Capitalist establishment in disarray
Hannah Sell, Socialist Party (CWI in England & Wales) from Socialism Today Dec/Jan 2017 edition
The referendum vote to leave the EU has thrown Britain’s capitalist establishment into disarray. The new Tory government, with no electoral mandate of its own, is split from top to bottom. Right-wing Labour continues to plot Jeremy Corbyn’s downfall. Rumours of political realignments are rife. HANNAH SELL examines this volatile scene.
On a global scale the shockwaves created by Brexit have been dwarfed by Donald Trump’s victory in the US. For the capitalist classes of Europe, and particularly Britain, however, Brexit remains a nightmare from which they cannot escape. The vote on 23 June was, at base, an elemental working-class revolt against the long years of wage restraint, job losses, public-sector cuts and growing inequality. It was a serious shock to capitalist politics, jolting it out of its normal channels. The repercussions have only just started to play out.
Over the summer, in the immediate aftermath of the referendum, it was the divisions in the Labour Party which took centre stage. Meanwhile, left-wing commentators bemoaned the Tories’ apparent escape from the Brexit debacle by anointing Theresa May as the new prime minister. That was an extremely superficial view of reality.
As we predicted, the deep fissures in the Tory party are once again being exposed. The Deloitte Report, much denied by Tory ministers, only revealed the increasingly obvious fact that the cabinet is split on Brexit and could take another six months to even agree its negotiating strategy, because "despite extended debate among permanent secretaries no common strategy has emerged". Six months could be optimistic! The Tories could split before they find a common strategy.
Every time one of the three ‘Brexit ministers’ – Boris Johnson, David Davis and Liam Fox – open their mouths, Theresa May is forced to slap them down. Most recently she disassociated herself from Johnson telling a Czech newspaper that Britain would "probably leave the customs union". Prior to that she had, among other things, to denounce Davis for telling MPs that Britain was "unlikely to stay in the single market", and Fox for saying that a trade deal would have to be secured before Britain left the EU. Meanwhile, she has continued an increasingly farcical policy of saying nothing about the government’s plans for Brexit.
The Tory party is in the process of being torn apart by the huge conflicting pressures on it. While much of the right-wing press campaigned for Brexit, a majority of Britain’s capitalist class and its institutions have no wish to leave the EU. They moved might and main to try and win the referendum for remain. It suits the interests of British capitalism to stay in the EU because it is, in essence, an agreement between the different capitalist classes of Europe in order to create the largest possible market within which they can profit. Through the passing of a series of neoliberal, anti-working-class treaties, the EU has assisted the capitalist elites’ struggle to maximise their profits at the expense of the working class.
Having failed to win the referendum the British ruling class is keen to minimise the consequences. They aim at least to make sure it leads to a ‘soft Brexit’ and hope to reverse the decision altogether, perhaps via a second referendum at a later stage. At the moment, however, their ability to move in that direction is extremely curtailed by the danger of turning last June’s electoral uprising into a movement on the streets if they are seen to ignore the Brexit vote.
Ireland voted against the EU’s Lisbon treaty in 2008, only to be sent back to the polls less than two years later to vote ‘the right way’. However, Britain in 2016 – nine years after the ‘great recession’ – is a more risky proposition. There is an enormous accumulation of anger at endless austerity that has the potential to explode. The wave of outrage that met the High Court’s decision that parliament had to debate Article 50 gave a glimpse of the furies that could descend on a government perceived as having reneged on the exit vote. (Triggering Article 50 begins the process for a member state to leave the EU.)
While fear of the possible economic consequences of leaving the EU may alter the opinion of some who voted leave, so far the polls have shifted very little on the issue. On the other side, some workers will hope that May’s claims to stand up for the working class might have some basis in fact. They will quickly find out otherwise. As the Sunday Times put it, the Tories’ real policy will be that "the ‘just managing’ will just have to manage".
Fearing the mass opposition that it could face, the government has made a number of retreats from former chancellor George Osborne’s policies, abandoning austerity in words, and scrapping some particularly unworkable measures such as ‘pay to stay’. Shame on those Labour councils, like Greenwich, that had already begun to implement this policy designed to wreck what remains of social housing! In a desperate attempt to kick-start Britain’s ailing economy the government has clearly been considering some major investment in infrastructure. However, the increase in the deficit, which is likely to be £10 billion to £15 billion higher for the current financial year than the £55 billion Osborne predicted, means that chancellor Philip Hammond’s proposals are extremely limited.
The government is ploughing on with the benefit cap and other measures which are driving working-class families into the dirt, and no plans to seriously tackle this were made in Hammond's autumn statement. It is planning £22 billion-worth of savage cuts to the NHS, using the mechanism of the so-called ‘sustainability and transformation plans’ (STPs). The result, if it is allowed to get away with it, will be the wholesale closure of local hospitals. However, the potential exists for a mass uprising against these cuts, which could take off from the national demonstration in defence of the NHS called for 4 March 2017.
A new stage of capitalist economic crisis, combined with the brutal anti-working-class character of May’s government being clearly revealed, will lead to a further deepening of the already profound anger of the working class and growing sections of the middle class. This will make it very difficult for British capitalism to find a way back from Brexit. In addition, the Tory party cannot be relied on to act in the interests of the capitalist class. On the contrary, it was David Cameron’s inept attempts to handle the dysfunctionality of the Tory party that led to the referendum being called in the first place.
The majority of the Tory ranks are died-in-the-wool Brexiters, ‘little Englanders’ with pipedreams of somehow returning to the long-gone days of British capitalism’s domination of the globe. It is estimated that two thirds of Tory party members voted leave. May was herself a remain supporter who stayed very quiet during the referendum campaign in order to increase her chances of taking the crown once Cameron was forced out. In a private pre-referendum speech to Goldman-Sachs, she put her real position: that "being part of a 500-million trading bloc" had significant economic benefits for British capitalism. To say this now, however, is politically impossible for her and for the whole swathe of leading Tory figures – particularly people like Johnson – who cynically argued for Brexit in the hope of furthering their own careers.
Once upon a time, Britain’s elite could have turned to a reliable second party of capitalism – New Labour – but the anti-austerity revolt that has twice thrust Jeremy Corbyn into the Labour Party leadership has put paid to that. Instead, the capitalist class is fumbling around trying to find the means to get a handle on the situation. In parliament, MPs from all parties are attempting to work together to ‘step back’ Brexit – including the pro-EU wing of the Tory party, the Liberal Democrats, and right-wing Labour. Hilary Benn, Labour chair of the Brexit parliamentary committee, is in a pivotal position.
Lurking in the background is Tony Blair. May’s aides have described him as being part of an "unholy alliance" of former ministers who are determined to block Brexit. The alliance also includes Osborne. According to the Sunday Times, "Tony and George have been meeting and have had lots of conversations about the post-Brexit climate".
Given the paucity of reliable forces for capitalism in parliament, the judiciary has also been called on to try and prevent a hard Brexit. For this it has been attacked by the right-wing press, hypocritically posing as defenders of democracy and ‘the people’. The ‘liberal’ press, meanwhile, shamefully backed up by some on the left, have rushed to defend the supposed ‘independence’ of the judiciary. Guardian journalist Paul Mason wrote an article calling for ‘bond traders and Trots’ to unite in defence of the "the judiciary guaranteeing the rule of law". But the judiciary is not a neutral defender of the rule of law. It is drawn overwhelmingly from the elite of society: 74% of High Court judges were privately educated. And the judiciary acts ultimately to uphold the interests of the capitalist class, as the many groups of workers who have had their strikes declared illegal on spurious grounds know all too well.
If the Court of Appeal upholds the High Court decision to insist parliament discusses Article 50 before it is triggered, it will not be a sign of its independence but of its determination to aid the capitalist class’s campaign to remain in the EU. It is not clear by what means May will try to muddle through in this situation. She is reported to be considering putting a very short, paragraph-long, bill to parliament triggering Article 50. She hopes that the difficulties of amending a short bill, and the political dangers for MPs who are seen to scupper Brexit, will allow her to force it through.
It is not at all certain that this ruse would work. The possibility of prolonged debates in parliament forcing her to reveal her negotiating strategy, or lack of one, could force her to try and call a general election. Given the Fixed-Term Parliament Act this would require the cooperation of Labour. For many right-wing Labour MPs, a general election in which they think May would increase her majority would be a price worth paying for what they hope would be a chance to finally ditch Corbyn.
Nonetheless, there are still strong reasons for May to avoid a general election. Particularly if Jeremy Corbyn was to fight it on a clear anti-austerity platform – and for a Brexit in the interests of the working class – the Tories could be defeated, whatever the opinion polls say now. In addition, it would be a very difficult campaign to fight given May’s desperation to say nothing on Brexit. In all likelihood, in order to try and make sure she came out of it with a strengthened mandate, she would have to campaign for a hard exit from the EU. That could, in turn, split the Tory party, and would be difficult for the capitalist class to step back from at a later stage.
Despite this, the intractability of the government’s situation and May’s desperation to increase her tiny majority and gain a mandate, could force her down that road. The prospect is posed of the most serious split in the Tory party since at least the 19th-century schism over the Corn Laws. Like today, that was a conflict between the globalising and protectionist wings of the capitalist class, and kept the Tories out of power for almost three decades.
The problems that British capitalism faces with Brexit are also enormously exacerbated by the situation in the rest of the EU, where capitalist politicians are facing the same pressures as in Britain. Capitalism remains based on nation states. Even in the period of globalisation that preceded the 2008 economic crisis – in spite of all the pressures on the capitalist classes of Europe to club together in order to compete more effectively with the US, and more recently China – they were not able to overcome the barriers of the nation state.
While the productive forces had massively outgrown national and, to some degree, even continental boundaries, capitalism remained based on nations which are not only economic units but also political and social entities. Even in a time of boom, the European capitalists could be described as being forcibly chained together – at the same time trading blows when their national interests clashed. Now world capitalism has entered crisis the blows being traded have become much more intense, as the neo-colonial treatment of Greece graphically demonstrates.
The factors pushing the European capitalists together remain, which means they will continue to fight to save the EU. At a certain point, however, the centrifugal forces will become so great that, despite their efforts, the eurozone especially and even the EU are likely to fracture. The Brexit vote is the biggest symptom so far, but there will be others. In June polling by the Pew Research Centre found that opposition to the EU was on the increase continent-wide, unsurprisingly highest in Greece at 71%, but also 60% in France and almost 50% in Germany, the Netherlands and Spain. It is inevitable that opposition to the EU has been on the rise, when for decades it has been driving forward neoliberal policies.
New ‘shock factors’, including the possible election of far-right and right-wing populist parties to national governments, a defeat for prime minister Matteo Renzi in Italy’s upcoming constitutional referendum and, above all, a new stage of the economic crisis and its political consequences, can very rapidly lead to a further fracturing of the EU. By the time the Brexit negotiations are complete, the EU may well not exist in its current form. It is in a desperate attempt to minimise the damage to the EU that its leaders are taking a tough stance on negotiations with Britain.
German finance minister, Wolfgang Schäuble, is one of those talking tough: "There is no à la carte menu. There is only the whole menu or none". This means there can be no ‘special deals’, that free access to EU markets – including ‘passporting’ for financial services companies, key for the City of London – is only available on the basis of continuing to accept the ‘four freedoms’ within the EU, including free movement of labour. Of course, it is not clear whether, in the course of negotiations, some small concessions could be made on this issue, but there is a strong mood among the capitalists of the major EU states that Britain must be punished for Brexit, in order to prevent others going down the same road.
It is urgent that the workers’ movement puts its stamp on the situation. The Tories, the traditional party of capitalism in Britain, are in an existential crisis, reflecting the crisis of British capitalism. There is a golden opportunity for the Labour leadership to assert the voice of the working-class majority in society. If this opportunity is not taken, in reaction against the poverty and misery they have experienced under neoliberal, globalised capitalism, a section of workers can be attracted to right-wing, racist and nationalist politicians falsely posing as the friends of the ‘little men and women’, as the billionaire Trump did. But there is nothing automatic in this. If mass parties are built which put a clear, class position it is possible to win many of those who could otherwise be swayed by the right.
One thing is certain: a strategy of uniting with the pro-globalisation, liberal wing of the capitalist class in order to oppose right-wing nationalism – "the bondholders and the Trots protesting together", as Paul Mason put it – is doomed to failure. That would mean criminally leaving the right-wing nationalists as the only force claiming to stand up for the ‘little men and women’. It is the experience of globalised capitalism and the resulting economic crisis that has enraged millions of workers around the world. Only by putting a clear socialist alternative to capitalism – based on a united, anti-racist, working-class approach – will it be possible to cut across the right.
Bernie Sanders could have done that in the US. Potentially, Jeremy Corbyn could do it in Britain, by fighting to transform Labour into a party of the working class and impoverished middle class. The crisis of capitalism and its parties creates a significant opportunity for the left. If, however, Corbyn was to retreat under the pressure of the Blairites – the supporters of globalised capitalism in his own party – it could leave a space into which other forces will step. Socialists would fight to harness the anti-austerity mood that thrust Jeremy Corbyn into the leadership of the Labour Party into the creation of a mass workers’ party. But there would be a real danger that the UK Independence Party and its ilk would take advantage of the void to make further gains.
The battle to consolidate Jeremy Corbyn’s decisive leadership re-election victory is therefore increasingly urgent. The pro-capitalist elements of the Labour Party have repeatedly demonstrated how determined they are to isolate and defeat Corbyn. Endless attempts to compromise with them would mean squandering the opportunity of creating a democratic, socialist Labour Party. Instead, it is necessary to mobilise the hundreds of thousands who have flooded into Labour into a campaign to transform the party and to remove the Blairites from their positions. This should include campaigning to readmit all those socialists who have been expelled or excluded from membership by the Blairite party machine, and opening up the Labour Party to all anti-austerity forces, allowing them to affiliate on a democratic, federal basis.
It is also crucial that a campaign is launched for Labour councils to oppose cuts at local level – instead of acting as loyal axemen and women. Already, local authority services have been cut by 40% since 2010, with further savagery in the budgets for next year. Walsall Labour council, for example, is planning to close all but one of its 17 libraries. In Liverpool, residents are being offered a Hobson’s choice between an eye-watering 10% council tax increase and ‘manageable cuts’, or the halving of all council services! It is wishful thinking to imagine it will be possible to convince working-class people that Labour is now an anti-austerity party if its leaders do nothing to oppose these cuts taking place.
However, if Jeremy Corbyn and shadow chancellor John McDonnell were to make a clear call for Labour councils to use their reserves and borrowing powers to not implement a single cut to jobs or services, while demanding the return of the money taken by central government, it would transform the situation. It would create the possibility of building a mass movement against the cuts that could lead to the fall of the government. If Corbyn and McDonnell fail to oppose local council cuts, it will not prevent struggles against them developing – as the heroic strikes by teaching assistants in Durham testify – but it will severely undermine the hopes of workers that Labour could be transformed.
Of course, such a call would send the pro-capitalist elements in the Labour Party into a frenzy, and could well be the trigger for them splitting away. Good! Any clear step towards transforming Labour into an anti-austerity party would have the same effect on them, but taking steps in the other direction – trying to keep them on board – is the path to defeat.
This is clearly posed on the question of the EU, which is a central issue for the capitalist class and therefore the Labour right-wing. John McDonnell made a very moderate criticism of the EU on 14 November, saying that Labour would not block an Article 50 notification and that, "we cannot hide from the fact that too much of the EU also had aspects of the old model, putting the interests of big business over ordinary people". Therefore, he said: "Labour accepts the referendum result as the voice of the majority and we must embrace the enormous opportunities to reshape our country that Brexit has opened for us". Immediately, however, this statement was met with fury by the Labour right-wing, with Keir Starmer, the pro-EU shadow Brexit secretary, telling the press he was "absolutely furious".
On the question of the EU, Jeremy Corbyn has put a better position than the slavish support for the ‘single market’ coming from the Blairites. Nonetheless, his position of calling for ‘access to the single market’ is mistaken if that means acceptance of its neoliberal rules. Socialists have to oppose the EU’s single market, which was inaugurated, after all, by a treaty signed by Margaret Thatcher. Socialists are internationalists, standing for a socialist confederation of Europe. It would not be possible to solve the problems workers face within one country. Even public ownership under democratic working-class control and management of large sections of one country’s economy would only be a first step towards breaking the power of hostile world capitalism.
Even so, it is most likely that the first steps to building a socialist society will take place in one country rather than simultaneously internationally. Once one country had begun, socialism would spread like wildfire. In the meantime, the first countries to break with capitalism would have to defend themselves against the sabotage of global capitalism. This is entirely incompatible with membership of the EU single market, a capitalist tool to maximise profits and drive down working-class living standards across Europe.
Corbyn has rightly emphasised the importance of protecting workers’ rights, and opposing EU measures like the posted-workers’ directive, but he needs to go further. Having initially blundered by backing remain, under pressure from the Labour right, he has started from a disadvantage. Nonetheless, he could overcome that by campaigning for a socialist Brexit. He could propose a different kind of repeal bill to that proposed by May – one that annulled all EU regulations which go against working-class interests. Such a bill could call for repealing anti-trade union legislation, including the Tories’ latest Trade Union Act, and enforcing collective agreements. It would mean bringing about real working-class control via democratic public ownership. A campaign for Brexit on this basis could transform the political situation in Britain, cutting across racism, and could bring Jeremy Corbyn to office as the leader of a Labour government with genuine mass support.
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