The £6.2 billion cuts package announced by chancellor George Osborne and his Lib Dem partner in crime David Laws will cost jobs and hit services, and are just the opening round in plans for savage reductions in public spending. The big issue is how workers and communities can defeat these plans.
Osborne claimed that the first tranche of cuts were aimed at eliminating “wasteful expenditure”. But the freeze on job recruitment in the civil service and the axing of a series of semi-government agencies can only result in fewer jobs and more intensive conditions for those who remain. The cancellation of private sector contracts will inevitably result in closure of medium-sized firms and send more people to the dole queue, which is already at its highest level since the early 1990s.
The immediate cuts will be followed by an emergency budget next month and a major programme of reductions lasting years will be announced in the autumn. These are certain to include effective pay cuts for hundreds of thousands of public sector workers.
To plan how to defeat the coalition and its plans, we have to be clear what the cuts aimed at reducing the state’s £150 billion plus budget deficit are about. The deficit is a result of the meltdown of the financial system in 2008, the bank bail-outs and the consequent recession.
The economic globalisation that began in the 1980s was driven by debt – the debt of individual households, corporations and governments. There is a reason for that and it’s called capitalism. As we explain in our Manifesto of Revolutionary Solutions:
“Competition on price demands increases in the productivity of labour which reduces the hours needed for the production of a commodity. So the value, which is determined by the quantity of labour it contains, and hence the price of, and profit from each commodity tend to decline as a result. To offset the reducing profit derived from each ever-cheaper computer or car, more units of each type of commodity must be manufactured and sold.”
Because people’s income through wages can never be sufficient to buy all the goods produced globally, the financial system developed new ways to provide credit. This in turn got completely out of hand, as the Manifesto notes:
“The global cloud of credit expanded way beyond the value of productive capacity, goods and services it supposedly represented, engulfing the world in debt. By 2006, around 90% of the world’s credit was effectively worthless, sustained by and sustaining the fiction of endless growth ... The consumer boom gave way to a downward spiral that ended the dream of continuous credit-and-debt fuelled growth.”
The globalisation train is now running in reverse as global capitalism heads for an unparalleled slump. Countries with massive state debts are the weakest links in the chain. These include not just Greece and Spain but the United States and Britain.
The cuts are the expression of the destruction of capacity and assets by capitalism when it is in crisis and, of course, they only deepen the problems of the economy as more people become unemployed. The British coalition government has to make the cuts because that’s what the system demands, just as British Airways has to slash staff costs and benefits to survive.
So when Osborne says “we are in this together” and that today’s cuts are a first step to “improve the quality of people’s lives and build a better future” we know that he is simply lying. The immediate future is one of building an all-out struggle against the government, telling the trade union leaders that if they are at all serious, they will have to defy anti-union laws and lead immediate walk-outs.
Actions in Spain and Greece have already provided a significant lesson. Strikes, rallies and resistance must be part of a vision of a different society, one based on co-operation and co-ownership not competition and profit or they will not succeed. People’s Assemblies that take up the issue of power and an alternative to capitalist rule have a decisive role to play in the coming struggles.