The politics of increasingly small differences

It’s reached the point where you need a high-powered microscope to detect the differences between the major political parties. If there are any, they are at sub-atomic level as the much-heralded speech on the economy by Ed Miliband demonstrates.

The economy is in crisis, in its deepest recession since the 1930s. People have stopped spending because they don’t have the money. Retail sales fell last month and not just because of the bad weather.

Most ordinary people are either repaying debts or simply don’t have the income. If you have a job, your wages are falling in real terms; if you’re unemployed your benefits are miserly and also declining.

ConDem austerity policies have made a bad thing worse. But then they are also caught up in the crisis not just of the British economy but of the global capitalist system. Yesterday Germany and France reported deep contractions in their economies, for example.

Corporations are ripping off the taxpayer while the privatised utilities, rail networks and supermarkets are banging up prices like there is no tomorrow. Meanwhile, the supermarkets have never bothered to check whether beef is actually horsemeat. 

People are angry, fed up and increasingly desperate for a solution.

Enter the Labour leader Miliband. Did he promise a cut in train fares, control of soaring private rents or a return of gas and electricity to public ownership? Did he hell! All he came up with was the return of a 10p tax rate for the low paid scrapped by the previous Labour government and a so-called “mansion tax”.

The Tories are thinking of introducing the tax rate and the Liberal Democrats are in favour of the mansion tax. So forgive me for declaring Miliband’s speech to be a prime example of the politics of small differences. As The Independent noted:

What was striking was the overlap with either existing Coalition plans or proposals from one or other of its members. Even the repeated references to “working people” sounded suspiciously similar to the Tory pre-occupation with “strivers”.

It’s not as if the sums even add up. A 10p tax rate for low earners would cost the Treasury about £7 billion. The best estimates for the revenue for a tax on high value homes is £2 billion, according to experts at the Institute for Fiscal Studies (IFS), which noted:

"To have observed lower starting rates of tax being introduced and abolished by governments of both complexions over the last three decades and then to propose the same thing again suggests a remarkable failure to learn from history." The same aims, the IFS added, could be achieved by increasing personal tax allowances.

On the mansion tax proposals, the IFS described the idea as a bandage over the regressive council tax system which under-taxes valuable properties. "Rather than adding a mansion tax on top of an unreformed and deficient council tax, it would be better to reform council tax itself to make it proportional to current property values," the think tank said.

Perhaps Labour will abandon the mansion tax proposal –  which is widely viewed as a bid to cosy up to the Liberal Democrats in case the next election is a stalemate – when it realises that several of its MPs will be in the firing line.

David Miliband’s home is in the £2 million-plus bracket which Labour intends to use as a benchmark. So is deputy leader Harriet Harman’s home in Herne Hill, south London, which she bought with a cheap mortgage provided by her husband’s union (she also has another home in Suffolk).

And then there is the wealthy Labour MP for Feltham and Heston, Seema Malhotra who won a by-election in the relatively poor West London constituency. The market value of her home in fashionable Chelsea is reputedly over £3 million.

Finally, there is Ed himself. He lives in a house, in the name of his wife, which is valued at up to £2.3 million – a rise of £700,000 in the three years since it was purchased. Yes, they are all in it together. One big ConDemLab nation.

Paul Feldman

Communications editor

When people decided that enough was enough

Long ago, society was being overwhelmed by a series of catastrophes to which there seemed no answers. Unemployment, poverty and inequality were rife as a global crisis took hold. The old capitalist economic system had run its course and was unsustainable.

The world was choked with products, many of them out of date as soon as they came off the production lines. Huge dumps and rubbish piles accumulated and overwhelmed parts of the planet. Waste, some of it lethal, became big business as it was shipped across the globe.

People became poorer as they lost jobs and services were cut by a undemocratic governments in the pockets of the corporations. Increasing numbers depended on charity food banks just to survive. Obesity and diabetes epidemics affected the poor – due to the marketing of junk food by agribusiness and supermarkets.

As ordinary people fell into deeper debt and could not afford high rents and mortgages, they saw their government continue to hand over hand vast amounts of public money to bankers and financiers. Britain’s debts continued to rise at every level as the global money markets and speculators ruled the roost. The ConDem coalition blamed the people and said they had to tighten their belts for another five years.  

Floods swept Britain for an entire year as extreme weather resulted from climate change. Green belt areas, parks and woods were ruined, as property speculators ran rampant. On the global scale, ecological disasters mounted. Air pollution due to carbon emissions together with rainforest clearing increased icecap meltdown at a rate that outpaced scientific predictions.

By 2012, parliament as a representative, democratic law-making body had become discredited. Corrupt collusion between media, parliament and the police was exposed and people stopped trusting those in power. Large numbers of people refused to vote in elections. Top state institutions - the BBC and the Church of England - were riddled with crises. The Trade Union Congress organised a protest against government cuts, but people had clearly lost confidence in its feeble bleating.

People could see no way out through the existing political system and could only look forward to years of cuts in jobs and services. The parliamentary alternative was a return to Labour, which was equally – if not more – tied to the global corporations and business.

But during 2012, there were glimmerings that people realised new kinds of politics were needed. Despite the media obsession with medals, naked corporate interest and security madness, people were enthused by the London Olympics. They seemed to indicate a hidden mass creativity whereby ordinary people could accomplish the impossible.

In 2013, people realised that the political system, the institutions of the state, had become a brake on the aspirations of those it ruled over. A fundamental transition to greater democracy was needed.   

Inspired by the global Occupy movement and movements such as those in Egypt and Latin America – in particular the Cochabamba World People’s Conference on Climate Change and the Rights of Mother Earth - people in Britain said it was time to determine their own fate. They looked into their history and discovered that at the time of the English Revolution during the 1640s, the Leveller movement had put forward an Agreement of the People.

Surely a new constitution could provide a new framework for the society of the 21st century? If the existing system had lost its legitimacy it was up to the people to work out a new solution. So groups of people in London and around the country began to call for a new Agreement of the People for the 21^st century.

It provided a basis for transferring power from the old institutions to democratic grass roots movements, organised by co-leaders who were accountable to people’s assemblies. They took the discussion over what rights such an Agreement had to enshrine out far and wide through the country. Large numbers of people came forward with their grievances and brought their ideas for a future society into the debate.

The idea of a constitution began to take root and eventually the mass of the people did it. They rose up and cleared out the fat cats, the speculators and the billionaires and set up an alternative people’s parliament, using the internet and social networking technology to make it inclusive. Land was declared a common treasury. Global corporations in Britain, banks and supermarkets were taken into co-operative ownership and control.

The transition was not easy. As the movement from below gained strength, some people in the ruling elites broke ranks and joined in. But those in power did not want to let go of their privileges and resisted. But for once in history, the movement did not allow itself to be taken by surprise. They realised that they had to take power from the old rulers. In the end, the One Percent could not keep their machinations secret, were overwhelmed and lost control for good.

A World to Win editors 

Revolutionary New Year's greetings!

Egypt's military regime is challenged

The 25th of January revolution in Egypt that swept Mubarak from power after 30 years vented simmering social, political and economic pressures which had been building for a long while.

Revolutionaries are keen to shed the old “puppet state” stigma from the days of deposed President Hosni Mubarak, whose regime received more than $50bn from the US during his three decades in power.

Egyptian finance officials are scrambling to find internal fixes so that foreign aid isn’t necessary to cover a reported $28.5bn deficit. Polls show that an overwhelming majority of the population rejects foreign aid, especially from the US, even as the country struggles to recover.

A Gallup poll found that 75% of Egyptians oppose US aid to political groups, and 68% think the US will try to exert direct influence over Egypt’s political future. In the last week, the military council that runs the country rejected the caretaker government’s proposed budget largely because of its dependence on aid from the US and other foreign donors.

Egypt also retreated this month from seeking loans from the International Monetary Fund and the World Bank after activists complained that such arrangements compromise the country’s sovereignty. Instead, a new package of help for housing and small firms has been agreed with the United Arab Emirates.

Foreign aid typically comes with conditions about how such money is spent, which many Egyptians interpret as making the country beholden to Western interests. The IMF’s offer over the weekend of a $3bn loan to Egypt came with veiled conditions that suggest “it expects the country to alter its subsidies system and adhere closely to free-market principles despite previous claims that IMF assistance is unconditional,” according to a Cairo newspaper.

Pro-democracy activists say the long-time annual US aid package of up to $2bn – $1.3bn of it for the military – ensured that Mubarak’s authoritarian regime upheld the unpopular peace treaty with Israel and kept the Suez Canal open to facilitate American military operations in Iraq and the region. The joint US-Israel-Egypt enterprise that allowed tariff-free exports to the US must also be under threat.

The Muslim Brotherhoood's newly established Freedom and Justice Party is planning to focus on replacing Egypt's use of financial instruments such as derivatives and futures, with the three-decade old Islamic system operates by sharing profit or loss between the bank and its clients, instead of interest, which is forbidden.

John Sandwick, an Islamic finance adviser in Switzerland, believes that introducing more Islamic finance would not necessarily solve the country's economic problems. "Shari’ah is a method of doing business that doesn't stop speculative frenzies and impractical or unethical behaviour, as we've seen all too clearly," he said.

Nothing is settled, as blogger Jesse McLaren, who has followed the Egyptian revolution, notes: “Despite the removal of Mubarak, his regime is still intact: the emergency laws and military trials of civilians are still in effect; police cracked down on demonstrators on Nakba Day and beat a bus driver to death in June.”

Workers are demanding a minimum wage of 1,200 Egyptian pounds ($200) a month. Women demonstrated in Tahrir on International Women's Day for government-funded child care, an end to discrimination in hiring and promotions, and an end to sexual harassment and violence against women. Peasants have began reclaiming the land.

“But these demands challenge the military regime and the corporations that support them, which persists despite Mubarak's overthrow. As a striking doctor said, ‘Every percentage point for increasing health care will come from the budget of the Ministry of Interior and other parts of the oppressive machine.’ The same economic crisis that contributed to the revolution is driving a deeper wedge between political reforms gained and the social and economic demands that have yet to be met,” McLaren rightly points out

The outcome of the political struggle will determine whether the country continues as a subordinate part of the web of finance and trade relations that unite the global capitalist economy or whether the popular revolt finds a leadership that sets out on a new path to not-for-profit social ownership.

Gerry Gold

Economics editor

70 years on - preventing a new apocalypse

Business editors are scouring the world for signs of a recovery. But, despite government intervention to stimulate the credit markets, including the temporary effects of car-scrappage schemes, latest figures show the UK capitalist economy facing its worst nightmare.

Business investment is dropping sharply and debt is being repaid faster than new loans are being issued.

In the second quarter of the year:

• Businesses slashed investment spending at the fastest pace since records began in 1966
• Fixed capital formation fell by 4.5 per cent.
• Business investment for the second quarter of 2009 is estimated to be 10.4 per cent lower than the previous quarter a much sharper decline than the 3.6 per cent expected by economists, and 18.4 per cent lower than the same period last year.

“The further sharp decline in business investment signals serious threats to Britain’s long-term recovery,” said David Kern, chief economist at the British Chamber of Commerce.

“Unless this trend can be reversed, the ... productive capacity of the economy will be damaged, and the country will lack the necessary capital stock to sustain a recovery.”

Business investment has dropped more sharply over the course of the recession than in the downturns of the 1970s, 1980s or 1990s.
Hopes that increased lending is working have been knocked sideways. Consumer spending fell by a further 0.7 per cent in the second quarter, following a 1.3 % drop in the first quarter, and the issue of new credit and debt has gone into reverse. For the first time since records began in 1993 debt is being repaid faster than it is being issued

Figures from the Bank of England show that outstanding loans to companies and individuals declined at a record pace in July. Private non-financial corporations – which form the backbone of the nation’s economy – paid back £8.4bn of debt during the month, a 1.7 per cent overall drop in their bank credit and the largest decline since records began in 1997.

The intertwined worlds of finance and production are locked in a downward spiral, and in the UK at least there is no sign of it ending. Nor can there be any until the credit-induced levels of overcapacity accumulated in the globalisation decades are eliminated. Capital values are deteriorating fast, but must be destroyed outright before there can be a return to profit-led accumulation.

Seventy years ago today the Great Depression of the 1930s turned into armed conflict, as the capitalist powers, aided and abetted by Stalinism, embarked upon an orgy of destruction on a scale unprecedented in history, World War II.

Today, the crisis facing humanity is immeasurably worse as climate change induced by capitalist overproduction threatens life on earth. Wildfires threaten to engulf Los Angeles, famine stalks Ethiopia and Kenya as crops fail, and sea-levels are rising as glacial ice melts.

Millions throughout the world must be mobilised to prevent a return to the demolition of productive resources, lives, cities. This requires the transfer of land, factories, offices and financial institutions into forms of democratically-controlled collective ownership, replacing for-profit production with producing for need in a way that is compatible with sustaining life on this planet.

Gerry Gold
Economics Editor

Vacuum at heart of the system

The expenses scandal continues to stoke up outrage and fury everywhere from deepest Tunbridge Wells right up to the north of Scotland, as the credibility of the political class continues to sink into the mire.

Commentators from New York to Berlin are realising that the crisis is far deeper than simple embarrassment over dodgy expenses claims, like Chancellor Alistair Darling’s for accountancy advice or New Labour deputy leader Harriett Harman’s £10,000 for a “media trainer”.

As a New York Times writer notes, “the expenses abuses are only the tip of a malaise that has seen parliament grow ever more remote from the voters, and governments grow ever more oblivious of Parliament”. He compares today’s popular resentment to the time when the Great Reform Act was “speeded through Parliament by riots in several cities”.

The constitutional crisis, marked by the resignation of Speaker Michael Martin, is much more than a storm over a jaded and discredited institution. Britain’s modern parliament was the result of a Civil War and the political revolution of 1688 which enabled the emerging capitalist class to rule after the end of the feudal monarchy. So what is happening now is no small thing. What is at stake is the entire capitalist system of political rule and control.

The leaders of all the parliamentary parties and editorialists from the Telegraph to the Guardian hope and pray they can soothe over anger by a “root and branch overhaul” that will restore the credibility of politicians to the people. Facing not only public scrutiny of their greed but also the loss of their seats in the next election, MPs are looking desperately for ways to rescue the existing order of things.

Health Secretary Alan Johnson, for example, is calling for electoral reform. Others hope that proportional representation will do the trick. The Tory leader David Cameron is purging his party of MPs from the shires – who have used expenses to clean their moats and build duck houses – in a bid to appease the electorate.

But what the advocates of parliamentary reform miss out is that behind the constitutional crisis is the even deeper crisis of globalised capitalism itself. The revelations of parliamentary sleaze shows Parliament for what it is – not the centre of real political power but a club of parasitic hangers-on, far more concerned with looking after their own interests than those of the electorate.

The question must therefore arise – where then are the real centres of power? These are actually to be found in the boardroms of the corporations and the banks. And it is no accident that the scandal comes in the wake of convulsions in the banking system which go to the very heart of globalised corporate capitalism.

It is becoming abundantly clear that all the parties which make up the existing political classes are incapable of dealing with the worsening economic crisis. In fact, they are far more concerned with hiding their own greed at a time when hundreds of thousands of people are losing their jobs, their savings and their pensions as the effects of the economic crisis take hold.

Yes, the existing parliamentarians need to be swept away. But we desperately need new forms of democracy and representation and that must happen at the same time as a fundamental restructuring of the economic system itself, to create not-for-profit forms of co-operative enterprises in place of a profit-driven capitalism that is in meltdown on all fronts.

Corinna Lotz
A World to Win secretary