The politics of fightback: Capitalism's crisis and our response, part 3

The banking crisis broke out again in full force in Britain in mid-January forcing Brown into a new round of bailouts in the financial sector. By February 2009 a trillion dollars have been handed over to the bankers worldwide and $1.5 trillion had been injected in fiscal stimuli. By the end of February RBS had turned in the biggest loss in corporate history and Lloyds was £10bn in the red thanks to toxic loans it inherited from HBOS. Citigroup, the world’s biggest banking group was collapsing and the situation getting worse by the day.New Labour is a part of the international interventionist consensus. They are seeking to hold the banking system together whilst spending their way out of the crisis by building up debt and printing money. They have nationalised various banks with massive cash injections, they have cut interest rates to the record low 0.5%, they have cut VAT to 15%, and now they have turned to quantitative easing to inject £75 billion over three months in an attempt to boost consumer spending and get the banks to lend money. This is a figure approaching the annual budget of the NHS and is clearly a last-gasp measure to prevent a slump. It is also a shot in the dark in what is completely new economic territory. And they are clocking up more debt under conditions where Britain already owes a record £2 trillion. This severely limits their scope for fiscal stimuli and makes the problem of eventual repayment more awesome.

They are doing all this as part of their anti-working class New Labour project. It is a of marriage between Keynesian economics and right wing politics, and it creates huge contradictions. Whilst they are nationalising banks they are at the same time part-privatising Royal Mail. Local authorities, Labour as well as Tory, are privatising everything that is left that they can get their hands on under the impact of the crisis. Their overarching approach to the crisis, however, is interventionist

Under these conditions the overall character of the Brown Government remains the same: new Labour. Brown, whilst intervening into the economy continues to support the war drive and attack public services, welfare rights, civil liberties, wages, pensions and working conditions just as he did before. Sarkozy and Merkel do the same.

6) The role of Obama

Far more important than what Brown does, though, from a global point of view, is the role of Obama in the USA. His election represents an important shift in US politics and would have done so even without the economic crisis — assuming he could have won the election without the crisis. He will act consistently on behalf of US imperialist policy, of course, there is no doubt about that. This is already clear both from the scandalous way he allowed the blitz of Gaza to continue without comment in the run up to his inauguration and his policy of boosting the war brutal in Afghanistan.

On social policy, however, he represents a break with the Bush era and the significance of this has increased sharply with the escalation of the economic crisis. The $787 billion economic stimulus package he has launched — which was opposed almost unanimously by the Republicans — is the biggest in the world other than China and is already an international benchmark for interventionism. It is likely to become even more so as the crisis deepens.

True some of his campaign proposals for renewable energy have been watered down and they are clearly already inadequate to the scale of the problem. But overall it is a big turn round from anything the Bush administration could have produced and his package is linked to his $2.5 trillion budget, which reverses some of the policies of the Bush era including major proposals such as the reform of health care. Whether such proposals ever come to fruition is another matter of course, but we should not underestimate what Obama represents.

Brown sees his best chance at the present time in climbing aboard Obama’s bandwagon.

7) The politics of the fight back

The central political issue thrown up by the crisis is “who will be made to pay for it -capital or labour?” In this regard the two options that capitalist governments have been debating — market forces or interventionism — are no different. They are both designed to make the working class pay and give capitalism a new lease of life.
This does not mean, however, that the immediate impact of the two options on the working class are the same or that the opportunities that each presents for building a fight back are the same.
From this point of view socialists should welcome the ‘New Deal’ interventionist approach in as far as it saves some industries, saves some jobs, and gives some relief to the working class in the depth of a crisis of the system. It does of course raise as many questions as it answers. We have to demand that it goes much further than Obama or Brown, or any of the others, are prepared to go. We have to demand programmes of public works which can employ and reemploy millions of workers. It can be done. If trillions of pounds can be given to the banks the same can be done for programmes of public works. Why not? And we have to demand that such public works are directed towards establishing a more sustainable society for the future, in order that the ecological crisis is tackled at the same time.

We should welcome this approach, as opposed to that of market forces which would send the weakest to the wall and many more millions on the dole, not only because it creates the best immediate conditions for the working class but because it creates the space in which to build a fight back. The more workers are thrown into unemployment and atomised as individuals the more difficult it will be to begin to organise. On the other hand if workers remain employed or are taken on for public infrastructure work they are in a far stronger position.

8 ) Nationalisation

The key to developing a socialist approach to this crisis is nationalisation. It also takes the issue to the political level and there is a big opportunity in this. The perception of nationalisation, which was discredited by Labour in the 1970s and 1980s and demonised by the Tories in the same period has been transformed in the course of this crisis out of all recognition. It has gone from an issue discussed in socialist circles to a part of the mainstream debate on the response to the crisis. When leading members of the US government (first the Bush regime and now Obama) discuss how much of banking and even of industry to nationalise it’s clear that something has changed.

This opens up a space for the left which to which it has a responsibility to respond. It gives the opportunity not only to demand that governments intervene into the crisis but that the framework for their intervention should be nationalisation. Nationalisation does not equal socialism, of course, but it does open a space in which socialist ideas and a wider socialist programme can be developed.

There are many things wrong with recent nationalisations of course. They are the nationalisation of bankrupt companies, carried out in order to socialise risk and bail out debt, and with the intention of handing them back at a later date. Many of them are not nationalisations in the formal sense but simply government majority shareholdings, which can be sold off at any time. Moreover there is very little control exercised over these institutions but Brown is making it clear that he does not want to exercise control if he can possibly avoid it.

It would be a big mistake, however, in the current circumstances, for socialists to say either that such nationalisations are irrelevant or that they are unsupportable. Rather socialists should welcome the nationalisation of financial and other institutions as far as they go, whatever form they take, as better than the alternative — which is to leave it to market forces. At the same time socialists should strongly oppose any adverse conditions imposed on the workforce in the course of the takeover and vigorously demand that the initial takeover is replaced by full nationalisation under democratic control.

The arguments for full nationalisation under democratic control are overwhelming and extremely popular. There has been a wide-ranging debate in the mainstream media about it. It has been a popular move. If huge sums of money are being injected into bankrupted companies it makes no sense at all to do it without full democratic control of the process and of the future development of those industries. Socialists need to put themselves at the centre of this debate. A year ago it didn’t exist.

At the same time the preference given to the banks when it comes to state aid should also come to an end. Other industries have an equal need and this must be met. In many cases nationalisation is the only framework in which a solution can be found. It is the only framework which can provide any kind of answer to an industry like car manufacture which is faced with a very bleak future in its present form and which needs a serious programme to change it over to socially and environmentally useful production.

All this implies a big campaign by the labour movement and the trade unions around both the demand for nationalisation and the form it should take, which is not happening at the present time. The People’s Charter would be a good starting point for such a campaign.

9) The response of the working class to the crisis

Given the scale of the crisis almost anything is possible in response. So many people are getting hurt that we are in uncharted territory. We are still at the beginning of the crisis and are about to see a dramatic increase in unemployment worldwide as the events of the past three months come to fruition. Upheavals seem inevitable. The problem is what form will they take and whether they defend the interests of the working class.

Already there has been a backlash against the effects of the crisis across Europe and beyond. France and Greece have been in the forefront but there has also been protests from Spain and Italy to Ireland where over a hundred thousand responded to a trade union call to demonstrate and where 300 workers are in occupation at Waterford Crystal. There have been general strikes in Martinique and Guadeloupe and strikes and protests in Russia and Eastern Europe.

How this will play out in Britain is harder to say. Some of the tabloids are predicting riots on the streets in the summer. This is one possible development in a provocative situation. Those getting most money from the government, i.e. the bankers, are the very people most responsible for the crisis.

The situation with the unions, however, is verging on disastrous. The leaders of the major unions have nothing to say about the crisis. Nor has the TUC. They have reverted to defending their own patch — if they do anything at all. Mostly they do nothing at all — or worse, they negotiate away hard won wages and conditions in give-back deals to ‘save jobs’. Every day the media carries new announcements of closures and job losses, often by the tens of thousands, and the unions are nowhere to be seen.

That trade unionists are looking for an alternative to this kind of disastrous leadership is demonstrated by the remarkable vote for Jerry Hicks in the election for General Secretary of Amicus. He came second with 39,000 votes on the basis of a radical platform which spelled out a strong and detailed response to the crisis.

There have also been some welcome protests around the privatisation of Royal Mail and the strikes by construction workers at oil refineries and power stations. The construction strikes were, in my view, confused and even problematic. But they were at least a reaction to the growing threat to jobs as the strikers perceived it. Elsewhere there is very little happening. Even in other parts of the construction and building industry the situation is absolutely dire. Swinging wage cuts are being routinely imposed, at will, on bricklayers, steel erectors carpenters and other trades right across the industry.

It is similar across a range of industries from manufacturing to retail to service industries and financial services. Previous recessions have hit the blue-collar sectors the hardest with white-collar jobs generally a safer prospect. Not so this time. Everyone is being hit from bank workers to steel workers.

There has been the scandal of the sacking of agency workers in Cowley at an hour’s notice with no redundancy pay. Not only did the unions refuse to defend them but it was the unions who told them that there was nothing which could be done because it was beyond everyone’s control — including the management’s control. Yet the unions in Cowley were built in the 1950s and 1960s out of very militant strikes against pre-emptive redundancies. After that car employers had to pay heavily to get redundancies through. Now the wheel has turned the full circle and instant dismissal is back.

Not only are people being thrown onto the dole but widespread givebacks taking place. Many unions are accepting wage cuts, longer hours, higher work rates and unpaid overtime as an attempt to save the firm.

In Birmingham workers at LDV Vans have voted to accept a 10% wage cut, a three day week and the cancellation of their bonus in a deal to ‘save jobs’. At Land Rover/Jaguar workers voted to accept a package of cuts, recommended by the unions, which involved a four-day double day shift with no shift premium, a cut of one hours pay, no pay increase in 2009, and an increase in pension contributions. Employees are required to work three hours extra per week for no extra pay, accept full flexible working across all sites in the West Midlands, along with cuts in sick pay, holiday pay, and maternity entitlement.

What is taking place in Britain at the present time is probably the biggest attack on wages jobs and working conditions since Thatcher started it in the 1980s. If the unions fail to organise against it we could see a response which bypasses the unions, at least in its initial stages — and possibly amongst young people. Job prospects for young people are plummeting and in the summer the highest number of graduates ever will leave university without the prospect of the job. If this takes place the task will be to bring the unions on board and widen and develop the fight back.

But any fight back will also need a political expression, which makes the building of a broad political alternative to new Labour, which can articulate a response to the crisis, even more urgent. In Britain Respect is clearly the starting point for such a development along with broad initiatives such as the Peoples Charter

Ultimately if the working class does not defend its interests — through the unions or otherwise — capitalism will go ahead with its own solutions at its expense. There is never a crisis that capitalism is incapable of resolving providing it is at liberty to impose the conditions on the working class necessary for its solution.

This is the third part of Alan Thornett’s article looking at how we should respond to the crisis.