Perspectives for Britain: 2014

The events in Britain and worldwide are and will have a major impact on the consciousness of the working class and youth. Although the situation will be protracted, there will be sharp and sudden changes in the situation. This crisis will at a certain point become pre-revolutionary, as in Greece today. After all, Greece is only a mirror reflection of Britain in the future. Then the situation can open up in the direction of a revolutionary one, where there occurs a profound break in consciousness.

We publish here the first part of a discussion document, written by the editorial board of Socialist Appeal, which outlines the economic and political perspectives for Britain.

“To be sure, during a revolution, i.e., when events move swiftly, a weak party can quickly grow into a mighty one provided it lucidly understands the course of the revolution and possesses staunch cadres that do not become intoxicated with phrases and are not terrorised by persecution. But such a party must be available prior to the revolution inasmuch as the process of educating the cadres requires a considerable period of time and the revolution does not afford this time.” (Trotsky, The Class, the Party, and the Leadership, 1940)

World Background

In 2008, world capitalism experienced its biggest slump since the 1930s. In many ways, given its scope and breadth, the crisis has been even more serious. That was more than five years ago. Despite the talk of improved “confidence”, the crisis still continues to plague world capitalism.

The bourgeois economists have declared several false dawns of recovery since 2009. Even where there is a partial “recovery”, it has been the weakest for 100 years, or possibly in the history of capitalism. This tells us a lot about the depth and character of the current crisis, which is not cyclical, but organic in character, as in the 1930s. Most bourgeois strategists are completely blind to this state of affairs.

Even with a deep crisis of the system, recoveries, however partial, are not excluded. Even a dying organism occasionally shows some signs of life. This happened in the 1930s, but did not alter the fundamental situation.

“The economic revival of the past year has, it is true, somewhat dampened theoretical and social criticism”, explained Trotsky. “Hopes arose that the process of economic growth interrupted by the crisis would again be re-established. But sooner than one could have expected, the hour of a new crisis struck. It started from a lower level than the crisis of 1929 and is developing at a more rapid tempo. This demonstrates that it is not an accidental recession nor even a conjectural depression but an organic crisis of the whole capitalist system.” (Trotsky, 29 November 1937)

Five years after the collapse of Lehman Brothers, the world capitalist system remains in a blind alley. It is not capable of developing the productive forces (industry, technique, science) in any meaningful way. As Marx explained long ago, no social system ever leaves the scene of history until it has exhausted itself and proves incapable of developing the productive forces. Then society enters into a period of social revolution. This is precisely the situation that exists today on a world scale. Capitalism has exhausted its historic role and has become a gigantic fetter on human advance.

Following the collapse of Stalinism in 1991, the world capitalist economy experienced steady growth, driven by the massive expansion of credit, the intensification of world trade, opening up of China and South East Asia, financial deregulation, and the increased exploitation of the working class. This increased relative and absolute surplus value and drove up the rate of profit. It was a period of wild speculation, which accompanies every boom. But this time it reached new heights. This in turn gave rise to colossal illusions and euphoria comparable to that of the “Roaring Twenties” in the United States. The Financial Times, the organ of British finance capital, ran an editorial in the middle of 1995 entitled “Dreaming of Golden Ages”, which epitomised the euphoria.

“Could it be a golden age? It could be. A great deal has been learned since 1970. With luck and effort, this could be something better than another recovery. It could be the start of a long secular expansion.” (20/5/95)

According to the dictionary, the word “secular” means lasting an indefinitely long time or even a century. The bourgeois were looking to a new epoch of growth without recessions or crises. Today, Lawrence Summers, the former Treasury Secretary under Clinton, talked at the IMF’s research conference not about expansion but about “secular stagnation”, namely a new epoch of stagnation. This is simply another term for a new depression. Amongst the strategists of Capital, optimism has been replaced with the deepest pessimism. This was reflected in a comment by Martin Wolf, the chief economist of the Financial Times, who pondered how it was possible to return to the 1930s. “I did not know. Now I do.” With the weakest “recovery” on record, the seriousness of the situation (the new “normality”) has finally dawned on the most serious bourgeois representatives. They have been compelled to accept that they are in a crisis of the system very similar to the crisis in the ‘30s. The system has reached its limits, with huge amounts of over-production of capital and commodities. “The real barrier of capitalist production is capital itself”, explained Marx. This “barrier” of excess capacity and weak markets explains the collapse in productive investment, which, in turn, can be the only basis for a recovery.

Many European countries are in recession or on the verge of recession, some five years after the slump. Bourgeois economists have been predicting every year since 2010 that the economy of the United States was about to accelerate, but without much success. Growth was a meagre 2.5% in 2010, 1.8% in 2011, 2.8% in 2012 and something near 2% in 2013. Japan’s recovery has also faltered. With the near stagnation in the western economies, the capitalists looked to the BRICs to pull them out of the crisis. But these too are facing a slowdown. According to the IMF the: “projected shortfall in Brazil, India and China is similar to the hits to output rates that advanced economies have suffered in the post-crisis period.” (FT, 9/10/13) With all avenues blocked, the system is trapped in long term stagnation, with a devastating and lasting impact on gross domestic product.

According to Professor Eswar Prasad, senior fellow at the Washington-based Brookings Institution, “the recovery is still tenuous and just a shock or two away from turning into another slump.” (FT, 7/10/13) The US government shut-down in October, when Congress failed to agree to continue servicing US debt (growing by $2.7bn a day) which risked a default and a new debt crisis greater than 2008, is an example of such a shock. Neal Soss, an economist at Credit Suisse, put it: “We are moving out of crisis mode, and the long tail of it is just a reminder of how intense the crisis was. It may be a very long time before we put that behind us.” (FT, 20/12/13) While Wolfgang Munchau in the FT explained: “Economically, this is 1990s Japan all over again, probably worse given the periphery’s dire economic state.” (FT, 23/12/13) Clearly, none of these economists knows what is really happening, or why, but they know it is serious and long-lasting. They are blinded by their class outlook and their role as apologists for capitalism. Nevertheless, even they are extremely disturbed by what is unfolding on a world scale.

The austerity policies have served to make the crisis worse by cutting the market. But they have no alternative but to cut and slash. In reality, given the contradictions, whatever they do will be wrong. They are trapped. Neither deflationary nor inflationary (Keynesianism) policies will resolve anything.

Before the war, Trotsky described the epoch as the “death agony of capitalism”. He went on to explain, “Conjunctural crises under conditions of the social crisis of the whole capitalist system inflict ever heavier deprivations and sufferings upon the masses. Growing unemployment, in its turn, deepens the financial crisis of the state and undermines the unstable monetary systems.” This is precisely the situation today, as we can witness clearly in Europe and elsewhere. While the Thirties’ Depression was ended by the Second World War, today’s depression is set to continue for years and even decades, for as long as capitalism is allowed to continue. Unlike in 1914 and 1939, there can be no world war under current conditions, given the existence of nuclear weapons and the balance of class forces. This means that the contradictions will multiply and become internalised, which will result in social explosions and increased class conflict.

As mentioned earlier, there can be certain “recoveries” and economic fluctuations as in the 1930s. For example, from 1934 to 1937 in the US we saw the Roosevelt “prosperity”, a temporary stabilisation which gave way to a new slump in August 1937. But the general feature of the epoch, as in the 1930s, is one of stagnation, crisis and austerity. There will be falls in living standards and continuing attacks on the working class. The basis of reforms has been undermined by the crisis of capitalism. The system can no longer afford reforms, and counter-reforms are on the order of the day. There has been a massive rise in anti-capitalist feeling everywhere, especially at the billions made by the banks and monopolies. At the same time, in the US and elsewhere, the share of National Income going to wages is the lowest level since records began. On this basis, the working class will repeatedly seek a way out of the crisis, as it has no alternative. The middle class will also be hard hit and also seek a way forward, swinging to the left and the right.

“The current struggles will be protracted, not only due to the relative strength of the workers over the ruling class (which prevents the ruling class from imposing its own solution), but because in this context the leadership of the working class acts as a brake and so prevents the workers from imposing their own solution, resulting in deadlock.”

Today, we are witnessing the on-going revolution in Egypt, where 17 million took to the streets to oust the Morsi regime. In Turkey, the revolutionary developments surrounding the occupation of the central park in Istanbul are symptomatic of the situation. This was quickly followed by millions taking to the streets of Brazil, provoked by increased transport prices. There has been a general collapse in support for bourgeois governments and institutions everywhere. “A decline in public confidence in Europe’s governing classes is wider, and it relates to technocrats as well as politicians”, states the Financial Times. “According to a Eurobarometer poll, trust in the EU had slumped from 57% in 2007 to 31% last May… Trust in national governments, meanwhile, was at 25%, down from 41%.” (FT, 3/1/14) This is a direct reflection of the crisis, mass unemployment and falling living standards. The ruling class dread that what has happened in Egypt, Turkey and Brazil, could easily happen in Europe. We are facing the perspective of world revolution, if we take the process over the next 5, 10 or 15 years. This is a situation that we predicted long ago would emerge, but for certain reasons, was delayed for a whole period. The contradictions have now burst through to the surface.

For an understanding of the processes unfolding on a world scale, we recommend reading the World Perspectives by the International Marxist Tendency, which can go into far more detail. They provide a background to events that will unfold in Britain in the coming period.

British Capitalism

British capitalism, once “the workshop of the world”, has been reduced to a second rate power. In many ways, the “workshop” has now become a centre for international finance and speculation, which served to partially mask Britain’s decline. The British ruling class, given its short-sightedness, has presided over a near collapse of its industrial base. This was due to the special crisis of British capitalism and the failure of the British ruling class to invest in productive industry. The decline of British capitalism, in turn, has been reflected in the degeneration of its ruling class and, above all, its political representatives. This was particularly the case under Thatcher, who wanted to “rebuild” Britain on financial services and international banking, while allowing industry to go to the wall. Thatcher represented the dominance of finance capital, the most short-sighted sector, which increasingly rested on speculative short-term investments. While Britain suffered industrial decline, the financial sector boomed during the 1980s, especially after its de-regulation. By 2010, UK manufacturing accounted for 8.2% of the workforce and 12% of the national output.

In order to raise the declining rate of profit, the capitalists launched an offensive to squeeze increased amounts of unpaid labour from the working class through absolute and relative surplus value, namely to increase hours and the intensity of exploitation. Over the past 30 years, the working class was faced with an unprecedented onslaught on its terms and conditions, especially following the defeat of the year-long miners’ strike of 1984-5. The failure of the trade union leaders to support the miners led to a series of heavy defeats and contributed to widespread demoralisation. This, in turn, resulted in the emptying out of the workers’ organisations and prepared the way for a sharp turn to the right in the leadership of the labour movement. This shift was reinforced by the world boom for most of the Eighties and Nineties, in fact right up until the crash of 2008. This boom served to intensify the pressures of capitalism on the tops of the movement, and resulted in a turn to “moderation” and class collaboration. This was the objective basis for the success of Blairism, which saw the complete domination of the Labour Party by the right wing and the collapse of left reformism.

The trade unions, especially the tops, were also affected by this process of mild reaction. These organisations do not exist in a vacuum, but are affected by their capitalist environment and influenced by the pressure of alien classes. The leadership, which is largely divorced from the shop floor, came under the direct pressure of the ruling class and bourgeois ideology. As a result, a considerable portion was transformed into a bulwark of capitalism. The right wing trade union leaders are directly corrupted and act more or less as conscious agents of the bourgeoisie. The left wing, while subject to the same pressures, is also under the pressure of the rank and file, and therefore tend to vacillate. They have no perspective and are buffeted by events. Dominated by a feeling for “realism”, they also tend to capitulate for lack of any alternative to capitalism.

Following the revolutionary struggles of the early 1970s, the defeats of the 1980s transformed the situation. The class struggle suffered a prolonged ebb. As a consequence, the working class remained largely passive during these years, despite the increase in discontent, and attempted to find a way out of their problems through individual solutions, personal sacrifice and increasing debt. Many activists became affected by the prevailing moods. Lacking a Marxist perspective, many of these layers became sceptical and pessimistic and dropped out of activity. The fall of the Soviet Union seemed to seal the fate of this generation. These were the years of mild reaction, dominated by the ideology of Thatcher and Reagan, and then continued under Tony Blair. All the most degenerate elements came to the fore. The bourgeoisie were euphoric, especially after the fall of Stalinism. For them, it was the end of history. There was now “officially” no alternative to capitalism.

As time went on, and the squeeze on the working class intensified, the right wing domination of the unions eventually began to break down and gave rise to a partial shift to the left and the rise of the so-called awkward squad. However, this “left” was a pale reflection of even the lefts of the 1970s, let alone the 1920s. The number of strikes remained historically low. Trade union membership shrank to half its 1979 level, mainly as a result of the de-industrialisation, which affected trade union density. This was compounded by the defeats of the 1980s and the economic boom of the 1990s. The new “left” leaders had little confidence in the workers or in themselves and proved powerless to prevent the continuing onslaught against the working class.

New Labour

Blocked on the industrial front, the growing opposition to the Tories pushed the working class onto the political front. This reflected itself in the crushing defeat of the Tory Party in the general election in 1997, after being in power for 18 years, and the coming to power of a Labour government with a massive majority. The Labour leader, Tony Blair, who was the candidate of the bourgeoisie, had used this dominant position to shift the party further to the right. He began where Hugh Gaitskell left off. He represented the new generation of degenerate bourgeois careerists who had captured the Labour Party and elbowed the working class elements aside. Clause 4, the party’s commitment to socialism, was abandoned and the party leadership fully embraced capitalism and the market. The “left” collapsed and many of them simply shifted over to Blairism, which proved as simple as moving between carriages on a train. Labour was reinvented as “New Labour” by Blair. The attempt, however, to break the Labour-trade union link, and transform the party into an openly bourgeois party, failed. The party, despite the extreme rightward shift, was still based on the unions and, in the final analysis, on the working class.

Given the electoral shattering of the Tory Party in 1997, the bourgeoisie were forced to lean for support on the Labour Party. Blair was extremely fortunate. He came to power when capitalism was experiencing a relative boom. As a result, despite the continued squeeze on the working class, the Labour government was able to give certain concessions, such as the minimum wage and tax credits. This carried Labour on to victory in 2001 and 2005, but with reduced majorities and growing discontent. Blair’s support for Bush and the wars in Iraq and Afghanistan created widespread disillusionment. In policy terms, there was very little difference between the Tories and Labour. It was like during the 1950s, where this process was referred to as the “Butskellite” consensus (a combination of the name of Rab Butler, the Tory Grandee, and Hugh Gaitskell, the Labour leader).

This left some on the fringes of the movement to draw the wrong conclusions, namely, that Blair had destroyed the Labour Party as a vehicle for working class representation. Typical of such fringe groups, they lost all sense of proportion. They do not have a dialectical approach, but an empirical one. Furthermore, they fail to recognise that the Labour Party has very deep roots in the working class going back over 100 years. Without doubt, the Labour Party had certainly moved far to the right. But this was not a unique phenomenon, but had occurred at different times in the past, especially in face of prolonged ebb in the class struggle. In fact, for most of the history of the Labour Party, the right wing has dominated the leadership, mainly with the support of the right-wing trade union leaders. It was this 20-year ebb in the class struggle from the mid-1980s that had produced “New Realism” (class collaboration) and the dominant bourgeois trend, Blairism. Only on the basis of a radicalisation of the working class would this be changed, which was part of our perspective. There is no other alternative. There is no short cut to history, as some imagine. Despite some delay, this remains the perspective.

The 1997 general election defeat was the worst defeat for the Tory Party since 1832. It was a shattering blow. In an attempt to regroup and restore its position, the party went through a series of failed leaders. The Thatcher years had created an indelible stain on the Tory Party. They were regarded by most as the “Nasty Party”, and reduced to a rump of electoral support in the South East of England and the Shire counties. The Party was shattered in the North, Scotland and Wales. The election of David Cameron as Tory leaderer was an attempt to discard the “Nasty” image. Cameron’s task was to reinvent the party and give it a broader electoral appeal. The party had been plagued with disputes over Europe with the domination of the Euro-sceptics, aptly described by John Major as the “bastards”. The pro-European wing had become more and more isolated. Cameron attempted to change the agenda and image, which he managed to do, at least temporarily. The problem was that the party rested on the wild middle class reactionary elements in its rural constituencies, who resented the newcomers and their “modern” ideas. They still clung to unadulterated Thatcherism. The Cameron leadership was tolerated as long as they could win elections. If not, they would be out.

The Tory Party

In its heyday, the British Conservative Party was held up as a model of stability, as compared to the quarrelling bourgeois parties on the Continent. British Conservatism had traditionally rested on “One Nation” Toryism, based upon moderation, consensus and a shrewd understanding of strategy and tactics. This pragmatism was epitomised by the Tory Prime Minister Harold Macmillan, who stated that “if capitalism had been conducted all along as if the theory of private enterprise were a matter of principle”, and all state intervention had been resisted, “we should have had civil war long ago.” The post-war upswing of capitalism provided the basis for “class peace” and a softening of class relations. Capitalism could afford to make concessions, while resting on the trade union leaders to maintain order. This was the heyday of reformism. The forces of genuine Marxism worldwide were reduced to a tiny handful. This situation lasted for more than two decades until the early 1970s, and in particular the world slump of 1974, which finally served to break-down the social consensus.

With inflation, Keynesianism was soon abandoned in favour of “monetarism” and balanced budgets. This period was epitomised by the emergence of Thatcherism. With the introduction of “democracy” into the Tory Party, much regretted by the Tory Grandees who once ruled the party, the backward, reactionary ranks sought to influence policy and leadership. “Today”, wrote Ian Gilmour, the former Conservative Minister and theoretician, “the increase of ‘democracy’ in the Tory Party as in all other parties could threaten to make the party more responsive to the needs and wishes of its active partisans, at the expense of making it less responsive to the needs and wishes of the nation as a whole.” The term “partisans” refers to the blue-rinse hang ‘em, flog ‘em brigade of the Tory backwoodsmen and women, who have increasingly pushed the Tory party to the right. They were passionately anti-European and forced the party to become euro-sceptic. Ideas about gay marriage and the green environment fostered by Cameron were an anathema to them. Dissatisfied with the Coalition, they are tending to either drop away or look towards UKIP which appeals more to their prejudices. To regain some support and hold UKIP at bay, Cameron has been forced to drop his modernisation plans and shift towards the right on asylum, immigration and Europe. He is caught between a rock and a hard place. The 2015 general election will decide his fate.

In the future, as the crisis intensifies, deep splits will open up in the Tory Party. It is always a symptom of crisis in a social system when the ruling class itself splits in different directions. It is an indication of the impasse of capitalism. The more backward reactionary elements of the Tory Party will form the basis of a Bonapartist-monarchist wing, standing demagogically for the Nation, Queen and Country, and Law and Order. On the basis of events, this wing could split away to form a new reactionary party with growing support in the most reactionary and backward layers of society. As we have explained before, reaction in Britain will not be built around the likes of the BNP or the National Front, which have no social base. These organisations have split and have largely disappeared. The residue of support they once had has moved to UKIP. The forces of British reaction will not be based on supporters of Hitler, but will be a British-based middle class phenomenon, sporting the Monarchy and the Union Jack. This is not an immediate perspective, but a future one, based on the polarisation of society to the left and right, and the desperation of a ruined middle class. It will be linked to military conspiracies, as in the 1970s, especially with the advent of a future left Labour government. It is the music of the future, but nevertheless represents a warning to the Labour movement.

We should emphasise that the perspective of fascism in the near future is completely ruled out. At this stage, the social basis for reaction is very small. In the inter-war period, those layers that looked to the fascists, such as the students, professional workers, and civil servants now look to the left and the trade unions. Many have taken militant strike action for the first time in their history, such as the recent “strike” by the barristers. At the same time, the working class has never been as strong numerically. Some on the fringes of the movement, who lack a sense of proportion, become hysterical about the dangers of “fascism” every time the BNP or any other racist sect gets an increased vote for a council seat, running around like headless chickens. Then they set about organising a “struggle”, not led by the working class, but by a popular front alliance on a milk-and-water programme.

With the growing unpopularity of the Coalition, Cameron has tried to turn things around by attempting to engage in overseas military ventures, firstly in Libya, then more recently in Syria. However, the most recent fiasco blew up in Cameron’s face within the space of 24 hours. Cameron went from banging the drum for military strikes against Syria to a humiliating parliamentary defeat. So confident, Cameron recalled Parliament to rubber stamp the vote for intervention. The parliamentary defeat was unprecedented, and simply served to undermine Cameron’s political authority. After defeating the Labour amendment, the government thought they were home and dry, paving the way for a second vote on the timing. But with 30 Tory MPs rebelling, the government lost the vote by 272 votes to 285. This was the first time in history that a British government was defeated in Parliament on a foreign policy issue. Cameron was fuming with Ed Miliband for failing to support the government. But it demonstrated that Cameron was out of touch with public opinion, which firmly opposed action. Following this set back, the French and Americans, outmanoeuvred by the Russians, were forced to an ignominious retreat.

2008 Crisis and 2010 Election

The replacement of Blair in favour of Gordon Brown did not make any fundamental difference, as the “Iron Chancellor” simply continued where Blair had left off. The financial crisis in 2007 and the economic collapse of 2008, did however force the government to intervene reluctantly, unlike in the past, to nationalise failing banks and bailout the system. The “light touch” was replaced with state intervention not to put an end to capitalism but to prop up a failing system. Brown then put off even the talk of austerity as long as he could, fearing the electoral consequences.

In the 2010 general election, the ruling class were looking for a strong government to impose austerity. The Labour government had exhausted itself and was no longer of any use. The bourgeoisie looked to a rejuvenated Tory Party, with a big majority, to wield the axe and carry out the job.

Despite Labour’s lack of popularity under Blair and Brown, the fear of a new Tory government, still marked by Thatcherism, served to rally Labour’s core working class support. While not enough for Labour to win a majority in 2010, it was enough to keep the Tories out of office. The only way Cameron could gain power was in a coalition with the Liberal Democrats, who were desperate to take part in ministerial office, whatever concessions they needed to make. The Coalition agreement signed the death warrant for the Liberal Democrats, who were seen as betraying their principles for thirty pieces of silver. Clegg went from “hero” to “zero”. All he was interested in was in becoming deputy prime minister, no matter the cost. If the Tories did not share his “principles”, he would exchange them for theirs, including support for tuition fees. They all agreed on one thing: the working class must pay for the capitalist crisis, the deficit would be slashed, and austerity would be the central programme of the coalition government.

This act of “treachery” by the Liberal Democrats was to destroy their traditional role as a safety net for discontented Tory voters, who were in danger of voting Labour. The Liberal Democrats are the junior party of British capitalism, which was forced to give way to the Tory Party after the rise of the Labour Party. The Lib Dems retained their “radical” aura against the two “Establishment” parties, except where they have controlled local government and acted in the same brutal manner as the Tories. Their entry into the Tory Coalition has far reaching consequences in the coming election.

The slump of 2008-9 hit Britain particularly hard. Ironically, there were those who said Britain would not be affected by the slump because it rested on financial services! The opposite, of course, was true. In Britain, the slump was deeper than 1929-1931. Even now, despite the numerous false dawns, the British economy is still smaller than before the crash, lagging behind most of its rivals. Industrial production is still 10% below its pre-crisis peak. Construction is also 10% down on pre-crisis levels. Investment has fallen by 25% since 2008, and fell by a massive 5.5% alone in 2013. In 2012, the economy was 12% below the 1950-2007 trend, which reflected the deep slump in production followed by the weakest recovery on record.

Recovery or austerity?

Despite this, the capitalist apologists still talk of “recovery”. They say that 2013 started with fears of a “triple-dip recession” but ended with one of the fastest growing economies in the developed world. Firstly, growth in the developed world is anaemic. Secondly, the “spectacular” growth in Britain in 2013 is estimated at 1.9%, hardly a “boom”. Until then, it was amongst the worst performers of the Group of Seven economies. The British “recovery”, as such, is built on sand. As Spencer Dale, the Bank of England’s chief economist, asked: “Why after throwing everything bar the kitchen sink at the economy over the past few years, has the economy started to grow only now? Even more importantly, will the recovery last?” For a major bourgeois economist to raise such questions is an indication of the fragility of the situation.

While exports and trade are not growing and the trade deficit is as wide as ever, the only stimulus has been the Help to Buy scheme – and the resultant housing bubble in London and the south-east - and a temporary increase in consumption due to a fall in savings. In the third quarter of 2013, households spent 1.7% more than in the previous quarter, while wages rose by only 0.2%. With real wages falling, savings will run out at a certain point. This situation is completely unsustainable. The idea that the British economy can grow in a sustained manner in 2014 whilst Europe is mired in crisis and the rest of the world is slowing down is fanciful in the extreme. Without real productive investment, which has fallen, there can be no real recovery. The general flat-lining of the British economy is set to continue, but with inevitable fluctuations caused by particular short-term circumstances. With continuing deep austerity, falling investment, both private and public, the general feature of the economy in the next period will be one of stagnation and decline. Any partial recovery will be short-lived as the economy continues to bump along the bottom.

The Coalition demanded that the budget deficit, which had grown enormously due to the crisis, be drastically reduced. Government debt, which had also grown massively, had to be cut down. They had managed to save capitalism by a colossal bailout, now they wanted the workers to pay for it. All of this meant austerity and the biggest cut in living standards in over a century. Social spending is continually being slashed; money for local government is being butchered; hundreds of thousands of public sector jobs have been cut and more is to follow, in an austerity programme that keeps on extending. The cuts programme was supposed to end in 2015, then 2017, now in 2020. The Office of Budgetary Responsibility has noted that the government’s plans for the next parliament “will take government consumption of goods and services … to its smallest share of national income at least since 1948”. This admission means the destruction of the welfare state as we know it. The austerity is clearly set to last years, according to Osborne, if not decades. All the government’s projections have been based on unrealistic growth figures, which have to be continually revised downwards, the latest economic blip notwithstanding.

Today, according to the Institute for Fiscal Studies, only 30% of cuts have been carried through, with a further 70% in the pipeline. Local authorities have slashed services and made redundancies as budgets are drastically cut. In Birmingham, the largest local authority in the country, some 7,000 jobs have already been axed, with at least a further 1,000 jobs to go. By 2017, some two-thirds of its income would have been cut, provoking the council leader to say that the authority would not be able to meet its statutory obligations. Councils up and down the country are in a similar boat. Voluntary redundancies are followed by compulsory ones. So-called front-line services have also been affected. The cuts have affected the most needy and vulnerable sections of society, the sick, the elderly, the infirm. Benefits have been cut while people have been forced off housing benefit and disability allowances by private companies guided by draconian targets. We are witnessing the return of Victorian conditions as past reforms, seen as the basis of a civilised society, are destroyed. In London, for example, the ambulance service, in order to save money, are hiring taxis to deal with 999 emergency calls. Central London boroughs are shipping out homeless people to other local authorities to deal with, which, in turn, are making cuts. The bedroom tax is forcing people out of their homes, placing greater hardships on disabled people. Young people are especially suffering greatly under this austerity regime.

The capitalist system is forced to cut away the branch upon which it is resting and undermine its social reserves. The welfare state was introduced in the post-war period under the pressure of the working class to provide a safety net for the most needy in society. Despite its limitations, it served to provide some kind of civilised existence. As the Financial Times explained recently, the welfare state “was the core element of the European social contract that blunted political extremism and solidified support for capitalism and democracy.” The destruction of the welfare state, which capitalism can now no longer afford, will therefore mean the destruction of this “social contract”, undermine support for capitalism and increase political “extremism”, i.e. revolutionary politics.

Fighting the cuts

The crisis of capitalism puts all parties and tendencies to the test. Today, Labour councils have capitulated in the face of Tory austerity and are shamefully carrying through the cuts around the country. Rather than make a principled stand, they have become the agents of the Coalition’s austerity. There is no dented shield, as in the past; there is no shield at all. Only in a few places have Labour councillors voted against cuts, most notably in Hull. These comrades have taken a principled stand, in the face of disciplinary action from the Labour Party bureaucracy. Unfortunately, the anti-cuts movement, led by the trade unions, has failed to mobilise the latent opposition which exists in the area.

At the end of the day, it is down to the trade unions, whose members are facing job losses and attacks, to take coordinated industrial action. Only in this way can an effective anti-cuts campaign be built up. This is the only way that mass pressure can be exerted on the Labour councillors to back away from making the cuts. Without this pressure, many councillors will reluctantly accept the cuts for lack of an alternative. The introduction of payments for councillors has also served to create a gravy-train, encouraging many to “tow the line”. Only mass pressure can break this obstacle.

Again, a local campaign needs to be linked to a national campaign of resistance. However, the trade union leaders have abdicated this role. Instead of national action, they have left workers fight local authority by local authority. Clearly, the Labour Party leaders are against such a fight, but simply shed crocodile tears. They refuse to break the law and instead direct Labour councils to administer the cuts “responsibly”. If that means breaking the poor, rather than breaking the law, then so be it. Of course, they will offer bucketfuls of sympathy to the workers and blame the Tories. But they fully understand it will be the task of a new Labour government to implement the cuts when it comes to power. Such is the logic of capitalism and the bankruptcy of reformism.

Under the Coalition, living standards have plummeted and we have witnessed the biggest assault on the working class for generations. The cuts in living standards have been the deepest and most sustained since records began in the 1860s, more than 150 years ago. Energy bills have tripled since 2004, with huge price hikes in the pipe-line. Those living in fuel poverty have reached record levels of 4.5 million households. Food and transport has shot up in price and many families are feeling the squeeze. A sizable proportion are living on the edge, deciding whether to spend their meagre earnings on food or heating. Some 14 million are living on or below the poverty line, and this is set to increase. More than a million people rely on food banks. A million people have used payday loans to cover the cost of Christmas, being forced deeper into debt. Meanwhile, there are more millionaires and billionaires than ever before.

“Greece, Ireland, Portugal, Spain and the UK – countries that have pursued budget cuts most aggressively – are soon reaching the rank of the most unequal countries in the world,” states a recent Oxfam report (September 2013). According to Natalia Alonso, the head of Oxfam’s EU office: “The gap between rich and poor in the UK and Spain could soon become the same as in South Sudan or Paraguay.”

The trade unions

This brutal picture is producing record levels of discontent, frustration and rage in society. The riots in many cities in Britain in 2011, reminiscent of the riots in 1981, were an indication of this growing discontent. The mass student demonstrations over tuition fees, not seen for generations, were also a symptom of this situation. The youth, especially the student youth, are always a barometer of deep underlying moods in society. Soon after, pressure arose in the trade unions for action against the government attacks. This resulted in the biggest trade union demonstration in history and was followed by millions taking strike action over the threat to pensions. Where the TUC raised its little finger to support a lobby of the Tory Party conference, 50,000 responded to the call.

For the first time since 1926, the TUC Congress passed a resolution to examine the practicalities of calling a general strike against the Coalition. All this showed the potential for mass action, but in the hands of the TUC leaders, such potential has been squandered. 18 months later and they are still “considering” the practicalities. Even in the case of the “left” McCluskey, his support for a general strike against the Coalition is merely verbal. It is used for speeches at rallies, but is not linked to practice. Experience shows he recoils from decisive action, let alone a general strike.

Instead of coordinating strike action, the TUC has simply sat on its hands, paralysed by inaction. Different unions, mostly in the public sector, have entered the fray in one dispute after another, but with no clear strategy, except by calling a series of one day strikes. The attempts to build a united front in the public sector have been largely derailed, as the main unions went their own separate ways. Even the left unions, like PCS and NUT, failed to link up their struggles. And yet here has never been a more appropriate time for united action.

To many workers, attempts to force the government to retreat using limited forms of action seem futile. They instinctively see the need for unity. Even where unions have increased the number of strike days, the action still remains limited, permitting the employers to avoid major disruption. Single days of strike action either lead on to all-out action or they will eventually dissipate. What is the point of losing days’ pay with little result to show for? The members are then blamed by the leadership for a lack of fight. But workers are not stupid. When they see union leaders acting in a half-hearted way, it does not inspire confidence, and serves to spread confusion. Under present conditions, selective action is not a threat to employers or government, but can simply serve to wear workers down. This reflects not unwillingness to fight, but a failure of leadership to lead effectively.

The trade unions have enormous power - potentially. They could bring the government to its knees if they wanted. The PCS union alone could bring vital areas of government to a standstill. UNITE could bring the country to a halt by withdrawing its members in the power industries or transport. UNISON could also paralyse key sectors. The GMB is in the same position. They have the power, but they are afraid to use it. They panic at the very thought of taking such militant action.

Of course, we are in favour of such campaigns as UNITE’s “leverage” campaign, but they can be no substitute for industrial action. When it comes down to it, the trade union bureaucracy is terrified of an all-out clash with the employers or state. They do their damnedest to prevent such a thing. The ruling class knows what these leaders are made of. When Lloyd George met the leaders of the Triple Alliance (miners, transport workers and rail workers) he said that if they used their industrial muscle they would win. “But if you do so,” said Lloyd George, “have you weighed the consequences? The strike will be in defiance of the government of the country and by its very success will precipitate a constitutional crisis of the first importance. For, if a force arises in the state which is stronger than the state itself, then it must be ready to take on the functions of the state, or withdraw and accept the authority of the state.” “Gentlemen,” said the Prime Minister quietly, “have you considered this, and if you have, are you ready?” “From that moment on,” said Robert Smillie, the miners’ leader, “we were beaten and we knew we were.”

This sums up the dilemma and cowardice of the trade union leaders at decisive times. Instead of rising to the challenge, they capitulate for lack of an alternative. In 1974, the left trade union leaders Hugh Scanlon and Jack Jones were terrified at the movement they had unleashed. “We were starring at the abyss”, stated Jones, “so we had to retreat.” It is for this reason, as Trotsky explained, that trade unions must either become revolutionary or they must capitulate and accept the dictates of capital. In this epoch especially, there is little room for compromise.

We have seen this fact very graphically in the recent period. We had the case of the postal workers’ dispute. There was a threat to terms and conditions as a result of privatisation and the union called a strike ballot. Despite overwhelming support for action, the ballot for action came too late. The company had already been privatised before the ballot result was announced. The whole thing was a shambles, exposing the weakness of the CWU leadership, which served to hand management the initiative. In the end, the CWU leadership cobbled together a deal which involved a three-year no-strike agreement. This is exactly what the management wanted, namely, three years of industrial peace to allow the privatisation to work.

Grangemouth

However, the biggest disappointment recently was the defeat at Grangemouth, which has serious implications for the future. The defeat, dressed up by union leaders as something else, is a blow to the confidence and morale of workers, at least in the short term. The employer was seeking to impose savage changes in terms and conditions (the “survival plan”) and even closed down the plant. The workers were faced with the stark choice of either fighting the announced closure or giving in to blackmail. Instead of mobilising the workers for action, putting the full weight of the union behind the battle, the UNITE union leadership capitulated without a fight, which was the worst possible outcome. The trade unions leaders were wringing their hands about the awful employer. However, the leaders of UNITE were lagging woefully behind the situation. “We were up against a phenomenon we have never come across before”, said one Unite official, clearly shocked at what had happened. Len McCluskey, UNITE’s general secretary, denied that the union had been humiliated, saying the “ultimatum” was “not the way 21st-century industrial relations should be conducted”, as if the class war was a game of cricket.

In a war - and this is a class war - the opposing sides weigh up the strengths and weaknesses of their opponents. Ever since Ratcliffe, the owner of Grangemouth was defeated over proposed changes to pensions in 2008, the bosses have preparing the ground for a new confrontation. One does not have to have a degree in military strategy to understand this. The bosses would have taken fully into consideration the big concessions given by the UNITE leadership to employers elsewhere who threatened redundancies or closures. The deal at Vauxhalls on Merseyside, where the workers were forced to accept big changes to their terms and conditions in return for keeping their jobs, was an obvious example. This involved UNITE, who attempted to keep the concessions under wraps. The defeat of the UNITE union over the British Airways dispute is another example, where again, the workers were forced to accept significant changes to keep their jobs. These failures, dressed up as “negotiated concessions”, by the trade union leaders simply give confidence to the bosses. Weakness invites aggression and Ratcliffe took full advantage.

It is clear that Ratcliffe prepared the ground for a conflict at Grangemouth, beginning with the victimisation of Stevie Deans, one of the two full-time convenors. The union secured a big majority for industrial action over this incident, instituting a work-to-rule and overtime ban, and announced a 48-hour strike. Ratcliffe closed the plant ahead of the strike, locking out the workers. The union reacted by calling off the strike, but the plant remained closed. Ratcliffe was holding a gun to the heads of the workers and demanded that the workers agree to his “survival plan” before the plant would reopen. This included an end to the final salary pension scheme, a three-year wage freeze, cuts in bonuses, cuts in overtime pay and shift allowances, a three-year no-strike agreement, and an end to full-time union convenors on site. This constituted a draconian attack which could not go unanswered.

The bosses’ propaganda machine churned out the story that the company was in financial difficulties and losing £10 million every month. They made sure the figures were fiddled to put the plant in a poor financial light. Thus, it was the workers, who wanted to hold onto their hard-won gains, and not the bosses, who were portrayed as “greedy” and “unreasonable”.

Ratcliffe went over the head of the union and sent every worker an ultimatum: sign the new terms and conditions or else face the consequences. He attempted to split the workers, especially those in the petrochemical plant and the refinery. The union correctly told workers not to sign the new contracts and over 70% of workers followed this advice. Within a few days, management announced that the petrochemical plant would permanently close with a loss of 800 jobs. The oil refinery would also remain closed until further notice.

The employer had declared war. It was clear the union leaders were shocked at his ruthlessness. They thought they could force a deal as in the past. They failed to prepare the ground. Instead, the employer staged a provocation. But the union should never have made threats it did not intend to carry out. The fact is the union had a very powerful weapon in its hands: they had a large base in the petrochemical refinery. The plant supplied the bulk of fuel to Scotland and the North of England. An official strike at Grangemouth, linked to an occupation, could be used to send pickets to all refineries to bring them to a standstill, as in the Lindsey oil refinery dispute a few years ago. Tanker drivers are also organised by UNITE nationally. None of these drivers would have crossed an official picket line. Within a short period, the strike would have paralysed large sections of industry and brought the employers to their knees.

Initially, the workers made a call for the nationalisation of Grangemouth, which had been earlier privatised. This showed a high level of consciousness. This should have been the union’s central demand - nationalisation without compensation and under workers’ control, to take such a vital industry out of the clutches of the likes of Ratcliffe. It would have put the pro-business SNP government in Scotland, who were alarmed at the situation and working hand-in-hand with the London government, on the spot.

The example of UCS in 1971, where the workers organised a “work-in”, became a cause celebre and an inspiration to all those workers fighting closures and attacks. Grangemouth could have been the same. The difference being that the situation would have immediately escalated. The Stalinist leaders at UCS organised a “work in” and refused to organise an occupation. They also refused to spread the dispute. The dispute at Grangemouth could have been brought to a head in a matter of days! However, the union leaders managed to steal humiliating defeat from the jaws of potential victory. They have senselessly frittered away the power they had. The UNITE leadership threw in the towel, saying the workers were not prepared to fight and they had no alternative to surrender. Len McCluskey went to Grangemouth to sign the deal “warts and all” to keep the plant open and save the jobs.

“We’re not going to allow 800 jobs to go. We’re not going to allow the community of Grangemouth to become a ghost town and the security of Scotland be put in peril”, he said. McCluskey described our position as ultra-left, but we cannot gloss over this defeat. As Trotsky explained in the late 1930s, “above all, we must clearly tell the masses what’s what. It is unacceptable to play hide-and-seek.” The lack of a fight at Grangemouth has resulted in the full-time union convenors being banned from the site. It represents a humiliating climb down by UNITE. They succeeded in turning a victory for workers everywhere into a defeat, which will have a negative effect nationally.

Crisis of leadership

This whole episode reflects the crisis of leadership within the trade union and Labour movement. Where successes have been made, as in the Besna (“sparks”) dispute, the bosses were beaten back by the initiative and courage of the rank and file. If it had been left to the union official in the construction industry, who was dismissive about taking action and initially attacked the rank and file committee as “cancerous”, the dispute would have ended in defeat.

The UNITE leadership sees itself as very “practical”. But at Grangemouth, it failed to prepare for an all-out struggle, believing the conflict could be handled “the way 21st-century industrial relations should be conducted.” In fact, they had no plan or strategy, but hoped that Ratcliffe would cave in by mere threats. But threats need to be carried through or they are meaningless. The union leadership made a complete blunder. The cause of the defeat in Grangemouth certainly does not lie with the workers. They were prepared to fight. However, if there is no leadership in face of a ruthless employer, then they will see no alternative but to accept the bosses’ terms. Of course, this is not the end of the matter, far from it. At a certain point, the workers will recover from this setback and fight to retrieve their position.

Another example of the lack of leadership concerns the BAE job cuts and closure of shipbuilding at Portsmouth Dockyard. It is quite clear that the trade unions were aware of the threat a year and more in advance and did nothing to prepare. The local leadership in the Portsmouth Dockyard, as elsewhere, acted as a barrier to the movement of the workers. Despite wide public support and practical efforts by other local trade unionists, both public and private sector, no real campaign was organised and any mood among the workers was allowed to dissipate. The company has been allowed to go ahead with a largely voluntary redundancy programme, funded by the taxpayer. But workers in other sectors will learn lessons from this episode, as in the case of Grangemouth, and in time will replace the leaders who have effectively betrayed them with a fighting leadership.

UNITE is the biggest trade union in Britain with 1.42 million members. It is on the left and has enormous potential power. The ruling class, although understanding clearly the weakness of UNITE’s leaders, nevertheless fears the union’s potential strength. As a result, it has been subject to attacks by the Tories and the capitalist press, especially regarding its “leverage” campaign involving an inflatable rat. While, of course, we defend the union against these attacks from the capitalists, we do it in our own way. We want militant unions that tell the truth and defend the working class. We want unions that fight against capitalism and offer a socialist perspective. Every step forward UNITE has taken, we support. Under pressure from the rank and file, the union played a progressive role in the Besna dispute and in Crossrail. However, every step backwards, every retreat and every concession to big business, we oppose. The Grangemouth example is a case in point. We need to tell the workers the truth and not embellish the facts. Only in this way can we raise the level of understanding of workers.

Reformism without reforms

If the truth is to be told, none of the union leaders have any confidence in the working class. All of them, including the lefts, view the crisis as simply “ideological”, brought about by the actions of wicked Tories. “It is sad that you have a government locked into a particular ideological philosophy that brings so much hurt and pain to ordinary working people”, stated Len McCluskey recently in the Daily Mirror (10/9/13). The responsibility for the crisis is reduced to ideology and not the contradictions of the capitalist system. They think that simply by changing policies (or government) this will resolve the problem. They have no understanding whatsoever of the nature of the present crisis as a protracted terminal crisis of capitalism. They somehow think it is possible to return to the past. They pride themselves on being “practical”, but they are in reality the worst utopians of all. Even when they speak about “socialism”, which is seldom, it is an abstract idea with no content. Apparently, even Ed Balls agrees with “socialism”, as long as it does not refer to the economy, or in other words, does not touch the power of the capitalist class! For him, “socialism” is a responsible capitalism, based on “social justice”, whatever that means. The trade union leaders accept the continuation of capitalism. As arbiters they seek “compromise” and conciliation between the classes. However, in this epoch of capitalist crisis, there is no longer any middle ground.

In reality, the right-wing reformists are no different from the open representatives of big business. Both accept capitalism and the dictates of capital. They also argue that eliminating the deficit is the way forward, despite the fact that it will cut the market and deepen the crisis. In contrast, the Labour and trade union “lefts” simply argue for Keynesian policies, when there is no room for increased state spending at the present time. Capitalism can no longer afford such luxuries. The system demands counter-reforms! That is why all governments are cutting back on everything. It is not a personal or “ideological” question, but the logic of capitalism.

Marxists are in favour of higher wages and more spending on schools and hospitals, but we do not limit ourselves to what capitalism can afford. The lefts talk vaguely of a “programme for growth” instead of austerity, as if it is a choice on a menu. In some way, they believe we can borrow our way out of the crisis, as if the problem is simply of demand and not over-production. Firstly, we are dealing with a world crisis of capitalism, not simply a little local difficulty. Borrowing is incompatible with a policy to reduce the budget deficit. In any case, state borrowing has to be paid for and the money can only come from two sources: either by taxing the working class, which will cut into the market, or tax the capitalists, which will cut into investment. In reality, the government has already been pumping vast amounts of money into the economy, month by month, through Quantitative Easing, but to no avail. For capitalism, it is not simply about markets, but profitable markets.

In a sense, both the monetarists and Keynesians are right, but they only see one side of the problem, not the problem as a whole. Either way, they cannot overcome the contradictions of capitalism. While we attack the monetarists, we must make no concessions to Keynesian arguments, which are also attempting to square the capitalist circle. At the same time, the orthodox economists have no solution except more austerity, which aggravates the crisis.

The European capitalists are pressing Germany, which has a surplus, to expand its economy to provide a market for the rest of Europe. But the Germans are not prepared to foot the bill. It is every capitalist for himself, the devil takes the hind most! Whatever they do will be wrong. On the road of austerity, there is no way out. In fact, it will only make matters worse by cutting the market for capitalism. However, on the road of Keynesianism there is also no solution. Marxism explainsthere is no way out on the road of capitalism, as events are demonstrating. Of course, we also understand that there is no final crisis of capitalism. The system will not collapse on its own. But this crisis can last decades if they system is not overthrown by the working class. What is certain is that the “boom years” of the past are gone forever. This epoch of austerity is now a permanent feature of capitalist decline.

Trotsky on the trade unions

The trade union leaders are blind to this situation. It confirms what Trotsky said that the trade union leaders are the most conservative force in society. They are frightened of their potential power and do everything in their power to dampen down the mood. In this epoch of capitalist decline, the trade unions are faced with a choice: fight to challenge capitalism or capitulate. “Capitalism can continue to maintain itself only by lowering the standard of living of the working class”, explained Trotsky. “Under these conditions, trade unions can either transform themselves into revolutionary organisations or become lieutenants of capital in the intensified exploitation of the workers.”

“Unfortunately, no one in the upper tier of the trade unions has yet dared to deduce from the sharpening social struggle such bold conclusions as those made by the capitalist reaction,” continued Trotsky. “This is the key to the situation. The leaders of capital think and act immeasurably more firmly, more consistently, and more daringly than do the leaders of the workers – these sceptics, routinists, bureaucrats, who smother the fighting spirit of the masses.” (Our emphasis)

“The trade union leaders come out with platitudes at the very time when each worker senses a catastrophe overhead.” Our programme must be linked to the overthrow of capitalism, explained Trotsky.

“Of course, this programme involves struggle, not prostration. The trade unions have two possibilities: either to manoeuvre, tack back and forth, retreat, close their eyes and capitulate bit by bit in order not to ‘upset’ the owners and not ‘provoke’ reaction… Another route is to understand the inexorable nature of the present crisis and to lead the masses onto the offensive.”

This is our stand. Events will further transform the trade unions. Pressure will mount. Those leaders who act as a brake will be pushed aside by those who wish to fight. The unions will be a vital arena for revolutionary schooling. Our task must be to train up Marxist cadres in the trade unions.

Conditions and consciousness

“Men make their own history”, but not under circumstances of their choosing, explained Marx. Consciousness tends to lag behind the objective situation. The tradition of all the dead generations weighs like a nightmare on the brain of the living. The last sixty years of upswing and relative boom conditions, where capitalism experienced a new lease of life in the post-war period, allowing the working class to win big concessions, deeply affect the outlook of the masses.

These decades of reformist domination, in which living standards increased enormously compare to the inter-war period, certainly left its mark. “Capitalism has been portrayed as a system of continual progress and consistent improvement...In Britain the religion of capitalist progress was more potent than anywhere else. And it was just this that formed the foundation of the conservative tendencies in the labour movement itself and especially in the trade unions,” stated Trotsky in relation to problems of the British Labour Movement. In 1932, after the victory of the National Government, Trotsky explained that despite the slump, “the political superstructure in this arch-conservative country extraordinarily lags behind the changes in its economic basis. Before having recourse to new political forms and methods, all the classes of the British nation are attempting time and again to ransack the old storerooms, to turn the old clothes of their grandfathers and grandmothers inside out.”

In other words, the crisis of capitalism, despite its depth, does not mean that workers move in a straight line or draw immediate revolutionary conditions. It will take big events to wash away past prejudices. Nevertheless, things are definitely changing. The molecular processes in the minds of the masses are unfolding. However, changes in consciousness take place in a series of leaps and shocks. Workers learn not through books but through experience, explained Lenin. The capitalist crisis, and all that means, is having an effect.

The Old Mole of Revolution, to use the expression of Marx, is burrowing deep in British society. Events are hammering away at peoples’ consciousness. They know that there is something very wrong. This explains the changing mood. In every opinion poll, there are big majorities in favour of nationalising the energy companies, taking back into public ownership the Royal Mail, the railways, water companies, and other industries that were privatised. There is a growing hatred for the bankers and big business sharks, who receive millions, but who wreak hardship on everyone else. There is a growing hatred of capitalism and all it stands for, while the Labour leadership talks blandly about “responsible” capitalism.

These changes in opinion are profoundly symptomatic. They are preparing the ground for a qualitative change in the situation, which will ultimately lead to the British revolution. Today, the masses are a thousand times more to the left of the Labour leadership, who accept the market and the laws of capitalism. This radicalisation is above all effecting the youth, who are at the sharp end of the crisis.

“If David Cameron genuinely believes ‘Red’ Ed Miliband is a socialist then a new poll suggesting the public are far to the left of Labour and want state control of key sectors of the economy, will be enough to provoke nightmares of a Marxist revolution in Downing Street”, stated an article in the International Business Times (5/11/13)

Support for nationalisation; sympathy for revolution

Fears about this new radical mood were expressed by Alistair Heath, the right wing editor of CityAM, who is deeply distressed at the situation. “Slowly but surely, the public is turning its back on the free market economy and embracing an atavistic version of socialism which, if implemented, would end in tears.” He is referring to a YouGov opinion poll for the Centre for Labour and Social Studies, which revealed that voters do not believe that either party is on the side of working people, including 38% who didn’t see either Cameron or Miliband as being on the side of working people. This says a lot of how people perceive the Labour leader, who is regarded as closer to the Tories than to themselves. Some 67% believe Royal Mail should be in state hands, as against 22% who back privatisation. Surprisingly, by 48% to 43%, even Tory voters refused to back privatisation. The same goes for the railways, public utilities and energy companies. 80% said they were not personally benefiting from the “recovery”, with 70% of Tory voters feeling the same way.

But Heath’s conclusion is very interesting! “Supporters of a market economy have a very big problem”, he says. “Unless they address the concerns of the public, they will be annihilated.”

This is a warning to the ruling class. But they are powerless to intervene. It says a lot about the state of Britain today. While industrial action remains on a low level, the level of hatred for capitalism is extremely high. We cannot gauge the level of radicalisation by strike statistics alone. That would be formalism. We need to take a broader view involving the picture as a whole. These subterranean feelings are preparing an explosion. We must not be taken unawares. We are in a period of sharp and sudden changes.

It is no accident that the interview with Russell Brand, where he came out for a revolution to overthrow the economic and social order, went viral on YouTube with over 10 million views. He is expressing a view which resonates with millions of people, especially the youth.

Even the Church of England, once described as the Tory party at prayer, has issued warnings about the gulf between rich and poor and the growing opposition to money making. These warnings are nothing to do with the plight of the poor and everything to do with propping up capitalism. The Church is part of the Establishment and sees the need to call attention to this dangerous state of affairs in society. The chief function of morality is the justification of capitalism, dispensed through the services of professional petty-bourgeois theoreticians and moralists.

Paradoxically, the crisis of British capitalism precisely reflects itself in a crisis of morality, the Church, and the pillars of the establishment. The crisis in the Church of England over women bishops and gay rights is followed by the scandals over MPs’expenses, scandals over phone-tapping by press barons, corruption involving Police Chiefs, cover-ups over Hillsborough and Orgreave, and the personal involvement of the Prime Minister with the likes of Andy Coulson and Rebekah Brooks, who are currently on trial. We are witnessing a profound crisis of the whole capitalist Establishment, even touching members of the Royal family and their dealings with corrupt businessmen and rotten regimes. This is dangerous for the ruling class who will need to use the monarchy as a reserve weapon in the future.

This monstrous cesspit is being increasingly exposed for all to see. It reflects the rottenness of British capitalism. This is extremely dangerous at a time when the authority of the Establishment must be used to justify and enforce the biggest assault on living standards in generations.

The Labour Party

At a time when capitalism is more and more exposed as a bankrupt system, the Labour leaders rush to defend capitalism. “I am for the reform of capitalism”, says Ed Miliband in an interview in the FT, “not for the overthrow of capitalism.” This is a law. Like all reformists, Miliband is a faithful servant of capitalism. In times of crisis, they become the greatest defenders of the system. Everything is said and done to justify capitalism and maintain the system class rule and exploitation.

When Miliband gets into office, which is the most likely perspective, his programme to prop up capitalism will mean savage attacks on the working class. The reformists do not dictate to the economy, the economy will dictate to them. It is not good intentions, but the laws of capitalism that will prevail. The road to hell is paved with good intentions. A new Labour government, in times of capitalist crisis, will be mercilessly squeezed, on the one hand, by pressure from the working class, and on the other, by pressure from the capitalist class. Early on, it will be a government of crisis caught between the millstones of the class struggle.

In the past, the reformists would at least promise some reforms in order to get elected. Now they have become “realistic” statesmen and women. They do not wish to raise false hopes and expectations that they cannot satisfy. The capitalist cupboard is bare. They have only promised to implement policies that do not cost money – in other words hardly anything. Of course some things will be welcomed. For instance, they have promised to abolish the bedroom tax. They have also promised to freeze energy prices for 20 months, which again, has widespread support. They will “review” the minimum wage and also a living wage, which, Miliband believes can be funded through tax breaks for businesses. But this is utopian.

In any case, Miliband intends to continue with the wage freeze in the public sector, affecting some six million low-paid workers. Labour will increase the amount of nursery places, financed by a bank levy. They promise to build 200,000 homes, by exerting pressure on the building companies to build more houses. But this is a dream if there is not sufficient profit from building houses. Today house building is at its lowest level since the First World War. At the same time, the Labour leaders have promised to be even tougher on those living on welfare benefits.

Instead of “Tory” cuts they want “Labour” cuts, and have promised to continue with the Tory spending cuts in the first year of office. “There will be no reversal of Tory spending cuts”, states Ed Balls, the Shadow Chancellor, emphatically. “The next Labour government will have to make cuts too.” This statement is aimed not at the working class, but is an attempt to reassure big business. A Labour government will not flinch from its responsibilities. Very quickly, all “reforms” will be abandoned in favour of “balanced budgets” and “sound finance”.

While we can never be certain about the outcome of the next general election in April 2015, it seems likely that the Labour Party will win, possibly without an outright majority. Although Labour is ahead in the opinion polls, there is no great enthusiasm for Labour. Workers and especially young people have been increasingly alienated from “party” politics, including Labour. Westminster is distant from real life. Politicians are viewed as careerists and out-of-touch. A recent Guardian/ICM poll showed that nearly 50% are “angry” with politicians.

As the cuts continue to bite, bitter discontent with the coalition parties will continue to grow. Their call to “safeguard the recovery” will sound completely hollow, when there is no recovery for the mass of workers. The Liberal Democrats will be crushed, squeezed by the polarisation between Labour and the Tories. They will suffer the greatest blow. Their “radical” image has been shattered, especially amongst the youth. The Coalition with the Tories has been the kiss of death. Many former Lib Dem supporters will shift to the Labour Party, which will benefit from the general opposition to austerity. When the time comes, most workers will hold their nose and vote Labour to get the Tories out.

The Tories and Europe

The Tory Party has not won a general election since 1992. It only managed to climb into power in 2010 in a coalition. The frictions with their Lib Dems over electoral reform resulted in the Lib Dems blocking boundary changes the Tories had hoped for. The rise of UKIP has also eaten into Tory support, forcing Cameron to offer a referendum of Europe after 2017 if he is returned to power. He is prepared to risk Britain’s membership of the EU for electoral advantage, much to the annoyance of big business. Cameron is prepared to jettison the “national interest”, namely the interests of British capitalism in Europe, in order to get back to power.

With 40-50% of British exports going to the European Union, the interests of British capitalism are firmly in Europe, and not outside. This is the view of the big monopolies. However, for short-term gain, Cameron is increasingly forced to lean on his euro-sceptic base, which is a dangerous game to play.

The Tory party has never succeeded in casting off its “Nasty” party image. The shadow of Thatcher, hated by millions of workers, still dominates the party, as was seen at the last party conference, where gushing eulogies were delivered to their dead former leader. At the conference, traditional deep Tory blue replaced Cameron’s green tree-like modern image. Measures against immigrants and benefit scroungers drew the greatest applause from the aging mob of reactionaries.

In the distant past, the Tories dominated Scotland and had a base in the Northern towns and cities. Now that has been completely undermined, a legacy of the Thatcher years. The Tory Party is therefore likely to get fewer votes than in the 2010 election. A recent opinion poll by Lord Ashcroft found that more than a third of those who voted Tory in 2010 say they would not do so in an election tomorrow. Half would defect to UKIP. The only way the Tories can regain office is if the Labour Party leaders succeed in throwing away the election, which cannot be totally excluded.

Electoral prospects

Over the past period, the electoral prospects for Labour have improved with its concentration on the standard of living crisis. This has certainly struck home with the ever-squeezed electorate. The promised freeze on energy prices, together with Miliband’s attacks on the energy companies and construction corporations, have certainly resonated with many. Prior to this, Miliband’s whole strategy seemed aimed at losing the election. He refused to make any commitments for fear of raising peoples’ hopes. He made it plain that a Labour government would not reverse the cuts and would continue with austerity. He did everything to dampen down the mood, while putting out an olive branch to the Liberal Democrats, especially Vince Cable. At best, he was looking for a Lib-Lab coalition or a minority Labour government resting on Liberal support.

This feeble policy was giving rise to massive discontent in the working class, especially the trade unions. Miliband was eventually forced to change tack and offer something more, however small. On this basis, with Labour offering something positive, the party could win at the next general election. The problem is that Miliband, and the leadership as a whole, are frightened of winning with a big parliamentary majority. They can see what is coming and are terrified of what they see. They can see the mounting class pressures.

A big Labour majority would take away their excuses. In fact, the pressures would mount for greater action to solve the problems of the working class. This is a nightmare scenario for the Labour leaders and the ruling class. That is why Miliband prefers a coalition with the Liberal Democrats, which can act as a brake on such pressure. He needs however to give Labour’s ranks something positive to offer the electorate. This is a difficult balancing act. What Miliband wants and what he gets may be two different things. This explains his dithering and zig-zags.

It cannot be ruled out that the Tories could scrape back into power, in a possible coalition. But they would face massive opposition and they would be perceived as a weak government. This is not at all satisfactory for the ruling class who need a strong government under present circumstances. The austerity programme needs to be intensified. 70% of cuts still have to be introduced. A new world slump is not far away. They will face a referendum over Europe, unless the Lib Dems can block it, which will create a new crisis. Another Tory government or coalition will face increasing anger. Pressures will mount in the trade unions to act decisively. The working class would swing back from the political front to the industrial front. New fierce class battles would be on the order of the day. Even the question of a general strike will be posed more forcefully, as frustrations mount with the dithering of the union leaders.

A Tory victory would spread demoralisation in the Labour Party ranks. There could be a new leadership election, but given the lack of a left candidate, there would not be a fundamental change in direction. Dissatisfaction would mount in the unions, which would attempt to exert greater influence. Workers for the time being would turn their attention to the industrial plane.

While the capitalists would see the problems with a weak Tory government, they would not be enamoured with the prospects of a Labour government. Despite all the reassurances from Miliband and Balls, the bourgeoisie can see what lies behind the Labour Party. They can see the increased pressures from the trade unions and the working class generally. Nevertheless, they may feel it time for the workers to be sent to the school of Miliband to learn a few lessons, and allow the Tory Party to recover under a new leader.

Miliband, Blairism, and the Unions

The attempt by Miliband to use the Falkirk affair to introduce party “reforms” (in reality counter-reforms) shows how much he is afraid of greater trade union influence. It also shows how susceptible he is to the wishes of big business. He is nevertheless unlikely to succeed in weakening the trade union base of the party, given the opposition of the trade union leaders. Under pressure, it now seems that these “reforms” have been kicked into the long grass, much to the annoyance of the Blairites and the ruling class. If Blair could not break the Labour-trade union link, it is clear that Miliband will not be able to do so. He has less authority and faces far greater opposition from the trade unions than Blair.

In the eyes of big business, Miliband has many weaknesses. He is not Tony Blair. He appears too unreliable and open to pressure from below. He is not viewed as a man able to carry through draconian measures with a steady hand. If Labour comes to power, big business will exert extreme pressure to ensure the government remains faithful to capitalism and carries on where the Coalition left off. The ruling class will rest on the Labour government to do its bidding. If elected, Miliband and Balls will seek to carry out the dictates of big business, as all previous Labour governments have done. The crisis is too deep to offer any respite. Nevertheless, there will be massive pressures from the working class, which will lead to big parliamentary revolts and splits.

While Miliband may offer some initial concessions if he gets to power, they will not buy him much time. He has already committed himself to carrying out the Coalition’s austerity plans for the first year in office. This will be extended indefinitely. Balls has willingly surrendered his spending plans to the Office of Budgetary Responsibility for their approval. These policies will cause howls of protest from the trade unions, which will in turn be under pressure from their angry members. Very quickly, the unions will be forced into opposition to the Labour government. This will place tremendous pressure on the Parliamentary Labour Party, especially the new intake, who will be more responsive to the unions. Pressures from outside will eventually lead to the crystallisation of internal opposition. Some figure will break ranks and reflect these pressures, around which a new left wing is likely to form.

The Labour Party is not at this stage yet, however. Bureaucratic policy forums and “reviews” have replaced largely democratic conferences. While there is latent discontent in the party, it remains subdued. This is inevitable. The machine still dominates. The years of right-wing domination, first under Kinnock and then Blair, have had their effect. The number of working class Labour MPs has been reduced to a handful, and replaced by professional careerists. The PLP is more out of touch than ever before. The small number of youth in the party has been kept under control and largely dominated by upcoming careerists.

As we explained before, the left in the Labour Party will be built on the basis of the fresh winds of heightened class struggle outside the party that will lead to a rebirth of the left. The class struggle still remains – for now – relatively subdued. The trade union leaders have played a baneful role in this regard. At this stage, the working class is largely marking time and absorbing the experiences of the past.

This situation will inevitably change, as beneath the surface there is enormous anger and rage. We have already had the biggest trade union demonstration in history. Three million workers were involved in strike action over pensions. With the revival of the class struggle and the crystallisation of opposition within the movement, we will see the re-emergence of a mass left tendency inside the Labour Party. At a certain stage, the right wing will be vomited out and the left will take over the party. It will be events that will transform the situation, breathing new life into the labour movement and build the left, as was the case in the 1970s.

Protracted class struggle

The mass revolutionary party will be built not on sectarian lines, but on the basis of historic events. These events will transform the working class and eventually transform the mass organisations, starting with the unions. These organisations will be transformed and retransformed on the basis of events. There will be mass splits and mass left, possibly even mass centrist, currents formed. Centrism is a political current in the process of breaking from reformism and moving in the direction of Marxism. The mass revolutionary party will be built, as in the period 1919-23, through mass left splits in the traditional organisations of the class.

This process will not be an immediate one, or one of linear progress. Rather, there will be a drawn out period of ebbs and flows. This protracted situation is bound up with a number of factors. The trade union and labour leaders act as a colossal brake, more so now than in the past. They consciously sow confusion and spread demoralisation in an attempt to maintain their control. Rather than unite the movement, they act to divide it. Following the movement over pensions, the trade union leaders intervened to force through a deal with government and deliberately derail the struggle. At every step, they have sought to maintain this disunity.

The level of degeneration of the workers’ organisations is unparalleled. The corrosive long-term effects of the boom of capitalism over two generations have also left their mark. Thus, apart from late 2011, there have been no coordinated mass struggles. Each attempt has run into the sand. The reason why the Coalition government has lasted till now was a result of the passivity and sabotage of the trade union leaders. Of course, this situation cannot last indefinitely. Mighty pressures are building up in the working class, but are not yet reflected in the mass organisations.

The attempt by UNITE to “reclaim the party” for the working class is a step forward and is an indication of how the process will occur in the future. We predicted this development. However, the attempt to carry this through bureaucratically from the top can lead to all kinds of complications. Falkirk was an example of this. Instead of a political campaign to build the active membership and involve trade unionists in the party, union members were recruited simply as voting fodder to select a favoured candidate.

While we support UNITE’s efforts in attempting to change the party, we also explain that this must be part and parcel of a campaign for socialist policies. We stand for the maximum involvement of workers in the party, not backroom deals. We push forward the idea of a “workers’ MP on a workers’ wage”, to counter the careerism from the trade union bureaucracy. We demand the adoption of a socialist programme as the only alternative to capitalist policies and the only way to generate real enthusiasm and build the Labour Party.

Scotland

Events in Scotland in 2014 will be coloured by the Independence referendum. We are against the status quo, which has failed to satisfy the aspirations of the people of Scotland. We are in favour of the right of nations to self-determination, and believe in the maximum autonomy for Scotland, as part of the fight for a socialist Britain and world federation of socialist states.We believe an independent capitalist Scotland will offer no solution to the problems facing the people of Scotland and will only serve to divide Scottish workers from their brothers and sisters in the rest of the United Kingdom. That is why we argue for a “no” vote in the referendum.

While we reject the arguments of the nationalists, we are equally critical towards the so-called official “No Campaign”, a popular front led by Alistair Darling. Their arguments are based upon maintaining the union on a capitalist basis, which has little attraction, especially for the youth. The support of the Conservative Party has proved to be the kiss of death for many.

The coalition government is very unpopular north of the border and the Tories have been repeatedly rejected by Scottish voters. Lead by Darling, the No Campaign has been dubbed a “headless campaign”. He has correctly been described as “dreary” and “almost comatose”. But there are very few willing to take the job. While the Scottish Labour Party forms the core of pro-union political support, its leader, Johann Lamont is more of a blur than the invisible Alastair Darling. A recent poll in the Herald found that 40% of voters did not know who she is.

The opinion polls suggest that independence will be rejected by a sizeable majority, although events can cut across this. The suggestion by Cameron and Osborne that the next Tory government would carry through a further £25 billion in cuts was seized upon by the nationalists to argue for independence. The “No Campaign” offers no real alternative to just more of the same. It has therefore no attraction. The offer of independence has the appearanceof seeming to offer an alternative, despite the reassurances of the nationalists to maintain the monarchy and the pound. The feeble “No Campaign” just plays into the hands of the nationalists, .

Nevertheless, the rejection of independence still seems most likely. Attention would again focus on the nationalists and their inability to offer a way forward. The Scottish Labour Party would also face a crisis given its political impasse under the present leadership. A victory for independence would produce a constitutional crisis. The eventual establishment of an independent Scotland would solve nothing and could be an economic disaster given the fragility of the economy. It would be a set-back for the struggle for socialism in creating divisions in the working class but would soon expose its inability to solve any of the problems on a capitalist basis. While it would boost the nationalists in the short term, events would serve to expose their real role and, with a new slump, lead to a radicalisation in Scotland. We would fight for a socialist federation of the British Isles, as a step towards a socialist united states of Europe.

The youth

The capitalist crisis has had a massive effect on the youth. They have been the hardest hit. Youth unemployment stands at nearly one million or 21%. The number of under-25s in work has fallen rapidly since 2008, reaching 49.9% in recent months, the lowest figure since records began in 1992. Long-term unemployment is also increasing. The number of workers aged 18 to 24 and unemployed for over two years trebled since the start of the recession to 115,000—the highest figure since July 1994. A third of those unemployed, a quarter-million youth, have been jobless for more than a year. More than 650,000 young people are classified as NEETs, that is, not in education, employment, or training, or 9% of the total.

Youth unemployment is pushing increasing numbers into further education or training, with the number of full-time students up 10% since the onset of recession. These youth must shoulder a huge student debt burden and face a stagnant job market after graduating. Most graduates cannot find work commensurate with their skills, with 47% of recent graduates in unskilled jobs, up from 39% in 2007 and 27 per cent in 2001. Student debt burden has increased 60% since 2007, as the tuition fee cap was almost tripled in 2012 to £9,000. Universities now charge an average of £8,400 per year, in addition to living expenses.

Youth have also been targeted for cuts to housing benefit and even the loss of benefits themselves. Cameron plans to eliminate housing and unemployment benefit for under-25s, which will condemn hundreds of thousands to continue living with parents or homelessness.

Under these conditions, where the youth are being systematically downtrodden and face a bleak future, they become radicalised far more than other sections. Youth are more disillusioned with capitalism. They are increasingly alienated from “party” politics, reflected in many refusing to vote in elections. This disenchantment is getting worse and worse, and was reflected in the views of Russell Brand. Politicians are seen as out of touch liars, establishment figures, who are generally corrupt.

The youth have been turned off by “politics” and New Labour politicians. They see no difference between the parties. Rage has become the dominant sentiment. Such layers have already gone beyond reformism and want to challenge the capitalist system. A large number are drawing revolutionary conclusions.

Economic, social, and political turmoil

The slump of 2008-9 was only a foretaste of what is to come. It is not the end of the process but the beginning. “The new crisis, which promises to be more terrible than the last one, will deliver a terrible blow to all these illusions,” remarked Trotsky before the war. Events will shake up the working class and prepare it for its historic role. There will be no shortage of economic, social and political turmoil in the coming period. Such is the stuff of revolution and of counter-revolution, which characterises our epoch. Trotsky once remarked that those who are looking for a comfortable existence have chosen a bad time to be born. There has never been a better time to fight to change society.

British capitalism is one of the weakest links in the chain of European and world capitalism. Here, the deepening crisis poses a grim future for the working class and young people. In spite of their hold on property, and the mass media and the tradition and habits of obedience, the ruling class cannot control and regulate the development of events. There are many upheavals in front of us. Ahead of us lies a period of protracted struggle as in Spain 1931-37 where our tendency will be built and tested. However, over the next decade or so, the crisis will push things to the limits. There will come a point when the ruling class will want to settle accounts with the working class once and for all.

The working class and its organisations will go through transformation and retransformation. Mass left wing and centrist currents will emerge. As Trotsky explained in “Where is Britain Going?”, the working class will in all probability have to renew its leadership several times before it creates a party really answering the historical situation and the tasks of the British proletariat.

Commentating on the situation in Britain in the early 1890s, Frederick Engels wrote: “the epoch is pregnant with change.” We can make the same observation today, only more so. He went on to say that there were periods in which 25 years can seem like a day, as in the long post-war period. But, on the other hand, there are periods when there can be days in which 25 years are compressed. This is the situation we are in now.

The events in Britain and worldwide are and will have a major impact on the consciousness of the working class and youth. Although the situation will be protracted, given the strength of the working class and the weakness of the ruling class to impose its solution, there will be sharp and sudden changes in the situation. The crisis will at a certain point become pre-revolutionary, as in Greece today. After all, Greece is only a mirror reflection of Britain in the future. Then the situation can open up in the direction of a revolutionary one, where there occurs a profound break in consciousness.

Of course, the situation will not be a straight line. Revolutionary waves are likely to be followed by periods of lull, despair and indifference, even reaction. This is part of the ebb and flow of the period. But these, in turn, will be followed by even greater movements to the left and struggles of the working class.

For decades, the Marxists have been swimming against the stream. For the most part, the important thing was to keep alive the ideas, methods and traditions. That was the major contribution of Ted Grant. Now the situation has begun to change, as we predicted. We are beginning to swim with the stream. We have the correct perspectives, ideas, methods and traditions. Our aim is nothing less than the end of capitalist barbarism and complete material and spiritual liberation of humankind.