Despite George W. Bush’s controversial bailout package (see page 5), we have by no means seen the back of the current economic crisis. Up to 1000 more banks are expected to close across the US and firms are being bailed out across Europe. This is the worst banking crisis since the Great Depression of the 1930s.
The damage that the financial crisis has caused to the real economy is only now becoming apparent. Several economies across Europe are moving into recession and no economy is truly safe from the crisis (see page 24).
Here, the working class is already suffering. The Reserve Bank is predicting 100,000 job losses over the next year, superannuation funds have lost $100 billion and the housing market remains tight.
The mining boom appears to be coming to an end, although it still accounts for the modest growth in the economy. The manufacturing sector fell in September for the fourth straight month and the retail trade fell 0.5 per cent. Ordinary people are already feeling the squeeze.
Infrastructure spending
Desperate to been seen to be doing something about the crisis after coming back from New York, where he spoke in favour of bailing out the super-rich, Kevin Rudd announced that he would fast track a building plan from Infrastructure Australia in response to the crisis.
We don’t need a report to tell us that most places in Australia suffer under archaic public transport systems and that schools and hospitals are in short order.
The truth is, Rudd and Infrastructure Australia are not talking about the infrastructure needs of the majority of Australians—they are talking about the infrastructure needs of big business. Better rail lines to ports for coal exports and improved shipping facilities to name a few. This is why Rudd wants the $20 billion to be spent in public-private partnerships—a recipe for disaster if you look at Sydney’s toll roads or public transport systems around the country.
If the government was short on ideas for infrastructure needs, Rudd could sink serious money into renewable energy technologies that could provide thousands of jobs and make headway in the climate crisis.
Instead, in the wake of the Garnaut review (see page 11) business leaders and government figures were quick to put the dampener on any significant action, citing the financial crisis as an excuse for business as usual.
Fighting for wages and conditions
Infrastructure and social spending alone will not ease the pain of the crisis for ordinary people.
In times of crisis bosses go on the front foot, slashing jobs and driving down wages and conditions. With a contraction in the Australian economy, it is more important than ever that we see a shift in the way wealth is distributed—from the profit column of big business to the wages of workers.
Labor governments around the country are using the financial crisis as a further excuse to force public sector workers to take real losses in pay. Now we have Rudd backtracking on his promise to pressure banks to pass on interest rate cuts in full.
This makes the struggle to get rid of Howard’s (and now Rudd’s) Workchoices laws (see page 32) and the campaign against the public sector wage caps of state Labor governments (see page 7) more important than ever.
As the crisis unfolds, leading neo-liberals have been lining up to declare an end to the reign of the free market.
Neo-liberalism was supposed to bring an end to the cycle of boom and slump (see page 20). Instead, thirty years of neo-liberal carnage has culminated in a crisis of the sort not seen for the better part of 100 years.
People everywhere are questioning capitalism—and looking for alternatives—for the first time in a long while. It is clear the neo-liberalism has failed to be able to solve the food, oil and climate crises. Now billions of people face a new era of instability.
Our ability to mount a serious challenge to the push of the ruling class to make us absorb the cost of the crisis will make all the difference over the coming period.
There is a real alternative to capitalism—socialism. As you can see from this issue, Marx’s ideas are necessary to explain what is happening in the economy today. More than that, they are central to building the fight to ensure the working class does not bear the brunt of the crisis.
Socialists have a key role to play in providing the basis for struggle over the coming period. Whilst their crisis is already becoming ours, it does not have to continue that way. The seeds of opposition are there, and the time to unite them is now.
