Thursday, 24 February 2011

From Economic to Political Crisis

The Economic Battle

There has been much discussion on the left about developing the anti-cuts campaigning beyond “simply” protesting about spending cuts.

One of the most frequent, and often difficult, questions we are asked is “if you aren’t going to cut spending, how would you reduce the deficit”. This point then leads to the favoured criticism from the right, that anyone who questions spending cuts is a “deficit denier”.

This question demands an answer. If we want people to accept that the cuts are an ideological assault on ordinary working people, we need to show the majority of the population that another path is possible.

Firstly we must not deny that the deficit is a problem. Reducing the amount of interest the government pays on its debt is a good thing! A country cannot run a deficit forever. However we must continue to make the argument, which is often done very well, that the deficit has been exaggerated, that the total national debt is both historically and internationally manageable (and even small), and that cutting spending is not the best way to reduce a deficit.

The Labour Party leadership has taken a very small step in this direction. However it is still a party of cuts, and a party unwilling to offer credible alternatives to the Con-Dem agenda.

Many on the left demand that we fight every cut. There is nothing wrong with this in essence, but what about cutting bankers’ bonuses in the state owned banks, or reducing military spending to average European levels, or cutting high pay in the public sector, or cancelling Trident replacement? We need a more measured line than “don’t cut anything”. The line needs to be “fight every job cut” or “fight every welfare cut” or “fight every cut to services”.

So, to take the Labour line, there are three ways to reduce a deficit.

  • Cut spending
  • Increase taxes
  • Encourage growth (which leads to an increased tax revenue)

We are part of the anti-cuts movement, therefore the “cut spending” option is not open to us (taking into account the more subtle points of the last paragraph).

The increase taxes option is a good one. A transaction tax on the banks could raise as much as we like. Reasonable estimates, without driving the banks out of business, seem to be around the £20bn a year mark – significantly more than George Osbourne’s £3bn. Another important argument to make is that around £120bn a year of tax is either avoided, evaded or simply uncollected. This is the line put forward most strongly in the PCS union campaign, and is an important tool for us to use, especially given the level of corporation tax Barclay’s paid on its most recent profit figures (an equivalent of only 2% according to most analysts).

However the “tax the rich” mantra can only go so far. While all socialists will argue for a more progressive taxation system, the general public are still being bombarded by right wing arguments that if we tax the rich, they will leave, and they will take their “wealth” and “job creation” with them. We know this is rubbish, we know that without the poor the rich wouldn’t be rich, but if we take this as the main plank of our argument, we will put off many people.

The final point on economic growth is an important one because it can be used in two ways. The first is simple.

By cutting investment, jobs and general spending, more people will be out of work. This will increase the welfare bill and reduce the income tax intake.

The second line is something Ed Balls has been trying to put forward. When the private sector is weak, the public sector should spend more, as the public sector is able to borrow money over incredibly long terms (some bonds are issued over 99 years), allowing the government to be the economic driving force behind job creation. This is when we can argue that after the second world war the UK government built the welfare state, created the NHS, began the motorway building project etc etc etc.

This Keynesian economic model is something the left and Labour Party need to put forward more strongly. But, like the other solutions to the economic crisis, it cannot be put forward in isolation.

Developing the Political Crisis

So why is it that with the greatest economic crisis the world has seen in several generations, the people of the UK, USA and Europe are electing right-wing, neo-liberal, pro-business, anti-worker governments?

One reason is that the crisis occurred while moderately left and centre governments were in power. Therefore popular discourse blames the government of the time for “causing” the crisis. This very simplistic argument comes more readily in the UK following the parliamentary expenses scandal and general distrust in our politicians. This is also the dominant theme in the media, a media which relies so heavily on the advertising revenue of big business, it dare not upset them.

The challenge for the anti-cuts movement, once we have a solid grounding in the arguments of why the cuts are wrong, is to turn the economic crisis into a political crisis for the ruling elite and the capitalist class. If we cannot put forward a strong socialist alternative at this time, then we will have no chance of gaining ground when the capitalist system is once again in a growth phase.

To some extent the government are already creating their own political crisis. As the cuts begin to bite and living standards fall, people will start to look for alternatives. Some people may truly believe that the cuts are necessary and accept the “no pain, no gain” argument. These people are likely to be Tory supporters, and it is up to individuals how much of their time they want to waste on them.

The people we need to reach are the unconvinced, largely uninterested, majority. At the moment people are bombarded every day by the cuts message. Until people learn about and accept the alternatives, there can be no political crisis.

But whom are we trying to create a crisis for? Whom do we need the people to rise against?

The anti-cuts movement needs to show that all three major political parties are to blame. We can use the rhetoric of the media to blame Labour, but then we need to show that the alternative offered by the coalition is more of the same (and worse). Labour began PFI schemes, academy schools, banking deregulation, selling public assets, privatisation, supporting anti-trade union laws, and this government wants more of the same.

This government is cutting corporation tax as a solution to the crisis. Ireland had one of the lowest levels of corporation tax in the EU and one of the worst of the financial crises! What is this coalition trying to do!? The tax cut for business is a give-away roughly equal to the tax increase from the VAT rise. This is a naked, shameless transfer of wealth from the poor to the rich.

We need to show that there is a revolving door at the top of politics and big business – MOD staff in the arms trade, ministers “retiring” into company directorships, company directors becoming government advisers, newspaper executives working in PR departments.

Our politics is dominated by a small elite. Many are millionaires, most went to private schools. Upon retirement they award each other titles, pensions and jobs for life as ambassadors or in the unelected House of Lords.

None of the main political parties are offering real policies that will directly help normal people. There is no plan on housing, transport, the environment or job creation. We are expected to let the private sector and free-market come to the rescue.

We are dominated by an ideology that believes big business is good for us. We need to remind people that it was big business that caused the crisis, and big business that caused the increased government spending and resulting deficit.

We also need to show that much of what the coalition is doing has nothing to do with deficit reduction.

  • Restructuring the NHS will not save any money – it merely moves the administrators off of the governments pay sheet and their cost is bundled up with the management costs paid to the private companies that will replace the Primary Care Trusts.
  • Free schools don’t save any money – it will actually take money away from already established state schools.
  • Selling Royal Mail won’t save any money – Royal Mail is a profitable company, and the one part the government will keep hold of is the pension deficit, resulting in a net cost to the government.

One thing that left wing parties, activists and anti-cut campaigners should be able to agree on, is that the best way to stop the cuts, is to get rid of the coalition.

Until we can successfully turn the economic crisis into a political crisis for the ruling elite, we will not be able to do this.

Creating this political crisis demands that we show that cuts are wrong, there are alternatives, and the ruling coalition is acting for big business and against working people.

Saying that all politicians are as bad as each other is a simplistic argument, but in this case quite a good one.

Tim Gulliver
Exeter and South Devon Branch
Communist Party of Britain

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