As the free market fails, the state steps in. Whole industries are being shut down, others are being commandeered, and many are being artificially propped up by government subsidies and handouts. Discussion rages about how the state might take a lead in public life: nationalisations, free provision of public services and the state-led redevelopment of manufacturing industry. It all proves the much-maligned socialist argument that the profit motive and the free market can’t organise a decent society.
But the state’s takeover of the economy isn’t a transition to socialism, despite what both the market-worshipping right and the reformist left might say. In fact, it can just be the catalyst for an even more repressive, violent form of capitalist rule – the kind capitalists often feel is necessary in a crisis. The alternative to the free market isn’t a hyper-powerful capitalist nation state. It’s international workers’ power. So while we should fight for nationalisation rather than the propping up of private capitalists, this must be part of a larger fight for workers’ economic and political control.
In the face of the COVID-19 crisis, most world leaders have been tentative, hoping to keep the neoliberal order on life support so they can revive it once the worst passes. Today’s politicians mostly entered the crisis having been trained from childhood to reject the idea that the state should run services. “Government isn’t the solution to our problem: government is the problem”, Ronald Reagan said in his 1980 inaugural address. He didn’t mean cops or soldiers; he meant things like free health care and public housing. Despite all their differences, politicians from France’s Emmanuel Macron to Donald Trump have accepted that basic logic: if it moves, privatise it, if it doesn’t move, cut its budget. Justifying his failure to mobilise industry to produce medical supplies, Trump told reporters, “We’re a country not based on nationalising our business. Call a person over in Venezuela, ask them how did nationalisation of their businesses work out? Not too well”.
But despite themselves, governments are increasingly having to take this very sort of action to stop the system collapsing. In doing so, they’re laying waste to any idea that the capitalist class are self-sufficient wealth creators who could achieve great things if only the state didn’t get in their way. Which raises the question: why are we paying just to let them profit?
Privatised operators of public transport are being paid millions of dollars to run empty trams and buses. Companies are being funded by the state to “hibernate”. Major airlines, many of them formerly state-run, are being bailed out even as they sack workers. These measures are designed to prop up a failing system and make a so-called “snapback” more likely, but they are the worst of both worlds. At enormous expense, inefficient private corporations keep making profits while they’re doing nothing useful. Why not just end the farce and take them under state control?
It’s an idea that is circulating more and more, to the unease of capitalists and their intellectuals. In Europe, the temporary nationalisation of major airlines and car manufacturers is floated with ever increasing frequency. Rupert Murdoch’s global press machine is running a coordinated campaign to nip this in the bud, wind back the state interventions and restore laissez-faire capitalism, even if it means millions will die. “Australians can – and must – be back to work within two weeks”, wrote Andrew Bolt in the Herald Sun. He’s not just hoping to facilitate the pursuit of quick profits; right-wingers are worried the return of state intervention will become a permanent fact of economic life. The Australian despairs that a “neo-Whitlamist fiscal freak show” in which the “nominally conservative, small-government, low-tax side of politics is building a welfare state on a vast scale” might become the “new normal”.
Governments from all sides of politics are now battling each other for face masks and ventilators, leading to a growing current of mainstream opinion that, once the first phase of the crisis passes, states should somehow force the redevelopment of national manufacturing sectors. “Our manufacturing industry is as important as our army, our navy, and our airforce”, Bill Shorten told parliament. “We need it back ... We need pharmaceuticals, ventilators and the like, and they should be within our control and within our borders.”
Of course, it is an obscenity that empty trams and idle airlines should be run for profit by private operators, with state budgets that could be spent on health care being used to inflate their owners’ bank accounts. Those companies should be confiscated immediately. Parasitic capitalists should be knocked out of their controlling positions in important sectors like transport, health care, education and the production and distribution of food. But even if this were to eventuate, it wouldn’t mean we’d overcome capitalism’s logic.
The madness of capitalist competition still exists when the economy is more state-directed. And it can be just as inhuman as the pursuit of profits on the free market. Competition between repressive and belligerent capitalist states, all seeking to emerge from a global crisis ahead of their rivals, can just as readily lead to military confrontation. And state-dominated capitalist economies will punish their own workers brutally in order to gain an advantage globally.
If key industries are taken over by the state, it will be because the ruling class recognise the depth of the crisis facing them, but not because they want to move beyond the inhuman system that has led us to this point. Far from it: they’ll fight hard to defend it against any working-class challenge, and a strengthened nation-state will be their best weapon
Many have compared the COVID-19 pandemic to a war. It’s a useful comparison. The free market doesn’t organise wars well: states have to take the lead, commandeering industries and directing the economy. But when capitalist states massively expand their power during the crisis of wartime, it’s not to benefit workers. When key industries are marked out as essential for national survival, the state can direct bosses to produce this or that item – but they will likewise crush any worker who threatens the “national interest”.
In the late 1930s and early 1940s, the liberal president Franklin Roosevelt was the darling of much of the US left. His New Deal spending program is promoted even today as a kind of quasi-socialist policy. But as that New Deal grew over into the militarisation of the economy to prepare for WWII, it brought with it repressive laws to crack down on strikes and dissent. The FBI was sent out to terrorise and lock up radicals who might organise strikes in war industries, and many socialists and unionists were imprisoned. That political and industrial repression was bound to the statification of the economy, and it laid the foundations for the Cold War and McCarthyism.
In both world wars, it was workers in the key war-production industries – some run by private corporations making huge profits from the guaranteed sales, others under state control as part of the totalising war mobilisation – whose struggles were the most viciously repressed by the state, and often the most radicalising. Much of Russia’s revolution was led by workers in war industries, producing armoured cars, artillery shells and explosives. To fight their bosses and the state, they needed the political courage provided by an internationalist, anti-capitalist world view. That meant that when they struck, they knew they weren’t traitors to their nation for sabotaging the war effort: they were heroes to the world’s working class.
A crisis like this can bring together politics and economics, as the capitalist state is compelled to take responsibility for production and distribution. That also means economic struggle by workers can more immediately become politically dangerous, prompting the state to crack down. Already, workers are heroically taking responsibility for solving the social problems caused by the pandemic. They are fighting to shut down non-essential industries, and to convert unnecessary industries like war production into health care. Efforts such as these will be the only way to guarantee a dignified and safe life for workers everywhere.
Working class organisation, built out of day-to-day struggles in the workplace, can construct a collective, internationalist foundation on which to reorganise economic life in the interests of humanity. This directly challenges the interests of both private capitalists and their state. Both want to maintain the oppression of workers in the workplace, keep production running according to the hierarchical laws of capitalist society, and bind the working class in loyalty to their class enemies through dividing the world into nation states. Workers’ control, workers’ power and socialism will have to be built in opposition to this, from the bottom up, in a struggle against bosses in both private corporations and state-owned industries.
This matters, because the current crisis provides a powerful basis for nationalist, pro-state politics. All of a sudden, nationalisation seems like common sense. And in the last few years, a revival of reformism has led many to identify socialism plainly and simply with the nationalisation of key sectors of the economy. The powering-up of the nation-state in a global crisis can provide a big opportunity for reformist leaders and union bureaucrats who want to play a role in managing a national economy. They can paint their integration into the state as a triumph for workers. This can fuel illusions that the takeover of the economy by the capitalist state means a step away from capitalism.
Some state takeover, including nationalisation, should be fought for. But to move away from capitalism, we need much more than state control. We need the working class to assert ourselves as an independent force. We need international solidarity, not national unity; workers’ power, not the lockdown state. We need to assert and test our right to strike and organise at work, even in “essential industries”. The humane society we need to replace capitalism will not emerge from the growth of the state, but from the actions of the working class. We start laying the basis for that control by organising collective rank-and-file resistance in the workplaces today.
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