If ever there was a party that made the left look pathetic, weak, self-serving and reeking of multicultural opportunism you can’t find better than the Respect Party.
So it shouldn’t come as too much of a surprise that Lee Jasper Inc has joined George Galloway Inc to attempt to try and shore up the black vote in Croydon.
For those not quite in the know about dear Lee, below we reproduce an article by the IWCA from back in 2008. Just remember folks, class isn’t the issue any more, it’s all about race and which pocket of funding you can squeeze out as a self appointed representative of your chosen racial identity. The sleazier your character the better and bags of money for everyone especially if you’re a friend of Ken Livingstone. And when you don’t deliver? Take cash and move to the next town and start over leaving the ‘community’ you’ve chosen to ‘represent’ in a worse state than they were before.
Let’s hope the working-class people of Croydon North put Jasper and the Respect Party right where they belong…firmly on their opportunistic segregationist money grabbing arses….
Some are more equal than others…
In the land of ‘equal opportunities’ some are clearly more equal than others, if the grants by the London Development Agency (LDA) described as the Mayor’s ‘business arm’ are anything to go by. Under the guiding hand of Lee Jasper, the principle race adviser to Mayor Ken Livingstone, the LDA, has been doling out grants to his friends and cronies, as if there is no tomorrow.
Of course with police currently investigating four of the beneficiaries there may indeed be no political tomorrow for Jasper and Co; so ‘make hay while the sun shines’ seems to be the motto. And with good reason.
On Tuesday Rosemary Emodi, the deputy to the Mayor’s adviser on race, was exposed as a liar and forced to quit her £64,000 job, after initially denying she had accepted a free weekend at a £200-a-night beach resort in Nigeria without telling her employers. Her stay was paid for by the resort, La Campagna Tropicana , near Lagos.
When journalists made inquiries about the trip, Ms Emodi told her employers that she had never been to the resort, and the Mayor’s office issued a statement which later turned out to be untrue. The BBC obtained confirmation that Ms Emodi had in fact flown to Nigeria on Friday 30 November, returning the following Monday. The Mayor’s office has emphasised that no public money was involved.
But Brixton Base, run by a friend of Mr Jasper, Erroll Walters, a long-standing friend of Ms Emodi, who accompanied her to Nigeria, has however benefited hugely from public money. Brixton Base has received more than £500,000 in the shape of LDA grants to be precise. The London Evening Standard claims that, to date, nine students have complained to the LDA of intimidation and lying by Brixton Base staff.
In all it is believed that approximately £3 million of taxpayers money has been invested in similar projects with no discernable return. For example Diversity International, a company run by another business associate of Mr Jasper, received a £295,000 grant from the London Development Agency – all the money has disappeared without trace.
Of the total of thirteen projects under suspicion, not one thought it worthwhile to invest even a tiny fraction of the money in covering their tracks. Had they done so there would be something, anything, to show for their efforts, when the auditor or police came calling. As the story is breaking in increments, initially and inevitably the greatest shrieks of outrage from the media have been on behalf of the London taxpayer.
This is perfectly understandable, but there are other victims in all of this, and they are the supposed beneficiaries of the LDA largesse; London’s black working class. They, and their interests are after all supposedly Jasper’s reason for being.
His entire career from when he first emerged in the late 1980’s has been based on the premise that when you come down to it race remains the determining factor that transcends all else. He is, as one critic put it, ‘some one who would play the race card in a game of solitaire’. And he would also go to extraordinary lengths to prove his point.
In 1991 he organised a march through the predominately white class neighbourhood of Bermondsey simply to prove that racism did exist there and because of that fact a grant funded initiative he himself had proposed was needed to tackle it. Jasper chose to march on a day and a time that made conflict with fans of the local football club, Millwall, who were playing at home, inevitable.
The result was a race riot, with attacks carrying on long into the night. Whether he subsequently got his grant is not known, but whatever the outcome, it was the black working class locally and not Jasper who paid a high price for this particular political misadventure. But then again having others pay the price is hardly novel. When the Lib Dem candidate for Mayor, Brian Paddick, was a serving police officer, he and Jasper’s often crossed paths in the run up to the annual Notting Hill Carnival.
Predictably Jasper had cast himself as a ‘community leader’ in west London even though he was born in Oldham and actually lived south of the river. According to Paddick’s account, Jasper’s real interest in the affair was restricted to one long street that he, Jasper, insisted was ‘controlled by the community’, which in Jaspers eye’s entitled the ‘community’ to collect the monies from stall-holders that would normally go to the organising authorities. A standoff would normally ensue, with Jasper invariably emerging as triumphant. ‘An example of entrepreneurship’ was how Jasper would describe it.
That Jasper appears to have taken ‘affirmative action’ as a personal entitlement is beside the point. In terms of race relations there is more to this than the odd rotten apple, or indeed barrel.
Observer Columnist Nick Cohen recently appeared on a panel to discuss the forthcoming Mayoral election. A question came up on the issue of ‘affirmative action’. The substance of Cohen’s criticisms was that it always went to the ‘wrong people’. In his experience he told the meeting the principal beneficiaries of such schemes were ‘already middle class’.
This is undoubtedly true, but that objectively is the entire purpose of the stratagem: talk up equal opportunities for all but in reality work to create and sustain a black middle class as a buttress to the existing white middle class in order to maintain the political equilibrium, with the working class, white and black alike, picking up the tab in one way of the other.
‘Rosemary Emodi Plc’
A case in point is the career of Rosemary Emodi herself. Nigerian born to a middle class professional family she moved to London with her sister to study. She qualified as a barrister and in the late 1990’s became active in the Society of Black Lawyers (set up in 1973 to fight racism).
Ms Emoldi was fond of arguing that SBL should remove obstacles to “black success.” She certainly tolerated no obstacles to her own success. Within the black business community she was, it is alleged, widely known as “Rosemary Emodi PLC”. At the Town Hall her persona was of course very different. There she talked ‘the good fight’, both eloquent and consistent in her appeals on equality issues which endeared her to minority campaigners.
The likelihood is she didn’t believe a word of it. For when she took a free holiday in a 5 star holiday in Nigeria with her hosts believing that she and her companion, Errol Walters, were on an official mission from the GLA to investigate ‘funding visits for London youngsters with African roots’, she was consciously exploiting the inequalities, real or contrived, she was paid £64,000 a year to address.
And just because the scheme in question was an absurd improvisation of no imaginable merit, there can be little or no doubt that Emodi would have been just as eager to leech off it, had it been authentic and worthwhile. So what does that say about the integrity of the man that had her appointed his deputy, Lee Jasper? And indeed the probity and judgement of the individual who in turn had hand-picked Jasper?
Livingstone stated recently that he believes he can ‘trust Lee with his life’. Who knows, he may even believe It? But if Livingstone was anyone other than the High Priest of Multiculturalism, Jasper and company would already be toast. However startling it might appear, Jasper and Emoldi may not be the final word in self-serving hypocrisy.
Especially when compared to the unedifying crew responsible for running the Major’s administration, serving as the well lubricated liason between City Hall and the City. As is now widely known the main stringpullers are former members of a group called Socialist Action.
In 1990 following the collapse of the Berlin Wall, Socialist Action (no. 7, Summer 1990) had this to say: “The destruction of at least some of the workers’ states, in Eastern Europe, and the imperialist reunification of Germany are both the greatest defeats suffered by the working class since World War 2…” The reference to only ‘some of the workers states’ was because SA still had high hopes for Romania!
If, as Channel 4’s programme Dispatches claims, the Mayor has of late taken to indulging in the odd tipple, prior to, with, or instead of his museli, it is not too surprising. What will be probabaly hard for Livingstone to stomach if, as it appears, the old fraud’s entire career and legacy is hanging by a thread, is that he really has no one to blame but himself. As the old saying goes, ‘show me your friends and I’ll tell you who you are’.
Article by the Independent Working Class Association
As the Eurozone crisis moves towards some kind of conclusion, the far-right are gaining ground across Europe. Mainstream commentators are noting the parallels with the 1930s, but there is one key difference: then, there was an organised, motivated working class ready to mount resistance. Today, the drift to the right faces no such obstacle.
‘The chief of the opposition’
In the recent French presidential elections, the Front National’s Marine Le Pen came third in the first round with a historic 17.9% of the vote, exceeding the 16.8% her father achieved at the same point in the contest in 2002 before coming second overall. Jean-Luc Mélenchon, the candidate of the Left Front coalition backed by the once-mighty French Communist Party and who had made the defeat of Le Pen an explicit campaign objective, trailed in a distant fourth on 11%. Prior to the election, the Guardian had stated that ‘Mélenchon is locked in a vicious battle with Le Pen for the protest and working class vote’. Evidently, Le Pen won that battle, winning ‘a higher percentage of the working class vote than any other candidate’ (link).
The Financial Times has declared Marine Le Pen to be ‘the third force in French politics’, and has noted that she ‘managed to expand her support beyond its traditional base among male factory workers in the industrially blighted north and east of the country. The country’s so-called “invisibles”, who back Ms Le Pen, now include increasing numbers of women, countryside-dwellers and poorly
Significantly, Mélenchon called on his supporters to transfer their support to the centre-left candidate Franois Hollande in the second round of voting, while in contrast Le Pen refused to endorse the centre-right incumbent Nicolas Sarkozy or anyone else: she instead stated her intention ‘to “become the chief of the opposition” and cast a blank ballot. Le Pen’s success sets the scene for the French parliamentary elections in June, where the FN ‘hopes to pick up as many as 15 seats – including one for an increasingly self-assured Ms Le Pen’ (link).
The success of the far-right in France is far from an isolated occurrence in Europe. In the Netherlands, the Freedom Party has recently brought down the minority liberal-conservative coalition government by refusing to support its proposed austerity budget, prompting elections in September. In the recent Greek elections the openly neo-Nazi Golden Dawn party took 7% of the vote (up from 0.23% three years ago), earning them 21 seats and becoming ‘the most extreme right-wing party to sit in parliament since Greece returned to democracy after the fall of a military dictatorship in 1974′ (link): according to former Greek deputy prime minister Theodoros Pangalos, ‘In the places where the police voted, the fascists got 25 per cent’ (link). In 2010, the Seden Democrats entered the Swedish parliament for the first time, winning 20 seats; in Denmark, the People’s Party are the third biggest in that country’s parliament; in Austria, the Freedom Party are ‘neck and neck with the country’s two largest mainstream parties in the polls’ (link), while in 2011 the True Finns took 19% in the Finnish elections, making them the third biggest party in the Finnish parliament.
‘”Golden Dawn has cleaned up Athens!”‘
With regards to France, almost as significant as the fact that 6.4m French voters backed an explicitly fascist candidate is the wider effect the Front National is having on French politics. The Front’s presence has not only grown in its own right, it has pulled the centre ground of French politics to the right. Throughout the presidential electoral campaign (and in the years preceding it) Sarkozy constantly attempted to match or appropriate the Front’s themes and rhetoric, either to hive of some of their support or to prevent losing more of his own. Among other things, Sarkozy stated that there are “too many foreigners” in France (link) and claimed that “the biggest concern of French people is halal meat” (link), a direct response to a fallacious statement by Le Pen that “all the abattoirs in the Paris region” produced halal meat. An NF adviser, Nicolas Bay, stated that “Nicolas Sarkozy is trying to renew 2007 [the previous Presidential election] by encroaching on our turf. That means we have to go on the offensive as we have no intention of letting him do it again” (link).
Likewise, in the Greek elections the centre-left PASOK and centre-right New Democracy both ran ‘xenophobic campaigns. ND has said it intends to repeal a law which grants Greek citizenship to children born in Greece to immigrant parents. And cabinet member Michalis Chrysochoidis, of PASOK, has announced “clean up operations” whereby illegal immigrants are to be rounded up in encampments and then deported. When he recently took a stroll through the center of Athens to collect accolades for his commitment to the cause, some called out to him: “Golden Dawn has cleaned up Athens!”‘ (link). As has been noted elsewhere, ‘the real potency of the fascist renaissance across Europe is far better judged by how easily its appearance on a national stage can first panic, and then stampede, an erstwhile political centre to the right’.
‘I sense an evolution at European level, even in classic governments’
The UK has not been immune to these pressures. In March 2011 David Cameron gave a speech in Munich attacking ‘state multiculturalism’ (link). Marine Le Pen immediately seized on this as endorsement of the Front’s agenda, saying that Cameron’s speech was ‘exactly the type of statement that has barred us from public life for 30 years. I sense an evolution at European level, even in classic governments. I can only congratulate him.’ The BNP’s Nick Griffin described Cameron’s remarks as ‘A further huge leap for our ideas into the political mainstream… A few years ago we had the then Labour Home Secretary David Blunkett admitting that ‘multiculturalism has failed’. Then Gordon Brown used and legitimised our call for ‘British Jobs for British Workers’… And now we have the Prime Minister admitting that the British National Party [was right] in our 30-year campaign against the unworkable folly of multiculturalism’.
Perhaps more significantly, in France the FN is beginning to set the agenda on matters of economic policy as well. Le Pen’s rhetoric has long referenced economic protectionism: this is the base of her appeal to France’s industrial workers. During the election campaign Sarkozy, the avowed advocate of free markets and the ‘Anglo-Saxon’ economic model, also engaged in such anti-free trade rhetoric (link). As the Financial Times’ Gideon Rachman said of the French elections: ‘All the candidates, from the extreme left to the extreme right, campaigned against financial markets and in favour of even higher taxes on the rich. While the candidates emphasised their differences, what was most striking as an outsider was how similar they all were: with their attacks on globalisation and on finance, their praise of the French social model, their lists of glorious episodes from French history and their insistence that France was not just any old country, but a model for the world’ (link).
Yet with such an anti-capitalist mood in the air, the French working class are turning to the right, not the left: it is the fascists, and not just in France, who are able to present themselves as the radical alternative. It is enormously instructive that Mélenchon called on his supporters to vote for Hollande, while Le Pen refused to endorse anyone: at the moment of truth, Mélenchon acted to prop up the centre which has been discredited in the eyes of the French working class, while Le Pen refused to do any such thing. Le Pen is seen as the radical alternative because she is more radical.
The defeat of Ken Livingstone in the London mayoral election is a further demonstration of how the ‘left’ has managed to alienate a chunk of its core support. London is a Labour-leaning city, Labour are ahead in the polls and the Tories had a disastrous night nationally – yet in the capital they still won the most high profile contest of the night. Why? There are many reasons, but part of it can surely be explained by a reaction of London’s white working class against Livingstone’s opportunistic embrace of divisive identity politics: the Greater London Authority’s own research found that between the 2004 and 2008 Mayoral elections ‘those areas with a higher percentage of the population listed as White British became less likely to vote for the Labour candidate’ (link).
The actions of supposedly left-wing politicians like Livingstone and George Galloway in appealing to a narrow ethnic, and particularly Muslim, nationalist vote is simply the flipside of the likes of Le Pen demonising those self-same groups: in both cases the strategy divides and polarises the working class along ethnic lines, instead of uniting it. It is this kind of ‘multiculturalism’ which the BNP themselves support, for transparent reasons. It is to be hoped that the defeat of Livingstone marks the end for this type of identity politics, which Livingstone himself did so much to create and normalise.
21st century fascism
Another factor in the FN’s success is the detoxification of their brand under Marine Le Pen. Younger and more telegenic than her father, her elevation has seen the dumping of the FN’s World War II, anti-Semitic baggage. It is hostility to Islam rather than Jewry which provides the racial animus behind today’s FN. The same applies to much of the resurgent far-right in western Europe (although anti-Semitism remains a factor the further east you go): the only thing extreme about Anders Breivik is the lengths he went to in pursuit of his worldview. His worldview itself – based on an opposition to ‘multiculturalism’, ‘cultural Marxism’ and ‘Islamification’ – is common currency for the European far-right from Burnley to Vienna: one can hear much the same thing from the FN, the BNP or Norway’s Progress Party, the second largest grouping in the Norwegian parliament and who once had Breivik as a member.
The far-right have worked for years to put themselves in the position they are in today. A senior FN spokesman said in 1997: ‘People are coming to us because we go to them… We are there on the street, on the landings of the tower blocks. People see we don’t have horns. They see our ideas are their ideas. And they don’t see the other parties at all’ (link). The left hasn’t been on the landings of the tower blocks, in France or anywhere else, which is largely why this 21st century fascism is in pole position to reap the rewards as the economic crisis proceeds.
What success the BNP have had has been from adopting this ‘landings’ strategy. At present, the BNP do not have the capability to take full advantage of the political opportunities available to them. Unlike the FN (the gold standard for fascist parties of this type), the BNP have not had thirty-odd years of uninterrupted development and maturation. When ‘catch-up’ success rapidly came their way after adopting the ‘Euronationalist’ strategy – they attracted the attention of the establishment (including, we can assume, the security services) and have been significantly debilitated as a result.
Another effect of their meteoric rise from electoral obscurity was psychological: one moment they were running Blood & Honour gigs in places like Thornton Heath; the next they were forming the opposition in local councils, appearing on Question Time and making speeches to the European Parliament without any time to grow a solid middle management and adjust mentally and politically.
But despite these setbacks, the underlying conditions which facilitated the BNP’s rise are still there: disillusionment with the neo-liberal centre and a Labour party that has turned its back on the working class, producing a political vacuum. There is no reason to assume that the BNP is permanently impaired or cannot learn their lessons; but even if that were so, the opportunity remains for some other right-wing formation to fill the vacuum (it is notable that UKIP did well at the recent local elections, a new phenomenon for them).
‘The more people were personally hit by the economic crisis, the more they turned away from democracy’
The economic crisis is discrediting the mainstream capitalist order, and the political centre is coming under the most pressure where the economic crisis is most acute. The recent Greek elections saw 70% of votes go to parties of the left and right opposed to the current austerity programme, which is being forced upon Greece by the ‘troika’ of the EU, the European Central Bank and the International Monetary Fund as a condition of the bail-out money which is keeping the country afloat. Unlike elsewhere, much of the protest vote in Greece is going to the left: as the BBC’s Paul Mason has noted, Greece is a country where ‘Marxism has massive prestige due to its role in both the [WWII] anti-fascist resistance and in the 1946-49 Civil War’ (link). Such historically favourable conditions do not exist in many other places.
In Greece, we are now witnessing a clear stand-off between democratic expression and capitalist necessity; between the will of the people and the will of international economic institutions. The Greek people want to stay in the Euro, but cannot swallow further cuts to their standard of living; for the ‘troika’, the price the Greeks must pay to stay in the Euro is precisely further cuts to their standard of living, for the alternative (other than Greek exit) is inflation and loss of competitiveness for Germany and the other Euro creditor economies, which they cannot entertain. Which will win out? What will happen if Greece’s June elections give a clear mandate to the anti-austerity forces? Will the views of the Greek people be given any weight? Or will the troika continue to inflict its liquidationist policies upon them?
Holding the Euro together even this far has required elected leaders in Greece and Italy being deposed and replaced by unelected ‘technocrats’, economic policy autonomy being removed from nations in receipt of bail-out money and the centralisation of decision-making power in the hands of the ‘troika’. The only way for the Euro to be rescued in its present form and scope would be through the creation of Eurozone-wide economic and fiscal union, which would require a level of political unification for which there is no democratic support. So while any break-up of the Eurozone and the economic depression that may well follow it would be a boon for the far-right, the survival of the Euro also poses a similar, if different, threat to democracy. And what we are witnessing now in Greece illustrates a more fundamental point: capitalism does not need political democracy – in fact, it often functions better without it.
In 2011 a report from the European Bank for Reconstruction and Development found that ‘support for democracy and markets… has declined in many of the more advanced transition countries, including all the new EU members except Bulgaria [since 2006]… the more people were personally hit by the [economic] crisis, the more they turned away from democracy and free markets’ (link).
As the report shows, the very idea of democracy is coming under question. The economic crisis is catalysing this – the historian Mark Mazower has written that ‘The crisis has thrown into question the very idea that the world can be governed’ (link) – but on a more fundamental level it is to do with the defeat of socialism as a transformative, progressive force. Socialism was meant to take mankind beyond mere capitalist democracy into more substantive forms of political and economic democracy, but this project did not succeed. Now, the concept of ‘democracy’ is synonymous solely with liberal capitalism. The only thing liberal capitalism offers is the prospect of increased material wealth, and now even this can no longer be guaranteed.
Fidesz or Jobbik
The American Nobel Prize winning economist Paul Krugman has noted these trends, and has pointed to one European country in particular as a possible harbinger of the future: Hungary. In 2010 the right-wing Fidesz won an overwhelming 226 of the 386 seats in the Hungarian parliament (the Socialist party coming second with 48) due to, in Krugman’s words, Hungary suffering ‘severely because of large-scale borrowing in foreign currencies and also, to be frank, thanks to mismanagement and corruption on the part of the then-governing left-liberal parties’. In coalition with the Christian People’s Democratic Party, Fidesz have a sufficient majority to change the Hungarian constitution, with the following results:
‘A proposed election law creates gerrymandered districts designed to make it almost impossible for other parties to form a government; judicial independence has been compromised, and the courts packed with party loyalists; state-run media have been converted into party organs, and there’s a crackdown on independent media; and a proposed constitutional addendum would effectively criminalize the leading leftist party.’ (link)
But Fidesz are not alone: coming third in 2010 was Jobbik, described by Krugman as ‘a nightmare out of the 1930s: it’s anti-Roma (Gypsy), it’s anti-Semitic, and it even had a paramilitary arm… Taken together, all this amounts to the re-establishment of authoritarian rule, under a paper-thin veneer of democracy, in the heart of Europe. And it’s a sample of what may happen much more widely if this depression continues’.
With the outlook for democracy looking decidedly cloudy in much of Europe, Fidesz or Jobbik illustrate two of the fates that the future may hold: on one hand creeping state authoritarianism reminiscent of modern day Russia; on the other, if the worst case economic scenario comes to pass, something resembling a re-run of the interwar period. With neo-liberalism discredited and the far-right in the ascendant (and working to a proven strategy), it is not scaremongering to speculate in this way. There is a counter-strategy: for those radically opposed to fascism and neo-liberalism to get on the landings and take on the fascists there, by engaging with and responding to working class concerns, and articulating progressive, pro-working class solutions. That is where battle is to be joined, for now. But if that challenge is not taken up, the battles against fascism in the future will likely be considerably more daunting.
Indeed as bad as things are, we are considerably further down the track than it may appear, for one critical but widely ignored reason. Unlike the 1920s when Social Democracy and Communism seemed to promise the working class a way out of the economic crisis, today, nearly a century later, the liberal Left across Europe is busily losing touch with, abandoning, or being abandoned by what was formerly its core constituency. And so, should this drift continue without some decisive intervention, what section of society is it exactly, when events accelerate or take a sudden turn for the worse, that we anticipate will man the barricades in their stead?
 Sean Birchall (2010), Beating the Fascists: the untold story of Anti-Fascist Action (London: Freedom Press), p17.
The current Eurozone crisis is only the spearhead of a wider crisis of globalisation. The neo-liberal economic model which has swept the world over the past thirty years has reached, or is reaching, its limits. Senior capitalist spokespeople are talking of the possibility of ‘deglobalisation’, and the need for a ‘rebalancing’ of the global economy. We are in the early stages of a transition to a post-neo-liberal era. What that era will look like is unknown, but there is no guarantee that it will be progressive.
Just before Christmas, the European Central Bank took the unprecedented step of making almost €500bn available to 523 Eurozone banks in cheap three year loans, the intention being, according to the Financial Times, ‘to provide a “wall of money” to shield the banking system and prevent a European version of the 2008 collapse of Lehman Brothers‘. This was repeated in late February, when a further €530bn was taken up by 800 European banks, taking the total amount of cheap loans issued to over €1trn. The level of fear that was stalking the European banking system is illustrated by the fact that over the Christmas/New Year period, Eurozone banks repeatedly deposited record amounts of cash overnight with the ECB – cresting at €528bn – rather than risk lending to each other at higher interest rates on the commercial interbank market (link). Mario Draghi, President of the ECB, has said that because of these actions ‘we have avoided a major, major credit crunch, a major funding crisis‘.
These actions illustrate the gravity of the situation facing the European financial system. While this massive bridging loan has postponed what was becoming an increasingly imminent moment of reckoning, by itself it cannot resolve the structural causes of the Eurozone crisis, a crisis which threatens the integrity of the world economy as we know it.
When the economic crisis first hit in 2008, we saw major global financial institutions having to be bailed out by states. Now, we are seeing states themselves heading towards bankruptcy, which in turns threatens to take the banks exposed to their debt down with them.
The long-standing fear of a sovereign debt default within the Eurozone has passed the peripheral states of Ireland, Portugal and Greece and has spread to the major economies at the core of the system, toppling Silvio Berlusconi from power in Italy in the process. Simply put, no-one – not even the wisest, greyest heads – knows for certain how this matter will resolve itself. Since the crisis began, what had previously been regarded as unthinkable has happened all too readily. At the start of September 2008 it seemed unthinkable that a major Wall Street investment bank would collapse and that others would survive only through unprecedented levels of state support and giving up investment bank status, but within weeks this is precisely what happened.
Now a break-up of the Euro, and everything that would go with it, is being openly discussed as a possibility. Olli Rehn, the EU’s commissioner for economic and financial affairs, has said that ‘a collapse of Italy would inevitably be the end of the euro, stalling the process of European integration with unpredictable consequences’, while JP Morgan are advising their clients to ”at a minimum hedge the bulk of their exposure to the euro”, and that a break-up of the Eurozone, should it come to pass, would likely be followed by ‘a European depression, a global recession and possibly a global depression’ (link).
No less a figure than General Martin Dempsey, chairman of the Joint Chiefs of Staff and the highest ranking officer in the US military, has said ‘We are extraordinarily concerned by the health and viability of the euro because in some ways we’re exposed literally to contracts but also because of the potential of civil unrest and break-up of the union’, while the Nobel-winning economist Paul Krugman has stated ‘a few months ago I regarded a complete Euro crackup as highly implausible. Now I’m having trouble finding a plausible story about how the thing survives.’ Mohamed El-Erian of PIMCO, the world’s largest bond investor, has said that he expects Portugal to follow Greece in needing a further bail-out (link).
Why is this happening? What has brought us to this pass? How likely is a break-up of the Euro, and what exactly would it entail?
In the first instance, as one of the architects of the Euro, Jacques Delors, has recently stated, the project had fundamental design flaws from the beginning. In an interview with the Telegraph, Delors stated that at the outset of monetary union ‘the Anglo-Saxons’ argued that a single currency and central bank which wasn’t backed by a single state was bound to eventually fail, and Delors now thinks that ‘they had a point’ (link).
The Financial Times’ Martin Wolf – who was one of those ‘Anglo-Saxon’ critics twenty years ago – writes more forensically that “As designed, the Eurozone lacked essential institutions, the most important being a central bank to act as a lender of last resort in all important markets, a rescue fund large enough to ensure liquidity in sovereign bond markets and effective ways of managing a web of sovereign insolvencies and banking crises” (link; see also link).
This is crucial to understanding what is happening. The Eurozone crisis stems from a fear among investors that states will default on their debt obligations. However, this fear does not necessarily stem from the scale of debt held.
Since 2002 Spanish government debt as a percentage of GDP has been lower than that of Germany, and Spain “actually ran a modest budget surplus in the years before the crisis hit… if public debt is your yardstick, then the Spaniards were paragons of virtue. They borrowed lightly despite the fact that their euro-zone membership gave them an all-you-can-eat buffet of financing at bargain-basement rates” (link). Likewise, Irish national debt was relatively low and falling until 2008, when its deregulated ‘Anglo-Saxon’ financial system began to implode; and Italian public debt, while high, was also falling up until 2007.
The US and UK have sovereign debt levels that are comparable to or higher than all of the distressed Eurozone countries other than Italy and Greece (diagram), yet the markets display no fear of default on their part. Quite the opposite, in fact: the interest on government debt for the US and UK is currently at historically low levels, they are regarded as safe havens in the current storm (on the 18th of January UK 10-year yields reached 1.96%, the lowest since records began in 1703). This is in large part because these countries do have the ‘essential institutions’ backstopping their currency in place – in this light their debt looks quite manageable, and in the final analysis they can print money if need be.
The Eurozone does not have this facility: while the European Central Bank has recently been acting as a de facto lender of last resort to Europe’s troubled commercial banking sector, it has no mandate to do the same for Eurozone member states (although much of the €1tr injection of liquidity has in reality been funnelled by the banks into Spanish and Italian government debt, effectively functioning as quantitative easing through the back door).
This is why investors fear a default among one or more of the vulnerable Eurozone nations, which in turn is creating fears for the solvency of the banks holding their debt, which in turn risks creating a self-fulfilling run on those banks. As Paul De Grauwe of the London School of Economics summarises it:
‘National governments in a monetary union issue debt in a ‘foreign’ currency, i.e. one over which they have no control. As a result, they cannot guarantee to the bondholders that they will always have the necessary liquidity to pay out the bond at maturity. This contrasts with ‘stand alone’ countries that issue sovereign bonds in their own currencies. This feature allows these countries to guarantee that the cash will always be available to pay out the bondholders… The nice thing about this solution is that when deposit holders are confident that it will be used, it rarely has to be invoked… Contagion between sovereign bond markets can only be stopped if there is a central bank willing to act as a lender of last resort, i.e. willing to guarantee that the cash will always be available to pay out the bondholders… The reluctance of the ECB to take up its responsibility as a lender of last resort is the single most important factor explaining why the forces of contagion in the eurozone’s sovereign bond markets has not been stopped.’ (link)
So while Con-Dem politicians – and deficit hawks in the US – like to invoke Greece and Italy as reasons why public spending must be cut, the fact is that the US and UK are qualitatively different cases, because they have the necessary institutions guaranteeing their debt which the Eurozone countries do not. If Gordon Brown deserves credit for nothing else, it is for having the foresight to keep Britain out of this doomed institution, otherwise the UK would be in a similar predicament to Greece, Italy and Spain.
‘The endgame for the Eurozone’
These design faults with the Euro are now being exposed by other factors economic and, ultimately, political. The Euro has seen the locking together of countries with very different levels of competitiveness, productivity and other economic fundamentals into a single currency, with a single exchange rate and a single interest rate which may or may not be appropriate for each countries needs. As Thomas Mayer of Deutsche Bank has put it: ‘below the surface of the euro area’s public debt and banking crisis lies a balance-of-payments crisis caused by a misalignment of internal real exchange rates’.
These ‘misalignments’ have driven the wider imbalances inside the Eurozone which are the ultimate economic root of its crisis, imbalances described by Nouriel Roubini of New York University thus: ’For the last decade, the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) were the eurozone’s consumers of first and last resort, spending more than their income and running ever-larger current-account deficits. Meanwhile, the eurozone core (Germany, the Netherlands, Austria, and France) comprised the producers of first and last resort, spending below their incomes and running ever-larger current-account surpluses’ (link).
These imbalances were largely driven by the differences in competitiveness and productivity between the Eurozone nations, meaning countries such as Germany were able to export more than they imported, while the reverse was true of the PIIGS nations.
In Ireland and Spain, like the US and UK, which are also major current-account deficit nations, much of this trade deficit was made up for by a massive expansion of consumer credit largely backed by a housing bubble (i.e.: private debt); whereas in Greece, Portugal and, up to a point, Italy, government spending played a greater role in filling the gap (i.e.: public debt). While the Eurozone has a unifiedmonetary policy – interest rates, exchange rate and money supply – it does not have a unified fiscalpolicy – tax and spend. For this reason the governments of Greece, Portugal and Italy were able to borrow without any oversight, enabled by the credibility they had as members of the Euro. But it was largely because they were members of the Euro that they had to borrow in the first place: the Euro, while perhaps under-valued for Germany and the surplus Northern nations, is over-valued for the Mediterranean countries, which don’t share Germany’s levels of productivity or competitiveness (On how this has effected Italy, see link).
It is this factor which is giving countries reasons to consider leaving the Euro. The current interest rate on 10-year Italian bonds is 4.91%. 7% is the rate which is considered unsustainable: Ireland, Greece and Portugal were forced to seek IMF/EU bail-outs when they breached this level, and it was when Italy did likewise that the democratic process was cast aside, Berlusconi was removed from office and Mario Monti – a career economist, former EU commissioner and adviser to Goldman Sachs – was installed. The markets seem to have been temporarily calmed by this and/or the European Central Bank’s Christmas largesse – Italian 10-year yields were 7.159% as recently as the 10th of January – but Italy’s problems are structural and systemic, and cannot be permanently resolved by emergency hits of cheap money alone.
Roubini’s view is that the best policy option for addressing the Eurozone crisis is ‘significant easing of monetary policy by the European Central Bank; provision of unlimited lender-of-last-resort support to illiquid but potentially solvent economies; a sharp depreciation of the euro, which would turn current-account deficits into surpluses; and fiscal stimulus in the core if the periphery is forced into austerity’, while still undertaking ‘austerity measures and structural reforms’ where necessary. While the PIIGS nations are certainly being forced into austerity, of the constructive policy options only ‘easing of monetary policy by the European Central Bank’ is taking place, and this only on an emergency basis.
This is because, Roubini believes, of ‘the prospect of a temporary dose of modestly higher inflation in the core relative to the periphery’ or, in other words, Germany is acting its own sectional interests rather than the general interest. Germany and the other surplus Eurozone nations are unwilling to give up their competitive advantage, but if the Euro is to survive in its present form this is precisely what must happen.
However, instead of the Euro adjusting, even in part, to the needs of Italy and Greece, Italy and Greece are having to adjust wholly to the needs of the surplus bloc within the Euro, laying waste to much of their economies – and their social fabric – in the process. Greece is a hopeless case – but is also rather a small one: the Euro and the world economy can survive a Greek default. Italy is another matter: David Riley, head of the ratings agency Fitch, has said that ‘The future of the euro will be decided at the gates of Rome’. However, as long as Italy remains within the Euro it is damned if it does or if it doesn’t: it cannot take on any more debt without again triggering the wrath of the bond markets, while cutting spending in the teeth of a recession leads, in the words of Jim O’Neill of Goldman Sachs, ‘to weaker growth which then leads to bigger deficits’.
But if Italy leaves the Euro, they can once again issue their own currency, and it can find (or be manipulated towards) an exchange rate appropriate to the needs of the Italian economy, allowing the Italy opportunity to work its way back to some kind of economic health and eventually regain access to the international capital markets, this time with the correct institutions backing their currency in place.
But as we have seen, should this happen it would likely trigger ‘a European depression, a global recession and possibly a global depression’. Willem Buiter, chief economist of Citigroup and a former member of the Bank of England’s monetary policy committee, has said: ‘A disorderly sovereign default and eurozone exit by Greece alone would be manageable. Greece accounts for only 2.2 per cent of eurozone area GDP and 4 per cent of public debt. However, a disorderly sovereign default and eurozone exit by Italy would bring down much of the European banking sector… If Spain and Italy were to exit, there would be a collapse of systematically important financial institutions throughout the European Union and North America and years of global depression’ (link).
Not an appetising prospect, but for Italy and Greece the alternative as it stands is slow economic death and probable political revolt inside the Euro. The core Eurozone members are not presently concerned with the general interest, so why should Italy or Greece be? Why should they ‘take one for the team’ if Germany and the other surplus nations are unwilling to do likewise?
This brings us to the obvious question to round off this section: why does the Euro not have the ‘essential institutions’ in place to prevent the kind of financial crises we are currently seeing? This takes us back to Delors and the lack of a single state supporting the Euro: only a Europe-wide political authority can provide the essential institutions identified above, but there hasn’t been – and isn’t likely to be – any democratic mandate for such a level of political and economic union.
But with the Euro’s institutional failings now exposed – the Harvard economist Kenneth Rogoff has called it ‘a halfway house which doesn’t work’ – it now must move either forward or back: either it progresses towards full fiscal and economic union – a common Eurozone-wide treasury, with a pooling of taxes and debts, or in essence a United States of Europe – for which there is no popular support; or it falls apart.
This highlights one of the binds the European project finds itself in: at bottom, the drive towards European unification was driven by the need to put an end to the centuries of increasingly bloody slaughter that had characterised European history up until 1945 and to safeguard liberal capitalist values, yet the only way to complete the project now would be through the over-riding of political democracy. Without the political will to move towards the necessary degree of fiscal union, Roubini’s view is that ‘With Italy too big to fail, too big to save, and now at the point of no return, the endgame for the eurozone has begun. Sequential, coercive restructurings of debt will come first, and then exits from the monetary union that will eventually lead to the eurozone’s disintegration.’
‘Ideas, knowledge, science, hospitality, travel – these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible and, above all, let finance be primarily national.’ John Maynard Keynes
What would a sovereign debt default by Italy be likely to mean outside the realms of high finance? For one, it would threaten the solvency of any financial institution holding significant amounts of Italian debt. The size of the Italian economy means any bail-out would have to be of a scale that would threaten the fiscal position of any coalition of Eurozone nations who may attempt to mount it.
An exit from the Euro and a reversion to their own currency by any nation risks rendering contracts denominated in the Euro void; while the inevitable devaluation which would follow any Euro exit puts at risk the value of holdings in that country, which is prompting capital flight from the European banking system (link and link).
In response to this, the Treasury is apparently working on “contingency plans for the disintegration of the single currency that include capital controls” (link) while Christine Lagarde, managing director of the IMF, is currently concerned enough to publicly warn of the risk of ‘retraction, rising protectionism and isolation. This is exactly the description of what happened in the 1930s and what followed is not something we are looking forward to’ (link). This echoes the view of Bill Gross, managing director of PIMCO, expressed in 2009 that ‘[t]he future of the global economy will likely be dominated by delevering, deglobalization, and reregulating’ (link), while PIMCO’s investor forecast for 2012 talks of the ‘slowly creeping but surely rising risks of financial and economic de-globalization, and the constant drum beat of re-regulation, particularly in developed country banking systems’ (link).
It is of tremendous importance that such significant figures are talking in this way. It has been assumed that ‘globalisation’ is something both inevitable and beneficial. To an extent, its inevitability is true: technological advancement has made the world a smaller, more connected place. But ‘globalisation’, when used in the economic sense, refers to one thing: the globalisation of the movement of capital.
The financial crisis has brought with it a realisation, even among some of its cheerleaders, that the globalisation of capital may in fact be neither beneficial or inevitable. A recent Bank of England report on the future of international capital flows began by stating that ‘The experience of the past decade has demonstrated the challenges that international capital flows can pose for financial stability’, before warning that ‘faced with further increases in the magnitude and/or volatility of capital flows, it is likely that some countries will choose to introduce capital controls’ (link). In reviewing this report, Gillian Tett of the Financial Times commented:
‘Back in the halcyon pre-crisis days of the late 20th and early 21st centuries, it was taken as self evident that financial globalisation was a good thing. After all, free capital should enable money to flow to where it is most needed, at the best price; or so the theory goes. But the subprime crisis and eurozone dramas are shaking that belief. Never mind the fact that imbalances amid globalisation can stoke up bubbles; what is the bigger risk now – particularly in the eurozone – is that financial globalisation has created a system that is interconnected in some dangerous ways. This makes it highly vulnerable to contagion, and booms and busts, of the sort that occurred in 2008 when global capital flows collapsed to a mere 1 per cent of GDP. And if globalisation increases, these swings could potentially get worse’ (link).
Why does this matter? Because the defining characteristic of neo-liberalism, above everything else, is the globalisation of capital. This has defined the history of the past thirty or so years: it is the globalisation of capital that has created the conditions for the current crisis, enabled the flight of manufacturing jobs from the West to those countries where wages are lowest, and has helped produce unprecedented inequality and the emasculation of the labour movement across the globe. It is what separates the previous, Keynesian, era of economic history from ours, and now senior capitalist spokespeople are saying that the era may have reached its natural end.
Financial globalisation is a man-made process made up of man-made institutions: it has gone into reverse before, there is no reason why it cannot do so again. As Peter Mandelson has recently said, ‘the shipping container and the internet are genies that can’t go back in the bottle – nor would we want them to. But much of what we call globalisation results from policy choices.’
The American economist Barry Eichengreen divides the development of international finance in the capitalist epoch so far into four stages:
Firstly, prior to World War I, controls on international financial transactions were absent, the value of national currencies were fixed (to the price of gold) and capital flowed freely around the world across international borders to wherever it found most attractive (the gold standard era).
Secondly, the political and economic crises of the inter-war period saw the collapse of this system and the widespread imposition of controls on the movement of capital across international borders, with a corresponding contraction of international capital movements.
Thirdly, the thirty years following World War II were defined by the Bretton Woods system, an internationally-agreed system of highly controlled capital movements and fixed exchange rates tied to the dollar, the value of which was in turn tied to gold.
Fourthly, the neo-liberal period following the collapse of the Bretton Woods system in the seventies, which has seen a restoration of the globalisation of capital seen before World War I, but with a regime offloating exchange rates as opposed to the fixed exchange rates of the pre-WWI period.
The period during which the Bretton Woods system operated has become known as the ‘golden age of capitalism’. The economic historian Angus Maddison has commented that “Within the capitalist epoch [1820 onwards], one can distinguish five distinct phases of development. The ‘golden age’, 1959-1973, was by far the best in terms of growth performance. Our age, from 1973 onwards (henceforth characterized as the “neoliberal order”) has been second best” .
The Bretton Woods system, which underpinned the ‘golden age’, was constructed by the US and the UK – with Keynes himself as the UK rapporteur – as WWII was drawing to a close. It was introduced to provide a stable macroeconomic environment in which the international economy could be nursed back to health, after the disasters of the Great Depression and two world wars had brought the capitalist system to the brink of extinction.
It is the concern of Christine Lagarde, PIMCO and others that Eichengreen’s fourth stage – a stage which has been an unprecedented bonanza for the capitalist class, if no-one else – may be coming to an end, and their concern is fully justified. The political scientist Colin Crouch has written of ‘the strange non-death of neo-liberalism’ (link), but history moves slowly. Neo-liberalism did not vanquish Keynesianism overnight, and neither will it slip from view in the blink of an eye. But the underlying historic and economic trends are clear: the model of neo-liberal globalisation as we have known it is broken and cannot be repaired; and even if it could be repaired, it could not be sustained.
The beginning of the neo-liberal era can be traced back to 1971, when Richard Nixon took the dollar off gold, allowing it to devalue. This led to the complete break-up of the Bretton Woods system in 1973 and helped produce our era of freely floating currencies, something the godfather of neo-liberal economics, Milton Friedman, had been advocating since 1953 (George Shultz, who oversaw much of this process as US Treasury Secretary between 1972 and 1974, was a colleague of Friedman’s at the University of Chicago’s economics department).
This ushered in, and was a pre-condition for, our era of globalised finance. As the Cambridge economist John Eatwell states:
‘Once Bretton Woods collapsed and significant fluctuations in exchange rates became commonplace, then opportunities for profit proliferated, regulatory structures which inhibit flows of capital were challenged as ‘inefficient’ and ‘against the national interest’, and the modern infrastructure of speculation was constructed.
‘Combined with other domestic pressures for the removal of financial controls, the collapse of Bretton Woods was a significant factor driving the world-wide deregulation of financial systems. Exchange controls were abolished. Domestic restrictions on cross-market access for financial institutions were scrapped. Quantitative controls on the growth of credit were eliminated, and monetary policy was now conducted predominantly through the management of short-term interest rates. A global market in monetary instruments was created’.
But the world did not move from the Keynesian era of fettered finance to the neo-liberal era of unfettered finance in one fell swoop: it was a gradual process which wasn’t sealed until the last major industrial economies, Norway, abolished its capital controls in 1995 (link). In between there was the Pinochet coup and the ‘Chicago Boys’ in Chile, the US abolition of capital controls in 1974, the Thatcher revolution in the UK (the first major act of the Thatcher administration was to remove exchange controls in June 1979), the fall of the Berlin Wall, the New Democrats and NAFTA in the US and the birth of New Labour here: all steps along the neo-liberal road. Just as the ‘Nixon Shock’ of 1971 was the beginning of the end for the Keynesian era, so the Lehman’s collapse of 15 September 2008 marks the beginning of the end of the neo-liberal era.
We are in the early stages of the transition to the post-neo-liberal era. What will this look like? That is unknown. When Keynesianism fell, the architects of neo-liberalism had been planning for and working towards their takeover for decades.
Presently, there is no-one so equipped to step into the vacuum. If anything explains the ‘strange non-death of neo-liberalism’, it is that no other contender is currently strong enough to kill the wounded beast. The left, which was unable to seize the opportunity in the 1970s, is even weaker now. In academia, Keynesian economic solutions are beginning to be looked at again with interest. But is there the political will behind neo-Keynesianism as there was behind neo-liberalism? After all, the capitalist objections to Keynesianism were largely political, not economic.
Keynesianism delivered the greatest period of economic growth in the capitalist era; it also delivered the most equitable growth, which is why it was so despised. The restrictions it put on the movements of capital across national boundaries left capital unacceptably vulnerable to attack from the domestic working class, wherever it was. The removal of these restrictions gave capital the whip hand over labour, which largely accounts for the emasculation of the labour movement worldwide in the neo-liberal era.
But the removal of these controls on finance invariably leads to the kind of economic crisis we are currently going through. This is the bind capital finds itself in: liberalised capital is politically secure (because it weakens the position of the working class) but economically unstable; ‘repressed’ capital is economically stable but politically vulnerable.
While the problems with Keynesianism were political, the problems with neo-liberalism are economic. If anything drives the world toward financial deglobalisation, it won’t be political action by the mass of the population, but the actions of capitalist agents protecting themselves and working in their own interests.
Lose-lose for the capitalist class
It is not just the Bank of England now acknowledging the potentially destabilising effect of the free movement of capital: the IMF, in a complete reversal of what it has been preaching and demanding for thirty years, is also publishing research papers stating that ‘capital controls are a legitimate part of the toolkit to manage capital inflows in certain circumstances… following the crisis, policymakers are again reconsidering the view that unfettered capital flows are a fundamentally benign phenomenon and that all financial flows are the result of rational investing/borrowing/lending decisions’.
More significantly, this is happening in practice: a number of emerging economies ‘ranging from Brazil to South Korea to Turkey are limiting capital flows in an effort to control inflation, limit the rise in their own currencies or prevent bubbles in their stock and real-estate markets’ (link). And as we have seen, should a significant default event happen in the Eurozone, capital controls would almost certainly be utilised in order to prevent bank runs and to preserve the integrity of the financial system.
But the recognition that unregulated flows of capital can be destabilising is not the only factor that may force deglobalisation. If the crisis inside the Eurozone is at bottom driven by imbalances between debtor and creditor nations, something similar is also at work in the wider world.
Just as economic growth in the Eurozone has been sustained by one part spending beyond their means and accruing debt (those nations now in crisis) and the other accruing surplus (Germany and a handful of smaller, northern European countries), so the global economy in recent years has been sustained by a similar dynamic: China, Germany, the major oil producers and a few others run large trade surpluses, while the US, the UK, Italy, Spain, France, Australia and a handful of the other major nations run large trade deficits. As seen within the Eurozone, such a situation can only be sustained so long as the debtors are seen as creditworthy, and there inevitably comes a point when the supply of willing lenders dries up and such debt-fuelled growth can no longer be sustained.
For much of the deficit world – whether governments in the Eurozone, or homeowners from California to the Costa Blanca – such a ‘Minsky moment’ has now come. As the governor of the Bank of England, Mervyn King, puts it:
‘Global imbalances helped to fuel the financial crisis. And today they threaten the sustainability of the recovery in global demand… At the time, all the economies seemed to gain: just as the high-saving countries created employment, the low-saving economies enjoyed faster real consumption growth as the price of imported manufactured goods fell. Within their own terms, all these actions were rational. All the main players –countries, regulators, central banks, and commercial banks– were rationally pursuing their own self interest. But what made sense for each player individually did not make sense in aggregate. These actions had collective consequences… The pattern of growth, with the associated imbalances and mis-pricing of risk, was not sustainable: as we know only too well, the ensuing financial crisis threatened the entire stability of the financial system.’ (link)
Astute observers have noted that a global ‘re-balancing’ is an essential prerequisite to the world working its way out of the current crisis. Olivier Blanchard, chief economist of the IMF, writes that ‘there is an urgent need to implement policy changes to address the remaining domestic and international distortions that are a key cause of imbalances. Failure to do so could result in the world economy being stuck “in midstream”, threatening the sustainability of the world recovery’ (link), while Ben Bernanke, head of the US Federal Reserve, has said that ‘the countries of the world must recognize their collective responsibility for bringing about the rebalancing required to preserve global economic stability and prosperity’ (link). Mervyn King notes that ‘the global economy will remain vulnerable to the risks associated with imbalances if they are not tackled at source… All countries accept that global rebalancing is necessary.’
But while all countries may ‘accept that global rebalancing is necessary’, not all countries agree on how this should be achieved, or share the same interests in this process. As King noted, the world reached this point through ‘all the main players rationally pursuing their own self interest’. For rebalancing to occur would require some major players not to rationally pursue their own self-interest, and why should they do that? Why should the Germans or Chinese allow their currency to appreciate and lose their competitive trade advantage? This is, however, what ultimately needs to happen if the imbalances that have so destabilised the world economy are to be removed.
It is for this reason that since the crisis began, there has been talk of the potential for ‘currency wars’. To again quote Nouriel Roubini:
‘A world where over-spending countries need to reduce domestic demand and boost net exports, while over-saving countries are unwilling to reduce their reliance on export-led growth, is a world where currency tensions must inevitably come to a boil. Aside from the eurozone, the US, Japan, and the United Kingdom all need a weaker currency. Even Switzerland is intervening to weaken the franc.
‘The trouble, of course, is that not all currencies can be weak at the same time: if one is weaker, another must, by definition, be stronger. Likewise, not all economies can improve net exports at the same time: the global total is, by definition, equal to zero. So the competitive devaluation war in which we find ourselves is a zero-sum game: one country’s gain is some other country’s loss.’ (link).
Likewise, Mervyn King has called for a “grand bargain” among the ‘major players in the world economy’, but states clearly the difficulties in achieving this, and the likely consequences if such a bargain can’t be struck:
‘The major surplus and deficit countries are pursuing economic strategies that are in direct conflict… Current exchange rate tensions illustrate the resistance to the relative price changes that are necessary for a successful rebalancing… The need to act in the collective interest has yet to be recognised, and, unless it is, it will be only a matter of time before one or more countries resort to protectionism as the only domestic instrument to support a necessary rebalancing. That could, as it did in the 1930s, lead to a disastrous collapse in activity around the world. Every country would suffer ruinous consequences.’
And as the BBC’s Paul Mason has observed:
‘If we get a double dip, then there is no more fiscal stimulus type ammo in the clip: countries will – and Britain as I say effectively already has – devalue in order to boost competitiveness.
‘As all students of the Great Depression know, those who devalued first – by coming off the Gold Standard – escaped recession first. Since everybody has now read the history books on the Depression, and understood the importance of currency (Labour famously “did not know you could” come off Gold pre 1931) we can expect a self-cancelling war of competitive devaluations. And for this reason competitive devaluation is only going to take you so far.
‘So the real endgame comes when countries realise devaluation is a dead end and go for the only escape route left, which is actual physical trade protectionism accompanied by the creation of currency blocks. The world, which thought it had escaped catastrophe in a flurry of state-fuelled remedies after the Lehman crisis, is inching back towards one, and it will be about more than just the value of sterling.’ (link)
The world has already taken some tentative steps down this road. Eighteen months ago the Brazilian finance minister Guido Mantega stated that ‘We’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness’ (link), while in September 2011 the Swiss central bank intervened in the currency markets to drive down the value of their franc (link).
Most significantly, the US and China have long been locked in the early stages of a diplomatic battle over what the US sees as China’s undervalued currency and anti-competitive trade practices. In January, the US Treasury secretary Tim Geithner stated that the Chinese yuan was ‘still below almost all measures of fundamentals’ and that ‘it’s very important that we get China to move comprehensively not just on the exchange rate but on dialling back its subsidies and distortions’ (link).
For now, the major players have stepped back from the brink. The yuan has appreciated a little against the dollar (although not enough for Washington’s liking), the US have stopped short of publicly branding the Chinese as currency manipulators (link) and the priorities of the Brazilians have for now shifted to control of domestic inflation. The healthy US economic recovery has helped, but the underlying tensions remain: Brazil appear to be returning to this particular fray, with their president Dimla Rousseff describing quantitative easing in the developed world as ‘a currency war that is based on an expansionary monetary policy that creates unequal conditions for competition. We will continue to develop (our) country by defending its industry and ensuring that the strategy used by the developed countries to exit the crisis does not cannibalize emerging markets’ (link). Roubini remarks that ‘currency wars eventually lead to trade wars’. More frightening is the rubric that trade wars often lead to real wars.
The current crisis is a lose-lose situation for the capitalist class. Either the global economic system continues on its current track and implodes; or the current crisis is resolved through global co-operation on rebalancing and tighter regulation of the flow of capital, with major countries such as the UK and the US turning away from debt-fuelled growth and embracing more production-led economic strategies. The former would be grim for everyone; the latter runs the risk of allowing the working class to return to the political stage in many of the most advanced economies, and in the world as a whole. Some degree of ‘deglobalisation’ seems inevitable: how progressive it will be is up for grabs, and it is something largely out of the hands of the general populace. How the capitalist order deals with its crisis will define all our futures.
 See Barry Eichengreen (2008), Globalizing Capital: a history of the international monetary system(Princeton, NJ: Princeton University Press).
 Angus Maddison (2006), The World Economy: a millennial perspective (Paris: OECD), p125, table 3-1b, also available to view athttp://blogs2.lesechos.fr/IMG/pdf/Statistiques_historiques_OCDE_par_pays_depuis_1820.pdf
 John Eatwell (1996), International Financial Liberalisation: the impact on world development (New York: UNDP), p5, 6.
 Jonathan D. Ostry, Atish R. Ghosh, Karl Habermeier, Marcos Chamon, Mahvash S. Qureshi, Dennis B.S. Reinhardt (2010), Capital Inflows: The Role of Controls, IMF Staff Position Note 10/04 (Washington: International Monetary Fund), p15. Available at http://www.imf.org/external/pubs/ft/spn/2010/spn1004.pdf.
IWCA article looking at the politics of race and identity.
Recent weeks have seen racial tensions in the news once more, with the antics of the ‘English Defence League’ and those responding to them featuring high in the headlines. Like the BNP, the EDL claim to be defending the rights of the majority culture in the same manner as minorities, with support from their liberal sympathisers, defend theirs. As times get harder and the economic cake shrinks over the coming years, the battle for the crumbs will, as things stand, be fought along racial lines. This is the legacy of identity politics and multiculturalism.
The purpose of this article is to start the process of taking our analysis of multiculturalism and identity politics to a new level. The aim is to ensure we have the tools to be able to challenge the stance of both the left and the right on this issue. With regard to the right, it is not just the BNP we want to challenge but the more deferential kind of conservatism that may fill the vacuum created by the collapse of the neo-liberal project. A key part of this challenge is to highlight how backward and reactionary the embrace of multiculturalism and identity politics is. In particular, we want to draw attention to the way in which identity politics traps people and denies them the opportunity to transcend their circumstances – a vitally important aim given the parlous state of the economy and the coming age of austerity.
The 30 year experiment with neo-liberalism has crashed and burned. The bubble economy of the last ten years was built on the triple pillars of a debt fuelled consumer boom, supposedly ever rising property prices that were meant to underpin that debt and last, but by no means least, the shenanigans of high finance. These three pillars have crumbled to dust leaving an economy with no dynamism and no means of renewing itself. Neo-liberalism has been responsible for the decline of upward social mobility from the working class over the last thirty years. With a moribund economy, the downward mobility of those who thought they could buy the middle class lifestyle on credit will, if anything, swell the ranks of the working class.
New Labour are in the process of self destructing, Unless Gordon Brown can pull off the miracle of all times, the Tories look set to form the next government. With the failure of neo-liberalism leaving a vacuum on the political right, conservatives are grasping around for a new narrative that will fit the looming age of austerity. Further investigation is needed to enable us to predict with some certainty what that narrative will be. However, in an age where prevailing economic circumstances have made upward social mobility from the working class almost an impossibility, an acceleration of the return to a more hierarchical, rigid society is pretty much on the cards, albeit one assuming a 21st century form utilising the green rhetoric of limits. In this kind of climate, any kind of thinking that implies peoples’ identities are fixed, whether they are cultural, religious or based on class, will only serve to reinforce social and cultural divisions, thwarting any attempts to move society onto a more dynamic, progressive footing.
We have a responsibility to challenge backward notions about the immutability of peoples’ identities and to fight for a vision of a society where the majority of ordinary working people, regardless of their ethnic, religious or social background, can fulfil their aspirations.
The left’s obsession with identity politics
To be brutally honest, there never was a golden age of the political left. But there was a time when there was more of a commitment to universal values and aspirations. The problem for the left was that they never had a convincing or successful programme that could deliver equality for all along with economic and social justice. The left certainly never had an analysis or programme that convinced the vast majority of working class people to fully place their faith in them. This failure inevitably led the working class to give up on the left and the left to emphatically turn their backs on the working class. The rest is the grisly history of the left’s retreat into the world of identity politics.
It is a travesty that so called progressives should embrace the politics of identity. For what are identity politics other than a celebration of what you were born into? Celebrating an accident of birth denies the possibility of transcending what you are and striving for a better future for yourself, your family and your community. The only people who would willingly embrace such a limiting and rigid society are the more traditional conservatives who long for a more stable and hierarchical society, even if upward social mobility is a casualty of this. Which makes it all the more odd that so called ‘progressives’ are quite happy to promote identity politics and multiculturalism when it is clear they only serve to consign people to a fixed status in society. It may not be the explicit intention of these ‘progressives’ to do this but it is certainly the unintended consequence. What they also fail to see is that conservative notions about identity and culture being immutable can also be applied to class. When a devastating economic crisis has effectively ended any chance of upward social mobility for the working class, championing the politics of identity is a betrayal of their aspirations.
So this begs the question, why has the left embraced identity politics? While the purpose here is not to undertake a post mortem on the failure of the left, the answer to the question does lie in some of the numerous wrong turns they have made in the past.
The liberal left’s inexorable drift into identity politics has its roots, in part, in the struggles against imperialism and racism. The problems the left has brought upon itself in the course of those struggles stem from an over-emphasis on the cultural aspects of these issues and an underplaying of the material and economic factors at play.
The failure of much of the liberal left in their analysis to effectively take on board the political, material and economic factors which fuelled imperialism from its inception in the 19th century have led to the cultural and moral aspects of the issue being over-played. The politics of guilt and self loathing that are the hallmarks of the liberal left are a direct consequence of this failure. A few of the more orthodox Marxist sects certainly had a much better understanding of the dynamics of imperialism but the very nature of these groups meant there was always going to be a very limited audience for their analysis.
This liberal left self-loathing guilt and the automatic, unthinking and uncritical reflex of West-equals-bad and anything non-Western must be good sits uneasily with the fact that many leaders of the liberation struggles from the 1940s onwards respected the learning and thinking of Western civilisation. These leaders wryly observed it was a great shame the colonial powers didn’t live up to the Enlightenment values they supposedly espoused. Kenan Malik describes this outlook thus:
Those who actually fought Western imperialism over the past two centuries recognised that their struggles were rooted in the Enlightenment tradition. ‘I denounce European colonialist scholarship’, wrote CLR James, the West Indian writer and political revolutionary. ‘But I respect the learning and the profound discoveries of Western civilisation.’ 
The struggle against racism in Britain has been diverted into the sidings when it comes to upholding universal values such as economic and social justice for all. There have been plenty of barriers to immigrants over the generations that have prevented them from achieving their aims of building a new and better life – one being active racial discrimination and the other being the limits to the ability of the economic system we live under to guarantee the chance of improvement for all. While it was essential to fight racial discrimination, the left failed to effectively link this struggle with a challenge to the material, economic and social constraints that prevented immigrants and the working class as a whole from moving up the ladder. The consequence of this was to allow the issue of racism to become one of culture and attitudes with the material and economic aspects of the matter only paid occasional lip service.
Merely stepping onto the terrain of culture and attitudes sets in motion a chain of consequences that lead to blaming the majority population for the continuance of racism and the finger wagging, moralising approach to anti-racism that has been a hallmark of the left for over thirty years now. The situation was reached where the ethnic minorities could do no wrong and the white working class were condemned pretty much every time they expressed concerns over the impact of immigration or the unfairness of multiculturalism. The bitter legacy of the embrace of identity politics is the cleavage of the working class along the lines described by Frances Fox Piven thus:
Identity politics fosters lateral cleavages which are unlikely to reflect fundamental conflicts over societal power and resources and, indeed, may seal popular allegiance ‘to the ruling classes that exploit them. 
On the other hand:
Class politics, at least in principle, promotes vertical cleavages, mobilizing people around axes which broadly correspond to hierarchies of power, and which promote challenges to these hierarchies. 
The consequence of this is the division of the working class as the liberal left fawns over the ethnic minorities while barely concealing their contempt for the white working class. A contempt which once you examine the language used and the motivations behind it, is racist. The left long ago abandoned what was at best, an uneasy relationship with the British working class when it was judged that the class wasn’t overly enthusiastic about the political programme on offer. That breakdown of the relationship has over the decades, morphed into a despairing contempt for the British working class and the assumption that they are irredeemably reactionary and resistant to any attempts at enlightenment. In other words, the left has implicitly embraced the notion that there are certain characteristics of the British working class that are immutable and unchanging. When you consider the consequences of ascribing immutable characteristics to any social or ethnic grouping, then it has to be said the liberal left are on very dangerous ground indeed in their demonisation of the white working class.
The BNP are multiculturalists
The BNP claims to despise multiculturalism. While it can be said they deplore what they see as the consequences of the liberal left embrace of multiculturalism, the far right see each and every culture as immutable and unchanging, hence the need to preserve the cultural identity of the white majority by taking a stand against inter-marriage. The BNP will claim they respect the premise that other cultures have a right to their own existence, the proviso being that differing cultures have to be kept separate in order to preserve their ‘purity’. They also claim that cultural divisions are natural and attempts to eradicate or even dilute them run against the natural order. Alastair Harper writing in the BNP journal, Identity, stated that:
As the Duke of Wellington said “Being born in a stable does not make one a horse” – Britishness is chromosomal not residential. 
The far right have looked at how the left has embraced identity politics and have appropriated some of the terminology and language of the left to celebrate the culture of the majority white population. After all, when the BNP say that if such and such a group can celebrate their culture, then surely the white majority has as much of a right to celebrate theirs? If you are of a liberal left persuasion and have already signed up to the notion that minority cultures have a right to celebrate what they are, then it can be said it is hypocritical of them to deny that right to the white majority. Such is the dilemma faced by the liberal left as the consequences of their embrace of identity politics start to bite them back.
The BNP in their desire to defend and enforce cultural and ethnic boundaries face a potential flaw in their desire to portray themselves as the ‘friends’ of the working class. The fatal flaw is that the far right’s assertion that cultural divisions are natural can also quite easily be turned around by conservatives and applied to class divisions…
Why traditional conservatives love identity politics
With an allegedly reformist leader in the person of David Cameron who has been frantically re-branding conservatism to make it relevant to the 21st century, why are we talking about ‘traditional conservatism’? As stated in the introduction, the disintegration of the neo-liberal economic and social experiment has left a vacuum on the political right. We are moving into a period where even if there is a technical recovery from the recession, the pace of growth will be so sluggish that there will be no feeling of dynamism in the economy. Allied to this will be the inevitable raising of taxes and painful cuts in public spending as the government of the day attempts to work off the massive public debt, a considerable chunk of which was incurred in the desperate bid to avert systemic bank failure.
To put it bluntly, for any incoming government after the next election, the prospect they face is a nightmare of the worst order. Given New Labour’s complete and utter disintegration, it is more than likely that the next government will be a Tory one. The Tories are going to have to find a narrative to help them in presiding over at best a sluggish economy, austerity and the ever present threat of the IMF having to pay a visit if insufficient progress is being made in reducing the crippling level of public (and private) debt owed by UK plc. The Tories are going to have to find a way of telling the vast bulk of the population that they can forget about their dreams and aspirations as the nation hunkers down to generations of austerity.
Talk of economic growth, dynamism and the prospect of rising living standards will be off the agenda for a long while. Instead, the discussion will be about limits, making do, and accepting what you have and where you are in society. While it would be difficult for the Tories to openly return to the hierarchical view of society they embraced in the past, they will be making every effort to develop a narrative of limits and accepting what you have that will be relevant to the 21st century. There are considerably more subtle ways of promoting this notion, one being green rhetoric about limits to growth being appropriated and twisted around to a dialogue about people learning to be more content with what they have. As well as this, the Tories will have the extremely delicate task of having to explain why upward social mobility is an ever receding possibility for the bulk of the population. As stated earlier, the issue of how the Tories will develop this narrative will be the subject of further investigation.
Traditional conservatives claim that cultures do not mix successfully and that different peoples are best left to get on with their own affairs. This stems from the assumption that culture is an immutable characteristic of any given society and one that only evolves slowly. The same argument has been used by some conservatives to justify the continuance of class divisions, hence their making every effort to depict class as something that is more or less immutable with only a few being deemed capable of making an upward move out of their class. Obviously, it is a rare conservative who will explicitly state such open prejudice – most will choose a form of language that either implies or sows the seed of a notion in peoples’ minds that there is a natural and unchanging aspect to class divisions. One example of how these notions can be sown came in this recent utterance from the former chief schools inspector, Chris Woodhead, on the issue of social class and life chances:
I think it would be unlikely that large numbers of grammar school kids would come from those disadvantaged areas – the genes are likely to be better if your parents are teachers, academics, lawyers, whatever. And the nurture is likely to be better. But that doesn’t mean that there are not going to be DH Lawrences. 
With a long period of austerity, a moribund economy and upward social mobility a thing of the past, it will be tempting for at least some conservatives to revisit past thinking about class divisions having at least in part, a natural element to them, albeit that thinking will have to be re-presented in a form that has relevance to the 21st century. It is worth taking a brief look at the history of such thinking. Racial thinking in the 19th century had its origins in the deterministic notion that the poor were poor because of the lot dealt to them by nature and that in the main, there was little chance of the majority of them ever being able to transcend their circumstances. This account of working class life in the Saturday Review, a well-read liberal magazine of the Victorian era, typifies the English middle class attitudes of this era:
The Bethnal Green poor… are a caste apart, a race of whom we know nothing, whose lives are of quite different complexion from ours, persons with whom we have no point of contact. And although there is not yet quite the same separation of classes or castes in the country, yet the great mass of the agricultural poor are divided from the educated and the comfortable, from squires and parsons and tradesmen, by a barrier which custom has forged through long centuries, and which only very exceptional circumstances ever beat down, and then only for an instant. The slaves are separated from the whites by more glaring… marks of distinction; but still distinctions and separations, like those of English classes which always endure, which last from the cradle to the grave, which prevent anything like association or companionship, produce a general effect on the life of the extreme poor, and subject them to isolation, which offer a very fair parallel to the separation of the slaves from the whites.
In the 21st century, it would be hoped that this kind of deterministic thinking would have been thoroughly discredited. However, a scan through the comments left after any article on social mobility and class in a right wing paper such as the Telegraph will reveal that these prejudices are alive and well. The quote below is just one example of how these views can be expressed:
More children is not a solution or a good idea if those children are born to those at the bottom of the social ladder. Intelligence, either of the genetic or acquired variety, does not occur naturally at the bottom of the socio-economic ladder at anything like it does at the middle or upper ends. Having a disproportionate number of children born to parents at the bottom of the mental acuity scale will not save anything. It will create an intractable feudal society with an educated, intelligent elite and a far larger uneducable underclass. We must encourage educated women to bear more children or do it ‘artificially’ if we are to avoid this dysgenic nightmare. 
While conservatives condemn the obsession of multiculturalists with celebrating the identity of minorities while ignoring the majority, privately they must be delighted at the message that is implicitly conveyed by the liberal left. The left’s obsession with encouraging minorities to celebrate the culture they have in a world where upward social mobility is a fading dream, sends out an implicit signal that identities cannot be transcended and that people have little choice but to accept what and where they are. In other words, there is the danger that where there is little or no upward social mobility, class divisions become naturalised. This has to be music to the ears of those conservatives who hanker after a stable social order where people know their place in the pecking order…
Why multiculturalism and identity politics are reactionary and backwards
The celebration of a particular culture is in fact, a recognition that in a society where material and social progress can no longer be guaranteed for the mass of the people, cultural identity is the one constant that people can hang onto when times are hard. It is an implicit admission that the project of achieving material, social and economic progress for the mass of the people has effectively been abandoned by the left. As Kenan Malik states, this outlook is the consequence of the narrowing of political options.
As the meaning of politics has narrowed, so people have begun to view themselves and their social affiliations in a different way. Social solidarity has become increasingly defined not in political terms – as collective action in pursuit of certain political ideals but in terms of ethnicity or culture. The question people ask themselves are not so much ‘What kind of society do I want to live in?’ as ‘Who are we?’ 
The liberal left is unable to understand that there is nothing progressive in unthinkingly encouraging people to simply celebrate what they are. This is particularly the case when reactionary and backward social practices not only go unchallenged but are excused on the basis that they are an ‘integral part of the culture’. This unthinking encouragement for ethnic minorities to celebrate what they are is at odds with the prime motive of any immigrant which is to start a new life in a new country and to leave the past behind.
The major failure of the left was promoting this uncritical celebration of culture for pretty much every ethnic and religious minority while at the same time, strongly condemning and such expression of pride from the white working class majority. Not only did the left turn its back on the white working class, they embarked upon an ideological trajectory that would guarantee the white working class turning its back on the left in utter disgust!
Fairness for all
When the IWCA have been canvassing and the issue of race and multiculturalism has been brought up, the vast majority of white working class people we have talked to simply want fair treatment. They rightly object to public funding for community projects that benefit one small ethnic minority at the expense of the majority.
The liberal left’s encouragement for various minorities to celebrate their culture stands in stark contrast to their thinly veiled contempt for any of the white working class who simply want an acknowledgement of their Englishness / Britishness. As discussed earlier, part of this is down to liberal guilt about the colonial past plus an anti-imperialism that unthinkingly assumes that anything Western is bad, so by definition, anything anti-Western has to be good. However, that is only part of the explanation for their dismissive attitude towards any white working class assertion of English / British identity. Again, as discussed earlier, there is a thinly veiled contempt for the working class who had the temerity to snub the patronising, middle class, Fabian, social democratic political model. One clear consequence of this contempt is that the white working class majority can never expect fairness from a middle class left who despise them. This is why we need to have the argument out with the left on how backward, reactionary and ultimately their unthinking support for multiculturalism and identity is.
Despite the siren promises made by the likes of the BNP, the working class cannot expect a fair society to be delivered from an authoritarian political tendency that supports a rigid social structure. The far right’s implicit support for a rigid social hierarchy has to be brought out and shown as the barrier to working class advancement it really is.
Firing our guns in both directions at once is the only way we can offer a distinctive analysis and critique of identity politics that once and for all, labels it as a reactionary and backward doctrine that only serves to hold working class people back. This means paradoxically, de-racialising identity politics and showing it to be nothing more than support for a social hierarchy where people are expected to know their place. Once this can be achieved, the more fundamental questions of what kind of social economy we want can then start to be seriously addressed.
The following points are intended to act as a brief summary of why we think multiculturalism and identity politics have dangerously reactionary consequences.
1) Over recent decades, the left has increasingly abandoned the working class and class politics in favour of identity politics: the politics of race, gender and sexuality. In turn, this has caused the working class to increasingly abandon the left.
2) Taken to its logical conclusion, identity politics is a conservative, anti-human concept that sees society as static – a view that can translate just as easily to rigid class hierarchies as it can to competing and incompatible cultural and racial identities.
3) Defining people in terms of the ‘identity’ they were born into is a rejection of the idea of a dynamic society, where it is seen as possible – and desirable – for class and cultural identities to be transcended so that everyone can reach their full and unique potential.
4) The promotion of identity politics fosters artificial divisions within the working class and helps to encourage a racialised view of the world, preparing the ground for race-based politics. This view of society simply doesn’t reflect fundamental conflicts over economic and societal power yet it has the potential to fatally fragment each and every progressive working class movement in the future. Like the Labour Party, the BNP is fully signed up to the notion of identity politics, to the extent that their magazine is called ‘Identity’.
5) We support the concept of full equality, where people are judged on what they do rather than on what they are perceived to be. As a consequence of this, we oppose funding for initiatives that are restricted to particular ethnic and cultural groups as they undermine community solidarity. We support efforts to end discrimination, with the aim being equal treatment for all.
 Kenan Malik – Against multiculturalism – New Humanist, Summer 2002 –http://www.kenanmalik.com/essays/against_mc.html
[2&3] Frances Fox Piven – Globalising Capitalism and the rise of
Identity Politics - http://socialistregister.com/socialistregister.com/files/SR_1995_Piven.pdf
 Alastair Harper – Blood of the Isles – Identity, June 2007 -
 Polly Curtis – ‘Don’t say I was wrong’ – The Guardian, 12 May 2009 - http://www.guardian.co.uk/education/2009/may/12/chris-woodhead-teaching
 Saturday Review – 16 January, 1864
 Comment made by Scott on: Can we pay for pensions without working until we drop? – Daily Telegraph, 7 May, 2009 –http://www.telegraph.co.uk/finance/comment/edmundconway/5286906/Can-we-pay-for-pensions-without-working-until-we-drop.html
 Kenan Malik – Making a difference: culture, race and social policy – Patterns of Prejudice, Vol 39, no 4, December 2005 –http://www.kenanmalik.com/papers/pop_multiculturalism.html
With the annual black history month approaching here’s an article from a few years back discussing the view that ‘celebrations of difference’ such as BHM do far more to cause division than avoid it.
“While Leys News devotes much of this issue’s column inches to commemorate Black History Month, not everyone agrees that we should be joining the party. IWCA Councillor Stuart Craft believes it is time to pull the plug on publicly funded celebrations of ethnic differences. Here Stuart argues that those who claim to oppose the white nationalism of groups such as the BNP, while promoting the political strategy of multiculturalism and black nationalism, are hypocrites playing a dangerous game.
This article was written for the local paper, Leys News. The version which appeared in Leys News was edited for reasons of space. The version below is the complete article.
A generation ago, working class activists addressing the propaganda of the far-right had one major advantage – that most of this propaganda, such as statements about non-whites receiving special treatment was nothing more than the wishful thinking of those desperate for any justification for a race war. Today things are not so straightforward. With all the main political parties committed to a political strategy of divisive multiculturalism, which has seen a dramatic increase in the number of religious schools, segregated housing and youth clubs, the fascists at last have something concrete on which to base their ultra-conservative, political propaganda. And with 55 councillors at the last count, at least one party – the BNP – has not been shy to exploit this gift-wrapped new opportunity.
Those who are tempted to believe there is no cause for alarm in Oxford should think again. The African Caribbean Youth Project and Asian Young Men’s Youth Project in Blackbird Leys and Rose Hill respectively, were set up with local government funds. Recently the city council considered financing exclusive free swimming for ‘Muslim’ mothers at Hinksey Pool. There are plans to turn Peers School into a Church of England-backed Academy, which is likely to open the door to more ‘faith schools’ across the city. And only last week, Oxford’s South-West Area Committee discussed separate housing for ‘Black and Minority Ethnic People’.
If the far right had made any of this up only a handful of years ago, they would have been accused of being racist scaremongers, but those making such accusations now find themselves on shifting sand. Welcome to Blair and Brown’s Britain.
With the general reduction in the allocation of government/council funds to the working class (regardless of background), the political strategy of multiculturalism plays an important role. By encouraging people to exaggerate their cultural differences in order to ‘win’ funding for youth clubs/schools/housing etc, potential allies are dissuaded from working together for the common good, while middle class careerists from ethnic minority backgrounds are placated through potentially lucrative positions within the ‘race relations industry’ and through a myriad of state funded separatist projects across the country.
Yet in real terms (and especially in the context of what has been lost through the clawing back of universal gains over the last 25 years) these schemes benefit working class ethnic minorities very little. Inevitably, it also encourages resentment not just within the majority white working class, who understandably feel aggrieved at the injustice of racialised funding from which they are excluded, but also amongst different minority groups battling each other over funds.
In the confusion created by this complex situation, most overlook the fact that the slice of the pie that the working class receive, across the board, continues to be reduced at an alarming rate. Yet this (from the establishment’s point of view) is the whole point. The promotion of multiculturalism was never intended as a stepping-stone to universal social justice—but as a replacement for it.
Constructive criticism of multiculturalism is nothing new. As far back as the late 1960’s, across the Atlantic, The Black Panther Party for Self Defence had come to the conclusion that multiculturalism was a deliberate strategy devised to undermine pro-working class politics. The panthers believed that, ‘those who want to obscure the struggle with ethnic differences are the ones who are aiding and maintaining the exploitation of the masses of the people’
When an article by the Africa Research Group titled ‘The CIA as an Equal Opportunity Employer’ appeared in 1969 in Ramparts magazine presenting convincing evidence that ‘the CIA has promoted black cultural nationalism to reinforce neo-colonialism in Africa,’ it was reprinted in the Black Panther newspaper to support the analysis that similar tactics were being employed closer to home.
The Black Panthers recognised what they called ‘Black Cultural Nationalism’ as a tool created by the establishment to undermine the organised working class. The party’s co-founder, Bobby Seale, attacked the cultural nationalists on many occasions: ‘Cultural nationalism sees the white man as the oppressor and makes no distinction between racist whites and non-racist whites, as the Panthers do. The cultural nationalists say that a black man cannot be an enemy of the black people, while the Panthers believe that black capitalists are exploiters and oppressors’. Again: ‘The ruling class and their running dogs, their lackeys, their bootlickers, their Toms and their black racists, their cultural nationalists – they’re all the running dogs of the ruling class. These are the ones who help to maintain and aid the power structure by perpetuating their racist attitudes and using racism as a means to divide the people.’
That Bobby Seale’s criticisms of the political strategy of multiculturalism – jive talk aside – are as relevant today as when first applied in the USA, nearly four decades ago, is depressingly self evident and indicates the level of success that the ruling establishment has had in applying the politics of their American cousins to the UK.
Racial nationalism is dangerous in all its forms, most notably when adopted by the largest ethnic group. In theory this means that a minority black nationalism is less dangerous in this country than white nationalism. However, minority black nationalism can easily feed majority white nationalism. By playing up injustices, whether real or constructed, and more importantly by attempting to place the blame squarely on the ‘opposite national’ or racial group, minority nationalists can easily stoke up the kind of resentment that pushes people (and not just white people) towards the BNP.
Slavery has always been a major weapon in the Black Nationalist armoury; proof indeed that ‘the white man’ alone bears responsibility for the historic ills suffered by ‘black people’. The sense of grievance over the legacy of slavery coupled with the claim that black people are an especially oppressed group at this present time, allows (usually middle class) black nationalists to occupy the moral high ground over the guilt ridden white middle class liberals who are in turn able to influence the allocation of public funds and other resources.
There is no question that the millions of Africans who were enslaved or born into slavery under the plantation system instituted by the western colonial powers suffered horrific injustice. What is less obvious, at least from standard accounts, is who and what were to blame and what the legacy of that injustice is today.
The idea that chattel slavery was a crime thought up by whites to oppress blacks is a myth. Slavery existed in Africa for centuries before the arrival of white European colonialists and this barbaric tradition still continues in parts of Africa today. The prolific use of slavery throughout the Chinese, Ottoman and (multi-ethnic) Roman empires is also a slice of history, which sits uncomfortably with the Black Nationalist cause, as does the fact that White Europeans – including English men and women, were kidnapped and taken for use as slave labour throughout the 17th Century by black, North African pirates.
The English slave trade also, initially, preferred white slaves and looked to its closest neighbour and earliest colony for a ready supply of free labour. As early as 1612, Irish men and women were being shipped to the Amazon River settlements for use as forced labour. In 1625, the English authorities issued a Proclamation ordering that Irish political prisoners be transported and sold as slaves to English planters in the West Indies, (pre-dating the arrival of African slaves to the Caribbean). In 1629 a large group of Irish men and women were sent to Guiana, and by 1632, Irish were the main slaves sold to Antigua and Montserrat in the West Indies. The small island of St Kitts, alone, held 25,000 Irish slaves during this period and by 1637 a census showed that 69% of the total population of Montserrat were Irish slaves. Although Africans were thought to be better suited to work in the Caribbean sun, they had to be paid for. The Irish on the other hand cost nothing, so were inevitably the preferred option. African slaves did, of course, eventually outnumber the Irish, but in relation to the size of population, it can be argued, that Irish society paid the bigger price.
But in common with all racial nationalists, Black Nationalists are not interested in historical episodes that undermine their stake for lucrative victim status. Their cause is far better served by encouraging us to view the past through the skewed lens of storytellers such as Alex Haley, who’s book ‘Roots’, televised in the 1970’s, did much to colour our view of black history. Roots was a hugely popular television series in the 1970’s, and was for many black people, the book and, more importantly the television programme, that played a significant role in the awakening of their ‘racial consciousness’. American academic Jim Sleeper, commented on this in his 1997 book ‘Liberal Racism’:
Haley ‘Depicted a pre-colonial Eden that hadn’t existed; created his account of Kunta Kinte’s youth there more out of current anthropology than history; paired all that with the story of his own communing with village elders in postcolonial Gambia; and wildly inflated black Americans’ expectations of sub-Saharan Africa, past and present. Sudan, Ethiopia, Somalia Rwanda, Burundi, Zaire – one could double the list before finding a sub-Saharan nation that isn’t now run by thugs, wracked by bloody tribal wars, or watching hundreds of thousands starve. Black Americans visiting such places have experienced ‘solidarity’ with their inhabitants only by letting skin colour eclipse virtue and blaming everything on the legacies of colonialism. Africans can’t do that because they are busy fighting other black Africans, as did their pre-colonial forebears, who enslaved and sold millions of people to the whites who transported them here. This is not hyperbole; it is a reality which it takes hyperbole to deny, especially now that South Africa no longer serves as a foil against which black nations to its north can be made to seem more grand, or at least legitimate, simply for being black’.
The important thing to recognise in Western colonial slavery is that it was driven less by racism, than by money. In fact racism was largely constructed after the fact to motivate the perpetrators and justify what had become a highly profitable enterprise. It is also important to remember that no ethnic group has the monopoly on greed.
The move away from chattel slavery to wage slavery was purely down to the realisation by the capitalist entrepreneurs of the time, that more profit could be made if slaves were dispensed of and workers were hired for wages. In 1910, James Connolly, who himself suffered execution in 1916 for his part in opposing British colonialism in Ireland, explained this using the following parable: ‘A Negro slave in the Southern States of America was told by his owner to go up and fasten the shingles on top of the roof of his master’s dwelling. ‘Boss,’ said he to the slave owner ‘If I go up there and fall down and get killed you will lose the 500 dollars you paid for me; but if you send up that Irish labourer and he falls down and breaks his neck you won’t even have to bury him, and can get another labourer tomorrow for two dollars a day.’ The Irish labourer was sent up. Moral: Slavery is immoral because slaves cost too much.’
Having punctured the black nationalist myth that slavery was chiefly a matter of racial domination rather than economic exploitation, let us look at another staple of the nationalist repertoire – the appropriation of role models singled out for their membership of a particular ethnic group.
Only a racist would deny that this country has produced, and continues to produce great black men and women, but as is the case across the board, their greatness is not by virtue of their skin colour. If, however, we are looking for a role model in British history, who happens to have been black, a role model who believed that class, not race, is the main fault line in British society we could do worse that single out William Cuffay – who has all too often been airbrushed out of history by the supporters of multiculturalism and Black Nationalism.
Alongside Irishman Fergus O’Connor, Cuffay was leader of the ‘physical force’ wing of the British Chartist movement in the 1840’s. The Chartists were Britain’s first major working class movement of the industrial age, so- called because they campaigned for a charter of human rights including the right of working class people to vote. Cuffay, a tailor by trade and son of a freed slave, was respected as a leader by his almost exclusively white working class peers, regardless his skin colour. This respect was not inspired by liberal tokenism but because he was best man for the job and led to his election first to the five man National Executive of the Chartists and later to the role of President of the London Chartists. William Cuffay’s prominence at the forefront of the Chartists can be seen in the tone of newspaper accounts of the time, which positioned him as leader of the movement. The Times went as far as to describe militants in London as ‘the black man and his party’.
As part of a sustained attack on the Chartist movement by the establishment, which included violent police disruption of Chartist meetings, black propaganda, summary arrests and the destruction of property and offices, Cuffay was eventually set up by a Government spy, arrested and convicted of ‘Conspiracy to levy war against Her Majesty’. He was sentenced to transportation to Tasmania in the summer of 1848 where he spent the rest of his life. When sentence was passed Cuffay defiantly stated:
‘I say you have no right to sentence me. Although the trial has lasted a long time, it has not been a fair trial, and my request to have a fair trial – to be tried by my equals – has not been complied with. Everything has been done to raise a prejudice against me, and the press of this country – and I believe of other countries too – has done all in its power to smother me with ridicule. I ask no pity. I ask no mercy. I expected to be convicted, and I did not think anything else. No, I pity the Government, and I pity the Attorney General for convicting me by means of such base characters. The Attorney General ought to be called the Spy General. I am not anxious for martyrdom, but after what I have endured this week, I feel that I could bear any punishment proudly, even to the scaffold.’
We are lucky enough to live in England at a time when we have neither transportation to Australia nor the scaffold as punishment for having the audacity to stand up for working class interests.
Nonetheless, the militant working class can still expect to see underhand methods employed against it, one of which is the well-worn tactic of divide and rule.
While the study of any area of history is worthwhile in itself, it is particularly urgent, at a time when our communities come under threat – from the political establishment as well as white and ethnic minority nationalists – that we take heed of the rich history of militant working class struggle for equality and justice for all.”
Beating the Fascists: The untold story of Anti-Fascist Action, by Sean Birchall (Freedom Press), reviewed by Ben Aylott
A couple of reviews below about the recently published account of militant anti-fascism over two decades in the UK by Anti Fascist Action…a must read on so many levels for all those professing to understand fascism, anti-fascism and the working class in the UK.
Beating the Fascists is a highly readable and uncompromising account of two decades of militant anti-fascism with important lessons for today. Beginning with the background to the formation of the Anti-Nazi League (ANL) in the late 1970s and the expulsion of the ‘squaddist’ street-fighters from the Socialist Workers Party (SWP) in 1981, Birchall takes us on a tour of the following 20 years of Anti Fascist Action (AFA).
The book is a real page-turner, but it’s not for the faint-hearted. The description of the often brutal treatment of the fascists at the hands of the militants is graphic to the point of absurdity at times. But Birchall also has some serious points to make.
There is a sense of setting the record straight: principally in Birchall’s argument that AFA, and the militant anti-fascism it espoused, had the most devastating impact on fascism in mainland Britain in the period and that it directly contributed to the BNP’s eventual retreat, in the mid 1990s, from the Mosleyite dogma of the necessity of controlling the streets. Indeed, Birchall claims a continuity between AFA and the 43 Group of Jewish ex-servicemen, who confronted Mosley’s attempts at a fascist resurgence in the immediate post-war period.
The publication of this book has inevitably been controversial, not least because of its critical account of ‘constitutional’ anti-fascist organisations, in particular the SWP. Its recurring criticism of the British left in general is that it is largely to blame for the alienation of working-class voters who are getting behind the BNP, an argument that has taken on renewed relevance in the debate about the significance and role of the English Defence League.
Street politics: ‘Beating the fascists’
For two decades British anti-fascists fought a cold blooded battle for control of the streets against burgeoning far-right movements, Brian Whelan meets the authors of a controversial new book by activists who were there on the frontlines.
Just last year the BNP put forward 338 candidates for the UK parliamentary election, the biggest fielding by the far right the country had ever seen, topping the National Front’s 303 candidates in 1979.
The party gambled and lost, failing to win any seats and losing their 12 seats on Barking Council. The British left declared the BNP to have been finally defeated, decimated and no longer a threat.
However, veteran members of Anti-Fascist Action (AFA) have a different analysis, they point out that the BNP have more than tripled their vote and say things are going to get a lot worse.
Joe and Ian are veterans from AFA’s war against the far-right, meeting in a bar in their former stomping ground of Islington, North London, they say they must protect their identities for fear of reprisals to this day.
Their book Beating the Fascists has caused a huge stir in the UK; published by Freedom Press, the book pulls no punches in its accounts of the physical fight against fascism on the streets and the internal political tensions that often threatened to tear the group apart.
Over ten years in the making Beating the Fascists not only chronicles the bloody street battles and political squabbles but also points out how fascist filled a vacuum for a radical alternative that the left has failed to.
The BNP’s turn to electoralism and attempt to become, on the surface, a respectable political party, was a direct result of the remorseless violence they were met with by AFA in the early 90s, the authors claim.
They explain that the BNP’s decision to abandon their Mosleyite strategy of winning control of the streets through menace was due in no small part to AFA’s violent counter-strategy.
However, they say AFA always argued that unless the left could undermine the far-right’s political constituency in the white working class they would never be truly beaten.
“The NF, C18 and BNP all had the same Mosleyite strategy to win control of the streets and after that the wider political narrative would kick in,” Joe explains.
“That was their plan so I mean there was a flaw in that if they were met by equal or superior violence they would be left in a limbo and that’s the position they found themselves in in the mid-90s, so they stepped off”.
The book is an often disturbing read, each chapter switching from graphic details of violent operations with militaristic discipline against fascists to analysis of the political decisions they faced.
When questioned on whether they have exaggerated for bravado or omitted stories of fights lost, the authors claim that the book is true to events as they happened.
“The punches are pulled on a number of instances to be fair, it’s a proper history and the violence and subjective perspective of the participants is presented to allow people to see that anti-fascism wasn’t a non violent affair,” Joe explained.
They reveal inside accounts of events such as ‘Battle for Brick Lane’, a series of running battles spanning 1990-1993 which saw the far-right lose one of their strongholds in London’s East End.
“Initially fascists were operating in kings cross – we wiped them out and after that their paper sales in chapel market were destroyed,” author Joe explained.
“We had boundaries and there were no prisoners taken, once we set up north London – west London divide we started moving into east London knowing we could retreat back.”
“We had a safe area here in Islington, North London became a stronghold for us, it was a prototype for clearing out fascists.”
This strategy was expanded nationally and the group enjoyed varying success in Manchester, Leeds and Scotland.
“When we went to brick lane, it was very symbolic for the BNP, they had been there from 1979 and hadn’t been touched, then suddenly they had to fight for their pitch and lose.”
The book crudely details how members of the far-right were ambushed leaving their pubs, attacked with bricks on demonstrations and kept under watch in extensive files.
The Irish diaspora played a central role in this battle as republican marches and the Irish community became a prime target for attack by skinhead thugs.
“There were trips to Belfast by members but not by AFA officially, there is no denying it,” Joe confesses.
“There was support there for Irish republicanism. People visited militant republicans in Belfast and friendships developed.”
“There were also people involved who had a more hands on role in republican movement – stuff that was learned over there was used against state operations over here and gave us an edge on the streets.”
The authors say that the political climate allows no place for violent confrontation in Britain at present, but they express no remorse for their past activities.
“It had to be violent because the opponent was violent – if they’re going to use violence you can’t use non-violence against that, you’ll be battered into the ground.”
They still see the BNP as a great threat pointing out that after they “fought them to a standstill” the party adopted a more respectable electoral approach pushed by Nick Griffin.
“I don’t think there is room for fighting them anymore, if the BNP stand 800 candidates to be effective you’d have to confront all 800,” Joe added.
“Would that damage anti-fascism or improve it if someone is running for election and you’re kicking in their door and setting fire to their cars people will ask what you are standing for?”
Having spent a decade fighting the far right on the streets Joe now believes they are now more dangerous than ever, as they hold elected positions.
He explains that alongside the war stories the book explains how AFA predicted almost two decades ago that the BNP would inevitably make serious electoral breakthroughs.
Over the last ten years of producing their book they have seen their predictions and worst fears for the BNP’s success realised.
“You can keep saying they’re not a threat up until the point you’re walking into the camps,” Joe adds.
“Things will get worse but how it turns out in the end is anyone’s guess, nobody can disguise the fact that the left are completely finished now in London.”
“They are bereft of ideas and bereft of constituency. Unfortunately groups like the BNP are now the official radical opposition.”
Ian adds that they believe the BNP are currently only experiencing setbacks and to write them off as a threat is a great mistake.
“The left should understand what the BNP are trying to achieve is very difficult – trying to bring nationalism in from the cold.”
“That’s something the left has entirely failed to do with communist politics. Its not going to be overnight, they’re going to have setbacks and recover ground.”
Beating the Fascists could be two separate books, appealing to very different audiences. The first a brutally violent story bragging of hard man conquests, the other a vital political analysis of the rise of the BNP and detailed history of the groups that fought them.
Here’s look into progressive political arguements and the alternative from the usual lefty rubbish the majority of the working-class in the UK are sick and tired of. While the same faces jump on the same bandwagons, hand out the same dreary leaflets year after year, and encourage the segregation of our communities by supporting the lie that is government led divisive ‘multiculturalism/identity politics’, there are those about who see past the nonsense and are genuinely fighting for the working-class.
Here is one Stuart Craft at work in Oxford City Council. We have quite a soft spot for Stuart who never fails to tell it like it is…
“We don’t really recognise the term left anymore, because looking around I don’t see any of the people that profess to be left or socialist as actually pro-working class.”
“IWCA councillor Stuart Craft points out that Oxford City Council’s supposed desire for integrated communities as expressed in government PREVENT strategy and its continued funding of ethnically segregated youth clubs and other facilities are totally at odds with each other.
PREVENT was launched to ‘stop people becoming terrorists or supporting violent extremists’ and is supposed to help ‘create and support cohesive, resilient and empowered local communities.’ Yet PREVENT funding seems to be targeted along racial/ethnic lines despite the fact the council plan admits racial/ethnic conflict isn’t the problem in Oxford.
In fact it’s hard to see why Oxford has received this highly selective funding unless you factor the existence of the IWCA (as a class-based opposition to New Labour) into the equation.”
What lies behind the riots seen on English streets three weeks ago?
In January ‘09, an IWCA analysis piece entitled ‘Dealing with the renegades’ stated: ‘Amidst all the concern about knife crime and gang culture, it is often tacitly assumed that the perpetrators are representative of alienated working class youth. Not so: what they are more generally representative of is a new -and growing- social formation that has willingly embraced a non-work ethic. It needs to be recognised that these lumpen elements represent a grouping that is quite separate from, and actively hostile to, the interests and well-being of the working class proper.’
It was a piece which provoked controversy, including within the IWCA itself. After all, right-wing commentators delight in denigrating the ‘underclass’: were we not now joining in? Whenever the right, or the liberal left, discuss this matter, there is an underlying assumption that ‘underclass’ and ‘working class’ are two interchangeable terms: the two groupings are one and the same, to be regarded with either pity or loathing depending on one’s orientation. By contrast, the IWCA analysis made clear that not only is the ‘underclass’ not synonymous with or representative of the working class, its instincts and actions are often opposed to the working class (who tend to constitute its primary prey). The term ‘lumpen proletariat’ is not a right-wing canard, but was coined by Karl Marx, who described this grouping as ‘the “dangerous class”’ whose ‘members felt the need of benefiting themselves at the expense of the labouring nation’. Our analysis explicitly distinguished between the working class and what we described as ‘a renegade section of the working class that has learned to embrace the ‘no-work ethic’’.
The riots and looting of three weeks ago mark the emergence of that renegade section onto the national stage. It became newsworthy because its actions have, for the first time, impacted on the middle class, particularly for those who choose to live in areas they like to describe as ‘edgy’. Previously reassured by the deference of Big Issue sellers and the unfailing good manners of street drinkers, the stepping up onto the stage of the militant wing will have caused profound shock.
The riots have been reported as though they were, in the first instance, a spontaneous reaction by the community to the killing of Mark Duggan by the Met. The background is in fact more complicated, and the initial rioting was much less impulsive and more organised than has generally been presented. Understanding this is key to understanding the riots, and the motives, reasoning and disposition of those involved.
A few days prior to the killing (execution?) of Duggan, police raided 25-30 homes on the Pembury estate in Hackney. A whole layer of drug-dealing middle-management were lifted and remanded in custody. This was the result of an eighteen-month ‘Wire’-style operation, so inevitably the remands were all custodial. One of the critical details largely missed by the media is that many of the gangs, who generally spend their leisure time gouging, stabbing and shooting each other, came under one flag for the jaunt. According to Daniel Weston, a youth worker in Brixton, Peckham, Clapham, Tulse Hill and Brixton ”came together and forgot their rivalries.” The Pembury, London Fields and Frampton Park similarly formed a united front in Hackney. The latter was very much an ‘old school riot’, in that they were ‘defending’ ‘their’ estate, as they saw it, from further police encroachment. As was Tottenham old-school, to a large degree led by rioters first, and looters second. Almost all the others inverted that order. Large gangs two hundred-plus strong were moving -or were being directed- from Croydon to Lewisham to Camden and wherever else took their fancy. The police were not the target, but were instead a force to be circumvented.
It was well known on the Pembury that there would be a return of serve after the arrests (shots from pellet guns were fired at caretakers the same day). The scale of the backlash may have been a result of gang leaders in Tottenham and Hackney deciding that the shooting of Duggan (who was a major player, and perhaps tellingly also something of an elusive pimpernel) and mass arrests were all part of the same dance. Prior to the riots the Met were moving against gangs across five London boroughs simultaneously. Though for operational reasons the boroughs have not been identified, it’s safe to assume that Haringey and Hackney are amongst them. So the united front may have come about in response to an escalation made against them by a common enemy, and would have been put together prior to riots in order to maximise impact and drive the message home to both police and politicians that ’leaving sleeping dogs lie’ is generally a wise adage.
Peter Fahy, Chief Constable of Greater Manchester confirmed that rioters in Salford were specifically looking to “get back at police” after a clampdown on them in that area. In Newtown in Birmingham, police claim that they were shot eleven times, from four different guns. While in London, police estimate that of the 1500 arrested in the first week or so, ‘one in four’ were either gang members or ‘affiliates’. In 2007 there were an estimated 170 streets gangs in London, according to Scotland Yard’s Barry Norman. But on Question Time, Tory MP David Davis flagged up a figure of 240 (some of them up to a hundred strong).
The crack battalions of the lumpen class
Perhaps the most important characteristic of the recent riots has been the self-evident differences between these and those of the 1980s, something which is deeply illustrative. In 1985 after Cherry Groce was shot by the Met, ‘Paul’ -a long-term member of south London Anti-Fascist Action- estimates that the make-up of the subsequent Brixton riot “was approximately 90 per cent fighters to just 10 per cent looters.” Ten years later in 1995, in the disturbances after Wayne Douglas was killed, “it was more like 60-40.” Come 2001, after Andrew Kernan was shot down, “looting was the primary motivation, with the fighters already reduced to a tiny minority.” So if we follow the trend, of the 30,000 estimated by police to have played some part in the riots nationally, the politically progressive will at best, have made up no more than the smallest of fractions.
Furthermore, from studying the extensive television footage it is also clear that it was only the organised elements in the gangs who had the necessary authority and swagger to give the impetus to the riots. It was they who picked the shops, put in the windows, and where there was serious money to be made (other than where the vandalism and fire-setting was intended as a diversion) had pre-arranged for vans and cars to be available to make off with the loot. The looters summoned by social media to provide cover were generally patsies, who only followed on in the aftermath, while the former functioned as the crack battalions not just in the riots themselves, but of the lumpen class as a whole. So in that sense the riots were indeed politically motivated, but just not in the way the liberal left would be willing or capable of understanding.
Laughably, in a discussion with Michael Gove on Newsnight Harriet Harman had suggested that at least in part the rioters were incensed by the “tripling of tuition fees”. Cameron has promised to ‘declare war’ on the gangs, but after this show of force and with the Olympics just around the corner, discretion will likely trump valour. On discussion sites in the immediate aftermath, the prescience of the original IWCA article was rewarded with a collective flinch. Refreshingly, Rob Berkeley, a director of Runnymede Trust, a race equality think tank, was honest enough to admit that it is indeed “new phenomenon about which we know very little.”
If this is a ‘new phenomeneon’, where does it come from? That can be answered relatively easily. A pre-condition has been the ending of the full employment of the post-war boom era, with insecure employment and large-scale unemployment becoming the norm over the past thirty years (it is unlikely that unemployment has ever truly fallen below the three million mark of the Thatcher years), and the concomitant destruction of the working class movement that has accompanied it. This has brought about demoralisation, degradation and dependency where once there was pride, strength and independence. In many places it has created a generational culture of worklessness from which it is almost impossible for youngsters, often semi-literate and semi-numerate, to escape. Such a state of affairs would be bad enough in itself, but when the old values of solidarity, community and hard work are not just lost but increasingly replaced by neo-liberal morality –greed, avarice, pathological self regard- it leads to the creation of the sub-set that made their presence felt three weeks ago. Those who attempt to paint these riots ‘red’ –as some kind of political response to the cuts, or youth poverty and hopelessness- misunderstand both their character and how defeated and broken the last thirty years has left our side. These were neo-liberal riots in every sense.
Two years ago the journalist Peter Wilby wrote of the Thatcher revolution:
‘Once, western governments tried to subjugate the working class. The governments of the postwar era, by contrast, tried to pacify it. High wages, good working conditions, decent housing, stable employment, predictable pensions and, crucially, the power of a large state sector to head off deep recession through fiscal intervention delivered the workers’ consent to, even enthusiasm for, a capitalist economy. It also ensured the stable domestic markets that provided the basis for unprecedented economic growth. Thatcher offered what you might call a “third way”. The working class was not to be enslaved or tamed, but abolished. Everyone would become, in their private if not in their working life, a member of the bourgeoisie, owning a house, acquiring debt to improve themselves, trading in shares and bonds. With such financial commitments, they would be reluctant to sacrifice regular income by going on strike. Better still, they would vote Conservative, or at least for an alternative party that accepted, as new Labour did, the broad principles of Thatcherism. The spectre of communism or socialism would be exorcised.’ (New Statesman)
In short, the aim of neo-liberalism was to ensure everyone became a mini-capitalist: we were ‘all middle class now’ as John Prescott told us. Eliminating the working class as a political entity would, in turn, eliminate the threat of socialism. There would be no ‘working class’ any longer: there would be those who had managed to get on board and literally buy into the system (supposedly ranging from anyone with a mortgage up to Roman Abramovich, all forming part of the same strata), and those unfortunates who had not. The latter phenomenon forms the counterpoint of Wilby’s thesis: the working class wasn’t just to go through embourgeoisment at one end, but also lumpenisation at the other, and in all cases were to internalise the same neo-liberal values. While one may feel greater sympathy with the latter grouping (the former are soon to receive a particularly rude shock, as the economic crisis inexorably works itself out), from a tactical point of view once the neo-liberal mindset has been accepted the individual has to be viewed as being in the enemy camp. It was this layer who came to the fore in the riots.
Why not Oxford?
The Labour party has traditionally been happy to foster working class dependence, rather than independence. The Joan of Arc of British socialism, Beatrice Webb, came out against the 1926 General Strike, describing it as “a monstrous irrelevance in the sphere of social reform” and the notion of workers’ control of industry as “an absurd doctrine… a proletarian distemper which had to run its course – and like other distempers, it is well to have it over and done with at the cost of a lengthy convalescence”. It’s an attitude which Labour has never lost towards its constituency: something to be controlled, not controlled by. Gordon Brown’s ‘socialism’ was to remove all restraints on the City of London and use the tax receipts to buy what was left of Labour’s core vote. The notion of any kind of return to full, productive employment was never part of the game.
Labour’s stance towards the worst elements in its domain has usually been to either ignore them, excuse them or co-opt them. One place which saw no trouble in the riots was Oxford. One would think that somewhere like Blackbird Leys –one of the largest housing estates in Europe, and which saw rioting in 1991- would have been a prime candidate for copycat violence, but it never happened. It did happen in Gloucester fifty miles to the west, but not Oxford. Why was this? There may be many reasons, but one thing which is certain is that on Blackbird Leys the worst elements have, over a number of years, been identified and confronted instead of being appeased or pandered to, and this has been solely down to the efforts of Oxford IWCA. In the words of IWCA councillor Stuart Craft:
“Back in 2004 on Blackbird Leys, we proved that working class activists can also set the agenda. By exposing and challenging the authorities policy of containment of crack and heroin dealing – in particular the exploits of a recently arrived yardie gang implicated in at least two murders and two gang rapes on our estate – and by putting into place (or often merely threatening to) our own popular strategies to deal with these problems, we too had the political establishment, police and housing authorities desperate to be seen to address a problem that they had hitherto been happy to pretend didn’t exist. The pressure we brought to bear had a significant impact so that many of the worst elements fled the estate. It seems inconceivable that without the efforts of IWCA activists and residents that the ‘top shops’ area (which sits opposite the yardies’ old base, the Blackbird Leys Community Centre) would not have suffered the same fate as other such areas across the country.” (See ’IWCA calls for clean sweep at community centre bar‘ and ’Management to vacate community centre bar‘ on the Blackbird Leys IWCA website for further background.)
It speaks volumes about the character and nature of these riots that the rioters folded and melted away almost everywhere they encountered any kind of resistance. It is equally significant that these same elements were stopped from reaching critical mass through the promotion of working class first policies on Blackbird Leys. If the first rule of war is to know your enemy, identifying an opponent (the purpose of these articles) is arguably the first rule of politics.
Ireland and Greece have had austerity forced upon them. Here in the UK, the coalition government has voluntarily chosen it. Why?
As is well known by now, the coalition government has declared its intention to cut £81bn from annual public spending over the four years to 2014-15, equating to an average of 19% being cut from the budget of every government department over that period, coupled with tax rises such as the recent increase in VAT.
Why are they doing this? Why are they taking what will cumulatively amount to £203bn out of the economy over four years (link, p78, table A.2), at a time when unemployment is 2.5m (according to official estimates) and rising, and economic recovery is by no means secure?
The Treasury has stated that “The economy has become unbalanced and too reliant on public spending and unsustainable debt. The Government is committed to promoting growth by tackling the deficit, rebalancing the economy and creating the right conditions to support a private sector-led recovery. In the medium term, sustainable growth must be based on expansion in the private sector, not the public sector” (link).
So essentially, the cuts are being justified on the grounds that 1) the deficit has to be reduced now because it is unsustainable, and 2) reducing the deficit will aid economic growth. Are these actually the case?
There is a coherent economic theory of sorts behind the cuts agenda, as has been outlined lately by the former Tory peer Robert Skidelsky. He summed up neatly the guiding principle behind the cuts in the Financial Times in June:
“The implicit premise of the coming retrenchment is that market economies are always at, or rapidly return to, full employment. It follows that a stimulus, whether fiscal or monetary, cannot improve on the existing situation. All that increased government spending does is to withdraw money from the private sector; all that printing money does is to cause inflation” (link).
In this ‘classical’, free market view of the world, there cannot be such a thing as insufficient demand or involuntary unemployment. Market conditions are governed by ‘Say’s law’: supply creates its own demand, there can never be an oversupply of commodities, all money earned will either be spent or invested, and all unemployment is due solely due to individuals choosing for their own reasons not to take work at the going rate (link).
With regards to spending cuts acting to stimulate the economy, or ‘expansionary fiscal contraction’ to give the technical term, Skidelsky writes:
“The proposition that cuts in government spending can grow the economy relies on ‘Ricardian equivalence’ – the oft-repeated claim, made by the likes of Osborne, that government borrowing is just deferred taxation. If households and investors factor in future levels of taxation when they are making spending decisions now, a stimulus would have no effect on economic growth: households will simply cut back on their consumption in anticipation of inevitable tax increases. So public spending ‘crowds out’ private spending.
“But now let’s ask: what would households and firms do in response to a cut in government spending? Ricardian equivalence says that reduced borrowing will create an expectation of lower taxes in the future (even if in the short term the deficit reduction includes tax rises). Freed of the burden of future taxes, private agents will happily spend more now, providing the required boost to demand when the government steps back. Increased demand means more jobs created in the private sector. The resulting increase in spending may well be enough to outweigh the money taken out of the economy by the government, and thus it will increase output overall.
“The other way cutting the deficit can reverse ‘crowding out’ is by leading to lower interest rates. According to this argument, government borrowing drives up interest rates, because at a fixed level of saving the government demand for borrowing increases the price that private borrowers will pay for access to finance. As a result, government spending “crowds out” private spending, substituting on a one-to-one basis. So, if government borrowing falls, interest rates will fall, allowing private firms to borrow more cheaply.’ (link)
That is a brief summation of the ‘theory’ behind the cuts: market economies don’t need stimulus, for if left alone they will automatically tend toward full employment and full utilisation of resources; any attempt at government stimulus will simply be seen by the populace as a form of future taxation, and they will withhold their spending accordingly.
Furthermore, the government borrowing required by stimulus measures only serves to drive up interest rates (which in turn drives up the deficit, leading to a vicious circle), further depressing the economy and discouraging investment.
Thus, the best thing the state can do is to eliminate deficits, stay out of the way and let the economy work its own, inevitable way back to full health. In this view, the only stimulatory role for the state lies not in fiscal policy (tax and spend), but in monetary policy: cutting interest rates, and creating more money if necessary via quantitative easing: as George Osborne has said, “Monetary policy is the principal tool for creating and regulating demand.”
“Austerity is not forced but chosen”
One might have thought that the epochal crisis in capitalist economics which we are currently living through might have dented the enthusiasm of our political masters for this idealised, free market view of the world. However, this doesn’t appear to be the case: indeed, the enthusiasm for the cuts agenda seems to show that its hold is as strong as ever. As Skidelsky writes, it comprises one of two fundamentally differing views on how capitalism should be run, this ‘classical’ view and the Keynesian view.
The ‘classical’ view has it that there can never be a lack of demand in a market economy; whereas one of the starting points of the Keynesian view is that it is entirely possible for there to be a lack of effective demand at any given point, that all money earned may not be spent or invested and may instead lay sterile, and when this happens it is legitimate for the state to run a deficit to stimulate demand in the economy and increase employment (a deficit which can be clawed back by running a surplus in times of rude economic health).
This isn’t a new argument, it was first had in the 1930s. Then, the Keynesian theory eventually won out: it was the only way to revive a capitalism which had taken itself and the world to the brink of annihilation.
This time, no serious debate has taken place, at least not up to this point. Among the political class in this country there has been almost unanimous agreement: the deficit needs to be cut now, as a matter of overriding priority; austerity has been unambiguously chosen over stimulus, the classical approach has won out over the Keynesian approach.
Clearly the Lib/Con coalition is wholly enthusiastic for this classical approach, and as Alistair Darling made clear before the election Labour were planning “deeper and tougher” cuts than those of Thatcher in the ‘80s had they retained power (link). For Labour to now try to paint themselves as opponents of the austerity agenda is no more than the simplest, most bare-faced hypocrisy.
But while the matter seems to have been instantly settled among politicians, among economists and in the financial press there exists a far greater degree of discussion and dissension. The American economist J. Bradford DeLong, a former US Assistant Secretary of the Treasury, has described Britain as a place ‘where confidence in the government has not cracked and where austerity is not forced but chosen’:
“[I]f you ask the government’s supporters why there is no alternative to mammoth cuts in government spending and increases in taxes, they sound confused and incoherent. Or perhaps they are merely parroting talking points backed by little thought. What is so bad about continuing to run large budget deficits until the economic recovery is well established? Yes, the debt will be higher and interest on that debt will have to be paid, but the British government can borrow now at extraordinarily favorable terms. When interest rates are low and you can borrow on favorable terms, the market is telling you to pull government spending forward into the present and push taxes back into the future.
“Advocates of austerity counter that confidence in the government’s credit might collapse, and the government might have to roll over its debt on unfavorable terms. Worse, the government might be unable to refinance its debt at all, and then would have to cut spending and raise taxes sharply. But that is what the British government is doing now. How is the possibility that a government might be forced into radical fiscal consolidation an argument for taking that step immediately, under no duress and before the recovery is well established?” (link)
DeLong raises a key point: ‘the British government can borrow now at extraordinarily favorable terms’. A crucial argument used by those who advocate immediate austerity is the threat of the ‘bond market boogieman’: that if the deficit is not urgently addressed, the cost of government borrowing on the international bond market will spike, just as happened to Greece and Ireland (and is soon to happen to Portugal and very possibly Spain) when their fiscal positions came to be regarded by the markets as untenable (see http://business.timesonline.co.uk/tol/business/columnists/article7034455.ece for one example of this kind of commentary).
While the ‘bond market boogieman’ is rhetorically useful, there isn’t any evidence for its actual existence with regard to the UK. For one thing, this country has options which the troubled Eurozone countries do not: we can reduce interest rates, we can allow the currency to depreciate to make our exports more competitive. There has been no evidence of any threat coming from the ‘bond vigilantes’ necessitating an immediate tackling of the deficit in this country, or that the tough stance on the deficit has improved our standing on the markets (a fallacy recently repeated by Nick Clegg [link]). As Martin Wolf of the Financial Times commented in September:
“[I]nterest rates on index-linked gilts have been 1 per cent, or less, for more than a year; the yield on 10-year gilts has remained below pre-crisis levels and is now close to 3 per cent; and spreads over German bunds have been 1 percentage point, or less, throughout the crisis. The government argues that borrowing costs have been contained only because of its commitment to austerity. In fact, spreads over bunds have stabilised since February and fallen by just 0.2 percentage point since the election. This suggests that the coalition’s strong fiscal stance has brought modest credibility gains.” (link)
Scott Mather of PIMCO, the world’s largest bond house, said in the summer that “There are parts of Europe where austerity wasn’t called for immediately. We’ve been a bit surprised by how quickly even countries that don’t have austerity forced upon them by the market are willfully heading down that path”, mentioning the UK and Germany as examples (link).
Meanwhile, the Yale economist Robert Shiller has said:
“The supposed threat posed by government debt levels hasn’t hurt [bond] markets, at least in the relatively few countries that have inflation-indexed bonds. Long-term inflation-indexed bond yields have fallen to around 1% a year, or less, in the United States, Canada, the United Kingdom, and the eurozone. Elsewhere, yields have been a little higher – around 2% in Mexico, Australia, and New Zealand – but still very low by historical standards… low long-term real interest rates appear to reflect a general failure by governments over the years to use the borrowing opportunities that the inflation-indexed markets present to them…
“Surely, governments’ levels of long-term investment in infrastructure, education, and research should be much higher now than they were five or ten years ago, when long-term real interest rates were roughly twice as high. The payoffs of such investments are, if anything, higher than they were then, given that many countries still have relatively weak economies that need stimulating. It is strange that so many governments are now emphasizing fiscal consolidation, when they should be increasing their borrowing to take advantage of rock-bottom real interest rates.” (link)
Political choice dressed up as market necessity
Those are the counterarguments to the cuts agenda. Are they true, and compelling? Perhaps. But what is most illustrative and significant isn’t that cuts have won the battle of ideas over stimulus, it is that the battle never took place at all, even when many serious and credible people have publicly questioned the wisdom of the austerity agenda. As the FT’s Martin Wolf again states:
“None of this would matter if the risks went only one way – from a failure to tighten rapidly. This is not so. The danger on the other side is that the economy weakens sharply under a structural retrenchment averaging 1.6 per cent of GDP a year over five years. This would be bad for output and jobs.”
And should this happen, it is entirely possible that the cuts project will fail on its own terms and lead to an increased deficit, with increased unemployment leading to a lower tax take and higher numbers on welfare (link). Yet the coalition are quite prepared to blindly run this risk, and Labour would have done the same. Why?
The experiment in neo-liberal economics which Britain has been subject to over the past thirty years was intended, from the beginning, to destroy the post-war Keynesian settlement, a settlement which saw the working class in possession of full, secure, well paid employment and ready access to affordable housing.
Social mobility during this era (roughly the thirty years following World War II) was markedly better than now: a bright working class child had more chance of getting further in life then than they do now. This settlement impinged significantly on the prerogatives of the capitalist class: it rendered the position of capital relative to labour unacceptably weak, which is why it had to be destroyed. Keynesianism did its job of saving capitalism in the middle of the century, but by the last quarter of the century it hindered capital more than it helped, so it was time for Keynesianism to go.
All three main political parties are wholly committed to the neo-liberal project, the project to unleash capitalism on an unrestrained, global scale. Unfettered, deregulated capitalism always brings with it economic and financial crises, as we have seen, but for the neo-liberals there can be no going back now.
The current crisis of globalised capitalism represents not a defeat, but a golden and essential opportunity for them to push their project further: as the old imperial maxim goes, ‘when in doubt, escalate’. And for the neo-liberals it is not a question of choice: they have to do it, it is either push the boundaries or stagnate. After thirty years of neo-liberalism the social fabric has been stretched to (or beyond) its limit, and now it is being stretched further: there are whole swathes of the country where almost the only investment comes in the form of state spending, and now this is being slashed.
So while the cuts have been presented as economic necessity, in reality they are political choice, a choice deriving from the dominant economic and political doctrine of our time, a doctrine that from the beginning had the smashing of the organised working class at its centre.
The neo-liberals are grasping the opportunity to remodel the state and society along their preferred lines. This isn’t even hidden, the Tories have adopted the same approach in local government in recent years, in preparation for taking power nationally (link).
Will the same austerity be applied to the financial sector the next time it gets itself into trouble? Of course not, in that case the state will once again come riding to the rescue: indeed, the coalition government was able to raise £7bn to lend to Ireland to help protect British financial interests there during their most acute moments of crisis only weeks ago.
The situation is best summed up by the American Nobel-Prize winning economist Joseph Stiglitz. In December, Stiglitz proffered “a deficit-reduction package that boosts efficiency, bolsters growth, and reduces inequality”.
The first ingredient of Stiglitz’s alternative economic plan is “spending on high-return public investments… Even if this widens the deficit in the short run, it will reduce the national debt in the long run. What business wouldn’t jump at investment opportunities yielding returns in excess of 10% if it could borrow capital … for less than 3% interest?” (something alluded to by Shiller and DeLong above).
Stiglitz also calls for the elimination of “corporate welfare” and “a fairer and more efficient tax system, by eliminating the special treatment of capital gains and dividends… Why should those who work for a living be subject to higher tax rates than those who reap their livelihood from speculation (often at the expense of others)?”
As Stiglitz notes, “a deficit-reduction package crafted along these lines would more than meet even the most ardent deficit hawk’s demands. It would increase efficiency, promote growth, improve the environment, and benefit workers and the middle class.”
However, Stiglitz concludes his proposal by noting why such a programme will not be chosen:
“There’s only one problem: it wouldn’t benefit those at the top, or the corporate and other special interests that have come to dominate America’s policymaking. Its compelling logic is precisely why there is little chance that such a reasonable proposal would ever be adopted” (link).
Indeed, and for America, also read the UK
In politics, being competitive in the realm of ideas is a prerequisite to being competitive anywhere else. The following is the first part of an attempt to start mapping out an explicitly pro-working class vision upon which a wider movement might be built, namely that of economic democracy as opposed to state socialism or ‘free-market’ capitalism.
Part 1 attempts to cover the philosophical underpinning, the ‘why’ of economic democracy.
Part 2 looks into the ‘what’ and the ‘how’.
Health Inequalities Worst Since The Great Depression – With The Cuts Still To Come (I.W.C.A. Article).
Inequalities in premature death are as high as they have ever been in this country, and this is before the cuts. The Lib-Con coalition thinks that deep, swingeing spending cuts are the only way to get this country out of its economic hole, but is there any justification for that view? Or is there another agenda at work?
Research published this week in the British Medical Journal looking at inequalities in premature mortality between the richest and poorest areas of the country found that “inequalities in premature mortality between areas of Britain continued to rise steadily during the first decade of the 21st century. The last time in the long economic record that inequalities were almost as high was in the lead up to the economic crash of 1929 and the economic depression of the 1930s… geographical inequalities in mortality are higher in the most recent decade than in any similar time period for which records are available since at least 1921”. By 2007, for every 100 people under 65 dying in the best-off areas, 199 were dying in the poorest” (link).
The research also found that “Recent government interventions have aimed to reduce these inequalities, but, the evidence suggests, to little effect”. This is amply borne out by a report from the National Audit Office earlier this month, looking at the success (or otherwise) at the Department of Health’s efforts to reduce health inequalities in England (link). By way of contextualisation, the report begins by stating that “In the early 2000s, in England, people living in the poorest neighbourhoods, could on average expect to die seven years earlier than people living in the richest neighbourhoods and spend far more of their lives with ill health.”
Addressing health inequalities was something that New Labour made a priority, at least rhetorically. Their target was to reduce inequalities in life expectancy between the poorest areas and the national average by 10% by 2010. The outcome of their efforts has been that:
“life expectancy in spearhead areas has not improved as fast as the whole population and the gap in life expectancy between the two has widened since the baseline by 7 per cent for males and 14 per cent for females. Life expectancy for the whole population now stands at 77.9 years for males and 82.0 years for females”, with the result that inequalities in life expectancy “can still be 10 years or more depending on socio-economic background… In Blackpool, for example, men live for an average of 73.6 years, which is 10.7 fewer than men in Kensington and Chelsea in central London, who reach 84.3 years. Similarly, women in the Lancashire town typically die at 78.8 years – 10.1 years earlier than those in the London borough, who reach an average 89.9 (link).”
One does not need to look too far to find the cause of Labour’s failure. By now there is a good deal of research literature on the ‘social gradient’ of health: that “health inequalities result from social inequalities… the lower a person’s social position, the worse his or her health” (link; see also http://www.iwca.info/?p=10011). As the socioeconomic gradient steepens, so the social gradient of health steepens, something that Labour allowed to happen on their watch (link).
This brings us to the present day pass where Dr Sam Everington –a former deputy chair of the British Medical Association, and now a GP in Tower Hamlets- can state of his patch that “We estimate probably a half of our children are malnourished; vitamin D-deficient, iron-deficient. We have a massive problem right next to the City of London. It’s very similar to what you would find in developing countries in big parts of our communities” (link). That ‘Third World’ conditions should be emerging in London, cheek by jowl with tremendous wealth, simply shouldn’t be possible, but it is happening, demonstrating that “Inner London is by far the most unequal of all regions in England” (link).
Recent research has shown, that the Cockney accent –the accent of working class London- is being forced out of the capital, to surrounding areas like Hertfordshire and Essex (link). This gets called ‘white-flight’, but it’s not solely white-flight anymore, and has far more to do with affordability and economic opportunity than race. With the decline of industry, the rise of finance and its offshoots, and the decline of social housing, the working class is being increasingly priced out of the nation’s capital, with the city becoming increasingly the domain of the wealthy and welfare dependent. And even this latter group will come under increasing pressure once the cuts in housing benefit kick in.
“Slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating”
Will the cuts do anything to reverse the appearance of child malnutrition in London? The Lib-Con coalition and its supporters argue that the cuts are for the patients’ benefit, that the long-term effect will be to purge the economy of waste and inefficiency, restore market discipline, drive down the cost of government borrowing on the international bond markets, lowering long-term interest rates and allowing the private sector to power us back to prosperity.
That’s the justification that is being given, but is there any truth to it? The medicine certainly doesn’t appear to be working in Ireland. Ireland has been undergoing deep spending cuts for almost two years now, yet this week saw the Irish government’s credit rating downgraded by the ratings agency Moodys. The reason given was “the Irish government’s gradual but significant loss of financial strength, as reflected by its deteriorating debt affordability”. As the Financial Times explains, “The country has suffered a dramatic contraction in GDP since 2008, causing a sharp decline in tax revenue. The general government debt-to-GDP ratio rose from 25 per cent before the crisis to 64 per cent by the end of 2009, and is continuing to grow” (link).
The austerity which has helped devastate the Irish economy has not appeared to help one bit: the proportion of government debt in the economy hasrisen, and the Irish government is still paying 5.5% to borrow on the international bond market, compared to around 2.5% for Germany. We see no evidence of Ireland reaping any rewards, from the bond market or anywhere else, for its masochism. As the Nobel Prize-winning economist Paul Krugman has said “It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating”(link).
Why, then, are the Lib-Cons so gung-ho about making cuts so soon and so deep? As Will Hutton has said of the cuts in store for us, “No country has ever volunteered such austerity” (link). Certainly, no such measures are being planned in the US. What we are seeing in Britain is a rerun of 1929, when the Treasury argued that domestic fiscal deflation is an appropriate method of pulling a country out of recession. In the words of Robert Skidelsky, “The implicit premise of the coming retrenchment is that market economies are always at, or rapidly return to, full employment. It follows that a stimulus, whether fiscal or monetary, cannot improve on the existing situation. All that increased government spending does is to withdraw money from the private sector; all that printing money does is to cause inflation” (link).
Such market fundamentalist thinking is, almost unbelieveably, back in the ascendant after the financial crash. So weak is the left that, in the wake of the worst crisis of capitalism since the 1930s, neo-liberal ideology is coming back even stronger. There is currently a robust debate taking place among economists and academics on how fiscal deficits should be tackled (link), but the Lib-Cons are apparently as unaware of this debate as they are of what’s happening in Ireland.
What is happening is the triumph of ideology over pragmatism, in the name of shrinking and remodeling the state along neo-liberal lines. New Labour were hampered in this quest by their dependence on the public sector unions for finance, votes and their activist base. The Lib-Cons have no such obstacle. In 1929 there may have been the excuse of inexperience. Now, only the most blinkered ideologue can unquestioningly laud the benefits of cutting spending in a recession, and blinkered ideologues it is who are in the Treasury. In 1929 it led to tragedy. In 2010 it will do so again.
Article Taken From The National Website Of The Independent Working Class Association
New Labour’s sudden concern for the wellbeing of the ‘white working class’ is a product solely of the threat they feel from the BNP. Aside from its cynicism, this move is too little, too late. New Labour made the conscious choice to turn its back on the working class once and for all in 1994. They have sowed the wind, now they will reap the whirlwind.
Reviewing the responses to Local Government Minister John Denham’s recent announcement on the race vs. class issue (see BBC News – Labour battles the BNP on class and race), it was noticeable that the right wing press (The Times, the Telegraph and the Financial Times) were able to respond to Denham’s statement in a rational, coherent manner. They were able to conceive that, just perhaps, class is at least as important a social factor as race. This stood in contrast to the reaction of The Guardian, which accused Denham of saying that racism no longer existed (which he didn’t) and pandering to lowest common denominator underclass prejudice.
Take, for instance, the response of Andrew Gilligan in the Telegraph, who was able to articulate -as clearly as the IWCA has often done- how many social problems which are normally viewed as racial are in fact class-based:
“Class has always explained far more about Britain than race – and many of the problems we think of as racial are at least as much about class. Take British Pakistanis and British Bangladeshis. Undoubtedly two of the most disadvantaged groups, they are far more likely to be poor or jobless, than the average white person. The traditional liberal explanation was simple – they were the victims of racism. Of course, they did, and do, suffer from racism. But that simple diagnosis cannot explain why British Indians – exactly the same race as Pakistanis and Bangladeshis – are, on average, richer, better educated and more likely to be employed than whites. Nor can it explain why members of Britain’s Chinese community are wealthier than whites. Most Pakistanis and Bangladeshis are Muslim – so perhaps it’s about faith? No – sadly for those ranting about “Islamophobia”, British Arabs, though mostly also Muslim, are almost as wealthy and advantaged as the Indians. The key factor is not race, or faith, but class. British Indians are mainly middle-class, the descendants of merchants and traders. So are Britain’s Arab and Chinese communities. British Pakistanis and Bangladeshis are mainly working-class, the descendants of poor villagers brought here for factory work.
“Thirty years ago, there was not a single non-white MP, let alone minister, and it was perfectly acceptable to tell bigoted jokes on prime-time TV. Mixed marriages were almost unknown; the police were openly racist. Racism has undoubtedly diminished, but class discrimination has, in some respects, got worse. A working-class Londoner is more trapped, less likely to advance than he or she was 30 years ago. State education is no longer a force for mobility. Training in non-academic skills has collapsed. Housing is impossibly overpriced. Above all, work itself has become less secure. And though class discrimination affects all races, the largest group of victims is white. White working-class anger has become a force that no politician can ignore. And those politicians who do ignore it – such as Ken Livingstone, the former mayor of London – get swept away.” (John Denham’s right: It’s class, not race, that determines Britain’s have-nots – Telegraph).
Even the rabidly right-wing Simon Heffer was able to get his head around the concept of ‘class not race’, though as a good Thatcherite he attributes the travails of the British working class not to the destruction of the productive economy and the triumph of finance capital, but to single mothers and the demise of grammar schools (How to help the white working class – Telegraph).
This stands in contrast to the reaction of the Guardian. To the liberal multiculturalist mindset, it is literally inconceivable that the issue of class might explain more than race; that it may not be the case that all whites have a uniform access to power, opportunity and influence, the type of which is denied to all non-whites; that non-white ethnic groups are not uniform, and significant class cleavages might exist within them. To the liberal multiculturalist, the notion of class unity and class politics across racial lines is a threat not only to their worldview, but also in many cases their paycheques and funding. Home affairs editor Alan Travers worried of Denham’s statement that “such a “sophisticated” message ends up falling between two stools and reassures neither the poorest of the white working class nor inner-city black and Asian “core” Labour voters” (John Denham’s subtler approach to race and class carries new risk | Society | The Guardian, the use of quotation marks around ‘sophisticated’ is Travis’s). But the most revealing reaction, the one truest to multicultural form, came from assistant comment editor Joseph Harker, who had this to say:
“New Labour abolished the Commission for Racial Equality, the Equal Opportunities Commission and the Disability Rights Commission and shoved all the “isms” into one overbearing, bureaucratic and malfunctioning equalities commission. Now Denham wants to repeat the thinking, merging minorities into an overall “social class” group which will represent all the economically disadvantaged. Well, this just won’t do, because Britain’s racial minorities do not fit neatly into its traditional class structure (emphasis added). Most minorities in Britain are from poor backgrounds, with little or no longstanding family wealth. Even those who have not faced direct or indirect discrimination have had to overcome economic and social obstacles. But do those who have done so, and gained a decent education or a decent job, immediately break free from all-pervasive racism and therefore no longer require any legal or other support?
“Not only that, but no one has yet come up with a decent, all-encompassing description of what “working class” really is. Does a man or woman automatically become middle class the moment they gain an A-level? Or a degree? In which case, class inequality will always be embedded, because the success stories are excluded from the figures – and it will always appear that the working class are worse-off than minority groups. Even if such distinctions were worked out, why would black and Asian people want to join with the white working classes, when some of them are signing up to the British National party and seem only too keen to blame non-whites for their own disadvantages? (emphasis added)” (Labour has not eliminated racism | Joseph Harker | Comment is free | guardian.co.uk).
So, Harker thinks it’s a bad thing that all the ‘economically disadvantaged’ might be thought of as an ‘overall social class’; disputes the existence of such a concept as ‘the working class’; believes that black and Asian people shouldn’t join with the ‘white working class’; accepts that ‘class inequality will always be embedded’, and believes that minorities ‘who have gained a decent education or a decent job’ are still in need of ‘legal or other support’. So: race over class (class no longer existing), support for political balkanisation and separatism, and the acceptance of existing class/economic hierarchies – not to mention inherent racial differences, at least among the lower orders – alongside continued support for the black middle class, all in the space of 250 words. Quite remarkable, even for the liberal left. It takes some doing to miss the point so spectacularly, but Harker has managed it.
We should finish by pointing out what should be obvious: that Denham’s concern for the ‘white working class’ is purely opportunistic and, in any case, comes years too late. It is motivated solely by the (justified) concern that the BNP have the potential to eat into what is left of Labour’s core vote. While it is not too late for the BNP to be taken on and stopped politically, it is too late for Labour to do the job: that ship has sailed. New Labour made the choice to turn its back on the working class, assuming it had nowhere else to go. That betrayal will not be forgotten or forgiven.