THE UNITED SOCIALIST PARTY
A Party that always campaigns for a fair and just society for all in Britain
‘Socialist Studies’
the pamphlet
for people who want an
alternative opinion to Capitalism
Not a member
of TUSP
Come and join
us and start to
change British
Politics.
We Need You
Read Bob’s
article click on
folder
If you want to
reply to the
current pamphlet
or you wish to
put forward an
article to be
included in the
next issue of
Social Studies or
our ‘Unite’
newspaper
e-mail us at:
Problems of the workers’ movement
an Introduction
THE WORKERS’ movement has suffered serious setbacks in the decades since 1980. The
collapse of the workers’ states in the USSR and Eastern Europe revealed the depths to which
they had degenerated, discrediting the high hopes of the founders of the socialist movement
and the millions who sacrificed and fought to achieve a better world.
Following on from the defeat of the air traffic controllers in the US and workers in the iron
and steel industry in the UK, one group after another of organised trade unionists has been
deliberately broken up as industries have been decimated. Miners, printers, seafarers,
dockers, bus-workers, car workers have all seen nationalised industries privatised, trade
union strength shattered or dissipated and working class communities dispersed.
Meanwhile the parties upon which working people relied to express their political needs have
either collapsed into fragments like the Communist Parties around the world or have been
rotted away from within like the British Labour Party, abandoning any pretence of socialist
principle in order to rule on behalf of bankers, speculators and very rich individuals and
companies.
Many workers and activists have drawn their own conclusions about the quality of the trade
union and party leaders who were not able to muster united opposition to these attacks, but
instead have joined in a partnership with big business and finance.
At the same time there was a real ideological offensive against socialist ideas in the media
and in academic life. A barrage of propaganda was unleashed to persuade us all that socialism
is a blind alley, that life is actually better under capitalism. Meanwhile any trace of real
working class life has been hidden from the public view, or the working class has been
presented as a brutish underclass.
A major consequence of all this has been that the very most basic concepts of socialism
have taken a battering in the minds of the public. The understanding of capitalist
exploitation that had been passed on from generation to generation as part of a class
consciousness -- which generally expressed itself in the hope of a socialist future -- has
been eroded.
Socialists have understood wealth as the product of men and women labouring on the fruits
of nature. In using their limbs and their brains to work on nature (as one of her own forces),
human beings have developed their own mental and physical potential to create a better life.
While doing their labour, workers create something new over and above the things and
services which are needed to create and recreate them as workers. In a capitalist society, this
“something new” takes the form of surplus value, and it is from this surplus value that the
owners of capital draw their profits.
Many generations of ordinary people have had no trouble in grasping that the riches and
power of the wealthy are derived from the labour of the many.
But all this has been obscured and veiled by the direction which society took under Ronald
Reagan and Margaret Thatcher. The ideas they followed are known as “neo-liberalism” or
“the Washington consensus” and they include support for “supply-side economics”, “market
forces”, “monetarism” and a particular form of “globalisation”.
On their planet, wealth arises from the enterprise of a capitalist who spots a gap in the market
or is able to produce goods or services more cheaply than competitors. Labour is simply
downgraded to one of the “inputs” or one among several “factors of production”. Clearly, a
social class which is on a level with a pile of iron-ore or a tank full of oil merely needs to
know its place and get on with the work. That’s why companies now refer to their workers as
Human Resources and not real flesh and blood people.
These ruling class thinkers denied that profits arise from the surplus value created by labour.
In their view, profit is the reward for risk. The spirit of enterprise leads the person of vision
into new fields of endeavour. The reward for a successful advance is greater profits. Failure is
good because it shows others where there is a blind alley to avoid.
The “neo-liberals” and their supporters asserted that states had no business trying to
encourage economic equality and harmony, for instance taxing the rich in order to
redistribute wealth, supporting industries in difficulty, investing in regional development of
industry and using government spending to steer economic growth and social progress (fiscal
policy).
They were called “liberal” because they were supposedly against any attempt to control or
regulate the operations of the market. They believed that by single-mindedly following
selfish interests in the most perfect possible market, capitalist individuals would necessarily
bring about the greatest possible benefits for all. They thus “fetishised” market relations in
the extreme, assigning to things and the relationship between things (Adam Smith’s “hidden
hand” of the market) greater importance than human relations between people. They
particularly attacked any institution which helped working class people to maintain wages
and social benefits through collective action.
Actually they are far from “liberal” because they are usually hired guns on behalf of massive
industrial and banking monopolies which enjoy disproportionate power and wealth. Their
“liberalism” mainly extends to reducing the share of the national income which falls to
labour, the working class, and increasing the proportion which is enjoyed by capital. They
also systematically dismantled regulations controlling the movement of capital which had
been imposed in the aftermath of the Second World War, and banking regulations which had
been introduced following the experience of the Wall Street Crash of 1929 and the Great
Depression which resulted.
Actually they relied heavily on state power to drive through these changes and they
understood very well that in a crisis they should turn to the state for help in shoring up the
great banking monopolies.
All this was tied up with a crippling deformation of the healthy development of a world
market and a world division of labour under the domination of finance capital. Their debased
“globalisation” first of all provided the conditions to break up the militancy and trade union
strength of workers organised in industries in the US and above all the UK. Cheap coal from
Poland and Colombia was one of the weapons used to break the miners in the strike of 1984-
1985 and annihilate the British coal industry. Industrial competitors to the existing
“developed” nations were encouraged in South America and Asia. The threat (often carried
out in practise) that production would be transferred to a far-distant country with low wages
and little social protection was used to discipline the established workforce in the US and
Western Europe, greatly reducing the numbers employed in industrial production, and
introduce working practises which allowed much higher levels of exploitation.
At the same time modern technical and scientific developments were also used to break up
trade union traditions and change working practices in order radically to ratchet up the
exploitation of labour and savagely reduce staffing levels. The docks under containerisation,
the entire printing industry and the automobile industry were the foremost examples of this,
but there have been many others. The trend started long ago with textiles and the mass-
production of clothing and has been going on ever since.
A century ago, liberal economists like Hobson wrung their hands over the move by British
capitalists to take their money out of industrial production and to invest instead in banking
and finance. This process now went forward with breakneck speed. To encourage it, some of
the key features of deregulation under Thatcher were to do with removing controls on
banking and finance, prudent regulations which were based on bitter experience. It became
easier to move capital and goods from country to country. It became more difficult to defend
wage levels and conditions through regulations enshrined in national legislation and political
arrangements.
The “Big Bang” which transformed the City of London swept away distinctions between
different kinds of banking activity and allowed a number of big organisations to include
under one roof a commercial bank, an investment bank, a savings bank, a mortgage company,
a stock-jobber, a stock-broker and a currency trader.
Big institutions of this sort made money from mergers and acquisitions, which enabled
capital to be withdrawn from less profitable enterprises and invested where there were fewer
limits to the exploitation of the workforce. They grew fat on the fees from this kind of
activity. They became even richer through financing the growth in international trade as
consumer goods from the new factories in “emerging markets” (partly financed by judicious
investments from the same banks) flowed into the burgeoning shopping malls of the west.
They made other fortunes from buying up and monopolising the sources of raw materials,
energy and food. Emerging markets in South America, South Asia, China and the Pacific Rim
needed these resources in order to build up and run their industries. Finance capital made
further fortunes dealing in shares in the mining, agribusiness and energy companies which
were traded on western stock markets. They made enormous fortunes from insuring trade
deals, factories, shipping, and business itself.
These banks set workers in the emerging markets into competition against workers in the
West, thus screwing up the rate of exploitation of labour and forcing down the share of the
national wealth enjoyed by labour. Meanwhile the bankers’ control of finance enabled them
to warm their hands at the growth of industrial competitors in the “emerging markets” instead
of suffering from it.
The way the world economy was set up under the bankers meant that wealth was sucked out
of the emerging markets and accumulated in the hands of financial institutions of the US and
the UK and to a slightly lesser extent Germany, France and Spain. The countries where
manufacturing industries were less and less central to the home economy were getting richer
and richer, while labour in the “emerging economies” is exploited under conditions
reminiscent of Britain’s industrial revolution.
Nevertheless, the fact that production was to a great extent transferred from Western Europe
and North America to elsewhere (particularly China) meant that dollars flowed into those
“emerging market” countries to pay for the goods exported to the “developed” countries.
These dollars were then “re-cycled”: the Chinese banks used them to buy US treasury bills
and other bonds in the US. This became part of a great flow of money back in to the United
States and the UK banking systems.
Huge holdings of US bonds built up, particularly in the hands of Chinese banks. This was
part of the notorious “global imbalance”, the massive debt which the US owed to the rest of
the world. The US enjoyed an inflow of cheap funds (some of which came to play in
London). But the emerging economies rely on the US as the customer, the market whose
imports drag their export industries forward. The two sides of this global imbalance were
held in a relationship of mutual dependence described as a “balance of financial terror”.
Meanwhile, the incessant privatisations of housing, education and health in the West had two
results. First they diverted large amounts of the state finances into a “cash stream” right into
the hands of finance capital. Secondly they meant that people in the “developed” world who
wanted a home, a university education or an urgent medical intervention had to go into debt
to a bank or a mortgage company. The finance industry has thus been enabled to tax the
heard-earned incomes of employed people, just as the credit card company’s tax consumers,
by charging interest.
With the share of national income that goes to labour at a record low level, households spent
all their income then went into debt just in order to access the necessities of life.
The stream of incoming money from the emerging markets also stimulated industrial and
commercial investment, building shopping malls and stocking them with yet more consumer
goods from abroad.
Economists warned about “global imbalances”, and wondered whether the huge US debt to
China would “unwind” in an orderly or disorderly manner.
Corporate and household debt reached record levels in the US and the UK.
The scene was set for a crisis which was to discredit the whole course that capitalist world
economy has taken since the start of the 1980s.
