One party for the movement

What repercussions does the financial meltdown have for working class organisation? Steve Freeman argues for a halfway house

The UK is facing the worst economic crisis since 1929 and the worst political crisis since the Iraq war in 2003. The first point is now clear: “The credit squeeze that has stalked the global economy since August 2007 has morphed into a terrifying financial crisis” (Financial Times October 10). The second is not obvious and is yet to be proven. But I feel sure the proof is lying in wait ready to ambush us.

The Financial Times says the “world’s most powerful politicians have become impotent commentators, announcing action plans, then changing their minds as the situation deteriorates. Under such conditions of stress, liberal economies and democracies are at risk” (ibid). Here the two sides of political economy feature - a crisis of “liberal economies” and a crisis of “democracies”. Economic turmoil produces political turmoil.

Last week I argued that the crisis in the financial sector had affected the rich part of society but had not yet impacted on the real economy and the lives of ordinary working people (‘Great Fire of London’, October 16). Since then it was reported that the queen has lost £37 million because of crashing share prices: “I think she will have taken an enormous hit,” said Philip Beresford, who compiles the ‘rich list’ (Daily Express October 18). It could have been worse except that in recent years the Duchy of Lancaster, her private fund, has moved out of shares into other investments.

The crisis may have hit the queen, but not her working class subjects. Of course, this is an exaggeration. I am not forgetting that working people are already losing their jobs and houses or feeling the squeeze from higher food, petrol and energy prices. But in reality we are in a period of ‘phoney war’ - the name given to the six months after the start of World War II before the shooting really began. The future is looking very bleak, but it has not arrived yet.

At present the capitalist parties have to be on their best behaviour. They cannot mount a major assault of the working class just yet. The state bail-outs to the bankers have undermined this. The Economist goes to the heart of the problem when it says: “It will be a brave president who goes to Detroit and explains why the 45,000 well-paid folk at Morgan Stanley should get $10 billion of taxpayers’ money, but the 266,000 people at General Motors should not. Brave too would be any politician who proposed deregulation as a solution to a public-sector problem” (‘Capitalism at bay’, October 16).

However, we can see the way to overcome this little difficulty. Labour’s minister for racism and immigration, Phil Woolas, now raises the spectre of tighter border controls. He has warned that Britain will have to restrict immigration and reserve British jobs for British workers, providing it does not inconvenience the bosses. Labour’s message is that Britain will have to adopt a tougher stance on immigration. This was music to the ears of the British National Party. It indicates the line of attack the government will take to divide the working class and undermine any resistance. As the crisis gets worse, the sound of racist drums will beat louder and louder.

It will take six months to two years before the financial crisis fully impacts on the rest of the economy. In 2009 the situation will get much worse, argues Time magazine (October 20). “The slowdown in the UK economy is now spreading to sectors previously resilient to the weakness in the banking and housing markets,” says Ian McCafferty, CBI chief economic adviser (‘Factory gloom worst since 1980’, BBC news, October 21). All the warning lights in the real economy are starting to flash. More and more of them are turning from green to red.

As the capitalists cut back on investment and consumers cut back on spending, output and jobs will be lost. Each cutback only adds more fuel to the bonfire. The International Monetary Fund predicts that next year the US and European economies will be stagnant and growth in the world’s engine room, where Indian and Chinese workers are slaving away, will also fall significantly. The global financial crisis will add at least 20 million extra people to the world’s unemployed, a study by a United Nations agency has predicted (‘World jobless “to add 20 million”’, BBC news, October 20). In these circumstances the attacks on the workers’ wages, jobs, conditions and rights will heat up to boiling point.

Worse to come

There are two reasons to think there is worse economic news to come. First, the financial crisis in the banks and stock markets has not yet passed its peak. There are an estimated $62 trillion of credit default swaps (CDS) out there somewhere (‘Capitalism at bay’ The Economist October 16). The IMF has estimated that there are $1.4 trillion of virtually worthless securities. But the banks have written off only about half, according to Time magazine (October 20). The Financial Times tells us that pensions funds stand to lose up to $700 billion from investments in toxic assets (October 20). The IMF’s comparatively optimistic forecasts will probably be out of date soon.

None of this gets to the heart of the problem. Imagine we are in the cabin of one of those huge World War I Zeppelin airships. A fight breaks out amongst the passengers. A shot is fired, piercing the gasbag above our heads. Suddenly the whole thing goes up in a massive fireball. On the ground people see the horrific flames. However, the cause of the problem is not the vastly inflated gas bag, but the fight in the cabin. Marxism tells us the current problems are not caused by greed, speculation or fear, but by the economic cycle. If the undoubted bank greed and financial speculation is not the real cause, the problem cannot be fixed there either. It goes back to the productivity of the world army of labour.

Cameron’s speech

On October 16 Tory leader David Cameron made a well reported speech on the crisis. I will concentrate on some of his economic arguments. He says: “Over the past two decades, two billion people - a third of the world’s population - left subsistence agriculture and joined the global economy. The result was cheaper goods for all of us in the west, and an enormous increase in wealth among those who began to trade.”

The Economist makes a similar point, adding its own spin: “Hundreds of millions of people have been dragged out of absolute poverty. Even allowing for the credit crunch, this decade may well see the fastest growth in global income per person in history” (‘Capitalism at bay’, October 16). Cameron adds: “For example, in China for a time the average family saved over half its income. These savings were invested in the west, giving us and our governments the licence to borrow from overseas like never before.”

The world expansion of capitalism led to the current crisis. As a new working class was drawn into the world army of labour, massive surpluses were generated from their exploitation. These surpluses were channelled into the global financial markets. The Economist says: “The emerging world’s determination to accumulate reserves, especially China’s decision to hold down its exchange rate, sent a wash of capital into America. There was something of a perfect storm in which policy mistakes combined with Wall Street’s excesses” (ibid).

Consider the real economy as a merry-go-round. Cameron says: “The crisis that we face has deep roots” (we should add ‘in the real economy’). He continues: “We all know the simplistic version. People in America were given sub-prime mortgages they couldn’t afford. The banks devised new ways of chopping up debt and selling it on. No-one understood the assets they were buying. So when the merry-go-round stopped, it all came tumbling down.”

So the real global economy slowed down and then the debt crisis blew up. It is this worldwide network of cooperative labour which produces our real wealth, but operates according to the laws of profit. “Capitalism has always engendered crises, and always will,” boasts the proud and self-satisfied Economist (ibid). The boom starts in the real economy and so does the slump. As the rate of profit falls, the real economy starts to slow. A small hand grenade, pistol shot or lighted cigar is enough to pierce the great gas bag of finance and turn it into a raging inferno. Nationalising the banks is not a solution. It is merely an expedient to prevent a much bigger catastrophe.

Cameron says quite rightly: “It’s only by understanding the deeper causes of this crisis that we can hope to find the long-term cures. The underlying dynamic was this global boom presented those in charge of economic management in Britain with a temptation … and they succumbed to it. And the result was a combination of irresponsible capitalism and irresponsible government that has brought us to instability and our present crisis.”

At this point Cameron moves over into British politics. I hope to return to this aspect in another article. Suffice to say that his political purpose is to establish the Tories as the party of opposition. It is an ambition the socialist movement cannot even dream about. However, the Tories must first re-establish themselves as the party of the City and the banks. That has proved very tricky, since New Labour and now Brown have replaced the Conservatives and are now receiving bourgeois accolades.

Therefore at the very start of the speech Cameron puts down his credentials: “One important judgment call for us as an opposition party was whether to support the recapitalisation of our banks with billions of pounds of taxpayers’ money. We did support that - and my party backed the decision, united and strong.” Standing at first base, he hopes to pull away with the rest of his analysis to build his party as an alternative government.

The party of the working class must draw its own conclusions. The global crisis of capitalism and the financial meltdown will have a major negative impact on the working class. We will be made to pay. After the 1929 Wall Street crash there was a sustained assault, which included, in Germany, the destruction of the most powerful working class movement in Europe. As Trotsky predicted, this led directly to World War II. It also led to the holocaust. To say that is not alarmism, but to recognise how high the stakes can become.

Communists and socialists

The working class either internationally or nationally is not in a strong position to resist the coming onslaught. The international communists are marginal and isolated. We must work urgently for the formation of a new world Communist Party. There may be revolutionary democratic communists in America, Japan, Iran, Israel, China, India, Brazil or Russia, but if so they have not organised themselves into one party. There is a role here for the Campaign for a Marxist Party.

Here in Ukania1 the socialist and trade union movement needs its own party right now. This is not merely to be able to defend the trade unions and the working class, but to counterattack and present an alternative. For this a democratic programme is absolutely essential. The current uneven crisis of capitalism demands the socialist movement forms one such a party today or at the latest tomorrow. This is the only thing that can succeed by taking the movement, as it currently is, a step forward.

The socialist movement has operated within dozens of groups and ‘parties’. It is hardly surprising to find that this did not work and has made the socialist movement look foolish. Tony Benn’s joke that there are more socialist parties than socialists brings a laugh the first time you hear it because it is just about true. But after you have heard it a few times it makes you want to cry.

We need a party of organised labour, but not a Labour Party. The party armed with a democratic programme is precisely and scientifically a republican socialist party. The Labour Party is not a socialist party and has never been a republican party. In Ukania the bourgeoisie and all its parties support capitalism and the crown.

The major problem is sectarianism. Because of the credit crunch it is a luxury we can no longer afford. In Ukania the communists have to fight for one party for the socialist movement. If elements amongst the communists pursue the idea of setting up their own party as an alternative to one united socialist party, they should be condemned as the worst kind of sectarians and betrayers of the communist movement. Communists have to be at the very forefront, in the vanguard, of the fight for one party.

The Campaign for a Marxist Party must change gear and dump any ambiguous formulations. It must decisively reject the Stalinist idea of a national Communist Party. This is profoundly mistaken. If the CMP tries to move in that direction, it will become a campaign that simply proves the case against itself. It should have no truck with the lies that are being told that the only alternative to New Labour is another Labour Party. In Ukania the only real alternative is a republican socialist party. That will become clearer when we next examine the political arguments put forward by Cameron and the Tories.

Let us end with Karl Marx. He was an anti-sectarian communist. He fought all the time to build up the communist movement, but never in contradiction or against the uneven development of the broader working class movement. This is why he could support the Chartist Party, the Communist League and the First International - all of which represented different facets of the combined and uneven movement of the international working class. This is why communist have to fight for a party on two fronts.


1.The word ‘Ukania’ was used, perhaps invented, by Tom Nairn in a reference to the United Kingdom of Great Britain and Northern Ireland.

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