Thursday, 24 March 2011

Another Tory budget demonstrates the poverty of neoliberal thinking

I've posted many times on the blog about the current neoliberal paradigm, and the 'free' market fanatics who espouse it. Yesterday we saw a classic neoliberal budget, entirely one dimensional and doomed to failure in terms of doing what the country needs - creating jobs, greening the economy and lowering economic inequality. Its important to understand that if we had a Labour or purely Liberal Democrat government, we wouldn't have seen much difference. All three main parties subscribe to the same 'economic' philosophy - the market must rule - even though its clearly been shown recently that the unregulated market causes boom and bust which only the state can rectify.

Neoliberalism is more akin to a religious cult than a political philosophy and all its adherents, from Blair to Clegg to Cameron to Sarkosy and even Sarah Palin subscribe to the same narrow orthodoxy; only the market can be allowed to do anything. The role of governments is simply to make the market supreme, they are not allowed to intervene, take initiatives, engage in economic planning, or invest in society through public services.

This means that the only economic measures we are allowed to pursue are ones that (big) businesses want - lower taxes and cutting 'red tape'. This is similar to the policy that was followed by Western governments during the last great economic crisis in the 1920s and 1930s - we are going backwards rather than forwards. Suffice to say these policies failed then and they will fail now, leading to at least another decade of economic stagnation, mass unemployment and increasing poverty. The irony then was that it took a world war and massive government spending in the USA, which was the powerhouse of the world economy, to lift the world out of depression and into post-war prosperity.

The neoliberals only have only three economic levers to pull: lower taxes, cutting 'red tape' and labour market flexibility (bashing the workers). These fetishes have already demonstrably failed to make the West more prosperous in the past thirty years. All they have succeeded in doing is making the rich much wealthier and the rest of us poorer. The cunning plan is supposed to be that if you cut taxes on corporations and the rich they will invest more - thus creating more wealth for all of us. Unfortunately the evidence is that this doesn't work. The rich pocket the money and corporations pass it on to their shareholders. Large corporations just don't create jobs anymore, or if they do they invest in low wage economies like China. The wealthy invest in property or financial schemes which bring a bigger return.

We need government investment in our economy. The Green Party has an economic programme which would have cut the deficit by £70 billion over 4 years, created one million jobs and protected the public sector and the welfare state - see our manifesto. Yes, we would have raised taxes but to the same level they were during the Thatcher government - about 43% of GDP. Higher taxes benefit the economy and ordinary people. The public sector generates wealth by investing in society and stimulating private sector growth.

The irony in all this is that the greatest period of wealth and economic equality we had in our history was at a time when we had a mixed economy, strong trade unions, high taxes and a strong public sector. The neoliberal approach only benefits the rich and corporations. The question is - how long can this go on before the penny drops with the majority and there is a real drive for political change? I suspect that we are all going to have to get a lot poorer before the tide is turned.

1 comment:

Anonymous said...

And did you make it to the TUC rally Sat to make your views known??