Anything goes for neoliberals
Bank of England governor Mervyn King left no room for doubt in his address to businessmen at Newcastle Civic Centre on Tuesday night.
He expects working people to pay the price of the economic crisis through job losses and lack of purchasing power because their loss is business’s gain.
It is incredible that King can posture as an authority on the economy when the banking crisis erupted on his watch and he neither foretold it nor was prepared for it.
Like Establishment politicians in all three main parties, he saw the massive profits and shareholder payouts made by the banks, accompanied by obscenely high payouts in salaries and bonuses for the boardroom, as evidence that the bankers were doing what they should do.
They ignored the complaints of the manufacturing sector and small businesses that they were treated as second-class citizens when they sought finance and followed the speculators’ yellow-brick road.
When the speculative frenzy ended in the wake of the bursting of the South Sea Bubble that was the US housing market, King and the City put on their contrite face while the Labour government shovelled shedloads of cash into their industry.
“Prudence” Brown, who had justified his addiction to public finance initiatives and privatisation and his refusal to take back privatised industries back into public ownership on the basis of the need to curb public spending, handed over £1.3 billion without blinking to the same banks that had robbed us, enriched themselves and precipitated a global crash.
Brown’s successors George Osborne and David Cameron, together with their Liberal Democrat pawns, berated the banks, threatened them with sanctions, warned of punitive tax rates and then did absolutely nothing.
Rather than dealing with the deficit caused by the bankers’ behaviour, the coalition government is intent on using the economic crisis to transform society in the interest of its City pals.
It has ordered cuts in public spending, which will have an impact on the jobs, conditions and living standards of civil servants, local authority staff and other public-service workers.
But, as many trade unions have warned, these cutbacks also affect workers in the private sector, many of whom depend on contracts emanating from public bodies.
Barclays’ announcement of 1,000 redundancies confirms that, for the capitalist class, workers are simply numbers on a balance sheet who can be dispensed with at the stroke of a pen to maximise profitability.
And the decision by Wrexham & Shropshire Railways, owned by German state railway Deutsche Bahn, to walk away from its contract to operate a service between Wrexham and London via Shropshire is based on the same premise.
Deutsche Bahn could not simply abandon its contractual obligation so easily in Germany, but in Britain, where neoliberalism remains the dogma of all three major parties, anything goes.
And the “anything” that King has in mind is taking real wage levels back to 2005 levels in order to provide the stability to return to “sustained, balanced growth.”
The likelihood is that the bank’s monetary policy committee will raise interest rates later this year, making small businesses even more precarious and forcing a rise in mortgages and rents, further cutting workers’ standard of living.
No sweet words from union leaders or anyone else will persuade either King or Cameron to rethink their class-based priorities. It will take unified, determined and militant action.