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Worsening economy behind coalition crisis

All the indications are that the British and European economies have now been drawn into the deepening contraction of global capitalism:

The Cameron-Clegg Coalition’s current austerity programme of spending cuts and tax increases was based upon an unrealistic expectation of growth, which has now been replaced by the certainty of its opposite. This – and the crisis within the Coalition itself, spurred by the virulently anti-Cameron Old Tories – underlies the sharpening of tensions as the Tories abandon plans for reform of the House of Lords to focus attention on the economy.

As BBC economist Stephanie Flanders puts it, we are experiencing: “by some measures the worst four-year period for the UK, outside wartime, in at least 100 years – worse than what happened in the 1920s and 1930s, and worse than anything in the 1970s and 1980s”.

People in the UK face the same challenges as the rest of Europe in battling assaults on public services, jobs, pensions and benefits and the loss of their homes. Amongst the worst-hit countries is Spain, where unemployment amongst young people stands at around 50%. In Greece, the Orthodox Church has set up emergency feeding centres for hundreds of thousands of people who have lost everything. They include formerly well-paid professionals – architects, engineers, information technology specialists who hardly know what has hit them.

The contraction means demand is dropping fast, so exports, imports and production must follow. Government revenues from tax continue to drop, so “unaffordable” public services have to be broken up and those parts that can be made profitable handed to the private sector. Then, as the spiral of recession deepens, comes the competitive elimination of surplus productive capacity – the mothballing of factories, boom-year housing estates left empty, infrastructure left to decline and rot, millions upon millions of people driven from their jobs and homes, left without food, abandoned to their fate.

In country after country people have protested, marched and even occupied workplaces. The Trade Union Congress in Britain is calling for another demonstration in October. But the experience of its last national anti-austerity protest in the spring of 2011 showed that it changed not a whit of the Coalition’s policies.

Thus resistance must be transformed into preparations to replace the broken system of capitalist social relations dominated by the giant global corporations. It is these which have undermined the legitimacy of the state and hollowed out the old forms of parliamentary democracy.

New forms of fully inclusive, participatory, direct and representative democracy are needed. They can learn from the experiences of those who’ve worked in not-for-profit institutions like the National Health Service, housing, education and social services as well as the workers’ co-operatives, credit unions, food co-ops and community shops that have spread around the world as people try to protect themselves against the worst effects of the crisis. These need to go further to develop policies and strategies to replace capitalist social relations.

A World to Win believes that a global network of People’s Assemblies can provide this framework. You’re invited to join the discussion.

Gerry Gold
Economics editor
8 August 2012

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