Event Horizon: Beyond the 2010 Election

by Robin McAlpine

You probably think you know the implications of the General Election. I think I know the implications, or at least some of them. But I’m not sure. And therein lies the monumental success (and failure) of the 2010 General Election. It was the natural conclusion of a process of collapse of party politics in Britain and perhaps the death throes of the neo-liberal project. What comes next will not be an extension of what just happened, but that does not necessarily mean that because we dislike what just happened we will like what comes next. What I want to argue here is that we must learn what it was that just happened so we will be able to influence what comes next. And make no mistake; the “other side” has begun that process with great energy and vigour. There is a sense floating around the Left that time is on our side and that the mess the world is in will now lead inevitably to something better. This would be a fatal mistake.

 

SOCIAL IMAGINATION

Let me begin by sketching out my basic thesis on the neo-liberal project. The idea of “imagination” is commonly taken to be a personal and private thing, but it is nothing of the sort. In fact, imagination is social in almost every sense; we do not imagine something which does not exist but rather reassemble what already exists in a different way guided by current beliefs (when the Victorians imagined travelling to the moon they did so in petticoats and hot air balloons – while before Copernicus people simply didn’t imagine going to the moon). Social imagination is an important motor of historical change because it is when a vision of something different (and better) than what exists today is shared by a sufficient number of people that momentum begins to make that “something different” possible. That is why the neo-liberal project has been so keen to keep our imaginations individual (and individualistic) with dreams of gadgets, holidays, home renovation, celebrity lifestyle and cosmetic surgery. We have no remaining vision of utopia in Western society, only a sort of omnitopia in which everyone wants everything and so everyone wants the same thing. Monolithic, ubiquitous, depersonalised. The shopping mall. The project wasn’t to defeat utopianism and the vision of a better world, but to defeat the belief that a better world was possible at all (or even desirable). Everything is as it is because this is how it is meant to be. Even state communism was less pervasive in its ideology – medieval theocracy is probably the most recent parallel.

The deregulation agenda was not really the heart of neo-liberalism because that would suggest that regulation is something which can be chosen. Really it was about abolishing the idea of the possibility of the regulation of capital altogether – you can’t buck the market.

So where does this leave us in the aftermath of the General Election? The first and most important thing we might do is to try to reattach words to meanings. We have just sat through an entire election in which none of the parties contending it seemed willing to use any words which might be accidentally attached to any identifiable idea or analysis. So let’s start with why that is. And so the first definition:

“Triangulation is the process of determining the location of a point by measuring angles to it from known points at either end of a fixed baseline.”

Most will be familiar with the political application of this concept as developed in the US by the Clinton campaign in the 1990s. If you wish to gather the most possible votes, simply identify a position to take based on a calculation of equidistance from possible baseline positions. In the British context “tough on crime” (for the Daily Mail), “tough on the causes of crime” (for the nuisances who actually bothered to join your political movement). There is of course a problematic conclusion from this which ought to have been obvious and that is that if this works, it works for everyone. Like a TV CIA agent tracking a mobile phone, just keep recalibrating your position according to given reference points and eventually you will find the “source point”.

Initially this was about economics – it has been almost 20 years since there was any real economic policy position difference between the main political parties. In Britain there has never really been any divergence in position on foreign affairs (no government has really made a significant change in British foreign policy). Which is to say that quite quickly after the loss to Blair the Tories started triangulating for themselves and by the 2005 election it was hard to see any difference between Blair and Michael Howard on anything in economic, foreign or defence policy. The “differentiator” was social policy where Howard thought knee-jerk populism could edge it. But that didn’t work and so they got rid of him and replaced him with someone who could finally triangulate the Tories into a winning position by seeking to take the remaining differentiator and triangulate it out of existence – hence hugging hoodies and cycling to work to save the environment.

EVERYTHING FELL APART

But just as this was happening (as happen it inevitably would given the inescapable logic of triangulated politics) something else happened. Just at this moment the sky fell in. The point upon which everyone had been expected to congregate turned out not to be sufficiently stable to take the weight. Of anyone. Just at the moment when we were to have believed in the End of History, the final victory over all concepts of social control of markets, the markets did what uncontrolled markets always do eventually and they fell apart. It was as if everyone had decided to moor their boats at exactly the same spot in the ocean only to find that it was a whirlpool. Everything fell apart in the most spectacular of manners but no-one could do anything about it because they were very firmly pitched inside the vortex and could find no way out. And so it was that we got an election where everyone had the same script, everyone knew that they all had the same script, everyone knew that everyone else’s script was absolutely riddled with holes, but no-one could point out the glaring holes in anyone else’s script because it would instantly highlight the same holes in their own. And so we watched comatosed while everyone said nothing.

There should have been no surprise – this was all the utterly predictable effect of the myth of triangulation. There simply isn’t a spot which is equally unobjectionable to everyone because of two major problems. The first is simply that it’s a stupid idea because people have different views. The second is simply that not everyone has quite the same force of objection. Triangulation was really between two points, not three. It was a point as close as possible to the massive political clout of Big Money while being just within the boundaries of not too far away from what real people can be made to swallow. And naturally that meant more-or-less where Big Money wanted it (thought slightly short of not actually using the poor and “unproductive” as a source of fuel). But since Big Money is demonstrably nuts (in fact, psychotic in its narrow-sighted, narcissistic, sociopathic disregard for everything else) it was always a dangerous point to choose.

And so for another definition to try to find words which properly reflect what is happening:

“An event horizon is a boundary in spacetime, most often an area surrounding a black hole, beyond which events cannot affect an outside observer.”

For those not familiar with astrophysics, it goes like this. When a star starts to burn up too much of the fuel which keeps it going its weight and therefore gravity reduces and it starts to expand (it is made of gas and is held together by its own gravity). As it expands it sucks up planets and other debris until it starts to get so heavy again that its gravity grows and grows, gradually sucking in more and more matter in a chain reaction until its gravity is so great that it starts sucking all its own weight into itself. What is happening is that more and more matter is trying to take up less and less space. If you want, the star is trying to triangulate itself. Except that in the physical universe (unlike the political universe) it simply isn’t possible to pack an infinite amount of material into an ever-smaller space. When it finally collapses it becomes so incredibly dense that it rips a hole through space and time and creates a black hole. Around a black hole is a fringe, the last place from which the outside world can sense anything at all – light, heat, matter. After that is event horizon, the point where everything disappears from our ability to see it.
 

HOLE THROUGH REALITY

It wasn’t an election, it was an event horizon. Such a giant volume of shit tried to squeeze itself into such a tiny space that it ripped a hole straight through reality and those of us not sucked in were unable to see any light, hear any noise or feel anything solid.

The start of this article referred to the election as a “monumental success”. And so it was. The neo-liberal mess was so big and the implications so enormous that its only hope was to disappear, to distort reality to such an extent that people could no longer see or hear anything. Instead, a vacuum exists in which ridiculous tales about “gold plated pensions” for nurses and “bloated government” (bloated mainly by the actions of Big Money) are now passing for “information” for those of us outside the event horizon.

The other suggestion at the start of this article is that we have to realise what has just happened if we are going to respond properly. The event horizon metaphor was not chosen at random. One of the lessons for astrophysics is that once you reach the point of event horizon then you give up. Event horizon is the point beyond which rescue is impossible, “beyond which events cannot affect an outside observer”. However, the event horizon is a halo around a tiny point. The vast majority of the universe is outside the event horizon. The trick is to work out what can be saved and what we must accept is consigned to eternal darkness beyond reality as we know it.

It is probably too early to be writing a manifesto, but we need to be quite clear-eyed about the difference between the salvable and the damned, that which still exists in reality and that which does not. Firstly, markets remain institutions which exist in the real world and they are very capable of affecting an outside observer – and equally capable of being reformed and tamed. So too the media and the global institutions of neo-liberal capitalism. It may suit them that politics has slipped beyond an event horizon for now, but that may just mean that they’ve been left out here along with the rest of us. Because we are all definitely left out here in reality, along with all the civic institutions and organisations which constitute the real fabric of society.
 

NO HOPE FOR SALVATION

What has slipped beyond our reach is the political party system. For now, at least, there is no realistic hope of salvation for or from the political parties. All of them in their different ways have been sucked too far into the vortex to escape easily. The Labour Party would need to admit that its 12 years in power were a disaster. The SNP would need to reinvent the best part of a decade of pro-market rhetoric as something completely different. The Tories and Lib Dems are currently enjoying life in the vortex. The small parties have given up their gravity, their ability to drag matter in their direction. The socialists simply exploded but without the majesty (or impact) of even a mini-nova. The Scottish Greens have played their own game of triangulation out in some obscure field where they seem to have formed a small but orderly circle and await someone else to notice just how inoffensive they can be when they try. And Westminster itself is well beyond the event horizon; it is the black hole. There is more hope of gravity reversing itself than there is of Westminster reforming itself – those glued to the Guardian for days after the election hoping for a “progressive consensus” to emerge which would reform the British State once and for all were like some sort of cult allowing itself to be pulled right into the heart of the black hole in the belief that something better might exist on the other side. It doesn’t. For as long into the future as it is possible to see, Westminster is the exact point at which all events which might affect the observer end.

SCATTERED VOTE

This is not a reason for despair but for great hope – if we wake up to the reality. The people who voted in the election did something very interesting – they scattered their vote. If ever there ought to have been a moment when there was a shift in the gravity of politics it was now. After 12 years of Labour misrule and Murdoch propaganda the neo-liberal project should have seen Cameron anointed untouchable as the man who will finish the job. It didn’t happen, and that for one simple reason: while there may be a wide range of views and feelings on many issues, we’re all to the left of the vortex on economic issues. None of us – barely a person – thinks that nurses should pay for bankers’ mistakes. There is an event horizon, but it is miles off to our right and all the space between here and there is left. It is just not possible to reclaim that space on the basis of the political parties we have.

This is the source of hope. We have to create a new source of gravity in this cosmos, one which will drag the matter of reality back towards real people and where they want it to be. This article does not seek to prescribe a new gravity, but rather to make a plea for a new search. I will offer three simple examples of what it might mean at first and then hope that this will be where left debate and discussion takes place. We could simply escape the event horizon by breaking up the British

State for good – Scotland need no more revolve around the decayed, imploded mess which is Westminster/Whitehall/The City of London. We could drag the parties back to a productive position by force – through fear of losing control of the population on the model of Greece. Or we could create new centres of gravity by organising outside the party system, much as we did in the 1980s and 1990s to create the momentum for Scottish devolution. Personally, I believe we will require all three, because without them we can’t get into a position to really create change – reforming the markets, the media, the institutions of society and injecting real representative and participative democracy into the economy.

And so one last definition, or rather an etymology:

“Aftermath: derived from obsolete agricultural terminology meaning a second mowing; the grass which grows after the first crop of hay in the same season.”

There must be a more fundamental process of cutting away the overgrown mess created by the political systems in Britain, Europe and beyond. Only then can we talk meaningfully of an aftermath.

Robin McAlpine is editor of Scottish Left Review.

Sketches From a Small World – BP and Environmental Justice

By Eurig Scandrett

By the time you read this, the oil giant BP may not exist, having collapsed in the wake of the Gulf coast oil spill, the disastrous attempts to stem the flow of oil from the deep sea bed and the incompetent measures to contain the oil slick and protect the southern shores of the USA. We can be sure that the local fishing industry has been pretty well destroyed and most likely the tourist and many other industries in Louisiana and its neighbouring states.

The complex human ecology supported in the wetlands along the Louisiana coast had already begun to degrade as a result of the oil industry in the Gulf and the rising sea levels from climate change. It now looks as though the destruction will be complete. BP’s safety and environmental record is appalling. Whether the company survives or goes will be a decision largely dictated by the market. In other words, the company is primarily accountable to the interests of capital, not to any government. This is something we know. The lesson is that ecological destruction and the loss of lives and livelihoods is the outcome of this lack of public accountability.

On a recent trip to Shetland I saw the result of what is acclaimed as the success story in making the oil industry accountable. The oil terminal at Sullom Voe was built in the mid 1970s, in the middle of pressure on the global supply and price of oil from the Organisation of Petroleum Exporting Countries (OPEC) in response to the west’s support for Israel when Egypt and Syria attempted to reclaim the land occupied in 1967.

The oil crisis allowed Shetland, represented by Liberal leader Jo Grimond, to demand concessions. Sullom Voe oil facility is reasonably well hidden and there appear to have been few polluting incidents. Moreover, a local tax per barrel of oil processed has enabled large public sector employment and provided communal facilities throughout the islands in the form of village halls, arts activities, leisure centres and community trust enterprises, none of which bears a logo from an oil company. A success in compromising with the capitalist oil industry in the interests of the population? I’m not in a position to judge James O’Connor’s 1979 prediction (1) that the benefits of the industry would be to the petty bourgeoisie and their allies in the political class, rather than to workers.

Having recently participated in the wonderful opera Carbon Chronicles by Camilla Cancantata I’m reminded of the geological scale of these things. I have written before about the imminent end to the 250 year oil era in which capitalism burns up the oil which took 50 million years to form. As I write, the annual targets for carbon dioxide reductions are being negotiated in the Scottish Parliament, after the SNP’s first derisory attempts were thrown out. We have 40 years to cut 80% to meet the targets in the Climate Change Act. Simple arithmetic tells you that anything less than 2% per year now, delays the big cuts to later and leads to a greater total level of climate change. We need at least 3% annual reduction, implemented with social justice.

This means hitting the most privileged emitters hardest – the oil industry, the fossil power stations, the businesses most dependent on aviation – and implementing just transition programmes for the workers who have been made dependent on these. This cannot be done by classifying polluters as “National Developments”, putting them outwith the control of local accountability. Already two National Developments, the proposed coal-fired power station at Hunterston and the gas power station at Cockenzie, have run into trouble with conflict between national expediency and local and global interests.

Thousands of us marched through Edinburgh and many thousands more in other cities throughout the world, demonstrating against the latest aggression of the Israeli military and government in killing nine activists carrying humanitarian aid towards Gaza. At this time it seems unlikely that we will ever get a full picture of what happened since Israel is blocking calls from the UN and world governments, including those friendly to it, for an independent inquiry. As I write it seems unclear whether the level of violence was premeditated and planned by Israel or whether it erupted spontaneously amongst the commandos and subsequently praised by the Israelis. We do know however that the Israeli military’s violent occupation of the Mavi Marmara in international waters included deliberate shooting to kill and summary executions. We know that they met with some resistance by unarmed activists using sticks and kitchen knives. We know that the attack was justified by Israel in order to search for weapons amongst the cargo which had already been checked by officials in Turkey, its erstwhile ally. It is clear that Israel’s fanatical fundamentalism, its belief in its God-given right to flout international law in pursuit of its 60+ year violent repression of the Palestinians is tolerated by the world community and especially the USA which bankrolls it.

If, as the Israelis claim, their commandos were attacked by activists as they attempted to board the aid flotilla, then arguably the actions of those activists are close to the principles of non-violence developed by M.K. Gandhi and Martin Luther King. Although these leaders encouraged their supporters not to use violence, the main purpose of non-violence is to expose the violence in the oppressor rather than simply avoiding violence in the victim. By offering resistance with sticks and knives to one of the most lethally equipped militaries in the world – and paying with their lives – the activists exposed to the world the violence inherent in the blockade of Gaza and the whole Zionist occupation of Palestine.

Israel’s actions will, by contrast, lead to more violence. Like most people, I am furious about the murders and the ongoing oppression of Palestine, and feel helpless in the face of the world’s toleration of Israel’s behaviour. I am a 48 year old Christian. If I were a 24 year old Muslim I am sure that I would be raging and I might look for other means to challenge Israel and its appeasers. Israel’s state terrorism will fuel more terrorism.

In India we are also seeing violence escalating from an attack on the poor dressed up as a war on terrorism. India’s Operation Green Hunt is a concerted attempt to destroy “Naxalites” (Maoist insurgents), especially in the central-eastern forests of Chhattisgarrh, Jarkhand, Orissa and West Bengal. Little reported in the UK media, the death toll of state military and paramilitary, guerrillas, tribal people and other civilians is growing rapidly, especially since an Indian military detachment of 76 soldiers, deep inside tribal forest lands, were killed in a Maoist ambush on April 6th. The recent derailing of a passenger train in May seems to have been the work of tribal militias allied with the Maoists. Communist Party of India (Maoist) is strongest in areas where tribal people are being evicted in order to allow access for mineral extraction companies. The writer and activist Arundhati Roy spent weeks with CPI(M) guerrillas in the Dandakaranya forest and published a revealing account on www.outlookindia.com/article.aspx?264738.

One cheer from Bhopal as eight executives and managers of Union Carbide India Limited (UCIL) are found guilty of causing deaths through negligence. This should not be confused with justice. UCIL was the Indian majority-owned subsidiary of Union Carbide Limited (UCL), the US multinational parent, which oversaw the corner cutting which led to the Bhopal disaster and is now owned by Dow Chemical. UCL has always tried to avoid accountability, initially by blaming Indian workers, then by negotiating a cut price “settlement” with the Indian government, and finally by absorbing the company into Dow Chemicals which is attempting to distance itself from any liability.

NOTE 1 Published in his Natural Causes: Essays in Ecological Marxism, 1998.

Alasdair Gray, by Sandy Moffat

The full image:

© Copyright the artist.

PDF of the article from page 2 of The Herald, 24th June 2010:

Herald_AlistairGray

DLS to Unveil Major Portrait of Alasdair Gray

A major portrait of Alasdair Gray is to be unveiled on Wednesday 23rd June at Oran Mor, 731 Great Western Road, Glasgow.

The painting was commissioned from leading Scots artist Sandy Moffat by Democratic Left Scotland, Scotland ‘s radical, feminist and green organisation. The unveiling will be at 6.30pm at Oran Mor. All are welcome for the ceremony.

The portrait will be unveiled by the Scottish Arts Council’s head of literature Dr Gavin Wallace.

Alasdair Gray is the author of a number of influential books, including Lanark. Originally a lecturer at Glasgow School of Art, Gray wrote Lanark over a 25 year period. It is the greatest inspiration on the new Scottish urban literature of, amongst others, James Kelman and Irvine Welsh.

Oran Mor was chosen to house the painting both because of Gray’s links with the building and its role as Scotland’s leading centre for popular culture. Alasdair Gray painted the ceiling murals in the main hall. Sandy Moffat is one of the most significant Scottish portrait artists of the late 20th and early 21st centuries. His most prominent works include portraits of Dame Muriel Spark and Iain Hamilton Finlay, as well as the “Poet’s Pub” featuring Hugh MacDiarmid, Norman MacCaig and Sorley MacLean.

Stuart Fairweather, convener of Democratic Left Scotland said: “Alasdair Gray is an inspiration for all Scottish radicals. His contribution to Scottish culture has been enormous and we wanted to honour that. We are delighted that Alasdair Gray allowed the commission and that Sandy Moffat has been able to it for us. This shows an enormous generosity of time and spirit on both their parts. We hope it will become the definitive image of Alasdair Gray, and that it will add enormously to its surroundings in Oran Mor.”

Colin Beattie, of Oran Mor, said: “It is fantastic to be able to hang this painting. We are enormously grateful to Sandy Moffat, Democratic Left Scotland and of course to Alasdair Gray for giving us this opportunity. We hope that it will add to the cultural life of Glasgow and to Scotland.”

Democratic Left Scotland – Annual General Meeting

City Chambers, Edinburgh:

Saturday, June 5^th, 11am – 4pm.

This year’s AGM will discuss the prospects for our organisation and the role it plays.  The afternoon discussion will focus on the Coalition and response to it. All members who can are encouraged to attend.  If you need assistance with travel or childcare please let us know.  It would be helpful to know if you likely to attend (or not).

The following members have been nominated for the National Council:

Maggie Chapman – Edinburgh

Mike Arnott – Dundee

Doug Bain – Glasgow

Sean Feeny – Glasgow

Davie Laing – Glasgow

Peter McColl – Edinburgh

David Purdy – Stirling

Stuart Fairweather – Dundee(Convener)

We would also encourage members, particularly women members and newer members, to consider taking part in the National Council meetings.  This is the group that runs our organisation between Annual General Meetings. Its bi-monthly meetings are focussed but relatively informal. We need a range of skills and views.  If you want to be considered co-opted onto the National Council please let us know.

Contact Stuart or any of the other National Council members if you wish to discuss what is involved

Agenda:

11am – Registration/Welcome

11.15am – Introduction ‘Our Year 2009-2010’

· Report of Work/Perspectives

· Financial Report

· National Council/Convener Nominations

12 noon – 1.15pm

2010-2011: Democratic Left Scotland our role and priorities. DLS plans an ‘away day’ in autumn 2010.  Today’s discussion will produce suggestions for that events discussion.

1.15pm – 2pm – Lunch

2pm – 4pm

The Coalition– developing a democratic left response in Scotland.

All members are welcome to share their views on their assessment of the Coalition, its plans and how we and others respond.

If you have any comments on the suggested Agenda or our plans for the AGM, then please let us know.

Can the Lib-Cons do it? How should we respond?

David Purdy

With the decision of the Liberal Democrats and Conservatives to form a coalition, the realignment of British politics has begun. We now know that in the course of the inter-party talks that followed the election of a hung parliament, Clegg and Cameron (or Nick and Dave, as they wish to be known) considered and rejected the option of a “confidence and supply” arrangement whereby the Lib Dems would support a minority Tory government on confidence motions and finance bills, but would not join the government on the basis of a comprehensive and jointly agreed policy programme. Any such deal would have been an uncertain and short-lived affair, soon to be followed by another election with the attendant risk of provoking panic in the financial markets. Instead, the adoption of the name “Liberal-Conservative”, the carefully crafted composition of the new government and its early policy announcements signal a clear intention to serve a full, five-year parliamentary term, to make a serious effort to tackle Britain’s economic crisis and, in the process, to break the mould of British politics.

The coalition has four policy priorities:

• to repair the country’s battered public finances by instituting a phased programme of fiscal retrenchment, starting this year and heavily weighted towards public spending cuts rather than increases in taxation, as envisaged in the Conservative election manifesto, with the aim of reducing the UK’s record budget deficit by more than would happen if the government relied solely on economic growth to boost tax receipts and reduce social security outlays;[1]

• to mitigate the impact of fiscal austerity on low and middle income taxpayers by  raising the standard personal income tax threshold to £10,000, as proposed in the Lib-Dem election manifesto, while ditching the Tory pledge to raise the threshold for inheritance tax to £1 million, retaining the outgoing government’s plan to raise employees’ national insurance contributions next year, but rescinding the planned rise in employers’ contributions (the so-called “jobs tax”)[2];
• to break up and restructure the banks and to install a new system of financial regulation, a task to be shared between Vince Cable, whose reputation as a financial sage will now be put to the test, and George Osborne, Chancellor of the Exchequer, who will be in overall charge; and

• to reform key aspects of Britain’s dysfunctional and discredited political system, a substantial task for which Nick Clegg has assumed responsibility, in addition to his symbolic role as Deputy Prime Minister.[3]

Taken together, these measures add up to a bold plan for tackling the twin crises that engulfed and finally brought down Gordon Brown’s government. When the US housing bubble burst in early 2007, the global financial system began to seize up. By autumn 2008, several major banks had become insolvent and Britain, along with most other developed capitalist economies, was plunged into a deep recession from which it has only just emerged. Though culpably slow to appreciate the gravity of the crisis, the government eventually took decisive action to rescue the banks and avert a re-run of the Great Depression. That it received little credit for this achievement is partly because there is a difference between staving off disaster and stimulating recovery, partly because of the success of the Tories in converting what began as a crisis of capitalism into a crisis of public finance, and partly because the economic downturn coincided with the eruption of a full-scale crisis of legitimacy.

May 6th and After

Will a Brown led government be better than Cameron? Yes!  Could collation government improve our democracy? Perhaps!  But the question is: How can progressive opinion challenge the dominant ‘markets first’ approach?  This needs to be asked before, during and after the election.

The prospect of a televised debate between the leaders of the three main parties may have a superficial appeal.  Creating a situation where more people engage in ‘political debate’. However this approach runs the danger of seeing professional politicians as separate from the general population.  At its worst it will reduce debate to a popularity contest.

Brown and Cameron will approach the election on the basis of protecting Britain in troubled economic times.  Unionism will be the back-drop and taking the strong-medicine of cuts will be presented as us all pulling together.  Brown might indicate a more caring response to people’s needs but this will be in the context of maintaining the City of London as a global financial centre.  The social will be sacrificed for the needs of the market.  Cameron suggests doing the same whilst attacking the public sector.  The Liberals will suggest little more than a variation on this theme.

Salmond will attempt to get best out of a Westminster election. The degree to which in Edinburgh, Cardiff and Belfast impact ‘London centred politics’ will be of more than mere interest. DL members will be involved in the election as members of political parties, as trade unionists, as community and campaign activist, as well as voters.  Perspectives will reflect differing progressive understandings and responses.  As an organisation we will provide an early opportunity for a discussion of the election’s outcome.

Women’s Support Project

The Women’s Support Project’s core funding has been affected by budget cuts, with Glasgow City Council cutting its contribution by 100%. The Project is seeking alternative funding to continue the service, and is launching a funding appeal.

It  needs to raise £100,000 as quickly as possible to secure the Project for the coming year and to allow time to identify alternative funding.

Donations of any size will be very much appreciated. You can donate on the Women’s Support Project website at www.womenssupportproject.co.uk

Or send a cheque to 31 Stockwell Street, Glasgow, G1 4RZ. You can also help by forwarding this information to friends and colleagues.

The Women’s Support Project was established in 1983 and has provided crucial support to vulnerable women, on a broad range of ‘violence against women’ issues. The support and information service has offered a lifeline to thousands of women over the last 27 years, prioritising support for women whose children have been sexually abused. The loss of this funding threatens to end a vital and specialised service.

The Project is a key player in preventative work against violence against women in Scotland, offering training workshops and public education events, including an annual screen debate to raise awareness of child sexual abuse, and a range of seminars on issues such as domestic abuse and child contact, child protection, and child sexual abuse.

Tireless campaigning against commercial sexual exploitation has been a feature of the Project’s work. Highlighting prostitution as a form of violence against women and identifying the need to challenge the demand from men to buy sex as the only effective long-term solution. The Project has also contributed to pioneering international prostitution research, organised hugely successful national conferences on commercial sexual exploitation, and offered local and national anti-pornography training.

The Women’s Support Project is crucial to the fight against violence against women and the loss of this key service would be a serious retrograde step for women who have experienced violence, and for the fight to end violence against women.

 

 

Budget deficits, public debt and economic recovery

by David Purdy

The recession that began in the second quarter of 2008 has been the longest and deepest since 1945. By the third quarter of 2009, UK GDP, the chief measure of the (unduplicated) market value of newly produced goods and services, had fallen from its pre-recession peak by 6 per cent.¹ Over the same period, unemployment, as measured by the Labour Force Survey, a quarterly estimate of how many jobless people of working age have recently been seeking employment, regardless of whether they claim Jobseeker’s Allowance, rose from 5 per cent of the workforce to just under 8 per cent. Since unemployment tends to lag behind output and employers now have ample scope for increasing output without hiring new workers, it is likely to go on rising throughout 2010, albeit more slowly than before, perhaps eventually peaking at around 9 per cent. This is well below the post-war record of 12.4 per cent, posted in 1983 after Mrs Thatcher’s great deflationary purge. Nevertheless, even on the most favourable assumptions, it will take years to get back to the pre-recession rate. If from now on GDP were to grow at a steady rate of 2.5 per cent a year, in line with its previous trend, then with output per worker growing at 2 per cent a year, employment would grow by 0.5 per cent a year. Hence, even with no increase in the workforce, it would take eight years to reduce unemployment to 5 per cent.

We should perhaps be thankful it hasn’t been worse. Just about the only redeeming feature of Gordon Brown’s premiership was his government’s response to the financial crash of September 2008. To be sure, both the government and the Bank of England were slow to appreciate the seriousness of the credit crunch, which surfaced in the summer of 2007 and turned toxic in the autumn with the run on Northern Rock. Even in September 2008, as banks tottered and stocks tumbled, the Bank of England’s base rate stood at 5 per cent and, with the sole exception of David Blanchflower, the Monetary Policy Committee were still worrying about the risk of inflation rather than the danger of falling prices and a Japanese-style debt deflation. Similarly, one can argue that the fiscal stimulus announced in the Pre-Budget Report of 2008 was too little too late and relied too heavily on the “automatic stabiliser” of falling tax revenues rather than on discretionary and purposeful increases in public expenditure, though critics should bear in mind that it takes time to design and launch new projects and that in an emergency there is a premium on measures which can be introduced without delay and will have a rapid impact.

At all events, once the crisis broke, the authorities moved quickly and avoided the policy mistakes that were made after the Wall Street Crash of 1929. By March 2009, the Bank of England had cut its base rate to an all-time low of 0.5 per cent and was about to embark on a major programme of “quantitative easing”, buying up government bonds (gilts) held by the banks and other private investors in a bid to boost the money supply, support bond prices and hold down bond yields so as to avoid any rise in borrowing costs. At the same time, the Chancellor suspended the fiscal rules the government had unwisely imposed on itself, under which public borrowing over the cycle was to cover public investment, but no more, and outstanding public debt was not to exceed 40 per cent of GDP.

It would have been better to scrap these tokens of neo-liberal rectitude altogether and to make the case for functional budget deficits designed to offset an actual or impending fall in private spending on goods and services so as to maintain employment and prevent or at least mitigate any rise in unemployment. The scale of the current budget deficit (equivalent to 12.6 per cent of GDP, the highest since the Second World War) is a simple consequence of the severity of the recession – regrettable certainly, but as Maurice Chevalier said about old age, better than the alternative. If the government had acceded to the demands of the Tories and tried to reduce the deficit by cutting public spending, it would have made a bad situation worse, compounding rather than compensating for the fall in business investment and consumer spending, and thus exacerbating the recession. The fall in output and the rise in unemployment would have been even greater than they were; public services would have been damaged, yet the budget would still be in deficit thanks to the further loss of tax revenue; and business confidence would have been shattered, not just battered, extinguishing any prospect of an early and sustained recovery. In this sense, the Brown government saved us from a re-run of the Great Depression, though it is one thing to restabilise the economy and quite another to engineer a recovery.

Does public debt matter?

But now that the danger of headlong economic collapse is (we hope) past, clamour for action to rein in the budget deficit and reduce public debt grows louder by the day. Does it matter that UK public debt is heading towards 80 or possibly even 100 per cent of GDP? Should the budget deficit be cut and, if so, when: this year, next year or only when recovery is assured? As regards the debt ratio, three preliminary points need to be made. First, its measurement is a matter of convention. The ratio is a comparison between a stock (public debt) and a flow (annual GDP). If we compared the stock with quarterly GDP, the ratio would be four times as big. If we compared it with GDP per decade, the ratio would be one tenth as big. Arguably, it would make more sense to compare public debt with tax revenue, which normally accounts for 95 per cent of government income, the rest coming from service charges, trading activities, property income and fines imposed by the courts. A debt/GDP ratio of 100 per cent would correspond to a debt/tax revenue ratio of approximately 250 per cent, roughly comparable to the multiple that prudent building societies used to apply to the incomes of prospective borrowers in deciding how much they were prepared to advance as housing mortgage loans.

Second, besides having liabilities, the public sector owns substantial assets: land, infrastructure, buildings, equipment, stockpiles, shareholdings etc. In 2007-8 the net worth of the public sector – the difference between the value of its assets and liabilities – was estimated at about 29 per cent of GDP. Moreover although most of the recent and projected rise in public debt is due to cumulative budget deficits, the total has been swollen by the liabilities of rescued financial institutions. In June 2009, the debt stood at £800 billion when these liabilities are included, and just under £660 billion when they are excluded. If and when bank share prices rise sufficiently for the government to sell its recently acquired holdings at a profit, there will be a corresponding fall in the national debt. More generally, if public borrowing is used to finance investment in assets that yield long-lasting benefits for society as a whole, the addition to public debt is matched by a corresponding addition to public assets.

Third, public debt is held by private individuals and institutions, mostly in the UK. For their holders, government bonds, national savings deposits etc. are assets, and in some cases – notably, pension funds – the associated interest payments are a significant part of their income, out of which pensions are paid. Gilts, of course, are free from the risk of default. It is possible that in the coming months, one of the credit-rating agencies – which, remember, gave their seal of approval to asset-backed securities that later turned toxic and failed to foresee the recent financial crash – will downgrade the UK’s triple-A status.² Anyone inclined to worry about this should ask themselves when was the last time the UK government failed to repay or to service its debt. To be sure, the higher the debt, the more it costs to service it. Debt interest payments are currently running at about £30 billion a year, or 4.5 per cent of total public spending – hardly a negligible sum, but perfectly manageable as long as yields on government bonds remain at current levels.³

A public debt ratio of 100 per cent is not high by historical and international standards. Throughout the whole period from 1918 until 1963, the ratio exceeded 100 per cent. By the end of the Second World War, it stood at 250 per cent. Currently, compared with other G7 countries, the UK is a middling public debtor with a ratio of 65 per cent – just below the US (69 per cent), but some way above France and Germany (57 per cent) and Canada (33 per cent). Italy and Japan, on the other hand, both have debt ratios well in excess of 100 per cent and have done for years.

A high public debt ratio is sustainable as long as it does not keep on rising. A little algebra helps to clarify the relevant relationships. Let Y stand for the level of GDP and g for its percentage rate of growth; let B denote the budget deficit and D the public debt, measured in absolute terms; and let b and d denote the corresponding ratios, so that, by definition, b = B/Y and d = D/Y. When the government runs a budget deficit, public debt grows at the rate B/D (= b/d). But whether the debt ratio rises, stays constant or falls depends on whether b/d is greater than, equal to or less than g. Suppose, for example, g = 5 per cent and d = 100 per cent. Then d, though high, will be non-increasing as long as b does not exceed 5 per cent. Notice that since B and D are measured as nominal magnitudes, without adjusting for price inflation, it is the rate of growth of nominal GDP that matters. This, by definition, equals the rate of growth of real GDP plus the rate of price inflation. In the UK from 1993 to 2007, real GDP grew, on average, by 2.5 per cent per annum and the rate of price inflation averaged 2.5 per cent per annum, giving a figure of 5 per cent for g.

Fiscal politics

In practice, the critical issue for a government which is running a budget deficit and allowing the debt ratio to rise, is whether it has a credible strategy for reducing the deficit over the medium term, at least to the point where the debt ratio stops rising. Otherwise investors may start to switch out of government bonds into other assets, putting downward pressure on bond prices, driving up yields and raising the general cost of borrowing. So far the UK government has had little trouble in issuing new bonds, partly because gilts offer a safe haven in troubled times, and partly because the Bank of England has supported bond prices by means of quantitative easing. But as the recession recedes and QE comes to an end, the government must convince financial investors that its fiscal plans are realistic. Three questions arise here: How should the deficit be reduced and how fast? When should the process of deficit reduction start? And how far should the process go? ⁴

The first two of these questions already dominate what is, unfortunately, going to be a long election campaign. Throughout 2009 the Conservatives inveighed against deficit finance, giving the impression that in government they would take an axe to unprotected public spending programmes and would confirm the tax increases that have already been announced, but have not yet taken effect. On 1^st February 2010, they modified this stance and moved closer to Labour by announcing that they did not now propose to introduce “swingeing” spending cuts in their first year in office. Labour has consistently argued that fiscal retrenchment is necessary, but insists that it should be delayed until 2011 when the economy is stronger. A general point that needs to be borne in mind amidst the political posturing is that the largest single contribution to reducing the budget deficit as a proportion of GDP will be the growth of GDP itself, for even with unchanged tax rates and rules, tax revenues rise as the economy grows. There will have to be some tax increases or spending cuts since revenues will no longer be buoyed up by a booming financial sector, but the state of the public finances will depend mainly on the strength of the economic recovery.

On the question of timing, Labour is surely right. While the prospects for 2010 are brighter – hardly difficult after such a savage downturn – the upswing will be muted. In 2009 consumer spending, which accounts for two thirds of GDP, fell by 3 per cent. This year it is more likely to stand still as households continue to pay down debt, but fear of job losses abates. Private investment in fixed capital, which fell sharply last year, will probably fall less sharply this. On the other hand, since firms have been meeting demand out of inventories, restocking will provide a modest expansionary impetus. And the depreciation of sterling should enable British firms to take advantage of a recovering world economy. Since mid-2007, the trade-weighted value of the pound has fallen by almost a quarter. This did little to stimulate British exports when world trade was shrinking, but net exports should start to grow from now on. Nevertheless, it is clear that without a hefty budget deficit, aggregate demand in 2010 would be too low to sustain even the current, sub-capacity level of GDP.

What of 2011 and beyond? Will the private components of aggregate demand – consumer spending, business investment and net exports – grow sufficiently for the budget deficit to be halved by the fiscal year 2013-14, as envisaged in the 2009 Pre-Budget Report? According to the Treasury, we can expect the same strong recovery – in GDP that is, not employment – as occurred after the recessions of the early 1980s and early 1990s. But the current recession is different from those previous episodes. They were recessions of choice, deliberately induced by government in order to beat down inflation. The crash of 2008 resulted from the interplay between a housing bubble, easy credit and financial speculation. Notwithstanding the bail out of the banks, little has been done to reform and restructure the UK’s bloated financial sector and British households are still weighed down by record levels of personal debt. In these circumstances, the Treasury’s optimism seems unfounded. But if private spending remains subdued and government is bent on fiscal retrenchment, where is the expansionary stimulus to come from? Yet how can any government, whatever its political complexion, maintain an expansionary fiscal stance if it does not have the confidence of investors?

There is no easy way to resolve this dilemma. Is there any way at all? In principle, yes, but only if the case for fiscal expansion to promote economic recovery is coupled with the need to tackle the profound social and environmental challenges we face, and only if we set about winning broad support for a new political economy, including the support of business interests. The values, beliefs and general view of the world that underpin the state of business confidence at any given time are not set in stone and impervious to reason, though changing them calls for imagination, courage and stamina. In the 1920s and 30s, for example, conventional wisdom held that any attempt to create new jobs by increasing public spending was futile because it would lead to an equal and opposite fall in private investment. After the 1929 Wall Street Crash, this doctrine, the “Treasury view” as it became known, was gradually discredited, partly by the experience of the Great Depression and the persistence of mass unemployment, and partly because Keynes and his followers undermined its theoretical foundations and legitimised activist economic management. But although the crisis of 1929-31 marked the death of laissez faire, it took a decade for the proponents of the new approach to win the battle of ideas. Not until 1941 when the wartime coalition government announced its first budget, was Keynes the undisputed architect of macroeconomic policy, and by then the problem was no longer how to conquer unemployment, but its twin: how to control inflation.

The comparable battle today is to reinvent economics as a moral science which takes proper account of the social and environmental consequences of economic activity, and to shift the focus of policy debate away from the question how to restore business as usual towards the more daunting, but nobler challenge of creating a sustainable way of life in a fairer, happier and more cohesive society. Proposals for a green new deal point the way forward. ⁵ They have so far received scant attention in the media. Whatever the outcome of the coming election, our task is to develop these ideas to the point where they cannot be ignored.

1 Provisional estimates suggest that in the fourth quarter of 2009 GDP had (just about) stopped falling. Over the calendar year 2009, GDP fell by 4.75 per cent.

2 The Conservatives make much of the need to protect the UK government’s credit rating, pledging that if they form the next government, this will be one of eight benchmarks by which their economic stewardship should be judged. Of course, governments cannot afford to ignore financial market sentiment, but neither should they defer to it. The trick is to lead it.

3 Over the past two years, the nominal yield on ten-year UK government bonds – i.e. before adjusting for inflation – has averaged 3.5 per cent. Over the past two months, it has edged up to 4.0 per cent.

4 Once the debt ratio has stopped rising, the government has to decide whether reducing it should be one of the aims of budgetary policy. As the argument in the previous paragraph shows, this need not entail running a budget surplus: as long as the ratio of the budget deficit to public debt is less than the rate of growth of nominal GDP, the debt ratio will fall. From 1945 to 1965, for example, the UK government’s budget was, on average, in deficit, yet the debt ratio fell steadily. In any case, since no one knows what the economic situation will be at the point when the debt ratio peaks – perhaps in three or four years’ time – it is best to cross this particular bridge when we reach it.

5 See Green New Deal Group (2008) A Green New Deal (New Economics Foundation); David Purdy (2009) “Recovering From Recession by Combating Climate Change: The Case for a Green New Deal” Perspectives, No 21, Spring 2009; and Tim Jackson (2009) Prosperity without Growth (Earthscan).

Democratic Left Scotland

Democratic Left Scotland is an organisation committed to a radical Scotland. We see the need for social transformation toward a society based on equality, human rights and social and environmental justice.  We believe that this change can be achieved through constitutional change, better engagement with the people of Scotland and overturning neo-liberal hegemony.

DLS has been involved in a number of campaigns, and published a pamplet “There’s more to Politics than Parties”. DLS produces a regular magazine called Perspectives.

For more information about DLS, see the ‘Our Vision’ link above.  For information about our publications, see ‘Perspectives’.  To get involved in DLS, please contact your local National Council Member (see ‘Contact’ info).