Bleak midwinter of the economy

Things went from bad to worse for capitalism, yet big questions about the crisis were frozen out of debate.

Mick Hume

Mick Hume

Topics Politics

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To judge by UK news coverage, you might think that the big story of late has been the mild weather for the time of year. Yet whatever the weather, so far as the economy is concerned 2011 has been an entire year of bleak midwinter. In the words of one top banking economist this week, ‘we are living in a world of economic permafrost’ where, even if a technical recession is avoided in the coming months, there are no real signs of recovery and even Tory politicians are not foolish enough to talk about ‘green shoots’ breaking through the tundra.

Everybody with any sense knows that things went from very bad to even worse for British and Western capitalism over the past year. Yet if the economic landscape looks like a permafrosted Narnia – where it was always winter but never Christmas – politics has remained locked in a different sort of fairytale world.

In an age of historic stagnation and depression, the most potentially depressing thing in 2011 has been the continued absence of the economy from serious political debate. Of course the financial and economic crisis hangs over discussion of everything from pensions to fuel prices. But there has been no real debate about economic fundamentals, no clash of alternative visions for the future, no big questions asked about the sort of society in which we might want to live and work.

Instead in the UK, political discussion of the economy remains restricted to the tired narrow issue of the correct speed at which the all-party politics of austerity should be enforced. Meanwhile in Europe, there have been endless leadership summits to discuss the crisis of the Eurozone, at which the talking never stops yet nothing much is said. Instead of an argument about possible alternatives, the Eurozone leaders are now trying to impose conformism on the future by writing the principle that There Is No Alternative into their new rules on fiscal control.

The Western media has had fun pointing out the bizarre contrast between the stately pomp of Kim Jong-il’s funeral procession and the devastated state of North Korea through which it was passing. At times, the Euro-summit world of political theatre has appeared almost as far removed from everyday reality.

The economic credibility gap has grown as Western capitalism stagnates while rates of high-level denial and delusion grow. The bullshit market was particularly bullish earlier in 2011, with healthy growth-rate forecasts and promises that the Euro crisis would soon be solved. By the end of the year, real events had taken their toll to a degree, so that the UK Office of Budgetary Responsibility (OBR) had to downgrade its forecast for growth in 2012 from 2.5 per cent to 0.7 per cent. Yet even then, the OBR still tried to claim that by 2015, UK growth would be higher than it had previously forecast. Why the bean-counters should believe that was anybody’s guess – until you read the small print of their report and note that ‘Our central forecast assumes that the Euro area finds a way through the current crisis and that policymakers eventually find a solution that delivers sovereign debt sustainability. A more disorderly outcome is clearly possible.’ So that’s all right then.

Alongside the long-term trends of delusion and denial has gone the continued fixation with almost meaningless short-term measures, such as whether the markets are marginally up or down today and whether the British economy grew on paper by 0.6 or 0.7 per cent during the third quarter of 2011.

But whether or not the UK and Europe are heading back into technical recession at the start of 2012 is not the issue. The prospects are for continued stagnation and slump either way. What is to be done? Far from coming up with any fresh answers, our rulers refuse even to address the big questions. The economy remains depoliticised. The issue of how our society produces and distributes its wealth, the central question of political struggle through the past two centuries, has effectively been removed from the agenda in recent decades. Some hoped that the crisis would be an opportunity to force the reopening of that debate. Yet with no real opposition pressure from without, the elites have managed to carry on in their fantasy world, spouting the same non-solutions for 2012 as 2011. Indeed, with the march of the technocrats trampling over European democracy, the prospect is for even less debate than before (see Dear Santa, please get rid of the Euro, by Phil Mullan).

There is no shortage of fundamental questions to address about the future of everything from the UK economy to the Eurozone and the global imbalance of economic power. There are no obvious or easy answers available. But that is no excuse for refusing even to pose the big questions and pretending that all can carry on as before.

There are big questions here for us critics of the status quo, too. It now seems clear that we are in the midst not simply of a financial crisis but a crisis of capitalist profitability. There is no shortage of cash in big company accounts or bank vaults, yet investment is stagnating. Bankers and the rich are not simply hoarding their resources out of personal greed, but because they can see few profitable outlets in which to invest. And without investment, leading to rising productivity and economic growth, it is hard to see where a better future is coming from.

Yet unlike during previous crises of the system, today there is no obvious alternative to capitalism on the table. Instead the economic permafrost appears to have frozen the political imagination, too. So the only ‘alternative’ we heard much about in 2011 came from the creeping Jesuses of the Occupy movement, who seem to believe that we would all be better off living in tents, and whose most ‘radical’ proposal for change was for independent regulation of the banks (as supported by the Financial Times). If that is the best we can come up with, the bleak midwinter of Western capitalism appears set to continue no matter what changes the weather might bring.

Mick Hume is spiked’s editor-at-large.

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Topics Politics


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