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Capitalism Can’t Solve the Crises it Caused

Rishi Sunak's pathetic response to the cost of living crisis shows mainstream economics has no solution to the elite interests reshaping the world economy. It’s up to the Left to set out how to take on the billionaires.

If you’re not being paid more than you were, but prices of most things you buy have risen, someone, somewhere else, must be making more money. (Malte Mueller / Getty Images)

The cost of living crisis is not only tearing open this empty shell of a Tory government. As prices grind higher, with forecasts for extraordinary new increases in the cost of energy and food over the coming months, the whole of mainstream economic thinking stands exposed as bereft of ideas or solutions. It’s time for socialists and the Left to step up.

Forced to act, Chancellor Rishi Sunak last week pushed through a package of handouts that, for an average household, will not cover even half of the expected £830 increase in their energy bill. Meanwhile, bankers and mainstream economists can be found urging interest rate rises and pay ‘restraint’ for workers—demanding a recession to restrain inflation but seemingly oblivious to the record profits that high prices are delivering for big businesses.

This is a time when new ideas and new ways of thinking about the world can come to the fore—when millions of people will be starting to look for answers and explanations as to what is happening, and what they can do about it. There is an urgent need for socialists and the Left to be ready with at least some of the answers: on how to stop price rises, why wages should be much higher than now, how we can build an economy that protects people from the brewing chaos of climate change.

The challenges ahead look different to those of the decade since the 2008 financial crisis. Back then, the detonation of the world’s financial system turned into a recession across the globe. In Britain, as across Europe, governments perversely used this failure of capitalism to push through austerity spending cuts—an attempt to reinforce the grip of the financial system over the economy. Many of us cut our campaigning teeth protesting against those cuts, from the tripling of tuition fees to the trashing of pensions to the appalling ways in which even the minimal support the welfare state offered many was removed. The effects of this austerity decade are only too visible today, in the millions reliant on foodbanks, forced into overpriced, substandard housing, or having to work in insecure, underpaid jobs.

In the middle of the decade, Jeremy Corbyn’s leadership of the Labour Party offered the glimpse of an alternative: opposing austerity and promising an economy that worked ‘for the many, not the few’. But that moment has passed, and the challenges we face now are more fundamental. Covid-19 was a dire warning about our future, as climate change accelerates the spread of diseases new to humanity, and, today, droughts and floods and even plagues of locusts threaten food supplies. This is one of the real drivers behind the cost of living crisis: that far from being a ‘temporary’ or ‘transitional’ shock, as many mainstream economists were insisting until just a few months ago, as our climate changes it is making the whole economy more unstable and bringing an end to what Marxist economist Jason Moore has called ‘the era of cheap nature’.

The other driver of the cost of living crisis are the monstrous profits companies supplying those raw materials of modern life are now making. BP and Shell between them made £40 billion last year in profits—easily enough to cover the entire cost of the expected energy price hike in October. Oxfam revealed two weeks ago that, while billions of us endured the misery of lockdowns and social distancing, more billionaires were created during the pandemic than ever before—particularly in food, tech, and pharmaceuticals. If you’re not being paid more than you were, but prices of most things you buy have risen, someone, somewhere else, must be making more money—and that is exactly what has happened to big corporate profits.

Dealing with this doesn’t only need a Green New Deal, essential as investments in renewables, public transport, and decarbonisation all are. It will need a fundamental rewiring of our economy, creating more resilient food systems, recycling and reprogramming old equipment wherever possible, and looking to properly value the kinds of work of care, typically performed by women, that are essential to human society but which capitalism systematically underpays and devalues. But—crucially—it means having answers that work, right now, to deal with the skyrocketing costs of essentials from cooking oil to petrol, and winning the case for big, inflation-beating pay rises.

It will mean, also, knowing how the economy is being reshaped in front of us, as monetary systems are disrupted by cryptocurrencies, or as the digital technologies monopolised by the tech giants intrude further and further into our social life. It will mean knowing how to take on the enormous hoards of wealth that a tiny few have built up, and dealing with the arguments their apologists use for them. It will mean having a vision for economic management in government that doesn’t see rising prices and immediately demand pay cuts.

That’s why the Progressive Economy Forum is holding its first conference, with the University of Greenwich, this Saturday. The full timetable is here, with speakers and sessions covering all the most pressing issues that face us all. We think this is an absolutely crucial moment for socialists and the Left in general to reorientate its thinking—to dust itself down, set its collective eyes on the future, and start to again win the arguments.