12 weeks to pensions showdown

The pensions confrontation clock is counting down. Twelve weeks from now, at the end of October, the leaders of the trade union movement will either have to put up or shut up in the wake of yesterday’s provocation by the ConDem government.

While negotiations are still ongoing, the coalition unilaterally announced that more than two million NHS workers, teachers and civil servants will pay £1.1bn in extra contributions from April 2012. They are just the first of three annual increases planned by the government and amount to a substantial cut in take home pay.

What is clear is that the government is actually preparing for a showdown, using divide and rule tactics by exempting lower paid workers, while challenging union leaders to take up the gauntlet.

Leaders of the PCS civil servants union and the major teaching unions who mounted major strike action on June 30, expressed anger at the announcement and declared their readiness to resume the fight. PCS general secretary Mark Serwotka said the proposals "made a mockery" of the ongoing talks. "These highly detailed proposals show that the government has made its mind up and is not negotiating seriously," he said.

The Fire Brigades Union said it was making preliminary arrangements for a strike ballot, warning that industrial action looked "increasingly likely" in the autumn. "Members have taken strike action before to defend their pensions and will do so again," said NUT teachers’ union leader Christine Blower.

At TUC headquarters, however, there is little sign of a parallel determination. Dave Prentis, general secretary of the biggest public sector union Unison, accused the government of putting the talks in “jeopardy” by their ”naïve tactics” in making public how much workers will have to pay in higher contributions.

“The government must take its responsibilities seriously, and stop treating these talks like some kind of playground game,” he said. No threat there then, even though the Unison conference gave Prentis a mandate to call a strike ballot over pensions.

From the other big unions, there was similar reluctance to take up the challenge. Unite, the largest union in the country with 250,000 members in the public sector, said the government’s announcement was “an exercise in ineptitude” by ministers.

Assistant general secretary Gail Cartmail stated the blindlingly obvious when she said that the coalition was “not interested in genuine negotiations, but just in pushing through these changes”. And, then what?

The statement concluded: “Unite said that it will keep its members fully informed and consult them on the final package when it finally emerges.” That will have them shaking in their boots in Downing Street!

The three big unions – Unison, Unite and the GMB, which described the proposals as “reprehensible” and left at that – are closely aligned with the fortunes of Ed Miliband, the Labour leader. He opposed the June 30 strikes and clearly has no intention of supporting co-ordinated action being demanded by Serwotka and other smaller unions if and when negotiations fail.

The big three are self-evidently determined to reach an accommodation with the government and leave others, which are not affiliated to Labour, to sink or swim.

In the end, the major unions may not get the opportunity to make a deal. The coaltion does not intend to give way on a policy that is central to its plans for reducing the budget deficit that results from the capitalist economic and financial crisis.

Their bluff may be called, leading to calls for a general strike over pensions. Such an eventuality is simply not under consideration by the TUC. As in 1926, the year of the last general strike, all the preparation is on the side of the government and the state. When push came to shove after nine days of massively supported action, the TUC leaders sued for peace and sold the miners out. This time the betrayal may well come earlier.

Paul Feldman

Communications editor

Ethiopia evicts farmers as starvation grows

The Ethiopian government is evicting up to 90,000 of its own people from their land to lease to foreign investors to grow crops for export. And they are doing this at a time when 4.5 million Ethiopians in the south-east of the country face starvation.

Survival International has charted the government’s theft of the country's most productive farmland, using so-called “nationalisation of land” to further the interests of a corrupt élite.

Along the Omo River in south west Ethiopia, Malaysian, Italian, Korean and Chinese firms are operating agri-businesses. The government is clearing as much as 245,000 hectares for vast state-owned, sugar-cane plantations. The self-sufficient, and efficient, Omo Valley people who have lived for centuries on small-scale mixed farming - the most sustainable kind of farming - are being forced out. Threats, jailings, beatings and rape are used to silence opposition.

The government deems the Omo valley people 'backward' and in need of modernisation. In other words, from independent farmers they will become landless labourers - either working for foreign interests or building a series of dams. This is an ecological disaster in the making that will deprive the land of its annual irrigation.

Survival International’s Director, Stephen Corry, said: "The Omo Valley tribes people are neither ‘backward’ nor need ‘modernising’ – they are as much a part of the 21st century as the multinationals that seek to appropriate their land. The tragedy is, forcing them to become manual labourers will almost certainly lead to a drastic reduction in their quality of life and condemn them to starvation and destitution like so many of their fellow countrymen."

The Ethiopian Minister for Mines clarified his government's investment policy when he said that the country's deposits of gold, silver, copper and other metals and minerals are "totally open" to foreign investors, with "no restrictions" at all.

China is seizing the opportunities on offer - some might call it a simple buyout. China's trade with Africa will exceed $110bn (£71bn) in 2011 and in Ethiopia they are creating a huge construction boom and increases in food and other exports.

Ethiopia is a capitalist success story, with GDP rising from $6.88bn in 1994 to $28.53bn in 2010. The annual growth rate is 8% but the impoverishment of the majority is the price being paid. Half the country's 72 million people live on less than $1 a day. Children as young as eight labour in government-owned sugar cane plantations, managed by Indian agri-businesses, who pay the equivalent of $0.83 a day. Newly-landless Omo Valley people who don't find work will be forced to move to the capital, Addis Ababa – dubbed “the world's biggest slum city” – in search of work.

Prime Minister Meles Zenawi cynically defends these rapacious policies and says those who accuse foreign companies of land grabbing are ill-informed, saying: “We do not want to admire the beauty of our country while we starve.” Zenawi and his EPRDF party are a corrupt élite who stole the 2005 election. In a wave of protests, 30 people were killed and 80,000 students rounded up; many oppositionists are still in jail.

This opposition movement, driven temporarily underground, will re-emerge as Africa's peoples set out to complete their struggle for liberation from colonialism with a struggle for democracy. But to succeed it will need outside assistance and what happens now in Egypt - Africa's second most populous and politically now most advanced country – is absolutely crucial to all of Africa.

The establishment of a popular democracy in Egypt, based on People's Assemblies, could rush aid and support to democratic struggles elsewhere. The future of Africa is not in the hands of the Chinese government, the World Bank or the aid agencies - it is to a very great extent, in the hands of the Egyptian masses.

Penny Cole

Environment editor

Time runs out for Obama and the constitution

The irresistible march of economic and financial events undermines legal and constitutional structures, weakens bureaucratic constraints, exposes weak and divided political leadership and transforms long-established relations between people and states.

Generations have stood before the Stars and Stripes and sworn allegiance to the Constitution of the United States. Adopted in 1787, and subjected to 27 amendments – the latest in 1992 – it is the oldest written constitution still in use by any nation in the world.

This is according to Wikipedia, which was itself set up as part of a global movement to undermine the property rights which are of the essence of the capitalist system. They argue rightly that private property in knowledge and software impedes human progress.

But world-shattering events are now shaking the foundations of the United States. The 14th was particularly important in establishing the legal authority of the Federal government in Washington during the reconstruction in the wake of the civil war and the ending of slavery.

Section 4 of the amendment reads: “The validity of the public debt of the United States, authorised by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

Some have suggested that President Obama could invoke this section to raise the government’s $14.3 trillion debt ceiling which is fast being approached. The Republicans are playing hard-ball and declining to reach an agreement with the White House to raise the ceiling before next Tuesday’s deadline. Raising the ceiling is required so that the United States can go on borrowing on international markets and service its debts.

Such a move by Obama would be a constitutional declaration of war with echoes of Abraham Lincoln’s military campaign to bring the south into line. Whether he’s up for this is debatable. But while Obama ponders his next move, what, according to the constitution, “shall not be questioned” is in reality being challenged by the money markets, as well as the obdurate Republicans.

The credit rating agencies which were effectively given power over companies and states by the Basel 2 international agreement on banking laws and regulation first published only in 2004, are threatening to downgrade US debt. That would force up borrowing costs and add billions to the total debt. The “validity” of the US public debt is definitely being questioned.

In any case, would invoking the constitution to raise the ceiling unilaterally do the trick. Not at all, as US commentator Andrew Leonard points out:

“Would taking action under the 14th Amendment make the debt ceiling crisis go away? Highly dubious. Not only would the House GOP [Republicans] immediately start impeachment proceedings, but, as several commentators have observed, there's a real question as to whether investors would continue to buy US Treasuries while the legalities of the president's action were settled. Pretend you are China – do you think it's a wise move to keep buying US government debt while the US goes through a constitutional crisis? Using the 14th Amendment to protect the ability of the US to pay its debts becomes a lot less attractive if as a consequence, borrowing costs for the U.S. government rise sharply.”

Not least among the many problems facing the multitude of politicians, bankers, and civil servants with the hopeless task of holding back the catastrophe is that downgrading a country’s debt to “default”, whether that country is Greece, the United States, Spain or Britain, has dramatic consequences.

During the madness of the last couple of decades, the entire global economy became irretrievably entangled in a seething interdependent mass of credit and debt held together by those fiendish financial instruments known as credit default swaps. The trouble is that if, or rather when one country is declared to be in default, it will trigger a chain reaction throughout the millions of CDS contracts.

No power exists to stop it. And it doesn’t much matter which country is first up. There are no “fixes”, quick or otherwise, as Obama is about to find out.

Gerry Gold

Economics editor

The cruelty of stardom

Singer-songwriter Amy Winehouse’s death at the age of just 27 has robbed the music world of a special talent.

Her music combined with a superbly rebellious persona, which broke from the bland “girl next door” image of 1990s bands. She dropped out of school aged 16, and even attending various London stage schools could not smooth off her rough North London edges. She shot to fame at the age of 20 with her first album “Frank”, which was nominated for the 2003 Mercury Prize and went triple platinum in the UK.

She celebrated a new kind of female singer – looking back to the 1960s but expressing the introspective anxieties of young women in the 21st century. Her appearance and her powerful smoky voice, which has been compared to that of Nina Simone, reprised American black girl bands such as the Ronettes. 'Back To Black' (2006) was a global hit.

The titles of the singles that made her famous in their own way tell the story of her life: 'Rehab', 'You Know I'm No Good', 'Love Is A Losing Game' and 'Back to Black' itself. As a songwriter she was uncompromising; and she also gave new life to other people's earlier work.

Her sultry-sad jazz blues were eloquent and frank about her personal experiences in a way that others could share, and, as the tributes outside her Camden home reveal, her self-abuse, hard-drinking, drug-taking lifestyle – which the gutter press and media exploited mercilessly – were “elevated” into a way of life which young people, girls in particular, empathise with.

That’s why the issues surrounding her death have a significance beyond the girl-woman herself. As someone commented on the BBC’s news site: “Why do so many exceptionally gifted people die so young? Do they place pressure on themselves, and self-destruct in pursuit of greatness; or does society, once it recognises talent, demand too much and focus on achievement - without nurturing and caring for their 'vulnerabilities'?"

Comparisons are being made with other singers who died at the same age and for similar reasons, such as Janis Joplin, Jimi Hendrix and Kurt Cobain. The combination of personal talent, incredible success and the pressures of the music industry become a toxic mix in which addiction to drugs and drink are allowed to take a fatal toll.

Some musicians are picked up and lifted out of any ordinary kind of life by the media, because there is money to be made out of their talent. Seeing video footage of Winehouse’s abortive and tragic last tour in Serbia raises the question – how could she possibly have been allowed to go on stage by her managers when she was clearly incapacitated?

The media industry is quick to recognise those who give voice to the moods and anxieties of their generation – but for one end only: making vast amounts of money. Significantly, global computer giant Microsoft has had to apologise for posting an online message grotesquely urging Winehouse's fans to buy her records shortly after she died.

Her death, like that of so many other and less well-known substance abusers, was not inevitable. It’s a condemnation of the society that could not make it a priority to protect her from her own demons. Time after time, we see the music 'business', and the media, opportunistically raise artists to crazy and destructive stardom only to destroy them.

All the more reason to transform the entertainment industry completely and remove the profit-making element. Supporting and nurturing young talent should be society's aim and responsibility, rather than allowing corporations to exploit them.

Corinna Lotz

A World to Win secretary

Norway attack warning for us all

The killing spree in Norway was not a one-off attack by an “evil madman” but a conscious act of terrorism that will reverberate around Europe as the continent’s growing social crisis unfolds.

Anders Behring Breivik may have acted alone, but his thinking reflects a modernised fascist ideology that views existing political establishments as the enemy for undermining a “way of life”.

In Norway, the target was the ruling Labour Party – which is synonymous with that country’s establishment – and its future leaders, who were at their annual summer camp on the island of Utøya.

He described members of Norway’s Labour Party as “traitors” because of their alleged support of “multiculturalism and Islamisation.” According to his 1,500 page manuscript written in preparation for his murderous attacks, Breivik regarded himself as a crusader in a war against a “Marxist-Islamist alliance”. He described himself as a “martyr” and “resistance fighter.”

Norway’s Labour Party, according to Breivik, were “traitors” for encouraging multi-culturalism, where communities can co-exist peacefully. Like his contacts in the English Defence League (EDL), Breivik wants to prevent a national culture from being “overwhelmed” by a foreign one, in this case Islam.

Breivik was inspired by and drew his thinking from a number of sources, including the right-wing evangelical movement in the United States and the ultra-Zionist Avigdor Lieberman, who is Israel’s foreign secretary and deputy prime minister.

The European fascist movement paradoxically support the Jewish state of Israel because the present Zionist leadership view Palestinians as a threat culturally, demographically as well as politically. The EDL has been known to wave Israeli flags at its demonstrations. Norway’s government is strongly pro-Palestinian and was moving towards supporting the boycott and disinvestment campaign aimed at Israel.

Breivik’s writings clearly indicate that he saw himself as part of a wider movement, declaring. “I know that tens of thousands of brothers and sister all over Europe are fighting the good fight every single day. Fighting the cultural Marxist/multiculturalist alliance every single day. Many have sacrificed everything already; many are incarcerated and some have even martyred themselves.”

As the award-winning American journalist Max Blumenthal noted: “As horrific as Breivik’s actions were, he can not be dismissed as a ‘madman’. His writings contain the same themes and language as more prominent right-wing Islamophobes… and many conservatives in general. What’s more, Breivik was articulate and coherent enough to offer a clear snapshot of his ideological motives.”

Blumenthal also pointed out that Breivik, who was for a time a member of the anti-immigrant Progress Party in Norway but left because it was too respectable, reflects the same “leaderless resistance” style as America’s anti-abortion terrorists. “Breivik’s writings offer much more than a window into the motives that led him to commit terror. They can also be read as an embodiment of the mentality of a new and internationalized far-right movement that not only mobilizes hatred against Muslims, but is also able to produce figures who will kill innocent non-Muslims to save the Western way of life.”

Breivik’s attack reveals the fragility of the Scandinavian model of reformist social democracy with its deep undercurrents of racism and nationalism. Far right movements in Scandinavia have been researched by journalist and crime writers like Stieg Larsson and Henning Mankell. Connections to rogue elements in the state cannot be ruled out.

More widely, of course, opposition to multiculturalism and the threat to “our way of life”, has been taken up by the British political establishment in a grubby bid to win votes and keep the ultra-right at bay. Earlier this year, prime minister Cameron said in a speech that multiculturalism had “failed”, while successive New Labour ministers attacked the concept in office. Present leader Ed Miliband says the party has ignored justified fears about immigration amongst its supporters.

As the mainstream parties in Britain make further accommodation with reactionary views, a wider crisis is ensuing. Cameron today admits that people’s confidence in the establishment had been “shaken to the core” by the expenses scandal, the financial crisis and phone hacking. “There’s a sense that the rich and the powerful – politicians, bankers, the press and the police – have been serving themselves, not each other.”

Relying on such a discredited state establishment to defend people’s rights and protect them from fascist attacks is utterly wrong. Building a mass movement for self-determination in every sphere of society, based on a network of democratically-organised and run people’s assemblies, is the best response to what took place in Norway.

Paul Feldman
Communications editor

Greece is the first domino to fall

The global debt crisis has claimed its first sovereign state victim in the shape of Greece, which has effectively defaulted on its international loans. It won’t be the only country to suffer this fate or its population the last to feel its social impact.

The eurozone’s political heavyweights Germany and France sealed Greece’s fate last night when they agreed that private holders of Greek’s mammoth debt will take a hit of €50 billion over three years. Whether the banks and bond holders in the firing line will do so quietly is another question, however.

Not even achieving an agreement in Brussels can paper over the deep divisions between Bonn and Paris about how to prevent the collapse of the euro as a trading currency or prevent financial contagion moving on to other economies like Spain and Italy.

All the 17 eurozone governments could agree was that a "controlled" failure was the only way to prevent the collapse of the single currency and a global financial rout. In the end, the figures are meaningless and only add to the debt mountain facing Greece.

Athens will get another bailout package totalling €159bn. This is on top of the €110bn “rescue package” agreed less than two months ago. The country’s debt is by various manoeuvres, including subsidising interest rates, cut by a quarter.

So get this straight. You give someone more money to pay back existing debt, adding to the total outstanding, extend the repayment period by decades and ask some lenders, including the European Central Bank, to take less in return.

That’s the world of fantasy finance that was built by the banks and has now been adopted as the way to go by governments.

Refinancing is clearly a miracle cure of our age! Shame this arrangement is only available to states facing bankruptcy and not individual households running out of money for housing, food, transport and energy.

The deal means that banks could be forced overnight to write down as losses billions of euros in losses on Greek debts, leaving them short of capital. Financial experts say the

the debt restructuring could also trigger payouts on billions of dollars of credit derivative contracts, used to hedge against or speculate on a Greek default

The emergency summit was accompanied by a truckload of wishful thinking. Dutch Prime Minister Mark Rutte said: "We have thus sent a clear signal to the markets by showing our determination to stem the crisis and turn the tide in Greece, thereby securing the future of the savings, pensions and jobs of our citizens all over Europe."

What has actually happened is that the “peripheral” economies like Greece, Ireland and Portugal are being cut adrift or reduced to vassal states to buy up goods produced in northern Europe. The European Union is beginning to resemble a corporate empire with cheap labour subsidiaries disguised as countries.

France pushed through a plan to create the European eqivalent of the International Monetary Fund and there was agreement for most countries to rein in their spending to protect the euro. It won’t be enough to hold back a crisis generated by mountains of debt built up in every sector over decades.

As Reuters correspondent Felix Salmon noted: “Overall, this looks like a deal which can quite easily be scaled up and used as a framework for future default/restructurings … But there’s nothing here to reassure holders of Portuguese and Irish bonds — or even Spanish and Italian bonds, for that matter — that they’re home safe. Greece will be the first EU country to default on its debt. But I doubt it’ll be the last.”

The second wave of the global financial crisis that has shaken global capitalism is under way and is certain to be much more devastating than the first shock of 2008.

Paul Feldman

Communications editor

Famine is not made in Africa

Millions have watched in horror the TV pictures of the famine in Africa. Over 11 million people in the Horn of Africa – Somalia, Kenya, Ethiopia, Djibouti and parts of Uganda – face starvation, according to the United Nations.

The refusal of the world's governments to act on climate change, and the debt-fuelled financial crisis, have combined to create a human catastrophe. There is enough food to feed everyone in the world, but food prices are at an all-time high.

There have been no real rains since last April and there is little water, pasture or arable land left. There is some food, of course - but at prices that most people cannot afford.

The West denounces the Shabab rebel government for refusing foreign aid until now but forgets their role in undermining one of the ancient cradles of trade and civilisation. British and Italian colonialism began the carve-up then the US invasion of 1993 led to the division of the country. War and conflict have combined with the extreme fragility of the climate to create the current disaster.

In 2005, the World Health Organisation (WHO) estimated that by 2030 the number of climate-related deaths, from disease, malnutrition, flooding and crop failures, would be 10 million. Like global warming, this process is happening faster than anyone predicted and the figure could be more than reached in 2011, almost 20 years earlier than forecast.

Capitalism's great Chinese economic miracle is also proving unsustainable, as the water runs out in the north of the country. Like Somalia, the north China plain has fragile water resources and these have been squandered to develop giant industrial cities, such as Beijing and Tianlin, and “modern” agriculture.

Now many rivers have dried up because of a long drought, with the situation worsened by diverting and damming their natural flow. The industrial cities are using up underground aquifers faster than they can replenish. The original estimate for when they would dry up was 30 years but it's happening even faster and the Chinese authorities have no answers.

And when governments have no answers, watch out for wars over resources.

The UN Security Council met yesterday in Canada to talk about climate change as a security issue. They heard Achim Steiner from the UN Environment Programme telling them climate change will "exponentially" increase the scale of natural disasters.

The crisis in the Horn of Africa, he warned, shows that "our capacity to handle these kinds of events is proving a challenge, particularly if they occur simultaneously and start affecting, for instance, global food markets, regional food security issues, displacing people, creating refugees across borders".

The global market will always give corporations and financial speculators opportunities. For example the Russian wheat crop has recovered this year but in the US and Canada heavy rain delayed planting and as a result prices remain high.

But when big countries appear to profit at the expense of others in a trade war, it isn't long before politicians start to present it as an act of actual war.

Our modern day "four horsemen of the apocalypse" are war, famine, profit-driven capitalism and climate change, with capitalism in the role of the false god that ushers in the other three.

Of course, we have the resources to deal with the crisis in the Horn of Africa. We can tackle climate change. A wealth of research sets out what we need to do in the short, medium and long term. We can grow and distribute enough food. We can overcome war by creating the economic and social conditions for peace. But we can't vanquish climate change, war and famine until we vanquish capitalism and free our shared resources from its grip.

Penny Cole

Environment editor

System overload brings meltdown closer

Screaming headlines and scary language convey the immediacy of a renewed economic collapse as financial markets demand political solutions to a runaway debt crisis on both sides of the Atlantic.

According to the International Monetary Fund there is now "serious risk" of eurozone contagion with "large" potential knock-on effects worldwide. "Market participants remain unconvinced that a sustainable solution is at hand."

An emergency meeting of European presidents and prime ministers has been called for tomorrow to try and head off the break-up of the eurozone single currency.

According to the Daily Telegraph’s Ambrose Evans-Pritchard: “Only Germany can save EMU as contagion turns systemic.” He says “Europe's leaders have finally run out of time…. they risk a full-fledged run on South Europe's bond markets and a disorderly collapse of monetary union.”

But Germany’s banks are already heavily exposed to Greek debt and helping Greece would only serve to accelerate the spread of the contagious crisis throughout Europe. Now Portugal’s new government has discovered a gaping hole in the country’s finances, just as Papandreou’s PASOK administration did when it came to power.

Leading business commentator Jeremy Warner does not mince his words: “Financial confidence is again fast evaporating, threatening to plunge the world back into deep recession and some of the hardest times since the 1930s. This might sound unduly apocalyptic, but not since the depths of the banking crisis have conditions looked as perilous as they are today.”

While the failure to resolve Greece’s debt crisis would detonate a global explosion, the much bigger Spanish and Italian economies are under attack by market speculators.

Spain’s cost of borrowing has followed Italy’s soaring rates to unsustainable levels as investors demand higher and higher rates to cover the mounting risk of default. But compare their single digit rates to the punishing greater than 20% now demanded from Portugal and Greece.

Using the terminology of war, global bond trader Pimco says a plan of "overwhelming force to let the markets know that once and for all you’re putting out the fire" in Europe, should start with letting Greece, Portugal and Ireland default.

Attempts to break the US impasse grow ever more desperate as the August 2 deadline for raising its self-imposed $14 trillion debt ceiling approaches. The Financial Times warns that the “US faces economic suicide if spending isn’t restrained”.

President Obama has embraced the latest plan from the bipartisan “Gang of Six” which would sacrifice health and welfare and lead to a dramatic increase in unemployment. Yet there is doubt whether the political will exists for the Republicans to sign up to the deal.

So what of the UK? With the worst ratio of combined public and private sector debt to national income of the world’s developed economies, it is the most vulnerable to a renewed global recession, which would turn to depression immediately.

Says Warner: “The deleveraging [debt write-off] pressures are at their most acute in the[UK] banking sector, where bad debts and higher capital requirements are driving a sustained contraction in available credit. To meet these higher capital requirements, banks must either increase the cost of credit, so as to attract the necessary equity, or significantly reduce the size of their balance sheet.”

As the panic begins, the solutions being promoted become more extreme every day. No manufacturer can avoid the inevitable consequences of a sharp reduction in production. Whilst previously confident global corporations proclaim their prospects for growth to retain shareholders’ loyalty, in the shadows they are taking every opportunity to “restructure”.

Millions of people across the globe are determined that they can’t and won’t bear the costs of the systemic implosion engulfing the capitalist system. The revolutionary wave that began in Tunisia and Egypt is gathering pace as people become ever more impatient with the pace of change.

In town and city squares new democratic forms are in formation that can replace the discredited political systems. The creative genius of the people must now turn to seizing the resources of the system of for-profit corporations that are the source of the crisis and replacing it with a global society producing for need.

Gerry Gold

Economics editor

When the sky was the limit for Murdoch

While the attention of most people was focused on the illegal invasion of Iraq in 2003, legislation was making its way through Parliament that would open up media ownership and create the conditions for Rupert Murdoch’s empire to flourish in Britain.

The Communications Act 2003 received Royal Assent on 17 July 2003 and represented New Labour thinking about globalisation, markets and ownership. It allowed cross-media ownership – newspapers owning TV stations – and opened up the market to non-British companies.

“Ownership rules must reflect the reality of a global marketplace,” the then culture secretary Tessa Jowell told MPs.

Many of the media specific rules in force that prohibited particular accumulations of broadcast licences, or combinations of press and broadcasting interests were abolished. Media concentration was primarily to be dealt with on a case by case basis.

The secretary of state was given power to block any deals that might threaten “plurality” in any sector, although this measure was forced on the government by a revolt in the Lords led by Labour peer Lord Puttnam. The real clout went to a non-government body, the regulator Ofcom which itself was there to champion competition and the market as its first priority.

In his acute analysis about the political elite and its relationship to the media, and Murdoch in particular, John Harris notes how Margaret Thatcher cleared the way for his move into British television. But he adds that “as with so many things, the rot decisively started under New Labour”, saying:

“The Murdoch factor undoubtedly informed swaths of New Labour politics: not least, an ingrained reluctance to embrace the more economically interventionist aspects of the European Union, and a reckless belief that Britain should always support American foreign policy, no matter how dangerous the consequences (never forget: all of Murdoch's newspapers loudly backed the invasion of Iraq).”

He relates how two Labour MPs as far back as 1996 had mysteriously disappeared during a crucial vote on a clause in a Tory bill that gave Murdoch monopoly over the equipment required to watch BskyB. The vote was tied 11-11, “Murdoch got his way – and we began our passage into that brave new TV world where BSkyB has a UK market share of 80%.”

Harris suggest that the price of cosying up to Murdoch was an electoral quid quo pro. He cites Blair’s press secretary Alastair Campbell who in his diaries refers to a meeting with senior News International figures: "I emphasised that they had to understand that there would be a big price to pay in the party if we restricted and curbed the natural desires of people to do something about Murdoch, and ultimately the Sun and News of the World really went for us.”

After Blair resigned in 2007, Murdoch’s papers began their shift away from New Labour and plumped for the Tories in 2009. David Cameron was feted and courted by Murdoch and took on Andy Coulson, first at the Tory Party and then in Downing Street. The rest, as they say, is history.

The British political regime is imploding and not just because some phones were hacked by unscrupulous journalists and investigations. It’s a case of one scandal too many because it follows the banking collapse, involving financiers close to and admired by New Labour, the MPs expenses scandal that undermined any residual trust in Parliament and attempts to offload the economic crisis on to the backs of ordinary people.

Harris is worried that the crisis might “actually push us into a deadening stand-off between most of those at the top, and a public who now simply trust no one at all”. He is right to be concerned. This is a profound moment for a political system that few have any faith in to sort out pressing problems. A plan for a truly democratic alternative to a corrupt, market state in thrall to corporate power is more urgent than ever.

Paul Feldman

Communications editor

Crisis at the top out of hand

A full-blown constitutional crisis is emerging within the British state, with the country’s top policeman challenging the authority of the prime minister who himself is connected to phone hacking through his former press secretary.

For Cameron to rush back from South Africa, while asking Parliament to meet on Wednesday – it was due to go into recess tomorrow – indicates the ever-increasing scale and scope of events precipitated by the Murdoch news empire’s meltdown.

The latest casualty is deep in the heart of the state – Metropolitan Police Commissioner Sir Paul Stephenson. Although Home Secretary Teresa May poured oil on troubled waters in an unctuous statement, thanking the commissioner for his splendid work, knives are out big time between the police chief and the government.

The Commissioner claims there was nothing untoward in his relationship with ex-News International deputy editor Neil Wallis, But, as the Guardian points out: “The Metropolitan Police chose to hire the former second-in-command of an organisation while that organisation was being publicly accused of criminal activity”. Worse still, it failed to inform Downing Street about its close relationship with Wallis.

The real bombshell in Stephenson’s statement is his thinly-disguised challenge to Cameron. By comparing the PM’s hiring of former News of the World editor Andy Coulson to Scotland Yard’s hiring of Wallis, Stephenson has made a direct challenge to Cameron. Coming from Britain’s top police officer, who has only been in the job since 2009, this has the makings of a constitutional crisis.

The truth is that the media, the police and politicians (including of course New Labour) are all part of the system of governance. They have formed a social glue over a half-century as Murdoch’s media web stretched its tentacles around the world.

From the standpoint of logic, Stephenson is right. Cameron, like his New Labour predecessors, is absolutely tainted – and with him, Blair and Brown who repeatedly turned down opportunities to reopen hacking inquiries. Ed Miliband has also courted Murdoch and hired a former News International hack with question marks hanging over him as his own press advisor.

Stephenson’s resignation reveals a crisis of the state, intensified by the globalisation process and its subsequent crash. Deputy prime minister Nick Clegg yesterday warned of the dangers of another meltdown. A new report out today shows the UK economy is faltering – so badly that some suggest the Murdoch crisis is a convenient deflection from the real crisis.

The departure of the Met chief, under pressure from London mayor Boris Johnson, leaves a leadership gap at Scotland Yard which will grow if – as seems likely - counter-terrorism chief John Yates also resigns. It’s becoming blindingly clear that the Met is like that because the state as a whole is rotten and undemocratic and confidence in politicians as well as the media – and the police – continues to plummet. Now no one believes what they say – even if they are right!

The political turmoil is exacerbated by the plotting of right-wing Tories who see Cameron as too soft. The Telegraph and the Daily Mail are gunning for the Tory leader, believing they can get a more “traditional” one in his place.

So, while we can be pleased that the Pandora’s Box (more like a three-way sewer between Scotland Yard, Downing Street and Media-ville) is open, its secrets out and many involved tearing each other apart, there are many dangers behind the scenes.

Not least is the threat of a national government as the political crisis meets a worsening economic situation. Such a government would undoubtedly introduce emergency measures in “the national interest”.

The whole political structure and its disgruntled counterparts in the police and security services are irretrievably tainted and compromised. We should take up the call from the Spanish Real Democracy Now activists: Don’t vote for them! Build People’s Assemblies instead!

Corinna Lotz

A World to Win secretary

The political system is part of the problem not the solution

The somewhat contrived outrage by politicians of all parties over the hacking of phones by the News of the World should not blind us to the permanently changed relationship between Parliament and corporations that goes well beyond Murdoch’s News Corp.

Those who talk of a “triumph for democracy” and the “will of the people” as expressed through the House of Commons following Murdoch’s withdrawal of his bid for the rest of BskyB’s shares, are fooling themselves as well as the electorate.

New Labour became infatuated with Murdoch precisely because his was a global corporation, exercising media power on both sides of the Atlantic. He was symbolic of market-driven globalisation that Blair and Brown embraced before they took control of their party in the mid-1990s.

They sought and won Murdoch’s support at the 1997 general election because New Labour actually believed in his free-booting style of capitalism that symbolised the period. Built on debt, Murdoch’s empire was to be admired, notwithstanding the destruction of trade unions at his British papers.

New Labour, according to the author and journalist Peter Oborne (whose book The Triumph of the Political Class foreshadowed what has been revealed), went on to develop a “corrupt, complicit, and conspiratorial system of government” that in essence matched the way the corporations functioned.

During its heyday, Murdoch’s malign influence was matched by a range of other corporate “interests” equally favoured by New Labour:

- the banking and financial sector, further deregulated and freed from any significant supervision by the ever-so-tame Financial Services Authority

- major supermarkets, allowed to take over and destroy high streets (with Sainsbury and Tesco executives sitting on government ‘task forces’)

- energy corporations like British Gas who allowed to drive up fuel prices according to “market conditions”

- rail companies who fleece commuters and charge the most expensive fares in Europe

- big contractors, who were given access to £90 billion of public sector contracts on exceptionally favourable terms through the so-called public-finance initiative

- house builders who were given control over the market for new homes, driving up the cost of land beyond the reach of housing associations

- IT corporations like Microsoft who became partners in education programmes

- Private health firms that provided treatment centres for profit financed out of NHS funds.

The fact that this relationship turned sour when Murdoch switched back to the Tories in 2009 coincided with the collapse of the whole period of corporate-driven globalisation championed by New Labour.

And, as we well know, when the banks went belly-up, prime minister Brown rushed to their support and used taxpayers’ money alongside unlimited state guarantees to prop up a financial system that was no longer sustainable. Parliamentary sovereignty had come to express no more than the power of the banks.

None of the major parties could or would challenge this effective merger between the parliamentary state and corporate power. As a result, the political establishment lied about the spending cuts that inevitably followed last year’s general election campaign. The Coalition that emerged has no democratic mandate for the onslaught on living standards that has taken place over the last year but instead takes its marching orders from financial markets.

The shock and horror at the underhand, criminal methods used by the Murdoch press is an attempt to get people to view Parliament in a better light, as an institution that will stand up to powerful interests. However, it is window dressing because global corporate power is very much alive in the hearts and minds of ministers, opposition leaders and MPs.

As the Real Democracy Now movement in Spain established, the existing political system remains very much part of the problem and not the solution. A deconstruction of the capitalist parliamentary state and its recreation along truly democratic lines, around a system of people’s assemblies, is an alternative way forward.

Paul Feldman

Communications editor

Foul play in the name of profit

There are few sports left where rampant commercialism and profit making is not the driving force at the top level.

Sport, over the last 30 years, has been sucked into the orbit of the global makers of profit, and its image as an innocent, healthy competitive pastime, combining strength, skill and artistry with fairness and teamwork at its heart, has taken a serious knock.

Take Premier League football in England. The total operating losses of the 20 clubs in the premiership last year alone came to nearly £500 million, despite having the world’s most expensive tickets and the billions in TV money from Sky (part-owned of course by Rupert Murdoch).

The total wages bill for the clubs came to £1.4bn accounting for nearly 70% of their income. The combined debts of the clubs is a staggering £2.5bn. This fantasy world of finance in the Premiership is further distorted by the huge sums (over £2bn) “loaned” to the clubs by the billionaires, oligarchs and sheiks that now own many of them.

Hardly any of this money has gone into anything tangible for the fans, who are traditionally the bedrock of the game. The stadiums were already built (with the help of public money in some cases) when the billionaires arrived on the scene. Their money has simply been swallowed up by the spiralling wage bills of the players and the fabulous transfer fees for the top players and their agents.

The Premiership exists in a free-floating capitalist bubble that sucks many of the best players from Europe and beyond into it, leading to a kind of arms race in the transfer market.

The three biggest spenders in England, Manchester City (with oil money via Sheikh Mansour), Chelsea (with funds from property dealing in the former Soviet Union) and Manchester United (which are able to spend because of their size, despite debts of £600m and despite the owners, the Glazer family from the US, actually taking money out of the club) are able to dominate the market and attract the best players.

Other clubs, in England anyway, for the most part, cannot compete and continually find that their best players are targeted by the big three. The current predatory bid of £27m by Chelsea’s for Tottenham’s Luka Modric, is a case in point.

Financial Fair Play rules drawn up by Europe’s governing body UEFA are an attempt to force clubs to spend within their means and to stop the new owners, particularly in England, from splashing out huge sums on the best players and managers, in their egotistical quest for glory.

But these new regulations are unlikely to impose the necessary sanity on what is, after all, a capitalist market-place in which “global brands” control most of the business. There are many anomalies and loop-holes in the rules

For instance Barcelona and Real Madrid receive a much larger proportion of the TV money available in Spain, as much as £150m each, compared to the £50m that the top Premiership clubs receive. This will allow these high-spending clubs in England to argue that they need to spend more “in the interests of fairness” to keep up with the Spanish clubs.

It may be some time before new clubs such as Wimbledon AFC, United FC of Manchester or Ebbsfleet United — all of them democratically run and owned by the fans — can challenge for honours at the top level, but this has to be the way forward for football.

These clubs do not pay dividends as there are no shareholders, and are not run for profit. The unsustainable debt-ridden, market-driven football clubs in the Premiership, many of them the playthings of the super-rich like Chelsea’s owner Roman Abramovich, can only take football and its fans down the road to ruin.

Peter Arkell

Second wave of the crisis reaches land

In pursuing what the prevailing law defines as their perfectly legitimate individual interests, investors are collectively destroying the universe within which they – and we – all live. As agents of the capitalist way of doing things they have no alternative.

The latest assault on Italy, where investors are bailing out of banking and the market rate of borrowing has soared underlines, what is surely obvious to all – the second wave of the crisis which erupted in 2007-8 is now underway.

The punitive rates of interest charged for the loans needed by Greece, Portugal, Spain, Ireland, Italy and Iceland to avoid default only ensure that such defaults are inevitable.

Rating agencies have now declared Ireland’s debts to be worthless. Greece is virtually certain to default in the immediate future. The recession – decline in production – in each of these debt ridden countries is deepening. A collapse of the euro as a currency, leading to an immediate slump in trade, is a distinct possibility.

The formerly mighty US is locked into a political impasse over proposals to reduce its staggering $14 trillion debt mountain. If it is not sorted out soon, the US government will come to a default and the unthinkable – a dollar default – comes closer.

Occasionally, in struggling to find solutions to the impossible contradictions which dog their attempts to explain the deepening crisis and find solutions, a rare commentator will be found shedding light on the inevitable consequences of following the current path.

The Financial Times’ Martin Wolf is one member of this rare breed. In a recent column reviewing the crisis in the eurozone he revealed another two of the impossible contradictions that are skewering the global economy -

- the more successful a country is in reducing its debt burden in order to be able to return to growth, the deeper its recession gets. Latvia’s GDP, for example has dropped 23% since the crisis erupted.

- the more successful a country turns out to be in cutting its costs, the worse the debt burden becomes.

The solution? Wolf says “debt restructuring [a polite term for state bankruptcy, default, and debt cancellation] is merely a necessary condition for an exit. It is unlikely, in all cases, to be enough.”

His chilling prediction sets the scene for the coming months. “Some economies may just wither away.”

Putting it simply, mounting and ongoing resistance to the measures – “austerity” hardly begins to encompass it – being used to attempt to reduce unsustainable global levels of debt, means that debt must now be “restructured”, wiped out.

But the debt grew throughout the last 40 years to fund growth. So growth must now give way to contraction. Latest estimates suggest that the value of Greece’s debt must be reduced by 75%. And so must its production. And not just in Greece.

Grasping how markets, governments and corporations are driven by forces more powerful than the sums of their parts is vital. We have to get to grips with the contradictory forces at work in the capitalist economy and show that the system itself is broken and unsustainable.

Cuts in services, £9000 fees for university courses, soaring unemployment, inflation, mounting house repossessions, privatisation and attacks on pensions are the consequences of the crisis that broke in 2007-8.

What is coming up the line as the second wave of the global tsunami advances will shake society to its foundations. At the same time, it will create opportunities for transcending capitalism and creating a rational, sustainable economy. It’s a chance we can’t afford to squander.

Gerry Gold

Economics editor

How New Labour sat on its hands over Murdoch

Although former prime minister Gordon Brown is rightly upset about the underhand not to say criminal methods used by the Murdoch press to obtain sensitive medical details about his son, the fact remains that New Labour did nothing to upset the applecart while they were in power.

The use of “blagging” by journalists or people working for them as a means of securing information is not exactly a new practice. Pretending to be someone else – in this case Brown himself – to obtain confidential information was actually identified as illegal in the Data Protection Act in 1998.

But the punishment was considered too weak. So the last Labour government led by Brown himself made changes to the law. However, Christopher Graham, the information commissioner who is responsible for checking compliance with the law, said today:

“We really need to get a serious penalty in place to stop this happening ... Frankly, we need to say to people 'You will go to prison if you do this'. The serious penalty that is needed has been on the statute book since 2008 - Section 77 of the 2008 Criminal Justice Act provides for a custodial sentence of up to two years in the Crown Court, but it has been suspended for three years because of a stand-off between the Press and the politicians.”

Inaction was the byword, even though phone hacking was known to be taking place in the early years of the Blair government. In his autobiography, Blair’s chief of staff, Jonathan Powell, confirms that the cabinet discussed the “failed relationship” between the media and politics as far back as 2002.

He adds: “We discussed the issue back and forth for the next three years, but Tony never felt the moment was right to speak out…Gordon, who was courting the press, had no intention of agreeing to anything that might upset them.”

When the original Metropolitan Police inquiry into phone hacking unexpectedly petered out, many were suspicious why this had happened. Did the government pursue this? To ask the question is to answer it.

Today, Alan Johnson, the former Labour home secretary, told Sky News that the government did not set up an inquiry into phone hacking because ministers would have been accused of exploiting the issue for party political gain! He said:

“If I'd have ordered a public inquiry at the time, I'd have probably been castigated because in the run-up to a general election people would have said it was an attempt to get at Andy Coulson who'd been appointed by Cameron. So you can't take today's knowledge and just apply it retrospectively, you have to look at the information that was available at the time.”

Despite the despicable invasion of his privacy by The Sun in 2006, Brown himself continued to lend his name to Murdoch’s publications. In March 2008, explaining the government’s action during the financial meltdown, he told Sun readers: “My pledge to the British people - to homeowners, to businesses, to households everywhere - is that I will do nothing that puts the stability of the economy at risk.”

A year later, News International’s papers withdrew their support for New Labour after more than a decade and switched their support to David Cameron. It wasn’t long before Cameron too was drawn into the Murdoch web, bringing former News of the World editor Coulson into Downing Street.

After just 14 months in office, the Coalition is staggering from pillar to post, buffeted not just by the scandal but by innumerable economic problems and a widespread hostility to everything it stands for. With the lid now blown off the incestuous relationships between police, Murdoch, New Labour and the Tories, a full-blown political, not to say constitutional crisis, is gathering steam.

Paul Feldman

Communications editor

The emperors have lost their clothes

Nick Clegg’s statement that "the pillars of the British establishment are tumbling one after the other," should be taken seriously. The question is why now? What is driving the break-up of the institutions that rule Britain? And what follows?

The deputy prime minister has no intention of seriously upsetting the apple cart of British politics, but he has put his finger on an important insight. But the News of the World scandal is part of a wider, systemic crisis.

For prime minister Cameron, his connections with disgraced former News of the World editor Andy Coulson and through him to Rupert Murdoch, have rocked his already unstable government. Peter Oborne’s account of Cameron was drawn into Murdoch’s embrace – after some initial reluctance – is worth reading because it shows how fragile the political establishment is.

Whilst there are separate and independent reasons for flashpoints in the “parts” – the media, financial system, the police and parliament – together they constitute a “whole” which is also known as the capitalist system in Britain (and its relationships globally).

The unravelling of the unsavoury networks which constitute the power structures sheds a powerful light on this interconnectedness. And, crucially, the ruling class’s ability to rule relies on these connections remaining as secret as possible.

Trust - not only in the news media but in politicians and the venal connivance of the police (who had their own fingers deep in Murdoch’s pie) - is sinking at an unprecedented rate.

Murdoch’s chief executive Rebeka Brooks, who now faces questioning by the police, was not only a neighbour and family friend of the Camerons, but she is a crucial link in the spider’s web that embraces the Royal Family, the Blairs, and major corporations like the De Beers diamond dynasty and, of course, the media empire that is News Corp.

In the first years of the last decade, while the credit boom was in full swing, the phone hacking was put on the back burner by the police and the New Labour government. It must have seemed secondary to the mountains of “wealth” generated by the financial sector.

The crash of 2008 not only devastated the economy but it also shattered ordinary people’s faith in the market economy. This in turn led to a loss of confidence in ruling circles. The system was shaken and the skeletons fell out of the cupboard at the News of the World in the wake of the MPs’ expenses scandal, bankers’ bail-outs and bonuses and the resulting stalemate election of 2010.

And while many in ruling political and media circles are working feverishly to restore a modicum of confidence in the British state, the global economy and its financial system is heading for another meltdown.

Still reeling from the near default of Greece, the Eurozone is now staring into a new abyss: the spreading of “fiscal contagion” to Italy, the world’s seventh biggest economy. As one economics writer says: “It’s just too big to bail out. While the Eurozone could perhaps survive a Greek default, an Italian debt failure would mean all bets are off”. In the United States, a $4 trillion cuts package is seen as the only way to avoid a dollar default.

Separating out the political crisis in Britain from the continuing and worsening global debt crisis would be to ignore the reinforcing interactions which characterise the deep crisis of an entire system. That’s why stuffing the ugly genie that the News of the World scandal has revealed back into the bottle could be impossible.

The least we can do is to understand how fragile – ideologically speaking – the arrogant façade that the ruling classes deploy to intimidate those below them actually is. Each side of the crisis – political, economic, ecological – are parts of a rapidly changing whole reacting upon each other to create something quite new.

The rapidly-developing political crisis at the top cannot be patched up, not least because the economy is staggering from bad to worse. Down in society itself, a massive social upheaval, driven by a lack of confidence in the ruling classes, is brewing for which there is no obvious outlet. A heady mix indeed.

Corinna Lotz

A World to Win secretary

Media is the message

Lest anyone gets too excited about the impending closure of the News of the World in the wake of the phone-hacking scandal, it’s as well to remember the role and power of the media in society.

From the most liberal to the most reactionary of newspapers, the media is ultimately part of the relay mechanism for the dominant outlook, ideology, philosophy, culture or whatever term you care to use, of the ruling political and economic elites.

How could it be otherwise? Media empires like Rupert Murdoch’s News Corp are run for profit and will never ever challenge the capitalist system and what it stands for.

This conveyor belt assumes many forms but it all adds up to the same thing: the notion of a “free press” is so conditional and restricted that its carries no real meaning for the mass of ordinary people. The media may not be formally part of the state but it sings from the same hymn sheet.

The News of the World, for example, dates back to the Victorian period when scandal-monging dominated the discourse of the landed aristocracy and other idle beings. Gossip and tittle-tattle are among the lowest forms of social intercourse.

Papers like the News of the World took aspects of the frail and vulnerable sides of human behaviour and blow them up to ruin people’s lives and titillate their readers. It won’t be missed.

The use of lies, distortions, omissions, witch-hunts and sensationalism is the stock-in-trade of all the tabloid newspapers as many an activist or striking trade unionist will readily acknowledge. Notoriously, the Daily Mirror launched a ferocious attack on miners’ leader Arthur Scargill in the wake of the 1984-5 strike.

In the recent public sector strikes, virtually all the media slavishly followed the government’s line about the “unaffordability” of existing pensions. This helped to create the impression – and that’s all it is – of a public that was in general against the strike.

This is how “public opinion” is shaped or, more accurately, concocted.

Journalists often try their best to buck the trend but as any hack will tell you, proprietors have editorial control through their appointees who have absolute power over what gets published. If they want to work, journalists have little choice but to comply.

Other newspapers and media outlets are perhaps more subtle, but ultimately the message is the same: the status quo is alright, even if it does need cleaning up a little to make it more presentable.

The “serious” papers swallow official propaganda without too many qualms. Take the invasion of Iraq in 2003. None of them seriously challenged the lies and distortions and the notorious “dodgy dossier” put out by New Labour about so-called weapons of mass destruction. This proved the justification for an invasion with far worse consequences than a bit of phone hacking. Patriotism overcame questioning as normal.

As for the BBC, it sounds more and more like an official state broadcaster every day. ConDem statements are repeated ad nauseam as if they were the gospel, while the language used over Palestine, for example, ensures that Israel’s line predominates.

If there is a rush to purge the “excesses” of the tabloids through tougher regulatory control, it is because the general public – who are denied access to the media – somehow need to be reconnected with the conveyor belt of images, distortions, half-truths and support for the status quo.

The breakdown of this relationship is significant because it runs alongside the cracks in the edifice of the state itself, embracing the police, Parliament and legal system. There is an opening here for susbstantial, revolutionary change and we should seize it.

Paul Feldman

Communications editor

Hacking shows state's corrupt underbelly

The News of the World phone-hacking scandal shines a spotlight on the sinister side of the tabloid media, the police and Parliament at a time when these institutions are already in crisis and increasingly discredited.

Coinciding as it does with deepening economic and financial problems, the hacking saga sums up all what is rotten and threatening about British capitalist society.

The fact that the News of the World was hacking phones of murdered children, and families of people killed in the London underground bombings or in the Afghan war, is not separate from, but all of a piece with their POLITICAL position.

The paper offer regular doses of jingoism and racism. They support the cuts absolutely, and would like them to go further. They are anti-union to the core, and they supported New Labour on the basis that they were too. When the economic crisis got out of control, they quickly switched back to the Tories.

NoW's circulation is falling by more than 5% year on year, but in spite of that, their revolting agenda has had incredible power over British politics. Members of Parliament have been "gelded" by fear, as Tory Zac Goldsmith put it in Parliament yesterday.

Ed Miliband may have called for a public enquiry - an old political trick to kick an issue into the long grass - but it was a different story on the evening of June 11, when he and his ex-Rupert Murdoch hack adviser Tim Baldwin joined Cameron and leading figures from big business, politics and the state at Murdoch's annual summer party. Champagne and oysters were on the menu.

The police and undoubtedly New Labour knew as long ago as 2005 what was going on. But the police investigation was mysteriously restricted in terms of resources. A nod and wink between ministers and Murdoch, whose papers at that time supported the Blair government, seems a plausible explanation.

Prime minister Cameron is squirming on the hook too, hoping to survive a scandal that couldn't be closer to home. Andy Coulson, NoW's editor during the period under investigation, was his communications advisor. And Cameron is also part of a wealthy social set in Oxfordshire which includes Rebekah Brooks, former editor of NoW, and the odious Jeremy Clarkson. They all have regular drinkies together.

Culture and Media Secretary Jeremy Hunt was due to give the nod for News Corporation, News International's parent company, to buy a majority holding in BskyB tomorrow. Now even some City dealers are asking for a pause - they don't want the sale going through when NC shares fell by more than 3% in the US and Australia yesterday.

The revealing of these corrupt relations continues the unravelling of the credit-fuelled boom, of New Labour's rule and everything that went with it: the obsession with celebrity; vulgar displays of wealth; get-rich-quick fantasies that led to the impoverishment of millions through debt.

There are plenty in the Tory Party itself who would like to see this scandal sink Cameron himself. They want to see coppers focused on beefing up the methods developed during the miners’ strike and indeed at Wapping, when Murdoch smashed the print unions with their help.

Stop bugging models and footballers and start bugging those involved in opposing the state - that's the desire at the top of the state. There are reports that the army is stepping up riot control training. All state forces are being told, get ready for resistance in myriad forms – from riots against supermarkets and food prices to strikes and occupations.

And on the other side, we see the difficulty the state has in operating in secret in the digital age. The new generation don't buy these newspapers, and they don't buy their political line either. They get their news on the net, from their peers on Facebook, on YouTube, Twitter and WikiLeaks.

Using these new methods of communication, with all their problems, the mass of the people bypass the reactionary media and develop their own views and understanding. This is laying the groundwork for bold and independent political initiatives aimed at creating a real people’s democracy based on self-determination in every sphere, to take society forward.

Penny Cole