The past several months have witnessed a shift in social policy by the international bourgeoisie even further to the right, marked by a turn from economic stimulus policies to brutal austerity measures. In the name of deficit reduction, the ruling classes of all the major capitalist countries are carrying out a frontal assault on the past social gains of the working class.
The long-term aim of these policies is to eliminate the welfare state, reestablishing the competitiveness of the older capitalist powers by slashing workers’ living standards to the level of their impoverished counterparts in emerging economies like India and China. That the living standards of the world’s people are to be equalized downward, rather than upward, is an indictment of the capitalist system.
The “Big Society” speech delivered Monday by British Prime Minister David Cameron exemplified this shift. It was a manifesto for a return to Dickensian conditions of working class poverty.
Seeking to camouflage the brutal implications of his plan to impose between 85 and 100 billion pounds in social cuts over the next four years, Cameron described his “Big Society” as a “huge cultural change” that will “empower” and “liberate” people. It will supposedly achieve this by privatizing and gutting government-run social services.
The shift from the stimulus policy of 2008-2009—which centered on the plundering of national treasuries to bail out the banks, without providing any serious relief to the working class—to the austerity programs of today coincided with the 750 billion euro bailout fund announced in May by the European Union and the International Monetary Fund. The fund was established to stave off default by euro-zone countries such as Greece, Portugal and Spain and the threatened collapse of the euro.
It represents yet another massive transfer of public funds to the big banks. As Mohamed El-Erian of the bond investment firm Pimco put it: “Through the ECB [European Central Bank], EU and IMF, the official sector has stepped in with its balance sheet to assume liabilities previously held by the private sector, thereby allowing private investors to exit in an orderly fashion.”
When the fund was established, the major European governments agreed that the cost of offloading the banks’ bad debts would be borne by the working class in the form of savage cuts in social programs, jobs, wages and pensions. Talk of stimulus to continue the “recovery” was dropped and replaced by the universal demand for “fiscal consolidation.”
The shift was signaled at the G20 finance ministers meeting the first week of June and formally ratified at the G20 summit meeting held at the end of the month in Toronto.
In working out its class policy, the bourgeoisie was emboldened by the experience in Greece, where the social democratic PASOK government has been able to push through a series of austerity measures in the face of massive popular opposition.
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