Victims Of Their Own Incompetence - Part 1

I haven't had time to fully study the details of the CSR yet, let alone think clearly what they mean, so I reserve the right to completely change my mind about some of the thoughts presented here. The impression I get is that although in global terms, to quote Paul Mason, Osborne didn't flinch, I think that in terms of the scheduling, and the potential for manoeuvre, he has. However, I think that in terms of the economic consequences it probably doesn't matter. For months now the Tories and the Liberal allies have been providing a narrative based upon the likelihood of economic disaster if serious action was not taken, and the conclusion of that narrative was that serious action was required IMMEDIATELY. Given the intensity of that narrative it is not surprising if consumers, firms, and other market participants took them at their word, and adjusted their plans accordingly.

For the last year, I have been arguing that although ultimately the problem of UK debt – and indeed the debt of other heavily indebted economies such as the US – had to be dealt with, that debt was a symptom of basic disproportions both within those economies and within the global economy. Deal with those underlying disproportions and over a period, growth, and inflation would itself deal with the debt. A look at the charts I provided in my blog UK Debt The Facts, demonstrates how over the last 300 years there have been many such periods, with much higher levels of debt to GDP, and they have been accommodated, and dealt with over a prolonged period by the kinds of means described above. Indeed, dealing with the debt by means of Cuts, which undermine growth could create precisely the conditions under which the potential for repaying the debt could be undermined. It might even worsen the possibility of bringing about the necessary restructuring of the economy required for dealing with those underlying disproportions. It certainly means that where that could have been achieved relatively painlessly over a number of years, if it is to happen, it will instead have to be done more quickly and brutally.

The question that arises then is why the Liberal-Tories went for this option. On the Right the argument remains simply one of apologism, maintaining the argument that there was no alternative. There are those on the Left who will agree with that diagnosis too. There has always been a strong trend within the Stalinist and Trotskyist Left, which finds it impossible to recognise any reality other than that Capitalism is continually on the brink of collapse, a collapse they hope will somehow lead to workers rising in revolt, and sweeping them to power. In fact, of course, all the evidence is that were such a collapse to occur its far more likely that the beneficiaries would be some kind of authoritarian or fascist Right. These sections of the Left, buy into the narrative that the Liberal-Tories had no alternative, because this catastrophist view leads them to believe that the current crisis is merely a symptom of a Capitalism about to collapse or at least go into convulsions. The concomitant of this view is that because the Tories are viewed as the party of Big Business, any course of action taken must be one that is being directly dictated to them by that Big Capital. This view completely blurs the distinction between Government and State, and fails to analyse concretely the social relations, the economic and other interests of the various players, and the constraints that bourgeois democracy places upon political parties and elected Governments. In other words it is not the complex and concrete analysis of all these factors, and their consequences that Marx and Engels insisted was a necessary part of their Historical materialist method (see Engels letter to Bloch, but is the method of crude economic determinism, of the kind disdained by Engels in that letter. As Engels says, their actual method can be better grasped by looking at the way they analysed concrete events e.g. The Eighteenth Brumaire of Louis Bonaparte.

I have argued in previous posts that, as Engels described, Big Capital by the end of the 19th Century had abandoned the penny pinching means of extracting Surplus Value. Instead, its interests were best served by the creation of conditions of stability, both economic and social stability. As Engels puts it,

“The largest manufacturers, formerly the leaders of the war against the working-class, were now the foremost to preach peace and harmony. And for a very good reason. The fact is that all these concessions to justice and philanthropy were nothing else but means to accelerate the concentration of capital in the hands of the few, for whom the niggardly extra extortions of former years had lost all importance and had become actual nuisances; and to crush all the quicker and all the safer their smaller competitors, who could not make both ends meet without such perquisites...

Of the legal enactments, placing the workman at a lower level or at a disadvantage with regard to the master, at least the most revolting were repealed. And, practically, that horrid People’s Charter actually became the political programme of the very manufacturers who had opposed it to the last. The Abolition of the Property Qualification and Vote by Ballot are now the law of the land. The Reform Acts of 1867 and 1884 make a near approach to universal suffrage, at least such as it now exists in Germany; the Redistribution Bill now before Parliament creates equal electoral districts-on the whole not more unequal than those of France or Germany; payment of members, and shorter, if not actually annual Parliaments, are visibly looming in the distance and yet there are people who say that Chartism is dead.”
See: Concessions Or Conveniences

In other words, Big Capital adopted the political programme of the working-class, and adapted it to their own ends, to create a Social-Democratic consensus. It won them the workers votes they needed to get elected; it created the conditions of economic and social stability that Big Capital needed to make its increasingly huge long-term investments, and it imposed conditions, which ensured the reproduction of the kind of Labour-Power it required, whilst disdvantaging its smaller competitors, thereby enhancing the process of concentration; and it headed off the growing tendency of workers to establish their own independent organisations that could have stood as an alternative to Capital. However, its necessary to add a slight adjustment to what Engels says. What we have seen in the 20th Century, is that, despite these attempts, Capitalism is prone not just to the usual business cycle, but also to the Long Wave. During the Long Wave downturn, with prolonged slow growth, stagnation and repeated recessions, even Big Capital, or at least sections of it, are led to resort once again to those old penny-pinching measures, and certainly to resist any big improvements in workers living standards. High unemployment means that Capital’s requirements for Labour-Power can be met more easily without the need to increase its spending on Education and Healthcare. And, as Engels also sets out it is more likely to actually welcome strikes as a means of actually saving money, and clearing excess stocks.

If this were the 1930's, or the 1980's I would be inclined to see in the actions of the Liberal-Tories a reflection of that underlying reality. The rise of fascism, and right-wing governments in the 1930's undertaking harsh measures to that effect, and of a similar trend in the 1980's in the form of Thatcher and Reagan can be understood in that context. But, as I've written elsewhere , this is not the 1930's nor the 1980's, this is not a period of Long Wave downturn, but of Long Wave Boom, the current crisis is not a symptom of a Capitalism in a state of imminent collapse, but a Capitalism going through a powerful global boom and expansion, within which a serious Financial Crisis in the West has led to a temporary economic crisis. Indeed, Big Capital can no longer within that context be viewed as national, but has to be analysed within the context of Imperialism as a global social relation. Even were these measures in the interests of Big Capital within the UK (which overall they are not), those measures, certainly when taken in combination with similar measures by some governments in Europe, are most certainly not in the interests of Big Capital as a whole, because they are likely to lead to an unnecessary global recession, a recession in which the main beneficiaries are likely to be those economies such as China, and other dynamic Asian economies, who will continue to grow, and strengthen their global power, a global power that will not just be economic, but increasingly military and political. That is why US Capital has been so vocal in opposing the austerity measures in Europe.

Forward To Part 2