Where is Britain going? – Economic and political perspectives

As the Coalition government gears up for the second half of its term in office, it is clear that the British economy is far from the path of recovery. Despite some terrible betrayals over the past year, the labour movement is debating its next move and the possibility of a general strike. On the following three pages, we print a resolution passed by the November meeting Workers Power National Committee on the way forward for the working class

The British labour movement is facing unparalleled challenges:
• A period of recession and stagnation that has already lasted five years and shows no sign of ending

• A right wing Tory-dominated government with half its life still to run and a programme of austerity that will, if carried through, demolish the welfare state

• A weak trade union movement – too heavily dominated by the public sector – whose leaders are unwilling or unable to mount a united fightback

• A far left which insists on setting up rival anti-cuts campaigns each claiming (falsely) to have ‘united the resistance’.

However the balance sheet is far from being all negative.
• In November-December 2010 we saw a massive week-long wave of militant student demos protesting the hike in fees to £9000 and the abolition of the education maintenance allowance

• Starting in October 2011 the Occupy movement came to Britain and exposed crying social inequality and the corruption of the of the 1 per cent

• 2011 also saw the total number of working days officially lost to strike action rise to 1.4 million, the highest figure since 1990, thanks in large measure to N30. In fact the real figure was probably substantially larger.

• In 2012 we saw the return of the wildcat – walkouts, pickets and blockades of sites by rank and file electricians and construction workers, beating Balfour Beatty and moving on to the giant London Crossrail project.

• 2012 has also seen 20,000 London bus workers wage one-day strikes, using militant picketing to win payments for extra work during the Olympics.

• On the European mainland, Greece, Portugal, Spain and Italy, have seen mass general strikes with the ETUC calling a continent wide day of action on 14 November.

Add to this the international revolutionary movements and struggles – notably the Arab Spring, the Occupy movements in Spain, USA, Greece and Germany and the South African gold and platinum workers’ strikes – and it is clear that the depression has generated a new period of deep social crisis for capitalism.

This is made up of revolutionary and pre-revolutionary situations, but also counter-revolutionary ones, as the rise of Golden Dawn in Greece or Jobbik in Hungary threatens. These can well occur in the wake of major defeats – or failures by the left to rise to fight for power.

Nothing says revolutionary potential has to be realised. If its development is left either to spontaneity or to the trade union leaders, it will be frittered away as it has been several times over the past decade. But this time the punishment will be in proportion to the greater severity of the crisis.

The halving in size of the trade unions and weakening of their shopfloor strength has left the public sector unions as the big majority of the TUC. But these too will be decimated too if the Tory cuts are implemented in the next two years.

Unemployment will remain in the millions and fulltime secure jobs in central and local government, in social services, health and education will be decimated too – reducing us to a pre-1945 Poor Law provision, and releasing the upper middle classes from paying into the system.

But to do this, Osborne and Cameron must smash the resistance of the public sector unions, and pick on and destroy private sector unions such as the RMT which put up militant resistance to downsizing, closures, outsourcing and the array of wage reducing and profit boosting measures the bosses are intent on.

The historic nature of the attacks presents the necessity for an equally historic resistance. Our biggest enemy is thinking small, limiting ourselves to slowly rebuilding our unions, workplace by workplace. With this approach we will soon have precious few workplaces left.

There is a growing layer of new union militants and youth who are waking up to the need to fight all together, with industrial action but with class-wide political goals. Such a tactic has a name – a general strike.

In September 2012 the TUC finally dared name it – if only to study its practicality. We should seize on this half-hearted measure with both hands and campaign over the coming year for a general strike to defend our jobs, services and union rights, and fight for a better future.

The ongoing recession
We are now five years into an economic crisis unparalleled in the post-war era. Weak recoveries have repeatedly given way to quarters of recession, indicating an overall stagnation in the old imperialist heartlands.

Its origins lie, as we predicted, in the failure of neoliberal attempts in the 1980s and 1990s to offset the tendency of the average rate of profit to fall. In fact these measures rather “blew back” causing a terrific crisis of the banking system.

There is not a shortage of capital. In Britain there is a £750 billion “corporate cash mountain”, roughly equal to half the UK’s annual GDP. The problem is not that banks are refusing to lend but that industry and commerce are unwilling to make long-term investments because they cannot foresee a rising rate of profit.

The feverish boom of 2002-06 led inevitably to a crash. It originated in the US as the 2007 subprime mortgage crisis, threatened to bring down their banking sector and rapidly spread to Europe. The trillion dollar bailouts of the banks in 2010 – not government spending – created a huge fiscal crisis in the Eurozone, starting with Greece and Ireland but spreading to the Iberian peninsular.

As a result the US and most of Europe remains in a great depression – a historic crisis of the capitalist system as a whole. As we predicted, this has engendered pre-revolutionary and revolutionary situations and will continue to do so.

When the mortgage crisis of 2007 turned into a credit crunch in 2008, most governments responded with stimulus packages – public investments in infrastructure and services, education and training, and printing money (quantitative easing). Fearful of repeating the Hooverism of the 1929-33, Great Depression, governments, right and left, on both sides of the Atlantic, used public spending to boost demand – the standard Keynesian recipe. The long out of favour neo-Keynesian economists rejoiced. But their celebrations were short-lived.

In 2010, faced with fiscal deficits caused by the trillions spent on bailing out the banks, and a run on government bonds and currencies, European governments abruptly changed course, claiming the crisis had been caused by costly public services. Britain was in the forefront but Germany’s Chancellor Merkel took a similar line – not with Germany, but with Greece, the weakest link of the Euro chain.

The southern and Mediterranean EU states – Greece, Portugal, Spain and Italy – are imposing brutal cuts to public services. But across Europe – from Ireland to Latvia – crushing austerity measures are being imposed. The EU heavyweights, Germany, France, and Britain, demand endless cuts and privatisation in return for bank bailouts and support in the bond markets.

Where next for the EU?
Austerity is underpinned by a new European Fiscal Treaty, railroaded through Eurozone parliaments or just signed by heads of state in the Spring and Summer. The treaty introduces a “golden rule” making balanced budgets mandatory. Every state’s structural deficit would be capped at 0.5 per cent of GDP. “Automatic brakes” will be triggered if this goal is missed. The new rules must be “preferably” enshrined into their constitutions – beyond the reach of democratically elected left governments. The unelected European Court of Justice can impose fines of up to 1 per cent of GDP on any state which breaks it.

The treaty, which comes into force on 1 January 2013, was imposed by Germany as the price of further loans or support in the markets. It nakedly subordinates the economies of the weaker states to Germany and France and is a major leap in the centralisation of the EU. This is why Britain’s Tory government is considering its future as a full member of the EU and Cameron is talking of a referendum.

The Europe-wide austerity policy and the new treaty will drive countries into even deeper recession with more debt and increased misery for working people. Cyclical recoveries will hardly rise above stagnation. The winners are the big banks and assorted corporations of Germany and France, which are cherry-picking the potentially profitable enterprises and services in the states whose economies are subordinated to their dictates.

Germany’s strength lies in its domination of the EU’s markets and institutions, especially the European Central Bank. From this position of strength it has been able to set the Euro at a rate that has forced weaker economies to borrow massively to sustain their state budgets and less productive corporations: a rate enormously profitable to the German, French and British banks.

Another strength was the success of Schröder’s Hartz4 laws in holding down German workers’ wages at or below the rate of inflation. The entire German working class did not lose equally from this. A large labour aristocracy, tied to their employers by the class collaborationist policies of IG Metall, has maintained job stability and wage levels for skilled workers – though this too is under threat, e.g. in the car industry.

But a huge part of the economy has slipped into precarious working, so German workers as a whole get only the crumbs from their bosses’ pillaging. Indeed the workers of Europe should not line up with their “own” bosses and governments, whose cuts prove they have no loyalty to them. Instead we must use the international character of the crisis as a weapon against the capitalists and their institutions.

Massive, co-ordinated action across Europe is vital. Workers in Germany, France and Britain need to organise solidarity, and fight to cancel the debts.

How real is the recovery?
The IMF in October 2012 gives a bleak forecast for the world economy:

“The recovery continues, but it has weakened. In advanced economies, growth is now too low to make a substantial dent in unemployment. And in major emerging market economies, growth that had been strong earlier has also decreased. Relative to our April 2012 forecasts, our forecasts for 2013 growth have been revised from 2.0 per cent down to 1.5 per cent for advanced economies, and from 6.0 per cent down to 5.6 per cent for emerging market and developing economies.”

And as for Britain, The Financial Times – an ardent supporter of Osborne-ism – says it “led the way in voluntary deficit reduction… [but] is now enduring a prolonged period of near-stagnation… Growth is expected to remain below 1 per cent in 2012 for the second year running and prospects have dimmed to such an extent that the Conservative-Liberal Democrat coalition government is now planning for seven years of public spending cuts and tax increases to rein in the budget deficit, rather than the five it had intended on coming to office in May 2010.”

By 2015-16 the Government will have slashed £99 billion of spending and raised taxes by £29 billion – a cumulative cut of £128 billion. However, the deficit, on current forecasts, will have fallen by only £64.5 billion. For every two pounds of austerity the deficit will only have fallen by one pound.

The economy has grown by just 0.6 per cent since the Osborne’s first Spending Review of October 2010, compared to an OBR forecast of 4.6 per cent. GDP remains over 3 per cent below its 2008 peak.

But this policy is not, as the Keynesians think, the result of a fit of dogmatism or idiocy; it was the policy called for – virtually unanimously – by the bourgeoisie itself, via the CBI and the City.

Britain is officially out of recession, with Office for National Statistics (ONS) figures showing that the economy grew by 1 per cent in the third quarter of 2012. But the ONS report itself was far less adamant; admitting that 0.2 per cent of that “growth” could be accounted for by ticket sales to the Olympic Games, a one-off factor if ever there was one. Further, the ONS predicted back in July that this quarter’s figures would gain by about 0.5 per cent simply because June’s extra bank holiday had depressed the baseline.

Manufacturing is down again, as is the long-suffering construction sector, by 2.5 per cent. The massive cuts in public sector construction will continue to erode jobs, outside of a few prestige projects like Crossrail in London. Banking and business services have seen a 1 per cent rise but the 10,000 job losses announced by UBS could be a sign of further downsizing in the pipeline.

In short, we are still in the longest and deepest downturn since the 1930s. Further quarterly downturns could follow as British capitalism stagnates.

The rise of the part-time worker
The fall in unemployment figures is more sustained over the past few months and now stands at its lowest level since June 2011. There are also a record number of people in work. Nevertheless, there are still 2.56 million people looking for work and 1.6 million on the dole.

Nearly a million young people – one in five – are not in education, employment or training. The John Rowntree Foundation says that 66 people are chasing every retail job and one in four young black men are jobless. So the fight for jobs and against every cut is still vital.

Long-term unemployment has continued to increase: 897,000 people have been unemployed for over one year; 444,000 people for over two years.

The nature of work that is emerging from the recession is also changing: more likely to be part-time, lower paid, or “self-employment”. Full time jobs are not being replaced like for like. With further cuts in the pipeline and 80 per cent of public sector cuts still to be implemented, this trend will continue.

Over 2 million people remain underemployed, as 1.4m people are in part-time work because they cannot find full time work, and 649,000 are in temporary work because they cannot find permanent work.

One in three new jobs are for less than 15 hours a week; 54 per cent of them, i.e. over half, are under 30 hours a week. Since the economic crisis hit in 2007, part-time work has increased by over 350,000 (to 8.1 million) while there have been a loss of 600,000 full-time jobs. It is estimated that 18 per cent of part-timers would like to work longer hours, but the jobs do not exist for them.

In addition, there has been an unprecedented rise in the number of self-employed workers: an increase of 350,000 since 2007. Over half of these, 200,000, are also part-time, a quarter of them in “elementary occupations”. Clearly the tougher than ever benefits regime has forced many unemployed workers into registering self-employed and making up a subsistence wage with working credits and housing benefit.

Part-time work also attracts lower wages, and tends to be temporary work, which again attracts lower wages. There has also been a dramatic increase in temporary and agency working in Britain over many, many years. The French have a word for this précarité – precarious working – and its is a Europe-wide phenomenon.

Falling real wages
According to PayScale the average wage of permanent full-time workers is £24,477, while pay for part-timers averages at £15,022 and for temporary staff, £18,918.

But we should beware of any attempt to pit “privileged” full-time workers against part-time workers. The truth is that all workers’ wages are falling behind inflation. According to recent TUC research a worker on £26,000 a year is “£1,500 a year poorer than they were three years ago” and the “proportion of economic gains going on wages has been falling for 30 years”.

Put another way, in the 50 months since June 2008, wages have fallen behind inflation in every month except for three – and this is according to the discredited CPI scale, rather than the more generally accepted RPI scale of inflation.

And inflation is set for another destructive impact on our pockets, with food prices rising again following poor rice, wheat and potato harvests across the world, and energy companies raising prices again by between 6 and 10 per cent in the next few months.

Against this backdrop, the minimum wage was raised by a measly 11p at the beginning of October to £6.19. If it had been pegged to top executives’ pay back in 1999, when it was introduced, it would now be £19 an hour! New research shows that one in five workers – nearly 5 million people – earn less than the living wage of £7.45 an hour (£8.55 in London).

Beyond coordination
This is the real picture of Tory Britain – where the capitalist crisis is being paid for by mass unemployment and underemployment, as full-time, secure jobs are replaced by part-time, insecure and lower paid work, and falling real wages.

It is why hundreds of thousands marched with the TUC in October, demanding more action – a general strike – to stop the cuts and bring down this cruel government.

For a long while the big unions have neglected and ignored these workers and done little or nothing to organise the unemployed and bring them into the labour movement. Today some, like Unite, are beginning to stir on this front. Yet these mainly young workers have an enormous potential of militancy and creativity.

A general strike, if it is to be effective, cannot be a legalist and bureaucratic manoeuvre of the existing union memberships, mainly in the public sector. It needs to be a real uprising of the millions of young workers in precarious jobs, and the unemployed too, including their mass recruitment into a transformed trade union and socialist movement.

The attempts of the centre-right and left union leaders to avoid a head on political conflict with the government and its anti-union laws – especially the pensions campaign of “coordinated strike action” – has failed, as Workers Power, almost alone, predicted it would do. Any strategy, which bases itself on a series of separate “lawful trade disputes” with their separate ballots and negotiations, was doomed from the outset.

Coordination will always be at the mercy of the courts, subject to disruption by government and employers’ new offers, arbitration and inquiries. Above all it would be liable to sudden betrayal by trade union leaders – ready to grasp at the smallest concession to hightail it off the battlefield, as they did after 30 November 2011 – leaving the other unions in the lurch. Worse, because of the legalism, the real objective of the struggle – a political clash with the government – could not be explained to the membership.

Political struggle
We are entering a new and decisive phase in the struggle against the Tory-Lib Dem coalition. The strategy of the left and centre-left union leaders – if you can call it such – has collapsed. The right are simply waiting for a Labour government.

But the lefts have been obliged to raise the spectre of a general strike in the hope of warding off the blows raining on their heads from a government eager to do the maximum damage in the two years or so left to it.

This change at the top lies behind the TUC decision to investigate “the practicalities” of a general strike and Len McCluskey’s “vote of Hyde Park”. It also reflects a growing awareness amongst the hundreds of thousands of union activists that we need to fight “all together” is finally becoming common sense.

But the question remains, how to get a general strike. This poses the question of how to impose our will on the right wing general secretaries – Dave Prentis (Unison) and Paul Kenny (GMB) – who hate the idea of a general strike and will do all in their power to avoid or sabotage it.

Then there is the need to establish control over the left wing general secretaries, Len McCluskey (Unite), Mark Serwotka (PCS), Bob Crow (RMT) and co. For all their talk, they tend to take the line of least resistance and go down the road of legal, coordinated actions – exactly the strategy that led to defeat last year. The difference is that they may dress it up as a general strike.

How to stop this is not yet common sense. Revolutionaries have to blaze a trail for this – when it still seems “impractical” to most. Here the professional pessimists and naysayers of the far left are also an obstacle.

How do we do this? By agitation whenever there are demos, strikes or direct action, and by patient discussion and argument with activists, including the cadres of the far left groups, especially the Socialist Workers Party and the Socialist Party.

Centrist obstacles
These two largest “Trotskyist” groups are likely to grow significantly in the year ahead. The SP has a flying start by having campaigned for a one-day general strike for years and also by having executive members in the POA, Unite and PCS, who played a key role in getting the TUC resolution passed. Their weakness is their uncritical attitude to the left bureaucrats and their dogmatic restriction of general strikes to one-day protests.

The SWP, after some hesitation, are now using the TUC’s semi-call vigorously and not tying it totally to the one-day formula like the SP. Its biggest weakness is its retention of the “united front of a special type” – i.e. a block with a few left union leaders and Labour MPs at six-monthly or annual “conferences”, which they control from behind the scenes. They still seem determined not to risk a real united front from above and below, uniting all forces willing to fight the cuts.

So though Unite the Resistance is probably the largest anti-cuts campaign, it faces the Coalition of Resistance with Counterfire at its core and the National Shop Stewards Network with the Socialist Party and the RMT at its centre. This farcical triplication of effort merely limits the size of the movement and prevents it uniting in action.

Labour
As for the Labour Party it remains a bourgeois workers’ party as Lenin called it – despite its major swing to the right under Blair and Brown. It remains massively dependent on union funding. Last year the GMB and Unison each donated £3.2 million and Unite £6 million to Labour.

Ed Miliband, despite owing his victory to the unions’ vote, has not steered the party in their direction. Like his predecessors, he used the Labour conference to “stand up to the unions”, asserting that Labour is “not the party of any special interest group” but stands for “One Nation”, shamelessly stealing the Tories’ clothes. Ed Balls also rebuffed the union leaders’ calls to promise to reverse the cuts when in government.

Miliband on the platform in Hyde Park provoked loud boos and whistles by asserting he would not make any promises to restore the bulk of the Tory cuts. Meanwhile Labour councils are making the cuts “with a heavy heart” and the unions are not penalising them for doing it. Two Labour councillors in Southampton, Keith Morrell and Don Thomas, who have bravely opposed cuts, have since been expelled from the party.

The Labour Left – the Labour Representation Committee – is at an all-time low in terms of influence with the party leadership, in the ranks of MPs and councillors. The indefatigable John MacDonnell is everywhere – on demos, platforms and picket lines – but he is virtually a one-man band, where once there was an orchestra of lefts.

Len McCluskey – the most tireless advocate of “reclaiming Labour” and staunch foe of attempts to found new party – has summoned 5,000 trade unionists to join Labour to do this, saying:

“We are trying to win Labour back for our core values: a belief in collectivism, a belief in fairness, justice, equality, decency and respect and to kick the New Labour cuckoos out of our nest.”

Yet a few days later, he was praising Miliband’s conference speech as “very good”. Don’t expect this man to lead the charge against the Blairites.

The Communist Party of Britain remains a force in the Labour movement mainly because of its influence within the union bureaucracy and the Morning Star. The paper has become a more lively read recently, mainly because the CPB itself is divided between those, like general secretary Rob Griffiths, who would like to abandon Labour and go for a new reformist party, and others, who are unwilling to break because of their links to the pro-Labour leaders of the GMB, Unison and Unite. Moreover the Morning Star is plainly unsympathetic to the general strike.

In summary: a year of decision
We are facing a decisive movement in the struggle against the coalition. The Tories are preparing to implement as many “irreversible” reforms as possible since they face the being out of office in May 2015.

More cuts are planned, targeting benefits, especially for the under-25s. Privatisation will be stepped up, especially in the NHS. A massive anti-working class “reform” of the national education system is in process under Gove – with the reforms to the exam system, EBac and vocational-only courses for working class and “difficult” students at age 14. Politically there will be the Scottish independence referendum and possibly some form of anti-EU referendum (withdrawing from the federalising inner-core, dumping many legal restrictions, European Court of Human Rights, etc.)

Pay will increasingly become a real issue as inflation is again in the system, especially in food, fuel and imports from China. The three-year public sector pay freeze is now being followed by a two-year 1 per cent pay cap. It appears likely that there will be at least another big day of strike action, involving the right wing unions, Unison and the GMB, alongside the left. This could be over public sector pay or an attempt to coordinate on a wider basis (a “legal” or “non-political” general strike).

In particular they are preparing to take on the unions and win. The RMT will likely be provoked on London Underground. More anti-union legislation is likely – bans on action that affects “essential services”, strike ballot turnout/victory margin thresholds.

In this context, there will be further rank and file initiatives, but these are likely to be on a sectional and economistic basis; for example, the electricians continue to be dynamic, but show no real interest in becoming a beacon for wider rank and file organisation. Unite Grass Roots Left will have its national conference on 17 November but has so far failed to grow significantly. Labour is still toying with accepting the Tories’ spending plans for two years in order to win over “middle England”. Miliband will, like Blair and Brown, act as ratchet mechanism for the boss class, preventing any reversal of the Coalition “reforms”.

If the Coalition’s attacks are allowed to go through and then stand, we face a strategic defeat, bigger even than Thatcher’s victories over the miners, the printers and the dockers.

To those who advocate rebuilding the labour movement when it is under strategic attack, we say bluntly: it doesn’t work like that. If we go down to defeat: expect union membership in the public sector to fall like a stone, as it did in the private sector in the 1980s and ’90s; do not expect to rebuild workplace organisation, little by little, expect to see it evaporate; expect to find militants on the dole or working in Starbucks.

The historic danger we face requires a historic change of strategy for union militants and the left. Worrying about the local and the individual workplace to the exclusion of the national and the international big picture will lead to disaster. So too will the idea that we need to unite the left on the lowest common denominator, rather than on the key issues we need to fight on and the tactics and strategy we need to win. Creating a broad party based on either submerging these differences, or making it a parrot house of individuals and cliques endlessly discussing will likewise lead nowhere.

A united party is however a possibility, providing it draws in a mass of worker militants from the struggles against austerity, allows debate over key policies for a fightback, and develops a strategy for the struggle for power.

Workers Power will be fighting around key issues and slogans we believe are of burning importance if we are to beat off the attacks and lay the foundations of a revolutionary socialist alternative.

These are:
• An all-out general strike to stop all the cuts and defeat the government.
• While we call on the TUC to organise a general strike – we call for building councils of action to fight for one and to control it.
• A rank and file movement to dissolve the bureaucracy, rooted in the workplaces and capable of delivering action without the official leadership – left or right – where necessary.
• A new working class party with support from the left unions and the socialist organisations, with the right for revolutionaries to fight for their programme.
• A revolutionary youth movement to fight education reforms, unemployment, super-exploitative working conditions, police harassment and the EDL.
• International solidarity and coordination, linked to the fight for a new International.

These will remain the principle policies Workers Power fights for in the coming period.