What Lies Behind the Health Service 'Reforms'

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There is enormous opposition to New Labour's "reforms" of the health service. But there is not usually the same level of understanding of what lies behind them.

That is why conservative politicians can sometimes take the lead in local campaigns.

Health provision is important for the mass of people as an essential precondition for enjoying life. But capitalism looks at it in a very different way.

Capitalist ruling classes can only prosper by exploiting people's capacity to work - what Marx called "labour power". That capacity is damaged by illness, accidents and malnutrition. So bosses have to worry about keeping a fit and able body of workers - again, in Marx's terms, "reproducing labour power".

That was brought home sharply to British capitalism at the beginning of the 20th century when it tried to recruit young working class men to fight in the Boer War. Malnutrition meant a vast number were not physically up to the job. An inquiry into this was an important stage in the development of what became known as "the welfare state". Capitalists were persuaded that just as healthy cows are productive of milk, healthy workers are productive of profits.

But this did not mean that capitalists were ever happy about paying for welfare. They pushed incessantly for the cost to be shifted from taxation on companies and the rich to taxation on those workers who were healthy and in employment. And they tried to reduce to a minimum the provision for those whose labour was not needed, or those who were incapable of providing it because of long term ill health or old age. The logic of capitalism is that these groups should not receive any health or other benefits.

But it is not a logic that capitalism can simply impose. Productive workers with jobs are hardly likely to accept the capitalist system if they (or their grannies) are left to die the moment they have an accident, suffer from some long term illness, or grow old. That is why the big US corporations pay for the health insurance of their workers, even though this can enormously cut their profits.

It is for this same reason that British capitalism tolerated a health service that treats the old and infirm as well as those who need patching up if they are to return to a life of wage slavery. In fact the British NHS has proved a more efficient mechanism for capitalism than the US system - absorbing 4 or 5 percent less of national output. And the introduction of the NHS solved other problems - it helped keep in check the wave of feeling for a radically different society that arose during the Second World War. And as well as catering for workers, it provided a service for the professional and managerial middle classes that identified with the Tory party.

But, as Marx pointed out long ago, the drive for profits produces continual changes in capitalism, so what is taken for granted at one stage is thrown into question at a later one. Capitalism was expanding at great speed in the first decades after the Second World War and profits could grow even as it conceded welfare.

Things have been rather different for the last 30 years. As growth has become feebler and profits have come under pressure, governments have repeatedly reduced the level of taxation on companies. So figures for post-tax profit rates show them falling much less than pre-tax profit rates.

But this raises the problem for governments of how to pay for welfare costs. The obvious response is to cut benefits and health provision. This is what successive Tory and Labour governments have done in Britain. But it can create immense political problems. People who have grown accustomed to a certain level of basic services do not take lightly to losing them and can direct their bitterness against the government. Despite all the talk about neoliberalism, right across the world the level of public spending has hardly fallen.

A second response is to sell off government property and use the money to prevent short term indebtedness. This, of course, provides bumper profits for some capitalists.

It also serves a very important ideological purpose. Once privatised, faults with the services are said to lie with the inability of their workforce to be "competitive" in market terms, rather than with the allocation of resources in society at large. This is why governments are so keen on a form of backdoor privatisation which sets hospitals, schools, colleges and universities in competition with each other, even though this results in absurd inefficiencies.

But privatisation is only a short term solution to the financial problems. The money governments get in the short term is soon offset by their long term loss of revenues. It is like the contracting out of tax collecting ("tax farming") characteristic of decrepit pre-capitalist empires and monarchies - the short term boost is followed by long term debilitation.

That leaves governments that operate within the capitalist system with no choice but to push for more cutbacks in social expenditure, especially on things that are "non-essential" from capitalism's point of view - pensions, long term care for the aged, health treatments for the chronically sick. But such cutbacks inevitably breed political resistance. People who work in the services regard their jobs as involving more than just earning a living by patching up people for capitalism to exploit.

And people who use the services, whether from the working class or the lower middle class, are not prepared to see their lives reduced to the cost calculations of capitalist profitability.