John Strachey on Using Welfare Spending to Break Capital’s Control of Working People

Strachey Socialism pic

Yesterday I put up John Strachey’s six point programme for a radical Socialist reform of the economy from his 1940 book, A Programme for Progress (London: Victor Gollancz). In the same book, Strachey makes the point that spending money on welfare services and public works is, contra to the Tories and classical economists, not wasteful. He then goes on to make the point that the state, by giving welfare provision to workers in the form of pensions and unemployment benefits, breaks the absolute grip of the employers over them. He writes

Welfare Spending Is Not Wasteful

Before going on to the underlying theory of the function of money in such a society as ours, it is necessary to establish that this is no less true of our third, last, and most startling plank – the proposal of giving people newly created money as a remedy for unemployment. For there is a very strong prejudice in our minds which almost compels us to suppose that giving away money for nothing in this way (by way, say, of old age pensions or children’s allowances) is a wild proceeding; that a government which did that would be for instance, far more profligate than on which spent a like sum on public works; that to give money away is sheer waste; that such a government would “get nothing for its money”. But this is not the case. The truth is that a decision to give people money is a decision to have more consumers’ goods and services produced, while the expenditure of money on a public works programme is a decision to have more means of production produced. That is the difference.

All talk of it being waste and squandering to give otherwise destitute or severely straitened people money with which to buy consumers’ goods is nonsense. The money will circulate through the system at least as well if it is put in at this point as it will if it is put in at the means of production end. If it is given to the ultimate consumers, it will flow first into the hands of the producers of consumers’ good, next to the producers of producers’ goods, next to the banks, and finally back to the Government itself, just as surely as if it were spent on building new factories in the most orthodox manner. It is necessary to insist up this point, for our minds have been so condition that we almost all tend to believe that money given, say, to the unemployed, or the old, is spent and gone, used up once and for all-if not actually wasted-in a sense in which money invested (a much more respectable word than spent)in a new factory, or in public works, especially if they are of an income-producing type, is not.

But there is not a word of truth in it. The one sum of money is spent on consumers’ goods, the other and producers’ goods. And that is all the difference there. (pp. 93-4).

This is a point which the Keynsian economists cited by Mike over at Vox Political, and by the Angry Yorkshireman, have been making time and again. It’s entirely correct, and was one of the reasons Roosevelt’s New Deal was so successful.

Breaking the Employers’ Grip

Of the effect of welfare spending breaking the stranglehold employers have over working people, Strachey writes

Is it, then, mere intellectual error which makes the dominant, ruling, financial section of the capitalist class so vehemently oppose all policies of this sort for re-employing the factors of production? We shall find, on the contrary, there is quite a rational explanation of their opposition. We have seen that private enterprise knows no way of getting extra money into the hands of the ultimate consumers except by employing them on the production of producers’ goods, or of durable goods such as houses. But now look at the proposition from another standpoint. From the point of view of the ultimate consumers, this means that they cannot live until they can get some private entrepreneur to employ them. It expresses, in a word, the dependence of the people of a capitalist society upon those who own the means of production. It expresses the monopoly of economic power which rests in the hands of these owners. It is precisely because all those who do not own, and have no independent access to the means of production cannot get money into their hands in any other way than by selling their ability to labour, that the owners are enabled to dictate the terms of sale of labour power. it is this which enables them to reap for themselves a rich harvest of the fruits of the labour of others. But what if a new channel is dug by which money can come into the hands of the mass of the population without their having to sell their ability to labour to the employers? To the extent that this is done the employer’s hold over the population is weakened; his power to dictate the terms of employment, rates of wages, hours of work, etc., is qualified. For the worker can now live without him. Nor is there the least doubt of the immediate, strong and practical effect which the provision of decent scales of old age pensions, children’s allowances, and any other distributions of purchasing power will have upon the bargaining power of the wage-earners. The real reason, then, which the great capitalists, and those who consciously or unconsciously speak for them, will always feel that direct distributions of money to the ultimate consumers are a grossly unsound measure, is that it weakens the absolute character of their control over the working population. The capitalists are bound to object that if you give the workers money for anything except work in private profit-making industry, they will get “out of hand”. And so they will; they will get out of their employer’s hand. Surely no democrat will deplore this? But if the employer’s capacity to impose dictatorially the obligation to work upon the rest of the population is ended, it will ultimately be necessary for society to devise a democratic form of self-discipline by which the natural obligation to labour is enforced by society itself.

Experience tends to show, however, that this necessity is far more remote than might be supposed. the conservative’s nightmare that if, for instance, the Government paid really adequate relief to all the unemployed, no one would come to work the next day, is grotesquely incorrect- though no doubt the strengthening of the bargaining position of the workers which would result would be remarkable. Moreover, it is perfectly possible to arrange the giving of money to the ultimate cons8umers in such a way that any tendency to enable the slacker to live without working is reduced to a minimum. For the money can be given to sections of the population who are not required to work in any case. The obvious sections are the old or the very young. Really adequate old age pensions, or children’s allowances, paid out of newly created money, are a most valuable part of a programme for re-employing the factors of production in the conditions of economic stagnation which have recently obtained in contemporary Britain and America. (pp. 98-100).

And this is what the Tories do indeed fear, and have done. One of the first things Thatcher did was to cut the entitlement of striking workers to social security benefit. It’s why they have been so hard on the unemployed, and replaced unemployment benefit with ‘Jobseekers allowance’. And it underpins the whole of workfare and the sanctions system. It is part of keeping a cowed, powerless workforce desperate to accept any job, no matter how tenuous and poorly paid. And it needs to stop. Now.

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15 Responses to “John Strachey on Using Welfare Spending to Break Capital’s Control of Working People”

  1. joanna Says:

    You can make this highly valid point until you are blue in the face, but those who are of the Conservative bent of mind, will not take any notice.I know some people who believes that there are plenty of jobs, those who say “I survived without benefits”, but they didn’t, they still accepted child benefit, free prescriptions, free healthcare for their children, free dental and free opticians, not to mention free school meals for their children.
    If people have personal experience of plentiful employment, they tend to have blinkers on, even though they are working with people who find it extremely hard to even get on the ladder, whether it be for no work history, substance misuse or traumatic childhoods leading to many social problems in itself.
    They continue to “blame” the unemployed for them having to pay huge taxes, and to applaud “workfare” saying “at least they (unemployed) are not allowed to sit on their butts doing nothing”!
    As for the sick some people I know said “Everyone is capable of some work” I have tried to counter that by saying some disabilities require some strength and time learning to live and cope with them, in which case work is out of the question.
    People just want to think “I don’t get such help, then why should anyone else get help”, not realising that every penny that is given is spent in this country and every penny spent is taxed, (apart from children’s clothes) as far as i am aware.

    I hope I am not talking rubbish Beast?

    • beastrabban Says:

      You aren’t. I’ve had the same experience myself, over and over. You used to hear it a lot at one time. It was always ‘we never had it, when we were young, so why should they have it now.’ And the people, who so begrudge taxpayers’ money being spent on others tend to be the first to complain when theirs is cut. They never seem to make the connection that the same logic that will deny others their benefit will be applied to them. They are never ‘lazy scroungers’. It’s always, always somebody else.

      • joanna Says:

        Not to mention, those who have criminal records, those who do, don’t stand much chance in life as it is, which leads on to many, who are trying to lead a better life legitimately, being continuously penalised for previous crimes.

      • beastrabban Says:

        Totally, Jo, and this is a very big issue in America. it’s bad enough over here if you’ve got a criminal record, but in the states you can be very hard hit. If you’re sent down for a felony – that is, a serious crime, you lose your right to vote, and can’t get a student loan, and may have problems getting insurance. It’s a very harsh, punitive system. Despite this, America still jails more people than other nations, including China.

  2. joanna Says:

    Did you also know Beast that if you are diabetic, you get free prescriptions even if you are working, it doesn’t matter what your income is.

  3. joanna Says:

    It only works if you have been prescribed a medication for diabetes, I am Type 2 diabetic, I get Metformin, if I get a job tomorrow, all other medications I am on will be free to me. That works for everyone who has been diagnosed as such.

  4. joanna Says:

    Then again I don’t have a criminal record at all but no-one will employ me, and my friend has found out he didn’t get the permanent job he went after, after a second interview, now he has to go to the job centre for 30hrs a week for a 3 months sentence, he doesn’t have a record either, he is an awesome computer technician, he just didn’t go to university, he couldn’t afford to, he had to start work from school to help his family, which he did until 2010 when the cuts started.
    But then we live in Hull, a place where no-one needs to go through to get anywhere!

    So sorry if I am babbling but I am really depressed for my friend, he deserves much better, everyone does!

    • beastrabban Says:

      I’m sorry for your friend, Jo, and the many people like him that are doubtless elsewhere. I think a lot of young people will be caught like him, unable to go to uni because of the high tuition fees. The whole rotten system needs changing.

      But Hull can’t be that bad. Not if it shares a name with Rod Hull, the man – sadly deceased – who gave the world the spectacle of a giant puppet bird, Emu, assaulting chat show host Michael Parkinson. It was indeed a noble sight, and has brought joy to millions.:)

      • joanna Says:

        That was funny, but I’m not really a fan of slap-stick comedy, though my favourites are Blackadder, Red Dwarf, Ab Fab and The Vicar of Dibley, I really detested The Benny Hill Show.

      • beastrabban Says:

        A lot of women detested the Benny Hill show. My mother didn’t like it, because she thought it degraded women. She likes all the others, though, so you and her share the same tastes. 🙂

  5. joanna Says:

    William Wilberforce was from Hull, even though he made a name for himself as an abolitionist against slavery, did you know that he didn’t care at all about his constituents. But we also have other famous people such as, Philip Larkin, Maureen Lipman and Roland Gift. Henry viii visited Hull with Catherine Howard, and I think there was a baccarat scandal here. Those facts doesn’t help anyone even the fact that next year Hull is to be the city of culture.
    It’s like, what is the point of living in a gorgeous home if you are starving or can’t afford to run it.
    I really hope there comes a time when politicians will think about a basic guarantee income, then there will be no back stabbing.

    I’m sorry I went so off topic and babbled loads, I’m just feeling really down and I have no-one to talk to.

    Thank you so much Beastie for listening, I do get a lot from your articles as I am also interested in history.

    One article shocked me though, the one about children in a queue for food handouts, the shock is that nearly a hundred years apart and Nothing has changed!

    • beastrabban Says:

      I didn’t know William Wilberforce was from Hull, despite the fact that I took a biography of him by William Hague out of the City library. Maureen Lipman’s great – very funny lady. She was in the very last ‘Carry On’ film, ‘Carry On Columbus’, with Jon Pertwee, one of the Dr Whos and Wurzel Gummidge. Pertwee described meeting her in the make-up trailer for the movie at a Dr Who convention in Bristol about 20 or so years ago. ‘Mo!’ he said, ‘what are you doing here?’ ‘Same as you, love, making a buck’ said the great actress.

      I also hope that the politicos will introduce basic guaranteed income, but I think that sheer conservatism and resistance from orthodox business ideas were scupper it.

      And you’re right, it is shocking to think that, after almost 100 years, queues for food and starving children have come back.

      • joanna Says:

        Hi Beast I might be wrong about Wilberforce being born in Hull but he was a Tory MP in Hull. I was a young child when I first saw Benny Hill, to me the women looked old, but he looked ancient, but then, when I was 10yrs, 25 was old

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