Cuts and lay-offs as the crisis rolls on

The cuts! Unavoidable product of global recession, according to those who make them but won’t feel them; all the fault of the greedy bankers’ mismanagement being bailed out by the government according to others.

The current capitalist crisis (like all the others before it) is not the fault of foreign governments, nor of foreign immigrant workers, while bankers merely operate as the system dictates. Greed is necessary to all capitalists: take the maximum profit possible, protect your profits by passing debts on to others (usually the working classes), or go bust yourself. That is the nature of the economic and political system we live in, where overproduction (not in terms of what is needed but in terms of what can be sold) is on the one hand the greatest horror and on the other the thing that all capitalist production inevitably leads to.

This was summed up most eloquently by Frederick Engels in his 1877 work Anti-Dühring: “Commerce is at a standstill, the markets are glutted, products accumulate, as multitudinous as they are unsaleable, hard cash disappears, credit vanishes, factories are closed, the mass of workers are in want of the means of subsistence because they have produced too much of the means of subsistence, bankruptcy follows upon bankruptcy, execution upon execution.” (See also ‘Editorial: This system is bankrupt’, Proletarian, December 2009)

This paper has explained the cause of the crisis many times, but the purpose of this article is to look at how the crisis is affecting workers: their wages/benefits, their services, jobs and housing, their and their families’ health (mental and physical), their access to education and its quality,,and so on. Many companies, big and small, go to the wall during these periodic crises of capitalism, and even the biggest bourgeois business owner is not immune from losing a fortune, but the bulk of the burden falls overwhelmingly on the shoulders of the working masses.

When the kitchen and bathroom showroom group Homeform (which trades as Moben Kitchens, Dolphin Bathrooms, Sharps Bedrooms and Kitchens Direct) collapsed, the immediate effect was to put 600 workers on the dole (Sharps Bedrooms was sold off, saving those jobs for now). In addition, according to the administrator, deposits for new kitchens and bathrooms paid in cash by 453 customers are unlikely to be refunded.

This has had a dramatic effect upon the spending power of the sacked 600, and is also likely to put the out-of-pocket customers off making deposits on large goods in the future, both of which will affect demand in the economy, leading to more job losses and even further reduced spending power … and so it continues.

The Office of National Statistics (ONS) has released analysis of employment and related statistics around a two-and-a-half-year period including 2008/09 (the time around which most bourgeois economists date the start of the present recession). They show that manufacturing and the wholesale and retail trades suffered the greatest job losses across the UK as a whole, accounting for two out of every five job losses in many regions.

The worst-hit regions stretched from the North West down through the West Midlands (the very worst hit), followed by London and the South East, although no region is getting off lightly. The report also showed the clear link between poverty and mental illness, as suicides in 2008 increased by 6 percent on the previous year after a number of years in which the suicide rate had been falling steadily. To drive the point home the ONS stated that the number of suicides is “more closely related to economic changes” than other causes of death.

Coming back up to date, a new study published in July 2011 revealed that chain stores in the UK closed around 4,000 of their shops in the first five months of 2011: roughly twenty a day! Accountancy firm PricewaterhouseCoopers states in its latest figures that 375 retailers went bust in the second quarter of 2011, a 9 percent increase on the same period last year. This ‘lost jobs/diminished spending power’ spiral is proof in plenty that the crisis is far from over. Indeed, it becomes clear that it has not even peaked yet, let alone ended, as some bourgeois commentators would have us believe.

As we write, the Liverpool-based chain store TJ Hughes has just gone into liquidation, with its 57 stores running closing-down sales. Just a year ago this company was in the black, making profits of £6.8m on sales of £267m in the year up to 30 January 2010. What a difference a year makes!

Every day there is a new statistic showing the depth of the crisis and demonstrating the truth that overproduction leads to poverty, which in turn leads to inability to buy the goods that have been overproduced. All too clearly the bankruptcy of the capitalist system is revealed. Its claim to be the system that can deliver a decent life for working people rings ever more hollow, along with the oft-repeated lie that it is socialism that has failed. The truth is the very opposite, and the quality of life for workers in Britain is set to plummet dramatically unless they face this truth and act upon it.

The crisis is not being just felt in the manufacturing and retail sectors, however; it affects national and local government as well. A Financial Times investigation has analysed more than £750m of cuts made by 20 councils for 2011/12 (the first round in an expected four years (at least) of severe spending cuts by local government), which it then extrapolated nationally, finding that:

“The bulk of the cuts are being made to care services for children and the elderly. In adult social care, the FT’s investigation found 23 percent, or £1.4bn-worth nationally, of services are being cut as councils reprioritise spending to meet the needs of the most vulnerable and fulfil their minimum statutory obligations.”

Add this to the massive cuts in benefits to those unable to work by changing the goalposts to make sure very few now qualify and then dragging every claimant back through interviews and medicals in order to rubber-stamp the political decision to cut benefits to people who have no hope of getting or keeping a job and the true and far-reaching extent of the assault on the working class can be seen.

No capitalist government, whether managed by Tories, LibDems or Labour, will stop this attack. It will be stopped when workers in Britain follow the lead of workers in Greece and elsewhere and organise themselves to stand up and fight against the cuts born of capitalist crisis. It will be stopped when we see foreign workers, whether in this country or abroad, as our comrades not our competitors. It will be stopped when we stand with them to batter down the system that squats on all our shoulders and build a socialist society in its place.

The choice facing workers today is the same choice that has faced workers for over a century. It is summed up in an inspirational yet quite sober and down-to-earth quote by J V Stalin that adorned a banner carried through London on May Day by our party comrades: “Either place yourself at the mercy of capital, eke out a wretched existence as of old and sink lower and lower, or adopt a new weapon – this is the alternative imperialism puts before the vast masses of the proletariat. Imperialism brings the working class to revolution. ”