On the causes of Britain’s cost of living crisis, we must take a step back and consider some recent history.
The present crisis didn’t come from nowhere. It’s rooted in the global capitalist crisis of overproduction, and based most recently on decades of rampant money printing, which have steadily reduced the value of the pound, cutting not just real wages, but social wages too – the provision of public services worsens due to the resulting measures of austerity.
Based on this, Comrade Joti explains how Kwarteng’s budget fails to address any fundamental concerns. The decision to drop the national insurance hike is one small bone thrown to the workers in an attempt to maintain social peace and distract us from the budget’s main measures, which benefit the monopolists.
Touching on Nato’s proxy war against Russia, Comrade Joti points out that the conflict was launched with the intent of maximising profit; ie, by incurring some short-term pain in military expenditure and sanctions, Nato would gain in the long term via the looting of the Russian economy. (See The Drive to War Against Russia and China.)
Put into perspective, the purpose of this budget is clear. Maintain the facade of ‘saving’ the economy for everyone, whilst peeling back the remaining rights and regulations in place to protect workers. This is what the capitalists mean when they talk about being ‘more competitive’, ‘more flexible’, ‘light-touch’, etc, all of which are euphemisms for giving greater scope to capital to extract maximum profit by minimising wages – direct or indirect – for workers.
Proletarian editorial column on the budget
Caught between the rock of runaway inflation and the hard place of their commitment to war in Ukraine, Liz Truss and her chancellor Kwasi Kwarteng’s attempt to ‘reassure’ investors and workers alike that they ‘have a plan’ to get everything ‘under control’ has spectacularly backfired.
The problem, of course, is that no-one in government has the ability to do any of the things that might actually lead to improved conditions, either for workers or for businesses.
In the interests of trying to shore up profits, Kwarteng announced measures such as ‘light-touch’ economic zones (where planning, H&S and environmental regulations, and workers’ rights will be torn up in the interests of maximising returns), ‘slashing red tape’ (ditto), and lowering corporation tax. That is: facilitating corporations to pocket high dividends while the taxpayer picks up the bill for subsidising below-poverty wages, rectifying environmental fallout and degraded infrastructure, and funding vital services.
In aid of keeping London as the preferred base for finance capital, the chancellor added in such incentives as lifting the cap on bankers’ bonuses and scrapping the top rate of income tax. (A huge proportion of Britain’s GDP comes via the imperialist looting and money laundering that is routed via institutions in the City of London.)
Alongside these measures to ‘grow the economy’ by ‘encouraging investment’ (ie, facilitating maximum exploitation of the workforce and maximum subsidy by the taxpayer), Kwarteng felt impelled to include measures that were aimed at keeping the lid on rising social unrest. These were the ‘unfunded’ promises that sent international money markets into a tailspin and caused hedge fund managers to start betting heavily against the pound: the decision to drop the deeply unpopular National Insurance hike, which disproportionately hits poorer workers, and a promise to cap energy bills, subsidising whatever the providers are charging that goes above the present (already extortionate) rate.
Of course, such huge pledges could only be paid for by borrowing and/or by more money printing – both of which would ultimately fuel the inflation and debt crises in which Britain is currently mired. A little-discussed aspect of the energy cap is the very large subsidy being promised to businesses of all sizes (their energy bills will also be capped), alongside the gargantuan pay-out to the energy monopolies.
Of course, any sane government interested in the needs of its people would simply take over the entire energy sector and run it according to a plan so as to make sure that all workers could access enough energy at a price they could afford, without the need to provide dividends to shareholders.
Meanwhile, the (formerly steady and now precipitous) drop in the value of sterling will make imported goods (including energy) more expensive, fuelling inflation once more. And the money-printing that the Bank of England was forced into to try to stabilise the pound will fuel it still further.
It is, after all, the trillions of pounds that have been printed to bail out banks and corporations since 2008 that have led to the steady devaluation of the currency that has now become evident in rampant and runaway inflation.
Ultimately, the root cause of the country’s economic woes is the global capitalist crisis of overproduction, which no capitalist has any power to solve without indulging in an orgy of destruction – of men as well as of unsaleable goods.
The drive to war is ultimately the imperialists’ only hope of saving their system for another decade or two – by crushing rival powers and conquering independent territories, while destroying enough accumulated products and productive forces to create ‘demand’ in the form of a contracts to rebuild what they themselves have torn down.
So far, though, the war in Ukraine has been spectacularly backfiring. Instead of bringing the Russian economy to its knees and the Russian people onto the streets to bring down their government and allow the monopolists free reign to loot Russian resources at rock-bottom prices, the imperialists’ sanctions have only aggravated their own supply and inflation problems.
Unfortunately, since our government serves the monopoly capitalist class and not the workers, we can expect its war rhetoric to go up rather than down in response to the increased difficulties of our rulers. As far as the imperialists are concerned, their main hope of salvation still lies in destroying and then looting first Russia and then China.
The only real and permanent way out of this downward spiral of poverty, crisis and war is for humanity to abolish entirely the irrational, parasitic and murderous system of capitalist commodity production and replace it with a planned economy and working-class rule – a socialist state whose primary aim is satisfying the wants and taking care of the wellbeing of its workers.