Preparing for the showdown

In the run-up to the general election, which must be held by June 2010, the mainstream parties are united on their central theme: there will be deep cuts to public services. These will go alongside pay restraint and soaring unemployment. The only debate is the severity and speed of the cuts. And, despite twelve years of anti-working class policies, most trade union leaders continue to back New Labour to the hilt. The interests of working-class people, however, are glaringly absent from the debate. PETER TAAFFE assesses this important political conjuncture.

WHEN EVEN THE lumbering elephants of the TUC are stirred from their usual political and industrial lassitude into warning about ‘riots’ and ‘a general strike’ if the Tories win the general election, then the situation in Britain is indeed serious. The prospect of a Cameron-led Tory victory – he is ahead by 10-15% in the polls – like an execution, has "concentrated the mind wonderfully". TUC leaders, like Brendan Barber or Dave Prentis of Unison, have caught up with the analysis made in the pages of Socialism Today. We have consistently warned that a Tory government would represent a new departure in attacks on the living standards of the working class, particularly public-sector workers.

In preparation for this, David Cameron jettisoned his image of ‘compassionate Dave’ with the onset of a deep world and British economic crisis: what John Maynard Keynes called a ‘semi-slump’. He now invokes the image of Margaret Thatcher. He feels that the political wind has filled out the Tories’ sails. Big business, formerly lavish in its support of New Labour’s total acceptance of the neo-conservative policies of capitalism, is now rushing into Cameron’s corner. They have concluded that Labour is for them no longer ‘fit for purpose’. A weakened Gordon Brown government is besieged on all sides, and is no longer able to fully hold at bay the working-class and labour movement.

As big business largesse has dried up, Brown and Peter Mandelson are forced to turn to the formerly despised trade unions to supply more than 70% of the finance to keep Labour afloat and fight the next general election. And the craven trade union leaders oblige, even as this New Labour government spurns their demands, with Brown bowing the knee to the insistent calls from big business and its media for cuts. Cameron calls for an ‘age of austerity’ – for the working class, not the capitalists – and New Labour complies. The general election, therefore, will be a choice between savage cuts (the Tories) and ‘lesser’, ‘staged’ cuts (New Labour). The Liberal Democrats, as always, will attempt to straddle both camps but are also in favour of cuts.

Brendan Barber, the general secretary of the TUC, warned that the scale of cuts proposed by the Tories would see a repeat of the ‘riots’ that erupted in the first stage of Thatcher’s government in the early 1980s. Appropriately, he was speaking in Liverpool which witnessed the Toxteth upheaval, followed by Brixton, St Pauls in Bristol, and Tottenham. In a year’s time, he said, "the number of people signing on for the dole in cities and towns such as Liverpool and Middlesborough and Leicester would rise by more than 40% if the public-sector jobs promised to be slashed by the Tories are implemented". This is what a 10% cut in public-sector staff would mean: 700,000 workers would lose their jobs, which would be equal to a further 2.9% of the workforce being shown the door.

The Tories’ plans

CAMERON AND HIS sidekick George Osbourne, the shadow chancellor, will no doubt bluster that this is ‘incendiary’ nonsense. But, the think tank, the Institute for Fiscal Studies, states bluntly that Cameron will have to find slashing ‘savings’ across all departments, with the exception of the National Health Service. In reality, the Tories have plans to widen New Labour’s ‘internal market’ in the NHS and proceed with further privatisation.

‘Theory is grey, but green is the tree of life’; we do not need to wait until the onset of a Cameron government to see the disastrous effect of proposed Tories policies. John Cruddas, Labour MP, has pointed out that, at local level in the notorious ‘laboratories’ of Barnet and Hammersmith in London, and Essex, Cameron and Osbourne’s policies are already being road tested. The Thatcherite throwbacks in the driving seat in Barnet have as their model the ‘no frills’ airlines, EasyJet and Ryanair. The latter has raised the possibility of charging passengers to go to the toilet, has come up with the ‘novel’ idea of standing passengers at the back of the plane strapped in, all of this in the sacred cause of ‘cutting costs’.

The Cameroons seek to strip away or savagely cut all ‘unnecessary’ expenditure in local government, home helps for the elderly, nursing homes, meals-on-wheels, libraries, etc. These born-again Thatcherites have, in the process, thrown overboard the ruthless centralisation which was a hallmark of her regime. She brutally repressed local councils – like Liverpool and Lambeth – broke up the Greater London Council and Inner London Education Authority, in order to suppress left-wing ‘irresponsibility’ (read: protecting jobs and services) at local council and regional levels.

What this could mean in the NHS, for instance, is indicated by the catastrophic position of the health sector in the US, with almost 50 million people denied healthcare. Faced with a ferocious right-wing media campaign – urged on by the greedy pharmaceutical companies which are making record profits – Barack Obama has retreated. A publicly-funded national health service is put on ice. What are proposed now are increased resources to help those presently incapable of getting healthcare. Obama has been opposed, not only by the Republicans but also by the rightwing in his own party. Indeed, the main factor in preventing even the minimum reform in this sector is that US politics is dominated by the two-party regime of the Republicans and Democrats. Only the creation of an independent, radical campaigning left or workers’ party can break this deadlock and offer a real way forward for the mass of the American people.

The same applies to Britain. A Cameron government will not be able to completely dismantle the NHS because its importance is embedded in the consciousness of the British people. When the working class here see that, in the US, to lose your job means not only forfeiting your house but effective healthcare, they abhor any attempt to go in this direction. One proposal that has been floated by the Tories is to charge £10 to visit the doctor, something that already exists in Ireland and some other European countries.

The slashing of public-sector jobs will worsen the position of working-class people in general but, particularly, crush the hopes of young people searching for a foot on the ladder of work. They already face the prospect of mass unemployment, which for those aged between 16 and 24 is approaching a million. It could even reach the levels of 1929 according to The Guardian. In fact, it is to the 1920s that treasury officials here are already looking for examples of how to cut public spending.

Class collaboration

ONLY TWICE IN the 20th century has growth in public expenditure been reversed. One was for a temporary period in 1945, after the bloated war expenditure was reined in. In the 1920s, the infamous Geddes Report, did "help slash central government spending by an eye-watering 25%"! (Financial Times) This was ‘the whip of the counter-revolution’ which stirred a social upheaval from below which led to the 1926 general strike.

Dave Prentis of Unison clearly sought to warn the Tories and ruling class of this danger in his pre-TUC comments. But what conclusions did he draw for the labour movement? Not for him the formulation of bold policies implemented by a new political force – a new mass workers’ party. He prefers to cling to Brown’s trouser leg as he ambles towards what could be a terrible electoral nemesis for New Labour. Moreover, Prentis went on to say that the unions will have to "work with a Cameron government", which he earlier warned could provoke a general strike.

These are the same class collaborationist policies which were initially followed by the trade union leaders when Thatcher first came to power. She unceremoniously repudiated them and prepared consciously to crush the working class, beginning with the miners and Liverpool and Lambeth city councils. Even then, she only succeeded because of the pusillanimity of the trade union leaders at the time. They refused to come to the assistance of the miners even though, at that stage, the very future of the trade unions and the working class of Britain was at stake.

Yet, Cameron has gone even further than Thatcher before she came to power in elaborating what lies in store for working-class people. Before the onset of the crisis, his mantra was that he would keep to the same public-spending programme as New Labour. This was an echo of what Tony Blair had done in relation to the Tory government in the run up to the 1997 general election. Now the Tories’ allies, such as the Institute of Directors, together with the so-called Taxpayers’ Alliance, have spelt out proposals to cut out £50 billion from public spending. Its recent report includes "recommendations [for] a one-year freeze on the basic state pension; a one-year pay freeze across the public sector, apart from troops serving in conflict zones; and abolition of child benefit". The Observer also floated, on the eve of the TUC conference, that some New Labour ministers were preparing to ‘punish’ the middle class by also cutting child benefit and other payments from the state which now they want to means test.

‘Those whom the gods wish to destroy, they first make mad’. Completely remote from the working class and its history – there were 33 miners in parliament in 1950 and none today – and coming straight from university into ‘politics’, New Labour MPs have no experience or perception of the agonies suffered by the most vulnerable sections of the working class today. When the national government of the 1930s attempted similar measures by cutting unemployment pay, it provoked riots in 1932 in Birkenhead, Merseyside, and in Belfast, which forced a hasty retreat on the part of the government. Similar proposals today will provoke even greater upheaval.

But there is an imperative on the shoulders of all parties and leaders who accept the maintenance of capitalism – of its restoration to ‘health’. This is a system based on production for profit, which Karl Marx underlined was the unpaid labour of the working class. Rupert Murdoch’s son – now head of Sky – in his recent Edinburgh festival lecture on the media, stated bluntly that there was only one criterion acceptable for ‘enterprise’ and that was profit. This led him to propose the break up, limitation and commercialisation of the BBC. Despite its inadequacies from the point of view of the left and the labour movement, the BBC is still more ‘progressive’ than the rest of the mass of the media, and particularly the gross anti-working class bias of the Murdoch press and TV.

But Murdoch is right; ultimately, profit is the guiding principle of capitalism. The fight over the division of the surplus created by the labour of the working class is the class struggle. If you accept the logic of capitalism, you are forced to adapt yourself to the confines of the system. This has determined the policies of New Labour, both under Blair and Brown. The acceptance of capitalism and the rejection of a socialist alternative followed the collapse of the Berlin wall. This resulted also in the implosion of the planned economies of Eastern Europe and the former Soviet Union, which were dominated by a bureaucratic caste which was incapable of taking those societies further forward.

Creative destruction?

IRONICALLY, THE 20th anniversary of these events has coincided with a devastating economic crisis which has exploded the myth of the superiority of the ‘free market’. This crisis is the most devastating since the 1930s. Capitalist economist, Joseph Schumpeter, described capitalist crises as "creative destruction". A slump, recession, economic downturn, etc, would destroy outmoded and unprofitable capital. But, once an upswing developed, new ‘creative’ capital would lead to an economic flowering and, in fact, take society onto a higher level.

This present crisis is certainly destructive but not very ‘constructive’. In Britain, fully 5% of production, according to the economist Will Hutton, has been lost ‘forever’. The amount spent by the government in bailing out the banks and the finance sector is estimated to have reached £1.2 trillion. This is equal to one week of world GDP! The total amount used to bail out the financial sector worldwide is estimated at £10 trillion.

The labour movement has struggled for a shorter working week. But capitalism, as the example of the Sarkozy government in France demonstrated recently, constantly attempts to extend the working day and week. Irony of ironies, then, that the average working week in the US is presently 33 hours. This is, of course, more a reflection of mass unemployment, enforced short-time working with cuts in pay, rather than the conscious choice for a reduction in the working week without loss in pay. We are now in an era not of reforms but of proposed savage counter-reforms stretching into the distance, in what the capitalists and their hangers-on hope will be the ‘norm’.

Yet, urge the supporters of Schumpeter, capitalism will come out of this crisis and its ‘creative’ work will recommence. They point to the ‘green shoots’ of economic recovery as a sign of the viability of capitalism. ‘Green shoots’ or the ‘weeds’ of the recession? Marxism has pointed out that booms and slumps are organic to capitalism, much as inhaling and exhaling are to the human body. Moreover, we have always argued that, if in a crisis the working class and its organisations do not use the opportunity to wrest power from the capitalists then, inevitably, there will be a certain recovery, the re-establishment of a certain equilibrium in the system, albeit on extremely shaky foundations.

The capitalists are presently breathing a sigh of relief because they seem to have evaded a repetition of the great depression of the 1930s. Instead, we now have the ‘great recession’. If this is so, it is because of the emergency measures taken by the governments of the majority of the advanced industrial countries, particularly those most affected. They are massive stimulus packages – bail-outs of the finance sector, so-called ‘quantitative easing’ (the printing of money by central banks not backed up by the production of goods and services, particularly in the US and Britain). These measures have acted to soften the crisis, but not avert it completely.

Socially useless

MOREOVER, IT HAS been at the expense of the working class, which will be called upon to foot the bill. This at a time when the banks – universally excoriated and hated for their lavish bonuses – have rubbed the noses of the masses in the dirt by once more recommencing the merry-go-round of massive bonuses being doled out. It is in stark contrast to the unemployment which continues to rise inexorably.

The bankers and finance houses in this crisis have, so far, hardly had their finger nails trimmed, not even a slap on the wrist. Yet, during the Savings and Loans scandal in the US in the early 1990s, over 1,000 bankers and financiers were jailed because of that scandal. This time round, only the appropriately named Bernard Madoff has been jailed so far. But, such is the mass indignation at the plutocracy’s brazen arrogance, it is not excluded that some bankers could find themselves behind bars.

However, the refusal by New Labour tops to go beyond the confines of the system, even on an issue like bonus payments, is evident in the comments of Alistair Darling. He refused to join in the attacks, demagogic though they were, of the French president, Nicolas Sarkozy, and even of the conservative German chancellor, Angela Merkel. They called for action to be taken against financial oligarchs. Yet Darling stated that, even if action was taken to curb the bonuses, these creatures would merely increase their basic salaries. If action was then taken against the salaries – through tax increases and other measures – they would merely move abroad along with their capital. Rarely has there been a more visible expression of the bankruptcy and ineffectiveness of New Labour or its incapacity to control in any way the workings of capitalism and the capitalists. To rub salt in the wound, many of the banks paying the bonuses are, theoretically, in the ‘state sector’ and subject to the government. Yet Darling confesses ‘nothing can be done’.

The bankers can be faced down when they seek to blackmail the government by threatening to move abroad by instituting a state monopoly of foreign trade and the renationalisation of the banks and finance houses under workers’ control and management. After all, one sector of the capitalists in Britain – particularly those who look towards the re-emergence of a strong manufacturing sector – have denounced the ‘socially useless’ sections of the banking and finance sector (Adair Turner, chair of the Financial Services Authority). This denotes a split in the ruling class in Britain. It is presently on economic policy but, as the crisis worsens, it will be on broader issues of politics, the direction of society, and how to meet the threat of the labour movement. Turner’s proposals to ‘control’ the finance sector are utopian on a national basis in an era of capitalist globalisation. Moreover, it is not only the finance sector but capitalism as a whole which is ‘socially useless’.

Rising unemployment

THE CURRENT ‘RECOVERY’ is patchy, reflected only in certain industries, like the car industry and sections of retail, which are down to one-off factors which can run out of steam. For instance, car sales have been stimulated by the ‘cash for bangers’ in the US, Germany and Britain. It is a temporary measure which is unlikely to be sustained. It is this and other factors that prompt serious capitalist economists, like Nouriel Roubini, to say that, worldwide and in Britain, we are likely to experience a double-dip recession – more of a W than a V – in the next period. There is even the possibility of an L – stagnation for a long period like Japan has experienced.

Even a growth in the economy will not stop the inexorable rise in unemployment in Britain to at least three million, anticipated to balloon to four million by the TUC. This does not even count the estimated 750,000 people who do not claim benefit because they are either living on savings and/or are too ashamed to claim benefits. Some of them, no doubt, feel they will get jobs in an upturn. However, any recovery – the date of which is impossible to foresee – when it comes will be anaemic. In the words of Mervyn King, governor of the Bank of England, a recovery will be "slow and protracted", with the IMF predicting that Britain will be the last to come out of recession with the smallest increase in production.

British capitalism is at a crossroads; economically it is in the most exposed position in history. Socialism Today, in a series of articles, analysed and criticised the short-termism of the British ruling class typified by Thatcher. It was her government, through mass privatisation, the destruction of the miners, which also led to massive de-industrialisation, and the building up of the finance sector which laid the basis for this present crisis. After Thatcher’s ‘revolution’, New Labour ‘managed’ this system. The income from North Sea oil cushioned the fallout from Thatcher’s disastrous policies, with benefits doled out to the unemployed, including the hidden unemployed, many of whom were shuffled onto ‘disabled registers’.

But now the proverbial chickens are coming home to roost. North Sea oil income peaked in 1999. Britain faces a fuel shortage in the next period, with an echo of conditions in parts of the neo-colonial world, power blackouts, looming. The colossal state debt of at least £150 billion means that the government – any government – so long as it accepts the laws of capitalism, would be compelled to cut. Two-thirds of this arises from the crisis, with a massive loss in government revenue, taxes, because of the closure of firms and industry. The deficit accounts for 12.5% of GDP and could go higher, with some projections putting this year’s total national debt at £200 billion.

At the moment, the parasitic bondholders are prepared to lend to the government. Moody’s, for the time being, rates the British government ‘credit worthy’. This same agency gave AAA approval to the massive subprime mortgage lending which led to the disaster! Bonds will be bought for the present time. However, the interest on this debt, to be paid by the government and therefore by us, is unsustainable in the long term.

Who picks up the bill?

BUT IT IS entirely false, as New Labour luminaries argue, that ‘we’ – that is, the working class and labour movement – must pay by cutting our income, by tightening our belts. This state debt is not ours. It is, in effect, the transfer of the private debts of the banks to the state sector, to the shoulders of the average young person, unemployed and pensioner. It is one of the greatest con tricks in history, with the bankers laughing all the way, if not to their banks, then to their tax havens. On this and other issues, the scene is set for a colossal collision between the classes in Britain.

The situation confronting the labour movement today is far more dire than even at the time of the James Callaghan government in the late 1970s with which, correctly, the Brown government has been compared. Famously, Callaghan and the social democratic gurus at the time like Tony Crosland, after the IMF had come in and imposed brutal cuts, declared that ‘the party’s over’. This was a recognition that Keynesian policies of priming the pumps of increasing state expenditure, the foundation stone of social democracy, was finished. Thatcher built on this in her war against the public sector and the introduction of privatisation.

At the beginning of this crisis, New Labour seemed to fly in the face of Callaghan’s credo during a recession. Its measures, along with those of Obama and even Merkel, have put a cushion under capitalism. But, as the depth and seriousness of the crisis became evident, bourgeois opinion has switched and, with it, the Tories. New Labour in turn has adapted to this. Moreover, the campaign to rein in state expenditure has had an effect because it has not been sufficiently countered on a mass scale.

Facing severe insecurity on the housing, jobs and other fronts, those sections of the population able to do so have followed the advice of the tops and attempted to ‘rebuild’ savings. Because it has not been countered properly by the union leaders, the campaign to ‘cut the deficit’ has had some effect. ‘We are cutting our spending, the government must do the same’ has seduced some, especially sections of the middle class. However, there will be a different reaction when the same people see their local library, nursery, schools and social services shut down under a Cameron government. It is a bit like the incomes policy under past Labour governments. Polls gave big support to the idea but, once implemented, provoked a revolt from those whose wages were cut. How can the unions campaign against cuts effectively when they are tied to a party that implements them?

Ironically, increased savings pose the danger of what Keynes called the ‘paradox of thrift’. If ‘consumers’ follow the advice to tighten their belts, that will act to cut ‘demand’, already the main factor prolonging the present crisis. But, on the other hand, the cry to ‘spend, spend, spend’ will not have much effect in an era of mass unemployment. Over six million people have lost their jobs in the US, and 650,000 in Britain, since this crisis began. The debt ‘overhang’ in Britain is reflected in the £1.5 trillion consumer debt alone.

The whole of world capitalism is locked into this crisis. Only in China and parts of Asia are there any ‘bright spots’. China has, at least partially, limited the effects of the crisis because, in the words of the Financial Times, it is a "half command economy". Because it controls a large state sector, particularly the nationalised banks, it has been able to avoid the ‘credit crunch’ by supplying industry with capital, which has led to an estimated 6-8% growth in production. But China cannot offer a lifeline to the world, accounting as it does for only 5% of world GDP. Also its internal market is much smaller than the huge US consumer market and cannot fill the gap by the contraction there.

End union funds for New Labour

ALL THESE FACTORS point to an entirely different situation to the 1990s, even in the event of a faltering economic upswing. This will set the scene for big battles, which have already unfolded in what has been a summer of discontent in industry in Britain. Cameron will face as determined an opposition from the labour movement as did Thatcher in her first period in office, perhaps even more so.

Look no further than over the Channel to France to see what Britain is in for in the event of a Cameron government. Sarkozy, who came to power threatening to banish the ‘spectre of 1968’, has confronted an aroused working class which, this year alone, has engaged in two mighty general strikes. The French trade union leaders have dragged at the heels of this movement instead of organising a determined fight-back to overthrow Sarkozy and replace him with a workers’ government. This should also be the task of the labour movement, particularly its leadership, in the next period. Unfortunately, however, the TUC and the leaders of the biggest unions, such as Unison, Unite and GMB, bow to a version of Thatcher’s dictum, ‘There is no alternative’. This is now applied to the discredited New Labour government.

Yet Derek Simpson, joint general secretary of Unite, in an interview in the Daily Mirror – later ‘retracted’ – said: "Labour was as bereft of life as the deceased Monty Python parrot". He went on: "People are sick to the back teeth… our people are being told to ‘F--- off’ on doorsteps by people who have historically been New Labour supporters… The answer is to change the policies of the Labour Party and, if necessary, change the people of the Labour Party".

Similar sentiments have been expressed by Paul Kenny of the GMB and Prentis. Others have even suggested the adoption of a radical programme. Yet even Len McCluskey, a left candidate for the Unite leadership next year is in favour of clinging to New Labour. Only Bob Crow has come out clearly for a new independent workers’ and socialist coalition, led by the RMT and including the Socialist Party and others, in an electoral pact which can offer at least a real socialist alternative in the election. Simpson, despite his wailing about Labour, and by implication Brown, sat down with the other union leaders before the TUC and amicably discussed with Brown. But he has done nothing to alter the catastrophic course upon which this government and this party is set.

Indeed, his union has given £15 million pounds to New Labour to fight the election. For what? Supporting the European Union’s anti-worker Posted Worker Directive which led to the Lindsey oil refinery strikes involving his own members? For a miserly minimum wage which nobody can properly live on? For maintaining the brutal anti-trade union laws of Thatcher? For a continuation of the Afghan adventure? Truly, the working-class movement in Britain is like the troops in the first world war: ‘lions led by donkeys’.

The next period – specifically, the next year – will be crucial for the formulation of ideas, of a programme by the labour movement which can prepare the working class for the onslaught which is coming from the agencies of big capital. It will not find these in the warmed over, discredited policy of clinging to New Labour, served up by the trade union leadership and by an increasingly demoralised parliamentary Labour Party. We need fighting policies to defend jobs and protect services, linked to a socialist programme. No time should be lost in creating a new socialist alternative. The time for action is now, to put in place a force that can rally all those prepared to fight on the industrial plane, and to offer a clear electoral, socialist alternative in the forthcoming general election and prepare the working class for the decisive battles that loom.