Worsening economy behind Coalition crisis

All the indications are that the British and European economies have now been drawn into the deepening contraction of global capitalism:

•   The Bank of England today slashed its forecast for UK economic growth in 2012 to zero from its May estimate of 0.8%.  Governor Sir Mervyn King said recovery hopes had consistently been dashed.
•   Last night, S&P cut Greece's outlook to from “stable” to “negative”. The ratings agency said the economy in the already crisis-hit nation was worsening.
•   The Banque de France, the country’s central bank, said that its preliminary figures show that gross domestic product will be down 0.1% in the third quarter, which ends on September 30. The bank had already predicted that GDP would fall the same amount in the second quarter.
•   German exports slowed by a more than expected 1.5% in June. Imports dropped 3%, against a 2% prediction.

The Cameron-Clegg Coalition’s current austerity programme of spending cuts and tax increases was based upon an unrealistic expectation of growth, which has now been replaced by the certainty of its opposite. This – and the crisis within the Coalition itself, spurred by the virulently anti-Cameron Old Tories - underlies the sharpening of tensions as the Tories abandon plans for reform of the House of Lords to focus attention on the economy.

As BBC economist Stephanie Flanders puts it, we are experiencing: “ by some measures “the worst four-year period for the UK, outside wartime, in at least 100 years - worse than what happened in the 1920s and 1930s, and worse than anything in the 1970s and 1980s”.

People in the UK face the same challenges as the rest of Europe in battling assaults on public services, jobs, pensions and benefits and the loss of their homes. Amongst the worst-hit countries is Spain, where unemployment amongst young people stands at around 50%. In Greece, the Orthodox Church has set up emergency feeding centres for hundreds of thousands of people who have lost everything. They include formerly well-paid professionals – architects, engineers, information technology specialists who hardly know what has hit them.

The contraction means demand is dropping fast, so exports, imports and production must follow. Government revenues from tax continue to drop, so “unaffordable” public services have to broken up and those parts that can be made profitable handed to the private sector. Then, as the spiral of recession deepens, comes the competitive elimination of surplus productive capacity – the mothballing of factories, boom-year housing estates left empty, infrastructure left to decline and rot, millions upon millions of people driven from their jobs and homes, left without food, abandoned to their fate.

In country after country people have protested, marched and even occupied workplaces.  The Trade Union Congress in Britain is calling for another demonstration in October. But the experience of its last national anti-austerity protest in the spring of 2011 showed that it changed not a whit of the Coalition’s policies. 

Thus resistance must be transformed into preparations to replace the broken system of capitalist social relations dominated by the giant global corporations. It is these which have undermined the legitimacy of the state and hollowed out the old forms of parliamentary democracy.

New forms of fully inclusive, participatory, direct and representative democracy are needed. They can learn from the experiences of those who’ve worked in not-for-profit institutions like the National Health Service, housing, education and social services as well as the workers’ co-operatives, credit unions, food coops and community shops that have spread around the world as people try to protect themselves against the worst effects of the crisis. These need to go further to develop policies and strategies to replace capitalist social relations.

A World to Win believes that a global network of People’s Assemblies can provide this framework. You’re invited to join the discussion at http://aworldtowin.ning.com/

Gerry Gold

Economics editor

Charities row about venal self interest

The Coalition’s proposal to limit tax relief on charitable donations to £50,000 per year or 25% of a donor’s income has touched a raw nerve within the government’s natural constituencies – so called “wealth creators” and those who back the notion of “the big society”.

At present there is no limit on the amounts that can be donated to charities, thus making it possible to avoid paying tax altogether. One thousand millionaires currently pay 30% or less tax while nearly one in 10 people earning more than £10 million a year pay less than 20% in income tax, according to the Treasury.

Outraged members of the rich list have joined up to complain that the Budget proposal would “deter future donors” in a letter to the Sunday Telegraph. Infringing their “right” to use their wealth as they see fit is a restriction on the “liberties” of the rich and the super rich. To paraphrase Mandy Rice Davies, “they would say, that wouldn’t they?”

The idea that you can appear righteous and generous by giving away some of your wealth to the worthy poor and other selected “good causes” goes back to Victorian times and has long been the foundation of old Toryism as well as liberalism.

Philanthropists like Joseph Rowntree combined Quaker beliefs to build model housing schemes and fund research into social issues. Others raised money for public parks.

But the notion of selfless generosity has gone out of the window in favour of venal self-interest. Offsetting tax by making donations to charity is a convenient way for millionaires to minimise their tax payments. In fact Osborne’s proposal would only affect those giving more than £200,000, so it hardly “punishes” anyone but the super rich.

The web of connections between charities, politicians, corporate and banking interests are more often than not incestuous. Former prime minister Tony Blair, for example, has let it be known that "this is absolutely the right moment for government to do all it can to promote philanthropy; and certainly nothing to harm it."

Not too surprising for a man whose Faith Foundation pays six figure salaries to its staff. And his wife Cherie Blair’s Foundation for Women is backed by top US banks, JP Morgan Chase Foundation and Goldman Sachs.

Behind the pious phrases of “giving back to the community” is not only greed but a deep-seated animosity to the notion of a state that can tap into the income of the rich to provide any kind of benefit to the rest of society including the health service, pensions, education and all the rest.

So why has the coalition made this move? The globalisation of industry and banking combined with tax avoidance, growing unemployment and an aging population has significantly reduced state revenues. So little surprise that the state is desperate to claw back tax money while giving the appearance – and that’s all it is – that “we’re all in together”.

But fear not, ConDem ministers! Shining knight Ed Miliband has come riding to the rescue. Trying to outflank the coalition with a demagogic attack on “big money” funding of political parties he has proposed a £5,000 cap on donations. This makes Osborne’s £50,000 limit on charitable donations look like a tax bonanza to the rich.

Miliband equates trade union donations with those given to the Tories by capitalists and bankers. This is really reactionary and shows what contempt the Labour leader has for ordinary workers. His proposed cap also opens the door for Tories to demand that union members in affiliated unions opt in to paying the political levy to Labour (at moment unionists have to opt out – i.e. make a conscious decision not to pay).

Yes, they are all in together – the major political parties, that is. That’s why so many people are deciding to hold on to their precious votes until there’s something better to use them on.

Corinna Lotz
A World to Win secretary

Breaking out of the logjam

Meetings around the country are discussing where the anti-cuts movement can go from here. Despite the massive turnout, the TUC’s March for the Alternative has not, as everyone knows, stopped a single attack on jobs, services, benefits or grants to the arts.

A discussion at the weekend in London, organised by the National Campaign Against Fees and Cuts, revealed some of the issues and challenges. Both young and older speakers from a wide range of organisations revealed the desire to continue the struggle. At the same time, it proved hard to break with the notion that protests and strikes in themselves remain the only option.

The meeting heard Mark Barrett from the People’s Assembly Network seek endorsement of the motion passed at January’s National Education Assembly for a long-term strategy of city-wide permanent assemblies. But the appeal to broaden out the struggle in new ways was pretty much ignored.

Yet the cuts are getting deeper. An NHS worker from University College hospital said that 500 jobs were being cut in St George’s hospital alone. He called for support networks to be set up around hospitals. Some suggested that UNITE general secretary, Len McCluskey was evidence of a “left” tendency within the TUC leadership. There were calls for strike action in the NHS, and others for limited general strike action.

The discussion reflected the variety of actions being proposed by the spectrum of left organisations more widely. The Socialist Party, for example, says that a 24-hour public sector general strike “would terrify the ConDems”. Others call for a national anti-cuts organisation to be formed. The Socialist Workers Party has been calling for a general strike. The Right to Work campaign believes that March 26 showed that “we have the power to stop Cameron and Clegg” and that more protests, demonstrations and strikes are the answer

But the underlying issue of what is driving the Coalition to force through the cuts and wind up the welfare state was left in the dark. The unmentioned elephant in the room was the global crisis of the capitalist system, the financial crisis that has brought countries like Greece, Ireland, Iceland and Portugal to their knees, and the deepening recession.

In this context, the government is not for turning, as much for the fact that they are no more in control of the banking system and money markets than you and I. The stark truth is that without a strategy for power, without a political strategy, marches and even general strikes are ineffectual.

Unfortunately for those who believe that the ConDem government can be persuaded to change course by protest, Financial Times’ columnist Robert Shrimsley just about summed it up: “It’s irresponsible to admit it, but this kind of peaceful protest [March 26] is pointless. The system has all the shock absorbers necessary to handle a law-abiding demonstration.”

Those who seek to break out of this logjam, as UK Uncut and anarchists have sought to do, found themselves preyed upon by police provocateurs and susceptible to entrapment and, in the case of one student leader, targeting by the far right.

On the day and subsequently, it has been left to young people in Trafalgar Square and others in Hyde Park, to find another way forward. Inspired by the movement in Egypt that brought down Mubarak, they are still seeking to win support for equivalent action by trying to occupy key places like Trafalgar Square.

The strategy of building a People’s Assemblies Network is crucial as a way of uniting these aspirations with the anti-cuts movement, trade unionists, young people, unemployed, professionals and political organisations and the millions now facing huge cuts in services and jobs. Assemblies have the potential to become more than just unifying organisational forms. They could provide answers to the most important question of all – where power lies and how can it be transferred into the hands of democratic, popular assemblies.

Corinna Lotz

A World to Win secretary

Time to end the profit system

The Lib-Con Coalition government’s Spending Review is an attempt to rescue an already bankrupt economy. With £81bn cuts in public spending, it is the biggest and most sustained assault on the public sector since the creation of the welfare state sixty years ago.

But the reality is that despite the ruthless measures announced yesterday, the cuts will hardly make a dent on Britain’s budget deficit, which at £162 billion is the largest of the world’s major economies.

The plan is to bring government borrowing down by £149 billion in four years. This is a 19% per cent cut in real terms, as opposed to New Labour’s proposed 12 per cent. But can this gamble succeed? The very measures intended to reduce the deficit will deepen the crisis.

The one million people who will be thrown out of work and those made homeless will need some kind of support. And whilst blighting the lives of countless citizens, especially the most vulnerable, government spending will continue to rise by an additional £38 billion over the coming four years. As Chancellor Osborne announced: “total public expenditure - capital and current - over the coming years will be £702 billion next year, then £713 billion, £724 billion and £740 billion in 2014-15.”

An additional £7 billion cut brings the total cut in the welfare budget to £18 billion so far. The poorest ten per cent of the population stand to lose the most. It is a monstrous bludgeon expected to achieve just a £5 billion reduction in the £43 billion per year interest payments.

The measures include:
• a 30% cut in funding for local authorities
• a 74% cut in the budget for house-building combined with a trebling of rents for new tenants in social housing
• insecure tenancy of council house dwellers
• the minimum possible increase for the NHS, that will leave health care struggling to keep up with an aging population and scientific advance
• ending the universal right to Child benefits
• a 3.4% real cut in education
• cancellation of major infrastructure projects, like the renewal energy from the Severn Barrage
• a 10% increase in rail fares
• a £7 billion cut in the welfare budget
• Culture Department to be cut by 42% with almost 30% cut for Arts Council
• up to 30% cuts in budgets for government departments
• 20% cut in funding for the police
• rapid acceleration in the process of adding a year to the working life of a man and six to that of a woman before they can claim a state pension
• huge and damaging reductions in the settlements for Scotland, Wales and Northern Ireland

There is certain to be much more as the contraction of the global capitalist economy tightens its grip. The attempt to reduce repayments to the money markets will be undermined by tax revenues falling faster as the recession turns to slump. The populist gesture of £2 billion to be raised from a permanent levy on banks will surely be passed on in the form of higher costs of borrowing.

Cuts in administration of around 30% over four years will lead to a loss of an estimated 490,000 public sector jobs, 8% of the total. The effects of the overall programme confirms consultancy PriceWaterhouseCooper’s estimate of a further 500,000 jobs evaporating in the private sector as spending is reduced and contracts are cancelled.

The Coalition has issued a sinister threat with its promise that it will always be better to be in work than on benefits. It means that they’re hard at work on schemes to reduce wages across the board. No doubt employers will be rubbing their hands at the prospect of new sources of cheap labour from the enlarged European Union and beyond.

This is only the beginning. The Spending Review spells out that the capitalist state can no longer afford to fund any of the rights or life-support benefits won by unions in a century of struggle.

The intention to reduce the wide and complex range of benefits needed by millions of people suffering the effects of three decades of profit-chasing globalisation to an all-encompassing single payment, and a time-limit on the Employment and Support Allowance reflects a profound contempt for the individuals whose needs have been assessed by cohorts of public sector workers. Capitalism in crisis wants to reduce millions people to bottom-line cyphers of cost before trying to eliminate them altogether.

Calls last night outside Downing Street for “French-style” strikes are a welcome move from the total inaction of the Trade Union Congress. But even industrial action needs a political purpose. The desperate gamblers in No10 and 11 are driven by a real economic crisis of the capitalist system itself.

The solution to the debt mountain comes in the shape of action by People's Assemblies http://aworldtowin.net/frontline/BuildPeoplesAssemblies.html, formed locally throughout the country with a view to defending services, livelihoods, jobs, and homes. Eventually a government formed from a network of people's assemblies will need to take control of the financial sector, cancel the debts and turn it into a not-for-profit service.

The global capitalist classes are watching to see the results of Osborne’s cruel experiment. It’s time to realise that we too must enter new territory.

Gerry Gold
Economics editor

Wanted: a democracy for the people

The Tory wing of the Coalition’s plans for the “Big Society”, which now include a massive shake-up of the police force, are not simply a cover for public spending cuts. They are far more sinister than that.

The Tories, especially, because they are genuine representatives of the ruling classes rather than the aspirant New Labourites, understand and are concerned about a deepening social and political alienation in Britain.

The parliamentary state does not rule through naked force but through a changing mix of ideology and practice. Because the state holds power for a minority – the capitalist classes – it actually needs, even craves, a legitimacy from society at large.

This is achieved through various mechanisms such as elections at national and local level as well as a reiteration of the importance of the state in maintaining order in society and providing essential services.

Without a consent that is also fairly active, the state tends to lose its authority. People stop voting, or express little trust or faith in mainstream political parties. This extends to a loss of “respect” for other parts of the state like the police force or the legal system. These are all a feature of Britain today.

New Labour’s response was to create more and more layers of bureaucracy while retaining power over decision-making at the centre. Thus schools and hospitals, for example, were overwhelmed with new instructions and targets almost on a monthly basis. None of this worked. Teachers and health workers – and the police – faced mountains of bureaucracy, which led to fiddling of figures on a grand scale.

The Tories’ approach to the challenge of securing support for the state is openly populist, by contrast. Plans for schools, the health service and now the police involve co-opting vast numbers of workers as well as members of the public. Teachers will be invited to have a direct say in the running of schools, for example, while “free schools” will go further and bring in parents.

Yesterday’s announcement about the police force involve directly-elected local commissioners, joint patrols with the community and the recruitment of tens of thousands of special constables. They will be unpaid volunteers but have powers of arrest like ordinary police.

The sinister side becomes more apparent with the prospect of vigilante policing and right-wing, racist commissioners being elected. Special constables will always be useful in times of social unrest and strikes, which is the period we are entering as a result of the economic crisis. And, of course, getting workers delivering front-line services involved in making the spending cuts that are coming up the line is a great way to divide and rule.

Our response cannot be, however, to let things remain as they are. That would put us in a position of defending the capitalist state and the way it does things. The Tories are desperately trying to modernise a state whose political structures are 19^th century while coping with the demands of a genuine 21^st century global financial and economic crisis.

This is a set of improbable contradictions. The capitalist state cannot possibly reform itself by handing over power simply because it does not and can never represent the mass of the people. A leopard cannot change its spots and the present state will always rule on behalf of corporate and financial power.

Our demand is not for “involvement” but a genuine transfer of real power. That means democratic control and ownership of resources as well as a political voice that is direct and locally based. The “Big Society” is not that, of course. But it does create a challenge which we should start to answer in a creative, revolutionary way to claim democracy for the people.

Paul Feldman

Communications editor

Plans to bail-out BP

Contingency plans for a possible collapse of BP are reportedly being drawn up in Whitehall as the oil corporation’s crisis continues in the wake of the Gulf of Mexico catastrophe. If the Coalition had to take the company over, it would blow the governments budget-reduction plans apart.

BP accounts for £1 in every £7 paid out to British pension schemes in dividends. The value of the company is uncertain following the largest offshore oil spill in history, which has wrecked ecosystems and affected jobs in US five states. And the thinking is that the Coalition could not allow BP to be broken up or fall into entirely foreign ownership if it meant that pension schemes would suffer.

BP’s management is apparently touring the Middle East looking for governments willing to put up some defensive cash to protect the company against takeover bids from its bigger competitors Royal Dutch Shell, and Exxon Mobil. You can be sure that more than one of Cameron and Clegg’s people are in there batting for BP.

On Fortune magazine’s list of the world’s largest corporations BP ranks fourth, behind WalMart. The company reported profits of US$21.2 billion on its revenue of US$367 billion last year. So the US$20 billion it has so far been obliged to set aside for the costs of the oil spill wipes out last year’s profit.

What happens to BP affects the entire global economy, and not just in terms of its revenue and profits. BP’s product is as important to capitalist production as its profits. The entire system is fuelled and lubricated by oil. This is why proposals to cap the leak altogether fall on deaf ears. Stopping the flow of oil isn’t on the agenda.

Despite the rampant destruction, all of the oil producers are intent on drilling deeper, overcoming all obstacles. It didn’t take long for the corporations to get the US Federal court to overrule Barack Obama’s six-month moratorium on all pending, current or approved drilling plans for new deepwater wells.

BP’s shares have been on the rise again after the price dropped by more than a half since the oil began leaking into the ocean, for three reasons. Firstly, the company declared it wouldn’t be issuing shares to raise capital, which would have diluted the share value even further; secondly, the relief well drilling which, it is hoped, will at least help to stop the leak in August is ahead of schedule; and thirdly, they have just begun deploying a new “super-skimmer”, a third vessel at the leak site that is hoped to nearly double BP's capacity to 53,000 barrels of the leaked oil a day from around 25,000. But rough seas are hampering efforts to finish the job, and more hurricanes are threatening as the effect of climate change induced by the burning of that same oil bites.

Rather than cap the leak BP must scoop up as much as it can. Oil corporations are the most powerful organisations in the world. So last month’s call from General Electric and Microsoft for the US government to more than triple its spending on clean energy research and development has little impact.

If the rest of BP, already 60% per cent owned by non-UK investors were to fall into foreign hands, the British government’s emergency budget will become irrelevant. There’s every chance that Cameron and Clegg will be forced to follow New Labour’s solution to the bankruptcy of the banks and take BP into state ownership.

At this rate, the state will soon control the commanding heights of the capitalist economy! So much for the virtues of private ownership. It’s not at all indispensable. What remains is the issue of the state itself. A corporate state that functions on behalf of a bankrupt capitalist system serves only narrow interests and we should work to replace it with a network of democratic People’s Assemblies. Then we would see some progress.

Gerry Gold

Economics editor

Toronto is a turning point

The failure of the G20 summit in Toronto to find a common approach to tackling the global economic and financial crisis had an air of inevitability about it. After all, capitalism is not exactly a rational system where sensible men and women come together to sort out an international crisis.

If that were really the case, the 20th century would not have experienced two catastrophic world wars, for example. Nor would the inter-war years have been dominated by the calamity of the Great Depression in Europe and America, which only ended when the major powers took to the battlefields.

In reality, what the Toronto communiqué – which apparently took all of 54 hours to negotiate – heralds is another period of intense competition and rivalry. In an abandonment of the unity of the past three crisis-era Group of 20 summits, the leaders decided to adopt "differentiated and tailored" economic policies for each country. Earlier proposals for a unified approach to limiting the activities of major banks by imposing tighter capital requirements were also put on the back burner.

In other words, it’s every country for itself. Sound familiar?

President Obama’s plea not to start cutting budget deficits too soon because it might harm the “recovery” was simply ignored. All the major economies are cutting deficits – and America won’t be far behind. Obama, it was noted, praised Britain’s “courageous budget” of last week.

He is aware that his stimulation package has failed to revive the US economy. On the contrary, unemployment continues to grow despite an increase in state spending. The recession has wrecked the finances of many states too, which are dependent on local property and sales taxes.

The small southern California city of Maywood is disbanding its police force and firing all public sector employees. Every service is being contracted out. US states have an estimated $200bn budget shortfall, equivalent to 30% per cent of all state budgets. The federal government’s deficit is about $1.3 trillion and rising.

The impotence of the political elites who gathered in Toronto reflects a stark reality of the problematic and contradictory relationship between capitalist nation-state systems and the globalised economy. Masked while the world economy expanded, this conflict has worsened since the 2008 meltdown of the banks.

Modern globalisation has created immense economic and financial forces that are greater in their impact and power than the sum of their parts. They are way beyond the control of even the most powerful states. Take, for example, the financing of government borrowing through what is known as the bond market. This isn’t some single marketplace, with a sign outside the door but is a series of inter-linked buyers and sellers in Europe, Asia and America, trading electronically around the clock.

Participants include commercial and investment banks, hedge funds, insurance companies, pension funds and – of course – the governments that guarantee interest on fixed-term bonds. Identifying all the various buyers and sellers globally is a task in itself; “bucking” this market is virtually impossible because states never know when they might come under attack. Just ask the Greek government.

Toronto, with its insistence on halving budget deficits by 2013, makes the transition from recession to depression much more certain. The political classes in every country are locked in a deadly embrace with economic and financial forces too powerful and inaccessible to cope with. So they take it out on ordinary workers, cutting their wages, pensions, jobs and services.

Remedial, curative action is not an option, just as it wasn’t in the 1930s. Telling the bond markets to take a running jump off a short pier, that they can whistle for their interest payments, for example, requires something quite different and quite revolutionary. The G20's failure at Toronto is a turning point. Now it’s our opportunity to seize the initiative.

Paul Feldman
Communications editor

Prepare General Strike to bring down Coalition

Tory Chancellor Osborne’s collection of savage spending cuts and dramatic tax changes is intended to engineer a massive transfer of wealth to shareholders, whilst condemning millions to a life of grinding poverty on reduced benefits or on the dole. Claiming that “we are all in this together” is simply a lie.

It follows the £6 billion cuts announced in the days following the election. It comes in the wake of the scrapping of 12 major capital investment projects approved by New Labour in the dying days of its period of rule. And on top of cuts made by the outgoing New Labour government in higher education.

Much worse is to come. In the public sector, reducing the budget deficit will leave most departments – apart from health and international aid – facing a 25% reduction and the certainty of huge job losses. No advanced economy has ever made such drastic spending cuts in state budgets.

Pay for public sector workers will be frozen, initially for two years. As entire services are threatened with the axe, Cameron and Co. will be ratcheting up their caring, sharing approach. They will cynically encourage redundant workers to form co-operatives of volunteers to take them on with a pittance of a contract to cover expenses.

But for the private sector, the plan is quite different. Here the overarching idea is to make Britain an attractive place to do business, boosting profits by reducing corporation tax. Each year for four years the tax rate companies pay on the profits they fail to hide abroad will be reduced by 1%, bringing the headline rate down to 24% - amongst the lowest of all the developed countries.

With some of its measures, the Coalition is trying to disarm some of its potential critics with the appearance of concern for the poorest. As part-payment for the Liberal Democrats’ participation, the income tax allowance lower limit will be raised, exempting 880,000 of the lowest earners from paying tax. But this will be more than offset by the increase to 20% in VAT from next January. With housing benefit capped and child benefit frozen, it will hit the poorest hardest.

Further assaults on living standards are already planned. In a calculated move towards a national government the Con-Lib coalition is to be extended to include New Labour’s former work and pensions secretary John Hutton who will prepare the ground for an assault on state and public sector pensions. And then, in October, Osborne will announce his review of public spending which will detail the cuts to be made, department by department.

The Coalition has embarked on a high risk, “kill or cure” programme based on figures for growth that are already under challenge and that are not possible in the context of the global crisis of capitalism. Eurozone economies are diving deeper into recession, while many German and French banks are reckoned to have solvency problems. They hold piles of Greek and Spanish government debt now worth far less than it was bought for.

This is not a government of strength but one thrown together in an emergency and which has no mandate for the unparalleled cuts it is making. The general election was a fraud because none of the major parties would come clean on what was being planned. So the electorate has every right to fight the Coalition.

Protest campaigns are already underway around the country. Trade unionists, pensioners and community groups are meeting to plan their actions to protect jobs and services. They should begin to create People’s Assemblies to co-ordinate their struggles and to plan for political and economic alternatives to a capitalist system now in profound economic and political crisis.

Unions who are opposed to the cuts will have to step up to the plate in the absence of any resistance from the Trades Union Congress. Brendan Barber, the TUC general secretary, could only say the budget was “economically dangerous and socially divisive”. He offered no challenge to the Coalition or its unacceptable budget whatsoever.

Bob Crow, general secretary of the rail union RMT, was more forthright, declaring: “There is no question that there will be widespread industrial and community resistance to the cuts agenda and RMT will be in the front line wherever people are making a stand.” This is good as far as it goes.

The RMT is part of an alliance called the Trade Union Coordinating Group, along with firefighters, civil servants, university and college teachers and other sections. The TUCG should start a campaign within the TUC to make preparations for an indefinite General Strike against the Coalition government, which is assuming the role of a dictatorship over the working population.

Resistance is not enough. The aim must be to bring down the Coalition and create a revolutionary government in its place. This is the road we have to take to prevent a social catastrophe far worse than that of the 1930s.

A World to Win
23 June 2010

Tory right guns for Lib-Dems

When David Laws was forced to resign last month, we asked if the Tory right wing was trying to destabilise the Lib-Con coalition. With the announcement that Liberal Democrat Energy Secretary Chris Huhne is leaving his wife in the wake of gutter press exposure of his relationship with economic advisor Carina Trimingham, the cracks are widening.

Like the former Treasury Chief Secretary, Huhne is a heavyweight inside the Liberal Democrats. Already there is speculation about whether Cameron should ask for his resignation which would seriously weaken the government just as the Budget is due to be announced. The campaign against Huhne, must therefore be seen in a bigger picture.

Apart from the cardinal sin of being a Liberal Democrat in the first place, Huhne has opposed expanding nuclear power and is in favour of carbon capture technology. Last week the Coalition announced that the £80 million loan needed to make the castings for nuclear reactors was to be cut, which has enraged the pro-nuclear lobby.

As with Laws, the allegations of sexual or marital “impropriety” are simply a smokescreen for far more serious and sinister matters.

The real issue is: what forces are guiding the snooping hacks of the News of the World, whose stories were immediately picked up by the Daily Mail and the Sunday Telegraph? Who tipped them off to tail Trimingham to Huhne’s constituency home in Eastleigh and follow the couple on the train all the way back to Waterloo, tracking their movements and phone calls? Last year Huhne demanded an inquiry into the News of the World phone-hacking saying: "It strikes at the heart of the privacy any individual can expect in a civilised society."

Is it payback time, or is it possible that they are being helped by operatives in one of the intelligence agencies, MI5, MI6 and GCHQ? Richard Aldrich, the author of a new book about the GCHQ spy centre in Cheltenham, which absorbs the largest chunk of the £2.4bn budget, says that GCHQ holds “enormous surveillance powers”. The frightening truth, he says, is "no one is in control" of these powers.

As Cameron’s coalition comes under strain, he is singing the praises of the military. The Prime Minister wrote yesterday that it was the whole nation’s “social responsibility to put servicemen and women “at the front and centre of our national life”, adding “I want to see an explosion of red, white and blue all over the country”.

As the 300th soldier is killed and when the majority of citizens are opposed to the hopeless war in Afghanistan, the pressure is on to re-legitimise the armed forces. The ruling class need to put down a marker in the wake of the Saville Report which proved beyond question that British troops deliberately fired on innocent civilians. This explains why even General Sir Richard Dannatt has backed Cameron in saying that the Bloody Sunday shootings in Derry 38 years ago were “unjustified and unjustifiable”. That event must be firmly put in the past so that the troops can now be seen as self-less heroes who need “our” unstinting moral and financial support.

On the eve of what will is likely to be the most ferocious budget in history there are serious fears of civil unrest as the whirlwind of cuts hits jobs, services, pensions and pay.

No wonder that the media drums are beating to get support for the Armed Forces Day this Saturday. It’s time to join the campaign to build People’s Assemblies as the democratic alternative to these increasingly authoritarian state forces.

Corinna Lotz
A World to Win secretary

Britain - a failed state

A system that produces a government intent on forcing people to cut their own throats is a failed state and we ought to find a democratic replacement for it as soon as possible.

The Conservative-led coalition of public school-educated ministers wants to make the whole of the British electorate party to decisions that will “change our way of life” over the next few years.

Cameron and Clegg’s already damaged coalition – together with the entire media circus – are engaged on a campaign of attempted mass hypnosis. If they had their way, they’d draw the entire population into a self-inflicted tsunami of devastating cuts in wages, jobs, pensions and public services on a scale never seen before. This is change for the very worst.

As the government’s new “independent” Office for Budget Responsibility will reveal, the economy is on much shakier ground than previously thought. Treasury growth forecasts which, if true, would have cut the budget deficit, are pure invention by the outgoing New Labour government. The OBR, by the way, is headed by Sir Alan Budd, who, in 2005 became a director of IG Group, which trades in financial derivatives and spread betting. Very “independent” then!

Attempts to restart economic growth through the printing of money inevitably came to nothing, both in Britain and in the United States. The crisis of the capitalist system has not gone away. Far from it, as John Authers writes in his new book for the Financial Times, "The fearful rise of markets”:

“The financial disaster of 2007 to 2009 … has not cured any of the underlying factors that led markets to become intertwined and overinflated and to endanger the world economy. This does not mean that another synchronised bubble followed by a crash is inevitable, but it does mean that such an event remains a distinct possibility.”

The global capitalist system has failed – economically and politically. So what follows is a short list of the changes to the social relations that define “our way of life” we think are worth considering.

First to go should be the profit-based financial system and all the associated wasteful, absurd activities that turn reasonable, well-educated, clever, potentially socially-useful people into crazed traders and wild-eyed speculators. They have gambled with everyone else’s pensions, savings and futures, and now hold governments around the world to ransom. Sure we’ll need a system of credit and money, but why not run it as a not-for-profit community service?

Then there’s the system of land and property ownership. This has survived more or less intact in Britain since the Middle Ages. It ties millions of people into paying the major part of their income as rent or interest in exchange for temporary occupation and use or the mirage of security as a house owner. It’ll be better, much better when all property is held in common. Socially-owned land and housing for all!

And that also applies to the ownership of capital – factories, offices, machines, tools, knowledge – all the durable things we’ve created that help us to produce what we need to live. As Marx explained, capital is value accumulated from many workers’ labour. For little more than 350 years the ownership of capital has given employers control over their employees.

Life will be better when private ownership, production for profit and the wages-for-labour employment contract is ended, and capital is under the control of the people who do the work that produces it.

We’ll need a new democratic process to make this happen. When Cameron’s campaign of persuasion meets popular opposition, he’ll either resort to force or the coalition will be driven out of power. Let’s build a real, much more democratic system of Peoples Assemblies that can make this new “way of life” a reality.

Gerry Gold
Economics editor

A very British coup

The political marriage between David Cameron and Nick Clegg in a ceremony in the garden at the back of Downing Street yesterday is not simply the result of a general election that failed to produce a party with an overall majority. Britain’s first coalition government for 70 years also shows that the process that produced New Labour is still at work.

In 1995, Tony Blair and Gordon Brown persuaded their party to ditch Clause IV of its constitution, which aspired to common ownership of the means of production and popular administration of the economy. Adopted in 1918, the clause was anathema to the “modernisers” who were busily creating “New” Labour.

The Blairites were adapting to a new world order summed up in the term “globalisation”. Where the Tories were divided on the issue, revealed in the splits over Europe, New Labour would embrace the free movement of capital, deregulation, public-private partnerships, the European Union, the World Trade Organisation and promote an “enterprise economy”.

Even before New Labour’s loss of nearly 100 seats last week, voters were turning their back on a government that had created vast inequality, put an end to social mobility and encouraged a casino economy. When a globalisation driven by the banks and corporations finally crashed in 2008, the die was cast and the raison d'être for New Labour was terminated.

With the Tory Party deeply divided between a right-wing that believes that anything not purely Anglo-Saxon is suspicious and “modernisers” who understand the world has changed, the electorate understandably failed to give them a mandate to govern alone when they went to the polls on May 8.

Cameron is astute enough to recognise that the old-style bourgeois party politics – based on some worked-out framework and an ideology related to things purely British – is dying. No single party seems likely to win an overall majority again. The election deadlock propelled this understanding into a swift and dramatic realignment with the Lib Dems. This is, in effect, Cameron’s Clause IV moment.

He and Clegg have in practice staged an audacious joint coup against their own parties, ignoring dissent and rumblings from rank-and-file members who only last week were at each other’s throats as they fought for votes. In some respects, the logic of their alliance might even signal the end of their parties in the shape that we know them now.

Both the prime minister and his deputy, for example, say they have put party politics to one side to govern in the “national interest”. In other words, they have taken the politics out of politics, a process that began with Blair and Brown who reduced government to a grinding form of managerialism.

The spurious “national interest”, as we know, is a not-so-clever mask for the interests that really count. These have everything to do with what the financial markets are demanding and nothing to do with those on the dole and the millions who will join them as Lib-Tory cuts and tax rises get going. New Labour saddled all households with £135,000 in debts. Cameron-Clegg's role is to make sure we make the payments.

As we pointed out yesterday, the global financial meltdown is visiting one country after another. In Spain, the Socialist Party government yesterday rushed through a ruthless cuts package to appease the money markets. Greece’s government – also claiming to be “socialist” – did so last week. Given half a chance, New Labour would have done the same.

In Britain, we now face what amounts to a “government of national emergency”. How will long will it before we are told that all opposition to the cuts is anti-patriotic behaviour? The new boys in Downing Street are a ruthless duo yet their bonhomie cannot disguise their relative weakness and isolation from their own parties. That is what lies behind the rapid march away from what is left of parliamentary democracy with a five-year, fixed term for the government and raising the bar for a no-confidence vote to 55%.

We certainly need a “new politics” and that’s the subject of our May 22 conference, Taking the Revolutionary Road.

Paul Feldman

Communications editor

Election crisis: markets call the shots

The hung parliament that has resulted from Britain’s inconclusive general election is certain to lead to a prolonged period of political instability slap bang in the middle of the gravest economic and financial crisis since the 1930s.

Now the horse-trading begins – behind the voters’ backs – to put together a government that is unlikely to see the year out. The Tories, New Labour and the Lib Dems don’t have much time, as the markets made clear while the last votes were being counted.

Sterling fell on the foreign exchange markets, while the cost of borrowing to fund the huge budget deficit rose as dealers in British bonds began to take evasive action. Shares on the FTSE 250 – which more closely reflects the British economy - fell by over 270 points. “They have got until the markets open on Monday to sort this out,” one dealer said.

Paralysis at Westminster comes amidst turmoil coursing through global markets in the wake of Greece’s bail-out by the International Monetary Fund and other eurozone countries. Few think the £100 billion rescue package will be sufficient and the resistance by Greek workers has further unnerved the markets.

“The election is shaping up to create the worst possible outcome at the worst possible time,” warned David Morrison, strategist at GFT. “Investors’ nerves are already jangling and this added uncertainty will undermine UK equities further. The sell-off in gilts [bonds] and sterling is a clear indication of how unimpressed the City is by the lack of a clear winner.”

If the City was unimpressed, so too were the electorate. Their refusal to give any party a clear mandate could be seen to express a fear that such an outcome would make massive cuts in services and living standards more certain. While the turnout was up slightly on 2005, in many inner-city areas it was below 60%. More than one in three registered voters did not participate, despite intense pressure to do so.

Clearly the TV debates did nothing to enable voters to distinguish one party from another, apart from the style of the respective leaders. Many undecided voters failed to work out a choice in time while thousands of those who made up their minds late in the day found themselves locked out because polling stations were understaffed.

All the major parties have now pledged to act “in the national interest”, which is tantamount to saying that the markets must be mollified by a cross-party agreement to make the cuts they hinted at but shied away from spelling out in any detail during the election campaign. Ruling in the people’s interest is not an option for any of them.

One thing is clear. New Labour spent 13 years in office promoting a market capitalist economy that ultimately crashed and in doing so created the political space for the hated Tories to make a comeback from the dead. In 1997, New Labour got 43% of the vote and more than 12 million votes. Now they are down to a 29% share and 8 million votes.

A majority New Labour government is now no longer a practical possibility in British politics. Any pact with the Lib Dems would simply confirm a new political alignment that is not so much “progressive” as anti-socialist, anti-trade union and pro-business.

The election result shows that the Parliamentary system is in melt-down, one that reflects the real chaos in global economics and finance. An anti-people regime without any mandate will set about clobbering the electorate very shortly. On that basis, we have an absolute right to oppose and reject whatever government and policies emerges this weekend. More than that, we should set out creating the framework for a real democracy in the shape of a network of People’s Assemblies. The old system is broken and can’t be fixed.

Paul Feldman

Communications editor

PR is not the road to happiness

As the likelihood grows of the Lib Dems holding the balance of power in terms of seats after May 6, so does the debate about what price Nick Clegg’s party might exact for joining a New Labour or Tory-led coalition government. Centre stage is the idea of replacing the present voting system with PR or proportional representation.

The Lib Dems have always been in favour of PR, which is not surprising. Under the present system, they could, for example, gain a larger share of the total votes cast than New Labour and yet end up with fewer than half the number of seats. Even the Tories could poll far higher than Gordon Brown’s party and still have fewer seats than New Labour. Democracy in action this isn’t!

Some people who are fed up with the present political system see PR as a way forward. It would, they argue, allow smaller parties to be represented in Parliament. PR could even open up the floodgates to “revolution or fundamental reform”, according to one response to our election policy of “hang on to your vote – build People’s Assemblies”.

But would it? PR assumes that a) Parliamentary representation is the only possible form of democracy b) Parliament in the shape of the House of Commons has real power c) reforming the voting system will benefit ordinary people d) the Lib Dems are alright really e) the present capitalist state system can become the tribune of the people.

None of these presuppositions holds water, however. As we have demonstrated many times, Parliament has had no real power for over 140 years, when the executive first established a permanent stranglehold over MPs. Representation is an extremely limited form of democracy. It was first elaborated by Alexander Hamilton, one of the key thinkers behind the American Revolution. He saw it as a way of filtering popular sentiment while keeping it at arms length.

So what developed much later in Britain following the 1867 Reform Act was representation – but without power, which lay firmly in the hands of the state. The founding of the Labour Party did not fundamentally alter this relationship, even when it took office for the first time as a minority government in 1923.

This is because the government is only a part of the state system as a whole. And this state is indisputably capitalist by nature in the sense that its primary role is to uphold the status quo of private property and the wage contract system for workers, with force when necessary. Globalisation has brought the character of the state out into the open for all to see, with banks and corporations ruling through parties like New Labour and the state reorganised to facilitate global finance and the free movement of capital.

In this context, PR would not make a jot of difference. Sure, smaller parties would be represented in Parliament – the Greens, the neo-fascist BNP and the ultra-right UKIP to name but three. But the levers of power would remain in the hands of the ruling classes.
The experience of Italy, which elects its MPs through a system of PR, is a clear example that a more balanced voting system does not result in progressive change.

Advocates of PR are in danger of missing the wood for the trees, the form for the content. A fairer voting system is obviously required because the first-past-the-post method used in general elections is clearly weighted against change. But something like PR only makes sense within a truly democratic political system built around ideas like People’s Assemblies. Otherwise PR could actually be used to reinforce the status quo.

This is, we repeat, a crisis election. Britain’s debts are enormous and the crisis convulsing Greece is a warning of what’s to come here. Whatever the manoeuvres around a post-election arrangement, whatever regime emerges will be down on our necks like a ton of bricks because that’s what the money markets are demanding. Voting for any of the parties planning these cuts would be like turkeys voting for Christmas, whatever the merits or otherwise of PR.

Paul Feldman
Communications editor

TV debate masks fraud of an election

With the general election now firmly in the realms of a TV game show, the degeneration of mainstream politics is clear for all who care to take note. Another ninety minutes of well rehearsed assertions could not disguise the fact that in essence, there is nothing between the major parties.

Fundamentally, there are no disagreements between the three parties when it comes to the economy, immigration, defence, Afghanistan, climate change etc. Even on Iraq, where the Lib Dems opposed the war, the subject hardly got a look in, with the questions from the audience reduced to anodyne levels (e.g. should the Pope be allowed into Britain?!).

Forget all the knockabout stuff – that’s routine in the House of Commons every week at prime minister’s questions. It’s all for show, to try and sell the electorate the idea that politics is exciting and that New Labour, the Tories and the Lib Dems are brimming with different ideas.

Any differences between them are about emphasis, not content. They are about ways of doing things – not changing the things themselves. The electorate is being asked to change management rather than elect a new government. None of the three leaders, for example, questions the assumption that massive cuts in public spending are needed to reduce the mounting budget deficit.

As the Financial Times reported hours before the televised debate, the government borrowed £163.4bn in the past financial year, the worst level of in Britain’s peacetime history. Public sector net debt rose to 53.8% of national income in 2009-10, up from 44% the previous year. The bankers’ paper noted: “The level of borrowing – at more than 11% of national income – highlights the need for the next government to enforce stringent public spending cuts and tax increases as the economy recovers, something all the parties agree on (emphasis added).”

The only reason the cuts are deemed necessary, however, is to appease international lenders who finance the deficit with loans and global foreign exchange traders buying and selling the pound. Yet the deficit itself is the result of the recession caused by the collapse of the very same financial system which has benefited from state bail-outs on a massive scale.

The alternative to making massive cuts in spending would require a total reorganisation of the economy and financial system. It would mean defying capitalist markets and relaunching the economy on the basis of gearing production to social need. None of this is going to happen at Westminster. After May 6, some sort of coalition will be cobbled together to clobber the electorate. Make no mistake about it.

So our twin policy of hanging on to your vote while campaigning to launch a network of People’s Assemblies may appear utopian but is actually a practical alternative. If you wouldn’t buy a used car off of Brown, Cameron or Clegg, why lend them your vote? If the present parliamentary system is undemocratic and unrepresentative, one where your vote counts for little, why participate in the fraud that is the 2010 general election?

If we want a real democracy in a society not beholden to bankers and corporations, we are going to have to take the initiative ourselves. A struggle for power against the political and economic elites is a tough road to go down. A World to Win is launching as an international organisation next month, committed to providing leadership for such a strategy. You are warmly invited to take part in the May 22 conference.

Paul Feldman
Communications editor

Political pop idol comes to Britain

Such is the decline in traditional political allegiance in Britain that one appealing TV appearance can thrust an average performer to apparent super stardom as the general election comes to resemble a TV talent show rather than a political campaign.

The political version of Britain’s Got Talent or Pop Idol has propelled Liberal Democrat leader Nick Clegg from an also-ran to the one to beat, according to the pollsters. Clegg’s rise to fame certainly makes a hung parliament more likely than not.

There is no other way to explain the violent swing in the opinion polls since Clegg’s triumph over Gordon Brown and David Cameron during their TV debate last week. Faced with the prospect of either a New Labour or Tory government, voters have understandably taken fright.

Whatever Clegg is, he is not Brown or Cameron! Never mind what he stands for – he is young, appealing and pours scorn on the two parties that for almost 70 years have taken turns in running the country in a Tweedledee-Tweedledum act.

Disgust with New Labour runs deep for a variety of reasons. Watching Lords Mandelson and Adonis outside Downing Street, explaining why the volcano eruption in Iceland is bad news, is enough to put you off on its own. Both are courting the Lib Dems because essentially that is their natural home.

Mandelson came within a whisker of defecting to the Social Democratic Party in the 1980s, while Adonis was a member of the outfit that broke away from Labour and subsequently joined with the Liberals (Britain’s oldest capitalist party, going back to the mid-19th century) to form the Lib Dems.

New Labour – with the support of the Tories – enabled Britain to become an offshore haven for global financiers and left the economy to stagger and eventually collapse under unparalled debt burdens. Add in the invasions of Iraq and Afghanistan, the undermining of human rights and creating markets for public services, you can see why many people find it hard to stomach voting New Labour.

As for inequality, City bankers have experienced near-unprecedented income growth over the past decade, with the highest-paid workers taking home nearly a third of the UK’s total wage bill, new research from the London School of Economics shows. The report reveals that the top 10 per cent of workers seeing their share of wages rise from 27 per cent to 30 per cent between 1998 and 2008. Big bonuses paid to bankers and traders accounted for most of those gains, with financial services professionals taking home an extra £12bn per year by the end of the decade.

The extreme electoral volatility shown in the polls does not herald, however, a new political dawn so much as the break-up of the old arrangements under the impact of globalisation and its offspring, the world economic and financial crisis.

The fact that Clegg himself represents constituents in Sheffield – once an engineering and steel-making town – speaks volumes for the decline of New Labour in what were once its heartlands. The city council is also Lib Dem controlled, as is Newcastle, York and other northern towns and cities.

If the Lib Dems do end up joining a coalition to keep New Labour in power it would mark the full turn of the circle and the completion of the Blairite project to unite both parties. Labour was formed in 1900 to end Liberal influence over the trade unions and win reforms from capitalism. A coalition would be a step along the road to a merger that would signal the formal and historic end of that venture.

Paul Feldman
Communications editor

Hang on to your vote!

So the latest opinion polls are again pointing to a “hung” Parliament after the upcoming general election, with no single party able to form a majority government. In that event, say constitutional experts, the queen and her advisors could play a key role in deciding who is asked to form a government.

Yes, we are living in 2010 and the absolute power of monarchy was terminated in the English Revolution with the execution of Charles I for treason against his own people in 1649. But such is the nature of the compromise British constitution, the monarch still has residual powers as head of state. There is nothing written, for example, that says the largest single party in Parliament must be invited to form a government. New Labour could have fewer seats than the Tories but try to govern with the Liberal Democrats at the invitation of the queen.

The fact that an unelected figure, who inherited her power and position from her father (whose family has its origins in the German House of Saxe-Coburg and Gotha!) still has potential political influence in modern Britain just about says it all about the restricted nature of bourgeois democracy. But one suspects (as they say at Buck House) that another unelected group – the global hedge funds and the big wheels in the financial system – will have a more decisive role to play if the election results in stalemate.

That is because the British state is heading for bankruptcy as the recession deepens and the money markets want action sooner rather than later to sort things out. Every January since modern records began, tax receipts have been larger than government outgoings.Not this January, however. In January 2010, the Treasury had to borrow £4.3 billion – compared to a surplus of £5.3 billion last year and £14 billion the year before. All the signs are of a worsening position, as unemployment grows, consumer spending falls further and corporate profits decline.

The markets reacted to the January deficit by raising the interest rates it charges to lend to the British government, adding to the total debt which is probably running somewhere near £200 billion a year or close to 13% of the annual value of economic output. It’s more or less the same ratio in Greece which, as you know, is said to be bankrupt.

Back to the general election scenario. Jonathan Loynes, senior figure at Capital Economics research consultancy, was voicing something more than his own opinion in commenting on the deficit: "It is clear that a more credible plan to restore the public finances to health will be required shortly after the general election to keep the markets and rating agencies at bay."

The markets will not want a weak government cobbled together as a result of some horse-trading between the parties and blessed by the queen. You cannot, therefore, rule out the possibility that in the event of a deadlocked general election, the pressure will mount for an emergency national government of all the main parties in a grand coalition to deal with the country’s financial crisis.

And with a “return to growth” as likely as the discovery of weapons of mass destruction in Iraq, we know that will mean unparalleled, savage cuts in spending on public services, attacks on wages and pensions and more job losses. Opposition will be silenced in the “national interest”. Those who voted for one or other of the major parties will have been disenfranchised. You may ask yourself what the point is in participating in the general election under these conditions? And you would be right. Our votes are too precious to hand over to any of them in 2010.

Paul Feldman
Communications editor