Capitalist crisis and rising tide of class struggle in Britain

On 17 and 18 September, the Socialist Party (CWI England & Wales) national committee met to discuss the political situation and our priorities for the autumn. Here we outline the main themes from the first discussion on perspectives for Britain.

The national committee was meeting at the end of a summer dominated by a rising tide of class struggle, a developing economic crisis, and an extremely weak Tory government. These are the most important features of the current situation, but they were momentarily obscured by the Queen’s death and funeral.

The capitalist elite consciously attempted to use the period of mourning for the Queen to create a mood of ‘national unity’ and to bolster support for King Charles, in the hope he can play the same role as his mother in defending the interests of British capitalism. However, their efforts have only had an extremely limited and ephemeral effect, which is already fading.

It is true that, over the recent decades of austerity and pay-restraint, the monarchy has maintained higher levels of support than many other capitalist institutions. For example, whereas only 20% of people have trust in capitalist politicians, 30% in parliament, and 37% in the Metropolitan  Police, around 55% of people continue to think that it is ‘quite’ or ‘very’ important for Britain to have a monarchy. Nonetheless, the 300,000 who came to London for the lying in state was less than half the numbers predicted, and has been dwarfed by numerous demonstrations in recent decades – like the 750,000 trade unionists who marched against austerity in 2011.

While, at this stage, the majority still view monarchy as an “innocent and decorative institution”, as Leon Trotsky described the outlook of the working-class in the 1920s, the depth of support for the monarchy has been hollowed out. It is lower today, for example, than the 85% who thought it was important to have a monarchy in 1983, and for the first time in 2021 the numbers who wanted the monarchy to be abolished reached 25%, 31% among the young.

A big element in the continued levels of support for the monarchy has been the relative popularity of the Queen who, during her long reign, largely managed to maintain the illusion that she was ‘above’ politics, and was associated with growth in working and middle-class living standards in the first decades of her reign.

The capitalist class are worried that, in an era of increasing turmoil, Charles will be a far less effective bulwark of support for their system. In 2021 only 32% of people thought he would make a ‘good king’. Inevitably that has been temporarily boosted in the last week, but events are likely to undermine his popularity once more.

While the mainstream media in Britain has had wall-to-wall positive coverage of the Royal Family, the serious press internationally have been focused on the scale of the crisis in Britain. The New York Times bleakly reported that Britons “are unsure of their nation’s identity, its economic and social wellbeing, or even its role in the world. It almost seems as if London Bridge is down. In just the two months since Mr Johnson announced he would step down, inflation has soared, a recession looms and household energy bills have almost doubled… It all feeds into a sense of uncertainty and insecurity, which was already there because of Brexit and then Covid, and now a new, very inexperienced prime minister. The Queen was the rock, and now the rock is removed.”

Cost-of-living fightback

While the current pomp might marginally and momentarily distract the mass of the population from the cost-of-living crisis, the end of the Queen’s reign will turn out to be one more element that undermines the institutions of British capitalism. And it is already clear that the fight against the cost of living squeeze will not be delayed for long. On 1 October we will see the biggest step towards coordinated strike action so far, with CWU workers at Royal Mail, RMT and Aslef on national rail, plus Felixstowe and Liverpool Dockers, all on strike.

The TUC Congress, with motions from six national unions calling for coordinated action, has been rescheduled for 18-20 October and the National Shop Stewards Network will be rallying on its eve – Sunday 16 October – to demand that coordinated action is made into a reality. The TUC lobby of parliament has also been rescheduled for 2 November. Turning it into a mass midweek march on parliament, to show Truss and her cronies that the working class is fighting back, would be an important step towards the coordinated action that is needed.

However, while it is clear that working-class struggles are on the rise, they are still a long way from fully expressing the depth of anger at the biggest fall in living standards that has taken place at any point in the Queen’s reign. One factor is the effect of the 2016 anti-trade union legislation, which has created huge bureaucratic obstacles to taking legal national strike action. With no counter-arguments prepared in advance by the trade union leadership, generally there is not the confidence to ignore the cumbersome process of campaigning to win and get the necessary turnouts in national ballots.

However, the CWU and RMT have already shown that it is possible to smash through the legal turnout obstacles. The 97.1% yes vote for strike action in Royal Mail means that the 100,000 or so postal workers who voted to strike is greater than the 81,000 ageing Tory party members who elected the new prime minister!

In a number of unions, including civil service union PCS and the National Education Union (NEU), Socialist Party members have been campaigning for many months for a national lead to build for strike action, which would have enabled earlier ballots. However, only now, under pressure from below, are their leaderships moving to ballot, meaning that legal coordinated strike action involving the big majority of unions balloting will not be viable before the late autumn at the earliest.

Nonetheless, the pressure from below for both national and coordinated action is growing. One indication was the recent consultative ballot in the 55,000-strong Scottish teachers’ union, the EIS. In a very short, two-week ballot, 91% voted for strike action, on a 78% turnout. While, at this stage, the level of generalised strike action still falls well short of the public sector strikes of 2011, the level of anger and determination of the current action, including the number of indefinite strikes, show that the potential is there for far broader and more deep-rooted action than a decade ago.

It is the current dramatic fall in living standards that is the immediate cause of the strike wave; but it comes on top of decades of pay restraint, making Britain one of the most unequal countries in the world. Whereas the richest 10% are the fifth richest in the world, average earners are only 12th richest, and the bottom 10% are languishing at 15th, with lower living standards than Slovenia, and only marginally higher than Poland. As pay has fallen in real terms in the last few months, 42% of low-paid workers report missing meals because they cannot afford to eat enough.


Given the state of Britain’s economy, this brutal squeeze on living standards is set to continue and, whatever the short-term developments, will result in increased class struggle in the next period. Worldwide capitalism is heading into recession, with the World Bank predicting the steepest, and most synchronised, slowdown since 1970. All the major blocs – the EU, China and the US – are slowing sharply as central banks raise interest rates to try and drive inflation down.

The World Bank does not predict, however, inflation being successfully squeezed out, expecting it to remain around 5% globally throughout 2023. Stagflation, and a new era of debt crises – particularly for the neocolonial world – are therefore what lie ahead for capitalism worldwide.

Within that, the specific crisis of British capitalism, and of its historic political party – the Tories – is particularly acute. It’s true that the predictions for Britain’s peak inflation has come down slightly, from 14.8% to 10.8%, in part because of the scale of Truss’s state intervention into the energy market, but it remains the highest in the G10 advanced capitalist countries. What is more, it can rise further, even if world energy prices come down a bit, as a result of the slide in sterling.

Sterling fell to its lowest level since 1985 as the markets absorbed the grim economic news coming out of Britain. In August alone, the amount of goods bought in the UK fell by 1.6%, while the companies in administration rose by 43%. The decline in sterling is likely to dramatically aggravate the problem which triggered that fall. With the lowest proportion of the economy based on manufacturing of any G7 country, at just 10%, the big majority of ‘goods bought’ are imports, which will now again become more expensive.

This squeeze affects the working class and poor the most, but will also hurt the middle class, including small business owners. It will also lead to a further real-terms cut to council and public sector budgets. Meanwhile, rising inflation is increasing the cost of government debt. The national debt is now around 100% of GDP, which is still slightly lower than France or Spain, but in Britain a quarter of it is ‘index-linked’, meaning the cost of servicing it goes up with inflation.

No capitalist government would be able to find a way out of the intractable problems facing the British economy, which flow from the long-term decline of British capitalism. Nonetheless, there is no doubt that the serious representatives of the ruling elite have got their head in the hands in despair about what Truss looks set to do.

In response to Truss’s victory, Deutsche Bank wrote a report outlining the dangers called ‘Crunch time for sterling’. Given that Britain’s current account deficit requires constant inflows of capital, they warned that a “large, unfunded and untargeted package of tax cuts and spending pledges could alarm global markets. It could lead to foreign investors refusing to fund the UK external deficit by buying government debt, as investor confidence cannot be taken for granted”. They concluded that a 1970s-style balance of payments crisis, when the government was forced to go cap-in-hand to the IMF was on the agenda.

It is against that background that the very weak Truss government is operating. She was forced into an immediate, huge U-turn over energy bills: if she had not acted her government would have been forced out in short order. Even with the measures she has taken, energy bills will be completely unaffordable for millions.

However, her strident ‘ideological’ opposition to making the owners of the big corporations and the rich pay for anything, means that she has refused to offset the £100 billion plus cost of capping energy bills by even a token tax on the huge profits of the energy companies. The only other announcement made by her government so far is to lift the cap on bankers’ bonuses!

She also appears to be set on announcing cuts to national insurance and corporation tax. These measures make no sense beyond pleasing her extremely narrow support base of 81,000 Tory party members and less than a third of Tory MPs. Her government’s blatant defence of increasing inequality will dramatically fuel class struggle.  At the same time, her cavalier discounting of the real dangers facing British capitalism could speed up the markets turning on Britain as a ‘basket-case’.

General election

It is not possible to give an exact timetable of how quickly this government will melt down, but it would be a big mistake for Truss to conclude that it’s within her gift to determine that the election will not be until 2024. It is not the most likely prospect that the two-thirds of Tory MPs who did not back Truss will continue propping up her government if it presides over a plunging currency and surging class struggle. There is every chance that some will instead put the interests of their class – the capitalist elite – before their disintegrating party, and break with Truss. Starmer’s New Labour has over the last two weeks led the charge to try and bolster the institutions of capitalism and create a false sense of ‘national unity’, and is ready and willing to welcome Tory defectors.

Does the extreme weakness of this Tory government mean that it will be forced to make concessions to the strike wave that is developing?  In this period of growing struggle, the bosses and governments can be forced to make concessions. In Spain, for example, the unions have forced a third of collective wage agreements to be automatically linked to inflation, something that seemed utopian not long ago. It is certainly possible that the strikes can win victories, and beyond that inflict a decisive defeat on the Tories, forcing them out of office.

However, from the point of view of the capitalist class there is a point to digging in and trying to face the strike movement down. After all, concessions to one group of workers, even if they are crumbs compared to what is needed, would only give confidence to others to fight. If Truss attempts to ‘dig in’, escalating action will be required, but would be able to defeat this crumbling Tory government.

If the government is short-sighted enough to try and introduce the new anti-union legislation Truss promised in her election campaign, it will prove a major miscalculation. This is not taking place against the background of very few strikes, as in 2016, but when the unions are being forced to fight. Already, with the sit-ins of Amazon workers, we have seen that a new generation will sometimes take action without a thought to anti-union laws.

If new laws are threatened, the TUC should respond by calling a 24-hour warning strike – going beyond coordinating existing ballots and mobilising the whole trade union movement out on a specific day. Given the increasing tempo of the struggle, if the TUC leadership does not act the prospect would be posed of such a strike developing from below in response to the government attempting to act against a strike, as happened in 1972 to free five dockers jailed under the Industrial Relations Act.

Against the background of this tumult, there is every possibility that a Starmer-led government could be thrust into power as a result of Tory meltdown. However, while there is growing desperation to get rid of the Tories, there is also a widespread feeling that Labour is no longer a workers’ party, and that Starmer stands up for the elite, for the few rather than the many. If any authoritative section of the trade union movement was to launch a new workers’ party, it would quickly gain significant support.

The Socialist Party has a vital role to play in campaigning for every possible step towards such a party being formed. Our most important task, however, is to win a new generation to the Socialist Party. The crisis of capitalism over the last decade has led many to begin to look towards socialist ideas. Current events are beginning to show them that the working class could be a force capable of leading a successful struggle for a socialist society.

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September 2022