The Voice Of Anti-Capitalism In Guildford Strongly Supports The Socialist Party and CWI Oposition In the debate on The Causes Of The Great Recession

The debate on the causes of the Great Recession

Mick Brooks, Author of Capitalist Crisis: Theory and Practice, comments here on the debate within the Committee For a Workers’ International on The Causes of the Great Recession and Capitalist Crisis.

Mick Brooks, September 2013
Since the outbreak of the Great Recession Marxists have debated its cause. This is a vital theoretical issue for understanding the world around us.

The debate centres around the issue as to whether the present crisis is caused by falling profits as explained by Marx’s law of the tendential fall in the rate of profit (LTFRP), dealt with in chapters 13-15 of ‘Capital Volume III’. Others argue that the crisis can be explained as one of underconsumption.

This debate is bubbling under within the ranks of the CWI. The leadership of the CWI (as of the IMT) take what I would characterise as an underconsumptionist position. Already two blogs are circulating inside the ranks of the CWI that advocate the LTFRP explanation, in addition to an excellent short film, and debates are beginning to take place in the localities. Signs of intelligent life? It looks like it. Check out:
Marx returns from the Grave, http://69.195.124.91/~brucieba/
Socialism is Crucial, http://socialismiscrucial.wordpress.com/

It should be explained at the outset that all parties agree that a crisis of capitalism takes theform of overproduction, of unsold goods, as it says in the ‘Communist Manifesto’. Overproduction and crisis, however, are not permanent features of capitalist production. It remains to be explained why capitalism dips into crisis when it does.

The leadership, reacting to criticism, has resorted to an ‘underconsumptionist’ explanation of the cause of crisis. The crisis is caused, according to a quote from Chapter 30 of ‘Capital Volume III’ by “the poverty and restricted consumption of the masses.” (As one of the bloggers, CrucialSteve, points out this was actually a bracketed note added by Engels into the original text.)

The problem with the underconsumptionist explanation is that there is a permanent tendency for capitalism to restrict the purchasing power of the working class, because it is a system based on profit. Underconsumptionism therefore has no explanatory power as an explanation of crisis.

In any case not all commodities are produced for workers – pallet trucks and computer numerically controlled machine tools are capital goods bought by capitalists. There are also luxury goods consumed only by capitalists such as yachts and private jets. Why should there be a specific outbreak of overproduction of consumer goods intended for workers’ consumption such as jumpers rather than pallet trucks or yachts? Empirically crises of overproduction usually break out in the capital goods industries. Investment is the most volatile element in national income.

The opposition bloggers within the CWI have a powerful argument in their favour – the rate and mass of profit in the major capitalist countries fell sharply prior to the onset of crisis in 2007. Marx’s theory is confirmed! To take the case of the USA: “The US Bureau of Economic Analysis (BEA) shows that in the 3rd quarter of 2006 the mass of profits peaked at $1,865bn. By the 4th quarter of 2008 it bottomed out at $861bn.” (Brooks – Capitalist crisis; theory and practice, p.32)

The facts confirm Marx’s analysis of the LTFRP as the fundamental cause of crisis. Why should this cause surprise, since we all agree that capitalism is a system of production of profit? The school of Marxian economists who support this analysis view the falling rate and also mass of profit only as an underlying cause of crisis. Essentially the argument is about levels of causation in the crisis. What about the financial aspect of the crisis – the housing bubble, crazy loans and collapsing banks? Of course this was all very important. These specific factors profoundly influence the depth and nature of the downturn. Every crisis is a unique event with its own characteristics. But, with or without a ‘financial crisis’ the fact that the mass of profits in the USA, the most important capitalist country, halved over two years would have provoked a big collapse of output in any case.

How does the leadership of the CWI deal with the detailed criticisms of their approach thrown up by the advocates of the importance of the LTFRP as an explanation of crisis? Lynn Walsh argues in ‘Socialism Today’ that profit and investment have become disconnected in recent decades. “Despite the staggering increase in the share of income taken by the top 1% in the US, investment declined.”(‘Socialism Today’, November 2012) So profits (with the share of the top 1% as a proxy) are supposed have soared at the expense of working people, but this has not translated into productive investment. Walsh concludes, “This factual data, in our view confirms the analysis of a crisis in capital accumulation put forward in ‘Socialism Today’ over many years” (ibid.).

If true, this is not an explanation for a pattern of booms and slumps. It presents a stagnationist perspective for the future of capitalism, a permanent slowing down of the rate of accumulation. Is the CWI serious about decades of stagnation? How do they explain the present crisis, where investment fell as a result of the fall in profits?

In fact there is a simple explanation for this alleged disjunction between profits and investment: the profit figures quoted are wrong. Michael Roberts has meticulously chronicled the rate of profit since the Second World War in his blog. Nobody has challenged his figures, which attempt to look beneath conventional statistics to work out a Marxian rate of profit.

Roberts concludes: first that there has been no return to the fabulous profits enjoyed by capitalists during the golden years of the post-War boom; and secondly that the rate of profit today in 2013 remains below that of 2007 before the onset of the great Recession. Andrew Kliman also carefully shows (in ‘The failure of capitalist production’) that the reason for lower investment in the years since 1974 is lower profits. There is just less to invest. Simples.

The CWI leadership buttress their ‘explanation’ as to why investment has been lower with recourse to the notion of financialisation. As Lynn Walsh argues in the same article, more and more funds have been gobbled up by financial shenanigans in preference to investing in industry. There is no mystery here. In so far as more “profits disappeared into the financial sector” (ibid.), that is a response to lower pickings to be made in production – because of the LTFRP itself.

Increasing exploitation of the workers over recent decades has not led to increasing rates of accumulation because of financialisation, it is asserted. This is part of the analysis of a whole school of thought, regarding itself as Marxian, which sees the current crisis as one of the neoliberal form of capitalism rather than capitalism as a whole. In fact this is the conventional wisdom of the majority of academic Marxist economists. A whole new stage of capitalism is supposed to have developed since about 1980, buttressed by the holy trinity of globalisation, neoliberalism and financialisation.

Dumenil and Levy’s book – ‘The crisis of neoliberalism’, 2011 – is an example. Phil Hearse writing in Socialist Resistance, the publishing house of the so-called Fourth international, also refers to “a neoliberal ‘regime of accumulation’”. The logic of this approach seems to be that neoliberalism should be destroyed rather the capitalist system overthrown. As we see, the CWI leadership has swallowed this analysis whole. By accepting the interpretation of this school the CWI is on a slippery slope indeed. We’re with the opposition within their ranks on this one.

The Socialist Party Debates: The Tendency For The Rate Of Profit To Fall Vs Underconsumptionism.

The VOAG can’t help but notice the growing debate inside the Socialist Party (SP). The VOAG’s inbox had just quietened down following an avalanche of emails during the recent SWP splits. Now it seems it’s the Socialist Party’s turn to spam the living daylights out of us all.

The VOAG has already heard rumours of people being banned from the Socialist Party’s International Summer School, now I understand the SP’s NC is removing members from the SP Facebook group and banning all discussion relating to Marxist economics. (1)

As Bruce Wallace, one of the leading dissidents put it: “Under the pretext of agreeing to comradely debate, the critical material of oppositionists is being censored and repressed while public attacks on us are made by the leadership”. How SWP. (2)

And just like the SWP debacle, the argument is being conflated with a general dissatisfaction with internal party democracy. One dissident quotes Lenin: “Criticism within the limits of the principles of the Party Programme must be quite free, not only at Party meetings, but also at public meetings. Such criticism, or such “agitation” (for criticism is inseparable from agitation) cannot be prohibited”

What’s it all about.
 At the root of the argument are different perspectives regarding the relative importance in Crisis Theory (why capitalism goes into cyclical recessions) of “The Tendancy For The Rate Of Profit To Fall” (TRPF) and “Overacculation /Underconsumption”. Another SP dissident, calling himself Crucial Steve, writes on his blog:

“According to Lyn Walsh [editor of the SP’s monthly Socialism Today], the current crisis is one of over accumulation and lack of demand. Peter Taaffe writes in issue number 157 “The capitalists refuse to invest because there is no ‘profitable outlet’. In this sense, it is a crisis of ‘profitability’. Not because profits have dropped or there is a ‘tendency’ for the rate of profit to decline. Both the rate and the absolute amount of profit have increased it seems, even during this terrible crisis”.” (3)

Crucial Steve (Steve Dobbs) counters: “Marx was very clear that the accumulation of capital and the Tendency of the Rate of Profit to Fall were in fact “two expressions of the same process”. As capital accumulates, the organic composition [fixed capital over variable capital] rises and the rate of profit tends to fall. Thus to speak of over accumulation without reference to the rate of profit is somewhat “one-sided”, shall we say.

Cde. Crucial sets out his stall: “According to the statistics, the rate and the absolute amount of profit have not increased as the SP would have it. As anyone who has worked with management in the private sector will tell you, capitalists are concerned with the rate of return. So naturally, the projected rate of profit will determine investment. A fall in return and a subsequent fall in investment can also lead to a drop in the mass of profits. We can see empirically that the fall in the mass of profits precedes a fall in investment prior to a recession”.

Crucial quotes Walsh in Socialism Today No.161: “How, as socialists, should we regard a stimulus package or programme of public works? In the face of mass unemployment and the prospect of prolonged economic stagnation, the leaders of workers’ organisations should indeed be calling for a massive programme of public works to provide jobs and stimulate growth. Effective economic stimulus would require a big increase in social spending, increasing pensions and other benefits. Tax rates for the wealthy and big corporations should be substantially increased, with a levy on the uninvested cash piles of big companies. Effective measures should be taken against tax evasion and avoidance”. (4)

The SP’s official position, that the current crisis is one of over accumulation and lack of demand, implies that the answer is to inflate the economy by increasing salaries and public spending, in order to spend ones way out of crises. In other words, classic Keynesianism. We at The VOAG reject this approach and agree with Marx, that capitalism has structural contradictions that cannot be resolved by keynesian economics or reformism.

Socialist Fight breaks it down.
To get some help understanding this argument, let’s visit the pages of this month’s Socialist Fight:
Let us first of all set out the proposition according to Marx: “The progressive tendency of the general rate of profit to fall is, therefore, just an expression peculiar to the capitalist mode of production of the progressive development of the social productivity of labour. This does not mean to say that the rate of profit may not fall temporarily for other reasons. But proceeding from the nature of the capitalist mode of production, it is thereby proved a logical necessity that in its development the general average rate of surplus-value must express itself in a falling general rate of profit. Since the mass of the employed living labour is continually on the decline as compared to the mass of materialised labour set in motion by it, i.e., to the productively consumed means of production, it follows that the portion of living labour, unpaid and congealed in surplus-value, must also be continually on the decrease compared to the amount of value represented by the invested total capital. Since the ratio of the mass of surplus-value to the value of the invested total capital forms the rate of profit, this rate must constantly fall”. Karl Marx, Capital vol. 3, chapter 13.

TFRP is the central plank of Marx’s revolutionary economic theories. He formed his theory in opposition to the closely related theories of the so-called “iron law of wages” and underconsumptionism, and sharply counter-posed TFRP to them. The Iron Law of Wages is a proposed law of economics that asserts that real wages always tend, in the long run, toward the minimum wage necessary to sustain the life of the worker. Karl Marx attribute the doctrine to Lassalle (notably in his Critique of the Gotha Programme, 1875), but credited the idea to Thomas Malthus in his work, An Essay on the Principle of Population.

Marx did not have several theories of capitalist crisis, he had one: TFRP. Marx attacked the “iron law of wages” in two lectures to the international Working Men’s Association in 1865. The argument was that the “iron law” meant the absolute immiseration of the working class which led to a lack of demand for commodities and hence a crisis pushing prices below the value of commodities finally squeezing profits.

This is closely allied to underconsumptionism. Of course it has an immediate reformist implication; there is a Keynesian solution to the crisis of capitalism. All we need to do is raise wages and pump more money into the economy and the crisis will be solved. The underconsumptionist tells us there is plenty of money available but the capitalists just won’t invest. So implicitly all we have to do is force them to do so or get the government to do so on their behalf. It is this reformist conclusion that Bruce Wallace has correctly identified in the line of both the CWI and the CPGB. The notion that they won’t invest because the rate of profit is too low is beyond them.

The point about TFRP is that it is a revolutionary theory; capitalism is in crisis because it has these fatal structural flaws; private ownership of the means of production and a system of production for individual profit which has this inescapable tendency to fall and halt production through lack of investment. Only a rationally planned socialised economy based on production for need will overcome the ever recurring [and increasing] crises of capitalism. War on a global scale is the only thing that will temporarily solve this crisis for the capitalists; a much smaller group of monopoly capitalists will now have their profits rates restored before they fall again and the next conflagration is prepared. That is the history of the twentieth century. The same iron laws apply to the twenty-first. (6)

Notes
1. http://howiescorner.blogspot.co.uk/2013/07/is-shttp://howiescorner.blogspot.ocialist-party-heading-fo-split.html
2. http://69.195.124.91/~brucieba/2013/08/01/what-exactly-did-marx-and-engels-get-wrong-a-la-nial-mulholland/
3. http://socialismiscrucial.wordpress.com/2013/07/15/ted-grants-notes-on-marxist-economics/
4. Ibid
5. https://suacs.files.wordpress.com/2013/08/socialistfightno14.pdf
6. Ibid

Acknowledgements and Thanks
Many thanks to Ray Rising for providing a selection of print-outs regarding the Tendency for the Rate of Profit to Fall.

The VOAG would like to acknowledge Socialist Fight for their article “Ticktin, Taaffe and Underconsumption” in Socialist Fight No.14 some of which is reproduced here.

Thanks also go out to Socialist Fight for their excellent Open Meeting on the “Tendency for the Rate of Profit to Fall” which The VOAG attended. For details of future Socialist Fight meetings contact: Socialist_Fight@yahoo.co.uk.

Three Short Essays On The Crises

Three Short Essays On The Crises

The Voag was checking out the news today and came across these three articles, which we figured were worth reposting. 

These essays have been republished without permission. 

Bond Markets Have The United States In Their Sights

Gerry Gold, 20 April 2011
Assessing the significance of credit rating agency Standard & Poor’s historic decision to downgrade the debt outlook for the USA is complex. But significant it definitely is. S&P and Moody’s, which between them control 80% of the rating market, act as intelligence gatherers and forecasters on behalf of capitalist investors. They examine relevant aspects of an institutional issuer of debt – usually a corporate entity or a state body – and assess the risk to an investor of placing their money with that institution.

The higher the risk, the more the issuer of debt has to pay to the investor in interest or “yield”, and consequently, the more the corporation has to make from its operations, or in the case of a state, the more it has to extract from its citizens in taxes. So, you might say, the increasing burden being placed on the populations of effectively bankrupt countries like Ireland and Greece is largely on the say-so of these agencies.

Like all these agencies, S&P is a competitive, for-profit operation. In order to keep its customers paying their fees – and that is mostly the corporations whose performance is being assessed – it needs to show that it is getting its assessments right, more than it gets them wrong.

In the run-up to the 2007-8 global crash, S&P was itself mesmerised by the hysterical expansion of fantasy finance in which products derived from the issue of traditional forms of credit and debt based on real value multiplied the amount in circulation many times over. The big players issued monumental quantities of derivatives and they paid the ratings agencies huge fees to provide the market with favourable assessments. Money talks. So the agencies failed to provide any warning about the impossible state of Lehman Brothers which crashed out of existence in 2008.

Governments, on the other hand, don’t pay the agencies to assess the health of their economies, or to assess the risk that they might default on interest payments to the investors who lend them money through the bonds they purchase.

The rating agencies make their assessments as part of the fees paid by corporations who want to know whether the state’s debt is more or less risky. The big, or even only question at stake is: will the government act sufficiently strongly to provide the conditions for the corporations to intensify the extraction of profit from their population?

So when S&P decides to downgrade the outlook for US debt, it is taking into account many factors. These days the judgement is more political than it is economic. The on-going Punch & Judy style shadow-play between Obama and the Republicans over the $4-5 trillion programme of cuts to be visited upon the American people is one aspect of the analysis.

As one economist observed: “The key question is whether the gridlocked US political system can respond in time to avert a bond market revolt.” Some commentators say that S&P’s action is a warning to Obama from the world of finance. If they don’t crack down hard enough, investment money will go elsewhere and interest rates will rise. But they’ll also be assessing the likely contagion effect of the wildfire of revolt spreading outwards from Tahrir Square throughout the Middle East, North Africa and taking in Gabon in Central Africa.

They’ll be weighing up the likely outcome of the political struggle against the regimes that have ensured the supply of cheap oil to fuel growth over the last forty years. They’ll be closely examining the protest movement in Europe for signs that it is moving beyond resistance. And they’ll be studying developments like the People’s Assembly arising from the occupation of the State Capitol in Wisconsin. It’s no wonder S&P has downgraded the US government’s prospects for paying back its loans.
Gerry Gold, 20 April 2011

 

The S&P Debt Warning: Wall Street Extortionists Demand
Savage Cuts

WSWS, 20 April 2011
Five days after the US Senate Permanent Subcommittee on Investigations released a voluminous report detailing the criminal activities of the banks and credit rating firms that precipitated the 2008 Wall Street crash and global recession, one of the named culprits, Standard & Poor’s Credit Ratings Services, issued an ultimatum to the White House and Congress demanding an agreement on savage austerity measures ahead of the 2012 elections.

In lowering its outlook from “stable” to “negative” on the top AAA rating for US Treasury bonds, S&P spoke Monday for the entire financial mafia that is headquartered on Wall Street. The ratings firm declared in a press release that failure to reach an agreement in the coming months to reduce the federal deficit by at least $4 trillion over the next decade “could lead us to lower the rating.”

This amounts to a threat to crash the US and global economy and undermine the status of the dollar as the world reserve currency. The move is part of an internationally orchestrated drive by the major banks and speculators to push through devastating attacks on the living standards of the American working class.

They are applying to the United States the extortionate methods used previously to stoke up speculative attacks on the sovereign debt of a number of European countries, including Greece, Ireland, Portugal and Spain. S&P and its major ratings rivals Moody’s and Fitch have issued strategically timed credit warnings and downgrades to create a crisis atmosphere, which governments have then utilized to override popular opposition and impose mass layoffs and wage cuts and shred social programs.

John Chambers, chairman of the sovereign ratings committee at S&P, virtually admitted as much, according to a report in Tuesday’s Wall Street Journal. The Journal wrote: “If the US reaches a British-style resolution, S&P will restore the US outlook to stable, Mr. Chambers said.”

In May of 2009, S&P lowered Britain’s credit outlook. It reversed the action 17 months later after the newly elected Conservative-Liberal Democrat coalition government announced a program of draconian cuts that will shatter the country’s social safety net.

Readers can make their own judgment as to S&P’s standing to be issuing such ultimatums. The Senate report on the Wall Street crash describes the corrupt process by which S&P routinely slapped AAA ratings on worthless securities marketed by the banks as follows: “Credit rating agencies were paid by Wall Street firms that sought their ratings and profited from the financial products being rated… The ratings agencies weakened their standards as each competed to provide the most favorable rating to win business and greater market share. The result was a race to the bottom.” Senator Carl Levin, the chairman of the subcommittee, described what the investigation uncovered as “a financial snake pit rife with greed, conflicts of interest and wrongdoing.”

By rights, the top S&P executives who presided over this fraud and pocketed multi-million-dollar salaries in the process should be sitting in prison. Instead, still at their posts and having suffered no consequences, they are using the disaster of their own making to gut bedrock social programs such as Medicare, Medicaid and Social Security upon which tens of millions of people depend.

The statement issued by S&P on Monday described both the Republican fiscal year 2012 budget plan and that outlined by President Obama last week as a basis for cutting the federal deficit by $4 trillion. However, the two sides had to come to an agreement before the national election in 2012, the company insisted.

This demand underscores the anti-democratic character of the so-called budget debate. It is an elaborate charade, behind which stands the dictatorship of the banks. The deal to eviscerate what is left of the social reforms of the 20th century has to be sealed before the elections to make sure that the vote in no way becomes a referendum on austerity and the electorate has absolutely no say in the matter.

The mass opposition to the measures being proposed by both parties is well known to Wall Street and its political servants in Washington. On Monday, the same day as the S&P announcement, McClatchy Newspapers published the results of a McClatchy-Marist poll showing that voters by a margin of 2-to-1 support raising taxes on incomes above $250,000, with 64 percent in favor and 33 percent opposed. They oppose cutting Medicare and Medicaid by 80-18 percent.

S&P intervened at the behest of the banks to shift the phony budget debate even further to the right and create the conditions for even deeper cuts than those being currently proposed. Interviewed Monday on Bloomberg Television, David Beers, S&P’s global head of sovereign finance ratings, said the $4 trillion deficit-cutting target was “not enough to ultimately halt the rising trajectory of US debt.” It was, he said, merely “a useful starting point.”

The establishment media immediately signaled that it had gotten the message. The Los Angeles Times editorialized that “Congress and the White House can’t afford to ignore this warning shot.” The Financial Times of London published an editorial that declared, “S&P’s warning shot should galvanise America’s leaders.”

Democratic leaders rushed to reassure Wall Street that they were on board. Speaking at a community college in Virginia Tuesday, Obama said, “I believe that Democrats and Republicans can come together to get this done.”
Steny Hoyer of Maryland, the No. 2 Democrat in the House of Representative, said Monday, “Today’s revised outlook shows the urgent, bipartisan action needed to put our nation on a serious path to reduce deficits.”

Erskine Bowles, a former White House chief of staff for Bill Clinton and co-chair of last year’s bipartisan fiscal commission, was even more emphatic. Speaking to the Financial Times, he said S&P had been “absolutely right” in lowering it outlook on US debt. “If anything, they understate the extent of the problem,” he said.

Only a mass, independent movement of implacable opposition by the working class can defeat this criminal conspiracy. The World Socialist Web Site and the Socialist Equality Party urge workers and young people to reject the entire framework of the so-called budget debate. There must be uncompromising opposition to any cuts in jobs, wages or social programs and services. The working class bears no responsibility for the crisis of the capitalist system.

We propose an alternate policy. As a down payment, to begin to recoup the wealth plundered by the financial elite, we propose a 50 percent tax surcharge on all household wealth over $5 million. This should be supplemented by raising the income tax on households taking in more than $500,000 a year to 90 percent. These measures will not only generate hundreds of billions of dollars for jobs, schools, health care, housing and pensions, they will attack the profligate squandering of resources and contribute mightily to the moral as well as the economic health of society.

These initial steps lead inexorably to the nationalization of the banks and major corporations and their transformation into public utilities under the democratic control of the working population. This is a socialist program. It requires that the working class break politically from the two parties of big business and build a mass movement to fight for a workers’ government.
Barry Grey, 20 April 2011

Portugal: Another Triumph For The Bond Dealers

Paul Feldman, 8 April 2011
As Portugal declares state bankruptcy, after its Socialist Party government failed to get an austerity package through parliament, it’s another triumph for the dictatorship of the money markets and bond dealers. Now, even though Portugal is without a government, the price demanded by Germany and the richer EU countries for an €80 billion bail-out is even deeper cuts in public spending than were first proposed. The upcoming general election is definitely one to lose.

Portugal’s finances collapsed because its budget deficit grew rapidly following the onset of the global recession. But the money markets drove up interest rates until Portugal was borrowing at over 8.5%, adding to the total deficit at a rate which made it impossible to repay.

In the last year, Greece – which still has a ‘socialist’ government and Ireland, which saw the ruling party wiped out at the recent general election, have suffered the same fate. Does the ‘contagion’ stop at Lisbon, or is Madrid next?

Spain’s government – yet another one that claims the rubric ‘socialist’ – is confident it can avoid Portugal’s fate – because it says it’s already making deep cuts in public spending! Youth unemployment is running at over 40% as a consequence. Meanwhile, Spanish bank assets are worth far less than before because of the collapse in property values and refinancing is increasingly expensive and hard to come by.

You can cut – as the Coalition is doing in Britain – to avoid higher borrowing rates but that only deepens the recession. Spending more would leader to higher borrowing rates, which the banks won’t like. Why? Because in the perverse world of capitalist finance, the value of the government bonds, which they hold as assets, depreciates as rates rise.

At the same time, British banks are steadfastly refusing to resume rates of lending last seen before the credit crunch of 2007. That’s because their balance sheets remain toxic and full of bad debt. Even the right-wing press is fed up with the banks.

On Monday, the Independent Commission on Banking set up by the government reports, and no one expects it to suggest any fundamental changes. The Daily Telegraph’s Jeff Randall reported: “The banks have captured our money twice over: as cash in their vaults and investments in their shares. We own all of Northern Rock, most of Royal Bank of Scotland and nearly half of Lloyds Banking Group. We rescued them – and in so doing became their prisoners.

But this is not a new problem. By the outbreak of World War One, the banks and the monopolies had formed an unholy alliance against ordinary working people and elected governments alike. After creating the Federal Reserve – America’s central bank – President Woodrow Wilson declared:

“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilised world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men”.

In the recent period of corporate-driven globalisation, the tensions and contradictions between the capitalist state and capitalist finance have deepened to the point where governments tread warily. The only way to sort that out is to put an end to the power of the bond dealers, banks and money markets and create a new, socially-driven financial system. It doesn’t need me to tell you that bourgeois governments are not capable of such a revolutionary change.
Paul Feldman, 8 April 2011

Focus On The Election: The Trade Union and Socialist Coalition

 Trade Union and Socialist Coalition

“The £11 million spent on Labour by the Unite union does nothing else than allow them to kick us in the teeth” said Hannah Sell, deputy leader of the Socialist Party as she opened last night’s launch rally for the Trade Union and Socialist Coalition.

The Trade Union and Socialist Coalition, ‘TUSC’ is standing in many constituencies across the country to give voters an alternative to Labour in the general election. Chris Baugh, assistant general secretary of the PCS union said “we are all being told to pay the cost of the bosses’ crisis.” This coalition can “restate the idea that another world is possible.”

Last month’s launch rally was attended by more than 300 delegates and a large media presence. Speakers included Karen Reissman, a mental health nurse who was sacked from her job for ‘whistle blowing’ over patient care. She is standing for the Manchester Gorton constituency.

Brian Caton, leader of the Prison Officers Association spoke from the platform as did Dave Nellist, a Socialist Party Councilor standing in Coventry North East. Some of TUSC’s London candidates delivered strong speeches about their campaigns. Steve Hedley, of the RMT London region announced the breaking news of strike action on the railways.

 We won’t pay for their crisis
A key argument from speakers was that billions have been given to the rich bankers, whilst workers and public services are being made to pay the cost. Chris Bough spoke about the propaganda campaign by the media to enforce this injustice.

To laughter in the audience, and in a snub to the media he joked about the number of hedge-fund managers who have recently appeared on the BBC’s Newsnight programme. He said the media had launched a “torrent of abuse” against trade unions, with the British Airways strike being a good example. But he said, “The public are with the unions. They are way to the left of the politicians. 50 per cent of the public don’t think that cuts are necessary”.

Karen Reissman agreed and continued along this theme. “People say to me: we’re glad you’re standing, representing what we think.” She said, “There are millions of people who don’t think they should be made to pay.” Tottenham candidate Jenny Sutton, a college teacher, said that education was a good example of what is happening to public services everywhere. “We are being absolutely hammered.”

We need a new party
Brian Caton said that working class people need a new political party “by the people, for the people. It’s time for socialism to become real. I supported Labour all my life and got nothing in return.”

Dave Nellist also called for a new workers’ party. He said the difference between Labour and the other parties could be reduced to whether the full extent of public sector cuts are brought through in “six years or seven.” “Indeed, last night, Alasdair Darling told the BBC that Labour would cut deeper than Thatcher.”

Nellist went on to say that success for TUSC won’t just be measured by the number of votes, but will “plant it’s flag in the ground – saying that an alternative is possible.” He said that TUSC could be the start to building an “independent trade union and socialist voice.” Hannah Sell said, “This is the modest beginning of something historic. We hope this will start the development of a mass party.”

Some TUSC candidates should do quite well – at least save their deposit. Karen Reissmann and Jenny Sutton (London regional secretary of UCU), for example. Dave Hill of Socialist Resistance is expected to do well in Brighton– And of course Paul Couchman in the Spelthorne constituency in Surrey. If 5-6 candidates save their deposits or do even better, then the pressure for a new party would be very high.

Paul Couchman is a paragon of what a candidate for a new workers’, anti-capitalist party should be. A Socialist Party branch organiser, he is a Unison branch secretary. He has consistently been involved in the community over many years and takes an active part in many local groups. He is the founder of “Save Surrey Services”, and is the founder and organiser of the campaign to save Surrey’s care homes. Paul is well known and respected throughout West Surrey and is known for his campaigning to keep schools and hospitals from closure. 

For an anti-capitalist party!
When the capitalist parties like Labour, Tories and the Lib Dems are about to launch such a huge assault on working class people, it is important that many TUSC candidates and supporters recognise that we need a new party to defend ourselves.

But speakers also made clear that there are many obstacles we will have to overcome to form such a new party. Onay Kasab, a Unison branch organiser standing for Greenwich & Woolwich spoke about how he had been witch-hunted by the Unison leadership. The union is currently victimizing left-wing activists. He told us that a memo had gone round to branch secretaries telling them that to lobby for non-Labour candidates in the general election would result in expulsion from the union. He told a disgusted audience that the Unison orders were “gobs shut for Labour.”  This is a declaration of war by the Unison leadership – vote Labour or else!

Steve Hedley said that the RMT union would only be supporting left-wing Labour candidates, although he admitted that these candidates were standing for the wrong party. He said that we urge left MPs like Jeremy Corbyn and John McDonnell to break from Labour.

In doing this, RMT leaders are stepping back from the kind of fight that is necessary for a new party. Some candidates, including the Workers Power candidate in Vauxhall, Jeremy Drinkall, were barred from standing for TUSC because they were standing against ‘left’ Labour MPs (in Vaxhall this is Kate Hoey). PCS leaders have been similar in their procrastinating, whilst the Labour government have been laying the way for civil service job cuts by attacking redundancy pay.

Despite the potential of the Trade Union and Socialist Coalition, its weakness is that left-wing trade union leaders ultimately have a veto over all the decisions that are made. The launch meeting was very weak on the question of socialism with almost no mention of a goal for the coalition how to achieve it.

The PCS, RMT and other unions outside Labour – along with groups like the Socialist Party and Socialist Workers Party should have organised a mass conference to decide on the politics and policies of this coalition. They could have used it to galvanise support from workers and youth all over the country who are in struggle against the economic crisis with the explicit aim of forming a new political party to destroy capitalism for good.

This new formation should be federated and it’s members free to belong to other political organisations which support the new party. The branches of such a formation should act as pluralistic campaigning groups, and encompass anarchists, radical environmentalists and syndicalists as well as trades unionists and socialists. In-fact, all those who appreciate that capitalism is not working and that we need to fight for a better future, free from the rule of profit, the threat of war, fascism and global warming.

This has not been done. TUSC drafted its manifesto in secret meetings behind closed doors, asking workers to ‘like it or lump it’. As a result there are major weaknesses with the TUSC programme reducing it to an ‘old Labour’ manifesto seeking to reform capitalism, rather than abolish the rotten system for good.

Such a conference should still be called, to start preparing the ground for a new party. The next few weeks are due to see a huge number of strikes – highly unusual in the run-up to the general election. Why not call for such a conference now and bring in the BA, RMT and British Gas workers, civil servants and teachers who are all taking industrial action to save their jobs? Then socialists could start having the arguments around the kind of action and international solidarity needed to protect the class as a whole. -And begin to build an alternative society with an alternative economy – where workers and communities are the ones who control it.