Austerity & the Economic Crisis of British Imperialism

[This speech was delivered at a meeting in Consett on 01/09/15. It is an analysis of the fundamental political purpose of austerity – something which I have already briefly detailed here. It is intended to communicate only basic points of a Marxist approach to austerity & is by no means comprehensive. The most glaring omission is that of an explicit definition of Imperialism. The speech is primarily geared toward explaining Marxism at a basic level, therefore, certain aspects have necessarily not been communicated. The “exercises” described in the below text were posed to the meeting. – JRB.]

I want to begin by making it clear that this session is by no means comprehensive. I want to provide every1 here with a basic understanding of austerity – its political meaning & its relationship to Capitalism, Imperialism & crisis. In order to do so, within any reasonable time frame, I have resorted to simplified, generalised explanations at points. If there are any points covered tonight which cannot be discussed sufficiently, I would propose we return to them in future meetings.

If there is 1 thing that I’m certain we’ll all agree on, it is that we are opposed to the human consequence of austerity. The cuts are barbaric. Statistics released by the DWP after considerable pressure have revealed the extent of this barbarity in relation to disability benefit. Nearly 90 people are dying every month, after being declared fit for work. (Patrick Butler, ‘Thousands have died after being found fit for work, DWP figures show‘, The Guardian (27 August, 2015).) Homelessness is rising. Between 2013 & 2014, 12,000 people were made homeless. Last year, homelessness amongst young LGBT+ people rose by 160%. (Butler, ‘Welfare reforms are the main cause homelessness in England, study finds‘, The Guardian (4 February, 2015).) Suicide rates are disturbingly high, accounting for 24% of deaths for men between 20 & 34 years of age in 2013. In impoverished areas this rate is even higher – the North East of England having the highest suicide rate in the country. (Caroline Davies, ‘Number of suicides in UK increases, with male rate highest since 2001‘, The Guardian (19 February, 2015).)

In response to these appalling statistics, the Conservative Party has declared more cuts, deeper cuts. £12bn will be cut from spending on benefits every year. The poorest 10% of the population stand to lose £800 per year – 7% of their net income. Unemployed youth – under 21 – will no longer be entitled to housing benefit. More & deeper cuts are planned to sickness benefits. (Robert Clough, ‘A naked act of class war‘, Fight Racism! Fight Imperialism! 246 (August/September, 2015).) The Labour Party abstained on the last welfare bill, giving it their tacit approval. Less than a ¼ of Labour MPs voted against the bill. (George Eaton, ‘Welfare bill passed as 48 Labour MPs defy leadership and vote against‘, New Statesman (20 July, 2015).)

We can agree. We are opposed to austerity & we demand that it end. In order to make this demand win out, in order to stop austerity, we must understand why austerity is happening. Why? It is impossible to defeat an enemy you do not understand.

Exercise 1: Why is austerity happening? (Answer anonymously)

In order to understand this, we need to take a step back.

I am a Marxist-Leninist. As such, I believe that in order to understand the politics of the present, it is necessary to understand history. In a very real way, we are defined by that which has come before us.

We live in an historical epoch – the epoch of Imperialist Capitalism. An historical epoch is defined by general relations, by the relationship between classes of human beings. Put simply, an historical epoch is defined by the economic & political relationships between different groupings of people. In Marx’s words: ‘The history of all hitherto existing society is the history of class struggles.’ (Karl Marx & Friedrich Engels, The Communist Manifesto (February, 1848).)

Under Capitalism there are ruling-classes & working-classes. In a generalised sense, Capitalism is defined by the struggle between the bourgeoisie & the proletariat. These are scientific terms. They mean very specific things.

Exercise 2: What is meant by bourgeoisie? What is meant by proletariat? (Discuss in small groups, then feedback)

1stly, the bourgeoisie are the ruling-class in Capitalist society. The proletariat are the working-class. This is their political relationship. The bourgeoisie are the oppressor class & the proletariat are the oppressed. Iain Duncan Smith is bourgeois & we are proletarian.

2ndly, we must understand the economic relationship between these 2 classes in order to understand their political relationship.

What is central to understanding this relationship is what Marxists call the means of production. The means of production must be broken down into 3 categories: labour, tools (or the instruments of production) & raw materials. Labour is work; it is human activity. The instruments of production can, in essence, be described as those objects which produce – factories, machines, farming equipment etc. Raw materials are the subject of this – those objects which are acted upon: coal, stone, wood, steel etc. They are the substances, provided by Nature, which human beings use to create objects. The bourgeoisie are the Capitalist class. They are that class which owns Capital. Capital can be equated to the means of production. In other words, the bourgeoisie are the owners of the means of production. They own the instruments of production & raw materials. They employ labour. Those parts of Capital which the bourgeoisie own in a definite sense – tools & raw materials – are economically described as constant Capital.

Labour, that aspect of Capital employed by the bourgeoisie, is economically expressed as variable Capital. This is the active portion of Capital. Without it, Capitalist production would not function. Bluntly: there would be no1 to work the machines.

The proletariat own nothing, save for themselves. As such, they are employed by the Capitalist class to provide their labour. The proletariat, therefore, sells their labour-power to the Capitalist class. This can take many forms. Most commonly it takes the form of waged-labour.

At 1st glance, this relationship could appear to be even. The proletariat is driven towards selling their labour in order to secure their bread; the bourgeoisie need the proletariat in order to work their machines. However, the bourgeoisie – as the ruling-class under Capitalism – exploits the proletariat. They steal from them.

Exercise 3: How do the bourgeoisie exploit the proletariat? (Discuss in small groups, then feedback)

As waged-labour is the most common form of exploitation under Capitalism, we shall use it as an example. The example is abstract, it is not a description of an actual person or set of people. Rather, it should be viewed as an illustration.

The Capitalist employs workers, paying them in wages. This is the same as saying that the proletariat sells their labour-power. The workers create objects – commodities – for the Capitalist to sell. If all is working well & good for this particular Capitalist, they sell these goods at a profit.

The root of exploitation can be found by gaining an understanding of profit. If we were to assume an equal exchange between the Capitalist & their workers, profit would necessarily be generated from outside of this labour process. In point of fact, the only immediately conceivable way to generate profit would be for the Capitalist to sell the commodities created for them by their workers at a price above their value.

In Capital, Marx demonstrates that the amount commodities are sold for is based upon 1 thing alone: the amount of human labour it has taken to produce them. He arrives at this conclusion by analysing the 2 forms of value present in a commodity: use-value & exchange-value.

Use-value refers to the actual purpose of a commodity in human life – its usefulness. A glass holds water, human beings sit in chairs, we put things on tables – these are all use-values. They are all different.

Exchange-value refers to the process of the exchange of commodities. So much milk is worth a certain amount of bread, a lamp is worth 2 chickens, my shoes are worth a caravan – these are exchange-values. They are determined upon a commonality. My shoes must be worth the same as a caravan for a reason.

It is transparent that use-values cannot be this commonality; they are all different. My shoes and a caravan do very different things. They cannot be worth the same based upon their function. The only aspect common to all commodities is that they are produced. They are the result of human labour. This must, therefore, be the basis for exchange.

A commodity’s value is value is, therefore, determined by the amount of socially necessary labour that has gone into its creation. The value is set by the average of human labour needed to create such & such a commodity. The exploitation that is at the root of Capitalist economic organisation can now be explained.

In Value, Price and Profit, Marx writes that, ‘The value of a commodity is determined by the total quantity of labour contained in it. But part of that quantity of labour is realised in a value for which an equivalent has been paid in the form of wages; part of it is realised in a value for which NO equivalent has been paid. Part of the labour contained in the commodity is paid labour; part is unpaid labour. By selling, therefore, the commodity at its value […] the capitalist must necessarily sell it at a profit.’ (Marx, Value, Price and Profit (1898), p.21. Italics in original.) Labour is the sole source of human wealth. The basis of profit is exploitation. Profit is economically expressed as surplus value.

You might, quite reasonably, be wondering what any of this has to do with austerity by now. Does anybody have any thoughts?

Exercise 4: What does this have to do with austerity? (Whole group discussion)

The sole purpose of Capital is its own expansion. The money gathered by Capitalists as surplus value is reinvested into more production, with the aim of gathering more surplus. It would seem fairly obvious to us that infinite expansion is, in fact, impossible. Sooner or later, the Capitalist will come across definite limitations & a decline in their profits. This is called economic crisis.

When crisis occurs, there remain certain options to the Capitalist class: speculation in the form of credit, expansion into new markets, war. Then there is the other option, the option that we are seeing now in the reality of our lives. This option is depreciate the value of labour – to lower wages. If the proportion of Capital spent on variable Capital (wages) is lower, but productive output remains the same, then the amount of surplus (profit) will increase. Increased exploitation leads to greater profits.

Austerity is a political tactic to enable this. It is designed to create conditions where wages can be lowered, with little to no resistance.  

In order to explain this I must, 1stly, explain the concept of precarity. To do this, I will be looking into 1 cuts which has captured the public imagination & aroused a certain degree of resistance: the Bedroom Tax. We are going to look at the political meaning of this in specific in order to understand how it contributes to the general nature of austerity as an act of class war.

Exercise 5: What is the political point of the Bedroom Tax? (Discuss in small groups, then feedback)

1 April, 2013: the Bedroom Tax is brought in. Housing benefit claimants lose 14% of their benefit if the government deems that they are “under occupying” their homes by 1 bedroom. If they are deemed to have 2 or more spare bedrooms they lose 25% of their benefit. Under this legislation, children of the opposite sex are expected to share a bedroom until the age of 10. If they are the same gender, they must share a bedroom until they are 16. There are no exemptions for shared custody of a child. There are no exemptions for medical reasons. (Bromford, ‘Bedroom Tax – The Facts‘, Bromford website.) The rent must be paid & it must be paid on time. Many tenants receive threats of eviction after even 1 missed payment. (James R. Bell in FRFInortheast, ‘27 July Bedroom Tax Protest – Newcastle‘, FRFInortheast YouTube channel (30 July, 2013).)

1 of the interesting things about the Bedroom Tax is that it affects a relatively small percentile of the population in comparison with other cuts. By January, 2014, 5,117 households were hit by the Bedroom Tax in Newcastle. (Bell, ‘Fighting the bedroom tax in Newcastle‘, Fight Racism! Fight Imperialism! 237 (February/March, 2013).) Compared to the 7629 sanctions given to Newcastle based JSA claimants in the 3 months prior to this, the figure is quite small. (Department of Work and Pensions, ‘Jobseeker’s Allowance and Employment and Support Allowance sanctions: decisions made to December 2013‘, GOV.UK website (14 May, 2014).) However, these claimants are hit hard. When I was campaigning & writing against the Bedroom Tax – as late as 2014 – I quoted a resident explaining how the Bedroom Tax was affecting him. He said, ‘I pay to feed my son every day and the rest of my money goes on rent. I have scurvy because I can’t afford food for myself.’ (Bell, ‘Bedroom Tax – Newcastle council – cruel and incompetent‘, Fight Racism! Fight Imperialism! 238 (April/May, 2014).) A quick glance at any statistics shows that he isn’t alone.

So, what is the point of the Bedroom Tax? I would argue that there are 2, specific, political goals implicit within the policy:

  • To force tenants into the private sector;
  • To create a mobile, roaming workforce.

The Bedroom Tax is designed to force people out of social housing. The viscous, unrelenting manner of its implementation makes this clear. Many tenants, complaining to their local council or housing association, have been told simply that they should look for new housing – either in the private sector or with less bedrooms. 1 bedroomed housing stock in council homes is miserably thin on the ground, essentially ruling out any possibility of moving into social homes with less bedrooms. The message is clear: go private, or else.

Marx lists rent as 1 form of surplus value in Value, Price and Profit. He says that the ‘monopoly of land enables the landlord to take one part of that surplus value, under the name of rent‘. (Marx, p.21. Italics in original.) Rent is, therefore, a manner of dividing surplus value amongst different individual Capitalists, not simply retained by industrialists or the service industry. As a class, the bourgeoisie must retain a monopoly on all private property – they must be funded to do so.

The Bedroom Tax, therefore, is a way of offering further state subsidy to those Capitalists possessed of private housing. Many proletarians are forced into private accommodation, their conditions of life severely worsened & the landlords of the bourgeoisie experience a swell in their income. The effect of this is doubled when we consider the impact upon inflation. The exodus of tenants from social housing has contributed in the creation of an artificial demand for private housing stock. The relatively low amount of housing stock allows for a steady inflation of value in regards to housing. Housing prices & rent go up, further increasing the amount of surplus scraped up by the bourgeois landlords. The effect is, in fact, so pronounced that the artificially inflated price of housing has become a cornerstone in the myth of a recovering British economy. (See Bell, ‘Notes on the Crisis of Imperialism: The Thrust of Austerity in Britain‘, Notebook (16 January, 2015).)

The precarity of conditions created by the Bedroom Tax & by life in private housing serves the purpose of providing a workforce willing to move & easy to evict. The importance of this for the bourgeoisie cannot be understated. As we noted before, a principal way for the bourgeoisie to resolve their economic crisis is by expansion into new markets. If & when this occurs, they will quickly require a wave of unemployed workers to plunge into their new investment – wherever that may be located. The Bedroom Tax is a step towards the displacement required to create such a workforce.

I say again: austerity is a political tactic designed to allow for higher levels of exploitation & higher levels of profit. It achieves this by institutionalising economic precarity for the proletarian population, manufacturing want & need, creating poverty & the desperation that flows from it.

Austerity is economic terrorism.

In this period of history austerity is inherent to Imperialist British Capitalism. It strikes at the very root of Capitalist economics. All that is shown by the continuation of the crisis is that austerity has not been sufficiently brutal to resolve things in favour of the bourgeoisie. I said at the beginning of the meeting that we are agreed: we demand that austerity end. In order to achieve this, we too must strike at the heart of the matter. In order to prevent austerity, we must organise against the bourgeoisie: we must organise to destroy Imperialist British Capitalism.


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