Wednesday, April 25, 2012

Why the Ruling Class Loves a Good Recession

Marx and Engels characterized the "executive of the modern state" as being "but a committee for managing the common affairs of the whole bourgeoisie". This can easily be seen in the cabinet structure, where ministers with different responsibilities argue for 'their' own area of responsibility. But ultimately it is the Prime Minister who must make the casting vote, and it is the finance minister - or chancellor in the UK - who holds the purse strings. The ruling class thrives on economic growth, and yet since their rise to power Prime Minister David Cameron and Chancellor George Osborne have deliberately pursued policies which have led to today's inevitable revelation that the UK economy is shrinking again. How can this be accounted for?

This morning, the Office for National Statistics announced that the UK was officially back in recession, having experienced negative growth for two consecutive quarters. This is being called a 'double dip', because it is the second recession since the onset of the economic crisis in 2008, and the country has had no significant growth since then. Commentators who only yesterday were predicting growth of around 0.2% growth, are pronouncing themselves shocked at a 0.2% reversal. And at Prime Minister's Questions this afternoon, Cameron himself declared the figures were "very, very disappointing".

But for all their mendacity and corruption, leading politicians are rarely stupid. Since John Maynard Keynes, the bourgeois have at least theoretically understood that increases - rather than reductions - in government spending stimulate a stagnant economy. When PMs and Chancellors since then have refused to do this, it has been because they've had an eye on the longer term picture, and have focused on reshaping the economic landscape. But no, that's a polite way of putting it. I really mean taking a sledgehammer to working class living standards.

Think what has happened since the official end of the last recession, at the end of 2009. Unemployment has risen from 2.5 million to 2.65 million. Nevertheless, the scale of even this rise is masked by the huge increase in underemployment, due to employers cutting hours. But even hourly pay rates have dramatically failed to keep pace with inflation, leaving working people several percentage points worse off than they were. And generally, when they have been in work, they've had to work much harder, as they cover for a combination of lost hours, lost colleagues, and demands for productivity increases.

For all the talk of "a loss of confidence", it's time to get down to brass tacks. Question: where does profit come from? Answer: from the unpaid surplus labour of the worker. But this profit can only be realised when there is someone to buy the commodity or service being offered. As the unemployment and underemployment figures since 2009 illustrate, the growth since then has not resulted from any great increase in sales. On the contrary, it was the economic representation of sweat wrung from the working class.

The plain truth is that when people have less money to spend, they spend less money, and less profit is able to be realised, so companies start laying more people off. The government's spending cuts have exacerbated this, especially in construction, which is plummeting despite the coming Olympics. Such is the magnitude of the current crisis, the economy is on the verge of entering a hellish downward spiral. Indeed, despite the opportunistic Labour calls for a "Plan B", it will.

The politicians - and behind them the international banksters - are hellbent on using the economic crisis to reduce our living standards to those that existed before the working class made huge gains in the aftermath of World War Two. They figure that a recession makes this easier, as workers are more likely to put up with their lot, for fear of losing their jobs, their homes, and so on. However, an elastic band can only be stretched so far before it snaps back, and that day is fast approaching.
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