This document is a statement on Britain, an analysis which was agreed unanimously at the national conference of Socialist Appeal in April. The statement constitutes an analysis of the deepening social, political and economic crisis of British capitalism. This perspective applies the method of Marxism to these developments, seeking to uncover the trends and processes within, and serves as a guide to action for all those workers and youth who want to struggle for a socialist transformation of society.
Growth at the expense of working people
What growth has taken place in the last period has mainly been at the cost of increased exploitation of the workers. The savage attacks on the working class over the last 20 years are continuing and intensifying. Using the whip of foreign competition, together with the threat of closures, the bosses are looking for even greater concessions. They are demanding further draconian measures of "flexibility" to boost their profits. This is creating a mood of increasing anger and frustration in the workplace, which must be reflected at a certain stage in an increase of strikes and industrial militancy.
In a recent survey of more than 500 chief executives and directors, more than three-quarters of senior executives would like to operate an annual quota of staff dismissals to weed out "underperforming workers". In an article tucked away on the inside pages of the Financial Times, entitled "Directors want staff cull every year, says survey", it states some 17% of executives believed that a company could "target up to 20% of its workforce for dismissal per year without damaging productivity", according to management consultants, Hudson, which conducted the study. Jack Welch, former chief executive of General Electric, advocated firing the weakest 10% of staff every year. "Many British executives appear to share these views", stated the FT (12/1/07)).
"Sometimes, the best career direction for an employee is out of the company..." stated John Rose, chief executive of Hudson UK. "Companies must take care, of course, that they do not inculcate a culture of fear..." If this is the attitude of the British bosses during a boom, what can the working class expect in a downturn, which is inevitable in the next period?
As a consequence of the already acute stress imposed on the workers, figures for long-term illness and depression have soared. Recent figures showed that almost 1.1 million were on income capacity benefit last year, unable to work due to mental health problems. This was a sizeable increase, up from 730,000 in 1997. The number of claimants suffering from severe stress has trebled to 49,000 while those who have experienced episodes of depression have almost doubled to 501,000. This is only a glimpse of the real situation, created by the collapse of manufacturing jobs. According to the FT, "The rising number of claimants who suffer from mental disorders is a reflection of a service-dominated economy. Many male manual workers made redundant from heavy industries in the 1980s only to spend the rest of their working lives on long-term sickness benefits." (1/2/07)
Unemployment stands at 1.7 million and rising. However, the number actually claiming unemployment benefit in January declined by 13,500 - the largest monthly fall for almost three years - to 925,800. This is a further indication of the government's drive to force people off the unemployment register. Youth unemployment is on the increase, despite the New Deal scheme, which subsidizes employers if they take youth placements. After the New Deal period expires these youth are usually back on the dole. This is illustrated by the fact that four out of every nine placements on the New Deal are taken by those who have done placements before, with many young people having been on what they now see as a treadmill four times or more.
An additional two million immigrant workers have entered the country over the last three years, many forced into low-paid casual jobs, "assisted" by a plethora of rogue private employment agencies. Big business has welcomed this influx of cheap skilled labour, which it is keen to exploit. Some 80% of those who have entered Britain live on the minimum wage. Given the massive decline of apprenticeships over the last 20 years - again a reflection of the decline of British capitalism - there exists a chronic skills shortage in Britain. The British capitalists prefer to import skilled workers rather than pay for training. This situation also leads to greater pressures on social housing, which private landlords are eager to exploit.
The numbers in employment rose to 29.04 million in December, 278,000 more than a year ago. In the last three months of 2006, employment rose by 51,000. However, more than two-thirds of the rise was due to a rise in self-employment. The number of full-time employees fell by 57,000 during the quarter while temporary workers rose by 70,000, suggesting "a marked degree of uncertainty on the part of employers when hiring staff", said John Philipott, chief economist at the Chartered Institute of Personnel and Development. Low pay and flexible part-time working is now the norm in Britain, serving to cut wages, especially in the service and building industries, and resulting in downward pressures on the working class.
This is an epoch of counter-reforms (called in Orwellian language, "reforms") and attacks (called "flexibility"). British and world capitalism can no longer afford lasting reforms. They are attempting to dismantle those reforms won by the working class in the past that created at least the elements of a civilized existence. What it gives with one hand, it takes with the other. The illusion of an uninterrupted "progress" of all classes is rapidly vanishing without a trace. There is a growing pessimism in what the future holds.
Growth in inequality
While GDP in Britain is supposed to be the fifth largest in the world, the division of this wealth is extremely unequal. While there are more than 11 million living in poverty, the bourgeoisie are busy gorging and indulging themselves as never before. This year, the bonuses for all 170,000 Goldman Sachs employees alone equalled the annual national product of Vietnam, a country of nearly 80 million people. This obscene wealth is confined to the tops of society. There is no "trickle-down" effect, only a "trickle-up" effect.
In Britain, £9 billion was paid in bonuses to City of London traders with one Goldman Sachs trader alone getting £50 million. Under the mantle of New Labour, the inequalities of income and wealth in the UK (just as in the US under Bush) have increased substantially. On the day that Goldman Sachs announced its bumper bonuses for 2006, its cleaners went on strike and demonstrated about the appallingly low rates of pay (£5.35 an hour) their employer (part-owned by GS) gave them.
The more far-sighted strategists of Capital understand that this situation is sowing the seeds of bitter class conflict in Britain. A recent survey in The Economist warned that "... a growing social malaise and lack of cohesion" is affecting Britain. While, of course, it praises the anti-working class changes to the British economy, such as deregulation, flexibility and greater competition, it is forced to admit the serious social consequences of this development. "Globalisation is undermining the old certainties in lots of ways: employment is less secure, communities less rooted, the gaps between rich and poor, skilled and unskilled, young and old, are wider, and immigration has risen sharply in recent years. All this has created vibrancy and buzz [!], but also dislocation and often a sense of grievance."
These words confirm completely the prediction of Marx: "Accumulation of wealth at one pole," he wrote, "is, therefore, at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole." This thesis of Marx has been attacked for more than 150 years by liberals and bourgeois apologists of capitalism, who believed that the system was gradually eliminating class differences and bring increasing prosperity to all. Today the division between rich and poor has never been greater. The concentration of capital has never been so great. Mergers, acquisitions and takeovers have reached record levels.
In practice, Blairism has been a continuation of Thatcherism. With the collapse of the Tory Party, Blair came to faithfully represent the outlook and interests of the British bourgeois. He is their man. He has done their bidding without question. As Trotsky wrote about Ramsay MacDonald, "there is something of the flunkey running all through him." He very much suited the needs of the ruling class at this time - someone they could fall back on while the Tory Party had time to recover its rightful role.
By 1997, the Conservative Party had exhausted itself. It was time for the "second eleven" to take up the sticky wicket. In due course, with the collapse of the left-reformists, Blair has taken the Labour Party far to the right. As a result, under Blair, public spending was initially less than under the Major government, anti-trade union legislation was retained, privatisation continued, and the public services were opened up to big business. After a long period of reactionary Tory governments, the working class was prepared to tolerate these impositions, grudgingly and for a time from the Labour government. But now their patience has been exhausted. The stage is set for a big swing to the left, against Blairism and all its works.
Market Reforms
During the 1980s and large part of the 1990s, the left reformists were routed in the Labour Party and in the trade unions. The trade unions were in the hands of the "New Realists". Blair, the Thatcherite, had a solid parliamentary majority and carried out the bidding of big business. The Bank of England was made independent and Private Finance Initiative projects were introduced. Under this scheme billions of pounds of public money continue to be handed out to private companies to build schools and hospitals, which after 30 years will have been paid over and over again. Even then, the buildings will still not be owned by the government.
Market principles were introduced into education and the health service. As a consequence, hospital trusts have found themselves increasingly in debt, closing wards and sacking staff. The Hillingdon primary care trust in London, for example, has been left with debts of £54 million, to hand over nearly all its core functions to the private sector. Anthony Sumara, Hillingdon's PCT interim chief executive stated: "I want to get rid of everything - outsource it".
In hospitals, which are inadequately cleaned by private firms, MRSA and other diseases are rife. Thousands die each year from these diseases as a direct consequence of privatisation. In education, a two-tier system is being created. As well-off schools choose to apply for "specialist" school status, failing schools in poor areas are being replaced by "academies", sponsored and part-financed by businesses, faith groups or charities. This is a throwback to the nineteenth century. Following legislation last year, all schools will be encouraged to bid for "trust" status, linking with other schools or businesses to create schools with a distinctive "ethos" and considerable autonomy from the control of local education authorities. This is going further than the hated Thatcher government.
Despite the promises and extra cash, more than one-third of British students leave school with no formal qualifications. About one-sixth are functionally illiterate and one-fifth innumerate, meaning they cannot read and write or deal with numbers as well as an average 11-year-old. Consequently, according to the OECD, Britain ranks only 13th among the 30 richest countries for the share of people aged 55-64 who have completed secondary school. In younger age groups, Britain does even worse: for those aged 25-34 it ranks at 23rd position. Although more young people are staying on at school, Britain is being outclassed by countries such as Ireland and South Korea.
Tuition fees of £1,000 a year were introduced in 1998. Five years later, the maximum fee was increased to £3,000 from 2006, and is likely to increase even further. Students were offered loans and have sunken deeper into debt as a result.
There are elements of social disintegration and the demoralization of some layers of youth. In many inner cities there is talk of a "gun culture", street gangs, drugs and violence, reflecting a breakdown of society. This affects a layer of youth, especially black and immigrant youth, who experience poor education, exclusion from school, no proper jobs and no real prospects. There is low self-esteem. They become ghettoized and alienated from society. It is a total contrast to the life-style of the wealthy upper class.
The whole situation reflects the impasse of capitalism. The only response of New Labour is to ape the language of the most reactionary sections of the Tory Party, talking about "tough" measures and "law and order". In reality, the wave of crime and violence reflects the lack of opportunities, deprivation and alienation on poor working class estates. It is a social blight caused by a sharply divided class society. This is precisely what Marx meant when he spoke of an accumulation of "misery, agony of toil, slavery, ignorance, brutality, mental degradation" at the lower end of society.
The main victims are children and young people, who represent the future of society. According to the recent UNICEF study of the United Nations, British children suffer greater deprivation, worse relationships with their parents and are exposed to more risks from alcohol, drugs and unsafe sex than those in any other developed country in the world. 3.4 million children, or more than one in four, live in poverty in the UK today. The number of children admitted to hospital with alcohol-related conditions has risen by 20% in the past five years. Twenty youngsters are diagnosed each day with conditions such as alcohol poisoning and problem disorders due to excessive drinking, according to NHS figures. In the UNICEF survey of 21 of the richest countries, as far as children's health is concerned, Britain comes bottom.
Throughout these years of Labour government, Gordon Brown has maintained his image as the "Iron Chancellor". In 2004, he announced to cheers from the New Labour benches in the House of Commons that over 100,000 civil servants' jobs are to be axed. At the same time public sector wages are going to be held down to a 2% increase - which after inflation represents a wage cut. At the same time record City bonuses are announced, and New Labour Ministers congratulate the City for its success.
These attacks have forced the civil service union PCS into calling industrial action - the most recent in January being the biggest strike of civil servants in British history. A third of PCS members earn less than £15,400 a year and cannot accept what amounts to pay cuts over the next three years. "My members can't stand by when the government is spending £2.2bn a year on consultants, and employing consultants in the Revenue and Customs on salaries at 10 times the rate of civil servants," explained Serwotka, the general secretary of the PCS. The attempt by the government to impose wage cuts is a clear recipe for future class battles.
Life has become very hard for many people. Utility bills, rents, mortgages and council tax keep on rising. The only thing that is keeping people afloat is the historically high levels of personal debt. Personal debt in Britain stands at £1.2 trillion, greater than the GDP of the country. High Street banks are preparing to write off an unprecedented £6.6 billion for 2006, as people default on a record amount of personal loans and credit card debt. For 2007, the estimate is £7.2 billion.
Credit
Lloyds TSB revealed that its customers defaulted on £1.24 billion last year, including £740 million of personal loans and £490 million of credit card debt. The write-offs were up by 16% on 2005 and would continue to rise this year. In February Barclays were forced to write off a record £1.7 billion due to bad debts, an increase of 36% on 2005. The Royal Bank of Scotland, HBOS and HSBC are expected to announce write-offs of £1.35 million, £943 million, and £1.24 billion respectively in the coming weeks because of defaults.
Marx explained long ago the role of credit as a means whereby the capitalists can artificially expand the market beyond its natural limits. The massive expansion of credit has been a major factor in prolonging the present consumer boom in Britain and the USA. But sooner or later this must change into its opposite. Rising interest rates serve to increase the burden of debt and undermine consumer spending. At a certain point, this "credit bubble" will burst, causing a contraction of the economy and economic recession.
This debt-propelled consumer boom is sustained by house prices that have almost trebled in a decade. How far house prices will continue to rise is another question, when mortgage rates are heading upwards throughout this year. Higher borrowing costs will curb the ability of the average working family to spend more. Household debt has leapt from around 100% of disposable income in 1997 to 160% in 2006. With three separate interest rate hikes by the Bank of England in six months, the housing bubble is also bound to burst at some point. It is a similar picture everywhere. Interest rates have been going up in the US, the eurozone, the UK and even Japan.
At the lowest point of the last recession in 1991, personal insolvencies barely topped 25,000. The latest figures bring the total for last year to 107,288 - the first time the figure has exceeded 100,000. At the same time the banks are making record profits. Barclays just made £7.1 billion and Lloyds made £4.2 billion.
Yet despite more than a decade of growth, British capitalism's share of world exports has continually decreased. Britain imports far more than it exports. This fact, which expresses Britain's decline vis-à-vis other capitalist nations, manifests itself in a stubborn deficit in its current account, reflecting an inability to compete. This deficit has worsened although Britain grew faster than its main trading partners in Europe. Exports began to pick up last year along with growth in Europe, but imports grew faster, and the deficit in goods topped £82 billion in the year to September 2006, a record 6% of GDP.
The deficit has been sustained by foreign investors who have been investing in Britain in order to take advantage of high interest rates. The surplus on services filled more than a third of the deficit, and net investment income from abroad about another third. "The question is whether this bonanza can continue", states The Economist. "Britain's liabilities abroad officially exceed its assets, to the tune of 18% of GDP in the 12 months to September, and the gap was bigger than the year before."
These figures expose the weakness of the British economy. It only survives because of its rentier base: services, finance, insurance, private equity, bonds and banking. However, any serious financial crisis or downturn internationally will have major repercussions here in terms of jobs and living standards.
In the last analysis, economic factors play a fundamental role. However, there are many other factors, which can also affect changes in consciousness: imperialist wars military defeats, government crisis, political crisis, terrorist acts, electoral defeats, rail crashes, hospital deaths, environmental changes, resignations, scandals, and so on.
The "war on terrorism"
Even without an economic crisis, consciousness in Britain is changing. The war and occupations of Iraq and Afghanistan have brought terrorism to the shores of Britain. The July bombing in London brought this home to millions of people. The mayhem wrought by imperialism in the Middle East is now impacting on the consciousness of the people of Britain and the USA.
The "war on terrorism" has provided a convenient cover for a massive attack on civil liberties, which we have dealt with in previous documents. The shooting of Jean Charles and the ham-fisted police raids into Muslim areas in London and Birmingham have only served to reinforce perceptions that Britain is becoming a "police state for Muslims". Despite the numerous arrests, hardly anyone has been charged with terrorism offences. Out of over 22,000 stop-and-search incidents last year, only 27 resulted in arrests associated with counter-terrorism issues, or less than 0.1%.
The actions of police, who have new extensive powers of stop-and-search without reason, are viewed as deliberate intimidation and an attempt to stigmatise Muslims as terrorists. Youth, especially young Muslims, have become radicalised by what is happening in Iraq and are vehemently opposed to the actions of US and British imperialism. Young Asians are being criminalized by the state and portrayed in the media as potential terrorists, in the same way as the miners were portrayed as the "enemies within". With a revolutionary approach, and to the degree that they can be reached by our forces, sections of these youth can be won to Marxism and the revolutionary movement.
The basic democratic rights won by the working class through generations of struggle are under threat. The reformist leaders, the faithful servants of capitalism, are in the forefront of these attacks. The repressive legislation measures brought onto the statute books supposedly to fight terrorism today will be used against a radicalised working class in the future. This is extremely dangerous from the point of view of the interests of the working class. They will be used by the capitalist state against trade unionists, strikers, demonstrators and anyone considered a threat to state security. The right to strike has been undermined over the years. The right to assembly and free speech is being challenged. The right to a fair trial by jury is also being weakened. This is not a reflection of a stable situation, but of the underlying crisis facing British society.
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