There has been a lot of noise from the government that they have rescued us, that we are now back to ‘growing’ as an economy but we shouldn’t mess with their plan because hey, things are working.
There are notable problems with such an argument, including:
- Who cares if the GDP is reporting a positive if people’s actual lives are not improving. People’s lives are not only not improving, the majority of people are becoming considerably worse off. This is what we should care about, and it is something I have written about before in terms of what growth in terms of GDP actually means. It is an unhelpful measure of economic ‘progress’, with inequality and destruction alongside excessive consumption fuelling this so-called economic burst.
- This fits into the main point that this economic growth is reliant on continual financial ‘innovation’, which caused the 2007/2008 crisis through processes and tools such as securitization. The housing sector has boomed again through the cheap pop of credit created through the encouragement of first (and second and third…) time buyers, driving up housing prices. Also, people are using short-term borrowing methods such as pay-day lenders and generally getting themselves into more debt as pay is frozen (well public pay) benefits are frozen and cut, and general access to services and opportunities are destroyed in the name of ‘national interest’.
What this comes back to is an inherent weakness of our structural underlying real economy. This has been considerably weakened since the 1970s/80s when Thatcher started the Big Bang, attacked the trade union movement and with it collective bargaining and workers’ rights, and saw the rapid erosion of social, economic and political rights for the mass as an ideology of individualism, hatred and survival of the fittest was whipped up with an economic movement that saw increased personal debt, as people lost their jobs, saw their wages cut and benefits become harder to get. So more and more people need access to credit cards, refinancing of mortgages and other consumer and debt induced forms of survival. There is also the maintenance of false needs that the system needs to keep its ‘growth’ going despite this inherent weakness of the structural economy.
Key to maintaining the status quo and for the system to look superficially like everything is going well is therefore an ever-expanding financial sector. However, this sector’s growth through tools such as securitization is based on non-existent money and rather predicated on gambling. Greece was faced with such a fate when it saw speculators taking credit default swaps out on its public debt defaulting and therefore causing a problem with paying such borrowing payments and thus having to go to the IMF and the related Troika and inflict painful, destructive cuts in the name of ‘national interest’.
What ‘national interest’ means is private sector interest. It means that the top are looked after, after all the rich have got richer despite the crisis meaning that apparently we have ‘no money left’. No, we do have money left – you only have to look at how private sector debt is 450% of GDP whereas public sector debt is around 70% of GDP. Private debt is neoliberalism’s and also the national media’s blind spot, they don’t want to talk about that as it will get people to start to question why the hell they are having their life attacked when actually it is the private sector, not the public sector, that is unsustainably indebted.
It makes me laugh that there is all this commotion about debt when this system needs people to be in debt. The structural economy is too weak for it to support the profit motive of those running the show. They need to create fancy tools such as securitization and then use such apparent ‘growth’ based on such an unsustainable system to scare people into thinking we couldn’t do it without them. This is what is so laughable about George Osborne’s suggestion that he realises we need to improve our production and exports when he is hell-bent on supporting the City of London’s dominance, as after all they provide 50% of the Tories’ funding. We have long stopped caring about proper production – that stopped around the time the Tories felt the need to destroy the mining communities and provide no alternative source of real production or support. Rather, as a country we are too dependent on the City of London that doesn’t produce anything other than unsustainable and greed-based ‘growth’ that has negative and damaging effects on society as the real economy is continually weak, and in response the financial sector needs to mess over more and more people, grow even more, and become even more unsustainable to keep everything as it is.
These are issues I will be exploring more in my book, The Capitalist Production of ‘Ideals’.