Though Cowards Flinch

Anthony Painter has an interesting article up at Labour List about Labour, and the possibility of an EU referendum if it comes to power in 2015. 

It’s good that the debate is now being had (I had first say on it a couple of weeks ago, but it does take other blogs a while to catch up), but I disagree wholly with Anthony when he advises the Labour leadership thus

Act irresponsibly and the consequences could be severe. This is one of the moments when indecision is justified. Don’t play political games with the national interest.

With this, he’s a bit too close for comfort to Alex Massie’s sneering rubbish at the Spectator:

The Better Off Outers at least have a respectable case for their beliefs and, rather importantly, actually believe Britain would be better off outside the EU…….That can’t be said of a party that so obviously makes a game of what might be thought quite an important issue.

The problem for both writers (and for Gabby Hinsliff/Mark Rusling) is that they fail to recognise that:

a) The European Union is not what it was pre-2008;

b) By consequence of a), it is perfectly admissible for the Labour party to adopt a wholly different stance to the EU from the one adopted in 1974, and that it does not need to be bound by its previous support for EU membership;

c) This would not be playing games with the national interest, the electorate, or anything else; it would be developing a coherent political position to put to the electorate.

So, I’m sure readers will be asking, if I had the Labour leadership’s ear like Anthony has the Labour leadership’s ear, what would I advise and why?

My advice to Ed and Jon would go something like this.

First, clarify why Labour thinks a referendum in 2018 or so would be a good idea.  This is because, in the wake of both the 2008 crash and the Lisbon Treaty (1), the European Union is markedly different from the one that British voters chose to join and then remain in.  

This is the opportunity to differentiate Labour from the Tories over Europe.   Labour should be openly critical of the way the institutions of the European Union has been hijacked by the Right to set disastrous neoliberal policies in law.  

Unless this can be changed in the 2014-18 period, Labour should say, then it may well be that Britain will be better off outside the EU.

Second, make clear that for the reasons set out above Labour has not yet decided what position it will take when it comes to a referendum.  

The reason Labour wants to defer a referendum to 2018 or so is not because it is ‘playing games’, but because it is developing a clear strategy to engage with other centre-left governments and parties in Europe to change what how the EU operates; only when it has had a chance to do this will it be in a position to decide whether in or out is in the national interest.

In short, Labour should be showing that it’s leading the charge to change European institutions for the better, not simply accept it for what the Right has made it.

Third, recognise that 2018 is a long way away for voters.  After all,  around 8-10% of people voting now will be dead by then.  

Thus, a 2018 referendum promise must be tied explicitly to the 2014 European parliamentary elections.  Labour should be stressing right now how important these elections are;  the national parties that make up the Party of European Socialists (PES) has  a real opportunity to take an overall majority in Strasbourg, and with that majority comes the opportunity to amend European law currently stacked against the working class/ordinary people/the poor. (2)

Fourth, the importance of the 2014 election should in turn be linked to Labour’s selection process for those elections, likely to take place later this year/early 2013. 

As a display of  strong leadership combined with evidence that Europe really, really matters to Labour now, Ed Miliband should take to conference plans to rejig the selection process in the way Jon Worth suggests i.e. by opening up the list to non-incumbents as part of  wider process to re-energize Labour’s team in Strasbourg for a parliamentary period when fundamental battles will be fought about the nature of Europe’s institutions.  

It is an indictment of the current system that someone like Jon, a socialist who has lived and breathed Europe for a decade, feels he has absolutely no chance of being selected, primarily because he’s actually spent his time in Europe rather than oiling the selection wheels in London.

In summary, Labour needs to be bold on Europe, and go much further, much sooner, than the first tentative steps it has taken in the right direction.  It needs to see itself as a pro-active force on Europe, aggressively differentiating its own pro-activity from the reactionary little-Englander nonsenses of the Tories. 

Labour (and the commentators who support it) need to stop worrying that an EU referendum will ‘define’ Labour’s first parliamentary term (assumed to be in some way for the worse), and instead be confident that it will be seen by voters as an integral part of strong Labour party project.

Labour needs to enunciate clearly that Europe is not currently working for working class people, because its institutions have been captured by the Right, and it needs to have a clear plan for their recapture by the Left.  This is not an anti-Europe stance. This is an anti-rightwing Europe stance.

Labour needs to be clear on what it means by European democracy, and it needs to put in place the right people to make European democracy work. 

Finally, Labour needs to ensure that what Europe does now, and what it can do, is understood by the electorate, primarily through the prism of the financial mess we’re in now.  People now ‘get’ Europe, in a way they didn’t in 2008.  Labour’s job is to build on that new consciousness.

(1) In particular, Labour should focus on the need for a (centre)-left led redrafting of the Lisbon Treaty. 

At the heart of the mush-that-is-now-Europe is the establishment of the Council of Ministers as a decision and law-making body in direct competition with the European parliament, as evidenced that we now have two sets of laws concerned with fiscal management of the Union – one an (unratified) intergovernmental treaty in the form of the Fiscal Compact, and the other the ‘six pack’ of regulations already made law by the European parliament.  Officially the European Commission says that these will work ‘in parallel’, but in reality they reflect a power struggle between two competing ideas of what European-level democracy is supposed to be.

Labour should therefore be clear that it favours the European Parliament as the supreme lawmaking body, while also making it clear that it is committed to ensuring that it has the best possible MEP team in there, rather than allowing the (strong) perception to continue that being a Labour MEP is a ‘gravy-train’ job for people who have served the party loyally. 

Part of this overall process should be a strong commitment – noticeably lacking to date – to the PES ‘fundamental programme’ review and ensuing manifesto development, such that all PES parties across Europe enter the 2014 election with a common manifesto for socialist change in a bold attempt to make the elections something other than a mid-term referendum on domestic government.

(2) I have already covered two areas of European law that I think should be subject to radical socialist amendment in the event of a PES majority in 2014.  Of course there are others (notably around sustainable agriculture and the CAP) but I’d want to see these at the top of my new-style MEP’s priority list.

First, and as noted above, the six-pack regulations on the implementation of the Stability & Growth Pact, which currently enshrine in law neoliberal economic orthodoxy, should be dismantled and replaced with a set of Keynesian prescriptions for management of the economic cycle (or the law simply annulled and macro-economic management handed back to national governments in the event of the end of the euro).

Second, PES should impose through its majority the amendments it failed to get through in 2011 on the human rights safeguards needed when it comes to the development of (free) trade with the developing world.

John McDonnell MP has asked TCF to publish this statement.  We’re happy to oblige.  John says of the statement:

It is not meant as a definitive statement but at least a broad depiction of what a radical alternative would comprise.

I am asking people to consider putting their name to it so that we can continue to circulate it to the movement.

Please let me know if you are willing to put your name to the statement by emailing me on mcdonnellj@parliament.uk.

The Radical Alternative to Austerity

The austerity programme of the Coalition government is not just failing; it is prolonging and deepening the recession. Cuts in investment in public services, in jobs, wages, pensions and benefits are creating mass unemployment and mounting hardship.

Austerity is creating a spiral of economic decline as cuts produce high levels of unemployment which in turn reduces tax income and prompts another round of cuts and job losses.

The Government’s austerity measures are also unfair as the only people the Government seems intent on protecting from the recession are the rich.

There is an alternative to austerity

There is no lack of wealth and resources in our country that we can draw upon to tackle this recession. The problem is that this wealth and these resources are held in the hands of too few people and are not being used productively to create the growth and jobs we need.

If we can release these resources, we can overcome the current recession and start to build a prosperous future for our country, linking with others across Europe and the United States to overcome this global economic gridlock.

Releasing the resources within our own country is not difficult.

It simply requires the introduction of a limited range of redistributive measures which will raise the funds we need from those most able to pay and who have profited most out of the boom years.

This redistribution can be achieved through;

• a wealth tax on the richest 10%;
• a Robin Hood tax on financial transactions;
• a Land Value tax;
• the restoration of progressive income tax of 60% on incomes above £100,000;
• and a clamp down on the tax evasion and avoidance that is costing us £95 billion a year.

Investing the resources released can halt the spiral of decline.

With unemployment rising month by month we urgently need to get people back to work and earning a decent living.

We can do this by investing the resources we have released through taxation in modernising our economy, its infrastructure and our public services to meet the needs of our community.

Instead of cutting and privatising our health, education and local services, this means:

Investing in a mass public housing building and renovation programme, in universal childcare, in the modernisation of our public services, in the NHS, in creating a national Caring Service, in our schools and colleges, in our transport infrastructure and in the extension of broadband.

Investing in alternative energy, combined heat and power and insulation to both tackle climate change and create one million climate change jobs.

Establishing a national investment bank with the resources levied from the banks so that there is no shortage of funds to lend for manufacturing growth and research and development.

To be successful the recovery programme has to be fair.

We will need the support of a significant majority of our people if we are to drive through this type of radical regeneration and redistribution programme.

To gain this level of support means the Radical Alternative must be seen to be fair. This means addressing many of the inequalities of our current system.

For those at the top it means ending the bonuses and limiting high salaries to no more than 20 times the lowest paid in any company or organisation.

For all others it means replacing the minimum wage with a living wage and a living pension and living welfare benefits, reducing the working week to 35 hours, closing the gender pay gap, controlling rents and energy prices, and restoring rights at work.

For young people it means a guaranteed job, apprenticeship, training or college place for every young person with the burden of fees abolished.

There is no shortage of resources to implement this programme of reform.

The problem is the distribution of these resources.

The Radical Alternative simply releases the resources we have to regain control of our economy and invest in our future.

Never again can we let them say that there is no alternative.

There are a striking number of self-declared British socialists expressing the view that Greece will be better off just defaulting on its debts and leaving the euro.  Leaving the euro, goes the argument, will be a victory for the Greek people, and a real slap in the face for the Merkelian forces of austerity.

This is total bollocks.  It’s also totally unsocialist.

Leaving the euro (and re-establishing the Drachma) may well be exceedingly good for a few Greeks, but it will be very bad news indeed for the vast majority.

While it’s impossible to say exactly how leaving the Eurozone might pan out, these will be among the consequences*:

1. Within a day of the creation and flotation of the New Drachma (probably only electronic and virtual at first as it will take three to four  months to print a new currency in sufficient quantities), its value will crash against ‘hard’ currencies, and the purchasing power of Greeks for anything imported will be slashed.  It’s impossible to know by how much, but a cut of 75% purchasing power is certainly not out of the question. 
2. In an internationalized economy like Greece, there is no such thing as ‘out of the euro’. Most rich Greeks able to do so will already have stored their wealth elsewhere and the capital flight will continue to happen.  The idea of proper capital controls is frankly fanciful.  As holders of still-valid euros, or other ‘hard’ currencies, they will then be in position to purchase both the assets and labour of the mass majority of increasingly desperate Greeks at rock-bottom rates. 
3. A dual economy will swiftly emerge, as in pretty well all countries without their own hard currencies.  This will further deepen inequalities in daily life, potentially even with usual services and products only available to those with access to hard currency, as will the emergence of black market currency trading, where the New Drachma is even less valuable than at the official exchange rate.
4. This might be exacerbated by the government seeking (understandably) to gather its tax revenues in hard currencies, although for the long-term it is better off using taxes collected in New Drachma as a way of stabilising and promoting its use within the wider economy (cf. by way of contrast Bristol City Council’s innovative plans to accept business rates payment in the “Bristol pound” as a way of promoting its use as a tool for local economic sustainability).

In short, then, it seems bizarre that socialists should be arguing for a ’resolution’ to the current crisis, whereby ordinary Greeks fall prey to even greater exploitation, and wealth inequalities become even starker.

Fortunately, the signs are that SYRZIA have decent economists, who realise what the official exit from the Eurozone would mean for their constituents.   While they are firm in their commitment to ending self-defeating austerity, they have already stated that they want Greece to remain in the Eurozone.

If British and other European socialists really want to help their comrades in Greece, they would be better off stopping the reality-free anti-German rhetoric, and starting to throw up alternatives that might assist their Greek comrades, as the latter enter an inevitable period of brinkmanship with Merkel and the European Commission.

One alternative already exists, of course.  This, as our very own union economist Duncan Weldon has set out, is through “artificial devaluation”:

By imposing a duty on imports and equal subsidy to exports a country can, in effect, devalue its currency without leaving the Eurozone. A, say, 15% surcharge on imports and a 15% subsidy to exports in Greece would be effectively a 15% devaluation in the currency.

As these countries run deficits it would, at first, be fiscally beneficial as the surcharge on imports outweighed the costs of subsidised exports.

When Duncan mooted this to economist colleagues in Rome the other week, he wasn’t laughed out of the room in the way he might have been a year ago.  Of course there is a reluctance even to think about tinkering with the fundamentals of the Single Market in this way, but as ‘eurogeddon’ approaches for both Greece and the rest of Europe, a temporary fix like this may start to seem an awful lot more attractive, and it might be possible to reach a compromise which includes a fix like this alongside a further debt ‘haircut’ for creditors, in a way which allows both Merkel and co claim that they’ve not let the Greeks of scot-free, but bringing the debt repayments into the realms of the achievable (or at least creating a breathing space while a new haircut plan is developed). 

For ordinary Greeks, artificial devaluation would also mean a major hike in prices, just as leaving the euro would, but at least it would affect ALL Greeks.  That may be preferable to a massive and permanent shift in the balance of financial muscle in favour of the part of the population that got them into this mess in the first place.

The question for socialists outside Greece is whether they prefer an end to this crisis which leave Merkel with egg on her face but the Greek people destitute, or one which lets Merkel leave office without the eggy bits but keeps the Greek people somewhere above the bread line.

Call me a hoary old social democrat washout, but I know which I prefer.  

* For a much more detailed assessment of how the euro would end as the national currency of Greece, and the New Drachma be established, Modern Monetary Theorists like Edward Harrison and Marshall Auerbach are helpful. 

Note, however, that they favour exit from the euro and the establishment of the New Drachma because they fail (or do not want) to see the economic consequences for real people, preferring instead to see Greece as a test case for their theories about how a new currency might be established  through the use of coercive currency switching (aka. theft) and Drachma-based taxation.  They also appear totally unrealistic about the capacity of the Greek government to impose its political will throughout its bureaucratic machinery.

Owen Jones is on ‘cracking’ (his term, not mine) polemic form in the Independent, telling us:

Until now, Britain’s anti-austerity movement has been fragmented and lacking in direction.  The new winds blowing in from the Continent could change all of that.

Fair enough.  

But this bit makes my blood boil*:

Those calling for a “No” in the upcoming Irish referendum on the EU Treaty – slammed as an “Austerity Treaty” by opponents – feel momentum is on their side, too. “The people of France, the people of Greece are against the policies of austerity and it is now the moment for Ireland to add our voice to that,” declared Mary Lou McDonald, a leading anti-Treaty politician.

It makes my blood boil because it gives the completely wrong impression to readers that a “No” to what Owen (justifiably) calls the Austerity Treaty will actually change anything.

It won’t.

This is because this Austerity Treaty – officially the Fiscal Compact – is little more than a show of political strength cooked up by Merkel and Sarkozy as a late desperate attempt to ward off Sarkozy’s defeat.

If, as looks likely, it is not ratified by all the 27 member states, it doesn’t matter one jot, because  (in Owen’s own terms), Keynesian fiscal expansion has already been made “illegal”.

Keynesianism was in fact made illegal on 16th November 2011, before Merkel and Sarkozy announced their grand new plan.  It was made illegal when the European Parliament signed into law the ‘six pack’ of regulations for the renewed implementation of the original Stability & Growth Pact, put together in the 1990s but broken by Germany itself in the wake of its reunification spending.

All the relevant details are here, and my formal submission to the Party of European Socialists on what the Left should do about it is here.  

It’s really, really, not that hard, and I simply can’t understand why the Left commentariat can’t get its head round the fact that the Merkozy Treaty is anything other than a diversion. 

Read the bleeding small print, you leftie commentators.  It’s what you’re paid to do (or it should be).

* Actually, it doesn’t make my blood boil at all.  Owen has written a quite legitimate piece aimed at wider concientization rather than specifics of what we need to do next, but I thought if I pretended to launch a personal attack on him, someone might read what I had to say. Still, I do hope he reads this and writes something based on the details I seek to get across.

Carl on this blog has just today touted his idea that the BNP are finished, backing it up with a Martin Goodman article from the Guardian site about the BNP getting pretty much annihilated at the May 2012 local elections. It’s entirely possible that they are right, and that the BNP is finished as an electoral force, and that some role was played by Hope Not Hate and other campaigns which used their manpower to get out an anti-BNP vote.

There are some cautionary notes to be sounded. First, the degree to which it matters how well the BNP do is limited. Their efforts to turn mainstream are not about to be abandoned, and there are other groups out there which have learned some of the lessons – and which have in turn had a right-wards drag upon Labour’s leadership courtesy of “Blue Labour”. I mean, of course, the English Defence League and their new political aspirations.

Second, BNP councillors by and large voted just like Tories, so in terms of the actual presence of these 57 (and now a damn sight fewer) people in council chambers, the practical effect is like eliminating that number of Tories. Though it bears mentioning that in one of the six wards the BNP just lost, it was lost to a Tory, who will almost certainly continue a record of voting for privatisation, cuts to services and piss-poor planning decisions.

This is quite an important point, as it gives the answer to those people who condone working with Tories if it means getting rid of the BNP. Tories, being the immediate political face of capitalism, cause fascism. They attack every means of working class subsistence and culture that can’t turn their mates a profit and then when the workers complain, they blame it on human rights, political correctness, immigrants, homosexuals and Jews, or Muslims these days.

Third, and linked to point number two, electoral armageddon or no, the physical force mob of the BNP will almost certainly go nowhere, except to other parties or groups who can offer them the same sort of opportunity for getting their bald heads and beer bellies on national television. This is a serious issue, as these people are the shock troops who can break up opposition to fascism at a community level.

Fourth, this defeat might not have the morale impact we expect, thanks to the parallels with the electoral eclipse of the NF post-1979, and the cautionary tale that will give to any thinking fascists out there, contradiction in terms though that may be. Griffin and his crew are bound to be aware of this, most of them having lived through it. Even if these aren’t the lessons they draw, the survival of Griffin as leader indicates that he’s found some means of innoculating himself.

The historical parallels I mention have even more importance for us socialists however, and our political understanding. The election of a Conservative government starkly poses the issue of class. Then as now, a Tory government cut social spending and attempted to extort ever greater productivity out of workers, through the threat of unemployment.

The most politically aware layers of the working class, perceiving the attacks, moved to galvanise resistance through the unions, through anti-cuts groups and through socialist organisations.This socialist and working class resurgence can, by bringing in new layers of workers to political activism, demoralise and push out the fascists.

Labour, offering an immediate electoral alternative will be the key beneficiaries in the early stage of this process, by virtue of being not-Conservative, and will claim back all those who voted Lib-Dem in 2008, since the Lib-Dems no longer have the political space to pretend to an alternative. This is hardly any different to the elections of 1981 in which the Ken Livingtone-led GLC was elected; the NF share of the vote dropped there too.

That Labour’s alternative cuts, “not so far, not so deep”, are not a viable long-term option beyond the first euphoric wave of having dispensed with the arch-enemy is neither here nor there. Hence in Burnley, where another BNP councillor has bitten the dust, Labour have also reclaimed at least four seats from the Liberal Democrats, who won them in 2008.

In the Amber Valley wards of Heanor East and Heanor West, the voting figures stack up as follows; the Tories in 2008 scored 482-412, then 391-381 in 2012. Labour scored 454-560 in 2008, then 744-838 in 2012. Meanwhile the BNP went from 537-727 in 2008 to 284-272 in 2012. The left-wing party, such as it is, gained from both the right-wing parties, and this gain was replicated across the country, by and large, and is a cause for a small celebration.

It is only a small celebration because Labour’s resurgence can be halted in its tracks by the short, sharp demoralisation of the organised working class, in the form of defeats of the industrial action sweeping the country. Despite the electoral jubilation, this is a defeat which the Labour Party is doing nothing to avoid and is in fact actively encouraging, with constant disparaging remarks in the press not to mention obstructionist tactics by Labour bureaucrats in the unions.

It’s also a small celebration because Labour’s political strategy is akin to blowing their own heads off, should they actually win the next election. They will immediately and massively undermine their own working class support by instituting cuts across the board; if these are not so deep as the Conservatives, I’m sure that will be of some consolation to the people having their wages cut by £900 instead of £1000, or who are one of nine hundred and not one of a thousand made redundant as public services are cut to the bone.

Such a strategy is all Labour has, and this will not change, period. It will definitely result in a much bigger Tory government being returned to office shortly thereafter, unless something changes drastically – or, as in Greece, some new force emerges from the chaos to challenge Labour from the left.

Ironically, it’s this very threat of a Tory government which would be used against PLP backbenchers to shore up the leadership. And the reason Labour goes around and around in these circles is because it has no class-based analysis and cannot see any further than the wafer thin difference between Labour and the Tories, or any further than the next election for that matter.

Class is the fundamental, unavoidable division in capitalism, created by the very structure of how we produce everything of which the modern world consists. At times of crisis in capitalism, all other questions become subordinate to this one fault line. This is one fault line which Labour cannot understand, even as it is pushed to defend the working class by virtue of its historical traditions. It is intrinsic to capitalism, outside of which Labour refuses to step. It can and will only be solved by a revolutionary party that unites the working class to abolish capitalism.

As disappointing as it may be to some long-time blogofriends, who really despise him, I am resolutely indifferent to George Galloway. This might be seen as some political lapse on my part. After all, only the other week I was expressing my sympathy for Peter Cruddas, the Tory apparatchik caught trying to sell access to our dearly beloved PM.

Even so, when reading the headlines over my cornflakes today, I did laugh very hard indeed at Galloway’s absolutely massive victory in Bradford West. I laughed harder still at the lightning speed responses from Labour people on Twitter, which amounted to “Bloody [insert ethnic or religious minority]“. I’m not joking there. That’s really what it came down to.

Let me clarify. A lot of people are talking about the “machine politics” practised by some Asian communities, and suggesting that Galloway has appeased the powers that be there, to win the votes they can command – a little like Tammany Hall. It is entirely possible that Galloway benefitted here (and I make no claim to authority in the matter) but it is rather hypocritical for Labour to attack it, as if it is true that Galloway benefits from it, then in many areas Labour also benefits from it. Or the whole conception might be a vaguely racist appraisal by people who stand outside those communities.

In any case, an 18,000 strong vote, based on slogans like “Real Labour not New Labour”, “Stop this Cuts Madness” and “Stop the Break Up of the NHS” (as well as the expected “Bring Our Boys Home” tropes), is not easily dismissed.

I am not a Respect supporter; I think they are a dead-end, and I think Galloway is an unaccountable, uncontrollable celebrity personality, rather than the sort of local campaigner I’d be more comfortable voting for (see TUSC for further details). But in the Bradford West by-election there was no one else to vote for, if deciding purely on the basis of what the candidates said in their electoral material, which is presumably the only contact most people had with the matter.

The key question is, having won this by-election, what is Galloway going to do now? Those who enjoy ridiculing him have made much of  his Celebrity Big Brother shenanigans, as being “disrespectful” to his constituents etc etc. Again I’m seized by indifference over the matter – though it might give a tell-tale indication as to what sort of MP Galloway might be. It bears saying, however, that as with the “machine politics” stuff, Labour people voicing their discontent are somewhat hypocritical. I’m sure Ed Miliband would jump on any TV show going if he thought he would win the election as a result – only he’d probably have to call in at Hackett’s for a bespoke personality and not just his usual custom-made suits.

Is Galloway, on the other hand, being the darling of the media because he seems immune to embarrassment, going to run a media-luvvy orientated campaign henceforth, or is he going to be in Bradford High St, manning the anti-cuts stalls? He should be. Such a high profile victory, allied to the right campaigning strategy, could galvanise the whole working class of Bradford to come out and fight the cuts. There are practical tasks at stake; the coordination of local union action, the preparation of anti-cuts candidates for council, on a “needs-budget” slate, and the extension of cooperative efforts to other nearby areas, such as Leeds, where the cuts are biting just as hard.

A high profile figure can lend weight to that strategy, which is really the only strategy.

Is that to be George Galloway’s role? We don’t yet know, so we don’t yet know what the significance of this by-election will be. We know it shows discontent – but whether or not that discontent can be turned from a passive kind, that results in one-off by election votes, into an active kind that will defeat the cuts…therein lies the real question mark over Bradford. Everywhere on the Left can be felt Labour’s ebb, particularly from those unions which move into struggle whilst Ed Miliband talks about “resolution at any cost” (which means “at any cost to workers”, as we know from experience).

What force will replace it is still up for debate – and replace it something will. Bradford notwithstanding, Labour are still the main repository for the votes of the passive resistance. As workplaces move into active struggle, Labour people find themselves standing by the wayside. People don’t forget that the pickets of the last year or so were not that long ago pickets erected against the policies of a Labour government. Moreover, that active struggle demands answers which Labour cannot supply. The election of a Labour government is only the end of Round One in the battle against the cuts – the battle against capitalism.

Round two will be the creation, through the struggle against that Labour government and its equally repugnant cuts, of the organs of an alternative, unifying and representative seat of working class power.

In Bradford, the local paper reported in 2009 that 41% percent of the areas in the district are among the most deprived in the country. Labour people can do all the whinging they want about machine politics – but there are very good reasons for the people in this area not to vote Labour; a Labour council, tarred by Galloway with the same cuts-loving brush as the Tories, could not save a Labour candidate from being absolutely annihilated. That is telling enough as to the continuing abysmal state of the Labour Party.

Lastly, the Lib-Dems apparently lost their deposit. May there be heaps more of that, thank you very much.

10 days ago, Spanish Prime Minister Mariano Rajoy told Angela Merkel and the European Commission where they could stick their Fiscal Pact. 

He signed the pact, then promptly announced that Spain’s deficit budget target for the year would be 5.8%, not the 4.4% agreed with Brussels.

This took a lot of people by surprise, and accepted wisdom might have expected the markets to signal their displeasure at such blatant reneging on fiscal discipline.  

On Monday 5th March it looks as though the markets might do just that: 10 year Spanish bonds started to rise and soon topped 5% from their 4.95% starting point  On Tuesday they continued to climb, reaching 5.1%.

Then they fell.  Steadily, through the rest of the week, the rates fell back and closed on Friday at 4.99%, just 0.04% above where they’d started.  What had looked on Monday morning like it might be an inexorable move towards the unsustainable 6% level now looked consistent with a few moves from traders trying to get ahead of the game (and subsequent “herding“), followed by a realisation that nothing much had changed, and there were no great gains or losses to be made.

This little episode is, I suggest, provides a big lesson for the British Labour party.

Since the Autumn, Labour has been busy developing its new economic policy narrative.  This is encapsulated by the sages from the influential In the Black Labour team, who preach the overriding importance of “credibility“:

Taxpayers, voters and lenders to the British state feel they have a right to know what the main opposition party would do about high levels of borrowings and when they would do it by. Satisfying this demand is fundamental to being regarded as a credible alternative government.

At the heart of this new “fiscally conservative” narrative, though, lies a key false assumption.  This assumption is that “the markets” will always demand fiscally conservative policies, and will use their muscle to enforce these, through increased borrowing rates, if governments do not toe the line.

But 2012 is not 2010.  Those who work the bond markets for themselves or (mostly) for their financial institutions read the same economic news and analysis as the rest of us, and they recognise two things.   First, they know – much better than they did in 2010 – that forced austerity does not lead to economic recovery.  Second, they know that they stand to lose a great deal more if a country spirals towards default through enforced austerity than if it is allowed to pick a more sensible course of longer term deficit reduction.

Labour, however, is behind this curve.  It has taken a year since Miliband’s election for the hierarchy to work out that “credibility” can only be regained by talking tough on austerity, but in the time they have been reifiying* the markets in this way, they have moved on. 

This has negative consequences. 

Take last week’s PMQs.  Just as the markets were deciding that Spain had credible economic policies after all,  Cameron reached for the standard excuse for his welfare cuts: the government has a deficit to sort out and has to make difficult choices.   This time, he quoted Labour back in its face:

I think that it is time the right hon. Gentleman listened to his own shadow Chief Secretary, who said that “we must ensure we pass the test of fiscal credibility. If we don’t get this right, it doesn’t matter what we say about anything else.”

Cameron knows he’s on to a winner here.  As Labour Uncut points out, voters now appear to be more with the Tories on the need to cut spending than they were a few months ago:

Last Sunday brought a pivotal result in the polling. One of the intermittent questions asked by YouGov is whether voters prioritise action on the deficit or growth.

In last Sunday’s results, 38% agreed with the proposition that the government should stick to its current strategy of reducing the deficit, even if growth remains slow while 34% agreed with the statement that the government should change its strategy to concentrate on growth even if this means the deficit stays longer or gets worse.

For the first time, voters’ had prioritised tackling the deficit, and by a clear margin of 4%. In comparison when the question was last asked in late November, the numbers choosing growth had led by 1%.

Labour Uncut, being Labour Uncut, draws entirely the wrong conclusion from this polling, arguing that Labour should therefore focus on talking about where it will make cuts, not on where it will stimulate growth. 

In fact, the opposite should apply. Labour is currently caught in a trap of its own triangulation (or maybe that’s triangulatory reification).  The more it kowtows to fiscal conservatism, the more the voters appear to distrust it; after all, if you want fiscal conservatism, at the beck and call of the markets, as an overriding priority, and irrespective of the social costs, the Conservative party is bound to be a better bet.

While Labour triangulates the votes out of itself, Spanish rightwinger Rajoy has just provided pretty good evidence that the markets are, if the political will is strong enough, not the implacable force for austerity they’ve been taken for.  Meanwhile, across the Pyrenees, a central aspect of Francois Hollande’s campaign is the denouncing of high finance, and a commitment to growth over austerity**.  At the moment, lest you hadn’t noticed, Hollande is on course to win.

Labour, rather than working within the confines of the supposed economic realities set out by In the Black Labour, should be committing itself to change those realities.  Then, as in France (and even in Spain), the electorate might at least sit up and take note.

* By reification I simply mean ascribing to ”the markets” an independent “in themselves”-ness, tending to automaticity of action, rather than seeing them as a set of actors open to economic and social influences (while recognising that some trading is carried out via computer algorithm to the point that, in some cases, “the markets” might actually be acting automatically).

 ** This is not to say that Hollande’s campaign is without its commitments to spending restraint, but the broad narrative set out in his 60 engagements and subsequent speeches is about contesting the Merkozy orthodoxies, principally through a commitment to a renegotiation of the Fiscal Pact, where – strangely – he may now find he has support from Spain.

When Cameron vetoed the ‘Merkozy treaty’ in early December, it meant that the deal could not be signed off as a variation to the Lisbon Treaty, and that any deal would need to be an intergovernmental treaty of the 26 participating countries.  As such, any deal is separate from the workings of the European Union.

This threw into doubt whether the 26 countries signing up to the Merkozy “non-EU” treaty could legitimately use the Court of Justice of the European Union (ECJ) to police the deal and punish states which failed to abide by the proposed fiscal rules.  At the time, Cameron threatened legal action to stop the other 26 governments trying to use the ECJ in this way.

Unsurprisingly, now that he’s gained cheap political brownie points from using the veto, Cameron’s not bothered about pursuing this threat.  Diplomats are calling it a “heat of the moment” thing, and it’s being dropped as quietly as possible. 

This does, however, raise an intriguing possibility.

If the 26 member states now do go ahead uninterrupted and sign offtheir economically absurd pact, and include within it provision for ECJ ruling authority, it sets an important precedent for any set of European countries to come together, bash out a deal, and then call on the ECJ to do its thing.

Logically and legally, what could stop Francois Hollande, coming together with other like-minded European countries to sign a pact running entirely counter to the Merkozy pact, and asking the ECJ to be the binding arbiter on that too? 

After all, Hollande has already set out a clear manifesto promise around the need for a new ‘pact’.

Je proposerai à nos partenaires un pacte de responsabilité,de gouvernance et de croissance [growth] pour sortir de la crise et de la spirale d’austérité qui l’aggrave. Je renégocierai le traité européen issu de l’accord du 9 décembre 2011 en privilégiant la croissance et l’emploi, et en réorientant le rôle de la Banque centrale européenne dans cette direction. Je proposerai de créer des euro-obligations [Euro-bonds]. Je défendrai une association pleine et entière des parlements nationaux et européen à ces décisions. Cinquante ans après le traité de l’Élysée, je proposerai à notre partenaire l’élaboration d’ un nouveau traité franco-allemand.

Why would this new pact have any less legal weight than the one now being rushed through before Sarkozy is sent packing?

The  like-minded countries Hollande needs for such a scheme might include Spain, whose (rightwing) government is now calling for a ‘new realism’ about how to manage the economic crisis in light of its descent into economic chaos, and Greece,  fuming at Germany’s proposal to make its government subservient to an EU budget commissioner. 

It might, in 2015, also include Britain (or England/Wales/NI & Scotland) if Labour were minded to push for an entirely new approach to the European economy, something Ed Miliband at least hinted at in Davos this week (though clearly ideas on what to do are not yet formed).  If Labour has its wits about it, it should see jumping on the Hollande bandwagon, in a common drive to reorientate the EU towards the welfare of its people, as a very attractive proposition.

The alternative ‘Holliband’ pact might include shared commitments to investment in jobs, with targets for the reduction in unemployment levels, as a mirror to the stupid fiscal targets advocated by Merkozy, and call on the sanction of the ECJ for countries that failed to meet the employment and other needs of its citizens.

Clearly, two diametrically opposed  intergovernmental pacts, formed outside the EU but calling on the same EU institution for their operative legitimacy, would create a legal and institutional crisis at the heart of the EU that Cameron could never possibly have dreamed of when he stook his foot in his mouth in December, but that might well be better than simply allowing the current rightwingers in France and Germany to carry through their plans for the outlawing of  socialist econmics in Europe.

And what better payback for Cameron’s arrogant but wholly ignorant politicking with the EU than for him, in time, to see it used as the opening for a few Left front for a new Left ascent in Europe.

The obstacle to redistribution of income on any meaningful scale  is identical with the obstacle to explosive, never mind expanded, growth; to overcome it is to defeat the basic interests of neo-capitalism as a corporate structure. 

It will be impossible to generate the kind of pressure which can effectively sustain Peter Townsend’s priorities [around poverty] without mobilising a really substantial campaign within the Labour and Trade Union Movement.  Only a mass movement can have the effective force to override the bankers’ insistent and effective lobby.

It is necessary to evolve a coherent strategy, a policy which will integrate the extremely valuable findings of these Fabian researchers with an overall plan for the socialist reorganisation of the economy, based on structural and anti-capitalist reforms, and an extensive development of trade union powers through workers’ control.

Ken Coates (1967), Dismantling the Welfare State, in The Crisis of British Socialism: Essays on the Rise of Harold Wilson and the fall of the Labour Party (p. 157-8)

I’ll admit to being a bit nonplussed by today’s media coverage over the Health and Social Care bill, and the ensuing twitterstorm. 

The BBC, for example, announces:

NHS hospitals in England will be free to use almost half their hospital beds and theatre time for private patients under government plans.

A recent revision to the ongoing health bill will allow foundation hospitals to raise 49% of funds through non-NHS work if the bill gets through Parliament.

Yet the removal of the cap on private income was in the bill as it was set out in its first reading to the Commons on 19th January 2011.  Clause 150 in that original version announces the end of the caps put in place by Labour:

In section 44 of the National Health Service Act 2006 (private health care), omit—

(a) subsection (1) (restriction on provision of private health services) (b) subsection (2) (cap on private income)…..

The amendment, agreed in the Lords on 15th December, and now inserted at Clause 163 of the Bill (the numbers change as the bill is amended) reads:

The NHS foundation trust does not fulfil its principal purpose unless, in each financial year, its total income from the provision of goods and services for the purposes of the health service in England is greater than its total income from the provision of goods and services for any other purposes.

There are a couple of point to be made on this amendment.

First, it is concerned with resolving concerns about whether the total lifting of the cap would open the NHS up to EU competition law.  It has nothing to do with any the core principle about the nature of the NHS. 

Second, the BBC is quite wrong to peddle the idea that to use “almost half their hospital beds and theatre time for private patients under government plans.”   The amendment refers to income totals, not to bed or theatre time. 

It is quite conceivable, therefore, that in fairly short order most beds/theatre time will be taken up by private patients, given that private providers will cherrypick the ‘straightforward’ patients from whom they can extract maximum profit, while leaving the more difficult, less lucrative treatment and care to be picked up by the public purse.

This is evidenced quite clearly in the Lord debate.  During the debate Shirley Williams argues for a strengthening of the amendment:

In my view, it would be very helpful if there were “belt and braces”, by which I mean a government amendment which would indicate that, in the case of foundation trusts, the majority of patients should be NHS patients. That is, there should be an unquestionable commitment to having a majority of NHS patients…..It is helpful in this complicated Bill to have some islands of clarity that those who are not experts in the field-again, I include myself-can understand. People could understand the simple concept that a majority of patients should be from the NHS, not the private sector.

Tory minister Earl Howe rejects this proposal:

I cannot agree with her [Williams']… arguments that support the need for an amendment. First, we do not agree that legislation should be used symbolically in this way. Foundation trusts’ principal purpose already covers the point that she raised. Secondly, even if we had such an amendment, it would not make any difference to how the courts interpret and apply EU competition law.

From this exchange it seems quite clear that the government envisages hospitals in which many more than 50% of all patients are private (thus opening up a future narrative for the near future that the NHS-funded minority are scroungers).

Overall, I stick with my initial view, set out in March 2010 when I’d seen the initial bill, that the NHS as we know it is effectively dead.  I don’t see major industrial unrest stopping it in its tracks at this stage, and many of the crucial parts of the NHS infrastructure has already been dismantled or will soon be beyond repair.

While of course the left should be doing what it can in the way of rearguard resistance, we should be wary of dilettantism (h/t Leon Trotsky, 1929), and focus on battles that we can win (more around commissioning than around provider services).

Instead to be looking at what a future Labour government should be committing itself to in the form of NHS II, without fetishing NHS I (which has had plenty of faults) and I’ll be writing a lot about that in the near future.