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Tuesday, 12 June 2012

Defeating the myths on the need for cuts

Before the general election in 2010 David Cameron tried to claim that the Tory party had changed and was no longer the brutal anti-working class party of the 1980s.
Within days of taking office they revealed themselves as Thatcherites to the core.

The Tories' propaganda is that cuts are necessary because of New Labour's excessive public spending. This is a giant con-trick.
Nothing could be further from the truth. The crisis Britain is facing is not a crisis of the public sector but of the private sector.
It was the collapse of the banking system, not greedy public sector workers that the economy into crisis.
Yet, while public services are being destroyed, the rich are increasing their wealth further still.

In reality, New Labour did not preside over a significant increase in public spending. On the contrary, under New Labour, as under the Tories before them, public spending on measures that decrease poverty has fallen back and, as a result, for much of New Labour's tenure, inequality and poverty increased.

High quality council housing, unemployment benefit and a pension that it is possible to live on, these are all now distant memories. Job Seekers Allowance is at, £64.30 a week, equal to just 10% of average earnings compared to 17% when Margaret Thatcher was in power.
It is the lowest in the developed world and is literally impossible to live on. Even in those sectors such as health where public spending increased under New Labour, although not enough, this has been linked to increased privatisation.
When New Labour was elected in 1997 total public spending had fallen to 37.7% of gross domestic product (GDP), its lowest level since the 1960s. New Labour kept it at the same level for its first two years in power.
By 2008 it had increased marginally to around 41%, although this remained extremely low compared with other major European countries such as Germany, and particularly France, where it was still 53%.
Since then it has jumped again to around 46%. To put this in perspective it was 45% in 1985 - when the Tories had been in power for six years! However, the jump has nothing to do with increased spending on public services and everything to do with the bailout of the banking and finance system.

The Treasury department spent £109.5 billion in 2008/09, an increase of 49,891% on the previous year! This vast sum of money, slightly more than the entire spending on health for the year, was used to bail out the finance system.
Yet the same big financiers whose profligacy triggered the economic crisis are now demanding cuts in services. All capitalist politicians accept the need for cuts because 'the markets' demand it.
The Tories are particularly enthusiastic about cutting as much and as fast as possible, but New Labour has also made it clear it would do as the markets demand and carry out severe cuts.


What are these markets? Not some elected or democratically accountable body but a few handfuls of unelected bond market traders interested only in their own mega-profits.
These are the people who are demanding vicious cuts which will ruin the lives of millions.
If this government gets away with it, the clock of history will be unwound with levels of poverty returning those of the 1930s. But it will not get away with it.
This government is deluded if it imagines it will be able to carry out its programme without meeting an avalanche of opposition.

United we are strong, divided we will be defeated. The government knows that and is desperate to divide us - public sector from private sector, old from young, benefit claimants from everyone else...
To avoid the government's trap, and build a united movement, it is vital that we oppose ALL cuts in jobs and services. If we fall into the trap of accepting pay cuts on the spurious grounds that they will stop a local library or swimming pool open, or fighting to save one local hospital but not another, we will allow the anti-cuts movement to shatter into a thousand pieces.
Of course, we will not always succeed, but our starting point must be to fight every single cut. This includes cuts implemented by Labour councils, who are willingly wielding the axes handed to them by the government.

The socialist party does not accept the need for any cuts and fights for a new mass workers party that can give ordinary people a voice again.
To be fully effective, a workers' party would need to put forward socialist ideas. Socialists do not accept that cuts are necessary.
Capitalism has created enormous wealth, science and technique. We have technology today that was unimaginable a generation ago.
The world economy is 17 times the size it was a century ago. Yet we are being told that the most basic public services - a decent public health service, the right to an affordable home - cannot be afforded by capitalism.
The current crisis is not caused by a bloated public sector but by the worst crisis of capitalism in 70 years. This is a crisis of the private not the public sector.
Yet all the major capitalist parties - Tories, Lib Dem and New Labour agree that it should be the working class and public services that pay for it.

Any government that acts in the interests of the markets would put forward savage cuts along the lines of those being proposed by the Con-Dem coalition.
Across Europe - from the ex-social democratic governments (equivalent to New Labour) of Greece, Spain and Portugal to the right-wing capitalist parties of Britain, France, Germany and Italy; the cuts are virtually identical in their brutality.
All of Europe is dancing to the axe-men's tune. Capitalism is in crisis and it is the working class that is expected to pay the price.

This crisis is more than simply the responsibility of a few greedy bankers. The severity of the economic crisis that began in 2008 is a consequence of the increasingly parasitic nature of capitalism over the last decades.

Capitalism has always been a system based on the exploitation of the majority, the working class, for the profits of a few at the top.
There was a brief period, from around 1950-73, when capitalism developed rapidly. At least in the more economically developed countries, including Britain, working-class people were able to win a few crumbs from the capitalists' table.
In Britain, a National Health Service and a mass council house building programme made a real improvement in workers' lives.
However, when capitalism went into crisis, it set about restoring its profits by driving down the share of the wealth taken by the working class. Production was moved abroad to countries with cheaper labour, wages were driven down, and spending on public services was cut back.

The consequence of all of this was that, by 2007 in the G7 countries, the share taken by the working class (wages plus benefits) had fallen to a post-war low of 53% of total income.
During the last boom profits reached an all-time record. However, they had difficulty finding profitable fields to invest in.
Investment in science, technique and production remained at an historic low. Why? Because working-class people lacked the means to buy the goods that could potentially be produced.
This is the terrible reality of capitalism. It does not matter that two billion people are without the most basic necessities of life, they are not 'a market' because they lack the money to buy what is produced.
Instead of investing in industry, the capitalist class made its profits in the last boom by gambling on the world's stock markets in a speculative frenzy. To try and increase their markets the working class got its own little share in the credit frenzy: cheap credit cards and mortgages - not crumbs but bubbles from the table.

But while the bankers' debts were nationalised - handed to us to pay off via cuts in our public services - our debts (the £1.5 trillion consumer debt overhang from the boom) remain like millstones round our necks.

Socialists argue that the rich should be the ones who pay the crisis, via dramatically increased taxes for the super-rich and the big corporations. For most of the 1970s the tax rate for the highest band of income was 83%.
Likewise, for most of the 1970s, big corporations paid 52% of their profits in tax. But that percentage has been reduced step-by-step ever since, to just 28% now.
As the PCS points out, even with the existing low levels of taxation for the rich, more than £120 billion goes uncollected every year. While we favour taxing the rich, we also recognise that the 'markets' - neither the big corporations nor the bond traders who hold whole countries to ransom - will never meekly accept dramatically increased regulation and taxation.


So what is the alternative to this market madness? The starting point is to refuse to accept the cuts. Faced with a determined working class, big business will be forced to retreat.
However, in its relentless pursuit of profit, capitalism would then come-back with other ways of making the working class pay, for example, by using inflation.
That is why we need a socialist solution. For a start we call for the nationalisation of the big banking and finance companies.
Compensation should be paid on the basis of proven need. Not one penny should go to the speculators who are demanding that the working class pay for the crisis for which they - the speculators - bear responsibility.
It would then be necessary to introduce full government control of all incoming and outgoing foreign trade. That would enable a democratically elected government and the working class - not the market - to control imports and exports including capital.
A socialist nationalised banking sector would be democratically run by representatives of banking workers and trade unions, the wider working class, as well as the government.
Decisions would be made to meet the needs of the majority - for example, offering cheap loans and mortgages for housing and for the planned development of industry and services, and ending all repossessions of peoples' homes.

However, that would only be the start. Capitalism has led to enormous economic destruction.
In Britain around 10% of wealth has already been lost as a result of the recession, due to factories and workplaces closing, resulting over 2.6 million officially unemployed with the number rising.
Nor is there any prospect of a return to healthy growth. This is the real difference between now and, for example, the end of the second world war when the total national debt was far higher than it is today - over 200% of GDP compared to around 60% now.
Then, however, Britain entered a period of significant economic growth, thereby shrinking the national debt.



Its time to reject the need for any cuts at all, we do not accept like new labour that some cuts are needed at all. Lets redouble our efforts to win the arguements and win more people to our ideas of socialism and a change of society to benifit the many.

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