The government’s pre-election budget has carefully evaded setting out Labour’s plans for trying to haul Britain out of recession and avoiding the devastation with which the economic crisis is threatening every capitalist country, especially those which, like Britain, are generally less competitive than newer players on the world market such as the BRIC countries (Brazil, Russia, India and China).
To try to hold off the day when British imperialism has to succumb to the status of a minor power, the government has been borrowing billions so that British imperialist concerns can survive.
Chris Giles explains: “The surge in borrowing will almost triple the debt owed by the British government from £527bn in 2007-08 to a projected £1,400bn in 2014-15. The government plans to borrow more in four years … than in the whole history of British governments since William the Conqueror. The level of public sector net debt by the end of the next parliament is the equivalent of £23,000 per person. So long as government borrowing costs remain under control, every person in Britain will be paying about £1,000 a year in tax to service it, before any money is spent on schools, hospitals and protecting the vulnerable.” (‘Pain deferred until the polls close’, Financial Times, 25 March 2010)
Although this level of borrowing is eye-wateringly high, it still supposes that the government – Labour or Tory – is going to be able to make drastic cuts in public expenditure every year, whilst at the same time substantially increasing tax revenue, thereby reducing the deficit from some 12 percent of national income down to 5.2 percent by 2014. “The unavoidable costs of debt interest” will require “cuts of about 10 percent in real terms over the three years after April 2011 and then more after 2014”. (Ibid)
Whichever bourgeois government comes into power as a result of the next election, it will have to face the dilemma that if it succeeds in reducing the deficit, it will at the same time throw many people out of work, and thus drastically reduce demand in the home market, threatening all prospect of recovery, triggering spiralling unemployment alongside plunging living standards, and inevitably giving rise to the kind of social unrest that could threaten the bourgeois order.
If it does not succeed in reducing the deficit, it is only a matter of time before it becomes unable to pay the interest on its debt, is bankrupted, and finds itself unable to maintain public spending anyway. Whichever course it chooses will be the ‘wrong’ course, and the government will be blamed, although there is no ‘right’ course – other than the overthrow of capitalism – which will never be on the agenda of a bourgeois government!
This is the absurdity of the capitalist system. While productivity is higher than it has ever been in the history of humanity, the working class is condemned to unemployment and barbaric cuts in living standards and public services because it has produced too much of what it desperately needs but can’t afford to pay for!
Meanwhile, while publicly vying to denounce as erroneous each other’s economic policies, none of the parties is in a position to tell the truth about the extent of the cuts they plan to make if they get elected, for the simple reason that if they did, nobody would vote for them!