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Get ready for the New Thatcherism
Anatole Kaletsky, the chief economic correspondent for The Times, warned on 10th September under the headline 'Hasty action on public spending would jeopardise economic recovery':
"For the Tories, a serious debate on fiscal strategy that moves beyond sensationalised headlines about imminent national bankruptcy would create both opportunities and pitfalls. The opportunity for the Tories would be to demonstrate that they have a coherent strategy for managing public services. The pitfall would be revealing that they still have no understanding of public expectations in Britain, nor of macroeconomics."
Kaletsky, who is also an associate editor of the newspaper, continued:
"To tighten fiscal policy immediately beyond the measures already announced in the last Budget could be a big mistake on the part of the Tories, since the recovery that is now only just starting is unlikely to have developed a self-sustaining momentum by next May or June.
"Indeed, every finance minister and central bank governor at last weekend’s G20 meeting agreed that 2010 would be too early to start reversing the macroeconomic stimulus programmes that have saved the global economy from a 1930s-style collapse. For the Tories to put themselves in a minority of one on this issue is perverse — not only because a major fiscal tightening next year could abort recovery, but also because there is almost no risk that investors will dump sterling or refuse to finance the British Government’s deficit at a time when other major economies are also running deficits that are almost as large."
How to account for such 'perversity' by the likely next prime minister and chancellor of Britain? Could it really be that they really have 'no understanding of macroeconomics'? Much as one would enjoy joining those who throw that accusation against the Tory leadership, there is a likelier, and far darker, explanation. Cameron and Osborne do not want - at least in the short term - an end to the recession. Rather, they would prefer unemployment and job insecurity to keep on rising.
Why? For two excellent reasons, from the strategic point of view of the Conservative leaders. The first is that mass unemployment- as anyone with even a faint grasp of economics knows- helps to keep down or even reduce wages, and therefore increases the profits of business owners.
The second is that a context of high unemployment, by further reducing the power and confidence of the trade unions, will assist in minimising resistance to the wider Conservative programme. That is, to complete the job which Margaret Thatcher left only half-finished- the final destruction of the social gains which were made by working class people in the post-WW2 period; along with reversing those improvements which have been made under New Labour.
New Labour isn't working
Improvements for working class people under New Labour? That is of course a controversial, even shocking statement. New Labour policy, known to its ideological adherents as the 'Third Way', was a practical and philosophical retreat from the social-democratic policy of previous Labour Party governments. That previous social-democratic policy- whose great achievements included the nationalisation of much of industry, the provision of universal public services and welfare benefits, very low levels of unemployment, massive improvements in workers' wages and working conditions, and a progressive reduction in the gap between rich and poor- was already a retreat from the full-blooded socialism that was espoused in the old 'Clause 4', which was deleted from the Labour Party constitution in 1995.
Under Blair and Brown, the programme of privatisation and marketisation of the public sector, and the de-regulation of the private sector, (which had already been driven a long way by its Thatcherite originators) was continued, though at a slower rate; yet, in contrast to Conservative policies, a proportion of Britain's increased wealth- which was supposedly created by these neo-liberal economic reforms- was redistributed to the masses via the state through steep increases in public spending, particularly on health and education, the introduction of a minimum wage, and higher welfare benefits in the guise of 'tax credits'. Investment in the public sector infrastructure, which had been reduced almost to zero under Margaret Thatcher and John Major, was re-commenced.
So from the late 1990s, unemployment declined as hundreds of thousands of new public sector jobs were created; the desperate poverty and homelessness which had resulted in the phenomenon of 'cardboard cities' in our main urban areas was alleviated; and many crumbling and neglected schools and hospitals were replaced by shiny new buildings- albeit that much of the construction work was financed through the PFI scam.
It was possible to do all this, while helping the rich to carry on getting even richer, so long as Britain could remain a beneficiary of globalisation, and until the economic crisis exposed the fictitious nature of most of the 'wealth' produced in the financial sector.
But in the end, the Third Way was a dead end. Having eventually unseated his more glamorous colleague and rival Tony Blair- who must be thankful that he was pushed out while the going was still good- Gordon Brown has nowhere to turn, and those who are prepared to turn to him are as willing to bury him as to praise him.
Historical experience- that of the late 1970s and the '80s- has some relevance to our present debacle. Having decided in the circumstances of the economic crisis of the mid-to-late 1970s to implement an IMF-directed cuts programme, and further alienating the trade unions by imposing 'pay restraint', the last 'Old Labour' government, headed by Prime Minister James Callaghan, was beleagured on all sides and duly lost the May 1979 general election.
Margaret Thatcher's most effective weapon in that election campaign was a poster depicting an unemployment queue, under the slogan 'Labour isn't working'. Unemployment in the last months of the Callaghan administration was approximately 1.4 million; and after winning the election on that basis, Thatcher proceeded to implement fiscal and monetary policies which drove the unemployment figures up to 3.2 million.
Thatcherism redux
Surveying the isolated and divided ruins of the New Labour project, and assured that Britain's tenuous 'recovery' from the capitalist economic crisis is, so far, merely a recovery for the profits and bonuses of the rich and has not translated into a recovery for the majority of voters, Tory leader David Cameron approaches the 2010 general election in a calmer and more confident mood than that of his predecessors. With the active support of the privately owned media empires which have turned against the Labour Party leadership because it is no longer of any use to them, the Conservatives are succeeding in convincing people that the main problem is the expense of public enterprise rather than that of private enterprise.
On winning power, the Tories will not feel that they are bound by any promises that they have made in order to ensure their election. As is normal for a newly-encumbent right wing party, they will declare that they have discovered that the 'black hole in the public finances' is much worse than even they had expected- and therefore requires far more radical measures than those they espoused before the people gave them their vote.
Nevertheless, elements of the actual Tory programme can be ascertained from the recommendations of Conservative and business think tanks, the discussions on Conservative Party blogs, off-message statements by leading Conservatives, and by looking at what the last Conservative government had intended to implement had it not lost the 1997 election.
The hard-core capitalist right wing are salivating at the prospect of the abolition of child benefit and the education maintennance allowance, a massive cut in child tax credits, scrapping the school building programme, ending subsidies for public transport, privatising the remaining publicly-owned sectors, cutting the real wages of public sector workers and abolishing their pension schemes; and any attempt by the trade unions to resist will be made illegal.
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From the Daily Mail: a list of proposed public expenditure cuts, totalling £50 billion. The Conservative record indicates that the reductions in military spending on this list are purely notional- a future Tory government would increase expenditure on warfare at the expense of social programmes. |
Everything that has been won by working class people since 1945, everything that remains of that compromise between workers and capitalists which made Britain into a civilised country even for its poorest citizens, is under threat.
Margaret Thatcher will not live to see the completion of her dream of the abolition of 'society'. Will we? That depends, in part, on our recognition of what is at stake in the coming general election and the struggles that will follow.