Cutting Public Debt: Economic Science or Class War?

Linked with Politics and International Studies ESSL. – Published on The Bullet, Socialist Project’s E-Bulletin No. 350, by Hugo Radice, May 4, 2010.

… Class Warfare:

The answer to this question, now as in the 1970s, lies not in economics, but in politics, or more specifically, in class warfare. It concerns the privileged position of private wealth within our restricted form of democracy. After 1945 the propertyless in most parts of the world, West, East and South, made remarkable gains in their well-being and in the strength of their political voice. By the mid-1970s, the propertied classes, whether capitalists, usurers, merchants or landlords, or indeed the Soviet-bloc bureaucratic elite, found themselves on the defensive on many fronts. 

Many radical nationalist governments in the Third World continued to press for reforms in the governance of the world economy, challenging the new forms of economic colonialism that followed independence. In the Soviet bloc, the Prague Spring and the first stirrings of the Polish workers’ movement threatened the bureaucrats’ highly centralised power. And in the West, not only had new social movements challenged the elites on issues of gender, race and the environment, but workers were also advancing new claims to workplace democracy and economic security that seriously threatened the power of big business and high finance.

The neoliberal counter-revolution was the concerted response. For more than thirty years, the ideologists of neoliberalism, with economists to the fore, have worked assiduously to construct and maintain a new common-sense about the economy based on the old liberal mantra: property rights, individualism and the residual state. By the time neoliberalism’s sequence of localised crises that began in Britain on Black Wednesday in 1992 culminated in the global credit crunch of 2007, this work of construction was very largely complete.

Faced in September 2008 by an imminent total meltdown of global finance, the business and financial élites had no choice but to sanction a massive and collective rescue programme by the governments of the leading economies. There followed a period during which neoliberalism appeared to be in disarray, and in both academia and the media, alternative voices could once again be heard.

But within about six months, the neoliberals had regrouped. In Britain, as the debate over Darling’s 2009 Budget already showed, their ownership of the economic common sense allowed them to steadily shift the focus of debate from exacting retribution and repayment from the banks, to blaming governments for assuming the vast fiscal deficits that have kept capitalism afloat. Meanwhile, those who have spoken up for real alternatives – for Green New Deals, for radical reform of the banks, for a new international financial architecture – have been pushed back to the margins of public attention. All that matters now, apparently, is to make sure that the state is cut back.

And to make absolutely sure that this happens, the IFS message comes with a chorus of attacks on the competence, work effort and dignity of public sector employees. The accompanying relentless demands for ‘efficiency gains,’ common to the platforms of all three contending parties in the election, have a double purpose. On the one hand, they are a euphemism for cuts in public sector jobs and pay, heralding an assault on the last redoubts of organised labour while undermining continued citizen support for nurses, teachers and soldiers[1] alike. On the other hand, they undermine our confidence in the provision of public goods, encouraging a resumption of the shift to private sector providers initiated under Mrs. Thatcher.

Given these attacks on working people and their communities, it is surely time to summon up our collective courage and reject the lies and misrepresentations that are being foisted upon us in this phoniest of all elections. For at present, it really doesn’t matter what combination of Libs, Labs and Cons cobble together a majority at Westminster. The Institute for Fiscal Studies are sadly right about one thing: the government that emerges will impose massive cuts in public spending. But they are not, repeat not, economically necessary. (full long text).

(Hugo Radice is a Life Fellow of the School of Politics and International Studies, University of Leeds. His recent columns on the crisis in the Yorkshire Post are available via his webpage).

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