The financial markets are in "turmoil." With the Eurozone debt crisis looming large in the background, William Hague has held a "crisis meeting" in Britain, as the European Commission has vowed to consider "all possible options." It is almost certain that, especially if this economic crisis deepens, those "options" will have to include attacks on the working class.
Hague hinted at this when he stated that Britain is "are not in the firing line of these problems because of the difficult decisions that we've taken over the last year to bring spending under control, to bring down borrowing, to control debt." Likewise, Barack Obama has stated that the debt ceiling compromise puts the US on "sounder fiscal footing" as it moves ahead. A paper by Peterson Institute for International Economics (PDF) puts it even more explicitly, saying that "significant public sector wage and benefit cuts that bring the primary balances into substantial surpluses" is "the most direct route" to recovery.
It almost goes without saying that the "recovery" concerning economists and governments is the recovery of the ruling class. For the working class, there has been no return to prosperity in the wake of the credit crunch, as the bosses have consolidated their own positions even further at our expense. Only today, it has emerged that average take-home pay in Britain has fallen by £1,200 in the last two years, and we already know that increases in employment translated into an increase in part-time and casual work, leaving workers less secure and worse placed to support themselves and their families. Similar situations and worse can be found across the world, as crises provide suitable justification to attack any and all gains made by those who have built the wealth of the world.
But such a trend cannot be infinite, as I noted back in January;
Cuts in public sector spending are undoubtedly taking their toll, but the private sector is being hit by the double whammy of the bosses' own austerity measures and the knock-on from government cuts. Research by the Incomes Data Services suggests that, yet again, private sector pay rises are to trail inflation. In the past three years, workers have faced pay freezes and below-inflation pay rises which amount to pay cuts in real terms. So, their income is declining whilst costs continue to rise, and this of course affects consumption.
With classical economics, there is a natural limit to this. Adam Smith wrote in The Wealth of Nations that there was "a certain rate below which it seems impossible to reduce, for any considerable time, the ordinary wages even of the lowest species of labour."
The era of cheap credit destroyed the idea that "wages must at least be sufficient to maintain" the workforce. It allowed for the bosses to siphon off the production of their employees as profit far beyond this basic limit, and to grow ever richer as more people were forced into debt and to living hand-to-mouth. But, even within the existing economic framework, it is nothing short of madness to think that this trend can continue after the spectacular crash of this system which wrought the recession and the subsequent "need" for austerity in the first place.
But madness is fine as long as it produces gain in the short-term. Capitalism is eating itself, and economists have been predicting such a downward spiral for some time. But, as a CEO, to heed and act upon these warnings would be to defy the gods of profit margins and put your own job at risk. So the economic implosion continues.
There is an alternative to this, as unions such as PCS continue to argue. But it remains true that it is not an alternative that will be willingly put into practice. Nor will the drive for "structural reforms" and deficit cuts be stayed with appeals to reason and "winning the argument."
We are likely to see another rapid escalation in the class war being waged against workers very soon. It is no longer that much of a stretch to imagine a significant section of the world economy being dragged into the same mire as Greece if things go particularly bad. If that happens, then the same brutal response inflicted upon that country by the IMF will certainly follow. The cuts will go beyond a scale we are yet able to imagine.
But the question is whether we will be able to mount as fierce a resistance as the Greeks to such attacks. For Britain, the answer is almost certainly no, even by the admission of those who do not see the crippling limitations of the most "militant" sector of our union movement.
This doesn't render the situation hopeless. Historically, extreme crisis and hardship have often provided the catalyst for class anger to explode beyond the boundaries of official movement and cause significant headaches for the ruling class. The "indignants" movements in Spain and Greece are just two very recent examples of this. With the influence of anarchist organisations and ideas growing in the anti-cuts movement over the past year, and with both the student movement and UK Uncut providing an unexpected spur to the fight as it emerged, there is the strong suggestion that something similar could well be possible in Britain.
But, just as likely, the same conditions can breed reaction and see the working class tear itself apart. It is by no means certain which course events will take. But as capitalism lurches from one crisis to the next, our collective interest as workers demands that we push in the former direction. The ruling class will want to heap their turmoil upon us, and it is vital that we resist that.