Friday, August 24, 2012

News and Action

Dear Comrades
This is the third of our (just about) weekly email and blogs and thanks for the comments on the first two. The blog is still in an experimental stage so bear with us if we have some technical problems. Don’t forget, if you have any information and you think it is the sort of thing that would fit the ethos of the blog and email, send it to us to circulate and post; if you wish to comment please feel free to do so on the blog; and if you are a WLG member, please submit posts.
Next Welsh Labour Grassroots meeting and other forthcoming events

The next WLG meeting will take place on Saturday 8th September at Newport Centre, Kingsway, Newport NP20 1UH, between 11.00 am and 1.00 pm. Further details will follow soon. Please also note that our AGM will take place in Cardiff on Saturday, 27th October.

You may also be interested in these other forthcoming events:

Cardiff, Saturday 25th August: Cymru-Cuba will be presenting the film, 7 Days in Havana – in which seven directors present their own different (fictional) views of the Cuban capital – 8.00pm at Chapter Arts Centre, Canton, Cardiff  CF5 1QE. Cymru Cuba will be giving a brief introduction to the current situation in the country just before the film starts. They invite you to join them for a drink afterwards and to visit their stand selling CDs, books and T-shirts.

Cardiff, Wednesday 29th August: Disabled People Against Cuts (DPAC) will be holding a mass 'die-in' at the Aneurin Bevan Statue, Queen Street, Cardiff, at 5.00 pm, as part of nationwide protests against ATOS, the French IT company that carries out Work Capability Assessments for the Department for Work & Pensions (DWP). The ‘die-in’ is intended to represent all the disabled people who have been driven to suicide after ATOS has found them ‘fit for work’ and stopped their benefits, or for other reasons associated with the draconian ‘welfare reforms’ introduced by the UK government. For further details, see:

Left Week

The case of Julian Assange has been one of the most significant issues this week, dividing opinion, including on the left. Owen Jones in the Independent and Seamus Milne in the Guardian are among those who have commented. While drawing different conclusions, both writers agree on the need to separate the serious allegations of rape, for which Assange must answer, from the important work done by Wikileaks, which has so antagonised the political establishment in the USA and elsewhere. Another cause celebre has been the disgraceful imprisonment of the Russian feminist punk band, Pussy Riot, for daring to antagonise the Putin government and the Orthodox Church. Amnesty International, among others, is rallying support for these courageous women. Following on from the economic discussion pieces of the last two weeks, Michael Roberts again provides two very accessible pieces that supports the points made and provides more evidence here and here.

Whilst there is a build up to the Paralympics the Tories, who will try again to bask in reflected glory, have shut down half of the 54 Remploy plants around the country and some have vote to take four day strike action from 28 August.  The thick skin and hypocrisy of this government knows no bounds.
Events in China need some unpicking after the murder trial and again Seamus Milne has managed to provide an insightful context.

Left Roundup

Red Pepper is a socialist magazine that manages to keep sectarian point scoring to the minimum and work to unite a socialist as well as a green analysis. The latest edition is full of good articles – Syriza; defending the NHS; community unionism; disabled fightback; - some of which are on the website and others will be gradually posted over the next two months. The magazine is in need of financial support so please consider a subscription and a donation.

CLASS (Centre for Labour and Social Studies) the new left research, activist and policy organisation has been up and running since May and already has some excellent work and arguments published.

CRESC is a social and economic research unit based at Manchester University. I came across them this week as an article in Red Pepper is based upon one of their publications. There is no reason to be put off by the unit being based in a university; it is providing a very high standard of evidence-based left analysis.

False Economy continue to provide a constant supply of hard hitting arguments against the Tories; here is their latest, a factsheet providing all those important arguments about why the deficit is not the problem.

Labour Party

Here is the UK Labour Party link with all the recent Party statements covering education and the Tories continued inability to understand how get themselves off their own deficit hook even though they are borrowing more, to no avail.
Here is the Welsh Labour Party link which still needs keeping up to date. The Welsh Government has just started a consultation on the future of the NHS in Wales which requires a response by 24.10.2012. All the documents can be found here and contain issues that we should take seriously as socialists. Which ones do you think we should home in on as WLG?

Labour MP Stella Creasy who has undertaken some excellent work on loan sharks and around Wonga, the company that loans money against wages, made the headlines this week when she argued that the next Labour government should prioritise value for money, trying to shift the policy agenda to the right, away from the rich paying for the crisis. What do you think?

Left Futures reported that Plaid has indicated that it could be prepared to work with the Labour Party in a progressive alliance after the 2015 election. What do you think?

20 October must be in every member’s diary to get themselves, family, friends, brothers, sisters, comrades up to London for the TUC ‘A Future That Works’ demonstration. Everyone who wishes to see an end to this Tory government should attend. Here is a link to the Coalition of Resistance leaflets and posters supporting the demonstration.

Resolutionary socialism
Left motions for the Labour Party conference are being circulated and it is important that all socialists in the Labour Party raise at least one of these at your next branch or constituency meeting, both to try to ensure the issues are discussed at conference and that the debate is had with members.

Here are the LRC motions.

Here are the motions from the CLPD.
All the best

Darren Williams WLG Secretary
Len Arthur WLG Assistant Secretary

Discussion – we shall overcome: challenging the power of capitalism (1). Len Arthur

Discussion – introduction Len Arthur
A word of explanation could be necessary. The first four discussion pieces from me can be criticised for being too abstract. Laying down some foundations in the socialist tradition is the aim, hopefully to act as an aid and reference point for more specific policy discussions as well as being an interest in their own right. It may also be a retired socialist indulgently working out some personal demons! Well, whatever your view, the blog format allows any interested WLG reader to add to the blog by posting or, by any reader commenting, so there is also a hope that these pieces and others are transformed into a collective reference point. I’ll soldier on for another two weeks in this vein and please feel free to join in.  This week and next week will explore how it is possible to challenge the power of global capitalism.
Discussion – we shall overcome: challenging the power of capitalism (1). Len Arthur
Whilst texts such as Naomi Klein’s The Shock Doctrine (see previous blog) are both revealing, frightening and lead to anger, they can also act unintentionally in a contradictory way, re-enforcing a consciousness of being dominated and unable to resist. Naomi demonstrates that ‘shock and awe’ is the intention of perpetrators of the history she describes: the description however, requires a consideration of effective methods of resistance, to avoid being caught in this dilemma.
Like Wilt, the fictional Liberal Studies lecturer of Tom Sharp’s novels, I also used to teach the subject and remember vividly when after a number of weeks describing how capitalism and the class system works one of the engineering apprentices stopped me in full flow and said ‘look we agree with you, but what can we do about it?’; then answered his own question by saying ‘nothing’. From that day on I re-wrote the lessons to work from where the students were at, on matters that concerned them trying to make links with the wider context; one or two may have joined a union as a consequence, but little more could be done within the education context. For us, in a political context, answering the ‘what can we do about it?’ question is essential and does require some consideration of how the exercise of power operates in our society; what are ‘the balance of forces’; and how we can shift them in our direction.
Power, among social scientists is a massively controversial concept. This needs to be recognised and it is difficult to set all the issues to one side. However, the Marxist tradition has had and continues to have much to offer if we are interested in resisting and challenging those that currently hold power, suggesting alternatively, that a society where power is distributed and held effectively accountable is a viable form of democratic socialism. ‘Labour power’ is a central concept of Marx explaining how it is central to the process of creating and adding value. When employers employ workers it is their potential labour power they are interested in and only then as people that can make this contribution. Within this description is rooted the key to understanding how power operates in capitalism: what the employer has purchased is only a potential; power, control – otherwise known as management – has to be exercised over the worker to extract and control as much as possible of the value created by the application of labour power. For Marx the source of surplus value and ultimately profit depend on the effective use of power and control over collective and creative process of labour power. As the employer – capitalist – needs workers to cooperate with each other and be compliant, the contradiction is that they can resist or take back some of this power by not cooperating and by stopping being compliant: the potential of resistance is built into Marx’s understanding of labour power.
Labour power being central to the operation of capitalism was, for Marx, a development of his philosophical understanding of dialectics and his critique of the philosopher Hegel. Consequently, for Marx, society was in constant change as a result human collective activity which takes place within a historical and physical context as in the famous quote ‘Men make their own history... . Moreover, in his Theses on Feuerbach  Marx, following a number of positional statements on the centrality of ‘human sensuous activity’ makes the statement that ‘The philosophers have only interpreted the world, in various ways; the point is to change it.’ For me, Marx is proposing that as change is constant, the key question is having the power to influence the direction of change: that, as even capitalism depends upon the difficult and often unpredictable process of influencing the future creative acts of employees working collectively together, within that unpredictable process lays the potential for resisting and changing the world in our direction.
Nicos Mouzelis is a sociologist who in the 1990s has written about power within the Marxist tradition. He has drawn upon and synthesized many of the key writers in this area in particularly in his book ‘Sociological Theory: What went wrong? Much that is in this book is useful to help develop ideas about how power works in modern society and, in particular, how it may be possible to challenge the power of capital. Social interaction (social relationships) is, for Mouzelis, central to understanding how society works but, like Marx, this takes place within particular institutional and historical contexts. Mouzelis suggests that individual actors within a particular social relationship – such as a workplace - can have unequal access to power resources, what he calls ‘capitals’ following the work of Pierre Bourdieu .
These capitals can be described as economic, social, political or cultural and an actor that has a high level of access can be seen as a ‘macro’ actor and one with less as a ‘micro’ actor. So, for example, in a workplace an employer can be seen to have a high level of all the capitals, but particularly economic and political (legal in this case). In addition, within an institutional setting, actors not only experience the distribution of capitals that is part of the structure or organization of the workplace but bring with them a ‘disposition’ from their other roles and from their personal history. These, potentially, could conflict with the institutional capitals, particularly the social and cultural. Then, finally, actors with these power capitals interact, say, within the workplace situation, creating a creative social process, the outcome of which may not be entirely predicated on the distribution of capitals – the balance of forces – as the workers – or micro actors – may be able to challenge the employers’ power through collective or individual negotiation. A strike would challenge the employer in all three areas, including the institutional and an agreed settlement may shift some power in the workers favour. It can also be seen, for example, that an institution like a formal church service will be dominated more by institutional interaction than say that which would take place in a ‘rave’ or club situation, where situational interaction would dominate.
Carter Goodrich, in his 1923 book called The Frontier of Control, describes the ‘stand-off’ situation over wages and piece rates in the British engineering industry as a ‘frontier of control’ which represents a temporary agreement which both sides continue to push against. It is possible using Mouzelis’ framework to see that a frontier of control could be seen to exist in many other institutional settings, that despite an unequal organizational (formal) distribution of power capitals between actors, in the logic of disposition and in the process of interaction, actors who could be seen as micro actors could have some capital that they could use and accrue these over time. In the late 1960’s one of the main bargaining aims of trade unions was something called ‘mutuality’. It represented the idea that a long term aim of workplace bargaining was to gradually ensure that all power of employers that affected workers was gradually submitted to collective and joint control. It was a project to progressively shift the frontier of control in the trade unions’ and workers’ favour.
One of the key methods that macro actors use to maintain their power is to divide and rule. If the micro actors whose interaction they attempt to direct and control can be reduced to seeing themselves as having a primary individual relationship with macro actors, it helps to change existing dispositions and reduces the possibility of alternative interaction taking place between the micro actors. The most nefarious tactics are adopted to achieve this. Similarly, avoiding divide and rule and creating an alternative collective opposition is a key to starting to shift the frontier of control toward micro actors. It is not possible to do this abstractly and largely revolves around making grievances - issues, problems, call them what you will - into as big as possible collective issues, by generalizing the relevance of the social justice issues involved. This can be readily seen in workplaces, but of course applies across all social movements, which are strengthened by collective action.
So how does this apply to the Labour Party and taking control through elections? Drawing upon the interaction framework outlined, it can be seen that if a majority among elected representatives is won, essentially the leaders of the winning party become the macro actors, taking over the economic, political, social and cultural power resources that come with the institution – local authority, parliament etc. However, in the wider country or international context, these representatives may be micro actors or up against equal or stronger macro actors, thus challenging their ability to use their hard won electoral power. Similarly, within the confines of the institution controlled, there is a large constituency of employees and electors who will have dispositions and a large range of interaction that exists beyond immediate institutional control and is thus very available for collective mobilisation. So, if a left administration is going to challenge other powerful institutions – such as international corporations - it will need to look to its own constituency to try to ensure that the potential of collective mobilisation works with it as opposed to against it, drawing upon all four forms of social capital.
Well I hope this makes some sense. What will be explored finally and next week, is how such an understanding of power provides a way of answering the ‘what can we do about it’ question, linking local issues with larger challenge to capitalism through ‘transitional demands’ and how the notion of a ‘frontier of control’ can apply not only to situations of trade union type collective mobilisation and challenge, but also to ‘alternative space’ type challenges through ‘transitional actions’.

Thursday, August 16, 2012

News and Action

Dear Comrades

This is the second of what we hope will be a regular – generally weekly - email from Welsh Labour Grassroots, a network of activists of the left and centre left of the Labour Party in Wales.

We have also set up a WLG blog where the contents of the email will be posted, enabling followers to add comments, other information and have a reference point. The blog also has information relating to the basic position of WLG, a link to our existing but little used website and, if you are a member of the Labour Party, how to join and provide support to our activities. Sympathisers who are not LP members are most welcome to receive and comment on our emails through our blog - just as is currently the case on our WLG Facebook page - and if you wish submit sources and other information to us to be added to the posts, which may help in our discussions and joint action. All posts on the WLG blog will be signposted through Twitter and Facebook.

Left week - LA

Olympic fervour has been difficult avoid even by a non sporty miserablist lefty like myself. The elation written on the faces and expressed in interviews with those who had won a medal was simply infectious at a very human level. You could see that it was the culmination of years of hard work and commitment. It makes the ‘and me’ jumping up and down of some politicians seem churlish and the corporate presence together with their biased distribution of largess – like the BMWs – just appear pathetic.

There have some good comments on Labour List  but I’ve yet to see a socialist conclusion drawn yet. Many will understand and know the history of the organisation and funding of the Olympics and Britain’s improved medal position over the last 12 years better than myself but it does seem to represent, at least in part, democratic state planning, supporting people through facilitative organisation and investment at its best: and all taken forward by the last Labour Government. Pity it was about competitive sport and not restructuring the economy – well look who’s being churlish now!

Left roundup

Labour Representation Committee news reports on preparations for the 20 October TUC demonstration, the 68 is too late campaign both with model motions for LP branches together with industrial action taking place currently. All LP branches should now be making arrangements to ensure a huge turnout of members on the 20th.

Greece has not gone on holiday! The Coalition of Resistance reports on how the Greek ‘austerity’ coalition government is facing new pressures from the EU troika and how resistance is again building. Whilst in Italy the constitutional court has ruled against privatisation.

Following on from the discussion piece about the growing real and ideological collapse of neo-liberalism Labour Left suggest it is time to ‘feel some’ white collars.

Strikes are continuing to save Remploy and if you can’t get to the picket line the GMB union has an online petition . See also Union News.

Labour Party

Things are going quiet for August and I notice that all the leaders have gone abroad for their hols at the same time – national government in operation or agreed neutralising of the issueJ. Anyway here is UK Labour News and that from Welsh Labour.

Owen Smith MP our shadow secretary of state for Wales has been raising some questions about how the relationship of devolved services works with a UK wide provision. And our Welsh Government has produced a consultation document on promoting local democracy. It is too late to comment but raises issues that we on the left might think about developing as the debate is sure to continue.

Welsh Labour Grassroots

Well we are getting the blog going and some days the visitor sessions – people actually read something - have been running at around 20, so not bad for the first week and one supporter has added a comment. Hopefully we can iron out the inevitable bugs over the next few weeks, so bear with us.

All the best

Darren Williams WLG Secretary
Len Arthur WLG Assistant Secretary

Is Marx now right? (2) Len Arthur

Discussion piece (2) is Marx now right? – Len Arthur

In the first part last week questions were raised about the extent to which the economic ideas of Keynes could remain central to the development of Labour policy on the economy. It was suggested that Ed Miliband is right to start to point to the structural weakness of the UK economy but then went on to suggest that they may actually be more fundamental than he has so far been prepared to accept. It was suggested that the Libor scandal was not an aberration but, on the contrary, revealed that fixing and possible criminality, is directly related to economic power being out of control and concentrated in rich, self interested hands.

Recently in the New Statesman Will Hutton reviews three books by leading radical Keynesians, including one joint authored by Larry Elliott who was referred to last week. Will shares the criticisms of the weaknesses of Keynes for the current situation but goes on to support Skidelsky in the call for a new social morality as a way of achieving for “Britain, the US and Europe need a better capitalism informed by a persuasive moral outlook that trumps that of the right”. He refers to the need for more equality but avoids the structural issues of power and control. Jonathan Portes also writing in the same recent issue of the New Statesman still argues the Keynesian case that GDP as measured per head will continue to grow if underused capacity was brought into operation and directly supports the cake argument by ignoring class and how GDP is increasingly unequally distributed, rendering the beneficial effects of a per head growth questionable. Despite the crisis the relevance of Marx is far from self evident.

So, does Marx have anything to say to us in considering Labour Policy?

There are two economic and social narratives dealing with the structural causes and possible answers that seem increasingly to take proper account of our historical situation; and if the Labour Party is going to develop effective policy in this we need to make it take them seriously. The first relates to the renewal of analysis based upon class – see Left Futures recently and the need to challenge the adverse effect of inequality, both in terms of people and the economy. The second relates to the renewal of analysis based upon Marx and the problems of an economy based on production for profit when the rate of profit tends to fall.

Class and social inequality is being put back on the agenda by the neo-liberal attempts to save capitalism by forcing the working class to pay through ‘austerity’. As Lenin once argued, capitalism will survive so long as the working class can be forced to pay the cost. Recent research and publications have also been reflecting on these attacks and there has been somewhat of a rapprochement between left Keynesians and Marxists. Richard Wilkinson and Kate Pickett produced a ground breaking book four years ago called the Spirit Level  , which demonstrated on a range of criteria how societies that were more equal were generally also more healthy and had a higher level of well being. More recently, economists such as Stewart Lansley in his book The Cost of Inequality  , have explored how inequality not only is an issue for social justice and health but is also directly linked to the economic crisis, reducing effective demand and handing over trillions to the worlds rich who have then failed to invest. More recently Joseph Stiglitz has supported a similar analysis in his recently published book The Price of Inequality. In some respects these arguments overlap with those put forward by David Harvey and Richard Wolff who use Marx’ analysis to demonstrate how profits have been preserved over the last 30 years by driving down the returns to labour, then linking the results to borrowing and the financial crisis. Wolff is particular good at making this connection.

For the Labour Party these arguments offer an opportunity to re-engage with class and the issues of inequality as well as laying the basis of a longer term economic strategy. The working class is under the cosh to save the bankers and profit levels. Our slice of the cake is shrinking as opposed to growing. Not only has the proportion of national income going to wages and salaries fallen from its peak of 65% in the mid 1970s to around 45% in 2006 but the richer you are the greater the increases over the same period, the bottom 10% experiencing an increase of 22% as opposed to 200% for top 10%. So the share for lower paid workers has dropped faster barely maintaining real spending power. These trends have continued together with the loss of other benefits for those in work, such as pensions and family credit. For the increasing number out of work not only are benefits being reduced but they are experiencing a form of state harassment and terrorism, egged on by right wing papers such as the Mail and Sun. As Stewart Lansley argues addressing such inequality will provide a rise in real consumer incomes – still around two thirds of GDP - underpinning a long term recovery and a sustained Keynes type boost to the demand side of the economy. There is an opportunity for a double win if the Party wishes to be bold enough to argue the case.

And yet is this sufficient? The second economic and social narrative dealing with structural causes of the crisis is the tendency of the rate of profit to fall - here and here - under capitalist production which, as Larry Elliott suggests, is much more closely associated with Marx. Chris Harman in his last book Zombie Capitalism sets out the detailed case for why there is this tendency in capitalism and how it affects the global system we now live under. In relation to the current financial crisis Harman argues that capitalist economies have become dominated by the role of finance over the last 25 years – what he calls ‘financialisation’ – resulting from a falling rate of profit in commodity production and a growing rate of return in dealing in finance and associated derivatives. In essence capitalism, particularly in the West, has started to withdraw from producing goods and services and have moved instead to just financial transactions – such as creating deals and shifting ever larger sums of money around – as this had become relatively more profitable. In the end no economy can be sustained without the production of use value and the financial crisis is the consequence.

Michael Roberts is another economist who has used the rate of profit analysis to explain the crisis in very accessibly written blogs and other writings. Here is one which covers the same issues as in this blog, here are is a more technical but still accessible one that also doubles as a review of another economist Andrew Kliman who has just published a book on the importance of the same subject. The debate with Marxists such as David Harvey mentioned above are covered here. Another useful review of Kliman’s book and the debate covered in this blog is also available here.

The key conclusion is that increasing demand of itself will not necessarily result in growth unless it also has the effect of raising the rate of profit and this can only be raised at the expense of the working class so will have the knock on contradictory effect of restraining demand and creating unemployment. If production of financial value alone remains more profitable that is where the money will go: hence banks stuff their coffers and companies go on investment strike. Capitalism in order to maintain or increase the rate of profit will resort to every trick both in and out of the book including criminal behaviour as well documented by Maurice Punch in his book Dirty Business, and by Naomi Klein in her book The Shock Doctrine referred to in the blog and email of last week. I’ve also explored how it relates to other activities such as the marketisation of the public sector and the growth of international monopolies in one of my blogs on ZNet.

The conclusion that Michael Roberts and the other writers come to in relation to policy and action, is that the state has to play a greater role in the economy, as the market and profit based capitalist system is increasingly unable to create and allocate production and investment without great cost to society. At the very minimum the banking and investment system should be under public democratic control, together with the provision of goods and services serving basic needs where income streams and output are reasonably predictable such as, health, education, housing, social and other services and basic utilities. If the rate of profit arguments are convincing then they have a very radical implication for Labour Party policy.

It is clear that such a radical challenge to neo-liberalism, the operation and role of the market and the current system of ownership and control, would raise issues of how would it be possible to win the power and legitimacy, to undertake such a transformation. Naomi Klein clearly spells out the frightening extent that state power has been used to impose the domination of private corporations globally and finds it difficult herself to suggest how such power can be effectively challenged. However it is clear that the bankruptcy of the system that has been imposed on us has been exposed in the current economic crisis and those that legitimise, benefit and run the system are currently running out of workable options, other than to self destructively continue to attack the working class.

This state of affairs could mean that the balance of forces moves in our direction if we can get our act together. It may not seem this way as the task seems huge and our ability to resist and challenge limited but this can change quickly as we have seen in Greece. But even in our daily circumstances there is a ‘frontier of control’ that we can engage with and in our various small ways have a much large impact. Other organisations such as the European Left are rising to the challenge and we should think of ways of doing so ourselves: of course, power and the balance of forces is the subject of the next blog.

Tuesday, August 7, 2012

Discussion: Is Marx now right? (1) - Len Arthur

Is Marx now right? (1)

We know that the Tories attack on the state is a cover for an attack our social institutions that provide collective support for the working class. We know that they are doing this to make us pay for the bankers’ crisis. Moreover we know that even representatives of the ruling class and the bankers’ banker the Bank of England know that their crisis is so deep that even their free markets are rigged and are considered to be a cesspit. We also know that New Labour supported this cesspit and is struggling to find alternative economic and financial policies. This much as a left we agree on.

But is this an adequate description of the current crisis? Does it provide enough analysis to develop alternative left polices for Labour in government? We know it provides the source of great anger and unity but does it provide enough understanding to act as a guide to us as socialists to know how to fight back effectively in our everyday lives whatever our daily activities and positions we hold?

Is it possible for us to go beyond our current ‘frame’ of collective knowledge and agree on the reality that seeks to dominate us; thus connect our agitation and actions in a way that not only effectively challenges this reality, but also acts as a bridge to a humane, democratic and socialist society?

There are different approaches to understanding the reality of our predicament.  As the capitalist economic system is currently experiencing arguably its worst international crisis ever, it makes some sense to start with that and see where we can go.

Gross Domestic Product (GDP) is central to economic and social considerations. When we say that capitalism is in a crisis one main indicator is falling or stagnant GDP. In the UK it is measured quarterly so when in July this year press statements referred to a decrease of 0.7 % of GDP they were saying that in April – June 2012 economic growth as measured by GDP was 0.7% lower than the first quarter January – March 2012. Consequently most of the debates about economic policy are couched in terms of how growth can be achieved again: through the ‘supply side’ – cutting wages, costs and boosting profits; or through the ‘demand side’ increasing employment through investment and boosting real wages and incomes.  In a wider social context GDP and its relevance is also important, as growth is linked to climate change and debates about whether it is possible to have no or slower growth or to have growth that does not harm the planet.

So what are the causes of the current crisis of capitalism? Does Marx have renewed relevance? And what are the implications for Labour Party policy?

Larry Elliott is the Guardian’s economics editor and is one of the most accessible and prolific writers on economics around. He is a good starting point as he presents the range of possible causes of the current crises with clarity and an open minded honesty; being critical without shutting down the debate. He also well represents and presents the dilemma that current economic theory finds itself in, starting from a position that there is a basic strength in the complex world of markets. He describes this as the ‘muddling through’ explanation such as in this piece written 9 months ago:

‘History would suggest that Sir Mervyn King, Ben Bernanke and Jean-Claude Trichet are right to be cautiously optimistic. Over the past 250 years, industrial capitalism has displayed a remarkable ability to regenerate itself.’

In this piece then goes on to explore the hurdles that still stand in the way of getting to this nirvana. More recently he has suggested that these hurdles may be even structurally greater and that contrary to the markets muddling through, Karl Marx may have been right about the tendency of rates of profit to fall under capitalism and for money to move in directions that are not beneficial to either the economy or society. However, when it comes to policy Larry’s Keynesianism – albeit a left version – gets the better of him and we are back to the need for the state to pump prime optimistic spirits back into investors and the economy to get the market working again and growth (GDP) on the up.

Larry Elliott’s articles referred to are worth reading in full as this little overview does not do justice to the depth and acuity of his writing. Nearly all of his writing contains real insight and he has contributed significantly to the wider issues of climate change and the green economy. The point though is made, that Keynesian ‘demand side’ economic management by the state to kick start growth, retains a strong hold on the centre left critique of the ‘supply side’ cuts and austerity policies of the Tory and other neo-liberals. It is a hold that currently dominates Labour Party thinking as represented by Ed Balls.

Keynes ideas of achieving growth and avoiding recession through the use of public spending have, historically, a great appeal to the Labour Party. They offered a lifeline in the 1930’s when the working class were first seen to be defeated following the 1926 general strike and the failure of the 1929 – 31 Labour government to come up with any ideas to solve the economic crisis without reducing public spending. The Party split over the issue and Ramsay Macdonald the first Labour PM and many Labour MPs left to form the National government with the Tories. It was a lifeline that appeared to work until the 1970s enabling full employment to remain a legitimate policy aim and unpinning the post war anti communist social democratic settlement.

For the Labour Party it was and remains a convenient way of avoiding or suppressing issues of class and inequality. Issues of ‘post capitalism’, the ‘end of class’, ‘relative deprivation’ and the ‘corporate society’ are not new and are well documented in the 1965 critique of these interpretations produced by the New Left review called ‘Towards Socialism’ as well as Ralph Miliband in his book ‘Parliamentary Socialism’. I can remember Barbara Castle spelling out the problem at a Labour conference in the late 1960’s using the famous analogy of the expanding cake. If using Keynes demand management it was possible to continually expand the total wealth through GDP growth – making the available cake bigger - then the slice that went to the working class could also grow at roughly the same or slightly greater pace thus avoiding the awkward class and structural issue of unequal shares. Basically giving the impression of the having your cake and eating it! It is this comfort zone that remains so electorally attractive to the Party enabling a ‘being sensible’ appeal to possible Tory voters.

Ed Miliband in some speeches has recognised however, that it may no longer be sufficient to just stimulate the existing markets. There are issues of the balance of the economy between finance and manufacturing as well as good and bad capitalist practices. The social and economic structures that markets operate within, such as regulation and perhaps even the ownership and control of investment, may need to be addressed. For Labour the mere hint of this will start to open Pandora’s box: once there is a recognition that markets may not work as well as the theory it allow the idea of Marx to start to creep back onto the stage. The cake analogy starts to crumble – I know, I know! – and the issue of class, fairness and inequality press to be addressed. This is especially becomes the case as the neo-liberal politics of ‘austerity’ of making the working class pay for the bankers’ crisis has already raised of the issue of 1% against the 99% through the occupy movement. Even proletarianisation – expanding the working class through the reduction of ‘middle class’ benefits - has been recognised through Miliband’s equally awkward phrase, the ‘squeezed middle’.

The structural problems facing capitalism are more deeply seated than have yet to be acknowledged by leaders of the UK Labour Party. Scandal over the fixing of the Libor inter-bank interests rates which looks increasingly likely to result in criminal charges, is more than symbolic cesspit of the current situation. Here, at the very heart of the market system, the distribution of money in the City of London, is a systematic failure of anything like a free market to work: it is a fix by deeply self interested people. It ripples out to further challenge and deepens the ideological crisis of free market neo-liberalism that has been dominant since the early 1970’s.

Milton Friedman and his Chicago boys greatly influenced by Keynes nemesis Friedrich Hayek argued the ‘supply side’ case: that market will work if they are free of distortions, one of the biggest of which is state spending and the public sector.  As Naomi Klein documents in her book The Shock Doctrine large corporations, the rich and parties that wanted to break away from the post war social democratic settlement, brutally used these ideas to re-gain control over labour costs and the working class – Thatcher among them - and, until recently, were the new economic ‘common sense’ against that of Keynes. Scandals like the Libor one, also hit at the heart of this ideological framework: self regulated ‘free’ markets end up being rigged to the benefit of those who have the power to access them. Since the start of the 2007 financial crisis the rapidly accumulating evidence on how the neo-liberal theoretical narrative is itself bankrupt has given confidence to writers to mount an effective critique. For me John Cassidy in his book How Markets Fail provides one of the best that is written from non-Marxist perspective. The double economic and ideological crisis has also bought to the critical fore radical Keynesian ideas such as those of Hyman Minsky who sought to demonstrate how financial crisis are an integral and destructive part of how capitalism works.

What these writers also suggest is that time has moved on and simply turning the clock back to a Keynesian alternative may not be possible. We are where we are in a historical process: since the time of his writing capitalism is more integrated globally, has penetrated more areas, corporations have undermined the role of the state where they have not captured them outright and markets are rigged and corrupted. Trying to stimulate the economy through quantitative easing (printing money) has just resulted in banks stuffing their coffers and in the UK we are experiencing an investment strike with UK corporations sitting on £754bn alone. If the comfort zone of Keynesianism is unlikely to be easily repeated what are the options for the left? We will have a look at the extent that a more radical Keynesian and a distinctive Marxist perspective may provide some answers next week.

News and action

Dear Comrades

This is the first of what we hope will be a regular – generally weekly - email from Welsh Labour Grassroots, a network of activists of the left and centre left of the Labour Party in Wales.

This blog also has information relating to the basic position of WLG, a link to our existing but little used website and, if you are a member of the Labour Party, how to join and provide support to our activities. Sympathisers who are not LP members are most welcome to receive and comment on our emails through our blog - just as is currently the case on our WLG Facebook page - and if you wish submit sources and other information to us to be added to the posts, which may help in our discussions and joint action. All posts on the WLG blog will be signposted through Twitter and Facebook.

As this is the first email the structure is a little experimental and will evolve with experience and comments. It is also suffering from new enthusiasm so is rather long.

Left week

With Boris being very really and symbolically caught by a zip (wire) and inviting the Digger to sit with him it appears to sum up August and the silly season. I’m sure Steve Bell will have a field day as it fully represents the Tories and our unfortunate predicament that they are in power over us and we have to suffer the consequences. Yet the ‘season’ does not halt the crisis of capitalism and the financial pages remain the most interesting read - more of which later – and horrific reports from Syria become the hardest to read and understand.

Left roundup

Mixed views on Hollande’s financial transaction tax in Left Foot Forward.

At last the state harassment of the disabled starts to hit the main news in Liberal Conspriracy.

Bankruptcy and further private control of the English NHS covered in list of those hospitals most at risk Labour Left

Unite’s new video on work in UK 2012 and what would be an alternative economic policy now Left Futures.

Labour Party

UK and Welsh Labour websites

The Cardiff South and Penarth campaign has started with Stephen Doughty as the candidate – ‘phone 02920 877700 to be involved.

Welsh Labour Grassroots

The last WLG meeting on Saturday, 21 July' heard a powerful presentation from Bob Clay on the economic, political, military and moral arguments against Trident, which we hope will form the basis of a blog post in the near future. Also encouraging hearing about good the work being done by newly-elected socialist Labour councillors in Swansea, Bridgend, Cardiff, Newport and elsewhere.


Follow the excellent stand taken by comrades in Cardiff in support of the homeless.

Labour Representation Committee website is an excellent source of activity both in terms of direct action, argument and action within the Labour Party. The most important mobilisation with be the 20 October TUC demonstration for ‘A Future That Works’ this is an opportunity to oppose all the Tories have been doing and to demonstrate that we have an alternative as well as showing by action solidarity with comrades across Europe. We should try to ensure that it is the largest demonstration ever in the UK and here the LRC has a lot of advice and suggestions about how we can help build support within the Labour Party.

Resolutionary socialism

A model constituency motion to support the 20th is here and one for the 68 is too late campaign here. Use these motions to best effect in terms of gaining support and involving members in the discussion raise and speak to them at your local branch first.

All the best

Darren Williams WLG Secretary
Len Arthur WLG Assistant Secretary