Capitalism is failing. Don’t take my word for it; don’t even take the word of Lefty journalists and commentators. The word on the street is not coming from the Socialist Worker, Left Review or the Guardian. It is coming from the bastion of the ruling class. Harvard Business School is where the future rulers of the capitalist system such as US Treasury Secretary Henry Paulson, Ed Miliband and others such as Benjamin Netanyahu and Ed Balls go as a kind of finishing school for neo liberals.
Harvard economist Umair Haque made the following, breathtaking assertion in October 2013 regarding post crash austerity and its effects on the neo liberal system, “ It seems to be a toxic a mixture of capitalism for the poor, who are ruthlessly whittled down, in brutal Darwinian contests; and socialism for the rich, for whom there appears to be no limit to bailouts, subsidies, and privileges. It’s a lethal cocktail of cronyism for the powerful; and endless struggle for the powerless. It’s neither fish nor fowl; but a chimera.” (Source Harvard Business Review Oct 28th 2013)
The basic argument is that capitalism is practicing a slow and painful suicide which will eventually reach a tipping point resulting in serious and widespread social unrest. This point will be reached when the so called middle classes are squeezed so hard that they will be joining the queues of 913,138 UK citizens who were forced to seek three day emergency supplies by referral to a food bank in the year September 2013/14. (Source Trussel Trust http://www.trusselltrust.org/foodbank-figures-top-900000) With wages trashed and 8 million people either under or actually unemployed, and welfare having been cut to the bone the one thing that capitalism needs not only to thrive but to survive has been cut off. Demand.
Demand for goods and services are what spins money around the economy. Whilst in power Labour’s Chancellor Alastair Darling responded to the economic meltdown by cutting VAT and introducing a Government backed scheme to keep demand going in the UK’s ailing car manufacturing industry.
The car scrappage scheme saw the Government subsidise each new sale to buyers getting rid of a ten year or older car to the tune of £2000. 330,000 vehicles were sold which accounted for a 1/5th of all transactions. 4,000 jobs were saved meaning that the welfare budget was cut and the extra cash pumped back into local shops and services. In addition new cars emit 27% less CO2. (Source BBC news 30/3/10) Everyone’s a winner.
We can argue that it was Labour’s chronic lack of will to control the financial sector that led to the crash in the first place, and we would be right.
Tony Blair’s thirst for social justice was admirable and the creation of the minimum wage, the New Deal with its aim of bringing back the 1945 concept of full employment, allied to massive investment in the public services reframed the debate in favour of the state taking the lead in public policy and actions.
But it foundered because New Labour accepted far too many of the neo liberal ideas pushed ahead with by the Tories for the years preceding 1997. “Flexible” working saw an addiction to long working hours, a lack of meaningful trade union involvement and the placing of a high profit but low wage economy at the heart of the way the UK paid its way in the world. Add in to that a total lack of industrial and energy policy and being, “intensely relaxed about people getting filthy rich” (Peter Mandelson quoted by the Guardian http://www.theguardian.com/politics/2012/jan/26/peter-mandelson-knack-infuriating-enemies) and you have a toxic mix to corrode any gains made by working people. It became a case of us being made to feel grateful for any scraps that fell from the table of the ruling class.
The minimum wage and a commitment to NHS spending should be a given for a Labour Government. There should have been a debate about workers control and Co Operatives in the public services and industry, but instead we got the introduction of privatisation which has been seized on by the Tory led government and led to the mess we are in now.
Austerity. The very word conjures up the image on the cover of George Orwell’s audit of working class life, “The Road to Wigan Pier” written in 1937. Or the grey, smog filled era of post war Britain where rationing continued into the 1950’s. The modern day reality is food banks, a return to the humiliation of Public Assistance via ATOS and the return of the word, “destitution” to our vocabulary when talking about other fellow Brits. But that is the reality.
For the first time since records began more men aged 44 and over ended their lives by suicide in 2013 with experts pointing the finger at government policy. Dr. David Stuckler is Lead Lecturer in Sociology at Cambridge University. He said, “Human beings are the real tragedy of an economic crisis, so it is terribly frustrating that government leaders have not only failed to invest in programmes that protect people, but have actually done the opposite… This has been the pattern for three and a half decades but lessons have not been learnt.” (Independent 8/5/11)
Pay Day Loans are a scourge on our society and the resurgence of Pawn Brokers in our communities is an echo from the Hungry ‘Thirties.
Austerity is economically illiterate. The Harvard Business School recognises it. Why can’t Labour Shadow Ed Balls? Instead of refloating demand by using the opportunity to invest in house building, UK innovation in green energy and coal, or stimulating industrial output he announced at September 2014’s Labour Conference that he was going to cap welfare spending and hold child benefit payments to a 1% rise for an extra year beyond what the Tories want to do! Madness. His only “concession” to working people was a commitment to raise the Minimum Wage to £8/ hour by 2020. That will barely compensate for the trashing of wages we have seen since 2010 allied to crippling fuel costs and a VAT rate at 20%.
Balls’ speech offered nothing new and nothing that isn’t just about re arranging the deck chairs on the Titanic. Indeed he reaffirmed his intention to privatise the Government’s stake in the Banks. So much for tougher regulation. There was not one iota of a plan to turn things around, and there won’t be unless Labour turns its back on neo liberalism and instead adopts a socialist agenda starting with a Land Tax to eliminate the deficit, build 2 million new homes and abolish VAT. Then they can do what Harvard wants by injecting demand back into the economy. But this time it will be an economy own and run by the working class for the benefit of all, not narrow sectional interests.
With thanks to Mike Whale for the inspiration.