“A spectre is haunting Europe - the spectre of Communism ...” (The Communist Manifesto, 1848)

With even The Daily Telegraph titillating its conservative readers with the prospects of “rage on the streets” this summer, there have been a plethora of journalistic warnings that financial meltdown will be followed by social meltdown. The latest prophet of the end of the profits system is Stephen King, boss of HSBC, one of the few banks not beholden to government bailout, despite its record losses, but which has just asked its shareholders for £12.5 billions to bolster its balance sheet. In an article entitled “As capitalism stares into the abyss, was Marx right all along?”, he admires this in The Communist Manifesto

“...the commercial crises... by their periodical return, put the existence of the entire bourgeois society on its trial, each time more threateningly. In these crises, a great part not only of the existing products, but also of the previously created productive forces, are periodically destroyed. In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity - the epidemic of over-production.” (The Independent 2nd March 2009)

He comments:

“Whatever else one thinks of Marx, he certainly knew a thing or two about the business cycle.”

So what’s brought this agony of capitalist remorse on? The impact of the crisis, of course. Mr King, unlike many of his more complacent comrades, understands the state we are in.

“The pace of decline in global economic output is extraordinary. By virtually any measure, we are seeing the worst global downturn in decades: worse than the aftermath of the first oil shock in the mid-1970s and worse than the early-1980s downswing, when the world economy had to cope with a doubling of the oil price, the tough love of monetarism and the onset of the Latin American debt crisis. Moreover, this time we cannot use the resurgence of inflation as an excuse for lost output: the credit crunch in all its many guises has seen to that. Instead, we have a world of collapsing output combined with falling prices: a world, then, of depression.”

This is not confined to Brown’s Britain. Mr King is talking global. The annual rate of decline in Germany in December 2008 was 12%, in Spain 20%, in Japan 21% (and by January this was nearer 30%!). Global trade fell by 6% in November alone. Following the Wall Street Crash of October 1929, it took four years before the world economy had declined by 25%, the very pits of the Great Depression. According to Wolfgang Munchau, in The _Financial Times_ (9th February 2009), this could be achieved by the end of 2009.

The Price of the Crisis

Workers everywhere are already feeling the effects. Four million households in the UK are already suffering negative equity on their houses. 10% are in mortgage arrears. Unemployment is rising nearly twice as fast as even that during Thatcher’s de-industrialising vandalism in the early 1980s. 600,000 jobs were lost in January 2009 alone. The Government is expecting unemployment to reach 3 million by the end of 2010 but at current rates it will be earlier than that. And we should not forget that this figure substantially understates real unemployment since 2.6 millions have been taken off the unemployment figures (to hide the real state of things) as they have been put on disability benefit. 30,000 small businesses have shed jobs in the last three months.

And all this has an effect on pay. 25% of companies have postponed pay rises whilst almost 50% (of the 260 surveyed by the Industrial Relations Service) have frozen wages whilst some have also cut wages. Workers who believe the bosses and accept pay cuts because “we all have to make sacrifices to keep the firm going” may do no more than lose pay. At JCB the workers took a £50 a week pay cut despite the fact that the firm had made £100 million the year before that (and was profitable for years before even then) in order to save a couple of hundred jobs. Within a few weeks of this sacrifice 500 got the sack. The same thing could happen at Toyota in Derby and on Deeside where the Unite union has negotiated a one year 10% pay cut “to preserve jobs”.

Older workers who thought they were going to enjoy their retirement soon may not find that “enjoy” is the right word. Companies have been robbing their pension funds for years but now some funds have been writing to workers telling them that due to dodgy investments in “structured investment vehicles” they have just lost a substantial portion (anything up to 40%) of their pension pot.

Still, rising unemployment should mean prices come down shouldn’t it? Wrong. The retail price index rose from 3 to 3.1% in January (mainly due to the fall in the value of the pound) but even this understates the real situation for ordinary workers. Clothes may have come down as retailers desperately seek to offload stock but food is up 10.1% on last year. Average council tax in England will rise 5% (it is frozen in Scotland this year) and no-one has noticed the energy companies in a hurry to rescind last summer’s massive rises. The Government’s demagogic 2% cut in VAT has so far had little effect but when we are all reduced to penury we will no doubt be grateful for such small mercies.

But, just when the state is needed to guarantee a minimum standard of living, they are already preparing to put the boot in. Both main political parties are looking to cut £35 billion off government spending in 2011. They can only do this by hitting at services for the most vulnerable. One straw in the wind is that the 2.6 million on disability benefit will be forced to make themselves available for some work or lose their benefit. One of the inspirers of this idea has just defected from Labour to the Tories just to underline the fact that there is no difference between the ruling parties.

Fighting Back

The attacks on workers described here are only the beginning. As Mr King stated in his Independent piece:

“Suddenly, we’re facing a collapse in activity on a truly Marxist scale.”

We assume he means by a structural collapse. This means that for capitalism there is no quick fix in sight. Unchecked, the ruling class will drive down the standard of living of workers everywhere, in order to restore profitable production. However, the crisis is already too deep for that to succeed. The debts which exploded in 2007 would take 250 years of world production to pay off. So once they have driven down living standards and still not solved the crisis, what do they do next? The likely scenario is that the hesitant cooperation between the world’s rulers will gradually break down. Already there have been tetchy exchanges between the US and Europe as the great powers prepare for the G20 Summit in April. And every state has accused the others of adopting more and more protectionist policies. Trade wars will become more obvious and trade wars will one day lead to shooting wars. Capitalism thus offers only barbarism and war.

The only positive alternative lies with the world’s exploited collectively fighting back. This does not mean tired old union manouevres like that currently being carried out by the RMT union over job losses on the railways. Holding a ballot for a strike which might take place months away is not a real way to fight, but the first step in a negotiation strategy which will still end up with people losing their jobs (but if some jobs are saved the union will present this as victory).

Over the last two decades the unions have been largely absent whilst we have seen the better paid manufacturing jobs vanish. Now we are faced with the need to fight back the unions have suddenly appeared out of the woodwork to claim the leadership of that fight. But to accept such leadership means we have to accept an industry by industry strategy, it means negotiating with bosses who have nothing to offer and it means putting nationalist agendas before solidarity with workers everywhere. No sector threatened with unemployment can fight alone. Any workers who keep their heads down hoping that their turn to be laid off will never arrive will only allow the bosses to pick us off sector by sector. The capitalist system is finished and offers only more misery. We have nothing to lose but our debts. We need to take over the system and production, and transform it into one which produces for people’s needs, rather than get swallowed up in plutocrat’s pockets. This will not be easy but there are already signs from around the world that many workers have had enough.

One of the uplifting characteristic of the Lindsey Oil Refinery dispute (see article elsewhere in this issue) was that the workers saw the need to give solidarity to workers in other places and many travelled miles to give their support. At least one held up a poster which said that Polish workers supported the strike. If nothing else this indicates that some at least are well aware that this fight is international. In Guadeloupe a seven week general strike became a virtual insurrection which involved exchanges of gunfire between the strikers and police leading to the death of a union official. Although there was a danger that race got put before class as the strikers were all black and the ruling elite white “Bekes” (a factor which the media tried to inflate), the strike ended with some gains for workers. Sarkozy conceded a €200 increase in the basic monthly salary (part paid by the state) and agreed to reduce prices on basic goods (pasta for example costs 90% more than in France). However, as we go to press, there is still a lot of tension as the price decreases have not yet been agreed and many local employers are refusing to pay their bit of the wage rise.

In Ireland, the 120,000 strong demonstration against a massive 5.5% cut in public sector wages to pay for pensions was joined by soldiers whose own organisation declared that they would not let themselves be used as strike breakers in the event of a walk-out by public sector workers.

In Dundee, the12 workers at the tiny Prisme packing works were told that the firm had gone bust, the manager had resigned two days earlier and that they were unlikely to get any redundancy pay after 14 years service at the firm. It is neat capitalist trick which left the workers with nothing. Like the workers at Republic Windows and Doors in the USA, the Prisme people have no illusion about keeping a job but in order to fight for some redundancy payments they have occupied the plant so that the machinery and raw materials cannot be taken and sold on by the management. Solidarity support is pouring in from all over the UK and elsewhere.

All these are early signs that some workers have had enough. What we need is a clear alternative and that means taking control of our own struggles and our own workplaces. We literally do have nothing to lose but the chains which bind us to this rotting system, and we do have “a world to win”. Workers of the world unite - this is your time.