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Posts tagged ‘Cuts’

Lens on Labour: Words economists use – “Marx”, “capitalism”!

by Len Arthur

Karl Marx (1818-1883)

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I read ‘Capital’, the major work written by Karl Marx, when I was about 16 and an active member of the Young Socialists, which is what the Labour Party youth section was then called. Throughout my working and political life I’ve found that Marx’s analysis provided an effective understanding of what was happening to the international economy. Clearly the world has not stood still and I’ve worked at seeing how other economists like Keynes and Hayek challenged Marx and also followed analyses that have taken account of how capitalism has changed since the late 19th Century. In this sense, if asked, I will tell people that I remain a Marxist, his work providing an analysis of capitalism that has stood the test of time.  But not in the sense he provides readily accessible answers to the problems that currently beset us: these remain to be worked at.

The crisis of capitalism that we are currently facing is possibly the worst peacetime crisis since capitalism as a system came to dominate the social activity we call economics. Even with an understanding of past crisis such as that of 1929 – 1933, those with responsibility for economic management have very few options left. The crisis is more global and interlinked than previous experiences and the problems appear to be deeply rooted in the purpose, ownership, control and distribution of investment: or as Marx would say, value created within the process of production. Answers have to address this structural issue of power over the ownership and control of the process of production: democratically, we have to question whether production, simply for the maximisation of profit, provides us with a satisfactory method of addressing wealth creation. Do we all benefit, in terms of basic needs and can we arrange not to destroy the planet in the process?

Now this might sound like abstract madness; Keynes’ phrase ‘in the long run we are all dead’ rings in your ears. But our current situation requires us to put our cards on the table: we are either in the school where we face a crisis rooted in the ownership and control of capital or we are in the school where we face a business cycle crisis that with a few big and hefty pulls on the tiller and we will get back to business as usual. Some thinking along these lines is required to make a judgement about ‘capitalism’, as is being talked about by Cameron and Miliband.

If you are interested in delving a little deeper at this stage there are three books that I’ve found useful: The Big Short by Micheal Lewis which is a real novel type page turner; Zombie Capitalism by Chris Harman which is comprehensive and heavy in parts, which can be skipped; and How Markets Fail by John Cassidy which takes apart the classical economic theories that Cameron was relying on to say markets – less regulated of course – work for us all. Visually Professor Richard Wolff is also worth watching and listening to.

We face a crisis based upon the financialisation of the economy: it has become more profitable to shift investment to speculate in debt and related futures than to actually produce goods and services that satisfy peoples’ needs. In ‘short’ we face a bankers’ crisis that is rooted in the structural problem of the profitability of what most of us would call the real economy.

The Cameron view of how we address this situation is to force down wages costs through market deregulation so that UK costs allow competition with some of the cheapest world suppliers: the race to the bottom. As John Harris pointed out in yesterday’s Guardian over 4 million of the 28 million employed in the UK are self employed, essentially as cheap labour, outside of law and agreements covering employment. Even in employment, as an anonymous letter from a mother about her son in the Guardian the day before stated, many are on zero hours contracts that can result in ½ day a week of minimum wage work but that prevent working for anyone else.

Along with cutting benefits, pensions, regional pay – you know the list – that is the Tory view of how we are to save their capitalism, while they stuff their pockets with millions.

This is why I find Balls’ and Miliband’s position so worrying. They walk the tightrope between different analyses of the crisis but by supporting cuts at this time, and as an opposition, they cross the line into the Tory view of the world: the deficit is the problem and the workers have to pay for it. False Economy, for example, provides many possible alternative approaches. It may be difficult to make the argument about the structural challenges of capitalism and win elections, but we should also consider if it is possible to win elections playing the Tory game, considering the changed world we live in. Then again you may not consider it so changed. Can you just imagine the situation where, like Edward Heath, Osborne suddenly comes over all Keynesian and goes for growth even for PR purposes? The Labour Party would then be more right on the economy than the Tory government.

Well there we are I’ve suggested another way at coming at the debate. Here is the text of the key statements: Ed Balls’ speech to the Fabian meeting; Len McCluskey’s response in the Guardian; Ed Miliband responds to Len; Ed Miliband’s speech on responsible capitalism

To finish, here is an interesting graph and argument, sourced from within the investment industry, about what is the real debt problem.

British Private Sector debt out-does the world

As private industry is the largest borrower, trying to reduce those debts, and government cuts public spending at the same time, the result is to re-enforce a downward cycle. Low and behold, we have the Peacocks disaster! As David Blanchflower said in this week’s New Statesman (not Marxists by any means by the way)

‘Yet what Balls should have been more clear and robust about is what can be done to spur growth, beyond slowing public spending cuts and his rather timid five point plan. The UK government can borrow 30 year money at roughly 3%, which represents a once-in-a-generation opportunity to borrow long at negative real interest rates [due to inflation rates LA] and to use the money to invest in our crumbling infrastructure, with a powerful emphasis on job creation. Now that would be a bold plan.’

Yes, and we could demand that the Government do this to cancel Peacocks debt and allow the workers to set up a cooperative of a company that actually turned in £27m profit last year. It brings it all closer to home, doesn’t it.

Len Arthur is a Labour Party Member, Political Education Officer for his Constituency Party, and a former Trade Union Activist and Lecturer.

Owen Jones’ Review of 2011

“We’re all in this together!”

This article first appeared in ‘Dazed and Confused

2011 was the year the phoney war ended or – as the kids say these days, so I’m told – shit got real. When queues of anxious customers demanding their money suddenly formed outside Northern Rock over four years ago, it seemed like a slightly surreal – but one-off – disruption to normality, like an eerie re-enactment of a scene from Depression-era United States. As the entire global financial system faced total meltdown a year later, a sense of normality was mostly still preserved thanks to taxpayer bailouts and multi-billion fiscal stimuli. But more than one commentator conjured up the image of the global economy as a cartoon character who runs off a cliff, legs still flapping, suspended in mid-air as the scale of the fall sinks in. This year, the tumble began.

The declared strategy of the Conservative-led Government was that, as it pushed forward with the most devastating cuts since the 1920s, there would be a private sector-led recovery. By the end of 2011, unemployment had soared towards 2.7 million, a level not seen for 17 years. And while 67,000 public sector jobs were lost in the third quarter, just 5,000 private sector jobs were created. As had been predicted by those the Conservatives and their outriders had sneered at, the cuts were sucking growth out of the economy. Four years since the crisis began, Britain once again stands on the brink of another recession. Even on the Government’s own terms, its strategy is a failure, with George Osborne forced to borrow more than was projected under Labour’s plans at the last election. No wonder Osborne stood accused by Nobel Prize-winning economist Paul Krugman of being “a medieval doctor bleeding his patient.”

“We’re all in this together,” or so George Osborne and the Government told us. Throughout the year, it was a sentence that veered between the ludicrous and the insulting. The average Briton is experiencing the biggest squeeze on living standards since the 1920s. The majority of us will be no better off in 2016 than we were at the turn of the millennium. But there might as well be an economic boom as far as those at the top are concerned. The wealth of the richest 1,000 people in Britain surged by a fifth, one of the greatest leaps recorded. In the corporate boardrooms of the top 100 companies, pay went up by 49% – nearly as much as it did last year. Here was a silent class war waged from the top.

Bleak stuff, and enough to leave the Government in serious trouble, you would think. After all, the Conservatives had the last election on a plate thanks to the biggest economic crisis since the Depression and a woefully unpopular Labour Prime Minister – but they lost. Cameron is only ensconced in Number 10 because of the duplicity of the Liberal Democrats. But with a coherent alternative still lacking from the Labour leadership, David Cameron looked smugger with every passing month. Even as Job Centres became more crowded, the PM and Chancellor remained (perversely) more trusted on the economy than Labour. The genius of the Conservatives’ strategy of turning a crisis of the market into a crisis of public spending – and the failure of Labour to challenge it from the start – was paying off.

And as 2011 advanced, the Cameron regime looked a whole lot more like a hard-line Conservative government. “We are making cuts that Margaret Thatcher in the 1980s could only have dreamt of,” boasted Tory minister Greg Barker in April. As those on benefits became more demonised than they were before mass unemployment returned to Britain, a Government report proposed forcing cancer patients undergoing chemotherapy to be assessed for their fitness for work. With little co-ordinated opposition, the Government pushed through the first stage of the privatisation of the NHS, without bothering with the courtesy of putting it before the electorate first. And as Cameron flounced out of the EU Treaty negotiations – after making sure journalists were briefed he had eaten a full English breakfast – it was clear Britain had the most Eurosceptic government since World War II. But still the Liberal Democrats – a now indisputably rag-tag bunch of opportunists – kept the Government in power in cynical defiance of their (former) voters, with just the odd bit of choreographed “letting off steam” to keep up the pretence they were anything other than Tory voting fodder.

Though Cameron remained largely untouched, economic upheavals invariably cause things to “kick off”, as the BBC’s Paul Mason puts it. The students had led the charge at the end of 2010, throwing off illusions about British passivity and proving that it was possible to resist. They had put the trade unions “on the spot”, as Unite general secretary Len McCluskey put it. Many an obituary has been written for the labour movement since the hammering it suffered under Thatcher, but in 2011 it returned to the stage. Its unique potential to mobilise was showcased on March 26th, as it organised the biggest workers’ demonstration in a generation. The theme was ‘March for the Alternative’, and though that alternative remains far from properly sketched out, here was the biggest show of defiance against Tory rule yet.

But it was a Tory attempt to impose a deficit tax on public sector workers that forced the trade unions into action. Superficially, it was about pensions: they were becoming unaffordable, claimed the Government, even as a report it commissioned by ultra-Blairite New Labour ex-minister Lord Hutton revealed that pensions would shrink as a proportion of GDP in the years ahead. Indeed, the money raised from increased contributions is to flow straight into the Treasury’s coffers. On June 30th, teachers and civil servants went out on strike, and Tory minister Francis Maude had his arguments torn to shreds on national radio. Then came the biggie: on November 30th, public sector workers ranging from dinner ladies to top civil servants, lollipop ladies to nurses came out in the biggest industrial action since the 1926 General Strike.

There was a sense of exhilaration that comes from sharing a common purpose on the day. It didn’t last. In the face of media hostility, the union leaderships (with honourable exceptions) failed to present their compelling case in a way that could resonate with an increasingly union-free workplace. Dave Prentis, the general secretary of Unison, had promised “the fight of our lives”, but looks set to lead a capitulation to Government proposals. No concessions on the key issues were offered, and civil servants’ union PCS – whose leader, Mark Serwotka, had shown the most determination of the trade union leadership – was locked out of talks. And so 2011 could end with what may come to be seen as the biggest trade union defeat since Thatcher.

Resistance came in unorthodox forms, too. On 17th September, protesters set up tents in Wall Street in protest at the injustices of economic crisis; in part, they were inspired by the Spanish indignados (indignant) who occupied Madrid’s main square in protest at the political establishment in May, and they, in turn, looked to the example of the Egyptian revolutionaries who seized Tahrir Square. Occupy Wall Street was the catalyst for a global movement that finally came to the steps of St Paul’s Cathedral on 15th October. It was a drama that dragged in the usually irrelevant Church of England, forcing the resignation of three priests. But Occupy clocked up a real achievement: it reminded us all who caused the crisis, and who was being made to pay for it. Indeed, one poll revealed that 51% of Britons felt the protesters were “right to want to call time on a system that puts profit before people.”

Britain’s tearing social fabric could manifest itself in uglier ways. After 29-year-old Mark Duggan was shot dead by police, riots exploded in Tottenham on 6th August; within two days, rioting and looting were tearing through London; other English communities were next. Anger and fear provoked a ferocious backlash: mid-way through the unrest, one poll revealed one third of people wanted live ammunition used. Newspapers blamed single parents; and I was all too paralysed as I sat in a TV studio while Tudor historian David Starkey attempted to scapegoat black people by arguing that what he described as their “culture” had turned white people into rampaging thugs. As Government supported plans to evict rioters and their families if they lived in council homes and to confiscate their benefits, a precedent was set in Cameron’s Britain: if you are poor and commit a crime, you will be punished twice. With talk of “feral underclass” being bandied around, there was little sympathy for those – like myself – who argued that there were growing numbers of young people with no secure future to risk.

And so Britain leaves 2011 with an increasingly triumphant right in office; a broad opposition not lacking in passion, but scattered and lacking in coherent alternatives; a Labour leadership still failing to make the case against the Government; brutal cuts and economic crisis biting away at people’s jobs, living standards and futures; and swelling ranks of people with nothing much to lose. If it doesn’t sound pretty, it’s because it isn’t.

But it’s no time to flail around in despair. 2012 could be bleak, or it could be the year that a resurgent left gets its act together, unites around an alternative that resonates, and starts building pressure from below. Rather than assailing Ed Miliband for being hopeless, political space could be created for progressive policies, and the Labour leadership dragged to support them – willingly or not. But a note of warning. If the left doesn’t tap into the inevitable growth of anger and frustration, then somebody else will. And a cursory look back over the 20th century tells us just how disastrous that can be.

Have a look at Dazed Digital’s coverage of the Occupy movement HERE and read more of Owen Jones’ writings for Dazed Digital HERE

Owen Jones is a writer, columnist and author of the book Chavs: The Demonization of the Working Class’. His blog can be found HERE.

Welsh Labour left debates anti-cuts strategy


Darren Williams

The impressive performance of Wales’ team in the Rugby World Cup has provided a welcome boost to a nation that otherwise has little to celebrate at the moment. With a bleak outlook for jobs and public services, the Welsh political system – and especially Carwyn Jones’ Labour administration – is under unprecedented pressure, needing to present an alternative to Tory austerity but with limited powers to do so.

With a higher proportion of its workforce employed in the public sector than any other part of the UK except Northern Ireland, Wales was always particularly vulnerable to the Con-Dem cuts. Sure enough, twelve months after Osborne’s June 2010 emergency budget, Wales had already lost 10,000 public sector jobs – with much deeper cuts expected. The Tory theory that the private sector would fill the gap has been demolished by the latest unemployment figures, which show the Welsh jobless total 13,000 higher in June-August 2011 than a year before, taking it from 8.1% to 9% of the economically active population. Only an incurable optimist would have expected the requisite surge in private sector employment, given the extent to which the Welsh economy was laid low by the 2008/09 recession, losing 49,000 jobs (3% of the total), almost 40% of them in manufacturing.

Last year’s Comprehensive Spending Review left the Welsh Government with the toughest budget settlement of any of the devolved administrations: a £1.9 billion (12.4%) real-terms cut by 2014/15. And this was against a background of long-term underfunding, given the Barnett Formula’s increasing incapacity to deliver budget increases proportionate to Wales’ real needs. While publicly berating the UK government for jeopardising economic recovery and social cohesion, Welsh ministers adopted the ‘dented shield’ approach: drawing up a budget that sought to protect the most vital services while spreading the pain around. NHS prescriptions and other services that had been made free at the point of delivery were protected and there was a commitment to avoid compulsory redundancies and work with the unions to manage job cuts and facilitate redeployment.

The Welsh Government has now published its draft budget for 2012/13, which continues largely in the same vein as its predecessor, although this time health and education (together accounting for the lion’s share of the budget) have been protected, at least in cash terms, with money drawn from the government’s reserves. The budget also allocates resources to fund key initiatives announced recently in Welsh Labour’s Programme for Government, such as the creation of a ‘Jobs Growth Wales’ fund to help young people into work or training and the expansion of ‘Flying Start’, which provides free childcare in deprived areas. Unlike last year, when it was in coalition with Plaid Cymru, Labour now governs alone, with exactly half of the Assembly’s 60 seats, so it will need to persuade at least one other party to support its budget or, at least, abstain.

On the left, there are two main responses to the Welsh Government’s efforts to shield Wales from the worst of Westminster’s austerity. For the Wales TUC, dominated by the big three Labour-affiliated unions, all responsibility for the cuts lies with the Con-Dems and the Cardiff administration is effectively beyond criticism (WTUC general secretary Martin Mansfield has even tried to block union demonstrations being organised in Cardiff, lest they be seen as directed against the Welsh Government). At the other extreme, the sectarian far left demands that the Welsh Government sets a ‘needs budget’ and, in effect, spends money it doesn’t have; its failure to do this supposedly demonstrates that Welsh Labour is no better than the Tories and Lib Dems – yet these critics fail to explain where the money will come from if Westminster doesn’t immediately cave in, given that the Welsh Government can neither raise taxes nor borrow (unlike other devolved administrations and local authorities) and its reserves are already dwindling rapidly.

The left needs to develop a coherent position that avoids these two extremes, recognising that Welsh ministers are trying to do their best for the Welsh people with limited options but being willing to offer comradely criticism, to challenge certain choices (big business-friendly policies like the proposed Enterprise Zones, for example, or the Government’s readiness to cut 1,500 of its own staff, albeit on a voluntary basis), and to suggest alternatives.  The Welsh Government should be applauded for lobbying Westminster for borrowing powers and reform of Barnett (to be considered by a new Commission) but it also needs to play a genuine leadership role in building a mass anti-cuts movement.

These issues will be debated at a timely AGM of Welsh Labour Grassroots on 5th November at the Welsh Institute of Sport in Cardiff (11.00 am until 4.00 pm).  Participants will include Welsh Finance Minister, Jane Hutt, and PCS general secretary, Mark Serwotka. No-one on the Welsh Labour left can afford to miss this key event!

Darren Williams is a Trade Union Full-timer and a member of Cardiff West Constituency Labour Party and Welsh Labour Grass-roots

This article also appears in the November issue of Labour Briefing

 

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