Scottish National Investment Bank: A Marxist View

The SNP Spring Conference endorsed a motion calling on the Scottish Government to establish a Scottish National Investment Bank (SNIB). The idea of National Investment Banking has recently found favour among the left of British politics, with left wing Independence campaign Common Weal publishing a blueprint and Jeremy Corbyn proposing a British bank with regional branches as a key economic policy.

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Poverty Amid Plenty

by Tam Burke, September 2017

Child Poverty Action Group (CPAG),www.cpag.org.uk/scotland/, referred to the Scottish Government’s Report on Welfare Reform showing that 1 in 4 poor households lack enough warm clothes, are unable to afford school trips or have friends over for tea, and despite doing well at school grow up to be adults earning low pay. CPAG also show that in Britain, for 2014-15 (latest available figures) 28% of children are in poverty, almost 4 million in total. 67% of those kids have a parent in work! London has the highest amount of poor children.

 

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Marx vs Keynes

The Keynesian Economic doctrine is one of the most dominant doctrines taught in schools and universities around the world as an example of how capitalism can work in a positive way. Many cite Keynesianism as the solution to the inherent ills of capitalism. The reformist parties such as The Labour Party cite it as a credible of way of making capitalism work by supposedly making capitalism state regulated to serve the interests of all. As Marxists we know this to be wrong, but why and how?

Government intervention under Capitalism

The Marxist criticism of Keynes and his economic doctrine does not follow the same critique as others. We do not believe that the problem with Keynesianism is that there is too much government intervention but we believe that government intervention under capitalism does little good and ends up undermining itself. This is due to the fact that capitalism is governed by uncontrollable factors which no government intervention, short of ending capitalism, can stop.

Empowering the workers

​The fact is, any progressive reform under capitalism cannot be permanent and the ruling classes certainly will not let anything that damages their grasp on power survive. Many like Michał Kalecki argue that Keynesian full employment or high employment means a more solidified and more powerful working class, which would consequently lead to a weakened position for business. As we know from experience under Thatcher, this would not stand particularly whilst capitalism is in a deep crisis like now – when profits are down and debt is high, the capitalists will organise to demand the poor pay the bill. This is exactly what Thatcher represented and is what governments all over the world are doing now.

Keynes and Class

​Many Marxists argue Keynes is a prisoner of his neoclassical upbringing, this makes him unable to view capitalism in its entirety. Keynes overlooks the class role of the capitalist state and treats the capitalist state as a magical and neutral power to fix the capitalist system, or as it is sometimes referred to, a ‘Deus ex Machina.’ His students, such as Maurice Dobbs, a leading Communist Party member, highlighted his inability to accept the class struggle and class as an inherent feature of capitalism. Keynes often dismissed Dobbs’ considerations about class as “sentimental” considerations which did not concern him and according to Dobbs did not seem important to him. However as Marxists the class struggle is essential to our understanding of economic theory- and even our whole world view.

The fantasy of full employment

​Sustainable full employment is one of the many appealing fictions of Keynesianism. Keynes and his followers say that in a society without deficient demand, we can achieve full employment. However this full employment is reliant on a consistently stable economy, which as we know is very unlikely. To their credit the Keynesians have one example of full employment under capitalism, in Australia. The government’s policy of full employment lasts from 1941-1975. But then it ends. Why does it end?

One explanation from a Marxist perspective is the 70’s recession (1973-5), which reasserted the Marxist truth that capitalism goes through up’s and down’s – or booms and busts. However Keynesian economists are not big fans of the slumps as they tear apart the fantasy that anything progressive is sustainable in capitalism. Marx explained that capitalism creates and requires a ‘Reserve Army of Labour’. Unemployment is a structural part of capitalism, not a flaw we can iron out. This reserve army is required for times when there is overproduction. Capitalism is inherently unplanned and competitive, and so is chaotic.

​Periodically, the capitalists create overproduction, that is they discover they have collectively over-invested and must therefore massively cut back. This occurs partly due to the short-sighted nature of this anarchic market, and partly due to the necessary exploitation of workers, whose low wages will be insufficient to buy all that can be produced. Crises are therefore unavoidable and mass unemployment must be periodic.


Suppressing real change

​Keynes’ goal was not to make capitalism work but for ulterior motives. Many so called progressives forget that Keynes’ goal was not to help the workers but to maintain capitalism and suppress real transformation. His economic doctrine was about the ruling class attempting to manage its own crisis ridden system to save it from the early 20th century’s revolutions. Keynes was quite open about this. For example in a letter to Franklin Roosevelt in December 1933 he warned that “If you fail, rational change will be gravely prejudiced throughout the world, leaving orthodoxy and revolution to fight it out.” Keynes believed that by conceding minimal demands the ruling class can keep control, smoothing over their system’s sharp edges. Keynes was clearly an apologist for capitalism who ultimately would be prepared to throw the masses under the bus to allow power to remain in the hands of the few rather than transfer power to the many.

What do we want?

​We as socialists fight for real, meaningful and lasting change. Capitalism can no more be made to work for all, and to overcome boom -slump, than a tiger can be taught to be vegetarian. Surely the history of the past century of boom-slump, and the failure of Keynesian policies wherever practiced, proves this. Our demands are simple and modest. We demand a break with capitalism and fighting for a new and fairer society – a socialist society – one in which factories, companies and services are put under the control of workers so resources can be used in a way that benefits the millions not the millionaires. We are not fighting for Keynes’ fantasy, we are fighting for a Scottish workers’ Republic as part of a revolutionary socialist international, and ultimately the prospect of a new and entirely better world