No one with any sense believes Cameron’s lie that “we are all in this together”. The class nature of this government’s austerity programme and its effects on poor and working people is inescapable. Ben Curry of the Leeds Marxists looks at the geographical distribution of the cuts and discusses how the poorest and most disadvantaged areas are suffering the most. The effect is the sharpening of already glaring disparities.
No one with any sense believes Cameron’s lie that “we are all in this together”. The class nature of this government’s austerity programme and its effects on poor and working people is inescapable. To restore the profitability of big capital a war against every gain in welfare and public services is being waged. The poor, the sick, the very old and the very young are being made to suffer disproportionately. The same things can be seen in the geographical distribution of the cuts: the poorest and most disadvantaged areas are suffering the most and the effect is sharpening already glaring disparities.
Welfare cuts in the poorest parts of Northern cities represent a fall in income of up to 4.65% for every household, according to research conducted at Sheffield Hallam university, and published in the Financial Times. This compares to 0.86% in Tory heartlands like Surrey. Blackpool, for instance, will see the elimination of “6.5 years of real household disposable income growth”. This amounts to £914 a year being taken from every adult of working age. The result of these disparities is a strong feedback effect in the hardest hit areas.
Where workers are no longer able to spend, markets contract. Shops close, small businesses are bankrupted and big business moves elsewhere. Workers are thrown onto the scrapheap and swell the ranks of the unemployed. National averages mask the real rate of unemployment in Britain; the figure is 6% in the South East but is double that at almost 12% in the North East, according to further research by Sheffield Hallam. Young people of working age are moving to other areas such as London and the South East as a result. This small corner of the UK accounted for 53% of population growth in 2013 largely as result of what one could call a flow of “economic refugees” to the South.
The crisis of capitalism is fundamentally caused by the contradiction of overproduction – commodities are produced without end for markets that are fundamentally limited by the striving of the capitalist class to keep wages low. The result is that the system periodically produces more than the markets can absorb and is faced with crisis. Cuts in benefits and in the “social wage” also pull demand out of the economy, thus exacerbating the crisis. In some cities, particularly in the North of the country, these cuts represent a substantial further contraction in the market.
The North is left with a permanent crisis. Little is left on the high street apart from 99p stores, £-strechers, betting shops, pawn brokers and charity shops. A chronic social breakdown permeates communities. It hasn’t been this grim up north since the salted earth austerity of William the Conqueror – one can only assume that it was a model for modern Tory policy.
There is, however, a progressive side to all this: the Tories are politically cutting their own throats. In large parts of the UK the Tories, who are already an endangered species in Wales and Scotland, can expect to be further annihilated – especially in Northern England and the Midlands. It will be hard to conceive how the once proud Conservative Party, with its one-time mass support in the working class and middle class areas, will ever be able to form a strong government again.
However, the collapse of the Tories, already in turmoil and bleeding support to UKIP, can only benefit working people if a party representing their interests and armed with a real solution steps up to the mark. The response of Labour’s Ed Miliband to chronic and growing regional disparity has been to propose the formation of “Regional Investment Banks”. Without making it clear whether this would be a break up of private banks or a public bank with capital from who-knows-where, Miliband declared, “we need a regional banking system, reaching out to each and every region of the country […] Not banks that like to say ‘no’. But banks that know your region and your business.”
For a real alternative
Simply put, the proposal is based on a flawed supposition: that the big national banks are not investing in certain areas because they don’t “know the region”. However, the problem is precisely the opposite: the big banks know the regional disparities that capitalism creates only too well and they will not invest in depressed regions where they’re unlikely to find thriving markets that promise profitable returns. It is not that the big banks are nasty and simply “like to say ‘no'” – it is that they are motivated by profit and so, according to the logic of capitalism within which they must operate, their behaviour makes perfect sense!
The idea of “regional banks” has been taken up again recently by left-wing columnist Owen Jones in his recently published “Agenda for Hope”. To his credit Owen Jones has, unlike Miliband, made a concrete proposal as to where the capital might come from: by transforming the already publically owned, bailed-out banks into regional investment banks. The problem is he makes no mention of nationalising the banks that remain in private hands anywhere in his 10-point manifesto and so one assumes these regional investment banks, that are mandated to invest in areas regardless of their profitability, must compete on the market alongside private, profit making banks. Inevitably the profit-making institutions will have the advantage and will continue to invest only in the most profitable areas: they will drive the public, regional banks to the wall.
Indeed, credit unions are already playing the role of non-profit institutions on a regional basis whose mandate is to lend cheaply to poor people who might struggle to obtain loans elsewhere. Many have even begun lending to small businesses. However, despite booming demand for credit unions, due to the epidemic poverty that capitalism is creating, many are still going bust. Eight credit unions were declared bankrupt in the last year and a half because of an accumulation of bad debts on their books incurred by lending to impoverished debtors.
An island of socialism in a sea of capitalism is liable to being washed away! The fact is that without nationalising all of the banks and big monopolies under workers’ control it is impossible to conceive of a banking system which would be able to operate on a regional basis to invest in and thus regenerate those depressed, de-industrialised regions of Britain that are being battered by austerity.