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Review: From Boom to Bust: The capitalist crisis and how to beat it

A Socialist Resistance pamphlet reviewed by Raphie De Santos

Socialist Resistance’s new pamphlet “From Boom to Bust: The capitalist crisis and how to beat it” draws on the writings and analysis of its supporters covering economics, feminism, eco-socialism and anti-fascism to set the current crisis as a multi-faceted one.

The largest part of the pamphlet is devoted to the economic crisis and the ruling class offensive with a particular focus on Britain. The crisis has moved from one of bailouts of the financial system and the economy and lost revenues and increased benefits to paying the bill for this mess. The Tory coalition has launched an all-out offensive through cuts in services, benefits, pensions and wages while raising taxes. The overwhelming burden of these cuts and tax rises is to be carried by the less well of and poor. At the same time they are using the cuts as a cover for a massive privatisation of public services particularly the National Health Service.

The pamphlet points to the cause of the crisis as the structural impasse that capitalism reached in 1970s/80s and the solutions launched by the Tory Thatcher administration to solve it. Their policies of privatisation, the creation of consumer credit and deregulation of the financial sector and products were carried on by Major, Blair and Brown. This “credit bubble” capitalism became unsustainable with the accompanying growth of casino capitalism. At the same time there was a massive redistribution of wealth from the less well off to the rich and better off.

The crash, when it came was particularly severe in the UK where manufacturing industry had been allowed to decline. Its replacements - credit based consumer consumption, private housing and the financial sector which had grown out of proportion to the size of the economy, went bust.

The UK suffered more than any other major economy because of the size of the bail-outs and its deeper recession and its recovery has been slower because of this structural weakness. This has meant that the deficit created by the crisis has grown more than in any other major economy and shows no signs of bottoming out. Current debt to the size of the economy is 75% which has doubled in three years having previously taken ten to do so and stands to reach 110% by the end of the Tory coalition’s term.

This is based on very optimistic growth estimates from the new ironically named Office for Budget Responsibility (OBR). The OBR’s growth estimates are comparable to Britain’s boom years of the 1960s and since then growth has fallen dramatically each decade except for a modest pickup in the 1980s. Over the coalition’s five year term over £540 billion of new debt has to be issued by the government’s own estimates and £305 billion to be renewed and interest payments made which total £285 billion. Britain then is likely to have a debt crisis at some point over the next four years with 30% of our debt still held overseas.

Tax revenues as well as declining in absolute terms have also declined as a ratio of the economy going from 45% in 1982 to 37% now. By the end of the Tory coalition’s term 13% of our tax income will go to servicing interest payments of £69 billion per year. With no European union to turn to, the alternative is the International Monetary Fund for a bail out with even more austerity than the coalition is planning.

We have never put on these levels of debt in peace time. The previous three occasions that we have accumulated public debt of this magnitude have come as result of wars – Napoleonic, and world wars one and two. In the first and last cases Britain went through rapid periods of prolonged economic expansion and we were able to pay off the debt. In the second case we defaulted on the debt and a recession caused by speculative bubble on Wall Street bursting turned into a decade long depression.

The pamphlet argues that if we are to avoid walking blindly into a brick wall we must put forward radical anti-capitalist solutions that take control and ownership of the banking sector, North Sea oil, utilities and the food industries and redistribute wealth from the rich and better off across all of society.

Vital to doing this is to build democratic united front’s pulling together all those who wish to fight the cuts and fight for an alternative society. Key to this is the building of workers parties. In Scotland that has already begun with the SSP but in England this is yet to happen with several attempts derailed by sectarian opportunism.

The pamphlet points to that while there have been some gains for women over the last forty years they still remain severely oppressed. These gains could be rolled back by the crisis with women also carrying the burden of capitalism’s austerity drive.

The crisis has also allowed racism and the far right to gain strength and the pamphlet argues that we have to link the international struggle against fascism and racism with the fight against the austerity drive.

Finally, the pamphlet argues that the crisis is an economic one intertwined with an ecological one. The Arab revolution was sparked off by rising food prices driven by climate disasters and increased demand for western style food from the developing world. It argues that there are no private and market solutions to this ecological crisis only planning and collective action can solve the ecological crisis as well as the economic one.

The views expressed here are author’s own and not those of any other individual or organisation.