Beyond resistance

As the coalition government lines up massive spending cuts that even prime minister David Cameron acknowledges will shake society, a strategy that goes beyond resistance is needed if we are to defeat the Lib-Tory government’s plans.

Because make no mistake – that is what is involved. Throughout Europe, governments are impervious to protests and one-day strikes against cuts in pensions, pay and services. They can ride out storms that are only temporary.

Resistance isn’t futile, however, but to succeed it has to be part of a wider strategy that addresses the root cause of enormous budget deficits, namely the crisis of capitalism itself. If not, there is a real danger that protests could burn themselves out.

The coalition has seized the ideological high ground by presenting its plans as if “There is No Alternative” when it comes to saving the country from financial disaster. Inviting the public (and trade unions) to suggest where the axe should fall is part of this seductive approach.

Britain’s budget deficit in particular is the result of the dramatic plunge in capacity that followed hard on the heels of the 2008 global banking crash. The independent Institute for Fiscal Studies believes that the fall in the annual value of goods and services could be as high as 10% from pre-meltdown levels.

Government revenues of all kinds have dropped as production and consumption has plummeted. Tax takes from the financial sector, which propped up New Labour’s spending, have declined sharply, for example. With the housing market frozen, revenue from stamp duty has faded. Meanwhile, spending on unemployment and social security benefits has risen. And then there’s the cost of financing the banking bailouts.

In sum, the budget deficit expresses the crazy nature of an economic system driven by mammoth amounts of debt – personal, corporate and state. By the time of the 2008 meltdown, it was estimated that global debt was four times higher than the value of goods and services. Something had to give. And it did.

The destruction of capacity in the private sector is now to be followed by a similar massacre in the public sector. That is how capitalism traditionally “solves” its crisis.

So what kind of strategy do we need?

Firstly, it has to be a combined political and economic approach backed by mass mobilisation of people and their communities. As pressure on the government makes no difference – the demands of the financial markets carry far greater weight – the political aim is to bring the government down.

Obviously there’s no point in replacing the coalition with a rebranded version of New Labour, which in 13 years turned Britain into a playground for financial markets and speculators. As there is truly no alternative in this case, we should build
support for People’s Assemblies to challenge the existing political system.

Secondly, we have to demonstrate that the heart of the matter is capitalism itself. We have to terminate an economic system where artificially-induced booms are followed by slump on a regular basis. Democratically-owned and controlled sustainable production and finance is not only possible but absolutely necessary. Some ideas along these lines are outlined in our Manifesto of Revolutionary Solutions.

Opportunities exist to change the debate, to reject the capitalist state’s version of events. The anti-cuts committees that are already springing up around Britain should consider how to bring these essential political and economic questions into the heart of their campaigns. We must move beyond protest to prevent a calamitous reduction in living standards that the coalition and the bankers are preparing to impose on society.

Paul Feldman
Communications editor

Time to slay the dragon

As the clocks struck midnight in Washington on Sunday, the Bush government scrambled to rescue Citibank, formerly one of the world’s most powerful financial institutions, to prevent it from total collapse when the markets opened today. Another weekend, another bail-out of bankrupt banks as the era of fantasy finance unravels in remorseless fashion.

This time the bill for US taxpayers was $20 billion down and another $270 billion in guarantees in the likely event that Citibank cannot sell off its so-called toxic assets – bad debts to you and me. Not even the planned sacking of 75,000 staff could stop the downward plunge of Citibank shares. So the US Treasury’s printing presses continue to spew out crisp new dollar bills in a desperate attempt to keep the show on the road.

And that’s all it amount to. Despite all the bail-outs in the United States and Britain, the banks still refuse to lend to each other and to most corporate and small business customers. That is because the financial system remains weighed down by incalculable debts, tied up in packages that there is no longer a market for.

These so-called securities are now so insecure they are literally not worth the paper they are printed on. Even the US Treasury believes that to be the case. At the end of last week, it announced that it would not buy distressed mortgage securities through the Troubled Asset Relief Program (Tarp). Yet this plan was at the heart of the package voted through by Congress in October at the second attempt. Another month, another plan.

Governments are literally staggering from pillar to post in increasingly frantic efforts to sort out the financial system and “kick-start” the real economy at the same time. Today in Britain, hard-pressed, debt-burdened consumers will be told it’s their responsibility to save the capitalist economy by spending like there is no tomorrow.

The media is increasingly gripped by the need for governments to do something, anything, to stem the flow of job losses, home repossessions and the other consequences of the recession that have followed the financial crash. The right-wing Daily Express was almost beside itself at the weekend, declaring in its editorial: “Like it or not, the global economy depends on high indebtedness and rampant consumerism. We have created this monster and we must continue to feed it. Otherwise it will devour us.” (November 22).

So there you have it. The monster of globalised capitalism demands to be fed, assuming a mythical power over people, with shocking results if they don’t obey. It’s hard to believe we are living in the 21st century when you read drivel like this, which is more suited to fairy tales about the Dark Ages than a description of the state of affairs in 2008.

The fact is that we don’t actually have to feed the “monster”. It would make more sense to slay the dragon and set society on a more rational course where real people, not speculators and capitalists, assume rational control of social affairs. Don’t, of course, expect to see any recommendations along these lines from the Express or the rest of the media. And certainly not from New Labour, the party of choice for big business.

Paul Feldman
AWTW communications editor

Banks bail-out is a con and a swindle

The £50 billion bail-out of the banks is a desperate act by a cornered government. Worse, it is a futile bid to shore up a capitalist financial system that is in meltdown precisely because of the actions of the very same people the money is being handed over to.

Christmas has come early for banks who, egged on by New Labour and the Tories before them, created a world of fantasy finance based on building and trading in debt. Now that the wheels have come off the financial merry-go-round, the banks have gone cap in hand to the state.

They have not been disappointed. New Labour, without any shred of democratic approval, is to buy shares in eight banks and building societies (the shares will have no voting rights attached) and make another £250 billion available through the Bank of England.

So the banks are being handed new capital so that they can pay off their creditors and cover bad debts over the coming years. In other words, other banks and lenders are the priority, not ordinary people’s savings and deposits. There’s no guarantee that any of this money will ever find its way back to the Treasury. In fact, as the global financial crisis worsens the likelihood of the banks staying afloat diminishes by the day.

Financial capitalists are the ones who benefit from this state-perpetrated con and swindle. While New Labour can find cash for the bankers, the rest of us have to suffer the consequences of a crisis not of our making:

* There’s no state bail-out for people losing their jobs.

* Repossessions and homelessness are growing but the state washes its hands.

* New cancer drugs are too “expensive”, so there’s no state funds for those.

* Fuel and energy prices have gone through the roof but surprise, surprise, New Labour won’t do anything.

* The cost of living is soaring but the government says workers have to accept below-inflation pay deals.

From the trade unions and Parliament there is a deafening silence, a cowardly acquiescence as New Labour makes bailing out capitalism its only mission in life. One of the few honourable exceptions is the MP John McDonnell, who rejected the rescue package, saying: “Pouring taxpayers money into bailing out the banks by recapitalisation without nationalisation will mean that ordinary taxpayers pay for the crisis caused by the mistakes and greed of the bankers. Nationalisation to control the banks, prevent repossessions and halt company closures is the only way to provide the security needed."

The question is, however: Who is to carry through public ownership of the banks? Certainly not New Labour! This is an out-and-out capitalist government, as events of the last few weeks have demonstrated for all to see, which is as bankrupt as the system it presides over.

And the crisis will deepen as the world of fantasy finance continues to unravel under its own momentum, driving the real economy into slump. The system is beyond bailing out, as the negative reaction of the US markets to the $800 billion toxic debt buy-up package approved by Congress shows. State insolvency has hit Iceland and the United States could be next in line.

The entire financial system has failed but that doesn’t mean that capitalism itself will simply walk off the stage of history. We need to create a new revolutionary politics in the course of building mass opposition to the New Labour government and its policies. There is an urgent need to work out a plan to reconstruct the financial system along new lines, refounding them as people’s banks. These would have no private shareholders and repudiate the toxic debts accumulated by reckless speculation. They would put social needs first and not be driven by profit.

Achieving this transformation is, of course, an immense task. Rejecting the bankers’ bail-out is an important first step. Taking part in AWTW's October 18 Stand Up for Your Rights festival would be a great second step!

Paul Feldman
AWTW Communications editor


Who Pays for the Credit Crunch?
Monday 13th October, 7.30pm
Committee Room 10, House of Commons
Organised by the Left Economic Advisory Panel