The international situation is dominated by a new stage of the economic crisis led by led by Europe, the USA, and Japan.
1) The crisis of the Euro Zone.
In Europe the centre of the crisis is the Euro Zone, which is on the brink of disaster. This has reached the stage where the most vulnerable economies such as Greece, Portugal, Ireland, Italy and Spain, are forced into massive austerity programmes in an attempt to save the Euro Zone from disaster. These countries, most acutely Greece, stand on the brink of debt defaults which would have a massive impact on the European banking system causing contagion across the EU and presenting the Euro Zone with the prospect of immanent collapse.
This crisis was exacerbated by the turn, last year, by governments across the European Union (EU), from stimulus to austerity (in varying degrees) under the guise of the urgent need to tackle the debt. Such austerity resulted in mass struggle in Greece and in France with major protests including general strikes in Spain, Italy and Portugal. Up till now fiscal conservatism of this kind has won the arguments against this backlash and austerity has become the dominant theme.
A collapse of the Euro would not only threaten the existence of the EU itself but would have uncharted implications for the world economy – potentially greater than the sub-prime banking crisis of 2008. It would be a greater event than the collapse of Lehman Brothers in 2008 and would create a situation more difficult to control. Christine Legarde, of the International Monetary Fund (IMF), has said – as the IMF downgraded its global growth forecast for 2012 – that “the world economy in now on a dangerous downward spiral” and the IMF has again. The IMF has gone on to warn that both the USA and the Eurozone risk being plunged back into recession unless its policy makers take steps to halt the decline.
Faced with this situation the ruling elites in the EU are paralysed. A recent conference organised by European Commission President Jose Manuel Barroso in a last-ditch attempt to gain control of the situation went nowhere. His proposal to issue Euro bonds in order to take collective responsibility for the situation fell when it emerged that a move in this direction would split Merkel’s coalition in Germany wide open. The German Constitutional Court added to this by saying that it would regard such a move as illegal.
In Greece the most draconian measures (now called hyper austerity) are being demanded by the IMF. With its economy already collapsing new demands are being placed on Greece in order release the next tranche of IMF money – without which it cannot pay the wages of state employees from the middle of October. These measures include massive new layoffs in the public sector and wage cuts of up to 40% and a new property tax which people have to pay together with their electricity bills to undermine a non-payment campaign.
Such chaos threatens to push the US economy into full-scale recession and has created panic in the Obama administration. US Treasury Secretary Tim Geitner flew to Europe to urge bigger and faster action to prevent what he called “a full-blown financial and banking crisis”. He scathing told EU leaders that the EU is politically dysfunctional and that this is creating a dangerous and damaging situation worldwide.
He argued that the level of political integration achieved by the EU over the past 50 years is completely inadequate for economic management. The USA, he said, had reached the same level of integration 200 years ago. He identifies an important problem since one of the reasons why the EU is so vulnerable to the crisis because is unable to make fiscal transfers between its member states in the way the USA is able to do amongst the states of the USA. In fact if the USA was unable do this at the present time a dozen or more US states would already be paralysed by bankruptcy. Barroso’s answer is a crash programme of European integration – which is politically impossible.
2) The global situation
Globally we face a multiple crisis of the economy, energy, food, and of the ecology of the planet. Despite the attacks on climate science the reality of climate change is inescapable. 2010 was the hottest year on record with extreme weather events from the heat waves and fires in Russia to the floods in Pakistan, China, South East Asia, Queensland, Brazil and Sri Lanka. The consequent loss of harvests and a consequent rise in food prices to a historically high level is already impacting the economic situation. Rising food prices were a major factor in the Arab revolt. This situation, plus the end of easy-to- extract oil, is pushing commodity prices up relentlessly and making the change to renewable energy even more urgent.
The remarkable revolt in the Arab region was the product of many years of brutal dictatorship. It was also a product of the impact of the economic crisis on the region, particularly the prices of food and other essential goods, which impoverished millions of people already on the economic margins.
The stark reality is that the economic crisis is back to square one. It is back to the period before the collapse of Lehman Brothers (which is exactly three years ago) but with conditions for intervention and stabilisation far more difficult than it was then. Meanwhile the banks are carrying on exactly the same, and not just with massive bonuses but with untrammelled casino speculation – as the two billion dollar loss by the rogue trader at UBS makes clear.
We refuse, as a first principle, all responsibility for the debt. We call for a debt audit in both the peripheral and central countries of the EU. In the peripheral countries the debt should be repudiated and in the central economies preparation for this should be undertaken through debt audits to raise consciousness of the issue. As the crisis deepens, debt default may become an appropriate and understandable demand.
A ‘disorderly default’, even in the peripheral countries, would contribute to the breakup of the Euro Zone and even the EU itself. The EU and the Euro, however, are tools to manage the crisis in the interests of capital not the framework for developing progressive policies. Its breakup would allow the working class of each country to face up to their own domestic ruling class more directly and to establish a real internationalism.
3) The implications for Britain
In Britain the implications of all this for the Coalition Government are profound. A default in Greece, let alone the collapse of the Euro Zone, would be another major blow to British banks. Although they do not have the exposure to the Greek bonds on the level of the French and German banks the impact on and the destabilization of the European banking system would affect British banks as well.
It also has major implications for the coalition which was already seeing its economic strategy (if that term can be used) falling apart before its eyes. The plan was to use austerity to tackle the debt whilst hoping that the economy would start to recover in the latter part of 2011 and into 2012. This is dead in the water. The 80,000 rise in the unemployment count – in particular youth unemployment – makes Osborne’s mantra that the private sector will replace the jobs ‘lost’ (i.e. destroyed by Coalition policy) in the public sector look utterly ridiculous.
The British economy is going down the tubes by whatever indicator you choose to measure it: growth, unemployment, the housing market, the standard of living, or sales on the high street. And crucially the debt itself far from being reduced by the coalitions ‘debt reduction plan’ is going up sharply. Yet Osborne, faced with a situation where his economic policy is dragging the economy remorselessly into a double-dip recession, resolves to keep digging at all costs – including cutting taxes for the rich. Those who argue for a ‘plan B’ based on investment not cuts to create jobs are roundly denounced.
All this is beginning to change pubic opinion against Osborne’s policy. The mantra that massive cuts are necessary in order to tackle the debt and get Britain out of the danger zone is loosing its impact as their predictions fail to materialize and the economic situation gets worse. This is happening despite the on-going chronic weakness of Miliband’s Labour leadership, which is compromised by its own cuts agenda, and the scandalously slow response of the trade unions on the cuts in the first year of the coalition – factors which sustained it in office.
The riots in August reflected this vacuum of leadership. They were also a result both of the deepening economic crisis and a profound social crisis which has been festering in Britain since the 1980s when Thatcherism began to create an alienation and a depoliticisation amongst the most dispossessed sections of society. By the time the economic crisis struck three years ago this became a riot waiting to happen. It is hard to better the much used quote from Martin Luther King on this: that ‘the a riot is the voice of the voiceless and those who refuse to listen will not like it when it happens’.
Unlike the previous riots in Britain, the racial mix of these riots were very diverse. Never-the-less the racist behaviour of the police, as exemplified through the use of stop and search, was an important trigger in a number of areas. This was the case not only in Tottenham but also in Hackney and Birmingham at least. Such systematic police harassment against black youth was identified in the Lawrence enquiry as institutional racism – a judgement which has never been accepted by any significant section of the British establishment.
Alongside all this is the growing crisis of political legitimacy of bourgeois politics in Britain. This has been compounded by the MPs expenses scandals, as well as the shamelessly broken promises by the governing parties, and the total lack of democracy in the imposition of policies such as student fees. This has further undermined the credibility of bourgeois rule, particularly in the eyes of the most alienated sections of society particularly young people.
The phone hacking scandal and the position of News International is another dimension of it. The Murdochs and their like felt so born to rule that they did not even see phone hacking as a crime. This still has a long way to run with James Murdoch being recalled to the Home Affairs Select Committee to face questioning over lies he clearly told when he attended it first time round. As this process goes on the charges of criminality creep closer to the Murdochs, closer to Coulson and closer to Cameron himself with still unknown political consequences. What is involved, as with MPs expenses, is a form of criminality which had become so much a way of life that those carrying it out hardly recognised it as such.
4) The TUC strike call for November 30th
The unanimous vote at the TUC for coordinated action across the public sector on November 30th in defence of pensions. This is by far the most important decision taken in the struggle against the cuts since the Coalition and launched their agenda. It may not be the general strike the SWP and the SP have been calling for but it does represent a major advance on the previous successful action taken on June 30th by the education and civil service unions.
True the TUC has said that the day is not necessarily strike action and could be lunch-time meetings which in the past has been used as a get-out clause. In this case, however, all the signs are that that those behind this decision, even the big unions who are proposing action for the first time, are seeking to maximise the action not to minimise it. Brendan Barber said that “further consideration is being given to what further action may be appropriate beyond the day of action if progress towards a settlement is not secured”.
The mood at the TUC Congress was quite different to the usual routinism with Miliband roundly heckled and a determination to get some action. As a result three major unions UNISON, GMB and UNITE have launched a campaign for strike action on November 30. At least ten other unions will be balloting for strike action with them. These will include the Scottish teaching union EIS, the NASUWT and the north of Ireland’s public sector union NIPSA. Both the Fire Brigades union FBU and Prospect are likely to ballot as well, while the Prison Officer Association’s Steve Gillian told delegates that his members would walk out in solidarity in defiance of anti-union laws imposition of a no-strike rule on those workers.
Brian Strutton, the GMB national secretary for public services put it even more starkly “We are talking about throwing everything at it that we can, rolling into next summer. We are not just looking to nudge this along. We are assuming that this will be a huge set piece conflict running for a long time.”
The TUC decision is a product of the previous high-points in the struggle against the cuts and privatisation: the spectacular student revolt in November 2010, the mass response of the trade union rank-and-file to the TUC demonstration in March and the action of the education and civil service unions in calling the strike on June the 30th – which was itself a potential game-changer in the struggle against the Coalition Government. It is therefore also a tribute to the left-wing leaderships of the NUT and the PCS who have not only campaigned for coordinated action but were such strong advocates of their members case over the attack on pensions at the time of the June 30th strike.
For the TUC and the big unions who have now come on board there is also the issue of their own credibility. If they do not do something faced with the current onslaught when will they do anything and will they have any credibility left.
Cameron and his lackeys will continue to attempt to claim that this is about selfish public sector workers protecting their supposedly “gold-plated” pensions but this argument cuts little ice with most people. Those in the private sector have seen their pensions devastated and know that if the Tories succeed in further attacking public sector workers it will do nothing to improve their position but simply create a race to the bottom.
The task now is to make November 30th the maximum possible success. It is true the unions are starting from a low point and have made a scandalously slow start until now but a successful strike is entirely possible if they build up a strong momentum The coalition is in any case weak and in no position to face determined action. It is also an opportunity to start to rebuild the unions. The educations unions recruited thousands of members as a result of June 30th and there is no reason why the unions out on November 30th should not do the same.
Whilst the core of the action on November 30th is strike actions by the union every other form of solidarity and protest needs to be mounted alongside it to make a massive day of action. Demonstrations, student actions, city centre protests and pickets should also be organised. Mobilising committees for November 30 should be set up in every locality including activists from all the unions involved, user groups and others who want to support the action.
It is true that November 30th is formally around the single issue of pensions, and that many of the unions involved (including UNISON) have done little or nothing around other major sectors under attack such as the NHS – where the coalitions so-called reforms are going full steam ahead. But November 30th is also widely seen as an action against the whole range of attacks from the coalition and that a big success on November 30th could create a new situation, and new opportunities, in the struggle against cuts and privatisation right across the board.
5) A programme for the fight-back
Both in Britain and internationally we have to present a clear explanation of the crisis and the shape of the socialist response. This is essential in order to politicise the emerging movement of resistance. This means explaining that these cuts will only worsen the crisis because it is a crisis of the system itself. It means putting forward a radical programme of wealth redistribution and social ownership.
The aim of such a programme should be to share the wealth of society out differently. The share of produced wealth going to employees/wage-earners has decreased significantly, while bankers and businesses have increased their profits and levels of speculation. Yet higher wages would not only increase people’s purchasing power but would provides the resources for social protection and pension schemes. Reducing working time without wage reduction and creating jobs through public investment will also enhance the quality of life of the population.
The reconciliation of full employment with sustainable development and a low carbon economy involves creating more labour-intensive jobs, and large scale ecological investments. Public spending should generate public employment in socially necessary services such as education, childcare, nursing homes, health, community and social services. Women are the most intensive users of the public sector, and their place in the labour market is often dependent on the existence of such services.
The demands we advocate in the anti-cuts movement and in the labour movement more broadly should be no to all cuts: ‘investment not cuts’ — green sustainable investment not cuts. The cornerstone of this should the demand for a million green jobs now — in particular climate jobs, jobs which directly contribute to slowing down global warming. The priority in this should be renewable energy, refitting buildings and constructing a sustainable (and free) public transport system. If trillions of pounds can be given to the banks the same can be done for programmes of public works. As is often said, if the planet was a bank they would have saved it a long time ago.
These jobs should be carried out by workers directly (and properly) employed by the governments themselves in the framework of fully nationalised projects. Jobs created in this way and for this purpose would not only be tackling unemployment but would be constructing a new sustainable low carbon energy infrastructure.
An ecosocialist approach to the economy and the crisis should be to radically challenge the capitalist assertion that we always need more commodities by saying that we need enough to live comfortably. The aim should be for sustainable growth in quality of life rather than in quantity of output, for abundance of free time rather than abundance of unnecessary commodities. A massively enhanced social wage and a raised minimum wage, this would still allow for a major improvement in living standards for most workers.
It implies a planned and coordinated approach which can only be met by the nationalisation of the banks and of bankrupt industries with the participation of, and control by, workers and consumers. This should apply to other critical sectors such as housing, energy, infrastructure, pension system, education, and health. Without full control and ownership of the banking system even a debt default by a country like Greece would see a freezing of credit, leading to a deeper recession and big losses to workers’ pensions because the majority of a country’s debt is held by domestic banks and domestic pension funds. Taking banks under public control and ownership can nullify a credit crisis in defaulting nations and provide resources to cancel and pay off large parts of the debt in major economies; Financial resources could then be directed towards useful, green, planned investment.
Nationalisation does not equal socialism, of course, but it does provide a practical way to defend jobs and opens up a space in which socialist ideas can develop. The nationalisations of 2008 were carried out in order to socialise risk and bail out the creditors, and with the intention of handing them back at a later date. Some were simply government majority shareholdings, which can be sold off at any time, and meanwhile managed ‘at arms length’ from government. We should welcome them as better than the alternative — which was to leave it to market forces.
We should therefore put forward the following demands:
*No to all cuts and privatisation.
* Halt the attack on wages, working conditions and pension rights.
A crash programme to construct a sustainable, publicly owned, energy infrastructure based on wind, wave, and solar power, which could create Millions of new jobs in manufacture, construction and engineering across Europe.
* Build a free, sustainable and integrated public transport infrastructures.
* A crash programme of house building and conversion. The renovation and insulation of housing to conserve energy – which could also create hundreds of thousands of new jobs and avoid a new housing bubble.
* Stop the war, cut military spending.
* Nationalise the banks under democratic and popular control.
* Tax the rich. Raise corporation tax.
* Nationalise bankrupt industries under full social ownership and control to preserve jobs and reorganise production.
* Open the books of both the financial and industrial companies in order to prevent the use of the crisis to force through cost cutting and redundancies.
* Control international financial speculation both through controls on capital movements and through the taxation of such movements – a Tobin Tax.
* Stop the speculation in food. Break the power of the supermarkets and protect small producers against the power of agribusiness.
* Halt all house repossessions for mortgage arrears. Transfer houses to local authorities.
* A major programme of job conversion to socially useful production for industries such as car manufacture.
* The introduction of rent controls in the private housing market to break the power of the landlords.
This was agreed by the Socialist Resistance National Committee on September 17