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Sunday, 30 October 2011

The contradictions of capitalism part 3 : the class struggle

This is part 3 of my look at capitalist modes of production and its contradictions which lead to such crisis's in its system. The system of capitalism based on the exploitation of the working class by the ruling class to produce more and more wealth for a smaller and smaller minority is where this vicious system begins to fall down.

For as long as time has begun and humans have been about there has been some form of class structure to humans be it the old surfs or the monarchies and kingdoms of old. Now in todays world we have capitalism which pits two groups of class's against eachother in a constant tug of war if you like. The ruling class often called the bourgeoisie and the working class those who have to sell their labour to get by often refered to as the prolitariat . This has seen big battles of concessions and loss's for both sides over the years but very rarely the capitalists loose out at all. They will always find a way of surviving and do so up to this day.
We pick up this look at the contradictions of capitalism after looking at the over production of products and the ideas of monopolies and the failiure of the market to produce long term success for the majority in the previous posts i've made on capitalism so far. Next we look at the class struggle and the battles that have taken place over the years.

there is the contradiction between the capitalist class and the working class rooted in the exploitation that takes place in every capitalist workplace. This class conflict has accompanied capitalism from its birth. For centuries the bourgeoisie has used all its economic, ideological and political power to incorporate, divert and repress working class resistance. Time and again it has been successful, inflicting on the working class numerous grievous defeats, and time and again its ideologists have proclaimed the end of the class struggle.
But to no avail. The fact is capitalism cannot do without the working class; it needs it to produce its profits. And the more capitalism grows and expands, the more it is compelled to increase the size and potential power of its mortal enemy. The bourgeoisie can win battle after battle but it cannot win, or end, the war. The class struggle can end only with the overthrow of the bourgeoisie and the abolition of capitalism.

A further contradiction is that between the capitalists themselves. Capitalist production is organized on the basis of competition between rival capitals. This competition permeates the whole system from the level of the smallest corner shop to the biggest super market, from the most humble workshop to the mightiest multinational corporation, and, because the state is the instrument of capital, it produces competition between states which in turn leads to imperialism, arms races and wars.

Capitalist competition is competition to accumulate capital through the exploitation of labour. Any capitalist business that falls behind in the race risks bankruptcy or take over by its more profitable rivals. Every capitalist is therefore compelled to attempt to increase the exploitation of their workforce and the sum of their profits, thus intensifying the contradiction between the classes. Free market competition turns into its opposite, monopoly, as unsuccessful businesses are swallowed up by successful ones, but competition is not ended, it breaks out anew between the monopolies.

As the class struggles get more and more intense as capitalist production slows as it cant find anywhere new to make profits from the workers still demand more and more wages for working harder and harder. The capitalists will always look to cut workers pay and conditions first of all when looking to save money. This is another contradiction as capitlaists dont always look after their workers and as Karl Marx pointed out in his critical analysis of capitalism in Das Capital the workers are simply a tool of labour brought by the capitalist to produce the final product to sell on and make a profit from.

There is always money for a capitalist to spend on wars and exploitation of his or her workers but workers are told there is no more money for your wages and no more work and you will have to be laid off.
This is another fact of capitalism that workers are only wanted for a short time when there is no percieved need for their labour anymore the capitalist has no worries in laying them off straight away as all he or she is interested in is making that next profit.

A system based on exploitation of workers and the creaming off of the fruits of workers labour for their own greedy profits is not a system i'd like to entertain for much longer. I hope there is a general realisation of the way things work and a exposure of how this capitalist system works to open ordinay peoples eyes to the shocking way this system of waste and profit works.

In my next piece i will be looking at the ideas of Karl Marx further looking into his findings on workers wages and how they are constantly being squeezed by the capitalist and he/she never gets paid what their labour produces only a slice of that.

Friday, 28 October 2011

Is rank-and-file militancy on the rise again in Britain ?

Over the last few weeks we have sen lots of improvised walk outs and pickets of construction workers and electritions in and around London. Plus across teh rest of the country too. This has not been union lead or backed by any ballot but a clear sign that workers certainly in the construction industry have had enough. Facing cuts to their pay of around 35% they have every right to be angry i feel.
Along with the cold weather it was a sign winter is just around the corner. Despite the chilly weather though, the struggle between construction workers and the 'big seven' electrical contractors rages on as hot as ever.

These companies want to withdraw from the JIB national agreement. Balfour Beatty has been targeted because over 1,600 of their electricians have been given notice that the new inferior BESNA contracts will be imposed on them. This could mean a 35% pay cut.

Blockade
Pickets arrived in a determined mood and a blockade of the site was launched. This led to scuffles with police throughout the protest.

It appears that a number of workers refused to go into work, while many who did, took leaflets in with them.

A group of about 60 protesters blocked a supplier's entrance for a few hours, ensuring that some deliveries were missed.

A number of speakers addressed the protest including Chris Baugh, deputy general secretary of the PCS union who brought solidarity from his union and emphasised the need for public and private sector workers to take action together on 30th November and in the future.

Rob Williams, chair of the National Shop Stewards Network (NSSN), Clare Laker-Mansfield from Youth Fight for Jobs and UCATT General Secretary candidate Mick Dooley were also among the speakers.

The confidence of workers had been boosted prior to the protest by a meeting the previous day in Leeds.

At that meeting were Unite construction officials, shop stewards from across the country and representatives of the London rank and file body. The meeting agreed to ballot workers at Balfour Beatty sites for strike action.

Building for strike action
This is a big step forward in the fight to defend construction workers' terms and conditions. The workers can build on the huge success of their weekly protests as a platform to launch action that will shut down all sites operated by Balfour Beatty.

They now have the task of getting the biggest possible yes vote for a strike. This can be done firstly by getting as many workers as possible 'on site' into the union and at the same time convincing them to vote yes to strike action.

Those workers who joined the protest today can go back into work tomorrow and begin arguing the case for action.

Many workers who did go into work at Blackfriars today said they would vote for strike action if a ballot paper was put in front of them.

If a friendly, patient attitude is taken by pickets to workers who have not yet joined the struggle then there is every reason to be confident that they can be won over to the idea of taking action.

As Rob Williams pointed out in his speech, the worker who crosses the picket line today could well be the worker who comes out on strike tomorrow.

This point was echoed by a Unite official in the final speech to pickets when he said that the main enemy was not the workers still on the sites but Balfour Beatty itself.

It is vital that Unite the union backs up its promises with swift action. Electricians and others will return to Blackfriars next week to protest.

Unite official Harry Cowap will be meeting with workers on site that day to encourage them to attend the national day of protest in London on 9th November.

That meeting could be more important if it becomes part of a campaign to secure a yes vote for industrial action and begin planning for the shutdown of the site.

Similar meetings on every single Balfour Beatty site across the country would be a big step towards defeating the attacks of the employers.


pieces of this post have come from the socialist party website and original article from Neil Cafferky

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So will we see a return to a heightened state of militancy as we gear up for N30 and beyond. Will workers gain confidence from these smale scale demonstrations and look to broaden them out. I certainly hope so as this will lead to a more democratic struggle for workers where they feel more in control of their struggles and not being spoke down to by a trade union leader all the time. Linked to a national ballot this could really go somewhere i feel. As long as the union backs the protests where it can there could be a chance of a real victory here for construction workers if they keep their nerve.

Tuesday, 25 October 2011

Monday, 24 October 2011

NO to divide and rule, all unions must stand together for 30th Nov

Today we learn of the fact that the FBU will not be balloting its members on proposed pension reforms strike ballots like other public sector unions. This is a crying shame and a disapointment to hear as we approach what could still be one of the biggest strikes ever in the UK since 1926.
As a socialist we urge all union members of public sector unions faced with a ballot at the moment to vote a big yes this week and not be taken in by any divide and rule tactics this government will try and use on ordinary workers. Dont let your leaders take you fora ride keep the pressure on for industrial action. Only by standing together united we can win this battle and knock this government back off its perch.
We heard th other week of Brendan Barbour meeting tory ministers at the tory party conference for secret talks. We demand no secret talks and to keep ordinary rank-and-file informed and not hide the facts.

A striking committtee in the workplace can be a way around increasing beurocracy and remain the strikes democratic with ordinay workers. Below is a piece from union news UK and a bit from Matt Wrack on the FBU's position.

by Pete Murray of Union news UK - 19th October 2011, 12.16 BST
FBU members will not take part in the strikes on November 30th.

The decision not to ballot for industrial action, taken by members of the union’s executive committee, does not rule out strikes in the future. The news comes after the government made a key concession on changes to the fire fighters’ pension scheme.

In notes posted earlier this week on the FBU website, General Secretary Matt Wrack says Treasury ministers had agreed to extend negotiations over the “cost ceilings” on pensions. He says: “we have stated that these could set a financial ‘straight jacket’ for discussions around pensions. We have raised these concerns with various ministers, explaining our view that setting these without firstly considering other issues would clearly undermine the legitimacy of any discussions.”

The government-commissioned Hutton report on the future of public sector pensions had recommended imposing upper limits on the cost of individual schemes in an effort to limit taxpayers’ exposure to what ministers regard as “unfunded liabilities”. The Chief Secretary to the Treasury, LibDem minister Danny Alexander said in June that the government intended to extend Lord Hutton’s proposals to individual pension schemes, making each scheme subject to separate negotiations and – potentially – different timetables. Unions have repeatedly challenged government claims that the public sector schemes are unaffordable in the long term.

UnionNews understands that the government and a number of local authority employers have agreed to begin a 12-week consultation on cost limits being considered for the fire fighters’ scheme. While this will provide scope for FBU negotiators to revise some of the most damaging aspects in the Coalition’s pensions agenda – such as proposed changes to the retirement age for fire fighters – it also means that the FBU will not be in a position to notify employers of a “trade dispute” (as required by the anti-union legislation covering strike ballots) until that consultation is completed early next year.

An official source said the government “would have been crazy not to try” to make concessions to some of the 14 unions planning joint strike action next month, in order to reduce the impact of what is still likely to be the largest single mobilisation of workers in the UK for a generation. The union is expected to issue a public statement calling on FBU members to support any action on the 30th of November in whatever way they can.

A statement by FBU general secretary Matt Wrack is here




October 19, 2011
CIRCULAR 2011HOC0517MW

19 October 2011

TO: ALL MEMBERS (HOME ADDRESSES)

Dear Brother/Sister

HANDS OFF OUR PENSIONS: LATEST POSITION – 19 OCTOBER 2011

The Executive Council met yesterday (October 18) to assess the current situation around our campaign to defend pensions. This included report backs from discussions at our Committees across the UK as well as reports from the most recent meetings with Government ministers and officials.

The most significant development to be considered was the decision of the Westminster Government to comply with the FBU request not to set an immediate cost ceiling for the Firefighters’ Pension Scheme. This clearly does not resolve the issue in any way. It does however offer us an opportunity to try influence Government before any such cost ceiling is set. Among TUC trade unions, this has put us in a unique position since cost ceilings have now been set for the main public sector schemes.

A major concern of our colleagues in other unions has been a refusal by Government to engage in serious dialogue or genuine negotiations in the other pension scheme talks. Frustration at this is a key feature of the current campaigns in a number of unions. In relation to the Firefighters scheme it would be dishonest of us to make such a claim at this time. Ministers have met us on several occasions; have agreed to all meetings requested; have currently provided all information asked for and have allocated actuaries and pension officials to assist in talks.

It is important to note that none of this means the core issues will be resolved – there remain very serious disagreements. It simply means that in terms of current talks we cannot say that Government are refusing to engage in a dialogue. Most significantly, ministers have agreed to a very important demand from the FBU i.e. not to set the cost ceiling immediately.

As a result of these and other considerations, the Executive Council concluded that there should not be an immediate move to industrial action. Such action may become necessary and the next few weeks will be crucial in assessing the Government position before such a decision is made.



Best wishes.

Yours fraternally

MATT WRACK

GENERAL SECRETARY


FBU

Saturday, 22 October 2011

Lost in Euroland

This latest article posted on www.socialistworld.net is anotehr in the line of top in depth analysis of what is going on inside the Eurozone and the organisation of a deepening economic crisis by the week.

Robert Bechert, CWI

As the eurozone crisis develops, its political and institutional leaders are becoming increasingly desperate as they look for a way out. The latest postponement, amid increasing friction between the French and German governments, of a decision on the eurozone’s next steps is an indication of the crisis’s seriousness. Here, in an analysis written for Socialism Today (November 2011 issue), monthly magazine of the Socialist Party (CWI England and Wales), Robert Bechert examines both the crisis and the test it poses for the left.

"The Euro should not exist (like this)"
"Under the current structure and with the current membership, the euro does not work. Either the current structure will have to change, or the current membership will have to change." (UBS Investment Research, 6 September, 2011)

This blunt statement, at the start of a widely circulated report by a leading Swiss bank, brutally summed up the fundamental character of the ongoing crisis in the eurozone. Despite a series of emergency meetings and agreement of rescue plans this crisis continued to deepen, threatening not only the European economy but also to dramatically worsen the already deteriorating world economic situation, and help trigger a dreaded “double-dip” recession. That was the reason US Treasury Secretary Geithner attended an EU finance ministers meeting in mid-September. European governments faced a potentially massive crisis with no easy way out, as long as capitalism remains.

Desperate attempts are being made to patch up a “solution”, although how long any deal will last is a different question. Within 24 hours of a plan surfacing at the mid-October G20 finance ministers meeting Angela Merkel’s spokesperson was warning against “dreams currently doing the rounds” that everything will be solved at the following week’s EU summit, and then a decision was formally postponed to October 26 at the earliest. At the G20 meeting one minister warned of a “world of pain” if no solution was found, something which millions are already starting to suffer as the crisis hits them.


Angela Merkel, German Chancellor

The widely perceived helplessness of the governments and EU institutions, the fact that repeatedly they are seen to be lagging behind events and incapable of putting forward a solution has only added to the spreading popular fears of what lies ahead.

This is not an abstract crisis. The eurozone disarray is adding to the misery facing many workers and youth across Europe. Living standards are falling as inflation is rising, alongside increasing unemployment in many countries. Cuts in services and wages are widespread. In Greece, currently the worse hit country, the vast bulk of the population is plunging downward into a deep economic and social crisis and facing a huge drop in living standards. The London Financial Times estimated that “planned tax increases and spending cuts for 2011 are equivalent to about 14 per cent of average Greek take-home income – or 5,600 euro for every household ... (measured on) a per-head basis, the total 2011 austerity package is worth 2,200 euro” (18 October, 2011).

Europe is on the edge, facing the possibility of a sudden crisis, especially a banking and financial meltdown that could paralyse much of the ‘real’ economy.

A wake-up call
As popular fears grew, governments in and outside of the eurozone rapidly became aware of potentially devastating impact that an event, like a sudden Greek default, could have. ‘Contagion’ would spread throughout the international financial system. After looking over the abyss of what a new banking crisis and/or a country leaving the euro would mean, the main eurozone countries drew back and agreed to make another attempt to defuse the situation.

In recent weeks warning signs were flashing. Rumours flew around about the condition of the banks. Many are facing a critical situation which is why the European Central Bank (ECB) has again taken steps to prop some up. While the early October collapse and subsequent nationalisation of the Belgian-French Dexia bank took the headlines for a few days, it was hardly mentioned that simultaneously two smaller banks, Max in Denmark and Proton in Greece, were also nationalised.

At the same time as UBS published its views on the Euro, the chief executive of Bosch, the world’s largest auto parts supplier, warned that the eurozone has entered “an extremely critical situation”. While the German owned Bosch had full order books now “in 2008-09 we experienced how fast these orders can melt away” (Financial Times, London, website 7 September, 2011).

The worsening world economic prospects are deepening the European crisis, not just in the eurozone but also in Britain. As Wolfgang Münchau wrote “The most disturbing aspect of the eurozone right now is that every crisis resolution strategy depends upon a moderately strong economy recovery” (Financial Times, London, 5 September 2011)



Wolfgang Münchau

The CWI had warned before the euro’s launch that it would not lead to unity, but would breakdown as result of clashes between the rival national capitalisms and, in the absence of a workers’ alternative, strengthen nationalism. (See box)

In fact, the euro has created a Frankenstein monster. The Greek crisis has brutally revealed this truth. At one time markets expected a Greek “managed default” and there were voices inside the stronger eurozone countries that Greece should be thrown out. The German transport minister Peter Ramsauer told Die Zeit in mid-September it would “not be the end of the world” if Greece were kicked out of the single currency. But the growing realisation that this meant the prospect of massive collateral damage across the international banking system has forced other governments to act.

For now discussion of forcing weaker countries, like Greece, to leave or the possibility of stronger countries, like Germany, deciding to quit the euro has stopped, although this can reappear in the future. The failure of Belgian-French owned Dexia was a wake-up call. One reason for Dexia’s collapse was its exposure to Greek government debt estimated at 39% of its equity capital. But this was not unique amongst banks, this summer the comparable figure at Germany’s second biggest bank, Commerzbank, was 27% (Wall Street Journal, 31 August, 2011). Dexia’s collapse was a warning that it would be extremely expensive to maintain a financial firewall around Greece should it suddenly default.

A more drastic haircut?
With spreading fears of both the “health” of banks and impact of a Greek collapse, banks once again turned to the ECB as a “safe” place to invest, rather than lend to other banks, and for short-term funding. But it is not just a question of Greece triggering a crisis, unexploded financial bombs litter the European landscape. The European Bank for Reconstruction and Development has just cut back the forecasts it made in July for 2012 economic growth in central and eastern Europe - in Hungary from 2.8% to 0.5%. Not only does this bode ill for Hungarians but also it threatens Austria’s banks, which are heavily exposed to Hungary.

The new drive to attempt to stem the crisis was behind the pressure in October to force Greece’s creditors to accept more of a “haircut”, a reduction in the amount of their loans they will actually get back. In July’s rescue deal an average 21% was agreed in July. At that time the French government, fearing the impact on its own banks, rejected a 40% cut, however by mid-October figures of 40% to 60% were being discussed such was the seriousness of the situation. This, governments hope, would avoid a formal default and allowed a managed restructuring that would prevent a sudden crisis. But even with this figure it would not be the rich who really paid, the banks would attempt to offload the cost onto taxpayers and customers.

Nevertheless banks resisted any increased losses. German banks, in particular, were bitterly complaining. Andreas Schmitz, head of BdB (German banking federation) warned that politicians should not declare “war” against banks (Bild.de website, October 15, 2011). The next day Schmitz accurately summed up the current reality of the crisis when he said that the October 15 anti-bank protests were “a diversion from the fundamental problem: that we can no longer finance our welfare states”. (Financial Times, London, website, October 16, 2011). Of course when Schmitz spoke of “we” he meant the capitalist system and its ruling classes.



Andreas Schmitz

Really, a poker game is going on as the different countries and financial institutions struggle over the size of the “haircut”, the roles of the ECB and EFSF (European financial stability facility), how the EFSF will be funded, the role of funding from outside the EU and other issues. Relations between the French and German governments have become strained. While there is enormous pressure to reach an agreement, even if there are doubts as to how long it will last, the risk of “accident” causing a disaster is ever present.

Dangerous to leave
Fearing the consequences of a break-up of the current eurozone or an abrupt Greek default the stronger EU powers are debating possible new structures to tighten controls over economically weaker countries as a price to provide financial support.

While “Eurobonds” would appear to be a logical capitalist solution for the ruling classes to attempt, they would run up against the growing popular opposition in all countries to the idea of underwriting other countries’ banking debts. This is not simply as a result of nationalist campaigns against, for example, Greece. Falling living standards in most countries and the bitter understanding since 2007/8 that much of the bailouts will actually end up in the hands of the banks and finance markets also fuel the opposition.

In answer to this opposition to financing other countries’ debts there are proposals to set up new structures to impose controls on eurozone countries. How effect they would be is another question. In 2003 the euro’s original Stability and Growth Pact (SGP) was ignored because the two largest powers, France and Germany, broke its conditions. In an attempt to escape political pressures for flexibility, the Dutch Finance Minister Jager, while supporting the German economics minister Rösler’s idea of a European Stability Council that could impose sanctions, said that its decisions should be made by “academics and experts – but no politicians” (Spiegel Online, 22 August 2011).



Jan Kees de Jager, Dutch Finance Minister

However such measures will only back fire, already in Germany there is resentment at what is referred to as the EU moving towards a “transfer union”, meaning a permanent movement of funds from the richer to the poor EU countries, although in reality much of these payments end up back in the banks of the richer countries.

The tensions inherent within the eurozone will increase, especially in this period when there is no immediate prospect of sustained economic growth.

Events this year have posed the question about the eurozone’s future, whether all the present members will remain? As the UBS report (see box) shows there would be substantial economic and political costs and dangers involved in leaving the zone. This is the Frankenstein factor, the eurozone countries have created a system which is imposing huge costs on some economies and strangling others, but which is very dangerous to leave.

However, while these costs can delay such a break, tensions could mount that will force a brutal shakeup. This is why, despite the massive overheads, there are discussions both about the possibility and methods of break-up of the current eurozone, both “weaker” countries leaving or of Germany pulling out. In Germany there is a kind of undercover debate within the ruling class because, while leaving the euro would remove the need for it paying towards the weaker eurozone countries, this would, at a stroke, cut its “home” market from 332 million to just under 82 million. At the same time German exports would be undermined by a new currency that would probably initially soar in value.

A living struggle
Alongside the mounting euro crisis and national difficulties, there is rising anger amongst workers, youth and the middle class as the effects of the crisis bite deeper. This is the reason for the unpopularity of most European governments, the mass demonstrations and strikes in a series of countries.

A new stormy period has begun and sharper struggles will develop. While determined struggle, the threat of resistance or a very serious economic or social situation crisis can force governments to make temporary concessions, generally the ruling classes will be forced by the crisis of their system to, at best, hold down living standards. That is the meaning of Andreas Schmitz’s statement and the reason why ruling classes will be forced to attempt to push attacks through.

Faced with serious opposition, governments will tend to move to use more authoritarian methods. These will vary according to the situation in each country, but in the worse case scenario the ruling classes will even look to dictatorial measures.



Today, Greece is facing a social and economic disaster and its ruling class is not confident of what will happen. This is the background to the report last May in the German mass-circulation newspaper Bild, that the CIA were speaking of a possible coup in Greece in the event of severe unrest developing. This is unlikely in the near future, but in a situation of continuing turmoil such an attempt cannot be ruled out. The Greek military have done this before, the last time they staged a coup was in 1967 and they ruled for 7 years. But a new coup, in a time of deep crisis, would not automatically be a repeat of the last colonels’ regime.

Such a development is not inevitable, but depends on the character and policy of the opposition movements, particularly what the workers’ movement does.

In some sense it is a race between the left and the right as to who will lead the opposition to the eurozone’s polices. Already in a number of countries, it has been right populists who have, in the absence or weakness of the left parties, made electoral gains by combining taking up some social issues with nationalist based anti-EU and anti-migrant slogans. In Greece overwhelming opposition to the cuts and the country’s downward spiral has created a potentially revolutionary situation but, so far, there is no mass based genuinely socialist force that can give concrete direction to the movement.

Unfortunately the response of the official leadership workers’ movement has been limited, with most of the pro-capitalist trade union leaders only organising any action when they have been pushed from below. Even when actions are organised the trade union leaders try to restrict them to symbolic actions and strive to avoid them becoming a step in a serious struggle.

European left
There is a reluctance within the trade unions and in many left parties to challenging the EU or euro itself, something sometimes justified by pointing to the EU’s right wing nationalist opponents. Rather than explaining that the EU is not a step towards socialist internationalism but a club of capitalist nations run in the interests of big business and the big powers, the largest grouping of European left parties, the European Left Party (ELP), talks of a “refoundation” of the EU without mentioning any break with capitalism and, by implication, supports the continuation of the euro.

The UBS report warns of the wider possible consequences of a massive crisis and eurozone breakup. There would not only be huge disruption but the growth of national tensions and conflicts. UBS is not alone in warning of the “some form of authoritarian or military government, or civil war”. In mid-September the Polish Finance Minister warned the European Parliament, in a “personal” comment, of the dangers of new wars in Europe. Later he was asked to explain this and he said that while war is not likely “within a four-year legislative time frame ... Not in the months ahead, but maybe over a 10-year time frame, this could place us in a context that is almost unimaginable at the moment.”

While not immediately posed, future conflicts between states cannot be ruled out if the working class is not able to impose its own socialist solution to the crisis. But the EU, a complete capitalist institution that is effectively run by the major powers, is not a vehicle for either socialist change or democratic socialist planning.

The ELP, whose strongest parties are DIE LINKE (Left party) in Germany, the Parti Communiste (PCF) in France, Left Bloc in Portugal and Izquierda Unida (United Left) in Spain, puts forward a number of individual policies that socialists support, although often these are vague, loose formulations. However it does not link these together into an overall anti-capitalist, socialist programme.

This approach was seen in DIE LINKE’s three demands on what the German government to argue at the October 15/16 G20 finance ministers’ meeting. They were worldwide strict regulation of “Finance Casinos”, a tax on financial transactions and a coordinated conjunctural programme. However, these proposals cannot be fully implemented under capitalism and, while DIE LINKE also mentioned its call for public ownership of the banks, its approach was one of simply demanding measures that could be taken within capitalism.

Naturally Socialists argue for individual demands that can immediately improve the conditions of working people and the poor. But such campaigns have to be accompanied by an explanation that such demands can only provide temporary improvement and that, especially in this time of crisis, a socialist transformation of society is required. Without this explanation they are attempts to run this system in a ‘better’, ‘fairer’ way, efforts that will ultimately fail.

The speculators’ grip
A key factor in the development of this crisis has been the massive pressure from the financial markets. Since the break-up of the post Second World War Bretton Woods currency system and the deregulation of finance there has been a huge explosion of the finance markets, alongside a similar growth of all forms of speculation in commodities, property and spread betting on anything that moved, or didn’t. The figures are simply mind-blowing and are hard to grasp. In the EU finance transactions were, in 2010, 115 times the EU’s 12,300bn euro GDP (Austrian Institute of Economic Research, Financial Times, London, 18 August, 2011). All the political leaders bow to these markets, often their official statements are directed simply to the markets.



Naturally the question of how to break the grip of this speculative market’s grip over nearly all aspects of life is a burning issue. It cannot be ruled out that different capitalist nations, or groups of nations, may attempt to isolate themselves or place some controls on these markets, in effect states clipping the speculators’ wings in the wider interests of the capitalism as a whole. But this would be no long term solution. For example an attempt to go back to a system of fixed exchange rates would not, in the medium or longer term, prevent currency crises or forced devaluations.

There is now growing support for a tax on financial transactions (a ‘Robin Hood’ or ‘Tobin’ tax). This is now the official policy of the EU’s Commission, seen by them as a useful political gesture and a way of raising funds. But while socialists would not oppose such a tax it would leave untouched the basic power of the huge financial and trading institutions that runs these markets.

Similarly simply leaving the euro would not solve the problems of Greece or other countries. Socialists opposed the introduction of the euro and today support breaking its grip and that of “Troika” of the EU, ECB and IMF that are effectively dictating what the Greek government should do. The key question in Greece is breaking with the capitalist system, without this living standards will fall for some time whether or not it stays with the euro.

A socialist task
Socialists would not oppose leaving the euro but would firm link it to a socialist, not state capitalist, policy of bank nationalisation. In a single country breaking from capitalism a state monopoly of foreign trade and exchange controls would be necessary as a defence from the international markets until similar movements spread to other countries. These steps, as part of a policy to bring the commanding heights of the economy into democratically run public control and ownership, would allow a start to be made in planning the use of economic resources for the benefit of all. Without such a socialist policy the results of leaving the euro would be along the lines spelled out in the UBS report, namely a cut in living standards.

Much of the population opposition to the EU is based upon the way it is run, the privileges of its bureaucratic elite and the way it is run it the interests of the big countries and companies. Socialists however, while fighting nationalist oppression and EU diktats, do not oppose the EU or the euro from a narrow, nationalist standpoint. The unification of the whole of Europe would be an enormous step forward. But this cannot be achieved on a capitalist basis. The existing EU institutions, like the EC, the ECB and so on, are clearly agencies of the capitalist ruling class, incapable of surmounting capitalist limitations.

The task facing socialists is to argue for a socialist internationalist alternative, a voluntary socialist confederation of European states, to the pro-business EU. Without this there is the danger that opposition will take a nationalist direction.

This divisive turning point in EU has opened up new period of sharper struggles, will provide an opportunity to rebuild the workers’ and socialist movement, but not as an end in itself but in order to build the forces that can fundamentally change society, end the chaos and instability of capitalism and really make poverty, fear a thing of the past.

Europe in turmoil – A socialist analysis
June 18, 2005
The current crisis is a vindication of the analysis of the Committee for a Workers’ International (CWI) that the European capitalist classes are unable to unify Europe to construct a capitalist ‘United States of Europe’, as even some Marxists outside the ranks of the CWI believed.


The EU ‘project’ for greater economic and political integration was rooted in the pressure on the European capitalists from competition from US imperialism and, more recently, from China. This drove them towards increased collaboration and led to illusions that this would result in a politically unified Europe. This trend, along with the process of globalisation of the economy and growth of multi-national and trans-national corporations, illustrated how the productive forces have outgrown the limitations of the national state and to a certain extent have even outgrown continents. The big companies increasingly look towards the world market rather than simply their national or regional base.


Yet, at the same time, this process has its limits and comes up against the insurmountable barriers of the separate nation states and the national interests of the capitalists. In the aftermath of the referendum these factors have reasserted themselves, exposing clearly a clash of interests. Some thought that the process of EU integration and EMU represented the point of “take off” for a unified capitalist Europe.


The CWI consistently argued that this was not the case. Our analysis explained that although the process of integration of the EU went a long way, further than even we originally anticipated, at a certain stage a recoil would take place. This would result in renewed national antagonisms and conflicts between the various national states. This process of unravelling would worsen in the event of a serious economic crisis, recession or slump.


The end of the euro?


The introduction of EMU and the euro was a political and economic gamble by the capitalists, pushed through in the teeth of some opposition from their own side, during the triumphalist wave which followed collapse of the Berlin Wall. Initially the Bundesbank opposed the introduction of the euro but was compelled to accept it in the light of the political pressure of the capitalist politicians who supported its introduction. The stability pact was introduced as a ‘safety net’, which was intended to prevent governments resorting to “profligate spending”.


Yet, the whole idea of the euro was tailored to a situation of continued growth of the European economies, with no real account taken of what would happen in the event of a slowdown, stagnation or recession. The mood expressed in the referendums and recent workers’ struggles also reflects dissatisfaction that the economic growth, jobs or higher living standards promised with the introduction of the euro have materialised.


The ruling classes attempted to impose an economic union in the absence of an existing political union. As we explained at the time, this has never succeeded in the past. Without a political union, moving towards the establishment of a unified nation state, an economic union or currency could not survive indefinitely.


When the “project” was on track the capitalists ignored the lessons of history. Now faced with today’s crisis, newspapers like the London Financial Times belatedly can warn that such contradictions cannot be reconciled indefinitely.


In an article which seriously questions the sustainability of the euro, Wolfgang Münchau pointed out: “All large-country monetary unions that did not turn into political unions eventually collapsed. The Latin Monetary Union of 1861-1920 collapsed partly because of a lack of fiscal discipline among its members – Italy, France, Belgium, Switzerland and Greece. A monetary union set up in 1873 between Sweden – which included Norway at the time – and Denmark failed as political circumstances changed. By contrast, Germany’s Zollverein, the 19th century customs union that developed into a monetary union, succeeded precisely because of the country’s political unification in 1871.” (Financial Times, London, 8 June 2005).


There is a vast difference between a federal state, such as the US, which can distribute funds to local state governments in a relatively easy fashion on the basis of an agreement and the EU. The distribution of resources or funds cannot be done in the same way, in a Europe composed of different nation states, as the current struggle over the EU budget shows.


The current EU crisis has revealed that the monetary union, rather than leading to a political union, has resulted in a political fracture between the national states. Partly, this is what lies behind the current spat over the EU budget, which was triggered by Chirac’s challenge to Britain’s rebate. This is a dangerous ploy, from the point of view of the French ruling class, because it has allowed Blair to raise the whole issue of the Common Agricultural Policy (CAP) in retaliation. France currently receives over 20% of farm subsidies from the CAP, which is a purely political decision to maintain support for the French bourgeoisie and Chirac amongst French farmers.


Chirac is attempting to use these issues to turn the underlying class vote of the referendum into a nationalistic conflict over the EU budget. Blair, dressed in the political gown of Thatcher, is also attempting to present himself as the nationalistic defender of Britain over the EU rebate. The German Chancellor, Gerhard Schröder, is aligning with Chirac, while his opponent in the forthcoming elections, Angela Merkel, from Christian Democratic Union (CDU), tends to support Blair. While some compromise on the budget is eventually likely this conflict illustrates the new increased national tensions and contradictions which are set to emerge in the coming months and years.


While an immediate collapse of the euro or the EU is not the most likely short term perspective, the sharp increase in political and economic tensions between the representatives of the various ruling classes will intensify. The conflict of interests is now driving the capitalists of Europe towards the establishment of a looser federation of national states which is contrary to the dominant tendency of the recent period.


However, the onset of a deep economic recession or slump or world financial crisis will sharpen these conflicts further and could provoke a relatively rapid collapse of the euro. The withdrawal of Britain from the ERM in 1992, on ‘Black Wednesday’ shows how diverging national economic conditions can drive the capitalist class of a country to break from a currency or monetary agreement. Although there are differences, and it will not be repeated in exactly the same way, the euro can break up, with one or more country withdrawing or even being expelled from it.


Even before the French and Dutch referendums, the question of the sustainability of the euro in the face of diverse growth and inflation rates was beginning to be discussed amongst capitalist’s strategists. At one private meeting, on May 25, involving the German Finance Minister, Hans Eichel, and Axel Weber, President of the Bundesbank, a representative from Morgan Stanley (an investment bank) Joachim Fels, expressed concern about the sustainability of the euro. According to the Financial Times even the extreme pro-EU lobby group, ‘Centre for European Policy Studies’ published a report in early June that raised the prospect of a collapse in the euro. (8 June, 2005).

(Extract from a 2005 CWI statement written at the time of an earlier crisis after a draft EU constitution was rejected in referendums in France and the Netherlands)

Extracts from UBS study “Euro break-up – the consequences”:
The economic cost for a “weak” country leaving the euro
The cost of a weak country leaving the Euro is significant. Consequences include sovereign default, corporate default, collapse of the banking system and collapse of international trade. There is little prospect of devaluation offering much assistance. We estimate that a weak euro country leaving the Euro would incur a cost of around 9,500 to 11,500 euros per person in the exiting country during the first year. That cost would then probably amount to 3,000 to 4,000 euros per person per year over subsequent years. That equates to a range of 40% to 50% of GDP in the first year.

The economic cost for a “stronger” country leaving the euro
Were a stronger country such as Germany to leave the Euro, the consequences would include corporate default, recapitalisation of the banking system and collapse of international trade. If Germany were to leave, we believe the cost to be around R6,000 to 8,000 euros for every German adult and child in the first year, and a range of 3,500 to 4,500 euros per person per year thereafter. That is the equivalent of 20% to 25% of GDP in the first year. In comparison, the cost of bailing out Greece, Ireland and Portugal entirely in the wake of the default of those countries would be a little over 1,000 euros per person, in a single hit.

The political cost
The economic cost is, in many ways, the least of the concerns investors should have about a break-up. Fragmentation of the euro would incur political costs. Europe’s “soft power” influence internationally would cease (as the concept of “Europe” as an integrated polity becomes meaningless). It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war.

Thursday, 20 October 2011

Contradictions in capitalism : part 2 market increasing competition ?

In this second part of my series on marxists view taht capitailism is a unfair and a system rooted with deep contradictions i will look at the theory taht capitalists will try to tell you to convince you that the market is the best way forward. The arguement they say is that the more we let the market in the more competition there will be leading to greater choice and a cheaper price for the consumer.

I look at the facts behind this and the deep contradiction this is.

Marx assumed that the competitive processes of a capitalist market society would lead to a concentration of capital ownership in fewer and fewer hands. Marx built this claim on the assumption, which he holds in common with laissez faire economics, that a competitive economy must lead inevitably to the elimination of some producers by others, there must be winners and losers and the winners would grow increasingly large. Capitalism, Marx argued, contrary to the general assumption of laissez faire economics, had an inherent tendency towards concentration of capital in oligopolies and monopolies. The concentration of capital involved, first of all, the displacement of the handworker and the craftsworker and increasing domination of factory-based technology. An industrial proletariat of wage workers emerged, and grew larger, as independent producers were eliminated by factory-based competition. Capitalist corporations grew more concentrated and larger, the number of individuals owning the means of production became fewer. The class structure becomes polarized and the economic and social conditions of the two opposed main classes more strongly contrasted, leading to political activation of the working class and prolonged conflict with the dominant bourgeois class through political and industrial organisation.
It is this development of social polarization that provides the unsolveable social or relational contradiction of capitalist society. The social organization of a capitalist society also presented an inherent structural contradiction in the economic dynamics of capitalism. While capitalism revolutionized the means of production by promoting the greatest economic development in human history, its class structure focused the capacity to consume in a tiny minority of the population. The mass social scale of production could not remain compatible with the concentration of wealth in fewer and fewer hands.
The fact that leading the market do as it pleases will bring us stabilitya nd fair competition benifiting us all is a lie to be honest. As the markets develop and under cut each other Marx was right by saying in capitalist society there will be winners and loosers. The more winners thre are will eventually swamp out the loosers and as Marx rightly pointed out the competition will be concentrated between a few big multinationals who dominate the market.

You can see this in practise in the computer market where Microsoft and Windows dominate still the office based computer market and the likes of Apple are squeezed out. Is this the competition and choice the capitalists talk of ?

This would be completely different to socialism where a nationalised industry run by workers for workers on the basis of need not profit. There would be choice but not 100's of choices which lead to waste and poor quality products.

Tuesday, 18 October 2011

contradictions of capitalism part 1 : over production

In this short but could turn out to be something more i will look at the inherent contradictions that exist in the capitalist system of production and how i feel a chance of system namely socialism can help to get around these issues well and truely for good.

As we sit here worrying for our jobs, pay and benifits i thought i'd look at the system which has caused all this and is still causing this and how it knows no way out.

The first contradiction i will look at is the fact that as capitalism has progressed over there years and has been progressive up to a point. When Margret Thatcher declared in the late 70's early 80's that the harder you work you can move up the scale and improve your life. This was true up to a point as some did make it and were able to buy their own home and such like. But for the majority this was not the case their living standards and pay stayed the same. Much like in America many are promised if they work hard they can achieve anything via the American Dream but for many now it is turning into a American nightmare as debts pile up and cheap credit has been ended.

The fact with capitalism as Karl Marx described over 100 years ago now is still relevant today that capitalism and its sheer blind drive for profit can lead to a over production in its products. Leading to a surplus. Marx identified this surplus as a labour surplus and a surplus of capital wrapped up in too much made of one product or another.

For example when the original banking crisis hit in 2008 Honda actually stopped production of its cars for 6 months as it had made too much cars. Sounds remarkable too many cars but this wasnt for the fact there was no need. There is a great need around the world. But capitalism only produces where it feels it can make a profit. The fact that there is a need for something is neither here nor there. Take for example many drugs are needed to help cure diseases around the world in places like Africa but yet Africa which has been raped for its raw materials over the years for capitalist profit over the years has resulted in desimation in Africa.

Going back to my last point even though there is a need there in places like Africa for cars, food, drugs and things that will improve their lives the fact that in Africa few have much capital to invest in these the capitalists in the west ignore Africa and let it starve effectively as there is no profit to be made there.

Where the system which we as socialists advocate would be far more efficient and useful for the majority not just the few would be that there would be no unessesary waste of materials as everything produced and propriated would be for a need and peoples needs as a whole not just to make profit. Indeed there would be a end to a profit driven society where things were only made if a profit could be made.

In socialism things would be run, managed and controlled democratically by workers. Not greedy capiatlists only interested in profit. Only the workers know how to distribute the resources effectively and to help the many not just the few.

Of course this will take some time to bed into peoples minds as capitalist modes of productions and the means of production has been with the capiatlists for so long now and how labourers have had to sell their labour just to live is so ingrained in many peoples minds it will be hard to overcome these ideas but a mass political understanding of what society needs and how their actions can benifit society by working for the collective not a capitalist only interested in profit.

This is just a basic outline of just one of capitalisms many contradictions and i will try to uncover many more where i feel capitalism has failed the mass's and highlighting its weakness's as a system.

Sunday, 16 October 2011

Some initial thoughts and feelings on occupy London stock exchange

This weekend saw London join other parts of the world in occupying a major financial district of teh capital in protest to a growing feeling of injustice in the system we live under. I thought i'd just lay down a few of my own thoughts and feelings on it all as it appears to be a interesting developing movement. If you can call it a moveemnt i'm not sure.

It seems to have been something born out of the Arab spring the Egyptian and Tunisian revolutions where major squares in towns and cities were occupied and this gained big support. The big bit that many comrades out there are forgetting mainly due to the bourgeois medias attempt at trying to portray working class movements but not fully understanding it is that these revoulutions would not have been possible if it wasnt for large scale general strikes crippling major parts of the state to help remove these vicious brutal dictators. It was not as many seem to believe the result of sitting in town squares for ages lead to the falling of these regimes at all. This common misconception has spread to places like Spain and America where the feeling is if we occupy a place long enough change will happen.


It will not on its own i'm afraid. I dont mean to be cynical but the lack of any structure to this movement can also be its downfall aswell as its advantage.

Much of the media - the bourgeois media has ignored these protests up to now but due to the size of some of these occupations have been forced to cover them now. The conclusions many in the media have drawn are interesting. Making out that these protests are against so called corporate greed like it is in any sort of doubt at all.

Also many protesters and commentators alike seem to be loathed to say this is about capitalism. Saying it is about corporate greed is great but why are they so afraid to call it what it is, capitalism i wonder.


Whilst many trade unionists observe this movement growing it will be interesting how the wider working class react to this. So far the protests seem to be a wide range of protesters. Students, graduates, left wing activists the usual sorts you may think. But also some ordinary people have come out too. In america some of the trade unions have linked up with these occupations and offered solidarity. But if the same thing will happen in this country it is unclear as yet.

The success of these occupations will be judged on how well it can link up the struggles of workers those who are facing the cuts and pay cuts right now. Will they look to join with the public sector strikes on 30th of November ?

It is key to it spreading and growing if they link up the struggles to a wider movement of the whole class. One of the slogans popularised in America has been " we are the 99%" which is a clever slogan but i somewhat doubt these 1000 or so speak for the 99% the so called 99% is made up of lots of different parts of the working class and all have their own struggles day to day. The importance to relate to them all to form a clear list of demands will be key to this progressing into anything long lasting and meaningful.

Many who have fell out of love with mainstream politics which i can fully understand and sympathise with have claimed this is a fully autonomous movement with no leaders and this is encouraging more in. But this tactic made popular by the likes of UK uncut has its limitations. When decision making comes and decisions need to be made to root the movement in the working class quite often no one is held to account leaving the movement to stray in all sorts of directions. This can be an disadvantage if the wrong sorts of tactics and ideas are put forward. All ideas are good to hear but due to the lack of democracy and leadership this could fizzle out if not given a solid foundation in the struggles of ordinary working people.

The occupations which are in their 3rd or 4th week in Wall Street in America now have been analysed by socialist alternative our part in America part of the CWI here is a analysis they have made of the occupations and the directions so far.

How can we take the struggle forward?
Many are occupying to “liberate space” in order to build a new, more equal and just community, hoping it will inspire others to follow. While the Wall Street occupation is an example of a community based on democracy, cooperation and solidarity, unfortunately the occupation alone will not be enough to build a mass movement capable of changing society.

Many have alluded to Egypt saying that a growing occupation with one basic demand is how the dictator was overthrown. But in fact, the situation was more complicated than that. In the week before Egypt’s dictator Mubarak was ousted, the working class entered the scene with decisive strike action paralyzing key parts of the economy.



The occupations in Spain and Greece have been much bigger than Wall Street, but they too need the more powerful forces of the working class to move into action in order to win. In Wisconsin, a huge occupation of the Capitol lasted for over 3 weeks and was at the center of mass demonstrations of the workers and youth. They could have won if that movement had moved toward a general strike of public sector workers to shut the state economy down.

Instead the Wisconsin battle was consciously derailed by the Democratic Party and the top union leadership by diverting the mass movement into a campaign to recall the Republicans from power in order to elect Democrats in their place. However, the Democrats, like the Republicans, are a party of Wall Street and Big Business, and they offer no solutions. We need an independent struggle which seeks to draw in the widest layers of workers and youth. United we have the power to withdraw our labor, stop “business as usual,” and hit the banks, corporations and ruling elite where it counts.

We need to build up the confidence to take such bold measures. That’s why Occupy Wall Street needs to call for mass demonstrations around key demands that address the burning issues that working people and youth face like jobs, education, healthcare and so on.

System Change
Not only the economy but society as a whole is in a deep crisis. Global capitalism is a failed system that cannot overcome the problems of growing inequality, poverty, mass unemployment, environmental destruction, and war which it creates. The movement has to challenge Wall Street and both parties of big business. We must stand up to their policies where they try to solve their economic crisis on our backs in order to maintain a system which only benefits the elite in the first place.



But we must also provide a clear alternative. We need to fundamentally transform society to one not based on profit but instead on meeting everyone’s basic human needs. The only real alternative to corporate greed and capitalism is democratic socialism where the economy, workplaces, and society as a whole is democratically run by and for the vast majority of people.

Join Socialist Alternative! We Say:
•Spread the occupations across the U.S. and into schools and communities. For systematic, mass campaigning to mobilize the widest layer of workers, young people and labor unions into struggle.
•Organize weekend mass demonstrations that call for: No cuts to social services, A massive jobs creation program, Major tax hikes on the super-rich and big business, End the wars, Slash the military budget, and Defend union and democratic rights.
•Build up to the November 16-23 National Week of Action to combat the Congressional Super Committee plan for $1.5 trillion in cuts to social services. We demand jobs not cuts!
•Prepare to run independent anti-corporate, working-class candidates in 2012 to challenge the policies of the two parties of Wall Street as a first step towards forming a new party of the 99%, a mass workers’ party.
•End the dictatorship of Wall Street! Bring the big banks that dominate the U.S. economy into public ownership and run them under the democratic management of elected representatives of their workers and the public. Compensation to be paid on the basis of proven need to small investors, not millionaires.
•Build the movement to replace the rotten system of capitalism with democratic socialism and create a new society based on human need.



Committee for a Workers' International



Just a few initial thoughts i'm sure i'll be revisiting this growing idea and movement in the coming weeks and months as we move towards november the 30th where we ccould possibly see the biggest number of workers out on strike since the first day of the 1926 general strike. That to me will be far more key to winning the battles against the cuts and uniting the struggles in a organised way.

Thursday, 13 October 2011

private rents in 55% of local authorities unaffordable, demand decent affordable housing now

Just 12% of areas in England have affordable rents, research by housing charity Shelter found
Private rents are now unaffordable in 55% of local authorities in England, the housing charity Shelter has said.

Homes in these areas cost more than 35% of median average local take-home pay - the level considered unaffordable by Shelter's Private Rent Watch report.

The charity said 38% of families with children who rent privately have cut back on buying food to help pay rent.

Shelter's research found rents had risen at one-and-a-half times the rate of incomes in the 10 years up to 2007.

'Dramatic impact'

It said private rents in 8% of England's local authorities were "extremely unaffordable" - with average rents costing at least half of full-time take-home pay.

Just 12% of areas were affordable, it added.

Shelter analysed two-bedroom homes because they were so widely found and used Valuation Office Agency and Office for National Statistics data.



Average monthly rent for two-bedroom home in London is £1,360 - almost two-and-a-half times more than the rest of England
Kensington and Chelsea is the highest at £2,714 a month
Burnley in Lancashire the lowest at £394 a month
Oxford is the least affordable area outside London
Blackpool is the least affordable in north of England
Source: Shelter



It is high time we started to demand decent affordable housing for all. Not just a few or just for those who are in work like Ed Miliband likes to put forward. There is no reason why everyone shouldnt have a right to a decent affordable home for themselves. The fact that successive governments have turned a blind eye to this housing crisis is to their eternal shame. Even a labour government did not build nearly enough affordable homes in their time in government. With Ed Miliband coming out at his conference in support of Margret Thatchers right to buy scheme it shows where his and his parties priorities lay. Not with the working class.



We say :
§ Build a million affordable new homes to ease the housing crisis immediately.
§ Nationalise the construction industry, banks and financial institutions, under democratic workers' control and management.


then look to build more homes as the need is wanted. This will not only provide new decent affordable homes for ordinary people but will provide jobs in the construction industry which has seen its work hit as a lack of building projects as a result of the cuts. This could be just one way of getthing things moving again. Of course as socialists we'd want to go further but this would be a key first step and would make a big difference to many ordinary working class people today.

Tuesday, 11 October 2011

As youth unemployment tops 1 million join youth fight for jobs and the jarrow march to demand jobs

In Japan they call them freeters, an amalgamation of "freelance" and the German word for workers arbeiter. The Tunisians opt for hittistes, a slang Arabic phrase which roughly translates as people who lean against walls. In Britain we prefer NEETs, the term we use to describe the depressingly swelling ranks of our young who are not in education, employment or training.

But whatever you call them and wherever you are, the youth unemployment time bomb is ticking and in Britain there are few signs of things getting better.

Today the Office for National Statistics (ONS) will release the latest employment figures from the past three months, with most analysts expecting the number of under-24s out of work to pass the one million mark for the first time since the early 1990s.

According to the figures covering May to July this year, unemployment among under-24s officially stood at 973,000, but the growing belief among some economists is that over the past three months – with scores of new graduates flooding into the job market over the summer – the figures might have risen by as much as 90,000 taking them into seven figures for the first time since 1993. For the pessimists it heralds a return to two decades ago when the young were hit disproportionately hard and suffered for years afterwards.

Young people are feeling desperate and hopeless unfortunatly as a result of this long term unemployment.
The Jarrow march 2011 which is backed by 8 national trade unions which is no small feet at all including
RMT, PCS, UNITE, UCU, FBU, BECTU,CWU, TSSA
is trying to do something to raise awareness and hope for young people. The march which Has recieved big backing all the way so far. You can keep up to date with the march as it winds itself down the country at :
www.jarrowmarch11.com
and on our twitter page @youthfight4jobs for updates.

With youth unemployment set to fly over the 1 million mark whenofficial figures are announced this week, the worst unemployment since the early 90s, the Tories have decided to attack young unemployed people marching to London and following in the tradition of the 1936 Jarrow March. Robert Goodwill the Tory MP who has been quoted in the press saying the marchers were not fit to follow in the footsteps of the 1936 marchers is the same MP who’s constituency has the highest unemployment in the North East and who has claimed £145,387 in the expenses scandal. In contrast Stephen Hepburn, the MP for Jarrow has declared support of the new Jarrow March against youth unemployment and the cuts.

Stephen Hepburn MP for Jarrow said:

“I am delighted these young people are highlighting the pressing issue of unemployment in the UK. The government need to respond positively and not be arrogant and shut the door in their face” Stephen Hepburn MP has also accepted an invitation to speak onthe last day of the Jarrow March on the 5th November which is being organised as a national demonstration.

Matt Dobson – Unemployed from Dundee said:

“As a long term unemployed layabout I will be joining the Jarrow March to London organised by Youth Fight for Jobs.

On 17 October I’ll be abandoning my feckless lifestyle to join the march in Leicester after a seven hour train journey from Scotland. I’ll just have to tape Jeremy Kyle for a couple of weeks!

I am sure myself and Robert Goodwill will have a lot in common. I can explain what is like to live in one room when you are too young to receive the full amount of housing benefit for a flat. He can describe his 250 acre country estate which I’ve no doubt is very stressful to manage.

This year as to raise the ideas and contiousness of people out thre and to comemorate the 75 year anniversary of the original Jarrow Crusade Yought Fight For jobs are recreating this march in their fore fathers footsteps.

This summer our streets exploded with the fury and frustration of young people who have had their future torn away from them. These new Jarrow marchers are offering an organised alternative, with clear demands and a determination to link up with organised workers in trade unions.

The Jarrow March will end in London with a mass demonstration on 5 November, assembling at Temple Embankment at 12 noon.

We will hand in a petition to Downing Street as we pass.
demanding :
■A massive government scheme to create jobs which are socially useful and apprenticeships which offer guaranteed jobs at the end – both paying at least the minimum wage, with no youth exemptions.
■The immediate reinstatement of EMA payments, expanding them to be available to all 16-19 year olds.
■The immediate re-opening of all youth services that have been closed, including reinstating sacked staff.
■The scrapping of ‘workfare’ schemes – benefits should be based on need not forced slave labour.
■A massive building programme of environmentally sound, cheap social housing.

We will then have a rally in Trafalgar Square

Speakers include:

■Jarrow Marchers,
■Bob Crow – RMT General Secretary,
■Matt Wrack- FBU General Secretary,
■Paul Murphy- MEP (Socialist Party Ireland),
■Lizi Gray- Descendent of 1936 Marcher,
■Stephen Hepburn- Jarrow MP,
■Young Deacon- Rapper (performing his track about the riots called ‘Failed by the System’),
■Ed Marsh- NUS (VP Union Development),
■Day-Mer Youth Speaker.

please join us and give us your backing as these people are not how the media like to portray them they have feelings and real hopes and ambitions in life.
lets not loose a generation of young people to the scrap heap again.

links, quotes and snipets taken from
www.jarrowmarch11.com
with special thanks to youth fight for jobs for organising this and to Matt Dobson for the quotes !

Saturday, 8 October 2011

As winter approach's many face tough decisions on fuel bills

As we approach winter with the dark nights drawing in and the first frosts of the autumn arriving. People right across the country will be pressured more than ever to try and find ways of reducing their energy bills and to heat and keep their homes going.

Winter time can be particularly challenging for the elderly and the poor and this year as we face another hard winter of austerity and cut backs. The energy companies have felt the need to squeeze even more out of us and decided a few months back to put up their charges by eye watering figures.

Gas bills will rise by an average of 18% and electricity bills by an average of 16%.

The change will affect nine million households with the average dual fuel customer paying an extra £190 a year.

British Gas customers will have seen their bills shoot up by £258 or 25% within a year”
End Quote
Uswitch
In May, the company said its customers were not paying enough to reflect the increased cost of gas on the wholesale markets, and that this would depress its profits for the first half of the year.

But this argument was rejected by Mike O'Connor, the chief executive of Consumer Focus.

"Wholesale costs have gone up but they are still around a third lower than their 2008 peak," he said.

"Yet in this time British Gas' prices alone have risen by around 44% on gas and 21% on electricity and suppliers have made healthy profits."

Last year, British Gas' residential business made £740m.

Spending squeeze

In June, Scottish Power became the first of the big-six energy suppliers to announce another set of price increases.

It said it would raise the cost of gas by 19% and the cost of electricity by 10% at the start of August.

Energy price rises
Nov Dec Jan Feb Mar... ...Aug
*G= Gas E=Electricity

Scottish Power
G: 2% E: 8.9%
G: 19% E: 10%

Scottish & Southern
G: 9.4%

British Gas
G&E: 7%
G: 18% E: 16%

Npower
G&E: 5.1%

E.On
G: 3% E: 9%

EDF
G: 6.5% E: 7.5%

The latest increase in energy bills, which is likely to be followed by other big energy suppliers, comes after a round of increases last winter which saw British Gas put its charges up by 7% in December.

"Average household bill for a dual fuel British Gas customer will now go up from £1,096 to £1,288," said the price comparison service Uswitch.

"In total, British Gas customers will have seen their bills shoot up by £258 or 25% within a year, taking them from £1,030 a year to £1,288," Uswitch added.

Richard Lloyd, of the consumers' association Which?, said the energy firm's announcement was an unwelcome


He can say that again, it is very much unwelcome for many working class families across the land who are finding making ends meet a increasing struggle as this economic crisis of capitalism deepens. I am sure we will see many trying to go without heating this winter with the rise in costs trying to save money wherever they can to get by. After this con-dem government cut teh winter fuel allowance for elderly people i am fearful of this winter where if it reach's really cold temperatures over a consistent period we may risk loosing some of our elderly friends and family if we are not careful. Elderly people who by definition do noth ave bags of money would have been relying on teh winter fuel allowance to get them through the winter. Now it is gone i fer for many who are on the cusp of povety and those in what they call "fuel povety" those who cannot afford to have energy in their homes for long if at all.

This is something we must bear in mind over the winter and lend solidarity to the elderly and the poor if they are in need not to abandon them but offer them shelter in the warmth and not let them suffer. If the government of millionaires dont care the organised working class has got to. The trade unions and labour movement must step in to offer support and help wherever we can. We are all facing hard times but lets not let this actually claim lives we must fight for us all and this winter will be no different.

It is ok for the likes of Ed Miliband to announce to his middle class friends in the labour party that he'll take on the vested interests of the big energy companies its good he recognises thre is a issue here that huge profits are made and te service is poor and unfair to those at the bottom. But what Mr Miliband should be saying he'll do is nationalise all of the utilities and energy companies and bring them under democratic workers control. To be run for peoples need and boy we need energy today and not for the need to make a profit. Need first everytime for me and that way we will have a better all round social society .

Occupy Wall Street: how can we take the struggle forward ?

All around the world attention has been drawn to the occupation of Wall Street. The protests have captured the imagination of thousands and inspired new occupations which are spreading across the U.S.

The police crackdown in New York, intended to intimidate this movement, completely failed to break our spirit. Now we are more determined than ever to fight. Inspired by the revolutionary upheavals in Egypt and across North Africa, as well as the mass youth occupations in Spain and Greece, protestors have taken to the streets of New York and cities across the U.S. to stand up to the domination of Wall Street and Big Business over our lives.



Below the surface there is deep anger in U.S. society which only seemed to be getting a twisted expression in the right-wing lunatics of the Tea Party. But the mass movement in Wisconsin this spring, and now the occupation of Wall Street provide a glimpse of the enormous potential to turn that anger into a progressive social movement.

How can we take the struggle forward?
Many are occupying to “liberate space” in order to build a new, more equal and just community, hoping it will inspire others to follow. While the Wall Street occupation is an example of a community based on democracy, cooperation and solidarity, unfortunately the occupation alone will not be enough to build a mass movement capable of changing society.

Many have alluded to Egypt saying that a growing occupation with one basic demand is how the dictator was overthrown. But in fact, the situation was more complicated than that. In the week before Egypt’s dictator Mubarak was ousted, the working class entered the scene with decisive strike action paralyzing key parts of the economy.



The occupations in Spain and Greece have been much bigger than Wall Street, but they too need the more powerful forces of the working class to move into action in order to win. In Wisconsin, a huge occupation of the Capitol lasted for over 3 weeks and was at the center of mass demonstrations of the workers and youth. They could have won if that movement had moved toward a general strike of public sector workers to shut the state economy down.

Instead the Wisconsin battle was consciously derailed by the Democratic Party and the top union leadership by diverting the mass movement into a campaign to recall the Republicans from power in order to elect Democrats in their place. However, the Democrats, like the Republicans, are a party of Wall Street and Big Business, and they offer no solutions. We need an independent struggle which seeks to draw in the widest layers of workers and youth. United we have the power to withdraw our labor, stop “business as usual,” and hit the banks, corporations and ruling elite where it counts.

We need to build up the confidence to take such bold measures. That’s why Occupy Wall Street needs to call for mass demonstrations around key demands that address the burning issues that working people and youth face like jobs, education, healthcare and so on.

System Change
Not only the economy but society as a whole is in a deep crisis. Global capitalism is a failed system that cannot overcome the problems of growing inequality, poverty, mass unemployment, environmental destruction, and war which it creates. The movement has to challenge Wall Street and both parties of big business. We must stand up to their policies where they try to solve their economic crisis on our backs in order to maintain a system which only benefits the elite in the first place.



But we must also provide a clear alternative. We need to fundamentally transform society to one not based on profit but instead on meeting everyone’s basic human needs. The only real alternative to corporate greed and capitalism is democratic socialism where the economy, workplaces, and society as a whole is democratically run by and for the vast majority of people.

Join Socialist Alternative! We Say:
•Spread the occupations across the U.S. and into schools and communities. For systematic, mass campaigning to mobilize the widest layer of workers, young people and labor unions into struggle.
•Organize weekend mass demonstrations that call for: No cuts to social services, A massive jobs creation program, Major tax hikes on the super-rich and big business, End the wars, Slash the military budget, and Defend union and democratic rights.
•Build up to the November 16-23 National Week of Action to combat the Congressional Super Committee plan for $1.5 trillion in cuts to social services. We demand jobs not cuts!
•Prepare to run independent anti-corporate, working-class candidates in 2012 to challenge the policies of the two parties of Wall Street as a first step towards forming a new party of the 99%, a mass workers’ party.
•End the dictatorship of Wall Street! Bring the big banks that dominate the U.S. economy into public ownership and run them under the democratic management of elected representatives of their workers and the public. Compensation to be paid on the basis of proven need to small investors, not millionaires.
•Build the movement to replace the rotten system of capitalism with democratic socialism and create a new society based on human need.

Thursday, 6 October 2011

Eurozone endgame

The following is taken from the October edition of Socialism Today issue 152


After a year and a half, the Greek debt crisis is far from resolved. In fact, with Greece on the verge of a social explosion, a default and exit from the euro appears almost inevitable. The eurozone is threatened by an interlocking sovereign debt and banking crisis, compounded by near-zero growth. Capitalist leaders are in complete disarray. Competing national interests are a barrier to cooperative measures. LYNN WALSH analyses the latest twists and turns of the eurozone crisis.

ON 21 JULY, the eurozone leaders proclaimed at their summit that they had agreed on a package to stabilise the Greek debt crisis. This, they claimed, would avert the threat of a Greek default and precipitous exit from the euro. There would be a further €109 billion (following the 2010 €110bn package), while the role of the European Financial Stability Facility (EFSF – with proposed €440bn funds) would be extended to allow intervention to support governments and banks. There would, moreover, be a bond exchange that would involve a 21% ‘haircut’ for the holders of Greek bonds.

This package, however, was more a promise of future salvation than an immediate, practical solution. The whole deal is dependent on the approval of the 17 eurozone governments or parliaments, and this is not likely to happen until the end of September or the beginning of October. The 20% ‘haircut’ for Greek bonds will provide very minimal debt relief for the Greek government – Greek government bonds are already trading at less than 50% of their nominal value on the secondary bond markets. If the bond exchange goes through (it requires the agreement of 90% of the bondholders) it will be a good deal for the banks and a raw deal for the Greek people. In fact, it would require a ‘haircut’ of at least 50-60% to make any real difference to the debt mountain weighing down the Greek economy.

There is no guarantee whatsoever that all 17 governments will agree on an increase in the funds available to the EFSF or to increased powers of intervention. The eurozone leaders are reportedly arguing in tense, behind the scenes negotiations about where the EFSF funds will come from. Some leaders are proposing that they would mainly come from the European Central Bank (ECB). This would be, in effect, another form of ‘quantitative easing’, printing money in order to bail out governments and banks through the EFSF. This is strongly opposed both from within the ECB and by a number of governments, such as Germany and Netherlands, who see it as a road to escalating inflation. Regarding the €109 billion loans package, the government of Finland is demanding collateral (security) for its share of the loan. Other governments, such as Slovakia and Austria, are likely to make similar demands. These governments are demanding that a slice of government revenue or physical assets, such as land or buildings, should be allocated to them as security. This is reminiscent of the demands for reparations made on Germany after the first world war.

The wrangle over this new package demonstrates once again the way national interests stand in the way of common agreement. The 17-strong eurozone is an alliance of national states, not a confederation with a unified governing body.

Soon after the July summit, moreover, there were precipitous falls in the shares of major French banks, reflecting fears about the repercussions of a Greek default. At the same time, European banks were finding it increasingly difficult to borrow dollars from US banks to finance their current business. The ECB, which under Jean-Claude Trichet had been extremely reluctant to intervene, was forced to step in to offer unlimited dollar loans to eurozone banks. The ECB also started buying the bonds of the Italian and Spanish governments in order to prevent a precipitous rise in the borrowing costs of Italy and Spain.

Meanwhile, growth in all the major eurozone economies slowed to near zero, indicating a renewal of the recession that began at the end of 2007. The British economy also slipped into stagnation. This renewed slowdown is partly the result of fears about a sovereign debt meltdown and banking crisis, but more especially the result of austerity measures that have cut demand and reinforced the spiral of weak demand, falling investment, and rising unemployment. This in turn reduces government tax revenues, and actually leads to bigger deficits.

Piling the pressure on Greece

AT THE EUROZONE summit on 17 September, the troika – the European Council, International Monetary Fund (IMF) and ECB – who police the austerity measures imposed on Greece, postponed payment of the latest €8 billion loan due under the 2010 package on the grounds that Greece has not carried out sufficient cuts in state employment, spending, etc. Georgios Papandreou, the Greek prime minister, duly scurried back to Athens in order to carry out the troika’s orders.

The package of additional austerity measures includes a property tax, together with more public-sector job losses – on top of the plan to sack around 150,000 civil servants (20% of the total) by 2014 – and draconian wage cuts. If implemented, the accumulated measures will mean an economic and social catastrophe. The troika is "holding a knife to the throat of the Greek government", as one Greek minister put it, partly to enforce deeper and more rapid cuts and partly as a warning to other governments like Portugal and Ireland to keep to their austerity packages. This is a very dangerous game, however, and could detonate a political explosion in Greece, propelling the country towards default and exit from the euro.

Economically, there is no way these measures will provide a way out of the ever deepening slump. In fact, further austerity measures will only push the Greek economy even deeper into slump, pushing up the outstanding debt and making it even harder for Greece to pay it off. After falling 4.5% last year, GDP will fall by at least 5% this year (second-quarter growth was 7.3% down over last year). Unemployment is officially 16%, but more realistically is over 20% nationally (with over 900,000 unemployed). The northern region of western Macedonia, where an estimated 20% of small businesses have shut down during the recession, has an official unemployment rate of 22%. Health, education and other public services are collapsing. There is a process of social disintegration.

Angela Merkel and other eurozone leaders have repeatedly denied that they are seeking to provoke a default on Greece’s debt or force Greece out of the eurozone. Other leaders, however, appear to contradict this line. For instance, Wolfgang Schäuble, the German finance minister, has threatened that if Greece does not meet the conditions set by the troika, payments will stop (regardless of the fact that Greece urgently needs cash to pay its bills and refinance debts in October). "Then Greece has to see how it gets access to financial markets without help from the eurozone", said Schäuble. "That’s Greece’s problem".

The Netherlands prime minister, Mark Rutte, went even further: "Countries which are not prepared to be placed under administratorship can choose to use the possibility to leave the eurozone". (International Herald Tribune, 9 September)

It may be that some of the eurozone leaders are bluffing, and their statements are intended to maximise the austerity measures implemented in Greece. However, they are playing an extremely dangerous game. Christine Lagarde, the head of the IMF, has recently warned about the rise of social tensions as a result of austerity measures. Massive strikes, demonstrations and other protests have continued unabated in Greece – and, at a certain point, will result in a social explosion.

Debt default and eurozone exit

PUSHING FOR EVEN greater austerity measures, eurozone leaders are ignoring the reality that Greece’s debts are absolutely unsustainable. While political leaders are repeatedly stating their determination to defend the eurozone and avoid a breakup, strategists closer to the investment banks and other financial institutions are quite clear that, sooner or later, there will be a Greek default. That would mean a Greek exit from the eurozone.

For instance, Nouriel Roubini, who has a far more realistic view than most commentators, argues that Greece will never resolve its debt problem within the straitjacket of the euro. In order to stimulate economic growth, the precondition of debt reduction, Greece would have to be able to devalue its currency in order to boost exports. Clearly, this would mean abandoning the euro and returning to the drachma. The drachma would undoubtedly sharply fall in value against the euro. This would enormously increase the foreign debt, in drachma values, of the Greek government, banks and businesses. In reality, Greece would (like Argentina in 2001) have to write off a significant part of these debts by revaluing the debt in drachma terms. Greece would undoubtedly become a pariah on financial markets, unable for a time to borrow from European and international banks. As in Argentina (comments Roubini), the situation would mean ‘bank holidays’ (denying or limiting savers access to their accounts) and capital controls to prevent a flight of capital out of the country.

Roubini argues that an orderly default and exit from the euro, although inevitably imposing extreme hardships on the Greek working class for a period, would be preferable to the "slow disorderly implosion of the Greek economy and society". He argues that there should be international, coordinated action to recapitalise the banks and other financial institutions suffering losses on their Greek loans. Moreover, international banks should step in to recapitalise the Greek banks, which would also suffer massive losses on Greek government bonds.

In theory, an approach along these lines, based on a coordinated, international intervention to mitigate the problem of unsustainable debt in Greece, would be preferable to blundering into an explosive collapse of the Greek economy and all the uncontrolled repercussions this would have in Europe and beyond. However, the capitalist markets do not function in an ‘orderly’ way, and recent events demonstrate the complete lack of policy coordination between the leaders of the advanced capitalist countries.

Default on the country’s debt and exit from the eurozone would not, in themselves, provide a solution for the working class of Greece. As in Argentina 1999-2002, the Greek ruling class would attempt to throw the burden of crisis onto working people. In time, the return to the drachma and devaluation would boost exports and possibly see a return to growth. In the short term, however, this would be on the basis of low wages, shortages of food, fuel and other essentials, and a degradation of public services.

To protect the interests of the working class it would be necessary to nationalise the banks and cancel the debt held by foreign big business and financial institutions, while protecting the savings of working people. It would also be necessary to take over the commanding heights of the economy (with minimum compensation on the basis of need) to ensure the supply of essential goods and services. Priority should be given to reconstructing public services such as health, education, etc. Control of the economy should be through bodies of democratically elected representatives from the trade unions, community organisations, and the wider public. On a capitalist basis there is no easy way out.
Eurozone banking crisis

THE EUROZONE SOVEREIGN debt crisis is interlinked with a Europe-wide banking crisis. In 2008, eurozone governments intervened to bail out a number of shaky banks. But they did not carry out the kind of large-scale recapitalisation of banks that took place in the US under the Troubled Asset Relief Programme. Only eight eurozone banks out of 91 failed the recent ‘stress tests’, a theoretical test to determine whether banks can withstand another financial crisis. The big investors and speculators, however, are not convinced that all the banks are healthy. In fact there was recently a leaked IMF report which said that eurozone banks need €273.2 billion of additional capital. Lagarde commented that the eurozone crisis was entering "a dangerous new phase" and called for part of the EFSF funds to be used to recapitalise banks. This provoked strong opposition, some from political leaders who object to EFSF funds being used to prop up banks, and some from the banks themselves which deny that they are in trouble.

Nevertheless, there are clear indications of a new crisis building up in the eurozone banking sector. For a start, banks are refusing to lend to one another, preferring to park their cash in the ECB, even if this earns them a lower interest rate. A more startling recent development is the fact that Siemens, the giant German engineering firm, has deposited almost half its cash reserves (€6bn) with the ECB, rather than with commercial banks. Eurozone banks have also had difficulty in securing dollar loans from US banks, vital funding to conduct their US and global business. The ECB was forced to step in and offer eurozone banks unlimited dollar funds on the basis of three-month loans (though this will cost the banks more than loans from the commercial money markets, which have begun to dry up).

In mid-August the focus turned to the French banks. A rumour circulated that Société Générale was in trouble, and there was a massive fall in its share price (with a 50-60% fall between June and September). Société Générale shares were worth €52.7 in February, while by early September they had fallen to €21.19. Société Générale holds €2 billion of Greek bonds, while BNP Paribas holds €4 billion and Crédit Agricole holds €800 million. Big investors and speculators fear that a Greek government default on its debts would precipitate a deep crisis for these three major French banks, which play a key role in the French economy. French government ministers assert that the fears about these banks are ‘irrational’. Any short-term liquidity problem (ie a shortage of funds to cover current business) would be covered by intervention by the ECB. They deny that there is a basic solvency problem, asserting that these banks have enough capital reserves to survive a Greek default and other shocks. French ministers have furiously rejected the idea that they are discussing plans to nationalise these banks. This is reminiscent of the position of Gordon Brown and Alistair Darling at the time of the Northern Rock bank crisis in 2007/08.

Lagarde, however, let the cat out of the bag. When she was previously French finance minister, she claimed there was no problem with the French banks. Since taking over as head of the IMF, however, she has called for a recapitalisation of the major French banks and other banks in trouble using the EFSF funds. There has been a furious reaction against this. On the one hand, any such bailout would confirm that these banks have a solvency problem, and could actually exacerbate their situation. On the other, existing shareholders are up in arms because a government bailout (which would involve the government buying shares in the banks) would effectively dilute the value of shares of existing shareholders.

Eurozone leaders’ disarray

UNDER THE IMPACT of the economic crisis there has been a sharpening of national tensions within the eurozone. There are also divisions within the leadership of the German government, the key power in the eurozone. Merkel has faced growing opposition from leaders of the Bavarian Christian Social Union (CSU) and the Free Democratic Party (FDP), the Christian Democrats’ coalition partners. These leaders have been playing the euro-sceptic card, reflecting the growing opposition in Germany to bailing out Greece and other so-called peripheral states.

The lack of decisive action at eurozone summits shows that the eurozone leaders are in complete disarray. Each time they proclaim everything will be fine, Greece will not be allowed to default or be pushed out of the eurozone. The big investors in financial markets, however, do not take these reassurances seriously. Most of the strategists who speak for investment banks, etc, now believe that a Greek default is inevitable and will result in an exit from the eurozone.

The leadership of the ECB is also divided. While buying Greek, Portuguese and Irish government bonds in order to keep down interest rates for their respective governments, Trichet and other ECB leaders repeatedly stated that they were against large-scale intervention to support other eurozone governments. However, the speculation against bonds of the Italian and Spanish governments, which was forcing up their interest rates at the beginning of September, forced the ECB to intervene with large-scale purchases of these bonds. This provoked the resignation of the German representative, Jürgen Stark. There is now an intense battle between those ECB leaders who believe that an even bigger intervention is required. They argue that unlimited support for the bonds of threatened governments would stave off a sovereign debt crisis. However, other ECB leaders are still intransigently opposed to this kind of intervention. They believe that the ECB’s role should be strictly limited to monetary policy, ie setting interest rates and regulating the money supply.

There is also a growing difference between capitalist leaders over economic policy. The prevailing policy, upheld by Merkel and other eurozone leaders, is that ‘fiscal consolidation’ is imperative to reduce deficits. This means severe austerity policies. However, this has produced a new downturn in the European economy and, as Timothy Geithner, the US Treasury secretary, has warned, now threatens the whole global economy. The fall in government spending and massive cuts in public-sector jobs have set in motion a downward spiral: declining consumer spending, weak investment, higher unemployment, and a decline in tax revenues that can result in even bigger deficits.

The ultimate stress test

A WARNING WAS recently sounded by Lagarde. While advocating continued austerity for countries like Greece, she is – without naming names – calling on the major European economies to adopt short-term stimulus measures, while maintaining the aim of fiscal consolidation in the longer run. She warned: "A vicious circle [of weak growth and weak government balance sheets] is gaining momentum in Europe and the US". "Political dysfunction" was feeding policy indecision in a "dangerous new phase of the crisis". "Social strains", she warned, "are evident in many parts of the world, not just in the countries undergoing severe [fiscal] adjustment". (IMF, 15 September)

Since then, the IMF has published its latest economic outlook. This forecasts global growth for 2011 to be 4%, but warns that, unless there is concerted action to revamp economic policies, there is a strong possibility of growth falling below 2%. In the US and Europe, growth will certainly be under 2% and is likely to be virtually stagnant, while there is zero growth in Japan. But, as the Wall Street Journal comments (21 September): "It is unlikely that either the IMF or the G20 will manage to produce a cooperative plan of action this weekend, given the sharp political discord within the US and Europe".

However, it may be too late for the major capitalist economies to avoid a prolonged stagnation or a further downturn. The ruthless pressure on Greece to intensify the austerity measures can detonate an explosion in that country, which in turn would detonate a meltdown of the eurozone. It is hard to imagine that Greece could default on its debt and remain in the eurozone. That would undermine the credibility of the whole eurozone. In any case, the only way Greek capitalism could escape from its crisis would be through readopting the drachma and devaluation. And if Greece takes this path, why should others stick with the pain of eurozone austerity measures?

On the basis of the relatively strong growth of the world economy since 2000, the eurozone appeared to become a success. But the growth was based on huge volumes of debt, which are now at the heart of the current crisis. Since the financial meltdown and economic recession of 2007-09, the eurozone is being subjected to a severe stress test – from which it will not emerge intact. At a certain point it will break up; but how long the process will take and through what permutations it will twist and turn cannot be predicted. The eurozone has entered its endgame, only the moves and timescale are uncertain