Who pays for the economic crisis?

The Prime Minister needs to realise that for the general public the Government's treatment of bankers' bonuses is the key test of who will pay for the economic crisis they have caused.

Allowing bonuses to be paid to the higher paid bankers who caused this crisis by their greed and recklessness will be seen as fundamentally unfair. Fumbling around with nothing more than ineffective warnings of inquiries is pointless. The Prime Minister needs to get a grip and take the decisive action needed to end the bonus culture and send a clear message that the binge banking party is over.

*John McDonnell MP has tabled EDM 353 'Banking Sector and City Bonuses' in the House of Commons. It calls for "the banking industry to be fully nationalised under public control so that finance is provided in the national interest."

5pm update: See Richard Murphy's take on Brown's hot air too.

Crisis fightback - time to be bold

I spoke at the opening session of the Communist Party's Capitalism in Crisis political school earlier today on 'Trends in the British Economy and Employment'. The other speaker, economist Frank Wilkinson was unable to attend as he was snowed in, and so CPB General Secretary Rob Griffiths spoke alongside me - giving a very coherent and theoretical analysis of the crisis.

The debate that followed was passionate, articulate and wide-ranging - exactly what the Left needs to be in the coming period if we are to make an impact in this crisis. And if we don't, others like the BNP will.

We are not living in the most cheerful times. As I pointed out in my contribution:

• We have unemployment at over two million
• Youth unemployment is at its highest for fifteen years
• The claimant count is at its highest for 18 years
• Vacancies are at the lowest level on record
• The UK economy has shrunk for two consecutive quarters meaning we're in recession
• Company insolvencies have risen by 220% in the last year
• House prices have fallen 15% in the last year, and the repossession rate doubled
• Car sales have dropped by 30% in the last year
• UK manufacturing production recorded its largest quarterly fall since 1968

However, we should be confident, bold and unintimidated in taking the fight to the Government and corporate interests. It is they who have led us into this crisis and they who are currently doing everything to ensure it is a deep recession.

The Government remains hopelessly misguided and wedded to its outdated neoliberal ideology. The banks have not been nationalised in any real sense. The meeting variously described it as 'the privatisation of public money' and 'light-touch nationalisation'.

The power workers' wildcat strikes were also discussed - emphasising the need to protect jobs, pay, and terms and conditions in the current period. Protectionism was also debated. As Rob Griffiths pointed out, what else is the labour movement for if not to protect jobs and protect wages. There is nothing progressive about the right of transnational companies to freely move capital, labour, and resources around the globe. At the same time we have to argue for the greatest international solidarity and to challenge those reactionary forces who want to turn this debate about class into one about race or nationality.

Another issue that generated alot of outrage is the Government's current attack on welfare, which at a time when unemployment is over two million and there are only 200,000 vacancies in the economy is a cruel attack on some the least powerful and most vulnerable in our society.

The trade union movement has been shameful at times in defending welfare rights. Unemployment benefit is worth a fraction of what it was thirty years ago, lone parent benefit entitlement is being attacked and those with children as young as three will be compelled to undertake 'work-related activity' just to keep their existing benefits. The long-term unemployed will be put on workfare programmes - full-time work just for their benefit - that's £1.73 per hour. We are on our way back to the workhouse.


It's about time that all unions started fighting on behalf of working people - at least another million of whom will become non-working people this year and be subjected to this degrading regime . . . unless we stop it.

There is a Lobby of Parliament, organised by PCS, on Tuesday 3rd March. Get to Parliament and tell your MP to vote against the Bill. This is about who pays for the crisis. Let's see the Government instead attacking the city spivs and speculators and the tax avoiding companies with the same verve.

Ten Days That Shook New Labour

Large numbers of workers taking spontaneous direct action have not only shocked this New Labour Government but have also disoriented some sections of the Left.

I have been off the scene largely because of the 3rd Runway announcement two weeks ago. When the Government announces that 10,000 members of your community are about to lose their homes and you are their MP you have a responsibility to focus your attention on their deep felt cares and concerns. So in the last couple of weeks I have thrown myself into organising meeting after meeting in my constituency, speaking to over 1500 people and contacting by various means nearly 20,000. Their response has been feelings of fear, insecurity, anxiety, anger and sheer determination to fight back.

It is these same feelings of insecurity, turning to anger and determination to resist that has motivated the workers involved in the strikes at the energy companies around the country. No worker can feel safe in their jobs as the recession slips into a depression. People are inevitably fearful for their futures.

They also have no confidence in the existing political structures and process being able or willing to do anything to protect them. The party that they voted into power has turned out to be the very Government that has promoted the privatisation, contracting out, outsourcing, and off-shoring, which have stripped away their basic protections at work, undermined their employment security, intensified their exploitation, cut their wages and forced them into debt dependency.

People have also learnt that working through the official structures of their trade union has been rendered largely ineffective by the persistence of Thatcher’s anti trade union laws under this Government. Increasingly they have also come t know that they cannot rely upon many of their trade union leaderships who have delivered up their unions in support of New Labour and who less than 2 years ago installed Brown as Labour leader, the evangelist for globalisation, free markets and flexible labour.

Without political representation and with limited potential to mobilise through official union channels there is no other route but to take but direct action when fear for jobs turns to anger.

Every member of the Labour and trade union movement should welcome the energy workers getting off their knees, standing up and fighting back. It's called solidarity.

In any dispute or struggle this doesn’t mean blindly accepting either the analysis or demands of those directly engaged in the dispute. It certainly doesn’t mean accepting without question the media’s representation of their demands. Disputes are at times chaotic with goals sometimes ill defined and often quickly evolving.

This latest round of disputes, like many more to come, has been about the right to work. As this latest crisis of capitalism unfolds many more workers will be demanding the right to work and we must support them.

If we are provide effective support we can learn from some of the lessons of this dispute so far.

First, as the Government has refused to abolish the anti trade union laws the lesson is that if workers are sufficiently determined they can just ignore them. Using unofficial structures has been successful in mobilising this time but by their nature they are difficult to maintain. If the TUC and the general secretaries of major unions showed the same determination and solidarity of the workers in this dispute and stood together to challenge the legal restrictions on trade union rights in Britain we could destroy them once and for all. Future disputes should be made official to bring this issue to a head.

Second, if cheap labour is being used by employers to undermine wages and conditions, its country of origin is irrelevant. Similarly, "British jobs for British workers" was designed to divide us to compete for increasingly scarce jobs, forcing down wages and eroding job security. Just as many of the stewards in this dispute have made clear, we should never allow the bosses or the media to divide us on grounds of nationality or race. Our demand is the right to work for all.

Third, because the EU legislation and court rulings associated with the open market are being used to divide worker from worker the onus is upon us to build urgently the links of solidarity with European unions to enable joint action to protect jobs, wages and conditions. Where the TUC has failed the newly formed TUCG of radical unions could succeed by launching a series of talks and measures to construct these international alliances.

Fourth, as the depression forces more workers onto the dole queue industrial action alone will not be enough to protect jobs and living standards. The question of who will pay for this crisis will be determined by the answer to the question who controls our economy. The battle for control of our economy needs to be fought out politically as well as industrially, and nationally as well as at the level of the firm and industrial sector. Our demand is for a national economic strategy aimed at protecting and creating jobs, investing in public services, ending privatisation and promoting public ownership, tackling poverty and inequality and creating a sustainable environment. The launch of the People's Charter campaign presents us with an opportunity to mobilise for this change.

Fifth, the depression is likely to present the Left with ever new situations and challenge us to respond swiftly and effectively. Very quickly we need to decide the best mechanisms for the faster flow of information and for the co-ordination of solidarity action. The TUCG, the LRC, the Convention of the Left, union broad lefts and the emerging People's Charter network of activists, all have a critical role to play. Putting this together quickly over the coming period will be a central task for us all.

Unite against our common enemies

The angry walk-outs by engineers and construction workers at refineries and power plants around Britain in defence of their livelihoods is the first major - and explosive - reaction to the economic crisis in the UK. That said, the form these strikes has taken urgently needs redirecting.

They cannot be endorsed so long as they are aimed principally against foreign workers.

When strikers have the enthusiastic backing of the far-right British National Party because their main demand is “British Jobs for British Workers”, it is necessary to ask: What is going on here? When a few hundred Italian workers are too scared to show themselves in public, you have to say that this is shocking and unacceptable.

The contradiction between the essence of this struggle and the form it has assumed is not surprising. Getting right to the heart of the matter - the emerging capitalist slump and the crisis of governments as unemployment accelerates - demands a united, revolutionary stance against the joint rule of global corporations like Total and client regimes like New Labour.

Then, and only then, can we begin to find solutions to the immediate and pressing question of unemployment affecting workers who were passed over for jobs at Lindsey when the French-based global corporation Total awarded a contract to an Italian firm (which itself is sub-contracted by an American company) which brought its own workforce along.

If there were jobs available locally, then no one would be on strike. But how can employment, new jobs, be generated? That question won’t be answered by driving a few Italians home and lining up authentic “British” workers to take their place. If workers from Europe or elsewhere should not take “British” jobs does that mean that British workers in other countries should be driven home in similar fashion?

Brown, who took up the BNP’s “British Jobs for British Workers” policy, says there are no ready solutions to the global capitalist crisis to hand and no lessons to be learned from history. In that case, he and his wretched government should go now because it is of no use to man or beast. Ministers like Lord Mandelson, with his contemptuous remark that workers should get on their bikes and look for work elsewhere in Europe, are deservedly hated by the strikers.

Trade union “leaders” like Derek Simpson, who have done nothing to defend jobs during the recession and who now encourage nationalism amongst their members for the most opportunist of reasons, should also be got shot of. Simpson, on £200,000 a year plus a luxury house for life, free, is standing for re-election and is cynically using the dispute to help his campaign.

The issues involved in the walk-outs are all aspects of corporate-driven globalisation: contracting out, sub-contracting, flexible labour, a European Union run by and for the corporations and a trade union movement which has halved in membership and now largely led by donkeys whose respect for Tory/New Labour anti-union laws remains unbroken.

Dividing workers along national lines, as the Unite bureaucrats are happy to do, plays into the hands of the global corporations and the political parties that service them. Defending the action on the grounds that workers are the victims of globalisation, is simply kow-towing to backwardness, instead of raising the level of their struggle. Like it or not, there is a new internationalisation of labour. The point is to turn it against the employers, not go backwards to insularity and localism.

Workers in Iceland, Russia, Greece, Hungary, Latvia and France have demonstrated against their governments. In Ireland, workers at Waterford Crystal have occupied their plant, providing an inspiration to every worker by challenging the right of owners to decide their future. Now is the time to move against an unsustainable profit-based system based on exploitation of human and natural resources. The epochal character of the crisis means that the time for defensive actions is past.

It's not an accident that this sudden eruption of anger takes place in the oil industry - control over the use of fossil fuels is at the heart of the global crisis. If workers are unhappy at the way Total divides up jobs and plays one group off against another, then let the plant be occupied and the management driven out. Bring Total under permanent workers’ control and management as a first step towards reorganising the corporation. Decisions about the production and distribution of oil can be on a sustainable not-for-profit basis.

Bring down New Labour, the bosses’ government! The government is in secret talks with the army and the police and could spring an authoritarian national government on Britain as the crisis worsens. Don’t give them the chance. Replace Unite leaders with those committed to fighting New Labour.

Start to build local Assemblies to represent all workers of whatever nationality and origin, and other sections of the community, as a step towards transferring political and economic power to working people.

Launch a programme of publicly-financed building projects to create new homes, schools and other infrastructure so that work is available to all who need it.

Fighting for policies along these lines would take the strikes in a different, outward looking direction and inspire millions to join them in the project to transform society to one which puts the interests of ALL workers first.

Paul Feldman
AWTW communications editor
reposted from www.aworldtowin.net

Wildcat strikes, the EU and UK labour law

The news is full of allegations of strikes against foreign workers. This is a misrepresentation of the facts, if not some of the sentiment expressed on placards that have quoted Gordon Brown's words in his 2007 speech to Labour Party conference, his first conference as Labour leader, where he uttered the phrase "British jobs for British workers".

EU law allows for the "free movement of labour". Many Britons of course work in the EU and have benefited from this provision. Likewise many skills shortages have been filled in the UK by EU workers. While many conceive of this on an individual basis of European workers able to seek work without discrimination across the continent, in fact there is the power for EU firms to export entire workforces across the continent.

Is this a socially progressive statute? I would argue not. A legal verdict in 2007 sanctioned the right of a company using foreign labour for work in another EU country without observing local pay rates. The right to free movement of labour in the EU is increasingly therefore a right for companies to freely move labour around the continent.

While companies have always relocated across the world to cut labour costs, now they also have the right to move labour across the world to reduce labour costs. This is a right for big business not people. The 2007 EU Court's decision in the Laval case allowed a Latvian company renovating schools in Sweden to bring in workers from Latvia and pay them at Latvian rates.

Of course no one has actually seen the terms and conditions of the Italian workers at the Total oil refinery in Lincolnshire, as the figures are "commercially confidential". But the suspicion is they are being paid less, which is probably why the Italian company won the contract.

While there is nothing progressive about sloganising "British jobs for British workers", there is nothing progressive either about the EU law in this matter.

As the left, we have to come up with a progressive solution that protects workers of the world. Neither the Gordon Brown parroting the BNP (from whom he stole the phrase) nor the EU offer us a solution.

Convention of the Left

The Convention of the Left recall conference in Manchester on Saturday, January 24 “Capitalism Isn’t Working – what is the alternative?”, met in the shadow of confirmation that, after six months continuous contraction, the UK economy was officially in recession and heading in the direction of depression.

As more than 180 delegates and individuals gathered - socialists and anarchists, trade unionists, environmentalists, democrats and those who favour direct action - they were confronted from the outset of the discussion with the global economy in free-fall.

The sudden sharp economic downturn since the September Convention, and a succession of failed bail-outs, served to dispel the myths of a stand-alone crisis in the financial sector that could be resolved by a new regime of regulation and a programme of government spending funded by increased taxes, and ever more debt.

News that car production in December had fallen to half the output one year earlier and Honda had doubled its two-month UK shutdown added to a mounting sense of the possibility of recession giving way to a complete economic collapse and gave a new urgency to a vigorous discussion, which I introduced on behalf of LEAP.

However carefully prepared, many proposals crafted in advance proved inadequate for the sudden and sharp deterioration. Almost as quickly as they were raised, calls for pressure on New Labour to pursue a growth agenda, for previously radical-sounding programmes of demands to nationalise the banks, to build resistance to job cuts, for a Green New Deal, for doubling of jobseekers’ allowance and slashing rents, all began to look too weak for the new turn of events, on a scale unprecedented, and therefore unexpected by most.

As the oil price plummeted to new lows, undermining the campaign for a windfall profits tax on energy companies, much of the discussion on the climate crisis revolved around the TUC’s proposals for a Just Transition and how to resolve the conflicting objectives of solving the energy crisis by preserving and creating jobs in coal and nuclear power, whilst moving to a low-carbon economy.

As the day progressed, stronger, bolder proposals began to dominate, coming together in agreement of the need for a coherent strategy to establish a socialist economy.

Beyond fighting to preserve jobs and hence the employment contract, which is being broken everyday as redundancies accelerate, ideas for were put forward for extending existing forms of collective ownership and creating new ones, based in the communities.

Suggestions like using unsold Jaguar/Landrover vehicles as the basis for community transport came together with the necessity not just to oppose the global corporations, but to transfer their resources and those of the privatised bus, and train companies into socially-owned enterprises, democratically controlled and managed by committees of workers and transport users.

The Convention’s own open democratic processes were tested and survived a challenge to its stated policy of broad and inclusive unity rather than campaigning for a new party. A vote to move on from a short discussion about the idea of a new party was carried by more than two to one.

A new steering group was elected with nominations from a range of organisations, and strengthened by a new sense of direction, the Convention decided to invite the absent cooperative movement to join the group.

The Convention provided a timely and valuable opportunity to bring together a wide variety of previously disparate strands. Hopefully, it will be followed up and developed through local Conventions.

The Economic Crisis and Pensions

In November 2008, LEAP published its Red Papers on the Economic Crisis. One of the papers, 'Pensions after the Credit Crunch' by Graham Turner, concluded that:

• The slide in the FTSE 100 could reverse all the rises since the early 1990s, as the recession bites – leaving a multi-billion black hole
• Remaining final salary pension schemes are likely to close, and private pension values dwindle
• There may be no escape from a return to a higher, state funded pension.

Earlier this week, the National Pensioners' Convention issued the following press release - and it seems points one and two are happening while, almost inevitably, the Government is doing nothing to protect people from this crisis.

Credit crunch puts pressure on company pensions –
only the state can now offer security in retirement

Britain’s biggest pensioner organisation, the National Pensioners Convention (NPC) has called on the government to strengthen the state pension system in light of reports casting doubt on the future of decent company pension schemes.

The call comes as the National Association of Pension Funds is expected to announce on Monday (Jan 26) that 25 major companies will close their final salary pension schemes to existing members, and replace them with less secure defined contribution (money purchase) schemes.

The NPC has criticised successive governments for relying on good quality occupational pensions as a way of avoiding having to pay a decent state pension. But this approach is now unravelling:

• At least 75% of final salary occupational pensions have closed to new entrants
• The current economic crisis is estimated to have wiped £250bn from pension funds
• The average private pension pot will eventually give a single man of 65 an annual income of £1,960. A pension pot of £100,000 will give you a yearly sum of just £4,500
• Up to 9m existing workers have no pension provision other than the state

Joe Harris, NPC general secretary, said: “If we are serious about giving everyone a decent income in retirement, we must end the over-reliance on private occupational pension schemes which are governed by a volatile stock market. The pensioners of tomorrow – just like today’s pensioners – need security and that will only come when we recognise, like our European counterparts, that the state is best placed to provide it through a living state pension that ends poverty in old age.”

The NPC is calling for the state pension to be set above the official poverty level of £165 a week for all men and women and linked to earnings or prices (whichever is the greater).

This could be financed through a number of measures, including:

• Using the surplus in the National Insurance Fund, which currently stands £46bn, and is forecast to grow to £114bn by 2012
• Abolishing the upper earnings limit on national insurance contributions would raise at least £8bn a year
• Scrapping higher rate tax relief and tax avoidance (through tax havens) on private pension contributions could raise up to £40bn a year