The months of September-October 2008 saw the worst financial crisis since the 1930s. All five Wall Street banks collapsed and the media, the economists and politicians of all parties accept we are sinking into a recession whose severity is yet to be determined. As global capitalism comes adrift we have already seen in the UK:
– House repossessions increasing by 71%. Shelter predicts 45,000 repossessions, with 1.2 million households heading for negative equity
– Growing unemployment: government figures put it at 1.8 million, others at three million, with the Rowntree Foundation calculating six million people of working age without jobs.
– Food prices rising by over 10%, and in numerous cases by over 40%. Gas and electricity bills have risen 29.7%, twice as fast as the European average.
– Real wages falling: the share of the overall economy going to wages has gone down every year since 1995.
The government says wages must be kept down to stop inflation – but it is not wages that are to blame. Over 90% of workers received wage rises beneath inflation. Wages are nowhere near enough to meet the rising costs
– A mere 22% of a typical household’s monthly income is left after tax and essential bills, down from 28% since 2003. The situation is getting worse.
– Income inequality is equal to its highest level since records began in 1961, and child poverty is above the levels experienced during the recession of the mid-1980s.
To the melodies of ‘things can only get better’, New Labour boasted that it had overcome the cycle of ‘boom and bust’; now it seems things can only get worse. The scale of the breakdown is almost beyond comprehension: after the Wall Street investment banks collapsed, the crisis extended tsunami-fashion into Europe, the world’s financial firms losing £1.8 trillion in the credit crisis. As Karl Marx once wrote: “The only part of the so-called national wealth that actually enters into the collective possessions of modern peoples is their national debt”. His words ring truer than ever, for it is the world’s taxpayers who have forked out £5 trillion to preserve the banks; in the UK the cost to the taxpayer to three banks will be £57 billion.
The intensity of the crisis in the UK, whose full affects are yet to be felt, is exacerbated by the fact that the business and financial services sector grew to over one-third of the economy under New Labour. One of the more common explanations presented by the press and politicians is that the events of recent months were a severe crisis, though of limited duration, caused by irresponsible conduct in the financial centres. Having ‘recapitalised’ the wheels of finance, ‘confidence in the markets’ will be restored with new preventive safeguards in place and after a period things will revive. This shallow analysis is bogus.
The present crisis is not rooted in the “greed” and “misconduct” of City speculators. The current crisis is systemic: its recent manifestation is right in the heart of global capital but its scope is world wide.
This crisis of organised capital should be an opportunity for organised labour to go on the offensive – but instead the response of the official labour movement has been pathetic. Capital has nothing to fear from leaders calling for increased redundancy payments and agreeing to job cuts. The co-ordinated campaign of strike action agreed at the TUC Congress is now in tatters. Anyone who has been active even for a short time in the movement knows that union leaders prepared to stand up for the interests of their members are few and far between. It is twenty-eight years since Thatcher’s anti-union laws were first introduced: are we to go through another recession curtailed by these laws and the prison-wardens of the union bureaucracy?
The labour movement requires a new direction – a complete recomposition: we do not need another Labour Party or even the existing TUC – those sections of the movement prepared to stand up for workers’ interests desperately need to forge a united workers’ front from below and begin the process of developing a new organising centre for our movement that will stand up for the interests of workers, not genuflect to the needs of crisis-ridden capitalism.
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