Crisis? What Crisis? part 3 – down, down, deeper and down

Sterling as a picture of the future

Sterling as a picture of the future

Tory lies over Brexit and the sunlit vistas of UK sovereignty that lie ahead are nothing new.  Uncriticised by the Tory press and a BBC that is both scared of them and shares their broad establishment understanding of society, they have been able to present themselves as the only trusted stewards of a successful economy, with only its fruits perhaps needing some fairer distribution, now that they are the workers’ friend.

But the Tories have lied to themselves and everyone else that the British economy is in rude health, especially when compared to the sclerosis of the rest of Europe.  They quote statistics showing that real Gross Domestic Product has grown faster in Britain than in the bigger EU economies such as Germany, France and Italy.  What they don’t say is that GDP per person was no higher in 2014 than 2007 and that the British are no richer compared to the EU 15 average now than they were 15 years ago.  In fact Britain lags behind Spain and France on this measure.

In order for Britain to grow it has needed to increase its population and workforce, including through immigration, and make the working class work longer hours while reducing their wages, which declined by 10% between 2008 and 2014.  Productivity relative to the EU average has fallen to 90% so that output per hour is 25% below French or German levels.  In only one other region apart from London is GDP per head in excess of the EU average.  This means only 27% of Britons are wealthier than the EU average; but we are expected to believe that the EU is holding Britain back.

The Tories (and Blair before them) have relied on a high debt, low wage and low skilled economy that compensated for poor productivity by increased exploitation, symbolised by zero hours contracts on the one hand and long working hours on the other.  Such a model has no need for a comprehensive education system that can provide a highly educated and skilled workforce for employment across a wide number of economic sectors.

Increased exploitation of labour substitutes for increased capitalist investment in technology, which is mirrored in less state investment in infrastructure.   One example of the result of this is the threat of the lights going out because of a shrinking margin of spare power generation capacity.  This in turn leads to huge subsidies to foreign states to supply nuclear power that may keep the lights on – in the shape of Hinkley Point C and the French and Chinese state companies involved in its development. The lack of infrastructure puts a further drag on the development of productivity and the growth of living standards.

Brexit is being sold as the opportunity to improve this far from outstanding economy but leaving the EU will discourage the foreign investment that helps bail out Britain’s chronic deficit in trade.  Exit from the EU will diminish the financial sector and its acquisition of profits from around the world as bankers already threaten to pull out.  Trade will face new barriers and even old Tories like Michael Heseltine have laughed that there are new markets that no one has so far spotted to replace those that will be lost in Europe.

Devaluation of sterling will hit peoples’ living standards, reducing the domestic market just as foreign markets become harder to enter, while lower economic activity will reduce the capacity of the state to spend on infrastructure. A poorer Britain with reduced foreign earnings will have pressure placed on its interest rates, which will rise to cover the cost of financing a state whose currency is falling.

This risk was made clear by a market analyst quoted in the ‘Financial Times’ as saying that sterling is behaving more like an emerging markets currency and that there is no idea what its true level is. If a foreigner lent £100 to Britain, costing them say $120 in their own currency, it will mean that when she’s paid back the pounds she receives could be worth only $100.  So how much more interest on the loan would she require to protect herself against this risk?  And what sort of investment could warrant borrowing at this rate of interest?

Britain has created an economic model based on sweating its workforce.  Karl Marx noted the limits to exploitation by lengthening the working day 150 years ago, limits again being exposed today by Britain’s declining productivity.  And anyone believing that the Tories will move to create a high wage economy that involves upgrading the skills and talents of the workforce will have to explain the latest genius idea of promoting grammar schools, which relies on improving the education of a few by shiting on the rest.

An economic logic will apply to Brexit regardless of whether the Tory party realises it or not just as we have already seen its political logic unfold despite what some might have believed it was all about.  In last Monday’s ‘Financial Times’ some ‘liberal’ Brexit supports complained that they wanted an ‘open’ Brexit and not the nasty Tory variety.  But this is just as innocent of reality as the supporters of a ‘left’ exit – Lexit – thinking that a decisive move to national capitalism could be anything other than reactionary.

The economic logic of Brexit suggests increased unequal competition with other much larger state formations, such as the EU and the US, not to mention China, a la Hinkley Point C.  One weapon of the smaller and weaker is a race to the bottom with reduced corporate taxation as one example, already signalled by the late chancellor George Osborne, but this is not a credible strategy away from the current model.

There are therefore no grounds for believing that an interventionist state acting on behalf of workers will arise from any change in approach by the Tories.  However it is not excluded that the inevitable crisis that Brexit will induce could give rise to a change in direction to a more interventionist approach in order, as we have said in the previous post, to allow “a Tory government (to) save capitalism from itself.”

Unfortunately the Tories have tied themselves to those sections of the electorate least supportive of this approach; those who support lower taxes and a less interventionist state, unless its intervention is into other peoples’ countries.  The best hope of such an outcome is the influence of those sections of British big business that are tied to the Tories who do provide a constituency for such an approach.

However the weakness of a stand-alone Britain doesn’t help such change.  So for example, it is reported that the Tories may be thinking of devising restrictions on foreign investment, which had more potential within the EU than outside, but this idea will conflict with Britain’s more isolated situation and greater need for outside funding.  Their idea of increased state intervention will also be restricted by budgetary pressures arising from the weakened tax base of an ‘independent’ Britain.

As Boffy’s comment to my last post made clear, state intervention in the economy is not by definition left wing, despite much of the left’s identification of Keynesianism with socialism.  There are all manner of right wing Keynesian interventions so a Tory lurch to increased state intervention in the economy is perfectly compatible with increased authoritarian intervention by the same state with both masquerading as the workers’ friend; or more pointedly as the British workers’ friend.

The Tories newly found working class agenda, such as it is, cannot accommodate any sort of workers’ identification with their brothers and sisters beyond their own nation.   Xenophobia thus unavoidably defines the anti-working class core of the new Tory ‘left’ agenda.  This rabid xenophobia is perfectly compatible with false concerns for British workers but utterly incompatible with workers’ real interests, British or otherwise.  The Tories can feign sympathy with all sorts of working class concerns but not with its interest in solidarity across nations.  This appears most immediately in the shape of immigrant workers and, as a member of the EU, in the shape of all those workers who have moved from the EU who have now almost become hostage to the wilder delusions of the Tory right.

The centrality of workers unity was recognised by Marx long ago when he noted the two principles separating the socialists of his day from others:

“The Communists are distinguished from the other working-class parties by this only: 1. In the national struggles of the proletarians of the different countries, they point out and bring to the front the common interests of the entire proletariat, independently of all nationality. 2. In the various stages of development which the struggle of the working class against the bourgeoisie has to pass through, they always and everywhere represent the interests of the movement as a whole.”

No matter how any right wing force attempts to portray itself as the workers’ friend this is always the one area in which they can make no pretence and, in this failure, expose their true character – that they cannot accept never mind promote the identity of the interests of the workers of their own country with the interests of the workers of others.

The nationalists in Scotland in the shape of the SNP have at least temporarily succeeded in fooling many that the interests of Scottish workers are somehow radically different from those in England and Wales, although the rise of Corbynism has demonstrated that in the rest of Britain there might be more of a fight against nationalist division.  It is noteworthy that this blog draws to our attention the SNP’s approach to immigration set out in its White Paper for independence, which was a points based system, rather like that of those British nationalists like Boris Johnson.  But then nationalism is nationalism, innit?

Back to part 2

Forward to part 4

Crisis? What Crisis? part 2 – the Tories become the workers’ friend

theresaSome people might object to the view expressed in the previous post that the Tories are intent on even more drastic austerity – after all hasn’t the new Chancellor scrapped the target for achieving a budget surplus by 2020?  And as one Tory official is reported to have said – “perhaps only a Tory government can save capitalism from itself.”

And hasn’t Theresa May gone even further than this?  Hasn’t she said she will make capitalism fairer for workers, crack down on corporate greed, promote state intervention, provide for more workers’ rights and put “the power of government squarely at the service of ordinary working-class people.”  Hasn’t she criticised uncaring bosses, tax-avoiding multinationals and directors who took out “massive dividends while knowing the company pension is about to go bust”?

Yes of course, she has gone further, but none of these steps are necessary for a Tory government “to save capitalism from itself” and the chances of a Tory government putting “the power of government squarely at the service of ordinary working-class people” is zero.  So what is going on?  Is it just a case of ideology being employed, not to unconsciously blind the beholder, but consciously to blind those naive enough to believe Tory lies?

Before I answer this it is useful to make two observations. First, the language of the Tories shows how bankrupt the anti-Corbyn forces in the Labour Party are – afraid to mention class while the Tories outflank them from the left.  Just how much of a future would the Labour Party have if it stood permanently exposed on the left by a Thatcher Mark II?  What future would it have to endlessly repeat an approach symbolised by allowing cuts to disability benefits to go through only for the Tories to then scrap them?  Would the Labour right have wanted to abstain on scrapping them as well?

The second point is that this Tory rhetoric is described, by the same political commentators who got Brexit wrong, as the Tories moving against the Labour Party by ‘moving to the centre ground’.  This is almost as funny as their voting for Cameron while opposing Brexit.  Since when did promoting workers’ rights and cracking down on corporate greed, even if only verbally, been the centre ground – surely this is moving to the left?

And to answer the question – of course it’s moving to the left, and its only became the centre ground since Jeremy Corbyn arrived from Mars to become leader of that part of the British people regarded as swivel-eyed-mad-lefties by the media.  But of course it is also claimed he leads an ineffective opposition – despite him causing the ‘centre ground’ to shift leftwards.

It’s difficult to know whether this ridiculous view of the Tories’ approach is unconscious ideological self-deception – that the political battle is always fought on the centre ground –  without pausing to think just where this ground might be; but I tend to think that it’s more likely to be cover for the fact that the political commentators who write such rubbish know that it’s all Tory rhetoric without any chance of being implemented.  If the Tories have moderated austerity it is only because they fear they have to because, as we have seen, a Tory government is necessary “to save capitalism from itself”, or rather a new Tory government is necessary to save the country from the last Tory government.  But then, even the last Tory government carefully implemented austerity and extolled its virtues only to ensure it could continue as a political weapon and as an economic policy option that fitted an ideological agenda.  They were well aware, or at least some of them were, of the limits of a policy that involved bleeding the patient to death.

The case for this new Tory tilt to the left being a conscious attempt to blind those naive enough to believe Tory lies is supported for two reasons.  First, a ‘sovereign’ UK outside the EU will slip down the global power rankings like a stone.  It will be too big to ignore but too small to decisively shift its environment to its benefit.  The EU cannot afford to indulge its delusions of greatness because it’s big enough to matter but not big enough to influence the EU to submit to its claims or demands.  Some Tories might believe it can trade with the rest of the world while turning its back on those next door – that it already has almost half its trade with – but it requires outside investment to pay its way and this can only come through modelling itself as an attractive centre for foreign investment.

To do this will not entail the reassertion of British sovereignty but will expose its weakness and expose its lack of sovereignty.  The inability of relatively small and even medium sized states to interact in the world mainly to their benefit is precisely why larger economic blocs like the EU were formed.  The world will not change its rules because the British don’t like them.  The British state will therefore become weaker with less capacity to intervene and the economy it has to intervene into will be even more in need of assistance.

to be continued

Back to part 1

Forward to part 3

The Left against Europe 4

david cameronThe question of membership of the European Union has loomed large because of the recent successes of UKIP in Britain.  Many of the questions raised by it also underlie the recent Scottish ‘independence’ referendum: questions of nationalism and internationalism.  Both are or might be settled in referenda.

Thus many of the points I have argued in the posts on the Scottish referendum apply to the debate on Europe, which I was addressing in a series of posts before I interrupted them to post on Scotland.  This post continues to look at the issues that are thrown up for the Left by looking at the ‘great debate’ generated by Britain’s potential membership of the Common Market (as the EU was called then) in 1971.

In the previous post on the question I looked at the views of the International Socialists (IS), which was the forerunner of today’s Socialist Workers Party.

By the time of the ‘great debate’ among the ruling class in 1971 over joining the Common Market the majority of the International Socialists appeared to have dropped their previous attitude, which recognised the positive features of the capitalist European project (while still recognising that the working class had to assert its own position).

Instead the majority position appeared to be represented by a Chris Harman article in their journal ‘International Socialism.’  In this article Harman provided an analysis of what the European Economic Community was – “The Common Market is essentially what its title says it is – a business arrangement, an agreement between different capitalist ruling classes, relating to the way in which they organise their markets.”

“The second aim of the Common Market has been to move beyond being merely a unified arena within which different competing national capitalisms compete, to the beginnings of a positive integration of the rival capitalist classes.”

“There are a number of steps which would have to be taken for such a merging of interests to occur.”  These included that:

“ Impediments to the free movement of capital from one country to another would have to be done away with.

Legislation and tax policies in different countries have to be made homogenous with one another.

Exchange rates of the different European currencies with one another should be fixed immutably,

and preferential treatment in the allocation of governmental contracts to national rather than other European firms would have to be overcome.”

Today some of these steps have been taken while others are still the subject of controversy, such as harmonisation of taxation.  Others have been surpassed, such as the creation of a common currency.  All are steps that a state must take to advance a unified European capitalism.

Harman maintains that “paradoxically, the very internationalism of capitalism is an important factor enhancing the role of the national state.”  The problem then is to create a European state that can do at a European level what national states have been unable to do for their national capitalisms:

“The failure of the nationally based capitalisms to begin to merge with one another does not, however, do away with the need for them to do so. Resources have to be mobilised and production organised on a continental, rather than a merely national basis, for survival in the most advanced industries. Europe’s failure to integrate has been paralleled by a failure to keep up with the international leaders in such fields.”

So the problem becomes a political one: European capitalism “wants a ‘Europeanisation’ of capital – but this continually clashes against national state boundaries. The only way out would seem to be to somehow reduce the dependence of firms on the national state by developing some sort of European state.”

Harman sees the mechanism to achieve this as the European Commission, which he states was the original intention of the Treaty of Rome, officially the Treaty setting up the EEC.

“The Commission, it was implied, would represent a political projection of the economic trend for national boundaries to be superseded. What the international companies were accomplishing in economic terms, the Commissioners would accomplish politically. Eventually they would concentrate in their hands the budgetary and monetary prerogatives of national governments, and oversee on a European scale the economic and social needs of the system as a whole. At this point the present national governments would be effectively redundant. Such was the dream of the more extreme ‘Europeans’ [13] – and the nightmare of those who criticise the Market from the point of view of ‘national sovereignty’.”

“However, there is little evidence that the Commission has been able to fulfil this role at all, even in an embryonic form. So far the European institutions have not begun at all to rise above the squabbles of opposed national interests.”

“The failure of the Commission to develop as an autonomous power has effectively left real power with the separate governments. But these remain under the sway of different national economic interests and political orientations. Their interaction so far has failed completely to produce the sort of single minded direction that would correspond to the needs of the advanced sections of capital seeking integration.”

In part this would seem to be a failure of the institutions to take on the most essential role of the capitalist state:

“Above all the state remains the chief means by which the capitalist class exercises its political and ideological control over the rest of society. This does not only mean repression, although it remains of crucial significance. Also involved is guaranteeing the conditions under which subordinate classes can identify with the status quo.”

“Left to themselves the rival capitalist concerns would tear society apart in their relentless search for profits. The state prevents this, in so far as it can, in the interests of continued capitalist domination. It tries to integrate the middle classes into the system by all sorts of privileges for them; it attempts to placate working class discontent by ‘welfare’ policies and the like; budgetary and other measures are used to impose some restraint on economic fluctuation and to ensure some evenness of economic development in the different regions of the country.”

While the seemingly natural workings of the capitalist market, and the widespread view that there is no alternative, is the primary ideological force imprisoning workers, nationalism is the primary means by which the subordinate classes identify with the status quo.  This allows support for a variety of policies that the state can pursue but none that involve breaking the bounds of what is defined as the national interest, and certainly none that threaten capitalism or that point to a socialist alternative.

It is the national state that continues to tax and spend and so continues to pull the levers of privilege sought by the middle class and which also form the basis of welfareist measures to placate workers.  It also still has powers to ameliorate economic fluctuations endemic to the capitalist economy and which today’s EU has been so criticised in the ‘Euro crisis’ for being unwilling or unable to introduce, at least to the extent some consider necessary, (such as quantitative easing, Eurozone debt instruments etc).

It is not quite true today that, as Harman said over 40 years ago, “the European institutions have not begun at all to rise above the squabbles of opposed national interests” but it remains true that the European project has not won the workers of Europe to identification with its institutions or ultimate objective of a European state.  This means that national political forces continue to promote nationalist solutions, or solutions premised on nationalist assumptions, which therefore create difficulties for everyone when they need to take steps that go beyond the framework of the nation state.

These difficulties can become quite acute.  In January the ‘Financial Times’ carried a long article – ‘Torn in two’ – about the Tory leader David Cameron and his decision to call an in-out referendum on British membership of the EU by 2017.  ‘The British prime minister’s ‘in-out’ EU referendum strategy  looks like it is backfiring as he is caught between the anti-Europe faction of his Conservative party and powerful business groups.’

The Eurosceptic wing of the party has grown and is now making demands that Cameron cannot satisfy and which therefore threaten British membership of the EU and the vital interests of big business that are associated with it.  It is making demands that would mean, according to former Foreign Secretary William Hague, that “the European Single Market would not work” and other demands on restricting immigration from Eastern Europe that would be illegal under EU law.

The article quotes a spokesperson for a right-wing think-tank saying that “the party is going to split, there’s no doubt about it.”  It quotes former leader John Major saying that “calling three of my colleagues bastards was absolutely unforgiveable.  My only excuse is that it was true”.  The number of bastards has grown and some in big business have become concerned.

“Bankers attending last year’s Tory conference were startled by the pervasive mood of “rabid” euroscepticism.  “It seems to me they are bending more and more to Eurosceptic concerns because of Ukip, and the more they do that , the more unhappy business will be,” says a City worker.  “Companies want better outcomes from Brussels but you don’t get it by shouting insults from the sidelines.  City lobbyists are gearing up for intensifying discussions with senior Tories.  The Square Mile realises that if it waits for the referendum to be called, it could be too late to influence the debate.”

Contrary to the Tory policy of seeking big changes to powers given over to the EU, the City of London has taken the “view that there was no need for a “repatriation of powers” but that Britain should strengthen its ties with Brussels, for example by boosting the number of UK officials working there. “There is no prospect of negotiating a better deal for Britain of any significance” says a leading City manager.”

The split in the Tory party reflects the division in its support between big business which has Britain as its main base, but Europe and the world as its field of operations, and small capitalists and reactionary middle class who need not or cannot see further than the British market and for whom a ‘little Englander’ mentality is perfectly satisfactory for their position in the world.

The dynamic development of capitalism continues to disrupt all class and political relations just as much, if not more, than its revolutionary effects so vividly captured by Karl Mark over 150 years ago in ‘The Communist Manifesto.’

This development causes problems not only for the right but also the left.  Harman writes that “of course, the development of the forces of production demands the creation of a European state. But then the development of the forces of production also demands a socialist revolution. It may well be the case that the former will take place after the latter.”

If only this were true the problems posed by it not being true would not prove such a barrier to an internationalist policy.  Harman appeared to believe that the European capitalist project would fail but so far it has not:

“Indeed, it is an important fact that there seems to be no historical precedent for the peaceful integration of different bourgeois states. A minimum of physical force has always had to be used. The examples of Germany, Italy and the US bear this out. In the modern world national ruling classes are more closely linked to national state structures than ever before. There is no certainty that such an obstacle to unity can be removed.”

On top of this the prospect of socialist revolution in Europe looks further away than it did in 1971.  The view that the problems posed by the continuing rapid development of capitalism can somehow be ignored through the immediate alternative being a programme of socialist revolution is obviously mistaken.  But how is it mistaken and how does this relate to a socialist approach to the EU?  In the next post on the ‘great debate’ I will look at what policy Harman advocated and the alternative put forward in the same issue of ‘International Socialism’ by his comrade Ian Birchall.