[GegenStandpunkt Index]
[Contents]
[Introduction]
[1]
[2]
[3]
[4]
[5]
[6]
7
[8]
[9]
[10]
The Democratic State
Critique of Bourgeois Sovereignty
Chapter 7
Financial policy
Budget
Government debt
Taxation enables the state to serve its citizens, but it also directly
hampers their economic pursuits. Consequently, the state’s resources and
therefore its services are limited by its citizens’ economic success, which it
must not jeopardize by ruthless taxation. It must fulfill its tasks, but with
limited means to do so. In the budget the state regulates its
functions for which limited revenue is available. It allots its
revenues in such a way that it can still maintain the antagonistic mode of
production. Since its activities are indispensable it does not keep to the
funds actually available but maintains its ability to function by going into
debt.
a) Budgetary principles are established…
In the legal regulations the state issues against itself it acknowledges
the economic limits on its actions. These laws are aimed at
preserving its ability to function, which is continually endangered by the
limited means society puts at its disposal. In keeping with this goal, the
state has established the principle of budgetary unity
whereby all receipts are fundamentally funds for all expenditures. This
effectively bars its citizens from making legal claims for specific
expenditures. However, once the expenditures have been decided upon by the
state (appropriated) the funds are tied to these purposes.
The state prohibits itself from using general revenue funds (slush funds!)
which while not tying state moneys to certain areas also make them
inaccessible regardless of current needs. Another budgetary principle is to
fix the amount of an expenditure for a certain purpose for a set time period.
All these fine budgetary principles are intended to prevent the government
from neglecting functions which it could well afford (and squandering the
funds on unnecessary things), as well as from manipulating its accounting to
transform deficits into a sound budget.
b) …only to be circumvented!
When the state plans its budget it must consider the “extent and
composition of anticipated expenditures and the possibilities of financing
them in their interaction with the projected development of macroeconomic
capacity” (Report on the State of the Nation [Germany] 1972).
Since this prognostic activity is difficult in view of all the freedom the
state grants the economic actors, it offers itself a way out for false
forecasts. It circumvents all the glorious principles it has set up itself
with the help of the savings clause, which enables balancing
of surplus and deficit between different items, and the transfer
clause, which allows payment during the following fiscal year.
Necessary tasks must be taken care of even when those in charge have made
mistakes when planning the budget, so that “extraordinary” and
“off-budget” expenses are also allowed. And since the necessary
money is not available when all receipts have already been budgeted, the state
goes into debt. In America, for example, legislation is passed to
raise the “debt ceiling,” while in Germany, Article 115 of the
Constitution states the conditions which must be met. Debts are part and
parcel of bourgeois state financial policy because the functions of the state
must be carried out regardless of the competing citizens’ ability to provide
it with funds.
c) The result is inflation.
As the “ideal collective capitalist” (Chapter 5 b) the state
makes sure that the interests of banking capital do not endanger the
functioning of the credit system for industrial accumulation, and sets limits
on the accumulation of money capital by regulating the expansion of credit.
However, it contributes to increasing credit by its own debt. When it comes to
its own economic existence it does not mind in the least that debts circulate
and are used for the fictitious realization of capital. It accepts the fact
that national debts, by circulating as credit money “backed” by the
state, influence the relation between supply and demand so as to result in
inflation. It can also live with the resulting aggravation of
conflicts between the classes whose buying power is diminished by
inflation.
d) Historical remarks
By using government debt as a means to carry out its functions for the
preservation of class society, the state acknowledges that its powers in
relation to its citizens involve an economic dependence on them. Its
financial sovereignty is based on forgoing any direct
economic powers itself and turning into a power that serves the economic
goals of its citizens. The early bourgeois state was itself an economic actor,
but became more and more dependent on trade and industry and was forced to
make one concession after another. Only after the state relinquished its own
wealth and allowed it to be used by capitalists, did it become the modern
state which serves its society while ruling over it. The indebtedness
of the state, which meant that it no longer existed as an independent economic
power, became one of the levers of primitive accumulation.
e) Ideologies
The loss of price stability concerns citizens only to the extent that
their bank accounts or wallets signal that everything they must buy
has become more expensive. They always grumble that taxes are not used enough
for the items they favor. All they usually have to say about the budget is how
unnecessary they think the expenditures are. Some like to take a stand for the
social state and against national security and to deplore the high salaries of
state officials. Others use Sweden as a counterargument to stress the high
cost of social programs, and even discover that it’s the citizens who have to
pay for it all. Hence, “Down with the control of the individual and his
happiness by the welfare state!” The ultimate in this kind of
“critique” comes again from the revisionists, with their
demands such as, “Education not arms!” However, their adversaries
are more successful with their demands for a cut in social expenditures in
favor of more direct and indirect support for their profits. The pure form of
civic virtue is exhibited in the desire for “sound finances” as
such. This desire is shared by the fascists, who always complain
about the “laxness” of the democratic administration of office. Once
they reach power, of course, they are more generous in their use of money than
any democratic bureaucracy. Their policies of a “free” people’s
state “independent” of the economic conditions of society lead to a
sovereign use of funds, to the creation of economic means without an economic
basis (e.g. printing money). The political power proves itself by continually
entering debts on the asset side of the balance sheet.
[GegenStandpunkt Index]
[Contents]
[Introduction]
[1]
[2]
[3]
[4]
[5]
[6]
7
[8]
[9]
[10]
© GegenStandpunkt 1993