There is a deep capitalist crisis underway, inflicting huge damage to working people and leading to war and conflict internationally. The rich are increasing their wealth at the expense of our class, whilst launching a major political offensive to legitimise their theft. But there is growing resistance and we have more to do.
STILL IN CRISIS
Capitalism is in a crisis, which is has shown itself incapable of extricating itself from. In Britain, the Office for Budget Responsibility is talking of cuts until 2060.
Huge amounts of capital are swilling around Britain and the world desperately seeking profitable avenues for investment. Quantitative easing has significantly increased good quality private capital available for investment. Large non-financial corporations in Britain have a stockpile of £750 billion in cash. But we face a capital strike – a refusal to invest.
It is the classic and fundamental problem that Marx identified with Capitalism – overproduction (and under-consumption) on an enormous and now global scale. The rich have stolen too much of the wealth for themselves, which they want to invest rather than spend. It needs to be redistributed into the hands of those who will spend it – the workers!
But never let a good crisis go to waste
There is also a political aim behind the ruling class’ response to the economic crisis. The strategic aim of the ruling class offensive is to use the post-2008 crisis to effect a vast shift of wealth away from the working class, and this is especially aimed at the wealth that we have accumulated in the post-1945 period.
The working class does have substantial accumulated personal wealth in the form of pensions (deferred wages) and private home ownership (insofar as mortgage debts are paid off). The wealth represented by these is being leeched out to cover the huge cuts in the social wage. The ‘golden generation’ now has to look after, and pay for, both aging parents and adult children. Amongst many other things this includes childcare and education costs, social care costs, and housing costs for those unable to afford to leave home.
But the impact of the current crisis goes well beyond this.
THE DIRECT IMPACT OF THE CUTS
There has been an explosion in the number of people forced to rely on food handouts in the UK. The Trussell Trust, which now operates more than 300 food banks in the UK, has seen demand for its service increase year on year since the 2008/09 financial crisis. In 2011/12, 128,697 emergency food parcels were handed out – up from just 26,000 in 2008/9. A local councillor recently donated £500 from his community fund to a food bank.
This is an outraged in one of the richest countries on earth. It is potentially a human rights abuse, according to Olivier de Schutter, the UN’s Special Rapporteur on the Right to Food, whose work is normally carried out in developing countries where much more severe food crises are caused by rising global food prices and supply constraints. The right to an adequate diet is required under the International Covenant on Economic, Social and Cultural Rights (IESCR). Incidentally, this set of rights exists because they were fought for by the Soviet Union and its allies against western powers who wanted to restrict human rights to political rights.
Article 11 of the IESCR enshrines people right to be able to afford an adequate amount of food without having to compromise other basic needs.
With Gove swinging a wrecking ball at a comprehensive education system, planning to slash spending in his own department by 50%, and cuts leading to councils spending 26% less on youth services (a cut of £300m) it is unsurprising that the government wants to revise measures of child poverty to reduce the importance of income and help cover up their crimes.
It is reported that the UK’s biggest local authority – Birmingham council – estimates that it will have to make £600m of savings by 2016-17, a cut of nearly half of the its controllable spending. In Newcastle in England and Moray in Scotland the councils are completely axing arts funding.
Hammering the poorest
In April we will see poverty really starting to bite. People across the country, young and old, in big families and small, unemployed or in work, will be hit by a range of changes to the support they receive from our welfare state. By September these changes will be fully in place. The ‘bedroom tax’, council tax benefit reform, the benefit cap, the end of a national system of crisis loans and community care grants. The annual increase in welfare payments will be only 1% this April, well below the rate of inflation. Each of these measures is a major change – and collectively they are an avalanche that will hit the most vulnerable in our society.
Disabled people are being hit already, of course. A Citizens Advice Bureau worker has a client who failed an ATOS medical for the second year running, and has had her benefit cut. So now she needs to send in a sicknote in order to get appeal rate ESA. She went through the same process last year, and won her appeal, but she can’t get a GPs appointment for another month and so it left in hardship. Just one story like so many others. Sick and disabled people are being left without food and heating.
In its annual report on poverty, the New Policy Institute analyses poverty trends in the UK today. It is quite revealing:
6.1 million people in poverty are in working households. Excluding pensioners, in-work poverty now outstrips workless poverty at 5.1 million households.
6.4 million people now lack the paid work they want. There are 1.4 million part-time workers wanting full-time work – the highest figure in 20 years.
The churn of people in poverty or out of work is substantial. While 18% of people are in low income at any one time, 33% experience at least one period of low income in a four-year period, and 11% are in low income for more than half of that time. So poverty is more widespread than the statistics show.
Similarly, while 1.6 million people are claiming Jobseeker’s Allowance (JSA) at any one time, 4.8 million have claimed JSA at least once in the last two years
And more people are just getting by through debt. Research by the Working Lives Research Institute for UNISON found that 1-in-4 members were in financial difficulty, or “struggling but surviving”. Nearly half were not “comfortable” but just surviving.
Debt advice has been hit by cuts in grant funding. In East London, the Bromley by Bow Centre has seen demand for debt advice surge as council funding has been cut and the number of staff has almost halved. Tamara Hopewell, a worker at the centre, was quoted as seeing a noticeable change in recent months with more people queuing for debt advice services – some “in the freezing cold” and from very early in the morning.
And debts are currently controlled by interest rates at historically low levels, which may not continue for ever.
The official unemployment figures have recently fallen, but a TUC analysis shows that since the eve of the recession in 2008 there has been an almost 100% increase (a rise of 696,000) in involuntary part-time work, which has risen from 724,000 in early 2008 to 1.42 million workers now.
In addition to this group of part-time workers seeking full-time jobs (whose prospects are regularly reported) there is also an increasing number of people who would like to work additional hours in their current job (although they may not want to work full-time, and may not be in part-time employment). This means that in total the number finding themselves under-employed has risen by around one million since the start of the recession, with 2.3 million people under-employed in early 2008 compared to 3.3 million today (a 42% increase). One in ten workers in employment are now in this position.
Young people are particularly affected, and 19% of 16-24 year olds are in this position.
The housing crisis has taken a different nature in Britain compared with other countries which had major building booms such as Spain, Ireland and the US. There is a chronic shortage of housing – especially housing which ordinary people can afford. This is being exacerbated by swinging cuts in funding for building new social housing although cash-rich investors seeking investment opportunities are continuing to drive up prices in some areas.
There is a structural shortage of at least 2 million homes in England and Wales alone, comprised of the numbers of households on waiting lists for housing (1.7 million) and others in grossly substandard accommodation. Yet there were just over 100,000 new homes built in the latest 12 month period. This is slightly less than the growth in the number of households, meaning that the housing shortage is increasing.
Yet the Financial Times recently reports that UK housebuilders are enjoying a ‘state-backed boom’. The boom is in the share price of the stock market-listed housebuilding firms, up 46% in the last 6 months, based on an unprecedented rise in profits.
These profits arise because the term ‘housebuilder’ is a misnomer. Housing starts are at a record low but, for example, Barratt (one of the biggest firms) has been buying land at its fastest rate ever. These firms are in reality land buyers, who have an incentive in hoarding land, which continues to rise in price and in restricting the supply of new housing for the same reason.
Property website Zoopla reports that house prices rose by 5% in January in London, bringing the number of UK properties worth more than a million pounds to 300,000. But prices slid by 8.5% in Northern Ireland and by 2.4% in North East England. Lawrence Hall of Zoopla said: “The London property price rise has been driven by overseas buyers, mostly from Asia and Russia. London has a small amount of highly sought after property stock of what we might call trophy properties. It is these properties that are fuelling the boom.”
Not all are so lucky. Standard & Poor’s forecast a rise in repossessions from an estimated 35,000 this year to 39,000 next year, or 0.37% of all mortgages.
Maggie Thatcher’s home ownership myth is now over. The 2011 census reveals that the number of people renting from private landlords or letting agents rose from 9% to 15 % between 2001 and 2011, there was a decline in social renting over the same period from 13% to 9%, and the number of owner occupiers has decreased from 68% to 64%. People are being forced to rent privately, in a sector offering little protection to tenants with sky-rocketing rents.
And poverty is no longer concentrated in the social rented sector. The numbers of private renters in poverty are now as high, having doubled in the last decade.
And there is an especial impact on younger people. There are now half a million more young people (aged 20–34) living with their parents than in 1997, and 3 million in total. This causes a huge lack of stability. Someone who has lived in the same home for 20 years without owning it is likely to feel the same sense of neighbourhood belonging as someone who owns their home but has lived in it for just six years, according to the IPPR’s “No Place To Call Home” report.
A 27-year old man from County Durham was quoted as saying “Right now I’m single. In the past I was with a girl who had a flat so we spent time there but the whole time I felt like a bit of loser. I went out with a woman who lived at home like me – we had to meet up and go sit in the park and it felt like we were 15 – and I’m 27.”
There is a crying need for more affordable rented housing: There are 5 million people (2 million households) on housing waiting lists – a figure which has been growing for a number of years.
But why have we got a housing crisis? The government has slashed funding for more affordable housing – capital funding for new social housing was cut from £8.4bn over the previous comprehensive spending review period to £4.4bn in this one. But interest rates are rock bottom. People need jobs. Why isn’t the government employing the unemployed to build houses for those who need them?
Climate change and poverty
The World Bank (2008 World Development Index) calculated that the 10% of the world’s population with the highest income, some 700 million people, use 59% of the world’s resources whilst the poorest 40 percent of people on Earth use than 5% of natural resources. If somehow the poorest billion people disappeared tomorrow, it would have a barely noticeable effect on global natural resource use.
This is important, and not just for equality but for addressing the global environmental crisis. The Royal Society, possibly the most prestigious scientific institution on the planet, recently published a report into the environment and development “People and the planet”. Somewhat dry you might think?
But actually it is remarkable. The first recommendation is to reduce inequality and bring the 1.3 billion people living on less than $1.25 per day out of absolute poverty. It says this “will require focused efforts in key policy areas including economic development, education, family planning and health.”
But two recommendations stand out:
Recommendation 2 says:
The most developed and the emerging economies must stabilise and then reduce material consumption levels through: dramatic improvements in resource use efficiency, including: reducing waste; investment in sustainable resources, technologies and infrastructures; and systematically decoupling economic activity from environmental impact.
Collaboration between National Governments is needed to develop socio-economic systems and institutions that are not dependent on continued material consumption growth. This will inform the development and implementation of policies that allow both people and the planet to flourish.
Now, this is a scientific institution and not a mass social movement, but what it is calling for is a radical break with capitalism’s laws of motion. There have also reportedly been a revolt by climate change scientists against attempts to downplay the predicted impact of global warming – revising the impact of the 2°C threshold upwards, so that what had earlier been seen as marking the threshold “between acceptable and dangerous climate change,” is now recognized as representing the threshold “between dangerous and ‘extremely dangerous’ climate change”— of the kind threatening the survival of humanity.
The root of the problem lies in our mode of production. Capitalism is an economic system that is impelled to pursue never-ending growth, which requires the use of ever-greater quantities of resources. When growth slows or ceases, this system is in crisis, expanding the number of people who are unemployed and suffering. Growth is sustained by advertising and the media.
Private sector influence
The increasingly direct influence of capital over government was highlighted recently as Liberal Democrat Energy Secretary Ed Davey MP proposed to persuade EDF Energy to build new nuclear reactors with contracts guaranteeing subsidies for up to 40 years. Spinwatch has identified at least 15 people working for the nuclear energy industry or its consultants that have been seconded to Government departments responsible for policy or regulation, with some being paid for by the taxpayer.
The Department of Energy and Climate Change hospitality register from late last year showed that the three most senior officials at the Office for Nuclear Development (OND) have received hospitality from nuclear industry representatives on dozens of occasions since the office’s formation in September 2009. Many of the meetings have taken place at some of London’s most luxurious restaurants, hotels and private members’ clubs.
The same increasingly pervasive corruption is demonstrated in the horsemeat saga. Some might say that eating horse is not intrinsically any different from eating cow, but the big issue for neighsayers is “if horse meat is in there, what else is in there?” A major contributory factor in the low standards of meat products available to people is the inadequate regulator. In meat production, the Food Standards Agency is highly influenced by a disreputable and downright dangerous industry, whom it wants to place more trust in to cut costs. Tim Smith went from being chief executive of the FSA to TESCO as technical director, and the number of meat inspectors was halved from the mid-1990s.
This is symptomatic of the intertwining of the regulators and industry – the FSA, OFWAT, OFGAS, the PCC all see themselves as party protecting those who are supposed to be regulating. As funding is cut and regulators are compromised, they become a fig leaf for industry, a mere quality mark as part of their marketing effort, despite the good intention of many of their staff.
Internationally, imperialism is accelerating its drive to control physical resources as competition for raw materials hots up. There is no interest in the human consequences, but merely the maximisation of profit. And nowhere is this seen more clearly than in Africa. The intervention in Mali was clearly designed to shore up mineral resources there, and in the adjacent Niger basin. Newly independent South Sudan continues to be wracked with violence, but is more pliant to western interests in its oil reserves.
The key economic drivers of the ‘Arab spring’ were unemployment and rising food prices. These have not been addressed and Tunisia, Libya, and Egypt remain unstable due to this, and imperialist machinations.
Imperialist aggression to secure control of resources is also behind brewing conflicts in the South China Sea, and of course the invasions of Iraq and Afghanistan. And more widely in the middle east where attacks on Iran – undoubtedly by the U.S. – have taken the form of sanctions and computer viruses, whose sophistication is such that they required cutting-edge world-class scientific advances to design.
In the second half of the twentieth century US imperialism dominated Latin America, mainly indirectly through military coups. But despite a military coup in Honduras and a legislative coup in Paraguay, a raft of left-leaning governments is making solid progress in the face of US hostility – Cuba, Venezuela, Nicaragua, Argentina, Brazil, Bolivia, and more.
Ecuador has just re-elected Correa with 57% of the vote, almost 40 percentage points more than his closest rival, banker Guillermo Lasso. And this is on the basis of a radical left agenda.
Whilst the country’s stifling national debt has been renegotiated, Correa has been clear that economic growth is not enough – its benefits must be shared. This has seen a million households escaping the grind of daily poverty; 450,000 children taken out of child labour; free education, including at university level, and free healthcare now being guaranteed. The law now compels companies to set aside 4% of jobs for people with disabilities.
BUT NOT ALL ARE SUFFERING
As the left advances in Latin America, closer to home the ruling capitalist class is securing its own wealth. In 2010 US, the top 1% captured as much as 93 percent of the nation’s current economic recovery. In the UK, the Sunday Times rich list found that the wealth of the richest 1,000 people rose by 4.7% – £15bn – last year.
Strategies of control
But faced with major opposition, and many governments across Europe being thrown out or into crisis since the great recession began to drive back living standards (Italy has just voted to reject austerity policies), they have reacted by trying to buttress their control.
Directly, the security state has been contentiously built up by successive governments, to hand more money and powers to the police and security forces, with increased legal powers over the population. This is increasing.
But the major threat to the bosses – the organised labour movement – is also facing a raft of attacks.
Employment rights are being undermined, with workers no longer having employment rights until they have two years service (up from one year). Taking cases to Employment Tribunals will cost upwards of £1,000, Judicial Reviews will cost £5,000, and rights around equalities and TUPE are under threat.
This backs up the fear of being made unemployed which is widespread amongst the workforce, and which has undermined the fight against real-terms pay cuts. Local government workers pay has fallen by 13% since 2009. The demonisation of those on ‘welfare’, and huge levels of personal debt only add to this.
Divide and rule
The capitalists have invented a new way to try to divide our class – apparently we are now all either ‘shirkers’ or ‘strivers’. It is an attempt to divide people in basically similar circumstances, and to intimidate those who are not able to find full-time work. It is also an attempt to focus attention away from the actual problem.
They are also trying this on tax avoidance. The HMRC may publicise 9 small businesses which have evaded some tax, but this is nothing compared with the countless billions avoided by big corporations like Amazon, Google, Vodafone, and Starbucks, who paid less than 1% of its UK profits in tax over the past 14 years. This is despite a steady reduction in corporation tax rates from their 1969 high of 45% to a planned 21% – a trend happening globally.
The public outcry was such that George Osborne felt compelled to pretend to act, and has proposed a very limited form of country-by-country reporting on tax for the extractive industries alone with regard to their activities in developing countries.
This crisis is being used by the ruling class to bolster their interests, but they do not wish to have their system in crisis. Many areas of the world are not the predictable, controlled places they were previously. Labour is riding high in the polls as the electorate begin to react against austerity, but they are an unreliable leadership unless put under concerted working class pressure.
John Cruddas may say “markets and financial transactions have been introduced into areas of life they do not belong”, and talk about the “power of relationships”, but even tentatively straying into the territory of “pre-distribution” is avoiding the key questions that need to be faced.
Now is the time for us to go on the offensive for an alternative to capitalism. The legitimacy of the system is crumbling – MPs, press, police, bankers are all in disrepute. Science is fighting back against the irrationalism that is increasingly being resorted to in order to prop up a failing society.
We need unity on the left, to convince people there is an alternative, to get them to fight in their own interests as a class. Instead of the plethora of ultra-left anti-cuts front organisations, we need to unite around opposition to austerity, and the People’s Assembly Against Austerity on 22 June is our immediate organising focus for this.
Their crisis is also our opportunity.
The above text was the political opening to a discussion at Education for Tomorrow collective