Investment not cuts

F
alling real wages, record youth unemployment and collapsing living standards are not by-products but the aim of Tory economic strategy. The goal is to push up profits by driving down wages and slashing public services, to encourage business to invest and kick start the economy. But it hasnt worked. Investment remains sluggish and the economy is flat-lining. Rather than rethink the strategy, the Tories have decided they need to go further, through attacking employment law and the unions. A successful fight-back against these attacks needs a credible alternative economic policy. First this means rejecting the childish nonsense that the problem is we have overspent the national credit card. The root of the crisis unfolding since 2007 is not too much debt, but insufficient growth. Addressing why there is virtually no growth in the British economy should be the starting point of economic policy. If there is a return to growth, debt will be paid down as a by-product of rising national income. The reasons the failure of growth is the combination of a long-term decline in the level of investment as a share of GDP, exacerbated by a complete collapse in investment with the onset of the economic crisis. Despite its appearance as a debt crisis first in sub-prime mortgages in the US, then the banks, and now sovereign debt in the Eurozone the roots of the crisis lay in a long-term decline in investment. With the onset of the crisis, this decline in investment turned into a rout, as companies many of which have huge levels of unused savings stopped investing their capital. Given the British economy is overwhelmingly controlled by private companies, this refusal to invest has dragged the whole economy down. Breaking this capitalist investment strike is key to restoring growth in the economy. Instead the Tories are trying to placate them through making investment safer by driving down wages, living standards and labour rights. But this has not persuaded the capitalists to invest, and just sent the economy into a downward spiral as consumption also collapses. Cuts and austerity have reduced living standards at their sharpest rate for 30 years, meaning that in recent months the decline in private consumption has even surpassed the huge fall in investment levels. The exact opposite is needed. If the private sector refuses to invest, the government needs to step in and stimulate the economy through an investment programme. This would create growth and jobs, increase consumption and encourage private investment. The Tories argue that a programme of investment is not feasible because of the high levels of public debt. But this is looking at the problem through the wrong end of the telescope. It is the lack of growth that is causing the deficits and making them more difficult to pay back. As a recent Guardian editorial explained: borrowing rates for the government remain rock-bottom the markets are therefore willing to finance infrastructure development, and the government should borrow to create a recovery fund (17 November 2011). Anyway, we know the government can find resources for its priorities, such as a possible 1 billion or more to unleash thousands of bombs on Libya. Britain continues to have the fourth largest military in the world, with an annual budget of 40 billion, plus the billions in the so-called special reserve for fighting wars. Cutting the military budget to the level of Germany would save about 18 billion per year. Refusing further military adventures and cancelling the 100 billion to be wasted on replacing Trident would yield much more to reverse cuts, boost consumption and carry out targeted investment. Or the government could simply force companies to invest by seizing their assets if they dont. But instead the government is stepping up its attacks on the working class. Our response must be to demand investment not cuts, welfare not warfare.

Uniting the 99 per cent

he Occupy movement, which has spread from Wall Street across the developed world, with a dynamic presence in London, marks a new wave of radicalisation in response to the global financial crisis. Its combination of radical forms of protest and a hegemonic political approach for the 99 per cent is a positive contribution to the opposition to austerity. Across North America and Europe, governments are carrying out policies that hit the living standards of the majority of people, in order to increase profits and bail out failing banks. This is meeting an inevitable rise in discontent, but also a political fight over how this disaffection is expressed. Capital knows its attacks will be unpopular, and so seeks to weaken potential opposition by whipping up a reactionary response which will divide the majority of society against itself, rather than against capital and its political servants. Centrally this means whipping up racism and Islamophobia, but also bigotry and prejudice on immigration, travellers, benefit claimants, the unemployed and other minorities. This type of reactionary response has gained weight within mainstream politics and spawned new right-wing movements such as the Tea Party in the US. In Europe and Britain, different types of militant extreme far-right organisations have developed that physically attack minorities and movements on the left and in some cases have made significant electoral inroads. Despite some major struggles in Britain like the student protests late last year, the TUCs March protest this year, or the united strike against public sector pension cuts at the political level a progressive response has so far been weaker and more restrained than the growth of reaction. The arrival of the Occupy movement gives the progressive struggle its own radical wing. At Occupys core is opposition to

the reactionary offensive; instead of division it promotes unity. In the words of Occupy London Stock Exchanges initial statement we are of all ethnicities, backgrounds, genders, generations, sexualities dis/abilities and faiths. Opinion polls, in the US and Britain indicate support for the aims of the Occupy movement is stronger than opposition. Millions recognise and reject a society where 99 per cent are suffering falls in living standards or quality of life while the 1 per cent are getting richer and richer. Facts speak for themselves; for example the top 1 per cent in Britain already took home 6 per cent of national income in 1979, and this rose to 14 per cent by 2007 (High Pay Commission 2011). The Tories fully grasp the significance of this new opponent, hence why David Cameron and Boris Johnson are so eager to close down Occupy LSX and drive it off the streets. The violent eviction of Occupy Wall Street in New York indicates how capitalism wants to crush this new radicalism. The Occupy movement takes its stand with the majority of humanity against the oppressors, the super-rich and their political henchmen, and deserves whole-hearted support.

After Libya West has Syria and Iran in its sights

espite claims it was supporting the Arab Spring, NATO bombed Libya for its own time-honoured reasons to depose a regime that was unreliable for Western interests, a frequent nuisance in OPEC, and sometime supporter of various anti-imperialist and anti-colonial struggles. The 2004 Deal in the Desert opened a phase of collaboration between Libya and imperialism, but did not mean Gaddafi was seen as sufficiently reliable. This was the latest in a history of wars, or proxy-wars, against what the West calls rogue regimes i.e. regimes that are not fully compliant with its interests. The bombardment of Libya stands in a tradition that includes interventions in the Congo, Cuba and the attempt to overthrow the regime in North Vietnam in the 1960s; the invasions of Grenada, Panama and the Contra war against Nicaragua in the 1980s; the Iraq wars, bombing of Serbia and invasion of Afghanistan in the 1990s and 2000s; and many others. Having won this war on Libya, the West is securing its interests. Militarily, this may include a future NATO base in Libya. Some reports suggest one is already secretly agreed.

Immediately, the West is focused on commercial and economic gains from the war. The UKs share of the costs of bombing Libya is estimated at possibly 1 billion. But the value of contracts to rebuild Libyas schools, hospitals, housing, roads, electricity supply and so on are estimated to be worth 200 billion over the next 10 years. NATO first smashed the country with bombs and will now charge it for rebuilding. Under Gaddafi, Libyas natural resources were mainly in public hands. Also some taxes on foreign oil companies were at 93%. This income was at least partially pumped back into Libyan society, funding a healthcare system. Libya had achieved an 88% literacy rate and it had the highest average per capita income in Africa (9,640 before the 2008 crisis). As NATO governments seek to cash in on their support for the rebels, they are applying intense pressure on Libya to liberalise, i.e. hand over its assets to foreign companies. French newspaper Liberation revealed the Libyan rebels promised France 35 per cent of Libyas oil in return for support in the war. This is what imperialism means by its successful war in Libya. Buoyed up by this success it is now turning with renewed energy to tightening the noose around Iran and replacing Assad with a compliant regime in Syria.

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Photo: Ilias Bartolini