The document presented below is, by no means, intended as anything other than a set of notes. Originally written as an economic introduction on the current crisis of British Imperialism to be spoken, it should be treated as a form of guide; a guide for what to look at, where & why. In part, it is an attempt to explain the thrust of austerity in Britain, & that the supposed “economic recovery” of British Imperialism is little more than a lie. British Imperialism is, very clearly, headed for another crisis.
The content of this article is drawn from various different sources, but explicitly based upon the analysis given by David Yaffe. The specific article from which content & structure is drawn is referenced within the main body of the text. However, it must be stated that I am indebted to the work carried out by Yaffe in the pages of Fight Racism! Fight Imperialism! in general.
Finally, I would like to make it plain that this is the initial piece in a wider series on political economy that I intend to publish on this blog. This will consist of items like the below article, notes, essays etc.
A lot of this introduction is, realistically, going to consist of reiteration. I would expect comrades to possess a certain understanding of the key concepts I’m going to outline: the ongoing economic crisis of British Imperialism & the bourgeoisie’s ever more ferocious austerity agenda.
To begin, David Yaffe’s most recent article on the economy ‘Red warning lights for global economy – Class war to intensify in Britain‘ provides us with a basis. We could point to various facets of this article. Each indicator paints a general picture. The Eurozone faces pathetic growth ratios – overall its economy expanded by a mere 0.2% over the last year. The euro itself is under threat, in a dangerous deflationary spiral. The European Central Bank need inflation at 2%. In October, it stood at 0.4%; by November, this had again fallen to 0.3%. All policies short of Quantitative Easing – the direct purchase of sovereign debts – appear to be failing. Quantitative Easing is an extremely aggressive economic policy, which a lot of bourgeois economists generally conceive of as a restart button. Despite this, a quick glance at various Financial Times surveys shows that many highly regarded economists regard QE as insufficient for the Eurozone: ‘The ECB will purchase sovereign debt in 2015, mostly for want of anything else to buy.’ (Lorcan Roche Kelly, Agenda Research, cited in The Financial Times, ‘Economists sceptical ECB bond-buying would revive eurozone’, 4 January, 2015.) The ECB may make a decision regarding QE by 22 January.
What does this mean for Britain’s economy? As Yaffe points out in his articles, Britain occupies an increasingly parasitic position in regards to the rest of the world. In the article used for this introduction David underlines this point in his demonstration of the (still rising) global debt-to-GDP ratio & his demonstration of the pantomime that is Britain’s apparent “economic recovery”. The article highlights all the old hallmarks of British Imperialism – low productivity in industry, an unswerving regard for the needs of finance Capital, I could go on. What I instead wish to highlight is what this supposed recovery is built on. To quote: ‘the recovery of the economy is largely based on debt-fuelled consumer spending and inflated house prices’. From this, we can trace a pattern.
On 30 December 2014, the FT reported that the growth in housing prices has begun to slow. Month on month growth for December stood at 0.2%, leaving the annual growth average at 7.2% – the lowest in 13 months. The annual peak was in June, at 11.8%. It has been declining ever since. In London, annual price growth was at 17.8%, down on last year’s 21%. (The Financial Times, ‘House prices rise at slowest for a year’, 30 December, 2015.) The point of this is not that real prices still rose, but that the rate has begun to stagnate. Stagnation is an indicator of crisis*.
This is a trend repeated across the board. All paths are leading to stagnation. All roads lead to crisis.
The problem, therefore, faced by the bourgeoisie is enormous. Austerity is not working, as the global debt-to-GDP figures, the general economic trend to stagnation etc etc indicate. Austerity is not working precisely because of the fact that it has not been sufficiently savage. What this demonstrates is that what the bourgeoisie hail as an economic recovery equates to an intensification of the class war being waged under the banner of austerity.
Presently, the base line – that is, the minimum amount to be cut by the bourgeoisie – following the General Election stands at £22.5bn. Presently, we have witnessed roughly 40% of the austerity measures promised to date. I could go into specifics, but I think that misses the point we need to be making. Comrades know a lot of this information and the political points we need to be drawing are, in my opinion, wider.
In order to agitate sufficiently, we 1st need to understand the thrust of austerity, what it means & why it is so readily committed to by every major political party in Britain. The thrust of austerity is to decrease the value of that part of Capital as represented by variable Capital – that is, that part of Capital which equates to wage, the cost of human labour. In order to do this, the bourgeois class must reduce the standard of life for workers, reduce their wages, conditions etc etc. The attacks upon state welfare are ideological only insofar as they allow the Capitalists the opportunity to do this. In other words, a reduction in wages, an attack upon worker’s conditions becomes acceptable in the context that it is better than what is on offer otherwise. Whether that be the horror of the Jobcentre at present, or absolute starvation is determined by social consciousness. Austerity, therefore, is an attack upon the working-class as a whole. It is the bourgeoisie’s attempt to reduce the value of variable Capital.
As the economic analysis above presents, austerity is not achieving this aim, at least not thoroughly enough. As a class committed to profit, to the extension of surplus-value, the bourgeoisie have no option other than further savagery.
* To pre-empt arguments that this may, simply, be a short-term fluctuation of the market, I offer the following sentiment: only time will tell. Whether or not the stagnation of housing prices continues, or if it will cause the next crisis at all, remains to be seen. What 1 can state certainly is that the tendency toward crisis exists in the present.