Following the emergency Budget the BBC Radio 4 Today programme for once put the ruling coalition's politics under pressure. Its presenter demanded that Nick Clegg explain why he was supporting a Budget that hit the poorest the hardest. The Lib Dem's blustering and vague accusations about "unfunded cuts" did not really deal with the issue at all. The philosophy and economic strategy behind the Budget aims to roll back the welfare state. This is not a new idea - the same thing's already happening at great speed in Greece and Spain. Both are being forced to swallow a toxic medicine of cuts and redundancies among valued public employees. What we are seeing in Europe today is strikingly similar to the economic policies prescribed to indebted poor countries by the International Monetary Fund and the European Central Bank. They've long promoted cuts to public spending, privatisation of services and a reduced role for the state in all social matters. Internationally taxation policy has become a beggar-my-neighbour strategy where all are forced to compete in reducing corporate tax levels. And on Tuesday Chancellor George Osborne promised that Britain would see one of the lowest levels of corporation tax in the world. Gone is even any discussion of a "Robin Hood" transaction tax, better known as the Tobin tax, to enforce some taxation on the huge levels of capital flows around the world.
The Budget is the first of a long series of plans that the Con-Dems have in store. This week it was attacks on welfare benefits and housing benefit. Before that it was cuts to free school meals. In October the coalition will set out spending plans for the next three years which will wreak enormous damage to the welfare state. Despite Con-Dem claims about protecting health expenditure, it is clear that the NHS will suffer too as it struggles with the huge built-in costs of existing private finance initiative contracts and growing demand from an increasingly elderly population. On top of this our health service will have to deal with a wave of demand as poor housing, unemployment and poverty lead to greater sickness. A day before the Budget, Parliament had hosted a different debate on spending where talk of cuts, retrenchment or rolling back the state's role were off the agenda. MPs were discussing the Strategic Defence Review first announced by the outgoing Labour government, which made sure that our hugely expensive nuclear weapons and Trident programme were not included. Scottish Nationalists did try to get Trident into the review and managed to force a vote on its inclusion during a debate on the Queen's Speech. However the entire coalition voted against the SNP demand - a Liberal Democrat manifesto pledge - while the Labour front bench demanded that MPs abstain. This instruction was ignored by a large number of Labour MPs.
An air of unreality permeated last Monday's proceedings. Both front benches were agreed on Iraq, Afghanistan, nuclear weapons and essentially about interventions elsewhere. Tory backbencher Bernard Jenkin delivered a speech that underlined the position of those who favour arms spending. "In today's world overpopulation," he declared, "competition for food and resources, the risk of environmental catastrophe, mass migration, accelerating technological change, nuclear proliferation, nationalism and extremism are all on the rise. That is quite a list, aggravated further by the global recession. Is this the moment to substitute hard power for soft power?" He talked in the language of Bush and Blair, declaring the "right" of the powerful to intervene where they think fit. Mercifully his allotted eight minutes were up before we could learn more of his apocalyptic worldview. The same day the House of Commons library published an analysis of the financial costs of the Iraq and Afghanistan adventures. In total from 2004 to 2009 the British public have paid £11.8bn. In the last full year for which information was available, 2008-9, Iraq had cost £1.3bn and Afghanistan £2.6bn. The bill for the latter will be far higher in 2009-10. What's more the predicted cost of replacing the Trident missile-carrying submarines and their warheads stands at £76bn over a predicted 25-year life.
Those who support this strategy - including those who claim that Britain's nuclear arsenal are about deterrence - actually share Jenkin's swivel-eyed, Dr Strangelove worldview. If such a perspective were allowed to dominate, the 192 non-nuclear-weapons nations which do not wish to have WMD would do better to develop them as quickly as possible in preparation for a new era of resource wars. For the biggest corporations these kind of wars work. The bizarre auction of Iraq's oil reserves a year ago and Afghanistan's reported multibillion-pound mineral wealth show what is really behind such interventions. However they do nothing for ordinary people, the very people who are being asked to swallow huge cuts in social spending, lower tax for big corporations, an enormous defence budget and a new generation of nuclear weapons. As the cuts bite, the public focus will turn increasingly to issues of social need. It is time to promote an alternative view with social and economic justice at the forefront, at home and across the world.
Showing posts with label poverty. Show all posts
Showing posts with label poverty. Show all posts
Monday, 28 June 2010
Wednesday, 2 June 2010
Back in the old routine
It's been a bit of a rough start for our new coalition government as far as its personnel is concerned and it didn't look to be getting any better at the weekend. Firstly, Tory leader David Cameron was handed a personal kick in the teeth when Sir Anthony Bamford, the chairman of the JCB construction equipment firm and Mr Cameron's personal nomination for elevation to the House of Lords, was blocked from becoming a peer because of apparent concerns on his tax affairs. Sir Anthony had his nomination rejected by the House of Lords Appointments Commission when the tax authorities declined to support it, although neither they nor anyone else has made any suggestions of improper conduct. He had been a generous backer for the Tories, with his firm contributing to the tune of a cool £1.5 million and the knight himself coughing up £86,000. So no seat in the Lords for him, then. And it left the Tories even shorter in the upper house when Lord Laidlaw, another of the Tories' big backers, who has contributed more than £3 million to the party's coffers, forfeited his seat in the Lords because he was unwilling to lose his non-dom status and face the resulting tax bills. The noble tax exile apparently promised to become resident in Britain when he took the title in 2004, but has never honoured that pledge. Mind you, it's not surprising, because he's worth £700 million and would face a £50 million tax bill if he had. And, of course, we're still waiting with bated breath to see if Tory donor Lord Ashcroft follows suit or if he values his Lords seat enough to come back and cough up.
But it's not just the nobility or would-be nobility that is giving the coalition problems at the moment. The new austerity seems not to have sunk in with the new ministers in the Commons and that's left egg on a few faces. Defence Minister Andrew Robathan raised more than a few eyebrows when, instead of following the new ministerial guidelines about using public transport wherever possible, he took a chauffeur-driven government car across the Channel to attend the veterans' anniversary assembly in Dunkirk - a means of transport that he described as "appropriate and inexpensive." 'Nuff said. And now, as if all that wasn't sufficient, Treasury Chief Secretary David Laws has had to resign after it was revealed that he had paid £40,000 of public money claimed as expenses to his partner James Lundie for renting rooms in Mr Lundie's home, in clear breach of the Commons rules on expenses. The expressions of support for him have been effusive, from both Tory and Lib Dem sources, but he has admitted his guilt and is repaying the claimed cash. That won't give him many sleepless nights, of course, since he is, like so many others in this government, a millionaire in his own right. But it really can only be in this coalition that you can cheat the taxpayer out of £40,000 and be described by the Prime Minister as a "good and honourable man." Mr Cameron was joined by Business Secretary Vince Cable in his appraisal of Mr Laws, saying that "it is a big loss, but he has done the right thing." The right thing? Ripping off £40,000 of our money and only owning up to it when exposed by the press? And to cap it all, Iain Duncan Smith says that he "has the talent to come back." Words fail.
So, when you next hear that we're all in it together, that a new age of austerity has dawned and because of it your wages are cut or your job vanishes, bear in mind that the "all" who are in it together excludes Tory donors, tax-dodging multimillionaires, filthy rich "sex addicts," coalition ministers and all the rest of the rag-tag bunch of money-hungry parasites grouped around this disreputable coalition of profiteers and big business stooges. We're not all in it together. They are in power and in the money. We're in trouble and being squeezed until the pips squeak. It's a great world in Cameron's coalition. Once again, this government has announced new policies - and, once again, they have proven to be just old Tory policies dragged out of storage, dusted down and prepared for use yet again, a couple of decades later than their last airing. This time it's unemployment and the benefits system that comes under the coalition's scrutiny and, appropriately, it's a recycled Tory laying out the recycled policies. But, since Iain Duncan Smith, yet another unsuccessful Tory leader who has popped up in this Cabinet of all the failures, has spent the last few years developing policies to deal with worklessness and welfare benefits, you might have hoped that he would have come up with something new. No such luck, unfortunately, it's just the same old Tory whinges about benefit scroungers and the same old attacks on the least well off in our society. On he spouts about people becoming "parked" on incapacity benefit, whose 2.5 million recipients face a status review in the coming months designed to force them off benefits and back into work. Just what work he means isn't made clear. The 2.5 million people already fruitlessly searching for non-existent jobs are soon to be joined by as many others as the Tories can bully off incapacity benefits, presumably to take the millions of jobs that they have accidentally overlooked in the meantime.
And that's without counting the tens of thousands of civil servants and local authority staff who are destined to join them on the dole queues once the coalition gets into the swing of cutting the services that the unemployed and benefit recipients rely on for survival. It's all so old hat, really. It's the Tories falling back on the same mantra of beating up those least able to defend themselves that they have always employed.There is nothing new about it and nothing of real substance, either. And this supposed concern for those trapped on benefit it doesn't sit terribly well with the announcement in the recent Queen's Speech that the coalition is to scrap the regional development agencies. Not much help there in solving something that is a heavily regionalised problem and one, incidentally which dates back to the last time the Tories held office, when they decimated whole communities in their attacks on the coal and steel industries. Mr Duncan Smith makes great play of the fact that 1.4 million people in Britain have been on an out-of-work benefit for nine or more of the last 10 years and that income inequality in the UK is now at its highest level since comparable statistics began in 1961. But he gives little hope that any government in which he participates will do anything to improve matters. He highlights that people are better off claiming dole rather than in a job paying £15,000 a year or less.
But, unfortunately for all concerned, the problem is seen by Mr Duncan Smith and his Cabinet allies as benefits being too high and easily available, rather than wages being so bloody low that bare subsistence benefits can overtake them. "One of the biggest problems is that, for too many people, work simply does not pay," says the Tory gentleman. So make it pay, Mr Duncan Smith. Force your mates in the boardrooms to forgo a few billion out of their bonuses and jack up the minimum wage to a decent level. That will do a bit to solve income equality and it will give you clear blue water between wages and benefits. It will also inject some much-needed spending power into the economy and boost demand. But, for God's sake, don't fall back on battering the claimants again. Haven't you learned anything in 13 years out of power? Then again, you're a Tory, so perhaps you haven't. It is to be hoped, however, that your Lib Dems allies are getting a feel of just what they've allied with.
But it's not just the nobility or would-be nobility that is giving the coalition problems at the moment. The new austerity seems not to have sunk in with the new ministers in the Commons and that's left egg on a few faces. Defence Minister Andrew Robathan raised more than a few eyebrows when, instead of following the new ministerial guidelines about using public transport wherever possible, he took a chauffeur-driven government car across the Channel to attend the veterans' anniversary assembly in Dunkirk - a means of transport that he described as "appropriate and inexpensive." 'Nuff said. And now, as if all that wasn't sufficient, Treasury Chief Secretary David Laws has had to resign after it was revealed that he had paid £40,000 of public money claimed as expenses to his partner James Lundie for renting rooms in Mr Lundie's home, in clear breach of the Commons rules on expenses. The expressions of support for him have been effusive, from both Tory and Lib Dem sources, but he has admitted his guilt and is repaying the claimed cash. That won't give him many sleepless nights, of course, since he is, like so many others in this government, a millionaire in his own right. But it really can only be in this coalition that you can cheat the taxpayer out of £40,000 and be described by the Prime Minister as a "good and honourable man." Mr Cameron was joined by Business Secretary Vince Cable in his appraisal of Mr Laws, saying that "it is a big loss, but he has done the right thing." The right thing? Ripping off £40,000 of our money and only owning up to it when exposed by the press? And to cap it all, Iain Duncan Smith says that he "has the talent to come back." Words fail.
So, when you next hear that we're all in it together, that a new age of austerity has dawned and because of it your wages are cut or your job vanishes, bear in mind that the "all" who are in it together excludes Tory donors, tax-dodging multimillionaires, filthy rich "sex addicts," coalition ministers and all the rest of the rag-tag bunch of money-hungry parasites grouped around this disreputable coalition of profiteers and big business stooges. We're not all in it together. They are in power and in the money. We're in trouble and being squeezed until the pips squeak. It's a great world in Cameron's coalition. Once again, this government has announced new policies - and, once again, they have proven to be just old Tory policies dragged out of storage, dusted down and prepared for use yet again, a couple of decades later than their last airing. This time it's unemployment and the benefits system that comes under the coalition's scrutiny and, appropriately, it's a recycled Tory laying out the recycled policies. But, since Iain Duncan Smith, yet another unsuccessful Tory leader who has popped up in this Cabinet of all the failures, has spent the last few years developing policies to deal with worklessness and welfare benefits, you might have hoped that he would have come up with something new. No such luck, unfortunately, it's just the same old Tory whinges about benefit scroungers and the same old attacks on the least well off in our society. On he spouts about people becoming "parked" on incapacity benefit, whose 2.5 million recipients face a status review in the coming months designed to force them off benefits and back into work. Just what work he means isn't made clear. The 2.5 million people already fruitlessly searching for non-existent jobs are soon to be joined by as many others as the Tories can bully off incapacity benefits, presumably to take the millions of jobs that they have accidentally overlooked in the meantime.
And that's without counting the tens of thousands of civil servants and local authority staff who are destined to join them on the dole queues once the coalition gets into the swing of cutting the services that the unemployed and benefit recipients rely on for survival. It's all so old hat, really. It's the Tories falling back on the same mantra of beating up those least able to defend themselves that they have always employed.There is nothing new about it and nothing of real substance, either. And this supposed concern for those trapped on benefit it doesn't sit terribly well with the announcement in the recent Queen's Speech that the coalition is to scrap the regional development agencies. Not much help there in solving something that is a heavily regionalised problem and one, incidentally which dates back to the last time the Tories held office, when they decimated whole communities in their attacks on the coal and steel industries. Mr Duncan Smith makes great play of the fact that 1.4 million people in Britain have been on an out-of-work benefit for nine or more of the last 10 years and that income inequality in the UK is now at its highest level since comparable statistics began in 1961. But he gives little hope that any government in which he participates will do anything to improve matters. He highlights that people are better off claiming dole rather than in a job paying £15,000 a year or less.
But, unfortunately for all concerned, the problem is seen by Mr Duncan Smith and his Cabinet allies as benefits being too high and easily available, rather than wages being so bloody low that bare subsistence benefits can overtake them. "One of the biggest problems is that, for too many people, work simply does not pay," says the Tory gentleman. So make it pay, Mr Duncan Smith. Force your mates in the boardrooms to forgo a few billion out of their bonuses and jack up the minimum wage to a decent level. That will do a bit to solve income equality and it will give you clear blue water between wages and benefits. It will also inject some much-needed spending power into the economy and boost demand. But, for God's sake, don't fall back on battering the claimants again. Haven't you learned anything in 13 years out of power? Then again, you're a Tory, so perhaps you haven't. It is to be hoped, however, that your Lib Dems allies are getting a feel of just what they've allied with.
Wednesday, 26 May 2010
Youth job lambs to slaughter
The latest unemployment figures saw those looking for a job top 2.5 million, unemployment of 16-17 year olds rise by 4.4%, and the number of economically inactive reach its highest ever levels. But neither the Conservative nor the Lib Dem wing of the new government has proposed serious measures to provide jobs for workers and young people facing the brunt of this ongoing crisis. Instead the headlines are £6 billion cuts in public services to reassure the 'markets', code for multi-billionaires like George Soros and co. But why is it a priority to reassure the wealthy fat cats and not unemployed young people? During the election campaign, an unemployed young woman called Vicky Harrison committed suicide because of the hopeless situation she felt confronted by, after receiving over 200 job rejections. How many more young people feel in a similar situation? How much more are they in need of reassurance than wealthy hedge fund managers who only noticed the recession because their bonuses were five figures rather than six. We were abandoned by Labour during the onset of the recession, and the Tory/Liberal coalition is not going to change that situation.
The Conservatives during the general election talked about abolishing the Future Jobs Fund. Youth Fight for Jobs criticised this scheme because it did not offer permanent jobs, only six month placements, often on the minimum wage. Because of their temporary nature, they were likely to be low skilled, and more fundamentally did not ultimately change the employment outlook. The number of vacancies is dropping (now at 475,000) while the number of unemployed increases. This scheme has already created anger amongst young people forced onto it, many of whom will undoubtedly welcome its abolition. But signs are that the Conservatives will introduce schemes which are less useful than that. According to the Financial Times: "The Tories promise to create 400,000 apprenticeship or training places and give smaller companies a £2,000 bonus for every apprentice hired but have made no pledge to continue Labour's £1 billion in Future Jobs Fund."
During the 1980s, Thatcher's government reacted to mass unemployment with the Youth Training Scheme (YTS), but its inadequacy in providing a real way out for young people provoked mass opposition, including school student strikes involving 250,000. As Seumas Milne, commentator, says: "The prospect of ... Iain Duncan Smith dragooning the sick and jobless into privatised cheap labour schemes is a sobering measure of the new reality." This sort of scheme could provoke a reaction comparable to the protests in the mid-eighties. Benefits are widely expected to be "reformed" ie cut, and used to force people into schemes that will not benefit them. Big attacks are already expected to continue in further and higher education. Many young people have continued in education, or re-entered, to gain skills and avoid the thankless task of chasing non-existent jobs. But cuts in colleges and universities will still go ahead, while many young people are worried about attacks on grants for those in colleges (EMA for 16-19s, ALG for those above 19). Further down the line, the cap on university places remains in place and the threat of university fee increases. Many young people voted Liberal Democrat because they were seen as an alternative to the main political parties, especially because they promised eventually to scrap university fees.
However, the details of the coalition deal make it clear that the Liberal/Tory coalition will definitely not abolish fees, and most likely will preside over increases in charges for students, with Conservative and Labour MPs voting them through. The only thing that would stop them are cynical calculations in order to cling onto power in the face of organised mass opposition. This coalition will implement Conservative attacks on young people and the unemployed - the attacks that were found in the manifestos of Labour, the Tories and the Lib Dems. The new cabinet is two-thirds private school, two-thirds Oxford and Cambridge university educated, with multi-millionaires well represented within their ranks. Youth Fight for Jobs will continue to organise for a mass fightback, for a programme of job creation to solve the problems of unemployment, for free education to allow people to develop to the best of their abilities, and for a living wage that will allow those in work to live a decent life.
The Conservatives during the general election talked about abolishing the Future Jobs Fund. Youth Fight for Jobs criticised this scheme because it did not offer permanent jobs, only six month placements, often on the minimum wage. Because of their temporary nature, they were likely to be low skilled, and more fundamentally did not ultimately change the employment outlook. The number of vacancies is dropping (now at 475,000) while the number of unemployed increases. This scheme has already created anger amongst young people forced onto it, many of whom will undoubtedly welcome its abolition. But signs are that the Conservatives will introduce schemes which are less useful than that. According to the Financial Times: "The Tories promise to create 400,000 apprenticeship or training places and give smaller companies a £2,000 bonus for every apprentice hired but have made no pledge to continue Labour's £1 billion in Future Jobs Fund."
During the 1980s, Thatcher's government reacted to mass unemployment with the Youth Training Scheme (YTS), but its inadequacy in providing a real way out for young people provoked mass opposition, including school student strikes involving 250,000. As Seumas Milne, commentator, says: "The prospect of ... Iain Duncan Smith dragooning the sick and jobless into privatised cheap labour schemes is a sobering measure of the new reality." This sort of scheme could provoke a reaction comparable to the protests in the mid-eighties. Benefits are widely expected to be "reformed" ie cut, and used to force people into schemes that will not benefit them. Big attacks are already expected to continue in further and higher education. Many young people have continued in education, or re-entered, to gain skills and avoid the thankless task of chasing non-existent jobs. But cuts in colleges and universities will still go ahead, while many young people are worried about attacks on grants for those in colleges (EMA for 16-19s, ALG for those above 19). Further down the line, the cap on university places remains in place and the threat of university fee increases. Many young people voted Liberal Democrat because they were seen as an alternative to the main political parties, especially because they promised eventually to scrap university fees.
However, the details of the coalition deal make it clear that the Liberal/Tory coalition will definitely not abolish fees, and most likely will preside over increases in charges for students, with Conservative and Labour MPs voting them through. The only thing that would stop them are cynical calculations in order to cling onto power in the face of organised mass opposition. This coalition will implement Conservative attacks on young people and the unemployed - the attacks that were found in the manifestos of Labour, the Tories and the Lib Dems. The new cabinet is two-thirds private school, two-thirds Oxford and Cambridge university educated, with multi-millionaires well represented within their ranks. Youth Fight for Jobs will continue to organise for a mass fightback, for a programme of job creation to solve the problems of unemployment, for free education to allow people to develop to the best of their abilities, and for a living wage that will allow those in work to live a decent life.
Tuesday, 18 May 2010
Reject the millionare government
Other than a Tory majority this Conservative-Liberal coalition is the worst possible outcome of the general election, since it is the most effective platform available for cuts, austerity and unemployment. Cameron and Clegg tell us that the coalition has been formed ‘in the national interest’. That’s the code phrase for their own class. The façade of equality within the coalition projected by making Clegg Deputy Prime Minister is a deception perpetrated by a Tory leadership which was determined to get their hands on the reins of power by any means necessary. It is an embrace of death which is already tearing the Lib Dems apart. In return for the trappings of office the Lib Dems have decided to underpin a reactionary coalition and sign up to the onslaught on jobs, pensions and services which the Tories have been preparing. The cuts agenda and deficit reduction are the cornerstones of this anti-working class coalition. Yet in the election campaign the Lib Dems supported Brown’s approach to the crisis, which was for a limited level of government stimulus (and quantative easing) in order to maintain demand in the economy for another year. This was inadequate, and did not avoid cuts, but it had temporally cushioned the crisis — though it was based in the illusion that the economy would recover next year and that the working class could then be made to pay the bill.
However this was an important difference which would have kept more people in work and created better conditions for a fight back. It has now been junked in favour of Tory proposals for an immediate £6 billion slashing of public expenditure with much more to come. This can only make the economic situation worse and a full-scale double-dip recession more likely. The backdrop of crisis across Europe throughout the election period should have served as warning on this. There was rioting in Athens and so-called ‘contagion’ was threatening Spain, Portugal, and Italy. To this mix was added fresh instability in the banking system and the markets and the threat by Sarkozy to pull France out of the Eurozone unless Merkel accepted the EU’s €750bn bailout fund for the single currency. The Lib Dems capitulated to the Tories knowing that there was alternative deal with Labour and the nationalist parties on offer — the so-called progressive alliance. This was not a project that we would have called for or supported but we are not neutral on whether the Lib Dems line up with the Tories or against them even though neither of these parties represents the interests of the working class. Caroline Lucas put it well, saying that neither side was progressive and that she would have supported any measures put forward on a case by case basis. For the Lib Dems this represented a spectacular betrayal of their own principles.
The Labour offer held out a real possibility of replacing Britain’s bizarre and corrupt electoral system, which has under-represented them for so long, with some form of Proportional Representation (PR). This is something which the Lib Dems have correctly called for over many years. It would completely change the scandalously anti-democratic “first past the post” system which deprives millions of voters of representation in parliamentary elections. It does not represent workers’ democracy, of course, but it is an extremely important working class democratic demand. A Labour-Liberal coalition would have been a less effective platform for cuts which is one of the reasons the Lib Dems gave for rejecting it. Such a government would have come under massive pressure from the media to implement a cuts agenda. It is true that the arithmetic was tight with the Labour option and that it would probably not have lasted 5 years. But it could have lasted long enough to ensure that the next election would not be under the “first past the post” system. What the Lib Dems have ended up with is a coalition in which all the cards and the key ministries are in the Tories’ hands. The Tories have offered them a referendum on the Alternative Vote system. It is not PR since it is not proportional and is arguably no better than first past the post since it would have no effect on the constituencies dominated by Tory or Labour inbuilt majorities which are the distorting factor in the first past the post system. One thing the Lib Dems extracted from the Tories was early legislation on fixed term Parliaments. This would mean that the next general election is scheduled to be on Thursday May 7th 2015.
This is a very important electoral reform measure in itself, although five years is too long for a government to hold office. Its purpose in these circumstances is a good illustration of the Lib Dems’ cynicism. They wanted to make sure that the Tories did not use them to get into power only to spit them out again when they thought they could win a full majority. The outrageous proposed change of parliamentary procedure to require 55% of the vote to pass a motion of no confidence in a government is another example of the Lib Dems’ desperation to be in office. Whether these safeguards can guarantee a stable government for five years of economic distress and attacks on the working class is another matter. There are some limited progressive measures in the deal between the parties: the abolition of identity cards; the postponement of the inheritance tax relief and a rise in capital gains tax. Most of the rest of the coalition agreement is Tory policy. Trident, the one issue on which the Lib Dems were out of step with establishment politics, is to stay. There is an unspecified commitment to raising the tax threshold, which is sure to be kicked into the long grass. It is also clear that a substantial rise in the regressive VAT is in the offing. On immigration the Lib Dem proposal for an amnesty after 10 years has been junked in favour of the reactionary Tory proposal for a cap on non-EU immigration.
One of the vile features of the election campaign was the repeated racist attacks by both the Tories and Labour equally over their amnesty proposal. Behind these attacks was the bankrupt attitude which rendered all three main parties unable to tackle the far right during the election campaign other than to compete with them on how many migrants they could stop coming in and how many they could throw out. This makes them directly responsible for the advances made by the BNP and UKIP in the campaign. The reason why both the BNP and UKIP won worrying scores at the national level was because the main parties insist on competing with them rather than opposing them. The war and the environment were marginal issues in the election campaign and nothing has changed with the coalition agreement. The Lib Dems have also collapsed on nuclear power. The Tory policy of a new generation of nuclear power stations is coalition policy with the Lib Dems having the right to abstain when it comes to a vote. The agreement is against a third runway at Heathrow and other London airports — but there is nothing about Boris Johnson’s proposal for a new airport in the Thames estuary. The most divisive issue facing this coalition government is that of the European Union (EU). It means the Euro-sceptic Foreign Secretary William Hague sitting in Cabinet alongside life-long EU enthusiast Lib Dem ministers. The agreement not to go into the Euro zone in the current Parliament and a referendum on any transfer of powers to the EU is unlikely to contain this issue even inside the Tory Party.
The coalition is hugely controversial in both of the parties involved. The right-wing of the Tory party regards it as a sell-out as do most of the rank and file of the Lib Dems. This means that the coalition will come under massive pressure once the decisions on cuts start to be taken particularly since neither party has a mandate from the electorate for the cuts they are intending to make. Labour is already indicating that it is unlikely to oppose the cuts in general but may object to some of the details. They say they want to be a ‘responsible opposition’. This would be a scandalous capitulation to the concept of “national interest” peddled by the Con/Lib Dem coalition and the media but it is in line with the way they have governed and fought the election in the interests of business. The performance of the left in the election was a disaster. It is true that the two great positive outcomes of the election were the defeat of Nick Griffin in Barking and the election of Caroline Lucas in Brighton. We congratulate those involved in both campaigns. The Trade Union and Socialist Coalition (TUSC) result was weak. It made no impact on the election at national level and is unlikely to be the basis for anything after the election. Respect polled far better than any other part of the left but lost its MP and most of councillors. It will need to regroup and revisit its strategic approach. The need for an effective party to the left of Labour remains a crucial element of the fight back. One lesson this the 2010 election is that the left should redouble its effort to create a united and pluralist party of the left.
This makes the response of the trade unions to the situation of first class importance. Most unions have so far remained largely passive in the face of cutbacks. This has to change as a matter of urgency. The unions must demand that gaps in the budget created by the banking crisis are tackled through the cancellation of Trident; ending the war in Afghanistan; withdrawal from Iraq and energetic collection of taxes from big business, the banks and the rich. As a minimum corporation tax should be raised back to at least the levels levied under Thatcher and the key demand for a million green jobs supported. We must seek to build a mass campaign in the trade unions and Labour Movement to press for the rapid implementation of progressive electoral reform based on PR. The Labour movement must also rally against the dangerous slide towards racist, anti-immigrant policies. Years of the unions trailing meekly behind Blair and Brown have brought us to the very brink of a Tory government. Only the movement of the working class and the creation of an effective coalition against the cuts can save the working class from fresh, massive and damaging attacks.
However this was an important difference which would have kept more people in work and created better conditions for a fight back. It has now been junked in favour of Tory proposals for an immediate £6 billion slashing of public expenditure with much more to come. This can only make the economic situation worse and a full-scale double-dip recession more likely. The backdrop of crisis across Europe throughout the election period should have served as warning on this. There was rioting in Athens and so-called ‘contagion’ was threatening Spain, Portugal, and Italy. To this mix was added fresh instability in the banking system and the markets and the threat by Sarkozy to pull France out of the Eurozone unless Merkel accepted the EU’s €750bn bailout fund for the single currency. The Lib Dems capitulated to the Tories knowing that there was alternative deal with Labour and the nationalist parties on offer — the so-called progressive alliance. This was not a project that we would have called for or supported but we are not neutral on whether the Lib Dems line up with the Tories or against them even though neither of these parties represents the interests of the working class. Caroline Lucas put it well, saying that neither side was progressive and that she would have supported any measures put forward on a case by case basis. For the Lib Dems this represented a spectacular betrayal of their own principles.
The Labour offer held out a real possibility of replacing Britain’s bizarre and corrupt electoral system, which has under-represented them for so long, with some form of Proportional Representation (PR). This is something which the Lib Dems have correctly called for over many years. It would completely change the scandalously anti-democratic “first past the post” system which deprives millions of voters of representation in parliamentary elections. It does not represent workers’ democracy, of course, but it is an extremely important working class democratic demand. A Labour-Liberal coalition would have been a less effective platform for cuts which is one of the reasons the Lib Dems gave for rejecting it. Such a government would have come under massive pressure from the media to implement a cuts agenda. It is true that the arithmetic was tight with the Labour option and that it would probably not have lasted 5 years. But it could have lasted long enough to ensure that the next election would not be under the “first past the post” system. What the Lib Dems have ended up with is a coalition in which all the cards and the key ministries are in the Tories’ hands. The Tories have offered them a referendum on the Alternative Vote system. It is not PR since it is not proportional and is arguably no better than first past the post since it would have no effect on the constituencies dominated by Tory or Labour inbuilt majorities which are the distorting factor in the first past the post system. One thing the Lib Dems extracted from the Tories was early legislation on fixed term Parliaments. This would mean that the next general election is scheduled to be on Thursday May 7th 2015.
This is a very important electoral reform measure in itself, although five years is too long for a government to hold office. Its purpose in these circumstances is a good illustration of the Lib Dems’ cynicism. They wanted to make sure that the Tories did not use them to get into power only to spit them out again when they thought they could win a full majority. The outrageous proposed change of parliamentary procedure to require 55% of the vote to pass a motion of no confidence in a government is another example of the Lib Dems’ desperation to be in office. Whether these safeguards can guarantee a stable government for five years of economic distress and attacks on the working class is another matter. There are some limited progressive measures in the deal between the parties: the abolition of identity cards; the postponement of the inheritance tax relief and a rise in capital gains tax. Most of the rest of the coalition agreement is Tory policy. Trident, the one issue on which the Lib Dems were out of step with establishment politics, is to stay. There is an unspecified commitment to raising the tax threshold, which is sure to be kicked into the long grass. It is also clear that a substantial rise in the regressive VAT is in the offing. On immigration the Lib Dem proposal for an amnesty after 10 years has been junked in favour of the reactionary Tory proposal for a cap on non-EU immigration.
One of the vile features of the election campaign was the repeated racist attacks by both the Tories and Labour equally over their amnesty proposal. Behind these attacks was the bankrupt attitude which rendered all three main parties unable to tackle the far right during the election campaign other than to compete with them on how many migrants they could stop coming in and how many they could throw out. This makes them directly responsible for the advances made by the BNP and UKIP in the campaign. The reason why both the BNP and UKIP won worrying scores at the national level was because the main parties insist on competing with them rather than opposing them. The war and the environment were marginal issues in the election campaign and nothing has changed with the coalition agreement. The Lib Dems have also collapsed on nuclear power. The Tory policy of a new generation of nuclear power stations is coalition policy with the Lib Dems having the right to abstain when it comes to a vote. The agreement is against a third runway at Heathrow and other London airports — but there is nothing about Boris Johnson’s proposal for a new airport in the Thames estuary. The most divisive issue facing this coalition government is that of the European Union (EU). It means the Euro-sceptic Foreign Secretary William Hague sitting in Cabinet alongside life-long EU enthusiast Lib Dem ministers. The agreement not to go into the Euro zone in the current Parliament and a referendum on any transfer of powers to the EU is unlikely to contain this issue even inside the Tory Party.
The coalition is hugely controversial in both of the parties involved. The right-wing of the Tory party regards it as a sell-out as do most of the rank and file of the Lib Dems. This means that the coalition will come under massive pressure once the decisions on cuts start to be taken particularly since neither party has a mandate from the electorate for the cuts they are intending to make. Labour is already indicating that it is unlikely to oppose the cuts in general but may object to some of the details. They say they want to be a ‘responsible opposition’. This would be a scandalous capitulation to the concept of “national interest” peddled by the Con/Lib Dem coalition and the media but it is in line with the way they have governed and fought the election in the interests of business. The performance of the left in the election was a disaster. It is true that the two great positive outcomes of the election were the defeat of Nick Griffin in Barking and the election of Caroline Lucas in Brighton. We congratulate those involved in both campaigns. The Trade Union and Socialist Coalition (TUSC) result was weak. It made no impact on the election at national level and is unlikely to be the basis for anything after the election. Respect polled far better than any other part of the left but lost its MP and most of councillors. It will need to regroup and revisit its strategic approach. The need for an effective party to the left of Labour remains a crucial element of the fight back. One lesson this the 2010 election is that the left should redouble its effort to create a united and pluralist party of the left.
This makes the response of the trade unions to the situation of first class importance. Most unions have so far remained largely passive in the face of cutbacks. This has to change as a matter of urgency. The unions must demand that gaps in the budget created by the banking crisis are tackled through the cancellation of Trident; ending the war in Afghanistan; withdrawal from Iraq and energetic collection of taxes from big business, the banks and the rich. As a minimum corporation tax should be raised back to at least the levels levied under Thatcher and the key demand for a million green jobs supported. We must seek to build a mass campaign in the trade unions and Labour Movement to press for the rapid implementation of progressive electoral reform based on PR. The Labour movement must also rally against the dangerous slide towards racist, anti-immigrant policies. Years of the unions trailing meekly behind Blair and Brown have brought us to the very brink of a Tory government. Only the movement of the working class and the creation of an effective coalition against the cuts can save the working class from fresh, massive and damaging attacks.
Bitter bite of Tory cuts
We are now getting an early taste of just what Tory Britain will be like and it's a bitter taste indeed. For all of those who argued that there was no point in a Labour vote at the recent general election, it should be a sharp lesson. There is no doubt that new Labour was far too close to the Tories and Lib Dems in its policies and there's certainly no doubt that we were never about to see a social revolution brought about by Vladimir Illyich Brown. But the butchery that we are seeing brought into existence now is far more extreme, far more drastic and far quicker and less thought out than anything projected by Labour, so much so that that tens of thousands of people are facing harm to their lives that could have been avoided or at least postponed and more vulnerable to trade union pressure had there been a Labour government. In a matterof days, Tory Chancellor George Osborne and his Lib Dem henchman David Laws have dreamed up £6 billion of cuts to land on us all within a few weeks in an emergency Budget that shows all the signs of being more like a butchers bill than a logical programme. Lofty talk about not cutting front-line services begs the question of whether such front-line services can function without the administrative and technical backup that allows them to get on with the job and, of course, they can't.
The Lib Dems appear to have undergone a Damascene conversion to cuts that, not a fortnight ago, they were damning as over the top and irresponsible. Evidence of things to come is seen most clearly in the NHS, which has been instructed by the Department of Health to set aside a £2 billion pot to pay for one-off costs such as redundancies. A DoH spokeswoman said that "2010-11 will be the last year of significant growth for the NHS. "The NHS will need to plan now so it can continue to deliver service and quality improvements in the future. But with £2 billion worth of redundancies facing the service, that will be a damned sight more difficult to do than to talk about. Rather than "service and quality improvements," we can expect to see jobs go in the thousands and, when jobs go in a labour-intensive NHS, service standards will inevitably go with them. And that's not even counting the jobs that will have to go to pay for the £2 billion that is to be spent on the cutbacks. It's a downward spiral which will be difficult to halt, because the effects won't only be felt within the service. Taking up to 36,000 staff out of the service and onto the dole queues will remove a huge chunk from the spending power that manufacturing, wholesale and retail trades rely on. Shunting tens of thousands onto benefits will have an equally calamitous effect on public expenditure, which will then result in this cuts-mad and callous government attempting to slash the bill by restricting the amount of and access to benefits. With the same thing happening across the public sector, all the signs then point to the much forecast and much dreaded double-dip recession.
This brutal hacking back of the economy is so potentially damaging that it's impossible to forecast where such a downward spiral would end. The coalition of the ungodly clearly believes that the private sector will somehow recover and plug the gap created by the public-sector massacre, with new jobs appearing out of thin air, created by a market revived and fertilised by government largesse to the rich and the entrepreneurial. But faced with a manufacturing sector that is dying by inches and a consumer market crippled by job losses, how this would happen is beyond the understanding of mortal man. Not, apparently, by the Bullingdon butchers aided by their Lib Dem chums. It's just that no-one has yet explained how the conjuring trick is going to work. While the nation was swept up in the furore of the general election, the local elections sneaked by without a bat of an eyelid. Although some might argue that ultimate power lies at No 10, this doesn't mean local councils are mute when it comes to how to spend their government-allocated money. Just as there's a national budget, each local authority has its own mini-budget too. And many councils make their most progressive changes when coming head to head with an opposition government. So for Labour voters there's hope yet. Not only did left Labour MPs like Jeremy Corbyn and Diane Abbott increase their majority in the general election, Labour fared remarkably well in the locals.
Let's go through some of the statistics. Labour has gained 415 seats on councils since the last election, increasing its number of councillors to 2,945 - its best performance since the party's landslide victory in 1997. Labour has also gained control of 17 councils across the country, 10 of which are in London, bringing the total number of local authorities under its control to 40. Out of the 23 councils that Labour retained control of, it gained seats in 20, made no change in the two local authorities of Manchester and Preston and only lost seats in Stevenage, losing just three councillors. It is also the only party to have complete control of any council in the country, with the two London authorities of Newham and Barking & Dagenham, where it fought off the BNP threat. By contrast, the Tories lost a number of councils, most notably those to Labour in the London boroughs of Ealing, Harrow and Enfield. The latter has long been seen as a young, up-and-coming Conservative stronghold compared with its neighbour Barnet - a traditional stuffy Tory borough that won't be going red for some time. Not only was Barnet Margaret Thatcher's old stomping ground during her time as MP for Finchley & Golders Green, its current mayor and Assembly Member for Barnet & Camden Brian Coleman once described Haringey as a place "where respectable folk have to lock their car doors as they drive through it." And let's not forget the well-publicised comments of Barnet's Mill Hill Councillor John Hart, who said of Marxists that they "were the laziest bastards on Earth."
Former Barnet Council leader and newly elected MP for Finchley & Golders Green Mike Freer defended Hart's comments by saying Hart had formed his opinions "when he used to work with Marxists at his university's student union." The local polls also saw Labour gain control of 13 local authorities which previously had no overall control, including Camden and Islington in London and Coventry and Doncaster elsewhere. What's interesting this time around is, aside from it being far from a landslide Tory victory in the general election, Labour has done extraordinarily well in the local elections, particularly in London," said Keith Flett, socialist historian and chairman of the TUC in Haringey. In 1997 the Tories were practically wiped off local authorities but this time around, at a time when Labour has had a lot of bad press, the party has actually become the ruling party on many councils. I see this as being a key battleground over the next year. Working people have voted Labour because they don't want Tory cuts." In Haringey Council in north London there were just a few seats separating the Liberal Democrats and Labour, which has run the council for over 40 years. In the wake of bad press following the child protection failings that led to the death of Baby P, everyone thought the Lib Dems might just clinch the public vote and rule the council. But Labour support in the poorer east of the borough was unwavering and, instead of the Lib Dems winning three seats to gain control of the council, they lost three. Flett added: "You ask any Afro-Caribbean living in Tottenham how they voted and they will reply: 'We vote Labour' - and that's all there is to it. "People's intelligence goes beyond the expectations of the sensationalist tabloid media to the extent that voters realise that the death of Baby P has very little to do with party politics." The tabloids might think they can bend public opinion at will, but you can bet The Sun was left nursing a bruised ego following the Tories' underwhelming performance.
Despite getting the full backing of the biggest-selling newspaper in Britain, despite the Iraq war inquiry and despite Gordon Brown's howling gaffe of calling a pensioner a "bigot," the Conservatives still could not muster enough support to win an overall majority of the vote. In fact they did appallingly considering the circumstances - showing that local people were not fooled by the tabloids' ranting. Deputy leader of Haringey Council and Tottenham Hale Councillor Lorna Reith believes the local electorate did not buy into the press reports surrounding Baby P. "The issue of children's safeguarding and baby Peter didn't come up on the doorstep," said Reith. I think those residents who were particularly concerned had probably followed the stories in the press and were aware that our Ofsted report in January showed we were making good progress. In 2006 borough turnout for the local elections was just under 36 per cent and this time it was 60.3 per cent. A higher turnout is usually beneficial to us." Even the Lib Dem leader in Haringey Robert Gorrie had to confess he was not surprised that Labour won again. "Disappointing, yes. Surprising, no," he said. "The Greens and Conservatives again won no seats and, as such, the Lib Dems remain the only alternative to Labour in Haringey." Perhaps turnout was a key factor here. Local elections are not normally held on the same day as general elections, which means that in some areas double the number of people voted at the locals compared with 2006. Could this be a sign that the majority of people in the country who choose not to vote would vote Labour if it came to it?
Robin Wales was re-elected as Newham Council's mayor with a staggering 64,748 votes - a majority of nearly 50,000 over the second-placed Tory candidate. The borough is led by the mayor and cabinet and got the largest swing to Labour in the country. "Across London the results show that the Labour vote held up well," he said. "Although the national result was disappointing, winning back London councils is a real achievement. Clearly the general election turnout was beneficial because it made it more likely that our voters would turn out to cast their vote. And London voters have had first-hand experience of a Tory administration through the Mayor Boris Johnson - the results indicate they don't like what they've seen. In Newham we got the largest swing to Labour in the country and this suggests that we benefited from more than just increased turnout. For example, we've got the biggest range of free events in London, we give all primary school children free school meals and last year we made £12 million available for locally directed projects." A Labour Party spokesman added: "We are very proud of the hard work and dedication from our Labour teams across the country, which meant we took back control of a number of councils. Once people see the reality of Conservative or Lib Dem councils, they are keen to return to the progressive policies of the Labour Party." Britain will certainly be seeing the reality of the Conservative-Lib Dem coalition all too soon, as the parties of the right formulate their slash-and-burn policies. Lessons will have to be learnt - but the tragedy is that we'll be learning the hard way.
The Lib Dems appear to have undergone a Damascene conversion to cuts that, not a fortnight ago, they were damning as over the top and irresponsible. Evidence of things to come is seen most clearly in the NHS, which has been instructed by the Department of Health to set aside a £2 billion pot to pay for one-off costs such as redundancies. A DoH spokeswoman said that "2010-11 will be the last year of significant growth for the NHS. "The NHS will need to plan now so it can continue to deliver service and quality improvements in the future. But with £2 billion worth of redundancies facing the service, that will be a damned sight more difficult to do than to talk about. Rather than "service and quality improvements," we can expect to see jobs go in the thousands and, when jobs go in a labour-intensive NHS, service standards will inevitably go with them. And that's not even counting the jobs that will have to go to pay for the £2 billion that is to be spent on the cutbacks. It's a downward spiral which will be difficult to halt, because the effects won't only be felt within the service. Taking up to 36,000 staff out of the service and onto the dole queues will remove a huge chunk from the spending power that manufacturing, wholesale and retail trades rely on. Shunting tens of thousands onto benefits will have an equally calamitous effect on public expenditure, which will then result in this cuts-mad and callous government attempting to slash the bill by restricting the amount of and access to benefits. With the same thing happening across the public sector, all the signs then point to the much forecast and much dreaded double-dip recession.
This brutal hacking back of the economy is so potentially damaging that it's impossible to forecast where such a downward spiral would end. The coalition of the ungodly clearly believes that the private sector will somehow recover and plug the gap created by the public-sector massacre, with new jobs appearing out of thin air, created by a market revived and fertilised by government largesse to the rich and the entrepreneurial. But faced with a manufacturing sector that is dying by inches and a consumer market crippled by job losses, how this would happen is beyond the understanding of mortal man. Not, apparently, by the Bullingdon butchers aided by their Lib Dem chums. It's just that no-one has yet explained how the conjuring trick is going to work. While the nation was swept up in the furore of the general election, the local elections sneaked by without a bat of an eyelid. Although some might argue that ultimate power lies at No 10, this doesn't mean local councils are mute when it comes to how to spend their government-allocated money. Just as there's a national budget, each local authority has its own mini-budget too. And many councils make their most progressive changes when coming head to head with an opposition government. So for Labour voters there's hope yet. Not only did left Labour MPs like Jeremy Corbyn and Diane Abbott increase their majority in the general election, Labour fared remarkably well in the locals.
Let's go through some of the statistics. Labour has gained 415 seats on councils since the last election, increasing its number of councillors to 2,945 - its best performance since the party's landslide victory in 1997. Labour has also gained control of 17 councils across the country, 10 of which are in London, bringing the total number of local authorities under its control to 40. Out of the 23 councils that Labour retained control of, it gained seats in 20, made no change in the two local authorities of Manchester and Preston and only lost seats in Stevenage, losing just three councillors. It is also the only party to have complete control of any council in the country, with the two London authorities of Newham and Barking & Dagenham, where it fought off the BNP threat. By contrast, the Tories lost a number of councils, most notably those to Labour in the London boroughs of Ealing, Harrow and Enfield. The latter has long been seen as a young, up-and-coming Conservative stronghold compared with its neighbour Barnet - a traditional stuffy Tory borough that won't be going red for some time. Not only was Barnet Margaret Thatcher's old stomping ground during her time as MP for Finchley & Golders Green, its current mayor and Assembly Member for Barnet & Camden Brian Coleman once described Haringey as a place "where respectable folk have to lock their car doors as they drive through it." And let's not forget the well-publicised comments of Barnet's Mill Hill Councillor John Hart, who said of Marxists that they "were the laziest bastards on Earth."
Former Barnet Council leader and newly elected MP for Finchley & Golders Green Mike Freer defended Hart's comments by saying Hart had formed his opinions "when he used to work with Marxists at his university's student union." The local polls also saw Labour gain control of 13 local authorities which previously had no overall control, including Camden and Islington in London and Coventry and Doncaster elsewhere. What's interesting this time around is, aside from it being far from a landslide Tory victory in the general election, Labour has done extraordinarily well in the local elections, particularly in London," said Keith Flett, socialist historian and chairman of the TUC in Haringey. In 1997 the Tories were practically wiped off local authorities but this time around, at a time when Labour has had a lot of bad press, the party has actually become the ruling party on many councils. I see this as being a key battleground over the next year. Working people have voted Labour because they don't want Tory cuts." In Haringey Council in north London there were just a few seats separating the Liberal Democrats and Labour, which has run the council for over 40 years. In the wake of bad press following the child protection failings that led to the death of Baby P, everyone thought the Lib Dems might just clinch the public vote and rule the council. But Labour support in the poorer east of the borough was unwavering and, instead of the Lib Dems winning three seats to gain control of the council, they lost three. Flett added: "You ask any Afro-Caribbean living in Tottenham how they voted and they will reply: 'We vote Labour' - and that's all there is to it. "People's intelligence goes beyond the expectations of the sensationalist tabloid media to the extent that voters realise that the death of Baby P has very little to do with party politics." The tabloids might think they can bend public opinion at will, but you can bet The Sun was left nursing a bruised ego following the Tories' underwhelming performance.
Despite getting the full backing of the biggest-selling newspaper in Britain, despite the Iraq war inquiry and despite Gordon Brown's howling gaffe of calling a pensioner a "bigot," the Conservatives still could not muster enough support to win an overall majority of the vote. In fact they did appallingly considering the circumstances - showing that local people were not fooled by the tabloids' ranting. Deputy leader of Haringey Council and Tottenham Hale Councillor Lorna Reith believes the local electorate did not buy into the press reports surrounding Baby P. "The issue of children's safeguarding and baby Peter didn't come up on the doorstep," said Reith. I think those residents who were particularly concerned had probably followed the stories in the press and were aware that our Ofsted report in January showed we were making good progress. In 2006 borough turnout for the local elections was just under 36 per cent and this time it was 60.3 per cent. A higher turnout is usually beneficial to us." Even the Lib Dem leader in Haringey Robert Gorrie had to confess he was not surprised that Labour won again. "Disappointing, yes. Surprising, no," he said. "The Greens and Conservatives again won no seats and, as such, the Lib Dems remain the only alternative to Labour in Haringey." Perhaps turnout was a key factor here. Local elections are not normally held on the same day as general elections, which means that in some areas double the number of people voted at the locals compared with 2006. Could this be a sign that the majority of people in the country who choose not to vote would vote Labour if it came to it?
Robin Wales was re-elected as Newham Council's mayor with a staggering 64,748 votes - a majority of nearly 50,000 over the second-placed Tory candidate. The borough is led by the mayor and cabinet and got the largest swing to Labour in the country. "Across London the results show that the Labour vote held up well," he said. "Although the national result was disappointing, winning back London councils is a real achievement. Clearly the general election turnout was beneficial because it made it more likely that our voters would turn out to cast their vote. And London voters have had first-hand experience of a Tory administration through the Mayor Boris Johnson - the results indicate they don't like what they've seen. In Newham we got the largest swing to Labour in the country and this suggests that we benefited from more than just increased turnout. For example, we've got the biggest range of free events in London, we give all primary school children free school meals and last year we made £12 million available for locally directed projects." A Labour Party spokesman added: "We are very proud of the hard work and dedication from our Labour teams across the country, which meant we took back control of a number of councils. Once people see the reality of Conservative or Lib Dem councils, they are keen to return to the progressive policies of the Labour Party." Britain will certainly be seeing the reality of the Conservative-Lib Dem coalition all too soon, as the parties of the right formulate their slash-and-burn policies. Lessons will have to be learnt - but the tragedy is that we'll be learning the hard way.
Friday, 14 May 2010
Fall from grace of yellow Tories
How far the Lib Dems have sunk is debatable. Some say that they were pretty low on the food chain even before their distasteful deal with the Tories for a seat or two at the big boys' table. But the distance of their fall is measured in the fact that the yellow-blue coalition held its first Cabinet meeting yesterday, but Deputy Prime Minister and groveller-in-chief Nick Clegg is only going to his members to seek approval of the deal on Sunday. Tough luck if you happen to be a member whose last possible ambition was to climb into bed with the Tories, but that's the way it goes with these most undemocratic of democrats. Chairman of the party's federal conference committee Duncan Brack even had the brass neck to claim that, "in holding this special conference, we are demonstrating again that we are a democratic party which listens to and trusts its members." Stable doors and horses, Mr Brack. No harm in getting used to the doublethink that the Lib Dems have to keep working on if they are to keep even a vestige of self-respect, one supposes, but Mr Brack really ought not to be wasting the two-faced flannel on his own members. They can see as easily as him which way the wind's blowing. It remains to be seen if they have any more spine than their parliamentary colleagues demonstrated. And the wind's blowing in a very chilly direction as far as anyone who thought that the Lib Dems had any trace of progressive credentials is concerned.
Gone is the opposition to any "like-for-like" Trident replacement. In its stead is a commitment to the continuation of Britain's nuclear weapons status, with just the sop that Trident replacement will be judged on value for money. No matter how much the posh chaps at the top wriggle and writhe, that certainly wasn't the rank-and-file Lib Dem understanding of the position. As far as civil liberties are concerned, ID cards are certainly going and good riddance to them, but new blue-yellow Home Secretary Theresa May's first utterance was "more police on the street and less paperwork for them to fill in." Suggestions of the old "sus" laws spring immediately to mind, with all that implies for black youth in the inner cities. In the new Cabinet, the cracks have started appearing even before the first week has ended. New Business Secretary and Lib Dem economics guru Vince Cable has taken a public slapping down by George Osborne. No sooner had rumours started circulating in the City that Mr Cable was to take responsibility for the reform of Britain's banks than the phone calls were made and Mr Osborne leaped in to quash the rumours. The Department of Business, Innovation and Skills had said that Mr Cable would jointly chair a Cabinet committee which is to determine the shape of the UK banking industry.
But Mr Osborne put an end to all that nonsense, briskly stating that the Treasury was going to remain in charge of banking policy and the financial services sector and that he would be chairing that key committee. That was a short old rise to glory, wasn't it Vince? To cap it all came the coalition's so-called accord on National Insurance. The deal worked out put paid to any pretensions that the Lib Dems might have had to positive policies. Under it, the bosses won't face Labour's proposed rise in National Insurance contributions, but the workers will. Progressive, it ain't. And it's all put into perspective by the suggestion that the coalition will legislate to raise the threshold for a successful no-confidence vote in Parliament from the traditional 50 per cent-plus-one level to a new 55 per cent mark. Not a lot of trust there between the so-called happy partners, it would appear. It's not difficult to discredit this lot. In fact it's rather like shooting fish in a barrel. But it remains to be seen if Labour can ditch its new Labour losers and reform itself into a fighting progressive force to oppose a new generation of warmongering, cutback-obsessed profiteers, this time outside their own ranks. We live in hope. So it would appear that the people have spoken and the Tories and Lib Dems have not listened to a single word they said - as is usual. For it is a completely and absolutely reactionary government that now holds the reins of power. The Lib Dems, who made such a play of being neither Tory nor Labour, but something completely different, have shed their protective coloration and come out in the open for what they are, at least in their national leadership, just plain old closet Tories.
The tens of thousands of people who voted Lib Dem in this, and indeed in many previous elections, just to keep the Tories out, have been discarded and their views ignored by a Lib Dem leadership which, sniffing at a couple of seats at the top table, jettisoned everything that they claimed to believe in to get a taste of it. And in country constituencies, many of which have seen resounding battles between Liberals and Tories and in which the Labour Party regularly comes a poor third, what choice now faces the Lib Dem voter? The answer is, precious little. They can now vote for the yellow Tory or the blue Tory and that isn't going to please them in the slightest. And what of the thousands who voted Lib Dem because that party's policy on Trident was better than anything else on offer? That particular policy hasn't been exactly prominent in the posh chaps coalition's utterances so far and merely including it in a spending review will convince no-one. Then there's Europe. Granted that Tory scepticism on Europe wasn't for the best of motives, how will William Hague sit with the Europhiles in the Lib Dem fold? Again the answer is brief. Not very well. All in all, it would seem that the Lib Dems have just committed a very public act of hara-kiri in the pursuit of a few seats in the second rank of a Tory government. Not that that need concern us very much.
They were always the acceptable face of Toryism anyway, and their pronounced anti-trade unionism will probably be a good fit with the Tories as they nestle into their new blue-yellow brotherhood. And brotherhood it most definitely is. The lack of little except white men in suits - with the exception of Theresa May, whose policies seem to be more anti-women than pro - is the most evident thing about the Cabinet line-up so far. So what does this mean for Labour? Well what it should mean is that the battle for the centre ground, which was always new Labour's flagship strategy, has failed dismally and that should mean the unmourned end of the dismal new Labour project. It should mean a return to policies to benefit working people and an end to the nonsense about being the "natural party of business" and all the class-collaborationist drivel that was spouted during the Blair-Brown era. But the new Labour clique don't give up that easily and there are already signs that they are regrouping and preparing to put up yet another set of candidates for the vacant leadership slot who will dance to the City's tune whenever the bell rings. This quite simply cannot be allowed to happen. With the new unity of declared and previously undeclared Tories that this improbable coalition represents, it would be unthinkable to to try to approach Parliament with anything other than a progressive platform of policies clearly differentiating Labour from the Libservatives.
New Labour has failed, even in its own limited terms, and it is time for the trade unions and the other organisations of the working class to flex their underused muscles and warn that only a radical and progressive opposition will succeed in toppling this government. It's time for Labour to remember its roots, to rebuild its relationship with the labour movement and to abandon the pale impersonation of a government for suburbia that it has adopted for so long. There is a huge fight on cuts and jobs coming and it has to be won. And if Labour hasn't the belly for that fight, it will be fought without, or in spite of, them.
Gone is the opposition to any "like-for-like" Trident replacement. In its stead is a commitment to the continuation of Britain's nuclear weapons status, with just the sop that Trident replacement will be judged on value for money. No matter how much the posh chaps at the top wriggle and writhe, that certainly wasn't the rank-and-file Lib Dem understanding of the position. As far as civil liberties are concerned, ID cards are certainly going and good riddance to them, but new blue-yellow Home Secretary Theresa May's first utterance was "more police on the street and less paperwork for them to fill in." Suggestions of the old "sus" laws spring immediately to mind, with all that implies for black youth in the inner cities. In the new Cabinet, the cracks have started appearing even before the first week has ended. New Business Secretary and Lib Dem economics guru Vince Cable has taken a public slapping down by George Osborne. No sooner had rumours started circulating in the City that Mr Cable was to take responsibility for the reform of Britain's banks than the phone calls were made and Mr Osborne leaped in to quash the rumours. The Department of Business, Innovation and Skills had said that Mr Cable would jointly chair a Cabinet committee which is to determine the shape of the UK banking industry.
But Mr Osborne put an end to all that nonsense, briskly stating that the Treasury was going to remain in charge of banking policy and the financial services sector and that he would be chairing that key committee. That was a short old rise to glory, wasn't it Vince? To cap it all came the coalition's so-called accord on National Insurance. The deal worked out put paid to any pretensions that the Lib Dems might have had to positive policies. Under it, the bosses won't face Labour's proposed rise in National Insurance contributions, but the workers will. Progressive, it ain't. And it's all put into perspective by the suggestion that the coalition will legislate to raise the threshold for a successful no-confidence vote in Parliament from the traditional 50 per cent-plus-one level to a new 55 per cent mark. Not a lot of trust there between the so-called happy partners, it would appear. It's not difficult to discredit this lot. In fact it's rather like shooting fish in a barrel. But it remains to be seen if Labour can ditch its new Labour losers and reform itself into a fighting progressive force to oppose a new generation of warmongering, cutback-obsessed profiteers, this time outside their own ranks. We live in hope. So it would appear that the people have spoken and the Tories and Lib Dems have not listened to a single word they said - as is usual. For it is a completely and absolutely reactionary government that now holds the reins of power. The Lib Dems, who made such a play of being neither Tory nor Labour, but something completely different, have shed their protective coloration and come out in the open for what they are, at least in their national leadership, just plain old closet Tories.
The tens of thousands of people who voted Lib Dem in this, and indeed in many previous elections, just to keep the Tories out, have been discarded and their views ignored by a Lib Dem leadership which, sniffing at a couple of seats at the top table, jettisoned everything that they claimed to believe in to get a taste of it. And in country constituencies, many of which have seen resounding battles between Liberals and Tories and in which the Labour Party regularly comes a poor third, what choice now faces the Lib Dem voter? The answer is, precious little. They can now vote for the yellow Tory or the blue Tory and that isn't going to please them in the slightest. And what of the thousands who voted Lib Dem because that party's policy on Trident was better than anything else on offer? That particular policy hasn't been exactly prominent in the posh chaps coalition's utterances so far and merely including it in a spending review will convince no-one. Then there's Europe. Granted that Tory scepticism on Europe wasn't for the best of motives, how will William Hague sit with the Europhiles in the Lib Dem fold? Again the answer is brief. Not very well. All in all, it would seem that the Lib Dems have just committed a very public act of hara-kiri in the pursuit of a few seats in the second rank of a Tory government. Not that that need concern us very much.
They were always the acceptable face of Toryism anyway, and their pronounced anti-trade unionism will probably be a good fit with the Tories as they nestle into their new blue-yellow brotherhood. And brotherhood it most definitely is. The lack of little except white men in suits - with the exception of Theresa May, whose policies seem to be more anti-women than pro - is the most evident thing about the Cabinet line-up so far. So what does this mean for Labour? Well what it should mean is that the battle for the centre ground, which was always new Labour's flagship strategy, has failed dismally and that should mean the unmourned end of the dismal new Labour project. It should mean a return to policies to benefit working people and an end to the nonsense about being the "natural party of business" and all the class-collaborationist drivel that was spouted during the Blair-Brown era. But the new Labour clique don't give up that easily and there are already signs that they are regrouping and preparing to put up yet another set of candidates for the vacant leadership slot who will dance to the City's tune whenever the bell rings. This quite simply cannot be allowed to happen. With the new unity of declared and previously undeclared Tories that this improbable coalition represents, it would be unthinkable to to try to approach Parliament with anything other than a progressive platform of policies clearly differentiating Labour from the Libservatives.
New Labour has failed, even in its own limited terms, and it is time for the trade unions and the other organisations of the working class to flex their underused muscles and warn that only a radical and progressive opposition will succeed in toppling this government. It's time for Labour to remember its roots, to rebuild its relationship with the labour movement and to abandon the pale impersonation of a government for suburbia that it has adopted for so long. There is a huge fight on cuts and jobs coming and it has to be won. And if Labour hasn't the belly for that fight, it will be fought without, or in spite of, them.
Wednesday, 12 May 2010
Democracy is dying
So that’s what “democracy” means. Every five years or so we vote – and that’s the end of it until the next election. Of course, having a vote is certainly better than not having one. But the hung parliament has led to backroom discussions – and we are all as excluded as the thousands of people who couldn’t get into polling stations after 10pm on election day. The truth is that what we voted for bears little resemblance to what we got. The Tories have far more seats than can be justified by the number of votes they got. In this situation, many, including myself, are calling for a change to the voting system, in the shape of proportional representation. The first-past-the-post electoral system, which allowed Margaret Thatcher and Tony Blair to win election landslides with just two fifths of the vote, is indeed unfair. The last time there was momentum for PR on the left was when the Tory election victories in the 1980s and 1990s looked like they would never end. Then it was out of desperation – a belief that only by changing the voting system could the Tories be beaten. Now it is out of frustration that all the parties are so similar. After the Second World War, the Labour and Tory parties completely dominated British politics, sharing around 96 percent of the popular vote between them. Last week they got just 65 percent between them. Yet parliament is still dominated by the two biggest parties.
That’s why socialists support electoral reform although we need proper debate about what form takes. The strongest argument is that it would help break the dominance of two increasingly unrepresentative big parties, opening up a space for the left – and this is true. Voting systems like multi-seat constituencies or alternative votes and a list system are more democratic than what we’ve got. But the left should not obsess over PR and get trapped in a debate about constitutional reform that in many ways serves the interests of the big parties. For example, Southern Ireland has a “fairer” electoral system – yet politics is dominated by right wing parties and corruption. The Northern Ireland Assembly was structured after enormous care and effort to provide proportionality and parity of esteem, yet it has copper-fastened sectarian division and put the bigots of the DUP in charge. Greece has PR – but this has not prevented the government trying to impose swingeing cuts. In Britain, the radical left is fragmented and electorally very weak. The collapse of the existing party system could even make things worse if the only alternatives come from the far right – racist parties like UKIP and the BNP.
The problem with today’s democracy, and with the dominant view of democracy in our society, is that it is far too limited. To address that we need to go far beyond which type of voting system we want. To make democracy truly relevant to the majority of working people, what is needed is not just political democracy but also economic and social democracy. The capitalist class can live with political democracy alone – the election of parliaments and governments – because the decisive levers of power are not in parliament. Control over society really lies first in the boardrooms of industry and the banks, and second in the permanent institutions of the state, above all the armed forces. The capitalists own and control the former directly, and the latter is bound to it by a thousand economic, social and ideological ties. By these means they can turn parliament into a talking shop and bend governments to their will. We got an insight into the real base of power when the media with demands to reassure “the markets” that the new government would be formed quickly. Marxists call what we have now “bourgeois democracy” – democracy that is based on and enshrines the rule of the capitalist class, the bourgeoisie.
To move beyond this to a system based on real power for the masses, it is necessary to extend democracy to production and work, and then other areas of social life. This means democracy in every factory, call centre, supermarket, school, university, hospital and post office. It means workers’ democracy. That cannot be achieved without overturning capitalist property ownership, law and the state – with a workers’ revolution that will enable the working class to run society. In the full glare of publicity the three main parties jostle and manoeuvre over power. But, in the background, there is a much more fundamental assertion of power.This is, of course, by the famous “markets” that hover threateningly over the politicians as they negotiate. The process began even before the general election took place. At the beginning of last week the Financial Times reported that the London International Financial Futures and Options Exchange was planning to open at 1am that Friday morning, three hours after voting ended. This was to allow traders in gilts—British government bonds—to start buying or selling them as soon as the result of the election began to become clear. It was clear that there was only one outcome that was really acceptable to the bond markets—a majority Tory government that would immediately implement unprecedented cuts in public spending.This announcement amounted to hanging a sword of Damocles over the heads of the British electorate.
When the voters failed to deliver the result the markets had demanded, the latter’s spokespeople were absolutely furious. Sir Martin Sorell, chief executive of the advertising empire WPP, spluttered on Radio Four’s World at One on Friday last week that a hung parliament was the “worst possible” result. Alan Clarke of Paribas pontificated to the Financial Times that “the UK could lose its top triple A credit status because of its failure to deliver a majority government with the authority to tackle the country’s public finances immediately”. Arnaud Mares of Moody’s, one of the three agencies that rate the credit status of states and firms, said he assumed that “the incoming economic team could muster convincing parliamentary support for a fiscal adjustment that was no looser or slower than outlined by all three political parties during their respective election campaigns.” All this reminds us that Jimmy Carville, one of Bill Clinton’s advisers, said in 1993 that, “if there was reincarnation... I want to come back as the bond market. You can intimidate everybody.” Let’s remind ourselves of what’s really going on here. Less than three years ago, the banks, hedge funds, and the like precipitated the biggest financial crash and the worst economic slump since 1929. The ratings agencies were condemned only last week by the French and German governments for their contribution to this disaster by giving triple-A ratings to various financial instruments that are now mostly worthless.
To prevent a repeat of the Great Depression of the 1930s, states increased their spending. They found that money largely by borrowing. This was a good thing because it helped to maintain demand for goods and services. But, as a result, budget deficits have risen. Now all the banks and other financial institutions that were saved thanks to this spending and borrowing are denouncing the rise in deficits as an economic scandal that can only be expunged by the most savage cuts in public services. To get an intimation of the kind of suffering that this will cause, look at Greece. The austerity programme extracted as the price of the country’s “rescue” by the International Monetary Fund and the eurozone will slash wages, pensions, and services. As a result the Greek economy is projected to shrink by 4 percent this year and by 2.6 percent in 2011. In other words, slashing the deficit is economic nonsense. Its only justification is to increase the profits and bolster the power of the very forces that unleashed the crisis in the first place. But, at the same time as demanding austerity, these same forces are scurrying back to the state to rescue them again. Last Sunday’s New York Times anxiously reported: “The fear that began in Athens, raced through Europe and finally shook the stock market in the United States is now affecting the broader global economy.” The European Union emergency package agreed at the weekend is designed particularly to bolster the bond markets. The sacred “markets” that sit in judgement of mere voters and elected politicians are themselves deeply fragile, riven with deep fractures.
That’s why socialists support electoral reform although we need proper debate about what form takes. The strongest argument is that it would help break the dominance of two increasingly unrepresentative big parties, opening up a space for the left – and this is true. Voting systems like multi-seat constituencies or alternative votes and a list system are more democratic than what we’ve got. But the left should not obsess over PR and get trapped in a debate about constitutional reform that in many ways serves the interests of the big parties. For example, Southern Ireland has a “fairer” electoral system – yet politics is dominated by right wing parties and corruption. The Northern Ireland Assembly was structured after enormous care and effort to provide proportionality and parity of esteem, yet it has copper-fastened sectarian division and put the bigots of the DUP in charge. Greece has PR – but this has not prevented the government trying to impose swingeing cuts. In Britain, the radical left is fragmented and electorally very weak. The collapse of the existing party system could even make things worse if the only alternatives come from the far right – racist parties like UKIP and the BNP.
The problem with today’s democracy, and with the dominant view of democracy in our society, is that it is far too limited. To address that we need to go far beyond which type of voting system we want. To make democracy truly relevant to the majority of working people, what is needed is not just political democracy but also economic and social democracy. The capitalist class can live with political democracy alone – the election of parliaments and governments – because the decisive levers of power are not in parliament. Control over society really lies first in the boardrooms of industry and the banks, and second in the permanent institutions of the state, above all the armed forces. The capitalists own and control the former directly, and the latter is bound to it by a thousand economic, social and ideological ties. By these means they can turn parliament into a talking shop and bend governments to their will. We got an insight into the real base of power when the media with demands to reassure “the markets” that the new government would be formed quickly. Marxists call what we have now “bourgeois democracy” – democracy that is based on and enshrines the rule of the capitalist class, the bourgeoisie.
To move beyond this to a system based on real power for the masses, it is necessary to extend democracy to production and work, and then other areas of social life. This means democracy in every factory, call centre, supermarket, school, university, hospital and post office. It means workers’ democracy. That cannot be achieved without overturning capitalist property ownership, law and the state – with a workers’ revolution that will enable the working class to run society. In the full glare of publicity the three main parties jostle and manoeuvre over power. But, in the background, there is a much more fundamental assertion of power.This is, of course, by the famous “markets” that hover threateningly over the politicians as they negotiate. The process began even before the general election took place. At the beginning of last week the Financial Times reported that the London International Financial Futures and Options Exchange was planning to open at 1am that Friday morning, three hours after voting ended. This was to allow traders in gilts—British government bonds—to start buying or selling them as soon as the result of the election began to become clear. It was clear that there was only one outcome that was really acceptable to the bond markets—a majority Tory government that would immediately implement unprecedented cuts in public spending.This announcement amounted to hanging a sword of Damocles over the heads of the British electorate.
When the voters failed to deliver the result the markets had demanded, the latter’s spokespeople were absolutely furious. Sir Martin Sorell, chief executive of the advertising empire WPP, spluttered on Radio Four’s World at One on Friday last week that a hung parliament was the “worst possible” result. Alan Clarke of Paribas pontificated to the Financial Times that “the UK could lose its top triple A credit status because of its failure to deliver a majority government with the authority to tackle the country’s public finances immediately”. Arnaud Mares of Moody’s, one of the three agencies that rate the credit status of states and firms, said he assumed that “the incoming economic team could muster convincing parliamentary support for a fiscal adjustment that was no looser or slower than outlined by all three political parties during their respective election campaigns.” All this reminds us that Jimmy Carville, one of Bill Clinton’s advisers, said in 1993 that, “if there was reincarnation... I want to come back as the bond market. You can intimidate everybody.” Let’s remind ourselves of what’s really going on here. Less than three years ago, the banks, hedge funds, and the like precipitated the biggest financial crash and the worst economic slump since 1929. The ratings agencies were condemned only last week by the French and German governments for their contribution to this disaster by giving triple-A ratings to various financial instruments that are now mostly worthless.
To prevent a repeat of the Great Depression of the 1930s, states increased their spending. They found that money largely by borrowing. This was a good thing because it helped to maintain demand for goods and services. But, as a result, budget deficits have risen. Now all the banks and other financial institutions that were saved thanks to this spending and borrowing are denouncing the rise in deficits as an economic scandal that can only be expunged by the most savage cuts in public services. To get an intimation of the kind of suffering that this will cause, look at Greece. The austerity programme extracted as the price of the country’s “rescue” by the International Monetary Fund and the eurozone will slash wages, pensions, and services. As a result the Greek economy is projected to shrink by 4 percent this year and by 2.6 percent in 2011. In other words, slashing the deficit is economic nonsense. Its only justification is to increase the profits and bolster the power of the very forces that unleashed the crisis in the first place. But, at the same time as demanding austerity, these same forces are scurrying back to the state to rescue them again. Last Sunday’s New York Times anxiously reported: “The fear that began in Athens, raced through Europe and finally shook the stock market in the United States is now affecting the broader global economy.” The European Union emergency package agreed at the weekend is designed particularly to bolster the bond markets. The sacred “markets” that sit in judgement of mere voters and elected politicians are themselves deeply fragile, riven with deep fractures.
Reclaiming the modernity mantle
To talk of "modernisation" is to speak the language of neoliberalism. To be radical and revolutionary, to transform this, reform that - to anyone under 40, these terms evoke the rhetoric of what Peter Mandelson called "the Blair revolution" of 1997 as much as the Russian revolution of 1917. While it couches itself as the very thrusting edge of modernity, neoliberalism harks back to an earlier, allegedly better time, that of neoclassical economics, the system of the workhouse and "self-help." Nonetheless, the actual effects of neoliberal capitalism - the destruction of working-class communities, of entire countries' economies, of the very notion of "society" - are extreme in their effects. Bertolt Brecht once claimed that "communism is not radical. It is capitalism that is radical." Capitalism is the system that makes all that is solid melt into air, the furnace of all traditions - while communism, at least as he imagined it, tries to slam on the brakes and to take control of a relentlessly accelerating, unmanned vehicle. Today, where the remains of the welfare state that have survived the last 30 years are facing even more extreme attacks in order to repay a "deficit" created by the bank bail-outs, the right is again posing as fearless, unsentimental and radical. How should we respond?
For historian Tony Judt, the left must assume its mantle as the new conservatism. He claims that social democracy, as a counter-movement both to laissez-faire capitalism and communism, was a movement against insecurity. As generations got further and further from the Depression and the war, the security of the new social infrastructure was carelessly, thoughtlessly discarded. Politicians like Gordon Brown bizarrely argued that their speculative boom meant "an end to boom and bust." Judt argues that such arguments only seemed credible because, by the 1980s, "few in the West are old enough to know just what it means to watch our world collapse." Yet he implies that we will do, sooner rather than later. Judt says that the welfare state and social democracy are still viable, more so than the seamless fantasies of neoliberalism. But his argument goes further than this. "The 20th century narrative of the progressive state," he writes, "rested precariously upon the conceit that 'we' - reformers, socialists, radicals - had history on our side ... if social democracy has a future, it will be as a social democracy of fear. Rather than seeking to restore a language of optimistic progress, we should begin by reacquainting ourselves with the recent past ... the left, to be quite blunt about it, has something to conserve. It is the right that has inherited the ambitious modernist urge to destroy and innovate in the name of a universal project."
We can leave aside Judt's occasionally glib anti-communism and the conventional amnesia over social democracy's record of grim political conformism. From the murder of Luxemburg and Liebknecht in 1919, to collaboration with colonialism and imperialist wars, to standing idle in the face of Hitler, social democrats have a far less impeccable a moral record than they think they do. His central point is intriguingly counterintuitive - the left should appeal to the memory of the recent past rather than the imagined future. Frankly, it sounds preferable to smashing in the windows of McDonald's. But what does this mean for those who have no memory of social democracy? What use are memories of Nye Bevan to those who can't remember Thatcher? Curiously enough, the main outlet for this yearning for the recent past is not in party politics, which - with some Marxist-inflected exceptions which Judt no doubt disdains, such as Die Linke, France's Nouveau Partie Anticapitaliste or the "pink tide" in Latin America - remains overwhelmingly neoliberal. It can be found instead in much contemporary art and music. Here, over the last few years something often described as a "nostalgia for the future" has obsessed over the lost gains of the post-war settlement, to often brilliant effect. The Ghost Box record label, for instance, shows an obsession with the public modernism of an earlier era - the egalitarian spaces of comprehensive schools and council estates, the unearthly sounds of the BBC's avant-garde Radiophonic Workshop or the minimalist design of cheap Pelican paperbacks.
This isn't at all a phenomenon localised to the "democratic" side of the ex-iron curtain - east European artists have spent much of the last two decades playing with the futuristic dreamworld of "actually existing socialism" as if to reimagine its collective spaces without its petty brutalities. This nostalgia is not for the recent past itself - it is a yearning for the future that it promised. Such artists hold up yesterday's examples of social democratic modernist design as a quiet protest against the crassness and barbarism of postmodern capitalism. But it is also as a reminder that it failed to bring about a new society. The social democratic welfare state was, for many, not so much a settlement as a step on the way to something else - socialism. Yet it seems unlikely that socialism can be rekindled by appealing to past hopes and dreams that few can remember. Nostalgia for lost dreams of the future only has value if it can actually help create a viable path forwards - otherwise, it's English Heritage with spacesuits. The left would do well to remind people that poorer societies than ours spent more on health and welfare than we do and that they considered education a right, not a product. But such lessons from history must be combined with a new modernism of the left. To hand the mantle of "modernity" to the right is to give it a powerful weapon against which halcyon memories, real or imagined, are powerless.
For historian Tony Judt, the left must assume its mantle as the new conservatism. He claims that social democracy, as a counter-movement both to laissez-faire capitalism and communism, was a movement against insecurity. As generations got further and further from the Depression and the war, the security of the new social infrastructure was carelessly, thoughtlessly discarded. Politicians like Gordon Brown bizarrely argued that their speculative boom meant "an end to boom and bust." Judt argues that such arguments only seemed credible because, by the 1980s, "few in the West are old enough to know just what it means to watch our world collapse." Yet he implies that we will do, sooner rather than later. Judt says that the welfare state and social democracy are still viable, more so than the seamless fantasies of neoliberalism. But his argument goes further than this. "The 20th century narrative of the progressive state," he writes, "rested precariously upon the conceit that 'we' - reformers, socialists, radicals - had history on our side ... if social democracy has a future, it will be as a social democracy of fear. Rather than seeking to restore a language of optimistic progress, we should begin by reacquainting ourselves with the recent past ... the left, to be quite blunt about it, has something to conserve. It is the right that has inherited the ambitious modernist urge to destroy and innovate in the name of a universal project."
We can leave aside Judt's occasionally glib anti-communism and the conventional amnesia over social democracy's record of grim political conformism. From the murder of Luxemburg and Liebknecht in 1919, to collaboration with colonialism and imperialist wars, to standing idle in the face of Hitler, social democrats have a far less impeccable a moral record than they think they do. His central point is intriguingly counterintuitive - the left should appeal to the memory of the recent past rather than the imagined future. Frankly, it sounds preferable to smashing in the windows of McDonald's. But what does this mean for those who have no memory of social democracy? What use are memories of Nye Bevan to those who can't remember Thatcher? Curiously enough, the main outlet for this yearning for the recent past is not in party politics, which - with some Marxist-inflected exceptions which Judt no doubt disdains, such as Die Linke, France's Nouveau Partie Anticapitaliste or the "pink tide" in Latin America - remains overwhelmingly neoliberal. It can be found instead in much contemporary art and music. Here, over the last few years something often described as a "nostalgia for the future" has obsessed over the lost gains of the post-war settlement, to often brilliant effect. The Ghost Box record label, for instance, shows an obsession with the public modernism of an earlier era - the egalitarian spaces of comprehensive schools and council estates, the unearthly sounds of the BBC's avant-garde Radiophonic Workshop or the minimalist design of cheap Pelican paperbacks.
This isn't at all a phenomenon localised to the "democratic" side of the ex-iron curtain - east European artists have spent much of the last two decades playing with the futuristic dreamworld of "actually existing socialism" as if to reimagine its collective spaces without its petty brutalities. This nostalgia is not for the recent past itself - it is a yearning for the future that it promised. Such artists hold up yesterday's examples of social democratic modernist design as a quiet protest against the crassness and barbarism of postmodern capitalism. But it is also as a reminder that it failed to bring about a new society. The social democratic welfare state was, for many, not so much a settlement as a step on the way to something else - socialism. Yet it seems unlikely that socialism can be rekindled by appealing to past hopes and dreams that few can remember. Nostalgia for lost dreams of the future only has value if it can actually help create a viable path forwards - otherwise, it's English Heritage with spacesuits. The left would do well to remind people that poorer societies than ours spent more on health and welfare than we do and that they considered education a right, not a product. But such lessons from history must be combined with a new modernism of the left. To hand the mantle of "modernity" to the right is to give it a powerful weapon against which halcyon memories, real or imagined, are powerless.
Monday, 10 May 2010
Betting on bankruptcy?
As speculation swirls as to whether the European Union (EU) or the International Monetary Fund will bail out Greece - a deal that in either case would stipulate crippling austerity measures on Greek workers--questions are emerging about the role that large banks played in making the crisis worse, and then profiting off it. Specifically, the question is whether the banksters hushed up the scale of Greece's debt situation, and then used that inside information to speculate on a potential default. Goldman Sachs is at the center of the scrutiny. Recent reports show that the firm consulted Greece as far back as 2000 on ways to take on more debt--and then hide it by packaging the liabilities into complex securities that were then counted as assets. It's the same kind of financial trickery that contributed to the massive housing boom and bust in the U.S. By hiding its new debts, Greece could circumvent stringent conditions on government budgets that the European Union imposes on member countries. And if that's not bad enough, it seems that Goldman used its insider knowledge of Greece's precarious financial situation to bet on a potential default by Greece. Thanks to its complicated financial maneuvers, the super-bank stands to make a killing in the event Greece defaults or needs to be bailed out. The culprit here is a familiar one. Goldman and other speculators are using credit default swaps as a way of gambling on the possibility that Greece will default--that is, it won't be able to repay its debts on time.
Credit default swaps are a kind of insurance policy that pays off if a particular bond or security defaults. The ostensible purpose of these credit default swaps--a form of the financial instruments that Wall Street calls "derivatives"--is for big investors to obtain financial protection against the possibility that a number of their investments could go bad. The idea is that the firms issuing credit default swaps agree to pay off what the original debtor owed. These swaps were popular during the sub-prime mortgage boom--they were supposed to be insurance for investors who bought securities that were based on large numbers of mortgage loans being paid off on time. It sounds fine in theory. But there are huge problems with credit default swaps. For one thing, the market for swaps is completely unregulated, and they aren't traded on public exchanges. That means a lot of backroom dealing can occur. Moreover, there's no limit on how many credit default swaps can be created and issued. So the market can swell to many times the size of the original assets or investments being "insured." Thus, the possibility that credit default swaps can turn from financial insurance to a gamble by speculators on whether homeowners or companies or whole countries will default on their debts. The lack of regulation allowed the market for credit default swaps to swell to such an enormous size, so that movements in the prices of derivatives can have knock-on effects on the real economy. Since 2000, the market for such swaps has ballooned from $900 billion to more than $36 trillion.
Credit default swaps helped drive the insurer AIG into insolvency. AIG had issued so many swaps backing up securities based on mortgage loans that when the U.S. housing market collapsed, the federal government nationalized AIG and pumped billions of dollars into the company so it could pay off its swaps. Because of all this, complex derivatives can have a massively destabilizing effect on the economy; which prompted super-rich investor Warren Buffet to call them "financial weapons of mass destruction." Importantly, investors don't actually have to own the asset that they are arranging a swap to cover. Thus, swaps can become a tool for gambling on defaults occurring--and can even contribute to defaults taking place. This is the equivalent of everyone else on a street buying fire insurance on one person's house--and then collecting when the house burns down. There's a reason that's illegal in the insurance business--the incentive is for all kinds of people to load up on insurance and then commit arson to collect. But on Wall Street, the same sort of activity applied to financial investments--called naked credit default swaps--is perfectly legal. In the case of Greece, it seems that the speculators have pushed the country closer to default.The growing demand for credit default swaps covering Greece have made it increasingly difficult for the country to raise money with newly issued bonds unless it pays a steep price--if it can find buyers at all. That increases demand for swaps still further, and so on, as the vicious cycle plays out. These practices forced even Federal Reserve Chair Ben Bernanke--hardly a critic of Wall Street--to admit last week, "Using these instruments in a way that intentionally destabilized a company or a country is--is counterproductive."
In Greece's case, the firestorm began last October when the government revealed it had a budget deficit that amounted to 12.7 percent of its gross domestic product. Overall, Greece's debt stands at $300 billion. As a percentage of GDP, that's three times the limit for member nations of the European Union. Concerns about Greece--along with Portugal, Italy and Ireland--have shaken confidence in the EU's currency, the euro, and prompted the EU to pressure Greece to get its books in order. The Greek government promised to cut the gap to 3 percent of GDP by 2012 by freezing public-sector salaries and raising taxes. It raised taxes on fuel earlier this month and has announced a series of further measures, including making Greeks collect receipts for goods and services, like taxi rides, in an effort to fight tax evasion. But more painful cuts are in store.
Greece has until March 16 to convince EU finance ministers and the executive European Commission that the steps it has already announced are enough. It also needs to borrow or refinance $72 billion--with nearly half of that amount due in April and May. The interest rate that Greece would have to pay on bonds that can raise this money is currently being valued at 7 percent--nearly double what Germany has to pay to borrow and 3 percentage points higher than Greece's borrowing costs before this crisis. This is the result of investors betting in various ways against Greek bonds. The problem has become so vexing that the German government is trying to identify speculators in Greek debt to prevent them from profiting from any bailout. Here is where Goldman Sachs' damaging influence comes into play. In 2001, Goldman advised Greece to turn some of its debts into derivatives that could then be counted as assets rather than liabilities, thus hiding the real level of debt. As the New York Times described: "As in the American sub-prime crisis and the implosion of [AIG], financial derivatives played a role in the run-up of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere...Critics say that such deals, because they are not recorded as loans, mislead investors and regulators about the depth of a country's liabilities."
A report in the German newspaper FAZ indicates that AIG sold the credit default swaps on Greece. Ultimately, these transactions enabled Greece to borrow 1 billion euros without adding to its official debt--and according to Bloomberg, Goldman was paid $300 million for arranging the deal. And that was just one deal. According to the New York Times, a legal entity called Aeolos, created in 2001, gave Greece cash upfront in return for pledging future landing fees at the country's airports. A similar deal in 2000, called Ariadne, did something similar with revenue from Greece's national lottery. Similar deals were structured by Goldman and other banks, including from Europe. In late 2009, Goldman came calling again. A team, led by Goldman President Gary Cohn, proposed that Greece push debt from its health care system into the future by creating another set of derivatives. The proposal was rejected. But Goldman wasn't done. It had loaded up on credit default swaps covering a default by Greece. "Wall Street, led here by Goldman and AIG, helped to create the debt, then helped to create the hysteria about possible defaults," Marshall Auerback, a professor of economics at the University of Missouri-Kansas City, wrote. "As [credit default swap] prices rise and Greece's credit rating collapses, the interest rate it must pay on bonds rises--fueling a death spiral because it cannot cut spending or raise taxes sufficiently to reduce its deficit." The overall amount of swaps on Greek debt hit $85 billion in February, up from $38 billion a year ago, according to the Depository Trust and Clearing Corporation, which tracks swaps trading.
As a result of these activities, the Securities and Exchange Commission and Federal Reserve Bank are investigating the role that Goldman played. But given the kid-gloves treatment that Goldman has received--not to mention the extent that it's already been bailed out by the government--it seems highly unlikely that anything will come of these inquiries. As Gretchen Morgenson wrote in the New York Times: "If the past is prologue, we might see a case or two emerge from that inquiry five years from now. The fact is that credit default swaps and other complex derivatives that have proved to be instruments of mass destruction still remain entrenched in our financial system three years after our economy was almost brought to its knees." Worse, it's now clear that the U.S. government will do whatever it takes to bail out financial firms out and keep them solvent, even when their gambling blows up in their faces. This implicit guarantee is only encouraging more reckless behavior. Whilst Goldman cashes in and likely gets off scot-free for helping to cause the crisis, the working class stands to be punished brutally. Over the past month, the Greek government has already announced wage freezes, bonus cuts, tax crackdowns and pension reforms meant to save about $6.7 billion. New measures that could be part of a bailout plan engineered by the EU could include a 2 percent increase in the country's value-added tax--already at 19 percent--higher fuel prices and the possible abolition of one of two additional months of pay received by public-sector workers and employees at many private firms. In other words, the costs of Greece's default are being passed on to workers.
What's more, Germany's involvement in the bailout is creating a race to the bottom across national borders in Europe. "Germany has, in the last 10 years, been through very painful social reform, which means curtailing rights and social benefits, and pushing back the retirement age," Thomas Klau of the European Council on Foreign Relations told the New York Times. "The argument in Germany is 'Why should our workers work to the age of 67 to enable Greeks to retire earlier?'" The harsh measures in Greece will ultimately make things worse. As economists Simon Johnson and Peter Boone wrote, austerity programs in Greece and other countries with high debt loads could "massively curtail demand, lower wages and reduce the public-sector workforce. The last time we saw this kind of precipitate fiscal austerity--when nations were tied to the gold standard--it contributed to the onset of the Great Depression in the 1930s." In addition, privatizations--also done at the behest of financial firms like Goldman--mean that former sources of government revenue, such as toll roads, are no longer in the state's hands--leaving it even less able to pay its public debt. Thus, the pay cuts and austerity programs could end up exacerbating defaults and necessitating another round of reductions--exactly when governments should be running up deficits to hire unemployed workers, pay out benefits and stimulate economic activity. That's the cost of the vicious cycle that the banksters set in motion.
Credit default swaps are a kind of insurance policy that pays off if a particular bond or security defaults. The ostensible purpose of these credit default swaps--a form of the financial instruments that Wall Street calls "derivatives"--is for big investors to obtain financial protection against the possibility that a number of their investments could go bad. The idea is that the firms issuing credit default swaps agree to pay off what the original debtor owed. These swaps were popular during the sub-prime mortgage boom--they were supposed to be insurance for investors who bought securities that were based on large numbers of mortgage loans being paid off on time. It sounds fine in theory. But there are huge problems with credit default swaps. For one thing, the market for swaps is completely unregulated, and they aren't traded on public exchanges. That means a lot of backroom dealing can occur. Moreover, there's no limit on how many credit default swaps can be created and issued. So the market can swell to many times the size of the original assets or investments being "insured." Thus, the possibility that credit default swaps can turn from financial insurance to a gamble by speculators on whether homeowners or companies or whole countries will default on their debts. The lack of regulation allowed the market for credit default swaps to swell to such an enormous size, so that movements in the prices of derivatives can have knock-on effects on the real economy. Since 2000, the market for such swaps has ballooned from $900 billion to more than $36 trillion.
Credit default swaps helped drive the insurer AIG into insolvency. AIG had issued so many swaps backing up securities based on mortgage loans that when the U.S. housing market collapsed, the federal government nationalized AIG and pumped billions of dollars into the company so it could pay off its swaps. Because of all this, complex derivatives can have a massively destabilizing effect on the economy; which prompted super-rich investor Warren Buffet to call them "financial weapons of mass destruction." Importantly, investors don't actually have to own the asset that they are arranging a swap to cover. Thus, swaps can become a tool for gambling on defaults occurring--and can even contribute to defaults taking place. This is the equivalent of everyone else on a street buying fire insurance on one person's house--and then collecting when the house burns down. There's a reason that's illegal in the insurance business--the incentive is for all kinds of people to load up on insurance and then commit arson to collect. But on Wall Street, the same sort of activity applied to financial investments--called naked credit default swaps--is perfectly legal. In the case of Greece, it seems that the speculators have pushed the country closer to default.The growing demand for credit default swaps covering Greece have made it increasingly difficult for the country to raise money with newly issued bonds unless it pays a steep price--if it can find buyers at all. That increases demand for swaps still further, and so on, as the vicious cycle plays out. These practices forced even Federal Reserve Chair Ben Bernanke--hardly a critic of Wall Street--to admit last week, "Using these instruments in a way that intentionally destabilized a company or a country is--is counterproductive."
In Greece's case, the firestorm began last October when the government revealed it had a budget deficit that amounted to 12.7 percent of its gross domestic product. Overall, Greece's debt stands at $300 billion. As a percentage of GDP, that's three times the limit for member nations of the European Union. Concerns about Greece--along with Portugal, Italy and Ireland--have shaken confidence in the EU's currency, the euro, and prompted the EU to pressure Greece to get its books in order. The Greek government promised to cut the gap to 3 percent of GDP by 2012 by freezing public-sector salaries and raising taxes. It raised taxes on fuel earlier this month and has announced a series of further measures, including making Greeks collect receipts for goods and services, like taxi rides, in an effort to fight tax evasion. But more painful cuts are in store.
Greece has until March 16 to convince EU finance ministers and the executive European Commission that the steps it has already announced are enough. It also needs to borrow or refinance $72 billion--with nearly half of that amount due in April and May. The interest rate that Greece would have to pay on bonds that can raise this money is currently being valued at 7 percent--nearly double what Germany has to pay to borrow and 3 percentage points higher than Greece's borrowing costs before this crisis. This is the result of investors betting in various ways against Greek bonds. The problem has become so vexing that the German government is trying to identify speculators in Greek debt to prevent them from profiting from any bailout. Here is where Goldman Sachs' damaging influence comes into play. In 2001, Goldman advised Greece to turn some of its debts into derivatives that could then be counted as assets rather than liabilities, thus hiding the real level of debt. As the New York Times described: "As in the American sub-prime crisis and the implosion of [AIG], financial derivatives played a role in the run-up of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere...Critics say that such deals, because they are not recorded as loans, mislead investors and regulators about the depth of a country's liabilities."
A report in the German newspaper FAZ indicates that AIG sold the credit default swaps on Greece. Ultimately, these transactions enabled Greece to borrow 1 billion euros without adding to its official debt--and according to Bloomberg, Goldman was paid $300 million for arranging the deal. And that was just one deal. According to the New York Times, a legal entity called Aeolos, created in 2001, gave Greece cash upfront in return for pledging future landing fees at the country's airports. A similar deal in 2000, called Ariadne, did something similar with revenue from Greece's national lottery. Similar deals were structured by Goldman and other banks, including from Europe. In late 2009, Goldman came calling again. A team, led by Goldman President Gary Cohn, proposed that Greece push debt from its health care system into the future by creating another set of derivatives. The proposal was rejected. But Goldman wasn't done. It had loaded up on credit default swaps covering a default by Greece. "Wall Street, led here by Goldman and AIG, helped to create the debt, then helped to create the hysteria about possible defaults," Marshall Auerback, a professor of economics at the University of Missouri-Kansas City, wrote. "As [credit default swap] prices rise and Greece's credit rating collapses, the interest rate it must pay on bonds rises--fueling a death spiral because it cannot cut spending or raise taxes sufficiently to reduce its deficit." The overall amount of swaps on Greek debt hit $85 billion in February, up from $38 billion a year ago, according to the Depository Trust and Clearing Corporation, which tracks swaps trading.
As a result of these activities, the Securities and Exchange Commission and Federal Reserve Bank are investigating the role that Goldman played. But given the kid-gloves treatment that Goldman has received--not to mention the extent that it's already been bailed out by the government--it seems highly unlikely that anything will come of these inquiries. As Gretchen Morgenson wrote in the New York Times: "If the past is prologue, we might see a case or two emerge from that inquiry five years from now. The fact is that credit default swaps and other complex derivatives that have proved to be instruments of mass destruction still remain entrenched in our financial system three years after our economy was almost brought to its knees." Worse, it's now clear that the U.S. government will do whatever it takes to bail out financial firms out and keep them solvent, even when their gambling blows up in their faces. This implicit guarantee is only encouraging more reckless behavior. Whilst Goldman cashes in and likely gets off scot-free for helping to cause the crisis, the working class stands to be punished brutally. Over the past month, the Greek government has already announced wage freezes, bonus cuts, tax crackdowns and pension reforms meant to save about $6.7 billion. New measures that could be part of a bailout plan engineered by the EU could include a 2 percent increase in the country's value-added tax--already at 19 percent--higher fuel prices and the possible abolition of one of two additional months of pay received by public-sector workers and employees at many private firms. In other words, the costs of Greece's default are being passed on to workers.
What's more, Germany's involvement in the bailout is creating a race to the bottom across national borders in Europe. "Germany has, in the last 10 years, been through very painful social reform, which means curtailing rights and social benefits, and pushing back the retirement age," Thomas Klau of the European Council on Foreign Relations told the New York Times. "The argument in Germany is 'Why should our workers work to the age of 67 to enable Greeks to retire earlier?'" The harsh measures in Greece will ultimately make things worse. As economists Simon Johnson and Peter Boone wrote, austerity programs in Greece and other countries with high debt loads could "massively curtail demand, lower wages and reduce the public-sector workforce. The last time we saw this kind of precipitate fiscal austerity--when nations were tied to the gold standard--it contributed to the onset of the Great Depression in the 1930s." In addition, privatizations--also done at the behest of financial firms like Goldman--mean that former sources of government revenue, such as toll roads, are no longer in the state's hands--leaving it even less able to pay its public debt. Thus, the pay cuts and austerity programs could end up exacerbating defaults and necessitating another round of reductions--exactly when governments should be running up deficits to hire unemployed workers, pay out benefits and stimulate economic activity. That's the cost of the vicious cycle that the banksters set in motion.
Sunday, 9 May 2010
Stand by Greek workers
As was not only predictable, but inevitable, the people of Greece have turned out onto the streets in their tens and hundreds of thousands to show their resistance to the draconian economic measures being forced on them by the European Union and the ECB. The organised Greek working class has sent and is still sending a strong message to its own government and those "friendly" governments that are supposedly bailing out the Greek economy. And that message is that they will not stand idly by while, under the pretext of friendly assistance to their country, the privatisers and market parasites of the EU strip them of their wages and their pensions, extend their working lives and demolish their public sector. They will not allow a weak, supposedly socialist, government to collapse under pressure applied by a pincer movement of the EU on the one hand and the finance sector on the other. Rather, they will fight on the streets and in the factories and offices to ensure that those who caused the crisis will pay for it and that isn't the Greek working class. In this country, the Greek crisis has produced an outbreak of appallingly bigoted national stereotyping, with the Greek people being variously described as lazy, shiftless and indolent and greedy in the Tory press. Such slanderous and vicious assaults on a people who are the victims, rather than the offenders, are distasteful in the extreme, but illustrate well just how far down the line the capitalist offensive will go to justify its raids on the living standards of ordinary people. We must be very clear on this. The Greek bail-out is no such thing.
It is an orchestrated attempt to turn Greece into a wasteland, a battleground where free-market capitalism can first kill civil society in the country and then pick over the corpse, stealing what it can and wrecking what it can't, a forced auction of a whole country's assets to the highest bidder. And what rankles deepest with the organised working class in Greece is that it is the representatives of capitalism who caused the crisis in the first place, it is those same capitalists who will benefit from the auction of the country and it is that very same class that isn't being asked for any sacrifices to remedy the crisis that they caused. Let's not forget also that the latest episode in the Greek crisis was precipitated by yet another capitalist edifice, the ratings agency structure that downgraded Greek debt to junk status - those same ratings agencies that gave AAA ratings to billions of dollars of residential mortgage-backed securities which precipitated the near collapse of the world economy. The Greek trade unions are quite clear about it. They will never accept the destruction of their country as the price of bailing out a rich class of greedy tax evaders and profiteers. And in their statements over the last few days, they send a warning to workers in other countries. They are right to do so. The measures being forced on them by the EU as the price of support are precisely the same measures being punted by the new Labour, Tory and Lib Dem friends of the ruling class to reduce the national debt level in this country.
This is no coincidence. It is part of the world-wide drive by capitalism to reverse the tide of history, to attack working class living standards and to shrink the edifices built up to benefit ordinary people. The price of a decent life for all is to high for capitalism to accept. The capitalist system has bought itself a continuation long past its sell-by date, but it is no longer prepared to tolerate the carrot. It's now time for the big stick, because they will not tolerate anything eating into their profits and civil society is doing just that. We wish the Greek workers well in their fight and urge everyone to show what solidarity that they can. Our fight will come sooner than we might expect.
It is an orchestrated attempt to turn Greece into a wasteland, a battleground where free-market capitalism can first kill civil society in the country and then pick over the corpse, stealing what it can and wrecking what it can't, a forced auction of a whole country's assets to the highest bidder. And what rankles deepest with the organised working class in Greece is that it is the representatives of capitalism who caused the crisis in the first place, it is those same capitalists who will benefit from the auction of the country and it is that very same class that isn't being asked for any sacrifices to remedy the crisis that they caused. Let's not forget also that the latest episode in the Greek crisis was precipitated by yet another capitalist edifice, the ratings agency structure that downgraded Greek debt to junk status - those same ratings agencies that gave AAA ratings to billions of dollars of residential mortgage-backed securities which precipitated the near collapse of the world economy. The Greek trade unions are quite clear about it. They will never accept the destruction of their country as the price of bailing out a rich class of greedy tax evaders and profiteers. And in their statements over the last few days, they send a warning to workers in other countries. They are right to do so. The measures being forced on them by the EU as the price of support are precisely the same measures being punted by the new Labour, Tory and Lib Dem friends of the ruling class to reduce the national debt level in this country.
This is no coincidence. It is part of the world-wide drive by capitalism to reverse the tide of history, to attack working class living standards and to shrink the edifices built up to benefit ordinary people. The price of a decent life for all is to high for capitalism to accept. The capitalist system has bought itself a continuation long past its sell-by date, but it is no longer prepared to tolerate the carrot. It's now time for the big stick, because they will not tolerate anything eating into their profits and civil society is doing just that. We wish the Greek workers well in their fight and urge everyone to show what solidarity that they can. Our fight will come sooner than we might expect.
Wednesday, 5 May 2010
A better democratic alternative
What could be done with £18.9 million? It could help fund a local hospital or school. But that figure is the limit on political parties for national spending in this general election. Cameron, Clegg or Brown's face on billboards, with a ridiculous message, are funded from the £18.9 million. And this figure is before the individual constituencies spend their money on their candidates. A British general election is nowhere near as expensive - yet - as in America, where a billion dollar election took place in 2008. But all three big parties have tried to get donations from companies. When Blair became leader and later prime minister, New Labour got millions from big business. However, the capitalists no longer believe that discredited New Labour can carry out the size of cuts to services and living standards that they require to make ordinary people pay for their crisis. And although Alan Sugar gave £400,000 recently, most big business funding to New Labour has dried up. The capitalists' hopes that the Tories will be elected were shown by Cameron's party getting the lion's share of donations in the week ending 13 April. They received nearly £1.5 million in a week from just 33 individual 'gifts'! They have also had millions of pounds in recent years from self-declared 'non-domiciled' Lord Ashcroft to spend in marginal constituencies.
The Liberal Democrats only received £20,000 that week but that was before the media-inspired 'Cleggmania' took hold. Increased donations will probably be reflected in the next figures. However, the Lib Dems have been allowed to keep a donation of £2.4 million from convicted fraudster Michael Brown! With the backing from big business cooling, New Labour has relied more on the trade unions to fund their campaign. The government has given workers very little in exchange over 13 years and trade unions have an even more restricted right to strike than in 1997. Yet still the trade unions fund this pro-capitalist party. Recently, the building workers' union Ucatt gave £371,000 and shop workers' union Usdaw donated £266,000 of their members' money. Unite has donated £11 million to Labour since the merged union was founded in 2007. Likewise Unison has given Labour around £1.5 million each year. Socialists do not believe trade unions should be non-political but they should donate money to parties representing their interests. New Labour does not do that. The Trade Unionist and Socialist Coalition (TUSC) has received donations from the RMT transport union but what effect could it have if trade unions funded genuine workers' candidates with millions of pounds? Trade unions must stop funding New Labour and put their resources into building a fighting alternative for workers.
The Liberal Democrats only received £20,000 that week but that was before the media-inspired 'Cleggmania' took hold. Increased donations will probably be reflected in the next figures. However, the Lib Dems have been allowed to keep a donation of £2.4 million from convicted fraudster Michael Brown! With the backing from big business cooling, New Labour has relied more on the trade unions to fund their campaign. The government has given workers very little in exchange over 13 years and trade unions have an even more restricted right to strike than in 1997. Yet still the trade unions fund this pro-capitalist party. Recently, the building workers' union Ucatt gave £371,000 and shop workers' union Usdaw donated £266,000 of their members' money. Unite has donated £11 million to Labour since the merged union was founded in 2007. Likewise Unison has given Labour around £1.5 million each year. Socialists do not believe trade unions should be non-political but they should donate money to parties representing their interests. New Labour does not do that. The Trade Unionist and Socialist Coalition (TUSC) has received donations from the RMT transport union but what effect could it have if trade unions funded genuine workers' candidates with millions of pounds? Trade unions must stop funding New Labour and put their resources into building a fighting alternative for workers.
Monday, 3 May 2010
The trillion dollar crash
“History books will document that the global economy experienced a sudden stop after 15 September. The manner in which Lehman Brothers failed disrupted the trust that underpins the smooth functioning of market economies. As a result, virtually every indicator of economic and financial relationships exhibits characteristics of cardiac arrest”. These words, from one of the Financial Times’s guest columnists, could have come from virtually any of the mainstream economic commentators witnessing the chaos afflicting their system. Things that seemed an outside possibility three months ago, when we sent the previous issue of this journal to press, had become a reality by the time it came back. The credit crunch had turned into possibly the biggest crisis the global financial system had ever seen, leading governments to pour in more than a trillion dollars and partially nationalise banks across Europe and the US to prevent their collapse. But even that failed to halt the crisis, as was shown dramatically when the Bush administration “all but nationalised Citibank, the world’s largest bank” in the last week in November. By that stage the crisis had spread to what mainstream commentators call the “real economy”. There was “a week of living perilously” as “panic seized the markets”. The plague of insolvency sweeping the City had now spread to the High Street, with the demise of Woolworths and MFI, and to the historic core of US manufacturing as car sales slumped. Chrysler lost millions by the day, General Motors said it needed $4 billion immediately to avoid bankruptcy and Ford joined them in asking for a $34 billion government handout. The toll of sackings in every sector began to compare with the haemorrhaging of jobs in the crisis of the early 1980s. And the pain was felt not merely on both sides of the Atlantic, but on both sides of the Pacific too, with thousands of factory closures in south east China and the spread of recession to Japan.
The crisis has produced something else previously unimaginable to most commentators—a phase change in the approach of those who try to manage the system. Until August their approach was still that often described as “neoliberalism”—meaning a revamped version of the laissez faire market “liberalism” that preceded the turn to state intervention three quarters of a century ago. It was always somewhat misleading as a description of capitalist practice, as opposed to capitalist theory. States have intervened to help capitalists deal with economic crises or foreign competition throughout the past three decades. For instance, the US state bailed out Chrysler in 1979-80, the saving and loan (S&L) associations in the mid-1980s and the Long Term Capital Management hedge fund in 1998. But these were treated as exceptions. Now not only have multibillion bailouts become the norm but so too has partial nationalisation. The theory has been abandoned—for the time being at least. The collapse of Lehman Brothers was decisive. Allowing it to fail was meant to signal that market discipline could restore the health of the system by purging financial institutions holding “toxic assets”. Instead it spread the problems of one part of the system to others thousands of miles away, causing huge dents in the balance sheets of banks in Britain, Germany, Belgium, Iceland and the Netherlands as well as the US, and bringing the whole financial system close to collapse. The only way for states to keep the system going was to return to the methods of wholesale state intervention—state capitalism—supposedly jettisoned in the aftermath of the recession of the mid-1970s. “Friedmanism” and “Hayekism” got their marching orders as Keynesianism came back with a vengeance. Such a phase change will have political repercussions. Even more than a theory of economic management, neoliberalism has been an ideological prop for the system, translated into common sense aphorisms such as “No one owes you a living”, “You have to stand on your own feet” or “State intervention never works”. It served to absolve those who ran the state from responsibility for the harm done to people’s lives by capitalism. Now they have very visibly intervened to save the bankers and will find it hard to avoid demands to intervene to do something about the devastation of jobs and homes caused by the crisis.
The crisis has produced something else previously unimaginable to most commentators—a phase change in the approach of those who try to manage the system. Until August their approach was still that often described as “neoliberalism”—meaning a revamped version of the laissez faire market “liberalism” that preceded the turn to state intervention three quarters of a century ago. It was always somewhat misleading as a description of capitalist practice, as opposed to capitalist theory. States have intervened to help capitalists deal with economic crises or foreign competition throughout the past three decades. For instance, the US state bailed out Chrysler in 1979-80, the saving and loan (S&L) associations in the mid-1980s and the Long Term Capital Management hedge fund in 1998. But these were treated as exceptions. Now not only have multibillion bailouts become the norm but so too has partial nationalisation. The theory has been abandoned—for the time being at least. The collapse of Lehman Brothers was decisive. Allowing it to fail was meant to signal that market discipline could restore the health of the system by purging financial institutions holding “toxic assets”. Instead it spread the problems of one part of the system to others thousands of miles away, causing huge dents in the balance sheets of banks in Britain, Germany, Belgium, Iceland and the Netherlands as well as the US, and bringing the whole financial system close to collapse. The only way for states to keep the system going was to return to the methods of wholesale state intervention—state capitalism—supposedly jettisoned in the aftermath of the recession of the mid-1970s. “Friedmanism” and “Hayekism” got their marching orders as Keynesianism came back with a vengeance. Such a phase change will have political repercussions. Even more than a theory of economic management, neoliberalism has been an ideological prop for the system, translated into common sense aphorisms such as “No one owes you a living”, “You have to stand on your own feet” or “State intervention never works”. It served to absolve those who ran the state from responsibility for the harm done to people’s lives by capitalism. Now they have very visibly intervened to save the bankers and will find it hard to avoid demands to intervene to do something about the devastation of jobs and homes caused by the crisis.
Robbed of housing by business bandits
A quarter of all households - in owned or rented accommodation - say that worry over housing costs is causing them stress or depression, says a survey by housing charity Shelter. Working class people are being asked to pay the bill for bailing out the banks. But the banks still behave the same way. Last year they repossessed 46,000 homes of people in financial difficulty - a 14 year high - and that figure is projected to reach 53,000 this year. The banks claimed that they would obey 'new protocols' but subprime lenders still charge exorbitant fees to borrowers who fall into arrears, flouting Financial Services Agency guidelines. Shelter's magazine 'Roof' reports that one borrower was taken to court by Southern Pacific, her lender, for arrears of almost £2,000. Three quarters of that arrears was charges that a judge ruled to be unfairly levied. Fees, including over £1,000 for 'litigation management' and £250 for 'arrears management', were imposed even though the borrower was never more than two months behind on her payments. The banks should be fully nationalised and run democratically to support a housing plan based on need. They should stop paying massive bonuses and offer cheap loans to support a programme of building good quality homes, upgrading existing stock and a massive expansion of council housing. At the last count, the government's mortgage rescue scheme had helped just six people! It should be massively expanded to stop banks creating more homelessness. If you can no longer pay the mortgage you should be able to stay put as a tenant.
All three main capitalist parties advocate market solutions in housing even though this is what led to the financial crisis. Housebuilding is now at the lowest peacetime level since 1922. Shelter says that 98% of councils are failing to deliver enough homes to meet need. They comment: ""With 1.8 million households on housing waiting lists and more than one million children living in overcrowded homes it is unacceptable that only eight councils have produced enough homes to meet social need." The main parties still see home ownership and the market as the way forward. But the average age of a first time buyer is now 37. Young people are priced out - the image of home ownership starting a smooth escalator of increasing wealth and better housing is a mirage. Given the lack of new social housing (and the need to improve existing social housing) and the problems of the private rented sector, this causes massive discontent. Between 1997 and 2007, house prices rose 200% although earnings went up just 52% - that was part of the property bubble that led to the credit crunch. House price rises create no new real wealth, but redistribute wealth to people who own property from those that don't. Some people exploit this even further by owning property they can trade (ie not just your own home). The more you own, the more you make. Some blog sites reflect the problems of millions whose aspirations are frustrated by the housing market. The 'Renter girl' blog describes life surviving in insecure and often badly managed private rented accommodation. None of the big parties can respond to this.
The 'Priced out' website campaigns for the 1.2 million first time buyers "denied their own home because government policy gives billions in tax breaks to property speculators" and talks of improving tenants' rights for the "87% of renters who are, predominantly, priced out first time buyers, to improve their security of housing." Socialists call for improved tenants' rights and proper regulation of the private rented sector as well as a clampdown on tax perks that drive up house prices. We oppose cuts in legal aid that make it harder for tenants to defend themselves against bad landlords. We also support calls for tighter regulation of the banks, but the real answer is to fully nationalise them and run them for people not profit. Trade unions need to take up this issue which will hit their younger members. It is only possible to do so by opposing New Labour. In this election, that means supporting Trade Unionist and Socialist Coalition candidates where they are standing. It will mean building a mass movement against the profit-making banks, against public sector cuts and for a housing policy based on need not profit or speculation. Barking and Dagenham borough has London's lowest house prices. But you still need a £60,000 annual household income and a deposit of around £20,000 to buy a family home, putting buying far out of reach of most people locally. Since 1980 the council has sold off 17,523 council houses and its housing stock is now half what it was 30 years ago. A local Labour MP, Jon Cruddas, identifies a need for more housing in Inside Housing magazine (5 March). But Cruddas offers as his basis for hope Barking Riverside, part of the Thames Gateway development which will create 11,000 homes at a cost of £3.1 billion.
Most homes will be for sale, and 14% of these will be "affordable", which just means a little cheaper than the market rate. Many people will stretch themselves to get one because of the lack of alternatives, but many locals will find this out of reach. The remaining 'social housing' will not be council controlled and will have less security of tenure than council housing. Much of the 'for sale' housing could end up in private landlords' hands. No doubt banks, landlords and Bellway Homes (the major builder involved) are pleased. Working class people may be less hopeful! Another local Labour MP, Margaret Hodge, who faces an electoral challenge from the leader of the far-right racist BNP, acknowledges that more houses should have been built. The local council has commissioned just 63 new properties. But she says: "There won't be a return to the 1960s and 70s when we saw mass building of council houses." Jon Cruddas doesn't put a different position. Many people struggling to find a decent home, or make rent or mortgage payments, may drift into despair and groups such as the BNP feed on despair. The workers' movement must pose the alternative of fundamental socialist change that can meet people's clear need for affordable public-sector housing.
All three main capitalist parties advocate market solutions in housing even though this is what led to the financial crisis. Housebuilding is now at the lowest peacetime level since 1922. Shelter says that 98% of councils are failing to deliver enough homes to meet need. They comment: ""With 1.8 million households on housing waiting lists and more than one million children living in overcrowded homes it is unacceptable that only eight councils have produced enough homes to meet social need." The main parties still see home ownership and the market as the way forward. But the average age of a first time buyer is now 37. Young people are priced out - the image of home ownership starting a smooth escalator of increasing wealth and better housing is a mirage. Given the lack of new social housing (and the need to improve existing social housing) and the problems of the private rented sector, this causes massive discontent. Between 1997 and 2007, house prices rose 200% although earnings went up just 52% - that was part of the property bubble that led to the credit crunch. House price rises create no new real wealth, but redistribute wealth to people who own property from those that don't. Some people exploit this even further by owning property they can trade (ie not just your own home). The more you own, the more you make. Some blog sites reflect the problems of millions whose aspirations are frustrated by the housing market. The 'Renter girl' blog describes life surviving in insecure and often badly managed private rented accommodation. None of the big parties can respond to this.
The 'Priced out' website campaigns for the 1.2 million first time buyers "denied their own home because government policy gives billions in tax breaks to property speculators" and talks of improving tenants' rights for the "87% of renters who are, predominantly, priced out first time buyers, to improve their security of housing." Socialists call for improved tenants' rights and proper regulation of the private rented sector as well as a clampdown on tax perks that drive up house prices. We oppose cuts in legal aid that make it harder for tenants to defend themselves against bad landlords. We also support calls for tighter regulation of the banks, but the real answer is to fully nationalise them and run them for people not profit. Trade unions need to take up this issue which will hit their younger members. It is only possible to do so by opposing New Labour. In this election, that means supporting Trade Unionist and Socialist Coalition candidates where they are standing. It will mean building a mass movement against the profit-making banks, against public sector cuts and for a housing policy based on need not profit or speculation. Barking and Dagenham borough has London's lowest house prices. But you still need a £60,000 annual household income and a deposit of around £20,000 to buy a family home, putting buying far out of reach of most people locally. Since 1980 the council has sold off 17,523 council houses and its housing stock is now half what it was 30 years ago. A local Labour MP, Jon Cruddas, identifies a need for more housing in Inside Housing magazine (5 March). But Cruddas offers as his basis for hope Barking Riverside, part of the Thames Gateway development which will create 11,000 homes at a cost of £3.1 billion.
Most homes will be for sale, and 14% of these will be "affordable", which just means a little cheaper than the market rate. Many people will stretch themselves to get one because of the lack of alternatives, but many locals will find this out of reach. The remaining 'social housing' will not be council controlled and will have less security of tenure than council housing. Much of the 'for sale' housing could end up in private landlords' hands. No doubt banks, landlords and Bellway Homes (the major builder involved) are pleased. Working class people may be less hopeful! Another local Labour MP, Margaret Hodge, who faces an electoral challenge from the leader of the far-right racist BNP, acknowledges that more houses should have been built. The local council has commissioned just 63 new properties. But she says: "There won't be a return to the 1960s and 70s when we saw mass building of council houses." Jon Cruddas doesn't put a different position. Many people struggling to find a decent home, or make rent or mortgage payments, may drift into despair and groups such as the BNP feed on despair. The workers' movement must pose the alternative of fundamental socialist change that can meet people's clear need for affordable public-sector housing.
Breaking the bankers' hold
Gordon Brown is right to say that the last few days of the election campaign will be crucial, but Labour's tactics laid down by Peter Mandelson risk turning off already alienated working-class voters. Mandelson insisted that Brown would be lauded as tough and up for a fight and that party campaigners would put more emphasis on the tough decisions he has taken. The millions of working people who have edged away from Labour since 1997 are in no doubt that Brown is capable of showing how tough he can be against people like them. That's partly the reason why Labour Party membership has plummeted and why Labour's vote has continually declined in every election since those heady days 13 years ago. Billionaire media leader writers may well be impressed by the government's refusal to abolish anti-trade union legislation, its rejection of the case to jail bosses responsible for safety lapses that kill workers and its siding with employers in industrial disputes. But these people are not the bedrock of Labour's electorate. Its bedrock has always been the workforce in both private and public industry and the government has let the entire working class down. It has allowed 1.5 million jobs in manufacturing to haemorrhage since 1997 and it is now lining up civil servants and local authority staff, among other public-service workers, to bear the brunt of the crisis caused by the greed and adventurism of finance-sector fat cats.
Labour is being described by Tory-Liberal politicians and the City bankers as profligate for increasing public spending and running up a huge deficit, ignoring the fact that these were in direct response to a crisis of the bankers' making. Unfortunately, Labour remains in thrall to the finance industry, allowing it to rebuild its reserves and profit margins on the basis of readily available pump priming from the Treasury. Those parasites who gorge on the banking sector are never satisfied with the levels of their unearned wealth and have caused Barclays shares to dip by 6.4 per cent despite the bank announcing a 47 per cent rise in quarterly pre-tax profits of £1.82 billion. When Alistair Darling stepped in just over a year ago, he didn't simply bail out a number of banks. He rescued the entire finance system. The bankers took it as their due and are still dispensing not so much advice as orders, which the government is following rather than having taken the banking sector under public control. Such decisive action would have enthused much of the electorate and sent a message that bankers' gambling debts would not be met by low-paid workers and pensioners. Even now it is possible for Brown and Darling to mark a sharper distinction between the immediate and savage cuts proposed by the Tories' Bullingdon Club boys and Labour's approach. The resistance to the international bankers' agenda shown by workers in Greece, Portugal and Spain indicates that the current crisis will not be short-lived. If the Tories are returned to office, with or without the Liberal Democrats, they will not delay before laying waste public services and the welfare state. It is essential to prevent this happening and to then mobilise the entire labour movement to learn how Labour and the unions fell for the neoliberal line and how to chart another more progressive direction in future.
Labour is being described by Tory-Liberal politicians and the City bankers as profligate for increasing public spending and running up a huge deficit, ignoring the fact that these were in direct response to a crisis of the bankers' making. Unfortunately, Labour remains in thrall to the finance industry, allowing it to rebuild its reserves and profit margins on the basis of readily available pump priming from the Treasury. Those parasites who gorge on the banking sector are never satisfied with the levels of their unearned wealth and have caused Barclays shares to dip by 6.4 per cent despite the bank announcing a 47 per cent rise in quarterly pre-tax profits of £1.82 billion. When Alistair Darling stepped in just over a year ago, he didn't simply bail out a number of banks. He rescued the entire finance system. The bankers took it as their due and are still dispensing not so much advice as orders, which the government is following rather than having taken the banking sector under public control. Such decisive action would have enthused much of the electorate and sent a message that bankers' gambling debts would not be met by low-paid workers and pensioners. Even now it is possible for Brown and Darling to mark a sharper distinction between the immediate and savage cuts proposed by the Tories' Bullingdon Club boys and Labour's approach. The resistance to the international bankers' agenda shown by workers in Greece, Portugal and Spain indicates that the current crisis will not be short-lived. If the Tories are returned to office, with or without the Liberal Democrats, they will not delay before laying waste public services and the welfare state. It is essential to prevent this happening and to then mobilise the entire labour movement to learn how Labour and the unions fell for the neoliberal line and how to chart another more progressive direction in future.
Saturday, 1 May 2010
Wake me up when the crisis is over
The state of the economy will continue to mould British politics after the election. Economics will constrain the room for manoeuvre of the political elite, pressing them to drive through a series of attacks. It will also create the terrain on which workers will have to organise and resist. The prospects for the system are, then, of keen interest to those who wish to challenge it. After almost three years of chaos, what lies in store? It is worth reminding ourselves of the enormity of the crisis that has unfolded around us. It is estimated that lost output, the goods and services that went unproduced during the crisis, amounts to $4 trillion - enough dollar bills to stretch to the sun and back twice over. That sum would also be sufficient to provide basic education, healthcare, sanitation and nutrition to all those on the planet currently denied them, and to do so for 30 years. According to Andrew Haldane, the Bank of England's director of financial stability (an oxymoron if ever there was one), the permanent long-term impact of the crisis could magnify these losses to anywhere from $60 trillion to $200 trillion. One of the oldest and most powerful arguments for socialism is the gap between what the system ought to make possible, the capacity of collective human labour to enrich the lives of those who undertake it, and the miserable reality of what it actually delivers. And every sign is that the impact of the crisis, which has already mutilated nations, tortured millions with hunger and sparked both instability and resistance, will continue to be felt.
A year ago economists Barry Eichengreen and Kevin O'Rourke published research showing that the "Great Recession", as it has been dubbed, was closely tracking the trajectory of the Great Depression that began in 1929. But history seldom repeats itself. In a recent update to their original paper they show how the global economy has begun to diverge from the path of that earlier meltdown. The action of states across the globe, which engineered a series of financial bailouts, stimulus packages and liquidity injections on a scale hitherto unseen, is largely responsible for preventing a 1930s-style slump. But this intervention has come at a great price. Socialising the risks associated with the crisis, at the very moment when tax revenues were spiralling down, has replaced the danger of a private-sector meltdown with that of entire nations becoming bankrupt. Events in Greece this spring are the clearest example. After months of insisting that it would not bail out the heavily indebted Greek economy, the German government, along with the other eurozone countries and in partnership with the International Monetary Fund (IMF), agreed to do just that. The bailout comes with strings attached - Greek workers, a fifth of whom already live below the poverty line, will now face a structural adjustment programme as savage as that imposed on many Third World countries in the past. In return the IMF and eurozone government will guarantee that Greece can, in the short term, roll over its debt. Even this may well merely postpone the inevitable as markets continue to bet on an eventual default.
But even if Greece does avoid bankruptcy, this is not the end of the matter. Several financial columnists likened the bailout to that of Bear Stearns, which in spring 2008 became an early casualty of the crisis on Wall Street. Few people now remember Bear Stearns, but most do remember the next big Wall Street bank to collapse - Lehman Brothers - and the meltdown that followed. Speculators are already looking for the next domino set to topple after Greece. It might be one of the other weak eurozone countries, with Portugal tipped as the most likely, but it might well be Britain. As the Guardian economics editor Larry Elliott writes, "Greece's...projected budget deficit in 2010 is lower than those for the US, Ireland and, of course, Britain. The UK is helped by the long maturity of its existing debt, which removes some of the short-term pressures on government bonds, and by its floating exchange rate, which allows the currency to take the strain during a financial crisis. On the other hand, there are plenty of off-balance-sheet liabilities, a record peacetime budget deficit, a dysfunctional financial system and a grotesquely unbalanced economy. "The assumption is that the US is too big to fail because the dollar is the world's reserve currency... The assumption is that Japan is too big to fail because a debt-to-GDP ratio in excess of 200 percent can always be financed by high levels of domestic savings. The assumption is that Britain is too big to fail because, well, just because those sort of things don't happen here." As Elliott points out, this is hardly reassuring.
All this is happening despite the fact that the major economies are technically out of recession. The recovery can be characterised in three words: "weak", "fragile" and "uncertain". The recovery is weak because the crisis, in spite of its severity, has not resolved the underlying problems capitalism faces. The conditions for the crisis were created by three decades of sustained low profitability. This argument, often made by Marxist commentators, occasionally finds an echo in the mainstream press. So a recent column in the Financial Times lamented the collapse of the "return on capital", roughly equivalent to what Karl Marx called the "rate of profit". It pointed out that after the Second World War this held up at about 15 percent in the US. By the 1980s it was 10 percent, and today it is just 5 percent. If these figures are to be trusted, the system has gone from a situation in which US firms could double the scale of their investment in just six years to one in which it would take two decades - hardly a great advert for the dynamism of global capitalism. Marx placed just such a long-term decline in the rate of profit at the centre of his theory of crisis. He also argued that profitability could be restored by crisis itself, through what he called "the annihilation of a great part of the capital". During a recession some companies fail and are bought up by rivals, and others have to sell off parts of their business or dump their stock on the market to meet their obligations. Those companies that survive can take advantage of this, grabbing assets at a fraction of their real value and putting them to highly profitable use in the recovery that follows. Depressed wages and high unemployment also allow capitalists to squeeze more out of workers. A process of "creative destruction" may lead to a boom following a slump.
But this is not some automatic process that pushes the economy back towards some natural equilibrium. The post-war boom followed only after the prolonged horror of the 1930s slump and the destruction of the Second World War, which also forced states to intervene to reorganise whole national economies. The current crisis has led to a surge in firms failing. In the US the asset value of publicly listed companies filing for bankruptcy in 2008 and 2009 was greater than the total for the preceding 28 years. However, so far the current crisis has not been long enough or deep enough to clear out the system and pave the way for a boom like that of the 1950s and 1960s. Some of the big multinationals have been able to survive by reducing their output for a time in an attempt to ride out the storm. And, more importantly, states have intervened to keep failing businesses afloat, for instance by rescuing car manufacturers Chrysler and General Motors along with large chunks of the banking system. Eichengreen and O'Rourke contrast the length of the Great Recession with that of the Great Depression: "Global industrial production now shows clear signs of recovering. This is a sharp divergence from experience in the Great Depression, when the decline in industrial production continued fully for three years." Paradoxically, staving off a catastrophic slump may have simply guaranteed that problems linger on, ensuring that recovery remains weak. The recovery is also uneven.
Initial estimates suggested that British growth slowed to just 0.2 percent in the first quarter of 2010. The US is growing faster, and is also faring better than Germany and Japan, which are more export-oriented and have suffered more from the decline in world trade than from the initial financial meltdown. China was also hit by falling demand for its exports but has continued to boom due to a massive state-sponsored domestic investment programme. This has revived the fortunes of some of the developing economies that supply it with raw materials. But even in China there are fears that growth is unstable, with widespread concerns about an emerging property bubble, a glut of lending raising the prospect of colossal levels of bad debt, and the danger that too much is being produced for still-limited markets. The weakness of the global recovery means that workers will continue to suffer. In some countries this takes the form of high unemployment and attacks on wages, as in the US, Spain and Ireland. In others, such as Germany and Japan, where unemployment has not risen as fast, companies have sought to hold on to workers but have cut pay rates, reduced hours or shifted workers onto part-time contracts. Britain lies somewhere between the two extremes. Wages have been held below the rate of inflation and unemployment has increased significantly. In April the jobless rate hit 8 percent, the highest it has been in 14 years. This figure excludes the growing number of people no longer looking for employment, which currently stands at over 21 percent of those of working age. In addition, the number of people working part-time because they cannot get full-time work is at its highest level since 1992.
Unemployment and underemployment will persist well into any recovery. A recent IMF report argues that employment falls further and takes longer to recover during recessions that have a significant financial component. The report indicates that it could take a year and a half from the end of the recession for any substantial improvement, assuming that the recovery continues. Accompanying the weakness of the recovery is its fragility. This is a product of changes to capitalism that took place during the past few decades. Faced with continued low profitability, capitalists began to shift their investment towards the financial system, where they hoped to be able to grab short-term paper profits. This created a series of bubbles as asset prices boomed, from the dotcom bubble of the 1990s through to the subprime mortgage and commodities bubbles that had swollen to huge proportions when the crash came. These bubbles flattered economies with the impression of dynamism and kept the system ploughing forwards. Underlying them was a "mega-bubble" of credit, fuelled by low interest rates and excess savings seeking a profitable outlet.
Martin Wolf of the Financial Times, one of the ruling class's most brutally honest spokespeople, argues, "Quite simply, the financial system has become bigger and riskier. The UK case is dramatic, with banking assets jumping from 50 percent of GDP to more than 550 percent over the past four decades... A large part of the financial system seems to be a machine to transfer income and wealth from outside to inside, while increasing the fragility of the economy as a whole." He concludes that the financial system produced "illusory gains on the way up and real pain on the way down". The excesses of the bubble era now emerging are astonishing. April saw the beginning of a series of litigations against those who created the arcane financial instruments traded in the run-up to the crash. Goldman Sachs stands accused of repackaging loans, including what it knew to be toxic debts, in an asset it created for the Paulson hedge fund. Paulson could then bet on its failure, while unsuspecting buyers lost out. So too did companies who insured the investment, including RBS and AIG, in which the British and US governments respectively are now the majority shareholders. Goldman Sachs denies the allegations, but whatever the outcome of the case it sheds light on the increasingly bizarre and bloated world of finance. There is little evidence that the crash has "tamed" finance, as some left-leaning economists had hoped. Indeed, all the features of the bubble era are returning. Financial profits are growing far faster than profits in the wider economy; the housing market, which tumbled with the recession, is shooting back up, as are oil prices; speculation on exchange rates continues; banking bonuses are back. The super-rich are also returning to the conspicuous consumption to which they are accustomed, as evidenced by the 33 percent growth in sales of Dom Pérignon and similar high-end champagnes in the first three months of 2010.
Financialisation means each new problem that emerges is amplified as panic spreads rapidly through the system. This is what happened just before Christmas with the Dubai property crash and then in spring with events in Greece. All of this lends an additional fragility to the already weak recovery.
Finally, any recovery is and will remain uncertain. State interventions replaced private borrowing and investment with mountains of public debt, and falling tax revenues made it difficult to recover the money spent. Now governments everywhere face a dilemma. Do they cut back to pay off their debts, risking a "double-dip recession" as the stimulus is withdrawn? Or do they continue spending and risk a run on their currencies, as the eurozone experienced amid fears of a Greek default? Chris Giles writes in the Financial Times, "Never has a UK government borrowed more in peacetime than Labour did last year, when it was in the red to the tune of 11.8 percent of national income. Never has a government had to obtain £1 for every four it spends from investors rather than tax payers. And never has a government borrowed £6,000 annually, as in 2010-11, on behalf of every household, with a further £25,000 expected over the course of the coming parliament." Even if Britain avoids a complete loss of faith on the part of its financiers, the political elite is committed to an assault on the public sector the likes of which we have never seen. The general election result was unknown as Socialist Review went to press but the consensus between the parties in the run-up to polling day was greater than the differences. As Giles argues, "In terms of defined spending cuts, each [party] has outlined less than £10 billion worth - far less than the minimum £40 billion needed in the first three years." In order to appease the City of London real government spending will have to be slashed by about one fifth, he concludes.
Similarly, the Chartered Institute of Personnel and Development, a body representing human resources professionals, predicted "a 10 percent reduction in the 5.8 million core public sector workforce...the likelihood of 500,000 jobs being shed in the next five years dwarfing the figures the parties have been prepared to acknowledge".
The scale of the challenge facing the left can seem paralysing. But it is important to remember that crisis also weakens and divides our rulers. Capitalism has been discredited in the eyes of many who live under it as once solid certainties have melted into air. The crisis has sharpened the divisions within the ruling class, setting its representatives against each other as they each seek to find ways to preserve their profits at the expense of their rivals. Different groups of capitalists are coming into conflict on a global and national level, further fracturing the ideological consensuses of our age and creating cracks that the left can exploit by putting forward its own arguments. The political elite who claim to preside over the system have suffered blow after blow to their legitimacy. Any incoming government will be a weak one, lacking real hegemony over those it seeks to rule. But it will be under pressure from the wider ruling class to drive through attacks on an unprecedented scale, whether it does so enthusiastically or reluctantly. This is an explosive combination, and in this context there will be further struggles, both local eruptions and national disputes. Politics will be crucial to these battles. For instance, in order to break out of the commonsense view that some part of the public sector has to be slashed, it will be necessary to argue that there are other ways of raising the money - through cutting the budget for the Trident nuclear programme, for example, or closing tax loopholes exploited by the rich, or by increasing the top rate of income tax. That means challenging the agenda of the mainstream political parties.
Politics can also bridge the gap between local campaigns to defend public services and struggles by groups of workers in these services who also wish to defend their wages and their jobs. The Right to Work initiative, set to hold an emergency conference on 22 May, can begin to draw together a network of solidarity and resistance, strengthening each of the different battles and maintaining a permanent relationship between all those who want to fight back. At the heart of the resistance, we also need a growing core of revolutionaries committed to a socialist alternative to capitalism and capable of arguing for a way forward for the working class movement as a whole. The situation in the coming months can change very rapidly indeed. To rise to the challenge, the left must be able to match the pace of events.
A year ago economists Barry Eichengreen and Kevin O'Rourke published research showing that the "Great Recession", as it has been dubbed, was closely tracking the trajectory of the Great Depression that began in 1929. But history seldom repeats itself. In a recent update to their original paper they show how the global economy has begun to diverge from the path of that earlier meltdown. The action of states across the globe, which engineered a series of financial bailouts, stimulus packages and liquidity injections on a scale hitherto unseen, is largely responsible for preventing a 1930s-style slump. But this intervention has come at a great price. Socialising the risks associated with the crisis, at the very moment when tax revenues were spiralling down, has replaced the danger of a private-sector meltdown with that of entire nations becoming bankrupt. Events in Greece this spring are the clearest example. After months of insisting that it would not bail out the heavily indebted Greek economy, the German government, along with the other eurozone countries and in partnership with the International Monetary Fund (IMF), agreed to do just that. The bailout comes with strings attached - Greek workers, a fifth of whom already live below the poverty line, will now face a structural adjustment programme as savage as that imposed on many Third World countries in the past. In return the IMF and eurozone government will guarantee that Greece can, in the short term, roll over its debt. Even this may well merely postpone the inevitable as markets continue to bet on an eventual default.
But even if Greece does avoid bankruptcy, this is not the end of the matter. Several financial columnists likened the bailout to that of Bear Stearns, which in spring 2008 became an early casualty of the crisis on Wall Street. Few people now remember Bear Stearns, but most do remember the next big Wall Street bank to collapse - Lehman Brothers - and the meltdown that followed. Speculators are already looking for the next domino set to topple after Greece. It might be one of the other weak eurozone countries, with Portugal tipped as the most likely, but it might well be Britain. As the Guardian economics editor Larry Elliott writes, "Greece's...projected budget deficit in 2010 is lower than those for the US, Ireland and, of course, Britain. The UK is helped by the long maturity of its existing debt, which removes some of the short-term pressures on government bonds, and by its floating exchange rate, which allows the currency to take the strain during a financial crisis. On the other hand, there are plenty of off-balance-sheet liabilities, a record peacetime budget deficit, a dysfunctional financial system and a grotesquely unbalanced economy. "The assumption is that the US is too big to fail because the dollar is the world's reserve currency... The assumption is that Japan is too big to fail because a debt-to-GDP ratio in excess of 200 percent can always be financed by high levels of domestic savings. The assumption is that Britain is too big to fail because, well, just because those sort of things don't happen here." As Elliott points out, this is hardly reassuring.
All this is happening despite the fact that the major economies are technically out of recession. The recovery can be characterised in three words: "weak", "fragile" and "uncertain". The recovery is weak because the crisis, in spite of its severity, has not resolved the underlying problems capitalism faces. The conditions for the crisis were created by three decades of sustained low profitability. This argument, often made by Marxist commentators, occasionally finds an echo in the mainstream press. So a recent column in the Financial Times lamented the collapse of the "return on capital", roughly equivalent to what Karl Marx called the "rate of profit". It pointed out that after the Second World War this held up at about 15 percent in the US. By the 1980s it was 10 percent, and today it is just 5 percent. If these figures are to be trusted, the system has gone from a situation in which US firms could double the scale of their investment in just six years to one in which it would take two decades - hardly a great advert for the dynamism of global capitalism. Marx placed just such a long-term decline in the rate of profit at the centre of his theory of crisis. He also argued that profitability could be restored by crisis itself, through what he called "the annihilation of a great part of the capital". During a recession some companies fail and are bought up by rivals, and others have to sell off parts of their business or dump their stock on the market to meet their obligations. Those companies that survive can take advantage of this, grabbing assets at a fraction of their real value and putting them to highly profitable use in the recovery that follows. Depressed wages and high unemployment also allow capitalists to squeeze more out of workers. A process of "creative destruction" may lead to a boom following a slump.
But this is not some automatic process that pushes the economy back towards some natural equilibrium. The post-war boom followed only after the prolonged horror of the 1930s slump and the destruction of the Second World War, which also forced states to intervene to reorganise whole national economies. The current crisis has led to a surge in firms failing. In the US the asset value of publicly listed companies filing for bankruptcy in 2008 and 2009 was greater than the total for the preceding 28 years. However, so far the current crisis has not been long enough or deep enough to clear out the system and pave the way for a boom like that of the 1950s and 1960s. Some of the big multinationals have been able to survive by reducing their output for a time in an attempt to ride out the storm. And, more importantly, states have intervened to keep failing businesses afloat, for instance by rescuing car manufacturers Chrysler and General Motors along with large chunks of the banking system. Eichengreen and O'Rourke contrast the length of the Great Recession with that of the Great Depression: "Global industrial production now shows clear signs of recovering. This is a sharp divergence from experience in the Great Depression, when the decline in industrial production continued fully for three years." Paradoxically, staving off a catastrophic slump may have simply guaranteed that problems linger on, ensuring that recovery remains weak. The recovery is also uneven.
Initial estimates suggested that British growth slowed to just 0.2 percent in the first quarter of 2010. The US is growing faster, and is also faring better than Germany and Japan, which are more export-oriented and have suffered more from the decline in world trade than from the initial financial meltdown. China was also hit by falling demand for its exports but has continued to boom due to a massive state-sponsored domestic investment programme. This has revived the fortunes of some of the developing economies that supply it with raw materials. But even in China there are fears that growth is unstable, with widespread concerns about an emerging property bubble, a glut of lending raising the prospect of colossal levels of bad debt, and the danger that too much is being produced for still-limited markets. The weakness of the global recovery means that workers will continue to suffer. In some countries this takes the form of high unemployment and attacks on wages, as in the US, Spain and Ireland. In others, such as Germany and Japan, where unemployment has not risen as fast, companies have sought to hold on to workers but have cut pay rates, reduced hours or shifted workers onto part-time contracts. Britain lies somewhere between the two extremes. Wages have been held below the rate of inflation and unemployment has increased significantly. In April the jobless rate hit 8 percent, the highest it has been in 14 years. This figure excludes the growing number of people no longer looking for employment, which currently stands at over 21 percent of those of working age. In addition, the number of people working part-time because they cannot get full-time work is at its highest level since 1992.
Unemployment and underemployment will persist well into any recovery. A recent IMF report argues that employment falls further and takes longer to recover during recessions that have a significant financial component. The report indicates that it could take a year and a half from the end of the recession for any substantial improvement, assuming that the recovery continues. Accompanying the weakness of the recovery is its fragility. This is a product of changes to capitalism that took place during the past few decades. Faced with continued low profitability, capitalists began to shift their investment towards the financial system, where they hoped to be able to grab short-term paper profits. This created a series of bubbles as asset prices boomed, from the dotcom bubble of the 1990s through to the subprime mortgage and commodities bubbles that had swollen to huge proportions when the crash came. These bubbles flattered economies with the impression of dynamism and kept the system ploughing forwards. Underlying them was a "mega-bubble" of credit, fuelled by low interest rates and excess savings seeking a profitable outlet.
Martin Wolf of the Financial Times, one of the ruling class's most brutally honest spokespeople, argues, "Quite simply, the financial system has become bigger and riskier. The UK case is dramatic, with banking assets jumping from 50 percent of GDP to more than 550 percent over the past four decades... A large part of the financial system seems to be a machine to transfer income and wealth from outside to inside, while increasing the fragility of the economy as a whole." He concludes that the financial system produced "illusory gains on the way up and real pain on the way down". The excesses of the bubble era now emerging are astonishing. April saw the beginning of a series of litigations against those who created the arcane financial instruments traded in the run-up to the crash. Goldman Sachs stands accused of repackaging loans, including what it knew to be toxic debts, in an asset it created for the Paulson hedge fund. Paulson could then bet on its failure, while unsuspecting buyers lost out. So too did companies who insured the investment, including RBS and AIG, in which the British and US governments respectively are now the majority shareholders. Goldman Sachs denies the allegations, but whatever the outcome of the case it sheds light on the increasingly bizarre and bloated world of finance. There is little evidence that the crash has "tamed" finance, as some left-leaning economists had hoped. Indeed, all the features of the bubble era are returning. Financial profits are growing far faster than profits in the wider economy; the housing market, which tumbled with the recession, is shooting back up, as are oil prices; speculation on exchange rates continues; banking bonuses are back. The super-rich are also returning to the conspicuous consumption to which they are accustomed, as evidenced by the 33 percent growth in sales of Dom Pérignon and similar high-end champagnes in the first three months of 2010.
Financialisation means each new problem that emerges is amplified as panic spreads rapidly through the system. This is what happened just before Christmas with the Dubai property crash and then in spring with events in Greece. All of this lends an additional fragility to the already weak recovery.
Finally, any recovery is and will remain uncertain. State interventions replaced private borrowing and investment with mountains of public debt, and falling tax revenues made it difficult to recover the money spent. Now governments everywhere face a dilemma. Do they cut back to pay off their debts, risking a "double-dip recession" as the stimulus is withdrawn? Or do they continue spending and risk a run on their currencies, as the eurozone experienced amid fears of a Greek default? Chris Giles writes in the Financial Times, "Never has a UK government borrowed more in peacetime than Labour did last year, when it was in the red to the tune of 11.8 percent of national income. Never has a government had to obtain £1 for every four it spends from investors rather than tax payers. And never has a government borrowed £6,000 annually, as in 2010-11, on behalf of every household, with a further £25,000 expected over the course of the coming parliament." Even if Britain avoids a complete loss of faith on the part of its financiers, the political elite is committed to an assault on the public sector the likes of which we have never seen. The general election result was unknown as Socialist Review went to press but the consensus between the parties in the run-up to polling day was greater than the differences. As Giles argues, "In terms of defined spending cuts, each [party] has outlined less than £10 billion worth - far less than the minimum £40 billion needed in the first three years." In order to appease the City of London real government spending will have to be slashed by about one fifth, he concludes.
Similarly, the Chartered Institute of Personnel and Development, a body representing human resources professionals, predicted "a 10 percent reduction in the 5.8 million core public sector workforce...the likelihood of 500,000 jobs being shed in the next five years dwarfing the figures the parties have been prepared to acknowledge".
The scale of the challenge facing the left can seem paralysing. But it is important to remember that crisis also weakens and divides our rulers. Capitalism has been discredited in the eyes of many who live under it as once solid certainties have melted into air. The crisis has sharpened the divisions within the ruling class, setting its representatives against each other as they each seek to find ways to preserve their profits at the expense of their rivals. Different groups of capitalists are coming into conflict on a global and national level, further fracturing the ideological consensuses of our age and creating cracks that the left can exploit by putting forward its own arguments. The political elite who claim to preside over the system have suffered blow after blow to their legitimacy. Any incoming government will be a weak one, lacking real hegemony over those it seeks to rule. But it will be under pressure from the wider ruling class to drive through attacks on an unprecedented scale, whether it does so enthusiastically or reluctantly. This is an explosive combination, and in this context there will be further struggles, both local eruptions and national disputes. Politics will be crucial to these battles. For instance, in order to break out of the commonsense view that some part of the public sector has to be slashed, it will be necessary to argue that there are other ways of raising the money - through cutting the budget for the Trident nuclear programme, for example, or closing tax loopholes exploited by the rich, or by increasing the top rate of income tax. That means challenging the agenda of the mainstream political parties.
Politics can also bridge the gap between local campaigns to defend public services and struggles by groups of workers in these services who also wish to defend their wages and their jobs. The Right to Work initiative, set to hold an emergency conference on 22 May, can begin to draw together a network of solidarity and resistance, strengthening each of the different battles and maintaining a permanent relationship between all those who want to fight back. At the heart of the resistance, we also need a growing core of revolutionaries committed to a socialist alternative to capitalism and capable of arguing for a way forward for the working class movement as a whole. The situation in the coming months can change very rapidly indeed. To rise to the challenge, the left must be able to match the pace of events.
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