Socialist Worker

When economic boom goes bust

Issue No. 1761

'THE WORST is yet to come.' They were the words of a City economist as British manufacturing industry was officially declared to be in recession. Figures released this week showed the biggest fall in manufacturing output for a decade.

Every reader of Socialist Worker will know what that means-the dole, or fear of the dole. More than 100,000 jobs have been cut in manufacturing since the start of the year. The TGWU union warned this week that another 250,000 are at risk. The talk everywhere in the media is of a 'global slowdown'.

Take the state of the three biggest economies in the world:

  • The United States: nearly one million jobs will be cut this year. The job losses announced in July were 65 percent up on the previous month.

  • Japan: unemployment is at a record high, production is falling, and the government plans a £17 billion cuts package.

  • Germany: panic set in this week with news that the economy is shrinking and exporters predict a sharp cutback in orders.

    More than a quarter of a million jobs have been cut in the global telecommunications industry in the last three months. 'The global situation is now much more serious than in 1999,' says the bosses' Financial Times. The Asian and Russian financial crashes sent shockwaves around the world in 1999.

    The Bank of England cut interest rates last week in a bid to prevent the economic situation in Britain getting worse. People are already suffering. Millions more will do so if the world economy goes into a full scale tailspin. But why? Human needs have not suddenly changed. We still need workers to produce buildings, machinery and the basic goods that people need.

    The enormous devastation of a world recession is threatened because of the madness of the capitalist system of production. Profit is the guiding light of everything. When business thinks it can make money, it rushes to invest and the economy spirals upwards. But if capitalists think they will not get a profit, they pull their money out and the economy spirals downwards. New Labour promised an end to the cycle of boom and bust. But boom and bust are built into the logic of capitalism.

    The consequences of this crazy system are barbaric. Some 17 African countries, almost half the entire continent, are currently facing food emergencies, according to a report from the United Nations Food and Agriculture Organisation.

    Millions are in danger of starvation if food is not provided urgently. In Sudan and Congo alone more than five million people are at risk. Yet the response of world leaders is to prescribe more of what is making the patient sick in the first place.

    They say more of the free market, more privatisation and job cuts, more slashing of subsidies on basic foodstuffs so that every meal becomes more expensive in some of the poorest areas of the world. New Labour is now one of the leading advocates and cheerleaders of the free market agenda of any government in the world. Tony Blair continued his tour of Latin America last week, praising every IMF-inspired cuts package he came across.

    In Britain New Labour's policies mean kowtowing before business, giving more power to fat cats, wrecking services and jobs. But Blair faces resistance.

    We must all do our utmost to ensure the demonstration planned outside the Labour Party conference in September is as big as possible. The aim of that demonstration is to voice opposition to privatisation. And it will show solidarity with all those who are suffering from, and fighting against, privatisation and the ravages of the free market across the world.


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    Article information

    What We Think
    Sat 11 Aug 2001, 00:00 BST
    Issue No. 1761
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