Worsening economy behind Coalition crisis

All the indications are that the British and European economies have now been drawn into the deepening contraction of global capitalism:

•   The Bank of England today slashed its forecast for UK economic growth in 2012 to zero from its May estimate of 0.8%.  Governor Sir Mervyn King said recovery hopes had consistently been dashed.
•   Last night, S&P cut Greece's outlook to from “stable” to “negative”. The ratings agency said the economy in the already crisis-hit nation was worsening.
•   The Banque de France, the country’s central bank, said that its preliminary figures show that gross domestic product will be down 0.1% in the third quarter, which ends on September 30. The bank had already predicted that GDP would fall the same amount in the second quarter.
•   German exports slowed by a more than expected 1.5% in June. Imports dropped 3%, against a 2% prediction.

The Cameron-Clegg Coalition’s current austerity programme of spending cuts and tax increases was based upon an unrealistic expectation of growth, which has now been replaced by the certainty of its opposite. This – and the crisis within the Coalition itself, spurred by the virulently anti-Cameron Old Tories - underlies the sharpening of tensions as the Tories abandon plans for reform of the House of Lords to focus attention on the economy.

As BBC economist Stephanie Flanders puts it, we are experiencing: “ by some measures “the worst four-year period for the UK, outside wartime, in at least 100 years - worse than what happened in the 1920s and 1930s, and worse than anything in the 1970s and 1980s”.

People in the UK face the same challenges as the rest of Europe in battling assaults on public services, jobs, pensions and benefits and the loss of their homes. Amongst the worst-hit countries is Spain, where unemployment amongst young people stands at around 50%. In Greece, the Orthodox Church has set up emergency feeding centres for hundreds of thousands of people who have lost everything. They include formerly well-paid professionals – architects, engineers, information technology specialists who hardly know what has hit them.

The contraction means demand is dropping fast, so exports, imports and production must follow. Government revenues from tax continue to drop, so “unaffordable” public services have to broken up and those parts that can be made profitable handed to the private sector. Then, as the spiral of recession deepens, comes the competitive elimination of surplus productive capacity – the mothballing of factories, boom-year housing estates left empty, infrastructure left to decline and rot, millions upon millions of people driven from their jobs and homes, left without food, abandoned to their fate.

In country after country people have protested, marched and even occupied workplaces.  The Trade Union Congress in Britain is calling for another demonstration in October. But the experience of its last national anti-austerity protest in the spring of 2011 showed that it changed not a whit of the Coalition’s policies. 

Thus resistance must be transformed into preparations to replace the broken system of capitalist social relations dominated by the giant global corporations. It is these which have undermined the legitimacy of the state and hollowed out the old forms of parliamentary democracy.

New forms of fully inclusive, participatory, direct and representative democracy are needed. They can learn from the experiences of those who’ve worked in not-for-profit institutions like the National Health Service, housing, education and social services as well as the workers’ co-operatives, credit unions, food coops and community shops that have spread around the world as people try to protect themselves against the worst effects of the crisis. These need to go further to develop policies and strategies to replace capitalist social relations.

A World to Win believes that a global network of People’s Assemblies can provide this framework. You’re invited to join the discussion at http://aworldtowin.ning.com/

Gerry Gold

Economics editor

Time to end the profit system

The Lib-Con Coalition government’s Spending Review is an attempt to rescue an already bankrupt economy. With £81bn cuts in public spending, it is the biggest and most sustained assault on the public sector since the creation of the welfare state sixty years ago.

But the reality is that despite the ruthless measures announced yesterday, the cuts will hardly make a dent on Britain’s budget deficit, which at £162 billion is the largest of the world’s major economies.

The plan is to bring government borrowing down by £149 billion in four years. This is a 19% per cent cut in real terms, as opposed to New Labour’s proposed 12 per cent. But can this gamble succeed? The very measures intended to reduce the deficit will deepen the crisis.

The one million people who will be thrown out of work and those made homeless will need some kind of support. And whilst blighting the lives of countless citizens, especially the most vulnerable, government spending will continue to rise by an additional £38 billion over the coming four years. As Chancellor Osborne announced: “total public expenditure - capital and current - over the coming years will be £702 billion next year, then £713 billion, £724 billion and £740 billion in 2014-15.”

An additional £7 billion cut brings the total cut in the welfare budget to £18 billion so far. The poorest ten per cent of the population stand to lose the most. It is a monstrous bludgeon expected to achieve just a £5 billion reduction in the £43 billion per year interest payments.

The measures include:
• a 30% cut in funding for local authorities
• a 74% cut in the budget for house-building combined with a trebling of rents for new tenants in social housing
• insecure tenancy of council house dwellers
• the minimum possible increase for the NHS, that will leave health care struggling to keep up with an aging population and scientific advance
• ending the universal right to Child benefits
• a 3.4% real cut in education
• cancellation of major infrastructure projects, like the renewal energy from the Severn Barrage
• a 10% increase in rail fares
• a £7 billion cut in the welfare budget
• Culture Department to be cut by 42% with almost 30% cut for Arts Council
• up to 30% cuts in budgets for government departments
• 20% cut in funding for the police
• rapid acceleration in the process of adding a year to the working life of a man and six to that of a woman before they can claim a state pension
• huge and damaging reductions in the settlements for Scotland, Wales and Northern Ireland

There is certain to be much more as the contraction of the global capitalist economy tightens its grip. The attempt to reduce repayments to the money markets will be undermined by tax revenues falling faster as the recession turns to slump. The populist gesture of £2 billion to be raised from a permanent levy on banks will surely be passed on in the form of higher costs of borrowing.

Cuts in administration of around 30% over four years will lead to a loss of an estimated 490,000 public sector jobs, 8% of the total. The effects of the overall programme confirms consultancy PriceWaterhouseCooper’s estimate of a further 500,000 jobs evaporating in the private sector as spending is reduced and contracts are cancelled.

The Coalition has issued a sinister threat with its promise that it will always be better to be in work than on benefits. It means that they’re hard at work on schemes to reduce wages across the board. No doubt employers will be rubbing their hands at the prospect of new sources of cheap labour from the enlarged European Union and beyond.

This is only the beginning. The Spending Review spells out that the capitalist state can no longer afford to fund any of the rights or life-support benefits won by unions in a century of struggle.

The intention to reduce the wide and complex range of benefits needed by millions of people suffering the effects of three decades of profit-chasing globalisation to an all-encompassing single payment, and a time-limit on the Employment and Support Allowance reflects a profound contempt for the individuals whose needs have been assessed by cohorts of public sector workers. Capitalism in crisis wants to reduce millions people to bottom-line cyphers of cost before trying to eliminate them altogether.

Calls last night outside Downing Street for “French-style” strikes are a welcome move from the total inaction of the Trade Union Congress. But even industrial action needs a political purpose. The desperate gamblers in No10 and 11 are driven by a real economic crisis of the capitalist system itself.

The solution to the debt mountain comes in the shape of action by People's Assemblies http://aworldtowin.net/frontline/BuildPeoplesAssemblies.html, formed locally throughout the country with a view to defending services, livelihoods, jobs, and homes. Eventually a government formed from a network of people's assemblies will need to take control of the financial sector, cancel the debts and turn it into a not-for-profit service.

The global capitalist classes are watching to see the results of Osborne’s cruel experiment. It’s time to realise that we too must enter new territory.

Gerry Gold
Economics editor

All bark and no bite

There was dismay and anger amongst the several thousand trade union members who crowded Westminster Central Hall; some including a large number from the prison officers union, couldn’t get in to the TUC’s anti-cuts rally. People had travelled from Lancashire, Devon, Cornwall, Northamptonshire and around London to take part in the protest meeting and lobby of MPs.

As well as the Prison Officers Association, there were big delegations from Unison, actors’ union Equity, rail and transport workers, public services unions UNITE and GMB, the National Union of Teachers and the Right to Work Campaign. Screen actors Benedict Cumberbatch and Roger Lloyd Pack said they opposed cuts in the arts which will privilege the rich. They all shared a deep anxiety as it emerged that around half a million jobs are to go by 2015.

Tony Woodley, joint secretary of the UNITE trade union, pointed out that for every four public sector jobs scrapped by the cuts, three more would follow in the private sector. He pointed out that the Lib-Con coalition has no mandate for the cuts, and that people “did not vote for the dismantling of their schools, hospitals and communities.”

“Cuts on this scale make no sense,” he said – but they make sense to the coalition, the bankers and the IMF. It’s the survival of the capitalist system that is at stake for them.

TUC general secretary Brendan Barber continued the myth that the cuts are just a political choice, not an economic necessity for the ruling class: "They want us to believe....this is economic necessity. Yet economic experts across the spectrum warn us that the cuts are too deep and too rapid.”

Dave Prentis of Unison warned that if the government doesn’t listen, “we will be back. For every one of us in this room today, we will bring a hundred more. We’ll march in our thousands and we’ll vote in our millions,” he said in a fit of demagogy. But vote for what? For New Labour Mark 2?

None of the trade union leaders have any answers. In fact they are determined to hold back any serious movement by workers in the face of the re-shaping of the entire British state. Asked why the British workers were not angry as those in France, Woodley cited the anti-trade union laws making striking difficult. But if they were serious about halting the cuts, trade union leaders would bring every member out and let the law go hang. By directing all their fire towards parliament and the next election nearly four years hence, they hope to act as a lightning rod to defuse and disarm any movement.

And where was Milliband? He was in hiding from the trade union leaders who got him the Labour leadership. The reality is a New Labour government would be doing the same – and it may not be too long before they too are co-opted into this government of desperate decline.

Today’s spending review is not the result of a nasty bunch of old-style Thatcherite Tories. It is a response to the most serious economic and financial crisis of the capitalist profit-based system. As Bank of England governor, Mervyn King, speaking in the Midlands, made plain. Deep tensions underlay discussions at the International Monetary Fund meeting last week, he said.

Global currency conflicts, particularly between the US and China, are evidence of profound disagreements about the way to deal with the crisis. A 1930s-style collapse of business activity and international trade is possible. So much for the cuts being an “ideological exercise”! They are the ruling class’ response to an uncontrollable crisis of the system.

Fighting against the cuts agenda means challenging the ruling class by working for a transfer of power, property and control to a democratically elected and accountable network of peoples’ assemblies http://aworldtowin.net/frontline/BuildPeoplesAssemblies.html. Come to the Beyond Resistance conference on December 11 to make this come alive.

Corinna Lotz and Peter Arkell
A World to Win

New Labour lines up with BA

There’s nothing like a looming national strike to bring out the true class credentials of the political parties, together with the baying hound-dogs of the media. The democratically-agreed industrial action by 12,000 BA’s cabin crew workers in defence of their jobs, pay and conditions is certainly having this effect.

Leaders of all the major parties are only too anxious to condemn BA workers. Leading the pack are New Labour’s Lord Mandelson and transport secretary Lord Adonis (NB: There are no elections to the Lords). Adonis said yesterday: “I absolutely deplore the strike… it’s totally unjustified.” Today Gordon Brown declared: “It's not in the company's interest, it's not in the workers' interest and it's certainly not in the national interest."

Never mind the fact that cabin crew staff have now voted twice for strike action with overwhelming majorities. In the latest ballot nearly 79% of the membership voted 80.7% for action. New Labour, you will recall, was elected with the support of 25% of all registered voters at the last election. As for turnout, the BA ballot is far higher than anything you can expect in the upcoming general election.

And the notion peddled by the Tories that New Labour is “soft on the unions” is complete and utter hokum – and they know it. It is a fact that Britain’s biggest trade union, Unite, has paid a total of £11 million into the Blair and Brown’s coffers since 2007. It is the biggest single donor to New Labour. Without this support, New Labour would be unable to survive. The £11 million has brought Unite nothing in return.

Rather than making New Labour more pliable towards the interests of trade union members, the opposite is true. The rights of trade unions are perhaps even more restrictive than they were under the Tories. Secondary strikes and effective picketing remain illegal because this government retained all the anti-union laws introduced by Thatcher. Union leaders, with a few honourable exceptions, have fallen over backwards to comply with New Labour and its capitalist policies such as bailing out the banks.

Willie Walsh, BA’s chief executive, who is paid £735,000 a year, is determined to sack up to 2,000 staff and undermine the union Unite. The company has been running courses for strike breakers ever since the union’s first ballot showed a huge majority in favour of strike action. Walsh plans to use a 1,000-strong force of strike breakers to keep a skeleton service running and to defeat the strike.

Instead of getting ready to mobilise its membership at Heathrow and other airports against this threat, Unite leaders Len McCluskey and Tony Woodley have expressed shock at Adonis’ outright support for BA management. But this is a false naiveté. The real danger for BA cabin crew is that Unite leaders and the Trades Union Congress will quickly buckle under pressure and impose some rotten deal on their members. In any case, McCluskey and company certainly have no intention of defying the anti-union laws, which would be necessary to defeat BA’s strike-breaking actions with solidarity strikes.

British Airways, like the economy as a whole, in a major crisis. Walsh knows what is at stake. He needs to enfeeble the trade unions to save the airline for shareholder returns. Pretending that New Labour will broker a favourable compromise deal because it faces an election is living in a dangerous cloud cuckoo land. Precisely because of the election, Brown, Adonis and Mandelson will take the hard line. The future of a private corporation like BA is more important to them than the jobs and pay of the workforce.

Corinna Lotz
A World to Win secretary