Welfare? That is only for corporations and the rich

Welcome to the new welfare state - Coalition government style. Despite the fact that we are supposed to be struggling with a massive structural deficit and our economy is stagnant, the Chancellor, George Osborne, found plenty to give away in last weeks budget in terms of  welfare - for the 1%. We certainly ain't in it all together but what we do know is that this is a government which punishes the needy and rewards those who have much, much more than they need. 

From 1st April we will see yet more cuts in welfare, the punitive bedroom tax,  and further massive cuts in public services. Add to that an ongoing clamp down on public sector pay which is reducing the standard of living of hundreds of thousands of workers, many of whom are low paid. In contrast the richest in the UK will receive a massive tax cut and corporations will see further cuts in corporation tax. George Osborne is also doing his best to create another house price boom by allowing for £130 billion to back house buyers, a move which can only make it more difficult for people who want to buy houses.

As I've posted before the government's austerity cuts programme has nothing to do with reducing the deficit and everything to do with the demolition of the welfare state and privatisation of public services. The truth is that the main recipients of welfare in the UK are the 1%, the corporations and the rich. Whilst the 99% see their living standards cut further in order to pay for a crisis caused by neoliberal capitalism, corporations like Starbuck's benefit from not paying taxes and tax dodgers avoid £120 billion in tax. It may be hard for some people to accept but we are all under attack - from our own government. There is only one option - organise and fight back to protect our living standards. Groups like UK Uncut have lead the way but there is much more work to be done. Its time to get involved. Come and help us defend our communities!

Why capitalism won't exist in 50 years time

I've been reflecting on the Coalition government's claim that the market will make up for the 750,000 public sector jobs that are going to be lost under the austerity measures imposed by Chancellor George Osborne. In his first emergency budget, which introduced £81 billion of cuts, Osborne claimed that the private sector would take up the slack by creating 2.5 million jobs. Clearly that hasn't happened, but what if it never does? Why should the private sector create that number of jobs in the UK anyway? In a golbalised economy it may be that the market will provide jobs elsewhere instead, or maybe the jobs will just never materialise.

Of course, Osborne never mentioned what kind of jobs would be created, but its a fair bet that the jobs, if created won't be as good as the public sector jobs that have been culled by the government. Not all public sector jobs are well paid by any means but many are highly skilled, and nearly all offer better benefits than private sector equivalents. Its likely that many 'replacement' private sector jobs will be low skilled 'McJobs'. To add to the existing problems in the job market, Osborne is now trying to implement a long held dream of the Tories to 'regionalise' public sector pay in order to drive down wages still further, on the excuse that the private sector will be able to compete in the jobs market with their McJobs. This is likely to backfire on the government because public sector workers will seek to keep pace with those in similar jobs around the UK, leading to more disputes and industrial action.

There is still the question of whether any jobs will be created. The record is not good. Its worth reading this article by Larry Elliot which shows that in the past 100 years the private sector has failed to replace jobs in the North of England lost when heavy industries such as shipbuilding, cotton manufacture, steel-making, and coal mining went into terminal decline.The reality is that Osborne's approach is going to hit the North, which is already suffering, very hard. That is part of the reason for George Galloway's recent victory in Bradford West - people are fed up with a lack of jobs and opportunity and the fact that none of the three main parties are offering an alternative to austerity.

My view is that the oft promised jobs will never be created. For sure, as long as we follow the discredited 'free' market neoliberal ideology beloved of Mr Osborne. Why? -  because we have entered a different, and, I believe, final, phase of capitalism. There are a number of different factors working here to bring about the demise of capitalism as we know it;

Firstly, the rise of financial capitalism, fuelled by deregulation of the banking and finance sectors. If you want to get the best return and make money you invest in financial instruments, and property, that is the quickest and easiest way to make a buck. There are currently trillions of dollars flooding this financial system, and none of it is being invested in job creating industries. The problem for capitalists is that the 'real' economy is suffering from falling profitability;

Secondly, the model of consumer capitalism on which we currently rely for our prosperity is slowly breaking down. Consumer capitalism really started in the 1920s with Edward Bernays, and only really took off in the period of prosperity following WWII. Bernays, who is often called the father of Public Relations is credited with creating consumer 'wants' rather than the 'needs' that existed previously. Neoliberalism is undermining that consumer-lead model though globalisation by making people, particularly in the affluent west, poorer. You have to earn a decent amount of money to support the consumption that consumer capitalism needs. In the USA consumer spending is 70% of the economy. That is why neoliberal capitalism is relying increasingly on, the creation of debt to sustain consumerism, the cannibalising of the public sector, and corporate welfarism, to maintain its failing profitability;

Edward Bernays - the man who invented consumer capitalism

Thirdly, and most importantly, we are reaching the limits to growth. Resources, and oil in particular, are becoming depleted, which means that capitalist expansion is becoming impossible. capitalism relies upon compound growth, and you don't need to be a Nobel prize winning economist to understand that this kind of growth is unsustainable.

The fourth factor may prove to be the most important - climate change -  which is likely to damage the global economy further by extreme weather events like the recent tsunami in Japan, and damaging agriculture, thus limiting food production. That is an issue which I have covered extensively on this blog. Attempts to postpone the inevitable end of 'business as usual', such as the exploitation of shale gas and tar sands, are likely to be self-defeating.

If you want to know more about monopoly capitalism and how this crisis is being driven by factors one and two then you should read the excellent book 'The Great Financial Crisis' by Magdoff and Foster, which explains how capitalism has increasingly invested in finance, at the expense of the real economy.

I just want to finish this post with a prediction. Capitalism as we now know it won't exist in 50 years time. I won't be around to see it but I have no doubt that capitalism will reach its limits, economically and environmentally in the next 50 years or so. What we ought to be doing now is planning for the future. That future will inevitably mean more state intervention, not because of ideology, but because of necessity. In 2008, when the global economy was crashing, the state came to the rescue. There is no doubt that it will have to come to the rescue again because, by then, 'free' market fundamentalism will have brought the whole house of cards crashing down.

The government that nobody wanted is doing what nobody wants

We have just had two very grim days in succession. First, from this reactionary government, we get Black Tuesday, the dismantling of the NHS, something that the Tories have dreamed about for decades. Now, today, we have had yet another class war budget which benefits the rich and corporations at the expense of the rest of UK society. A budget which contains £20 billion of disguised cuts for corporations.

But this is a government that nobody voted for,and has no mandate to make these changes. Much has been said about the role of the Liberal Democrats in propping up a Tory government, and despite the fact that people should feel betrayed and angry about that, the real problem is Cameron and Osborne, they are the architects of destruction of the public sector, and the 'free' market fundamentalist approach which is damaging our economic, environmental and social fabric.

What we have witnessed is a crisis of capitalism, caused by the market, and now being used as a weapon to destroy all the democratic gains made by ordinary people in the past century. This is the 'shock doctrine' in action.These measures are taking us backwards in time to 19th Century capitalism, an age in which the most vulnerable people, the sick, the unemployed, the disabled, and the low paid, will, like then, be abandoned to the vagaries of the market. In the USA, there are  already shanty towns and tented villages, and make no mistake, that will happen here. We will see slums in the UK, where the poor and disadvantaged, live in abject Third World levels of poverty. Don't believe it? These things are already happening in Greece, which is the front line of  'free; market austerity. The British people need to wake up and smell the very bitter taste of Coalition coffee.

What's the solution? We have to make use of the democratic process and get out on the streets and protest peacefully to bring about change. The Egyptians have shown us the way. We need to turn Trafalgar Square into Tahrir Square. We need to work and agitate in the trade unions to build this protest movement, and we need to make sure that the Liberal Democrats get wiped out in the next round of local government elections in May. There is hope, and protest groups like UK Uncut have shown the way forward. We need to work together use this pressure to crack open the Coalition, and force an election at which we can persuade people to vote for anti-austerity parties like the Green Party and TUSC. We are in the fight of our lives and we need to make this fight count.