Lightweight neoliberal groupies can talk forever about the long-term economic plan if they like. But the plan is doomed, and it’s got nothing to do with politics

Ee bah ‘eck, there’s trouble at t’Tesco…more profit warnings and a 12% share price slump. Asian shares are down around 5% on “fears about global growth”. The price of oil has hit another five-year low as fears of oversupply continue to mount. Despite the weak euro, German industrial output is flagging.

These might seem like random extracts from this mornings business “news”. But in fact they all display one simple truism: without the ability or need to consume, consumption-driven capitalism cannot move forward. You might persuade the People to eat cake: but first they need to get to the cake shop with money in their pockets.

Today I want to offer a commonsense close-up of the consumption gap that lies at the core of all our problems in the West.

It is one of the unshakeable rules of life that, before you can do stuff in order to make money, you need to have some money to start with: some seed capital. It’s another Page Oner that neoliberals can’t get their muddled heads round, but it’s true. And it is the single biggest reason why none of the Western economies have been able, since 2008, to sustain any kind of real recovery.

I realise I’ve posted about this before, but bear with me because I propose to try and join up some dots in order to enlighten the likes of Iain Duncan-Donuts and all the rest of the legislators inside The Bubble. As in, What’s What, This Way Up, Pay Attention and so forth.

If we survey the policy that has been followed by the US, UK, and EU since 2008, the three main elements of it have been Zirp (effectively, the overnight removal of all spending power by those who have capital in savings), QE – openly in the Anglo-Saxon countries and covertly by Mario Draghi – and austerity in the UK/southern Europe.

The desire has been to balance the books, cut expenditure, and repay debt. As I blogged last week, a good 30% or more of that debt isn’t real anyway, but the question to ask here, it seems to me, is WHO thinks that debt repayment and austerity are the priorities? The answer (by and large) is the neoliberal financiers in the US, the inflation-obsessives in Berlin, and the clique at the top of the UK Conservative Party.

One of the spooky ironies is that none of these minute interest groups will apply the rule to themselves; and none of them represent anything to do with (or indeed, have any experience of) manufacturing or food production….and the somewhat basic need for consumers to have the money with which to consume.

Thus the politics-defence-Wall Street axis in the States is very happy to have an ever-rising debt ceiling and a the Dow based on profits that come from QE; one former Communist leader and one security spook in Berlin want austerity without giving thought to the obvious consequences; and four or five Friedman fanatics in London want consumption-cutting welfare reduction…but rises for themselves – and a continuing lawless bonus culture in the City.

Let me relate an imaginary but not atypical social case history to you. You have an aged relative living with you, because ill-thought-out medical advances have increased longevity. Your husband buggered off years ago, the CSA of course failed entirely to find him. There is no way you can afford care home fees for the old boy in the attic, and with one child still at home you’ve so far avoided the bedroom tax…but that won’t last forever. As you can’t leave the domicile in order to retrain – you still have to work because the State pension’s been put back to 67 – you’ll get a carer’s allowance which, if you’re lucky, covers 35% of the cost of feeding the oldie…but not exemption from Council Tax, because you’re already on benefits.

This year, you won’t be sending Christmas cards because at 50p a pop, that plus the stamps is going to blow 20% of your already stretched budget. You used to shop in Tesco, but now Lidl is preferred because it saves you £12.35 a week on average. Sadly, not being yet an official pensioner, you get neither free bus transport nor a winter fuel allowance…and Lidl is three stops further on the bus. You’d like to have a day out somewhere nice, but train travel in 2014 is simply off the agenda.

Without some investment in you, you’re not going to get off benefits, you’re not going to consume, and you’re not going to find a job. And so,

the end result for a disturbingly large percentage of Britons is a downward spiral of poverty and social exclusion

the end result for the Treasury is higher costs of welfare for aged support and unemployment relief

the end result for the economy is more and more goods chasing less and less money…with not enough emphasis on exports….because all your overseas customers are also in the Poor House.

Wherever it starts and whoever has a crack at it, in the medium term things must get worse as long as this policy-set for the benefit of 3% is being applied to a near 100% problem. There is no way out of that, none whatsoever, as long as the mode of transport is the existing policy box without wheels. But, I would submit, as a diagnosis of the general problem, mine is Fluffy-free and neither socialist nor Keynesian: it is, my friends, common sense consumption capitalism.

We have a globalist Big Business community whose sole route to profitability since roughly 2010 has been high share prices created by the buying of toxic bond junk. Remove that (as we’re already seeing) and the edifice implodes…because there ain’t no demand. And the reason is the same as the one I set out several paragraphs ago: Bourse speculators, bullet-headed Germans (and their creatures in Brussels) plus banks are running the show.

There are no consequences for these people. And as the mass media themselves come from their ranks, those gargoyles plus political prs obfuscate and dissemble at maximum Warp Factor to ensure that most ordinary people (with more pressing things to think about) never work out just how obvious – and myopic – the scam is.

In ClubMed, there is a growing Opposition – especially in Italy and Greece…and France’s believers of both Left and Right are falling out of love with l’Anglo-saxonisme. In the US, the harder end of self-styled liberals are becoming hacked off – as is the black population. There’s no real Opposition in Congress (beyond Elizabeth Warren) but the citizenry is armed. In the UK, the Labour Party is offering big pies in blue skies, but has lost its way in terms of pandering to pc nutters and votecentricity. The only functioning Resistance in the UK is the internet in general, and life beyond the lunatic fringe in the blogosphere…but as we’ve seen, the NVE ploy is really a Trojan Horse being lined up ready to shut anyone up with a lucid, radical voice offering up something rather closer to the Truth.

“Our long term economic plan is working” trot out the Stepford Wives of Camerlot. Add the words “for us”, and you’re about right. But the odd thing is, offering a simple, empirical train of thought about why it can’t possibly work in the long run for anyone is not a political act: it is merely a rendition of the basics of market capitalism.

The track record for tiny-minority depraved oligarchy is, like multiculturalism as a model, not that great. The Stuarts, Bourbons, Romanovs and Soviets all went down with varying degrees of unpleasantness. Those who aspire to control contemporary levers are – surveillance and water cannon or not – heading for the same fate.

Yesterday at The Slog: Contemporary toss through the medium of definitions