No sooner did the Bank of England release its latest inflation report, speaking with guarded optimism of a 2.2 percent UK growth rate next year and 4.1 percent the following year, than the Organisation for Economic Co-operation and Development (OECD) poured a bucket of cold water over such predictions. In their own report, the OECD suggested a UK growth maximum of only 1.2 percent in 2010 and 2.2 percent in 2011.
The Daily Mail of 20 November reported that government borrowing for October came to 88 times the amount for the same month last year, taking the total for the fiscal year to date up to £86.9bn, and suggesting a likely annual figure of £200bn. According to the OECD, the UK’s budget deficit will for the next two years yawn wider than those of any of the organisation’s other 29 members.
Meanwhile, the government’s tax haul is decreasing by the day, reflecting the diminishing proportion of the population in paid employment.
By far the biggest drain on public expenditure has been occasioned by the massive subsidy given to the ‘lame duck’ banking sector. Yet the Bank of England’s efforts at pumping free cash into the system has done nothing to get the capitalist commodity production show back on the road. Unable to realise the full value of their commodities on the stagnating demand market, enterprises now look in vain for the banks to tide them over this ‘bad patch’ with some low-interest loans.
The interest rate may be low, and the banks may be flush with dodgy cash, but none of that is getting capitalism out of its overproduction crisis. Lending to business is decreasing faster than at any time in the last 10 years (September’s lending was down 6 percent from the same month in 2008), even though two of the banks surveyed (Lloyds and Royal Bank of Scotland) are part-owned by the state.
The banks are either salting away the government hand-outs in the hope of sitting out the recession or using the funds as a war-chest for future acquisitions.
Faced with these contradictions, larger enterprises are shelving expansion plans and scaling down operations, hoping in their turn to weather the collapse in demand and the credit-drought. Smaller firms less able to survive without regular assistance from the banks are feeling the squeeze worst, with the prospect of bankruptcy or take-over breathing down their necks.
And whether it’s big firms scaling down or small firms shutting up shop, the end result is the same: the OECD tells us that UK unemployment, currently standing at 7.8 percent (amounting to 2.46 million people) is set to rise to 9.3 percent in 2010 and 9.5 percent in 2011. The real, unmassaged figures will, of course, be much higher.
It is intolerable that the whole productive existence of modern society should get stuck in this ditch of an overproduction crisis, with poverty and inequality stalking the land, when there exists an ample supply of labour, productive capacity and resources to secure the material needs of all within society.
All that prevents people’s needs being met is the continued private ownership of the means of production by a class of exploiters, the capitalist class. Their indefensible private appropriation of the fruits of labour stands in contradiction with the social character of the productive forces over which the capitalist exercises command. Only when that contradiction is resolved, by the expropriation of the bourgeoisie and the inception of a planned socialist economy under the revolutionary authority of the working class, will modern society escape at last from the curse of capitalist crisis, mass poverty, massive waste of resources and war.
