Thursday, 14 July 2011

We can win the economic argument - so lets do it!

"Its the economy stupid!" - it sure is. The economy is just about all we hear about these days, and its no wonder, because we are going through the biggest economic crisis of capitalism since the Great Depression. But the problem we have is that the neoliberal right are in the ascendancy, they have the power. This means that the response to the economic crisis is the same as it was during the Great Depression. Does this mean we have learnt nothing in the past 80 years? To some extent yes, but the real problem is that the same kind of people are in control now as were in control in the late 1920s - capitalist corporations and the politicians who support them. The Great Depression lead to immense hardship and deprivation for people around the world. In America, the slump, despite the uplift given by Roosevelt with the New Deal, lasted over a decade until the end of World War II. It was the massive US spending during the war economy that lifted the whole world out of the Great Depression. Without that lift the world economy would probably  have remained stagnant for many more years, possibly decades.

In the mid 1930s  the economist John Maynard Keynes explained that in a economic slump governments needed to take counter-cyclical measures to revive the economy. In other words, you don't cut spending in a recession - you increase it. But Keynes's ideas were ignored then - just as they are being ignored now. Then as now, for reasons of class, politicians preferred to cuts jobs and welfare rather than increase spending or increase taxes on the rich - who could have afforded to pay more. Belt tightening was, as usual, forced on the poorest in society.

So where does that leave us? The sovereign debt crisis which is now engulfing Europe and the USA is a direct result of the banking crisis known in the UK as the 'credit crunch'.  This crisis would have brought down the world economy, if it had not been for the fact that the state intervention, both here and abroad, propped up the faltering world private banking system. The resulting losses (costs) were nationalised and the gains (profits) remained in private hands. The people who caused the crisis got away free whilst ordinary people picked up the tab, bailing out the banks, and paying by losing their jobs, homes and pensions.

But that was only round one. The debt form the economic crisis didn't just  disappear - it became the sovereign debt which is crippling Ireland, Greece, Spain and Portugal, and which now threatens the USA itself with debt default. So, the people are  being made to pay for the crisis a second time around. The name of the game now is austerity. Yet more cuts in welfare and more jobs losses - all to protect the same people  - the private sector, the banks and bondholders - financial capitalism. But as Keynes showed more cuts and austerity won't fix the problem - it will make it worse. That means the best we can hope for in the UK and Europe is economic stagnation, continuing high unemployment, and increasing hardship and poverty. The result is that your children will inevitably be poorer than you are and your grandchildren will be poorer still, in a society blighted by homelessness and inequality.

In the UK we have our own austerity crisis. The Chancellor of the Exchequer,  George Osborne, has taken a reckless ideological and political gamble with our economy by instituting savage austerity cuts of £81 billion. His aim is to use the debt crisis as cover to slash the welfare state - which is something the right have always hated. He is hoping that the economy will recover enough so that he can announce tax cuts before the next election. he believes this will win the next election for the Tories. That is why the Tories wanted a fixed term five year parliament - because they need at least 5 years for this ideological economic gamble to have a chance to work.

So, if the economic policies being followed by the EU, in Greek debt crisis for example, and in the UK government aren't working, why are they being followed? The answer is simple - neoliberal ideology. This is class war politics. The lesson of the past thirty years is that the capitalist class and their politicians have allowed a world economic crisis to develop by following neoliberal 'free' market dogma, by deregulating financial capitalism (the banking and shadow banking system). Now they are exploiting the outcome of that crisis, and using it to roll back all the democratic gains made by working people in the last century. 

So what does the left do about this? Well, we have to win the economic argument. That is essential. We have to explain to people how the failed 'economic' policies of the neoliberalism got us here. We have to explain how the crisis has been exploited to benefit the people who caused it. We have to debunk the myths about the benefits of the unregulated 'free' market. But most of all, we have to show that we have an alternative which can create jobs and prosperity. That is what the Green Party did in its 2010 election manifesto. We showed that  by investing in creating one million green jobs, and by building housing, by improving public transport, by controlling the banks, and by growing our economy in a sustainable way, we could lift the UK out of the economic crisis it is in.

The reality is that Osborne's reckless ideological gamble with our economy won't work, and when it fails, we have to be ready to strike. The next UK quarter figures are due soon. All the indicators are that they will be very poor - either very low growth, or no growth at all. That is the time we must put the boot it - and hard. People in the UK are beginning to waver in their support for cuts. In the past year support for the cuts has fallen from 69% to 55%, with 45% now against Osborne's savage cuts. Once the British people realise that Osborne's economic 'policy' isn't working the Tories economic competency will be finished. It is then that the Coalition will be in real danger. The Coalition government is a weak and divided government which has only survived because the British people have been conned into believing that it was acting in the national interest, to tackle the economic crisis. Cameron has already been severely wounded by the phone hacking scandal. Its hard to see how the government could survive similar damage to Osborne.

The reality is this; pensions and the welfare state aren't unaffordable; low taxes only benefit the rich; the state is not inherently a bad thing - governments can and should intervene to create jobs, build houses and protect the vulnerable; we can only have a better health service if it is provided by the public sector; privatisation means that you pay more for less; banks can be nationalised and brought under democratic control; co-operation is much more important than competition.

These are the messages that all those who oppose this government; UK-uncut, the Coalition of Resistance; trade unionists, and all the other anti-cuts groups need to get across, and get across soon. The only way we can slay this neoliberal system and get rid of this government is by winning the economic argument. Until we get on with the task of doing that we won't have the power to change things for the better and we won't be able to stop the deliberate destruction by this government of all the things which make this a society worth living in.

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