The first thing I think of when the government cuts benefits is my friends – friends already forced to their knees by massive youth unemployment, now being kicked in the teeth by those who destroyed the jobs in the first place.

But perhaps as galling as the injustice is that the measure is likely to make the economic situation worse. At its most simple level, the economic crisis at the moment is one of demand. Once the banks had collapsed, once the lending had dried up, people stopped spending.

A pound spent is the unit of economic success the government pretends to care about. It is, basically, what GDP is made up of. So if no one is buying anything, they have no chance of mending the economy. Once a pound is spent, the person who receives it will then likely spend it themselves, and the person who receives that will likely spend it again. Get spending moving, and economies fix themselves.

If you are the government, where to take that money from is, of course, contentious. There are so many options, it must be hard to pick:

  • You can tax it off the richest humans who have ever lived (because the rich tend to save, taking money away from them and giving it to poorer people increases spending).
  • You can borrow it at low interest rates (though these have risen a little in recent months as the Tories have continued to trash the economy).
  • You can create it by getting the Bank of England to press a button (which only leads to inflation if it doesn’t deliver growth because you do something stupid with it, like giving it to banks).

And how you spend it is also difficult. Were I in charge, I’d like to see a very different kind of spending, building a different kind of economy. I’d like to see public spending on new council houses, on education, on social services; on funding new workers co-ops and mutuals and on community buy outs.

But given the current government, this isn’t going to happen. So, let’s imagine that what you wanted was to save the consumer capitalist economy. What would be the easiest way to do it? What’s the easiest way to increase spending in the economy? Well, you could increase spending on public services. They should do this, but it takes some time. If you want to stimulate the economy quickly – if you want to inject cash straight into the pockets of the people most likely to spend it (ie, the poorest people), then there is a dead easy way to do that. Increase benefits.

Given this, we can assume that the government’s move to cut benefits has nothing to do with a desire to save the economy, and everything to do with a political attempt to divide the working class, and attack us all.

Adam Ramsay

About Adam Ramsay

Adam is Co-Editor of Open Democracy UK and a green activist based in Edinburgh. He co-founded Bright Green in 2010.