What are concerned and honest workers to make of the economic and political mess that they see around them as we enter the conference season?
Britain is in a mess. Manufacturing is collapsing, not so much from lack of demand, but because of the refusal of banks to lend for investment, while the bankers themselves are back at the roulette table after taking trillions of pounds of our money.
Instead of the government forcing the banks that it controls to lend to industry, it prepares to sell off Northern Rock to Tesco while allowing Lloyds and RBS to repossess record numbers of houses. The construction industry grinds to a halt while young families cannot get housed. Record numbers of young people are up to their neck in debt due to student loans while record numbers of the same young people cannot find a job.
Disaffection with politics has never been greater while unelected “politicians” appear to have taken over our country after what passed for an incompetent coup attempt to dislodge Gordon Brown by a bunch of inadequate politicians.
The British Army has been kicked out of Iraq while generals tell us that our young men and women will be sent to die in Afghanistan for another 40 years. One employer in twelve says it plans to recruit immigrant workers instead of British workers over the next months while unemployment in Britain tops the 2.5 million mark. And all this under a Labour government!
So how did we get here and what should be done?
The City
In the earlier days of British capitalism, the City of London’s financial institutions provided crucial services to lubricate the cogs of burgeoning industry and commerce. The Limited Liability Joint Stock Company helped break the bonds of small-scale production, by pooling the riches of individuals to create the massive investment needed for the Industrial Revolution.
Banks provided essential credit, a secure deposit, a safe currency, the means of settling bills and of exchanging currencies. The insurance services provided traders with the confidence they needed at a time when shipping was a very risky business. And the commodity dealers made sure that, in the end, buyers did meet sellers. At that time, the City of London was at the core of British industry and it was through the City that the vast operations of imperialism were conducted – the export of capital, the import of raw materials, the financing of trade and the reaping of profits.
Marx analysed the strengths and weaknesses of capitalism when the City was at its peak. His basic simple point was that all wealth, all economic surplus, is created by the labour of workers. Capitalists, in their various forms (industrial, merchant and financial) all get rich by taking this surplus, created by workers, for themselves.
Finance capitalists in particular, said Marx, had a tendency to forget this basic truth. He went on to say that the Stock Exchange had created a new variety of parasites in the shape of promoters, speculators and simply nominal directors. Its system of buying and selling shares meant that the “gains and losses through the fluctuations in the price of these titles of ownership…become by their nature more and more a matter of gamble, which appears to take the place of labour as the original method of acquiring capital…”(Karl Mark, Capital, Vol 3)
In other words, labour power is the essential ingredient for creating wealth, but finance capitalists will always look for ways of making money by gambling money. Gambling does not create wealth: it is simply the same finite amount of money being sloshed around in the system. It’s rather like a casino. There are winners and losers, but the casino owner always comes out on top.
After the Second World War, there was state intervention to encourage workers to get involved in this gambling. Tax relief on occupational pension contributions and on mortgage interest was introduced to encourage workers to contribute to company-based occupational pension schemes and take out mortgages and become “property owners”. The occupational pension schemes invested their income in stocks and shares, not in industry, and property ownership was intended to make people believe that they were investing in an asset that would inevitably increase in value.
Industry
Until the 1970s, British capitalism still rested most of its foundations on British industry and the British working class, although the truth is that capitalism has never been about creating wealth or meeting the needs of people. It has achieved these things in varying degrees and at various times, but only as a by-product.
Capitalism is about profits, and profits can be made from asset stripping, the creation of artificial shortages, from war, from speculation, plunder and extortion, as well as by creating real wealth by producing economic surplus. To the capitalist they are all the same, and in the coming years all of these options would be utilised by capitalism except creating real wealth by producing economic surpluses.
But capitalism had already been in decline, and since the demise of its main imperial era and the advent of new capitalist competitors, such as Japan and Germany, together with the growth and influence of the Soviet Union, it was now in terminal or absolute decline. This was reflected by Britain’s joining the Common Market, the forerunner to the EU. The other important factor of that time was organised labour. In the 1960s and 70s, British workers through their trade unions were taking on the beast by widespread strike action.
With the advent of Thatcher to power in 1979, things began to change. Her first act was to abolish controls on the export of capital, freeing British capitalists to abandon Britain and its working class. Her government basically took the line of finance capital, that British capitalism would now make profits from anything except workers creating wealth.
So Thatcher freed up the financial sector, deregulated the Stock Market, demutualised building societies, privatised most major state enterprises creating new businesses run by the financial institutions, and initiated the sale of council housing which began the spiral of personal debt as she created a “property-owning democracy”.
The City would no longer be a centre of industry and commerce, but was to be the centre of a new type of speculative finance that would put off or slow down capitalism’s absolute decline.
At the same time, the Thatcher government declared war on the working class who were no longer needed. Anti- trade union laws were introduced and whole industries such as coal mining, steel, shipbuilding and manufacturing were either destroyed or seriously damaged in her scorched earth policy to destroy the working class and the industries they worked in.
When the Labour Party came to power in 1997, this policy was well advanced, and the Blair government immediately gave it a further boost when Chancellor Gordon Brown announced the “independence” of the Bank of England, effectively removing its regulatory role over the City and creating what we now know as “light touch regulation”.
As the Labour government continued to encourage finance capitalism’s attempts to make money out of money without relying on labour to create wealth, more ways were dreamt up to continue the attack on British workers. More privatisations, mass immigration and the EU’s free movement of labour were next on the agenda. What was left of manufacturing was encouraged to move to Eastern Europe or Asia.
But of course Marx was right. Wealth is only created from labour, and those whom he accused of having a tendency to forget this basic truth, and who were now running the capitalist show, not just in Britain but across many parts of the world, would soon prove to us that he was right. Bankers and financiers paid themselves obscenely huge sums of money for dreaming up schemes that could make even more money .
But if the total amount of money in the system was finite, and the banks and financial institutions were now making profits of billions, where was it coming from?
Of course, now we know. It didn’t exist, and when the whole thing collapsed, they had to find it from somewhere. But from where? From us of course. It came from workers, now up to their necks in record debt, whether it be credit cards, loans, mortgages or loan sharks.
The speculative investment of occupational pension funds, workers’ deferred wages, has created losses on a gigantic scale leading to the closure of most schemes to new young workers and many schemes to existing workers. But it’s the trillions of our money given to the banks that is the icing on the cake for the capitalists. They have taken it and carried on as if nothing has happened. It looks as if they are uncontrollable by governments.
So what is to be done, especially given the parlous state of our class and our trade unions? It’s no use drawing up a wish list impossible to achieve under capitalism. We have to argue for the achievable. We may have to play capitalism at its own game, demanding a return to old-fashioned capitalism that invested in industry and commerce. Maybe we should draw up a national plan for the reindustrialisation of Britain.
For example, if, as we are being told, Britain is to have a new high-speed rail network plus electrification of other lines, we should be demanding that it should be made in Britain, with British-made steel and with British-constructed rolling stock, not Japanese or Scandinavian. What a potential campaign for the rail and manufacturing unions to get stuck into!
Or for the new breed of nuclear power stations to be built, we demand the use of British technology and that they be built by British workers, not by a French company using east European labour. This would be a natural extension of the current campaign by Unite, GMB and UCATT.
How about a construction programme to build houses, to rent, not to buy, but not the rabbit hutches that today pass for “affordable housing”? What about making Britain self-sufficient in food by developing agriculture using the latest technology?
We could involve unemployed young workers in any of these projects, alongside skilled workers who can pass on their skills. These new skilled workers would then move on to new work. Such campaigns would be based on us doing this for ourselves. Pressurising whatever government we end up with, and not getting diverted by notions of reinventing the Labour Party. This would be a fight by the working class for its future.
But how could we fund it? Let’s start with the banks. Well, if the banks will not fund it, we should remember that the state has a controlling interest in RBS and Lloyds who could either be nationalised or instructed to join Northern Rock as a new state bank. The fact that Northern Rock was nationalised at all means that it can be done. The government could decide only to deal with the state bank on all matters from payment of salaries of civil servants to handling all Treasury money.
Non-state banks could be excluded. All banks and companies should be forced to pay their taxes without recourse to Off Shore tax havens.
Let them go
If the banks threaten to leave Britain, let them go, but seize their assets first. What about the reintroduction of Usury Laws to prevent banks from propelling millions of people into debt (a campaign is already under way by London citizens on this issue and should be supported)?
Of course, there are other means of securing funding for investment. How about scrapping the replacement of Trident nuclear-armed submarines, and the cancelling of contracts to build two unnecessary aircraft carriers and other warships?
This idea already carries widespread public support. The skilled workforce that would be engaged on these projects could be redirected to the new construction plans. We should also withdraw from the war and occupation in Afghanistan and withdraw from our many military bases around the world, starting with Ireland, and then everywhere else from the Falklands to Cyprus.
The principle of such a plan, and these are only ideas, would be to be realistic about the state of capitalism, and the state of our class. It means proposing ideas that are achievable through struggle that could become demands of trade unions in those industries. Not pie in the sky demands. If these demands were taken up by our trade unions, whilst we boycott next year’s General Election as irrelevant, we would be saying the we will not sub contract our struggle to any political party, but will take it on ourselves.
Now is not the time to demand the “nationalisation of the commanding heights of the economy”! Now is the time to think about how we may save the British working class from going down with capitalism in absolute decline. It would mean defying EU laws that we have had no say over, but what would they do if we did? Invade us?
Oh, and it’s important to encourage people to read Marx, because he is as important today as he was 100 years ago.