13.11.2008

Brown's recovery and the global downturn

Ted North looks over progressive, Keynesian Brown

Whilst it is typical media hyperbole to claim that Gordon Brown has a “new-found status as a global financial leviathan”, it is clear that major political changes are afoot (Sunday Herald November 10).

An end to the troubles and downward spiral of the Labour Party seemed unlikely just a couple of months ago. Labour’s loss of Glasgow East in July and continuous talk of leadership challenges seemed to herald the inevitability of a Tory government and David Cameron as prime minister.

However, the financial crisis has changed everything and with it there has been a turn away from neoliberalism, with its illusory laissez faire policy, to some form of renewed Keynesianism. This is reflected, on very different scales, by Barack Obama’s victory in the US and Labour surprising the pundits and holding Glenrothes in last week’s by-election.

The election of Barack Obama, in the wake of the politically painful state interventions of Bush and co into the ‘free’ market, demonstrates that in the world’s hegemonic imperialist power there has been a clear shift to dirigisme in some form, away from the illusion/myth of ‘pure capitalism’ à la Adam Smith. Besides the genuine enthusiasm from below which grew behind the Obama campaign there was the political support of Republicans such as Colin Powell and the help, financial and otherwise, of core sections of the bourgeoisie.

The key factor for the global system of capitalism in the face of the current economic crisis is that Keynesian-type policies are pursued at the international level; this does not mean that there will be an immediate switch to centre-left parties in every country - the rightwing National Party has just won the New Zealand general election. The particular form of the class struggle and position in the imperialist pecking order of different countries will lead to varying political outcomes, even if there is a general pressure - from capital itself - towards open Keynesianism.

What is the situation in Britain? Recent years have not been kind to Labour. The party’s parliamentary majority has fallen from 179 in 1997 to 66 in 2005, whilst membership has fallen spectacularly from more than 400,000 in 1997 to less than 159,000 in July 2008 (www.savethelabourparty.org). In towns and cities across Britain ex-members tore up their party cards in protest against (primarily) the Iraq war.

Following the original ‘Brown bounce’ - a short swell in support following his coronation as Labour leader - opinion polls have made depressing reading for the government. Before the current financial crisis the Tories seemed to be unstoppable. Over the summer, in the shadow of the 42-day detention proposals, some polls put Labour on just 25% and a resurgent Conservative Party as high as 45%. According to The Times, “There is no precedent for a party to win from this level” (June 10).

The popular view of the Labour Party sees (correctly) a web of spin, false promises and bureaucracy. The opium-like haze of the ‘things can only get better’ days have dissolved in bitterness with the Iraq war and the failure of New Labour to make fundamental positive changes to most people’s lives. In addition Gordon Brown is about as charismatic as a paper bag. But, while the financial crisis has left the Tories all at sea, Brown’s handling of the economic situation has generally been positively received in establishment circles.

Whilst the Conservatives are largely wedded to Thatcherism, albeit with entirely superficial additions such as Cameron’s flirtation with greenism, the Labour Party’s social democratic past leaves it as the natural choice when a speedy switch to Keynesianism is called for.

From a capitalist perspective the Labour Party was perfectly acceptable as the post-war alternative party of government. Whenever working class militancy rose, Labour could be relied on to offer, or promise, a few crumbs, undercutting support for independent working class politics. The turn to finance capital from the 1970s was far more the terrain of the Conservative Party, the traditional flag-bearers of the big bourgeoisie. The present situation parallels post-war conditions in the sense that policies traditionally associated within the centre-left party are demanded to deal with the effects of the financial crisis and avoid a full-blown crash.

The comfortable victory of Lindsay Roy in the Glenrothes by-election, which saw the Labour vote actually increase despite the reduced margin, came as something as a shock to the party’s top echelons. Incidentally, the abysmal votes for left - or more accurately left nationalist - groups, with the Scotish Socialist Party winning 212 and Solidarity a disastrous 87 votes, show that crises do not automatically lead to increased support for those who claim to be socialists. The combined vote of the two left-nationalist groups is less than a third of what the SSP achieved in the 2005 general election.

Labour’s victory must, in large part, reflect how people viewed Brown’s handling of the economy - and the media’s largely positive assessment of it. The failure of the Scottish National Party also presumably reflects the realisation, made painfully obvious by the state of the economy, that an independent Scotland is a utopian fantasy. Comparisons with Iceland or Ireland are, for obvious reasons, no longer so attractive options.

Brown has, of course, welcomed the election of Obama, and predictably called for the two men to work together for a world where “markets need morals” and talked of the “collapse of failed laissez faire dogma”. On the other hand, he is at pains to reassure capital that “our government is pro-business; I believe in markets” (The Observer November 9).

After years of Labour being defined by its relationship to figures such as Lord Sainsbury, rather than the traditional trade union bureaucrat, Brown is keen to talk of a more general “us”, in contrast to the “very privileged”.

The global nature of the financial crisis makes transparent the global nature of capitalism. There are no isolated national solutions. Brown is thus keen to position himself as a figurehead of an ‘internationalist’ Keynesianism. With an imminent Obama presidency Brown will be able to pursue Britain’s ‘special relationship’ with America, something which has been set back by the wars in Iraq and Afghanistan. Nevertheless, while seeking coordinated international action to minimise the impact of the financial crisis, Brown must also pursue policies aimed specifically at boosting UK capital - he talks in the same Observer article of British firms winning “the race to the top”.

Throughout the article Brown appears to use the word ‘progressive’ as an ambiguous alternative to ‘Keynesian’, just as the Obama campaign focussed on nondescript ‘change’ - the Republicans and Conservatives are in a sense more ‘honest’ than Labour and the Democrats. To ensure social stability the extreme effects of capitalism’s cycles must be controlled - and neither the Conservatives nor the Republicans can easily shed their neoliberal elevation of the market beyond the reach of the type of state intervention now called for.

In circumstances where Keynesianism has rapidly become an important weapon in the bourgeois armoury, it is essential that the left recognises it for what it is - an attempt not just to moderate capital’s cyclical extremes, but to put off the end of the system itself.