A workers' response to the crisis: fight for a workers' government!

Submitted by Anon on 25 July, 2008 - 4:37

By Dan Katz

The precise details of the on-going economic crisis can, at best, be the subject of informed speculation. But some general lines are clear. The Chancellor says he expects the crisis to be "profound", Ernst and Young says the outlook is "like a horror movie" and the Economist magazine comments, "Things can only get worse."

As Marxists and activists our first concern is to consider the impact of the economic downturn on the organisation, consciousness and combativity of the working class. We aim to suggest policies and slogans that the left and the labour movement can adopt to give coherence to a fightback against the effects of the economic crisis. Our concern is not to try to 'mend the system' but to protect workers from the effects of the crisis and lay the basis for a working-class counter-offensive against capital.


By all official indicators inflation is rising sharply. The Consumer Price Index (CPI) rose almost a whole percentage point, to 3.8%, in the two months to June 2008. This is the CPI's highest rate since 1992.

But the CPI fails to accurately reflect workers' concerns.

Better, the broader Retail Price Index (RPI), stands at 4.8% per year.

Nevertheless the RPI also understates the problem. Many key costs that impact on workers are rising faster than the RPI shows. Road-fuel costs rose 24% in the year up to June; food costs rose by 10.6% (CPI figure, and a 19 year high); gas bill inflation stands at 11.2% and electricity at 10.2%.

And the poor are being hit hardest, because food and heating costs make up a larger proportion of their spending. So the Office of National Statistics (ONS) suggests, for example, that the inflation index for pensioners "mainly living on benefits" is now 5.4%.

The fact that the official measures of inflation give different figures and underestimate the real impact on most workers, means that the socialist left must propose that the labour movement should begin to use its own economists to calculate the real rate of inflation as it impacts on workers.

Minimally such figures could be used to undermine the bosses' calls for 'wage restraint' (i.e. workers paying for capitalist crisis with cuts in real wages). However such work can also be combined with a radical answer to protect workers from inflation: we propose that wages should automatically rise to compensate for inflation.

Such a law has been (partially) won before - for example, in Italy and Israel. And in the 1940s - under Trotskyist influence - it was fought for and won in the US car industry.

According to the Economist, "Households have been feeling the pinch since 2004 as a result of rising prices, taxes and the cost of servicing debt. The squeeze intensified in 2006 and 2007, when real disposable income per person rose by less than 1% a year: this was the lowest growth since 1982. Despite the slow growth in real incomes over the past couple of years, consumers nonetheless maintained a brisk rate of spending by borrowing against the rising value of their homes. As a result household saving fell in 2007 to just 2.9% of disposable income, the lowest since records began in 1963." Now the credit crisis is squeezing the availability of easy credit.

House prices look set to fall 15% this year and perhaps by the same amount next year. As a result over 2 million householders will find themselves in negative equity (debts more than the value of the property). New home loans have fallen; repossessions are rising.

The unstable banking system - run by the very wealthy in the interests of capital, and willing to make thousands homeless - should be unified under state control.

We propose that the banking and financial sectors are nationalized. We propose that the huge incomes paid out to the rich should be taxed heavily to pay for necessary reforms. We propose that social housing is built, or properties confiscated, converted, or renovated, and housing is provided at cheap rents to all workers who need it.


Unemployment levels stand at 5.2%, or 1.6 million workers, and are set to rise. The most recent figures - for June - show an increase of 15,500 claiming unemployment benefit, the biggest monthly increase since 1992. A number of big building companies have made job cuts, which are yet to register on the official figures.

David Blanchflower of the Bank of England's interest rate committee expects the figure to rise to 7% over the next year, meaning that he expects hundreds of thousands of workers will lose their jobs.

The number of companies "in serious trouble" has increased 700% over the past year (Begbies Traynor report in the Guardian) with building, IT and retail firms suffering most. However the report's authors comment, "In times of economic slowdown you would expect construction and retails sectors to suffer. However many other industry sectors are being affected... Credit lines have dried up..."

Unemployment is a problem for individual workers and it is a political problem for the workers' movement as a whole. Increasing unemployment will tend to work against industrial militancy over wages which inflation is already producing.

We need a government that will guarantee work and a living minimum wage for all who can work. A crash programme of reviving public services and bringing contracted-out sectors back into public ownership will provide the jobs, at living wages, that are needed.

Working-class political representation

It is not only the pressure of unemployment and the immediate past history of the working class that press down on the possibility of militant working-class revival, but the existence of repressive anti-union laws. The laws brought in by Margaret Thatcher's Tory government after 1980 ban such things as solidarity action and make union funds vulnerable to seizure if the law is broken. The anti-union laws need replacing by a set of positive trade union rights.

And workers need the welfare state to guarantee high quality health provision through the NHS and free education, reunified with public ownership and democratic and workers' control.

Which begs the question, who will push through all these necessary changes? All these matters require governmental-level action; none can be solved by industrial militancy alone (even if such militancy existed).

None of the existing parties are in any sense pro-working class. The Labour Party was set up by the labour movement, but has been gutted by Blair and Brown, and now has been cut adrift from even the possibility of labour movement control.

And in such conditions - a credit crisis, falling house prices, inflation - other parties could grow rapidly. The BNP may well be a beneficiary of the crisis if workers fail to hear and rally around the socialist left. Which make the case for organising and agitating around such demands particularly pressing.

The working class needs its own party, a party resting on the working class for its power and accountable to our class. The working class needs its own government, a workers' government.

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