Category: Economy

It is worth listening to what the ruling class is saying. Because often they display a greater level of class-consciousness than we do when analysing the economic and political crisis.

Take Bruno Le Maire for example. Mr Le Maire is the Economy and Finance Minister in Macon’s government in France. He appeared recently in an interview with Stephen Sackur on Hard Talk (BBC News Channel). His response to Sackur’s questions about the political turbulence in France was telling. Here is the quote (his English is good but there are some expressions he would have changed had he been speaking in his native tongue).

“We are all facing the same crisis, which is a social crisis, an economic crisis and also a political crisis. You have a large amount of people in the UK, in France, but also in Germany, in Spain and in Italy which are suffering from the globalisation; which had deeply the impression of being neglected, of being left out. We have to listen to those people.”

What Le Maire recognises here is that the break-up of the political status quo is driven not by political mistakes on the part of the ruling parties, but more profoundly by economic factors.

Personally I have trouble grasping what they mean by globalisation. It is a vague term. But what is clear is that the economies of most of the advanced capitalist countries are experiencing major problems. And the greatest one is that they have had to reduce the living standards of millions of people in an attempt to deal with the financial crisis of 2007-2008. In the UK the government approach has been termed ‘austerity’. Austerity is just a propaganda term to describe a series of attacks on the wages, living standards and social conditions of the working class. They like to call it austerity because it has a ring of religious abstinence. But economic austerity is not a choice we made. It is a policy of cuts and more cuts.

They like to pretend that austerity is over. Or it is about to be over. But only the other day they announced cuts to pensioner tax credit which would take effect in May 2019. Up to that date, pensioner couples on low income were eligible for a credit that amounted to about £100 per week. But from May if either of them is under pension age then no tax credit is available. So a 70 year old man with a 62 year old wife is not eligible. To soften the blow they are allowing couples who were in receipt of the credit before May to continue receiving it. But approximately 10,000 of the poorest pensioner couples who would have received this assistance will have it witheld.

That is just one small example of how the attacks on living standards are continuing. Public sector workers still have their pay rises held to below inflation. For many workers this has been a 2% cut in wages every year for the last 9 years.

Cuts to local government funding continue apace, with most councils having their funding cut by 60-70% since 2010. This has meant reductions in many of the services provided by local authorities.

According to Mr Le Maire many people have “the impression” of being neglected. It is not an impression. It is a fact of life for many of us. And it is the fundamental driving force behind the disgruntlement, anger and frustration that workers feel.

The media would like to tell us workers are angry because they feel the political class ignores them. They will tell you the anger is because we feel immigrants are making the country worse. But the real reason, the reason even Mr Le Maire acknowledges, is the economic impoverishment we are experiencing.

It is no use the ruling class telling us they are going to listen. It is deeds that count, not words. Listen all you like, but if the economic system over which you preside cannot provide a better standard of living for most of the population you have a big problem. And that problem is that capitalism is bankrupt. It has no future, and has only survived this long by creating massive amounts of made-up money in the form of quantitative easing.

The future of the working class does not lie in following the well-travelled political paths we have been pushed down by the ruling class. Our future involves taking ownership of the wealth we create, and taking political control by rejecting the false democracy of corrupt parliamentarianism in favour of a direct workers’ democracy.

That involves a social revolution, and the signs are out there that its time is coming.

Time to get ready for the big change.

The referendum campaign was cheapened and degraded by accusations of lies. And the most vociferous accusers were the Remain campaign.

We were repeatedly told the Leave campaign were telling lies. The Remain campaign, on the other hand, had so-called experts on their sides. International colleagues with their own vested interests to protect waded in with advice for the ignorant British working class, who were too stupid to understand the issues. The IMF, the ECB and IFS were all quoted as expert opinion.

One of the arguments the remain campaign promulgated is now coming home to roost. They told us that the UK would not be able to negotiate good terms for the “financial passporting” arrangements. These, we were told, were essential for the UK’s financial sector.

Today we read that 13,484 firms use financial passporting arrangements to transact business between the UK and the rest of the EU. But only 5,476 British firms are using passporting to sell into the EU. Far more firms, 8,008 to be precise, are using the device to sell financial products into the UK.

Well, Mr Osborne, Mr Cameron and the rest of the Remain campaign, you kept that very quiet, didn’t you? So there may in fact be more for the European financial services providers at stake than there is for the City of London.

The trouble with Marxism is that most of the people use that expression have not got a clue what he was about.

And I am not referring the common man or woman in the street who has misconceptions. No, the people who really misunderstand him (or misrepresent him, which is worse) are the educated class. People who should know better, but park their critical faculties when it comes to Marx, because “everybody knows” he got it all wrong.

The Economist magazine recently reviewed “Karl Marx: Greatness and Illusion” by Gareth Stedman Jones. The reviewer, who is not named in the article, makes statements so stunningly ignorant you would have to wonder if they actually worked for The Economist. Perhaps they just sent in a review on spec, written while sitting in their bedroom, between reading chapters of ‘Marx for Idiots’.

The erudite reviewer wrote:

“In one passage Marx set out to answer a puzzle. Changing levels of supply and demand explain why the price of a commodity goes up and down, but does not explain what the equilibrium price of that commodity is what it is.”

In one patronising clause, our erudite reviewer reveals he has never even tried to read Capital. Does this reviewer really think that, in the three volumes of Capital, Marx only set out to answer the question of what determines price in one single passage? One of the central questions for Adam Smith and David Ricardo was dealt with by Marx “in one passage”?!

Leaving that to one side, the reviewer then summarises Marx’s solution to the puzzle – the labour theory of value. The reviewer quotes Stedman Jones saying Marx “arbitrarily ruled out the relative desirability or utility of commodities” which, according to the reviewer, would strike most people as the obvious explanation.

So where Marx was trying to work out the intricacies of the most complex and non-intuitive economic system in human history, our reviewer is satisfied with an explanation that “would strike most people as … obvious”.

Dear reviewer, I for one am a person to whom the obvious explanation does not appear obvious at all. If we believe you, price is determined not by supply and demand, but by “the relative desirability or utility” of a commodity. Or perhaps by both. But not ultimately by the amount of socially necessary labour needed for its production.

So let us compare a strawberry and a motor car. Why does a strawberry cost less than a car? Because the car has more desirability or utility? What does that even mean? A strawberry tastes better than a car, so the strawberry should be more expensive because it has more taste utility. But a car drives faster than a strawberry, so the car should cost more because it has more speed utility. Really? You think that is obvious?

Or compare the car with something less edible; say an aircraft carrier. The car costs less than the aircraft carrier because the car has less desirability or utility.

So how do we know how desirable an aircraft carrier is, compared to a car? How do we compare the utility or desirability of commodities which are qualitatively different? Compare a ballpoint pen with a bunch of flowers. Or a blockbuster movie with a rucksack.

My advice to this reviewer is simple and almost as patronising as their review. Pick up a copy of Capital, and read Chapter One. Just Chapter One. The rest will probably be too complex for you. Just read chapter one.

Learn what he difference is between use value and exchange value. And if you grasp that basic concept, then tell me how the hell do you imagine it would EVER be possible to make a direct comparison between different use values (or “utility” as you like to say)?

Vicky Pryce has written an article for The Evening Standard setting out what she thinks will decide the forthcoming election. She is an economist. And she argues that “It’s still the economy, stupid”.

She makes a good point in her opening paragraph: “in reality voters are not stupid. What matters to them is the economy and jobs.” But in the very next sentence she lets you know that she is the economist who is clever enough to explain capitalist economics to us uneducated masses. She says; “Yet the information they are given on which to base their decisions is often biased, wrong, or wilfully distorts the truth. It is important that voters have the proper economic evidence: this is where the real battles will be fought.”

So here comes Vicky Pryce bringing “proper economic evidence” to the masses.

The problem I have with academic economists is that they purport to have “theories” which are based on some kind of scientific principles. But in fact their so-called science is nothing more than a description of what is in front of their eyes. No analysis. No attempt to go beyond superficial appearances and understand the reasons for the changes in world capitalism; growth, shrinkage, stagnation or even collapse. If they had anticipated the economic crash in 2008-2009, or had told us at the start of the recession that austerity measures would be counter-productive, they might have  a little credibility. But most of them simply run with the crowd.

Where was Vicky Pryce’s when her husband was a Liberal minister in the coalition government, and joined the Tories in enthusiastically cutting the wages and social support for working people? She would have been a more credible economic commentator if she had rushed to the printing presses to attack a theory that she is now convinced is counter-productive.. When she gave evidence to the Parliamentary Select Committee in 2013 on the Eurozone crisis she commented:

“We are having countries where GDP is declining, like in Greece for the sixth year running, and loads of other countries. Of course, we are forecasting growth possibly to resume next year but perhaps not, so there will be more declines in some of the really big countries, including of course France, Italy and Spain.”

That’s what impresses me. We are forecasting growth to resume next year, then IMMEDIATELY she adds “but perhaps not”. There’s a really useful forecast. A few years later and we know what that forecast was worth: less than the paper it was recorded on in Hansard.

So what has Vicky got to tell us about the electorate and economics. Apparently the main issue is the deficit. “At the centre of the issue are policies aimed at eliminating the UK’s budget deficit, currently around five per cent of GDP.” That’s at the centre of the issue. That is that what the electorate genuinely feels strongly about.

In the last 10 years total government debt (i.e. all government debt minus its liquid assets) has more than doubled from less than £500 bn in 2003 to approximately £1.2 trn in 2013. In the same period total debt has also more than doubled as a percentage of GDP from less than 40% to 90%. The reasons for the sudden increase in debt do not need to be considered by our learned Vicky. They are not relevant to her message.

And her message is very straightforward. The politicians tell us we have to reduce the deficit. Therefore we have to reduce the deficit. Not very scientific, Vicky. Perhaps you could preface your conclusion with the phrase “economic theory tells us that …” and then we will definitely be convinced. Vicky is simply buying in to the right-wing cuts programme (euphemistically called “austerity” in the hope we will not realise what they are doing) which George Osborne and his Liberal cronies have been so enthusiastically espousing since the last general election.

Then later in the same article she says: “But again the evidence would suggest that there is nothing sacrosanct about a balanced budget — and nothing sacrosanct about when to reach it, especially if interest rates for government borrowing remain low.” I am afraid all this economic theory and evidence is confusing me, Vicky. One minute we all have to knuckle down and put up with the cuts Osborne, Danny Alexander, Vince Cable, Ed Balls and Miliband unanimously agree we have to suffer. The next minute “the evidence” suggests we do not.

Meanwhile we look at Greece and we see an increasing number of working class people attracted to the Syriza programme. Clearly there are economists with theories different from Vicky Pryce. The academic economists in Syriza, university trained and qualified, seem to think writing off half of Greece’s debt would be good economic policy. So too does the free-trade espousing Economist magazine.

So stop parading your opinion as science, Vicky.

Working people across Europe are not stupid. We know that ‘austerity’ means forcing  ordinary people to pay for the financial crisis in the financial sector that they did not create.

It is time for working people across Europe to stand up and say the debts incurred by our capitalist leaders are not our debts. We repudiate them. Take over the banks, finance houses and insurance institutions in the name of the people, and put them under workers’ democratic control.

Our assets should be used for our benefit, not for the protection of the wealth and privilege of the few.