Since 2008, there has been a broad political consensus among the mainstream political parties around the need for ‘austerity’, whether in its New Labour ‘lite’ or Coalition ‘shock therapy’ forms to tackle the public accounting deficit left by the financial crash and the ensuing economic recession. The massive mobilisations led by the TUC and the People’s Assembly and recent events inside the Labour Party have at last begun to throw this consensus into question. However, the immediate fact remains that the governing political party is still operating policies aimed at attacking working people, including their trade unions, on the justification that the country’s public finances and its businesses require a one-sided exercise in mass self-sacrifice called ‘austerity’. It’s important therefore that trade unionists understand what austerity is and why it is happening.
Many left of centre economists, influenced by John Maynard Keynes, tend to focus on austerity as a set of macroeconomic policy assumptions about the need to make public spending cuts during a recession. Following Keynes, they argue, rightly, that during a recessionary phase, public spending is more important than ever to rejuvenate the economy. Having demonstrated that public spending cuts are the wrong response and satisfied themselves that ‘stimulus’ is the better alternative, they appear mystified as to why the Conservatives persist in their error. This was even more the case when they were trying to understand why the Labour Shadow front bench Exchequer team under Ed Balls weren’t listening either.
The TUC shares much of this ‘Keynesian’ analysis, certainly in its macro-economic analysis. But the notion of austerity current among left unions and organisations like the People’s Assembly is much broader. For these, austerity is a project and a political choice, made by the super-rich, aimed at the poorest and targeted at shrinking the state and destroying the public sector and its unions. Austerity, then covers not just the public spending cuts as a macro-economic tool, but the variety of measures that aim to restore big business to profitability at the expense of working people and even those who identify themselves with the ‘middle class’. This is also the kind of understanding of austerity that has mobilised forces on the left in Europe, especially in forces like Podemos in Spain and Syriza in Italy.
There is a lot about this analysis that’s simply correct. But it’s also important to be more specific and definite in our understanding of austerity. If we are not, austerity risks becoming a word that conceals as much as it reveals. The key question, from a Marxist perspective, is what class interests are at work and what are the real processes taking place beneath the ideas. For example, if austerity ideas were abandoned by the political mainstream parties, would that necessarily mean that a significant change in our society had taken place? Would working people necessarily have more power in society? Why has Britain persisted with a particularly harsh austerity offensive when other countries have moderated theirs with more use of public spending? Is it just that we’re stupider and don’t listen to common-sense Keynesian economists as much as other countries? Or are there deeper forces at work? And, if we begin to understand those deeper forces, what then should be the specific response of trade unions?
To help the discussion and debate among trade unionists on the left around these issues, Trade Union Futures has published the latest in our series of briefing notes. Our new downloadable resource suggests that austerity is not only an embracing class offensive but one that is driven specifically by the economic and political dominance of finance capital within the ruling class. The peculiar overdependence of the British economy on finance capital helps to explain why austerity has taken such a harsh form in Britain and why even New Labour, which accepted the legitimacy and power of the capital markets long ago, has been so enslaved to its dogmas. The briefing makes concrete suggestions for how trade unions can play their distinctive role in developing the struggle to overthrow the ideas of austerity and the forces that generate them: work to build effective economic struggles over wages and the distribution of wealth should be combined with the development of a political agenda that targets the economic and political power of finance capital in Britain. And if you want to read more on this issue at Trade Union Futures, you can also download the longer essay by Professor John Foster which puts austerity in a greater historical context.