New Communist Party of Britain
The balance of economic power is shifting away from the developed world. In 2000 the share of developed countries global GDP was 63 per cent, in 2007 this had dropped to 56 per cent and then dropped again to 53 per cent in 2011. Even so the 1.2 billion people of the “developed” world, 18 per cent of world population, still consume more than half of the GDP; the other 82 per cent of the world’s population have the remainder.
The shift in the distribution of the world’s GDP has been brought about because of the faster growth in the developing world, which has not been interrupted by the economic crisis in the developed countries. On a country-by-country basis, since 2005 GDP has increased by five per cent in the US, four per cent in the Eurozone and two per cent in Japan and Britain. Since 2005 GDP in Brazil has increased by 25 per cent, in India by 47 per cent and in China by 69 per cent. In Africa overall growth in 2011 was six per cent.
These figures show that the so-called world crisis has been solely limited to the “developed” world.
For all their bragging, by the European ruling class, that the European Union with its unified set of rules and regulations, its minimal regulatory interference unbound by specific state control, has allowed capital to be used more efficiently, has proved to be an illusion. Much of the European Union’s capital lies idle with factories either closed or operating below capacity and it has the highest unemployment rates seen in the “developed” world.
As the economic crisis in the European Union deepens the impact on workers has been enormous. By April 2012 there were over 24 million unemployed, 11 per cent. The highest rates were in Spain (24.3 per cent), Greece (21.7 per cent) and Latvia (15.2 per cent).
Of these 5.5 million were young people (under 25), 22.4 per cent of all young people, with the highest in Greece, 52.7 per cent, and Spain, 51.5 per cent.
The main purpose of the EU is to strengthen European monopoly capitalism so that it could compete with the United States for world markets and increase the exploitation of the European working class. Since its establishment the rules and regulations have been loosened in the interests of capitalism whilst reactionary laws and draconian measures have been imposed on the working class.
Many of the countries that have joined the EU and Eurozone had relatively undeveloped economies when compared to the original members of the EU and with the high value of the euro it made their economies “uncompetitive”. The rules and regulations that favoured European monopolies meant that national governments’ spending to boost investment in jobs and skills was deemed to be anti-monopoly and illegal. The powers of national governments have been usurped by the monopolies.
Almost 50 per cent of goods manufactured within the Eurozone get exported to other countries in the zone; much of this exporting has been financed by loans from the main banks backed by the money markets. It is not the so-called “irresponsible” southern Europeans who have caused the near collapse of the Eurozone; it has been the very nature of capitalism itself which has caused supply to exceed demand with the difference being used up by the taking on of debt.
Like Britain, Europe’s banking system is reliant on the wholesale funding markets. In total it has about $55,000 billion of outstanding loans on its books (about four times greater than that of the US banking system) of which $30,000 billion has been borrowed from the wholesale markets (about ten times that of the US). This strategy was similar to the one that brought down the British Northern Rock bank.
When the money markets froze, the European banks could not get new loans to repay the maturing debts, so have had repay them from internally-generated funds such as customers deposits. To service these outstanding debts the banks need to generate $800 billion in cash per month, which is about one third of Britain’s annual GDP. They have not been able to do this, hence the bail-out from the European Central Bank to governments who in turn lent to their sovereign banks.
The scale of the problem is so large that the Eurozone is finding itself powerless to find a pool of money large enough to solve the crisis, so it resorts to reducing the living standards of workers in an attempt to resolve the crisis.
The one solution that it chooses to ignore is that of restricting the profits of the monopolies and increasing, through higher wages and improved benefits, the spending power of the working class.
The NCP opposes British entry to the Eurozone and calls for unconditional withdrawal from the European Union (EU). The European ruling class hoped that British entry to the Eurozone would have strengthened European monopoly capitalism and invoked an era of sophisticated class war on the working class.
That ruling class intention was that their rule would be strengthened by cutting wages, social welfare, trade union rights, increasing working hours and reducing job security - and that by doing so the European ruling class would build a zone that would allow European imperialism to dominate the world.
This must not be allowed to happen.
In this global battle between European and US imperialism to dominate the world, workers in the US have also had to pay a terrible price. Since 2007 the proportion of US total income going to profits has risen whilst the proportion going to wages has shrunk.
In real terms wages in the US have not risen since 1975 and more recently the proportion of national income has shifted to the ruling class. In 1995 about 64 per cent of national income went on wages, this has now dropped to 58 per cent. The profits flowed to the rich, increasing the income of the top one per cent from eight per cent of total income in 1974 to 18 per cent by 2008. This shift has resulted in the wages of workers in the US being brought down to the same level as workers in Britain and Europe. In real terms US workers are much worse off, as they have to pay directly a higher proportion of their wages on health costs and other services, whereas in Europe these costs are paid for by taxation.
Non-financial company profits are at their highest at any time since 1950 and the larger monopoly companies have accumulated a cash pile of about $2,000 billion. In February 2011 President Obama urged companies to spend their cash pile to stimulate growth by hiring more workers. This has not happened; capitalist monopolies don’t react well to suggestions; they have to be forced to take action that they see not to be in their interests.
Unemployment is over 14 million (9.1 per cent) with 5.7 million manufacturing jobs lost since 2001 despite an increase in GDP. Though GDP has risen, productivity has risen faster. Between 1997 and 2007 US manufacturing output increased by 3.9 per cent whilst productivity increased by 6.8 per cent. It has been estimated that a further 2.3 million jobs will be lost through productivity gains alone by 2020.
By 2010 the increase in unemployment and reduction in wages has increased the number of workers in poverty to 46 million or 15.1 per cent of the US population the highest since 1993 with nearly 10 million falling into poverty since 2007. Poverty in the US is the reason why 50 million Americans, 17 per cent, have no health insurance, resulting in them being forced into life-threatening decisions.
As in all economies the workers are the largest group of consumers by far and in the US account for about 70 per cent of total spending. With workers struggling with falling wages, higher energy and food costs and job insecurity, the US is heading in a downward spiral.
In 1969 the US had 36 per cent of world income; by 2010 this had dropped to 23 per cent.