WRITING in the Guardian this week, Labour shadow chancellor, Ed Balls, made it clear that the Labour leadership’s economic policy consisted solely of moving into the Tory territory of cutting the budget deficit by waging war on the public sector.
According to Balls, he and Miliband are now confident that they can move into the ‘middle ground’ that has been vacated by the Tories as they move sharply to the right.
Balls cited Tory chancellor George Osborne’s Autumn Statement – which pledged that any future Tory government would cut the amount of government spending on the state by one third and reduce it to the size corresponding to that of the 1930s – as a defining moment in showing to the world the difference between Labour and the Tories.
Balls wrote that, with this statement, Osborne ‘ceded the political centre ground to Labour’. Not so much a centre ground as a stinking and treacherous austerity bog.
Balls took pains to emphasise that Labour fully agreed with the Tories on the need to bring down the budget deficit and that this would necessarily mean cuts to public spending, but he insisted that while Osborne was proposing to smash up every vestige of the Welfare State, including the NHS, Labour would reduce the deficit over a period of years by sticking to the cuts already being pursued by the coalition.
At this point, it may be useful to remind ourselves exactly what is this budget deficit that both Tories and Labour are so desperate to bring down.
The budget deficit is simply the gap between government everyday spending and the amount it is able to raise, mainly through taxation. To cover this shortfall, the government has to borrow the money and pay interest on this debt.
Osborne originally forecast that all the cuts to pay and services would reduce the deficit to £40 billion in 2015. In fact, the latest figures from the Office of Budget Responsibility show that the deficit will actually be £100 billion with forecasts that at the current rate it will exceed £280 billion in five years time.
It was the recognition by Osborne that the previous cuts, savage as they were, had signally failed to do anything to reduce the deficit that pushed him to announce that the only way out of this crippling debt crisis is to completely smash up the Welfare State and return to the levels of spending last seen in the 1930s, before there was an NHS or benefit system.
In the face of these stark facts that capitalism can no longer afford the ‘luxury’ of a welfare state, Balls is still blithely promising to carry on with the same policies only in a ‘fairer way’.
All of this begs the question, where did this budget deficit come from in the first place?
In 1997, the year Labour came to power, Britain actually ran a balanced budget – government spending was matched by its income. By 2010, the deficit had mushroomed to £170 billion.
Britain was not alone in this deficit explosion (Spain, Ireland and the US also suffered similar massive increases).
What lay behind it was not, as the Tories claim, a public sector spending spree by the Labour government but simply the banking collapse of 2007 and the huge amounts of money spent by these governments in bailing them out of bankruptcy.
It was the cost of bailing out the banks that has driven the UK’s national debt to over £1.4 trillion and its budget deficit to over £100 billion with both debts increasing by the day.
It is this stark reality that has pushed the Tories into declaring that, in order to survive, British capitalism must wage outright war on the working class and all its gains and drive them back to the hungry thirties.
There is no ‘fair’ way for capitalism to survive its historic crisis. It has to smash the working class. Equally, for the working class there is no way out other than to overthrow this bankrupt capitalist system with a socialist revolution.
A Labour government that carries on with the Tory austerity measures against the working class will be digging its own grave politically.
The working class will advance over its stinking corpse to carry out the socialist revolution, playing its part in liberating humanity from capitalism and imperialism.