Austerity Britain: Capitalism's New Normal

Surprise, surprise the Bank of England’s latest report on the economy now sees no return to ‘normal growth’ for at least two years. As forecasts were revised downward yet again the Monetary Policy Committee admitted it has “no real idea when the recovery will take hold”. (See ‘BoE Running Out of Policy Options’ in Financial Times 9.8.12) Apparently the professional guardians of the economy are astonished that this time a 200 year old pattern of about 3% growth rates in the two years following a recession has not materialised. Given the context of global economic crisis, when even China’s cheap export-led growth is declining, it is hardly a bolt from the blue that British exports are falling sharply. From the eurozone, which accounts for 40% of British goods exports, to the US and China (where sales fell by 8.6% between May and June alone) the UK is in no position to escape what is now undeniably a crisis of the global ‘real economy’. So, while Cameron has had to get Tory little Englanders to tone down their gloating over the EU’s economic woes his economic advisers for the UK domestic economy have come up with a ‘key change of assessment’: the lower than expected ‘ability of workers and businesses to supply demand for goods and services’! In other words, the recession is getting worse not better. Behind the experts’ banalities lies a situation of increasing hardship for wage workers and their families.

One of the things which puzzles economic forecasters is the official figures showing a fall in unemployment. (A measly 0.2%.) According to the Office for National Statistics 182,000 new jobs were created in the three months to May this year. Why, then, a fall in consumption (demand)? It shouldn’t really need another economist to fathom that behind the statistics, where a job is a job, full-time permanent employment is being increasingly replaced by part-time, low-paid precarious and casual work. Thus,

Michael Saunders, economist at Citi, said that too many people took the employment data at face value.

If one only looked at full-time permanent employees as a percentage of the nation’s total workforce – the group of people most willing and able to spend money – the picture was very different.

In the first quarter of 2012, these constituted 54.7 per cent of the workforce, down from 55.6 per cent a year earlier and down from 58.9 per cent in the first quarter of 2008 before the recession began.[i]

This, as wages in general continue to lag behind inflation which means that working people are spending more and more of their wages on the basic necessities of life, from food, housing and utility bills to the cost of getting to work. Supermarkets for instance are fighting for our custom via promotion wars which cannot alter the fact that workers simply have less to spend. This is borne out by anecdotal evidence. For example Asda has noticed that shoppers increasingly wait for payday before stocking up. Moreover, customers have complained about having to withdraw cash from ATM machines in multiples of £10 or £20. Consequently, Asda has begun dispensing £5 notes through the machines from which one in 20 customers withdraws exactly £5, while one in five withdraw a multiple of £5 such as £15, £25 or £35.

On the housing front possession claims against tenants who are in rent arrears are rising with an increasing proportion ending up in actual evictions.

Possession claims for social rented properties hit 25,207 in the first quarter of 2012, up 8 per cent on the previous three months, according to court data obtained by the legal publisher Sweet & Maxwell. Successful possession claims, where a court has granted an eviction, rose by 5.6 per cent to 17,130. Both these figures are at their highest since the first quarter of 2009.

The “overwhelming majority” of cases related to rent arrears, according to Daniel Dovar, a barrister at Tanfield Chambers, who was involved in the research. “While some possession orders are the result of antisocial behaviour or illegal sub-letting, the fact is that most orders are issued because the tenant’s rent arrears have become unsustainable,” said Mr Dovar.[ii]

Unsurprisingly possession orders are highest where unemployment is high, while the capping of housing benefit at the same time as implementing the government’s ‘affordable rent’ scheme — where social rents are increased to up to 80 per cent of local market levels — will no doubt result in more arrears.

Meanwhile, in the private housing sphere [see article which follows this], that bulwark of property-owning democracy and heart of the financial bubble: mortgage rates, up to now kept deliberately low, are creeping up. The average standard variable mortgage rate is now 4.22%, the highest since February 2009, when the Bank of England cut its rate to the current record low of 0.5 %.

But as rates creep up, they pose growing problems for those the Financial Services Authority identified as “mortgage prisoners” who could account for half of all borrowers and who cannot refinance their loans because they either do not have enough equity in their homes or have a patchy credit history. Either factor is likely to disqualify them from refinancing their loans as rates rise.[iii]

In short, more households are due to find they can’t make ends meet: especially if the main earner works in the public sector, or where someone has to travel to work by rail (fares up 6.2%), or where higher student fees have to be paid or an unemployed youngster supported[iv], or where a sick or elderly relative has to be looked after… In other words, beyond the categorising, identifying, isolating and cataloguing, the whole working class is experiencing a massive assault on their standard of life. This is apart from the prospect of lower pensions deferred until you are fit to drop, and the continual erosion of every aspect of universal welfare [see item on workfare which follows this article] from the NHS to unemployment benefit. (Government plans for the NHS alone are for a further 8% cuts in spending over the next three years.)

Class Struggle On Hold?

So far the response from the working class as a whole has been a resounding tinkle. Many activists have been diverted into single issue campaigns while the TUC has successfully divided public sector workers from the rest and is now carefully orchestrating a ‘march’ for 20 October round the suitably ambiguous slogan For a Future that Works. If they mean a future of fully-employed wage slaves working all hours of the day for a pittance their sterile processions are the right way to go about it. The truth is sometimes hard to face. The capitalists themselves are loathe to face up to the fact that the present crisis goes way beyond the financial sphere, and is of systemic and unprecedented proportions. It’s not so long ago that the myth of ‘free-market’ capitalism going on for ever and bringing bounty to everybody held sway. Now, however, the message we hear is that the future is grim, not just for the next two or three years, but for generations to come. When the Con-Dem coalition first announced its draconian austerity programme we noted that they had pencilled in the prospect of having to deal with a certain amount of ‘social unrest’. Apart from last summer’s blind outburst from disaffected youth, British ruling circles can hardly believe that there hasn’t been more concerted working class resistance to all the attacks. This is not the place to try to analyse the hold of media propaganda, the fragmentation of the working class and the outright sense of powerlessness in the face of the capitalist machine. We cannot predict when or whether the working class worm will turn. What we can say with certainty is that the capitalist crisis is not going away and at every twist the question of finding an alternative way of living and working will be more sharply posed. Meanwhile the small — but growing — cluster of revolutionaries who exist today can use the time to prepare for when they will need to present a practical programme to a working class who have decided to take the running of things into their own hands.

[i] ‘GDP Data Trigger Debate on Economy’ Norma Cohen and Sarah O’Connor, Financial Times 25.7.12

[ii] Kate Allen in the Financial Times, 15.8.12

[iii] ‘Mortgage Data Fuel Housing Market Fears’, Norma Cohen, Sarah O’Connor and Kate Allen, Financial Times 31.7.12

[iv] So-called NEET unemployment (percentage of 18-25 year olds with no education, earnings or training) now stands at 18.5%.

Saturday, September 1, 2012


In the paragraph 'Class Struggle On Hold' it is argued that revolutionaries who exist today can use the time to prepare for when they will need to present a practical programme to a working class who have decided to take the running of things into their own hands'.

Is it not the case that few people will be attracted to whatever is meant by communism until they can see a practical programme for the running of the economy in the interests of the working class ? Is it not also the case that even fewer people will be inclined to become 'revolutionaries' until then ?

A great deal of web space is devoted by marxist websites to lengthy descriptions of all that is wrong with capitalism, but millions of workers are already well aware of the problems imposed by capitalism, whereas so far there is nothing other than sheer rhetorical exhortations to adopt communist views. Personally I now doubt if communism in any form is any practical solution to working class problems. I and probably millions of other workers, pensioners, students need to see a blueprint, yes, a definite plan of exactly how a communist-inspired economy will run. Mind you, I'm not saying a plan of how it might run, but a definite set of arrangements for practical implementaion, so that the parents with kids can accept with confidence that there will actually be food on the table at home, if they have a home. It's really a question of marxists needing to get on with it. I'm not longer inclined to agree with marxism anyway, so I and millions of other people need convincing by marxists, if their aspirations are anything other than moonshine. Engineers cannot build a bridge unless they have clear plans, still less a whole economy. Cobbling something or other together when the time comes won't do.

True enough: but the building of the new society is the task of the working class as a whole. Like it or not, the majority of workers are not going to be won over to communism simply by force of argument. Much depends on the evolution of the capitalist crisis and how far it engenders widespread disaffection and revolt: in other words, the widespread desire for an alternative society. This may not happen: the overriding force might be for some sort of reactionary inter-capitalist conflict. Much will depend on how far workers worldwide have a sense of solidarity and are willing to struggle for a different kind of world. At that point the need to have a clear, practical political programme for communism is key because — in our view, and I think also yours, — the desire for a just and equal world is not enough in itself to bring about the overthrow of capitalism and take us on the way to a society of freely associated producers. Clearly, too this implies that revolutionaries and their political organisations will have an extensive presence and influence amongst the working population in general. Perhaps the idea of revolutionaries using the time between now and then to prepare to put forward the communist programme is a bit misleading since it’s not simply up to the revolutionary political organisation to wait for the right moment. Even if the historical/theoretical outline and basis for that programme already exist the nuts and bolts have to emerge from the interaction between the growing political minority and the wider class movement. The key issue at present is gathering together as many people as possible on a clear political basis with a view to developing a wider influence in the world beyond.

I didn't know communism meant running the economy in the interests of the working class, I thought it meant running society in the interests of the whole of humanity. As there won't be an exploiting class, there won't be an economy as in the current meaning of the word, will there? In a society of abundance - possible now if we didn't have the bourgeoisie blocking it via their economy, which only benefits them - everyone will contribute their work abilities (not allowed now, the economy can't allow everyone to contribute) and everyone will be fed: and housed: and educated.

It is true that hardly anyone can be attracted to communism if they don't know what it is. This is something they have to realize for themselves, through struggles against this crippling system, and through the solidarity and class consciousness that is evolved in struggle. So you can't have a "program" for communism in advance of starting to do it so to speak, and of developing the consciousness of what it is, and and of being conscious of what we're doing, and why, and where we want to go. Communism is the next evolutionary stage of humanity's development, so it's impossible to know exactly in advance of doing it, exactly how we'll do it! But we know we'll be doing it for everybody's benefit and that's a start. At the present time lots of parents with kids must frequently wonder where the next meal is coming from. Yet, under different and better social arrangements, enough food for all of humanity could doubtless be grown - not under capitalism of course. When the time comes (soon I hope) when enough of us realize that we don't have to go on suffering under the present penal servitude forever, but have something better at out fingertips, and just need to decide to do it, then I hope you'll put your doubts to one side DKTZ, and join us in building a better society. The day after the revolution we can work on as many plans and blueprints as you like.

Good clarification: in a world of freely associated producers where everyone takes part in deciding on the what, where and how of both production and distribution in the context of directly answering social needs, the separation between economic and political will have disappeared. Agree also that it is pointless trying to produce a blueprint for the post-revolutionary world when capitalist states have been overthrown and the practicalities of everyday life will heighten general communist consciousness. However, a political programme is not the same as a blueprint – i.e. a nuts and bolt plan for post-capitalist society, rather it's — or will be — about the necessary steps the working class needs to take to see off capitalism, the details of which will become clearer in the struggles to come. That programme, in our view, is not only about immediate or recent experiences but also a distillation of the historical experiences of previous generations of the working class. That’s why we argue that somehow or other we communists have to bring those insights to the struggles facing us today: and as these become much sharper confrontations with capital hopefully impress more and more workers of the possibility and necessity of communism.

Further to preceding comments, the following might be relevant and useful. I'll put them in separate categories, but they interrelate in some ways.

CONFIDENCE. I now have less confidence in my assertion that a pre-revolutionary blueprint for a socialist economy is essential, following a remark that a plan might not be implemented anyway! It seems to me that assumed logical arguments for various political lines ought to be ok, testable in practice and so on, but the question about each is the level of confidence or otherwise which they evoke. There is a lingering level of confidence in the status quo's ability to get us out of austerity and a measure of confidence in a socialists' ability to do so. The respective levels of confidence in conflicting lines of political arguments needs to be considered when assessing what people are likely to do, within steadily developing material circumstances, such as those of austerity, class struggle, thresholds of revolution.

REVOLUTIONARIES might be viewed in two categories, those with weapons and those without them. As well as studying and promoting Marxist theory, can workers who do not have guns be as effective as those who do have access to them? The old Maoist view that 'power grows out of the barrel of a gun' comes to mind. In the course of a revolution would those with guns become dominant, seizing power, setting up a 'dictatorship of the proletariat', then issuing instructions to all and sundry? In that situation, workers council discussion groups (if any exist) might be told to do as leading light leadership says, never mind notions that they might have preferred. Society cannot be run by anarchistic dissent.

NUMBERS OF PEOPLE are thought to be essential. To quote from the main Austerity article, 'The key issue at present is gathering together as many people as possible...(etc).'. At present the largest numbers of people on anti-austerity demos are galvanised and organised by the SWP and Socialist Party in the UK. Is it helpful to the struggle to be issuing CWO propaganda amongst the demonstrators, or does it have the effect of generating confusion rather than fraternity and solidarity? I handed out some Auroras not so long ago at a local meeting and demo, but had the feeling of a degree of alienation. That is not to say that the Trotskyist lines are any better than those of the communist left, though despite the book 'Trotsky, Trotskyism, Trotskists' they might be at this stage in the short term in the UK and elsewhere.

SUBJECTIVE VIEWS, OBJECTIVE CIRCUMSTANCES, NOW AND LATER ON. In a recent book by Laurence Rees on the 'charisma' of Hitler, which I saw in a bookshop, he quotes Hitler as having claimed words to the effect that his achievement was to have made 'ceaseless efforts to persuade people'. The comments under the Austerity article contain some references to the effectiveness or otherwise of persuasion. If what happened in the thirties is anything to go by in terms of the effectiveness of persuasion within dire circumstances, then maybe techniques of persuasion should be studied by Marxists, even though access by them to means of propaganda is restricted. I continue to reckon that too much small print is a mistake when churning out articles on Marxist views.

PROPORTIONATE EVALUATIONS seem to be needed by workers in trying to decide what to do for the best at any one time, both for short term and long term gains.

These comments are haunted by terrible defeats of the past and are no longer a response to the article they purport to be commenting on. (e.g. the supposed quotation on numbers is not part of the text and isn’t even a summary of the argument) . We cannot predict how bloody or otherwise the birthpangs of the new society will be: but none of us in the ICT is advocating, condoning or in any other way supporting a struggle defined by armed guerrilla groups: without workers councils, soviets or whatever new name similar bodies of mass proletarian democracy appear under – without control by the majority of the working class and without that majority taking up the communist programme (that word again), then a future of capitalist barbarism such as you indicate awaits.

CWOer's comment of 2012-09-14, 12:45 talks of 'the majority of the working class' and of 'that majority taking up the communist programme'. On the other hand, large, if not overall majority organisations, of the working class, such as trades unions, get constant flak from such as the CWO for allegedly not correctly operating as they should for working class interests. The Trotskyists struggle to swing the unions to Trotskyist views, with which such as the CWO disagree. Whereas the old alchemists claimed to have a cure for every ill, some folk seem to have an ill for every cure. Next to my keyboard, side by side, are the booklet of the CWO 'Socialism or Barbarism' and Trotsky's 'The Transitional Programme'. OK, it's not a matter of trying to 'cure' capitalism, but it is not clear, so far, just how the 'majority' of the working class are going to control anything, whether or not efficiently, however necessary and desirable that is regarded by the CWO, for which they recommend 'workers councils'. Would they support or oppose centralised planning ? OK, the answers are not yet known, but is it dream on or dream off ? Marx's idea was for workers to know themselves as a class and to substitute science for dreams.

The trades unions are no longer working class organizations as they work, these days, for the bourgeoisie. They negotiate the price of labour power: they are not revolutionary. Just because the working class are in them doesn't make them working class. Trotskyist organizations are for reform only, not revolution: despite their fiery rhetoric. Left communism is not alchemy, it's the distillation of theoretical insights gained from workers struggles going back at least till 1848.

The communist manifesto was the product of those early struggles of the working class. And we have learned more since. You say we can't cure capitalism: good point ( why would anyone want to anyway, it's cruel and deadly!) but it isn't clear whether workers would do any better or how exactly they would set about it. The communist left doesn't "recommend" workers councils: the working class invented them as their own decision making bodies, and produces them when moving towards political control. As you say: the answers are not completely known, but we may find out one day. As to whether communism is a's a sort of dream for me because I'm old. But capitalism's a nightmare. I agree we want to substitute science for dreams, and proletarian rule for that of the bourgeoisie. That'll do for starters.

Noting Charlie's comments of 2012-09-15, 03:07, would he like to let us know his views as to leadership? Should we foresee an evolution from workers councils to one or more leading organisations, if and when moving towards political control? Something about centralism? Enforced dictatorship of the working class, somehow popular, perhaps in ways other than those of Stalin, Mao and Pol Pot?

Just as the working class cannot take over the bourgeois state and use it for their own purposes ( major lesson of the Paris Commune) so I don't think you can take major political and social concepts of the bourgeoisie - like leadership - and wonder how the working class will deal with that. The dictatorship of the proletariat will exercise it's power through the democratically elected soviets, or whatever they're called, and that could be all the leadership we require. The role of the international party needs some elaboration here, but I'm not about to do it! But you cannot compare the rule of the proletariat - as both that rule, and the state itself will disappear as communism fully develops - with the bourgeois monstrosities of cruel exploitation perpetrated in the name of the working class and Marxism itself (the political weapon of the working class) by the despicable Stalin, Mao and Pol Pot. And others of course. As to the future evolutions of humanity once the vicious constraints of capitalism have been removed, and we are all free at last to educate and develop ourselves and our various abilities, Wordsworth commented on his experience of the bourgeois revolution in France in c. 1793, "Bliss was it in that dawn to be alive!". It turned out to be a bit of a false dawn for most of us, but I think we get his point. But just imagine the bliss of the proletarian dawning...words fail me!

Thank you, Charlie, for your latest comment of 2012-09-16, 03:26, and for previous ones. However, whilst aware of the marxist views on all nationalism as being divisive and its services to capitalism, surely it has to be remembered that the 'international proletariat' doesn't just all live on 'planet thin air'. Locality is unavoidable. That has considerable effects and requirements. Even if the entire population of the world only had green skin, most people in most places would not think it desirable to allow a totally unresticted influx of large numbers of people from beyond their accustomed locality. The reasons for people wanting to leave their early localities for assumed more attractive ones are fairly clear , for reasons such as poverty, lack of health services and jobs, etc. I won't ramble on and will probably restrain myself from further comments, you might be pleased to know.

Revolutionary Perspectives

Journal of the Communist Workers’ Organisation -- Why not subscribe to get the articles whilst they are still current and help the struggle for a society free from exploitation, war and misery? Joint subscriptions to Revolutionary Perspectives (3 issues) and Aurora (our agitational bulletin - 4 issues) are £15 in the UK, €24 in Europe and $30 in the rest of the World.