"CAPITALISM IS the only system that works," pronounced Polly Toynbee, a
columnist in The Guardian, as 2004 drew to a close. Yet, a torrent of reports,
factual comment and information in her own newspaper and the rest of the
capitalist media indicate that the system she supports is working badly and
potentially is on the verge of a catastrophic breakdown. An ‘economic tsunami’
on a world scale could follow the disaster in Asia.
Peter Taaffe, Socialist Party general secretary
A banner headline in The Independent in mid-December read: "Poverty and
despair of Britain’s lost generation". Across Britain, almost 20 per cent of
children are in families receiving means-tested help because they are not
working. A recent arrival from Bangladesh, an engineer, commented: "I was
shocked, I thought I was coming to a leading world country."
Around eight million people are living on less than £10,400 a year and
cannot afford essentials such as furniture. Two million cannot afford to heat
their homes properly, which results in 50,000 deaths a year, while thousands
have to choose between prescriptions for medicine or food.
On the other hand, the wealth of the super-rich has doubled since Blair
came to power. Polly Toynbee’s system is indeed working for some as inequality
rose in Britain by 40% between 1979 and 2001. The number of dollar
millionaires in Britain rose by 28,000 to a staggering 383,000 in 2003.
Worldwide, the ranks of "high networking individuals" – those with more
than $1 million (£547,000) in assets – increased by 500,000 to a total of 7.7
million. Their combined wealth rose by 8 per cent to $28.8 trillion. Bolstered
by a colossal increase in profits – the surplus extracted from the labour of
the working class in Britain and worldwide – the super-rich are creating
"100-year plans" to hold on to their wealth.
This at a time when half the world’s 2.8 billion workers who actually have
jobs are struggling to survive on less than $2 a day, while 550 million live
on less than $1 a day. This is the grim reality of Polly Toynbee’s "best
system" as we enter 2005, a year that promises the turning of the tide against
what is seen as an increasingly discredited system.
Polarisation
ANY ECONOMIC and social system is ultimately judged on the basis of whether
it can develop, maintain and increase the productive forces – science,
technique and the organisation of labour, and with it the living standards of
the majority. In the 1990s, given the collapse of the regimes of Eastern
Europe and the Soviet Union, capitalism worldwide claimed that it was
fulfilling this task through the 1990s boom.
The underlying reality, however, was a colossal polarisation between rich
and poor, between the capitalists and the working class, as the former
ruthlessly applied neo-liberal policies which, in turn, generated an incipient
revolt amongst young people and growing numbers of working-class people.
This could assume mass proportions if the present highly unstable economic
situation tips over into what the Financial Times warns could be a severe
"economic depression".
The US economy, which is the Atlas of world capitalism, holding up the
whole system, was mainly sustained after the economic shock of 1997 by huge
inward investment by foreign capitalists, particularly from Asia, with the
governments of Japan and China in particular also plugging the US federal
deficit by buying Treasury Bonds.
They have done this because of their dependence on exports to the US
market, without which they would plunge into an even worse crisis than in
1997.
The consequence has been a huge US balance of payments deficit of almost 6
per cent, almost double what it was in the 1980s, which in turn has now
resulted in a big drop of about 30 per cent since 2002 in the exchange rate of
the dollar against other major currencies.
While proclaiming support for a "strong dollar" the US government of Bush
has colluded in the devaluation of the dollar, which in turn cheapens US
exports against the major competitors of Europe and Asia. In effect, the US
has put the European capitalists on reduced ‘rations’, driving up the euro to
around $1.33 and the pound almost to the level of $2, which will savagely
undermine even further the stagnant eurozone and could result in a spiralling
of factory closures and unemployment.
At the same time the holders of US dollars abroad, having seen it plunging
and their holdings further devalued, can divest themselves of this currency
for others, setting in train what US economist Stephen Roche has told his
clients may be an "economic Armageddon".
However, not just the US but also the Asian capitalists and governments are
terrified of jumping off this speeding economic merry-go-round for fear of
collapsing the whole financial house of cards. A former US Treasury secretary
has described this as a "balance of financial terror". When and just how the
system could implode is unpredictable but as the British economist Wynne
Godley comments: "The crunch may be at hand."
US trade deficit
THE INEXORABLE rise of the US deficit means that the Bush regime will have
to savagely take the axe to public spending in the US and, at the same time,
through a cheap dollar, seek to recapture markets from its European and Asian
competitors. If this is successful, it will enormously aggravate the 10%
unemployment in France, for instance, with almost that figure existing in
Germany.
Moreover, there is no salvation to be found even in the growing market of
China. Half of Britain’s exports go to Europe whereas only one per cent goes
to China. True, the British capitalists are behind their US and European
counterparts in exploiting this market but even US companies are currently
earning greater profits in Australia, a market of 19 million people than in
the potentially 1.2 billion market of China.
At the same time, China is churning out huge amounts of manufactured
exports that are pouring onto the world market, which is becoming saturated.
The result could be massive ‘overheating’ in China and an economic crisis on
the scale of Asia in 1997.
But, given poverty-stricken wages, China and, to a lesser extent India,
still remain threats to the jobs of millions of British workers from
"outsourcing", particularly in manufacturing. Outsourcing is predicted to
increase massively in the next period.
Despite this, Gordon Brown gives the impression that he is on economic
cruise control, with promises that Britain under his stewardship will remain
unaffected by the world economic storm clouds that are gathering. Nothing
could be further from the truth. In many ways, the economic position of
Britain is a replica, albeit on a smaller scale, of the chronically diseased
US capitalist economy.
Its trade deficit in manufacturing is the worst for three centuries. Its
first deficit was in 1983, a signal of British capitalism’s long-term decline
but this has now burgeoned to almost £39 billion in 2003 and was almost that
figure in the first ten months of 2004. It therefore has a similar "balance of
payments crisis" to that of the US.
Unlike the US, however, Britain still has a surplus from the capitalists’
investments abroad and in ‘services’, which plugs, for the time being, this
growing black hole.
But the scale of the collapse is indicated by the fact that British
capitalism, in the first ten months of 2004, had a £2.4 billion trade deficit
with Belgium and Luxembourg, a £4.7 billion deficit with the Netherlands, a
deficit over £10 billion with Germany, and a more than £3 billion gap even
with Berlusconi’s ailing Italy!
This situation is destined to worsen as the price of the pound reaches
towards $2. It was last at this level just before "Black Wednesday" in 1992.
Whether it results in a crisis on that scale for the New Labour government is
doubtful but the exports of British capitalism will suffer severely, factories
will close and workers will be thrown out of jobs as a result of this.
‘Golden rule’ breached
AT THE same time Brown, despite his claim of further ‘record’ growth, faces
a slowing down of the British economy this year and with it the shipwreck of
his "golden rule" of only borrowing to finance investment over an entire
economic cycle. There is already a growing gap between income and expenditure
in the government accounts.
Either Brown will be compelled to increase taxes, a virtual certainty which
he hopes to delay until after the next election or savagely cut public
spending or combine both.
Up to now, the British economy and, thereby, even the paltry spending on
public services of the government, has been buoyed up by the growth in
consumption which has been a big factor in sustaining growth. The housing
bubble has been a crucial element in this, allowing increased spending, second
mortgages, etc. This, however, has led to a colossal household debt of 140% of
annual income, which is now clearly unsustainable.
Some capitalist economic experts hope that this will not mean a repetition
of the housing market collapse of the early 1990s, with a drop in prices that
resulted in repossessions and homelessness. Interest rates are lower now and
they argue that householders may just hang on to property and wait for "better
times".
But this discounts the likelihood of a serious world economic crisis, which
will severely impact on Britain as well as the underlying economic weakness of
British capitalism.
The privatisation of education, particularly in the universities, is
calculated by Brown and Blair to be one replacement for industry as a "foreign
earner". It is true that Britain is second only to the US in its attraction of
foreign students but this currently brings in less than £2 billion a year,
hardly an economic lifeline.
Moreover, the surplus from oil at £2 billion is now half of what it was a
year ago. The consequences of all this are felt in the harrowing poverty in
Britain’s major cities, with Glasgow, Liverpool and London accounting for half
of the poor children in Britain, as well as the steady erosion and attacks on
the past gains of the working class.
The assault on pensions, particularly the raising of the retirement age
from 60 to 65, is a major attack on the remnants of Britain’s once-famed
welfare state.
The scandal of MRSA in hospitals, with 100,000 people catching infections
and a horrifying 5,000 dying every year, is in itself an indictment of the
capitalist system and, particularly, its neo-liberal phase of deregulation and
privatisation.
This killer bug has been allowed to take root because the NHS now employs
half the cleaners it did 15 years ago, resulting in fewer than half of
hospitals having a "good or excellent cleanliness rating", according to the
government’s own health minister.
Privatisation is utterly discredited for the con which it is. The collapse
of Jarvis, which is quitting four PFI deals, leaving half-built student
accommodation at Lancaster University and elsewhere indicates this. Despite
this, Blair will press on regardless because he is organically linked to
diseased British capitalism.
Blair has even allied himself with the ultra-right neo-conservatives in the
Bush administration. He told The Times: "The [US] neo-conservatives are not a
world away from the progressive left"! Not just in politics but in lifestyle
and outlook he is a million miles removed, as is his Cabinet and now his
party, from the mass of working people in Britain.
He recently acquired a £3.6 million house bought against projected future
income of £20 million after he leaves 10 Downing Street! It is time to prepare
a new mass alternative to break the grip of parties rooted in the failed
system.
The Tories still bear the mark of Cain, of Thatcher, and are largely a
rural and suburban rump. Its main political message is that Blair is "always
stealing its clothes", which is true.
The Liberal Democrats, on the other hand, who give the impression of being
different, are also located firmly within discredited capitalism. They are
recent enthusiastic converts to privatisation and the neo-liberal agenda in
general. The future does not lie with these parties and the profit system they
represent.
Elected dictatorship
ONE OF Polly Toynbee’s colleagues at The Guardian, Martin Kettle, sought to
reinforce her message by proclaiming last year: "Socialism is dead. Long live
liberalism and social justice." Yet the past year has shown that his claim is
false.
Capitalism, even "liberal" capitalism, and "social justice" are not twins
but polar opposites. What is "liberal" or democratic about Blair’s capitalist
Britain? Lord Butler has revealed that Blair and a handful of cronies take all
the decisions, with little or no reference to the rest of the government. The
Cabinet meets for the same length of time as the TV programme Ready, Steady,
Cook!
In other words, a veiled personal "elected dictatorship" by Blair exists
which has taken Britain into bloody, devastating wars and relentlessly attacks
the working class here and internationally.
Where progress has been made, even on a limited scale, it has been
precisely by those who adopt a socialist outlook and oppose the capitalist
system. Roger Bannister, for instance, the left candidate for Unison general
secretary, and not the national leadership of UNISON, successfully mobilised
the workers in his authority (Knowsley on Merseyside) and established a
35-hour week.
The attempt in education to impose city academies on an unwilling
population was halted when Waltham Forest NUT, with socialists in its
leadership, teachers and parents forced Jasper Conran to withdraw from his
attempt to introduce the "benefits" of his "enterprise culture" to the
grateful poor of that borough.
It is also the socialists in the PCS and other unions who are leading the
battle for action to defeat the attack on the pension rights of the British
working class through a one-day public sector general strike.
These are small examples, it is true, but events and the testing out of the
official leadership of the trade unions, as well as the discrediting of New
Labour, are preparing the ground for these ideas to be embraced by millions of
British workers.
In projecting "liberalism" as the alternative, Martin Kettle imagines he is
also "modern". So-called liberal capitalism and the Liberal Party which
espoused these ideas predated the rise of the labour movement and of
socialism. It was their failure in the nineteenth century and since that
convinced working people to create mass organisations to challenge capitalism
and change society in a socialist direction.
Discredited system
WORLDWIDE, A certain rebirth is under way. Two major international trade
union federations are about to create a single body which, theoretically, will
encompass 174 million members worldwide.
These organisations, unfortunately, are presently under the control of
right-wing officials but the potential for radical change, especially under
socialist and Marxist leadership is indicated by the numbers who could be
mobilised for workers’ rights and for a change in society. And such a fighting
force is crucial given the worsening of the conditions of the working class
and the poor internationally.
The attempt, therefore, of those like Polly Toynbee to reconcile us to
this, "the only alternative", is doomed to failure. The rich might have a
100-years plan to hold on to their wealth but the capitalist system is
inherently unplanned, riddled with contradictions and incapable of satisfying
human wants or interests.
One capitalist commentator expressed this succinctly, in relation to who
really takes economic decisions in the US, when he wrote that the politicians
are "servants of the economic cycle and second to the Federal Reserve. [They]
might have some impact on jobs in the margins but Greenspan [chairman of the
Federal Reserve] is more important than the President and the economic cycle
is more important than Greenspan." (The Observer)
Precisely! Capitalism is a society of chaos; it is a blind system, with the
working out of economic processes taking place behind the backs of society.
We stand for a socialist, democratically planned economy, which can replace
the barbarity of capitalism with a society of human solidarity. 2005 will see
an advance in the forces of socialism in Britain and worldwide which have this
as their vision of what is possible.
No amount of capitalist journalistic balm, extolling this discredited
system, will deflect us and the working class from achieving this goal.
