LAST Thursday, Labour shadow chancellor John McDonnell outlined Labour’s economic policy for the general election which amounted to piling even more debt on the backs of workers by making vast borrowing from the banks.
McDonnell promised £400 billion that a Labour government would invest ‘on a scale never seen before’ to overhaul the infrastructure of the UK.
This colossal amount would have to be found through massive loans borrowed from the world’s financial sector or encouraging big business to enrich itself through the re-introduction of Gordon Brown’s Private Finance Initiative. This allowed big business to make billions out of constructing hospitals and had to be abandoned.
McDonnell dismissed any concerns about driving up the national debt saying that with interest rates at near zero levels Labour should grasp cheap loans to finance its plans. At the moment the UK national debt stands at around £1.8 trillion, on which it repays £40 billion a year in interest even with the low rates charged.
In reality the international investors McDonnell is relying on to bankroll his spending will see a Labour government piling up huge debts for ‘infrastructure’, which will generate no real profit, as a very risky place to lend money to.
They will demand much bigger rates of return for their loans. But even this risk is insignificant compared to the collapse of the entire world capitalist system.
McDonnell completely ignores the Gordon Brown experience. Brown boasted that he had resolved the boom to bust crisis that is at the heart of capitalism, that there was no such thing as value, and consequently sold off the gold reserves for paper money, helping to touch off the 2009 crash that devastated the capitalist world.
His way out was to gang up with the US ruling class to open up the paper and electronic money flood gates, that led to the super austerity for 10 years. This pauperised the workers of the UK under his regime and then the Cameron-led coalition that continued Brown’s work, and in fact praised it.
McDonnell is considering playing with the same fire! There is already a fast developing economic crisis that even the world’s leading financial institutions from the International Monetary Fund (IMF) to the Bank for International Settlements (BiS) are continually warning about.
These ‘watchdogs’ of the world capitalist financial system are openly predicting a global crash as the financial and industrial industries collapse under the weight of a debt mountain.
Labour’s solution to this crisis is to ignore it and return to the Gordon Brown crisis cookbook, and the prospect of another 2008-style banking crash when they printed trillions of worthless paper and electronic money which was handed to the banks to bail them out, while the working class was ruined.
McDonnell is in fact rejecting socialism. He wants to run-up massive debt to build more roads but they will be roads to nowhere as industries close down, and not just banks but sovereign states collapse into bankruptcy leaving the working class to pick up the bill through even greater austerity.
Behind McDonnell’s empty promises that workers could prosper under capitalism is the fear that the working class is being revolutionised by the crisis – a fear shared by the Tories.
Significantly, the Tory chancellor Sajid Javid revealed that they were proposing to tear up the old Tory rules about borrowing and austerity, embarking on a similar debt fuelled spending spree.
Labour’s policy is to attempt to divert the developing mass revolutionary movement of workers and youth into accepting the possibility of reforming a bankrupt capitalist system and making it work for ordinary people. This is a betrayal of the working class.
The only way forward for workers today is not through ramping up more eye-watering debt, while leaving the capitalist class intact, but in the working class seizing power and overthrowing capitalism.
This means rejecting Labour’s hopeless reformist policies and urging the working class to see to it that the nationalisation of the banks and the major industries must be on Labour’s programme.
This means organising not just for a Labour government but for a general strike to bring down any bourgeois government to advance to a workers government to expropriate the banks and the main industries. The WRP is the only party that fights on this revolutionary programme. Vote for us where our five candidates are standing, vote Labour in the rest and join the WRP today!