According to the right-wing press the cause of unemployment is that those seeking jobs are refusing to take the jobs offered to them. The new Lib-Con government is going to crack down on this type of behaviour. This is an example of what we might call the bourgeoisie's attempts to develop an economic narrative, which is often - but not always - interwoven with some threads of economic reality. However, once it is necessary to blame the unemployed for their own condition, then there are no elements of economic reality left.
This takes us back to the 1930s, when the bourgeoisie's economists, for lack of anything else to say, explained that all unemployment was voluntary. Not all the bourgeoisie thought that - Roosevelt and Hitler, for example, thought that creating new jobs might alleviate the problem. Furthermore Keynes, the bourgeoisie's last significant economist, thought so too, thus giving rise to the intellectual framework for the economic policy of the USA and the western European states after the Second World War.
The policies adopted within this framework were called Keynesian policies, in honour of the great man, or else policies of ‘full employment', or policies of ‘demand management'. All these terms meant the same thing, since Keynes had proposed that the disastrous fall off in economic activity during the Great Depression of the 30s, was due to a lack of demand, and that if the state made up the deficiency in demand then the slack in economic activity would disappear and full employment would result.
We do not have to consider here in detail whether these claims were true since we are only concerned with the development of the bourgeoisie's economic narrative which, by definition, cannot be the whole truth, since it is only what they want the world to believe. What we want to underline here, is that once the bourgeoisie are thrown back to the ‘explanation' of unemployment that it is voluntary, it is strong evidence of the depth of the crisis and, also, that they are running out of real ideas for dealing with unemployment.
Changing explanations for the crisis
On one point Keynes was undoubtedly right and that is that long term mass unemployment is a critically important expression of the economic crisis. And, for a lengthy period after the Second World War, the bourgeoisie in the Western metropolitan countries seemed justified in their belief that they did indeed have the secret to containing the economic crisis. This was evidenced by high employment levels and a relative prosperity for major sections of the population.
From the point of the view of the bourgeoisie it was unfortunate that the Keynesian policies proved to have no effectiveness over the longer term. In fact state intervention, whatever form it takes, is only a palliative for the crisis. If the underlying crisis of capitalism were not there, then there would hardly be a requirement for the state to intervene. In the ascendant period of capitalism in the nineteenth century, this type of permanent intervention of the state merely to keep the economy going was unknown. The bourgeoisie cannot admit this, of course, which is why it has to invent a ‘new' explanation each time the crisis enters a deeper phase, even if it is a question of recycling elements from an earlier period, which it often is.
In the mid 1970s the bourgeoisie had reached a point where every attempt to continue to stimulate the economy was resulting in runaway inflation - and furthermore was failing to stimulate the economy in any case. They called this phenomenon ‘stagflation'. Since it was impossible to continue like this, they settled on a compromise solution rather awkwardly called the NAIRU - the non-accelerating inflation, rate of unemployment. In other words they realised that they had to accept a certain rate of long term mass unemployment in order to keep inflation under control and therefore to give up the goal of full employment. The fact that they resisted this as long as possible is testimony to the fact that they recognised that unemployment was a key indicator of the economic crisis. Also it was difficult for them to acknowledge that everything that they had been saying since the Second World War on their mastery of the economic situation was proving to be completely empty.
In real terms we have been on the same economic trajectory ever since. Each downturn in the economy leaves its mark in terms of many more people being jettisoned from economic activity altogether. Meanwhile the upturns do indeed do something to alleviate the problem at the margin but always leave a clear stamp of the underlying problem clearly visible.
During the Thatcher years many unemployed people were persuaded to go onto incapacity benefit, for instance, and there are now 2.64 million people on this register, whereas in the 1970s there were 700,000. The bourgeoisie were just about to ‘do something' about this (according to their own declarations) when the recent recession struck, pushing up the number of ‘officially' unemployed up to 2.5 million. So, if they are serious about that still, it requires finding jobs for almost 5 million people altogether. Even that does not cover all the people who might be viewed as unemployed or partially unemployed but we do not have to be exhaustive here.
According to the bourgeoisie's version of reality - its changing account of the economic situation - while we do pass through ‘difficult and painful periods of adjustment' (as now for instance) we otherwise progress from one golden economic era to the next. Although memories of the ten years before the recent financial crisis and recession must necessarily be fading somewhat now, if you think back it was only a few years ago that Brown's long period of steering the British economy was acknowledged by all commentators as a period of outstanding economic ‘success'. The pound was strong, the City of London raked in huge profits and other parts of the economy forged ahead (house prices for instance). Even those commentators who were critics of Brown's stewardship of the economy accepted the idea of unending and apparently limitless economic expansion with its accompanying rewards (albeit for a much more restricted part of the population than in the 50s and 60s).
A new government faces the crisis
Cameron has a decidedly more difficult task in front of him to develop a theme of economic progress. His task is to implement the necessary cuts in state spending to bring the deficit under control (whichever party won the election would have had to do this, of course). Thatcher had to deal with a similar problem in an earlier epoch - she needed to show that somehow the adjustments needed after the collapse of the post-war economic boom portended a bright new future for the British economy. And some real and necessary policy adjustments were made at that time. For example it was necessary from the bourgeoisie's point of view to stop the fruitless and expensive support for sectors of manufacturing - like British Leyland and the steel industry - that had no prospect of ever paying off.
In Thatcher's presentation the resulting ‘withdrawal of the state' from the role of economic ownership and management was what would create the necessary market efficiencies to allow the British economy to flourish. Since some of the state support was simply building in inefficiencies there was a real rationale for what she claimed, in a limited sense. However, elevated to a general concept, we can see from the history of capitalism that we have briefly gone over here, that the idea that the capitalist market holds within itself the key to boundless economic expansion and that the ‘interference' of the state in economic matters is what holds back the natural trajectory of growth does not stand up to examination. More important than this is the fact that the state never actually gave up its role, under Thatcher or anyone else, in keeping the economy going. As indicated above, state intervention was simply reined in within a more manageable objective than the maintenance of full employment.
Much of the state's role in the economy is now disguised behind a limited shielding of ‘private' economic activity: "Lots of businesses in the north-east, south and west Yorkshire are entirely government-funded businesses. It's almost a form of nationalisation." (a spokesman of Grant Thornton quoted in the Financial Times, 10/5/10).
Cameron has indicated that he is well aware that whole geographic sectors of the British economy are actually economic dependencies of the state. When he speaks of cut backs in the public sector this ranges far wider than simply the areas that are directly and obviously under the control of the state. He is unquestionably right in thinking that whole areas of the economy are simply kept functioning to prevent the unemployment totals rising even further (effectively this is disguised unemployment). Therefore figures that total those currently unemployed are merely the first indications of the real underlying rate of unemployment.
If Cameron is serious about making a level of cuts that would bring more of this potential unemployment out into the open, it is important to understand that there cannot at this time be a repeat of the efforts made in the 30s to deal with it. That was the period of the first moves. This is definitely the end game that we have entered. The crisis is very much more developed now than in the 30s. It will be very difficult for the bourgeoisie to develop a new, really convincing explanation of how the economy will revive from now on. For the working class this is positive in the sense that the economic crisis is one of the most important factors driving the development of class consciousness. Hardin 13/5/10