Groucho Marxism

I often go and sell copies of the Socialist in my local town on a Saturday morning. Most members of the public I meet doing this are very friendly, even if they do not necessarily agree with my politics. So I was somewhat taken aback a couple of weeks ago when my paper-selling comrade and I were aggressively accosted by some people who turned out to be Labour councillors. They began by churning out all the usual stuff about us socialists letting in Reform. Then they accused us of only selling socialist papers in order to make ourselves feel good (?!). Next, they tried to gaslight me and my comrade by telling us that Labour weren’t making cuts to public services. Finally, they accused us of not having a coherent plan for how improved public services could be paid for. Here I shall respond to these points in turn.

The councillors’ claim that socialists like me and my comrade are somehow letting in Reform is obviously nonsense. In fact this is the clearest case of projection you will ever come across. It is Labour who are opening the door to Reform by offering zero solutions to the problems people of this country are facing and by normalizing right-wing talking points, particularly around the vilification of immigrants. I can also assure you that the reason I give up time to sell the Socialist on a Saturday morning is not to make myself feel good. Rather, it is to spread socialist ideas to the general public, and raise a bit of money for the Socialist Party at the same time. Somebody has to spread these ideas as we clearly cannot rely on the mainstream media to do so.

The claim that Labour isn’t making cuts to public services is also nonsense. The current Labour government has made many spending decisions that have effectively resulted in real-terms cuts to public services, particularly in ‘unprotected’ areas like local government, the criminal justice system, and the civil service. The claim that the UK government cannot afford to pay for improved public services is similarly nonsensical. However, I do think we socialists need to be careful in how we respond to this assertion. The standard response that we can raise the money by increasing taxes on the rich immediately runs into the counterargument that the rich will then just leave the country, taking their money with them. So how should we respond instead?

I once asked a wealthy acquaintance of mine how he was able to pay for a house he was purchasing in central London. ‘With money’ came his answer. (Ask a stupid question…) I think that this is how we socialists should respond when faced with the ‘how are you going to pay for it?!’ question that inevitably arises whenever we suggest that we should perhaps try to improve public services a little bit. As I explained in a previous blog post, a sovereign government that issues its own currency has no need to tax before it spends and can effectively create as much money as it likes. In the same way that my wealthy acquaintance had access to money on demand to buy property, a sovereign government has access to money on demand to improve public services (if it wants to).

The usual retort is that increased government spending without an equivalent increase in taxation inevitably leads to inflation. Indeed, this is precisely what one of the labour councillors said to me when I put it to him that the UK government does not need to rely on taxing rich people to fund public services. The first thing to note about this is the shifting of goalposts. In claiming that an increased budget deficit inevitably leads to inflation, my interlocutor was unwittingly conceding that the UK government can, in fact, increase spending without increasing taxation. The second thing to note is that the claim is empirically false. Japan, for example, persistently runs deficits of over 200% of GDP, more than twice that of the UK, but has had a lower inflation rate every year for the past decade.

I am not denying that budget deficits can lead to inflation, just that they necessarily do. In the words of American economist Milton Friedman: ‘Government deficits can and sometimes do contribute to inflation. However, the relation between deficits and inflation is far looser than is widely believed.’ Friedman is revered by many on the right and is one considered one of the main architects of neoliberalism. Yet even he concedes that budget deficits don’t necessarily cause inflation. So why is this idea so entrenched? I think it stems from a fundamental misunderstanding of what gives money value. Most people assume that the value money is driven by the amount of it that exists, whereas the value of money is actually determined by the amount that people have to work in order to obtain it.

The Labour councillors I encountered on that Saturday morning were an example of what the late, great American anthropologist David Graeber referred to as the ‘extreme centre’. Centrists like to portray themselves as pragmatists, but the truth is that they are often the most dogmatic people you will ever meet. I hope that this blog post will help my fellow socialists to cut through some of their nonsensical arguments.