“My friends, I am not a communist,” explained Boris Johnson. You could hear the sigh of relief from the captains of industry for miles around.
Boris was forced to provide this reassurance after announcing the biggest government intervention in the economy in any peacetime period. "I believe it is also the job of government to create the conditions for free market enterprise,” he continued, cheering up his big business chums no end.
Even better, Johnson – who declared himself fitter than a “butcher’s dog” – suggested that people should not only clap for the NHS, but for Britain’s financiers and bankers as well: the very people who brought us financial calamity and ruin back in 2008.
This statement alone shows how far removed the Tory leader is from ordinary people. No wonder his opinion poll ratings have collapsed.
Following the Prime Minister’s overblown promises of a ‘new deal’ last week, Chancellor Rishi Sunak fleshed out the government’s stimulus package in an announcement today.
Amongst the Chancellor’s pledges are proposals to: fund a “kickstart” job creation scheme for young people; offer bonuses to businesses who take on apprentices; invest in energy efficiency measures for public buildings and give grants to help people insulate their homes; temporarily cut stamp duty; cut VAT in the hospitality sector; and provide discounts to incentivise eating out.
The total cost of these measures is estimated to be around £30 billion. But this is the equivalent of firing a pea-shooter at a tank.
Sunak is talking like this is just a basic cyclical recession. The looming reality, however, is of a new depression. We are faced with a global, organic crisis of capitalism. No amount of tinkering around the edges will help.
And at the end of the day, all of this ‘stimulus’ is being funded by government borrowing. Johnson and Sunak have thrown more than £200 billion at the economy in an effort to save their system. The national debt is rising fast, now well over 100% of GDP.
The Chancellor asserted today that eventually this money will need to be paid back, as the government’s finances are put on a “sustainable footing”. This is but a euphemism for further austerity and attacks on the working class in the years ahead.
The scale of stimulus to protect our prosperity from #COVID19 is massive: £30bn today on top of £158.7bn since 11 March and £122.8bn of emergency loans and tax deferrals (much of which will be written off). This stimulus will end up costing taxpayers well over £200bn pic.twitter.com/FHp1uydApX— Robert Peston (@Peston) July 8, 2020
Tip of the iceberg
Despite Johnson’s boasts about the British economy, then, the working class is facing not a wave, but a veritable tsunami of job losses in the coming period.
This will especially be the case when millions of workers are removed from the furlough scheme in October.
Indeed, what was most noticeable in the Chancellor’s announcement today is not what was included, but what was not. There was no assurance for workers facing uncertainty and unemployment. The government’s furlough system will not be extended.
Johnson has talked of workers being in a state of “suspended animation”, and now they needed to stand on their own two feet – no doubt, in the dole queue.
Thousands of job cuts have already been announced by businesses across the board. 5,000 jobs are to go from the SSP Group, including Upper Crust. More are to go at John Lewis, Harrods, the Arcadia Group, Harveys, and Bensons. Airbus warned it would cut 15,000 jobs. EasyJet is to sack 727 pilots, but added there is a threat to 30% of its workforce – some 4,500 workers. Royal Mail has announced 2,000 redundancies. Others include Bombardier, Nissan, and Centrica.
The largest companies have announced that at least 100,000 jobs are to go. Tens of thousands of small businesses are set to go bankrupt.
Estimates say that 3.8 million will be unemployed in Britain by the winter. Already those claiming benefits rose by 500,000 in May to a total of 2.8 million. But given that we are in the deepest crisis for 300 years, this is likely to be just the tip of the iceberg.
British capitalism is in a parlous state, faced with a world depression and the calamity of Brexit by the end of the year. This will mean a massive decline in living standards in the years ahead.
Chancellor Sunak and the Tory government are pushing to “reopen” the economy as quickly as possible, despite the threat of a second wave of the virus. Under capitalism, public health comes a poor second to making profits. The cavalier attitude of the bosses and Tories is going to produce a social disaster.
Johnson has said, “there will be no going back to the austerity of the last ten years”. In this he is absolutely correct. Things are going to be far, far worse.
The budget deficit is likely to rise to £350 billion, an eye-watering figure. But as Martin Wolf of the Financial Times stated recently: “This now raises the question of how this debt is going to be managed and who is going to pay.” (FT, 5/7/20)
The simple answer is that the working class is going to pay, through tax rises, cuts and falling living standards.
Local government is in a deep crisis already, with dramatic falls in revenues. National funding of local authorities has come to an end, meaning councils are now forced to depend on income from business rates and council tax, all of which are in freefall. They are facing a shortfall of £10bn this year alone.
Coming on top of a decade of austerity, everything is reaching breaking point. Reserves have all but evaporated. 8 out of 10 local authorities face bankruptcy.
On a capitalist basis, this means more cuts to services and more attacks on local authority workers. We have already seen the draconian measures attempted in Labour-controlled Tower Hamlets, where the council are seeking to sack its entire workforce and re-employ them on worse terms and conditions.
This is the consequences of ‘managing’ the crisis – Labour politicians attacking the very people who elected them in the first place. This has correctly led to revulsion, anger, and strike action.
There needs to be a united fight against these cuts, involving left Labour authorities and trade unions. There must be a refusal to carry through the cuts, backed up by national industrial action.
Faced with such an onslaught, there can be no more tinkering or ‘creative accounting’. “Better to break the law than break the poor!” must be our motto. Anything less will mean capitulation and retreat.
A refusal to fight by councillors should be met by organised deselections, involving the unions. We need councillors that are prepared to fight, not become the paid agents of the Tory government.
Keynesianism vs socialism
In face of this “jobs crisis”, the Labour frontbench have essentially echoed the Tories’ call for a “jobs budget”, with money directed to the hospitality and tourism sectors. But this will do nothing to avert the coming avalanche.
Anneliese Dodds, Labour’s shadow chancellor, said their approach was to “grow” out of the crisis. This is a very noble aim. But on a capitalist basis, this is utopian – pie in the sky stuff.
It is the typical rhetoric of those who have swallowed the capitalist line. But capitalism is in its deepest crisis, and offers nothing but mass unemployment and hardship. Shamefully, the Labour leadership do not offer any socialist solution to the crisis, only palliatives to patch up capitalism.
The only way to protect jobs and ‘expand the economy’ is on a socialist basis – namely to take over the commanding heights of the economy, including the banks, and plan production in the interests of the majority. There is no solution on a capitalist basis.
Of course, the capitalist sharks are always on the lookout for an opportunity to make money out of disaster and suffering.
“Even as many companies are still struggling to survive, and as thousands of jobs are at risk, other businesses are attempting to turn the catastrophic impact of the past few months on the British economy to their advantage,” explains the Financial Times, the organ of big business.
They are talking about acquisitions and mergers: in other words, buy-outs and asset-stripping. One company talked of having “a war chest to use offensively”, and to be “ready to pounce if opportunities arise”.
“We have even stopped saying the word crisis: we talk about the ‘new normal’,” stated Lindsley Ruth, chief executive of Electrocomponents, a FTSE 250-listed company.
Whatever the misery, job losses, or hardship caused, the driving force of capitalism – the maximisation of profits – is what really counts. This dog-eat-dog system of big business has reached its limits. Crisis has become the ‘new normality’. We are told we must accept our lot in life; applaud the bankers, as Boris suggests, who are “doing God’s work”.
We say to hell with this system of capitalist ruin, which only offers permanent crises for working people. It is about time the Labour and trade union leaders got off their knees and mobilised workers to put an end to this rotten system once and for all. That means the adoption of a bold socialist programme.