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Title: Crisis and Capitalism’s Contradictions Author: Anarcho Date: May 12, 2011 Language: en Topics: financial crisis, capitalism Source: Retrieved on 5th February 2021 from https://anarchism.pageabode.com/?p=531
Anarchists have long argued that capitalism is an economic system
riddled with contradictions. These express themselves in recurring
crisis, when these contradictions expose themselves for all to see in
generalised misery they produce.
Some of these contradictions can be seen from the Bank of England’s
quarterly inflation report. In Governor Mervyn King briefing on the
11^(th) of May, he said growth would be weaker and inflation higher than
the Bank had set out in its last set of forecasts three months ago.
“A year ago, we thought that growth in the fourth quarter of 2010 and
the first quarter of 2011 would be 1.5%,” King said. “That hasn’t
happened.” He admitted that “the recent pattern of revisions to the
projections over the next year – downward to growth and upward to
inflation – has continued.” Inflation was a problem in part due to “the
increase in the standard rate of VAT” while the Bank had been forced to
revise its growth forecasts down sharply over the past year as reality
has repeatedly failed to meet the expectations of ideology.
In the latest lowering of the growth forecast by the Bank, this year has
been reduced from 2% to 1.7% and 2012 from just under 3% to 2.2%. King
admitted he had hoped for growth of 1.5% in the second half of last year
but it turned out to be zero (“the level of output appears to have been
broadly flat” over the last six months).
So much for Osborne’s budget for growth…
King stated the fiscal clampdown would limit growth in the next two
years as “household spending may have further to adjust to the
significant squeeze in real incomes.” In short, the reason why growth is
expected to “somewhat weaker” is because of “a delayed recovery in
consumption and a less pronounced boost from net exports.” The report is
more forthcoming – growth will be “weaker” due to reductions in
“households’ future real labour incomes and hence consumption.”
Surely, then, we can boost growth by boosting working class income and
so consumption? No, for inflation is too high and “resistance to the
erosion of real take-home pay” would “put upward pressure on wages and
prices.” Happily, though, there were pressures on wages and prices
downward with the “most obvious” being “the weak level of activity in
the economy.”
So for growth to rise, wages must rise; for inflation to fall, wages
must fall.
King failed to explain how that particular contradiction will resolve
itself but rest assured “the recent softness in activity will prove
temporary” with a recovery “driven by a continuing rise in business
investment.” Yet why should firms invest when King admits “the outlook
for growth and inflation is likely to remain unusually uncertain”?
And why is it so uncertain? Because of the Tories cuts in benefits,
public sector pay, employment and services. This increases uncertainty
for, unlike the private sector, state expenditures are steady and so
create regular demand for goods during uncertain times. And is industry
investing? The Bank’s report admits:
“Private domestic demand growth could be boosted if more of the
historically large corporate financial surpluses were spent on capital
investment or transferred to households in the form of higher wages or
dividends.”
King did not explain why business would invest when consumer growth is
so uncertain – business invests in order to meet demand and, as the
Bank’s report admits, “consumer spending stagnated as real incomes
fell.” Nor did King explain why higher wages could not eat into these
“historically large” surpluses rather be passed on as higher prices.
Could it be raising the more accurate “profit-price spiral” rather than
“wages-price spiral” would send the wrong message?
So the Tory attack on public-sector workers and those on benefits means
that growth is suffering and uncertainty is increasing. Both make it
harder for the government to repay the deficit, the ostensible rationale
for the cuts in the first place.
Still, King expected growth to bounce back later in the year. Why this
prediction should be any more accurate than the Bank’s previous ones he
did not explain.
Meanwhile, the propaganda war is stepping up a gear. A Policy Exchange
report jumped upon with relish by the right-wing media, stated that
public sector workers are 40% better off than their private sector
counterparts. This dubious claim has now entered the narrative of the
right’s attacks on workers and unions although the report is (as would
be expected) deeply flawed. It does not compare like with like (as
public sector workers are more skilled on average than those in the
private sector). Taking into account skill, the pay gap shrinks to a
mere 2% for men and 4% for women.
Of course, the real conclusion is not that public sector workers are
overpaid. It is that private sector workers are underpaid (as the
“historically large corporate financial surpluses” shows). If
unionisation and struggle were higher in the private sector then so
would be pay. Yet such obvious conclusions are not mentioned. Instead we
get a twisted notion of “fairness” based on levelling down (for us, not
for the rich obviously!).
Much of the current difference in income between public and private
sectors arise because of the slump in the latter due to the recession.
While the rich are doing well, the majority of workers have been
suffering a fall in income as the Bank’s report notes. This, it admits,
is having a negative impact on the economy. It seems incredulous to
think more reductions in pay will have a different impact.
This must be stressed. Public sector pay and employment maintains
aggregate demand in the face of private sector crisis. Targeting those
sectors of the economy that have a counter-cyclical effect on the
economy will only make the situation worse.
However, the Tories clearly wish to utilise this crisis to weaken labour
and secure rising inequalities in wealth and power. It is being used to
ram through their ideological goals (with the Lib-Dems abetting them).
The day after King’s briefing, George Osborne proclaimed his desire to
“reform” employment law to make it easier to fire workers. We are
expected to receive less protection against redundancy, dismissal and
workplace discrimination as well as a reduction in the consultation
period for collective redundancies from 90 to 30 days. Given the
existing laws on balloting for industrial action, this would weaken the
ability of trade unions to resist sackings before they happen. Osborne
suggested no “reforms” to laws on industrial action although various
Tories have argued that strikes have the backing of a majority of all
balloted workers rather than a majority of those who vote (heaven forbid
they apply that to their elections!).
Osborne attacked the trade unions as “the forces of stagnation” who
“will try to stand in the way of the forces of enterprise.” Blaming the
workers for capitalism’s contradictions is as old as that system.
Proudhon mockingly noted that, for economists, “Political economy — that
is, proprietary despotism — can never be in the wrong: it must be the
proletariat.”
Presumably, given the downward trajectory of the economy (and King
confirmed it is flat-lining), Osborne considers creating stagnation his
job and so objects (like all capitalists) to competition. In reality, as
the impact of his policies show, by cutting benefits and pay he is the
one promoting stagnation, not the unions. For as Proudhon argued in 1846
“though the workers cost you [the capitalist] something, they are your
customers: what will you do with your products, when, driven away by
you, they shall consume them no longer? ... if production excludes
consumption, it is soon obliged to stop itself.” Osborne seems keen to
prove us right.
Only by workers organising and resisting can demand be bolstered and
growth protected. Yet while we need to fight the cuts, exposing attempts
to divide workers as ideologically driven rubbish to force all wages
down and arguing for levelling-upwards, we also need to explain why
capitalism remains the contradiction riddled system of exploitation and
oppression anarchists have analysed since 1840.
If we fail then we can expect things to get much worse before they get
better. Moreover, any eventual recovery will, due to the contradictions
within capitalism, just lay the foundations for the next crisis. We will
continue to pay the costs for the crisis in their system and, as
Proudhon argued, capital will continue to “make the chains of serfdom
heavier, render life more and more expensive, and deepen the abyss which
separates the class that commands and enjoys from the class that obeys
and suffers.”
Ultimately, capitalism’s contradictions can only be solved by ending it
once and for all in favour of, to quote Proudhon, “a solution based upon
equality, – in other words, the organisation of labour, which involves
the negation of political economy and the end of property.”