World economy

For five years past from 2002 to 2007 the world economy was in a boom. The boom has actually been quite vigorous, with annual growth rates of 5%. This obviously raises the question as to whether capitalism is entering a new golden age like that of the post-War boom.

Our answer to that is in the negative. If we look at the growth figures for the advanced capitalist countries they show an average growth of 2.8%. These are fairly ordinary figures for boom years, characteristic of the slower period the world economy entered into after 1974.

What is different is that the ‘emerging economies’ are growing strongly at 7.8% a year. China has been growing at 11% and India at 9% since the end of the last recession. We have to be careful here. It is not the case that the less developed countries’ economies have all caught fire. We are mainly talking about India, China and other Asian economies. The pattern elsewhere is much more nuanced.

If we strip out these ‘emerging countries’ (which are of course very important to the world economy in view of India and China’s huge populations) it is business as usual. Commentators are unanimous that the world economy cannot decouple from the still overwhelming importance of the USA in a period of downturn. These economies cannot become the motor of world economic growth.

The USA

The engine of world economic growth over these past five years has been the American consumer. 4-5% of the world’s population have been apparently responsible for 19% of the increase of demand in the world economy.

Now at first sight this is strange, since most American consumers are workers, and working class incomes in the USA have been stagnant for the past thirty years. The American consumer is spending more not because their income has increased, but because their wealth has risen. For most Americans the only real wealth they have is their home. This house is not just a roof over one’s head, but also an appreciating asset that can be borrowed against.

We have pointed out for years that rising house prices are a classic bubble. Now the bubble has burst for all to see. US house price are in free fall. New house building is at a standstill. All commentators agree that the stimulus to world output given by the American consumers spending money they haven’t got was bound to come to an end in 2008 in any case. The USA is entering recession. It is probably in recession already.

Sub-prime mortgage crisis

The sub-prime mortgage crisis burst in the summer of 2007. It emerged that the banks were lending for mortgages to people with no income, no jobs and no assets. This recklessness has produced a hidden iceberg of bad debt that threatens to sink large chunks of the US and global financial system. The sub-prime mortgage scandal will exacerbate and bring forward a recession that was on its way in any case. One thing is certain. If the US goes into recession, so does the world.

Credit crunch

The next stage in the current financial crisis is the credit crunch. This means that the banks become suspicious of one another, and either refuse to lend or demand much higher interest rates than usual. Normally inter-bank lending is a routine part of the financial system. Economists discuss how central banks routinely adjust Official Bank Rate, the rate at which the central bank lends to the high street banks. This bank rate is assumed to be the tip of a pyramid of lending. The next level down in the pyramid, the rate at which banks lend to one another is supposed to automatically adjust to the change from the top. That is not happening. That means that the central banks are no longer in complete control of the situation.

Why has it all seized up? The sub-prime mortgages have been bundled up into ‘structured investment vehicles’ and sold on to other financial institutions. They usually end up in the banks as a reserve asset. It is normal financial practice under capitalism that what is a liability for one person (e.g. a mortgage) can be an asset for another. After all it provides a steady income stream. The problem is that millions of people are in the process of defaulting on their mortgages. The banks have no way of knowing which SIVs will continue to yield a revenue and which are duds. It is this uncertainty that has brought about the credit crunch. The collapse of Carlyle Capital Corporation and Bear Stearns, the fifth biggest bank in the USA, shows in the starkest terms that the financial institutions are all interlinked, that crisis quickly spreads through the financial system and that the present financial crisis is not going away.

The central banks of the world have decided to throw money at the national banking systems to try to overcome the freeze in inter-bank lending. It is possible that this could avert the immediate financial crisis. It is not certain that this will lead to a ‘soft landing.’ How far have the financial authorities lost control? Will it work? The situation is fraught with difficulties for world capitalism. It should be emphasised that the current crisis is the result of bubbles deflating. Re-blowing these bubbles is not a solution in the longer term. It will not make the problem go away. If it ‘works’ it will make things worse later on.

Northern Rock

It was the credit crunch in turn that brought down Northern Rock, in the first run on a bank in Britain for 140 years. It is an irony of capitalism that a bank that does not have a single sub-prime mortgage on its books should be laid low by dodgy dealings in Florida or Pennsylvania. But that is evidence that a world division of labour, and a worldwide spread of risk and calamity, is governed by the global financial system. We are all dependent on one another in the world market, but we don’t realise it till something goes wrong. And things are almost bound to go wrong from time to time if the world economy is interdependent but unplanned.

Northern Rock has had to be nationalised. After months of dithering, Brown and Darling have hurled more than £50bn of taxpayers’ money at the bank to keep it afloat and stop the panic from spreading. The myth of New Labour’s exonomic competence has taken a damaging knock.

Northern Rock’s strategy was to borrow short on the money markets to lend long to mortgage holders. This aggressive business plan had won the management many plaudits in the past. Northern Rock grew fast. Then the money markets dried up and the bank was left stranded.

Marx noted in a footnote to Capital that, “The monetary crisis defined in the text as a particular phase of every general industrial and commercial crisis, must be clearly distinguished from the special sort of crisis, also called a monetary crisis, which may appear independently of the rest and only affects industry and commerce by its backwash. The pivot of these crises is to be found in money capital and their immediate sphere of impact is therefore banking, the stock exchange and finance.”

There is no doubt that the present crisis originated in money capital. It is the second type of crisis discussed in the quote, rather than one triggered by a crisis in ‘the real economy’. Events are showing the huge backwash effects it will have on a world economy which appears to be on the verge of a recession. It is likely to bring the recession forward and could make it the most serious slowdown for decades.

We believe that the misselling of sub-prime mortgages is not a practice confined to the USA. The level of repossessions in the UK has risen sharply since the crisis broke out. House prices are falling and housing sales are frozen over. And it’s early days yet. More unpleasant surprises lie in store for finance capital in Britain.

Commentators like Will Hutton have emphasised that this is the most serious financial crisis in Britain for thirty years. Let us not forget that the 1970s was a period of the most severe economic crises since the Second World War, and one where these economic problems posed revolutionary possibilities in this country for the first time for decades.

It is worth looking briefly at previous financial crises, like the Wall Street crash of 1929. Contrary to the general impression, the stock exchange collapse did not come out of a clear blue sky. The USA was clearly entering recession from the spring of 1929, contrary to the situation with the present financial crisis, which is only beginning to infect the ‘real economy.’ Car sales, a decisive sector of the economy at that time, were already collapsing in the spring of that year. But the subsequent years after 1929 were not ones of a spiralling downward economic decline. For long periods the situation would appear to have stabilised. Then people would wake up to find, for instance, that the Kredit Anstallt bank had collapsed and the crisis had entered a new phase. So it is likely to be in the coming months and years. The present crisis will travel through different stages of difficulty and disaster.

The UK in the ‘neoliberal’ era is a country with instability built into its foundations. Yes, most people’s living standards have improved. But this has been at the cost of both partners going out to  full time work, with child care as a constant problem, particularly for the woman, with increased intensity of work, with overtime often unpaid, and with a mountain of debt hanging over workers just to get a roof over one’s head. Workers have survived so far. But it is like riding a bike. The real problem is how to avoid falling off when the thing stops.

The UK is one of the most heavily indebted countries in the world. Whereas Americans owe $1.42 for every dollar they earn, in Britain we owe £1.62 for every pound earned. These debts that have kept capitalism afloat now lurk like so many land mines below the surface as we enter a period of capitalist crisis.

Recession – when, not if?

Economic commentators have been predicting the next recession for 2008 or 209 in any case, even without the effects of the financial crisis upon the real economy. One of the problems in economic prediction is this interaction between developments in the real economy and apparently accidental occurrences in the world of high finance. Recession could be brought forward or made worse by the present financial crisis, as some argue the ‘new economy’ bust in 2000 acted as a trigger for the last recession in the following year. So economic developments are uncertain. 

British economy

But the alarms are clearly ringing for the world economy, and for Britain. What would recession mean for politics in Britain? It is elementary that it would not produce an immediate outburst of revolutionary zeal. That did not happen in the recessions of 1929 or in 1974. But a few years later there were revolutionary repercussions from the Wall Street crash. The question of power was posed in Germany, France and Spain as a result of complex processes, of which the economic crash was at least in part responsible. Likewise the 1974 recesssion did lead to revolution in Portugal and a revolutionary situation in Spain, though it cannot be regarded as the exclusive cause.

What would a downturn in the next year or so mean for consciousness? It would pose a big question mark over the ability of the British economy to sustain increased living standards for the majority year after year. As we have indicated, workers in Britain live a highly geared life, just managing to balance the stress of  life at work with the compulsion to get head over heels in debt in order to pay for a house and to keep a family. For many, the repossession of their home or getting stuck in negative equity or losing their job would be the last straw. For all, it would be a warning. The mood would be one of profound insecurity. Insecurity can turn into fear, or it can turn into struggle. A recession will change the terms of the debate. It could actually cause millions of people to call into question the basic principles of the ‘neoliberal’ phase of capitalism that has dominated their lives since 1974.

World recession: is Britain immune?

There’s an old saying that, ‘When the USA sneezes, we all catch cold.’ Alistair Darling and Gordon Brown claim that Britain is best placed to be immune from the looming world recession. They’ve even commissioned a Treasury report to try to prove it.

Don’t believe them. The chill winds of economic crisis are coming our way. The parallels between the US, which is already in the mire, and the UK are stark.

·        Both economies have had consumer booms that were fundamentally unsound, based on a housing bubble.

·        A housing bubble is when house prices go up because people are buying, and people are buying because prices are rising.

·        A housing bubble means people feel richer. They can borrow on the basis of the rising price of their house. In effect they can use their house as an ATM.

·        In both the USA and the UK consumers, who weren’t really getting much better off, went on a spending binge based on their rising paper wealth.

·        In both countries the government built up massive deficits by spending more than they were getting in tax.

·        Both countries accumulated huge debts with the rest of the world, in effect living at their expense.

·        In both countries, the currency took the strain of the trade deficit, and went into an uncontrolled slide.

·        Now the bubble has burst

This has already started happening in the States. It is no wbeing played out here.

According to John Authers (Financial Times April 3rd 2008) “Since 1988 US house prices have risen 155%.” (They’ve taken a dive recently, and they’re going to go lower). “UK prices, in spite of a slump in the early 1990s, have risen by more than 300%.

The sub-prime crisis in the States has caused defaults, the bubble has burst, and the banks are in schtuck. House prices have already fallen sharply. Capital Economics reckons we could see a worse fall in house prices here than across the pond – down 25% by 2010. Why not?

US consumers racked up debt that was 128% of household income. UK consumers have gone one better. We managed 175%. Households have traditionally been the sector of the economy that was always in surplus. Yet in both Britain and the USA households have moved into deficit – by 4% of GDP in our case.

It’s a financial crisis, right? In recent years the British economy has been booming in...finance. A third of all growth in the economy has been generated in finance, mainly in the City and Canary Wharf. Now that’s gone into reverse. At least 10,000 jobs are to go right away, with knock-on effects later on.

It’s not just the consumers that have been partying like there’s no tomorrow. Governments on both sides of the Atlantic have been spending money as if it were going out of fashion. Bush’s profligacy is well known. He’s been wasting huge sums on weaponry and dishing out tax cuts to the rich, with no thought for how to make the figures add up. He’ll leave a legacy of government debt that stands at $9.2 trillion and is still going up every day.

Meanwhile Gordon Brown has wasted £170bn of our and future generation’s money on bent PFI schemes. This is the direct equivalent of Bush’s tax handouts to the rich. From a government surplus amounting to 2% of GDP in 2002, Britain has moved to a deficit of 3%. This is important, because the government can’t now reflate its way out of the pickle we find ourselves in, as they are trying to do in the US with tax cuts.

Not only have the consumers and governments gone on a spree – so have the countries. Enabled by these wonderful new global capital markets, both nations have built up huge deficits with the rest of the world. Britain and the USA both have current account deficits of 6% of GDP. That means that we as a nation and the Americans are spending $106 for every $100 we earn abroad.

In the old days you just couldn’t do this. The Labour government in 1967 was forced to bow the knee, devalue and tear up its reform programme on account of a much smaller deficit – about 2% of national income run for a few months. More recently Britain has been permitted to run a deficit of 5-6% of national income for years at a time by borrowing the difference. No doubt the bankers will want their pound of flesh in time. Now the international banks are just like the high street version. They’re basically factories churning out debt. Their livelihood actually depends on our collective financial irresponsibility.

The current account deficit means that foreign capitalists are building up claims on UK assets to cover the difference between imports and exports. Traditionally both Britain and the USA, as imperialist countries, have relied on the export of capital to maintain their control and exploitation of other countries. (The export of capital was identified by Lenin as a key feature of imperialism.) In simple terms, imperialist countries make their living by plain old parasitism. Britain has enormous overseas assets of £5,000bn in 2005 (4 x GDP that year), a world record. But the net asset position is being nibbled away in both countries, as both countries live beyond their means and fall into debt. The layers of fat are melting away.

So both Britain and the USA are spending more than we earn, consuming more than we produce and borrowing to make up the difference. It can’t go on for ever. We can see that from what is now happening in America.

Then there’s the dollar’s slide. A country with a deficit like the USA can expect the dollar to become worth less against other currencies. Now there is one way they can prop up the dollar. That is by jacking up interest rates so holders of dollar-denominated assets will get a better return. But Bernanke at the Fed is desperately driving rates down to try to stave off the recession. Bernanke is reckless – he could forfeit the confidence of foreign owners of US assets. Then the dollar slide would become an avalanche. As it is, every day the dollar hits new lows against other currencies.

Since Britain is a country with as big a deficit as the USA, there is as much pressure on the pound as on the dollar. Sterling has fallen against the Euro from 1.45 in November to about 1.25 at the time of writing. There’s one important difference with the States. The Monetary Policy Committee of the Bank of England is charged with setting interest rates so as to stop inflation getting out of control. This rule comes from the monetarist dogma that monetary policy should be directed solely at the threat of inflation, and it can’t be used to influence the level of economic activity in a capitalist economy. The real effect of raising rates will be to dampen economic growth though, especially investment, and that is supposed to cut inflation. It’s a pretty blunt instrument.

Really inflation is more than 4%, way above the permitted maximum. So the MPC can’t do a Bernanke unless it fiddles the figures. It is doing that by using the Consumer Price Index which does not accurately show the rate of inflation workers face. The Bank doesn’t have a lot of wriggle room. Britain is a ‘small’ economy, dependent on what happens elsewhere in the world, above all in the USA. Raising rates will hurt. But even cutting them would accelerate the decline of sterling against the Euro. And that will hurt too, by making imports dearer.

If the sterling goes down in value, as it has been, that makes exports cheaper and imports dearer. In theory, that should correct the deficit over time – but that’s economic theory, not the real world. It hasn’t helped the Americans. And it won’t get us out of a hole.

Just as it made us feel rich once, so the housing market is taking us into recession. House prices are  the link between the world of high finance and ‘the real economy.’

As a result of the housing bubble bursting, the era of cheap credit is now at an end. The bankers have pulled the plug. The days of 100% mortgages have finished.  Now, if you want a mortgage, the bank wants 25% of the value of the house up-front. That amounts to kicking away the lower rungs of the housing ladder for first-time buyers. Mortgage approvals have also taken a tumble.  And some banks have declared outright that there are no mortgages except for existing customers. So you can’t buy a house at any price. The actual housing market is freezing, with HBOS predicting a 30% fall in transactions this year. New housing starts are down by 24% this year.

House prices are now falling in Britain as well. March saw prices down 2.5%, the biggest monthly fall since 1992. There are predictions of three million households in negative equity next year, trapped in homes they can’t afford just like in the 1990s. The Citizens’ Advice Bureau reports a worrying 35% rise in borrowers coming to them asking for help with their mortgage arrears. Dispossessions loom.

Britain is subject to the same processes as those that have already laid the USA low. The structure of British capitalism is very similar to that of the US, specially the out-of-control role of finance capital. In both cases house prices have been in a bubble that is bursting. The same house of cards of unstable credit structures has built up in both countries. They gave a false feeling of wealth. It was only this dance of the millions that kept the boom going.

Now, when house prices collapse, they will bring real impoverishment to millions of people. So the banks that dished the money out are struggling. House building is the first part of the ‘real economy’ to take a hit.

Relative decline halted?

In the past we talked about the special crisis of British capitalism. This analysis was based on Trotsky, particularly in his book Where is Britain going? It applied the notion of combined and uneven development to the first capitalist nation. From the 1920s Britain was perceived as falling behind its rivals. By the 1960s Britain was regarded as ‘the sick man of Europe.’

Has this special crisis disappeared? Yes and no. The crisis and relative decline was essentially a problem of the manufacturing sector. But this sector has severely contracted, at least in view of its former glory. So the problem of the relative decline of British manufacturing industry has been ‘solved’ by its virtual extinction! Formerly the ‘workshop of the world,’ Britain began deindustrialising earlier and more drastically than the other major capitalist powers. Indeed the Tories raised the slogan in the 1980s that ‘manufacturing doesn’t matter.’ They did so partly to cover the wanton destruction to industry caused by the mass unemployment of the 1980s, unemployment that their policies (and huge policy mistakes) had made worse.

Traditionally the relative decline of British capitalism expressed itself as a balance of payments crisis, of an excess of imports coming into the country, over and above our exports being bought by the rest of the world. Under a fixed exchange rate regime, this would lead to a run on the pound to pay for the excess of imports over exports, and the government would be forced either into a humiliating devaluation or deflation of the whole economy. As we shall see, this problem of uncompetitiveness has not gone away.

City and industry

On the other side of the coin from manufacturing the City of London has emerged apparently victorious in its contest with New York to become the world’s leading financial centre. The UK commands 20% of international lending compared with America’s 9% share. This is a blessing and a curse to British capitalism. On one hand hundreds of thousands are employed in the City and Canary Wharf on financial transactions. Though we all know about the £8bn in City bonuses paid out in Christmas 2006, most financial service workers have no share in this glitz and lead mundane  working class lives. The majority work in high street banking, not the City.

‘Invisibles’ are a massive earner of foreign currencies, partly filling the black hole in the balance of payments left by the collapse of manufacturing. These are services. For the most part they are financial services. ‘We’ make $1trn a day from derivatives trading. On the other hand, the success of the City has partially covered up the catastrophe occurring in the regions dependent on traditional manufacturing industries to make a living.

Exchange rate policy has been a traditional area where finance and industrial capitalism have clashed. Exporters of manufactured goods tend to favour a depreciation of sterling which makes their goods cheaper abroad. The City supports a strong stable pound so that foreign capitalists can have confidence in leaving their money here. Brown has taken the City’s side.

He has followed a policy of malign neglect in relation to the exchange rate, a policy instrument that remains available to finance ministers even in a ‘neoliberal’ age. The rate of exchange can be manipulated by using interest rates. In this he continues his short-sighted and stupid policy of keeping silent when the Tories pegged the pound into the Exchange Rate Mechanism in 1990 at what was clearly an over-valued rate. Sterling has clearly been over-valued for most of the past ten years. It has actually been higher for nearly all the 1997-2007 period than it was when it was lodged in the ERM from 1990-92. So a million manufacturing jobs have gone under this Labour government. Till recently the overvalued exchange rate has made it very difficult for British manufactures to compete on the world market. The recent depreciation of sterling has come too late to be a panacea for British manufacturing.

The result has been a balance of payments problem that would have been regarded as catastrophic, and would have brought down governments in the 1960s and 1970s. The deficit on goods with the rest of the world in 2006 was £60bn, amounting to more than 5% of GDP. A surplus on invisibles (services) brought the deficit down a bit to 4%. The only thing that prevents a vast gulf opening up beween what the world gives us and what we give to the world is earnings on investments overseas. British capitalism has become a rentier economy once again, as it was in the nineteenth century.

More evidence that the prolonged upswing is unsustainable comes from the statistics on consumer debt. Since Labour was elected, consumer credit has gone up by 65% and mortgages by 94%. Over the same period real earnings increased by an average 22.4%. Economic growth was fuelled by people spending money they didn’t have. When the recession comes and many of these people find themselves out of a job, there will be major repercussions throughout the economy.

Manufacturing still matters

It is clearly impossible for a nation of sixty million people to all make a living in the world by playing about with coloured pieces of paper in the City. New Labour’s notion that the economy can move into a new era where all jobs are based on knowledge and design skills is clearly also a fantasy. One reason, of course, is that their skills training programme is a joke. Another is that it is very difficult to maintain and hone design skills if you’re not actually making anything. Our surplus from other countries in design industries halved from £1.4bn in 2001-2 to £700m in 2004-5 for that reason.

We discuss later the predominance of new employment in what is called the service sector. What most of these activities have in common – child minding, nursing, driving people around Salford in buses – is that they cannot be exported. They are not internationally tradeable.

Generally, manufactures can be sold abroad for goods we want. It is therefore disastrous to let industry go to the wall. Such is the government’s commitment to neoliberalism, that it has made no attempt to protect or even encourage British industry. If manufacturing is dying, that must be the will of the market, and the will of the market is the will of God!

Growth and the government

The economy has been growing continuously for more than ten years. Two and a half million extra jobs have been created. The government has admitted that 1.3 million of these went to immigrant workers. Till the recent wake-up call the economic problems of the past have seemed to many workers to be a distant memory. This situation has led Brown to boast about an ‘end to boom and bust’. Britain slowed down but did not actually go into the recession of 2001-3 that hit the rest of the world. This long period of upswing is bound to have an effect on consciousness. In fact, from a historic core rate of growth of about 2 ¼%, over recent years expansion has been moving a little faster at about 2 ¾%. The principal reason for this acceleration seems to be the huge wave of migration from eastern European countries that have gained accession to the EU. We shall discuss the political implications of this change to the British workforce later in the document.

What has government policy done to create this benign economic environment? The answer is -nothing. Capitalist governments have two policy levers at their disposal – fiscal and monetary policy. Fiscal policy relates to government taxing and spending. For the first years after 1997, Gordon Brown stuck to very tight Tory public spending limits. His predecessor Kenneth Clarke, who left him this straitjacket as a little parting gift, admitted he thought the targets were impossible. Later Brown loosened the reins and spent serious money on the health service in particular. In fact 89% more was being splurged on the public sector than in 1996-7, the last financial year the Tories were in charge. This should have transformed the quality of public services. But the perception is very different. Certainly the big queues for treatment under the Tories have mainly disappeared. But anyone who has visited a hospital recently can see that resources are still being withheld. The problem here was that a large amount of this cash was drained away by the fraud of PFI.

The fat years are now definitively at an end. The government has called a halt to expanding public spending. It is time to rein it in. This is in advance of a crisis in the real economy. Of course cutting state spending will make the crisis worse, when it comes. Brown is also trying to cut the living standards of public sector workers, using the threat of inflation as an excuse. It will come as a surprise to many workers that the rising price of bread, of milk and of petrol are caused by above inflation settlements to nurses and teachers, particularly as they have already been putting up with very moderate wage settlements.

What did Brown do about monetary policy? In the first week of power in 1997, he handed control over to the Monetary Policy Committee of the Bank of England. A major lever of government policy under capitalism was delivered over to a bunch of apolitical economic ‘experts’.

So, if the economy has behaved well over the past ten years, the government can take no credit for that.

That is not the way it will be perceived by the mass of the population. As long as the economy delivers improved living standards to the majority of the people, active political involvement is likely to remain low. As we have argued above, recession is coming to the world and so to Britain. It will mean time for workers to take stock.

Industrial perspectives: background issues

Proletarianisation

The most significant trend in the world today is proletarianisation. Global head counts are hard to come by and figures come with a time lag. The last estimate of numbers seems to have been  by Filmer for the World Bank in 1995. He worked out there were 880m workers in the world. Since we know the ‘South’ has been industrialising fast, there are almost certainly now one billion humans who make their living exclusively by working for a wage. Together with their families, they have become a majority of the world’s working population.

Filmer estimated the peasant population at one billion in 1995. There continues to be a steady flight to the towns, so this number must have gone down since. It is probable that there are now more workers than peasants in the world’s workforce for the first time ever.

At the same time there were 480m  described as self-employed. Most of these live in the towns. Their jobs are often casual and precarious. It would be wrong to characterise them as lumpenproletarians (to use Marx’s expression in the Communist Manifesto), though the ever-growing shanty towns and slums on the outskirts of all the cities of the ‘third world’ pose the prospect of growing a hardened lumpen layer over time. But the vast majority of these people aspire to regular full-time work, to the status of proletarians.

Deindustrialisation?

When we discuss deindustrialisation, we need to take the long view of the processes. In 1900, according to Feinstein, 47% of the labour force in the OECD (rich) countries was engaged in agriculture. Britain was an exception in this regard, as it was already fully industrialised. A hundred years later the numbers involved in farming had fallen below 5%. Most of these workers moved into manufacturing in the first instance. The numbers involved in farming fell, of course, because productivity rose there and many fewer workers were needed to feed the population. The process of rising productivity in both agriculture and industry meant that, over the course of the century, workers flowed first from agriculture into manufacturing; while later others were migrating out of manufacturing into the service sector. Feinstein reckons that about 30% were involved in industry at the beginning of the century and the same proportion at the end. So the other net result - that the service sector went from 25% to 67% over the course of the twentieth century - is actually the result of several conflicting economic trends.

Feinstein points out that a 3% annual growth in GDP, which is about average for most countries in the OECD for the twentieth century, will over 100 years produce a seventeen-fold increase in income. How is this extra income spent? Since the industrial sector has been at the cutting edge of rising productivity, the relative price of manufactures has fallen, and people will spend a smaller proportion of their income on them, while enjoying vastly more material prosperity in terms of manufactured goods than people a hundred years ago.

There has been much discussion of deindustrialisation in the advanced countries even as the global south industrialises apace. We need to be clear what this means and what it does not mean. Feinstein shows that, for the OECD (mainly rich) countries, manufacturing output increased faster than national income over the period 1950-1995, with the sole exception of the USA. Manufacturing has become relatively more important in their economies. The advanced capitalist countries have been producing more manufactures, despite increased competition from the less developed countries in this regard.

But, because of the dramatic increase in manufacturing productivity, it takes fewer and fewer workers to produce these goods. If a smaller number of workers are producing the same amount of manufactured goods, then each manufacturing worker has potentially more power to paralyse profits. This is not only true of industrial workers. The sharpened division of labour and the development of stock control programmes such as the just-in-time system means that relatively small groups of workers (as in rail and road transport) have the power to paralyse capitalism and cause an enormous loss of profits in a short period of time. And, when workers with this clout have showed themselves prepared to use it, they have made gains and the unions have gained members. The message is loud and clear – militancy pays.

But there are other sectors where productivity has not risen at all, sometimes over centuries. Pulling pints in a pub or looking after children may be two examples. The service sector is labour intensive. In consequence a relatively larger proportion of the population is likely to be employed in these sectors, as less are employed in manufacturing. The shifts in the pattern of employment caused by this slewed productivity growth are bound to produce significant changes in trade union membership and organisation, and in the consciousness of the different layers of the working class.

Manufacturing and services

These expanding areas of employment are generally referred to as the service sector. Production is divided into primary (agriculture and extraction, such as mining), secondary (industry) and tertiary (services). The service sector is not a Marxist term. In reality it is a ragbag of contradictory elements. Transport workers such as bus and train drivers, are counted as part of  the service sector. In reality they know they are working class and most people would instantly and unhesitatingly identify them as such.

The term service sector is a hodge podge. Nurses, teachers and other useful members of society have little in common with bond dealers or corporation lawyers, who in any case are not workers at all. Yet both groups are described as working in the service sector.  Some differences between service and manufacturing workers seem to be the product of  statistical artefact. Workers at Gate Gourmet make convenience foods in the form of aircraft meals. They are manufacturing workers. Workers in McDonalds, who fulfill a very similar function, count as service workers.

The service sector is traditionally harder to unionise and it is easy for management to hire and fire, in general because of  the low skill base and the fact that they have no legal rights for the first year of employment (two years under the Tories). The other side of this is that workers in such jobs have no loyalty to the firm, no commitment to the industry and drift from job to job. Sectors like the NHS and local authority workers are exceptions with a long tradition of unionisation. The fact that most health workers have taken the time to acquire a scarce skill, and in doing so have shown a commitment to the health service as a long term career, means they are more inclined to organise to defend their wages and conditions. Even if they have not gone through a formal education process, public sector workers have usually received in-house training, so they cannot be regarded as casual and unskilled. That enhances their bargaining power with their employers.

We now have not many more than 3 million workers in manufacturing compared with a labour force of 29 million. It should be noted that millions of workers in energy generation, construction, dockers, forklift drivers and other ‘distribution’ workers in transport, all hospital workers and virtually everyone in the public sector are excluded from the manufacturing sector. But most of these are seen as traditional working class occupations. There are 1.75m transport and communication workers, 6.7m in shop and distribution, hotels and catering (are female shop assistants in Woolworths middle class?), and 7m in health and education (hospital ancillaries heavily outnumber doctors in health).

Transport workers are even productive workers in Marx’s sense; that is, they produce surplus value for their employers. Note that Marx does not narrow the definition of productive labour to those who make things, as Adam Smith did. Call centre workers are working for a boss’s profits, so they are productive workers in that sense. There are nearly a million such workers. Workers who write computer programmes are also producing surplus value.

The changing working class

In fact the distinction between productive and unproductive labour is not important to the  question of who is working class. The essential definition is – how do you make your living? Have you any alternative to working for someone else? Whether you actually perform productive or unproductive labour is irrelevant to your class affiliation.

Of course there are contradictory and transitional phenomena. The ruling class have always needed to work through stooges to do their dirty work for them, like all previous ruling classes. After all they have better things to do than supervise the working class! In a sense a stooge’s relationship to the means of production is irrelevant. If they have decided to become stooges and support the other side, the fact that they make their living through working for a wage is neither here nor there. We can use the contradiction between their ideological commitment and the way they make their living to  neutralise some  in the course of the struggle.

Blue and white collar

One important distinction between class and caste is that individuals can move between classes. That does not in fact obliterate class differences; it strengthens them. So we also have to look at the aspirations of workers, and whether they can fulfill these aspirations. Edwardian ladies of leisure may have taken up typing for a few years before entering into a well-appointed marriage. They never regarded themselves as members of the working class while they were slumming it. It goes without saying that their consciousness was a million miles removed from that of twenty-first century clerical workers in the private or public sector. For the vast majority of us there is no way out from wage slavery except socialist revolution.

The difference between blue and white collar workers was important at the beginning of the last century, with the beginnings of scientific management and the emergence of a managerial bureaucracy. These black-coated workers, as they were called, had markedly superior social status to those on the shop floor. In addition these layers were recruited from the old middle class. By and large they lived in different areas from industrial workers and had no social contact with them outside the world of work. Such people would often have investments to fall back on and kept servants. They could also be expected to share the outlook of the ruling class. Otherwise they would be unable to carry out their supervisory tasks satisfactorily.

How different now! The remorseless grinding down of the pretensions of the so-called middle class has been a feature of capital accumulation over the past century. Teachers may have regarded themselves as ‘different’ a hundred years ago. No more. They live in the same kind of housing stock in the same streets on the same sort of wage level as other workers. They have responded to their perceived change in status in a positive way by making their occupation one with a relatively high level of trade unionisation – in other words they have acquired working class consciousness.

Millions of white collar workers now work in conditions not fundamentally different from those manufacturing workers put up with. They are often in giant clerical factories, and their pace of work is measured relentlessly, often by the very computer that is their basic work tool. This has been the most significant change of the last century, that the so-called middle class has found its place in the labour movement. Regarding oneself as middle class today is actually a question of false consciousness based on the lack of effective trade unions at work and  the illusions created by home ownership. Though consciousness lags, the old nineteenth century type middle class has ceased to exist..

The petty-bourgeoisie, who both work for a living, and own their own dwarfish means of production, is little more than a distant memory. The peasantry had been destroyed in this country  long before Marx wrote Capital. In the countryside a tripartite class structure held sway, consisting of landlords, capitalist farmers and agricultural proletarians. Farm workers in Britain have always been extraordinarily difficult to organise. In the towns craft workers have long ago been displaced by mass factory production, except for isolated professions making luxuries. Their last hiding place, as small shopkeepers, is now being dive bombed by the supermarket express and metro convenience stores.

Working class consciousness

The definition of class is not a question of lifestyle, though it is true that workers who are conscious of their identity may share a certain lifestyle as they live together in a working class community. Certainly a worker of the Chartist era would not recognise wearing a cloth cap and keeping a whippet (long regarded as the parody of working class identity) as a badge of being working class at all. In any case the problem is that the development of capitalism tends to destroy settled working class communities, and their lifestyles with them. And capitalism is changing much faster now than it was in the time of Queen Victoria. In the nineteenth century, and for much of the twentieth century, the working class lived in separate homogeneous communities. The reason they no longer appear to do so is that they are now the overwhelming majority of the nation. They are between 80% and 90% by any criterion, with all the qualifications about intermediate layers and people in transition between classes.

Consciousness, of course, is not a direct reflection of social being. In general the ruling ideas of any era are the ideas of the ruling class. Workers come to class consciousness through struggle. The working class is many-layered, not a homogeneous lump. Occupational change produced by changes in capitalism is part, but only part, of the way consciousness changes. For long periods consciousness lags behind conditions. Then, in the course of struggle, it can take gigantic leaps. Over the last twenty years of government policies consciously designed to promote the idea that individuals can get ahead as individuals rather than advancing together in collective organisation, working class consciousness has become blurred.

But it is important that a growing 68% of us regard ourselves as ‘working class, and proud of it.’ Interestingly, a Guardian poll found that 56%  of 25-34 year old regarded themselves as working class compared with 48% of 55-64 year olds. So much for working class consciousness dying out.

A history of struggle

The general pattern of the industrial class struggle in Britain has been of a repeated cycle of a buildup of grievances and discontents without an outlet, then an eruption of anger and struggle, and a relapse as the movement sinks back, exhausted for the time being.

Occupational change is a permanent feature of a dynamic system such as capitalism. In the past there was a deep division between craft workers (often with a five year apprenticeship) and mass production workers. The unskilled were regarded by the existing craft unions as unorganisable. Sometimes developments appear to stagnate, perhaps for decades, and then there is a leap of consciousness with the opening up of class struggle. 1889 was the year when labour ceased what Engels called its ‘forty year sleep’. In that year accumulated changes led to the successful organisation of unskilled workers such as dockers and gas workers. That was also the beginning of the modern giant general unions. In fact trade union membership, the level of struggle and, apparently, class consciousness then fell back after 1889, though not to the 1888 level, till the next labour upsurge in 1909-14.

That has been the repeated pattern: sections of the working class regarded as ‘backward’ and unorganisable moving into struggle, followed by a partial relapse. There was another upsurge after the First World War, possibly the biggest of the lot, then, after the defeat of Black Friday, a period of the classes measuring one another up before the General Strike of 1926.

It is also the case that a lack of strike action is not necessarily evidence of a defeated working class. The General Strike of 1926 was the most serious defeat the working class has ever experienced industrially. The formation of the National Government in 1931 and the mass unemployment that peaked in 1932 were all part of a period of defeats. But the years before the Second World War were ones of revival in some parts of the movement, for instance among armaments workers and bus drivers (driving was then a scarce skill). Certainly the labour movement was continuing to advance throughout the 1940s and 1950s. Strike statistics were low. This is because disputes were often short, since management settled at once to keep the wheels turning and the profits rolling in. Strikes were almost always unofficial, as the monolithic right wing bureaucracy acted throughout as a fire hose. And often they involved small groups of workers. Leapfrogging differentials was a common pattern of class struggle in those years. This means that assembly line workers would put in for parity with craft workers, who would then begin negotiations to maintain their differential. This sounds sectional. It is not the ideal way to bargain for the interests of the workforce as a whole. But it was often treated as a kind of game by the workers, aimed at getting higher wages all round. It seems there was not one national official stoppage from 1926 through to the bus workers’ strike in 1958.

The 1960s and 1970s were one of the stormiest periods in the history of British capitalism. The setting was the relative decline of British capitalism becoming more acute as the world moved towards recession. What was significant was not the fact of recession, but the way it illuminated that an era of prosperity and relative class peace was coming to an end. Workers were forced to come to an understanding that they had to fight to maintain the wages and conditions they had gained over the previous period of post-War boom. The ‘soft’ side of the ruling class was shown to be a mask as the boss class in Britain and elsewhere began to prepare private armies and strengthen the forces of the state for use against the working class.

Revolutionary and counter-revolutionary possibilities began to open up. The 1970s were a decade of struggle. The miners’ strike of 1984-85 was almost the last act in a period that was one of unprecedented turmoil and change in the memories of the participants. It is not altogether surprising that we have seen a prolonged lull since after such titanic struggles.

Industrial perspectives: the present period

Class and leadership

The past year has continued what, for Marxists, has been a frustrating period on the industrial plane. The possibility of a breakthrough was always there. Take the case of the Post Office. PO management have made it quite clear that they intend to get rid of tens of thousands of Royal Mail workers. The workers took solid official action, supplemented in some areas with up to two weeks’ unofficial time on strike. Yet the ‘left’ union leadership showed themselves desperate to settle with management, with all the basic issues unresolved and with the threat of mass redundancy still hanging over their members’ heads. There was a real prospect of a unified movement of millions of public sector workers against what was clearly signalled to be a co-ordinated policy of cuts in living standards for all of them. That opportunity, which could definitely have seen the government off, was fudged. Different union leaderships called for separate, ineffective one-day actions. The Unison local authority and NHS sell-outs can be given as an example of the failure of leadership. The power for a fightback remains latent. The TU leadership is the problem.

How has this relapse happened over the past years? A layer of leaders (especially over the last 20 years since the defeat of the miners’ strike, though they have always been there) has come up through the structures of the unions. They have taken the rep’s job for a number of reasons, other than political - to get out of work, ‘no-one else wants to do it’ etc. These individuals have now made it to the tops of the unions. Any one that shows any ability gets elected. The competition for places has declined. It just reflects the period and the lack of class struggle.

Today, a lot of the present generation of trade union leaders have either not been tested or are manoeuvring before any fight starts. The key issue for them in the last 20 years has been mergers. The decline in union membership has mainly been in the manufacturing industries. The overwhelming majority of the present union leaderships are incapable of recruiting in the service sector because it would mean unionising from the coal face like in the beginning of trade unionism. This job will become the task of new layers of young people either politically motivated or faced with no other choice, who will become political. 

Those that were involved in politics in the 1980s have a different leadership style from other trade union lefts. In the past they were from the Communist Party, organised in the trade unions to take positions, and then from Militant in the 1970s and 1980s. There is no organised left wing presence of the same significance now as there has been in the past. This is general: a number of good individual fighters have come through. Not to become part of the union bureaucracy requires being backed by and being a part of a revolutionary organisation, which can explain the bigger picture.

The virtual disappearance of the CP as a serious force in the unions is an important development for industrial perspectives. Though never a serious force electorally, in the past the Communist Party has had a significant presence, particularly in the old-established industrial unions. Their influence went far beyond their actual membership. They managed to gain influence within the educational structures of the trade union movement, and acted as the core of the broad lefts. They had a tendency to hide their politics and concentrate on organisational manoeuvring. But their demise has left a vacuum. All that is left are Stalinist sects, of no significance in industry. There is no force at present that can replace them. But that is a task the Marxists must set themselves over time.

The last time the Communist Party was able to act as a lever on the mass movement was via the Liaison Committee for the Defence of Trade Unions in the 1970s. Then they were able to strike a chord to the extent of in effect calling an unofficial general strike (and putting pressure on the TUC to call an official general strike) in order to get the Pentonville Five dockers released from prison.

Other means such as overtime are being used to solve individual problems. If workers see no collective solution to their problems, they will look to an individualistic way out. Working class consciousness is based on an awareness of our collective power and underlines the need for collective action. Historically the middle class has been individualistic, convinced that they can improve their lot by their own effort, raising themselves above their fellows. Successive governments have attempted to play on and encourage this individualism in order to break down working class consciousness.

With inflation rising along with personal debt, wages will be a key issue in 2008 at the same time as the economy is taking a downturn, and bosses will be least likely to afford higher wage demands. It is worth stating again that, in periods of boom, wages normally rise. This has not happened for all workers in the last period. A lot of jobs are topped up by tax credits – such as those in Tesco etc. Workers have survived because the economy has grown, food and other goods have got cheaper and credit has been easy to get. Now that’s all in the past.

The power of the working class has not changed. What has changed is that a generation has left education and gone into work where trade unions either do not exist or are weak or have not resolved young workers’ problems - low pay, exploitation etc. An individual within a unionised workplace can make all the difference as to how trade unions are perceived.

The last upsurge

Clearly the past period of almost 30 years has been one of relapse. In the 1970s the trade union movement was officially led from the  left for the only time in its history. Scanlon and Jones were the General Secretaries of the two most important unions the AUEW and TGWU respectively. In 1979 trade union membership peaked at almost 13 million. A series of strikes involved ‘unorganisable’ sections such as women workers in action for the first time.  Women workers are now a majority in the trade union movement. Most households are totally dependent on both adults working to make ends meet. How far away it seems from the time when we had to argue against the notion that women only worked for ‘pin money.’

The strike struggles of  the 1970s demonstrate that service sector workers were working class and knew it. In that decade the shop stewards’ movement became a power in the land. A quarter of a million workers were involved, many with 100% facility time. There was even the emergence in some workplaces of elements of workers’ control, such as shop stewards’ control over whether and how much overtime was to be worked. This powerful shop stewards’ movement is now marginalised, banished to some parts of the public sector and long-unionised parts of private sector industry. Facility time was in any case a double-edged sword, as it could serve to separate the stewards away from the rank and file they were supposed to be representing. Life could become cosy away from the pressures of the assembly line. But the movement cannot go forward again without the mass involvement of workers at a rank and file level.

Another set of rank and file institutions that have faded over time are the local Trades Councils. In some areas these are still worthwhile bodies. But their influence is much reduced from the 1970s when they were effectively charged with organising the days of action against the Tories and getting the workers out on strike. With an upsurge in militancy, they are likely to regain their vitality together with the trade unions as a whole.

There are natural limits to pure industrial action. The movement of the 1970s was undermined by mass unemployment after the election of the Tories, unemployment in part deliberately engineered by Thatcher as a weapon against the trade unions.

We draw a basic dividing line, contrasting the present period with the period of the post-War boom, which had relatively full employment, steadily rising living standards, and the working class in a favourable bargaining position on the shop floor. But even within the earlier period, we have to bear in mind the British ruling class was becoming increasingly concerned after World War II about its declining position in the world and more and more determined to settle accounts with the working class as a way of retrieving its former glory.

The first serious attempt to take on the working class was provided by the election of the Heath government in 1970, which represented a clear break with the post-War consensus. Of course Heath was ignominiously defeated but, as far as the ruling class was concerned, those tasks remained on the agenda.

The defeat of Heath in 1974 coincided with the first generalised capitalist recession since the War, and the beginning of a new era with slower growth and permanently higher unemployment. Throughout this era the ruling class strove might and main to roll back the gains the working class had made in the era of the post-War boom.

Though this section of the document is concerned with industrial perspectives, we must never forget that one of the basic features of British working class struggle is the movement from the industrial to the political arena. After the defeat of the miners’ strike in 1985, hope was focussed on a Labour government. With the disappointments of New Labour, disaffection has been shown in the first instance by strike action.

Indicators of militancy

Membership of trade unions has declined since the 1970s, and has stabilised for the time being at a little above 6 million members. The reasons for this fall are complex. They include the timorousness of the trade union tops, general disillusionment with the leadership in the era of ‘new unionism’ and the difficulties posed by the abolition of the closed shop and ‘check-off’ of trade union subscriptions from the wage packet. But the main reason membership has declined is because workers have lost jobs in highly unionised traditional manufacturing industries, which have gone into decline or disappeared altogether.

Miners, steel workers, textile workers and other traditional sectors of the working class have seen their jobs disappear. In the case of the miners, the reason was politically motivated spite. In most cases, it was the ‘natural’ making and unmaking of places of work and the accompanying work force under capitalism. Often this decline is associated with the disappearance or scattering of a traditional working class community. These were fortresses of the working class and their loss is important to us. But these are not defeats on the scale of the period after 1926, when miners tore up their union cards and company unionism made its appearance in the pits.

In the 1980s these workers (usually)  managed to find alternative employment eventually in new industries that were unorganised. Rather than just naturally slipping into an organised and class conscious workforce the advanced worker would have to start completely from scratch. In the past building and recruitment was much easier because of the existence of extensive closed shops in employment. And, as we know, the trade union movement has not yet succeeded in organising the new sectors of capitalist industry that have emerged or become more important over the past quarter century. A new generation of workers will storm these redoubts of non-unionism and bosses’ autocracy.

Strike figures have also been historically low since the defeat of the miners’strike. It is likely that these figures understate the levels of working class discontent. The ways the figures have been collected have changed over recent years to encourage under-reporting. Workers have responded to the legal and other restrictions on strike action by resorting to short stoppages and to industrial action short of a strike. In the case of British Airways, industrial action took the form of a mass ‘sickie’. This shows two things: it shows how the balance of forces has shifted against workers on the shop floor to mount any form of legitimate protest against their conditions; and it shows that the discontent of the working class cannot be suppressed by legal or coercive means.

Still the 1984-85 dispute was a turning point. We did not realise at the time how significant a defeat it represented for the working class as a whole. It is now only older workers who remember the strike. It no longer impacts upon the consciousness of younger workers. We do not hear the argument, ‘If the miners can’t win, nobody can win’ any more.

The individualistic reaction after a strike defeat means that people are inclined give up on collective endeavour, to work overtime and seek promotion rather than resort to the collective method of increasing rates of pay as long as the economy is on the up. They cannot take this option if the economy fails. Then they draw the conclusion that a collective solution is the only alternative

Apart from strike figures, the Tories’ anti-union laws have given us another measure of workers’ readiness to struggle. That is the results of strike ballots. These have overwhelmingly been positive. It is true that workers who vote ‘yes’ may well understand that does not commit them to immediate and all-out action. But it is a useful bargaining chip for the union officials. And the rank and file does understand that, if the chip is to be used in negotiation, it  has to be backed up with action.

We have been using strike figures and union membership as proxies for class consciousness. And they are useful indicators of class consciousness. But they are not the whole story. Trade union density (trade union membership as a proportion of the workforce) is often taken as a proxy for the strength of the labour movement. Trade union density is probably lower in France at 8% than in any other major European country (This is a longstanding national tradition.). Yet the French workers have displayed the most militant traditions in Europe over recent decades. Militancy and discontent cannot be precisely expressed in figures.

Trotsky wrote a pamphlet called Trade unions in the era of imperialistic decay in which he suggested there was a tendency in the 1930s for the union tops to become absorbed into the state machine. He contrasted this to the ‘pure and simple’ unionism of an earlier age when capitalism could afford reforms, and unions stuck up for their members. But of course the period after the Second World War was not one of terminal crisis for capitalism. Trade unions in this country remained independent of the state. When the establishment reached out to involve the trade union leadership, it was usually in the form of social democratic politicians offering a corporatist agreement. The successive rounds of ‘incomes policy’ in the Wilson and Callaghan years usually involved figleaves such as a special deal for the low paid, in order to try to get the  union barons to co-operate with wage restraint. Since Thatcher came to number 10, no trade union leader had been invited for beer and sandwiches. The Blair/Brown government has maintained this tradition of intransigence, in sharp contrast to the way in which business leaders have virtually been invited in to write government policy.

The structure of British trade unions

As we know, the first trade unions in this country were craft-based. This was relatively unusual compared with the normal pattern of union formation on the continent, which was of politically motivated federations setting up factory and industrially based unions. The reason was the early development of British capitalism out of craft traditions in industry. Craft workers regarded themselves as working class, but as the aristocracy of labour. Craft consciousness was thus a distorted form of class consciousness. The craft unions were an electoral prop of the Liberal Party in the nineteenth century. Railway workers such as train drivers, guards and station porters for instance were all on different grades. Defence of grade differentials was progressive against the boss but reactionary within the working class movement.

At the end of the nineteenth century the first permanent general unions emerged. Their appearance coincided with new mass production industries, such as car production. They organised the production workers, while the craft unions represented the skilled trades such as engineers and electricians. This is in sharp contrast with the drive for industrial unionism that developed in other countries at around the same time. All the workers in a factory were to be in one big union, though sub-branches could represent craft aspirations. Industrial unionism was deliberately counterposed to craft consciousness, which was seen as divisive.

Craft and general unions have persisted side by side in recent decades. More recently unions have tended to collapse into one another. Often the reasons for amalgamation are not ones we support. Our basic aim is industrial unity.  It seems the trade union bureaucracy are concerned above all to preserve the revenue base that provides their salaries. Industrial logic is the last thing on their minds. In many cases, such as the recent super-union UNITE,  the membership has hardly been consulted, with the whole process railroaded through. Amalgamate first, work out the constitution afterwards! The danger of this approach for us is that the battle for democracy in UNITE seems to have been already set back. The super-unions tend to produce super-branches from the amalgamated affiliates, which make it more difficult to hold the bureaucracy to account. But the structure of the unions is not decisive. Bigger unions can provide opportunities as well as difficulties for revolutionaries. In the past even the most corrupt and rotten trade unions have been transformed into instruments of struggle by the movement of the working class. This will happen again.

The working class today

A determined effort has been made by journalists and other ‘theorists’ of the ruling class to prove that the working class as a conscious political entity no longer exists. Of course people still have to work for a living, they admit. But the connection between workers and class consciousness has disappeared altogether. Socialism has been abandoned as the goal of working class struggle. In fact socialists have always been a minority within the working class movement, except perhaps in pre-revolutionary times. Trade union membership ebbs and flows.

Those who are not in a union do not avoid membership because they object to what unions stand for. They are not anti-union. They are not in a union because the opportunity for them to join has not arisen. In fact workers in unions are paid more and enjoy better conditions than workers in equivalent work in non-unionised workplaces. And non-union workers know this. For the most part they would like to join a union. Part of the problem is that the effective abolition of the closed shop means that organising has to start from scratch every time an active trade unionist joins a non-union firm. Certainly the old propaganda that unions were ‘holding the country to ransom’ that we constantly heard in the 1970s no longer strikes a chord.

Another argument we have to combat is that the working class movement has been definitively beaten. They say workers are under the hammer; there seems no protection from the boss class at work; workers have become endlessly ‘flexible’ automata. In fact the reality is more complex. It is true that in some of the new industries, such as call centres, they  have managed to tear up the rule book which working class strength has imposed on most contemporary capitalists. There are undoubted cases of paying very low wages to a segmented section of the working class. But for most workers, real wages have risen through most of the past period. But so too has the intensity of work. Without the shield of the union, workers have found an individual way to improve their living standards. Often this involves working long hours, sometimes unpaid overtime. Workers are more and more shackled to their place of work by debt. But if living standards are improving without struggle, why struggle? The period since the defeat of the miners’ strike in 1985 is not dominated by defeats, as the early 1930s was, but by lack of struggle.

It is worth reviewing  the conclusions of Robert Taylor in Britain’s world of work, published by the ESRC. This body, and the author, are completely dedicated to the belief that harmony should exist between labour and capital. His conclusions are utterly at odds with this pious hope. “It is hard not to reach the conclusion that class and occupational differences remain of fundamental importance to any understanding of our world of work....we continue to live in a society and political economy where class differences remain of crucial importance to our understanding of employment.”

Taylor notes that occupational and social mobility have actually declined since the period of the post-War boom. This is a remarkable finding. The government holds that education is the road to social mobility. It will in effect bring a classless society, a meritocracy. Yet after the Second World War the ruling class was forced to promote people from working class backgrounds through the education system to help them run a modern economy. Now, it seems, the drawbridge has been pulled up. Despite more than 40% of workers having degrees, compared with about 10% graduate workers in the 1960s, this is not a passport to social advancement. The very development of mass higher education has devalued the significance of a degree as the passport to a lucrative career.

It is notable that an increased  proportion of the workforce are skilled compared with the past. They may have a formal qualification or some form of in-house training and experience that gives them some bargaining power. Bosses cannnot afford to sack such workers at will. Since these workers enjoy better pay and conditions than the unskilled in Macjobs, they are likely to fight to keep what they’ve got rather than just collect their cards when things get tough.

Taylor also records that job satisfaction has declined across the board over the last ten years, and that long working hours are increasingly the norm. On the other hand he puts paid to the myth of a totally flexible workforce. Gordon Brown and New Labour constantly boast about Anglo-Saxon flexibility which brings us higher employment and economic prosperity. What they mean by ‘flexibility’ is management’s right to hire and fire at will and the restoration of bosses’ autocracy on the shop floor. This may be an effective way of running firms based on unskilled tasks such as flipping burgers. It beggars belief that Britain can earn its living in the world by competing in the world of Macjobs with the poorest and lowest paid economies in the world. It is also startlingly at odds with the government rhetoric about a ‘knowledge economy’. In fact from 1992-99 the fastest growing occupation in Britain was that of hairdressing. It is not obvious how all these hairdressers are going to earn enough foreign exchange to overcome the massive payments gap with other countries.

In fact workers in temporary employment have declined since the 1990s. Likewise job tenure has actually increased over the past ten years. So  it is absolutely untrue that fundamental changes in the nature of work have taken place over recent decades, though there is no doubt the pace of work has become more intense.

Wilson’s study The future of the unions paints a relatively rosy picture of the strength of trade union organisation. He points out that membership is higher than in 1946, which most people would take to be a time of working class self-confidence.

Trade union density has fallen from 31% in 1996 to 28% in 2006. But of course most of the membership fall was recorded before that, during the mass unemployment and wave of factory closures of the early 1980s under Thatcher. Wilson observes that the typical trade unionist is likely to be a woman working from an office, rather than a male in an industrial occupation. (Women are now a small majority in the TUs.) The increasingly graduate workforce, in cases where workers have some independence at work, some control over the pace and direction of work and are trying to build careers, encourages the workers to see the advantages of trade union representation at work.

What is disappointing is the failure of the TUs to crack the new industries that have grown up – so far at least. Trade union membership is disproportionately concentrated in the public sector and old-established traditional working class workplaces. It will fall to a future generation of trade unionists to draw the workers in these new industries into the ranks of the organised working class.

Immigrant workers

A new opportunity and threat opens up on account of the mass immigration into the labour force from eastern Europe in recent years. This is a huge movement, more significant in numbers than the immigration of Asian and Afro-Caribbean workers in the years of the post-War boom. The only possible comparison is with the migration of starving Irish into Britain in the nineteenth century.

The danger lies in the appearance of a segmented workforce. We see immigrant labour concentrated in areas such as fruit and vegetable picking, organised by gangmasters in the way described by Marx in Capital. We see them flood into construction. British capitalism has for decades neglected the developing and sharpening of workers’s skills in the building industry and elsewhere. Now they overcome their neglect by poaching skilled workers from all over Europe and super-exploiting them in the process. It is clear that some east European workers do not speak much English because they don’t work with or mix with British-born workers. They are prepared for the time being to accept worse wages and conditions in different workplaces and occupations.

In some ways the alternative is worse. Some immigrant workers are being taken on by agencies to undercut the wages of workers in existing workplaces who are on the books. Agency work is casualisation. This obviously poses the danger of a split in the working class. Organising the new workers is a huge task for the labour movement.

As might be expected there are different prospects for different sections of the working class. In London there are huge construction works. There are skyscrapers that will dwarf anything already on the London skyline. Then there are the Olympics. With a deadline to meet, that gives the workers building them enviable bargaining power like those electrical workers employed on the Jubilee Line extension before the millennium. This is a real opportunity for the trade union movement.

Another thing to watch out for in the next few years is, if the trade unions fail to organise Eastern European workers, there may be a backlash against them and the bosses could foment racism within the ranks of the working class.

The trade union bureaucracy

The trade union leaders argue that their moderation is caused by their concern not to let the members’ assets be seized by the state and the ruling class. The problem, they say, is the anti-union laws. There is more than a suspicion that this has become a standing excuse for cowardice and inaction on their part. The Prison Officers’ Association defied the law in the form of an injunction and got clean away with it. After all, what were the authorities supposed to do to them – put them in prison?

The anti-union laws are an alibi for the trade union leaders. But they are an important shackle on the effectiveness of strike activity by the members. Take the case of the dockers’ dispute that led up to the jailing of the Pentonville Five in 1972. The dockers were mass picketing (now illegal) warehouses of firms with whom they were not directly in dispute (secondary picketing –  now illegal). Not only were these activities illegal. They were very effective as a way of winning strikes, and that is why the ruling class responded so strongly by jailing them. The Pentonville Five were released after their imprisonment led to a virtual general strike in protest. But the bosses were determined all the more to make effective industrial action illegal. Under Thatcher they got their way. The changes in the law have shifted the balance of forces in favour of the employers. But the laws only remain on the statute books because of the indecisiveness of the trade union tops in resisting them.

After the miners’ strike we saw a huge swing to the right among the trade union tops, under the banner of ‘new realism’. The swing went on for a long time, and many took it for a permanent change. Sir Ken Jackson and other trade union leaders went so far as to pioneer a strategy of signing no-strike union deals with employers to get their foot in the door, going so far as to virtually turn their organisations into company unions. USDAW is another guilty party. Tesco is now the largest single employer in the private sector. It is unionised. But that fact means virtually nothing to Tesco workers. The union does not give them a voice at work.

The discontent of the ranks with this subservience was not shown by open rebellion and strikes in the first instance, but by the election of one left wing trade union leader after another. The pendulum began to swing back to the left from the mid-1990s. At this distance in time we sometimes do not realise what a huge effort it was to get rid of Sir Ken Jackson and replace him with Derek Simpson as head of AMICUS, for instance. For the most part these left union leaders were untested in struggle. Their leftism was mainly verbal. This is the key to explaining what happened next.

The question to answer is, what happened to the ‘awkward squad’? The trajectory of Simpson is probably the clearest case. Elected on a clear repudiation of everything that Jackson stood for, Simpson has taken over Jackson’s methods and machinery at the top of the union. Possibly the machinery of the union has rather taken him over.  Whatever, there has been a realignment at the top of the union, and Derek Simpson has now clearly come out as a right winger and witch hunter.

The left in the trade union leadership is actually split now. There remain a minority of trade union leaders who remain committed class warriors and defenders of their members. Matt Wrack, Jeremy Dear and Mark Serwotka are three. It is not accidental that these leaders were actively involved in the struggles in the last period of industrial upsurge in the 1970s and 1980s. That was a formative experience for them. Their stance is now sharply at odds with the likes of Simpson.

The central problem for the movement is the pathetic dependence of the TUC tops on the Labour government rather than leading independent action. This has given New Labour a whip hand in dictating terms. The trade union leaders have given away their powers over policy-making at Labour Party Conference – for  a cosy deal with Blair and Brown. In doing so they are actually helping right wing Labour lay down policies that could lose the next election. When New Labour rightly stands indicted of institutional corruption, a defence of the democratic framework by which millions of working class people take part in the decision-making process of the Party they founded to defend their interests should not be too difficult.

Whatever happened to the Warwick agreement? The proposal to give equal rights to agency workers, for instance, was actually put in the 2005 Labour Party Election Manifesto. Not only are the Labour leaders ratting on the agreement with the unions, they are ratting on their promise to the British people, and the trade union leaders are letting them get away with it. The demand by the sects that a new working class party be set up based on the trade unions is ridiculous. It is the TU leaders who have let the Labour leaders get away with so much so far.

The bureaucracy are absolutely pivotal to our understanding of British perspectives. At present they are the main link betweeen the industrial and political arms of the labour movement. When the sects or frustrated left wingers denounce the Labour leadership as the worst Labour government ever and a continuation of Thatcherism by other means, we have no reason to disagree with them. What we have the duty to point out is that they can only get away with this because the representatives of the unions on the National Executive Committee of the Labour Party (who are officials, of course) have sat on their hands as anti-working class policies, and policies that sometimes mean wholesale sackings of their own members (as in the case of Royal Mail), have been discussed  and nodded through. The undemocratic National Policy Forum has been accepted  as the main policy-making body of the Party because the trade union bureaucracy accepted its setting up and the consequent removal  of decision-making powers from the floor of Party Conference. They have accepted their own castration as a force at Party Conference, giving up using the block vote to defend decisions democratically arrived at by their own members, and denying themselves (and the constituencies) the right to move resolutions that determine Party policy. Finally they connived at the sabotage of the McDonnell leadership challenge, which would have blown the whistle on right wing Labour’s undemocratic game. All this they have connived at by squalid behind the scenes deals with New Labour. They are a central prop of this government and its rotten policies.

The trade union leadership could not wait for a Labour government to come to power because they did not know what to do against the Tories. They hoped life would be easy under Labour. The Labour government has moderated the extremes of the Tories on GCHQ union recognition, granted a low minimum wage, given legal rights after 12 months working and made other small concessions. But the anti-union legislation is still in place. There is no legal right to strike in this country. Britain still violates international legislation by the ILO on union rights. Today the trade union leaders do not know what to do about the Labour leadership. They don’t want to do anything. They do not want to raise their heads above the parapet because they would have to put an alternative. That would either be the Tories or socialism - they want neither. They don’t want to oppose the Labour leadership and be blamed for bringing the Tories back. If the Tories did get in, what excuses can the trade union leadership use not to fight?

We cannot say when the industrial situation will break. We do know the pressures are building up and the present period of relative calm cannot continue indefinitely.

Public sector pay

This move to the right is not just disappointing for the activists who worked for change. It has been a big setback for the working class. In 2007 we saw no general unified movement of public sector workers against wage restraint. A great opportunity was lost. At present the Police Federation seems more militant than the official trade unions!

Yet we now have the possibility of two more years of Labour government, years in which Gordon Brown is adamant that public sector pay for almost six million workers will be below the real rate of inflation, that is will be cut in real terms.

The government complains about their budget deficit. Now in the first place public sector workers are not responsible for the soaring government deficit built up over the previous five years. Usually in periods of boom the government can be expected to run a surplus, as tax receipts increase in times of relative prosperity. This is supposed to compensate for times of downturn when tax takings dip and benefit payments increase. The present deficit is entirely down to the incompetence of Brown as Chancellor. He wants public sector workers to pay for his incompetence.

Second the government is raising a scare about inflation as a reason why public sector workers should have their living standards cut. It is economically illiterate to argue that the price of bread, of eggs, of petrol, of energy and of milk are caused by public sector pay increases – particularly when wage deals have been very moderate (often below inflation) in recent years. On the contrary state sector workers are victims of the ongoing inflationary process, just like other workers who can’t bargain for wage rises that compensate for inflation.

The trade union bureaucracy have exhausted all the excuses for failing to stand up to the government. Presumably, if asked why they failed to resist the Brown ultimatum on abandoning their democratic decision-making rights within the Labour Party they would plead that a general election was impending in autumn 2007. Now Brown has since backed away from an election, Party democracy should be put right back on the agenda.

The principle way the government was able to divide the unions last year was by arguing that they needed a quiet life in preparation for winning an election – an election that was never called, of course. No doubt the Labour-affiliated unions in particular were pressurised not to rock the boat in an election year. The bureaucracy obeyed. They want a Labour government as they believe it provides the best conditions for prublic sector jobs and conditions. Above all it lets them enjoy a quiet life.

As far as the ranks are concerned the government got away with it last year. Trade union leaders are now confronted with the prospect of another two years of Labour government. That means their members are faced with the prospect of two years of wage restraint under Labour. This puts the bureaucracy on the horns of a dilemma. Will they be able to resist for another two years the demands of their membership that they fight to defend working class living standards, which means standing up to a Labour government? That seems extremely doubtful.

The Labour Party:

The Blair-Brown government

Tony Blair came to power with a project. The project was nothing less than to destroy the Labour Party in a realignment of the centre-left through a deal, up to and including merger, with the LibDems. The ‘realism’ of the project was based on the perception that Labour would never again win an outright majority, presumably because the working class was supposed to be in the process of disappearing. What was required was a coalition with the LibDems to introduce a form of proportional representation. This would have two advantages: coalition politics would exclude the Tories from office as they would always be opposed by the combined forces of Labour and the LibDems (only a minority of the electors have ever voted Tory, even in the Thatcher landslides); and, more importantly, the forces of militant Labour would always be in a minority with no clear means of expression within the ‘natural’ centre-left majority. Never again would the Labour Party be threatened by being taken over by the left! Now Blair is gone, and so is his project. It is a measure of the political ‘realism’ of the right wing that all their political calculations were based on a monumental misunderstanding of the balance of forces in British society.

So Blair failed in his aims. But he got away with a lot. The remaining democratic structures of the Labour Party have been dismantled under his rule. The ability of the ranks to citicise and change policy, and their representatives along with it, have been made much more difficult. Membership of wards and GMCs appears pointless. What role do they have in the decision-making process? At present the LP does not even pretend to be democratic. Is this irreversible? No. The trade union ranks will move to reclaim their party. After all they have nowhere else to go.

It is not true that the election of Labour has made no difference to the working class. The partial restoration of union rights at GCHQ, the introduction of the minimum wage at a very low level and various other reforms are testament to this. Even Brown’s complex means tested system of benefits has made quite a difference to families at the bottom of the heap. But it is significant that these gains all date from the early days of the first Blair government from 1997-2001. In fact most of these measures were put in place as Party policy by Blair’s predecessor John Smith. In general the Labour government has pursued a neoliberal trajectory, a continuation of Thatcherite policies. Since those early reforms, the only thing Labour has got going for it is that, for most people, living standards have continued to rise as the economy boomed.

Brown replaced Blair determined not to have to face an election campaign for leader. Brown’s ‘triumph’ was a dirty victory of machine politics, only made possible by the compliance of the Parliamentary Labour Party, and indirectly of the trade union leaders. Now Brown seems determined to soldier on till 2009 or 2010, unelected by a single person. For many the whole process must have deepened disillusionment and cynicism in mainstream politics.

At the time of writing New Labour seems to be in meltdown. They are more than ten points behind in the polls though, of course, that situation could be recovered. But it seems that every move they make drags them deeper into the mire. They are bombarded with accusations of bribery and questions about donations that they cannot answer. This is not a question of personal peccadilloes. For New Labour corruption is not personal; it is institutional. Brown leads the way. Everybody who knew anything about it begged him not to let Metronet loose on the tube. He arrogantly overruled Livingstone and landed us all with a £2bn bill. He has left us and future generations with an insupportable burden of £170bn for mad PFI schemes. This is all part of New Labour cuddling up to big business. The logic is that we, the taxpayers, are taken to the cleaners by capitalists incapable of developing the productive forces, but dependent for profits upon looting the state.

New Labour shows a basic lack of competence, for instance in losing the  personal details of millions of recipients of child benefit. The administration can now do nothing right. We hear the voice of arold Macmillan as to what brings harold  HHH  HHH

Harold Macmillan on what brings governments down, “Events, dear boy, events.” The Brown administration is acquiring the same taint as the lame duck Major government. What is going on here? On the one hand the ruling class are gunning for Brown. The goof in losing CDs in the post was blown up as a major failing. Certainly the issue is important to people whose details have been ‘lost’, nobody knows where. But it is now clear that significant sections of the ruling class have decided that New Labour is exhausting its usefulness.

The trouble is, the ruling class is not a unified conspiracy. It works through a number of institutions that determine policy and  form opinions. They cannot unify or finesse their efforts. Though trying to weaken Brown, they cannot guarantee a Tory victory.

It remains the case that, with the Tories utterly discredited in 1997, the ruling class was very happy with the Blair administration. It ran the country in their interests when the Tories could not. But now New Labour comes across as tired and unpopular. They realise it’s time for the Tories to come back.

Blair came to office as the most popular Prime Minister ever. He left office ten years later as a tainted figure. When Brown came to office, many Labour supporters pathetically hoped he would be different. They hoped rather than believed that his natural Labourite instincts had been gagged by the requirements  of cabinet government under Blair. He left them little time for a honeymoon. He immediately declared his adherence to the entire ‘neoliberal’ agenda of the previous ten years. As to the commitment to replacing Trident and to commissioning a new generation of nuclear power stations, both long term decisions that are genuinely controversial for British capitalism, he was clear. These were to be railroaded through without even the pretence of consultation promised by Blair.

Brown presented himself as a new start, as a straightforward man untainted by spin. We now see that was all spin. He abandoned an election because he thought he might lose. In doing so he was seen as weak as well as devious. This apparently minor tactical error has sent Labour support in the polls into a tailspin. This shows that the government lead was not based on wholehearted support. It was conditional, based on a perception that the government displayed a minimum level of competence, and that the economy and living standards continued to grow under their stewardship. Brown then told us he needed time to show us his ‘vision.’ He seems completely tongue tied till he has considered how his words will go down with a handful of swing voters in a few marginal constituencies.

It seems New Labour have finally been rumbled by the electorate. Abstentions in the Labour heartlands are likely to prove their downfall. This mood will only harden when the government is perceived to have failed, above all in the management of the economy, when it stops delivering rising living standards for most.

To us it is hardly surprising that the government should look so discredited. Our earlier perspective was for a much faster disillusionment and crisis. Most comrades will be surprised they have got away with it for so long. Likewise Brown had a few months to show the Labour ranks he was ‘different,’ that he was ‘listening’, that he was ‘one of us’, in contrast to the sheer squalor of the Blair decade. He has blown it.

The occupation of Iraq may seem a background issue in British politics at present. This is in contrast to the movement of opposition in the USA. From a position where the anti-War movement was weak at the outset, anger and outrage against the Bush regime has steadily grown. By contrast, the movement against the invasion of Iraq here began with the biggest demonstration in British history. The fact that this mood met no expression in the official political process, was shrugged off by the Blair clique, and above all was not articulated by the cattle who make up the ranks of the Parliamentary Labour Party, led to a progressive demoralisation of many supporters of the anti-War movement. What else did they have to do to ‘make a difference’? The impression is given that Tony Blair ‘got away with it’. After all he has now left office and is poised to make millions on the American lecture circuit. In fact the distrust of the whole political process has been a permanent change in the scene in Britain. A contempt for politicians, the idea that ‘they’re all the same’ and declining interest in even walking a few yards to vote are all long term changes provoked by the War and the way the government ignored public opinion.

Brown is not seen as the instigator of the illegal War. But he is up to his neck in the lies that took us to war, lies that have acted as a corrosive acid upon the political process ever since. The Iraq adventure has been the bloodiest fiasco in British foreign policy for a hundred years. It is bound to have long term consequences for British politics. But the ruling class got rid of Eden as Prime Minister after the Suez adventure. What does it say about the mechanisms of the ruling class that they cannot even send out the message that the Iraq adventure was worse than a crime – it was a blunder?

To many on the left the casual insouciance with which New Labour apparatchiks send working class youth to pointless deaths in Afghanistan and Iraq is, quite frankly, shocking. Though New Labour seems to believe Britain is once again in the era of Palmerston, ready to send soldiers to the ends of the earth, they are unwilling to pay for them or to provision them adequately. The armed forces are competely overstretched, involved in two wars in Iran and Afghanistan. The loyalty of the garrison towns, traditionally conservative, is being stretched to the limit.

It is true that Brown has indicated that British troops will be coming home from Iraq at some point. At the same time he has been careful to show that this is not a display of independence, but that his masters in the USA have agreed to the withdrawal. Simultaneously he seems to have committed British soldiers to remain in Afghanistan for as long as it takes, which could be for ever.

To this discontent must be added the fury in the ranks of the police against New Labour. To save peanuts, actually just to show who’s boss, the government refused to honour the 2007 pay arbitration award. In retaliation the Police Federation is now demanding the right to strike. The incident shows the debasement of the political process. Most police authorities had already budgeted for the increase. This was actually the last pay settlement of 2007, not the opening shots for 2008. Home Secretary Smith turned the award down because she is a political nonentity with no independent power basis. She wanted to crawl to Brown, who retains a Treasury mindset. At the same time Straw invokes legislation against the Prison Officers’ right to strike.

Now they have made a prop of the bourgeois state furious with them. New Labour should remember it may need to rely on these people’s loyalty one day.

Brown’s prime advantage as Prime Minister is that he is seen as the man who presided over ten years of growth as Chancellor. As we pointed out in the section on the British economy, this is myth-making. Brown was lucky to be in charge of the economy when nothing went seriously wrong. His reputation and that of his government for  bringing ‘an end to boom and bust’ is being exposed as a sham with looming recession in the next year or so. This is all the more likely if the recession is coupled with a financial crisis accompanied by government incompetence, as seems very likely to those of us who have followed the Northern Rock story so far. Vince Cable, interim leader of the LibDems, was quite right to call for the nationalisation of this failing bank – in the interests of British capitalism as a whole. After all, the Tories under Thatcher took over the Johnson Matthey Bank for just £1 when it foundered in 1984.

The Labour Ranks

The John McDonnell, campaign, by contrast to the squalid tale we have outlined above, was exemplary as a means of taking the issues in British politics out to the active layers, including the trade unions. Significantly a layer of inactive members was revitalised and a number of ex members rejoined the party. Certainly John raised his profile as leader of the left in the PLP, which could make him a nationally known and important figure in the future.

It is certain that the presentation of a fresh alternative in a leadership election, together with the combined bumbling and arrogance of Brown in public debate would have had its effect. It is significant that it was the trade union ranks who were most strongly up for a campaign for John as leader.

At present Labour MPs feel free from the threat of deselection. Since the counter-revolution in the Party they are unaccountable to the membership. As with the Tory MPs after the fall of Thatcher, they are incapable of criticising and developing a fresh approach, even to save their own seats.

It has to be said that the campaign showed that the left wing of the Parliamentary Party is in numerical decline and generally in low morale. Candidate MPs are severely scrutinised and vetted by the bureaucracy, and the views of left wing constituency parties contemptuously overridden. So there has been no intake of left wing Labour MPs for over a decade now.

Although the development of the main left trend around the LRC was undermined by the failure of the John For Leader campaign to reach fruition, it is significant that regional, city-wide and even constituency LRC groups have been established. These may become a catalyst for local left wingers.

Many constituency parties are shells, dominated by aspiring careerists. In parties where there is a rank and file presence, they mostly consist of older, tired loyalists. Though it is probably true to say the LP is at an unprecedentedly low ebb, in fact passivity is the normal condition of the local parties. This is still more the case since the Blair era. Blair made it quite clear that he believed that an active Party was unnecessary. He believed he could win elections on his own with a PR machine. He lost no opportunity to kick the ranks in the teeth, ignoring democratic decisions and constantly arguing against the basic traditions and aims of the movement. It is no wonder that the local parties emptied out as the loyalists felt despised and ignored.

To say that local Labour Parties have not been vibrant political hubs for most of their history is similar to saying that most workers in trade unions are not on strike most of the time. Local party meetings are tedious events dominated by fundraising, irrelevant-sounding council business and intimidating jargon. Most people are able to get a life without all this. People will only become involved en masse if they see an urgent need.

Certainly reaction against right wing sell-outs by a Labour government in the past has not usually called forth a blaze of resolutions, debate and disagreement among the ranks while the government is still in office. Historical experience shows that discontent is more likely to take the form of dissidents tearing up their cards or lapsing into inactivity. The reasons for this are complex. Most Party members maintain a residual loyalty to ‘their’ government. They do not want to be seen as rocking the boat and giving aid and comfort to the enemy. They hope against hope that Labour will at last produce a rabbit out of a hat. They console themselves that ‘at least they’re better than the other lot.’ This has certainly been the case in the years of disillusionment since 1997.

It is actually after the Labour government has been booted out that the reaction is likely to begin. When the activists have been out on the knocker in the election and have been rejected night after night, they will have cause for reflection. They will find themselves unable to answer the criticisms of the Labour government they heard on the doorstep. In 1951 Labour lost (with more votes than the Tories and the biggest vote for Labour ever) after six years of the only ‘successful’ Labour administration. The Labour ranks saw a missed opportunity, and they were right. We saw a huge movement in Victory For Socialism, and later the Bevanites in the local parties. In 1970, and again after the 1979 election defeat, we saw the ranks take steps to rearm the Party. This is when Labour is most likely to swing left once more.

The Labour Party was dominated by the right wing in the period of the post-War boom, when capitalism could afford reforms and the Labour leadership were able to take advantage of that fact. There was a vigorous Bevanite movement in the constituencies, but it never seriously threatened the leadership in the 1950s, which relied on the block vote wielded by the right wing trade union barons at Labour Party Conference. It took the economic crisis of a later period after the end of the post-War boom to produce the beginnings of a mass left wing which seriously appeared to threaten ruling class privileges. The difference with the 1950s politically was the swing of the trade union tops to the left within the Labour Party.

Harold Wilson, Prime Minister from 1964, was the Tony Blair of his time. To the ‘old fashioned’ notion of class struggle and taking from the rich to give to the poor, he contrasted a programme of the ‘white heat of the technological revolution’, an essentially meaningless phrase that suggested that all classes could gain with rising productivity. Wilson’s government in 1964-70 was a massive disappointment coming after 13 years of Tory rule, dominated as it was by balance of payments crisis, a devaluation that did indeed devalue ‘the pound in your pocket’ and cuts in government spending.

His government produced a collapse in the Labour machine and an emptying out of local parties. His defeat began a process of renewal within the ranks.

The left reformists launched an ‘alternative economic strategy.’ They won victory at Party Conference for a programme of nationalising 25 top firms, which was included in the 1974 Manifesto. This was a vague and not well thought out, but radical, proposal. It was intended that these 25 firms should act as leaders in their industries and guide the others into directions that, as capitalist concerns, they did not want to go. The ruling class found it threatening as, if implemented, the appetite might increase with eating. The point is: the policy was accepted by the Party leadership. They had no choice. They were riding a mood where, not just party activists, but millions of workers knew the country could not go on in the old way. During the 1974 election, veteran right winger Denis Healy also promised as future Chancellor to ‘squeeze the rich till the pips squeaked.’

So the 1974 Manifesto was much more left wing on domestic and economic issues than the famous 1983 Manifesto, which was denounced by the right wing as the ‘longest suicide note in history.’ And Labour won on that Manifesto in 1974.

The Wilson-Callaghan government of 1974-79 was a still greater disappointment to the rank and file than the previous Labour administration. It was a crisis government sandwiched between the 1974 and 1979 world recessions, and confronted with inflation of more than 20% for much of the time. The Labour government, despite the left wing rhetoric it felt necessary to use to gain election, was solidly right wing. It introduced successive rounds of wage restraint (called ‘incomes policy’), allegedly as part of the fight against inflation. The 1974-79 government was successful in engineering the biggest fall in working class living standards since the Second World War. Three rounds of the ‘social contract’ were imposed with the connivance of the trade union tops. The government was also humiliated by the IMF, which forced it to shred its social programme in 1976, after yet another sterling crisis. Finally in the winter of 1978-79, wage restraint broke down and a revolt of low paid workers, dubbed the ‘winter of discontent,’ broke out. Labour duly lost the 1979 election and Thatcher came to power.

This was when the left came closest to capturing the Labour Party. There was a huge movement from the ranks to call their representatives to account. Tens of thousands became actively involved in the attempt to reclaim the Party. Reselection of recalcitrant MPs was the order of the day. The leader was to be elected by the Party as a whole, not just the MPs. The formula was an electoral college, with 30% of votes for the party activists, 30% from the PLP, and 40% from the unions who had founded the Party in the first place.

The ranks also wanted their say on policy. Labour became committed to a unilateralist foreign policy for the first time. This seemed audacious but, as we have pointed out, the 1983 Manifesto was less radical on domestic policy issues than that of 1974. The former leader of the left, Michael Foot, became Party Leader after Callaghan resigned. In 1981 Tony Benn came within a whisker of defeating Denis Healey for the post of Deputy Leader in an election conducted by means of the electoral college. The right wing then split to form the SDP. It seemed the left was in charge for the first time ever.

But that was not really the case. Though Shirley Williams and the extreme right wing had broken away with the aim of splitting the core Labour vote, they left behind key right-wingers like Denis Healey. These people were determined to sabotage the 1983 election campaign and show that Labour couldn’t be elected on a left wing programme. They succeeded. Neil Kinnock took over from the hapless Foot after the 1983 election debacle and began pulling the Party back to the right. At the same time he was wiping out the democratic gains of the 1979-83 period.

He lost two more elections, but bequeathed the Party leadership to John Smith.

After Smith’s untimely death, Blair staged his ‘neoliberal’ coup. The ranks were by now shell shocked by the fourth electoral defeat in a row. They would accept literally anything that would achieve another Labour government. The layers of activists had by now subsided or gone quiet. The left challenge was mainly at an end – killed by the lie that left wing Labour was unelectable. Most of the ‘soft left’ (such as David Blunkett!) had gone over to a position of ‘new realism’ by the mid-1980s. The right wing ran the Labour Party unchallenged. That remains the position today. The Party itself was emptied out, apart from a brief period of euphoria when Labour was elected in 1997. It did not take Blair long to disillusion this new intake. A revival of militant activity among the Party remains our perspective for the future, probably after an electoral setback as we have explained above.

The Tories

For the Tories Thatcherism was a huge success. They achieved successive Parliamentary landslides, though all with 43% or less of the popular vote. Thatcher introduced some of the methods later taken up by Blair. This included relentless centralisation of the decision-making process in the Prime Minister’s office and the exclusion of any role for the party, secret briefing against dissidents and banishing opposition into outer darkness. When Thatcher fell, the weakness of this approach became apparent. The system promotes yes-men, who are incapable of thinking for themselves and adapting to a new political situation. The Parliamentary Tory Party was dominated by weak, venal mediocrities, people incapable of expressing an opinion unless they had been programmed beforehand, and a vicious bunch of cliques. The Tories stumbled on in office under Major, with no vision or perspective. Then came meltdown in 1997. They did not know how to cope with this. They did not know how to take on Blair, who seemed fresh while they were stale and covered in sleaze. Thatcher’s methods had become an instrument of the Tories’ downfall. The comparison with the PLP under Blair is clear for all to see. Blair surrounded himself with mediocrities. Now New Labour has become vulnerable we shall see how inadequate these people are.

The defeat of 1997 was quite traumatic for the Tories. Over eighteen years of government they had developed considerable hubris. Ministers imagined they could dip their hands into public funds with impunity. New Labour Ministers should note that this disease of government seems to be infectious. But the expulsion of sterling from the ERM in 1992 destroyed the Tories’ reputation for economic competence. It is quite likely the unfolding financial crisis could do the same for New Labour. After Black Wednesday, the Tories were done for.

The response of the Tories to the 1997 defeat was to retreat to their heartlands. A handful of Conservative activists demanded they campaign on law and order, immigration and Europe, policies of great interest to Tory doctrinaires but less important to the rest of the electorate. Leaders such as Hague, Iain Duncan Smith and latterly Howard seemed to be conducting a holding operation, keeping faith with their declining membership in ‘middle England’ rather than trying to win elections. Any hope of electoral gains seemed to be based on the Labour government making mistakes.

The election of Cameron as leader, and his promotion in the press, is a sign that the ruling class now wants the Tories (the most successful conservative party in Europe) to once again set about trying to run the country. Cameron is attempting to move his Party, not without hiccups, away from the wilder shores of the right towards the ‘centre ground’. He has a slight problem. Squatters have already occupied that place in British politics. How does he differentiate himself from New Labour without placing himself back in the hands of the Tory lunatic fringe?

LibDems

It is quite likely that the LibDems will hold the balance of power after the next election. They are a party that faces both ways. It is rightly said that we have a three party system in Britain. But in English constituencies, there are usually two parties that matter. In solid Labour areas, the LibDems have usually emerged as the main opposition party as compared with the discredited Tories. In such areas their policy is to position themselves as a second line conservative party. In backward rural areas, where the Labour movement is a less significant presence, they position themselves to the left of the ruling Tories.

This ambivalence poses a problem when it comes to formal or informal coalition in Parliament. Should they side with Labour or the Tories? That would depend on the concrete situation, including the Parliamentary arithmetic. It would be difficult for them to go into coalition with Brown. Assuming the election was held in 2009, he would have been Prime Minister for two years without a single person voting for him for the job. He would be seen as an imposter. The election would inevitably be seen in part as a referendum on his premiership. In any case, if he had led Labour to electoral defeat, helping to squander the landslide of support they had in 1997, Brown’s position would be under threat from the Parliamentary Labour Party.

Or should the LibDems side with the Tories? In either case a part of their electorate would regard the decision as a betrayal of the policies they had fought for, so the situation would be very unstable, and the LibDems themselves riven by differences and splits.

Scotland

The Scottish National Party came to power in the Scottish Parliamentary elections last May, though they had neither a majority of votes nor of seats. In no way was that a vote for Scottish independence. This was a protest vote, a thoroughly understandable protest vote, against the miserable record in office of the Scottish Labour Party. The SNP’s hold on office might seem precarious. The opposition parties have made it quite clear that they will vote against a referendum on independence. So this proposal has been kicked into the long grass. But Scottish independence is the SNP’s reason for existence!

In reality the SNP was elected on a clever package of reform proposals that positioned them quite clearly to the left of Labour. The electorate took the proposals seriously and elected the SNP. Within a record short time the SNP has abandoned its entire reform programme and come out plainly as tartan Tories. They are pleading financial constraints and throwing the burden of change back on to the local authorities. A commentator might think these shameless political chameleons would be out on their ear in short order, but that would be to reckon without the conduct of the Scottish Labour Party. The Wendy Alexander baksheesh case is blatantly illegal and seems to be only the tip of a very big iceberg. The rottenness of the Scottish LP is the only thing that might allow the SNP to survive.

Wendy Alexander, leader of the Labour Party in Scotland, has declared that the SNP Government should “bring on” a referendum on independence and has gone as far as to not rule out a bill calling for a poll earlier than the Nationalist administration’s proposed date of 2010. This has resulted in the issue of Scottish independence making a large impact on the national media for the first time since the SNP’s victory in May of last year. It has also unleashed a potential Pandora’s Box that is threatening to divide the Labour leadership in Scotland from the national leadership, and could provoke a constitutional crisis at a later stage.

This latest stunt follows another large electoral defeat for the Labour Party, the second in two years. With this U-Turn Wendy Alexander and the Scottish Labour leadership hope to show up a popular SNP government by making them face up to their commitment on independence head on. Alexander also knows that although the SNP is popular, the idea of independence is not and in highlighting this issue she hopes to give the SNP a bloody nose. This has been done particularly as she know they do not want to hold a referendum until 2010,  when the political situation in the rest of the UK is likely to be more favourable to independence .

The SNP government is quite happy to wait until 2010 as by this point we could be faced with either the tail end of an increasingly unpopular Labour government or a Tory government that has unleashed a vicious arsenal of attacks on the working class and which Scottish workers in the main voted against. Under such conditions it is likely that independence would gain a higher vote from disenchanted working class voters.

The issue of a referendum has become an embarrassment for the Labour Party’s national leadership. Under pressure from David Cameron, Brown was forced to somewhat distance himself from Wendy Alexander. He went as far as to argue that in fact she had not argued in favour of a referendum. This is a potentially divisive issue, particularly at a time when Gordon Brown is desperate to show himself to be committed to ‘Britishness’. To be seen to in any way give into SNP demands or to be contemplating compromising the union could be disastrous for him. This comes at a time when the Labour Party is already suffering from an election defeat and consistent poor showings in the opinion polls.

It seems there is little grass roots support for a referendum. The issue has rather arisen because of the desire of the Labour and SNP parliamentary cliques to score points off each other. As Marxists we support the call for a referendum. In recent years the issue of Scottish independence has become one of importance and it is an issue that should be ultimately decided upon by the people of Scotland. It would be to their detriment to leave this fundamental question unanswered. While supporting such a referendum and fully respecting its outcome we would be under no illusions with nationalism or independence.

If such a poll were to go ahead we would argue against independence for Scotland and of the necessity to fight along class lines, rather than national lines. An independent Scotland on a capitalist basis would not remove one of the problems of poor public services, privatisation, student debt, unemployment or low pay that we face just now, not to mention the effects of the financial crisis that is now spilling over into the real economy.

In power the SNP have shown they provide no solutions to the problems of the Scottish working class. They have systematically failed to deliver on the progressive election promises such as abolishing student debt. The SNP are a party of big business through and through, with a significant portion of their funding coming from the millionaire bus tycoon and infamous homophobic bigot Bryan Souter. They were also publicly supported by the ex-chief executive of the Royal Bank of Scotland as a party for Scottish business interests. Edinburgh is now one of the biggest finance centres in the world and companies such as Standard Life and the Royal Bank see the SNP as a useful tool through which to gain greater financial autonomy. If the conditions are correct they will support full independence as this would allow them to dominate Scotland to an even greater degree.

Ultimately the problem of nationalism and the question of a referendum lie squarely at the feet of the right wing Labour leaders. By making compromises with big businesses and refusing to pose the question of socialism the Labour Party leadership has only itself to blame for the rise of nationalism in Scotland and the support of the SNP. Support for a referendum in the immediacy can only lead to the long term defeat of nationalism if it is accompanied by the adoption of a bold socialist programme that addresses the fundamental problems of workers and youth.

Wales

In Wales, regarded by the Labour Party as its own one party state, the LP has been forced into coalition with Plaid Cymru. The vote for the nationalists is still less a nationalist vote than that in Scotland for the SNP. Once more it is a protest vote against the ruling Labour Party in Wales. New Labour has been on trial in Wales for longer than the rest of the UK. The ‘parachuting in’ of Alun Michael MP as the leader of the Labour Party, acting as Blair’s agent, caused enormous resentment amongst Labour party members and voters. The trades union leaders played a backward role in loyally deciding to support and vote for Michael despite the clear popular vote for Rhodri Morgan. Whilst Morgan has never been a left, he was clearly not New Labour and decidedly ‘off message’. The only trade union which allowed members a ballot on which candidate they should support was UNISON and that vote was decisively for Morgan.

Since Morgan has been leader, the ‘New’ has been dropped from all Labour publicity and sets at conference and the Party followed a course of policies to the left of Westminster. The much mentioned ‘clear red water’ consisted of a programme of minor but progressive reforms.  League Tables of schools and exams for junior school children were abolished and academies were stopped at Offa’s dyke, with local authorities control of education strengthened. Foundation hospitals were not allowed and PFI projects in the NHS were halted. Free prescriptions and bus fares for the over 60s, free swimming for pensioners and breakfasts for junior school children were introduced, and recently the abolition of hospital car parking charges. The ‘efficiencies agenda’ which was introduced by the Gershon Report in England has been replaced with the ‘Making The Connections’ report, which emphasises collaborative working across public sector bodies rather than through privatisation. The Labour Assembly members regularly meet trade unions and the relationship with the unions is entirely different to that of the Blair and Brown cabinet.

However, this move towards minor reforms has been achieved despite the constant criticism and attempts at sabotage from Welsh Labour MPs. Virtually all the Labour MPs voted for Foundation Hospitals for instance, even though they would not be tolerated in Wales. But whilst criticism from the likes of arch Blairite and ex Tory Chris Bryant may have been irritants, a real battle for the direction of Welsh Labour is now opening up. Rhodri Morgan is due to retire next year and already two clear trends are forming; the right wing, around Finance Minister Andrew Davies and the ‘left’, probably Carwyn Jones, current Education Minister. Davies has been heard to denounce the ‘freebie culture’ fostered by the clear red water and there is a concerted effort by a faction of right  Assembly members, MPs and MEPs to push for privatisations of local government services, Foundation Hospitals, PFI etc.. In reality the divisions were rehearsed in the row over the coalition government, with the ‘left’ hoping to lean on the apparently more left Plaid Cymru to bolster their positions against the MPs, who were bitterly opposed to the coalition.

The Labour Party in Wales is not unlike the rest of the UK in that it is little more than a shell. The backlash against New Labour policies resulted in the loss of some Assembly seats but the situation in local authorities is much worse. Years of right wing complacency amongst Labour Councillors resulted in only 8 of the 22 local authorities being in Labour control before the 2008 wipe-out, with the Liberals controlling authorities such as Cardiff, Swansea, Bridgend and Wrexham.. But the election of a new leader would pose a challenge for the leaders of the trades unions and open up a political battle between the right and left, which will give opportunities to raise socialist ideas and revitalise the left.

The local elections

The Tory victories in the local elections on May 1st mean that the Conservatives are odds on to win the next general election and form the next government. Theoretically the Labour leadership could turn the situation round, but they seem incapable of changing their disastrous course. New Labour is in meltdown.

The results are as bad as any in forty years, since 1968. In that year, as a result of the disappointments of the right wing Harold Wilson Labour government, Labour was reduced to controlling just 13 boroughs. Accrington went Tory. Hackney went Tory. Of course the Tories won the general election in 1970.

In May 2008 Labour lost another 331 seats, starting from a very low base, since there had been losses in local elections for 11 years past. The Tories picked up 256 seats. New Labour, the governing party, is actually in third place in the polls with just 24% of the popular vote. The LibDems are ahead on 25% and the Tories are in the lead with 44%. These results suggest a Tory landslide victory in the next general election of over 100 seats. The Conservatives made gains North, South East and West – winning Bury, Harlow, Maidstone and North Tyne. Labout managed to lose heartlands such as Merthyr Tydfil, Blaenau Gwent, Torfain, Caerphilly and Sunderland.

Why has it come to this? Many Labour activists and dissident MPs – and there are a lot more dissidents now they realise their seats are not safe – blame Gordon Brown. Gordon Brown has been Prime Minister for just ten months. A sure way to reduce him to burbling incoherence is to ask him what his ‘vision’ is. He can’t answer. But if he doesn’t know what his government is for, how is the electorate supposed to guess?

This is not just a personal failing on Brown’s part. This is the heritage of New Labour, founded by Blair and Brown. They felt that elections were won and lost, not by the votes of millions who have voted Labour all their lives, but by a handful of swing voters in marginal constituencies. So Brown has to guard his tongue. Nobody knows what he stands for because he stands for no principle.

Others see Labour’s unpopularity as down to the abolition of the 10p rate of tax. This meant that 5 million low paid workers (natural Labour supporters) would lose out. Darling’s mini-budget in May has thrown money at the public relations disaster, but still leaves 1.1 million of the poorest worse off and feeling betrayed by the Labour Party.

If it really is true that Brown did not realise abolition would hurt the poor, then he is too stupid to be Prime Minister – or Chancellor of the Exchequer.  In reality it was all part of the New Labour agenda. Brown gloried in stealing the Tories’ clothes on the tax issue, regarding it as a masterpiece of strategy in preparation for the next election (which never came).

In any case there were voices that warned of the consequences of the abolition of the 10p rate. Left wing Labour MP John McDonnell explained exactly what would happen. And then? And then, when Blair resigned and the opportunity for John McDonnell to challenge Brown in a leadership contest arose, the unthinking cattle in the Parliamentary Labour Party allowed themselves to be bullied by the thuggish whips into nominating Brown in such numbers that Brown was ‘crowned’ without a contest. Now the backbenchers, fearful for their precious seats, pathetically whine in the lobbies about Brown’s alleged psychological flaws and political failings. They have themselves to blame.

Then there’s the economy. Voters have become uncomfortably aware that the good times are now at an end. Recession is closing in. We haven’t seen the worst of it yet. That is not why electors are angry with New Labour. They are angry because for eleven years Brown’s mantra has been ‘no return to boom and bust.’ He has lied, claiming responsibility for a boom that was happening anyway and was nothing to do with government policy. Everybody can see he lied.

Now he doesn’t want to claim responsibility for the bust. In fact New Labour is powerless against the rhythms of global capitalism, since they are determined to take no action against the system. People know this government will do nothing to protect them from hard times. Quite simply, New Labour has been rumbled by the electorate.

Will there be a leadership contest? One of the symptoms of the crisis in the ranks of the Labour Party is that the PLP is awash with rumour and plotting. The problem is to come up with a credible alternative to Gordon Brown. One of the features of New Labour’s rule is that Parliamentary candidates have been ferociously vetted to weed out any signs of independence. Backbenchers are engaging with their pagers rather than their brains, terrified of being ‘off-message.’ Unelected enforcers have imposed the will of the Prime Minister’s office upon the Parliamentary Party. As a result the PLP and the Cabinet are packed with talentless mediocrities. Who in the Cabinet would really pose a serious alternative to Brown? We would support a contest and support John McDonnell if he stood. But we remember that the PLP stole our right to elect the leader last year.

In London Ken Livingstone was caught in the slipstream of New Labour’s unpopularity. After the second preference votes were counted, he lost by 47% to 53% to the hard right old Etonian Tory, Boris Johnson. Livingstone did not do enough to differentiate himself from the government. In his campaign he stood on his record as an experienced administrator and incumbent against Johnson, who argued for some sort of change.

Ken has always done better when he has stood as his own man. In the 1980s as leader of the Greater London Council he mounted some kind of resistance to Thatcher, and won credit for it. In 2000 he stood up to the bullies in the New Labour machine, stood as an independent against the official Labour candidate, gave him a good thrashing in the polls, and emerged as Mayor. Ken lists his hobbies as breeding newts and socialism. He could have won if he had put the second hobby as part of his job description.

The London elections show how the ruling class is now swinging behind the Tories. After all, what use is New Labour to them now? A wall of money, at least £1 ½ million stood behind Boris Johnson’s campaign.

The Fascist British National Party got a worrying 2.84% in London, and a seat in the London Assembly, though they were marginalised elsewhere. It is possible that their second preference votes turned the trick for Boris in the Mayoral race.

New Labour has abandoned the poor. There seems no let-up in their handouts and concessions to big business. They have learned nothing from their bloody nose, in which case they will stagger on to defeat at the next elections.

New Labour claimed that Labour had to ‘triangulate’ in order to win. Labour had to imitate Tory policies and echo their prejudices in order to win over swing voters in marginal constituencies. Forget the poor, forget the working class! Their vote is in the bag anyway.

But under New Labour the Labour vote in the polls has sunk lower than the previous low point of 1983. The catastrophic results of 1968 and 2008 have been ‘achieved’ when the right wing was in complete control of policy and the Party. The message is clear – New Labour loses elections.

 The reason for the disaster in the polls is mass working class abstentions in previously solid Labour areas. Workers see no reason why they should walk a few yards to vote for a government that has abandoned them. The middle of the road Labour think tank ‘Compass’ has declared, “New Labour is dead.” We knew it was all based on spin, on denying every principle the Party had originally been set up to defend. But they told us it was the only way to win elections. Now we see New Labour has led us into a dead end. It’s time to reverse!

It is natural that under New Labour leadership, workers react in disgust, abstain and turn against Labour. But older workers remember; whenever Labour voters abstain in droves, the Tories sense that we are weak. They come in and put the boot in to the working class. If the Tories win, young workers will quickly learn that lesson too. What is needed is to begin the fight to reclaim the Labour Party from the hijackers now.

Conclusions

The next election

The Tories are most likely to win the next general election. But that could be two years away, so the situation remains uncertain. In the first place Brown has signalled that the election will not be held before 2009. If he were forced to call it earlier, that would be because he was in trouble. This would be on account of some sort of unexpected governmental crisis.

Secondly the result depends on the unfolding of the next recession, and on the performance of the other main parties. We know a recession is coming, but we don’t know how deep it will be. We have indicated that, overlain as it is by the credit crunch, it could be quite soon and quite severe.

Realistically there are three possible outcomes:

·        Labour maintains its overall majority in Parliament

·        There is a hung Parliament with no overall majority

·        The Tories win with a workable majority

Let us take each hypothetical situation in turn and consider what would be the significance of each one for perspectives.

Labour wins: At the time of writing it seems inconceivable that Labour will get more votes than in 2005. So even if Labour were able to form a government, votes and seats would have been lost. There will be economic crisis and crisis within the government. Backbench MPs are bound to compare Brown’s record adversely with the electoral record of Tony Blair. Even in this, the best situation for him, Brown would be seen as a loser. The Blairite sniping would increase in volume. More importantly Labour’s right wing would be exposed. The reason most Labour supporters have accepted policies from the leadership that are indistinguishable from the Tories is because they were persuaded it was the only way to win elections. They would see that they watered down their policies to no purpose. With a small majority, the left wing within the Parliamentary Party could have an impact on British politics way beyond its size. The way would be opened to a swing to the left within the Labour Party as a whole.

A hung Parliament: This is actually quite a likely prospect. This would be a nightmare for all the main parties. Even the LibDems, who have longed for a hung Parliament for decades as the only way to give them the power they think they deserve - the bargaining power to go for proportional representation and a new political dispensation - would be torn apart by the pressures. Could they align themselves with Labour, who would be perceived as the party that lost the election? Could they be seen as flouting the electoral will? On the other hand are they willing to be co-opted into what is likely to be quite a brutal anti-working class Tory programme?

For Labour the pressures on them would be so much worse. Brown would definitely be seen as an electoral liability and the plots against his leadership would begin immediately. More important, a hung Parliament gives a small unified group of MPs immense power to obstruct right wing policies and to make their presence felt. If the Campaign Group of MPs had the gumption, they could raise their profile in the country enormously, and become a significant force within British politics as a whole, not just a Parliamentary clique. Their stance and high profile could in turn galvanise Labour supporters into activity, now they saw an alternative to the right wing.

The Tories would be licking their wounds after an unprecedented fourth election defeat. They would be contemplating the prospect of remaining away from the levers of power for almost twenty years. Recriminations would be bound to follow. The Tories have shown no compunction in sacking leaders who they feel have failed them and their ambitions.

The Tories win: Although the Tories have been out of power for quite a long time now, folk memories of the Thatcher era persist. Advanced workers would be nervous and suspicious of them – and they would be right. The Tories would be determined to show who’s boss after such a long period out of power and would be looking to be put the boot in. A Tory victory would mean a turn to industrial class struggle.

All these various possibilities have two things in common. First, though we have been cautious as to the timing and severity of the next recession in this document, the next government would be governing in hard times. Secondly they are likely to be a weak government. This is a very unstable situation for British capitalism.

Perspectives and the Labour Party

The issue of party funding is up in the air. The issue has arisen because of actual or suspected corruption arising from big donations by millionaires. So ‘naturally’ the finger is pointed at trade union donations to the Labour party, donations that are voted on and are part of the tissue of the Labour movement. Brown has indicated he might be prepared to give this source of finance up, despite the near-bankruptcy of the Labour Party. At the moment the offer is only a bargaining counter, a ‘clever’ debating point against the Tories.

What would it mean if it went through? Would this change the fundamental nature of the Labour Party? The constitution of the Labour Party is unique to Britain, apart from attempts to export it abroad by British emigrants to foreign lands. The Party was actually created by the trade unions. In the same way whether the Labor Party in the USA lives or dies is mainly dependent on whether it is picked up and supported by a significant fraction of the trade unions.

Workers’ parties in many countries are naturally linked in policy and membership with the trade union movement. Such is the case in Germany and Scandinavia. But these parties do not have a federal structure with affiliated trade unions, as the British Labour Party does. The dissolution of that structure through the ending of the funding mechanism would be a setback. But it would not change the basic nature of the LP. It would not change its nature as a working class party, defined by its mass base. We have seen how the trade union leaders naturally look to the Labour Party in Parliament to protect the working class. They do so because that is what their members expect. There is simply no alternative.

We have seen the fiasco of the split in Respect. Further back in time we saw the Scottish Socialist Party splinter and lose its position in the Scottish Parliament. However right wing the leadership of the Labour Party remains, all the political movements of the working class are bound to find reflection in the first instance through the Labour Party. This basic ‘law’ of the British class struggle was laid down by Ted Grant over fifty years ago, and is just as true today.