Greece – a defeat for anti-austerity. This is a coup.
The Troika have imposed a harsh defeat on Syriza and all the anti-austerity forces in Europe. At every stage they sought a political solution; the complete rout of the anti-austerity forces and their first government in Europe……Read more here.
As Labour left advances the right lashes out
Jeremy Corbyn’s campaign for Labour Leader continues to advance, with his post-budget intervention shifting Labour’s agenda. This is disrupting the drive for Labour to accommodate further rightwards, so Labour’s pro-austerity, pro-war, right wing is becoming increasingly agitated.
Following the 7 May general election, an offensive was launched within Labour to shift it even closer to Tory polices, claiming it had lost as it was too ‘left wing’. The Blairites in particular attacked Ed Miliband’s tiny progressive pledges as being too leftist and they had initially succeeded in setting the political parameters of the leadership contest.
Labour’s interim leadership went along with this and started shifting the party’s official policy to the right. The Shadow Chancellor Chris Leslie conceded the Tories’ unrealistic policy goal of running a budget surplus in normal times. The interim leadership also proposes Labour reverses its 2013 opposition to intervention in Syria and that Labour MPs should vote in support of British military action in Syria in September.
In this framework, the interim leadership badly misjudged the 8 July budget. Having previously adopted the level of cuts set out in Osborne’s March budget – which was so draconian it was clear that the Tories never intended to implement it – Labour was left wrong-footed when in his thoroughly reactionary July budget, Osborne extended the timescale for these spending cuts. Harman then went on to accept the most regressive aspects of the July budget – the huge cuts to tax credits and reduced benefit cap.
On 12 July Harman announced that Labour would not oppose the Tory welfare bill and would even back the Tories’ plans to limit tax credits to families with a maximum of two children. This was despite the Institute for Fiscal Studies report that these welfare cuts would hit 13 million low-income families, most of whom will not benefit from the proposed increase in the minimum wage, rebadged as a fake ‘living wage’.
Jeremy Corbyn immediately made clear his opposition to these attacks on the poor and launched a petition, attacking the plans to limit child tax credits, which 20,000 signed in just over a day.
Given that the majority of Labour Party members and supporters are unlikely to agree with policies that so transparently push more people into poverty, the leadership contenders are having to take this into account. So following Corbyn’s clear stand Andy Burnham was next to voice opposition to Harman’s line and that was followed by Yvette Cooper. Only Liz Kendall has backed up Harman, and even some Blairites have pointed out this is not tactically astute.
At the Parliamentary Labour Party meeting on 13 July Harman called on MPs to abstain on the government’s welfare reform and work bill next week, but more MPs spoke against her proposal than supported her position. Labour whips are already expecting a sizable rebellion against the welfare bill in defiance of Harman’s stance.
Labour’s hard right-wing does not believe Corbyn will win the leadership election this summer, but is furious that he is pushing the policy agenda to left. Corbyn’s clear opposition to austerity is exposing the right’s adaption to the Tories. A concerted campaign has been launched, in conjunction with the Tory press, in an attempt to knit together an anti-Corbyn alliance. Progress and Labour First, the main pro-austerity, pro-war, factions within Labour, are urging party members to argue Corbyn’s views are ‘extreme’. His support for the Palestinians has been particularly attacked.
Despite this, Corbyn’s campaign is continuing to make gains and he has so far received the second highest number of local Labour Party nominations. The four candidates had the following (figures at 15 July): Andy Burnham 50, Yvette Cooper 30, Jeremy Corbyn 39 and the Blairite Liz Kendall only 5. Ballot papers will go to more than 220,000 individual members and ‘registered supporters’ plus to more than 50,000 (trade union) ‘affiliated supporters’ in mid-August.
- Support Jeremy’s campaign here.
- Peoples assembly Against Austerity – Demonstrate at Tory Party Conference in Manchester 4-8 October, details here.
Labour leadership’s militarism
Since the General Election, the Labour leadership has been consciously trimming towards the Tory government on military action in the Middle East, and on military spending. On occasion, they have been pushing further than the Tory leadership.
For months, President Obama’s administration has been pressing the British government to guarantee that 2% of UK GDP will be assigned for military spending. Obama raised this directly with Cameron when they met. US Defence Secretary, Ashton B. Carter, publicly spoke against cuts in UK military spending in early June, saying that ‘… it would be a great loss to the world if it now took action that would indicate disengagement’. Cameron had indicated that the UK might not reach the 2% target.
Given that only 4 of the 28 NATO countries reached the 2% in 2014, there was not a particular likelihood of UK the British government becoming isolated on this. Nonetheless the Labour leadership lobbied in favour of meeting the 2%, adding to the pressure from the US.
At the start of June, Osborne announced a £500 million anticipated cut in defence. This was attacked from the right by the Shadow Chancellor, Chris Leslie.
On 19 June Michael Fallon, Minister of Defence, announced that an unnamed US official had joined the review panel established to determine the future of British armed forces. Fallon said that the UK government was ‘… liaising closely with the Department of Defence’.
In the July Budget, Osborne affirmed the UK government’s commitment to 2% of GDP for military spending for the next 5 years. This represents a real increase in arms spending, rising to £47.7bn a year by 2020. But even this was insufficient for the Labour leadership. Vernon Coaker, Shadow Minister of Defence, asked Fallon on 13 July whether he would confirm that the UK government projected spending was ‘ … according to the NATO definition, only intelligence operations in support of the military can be used to contribute to the 2% figure’. There had been speculation that the Tory government might transfer some current intelligence spending into the 2%.
Equally, both Harman and Coaker have now stated that they will be willing to support UK military action in Syria. Such loyalty to US policy goals brings rewards. This week the pair were invited to join Cameron at a military briefing normally exclusive to the government. Doubtless this will explore the proposals Cameron will bring to Parliament on Syria, after the new Labour leader is elected in September.
Yet the fact is that this approach is unpopular. On 10 July Labour List published the result of a poll of 1,072 readers. 56% were against UK air strikes against ISIS in Syria; 36% were in favour, with 9% undecided. The poll will have been overwhelmingly composed of Labour members and supporters.
Chinese stock market crash will spark a debate, not a crisis
The equivalent of $3.5 trillion has been wiped off the value of shares on the Chinese stock market in a matter of weeks, equivalent to about one third of Chinese GDP. Gleeful opponents of socialism with Chinese characteristics have predicted enormous economic dislocation, as would naturally follow in any major capitalist economy.
This will not be the case in China precisely because it is not a capitalist economy. It is an economy in which the state sector predominates and where economic policy aims to achieve the optimal sustainable increase in the living standards of the population, organised via the Chinese Communist Party.
As a result, a set of policies was adopted which would not even be contemplated in the capitalist heartlands. The authorities responded to the crash by closing the stock markets. Many large sellers of stocks have been forced to buy them back. The very largest stocks have actually seen a rebound in prices (£), which suggests the state has been buying in stock, which is effectively a market-based renationalisation. In China there is no free movement of capital in and out of the country (despite the World Bank and others long pressing for ‘capital account liberalisation’). As a result, there cannot be a destabilising capital flight from China and the consequent slump in the currency that would occur in a capitalist economy. Together the subordinate position of private capital and the dominant role of public capital will allow the economy to emerge from the crash largely unscathed. As President Xi Jinping has said the authorities will respond with the ‘visible hand’ (of the state).
However the crisis itself not only demonstrates the large scope of private capital in the economy and the risks inherent in that over the long term. It also highlights errors in allowing the growth of speculative capital through the slower growth of productive capital in the economy. Lying behind the crash is an accommodation to the line of the World Bank and others in reducing the role of investment and trying to increase the weight of the private sector.
It is therefore likely that the crash will cause a renewed debate on the appropriate framework for economic policy and the relationship of the state and the market. Recalibrating these in favour of investment and the predominance of the state sector would optimise the growth of living standards for the Chinese population. It would also continue to provide the main engine of world growth.