I was privileged to attend the socialist party conference this weekend. What was significant was that it was addressed by two executive members of the Rail Maritime and Transport union (RMT) who congratulated us on our role in leading the Lindsey oil refinery strike. Where we skilfully turned around the slogan “British jobs for British workers” to building trade union links with the Italian workers on the site and links with the Italian trade unions and 102 jobs created in effect workers unity and aimed the struggle at the bosses not other workers.  This victory has given the Socialist Party some respect and Authority in the wider workers movement.

 See www.socialismtoday.org/126/fight.html for a more detailed analysis of the strike.

The reason they came was to appeal to the Socialist Party to take part with them in an electoral block to stand in the Euro elections in June. So that workers that don’t want to vote for the any of the main pro big business parties have something to vote for in their interests, instead of the BNP who are an anti working class party of racism and hate but are gaining some support because of the vacuum that exists  in working class representation.

The programme the RMT put forward, we support (see their website http://no2eu.com/ ) but as socialists we would go further. This initiative may come to little but could also take on a momentum and become the pre formation to a new mass workers party, attracting the advanced layer of workers and activists at this stage. It was the rail union at the end of the 19^th century that set up the Labour Party which at the bottom had a base amongst the working class but at the top it supported big business. It had that working class base right up till the end of the 1980s but then became a party of capitalism through and through.

Why do I think this initiative might work where other projects such as Respect, Scargill’s Socialist Labour Party, the socialist alliance and the Scottish Socialist Party failed? This time it is backed by a major workers organisation the RMT and we, as one government minister put it “are in the worst economic crisis for over 100 years”. It is only a matter of time before workers political consciousness catches up with events and mass struggle develops. Then this new formation could, maybe, take on a mass character and at long last give working class people a political voice!

The views expressed here are those of the author and not necessarily those of the Socialist Party see www.socialistparty.org.uk

Often people think socialism is just about sharing out from the rich to give to poorer sections of society. They then say where would the incentive be for people to work if there isn’t the possibility you can get rich at some point? But socialism isn’t just about sharing out what there is now but also producing more of what is needed. Although the top 150 companies in Britain (with the banks they own and control 85% of the economy) make enough profit each year to give everyone a decent paid job, a car, a home, free education and health care. Also Latin America produces enough food to feed the world 10 times over but sometimes it’s destroyed to just keep the price up. So the world is not overpopulated and no one should go hungry. Socialism would be about planning democratically with all the technology, engineering and technique that now exists it would seem straight forward to put a plan into action to end the world hunger crisis. Under capitalism of course, you get planning but only in that one particular company and that is to make profits.  But it is very limited, and the capitalist system is very anarchistic. We were told that with the super profits being made there would be a trickledown effect from the rich to the working class and poor. But now we have the most severe capitalist crisis possibly for over 100 years, which is exposing that particular lie. In fact the opposite has happened as working people are paying taxes to bail out rich bankers and the capitalists are making workers pay for the crisis through wage freezes, redundancies and short time working.

Human nature

Another argument put out against socialism is that people will never co-operate “it’s a dog eat dog world”  and that socialism is against human nature but if that was the case, millions of ordinary people would not give to relief funds when there is a natural disaster, such as an earthquake, tsunami or major flood.

 History shows us that before different classes developed in human society everything was done by the group from child care to hunting and everything was done through democratic planning although on a primitive level with primitive low level production. There may have been elders and chiefs but they would have played an advisory role giving their wisdom and experience, final decisions would have been taken as a whole, by the whole tribe. This was observed by studies of red Indians and other primitive tribes around the world in the nineteenth century.

Socialism would change human nature to a more co-operative instinct. People would much more like going to work for the benefit of society rather than to make money for a rich minority in society. Especially as workers would have better pay, job security, less working hours and better working conditions. And of course a real say in how things should happen in the workplace.

In the first instance in the transitional phase, socialism would raise the standard of living of the working class the majority in society. (See the program below). In the second phase when things had moved on and all the problems left over from capitalism had disappeared. Well it is almost impossible to predict or imagine how far human progress could take us freed from oppression and the constraints of capitalism and class society.

A socialist program for the trade unions and a new workers party.

Work & Income

• Trade union struggle to increase the minimum wage to £8 an hour without exemptions as an immediate step towards £10 an hour. For an annual increase in the minimum wage linked to average earnings.
• All workers, including part-timers, temps, casual and migrant workers to have trade union rates of pay, employment protection, and sickness and holiday rights from day one of employment.
• An immediate 50% increase in the state retirement pension, as a step towards a living pension. Reinstate the link with average earnings now.
• Reject 'Welfare to Work'. For the right to decent benefits, education, training, or a job, without compulsion.
• Scrap the anti-trade union laws! For fighting trade unions, democratically controlled by their members. Full-time union officials to be regularly elected and receive no more than a worker's wage.
• A maximum 35-hour week with no loss of pay.

Public services

• No to privatisation and the Private Finance Initiative (PFI). Renationalise all privatised utilities and services, with compensation paid only on the basis of proven need.
• Fully fund all services and run them under accountable, democratic committees that include representatives of service workers and users.
• Free, publicly run, good quality education, available to all at any age. Abolish university tuition fees now and introduce a living grant. No to academies!
• A socialist NHS to provide for everyone's health needs - free at the point of use and under democratic control. Kick out private contractors!
• Keep council housing publicly-owned. For a massive building programme of publicly-owned housing, on an environmentally sustainable basis, to provide good quality homes with low rents.

Environment

• Major research and investment into replacing fossil fuels with renewable energy and into ending the problems of early obsolescence and unrecycled waste.
• Public ownership of the energy generating industries. No to nuclear power. No to Trident.
• A democratically planned, low fare, publicly-owned transport system, as part of an overall plan against environmental pollution.

Rights

• Oppose discrimination on the grounds of race, sex, disability, sexuality, age, and all other forms of prejudice.
• Repeal all laws that trample over civil liberties. For the right to protest! End police harassment.
• Defend abortion rights. For a woman's right to choose when and whether to have children.
• For the right to asylum. No to racist immigration laws.

New workers' party

• For a new mass workers' party drawing together workers, young people and activists from workplace, community, environmental and anti-war campaigns, to provide a fighting, political alternative to the pro-big business parties.
• Trade unions to disaffiliate from the Labour Party now and aid the building of a new workers' party!

Socialism and Internationalism

• No to imperialist wars and occupations. Withdraw the troops immediately from Iraq and Afghanistan!
• Tax the super-rich! For a socialist government to take into public ownership the top 150 companies and banks that dominate the British economy, and run them under democratic working-class control and management. Compensation to be paid only on the basis of proven need.
• A democratic socialist plan of production based on the interests of the overwhelming majority of people, and in a way that safeguards the environment
• No to the bosses' neo-liberal European Union! For a socialist Europe and a socialist world!

I have a  friend who asked me recently. Should single parents be able to bring up children on state benefits and not have to work?

Firstly I think most people have a right to have children and most people have a right to work. The former even being in the human rights act. Can the two go together? Obviously yes, as there are more women in the workforce than ever before and lots of single parents are part of that but like everything in life under capitalism the question of class comes into the equation. If you’re a CEO or even a manager on a high salary then it will be easy to pay for childcare.  If you have a lower paid job on the minimum wage in retail or a Mc job then without state support childcare costs will likely cost more than is taken home in wages. Already billions is given in child and family tax credit to families. This in effect is a subsidy to the bosses as they clearly are not paying enough in wages for families to make ends meet. At the same time they have been taking plenty in profits by exploiting the workforce which the latest figures show are a majority of women in the workplace, especially in the lower paid sectors of caring and retail.

New Labour that is exposing its self as a party for the rich and against the poor.   With it’s welfare reform bill, which will hit benefit recipients hard especially single parents.  The bill will force single parents to work or lose benefits. (Of course if you’re a rich banker then state handouts are no problem).  In affect if you have a partner and bring up children then that is ok but if you’re a single parent then you will be forced to work, punished for being a single parent. The facts are most parents want to work but it is the cost of child care, low wages and travel costs that is a barrier to that. Of course the same reactionary anti poor brigade that bang on about the ills of society being the fault of breakdown and lack of discipline in the family. Won’t be campaigning against this bill which will leave children coming home from school with no one else in the house because their parent has been forced to work. The government's draconian proposals will cause insurmountable difficulties for many lone parents. Those who wish to stay at home to care for their children should not be forced to work; this is even a benefit to the capitalist system as they are bringing up the next generation of workers to be exploited. Nevertheless, if jobs on decent wages were available to them, many more would choose to work than can at present.

A socialist program for single parents

At work

• For the unions to take immediate action to implement their current minimum wage demands, as a step towards a legal minimum of £8 an hour.
• For a minimum income of £320 a week.
• No exemptions. For an annual increase in the minimum wage, linked to average earnings.
• Equal pay for work of equal value.
• Full-time rights for part-time workers. Employment protection from day one of employment.
• Paid maternity leave for at least twelve months on full pay, with the right to return to work part time if required.
• Paid parental / carers' leave.
• Scrap the anti-union laws.

Benefits

• A mass campaign involving the trade unions to stop the welfare reform bill.

• A minimum income linked to the minimum wage for carers, students, pensioners and all those unable to work.
• Restoration and uprating of lone parent benefits.
• No to compulsion in Welfare to Work. For the right of women to choose whether to work or stay at home with children.
• Maternity and child benefits to reflect real costs.
• Scrap tuition fees. Reinstate the grant. Free education for all.
• For a fair and flexible maintenance system that benefits lone parents and meets all children's needs.

Services

• A network of good quality, publicly funded childcare, including pre-school, after school and holiday schemes, accessible to all parents who want them.
• Stop privatisation. For a massive increase in spending on housing, education, health and other public services.
• The right of women to choose when and whether to have children.
• An increase in refuge provision, 24hr help lines and other facilities for women experiencing domestic violence.

Every week we have a SP meeting in Reading. Someone speaks for up to 20 mins then we have a discussion with contributions then the speaker sums up the discussion. The we go though the business part.  We discuss a number of subjects last week we discussed the NHS where the idea was put forward that if all the private, including the drug companies that make money out of the NHS, were publicly owned then all the profit they make could go into the NHS solving the funding crisis.

 This week’s branch was on the situation in Zimbabwe we said while we don’t support the regime the question has to be asked why are the media and other governments picking on Zimbabwe they don’t on Saudi Arabia and other countries that have an undemocratic and appalling human rights record. Also that the opposition MDC leadership have only the policies of the IMF and World Bank, which is the same policies that Mugabe followed of cuts and privatisation and what is needed in a new workers party with a socialist program.

Next week we are discussing a way to rebuild the trade unions and how workers can transform them from sometimes selling workers out to being fighting democratic organisations.

We meet every Tuesday 7:30pm Kings Tavern, Kings Rd, Reading. Come along and discuss with us if your interested in socialism and fighting back against this rotten capitalist system.

According to the BBC http://news.bbc.co.uk/1/hi/business/7351867.stm  the so called pillars of society, big business have been up to no good, colluding with each other to price fix building contracts for local councils etc. I doubt whether any one will go to prison for such fraud. Of course we will still see and hear the adverts against so called benefit fraud. Which in most cases are just people trying to make ends meet.  As neither benefits nor low paid work provides anything hear a decent standard of living. What needs to happen is not a fine which if it means a hit on profits they will make workers pay through redundancies. 

A Socialist alternative

·         Public ownership of the big construction companies under workers control and management.

·         A massive program of building social housing, schools and hospitals.

·         Properly enforced health and safety for all construction workers.

·         A maximum 35 hour week without loss of pay.

·         A socialist plan of production to carry out all of the above

Since I last wrote or even copied an article here, the world economy according even to the British chancellor could be heading for the worst crisis since the great depression of the 1930’s. For the past 15 years we have been told that the market works. Globalisation is the best thing ever. Giving us cheap food and other consumer goods. Even people in the third world would benefit. Tell that now to the poor people who can’t even afford the price of rice. Marxism teaches that everything turns into its opposite under certain conditions most workers and poor people are finding that out for themselves with the massive increase in prices for food and other goods. At the time of writing oil is at an historical high at over $112 a barrel even in real terms.

Socialists quite rightly argue that under capitalism there is no way out of what is happening and what is to come. The capitalists of course will try to find a way out on the backs of the working class and poor, through price rises, job losses pay cuts, public spending cuts etc. The British Prime Minister said today that he will take difficult decisions to help the economy by that he means below inflation increases for workers and spending cuts.

Workers will have their own ideas on the 24^th of April there will strikes of public sector workers but to find a way out a different approach and a different party is needed, a new workers party with socialist policies. Nat ionisation of all the banks and finance companies under democratic workers control as part of a socialist planned economy is one of those policies. This would mean money could be spent on social housing and anyone in trouble with their mortgage instead of  being repossessed could then rent back their home at a reasonable rent. Also we could reverse the cash crisis in health and education.

The near collapse of Northern Rock bank, accompanied by the most astonishing scenes of panic for generations outside its branches, has serious political implications for Britain and the government of Gordon Brown. This was the first open run on a British bank since 1866. Peter Taaffe examines some of the key features that led to this crisis and looks ahead at what is to come.

Capitalism could drag millions of working people into an economic and social abyss.

Peter Taaffe, General Secretary, Socialist Party (England and Wales)

In 1866, Overend, Gurney and Co, a discount house and a ‘banker’s bank’, second only to the Bank of England, almost brought London’s banking system down. It had a reputation for financial ‘probity’, associated as it was with Quakerism in Norfolk before it became a major bank. But it became involved in ‘ill-judged’ speculations on railways, shipbuilding and other ventures. The poor Quakers of 1866 were, it seems, duped by fraudsters and middlemen, including a Greek novelist and a wheeler-dealing Irish parish priest! The bank’s directors ended up in the dock for their misdemeanours. They were acquitted but were disgraced.

Northern Rock chiefs have had, by comparison, a light slap on the wrist. Northern Rock is less important in today’s financial system than Overend, Gurney and Co was in 1866. Nevertheless, its involvement in the sub-prime mortgage market and its risky lending policy is typically witnessed in all stages of a boom cycle of capitalism.

Karl Marx pointed out that credit can extend the life cycle of capitalism beyond its ‘natural limits’. But like a piece of elastic, it can only be stretched so far before it breaks. Because the financiers are not directly linked to the process of production – for instance, the incomings and outgoings which the individual capitalist in the 19th century knew in his factory - it inevitably spawns what Marx called the “most colossal form of gambling and swindling”, which is imbued with the “pleasant character of swindlers”.

Hence, during booms, the rise of financial crooks like Stavisky in France, in the 1930s, Leeson in the Baring Bank catastrophe in the 1990s, and now Applegarth, the Chief Executive Officer of Northern Rock. Applegarth paid himself £1.3 million while the house of cards he presided over threatened to crash and with it the savings of thousands who had invested their life savings in many cases in this enterprise.

Northern Rock used depositors’ money to speculate in the sub-prime market like many other firms which have gone bust or have threatened to do so in the US. Its recklessness is shown in that in the first six months of last year, net lending grew by 47%. The sub-prime market – lending to ‘high risk’ borrowers at high rates of interest – accounts for 7-9% of the UK mortgage market.

It has also dabbled in the US sub-prime market, which has turned into a slow-motion car crash for the US economy. This market amounts to $1.5 trillion, with an estimated $200 billion “valueless debt” parcelled out and distributed throughout the financial system. This is now described as “toxic” by bankers and financiers.

Moreover, nobody knows where this debt really is. One British financial commentator compared the task of discovering where this debt is to a Microsoft computer game called ‘Minefields’. In the course of the game, if a mistake is made, the ‘bomb’ goes off. The sub-prime bomb has already exploded with serious consequences for the US economy and globalised capitalism.

Workers pay price

In the real world, this is not a game. Working-class people pay a big economic price, like the million families who have lost their homes already in the US because of the general slowdown in house prices and now compounded by the sub-prime catastrophe.

Another one to two million home owners face ‘foreclosure’ and could be out on the street. There are 200,000 home owners in the US who are in immediate ‘dire straits’ and face imminent repossession of their property. In a feature in the British newspaper, The Guardian, on Cleveland, Ohio, one poor black woman faced with increased mortgage payments was shown to be desperately trying to hold onto her house for her family. She was already in a full-time job but was seeking another one which would mean a 16-hour working day!

This sums up the character of this capitalist boom, praised to the skies by Gordon Brown and others until this bombshell, which The Socialist and the CWI predicted, exploded. It has been based upon a sea of credit, with British households possessing accumulated debt of over £1 trillion, exceeding even the gross domestic product of Britain. This was perceived as an endless financial stairway to an ever-richer future, fuelling a consumer boom. On the very eve of the collapse of Northern Rock, one stockbroker urged his clients to buy its stock: “Load up, get your children, grandmother, your goldfish” to buy. The result was a threat of financial meltdown, more serious than anything we have witnessed in the recent past.

Contagion

Even the British secondary banks crisis of the 1970s, which was largely on the periphery of the banking system, did not result in a breakdown of ‘interbank’ loans, which was the case this time. Moreover, one month ago, when the sub-prime crisis became contagious and spread to the rest of the world from the US, Barclay’s Bank, a pillar of the British banking system, could not make payments because other banks would not lend it the resources. The Bank of England was forced to step in overnight as the ‘lender of last resort’. One commentator from a big investment bank wailed to the Financial Times: “What we are seeing now is like a natural disaster. Whole parts of the financial system which we took for granted have stopped working. But that was not something that people had really prepared for.”

Marxists and socialists had “prepared”, by warning working people of the fragility of this boom. These events are not a “natural disaster” or an act of God but arise from capitalism, an unplanned and blind system which, through the so-called law of ‘supply and demand’, works chaotically, and behind the backs of society. Capitalism’s contradictions are dramatically revealed in financial and economic crises. The phraseology of the so-called financial experts is an indication of the seriousness of the situation: “The economy has had a heart attack”; it is a “systemic” banking failure.

The financial excesses of the past involved ‘rocket scientists’ in the City of London, employed to devise ever more ingenious ‘financial instruments’, such as cutting up debt and distributing it blindly throughout the world. This has now blown up in their face. The collapse of the sub-prime mortgage market in the US, and the crashing of ‘hedge funds’ – multi-billion dollar betting syndicates – has spilled over into similar collapses in Australia, Germany, France, and many other countries. The result has been a worldwide ‘credit crunch’. The word credit originates from the Latin ‘credo’ which means trust. In this financial crisis, trust evaporated, and threatens to break down completely.

The Northern Rock events will help to change political consciousness in Britain. It is the equivalent of the Tories’ ‘Black Wednesday’, in 1992, which saw the Tory government, and its chancellor, Norman Lamont (who was backed up by his then aide David Cameron), fleeing from the Exchange Rate Mechanism of the European Monetary System. This effectively sealed the political fate of the John Major government and led to New Labour coming to power in 1997.

We have yet to see the political consequences of ‘Black Monday’ when Chancellor Darling was forced to overrule, in effect, the prevarications of Mervyn King and the Bank of England. He underwrote the savings of Northern Rock depositors and by implication, all British banks. This represented not just a technical U-turn but a severe blow against the ideas and practices of the unrestrained, unregulated free market capitalism of the last two decades

Darling’s actions were a form of ‘nationalisation’ of bank deposits, as even pro-capitalist experts have remarked. It immediately raises the question in the minds of previous victims of financial swindles, why did they not get the same treatment? Expect now a clamour for compensation from the victims of Equitable Life’s meltdown in 2000, which Brown refused to intervene in when he was Chancellor of the Exchequer.

What about those swindled out of their life pensions by gangsters like deceased press tycoon Robert Maxwell and other well-heeled captains of industry? Even the holders of endowment insurance policies had their final payouts slashed by the arbitrary vagaries of the stock exchange.

Also, why is it that this government can step in to save depositors and not the thousands of workers thrown on the scrapheap by, for instance, the closure in the recent period of companies such as Rover? Deregulated capitalism is okay, it seems, when the volcanic eruptions do not break to the surface and wreck the lives of millions. The example of Darling’s intervention will be invoked if industries begin to collapse as the result of a recession. As with the railways today, the demand of victims of capitalism will be for nationalisation of failing industries.

This crisis also reflected the massive collapse in the trust of British people in all authority and capitalist institutions. Initially, there was no trust in the banks by depositors; why should they when only the first £2,000 of savings was 100% guaranteed to be paid out? The government was not initially believed when Alistair Darling made his first ‘reassuring’ statement. “Why should we trust this government when they lied on so many other things such as Iraq?” said a woman interviewed on TV. When this did not work, the government had to take over the ‘independent’ powers of the ‘independent’ Bank of England and act as the guarantor, the ‘lender of last resort’.

Up to this point, the bankers and the capitalist press, particularly the Financial Times, semi-official organ of the City of London, were full of warnings of ‘moral hazard’. When the capitalists and their hirelings speak about ‘morals’, keep your hand on your wallet! ‘Moral hazard’ is not a lap-dancing club in the City of London which stockbrokers and financiers are warned to avoid. It is a code for free marketeers’ opposition to government bail-outs of firms and industries. They opposed in the past ‘deposit insurance’ which is greater in America – where depositors receive 100% of their savings up to $100,000 – than in Britain. But Darling is now likely to introduce an American-type system in place of the partial insurance for depositors that exists now. So, also, the previously ‘unswerving’ Mervyn King, Brown, Darling and the government have endorsed ‘moral hazard’ when faced with the possibility of financial meltdown by providing facilities of £10 billion for ‘interbank transactions’.

US economy

At the same time, US interest rates have been cut by a hefty 0.5% - 50 basis points – by the Federal Reserve. This action has been taken by Ben Bernanke, Federal Reserve chairman, to provide a stimulus to the US economy when it is heading for recession. The so-called ‘wealth effect’, arising from the upsurge in house prices, with home owners using their property like a hole-in-the-wall machine – is running out of steam. In fact, one Yale economist, speaking to the US Congress, feared “the collapse of home prices might turn out to be the most severe since the Great Depression”. The Center for Responsible Lending also predicted that the foreclosures on sub-prime loans will lead to a cumulative loss of $164 billon (£82 billion) in the value of homes. Investment banks are suggesting the cost to financial institutions could be more than $300 billion.

The present upswing in the US and the world has been fuelled by the consumer boom in the US, combined with an investment boom and cheap goods, which have flooded world capitalism from China. Without the maintenance of US consumption, the Atlas of world capitalism, the whole of the world will fall into a recessionary tailspin. The idea has been raised that the group of countries known as the ‘BRICs’ (Brazil, Russia, India and China), through increased consumption, could provide a lifeline to America. This is an illusion; these countries are ultimately dependent on the growth of the world market as providers of commodities (Brazil and Russia), a provider of business services (India), or as provider of cheap-labour manufacturer (China), which jointly powers the world market with the US. If US consumption stalls, so also will the factories of China, and exports of commodities from other countries.

Moreover, the rise in the price of oil to $90 a barrel or possibly $100 together with the rise in prices of food and other basic commodities, are adding to inflationary pressures. The rise in the cost of food in the US, in particular, could fuel pressure for an increase in wages. Once the immediate crisis appears to be over, the financial sharks will recommence speculation. This means further and bigger financial shocks in the not-too-distant future. If the cut in interest rates – Britain could follow the US – does not work as is likely, this will probably result in a reduction of another 0.25% in the US.

An even bigger drop in the value of the dollar than has already taken place could also develop. A ‘dollar crisis’ could now replace – or combine with – a financial crisis.

The main holders of dollar assets, China and Asian capitalism, when they see the value of their reserves diminishing, are likely to sell off a large portion of these in favour of the euro. This has risen to new and crippling heights for European industry, increasing the cost of exports, partly as a consequence of the drop in the dollar. All of this points to a recession in the not-too-distant future.

Following the 1998 Russian crisis, capitalism found an escape hatch through the dotcom bubble, which then crashed in 2000 and resulted in a recession in the US. After this, the increase in asset prices, particularly housing, was the main motive force driving ahead the economies of the US, Britain, Ireland and Spain. The latter two, like Britain, are on the edge of a financial precipice, with house prices set to decline, maybe quite dramatically.

Britain is one of the most, if not the most, exposed economies. The virtual abandonment of developing manufacturing industry means the lion’s share of growth comes from financial and business services, which account for almost 30% of GDP. In the second quarter of 2007, whereas the economy grew by 3.1% as a whole, the City boom and housing market meant that financial and business services grew by more than 5%. Charles Dumas of Lombard Street Research summed up the situation in The Guardian: “Britain is threatened by its position as globalisation’s epicentre. Any seize-up of global financial markets affects London and the British economy more than others. Lower real incomes combined with tight monetary conditions, and the overhang of a very high exchange rate, could hammer growth during 2008.”

Larry Elliott, the Guardian’s Economics Editor, concluded: “The opposition parties are right to sense political vulnerability. Beneath the surface, the UK is in worse shape than it was when the Conservatives left power, because at least during the post-Black Wednesday period Kenneth Clarke made an attempt to use devaluation of Sterling to good effect. Manufacturing exports thrived; the consumer was shackled with high taxation.” But since 1997, the pound has risen to record levels, crippling manufacturing exports. The policies of the Blair government, and now Brown’s, favoured the financial sector.

Election timing

Looked at rationally, and viewing future economic prospects in Britain and worldwide, PM Brown should go for an early general election. The immediate aftermath of his ‘Black Monday’ has not had the same catastrophic effect, as yet, as Major and Lamont’s Black Wednesday. The Tories, in the midst of economic problems, and having just come through an election where they lied about Britain’s economic prospects, were pilloried by the British people.

In previous financial crises, like 1931, 1967 and 1976, Labour’s standing in the polls suffered. Now, New Labour is a pillar of capitalism. Darling’s underwriting of savers’ deposits has, it seems, from the polls, temporarily assured ‘Middle England’ of the government’s financial ‘prudence’. The Tories, moreover, are still marked by their past crimes against the British people, despite the ‘smiling diplomacy’ of Cameron, the Tory opposition leader. But if an election is not held soon, the advantage that Brown has in the polls now will not last.

The floods in the summer were much easier to handle than the sea of debt, which threatens to drown the consumer boom in Britain. Once repossessions climb and jobs are lost, the government will be blamed. Brown hesitates, however, because of the volatility in Britain – notwithstanding the polls – that may yet blow up in his face. He does not want to be seen as ‘Gordon the brief’, if he is defeated in an election held soon. His tenure of office would then be the shortest since George Canning died in office in 1827. If Brown delays, then he may be forced to go the whole term until 2010, such are the economic rocks which loom that could imperil his government. Either way, a Brown or Cameron government would not offer economic and social salvation for the British people.

At this week’s Labour Party conference in Bournemouth, Gordon Brown will knock the last nails into the idea that Labour still somehow represents working-class people. Even veteran socialist Tony Benn now accepts that the emasculation of the trade unions at conference for a spurious ‘influence’ at the National Policy Forum means the end of Labour as a trade-union based, and, therefore, working-class, party.

Yet, instead of boldly calling, as has railway workers’ union leader Bob Crow, to begin to assemble the forces for a new party, Tony Benn proposes more of the same. Campaigns outside parliament, in effect, on single issues, are our only hope now, in the vain expectation that this will influence legislators to respond to pressure. Tony Benn’s claim that there are “20 socialist parties outside of the Labour Party” is an excuse for passivity. It is like the proponents of ‘Lib-Labbery’ in the Liberal Party at the end of the 19th century, who looked down in disdain on the efforts of the Independent Labour Party, of Friedrich Engels and of Keir Hardie, to raise the banner of an independent working-class party freed from the coat-tails of the two capitalist parties of the time.

We now have three capitalist parties – New Labour, the Lib Dems and the Tories – and the current economic crisis shows that they offer no way out. If the working class is not to be left politically leaderless then the idea of a new party must be energetically fought for at all levels of the labour movement. Such a party would use the Northern Rock scandal to raise the need for bank nationalisation.

Capitalism could drag millions of working people into an economic and social abyss. Only a socialist democratically-planned society can avoid this catastrophe. The instrument to prepare the way for this is a mass party that will give confidence to working people, firstly by linking the day-to-day struggles to the vision of a new socialist society.

A version of this article appears in this week’s Socialist, newspaper of the Socialist Party (CWI in England and Wales)

Fundamentally unsound

Over the last week, billions of pounds have been wiped off share values worldwide as stock markets plunged.

Editorial, The Socialist newspaper, Socialist Party (England and Wales), London

 The capitalists have watched, horror-struck, fearing that their finance system could face a drastic fall like a house of cards collapsing. The UK stock market dropped by around 10% - officially classified as a sharp correction. Twenty per cent or more is classified as a crash.

Two German banks have filed for bankruptcy, several hedge funds have imploded and Countrywide, the largest mortgage lender in the US is teetering on the edge of collapse.

Hedge fund managers have been splashed over the press during the last few months for their conspicuous consumption on an obscene scale. The top 25 took home $14 billion last year. These residents of Richistan routinely spend more than half a million dollars to join a golf club, or buy a watch, or a pen.

Now these masters of the universe, most of whom pay a lower rate of tax than their cleaners, are hitting the headlines for a different reason, as they demand state or bank intervention to rescue them as they hit financial crisis. Unfortunately, it will not be hedge fund managers but small investors and individuals with private pensions and mortgages who will pay the highest price for the crisis.

Stock markets

On the stock markets irrational exuberance has swung wildly to deep gloom. Jokes amongst hedge fund managers include the development of a new q.t.m (the mathematical models used to decide where hedge funds should invest) - a dartboard, and that the only certainty is that stocks in mattresses will rise as investors desperately search for somewhere safe to stash their cash.

Millions of people are following the gyrations of the world’s stock markets because they fear that they will tip the "real economy" into recession. The fear is well-founded; it is likely to happen. When, is a more difficult question to answer.

In an attempt to avert recession, the European Central Bank has injected $100 billion into the money markets. The US Federal Reserve, America’s central bank, also stepped in, cutting the cost of lending to commercial banks and hinting that it could cut overall interest rates in September. It had previously hesitated to do so, hoping that the developing crisis would lead to a correction and a gradual deflation of the bubbles in the US economy without it effecting the real economy. Now, however, in an indication of how serious the situation is, Fed chief Ben Bernanke, implicitly recognised that recession had become more likely and that he had no choice but to act, stating: "Financial market conditions have deteriorated, and tighter credit controls and increased uncertainty have the potential to restrain economic growth."

The utterly blind, short-term nature of the financial markets means that no-one knows whether the liquidity being pumped in will be sufficient to avoid recession in the short term. It is a method that the central banks have used repeatedly, to avoid, or lessen the effects of, financial crises over the last fifteen years.

However, at a certain point there will be a crisis that they can’t avert and, like a hangover after a party that went on too long, the accumulated problems of the last period will come home to roost.

What is more, there are factors that make this crisis likely to be more serious than those of the 1990s.

The ‘slow motion car crash’ in the US housing market seems to have reached the point of collision. One fifth of US mortgages are in the sub-prime sector mortgages given to those who have great difficulty paying back the debt. More than 20% have already defaulted and one million Americans have lost their homes.

Even if the central banks avert a credit crunch now, this will not alter the underlying processes being played out in the US, which is what, at base, the markets are reacting to. Most capitalist commentators keep insisting that the fundamentals are sound, but this is not true. In the second quarter of this year US consumption growth slowed to 1.3% and initial figures suggest it is falling further in the third quarter. US consumers have played Atlas for fifteen years, holding up the world economy by buying the world’s goods. They have only been able to do so because of unprecedented levels of government and personal debt. Now high oil and gas prices, falling home values and slackening labour markets have combined to force US consumers to tighten their belts. At a certain stage this will rebound against all countries dependent for growth on exports to the US, including China.

Whether a recession in the US economy comes now or a bit later, and whether it is sharp or more gradual, could however depend on events in the finance markets over coming weeks. Over the last week the financial consequences of the sub-prime crisis have spread like oil on a pond.

One of the features of the recent stock market frenzy has been the securitising of all kinds of assets. This means that assets are cut up into small pieces and then bundled together with other assets into packages that are bought and sold on the world’s stock markets. This is meant to spread the risk in a positive sense, but now crisis has hit, it has had exactly the opposite effect, it is spreading the panic.

Globally, no-one knows who owns pieces of the US sub-prime market, and as a result, no-one wants to loan money to any company that might be affected. The credit crunch which this has set off, if it is not reversed by the concerted efforts of the major capitalist powers, could ultimately trigger a sharp recession in the US, and as a result the world economy.

The current boom has relied on vast sums of money sloshing around the world’s stock markets. This has only been possible on the scale it has because of the role China, Japan and the South East Asian countries have played in using their trade surpluses to invest in US government bonds in order to sustain the US economy and its unprecedented trade deficit of over $800 billion dollars a year. They have done so in order to sustain a market for their goods. The capitalists worst fear is a rapid breakdown of this interdependent relationship, creating a massive world economic crisis.

Unstable system

Last week’s events have also led to disruption in the carry trade (where international speculators borrow in one currency - mainly the yen - and then change it into another) which has been another source of global liquidity. As a result the yen rose against the dollar, creating problems for Japanese exports to the US. If financial crisis causes the value of the dollar to drop dramatically, forcing the South East Asian countries to start to sell their dollar reserves, a sharp recession, even an absolute drop in world growth, would be posed.

There are many possible scenarios, as there are many fault lines in the world economy, not least the inability of US consumers to keep on buying.

Capitalism in the twenty first century is a more parasitic system than ever before. The capitalists are making mega-profits but they are not investing in production - capital expenditure is at an all time low in the US and Europe.

The current boom has been defined by the increasing chasm between the ultra-rich and the rest of the population. While a few roll in money, wages for the majority have stagnated, and public services have been cut. In the US, wages and salaries now make up the lowest share of gross domestic product since 1947. Ultimately the falling share of wages in national income is restricting the market for capitalism and increasing the tendency towards crisis.

Enormous anger has built up during the boom years at the unequal nature of society. A job (albeit often low paid and insecure) and the availability of relatively cheap credit, have softened the blows that have rained down on working-class people.

However the onset of world recession, when it comes, will profoundly alter that situation, as billions of working-class people will be expected to pay for the crisis. There is not a mechanical connection between economic developments and the consciousness and combativity of the working class, but whether sooner or later, the coming economic upheavals will lay the basis for a massive increase in radicalisation.  

New face, same pedigree, Cartoon by Alan Hardman with apologies to 'Romulus and remus and the she-wolf' , photo Alan Hardman

WITH ALMOST the entire parliamentary Labour Party backing him, Gordon Brown was anointed as successor to Tony Blair without a contest. Brown had pretended to want a contest, but when left wing challenger John McDonnell was struggling to reach the required 45 nominations, Brown refused to ask some of his own supporters to nominate McDonnell.

He said it would be "dishonest" to do so and that he could not "ask people to trade their conscience".

But there would have been no trading of conscience if at Brown's bidding some MPs had declared their support for Brown but their nomination for McDonnell. Instead, they collectively decided to deny every Labour Party member and Labour-affiliated trade unionist a vote in the matter, in fear of suffering some exposure to criticism of their anti-working class agenda.

With most concerned only about their career prospects, in an unseemly rush to crown Brown, ardent Blairite MPs together with other former Brown opponents were 'changing their religion as the dying monarch's life ebbed away' as one backbench MP put it.

John McDonnell deserves congratulations for trying to present a challenge. If he had succeeded in getting on the ballot paper it would have led to welcome publicity for a programme against cuts, privatisation and the Iraq war and in favour of free education, a decent minimum wage, civil liberties and trade union rights. It would also have been a chance for workers in Labour-affiliated trade unions to vote in favour of that programme.

New face, same pedigree, Cartoon by Alan Hardman, photo Alan Hardman

However, as the socialist warned, an eventual victory by John McDonnell against Brown was not going to happen, given the nature of New Labour today.

Labour membership has halved during Blair and Brown's ten years in power and the remainder has become predominately Blairite and inactive. Rather than there being an influx of new workers into New Labour as John McDonnell hoped, with Brown determined to continue with a pro-market agenda, the stage is set for a further decline of the remnants of the Labour left.

An FT Harris poll on 21 May showed that 80% of British voters think that hospitals have not improved during the last ten years of New Labour government and 72% think that education has not improved. However, Gordon Brown has made it clear that he will continue with privatisation and cuts. There will be changes in style and presentation, some relatively minor progressive promises and probably an earlier withdrawal of troops from Iraq. But the basic diet of pro-big business measures and attacks on workers' living standards will go on.

The contest for the deputy leader of the Labour Party, while actually having some challengers, also does nothing to indicate any turn to the left. The candidate supported by the major trade unions, Jon Cruddas, did oppose higher tuition fees and a renewal of Trident missiles, but he also nominated Gordon Brown for the Labour leadership! And Blairite candidate Hilary Benn only managed to get on the ballot paper through getting some final nominations from members of the parliamentary Socialist Campaign Group whose 'socialist' conscience amounted to only nominating him out of sympathy for his father, the left-wing Tony Benn.

A vital task for all socialists now is to prepare to assist the inevitable workers' struggles that will break out under the Brown-led government.

Much of the public-sector workforce is seething with rage at Brown's 2% wage limit, effectively a pay cut. Other battles are looming, such as against Royal Mail plans to axe 40,000 jobs and close a further 2,500 post offices.

Working-class people are hugely relieved that Blair is going and a layer are desperately hoping that Brown will break free of the Blairite neo-liberal agenda and reveal himself as different in substance as well as style. However, there is also a layer who know well that illusions in Brown are futile, who are already drawing the conclusion that industrial action will soon be necessary. Building for a good turnout of trade unionists at the RMT-initiated shop stewards' conference on 7 July will be an important step in preparing for such action.

But as well, socialists need to step up the campaign for a new political party that can represent workers' interests.

The successful second 'campaign for a new workers' party' (CNWP) conference on 12 May was a step forward on the path to realising this aim.

John McDonnell, now clearly obstructed in his aim of furthering workers' interests inside the Labour Party should join socialists outside the Labour Party who are campaigning for a new party. However, unfortunately, he confirms in his interview with the socialist this week, that he believes he should remain in the Labour Party at this stage.

The call for a new party receives enthusiastic support among rank and file trade unionists, community campaigners and young people whenever it is raised in meetings and on picket lines etc by Socialist Party members and others. The socialist will continue to argue for the urgent need to build the CNWP and for all socialists, trade unionists and others not yet part of it, to get involved in helping to build this vital campaign.

Curtain falls on disastrous reign

Editorial, The Socialist newspaper, Socialist Party (England and Wales), London

Ten years of ‘unremitting’ attacks on the working class and poor for the benefit of the rich, blatant corruption – symbolised by the Ecclestone affair at the beginning of his reign and ‘cash for honours’ at the end – the systematic undermining of the NHS, the continuation of the dirty work of the Tories through privatisation. Above all, the obscenity of the Iraq war with its 650,000 civilian victims and the country plunged back almost to medieval barbarism. This, and not the sycophantic blandishments by Blair and his media allies in the last week, is the real ‘legacy’ of his disastrous reign.

Thatcher was a modern Genghis Khan as her capitalist barbarism swept over Britain, leaving its mark to this day in the industrial wastelands and the monumental poverty which scars the country. New Labour’s accession to power deepened this, despite claims to the contrary. 1997 and the defeat of the Tories did, indeed, seem to be a ‘new dawn’ for millions of working-class people seeking deliverance from Thatcherite Tory despotism. Many hoped against hope that Blair and his government was the agency for this change.

These illusions were not shared by the socialist and the Socialist Party – we warned he could turn out to be as bad or worse than Thatcher herself – nor by the serious representatives of capitalism who knew precisely where he stood… in their camp. The Financial Times wrote before the election of 1997: "The New Labour ‘project’ looks increasingly like Margaret Thatcher’s final triumph."

The gradual realisation that this was, indeed, the real agenda of Blair and New Labour has led to the almost excoriating hatred with which Blair is viewed by working-class people, the young and, above all, the organised labour movement. Despite the stage-managed emotion of a few New Labour toadies in his Sedgefield constituency, his departure evoked hisses, boos and catcalls, rather than the hosannas and the crowd ‘calling for more’ ludicrously suggested by his coterie.

The representatives of the ruling class recognised his worth to them as he departs. Tory former chancellor Kenneth Clarke, appearing on BBC Question Time, praised Blair for "finishing off socialism" in the Labour Party. However, he correctly added that the "heavy lifting" – witch-hunts against the left and Militant in particular – was started by former Labour leaders, Neil Kinnock and John Smith. The result of all this for the Labour Party was underlined by John Curtice, the election commentator, in the Independent: "The party that was originally founded to provide working-class representation in Parliament is no longer regarded as a working-class party. In 1987, the British Election Study found that 46% of the electorate thought the Labour Party looked after the interests of the working class ‘very closely’. By the time of the last election, only 11% did."

According to Mori, the pollsters, at the last general election, Labour’s support among "A/B professionals was eleven points higher than in 1992. In contrast, its vote among the D/E, the working class, was a point lower." The ‘electoral wizardry’ of Blair and the New Labour machine resulted, in the recent local election, in New Labour attaining almost the same share of the vote as Labour did under Michael Foot in 1983. At the time, this earned Foot the jeers of the right and their press that Labour’s electoral manifesto was the "longest suicide note in history".

The idea that Blair himself was responsible for the victory in 1997 is punctured by Curtice: "Mr Blair did not enable his party to secure a double-digit lead in the opinion polls, he inherited one. Thanks to the ravages of ‘Black Wednesday’ [1992] Labour already enjoyed a 23 point lead over the Tories in May 1994, the month that Mr Blair’s predecessor, John Smith, died." In other words, it was the massive unpopularity of the Tories, rather than support for the programme of Blair and New Labour, which hoisted him to power in 1997.

But, protest the Blairistas like Peter Mandelson, thousands of children have been lifted out of poverty. Yet the UN recently declared in a special report that the position of children in Britain was the worst in the advanced industrial countries. Moreover, today, a million children live in overcrowded, run-down, damp or dangerous housing. The number of homeless people in Britain has risen to 391,000; across the UK 93,000 families are living in temporary accommodation, twice the number when Labour came to power. The average price paid by first-time buyers has doubled in five years. House prices are now beyond the reach of first-time buyers in 93% of towns, up from 37% in 2001.

But there is a minimum wage, isn’t there? Yes, of a miserly £5-35 an hour! This is at a time when the Sunday Times rich list – featured in a previous issue of the socialist – showed that the combined wealth of the UK’s 1,000 richest people had risen by 20%, to a staggering £59 billion in the last twelve months. A previous renegade socialist once declared that he believed in the ‘emancipation of the working class one by one, beginning with myself’. Blair has put this cynical philosophy into practice. When he leaves office, he will no longer have to ‘struggle by’ on an annual salary of £180,000 a year. His wife, Cherie, earns an estimated £100,000 a year plus £30,000 every time she gives a ‘lecture’. He is entitled to a backbench salary of £60,000, redundancy pay of £31,000 and a retirement pension of £63,000 for life. When he reaches 60 he will be eligible for another pension for his long service as an MP. This will be worth another £40,000 a year. The dosh will pile up as he lectures to the like-minded rich throughout the world.

But he leaves in his wake massive discontent and a broken-backed party which has no real connection now with the working class which historically created this party and hoisted its leaders on its backs into power. Contrast Blair’s reign with that of previous Labour governments. By no means a full-blooded socialist government, the Attlee government of 1945-50, under colossal mass pressure, did preside over a ‘quarter of a revolution’ by nationalising 20% of industry and creating the National Health Service.

Blair has presided over the dismantling of this previous monument to Labour rule. Listen to David Hinchcliffe, an ex-Labour MP and former chairman of the MPs health committee and an opponent of Socialist Party members in the Wakefield area, who declared recently: "We never envisaged that a Labour government under Tony Blair would go further with the Tory market reforms in health than Margaret Thatcher would ever have dared." This is why there is colossal anger on the NHS and other attacks on the public sector.

It would be even greater but for the fact that the British economy, allegedly now the world’s fifth-largest and richest, is in what capitalist economists describe as its ‘15th year of uninterrupted growth’. This is not down to the ‘management’ of Gordon Brown and New Labour but is the product, in the main, of the devaluation of the pound under the Tories in 1992. This created a certain economic breathing space for the British economy, together with the upswing in the world economy through globalisation and other factors.

But this, for the mass of the population, has been a ‘joyless boom’, one that has been marked by increased exploitation of the workforce – resulting in super-profits for big business, at their highest level for 50 years in Britain. It has gone together, also, with bullying in the workplace and increased stress. An attempted management counter-revolution has taken place against the rights, conditions and union organisation of the working class. Consequently, the situation in the workplaces and factories could be compared to a lake of petrol which an accidentally dropped match could ignite into an explosion. Public-sector workers, faced with a big increase in prices, will refuse to accept the diktat of Brown’s 2% limit on pay. Post office workers are threatening to strike.

The situation that Brown will inherit is entirely different to that of 1997 or of any time since. The British economy, like the American and many others, such as Spain, is floating on a sea of credit. Home repossessions have jumped by 65% to a six-year high of 17,000 last year. Personal debt has reached a record $2.6 trillion and, according to the Organisation for Economic Cooperation and Development, UK household debt, as a percentage of annual disposable income, hit 159% in 2005 – the latest year for which data is available – compared with 135% in the US. There is a growing deficit, presently at 3.5% in the trade current account. Interest rates have been pushed up to 5.5%, the fourth rise in nine months and a six-year high. Even a fervent Blairite like Will Hutton recently declared in the Observer newspaper: "The crash is coming, and it could be soon." And yet, the CBI (the bosses’ trade union) demands its pound of flesh, a further squeeze on public spending, attacks on public-sector workers, privatisation and a further shift in the balance of wealth and power in favour of the capitalist class.

Tony Blair facilely declared in 1999: "The class war is over. But the struggle for true equality has only just begun." This itself was a concession to the opposition to the gross and widening disparities in wealth. But inequality is not just an ‘unfortunate leftover’ from previous ‘uncivilised times’. Inequality is woven into the very fabric of class society, with the rich compelled to squeeze the share of the working class in order to boost its profitability, and the working class itself equally forced to resist. Sometimes that resistance is muted by conservative trade union leaders, but the ‘class war’ inevitably breaks over the heads of even this stratum who invariably rush to catch up. Britain is on the eve of such an outburst of working-class fury.

Despite the plaudits of the rich and powerful, Blair, in the words of Leon Trotsky to the Mensheviks in 1917, is about to go into the "dustbin of history". But, unfortunately, Blairism/Thatcherism will still dominate New Labour under Gordon Brown. Mandelson shows the real character of New Labour when he declared: "No Labour Party manifesto would now propose to repeal Mrs Thatcher’s trade union law, reverse privatisations or remove the right to buy a council house." (Evening Standard, 8 May)

The weakness of the left in the Labour Party is indicated by the difficulty, as we go to press, of John McDonnell reaching the 45 required nominations. Brown’s acolytes are reported to be struggling to prevent McDonnell appearing on the ballot. This is clearly because this would then put many trade union leaders on the spot in the Labour leadership election. While these leaders, almost to a man and woman, are prepared to drag behind Brown, their own members could exert pressure for a vote for McDonnell.

However, even if John McDonnell gets on the ballot, this will not prevent a Brown ‘coronation’. He has already re-emphasised that he is the joint architect, with Blair, of New Labour. There will, of course, be some concessions to the labour movement and the working class. But, fundamentally, Brown will continue the same policies as Blair but maybe not in the same brutal, blundering fashion.

Blair is considered, even by establishment figures, as an ‘American neo-conservative with a British passport’. Tariq Ali informs us in the Guardian that, "senior diplomats have told me it would not upset them too much if Blair were tried as a war criminal". Certainly, the Iraq disaster is the worst foreign policy catastrophe for British capitalism and imperialism since the Suez crisis of 1956. A man who once said that his could be the first generation who may "live our entire lives without going to war or sending our children to war" actually took British troops into five wars: Kosovo, ‘Desert Fox’ in Iraq, Sierra Leone, Afghanistan and Iraq.

Brown is not likely to make all the same disastrous mistakes. Nevertheless, his government, even with cosmetic changes in policy, will amount to little more than a ‘re-spray’ of New Labour, with the same Blairite/Thatcherite policies as the foundation of his government. Therefore, the real lesson of the last ten years is that the ruling class, through the medium of right-wing trade union and Labour leaders like Blair have succeeded, unfortunately, in destroying the former mass political expression of the British working class, the Labour Party, replacing it with the capitalist New Labour. There is, therefore, no time to be lost in creating the basis for a new force for the British working class, a new mass workers’ party.

The ‘new dawn’ of 1997 for the British workers turned out to be a false one under the stewardship of Blair and Brown. However, a new future can open up if the work of the Campaign for a New Workers’ Party, shown at the splendid national conference at the weekend, was built on, as it will be, in the struggles that will unfold in the next period in Britain.

Editorial from The Socialist, paper of The Socialist Party, cwi in England and Wales