What is happening in Britain 2005

The state of the world economy, the USA, China, the disastrous war in Iraq, all have a direct effect on the situation in Britain. Some may find a contradiction in the fact that although Blair is very unpopular he will almost certainly win the elections. The fact is that there is no alternative. The workers of Britain have not forgotten what the Tories did when they were in power. But the undercurrents are already discernable and these will sooner or later come to the surface.

“The contradictions undermining British society will inevitably intensify. We do not intend to predict the exact tempo of this process, but it will be measurable in terms of years, or in terms of five years at most; certainly not in decades. This general prospect requires us to ask above all the question: will a Communist Party be built in Britain in time with the strength and the links with the masses to be able to draw out at the right moment all the necessary practical conclusions from the sharpening crisis? It is in this question that Great Britain’s fate is today contained.”

Leon Trotsky, Where Is Britain Going, 1925

World Situation

It is impossible to understand the situation in Britain outside of the context of world events. More than at any other time in history we are living in the epoch of world relations, world politics and world economy. Therefore, in addition to reading these perspectives in conjunction with previous documents (which deal with some of the questions touched upon here in more detail), it is vital to study world perspectives in order to see developments in Britain in their proper context.

On an international scale events continue to be dominated by the war in Iraq almost 2 years after it began. The mighty US imperialist military machine, faithfully served by their batman British imperialism, is finding occupation far more difficult than invasion.

From the point of view of the imperialists this war is becoming a disaster, a new Vietnam, as we explained from the very beginning. More than 1000 US troops have now been killed in the fighting. Meanwhile there are up to a hundred times as many Iraqi civilians dead. For the people of Iraq it is a catastrophe. Their country is occupied by a foreign invader. It lies in ruins, misery and chaos. There is mass unemployment and a wrecked infrastructure.

For the imperialists this occupation is proving militarily, politically and economically costly. They have not even managed to get the oil out. Of course, the idea that this was simply a war for oil was always too simplistic. Capitalism fights wars not only for raw materials and markets, but also for spheres of influence: for political as well as economic reasons.

US firms like Halliburton, United Defense and co. are making a mint. As Lenin pointed out “war is terrible, yes, terribly profitable.” Yet at the same time the prolonged presence of so many troops does not come cheap, in monetary terms, and in the effect it has upon the outlook of American and British soldiers and their families and friends back home.

The re-election of Bush has been followed by a pledge to spread the American neo-conservative version of ‘Democracy’ beyond the killing fields of Afghanistan and Iraq with Syria and Iran next in their sights.

At present there is a large industry in the production of books purporting to explain the phenomenon of neo-conservatism in the United States. Many offer an interesting insight into the role of religion in the US. Bush’s election pledges against abortion and gay marriage confirm the role of the evangelical right in current US politics. This is one important ingredient but not the only one.

Most agree that following the fall of the Soviet Union a new external enemy was needed, and in terrorism they found an excuse for curbing civil liberties and introducing new reactionary legislation at home, as well as sending their troops abroad. There is some truth in this assertion, but still the fundamental point is missed.

Some grasp that US imperialism needs to carve out a greater share of world markets and raw materials, but this does not yet explain the need to attack democratic freedoms at home. They can see the struggle between nation states – despite the arid intellectual claims of their demise replaced by ‘transnational corporations’ — but they are blind to the struggle between the classes. The most important war the American capitalists are preparing for is the one within their own borders.

All talk of a future of peace and prosperity has proven to be Orwellian Newspeak for war, instability and insecurity. This is the real perspective of the imperialists. Their policy at home and abroad is tailored to meet the material needs of defending their system.

Michael Moore in his perceptive film Fahrenheit 9/11 argues that this is about defending the status quo, maintaining the power and privilege of the rich elite and so on. Yet even here we do not find out why all this is happening. To defend the system, yes, but in what way is the system under threat and from whom? Of what is the ruling class – to give it its correct name – afraid?

Only Marxism can provide the answer to this question. It is to be found in the inability of the social and economic system of capitalism to take society forward. There can be no such thing as a final crisis of capitalism, where the system simply dies of natural causes. This is a struggle of living forces, between the new and the old. The old will fight tooth and nail to protect themselves. Here we find the root not just of US neo-conservatism, but also of the foreign and home policies of US imperialism.

The crisis in international relations, the divisions between the US and the EU; war; the crises of the UN, NATO, the WTO, are not secondary matters but graphic illustrations of the general crisis of capitalism.

This is not simply a cyclical crisis, not just a matter of booms and slumps, but a profound crisis which has at its core the inability of capitalism to play a progressive role on a world scale.

There is a penchant amongst academics to attempt to invent ‘new’ ideas to react to new situations. Thus we have the theories of Empire, of the end of the nation state, of post-modernism, the third way, and all the rest. As Marxists we begin instead by going back to basics. The private ownership of the means of production and the division of the world into competing nation states constitute colossal barriers to the potential development of the productive forces, which, in turn, is the key to the development of society.

For a period of decades following the Second World War the capitalists were able to partially – and temporarily — overcome these factors on the basis of developing world trade, partial nationalisations and other measures. This was never a solution but only ever a sticking plaster behind which the wounds of capitalism festered.

What really worries the capitalist is not the prospect of a slump (most, unlike the Labour leaders, know this is inevitable: booms and slumps are like breathing in and out for capitalism) but the unravelling of the complex web of world trade and world economy – and running parallel to that process the disintegration of the political organisations built to accompany them, the UN, WTO etc. — culminating in a new downward spiral of protectionism; currency and trade wars. The outlines of this are now clear for all to see between the US, Europe, and Asia, above all China.

Ultimately what they fear is revolution, and therefore the working class and poor masses. Why is their system under threat: because it does not and cannot work, it cannot provide the basic needs of the majority of humanity. Despite the mighty forces of science and industry, a home, a job, running water, basic education and health care cannot be guaranteed for the majority of the planet on the basis of the profit system. Furthermore that system contains insoluble internal contradictions which inevitably lead to impasse and crisis.

Nevertheless, this system, for all its inefficiency and inequity, will not lie down and die. The ruling class will not give up without a struggle. From whom is there a threat? That class in society capable of wresting power from them and reorganising society, the gravediggers their own system creates in the shape of the working class and the poor masses of the world. The policy of the ruling class is designed precisely with these factors ever at the forefront of their minds.

While the Middle East burns, and Africa starves, the centre of gravity of world affairs, which long ago passed from the Mediterranean over the Atlantic, is now moving on across the Pacific.


Can China rescue the world economy? This is not the place to go into that question in detail – yet it is ironic that it is even posed, can a country which has not yet completed its reversion to capitalism be the saviour of the world capitalist economy? It certainly has played a part in propping up the depressed Japanese economy recently with its insatiable appetite for machine tools. The partial recovery of the Japanese economy was, after a decade of ineffective Keynesian pump-priming, almost entirely based on exports of industrial goods to China.

At the same time China is the major contributor to the colossal US trade deficit. There is a large market in China obviously (although a market is more than simply a headcount, China’s population may be 1.4 billion but those with money to buy western goods is a considerably smaller number) and its imports, particularly from the EU have grown, but its main contribution to world economy is exports, eating into the available markets of the other capitalists.

Herein lies another contradiction. The EU is now calling for a lifting of the embargo on selling arms to China. The US is opposed, fearful of the prospect of China’s military might intervening in their spheres of influence. The Europeans, however, see a major market for their arms production in China. This example serves to illustrate the growing three cornered trade conflict between the US, the EU and China, and the interconnection between the economic and political divisions developing between the major power blocs.

Meanwhile, China itself is wracked by contradictions between town and country, between the private sector and the state, and a growing inequality which is preparing new revolutionary explosions there too.

Despite the unceasing claims of the financial press about the role of China, the capitalists clearly do not believe their own propaganda. Their actions speak louder than words and their actions do not suggest preparations for 50 years or more of peace and prosperity. On the contrary they demonstrate clearly that they are preparing politically, economically and militarily for a period like the 1930s or the beginning of the last century. Not a simple repetition of that period, of course. As Mark Twain once wrote “History doesn’t repeat itself, but sometimes it rhymes”.

Everything they have done to patch up their system over the last decades has only served to postpone far greater crises. Decades of explosive economic growth have also meant a colossal strengthening of the proletariat on a world scale. Witness today not just the mighty movements of the working class of Germany or the Netherlands – which show Britain its future – but the revolutionary events throughout Latin America. The revolution in Venezuela is a source of tremendous inspiration. Events in that country in the next period can have a decisive effect not only on Latin America, but also on the United States, and consequently the rest of the world too. A revolutionary victory in any major country would quickly transform the face of the planet.

This is the epoch of globalisation, the world market, the world economy, world relations all of which create the conditions for world revolution. This is a new period in world history – and this is what Moore, Monbiot and all the other erudite critics miss – where the inherent contradictions of capitalism (which were always only hidden beneath the surface) have returned with full force, and with no solution within the outdated capitalist system. This is the period of history where the fate of humanity will ultimately be settled.

On a world scale more than at any other time in history this will be an epoch of wars, civil wars, revolutions and counter revolutions. At the root of the profound instability in diplomacy, international relations, politics and economy is the inability of capitalism to develop the productive forces in the way they did in the past.

This does not mean reducing everything to economics – an idea which is a perversion of Marxism. It means understanding that the crisis in every field arises from the inability of the capitalist system to take society forward.

At the heart of this crisis is the classic crisis of overproduction and overcapacity to produce – not for the needs of the majority but for making profit in the market economy. The productive forces which could be harnessed and extended to provide a life of luxury for all are instead choked by a leash – the private ownership of the means of production and the division of the world into competing nation states – that prevents their development, and thereby stands like a road block in the path of human progress.

US Economy

This is more than a matter of booms and slumps which follow one another with the inevitability of night following day. Early in 2004 the financial press got overexcited at the prospect of recovery in the US economy. A recovery there has indeed been but it has proven to be much weaker than their daydreams promised, in fact it is a recovery in which thousands upon thousands of American jobs continue to be destroyed.

For some time now the US economy has been single-handedly keeping the world economy afloat. US consumers have been swallowing up much of the world’s overproduction – particularly China’s. However, this spending is based on credit and cannot last indefinitely. Historic levels of personal, corporate and government debt hang like a weight around the neck of the US economy, dragging it backwards. Incidentally 15 percent of Britain’s exports are to the US, but the continuing fall of the dollar against the pound makes British goods more expensive, so even as the US market expands it does not benefit British capital.

A trade deficit of $50 billion per month and a budget deficit over $400 billion a year mean that the dollar has still further to fall. The fall in the dollar, the high price of oil, the prospect of rising taxes (the orthodox capitalist economists’ response to such a budget deficit) will hit spending and investment, and could tip the US over into recession. Until now the US has been keeping the world economy’s head above water, so the consequences of a new downturn in the States are self evident. It would have an enormous impact on the economies of Asia and Europe. Britain, whilst not benefiting much from a US recovery, would be hit severely by a recession across the Atlantic.

US imperialism must attempt to export its crisis, and seize a larger share of world markets. In so doing they create a new round of trade and currency wars, and, naturally, a foreign policy to match.

“For all its might,” wrote Trotsky, “American capitalism is not a self-sufficient whole but a part of the world economy. Furthermore, the greater United States industry grows the deeper becomes its dependence on the world market. While driving Europe more and more into a blind alley American capital is preparing wars and revolutionary upheavals which will then strike back at the economy of the United States with a terrible rebound.” (Where Is Britain Going)

Politically and economically US imperialism is packing dynamite into its own foundations while simultaneously exporting it around the world, not only to the Middle East and Latin America, but also to its former master, and now pet poodle, British imperialism.

Britain – War in Iraq

The impact of the invasion and occupation of Iraq on Britain is far from over. In the last perspectives we dealt at length with the question of the Hutton inquiry and the state of British parliamentary democracy. This is not a secondary question, but reveals clearly the lack of confidence felt by the ruling class in their own future. The events surrounding the death of Dr.Kelly and Lord Hutton’s ‘investigation’ served to widely expose the role of the state, the cabinet and the media in modern capitalist society. A light was shone into corners that the ruling class would rather remained in the shadows.

The latest revelations concerning the torture of Iraqi prisoners in Basra have caused widespread revulsion. The lies of the government at home on Iraq’s possession of weapons of mass destruction (and the spurious claim of an imminent, 45 minute threat) combined with the scenes from inside Iraq, are having a profound impact on the outlook of the population as a whole and not least upon soldiers and their families.

The organisation of a group calling itself “Military Families Against the War” must be unprecedented, and is a reflection not only of the general opposition to the war in society, but also of the profound discontent developing within the armed forces themselves. Take the Prince of Wales regiment. Of 300 soldiers taking part in operations in so-called safe zones, two have died and 48 have been wounded. That means a one in six chance of injury or death. This combined with the sight of American contractors raking in big profits, alongside all this death and destruction, inevitably raises questions in the minds of the troops.

Already one British soldier has called for a mass refusal to serve in Iraq. Lance Corporal George Solomou, from the London regiment of the Territorial Army (TA reservists are being increasingly deployed), said: “I am not going to Iraq, point-blank. I am a conscientious objector to this war... I would rather spend a year in prison than a minute in Iraq as part of an illegal war.”

His objections to the war are highly revealing, “I believe the occupation of Iraq to be illegal. They have tried everything – weapons of mass destruction, the connection to al-Qaeda – none of it was true. Now the fundamental bedrocks of democracy are being trampled by this war, with the American treatment of prisoners. Added to that, the Iraqis can see oil tanker after oil tanker coming out of Iraq while they haven’t even got electricity. This war is a turning point in history and is about America setting itself on a course to control the world’s petroleum.” Mr Solomou claims that many other soldiers agree with him.

Bourgeois Democracy and the State

Meanwhile, behind the cover of this “war on terror” new reactionary legislation, identical to those laws introduced in the US, has been introduced here. Basic civil liberties have been fundamentally undermined. Initially Home Secretary Blunkett introduced new laws allowing for the Home Secretary of the day to sanction arrests, house arrests and other measures against foreign terror suspects, without applying to a judge. When this was declared to be discriminatory by the law lords, new Home Secretary Charles Clarke squared this circle with the greatest of ease making the law applicable to British citizens as well as foreigners. Seen alongside the attempt to abolish the right to trial by jury, the introduction of Identity Cards, and other attacks on democratic freedoms described previously (not forgetting the raft of anti-union legislation which remains on the statute books after eight years of Labour government), the consequences for the struggles of the working class in the future are self-evident.

In recent documents we have written a great deal about developments in the ruling class. The monarchy, the church and the Tory Party have been analysed at length. There is a reason for this. The crisis of capitalism has an effect on all classes in society beginning at the top. The splits and divisions in the ruling class are an important indicator of just how profound is the crisis of the system.

The monarchy stumbles from one gaffe to another crisis, the latest involving Prince Harry dressing up as a Nazi on the eve of the world’s remembrance for the victims of Auschwitz.

The church too continues to tear itself apart over homosexuality and other issues. The detailed analysis of these questions in previous documents remains entirely valid.

Similarly we have written a great deal about the nature of the state and the changes taking place not just in undermining democratic freedoms but also undermining parliamentary democracy itself. Chief amongst these has been the undermining not only of Parliament but even of the cabinet replaced instead by a kind of court camarilla around Blair, a coterie of unelected, unaccountable spin doctors and advisors who increasingly usurp the power of government.

Marxists do not have any illusions in bourgeois parliaments. Bourgeois democracy is extremely restricted. In reality, all the important decisions are taken by the monopolies and the banks. We do, however, defend those democratic rights and conditions which have been conquered in struggle by the working class. It stands to reason that democracy, however restricted, is a better system for the working class to develop its organisations and struggles within than open dictatorship. In the present epoch those democratic rights that have been won by the working class are constantly in danger. Democratic rights, including the rights and powers of parliaments, are being undermined because they do not coincide with the needs of the capitalists.

Ultimately the state in capitalist society can be reduced to armed bodies of men in defence of private property, as Engels explained. The proposed reforms to the army, the police, the courts and so on have to be seen in this context. Yet at the same time the crises within even the army – hit by expenditure cuts and low morale – are symptoms of the sickness of the system. All those bodies and institutions carefully built up over centuries to maintain the minority rule of the capitalist class, and furthermore to maintain it subtly, hidden beneath pomp, circumstance and morality, are in crisis to one degree or another. Therefore they are being ‘reformed’ in an attempt to make them more suited to their task.

In the last perspectives document we detailed the complete overhaul of “emergency powers” being prepared. New laws are proposed giving ministers the right to ban gatherings, meetings or demos, the right to seize property, and more such draconian measures in the event of a terrorist scare or other civil unrest. The machinery of government, judiciary and the state in general is being refined to suit the needs of capital in the new situation unfolding before us.

Under Blair the government’s powers have increasingly been passed from Parliament to the cabinet and, in turn, from the cabinet to the Prime Ministers office and a clique of unelected advisers. This has now been exposed for all to see.

The former head of the civil service and the man who led the inquiry into British handling of Iraq intelligence, Lord Butler, confirms this saying in an interview that the prime minister puts too much emphasis on tomorrow’s headlines and central control, and too little on reasoned argument.

Interviewed in Spectator magazine, he repeats his claim that the government left out the caveats in its dossier setting out the threat posed by Saddam Hussein because to have revealed the thinness of the evidence would have weakened the case for war.

Lord Butler went on to attack the whole of the parliamentary process, and the power of the whips, saying: “I think we as a country suffer very badly from parliament not having sufficient control over the executive, and that is a very grave flaw.

“The executive is much too free to bring in a number of extremely bad bills, a huge amount of regulation and to do whatever it likes — and what it likes is what will get best headlines tomorrow. All that is part of bad government in this country.

“I would be critical of the present government in that there is too much emphasis on selling, there is too much central control and there is too little of what I would describe as reasoned deliberation which brings in all the arguments.”

“I think that what happens now is that the government reaches conclusions in rather small groups of people who are not necessarily representative of all the groups of interests in government, and there is insufficient opportunity for people to debate dissent and modify.”

He also complains that special advisers, political appointees of ministers, are taking too many decisions at the expense of civil servants who may produce boringly inconvenient arguments.

“The cabinet now — and I don’t think there is any secret about this — does not make decisions.”

Giving evidence to the public administration select committee earlier this year, the same Lord Butler stated: “The number of papers taken by the cabinet has declined since the second world war in an almost continuous curve.

“During the latter part of the time when I was cabinet secretary I do not think more than about 20 papers a year were circulated to the cabinet, that is one paper to every two meetings.”

He also complains in the interview that too many political decisions are taken by quangos, including the Monetary Committee of the Bank of England. “What can you really hold a politician responsible for in the field of domestic policy?”

Butler’s conclusion is that parliament and cabinet have been reduced, like the monarchy before them, to being “dignified” parts of the British constitution.

As ever The Guardian and others seek a solution in democratic reforms, more accountability etc. They fail to understand that these changes are not the personal whim of Blair or the Home Secretary. They are the equivalent in home policy to the changes in foreign policy, and must be seen alongside the general attacks on democratic rights. In this light they graphically illustrate the perspectives of the capitalist class. They are aware that at some point in the future parliamentary democracy will not be enough for them to maintain power. Even now the time consuming bother of presenting bills and debating them amongst elected members with at least some accountability, albeit tremendously limited, is an annoyance they are not prepared to tolerate.

Not just economic questions such as wages or house prices affect the outlook of the working class. Even assaults on civil liberties like these can have a big impact. We can already see the dramatic impact that events in Iraq have had on British society. These developments are all interconnected, and what connects them is the material needs of the ruling class to defend their system.

Each new measure, each new event has an effect on the outlook of society. One example of the connection between foreign policy and home policy, the needs of imperialism and the curtailing of democracy, in turn having an impact on public opinion, was the handing over of British soldiers to American command.

To assist the brutal US imperialist onslaught on Fallujah, British Defence Secretary Geoff Hoon handed over command of Black Watch soldiers to American officers. Initially claiming this to be a military decision, Hoon later admitted that the decision had actually been taken by himself and Blair. In other words Blair took the decision after receiving his orders from the White House. Neither Parliament nor even the cabinet have a say in these matters.

A poll conducted by the Mail on Sunday found two-thirds opposed sending these Black Watch troops to Baghdad. Meanwhile a YouGov poll found that 52 percent believe the war was wrong, and a Guardian/ICM poll found 71 percent wanted British troops brought home.

With his lies on Weapons of Mass Destruction blatantly exposed, it seems Blair thought of quitting. Certainly trust in the Prime Minister and the government is at an all time low. As Gordon Brown apparently noted “there is nothing that you could say to me now that I could ever believe,” although Brown’s disillusion was caused not by the lies over Iraq, but over Blair’s failure to hand over the keys to Number Ten as he had allegedly promised.

However, as Blair has rightly calculated, despite the fact that the majority of Britain would agree with Brown’s conclusion, there is no alternative on offer, so he can get away with it and cling on.

After all Bush won re-election. All the trendies cried in their muesli, bemoaning the stupidity of the American people. As always they fail to see the facts staring them in the face. Superficially the US election was a triumph for Bush but more importantly the result was an illustration of how sharply polarised US society now is, pointing the way to new battles in US society in the next period. Incidentally, had Kerry won things would not be fundamentally different. Personalities certainly set their own stamp on affairs — Marxism is a long way from denying the importance of the role of the individual, which at certain moments can be decisive, and even in normal times makes a difference to the tempo or coloration of events – however, the foreign policy and home policy of the United States is ultimately determined by the material needs of the capitalist system.

General Election

Bush has been re-elected in the US, and it seems Blair and co will most probably win here, too, in a general election this year, most likely in May. That is the most likely result, but it is far from guaranteed. The Tories have enjoyed a certain recovery, though they are still riddled by crisis. This has been dealt with in some detail in previous documents. The latest defection of former higher education minister Robert Jackson has highlighted the Tories splits and divisions once again. There is an irony in this. Jackson claims to have defected from the Tory opposition to the Labour government because he supported Blair’s policy of top-up fees for students and his support for US imperialism in Iraq. In other words his defection is portrayed as a shift to the right!

The more serious problem confronting the Tories continues to be their split over Europe, and the desire of the tops of the party to win parliamentary office conflicting with the reactionary demands of the blue-rinse rank and file. It was fundamentally this layer that supported the UK Independence Party in the European elections last year.

The UKIP is a nasty taste of the reaction to come on the right of the Tories, possibly at a certain stage in the shape of a reactionary, nationalist, monarchist split. However, their success in last year’s European vote will not be repeated in a general election. Their unwillingness to hand the leadership to Robert Kilroy-Silk has led to an acrimonious split. Kilroy denounced his former friends as a bunch of fascist nutters (pots calling kettles black comes to mind). Kilroy’s new party, Veritas, instantly dubbed Vanitas in the media, may succeed in taking some votes from the Tories, as will the remnants of UKIP. Their distasteful racist and xenophobic language will be increasingly aped by Howard and co to prop up their support. Neither UKIP nor Kilroy’s new outfit are fascists, although both contain elements with links to the fascists. Both represent rabid reactionary trends whose support, although limited, is another sign of the growing polarisation in society. They cannot be completely ignored because their emergence is indicative of a trend in society, namely its polarisation to left and right. In the same way one cannot ignore the BNP who have gained some ground in recent years. Of course this minuscule fascist grouplet is a pernicious outfit whose attacks on local communities and individuals should be combated by the labour movement. However, like their cousins on the reactionary right, their biggest impact at present will be inside the Tory Party, which will move further to the right, particularly on immigration – where they will find it difficult to outflank Blair to the right – in order to prevent a serious leak of their support. Even if they succeed in this they are still unlikely to win the general election.

Election results cannot be predicted with any certainty, all kinds of events, at home and abroad, can yet intervene. Only one thing is certain, a third period of Labour government, if that is indeed what emerges from that poll, will be fundamentally different to the period since 1997.

The collapse not only of illusions but even of trust in Blair and co as a result of Iraq, alongside the prospect of yet more privatisation in health, education etc, and the current attack on public sector jobs and pensions will undoubtedly mean a further fall in turnout at the next election. Workers disillusioned with Blair and co will not vote for the various sectarian fronts who are all suffering their own crises. With all due Respect, Galloway and co have got nowhere, and will achieve nothing by standing in the next election either. Even the most successful, the SSP – which had developed into a small party with a certain electoral base, but at the same time veered further in the direction of nationalism and reformism – is now in a crisis following the unceremonious dumping of its front man Sheridan.

Disillusioned workers will generally stay at home. Unlike in Spain where a mass movement against the war in Iraq and distrust over Aznar’s response to a terrorist attack, led to the ousting of the Popular Party government and the election of PSOE, here the only real alternative on offer to workers is either vote Labour or do not vote at all.

The Tories and The Liberals

The Tories have recovered some ground – this was to some extent inevitable given their historically low starting point (their worst result since 1832), and partly too reflects the growing polarisation of British society. They will not be overtaken by the Liberals as all the ‘experts’ have long claimed.

The Liberals, meanwhile, have travelled a full circle, abandoning their wild claims of winning an election, followed by their dream of becoming the main opposition, now pinning their hopes once more on a hung parliament and holding the ‘balance of power’.

In the end the Tories will probably not recover enough to win, rather their hopes are centred on Labour voters not turning out. Few would be more surprised by a Tory victory at this stage than Michael Howard, whose role as caretaker manager, holding on to the ruling class’ main party, will no doubt earn him a lordship in the not too distant future, after the Tories usher in a new leader following electoral defeat.

Labour’s victory, however, is no longer clear cut. For several years, following the last election, we were the only ones who argued that Labour could lose, and that the Tories could even make a comeback. Now we read this everywhere.

Nevertheless, the most likely result is a Labour win with a somewhat reduced majority, how much reduced will be largely determined by the turnout.

This would mean a Labour government being returned with even less enthusiasm than in 2001, with a smaller majority, which, in changed conditions, will encourage further parliamentary rebellions. With a 161 majority in parliament Blair won the vote on foundation hospitals by just 14 votes. Student fees scraped through a first vote with a majority of five, even after all Blair and co’s so-called concessions (and the pressure of the whips) the second vote was won by only 28.

Blair may well win the coming election, but Blairism is dead. The pipedream of converting Labour into a version of the US Democratic Party, which seduced many of the sectarian groups, as well as the Labour leaders, has evaporated. The triumph of Blairism was a consequence of defeat and demoralisation in the labour movement, leading to a period of inactivity. The right of the movement always rest on such periods. However, that period is over. Blairism reflects yesterday not today and tomorrow. The Labour leader says he will stay on for a full third term. That is not likely. If Labour were to lose, which remains a possibility, if not the most likely scenario, then Blair would go immediately. Who would replace him in this situation is hard to tell in advance. Brown, it is well documented, wants to be prime minister, but whether he would fancy being leader of the opposition is another matter. More importantly in the event of Labour losing there would be uproar and recriminations inside the party at all levels. A new struggle between a Blairite like Milburn and an element we might call the old guard, for example, Robin Cook (who resigned from the cabinet over his opposition to the war), would hardly be likely to favour a ‘New’ Labour candidate. In any case we should concern ourselves less with the personalities, which are impossible to predict, and more with the questioning that would inevitably dominate the process, especially in the trade unions.

Labour Government

With a third term Labour government in power would Blair pass the mantle to Brown? Despite all the best efforts of Roy Hattersley and co, the much discussed division between the prime minister and the chancellor is no left-right split, nor is it even new versus old Labour. The policy differences are now being exaggerated to gain the support of union leaders and the rank and file, but in reality they are minimal.

According to Hattersley writing in The Guardian the revelations in Robert Peston’s new book about the Blair-Brown split “elevated the two men’s dispute from personal squabble about the succession to fundamental disagreement over principle and policy...

“The author of the revelation writes that Brown rejected the notion that “public services, especially health, can be bought and sold in a de facto marketplace”... Brown wants something better than compassionate Conservatism. Blair does not.

“No doubt the chancellor will continue to protest that he is innocent of the charge of wanting to make the Labour party Labour again. That is his duty while he remains in the cabinet. And the account of how he rescued Blair’s half-thought-out proposals for tuition fees — although disapproving of them himself — confirms that he is not prepared to make a public show of his convictions if the revelation would do irreparable harm to the government. But confirmation that he will not cooperate in winning elections by renouncing everything that Labour once stood for will lift up hundreds of constituency parties. When the leadership election comes, we will all know exactly where we stand.

“The conflict between Brown and Blair is the direct consequence of the prime minister’s partially successful attempt to shift the Labour party’s philosophical position from left of centre to right of the location that Margaret Thatcher occupied. The market — as a method of allocating social resources and increasing the efficiency of the public sector — has already been extended into areas undreamed of by the last Conservative government. It is the belief that he can complete that process that makes Blair determined to deny Brown the succession, and it is in those terms that the conflict between the two men should be considered.” (our emphasis)

It is true that with a longer history in the labour movement than Blair and his small band of supporters, Brown is less detached from the rank and file than Blair’s coterie. To that extent the so-called Brownites at least have a clue about what to say and what not to say to the rank and file. Yet this is still the same Brown who has been Chancellor for eight years. He may recognise the stupidity of trying to implement private sector competition in supplying meals on wheels, he may even represent Blairism with a slightly more humane face, but ultimately he remains firmly wedded to the market and most of the policies employed by the Labour government since 1997. The Chancellor’s personal ambition is hardly masked either by his current ‘crusade’ to reduce third world debt. This may turn out to be a precursor to Brown becoming Foreign Secretary before going for the top job. The difference between Blair and Brown is not fundamental, in terms of policy there would be less difference than between Bush and Kerry.

With Labour re-elected, and Blair making it clear that he intends to stay on, Brown could challenge Blair, or someone else could mount a stalking horse challenge as used to be common in the Tory Party. This tinkering at the top is not decisive, however. What really matters is the pressure of events in society driving Blair out, or forcing a challenge, in any case opening up a new period inside the Labour Party, and in the first place the interaction of events in society with the opposition mounted by the trade unions and splits opening up at the top of the Labour Party.

The perspectives we have outlined for some time in this regard are now beginning to unfold, albeit with some delay. Under a third Labour government this process could well accelerate more quickly than we might think. There are three main reasons for this. Firstly the general level of disillusionment in society, what the pundits call apathy or disengagement which, in reality, is the disappointment of millions at the failure of Labour to make things better. The experience of two terms of Blair and co, a disintegrating infrastructure — health, transport and education all in crisis – means that there is little illusion that re-electing Labour will solve any of these questions. Combine this with the lies over the war in Iraq, the lack of trust in politicians in general, and Blair in particular, in society, and Labour’s re-election becomes not an indication of support, but merely the lack of any alternative.

Secondly, all the years of pent-up anger in the workplaces, which have already blown up in new struggles, and new militancy which has not gone away despite the illusions of The Guardian et al, is preparing new explosions. As we have always explained this process does not proceed in a simple straight line but through all kinds of ebbs and flows. The press tells us that October 2004 saw the fewest days lost through strike action – just 6000 — since 1999. However, this process has not ended, in truth it has only just begun. Already it has led to important disputes and changes inside the unions. The changes in the unions have even now begun to have an effect inside the Labour Party, most notably in the shape of the domination of the unions at Labour Party conference, but this will go a lot further under a third Labour government. What we have seen so far is only an indication of much bigger changes to come.

Last and not least, there is the economy. The current boom based on debt and the consumer spending it fuelled was always unsustainable. The housing bubble may have lasted a little longer than we initially thought, but burst it will and consumer spending with it.

British Economy – Boom at Workers’ Expense

Blair and Brown continue to delude themselves that they have abolished the boom slump cycle. They will face a rude awakening. At the root of a new economic crisis will be the same old insoluble crisis of overproduction and overcapacity to produce. The inherent contradictions of capitalism have not gone away despite the fact that if the economy grows this year it will be the 14th consecutive year of boom. That boom has been based on a cruel combination of stress and strain at work for millions; a service sector based on illegal practices and the virtual slavery of migrant workers; credit and consumer spending; the continued destruction of public services and the disintegration of the country’s infrastructure; and, despite all the rhetoric about tackling poverty, a massive growth in inequality.

The yawning chasm between wealth and poverty, and its impact on health and education, represents a sharpening of the class division of society, dispelling the myths that we have all become middle class, homeowners etc. Conditions determine consciousness and the changing conditions of the working class are at the core of the class polarisation of society which will be a fundamental feature of the next period.

According to a report from the Office for National Statistics published in December 2004, the wealth gap in Britain has widened significantly since Blair came to office, with the top 1 percent of the population now owning 23 percent of all wealth, compared to 17 percent in 1991. The report entitled ‘Focus on Social Inequalities’ also shows that 25 percent of the population now own 75 percent of the wealth.

Income distribution is just as unequal with 10 percent of the population grabbing 28 percent of all income. There are 1.6 million individuals in the UK with an income above £1000 per week. Meanwhile 17 percent of the population live in “low income” poverty (defined as households with less than £194 per week). This represents a higher degree of inequality than most other EU member states.

Increasing inequality impacts on every aspect of life, as the report effectively demonstrates. In 1992, 60 percent of children with parents in managerial/professional occupations attained five or more higher grade GCSE’s, compared with 16 percent of children in ‘unskilled manual’ occupations, a gap of 44 percent. In 1998 this gap rose to 49 percent. Final year students in higher education are leaving with an average debt of £8666, with those in the highest amount of debt coming from the “lower social classes”, following the abolition of student grants. In 2001, 50 percent of young people from non-manual backgrounds (those from professional, managerial and intermediate occupations) participated in higher education, compared with just 19 percent of young people from manual social class backgrounds (those from skilled manual, semi-skilled manual and unskilled manual occupations), a gap of 31 percent. In 1960 the gap was 23 percent. People who manage to obtain a degree earn on average gross weekly earnings of £632 in full time employment compared to £298 for those with no qualifications.

Blair’s rhetoric about education being his priority became in practice the privatisation of schools and colleges, and the introduction of fees. These measures have had an obvious impact on students and the ability of those from working class backgrounds to continue their studies.

However another set of education statistics tells us a great deal about the long term decline of Britain too. Most adults lack the basic skills expected of GCSE pupils in reading, writing and maths, according to a report from the National Audit Office (NAO).

The report found that despite government efforts to get 750,000 adults enrolled on reading and writing courses this year, almost eight out of 10 adults aged between 20 and 65 would fail to get a good GCSE pass in maths and 60 percent of this age group were not at the level of GCSE grade C or above in literacy. In total, about 26 million people of working age “have levels of literacy or numeracy below those expected of school leavers”, it said.

The health of the population is also affected by the yawning chasm of wealth inequality, with differences in mortality rates between professional occupations and manual occupations showing a gap of 7.4 years for 1997-99. This is an increase of 3.6 percent for men since 1986. The difference in mortality for social class is reflected in regional differences too, with average male life expectancy in Glasgow at 68.7 years compared to 79.3 for North Dorset. Infant mortality rates are affected by socio-economic status with lower rates recorded for babies of managerial & professional groups compared to manual occupations. Mental health is also shown to be effected, with people in unskilled occupations more than twice as likely to suffer neurotic disorders compared to those in professional occupations.

Meanwhile the Health Service is understaffed, underfunded, undermined and under attack. Privatisation, contracting out, competitive tendering, PFI are not just economically crazy, in reality a licence to print money with no concern for the service provided, they are themselves now the cause of ill health.

The spread of the MRSA hospital superbug has been blamed on a 45% cut in cleaning staff since the NHS allowed the private sector to compete for the work. UNISON has published independent research showing there were 55,000 cleaners in the NHS in 2003-04, compared with 100,000 20 years ago.

The government disputed Unison’s claim that increased infection was linked to contracting out. Standards of cleanliness in 440 hospitals cleaned by contractors were much the same as those in 707 hospitals which had in-house teams, Lord Warner, the health minister, said.

He conceded however, that contractors were responsible for cleaning at the three trusts with the dirtiest wards and 15 of the 24 hospitals where the standard was rated poor.

Unison said an investigation by Steve Davies of Cardiff University showed competitive tendering drove down standards regardless of whether the service was eventually contracted out

Unbelievably it is not just the cleaning services which are being contracted out to unscrupulous companies who exploit low paid workers. A report on forced labour, commissioned by the International Labour Organisation and the TUC is being suppressed by the government until after the election. It tells of the violence and intimidation suffered by these workers at the hands of gangmasters; the appalling and dangerous conditions in which many of these workers are working; and the terrible debt bondage many of them are forced into, borrowing large sums to travel to Britain, repayable at exorbitant rates of interest deducted from their wages.

One example cited is of a group of 32 nurses brought here from Asia to work in private care homes and the NHS being paid just £46 a week after the deductions of their ‘employment agencies’. When they started working for the NHS their monthly pay of £805 was reduced to £198 (£46 per week) after deductions were made at source by NHS trusts and handed over to these ‘agencies’.

Felicity Lawrence of The Guardian has carried out a detailed investigation of the status of many of these migrant workers. Her report makes for unpleasant reading and confirms the further decline of Britain, and the extent to which the so-called success of the service sector is based on a super-exploitation of workers.

Subcontracted migrant labour has provided a workforce that can be turned on and off at a few hours’ notice depending on the workload to sectors that have seen strong growth – food production and processing, construction, catering and hospitality, health care and contract cleaning – enabling the organisations that use it to compete globally.

The underworld of gangmastered labour that was glimpsed when 23 cockle pickers died at Morecambe Bay last year is spread like a web throughout the country.

One of the leading companies involved in food production, for example, is Natures Way Foods. It washes and packs over 14bn salad leaves a year for British consumers. Set up in 1994 at the suggestion of Tesco to supply all its branches with salad, it depends on migrant labour. It employs many of its local and foreign workers direct but it and its sister companies have also used a succession of agencies or gangmasters. The Natures Way website boasts of the “phenomenal growth” the company has achieved with backing from Tesco: “Our first four years were so successful... our business doubled in size every year ... In December 1999 we were placed 29th in the Fast Track 100 of the country’s fastest growing companies.”

Between 1996 and 1998, Natures Way was the fastest growing food company in the UK, a meteoric rise that mirrored the rapid growth in profits at its sponsoring retailer. It is now also a major supplier of salad to McDonald’s. It is owned by the Langmeads, a large landowning family that have farmed in the Sussex area for over a century. The two Langmead brothers have turned their farming business into an international operation that grows, imports, and packs food all year round through various related companies.

Natures Way has relied upon a flexible workforce, with migrants prepared to work long and unpredictable hours and gangmasters able to move them around the country at short notice.

Georgi was among a group of Bulgarian workers interviewed by The Guardian who were being supplied to Natures Way by one of its principal gangmasters, Advance Recruitment. They had arrived on business visas for the skilled self-employed but were packing salad for Tesco. Skilled self-employed business visas were the subject of a scandal earlier this year when a British diplomat blew the whistle on scams in Bulgaria and Romania, which famously included a one-legged Romanian obtaining a visa as a self-employed roofer.

Georgi said he had arranged work before arriving in the UK, having got a phone number through a friend, although he was supposed to be self-employed. “Because of my problems with a visa, Advance paid me very low wages, £200 for 72 hours,” he said. That amounts to £2.77 an hour when the minimum wage at the time was £4.50. Georgi said he had been working these long hours each week for over four months on the salad production lines: “The worst is I am never sure that I’m going to get paid. It happens to a lot of people.” He also said he paid no tax or insurance but had £48 weekly rent deducted from his wages for a bed in a maisonette he shared with six other men. He said he was afraid to talk about his circumstances. He had handed over the equivalent of nearly £1,000 to a Bulgarian agency in Sofia to fix his visa.

This scandal of forced and super-exploited labour has played a significant part in maintaining the profits of British companies, especially in the service sector, over the last ten years or so. Alongside the general squeezing of the workforce in industry and the services, we can see that this boom has been paid for by the sweat and stress of the working class and not by the productive investment of the profits the capitalists make from our labour.

Industrial production

Without an expanding market for their goods at home or abroad – or at least without the ability to compete in those markets where they do exist due to years of underinvestment in new machinery and research – the capitalists do not invest in increasing production. Instead they squander the profits we make on speculation, acquisitions and mergers. Through privatisation in all its different forms they have found a way to make money without the bothersome business of investing, employing and producing, by buying up already existing production and services and asset stripping while squeezing the workforce dry.

Thus even when there was some recovery in the US market, British capital was in no position to benefit from it. The Bank of England’s Monetary Policy Committee reports that although “the world economy was likely to grow more rapidly in 2004 than for thirty years, UK export growth continued to be relatively weak... exporters were apparently continuing to lose market share, more rapidly than expected.” This they correctly identified was partly due to the overvaluation of the pound. However, the long term failure of British capital to invest in new equipment and training remains fundamental, as we have explained previously.

In the third quarter of 2004 government figures showed that the economy had expanded by just 0.4 percent – half the rate of the previous two quarters – due to a sharp fall in industrial production by 1.1 percent, diluted by a 0.8 percent rise in the service sector. On an annual basis this equates to growth of 1.6 percent, a significant slowdown. A combination of producer price inflation, rising oil prices, but no retail inflation serves to squeeze profitability, and if the capitalists cannot increase their profits they will not invest more or produce more, but will try to squeeze more and more out of their workforce. Instead of increasing output they increase the rate of exploitation of the working class.

Investment has been cut by 40% in the last five years, and industrial production is now once again officially in recession. Britain’s GDP figures are kept artificially high by the growth of the service sector, to the extent, as we pointed out last year, that the measure of GDP has even been changed to give more weight to the service sector of the economy.

We have explained many times that the economy cannot survive on services alone, they are parasitic on the production of real wealth. Manufacturing now accounts for just 20 percent of economic activity, once more confirming Britain’s increasingly rentier state. There are less than 3.5 million now employed in manufacturing, yet this sector is still vital accounting for two-thirds of all exports.

Last year we exposed the myth of a new recovery in investment and this has now been confirmed. The series of interest rate rises introduced by the Bank of England – in a vain attempt to control the unprecedented growth of credit and debt in a ‘soft landing’ – has choked investment in industry.

While the decline of British industry has continued apace, with 750,000 manufacturing jobs destroyed since Blair and co came to office, Britain does lead the world in one sector – credit. At over one trillion pounds British indebtedness now outstrips GDP.

Credit and the Property Bubble

The Bank of England’s decision to increase interest rates was meant to bring this binge to an end, slowly, calmly and with no need to panic. Similarly it was intended to cool the overheated property market, gently, without causing a crash in house prices. Instead it has resulted in a further fall in investment and production, but an increase in credit as people paid their higher bills – mortgages, fuel bills (gas alone has gone up by 19% in the past year) – with their credit cards.

Increased mortgages have meant an increase in monthly housing costs of more than £100 for the average family. This must have an effect on consumer spending, and we have already seen the first evidence of this.

The housing bubble may even now be bursting. House prices rose on average by 18.5 percent last year, but by the end of the year were actually falling in many areas. According to Halifax, the UK’s largest mortgage lender, house prices fell by 1.1 percent in October 2004, taking nearly £2,000 off the average price of a house, the steepest rate of decline since October 2000. The average house price nationally stood at £152,159 at the end of October 2004 as opposed to £154,299 at the beginning of July.

On a quarterly basis prices fell by 0.4 percent between July and October. Five interest rate rises over the past year have raised mortgage payments as a percentage of earnings from 14 percent to 19 percent for new borrowers.

First time buyers can no longer afford to climb onto the property ladder. Young workers and their families don’t earn enough to buy so those wanting to sell to them can’t sell, they in turn can’t move up the ladder and so on. This downward spiral was hidden for a time by those buying houses to rent them out. Now the buy-to-let option is made ever more costly by rising interest rates. As a result, those who bought to rent out are trying to sell too, and there are more trying to sell than to buy. So prices stop rising and begin to fall. These are the conditions for a crash in house prices maybe even of 20 percent.

In the usual expert tone of understatement Martin Weale of the National Institute of Economic and Social Research stated “Looking at the history of the housing market, we have to say there is a significant risk of house prices returning to more normal levels fairly quickly.” More frankly he added, “I would not bet my money on there not being a 20% to 30% fall in house prices.”

He is not alone in this belief. Steve Nickell of the Bank of England, reacting to the figures released by the Halifax explained that there was the risk of a “much bigger correction”. Based on the long-term relationship between house prices and average earnings, of about 3.5 times, he said, house prices would have to fall by around 30 percent to re-establish the average of the last twenty years. Nickell however believes a crash can be avoided, however his reasoning will convince none of us. Wages, he argues, will grow more rapidly than house prices for the next few years, thus re-establishing the norm without a steep fall in property values!

Already, before any steep fall in house prices, there has been a dramatic increase in repossessions. In the third quarter of last year repossessions were at a three year high. The courts made 11,186 repossession orders the highest since the same period in 2001 and an annual increase of 8 percent. The same figures reveal that mortgage lenders had commenced repossession proceedings in 18,513 cases the highest figure since December 2000 and an annual increase of 15 percent.

As we have pointed out before there are two sides to the housing crisis in Britain. Young workers cannot afford to buy and are increasingly forced into the private rented sector as council housing stock has continued to decline. There are now just 2.8 million council houses left in Britain. Despite Prescott’s much trumpeted plans to build houses for young workers and their families, these will be privately owned. If Blair and co get their way there will be no council housing at all, even though the party conference voted overwhelmingly for more investment in local authority housing. The private sector cannot begin to tackle the housing shortage, after all it is in the business of making money not building houses on the basis of need. Not Labour Party conference but big business and the city of London determine Blair’s housing policy.

In a new pamphlet for the Fabian Society, a certain Jeff Zitron argues that tenants should no longer have a vote to keep their council landlords. Mr Zitron, who runs a housing consultancy that specialises in housing transfers and incidentally donated £10,000 to the Labour Party in 2002, proposes that the transfer of the remaining 2.8m council homes should be made mandatory by the end of 2007.

Blair and Prescott have pledged that all social housing should be improved to a decent standard by 2010. But they insist that the extra resources to achieve this will only be available to councils that switch their homes to housing associations, or private finance initiative consortia.

This is in direct contradiction with policy passed by Labour’s conference. Mr Zitron’s pamphlet, Transfer of Affections, said: “The division between the Labour government and the Labour party over stock transfer is undermining the interests of tenants and preventing many of our worst estates from being improved.” Undermining his ability to make money more like, nonetheless his statement highlights the growing opposition to Blair’s privatisation plans inside the Labour Party.

The lack of affordable housing is an important issue alongside health and education, and Blair and co have only one answer, PFI. This is a licence to print money for private consortia but cannot begin to solve these important problems. Meanwhile the property market teeters like an implausibly high house of cards which must tumble sooner or later.

Interest rate rises have resulted in falling investment and production, in turn strengthening of the pound, leading to further falls in investment and production. They have also meant increased credit to pay for the increasing cost of credit!

Consumer Spending

All of this is reaching its limits. Before Christmas sales were falling in the shops. In the last week of October department store John Lewis reported a three percent fall in sales. Marks and Spencer meanwhile reported that its womens’ wear sales had fallen by 18 percent on a year earlier. The Society of Motor Manufacturers and Traders published figures showing car sales down 13 percent in October, the worst October figures since they began collecting data in 1992.

Right up to Christmas shops reported sluggish activity, so much so that in December, the retail sector’s high point, there were sales in major high street shops before Christmas. Finally they gained some relief with heavy spending in the last two weeks of December. However, this in turn will have been paid for with credit cards and, therefore, will only serve to postpone and exacerbate the problem.

Right on cue, the banks have published figures showing that spending on credit cards in December 2004 totalled £584.6 million, up 12.6 percent on last year. For the first time spending in the shops on credit overtook cash and cheque transactions.

The economy is grinding to a halt, industrial production is falling and the credit that has been fuelling consumer spending and the service sector to mask it is reaching its limit.

Far from abolishing the boom-slump cycle, Brown will not even succeed in meeting his so-called ‘golden rule’ of balancing the budget in terms of current expenditure over the economic cycle. Growth in the economy is likely to be below the 3-3.5 percent needed for that. The trade deficit in the third quarter of 2004 was £15.2 billion, that means it is now running at £60 billion a year, or £1000 for every man, woman and child in the country. Whatever shade the new government may be they will have to increase taxes, increase borrowing or cut spending. Most likely it will be a combination of all three and the working class will once again be asked to foot the bill.

This will have an impact not only on spending, not only on statistics, but on real lives, on the outlook of classes, on class consciousness and on the class struggle.

Leon Trotsky explained something quite profound when he wrote that it is not simply the experience of a boom or a slump that determines outlook. The idea that slump means revolution and boom equates to social peace is patently absurd. Often in a boom, if order books are full workers can fight offensive battles for higher wages. A sharp decline in the economy leading to high level of unemployment can curtail the workers’ movement. It all depends on the context of the conditions, what period has been passed through. A slump following a boom based on increased stress and sweat and job insecurity can have a different effect to a slump following a boom in which the conditions of workers have improved significantly. More important is the change from one condition to the other. The mounting insecurity and uncertainty that disturbs routine has an unsettling impact and can have the effect of shaking a sleeping man. This fact makes it even more important not to hang on the prospect of a slump. From any point of view this is foolish. The exact tempo of the economic cycle cannot be forecast. In any case a serious slump in the economy is not the best situation for anyone. From our point of view a period like this in which despite statistical growth in the economy, jobs are in danger, conditions are under attack, raises questions in the minds of workers.

In the housing market at the end of October just 40 percent of people believed that prices would be higher in a year’s time, compared to 64 percent three months earlier. According to a Mori poll 38 percent of people now think the economy will get worse as opposed to just 12 percent who think it will improve.

One statistic more than any other sums up for us why spending, credit and the property bubble cannot continue, the steep decline of disposable income. Price comparison website uSwitch.com says spendable household income – after bills are paid – will fall in 2005 for the first time since 1998. The impact of higher taxes together with increased gas, electricity, water and sewerage charges mean that of every extra £1 of pay only 28p will be available for spending on items of choice. This compares with 38p per extra pound last year and 50p back in 2002.

This will have a profound impact on the economy so heavily reliant on consumer spending. It will have an important effect on the outlook of workers too. Yet it would be a serious mistake to think that consciousness is determined solely by such economic factors. As Marx explained social being (and not just wages) determines consciousness. Many other factors – political questions like the war in Iraq – and social questions like health, crime, education and so on have a big impact too. Working hours and conditions have just as much of an effect as wages. The economy is entering its 14th year of growth, and this has been achieved not through investment in new machinery, but above all through an increase in absolute and relative surplus value, that is through longer working hours and a massive increase in stress and strain at work. This applies to all sections of workers. In the past we have explained the role of speed-ups on the production line and the general introduction of new management techniques, including teamworking in the Post Office. No sector of the workforce is immune to this epidemic of stress.

Employment and Stress

According to a survey published by the Schools Advisory Service one third of all teachers working in schools in England and Wales took sick leave last year as a result of job-related stress. It claimed that more than 213,000 days were lost to stress, anxiety or depression suffered by the teaching profession at an annual cost to schools of over £19m. Teachers were off, on average, for 11.5 days in 2003 – more than two full working weeks. The main three reasons given were stress, broken bones and sciatica (pains in the back, hip and outer leg). It also pointed to government’s figures which showed that teacher absenteeism had grown by 11% over the last five years. The total number of days taken as a result of sickness was 639,077 last year, according to SAS.

More people than ever are in work in Britain, and this has an effect on outlook. However that effect is not one of widespread security and prosperity. According to official statistics employment increased by 55,000 over the quarter to October 2004 to 28.44m – the highest total since records began more than 30 years ago.

Unemployment fell by 29,000 to 1.39m, while the number of people claiming benefit was cut by 3,400 last month to 833,200 – the lowest for almost 30 years. These facts have an effect on the outlook of workers, but so too does the nature of many of these jobs – insecure and stressful. High employment suggests a strong economy, but the reality is that the strength of that economy is based on the sweat and strain of long hours and low pay.

At the same time the number of people not looking for work – the so-called economically inactive – increased by 5,000 to 7.9m, while jobs continued to be lost in manufacturing firms. The number of inactive men rose by 23,000 to a record high of 3.15m, while the total for women fell by 18,000 to 4.76m.

That total covers people who have been made redundant, students, individuals on incapacity benefit and those looking after sick or elderly relatives.

The work minister, Jane Kennedy claimed, “The improvement in the labour market is providing more opportunities for people to move from welfare to work. The last year has seen the number of people claiming unemployment benefits fall to its lowest level for nearly thirty years. There are also fewer claiming incapacity benefits and fewer lone parents on benefit.”

We can presume that most of those previously on incapacity benefit have not subsequently been cured, nor have the lone parents won the lottery and employed nannies. In reality they have been forced back into work, many in low paid jobs in the service sector.

The number of manufacturing jobs in the country fell by 112,000 to 3.26m in the three months to October, compared with a year earlier, the statistics also showed. The biggest cuts were in textiles, leather and clothing firms, and the number of people working in the industry is now the lowest since records began in 1978.

Across the economy, the number of job vacancies fell for the second month in a row – down by 2,000 to 644,300 in November. Jobs in the service sector are beginning to dry up and as consumer spending falls there will be job losses here too.

The UK has one of the lowest unemployment rates in the industrialised world, with only Ireland and Luxembourg having lower. However this headline masks the reality beneath of millions working under immense stress; many forced off benefits into work; and record numbers abandoned as unemployable. All these factors, and not just low official unemployment statistics, have an effect on society and the outlook of the working class.

Labour Movement

In these economic, social and political developments we find the maturing conditions for social explosions. In the first place further strikes, more activity in the unions, in fact the continuation of the process we have explained over the last two years, which is the mirror image of the process that led to the triumph of social partnership in the unions and Blair in the Labour Party.

In March we celebrate 20 years since the end of the miners’ strike. This most heroic post-war struggle deserves to be celebrated, but also to be studied and understood. The courage and determination of this struggle remains an inspiration. Yet ultimately it was a defeat, and a major setback that led to demoralisation, inactivity, and desperation in the movement. Its effects were long lasting. In the unions social partnership triumphed not because workers believed in it, but because they did not believe that a struggle could succeed. In turn Blair and co were able to rise to the top of Labour illustrating a sense of desperation to get rid of the Tories. This must be recognised.

However, the crust built up over the intervening two decades is cracking. The working class has the patience of Job it seems, but it does not last forever. The hopes of millions in the Labour government have been dashed and patience has largely run out. In the new international, political and economic environment facing the next government there will be a new chapter of militancy, of politicisation and radicalisation.

Our orientation to the trade unions flows from this fact. The correctness of our approach to the new generation of trade union leaders means that we understood the importance of these developments but did not have illusions, nor did we sow illusions, in these leaders.

Neither the shrill denunciations of the sects which prevent them from connecting with leftward moving workers, nor the cheerleading role of the Morning Star, aligning themselves entirely with each new left general secretary, but instead supporting every step forward, while criticising each failure to act and above all calling on them to put their words into practice has allowed us to make some important contacts amongst a new layer of workers.

The new generation of left leaders in the unions have already come into conflict with Blair and co, at least on the floor of conferences. We have to continue to demand that they turn these words of opposition into action.

The power wielded, or potentially wielded, by the trade unions in the Labour Party was demonstrated in a round about way by the so-called Warwick agreement. Whilst there was no reference to the rank and file by the union leadership for the set of extremely minor reforms agreed with Labour leaders at Warwick, nonetheless the fact that the Labour leaders were forced to meet and come to some kind of agreement with the union leaders is an illustration of what the union leaders could do if they raised their little fingers. This was demonstrated again at Labour’s annual conference. As we have pointed out before – and yet all the sects remain blind to the fact – just four main unions control 40 percent of the vote at the conference. Consequently they can dominate the agenda, and to some extent did so in 2004. A resolution demanding the renationalisation of the railways moved by TSSA was passed as a result, ironically in the absence of the RMT.

We explained previously that frustration with Blair and co might lead to one or two of the smaller unions disaffiliating. This was the case with the FBU for example reflecting the anger of the firefighters following the experience of their struggle with the government. However in the case of the RMT, had disaffiliation been put to a vote amongst the membership it seems clear it would have failed. Instead the decision to back the SSP by some branches in Scotland, meant the union had broken the party’s rules and so they were bureaucratically removed, effectively expelled without disaffiliating.

Woodley, Simpson and the other new leaders of the big unions will be quiet in the run up to a new election, but afterwards will be pushed into still further open opposition. Initially demand for disaffiliation may grow again but this will dissipate as union leaders are forced into further opposition inside the Labour Party. In those new struggles the RMT can easily bring its weight back into the Labour Party, as can the FBU.

At this stage the main union leaders seem determined to replace Blair with Brown, even UNISON’s Dave Prentice has called on Blair to hand over to the Chancellor. This is because they believe Brown has the best chance of winning a contest. What they still fail to see is that the candidate with the best chance of winning is whoever they choose to support given the weight of the union vote inside the party.

Labour Party

The opposition of the trade unions is intimately connected with the growth of a new left in the Labour Party. As we have always explained workers and youth will not suddenly wake up one day and join Labour in their thousands and transform it overnight. They certainly are not to be found there at present. Instead it is events in society which will encourage divisions at the top of the party, and the pressure of workers from below that will push the union leaders into conflict with the Labour leaders. The dialectical interaction of these developments, with cause becoming effect and effect becoming cause, will lead to the growth of a new left wing inside the Labour Party at a certain stage.

Will the Labour Representation Committee (LRC) be this new left force? No doubt it will be made up of all sorts. With the exception of one or two individuals like John McDonnell, and the now retired Tony Benn, the left has been virtually invisible in the Labour Party since the late 1980s. Which individuals will move to the left, or back to the left, in the next period is impossible to predict, but it will be events that will push them in that direction and not personalities.

At present the LRC has 400 paid up members and a programme similar to the old Alternative Economic Strategy. Given the opposition to Blair in the rank and file of Labour and the unions this is quite poor. We should participate, take part in a joint struggle against the right wing, but also raise our ideas as an alternative to the blend of reformism on offer.

In reality it will be events and the interaction between those events and the workers’ organisations which will not only remove Blair, and sweep away Blairism, but also create a new left force inside the labour movement.

This process will create many new opportunities for Marxism in the years ahead – we must prepare for that period now theoretically and by building amongst the youth and the unions, not by sitting in empty ward meetings. As Ted always says we are there not for what is there now but for what will be there in the future. Meanwhile, we have to prepare and build, the key to our future interventions in Labour will be the extent to which we build in the unions and above all the youth today.

We have described the strikes and changes of the last two years as the beginning of the catching up of consciousness with reality. This is still at an early stage, but it can accelerate more quickly than we might think in the next period. Again we must not be seduced by the surface of society, nor by the current tempo of events, which has an explanation and can change rapidly. Statistics are only one form of evidence. The last two perspectives explained the role of statistics in some detail. Facts and figures can hardly be ignored but they must be understood in context and anecdotal examples from the workplace are just as important and demonstrate the potential for explosions.

Is this not what we said before? Yes, these conditions continue to accumulate and mature. So where are these events then? We did not say and will not state now, that these events will happen tomorrow or next week. The process at work in British society will not proceed in a straight line and at an even tempo, left march until the revolutionary victory of the proletariat. There will be ebbs and flows. At this early stage ebbs can sometimes appear to be full stops. The role of leadership is vital here too. Strikes continue to be repudiated even by some of the supposedly new left leaders. Struggles like those of the firefighters and local government workers have been settled by the leadership when more could certainly have been won had the leadership shown the same determination as the rank and file.

Changing Mood and the Trade Unions

We have to keep our finger on the pulse of the workplaces as well as the statistics. The example of the Honda plant in Swindon is highly instructive here. This plant, employing around 2000 workers, was non-union until three years ago. Then the workforce was signed up to the AEEU under a sweetheart deal engineered by Sir Ken Jackson and co. The Jackson regime sold the Honda management a compliant workforce. The Honda workers, however, had other ideas. Faced with a compliant union leadership the management introduced a form of compulsory overtime. Working on one hour at the end of a shift in ‘emergencies’ rapidly became the regular working of two or three hours, workers staying on till 1 or 2am when they were supposed to have finished at 11pm. The union’s local full time official refused to call a meeting of the workforce despite their demands over several months. Then a worker we are in contact with in the plant called a meeting and informed the official. 70 workers turned up on a Sunday. There was an electric mood. The official attended and initially denigrated the meeting as ‘unofficial’ etc. The workforce was determined to fight against management’s attacks no matter what the union official said. In the end they won an impressive victory. They went through the official procedures, and union membership grew as a result of taking on management and the preparation of a ballot. The management caved in and removed the compulsory overtime. This tells us more about the mood developing in workplaces around the country than pages of statistics which do not take into account the role of the leadership in derailing struggles or other factors. The leadership of Amicus, for example, has repudiated 20 strikes in the last twelve months. Statistics are important but they must be understood in context.

All we have described so far are tremors, portents of explosions to come.

The struggle of the Firefighters was an important turning point not just because of their militancy, unfortunately not matched by the determination and tactics required of the leadership of such a struggle, but also because of the phenomenal level of public support they enjoyed. This represented something more profound than admiration for a dangerous job, it illustrated that millions of workers are equally disillusioned, feel the same way, and given half a lead by their own unions would fight back too.

The Unison Local government strike was also a decisive turning point. It was the first such nationwide struggle for perhaps a decade. The leadership of that struggle immediately buckled under the pressure of Blair and co. Yet nothing was settled by that dispute, and now public sector workers faced with job cuts and attacks on their pensions are preparing new battles.

“Agenda for Change” – the policy which claims to eradicate poverty pay in the public sector – represents a desperate bid by the leadership to accommodate Blair and co, not an attempt to defeat low wages. From the beginning the Affiliated Political Fund organisation in UNISON has been a transmission belt for the policies of the Labour leaders into the union rather than the other way around. Local government workers, health workers, the public sector employees represented by UNISON have borne the brunt of PFI and other Blairite privatisation schemes. Sooner or later the power of their 1.4 million members, and their power inside the Labour Party will have a dramatic impact on a shift to the left in the labour movement.

A single left candidate in the UNISON general secretary election would stand a good chance of defeating Prentice, if they stood on a programme of fighting Blair in the workplace with militant action to defend jobs and services, combined with a struggle against Blair inside the Labour Party.

Threats of a new massive closure programme in the Post Office, despite Royal Mail making a sizeable profit, promises a new round of struggle by postal workers who have been at the forefront of industrial action in recent years.

Civil servants have also been to the fore in the recent period. The shift to the left at the top of PCS is a genuine reflection of the changing mood below. The current plans, announced by Brown, to axe 100,000 civil servants jobs, combined with an assault on their pensions, is pushing the civil service in the direction of further militant action. Given the generalised nature of the attack on pensions, a mood is developing amongst a wide layer of workers for a fight on this issue. A call by the TUC for a one day general strike before the forthcoming election would gain an enormous echo, and mark another major step in the process unfolding in the unions. However, the TUC leaders would only call such action under enormous pressure from below.

Despite the decimation of British manufacturing, unions like Amicus, the T&G, and GMB remain immensely powerful. Not a wheel turns nor a light burns without these workers, no matter how many Starbucks fill our high streets, or how much income the tourist industry generates, this bald fact cannot be escaped. The shift to the left at the tops of these unions in recent years, under pressure from below, did not end with the election of this or that General Secretary. This process has a long way to go yet. The prospect of a merger between Amicus and the T&G – although the bureaucracies in the unions believe this to be an easier way to secure the unions’ finances than building the membership – will nonetheless, if it goes ahead, create an immensely powerful weapon for the industrial working class.

The growth of militancy in the workplace, the subsequent shift to the left inside trade union organisations and the interaction of those developments is still at an early stage after years of right wing domination and class collaboration. Nonetheless in this unfolding process lies the key to future changes in the Labour Party and one of the keys to the development of the British revolution.

We maintain that all the conditions are being prepared for the development of major struggles even a general strike in Britain. When we first raised this perspective it was met with some derision around the movement. Yet now even the TUC is forced to talk in these terms when preparing their day of action against the attack on pensions. Of course, the leaders of the TUC will avoid this development at all costs, but in the end they will not be able to stand in the way of generalised movements of the British working class.

International events, all kinds of unexpected developments, a failing economy, a crumbling infrastructure, increased militancy will all combine to have an impact on the outlook of all classes in society.


Much of our previous perspective has been borne out. Other elements are now developing. Still other perspectives that dimmed as events were delayed can once again loom large. In an election year it seems appropriate once again to mention the prospect of some form of National government, or government of national unity in the future. This would be a government of crisis. As such it is never simply a question of parliamentary arithmetic which results in some form of coalition, but a profound crisis in which the ruling class cannot rely on a simple majority in the House of Commons for its policy. After all this partly explains their attacks on the limited democracy of the parliamentary system. Still rather than abandon that system and the cover it provides for the untrammelled rule of the monopolies and the ruling class, they would, in the first place, probably attempt to use some form of national government to maintain at least the illusion of democracy for implementing the policy they require. In a very limited sense we saw a glimpse of this in the joint Labour-Tory vote on foundation hospitals and student fees.

The most important feature of the next period in Britain will be a growing class polarisation in society. That means developments to the right and the left. There will be a growth of reaction, of various right wing groups which cannot be ignored. The Tory Party will move further to the right. However the fundamental feature will not be this but the movement of the working class, and the shift to the left in the workers’ organisations, in the trade unions and, at a certain stage, the Labour Party too.

This is the fundamental conclusion of our perspective: all the features we have described will have the effect of increasing class consciousness on the part of the working class, the process Marx called transforming itself from a class in itself, to a class for itself.

For a whole period the waters have been muddied, and the class division of British society glossed over. The growth in the economy, with all its contradictions, combined with the lasting effects of important defeats, has served to mask the differences between the classes and the need to struggle. However that period has decisively ended. It may take some time for consciousness to catch up with reality, the process will take place at different tempos and not in a straight line, experiencing rapid advances, steps backward, and periods of stagnation.

At a certain stage the growth of new left reformist or even centrist currents will be an inevitable part of this process, too. In the future, on the basis of major events, the left will come to dominate the Labour Party once more. That seems hard to imagine at this point in time, when the party as a whole is largely dormant, and the left almost invisible. However, a dialectical interaction between events and the mass organisations of the workers, beginning with the unions, and then in turn between events, the unions and the Labour Party will transform all of these organisations again and again in the years ahead.

The method of Marxism allows us to see clearly the outlines of future developments which will lead to splits, divisions and the growth of a mass left force inside the workers organisations. From these developments the future mass forces of revolutionary Marxism will emerge, provided we have built a serious tendency of cadres in the meantime. It is precisely because we understand the importance of the mass organisations and their future course of development that we must now devote such attention to work in the unions and to independent work amongst the youth.

When these events will occur is not a question we can seriously address. Instead we concentrate our attention on each stage through which we pass in order to prepare ourselves to intervene in the movement of the working class and its organisations, and above all amongst the youth. Not when or if, but will we be ready, will we build and prepare the forces needed, these are the questions the answers to which are in our control.

The fundamental question facing our tendency is not when events will shake British society to its foundations – a question we cannot answer with anything approaching certainty. Nor is it whether there will be such events or not – our unshakeable confidence in the struggle of the working class and the socialist future of humanity is at the root of our indefatigable revolutionary optimism. This faith is not of the religious or mystical kind but instead is based on the sound science of Marxist ideas. The question that only we can answer is: will we be ready for those inevitable events?

In 1925 Trotsky posed the same question, quoted at the beginning of this document. All thinking workers and youth should make a serious study of Trotsky’s writings on Britain which retain all their validity and remain a powerful weapon for us today. That is not to say that Trotsky’s writings are a recipe book in which we can find ready made answers to the problems in front of us. Rather it is the method employed by Trotsky, the method of Marxism, which we must strive to understand and apply to the unfolding events around us.

Tragically, in 1926 the answer to Trotsky’s question turned out to be “no”. Our task is to ensure that we can answer “yes”, and our starting point is to arm ourselves with an answer to the question where is Britain going?

To the superficial observer the answer would probably be “nowhere far, and nowhere fast”, but as Marxists we must not allow ourselves to be seduced by the surface calm – increasingly now punctured by events like the anti-war demonstrations, the civil service strike, the Wembley dispute, etc. Our task instead is to burrow away under the surface to grasp the process, the shifts and molecular changes, taking place beneath. We must take the pulse of the economy, of politics, of international relations and try to understand their impact on the consciousness of all classes in society. This perspectives document seeks to describe and analyse the accumulation of changes taking place in society which must at a certain stage result in new qualitative leaps, sharp turns and sudden changes in the situation. We must not be caught unawares. We must build in advance of the events we foresee.

How do we prepare forces for events, without events to prepare forces? We concentrate on the ones and twos, recruiting and educating the most advanced workers and youth. Even at an early stage in this process there are new militants to be won in the trade union movement. Our work in this field is generally slow and patient work but even here we can make important gains. However, there can be no doubt – and there is no contradiction with the fact – that it is an energetic turn towards the youth which is the key to building our tendency now.

This period should have been ideal for the sects, yet they are all at sea. They lack a compass. The ideas of Marxism are the means by which we reach workers and youth, win them, educate and train them. We have those ideas. To the degree that we are convinced of the inevitability of events, that we understand the crisis of capitalism, we must lift ourselves up to the task of winning new layers of workers and youth to the struggle, to the programme of International socialist revolution.

Movements of the working class are inevitable. We cannot make predictions about the timescale involved. We cannot even commit ourselves to the five years referred to by Trotsky in the quote that opens this document, although even that is possible. When Trotsky wrote those lines it was only a matter of months later, in May 1926, that the great General Strike took place. We cannot say when new explosions will take place, but a period of decades does indeed seem highly improbable. All we can know for sure is that these struggles will take place. That is guaranteed. That we capitalise on our opportunities is not. It is in our hands. It is a conscious decision we must make to dedicate ourselves to building our movement.

We must feel on our shoulders a piece of history. This weighs not as a heavy burden but as an inspiration. The international struggle of the working class and the correctness of the ideas of Marxism must inspire us to commit ourselves to the effort and sacrifice required to build our movement.

We have a vision of a new society, a society without war, poverty, hunger or despair, where the remarkable power of science and industry is democratically planned and used in the interests of all. A world of superabundance is possible. That socialist world is no utopia, but a destination we intend to reach.

T.E.Lawrence once wrote “Dreamers of the night will wake to find their dreams but vanity, but the dreamers of the day, these are dangerous men, for they will act upon their dreams and make them reality.”

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