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The lying horsemen of the apocalypse
Thus enthused James Palumbo, property magnate and music industry entrepreneur, in an interview in The Times in July this year. Palumbo, while only a medium-sized fish among the sharks of capitalism (his personal wealth is estimated at a mere £130 million) is nevertheless a keen political operator who cultivates relationships with leading figures in all three main political parties. Although Palumbo was responding to a question about the prospects for his own business interests, his words reflect the political mood of Britain's right-wing radicals, eager to seize the opportunity provided by the economic crisis in order to make massive cuts in the public services.
Most of these radicals, but by no means all of them, are in or associated with the Tories (the British Conservative Party). But given the damage to free market ideology which has been caused by the economic crisis, many- though by no means all of them- prefer to propose their anti-public sector agenda not in the visionary terms which were used in the days of Margaret Thatcher, but rather as a regrettable but extremely urgent necessity. As the right-wing Labour MP Frank Field put it in an article entitled 'Horsemen of the economic apocalypse' published in the Guardian on 27th November:
I believe we need to cut, and cut quickly, if we are to prevent the scenario I have just described [cataclysmic financial meltdown] coming into full force. It isn't a choice between protecting the recovery by keeping in and cutting at a later date. If we don't convince the market how serious we are about cuts soon, there simply won't be any recovery whatsoever and that is putting out future prospects using the most moderate of language.
Convince the market! As a maverick politician who does not hold ministerial office, Frank Field can use a phrase which illustrates the contradictory nature of modern democracy. In order to get elected, political parties have to win the votes of the people; but the real master under globalised capitalism, the one who must before all else be convinced that a government has the right policies, is the market.
Cuts, lies and armageddon
By pure coincidence or otherwise, an article on almost identical lines appeared the same day in the Daily Mail, under the headline 'Is Britain on the brink of financial armageddon?' According to the article:
...any dispassionate analysis would spell only one thing - we need massive spending cuts and tax rises to avoid heading the way of Iceland and Dubai.
The author of the Daily Mail article, a certain James Palumbo, did not spell out the nature of the proposed tax rises. However, the Conservative Party's policy is to reduce the tax paid by the richest people in society- by cutting the top rate of income tax, raising the threshold for inheritance tax, and reducing corporation tax. So, in the likely event of a Conservative victory at the next general election, any increase in the government's taxation income would be gained mainly at the expense of the poor and middle-income earners; for example by upping the rate of VAT and by raising the national insurance and income tax burden on low and medium paid workers.
As befits his position as a dispassionate analyst, Palumbo critiqued both the Labour government and the Tory opposition for allowing the increase in the size of the public sector:
The massive spending by New Labour on public services during its last two terms was a good idea in principle but a disaster in practice. This was because Blair was not a 'details' type of person...
As a result, the Conservatives accuse the Government of 'not fixing the roof while the sun was shining'. But the problem is they didn't suggest it at the time. Politics had became so centrist that for the Tories to suggest restraint at a time of economic prosperity would have been electoral suicide.
We are now reaping the harvest of that short-sighted conformism.
While regretting that the Tories do not yet openly argue for massive reductions in public services because they are still too afraid of public opinion, James Palumbo acknowledged that their moment for breaking free from 'centrist' conformism will come after they have achieved power:
The Conservatives are odds-on to win the forthcoming General Election, to be held probably in May or June. There is a view they will not announce the full range of spending cuts they intend to make until it is safely won.
Once in office they can claim the situation is far worse than they envisaged and start swinging the axe.
Tory snake oil
But to be fair to the Conservative Party, they are doing as well as can be expected in their aim of convincing the people; and unlike the Labour Party, the Tories have no need to balance this by convincing the market- because, as the natural party of capitalism, the market needs no assurance that they have its interests at heart.
In a widely publicised speech to a right-wing think tank, Tory Shadow Treasury Secretary Philip Hammond has unveiled the Conservative Party's latest weapon in its battle for the hearts and minds of the public: the claim that the Tories will swing the axe to public spending without having any impact on the services delivered by the public sector.
A Daily Mail headline proclaimed Hammond's statement as a "pledge to cut £60bn 'wasted' by Labour on unproductive public services". And not merely a one-off saving of 60 billion pounds, but £60 billion per year! And to be achieved by the simple expedient of making the public sector as 'efficient' as the private sector. The Daily Mail reported:
More than £60billion of taxpayers' money is wasted every year because Labour has let public services become wasteful and unproductive, the Tories will claim today.
They say they could save the cash by making government staff catch up with levels of performance in the private sector.
The arithmetic for this formula was expounded by Philip Hammond as follows:
Over the first decade of Labour's rule from 1997 to 2007, according to the ONS [Office for National Statistics], quality adjusted public sector productivity shrank by 3.4%. Over the same period, productivity in the private sector of the economy grew by over 30% and even in the services sector, grew by more than 20%.
We have modelled what would have happened if the public sector of our economy had delivered the same productivity performance as the private service sector in each year of that decade. The result is startling: we would today be enjoying the same quality and quantity of public services - with a saving to the taxpayer of some £60 billion per year. That is the price we are paying, every year, for Labour's failure to deliver public service reform.
Put another way, possibly substantially more than half of our structural deficit - the bit of the deficit that we have to tackle by fiscal consolidation - is due to Labour's failure to obtain value for money for the increases in spending it lavished on the public services during the good years.
That means that at least £60 billion of efficiency savings could be achieved simply by making up the lost ground of Labour's lost decade without any impact on public service outcomes.
Which, if true, would surely be the answer to everybody's prayers. But Philip Hammond's formula is pure snake oil. Even the Daily Mail editors- loyal Tories to a man and woman- inserted scare-quotes in their headline (£60bn 'wasted') and carefully used the word 'claim' in their article; however, neither the Mail nor the other media outlets raised a very pertinent question in respect of the Conservative Shadow Treasury Secretary's claim: why are the services which comprise the public sector in the public sector? That is, why, even after many years of Thatcherism, and following that a market-oriented New Labour government whose main policies were not opposed- as James Palumbo points out- by the Conservatives; why have the health service, education, and the other remaining state-owned service sectors, remained in public ownership?
One of the most important reasons is that the nature of these sectors makes it unfeasable to run them at a profit while ensuring that they remain available to the whole of society; unless a massive government subsidy, much higher than the current cost of maintaining those services in the public sector, were to be paid out to capitalist firms willing to operate these services. Even in the USA, the school system remains largely publicly owned; and the privately-owned US health service costs about two and a half times as much to run, per citizen, as the UK's NHS, while not only achieving generally worse results but leaving scores of millions of people uncovered except for emergency treatment.
In Britain since 1997, the increase in state public sector expenditure has gone primarily to health and secondarily to education; the £60 billion which the Conservative Party claims can be recouped annually from allegedly 'unproductive spending' would have to be reclaimed mainly by cutting the funding of these sectors, and mostly from the National Health Service.
Why cannot universal health and schooling systems, along with the other services still in the UK public sector, be privatised without a huge, wasteful and permanent state subsidy being provided? Because they are, and will remain, 'hands on' services, highly labour intensive; and no amount of new technology can reduce the necessity for large numbers of workers- for instance nurses and doctors, teachers and classroom assistants- who must have frequent and direct contact with their patients or students.
In the private sector, including the privately owned services, the main way that productivity is increased is by the introduction of new technology. Workers are displaced by computers, robots or other machines- so the number of workers can be reduced while output stays the same or rises. The cashier at the bank is replaced by the ATM and online banking; the salesperson at the shop is replaced by the automated checkout and online retail. So productivity, which is the quantity of output values divided by the remaining number of workers, can rise rapidly; and, it must be noted, the increase in productivity in the private sector is gained at the cost of reducing the number of jobs available.
This process does not, and cannot, take place in schools, hospitals and the other services which, in the UK, are still publically owned. When computers are brought into the classroom, the teacher must still be present. When new diagnostic machinery or new therapeutic drugs are employed in the health service, those can improve the outcomes for the patient- but the need for doctors and nurses to tend the patient is not reduced; in fact, the reverse may be the case, as sick people who would previously have been untreatable require personal care to ensure their survival and recovery.
Though, in respect of the 20% productivity increase in the UK's private sector service industries between 1997 and 2007, it must be noted that this rise was not gained purely through the replacement of human labour by machines and information technology. There was also the outsourcing of call-centres, design offices and other mobile operations to lower paid labour in the Third World; in addition, the rising value of English-language information products in the international economy; and, by no means least- the leading global role of the City of London in promoting speculation in financial 'products'. Much of the gold generated by the City has since 2007 turned to dust; hence the fears that the UK may follow Iceland and Dubai onto the financial ash-heap.
None of the above provide any relevant lessons for efficiency in Britain's public services. But what of the 3.4% drop in productivity in the UK public sector during those ten years? At the outset, it should be cautioned that it is not absolutely certain that there has been such a fall. Unlike in the private sector, where productivity can be calculated 'objectively' on the basis of the total prices of the outputs as sold on the market, there can be no financially-based calculation of the values created by the hospitals, schools, police, fire service, social services or environmental health departments.
The 3.4% figure is sourced from a report published by the UK National Statistics Office, which bases its 'output' measures for the public sector on the amount of activities reported (eg, in the NHS, the number of treatments performed), together with some selected 'quality' indicators. For example, the measure by which the performance of the education system is calculated in the National Statistics Office report is the GCSE exam results of 16 year old children.
If we assume- as Philip Hammond and the Conservative Party do- that the National Statistics Office report is based on reliable assessments of the production of Britain's public sector, the emphasis on the 3.4% decline in productivity over the decade from 1997 to 2007 conceals the fact that there has been a massive improvement in the output of the British public sector. Public employment rose steeply- from 1998 to 2004 there was an increase of 583,000 in the number of people working in the public sector- while production per worker declined only slightly: a reduction of a mere 0.34% per annum over ten years. So overall, there has been a significant increase in the quantity and quality of public sector output.
Figures of life
These are dry statistics, but behind them are the lives of many human beings- both the people who have received employment opportunities, and the people who have received the services provided by those workers. While the UK private sector as a whole created no additional jobs whatsoever in the decade preceding the 'credit crunch', the public sector created well over half a million new jobs. In the National Health Service, the increase in the size of the workforce in England alone (ie, not including Scotland, Wales and the north of Ireland) has been quite astonishing. Between 1998 and 2008, the number of qualified nurses rose from 257,597 to 329,372 (full-time equivalent posts), an increase of almost 28%; and the number of doctors rose from 86,594 to 125,316, an increase of 41%.
One of the benefits of the increased output of the public sector has been a substantial improvement in the the survival rate of babies during their first year after birth. This figure, which is usually recorded as its converse (ie, the infant mortality rate) is, according to US National Center for Health Statistics, "one of the most important indicators of the health of a nation, as it is associated with a variety of factors such as maternal health, quality and access to medical care, socioeconomic conditions, and public health practices."
In Britain, infant mortality declined from 5.8 deaths per thousand in 1997 to 4.85 in 2008. The USA, despite its enormous spending on health, has an infant mortality rate of 6.26.
Continuing with the assumption that there was a 3.4% drop in production per public sector worker in the decade to 2007, there are two likely and fairly simple explanations for this fall. The first is that new investment, including investment in new staff, usually takes time to produce its full benefits. New workers are in general less productive than more experienced workers, precisely because they have less experience in the workplace. Over a few years, those more recently recruited workers become more productive as they gain experience.
The probable validity of this as accounting for some of the slight reduction in UK public sector productivity is borne out by the figures in the National Statistics Office report, which indicate that the entirety of the drop in productivity took place in the early and middle part of the period, and that productivity began rising again in 2006 and 2007.
Capitalist inefficiency
The other likely reason for the productivity fall is that the process of marketisation, part-privatisation and chaotic de-centralisation of public services- which has taken place since the election of Margaret Thatcher, was continued under the Labour government, and which the Conservatives will greatly extend and intensify when they return to power- has had an effect which is the opposite of that which is promised. The outcome of contracting, competition, payment by results and other capitalist mechanisms reduces productivity rather than improving it.
This can be observed at its starkest in the appallingly low efficiency of the USA's privatised health system, and it can also be seen in the staffing information on Britain's National Health Service. The replacement of the socialist system of central and devolved planning on the basis of need (by which the NHS was run from its inception in the aftermath of World War Two until the mid-1980s), with an increasing host of market mechanisms, has resulted in the employment of a rising number of managers and administrators- whose jobs have nothing to do with the care and treatment of patients; their role is purely to manage and sustain the financial competition between units, bid for contracts, and move cash around the different parts of the system.
Though they are as yet a small minority compared to the hundreds of thousands of nurses, doctors, technicians and other therapeutic and care workers in the NHS, the section of staff whose numbers have risen fastest since the 1980s is that of the managers and senior managers. According to a report to parliament based on statistics from the NHS Information Centre, this group of staff (who despite their small but rapidly increasing numbers are costly because of their high salaries) has increased in size by 73.6% since 1998:
The number of NHS managers and senior managers in England rose from 21,854 in 1998 to 37,937 in 2008, a 73.6% increase. In 2008, managers comprised 3.4% of the hospital and community health service workforce, up from 2.6% in 1998.
Unholy war
After the Tories are elected to power in 2010, their class war against the majority of people in Britain will be unleashed. A major front of that war (as was the case in the days of Thatcher) will be against the public sector; and they will lay waste with a three-pronged attack: making the public services less efficient by extending privatisation and market mechanisms; reducing services by wielding the financial axe; and increasing unemployment by cutting jobs (except, of course, for managers and senior managers).
And thus- when it is too late, when working class and progressive people, already demoralised by the failure of the Labour government to live up to expectations, have been futher demoralised by the crushing electoral defeat of that government- the Conservatives will be exposed for what they are.
Though could it perhaps it be said instead: if the Tories are elected to power? Because to the extent that they are exposed now, before it is too late, the very faint hope that David Cameron will not be Britain's Prime Minister in June 2010 could, just possibly, become a reality.
Gordon Brown's body, though mouldering and over-ripe for the political grave, twitches to a semblance of life when- and only when- he remembers the language of Labour in the days before he, and his collaborators Tony Blair and Peter Mandelson, cast out (as we were told) the socialist demon from the Labour Party, and re-branded the Party as 'New Labour'. But, as has become apparent, it was they who were the demons and what was cast out by that exorcism was the soul of the Party.
In government, the Party whose soul had been made redundant and replaced by the PR-assisted shining face of Tony Blair, became hugely successful by means of turning some of the gold generated by the City of London into public sector jobs and services.
Then, following the Iraq debacle, the face of Blair became a repugnant and unbearable mask; and, worse still, the bankers- who had been paraded as the 'wealth-creators', providing the basis of Britain's post-1970s economic recovery, were revealed as alchemists, scammers who had produced nothing of value and sold it at a high price to their own country and the rest of the world.
Can the Labour Party- and with it, the fortunes of the majority of people in Britain- recover from the spectacularly successful disaster of the New Labour era? Quite conceivably, yes- and if not at this coming election, at the next one or the one after that. It is possible that Labour may yet recover its soul. The Tories do not have a soul to sell.