23. British economy


Signs in the economy, notwithstanding Blair and Brown’s blandishments, indicated a slowdown. By October 1998 the wave of closures of factories and workplaces led to more and more redundancies being announced. Around 5,000 jobs a week were disappearing and it was the already weakened industrial sector that was being seriously affected. The closure of the National Semiconductor Company chip plant in Greenock, West of Scotland, led to the crippling axing of 600 jobs. Blairite council leaders suggested that workers in areas like this should stop looking back to traditional shipbuilding or manufacturing because hi-tech production was the future. Now that perspective had been shattered with workers asking how much money had this US-owned company received to go into areas like the West of Scotland, yet it was always the workers who were expected to pay the bill. We declared: “If the money’s still there, the workplace should stay open and not one worker should be sacked. If the money’s gone, we should fight to get it taken into public ownership, with minimum compensation and with workers managing and controlling production. We think that the bosses, not the workers should pay for capitalism’s crisis.”1 This was a refrain which would be heard again and again from workers as the crisis of British capitalism endured and dramatically worsened in the noughties.

The slow and inexorable decline had been evident long before this. Manufacturing industry’s continual contraction arose from a number of causes, not least the short-sightedness of the bosses. North Sea oil was used to cushion and prevent social upheaval, through the payment of benefits to those who were unable to work and could not find suitable employment. In particular, the criminal refusal to reinvest the surplus extracted from the labour of the working class back into production meant that British capitalism was more exposed even than its rivals with the onset of the world crisis. Also evident was the trend towards casualisation, accompanied by low pay and insecurity of employment.

It was the North, Scotland and Wales that suffered most, with a seemingly inexorable job slaughter. In October the Socialist commented: “In the past eight weeks 4,500 people have lost their jobs in North-East England. [The] Textilion garment factory in North Shields is making 230 people redundant.” A worker told our reporters: “Our redundancy pay will be very small anyway, about £1,500 for 15 years’ service. But because that money is due us, we won’t be able to get Job Seekers Allowance! We feel we’ve been short changed. We’ve set up our own task force to ensure we get the right advice about claiming benefits.”2 This was the lament of workers in general. The avalanche of redundancies – and the seeming incapacity of the union leaderships to do their job and give a lead – produced resignation and despondency rather than a preparedness to fight. Unfortunately, this was the general picture that emerged over the next 15 years. The Socialist Party did its best, with small forces, to convince workers to resist the offensive and warned about the threat of a recession that was inevitable in the future.

Even Brown finally admitted that his forecast of 1.75% to 2.25% economic growth in the year 1998 was too optimistic. He scaled down its prediction to a measly 1% growth in 1999. Brown thereby sought to nudge the Bank of England into lowering interest rates to relieve the pressure on manufacturing industry, but the 0.25% drop which was announced did nothing to halt or even slow down the looming recession. This would mean an increase in unemployment, with fewer people paying tax, and the cost of social security rising.  Then what would happen to public spending? The 2010 ConDem coalition government wrestled with a similar problem on a much grander scale, but enormously compounded the problems by piling cuts on top of cuts. We warned about the signs in the financial sector, where banks were running hedge funds, glorified gambling schemes, despite the collapse of Long-Term Capital Management (LTCM) in 1998: “A financial system collapse would plunge the world into a depression; meaning mass unemployment, mortgages foreclosed, and even people’s savings disappearing. Barclays are so big of course they’d expect to be bailed out when in trouble.”3

Few others at this stage made such a bold prognosis as this, which was borne out in the 2007-08 crisis. Indeed, the Socialist Party was condemned by various critics, as we have seen, for being alarmist, ‘primitive slumpists’, incapable of understanding that ‘capitalism has changed’. There was a new economic paradigm, reasoned our opponents, which makes your ‘economic catastrophism’ redundant. Yet not only in general have we been confirmed but, in particular, we anticipated mortgage foreclosures, that Barclays Bank would be bailed out and even that people’s savings would be threatened and could disappear, as was illustrated by the 2013 crisis in Cyprus. Yet this was just the beginning. The world crisis of capitalism is not over and new convulsions loom. It took time for the recession and slump to develop, but it would have developed earlier than 2008 had it not been for the massive injection of liquidity in 2001-02 which staved off the crisis for six years, although that only meant a bigger collapse when it came. The task of Marxists was to soberly analyse the processes at work within capitalism, the inevitable economic collapse and the huge political repercussions that would flow from this.

As 1999 drew to an end, criticisms of the New Labour government multiplied. Privatisation was proving to be a disaster, highlighted by the Paddington rail crash. There was an upsurge in public anger against fat cat companies which put profits before people’s lives. Ordinary people called for the railways to be renationalised and the media were forced to reflect this. They published some of the posters of the rail workers: “No protection on board. No second man with driver. Saving money is easy. Losing loved ones is hard.” A West Midlands rail worker commented to the Socialist: “Drivers always get the blame. Drivers are always being blackmailed and put under pressure by the bosses because of the threat of ‘disrupting’ hundreds of customers.”

In general, we had always supported the idea of the renationalisation of privatised industries, but then added ‘compensation on the basis of proven need’. This was in order to avoid the charge that this amounted to ‘confiscation’ of the investments not just of the big companies, which have lined their pockets through privatisation, but also those with a handful of shares. We are in favour of compensation for the small investors. Yet the public mood was such that there was absolutely no support for compensating the fat cat shareholders and rail bosses. We went even further and suggested that “the bosses’ profits should be seized and all their subsidies from public money taken back”. Needless to say, New Labour rejected this. However the opposition to privatisation went beyond the railways. The government was still considering the privatisation of air traffic control and even suggested applying this to part of the London Underground. In almost every corner of the public sector privatisation was spreading its greedy tentacles, bringing more misery and potentially loss of life. We stated: “In the NHS  the Private Finance Initiative (PFI) is already draining resources. In 15 years this drain will become intolerable.” That has been borne out as PFI is seen as a massive failure. However, such was the outcry at its effects on the railways, that Prescott, then Transport Minister, was forced to declare that within 24 hours £1 billion would be made available for improving rail safety! He said that finding money was never a problem, which posed the question: if that was the case, why the hell hadn’t he done it before and saved lives?4

Tony Benn recorded in his diaries: “Blair has just come back from holiday yesterday, 31 August… I feel the New Labour period is passing now; can’t quite describe it. And just as all the right wingers call themselves modernisers when you want to get rid of  socialist ideas, so I’m a post-moderniser. I feel the pendulum beginning to swing back.”5 Subsequent events were to show that within New Labour, despite the opposition to Blair in general and particularly from former Labour supporters, this was not expressed within the party itself. So long as Benn and what remained of the Labour left remained imprisoned within its structures, their effect was nullified.

This was indicated at the Labour Party conference, where Benn expressed deep pessimism in contrast to his recent optimism: “The conference is totally different now, they really have only tolerated any functional decision making and the media just hover around trying to find a bit of trouble. But the press may get bored with Jesus Christ, taking responsibility for all our sins… There’s no question about it, the media have taken the whole thing over. As I left I was given a T-shirt and a little rubber television set (a toy) to press in my hands for stress.”6 He admitted that the left was completely ineffective: “I went down to the Tribune meeting in the Winter Gardens. I would be surprised that there were 200 people there; last year it was 1,200. It was a terribly disappointing meeting, to be truthful.” Reduced to watching Blair’s speech on television, he commented: “The first and overwhelming impression is of a man absolutely inflated with his own role – ‘I’m doing this, I’m doing that…’ It really frightened me. On the other hand, he played all the right notes about the health service, dentistry and drugs, equality of opportunity and how the class war is over. Everybody cheered him; he got a standing ovation. I thought the PM had gone right over the top.”7

This theme – hopes for a change in the Labour Party, only to be followed by deep disappointment – was played out again and again, both in Benn’s private ruminations and in the writings and speeches of the left. Occasionally there are flashes of recognition of the hopelessness of expecting Labour to change. Commenting on Livingstone’s intention to stand for London Mayor, if necessary against Labour (which he subsequently did successfully) Benn commented: “I don’t want to see Ken expelled from the party, which he would be immediately. On the other hand, there will have to be a break made one day, and maybe Ken standing independently in London would be the moment to break the power and reputation and standing of New Labour.”8 Moreover, the attacks of the New Labour machine on Livingstone only increased his support, as Benn conceded: “Blair launched into a violent personal attack on Livingstone, actually naming him and going back to the bad old days of old Labour, and so on; it was quite unnecessary, very stupid, because it’s building a bigger sympathy vote for Livingstone.”9

Events were to show that Tony Benn’s hopes were to be dashed. Livingstone, who had evolved towards the right, was completely incapable of utilising his triumph in being elected London Mayor to then launch an initiative in favour of socialism and a new mass party. The dithering of Benn and the Labour left on this issue acted in no small measure as a brake on moves to create such a political force. There is no doubt that with the backing of leading left figures like Benn, a new party, albeit limited in the first instance, would have developed in outline at this stage. The Iraq war, the complicity of Blair and the New Labour government in this, would have given an enormous impetus to such a party as will be shown later.