The Brown bounce has become the Brown belly flop—and one into an ever stormier ocean. The immediate source of New Labour’s misery is obvious. Those who live by the image die by the image. Nothing distinguishes Labour’s post-Thatcherite programme for making capital happy from that of David Cameron’s Tories. A couple of poor speeches and misjudged donations from a property developer were all it required to turn an 8 percent opinion poll lead into a 10 percent lag. But New Labour has more to fear than a spell of unpopularity in the polls.
The turmoil in the financial markets looks ever more serious by the day (see the interview with Costas Lapavitsas in this issue). Most mainstream economic forecasters expect it to spill over into at least a slowdown in US economic growth and, more likely, an all-out recession. Much of the discussion has moved from whether the economic downturn will occur. It now centres on the degree to which the other sections of world capitalism will be able to “decouple” themselves from America’s problems.
The Northern Rock affair has certainly shown how little ten and a half years of New Labour government have done to repair the long-term fortunes of capital operating in Britain. There is suddenly a suspicion that the replacement of a million and half jobs in manufacturing by a similar number in finance amounts to a facelift, not a heart transplant. The Financial Times fears a property crash like that of the early 1990s.
This leaves the Brown government with very little room for manoeuvre. Its policy of holding public sector pay rises below the rate of inflation began before the financial crisis erupted. Now it will be keener than ever to placate big business and the City by enforcing the policy. Yet no government since the Second World War has succeeded in holding down pay for three years in the way Gordon Brown intends without eventually provoking wide-scale industrial action.
Last year union leaders did Labour a considerable favour. The health and local government unions managed to avoid any action. Postal union leaders persuaded their members to call off their highly effective series of strikes for an offer that conceded very little. This left civil service workers isolated for the moment—although 80,000 were on strike as we went to press. But, it has to be repeated, the battle over public sector pay is due to continue for more than another two years, with teachers balloting for action early this year. And strikes of some sort or other are no longer a rarity, even if we are still a long way from the high strike figures of the 1980s, let alone the early 1970s.
Any industrial action raises political questions about New Labour—especially about why union leaders fund New Labour. This question came up again and again on picket lines in last year’s strikes on London Underground and in Royal Mail. The thirst for a left wing political alternative to New Labour will grow stronger if Brown’s reaction to the political donations furore further weakens the union leaders’ supposed influence within the party.
Meanwhile, the other major cause of disillusion with Brown—the “war against terror”—is not going away. The failure of the US to crush resistance in Iraq and Afghanistan is causing it problems in an ever widening area, as is shown by the tensions on the Turkish border with Iraq, the inability of the Ethiopian army to subdue Somalia, the spill-over of the Afghan war into Pakistan, the recurrent political instability in Lebanon and the continued threats against Iran.
Brown sought to remove the focus for anti-war feeling, while demonstrating his continued commitment to Bush’s wars, by moving most British troops from Iraq to Afghanistan. But such gestures have not been enough to blot out people’s memories of what has been done to Iraq, or the suspicions these memories raise about any sort of imperialist intervention. This is shown most clearly by the angry reaction every time threats are made against Iran.
The liberal media columnists periodically claim the anti-war movement no longer exists. But its demonstrations and rallies are big by historic standards, even if they are not on the same gigantic scale as in 2002-3. Any attack against Iran would produce a similar response to the Israeli attack on Lebanon 18 months ago, but almost certainly much bigger. The 15 March international day of demonstrations, marking the fifth anniversary of the Iraq war, provides an opportunity once again to prove the liberal media wrong—and to increase New Labour’s misery. We can increase it even more if we tie the arguments over the war to the arguments over public sector pay and protests over deteriorating public services.