Notes from the front of 08-09-16
With less than two weeks remaining in the Labour Party leadership election, the right wing has initiated new battle fronts against Jeremy Corbyn, in preparation for his likely victory.
Capitalism wants Corbyn removed from the Labour leadership, to help shore up the weak government and stop its policies suffering defeats. Ideally Labour should restore its post general election orientation, prior to Corbyn becoming leader in September 2015.
Contrary to capital’s propaganda narrative, the Tories are in a difficult situation. The economy is stagnant and the government is tightening austerity. Living standards have been further hit by the sharp rise in import prices resulting from the post referendum drop in Sterling. The government only has small majority and can be defeated where divisions arise within the Tory Party, unless Labour abstains on issues.
In these circumstances it is difficult for the government to be decisive. Instead it is proceeding cautiously, even on Theresa May’s proposal to increase grammar schools and selection, where there is Tory division. However, far greater problems confront the government due to the EU referendum and threaten to embroil it in a persistent crisis for several years.
The government has not announced a Brexit strategy because it has not agreed one and is hampered by internal Tory conflicts on the various issues. Two months after the referendum ministers are arguing over the fundamentals, including whether to attempt to stay in the EU customs area or the single market, or try for some other framework. Theresa May wants to control immigration from the EU, which is against the single market rules, but the government has no policy on what to propose to the EU; whether that is a points systems, a permit system, an ’emergency break’ or some other restriction on free movement. Other countries, such as Australia, have indicated they cannot seriously negotiate trade deals with Britain till the details of its EU exit agreement have been negotiated. This is the beginning of a long Brexit process and the government already appears to be in chaos. When negotiations start with the EU it will face even greater difficulty.
The Tories’ problems increase the possibility of a Corbyn-led Labour government being elected. This latter prospect is something capitalism wants to avoid at all costs because Corbyn determinedly opposes core elements of its agenda, namely austerity, racism and war.
Corbyn’s economic framework is unacceptable to capital because he intends to increase state investment. Whilst the private sector itself refuses to increase investment it will fight against the state taking a greater role in the economy. It prefers a stagnant economy to economic growth that has resulted from state investment. Capital insists it has control over investment decisions and not the government.
Corbyn proposes that a Labour government invests £500 billion and establishes a National Investment Bank. John McDonnell is correctly committing that government to borrowing for investment whilst balancing day-to-day spending over the business cycle. Such an economic framework can replace austerity with growth and protect people’s living standards. It is completely different from the right wing policies Labour put forward at the 2015 general election. Prettified at the time as ‘austerity-lite’, Labour had actually signed up to matching, for two years, draconian Tory spending cuts proposals, the scale of which the Tories themselves abandoned after the election.
Corbyn’s current leadership campaign is putting forward a series of progressive pledges achievable by a Labour government. They are a key part of a reforming agenda that could aim to: end austerity, halt the promotion of wars, stop the official promotion of racism and sexism and protect the environment. Such a platform would ensure people were better off with Labour than any other political party.
Labour’s right wing has launched a new offensive to secure some important platforms within the party from which to attack Corbyn.
Firstly, the right wants Labour’s front bench to act as an opposition to Corbyn, so it proposes removing the Leader’s right to appoint the Shadow Cabinet. The current system encourages the front bench to work in unison as an opposition to the Tories. The aim is to deprive Corbyn of the right to lead the parliamentary party and create a powerful base from which to attack him. On 6 September Labour MPs voted 169 to 34 that MPs should get the power to elect the Shadow Cabinet. This proposal will need to be ratified by Labour’s NEC and Conference this month, so the fight on this issue is far from over.
Secondly, Labour’s right wing is trying to secure part of the agenda for Labour’s forthcoming conference for attacks on Corbyn. It is encouraging local Labour Parties to submit motions to the conference, such as pro-war positions on nuclear weapons and NATO, in the hope that these get agreed by the conference.
Labour’s right is keen to roll back the party’s internal democracy, in particular to end the ‘one member one vote’ system that elects the party leadership. It is too late this year for such proposals to appear on the conference agenda, unless the NEC agrees to table them.
The Labour left has stepped up its activity. In August the centre-left won all six CLP places on Labour’s NEC. Earlier this year it failed to win the youth place on the NEC and lost one PLP representative to the right wing. This crucial body has only 33 members and Corbyn’s supporters can assemble a majority on some issues but not on others. Overall the centre-left has made a one seat net gain on the NEC this year.
The Labour left is also campaigning for progressive motions to be submitted to the party conference. Recent polling indicates the Labour left is aware of the role of the media and state in destabilising Corbyn’s Labour. YouGov reports that 49 per cent of Corbyn supporters consider the media and 42 per cent the ‘Labour rebels’ as responsible for Labour doing badly in the polls. 55 per cent think the intelligence services are working to undermine Corbyn. 97 per cent believe the mainstream media is deliberately biased against Corbyn. This latter view is also widely held by Labour voters where 69 per cent think it is true and 18 per cent that it is not. The wider population also largely share this view with 51 per cent considering it true as against 29 per cent who think not.
The recent YouGov poll of members of Labour’s ‘Selectorate’ reported that Corbyn is ahead of Owen Smith by 62 to 38 per cent, with an even greater lead amongst women of 67 to 33 per cent. It is important Corbyn receives the maximum possible vote, so his campaign is having a big push till the ballot closes. Labour activists are encouraged to assist the Jeremy for Labour campaign with phone-banking and can sign up to here.
The right-wing Partido Popular (PP) has again failed to win sufficient parliamentary votes to form a government in Spain. Although they gained the support of the fake anti-corruption party Ciudadanos (‘Citizens’) the latest vote to form a government was defeated by 170 votes to 180 votes.Unless a new government can be formed before the end of the year, the likelihood is that there will yet another general election in December, the third in little more than 12 months.
The impasse is caused by the nominally socialist party PSOE (Spanish Socialist Workers’ Party). This is a Blairite party which has no fundamental disagreement with the right’s pro-austerity agenda, and has rebuffed all overtures to try to form a government of the left and other progressive forces. However, its calculation is that it will be the main casualty if it lends support to another unpopular austerity government, as has happened across Europe.
Standing to the left of PSOE on an anti-austerity platform is Podemos Unidos, the merged forces of Podemos (‘We Can’) and Izquierda Unida (‘United Left’). Podemos Unidos slipped a little in the last general election in June this year as small numbers of voters regrouped around the traditional parties in the hope of government stability, but it is still breathing down PSOE’s neck, Its presence is preventing PSOE from the betrayal of a Grand Coalition with former fascists, the corrupt representatives of big business and Spain’s own oligarchs.
Ciudadanos has already revealed itself as bankrupt; an ‘anti-corruption’ party allying with the embezzlers of the PP. At some point PSOE will have to decide. Whatever it ultimately decides, a new round in the recomposition of Spanish politics will begin.
Portugal’s Prime Minister Antonio Costa recently told the Financial Times that his government’s anti-austerity policies were working, shortly after publication of the latest GDP data showing a modest rise of 0.9 per cent in the second quarter of 2016 compared to the same quarter in 2015. Costa leads the Socialist Party, which despite its name belongs to the mainstream centre, in a coalition government with the Left Bloc, the Communists and the Greens.
The coalition has not implemented any new cuts to public spending and has set about the restoration of public sector wage cuts. This measures have led to a growth in both employment and in household consumption. Costa said in the interview that private sector investment had risen 13 per cent in the first half of this year. But data shows the total investment level fell 2.1 per cent over the same period. This can only be from a cut in the government’s own level of investment.
For most countries this is a disastrous policy mix, leading to falling productivity, inability to sustain either wage rises or public spending, and a widening trade gap. But Costa appears to be pinning his hopes on further EU Structural Funds, a supranational form of public investment. These will total €32.9 billion over a 7-year period and are equivalent to 18 per cent of GDP. The average annual contribution is therefore equivalent to more than 2.5 per cent of GDP.
It is doubtful that this is a sustainable strategy even for such a small economy in receipt of such relatively large external investment funds. This reliance also increases the dependence on the EU release of bank bail-out funds, which gives the Commission greater leverage in demands for renewed austerity measures. This is certainly what the bond investors via the credit rating agencies have been agitating for, in a clearly political campaign against a leftist government not implementing cuts. The reduction in the public sector deficit has been achieved only by cutting investment, which is not sustainable.
In order to produce a recovery, and in order to survive politically, the coalition may be obliged to adopt a more radical economic policy, in which the state increases its own investment in key areas such as housing, transport and communications. It has rejected Communist calls to nationalise the stricken Novo Banco, the ‘bad bank’ where taxpayers are saddled with private sector debts. These measures would increase the state’s ownership of the means of production which would allow it to direct investment, and so should be expected to be strongly resisted by business interests and the EU Commission.
On 31 August the Workers Party (PT) President of Brazil, Dilma Rousseff, was formally removed from office by the impeachment vote in Brazil’s upper chamber. Of the 81 Senators voting, 61 voted in favour of impeachment and 20 against, so the proposal passed with the required two-thirds majority.
The impeachment charge was based on a technicality, it being claimed that Rousseff presided over a budgetary irregularity of state bank funds being transferred to the federal accounts in order to cover government spending priorities. Even if true it is similar to the type of budgetary arrangements made by many governments without the law being invoked.
The Senate removed Rousseff from office but, on a separate vote, did not take away her rights to occupy public office for eight years. 42 voted in favour of a proposal that she lose these rights, 36 against and three abstained, the proposal failing to achieve the required two-thirds majority to pass.
Both Rousseff and her opponents have file appeals in court, the former against the impeachment and the latter against her continuing right to hold public office. The PT continues to fight the offensive being waged against it and still has huge support.
The PT have correctly called this a coup. State institutions including the police, prosecutors and judiciary have been working in tandem with opposition parties to abuse the constitutional process. The US has been closely involved in all the machinations. The goal is to bring to a definitive end the PT’s period of office, firstly by overthrowing Rousseff and then by preventing Lula and Rousseff being able to stand at the next election.
The US and powerful sections of Brazillian capital are celebrating the installation of a right wing administration. The former PT President has been replaced by a completely different party than was elected to the presidency. The new president Michel Temer is from the Brazilian Democratic Movement Party (PMDB) and the Brazilian Social Democracy Party (PSDB), that lost the last four national elections, has taken over key ministries.
The coup government is expected to shift economic policy back to neo-liberalism, which will deepen the current economic problems. It intends to privatise public assets, intensify austerity, cut pensions, health and education benefits and the anti-illiteracy programme. It will realign the country’s international alliances in favour of and subservient to the US. Brazil being Latin America’s largest economy means US influence will increase in the region as a result of the coup.
In its 13 years holding the presidency the PT delivered a significant redistribution of wealth and raised the standard of living of the poor. The proceeds of the 2000s commodity boom were channelled into a ‘revolution in distribution’. Prior to the PT presidency such money was just looted by Brazil’s bourgeoisie and taken to the US. The PT instead ensured the benefits from Brazil’s growth went to the majority of its population. This redistribution was a truly historic achievement.
Despite this huge success there was no parallel ‘revolution in production’, strengthening the economy so it could cope with subsequent problems in the global economy. The recent contraction in Brazil’s economy has facilitated the right’s comeback. Plus the PT’s own austerity programme will have aggravated the situation. Economic growth has collapsed from 7.5 per cent in 2010 GDP to minus 3.8 per cent last year. Unemployment reached 11.6 per cent in July this year. As living standards were hit support for the right wing parties has grown.
Since the end of the commodities boom the left in Latin America has been on the defensive engaged in struggles to maintain its previous gains. It lost the Argentine Presidency last year and there is huge fight taking place in Venezuela. The region’s economies have slowed down, which has undermined the support of the left wing governments.
The slow downs are not necessary and could be avoided with different economic policy. Fundamentally the left in Latin America would benefit from looking at the economic policies followed by the Asian left, as they have achieved ‘revolutions in production’, delivering the fastest growth in the world.