FRFI 165 February / March 2002

The labour aristocracy and imperialism

Part 5: Neo-liberalism and the new labour aristocracy

This is the fifth 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

Neo-liberalism
The growing stagnation in the capital accumulation process and the re-emergence of inter-imperialist rivalries in the early 1970s were the result of an overaccumulation of capital – insufficient surplus value to secure both the normal profitable expansion of productive capital and to finance a growing state sector together with a rapidly expanding unproductive private sector. The rate of profit was too low. In all the major imperialist countries the ruling class went on the offensive and used the state to restructure capital and attack the working class. The balance of class forces had to be changed nationally and internationally. The huge increase in the export of capital, the growing monopolisation of capital through mergers, acquisitions and privatisations, the unprecedented autonomy of the financial system from real production alongside the cuts in state welfare, mass unemployment and rapidly growing inequality, in short, neo-liberal globalisation, was to be capital’s response. In Britain ‘Thatcherism’ was the name given to the specific form of this counterattack in its initial stage.
Thatcherism
The Tory government under Margaret Thatcher came to power soon after public sector strikes, during the so-called ‘winter of discontent’ 1978-79, had confirmed the end of the social democratic consensus of the post-war years. The Tory victory resulted from the defection from Labour of significant sections of higher paid skilled workers and the middle classes, especially in the South East. The Tories embraced this new constituency from mid-1979 onwards. Subsidies and bribes for better off workers and the middle classes were a constant feature throughout four Tory governments. The privileges of this newly emerging labour aristocracy, as in the pre-1914 period, were increasingly market-driven and wage differentials rapidly grew. But there was a price to pay for this. The price was growing inequality as state welfare was cut, nationalised industries were privatised, trade union rights and employment protection were dismantled and millions of working class people were driven into poverty to pay for Thatcher’s programme. The privileges of this new labour aristocracy could only be preserved at the expense of ever increasing numbers of impoverished working class people. This is what lay behind the rightward shift in British politics over the next two decades.

The government intended to use the drive against inflation through a tight monetary policy as a cover for a rapid increase in unemployment, an attack on working class living standards and for drastically cutting back state expenditure. The objective was to restore the rate of profit on private capital by massively transferring wealth back to the private sector. Overall this strategy was designed to halt Britain’s economic decline while sustaining it as a major imperialist power.

Thatcherism failed in its economic programme. During her period as Prime Minister the British economy experienced one severe recession and was entering a second when she was forced to resign on 28 November 1990. Large scale private investment in the British economy did not take place and manufacturing investment and manufacturing output barely grew during her period of office. Throughout the 1980s the rate of profit on British capital was too low and capital exports overseas rapidly increased following the removal of foreign exchange controls in 1979. In the six years 1980-1986 private investment overseas (portfolio and direct) more than quadrupled, and reached nearly £34bn in 1986, a level equivalent to two-thirds of the total investment in British industry and over four times that of manufacturing investment. By 1993, after the second deep recession (1990-92), overseas investment had passed £100bn, greater than the total investment in British industry. The last time this had happened was before the First Imperialist War.

Where investment did take place it reinforced the growing weight of unproductive services in the British economy. Investment in banking, finance and business services increased in real terms by 313% between 1979 and 1990, while investment in manufacturing barely rose at all.2 Service sector employment increased from 13.58m to 15.87m from 1979 to 1990, 1.1m of that increase was in the banking, finance and business services sector. Manufacturing employment fell by 2m over the same period. As full-time jobs declined there was an increase in so-called ‘flexible workers’ – the number of temporary, part-time or home workers. By 1985 one in three workers in employment were in this category.

In the 1980-82 recession, 25% of manufacturing industry was lost as high interest rates and an overvalued pound made much of British manufacturing uncompetitive. This decline in manufacturing industry produced a net trade deficit in manufactured goods in 1983 for the first time ever. By 1989 Britain had a massive balance of payments deficit of more than £22bn, following a credit financed consumer-led mini boom set in motion before the 1987 election.

Unemployment during the two recessions rose well above 3 million, according to the official much adjusted statistics, but in reality it was very much higher. While the 1980-82 recession brought inflation down from a peak of over 22% in May 1980 to 2.4% in mid-1986, by the time Thatcher left office it had risen again, and, at just under 11%, was higher than the 10.3% inherited from Labour.3

The Tories believed that public expenditure was at ‘the heart of Britain’s economic difficulties’. They wanted to cut it in real terms. They failed. They claimed they would bring about a ‘continued deceleration of the growth of public spending’ to make it a declining proportion of GDP. They failed. On coming into office general government expenditure (excluding spending from privatisation proceeds) was 42.5% of GDP. It rose rapidly to 45.5% in 1982-83 after the first recession, fell to 38% in 1988-89 following the mini-boom and rose again to 43.5% in 1992-93 after the second recession. Government spending increased in real terms by about 20% over the period 1979-80 to 1992-93 with public borrowing at 6% of GDP.4 Yet the overall result was increasingly squalid and deteriorating public services. Public sector investment had been cut by 40% in real terms by the previous Labour government from 1974-79. The Tories cut it by a further 40% between 1980-83. By the time Thatcher left office, public investment was only 1.5% of GDP, compared to the 5-7% of GDP in the period 1963-64 to 1975-76. Much of the rise in public spending was taken by the social security budget. This increased by 32% in real terms from 1979-80 to 1989-90, growing from 25% to 30% of public spending, despite long-term benefits only rising in line with prices and not earnings from 1980. Social security spending rose with the growth of unemployment and poverty imposed on ever-greater numbers of the working class during the Thatcher years.

Thatcherism’s economic failure was disguised for a whole period by the monopoly profits of North Sea oil, the proceeds from privatisation and the income from overseas investment and the City. At its peak in 1985 Britain had a net oil trade balance of £8bn and oil profits contributed nearly a third of UK company profits. North Sea oil produced overall in the 1980s some £100bn towards government revenues. More than £60bn came from the sale of public assets by 1989-90. Invisible earnings from overseas investment and financial services made an increasingly crucial contribution to the balance of payments. But in this lay Thatcherism’s vulnerability and that of a British economy faced with adverse international developments. By the end of the 1980s a combination of falling revenues from North Sea oil and the increasing challenge to Britain’s international position by German and Japanese imperialism undermined Thatcher’s economic strategy. In 1986 the price of oil halved and UK net external assets fell from their peak of more than 20% of GDP (nearly £100bn) and moved into deficit in 1990.5 The pound was soon under severe pressure and Britain, having joined the European Monetary System’s exchange-rate mechanism in October 1990, was forced out again within two years on 16 September 1992. After this period, the combination of a much lower pound and falling interest rates allowed Britain to benefit from the gradually improving international economic situation. But by this time Thatcher was gone. Her economic policy had failed.

The growing split in the working class
Where Thatcher and Thatcherism did succeed was in accelerating the changes in the social and political character of the British working class. We have already pointed out the growing weight of unproductive labour in the British economy with the dramatic fall of manufacturing employment and the growth of service sector employment, especially in the parasitic banking, finance and business services sectors. Through privatisation and rationalisation, employment in nationalised industries fell from 2.1 million in 1979 to 800,000 in 1990, with other public sector employment remaining stable at around 5.5 million workers. Over the same period the number of self- employed increased from 1.84 million to 3.22 million and the numbers of part-timers rose by one million from 20% to 25% of all employees. During the Thatcher years trade union membership fell from over 12 million to just over 8 million. The split in the working class significantly widened during the 1980s. A new labour aristocracy was gradually being consolidated. The privileges of this labour aristocracy, as in the pre-1914 period, were once again increasingly market-driven as wage differentials grew rapidly.

Wage inequality
Average real disposable income grew significantly from the last full year of the Labour government in 1978 to 1990. However the rises for those in employment were very unequally distributed. The increase in employment in the services, for example, was concentrated in sectors such as banking, insurance, finance and business services with relatively high earnings and in hotel, catering and similar services with low earnings. The pay and conditions of employment of low paid workers, in particular, rapidly deteriorated relative to the higher paid, as, increasingly, social and legal protection for low paid workers were withdrawn. Earnings of non-manual workers tended to grow more rapidly than those of manual workers; the lower the earnings, the slower was the increase, and the earnings of part-time workers grew less quickly than those of full-time workers. The rate of increase of pay of the top 10% (decile) of non-manual workers was more than 3% a year higher than that of the lowest paid decile of manual workers over the period 1978-1990.

The government’s restructuring of the public sector added to these divisions which were extended with privatisation. In the public sector, the earnings of professional and related occupations in education, welfare and health grew at an average annual rate of around 11% from 1979-1990. This occurred while the relative situation of low paid workers, in terms of pay and working conditions, rapidly deteriorated. The average wages of low-paid public sector workers and those most affected by privatisation policies (hospital porters, caretakers, road sweepers, refuse collectors, hospital orderlies, school helpers, cleaners etc) rose little more than 8% a year. So whilst average earnings increased by 190% between 1979 and 1990, those of the low paid most affected by government wage policies in the public sector increased by 140% – a 50 percentage point difference. This difference allowed public services to be maintained at a lower cost and contributed to the profits of privatisation.

Finally, most welfare benefits fell by around 20% in relation to average earnings, so the position of the unemployed and others relying solely on social security benefits progressively deteriorated relative to the employed. This meant that while those on average income and above saw significant rises in their incomes, the number living in poverty rapidly increased.6

Bribes for better off workers and the middle class
Subsidies and bribes for better off workers and the middle classes were a constant feature throughout four Tory governments in the form of tax cuts, mortgage tax relief, subsidies for private pensions, privatisation shares, tax free equity plans and savings accounts (PEPs and TESSAs).

Between 1978-79 and 1990-91 income tax cuts worth around £27bn were made. The top 5.5% of taxpayers, earning £30,000 or above in 1990-91, received nearly 42% of the tax reductions over the period, while the bottom 70% of taxpayers, earning up to £15,000, received only 29%. The middle 24.5%, earning between £15,000 and £30,000, took 30% of the reductions. So the higher the earnings the higher the proportion of tax cuts received.7 In addition, tax-relief savings schemes, PEPs and TESSAs, are overwhelmingly held by those in the top 40% of the income distribution.

Owner occupation increased from 53% in 1979 to 67% in 1991 with 15.7 million people owning their own homes. Mortgage interest relief, a tax subsidy to those buying their own homes, doubled in the 1980s to almost £7bn a year in 1989-90 and cost in total some £39bn throughout the decade. Council housing stock fell from 6.5 million to about 5 million as tenants exercised their right to buy, subsidised by discounts of 33-50% on the market price depending on length of tenancy. The price of the average house almost trebled in the 1980s from £21,000 to £62,000, while the general price level only doubled.

Privatisation and the demutualisation of building societies and similar institutions dramatically increased the number of individual shareholders from about 3 million in 1979 to 11 million, one in four of the adult population, in 1990. Around 14% of adults owned shares in the privatised companies. 42% of individual shareholders, however, belonged to social classes A or B – managers, professionals, and higher paid workers in the public sector. Social classes A and B make up only 17% of the adult population.

While privatisation increased the number of individual shareholders, it did not prevent their proportion of total shareholdings falling from 47.4% in 1969, to 28.2% in 1981 and 20.3% in 1990. Financial institutions and pension funds held the vast majority of shares, 52% of the total in 1990, due mainly to the growth of pension funds from 9% of total shares in 1969, to 26.7% in 1981 and 31.6% in 1990. This reflected the rise in heavily subsidised private pensions and the already large numbers of employees, around 52% of all employees in the early 1980s, belonging to occupational pension schemes.8

During the 1980s, total personal wealth rose by 82% in real terms, while earnings went up by 25%. The real value of housing rose by 92%, while that of shares increased by 162% and life assurance and pension funds by 218% in real terms.9 It is little surprise that the Thatcher years saw rapidly-growing disparities in income and wealth distribution between those who benefited from her policies and those continually rising numbers of the poorer sections of the working class made to pay for them.

Poverty and inequality grow
By 1991/92 the number of people living in poverty, living in households with below half average income, had reached 13.9 million, a rise of 8.9 million on 1979. Income disparities (adjusted for household size, composition and disposable income) had significantly widened. Whereas average real incomes increased by 36% after housing costs between 1979-1991/92, that of the bottom 10% (decile) fell by 17%, with the next four deciles showing increases between zero and 23%, that is rising with higher incomes but well below the average increase. The lowest 10% of the population saw its share of total income halve from 4% to 2%, while the share of the bottom half fell from 32% in 1979 to 25% in 1991/2. In contrast, the top half (five deciles) saw their incomes rise rapidly, between 29% and 62%, the higher the income the larger the increase. The share of the top 30% rose from 48% to 55% and the top 10% from 21% to 27% between 1979 and 1991/92.10

These statistics highlight our central point, that following the breakdown of the post-war consensus, a new labour aristocracy of primarily higher paid white collar workers and professional middle classes could only emerge at the expense of greater and greater numbers of impoverished working class people.

When Thatcher left office Britain was entering the longest recession since the 1930s and was becoming increasingly polarised. The left had been put to flight by the ideological and political defeats inflicted by Thatcher governments, rapidly shifting to the right following three Labour election defeats and the severe weakening of the trade union movement. Nevertheless, growing opposition to Thatcher’s divisive policies was widespread and began to worry sections of the ruling class. The countrywide opposition to the Poll Tax, for example, had become increasingly militant and effective – a mass anti-Poll Tax demonstration in March 1990 ended with a dramatic battle with the police in the centre of London. But it was to be her dogmatic opposition to European integration that eventually brought Thatcher down.

In 1989 Heseltine had expressed clearly the Tory, and more generally the ruling class predicament over Europe:

‘The conditions which made it possible for Britain to be semi-detached from Europe for so long have vanished forever. There is no empire to sustain us: we are no longer an industrial superpower; we can no longer pretend that Britain is in any sense an equal partner of the US. There is no where for us to go except as part of a European consortium.’11

Thatcher was increasingly seen as an electoral liability and the Tory Party ruthlessly kicked her out.

In opposition – the British labour movement and the British left
The period from 1979 to 1992 saw economic conditions increasingly polarise class relations. The Labour Party and trade union movement rapidly refocused its policies and organisation on the newly emerging labour aristocracy, which had consolidated its economic position over the period. In doing this, it necessarily distanced itself from all the struggles of the poor and oppressed working class against the British state and British imperialism. The British left threw in its lot with the organisations of the labour aristocracy and decisively undermined the struggles of the working class and oppressed that broke out.

Labour’s initial response to losing the 1979 election was to adopt what appeared to be a series of more radical policies. In the late 1970s demands associated with the Alternative Economic Strategy (AES) – public ownership, planning agreements, import and capital controls, withdrawal from the EEC and increased public expenditure – gained popularity within the Labour Party. The left was to win a series of victories at successive Conferences, mainly due to changes in the internal and administrative organisation of the Party, rather than to any fundamental change. These caused a number of influential MPs led by David Owen to break away in March 1981 and form the Social Democratic Party (SDP) – a development that helped contribute to Labour’s crushing defeat in the 1983 general election.

That no fundamental change had, however, taken place in the Labour Party was demonstrated by its response in 1980 and 1981 to the two hunger strikes of Irish political prisoners and to the uprisings of black and white youth against police racism and oppression in British cities.

The Labour Party and trade union movement supported the Tories during the Irish hunger strikes and not one MP, including Tony Benn, expressed any public support for them. The Labour MP Don Concannon visited Bobby Sands – close to death – to tell him that the Labour Party did not support him.

Throughout this shameful period, the British left restricted its campaign in ‘support’ of the hunger strikers to what was acceptable to the ‘left’ of the Labour Party and other respectable public figures disturbed by the escalating conflict. The vehicle for the campaign was ‘Charter 80’, an alliance of the Labour Party ‘left’, the CPGB, the SWP, the International Marxist Group, a few people still active in the Troops Out Movement and a small group of Young Liberals. The SWP was the dominant force in the campaign. Under the guise of drawing in ‘broader forces’, Charter 80 attempted to depoliticise the Irish prisoners’ struggle, steadfastly refusing to support the prisoners’ demand for political status. The RCG attempted to build a campaign around the demands ‘Victory to the hunger strikers! Political status now!’ but faced constant hostility from ‘Charter 80’. The ‘broader forces’ never materialised. The potential support from the Irish community was demobilised. The result was pitiful opposition to Thatcher’s brutal prison policy in Ireland.12

The British left and the Labour Party were even more united on the inner-city uprisings. Not long after they had taken place, Labour leader Michael Foot told the 1981 Labour Party Conference that ‘what had happened in Moss Side and Liverpool is what we in the Labour Party are dedicated to stop’. Tony Benn said ‘the Labour Party does not believe in rioting as a route to social progress nor are we prepared to see the police injured during the course of their duties’.13

The British left reinforced this attack. The CPGB called the Bristol St Paul’s uprising ‘primitive’, saying that the ‘riots’ were no answer to the Tories. Those involved ‘must be helped to organise themselves for real political and social struggle’.14 The SWP described the black and white youth as ‘lumpen proletariat’, ‘the vulnerable underbelly of the working class’, and Chris Harman, now editor of Socialist Worker, wanted to channel ‘the anger from the streets into the ranks of the powerful sections of the class’.15 What both these left organisations desperately wanted was to divert the anger and energy of the youth against the racist British state from the streets into the safer channels of a racist British labour movement. Brutally repressed by the state, attacked by the British left, and undermined by opportunist middle class black leaders, the youth were isolated, and no organisational legacy of their important struggle emerged.

Though out of office Labour was still a major force in local government. ‘Municipal socialism’ became an avenue that Labour used to retain the allegiance of the new labour aristocracy from the public sector. Many jobs and ‘non-jobs’ were given to this already privileged layer as the left feathered its own nest. Spurious community groups, housing schemes, race relations and ethnic minority units for tiny privileged layers of black and Irish people were set up and paid for. They were all designed to foster the interests of those who found jobs and funding through them, with little benefit to those who were really suffering the onslaught of Thatcherism. Even when ‘municipal socialism’ took on a popular and widely supported position, its limitations were quickly exposed. The Fare’s Fair dispute of 1982 showed this at an early stage, after the Law Lords overruled an attempt to introduce cheap fares on London transport, and Ken Livingstone’s Greater London Council did not make a serious fight of it. In reality, Thatcher destroyed ‘municipal socialism’ by continually restricting local democracy and the rights of local authorities to raise and spend money.

The Labour Party and trade unions were as warmongering as Thatcher in the lead up to the Falklands/Malvinas war in 1982. Michael Foot called for the use of force to defend the Falklanders against the Argentinian takeover of the Malvinas/Falklands. When the British Task Force later set sail he said: ‘our first concern in the Labour Party as in the country as a whole is for their safety and success’. Without Labour’s support it is unlikely the Task Force could have been sent. The Labour ‘left’ faced a dilemma. It could not openly support Thatcher, but it did not oppose British claims to the Malvinas/Falklands, only the means of pursuing the claim. Typical was Tony Benn: ‘There is unanimity in the House of opposing the aggression of the (Argentinian) Junta. There is also unanimity on the right of self-defence against aggression.’ Benn wanted to use effective economic sanctions rather than force to promote British imperialism’s cause. The movement against the war led by the Labour ‘left’ in alliance with some trade union leaders, and supported by the traditional British left, was insignificant and ineffective.16 When the war was over, Thatcher was triumphant.

There was little to stop the Tories trouncing Labour when Thatcher called a general election in June 1983, despite the devastating economic consequences of the 1980-82 recession. Labour had gone to the country with a radical Bennite programme – the legacy of the first few years in opposition. The privileged working class and middle classes that had deserted Labour in the 1979 election were not about to support a programme which called for ‘a fundamental and irreversible shift in the balance of power and wealth in favour of working people and their families.’17 The SDP and Liberal Alliance gained votes from Labour. Finally, Labour’s support for the mood of national chauvinism and jingoism at the time of the Malvinas/ Falklands war helped create that tide of imperialist triumphalism that swept Thatcher back into power. The Labour Party registered its lowest share of the popular vote since 1918, only 2% above that of the SDP and Liberal Alliance. The election saw increasing numbers of the poorer working class in the inner-cities abstaining – a poll at the time suggested that only 33% of black people were going to vote – and the continued defection from Labour of a privileged strata of the working class. 59% of previous Labour voters who bought their council houses between 1979 and 1983 did not vote Labour.18

The labour movement shifts further to the right
Responding to this increasing conservatism among the more privileged sections of the working class, the TUC adopted a policy of ‘New Realism’, of increased co-operation and conciliation with capital. Labour responded with a shift to the right and the election of Neil Kinnock and Roy Hattersley on a so-called ‘dream ticket’. During his election campaign for leadership of the party Kinnock made his intention very clear:

‘…we can only protect the disadvantaged in our society if we appeal to those who are relatively advantaged. The apparent overconcentration of our energies and resources on those groups like the poor, the unemployed and the minorities – does a disservice both to them and ourselves…if we are to be of real use to the deprived and insecure we must have the support of those in more secure circumstances – the home owners as well the homeless, the stable family as well as the single parent, the confidently employed as well as the unemployed, the majority as well as the minorities.’

In other words a Labour victory would depend on its appeal to the more privileged. It would now abandon in words, as it had always done in practice, the interests of the poorer sections of the working class. This was a rejoinder to those like Ken Livingstone who, at that time, had argued that Labour had to appeal precisely to those groups like the poor, the unemployed and the minorities rather than the ‘labour aristocrats’ and white collar workers who were ‘middle class’. In doing this Kinnock found an ally in the SWP, when Alex Callinicos asked ‘who is left in the working class according to Livingstone’. He continued: ‘The implication is that socialists must create a new popular base by linking up with groups, which are not part of the working class. The examples most often given are those of such "minorities" as women, blacks and gays.’ The SWP was telling us, once again, to stand with the labour aristocracy, and abandon the oppressed sections of the working class.19

Before Labour could consistently pursue the interests of the new labour aristocracy with its middle class allies, the ‘old’ trade union movement had to be dealt with once and for all. The decisive battle was the 1984/85 miners’ strike.

At the time of the strike the miners’ union was split. The relatively greater security and better conditions of the Nottinghamshire miners made them at first indifferent to the plight of those communities in the other areas under threat. They first refused to support the strike, then crossed picket lines and finally became willing tools of British Coal and the Thatcher government to break the strike. In Arthur Scargill, the miners had a leader who was steadfast throughout the strike in the face of brutal attacks on the miners by the police and the continuous ideological assault on the miners by the government and media. The miners were ready to accept new methods of organisation: in particular the support groups set up by miners’ wives which consolidated support in the mining communities. Miners’ support groups were set up in working class communities throughout the country. Yet the strike was defeated, not by the state alone, but with the support of the trade union movement and the Labour Party, who successfully isolated the miners and the working class communities who supported them. Crucial unions scabbed on the strike by moving coal supplies. The Labour Party at first did nothing to support the miners and then denounced the miners for defending themselves. Typically, one of the main organisations on the left, the SWP, denounced miners’ hit squads, set up by the miners to deal with police-protected scab labour, on the grounds that ‘such raids can give trade union officials excuse not to deliver solidarity’ and more generally because ‘we are opposed to individuals or groups using violence as a substitute for class struggle’.20

With the defeat of the miners’ strike, Labour moved to the right, and rapidly adapted its policies to the prejudices of those better off sections of the working class and middle classes which determine the outcome of elections. Labour drove Militant out of the party, soon supported council house sales and began to talk of a share-owning democracy. In the lead-up to the 1987 elections, the chair of the Labour Party Tom Sawyer told the party ‘not to write off the white, heterosexual working class and replace them with a coalition of the dispossessed.’ The votes of the dispossessed did not win elections. But when the election came the country was in the midst of a mini-boom and the new labour aristocracy continued to back the Tories. Labour had not yet done enough to prove its readiness for power. It still had some way to move before it would become electable. Two developments during the 1990s showed it was well on the way.

The community-based campaign against the Poll Tax – a regressive tax on the poorer sections of the working class – was building massive support throughout the country. On 31 March 1990, a 200,000 strong demonstration, the largest yet, was attacked and broken up by the police. The demonstrators had bravely fought back to defend their right to demonstrate and protect themselves from brutal assault. Labour politicians, who opposed the anti-Poll Tax campaign, queued up to attack the demonstrators. Kinnock condemned the ‘minority’ for ‘causing this dangerous uproar’ and said ‘they should be dealt with severely’. Roy Hattersley described the events as ‘the work of mindless hooligans’ and said ‘I hope there have been substantial numbers of arrests and the sentencing is severe…exemplary’. Tommy Sheridan from Militant, an aspiring left-wing politician now in the Scottish Parliament, also joined in the witchhunt condemning the violence, saying ‘it was the work of 200-250 mindless people’.21

The position of the SWP towards the anti-Poll Tax campaign was predictable. It opposed the community based campaign, arguing ‘only industrial action can defeat the Poll Tax’. In November 1988 at a conference against the Poll Tax in Newcastle the SWP said that: ‘In a city like Newcastle the 250 employees in the Finance Department are more powerful than the 250,000 people who have to pay the Poll Tax.’ At the 1988 Socialist Conference, Chris Harman displayed his contempt for the poorest sections of the working class, when he argued against a community-based campaign against the tax because: ‘On council estates are drug peddlers, junkies and people claiming houses under false names. These people will complete the registration forms to avoid attention from the council.’22

The Gulf War was another opportunity for Labour to prove itself a trustworthy imperialist party deserving of power. It adopted, if anything, a more militaristic position than that of the Tory government. As during the Malvinas/Falklands war, Benn and his allies on the Labour left played the now familiar role. They accepted the substance of the leadership position – protecting British imperialism’s interests – but favoured other means to pursue them. They set up a Committee to Stop War in the Gulf (CSWG) – an alliance of the Labour left, the CND, the Green Party and, inevitably, the SWP. In the interests of ‘building the broadest possible alliance’ the CSWG not only refused to demand the withdrawal of British military forces from the Gulf, but actively campaigned for UN sanctions against Iraq – sanctions that were to kill and still are killing thousands of Iraqi children. Again no significant sections of the British left were prepared to act independently of Benn and the Labour left. Their determination to retain their alliance with Labour was again preventing the emergence of an independent anti-war movement.23

Despite the shift to the right, Labour failed to win the 1992 election, its decision to raise the top level of taxation to 50% and abolish the ceiling on National Insurance Contributions proving too much for the new labour aristocracy to accept. Under the leadership of Tony Blair Labour pushed further to the right and by 1997 was in a position to win a general election. The Labour Party could now strut the world stage again – a party fit to defend the interests of British imperialism and with it the new labour aristocracy.

To be concluded

1 The other four parts of this article appeared in Fight Racism! Fight Imperialism (FRFI) 161, 162, 163 and 164 – June/July, August/September, October/November 2001 and December 2001/ January 2002. They can be found on our website http://www.rcgfrfi.easynet.co.uk in the FRFI section.

2 See Financial Times 22 April 1991.

3 See Christopher Johnson The Economy under Mrs Thatcher 1979-1990 Penguin 1991 pp74-75.

4 See Financial Times 29 November 1995.

5 Net external assets were again positive between 1991-95, but then fell sharply from 1995 onwards and were in deficit by more than 17% of GDP (over £150bn) in 1998. See Bank of England Quarterly Bulletin Winter 2001 p391.

6 See Jonathan Michie (ed) The Economic Legacy 1979-1992 Academic Press 1992, Chapter 9.

7 See Christopher Johnson op cit, worked out from Table 27 p294.

8 Statistics on shareholdings taken from the Financial Times 2 December 1994.

9 See Christopher Johnson op cit pp172, 301.

10 Statistics from Households below average incomes: a statistical analysis 1979-1991/2 HMSO 1994.

11 Cited in the Financial Times 30 October 1992

12 See David Reed Ireland the key to the British revolution Larkin Publications 1984 pp362-5.

13 Cited in ‘Revolutionary unity’ FRFI 12 September 1981.

14 See ‘The false friends and St Pauls’ in FRFI 4 May/June 1980.

15 See Socialist Review 13 1981 and International Socialism 14 1981.

16 See ‘Falkland Crisis: oppose imperialist war’ in FRFI 19 May 1982 and ‘Labour backs Thatcher’s war’ in FRFI 20 June 1982 for fuller discussion.

17 Cited in John Callaghan Socialism in Britain Blackwell 1990 p227.

18 See R Clough Labour: a party fit for imperialism Larkin Publications 1992 pp169-170.

19 See Socialist Worker 1 October 1983 and ‘Facing political reality’ in FRFI 33 October 1983.

20 Socialist Worker, 11 and 25 August 1984. See D Reed and O Adamson, The Miners’ Strike 1984-1985 – People versus State, Larkin Publications 1985 for an analysis of the strike.

21 From FRFI 94 April-May 1990.

22 See Lorna Reid Poll Tax: paying to be poor Larkin Publications1990 p30 and R Clough op cit p177.

23 See FRFI 97 15 September/15 November 1990 and FRFI 98 December 1990/January 1991. The RCG joined the ad hoc Hands Off the Middle East Committee which actively campaigned on the demands Hands off the Middle East! and Imperialist Forces Out of the Gulf!