Hanging in the balance

In substance, Britain’s general election campaign is a phoney war. The three main parties will attempt to deal with economic crisis through harsh cuts in public services, public-sector pay and conditions, and will back parallel attacks in the private sector. Timescales and degrees may vary but the essentials remain the same. PETER TAAFFE reports on the current political situation and the possibility – rare in Britain – of a hung parliament, even a coalition government.

"IT’S THE POLITICAL equivalent of Rasputin, who in 1916 was given enough poison in cakes and wine to kill five men; then shot four times, clubbed and castrated and dumped in the icy river Neva (where he finally drowned, but only after struggling out of his bonds and a carpet wrapped around him). The Russian aristocrats got the stroppy monk in the end, but the legend of his struggle to live long survived his death". (Jackie Ashley, The Guardian, 1 March)

Can Gordon Brown go one better and actually remain alive politically and win the next election? Will David Cameron’s Tories emerge triumphant? Or will there be a hung parliament and a form of ‘national government’ arising from this? Such is the extreme volatility in Britain that it is not possible to predict with any certainty which of these variants will emerge from the election.

But, if there is one overriding factor which makes it possible that Brown could yet grab electoral victory from the jaws of defeat – slight though it still seems – it is a resurgence of ‘lesser evilism’. (Socialism Today has consistently predicted that this mood would emerge as the election approached.) As an electoral upset, however, this would exceed even John Major’s narrow victory in the 1992 general election. Economically besieged by the worst recession since the 1930s, and with the prospect of a Cameron government taking the axe to public spending and thereby depressing ‘demand’ – alongside a slew of other vicious attacks on the conditions of the working class – broad swathes of workers and the middle class now see stopping the Tory enemy ‘at the gate’ as a priority.

This mood has nothing to do with any enhanced political support for Brown and his government. On the contrary, there is deep hostility amongst working-class people to the government’s role in doing the dirty work of big business. Brown is not perceived as helping New Labour’s so-called bedrock, the working class and trade unions. There is no fundamental difference in the medicine being prescribed, which the three main political parties hope to force down the throats of the working class and poor.

David Prosser of the Independent newspaper summed this up simply: "The Tory/Labour divide is a political not economic one". He further comments: "The idea that there is some mammoth divide between Mr Osborne and Mr Darling on when to start work cutting the deficit is a myth". The only difference, if any, is one of timing. The Tories will immediately go for the jugular in attacking public-sector services and wages, probably with an ‘emergency’ budget along the lines of the infamous 1981 budget of Geoffrey Howe, chancellor in Margaret Thatcher’s first government.

Contrary to the fairy tale peddled by Tory historians of this period, this budget did not facilitate an economic recovery but enormously aggravated the serious economic crisis gripping Britain at that stage – part of a worldwide recession. The only things that saved Thatcher from electoral nemesis in the 1983 general election were the ‘Falklands factor’ and the treachery of Labour’s right wing, which split away to form the Social Democratic Party. This was an anti-Labour wedge for keeping Thatcher in power. She established a military exclusion zone around the Falklands during the war. Far more significant in Britain, however, was the three million unemployed who were in their own economic exclusion zone hell, alongside the millions of hidden unemployed.

Cross-party consensus

THOSE EVENTS HAVE been etched into the consciousness of the British working class – particularly of the older generation whose recollections generate an abiding hatred and fear of the possible return of a new Tory Thatcher – Cameron. Seeking to assuage these fears, the shadow chancellor, George Osborne, now says that a Tory government will ‘only’ cut public spending by "£1.5 billion in its first period of office". This is against the background of a yawning £200 billion budget deficit which the Tories expect to inherit. We are now assured that the Tory mountain will truly labour and produce an economic flea!

But the current ‘savings’ under New Labour – read: savage attacks on jobs and services – are already hitting public services, and amount to a £5 billion cut. On the main issue on which the general election is likely to be fought, there is no fundamental difference between the Tories, New Labour and the Liberal Democrats. Liberal Democrat leader, Nick Clegg, has even sought to assure the ‘markets’ – the venal bondholders who are presently holding the Greek government to ransom – that he would insist on "immediate cuts" in the event of a hung parliament with the Lib Dems holding the balance of power, as the price of his party’s votes sustaining a minority government.

The prospect of such a government has spooked the markets because the average capitalist investor wants a ‘strong’ government, citing the present ‘black-yellow’ coalition in Germany of Angela Merkel’s Christian Democrats and the vicious, pro-market Free Democrats. They seem not to have noticed that this government has come up against the implacable resistance of the working class and trade unions. This has resulted in plummeting support for the Free Democrats and increased support in the polls for the Greens and even the Social Democrats, who had been disastrously defeated in last year’s general election because of their previous attacks on the German workers.

In Britain, the more farsighted capitalist representatives – as opposed to those directly engaged in the market – tend to welcome the prospect of a hung parliament and what would flow from this in the form of a minority government. They calculate that such a government could be forced to do the bidding of the capitalists, and could even lead to a national government of the Tories, Liberal Democrats and New Labour. This post-election variant, surprising at first sight, has been the position of Samuel Brittan, the former arch-monetarist and an economic commentator of the Financial Times. Even the Citigroup chief economist, Willem Buiter, echoed Brittan in the Financial Times: "A commitment now to a three-party government of national unity could stabilise matters immediately. Failing that, all three parties could agree the size of post-election tightening, with only the mix of tax raising and spending cuts to be decided after the election". The proviso: "I am not holding my breath"!

Similar sentiments are expressed by the director of the Confederation of British Industry, Richard Lambert. He declared that current concerns "of the possibility of a hung parliament at the next election were slightly overplayed". Philosophically, he muses: "The world spins on. It’s what democracy is all about". But his particular spin is for a credible plan to ‘fix public finances’. He does not want immediate ‘deep cuts’ – the favoured option of the Tories – nor does he want hefty tax increases and a post-election emergency budget – a further rap over the knuckles for the Tories from the knight of big business. But he does want measures to favour his class (the bosses), including "modest cumulative cuts of £50 billion in current public spending by the middle of the next decade accompanied by the avoidance of tax rises on business". Such cuts would devastate the lives of millions. Moreover, this would be just the start of a programme of cuts stretching into the future.

In fear of the double-dip

AT THE SAME time, Lambert joins a chorus of capitalist luminaries expressing alarm at the future prospects for both the British and world economies. Indeed, Britain’s top banker, Mervyn King, governor of the Bank of England, has warned the capitalist world that it is living in a financial "fool’s paradise". With the reinforcement of the present great recession, fears have grown that, as bad as the current situation is, it is likely to worsen as an economic double-dip takes hold. In fact, there is already evidence in ‘euroland’ – beginning with the German economy – that such a phenomenon is already under way.

The Keynesian school of capitalist economists expresses this fear in the sharpest fashion. Larry Elliott bluntly declares: "This crisis is different, it has gone to the heart of the global economy, it has left the financial sector in a zombie-like state, and it has caused the same sort of existential crisis for the Chicago school of economists as stagflation caused for the Keynesians in the 1970s". (The Guardian, 1 March) The economic shocks which have resulted from this have meant that the current levers for extricating capitalism from this crisis are no longer working.

The massive stimulus packages in Britain, the US and throughout the world have avoided plunging the system immediately into a new great depression. The ‘cash for clunkers’ scheme (money for old cars) has also had some effect. But the withdrawal of these measures, the ending of the temporary VAT cut in Britain, alongside what King has described as a "dearth of demand", have reinforced the recessionary trends.

True, unemployment has not yet climbed to three million. This is partly because the official figures do not record those who have been thrown out of work but are not registered on the dole. There is also evidence that many workers are simply being refused the dole and/or benefits to compensate for loss of income. This applies in particular to immigrants who have been attracted to Britain in the boom times but who are now like pebbles stranded on the sea shore as the economic tide has gone out.

A yawning government deficit, if it continues, will tend to further undermine the pound on world markets – it has already sunk by about a third against the dollar. This has not resulted in an economic bonus for British capitalism, however, again partly because of the weak state of British manufacturing and the contracted market, particularly in the most important one for British exports, the EU. Also, the greedy bosses have not used the devaluation of the pound – which has fallen in value even against the Zimbabwean dollar! – to capture increased market share, but to boost their own profits. This has helped to keep them in business, but is not being used to boost investment back into industry of the surplus extracted from the labour of the working class.

Capital versus labour

CAPITAL, AS ELLIOTT has pointed out, is being scrapped but is not being replaced. This is the most profound indication of the lack of confidence of the capitalists in their own system. Enfeebled British manufacturing industry – which has plummeted to 12% of gross domestic product (GDP), employing only three million workers, compared to twice this 30 years ago – has seen a massive reduction in investment in the last year.

The decision of millions of workers, in effect, to trade a cut in living standards for holding on to their jobs through short-time working, has also disguised the unemployment figures temporarily. Moreover, the proportion of adults in two jobs has rocketed from 26% to 38% of the labour force in the last year, so more than one in three British workers are now compelled to have two jobs in order to keep their heads above water.

Meanwhile, taking advantage of the recession and the perceived weakness in the ability of labour to fight back in conditions of rising unemployment, the bosses have put the boot in. This is shown by the provocations of British Airways (BA) management with its attacks on cabin crews, and which resulted in an overwhelming ballot for strike action in March. They have backed up their threats with demands for reductions in wages and conditions, along with open preparations for a strike-breaking force. The TUC, under its almost invisible general secretary, Brendan Barber, has stepped into the dispute, not to back up Unite, the trade union representing the cabin crew, but to act as a ‘mediator’.

This illustrates the baleful role of the trade union leadership in Britain today. Barber has intervened in an attempt to broker a deal involving concessions from the workforce to BA. His role is matched by the criminal bureaucratic actions of the Dave Prentis leadership of Unison in banning from office the ‘heroic four’ Socialist Party members who have been disciplined on bogus charges of racism. This could open up the way for the bosses to sack some of them – for the ‘crime’ of representing their members effectively. Nobody outside the cabal around general secretary Prentis believes for a moment – nor do they, in reality – that these trade unionists, who have an impressive record in defending the rights and conditions of Unison members, could be guilty of the charge of racism hurled against them by this unscrupulous right-wing leadership. However, such is the colossal industrial storm that is brewing in Britain that if this right-wing leadership (and their co-thinkers in other unions) continues to pursue these methods, they could be swept away by the rise of a mass movement of ordinary trade unionists and workers against not just the bosses but the conservative trade union officialdom.

A future: cuts for all

THIS POLARISATION OF the classes, which is widening by the day, is predicated on the desperate economic straits of British capitalism and the capitalists’ policies which flow from this. The immediate focus is the public sector and the £200 billion budget deficit, which ‘all’ agree – except socialists and Marxists and, in time, the mass of the workers, too – should be cut, with the working and middle classes paying the main price. The Brown government has desperately attempted to fan the lifeless embers of the economy with a combination of measures. Interest rates are at an unprecedentedly low level. The government has pumped £200 billion into the economy through ‘quantative easing’ – in effect, buying bonds from itself through the Bank of England – with what one commentator has called "virtual money".

Britain’s record deficit, amounting to 12.8% of GDP, is actually worse than Greece’s, and the national debt is due to climb from 55% of GDP to 82% in 2010-11. Alongside this is the massive debt overhang of companies, individuals and the government. These accumulated debts are like giant concrete boots holding back the development of the economy, particularly its ability to stimulate demand. Keynes’s ‘propensity to thrift’ acts like an iron corset on the economy, not just in Britain but internationally. Rebuilding balance sheets – in other words, individual and company savings – is the order of the day rather than the previous shop-till-you-drop credo. Each of the parties vies with the others for which will be the most effective in cutting the deficit. Brown talked recently about the alternatives being ‘Tory cuts versus Labour investment’. However, under the pressure of the last attempted ‘coup’ in January, led by Geoff Hoon and Patricia Hewitt, he seems to have abandoned this position.

The two main parties have said that they will ring fence spending on health, education and overseas development. This, as John Lanchester comments in the London Review of Books, means "cuts everywhere else of 16% (by the way, a two-year freeze in NHS spending – which is what Labour have talked about – would be its sharpest contraction in 60 years)". He goes on: "Cuts of that magnitude have never been achieved in this country. Mrs Thatcher managed to cut some areas of public spending to zero growth; the difference between that and a contraction of 16% is unimaginable". (11 March)

Lanchester then says what this would mean: "At the transport ministry, an 18% reduction would take out more than a third of the department’s grant to Network Rail; a 24% reduction is about equivalent to ending all current and capital expenditure on roads. At the Ministry of Justice an 18% reduction broadly equates to closing all the courts, a 24% cut to shutting two-thirds of all prisons". He comments: "This is good blood-curdling stuff. But it is, I think, impossible for anyone to believe that any British government will ever administer cuts in public spending of that order". Don’t be so sure: desperate times provoke desperate measures.

The BBC website has recently reported on the background to the infamous Geddes report of 1921, which was prepared for Lloyd George’s government and proposed draconian cuts. Geddes was cheered on by The Times, dubbing his committee, ‘The Super Axe’. In 2010, the same newspaper, now controlled by Rupert Murdoch (then by Lord Northcliffe), declared that "the public sector has become obese", and must therefore be savaged. Geddes prepared the ground for the 1926 general strike. Similar proposals today can provoke a likewise response, despite the right-wing trade union leaders.

Market diktat

THESE CUTS MAY not go as far as that implied above but a new government will have to carry through savage cuts because they are threatened by the dictatorship of capital, in the form of the bond markets. In order to fund the deficit, the government must sell its debt as gilts on these markets. If the government does not come to heel, then there will be a "buyer’s strike and nobody will want to buy the many tens of billions of pounds of debt which the British government is going to have to issue over the next years", comments Lanchester.

He goes on: "You can lie to the electorate, but you can’t lie to the bond market, which is why there will certainly be cuts, severe ones – just not quite as severe as the Texas Chainsaw Massacre scenario implied in the budget". But they will be massive and will impact on working-class people. Already, the servicing of the national debt – the payment of interest – is climbing and burdening state expenditure. Accept capitalism and you are in thrall to its forces and its laws.

Not only Brown but Bill Clinton and his ‘reformist’ programme during a ‘boom’ were sabotaged by the bond market. "I used to think, if there was reincarnation, I wanted to come back as the president or the pope", James Carville, Clinton’s political strategist, said in the early years of the Clinton administration. "But now I want to come back as the bond market. You can intimidate everybody".

Again, only if you accept the laws of capitalism. Nationalise the banks under democratic workers’ control and management, introduce a state monopoly of foreign trade on this basis and, at one fell swoop, the blackmail of big business and the ‘bond tsars’ is clipped. Appeal to workers internationally to follow suit and their power can be not only curtailed but eliminated. But that implies a frontal challenge to the power of capitalism, which New Labour is not prepared to do.

The New Labour grandees have quite cynically leant on the trade union apparatus to hem them in, dragooning the labour movement to comply with an open and blatant pro-market, big-business programme. Amazingly, New Labour ministers and MPs are now warning the unions not to seek to exploit their role as Labour’s fundraising lifeline. David Blunkett, former home secretary, while actually asking for more money from the unions (which have already contributed the bulk of Labour’s £8 million election war chest), declares: "We’re saying to the trade unions, ‘it’s in your interest to back us rather than it’s in our interest to back you’"! (Financial Times)

The carrot first? He "insisted the unions had ‘behaved incredibly responsibly’ during Labour’s term of office". And said: "We’ve had a period of 13 years where the trade union movement have not taken their bat home, they’ve not caused major problems, they’ve ridden with the most enormous economic change". He also said: "People should actually look at the trade union movement and say, ‘goodness me, what a transformation there’s been’."

This is not just taking the trade unions for granted, it’s rubbing their noses in the dirt. New Labour has done absolutely zilch for working-class people and yet it expects the unions to continue to fill the boots of the party. In Blunkett’s contemptuous statement is summed up the real relationship between New Labour and the trade unions – to be more precise, with the trade union tops. The union leaders no longer present a threat to the New Labour grandees. This is because they have separated themselves completely from any control and influence from what was, at one time, a majority: the trade union and working class base of Labour of old.

Growing acceptance of coalitions

THIS, IN TURN, allows a ‘calm’ discussion on the possibility of a future coalition government involving New Labour in the post-election period. There is not the uproar that there would have been in the past from the party’s base or the unions at the mere mention of the possibility. The searing historical experience of the British labour movement in relation to this issue, particularly the betrayal of Ramsay MacDonald and the formation of the national government in 1931, previously meant implacable hostility to such a proposal. The Labour government of 1929-31 was broken, in effect, by the resistance of the trade unions – which, in the previous two years, had accepted attacks on workers’ rights and conditions from this minority government. Ultimately, however, they could not swallow what MacDonald proposed in 1931. It was this trade union resistance that broke the Labour government, and MacDonald went over to join a national government coalition with the Tories and the Liberals, which carried through a brutal austerity programme.

This experience was engraved on the consciousness of the older generation of workers in Britain. However, New Labour’s abandonment of its worker base – which has been an international phenomenon in the former workers’ parties – means that coalitionism is now seemingly accepted as a possibility under certain conditions. Consciousness has gone back on this, as on many other issues. This is indicated by the support for a change in the electoral system of Brown and those formally on the ‘left’, like Peter Hain. They do not propose a real proportional representation system but the alternative vote method which is virtually certain to produce coalitions after an election. So empty is New Labour that there will be no mass working-class revolt within it, let alone from the left which has shrunk into insignificance.

Therefore, a coalition government is possible at a certain stage in Britain. It cannot be ruled out that it could be one of the outcomes of this coming general election. The Tories need a lead of about 10% in the popular vote even to get an absolute majority. This would require them winning an additional 127 seats. But the Tory lead, according to some polls, is down to 5%, and has shrunk even further to 2% in one or two polls.

Being ahead in the popular vote does not guarantee electoral victory in the British first-past-the-post system. In 1955, the Tories beat Labour by 344 to 277 seats with no more than a 3.1% lead in the vote, and in 1970 by 330 to 287 with a 3.4% lead. In 1951, on the other hand, the Tories won by 321 to 295 seats despite winning fewer votes than Labour and went on to hold power for 13 years. In 1959, the Tories won 59% of parliamentary seats with a minority of 49.7% of votes.

The obstacles in the path of an overall Tory majority are indicated by the fact that, in 2005, they gained 30% of seats with 32.3% of the vote, while Labour landed 55% of seats with only 35.3%. Moreover, the Tories are demographically concentrated in England; 194 out of 198 Tory MPs elected five years ago represent English seats, where Labour gained 286 seats, even though the Tories had a fractional lead in votes.

The reason for this is the decline of the two larger parties and a certain resurgence of the Liberal Democrats. This has been strengthened by the growth of the nationalist parties and populists of various hues in the ‘Celtic fringe’. Now, the two main parties corner only 67.3% of the vote. Therefore, if no party has an overall majority, a minority government is possible.

Notwithstanding what Clegg has stated, it is unlikely that he will be able to lend his votes to Cameron to put him in power. In March 1974, the then Liberal Party leader, Jeremy Thorpe, was courted by outgoing Tory prime minister, Ted Heath, to join him in a coalition. However, Labour had emerged as the biggest party. If the Liberals had gone into a coalition, their party would have split asunder. Since then, although they have tilted towards the right, an open embrace of the Tories would be likely to result in a big fissure in the Lib Dems.

It is not excluded that Labour could emerge as the biggest party and could be sustained in power by the smaller parties for a period, as was the Harold Wilson government of 1974. On the other hand, such is the urgency for them for this situation, the capitalists may exert the greatest possible pressure after the election for the formation of a coalition or some kind of national government.

Preparing struggle from below

THE RATINGS AGENCIES are threatening even now to downgrade ‘British debt’ from its AAA status (which encourages the markets to buy this debt). These are the same agencies that prepared the way for the US subprime mortgage crisis, which heralded the present economic travails by granting carte blanche top grades to the massive pile of unsecured loans. This led to the colossal debt mountain which has not fully unwound and has left millions homeless in the US.

The election arithmetic is complicated and a number of variants are possible. But there is a constant factor, the desperate, underlying economic and social situation in Britain, occasioned by diseased capitalism. This is matched by the determination of the capitalists and their representatives to force working-class people to foot the bill for this crisis. Equally as certain is that resistance will come from the working class. As with the poll tax, this situation is objectively determined. The question of questions is: will it be organised as with the poll tax, ensuring the defeat of the capitalist enemy and a victory for the working class, or will it be disorganised and inchoate?

The trade union leaders in the main offer no guidance, strategy or tactics in preparation for this situation. Because they rest on a working-class base, however, it is not excluded that they will be compelled to lead, from behind, oppositional movements of the working class. If not them, resistance will burst out from below. In this election, the opportunity is presented to prepare for this new explosive situation in Britain.

The newly formed Trade Unionist and Socialist Coalition (TUSC) is not just an electoral alternative. Its votes, squeezed as they will be by the ‘lesser evilism’ that will be manifest, may not be substantial. That is not crucial. This stand is necessary in order to prepare for the future – and not the dim and distant future – and the position after the election. Then, no matter what the outcome of the election, New Labour will not swing to the left – as is fondly and mistakenly envisaged by some, even ‘Marxists’.

The desertion of Labour by an unprecedented number of ‘retiring’ MPs, many of whom stood on the left in the past, means that an even more enfeebled ‘left’ will emerge in the post-election situation. The trade union leadership, overwhelmingly right-wing, will not be propelled towards the left nor will ordinary trade unionists see the point of joining New Labour. It is in this situation that a new alternative must be laid, both politically and on the industrial plane.

If the trade union leaders do not lead, then organisations from below, like the National Shop Stewards Network, will seek to coordinate the fightback that will begin. Intense discussion will also flow from the election and the need for a new party, the basis for which has already been laid by the overwhelmingly positive experience of the No2EU-Yes to Democracy campaign in last year’s Euro elections and the current coalition in TUSC.

Britain is on the eve of important developments. It is necessary to prepare the most politically advanced workers, young people, black and Asian youth and women, for the big battles to come. This is necessary in order that the working class is armed with clear ideas and a broad organisational framework, in the form of a new mass party, which can take the struggle forward.