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Economic crisis


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From: Socialist Party docs Perspectives for Britain 2016, 23 March 2016: Socialist Party document as amended by the 2016 party national congress

Search site for keywords: Capitalist - Economic crisis - Capitalism

British Perspectives 2016

1. The speed of political developments in Britain has quickened dramatically. In last year's perspectives document we said: "The weakening of the social base of the major parties, a process that has taken place over decades, is now reaching a tipping point.

"In the next period, faced with increased class struggle and social explosions, these parties - now little more than shells - can suffer serious splits or even be destroyed." Today, both Labour and the Tories are deeply divided; it is not possible to say with certainty which party will split first.

"Such is the Tories' weakness that Cameron, or even the government, could be evicted from power within months.

2. While the immediate reasons for the fissures in the Tory and Labour Party are different - the EU referendum for one and Jeremy Corbyn's leadership for the other - they share a common underlying cause.

Worldwide, the crisis of capitalism has undermined the social base of the traditional pro-capitalist parties.

In country after country, traditional parties and politicians are increasingly undermined by populist and other forces from both the left and right.

Worldwide, the capitalists are no longer able to control the political direction of the major parties to the degree that they could in the past.

Against a background of continued world economic crisis, British capitalism has also suffered its own specific crisis; with the continuation of its decline from major imperialist country to a third-rate power both economically and politically.

3. As the world economy teeters on the edge of a new economic crisis it is already revealing anew the weakness of British capitalism, even before it has fully developed.

The CBI had downgraded its predictions for economic growth to 2.4% in 2016. Far from a rise in interest rates being imminent it has, as Larry Elliott put it, "receded so far into the distance that it would take the Hubble telescope to pinpoint it."

On the contrary, as in other countries, a further cut in interest rates or another round of QE is likely to be on the agenda.

4. The UK's productivity levels languish in sixth out of the 'G7' advanced capitalist countries. The weakness of British capitalism is shown in the country's woeful current account (trades and payments) deficit which is the largest proportion of gross domestic product (GDP) in peacetime since 1830! Osborne's claim that he would lead a 'march of the makers' - that is a return to manufacturing industry in Britain - was never more than a slogan and has now been quietly forgotten.

The slowdown in China has meant disaster for the remains of the steel industry in Britain (which of course is foreign-owned, along with a third of the UK economy, excluding the financial sector).

At the same time, what remains of North Sea oil, which has acted as a certain cushion for British capitalism in the past does not now play the same role, particularly as the world oil price has plunged. As a result, 35,000 jobs in the oil and gas sector are under threat.

5. But while it is the 'real' economy which is feeling the first tremors of a new economic crisis, it could be a new financial crash which marks the real beginning of a new economic crisis in Britain.

As turmoil has engulfed the world's stock markets, John Vickers, who led the commission into the banking sector, has warned that the UK's banks will not be able to withstand a new financial shock.

6. The political consequences of a new economic crisis are likely to be profound. In 2008, the shock of the economic crisis did lead to a temporary stunning of the working class.

At the same time, the legacy of the previous historical period meant that, while enormous anger against austerity developed, there was not the development of a widespread socialist consciousness among the working class.

That is still true today but consciousness is not the same as it was in 2008. The experience of the last eight years means that anger at all the institutions of capitalism - including the media, the police, the legal system and above all capitalist politicians - is far greater than it was at the start of the crisis.

For example, a recent YouGov poll asked people in seven European countries if the capitalist media could be trusted and if its coverage was too left wing or too right wing.

In every country only a minority thought the media could be trusted but in Britain the level of trust was the lowest (32%), with the biggest margins saying that they considered the media to be 'too right wing'.

But it is above all capitalist politicians who are despised by wide sections of the working class. The general election result, far from showing the strength of the Tory Party, confirmed the weakness of all the capitalist parties.

Throughout the Con-Dem years, the Coalition parties carried out austerity in government while the Labour leadership supported 'austerity-lite' nationally and implemented 'austerity-heavy' at local council level.

The result was a general election where the Lib-Dems were virtually annihilated - reduced to a tiny rump of eight MPs - and the woeful unpopularity of Labour allowed the Tories to win a narrow majority despite only winning the votes of 24.4% of the electorate, making this the most unpopular Tory government in history.

However, as we warned, the objective weakness of the Tories has not prevented them launching an intensified assault on the working class.

It has, however, forced some partial retreats on them - for example over cuts to Working Tax Credits.

Even the government's own translators were able to win a victory against them by threatening strike action.

The Tories' offensives against the working class are stoking up even greater hatred towards capitalist politicians which will, at a certain point, find dramatic outlets.

7. At the same time, there has been a development of an anti-capitalist consciousness among important layers, particularly of young people, as Corbyn's victory has shown.

A 2016 YouGov polled showed that more people in Britain have a favourable attitude to socialism (36%) than capitalism (33%).

A new crisis would be less likely to have a temporary stunning effect, and could also lead to a much more rapid development of consciousness.

In particular, sections of the working class - including the minority who even voted Tory in the last election - would be likely to have their illusions shattered that the 2008 crisis was a one-off and things would one day get back to 'normal'.

Already, hopes that the economy was on the road to recovery have been severely undermined. An Ipsos-Mori poll (27 01 16) showed that the percentage of people who expect the economy to get worse in 2016 has surged from 17% during the general election to 39% now.

A new economic crisis could be a potentially shattering blow for the Tory Party. All of their propaganda about Labour's responsibility for the last crisis would be shattered in one fell swoop, leaving their already shallow social base destroyed.

In such a situation, the capitalist class are absolutely right, from their point of view, to fear the consequences of a Corbyn-led Labour government.






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