In this issue:

An independent Scotland? - YCL Scottish Organiser examines the arguments put forward in favour of Scottish independence.

Change has Come? - Stop the War coalition chair Andrew Murray explores the implications for the peace movement of Barack Obama's election

In the name of the People - YCL London Region Organiser James Rodie looks at the lessons to be learnt from the Paris Commune 

COVER STORY  Whose Crisis? - YCL general secretary Ben Stevenson gets to the root causes of the capitalist economic crisis and explains what should be done

Plus; In the News; Fighting for Socialism in Europe, 7th meeting of European Communist Youth Organisations; Our future is Socialism, 10th international meeting of Communist & Workers' Parties; ALBA - a real alternative; The other Mexico '68 - Tlatelolco massacre; Cannabis debate; Unemployment—what is really going on?; Alienation—Part 1; Women & Class; Cartoon Corner; Painting Venezuela red - Venezuelan elections; Back 2 Basics: Part 12 - The rate of profit; South Africa’s Road to Socialism Part 2; Book @ Bedtime - Dialectics of Nature and Will the Bolsheviks Maintain Power? 

Featured Article: Whose Crisis?

YCL general secretary Ben Stevenson gets to the root causes of the capitalist economic crisis and explains what should be done.

You will forgive me if I begin by blowing our own trumpet but the current economic crisis has long been predicted by Communists. The unsustainable trends in the British economy and the fallacies of New Labour’s economic ’strategy’ have been extensively detailed in past issues of Challenge so there’s no need to repeat them in great detail here, instead I will concentrate how we’ve got to this point, what’s the real cause of the capitalist economic crisis, what is likely to happen, what has happened before, what (if anything) is the government going to do about it and how we can try and ensure that the inevitable backlash caused by this crisis doesn’t result in the working class being forced to make all of the sacrifices.

What on earth is going on?

The government has been at pains to disavow itself of any responsibility for the current economic situation The line continually parroted by government ministers is that the cause of the current economic climate has been the collapse of the Lehman brothers bank and irresponsibility on the part of US mortgage lenders. Yet this does not stand up to much scrutiny The government’s own economic policies have contributed to the scale of this crisis and the root cause is much more fundamental than irresponsibility on the part of a few individuals across the pond.

New Labour’s economic ‘strategy’ itself is in deep crisis with more than £600 billion (more than 4 times the amount spent each by the government on education & health combined!) promised already to bail out the banks along with the promise to continue writing blank cheques to bail out the banks so that they may retain their profits. None of this money will find its way into the hands of homeowners or small business. Despite banks such as HBoS, NatWest and Northern Rock being taken into partial or public ownership the only guarantees that are being made are to major shareholders and the fat cats who run these banks. The government won’t be exercising any control over the day to day running of these banks, the won’t stop them from repossessing homes force them to stop charging ludicrously over-inflated fees for overdrafts etc. or stop them from issuing eye-watering bonuses to executives. So its all business as usual then!

Yet what lays at the heart of this current crisis is the ‘neo-liberal’ economic strategy that New Labour has embarked upon.

De-regulation; the destruction of the productive economy; the exorbitant bonus culture of the City; over-dependence on foreign capital; the massive levels of personal and government debt; the increasing concentration of wealth in the hands of a tiny minority; the massive and unsustainable rise in house prices; are all factors that will ensure that this current crisis is not merely a hiccup but will cause a deep and prolonged recession.

Indeed the privatisation agenda as well as the support for US imperialist adventurism has had at its heart staving off the inevitable economic downturn by opening up and injecting new sources of capital into the market and helping to artificially stimulate demand.

We’re it not for the all bourgeois parties essentially agreeing on the response to this crisis, i.e. the working class will pay for this crisis and the labour movement’s continuing ignorance when it comes to understanding the nature of capitalist economics, we should expect heads to be rolling already.

The governments response has so far been a combination of more of the same or too little to late. The government’s proposal to reintroduce a limited amount of banking regulations now that the damage has been done is reminiscent of re-arranging the chairs on the deck of the Titanic. The only other real initiatives the government has enacted has been to cut the rate of VAT by 2.5% and to encourage the Bank of England to cut interest down to the lowest level since 1951 once again to encourage borrowing and stimulate demand. Given that unemployment is sky rocketing, the average wage is rising at a rate below inflation, housing repossessions have reached record levels and the level of personal debt is already higher than our GDP—does the government seriously expect us all in the current climate to borrow thousands of pounds and go on a spending spree?

In fact we should dispel any notions that New Labour is ‘readopting’ Keynesianism or moving back towards a more Social-Democratic economic strategy, this is just wishful thinking on the part of sections of the labour movement. New Labour’s economic ‘strategy’ has remained completely unchanged and besides which the Keynesian model (when properly applied) does not avert capitalist crises, it merely reduces the scale of the crisis.

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