Britain: Osborne’s cuts plans aren’t working

Time for ’Plan S’ for socialism

The school and college students have returned but it was the angry and loud booing of Cuts-Chancellor George Osborne at the Paralympics that really signals we are in a new season – which has all the potential to be an autumn of struggle.

Peter Taaffe, Socialist Party general secretary, explains why it is crucial for the trade unions to develop a bold programme in the preparation of what could be a truly mass TUC demonstration on 20 October and the generalised strike action that must follow it.

The wheels are beginning to come off the coalition government’s caravan. It is besieged on all sides.

It faces not just rising discontent from the working class but huge swathes of the middle class are in open revolt, which threatens to engulf the government: "It’s not just the poor.

For the first time, even the once comfortable are experiencing the anxiety of how to pay the mortgage, fill the car, meet the supermarket bill." [Yvonne Roberts, Observer, 26 August 2012.]

Now, disaffection is expressed on their own side with the Confederation of British Industry (CBI) and the British Chamber of Commerce questioning the unremitting austerity of Osborne and Prime Minister David Cameron.

They have not gone as far as demanding a ’plan B’ or even ’C’ but in the words of the CBI, the bosses’ ’trade union’, what is needed at least is "a little bit of growth… wiggle room for a bit of extra borrowing".

This semi-oppositional stance has been fuelled by a further plunge of the economy, which the CBI estimates will shrink by a further 0.3% this year on top of the 0.5% so far.

At the same time, Nick Clegg tries to burnish his ’radical’ credentials with a proposal for a "time-limited wealth tax on Britain’s wealthiest people" – after backing Osborne and Cameron to the hilt in the infamous recent ’rich man’s budget’.

Lib Dems on death row

This is entirely unrelated, of course, to the upcoming Liberal Democrat conference, where Clegg is likely to get a kicking from his own people.

Nor does it in any way arise from the collapse of the Lib Dems in the polls, which reveal that they can expect to drop from 57 MPs to just ten at the next election.

The Liberal Democrats are on ’death row’ and the party now "has fewer members than the British Psychological Society" [Independent].

On the 26th March 2012 strike demo, photo Senan

Clegg has given up all hope of those voters who were duped into supporting the Liberal Democrats in the last election, and who have now deserted them in droves, ever returning to the fold.

In a very revealing comment, he remarked: "What people [himself] once thought might have been a short sharp economic battle, a short, sharp recession, is clearly turning into a longer-term process."

In other words, the illusion that cuts could be carried out easily and swiftly, laying the basis later for a new sunny economic upswing and victory of the coalition parties in the next election, lies in ashes.

This, in turn, has led to sharp clashes within the Lib Dems. The business secretary, Vince Cable, is waiting in the wings – and is clearly the favourite of what is left of the rank-and-file Liberal Democrats – ready to unseat Clegg.

His supporters have been dubbed as the ’Continuity SDP’ – a comparison to the ’Continuity IRA’, which is in opposition to the Provisional IRA.

The former Social Democratic Party merged with the Liberal Party in the 1980s. Cable clearly is preparing the way for the demise of this government and its replacement, he hopes, with a coalition with New Labour.

Incredibly, Peter Hain – himself once chair of the Young Liberals and probably acting as an outrider for Ed Miliband and the New Labour leadership – has actually urged New Labour to embrace such a coalition.

New Labour is afraid of taking office alone because of the daunting economic problems caused by the crisis of capitalism.

It is prepared to link up with the traitors of the SDP who split from the Labour Party when, at bottom, Labour was still a workers’ party.

The ex-SDP faction is now perfectly at ease with the prospect of sharing power with a right-wing, pro-capitalist ’Labour’ Party that accepts cuts, etc.

On the other hand, New Labour flirts with such a coalition because it could be used as an excuse for not acting in a radical fashion.

Nor has the major partner in the government coalition, the Tory party, escaped internal strife. Half of all voters want Osborne removed with less than a third believing that he’s done a ’good job’.

The right of the party has also been emboldened with their success in forcing Cameron to jettison the Liberal Democrats’ sacred cow of House of Lords reform.

The Lib Dems retaliated by threatening to block the changes to electoral boundaries, which would give advantages to the Tories over the other parties.

This prompted the Tory chairman of the 1922 backbenchers committee to declare that the coalition government would break up before the next election.

More alarming from the government’s point of view is the growing opposition to the austerity measures which is coming from the grassroots of the Tory party itself.

For instance, Tory councillors in Oxfordshire opposed the recently announced changes to council tax benefits, which will hit the poorest hardest, and have even threatened to refuse to implement it.

The TUC is therefore presented with an exceptionally favourable opportunity to force an already shaky government into retreat and pave the way for an election and its downfall.

However, to make this a reality – and much sooner than just before the next election – the TUC must mobilise in action for a 24-hour general strike as we spelt out in the previous issue of the Socialist.

Alternative to austerity

But also central to the campaign for the 20 October TUC demo and afterwards is the necessity for outlining a different road to that of the government’s dead-end policies. What is the alternative to austerity, a zombie economy in which 440,000 people are condemned to unemployment for the last two years, with 100,000 more young people thrown on the scrapheap since the coalition government came to power? What new road is promised to the sick and disabled, to the users of the NHS, by the cuts programme, which Osborne promised to increase because of the rise in the government deficit in the past period?

Realising that an ideological gulf is beginning to open up between the mass of the British people – including the middle class – and the ruling class and its government, even capitalist economists are casting around for an alternative.

A new form of Keynesianism – an attempt to stimulate the economy to include increased government expenditure – is being aired, even in journals like the Financial Times.

For instance, Samuel Brittan – once a firm supporter of Thatcher’s monetarist policies – desperate to see some growth, has now swung around to advocating "helicopter money" as a means of stimulating the economy.

Past measures which aimed to achieve this, such as quantitative easing (the buying up of financial assets from the banks and other private businesses) have failed.

This additional largess from the government has ended up in the banks – clearing their deficits but also being used to engage in further speculation. The banks still refuse to lend and companies are reluctant to borrow.

The advantage of Brittan’s approach, he claims, is that "helicopter money is available to those fit enough to pick it up". Keynes in the 1930s advocated something similar as a means of getting out of the economic depression, which involved burying pound notes in the ground, and leaving "it to the well-trained forces of self-interest to dig them up again"!

Programme of public works

These quack nostrums of capitalist economists indicate the seriousness of the crisis confronting them.

They even favour a little bit of inflation – formerly heresy in capitalist economic circles – if this will get the economy moving.

Even George Osborne – without admitting it – has flirted with a little bit of a plan B with the promised injection of between £40 billion – £50 billion in ’UK guarantees’ to be used to rebuild the infrastructure and help Britain’s moribund economy.

This is a trifle – a drop in the ocean – against the background of a calamitous economic situation. It would hardly make a dent in the crumbling infrastructure of Britain or alter the dire prospects of the construction industry.

Symptomatic of the collapse is the 70% drop in brick production since 2007. This in turn reflects the virtual collapse of house building.

In the 50 square miles of Tory-run Welwyn Hatfield council, also the constituency of the Conservative housing minister Grant Shapps, only three social homes are being built in the next three years! In the 25 London boroughs only 4,000 social homes will be built between now and 2015.

What is required is a massive programme of public works to renovate housing – with the aim to build at least one million houses a year – repair and rebuild schools and the infrastructure, massively increase spending on education, etc.

The TUC must formulate such a programme and link it to the campaign to defeat the government’s austerity. Such a programme is the minimum that is required for decent human existence.

Yet an effective and substantial public works programme – combined with an increase in wages, which it is suggested will increase demand and therefore lessen the effects of the crisis – will be implacably opposed by the capitalists.

Who pays?

They and the Tories will shriek: ’How will you pay for it?’ Increased public expenditure on vital economic and social projects, not backed up by extra production of goods and services, particularly in a period of recession, bordering on depression, will ultimately have to be paid for in a number of ways.

Increased taxes on the capitalists, which will have the effect of cutting their profits, and in turn could lead to them closing factories or seeking to move elsewhere, are one way.

This is what is being threatened by the French capitalists in answer to the puny wealth tax proposals by the French president Hollande.

On the other hand, increased taxes on the working and middle classes will have the effect of cutting the market and cancelling out the effects of the boost from increased spending elsewhere.

Or it will lead the government to resort to the printing press, which will ultimately generate inflation and possibly introduce a new period of stagflation reminiscent of the 1970s.

Keynes, whose ideas have once again become fashionable, is the economist most associated with the idea of boosting public expenditure to combat serious recessions or depression.

However, in the 1930s the US was the only country with plump savings from the past, which were partially able, for a period, to offset the effects of the depression through the New Deal policies of President Franklin Roosevelt.

This does not mean that a wealth tax or a programme of public works should be scrapped as ’unworkable’.

But it does mean that the TUC and the labour movement must face up to the contradictions which flow from all attempts to maintain and improve the living standards of the working class in the midst of a devastating crisis of capitalism.

Attempts to secure even minimal reforms, never mind a substantial reformist programme to change the lives of working people, come up against the inherent limits of capitalism, the system based upon production for profit and not social need.

It poses the need to go further with the demand for nationalisation, under democratic workers’ control and management, of the banks and the summits of the financial system together with the big monopolies that dominate the great majority of the economy.

It will also require control of all foreign trade, through democratic nationalisation of all incomings and outgoings, in order to prevent sabotage as big business will attempt to move its resources abroad.

In short, in place of Osborne’s ’plan A’ we do not need a minimalist ’plan B’, as has been suggested, but a bold ’plan S’ for socialism.

Every opportunity should now be taken – particularly in the run-up and the aftermath of the 20 October TUC demo – to discuss the real alternative to increasingly discredited capitalism.

This is not the moth-eaten proposals of Miliband for a "good capitalism" in opposition to "predatory capitalism".

No ’good capitalism’

For all the victims of capitalism there is no "good capitalism" – those languishing on the dole queues, eking out an existence on poverty wages, young people threatened with working for nothing, unapologetic slavery, with Tory London mayor Boris Johnson acting as a boss overseer.

It is crisis-ridden capitalism, a cold brutal capitalism, in the form of Osborne, denigrating, disparaging and persecuting the most vulnerable, that is the reality. This is the real face of the system.

This is just one indication of how far removed from the trade unions the tops of New Labour have become, particularly for the rank and file.

Miliband is even trying to seduce ’business people’ – who don’t even have to be Labour Party members – to become Labour parliamentary candidates! And yet the trade union leaders continue to pour money into the treasure chest of New Labour to the tune of millions of pounds.

In fact, the trade unions now are the only ’benefactors’ for New Labour with Blair’s rich backers having jumped ship when Labour was ousted from office.

But there is no possibility here of applying the maxim, "he who pays the piper calls the tune". The piper – the New Labour leadership – plays what ever discordant tune it likes! There is not even a demand for a New Labour government to completely eradicate from the statute books the brutal and vicious anti-union laws.

And yet in every serious industrial dispute the bosses go running to the courts to use these laws. If New Labour will not even promise to eradicate vicious class-biased legislation, they do not deserve a penny of support from ordinary trade unionists.

A new party – a mass-based working class party – should stand for a new road, for plan S for socialism.

This should be an important part of the preparations for the mighty demonstration on 20 October, leading to a one-day national general strike – the date of which to be set by the congress of the TUC.

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September 2012