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Tories head for the rocks Nigel Lawson.
The Tory Cabinet is split over Europe, and Thatcher's electoral leadership is being challenged. In an editorial statement we examine the prospects for the British economy and ask, can the Tories recover in time to win the next election?
300 MIR "He who hath no stomach to this fight, let him depart," was the rallying cry of Tory Party chairman, Kenneth Baker, quoting from Shakespeare's Henry V at this year's Tory Party conference. Nigel Lawson took the advice to heart and promptly resigned!
In so doing, he provoked the most serious political crisis for the Tory government since the Westland affair in 1986. Then, Thatcher was on the brink of resignation. Indeed, before she went to the Commons for the critical Westland debate, as she has subsequently admitted, she told her private staff that by six o'clock that evening she would probably no longer be Prime Minister. Only a particularly inept parliamentary performance by Neil Kinnock, which he also admitted later, allowed her to save her political skin.
The upheavals in the Stalinist states, particularly in East Germany, have perhaps diverted attention away from the government's difficulties. But this will only be temporary. This crisis is far more deep seated and serious than in 1986. Nor is it likely that feeble speeches from the Labour leader can come to the rescue of the government this time. Leon Trotsky once commented that the British ruling class took great pains to screen any differences within their ranks. They were conscious that a 'third party, ie the working class, was listening in. Open divisions within the ruling class could not fail to stimulate opposition to their system by the working class. Hence the adoption by the British bourgeois of parliamentary cant, that special form of hypocrisy, whereby different factions of the Conservative Party, while plung ing the knife into each other's back, still address each other in honeyed phrases and as 'hon- The bitter trading of public insults and recriminations between different wings of the Tory Party are profound symptoms of the crisis which besets the government. In the past the strategists of capital fawned over Thatcher. At the time of the Falklands War, she was a 'Boadicea'. In her confrontation with the miners,
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MASTER
she was the Iron Lady'. But, as the German philosopher Hegel liked to say, 'reason becomes unreason and unreason becomes reason'. Now according to the Financial Times she is a 'megalomaniac. Brian Walden, formerly her favourite TV interviewer, accused her of 'being off her trolley'. In the ultimate insult, Shropshire farmers now refer to 'mad cow disease' BSE as 'Mrs Thatcher'. (Evening Standard 2 November 1989).
When thieves fall out the truth is revealed. The Thatcher-Lawson clash exposed the myth of 'cabinet government? The denunciations of Thatcher's virtual 'one woman rule', ', her elbowing aside of the cabinet and of parliament, her reliance on 'advisers' such as 'Rasputin' Walters, serves to underline our previous analysis that the Thatcher government has some features of parliamentary bonapartism.
..The strategists of capital tolerated this so long as Thatcher appeared to 'deliver the goods', presiding over an economic revival and cowering the labour movement. The looming economic and social catastrophe for British capitalism, however, has changed all that. Ostensibly Lawson's clash with the Walters- Thatcher axis centred on the European Monetary System. Yet the underlying cause is that the British economy is heading for the rocks. Thatcher and Walters are 'Atlanticists', who wish Britain to continue as a semi-satellite of US imperialism. The other wing of the bourgeois, probably the majority, see no alternative but to throw in their lot with Fortress Europe'. They
MIR C31 seek refuge from the looming economic storms
under the umbrella of the West German bourgeois, which is now the dominant economic power of Western Europe, and increasingly of Eastern Europe.
Developments in the world economy, which were of decisive importance in the Tory victory in 1987, will shape the perspectives for the British economy. The October 1989 stock exchange crash shattered the sunny optimism of the bourgeois, buoyed up when the October 1987 crash did not lead to an industrial recession but instead was followed by further growth.
The key factors sustaining this upswing were the colossal injection of fictitious capital, ie credit, by Germany and Japan - the real engines of growth in the last two years - and the expansion of world trade by 9% per annum since 1987. It was the collapse of the junk bond market, a particularly venal form of parasitism of modern capitalism, which set off the collapse in Wall Street.
While the industrial bourgeois try to discount the effects of the 'casino economy', developments in the 'real economy' are precisely the ultimate causes of the tremors on the stock exchanges. Above all, the Reagan boom in the US economy, still of pivotal importance for world capitalism, appears to be running out of steam. Despite notoriously unreliable statistics, and economic indicators which earlier this year gave contradictory signals, recent economic data point to a slowing down, with the possibility of recession in the next year or two.
The Wall Street Journal declared recently
Tory leaders, except Thatcher, see no alternativ but to throw their with Europ
in lot
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320 MIR Winter 1990 Britain
e world nomy is
caught between inflation
and deflation
"the stock market is sick because profits are crumbling". Profit levels steadily increased during the Reagan boom. But now some of the giants of US industry are reporting sharp reductions: profits in the third quarter of this year were down by 45% for Ford and General Motors, while Chrysler made an operating loss of
$178m. Manufacturing employment is falling, house building, a key economic index, is back to pre-boom levels, and investment dropped by 3.3% in April to June.
The US economy faces either a 'soft landing' ie. a slowing down in the rate of growth; a small recession along the lines of 1974-5 and 1979- 81; or even a serious slump. Despite the pledge of Alan Greenspan, Chairman of the US Federal Reserve Bank, to pump in liquidity' to shore up the stock markets, the bourgeois fear that this will give a further twist to inflation as in the post-October 1987 period. But a continuation of high interest rates, by increasing the cost of borrowing to manufacturing industry, would choke off investment, reinforce the tendency to cut back on accumulation, and could bring the boom to an end.
The world bourgeois are on the horns of a very uncomfortable dilemma, between deflation, where production and investment fall, and inflation, where prices accelerate. The coming period will probably see a combination of both, ie stagflation.
Marxists have never based their perspectives for the radicalisation of the proletariat on the mechanistic notion that slump equals a strike wave and an upswing in the class struggle, and boom means the opposite. The MIR predicted that the very upswing of world capitalism, with the jump in profits and the drop in unemployment, would reinforce the confidence and preparedness of working people to fight. This has provoked an international strike wave from which Britain has not been immune.
Offensive struggles among sections of the working class have already begun. The engineering strike for a 35 hour week in Britain is just one example. The boom meant that some employed workers received wages increases at or even a little ahead of the rate of inflation. But increased exploitation, not through increased investment but by squeezing more work out of a smaller workforce, has taken its toll. The accumulated bitterness, rage and fury at the conditions in the factories lie behind the engineering dispute.
The Thatcherite 'managerial counter-revolution' had transformed some sections of the car industry into virtual concentration camps. Neither the union leadership nor the shop stewards organisations, which in many cases have bent the knee to management, have been able to offer the necessary protection. All these unbearable tensions will break out, even if the
'best scenario' for
ding' transpires.
The illusion of a never ending boomlet will be shattered. A combination of inflation, already evident in Britain, and a slowing down in the rate of growth, which will increase unemployment, will mean bitter battles on wages and in defence of jobs. This in turn will begin to transform the trade unions and the mass workers parties in Europe. Moreover the next recession or slowdown will mean the entry of the US working class onto the arena of struggle. Not far behind them will be the West German and Japanese proletariat.
One thing is clear: while the perspectives for the world economy may be conditional, the British economy is heading straight for the 'iceberg' which Lawson alluded to in his Commons resignation speech. Fords UK management have bluntly declared, 'it is not a question of if a downturn will occur but when". This is the consensus of the more serious spokesmen of British capitalism.
In the retail sector, contraction has already begun, spreading to the manufacturing sector. The announcement of 2,000 lay-offs by Hoovers in Merthyr Tydfil and Cambuslang is a portent of future layoffs and closures of industry.
The Political Quarterly described the capitalists' dilemma in stark terms as a "strategic predicament of staggering proportions with the only real alternative to a trade deficit of §40bn or more... (being a) virtual stop in growth or even an absolute decline in total demand and output". The 1989 deficit on the balance of payments, reflecting the fundamental lack of competitiveness of British capitalism, will be between £19-20bn.
The Tories' boasts of an 'economic miracle' have turned to vinegar in their mouths. In 1979 Britain's trade deficit with West Germany was albn. Since then it has increased to the record figure of £9bn. The defcit with Japan has shot up from Elbn to £5bn.
Social upheaval on an unparalleled scale would have been inevitable in Britain but for the temporary shield of North Sea oil, which added £78bn to government revenue in the past decade. This lucky windfall, together with the upswing in the world economy and receipts from privatisation, propped up the Thatcher government. Despite all this, unemployment still officially stands at 1.7m, with the real figure closer to 2.3m.
The Tory government is now boxed in. A section of the bourgeois favour devaluing the pound to increase the competiveness of British exports. However, because 20% of industry was destroyed during the 1979-81 recession and investment only reached the levels of 1979 last year, there is little 'spare capacity' to fundamentally alter Britain's trade position, even
bourgeois
'soft lan-
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TAPT
POL FAX
NO POLL TAN POLt THA
with the leeway offered by devaluation.
This year has in any case seen a 10% devaluation against other currencies. An even more substantial devaluation would not result in a greater export performance. As in the past, notably in 1967, it would probably be used by the capitalists to increase prices and thereby their profits. Moreover, devaluation would give a further twist to inflation, already the highest of the top seven economies.
High mortgage rates have meant agonies for eight million homeowners. For many, the gloss of Thatcher's 'property owning democracy' has disappeared. In the first six months of this year 35 homes were repossessed each day. By the end of the year, 400,000 families could be in difficulties with their mortgage repayments.
One of the pillars of the Thatcher miracle was the huge piling up of debt. Household debt is now roughly equivalent to total annual household income. Cambridge economist Wynn Godley concluded that "in 1988 disposable household income was supplemented by borrowing to the tune of no less than £54bn. With high and rising interest rates and stagnant and falling house prices, the flow of net borrowing could easily fall by say $25bn, thereby directly reducing consumption by 5% or more. At the same time companies have an indebtedness higher than at any time apart from the period immediately preceding the recessions of 1974-5 and 1979-81."
Godley belongs to the Keynesian wing of bourgeois economists, the so-called 'demand siders'. . Yet so desperate is Britain's economic situation, he believes that there is "no way of avoiding a recession in the short run." He there-
fore favours increases in personal taxation and further credit controls. Yet increased taxation would merely deepen recessionary tendencies by cutting consumption, ie the market, tighter credit controls, which the government is already imposing through higher interest rates, would deflate the economy.
Notwithstanding the parlous state of British capitalism, is it not possible for Thatcher to ride out a small recession or slowdown, prime the pump with further tax concessions, and sail to victory in 1991 or 1992?
This cannot be completely ruled out but economic and social factors point overwhelmingly to a Tory defeat. John Major, the new Tory Chancellor, has planned for low or nil growth over the next year, and then a reflationary budget before the next election. But all the best plans of mice and men often go awry. Just as Major 'reflates for victory', there could be a downturn in the world economy. And that would seal the fate of his government.
Even without a world recession, the government will have problems. Any pre-election tax concessions would only drag in imports which could not be supplied by domestic industry. This in turn would widen the trade gap and provoke a run on the pound which only a further increase in interest rates could hold up. Increased interest rates would drag the economy further down.
Quite apart from these economic difficulties, the new mood which is taking place socially and politically spells doom for the Thatcher government. Thatcher herself is the most unpopular prime minister since polls began fifty years ago. She is even more unpopular, with
Founding conference of the All-Britain Anti-Poll Tax Federation.
Thatcher':
'economic miracle'
has been exposed
MIR
•33
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340 MIR Winter 1990 Britain
Kenneth
Baker.
Only the Marxists predicted Labour's
poll
victory
24% support, ed her.
In a sense the knot of history was broken in 1981, first by the Falklands war and then by the Reagan boom. It was these factors, combined with the splitting of the Labour Party and the formation of the Social Democratic Party in 1981, which ensured Thatcher's electoral victories. Now, at the end of the decade, this knot is being retied.
Following the 1987 general election, Thatcher made the fatal error of mistaking the pusillanimous tops of the labour movement as a barometer of the mood of the working class, adopting what her Tory critic lan Gilmour correctly called "electorally poisonous policies which it would not have touched with a barge pole it ministers had ever thought Labour could become credible." Chief amongst these were the poll tax and privatisation. Thatcher took encouragement to go ahead with the poll tax when she saw Labour's front-bench spokesmen acting as front-line troops in denouncing a nonpayment campaign.
Yet now we learn that various Tory grandees have 'always opposed' the poll tax. Nigel Lawson, it is now revealed, was an implacable opponent of the poll tax. So too was Michael Heseltine, a challenger for the Tory leadership. Not a word would have been heard from these gentlemen if the tax had stuck. That it has not in Scotland, that one million are refusing to pay, is entirely down to the magnificent non-payment campaign in which Militant supporters have played a key role.
As Militant and the MIR predicted from its inception, the poll tax alone, it persisted in, would mean an electoral disaster for Thatcher. Now in 50 key marginals, polls show that majorities against the poll tax have gone up from 54% to 63% in a year. And this is before the implementation of the tax in England and Wales. The determined opposition displayed in Scotland will result in a tidal wave in the rest of Britain which will engulf the government.
The class polarisation which is now taking place in Britain has little to do with the leadership of the Labour Party. Indeed, they are as astonished as Thatcher herself, if not more so, at the change in Labour's fortunes. The polls now put Labour at between 10-12% ahead of the Tories. It was the Marxists alone which held out the prospect of a Labour victory in the next election. The new theoreticians of Labour's right, Marxism Today, argued that such a possibility was well-nigh ruled out (see MIR No.39, Spring 1989). One third of the parliamentary Labour Party were openly canvassing for Kinnock's removal; in reality probably a majority were looking to replace him. Defeat in the Euroelections would probably have sealed his fate. But these elections showed the greatest swing
198
against the Tories in 100 years. Only the Marxists predicted that the pendulum would inevitably swing back to the left, in reaction against the Thatcher counter-revolution.
Thatcher in the past was like "Teflon-woman': nothing could stick to her. Now every scandal or even hint of a scandal, whether based in fact or totally unfounded, is widely believed to be the truth by the mass of the population. From 'the Tories greatest asset', she is perceived even within her own ranks as a heavy liability. It cannot be ruled out that she will be replaced before the next election.
The social reserves of capitalism, those layers of the population skilfully cultivated by the British bourgeois over generations, have gradually been eaten away by Thatcherism. The Archbishop of Canterbury, with his denunciations of the 'Pharisees', voices the disquiet of even the middle class at the widening class gulf. Also sig nificant was the threat of the director of the British Museum to resign if entry charges are imposed. Thatcher personifies the triumph of the 'Philistines' within the Tory Party with everything, including culture, reduced to what Thomas Carlyle called the 'cash nexus'. She recently described museums as 'dirty old places!
Teachers, doctors, university lecturers, scientists, have all been antagonised. Teachers, for instance, are at boiling point because of the deterioration of the schools, particularly in the inner city areas, the increased workload because of the 'national curriculum' and their totally inadequate salaries.
The deterioration in the 'quality of life', keenly felt by the middle-classes, has pitted normally pro-Tory layers of the population against the government. Clarke's NHS 'reform' is overwhelmingly unpopular. One poll showed that 12% of those who voted Tory in the last election (1.5 million people) intend to vote against the government if it persists with its 'reforms'.
The infrastructure is in a state of chronic disrepair. the rat population, which has increased by 50% in London, is the only real 'index of growth' that the Tories can boast of in the last ten years. 150,000 youth are homeless throughout Britain, with a doubling of those on the streets of London. One third of them, boys and girls, have been approached to become prostitutes! These elements of capitalist barbarism have repelled not just the working class but large sections of the middle class.
Nonetheless, is it not possible for the Tories to avoid nemesis, electoral disaster, by ditching Thatcher? If she remains, a landslide against the Tories is entirely possible. Scotland is just an anticipation of what could happen in the rest of Britain. The last opinion poll there put Labour at 51%, with the Tories on 21%, the same figure as the Scottish National Party.
The Scottish polls are in no way a vindication
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of the policies of the inept Labour leadership. North of the border, millions are utterly appalled at the role of the Labour leadership in the 'Pay It' campaign. Yet criticisms of the Labour leadership, including outright hostility by many advanced workers, are subordinated in the consciousness of the proletariat now to the need to get rid of 'this government', almost at any cost. If the Tories, however, decide to ditch Thatcher for somebody like Peter Walker or Heseltine, could they creep back into power?
The more far-sighted representatives of the ruling class have seen Heseltine and Walker as reserve weapons to replace Thatcher at an appropriate time. Heseltine recently revealed that he would have been 'dead' but for the support of the media. A new leader would probably invest in the infrastructure and water down to complete ineffectiveness, or even cancel, the poll tax. But the accumulated class bitterness which has now been smouldering for a decade within the ranks of the proletariat would probably mean that, notwithstanding any 'reforms' by a new leader, the Tories would be defeated in a general election. When Macmillan was replaced by Home in 1963 it did not stop a Labour victory. Now the economic and social situation is far worse.
In the short term, a big industrial movement is possible, unless the employers concede major increases. Thatcher's attempt to use the defeat of the dockers to cow the rest of the working class has completely failed. Within a month the NALGO workers had scored a big victory in their first national strike. This industrial movement, in effect the reawakening of the British proletariat, will also result over a period of time in the transformation of the trade unions. The depth of collaboration with management by the union leadership and a layer of the shop stewards was shown at the Ford's plant at Dagenham. Shop stewards, with full time officials, actually issued circulars denouncing 'unofficial strikes'! This attempted use of the official union machinery to police the workforce will inevitably provoke oppositional movements, particularly by young workers, who will move in to replace the tired elements with a new generation of fighting militants.
While a Tory victory cannot be completely discounted, all the conditions now point to a Labour victory in the next election. This is in spite of the leadership of the Labour Party and their policies, not because of them.
The Marxists, who will work shoulder to shoulder with Labour's ranks for a Labour victory, also have a duty to warn about the chatacter of a future Kinnock-led Labour government, given the policies of the leadership. It will be in the mould of the PSOE government in Spain whose recent victory evoked a unique response from the rich. Usually when Labour
governments come to power there is a drop in the stock exchange. Unprecedently, exactly the opposite happened in Spain.
A future Labour government will be more akin to the MacDonald governments of 1924 and 1929-31 than the Labour governments of 1964-70 or 1974-79. It will be subject to remorseless pressure between an aroused working class on the one hand and the bourgeois on the other. Initially a prriod of grace will be extended to the government. But, as we have witnessed in Spain, a recoil led by the unions is inevitable at a certain stage. Differentiation will begin to take place within the Labour Party and the trade unions and the Marxists will play a key role in this process. All the attempts to remove the Marxists and stamp out their influence within the mass organisations of the British working class have failed
It is the experience of big events which is the greatest teacher of the mass of the proletariat. Thatcher has played a huge historical role in educating millions in the brutal realities of class society. The experience of a Labour government in action will be a further harsh lesson for the proletariat. Millions who today harbour illusions in the Labour leaders, in casting around for an alternative, will swing to the left. Marxism will become a powerful influence within a mass resurgent left-wing that will develop in the trade unions and the Labour party.
The 1980s will be seen historically as a transitional decade between two epochs. For the capitalists it has been dominated by the 'Reagan boom' with the Thatcher government subsisting on its crumbs. But it has also been marked by the titanic miners' strike and the mighty movement in Liverpool between 1983-87. As an anticipation of what is to come, the decade fittingly closes to the echo of huge class battles in Belgium, 100,000 teachers on strike in Australia, 200,000 marching against racism in Italy and of course the mighty and convulsive movements of the proletariat in the Stalinist states.
The capitalists and Stalinists, while resting on antagonistic social systems, also lean on one another to shore up their rule. But now forces have been unleashed which will shatter to their foundations both systems in the next decade. The coming ten years will be the 'red nineties' a decade of revolutionary explosions engulfing all the major cities and countries of Europe. Marxism, as embodied by Militant and the MIR, which has stubbornly defended the ideas of socialism, the planned economy, workers' democracy and internationalism against the ideological offensive of the bourgeois and their shadows in the labour movement, will be the main beneficiaries of the mighty revolutionary wave which looms.
MIR Winter
Bi
•35 1990 itain
Michael Heseltine.
We now entering the 'red nineties'
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