FRFI 166 April / May 2002

The labour aristocracy and imperialism

Part 6: Labour imperialism 1997-2002
Britain punching above its weight

This is the sixth and final part of an extended version of the talk given by DAVID YAFFE on the Labour aristocracy and imperialism to the Free University of Turkey in Zurich in May 2001.1

In the course of the longest recession since the 1930s, the Tory Party was returned to power in April 1992 for a fourth consecutive term with an overall majority of 21 seats. This was a devastating blow for the Labour Party and the trade union movement. With the changes that had taken place in the working class, the Labour Party had failed to build a social base sufficient to win parliamentary power.

In order to defeat the Tories, Labour needed to win back the votes of sections of the newly emerging labour aristocracy which had deserted it in 1979. To this end, it had entered the election with major policies almost indistinguishable from the Tories: privatisation, council house sales, limits on trade union rights, racist immigration laws, increased police powers, nuclear weapons. It had become a ‘fair tax’ party for the well-paid. It was committed to the European Union, to the Exchange Rate Mechanism, and strongly opposed a devaluation of the pound. Labour still needed, however, to ensure the votes of public sector workers, pensioners and the lower paid, and this required some commitment to increase state spending.

Funding this spending in an economic crisis posed a dilemma. An increase in taxation would hit those better-off voters who had deserted it in the 1979 election. The other option, to increase government borrowing to fund the extra spending, would lead to a public sector deficit unacceptable to the City with a consequent run on the pound, which Labour was committed to defend. In the event, Labour proposed a small rise in taxation to fund a very modest rise in public spending. The proposal to increase the top level of taxation to 50%, affecting those earning £38,000 or more, and to abolish the ceiling on National Insurance contributions, applying to those earning over £20,000, proved too much for the majority of better-paid workers and middle classes to accept. Labour would not make the same mistake again.2

Preparing for power
Only a day after the election Ken Livingstone wrote: ‘We must be able to build socialism without taxing middle class families till it hurts…In London and the South East, £21,000 is average earnings and should not have been the target for higher tax. I have always argued the figure should have been £26,000.’3 This defence of middle class living standards at a time when millions of workers were struggling on the poverty line showed how far Livingstone had moved from the position he had argued in 1983.4 He needn’t have worried. By 1994 Labour had promised not to set a new top rate of tax and Blair, who was elected leader in autumn 1994, made the new position clear: ‘there are top-rate tax payers now who are hardly in the super-rich bracket, and I think we’ve got to be extremely sensitive to them.’5

The introduction of ‘one member, one vote’ at the 1993 Labour Party conference finally curbed trade union predominance and put the professional middle classes – lawyers, journalists, lecturers, educationalists, managers, consultants, professional politicians etc – fully in control. Labour’s programme would now predominantly express the interests of this influential section of the new emerging labour aristocracy. Such interests were far removed from those of the poorer sections of the working class. Labour said it would not re-nationalise any of the industries privatised by the Tories. It promised to retain Tory education plans, including performance league tables and most of the changes which introduced the ‘market’ within the NHS. It would keep the Tory anti-union laws, the Criminal Justice Act and promote itself as the ‘party of Law and Order’ (Blair). Labour would extend the means test by further ‘targeting’ of benefits and would not restore the link between pensions and earnings.

Most significantly, the Labour Party’s increasingly pro-Europe position was now in accord with the dominant strategy of the British ruling class. The economic failure of Thatcherism had demonstrated that Britain could not sustain itself as an independent imperialist power in alliance with the US. The City’s world financial role and its position as the predominant financial centre in Europe were now seen to be under threat, particularly from Frankfurt. Without a change of strategy, the City could have faced marginalisation within a developing European imperialist bloc, so accelerating British imperialism’s decline. Thatcher, a key obstacle to this reorientation, had been removed. However Major could not deliver the change of strategy without splitting the Tory party, because Thatcher’s supporters continued to frustrate him with their vocal opposition to the Maastricht Treaty and European Union. Increasingly, the dominant sections of the ruling class were looking to Labour to implement their strategy.

Sections of ‘left’ MPs within the Labour Party had already started the push for a new strategy towards Europe, putting their own opportunist gloss on the issues at stake. Typical were Ken Livingstone and Harry Barnes:
‘Democratic socialists must build for a European future, placing social welfare and democracy on the agenda …On its own the sovereign nation state is no longer up to the job of dealing with the many pressing issues, such as the power of multinational corporations, ecological crises, new technology investment, the conversion of defence industries…The socialist project goes through Europe or it probably goes nowhere.’6

How was all this to be achieved? ‘Intense pressure’ from European labour movements would be necessary to make this European-wide capitalist federation ‘concede significant social change.’7 They merely transferred their opportunism and their illusions to a European-wide stage. A Keynesian welfare state was no longer sustainable on a national basis. A European-wide Keynesianism was seen as a more viable alternative with British imperialism becoming a significant player within a European imperialist bloc. The economic success of this European imperialist bloc, however, its capacity to sustain a relatively privileged working class and middle class, would depend on its ability to compete with US and Japanese imperialism and, therefore, fundamentally, on it expanding and intensifying its exploitation of Eastern Europe and the underdeveloped world.

Support for the European Union was becoming increasingly widespread in the trade unions. This support went much further than that of the Labour Party for European Monetary Union. A policy statement, passed unanimously by the General Council to go forward to the 1996 Trade Union Congress (TUC), explained: ‘For the British government not to join the first rank of countries who would shape the new economic framework in the European area over its crucial five years would be to risk the same drawbacks as the UK has experienced in previous projects in the EU.’8 The trade unions believed that their members would be far better protected by British imperialism fully joining a European imperialist bloc than as an independent imperialist power on the outside. A year later at the 1997 TUC Ken Jackson, General Secretary of the AEEU, spelt this out. ‘A one-money Europe was a chance to end ‘casino capitalism’ in which workers’ livelihoods were put at the mercy of currency traders…If we had a single currency…[we would have] a unique chance to call in the chips on this “casino capitalism”. My union has the courage to stick to its position on Europe. For unions to do otherwise is an unacceptable gamble with their members’ future.’9

The Labour Party was well prepared for the 1997 general election. The Financial Times, the mouthpiece of corporate capital, and Rupert Murdoch’s tabloid The Sun were on side. The Tory Party was divided and in disarray, deeply implicated in corruption and sleaze, the increasing inadequacy of public services, the privatisation scandals, the inefficiency and cheating, and the personal enrichment at any price, which encompassed financial and corporate life in the minds of the British public. There was never any doubt that Labour would win, and by a massive margin.

A government fit for imperialism

Tony Blair told a conference of Rupert Murdoch’s News Corporation in 1995:
‘What is called globalisation is changing the nature of the nation state as power becomes more diffuse and borders more porous. Technological change is reducing the power and capacity of government to control its domestic economy free from external influence’.10

In effect he was reassuring the dominant sections of British capital with a very strong international presence, that, with domestic capital accumulation stagnating, he would not stand in the way of British capital, even at the expense of millions of people in Britain facing drastic cuts in state welfare and growing impoverishment. On no other basis, given the balance of class forces, could he lead a capitalist government in present day Britain.

One commentator described the coalition, which ensured that Labour was re-elected to power as encompassing: ‘virtually the whole of the professional class, large swathes of corporate-sector management, what is left of the old, organised, upper-working-class Labour interest that the party came into existence to serve, and most of the “new” Thatcherite working class that swung to the right in the late-1970s and early 1980s.’11

For large sections of the poorer working class in inner-city constituencies, most of which had a substantial black population, the election was an irrelevance and they did not participate. In 17 of these constituencies the turnout was less than 60%. In Liverpool Riverside it was only 51.7%. The overall turnout was 71.3%, the lowest since the Second World War.

The largest swings to Labour in the general election came from the key sections which had deserted the party in the 1979 election, the white-collar middle class (C1) and the predominantly skilled manual working class (C2) with swings of 19% and 15% respectively. However, as the new government was soon to confirm, it was the representatives of corporate and banking capital who were actually at the centre of Labour’s coalition. They were there because Labour, unlike the discredited and divided Tories, were in a better position, when economic conditions deteriorated, to prevent an alliance against capitalism developing between the poor working class and sections of the middle class threatened with proletarianisation.

Immediately after the election, the head of British Petroleum, Sir David Simon, was given a ministerial post at the Department of Trade and Industry (DTI). Lord Sainsbury, chair of J Sainsbury plc, was another minister at the DTI. Martin Taylor, Chief Executive of Barclays, with an income including bonuses of around £1.5m a year, was made chair of the government’s Tax and Benefits Taskforce. Sir Peter Davis, Chief Executive of Prudential, one of the main culprits in the pension mis-selling scandal, was appointed chair of the New Deal Task Force. Lord Marshall, Chair of British Airways, was put in charge of the energy tax review. Tony Merricks, Director of Balfour Beatty, was made chair of the government’s working group on combating cowboy builders. And so it went on, as the government at every level promoted corporate interests.12 There were 62 corporate stalls at the 1999 Labour Party conference.13

Prudence for a purpose

Every Labour budget since 1997 has been driven by one consideration: to ensure that the coalition of forces that elected Labour remains on board. Labour has to be able to govern in the interests of banking and multinational capital yet keep the support of the professional, middle class and upper working classes (the new labour aristocracy). Labour’s first two budgets assured banking and corporate capital that British capitalism was safe in its hands. Monetary policy was handed over to the Bank of England and a ruthless fiscal policy put in place to slash the public sector deficit and reduce the ratio of public debt to national income. ‘Enterprise’ was promoted through tax cuts and privatisation. Policies were put in place to discipline the poor working class, and inequality continued to grow as Labour steadfastly stood by its promise not to raise direct taxes on the middle classes. This neo-liberal dogma was called ‘prudence’.

When the Labour Party came into power, Britain was beginning to recover from the large budget deficits of the 1990s. The British economy was experiencing a consumer-led inflationary boom. The rising housing market and the £35bn windfall payments from building society flotations were to fuel it further. Economic conditions were to be relatively favourable throughout Labour’s first term in office, following the stimulus given to the world economy by the US after the 1997-98 Asian crisis. Yet the first budget made Labour’s plans abundantly clear. Public spending was to be cut. Its plans were, in fact, far harsher than those of the previous Tory governments. Fiscal tightening – reduced public spending and/or tax increases – between 1996/97 and 1999/2000 amounted to a huge 4.2% of GDP or some £40bn. Higher than forecast economic growth, higher tax receipts and lower social security spending produced a totally unexpected and massive current budget surplus for 1999/2000 of £17bn. At the time a cumulative surplus of £51bn was expected over the next four years.14

Rather than tackle the appalling state of the public services with these enormous surpluses and the further £20bn windfall from selling mobile phone licences, Labour chose to pay back the national debt. In 2000/01 it paid off £34bn – ‘more than all the total debt repaid by all the previous governments of the last 50 years’ (Chancellor of the Exchequer, Gordon Brown). Public sector net debt fell from the 43.7% of GDP inherited from the Tories in 1996/97 to 31.2% in 2000/01. This was ‘prudence’ really in tune with corporate capital.

That was not all. Over its first term in office Labour cut corporation tax from 33% to 30% and capital gains tax from 40% to 10% on all business assets held for four years or longer, instead of 10 years. Corporation tax on small businesses was further reduced to 10% on the first £10,000 profits. Britain, boasted Brown, now has both ‘the lowest corporate tax rates for businesses ever and the lowest ever capital gains tax for long-term investors.’

Prudence, however, went a little too far and the rapid deterioration of public services, especially in health and education, began to unnerve the middle classes. For the vast majority of the middle classes paying for private health and education would put a serious strain on their budgets. An adequately funded and relatively efficient public provision of health and education is fundamental to their needs and they had expected this from Labour. So spending on health and education had to increase significantly, yet within the fiscal restraints determined by ‘prudence’. Despite the claim to have massively increased funding, by the end of Labour’s first term of office little impact had been made in these areas and spending levels were still lower than that of the last Tory government. From 1992 to 1997 the Tory government spending on health was 5.5% of GDP, compared to Labour’s 5.4% from 1997 to 2001. Similarly education spending fell from 5% of GDP under the Tories to 4.6% under Labour.

The situation is even worse when capital investment in Britain’s crumbling public infrastructure is taken into account. Investment in the public sector fell to its lowest level as a proportion of national income since the Second World War after three years of Labour government. Even the promised doubling of public investment between 2000/01 and 2003/4 will take it only to 1.8% of GDP, well below the 5-7.5% of GDP of the 1960s and 1970s.15 Overall total public spending at 39.3% of GDP in 2000/2001 was still below the level of 41.2% inherited from the Tories.

Given the priority to support corporate capital and the commitment not to raise direct taxes on middle class incomes, new bribes for the middle classes were severely limited and even those given had to be at the expense of increased taxation on significant sections of the working class and lower middle class. During Labour’s first term of office income tax was reduced by one percentage point. However, the married person’s tax allowance and mortgage tax relief were gradually reduced and then abolished.

Labour did introduce one ‘extraordinarily generous’ scheme (according to tax experts) for the middle classes, under the guise of incentives for employees and managers. They would be allowed to buy shares in their companies up to a value of £1,500 from their pre-tax salary. A 22% basic rate taxpayer would pay £78 for £100 worth of shares with a higher rate taxpayer paying only £60. No capital gains tax would be due on the shares if they were held for three years and no tax on their purchase price when they were sold, if they were held for ten years. In addition, each share bought could be matched by up to two free shares from their company. On top of this most of the middle classes holding any shares would have benefited from the massive reductions in capital gains tax. Skilled workers and higher paid white collar workers, who set themselves up as self-employed businesses would have gained significantly from the reduced 10% corporation tax on the first £10,000 profits. Finally the threshold on inheritance tax was continually raised, so that around 97% of estates would be exempt from paying it.

This generosity towards the new labour aristocracy was in contrast to the treatment of the poorer sections of the working class. At the heart of Labour’s position was the patronising distinction between ‘deserving’ and ‘undeserving poor’, reminiscent of the attitude of the trade unions at the beginning of the twentieth century. Cutting the social security budget by forcing millions into low paid work is central to Labour’s efforts to cut public spending. The New Deal is at the heart of this process. The problem was that capitalist enterprise could not provide adequately paid jobs for increasing numbers of working class people. When Labour won the election around 14.1m people lived in poverty, including 4.6m children, and nearly 20% of working age households had no working adult. 40% of 50 -65 year olds were not working.16 Labour saw such people as a drain on public spending – clearly the undeserving poor. It was determined to force such people off benefits into lousy jobs at poverty rates of pay and, through subsidies and tax concessions to employers, hoped that sufficient jobs could be provided. All the measures in Labour’s five budgets were designed towards this end: the minimum wage set at an abysmal £3.60 an hour; the alignment of the starting rate of National Insurance contributions with income tax; the working family and child tax credits; the subsidised jobs; and the introduction of the New Deal for the over 50s. In the words of New Labour speak: ‘to reward work and ensure working families are better off’. So it would only apply to those in work – the deserving poor – and even then it did not amount to much. In October 2001, every working family with children, with no other means of support, was guaranteed £225 a week – not a living wage according to a recent study of Europeans living in poverty.

Labour’s tax credits, besides being a subsidy to businesses, embodied this distinction between deserving and undeserving poor at the heart of Labour’s reactionary ideology. Millions of poor people, who did not work, particularly lone parents with young children, would not benefit from these tax credits. As a result, inequality would be perpetuated as the state benefits of the poor were rigidly tied by Labour to price rises and not to the faster-growing earnings. In his fifth budget Brown made it clear that Labour was making a decisive shift to the US workfare system, denying benefits to all adult workers who refused the New Deal options. Those out of work would now have to undergo interviews about their readiness to work before being allowed to sign on. They would have to undergo tests and attend courses to improve their skills and literacy as well as their ‘attitude’ to work. This harassment was extended to lone parents with children under five on benefits. They would now face an initial interview, another one six months later and others at least annually afterwards. There was no compulsion as yet to seek work after the interview but the element of compulsion was clearly intended to grow.

Despite more than nine years of continuous economic growth in Britain, Labour has barely begun to address the growing poverty and widening inequalities of income since 1979. The latest statistics show that 14m people (25% of the population) still live in poverty. The top 30% of the income distribution with 56% of total income have more than double the share of the bottom 50% with 25% – exactly the same as when Labour came into power. Now that the economic downturn has begun the situation can only deteriorate.

It has become increasingly clear since the crisis of the mid-1970s that capitalism is no longer able to sustain state welfare at an adequate level for the whole working class. The dilemma for the Labour government has been that it has to retain the support of a significant section of the professional, middle class and upper working classes, with the majority of these not in a position to pay for private health, education and other social services. Yet they demand a much higher level of social services than this or any government can provide, while defending the interests of British imperialism, its banking and corporate capital. Will Hutton grasped this point in his book The State We’re In.17 Hutton offers a reactionary political economy of the new middle class; he argues that the middle classes have to be given a ‘vested interest in the entire system’ by ‘incorporating inequality into the public domain’ by ‘nationalising inequality’ within the state system. He wants to create a tiered system of contributions above a core contribution so that the middle classes could pay for the quality services they demand within the state system. Second best would have to be good enough for the majority of the working class. The government is now attempting to do something similar through the creeping privatisation of many services. But it is too little and too late given the appalling level of basic services. That is why the government has now signalled its intention to increase taxes in the coming budget in order to put more funds into the NHS.

Imperialist Britain – parasitic and decaying capitalism
All the incentives given to corporate capital by Labour have done little to increase productive investment in Britain. While total gross investment in Britain grew by 23% between 1997 and 2000 at current prices, business investment in manufacturing fell by nearly 11% and that in non-manufacturing production by 26%. Nearly all of the increase in business investment was in the services sector, a rise of 57%. In the same period British investment overseas (direct and portfolio) increased from £90.2bn to £228.7bn, about one and a half times, rising from the equivalent of 67% to 138% of gross investment in Britain over the period. Earnings from total investment abroad rose 40%, from £96.3bn in 1997 to £134bn in 2000, a size in 2000 equivalent to 71% of the gross profits of the UK non-financial corporations. In addition, Britain had a significant positive balance of £6.1bn in 2000 on its net investment income and of £14.7bn on its net foreign trade in services. Britain’s trade deficit and current account deficit are growing. Without the massive earnings from its foreign investments and foreign trade in services, Britain’s trade and current account deficit would be unsustainable. As it is, Britain’s international investment position showed net external liabilities of £113bn with the rest of the world at the end of 2000 – equivalent to nearly 12% of GDP. The British economy, even more than that of the US, is seriously vulnerable to external economic shocks.

Privatisation of public assets and services has been of crucial importance to British capital. It has allowed the development of new utility and service multinationals that have been predominant in a new form of colonialism: buying up state assets of the underdeveloped nations in the search for new sources of profit. The privatisation of state assets in underdeveloped countries provides such multinationals with potential sources of huge profits with minimal outlay. It also opens new markets for the export of services. The Labour government’s championing of privatisation and its drive to get a final international agreement of the General Agreement of Trade in Services, which requires privatisation of nearly all public services, have to be seen in this context. The City and the service multinationals are forcing the pace in a new round of privatisation of public services in health and education, just as much as the old utilities like gas, electricity and water. The Labour government is doing everything it can to oblige.18

The World Development Reports published by the United Nations show how Britain’s Foreign Direct Investment (FDI) abroad (outflows) compares with that of other imperialist nations. Between 1997 and 2000, Britain’s FDI outflows increased from $61.6bn to $249.8bn, a huge increase of 305%, mainly driven by an international mergers and acquisitions boom. In both 1999 and 2000 Britain was the largest foreign direct investor in the world, contributing 20.5% of world FDI outflows in 1999 and 21.7% in 2000. This gave Britain a clear lead over the other major players: the US with 14.2% and 12.1% in 1999 and 2000, France with 12.0% and 15.0% and Germany with 10.9% and 4.2%. Japan’s FDI outflows have dramatically fallen relative to its competitors over the last decade of economic crisis. The accumulated stock of FDI gives a more stable picture of the changing balance of power between the imperialist countries. In 2000 the US with over $1,244bn stock had 20.8% of the world total, Britain with nearly $902bn had 15.1%, France 8.3%, and Germany 7.4%. Despite the relative decline of the British economy, Britain is still a leading imperialist power, second only to the United States.19

Blair was recognising this reality and his determination to defend it when he said in his speech to the Labour Party conference in October 2001, with reference to the 11 September events: ‘The kaleidoscope has been shaken. The pieces are in flux. Soon they will settle again. Before they do let us reorder this world around us.’ No part of the world would now be exempt from imperialist intervention. Britain, he made clear, has a duty to destroy ‘the machinery of terrorism wherever it is found.’ He developed this theme a month later in a speech to the Lord Mayor’s banquet when he said of Britain’s armed intervention in Afghanistan: ‘Once again the vital role in foreign policy that our armed forces play has been demonstrated. They give us a standing which few can match.’ Blair is using Britain’s military capability and close co-operation with US imperialism to give British imperialism’s interests greater weight in Europe than would otherwise be possible while it remains outside the European Monetary Union. Labour’s military intervention in Afghanistan is the fourth time that Labour has used armed force outside UN control since it won power in 1997 (Yugoslavia, Iraq and Sierra Leone were the other three). Labour imperialism is rampant.

The working class movement
The change in the structure of the working class continued under Labour, as more and more jobs were created in the mainly unproductive services sectors at the expense of those in the production industries. In spring 2001, there were 6.8m jobs in public administration, education and health, an increase of nearly 400,000 on spring 1997. In finance and business services, the rise over the same period was 940,000, from 4.72m in 1997 to 5.66m in 2001. In contrast the numbers of jobs in manufacturing fell even further from 4.45m in 1997 to 4.13m in 2001, a fall of 310,000. This year they have fallen below 4m for the first time. Nearly 78% of all workforce jobs are in the service sector.

An increasing number of those in work are managers and administrators, professional and technical workers. In 2000, some 10.3m workers were in these categories, 37% of the workforce, an increase of 1.7m (20%) on the number in 1991. At the same time the number of part-time, casual and temporary workers as well as workers needing two jobs to survive have rapidly grown. Over 7m workers, 25% of the workforce were part-time in 2001, a rise of over 1.35m (24%) on 1991. 80% of them were women. The split in the working class is rapidly growing.

How have the trade unions responded to these structural changes and widening divisions in the working class? They have remained organisations that serve primarily the interest of the labour aristocracy in whatever historical form it has taken.

In 1999/2000 trade unions organised around 27% of the civilian workforce, 7.8m workers compared to 13.3m (50%) in 1979. They increasingly organise the professional, middle class and upper working class. The highest level of unionisation is in the public sector (60%) and public administration (61%) – with high rates among civil servants, local government officials and social workers and teachers. Unionisation in the public sector is more than three times that in the private sector (19%). Unionisation among professionals (49%) is more than twice that of clerical and secretarial employees (24%) and four times that of sales staff (11%). Unions organise a much larger proportion of the workforce with a degree (37%), or with other higher education (44%) than of those with no qualification (25%). Only about one-fifth of part-time and casual workers are unionised, 6% of workers in hotels and restaurants and 6% of workers under 20.

British trade unions are increasingly being run like business organisations. While their membership fell by more than 5m between 1979 and 1999/2000, their income from membership, investments and other income rose from £234m in 1979 to £754m in 1999/2000, an increase of more than 220%. Over the same period the gross assets of trade unions increased from £320.3m in 1979 to £1,000.9m in 1999/2000, a rise of 212%.

If trade unions are run like businesses then it is not surprising that top union leaders are paid executive salaries. Salaries for the leaders of the larger unions are usually above £70,000. Rodney Bickerstaffe of Unison had an income of £83,969 in 1997. This union had little time for those of its members fighting against poverty pay such as the Tameside careworkers and the Hillingdon hospital workers. The leader of the trade union who sold out the Liverpool dockers, Bill Morris of the TGWU, received £73,296.20 In October 1996 he urged the Liverpool dockers to break their link with activists in the anti-capitalist movement such as Reclaim The Streets. Ken Jackson of the AEEU, on a salary plus benefits in 1999 of £97,166, told The Sun, whose owner Rupert Murdoch’s Newscorp Investments has paid virtually no corporation tax in Britain, that his members: ‘are furious at being ripped off as taxpayers by scroungers and fiddlers. They are working a 40-hour week to pay that tax and keeping idle crooks on welfare and they are sick and tired of it.’ Trade unions like these with lucrative business interests and leaders on executive salaries can never become fighting organisations of the working class. They are increasingly organisations that act to defend the interests of today’s labour aristocracy. This does not rule out the development of militant working class struggle as rank-and-file trade unionists are forced out of necessity to defend jobs, wages and living standards. But such workers and their struggles will inevitably be betrayed by the very same organisations which have consistently betrayed the Irish people, the black working class and all peoples oppressed by British imperialism.

Labour easily won a second term of office in June 2001. The most significant point about the election was that millions of working class people did not vote. Turnout was 59% of registered voters, way down from the already low 71.3% in 1997. The rate of abstention rose to 47% for working class people and 53% for non-whites. In 68 constituencies, overwhelmingly in inner city areas, less than half voted. Liverpool Riverside, one of the poorest areas of Britain, had the lowest turnout with only 33.8% voting. The poorer sections of the working class understood that the outcome of the election would not change anything for them. Labour is as much the party of the rich and powerful as the Tories. This is something to build on. So is the fact that, in the first few months of 2002, some trade unions, under pressure from their members struggling against the consequences of privatisation, have threatened to withdraw funding from the Labour Party. These are developments that must be encouraged and consolidated if the political situation in Britain is to change.

This takes us back to our starting point. Only a severe crisis of the global capitalist system, as has been the case in the past, can significantly erode the social, economic and political foundation, the material basis, of today’s privileged sections of the working class. In such a crisis, divisions in the working class will widen dramatically, and the privileged sections of the working class will become a smaller but still politically significant minority – a new labour aristocracy. The Labour Party and official trade union movement will continue to represent them. Such a labour movement will not and cannot organise the mass of the working class. A new movement of the working class has to be built. At its centre must be an anti-racist and anti-imperialist standpoint that will require it to break decisively from the Labour Party. Building that movement, as the history of the British labour movement has shown, must become the task of socialists and communists organising among the ‘lower masses’ – the real working class.

1 The other five parts of this article appeared in Fight Racism! Fight Imperialism! (FRFI) 161, 162, 163, 164 and 165 – June/July, August/ September, October/November 2001, December 2001/January 2002 and February/March 2002. They can be found on our website http://www. in the FRFI section.
2 See R Clough Labour: a party fit for imperialism Larkin Publications 1992 pp178-180 and Editorial ‘A conservative nation?’ in FRFI 106 April/May 1992 for an analysis of the 1992 election.
3 Evening Standard 10 April 1992.
4 He then argued Labour had to appeal to the poor, the unemployed and the minorities rather than the ‘labour aristocrats’ and white-collar workers who were ‘middle class’, see 'Labour aristocracy and imperialism' part 5 op cit.
5 Cited in R Clough ‘Labour Party: enemy of the working class’ in FRFI 122 December 1994/ January 1995.
6 The Guardian 21 November 1991.
7 Ibid.
8 Financial Times 10 July 1996. Congress accepted the statement.
9 Cited in Larry Elliott and Dan Atkinson The age of insecurity Verso 1998 p168.
10 Financial Times 20 March 1996.
11 David Marquand The Guardian 16 July 1997.
12 For a long list of the representatives of corporate capital within government bodies see George Monbiot Captive State the corporate takeover of Britain Macmillan 2000 pp208-224.
13 Monbiot op cit p3.
14 These statistics and those that follow are taken from my articles on five Labour budgets based on contemporary sources from 1997 to 2001 in FRFI 138, 142, 148, 154 and 160, available on our website. Recent statistics from the Office of National Statistics (21 February 2002) suggest the surplus was even higher at £21bn in 1999/2000 and £24.9bn in 2000/01. These surpluses are to be contrasted with the deficit inherited by Labour of £23bn in 1996/97 falling to £1.1bn in 1997/78.
15 Figures from HM Treasury Spending Review 2000.
16 Figures on people living in poverty come from Households below average incomes published by the Department of Social Security for the relevant years.
17 Jonathan Cape 1995. See my review of the book ‘The political economy of the new middle class’ in FRFI 124 April/May 1995 available on our website.
18 See R Clough ‘The Labour government and big business’ in FRFI 155 June/July 2000 and ‘Labour government privatises Britain’ in FRFI 161 June/July 2001 – or on our website.
19 The statistics are taken from UNCTAD’s World Investment Report 2001, United Nations 2001. See my article ‘Globalisation, parasitic and decaying capitalism’ in FRFI 158 December 2000/January 2001 for a more detailed argument. The statistics from the World Investment Report 2000 used in that article have been significantly revised for the 2001 report, but give the same picture. The world economic crisis in 2001 has dramatically reduced FDI in 2001 according to recent estimates, as a result of a sharp fall in foreign mergers and acquisitions. See Financial Times 22 January 2002.
20 Information taken from Annual Reports of the Certification Officer and the Labour Force Survey (LFS). The latter has trade union density at 29.5% of employees in 1999, with 7.26m in trade unions.