In the words of Milton Friedman, hero to Margaret Thatcher and the extreme neo-liberals of the Chicago school of economics: “Only a crisis… produces real change.” The spiritual architect of national economic collapse in Chile, most notoriously, and other countries, maintained that incoming governments have a window of only six to nine months to act if they wanted to use the “opportunity” of economic crisis to bring about deep economic and social change. From a Tory perspective, we are in the middle of a disaster that has been long prayed for. Now they and their subservient Liberal Democrat spaniels have acted, just over five months into office. The prescription is as familiar as its justification is delusional, and its efficacy illusionary.
The illusion lies in George Osborne’s pledge that the Government’s measures will put the economy on a “sustainable footing for the long term”. After telling the people that there is no alternative, Mr Osborne is now inviting them to disbelieve what they see before their own eyes – austerity and suffering for those with no responsibility for the crisis is not the answer to recovery. In grasping the opportunity of “disaster capitalism” and accelerating its programme of privatisation, deregulation and massive spending cuts, the Government is reshaping the economy, away from the foundations of social welfare to one which disproportionately favours the interests of business. That’s why the 35 chief executives who spurred on the Chancellor while holding back on investment by their own companies attempted to shore up confidence in the Government plans.
Even in the earlier bonfire of the quangos, bodies responsible for holding corporations to account were disproportionately targeted. The delusion is that austerity will magically reduce the deficit, confidence in the economy will be restored and investment will come on stream, followed by a tsunami of new jobs and prosperity. As the Nobel prize-winning economist Joseph Stiglitz says: “Austerity converts downturns into recessions, recessions into depressions. The confidence fairy that the austerity advocates claim will appear never does…”
Mr Osborne’s attempt to camouflage the social savagery of the cuts with ameliorative references to the protection of education and health and the promotion of growth are hollow words. The services are already cutting and will have to cut more while private investment has slumped by $44 billion since the crisis began, equal to 70 per cent of the entire contraction in the economy. In a more clement economic climate, there may be justification for an examination of the balance between the size of the public and private sectors and a review of how government spends our money. But, as Tribune has consistently said, what we need now is carefully-managed investment. Alan Johnson (see page 5) has pointed the way for a potentially radical alternative with an emphasis on the need for growth, which can only come from investment, aimed at reducing the deficit successfully and humanely. Labour needs to get that message across now if there is to be a future chance of a stronger nation. Under the Tory plan, a weaker Britain starts here.
