‘Germany’s GDP is expected to shrink by 0.5% this year as the EU’s largest economy continues to struggle with an energy crisis and higher interest rates, the IMK institute reported on Tuesday.

The IMK’s forecast of 0.7% GDP growth for 2024 is also significantly more pessimistic than its spring projection of 1.2%. Other German economic institutes such as the Ifo expect GDP growth of 1.4% for 2024.

“The German economy, weakened by energy price shocks, will not really get going in the coming months, because high interest rates and a subdued global economy are putting the brakes on,” the IMK stated.

The report predicted that private consumption will recover from the end of the third quarter due to declining inflation and stronger wage increases. “This positive development comes so late that it can only somewhat mitigate the recession in 2023 as a whole, not prevent it,” the IMK noted.

Germany officially slipped into a technical recession in the first quarter of the year as GDP growth was revised from zero to -0.3%. The Bundesbank announced last week that the economy was likely to shrink this quarter thanks to slow private consumption and the increasing weakness of industry.

Deutsche Bank CEO Christian Sewing previously warned that Germany could once again be called the ‘Sick Man of Europe’ if structural economic issues are not addressed immediately.’

Companies in the UK’s private sector have been downsizing their workforce at the fastest rate since the global financial crisis, apart from the Covid-19 pandemic lockdowns, as output fell in September, according to data published by S&P Global on Friday.

The latest flash S&P Global Composite Purchasing Managers’ Index (PMI) figure for the UK slipped to 46.8, down from 48.6 in August, and reached a 32-month low. The reading was well below the 50-mark, which separates growth from contraction, and lower than economists expected, S&P said.

“The disappointing PMI survey results for September mean a recession is looking increasingly likely in the UK,” Chris Williamson, chief business economist at S&P Global Market Intelligence, warned.

“The steep fall in output signalled by the flash PMI data is consistent with GDP contracting at a quarterly rate of over 0.4%, with a broad-based downturn gathering momentum to hint at few hopes of any imminent improvement.”

‘The British jobs market is facing an “abrupt turnaround,” prompting companies to shed staff at the fastest pace since the aftermath of the 2008 global financial crisis, excluding the pandemic, S&P said.

“A major concern in the inflation outlook has been wage growth, but with the survey now signalling the sharpest fall in employment since 2009, wage bargaining power is being eroded rapidly,” Williamson added.

Overall, private sector business activity in the UK fell at the fastest rate since March 2009 as the cost-of-living crisis and surging borrowing costs dented demand, S&P concluded.’

Boom and bust

‘It might be worthwhile reminding ourselves of what all this boom and bust actually means. In a capitalist society, the whole power of the state’s propaganda machine – press, radio, television, pulpits, government pronouncements, everything – is geared to one all-encompassing end: that the inescapable fate of the working class is to spend their entire working lives labouring for the benefit of the owning class. When nearly all the work force has knuckled down to this unavoidable destiny, it is called a boom. But every so often problems occur in the smooth functioning of this system; and they have occurred every so often ever since we’ve had capitalism. And when that happens, large numbers of the working class, despite having been brainwashed from early childhood into believing that there is no way to run society other than producing surplus value for the owning class – large numbers of them are then told they will not even be allowed to fulfil this divine decree, to work for the capitalists. On the one side, the work is obviously there to be done – food must be produced, clothing must be made, houses must be built – and all the raw materials are there, ready and waiting, or easily able to be produced. And on the other side, there are people desperately wanting to eat food, and to protect themselves from the weather with clothing and houses and so on: but where the owning class cannot see exactly how to make a profit out of it, then nobody is allowed to grow the food, make the clothes, build the houses, and all the rest of it. And it’s called a slump.’

From Socialist Standard March 2009

https://socialiststandardmyspace.blogspot.com/2022/03/boom-boom-brown-2009.html

 “Robots can’t replace senior clerics, but they can be a trusted assistant that can help them issue a fatwa in five hours instead of 50 days,” said Mohammad Ghotbi, who heads a state-linked organisation in Qom that encourages the growth of technology businesses.   Iran’s recent history has been characterised by clashes between tradition and modernity. The country’s 200,000 Shia clergy — half of whom are based in Qom — have been the leading force in protecting traditional and religious values.   But with Iran’s leadership facing heightened calls to modernise in the wake of last year’s mass protest movement, the country’s clerical establishment views technology as a way to be seen to be welcoming development while strengthening the Islamic character of the country.    Ghotbi, who leads the Eshragh Creativity and Innovation House, affirmed the approach, arguing that the clergy should not oppose the desire of Iranians to share in global technological advances. “Today’s society favours acceleration and progress,” he said (ft.com, 24 September).

 Once upon a time

 ‘…Muslim women are able to define what feminism is for themselves. They are free political agents who can set the terms of emancipation for themselves…’

Unearthed Collective is a group of artists, curators and neighbours who meet monthly at Studio Voltaire to investigate Clapham’s community and history through the lens of creative practice. 

 Friday 22 September 19.30 (GMT + 1)

Football Belongs To…

“Football belongs to everyone”, or so

The TV trailer dribbles, with moving

Images of goals scored, shots saved, proving,

With men and women, girls and boys, there’s no

Inequality in the people’s game.

Except, of course, clubs are the property

Of potentates, those with the equity

And leveraged deals, their motives the same,

Premier profits. Players simply assets

To be bought and sold, fans are consumers

With no control over what occurs;

Promotion, relegation, crippling debts.

Football belongs to everyone et al?

No! The whole game belongs to capital.

D. A.

 For those who remember The Temptations / Edwin Starr song written by Whitfield / Strong song, ‘War’, the question was posed in the lyrics, what is it good for? ‘Nothing’ was the answer given in the song. An arms fair attendee was more forthcoming: ‘War is good for business’.

‘Military-industrial complex players big and small gathered in London this week, hawking everything from long-range missiles to gold-plated pistols to arms fair attendees—including representatives of horrific human rights violators—as weapon-makers and other merchants of the machinery of death reap record profits.

“War is good for business,” one defence executive attending the biennial Defence and Security Equipment International (DSEI) conference at ExCel London flat-out told Reuters. “We are extremely busy,” Michael Elmore, head of sales at the U.K.-based armoured steelmaker MTL Advanced, told the media agency.

Russia’s ongoing invasion of Ukraine and the West’s scramble to arm Ukrainian homeland defenders have been a bonanza for arms-makers.

“Ukraine is a very interesting combination of First and Second World War technologies and very modern technology,” Kuldar Vaarsi, CEO of the Estonian unmanned ground vehicle firm MILREM, told Reuters.

Sabre-rattling and fear-mongering by government, media, and business figures amid rising tensions between the U.S. and its allies on one side, and a fast-rising China on the other, have also spurred military spending, including Japan’s $320 billion buildup announced last December.

“We think this is a longer-term essentially ‘sea change’ in national defence strategy for the U.S. and for our Western allies,” Jim Taiclet, CEO of U.S. arms giant Lockheed Martintold told investors  during a call earlier this summer announcing higher-than-expected sales and profit outlooks. 

According to the  Stockholm International Peace Research Institute, the United States, Russia, France, China, and Germany were the world’s top arms exporters from 2018-22, with the five nations accounting for 76% of all weapons exports during that period. The U.S. accounted for nearly 40% of such exports during those five years, while increasing its dominance in the arms trade. The U.S. also remains by far the world’s biggest military spender.’

https://www.commondreams.org/news/dsei-2023-london

Why do capitalist states prepare for and wage war?

Socialist Standard November 2008

‘As we socialists never tire of pointing out, the primary function of military power in capitalism is to protect and expand control over resources, markets and transport routes on behalf of the capitalist class of the country concerned. However, the costs and risks that wars and armaments entail for the capitalists themselves often outweigh the benefits to them.

For example, while the U.S. did have real interests at stake in Vietnam in the 1960s and 1970s, those interests were hardly commensurate with the enormous costs of the war it was waging there. Growing awareness of this fact within the capitalist class eventually led to withdrawal.

In other words, states have a tendency to act in ways that appear to be irrational even in terms of the capitalist interests that they are supposed to represent.

War – a capitalist enterprise

There are various reasons for this apparent irrationality. But the main reason is this. War is not only a service that the state provides to the national capitalist class as a whole. War is also – and increasingly – a massive capitalist enterprise in its own right, a “war business” that wields considerable political clout and has special interests of its own.

The core of the war business, of course, is the so-called military-industrial complex. Arms manufacturers, like other capitalist firms, seek to maximise their profits. It does not concern them whether the weapons they sell have a cogent strategic rationale.

The military-industrial complex has a direct interest not only in the build-up of armaments but in war itself. War is the only way of testing weaponry under battlefield conditions. It uses up and destroys old stocks that then have to be replaced – rearmament is now, for instance, the top priority of the Georgian government – and stimulates demand in general.

But nowadays arms firms are not the only large-scale “merchants of death.” Companies like Blackwater sell combat capability directly as the labour of hired mercenaries. Other companies, such as Halliburton, sell logistics and other war support services.

Resource wars, “strategic” wars

The argument is not that all armed conflicts are irrational in terms of the costs and benefits accruing to national capital. Some undoubtedly make good sense in these terms, as when valuable resources can be acquired at moderate expense. One example might be the “cod wars” of the 1970s between Britain and Iceland over fishing rights in the North Atlantic. Another, perhaps, is the ongoing conflict over the Spratly Islands in the South China Sea, whose oil and gas deposits are coveted by China, Taiwan, Vietnam, the Philippines and Malaysia.

At the other extreme, some wars have no discernible connection with the control of markets and resources. The recent war in Georgia was in this category. Although important oil and gas pipelines run through the south of the country, Russia did not contest control over them. Russia’s rationale for war was “strategic” – that is, getting into a better position to fight future wars.

Again, Israel’s wars are senseless from the point of view of the Israeli capitalist class as a whole, which has a clear interest in a peace settlement that will give it full access to the markets and cheap labour of the Middle East. This interest, however, seems unable to prevail against the political stranglehold of Israel’s military-industrial complex.

The nature of the wars that the US and its allies are currently fighting in Iraq, Afghanistan and Pakistan is less clear-cut. Control of resources, markets and transport routes is certainly an important factor, especially in Iraq, but the likely outcome is hardly such as to justify the enormous costs involved. While the ultimate motive for war may be to arrest the decline in the competitive position of the US in the world economy, the actual effect is to accelerate that decline.

Capitalism and war: two models

So we end up with two contrasting models of the relationship between capitalism and war. In the first model, war appears as an instrument in the hands of the state, which acts as the “executive committee of the (national) capitalist class as a whole” (Marx). The second model, unlike the first, takes into account the fact that war is evolving from an instrument at the service of the national capitalist class as a whole into a capitalist enterprise in its own right — what we might call the war business. The war business has special capitalist interests of its own, so it cannot function simply as an instrument of more general capitalist interests.

Does the first model represent capitalism in its “normal” form, while the second model represents an “abnormal” ultra-militaristic mutation of the capitalist system? Is the first model rational, in capitalist if not in human terms, while the second model is irrational? At first sight that seems reasonable.

But is there in fact any good reason to regard one model as any more irrational than the other? Each model represents a possible variant of capitalism and a possible form of capitalist rationality. The difference is that the first model assumes the existence of such a thing as “national capital as a whole,” while the second model envisions only separate capitalist enterprises. Some firms sell sausages, some sell computers – and some sell war’.

Stephen Shenfield

https://www.worldsocialism.org/spgb/socialist-standard/2008/2000s/no-1251-november-2008/material-worldthe-war-business/

In a supplication reminiscent of the entreaty at the base of the statue of liberty in New York harbour, the UK Work and Pensions Secretary appeals to those of the working class who, through no fault of their own, are unable to offer themselves up to full-time, long-term exploitation, to help reduce the financial burden of running this particular capitalist entity. The MailOnline reports: ‘One million people on sickness benefits could be forced to start looking for jobs including thousands with mobility and anxiety problems as the Government gets set to slash billions from its welfare budget,

More: ‘Up to a million sickness and disability benefit claimants are to be ordered to seek work. Unveiled by Work and Pensions Secretary Mel Stride the blitz is aimed at slashing the £26billion welfare budget’.

‘An estimated 2.5 million incapacity claimants are deemed unable to work and languish on handouts. But ministers believe this total could be cut by hundreds of thousands if those excused work because of mobility or anxiety problems are told to look for employment.

They also hope the shake-up will plug gaps in the labour market and boost the economy. Official surveys suggest that up to half a million people on sickness benefits want a job and are keen to receive help’.

Those deemed capable of work could have their benefits docked if they refuse to cooperate.

The British Prime Minister Rishi Sunak is quoted as saying; ‘helping people back into work could ‘transform lives … providing not just greater financial security, but also providing purpose that has the power to benefit individuals, their families, and their communities… The steps we’re taking will ensure no one is held back from reaching their full potential through work, which is key to ensuring our economy is growing and fit for the future.’

Perhaps he should contemplate becoming a stand-up comedian?

Those with an interest in the welfare of the disabled are understandably concerned: “James Taylor of Scope, a disability equality charity, said: ‘We’re worried these proposals will end up forcing huge numbers of disabled people to look for work when they aren’t well enough, making them more ill. If they don’t meet strict conditions, they’ll have their benefits stopped. In the grips of a cost-of-living crisis this could be catastrophic.’

Sarah White, of the disability charity Sense, said: ‘We’re seriously concerned that if the Government does overhaul its assessment process without putting any additional support in place, then disabled people are just going to be put under more pressure to find work, without having the support they need to do so.’”.

https://www.dailymail.co.uk/news/article-12484217/One-million-people-sickness-benefits-forced-jobs.html

‘Why put workers through costly training programmes when there are ample skilled workers already available, albeit suffering ill-health or disability to varying degrees? Far better to meet the demands for a low paid, short-term casual and part-time workforce by scraping the barrel and getting the skilled disabled—specifically those who are suffering less than 65 percent disability—back into the labour market. With 2.8 million people of working age claiming benefits due to ill-health or disability, Harriet Harman, the Secretary of State for Social Security, intends to ensure their amount of benefits does not act a disincentive to them returning to employment.

This explains the emphasis Tony Blair places on “offering the opportunity” to those who are sick and disabled to provide for themselves with “appropriate support”. But such explanations also provide the means for the Blair government to distance itself from the present obligation of “provision of universal benefits for life” to a scenario of capping universal entitlement to incapacity and disability benefits to one, or two years, so that after that period means tested benefits come into operation’.

From Goodbye to the Welfare State . . . as we know it (1998)

Socialist Standard March 1998

https://socialiststandardmyspace.blogspot.com/2022/05/goodbye-to-welfare-state-as-we-know-it.html

‘A growing number of British households are falling behind on loan payments, with mortgage arrears jumping by 13% in the second quarter of the year to the highest level since 2016, Bank of England data has shown.

The value of home loans with late payments rose to £16.9 billion ($21.1 billion), up 29% on the previous year, as rising interest rates and unemployment in recent months have put pressure on household disposable incomes.

“The speed at which mortgage arrears are increasing is terrifying and should give cause to pause at the next Bank of England interest rate meeting,” Lewis Shaw, founder of Mansfield-based Shaw Financial Services, told the news agency Newspage. He warned that a “mortgage meltdown” was coming unless the regulator changes its approach.

The Bank of England has been hiking interest rates in an effort to contain rising inflation, which has worsened the cost-of-living crisis in the country. However, this makes home loans more expensive to pay back, since mortgage holders are paying higher interest.

“This is dire data, and we know that it’s about to get an awful lot worse with 1.6 million mortgage holders due to renew over the next 12 months at significantly higher rates than anyone has been used to for well over a decade,” Shaw added.

The data showed that mortgage lending was also down in the second quarter of the year, with gross advances falling by $7.8 billion to $65.3 billion. Borrowing has shrunk by almost a third in annual terms, to the lowest level since the worst of the Covid-19 collapse in lending in the second quarter of 2020.’