Politics and the State

1. Politics and the State Professor Roger Seifert Weekend School Doncaster 6th September 2013 Seifert/September2013

2. Introduction • Economic and social origins --Division of labour and scarce resources • Land, Labour, and Capital – the objective basis of class • Work, workers, and the working-class • Modern capitalism and the nation state • Neo-liberalism, public choice theory, and the current crisis • Democracy, the state, revolution, and rights Seifert/September2013

3. 1. Economic and social origins: division of labour and scarce resources • Early societies tended to be formed in coastal areas and were characterised as hunter gatherers. • This involved a division of labour based on skills, and natural functions such as child birth • Specialisms developed with social hierarchies based on the need to survive, and the role of non-material (magic and religious) powers • In some cases this resulted in ownership moving from common to private family which involved inheritance, rights of ownership, and rights over others • As resources become scarce then groups moved to new settlements, and/or sought to distribute goods differentially, and/or tried to improve supply through technological improvements in hunting and early cultivation. • Pressure on relatively scarce resources leads to generalised social conflicts Seifert/September2013

4. 2. Land, labour and capital 1.Land -- attracts rent as income (landlords) 2. Capital – attracts profit as income (capitalists) 3. Labour – attracts wages as income (workers) 4. These factors of production combine to form all economic activity anywhere in the world at any time – efficiency and productivity 5. There must be a market for them to be bought and sold – and for a market for their outputs 6. Economic ownership creates social classes Seifert/September2013

5. 3. Work, workers, and the working-class 1. Work is exchanged for wages 2. Work takes many forms – not all work is economic, some is social labour 3. Economic work includes levels and types of skills, scarcity of skills, and involves interaction with land and capital 4. Quantity of work is bought from the worker for wages, made up of different elements – basic, overtime, bonus, allowances, and special payments Seifert/September2013

6. Workers ... 1. Entering the labour market – points of entry and exit 2. Workers work for wages for themselves and their dependents 3. Wages come directly as pay, and indirectly as pension and benefits, and as state subsidy for social wage such as health and education 4. How ‘free’ are workers to stop working and leave their employment? The ‘loaded gun’ and paradox of being free and not free Seifert/September2013

7. Working class 1. Class is an objective economic category associated with how you survive through income – like Darwin’s finches 2. Landowning class income is rent; capitalist class income is profit; and working class is income from selling labour – not slavery or serfdom 3. Workers are born or become propertyless and therefore have to sell their labour in a market to employers – this is their common shared experience of reality 4. So they have no power as an individual in the market --- wages are low as usually there are more sellers than buyers, unless you combine together and become a monopoly supplier of labour to the employer then you have more market power. Otherwise the government and large employers act as monopsonists or oligopolists in the market and create a low wage economy. Seifert/September2013

8. 4. Modern Capitalism and the Nation state • As Empires began to disintegrate, especially in Africa, Asia, and South America so new political forms developed in the fifteenth century .. The city and nation states. • These were characterised by a central political power holding sway within a bounded geographical area. Inside the ‘walls’ there started to develop police force, tax collection, public goods such as sewers, and market trading protected by the state • This spread through war and conquest to natural boundaries and the creation of nations, as well as the rise of European empires. The main driver was the need to ‘house’ capitalist modes and means of production in a secure market environment with safe banking, and protected supply chains – laws and property rights • Once the state was acknowledged as the ‘natural’ setting for political life the centralising power of politics could develop through both unitary and federal systems. This later involved wars of national liberation, civil wars, and military interventions ... Still going-on. Seifert/September2013

9. 5. Neoliberalism • The neoliberal Washington consensus: ‘liberalize trade and finance, let markets set price (get prices right), end inflation (macroeconomic stability), privatize. The government should get out of the way -- hence the population too, insofar as the government is democratic’ (Chomsky 1999). • Emerged in France in the 1930s in opposition to the Popular Front government and the USSR; and re-emerged in the late 1940s as an aggressive ideology strongly in favour of competitive order through a structured and supervised state; and strongly against labour monopolies (trade unions and professional bodies) • By the 1970s this Austrian school was attacking both neo-classical and Keynesian economics, and its main protagonists were actively advising rightwing parties in Chile, the USA, and much of Europe, including the UK • The free market is seen as the best allocator of resources, the best decider of costs and prices, and provides the perfect home for the profit-seeking rational entrepreneur Seifert/September2013

10. Features of neo-liberalism • Market competition as the best resource allocator • Profit seeking and maximizing as the best form of incentive • No waste through efficiency at the point of production • Replace producer domination (the professions) with customer sovereignty – patients’ first? • Greater authority to senior managers through performance measures and targets -- indicators; league tables; inspections; regulations; name and shame • Marketize through competitive supply side institutions – NHS Trusts; FE colleges; Civil Service Agencies; Academy and ‘Free’ schools; and GP practices • Privatize through public finance initiatives; outsourced management of hospitals and GP practices; student fees and patient charges through insurance Seifert/September2013

11. Public choice theory • Critical analysis of public sector provision based on waste – the misallocation of resources, because • Politicians cannot be trusted to select the best pattern of provision because of their short-term electoral interests • Bureaucrats may ignore politicians and act inefficiently anyway; therefore • Public goods/services and publicly provided private goods/services should be provided by the private sector since managers will make rational decisions based on market need and not waste resources; • ‘The Government’s reforms will liberate professionals and providers from top-down control. This is the only way to secure the quality, innovation and productivity needed to improve outcomes. We will give responsibility for commissioning and budgets to groups of GP practices; and providers will be freed from government control to shape their services around the needs and choices of patients. Greater autonomy will be matched by increased accountability to patients and democratic legitimacy, with a transparent regime of economic regulation and quality inspection to hold providers to account for the results they deliver.’ Seifert/September2013

12. 6. Democracy, the state, revolution, and rights • The state inside the nation state requires legitimacy and support to survive in a peaceful manner • Democracy is the favoured shell within which nations exist, but it has a wide variety of meanings from majority rule (not majority dictatorship), constitutional issues of relations of elected and non-elected parts of the state, and rights of minorities • The state represents class interests and forms a dictatorship of the bourgeoisie or proletariat. The national interest is constructed to hide class interests, and involves nationalism, national identity, citizenship • Revolution changes the nature of class rule • Rights are contested with hierarchies linked with equality, freedom, justice, and opportunities. Seifert/September2013

13. The role of the state • The role of the state is to create and sustain the free market on behalf of the ruling class in a class society • It favours weak government but a strong state (in Germany ‘ordoliberalism’ – authority-backed markets) • It sees the inequalities that arise from market activity as a natural feature of society • Within this it accommodates the power of large companies and monopolies, especially in finance and trade • Public choice theory attests that the best decision-makers are managers in command (imperium and dominium) of profit-seeking • And so all economic activity should be in the private sector and taken away from short-term self-seeking bureaucrats and politicians • The 2008 crisis is an example of this that includes the collapse of financial and then trade markets; the use of the state to protect capitalist interests at the expense of the working-class; subsequent divide and rule tactics; and the instability in the world order deriving from both the crisis and the solutions. Seifert/September2013