Harold Wilson said a week is a long time in politics. With more than six months still to run before the General Election, there is still all to play for. Not too much can be read into the Glasgow By-Election result, but it does have a number of lessons. The turnout was low, but it always is in this seat, and by-election turnout is always lower than in a General Election. But, Labour’s vote was so large that even had their been a 100% turnout, the Labour vote would have still been around 19% of the total! Given the number of parties standing, that could have been enough to win, even if not one single extra voter had voted Labour. That is the measure of the extent to which Labour remains the Workers Party.
In fact, given the nature of the Constituency, and given the conditions under which the election took place, the result for Labour has to give some encouragement. It is amongst ordinary working class voters that the greatest resentment of all the palaver about the expenses scandal is most strongly felt, because it is with them that the greatest contrast exists. Many middle class people employed in white collar jobs, let alone those who run their own businesses, or occupy Management posts know only too well the number of expenses and other fiddles that exist to boost incomes. Its also the lower ranks of the working class who have suffered most over the last year of recession. If there were going to be a rebellion against Labour for all these things then Glasgow should have seen it. There were, after all plenty of other parties standing who could have attracted their votes, some like the SNP, even having the potential of winning. Yet, even the SNP was literally swamped by the Labour vote, whilst the Tories only saved their deposit by coming in third, and the busted flush of the BNP once again did lose their deposit, failing to increase their vote from the last election. As for the sectarian Left in all its stripes, once again it demonstrated its complete irrelevance to the working class, its only function here being to make the 1,000 votes of the BNP look more respectable than it was!
In recent weeks, it has appeared that Labour has been making a steady recovery. I wrote more than a year ago, that Labour should not be written off, because ultimately its how people feel in their pockets, which determines how they vote. We have increasingly moved towards a Commoditisation of Politics, along US lines, where what is important is marketing a message, and the superficiality of image. Under those conditions, Brown was unlikely to do well. The media focus on him as an image, as though he were some “celebrity” on Big Brother, rather than on politics. We continually have comments from supposedly knowledgeable reporters like John Sopel, on today “Politics Show”, who talk about him not being elected, as though the Prime Minister were a President! Now, it would be a good idea to actually have an elected Head of State, but the Head of State in Britain, is not the Prime Minister, who is elected by Parliament, but is the Monarch who is elected by no one. But, this superficiality can only run so far.
The fact, is that the economy is turning around. It is certainly a far cry from the predictions of a Great Depression that sections of the Far Right and Far Left were making – and hoping for in the belief it would improve their own political fortunes – only a few months ago. Many economists think that the last set of ONS statistics showing that the UK economy was still in recession in the third quarter are questionable. That certainly seems to contradict much of the other economic data that has come out. Either way, economic activity is increasing, and the latest surveys show increasing confidence on the economy from consumers. Its likely that as the effects of an end to restocking in the US, and Europe lead to a slow down in those economies, but I expect not a double dip, Britain will actually be showing stronger growth, partly based on the advantage gained from a lower pound assisting manufacturing, and partly as Britain’s large Financial Services Sector, once again begins to drive growth on the back of a recovering world economy, and massive growth in Asia, in particular, which fuels a phenomenal amount of financial transactions, most of which are funnelled through London, one reason why Brown could probably get away with introducing a Tobin Tax on such transactions whether or not other financial centres followed suit.
Labour’s tactics in Glasgow also demonstrate how they can run the election in the rest of the country as insurgents rather than incumbents. In Glasgow they were able to do that by attacking the SNP, and its record in Government in Scotland. But, in the rest of the UK, it is Tories, Liberals, and Greens who have occupied that role now for the last few years in control of Metropolitan Councils, County Councils and Districts. And, that record has not been a good one. It is a record of swingeing cuts in spending even during a time when Central Government has been massively increasing Public Spending. It is a record like that in Leeds of Tory-Liberal Local Government making outright attacks on Public Sector workers. The record in London under Boris Johnson, also shows what workers could expect were the Tories and Liberals to form the Government. Already, Cameron is talking about freezing all Public Sector pay, and as I have suggested previously that is likely to be at a time when inflation is let rip in order to shrink the Government’s debt in real terms.
Of course, a Labour Election campaign that focuses on such facts is itself hypocritical even were it electorally successful. Labour Councils have cut spending and attacked workers conditions too. The economic facts of life that mean that so long as Capitalism exists whoever is in Government will be forced to act in ways which place the burden on workers, will push down on a Labour Government as much as a Tory Government. Indeed, under the current conditions, they would push down as much on a “Workers Government”, because outside the kind of fundamental change of material conditions that place the working class in a strong economic and social position, that enable it to base any political advancement upon such real economic and social power, any simply radical Left Government would be one built on sand.
That is why for a Marxist the coming election cannot be about who wins the most votes, but is about how to intervene in such a way as to enhance that economic and social power of the working class. That has to be about formulating a programme, such as that I set out in Why We Need A Socialist Campaign For A Labour Victory, which seeks to mobilise the working class to engage in collective self-activity to resolve its problems rather than looking to Parliament or the Capitalist State as the means for doing that. Of course, as part of that it is necessary to raise demands that facilitate the working class in doing that. We do not place any faith in the Capitalist State’s commitment to basic bourgeois freedoms like “Free Speech”, but we recognise the importance for workers of such freedoms, and we fight to defend them using proletarian means of struggle. Similarly, we do not place any faith in the bosses state intervening in a neutral let alone pro-worker fashion in industrial relations, but we do demand that the bosses state get its foot off the workers’ neck, and allow us to organise freely without the hindrance of anti-union laws.
At the moment the sectarian Left have all the hallmarks of crew moving around deckchairs on the Titanic, and in the process even then squabbling about where to place them. The Stalinists of the CPB look likely to simply back Labour uncritically. Son of No2EU looks mercifully stillborn. The LRC looks set to simply accept the Labour Election Manifesto, whilst relying on support at an individual level for Left MP’s like Corbyn and McDonell. Others are likely to engage in individual acts of adventurism standing candidates with no base in the working class, purely in order to salve their own consciences and in the hope of recruiting a few more sectarians into their ranks, whilst others still like the CPGB will support “Left” candidates where they stand, and Labour where they don’t. It’s a bit like an equivalent of those poor souls who suffering from some terrible illness seek out a solution at Lourdes, or some other such unlikely solution to their problems. The truth is that the illness here is the low and falling level of class consciousness within the working class, an illness that has been largely caused by the sectarianism of the Left itself over the last century, which has contented itself with trying to build its own pure, and consequently ever smaller, ever more fragmented vanguard, rather than selflessly building the mass organisations of the class – its Trade Unions, Party and Co-operatives. Unfortunately, the Left look set to keep trying to administer such solutions to the working class.
What we need is a Socialist Campaign for a Labour Victory fought for by a Left inside and out of the Labour Party, a campaign that seeks to establish a minimum programme based around building collective working class self-activity, and rebuilding the basic structures and organisations of the class on that basis.
I don't think inflation will be a problem because of the weak position of the working class and the labor movement. We won't see consecutive increases in the prices of various products because workers won't be able to raise their salaries. All this money will feed various asset bubbles like in the eighties. This talk from governments and central banks about inflation is ideologically and politically motivated as a preemptive strike in case people start demanding a raise in their income. Besides they are planning to enforce public spending cuts to reduce the deficit, but even if they won't, look what happened to Japan with the huge injections of liquidity during the nineties, no inflation at all...
ReplyDeleteThat assumes that inflation is caused by workers pushingup wages. It isn't. Inflation, as Marx demonstrated, is a monetary phenomenon. If Governments wanted to pre-empt workers demanding more waages they would suggest inflation will remain low. That is what they are doing, whilst actually talking about spending cuts. They won't impose huge spending cuts, because a) past experience shows they have difficulty implementing them, and b) under current conditions it would risk sending economies into a severe recession.
ReplyDeleteAs for Japan, I've showed why Japan, the UK and US did not suffer inflation during the 80's and 90's despite huge injections of liquidity. Firstly, that was during a Long Wave downturn, second China was supplying the world with masses of commodities that soaked up this liquidity.
Now we are in a Long Wave uptrend, and although China continues to pump out lots of commodities it is facing constraints. Its own input costs are rising, and Chinese living standards are rising rapidly in real terms. When China revalues the Yuan its export prices will rise sharply raising the prices for all importers.
Salaries and the strength of the working class influence inflation. Look what happened during the seventies. If you are right that we are in a long wave upturn then all this liquidity will trigger an expansion of real production because the rate of profit is high and capitalists will increase their investments. The rising demand from the monetary easing will be met, in the medium term with rising supply. Unlike the seventies when the low rate of profit prevented the capitalists from investing and the liquidity that was pumped into the system produced inflation which went out of control because the labor movement was strong enough to demand serious wage increases to compensate for the losses. The cheap commodities from East Asia played an important role during the eighties, as you mention, but that factor won't be exhausted in the medium term, because China is still committed to the cheap export oriented model as an article from the last New Left Review shows. It will take a major realignment in the balance of class forces for that to happen..
ReplyDeletePart of your argument is correct. When workers are strong, and able to demand higher wages, one response of Capital is to respond by monetising those pay rises, rather than accepting a shift in production away from Capital and Luxury Goods towards Wage Goods. But, as Marx states it is not the increase in wages which causes the inflation, it is the increase in money tokens, which Capital undertakes in response.
ReplyDeleteBut, Capital can increase Money supply even when workers are weak in order that prices can rise/not fall, thereby raising profits without the need to actually cut nominal wages. That is what Capital did during the late 80's for example. The condition for rising Money Supply to result in inflation is that the Velocity of Circulation does not fall, and that the quantity of commodities circulated does not rise faster than the increase in Money Supply.
In the late 80's and during the 90's, increased Money Supply allowed western Capital to raise prices, and thereby profits, whilst nominal wages continued to rise modestly. Most wage goods did not suffer inflation because huge increased volumes of them were being imported from China. Without the massive increases in liquidity there would have been deflation.
As a result of the Credit Crunch and the consequent seizing up of economic activity, the velocity of circulation has decreased dramatically. Increased liquidity can only cause inflation if it actually circulates. That is the phenomena that Keynes spoke of in terms of pushing on a piece of string. But, the Monetary and fiscal stimulus is causing economic activity to resume, which the normal fuicntioning of the business cycle and the Long Wave would ensure anyway. As economic activity picks up that liquidity will begin to circulate, and the velocity of circulation will pick up.
Now, you are right that this will not lead to inflation IF the volume of commodities circulated rises faster than the increase in money supply. But, they will not, at least in the short run, because the amount of liquidity put into circulation has been phenomenal, and supply cannot be increased just like that. For one thing, suppliers will wait to see rising prices, and profits before committing to large increases in output.
China will not doubt continue to provide much of the worlds manufactured output, but not only is it facing capacity constraints in doing so, but its actions in pegging to the dollar have caused it to import large amounts of inflation itself. Its imports of raw materials are rising rapidly in price - which is why its been doing deals to control markets all over the world like a 19th century Colonialist - as are its costs of importing food for its workers. Either those increased costs are passed on, or else China revalues the RMB to bring them under control - when its not being pressured to do so by the West. BUT, if it does, it will reduce its import costs - which it also needs to do to raise living standards and stimulate domestic demand - whilst raising its export prices. Either way, the costs of imported goods in the West will rise. And, of course that needs to happen to rebalance the world economy. Even the Chief Economist at the Bank of England now says that inflation will rise rapidly in coming months. He's right, it will.
I can't see how all this liquidity will reach the average worker, consumer. The banks are not increasing considerably their lending and households are overburdened with past loans, so the last thing will want is to increase this burden. Unemployment is high and wages are stagnating, so were all this new demand will come from, and there is already considerable overcapacity in many sectors of the economy. Prices of raw materials have fallen sharply during the last year, so there is plenty of room for the Chinese manufacturers, until they reach their pre crisis levels, before they start increasing the prices of their products. The liquidity will probably end up in the world stock markets feeding various asset bubbles, as it is already starting to happen and the recovery that is beginning will probably be jobless in the midterm. If we don't want to be economic reductionists, we must admit that class struggle plays a major role in determining the course of the economy...
ReplyDeleteThe World Bank has today said that world food prices are rising sharply due to the massive amounts of liquidity pumped into the world economy. You say raw material prices have fallen, yet Oil has nearly doubled from its low point, and prices of Copper and other industrial metals have risen sharply in the past few months.
ReplyDeleteYou say, you don't see how the liquidity will get into the hands of workers. I showed how it already has in my post Aftershock?.
* More than 90% of the workforce remains in employment.
* For the large number of pensioners and others on Benefits there has been no reduction in income, in fact falling prices mean real increases in income.
* For the very large number of people with mortgages the fall in interest rates has meant the equivalent of a 20% pay increase!
* The Car Scrappage Scheme which this month alone has seen a 50% plus increase in new car sales over last year has again put large amounts of liquidity into workers pockets.
I could go on. Today's figures show that in the US unemployment has already fallen from 102% to 10%, and probably there was actual job growth. In Britain, not only has unemployment failed to rise as much as predicted, but Retail Sales have month after month held up for the reasons I have set out above. The supposed overhang of debt you refer to is largely a fallacy. It reflects wide disparities within the working population. The large majority of workers actually hold positive savings, and with falling house prices the real value of those savings rises. Moreover, its clear that large amounts of the liquidity fed into workers pockets has gone to pay down debt - what keynesians call a Precautionary Demand for money, during a period of uncertainty.
You say there is overcapacity in many areas. I'd like to see your facts. Where overcapacity DID exist, it was due to the disproportionality that existed in the world economy due to the continued role of US monopolies like GM. But much of that has now been cleared out.
We should not be economic determinists that is true, but it is necessary to recognise the dialectical relationship between class struggle and economic development, and as marx made clear many times, within that relationship class struggle plays a subsidiary not a major role.