As Boris Johnson’s premiership teeters on the brink, the underlying weakness of British capitalism will leave little room for manoeuvre for whoever replaces him, whether from within the divided Tory party or Sir Keir Starmer. Taking the necessary steps towards a mass working class political vehicle is ever more vital. These are the themes of the draft British Perspectives document for the Socialist Party’s national congress in March, written by HANNAH SELL, from which we print edited extracts.
In every country the pandemic has thrown all aspects of society into flux. It has created enormous economic uncertainty and increased tensions between nation states, different sections of ruling elites and, above all, between classes. At the start of the pandemic, governments were generally able to temporarily increase their support under the banner of ‘national unity’ against the virus. But this has now turned into its opposite, nowhere more so than in Britain. The new period we are going into will be one of class conflict and growing instability, with the current turmoil in the Tory Party a signaler of the stormy events that lie ahead.
The pandemic is not over. The current Omicron surge, and likely future surges in infection rates as new variants emerge, will continue for a period to be a huge source of stress on individuals and effect the functioning of society, adding to economic and political uncertainty. While it seems probable that Covid will become over time an endemic disease, this does not mean that there will be any abrupt ‘end’ of the pandemic. Covid will be an ongoing factor in events for some time. Nonetheless, the build-up of tensions and class anger that has accumulated, the expression of which was also partially temporarily supressed by the pandemic, will burst forth in the next period, fuelled by the escalating attacks on the living standards of the working class and substantial sections of the middle class.
Economic instability
Globally, there is absolutely no prospect of a sustained ‘post-pandemic’ economic upswing, still less in Britain. Inevitably, after the shutting of swathes of the world economy in 2020, there was a rebound in 2021. However, this was very uneven. Of the major capitalist countries, Britain had a relatively weak recovery. Growth stuttered quickly, slowing to virtually nothing (0.1%) in October 2021. Despite a small increase in November before Omicron hit, the British economy, at the end of 2021, had barely reached its pre-pandemic size.
However, that was, as the Financial Times put it in their predictions for 2022, “the easy part”, which is now over. A more difficult and uncertain period is ahead. The looming problems which could trigger a new economic crisis are numerous and intractable. No capitalist policy can successfully postpone a new crisis indefinitely. And even if the next phase of acute economic crisis is delayed, British capitalism is facing a period of instability and the working class – regardless of the formal growth figures – is going to be under the cosh. This will come on top of two decades of squeezed living standards. The Institute of Fiscal Studies estimates that, on the basis of current trends, in 2026 average household incomes will be 42% lower than would have been the case if wages had risen at pre-2008 financial crisis rates.
In the pre-pandemic era capitalism was already lurching towards a new crisis. Back in 2019 the IMF estimated that the levels of debt in eight major economies, including Britain, were such that a recession half as deep as 2007-08 would lead to 40% of businesses facing bankruptcy. To avoid such a scenario when Covid hit, and the mass revolt that would have resulted, the Tory government – like the governments of all other major economies – had no choice but to implement massive state-aid packages. Chancellor Rishi Sunak’s measures have totalled around £400 billion, combined with continued quantitative easing (QE) and ultra-low interest rates.
While they staved off economic disaster, however, they did not prevent a further increase in corporate debt. An estimated 20% of UK businesses are now ‘zombies’, only able to meet debt interest payments from their profits. Even a relatively small rise in interest rates and/or a new slowdown could tip them over the brink.
The danger of increasing interest rates also applies to government debt, which is now at the highest level since 1963, with no realistic prospect of it coming down significantly in the near future. The capitalist class has no choice but to cope with this situation, but that does not mean that British capitalism can afford to allow the debt to grow without limits. Britain is still the fifth-largest economy in the world, and has more room to manoeuvre than many smaller, weaker economies. It is also true that the average length it takes British government bonds to mature is longer than many other economically developed countries, which means that interest rate rises would affect the size of debt repayments relatively slowly. But this is partially undermined by the effect of QE – which has involved large purchases of government bonds by the Bank of England – which is expected to bring the median maturity of public sector debt down to less than one year by March.
Sunak’s refusal to take any significant measures to lessen the cost-of-living crisis is therefore not, as is reported in the capitalist media, only a result of his ‘ideological’ stance, but reflects real limits faced by capitalist governments in Britain. The long-term decline of British capitalism, the unreliability of its political representatives, and its isolation from the capitalist bloc of the European Union (EU), all make it potentially more at risk of attack by the markets if its debts were to spiral up further.
The government’s own Office for Budget Responsibility (OBR) recognised the potential for serious crisis when they explained that, while moderate inflation could be ‘benign’ against the background of strong economic growth, allowing the real value of government debt to decrease, “malign scenarios are possible too. If interest rates rise because investors demand a higher risk premium for some reason, this would more than likely be accompanied by a deteriorating economic and fiscal position, resulting in a vicious fiscal circle. In such circumstances governments can find it difficult to make the spending cuts and tax rises necessary to restore the debt trajectory to a sustainable path”. They did not add that the reason it would be ‘difficult’ would be because of mass working-class opposition to spending cuts and tax rises against the background – as it would be – of higher interest rates making mortgage and credit card debt unsustainable for millions, while a likely fall in the value of sterling also raised the cost of buying goods imported from outside Britain, with all the knock-on consequences.
Of course it is not only because of the fear of the potential economic consequences that the Tories are anxious to avoid further state interventions, but the political ones too, both in accelerating the developing splits in the Tory party and, more importantly, the possibility of state intervention increasing the confidence of the working class to refuse to accept the ‘logic’ of capitalism. They are right to fear this. The fundamental reason for the broad growth in support for ‘socialistic’ ideas is the experience of capitalism combined with, as Friedrich Engels described it, “the invading socialistic society”, as the capitalists are forced to increase the role of the state in order to shore up their ailing system. It is still not excluded, however, despite all the reasons they don’t want to, that the Tories could be forced under mass pressure into introducing some new measures, or retreating on some regressive ones, as the anger over falling living standards bursts out. But these would be the actions of a weak government, not one confident in its social base of support.
State intervention during the pandemic went further and was on a bigger scale than the response to the 2007-08 great recession. Many of the consequences have been similar, however. For the richest in society wealth has again increased rapidly as the financial markets have soared, while the poorest have been further squeezed. Overall levels of wealth in Britain increased during the pandemic, but it was entirely concentrated in the pockets of the richest. The richest 1% now has an average wealth of £3.6 million, while the bottom 10% has £15,400 or less. The increased billions held by the capitalist class have not, however, resulted in any increase in investment in the development of industry, science and technique. On the contrary, as the Financial Times put it, “it is difficult to overestimate the lack of UK capital expenditure growth, compared with the wider economy, its historical trend or other countries”. (6 December 2021)
Inflation
The underlying problems of British capitalism will continue and intensify in 2022. Most immediate, as in other countries, is the question of inflation, and the dilemma that tackling it by hiking interest rates and other measures could trigger a new recession. While still relatively low by historical standards, RPI consumer inflation breached 7% in November 2021, and feels much higher, particularly for the poorest sections of the working class. Nor is it expected to decrease markedly in the short term. On the contrary, the lifting of the fuel cap in April is likely to see a further spike as energy bills jump up again. As a result, the working class is already suffering a new form of austerity for this era, as wages fail to keep up with spiralling prices. According to the Resolution Foundation, the average household stands to lose an extra £1,200 in 2022 as a result of the National Insurance hike, council tax increases and increased fuel bills alone.
There are several causes of the current increase in inflation. The global increase in energy prices, which has fed through into the prices of other commodities, is a central factor. This in itself has multiple causes. The surge in demand for energy as economies reopened was the trigger, but it also reflects the role of the financial speculators and a decades-long lack of investment generally, but above all in clean energy. In addition, the increase in geopolitical tensions, not least as the different national capitalist classes grapple with the consequences of climate change, is having an effect. Worldwide markets are calculating that energy prices have peaked. This might be true in the immediate period ahead although, even then, it is easy to see how the situation in Kazakhstan, or the escalating conflict over the Ukraine between the West and Russia, could lead to further hikes.
There are other factors, aside from the increase in energy prices, which have affected inflation levels. Unlike in the great recession, this time the capitalist class were forced to not just implement QE – accurately described as ‘socialism for the rich’ – but to go further; in Britain, for example, paying 80% of workers’ wages while they were on furlough. While the measures still meant misery for millions who were in poverty even on 100% of their wages, it did act to limit the closures and mass job losses that would have otherwise taken place and allow sections of the working and middle classes, trapped at home and unable to spend as much as normal, to accrue savings. Like in the US at the end of the second world war, as economies reopened there was an accumulated desire to spend, particularly on consumer goods and, for some sections of society, a short-term ability to use savings to do so.
The disruption to supply chains caused by the shutdowns during the pandemic was one important factor in the degree to which some sectors of capitalism have struggled to meet this surge in the appetite for commodities. It is not the only one, however. Growing protectionism, particularly affecting trade between the US and China, has also increased the shortages. In addition, the major monopolies have inevitably cynically taken advantage of the situation to hike up prices and make mega-profits.
If inflation does not abate the Tory government would have no choice but to carry out more significant ‘tightening’ measures, including bigger increases in interest rates. Given the decades-long reliance on cheap money, this could be the trigger for a serious economic crisis. In reality there are no capitalist policy measures which can overcome the sickness of the capitalist system. Increasingly, every policy will lead to new problems, which the capitalists will react to with a new policy that offers no solution.
While there are deep divisions in the Tory Party and the capitalist class on how to navigate the intractable crises they face, there is one thing, however, around which there is unanimity: that the working class should be made to pay. The Financial Times ran an editorial on 5 January where they started what will be the bosses’ drumbeat in the coming months, arguing that, “while so-called transitory drivers of inflation will increasingly fall away, the public’s expectations of price rises are likely to catch up with the inflation seen over the past twelve months. That could become a self-fulfilling prophecy, especially as the labour market tightens even more as the grip of the pandemic fades”. Ironically, “the biggest inflationary challenge for monetary policymakers will begin even as the highest price pressures disappear”. Put in polite ‘financial-ese’, this is nonetheless a very clear call to stop ‘the public’ winning wage increases to compensate for soaring costs.
That workers’ wage rises are allegedly responsible for inflation is going to be an ongoing theme from the capitalist class. Yet, even before the current situation, the share of wealth taken by workers’ wages in Britain had been shrinking from a 1976 peak of 65% of GDP, while the wealth of the capitalist class has soared. In Britain, around £250 billion a year (in 2020 prices) from 1980 to today has been transferred from the pockets of the working class to the capitalist class. There would be nothing inflationary about workers succeeding, via struggle, in forcing the bosses to transfer some of their vast wealth back into the pockets of the majority. Socialists have to hammer home that the working class has absolutely no responsibility for the potentially inflationary policies of the capitalist class and its governments, and has no choice but to fight to defend itself against the bosses’ attacks, whether they come via inflationary or ‘old school’ austerity.
Rising tide of struggle
The capitalist class is right to fear a rising tide of working-class struggle. As the Financial Times worried in another editorial, “after 40 years in which capital has had the whip hand over labour, is workers’ power on the rise?” (5 January) They conclude that in Britain, the US and other countries, “whether or not the balance of power between capital and labour has changed for good, the pandemic has been instructive for both sides… And a new generation of workers, from shelf stackers to delivery drivers, have learned just how essential they are”.
One of the most important features of the current situation is increasing industrial militancy. The government’s Office for National Statistics has stopped producing strike statistics over the last two years – blaming the pandemic! Given the low number of generalised national strikes at this stage the figures would probably not show a dramatic increase from their pre-pandemic levels. Nonetheless, it is absolutely clear that there has been an increase in the number of local strikes and, even more importantly, in the number of all-out strikes and the number of victories. Three factors driving this are the increased class consciousness and confidence created by the pandemic amongst a section of workers; the desperate need to fightback in the face of the cost of living squeeze; and, in some sectors, the labour shortages that exist. It is not a coincidence that some of the most successful strikes have been of groups of workers who drive large vehicles! Those strikes are also helping to give confidence to fight to other groups of workers, however. None of the factors driving these strikes is going to end in the short term, and the first two will only intensify.
All of these factors mean that we are entering a period which will see important strikes. The £25 million in pay increases won by Unite members in Sharon Graham’s first hundred days as general secretary is an indication of the potential that exists. Of course, this rising tide of anger is developing against the background of the previous period. The workers’ movement went into the pandemic in a state of disarray. In the wake of the betrayal of the 2011 public sector pensions struggle, many of even the left trade union leaders had no confidence that struggle was possible. Especially given the low ebb of trade union struggle, the election of Jeremy Corbyn as Labour leader in 2015 seemed to offer a way forward. His final defeat within the framework of the Labour Party, coinciding with the start of the pandemic, fuelled the completely mistaken initial response to Covid from the big majority of national trade union leaders, who came behind the government in a show of ‘national unity’.
That phase has now passed, with growing pressure from below for union leaders to fight. This was reflected in the election of Sharon Graham, plus – for the first time ever – of a left majority on the national executive of Unison. However, at the same time the level of activists in the trade union movement is still low by historical standards. A report by the ‘Time for Real Change’ grouping on the Unison NEC, for example, estimated that there are currently only around 12,000 union activists. The picture is undoubtedly similar in many other trade unions. Fighting to develop broad left organisations, often from scratch – along with building the Socialist Party within the unions – will play an important role in transforming the potential new trade union activists who are currently angry and want to take action, into consistent fighters to transform their unions into fighting, democratic organisations.
One question the next period will urgently pose is how to prevent the Tories’ anti-trade union laws blocking effective action. One option is to disaggregate ballots, as the University and College Union (UCU) did to secure strike action in universities at the end of 2021, in order to maximise the chances that some sections of workers can take action. Although this is a tactic not applicable in all situations, where appropriate, if it is done as part of a fighting strategy with the aim of lifting the confidence of other groups of workers to fight, it can play a positive role in preparing for more generalised action, just as one public sector trade union taking effective action would inspire workers in other sectors. This, of course, is the basis on which coordinated action will be built, rather than moving at the pace of the most conservative.
However, there is no balloting tactic that can magic away the obstacle of the anti-trade union laws. As the experience of Royal Mail workers in 2020 showed (where they got a huge 97% yes vote on a 75% turnout), the capitalist courts can be used to try and block action even if every legal hoop is jumped through. Defying them cannot be done lightly, without weighing up the relative balance of forces and possible consequences, but it will be necessary and is the means by which the anti-trade union laws will be defeated at a certain stage.
Social struggles
Not only workers’ strike action, but also new and resurging social struggles will erupt in the next period, potentially including a new phase of the Black Lives Matter movement, struggles against sexism, police repression, mass protests for action against climate change, or others. Social movements on economic issues are also brewing – including against the rising tide of evictions and among students on the issue of free education.
The fact that the National Union of Students (NUS), after a decade of virtual inactivity, has been forced to call a national day of protest for free education on March 2, including a national demonstration in London, shows how deeply students’ outlooks have been altered by the pandemic. Prior to Labour calling for free education under Jeremy Corbyn’s leadership, this demand had seemed unrealistic to the majority of several generations of students. Once Corbyn called for it, students overwhelmingly turned out to vote for Labour’s manifesto in the 2017 and 2019 elections. Then, during the pandemic, students have experienced paying £9,250 a year for a largely online education. Some have also taken part in the biggest student rent strikes since the 1970s, successfully winning back at least some of the rent they had been forced to pay for accommodation they weren’t even living in for most of the year. Sir Keir Starmer, who as Director of Public Prosecutions was responsible for jailing student protesters in 2010, has been studiously silent on tuition fees ever since winning the Labour leadership – while his mentor, Tony Blair (originally responsible for introducing fees in 1998) is asserting it is essential to drop Corbyn’s free education pledge.
No longer able to look to Labour to deliver free education, students are starting to look to their own strength. The potential exists for the biggest student movement since the 2010 mass demonstration that occupied Tory Party HQ after the Tory-Lib Dem coalition increased tuition fees threefold.
Tory splits
Whatever movements erupt in 2022 they will face a deeply divided weak Tory government. Back when Johnson won the 2019 election we predicted, against the prevailing mood, that he would prove to be weak. On 13 December 2019, the morning after the general election, we declared: “The seeming strength of Johnson’s government will be shattered by coming events. In 1987 Margaret Thatcher had a majority of 102. Within twelve months the campaign of mass non-payment against the poll tax, led by Militant, now the Socialist Party, had begun. It turned the Iron Lady into iron filings, forcing her resignation in 1990. Today the Tory Party is far weaker than it was then. It is bitterly divided, and Johnson has only been able to win by distancing himself from his own party, using populist rhetoric to falsely claim he is standing up for ‘the people’. This was a ‘snapshot’, a very ephemeral result with even Johnson having to acknowledge workers had only lent him their votes”.
Now Johnson’s authority is in tatters. That he became prime minister – elected as Tory leader in 2019 by just 92,153 Tory party members – is ultimately a reflection of the anger and alienation felt towards all governmental parties that act in the interests of the capitalist class. The posturing of Johnson, the ‘Poundland Trump’, rhetorically attacking his own party, was the only means by which the Tories could win a general election. The Johnson government is now fractured in multiple ways and is increasingly being punished at the ballot box for its cronyism, corruption and, above all, its failure to deliver any levelling-up for the working class.
The divisions in the Tory Party are numerous, and are far from only being between ‘leavers’ and ‘remainers’. In fact, many of the ‘libertarian right’ who made up an element of the Tory Brexiteers are increasingly in open opposition to Johnson. In the Covid situation the government, as explained, had no choice but to rip up the policies of the previous neo-liberal era. The dream for Britain to become ‘Singapore-on-Thames’ is in tatters. As the former Brexit minister David Frost put it in his resignation speech, “the current direction of travel” is the opposite to “a lightly regulated, low-tax, entrepreneurial economy, at the cutting edge of modern science and economic change” of which he dreamed. At the same time, ‘red wall’ Tory MPs tend to reflect the anger of their constituents at Tory austerity.
The policies of Johnson’s government do not point only in one direction, however, but are being buffeted by events. Increased state intervention in the economy is being combined with a continuation of privatisation of public services, in an attempt to find more profitable fields of investment for the capitalist class. Chancellor Rishi Sunak’s visit to the US in December featured negotiations with private healthcare companies about buying parts of the NHS. There is no doubt that the current acute crisis in the NHS plays a certain positive role for the Tory government, as part of a campaign to build support for private healthcare. The position of Starmer’s New Labour is no different, as shadow health minister Wes Streeting made crystal clear when he pledged that an incoming Labour government would repeat the policy of the Blair and Brown governments and use private providers in the NHS. The 1997 New Labour government was elected pledging to end Thatcher’s NHS ‘internal market’, but within four years re-introduced and hugely accelerated it.
Sir Starmer’s New Labour
For Britain’s capitalist class, looking on at the car crash of the Tory Party, there is one ray of light. Their fear that a Corbyn-led government might have taken serious measures in defence of the working class has been replaced with confidence that the opposition can now be relied on to act in their interests. As a result of their experience of capitalism the majority of the population, above all of young people, are looking for a left alternative, but their radical outlook has no mass expression.
The honouring of Tony Blair with a knighthood, enthusiastically supported by Starmer, was one little indication of the capitalist state’s enthusiasm for a return to New Labour. That more than a million people have so far demanded he be stripped of it is an indication of how millions of people remember the imperialist warmongering and other crimes of Blairism. Nonetheless, that does not mean that Starmer’s ‘New Blairism’ cannot make electoral gains. Contrary to the Blairite mythology, New Labour won the 1997 election not as a result of its pro-capitalist policies, but despite them. It was the accumulated hatred of the Tories, and the effects of the 1992 economic recession, which thrust Blair into power. The same could happen to Starmer’s Labour.
Inevitably, if Labour manages to win the next general election, it would create some hopes that the new government would act in the interests of the working class. Such hopes would be even more ephemeral and shattered more quickly than last time round, however, due to the intractable crisis of British capitalism and, additionally, the hopes raised by Corbynism, particularly among young people and in the trade unions. Any government acting in the interests of the capitalist class would very quickly have to carry out anti-working class measures. As we have said previously, coming to power under pro-capitalist leadership would tend to speed up the destruction of Labour, raising the prospect of it becoming – like PASOK in Greece or the Parti Socialiste in France – an ‘ex’-party.
The consolidation of Starmer’s pro-capitalist leadership of Labour poses the need for a new mass workers’ party extremely sharply. In the period straight after Corbyn’s defeat many other forces on the left were demoralised and disorientated. We have been virtually alone in raising the need to fight for independent working-class political representation. However, the first indications of that changing have begun to emerge, albeit as yet in an extremely limited way.
In London it is possible that Jeremy Corbyn will contest his Islington North constituency as an independent, although he has up until now not said so publicly, never mind begun to use his position to build support for a broader stand. If he does so it is possible it could still have a significant effect, despite his invisibility through much of the pandemic. The Daily Telegraph has reported discussions on his Peace and Justice Project being launched as a party, but also that many of the few remaining left Labour MPs, including Diane Abbott and John McDonnell, are urging him not to do so because it could dent “Sir Keir Starmer’s prospects of winning the next general election”. If accurate, this would be no surprise. We have to vociferously argue the case that a new mass workers’ party, even if it only initially had a relatively small number of MPs, could significantly strengthen the struggles of the working class, including by giving them a voice in parliament and council chambers. The alternative is to accept ‘Tweedledum and Tweedledee’ politics, with an endless choice between different brands of capitalist politicians.
Although they are at an early stage, by far the most significant developments on working-class political representation are taking place in the trade unions, including Labour’s largest affiliate, Unite. The new general secretary Sharon Graham has linked her militant industrial stand to the need for ‘workers’ politics’, and has publicly attacked Labour councils that attack Unite members’ pay and conditions, stating that Unite will only back candidates that stand in the interests of their members. In addition, the decision of last year’s Unite conference, resulting from a motion instigated by Socialist Party members of Unite, to call on Labour councils to set “no cuts, needs-based budgets”, poses sharply what Unite members should do in this May’s local elections when faced with the prospect of voting for pro-cuts Labour candidates.
The idea that trade unionists should stand in elections on a pro-working class anti-cuts programme is lodged in the situation. This applies not only in Unite but across the trade union movement. Obviously, the relatively small bakers’ union (BFAWU) has gone furthest, disaffiliating from Labour but making clear that they were not turning away from politics. As they take further steps they can act as an important catalyst for other trade unionists.
In the absence, as yet, of decisive steps towards a new party being taken by any section of the workers’ movement, the immediate period is likely to include all kinds of different half-steps in the right direction, missteps, and retreats, as the remnants of Corbynism search for a way forward. However, the Trade Unionist and Socialist Coalition (TUSC), which the Socialist Party is a core component of, could be, more than at any time in its existence, a very effective lever to fight for steps towards a new mass workers’ party. Nothing is guaranteed. The 2020 decision by the RMT NEC – the trade union currently affiliated to TUSC – to support our party’s proposal that TUSC should again contest elections, was not unanimous. Undoubtedly there are forces in the union who would rather disaffiliate from TUSC. However, those that previously argued for the RMT to look to Labour are increasingly unable to put that forward given the record of Starmer and the London mayor Sadiq Khan. History is pushing in the direction of the workers’ movement standing its own candidates in elections and TUSC is an important lever to push that process forward.
The Covid crisis and its aftermath have shaken up and disordered every part of society, including the outlook of the working class and young people. The growing anti-capitalist consciousness which had already been developing in the wake of the great recession has been accelerated by experience of the pandemic. All of this will be enormously intensified by capitalist instability, impoverishment of the working class and, above all, the mass struggles ahead.