The Boss Needs You, You Don't Need Him!

Tony Benn - He Encouraged Us.

You've all heard it said. It is one of the leading cliches in politics: the older one gets, the wider one's waistband expands, and the more conservative one becomes. There are notable exceptions to such sad cases that affirm this dictum of aging reactionaries. One such prominent case was Tony Benn, who started out as a mainstream Labour politician of the social democratic post-war establishment, only move further to the Left as he passed through Parliament and more than one Labour cabinet. The only thing startling about the old man was that he was ever a banal centrist.

The praise now being showered on Tony Benn relegates him to the dull realm of acceptability. It was not so in the days when Benn posed a serious challenge to the Labour leadership and the prevailing Cold War consensus. The Murdoch gutter press went after him with characteristic fairness, they went through his bins, produced a bogus report on his mental well-being, and probably tapped his land-line. The hysterical press barons saw a dictator of the proletariat on the horizon, but they also saw a similar figure under their beds at night. Those days are long gone. The Soviet Union collapsed and with it the threat of democratic socialism evaporated. The death of socialism and the end of history were proclaimed. Only liberal capitalism was left standing, seemingly everywhere triumphant. A socialist like Benn could be praised for his integrity only because the game was over. The conservatives and liberals can now applaud him precisely because they think the battle is over and his ideas don't really work.

No longer a prospective dictator, we find Anthony Wedgewood can be lauded as a man of principle from the old-fashioned days of Clement Attlee and Nye Bevan. The exactitude of the principles if a another matter entirely, we're led to believe that the 'Old' Labour Party was for stripping away the wealth of the propertied classes. It just didn't work. It turned Britain into the Sick Man of Europe. Have no doubt about it, the Labour government of 1945 to 1951 established a welfare state and mixed economy which produced greater development, economic stability, and growth, than have been enjoyed since the post-war settlement was dismantled from 1975 onwards. As much a creature of the War (not to be confused with any mere wars) and the social democratic consensus of the 1950s and 60s Benn had the qualifications to speak for the anti-war movement and the socialist movement.

As a Labour politician who lived through the first Wilson administration which had sought to deliver significant rates of growth rather than address the distributional basis of the economy. The hope was that the growth would raise living standards for the working-class without really changing the class structure of Britain. Yet Wilson had come to power just as an economic boom was hurtling out of control. The government had to look to hold down wages and prices to get a grip on inflation. In the midst of this Tony Benn was made the Minister of Technology and would go on to chair the Industrial Reorganisation Committee. He spent the last years of the Wilson government picking winners and backing takeovers in the midst of the Jim Slater era of asset stripping and ram-raids on corporate structures.

History is full of ironies. It was the beginning of the deindustrialisation of Britain that would eventuate in the 1980s and 90s. The conditions of the post-war settlement which amounted to the grave crises of the 70s are what led the way for Thatcherism and later Blairism. Only for the new establishment to lead to the current crisis we're living with today. The vast swathe of Labour parliamentarians were on board with the new consensus by the 80s and many of them had been even before it had fully emerged from the womb of social democracy. It was the Callaghan government which had signed up for the IMF austerity programme, which Denis Healey later admitted was unnecessary and probably cost Labour the election. We can and should praise Benn for learning from this experience and having the fortitude to take the stances he did against the onslaught which was well underway by 1979.

The stagnation of the 1970s matched a political crisis within the establishment itself. The Conservative Party wasn't going to forget the humiliation of 1974 and was determined to inflict a historic defeat on the trade unions. Under these conditions Margaret Thatcher came to the foreground. Originally the candidate was going to be Keith Joseph, who had helped to spread the ideas of Milton Friedman. He argued the crisis was down to the decline of wealth-producing sectors of the economy and the growth of the public sector and government. It was tremendously popular in contrast to the perceived bungling of Ted Heath. In the end Joseph eliminated himself by giving a eugenicist speech on poor mothers and their children. This may have been the exuberance of the emerging consensus which would be consolidated under Thatcher. Few people saw what was coming.

The major ideological triumphs of the Thatcher regime can be rounded down to just two: the Falklands War and the Miners' Strike. Tony Benn was on the right side in both instances. He saw that the war was an unnecessary loss of life and should have been handled through the United Nations. It really was a battle between two bald men fought over a comb. Without the war the Thatcher government may have well paid the price for its vandalism and suffered a defeat in 1983. Instead the Conservatives benefited from the patriotic fervour whipped up for the war. It's possible that the subsequent battle over the mines would have not arisen had the tide been turned back at that point. Once the miners had been defeated in 1985 the Thatcherite era had well and truly consolidated its gains and could go on to further victories. The labour movement that had vanquished Heath was smashed.

Even in the face of such defeats Benn stood strong and kept to his principles. He maintained his position as MP for Chesterfield and condemned the pit closures which would toss so many onto the trash heap. He stood as a voice of working-class interests against the tidal wave of Thatcherism and its bid to dismantle the entire edifice of social democracy. He remained steadfast in his optimism, at a time when many despaired, and had good reason to do so. The arguments he put forward were rooted in common-sense and populist appeals to the moral collectivism of the people. He was not a Marxist, but a left-moralist. The influence of the Fabian tradition, with its gradualist approach, and fetish for reform, can be picked up here; but there's also a break with Fabian progressivism in Benn's shift to the Left. His faith in the democratic mechanism is not as lukewarm as some on the hard Left may like to claim. The welfare state was socialist development, but it wasn't the end itself. He wanted to see democracy extended to the economy, it was a syndicalist call for industrial democracy.

A Comrade Lost.

I'm sad to hear of Bob Crow's death. He was one of the last strong leaders of the labour movement left in this country. Crow fought valiantly for his members and the service we all rely on in London. We need more people like him and not less. He was never held back by the right-wing media smear campaign because he understood what it means to stand up for the interests of working-class people. Solidarity is not about altruism, it is about the rational pursuit of class interests. Sacrifices may be made collectively, and individually, in order to further a common end. In that sense Crow was an old-fashioned leftist in his affection and understanding of the common people and what is at stake in the age of austerity.

Unfortunately, many will welcome his death as good news, only to moan when tube fares rise and the standard of service declines. Even when the Oyster card is abolished so many will still not understand that if we have no organisations then we have no means to resist at all. Crow was hated precisely because people like him threaten the neoliberal agenda of stripping all public services to the bone to enrich a tiny elite.The Jubilee line was only extended to raise property values and procure enormous profits for speculators in the City. The tax-payer shelled out for that and the banks gobbled up the profits. It is capitalism which asks the poor to work for the benefit of the rich. Rational self-interest doesn't even come into the picture. 

The Boris Johnson Symptom.

 

In recent years there has not been a more significant symptom of disarray within the Conservative Party than the undiluted veneration of Boris Johnson. This is especially the case with the constant talk of Boris becoming Party Leader and maybe even Prime Minister one day. The Conservative Party must be aware of the fact that they haven’t won a majority government in more than 20 years. It’s hard to picture the traditionalists being massaged into ecstasy by a Prime Minister BJ, perhaps even less so than Prime Minister DC. So it must be about the desperation in the knowledge that the Party seriously needs popular appeal. The right-wing adoration for Boris ranks in high farce. There were those who claimed his re-election in 2012 was down to his strong conservative principles. Toby Young has bet £15,000 with Nigella Lawson that, by 2018, Boris will be Tory leader and, in the imagination of some, a prospective Prime Minister. Then in 2012, that custodian of the sacred foetus, Nadine Dorries came out in standard reactionary flair to berate David Cameron as a ‘sheep in wolf’s clothing’ before fawning over the imaginary prospect of a Boris Cabinet.

 

The prospect remains a realistic one in the minds of many. Yet we’d do better to examine the Boris phenomenon with more serious eyes. If we assume that Boris is sensible (a risk we may live to regret) then surely the Mayoral office is much more suited to his attributes. It’s not that he is an effective politician due to his strong conservative principles. The efficacy of the Johnson persona is his relatively detached relationship with power which lends great prowess to the anti-political role of a clown. As Mayor Boris enjoys the freedom to rail against the government and not commit to anything. In a higher office Boris would lose this non-committed freedom and be held to rigorous scrutiny within Parliament and in the press. No amount of bluster from foolish reactionaries and eejits will change this obvious flaw in the delusion. It was precisely the anti-political purity of Boris Johnson by comparison with Ken Livingstone that secured the glass testicle for the Conservatives. Boris doesn’t come across as a politician. He’s a combination of the Wodehousian aristo and a political tabula rasa. Behind the blank veneer you find, at best, the incoherence of market liberalism.

 

Last week Boris put forward a series of proposals for a ’2020 vision of London’ which he claims as his own. Apparently the future will be a ‘golden age’ in transport for Londoners. The programme is exactly what we would expect from the anti-political populist who has run City Hall for five years now. The prospect of 75% automation has the mouths of many commuters watering profusely. Smashing the last of the strong trade unions in this country is a cause endorsed by liberals as well as conservatives. It’s a broad based appeal to the urban poor who don’t want their lives disrupted regularly by strikes (and with good reason); as well as the suburban middle-classes who hope the roads may be less congested if the unwashed hordes are shuffling about underground. The regressive fare hikes are defended as necessary measures in austere times, yet it was Boris who closed the deal with Venezuela for cheap oil – a deal cut by Mr Livingstone to maintain low bus fares. There is no talk of necessity when it comes to slamming the breaks on the congestion charge to rake in petit-bourgeois votes. Simultaneously the £12 billion development of Crossrail 2 no doubt offers prospects for speculators, just as the extension of the Jubilee line cost £3.5 billion while it raised land values for speculators to rake in £13 billion.

 

Much has been made of the late date at which these proposals have been put forward. It is five years since Boris strode into City Hall on horseback leading a populist cavalry against ‘Red’ Ken and only three years until the next Mayoral election. It’s possible that the plan has been timed so that only a few of the proposals actually come into fruition. The safe bet would be that the transport reforms will pass, but the aim of building 400,000 new homes may not. After all this city is not for the poor, it’s for the wealth-creators in Canary Wharf. The London working-class find themselves battered by such regressive taxes as VAT and the exorbitant travel fares which absorb so much of the wage packet. Meanwhile the housing benefit reforms are likely to force many out of their homes as the question of extreme rents remains unanswered and even unacknowledged.

 

Take note, the so-called plan to build 400,000 new homes for the next decade amounts to releasing more publicly-owned land to be developed (probably by private companies) combined with greater borrowing for local government to boost building projects and a ‘use it or lose it’ measure to ensure private investment leads to development. The Mayor advocates the devolution of power – particularly over property taxes – to City Hall in order to further facilitate greater investment. All the while Boris Johnson argues that there is nothing to be gained from regulating the financial colossus in the City. It would seem this is more of a plan for profitability than anything else. It’s possible then that the houses may be built, but in what form we can only speculate. We can gauge as much from the fact that City Hall approved the construction of a block of luxury flats in Elephant & Castle as part of a billion-pound gentrification project. Just as we can expect similar efforts in Hammersmith around the Westfield centre where land values have risen. It’s plausible that the local working-class will be pushed out to make way for very nice houses for the more bourgeois.

 

With all this in mind, it seems there is an uncertain future for the Conservative Party with its shrunken talent pool. It seems probably that Cameron will hold onto his position simply because there isn’t a serious contender to unseat him. That goes for Ed Miliband, who poses little serious opposition to Cameron’s government in terms of policy. We can thank the Labour Party for helping to keep Margaret Thatcher in office for 11 years and we shouldn’t shirk to place the blame where’s its due come 2015. Not that we should really care that the Conservative Party seems a bit short of an effective leader, as it has been since the hag was slain, as what’s really lacking is opposition. The economy is still struggling to drag itself out of this slump, for the ruling-class there aren’t any clear answers at hand. Likewise, there aren’t any obvious ways for the Establishment to circumvent the problems incurred by economic crisis and electoral despair. In short, the signs of disarray within the Conservative Party are to be welcomed as much as the timidity of Labour and Lib Dem is to be despised.

This article was originally posted on the Third Estate on June 15th 2013.

Working-Class Heroism.

The trade union model has long tended towards reformism in its place within the capitalist system as a dependent. The union depends for its existence on the business class in it's role as the private owner of the means of production. Typically trade unions are content with the protection and promotion of working conditions, pensions, pay and so on. The labour movement on it's own is not an agent of revolutionary change for the simple reason it has a vested interest in the system. The labour movement is unlikely to overthrow the system or even try to take over the managerial duties to rearrange the workplace in a democratic form for workers’ control. The unions may even tend to dampen down radical currents by winning concessions from the capitalists. The great victories of the 20th Century came about partly as a way of "buying-off" socialism. The system has to survive for trade unions to remain necessary for empowerment of the working-class within its chains.

The preference is for a social democratic capitalism complete with strong welfare state institutions over the laissez-faire alternative of unfettered markets. In the 1980s right-wing administrations in the US and Britain staged a series of ram-raid attacks on the labour movement and the industries they sought to defend. The reactionaries succeeded in defeating the major unions and wiped out domestic industries such as cars and coal. The neoliberal turn has virtually destroyed the culture of solidarity in the working-class. In the aftermath the only union strongholds serve as defenders of the privileges of an almost ‘aristocratic’ layer in the working-class - what Žižek calls the ‘salaried bourgeoisie’. In Britain this recently took the form of defending the pensions of doctors and other public sector workers. This in turn creates the division between people who have no security because of the devastation of the last 30 years and the people who have managed to hold onto a raft. It’s the old division between the ‘deserving’ and the ‘undeserving’ poor.

The tube unions are the last bastion of working-class power left in this country and this is precisely the reason that the forces of reaction are out to destroy them. The widespread perception is that the tube unions are simply out to protect their privileges, which the rest of the working-class goes without. This is part of the death of the culture of solidarity and the devastation that the working-class has endured. But it isn't totally untrue of the tube workers. The strikes aren't, at the immediate level, about the preservation of the welfare state let alone any socialist dreams of overthrowing capitalism. The rest of the working-class can see this and are willing to support right-wing politicians to blow Bob Crow out of the water for the inconvenience he has caused them. Of course, this is a part of the very process of neoliberalisation which pits the working-class against itself in its bid to eviscerate the cultural solidarity. We are reduced to resentful individuals in this way, distant from one another and looking out for who's getting a better deal than us.

No longer is the trade union simply an instrument of workers’ power even as it was in the days when Arthur Scargill fought valiantly against Thatcher’s policy of mass-unemployment and deindustrialisation. It might seem that the working-class movement is totally finished because it has been de-industrialised and, at this point, unions have been reduced to xenophobic suspicions of anymore ‘foreign rivals’ coming over here. This isn’t to say that the deindustrialisation of the North was fine and that we should oppose the efforts of the fragments leftover of organised labour. Rather it should demonstrate the urgent need to reconstruct the working-class movement in a much more radical form. It's fine to propose unionisation of workers on a European scale. It would be wrong to confine the prospects of unionisation not just to the nation-state but to the traditional industries that have been wiped out. The unionisation of the indebted could serve as the means to undermine the power of the financial institutions.

Take a look at some of the stats. The household debt in Britain is set to rise from £1,560 billion to £2,126 billion in this time of austerity. I would assume there is something similar going on with household debts around the world given the attempts of government to patch up the system as it is. Household debt in the US was at 115% in 2011 down from 135% in 2008, the dip is probably the result of the crisis. In the years of the bubble, 2000 to 2007, households doubled their debt to almost $14 trillion while personal consumption shot up by 44% from $7 trillion to nearly $10 trillion. Over a period of 5 years American households ringed $2.3 trillion of home equity loans and cash-out refinancing from their homes. That's an injection of nearly $500 billion into the economy every year. So you can see why Obama's so-called "stimulus package" was a cop-out, $787 billion for 2 years doesn't cut it! Especially when it's left to the sort of self-glorified bureaucrats who would rather cut than spend.

There is actually an opportunity in this. It might seem that the working-class movement is finished because it has been de-industrialised and, at this point, unions have been reduced to xenophobic suspicions of anymore foreign rivals coming over here. That extends to the opposition of trade unions to European integration, these are supposed to be organisations that are internationalist. It's fine to propose unionisation of workers on a European scale. We're wrong to confine the prospects of unionisation to traditional industries that have been wiped out. The formation of debtors into unions on a cross-continent scale could potentially give the working-class a way to yank at the banks. A straight refusal by the majority of people with debts to make the payments unless the rates of interest are cut could work. It could also be a way to wipe away household debt altogether. This isn't to say that the capitalist system could not incorporate this into it, it could do easily, but it is a starting point in accordance with conditions which are radically different to the 20th Century.

A frank word about Immigration.

It is often the case that the cuts to public services are justified by the claim that the service is abused by immigrants. The claim most often made is that it is just the benefits are the reason that the ‘foreigners’ come here, they just want to leach off of the tax-payer and so on. It then follows that there should be cuts to benefits to deter immigrants, either to drive them into work or to stop the flow of immigrants totally. Benefit cuts will supposedly deter immigrants from settling here and pull the rug from under the feet of people already settled in the country, removing the safety net for the working-class as a whole. In the minds of many the ‘foreigner’ has two hands too many in the pot and this widespread perception (itself a product of a media campaign) the immigrant is left a vulnerable target. It doesn’t matter that out of the hundreds of thousands of Eastern Europeans who settled in Britain since 2004, only a few thousand have become benefit claimants. Similarly it has to be noted that only 2% of housing has gone to immigrants over the same time period.

The neoliberal model can push open borders on the grounds of free movement of labour and anti-racist individualism. The system requires an endless flow of desperate workers which can be exploited readily. Immigrants serve as a reserve army of labour which undermines the wages of ‘native’ workers. This holds down wages to ensure high profits for capitalists. In turn creates a division between ‘native’ and ‘foreign’ workers which can be used to pit the working-class against itself. The ethnic tensions are a result of economic relations, out of this comes a nativist populism which can be used to attack the standard of living for both ‘foreign’ and ‘native’ workers. This is just another version of ‘deserving’ and ‘undeserving’ poor, except it is ethnically charged to provoke nationalist sentiments among the self-identified ‘deserving’. This is to put aside the racism which emanates from the old colonial role of European nations, with Britain this takes the form of anti-black and anti-Asian sentiments typically. But let's focus on the economic foundation for a moment.

The system produces reserve armies of labour in the form of dole wastelands of unemployment and through the import of cheap ‘foreign’ labour. The contraction and expansion of the reserve armies of labour can undermine the wages of workers, even workers in trade unions. The need for a continuous flow of labour collides with the interests of the labour movement which in turn resorts to pitting relatively privileged workers against the unprotected worker. In short it’s a false hope that the limiting of immigration could reinstate the privileges of ‘native’ workers many of which have been decimated over the last 30 years. We should be careful not to sneer at working-class ‘bigotry’. The widespread support for an end to immigration entirely from the working-class will be pandered to when the economic system has gorged itself on cheap labour and can do without another injection for a while. The move by trade unions to protect the interests of the ‘native’ working-class is not entirely “irrational” and “racist”. But it is short-sighted.

It’s when the discourse descends into cleverly glossed language about the problems created by ‘cultural differences’ – e.g. that the Jews bring crime and disease as The Daily Mail once claimed – then it has sunk to xenophobic chauvinism. The same can be said of the calls for British withdrawal from the European Union and the whole debate over the EU in the UK. Withdrawal would only open up Britain to even more rapacious and destructive market forces. If it’s not Brussels it will be Washington! Economic integration actually may offer a solution. The answer could be multinational unions formed to transcend borders to protect the rights, freedoms and standard of living for ‘native’ and ‘foreign’ worker alike. This may be the only way to forge bonds of solidarity in the face of such division. We have to fight against the proto-fascist tendencies and nativist movements which seek to pit the working-class against itself. It can’t simply be that the best way to defend the working-class is to defend the free movement of labour under neoliberalism.

It’s not to say that the free movement of people is wrong in itself, rather the particular mode of immigration under conditions of exploitation has a significant downside. It is worth noting that the individual migrant would still be restrained by conditions of subjection, so it could hardly be described as ‘free’ in that sense. We would only describe the working-class as free with reference to negative liberty, the freedom from various forms of constraint. It’s clear that the main reason so many Africans try to get across to Spain or Italy on rafts is that the state of affairs in Africa has been horrendous for a very long time. Only to be captured by the Spanish police or navy and sometimes even killed by Italian fishermen. Similarly we find that the people fleeing genocide in Sudan to Israel have been met with appalling racism, there were race riots in Tel Aviv a couple of months ago and the Likudnik Miri Regev said that the blacks are a “cancer” on the Jewish state.

Crime Pays!

We live in fictitious times where Thatcher and Reagan are a lot like Gods for the present-day conservatives of Britain and America. It was demonstrated well when Reagan gave up the ghost in 2004 and we could see that the Republicans had succeeded in their efforts to elevate Ronald Reagan to almost deified heights. Of course, the death was just what George Bush needed to take the heat off the administration as the horrors of Abu Ghraib shook the world. The Reagan administration had some great tacticians, who had the sense to wage war on Grenada just as the US Marine Barracks in Beirut had been bombed. But the timing of Reagan's demise was a masterstroke that not even the Reaganite tacticians could have pulled off. It came at just the right moment. As if the funeral had not demonstrated just how far the deification had gone - how deeply the termites had feasted - Obama marked the 100th year since Reagan's birth with the words "President Reagan helped as much as any President to restore a sense of optimism in our country."

Perhaps it was the moment when Reagan added Nelson Mandela to the terrorist list (where he would remain until 2008) that restored so much optimism in America. The South African government only murdered 1.5 million people in their African neighbour-states. No wonder the Hoover Institution noted that Ronald Reagan is revered as a colossus whose "spirit seems to stride the country, watching us like a warm and friendly ghost." It can barely be muttered today that Reagan was perched as ornament to a criminal government. You might be called a conspiracy theorist for recalling that they gave the CIA permission to deal in guns and drugs in the funding of terrorist groups in Latin America. And if not then you will be called an extremist for recognising Reaganomics for what it was - a monumental disaster. For the reactionaries on both sides of the pond the post-war period was the real disaster, with its steady rates of growth, development and productivity. The crises of the 1960s and 70s opened up a space for the life to be snuffed out of this model.


The post-Thatcher period in which we are currently held captive holds that the time before the Iron Lady was a time of stagnant mediocrity. There were plenty of problems in Britain that had been a product of the post-war settlement. But we can't seem to see the mediocrity of what we're currently living in. The average growth rate of the 1980s was 2.4% which is what it was in the 1970s and even less than it was in the 60s. Supposedly Thatcherism rejuvenated sickly Britain and restored Greatness to its shores. Even though the same pathetic worries lingered around such topics as European integration, immigration, anti-social behaviour and crime alike. The English mind was still obsessed with the decline of status it had endured since the Empire fell. And in many ways, we the British are still in the fits that inevitably come with a disordered understanding of the past. It was actually decades of steady growth and significant development which were brought to a close in the 1980s. The golden age of capitalism was no more.

We now endure the society that the Thatcherites have laid waste to and the people who have done so well out of the devastation now tell us that the real problem are the immigrants and the dole queue. The old aim of full employment was dumped and the government effectively acted to increase unemployment in order to smash the trade unions and pacify the working-class. Before there had been a time when we were close to full employment and the wealthy paid a rate of tax which was relatively progressive. Incomes for workers had tended to rise alongside productivity which was partly driven by a strong labour movement. The bedrock of institutional power for the working-class could be found in a variety of industrial sectors and the extraction of natural resources. The Thatcherites embarked upon a savage deflation which destroyed a fifth of the industrial base in two years and oversaw a 30% decline in employment in manufacturing. The unions were blown away one by one, most famously with the mines shut because it was cheaper to import.

Since the Thatcher government smashed the unions the workers' share of national income has either stagnated or declined. With the defeats of trade unions in the 1980s the right-wing mutation of the Labour Party easily picked up pace. The socialist codger Michael Foot was soon replaced with the Welsh windbag Neil Kinnock, under whom the Labour Party served as an incompetent and hopelessly complicit opposition to Thatcherism. There was no serious opposition to take over the government, just as there wasn't in the Blair years and today under the Coalition. And yet these governments have each played the populist game, the Thatcherite mantra was "power to the people" as British Telecom was sold-off for £3.7 billion. In that decade the government transferred £14 billion from the tax-payer to the investors and paid banks £3 billion to handle these transactions. The programme consisted of giving away state assets to private companies at a reduced price to ensure maximum profits and to safeguard the interests of the private sector.

The Tories handed over a lot of public money to banks from 1992 onwards as part of the Public-Private Partnership, which sold-off public aid and gave greater power to bankers. As Michael Hudson wrote "The financial giveaway had the effect of increasing prices for basic infrastructure services by building in heavy financial fees – guaranteed for the banks, who lent the money that banks and property owners used to pay in taxes in more progressive times." The theory goes that the banks will create jobs as they invest the funds in British infrastructure, specifically public transport, but it was really a way for real estate speculators to get even richer. The extension of the Jubilee Line to Canary Wharf cost £3.5 billion as it raised property values along the route by £13 billion. The public investment in transport could pay for itself simply with a tax on the higher rent-of-location and the site value. But the government would rather the banks rake in the cash.

As Noam Chomsky has pointed out when politicians prefer to talk about 'jobs' than even utter the filthy word 'profits'. The allies of the super-rich then moved to sell-off British Rail and saw to it that the railways carry an over-flowing gravy train for the wealthy. It is standard practice in a privatisation for the state to make sure the buyers are well served with comfy pillows stuffed with the taxes of working-class people. Last year Richard Branson gobbled up £18 million of tax-payer's money as the system underwent a multi-billion state upgrade. The privatisation opened up a space for private ownership safeguarded by public investment and, even as standards of service have slipped, there has been no attempt to re-nationalise the railways. The government contributes £4.6 billion to the railways as the private sector pays just £459 million into the set-up, most of which goes towards stock rather than anything in the real world.

Looking back on it all, its clear that it was just the beginning. We shouldn't forget the real content of such policies when David Cameron talks the same way about hospitals and schools. The same goes for the talk of selling off the woods and the exposed plans to sell bits of the police even. The first decision of New Labour was to abandon the last lever of the state to the markets, the Bank of England became 'independent' of the government. It was clear that there would be no dramatic shift from the post-Thatcherite line that has been safely established to stand its ground. The pillaging and the pig-out for the rich has yet to cease, the same can be said for the pains of the poor. We may live to see the state reduced to a slither of what it once was before we see a change in paradigm. It isn't clear just how far this model can be pushed before something has to give, but it can be said that this is not the final crisis of neoliberalism.

Debtors of the World, Unite!

With City Hall in the hands of Boris Johnson, an anti-political clown if there ever was one, it would seem that the intransigence with which the state opposes the demands of trade unions. There has been talk for a while now of taking the workforce out of the tube completely, replacing them with automated machines. It would be a popular move in the London City-State, where any kind of inconvenience equates to an outright assault on one's basic liberty. The tube unions are the last bastion of working-class power left in this country and this is precisely the reason that the forces of reaction are out to destroy them. No doubt it's part of the same process that has rolled back the state in public services and even more so today. After all the tube is mostly to get people out there to be rinsed at work and in the shops, think surplus value. Thatcher could only dream of doing what Cameron is doing today. The Tories themselves have been caught saying this, though we all know it.

The Tories handed over a lot of public money to banks from 1992 onwards as part of the Public-Private Partnership, which sold-off public aid and gave greater power to bankers. As Michael Hudson wrote "The financial giveaway had the effect of increasing prices for basic infrastructure services by building in heavy financial fees – guaranteed for the banks, who lent the money that banks and property owners used to pay in taxes in more progressive times." The theory goes that the banks will create jobs as they invest the funds in British infrastructure, specifically public transport, but it was really a way for real estate speculators to get even richer. The extension of the Jubilee Line to Canary Wharf cost £3.5 billion as it raised property values along the route by £13 billion. The public investment in transport could pay for itself simply with a tax on the higher rent-of-location and the site value. But the government would rather the banks rake in the cash.

As Chomsky has pointed out when politicians prefer to talk about 'jobs' than even utter the filthy word 'profits'. The allies of the super-rich then moved to sell-off British Rail and saw to it that the railways carry an over-flowing gravy train for the wealthy. It is standard practice in a privatisation for the state to make sure the buyers are well served with comfy pillows stuffed with the taxes of working-class people. Last year that blond gannet Richard Branson gobbled up £18 million of tax-payer's money as the system underwent a multi-billion state upgrade. The privatisation opened up a space for private ownership safeguarded by public investment and, even as standards of service have slipped, there has been no attempt to re-nationalise the railways. The government contributes £4.6 billion to the railways as the private sector pays just £459 million into the set-up, most of which goes towards stock rather than anything in the real world.

Since the 70s we have seen a process of de-industrialisation and financialisation. Thatcher sold-off an awful lot of things and broke the backs of major unions as part of a policy that amounted to the destruction of entire industries. Production was taken abroad where there was a ready workforce desperate enough to work for a $1 a day or whatever. The businesses of the country began invest overseas and import much more from abroad. The back of the industrial working-class was smashed in the 1980s leading to a massive unemployment level. So the threat of unions to the power of the wealthy had been significantly diminished. The people were left in a position where they could easily be squeezed dry by businesses, working-class people suffered some of the biggest wage-cuts in 1990. You would've thought that this would've held down the ability of people to spend, spend, spend. But a lot of credit had been freed up as the constraints that had kept banks in check were removed.

The shock of the assault on the living-standards of the working-class left them in an increasingly dependent position on debt. To make up for the loss in wages people turned to their credit cards, there was a much greater need for loans and mortgages than ever before. This is the basis of the explosion of household debts in the last 30 years. A lot of these debts are concentrated in housing markets because the system is pushed to find profitable investments in order to grow. We're talking about a minimum of 3% compound growth. The desperation to find new investment opportunities for over a trillion dollars has led to greater investment in the control of assets. We might want to think that the banks take unused funds from our bank accounts and use them to help some family to buy a home somewhere. Instead, what we've seen is the emergence of a huge property bubble and the concentration of enormous sums to feather the nests of a very few.

The banking system is built on the knowledge that not everyone will come into the bank and want every last penny of their money. Of course, when a run on the bank happens it's newsworthy for this reason - remember Northern Rock. The odds are calculated in the favour of greater lending and accumulation. The presupposition is that there being enough money to keep the bank going, so that there is enough there for people to pay the bills and put food on the table. The tendency here is to lend out more and more money to accumulate in order to cover itself. This is how the system pushes itself at the ground level. Everyone knows that banks aren't what they used to be. There used to be a time when the pound sterling was symbolic of a pound of silver somewhere. Now that's gone with the advent of fiat currency much to the chagrin of nostalgic right-wingers. It's much more important that the financialisation of the economy has made financial crises likely.

The household debt in Britain is set to rise from £1,560 billion to £2,126 billion in this time of austerity. I would assume there is something similar going on with household debts around the world given the attempts of government to patch up the system as it is. Household debt in the US was at 115% in 2011 down from 135% in 2008, the dip is probably the result of the crisis. In the years of the bubble, 2000 to 2007, households doubled their debt to almost $14 trillion while personal consumption shot up by 44% from $7 trillion to nearly $10 trillion. Over a period of 5 years American households ringed $2.3 trillion of home equity loans and cash-out refinancing from their homes. That's an injection of nearly $500 billion into the economy every year. So you can see why Obama's so-called "stimulus package" was a cop-out, $787 billion for 2 years doesn't cut it! Especially when it's left to the sort of self-glorified bureaucrats who would rather cut than spend.

There is actually an opportunity in this. It might seem that the working-class movement is finished because it has been de-industrialised and, at this point, unions have been reduced to xenophobic suspicions of anymore foreign rivals coming over here. That extends to the opposition of trade unions to European integration, these are supposed to be organisations that are internationalist. It's fine to propose unionisation of workers on a European scale. We're wrong to confine the prospects of unionisation to traditional industries that have been wiped out. Follow the money, grab the vampire by the balls before you drive in the stake! The formation of debtors into unions on a cross-continent scale could potentially give the working-class a way to yank at the banks. A straight refusal by the majority of people with debts to make the payments unless the rates of interest are cut could work. It could also be a way to repudiate the debts altogether.

There are flaws here, but it is a way forward. It would definitely need to be well organised and coordinated to ensure that it was a mass-scale action that would have an impact. Generally the major flaw of the trade union is that the relationship between capital and wage labour can be taken for granted. The priority is to improve the conditions for workers within that relationship, which is fine but the relationship is the fundamental problem. The capitalists have the upper-hand to the workers in this relationship, so victories can only be temporary. It's true that the debtor union would only be active in pushing for a better deal for people who need to fall back on credit cards, loans and so on. But it's striking at the centre of the system and we forget that banking is actually more susceptible to social democratic compromise than labour-intensive industry was. If the bankers think they have to pay-off socialism that's exactly what they'll do.

Invisible Handjobs.

Mirrors without Economics.

The chorus of "I told you so!" cannot fall on enough ears right now, not just in Whitehall but in the rest of the country. As the ears of the charlatans behind this doomed experiment - they call austerity - are notably deaf, only from below can the opposition emerge to this vandalism. It's only austerity for the people who rely on the NHS, state-schools and a benefits system to fall back should they lose their jobs. There was just word of a double-dip recession when the oik first set about on his 'slash and burn' approach to the economy. Since then we've seen growth dip, flat-line and then dip further, it doesn't seem as though the artful oik knows what he's doing. Or perhaps this is part of a fiendish plan. It remains to be seen, but what we know is that this man lacks any formal education in economics (that's not unsual) and he's surrounded by a coterie of advisers who are devoid of theory. He's far too comfortable taking risks which he won't have to suffer for and ordinary people will - the so-called 'difficult decisions'.

The message was posted and it was received with the Conservatives getting smashed at the local elections. It didn't seem to remind them they never had a mandate to begin with, they only succeeded in raising their vote by 3% against one of the most unpopular periods for the Labour Party. That says a lot that the political class don't want to hear. The last Conservative leader to win 40% of the vote was John Major and Thatcher was never as popular as the Party itself. All that really mattered to the Party was to keep hold of the London City-State, if that was lost then the whole thing could be lost. It was also a key opportunity to snuff out any sign that Galloway's victory in Bradford would have impact outside of Yorkshire. And yet the Tories entertained the delusion that Boris won because he embodies a solidly conservative set of virtues. The gap between Ken and Boris now closer than ever at 3% rather than the 6% gap in 2008. There was some truth to Ken's suggestion that he was just "hated more" than Boris.

In the midst of this the BBC seem incapable of acknowledging that the ongoing attempts to reduce the deficit will shrink the economy. They can't even articulate that the cuts to the amount of money flowing into the economy will not boost demand and growth. We're just told that the cuts to the salaries and pensions of public sector workers are a necessity. It's even assumed that there's just 'waste' to be cut and growth can still emerge from this process. Oh yes, the new mantra is deficit reduction and growth - an oxymoron of the highest order. Even if the aims of the cuts go as far as deficit reduction, it would seem that the cuts are insufficient in this aim and may actually increase the deficit as unemployment remains high. The Right will naturally prescribe another round of cuts. For a long time it seemed that the possible had become impossible, yet today most of us can see cuts aren't the way out of this recession and no one dares to reach for the alternatives.

On the Tumbril.

The pretensions of travail, famille, patrie were done away with swiftly on May 6th. The French voter took the Rat Man to the tumbril and placed the Flanby in the Élysée Palace. Well, Hollande will take office tomorrow to be exact. He won 55% of the vote on a platform calling for an end to austerity, though Hollande may have defined himself as the successor to Mitterand he had plenty of words in the right tone as he spoke about a great change across Europe. This is the first time in France for 30 years that an incumbent lost a second term - a testament to the strange times we live in. Sarkozy now joins the ranks of Berlusconi as just another establishment right-winger to be knocked out of power in the midst of the Eurocrisis. The appalling attempts to grab the frothing racist vote shocked many, it was ultimately too much for the supposed pragmatism of French politics. The major point is that the tough-love programme of tax-cuts for the rich and public service cuts for the rest of society has been rejected.

As Mark Hanna would remind us "There are two things that are important in politics. The first is money and I can't remember the second." Word has it that £40 million of funds in the Rat Man's campaign chest came from the dearly missed Colonel Gaddafi. There has since been talk of $65 million and another despot Alexander Lukashenko has claimed that the actual amount was $100 million. Whatever the case it has long been clear that Sarkozy is a creep, a wannabe de Gaulle with that trope of French chauvinism - the suspicion of the Anglo-Saxons. That went as far as claiming the economic crisis is an 'Anglo-Saxon disease' even though Sarkozy had posed as a French Thatcherite. He suggested taking a Kärcher to the neighbourhoods affected in the riots of 2005. Supposedly it was Bernard-Henri Levy persuaded him to wage war on Libya. Really, it was probably the rebel's promise to respect old oil arrangements that made it clear Gaddafi was no longer a necessity in North Africa.

On May Day Sarkozy demanded of trade unions "Put down your red flag, and serve France instead." It was an impotent call, he had to have people brought into town to be filmed in front of the Eiffel Tower. Nonetheless, this dwarf embodied the spirit of reaction in French politics coming at the end of a long line from the Thermidoreans through Pétain to d'Estaing. This may be another instance of the Europeans taking out the incumbent for the other guy, but this time it is a guy who was calling for a stop to cuts. Hollande may retreat from this to some extent, if not all together. We have yet to see. The German elections are coming up and if we see a swing to the centre-Left there could be a shift in policy which might lead to a domino effect across Europe. Naturally the European ruling-class has already seen this coming and they're prepared for a fight. Not everything is going to plan, but it'll take a bit more from the people of Europe to derail this out-of-control train.

Business as Usual.

The process we have endured over the last 40 years was the nightmare of classical economists. The fear was that the merchants and manufacturers would conspire to shape public policy in their favour, that they would do business abroad - investing abroad and importing from abroad. It would rake in enormous profits, but England would have been ruined. Adam Smith argued that the merchants and manufacturers would give priority to their own country, as if by an "invisible hand" England would be saved in this way. Since the 1970s we have witnessed de-industrialisation at home combined with off-shoring of production abroad and shifting to finance over industry. The causes of the crisis are barely discussed, we just have to look forward to the way out. We're no far from the nightmare of classical economists. But it's been pretty awful for a lot of ordinary people and it could get worse. There is no "invisible hand" in sight.

We the British tend to love business as usual. That was evident in the 1930s when we lined up to vote for Conservatives who wanted to sell-off chunks of Europe to Hitler. We don't like to recall just how compromised the Establishment really was. It may have gone as far as the Royal Family, the House of Lords and the proprietors of major newspapers. Even Churchill said in 1937 "I will not pretend that, if I had to choose between communism and Nazism, I would choose communism." When it went wrong and no amount of appeasement could hold-off the inevitable there wasn't much else to do but stand still under the bombs. The people with any means available to them would escape to the countryside. For the lot left behind there was plenty of time to rob bombed out houses and even steal from the dying. Even firemen were caught looting buildings, the fires of which they had just put out. People were crushed to death in the panics to rush into the underground for safety.

David Cameron might be more Chamberlain than Churchill, but for the most part we've managed to stir clear of the spirit of the Blitz with the exception of the riots last summer. Still, it's not really a fair comparison. Between September 1940 and May 1941 there were over 4,500 known cases of looting and juvenile crime made up almost 50% of all arrests. And yet huge gains were won for the working-class movement after the war. The only moves we're seeing to secure those gains have been the odd strike. Officially 400,000 people marched this week in London over pensions, the crowd included 20,000 coppers, and London Occupy has sprung up once again. This is the ongoing resistance to the cuts that hasn't been going on in the US. The courageous protests across the pond in Wisconsin and on Wall Street (which shouldn't be sneered at) have been blips on that vast land-mass. There are huge differences, in Europe we're seeking to protect the social democratic accomplishments of the last century while in America these victories have yet to be won.

Freedom or Death.

We have seen large-scale demonstrations across Europe, including general strikes in Portugal, Spain, Germany and France. The most heroic of resistances has been fought in Greece, which has been hit badly by the crisis to say the least. Of course, there is a lack of coordination on a continental scale, so the bursts of rage are sporadic and unpredictable. Europe still has something of an organised Left, which America barely has anymore. Perhaps history only ended, as Fukuyama suggested, in the US. The emergent SYRIZA, a coalition of leftist parties, which has been making significant gains in the recent Greek elections. The coalition is only 2% behind New Democracy, the conservatives who are closest to taking power. Even the Communist have won 8% of the vote and the Democratic Left got 6%, while PASOK has fallen to 13%. It looks unlikely that the Greek Left will be able to form a coalition government due to differences over austerity and the usual sectarianism that plagues the Left wherever it can be sniffed.

It's possible that New Democracy and PASOK will form a government, - the equivalent of Labour cutting a deal with the Tories - a capitalist bulwark to push through austerity and wait until the socialist storm passes. In retrospect, the victory in France for the established Left holds greater significance with the gains of the radical Left in Greece taken into account. The ruling-class is determined to reconstitute the status quo and get its way. The fight isn't over, though some would prefer to turn our attention to the presence of the Golden Dawn in the Hellenic Parliament. This seems to overestimate the possibilities of a return to Metaxism in Greece, given the gains that the neo-fascists have made are still dwarfed by those of the Left. We shouldn't fool ourselves that these herds could put together the Fourth Reich. The Greek Left needs to push further and be on guard against any possible attacks Golden Dawn might launch on immigrants.

The rape of Greece has opened up all kinds of possibilities, it is an unstable situation. We're told not to sympathise with this profligate nation of wasters and yet this is where some of the longest hours in the world are worked. This is the birthplace of democracy which the Germans and the French have shown nothing but disdain. The Greeks remain remarkably in favour of European integration in spite of the garbage the Franco-German reactionaries have been trying to feed them. The country has been trashed for the sake of a right-wing experiment that was rushed into after Germany reunified. There are some profiteers in this crisis, Greek workers aren't being paid and are being fired across the board. SYRIZA are sticking to their guns, calling for the nationalisation of the banks, paying of the debts owed to pensioners and an end to "structural adjustments" in the jobs market. The Greeks are right to resist of the attempt to destroy the living standards of huge swathes of the population. Recall the old slogan: freedom or death.

No Society, No Alternatives.

The Iron Lady.

 

In the General Election of 1979 the Conservative Party came out on top with Margaret Thatcher as Prime Minister. For Thatcher any attempt to manage the economy would lead to disaster and the catastrophic crash of 1973 was caused by Heath's attempt to control the economy. Instead Thatcher decided the state should be "rolled back" and power be handed over to the markets, a wave of deregulation and privatisation followed. The idea was that the unhindered power of the free-market would reconstruct industry. Heath removed exchange controls and opened up the UK economy to the international financial markets, money could now be moved in and out of the country at will. The banks could now raise huge amounts of capital from anywhere in the world in order to finance the purchase and sale of a vast number of companies. The banks could now target a company, finance entrepreneurs to buy that company and then strip the company of its' assets. The point was to increase profits and maximise return to the shareholders.

Private Vices for Public Benefits.

We might understand Thatcherism as a combination of monetarism and rational expectations, which suggested that the changes in policy could only be managed if the public were convinced that the government would stick to it regardless of what happens. Of course, the cuts in public spending required a determination to confront and smash the labour movement. This went as far as sicking the right-wing elements inside MI5 on Arthur Scargill and the NUM. Thatcher provoked a strike with the announcement that there would be a wave of pit closures and redundancies on the grounds that it was cheaper to import coal. The Thatcher government went after one union after another in a bid to sweep away the remnants of the post-war settlement which had empowered working-class people. The country was opened up to foreign investment and competition, which further undermined the trade unions and destroyed industries like steel, cars and shipbuilding.

After the fall of the Heath administration in 1974 it was clear to the elites that the labour movement had to be broken. It was the only way to turn back the tide as the working-class made significant gains in the standards of pay and working-conditions. One of Thatcher's economic advisers Alan Budd has since conceded that in his most pessimistic moments he suspects that his ideas had been ruthlessly used. Furthermore that the ideas of monetarism served as a theoretical cover for the Thatcherite policies, which could not have been implemented otherwise. The capitalist class had simply seen in the ideas a way to instigate a crisis of capitalism which would smash the trade unions and leave the country immersed in unemployment. It would be easy to hold down wages from then on and profits could skyrocket once again. The rise of Thatcherism might then be attributed to the structural needs of the system for a much more timid working-class that could easily succumb to exploitation and domination.

The Road is Clear.

In the 1980s there was a decline in wages for working-class people and unemployment increased rapidly as the benefits system came under fire from the government. To supplement the loss in demand the need for a fast-track line of credit emerged, the debt economy was pushed to its limits as households across the country fell back on credit cards, loans and mortgages. The privatisation of social housing in Britain at first appeared as a gift to the working-class as it made it possible for them to buy an asset, at a relatively low cost, which might make them rich one day. The housing market was seized upon by speculators, eventually pushing low-income earners out to the outskirts of cities as house prices skyrocketed. The old industries were swept aside to make way for the new era, in which money would be made from money and not much else in Britain. After 11 years of Thatcherism manufacturing in the UK had been virtually destroyed, employment in manufacturing plummeted by 30%.

The deregulation of the financial colossus in London led to the currency crisis of 1984 - speculators had begun to sell pounds and buy dollars because of high exchange rates in the US - and the government just had to stand back and watch. It was the early signs of what would come in later years. In 1987 the Thatcher government retained power for a third election just as the country was hit with an economic crisis, as a wave of panic swept the stock market, as it turned out that shares which had risen in value for 4 years were over-valued. The global markets were soon infected by the contagion of fear and the governments were powerless in the face of such chaos. The rise of a rapacious financial sector had been the works for a long time, now it surfaced and went on to stumble into a devastating crash in 1992 and an even more destructive crash in 2008. As the political class had unleashed the forces of finance they had bound themselves as slaves to the financial colossus in the City of London.

The Long March, to Where?

The fall of Thatcher in 1990 came after the Poll Tax demonstrations descended into riots in Trafalgar Square converged with internal tensions in the Conservative Party. By then unemployment had reached around 7%, working-people had been by some of the biggest wage cuts in the world as inflation began to rise into double figures once again. John Major looked to reassert control over the market for the purpose of setting limits to the fluctuations of the exchange rate. Of course, it was too late for the Grey Man as the old forms of political control and planning had been obliterated as options. So under Major, Britain became a part of the Exchange Rate Mechanism and the pound was fixed to the Deutschmark in order to liberate the currency from the speculators. The currency markets then took on the British government, to force Major to devalue the currency and to abandon the Exchange Rate Mechanism. It began with the sale of billions of pounds on the foreign exchanges.

The marketisation and systematic privatisation has brought destruction to major industries and has significantly undermined the welfare state as it was in the post-war era. The workers' share of GDP in wages reached its highest points in the 70s, Thatcherism succeeded in the reversal of this trend and the policies which she first implemented in the 80s have become the orthodox for British governments. Between 1997 and 2009 wages for working-class people increased by 45% while the wages of high-earners increased by over 300%. Today we live in a society which is more unequal than it was 40 years ago, the top 10% get 31% of income, while the bottom 10% get 1.3% of income, this is the same 10% of the British population who sit on £4 trillion in wealth. On top of this, the end of the Cold War signaled the beginning of a supposedly post-political era in which only managerial politics remain and Thatcherism has taken the place of the social order it aimed to dissolve. We live in an era without ideas, where no alternatives are imaginable and where even the suggestion of 'society' is suspect. It was the collapse of the post-war settlement under the weight of its own contradictions which has left us in this state of affairs, now we need a new settlement.

The End of the Golden Age.

The Last Gasp of Liberalism.

In the late 1960s the Labour government cancelled many of its election promises and moved to cut public spending as it faced rising inflation. The government turned to raising productivity in order to drive growth, a quick way to reorganise British industry was needed. It would end up following a model pioneered by Jim Slater, who set out to strip companies of assets in order to generate a short-term profit. Slater did not profess to hold any concerns at a social level, the only concern he had was to make money and nothing more. So the government put together an industrial reorganisation corporation to supervise a radical experiment in British industry. Under the guidance of Tony Benn the state orchestrated massive takeovers and mergers in British industry, with conglomerates forged out of old companies and thousands of workers made redundant in the process. The Wilson government effectively oversaw the liquidation of industry in order to raise productivity and efficiency to new heights.

Thatcherite before it was Cool.

The Conservative government formed around Ted Heath in 1970 embarked upon a new approach to the economy. Heath rejected the suggestion that the state should or could manage the economy, instead he opted for less intervention in the economy and ultimately to leave the lame subject to the forces of the market. As Rolls Royce went bankrupt and the experiment led to the closure of numerous factories and unemployment began to rise Heath backed away from the approach. The government then went on a "dash for growth" through the liberalisation of credit and a raised public expenditure as the earlier policies seemed to not be working. For a moment it seemed to work, the British economy boomed briefly and then the phenomenon of stagflation emerged as inflation and unemployment began to rise at the same time. The Keynesian orthodoxy was left perplexed.

In 1973 the Conservative government attempted to suppress wages as inflation skyrocketed and in doing so provoked violent strikes. Whatever approach the government took it seemed that the trade unions were a significant obstacle. Ted Heath decided to slam the breaks on the economy, immediate freezes were introduced on wages, prices and even profits. It was a last ditch attempt to control the economy and the stock market panicked at the suggestion of a freeze on profits. Then came the OPEC protest against the Yom Kippur War, in which oil prices were hiked up by 400% and the consequent price shock led to rates of inflation as high as 27% by the mid 70s. The British economy fell into a catastrophic crash as a result, even though the explosion of oil profits flowed to British energy corporations and the rise in price made North Sea Oil increasingly profitable. Finally amidst industrial action, power cuts, a three-day week and out-of-control inflation the Heath government lost power in 1974. But the post-war settlement had been further undermined. The suggestion that the economy could even be managed began to breakdown.

The Science of Money.

None of the traditional methods of Keynesian economics seemed able to resolve the problems in the UK economy in the 1970s. It began to look as though any attempt to pump money into the economy for the purpose of growth was doomed to failure. The proponents of monetarism came on the scene with a theory which seemed to provide technical solutions to the bizarre situation. There was too much money chasing too few goods in the economy. To bring inflation under control it was necessary to slow down the rate of monetary growth. For Milton Friedman the economy was a predictable system governed by laws which were just as objective as the laws of science. The political project of the monetarists went as far as to further challenge the state as a planning apparatus of the economy. The beginning of the end for social democracy was set in motion a few years before as the Bretton-Woods system fell into disarray. The Nixon administration dismantled it as the system was strained by the porous boundaries to capital flows. The US government abandoned a fixed exchange rate in 1971 as gold could no longer serve as the base of international money. The US government retreated from traditional methods of control and the exchange rate was left to float.

Richard Nixon was the last liberal President of the United States, it was the Carter administration who laid the foundations for Reaganomics. Britain soon became enthralled in the same economic theory in the late 70s. Perhaps then we might deem Harold Wilson the last social democrat to stand as Prime Minister of the UK. The country was immersed by desperation as Britain seemed doomed to descend into a gray mediocrity and in 1976 Harold Wilson resigned. The resignation came after a persistent smear campaign against him by a small faction of ultra-rightist MI5 agents - who thought Wilson was a Soviet spy sent to destroy Britain. It was just one of a few plots - which were never followed the logical conclusion - within the Establishment, it went as far as plans to install Lord Mountbatten as Prime Minister and the formation of private armies to fight unions in the event of a General Strike. The resignation opened up a void in government, Tony Benn, Michael Foot and Denis Healey came forward in competition with Jim Callaghan, Anthony Crosland and Roy Jenkins. The right-wing of the Labour Party came on top with Jim Callaghan winning.

A New Game.

That same year Britain fell into the abyss and faced bankruptcy so the government turned to the IMF for  a loan, the catch was a prescription of economic reform. The nature of the economic reforms were clear at the Labour Party Conference that year when Prime Minister James Callaghan stated "We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you, in all candour that, that option no longer exists insofar as it ever did exist. It only worked on each occasion, since the War, by injecting a bigger dose of inflation into the economy on every occasion followed by a higher level of unemployment as the next step." The IMF came to the rescue later that year and Milton Friedman was awarded the Nobel Prize in Economics, this demonstrated the shift in paradigm as monetarism came to the forefront of economic theory. By now there was a new leader of the Conservative Party, Margaret Thatcher had surrounded herself with monetarists such as Keith Joseph. The road was clear as the people became increasingly disillusioned with the Labour government.