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Time to end the profit system

The Lib-Con Coalition government’s Spending Review is an attempt to rescue an already bankrupt economy. With £81bn cuts in public spending, it is the biggest and most sustained assault on the public sector since the creation of the welfare state sixty years ago.

But the reality is that despite the ruthless measures announced yesterday, the cuts will hardly make a dent on Britain’s budget deficit, which at £162 billion is the largest of the world’s major economies.

The plan is to bring government borrowing down by £149 billion in four years. This is a 19% per cent cut in real terms, as opposed to New Labour’s proposed 12 per cent. But can this gamble succeed? The very measures intended to reduce the deficit will deepen the crisis.

The one million people who will be thrown out of work and those made homeless will need some kind of support. And whilst blighting the lives of countless citizens, especially the most vulnerable, government spending will continue to rise by an additional £38 billion over the coming four years. As Chancellor Osborne announced: “total public expenditure – capital and current – over the coming years will be £702 billion next year, then £713 billion, £724 billion and £740 billion in 2014-15.”

An additional £7 billion cut brings the total cut in the welfare budget to £18 billion so far. The poorest ten per cent of the population stand to lose the most. It is a monstrous bludgeon expected to achieve just a £5 billion reduction in the £43 billion per year interest payments.

The measures include:

There is certain to be much more pain as the contraction of the global capitalist economy tightens its grip. The attempt to reduce repayments to the money markets will be undermined by tax revenues falling faster as the recession turns to slump. The populist gesture of £2 billion to be raised from a permanent levy on banks will surely be passed on in the form of higher costs of borrowing.

Cuts in administration of around 30% over four years will lead to a loss of an estimated 490,000 public sector jobs, 8% of the total. The effects of the overall programme confirms consultancy PriceWaterhouseCooper’s estimate of a further 500,000 jobs evaporating in the private sector as spending is reduced and contracts are cancelled.

The Coalition has issued a sinister threat with its promise that it will always be better to be in work than on benefits. It means that they’re hard at work on schemes to reduce wages across the board. No doubt employers will be rubbing their hands at the prospect of new sources of cheap labour from the enlarged European Union and beyond.

This is only the beginning. The Spending Review spells out that the capitalist state can no longer afford to fund any of the rights or life-support benefits won by unions in a century of struggle.

The intention is to reduce the wide and complex range of benefits needed by millions of people suffering the effects of three decades of profit-chasing globalisation to an all-encompassing single payment, and a time-limit on the Employment and Support Allowance reflects a profound contempt for the individuals whose needs have been assessed by cohorts of public sector workers. Capitalism in crisis wants to reduce millions of people to bottom-line cyphers of cost before trying to eliminate them altogether.

Calls last night outside Downing Street for “French-style” strikes are a welcome move from the total inaction of the Trade Union Congress. But even industrial action needs a political purpose. The desperate gamblers in No10 and 11 are driven by a real economic crisis of the capitalist system itself.

The solution to the debt mountain comes in the shape of action by People's Assemblies, formed locally throughout the country with a view to defending services, livelihoods, jobs, and homes. Eventually a government formed from a network of people's assemblies will need to take control of the financial sector, cancel the debts and turn it into a not-for-profit service.

The global capitalist classes are watching to see the results of Osborne’s cruel experiment. It’s time to realise that we too must enter new territory.

Gerry Gold
Economics editor
21 October 2010

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Your Say

Chris Clark says:

Very intellegent stuff here. I am an engineer and understand the limits to growth and have thought very deeply about this for decades. I am not religous or a believer in anything (feel free to label but boom there you are about some of the problem - labeling and isolating) but I sense that using the two only differentiating gifts we have in mass are most likely the only way out to avoid the same disasterous results. This is 1. Common sense and 2. Choice. We truely have to create with well thought out intention. The key correction in the last statement of the last post for the paradigm shift is that there is nothing that "has" to be done but I hope we use free will choice (desire) for the creation to physically manifest longevity for the trip home. We are already smart enough but we have to want it then be it. The enlightenment will happen when we grow up and step it up on common sense and free will choice to honor life. Do you guys want to start something up... because this internet thing might be the vital tool to manifest the shift that would allow the species to finally feel what real power is like. I could go on for hours but who cares. I think the key is to say the right thing to a largre number of people that will instill an unstoppable train that people would be totally excited about and would think is cool. People like excitement and cool. Not sure what that would be but I know if people think something is cool they go for it (iPhone-weeee). Pretty sure the desire for excitement and cool is not going to change before this dying system does.

John says:

From Canada, I usually follow with interest your passionate advocacy of social change, but I sometimes think you're missing the point. What's happening is part part of a wrenching change which is taking place all across the industrialized world and has nothing to do with politics, religion, philosophy, or what orphans Madonna is adopting next. We're facing the limits to growth. Not this week or next. Probably not in your lifetime and certainly not in mine. We're all too close to this to see it clearly, but if you look at world events through the prism of the limits to growth the pieces fall into place. The street riots in France, Greece, and soon in Spain, Portugal, and probably Britain. The Gulf oil spill. The Tea Party phenomenon. Peak oil. Climate change. Global warming. Our perilous food supply system. Industrial agriculture. We're all striving to prop up a society which is unsustainable in its present form. The American empire is beginning its rapid decline and declining empires are difficult to manage politically. 
George Santayana famously warned that those who fail to learn the lessons of history are doomed to repeat it, and I have lived long enough to verify how true that is. 
We must consider the future in a different way:
“The future is not the result of choices among alternative paths offered by the present, but a place that is created.... created first in the mind and will, created next in activity.
The future is not some place we are going to, but one we are creating. The paths are not to be found, but made, and the activity of making them changes both the maker and the destination.”
 John Schaar, University of California, 1983
For many years I had this statement pinned to my office wall wherever I happened to be working, and as the years have progressed and I matured and finally retired, I realized how much truth was contained in those simple words.
We need writers to explain to us that our choices are not among the alternatives offered by the present, but rather from conditions we will create as we undertake what may be the most difficult series of decisions our society has been called upon to make. The paths we will make in the next few decades will certainly change us and our destinations. We are singularly ill-equipped to deal with what lies ahead. The very success of our dominant social paradigm makes most of us comfortable, complacent and isolated from each other. We have become passive participants in a celebrity-drenched culture aptly described by Neil Postman as “amusing ourselves to death”
But in my long lifetime I have witnessed what societies can do when they determine their survival is at stake. I came of age during the Second World War and had first-hand experience of the sacrifices most of us made. I was luckier than many - I survived. Now another great testing period lies ahead for us, but this time it’s not an overnight catastrophe with clear-cut objectives; it’s a much more difficult and long-term battle with few short-term gains. It means deferred gratification, that most difficult of concepts to embrace in a 24/7 world of advertising and enticing consumer goods.
If the modern consumer is faced with the limits to growth there is a natural reaction: it begins with denial and then as the limits become evident, anger sets in. Scapegoats are sought and attention diverted to punishing those thought responsible. As the limits to growth become impossible to deny, a sense of hopelessness may prevail. Thrown back on our own resources we feel betrayed, lonely, and isolated. We become homo economicus and are stripped of  our self-imposed illusions about the future. We seek to survive economically by destroying ourselves environmentally. The limits to growth removes our comfortable assurances that our ever expanding economy will continue to work its magic. In a very real sense we become like children whose toys have been suddenly taken away. 
The limits to growth can only be ignored by thrusting ourselves into a hell of our own making, where that hell can best be described as a truth realized too late. We are approximately at the stage of denial giving way to anger. Rob Ford is but one small example. The Tea Party is another. Seen through the prism of the limits to growth, much of what's happening is more easily understood. I offer no solutions, but writers such as you can use your considerable talent and audience to help us understand what has to be done.
Sorry about the mess my generation left you. Many of us did try you know.

Gerry replies:
Hello John, and thank you for your thoughtful and considered comment.

It is good to know that there are serious readers out there.

In reply to your concern that I’m missing the point about the limits to growth, can I return the compliment by suggesting that there’s a glaring omission from your analysis - which is any reference to the exact nature of the society we live in and which has been responsible for the mess we now find ourselves in.

Since around the middle of the 19th century ‘capitalist production’ driven by its internal contradictory laws has produced uncontrollable alternating periods of growth and contraction. ‘Crisis’ characterises the point at which each period of growth arrives at its inevitable limits.

As I’m sure you know, the multidisciplinary Club of Rome published their prescient report ‘Limits to Growth’ in 1972. It was commissioned from a group of systems scientists – a relatively new discipline at the time, and of great interest to me as a brand new graduate – one of the first in the UK in that same field of study.

Luckily for me, very soon after, I became acquainted with the writing of Karl Marx and his followers, and spent some considerable time in the company of people working to develop materialist dialectics, the method of Marx and Friedrich Engels, his close friend and collaborator, developed more than a century earlier.

As one of his most ferocious critics made clear when Capital was first published, Marx’s great contribution was ‘the disclosing of the special laws that regulate the origin, existence, development, death of a given social organism and its replacement by another and higher one’.

It has become increasingly clear to me that systems theory or ‘systems thinking’ as some like to call it, can be understood as a cut-down, partial and inferior version of materialist dialectics – with the latter’s revolutionary side cut out. So systems theory became a weapon in the hands of those wanting to preserve the status quo.

As a consequence, whenever people use systems theory they never ask how a system came into existence or whether it might be approaching the end of its life. That the society built upon capitalist production could be at the end of its development either doesn’t occur to them, or the idea is suppressed. When a crisis arises these ‘scientists’ become popular amongst the system’s proponents because their contribution appears to offer a way of strengthening the system’s defences, giving it just a bit more life.

Amongst systems thinkers, Odum is perhaps the most influential in recent times in relation to the ecological crisis and possibly the most radical, but whilst he can explain that systems have their ups and downs or ‘pulse’ as he puts it, he doesn’t offer a way to replace the existing crisis-ridden social, economic and political system.

Part of what A World to Win is trying to do right now is to explain how and why, in the period of globalisation, capitalist production was driven to extremes of growth which have brought the planet to the limits of its ability to support life. We also propose how it must – and can – be superseded, not rejecting as you suggest but making use of much of the good and useful things it has produced.

We’ve been working on a new pamphlet ‘Beyond Resistance’ which sets out our analysis and proposals for discussion and it is currently being prepared for publication. It should appear on our website in a few days. I look forward to your comments on it.

Best regards, Gerry

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