A People's Programme for the Crisis

The Government needs to act urgently to protect the British people against the economic turmoil that was not of their making, but is now resulting in them losing their jobs, and struggling to pay their rent or mortgage, and fuel bills. There should be no blank cheques to bail out the banks that contributed to this crisis.

We are calling upon the Government to implement a people's programme to protect our people from the crisis not just the bankers, including:

1) nationalising the banks and establishing democratic control over banking decisions, ensuring democratic representation on boards, ending the bonus binges, controlling executive pay and share holder rewards;

2) Cutting interest rates significantly and immediately, restoring democratic control over key economic decisionmaking by not only widening the remit of the Bank of England beyond ensuring price stability to advising on the wider economic health of the country but also reverting the bank's role to being one voice amongst many others to be taken into account;

3) Securing people a home by converting repossessions to social rentals so that people have a 'right to stay' in their homes and embarking on a massive council house-building programme;

4) Enhancing security in employment by ensuring people have a say over the future of the companies by strengthening rights and representation at work;

5) Bring fuel bills under control with price controls on the consumer price of gas and electricity, so that people are not being forced to choose between heating and eating this winter, with the threat of nationalisation if needed.

We call on all people to support these measures and to campaign to the Government for their implementation.

If you would like a speaker from LEAP at your union or CLP meeting, please email LEAP.

Nationalisation - in whose interest?

Gregor Gall
(A version of this article first appeared in the Morning Star)

State intervention and nationalisation are both back with an incredible bang. Suddenly, TINA – there is no alternative – to the free market looks as hollow as Brown's promise to end the cycle of boom and bust. Indeed, state intervention has been used to back up the so-called free market. Taxpayers', not private, money has been ploughed into doing this.

It just goes to show that in this age of globalisation and neo-liberalism the state and market regulation are still very important to capitalism, particularly when it is facing financial and economic meltdown.

The downright annoying aspect is that the bailouts we've seen here and in the United States are nationalisations by the right and for the bosses. If they were carried out at the behest of the left and for the workers, taxpayers and citizens, they would look entirely different.

So sure the senior management was changed when Northern Rock was nationalised but one set of capitalist managers was replaced by another set. The same will be true of Bradford and Bingley. The nationalisations were not to safeguard jobs or workers' conditions or people's savings but the financial system in Britain upon which capitalism and profits heavily depend.

If the left is to make headway right now, we must start getting our ideas about public and social ownership out into the media, into union members' heads and onto people's radar screens.

We need to start off with what public and social ownership are not. We're not calling for a return to the age of nationalisation, where civil servants ran the industries in undemocratic and unaccountable ways. Jobs were not safeguarded and services were often poor. We're also not calling for a situation of a command economy where the centre dictated what was produced without consulting the consumers and the localities.

The lessons we've learnt are that whilst coordination and planning are needed, we should have decentralised structures that allow participation and that the process is one of bottom up democracy not top down diktat.

One model of social ownership, for say, public transport (buses, railways, ferries) would be that the boards of management consists of a third of seats allocated to representatives from the travelling public, a third from the workforce and a third from the local authorities. Here there would be a balance between producer and consumer interests.

The issues to be resolved here would include whether the unions would be the only representatives of the workforce, whether businesses would be entitled to seats and whether local authorities are closely connected enough to be the genuine representatives of the public at large.

Another model would be that all members of the board of management would be elected directly by citizens and those wishing to be board members stand on platforms of representing workers', business and passengers' interests and so on.

These are all issues which we can explore in more depth later once we have won the debate on the need for public or social ownership. The key thing here is that the primary purpose of these services (including financial services) being in public ownership would be that they are run on the basis of social need and not private profit.

What this means is that the constitution or articles of association of these organisations would be changed from the objective of pursuing private shareholder interests to providing services. The organisations would not then have to be concerned with chasing profits, market value, market share or being taken over by a rival.

The banks would then operate under this system by creating social justice and social inclusion by keeping open wide branch networks (with one in each community), practice safe lending, work by the principles of ethical investment and return surplus back into their operations to increase service provision.

The way in which the left can do this is by questioning each and every action of the government by saying 'Whose interests are being served by this?', 'Whose money is being used for this?' and 'If public money is being used, where is the public control?'

There is a role for left MPs in laying bills before Parliament to put organisations into social ownership instead of allowing this Labour government to remain the bankers' friend by doling out hand-outs to them.

The unions need to use their influence inside and outside Parliament to support these moves. Rather than being overly fixated on windfall taxes and curbing bonuses, they could tackle the underlying causes – rather than just the symptoms – by supporting social ownership. The odd call for public ownership of the utilities needs to be made writ large.

In New Zealand, after a period of brutal Thatcherism in the 1990s, the left-leaning coalition government has made moves to start to bring back some services (rail, air) and sectors (banking) of the economy back into state control. This may not be exactly what we are after but it does show that our calls are not going to be silent cries in the dark if we pitch them in the right way and loudly enough.

One good starting point is a new pamphlet just published by the Left Economic Advisory Panel which is part of the Labour Representation Committee headed by John McDonnell MP. It's called 'Building the new common sense: social ownership in the 21st century'. It has contributions from RMT general secretary, Bob Crow, and former Morning Star economics editor, Jerry Jones, amongst others. Copies can be bought for £3 either online at www.l-r-c.org.uk or by sending a cheque payable to 'Another World is Possible' to LEAP, PO Box 2378, London, E5 9QU.

Do what is needed, not 'what it takes'

John McDonnell MP, writing for Guardian Comment is Free on the financial crisis and what a Labour Government should do.

Careful thought has been given to the form of words to be used by the prime minister in reacting to the latest crisis of capitalism. There have been repeated assurances that the PM will "do what it takes". The Conservatives and Liberal Democrats have rallied round in almost patriotic fervour to support the government in doing "what it takes".

But "do what it takes" to do what?

Stabilise a system which has allowed homelessness in our country to double over the last decade? Bail out speculators whose obscene incomes and binge consumerism has created a society more unequal than at any time since the 1940s? Attempt to restore confidence in a system which has allowed 3 million of our children to continue living in poverty after 11 years of a Labour government?

And who is going to pay for enabling the prime minister with the support of the Cameron-Cable coalition to "do what it takes"? People are already paying for the crisis and are increasingly facing real hardship. The number of missed mortgage payments is up 50%, repossessions are up by 48%, unemployment has risen in each of the last seven months, electricity bills are up 18% and gas bills 28%, child poverty has increased in each of the last two years, and 20,000 pensioners are dying each winter from cold-related illnesses.

The government must do what is needed, not what it takes. What is needed first is an honest debate about how we got into this mess. The government has a duty to lead the debate on the fundamental causes of this crisis and the Labour party has a once-in-a-generation opportunity to lead the discussion of the profound changes needed in our society to transform an economic system that creates poverty, insecurity and inequality.

The seeds of this crisis were sown in the 1980s, when the belief in the unfettered free market moulded the attitudes of a generation of political leaders. Concreted into all governments' policy since has been that it is neither possible nor desirable for governments to seek to fetter finance capital nationally or globally, but labour costs must be constrained by privatisation, deregulation and restraining employment rights. In this market state, the provision of housing, energy, water, health, and education become less and less the essentials of life for which government stands as guarantor and more and more commodities for sale and opportunities for speculative profit-making. If prices soar and wages are held down, demand is reduced but debt can take up the slack to keep the boom going.

After three decades of the reign of the economic law of the jungle we can now reassert the basic principle that rational democratic government must control our destinies, not the irrational forces of the market motivated by rumour, speculation and profiteering. Market solutions to market failure will simply risk an unstable rerun of the same mistakes.

The government could take four simple steps to demonstrate decisively who is in control:

First, rather than reacting on a case-by-case basis as firms collapse, the government should act decisively by nationalising now all those financial institutions involved in home loans or at least taking a determining equity stake in these bodies. The current policy of bail-outs and nationalising the losses whilst privatising the profits of the banks means that ordinary people will eventually pay the cost of market failure. Repeated bail-outs caused Japan's government debt to soar from 65% to 175% of the country's GDP. In contrast, Sweden part-nationalised its banks in 1992 when their imprudence led them to the brink of collapse.

Second, to avert the prospect of the longest and deepest recession in living memory, the government must reassert democratic control of economic policy by overriding the Bank of England monetary policy committee (MPC) and cutting interest rates significantly. The remit of the MPC could be widened beyond ensuring price stability to advising on the wider economic health of the country but the bank's policy role should revert to being one voice amongst many others to be taken into account when democratic government not bankers determine our economic policy.

Third, the government must re-establish its role in the provision of secure housing, democratically accountable public services and affordable energy. The government programme needed is blindingly obvious – a massive social house-building programme, repossessions converted to social rentals, ending the privatisation mania, and control of fuel prices or re-nationalisation of energy companies.

Four, at a time of economic downturn, the government must ensure that people are secure in their jobs and that their pay reflects the cost of living – this means abolishing Brown's public sector pay cap, making the minimum wage a living wage, and restoring trade union rights.

If the role of democratic government is reasserted, the real debate can now start on what type of democratic government is needed.

Read more from John at www.johnmcdonnell.org.uk

Cutting interest rates a vital first step, says LEAP

On Thursday 9th October the Bank of England's Monetary Policy Committee will meet to discuss the whether to keep interest rates on hold at 5% or to cut them. The Left Economics Advisory Panel (LEAP) is calling for a significant cut. This follows a call from the TUC for "aggressive" rate cuts.

John McDonnell MP, LEAP Chair, said:

"To avert the prospect of the longest and deepest recession in living memory, the Government must reassert democratic control of economic policy by overriding the Bank of England Monetary Policy Committee (MPC) and cutting interest rates significantly, if it does not act to cut rates hard and fast.

"The remit of the MPC should be widened to advising on the wider economic health of the country, but the Bank’s policy role should revert to being one voice among many others to be taken into account when democratic Government, not bankers, determine our economic policy."

Graham Turner, economist and author of The Credit Crunch, said:

"Following the nationalisation of Bradford & Bingley, the case for an early and decisive rate cut in interest rates is overwhelming. The collapse of the Congress bailout and the persistent upward pressure on borrowing costs have also heightened the need for swift action from the MPC.

"Repeated liquidity injections are not the answer to the current banking crisis. The core problem is one of solvency, not liquidity. By failing to cut interest rates, the MPC has ensured the housing market will continue to slide into 2009, endangering more banks.

"And unemployment is set to rise sharply. Wages have not responded to the spike in headline inflation, as feared by some members of the MPC. With the honourable exception of David Blanchflower, the MPC has overstated the second-round effects from rising energy prices, exposing their lack of understanding over how globalisation has fundamentally changed the world economy.

"Furthermore, the sharp downturn in the Industrialised West has spilled over into emerging market economies, precipitating steep declines in commodity prices. Inflation will fall quickly next year, and could even be back within target by the mid-point of 2009. The Bank of England should not wait for confirmation of this swift reversal. It should act now in accordance with its mandate.

US Bail Out Failure Demands Decisive Action From Gordon Brown

Labour MP John McDonnell, chair of the Left Economic Advisory Panel, has called for decisive action from Gordon Brown in face of failure of US bail out plan.

John said:

"After Bradford and Bingley and the failure of the US bail out plan we are facing further collapses and a long and deep recession. Simply addressing this crisis in Britain on a case by case basis means that the economy is staggering from one crisis to another into recession.

"The root cause of this crisis is the Government's policy of allowing the housing market for over a decade to be used for profiteering speculation rather than to provide homes. The resultant crisis of confidence in the financial institutions has created a self-fulfilling crisis of liquidity.

"Gordon Brown must take decisive action before it is too late. I am calling upon him to bring the home loans industry under pubic ownership and control and override the Bank of England Monetary Policy Committee to cut interest rates decisively."

Debate on workers' control

Last night, I spoke at a discussion forum organised by the Commune entitled 'The Debates on Workers' Control'. The debate is part of a series of discussion forums on class struggles in the 1970s.

The debate was wide-ranging, considering different models of worker's control - from participation on boards to co-operative control under nationalisation, the role and limitations of trade unions, and the old chestnut of reformism vs. revolution. Around 20 people attended the debate.

You can download a copy of the presentation I gave, and please give any feedback in the comments section. It is a much extended version of the preface to the new LEAP pamphlet, Building the new Common Sense - social ownership for the 21st century.

You can buy Building the new common sense online for just £3 or by sending a cheque payable to 'Another World is Possible' to LEAP, PO Box 2378, London, E5 9QU.

John McDonnell on the latest crisis

Labour MP, John McDonnell has warned Gordon Brown against any plans to follow the US model of bailing out the bad debts of British banks and financial institutions.

This comes as the Treasury has announced the nationalisation of the debts of Bradford & Bingley, while Santander is rumoured to be taking over the savings and branches side of the failed bank.

John McDonnell said:

"People will be extremely angry if Gordon Brown tries to use taxpayers' money to implement a US style bail out of the bad debts of Britain's financial institutions. Every year we have witnessed obscene levels of bonuses doled out in the City.

"Ordinary people struggling with housing, food and fuel costs should not be forced to pay for the profligacy of these city speculators. Allowing the City to pass on its poor investments to the taxpayer whilst retaining the cream of the crop is simply not acceptable. Nationalisation of all the assets of an institution is the only fair way of balancing the risks to taxpayers.

"Given the current liquidity trap the Prime Minister needs to introduce an immediate and significant cut in rates if we are to avoid further institutional collapses."