Thursday, March 20, 2008


How delicious, you might think. The owners of the owners, the elite of the rentier capitalist class, the ultra-neoliberal wing of the ruling class, are begging for money. One minute it's privatise this, downsize the welfare state, supersize my debt, and don't you dare mention socialism. Now it's gimme gimme gimme. Martin Wolf of the Financial Times is now an ardent statist. I'm not made of stone. I admit to finding this bitterly humorous. But actually, schadenfreude is misplaced for several reasons. First of all, even if a global catastrophe does lead to mass suicides among City executives, they're only going to use the Central Line to top themselves, and that's going to lengthen your journey by an average of 30 minutes every day: who has that time to spare? Secondly, there is nothing new in this. Every time there is a crisis in capitalism, the neoliberals become Keynesians overnight. After the 1987 stock market crash, so-called 'monetarists' were screaming for money to be printed and disbursed in abundance. The US government is known for bailing out at-risk companies and hedge funds the second there's a threat to the system - to their system. As everyone from Noam Chomsky to Nouriel Roubini knows, socialising risk and privatising profit is in the nature of the system. Thirdly, we are going to be the main victims of this state of affairs. Of course, they demand more state intervention, but not for you and I - no, they quite like the idea of a recession disciplining the labour market and holding down wages. In fact, the recession will be used as an excuse to hold down public spending, restrict consumption, introduce more 'flexibility' to the labour market, keep interest rates comparatively high, suppress wages in the public sector and keep the minimum wage down. The 'disaster capitalists', if that doesn't seem like a tautology to you now, are quite adept at taking advantage of such situations.

Some people are determined to be chipper. Perhaps there is reason to be so. After all, the British government announced a fall in unemployment yesterday, albeit at a much slower rate than in recent months. And consumer spending was up in February (the Bank of England could use this as an excuse to keep interest rates at their present level which, while bad the the 'high street' and for manufacturing, is good for the City). Average earnings are steady. Public sector employment, having fallen for eight consecutive quarters, has suddenly risen. Manufacturing actually experienced some healthy growth in March. And there's still a budget surplus. If the cheermongers are right, then the self-evident distress of the US economy may be ring-fenced, and it may indeed be supported through this difficult period by continued growth in Asian markets and Europe. But who can believe this? First of all, the unemployment drop is based on the claimant count - no one takes this measure seriously. Secondly, earnings increases outside the public sector have actually slowed down. Thirdly, public sector employment increase could be seen as a counter-cyclical move, but it is no testament to the strength of the underlying economy. Of course, the government can plough money into it - and they should - but it will wipe out that budget surplus in a jiffy. Manufacturing growth depends on exports, which depends on a globally sound economy - hardly a guaranteed prospect at the present time. Further, it is likely that this was brought about by the recent low value of the pound, which made exports cheaper. That isn't a sustainable situation, and it is not one that the City will accept (hence, they will demand higher interest rates). Finally, consumer spending was reported as rising in the United States as late as last August. There is a lag between the emergence of an underlying crisis and its impact in spending and prices. Consumer signals are not very reliable when things are changing fast. Growth is predicted to slow to the lowest level since 1992.

I do so wish the Good News bible-thumpers were right because, as this article makes clear, the United States social safety net, such as it is, is likely to fail, and the labour movement and the Left is not in a position to make an assertive defense of working class interests. I daresay we in the United Kingdom not in a very much better position. The one exciting pole on the Left has recently been through a horrible split, and we are still dealing with the consequences. (If Londoners want something other than pandering to the City, they should vote for Respect's Left List in the upcoming assembly and mayoral elections, by the way). Realistically, we are staring disaster in the face, and the only chance we have is if the labour movement mounts a serious fightback against the government on pay and conditions, because this will redound to the benefit of all of us. Mark Serwotka has the right idea.