Thoughts on the Plan for Targeted Monetary Subsidies

Translator’s note: Last March, The Tehran-based Center for the Defense of Labor Rights held a roundtable at which various left-wing Iranian economists and labor activists commented on the Plan for Targeted Monetary Subsidies. Below are excerpts from comments made by Mohsen Hakimi, labor activist and translator of Georg Lukacs’s Young Hegel.

Author: Mohsen Hakimi
Date: January 28, 2011
Translated by Frieda Afary

. . . Attempting to explain the introduction or elimination of subsidies on the basis of the needs of global organizations such as the World Bank, the International Monetary Fund and the World Trade Organization which represent capital, still does not display an anti-capitalist approach. In my opinion, the necessity for introducing or eliminating subsidies in Iran is far more connected to the capital relation inside Iran than the needs of the above mentioned organizations.

The philosophy underlying the existence of the subsidies is to keep the labor force cheap for the extraction of ever more profit. The government distributes part of the wealth which workers have created (gross domestic product) among the producers in order for them to produce workers’ means of consumption at a lower cost of production. In this way, workers will reproduce their labor power by subsisting on cheaper commodities, and the price of labor power will remain low.

The impression might be created that the elimination of the subsidies (which is the main goal of the Plan for Targeted Monetary Subsidies) will lead to a rise in the price of labor power. . . However what distinguishes the elimination of subsidies at this juncture is an increase in the prices of workers’ means of consumption without an increase in the price of labor. For example, the price of petroleum which was sold at 10 cents per liter was raised to 40 cents per liter and then 70 cents per liter.

The prices of staple commodities have risen without an increase in wages. It is obvious that the meager sums paid as cash subsidies (which may not continue in the future) will not make up for the increase in the prices of commodities in any way. These cash subsidies cannot be considered an increase in wages. Therefore, the essence of the Plan for Targeted Monetary Subsidies is nothing but an intensification of the exploitation of the working class for the purpose of preventing the collapse of Iran’s crisis-ridden capitalist society. . .

One of the manifestations of crisis in capitalism is the problem of budget deficits. I will explain this problem on the basis of the Law of the Tendential Fall in the Rate of Profit. I consider the government a capitalist, that is society’s largest capitalist. If we accept this assumption, the tendential fall in the rate of profit for the government means that on the one hand the government will invest; on the other hand, the profit generated by this investment will not be enough to make the accumulation of capital possible. . .

One of the reasons for eliminating the subsidies in Iran was to make up for the budget deficit by intensifying the exploitation of labor. In this way, the government’s income will be increased. If you remember, Ahmadinejad first announced that the government needs to generate 40 billion dollars in income from the Plan for Targeted Monetary Subsidies. The parliament halved this amount and reduced it to 20 billion dollars. . . The parliament was telling the government to increase prices at a lower speed.

Regardless of the conflict between the government and the parliament on this issue, both sides had no doubt that the final aim of this plan was to increase the government’s income. What does this mean? It means that a worker who received let’s say 80 dollars in subsidies through the subsidies on fuel and other staple commodities such as bread, cooking oil and rice, now receives half this amount. The $80 dollars will be reduced to $40. The other $40 will go to the government’s coffers. In the absence of a struggle for increased wages, this reality signifies nothing but increased pressure on the working class.

As far as the history of this plan is concerned, I think it is correct to argue that the administration of Hashemi Rafsanjani and Khatami raised this plan before Ahmadinejad’s administration supported it…

In conclusion, I would like to raise another issue. Sometimes our critique of the neo-liberal discussions of structural adjustments, may create the false impression that we are defending a statist economy in our opposition to the private sector. I do not believe that a statist economy is in the interest of the working class or that we should defend state capitalism in opposition to neo-liberal privatization.

In societies like ours where the government is itself the biggest capitalist, it is obvious that the government can never do anything in the interest of the workers. In societies which once advocated the welfare state, the government now steals from the workers to give to the capitalists, in order to save capitalism from crisis. Look at the United States, the birthplace of neo-liberalism and of economists such as Milton Friedman. During the 2008 crisis, we saw how the government stuffed the mouths of the banks and private corporations with billions of dollars to prevent them from collapsing and to help them recover from the crisis. The fact that a faction of ungrateful capitalists accuses the Obama administration of being “socialist”, does not prevent this administration from selflessly paying to preserve capitalism in the U.S.

January 28, 2011

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