Lessons of The Local Elections (1) - The Economic Foundations Of the Political Crisis

There are a number of lessons to be drawn from the local election results. Firstly, British politics is again a contest between Labour and Tories. Secondly, the 30% of the population who are bigots, are firmly now in the camp of the Tories, some having moved from UKIP. Thirdly, any talk of a “Progressive Alliance” is a dangerous fantasy and a diversion. Fourthly, the division between nationalism and internationalism is now a significant divide in all political discourse. Fifthly, the conservative wing of the Labour Party is prepared to destroy the party, for their own narrow interests. Finally, the rank and file of the Labour Party, much as with the rank and file of the French Socialist Party, along with the advanced sections of the working-class, must begin to organise and mobilise now for the fight, whoever wins the General Elections in their respective countries.

The Economic Foundations of The Political Crisis

No one expected that Labour would do well in the local elections to County Councils, and for Metropolitan Mayors, held on Thursday. For the last seven years, there has been an unprecedented campaign by the Tory media against the Labour Party. After 2010, it sought to tell lie after lie about the nature of the 2008 financial crash, blaming it on Labour public spending, rather than on the fact that for thirty years, from the time of the big financial deregulation under Thatcher and Reagan, huge amounts of private debt were built up, as workers wages remained stagnant, and at the same time, the other side of this debt, was the inflation of massive speculative bubbles in stock, bond and property markets.

Where Labour did go wrong, is that they organised the bail-out of all the owners of the shares, bonds and property, after the crash of 2008, just as their counterparts across Europe did, as that crisis re-emerged with the Eurozone Debt Crisis of 2010. Having done so, the Conservative governments that followed them tried to fill the hole in public finances this bail-out of capitalism had caused, through insane policies of austerity, alongside yet more money printing to reinflate asset price bubbles, which simply sucked money out of the real economy, and into more and more speculation.

Had those bubbles been allowed to burst, back in 2008, without any attempt to reflate them, workers and the global economy would be in a much healthier position than today. But, the reason that did not happen, is quite simple, the dominant section of the ruling class today holds the vast majority of its wealth in the form of these paper assets. The global rich do not own factories and capital per se, they own fictitious capital in the form of shares and bonds, and they own vast tracts of landed property.

None of these assets have any real value. The only value they have is as a claim to receive revenue in the form of dividends, interest and rent. And, yet, although these assets have no real value, they are traded on markets, where their prices have soared over the last thirty years, due almost entirely to speculation. That was what was behind the 2008 financial crash, and it is because the global rich have no intention of seeing that paper wealth, upon which their power and significance depends, seriously eroded, that they used their power, and their political representatives to protect it, even at the cost of destroying the real economy, and prolonging its recovery from the crisis.

Part 2