Tag Archives: Keynsianism

Arming the resistance

What lies behind the ruling class cuts offensive and what strategy do we need to defeat it? This is an edited version of the speech given by Mike Macnair to the November 28 CPGB aggregate


There are two ways in which the question of fighting the cuts has to be approached. The first is to look forwards from where we are, starting from the immediate tasks facing the movement. The second is to look backwards, starting from just what it would take to actually defeat the cuts, as opposed to having large protests against them.

Looking forwards from where we are now, our aim is a mass campaign. It is not about small campaigns or about ‘thinking global and acting local’, and it is not about focusing on one particular campaign for a particular hospital or school which is being closed down and so on. In this cuts process, partial victories on single services which do not break the framework of the budget cuts would be like workers in a car factory winning no redundancies in the paint shop – on the basis that the same number of people would be made redundant on the assembly line. Our immediate aim is therefore to have united campaigns at local level. There are all sorts of anti-cuts campaigns springing up, and there needs to be coordination in the localities, and not just a multitude of ‘my own backyard’ bodies.

In addition to this, there needs to be a united national campaign. Judging from comrades’ reports from the November 27 Coalition of Resistance event, it looks as if this campaign is going to leap substantially ahead of the Socialist Workers Party’s Right to Work campaign. It also looks as if it will marginalise the Socialist Party in England and Wales, which seems unable to decide between national initiatives through Youth Fight for Jobs (merely a SPEW front) or through the National Shop Stewards Network, which is only slightly more than a SPEW front. But it looks as though these two campaigns have been very much pushed into the shade by COR.

But at the same time, COR runs the risk of not being the sort of campaign which can function at the level of the masses, but of a repeat of the Stop the War Coalition. That is, a central apparatus controlled by a particular coalition, which organises a series of national events of a grand old duke of York character (march them up to the top of the hill and march them down again). The political character of the project and an emphasis on ‘breadth, breadth breadth’ would mean that you cannot propose anything which the centre-left of the Labour Party would disagree with, or even (part of) the Liberal Democrats, given that the Labour leadership seems to be looking to break the Lib Dems from the coalition.

It is not that the alternative to this is a ‘hard left’ campaign. What we want to see is a democratic campaign, which means that the national organisation and leadership has to be based on delegates from the united campaigns in the localities and be answerable to them. To put it in a rather crude way, imagine that the local cuts campaigns are soviets and the central campaign is a congress of soviets. Obviously, this is a rather misleading way of putting it, because we are not talking about a situation where the working class is in short order going to take over towns and cities through its elected representatives. But in terms of the basic principles of organisation, we are talking about a mass campaign both in relation to the localities and in the character of the organisation at the centre, making the leadership answerable to the base.

Alternative politics

The second question which is immediately posed is not a task for a mass anti-cuts campaign as such. What is posed is the need for an alternative general policy. Of course, the COR statement talks about the necessity of an alternative vision, but in essence the leadership’s vision is British nationalist, with Britain following a Keynesian policy, printing more money and letting the deficit rise on the basis that the country’s economy will improve as a result. They might tack onto this a policy of fair trade with the third world; cuts in arms expenditure; ending the wars and so forth. But at the end of the day, the policy remains a British nationalist policy.

What is missing is a communist alternative policy, a Marxist alternative policy, which tackles head on the fact that these cuts are the product of an international crisis of capitalism and that they are a product of the choices which capital has made.

I stress capital because the cuts are not merely the choices of David Cameron and George Osborne. They are not about ideological blindness, nor are they simply about contributors to the Conservative Party wanting to do well. There have been enormous losses in the global financial sector and now the question which is posed after the numerous governments have carried out large-scale nationalisations, printed and borrowed huge quantities of money and bailed the banks out is: who is going to pay?

This question is not one which is simply posed within individual countries. It is also posed between individual countries. The fact that this is the character of the cuts decisions is reflected in the fact that the Conservatives are constantly able to say two things to dismiss Labour’s criticisms over this or that cut.

The first, which is a total lie, is that the deficit level is largely attributable to Labour’s ‘reckless spending’ in the period before the crash. The reason why it is a lie is that the turn which Labour took in spending more money was in response to international agreements to stimulate the economy in the wake of the east Asian crisis of 1997 and the dot-com crash of 2001. So the bubble and the structural deficit of the last period is not the result of the errors of the Labour Party in spending more money. It is a consequence of the recessions and house price crashes which should have followed either the first or the second of these financial crises (a serious recession after 1997 would probably have meant that 2001 would not have occurred), but which were averted by Keynesian deficit spending after 1998-99 and again after 2001-02.

The second thing which the Tories can say in relation to Labour opposition to the cuts is true. It is to point out that Labour was also going to carry out serious cuts. In the last months of the Brown government, Alistair Darling et al were talking about a serious reduction in public expenditure. So these cuts are not solely an ideological commitment of the Tories. There are features of some Tory donors benefiting from the proposed cuts, but the overwhelming bulk of what is going on is that something which a Labour government would have been doing too, had it won the last election.

There is a consequence of this. Because where the cuts are coming from is not a combination of stupidity on behalf of the Tory leadership and the Orange Book Liberals, because the cuts are not simply about a series of corrupt payments to the Conservative Party, addressing them on the level of a Keynesian alternative is not a realistic proposal. Because the actual overthrow of the existing regime of capital is not on the agenda, the Keynesian solution is presented as a realistic one – Britain can adopt an ‘alternative economic strategy’ and adjust its position in terms of the global world order.

But it is actually not a realistic proposal. The reason is that underlying the decision to go for cuts is a sense of a non-hegemon power having reached its limits – the limits of the Keynesian interventions of 1998-2001. Now the losses have to fall on somebody, and any government which pursues British ‘national interests’ and seeks to maintain Britain’s standing in the world, or to maintain the enormous role of financial services in the British economy (one of the biggest sources of income to Britain from foreign economies) is going to have to implement something like these cuts.

We need broad mass unity to fight them. But if this broad mass unity is to require the far left, which in theory does advocate the overthrow of the existing capitalist system, shutting up about this for the sake of unity, and serving as bag carriers for those who advocate national solutions, it is actually a waste of time. It is true that people may be mobilised and so forth. But at the end of the day it will not prevent the cuts or result in the political defeat of the cuts project. It will be mere protest, ultimately ineffective: what columnists in The Times and The Daily Telegraph are calling ‘nostalgia for the 1970s’.

The consequence of that is that, although we want a unified, democratic anti-cuts campaign which is not in and of itself committed to the overthrow of capitalism, it remains the case – and becomes more the case than under Labour – that we need a Communist Party as an alternative to Labourite politics. The question of party unity is not posed to the cuts campaign as a whole in the sense of an ‘anti-cuts party’. After all, people can be quite genuinely and sincerely opposed to these cuts and be Labour rightwingers who would defend Labour cuts. So can nationalists and advocates of Keynesian demand stimulus. But those people who are already theoretically and in principle in favour of the actual overthrow of capitalism and its replacement need to organise on a party basis and not on the basis that we currently have – ie, the various competing sects, and their competing fronts which attempt to unite one sect with a section of the social democratic bureaucracy to gain leverage at the expense of other sects.

Winning strategy

The second approach is to work backwards from the question of what could defeat the cuts. This question is posed in a sense by the (in my opinion largely futile) debates about direct action amongst our own ranks. I say futile debates because it seems to me that there are not any substantial differences. The line which the CPGB Provisional Central Committee took after the occupation of Millbank Tower was to say, ‘Great, we celebrate the fact that people were militant, but we cannot count on making two, three, many Millbank occupations.’ We celebrate militancy – though, of course, we criticise somebody throwing a fire extinguisher off the building, which amounted to ‘friendly fire’ on demonstrators below. We also celebrate that, by sheer luck if nothing else, the occupation came off and that it made the media.

After Millbank, education secretary Michael Gove has argued the need to deny the students the “oxygen of publicity”. By and large, the press and the BBC have concurred, particularly in relation to the student occupations which are springing up all around the country. In Millbank we saw the tactical advantage of the ‘spectacular’. But this will not be repeated.

We have seen this before with the first anti-capitalist demonstrations on May Day in the 1990s. They also hit the media, also were a trigger and also caused a very big deal. But, as the event was repeated every May Day, the police were not only ready to deal with it: it ceased to be real news any more. So, yes, it is great to be militant and to be creative, but it is not a strategic way forward. I think differences in our ranks have been largely centred around nuance in how to assess the event.

However, there is an important issue which lies behind this discussion: namely that protest in the simple sense of grand old duke of York marches through the streets of London is not going to stop these cuts. Witness the big demos against the Iraq war. But equally attempts to repeat Millbank are not going to stop these cuts. Nor are student occupations. So what is going to stop them?

The struggle against cuts is like struggles against redundancies and unlike disputes over wages and conditions of employment. In disputes over wages and conditions, the employers do actually want the work done; they just want to pay less for the same amount of work – whether directly, by speed-up or by dumping accident costs on employees. Strikes therefore hit the employers where it hurts: in their pockets. Nor is it like the poll tax. There the government’s aims included reducing taxes on business and the rich, cutting local expenditure and trying to get working class voters to blame Labour councils. But its immediate means was to try extract more tax from the poor, and direct resistance to paying could therefore defeat the project.

The cuts, on the other hand, amount simply to the government refusing to provide money for various purposes for which it has provided it in the past. That means that the government is not desperately concerned if things do not get done. Protest strikes are useful, but all-out strike action in the public services will have no coercive effect. Moreover, the coalition partners have deliberately ‘front-loaded’ the cuts. They expect to be massively unpopular and to face a certain degree of public disorder for the first three years of the five-year parliament they plan. They hope that after this they will be able to give out enough tax bribes, etc, to win the next election. If that fails there is always the possibility that some third-world nationalist will invade UK overseas territory in a repeat of the Falklands war or that the Blairites will wreck Labour as an electoral alternative by ‘doing an SDP’.

Capitalist crisis

Think about what lies behind the cuts. There has been an international capitalist crisis with massive sums of money lost in the financial markets. The question follows: who is going to pay for these losses? In the first instance, it is the masses in Iceland, Greece, Ireland and elsewhere who are going to pay. We are seeing a process by which the central imperialist powers use their control of the financial system (plus, lying behind that, US power and the implied threat of military action in the case of a default) to offload the crisis onto the masses of these peripheral countries.

So in essence what we see is the US and other top-dog powers using their position in the global order to dump these losses – onto the broad masses of their own countries to some extent, but also to a much larger extent onto weaker countries, which can be made to carry the can: loan capital is withdrawn back into the central core, which leads to a global debt crisis, and this then transmutes – as it has in Greece and Ireland – into a state debt crisis. This now looks likely to hit Portugal and Spain too.

The US would also very much like to externalise losses onto China by forcing Beijing to float its currency. If the Chinese currency is allowed to float freely and Chinese capital controls are removed, then there will be a very large asset bubble leading to a rapid crash à la Japan. After all, in the 1987 crisis floating currencies allowed the US to externalise the losses made in the financial system onto Japan, creating a slump in that country which has persisted to the present day.

In this situation, states are manoeuvring in complex ways against each other. My impression of the recent crisis over North Korea and the north-south borders is that it is really part of the same process. It seems that the hand of the US may lie behind this, rather than pure adventurism by the North Korean leadership: the US has found a reason to bring its fleet right up to Chinese territorial waters, which is what is involved in the current military exercises, and thereby remind the Chinese that they are not (yet) ready to embark on armed confrontation with the US in defence of their own freedom of action.

So states can externalise losses to the extent that they and their currencies remain high up in the pecking order. In this situation the UK government is making cuts, and shifting costs onto the poor, women and onto the north on a large scale. It is doing so not because it is absolutely out of money, but in order to stabilise its ranking in the global pecking order.

The point is to keep money flowing through London, because at the end of the day the material productive element of the British economy is not that strong. Money in global transactions flows through London, and this is skimmed off in the form of salaries and bonuses paid to workers in the city, and then these salaries are in turn skimmed through income tax. This is one of the most taxable parts of the economy, as opposed to corporate profits, which to a considerable extent have been made de facto tax-free by various scams, schemes and offshoring operations. So funds which derive from international flows of money actually make up a very substantial part of the state budget. The resulting income is then redistributed in the form of public sector expenditure, contracts for private finance initiatives and so forth, which keeps the rest of the economy going.

This is not a previously unknown situation. In a sense it rather resembles the 17th century Venetian economy or that of the Dutch the 18th century. That is to say, it reflects a former world hegemon which is no longer dominant militarily and has lost a large part of its material productive base and primarily become an offshore financial operation, skimming off the financial transaction flows in the world economy. (Like the 17th-18th century Venetians, but unlike the 18th century Dutch, Britain also gains significant income from tourism …)

But in order for that to continue it is necessary, from the point of view of capitalism, for the British government to be seen as a strong government vis-à-vis its own debts, and to some extent internationally (hence the fuss about cuts in military expenditure within the elite, in a way that cuts in welfare simply are not of any substantial controversy in this milieu). It is also necessary to maintain the alliance with the US: just as the 18th century Amsterdam financial market existed thanks to British toleration and was rapidly crushed when the Netherlands acted against British interests, so today Britain’s ability to live off financial services exists thanks to US toleration and support.

Let us go down a level in the explanation. The global crisis reflects the problem that – by retaining capitalism – society opts for coordination of labour and resource allocation on a global level – and on a national level through the money mechanism. At the end of the day, it is this mechanism of resource allocation which produces the cycle of boom-bubble-crash-slump and then gradual recovery leading to boom.[1]

To escape the imperatives of that situation it is necessary to carry out resource allocation in a different way: ie, to move very substantially towards direct planning in use-values and very substantial demonetisation of economic decision-making. That is the highest level at which the cuts could be defeated: we could defeat the cuts by overthrowing capitalism.

Obviously the problem with this, as we have seen in the Soviet Union, is that it cannot be done in a single country – not even one as enormous as the USSR in terms of population, resources and expansiveness. But it certainly cannot be done by unilateral action in the UK, which is not able to feed itself and is dependent on food imports just to keep its population alive – leave aside everything else in terms of the productive economy and the dependence on the financial services sector. So the overthrow of capitalism needs to taker place at an international level.

We could begin the overthrow of capitalism at a European level. We should certainly aim to prepare for such a project. That is why we have on our masthead “Towards a Communist Party of the European Union”. But, even short of this aim, we can aim for and fight for coordinated Europe-wide demonstrations, strikes, etc, against cuts and ‘austerity’.

Aims and outcomes

Level two: we could defeat the immediate cuts by overthrowing the present government without overthrowing the state and capitalism. This would be a tough job in itself, but it could perhaps be done if enough Liberal Democrat MPs lost their nerve. But then what do we put in its place?

Inevitably at present it means we put in its place a Labour government committed to cuts! Indeed, suppose we put a left Labour government in its place (who knows where the Labour lefts are going to come from, given they are so thin on the ground). But suppose we have a government – say, headed by Tony Benn dragged out of retirement, along with some Communist Party of Britain types, etc. We then introduce a policy which is based on the Labour left and CPB ‘alternative economic strategy’. What happens? Simply and obviously we will see capital flight on a very large scale, which in France the first government of François Mitterand was subjected to after making some ‘unwise concessions’ to the working class. The result will be that a left Labour government would be forced to more severe cuts than those now being imposed by the Con-Dems.

Level three: we persuade the state elite and the capitalist class that there are worse alternatives than concessions. Now, it may be that we can do this, as happened in 1945. The response of an important section of the elite in Britain to 1940 was to head to Kenya or the Caribbean. But across Europe in 1945, in France post-1968, and to some extent in Britain in the 1970s, the capitalist class was persuaded by working class political action which amounted to less than overthrowing the government and less than overthrowing capitalism, that the actual overthrow of capitalism was in prospect. Because they were persuaded that this was in prospect, they were also persuaded that it was a better option to make big concessions in order to head it off.

The problem we are in at the moment is that the state elite and the capitalist class is not persuaded of anything of the sort. The phenomenon of generational replacement means that the people who lived through the 1930s and the 1940s are now out of politics and deep into retirement. It also means that those who lived through the 1960s and 70s are also getting on. Those who remember the rise of the shop stewards’ movement and militant action from the 1960s are also getting towards retirement age. The people who are forming this government remember Thatcherism from their youth. At the moment they cannot imagine being confronted with really serious resistance.

It might be possible that with sufficiently serious resistance and a political alternative – even a very imperfect political alternative, like the Left Party in Germany – that the capitalist class will back off from these cuts and make concessions, even if it is not really the case that we are about to take power. (After all, it was not really the case that the working class was about to take power in France in 1968 or in Britain in 1974.) We might scare them sufficiently to force concessions.

But in order to do that we need mass action on a European scale. The reason is that, as long as the austerity consensus holds across Europe, any individual country which makes concessions to the working class will face a flight of capital. Mass action on a European scale could break the consensus. This idea is not at all unrealistic: we have already seen widespread mass action in individual countries across Europe. The obstacle is the nationalist character of the social democratic and ‘official communist’ leaderships.

But we also need people to be positively arguing for the overthrow of capitalism. Why the capitalist class perceived the overthrow of capitalism to be on the agenda in 1945 is obvious: Soviet troops reached the Elbe. The reason they perceived it to be on the agenda in the 1960s and 1970s is also due to international considerations – while the USSR was militarily very much weaker than America, the US had not attained the capability it sought of a first strike without effective Soviet response; the US was being defeated in Vietnam, the UK had been defeated in Yemen, and the insurgencies in Mozambique and Angola brought down the Portuguese regime. Also the mass actions of the late 60s and early 70s, though nationally limited, were global in range. And they took place in the context of there being large-scale ‘official communist’ parties, large Maoist splinters to their left, and beyond that substantial Trotskyist organisations, all arguing at least formally for the overthrow of capitalism.

As far as this is concerned, the problem we have at the moment goes back to the absence of a party in relation to the anti-cuts movement. Because they are all trying to get an inch ahead of their left competitors by making a bloc with the social democrats, Martin Smith, John Rees, Hannah Sell and co are not arguing for the overthrow of capitalism. They are arguing for a nationalist and Keynesian policy. Thus working backwards from what is needed to defeat the cuts, we arrive at one of the points we reached from the point of view of what the anti-cuts campaign immediately needs: a united Communist Party.

Of course, we in CPGB consistently argue for this, but the party is objectively the real link between a mass anti-cuts protest campaign and the actual defeat of the cuts. Without a real party arguing for the overthrow of capitalism, we are unlikely to get beyond the phenomenon of marching up and down the hill.

As for direct action, it is entirely morally justified. After all, the Con-Dems have come to power through fraud and corruption, and using occupations and even employing force against them is totally acceptable.

But the moral justification is not the issue. The issue is, what can inflict a defeat on this cuts project? This problem is one of politics, not of direct action tactics

mike.macnair@weeklyworker.org.uk

Notes

1. More in my articles ‘From boom to war?‘, Weekly Worker October 2 2008, and ‘Responding to the crisis‘, October 16 2008.

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