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From The Socialist newspaper, 18 September 2004

Behind New Labour's Power Struggle

Economic storms and class battles on the agenda

WHILE MOST people in Britain were preoccupied with the terrorist outrage in North Ossetia, with a worsening economic situation, price rises and the daily struggle to make ends meet, what were the priorities of Tony Blair and his New Labour government?

Peter Taaffe, General secretary, Socialist Party

They were, who is in the pecking order at the top and who will inherit Blair's crown when he is forced to vacate office. This is the real meaning of the brouhaha over his government reshuffle. Political commentators, trying to make sense of this, are like the Kremlinologists of old, who tried to discern who were the winners and losers in power struggles in Stalinist Russia by observing who was next to the "leader" on the plinth in Red Square during parades.

If the super-Blairite Milburn now "prefers to spend more time" with the government than with his family and has really "won out" over Gordon Brown and the 'Brownies', then it is of little consequence to working-class people. Blair, Milburn and Brown are all signed-up supporters of the New Labour 'project'.

Both wings of the leadership of this capitalist party want to take the axe to what remains of the public sector, to brutally slash the numbers receiving disability benefits (2.7 million at present) and to support the bosses in worsening hours, undermining conditions and cutting back on wages.

The only difference is the mood music emanating from the two camps. Blair and Milburn quite clearly want to use a New Labour victory at the next general election to carry out "substantial reforms" (read savage attacks) on welfare spending.

Brown is nervous of working-class people's reaction if a frontal offensive is launched; he still supports this programme, but wants it delivered on an instalment plan. In other words, the choice facing working-class people from New Labour is between Milburn and Blair's club or Brown's 'death by a thousand cuts'.

One probable reason for Andrew Smith's resignation as Secretary of State for Work and Pensions was that he's one of the few Labour MPs who lives on a council estate, in Oxford. Some of his neighbours are "chronically sick and disabled", which would have been very uncomfortable for him when these measures go through. The fact that he lives in and represents such a constituency was not unimportant when he jumped before he was pushed.

Behind the naked personal ambitions and struggle for power within the government, there is a determination to remorselessly attack working class people's living standards. This, in turn, reflects the serious economic and social situation confronting British capitalism - in a sense, one of the most serious in history.

Unlike the big players in Europe with a large manufacturing base - which has been most seriously affected in recent economic crises - Britain appears to have escaped the worst ravages of economic stagnation affecting its European competitors.

Britain's low-wage economy and sweated labour, together with the City of London's role as a major earner of income from 'services' in the financial sector, have provided a cushion against unfavourable economic winds from abroad.


NOW, HOWEVER, British and world capitalism could face an economic storm comparable to Hurricane Ivan that recently wreaked havoc in the Caribbean. The colossal bubble produced by the 1990s boom - sustained in particular by the massive accumulation of the US economy's twin deficits, budget and trade - was in proportion twice the size of that which preceded the Great Crash of 1929.

When it burst in the early years of this decade, Alan Greenspan of the US Federal Reserve took what capitalist economists called "extraordinary measures" by injecting money liquidity into the economy, which kept it going.

Faced with a slowdown from 2001 onwards, interest rates were slashed. This, in turn, led to a housing 'bubble' in the US and Britain, which itself financed an unprecedented borrowing spree, fuelling consumer spending and sustaining this house of cards.

House prices in Britain are at an unprecedented level, roughly five times average annual income. Household debt now exceeds 1 trillion (1,000 million).

Some capitalist economists believe that this could continue into an indefinite 'golden' future for British capitalism. They are in denial, as they were in the late 1980s: "There are good reasons for arguing that this historic norm (the widening of the ratio of house prices to income) may no longer be applicable in today's economy", wrote a capitalist economist in early 1989, a few months before the biggest property crash in 40 years!

Moreover, Greenspan has run out of buttons to press to sustain the US and therefore the world economy. Japanese and Chinese investors plugging the yawning chasms of the deficits will not continue if these go on rising. Combined with the rise in raw material prices, particularly the $45 a barrel for oil, the world economy could be heading for the rocks.

Already, global manufacturing activity cooled in August and, according to one economist, "We are seeing a global cyclical slowdown." Once the US economy slows, neither the eurozone nor Japan will be able to pick up the economic baton.

In this chilly and stormy world economic environment, the cosy complacency that "Britain is different", fostered by both capitalists and Gordon Brown, will shatter. The very hysteria surrounding their attempts to drive down living standards reflects their fear of the future.

The purpose is to drastically reduce the working class's share of the surplus - profit - produced by the working class. This is in order to boost the profitability of big business thereby, they hope, sustaining the capitalist economic merry-go-round. This will produce poverty on an unprecedented scale, massive inequality and workplace conditions designed for one thing: to squeeze more and more labour power out of the working class.

Germany is a terrible warning to Britain's workers as Thatcherised Britain was to the Germans until recently. Under the whip of the Schroeder government, fast-tracked Thatcherism is the order of the day, with wages reduced to poverty levels and a savage lengthening of the working week.

The workers in one factory, terrified by the bosses' threat to outsource production, were persuaded to lengthen the working week from 35 to 60 hours! This was not stopped by the trade union leaders but by Germany's 'health and safety' body, which said that it was "dangerous" to the health of the workers involved.

The threat of outsourcing is held like the sword of Damocles over the heads of working class people, compelling them to tolerate wages and conditions that would have been unthinkable not long ago. Even with their sacrifices, it is estimated that one million jobs will be lost from Europe in the next ten years - 750,000 of them going from Britain.

The cushion of North Sea oil is also running out - oil imports exceeded exports in June for the first time in 11 years. One spokesperson declared: "This is no blip, production rates are in decline." Moreover, the rising price of oil will cut Britain's economic growth rate, which will lead to higher unemployment and eventually squeeze the bosses' profits. This in turn will force them to resist even the meagre wage increases granted at present.

Cuts agenda

WHOEVER IS elected as the next government intends, as Gershon and Brown made clear, to further cut public sector expenditure. At the forefront of this attack are the members of the Public and Commercial Services (PCS), the main civil service union.

Brown's plan to reduce public-sector jobs by 100,000 is the biggest attack on a single workforce since the Tories' assault on the miners. Moreover, it has a similar purpose in cowing and rendering powerless the working class in the face of a capitalist offensive. Even Brendan Barber, TUC General Secretary, admits that the attack on the civil service is a "particular flashpoint at the moment".

Refusing to face up to reality of the situation is the worst mistake that can be made by those claiming to lead the working class and the labour movement. Possibly, the attacks on the civil service will be dragged out, maybe some of them postponed until after the general election.

But the government's determination is without doubt - to pursue a 'slash and burn' policy within the civil service. Blair made clear his intention by appointing Alan Johnson, the only trade union leader to support the abolition of the socialist Clause IV from the Labour Party's constitution, as Andrew Smith's replacement.

Quite rightly, the PCS is balloting for strike action, which all workers hope will be successful. They should not be taken in by the blandishments of either government spokespersons or, unfortunately, some trade union leaders, that this is merely a question of transferring workers from the 'back office' to the 'front line'.

All these jobs presently being done are vital and 'front line' for the working class. An attack on the civil service is not just an ordinary industrial dispute but impacts dramatically on the lives of the working class as a whole. It is therefore a combined political and industrial struggle.

Vital to any success in defeating the government's proposals is to win broader popular support by explaining the vital role of civil servants. It is also central to throwing back the bosses' offensive, which could be given a significant blow if public sector workers organised a one-day general strike.

This would be aimed against the capitalists as a whole, who in Britain are so bloated with arrogance that Digby Jones, the CBI Director-General, can declare that unions were useful in the past when workers were "largely unskilled"(?) but are now "obsolete".

A Ryanair manager went further in a memo, advising staff they were better off spending their union subscriptions on "fast women, slow horses or even greyhound racing", on the grounds that this would at least provide "a few minutes of fun". These provocative sexist, anti-union, anti-working class comments were made even before a serious economic crisis bites Britain.

Fighting unions needed

THE TEMPER of the working class in Britain is indicated by the series of strikes, or threats to strike, in the last year. The firefighters inflicted a partial defeat on the government's attempt to renege on the agreement which ended their dispute. Local government workers have been in action. British Airways' workers have been, in effect, on a 'go-slow', which compelled the bosses to give concessions. Eurostar and other transport workers have been on strike, and many others too.

But in the coming change to the economic climate. the employers' offensive can be much more serious than before. This requires a leadership at all levels of the labour movement equal to the temper of the working class - which is angry and embittered at what they are forced to accept.

With the exception of fighting leaders like Mark Serwotka of the PCS, most trade union leaders - including the so-called 'awkward squad' - have been docile and ineffective in the teeth of the employers' offensive.

The TUC, like a firm proud of its corporate identity, boasted in its review to Congress of the effectiveness of its "brand name". This will not stop the capitalists from seeking to intimidate and threaten working people with closing down factories as easily as matchboxes unless they bend the knee to big capital.

Fighting, combative trade unions are necessary. TUC membership is now at its lowest level since 1944, partly because of objective factors such as the contraction of manufacturing industry. Some of it, however, is due to ineffective leadership and policies. Typical is the acceptance by union leaders - particularly the 'Big Four' of the GMB, TGWU, UNISON and Amicus - of the minimal, and largely paper, 'concessions' given by Blair at the Labour Party's recent policy forum at Warwick University.

This was the quid pro quo for the unions bankrolling at least half the Labour Party's income. The other half now comes from donations by Labour's new capitalist backers for what is now a capitalist party. The discrediting of its leadership, the woeful state of its party, has reached such a stage that it can no longer be disguised.

Only estate agents and journalists on The Sun, the Daily Star and the Daily Mirror - considered the lowest of the low by the public - were rated more untrustworthy than government ministers. The lies on Iraq mean that the majority - 60-70% - no longer trust Blair, his government or his ministers.

The Labour Party's membership itself dropped from 400,000 in 1997 to 190,000 now, which is probably a gross exaggeration too. Even former witch-hunter general Peter Kilfoyle, who drove the 'Mersey Militants' out of the Labour Party in the 1980s, now wistfully looks back to that period, which he admits was a time of "active involvement" and interest in Labour affairs.

Then, of course, Labour was, at bottom, a workers' party but now is completely in the pockets of the bosses.

Socialist change

LABOUR MAY limp over the general election finishing line in May, probably with a reduced majority. The Tories have the mark of Cain - or at least Thatcher - still on them. Even William Hague, mooted for a return to the Tory leadership to replace the woeful Michael Howard, says he prefers to play the piano and make money instead!

The Liberal Democrats, who masquerade as a 'radical' party like all pro-capitalist parties, now eagerly embrace the free market, privatisation and the dismantling of the health service.

Such is the globalised capitalism's domination that this is the logic of all who accept working within its limits. Even the Scottish National Party, under its refurbished leadership of Alex Salmond, has come out against a further extension of public spending. New Labour's Scottish First Minister, Jack McConnell, equally declared in favour of treading in the footsteps of his mentor Blair, which heralds the limitation or ending of concessions to Scotland's workers.

Therefore, the idea peddled by Labour ex-deputy leader Roy Hattersley of a return to social democracy - by which he means maintaining a minimal state sector, opposing wholesale privatisation and improving living standards - is a dream given that all pro-capitalist parties are moving in the opposite direction to that which the working class will move in the next period.

The calamitous economic and social situation in Germany has resulted in a majority of those in the east and 51% in the west opting for "socialism" in opinion polls. The hammer blows of events will propel workers elsewhere, including in Britain, in the same direction.

At the same time, British workers are disenfranchised, without a mass political pole of attraction that can offer a way forward. That is why the Socialist Party's idea of creating the basis for a new mass workers' party is more urgent today.

The forces that will lead to such a development will mature out of the visible failures of capitalism, the incapacity of this system to show a way forward, the failure of the New Labour 'project' and the growth of the Socialist Party, which will, in turn, mean a more effective voice in arguing for socialist change.

This is the real alternative for working people not the sham, largely personal, conflict at the summits of New Labour.

Why not click here to join the Socialist Party, or click here to donate to the Socialist Party.

In The Socialist 18 September 2004:

Turn Anger Into Action

TUC Delegates Give Thumbs Down To Blair

Pay Us A Living Wage

Behind New Labour's Power Struggle

International socialist news and analysis

Bush Sinks Deeper In Iraq Quagmire

How The US Went To War

Nigerian Workers Must Fight Anti-Union Law

Anger, Bitterness And Increasing Opposition in Germany

Socialist Party campaigns

Big Macs Can Seriously Damage Your Health

The Prostitution Debate

Asleft: Rebuilding The Union

Swansea IT Workers Determined To Win


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