There Is An Alternative: reflections on elements of an anti-austerity economic policy.

Poster by freestylee

Similarly to the 1980s, when Thatcher proclaimed that There Is No Alternative (TINA) to her restructuring policies, again we are told in the UK that considering national debt levels, austerity is the only way forward. Up to one million public sector jobs are to be axed, public sector pensions and wages are under attack and welfare services are cut across the board.

Importantly, however, politics is always about choices and deciding on priorities. There are always several possible ways forward. In this post, I will reflect on some elements of an alternative, anti-austerity economic policy.

What would an anti-austerity policy look like?

• clearly, as a result of government bailout of banks, national debt has significantly increased. Nevertheless, as the PCS has already made clear a couple of years ago, the current national debt level is lower than between 1918 and 1961, when the British welfare state was established (PCS). In short, the gravity of the situation is exaggerated;

• tax justice – close tax loopholes by employing more inspectors: ‘figures produced for PCS by the Tax Justice Network show that £25 billion is lost annually in tax avoidance and a further £70 billion in tax evasion by large companies and wealthy individuals’ (PCS). Employing more staff at HM Revenue & Customs would allow the government to collect additional billions of Pounds every year;

• moreover, the PCS further calculates that if the so-called Robin Hood tax, ‘a 0.05% tax on global financial transactions – was applied to UK financial institutions it would raise an estimated £20–30bn per year (PCS). At the European level, it is the UK government which currently blocks moves towards a financial transaction tax;

Photo by the Workers' Party of Ireland

• tax justice would also imply that unlike the current government, an anti-austerity policy would not lower the income tax rate for high earners;

• government investment into infrastructure projects such as the generation of green energy and especially social housing to create employment. This would also help to address the energy crisis as well as solve the housing crisis, with many people finding it impossible to secure affordable housing at the moment (BBC, 8 July 2013). While this would initially lead to larger national debts, the creation of jobs would result in higher demand levels, less government spending on jobseeker's allowances and an overall more positive economic outlook;

• small companies struggle to raise necessary finance (BBC, 17 September 2012). An anti-austerity policy would imply that the government gives more direction to state-owned banks towards finance for businesses and a more focused industrial policy;

• emphasising cuts to wages is counter-productive as it takes demand out of the economy. An anti-austerity policy would protect wage levels in line with inflation and productivity increase;

Photo by Eddie Truman

• spending is always also about deciding on what are the key priorities. Do we actually need to replace Trident? ‘The government estimates renewal costs will be between £15bn and £20bn but anti-nuclear campaigners say the figure will be much higher’ (BBC, 16 July 2013). Is the British involvement in Afghanistan a societal priority? In addition to the loss of human lives, ‘the war in Afghanistan has cost Britain at least £37bn and the figure will rise to a sum equivalent to more than £2,000 for every taxpaying household, according to a devastating critique of the UK's role in the conflict’ (The Guardian, 30 May 2013). An anti-austerity policy would channel finance from war adventures to investment into schools, social housing, the health sector, etc.;

Of course, these are just a range of potential elements of an anti-austerity economic policy. They are not a comprehensive programme. What is clear, however, is that there are alternative policies available. If this is the case, then why does the UK government pursue these austerity policies in the first place?

What is the real purpose of government austerity policy?

 

The government claims that austerity policies are necessary to reduce national debt. However, how much money do these policies actually save?

• it is highly likely that the new loan scheme in Higher Education will ultimately be more expensive for the state than the past system of financing university education via block grants (see The Great University Gamble). Perhaps the real focus is on opening the door to private providers?

Photo by lusciousblopster

• in secondary education, finance is moved from comprehensives to academies and free schools. Is this really about saving money, or is the goal ‘to incentivise’ private sector involvement (see  Hands Off Our Schools)?

• the implementation of the bedroom tax is in all probability more expensive than what is actually saved in the process (see Nottingham Bedroom Tax Campaign). Is the real purpose an attack on social housing?

• NHS restructuring: is privatising the most profitable parts really about saving money and making service delivery more efficient, or is the objective to provide private investors with profitable investment opportunities (see also Broxtowe Save Our NHS)?

Photo by infomatique

In short, the real objective of current austerity policies is not to save money, but to open up the public sector for private investment. The financial crisis is used as a justification for a drastic transformation of society resulting in a redistribution of wealth from the poor to the rich and a change in the power balance from labour to capital. Austerity policies are a strategy of class warfare!

And yet, alternative policies are available. Whether they are implemented is a matter of political will and, ultimately, a matter of the balance of class power in society.  

Prof. Andreas Bieler

Professor of Political Economy

University of Nottingham/UK

Andreas.Bieler@nottingham.ac.uk

Personal website: http://andreasbieler.net

23 August 2013