A government in freefall

To paraphrase Oscar Wilde, to lose one minister, Mr Brown, may be regarded as a misfortune; to lose four in two days looks like carelessness. Actually, it looks like more like meltdown time for the New Labour government as it tears itself apart.

The leaked resignation plans of home secretary Jacqui Smith and the decision of two other ministers to leave the government yesterday in advance of a cabinet reshuffle, only reinforce the view that Gordon Brown is now prime minister of a government that is holed below the water line (thus the appearance of rats leaving a sinking ship). The resignation this morning of communities secretary Hazel Blears only adds to the nightmare on Downing Street.

And when even The Guardian, a newspaper known best as a New Labour supplicant, tells Brown that his time is up, you get the picture. The paper wants Labour MPs to “cut him [Brown] loose” now, while there’s still time, in its view, to rescue “progressive politics” in Britain from oblivion.

Several questions arise. Would replacing Brown make any difference to New Labour’s prospects? And, in any case, what is “progressive” about this government that is worth preserving?

There is considerable doubt about whether any other prime minister would make a difference because, in the end, it’s New Labour as a whole that’s despised, not just Brown. The reasons why the government has run into the sands are complex, but the turning point was undoubtedly the financial crash that began in 2007.

Almost everything New Labour did and does was based around introducing in a messianic way the alleged virtues of the market into areas of public life like education, housing and local services. After the kind of open market capitalism championed by Brown and Blair before him plunged into crisis, the government’s ideological underpinning went into tailspin too.

The bailing out of the banks is hailed as “decisive action” in some quarters, but it also showed the general population that a) the government had deceived them about the economy b) the bankers would not suffer in any circumstances c) ordinary people would pay the price in terms of unemployment and repossessions.

When the scandal of MPs expenses was added to this cocktail recently, the die was cast. Leading members of the government, not content with their six-figure salaries and massive pensions, as well as backbench MPs, were milking the system for all it was worth and Brown was unable to respond as the political crisis mounted.

And so what is so “progressive” about New Labour? The invasions of Iraq and Afghanistan? A systematic destruction of human rights and civil liberties? Cutting welfare benefits? Promoting financial and corporate interests without hesitation? Allowing privatised rail companies to rip off the public? Presiding over growing inequality? Opening public service provision up to the private sector on a vast scale? Reducing Parliament’s status further to the point where there was hardly anything for MPs to do? Encouraging the economy to “grow” on the basis of massive consumer debts? The list is endless.

The disintegration of New Labour is neither a time for rejoicing nor an occasion for sorrow but for a sober assessment as to where we have arrived at politically and historically. Wherever you look, the old order is breaking apart and political instability at a time of economic and political crisis obviously brings dangers along with it. But they also present opportunities to develop and organise a movement that looks beyond the narrow focus of who may or may not win a general election towards a democratic reorganisation of society as a whole.

Paul Feldman
AWTW communications editor

The system’s broke – and Larry can’t fix it

Any lingering doubts that the global financial crisis of 2007 would presage a deep, worldwide recession evaporated as 2008 opened for business with a quick-fire salvo of bad news for the economy. US manufacturing slumped to its lowest since April 2003, and global manufacturing growth slipped closer to negative territory – contraction – adding to fears that the US recession is spreading.

Despite slowing growth, prices paid by factories worldwide for inputs to their production rose to a six-month high. And that was before the key input, oil, breached the psychological barrier of $100 for a barrel of crude as news of increased tension in Nigeria, a major producer, added to the pressure of increasing global consumption led by China and deepening concerns about the approaching global peak of production.

As the news piles up, house prices drop, food fuel and mortgage repayments rise, where can you go for some explanation, forecasting and even advice? Surely Larry Elliott, The Guardian’s economic's editor for 11 years must have a good handle on events? After all he spends his working life studying these things, no doubt with considerable help from the paper’s staffers.

In a long article uncertainly titled “Is this the Big One”, Elliot takes us on a dance through the contradictory views and opinions of a select group of politicians, accountants, business advisors, professors, bankers and sundry experts about the likelihood that current problems will coalesce into “a perfect storm” in 2008.

Elliott is either confused or he is hedging his bets. Maybe both. Nowhere in the article will you find a hint of his own analysis, if he has one. In the face of so much contradictory evidence and opinion it seems as though Elliott just hasn’t got a clue. Advice for the government? None. Suggestions to the Bank of England? None. Like most of those convinced by the argument that capitalism is the only game in town, he is left floundering when reality departs far from the theories of how it is supposed to work.

But just in case, Larry’s got some advice for us on “How to survive a recession”. And he’s trying to divert your attention from any new ideas for solutions we, or anyone else can come up with. He’s got a copy of A House of Cards. We sent it to him. But, so far, he’s ignored it. His ideas are, in comparison, disappointing. Its all about personal survival. He says: “You and I can't do much more about the economy than we can about the weather.” All we can do is live within our means, minimise our debts, spend less. Fat chance!

The Financial Times looking out through its rosy pink pages, is at least calling for more of the “financial liberalisation” – by which the paper means easy credit - that facilitated the globalisation process, after a survey of economists predicted a dire year for capitalism.

One thing anybody with half an eye on events can see is that the system’s broke and nobody seems to know how to fix it. Most kinds of regulation having been dismantled in the last half-century to remove barriers to corporate profitability. Governments and central banks can do little more than tinker with interest rates and move credit and debt around from one balance sheet to another. And the old medicine just seems to make things worse.

But help is at hand. Just as the previously “alternative” energy principles and technologies have become mainstream in the face of climate change, so our proposals for composting capitalism are beginning to make sense to a lot more people. Join us in London on January 24th for a discussion about creating sustainable alternatives to the market economy.

Gerry Gold
AWTW economics editor