Now an economist proves what we already knew - capitalism doesn't work!

I was really interested to read about Thomas Piketty's new book 'Capital in the Twenty-First Century' which is being hailed as a 'groundbreaking'  work and, apparently, is making a real impact on economists. What Piketty has done is to 'prove' what many of us long thought was true - capitalism creates inequality, and left unchecked, ever increasing inequality. Piketty has done this by sifting through masses of economic data from the past couple of hundred years and he has written about his findings in a book which is accessible to the general reader.

All of this is good news - if it has a real impact on economics - and we can only hope now that it does. One hundred and fifty years or so ago Marx showed how capitalists expropriate wealth from working people through the mechanism of surplus value, and despite the fact that Marx had a huge influence politically, much of his work was ignored by mainstream economists, who were wedded to the capitalist economic system. Lets hope that Piketty doesn't suffer the same fate as Marx because economists whose ideas run counter to the prevailing order tend to have little impact in the end. This is because 'economics' is less an academic discipline and more a political justification of the current structures of economic power. 

David Harvey's new thought provoking book

I look forward to reading Piketty's book when I've finished a book I suspect will prove to be a much more interesting and thought provoking read - this is David Harvey's 'Seventeen Contradictions and the End of Capitalism'.  Harvey is a renowned Marxist who has lectured on Capital for many years. I'm only six contradictions into this book but Harvey has already nailed the iniquities and inefficiencies of capitalism and is well on the way to explaining what we must do to build an economy for the 99%. Its a book that I can thoroughly recommend. I'll get round to reading Piketty as soon as I can but I guess I owe him thanks already for proving what I have been saying on this blog for years - capitalism creates poverty.

Its time to begin to embrace the post-growth economy

Capitalism has brought about a double crunch; a crunch which is both environmental and economic. The cause is capitalism's drive for endless growth which has depleted the key natural resources, oil and gas, that it needs to continue its relentless material accumulation. One of the waste products of growth, carbon dioxide, is threatening to make our planet uninhabitable through climate change, natural resources are becoming exhausted and the biodiversity upon which we ultimately depend is threatened with destruction. Now that economic growth has stalled due to the economic crisis brought about by financial capitalism, politicians and economists are struggling to overcome the problem of massive debt from the banking crisis and get economies back 'on course' by re-starting growth. But what if they can't? And even if they could, would that option be desirable?

Growth, in conventional neoliberal terms, is not the answer. Continued privatisation and deregulation will not bring about growth, nor will it increase prosperity for the many. It will simply increase poverty and inequality. Neoliberalism is an ideology that has failed the people. Its time is over. The problem is that politicians and the ruling capitalist class are unable and unwilling to see an alternative to what has been rightly described as 'business as usual'. It will take political change to bring about economic change and to implement the solutions we need to deal with the unemployment, falling pensions, poverty, homelessness and inequality brought about by 30 years of neoliberalism.

The Green Party and others have proposed means to get us out of the current economic crisis by means of a national investment bank and a Green New Deal which will stimulate the economy and create much needed employment whilst helping to combat climate change. Amory Lovins and others in Natural Capitalism have proposed ways in which we can stave off the problems of growth and resource depletion by means of a vastly increased resource efficiency. All these measures will help us to overcome our present economic and environmental difficulties, but in themselves, are not long term solutions because they still create growth.

In the longer term we will need to adjust to an economy which can create prosperity without growth, because growth will no longer be possible. We simply won't have the energy resources to grow our economies in the way we have in the past 200 years. The Transition movement offers us a compelling model of how we can adjust to a low energy society, and there is no doubt that we can have prosperity without growth just as our forbears did before the advent of capitalism. What we will need to do is adjust our ideas about what prosperity means, and this means weaning ourselves off consumerism. This isn't going to be easy but, in the end, it is going to give us healthier and happier lifestyles. We have much to learn from indigenous communities who have lived in harmony with the land as to how we can develop a more successful management of the commons.

There will be those who argue that all this talk is a kind of madness and by ending growth that we are taking ourselves back to the stone age. They believe that we can continue business as usual by building hundreds of nuclear power stations and finding technological fixes for climate change as Daniel Ben-Ami does here. This is really akin to a science fiction fantasy. It is an example of the denial which affects many people, the sort of stuff that is reflected in Comment is Free when environmentalists who post on prosperity without growth are denounced by commenters as eco-fascists. The reality is that if the arguments of the fantasists prevail we are likely to end up living in caves rather than if we have an orderly and planned transition to a new kind of economy.

Prosperity without growth can be achieved and it does not mean poverty. It means a slower pace of life. It may mean less gadgets, but not no gadgets. It means things that last longer. It means more localism and more community. It means more labour and more labour intensive industries and it means more jobs, more community, more time with family, and much more social justice. But best of all it means the end of divisive, destructive capitalism.

God's investment banker still doesnt get it

Nice to hear that the Church of England is beginning to catch up with the protesters at occupylsx. The recent statement by Rowan Williams, the Archbishop of Canterbury, that there is "widespread and deep exasperation with the financial establishment",  is what we should expect from the church - support for the poor against their powerful and rich exploiters - now known as the 1%.

Now, the Bishop of London, he of the chauffeur driven car, has appointed an investment banker to look at solutions to the problems identified by the occupylsx protesters, though you could be forgiven for thinking that a banker is perhaps not the best person to seek advice from, given the problems we have been suffering from since 2008. However, in today's Sunday Telegraph, Ken Costa, Chairman of St Paul's Initiative, has written about markets losing their "moral moorings". He is right of course, but what are his solutions? Well, there is a lot of stuff about civic duty. Essentially we need reform, and we need to get rid of "shareholder value", something I couldn't disagree with, and we need to " reconnect the financial and the moral", and "legislation might help with this", but not yet apparently. Then he goes on to make this telling statement:

"Those in power should understand that governments are incapable of creating new jobs and wealth, that is what a vibrant private sector is for, supported by a vibrant financial services sector. "

I find this statement worrying because it is plain wrong. It is factually incorrect. Of course governments can and do create jobs and wealth. The public sector is essential, not only for delivering services, but it also creates jobs in the private sector as well. What we need is more government intervention to create green jobs in the UK, especially for young people, because the private sector has failed to do so, and is incapable of doing so. What the crash and its aftermath have shown us is that the powers of the private sector are very limited indeed, and that we need governments more than ever to directly create wealth and to help the rest of society to create wealth.

What Costa's article illustrates is that he is trapped in the same 'free' market fantasy as are all neoliberals. Perhaps that's not surprising when we learn from his article that he has been a banker for 30 years. That tells us that he has been part of the problem, and is therefore unlikely to be part of the solution. His pious words about "moral moorings", and patronising comments about the "usual suspects" at occupylsx are a dead giveaway - if we want to get out of this mess we need a radical change of direction, not the tinkering with legislation, appeals to goodness,and papering over of the cracks - however worthy that may be.

The free market fundamentalists are the purveyors of our poverty

I like to describe neoliberals as 'free market' fanatics or 'free market' fundamentalists. I always put the 'free market' bit in italics because there really is no such thing as a free market, and never has been. The 'free market' concept is a crucial part of the flawed ideology of neoliberalism, which is an extreme right-wing ideology that favours the rich - the capitalist class, over the rest of us. An important part of the reason why neoliberalism has been so successful is that it has successfully disguised itself as 'economics', an economics which pretends to be a mechanism for prosperity and has been sold to us as good for everyone.

We have been told by economists and politicians that the tenets of neoliberalism i.e. - globalisation; 'free' trade; privatisation; low taxes; downsizing; outsourcing; and deregulation are essential economically and that without them, we cannot have a prosperous and successful society. But prosperous and successful for who? All the aforementioned things benefit the capitalist class, at the expense of the rest of society. That is how they have gone from being the rich to the super-rich over the past 35 years or so, and these are the mechanisms by which the 1% have left the 99% way, way behind.

The simple fact is that the outcome of this neoliberal ideology, driven by the capitalist class, with the support of Western politicians, is a direct transfer of wealth from the 99% to the 1%. As wages have fallen as a percentage of GDP, profits and income for the rich have risen - see here for the recent US figures. The super rich don't need social security, they don't need healthcare, they don't need state education like the rest of us, so their view is - 'why should I pay for any of that through my taxes'? In fact, 'why should I pay taxes at all'? Furthermore, thanks to globalisation, if they can pay someone in the Third World $1 an hour to make widgets, why should they pay you, as a worker, in Europe or the USA, $10 an hour to do the same job?

But we still live in a consumer-capitalist economy, so as wages have fallen as a percentage of GDP, the 99% have accumulated more and more debt, with the help and encouragement of capitalist lenders, in order to try and maintain their lifestyles, and this is part of the debt crisis, and the economic crisis we are now in. Because if people in 'wealthier' Western countries can't afford to buy the products of capitalism, and are saddled with debt, the consumer-driven economy is bound to be depressed, which is exactly what is happening now. The 'free market' fanatics through the mechanisms of privatisation etc. are therefore purveyors of poverty, through lower wages, unemployment and austerity for us, the 99%.

In addition to the problems of the current banking debt crisis, which was caused by deregulation of the banks and financial capitalism, there is the longer-term problem for capitalism of the falling rate of profit. It has been noted by many observers that capitalism is uniquely versatile and able to re-invent itself when faced, as it always is, by periodic crises. If capitalism reaches a barrier it will find a way round it. So, the big driver for privatisation is the need for capitalist corporations to maintain their profitability, because having exhausted much of the possibilities of the private sector, through globalisation, they are now intent on devouring the public sector in the search for new profitability and never ending growth.

For the 99%, healthcare, education, pensions, housing and social security are essential. Healthcare and education are public goods - not commodities to be bought and traded like widgets. We need social security as a right, paid for through national insurance - not welfare as some kind of handout. We need social housing and pensions so that we can retire with some dignity in our old age. All these public services are best paid for through taxes, collectively, and delivered without the profit motive, for the benefit of all. If we want public services and pensions we need to pay taxes. Low taxes are only good for the 1%, and are bad for the rest of us. In addition to paying more taxes ourselves, we need to make the rich pay much more in taxes, as a prelude to permanent economic change.

Until very recently, we had all of these essential public services mentioned above here in the UK. Now the capitalist class are trying to take them away from us, they are trying to to roll back all the democratic gains our grandparents, and parents made in the 20th century. The banking crisis is being used as an excuse to pay for the failures of neoliberalism through austerity. It is essential that we resist privatisation and cuts in public services by supporting each other, and supporting the occupations, local anti-cuts organisations, student protests, and all the diverse community groups in their ongoing struggle against austerity, and the trade unions in their planned strike action on November 30th.

Last weekend, on 15 October, global demonstrations were held to show the growing discontent of the 99%, and as a result a video was produced - see below, and a manifesto, which is worth reading, and may be the start of global demand for change.



The many thousands of people involved in the occupation movements and protests which are now happening in 900 cities across the world are rightly suspicious of politicians, political parties, and ideologies. They must be able to determine their wants and their own destiny. But ultimately what they need are the things we all need, the public services which I have outlined above, plus work, and freedom of expression, and freedom from fear. What is clear is that they can only achieve their aims by breaking the stranglehold that 'free market' neoliberalism has on our economy and democracies, and to regain control over their lives they must seize control of the economy and make the global economy their economy.

Only when we control our economy will we have the freedom and dignity we all desire and need.

Cameron is wrong about the riots

Since last week, when the UK riots came to a halt, apart from the universal condemnation of the looters, there have been two responses: one from the political right; and another from the left. The right have sought to paint the riots as being all about criminality, and about individual bad behaviour. David Cameron has re-iterated this theme a number of times in the past week, also calling for the rioters to be hammered by the courts. Its typical of the right that they should portray the riots in such simplistic terms. Firstly, most right wingers don't want the riots to be viewed by people in a wider context - the context of poverty, joblessness, exclusion and social despair. That's understandable because if people were to see the wider context they would appreciate how damaging and destructive the right's neoliberal ideology is; Secondly, they know that such a response panders to the prejudices of many of our citizens; Thirdly, its crucial for Cameron and the political right that individuals be blamed because the government might not survive if it was widely believed that it was responsible for the troubles. At the very least re-election would be a remote possibility. So, its hardly surprising that Cameron has been seeking to monopolise the media with calls for 'tough' sentencing which amount to revenge, not justice, as two men in Cheshire discovered recently.

Unlike David Cameron, the left have looked for the causes of the rioting. This is not to excuse the behaviour of the rioters, just simply a recognition the we don't live in a vacuum, and that people's behaviour can be affected by the environment they live in. Part of that environment is that people see our society's leaders, including politicians and businessmen, with their fingers in the till, and getting away with it. Cameron himself was implicated in the expenses scandal as were other cabinet ministers. The phone hacking scandal has implicated the police and other senior people in the media, and then we have the bankers who crashed our economy and carried off big bonuses as a result. Naomi Klein has written a perceptive article about the wider global political context of the riots. Its not just here in the UK that people perceive that the rich elites are robbing us and getting away with it. She said:

"Of course London's riots weren't a political protest. But the people committing night-time robbery sure as hell know that their elites have been committing daytime robbery. "

As said in a previous post, there is nothing new about the recent riots and academic research has shown that austerity measures of the kind we have seen in the UK, with £81 billion worth of ideological cuts imposed by George Osbourne on our society, can cause rioting. The researchers, Jacopo Ponticelli and Hans-Joachim Voth, concluded:

"Nobody knows where and when social unrest is going to happen again, nor the scale it will take. However, history suggests we should not underestimate the consequences of social chaos. Germans to the present day remember Heinrich Brüning, known as the "hunger chancellor", who led the country from 1929 to 1932. He presided over an unprecedented austerity programme. At the same time, the Weimar Republic, Germany's first attempt at democracy, disintegrated amid a wave of social unrest and political violence."

The fact is that David Cameron is wrong about the causes of the riots and wrong with his views on sentencing. Far from being squeaky clean Cameron has soiled hands. He has also flipped on this issue. Do you remember the infamous 'hug a hoodie' speech where Cameron said we should be understanding about young people who commit crime? If not read this. Cameron is the Tory's version of a Blairite poster boy who is not much more than a front for an extremist Tory Party whose favourites include Thatcherite monsters from the crypt like William Hague and Eric Pickles.

If you want to, you can choose to believe that the austerity measures in the UK have nothing whatsoever to do with the riots, or you can choose to say that despite austerity and poverty no one should ever be involved in looting and causing wanton damage to life and property, and that the people who have done this should have acted responsibly instead. So why didn't the bankers, politicians, phone hackers and corrupt cops, who are supposed to know better than the 'feral rats' who rioted, measure up to being responsible? Why didn't they set an example? Is it simply that they are too greedy or is it that they knew they would never properly be held to account and face the consequences of their actions? And don't forget, who was it who sought to excuse the actions of the bankers? Why non other than Mr David Cameron himself at the Tory Party conference.

London riots - here we go again!

If, like me, you are middle aged, you will have seen many riots in the UK. Brixton, Broadwater Farm, and Toxteth are some of the the better known examples in the past 30 years or so. These riots are always triggered by an incident involving the heavy handed policing of members of an ethnic minority community, usually black. The Broadwater Farm riot was triggered by the death of a black woman, Cynthia Jarrett, when the police were searching her home. The riots always occur in  communities that are characterised by high unemployment, poverty and poor housing. Tottenham has a history of these problems, Broadwater Farm is just one example, and we still have not heard the true facts about the mysterious death of Smiley Culture, who died whilst in police custody in his own home in April 2011. Allegedly he stabbed himself. A thousand people protested after that incident. What the riots show is the simmering resentment that exists in many inner city communities in the UK.

In the case of the Tottenham riot, which took place on Saturday, supporters of the  family of Mark Duggan, who was shot and killed by the police last week, staged a peaceful protest. The police failed to respond to requests from the family to speak to a senior officer. The family and their supporters were kept waiting for hours. The police clearly failed to deal reasonably with the family, sparking further anger. After the Duggan shooting incident, we heard that a police officer had been shot, implying that Duggan had fired on the police, now we hear that both the bullets that were fired came from police weapons. Did someone fire on the police? We don't know. But what we do know is that the police have a history of putting out misleading information in the aftermath of incidents of this kind. In the case of Jean Charles De Menezes, in 2005, the police said that he had behaved suspiciously, and had vaulted a barrier at Stockwell tube station. This turned out not to be true. Jean Charles De Menezes was just a man on his way to work. The police killed an innocent man, and eye-witnesses to the shooting later claimed that they had no need to shoot him dead.

There is a clear pattern here. Communities plagued by unemployment, poverty and poor housing. Heavy handed, inept and racially dubious policing. The police putting out misleading statements about what happened. The police being used to keep a lid on the simmering community resentment. The establishment mouthing platitudes and making token gestures about investment and regeneration.  And so it goes on and on and on. This is 21st century Britain, a place where institutional racism and poverty are still being swept under the carpet, where mass unemployment, and four million people needing housing, has become acceptable . Riot inquiry follows riot inquiry but the same old pattern is still repeated. Kack-handed responses by Home Secretaries like Theresa May, who today launched a tirade against the "criminals" who burned and looted. Yes, Theresa, it was wrong and should be condemned, but why did it happen on your watch? Why were so many people involved? Why did it spread so widely? Tell us the answers to that Theresa, instead of mouthing off the usual platitudes about criminality.

The people who really suffer in the end are the people of the afflicted communities themselves. They are the ones whose houses and businesses are destroyed. I wonder what would happen if people took their resentments, arson and riots to Kensington or Mayfair? What sort of police response would we see then? A very different one to one we saw in Tottenham on Saturday night I'm sure. The point is that nothing will ever change until we have an economic system that can provide decent housing and jobs for all, and a police force which is there to protect citizens, instead of helping to keep them under control. Clearly capitalism is not that economic system, and as long as it exists, so will these problems.

SS Titanic-Capitalism is still heading straight for the rocks

Perhaps I should have entitled this post the 'comedy of errors'? The problem with that title that I have, is that the current crisis of capitalism, which is manifesting itself in the sovereign debt crisis, is being so cack-handedly managed by our leading politicians that it is really a human tragedy, rather than a comedy.

In the UK, the NoW phone hacking scandal is moving so quickly that people are forgetting about the main event - the slow motion collapse of the world economy, and the feeble attempts of politicians in Europe to deal with it - see this. The reason for the failure of politicians in Europe to sort out the economic crisis is obvious; they are completely blinkered; they are so conditioned to neoliberal 'free' market fanaticism and looking after themselves and the rich, that they, like the Captain of the Titanic, are going down with the ship.

Its just a pity that there are many many hundreds of thousands of Europeans, and other millions of peoples around the world who are going to suffer in the process. They don't deserve to suffer - the politicians do.

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.

The European project is failing the European people

The Eurozone debacle continues. Now Italy, the third largest economy in the Eurozone, is having to pay much more to finance its debt. Yields, the interest that Italy has to pay on government bonds, have reached over 6% which is unsustainable. So that is Greece, Ireland, Portugal, Spain and now Italy which are already in, or in grave danger of falling into, the sovereign debt crisis.

The people of Europe are being asked by the leaders of Europe to pay for a crisis which is not of their making, whilst the perpetrators of that crisis, the banks and financial capitalists, are being protected. This is not just a betrayal of the people of Europe, by their elected leaders, but of democracy itself. Politicians in Greece have recently sold out Greek sovereignty to the banks, bondholders, and the financial technocrats of the ECB and the IMF by agreeing to a second bailout.

We have been sold the story that the EU is a European creation with the countries of Europe coming together in solidarity after WWII. But the EU is fundamentally an American cold war creation foisted on a weakened Europe after the war, the aim being to create and ensure a capitalist 'free' market ideological and economic hegemony in Europe, at a time when Soviet communism was seen as a real threat. Despite strongish trade unions and a tradition of social democracy, the EU is now a neoliberal state - with neoliberal 'free' market policies enshrined in its constitution. The purpose of the Euro is to pave the way for a European superstate. The aim now of politicians and financial technocrats is to reduce the living standards of workers and the middle classes, in order to create a great big bonanza for western corporations and their capitalist owners. The only thing which distinguishes this capitalist corporatist European project from fascism is the use of suits instead of uniforms and jackboots.

Having created a crisis by building a casino financial capitalism out of democratic control, and nearly bringing down the world economy, politicians and bankers have used the crisis to cut welfare and workers terms and conditions in the USA and  Europe. This is straightforward class war, with ordinary people being made to pay for the failures of 'free' market capitalism. In the current circumstances the EU and its leaders are the enemies of the European people. In his excellent Guardian piece, Mark Weisbrot explains why the Euro deserves to fail. It is beginning to look like its failure may be the only hope for European democracy.

The EU may be a supertanker, but it will have to be turned round if the European people are going to be liberated from neoserfdom (neoliberal serfdom). That means a massive reform of the EU and re-writing of the constitution to remove the neoliberal shackles which bind the EU into this extreme right-wing project.

What is the Labour Party for?

A lot of people are wondering what the Labour Party is for. Since Ed Milliband became leader its been hard to to tell. But at least we know what the Labour party is not for; its not for the working class, it abandoned them a long time ago, letting the BNP fill the vacuum; its not for decent public sector pensions; its not much interested in housing; or the poor; or trade unions. It is, we know, in the historic words of Peter Mandelson - "intensely relaxed about the filthy rich" and it seems to be pretty keen on the banks; Oh!, and privatisation of the NHS, education, and well, pretty much anything else that moves.

The Labour Party is a party that has lost its way completely. So much so that it doesn't really know what it is for, except perhaps a vehicle for its leaders to get elected and hold political power, a vehicle for career politicians, the political class that I blogged about in this post. That means that it is the job of party members, who presumably think they are part of a project to change things, merely to have a role of furthering the career aspirations of Milliband, Jowell, Balls, Alexander et al.

I'm sure that Ed would be horrified if he read what I'd just written. He'd protest that he believes in a progressive future and that he, and his colleagues, have been traduced by that statement. If he thinks that I'd like to suggest its his own fault, because I think I think those are perfectly reasonable conclusions for onlookers like me to draw, based on the statements, and behaviour of Ed and other leading Labour politicians.

For example, for him to state that the June 30th strike was wrong, on the basis that negotiations about public sector pensions were ongoing, was laughable. It was obvious to all but the most naive that the government wasn't involved  in meaningful negotiations and had no intention of compromising on terms remotely acceptable to the striking teachers and civil servants. Not only that, but it was clear that the government had been hiding the fact that the Hutton Report showed that public sector pensions were affordable, and this had been exposed on the Today programme.

The Labour party has become a right-wing reactionary neoliberal party and there is little to distinguish it from the other neoliberal parties; the Liberal Democrats and the Tories. The reason for this transformation is not difficult to discern. This transformation has happened to 'left' parties all over the world since the collapse of the Soviet Union. Social Democracy has been abandoned in favour of 'free' market globalisation, and the domination of democracies by the multinational corporations and the banks. In fact, this is little different to Fascism. It is only a matter of degree, because Fascism is the subjugation of democracy to capitalist corporations -  with some goose-stepping in uniform, and gratuitous violence, thrown in.

This is what is happening in Greece. Democracy has been openly replaced, under a 'Socialist' government,  by the control of financial technocrats from the EU and IMF, on behalf of their market masters. Our politicians, including Ed,  are complicit in this free market coup d'etat. There is only one way we can stop this. We must stop voting for these people. We need to vote for parties which can stop the rot. In the UK there is only one party of social justice left - the Green Party.

We are the economy

One of the things that I find utterly baffling and amusing, in a very darkly comic way, is the BBC's analysis of 'our' economy. I listen to Radio 4 because it is supposed to be a serious news station, with journalists who allegedly offer us a realistic analysis of the world we live in. I mean people like; Robert Peston, Stephanie Flanders and Nick Robinson. The problem I have with these people is that their analysis is fairly useless if you really want to understand the world we live in.

What we get offered is an 'orthodox' economic analysis. Just think -  "Middle Ages" and "Catholic Church" . Because that is really what it is like. If you think further you might even get to "Spanish Inquisition". Keep listening  to this stuff and you hear things like - blah IMF, blah blah, default, blah Euro, blah blah Mervyn King, blah blah the markets, etc etc - remember Bart Simpson and his teacher Ms Krabappel? That is what happens to me when I listen to this stuff. Is it because I am thick - or is it because I am hearing total bollox?

I'd like to argue it is the latter, and I'd like to argue that the BBC is little more than a propaganda station for the UK government, and the market. In fact, I'd like to argue that I know more about economics than Stephanie Flanders and  Robert Peston. Is that because I am a bighead? No, its because I am a worker. Remember them? Well, you probably are one if you are reading this.

All you need to know about economics is that all the wealth in the world is created by working people. By wealth I don't mean suitcases full of cash. What I mean is houses, cars, and iPods. I also mean services like teaching, passports, probation, and emptying the bins. This is stuff that we do. Without us, none of these things would happen. We are the world economy. Fuck the markets, they are irrelevant. We don't need them, but they need us, because they prey upon our labour like parasites. They contribute nothing that is socially or economically useful.

Tomorrow, public sector workers will go on strike. Without them there is no economy. Without teachers, our children won't be taught, without civil servants, you won't get a passport.  Whether private or public sector workers - without workers, as Marx explained, we have nothing, no wealth and no prosperity. We don't need bankers, or hedge fund mangers. We don't need the free market. These people and their gambling casino are irrelevant. This is our economy and its about time we took control of it. Support the public sectors workers pensions strike tomorrow, and make that the beginning of a peaceful revolution to bring us to a position where our economy really does belong to us.

The Greeks MUST default on 'their' debt

I came across this post by Mark Hudson yesterday on a blog called Naked Capitalism. It's an excellent description of how the failures of financial capitalism, which culminated in the collapse of Lehman Brothers in 2008 and threatened to bring down the world economy, are being used by the capitalist class to roll back all the democratic gains made in the past century by ordinary people. This is, as Naomi Klein has described, an economic shock doctrine - use a crisis to impose cuts in living standards on the mass of the people which they would ordinarily never accept.

Its worth a brief recap of how we got here. Financial deregulation since the 1970's, combined with an aggressive free market doctrine known as neo-liberalism, which originated in the Chicago School, have lead to banks and financial institutions such as hedge funds becoming out of democratic control in Western countries. At the same time the standard of living of all except the wealthiest has come under attack. The lack of controls on financial capitalism has lead to a series of economic crashes since the 1980s, each one worst than the last. These include; the Asian crisis, the dotcom boom, and the latest and greatest crisis since the crash of the Great Depression, which began in the USA with the collapse of subprime mortgages in 2006.

The latest crisis resulted in the virtual collapse of banks worldwide which was only halted by state intervention. What began as a crisis for the financial sector lead directly to the current sovereign debt crisis which we are now in. This sovereign debt crisis, in which taxpayers are being asked, once again, to bail out the financial system is being used as a weapon to impose neoliberalism on people in Europe and the USA. This means an attack on welfare, pensions, wages, workers rights, and environmental regulation, and privatisation of public services and state assets. This is driven not by economics but ideology. The aim is not to find a solution to the crisis but to use the shock of the crisis to destroy the standard of living of the mass of the population in the West. Those who gain from this will be the capitalist class.

Nowhere is this revealed more starkly at the moment than in Greece. The bailout of Greece, imposed last year to the tune of €110 billion, failed. The important point is that this bailout was only ever in tended to protect French and German banks, and other bondholders, and not the Greek people. Also of great importance was the desire to protect the great European single-state project know as the Euro. Of course the Greeks should never have been in the Euro. Without their own currency and the ability to set interest rates they were always going to struggle economically. Of course it can be argued that successive Greek governments mismanaged the economy and that the Greeks were living beyond their means but that misses the essential point. This is really about a coup d'etat, about financial technocrats and finance capitalists taking control. It is a struggle between democracy and capitalism.

The only way forward for the Greeks (and the Irish for that matter) is to default on their debts and leave the Euro. The alternative is the end of Greek democracy and the wholesale privatisation of the country at knock down prices. Greece will become a sovereign state and democracy in name only. As Mark Hudson said in his post; this is the road to financial serfdom;

"This new road to neoserfdom is an asset grab. But to achieve it, the financial sector needs a political grab to replace democracy with financial technocrats. Their job is to pretend that there is no revolution at all, merely an increase in “efficiency,” “creating wealth” by debt-leveraging the economy to the point where the entire surplus is paid out as interest to the financial managers who are emerging as Western civilization’s new central planners".

The Coalition deficit cuts will increase the deficit

On March 26th half a million people marched in London against the savage £81 billion worth of cuts introduced by George Osborne in the 'emergency' budget last year. More recently an impressive (sic!) estimated 350 people attended a 'Rally against debt' on the 14th of May. Not hard to see where the British peoples' sympathies lie then - and the vast majority have got it right because the Coalition government's cuts are not only going to cause great social harm but they are more likely to increase the deficit than reduce it.

How can that be right? How can cuts in expenditure increase a deficit? Well, you only have to look at Greece and Ireland to see how. Both countries are in deeper debt now than they were when they began their austerity programmes. If you slash spending you increase unemployment which increases costs and reduces your income in the form of taxes. The best way to pay off debt is to earn more. Governments earn more if they increase taxes and if the economy grows. As the economy grows government income, in the form of taxes, increases. But the cuts here have lead to a stagnant economy with no growth. There is further bad news to come in the form of increasing unemployment as the cuts bite further. Government borrowing last month was the highest ever recorded for April because tax receipts fell. Osborne has clearly shown his economic illiteracy in the last budget, which did nothing to address the problems caused by these savage, unnecessary, ideological cuts. What our economy needs is a stimulus with investment in jobs through a Green New Deal, not savage cuts.

The same failed course of action is leading to an even greater crisis in the Eurozone where Greece is unable to repay its debt and will have to default at some stage. The effects of this could be even greater than the collapse of Lehmans in 2008. In addition, Ireland, Portugal and Spain are all in trouble. The truth is that none of the bailouts of the Eurozone countries were made to help the people of those countries. They were made to bail out the bondholders and the banks - the money lenders . As with the bailout in the USA and UK, taxpayers are being asked to bear the pain and bail out the market. It is clear where the real power lies, and that's not in your democratically elected government, which exists to serve the market, whatever the cost to you and your family. And if your economy is ruined in the process its just tough luck.

Cuts where they're needed, not where they hurt

Cheshire West Against the Cuts

We had a another good stall in Chester today. Lots of people signed our petition. Get involved and support us. We have a public meeting in Chester on Wednesday 20th April at the Guildhall on Watergate street - see you there.

There is an alternative

On March 26th 400,000 - 500,000 people marched in London for an alternative to the government's cuts programme. In the aftermath, political pundits sniped at the marchers claiming that protests don't work and that the marchers had no coherent alternative.

This blog is about the alternative. In over 200 posts I've laid out how we can create a different kind of economy which will create jobs, wealth and greater economic equality for people in the UK. I'm not a lone voice. The Green Party laid out such an economic plan in its election manifesto. Working with the New Economics Foundation, Green Party leader Caroline Lucas proposed a Green New Deal which would have revitalised our economy in the face the current economic crisis caused by financial capitalism.

This is the kind of fresh economic thinking that we need. It replaces the tired old neoliberal paradigm which has produced the economic stagnation and failure of the past thirty years. If you want economic progress, jobs and greater social equality you can't depend on the unfettered market to provide it. The market is an engine of inequality, producing extremes of wealth and poverty. This has been well demonstrated in the USA in the past thirty years where the rich have become the super-rich whilst the incomes of ordinary people have stagnated. Nobel Prize winning economist Joseph Stiglitz wrote about this recently in Vanity fair and its worth quoting from his article - Of the 1%, by the 1%, for the 1%:

"Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret."

Neoliberalism has allowed the rich to grab an ever greater share of the economic cake, at the direct expense of the rest of us. Our politicians have cravenly submitted to the demands of capitalists and their huge corporations. We need an economics that is for everyone, not a tiny minority, and this is what the Green New Deal is about. Its time to put aside the failures of the past, but this can only happen when people wake up, realise what is being done to them and vote for genuinely progressive alternatives espoused by parties like the Green Party.

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.

Public good, private bad

I never thought I would be re-publishing a previous post on this blog, but David Cameron's statement this week that every public service should be privatised made me realise that this re-post was essential. This was posted in April 2009, when we had a new Labour government but it anticipates what a future Tory government would do:

People who have followed the posts on this blog will know that I have been explaining how privatisation benefits the rich at the expense of the poor but it is probably worth pulling it all together in one post so here goes.

Privatisation of public services has been a key part of the neoliberal Thatcherite project of the past thirty years. Privatisation of public services makes the rich richer and the poor poorer. This neoliberal project is all about dumping costs onto the poor whilst creaming off more of society's wealth for the rich.

So how does it work? Quite simple really but it has to be bolstered by one big crucial lie. The lie is that the private sector is always, but always, more efficient than the public sector alternative. No evidence is ever produced for this but it has been repeated so often over the last few decades that most people accept it as a fact. There is evidence though to show that the private sector is not more efficient than the public sector. Here is an example that comes from the International Monetary Fund! (IMF) - see this paper. Here is a quote you might find interesting:

“….the empirical evidence and the theoretical debates do not support this assumption. There is a consistent stream of empirical evidence consistently and repeatedly showing that there is no systematic significant difference between public and private operators in terms of efficiency or other performance measures. The theory behind the assumption of private sector superiority is also being shown to have serious flaws”.

But we do need to consider what is meant by 'efficiency'. Normally it is taken to mean that the private sector can deliver public services at a lower cost - as if that was all that mattered anyway. The fact that the private sector can deliver services at a lower cost is questionable to say the least. But let’s consider what happens when a public service is privatised. A private company moves in and takes over the service and the workforce that delivers it. The company needs to make a profit so the first thing it does is to cut the workforce and lower the terms and conditions of the remaining workers. Workers have their pay, holidays and pensions slashed. The cost of resulting unemployment and low pay is pushed onto the taxpayer and the cost of the profit is pushed onto the remaining workforce. In fact the employer is literally taking money out of the pockets of its new employees and giving it to shareholders - hence a direct transfer of money from the poor to the rich. This is not lower cost delivery it is dumping the costs onto workers and the wider society. Its not efficiency - it is legalised robbery.

But it’s much worse than just this. Because we don't have competing public services (i.e. you only have one waste collector in your local council area) - what you end up with is a private monopoly. Once the public sector alternative has gone what happens if the company providing the service goes bust? Well it has to be bailed out. Why? Because even if you wanted to you couldn't just bring in another company to take over at short notice – wheelie bins have to be emptied. We are also sold a lot of guff about competitive tendering as if hundreds of companies were competing for every public service contract. This simply isn't the case and contracts are awarded to one of a few usual suspects.

What we end up with is a very cosy private monopoly replacing the public service and easy money for the people who own the company. In time, costs can be hiked up to increase profits and all this is at the taxpayer’s expense. No private company could ever compete with an efficient public sector alternative. Why? Because the public sector alternative does not have to make a profit therefore it will always offer better value for money. In addition, the public sector can always borrow money for investment at a lower rate of interest then the private sector which again saves the taxpayer money. The reality is that the most cost effective way to deliver public services is the public sector option. That is the way services should be delivered, paid for collectively by all of us and delivered without the profit motive.

Of course, it is an essential part of the privatisation project that the public sector is excluded from competing with the private sector because it is unacceptable to the privatisers for the public sector to be seen to provide better value for money and competing successfully. That is why everything has to be privatised. And that is why the public sector is now being privatised by stealth - slowly but surely. Once the Tories get into power they will have the confidence to accelerate this process because they will claim that they are eliminating 'public sector waste' and delivering ‘better value’ in a time of budgetary restraint.

Privatisation of public services is basically a racket. Its hard for people to understand that their government would want to institute a system which costs them more, reduces their employment opportunities, dumps costs onto local communities and only benefits capitalists but that is the kind of government we have. That is what New Labour stands for. In the long run we will all have to pay more for less and those who benefit will be the better off.

"Free" market corporate domination means mass unemployment - forever

Ever had the feeling you've been conned? Well, you have been, because I've no doubt you've been told that the "free" market will make us all better off, because that is what we are told by politicians and economists on a daily basis. The truth is the opposite, the "free" market will make us all poorer, and that is what is happening in the UK today. But this isn't just happening in the UK, it's happening all over the world.

The most instructive place to find out what is really going on is the USA. This is where the "free" market ideology known as neoliberalism started, at the Chicago School in the mid 1970s. Since the late 1970s incomes for working people in the USA haven't risen in real terms but incomes for the rich (i.e. capitalists) have boomed. The result of this is increasing inequality and increasing poverty. Through globalisation, which is a form of corporate economic imperialism, neoliberalism has spread worldwide.

The principal outcomes of the neoliberal project, which uses methods such as privatisation, deregulation, outsourcing, downsizing and shareholder value, have been squeezing the living standards of the working and middle classes, creating ever greater inequality, rising poverty and rising unemployment.

Wherever you look, in Europe for example, you'll find mass unemployment, even in that much vaunted economic powerhouse, Germany. And unemployment is rising inexorably in the West - 10% (the real figure is nearer 20%) in the USA, 20% in Spain, 6.7% in Germany, 9.8% in France, 8.7% in Italy. The average for the EU is a staggering 9.6%. Moreover, unemployment in these countries mainly affects the young. There are over 1 million unemployed people under 25 in the UK.

I can remember a time, not that long ago, when full employment was an aim for governments in the West. This is no longer the case. Such is the "free" market corporate domination of our democratic systems that the modern assumption by politicians is that job creation is purely a task of the "free" market - governments shouldn't be doing anything about it. If the market can't create enough jobs - that's just tough, apparently. We are told that all will be better in the future. But there is no guarantee of this. In fact, if we continue down this road, things are inevitably going to getting worse. Remember the Banana Republics? - countries dominated by Western corporations with corrupt politicians, wealthy elites, and the mass of the population living in poverty. That is where we are heading. Perhaps the UK will become the world's first turnip republic.

In an interesting Guardian article, the macroeconomist Dean Baker reports how American economists - the very people who dominate economic policy globally - accept unemployment without a second thought. Not only that but they seem to think that it is a good thing that you and I should become poorer. This quote is very illuminating:

"The fact that the overwhelming majority of economists in policy positions failed to see the signs of this disaster coming, and supported the policies that brought it on, did not seem to be a major concern for most of the economists at the convention. Instead, they seemed more intent on finding ways in which they could get ordinary workers to accept lower pay and reduced public benefits in the years ahead. This would lead to better outcomes in their models."

How can this be possible? How can it be that one of the goals of economists is to make you and me poorer? The answer is that this isn't economics; it's right-wing political ideology masquerading as economics. Economics as a discipline has become completely subsumed to the ruling capitalist ideology.

How do we get out of this mess? We have to ditch the “free” market rules all ideology for a start. We need to have governments, which are free from corporate domination and are prepared to intervene in the economy and actively create meaningful jobs. We need a vibrant public sector providing services such as health and education without the profit motive. Most of all, we need political parties and politicians who recognise the need for positive change and can bring these measures into effect. Currently the Green Party is the only party in the UK that has these policies. Come and join us if you want to see real change happen.

How to beat capitalism

Historically socialists have followed the' Marxist' model. By that I mean capture the power of the state and use it to control the means of production. By doing this you can put power into the hands of the people and liberate them from exploitation by the capitalist class. There are basically two ways of doing this: Communism, and democratic socialism. Both have so far failed. Communism, in the Soviet Union, liberated workers and greatly improved the condition of women, but failed to find a successful alternative economic model and degenerated into a dictatorship rather than a 'dictatorship of the proletariat'. Democratic socialism, whereby socialist parties have come to power through elections, has simply failed to control capitalism, again largely because the parties failed to pursue an alternative economic model and were content to 'manage' capitalism through social democracy. I know some people will argue those parties weren't socialist but that's another argument too complex to go into in this post.

There is a pattern here. The key thing is the economy and the creation of money. Having a capitalist economy and a socialist - or social democratic - government doesn't do much for most of the population apart from ameliorating the worst excesses of capitalism. It is certainly preferable to right-wing 'free' market alternatives but it doesn't solve the underlying problem. For a long time, capitalist entities like the big corporations have been more powerful than governments. Many corporations have turnovers which are larger than the GDPs of well-developed nations. Now, through global entities like the World Trade Organisation (WTO) - in which secretive panels of 'experts' are able to overturn national legislation, they have formally elevated commercial interests - the right to make money - above democracy, above all our democratic rights.

What the credit crunch has shown us is the true power of these capitalist entities. The mask has slipped. The 'free' market model has come unstuck through de-regulation, and selfishness and greed - the twin engines of capitalism. We, the poor, the unemployed, the disabled, the low paid, and the working and middle classes, have been forced to bail out capitalism. The losses have been nationalised and the gains are still in the pockets of the people who brought the system down. That is socialism for the rich and the market for the rest of us.

In his book, The Great Transformation, written in 1944, the socialist economic historian Karl Polanyi explained how economies work. He said that they are 'embedded' in society. By this, he meant that they are inseparable from the way we live. They are what we do. This may sound obvious but classical economists, such as Ricardo, have tried to separate the economy from society as if it exists separately in its own right. This is crucial because it allows conventional economists to ignore social and environmental concerns. They just don't figure on the balance sheet. Economists routinely ignore human suffering and environmental degradation caused by capitalism. This helps to give capitalism economic validity because it becomes simply about making money - forget about people and the environment. This is why economists are able to make ludicrous statements like - "It benefits all of us if production is moved to countries where labour costs are lower" - really? Does it? Who does it benefit? Not the people who have lost their jobs and the communities that are devastated. Of course, there have been dissident economists like Marx and E F Schumacher who wrote 'Small is Beautiful - a study of economics as if people mattered'. But Schumacher and Marx have been completely ignored by capitalist academia and media.

Karl Polayni: realised that society and economy are indivisible

Democratic socialists have made a similar error to the economists because they have assumed that politics is also separate from the economy. If you have political power you can change things. But as we have seen that is not true, not unless you change the fundamental basis of the economy. What socialists and progressives need if they are really going to change society is economic power. Capitalism can only be beaten economically. Therefore we need an alternative economic model and we need to start to build that model now. But what is an alternative economy? It is one where the means of production are owned and controlled by the people, and the creation of money is under democratic control.

For the means of production, there are basically two options: Nationalise industries or put them directly into the hands of workers to run and control themselves. Total nationalisation and state control, as in the Soviet Union hasn't worked well because people are not empowered and often they have little incentive to produce anything. They end up still as workers controlled by bosses. The real alternative is economic democracy. This is something that can be achieved through co-operatives. By co-operatives, I mean businesses owned and controlled by the people who work in them. Not possible? Think again. There are already many such successful businesses around. One example is the Unicorn Grocery, a worker-owned co-operative in Chorlton, which is thriving. There are many other examples.

Some cynics will no doubt say that this can only happen on a small scale but I don't believe it. There is nothing to stop larger scale businesses from being run in this way. The co-operatives in Mondragon in Spain provide us with an example of large-scale worker-owned and controlled businesses. Even models like John Lewis and Gore-Tex, which are not wholly worker-owned co-operatives in the sense that the Unicorn Grocery is, offer us a better alternative than voracious capitalists such as Tesco.

The beauty of the co-operative model is that we don't need a revolution or a socialist government to get started. There is nothing to stop people from starting co-operatives now. I have given examples in other posts such as the workers in Argentina who took over factories and started running them as going concerns during the economic crisis there.

In addition to this, we have to put the creation of money, and the control of its supply under democratic control. We need to ensure that only the state, through state-owned banks, rather than private sector banks, can create money. Alongside this, we also need to ensure that there are smaller local and regional banks. We also need a decentralised energy production system where locally owned companies generate energy from renewables and a centrally controlled energy distribution system.

None of this means that we shouldn't bother with socialist or political parties or be trying to get progressive governments elected. Changing our economic model isn't going to happen overnight. We need the support of governments who are friendly and can help with investment. In the shorter term nationalisation of the banks, railways, water, power generators, education, and health is essential for moving us away from a capitalist economy. It's a long haul but this is the only way forward. You cannot beat capitalism politically - it has to be done economically. Socialists and progressives need to start thinking seriously about building a new economy and making it happen - now.