Capitalism's crisis dictates the cuts

As the coalition begins to unveil its public spending cuts, the muddle-headed idea that they are simply “ideologically driven” remains fashionable, especially among those who think protest will produce a government U-turn.

It was the central theme of yesterday’s Right to Work march against the cuts in Birmingham, where the Tory Party conference is taking place. The notion is also at the heart of November’s Coalition of Resistance conference planned for London. Even trade union leaders like the RMT’s Bob Crow – a rarity as someone who puts his money where his mouth is when it comes to actually fighting back – holds this point of view.

The Labourites hedge their bets as they would surely be making cuts themselves if they had been re-elected. They accuse the Lib-Con coalition of wanting to “shrink the state” to benefit big business. (This is a bit rich coming from a party that created £90 billion in contracts for the private sector when in power in “partnership” projects).

There is an inconvenient truth that’s missing from all these viewpoints. It’s summed up just two words – capitalist crisis. The budget deficit crisis which is affecting every major economy, has its origins in the end of the speculative boom in 2007.

The recession that followed the global financial collapse exploded the myth that government deficits could be repaid out of the proceeds of a continuously growing economy. A sharp decline in private and corporate tax revenues ensued, whilst demands for social support like unemployment pay, housing benefits and pensions have grown.

In Britain, the budget deficit reached £162 billion in 2009-10. At 11% of national income (GDP), it is the highest of the group of 20 leading capitalist economies. The national debt - all the previous budget deficits added together - has reached £1 trillion (or £1,000 billion – three times the level of 2001) – equivalent to almost two-thirds of GDP.

Interest payments on the loans that fund the debt are expected to rise to £70 billion a year and could reach £100 billion a year. An estimated £110 billion of the national debt is the result of buying up Northern Rock and other failing banks. A report by the New Economics Foundation suggests further bail-outs are on the way.

Budget deficits are a global phenomenon which are themselves part of a wider financial and economic crisis. In the United States, total national debt is about $13 trillion dollars and rising and is over 92% of the country’s annual income. It is forecast to soar by another $10 trillion between 2011 and 2020. Those who call for “investment not cuts” should be aware that Obama’s administration has failed to revive the US economy with just such a programme.

The global capitalist economy is heading for a depression, according to the International Monetary Fund while others show that the "recovery”, such as it was, is over.

The coalition like all capitalist governments is caught in a vice. They have to cut the deficit to appease the financial markets and prevent state bankruptcy. Yet every cut takes money out of the economy and deepens the crisis. This is a graphic example of capitalism at its most self-destructive.

Rather than capitalist governments being in control and having an “ideological” choice, their actions are severely limited by circumstances. As Steve Barrow, Standard Bank, quoted in the Financial Times (June 28, 2010) said: "It might seem that these things [elections/strikes] don't matter too much as it's the financial markets that have the power to dictate to governments and so bring about change, not the unions and the electorate.''

General strikes in Spain, Greece, France and Italy have failed to halt the cuts because it’s the system itself that’s in crisis. Suggesting otherwise is to let the coalition and capitalism off the hook when we should be preparing a strategy to bring the government down and lay the foundations for a transfer of economic, financial and political power away from the ruling classes.

Paul Feldman
Communications editor

A future unfair for most

Once upon a time in the 18^th century, a Frenchman wrote “the style is the man”. Studying New Labour’s election manifesto published yesterday, it is wise to keep this in mind.

The garish-kitsch-retro design of the manifesto cover is a ham-fisted attempt to refer backwards to Old Labour with lashings of Stalinist Socialist Realism. The “vision” it presents is of a white family looking out over green fields towards a radiant sun emblazoned with the words “a future fair for all” (whatever that means).

From where most of us live in large or small cities and towns, this is not a Britain we would recognise, except when we might be on holiday. Likewise the bizarre fake cornfield projected behind Gordon Brown at the launch – has Britain suddenly turned into a rural idyll?

The appeal is directly to the middle classes, as confirmed by Brown: “We are the party of everybody of middle income and modest incomes in this country. We are the party appealing to middle class voters in every constituency.”

New Labour’s hope is that it can keep the real issues and its real plans in the shadows. Behind all the tinsel and promises of crumbs, the real strategy is “to encourage a culture of long-term commitment to company growth”. There is not an instant’s reflection on what has taken place since 2007, when the financial meltdown got under way.

New Labour’s corporate-friendly “high growth” policy of the last 13 years will continue if it is re-elected – as if there has been no evidence that the financial and economic crash was the direct result of giving free sway to the interests of the banks and global corporate capitalism.

That’s why Lord Mandelson said that “the spirit of Tony Blair smiles down on New Labour today” and described the manifesto as “Blair plus”. Helping the corporations to maintain their growth and profits will remain at the heart of New Labour, however great the suffering this will wreak on all but the super-rich.

New Labour intends to recover the staggering £900 billion national debt by huge cuts in public spending, including £20 billion-worth in the National Health Service and attacks on public sector pensions – punishing the very people who keep the country going – fire-fighters, NHS and council workers.

The manifesto boasts: “We will take a tough stance on public-sector pay, saving over £3 billion by capping public-sector pay rises at one per cent in 2011-12 and 2012-13. We have agreed tough reforms to public-sector pensions.”

Meanwhile, immigrant workers, young people and “problem families” are effectively blamed for social problems and crime. The manifesto proudly announces its primitive attitude: more punishment and medieval-style “shaming”: “We will ensure a total of 96,000 prison places by 2014. More EU and other foreign prisoners will be transferred abroad….For offenders not sentenced to prison we have brought in tough new ‘Community Payback’: hard work in public, wearing orange jackets.”

The database surveillance state will be breathing down our necks and prying into our lives. CCTV, DNA profiling and databases, biometric ID schemes (i.e. passports) will be “offered” at high prices. DNA data will be kept for six years for “serious” offenders.

A vision? New ideas? Quite the opposite. The manifesto is a tawdry and shameful attempt is to hoodwink the middle classes and whip up anti-immigration sentiments. Meanwhile, the need to pour money into the black hole of debt to pay for the banking bail-outs will consign lower-paid and public sector workers, the poor, the young, the disabled and pensioners to an impoverished and insecure fate.

And yet, you still meet people who tell us that you have to vote New Labour to keep the Tories out. Surely they are just joking?

Corinna Lotz
A World to Win secretary