“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
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
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
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
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
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.
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
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
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
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
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
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
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.
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
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
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
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
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.
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
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
“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
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.
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
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
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.