Jobs for all!
DURING the recent elections in France, the country's chronic and rising unemployment rate was one of the main reasons for the outgoing
Socialist Party's crushing defeat. Yet the new rightwing government has been able to propose nothing more than a more aggressive application
International Viewpoint #245 May 1993
Four principles
• An end to unemployment;
• Make satisfaction of social needs a priority;
• Establish new criteria for our ecoof the very neo-liberal measures responsible for the current crisis.
The following are excerpts from an alternative economic programme to fight unemployment, drawn up by the Economic Working Group of the
Ligue Communiste Révolutionnaire, French section of the Fourth
International. The full programme originally appeared in the February issue of the LCR's theoretical journal, Critique Communiste.
DOCUMENT
S
INCE the onset of the economic crisis every sort of economic scheme has been tried. Most European countries have seen both social democratic and conservative governments. Since the right turn of the French left government in
1982-83, policies in all the developed capitalist countries have been inspired by the same neo-liberal ideas. But while there was a limited upturn in growth in 1990, unemployment and inequality have not declined at all. The current economic slowdown has been marked by a new rise in unemployment. With more than 32 million unemployed in the OECD countries in 1992, it passed its previous record of
1983.
The alibi for austerity is the "theorem"
attributed to former West German chancellor Helmut Schmidt to the effect that
"today's profits are tomorrow's investments and the jobs of the day after".
This neat formula overlooks two problems:
• The movement from profit to investment is blocked by a lack of effective demand, since wages are being squeezed to raise profits; thus economic policy finds it impossible to obtain both higher profits and higher sales outlets at the same time;
• The movement from investment to more jobs is also blocked because in fact, at a time of low growth, investments go into rationalization which involve cutting jobs.
In France, even during the upturn of
1987-90, higher profits have gone side by side with a stagnation of the jobs market. Furthermore, a good part of the profit rise has gone into playing the financial markets.
This reality has favoured a revival of less blindly neo-liberal economic thinking. This was one of the main issues in the elections contest in the USA between Bush and Clinton, with the latter proposing a programme of renovation of transport and other infrastructure. In Europe also there is pressure for more active and less monetarist economic policies.
However, there is no whole-hearted return to Keynesianism owing to the constraint imposed by high state debts and the structure of the tax systems inherited from the 1980s which leave capital income more or less untouched. The social dimension of this new interventionism is very limited.
Furthermore, there is a clear contradiction between policies inspired by the desire for growth and the neo-liberal and monetarist aims of the European Single Act and the Maastricht Treaty on European union.
An alternative economic policy
The following are four principles around which an alternative economic policy can be developed:
• An end to unemployment. A place for everyone; to exclude a person from employment means turning them into a nomic choices;
• For international collaboration and
North-East-South cooperation.
Three immediate demands
• A 35-hour working week with no cut in wages, on the way to a 30-hour week;
• The right to decent housing;
• a minimum wage of 7,500 francs
(=$1416), the RMI (welfare) at 3/4 of the minimum wage.
Three sources of financing
• A cut in military spending;
• Tax reform;
• The redirection of financial flows.
Two requirements
• Control over capital movements;
• An alternative vision of European unity to that of the Maastricht
Treaty. * social non-being as well as representing a loss for the collective. Society must accept the task of finding a proper job for everyone. This is the point of departure of an alternative economic policy.
• Make the satisfaction of social needs the priority. A worker seeking medical help or good education for his or her children is a cost for the economy as it now functions; but when the same worker changes their car or buys a video they are reviving the economy. This logic needs to be broken. This means taking into account all needs, including those that do not express themselves in the form of effective demand.
• Make new criteria for economic choices prevail. Any large-scale economic decision must be looked at from the point of view of its effects on employment and the environment. In some sectors it is necessary to put an end to the indiscriminate replacement of people by machines. This means challenging the profit motive as the criterion for the essential economic choices. The basic aim must to be to pro-
15
----- pull-quotes on this page -----
FraNcE
----- photo credits and running heads -----
DOSSIER
International Viewpoint #245 May 1993 vide everyone, through appropriate economic and social organizational forms, with the means to participate in decision-making. Such producer sovereignty runs against the logic of the market. On the contrary, it implies non-bureaucratic planning, which is the way to socialize investment.
• We have to avoid any temptation to retreat behind national horizons without being starry-eyed about the forms of internationalization imposed by capitalism. This means promoting both within the EEC and in relations with the East and Third World common popular interests. This is the only way to combat the capitalist search for low-wage areas.
Insofar as French workers are better paid than South Korean workers and the latter more than Indonesian workers there will always be a difference in labour costs. We need to explore new avenues, for example, in terms of the "moralization" of international trade.
These four principles are part of a project for a society which would have nothing in common with those in the former eastern bloc. Our approach is not to limit private property on principle. We start from a simple idea: there are two possible criteria for determining socioeconomic decision-making - profits or needs. Our aim is to make the latter dominant, that is to say, establish economic democracy. Since this supposes that workers have the possibility to debate and decide economic choices, it is incompatible with any kind of single-party regime or transmission belt trade unionism.
### Respecting the limits
We have to learn to deal with the various constraints present in each socie-
• Societies are not infinitely malleable. Thus, in a Third World country, the potential of the economic structures are very limited. In every case, we have to control the balance between social supply and social demand. If purchasing power is created, there have to be goods that people want to buy. This condition must be fulfilled not only overall but for each sector. If, for example, the structure of demand is changed to the detriment of luxury goods, the sectoral specialization of production also has to be redirected.
• It can be forecast that the undertaking of social transformation will mean short-term imbalances, given the size of the shock and the different speeds at which different parts of the process will go. While demand can be changed almost at once, the adaptation of supply will take 16 longer.
Such imbalances will express themselves at four levels: the foreign trade balance, the budget deficit, inflationary tensions and the danger of an investment strike. On the first two points a certain margin for manoeuvre must be tolerated, which poses no insurmountable problems in a country like France. As for the behaviour of enterprises, both political and economic measures are needed. Readjustment cannot only be imposed in the medium-term through the mobilization of the workers.
### Lessons of experience
On these different points, we need to learn from the experience of the PS/PC government and its pro-growth programme of 1982. This came to grief on the following obstacles:
• The distribution of the additional income was real but did not go far enough to make workers feel they had won a basic conquest worth vigourous defence. The feebleness of the measures taken to cut the working week - determined by a reluctance to annoy the employers - ran into the same problem. At the international level, the failure to devalue flowed from the same political outlook.
• The external constraint came into play and there was a serious deterioration in the trade balance owing to the absence of even the simplest measures to control import flows.
• Investments died away as a result of the overall crisis and suspicion of the left government, but neither nationalized public sector nor the nationalized credit system were used to impose different norms of management and new investment plans, although this was the main justification for the nationa-
• The left's measures were not accompanied by any appeal for mobilization and an effort to make concrete changes in labour relations in the sense of greater initiative by the workers. The nationalizations were not really presented as the concern of the workers, even in the enterprises affected.
Taking into account these preliminary observations, we can now sketch out our programme for social transformation.
It is the work that needs to be shared, not the unemployment. The current situation in terms of working time in France is a combination of a 39-hour work week (to which additional hours can be added), part-time work (often involuntary — 89% of part-time workers say they would prefer a full-time job) and mass unemployment. Technological progress allows us to produce more in less time. The only progressive use of this fact is a big cut in the working week. We need to go beyond the 40-hour week won by the strikes of 1936.
This is a condition for a significant cut in unemployment. Some mistakenly claim that unemployment is a problem of training or the deficiencies of the education system. There is of course a relation between educational qualifications and finding a job. But education does not create the supply of jobs (except for those teaching the courses!).
In some sectors, such as construction there is indeed a lack of qualified personnel, but the demand here is marginal compared to the number of those seeking work. In November 1992, there were 57,500 jobs on offer. Furthermore, if there were really a lot of profit-producing jobs not being filled owing to lack of qualified personnel employers would undertake the training themselves, or put big pressure on the state to do this.
We need the 35-hour working week at once without any cut in wages. This is simply catching up with a situation where all the gains in productivity are going to profits while jobs and real wages remain stagnant. However, the 35-hour measure is not enough to cope with unemployment.
We need a clear timetable for a swift advance to the 30-hour week. Only in the framework of such a timetable can we discuss the wage levels that would allow the creation of the maximum of jobs. At the same time as being the only effective measure against unemployment, the 30hour week would also be a qualitative improvement in living standards.
### Socially useful jobs
Naturally, this return to full employment must be accompanied by a redirec tion of production to create socially useful jobs. Little real thought has been given to this problem. Obviously one could build up education at all levels and then the traditional "social" sectors — health, care of the aged or housing.
At the same time we have to prepare the reconversion of high-production agriculture, which seems to have reached its physical and economic limits. And of course we need to cut back on military industries and other sectors such as advertising
Housing construction has fallen to one of the lowest levels since the war. There were 275,000 housing starts in 1992, a 10% drop from the 1991 level. The rise in prices of recent years — on the order of
----- photo credits and running heads -----
DOSSIER
International Viewpoint #245 May 1993
What is the use of the stock exchange?
ACCORDING to the textbooks, the stock exchange is the heart of the economy. Here the capitalists (sorry,
"savers") buy their stocks and shares, rationally selecting from among the entepreneurs those that seem the most viable. In this way overall progress is served.
In fact, in the 1981-91 period, French companies invested 5,238bn francs.
Some 37% of this was financed by the issuing of bonds (405bn) and shares (1,518bn francs), the rest coming from companies' own resources (non-distributed profits)
and bank borrowing. However, in the same period, these same firms bought 378bn francs worth of bonds and 1,453bn francs of stocks and shares for speculative reasons.
Thus, the Bourse provided only 92bn in new money — 2% of total invest-
Far from being a place for directing investment, the Bourse is simply the temple of speculation. The October
1987 crash and subsequent gyrations confirmed the enduring validity of Keynes' comparison between the
Bourse (stockmarket) and a casino.
The Bourse is often described as the supreme example of the market in its purest and most perfect form.
Against this purity and perfection we propose the closure of the Bourse and the control of financial flows with the aim of achieving the conscious planning of the economy. * 230% in fixed prices between 1983-90 — increased housing segregation. When demand failed to keep up with the price spiral, prices fell slightly but the main effect has been an increase in the stock of new unsold housing - the total stock of housing would meet 20 months of selling, and the figure for offices is higher - and a reduction in housing starts.
We cannot count on the market to satisfy housing needs. It is up to the public authorities to intervene.
The emergency means that the law on the requisition of empty properties must be applied. New public housing needs to be built and the existing stock rehabilitated, measures which would both stimulate growth and resolve the problem of homelessness and bad housing.
In the face of rising poverty, society must assure everyone a decent income. A reference marker could be the estimate of the CP-linked CGT union confederation that in France one cannot live decently on an income of less than 7,500FF gross a month (the legal gross minimum wage is currently 5,756FF).
We can draw the conclusion from this affirmation that no wage or pension should fall below this limit.
Apart from pensioners and the disabled there are a huge number of people living on welfare (in France, the "minimum insertion revenue" or RMI). The unemployed must get an income of three quarters of the minimum wage, plus means of access to health care and hou-
The rise in the minimum wage and unemployment benefit must be indexed to inflation. Such a measure is not inflationary in itself; it only becomes so if the entrepreneurs try to claw back what they lose in wage and benefit rises by putting up
There are three obvious sources for financing our plans in the short-term. The first two are cuts in military spending and tax reform. The third, however, is the most significant - control of capital engaged in financial speculation.
In 1992, despite the break-up of the Soviet bloc, the French military budget remains equivalent to the national education budget. There is no justification for this, even in terms of the supposed industrial and trade benefits. These 250bn FF are a source for financing the change.
More than ever we must work for the unilateral, total and immediate dismantling of the nuclear strike force.
### Tax reform
The second source of finance would come from a deepgoing reform of obligatory contributions both in the form of taxes and of social charges.
• We must reject the false theory concerning the excessive weight of obligatory deductions. In the first place the very term "deductions" has a pejorative sense, and is part of the ideology of "the over-bearing state that weighs down the economy". Secondly, it ignores the fact that the bulk of the so-called "deductions" come back to individuals in the form of social benefit payments and services, and to enterprises as state purchases and subsi-
The real issue is the division of this burden and the use of the revenue. Overall deductions can be cut by abolishing the tax on big private fortunes or by lowering indirect taxes on basic products - with entirely different social consequences. On the other hand, taxes can be raised to finance military spending or get a public housing programme started.
Taxes should be both a means of financing public spending and a means of social redistribution. Tax policy reveals the social nature of policy.
• The successive cuts in taxes on firms (from 50% to 33%) have been justified by the need to lighten the burden on enterprises so that they can create jobs.
• Finally, we need a serious record and taxing of non-wage income and in particular of financial incomes. Even the Tax Council, hardly a den of leftists, has criticized the way that the rich get out of paying taxes. A whole series of tax breaks can be eliminated
• Direct deductions should be fairer. As far as income tax is concerned, family allowances should be abolished and taxation of family income be replaced by personal taxes. The uniform redistribution of family allocations and benefits from family allowances would be equivalent to one third of the minimum wage per month per
• Local taxes are especially unjust. The country's richest city, Paris, also has the lowest local taxes. The habitation tax which varies by a factor of 1 to 10 from one part of France to another must be calculated solely on the basis of income and become part of income tax.
• Social security is a fundamental instrument for ensuring that basic needs in spheres such as health, additional income and social protection are met. It must be defended and improved
In 1970 the total sum of interest represented 10% of French GDP. In 1991 it had risen to 30%. 14 million French people own shares - up sixfold from 1981 and ten times the number of trade unionists. In the "socialist" period, the total sum in the hands of investment companies has risen from 70 to over 2,000bn francs. The ten percent richest households get 28% of income, possess 54% of property and control about 70% of stocks and
In 1980, enterprises made 282bn francs worth of productive investments and 16bn of financial investments — 5% of the total. In 1991, the totals were 662bn and 317bn respectively - financial investments now making up 32% of the total
Thus, overall, firms are gaining proportionally more profits and making less productive investments. A growing part of this profit arises from financial profits (5% of the total profits in 1970, 20% in 1991). This terrible waste of social resources must be ended. There are several means to this end:
17
International Viewpoint #245 May 1993
• Firstly, the tax reform mentioned above. One of the reasons for the financial explosion has been the refusal to raise taxes to fund state spending. This has meant borrowing and a growing budget deficit. In 1992, the French state paid out 145bn francs in interest on its debt, while falling still further into debt.
• A thoroughgoing nationalization of the credit system and its reorganization to better socialize and earmark national savings. We must reverse the total deregulation and recreate a wholly public financial circuit with a network of savings banks financing communal services and housing.
• Having met these two conditions profit has to be deducted at the source and forced to fulfil its social role, which is to invest, by reducing to the minimum the above-described circuit. The redirection of financial flows is an important instrument from the point of view of financing. Reducing real interest rates to their level during the long period of expansion would release 200bn francs for more useful purposes.
Property speculation seems to have suffocated itself and now the main problem for many developers and bankers is how to extricate themselves. We need to take advantage of this crisis to put a stop to the invasion of the cities by luxury dwellings and offices and implement a policy of housing for all.
The international context
Then there are the international constraints. First, it is clear that our proposals mean completely undoing the labours of recent French and European politicians.
The ratification by France of the European Single Act and the Maastricht Treaty is the end product of a process of social liberalism, but they are a considerable obstacle to the implementation of any alternative policy. International financial markets have an effective veto over economic policy in different countries.
The external constraint - the alibi for the left's turn to austerity in 1983 - has to be put into its place at the start.
Fundamentally, foreign trade must be seen as a means of increasing national wealth but not as an end in itself. The external constraint exists, but it must be managed at the overall social level. Export receipts determine how much can be imported. Hard currency receipts must thus be centralized and earmarked for planned objectives in the light of the need to maintain a trade balance in the medium
To control the influx of imports the 18 barriers have to be put back up, in the first place by using all the existing possibilities, including those compatible with the EEC — safeguard clauses, customs duties and other mechanisms. Naturally, import controls must draw a distinction between rich and poor countries, rejecting any social dumping by the former and negotiating long term agreements with the latter. Furthermore, we must demand respect for minimum social rights in all countries wanting to trade with France.
This control must be extended to take in the control of exchange and capital movements. This is also a condition for disconnecting domestic interest rates in the interests of pursuing a monetary policy free from the requirement to align with international rates.
### Countering speculation
Moreover, a tax on all financial transactions could be a means of discouraging speculative capital movements.
Exchange rate policy must serve the ends of change. There needs to be wider scope for fluctuation and we should not be afraid of devaluation. If this is accompanied by correct measures such as redirection into national production - since devaluation raises the price of imports — and control on exchanges to block the speculative spiral, this could be a useful tool for short-term management of tensions in terms of prices and foreign trade.
The ultra-liberal Europe of Maastricht, which grants absolute freedom for monetary mechanisms in the framework of a central bank, is in radical contradiction with such a process.
One way of strengthening this policy is to approach workers in other European countries and simply say, "faced with austerity policies that hurt both you and us, we are undertaking an attempt at social change. We invite you to join us."
For example, in the struggle for the shorter working week we can count on a formidable power of attraction for workers throughout Europe.
A certain dose of utopianism is needed. This dose of utopianism - the willingness to contemplate economic measures that appear irrational from the point of view of existing economic arrangements - cannot be avoided. For one thing, on the purely technical level the existing economic forms can only reproduce what exists and econometric forecasting models assume stability of essential factors and cannot put a figure on policies that involve structural changes. If we try to measure the impact of the above proposals, we have to leave out of account the disturbance they would cause to the other variables in the model.
For these and other reasons it is not possible to present a programme of changes in which everything is decided in advance.
How can the control, planning and centralization involved in our proposals be combined with self-management and respect for the individual? The crisis has undermined the welfare state, which the bourgeoisie finds too expensive. At the same time, people aspire to more autonomy, more responsibility and less dependence.
But to recognize this does not mean forgetting the need for a collective approach to problems and constraints. While the solution does not lie in the state, nor does it lie in "dropping out" of the system. The latter needs to be tackled at the heart, at the level of relations of production and the state. And this implies an overall approach which reinforces the action of each of the individuals concerned.
For the achievement of this programme, in the last analysis, everything depends on the political will of the working class. *
Control, Centralization, Planning
Control: is what allows a collective will to produce facts. Exchange controls, for example, are a means by the which the majority of society can make sure that their efforts are not thwarted by a handful of property owners moving their money to Switzerland, playing the stock market or speculating against the franc.
Centralization: makes concretely possible social control of economic decision-making. Capitalist anarchy can easily live with decentralization, and the privatization of economic activity. But social transformation cannot take place without a constant movement of decision-making around the individual-local-central circuit.
Planning: is intended to realize the social control of economic orientation, use of technological progress and choice of priorities. From this point of view effective planning is unthinkable without producer democracy since it is they who must fix the basic objectives and means, forming the association of free producers dreamed of by Marx. *
----- photo credits and running heads -----
DOSSIER