Socialist Studies Socialist Studies

Carry On Austerity?

The Politics of Austerity

The budget is of no interest to the working class although the economic forecast given by the Chancellor, Philip Hammond, showed no let-up in poor economic growth and productivity. For the working class the austerity programme, introduced in 2010, will continue for at least another ten years. According to the INDEPENDENT it is the biggest fall in living standards for a generation with “[the] age of austerity and stagnant wages to last another decade” (Friday 24th November 2017). And the Resolution think-tank claimed that “productivity levels were running at their weakest levels since the Napoleonic wars of the early 19th century”. All doom and gloom

Socialists do not see the Tory politics of austerity as inevitable. Socialists were never taken in by the vacuous claim that: “we are all in it together”. Austerity was imposed by the Tory-Lib Dem Coalition on the working class to help the capitalist class in the wake of a severe economic crisis and trade depression. There is a socialist alternative to austerity but the social reformers keep on getting in the way by promising something to the working class they can never deliver: capitalism working in the interest of all society. It is a myth.

Seventy-Five Years ago, Beveridge published his 299-page report laying the foundations of “the welfare state”. We were told by the social reformers that we did not need socialism because the state, underpinned by Keynesian economics, would end the five social evils of “idleness, want, ignorance, squalor, disease”. That these five social evils are still with us not only shows the failure of social reformism but also its success in pushing the urgent need to establish socialism off the agenda.

The social reformers claiming to be able to ditch austerity and spend in the interest of workers have previous form. If Gordon Brown had won the election in 2010 he would have had to carry out similar economic reforms to the Tories. The Keynesian policies introduced by Brown in the wake of the economic crisis – a crisis he claimed would never occur under his watch - would have resulted in the same failure as in the 1970s when the Callaghan Labour government had to drop Keynesianism in favour of the equally flawed Monetarism of Milton Friedman. Callaghan told the 1976 Labour conference that the government could no longer spend their way out of a depression. He told them:

We used to think you could spend your way out of recession and increase employment by boosting government spending. I tell you, in all candour that that option no longer exists ...

The same economic reality would have applied to Ed Miliband as it will equally apply to Jeremy Corbyn if he ever gets elected into power. Past history has shown the Labour Party promising workers all and everything when in opposition but when in power forced to introduce measures to help British capitalism no differently than the Tories, resulting in cuts to public services, the NHS and the so-called welfare-state.

The impact of the politics of austerity has fallen on the working class particularly the unemployed, the disabled and those working in the public sector like the NHS and Local Government. Food bank usage has increased since 2010, half a million people received food package from the Trussel Trust’s 428 outlets and an all-party parliamentary group on food poverty estimated that at least as many independent food banks again were in operation (GUARDIAN 26th November 2017). Universal benefit has led to an increase in child poverty and there has been an increase in homelessness. Austerity for the poor while the rich get richer. The capitalist class has increased its wealth by investing capital, exploiting the working class and making a profit as capitalism slowly moves out from a deep economic depression. There are now more billionaires in the UK than ever before: so much for us all being in it together.

Of course, the Tory government will not admit that the economic crisis of 2008 was caused by capitalism. They conveniently blame the previous Labour government. In fact, they still blame the Labour government for the last economic crisis. During his Budget speech, the Chancellor Peter Hammond referred to “The Labour Government’s financial crisis” as though it was caused by their reckless economic policy. Governments do not cause economic crises and trade depressions. That is the result of capitalism and the anarchy of commodity production and exchange for profit.

Now Labour blame George Osborne for austerity claiming he never cleared the deficit and increased government debt to one trillion pounds. In fact, the policy of austerity is not about reducing the deficit or government spending or about reducing the national debt. Lowering corporation tax, and the rate of taxation of the rich, along with a reduction in state spending and a fall in real wages which is usual in a depression, are all factors the Tories believed, might tempt capitalists to invest again.

However, at the end of the day it is only when the capitalist class believes that economic conditions are right to make a profit that they will start to re-invest again. The movement of the trade cycle is immune to government interference. The only way to stop the economic and social consequences of the trade cycle – periodic mass unemployment, government attacks on the unemployed, the sick, the disabled and the vulnerable is for the working class to organise consciously and politically to replace capitalism with socialism. Otherwise the problems workers face will just be repeated from one generation to the next.

Workers should have nothing to do with the Labour Party

The Labour Party, under Jeremy Corbyn and his Shadow Chancellor, John MacDonnell, claim they oppose austerity. If he ever comes to power Corbyn wants to introduce a “People’s Quantitative Easing” to replace the Tory policy of austerity possibly causing inflation to rise. His Chancellor wants to “borrow and invest” (GUARDIAN 27th November 2017).

If Corbyn became Prime Minister and tried to put his policies into practice, he would find resistance from the markets and investors would require a higher rate of interest before lending to the Government. He would have to back-track and amend or drop the policy as previous Labour administrations have had to do. If there was an economic crisis other economic forces would also derail the policy as the government would be faced with high unemployment, lower taxes coming into the treasury and depressed markets. Note that in the speeches on the economy, if and when they take power, Corbyn and MacDonnell assume no economic crisis will take place during their administration. Why do they think they are any different from previous governments?

Of course inflation has always been a way of confiscating savers’ money and eating away at the interest on loans. Witness the Weimar Republic. Like the rest of capitalism, one person’s loss is another person’s gain. The total amount of wealth in circulation is unchanged at any one moment. It takes human labour power to create new wealth along with natural resources, including machinery and technology. Those who imagine new wealth can be created by the “stroke of a banker’s pen” are indeed living in an economic madhouse. What economists and politicians do not understand is that the total spending power of the capitalists and the government is a fixed amount at any time. If the government subsidises one section of the capitalist class, it is usually at the expense of other capitalists.

An understanding of the politics of austerity by the working class should be creating socialists. The working class does not have to put up with austerity nor sign up to the failed reformism of the Labour Party and the capitalist Left. Austerity shows that capitalism and those who administer it are not interested in the welfare of human beings, only in the interest of the capitalist class to make a profit. Deaths in the NHS resulting from cut-backs, discomfort to the disabled and blaming the poor for being poor as a result of benefit assessments and the imposition of the Universal Credit show what a callous and anti-social system capitalism is when having to sort out problems created by the profit system. Socialism should be seriously considered by the working class as an urgent necessity.

However, what stands in the way of clear working-class thinking about capitalism is the lure of social reformism. It is all very well being “against austerity” but the priorities and options governments are forced to follow are dictated by the capitalist system not the needs of the working class. It is very easy to blame the government for its politics of austerity but the government is behaving in the way any government, Labour, Tory, LibDem or Green, would behave in the circumstances. If you live in capitalism you have to play by the rules of capitalism. And the rules of capitalism are all about profit making, not about meeting people’s needs.

The politics of austerity can be resisted to some extent by trade union action but only so far. Long ago, in a paper WAGES, PRICE AND PROFIT, Marx said that there are limits imposed on trade union action. Determined action by the employers and the state cannot be overcome by trade union resistance and strikes. Trade unions can be successful here and there when particular economic circumstances are in their favour but they cannot change the playing field in which the class struggle is played out – the private ownership of the means of production and distribution protected by the machinery of government including the armed forces. In depressions or when trade unions are weak, employers and their government have the upper hand.

This is not defeatism but realism. Workers must be made aware of the reality of capitalism: class exploitation and the problems that causes, as well as the severe limitations imposed on what can and cannot be done by trade union action within the profit system. Workers must also understand that politicians and governments, whether well-meaning or vindictive have no option but to run capitalism in the interest of the capitalist class.

Socialists are not defeatists because we do suggest an alternative route away from the politics of austerity. We urge workers to consciously take political action to establish socialism, to change society by social revolution from minority ownership and production for profit to common ownership and production directly to meet people’s needs. Instead of the politics of austerity and the futility of reformism it has to be socialism.

The Capitalist Left get in the way of Socialism

And the capitalist Left continually get in the way between the working class and the case for socialism. On the evening of the 21st November 2017, following the announcement of the Budget, the People’s Assembly – an anti-austerity group - demonstrated outside the gates leading to Downing Street under the banner “Sack the Tories”. They also want an end to the Tories universal credit policy. As a publicity stunt they piled up £10,000 of food on the pavement to embarrass the Tories, which was then going to be distributed to a food bank in Coventry.

One of the leaders of this group is Counterfire. This is what they said:

We want to urge the Government to use the Budget to scrap their plans for Universal Credit, to close tax loopholes and force the tax avoiders to pay their fair share, to end the public sector pay cap with an increase above inflation, and to make sure our public services are properly funded.

Counterfire is not a socialist organisation but a reactionary group peddling failed political ideas to the working class. In “CLASS, WEALTH AND POWER IN NEOLIBERAL BRITAIN” (no date), Lindsey German calls for a Trotsky-inspired “United Front” to fight racism and fascism and a “new Leninism” while parasitically feeding off the discontent, anger and rage of a non-socialist working class.

A “United Front” formed by a non-socialist working class led by professional revolutionaries will not prevent the rise of racism and fascism because such political action does not deal politically with the capitalist cause. And a “new Leninism” is the last thing that should be offered to workers. The old Leninism was bad enough and is rightly seen as one of the principles barrier to socialism by distorting the ideas of Marx and exporting out of Russia a politics, which if successful, would only lead to state capitalism and totalitarianism.

What sort of propaganda is “sack the Tories”? Who is going to sack them? They were elected largely by a non-socialist working class vote and the conservatives do not have to seek re-election until 2022. It really was a crass and childish propaganda stunt by professional politicians who do not even believe in the practical success of their own publicity stunts. What did they achieve? Absolutely nothing. The last thing on their mind is to explain to workers the case for socialism.

In any case they would have been unable to explain the case of socialism to the working class and for a very simple reason. The capitalist Left do not advocate the establishment of the common ownership and democratic control of the means of production and distribution by all of society. Instead they offer the working class a vision of nationalisation or state capitalism. Socialists the capitalist Left are not.

The capitalist Left have an utter contempt for the ability of working class to understand and accept socialist ideas and become socialists. These self-appointed leaders think workers are too stupid to become socialists, to think for themselves and to understand the need for revolutionary socialist action. And their opportunism beggars belief. Here is John Rees, another leading intellectual of Counterfire on the former dictator of Iraq, Saddam Hussein:

Socialists should unconditionally stand with the oppressed against the oppressor, even if the people who run the oppressed country are undemocratic and persecute minorities, like Saddam Hussein” (Alan Johnson “The Euston Moment”, the, 21st April 2008)

Counterfire also supports Corbyn’s Labour Party and John Rees toured the country in 2016 to support Corbyn’s bid to become Prime Minister. Do these self-styled revolutionists ever learn from history?

At the demonstration in London, there was no analysis of capitalism by the organisers of the People’s Assembly Against austerity. There was no recognition of the futility of reformism. And there was no spreading of socialist ideas. Do they really believe a hectoring speech by Lindsey German, one of the leading lights of Counterfire, will so frighten the Tories that they will drop their Universal Credit policy, close the tax loopholes, particularly for those funding the Tory Party and end the public sector pay cap? What planet does she and her organisation live on?

The demonstration was a waste of time on a cold Wednesday night. Gesture politics does not change anything. A bitter truth is better than a sweet lie. The bitter truth is that the only way to end the politics of austerity is to abolish capitalism and establish socialism. And the sweet lie of the capitalist left is to make workers believe capitalism can be changed to meet their interest when it can do nothing of the sort.

Instead of the politics of austerity and the futility of social reformism, socialists suggest to the working class the establishment of socialism. Socialism has to be established by a majority of workers acting in their own class interest, without leaders and the led. As socialism will be based on the common ownership and democratic control of productive resources there will be no barriers, as there are under capitalism, preventing production being used solely and directly to satisfy people’s needs, such as housing, healthcare, education , transport and other services.

Socialism is, the only alternative to the politics of austerity. Jeremy Corbyn’s reformism and the Trotskyist-run People’s Assembly cannot offer a practical and realistic way out of the economic assault on the working class. Only the abolition of capitalism and the establishment of socialism will create a world free from capitalism and the brutal callousness of the politicians who serve it.

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