Editorial

New Labour in blind panic

RMT protests against privatisation on the London underground , photo Paul Mattsson

'Don't panic!' Peter Mandelson is begging his fellow cabinet ministers. It will not have any effect - New Labour is in a blind panic. No wonder; as the economy has sharply declined, so has New Labour's position in the polls. In some surveys it is now only two or three points ahead of the Liberal Democrats.

Peter Mandelson, the epitome of Blairism, and the man who famously declared that New Labour is "intensely relaxed about people getting filthy rich", has good reason to panic. New Labour is in this up to its eyeballs. It spent the last decade giving free rein to the bankers to do whatever they want. Not for nothing did a survey of hedge-fund traders in 2007 find that a majority preferred London to New York, because it was "more lightly regulated".

Resignation

The latest example of New Labour's collusion with the bankers has been starkly revealed by the resignation of Sir James Crosby as head of the Financial Services Authority. This man, as head of the bank HBOS, is alleged to have fired someone for pointing out that the bank was recklessly taking on too much risk. Even today, after HBOS's collapse, as a result of 'recklessly taking on too much risk', Sir James still says that the whistleblower's claims were "without merit".

And this is the man that New Labour appointed to second-in-command of the Financial Services Authority! This really is paying the wolf to guard the lambs. Prior to that appointment he was Brown's adviser on mortgages and was knighted in 2006 for his "contribution to financial services"!

New Labour is under huge pressure to act against the bankers' greed, particularly their bloated bonuses. Despite this they will do no more than trim the worst excesses. Nor would the Tories - who are equally culpable for the current situation - act differently; it was under Thatcher that the deregulation of the City began.

Mandelson in reality does not want even minor measures to be taken. In his recent speech he warned his fellow cabinet members to stop taking so many measures to combat the recession, as they only raise 'false expectations'.

For the taxpayers watching billions of pounds of their money being swallowed by banks that continue to refuse to lend, or for the almost two million who are now out of work, it will be difficult to imagine what 'expectations' New Labour is supposed to have raised. On the contrary, New Labour is lurching from catastrophe to catastrophe, marginalised by the magnitude of the crisis.

The profound disorientation of all capitalist politicians stems from the fact that this crisis is not just caused by the greed of the City financiers or even the domination of finance capitalism. The deeper root cause is the very nature of capitalism itself. Brown's claim to have 'abolished boom and bust' must now be deeply embarrassing to him. It is a sign of his total incomprehension of the system that he lauds that he was ever foolish enough to say it.

Capitalism, as Karl Marx explained 150 years ago is a crisis-ridden system, based on production for profit and not for social need. Crucially, Marx explained that the working class collectively can never buy back the full product of its labour, because workers' wages represent only a portion of what they produce. The capitalists can overcome this temporarily but it is a source of periodic crisis.

Over recent decades capitalism attempted to overcome this problem by injecting credit into the economy in order to prolong the boom beyond its 'natural' limit. Millions of us have managed to buy consumer goods on plastic, or by re-mortgaging our homes.

This, however, has now turned into its opposite. The credit crunch has bitten and reality is being revealed - that the working class is even less able to buy back the goods it produces as a result of the neo-liberal era. Capitalism in the last period has made unprecedented profits from driving down wages by a variety of means - increasing working hours, increasing use of 'temporary' workers with fewer rights, moving production abroad, and so on. The result is that in the US, for example, wages are now the lowest share of gross domestic product (GDP) than at any time since 1947, while profits were, until the recent crisis, at an all-time high. A similar situation exists in Britain.

Having been super-exploited in the boom years, workers are now being expected to pay for the crisis. Increasingly companies are trying to wriggle out of paying redundancy pay or even out of giving notice to workers being laid off. In many cases, like the weekend shift at the BMW mini plant in Cowley, formal status as agency or temporary staff, despite having worked there for years, has been used as an excuse to throw workers onto the dole with virtually no notice and no redundancy pay. To add insult to injury Cowley workers were told to hand their uniforms in or have £35 docked from their final pay-packet!

Struggle needed

The trade union movement needs to organise a determined struggle against the nightmare that is developing for the working class. The construction workers at Lindsey oil refinery have shown that, when this is done, it is possible to win victories.

The Socialist believes that such a struggle should be politically armed with a socialist programme - which would offer a real road out of this crisis. Its demands should include:

Nationalisation of all the financial institutions, with no compensation for the financial 'wizards' who have wrecked the banking system. Compensation should only be paid to small shareholders and depositors, on the basis of proven need. This should be just a first step to the unification of all the banks into one democratically controlled system.

The labour movement should demand majority representation at all levels of these banks, drawn from workers, including from the unions in the banking industry and the wider working class and labour movement, with the government also represented.

However, our demands should not be limited to the banking sector. Where jobs are being cut or workers put on short time, the unions' starting point should be to demand an opening of the books to the workforce for scrutiny. Where have all the profits gone in the last ten years or more? The unions should also demand that, instead of cutting jobs, hours and pay, the work should be shared out without loss of pay for any worker.

If these companies argue that 'normal' production is impossible in the current economic crisis then an alternative plan of production could be drawn up in these threatened plants. In car plants, for example, this could be linked to developing improved, and more environmentally-friendly, means of public transport.

Where the capitalists refuse to provide the necessary investment to keep the plants open we should demand that the government steps in and nationalises them, with compensation paid only on the basis of proven need, and places them under workers' control and management.

These demands should be linked to the need for a socialist plan of production, democratically drawn up and implemented by committees that include workers, trade unionists, small business people and consumers.