The usual response to an economic crisis from those of us who see ourselves as being on the left is to blame the government. After all they are convenient scapegoats and, to be fair, don’t seem to have much of a clue. In this article I am going to explore the possibility that the government, per se, is not as culpable as we like to think. Now I realise that I lost readers when I said it wasn’t the government’s fault. 

I have kept figures to a minimum, but we need to understand the economics behind why hospitals are run-down, why schools are crumbling, why there are pot-holes in the roads.

Let’s start with the headline news. A short while ago it was announced that UK inflation had fallen to 3%. This meant, among other things, that Rishi Sunak was able to say that “he” had halved inflation. In November UK inflation was a staggering 10.7%, making halving it a relatively easy task. Bearing in mind that inflation at the same time in France was 6.2%, in Germany 8.8%, and in the Netherlands 9.9%.

Graph showing inflation coming down since October 2022

I realise it’s not usual for Critical Mass to let Tory Prime Ministers off the hook, but, as we can see, inflation was a global issue, not unique to the UK. What was unique to the UK was the rate, some of that a consequence of mismanagement, some a Brexit effect. 

A point I have made previously about inflation bears repeating. If general inflation is, let’s say, 3% it does not mean that everything is going up by 3%. What it means is that, on average, prices this year are 3% higher than at the same time last year. We have been monitoring a basket of budget goods for 93 weeks (at the time of writing) and our basket rose 6.83% in the year to 16th March 16th. So, how inflation affects you is likely to be disproportionately affected by how much income you have in reserve.

Food prices are certainly stabilising. Goods which were rising weekly have not changed price for 4 weeks. However, they have not gone down in price either. On the whole. Actually sliced bread, a pack of apples and a pack of fish fingers are all marginally cheaper than they were a year ago. Having said that, everything else has risen by more than enough to mitigate against those savings. These prices actually tell us little about the state of the economy.

But, if inflation is now under control, and I’m not saying it is, what does that mean? Inflation has been brought down by a very crude economic policy and one favoured by ‘supply side’ economists and governments who follow them. To bring down inflation they argue it is necessary to put interest rates up. 

Most of the so-called G20 (with the exception of China and Japan) raised interest rates between 2021 and 2023. Most went from 0.1% to over 4%. This is presented as a necessary evil. Short term pain for long-term gain. But it is based on an economic orthodoxy rather than any concern for the well-being of people like you. 

Graph showing rise in interest rates between 2021 and 2024 in a number of countries

Governments believe that they can make the system work. They believe that because it has worked in the past it will work again. They believe, as do their economic advisers, that it is their job to ensure a hassle-free environment for business, particularly big business. Subsequently, whenever there is a choice between improving your life and enriching those who already have more wealth than they know what to do with, they do not pause to consider you or your family.

In their economic system negative growth, which actually means the economy is contracting, is the worst thing that can happen. Every aspect of our lives is predicated upon consistent growth. During the coming elections we will hear candidates and parties bandying around spending plans wrapped inside a caveat. Everything depends on achieving consistent, and high, growth. The road to this nirvana is to be found in maintaining low inflation.

Of course, there is a dilemma with constant growth. Not just that it is difficult to maintain, but that it runs counter to what climate scientists are regarding as essential action to prevent the planet from overheating. Production processes, which are essential for growth, are the main emitters of greenhouses gases. The target of net zero, declared for 2050 by most governments, is not only likely to be missed, but, even if met, would likely be too little too late. 

So, we all have a choice. Keep our consumer lifestyles, with the associated pollution. Or, save the planet. The majority of people it seems are choosing their consumer lifestyles.

But, given the economic orthodoxy, we should be seeing a period of sustained growth as inflation falls. So it is curious that, at the same time as inflation has stabilised, growth for the UK has been at -0.2%. In other words, the economic miracle is no miracle at all. Prices are still rising, albeit not as fast as they were, but as a result of high interest rates investors are finding the rate of return on capital is less attractive than investing in bonds. This is because when interest rates are high it makes sense to save rather than spend. All of which is great if you have millions to invest.

But for the rest of us high interest rates mean higher mortgages, higher credit card payments and subsequently fewer goods bought on credit. Fewer goods bought means less demand, which means factories that produce things laying off workers. Unemployment, which has been almost expunged from the political vocabulary, is still at 1.1 million people in the UK, and that is under counting rules that make it almost impossible to calculate how many unemployed there actually are. Those who own factories, whether individuals or not, cut their costs starting with the workforce but can continue to increase their wealth by investing spare money where there is less risk.

It sounds cruel doesn’t it? A person withdraws support from a factory employing people in order to invest their money in schemes that enrich them but produce very few jobs. And it is cruel. Particularly for those who lose jobs. But from an investment point of view it is entirely rational. If you have a sum to invest it surely makes sense to get the best return possible. If that means withdrawing support from one enterprise to invest in something less risky that is ‘just business’. Of course, there is a question that Karl Marx raised in Das Capital which was how come some people have money to invest and others have nothing to invest but their labour power? There is nothing natural about this split so how did it occur and why do we keep replicating it?

This is not a uniquely British phenomenon. We live in a globalised world where all the parts are inter-connected. Your decision not to replace your TV in time for the Paris Olympics will likely not result in any job losses in the UK but rather in, already, low wage economies, such as Indonesia, Taiwan, China etc. Though strangely it is the command economies with low wages that have the lowest inflation and the highest growth.

Virtually every country in the capitalist west has seen growth slump in recent times. In 1973 the world economy was growing at an average of 6.1% per year, by 2023 it was down to 3.1%. But that figure is not distributed equally. So in a country such as the US growth went from 5.6% to 1.9% over that period. Sweden from 4% to 2.9%. Whilst India went from 3.3% to 7.2%.

Graph showing how economic growth has fallen in the period 1973-2023

It is assumed that growth is a good thing. But some countries will have taken conscious decisions to reduce growth in order to meet their net zero targets. So there is a trade-off between indicators. There are only 8 countries that  have already achieved net zero: Bhutan, Comoros, Gabon, Guyana, Madagascar, Niue, Panama and Suriname. They all have in common that they are very small, mainly island states with a reliance on agriculture or fishing. Whilst they are important they represent less than 1% of the world’s land mass. The other 99% continue to emit at dangerous levels.

What we see is that our own lifestyles are driving the system many of us find oppressive. But, more importantly, in less than 100 years those lifestyles are likely to cause such immense suffering that not only will the system be unable to survive but neither will our species. It is self-harm on a global scale. But can we stop it?

The first thing to say is that nobody in the political arena in the industrialised west has a serious plan to reduce our reliance on commodity production. And it is unlikely that any electorate in the world would vote for any party that says that “you have bought your last phone/car/new kitchen” or “you have had your last overseas holiday”. But two things point to this being an, almost, inevitability. First, the entire system is built on more and more accumulation of wealth, and the route to wealth remains the sale of commodities. Second, people in such a system come to regard the acquisition of new things as their reason for existing. We even have words to describe the pleasure to be found in buying new stuff. Who has not been offered ‘retail therapy’?

The idea is that if life seems harsh then spending is the way to bring you pleasure. Of course, like any drug, the rush is short-lived. Pretty soon you are on the look out for that high again. Look in your cupboards; how many things have you got that you either never use or could easily have foregone? This is not to point the finger at anybody. I’m rather keen on books and records. But these are bad habits that could, quite literally, be the death of us.

Boring as the economy may appear to be, it controls everything we do. Very few people are able to avoid its tentacles. What we value are ‘things’, ‘goods’ or ‘products’. And whilst it does not mean we do not value other things – love, honesty, compassion etc. we are told that everything has its price. And few of us spend any amount of time arguing against that idea.

It was always assumed that socialism could take over the capitalist system and simply refashion it so that it served social ends rather than simply accumulative ones. But, if we are to transform the world, it has become clear that we have to find ways to live that do not rely on growth for growth’s sake. It is becoming imperative that we do more than simply change the ownership of industry, we have to change the entire way we think about what constitutes a useful and productive life.


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