Archive for the ‘economics’ Category

Capitalism in Crisis – a socialist solution

January 17, 2017

This is a review of the pamphlet “Capitalist Crisis – ‘Alternative Strategy’ or Socialist Plan” by Andrew Glyn, which has been recently republished with a new introduction.

Many people have looked to the left for answers to the crises of capitalism, since the downfall of financial markets across the globe from 2008 and the stagnation of the economy. Austerity is not some blip that can be transcended but is here to stay – driven by the internal contradictions of the capitalist system itself.

Andrew Glyn was writing in 1979, before the doctrine of neoliberalism held sway, and at a high point of industrial struggle which had won gains for working people. At the time, 13.5 million people in Britain were members of trade unions. The Tories, under Edward Heath, had been defeated by the miners’ strike of 1974; there was still a strong manufacturing base in the UK, and while there was a right-wing Labour government under James Callaghan, the left had a strong presence in Labour and the trade unions – cause for optimism, you might think going into the 1980s.

In 1979, there were 1 1/2 million people unemployed, a figure that seems laughably low nowadays, where millions are on zero-hour contracts, work part-time, have to work two or three different jobs to make ends meet, or are unable to find work. However, Glyn points out that if a determined socialist government were to initiate full employment, this would create enough wealth to increase minimum earnings, initiate a programme of council house building, provide an increase in pensions and better fund schools and hospitals.  An unemployment rate of 10%, he estimated, involved underproduction of 20%. Nowadays, the gap between what could be attainable and the conditions people are living under, has grown. The eight richest men in the world now own as much wealth as the bottom three and a half billion. Inequality has risen inexorably since 1979, due to deliberate policies of smashing the strength of the trade unions, with the defeat of the miners’ and the printers’ unions, the down-grading and de-skilling of jobs and casualisation of employment.

So why are we in such a mess? Unemployment provides capitalism with a “reserve army” of labour, which it can use to keep wages low, keep people hungry for job opportunities and enables more profits to be made at the expense of the working class. The pamphlet discusses the fall in the rate of profits, which has led big business to demand that the Callaghan government implement what was called, quite laughably, “The Social Contract”. A contract implies that we have some say in what was going on. In reality, Labour capitulated to the demands of big business for increased profitability, in return for cuts to living standards and cuts to public services. In this, we can see the beginnings of the policy of neoliberalism, which decimated communities, tore down industries and built a ramshackle service economy in its place, which meant a few city spivs became extremely wealthy, while the vast majority of people suffered. This was a vendetta carried out by the Tories against the trade unions.

In place of austerity, the Communist Party and Tribune put forward an “alternative strategy”. This was based on the idea of import controls, price controls, bringing banks under public ownership, defence cuts and increased investment in public services. The pamphlet does not argue that these measures would not be welcomed by the working class or that they should not be fought for, rather it questions how these reforms are to be brought about without huge pressure being brought to bear by capitalism, and how such pressure is to be resisted.

Leon Trotsky put forward a different sort of programme, which sought to win reforms for workers, but kept in mind that ultimately, global socialism is necessary in order for such gains to be consolidated. We have seen since the Labour victory of 1945, that the welfare state, the NHS, the nationalisation of the railways, public transport and the utilities, have all been destroyed by the ideology of the so-called ‘free’ market. Socialism needs to be tied to concrete demands and to be linked to the aspirations of ordinary people. However, it is utopian, as Glyn argues, that reforms can be won and held through capitalist democracy.

We have seen the pressure been brought to bear on left wing governments in the past. The pamphlet mentions the military coup against Salvador Allende in Chile, which toppled a hugely popular and democratically elected leader. More recently we have seen the vitriolic attacks against Jeremy Corbyn by the right-wing press, and the capitulation of the Syriza government in Greece to the demands of the Troika. It is naive to think that any left-wing government would be handed largesse from the pockets of the bosses, to revitalise the economy.

The measures put forward in the alternative strategy amount to a Keynesian approach to economics, an attempt to kick-start capitalism back into life, increasing wages and putting money into public services. The CBI, recognising the effects of neoliberalism on the world’s poor, fears revolts, strikes and uprisings, and has encouraged governments to do just this. However, no government is in the process of implementing such a programme, as austerity has become so embedded in the economy that any such measures would reduce profits in the short-term. The only answer to this contradiction is to move to a planned, socialist economy, to take profit out of the equation completely.

The final part of Glyn’s pamphlet explains what a genuinely socialist plan of production would look like. The largest companies and the banking system should be taken into public ownership and controlled democratically, from below. Production could be based on people’s needs and the needs of the planet, rather than funnelled into short-term profiteering. The only people who would lose out would be the rich businessmen, who are fleecing the rest of us.

The wastage inherent in capitalism and the pointless duplication of new models to capture more of a market share, and the constant drive for endless consumption would be eliminated. Full employment would mean a shorter working week, and people would be more involved in their jobs, gradually eliminating the need for micro-management, drudgery and sanctions that are a feature of capitalism.

However, such gains cannot be won without a revolution, to change the nature of society completely and for good. Such a revolution would need to be carried out initially in one country, and be the impetus for working people across the world to rise up. As Glyn puts it, “simply winning the argument and securing a Parliamentary majority for a socialist programme” is simply not going to cut it with the rapacious system of globalised capitalism.

This is not to say that gains cannot be won under the present system, or that socialists should abstain from standing in elections. We need to engage with people, put forward a coherent programme based on their expectations and to explain that we need to take control back for ourselves as a class, in order to change society. The alternative is continued austerity, environmental destruction, economic wastage, high unemployment and a shocking waste of potential for the whole of the human race.

 

 

 

 

 

Why are we in this mess?

August 16, 2013

“The history of all hitherto existing society is the history of class struggles” – the opening words of the Communist Manifesto highlights the fact that there has always been a subjugated class (slaves, peasants, workers) and a higher elite, which has opposed their interests (slave-owners, aristocracy, bosses).

The Communist Manifesto was written in 1848 at the dawn of the Industrial Revolution, which transformed economies – the mass of the population moved into cities for the first time, workers congregated together in factories as mass production took the place of traditional craftsmanship. This led to the emergence of a working class for the first time and the beginnings of socialist parties – making it possible for the working class to take over the running of society.

Looked at in terms of two opposing classes and the tension between them, economics begins to make sense. Workers struggle against oppression, while bosses fight to maximise their profits. The interests of the two are incompatible.

Marx describes this process as “surplus value”. For him, goods are valued according to the labour involved in their production. Companies take away some of our labour value – whether this is indirectly in terms of services, or directly by manufacturing goods. In return, we get a proportion of this as wages. Workers struggle through trade unions and may take strike action in order to get more pay. Meanwhile, the company seeks to maximise its profit margins. The film, The Corporation, gives a good description of how individual companies operate under capitalism – as psychopaths – devoid of human compassion, feeling or empathy and striving only to maximise their profits.

Because of this, capitalism is incapable of solving the problems of the world. It is incapable of co-operation on a global scale, incapable of planning to meet the problems of global warming, or of even finding enough resources to feed the world, or to provide clean, safe drinking water for all of us.

Capitalist economics, as Trotsky, said, creates within it the conditions for its own crisis – “capitalism is its own gravedigger”. However, there is no final crisis of capitalism, without a mass revolutionary movement to bring about socialism.

When capitalism cannot get rid of the surplus it creates, prices fall according to the law of supply and demand, and conditions are created for recession or even depression.

Eighty years ago, the Great Depression was caused by a perfect storm of forces – the stock market crash in the US, hyperinflation in Germany after the destruction of the workers’ movement, the collapse of banks, and a failure of harvests in the Dust bowl. Capitalism only emerged from this by using World War II to raze whole cities to the ground. The same process of imperialist resource-grabbing, of divide and rule (in the case of Nazi Germany taken to extremes), the naked preoccupation with nationalism and profit has led to violence, hatred and the loss of millions of lives.

Instead, socialists argue for workers’ co-operation internationally, for a planned, genuinely democratic economy where it ordinary people are in control over the means of production. We decide what our priorities are, how resources should be divided up, and we have a real involvement in decision-making. With the rule of profit gone, people are therefore able to enjoy the full fruits of their labour – a shorter working week, more leisure time and to rid themselves of the burden of poverty. We would be able to invest more resources into the economy in order to fully realise our human potential.

The present economic crash in 2008 was caused by speculation on sub-prime mortgages, with debts being consolidated and re-sold around different investors. There was a downturn in the economy, causing interests rates to be lowered, and so there was a boom of cheap credit. Loans were sold to people who simply could not afford the repayments. The system collapsed like a house of cards, or an elastic band that has been stretched way past its breaking point.

Any theory can be tested by how well it predicts actual events. Capitalist economists completely failed to predict the economic crash. Francis Fukuyama predicted “The End of History”, with the fall of the Eastern Bloc and the supposed world-dominance of neoliberalism. Gordon Brown said arrogantly that he had “abolished boom and bust”. However, in the pages of “Socialism Today”, we predicted that a crash would come sooner or later, that the bubble had to burst at some point, and that when it did the result would be disastrous for working people.

After the crash of 2008, house prices fell through the floor. No lenders were offering mortgages and banks had to be nationalised and bailed out to the tune of trillions of dollars worldwide. This goes to show that the money is there in society, it is just not spent where it is needed – on public services, or clean water, but on maintaining the status quo for big business, at any cost. Meanwhile the people at the bottom were left homeless.

In 2013, we are still not out of the woods. In an effort to reduce the debt, public services are slashed and privatised. However, post-1945, our national debt was much higher than it is now, at 240% of GDP. Yet we still managed to build council houses, found the welfare state, the NHS, and nationalise 20% of the country’s industry. All these gains were won by pressure from below – servicemen coming back from the front demanding change, a land fit for heroes. There remains massive potential for a huge fight back from the trade unions and community groups across the country – what is lacking is any leadership. Unlike 1945, Labour has shifted massively to the right, and refuses to countenance any alternative to cuts and austerity. We need to build that alternative.

However much workers gained through their struggles, capitalism will always come back for more. We get a few crumbs from the rich man;s table in good times, but in bad, there is no hesitation in cutting jobs and wages, even if this costs lives. Look at the rises in NHS waiting times and the increase in the number of deaths in our hospitals as the cuts bite.

We need to build a new parties to represent working people internationally. In Britain, TUSC is hopefully the genesis of a new workers’ party. The trade unions must break with Labour or be broken as they will lose members in their droves, either through disgust at the way they are treated by their leadership, or through job losses and privatisation. The Labour Party is undemocratic, and the Falkirk scandal, where Milliband threatened Unite with legal action for the crime backing its own (not even very left-wing) candidate, and getting working-class people to join Labour, proves that it is completely unfit for purpose.

Depressions can have a stunning effect on workers – they can keep their heads down, afraid of the sack, or grateful that they have a job at all. However, at some stage, there must be a mass fight back. The potential was shown on November 30th 2011, when 2 million workers took strike action. Across Southern Europe and North Africa, the fight back is already happening – people have no choice but to take to the streets and fight their own governments, who have nothing to offer but austerity.

The crying shame is the lack of a revolutionary leadership of these movements, capable of uniting struggles and putting forward a socialist programme to take power. Join the Socialist Party and the CWI and help us build that leadership.

Triple Dip

March 7, 2013

Something is wrong, when the future of millions
Is described as if we were fruit in a yogurt,
Or sticks of chocolate in an ice-cream pot.
“I’ll have a tub of your Triple Dip please, with billions
Of hundreds and thousands on top,
Just like the bonuses the bankers got”.
The politicians, with incredible gall
Try to make the poor pay for it all
By slashing our services and cutting our jobs
The youth go on riot, but they’re not the real yobs.
They’re in a cabinet of out-of-touch Bullingdon snobs
And Labour – hand-wringing, apologetic – sobs
That they can’t afford to pay any more.
Milliband’s not much better and Brown used to bore
On and on about abolishing boom and bust
But the working class have got them all sussed.
We don’t need a yogurt, we need a new workers’ party
To fight all the cuts and put an end to austerity.

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