Sunday, 29 June 2014

Understanding Our Economy and How To Change It, by Andrew Fisher

"Those who do not learn from history, and doomed to repeat it."

That seems to be the fate about to befall us, whoever wins the 2015 general election.

The causes of the economic crash are presented by the Westminster politicians in glib terms for short-term political gain.

On the one hand, George Osborne tells us our economic problems are all the fault of the last Labour government for over-spending, as if excess nurses' pay or teachers' pensions caused banks around the world to collapse.

This fatuous nonsense deserves no time, but the retort from Ed Balls, that the last Labour Government can't be blamed for the collapse of Lehman Brothers, deserves little more.

The US bank crashed in 2008, but here in the UK Northern Rock had collapsed in 2007.

Our economy was not an innocent bystander in the crash, buffeted by the fall-out of the US sub-prime crisis.

We have to accept responsibility. And that means looking beyond glib banker-bashing, too.

The crash wasn't caused by a few rotten apples in a few dodgy barrels. The crash was the inevitable consequence of the structural weaknesses in our economy.

Those structural weaknesses were as a result of deliberate policies by successive governments to reshape the UK economy: rolling back the state by  privatising, deregulating, and handing over large swathes of industry and economic power to an unaccountable cabal of corporations and oligarchs.

This left our society more unequal, reducing people's incomes and depressing consumer demand.

Consumer credit and asset bubbles were there to fill in the gaps. But transferring housing into a speculative commodity only caused greater crises, social and economic.

Deregulating finance and undermining other sectors left our economy unbalanced, fragile and unstable.

And what is astonishing, after the deepest and longest depression since the 1870s, is that this economic orthodoxy remains intact, the banks remain lightly regulated, and there is little discussion in (and even less concrete action from) the hallowed halls of Westminster to fundamentally change our economy.

What I find most encouraging though, is that despite no political parties or organisations campaigning vigorously for it, the British public remains in favour of significant changes

Two-thirds majorities want the railways, energy companies and Royal Mail brought into public ownership, and by an even larger margin people want higher taxes on the highest earners.

So why is the Westminster consensus so out of step?

Actually, the economic crisis is and always was a political crisis, a crisis of democracy.

Not just because no party is properly representing people's economic views, but also because too much economic power now resides outside the democratic realm.

By privatising publicly funded assets, we handed over control of our water, electricity, gas, telecoms, and later railways and postal service, to privateers.

In return they charged us more, asset stripped, and failed to invest. Leaving our infrastructure well behind that of other major economies.

By reducing taxation on capital, high incomes and corporations, more wealth has now been accumulated by that infamous one per cent.

We instead now tax the incomes of the poorest at a higher rate than those of the richest.

By asset stripping our economy and allowing only the richest to share the proceeds, our country is scarred by a grotesque inequality in which we cap benefits going to the poorest, but not the rents charged by the richest.

This is the morality of an economy rigged to benefit only those at the top.

If we want not only a moral economy, but also a stable one, then we have to redistribute wealth and power.

That means, as Tony Benn put it, "shifting power from the wallet to the ballot."

In practice putting those parts of our economy that are too important to fail, including the banks, in democratic public ownership and giving people economic rights: to not live in poverty, to decent housing, and in the workplace.

We need an economy that works for us.

That means taking on some very powerful vested interests, just as it did when the Chartists, trade unionists and Suffragettes fought to get rights, too.

If we are to learn anything from our history, it is that social movements change history, and that while the one per cent have the billions, the 99 per cent have the numbers.

We have to get organised.

Andrew Fisher is the author of The Failed Experiment - and how to build an economy that works.

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