General Election — What Labour Should Say On Benefits

  • A Minimum Wage is necessary to protect workers against exploitative bosses, but capital still has the upper hand, because capital can go on strike, preventing workers from working, unless those workers provide sufficient profits.
  • A Universal Basic Income is a bad idea. It is either utopian if it is set at a level high enough for workers not to have to work, and is also thereby reactionary, but it is merely another form of subsidy to bad employers, if it is set at a lower level.
  • Alongside a Minimum Wage, workers need a basic level of social insurance to cover periods of sickness, unemployment, strikes, retirement, and youth. This basic level should be sufficient without the payment of a series of bureaucratic additional benefits, which are costly to collect and administer, and which act as subsidies to bad employers, and landlords.
  • As long as ownership and control of this social insurance scheme is in the hands of the capitalist state, it will always withdraw, or reduce these benefits at those very times when workers need them the most. Labour should work with the TUC and Co-operative Movement to establish a worker owned and controlled social insurance scheme to collect the insurance premiums from workers, and establish the funds from which benefits are paid.
  • Control of the payment of benefits should be placed in the hands of committees of workers in each neighbourhood, who are members of the scheme.

— — — — — — — — — — — — — — — — — — — — — — — — — — — — -

Providing workers with a statutory minimum wage is all well and good, but besides the fact that capital has the power to replace labour with machines, and thereby create a relative surplus population, so as to push down wages, capital also has the power to effectively go on strike, to simply refuse to invest in new factories, machines, materials and labour-power, unless the profits it makes from workers are big enough.

The longer term answer to that, as Marx says, is for workers themselves to have control over those means of production, so that the machines work for them, not them for the machines. You wouldn’t let your lawnmower tell you when or if, or how you could mow your lawn, after all! But, that is what society does, when those machines etc. are used as capital. In the meantime, workers have to deal with the way things are. Workers need an insurance against those times when they cannot work, either because they are too young, too old, too infirm, or because the controllers of capital go on strike, and refuse to let workers work.

We often hear about how terrible it is that say Tube workers have gone on strike, and thereby prevented commuters from getting to work. Every so often, assorted Tories come up with proposals to make such strikes illegal, having already, over the last thirty-five years, made it increasingly difficult for workers to refuse to sell their labour-power to capital at prices the workers feel inadequate. The Tories say this with a straight face, even whilst, every so often, we hear horror stories about the near slave labour conditions unorganised workers have to endure on zero hours contracts etc. at various sportswear companies, and so on.

Yet, we never hear such complaints about capital refusing to sell to consumers. Go into any shop, and complain that their prices are too high, and insist that the shop sell them to you at a lower price, and people will consider you a bit barmy! If you keep insisting that the shop sell this commodity to you, at a price you are prepared to pay, because otherwise it really screws up your day, and enjoyment of your life, and the police will be brought along to take you away. Get on a bus, tube, train or plane, and insist that they allow you to travel to work, at a price you are prepared to pay, and you will get the same response.

Yet, when it comes to workers selling the only commodity they have to sell, their labour-power, all the rules are changed, despite the fact that workers are in a much worse position than are the big supermarkets, the train, bus and airline companies, who will refuse to sell you their commodities at the prices you desire, no matter how vital to your life and well being, those commodities might be. Need a cancer drug to save your life? Sorry, its too expensive, unless you are a multimillionaire and can afford to buy it privately.

Yes, commuters complain every year about how much they have to pay for train season tickets, and the TV and media might show some short-term sympathy, before moving on to other news, but nobody has proposed legislation that forces companies to sell their goods and services only at prices that all consumers feel would be appropriate. When Ed Miliband even proposed putting some kind of cap on energy prices, the Tories came out to call it Marxism! Nevertheless, given that it was electorally popular, they have pinched the idea themselves now!

And the reason is simple, besides the fact, that governments generally favour the bosses of companies, if anyone were to insist that companies sold their commodities at low prices, which did not produce big profits, the companies would simply keep the money in their pocket, and the commodities would not get produced.

Alternatively, the company would simply move to Poland, or Bulgaria, or China etc. where it could make these big profits. Its why Brexit and limitations on free movement of labour will not work, because if vegetable growers in Lincoln can’t get the Eastern European workers they need, they will simply move their capital and production to Romania etc. If there is no free movement of labour, the continued free movement of capital will simply mean that British workers lose out to an even greater degree.

But, workers do not have this option that capital has. Even less will British workers have that option after Brexit, when they will no longer be free to move to higher paid jobs in the EU. The owners of capital can choose to employ it anywhere in the world, and they do not have to employ it as capital if they so choose. They can simply use their money to buy their consumption needs,while they wait for workers to be starved back to work on low wages.

And, after periods when capital has grown rapidly, so that it employed labour to such a degree that wages rose, and profits shrunk, and a crisis broke out, capital in general always goes into such a period, as it did in the first great depression that ran from around 1865–1890, and in the second great depression that ran from the 1920’s through to around 1945, and again in the third great depression that ran from 1974 to 1999. During these periods, when the owners of capital do invest, it is in labour-saving machinery that replaces workers, drives up unemployment, and thereby pushes down wages.

If workers had control over the means of production they would utilise the machines for their own benefit, to make their work easier and more productive, not as their own enemy, telling them when and where they could work, at what speed they could work, or if they could work, but until workers do have that control, they have to have means of at least bargaining effectively for a decent wage and standard of living, and decent working conditions. Strong trades unions are important for that, and I will deal with that in a separate post. But, even strong trades unions cannot stop capital from going on strike. Workers need a social insurance to cover them for these periods, which will provide them with benefits adequate to sustain their living standards at a reasonable level so that they cannot be starved back to work, or starved into subsistence levels of pay.

Alongside the minimum hourly wage, and minimum weekly wage, therefore, Labour needs to establish a minimum level of social insurance and security. In my post on what Labour should say on Tax, I proposed that National Insurance should be scrapped, and consolidated into Income Tax. That means that all of the current complicated rigmarole over whether people have sufficient contributions to cover payment of pensions, of unemployed and sickness benefits and so on would be scrapped along with it. The savings in bureaucracy involved in administering the collection of these insurance contributions, and of administering the payment of associated benefits would go along way to covering the additional costs of making these benefits truly universal, rather than being discretionary and contributory.

Some people have proposed the idea of a Universal Basic Income. I am opposed to this idea. If this basic income was set at a level that was high enough to provide everyone with a sufficient income to live on, whether they worked or not, it would be utopian, because it would encourage everyone to simply take this income without creating any new value, via their labour. In this sense, it would also be reactionary, because the creation of a future society depends upon people working, and creating this new value on an expanding scale.

If, on the other hand, the UBI was not high enough to provide such an income, it would simply be used in the same way that low-paying employers use the benefits system now, as an excuse to pay workers low wages, knowing the state would pick up the rest of their wage bill! And, who does the state really mean in this sense? It means better paid workers, or the more efficient more profitable companies, whose growth is thereby artificially restrained, in favour of the inefficient, low paying companies.

We should aim to end all in-work benefits, because they are a subsidy to these inefficient, low paying businesses, who are able to continue in business, on the basis of their low wages, that gets subsidised from more efficient sections of the economy, and whose growth is thereby held back. We should seek to promote further the more profitable sectors of the economy that facilitate more rapid growth, and better pay and conditions for workers, not hold them back by subsidising the inefficient sections of the economy. As Lenin put it,

“And from these principles it follows that the idea of seeking salvation for the working class in anything save the further development of capitalism is reactionary. In countries like Russia, the working class suffers not so much from capitalism as from the insufficient development of capitalism. The working class is therefore decidedly interested in the broadest, freest and most rapid development of capitalism. The removal of all the remnants of the old order which are hampering the broad, free and rapid development of capitalism is of decided advantage to the working class.”

Lenin — Two tactics of Social Democracy In The Democratic Revolution, Chapter 6.

It should be the capital that employs and exploits labour for its profits that pays for that labour, and that is the purpose of a minimum wage, and it is the purpose of strengthening the position of trades unions so as to be able to negotiate those wages. And, in so far as workers cannot work, or are not allowed to work, by capital, for any of the reasons set out above, we need a minimum level of benefit. This minimum benefit should be payable to each worker, when required, and should be sufficient to enable them to reproduce their own labour-power. All other benefits such as Housing Benefit, Child Benefit, Tax Credits etc. should be scrapped, because with a minimum level of benefits set at an adequate level for workers to reproduce their labour-power, there should be no need for these other benefits, which simply act as a subsidy to low-paying employers, and to landlords and so on.

That goes against some of the ideas that have arisen out of Liberalism, and the development of the welfare state, for example, in relation to child benefits. But, Marx pointed out in the Critique of the Gotha Programme that, even in the first stage of communism it is not feasible to enable individual workers to make choices, and expect the rest of society to fund them. If someone decides to have six children, rather than the one required to reproduce their labour-power, they should not expect other workers to fund their additional five children, any more than their neighbour who decides to have no children could expect society to fund their decision to buy an expensive sports car instead!

As Marx says,

“In spite of this advance, this equal right is still constantly stigmatized by a bourgeois limitation. The right of the producers is proportional to the labour they supply; the equality consists in the fact that measurement is made with an equal standard, labour…

Right, by its very nature, can consist only in the application of an equal standard; but unequal individuals (and they would not be different individuals if they were not unequal) are measurable only by an equal standard insofar as they are brought under an equal point of view, are taken from one definite side only — for instance, in the present case, are regarded only as workers and nothing more is seen in them, everything else being ignored. Further, one worker is married, another is not; one has more children than another, and so on and so forth. Thus, with an equal performance of labour, and hence an equal in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on.”

If its utopian to believe that there could be provision of what would be unequal rights to workers in the first stage of communism, then it is certainly utopian to believe that is possible whilst still within the confines of capitalism. The idea of paying these additional benefits has been supported in the past, more or less as a back door means of sticking it to the system, of a belief that well if its the capitalist state that is paying these benefits, we should try to get whatever we can from it.

But, ultimately, this is self-defeating. It encourages welfarism and all of the defeatism that goes with it; it demeans and demoralises workers, turning them into atomised serfs, many of whom as recent events have shown, do not repay socialists with their support, but who often form part of what Marx called the “dangerous class”, whose atomisation, and separation from the organised labour movement leads them instead towards, individualistic solutions, and populism.

Moreover, in many cases, its not the capitalist state that pays these funds from some magic pot, but is either other workers, who having managed to get slightly above the value of their own labour-power, see it taxed away, or else it is funded from profits, which thereby reduces the pace of capital accumulation, and so reduces the employment and position of workers as a whole. What is more, it engenders a huge state bureaucracy employed unproductively in processing all of the payments of taxes and insurance contributions, only then to dispense them as benefits of one form or another from some other set of offices.

What is more, when it comes to actually needing to rely on this insurance at the most important points, it is refused or cut back. In 1931, for example, at the height of the depression, in Britain, the Labour Government of Ramsey McDonald was faced with cutting the payments of unemployment benefits to workers. The Labour Party, split over the issue, and McDonald formed a national government with the Tories, so as to push through the cuts in benefits. State old age pensions had been introduced by the Liberals at the start of the 20th century, but paid very little out, because workers rarely lived to, let alone much beyond, the retirement age. Only in recent years have workers started, on average, though its far more noticeable amongst the more affluent, to live longer, so as to be able to enjoy some few years of retirement, and now they are being told that they must work longer.

These benefits systems and the welfare state, are not there to benefit workers, but to benefit the large scale socialised capital, which needs to plan and regulate the supply of labour-power, and to minimise the potential for social disruption at any point when the system suffers some form of breakdown. The real answer, as with the control of the means of production, is for workers to have control of their own social insurance scheme. When it was first proposed in Germany under Bismark, and his successor von Caprivi, to establish such a national insurance scheme, and welfare state, Marx and Engels opposed it.

Marx favoured social insurance continuing to be in the workers hands, via their trades unions, co-operatives, and friendly societies. In the Programme of the French Socialists, he specifically calls for the state to keep its hands off those funds. And Engels, in his Critique of the Erfurt Programme wrote,

“Here I want to draw attention to the following: These points demand that the following should be taken over by the state: (1) the bar, (2) medical services, (3) pharmaceutics, dentistry, midwifery, nursing, etc., etc., and later the demand is advanced that workers’ insurance become a state concern. Can all this be entrusted to Mr. von Caprivi? And is it compatible with the rejection of all state socialism, as stated above?”

If workers had control of their own social insurance scheme, in the same way they pay into their union funds to build up for strike pay, and so on, rather than handing their money over to the capitalist state, they would be able to use these funds not only to cover those periods when large numbers are forced to go on strike, but to cover periods of unemployment, sickness, and retirement. They could do that without all of the excess bureaucracy that the capitalist state employs, which is often designed to prevent workers from claiming what they are entitled to.

A few years ago, Panorama revealed the fact that around 60% of the contributions that workers make into their pension funds, goes not to buy financial assets to cover their future pension entitlements, but goes to pay commissions and other remunerations to the banks, fund managers and so on who exercise control over those funds. If workers had control of all these funds, themselves they would do away with all of this syphoning off of their funds, and have much more available to be paid back to them when they require it.

Labour along with the TUC, and the Co-operative Movement should seek to set up a worker owned and controlled Co-operative Social Insurance Scheme. We should seek to have all existing workers pension funds transferred into it. We should carry out an analysis of all the money that workers have paid out in taxes and national insurance over the years, that should provide for pensions, sickness, and unemployment cover etc. as against what has actually been paid out, and we should transfer the balance to this Co-operative Social Insurance Fund.

Each neighbourhood would then be able to establish its own committee of Fund members, to assess the needs of their fellow workers within the community, so as to ensure that benefits were appropriately paid, and this would also be a means of ensuring that where appropriate funds could be used to establish co-operative ventures within the community, so that the unemployed could be provided with education, training, and where possible work, and so that those with disabilities could also be provided with appropriate facilities to be able to enjoy such resources.

Not only does this mean that the provision of these benefits would be provided without the animus and stress currently involved in obtaining benefits via the vast state bureaucracy, Capita etc., but it would immediately stop any small amounts of fraud that do exist within the system, because it would be your neighbours who would be directly determining your benefit requirements, ending all of the current divisions that the benefits system imposes, as the Tory media talk about benefits recipients as though those benefits recipients are not, in fact, all of us, at some point in time, and at almost all points in time, our parents, children, friends and relations.

Similar arrangements are required for other payments from such a social insurance fund, for example, in relation to health and social care, but I will deal with that in a separate post.

In short, Labour should promise to introduce a minimum level of benefit alongside the Minimum Wage. It should be sufficient to enable workers to reproduce their labour-power, and would thereby enable the scrapping of all of the other benefits, the cost of administration for which would then be saved. Most of these other benefits act in one way or another to subsidise bad employers, or private landlords, charging exorbitant rents, and thereby also act to distort the market, and hold back capital accumulation. But, if such social insurance is to work to workers interests, it must be in the ownership and control of workers themselves, not the capitalist state.

Originally published at on May 10, 2017.

Like what you read? Give Boffy a round of applause.

From a quick cheer to a standing ovation, clap to show how much you enjoyed this story.