Turmoil in Britain

Although initially written in December last year (and therefore already overtaken in places by new events and developments, most notably the announcement of the general election), this document written by Socialist Appeal provides an analysis of the main processes affecting British politics and society, as well as outlining the fundamental contradictions facing the ruling class and leaders of the labour movement. It is clear that the current political period in Britain is incredibly intense, and that a radical analysis and perspective is needed more than ever before.

British Perspectives 2017

“The fall of the Berlin Wall, on November 9th 1989, was when history was said to have ended. The fight between communism and capitalism was over. After a titanic ideological struggle encompassing the decades after the Second World War, open markets and Western liberal democracy reigned supreme. In the early morning of November 9th 2016, when Donald Trump crossed the threshold of 270 electoral-college votes to become America’s president-elect, that illusion was shattered. History is back—with a vengeance.” (The Economist, 12th November, 2016)

The purpose of this document is to update our perspectives in light of new developments. The situation in Britain is developing much faster than even we dared to predict. Of course, it is impossible to predict exactly the tempo of events. The task of Marxists is to outline the general processes developing in society as a guide to action. This document should therefore be read in conjunction with our previous articles on British Perspectives and World Perspectives.

In January 2016, the Royal Bank of Scotland announced that the prospects for the coming year were “cataclysmic”. While there has been no new world slump or Great Depression, as of yet, political events can certainly be described as “cataclysmic”. First with Brexit and then with the election of Donald Trump, everything has been turned on its head. Some have described it as “the politics of insurrection”, a very apt description of what is unfolding.

As we explained, the deep crisis of capitalism has opened up an extremely turbulent period, the most turbulent in history. This is affecting society politically, socially, economically and in every other way. This extreme turmoil is now plain for everyone to see. This is an epoch of sharp and sudden changes, in itself a reminder that the capitalist system has reached its limits. “We are sort of reaching the limits”, stated Agustin Carstens, governor of the Bank of Mexico. “In many countries monetary policy activism has run its course.” One by one the pillars of a previous period of relative stability are being destroyed.

This “new normality”, also reveals itself as a crisis of reformism, opening up unprecedented possibilities for the revolutionary tendency. Our task is to understand the present epoch and analyse the situation as it unfolds and then draw all the necessary conclusions.

The shock of Brexit was followed by the election of Donald Trump, whose “America First” policy threatens to end the 70-year-old US world order imposed after the Second World War. This political earthquake, which is shaking the capitalist world, epitomises this fundamental change taking place on a world scale.

“Donald Trump’s victory is no ordinary shock. For once the word seismic is merited”, explained the Financial Times. These events, which seemed impossible, are a reflection of the powerful underlying current of discontent and anger that has been building up within society.

The slump of 2008 was a turning point. Ironically, the bourgeois commentators following the 2008 slump were crowing that the Left was dead. These superficial “experts” were deceived by the slowness of the reaction of the masses, who were temporarily disoriented by the suddenness of the collapse. “Where is the worker backlash?” they asked. “Where is the rebellion?”

Human consciousness is very conservative and it requires time for the masses to absorb the meaning of a new situation. But sooner or later it catches up with a bang. This is an expression of the dialectical law of the transformation of quantity into quality. Now this delayed backlash has arrived with a vengeance.

This does not necessarily take the form of strikes, although there have been between 30 and 40 general strikes in Greece over the past few years. But there is a dramatic political radicalisation, reflected in a furious reaction against the status quo. There has been an accumulation of anger and rage against a system that produces obscene riches together with an accumulation of misery, suffering and the agony of toil.

This development, which was predicted by our tendency, was delayed for a long time, but history moves at its own pace. The contradictions take time to work themselves out. The capitalists in turn take measures to put off the crisis, but they eventually run out of the means to do this. Now the system has reached a blind alley.

As Marx explained, when a social system cannot develop the productive forces, it enters a into period of crises and revolution. This is precisely the character of the present epoch. The old order that was created in the post-war period is crumbling. And to use Marx’s expression, the mole of revolution has been busy burrowing away and it is now pushing its way through to the surface.

The system has not experienced a serious revival since the 2008 crisis. This is what makes it different to previous crises, including 1929-33. Instead, a period of “secular stagnation” has set in. World trade, the main springboard for the capitalist upswing for more than 25 years, has dramatically slowed down and now threatens to go into reverse. This is deeply disturbing for the bourgeoisie.

In the past, it was world trade, which expanded much more rapidly, that pulled along world production. This is no longer the case. “Globalisation”, which extended and deepened the world market for a whole period, now threatens to go into reverse. The adoption of “America First” policies in America threatens to provoke a wave of protectionism throughout the world.

We must remember that it was precisely protectionism, competitive devaluations and beggar-thy-neighbour policies that led to the Great Depression in the 1930s. Protectionism is basically an attempt to export unemployment. That is the real meaning of Trump’s slogan: “America first”. He intends to “make America great” at the expense of the rest of the world. But as each capitalist power attempts to unload the problems onto its neighbour, the outcome will be the outbreak of trade wars that can undermine the whole edifice of globalisation, creating an unstoppable downward spiral in the world economy.

This is viewed by the strategists of capital with growing alarm. Robert Kagan writes in the Financial Times: “None of this should sound far-fetched. This narrow, interest-based approach to foreign policy was dominant in the 1920s and 1930s. It is the preferred strategy of many American academics today. More importantly, it plays well with an American public that has come to believe the US has been taken to the cleaners. Mr Trump promises they will not be taken for suckers any more.

“How long can this new era last? Who knows? Americans after 1920 managed to avoid global responsibility for two decades. As the world collapsed around them, they told themselves it was not their problem. Americans will probably do the same today. And for a while they will be right. Because of their wealth, power and geography they will be the last to suffer the consequences of their own failures. Eventually they will discover, again, that there is no escape. The question is how much damage is done in the meantime and whether, unlike in the past, it will be too late to recover.” (Financial Times, 19th November 2016)

In the past, capitalism was able to move forward and develop by creating its own market. The capitalists reinvested the surplus value extracted from the unpaid labour of the working class, which developed the productive forces and allowed the system to advance. But sooner or later the market becomes saturated. Now there is massive overproduction on a world-scale, which they call “excess capacity”.

In such a situation there is no incentive to invest to create new capacity, since new investment will only make things worse. The capitalist system finds itself in a blind alley from which it cannot escape. “The real barrier of capitalist production is capital itself”, explained Marx. The crisis of capitalism is not created by external factors, as the bourgeois economists imply, but is born out of the internal contradictions of capitalism.

This however does not mean that capitalism will automatically collapse. It will endure until it is consciously overthrown by the working class. They will try everything to escape from the crisis. But the consequence will be the driving down of living standards, to squeeze more surplus value from the workers. The perspective is one of a long period of austerity. That is a finished recipe for class struggle everywhere.

Contradiction is piled upon contradiction. The economic witch-doctors have reduced interest rates to zero and even to negative levels, whilst Quantitative Easing (QE) – pouring money into the system - has also been tried and failed. Out of desperation the European Central Bank and the Bank of Japan are continuing to pour money into the economy through QE. But such measures simply create distortions in the economy and create further contradictions by feeding speculative bubbles. As a result, world indebtedness continues to rise inexorably, preparing the way for a new and even deeper collapse.

Political Instability

Every attempt to restore the economic equilibrium serves to destroy the social and political equilibrium. The election of Trump in the United States was simply the latest in these shocks. It will not be the last.

“Start with the observation that America has voted not for a change of party so much as a change of regime”, explained the Economist. “Mr Trump was carried to office on a tide of popular rage. This is powered partly by the fact that ordinary Americans have not shared in their country’s prosperity…

“Anger has sown hatred in America. Feeling themselves victims of an unfair economic system, ordinary Americans blame the elites in Washington for being too spineless and too stupid to stand up to foreigners and big business; or, worse, they believe that the elites themselves are part of the conspiracy. They repudiate the media—including this newspaper—for being patronising, partisan and as out of touch and elitist as the politicians. Many working-class white voters feel threatened by economic and demographic decline. Some of them think racial minorities are bought off by the Democratic machine. Rural Americans detest the socially liberal values that urban compatriots foist upon them by supposedly manipulating the machinery in Washington. Republicans have behaved as if working with Democrats is treachery. Mr Trump harnessed this popular anger brilliantly.” (The Economist, 12th November 2016)

The bourgeois strategists fear that the inevitable disillusionment with Trump at a certain stage can lead to the emergence of even more extreme forces. “The danger with popular anger, though, is that disillusion with Mr Trump will only add to the discontent that put him there in the first place”, explained the Economist. “If so, his failure would pave the way for someone even more bent on breaking the system.”

The same processes exist everywhere. The backlash against the status quo (at root against capitalism) has fuelled the rise of anti-establishment parties to the right and to the left. In the USA, it was reflected in the rise of Donald Trump and Bernie Sanders. The Sanders movement is part of the same process and is more significant from our point of view.

Millions of Americans looked to this self-professed “Socialist” as he lambasted Wall Street and the bankruptcy of capitalism. “We need a political revolution against the billionaire class”, he said, as he spoke to millions of voters. It is quite incredible that in the land of the McCarthyism and extreme anti-Communist propaganda, 69% of those under 30 years-old said they would vote for a Socialist for the President of the United States.

In a Gallup poll, 49% said they would vote for a Socialist. “Both Mr Trump and Mr Sanders are running from the fringes of their parties”, explained Gideon Rachman in the Financial Times. “Both have said things that would be regarded as political suicide in a normal year. Mr Trump is probably the most openly racist candidate since George Wallace, the segregationist, in 1972. Mr Sanders calls himself a ‘democratic socialist’ – in a country that has always rejected socialism. Yet the fact that both men are happy to smash rhetorical taboos has strengthened their respective claims to be genuine outsiders. That seems to be what voters are looking for…

“What is already clear, however, is that America’s political class is only beginning to grasp the depth of the anti-establishment mood that is gripping the US. Almost eight years after the financial crisis, this mood seems to be growing in strength, not weakening. President Barack Obama’s announcement last week that the US unemployment rate is now below 5 per cent barely registered on the campaign trail…

“If America’s yearning for anti-establishment leaders from the political fringes continues, the implications will be profound — for the US and for the world. The system, dominated by the Democrats and Republicans, has always rejected the political extremes. That means that, behind the day-to-day dramas, the nation has benefited from a deep political stability, which has contributed greatly to its economic strength and global power. If America’s immunity to extremism is ending, the whole world will feel the consequences.”

And these consequences will be far-reaching. The same process of anger and rebellion against the establishment exists very much in Europe. The rise of SYRIZA in Greece (before the betrayal of Tsipras), the rise of Podemos in Spain, Brexit and the rise of Corbyn in Britain, the Independence Referendum in Scotland and the demise of the Scottish Labour Party, the rise of the Front National in France, the rise of the Alternative for Germany party, and a host of other anti-establishment parties and movements to the right as well as the left reflect this phenomenon.

The masses are seeking a way out of the crisis. This is manifested in a series of violent swings of public opinion to the left and also to the right. The whole situation is becoming polarised. These are the first symptoms of a revolutionary crisis, which will develop over the coming years.

There is the prospect of a world slump that will be deeper than the crisis of 2008. The danger of such a slump has been highlighted by fears of a slowdown in China, or a crisis in Europe, possibly prompted by a banking collapse in Italy which would reverberate through Europe and beyond. A new world slump will certainly exacerbate the crisis of the old parties, which will be faced by convulsions and splits.

The bourgeois strategists are very worried about the future. The French Presidential election in the spring of 2017 will be followed by the German elections, which could lead to unexpected outcomes.

Every area of the world is being sucked into this vortex. From Trump in the US to the upheavals in Brazil and Venezuela, from Brexit to the crisis in Europe and in the Middle East, from the rebellion of the youth in South Africa to the biggest single strike action in world history in India, involving between 150 and 180 million workers. No country can escape from this process. This applies particularly to Britain.

Impact on Britain

Britain was once held up as a very stable capitalist country. The Tory Party was the most successful bourgeois party in Europe. The British ruling class sneered at the instability on the European continent. But all that has now changed. The crisis has finally hit home hard. British society has been thrown into the melting pot and is now one of the most unstable countries in Europe.

Suddenly Britain is facing the most serious political and constitutional crisis since the Second World War. The fact that Britain has had two constitutional referenda in two years is indicative of this instability. The victory of Brexit last June and the ending of almost half a century of close relations with Europe has created a shockwave which will reverberate far beyond these shores. It threatens the very future of the European Union, stoking the flames of anti-EU discontent throughout the continent.

It is true that the whole Leave campaign was permeated with racism and xenophobia, but the Brexit vote also reflected an anti-establishment mood and a reaction against the status quo and all the main Westminster parties. It was a rebellion by the dispossessed and forgotten people of those areas of Britain that were destroyed by Thatcher’s “counter-revolution”. The idea that such areas would be “stronger in Europe” sounded ironical to those on the scrapheap. By voting for Brexit they hoped somehow to “take back control” of their lives and communities that had been ravaged by capitalist crisis and deindustrialisation. Any racist and xenophobic sentiment amongst this section of the class is overwhelmingly superficial, and could be cut across by a socialist programme, if one was offered by the labour leaders.

“Historians will see the largest revolt against political, business and financial elites as the nearest Britain has come in centuries to a revolution”, warned former prime minister Gordon Brown. “This is not just a British problem. In country after country, the gap between the promise of globalisation and people’s day-to-day experiences of insecurity, joblessness and stalled living standards is so stark that we are bound to see more ‘take back control’ protests.”

While the comment about “revolution” is exaggerated, Brown has a point. Brexit was driven by the same forces as with Trump in the United States, the Scottish Referendum and the victory of Corbyn. In different ways, these phenomena are part of the same process.

“The evidence so far suggests that the Brexit and Trump campaigns appealed to the same sort of voters”, explained the Economist, “those who feel they have been marginalised, or even victimised, by the march of globalisation. According to polling immediately after the Brexit vote, those who voted to Leave were trying, in Mr Trump’s words, to ‘take their country back’, or make it great again. Whereas nearly three-quarters of Remainers thought that life in Britain was better today than 30 years ago, 58% of Leavers said it was worse. Among Leavers, 80% thought that social liberalism had been a ‘force for ill’, 74% thought the same of feminism and 69% of globalisation. In other words, they were flatly rejecting the liberal worldview of an open, equal country that successive governments have cultivated over the past few decades. Ring any bells?”

The article concluded: “The open markets and classically liberal democracy that we defend, and which had seemed to be affirmed in 1989, have been rejected by the electorate first in Britain and now in America”.

“This as a vote that changed everything. Economic and foreign policies crafted over nearly half a century overturned in the course of a single night”, lamented the Financial Times. “A political establishment shattered by an insurgency against the elites. The nations of the UK divided; and England split between its metropolitan cities and post-industrial provinces. A vote against globalisation. A decision that weakens Europe and the West. Political earthquake is an underestimate.” (24/6/16) The paper then went on to describe it as a “roar of discontent from the nation’s working class heartlands.” (30/6/16).

The Brexit result came as a profound shock to the ruling class. Although there were divisions, their interests had been tied to the European single market for the last 43 years. The majority was in favour of Remain, but they had completely miscalculated, just as they had miscalculated over Scotland’s independence referendum. David Cameron, the Tory Prime Minister, only narrowly avoided the destruction of the United Kingdom.

Both these “upsets” were down to the political short-sightedness of Cameron, who had put his personal short-term interests, as well as those of the Tory Party, above the “national interest” (namely the interests of the bankers and capitalists) and the dangers posed to British capitalism. This time, Cameron gambled and lost spectacularly. This forced his immediate resignation and threw the establishment into deep political crisis.

Cameron’s political short-sightedness is not accidental, but an individual manifestation of the crisis of British capitalism. The declining standing of the bourgeois runs apace with the narrowing horizons of the Conservative Party. In place of the old grandees have come the upstart Thatcherites, their outlook determined by their base in finance capital and the reactionary monarchist petit-bourgeois. The rise of UKIP threatened to split the Tories, which would have severely weakened the main party of the ruling class. Hence, the promise of a referendum prior to the 2015 general election, which did nothing to solve the problem but led to the present chaos and the resignation of Cameron.

Crisis of the Tory Party

Overnight the whole situation was thrown into turmoil. Boris Johnson’s leadership hopes were sabotaged by his old friend Michael Gove, who stabbed him in the back. But Gove failed to win the nomination. The way appeared open for the reactionary Brexiteer Andrea Leadsom. Her victory would have immediately split the Tory Party. That could not be allowed to happen. In order to prevent an election the Tory Grandees forced Leadsom to stand down. The leadership was quietly handed over to Theresa May, a “safe pair of hands”.

This exposed the deep rifts in the Tory Party. This time they had managed to avoid falling into an abyss. But although Mrs May was subsequently given a “coronation” as unelected Tory Prime Minister, the tensions in the Tory Party have not gone away and will re-emerge in the future as the wheeling and dealing over Brexit unravels. The entry of Theresa May into Number Ten, the Financial Times stated, “offered some hope that Britain has not gone completely mad.” But this relief will only be temporary. The whole situation is pregnant with instability.

In an attempt to mollify the discontent that drove the Brexit vote, May announced a new Tory vision “for a country that works for not just “the privileged few”. She then proceeded to appoint three leading Brexiteers - Johnson, Fox and David Davis - to senior posts in the Cabinet. Gove was ousted from the Cabinet and Johnson, who had insulted virtually every leading politician and head of state in the world, was brought in as Foreign Secretary.

This demonstration of “unity” would soon become the Achilles heel of the government. All Mrs May could say about Brexit was “Brexit means Brexit”. What kind of Brexit remains a complete mystery. Work would proceed on the negotiations after Article 50 was triggered in the spring of 2017. But the ranks of the Tory Party are pressing for a complete break with Europe, and the end to the free movement of labour, while others in the Cabinet are insisting on maintaining access to the Single Market, even if that means accepting free movement of labour. Unfortunately, the two propositions are mutually exclusive.

Immediately serious divisions were made apparent by the leaking of a secret memo. The leaked memo by Deloitte explained that the government has no overall Brexit plan and could need an extra 30,000 civil servants to deal with the complexity of the task facing the country. The memo, dated 7th November 2016, said that “divisions within the cabinet” were bedevilling Brexit preparations and that officials in different departments were being asked to work on 500 separate related projects.

There is no sign here of the clear-sighted preparations May talked about! Rather the whole thing appears to be in chaos, as different ministers and government departments constantly work against one another. Referring to frustrations, the memo says big businesses, in demanding certainties, could soon “point a gun at the government’s head” to secure what they need. Mrs May soon buckled. She announced at the CBI conference that the government’s agenda was “unashamedly pro-business.”

All bourgeois politicians say one thing and do the opposite. All the stupid talk of putting workers on boards and highlighting corporate greed at the Tory conference had not gone down well with big business. Therefore Mrs May quickly abandoned the idea, which was never going to happen in any case.

All that nonsense of “governing for the many, not the few” was soon forgotten. Mrs May made her position absolutely clear. “We believe in capitalism. And we believe in business”, she boldly announced to the CBI. “For if we support free markets, value capitalism, and back business – and we do – we must do everything we can to keep faith with them”. However, she did make a touching appeal to Britain’s top bosses to help her save capitalism by “avoiding corporate greed and other excesses”. Amen!

To moderate the effect of that sermon, she raised the prospect of cutting corporation tax on business to a mouth-watering 15%, a move that was far more to the taste of her audience. In addition, billions of pounds will be spent on new infrastructure to “get the country and business moving”, which will simply put more cash in their pockets. Here was an echo of the “guarantees” made to Nissan over its future investment plans in Sunderland.

Above all big business is fearful over the prospect of a “hard Brexit” and the potential loss of access to the Single Market. All May could offer was a hint at a transitional deal on Brexit. However, she was silent as to where such a transition would eventually lead. The government is trying to ride two horses at the same time. But the fudge over Brexit will not be passed over so easily.

The decisive section of the British bourgeoisie wants to stay in the Single Market at all costs, even if this means accepting the movement of labour, which it must. The Brexiteers on the other hand want to “take back control of our borders” and control immigration. The Cabinet is therefore split. Whatever they do will be seen as wrong and will have serious consequences in one form or another. There is no possibility of appeasing both wings.

The serious bourgeois strategists are alarmed by all this uncertainty and potential loss of markets, including access to cheap labour. In normal times, their interests are guaranteed, but these are not “normal” times. There are too many uncertainties that can upset the apple cart. As the Financial Times explained:

“This [process] will be subject of two sets of negotiations – the first with her own party, where the interests of business will collide with the ideology of Little Englanders, and then with the other 27 EU states. The former may be harder than the latter.” Her task is summed up as “squaring half a dozen circles.” The article concluded: “We are living through a period of political and economic upheaval – in Britain and in the rest of the continent.” We could add also in the rest of the world.

With fraught negotiations unlikely to be completed by October 2018, Mrs May is now thinking of a deal - a “transitional agreement” - allowing negotiations to string out for years in an attempt to kick the can down the road. But this is causing resentment. Any delay smells of betrayal to people like Nigel Farage, who has threatened to lead a popular revolt.

The Brexiteers will soon find that life outside the EU will not be as comfortable as they had hoped. After Brexit, Britain is fast losing its usefulness to the United States. Obama paid his final farewell trip to Europe, visiting not London, but Angela Merkel in Berlin. On top of this, American banks in London could be encouraged to relocate to New York, which will face even less regulation. Such an approach would tend to push the UK towards further cooperation with its European partners, only to find that Brexit has got in the way.

Boris Johnson hailed the victory of Donald Trump as “an opportunity” for Britain to get a favourable trade deal with the United States, overlooking the small detail that any trade deal with Trump must be to the advantage of America, not Britain. The so-called “special relationship” with Britain will count for less than nothing.

Trump’s election, rather than promoting British interests, is being very problematic, questioning the existence of NATO, demanding the Europeans shoulder greater military spending, talking up protectionism, and so on. Trump openly treats the British government with contempt. He personally called eleven other world leaders, including those of Ireland and India, before speaking to Mrs May. The real relationship was shown when the President elect met with Nigel Farage before any British minister. That was a public humiliation for Mrs May’s government.

Nor will May get a smooth ride in negotiations with the EU. The European leaders are not interested in the problems of the Tory Party in Britain. They do not wish to see the EU unravel and therefore will not want to make it easy or pleasant for the UK to leave for fear of setting an example to others. They have their own interests to defend, especially as they face the rise of anti-EU parties within Europe. The rules of Article 50 require consensus between all 27 countries on the terms of departure – making a good deal for Britain impossible. They will want to make it as hard and difficult as possible. Schauble, Hollande and Draghi have made this crystal clear.

Therefore, the UK could face a massive £100bn bill for Brexit over five years for the privilege of leaving the bloc. It has also been suggested that the UK will also need to keep paying into the EU budget for several years, all of which is like a red rag to a bull for the Brexiteers. “Until the UK’s exit is complete, Britain will certainly have to fulfil its commitments,” stated Wolfgang Schauble, Germany’s finance minister. “Possibly there will be some commitments that last beyond the exit… even, in part, to 2030… Also we cannot grant any generous rebates.”

These negotiations will therefore be very tough and very lengthy. This will only serve to entrench positions and poison the atmosphere, making things even harder. The Tory government will be pulled in all directions as it seeks to navigate between a rock and a hard place. This will open up all kinds of splits and divisions, as each step of the negotiations are leaked by either side.

With each new revelation, tempers will flare and the temperature will rise, making it even harder to reach an agreement. This in turn will be used by the Brexiteers to stoke up anger throughout the country. The people who voted for Brexit will feel increasingly frustrated and betrayed. With every prevarication, the government will become more and more unpopular.

British economic decline

The optimistic propaganda of the government about the British economy is completely misplaced. While it is true that the UK grew faster than Europe, this was due to the fact that Europe has been in and out of recession for the last six years. But the reality is that the British economy is now slowing down, and is only being kept afloat by consumer spending. Without this, Britain would already be in a deep recession.

In July, manufacturing had its sharpest fall in four years. Building has come to a halt, private car sales have fallen, house sales are the lowest since June 2008, and investment has almost frozen. Infrastructure spending has fallen by 23% over 2015, as projects are scrapped or put on hold. According to the Office of Budgetary Responsibility, net public sector investment fell from £51.5bn in 2009 to £33.6bn in 2015-16. This is set to fall every year to 2020.

The services sector, which now makes up nearly 80 per cent of the UK economy, was responsible for all of the third-quarter growth in 2016, expanding 0.8 per cent. The three other sectors — industrial production, construction and agriculture — contracted. The strength of services continues the pattern since the slump of 2008, with output 12.1 per cent higher than its pre-crisis peak. In contrast, manufacturing is still 5.6 per cent smaller than at the start of 2008 and construction 1.3 per cent lower.

The foundation of any modern economy must be its industrial base. This has been severely eroded over the last 40 years of de-industrialisation. Britain, once the workshop of the world, has been reduced largely to a rentier economy, based on finance, banking and services. Decades of industrial decline has undermined the position of British capitalism, reducing it to in effect a second rate power. This is what we have called the special crisis of British capitalism. The responsibility for this collapse lies squarely on the shoulders of the ruling class, which has failed to modernise and re-equip British industry, especially in the face of increased competition. Brexit will reduce the UK’s status even further.

“These areas have been deindustrialising for a long time. The end of the old manufacturing sectors — and the disappearance of plentiful and reasonably well-paid jobs for low-skilled men — started in the 1970s, with British industry going through the most rapid change of all in the 1980s. But we should note that everywhere, it was not the amount produced by factories that fell — it didn’t — but that production could increasingly happen with fewer workers thanks to technological change”, explained the Financial Times (23rd November 2016).

This reveals the squeeze that has taken place: fewer workers producing the same output. Machinery is used to squeeze out more surplus value. This is an example of the increase in relative surplus value that Marx talked about. The pressure and stress on the nerves of workers has increased as the degree of exploitation increases.

Much of Britain’s manufacturing industry is now foreign owned. Just take the example of the steel and car industries. In the seventies, more than 200,000 people were employed by the state-owned British Steel Corporation, but after privatisation the number fell to 40,000 and is now below 30,000. One in six of the remaining jobs are deemed precarious. It was owned by a Dutch corporation but is now in the hands of Tata Steel, an Indian conglomerate. Back in the 1970s, the car industry was still mainly British-owned, but is no longer the case. Jaguar Land Rover (JLR) was bought by Tata from Ford.

Other car companies operating in the UK are Nissan and Honda, Japanese companies. China’s Geely have plans for a £250m new factory to manufacture black cabs. The UK is no longer engaged in cheap mass production but upmarket cars. The UK car industry is more of an “assembler” of cars than a manufacturer. Only about 40% of the parts that go into cars made in Britain are sourced here, though the figure is about 50% for JLR. But whilst car output and exports may be rising, this sucks in more imported components. Fourteen of the world's largest 15 auto parts firms are based in Germany, Japan, the USA and France - all countries that still have a large domestically owned producer.

Professor Karel Williams, of Manchester Business School, argues the weakness of the domestic supply chain has been driven by the pattern of foreign ownership. Williams said:

"It's not simply about the number of shiny cars off the line; it's about the amount of British componentry under the bonnet. And the problem there is the cars in the 1970s were basically 100% British. And the percentage is now much lower.

"If you correct for the imported content, we will still only be producing something around two-thirds the value of output that we produced in the 1970s, and indeed probably significantly less than we produced in the late 1990s."

The degree of foreign penetration of British industry is a reflection of the failure of the British capitalists to invest. They developed a short-sighted approach. Rather than invest and produce real wealth, they turned to property speculation, financial services and areas that gave quick returns. This is a reflection of the degeneration of British capitalism. This once workshop of the world has been transformed into a rentier economy and a key assembly platform for foreign multinationals. Finance capital has emerged as the dominant force, with its interests in the City, insurance and banking. This in turn, given its different interests, has served to undermine Britain’s industrial base.

In 1979, when Margaret Thatcher came to power, Britain produced 122million tons of coal from nearly 300 mines, with the vast majority underground mines and about 60 open-cast. Since then, the coal industry has been privatised and then closed down, for political reasons. However, Britain still depends on coal for up to 40% of its electricity generation. As a result, despite having 700 years of coal supplies underground, Britain is now dependent upon imported coal, shipped across the world, mainly from Russia, but also from the US, Colombia and Australia.

The fact that Britain has to import so much has meant that it has now built-up a massive £100bn balance of payments deficit, over 5% of GDP. Britain has a current account deficit of £24.6 billion with the European Union alone. The trade gap in the UK widened to £5.2 billion in September 2016, reaching the highest in three months. Exports fell 0.4 percent while imports jumped 2.5 percent, hitting a record high. Total exports decreased by £0.2 billion to £45.4 billion while total imports rose by £1.25 billion to £50.6 billion.

Considering only goods, the trade deficit was £12.7 billion, widening by £1.6 billion since August 2016. The goods deficit with EU countries has reached an all-time high of £8.7 billion. This is at a time when sterling fell by more than 10 per cent against the dollar and euro, supposedly making British exports cheaper and more competitive. Most likely, manufacturers simply jacked up their prices and pocketed the difference, as was the experience in the past.

British capitalism’s reliance on financial services and the City of London is not a source of strength but a source of weakness. It is no accident that Britain was hit the hardest in the slump of 2008, with a greater fall in GDP than in 1929-1931. This fragile basis of the economy has become even weaker. On top of this, Brexit is likely to inflict particular damage on banking and financial services companies, some of which are already looking at relocating their headquarters overseas. The accumulating weaknesses of this rentier economy mean that the next slump will again hit Britain particularly hard.

If Britain is forced out of the Single Market it will be an economic disaster for British capitalism. Almost 50% of UK exports go to Europe. Tariffs on British goods – as well as imports – will have massive costs and plunge the economy into difficulties. “The process of unravelling four decades of political and economic integration will be complex, costly and frequently bad tempered”, writes the Financial Times. “The Britain that emerges will be weaker economically and have a smaller foot print internationally.”

The Tory government is at present facing profound economic and financial difficulties. Philip Hammond, known as “spreadsheet Phil”, has talked about scaling back of austerity. But with the economy slowing down, the government will be forced by the economic situation to increase austerity, not decrease it. The Office for Budget Responsibility has forecast growth in 2017 of 1.4 per cent - down from 2.2 per cent expected in the March budget - as greater economic uncertainty slows business investment and higher inflation hits consumer demand.

By the end of the decade, public borrowing will be £30bn worse a year, according to the OBR, compared with the budget forecasts. They forecast that public sector debt will rise to 90.2 per cent of national income by 2017-18. Over the five year forecast period to 2021, the government will have to borrow over £120bn more than it had planned in the March budget.

This is in sharp contrast to figures from the Office for Budget Responsibility, which forecast in March that the public finances would improve from a £76bn deficit last year to a £10bn budget surplus by 2019-20. Instead, Hammond will face a deficit of £15bn in 2019-20 — a shortfall of £25bn compared with the OBR’s projection. That is why Hammond has abandoned the unrealistic aim of a budget surplus by 2020.

The economy’s reliance upon consumer spending will be its Achilles’ heel. The squeeze on incomes will have serious effects on growth, which will slow down even further. “The outlook for 2017 remains poor,” said James Knightley of ING. “Consumer spending is likely to come under downward pressure as inflation eats into household purchasing power.” This, in turn, will mean lower tax receipts and increased debt. With the economic difficulties facing Britain there is little room for manoeuvre. The government is still faced with delivering all the spending cuts planned for the next three years, which have already been decided.

But there are growing signs that public services are reaching breaking point after six years of cuts. Ominously, the riot in Bedford Prison, after guards lost control of one of the wings, shows the breakdown in the prison service. The number of prison officers was cut sharply between 2010 and 2015. This riot took place only three days after Liz Truss, justice secretary, outlined plans for 2,500 additional prison officers to be recruited to help address rising levels of violence in prisons.

The frustration among prison officers led to illegal strike action across the country, which shook the government. “Circumstances are against him”, states the Financial Times. “After six years of spending cuts, the strains on public services — from prisons to hospitals — are becoming apparent.” However, it goes on to warn: “Yet the UK is still some way from bringing current spending to a level consistent with likely tax revenues.” In other words, cuts will still have to continue in order to balance the books, but over a slightly longer period.

Hardship Britain

This is not an isolated case. There is anger and bitterness everywhere. The number of workers living in poverty has reached record levels according to the Joseph Rowntree Foundation. Workers have faced more than a decade of declining real wages and on present trends will earn no more by 2021 than they did in 2008. Average earnings fell 9 per cent between 2008 and 2013 as wages failed to keep pace with inflation. According to the Institute for Fiscal Studies this is the worst period for workers’ pay in at least 70 years. “One cannot stress enough how dreadful that is — more than a decade without real earnings growth,” said Paul Johnson, head of the think tank. Mark Carney, the Governor of the Bank of England described the last 10 years as a “lost decade”, where real wages have not risen for the first time since the 1860s, adding ominously that this was the time when Karl Marx was scribbling in the British Library about revolution.

Real wages in the UK were hit badly after the crisis and the forecasts suggest real wages will be hit hard again. With the turmoil over Brexit and the fall in the pound, inflation will be pushed up. As a result, the IFS forecasts that real wage growth will stall next year and even by 2021 average earnings will be below their 2008 level.

Food price inflation will in particular squeeze those at the bottom. Helen Barnard, head of analysis at the Joseph Rowntree Foundation, said that “The poorest fifth of people in the UK spend £1 in every £6 of their income on food, much more than middle-income earners, so a price rise will have a bigger impact on the household budgets of less wealthy families.”

These cuts in real wages, combined with looming benefit cuts, are predicted to squeeze living standards even further. This will add to the feelings of anger and resentment that exist. Even in the summer and autumn of 2015, NATCEN social attitudes research revealed that three-quarters of respondents said that the “class divide” was very or fairly wide. The research concluded that people who see society as divided between a large disadvantaged group and a small privileged elite “feel more working class regardless of their actual class position.” 45% now want taxes and public spending to rise, while 10% want taxes and spending cut. In other words, only a tiny percentage is in favour of austerity. 40% believe there should be higher spending on welfare benefits, the highest figure since 2003. Significantly, today, the same proportion – 60% - identified themselves as working class as in 1983, a year before the year-long miners’ strike.

Stress at work has been rising consistently. Today, 33% of workers said they were “always” or “often” stressed, up from 19% in 2005. On the other hand, there has been growing concern over the ability of health and social care services to meet rising demand for these services. As a result there has been a sharp increase in the use of hospital beds as people are unable to leave hospital because no suitable care is available. The number of hospital beds taken up by patients suffering from malnutrition has almost trebled in a decade, according to official figures.

The situation is becoming unbearable. The 31 per cent reduction in council grants had led to a £4.6bn cut in social care spending. Some 400,000 fewer people were receiving care funded by local authorities in 2014/15 than in 2009/10, even though the number of older people has risen significantly. “There is a time bomb about to go off,” said Steve Brady, Labour leader of Hull council, while councillor Izzi Seccombe, chairman of the Local Government Association’s Community Wellbeing Board, said services across the country were “at breaking point”.

The government will be increasingly backed into a corner, especially as the economy deteriorates as a result of Brexit and a new world downturn. As soon as people realise what is going on, and that could be quite soon, the government’s popularity will plummet like a stone.

The Lib Dems, which acted in the past as a safety net for disillusioned Tory voters, have been shattered after their five-year collaboration in coalition with the Tories. From over 50 MPs they were reduced to just a handful. It is possible that, thanks to the on-going uncertainty over Brexit, the Lib Dems could pick up in the polls. This was what happened in the Richmond Park by-election in December. But this phenomenon is unlikely to last very long because the crisis of capitalism is affecting all the major parties, starting with the Lib Dems, squeezed by the political polarisation and the consequent collapse of the centre ground.

UKIP, a mixture of rabid reactionaries whipped into frenzy by anti-immigration rhetoric and more “respectable” Thatcherites, has benefitted from the collapse of the centre ground. Feeding on the general discontent with all the main political parties, they took advantage of the EU issue to challenge the Tories from the right. Together with pressure from the right-wing Tory Little Englanders, this forced Cameron to accept the fatal referendum on Europe. He managed to stem the rise of UKIP but at an enormous cost to British capitalism. But with Brexit negotiations now underway, UKIP can continue to put pressure on the Tories and gain support by highlighting every deviation of May’s and proclaiming themselves to be the only true champions of Brexit.

The new leader Nuttall aims to build support by challenging Labour in the Northern working class “rust belts”, based upon anti-immigration demands and chauvinism. Given the despair in these areas, and the rotten legacy of the Labour Party, an “anti-establishment” UKIP could pose a certain threat. The betrayals of reformism are responsible for this. A majority of Labour’s rotten boroughs are in these working class areas, which have been badly affected by the crisis of capitalism. Only the emergence of a left-wing Labour Party, with a clear fighting programme, could cut across this danger.

The trade unions

The discontent of the working class in Britain has not so far been manifested in a mass wave of strikes. In fact, the trade union struggles have been on a low level. Whereas in France the discontent of the workers expressed itself in an outburst of strikes and demonstrations, in Britain the strike movement is at a low ebb, the movement being held back by the trade union leaders.

The British trade union leaders see their role simply as mediators. They have acclimatised themselves to the capitalist crisis by repeatedly making concessions to the bosses. As “realists”, workers are asked by the union leaders to make sacrifices to keep their jobs, but their jobs are never safe. Workers are faced with a continual squeeze. Weakness invites aggression and the bosses take full advantage of the weakness displayed by the trade union tops.

Despite the cuts in real wages and the attacks on jobs and services, the trade leaders have led not a single national industrial struggle for years. Where they have been pressed to call some action it is always half-hearted and is quickly ended. Most recently Community and others have caved in to everything Tata Steel has demanded at Port Talbot, including big cuts to pensions, without a fight. It is the trade union leaders who are responsible for a whole series of retreats. They hide behind the Tory anti-trade union laws to justify their passivity.

The six-million strong TUC is a faint shadow of its former self. It does nothing and leads nothing. It has been reduced to issuing press releases. The TUC Congress passes motions for action, but nothing comes of it. It even passed a motion to consider the feasibility of organising a general strike, but this was kicked into the long grass. Rather than conduct any struggle, it lays down before the Tory government, which introduces even tighter anti-trade union legislation.

Trotsky once said that there is no greater conservative force in society than the trade union leaders. This remains true today as it was then. The union leaders are desperately striving to avoid a confrontation. They are quick to cling to whatever crumbs the Tory government has to offer. The suggestion by Theresa May that workers should be put on corporate boards was hailed as a tremendous advance. They saw this proposal as a means of furthering their class collaboration policies, fostering a brotherly “unity” between worker and boss, but the employers have no need of such an arrangement at the present time and the idea was soon abandoned under pressure from the bosses.

With the weakness of the union leaders, the employers feel they have the whip hand. The TUC leaders complain and moan, but do nothing. If they call rallies under pressure, they are merely used as a chance to blow off steam.

The struggle of the junior doctors – which had been considered a privileged layer in the past – and which started so promisingly, but has ended without a deal. The government is now attempting to impose its new contracts, which will increase resentment. But without a clear strategy from the BMA leadership to win the dispute, and planned strikes suspended, the dispute seems to be petering out.

Other disputes, such as on Southern Trains, London Underground, prison officers, London ambulance drivers, post office staff and the teaching assistants have continued. Led by the RMT, workers on the privatised railways have seen the profits that are being made and are prepared to take action on a regular basis to defend their position. Guards, in particular, have been at the forefront in demanding action. ASLEF drivers on Southern are also taking action.

As stated, the union leaders act as a colossal brake on the movement. Instead of uniting the different strikes, they isolate them. They are fearful of any movement that could get out of hand. In late 2011, they were forced to lead a coordinated strike over pensions involving nearly 30 unions. But as soon as they were granted a few crumbs by the government, they rapidly brought the action to an end. This strike showed the potential strength of the unions. It is clear that the most successful strategy today for the unions is not partial strikes in different sectors, but a nationally coordinated action of several unions, acting as one. This would be a serious challenge to the bosses and the government and give confidence to workers.

Attempts to block industrial action by the employers’ use of the courts should be met with further industrial action. Weakness invites aggression. Instead, the union leaders have run away from confronting the anti-union Laws. In fact, when challenged, they put their faith in the bourgeois courts to act "fairly". Such behaviour demonstrates their whole outlook. But their backtracking will eventually provoke a reaction within the union rank and file.

Nevertheless, the trade unions remain a key element in the equation. Despite the decline in membership, millions of workers are organised in the unions. There is a layer of younger workers who are discontented with the conduct of the leadership. The new generation of shop stewards will not be so easy to control as the old, tired elements who will be retiring in the next period. The potential was already shown by the marvellous militancy of the young doctors.

With new cuts being imposed and the health service at breaking point, new clashes are inevitable. With prices rising, workers will be pushed into action in order to try and keep up. The trade union leaders will continue to act as a dead weight, resisting calls for a serious coordinated struggle against the Tories. However, they will be under ever-increasing pressure from below and implacable resistance from the government and employers.

Pressure on the union leaders will also come from outside the ranks of the organised working class. Casualised layers working for Uber and Deliveroo have taken legal action and launched wildcat strikes in defence of their pay and conditions. This has proved that these casualised workers can be organised to take industrial action, if only the trade union leaders make the effort to do so. This has already forced a response from Unite, which is now focusing more energy on workers caught in bogus self-employment. The Deliveroo strike in particular also showed that militant strike action can win disputes, a fact that will not be lost on rank and file trade unionists pushing for bolder measures from their leaders.

At a certain point the trade unions will be forced, reluctantly, to engage in struggle. The union leaders will be under pressure from the rank and file to take action. They will pass from semi-opposition to open opposition to the Tory government. But even the stormiest strikes and demonstrations cannot solve anything fundamental. Sooner or later the demands of the workers will assume a political form. Already the process of radicalisation was shown by the big support for Jeremy Corbyn in the unions.

The main focus of the class struggle has been in the Labour Party. Trade union members have participated in this political struggle. The revolutionary process is not manifested in strike statistics alone. In Britain the movement in the direction of revolution is being reflected not on the industrial plane, but on the political plane, where it is causing a deep crisis in the main political parties with incalculable consequences for the future.

The labour civil war

The victory of Jeremy Corbyn in September 2015 and then again in 2016, with a bigger majority, has deeply shaken the establishment. The right-wing “coup” failed as Corbyn won a decisive victory despite an unprecedented campaign in the media. Hundreds of thousands of people joined the Labour Party to vote for him.

The right wing and the bureaucracy – backed by the ruling class - did everything to block Corbyn. Firstly, they tried to keep him off the ballot paper. Then they increased the supporters’ fee from £3 to £25, and chose an early cut-off point for those eligible to vote. Then they purged his supporters, who had been given the smallest window to register. Despite this vicious campaign, Corbyn was victorious, increasing his majority compared to 2015. A huge part in this was played by the mass meetings of Corbyn supporters all over the country.

These victories of 2015 and 2016 have in turn opened up a Pandora’s Box. For the first time in living memory, the right wing are losing control of the Party. Today, membership of the Labour Party is over 600,000, compared with less than 200,000 under Miliband. Incredibly, some 130,000 joined in two weeks.

Under Blair, the Labour Party was purged and pushed dramatically to the right. He hoped to turn the party into a British version of the American Democrats, completely wedded to the capitalist system. But Blair and the right wing failed to break the party’s links with the trade unions and the working class. The victory of Corbyn has shattered this perspective altogether. The talk of Tony Blair returning to politics in Britain has been met with a howl of protest, a reflection of the support for “winning Tony”. It is an indication of how desperate the right wing is at the present time.

The basis of right-wing support is in the Parliamentary Labour Party, where the Blairites have complete domination. They also have support in the Party machine - the bureaucracy built up in the past to dominate the rank and file. The Right also have support in the local parties, mainly concentrated in the councillors and their hangers on.

This layer has been present for decades, living off the proceeds of local government. They have a vested material interest in maintaining their positions. They have become the willing servants of the Tory government in administering the cuts. They refuse to defy the Tories or the law. Of course, in implementing the cuts they want as little fuss as possible. Where there is any danger of this, some councillors stay away from the vote, allowing the cuts to pass in their absence.

This was the case with the 20% council-imposed wage cuts on teaching assistants in Durham. But the struggle of the teaching assistants provoked divisions within the local Labour Party, which showed just how isolated the councillors were. The right wing unashamedly justified their actions, but many members opposed them.

To give the right-wing councillors more backing for their actions, the recent Labour Party conference passed an instruction – instigated by the right wing - to all Labour councillors not to defy the cuts or propose a needs budget on pain of expulsion. This ensures that there will be no resistance from this quarter. This is a far cry from the defiance of Liverpool or the Poplar councillors of the past.

The right wing in the PLP has attempted to oust Corbyn at every opportunity. They have tried everything to destabilise and remove him. They have staged revolt after revolt within the PLP and in the Commons. They have humiliated him whenever they could. Even the services of Cameron and Nick Clegg – true friends of the Labour movement – were conscripted to join the chorus calling on Corbyn to go.

At the centre of the Right’s intrigues is Tom Watson, the deputy leader, who has orchestrated things behind the scenes. Their mass resignation from the shadow cabinet and 80% vote of no confidence in Corbyn, culminating in the attempted coup, forced an election they did not want. They thought he would buckle under pressure, but they were mistaken.

All the old right-wing hacks like Neil Kinnock and Jack Straw were rolled out to denounce Corbyn, who nevertheless stuck to his guns. McCluskey correctly described this as a “political lynching”. In the end the election turned into a farce. Angela Eagle, who had been touted as the challenger, was quickly ditched in favour of Owen Smith, the “unity” candidate.

Smith made great play about how he supported Corbyn’s progressive policies, apart from Trident, but disagreed with his “approach” in running the Party. This irritated many right-wingers, who wanted to challenge Corbyn politically but could find no one who could do it. Once again, the rank and file and the new members in particular rallied to Corbyn and dealt the right a stunning blow. The Right mobilised the “graveyard vote”, while Corbyn won over the new active layers.

The clumsy and arrogant manoeuvres of the right wing even succeeded in alienating most of the trade union leaders, who would have been inclined to some kind of a rotten deal to remove Corbyn. Len McCluskey had originally supported Andy Burnham for leader and Watson for deputy leader. But Watson snubbed the union leaders by cancelling an agreed meeting, which provoked McCluskey to denounce him in public for “sabotage”. This was a fatal mistake. They had pushed the trade union leaders reluctantly behind Corbyn.

The Right was humiliated and demoralised. Some were openly pessimistic. John McTernan, for instance, stated that “the Labour Party is now dead”. 40,000 members have left. However, the majority of MPs will not give up so easily. They are fighting for their political lives. Their determination comes from the backing they receive from the ruling class, whose interests they defend. They feel this power behind them. It gives them strength and confidence. That is why they are more determined than the Lefts, who tend to buckle and compromise, even when they are victorious.

For decades the stability of the political system in Britain depended on two fundamental pillars: the Conservative Party and the Labour Party. The ruling class exercised firm control over the Labour Party through its right wing. Now this situation is being challenged. The ruling class is alarmed and is waging a stubborn struggle to keep control over the Labour Party.

Weakness of Momentum

The hundreds of thousands of new party members would be able to defeat the right wing and purge the party. On paper, Unite has come out publicly for mandatory reselection. But this would mean waging a serious struggle against the right wing. The Left leaders are afraid of such a step. They do not have the political will to carry it through. They prefer to compromise and avoid a direct confrontation with the Parliamentary Labour Party, hoping that the Right will reciprocate. But this is a vain hope. On the contrary, their weakness invites aggression.

Neither the right wing nor the bourgeoisie trust Corbyn, partly because of his views, but mainly because of what stands behind him. A serious threat is posed by a radicalised rank-and-file that has been mobilised for the struggle against the right wing. The creation of Momentum was a correct move to defend Corbyn within the Party and fight against the sabotage of the right wing. But Momentum has no clear aims. It is organisationally amorphous and politically confused. And its leaders are terrified of engaging in a serious struggle against the right wing.

Labour First, the right-wing grouping, ran rings around the Left in the local parties in the run up to the Labour Party conference. While Momentum wasted precious time on a fringe jamboree outside the conference, the Right organised effectively to get its supporters elected locally as delegates to the conference. The Left were completely out manoeuvred.

As a result, and despite Corbyn’s decisive victory, the Right were able to get two new positions from Scotland and Wales onto the NEC of the party. The Left were forced to retreat on Trident and other issues, to the glee of the right-wing media. Corbyn has big support in the ranks of the trade unions, but two right-wing unions, USDAW and Community, were able to throw their weight around and boast how they were going to block reselection. The Left are flabby by comparison.

The most important task for Momentum is to organise a campaign for reselection, starting with those MPs that supported the no confidence motion in Corbyn. This would galvanise the Left and give some purpose to its efforts. Unfortunately, from day one the Momentum leaders ruled out such a campaign. They were terrified that they would alienate the right wing in the PLP, the very people who were stabbing Corbyn in the back.

Corbyn has said reselection will take place over boundary changes and McDonnell said they would not intervene in local parties’ affairs. All that is very nice, but Momentum needs to start acting in as decisive a manner as the organised Right. Deselection must be at the centre of its activities. This should be linked to the fight for socialist policies, with no attempts to patch up capitalism.

The Momentum leadership remains effectively in the hands of an unelected clique around Jon Lansman. They have been attempting to shut down organisational democracy, removing any accountability of the leadership to the membership. And the Momentum leadership has continually lagged behind events, lying dormant for months. They never lifted their little finger over the mass suspensions. They want to control Momentum from the top with a docile rank and file. They want to create a Corbyn fan club, not a seriously organised Left.

They are therefore keen to adopt the Podemos model of “online” democracy, which undermines the real democracy of an organisation. Participation in Podemos has consistently dropped using such methods. Decisions need to be taken democratically through a delegate conference, and not stitched up through online voting without proper debate. The reason for this is that they fear debate for fear of losing the argument and being in a minority.

The truth is that Momentum now lies in a complete mess, the blame for which rests entirely on the shoulders of the Lansman clique and their bureaucratic actions. Some grassroots Corbyn supporters are continuing to organise locally to fight the cuts and reclaim the Labour Party from the bottom up, but the official Momentum leadership has effectively abandoned this struggle to transform the Party.

Nevertheless, Marxists should continue to campaign inside Momentum to raise the key political questions: the need for mandatory reselection to kick out the Blairites, and for a bold socialist programme to end austerity.

All the attempts of sectarian groups to set up a separate party outside the Labour Party have ended in abject failure. When Corbyn got the nomination in 2015, such people ridiculed his chances. They advised him to stop trying and join them instead. Now they want to affiliate to Labour, if only the right wing would let them! This ridiculous farce fools nobody and merely serves to underline the irrelevance of such sectarian groups in Britain.

An even more pathetic spectacle is presented by those “left” commentators like Mason who have abandoned any idea of socialism and are trying to push all kinds of revisionist notions that only serve to confuse and disorient the few people that bothered to pay any attention to them. At the very time that we need a bold socialist alternative, this former “Marxist” talks about “post-capitalism”, abandoning “utopian dreams” (that is, Marxism) in favour of a “sharing economy” – that is, a return to the dreams of the old pre-Marxist utopians.

Owen Jones, another such “left” commentator, is wallowing in the swamp of pessimism and confusion. “Labour and the Left teeter on the brink of disaster,” Jones warns. “I worry about the Left failing, and even disappearing forever.” He goes on: “it feels like I’m at a party on the edge of a crumbling cliff…all I can see is the cliff. And I’m desperate, at all costs, for us all not to fall off that cliff.” Again: “Many of you won’t thank me now. But what will you say when you see the exit poll at the next general election and Labour is set to be wiped out as a political force?”

These wailings are nothing more than the cries of despair from a sceptic. Jones wanted Corbyn to compromise with the right wing for the sake of “unity”. This supposed “left” confessed that he would have voted for Owen Smith as Labour leader if he had a chance of winning the next election. Such “radical” types as these play a negative role, insofar as they play any role at all. Jones, Mason, and other such cynics and sceptics are trying to get Corbyn to water down his programme – “to appeal to the centre ground” - precisely at a time when radical demands are needed.

Two Labour parties

Despite the leadership of Momentum, the rank and file of the party are moving in different areas to take it over and oust the right wing. The latest of such moves has been in Leeds Central, where Hillary Benn is the MP. Here the Left slate took all the positions. The same thing happened in Brighton and Bristol, but the Labour bureaucracy has stepped in, using bureaucratic suspensions.

In Lewisham, the Right still retained its control, but the Left made significant advances. It is clear that the process is mixed and reflects the guerrilla war taking place on the ground. In Garston and Halewood CLP, the party passed overwhelmingly a motion of no confidence in the general secretary, Iain McNicol, who was behind the intrigues against Corbyn and in charge of the “compliance Unit”. Maria Eagle, the MP, voted against. In Caerphilly constituency, the local MP Wayne David, was asked a question by a brand new member after Corbyn had won: “When are you going to resign?”, which was met with disbelief. These are clear signs of the struggles developing within the party.

Significant pockets of right-wing support still exist in many areas. They are fighting a rear-guard action. They will not give up easily. They still control many “rotten boroughs”. In effect, what we have is two Labour Parties, one based on the new members and the other based on the old membership. The latter reflects the past. For instance, while only 31% of older members are in favour of reselection, some 67% of new members support it.

The YouGov poll for voting intentions for Labour leader revealed that support for Corbyn amongst those members who joined before May 2015 was 32%. Those who joined between May and September 2015 showed 72% support for Corbyn, and for those who joined after September 2015, it was 86% support. In a whole number of areas, the new members have come up against the fierce resistance of the right wing, where the MPs and councillors dominate the party. New members are very much discouraged from taking an active and leading role.

Further shocks and sabotage of the Right in Parliament could accelerate a shift to the Left. When Stephen Kinnock MP attacked a single mother with two autistic children in his Aberavon constituency for daring to criticise him, asking what right this uninvolved person had to criticise, she told him bluntly she had previously no time to be involved given her personal situation. But then issued a threatening tweet: “I will certainly find time for you!”

Perspectives for Labour

At the level of the NEC, things are finely balanced between the Right and Corbyn supporters. The gains by the Left in the Constituency Section were bureaucratically cancelled out by the imposition of two right wingers from Wales and Scotland. Sometimes Corbyn wins, and sometimes the Right get their way.

The trade union representatives swing in different directions depending on the issue. Some of the CLP “Lefts”, like Ann Black, are not lefts at all, but right wingers masquerading as lefts. On the NEC, she voted to disenfranchise the new members and to increase the supporters’ registration to £25. At this level, this balance of forces seems to be set for the next year, creating paralysis.

The attempt by the Right to get the Shadow Cabinet elected was countered with a discussion on greater party democracy, but has since been abandoned. This reflects the shifting ground at this level. The Right hope they can hold the line and maintain McNicol and the Labour machine. They have been forced to lift the suspensions, but they have for now maintained the expulsions. This shows how the bureaucracy is prepared to manoeuvre to keep control of the party.

The suspensions and expulsions were part of the “coup” against Corbyn. Socialist Appeal supporters were partially caught up in the purge, shopped in by local right wingers or MPs who felt threatened. The fact that Socialist Appeal activists were ignored by the bureaucracy for 25 years but are now being expelled is no accident. With the guerrilla war in the local parties continuing, further expulsions are likely.

Despite Corbyn’s opposition to expulsions and proscriptions, the balance of forces on the NEC means that such expulsions can occur with little resistance. Originally, the Momentum leaders were fearful for their own position after the attacks on them by Tom Watson and others. Despite this, they were not prepared to oppose the expulsions in any meaningful way. Now they have come to an accommodation with the right wing, therefore ignoring the expulsions.

The present balance of forces within the structures of the Labour Party can change dramatically in the coming period. It will only take one deselection in one area to take place and the whole thing will blow up. Already, Frank Field has traitorously called on anyone deselected to force a by-election and stand against the party. Naturally Field is not subject to discipline or suspension for such scandalous declarations.

A single deselection will cause uproar in the capitalist press. The fragile truce between the Corbynites and the majority of the PLP will be instantly shattered. The right wing will be baying hysterically at every shift to the left, which in turn will inflame the situation and sharpen the struggle between left and right in the local parties even further. It will place on the order of the day the transformation of the Labour Party.

For the time being, instead of splitting away, the right wingers are biding their time. They hide their real intentions and sweetly talk of “loyalty” to the party, while preparing to stab it in the back. They have been told by the strategists of capital to stay for now and fight. There are threats by MPs of a Work to Rule and boycotts of important debates in the House of Commons. The leadership contest in Unite is being fought as a proxy war for control of the Labour party, with the right-wing hoping an anti-Corbyn candidate can unseat McCluskey. This trench warfare, designed to undermine Corbyn, is the preferred tactic of the Right for the time being.

The Tory Party under Mrs May is holding together for the moment. The Brexiteers are in a big majority but there are underlying conflicts and tensions, which at a certain point can also lead to a split. The Brexit negotiations will be very fraught and the outcome remains unclear. It is a ticking time bomb in the foundations of the Tory Party.

The strategists of capital are trying to hold the political centre together. But the fault lines are evident to all. Events can provoke splits in both the Tory Party and the Labour Party, which will lead to a serious political realignment. The precise timing of this process is difficult to predict. It may be that the May government will not last its full term.

Britain has to be out of the EU by the spring of 2019. But there are many stumbling blocks on the way. After all, the Tories only have a small majority. The storms of the coming months and years will shatter this temporary state of affairs. The mood is very volatile. This means that there can be massive swings in one direction or another.

Despite all the claims of Corbyn’s alleged unelectability, there can be a massive shift towards Corbyn and the Labour Party as the reality of a Tory-led Brexit becomes apparent. The serious representatives of Capital know that and they face a dilemma. Either they allow him to come to power and then attempt to discredit him, or else keep him out of government by wrestling back full control of the party or even splitting it.

A split, however, may not be necessary in order for the Labour establishment to regain control. Corbyn missed the golden opportunity following the second leadership election to go on the offensive against his Blairite opponents. Now, due to the timidity, confusion, and compromise of the leadership of the Corbyn movement seen since September, there is a clear possibility that Corbyn could be forced to step aside in favour of a more “electable”, “left” candidate. Prominent figures such as Clive Lewis and Owen Jones are already manoeuvring behind the scenes to achieve such an outcome. Poor showings in by-elections and local elections would further hasten the calls on Corbyn to resign. With many activists in the Corbyn movement demoralised by the lack of conviction from the top, and with Momentum offering no lead, it is possible that Corbyn could be removed this time without a mass grassroots backlash.

Alternatively, at a certain stage, the Blairites could split away and come together with the Lib Dems and disaffected pro-European Tories to form a new Centre party. The strategists of capital are already discussing this possibility: “Many centrist Tories have more in common with their counterparts on the Labour side than with English nationalist Brexiteers; and, likewise, middle-of-the-road Labourites are closer to pro-European Tories than to Mr Corbyn’s brand of 1970s state socialism.” (The Financial Times).

The Lib Dems are fishing around and trying various methods to tempt Blairites into their camp. Paddy Ashdown has launched a ‘non-party-political’ organisation to fund ‘moderate’ MPs across the party divides. This has been named ‘More United’, tellingly after a phrase used by the murdered Labour MP Jo Cox. It is an attempt to appeal to Blairites and to smooth their path out of Labour. Labour Tomorrow, a right wing faction within Labour, has the Lib Dem Lord Matthew Oakeshott for one of its biggest donors. These attempts are premature but are indicative of the coming split.

However, such a development would have far-reaching consequences. What remains of the Tory Party would shift to the right, absorbing the leftovers of UKIP, while the Labour Party would shift to the left, based upon an anti-austerity, anti-capitalist programme. At some point, it is not ruled out that the bourgeoisie could attempt to put together a national government, including the Labour Party right wing.

Again, that would mean splitting the Labour Party, with the Blairites joining such a government. Of course, the bourgeois are reluctant to carry this through, as the implications are very serious. It would add to the polarisation of British politics, and create a very left-wing anti-austerity Labour Party. This would transform the whole situation inside the Labour Party.

The Labour Party could shift very far to the left under these circumstances, possibly in a centrist direction, i.e. revolutionary in words but reformist in action. This would create extremely fertile ground for the ideas of Marxism. It would resemble the situation described by Trotsky in the 1930s: namely, a pre-revolutionary situation, ferment in the party, extreme polarisation and the possibility of a rapid crystallisation of a mass left wing.

The crisis of reformism

At a certain point the scene would be set for a Left Labour government, a crisis government, that would open the way for protracted revolutionary developments. Such a government would be faced immediately with a campaign of sabotage and a strike of capital. It would face a stark choice: either move to expropriate the capitalist class or capitulate to the blackmail of big business.

This was exactly the situation that faced the Left government of Tsipras in Greece. SYRIZA was swept to power by a huge wave of popular enthusiasm. Tsipras had colossal support for the referendum he called to defy the Troika, but then capitulated and sold out the Greek masses.

Trotsky once said that that betrayal is inherent within reformism. But this does not mean that the reformist leaders deliberately set out to betray. On the contrary, they may be quite sincere. Undoubtedly Tsipras wished to carry out a policy in the interest of the Greek people. But there is a problem. If you accept capitalism, which the reformists do, then you have to accept the laws of capitalism. In an epoch of capitalist crisis, this inevitably means accepting cuts, austerity and counter-reforms. There is no other outcome on the basis of capitalism.

Every Labour government in history has faced this dilemma. However, in this deep crisis of capitalism, unlike in the past, there is no room to manoeuvre. Already the Labour leadership is simply promising reforms which do not cost anything. They blame austerity not on capitalist crisis but on “ideological cuts”, imposed by the malicious mentality of the ruling class.

Even the most left of the reformist leaders have no perspective of socialism. They are in business to “reform” capitalism, and that is all. Ironically they consider themselves to be great realists, but the threadbare programme of Keynesianism that constitutes the sum total of their wisdom is the crudest form of utopianism, particularly in the present climate. The idea that you can borrow your way out of the contradictions of capitalism is entirely false. The government will not be able to satisfy the aspirations of the masses and will only antagonise the capitalists.

The role of reformism is always to prepare the way for reaction, as the example of Hollande in France clearly shows. He was elected with a massive majority on the basis of promising reforms and opposition to austerity. Very soon he was forced to do the opposite. As a result his electoral support has been reduced to only 4%, while the right-wing Front National of Marine Le Pen is riding high.

The attempts of the reformist leaders to tinker with capitalism simply lead to frustration and disillusionment amongst the working class and a swing to the right in society. The task of the Marxists is to patiently explain the limits of the programme of reformism and the need for a root and branch transformation of society.

It cannot be theoretically ruled out that such a government, under pressure from the masses, could go further than it intended. But it will soon meet with the ferocious resistance of the bankers and capitalists. The bourgeoisie will be screaming at the government to “save the country” with vicious cuts and austerity. There will be counter-responses from the movement. The government would be ground between two heavy millstones. The fate of the Venezuelan revolution constitutes a very serious warning. It is impossible to carry out half a revolution. That will only lead to chaos.

An explosive period

There are some on the Left who cry “fascism” upon seeing every turn to the right. But there is a big difference between right-wing bourgeois politicians like Trump, and the kind of movements led by Hitler and Mussolini. Fascism is a special form of reaction that signifies the complete destruction of the rights and organisations of the proletariat. This is not on the cards in any advanced country.

Even in Greece, where the situation has reached a critical stage, the vicious ruling class was unable to resort to open reaction as it did in 1967 with the dictatorship of the colonels. Although the Golden Dawn, unlike the French Front National, is a genuine fascist organisation, the Greek bourgeois saw that it was too dangerous to hand power to such people. They clamped down on the party and even put its leaders in prison.

By irresponsibly shouting about Fascism every five minutes, such lefts sow confusion amongst the working class and disarm it in the face of genuine fascist threats in the future. They are behaving like the little boy who cried “wolf” too many times, and when the real wolf came there was no response.

Nevertheless, we must warn the Labour movement of what is at stake if the working class does not take power into its hands. The continuation of capitalism in a period of terminal decline will seriously endanger the democratic rights of the working class. The overthrow of the system becomes an ever-urgent task.

Under present conditions the ruling class is unable to resort to Fascism or Bonapartism. The class balance of forces is radically different to the 1930s and does not permit an immediate move in the direction of the open reaction. But over a period that can change. Bourgeois democracy is a very fragile plant that can only thrive in the soil of economic prosperity that permits the ruling class to grant serious concessions. The material basis for this is rapidly disintegrating, although the bourgeoisie can still rely on a layer of fat that it is accumulated in the previous decades. But the next period will see a sharp polarisation to the left and to the right, a period of turbulence and instability that cannot be contained within the framework of bourgeois formal democracy.

At a later date, as the capitalist crisis deepens, the capitalists will have no alternative but to move in the direction of reaction. Behind the scenes, the ruling class will be preparing for a showdown with the working class. They will say: “there are too many strikes, too many demonstrations, too much chaos. We demand order!”

However, the working class is far stronger than it was before the Second World War and has not suffered a serious defeat. In such circumstances any move towards open reaction would provoke an explosion and even civil war, which the ruling class could not be confident of winning. That is why they will think a thousand times before embarking on such a road. Long before the threat of open reaction is posed, the working class will have many opportunities to take power into its hands and transform society. Only after a series of serious defeats of the working class would the danger of reaction become a serious threat.

Trotsky referred to the molecular process of socialist revolution, a slow and gradual process that eventually reaches a critical point where quantity becomes transformed into quality. We have entered a period of revolution and counter-revolution, of sharp changes in the psychology of the masses. A slow and gradual accumulation of discontent builds up beneath the surface, unnoticed by superficial observers, until it reaches a critical point where quantity becomes transformed into quality with explosive consequences.

“Great Britain is headed for gigantic revolutionary earthquake shocks, in which the last fragments of her conservatism… will go down without a trace. MacDonald is preparing these shocks no less successfully than did Nikolai II in his time, and no less blindly,” wrote Trotsky in 1931.

Present-day events have a striking resemblance to the situation that existed in Britain in 1931, which Trotsky described as a pre-revolutionary situation. But there are also important differences. In the period from 1917 to 1939 a pre-revolutionary situation did not last long, but was quickly resolved by the victory either of revolution or counterrevolution. The process will now have a more protracted character. The crisis of British capitalism will be prolonged for a number of years, perhaps decades, before reaching a decisive conclusion.

However, the protracted nature of the situation does not mean that it is less convulsive than in the past. On the contrary, a revolutionary crisis can develop in Britain far sooner than we expect, depending partly on national and partly international developments. All the objective factors are present for explosive developments. Sooner or later they will be reflected in the consciousness of the working class.

Ted Grant used to say: “Events, events, events, will transform the situation”. In fact, events are transforming the situation before our very eyes. “The post-war political order, dominated as it has been by parties of the centre-right and centre-left, is under unprecedented strain”, explained the Financial Times. “Rising populism of the extreme left and right has begun to sound echoes of the 1930s.” (24/6/16). The strategists of capital are drawing the same conclusions as the Marxists from their class point of view.

The political representatives of the ruling class are filled with a sense of gloom and foreboding. The ruling class is already split, which is the first condition for revolution. The centre ground is disappearing fast. “Britain is starting to imitate Greece”, writes Philip Stephens in the Financial Times: “Britain’s two-party system has been under strain for some time. Now it is splintering” (FT, 30/6/16). It threatens to produce a sharp polarisation to the left and to the right of British politics.

Donald Tusk, the head of the European Council, said last year: “For me, the atmosphere is a little similar to the time after 1968 in Europe. I can feel, maybe not a revolutionary mood, but something like a widespread impatience. When impatience becomes not an individual but a social experience of feeling, this is the introduction for revolutions.”

This was meant to be a warning to the ruling classes. We should take note of what the serious strategists of capitalism say. The masses do not learn from books but from experience. The experience of capitalist crisis and the betrayals of reformism will radicalise the situation even further. It will shake society from top to bottom. The working class, beginning with its most advanced and active layers, will begin to draw revolutionary conclusions. This has already begun to happen, especially in the youth.

The Marxists must intervene in this process. “This is our point of departure”, wrote Trotsky. “The programme must express the objective tasks of the working class rather than the backwardness of workers. It must reflect society as it is, and not the backwardness of the working class… That is why we must express in our programme the whole acuteness of the social crisis of the capitalist society.” We must tell the workers the truth and with such explanations we can win the best elements to the ideas of Marxism and revolution.

We must prepare ourselves for the events that are to come. “In the present world situation, time is the most precious of raw materials”, explained Trotsky. The urgent task ahead is that of building the Marxist tendency, in Britain and internationally.