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Proletarian issue 39 (December 2010)
Industry matters: The cuts
Osborne’s spending review

As the dust settled on Chancellor Osborne’s long-awaited Comprehensive Spending Review, it became clearer than ever that we are witnessing the beginning of a full-scale class war offensive against the working people of this country. Only the most determined resistance will succeed in pushing that attack back down the throat of the capitalist class.

The authoritative Institute for Fiscal Studies (IFS) quickly exposed as blatant lies government’s assertion that the reforms are ‘progressive’ and put the lion’s share of the burden onto better-off people. Such specious claims only appear to have any substance if one ignores a third of the welfare changes and is misled by tendentious graphs which only tell half the story, failing as they do to span the full four-year period.

The IFS points out that if you rank households by their spending rather than their income, the bottom 30 percent will be hit proportionately more than the top 2 percent. Poor people with children will be the worst hit of all.

Attacking the poor

The starkest expression of the further polarisation between wealth and poverty marked by this tax and benefits package will be the physical expulsion of many from neighbourhoods which will become no-go areas for those impoverished by the ‘reforms’. This process has been aptly described by PCS union leader Mark Serwotka as “social cleansing”.

At the same time as the cap on housing benefit pushes countless people out of accommodation now deemed to be unaffordable, the social housing budget is to be halved and council tenants are to face regular means-testing to prove their continued entitlement to council accommodation. Running in tandem with this plan to winkle folk out of social housing is the requirement that new tenants will be expected to pay rents equivalent to at least 80 percent of the ‘market rate’, ie, whatever private landlords and mortgage providers can get away with.

Meanwhile, with responsibility for the provision of council tax rebates devolving to local councils on the basis of a postcode lottery, it will be in the financial interests of councils to make it as difficult as possible for the poor to get such rebates.

All of these pressures will combine to force a mass internal migration as the poor up sticks and abandon traditional working-class areas to a narrowing band of gentrifying rich. The areas where such people find they can afford to live will inevitably be those where there are few jobs, poor schools and diminishing opportunities for climbing out of an increasingly marginalised ghetto.

Attacking the sick

According to research carried out by the IFS in conjunction with the King’s Fund, the NHS would need a real terms increase of 1 percent every year just to stand still. The government is promising one tenth of that, just 0.1 percent.

This is already translating into hospitals cutting back on ‘non-urgent’ operations like cataract, hip and knee replacements, and comes on the heels of the abolition of Primary Care Trusts in favour of an even more cost- and service-cutting option: the conversion of family doctors into small businessmen managing a budget.

Attacking the next generation

The attempt to dress up the withdrawal of child benefit from higher earners as a triumph for ‘fairness’ fooled nobody and was well understood to be the thin end of a wedge driving universal benefits towards dilution and means-testing. Nor was Clegg’s ‘pupil premium’ gimmick, wheeled out a week before the spending review, ever seen as anything more than a pathetic attempt to soften the blow to education when it came.

The same capitalist state that justifies jacking up the retirement age and robbing workers’ pensions on the grounds that thereby we will not let ‘our’ children suffer for the sins of their fathers is now hell-bent on scuppering the educational prospects of the next generation.

Despite all the government’s cant about ‘ring-fencing’ education, the IFS did its sums and concluded that, given the growth in pupil numbers, even with the small increase in school spending there would be real-term cuts for 60 percent of primary and 87 percent of secondary pupils. Indeed, there would be an overall spending cut per pupil of 2.25 percent over four years.

Moreover, the hopes of working-class students getting access to sixth-form and university education, already dimmed by the raising of the cap on tuition fees from £3,000 to £9,000, look even fainter now that the abolition of the means-tested (£10 to £30) education maintenance allowance promises to drive poorer kids out of school at 16 and slam the doors for many to both sixth form and university education.

Eight out of 10 EMA recipients currently claim the full entitlement, loss of which will drive many away from education. All this gives some context to a recent leaked document from the Department of Education suggesting that 40 percent of teachers could lose their jobs over the review period.



The response of the unions and the left

Large and angry demonstrations greeted the Comprehensive Spending Review on the Saturday following its announcement. The London March was organised by the National Shop Stewards Network (NSSN) and the RMT union, the TUC having abdicated responsibility for this task.

Industrial action is already under way by members of the FBU and RMT. The London firefighters voted by 79 percent to strike unless London Fire Brigade Commissioner Ron Dobson withdrew his letter of 11 August, which began the legal process of sacking the capital’s 5,557 uniformed and 41 non-operational firefighters.

This action is to a degree coordinated (no thanks to the TUC), with London Underground workers, already in dispute over safety-critical cuts, vowing to strike if poorly trained scab fire-fighters are entrusted with ensuring the safety of the Tube system. Other unions, notably the PCS, have urged the need for coordinated resistance.

Running against this healthy trend is, for example, the failure of Bectu to lead coordinated action with the NUJ over the BBC’s sabotage of pensions. The NUJ members forged ahead with their BBC action, with strikes on 5 and 6 November, although proposed action on 15 and 16 November was cancelled in return for a promise of talks with BBC management.

Many Bectu members are seething over the failure of their union to give a clear and confident lead in this crucial dispute, with obvious implications for the pension rights of everyone in public services, and a steady stream of members have been switching unions ever since the NUJ announced its intention of fighting on alone.

There is no doubt that open hostility to Labour is growing in the workers’ movement, and this is a very healthy development. However, it must also be recognised that heated tactical discussions over when best to have a national demo (December or March), or whether a one-day national stoppage would best rally the forces of resistance (SWP say yes, the NSSN say no), are doomed to sterility unless accompanied by some serious discussion about the real choices and tasks now confronting the working class.

Even amongst those who are seriously committed to making a fight of it, the political assumptions proper to social democracy persist. These assumptions may be broadly summed up as follows:

•    the crisis was caused by greedy bankers;
   
•    the debts could easily be paid off by nailing tax evaders and scrapping Trident;
   
•    in any case capitalism can live with a deficit indefinitely if it so chooses.

Taken together, these assumptions effectively conceal the systemic, urgent and insoluble character of capitalist crisis. These assumptions mask from the working class the true scope of the tasks with which they are confronted. These assumptions therefore need to be tackled head on.

Was the crisis caused by the bankers?

The near-collapse of the banking system was not the origin of the crisis, but a symptom of a disease that is endemic to capitalist commodity production and already at an advanced stage.

It was capitalist overproduction that glutted the market with commodities for which there was insufficient effective demand. It was global capitalism that sought to remedy the situation by increasing the exploitation of the masses, thereby further depressing effective demand and increasing the market glut.

It was parasitic imperialism that poured hot capital into sectors ever more remote from production in the pursuit of chasing speculative profits. And it was moribund imperialism that sought to gee up flagging demand at home by drawing ever more households into credit card and mortgage debt, until the subprime mortgage debacle in the US jammed on the brakes and the banks ran out of road.

The bankers are greedy parasites who deserve only the worst, but to hold them exclusively responsible for the crisis is too great a kindness to the capitalist system as a whole.

Could capitalism pay its debts without hammering the proletariat?

It may well be the case that most of Britain’s immediate debt could be squared if the super-rich were vigorously shaken down (nab tax evaders, tax the wealthy) and unproductive spending were slashed (Trident, Afghanistan). And it’s worth confronting capitalism with these budgetary suggestions whenever one of its apologists whines that the cupboard is bare.

Yet even were capitalism prevailed upon to act so radically counter to its own interests, it must be understood that the crisis of overproduction could not be bought off simply by stumping up the readies for the immediate debt.

The crisis of overproduction, so long staved off by credit creation, will continue to haunt the capitalist world, depressing the living standards of the masses, wiping out surplus capacity, slashing world trade levels, increasing trade and currency wars and laying the foundations for a military redivision of the world market between competing imperialist blocs.

All that can interrupt that barbarous juggernaut is the intervention of proletarian revolution.

It will be remembered that the last two great world capitalist crises were played out through both wars and revolutions. The more the conviction grows in the working class that capitalism truly cannot solve its crisis in any other way than by plunging back into barbarism, the sooner the necessity of communist revolution will win sober recognition.

Could capitalism live with the deficit?

One current left reformist approach is to draw a parallel with post-war Britain, which saw the creation of the NHS and the rest of the welfare state despite its massive indebtedness. ‘If then, why not now?’ runs the argument. This ignores some crucial differences.

The second world war saw the destruction of vast swathes of the world’s productive capacity – men, women, children, machinery, communications networks and infrastructure. This disaster for humanity spelled temporary salvation for capitalist commodity production, for which the bonfire of surplus capacity finally afforded relief from the crisis of overproduction.

US imperialism, emerging from the war with its wealth largely intact, seized with alacrity the opportunity to extend credit lines to Britain as part of the project to revive world capitalism on a pattern dictated by Washington. It was on the basis of US credits, coupled with the continuing subsidy wrung from the subject colonies, that British capitalism was able to weather indebtedness, revive the economy and pay the rent on the welfare state.

The situation at present is very different. The wiping out of surplus capacity worldwide, whilst already a human tragedy for millions of people, marks only the first faltering phase of a process of destruction that must ramp up to a much vaster scale to enable a capitalist ‘solution’ to the crisis. Market glut, toxic bank assets and threatened paralysis of the credit system create an ever more hostile climate for the self-expansion of capital.

The USA, the sickest and most indebted of the imperialist economies, is in any case in no position to extend credit lines to all and sundry. Nor is the US able any longer to whip the capitalist ‘free world’ – ever more fractured into competing trade blocs – into line behind a shared hostility to a Soviet Union that no longer exists.



One solution: revolution

It was fear of the shining revolutionary example set by the USSR that drove the British ruling class to retreat in the face of popular pressure and make welfare concessions post-war. And it was credit lines from America and imperialist superprofits that largely paid the rent on the welfare state that followed.

With the Soviet Union gone and with world capitalism staring into the abyss of crisis, the bell is tolling for welfare capitalism. For the exploiters, the only way forward is back into the ditch of slump and war. For the proletariat, the only way forward is the path of socialist revolution.

> Savage cuts in progress - February 2011
> Cuts presage fast growing homelessness among the poor - October 2010
> The truth about Labour- war crimes pay cuts and privatization - June 2008
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