New Year: Political and economic ingredients for volatile 2015

As crisis of capitalism worsens, vital to organise and continue the struggle

All the political and economic ingredients which made 2014 such a volatile year will be carried over and deepened in 2015. In Britain, a crucial general election – with possible long-term consequences for politics – will add to the brew.

We can predict that the strategists of capitalism will have just as little clue as in 2014 on how to overcome the evident ‘deficiencies’, more like catastrophic consequences, of their crisis-ridden system. They have characterised this as a ‘great recession’ – carefully avoiding the term ‘depression’ due to its association with the 1930s.

This did not prevent some of their spokespersons, like Martin Wolf of the Financial Times, from describing the current situation as a ‘managed depression’. Now, however, they speak of the ‘great frustration’.

This at least has the merit of summing up the inability of capitalist economists to prescribe solutions to the present crisis.

Six years after 2008 and despite the colossal stimulus worldwide of over $6 trillion – equal to one third of US gross domestic product – only the US of the major economic blocs is in ‘recovery’ mode. And even that is more of an illusion than a reality because, up to now, this has been largely ‘joyless’, for the millions of jobless and the army of poverty-stricken Americans. Figures for the growth of ‘in-work poverty’ are staggering.

And this is despite the unexpected bonus from the US shale ‘revolution’. This, it is estimated, has generated two million extra US jobs and a bonus for motorists of $160 billion through falling oil prices – equivalent to a big ‘tax cut’ that does not have to go through Congress! Yet even in the US this has not produced the hoped-for economic and political stability.

The turnout in the midterm elections was the lowest since 1942! Those who supported Obama in the last presidential election – the youth and minorities – deserted him as he had deserted them, shattering their hopes and aspirations.

The same poverty and racial discrimination as in the past, indicated by Ferguson and elsewhere, scars US society. This inequality and conflict is mirrored throughout the world as the continued carnage in the Middle East, an undeclared bloody war in Ukraine and ratcheted-up tensions worldwide show.


In Britain, the Cameron government is besieged by one damning report after another reflecting the scale and depth of poverty, a direct product of the system that their millionaires’ government protects.

The time when the Church of England was described as the ‘Tory party at prayer’ has long gone. But the findings of a report on poverty by the Archbishop of Canterbury Justin Welby and the Church of England make for damning reading indeed. Volunteers, it says, have been “courageously fighting” a “social Dunkirk”.

Yet there are still a million British people using food banks and behind the bald figures is a picture of the truly terrible plight of the poor: “An unemployed woman from Birkenhead was taken to hospital with malnutrition after not eating for five days because she had no money to buy food.”

This is my home town, long associated with poverty, even in the post-1945 boom. But it never led in the 1950s, 60s or 70s to the appearance of actual malnutrition!

In 1932, riots were provoked by the same fear of hunger that stalks Britain today. One of the themes of the hugely popular ‘Hunger Games’ is how hunger and oppression prepare the ground for revolution.

It is no accident that films like this are produced at this time. A similar trend in film, music and art preceded the revolutionary storms of the 1960s and 70s: “the wind blows the tops of the trees first”.

We recently witnessed how the big stores were besieged on ‘Black Friday’ for cheap goods. This is just one step removed, given the social situation in Britain to similar ‘raids’ in some countries for food!

Moreover, Guardian journalist Suzanne Moore, in commenting on the scandalous state of the housing stock in Britain, indicated that negligent slum landlords were turning a blind eye to ceilings falling and causing injury to renters. I had first-hand experience of this in Birkenhead in the 1960s when a ceiling collapsed on me in a bedroom of our family home, leaving me with a lifelong scar.

This ‘modern’ poverty is much more widespread as this recent report shows: “A heavily pregnant woman and her partner found living, without food, in a child’s tent in a wealthy Berkshire town in the middle of winter; and a man from Wirral crushed to death after a refuse lorry picked up the bin in which he was scavenging for food.”

Welby said that he was more shocked by poverty in Britain than he was on a recent trip to Africa because “it was so unexpected”.

He must have led a sheltered life, particularly when today you can literally trip over the destitute when walking in all the big cities of Britain.

The rising poverty in Britain is directly related to the cold cruelty of Osborne and Cameron, not to say Duncan Smith for imposing a system which punishes the poor and cuts their benefits with the futile intention of driving them to seek out non-existent jobs. The Guardian reported that since October 2012, almost 850,000 individuals have received benefit sanctions.

Yet these Tory and Liberal Democrat creatures pretend to be shocked when they come in for criticism.

‘Iron Chancellor’

Osborne particularly furiously protested when BBC commentators – acting on this occasion more as a semi-opposition to the government than Labour and Miliband – claimed that his proposed cuts would take Britain back to the 1930s and “the bleak living conditions” depicted in George Orwell’s ‘Road to Wigan Pier’. The BBC was just telling the truth… for once.

This episode illustrates that Osborne miscalculated. His attempt to present himself once more as the ‘Iron Chancellor’, ready to inflict further punishment on the British people, completely blew up in his face. After five years of austerity – in reality planned poverty – the British people are in no mood to accept more of the same, “colossal cuts” in the words of his own friends, the Institute for Fiscal Studies. They pointed out that only £35 billion of the £90 billion cuts required from Whitehall departments have already been implemented.

Like the Geddes report of the 1920s – which led to the 1926 general strike – this programme is for endless austerity, as the Socialist has predicted from the outset. It means a slashing of the state “to the levels of the 1930s as a proportion of GDP. That is an extraordinary concept – reading like a book of doom”, as BBC reporter Norman Smith correctly commented. He was roundly condemned for his “hyperbole” by Osborne.

Quite clearly, the government through Osborne has given notice of further attacks on top of what have already been made. He unsuccessfully tried to soften the effect by making concessions on Stamp Duty for house purchases.

But the government was exposed as having no policy for the mass of the population other than axing jobs and services in the public sector and living standards generally.

The assumption of Osborne’s plans was that any future spending leading to growth will not come from increased wages and income of the working class.

The government’s Office for Budget Responsibility openly refers to “subdued earnings”, government/bosses-speak for big wage and income cuts which have already taken place.

This, in turn, has automatically led to a drop in government tax revenue, necessitating further cuts in government expenditure in order to maintain even present government spending.

The Observer commented: “By the end of the next Parliament. The country will have experienced 18 years of lost wage growth, while the top 5% will have become even richer.”

Rising inequality

An explosion of inequality is taking place in Britain and worldwide. The gap between rich and poor is now so great that the Chair of the US Federal Reserve, Janet Yellen, says that it is actually against the US Constitution and the aims of the ‘founding fathers’.

Oxfam revealed that if the world’s richest man, Carlos Slim, of Mexico, spent his fortune – accumulated through privatisations in the main and, therefore, from theft of public property – at $1 million a day, it would take 200 years to run out!

Therefore, in Britain any increased expenditure capable of generating ‘demand’ growth, the government clearly expects, will be built from an explosion of household debt.

This is predicted to reach a “staggering 184% of household incomes by 2020. In 2010, at 170% it was high. Many of us don’t earn enough, so we continue to borrow – a tightrope for the clumsy footed, unbalanced as soon as interest rates rise.”[Observer, 7 December 2014]

Presented with an open goal, it should be possible to envisage that even New Labour and Miliband would not miss an opportunity to attack the government’s perspective for dead-end austerity, even advancing, for instance, a reformist alternative for a crash public works building programme.

Yet their reaction to Osborne’s statement has shown that they are not even skilful reformists. In fact, they are reformists without reforms, indeed counter-reforms are the real axis of their policies

Our programme for beginning to solve the crisis in the interests of the majority, working people, is outlined regularly in this paper. We stand for a socialist alternative, including serious reforms and increased living standards through socialist policies. We immediately call for the renationalisation of privatised failing industries, particularly the utilities.

In the case of the East Coast railway that collapsed on the basis of private ownership, it was then restored to a healthy financial position through state ownership. Once put back on its feet and ‘fattened up’, it was then handed back by the coalition to the private sector.

This is just one aspect of the ‘corporate welfare’ policies of this millionaires’ government that we don’t hear much about. In fact, according to Aditya Chakrabortty of the Guardian: “British businesses take £85 billion a year from the public in grants, subsidies, insurance schemes, preferential creditors and government services.”

The basis of our policies is for the taking over of the commanding heights of the economy including the democratic nationalisation of the monopolies and state control of the banks and finance houses. This, in turn, will allow all the financial incomings and outgoings which take place to be in the hands of working people and their organisations.

These and many other measures which we have outlined many times would allow the labour movement and the working class to take hold of the real levers of economic power.

Through a democratic plan of production we would guarantee a big increase in resources which would benefit the working class and the middle class, the overwhelming majority of the population.


But nothing of this character has been offered in the aftermath of Osborne’s statements. “Me too,” is the unchanging mantra of Balls and Miliband: “A New Labour government will cut unprotected departmental spending every year until the deficit is cleared, the party has said, toughening its stance on borrowing.” [Financial Times].

Ed Miliband also stated: “There is no path to growth and prosperity for working people which does not tackle the deficit.”

To Shadow Cabinet ministers he declared: “You should be planning on the basis that your departmental budget will be cut not only in 2015-16, but each year until we have achieved our promises to balance the books.”

Also targeted for cuts are ‘difficult’ decisions about scrapping the winter fuel allowance for rich pensioners – which could then become a benchmark for ending the allowance completely for the poor as well, some of whom could actually die because they have inadequate protection from a harsh winter.

Only the NHS, in the main, will be exempted from direct cuts by a Labour government. However, even this ‘promise’ is no guarantee. The last Labour government opened the door to its penetration by the private sector which, under the present Tory/Lib Dem coalition, now accounts for one third of NHS services.

Such is the political volatility in Britain today that it is virtually impossible to say who will come out of May’s general election as the victor or even if there will be one party with a clear lead. In December polls first put Labour and Tory neck and neck at around 30%. Then they gave Labour a 7% lead, with a safe majority of 80 or more seats. The number of Liberal Democrat MPs could shrink from its present 57 to fewer than 20!

It is impossible to say what the actual outcome will be, but there is still a real possibility of a hung Parliament, with no party having an overall majority. This, in turn, could mean a coalition but no certainty as to which parties would constitute the government that would result from this deadlock. This would be a crushing condemnation of Miliband, New Labour and those who prop up this rotting corpse.

New Labour is faced with the biggest crisis in its history. It seems destined to cling to the tattered ideological rags of discredited ‘social democracy’, sinking in the future into relative obscurity, like the ‘socialist’ parties Pasok in Greece and PSOE in Spain. Even German labour minister, social democrat Andrea Nahles, is introducing anti-union laws against small unions on behalf of the government coalition with Angela Merkel’s Christian Democrats. This is a further international example of the rottenness of social democracy.

There is no basis for lasting reforms, and therefore of social democracy, in crisis-ravaged ‘modern’ capitalism. Even some of its longest standing supporters, like the well-known novelist Margaret Drabble, have joined the almost five million workers who have abandoned the discredited New Labour ship.

The pathetic bleating of Polly Toynbee in the Guardian for her to stay – “ignore the flaws” – says it all about the character of those who still inhabit New Labour.

It is not just “flawed” but beyond redemption, a hollowed-out shell, with socialist workers and youth abandoning it not just in Scotland but throughout England and Wales as well.

Even the newly-elected Scottish Labour leader, the unreconstructed Blairite Jim Murphy, has said that New Labour in the referendum did not receive just one punch but were bashed over the head by a powerful electoral hammer! In his first act, he also desperately sought to distance himself from Miliband.

They are about to receive even further blows in Scotland in the general election, with the SNP likely to capture a swathe of formerly safe Labour seats.


Depending on how well Labour does in England and Wales, this could even deny Labour a working majority at Westminster, thereby curbing its ability to carry through its legislative programme, if it emerges in May as the victor.

The SNP will probably also capture a swathe of seats, including the likely election of Alex Salmond to Westminster, leading to the development of an ‘independent’ bloc. He will demand a high price from New Labour for more concessions for Scotland, possibly even a new referendum, and may even enter a Labour-led coalition, in an attempt to secure the long-term aim of independence.

Britain does not now face a two-party system, as in the immediate post-war period when 95% of voters were behind Labour or the Tories. From the mid-1970s a three-party system developed with the Liberals offering a home for ‘protest votes’ from the other two main parties.

But now, with the rise of UKIP and the Greens – themselves on 7% in opinion polls – Britain effectively has a five-party system, without including Scotland and Wales.

This is just one indication that the present institutions are dysfunctional and no longer represent the will of the people in elections. A democratic form of proportional representation is now required.

In the 1970s and early 1980s, the capitalists in Britain were enthusiastic for PR. They saw that the Labour Party had swung towards the left, with the rise of the Tony Benn left and the Militant Tendency – now the Socialist Party.

With the example of Chile in mind, they were fearful that a radical Labour party in Britain could come to power with a minority of votes but a majority of seats, because of the first-past-the-post electoral system.

They wished to prevent this at any cost and therefore seriously considered introducing proportional representation for Westminster, and actually implemented it in Scotland and Wales for their parliaments.

But with the expulsion of Militant and the complete neutering of the Left within the Labour Party, combined with the rise of neoliberalism typified by Tony Blair, changing the electoral system was put into cold storage. When considering electoral reform, the strategists of capital always approach this from their own class standpoint.

For the same reasons – what system is best for the left and working-class interests at each stage – we now favour a form of democratic proportional representation as the best means of expressing the will of the most radical sections of the working class.

If we had in Britain a similar electoral system as Ireland or the Scottish parliament, we would probably have as many MPs as the Socialist Party in Ireland does, with an enhanced politically powerful effect

Interesting times

The stored up opposition, even hatred, towards the Con-Dem government would in ‘normal’ times probably lead to a Labour victory. But this is not a ‘normal’ time. These ingredients were present in the Scottish referendum and in the strikes and upheavals which are taken place throughout Europe.

The masses are seeking to throw off the chains of the old order. This was shown in the mass demonstrations and civil disobedience taking place in Ireland on water charges, to the general strikes in Belgium, as well as the current political upheavals in Greece, which potentially could lead to a new general election and the coming to power of Syriza.

There are also the convulsions in Spain, with the formation in 2014 of Podemos, a new left party, already gathering 1.6 million votes in the European elections.

Even though Syriza has recently moved politically towards the right, the Greek ruling class is extremely uneasy about the possibility of it coming to power.

The masses as a whole do not study the fine print of programmes. Syriza coming into government, even if in a coalition, could open the floodgates of the stored-up bitterness and class anger, leading to the massively oppressed Greek working class pressing forward their demands.

Even occupations in the factories, schools and workplaces could take place as a means of taking back what was lost in the previous period. A similar scenario could open up in Spain if Podemos was pushed into power. Italy saw a massively supported General strike in December against the Renzi government.

So explosive is the underlying situation that even the British ruling class is not at all certain about Miliband coming to power. He has made occasional populist radical flourishes on electricity prices, on a living wage, on housing, etc.

Therefore, they worry that mass pressure could develop in Britain in the event of a Miliband government, which could go further than he intends. This is why the coffers of the Tory party are overflowing with £78 million of donations from big business!

Therefore, the social and political theme of 2015 for Britain and the world will be an increased and worsening crisis of capitalism. It is vital to organise and continue the struggle on the industrial plane.

But it is just as necessary in this pre-election period to ensure that a viable electoral alternative is also in place with the Trade Union and Socialist Coalition (TUSC) gathering together the forces that can offer this.

No matter what the outcome of Britain’s general election, the formation of a new mass workers’ party is posed. We must seize all the opportunities for the Socialist Party and the labour movement in this coming year.

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