A new year of struggle

Dramatic changes have affected Britain. The student protests of last year set the scene. Now the prospect of significant industrial action against savage public-sector cutbacks is on the agenda. As is building a broad, mass anti-cuts movement. PETER TAAFFE assesses the situation in an article taken from material for the Socialist Party’s national conference in February.

2010 WAS A tumultuous year in Britain and worldwide, marked by a deepening of the crisis of world capitalism and big social movements. We are now in an era of mass demonstrations, of popular participation by the working class which is seeking to stop the capitalist juggernaut from destroying all their past gains. But 2010 is as nothing compared to what is likely to unfold in 2011.

It is the enduring crisis of world capitalism that allows us to draw this bold conclusion. The chorus of capitalist commentators to the effect that capitalism is on a recovery road to ‘sunny economic uplands’ is bogus. True, the FTSE index of shares in Britain zoomed over to 6,040 points at the turn of the year. But the gyrations on the stock exchange – a giant casino – are of little real relevance in measuring economic health today and the prospects of real growth in the future. More significant is the admission by the pro-capitalist, ‘liberal’ commentator and historian Simon Schama: "Life for millions in burgered America goes on only through food banks and food stamps. Seventy per cent of the population has a close friend or family member who has lost a job. We are still living in 3D America: desolation, devastation, destitution". This, in relation to the engine room of world capitalism!

The US is running a yawning budget deficit which threatens a fiscal train wreck. At one stage in late December the uptake of treasury bonds, necessary for the continued financing of the deficit, was poor and threatened a crisis in government finances. However, with the capitalists possessing massive surpluses in cash and with nowhere to really invest productively – in itself an expression of the organic crisis of capitalism – a further sale of bonds was successful. But the Obama administration is faced with the invidious prospect of seeking to cut the deficit which will severely impact on living standards. If this concentrates on welfare – as the Republican right hopes – it will enormously aggravate the social situation and lead to a big radicalisation. Whether this is reflected in a shift leftwards partly depends, as elsewhere, on the creation of a left pole of attraction in the form of a new left party or formation. On the other hand, to attack the huge ‘defence’ budget would bring down even greater criticism from the right-wing Republicans – led by the Tea Party – on the heads of Barack Obama and his administration. Up to now, he has met this right-wing offensive by retreating and making concessions, for example on the taxation of the rich. This can only spur on the right wing to force further retreats.

In Europe, the economic meltdown in Ireland threatens to spread to Portugal and even Spain which, according to some capitalist economists, is the fourth largest European economy and ‘too big to save’. Even Italy and Britain are not entirely immune from the effects of the European banking crisis – because that’s what it is – triggered by the events in Ireland. The bailout of the Irish banks is an indication that it is a question, as Samuel Johnson said, of ‘hanging together or hanging separately’. Ireland is likely to default on its debt – or ‘reschedule’ in the more diplomatic language favoured by capitalist economists – despite all the best efforts of the EU member states and the different national governments to bail the country out. Britain’s chancellor, George Osborne, let us recall, found £7 billion to help Ireland as a ‘good neighbour’. Yet he is no ‘good Samaritan’ to the poor and working class as he seeks to push through the biggest austerity package for 80 years.

The intertwining fates of all the economies of Europe, through the sovereign debt crisis, show how crucial are developments internationally in shaping events on a national scale, sometimes decisively so. The underlying assumptions of the Con-Dem government are that, despite the savagery of the cuts, eventually ‘all will be right on the night’. Events will work out in its favour because of the ‘inevitable’ rebound of the economy. The ‘normal’ economic cycle will reassert itself, it is argued, with a crisis followed by a boom, and so the merry-go-round continues. These hopes will be dashed by the march of events. This is not a ‘normal’ cycle similar to 1950-75 or even the weaker boom of the ‘noughties’. This crisis is totally unfamiliar in its character, depth and seriousness to both the current rulers and the ‘ruled’.

Economic weaknesses

THE HOPES OF a revival in the fortunes of the Con-Dem government, already under siege from opposition to the cuts, will be dissipated. There is no outlet for Britain internally or externally in greater growth or significantly increased penetration of export markets. Indeed, the economic figures in December underline just how far British capitalism has gone back. City economists were cutting forecasts for growth in the final three months of 2010, particularly as the economy had been severely affected by the bad weather. There was a slowdown in the last quarter of 2010, yet it had been predicted that the economy was likely to grow by 0.8% in the third quarter – itself a miserly rate. This, in turn, was lower than the 1.2% recorded in the spring quarter. Growth is now expected to be a mere 0.5%. At the same time, the VAT rate increase from 17.5% to 20% will kick in, as will the effects of job losses, all adding to a contraction in ‘demand’.

The bourgeois employ anodyne language to disguise the scale of this collapse. They use meteorological language which seeks to cover up underlying class realities. For instance, The Economist speaks about "economic headwinds" as if this was something out of the control of human beings and not itself a product of the crisis of capitalism. Unemployment is described as "a headcount", and the deliberate cutting of living standards as "cutting costs". Massive attacks on welfare are also described as "cutting costs" and "paring down debt".

The employers’ organisation, the CBI, now predicts that the next year will see "high prices, low growth and rising rates". Stalled growth is bad enough, but adding to the misery of millions will be a significant rise in prices on top of the already increased rate of inflation, which is 4.7% at the time of writing. There is no possibility, at least in the short term, of restricting inflation to the government target of 2%. It was 3.3% in November as the effects of world price increases, particularly food and raw materials such as oil, etc, feed through into the economy. The huge devaluation of sterling automatically leads to an increase in prices at a certain stage. Food prices will be up, as will formerly cheap clothing at stores such as Primark and which will particularly impact on the poor. Petrol could rise to 222p per litre which will take an estimated £3 billion out of the economy. Moreover, the rise in inflation could prompt the Bank of England to push for an increase in base rates which could help to choke off any prospect of a further stimulus to growth.

The much vaunted claim that Britain, in particular its manufacturing exports boosted by a cheaper pound, will be able to storm world markets is a chimera. Britain’s trade deficit with other countries ‘unexpectedly’ worsened in October. Apart from anything else, there is no export outlet in countries, such as Spain, Italy and Portugal, suffering a ‘financial storm’. There are also restricted export opportunities in China, Brazil and Russia, not least because of the weakness of manufacturing industry in Britain. These countries are not as important as Ireland for the British economy. Hence Osborne’s panicky £7 billion ‘gift’ to the Irish government. This is another indication of the weakness of British capitalism. The British capitalists have not used the drop in sterling to increase competitiveness by maintaining or lowering prices but have used this to boost profitability. Hence the stagnation of manufacturing industry which, according to David Cameron and Osborne, is supposed to do the ‘heavy lifting’ in reviving the British economy.

There is a significant layer within the ranks of the ruling class – such as Paul Krugman in the US, and even Samuel Brittan, a former Thatcherite monetarist, in Britain – who are in favour of further measures of quantative easing (QE), a state-backed stimulation programme, to ward off the worst effects of the crisis. Brittan has echoed the words of the ancient Greek writer Euripides: "Those whom the gods wish to destroy they first make mad", in describing the coalition government. He is opposed to any measures that would cut demand ‘significantly’ at this stage of the economic cycle.

Undoubtedly, from a capitalist point of view, this section of the ruling class is more ‘correct’ than the Camerons and Osbornes. However, its programme is not capable of a long-term solution to the problems of the world or British economies. John Maynard Keynes was confronted with the argument that state intervention in the economy would, "in the long term", not solve the problems. His riposte was that, in the "long-term we are all dead", in the meantime let’s see what ‘we’ can do to ward off the crisis. Actually, the policies of Keynesianism and their opposite, austerity programmes, are head and tail of the same capitalist coin. They do not offer a long-term solution. But the ‘slash and burn’ school of Osborne and Cameron represents the worst option for the bourgeois at this stage.

Squeezed Britain

WHAT IS CLEAR is that, under the cover of this crisis, even the most ‘liberal’ section of the ruling class agrees that the working and middle classes must pay the major cost of this crisis. And there’s already been a significant worsening in living standards. What is striking about the present conjuncture is the clear perception – even of capitalist commentators – that while the ‘poor’ will be most significantly affected, they will not be alone in this. More and more reports have appeared from think-tanks – modern monasteries composed of a handful of self-appointed experts – producing some significant figures and examples about the effects of the forthcoming cuts. For instance, the independent Resolution Foundation – whatever that means – has looked at eleven million households who have incomes between £12,000 and £30,000 a year. Incredibly, it refers to this section of society as "squeezed lower-middle-class families". Twelve thousand pounds a year puts most people in the position of poorly-paid workers, particularly in high living cost areas such as London and the South-East. Even £30,000 a year in the London area would not automatically qualify anyone – particularly with a family – as being part of the middle class.

But what this survey inadvertently indicates is the increased proletarianisation of formerly cushioned, even privileged, sections of the population under the blows of the crisis of capitalism. Now ‘squeezed’ Britain is not just the poor and working class in general but those who formerly were or saw themselves as part of the middle class, perhaps the lower middle class. Research has predicted that families in this bracket will see their wages fall in real terms on average by a minimum of 4% over the next year as the major cuts overlap with the fragile jobs market. The effects of this on the aspirations of this section of the population, particularly in jobs and housing, of ‘owning your own home’, are dramatic. "Even if these families put aside 5% of their disposable income each year, the foundation finds it would take 45 years to accumulate the average first-time buyer deposit in 2009". (The Guardian, 25 November, 2010) This represents the complete smashing of Margaret Thatcher’s idea of a ‘property-owning democracy’. Its social and political effects, taken together with other factors, cannot be overestimated. More than 21% of those on ‘low-to-middle’ incomes are now part-time workers, compared with a 15% national average. The share in national wealth of this section of society has dropped dramatically since 1977.

If there was a mass party of the working class – even one along the lines of the bourgeois workers’ parties that existed prior to 1989, the Labour Party – giving a lead in this situation, it would result in mass uprisings. It would have also resulted in the emergence of a more conscious layer amongst whom the ideas of socialism, centrism and Marxism would be hot topics of conversation within the workplace and in communities. Even now, a small but significant layer of young people and workers are beginning to draw socialist conclusions, many of them travelling into the ranks of the Socialist Party.

The whole logic of this situation points to the crying necessity for the creation of a new mass party of the working class. Somewhat delayed, this process will develop. At first, this could be a small mass party, which is now in prospect in Ireland through the efforts of the Socialist Party there. The same is demanded in the current situation in Britain.

The battle against the cuts is a top priority for the working class, but it must be linked to the need to argue for an electoral alternative. The Trade Unionist and Socialist Coalition (TUSC) actually assumes even greater importance in this battle and it should strongly feature in all the anti-cuts battles. Without a serious electoral challenge, there is a danger, for example, that councillors carrying out cuts can remain impervious to the suffering that their callous approach can cause. Industrial action is vital, of course, but it must be buttressed by pressure for candidates – trade unionists in the first instance – to challenge them in elections.

Offensive ideology

THE SCALE OF the savagery to come was spelt out in all its brutal detail in The Observer on 16 January. Nicholas Ridley, the late Tory strategist and former cabinet minister, as is well known, prepared with Thatcher to defeat the miners after they had forced her government back in 1981. This led to the epic struggle of the miners in 1984-85. The Tories only succeeded because of the pusillanimity of the right-wing TUC leaders at the time. What is less well known is that, in a pamphlet published in 1988, Ridley also wanted to completely dismantle – effectively destroy – local government, seen then as a ‘bastion of the left’. It certainly was in the magnificent struggle of Liverpool city council between 1983 and 1987 alongside Lambeth. Ridley and Thatcher wanted to hand over everything from education to refuse collection to their rich friends in the private sector – a policy of mass privatisation. They were thwarted in the main by the resistance of the likes of Liverpool.

Now Cameron wants to complete the job: "City analysts and government experts expect big private contractors such as Capita, Serco and Sodexho to benefit" from council privatisations. It is expected that, if they get away with it, "third-party suppliers will make up 44% of total public-sector spend by 2014/15"! The GMB union has "established that a total of 113,765 posts are under threat". Vacancies will not be filled and services will collapse.

Even without real leadership, the objective situation in Britain is a guarantee of struggle. The programme of cuts is not a subjective wish on the part of Cameron and Co, although there is undoubtedly an ‘ideological’ element to their approach. They want to use the crisis to inflict lasting defeats on the working class – in a sense to go further than the situation demands. But, in general, the attacks arise from the concrete position that capitalism finds itself in at the present time. Even Vince Cable, Lib Dem business secretary, accused his Tory ‘partners’ of being ‘Maoists’ intent on ceaseless ‘revolution’, in reality counter-revolution. One Tory minister boasted that they wanted to create chaos. In reference to the counter-reforms in the health service, Nicholas Edwards, acting chief executive of the NHS Confederation, said: "There will have to be an element of Joseph Schumpeter’s ‘creative destruction’." (Schumpeter was an economist of the first half of the 20th century.)

As earlier with the poll tax – because we are in a time of drawn-out economic agony – for the working class, above all, the choice is between a conscious organised movement led by the trade unions and the labour movement but with a militant fighting policy, or scattered inchoate resistance. Unless properly organised, this can take the form – as we have seen to some extent in the student movement – of not just one ‘riot’ but a series of such events over a period of time.

This is one of the most crucial periods in British history for socialists and Marxists. To elaborate a clear programme in relation to the cuts, to understand as a precondition for this the possibilities as well as the difficulties in this situation, to formulate a clear way forward and to carry that through in action, are the highest priorities. This will shape the form of the labour movement in the next period.

The Lib Dems and the coalition

THE GOVERNMENT CLAIMS that it does not have a plan B, an alternative policy in the event of its ruthless deflationary policy collapsing, as it will. However, this is largely public posturing for the benefit of the ‘markets’. U-turns have already been made, for example, on school sports funding and the proposal to abolish free books through the Book Trust. Added to this must be the u-turn of Cameron – over Christmas in the hope that it would be hidden – when he took his ‘vanity’ staff off the government payroll. Much more significant retreats impend on the basis of big events.

In a certain sense, the initial strength of the government has been the preparedness of the Liberal Democrats to perform the role of lightning conductors for all the most unpopular and odious policies of the government. They play today the traditional role of the social democrat ministers in popular front governments in the past. Invariably, these ministers were given the unpopular portfolios – labour, for instance, responsible for keeping the unions ‘in order’. One Tory minister admitted as much when he blurted out to The Independent: "Thank goodness our policy had been fronted by Vince Cable". Andrew Grice, the political correspondent of The Independent who recorded this, added: "You bet"!

Having been used by the Tories to front the rise in tuition fees, and then discredited through his ‘quotes’ to Daily Telegraph ‘reporters’ about the Tories, the Lib Dem ‘saint’, Cable, has been stripped of effective power. He will not now be able to re-establish some of his lost credentials by ‘clipping the horns’ of Rupert Murdoch and his empire by preventing Murdoch’s full control over BSkyB, which would be a further step in the ‘Berlusconisation’ of the British media. The Liberal Democrats will not recover from this situation. The Oldham East and Saddleworth by-election saw them come second but only by the grace of an estimated 7,000 Tory voters switching their votes, with Cameron urging them beforehand to save his ‘partner’ Nick Clegg. Also, this was not a normal by-election as it had the stench of the corruption of Labour’s debarred MP Phil Woolas hanging over it. Even so, Labour increased its majority.

There are a number of big events, apart from the cuts, which could even shipwreck the coalition this year. For instance, on the question of the referendum on the Alternative Vote. This will be, in effect, a referendum – as the Oldham by-election was – on the government, including the Liberal Democrats. It is likely to be defeated because of the general unpopularity of the government. The Socialist Party is opposed to AV, despite the fact that we support a genuine form of proportional representation, because it entrenches the power of the major parties. It does not even provide the limited possibilities for new parties in the first-past-the-post system (see page 22). Additionally, it is linked to a proposal to cut the number of parliamentary constituencies from 650 to 600. This, too, is a profoundly anti-democratic and anti-working class measure. The intention is to entrench the power of the Tories and the Liberal Democrats, if they are still in coalition with them.

A split in the coalition could come on a number of issues, and not necessarily on the cuts. It could be on control orders, the prison reform programme announced by Kenneth Clarke, which has split the Tory party with proposals to grant the right to vote to certain categories of prisoners, on Europe and on AV itself. It cannot be excluded that we will have a general election later this year. Until recently, Cameron and the Tories have largely avoided the full odium of the cuts. He has stated that he intends to remain in power for five years. But the Tory right wing is becoming more and more restless as further concessions appear to be given to the Liberal Democrats. This parliament has already recorded more revolts against the government than any since 1945.

Cameron surreptitiously floated the idea of a kind of permanent pact between the Tories and the Lib Dems right up to the next general election! This has provoked opposition from Tory rightwingers. They could break ranks on a number of issues, including Europe and immigration. On the other hand, Cameron has made it clear that he intends to ‘last the full five-year term’ as has Clegg and the Lib-Dem leadership. Clegg has demanded that his party must not only participate in the coalition but "own it". That means accepting full responsibility for all its decisions.

Clegg along with David Laws and others from the Orange Book wing of the Liberal Democrats, represent those who will collapse – like the National Liberals in the 1930s – into the Tory Party. We should remember that, in the past, the Liberals were reduced to a sect, receiving just 2.5% of the vote in 1951. There have already been significant defections from the Liberal Democrats, from their alleged ‘social democratic’ wing, towards New Labour, while many have dropped into inactivity. It is not possible to give an exact perspective of the likely march of events but developments in the economy worldwide and in Britain, as well as the political conjuncture that flows from this, makes it highly unlikely, to say the least, that this government will last its full term. If it does, contrary to all expectations, it will be against the background of the most convulsive period in Britain for 70 years. This will present huge opportunities for the growth of significant forces of socialism and Marxism. This, in turn, is related to the future of the labour movement in Britain, including the Labour Party.

Ed’s New Labour

INITIALLY, THE ELECTION of Ed Miliband to the leadership initially caused a surge of optimism in New Labour circles, amongst trade union leaderships and, incredibly, even some ‘far-left’ groups. A new phase had opened up which would represent a step change towards the left, they argued. The Socialist Party stood out against this and showed that the election of Miliband did not represent a fundamental shift towards the left. We have been proved to be correct. The timidity of Miliband’s approach, however, exceeded expectations. He gained the support of the unions, which was decisive in the leadership elections, only then to repudiate them, refusing to attend even an indoor TUC rally against the comprehensive spending review. He repudiated Len McCluskey’s call for strike action against the cuts. He also opined that he "would like to meet the demonstrating students", only to dither, clearly afraid of the reaction of the right-wing press!

Miliband argues that he will form a ‘progressive alliance’. Yet the very formation of the Labour Party involved a progressive struggle against Liberalism, recognised by the pioneers of the Labour Party as a party of big business. Setting up the Labour Party also represented a decisive defeat for the Lib-Labs – half ‘Liberal’ but not yet fully Labour. This was consolidated in the adoption of Clause IV in 1918 under the direct influence of the Russian revolution. Miliband now scrambles around in the dustbin of history to rescue these discredited, tawdry garments. His courting of the Lib Dems – when they are in the process of being utterly discredited – represents something else as well. He clearly fears Labour ruling alone when this government collapses. He needs the Lib Dems as an excuse for inaction or, worse, carrying through cuts. Even Lord Owen, of the ‘gang of four’ who split from Labour in 1981, is considering rejoining Labour because of Miliband’s rightward shift!

Miliband’s latest guru is, it seems, Maurice Glasman, director of the faith and citizenship programme at London Metropolitan University. His pearls of wisdom include the following characterisation of Cameron: "I think that David Cameron is genuinely a One Nation Tory… It is Clegg and Osborne who are in deep alliance on the neo-liberal Thatcherite economics". He also advises Miliband: "What Ed should do is invite Cameron to join Labour, which is really about the Big Society and won’t be closing post offices and libraries".

These are not the actions of a bold socialist innovator. On the contrary, one of Miliband’s main planks is actually to seek to rescue the discredited Liberal Democrats in preparation for a future coalition – minus Clegg – with them! Miliband’s problem is that the Lib Dems will collapse as an electoral force. There may be little left of the Lib Dems to coalesce with.

There has been a certain influx into New Labour’s ranks but nowhere near the scale of the past when the Labour Party did act as a left pole of attraction for tens of thousands of workers looking for a real struggle against capitalism and the Tories. A layer of young people, some of them sincere in their intentions, may have joined. It was reported that 500 were mobilised in one day of canvassing during the Oldham by-election. But most new Labour Party members are likely to be passive new recruits, joined by the ‘salariat’ of paid councillors. They now make up the body of the New Labour ‘rank and file’, alongside officials, place-seekers and odious types from the ‘youth’, symbolised by Aaron Porter, president of the National Union of Students. These gilded youth are firmly entrenched in the confines of capitalism and are utterly incapable of finding a way towards the working class.

In fact, they do not even desire such an outcome. At most, they look for personal power, as does Miliband himself, but without even traces of the radicalism of social democratic parties and governments of the past. In the main, therefore, the Miliband factor will be a very short-lived phenomenon for the more advanced layers. This does not mean that Labour will not meet with electoral success, as Oldham showed. This signifies a reflex reaction on the part of the masses to the Tories, but with few real converts to the ‘idea’ of Labour and without big illusions that it offers fundamental change. The issue of a new mass workers’ party, if anything, is posed more sharply in this situation. In particular, TUSC assumes even greater importance as a first step in the struggle to build a large formation of this character.

The period that is opening up in Britain, linked to what is happening internationally, promises to be the most convulsive and enthralling for decades. It will not be ‘easy’ because of the increased hardship for working people arising from the crisis. But it will prepare, harden and steel a new generation of workers and youth who thirst for ideas on how to win the battle against capitalism. It is a situation pregnant with huge possibilities for an organisation that knows how to read the mood of the working class, to intervene in good season, and to establish a firm position within the organisations of the working class.