A Budget for the Monopolies and to Make the People Pay

Workers' Daily Internet Edition: Article Index :

Pre-Budget Report:
A Budget for the Monopolies and to Make the People Pay

G-20 Statement on the Economic Crisis:
A Declaration of Monopoly Right

The issue with Chancellor Alistair Darling’s Pre-Budget Report, delivered on November 24 to the House of Commons, was not that it was too little, too late, or even far too little far too late. It did not mark any move towards “wealth redistribution”. It does not tax the rich to help the poor, or any of the other fatuous claims that were made for it. And still less did it set out to renew the socialised economy. WDIE thoroughly condemns this report. It is a budget in the interests of the monopolies and to make the people pay for the crisis of monopoly capitalism through the medium of the government which controls the levers of the state. It underlines, through the complete failure of monopoly capitalism to serve the needs of the people, that a new direction for the economy under the control of the working people is demanded.

            Alistair Darling opened by saying that his statement was “made against a background of economic uncertainty not seen for generations. These are extraordinary, challenging times for the global economy, and they are having an impact on businesses and families right across the world. In these exceptional economic circumstances, I want to take fair and responsible steps to protect and support businesses and people now, while putting the public finances on the right path for the future.” However, his proposals are based on paying the rich, and spearheading the working class and the national economy as paying for the crisis.

            Darling’s Budget statement does not, as he claimed, invest in social programmes and infrastructure, nor does it address the health of the national economy. It does not have a glimmer of recognition that the tax system is outmoded, and the nation’s social wealth must be put at the disposal of the public good. It is predicated on the need for the rich to prosper, and even the much heralded 5 percent increase in the top rate of income tax is not due to be implemented for three years (well after time limit for the next election), and even then will only raise just £2 billion for the state treasury.

            The economic measures mentioned by Chancellor Darling are framed entirely to be in the interests of big business and the financial institutions. The plan paraded as so world-shattering at the G20 summit of cutting taxes and raising spending is seen as a massive smokescreen for in reality making the workers pay for the crisis. Such measures would do nothing to chart a way out of this monopoly capitalist crisis, but the pre-Budget report in any case sees the government doing the opposite.

            The present crisis is not taking place against a background of a “benign” world economy, as Alistair Darling so laughably claimed. Today’s crisis is only the latest phase, and the most serious, of the economic crisis of world imperialism since the Second World War. It is a phase where directly paying the rich through neo-liberal programmes became unsustainable. The “reduction in growth” referred to by the Chancellor cannot be dismissed so lightly as the government does and the lessons ignored. Alistair Darling wants the electorate to take a blinkered approach to the problems of the old system, and forget that while first the social welfare economy, then privatisation, and then neo-liberalism and the “Third Way” have all suffered crisis in turn, the ruling elites have been claiming that all is basically sound. All has not been sound, and the neo-liberal and “Third Way” policies have only exacerbated the underlying crisis. Now Brown and Darling are trying to wash their hands of any responsibility.

            It was only last year that it was reported that the people were having to take out credit at a record rate in order to survive and maintain anything approaching a modern standard of living. This has been one way of channelling funds to the rich at a rapid rate. The squeeze on credit as the system has failed is first and foremost hitting the working people, but the measures are not designed to alleviate this, but to get the financiers out of a hole. Working people are encouraged to continue to spend and run up debts. Meanwhile, the cost of utilities and other necessities is skyrocketing, with gas prices, for example having risen by 35 percent this year.

            The Chancellor announced that VAT is to be cut from 17.5 percent to 15 percent in an attempt to put £12 billion into the economy. However, the VAT cut on petrol, tobacco and alcohol will be offset by increasing duties. Working people are again having to pay through national insurance contributions to the state treasury, which are to rise by 0.5 percent from 2011, hitting everyone earning more than £20,000. To put things in perspective, this is expected to raise £5.4 billion, more than double the 5 percent increase in the top rate of tax. It has been calculated that changes to income tax and national insurance mean that somebody working and earning £10,000 will be just £118.80 better off a year until 2011 and £215.58 better off in 2012 – a figure that will be eaten away by rising costs.

            It exposes as a blatant lie not only that this is a return to “tax and spend”, or neo-Keynesianism, or even a resurrection of the Old Labour 1983 manifesto. These are not even palliatives, but measures to channel public funds into the coffers of the rich.

            The desperate fraud of “new government spending” is indeed a cruel hoax. Planned capital projects are simply to be brought forward from 2010-11. This is as far as the Chancellor’s “neo-Keynesianism” goes. At the same time the Chancellor announced cuts, euphemistically described as "efficiency savings", that cut back on social programmes and will also result in job losses. He stated that the government has already achieved efficiency savings of £26.5 billion, £5 billion over target, and intends to make additional cuts of £35 billion by 2010-11. The total reduction to planned public spending in 2010-11 is set at £5 billion.

            The NHS is the largest of 12 areas that will be hit by these spending cuts. The Treasury describes the £5bn as "recoverable savings" and removes any doubt as to whether these will involve cuts to funding allocations by clearly subtracting £5bn from its latest table of departmental revenue allocations for 2010-11. The £70bn NHS commissioning budget is cited as an area in which the Treasury believes “savings” could be made.

            The budget report says that the Treasury's public value programme has identified £100m a year that could be saved from 2010-11 by improving use of the NHS estate to "reduce the need for new hospital space". It also paves the way for entire PCT property estates to be transferred to public-private partnerships, to be known as PropCos . Last year's comprehensive spending review pledged to increase public sector spending in real terms by an average of 1.9 per cent a year between 2008-09 and 2010-11. But the pre-Budget report says spending will grow by just 1.2 per cent in real terms between 2011-12 and 2013-14.

            In contrast, the largesse of government was directed overwhelmingly towards the financial and corporate sector. Banks will be given additional funds worth £2 billion. However, it is just one more scandal that the banks are declaring that they still require more capitalisation before lending further. This whole fraudulent package is what Darling has declared as a “package to support business, worth £1 billion of tax cuts, £2 billion in loan guarantees, along with £4 billion of European money". What the socialised economy needs on this front is not-for-profit banking under public control.

            Alistair Darling’s largesse to the monopolies has extended to exempting transnational corporations from taxes on their foreign profits. They will be allowed to repatriate monies earned overseas tax free from next April. This measure is not disguised as aid to small businesses, as with the cash injections to the banks. "I will introduce an exemption for foreign dividends in 2009 for large and medium businesses, and improve our rules for taxing Controlled Foreign Companies," Darling said. The government has also abandoned plans to implement tax avoidance measures until there has been "further consultation".

            The “stimulus package” is being routinely linked to Darling's admission that government borrowing is to rise to £78 billion this year, and £118 billion next year. In fact this rise was already well on the way – thanks to the earlier £500 billion government bailout of the banks. Tax revenues for the financial sector have been down 35 percent. As a result, debt as a proportion of GDP is predicted to rise to anywhere between 57 and 68 percent in 2013-14. Total national debt will top £1 trillion by 2012-13. Risk is being transferred on a colossal scale from the private sector to government, to the burden of the public treasury.

            Fears are being raised over the ability of the government to raise the vast amount of debt. Faced with the prospect of governments in Europe, North America and Japan issuing more than $2,535bn combined of bonds in the next year, bankers warn of potential problems in meeting funding needs. Britain is expected to issue £10bn of bonds in December compared to average monthly volumes previously of about £2bn a month. In the past, monthly volumes have averaged about £2bn a month. The government is also expected to issue £60bn in the remainder of the financial year to the end of March – more than it would previously issue in an entire year. The government is being forced to pay higher yields to attract investors in bond auctions for stock maturing in three or four years. In fact, this all demonstrates that it is one way traffic from the labour of the working people into the bailout of the rich. Borrowing and lending in order to reap interest, fees and indulge in speculation has been a factor in bringing the crisis to a head. In the final analysis, the “borrowing” has got to come from those that create wealth in the first place, and if the present crisis has demonstrated anything it is that the banks are not a source of “wealth creation”. It must be a principle that the people have the first claim on the wealth they create, and not those that reap benefit from “debt”.

            The economic crisis is not going to be softened let alone resolved through stimulating the economic institutions controlled by the rich. Shoring up the old banking system is not at the heart of all economies, as Darling claimed. It is not a matter of remedying shortcomings. Those economic institutions are the cause of the crisis. Giving public funds to those institutions strengthens the hold of the rich over the socialised economy and will do nothing to alleviate the crisis. The burden of a downturn will still be borne by the working class. The Chancellor fails to address or answer the question of who a “strong banking system” serves. How can the old system serve the national economy when all that interests it is the amassing of fabulous profits by any means, and then demanding support when crisis reigns? Darling is in fact more concerned with the position of the City as “the world’s leading financial centre”.

            The Chancellor was forced to acknowledge that Britain was entering a recession, estimating an economic shrinkage of between -0.75 percent and -1.25 percent for 2009. But he then asserted that the economy would start to grow once more by the end of the year and forecast growth for 2010 of between 1.5 percent and 2 percent, at which time the reduction in VAT is to be rescinded. Commentators have pointed out how wildly this is at variance with all economic indicators, which point to a much more severe and protracted recession for both Britain and the economies of the imperialist system of states as a whole.

            The Organisation for Economic Co-operation and Development (OECD), for example has warned of a "severe" economic downturn in Britain in 2009, precisely because of its massive finance sector, as one of the countries "most directly affected by the financial crisis". The global financial collapse has already swallowed up bailouts and cash injections that dwarf Darling's latest offerings. Trillions of dollars have been made available by governments around the world, usually leading to a temporary rally on the stock markets – that is then eaten up by the speculators.

            The fact is that all the main economic institutions are controlled by the owners of monopoly capital. The government’s direction is not too little, too late. It is an agenda for strengthening state monopoly capitalism. The fraudulent “socialism for the rich” of Brown and Darling is highlighting both the opportunity and necessity to organise for socialism for the working class and people, the possibility and the imperative to empower the working class and its allies to gain control of the direction of the economy and of the decision-making process. The issue for the working class and people is how to gain control of the social wealth in order to be able to use it to set a new direction for the economy in which the people’s claims are at the centre. The old economic institutions controlled by the rich have to be bypassed or restricted in order to do so, and to invest in social programmes and benefit the national economy. In opposition to the concentration of wealth and power into the hands of a few, who use it for enrichment, for export of capital, and for economic and political domination, the working class must work to seize the initiative, and organise for power so as to be in a position to set a new direction for the economy. This once more highlights the necessity for democratic renewal, for an anti-war, pro-social and pro-worker government, in order to bring the people to power and establish the alternative, a new society.

K.C. Adams, TML Daily*, November 20, 2008

G-20 statement is a negation of the UN Declaration of Human Rights

From beginning to end, the G-20 statement issued after the November 14-15 summit in Washington, DC is an assault on the rights of the people won in the victory over fascism and militarism during the heroic battles before, during and following World War II -- the sacrifices and courageous battles of the people for their rights in the Spanish Civil War, against British colonialism in India, the defence of the Soviet Union from German invasion, the victories of the Korean, Vietnamese and Chinese peoples over Japanese and US militarism and countless other battles waged by the working class, peasantry and anti-imperialists for their sovereignty and right to be. These developments were formalised in the recognition by the United Nations that people have rights by virtue of being human and governments have a social responsibility to guarantee those rights in law and practice, that peoples and nations have sovereign rights to live in peace and free from interference by other powers no matter how powerful, and that war and preparations for war, including propaganda for war, are crimes against humanity and should be severely punished. The progressive consciousness that emerged from the period of the anti-fascist, anti-militarist, anti-colonial upsurge of the world's peoples was summed up in the Universal Declaration of Human Rights adopted by the United Nations General Assembly December 10, 1948.

            The imperialists of the Triad (US, Europe and Japan) led by the monopoly capitalists of the United States never reconciled with the verdict that emerged from that heroic period and have sought in every manner possible to take the world back to fascism, militarism and colonialism. The G-20 statement of the Triad dictators expresses the confidence that monopoly right has become unassailable and can dictate its will on the peoples and nations of the world even in the midst of an economic crisis. Throughout the statement, the right of the owners of monopoly capital to protect and expand their social wealth with impunity is held as paramount. The right of the people to use the social wealth they have produced to guarantee the security and rights of all and the well-being of their nations and socialised economies is never mentioned.

            The G-20 statement reads:

"Commitment to an Open Global Economy

"We recognise that these reforms will only be successful if grounded in a commitment to free market principles, including the rule of law, respect for private property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems."

            This is a universal declaration of monopoly right. The Triad dictators declare that peoples and nations of the world if they are to be recognised as legitimate must commit to "free market principles, respect for private property, and open trade and investment and competitive markets." In practice, this means the hegemony of the US dollar in international settlements and currency reserves, and the domination of world markets, raw materials and chattel labour by the most powerful monopolies backed up by their respective private and public militaries.

            The monopolies of the Triad have usurped power and have accumulated social wealth by force. The accumulated social wealth usurped by force is defined as "capital," which represents an unequal social relationship among human beings worldwide. "Capital" and its global movement represent a social relation among unequal social classes and nations.

            Monopoly right through the force of its capital, established militaries and institutions such as the IMF, World Bank and WTO and other unequal trading regimes, seizes added-value produced by the people and transforms it into yet more unequal social relations called "capital." Existing capital, an unequal social relation maintained by force, is used to overwhelm the working class, sovereign nations and their economies to capture even greater quantities of social wealth as "private property" of the rich and powerful punctuated repeatedly with economic crises and war.

            The G-20 statement demands that "Definitions of capital should be harmonised in order to achieve consistent measures of capital and capital adequacy." Dictating, defining and harmonising the unequal social relation "capital to achieve consistent measures of capital and capital adequacy" negates social wealth as use-value that can be employed to guarantee the security and rights of the people and the well-being, independence, growth and stability of socialised economies.

            The Triad dictators define capital not as an unequal social relation but as private property, primarily a fantastic variable representation of something real and material such as money or currency. They give this unequal social relation (capital) "rights" and declare it necessary for human development, and denounce and attack all those who may want to restrict its rights.

            For monopoly capital to exist and have rights, the human rights of the people must be negated. For the human rights of people to flourish, the rights of capital have to be negated. This is the contradiction that is played out every hour of every day. It is the clash between the human rights of the people and monopoly right.

            The negation of monopoly capital and its rights is what the Triad dictators of the G-20 want to avoid at all cost. They are deeply afraid that the economic crisis will awaken the people to the necessity to negate monopoly right. To divert attention from this necessity the G-20 statement raises the necessity of protecting capital, the unequal social relation: "Private sector bodies that have already developed best practices for private pools of capital and/or hedge funds should bring forward proposals for a set of unified best practices.... We should explore ways to restore emerging and developing countries' access to credit and resume private capital flows which are critical for sustainable growth and development, including ongoing infrastructure investment." The Triad dictators insist that the capturing of the people's social wealth and its transformation and diversion into "private capital flows" is not the cause of the economic crisis, poverty, instability, insecurity and degradation of the social and natural environments. Contrary to all science and material evidence, they insist the maintenance of an unequal social relation called capital is "critical for sustainable growth and development." The lords of the financial oligarchy can say and write whatever makes them feel self-satisfied about their archaic and criminal rule and domination of the socialised economies of the world but reality has a way of biting even aristocrats in the neck as they experienced during the French Revolution. Economic reality during this crisis and the fundamental contradiction between socialised production and private ownership are leading workers and anti-imperialists to organise to restrict monopoly right, affirm their human rights and sovereignty, and prepare themselves to take collective ownership of socialised production and its control and direction.

Annexation within the Imperialist System of States

            The G-20 statement crudely demands adherence and servile allegiance to the imperialist system of states dominated by the monopolies of the Triad and their states. The G-20 statement declares: "To the extent countries or regions have not already done so, each country or region pledges to review and report on the structure and principles of its regulatory system to ensure it is compatible with a modern and increasingly globalised financial system." According to the Triad dictators, national sovereignty and a self-reliant independent economy that upholds the rights of all by virtue of being human are not "compatible with a modern and increasingly globalised financial system." This is more a political statement using neoliberal dogma than a serious analysis of the economic crisis. The Triad equates "a modern and increasingly globalised financial system" with the right of the most powerful monopolies to run roughshod over the sovereign nations and peoples of the world. To make this position clear, the G-20 statement warns all those nations and peoples who may try to exercise their sovereign rights within the imperialist system of states or worse remove their economies completely and have relations with the Triad from outside its dictate will be labelled failed states and subjected to blockades, boycotts or military invasion. This is not an idle threat, as Cuba, the DPRK, Iraq and many others can recount.

            An aspect of this attack on sovereignty is the insistence on standards. The G-20 statement says: "The key global accounting standards bodies should work intensively toward the objective of creating a single high-quality global standard." Free trade and other imperialist agreements always demand standardisation to subsume the annexed territory into the authority of the imperialist power. Such is the case with Canada and Mexico within NAFTA, and the more recent TILMA executive decree between Alberta and BC that establishes the right of monopolies and investors to expect only the lowest standard, making it difficult for cities and municipalities to defend their own standards on such issues as environmental protection or social housing.

            Along with imperialist standardisation comes the threat of sanctions for those countries that fail to comply. The G-20 statement says: "National and regional authorities should work to promote information sharing about domestic and cross-border threats to market stability and ensure that national (or regional, where applicable) legal provisions are adequate to address these threats. National and regional authorities should also review business conduct rules to protect markets and investors... (and) to protect the international financial system In case of misconduct, there should be an appropriate sanctions regime." The Triad dictators while ostensibly discussing an economic crisis of their own making use the occasion to forewarn all those who would deviate from the norms and standards of the imperialist system of states that: "National and regional authorities should implement national and international measures that protect the global financial system from uncooperative and non-transparent jurisdictions that pose risks of illicit financial activity." The G-20 declaration of monopoly right is much like a wake-up call to the peoples of the world that relief from the present economic crisis will not come from the leaders of the Triad. Relief will only come from organised struggle for the rights of all and to re-establish on a modern basis the human rights won with much blood and tears before, during and after WWII in the heroic battles against fascism, militarism and colonialism. Those battles proved that another world is possible. The victory of the United Nations Declaration of Human Rights must be reaffirmed in the here and now. National sovereignty, the guarantee of human rights and prohibition of war can be won by negating monopoly right.

            The present economic crisis exposes the weakness of the US Empire and the imperialist system of states. The Triad dictators should not be allowed to transfer the burden of the economic crisis onto the backs of the weaker countries and working class. The organised working class movement must assert itself as the leader in the battle to restrict monopoly right and for an alternative to fascism, militarism and imperialism.

            Organised together in a mighty force, workers and their allies can negate monopoly right, defend the rights of all and build an alternative. Join and help organise the nation-building project for democratic renewal and to vest sovereignty in the people that has been undertaken by the committees for democratic renewal in Canada.

            Annexation no, sovereignty yes! Say yes to an alternative! Another world is possible!

* The Marxist-Leninist is the daily on-line newspaper of the Communist Party of Canada (Marxist-Leninist)