Greenshoots of recovery or back into the abyss

bristol | globalisation | event notice Friday November 06, 2009 09:36 by martin - east bristol socialist workers party

7.30pm, Wednesday 11th Nov @ Hawks Gym, Roman Rd. Easton

What is the state of the economic crisis?
Discussion led by Pete Wearden

When Lehman Brothers, the fourth biggest bank in the world, went under on 15 September 2008, the economic storm became a tsunami. Such was the scale of the crisis that some political commentators described capitalism itself as being on the verge of collapse.

Yet one year later, many of the same people are claiming that the global economy is already recovering. In a recent article about the left in Britain, one Guardian newspaper journalist even argued that the crisis was receding and the “left had missed its moment”.

Figures from Germany and France led to the flurry of headlines heralding the recovery – their gross domestic product (GDP) had grown by 0.3 percent in the second quarter of 2009.

Yet media headlines one day regularly contradict those on the next. For example economists were boasting recently that Japan had emerged from its worst recession in half a century.

But the ink had barely dried on those stories when the Guardian news­paper wrote, “Unemployment in Japan rose to a record high and consumer prices dropped at an unprecedented pace last month adding to fears that the country’s economic recovery is already stalling under the grip of deflation.”

Catastrophic

The world’s ruling classes have so far averted a catastrophic collapse of the world’s economy by pumping billions of dollars into the system.

This has sent government debt rocketing. Britain’s now stands at around £800 billion, or over 56 percent of Britain’s GDP. Some commentators predict that national debt in the US will reach $7,410 billion (£4,374 billion) over the next ten years.

But world leaders are now caught in an economic trap. Even if the “fiscal stimulus” – the injection of public money into the economy – is successful, will the effect only be temporary? Will the massive level of public debt governments have created drag the economy down again?

There are also high risks associated with halting what economists refer to as monetary and fiscal easing. This would mean raising taxes and cutting spending, which could undermine the recovery and tip the economy back into recession and deflation.

Caution is still the watchword for the world’s capitalists. The recovery is limited, fragile and in many countries non-existent.

The important thing for socialists is that the long-term problems of capitalism will not be solved by pouring money into the economy.

And importantly, the full price of any recovery is still to be paid. How will national economies that have pumped billions into failing banks rebalance their books?

The only way politicians and economists can see to solve the debt problem is through massive cuts. This means that we are in for a period of continued attacks on the working class.

Even the International Monetary Fund admitted in a recent report, the recovery “will not be quite strong enough to reduce unemployment.”

Unemployment in Britain stands at 2.4 million, its highest level for 14 years. Most commentators believe it will reach three million by December and will continue to rise throughout 2010.

Attacks on pensions will continue apace. The Royal Bank of Scotland, now 70 percent owned by the taxpayer, has announced it will cut back its workers’ pension scheme.

In contrast Sir Fred Goodwin, the boss who brought the bank to its knees, received a pension pot worth £16 million.

Technology firm Fujitsu, not content with announcing plans to close its final salary pension scheme, has now announced plans to sack 1,200 workers.

And it’s no state secret that the government wants to rip up public sector deals on pensions at the first opportunity.

These attacks are going to get even worse after the election.

The Financial Times newspaper recently ran an editorial titled “UK will not be spared the axe”. It boldly stated, “Whoever wins the election – and however strong their reforming zeal – the next government will be remembered as a cutter.”

A key question for socialists is – how will the British working class react?

The response to the economic crisis in Britain has been slow compared to many other European countries. There were huge strikes and protests in Greece, Ireland and France last Christmas.

The response in Britain was much more muted.

At that time, the scale of attacks British workers faced was significantly lower than elsewhere in Europe.

A continuing lack of rank and file confidence was coupled with the desperation of many trade union leaders to end the pay campaigns last autumn.

But over the last six months we have seen a modest but significant rise in class struggle.

There have been a number of factory occupations to save jobs, the key ones being Prisme, Visteon and Vestas. Rightly the ongoing campaign at Vestas has a good public and media profile because it combines the issues of climate change and jobs.

The Visteon occupation set a higher benchmark. It involved large numbers of workers and it won. It remains a model of what we will need in the future.

There are also a number of important strikes against job cuts – nationally in Royal Mail and at Tower Hamlets College in east London, for example. Some 8,000 firefighters are also set to take industrial action.

We are seeing new, more militant methods being used in trade union struggles – occupations, sit-ins and all out strikes.

Some of the conservatism of the past remains – reflected in one-day strikes, consultative ballots and even abject surrender.

But there is not an equal balance between the two. The new struggles are having the greater impact and are inspiring trade unionists and activists.