Friday, 22 October 2010

The ConDem cuts were neither fair nor necessary

£18 billion cuts in welfare, so far, from the ConDem government. Just contrast that with a £2.5 billion tax on the banks and £7 billion bonuses for bankers in the UK this year. These are the banks that we recently bailed out in the UK to the tune of £1.4 trillion. The economic crisis that we are in, which has lead to cuts which that will hit the low paid, unemployed, women, children, young people, and the disabled hardest, was caused directly by the failures of 'free' market financial capitalism. This failure and crisis was driven by neo-liberal right wing political ideology dressed up as economics - let the market do what it wants and all will be well. But remember that is where we were in the 19th century. Do we really want to go back to a time before we had pensions, welfare and half decent conditions for working people? Do we want to go back to the workhouse?

It may be hard to accept but that is where we are headed if neo-liberal ideology continues to prevail. Look to the USA, they are ahead of the curve as far as all this is concerned. The recent post I made about Gary shows this. If we allow the market to dominate, without democratic control and intervention then we are simply handing over our society to the whim of the corporate profit makers. What do they care about our welfare or about our communities? Why should they bother whether someone has a job in Mumbai or Middlesborough? All that matters to them is maximising the return on their investment. They are free to go anywhere, anytime, that they can make the biggest buck. And what does that say about the state of our democracy? Because it means that these people are above our democracy - they can do as they like. One law for us, and no laws for them.

The point about these cuts is that they were never necessary. We have survived bigger deficits in the past. George Obsourne's comparisons with the household budget are nonsense, we are talking about an economy, not a family. If we want to ensure a way out of the crisis we need to invest not cut. The Irish made cuts and look where that has got them - into a far worst state than when they started.

The reality is that the natural state of capitalism is economic stagnation, punctuated by boom and bust. The latest crash just happens to be the biggest since 1929, but there have been many others since capitalism started. In order to bring about real change we do must take these steps:

1. We must use democratic power to bring the market back under our control. As a first step we need to introduce the kind of controls on finance that existed in the 1940s, including exchange controls. During the period we had those controls we had a faster growing economy then we have had since the neo-liberal ideology became dominant.

2. We must create a viable economic alternative to monopoly capitalism by creating a truly mixed economy. This can be achieved, as a first step, by nationalisation of the banks and utilities. Secondly, we need to invest in co-operative enterprises which can help to re-build our economy. We need to put restrictions on the limited liability of companies, making it clear that mutuals are our preferred economic model. We also need to protect - yes protect! - our growing industries and build up our industrial base.

3. Alongside this we need to invest in our infrastructure and re-build our welfare state and education system. Of particular importance is social housing. We must allow councils to build and offer secure tenancies and ensure we have an efficient low cost public transport system.

Of course we must do all this is the greenest possible way, built around renewable energy, energy efficiency and the kind of resource efficient manufacturing to be found in Factor Four - see here. This will put us in a position to deal with the worst effects of climate change and peak oil, and help to build a secure and low growth prosperous economy for the future. All these things are possible, if only we hadn't spent £1.4 trillion on propping up the failed financial capitalist system, it would be a lot easier to achieve.

1 comment:

James said...

Great insight. The US is the perfect example of how badly wrong capitalism could go if unchecked, yet all I feel I can expect is that the UK follows blindly in the US's footsteps. How thouroughly unpatriotic of me to say that I'm glad I emigrated when it comes to UK politics.