Sunday, 13 November 2011

No Society, No Alternatives.

The Iron Lady.
In the General Election of 1979 the Conservative Party came out on top with Margaret Thatcher as Prime Minister. For Thatcher any attempt to manage the economy would lead to disaster and the catastrophic crash of 1973 was caused by Heath's attempt to control the economy. Instead Thatcher decided the state should be "rolled back" and power be handed over to the markets, a wave of deregulation and privatisation followed. The idea was that the unhindered power of the free-market would reconstruct industry. Heath removed exchange controls and opened up the UK economy to the international financial markets, money could now be moved in and out of the country at will. The banks could now raise huge amounts of capital from anywhere in the world in order to finance the purchase and sale of a vast number of companies. The banks could now target a company, finance entrepreneurs to buy that company and then strip the company of its' assets. The point was to increase profits and maximise return to the shareholders.

Private Vices for Public Benefits.
We might understand Thatcherism as a combination of monetarism and rational expectations, which suggested that the changes in policy could only be managed if the public were convinced that the government would stick to it regardless of what happens. Of course, the cuts in public spending required a determination to confront and smash the labour movement. This went as far as sicking the right-wing elements inside MI5 on Arthur Scargill and the NUM. Thatcher provoked a strike with the announcement that there would be a wave of pit closures and redundancies on the grounds that it was cheaper to import coal. The Thatcher government went after one union after another in a bid to sweep away the remnants of the post-war settlement which had empowered working-class people. The country was opened up to foreign investment and competition, which further undermined the trade unions and destroyed industries like steel, cars and shipbuilding.

After the fall of the Heath administration in 1974 it was clear to the elites that the labour movement had to be broken. It was the only way to turn back the tide as the working-class made significant gains in the standards of pay and working-conditions. One of Thatcher's economic advisers Alan Budd has since conceded that in his most pessimistic moments he suspects that his ideas had been ruthlessly used. Furthermore that the ideas of monetarism served as a theoretical cover for the Thatcherite policies, which could not have been implemented otherwise. The capitalist class had simply seen in the ideas a way to instigate a crisis of capitalism which would smash the trade unions and leave the country immersed in unemployment. It would be easy to hold down wages from then on and profits could skyrocket once again. The rise of Thatcherism might then be attributed to the structural needs of the system for a much more timid working-class that could easily succumb to exploitation and domination.

The Road is Clear.
In the 1980s there was a decline in wages for working-class people and unemployment increased rapidly as the benefits system came under fire from the government. To supplement the loss in demand the need for a fast-track line of credit emerged, the debt economy was pushed to its limits as households across the country fell back on credit cards, loans and mortgages. The privatisation of social housing in Britain at first appeared as a gift to the working-class as it made it possible for them to buy an asset, at a relatively low cost, which might make them rich one day. The housing market was seized upon by speculators, eventually pushing low-income earners out to the outskirts of cities as house prices skyrocketed. The old industries were swept aside to make way for the new era, in which money would be made from money and not much else in Britain. After 11 years of Thatcherism manufacturing in the UK had been virtually destroyed, employment in manufacturing plummeted by 30%.

The deregulation of the financial colossus in London led to the currency crisis of 1984 - speculators had begun to sell pounds and buy dollars because of high exchange rates in the US - and the government just had to stand back and watch. It was the early signs of what would come in later years. In 1987 the Thatcher government retained power for a third election just as the country was hit with an economic crisis, as a wave of panic swept the stock market, as it turned out that shares which had risen in value for 4 years were over-valued. The global markets were soon infected by the contagion of fear and the governments were powerless in the face of such chaos. The rise of a rapacious financial sector had been the works for a long time, now it surfaced and went on to stumble into a devastating crash in 1992 and an even more destructive crash in 2008. As the political class had unleashed the forces of finance they had bound themselves as slaves to the financial colossus in the City of London.

The Long March, to Where?
The fall of Thatcher in 1990 came after the Poll Tax demonstrations descended into riots in Trafalgar Square converged with internal tensions in the Conservative Party. By then unemployment had reached around 7%, working-people had been by some of the biggest wage cuts in the world as inflation began to rise into double figures once again. John Major looked to reassert control over the market for the purpose of setting limits to the fluctuations of the exchange rate. Of course, it was too late for the Grey Man as the old forms of political control and planning had been obliterated as options. So under Major, Britain became a part of the Exchange Rate Mechanism and the pound was fixed to the Deutschmark in order to liberate the currency from the speculators. The currency markets then took on the British government, to force Major to devalue the currency and to abandon the Exchange Rate Mechanism. It began with the sale of billions of pounds on the foreign exchanges.

The marketisation and systematic privatisation has brought destruction to major industries and has significantly undermined the welfare state as it was in the post-war era. The workers' share of GDP in wages reached its highest points in the 70s, Thatcherism succeeded in the reversal of this trend and the policies which she first implemented in the 80s have become the orthodox for British governments. Between 1997 and 2009 wages for working-class people increased by 45% while the wages of high-earners increased by over 300%. Today we live in a society which is more unequal than it was 40 years ago, the top 10% get 31% of income, while the bottom 10% get 1.3% of income, this is the same 10% of the British population who sit on £4 trillion in wealth. On top of this, the end of the Cold War signaled the beginning of a supposedly post-political era in which only managerial politics remain and Thatcherism has taken the place of the social order it aimed to dissolve. We live in an era without ideas, where no alternatives are imaginable and where even the suggestion of 'society' is suspect. It was the collapse of the post-war settlement under the weight of its own contradictions which has left us in this state of affairs, now we need a new settlement.

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