after the general election, what next?

Mark Ellingsen gave an introduction to a session at the recent Global Commune day school in Edinburgh:

If you ask people what they expect after the general election most people will answer public sector cuts. These will indeed dominate the coming weeks and months, but it is useful to step back and take stock of where we are.

We are still in the middle of an economic crisis which has yet to be resolved, a crisis which is the most serious since the Second World War. The continuing weakness and fragility of the global economy is still a major problem. The financial crash in the autumn of 2008 was an outcome of the heavy investment in financial assets some of which, such as the subprime mortgage market, were dependent on an unsustainable expansion of private debt. The financial mayhem which followed threatened to plunge the world into a second global depression, the like of which had not been seen since the 1930s. It was only the massive intervention of governments through financial bailouts, nationalisations and the injection of money into the economy which averted such a catastrophe.

However, this merely shifted the burden of debt from the private to the state sector which, coupled with the decline in tax revenues and increase in welfare spending, has meant a large increase in state indebtedness. However, this has given rise to an immediate problem of lenders lacking confidence that states won’t be able to pay their debts. So, from the perspective of the ruling class, the cuts in public spending are a damage limitation exercise to contain this fear, nothing more. But this is not the only problem unnerving the markets. Stock markets have also fallen because of the fear that reducing state indebtedness might trigger a second dip in the recession as unemployment rises and state spending declines.

Currently, there are three immediate problems with the global economy: a) the Eurozone crisis which is caught between state indebtedness, particularly Greece, Spain and Portugal but also threatening Ireland and Italy, and deflationary policies, either of which could end in disaster for the EU. Interestingly, Japan too has been warned recently that its debt to GDP ration which stands at 200% is too high; b) the weakening of the recovery in the United States which has recently has seen increase in unemployment against all expectations from the economic pundits; c) a tightening of credit in China as the government worries about a property speculation bubble, leading to fears that this will starve investors of the credit needed to maintain its economic growth.

Economic policy is being driven by fear and panic without any really clear sighted strategy to deal with the underlying problems in the global economy. There are two fundamental problems which up to now have been rather intractable. The first problem is the decline in profitability in the non-financial economy since the late 1970s. Apparently the return on capital investment was around 15% during the economic boom in the 1950s, 10% in the 1980s, and just 5% currently [1].

As it was pointed out from the floor, only a massive destruction of capital, by in effect destroying competition and restoring profitability to the surviving firms, has a chance of resolving the profitability problem. However, the last time this occurred on any sufficient scale was the literal destruction of economies during the Second World War, in particular those of Germany and Japan. The second problem is the global imbalances in trade particularly between the United States with a large current account deficit due to its over-reliance on imports to fuel a consumer-driven economic growth and China and Germany which accrue large surpluses through their exports to the rest of the world, particularly the United States. The debt accumulated in the United States drives the global economy and as we have now seen this is unsustainable in the long run [2].

This is the rather uncertain and fraught economic context which faces the incoming Conservative-Liberal Democrat government. However, it could be argued that the coalition’s legitimacy is also rather questionable in the eyes of voters, particularly those Liberal Democrat voters who saw the party as progressive and in opposition to the Tories. This legitimacy is likely to be tested as the coalition push through public expenditure cuts and austerity measures not seen since the 1970s. This is a high risk strategy which may appease markets in the short term but risks turning a recession into a full scale depression, particularly if the other governments follow suit which is what we are currently seeing across Europe. What is more, is that if these cuts are strongly resisted it could cause a crisis within the Liberal Democrats as its left-wing baulk at the prospect of class conflict and a rise in destitution and inequality. While we have not seen a change in the political landscape, as the media would like us to believe, it is certainly not business as usual.

One question which very few mainstream commentators dare ask is: what if there is a prolonged global recession? This is a possibility and one which may have to be faced by both the Left and the Right. Interestingly, this coalition government seems to believe that continuing the beggar-my-neighbour policies of neo-liberalism, which had proved completely inadequate to restoring profitability or addressing the global imbalances in trade, is the way forward. The privatisation of the Post Office is back on the agenda – yet another desperate attempt to throw some scraps of profit to the feed the private sector. As ever, workers will take the hit with lower wages and capitalism becomes ever more reliant on workers taking on private debt to shore up a consumer driven economy. One wonders whether their economic policies are really based on hope and a prayer.

With regard to the Left, we are likely to see a shift to the Left in the Labour Party in terms of rhetoric and it is quite possible that opinion polls will show a rise in support for the party, as recently occurred with the Socialist Party in France, and ironically with PASOK in Greece. The far Left is still marginal electorally both in the Britain and in the rest of Europe, although Die Linke in Germany and the Left Bloc in Portugal have done relatively well. The far Left in Britain (SSP, TUSC, Respect) performed dismally in the general election which puts into question the whole strategy of trying to build some electoral presence, at least without some massive increase of workers participating in Left political parties outside of the traditional social democratic and labour parties.

So where does this leave communist politics? Obviously we should be involved in the anti-cuts campaigns but how do we promote a politics which moves us towards communism rather than just trying to ensure that workers don’t take the brunt of the economic crisis, if that’s even possible? Resistance to making us pay for the economic crisis is absolutely essential but does it really get us anywhere if it merely postpones the day of reckoning if capital cannot restore its profitability without massive economic destruction? Most of the Left are understandably gearing up for a fight over the cuts but they seem extremely reluctant to raise the banner calling for the abolition of wage labour and the breaking of the hold of capital on our lives. Is that because they are afraid of being rejected by workers? That somehow workers won’t understand?

Surely it is better to tell it as it is and let workers decide whether they accept the analysis or reject it. After all it is only workers who can emancipate themselves from the tyranny of capital; their destiny lies in their own hands not of those of the party or a select band who understand what’s going on. Communists must tell it as it is and not be afraid of rejection – at the very least they will have engaged with workers openly and honestly. The key question for me is what strategy will bring in more people prepared to walk behind the banner which proclaims in favour of the abolition of wage labour, without which any attempt to transcend capitalism is doomed to failure. How do we move from this abstract demand to a concrete practice which gives it a political reality? [3]

[1] I can’t remember where I got these figures from but I think it was from a publication of the SWP citing a commentator in the Financial Times. However, the evidence for the decline in profitability is generally accepted, although the extent of the decline is contested.

[2] I didn’t mention this in my talk but the imbalance in world trade is as big a problem as profitability in its potential to destabilise the global economy.

[3] This wasn’t included in the talk although it was in the original notes. I decided to leave it off due to pressures of time but I think it’s actually fundamental to a consideration as to what it means to pursue a communist politics.