Sat Feb 24, 2024
February 24, 2024

The UK Economy – to hell in a hand cart!

While Johnson is pretending to throw the “kitchen sink” at the British economy, as with COVID-19 containment and prevention, many in the health, education and other public services say it is too little too late. The “kitchen sink” is meant to save capital not workers.

By Peter Windeler

Figures show that the UK’s debt is equal to 100% of GDP, amounting to £1.95trn in total. This is the highest level for the last 150 years, and higher than at the end of both World Wars. According to Gavyn Davies, the hedge fund manager, it is entirely right for the public to save private companies in this “unpredictable, temporary crisis”[i]. That is the capitalist strategy, but unemployment is rising and threatens to become out of control just like COVID, which is entirely system made.

Currencies with no real value

The Financial Times (FT) says that global economies are in such a state that the value of currencies is being based on a country’s share price. This is due, again, to the huge amounts of extra credit being pumped into economies despite heading into “… one of the worst recessions in history …”. The worst perhaps for 300 years.

Usually currency valuations are based on interest rates and a country’s economic performance. Interest rates are all at zero so one of the indicators has disappeared.

However, the massive government stimulus has created a new dynamic. For instance, the US currency is moving in an opposite direction to the US stock market and countries such as UK and Australia, which both have fundamental problems, see their currencies moving opposite to the US dollar.

As the FT says that,

“Sterling, meanwhile, has climbed about 9 per cent despite difficult Brexit negotiations, mounting UK unemployment and a collapse in economic output. The OECD predicts the UK will suffer the largest contraction this year among advanced economies.”[ii]

Most experts now see stock exchanges as over-valued and a fall is inevitable. We are heading into a major world recession, which will increase mass struggle and revolutionary tempos internationally, as we have seen in many countries already from Brazil to Sudan.

Less than a year ago the Tories were boasting of high levels of employment. Those figures hid the high levels of precarious work to which millions of workers had to submit if they wanted to work. The levels of compulsion are the same as in the 1930s even though the levels of unemployment were very different. In that sense we were already back to the 1930s, and the explosion of the Black Lives

Matter movement is an indicator that the system only survives with the use of oppression – of all types: racism, sexism and gender inequality.

Pension funds

The world is now entering into a crucial stage of the class struggle. Against a background of the Great Recession of 2008/9 the world economy has staggered on at the expense of workers.

Prior to the covid-19 crisis many companies were struggling. There was record levels of debt and increasingly those, such as pension funds, were unable to invest money to ensure they would be able to pay future pensions. Take for example the case of Calpers, the $400bn US public pension scheme based in California. On 22 June the Financial Times reported that Calpers’ trustees were in dispute as its managing board was intent on speculating in private equity and private debt, something that one trustee, Margaret Brown, considered “…way too risky”. But the Calpers majority decided to go ahead, as they felt they had no alternative but to take risks so as to meet future pension liabilities. It is a case of betting the house so as to afford to pay the mortgage.[iii]

Boris Johnson and the Tories

In the UK Britain was entering a slump even before the pandemic with many companies struggling. There had been a fall in output of 2% in January which had not even been affected by the lockdown, followed by 10% in the first quarter.

COVID has shown that the world economy, and the UK’s, was being built on sand.

As more and more jobs are axed the Tories are moving to privatise what is left of the welfare state. The Guardian on 3 July reported that tenders are being asked from the private sector to bid for a £5bn contract for COVID testing stations, although health experts say the NHS should run such centres. Boris Johnston and his government are intent on implementing draconian Thatcherite policies to protect the capitalist class from the economic tsunami that is about to descend.

Reformism cannot save workers

The ruling class is facing the huge storms of its own making . The coronavirus, racism, mass unemployment and climate crisis, are factors that are each developing at a different rate and yet impacting on each other and placing huge barriers on the rate of profit. It means that capitalism will become ever more desperate to attack workers and nature and drive deeper divisions of oppression they try to create.

But are the reformist political and trade union leaders preparing, building and fighting to overturn this system? Not at all. Francies O’Grady even gave a welcome to the government budget, as if they were really trying to help workers. The Labour party and TUC and union leaders prepare nothing while deeper storms are coming from those they claim to represent.

Workers will not be able to rely on the old union leaderships, as they can only outline some of the drastic attacks on their members and in the communities, but take no effective action. These leaderships remain stuck in the old sectoral struggles and are not building towards cross union, national and international working class struggle and yet the solidarity of nurses with BLM, the links between unions in work places under attack show the desire for workers to build struggle together. We all have to continue building these links and fight for national joint struggle against the bosses, government and reformist bureaucracies.

They TUC applauds the workers fight against COVID-19, the nurses and Black Lives Matter from the side lines, as the Tory Cabinet make workers and the oppressed take the weight of capitalist chaos, anarchy and profit loss, as they have done throughout their history.

And what of the Labour Party at this time? Its new leader Kier Starmer has no alternative policies to the Tory ones. As can be seen from his tame performance in the House of Commons he acts like the careerist lawyer he really is. As well as purging anyone who is faintly socialist, like Rebecca Long-Bailey, and criticising those with the temerity to pull down the statue of a notorious slaver, Starmer has done nothing.

Meanwhile the class struggle is intensifying. In Tower Hamlets 4,000 local authority staff have come out on strike against attacks on their conditions. Strikers say that if they accept the new contracts it will be easier for the council to sack them. As if taking a leaf out of Starmer’s book the Tower Hamlets Labour council has said if workers do not accept the worsened conditions they will just be sacked and re-hired on reduced terms.

Fight for Socialist Future

One sure sign of the dire straits of capitalism is the record price of gold, which has been hovering at about $1,800 an ounce. The ruling class knows there is to be a crash and those on the stock exchanges are now playing that old game of “pass the parcel”.

Capitalism has not worked out a plan to face a second rise in COVID-19 cases. The US will dictate harsh terms for economic trade to the UK, racism and oppression will continue to bare down on our brothers and sisters, the clashes with China are likely to deepen, and climate change will continue to disrupt.

Undoubtedly there will be many struggles. The International Socialist League calls on all those going into struggle to build unity on the streets to fight the bosses, the government and, where they appear, the fascist gangs.

The International Socialist League calls on all those that oppose the destruction of jobs and services to join with us to build a revolutionary party. To fight for a socialist Britain in a socialist world, for an economy run for need and not profit ensuring education, health and housing for all.

The greatest agreement we can have is with all those who set their eyes on socialism, see the need for an international socialist revolutionary party and that the mass struggle of the working class is the driving force for socialist change.

This is the only way to overcome the threat of pandemics.




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