#19 - Labour's new clothes, tailored to suit the capitalists

December 1994

Social reforms - the great dump

The most striking feature of Labour's policies over the past decade, and even more so over the past two years, has been the toning down and, more often than not the outright dumping of so many of its previous commitments to social reform.

Gone is the idea of the state playing a centralising and organising role in providing public services for all, running vital industries and more generally putting an element of rationality in the otherwise blind and chaotic operation of the capitalist market. Labour's past vocal protest against the Tories' privatisations is now forgotten. First came the statement that the privatisations made in manufacturing were there to stay. Then the re-nationalisation of the almost defunct coal industry - still an important symbol in Labour's tradition - was definitely ruled out. Finally previous commitments to bring back under state control such vital utilities as water, energy and telecommunications mysteriously disappeared from Labour's agenda.

Gone too is the concept of the state protecting the "little man" against the ups and downs of an unstable economic system by guaranteeing minimum standards for all in welfare, health, housing and education. There is no large-scale housing programme on Labour's agenda despite the increasing squalor of working class housing in many areas of the country. While opt-out schools used to be anathema in Labour's view until very recently, the incident around Blair's choice of such a school for his own son and Labour's heavy silence around it, shows that this too may be gone. And how long will it take before some "positive" aspects are acknowledged in the Hospital Trust system and the rampant introduction of the market across the Health Service? As to welfare, the report published recently by the Labour-sponsored "Commission on Social Justice" shows that in this field too Labour is now firmly in reverse gear.

Gone finally is the role of the state in providing some form of protection for workers against the excesses of capitalist exploitation. In early November, Blair explained to an audience of senior executives gathered at the Per Cent Club that "we are not in the business of sweeping away the trade-union and labou-relations law of the 1980s". Spelt out in a different context, that of a conference sponsored by the New Statesman a few days later, Blair's views on the role of trade-unions under a Labour government are that they should be "defending individual rights, providing innovative services and contributing to important debates on industry and the economy." The keyword here is "individual rights", a very popular concept in Tory circles. But that of workers' collective rights - to organise, to bargain, to strike - is yet another basic element in Labour's tradition which has been dumped. Just as has been dumped the previous commitment to restore the wages councils disbanded by the Tories in industries where low wages are dominant while the minimum wage, although part of Labour's official policy since its 1986 conference, faces an uncertain future involving at least its postponement and reduction.

This whole trend was summarised by Blair himself in an interview published last June, in the middle of the leadership election campaign, by the London Evening Standard: "We need economic renewal so that in place of the old debates between public and private sector, market and state, regulation or deregulation, we construct a modern industrial policy where government is not trying to pick winners or run industry, but working with it to enable firms to grow and be better able to run themselves." Put in a nutshell and leaving out the jargon, this amounts to saying that Labour's view of the role of the state is now to promote private entreprise and boost profits, no more, no less. Of course, this is just what Labour have always done. But what is new is that Labour is now shamelessly open about it.

A party of reform?

Those harking back to Labour's alleged "good old days" should remember the not so good old days when Labour, far from being a party of reform, undertook the task of imposing on the working class the sacrifices and stepped-up exploitation which the Tories felt unable to impose on their own.

Such was the case, for instance, during the Depression. The Labour government elected in 1929 promptly forgot the pledges made during the general election. Not only did it fail to repeal the infamous 1927 Trade Union Act which was known as the "scabs charter" and bore a number of striking similarities with today's anti- strike laws. It also indulged in a provocation against the miners leading to strikes and to a lock out in Wales. It conspired with the textile companies to impose wage cuts on their workforce, and sent its police to crush defiant locked-out wool-mill workers in the West Riding in 1930. All this ended up with a split in the Labour leadership. A "National Government" took over under Labour's ex-leader Ramsay Mac Donald as a coalition of Tories and former Labour ministers and proceeeded to cut unemployment benefit. Meanwhile Labour leaders sat back in opposition, satisfied with not having to take responsibility for this measure but determined to do nothing about it. Finally this period culminated during World War II, when Labour participated fully in Churchill's "National Government" to defend the interests of British capital at home and abroad. Labour and trade-union officials enforced military discipline and reduced conditions for millions of workers in the war industries while putting millions of others into khaki and sending them across the world to the killing fields of the war.

Of course, when talking about Labour's reform record, it is always the 1945 Labour government which is mentioned. What is never said about it, however, is that Labour's so-called reforms only carried into peacetime some aspects of the wartime organisation of the economy. This was in fact taking place in many other countries across the world, under governments which were not all led by Labour or social-democratic parties. In France, for instance, similar measures were implemented under General De Gaulle, whose main known loyalty in politics had been to the royalist far right. While in Japan and Germany, many of the reforms were carried out under American pressure and supervision, if not by the US general staff itself.

Throughout the world, and even to an extent in the USA itself although it was less visible, the postwar period was shaped in order to provide the respective states with every possible facility to rebuild economies which had been either partly destroyed or deeply disorganised by the war. This course was not imposed on the capitalists. In Britain, for instance, plans for postwar reconstruction had been drafted from the very early days of the war. And the agreement among the representatives of capitalism was, that on the basis of the experience of the period following the previous World War, three dangers had to be avoided at any cost: one was the possibility of a working class backlash aimed at bringing those responsible for the war to account; the second was the risk of a deep recession caused by the need to reconvert the war industries before world trade could get into full gear; the third was the threat of competitors rebuilding their own industry faster and therefore better placed in the future struggle for markets. Thus in each industrialised country the end of the World War marked the resumption of another war, this time on the economic and social fronts alone. And in each the capitalist class agreed, for the sake of efficiency, to allow the state to use wartime powers in order to achieve these objectives.

In Britain, the nationalisation of basic industries only formalised in law the previous wartime arrangements. It enabled the Labour government to inject into these industries the investments that British capitalists were unwilling to risk from their own pockets. This large public sector was able to supply the rest of industry at subsidised prices. In addition, in order to maintain the low wages which dated back to the 30s and had been continued, backed by force of law, during the war, the bosses needed a cushion to prevent any social explosion. The so- called welfare state, the main pillar of Labour's alleged reforming record, fitted the bill.

For the next 30 to 35 years the capitalist class as a whole held to this setup because the costs of the nationalised industries and the welfare state were more than paid for by the profits they gained from an expanding world market, in particular through the rich pickings from a more ruthless and systematic exploitation of the Third World. And this was reflected in the policies advocated by the two main parties. By today's standards, the Tory party of the 50s and 60s would probably be branded as raving socialists by the likes of Heseltine and Portillo. For, apart from the odd demagogic gesture to keep the most backward layers of its electorate happy, it did little against nationalised industries and public services or the welfare state. And in fact, in areas like public housing for instance, Macmillan's Tory government achieved much more than any Labour government in that period.

To go back to Labour's postwar reforms, the truth of the matter is that these reforms fitted in with the needs and wishes of the capitalist class. But just in the same way as other policies did, like, for instance, the colonial occupation of the Middle East and Malaysia and the bloody partition of India which were carried out by the same Labour government. In short, up to the mid to late 70s, Labour's reformist policies went as far as it suited the bourgeoisie, but not one inch further. The interests of the working class had nothing whatsoever to do with it.

The capitalists step up their demands

It was actually a shift in the requirements of the capitalist class which triggered a parallel shift among politicians, both Labour and Tory, and in fact across the industrialised world.

The process started in the early 70s, when the previously slow but relatively steady expansion of the world market came to an end. A new period of on-going world economic crisis began, which was in many ways not dissimilar to the pre-war situation. Towards the end of the decade spectacular bankruptcies of Third World states signalled the end of three decades of easy and riskless profits for many Western companies. New sources of profits had to be found by the capitalist classes of the rich countries to make up for their losses. They turned to their home economies, with the aim of increasing returns by stepping up exploitation and mobilising a larger share of the state resources for their own benefit. And this turn came earlier and was sharper in those industrialised countries where the capitalist class had been most parasitical, in that they had invested proportionally more in exploiting the Third World than in developing their own home market and industry. Britain was, of course, in the very top league of parasitism and this did not take long to show itself.

Across the industrialised world, governments of all descriptions took to the offensive against the working class to reduce its standard of living and began slashing state expenditures. In Britain this was initiated not by Thatcher, but by the preceding Labour governments. Thus, for instance, between 1974 and 1978, 35,000 hospital beds disappeared just as the generation who while fighting World War II had been promised full and free health care was reaching old age. Likewise the now familiar cuts in social benefits through so-called "re-targetting" was initiated in that period, while plans to slash tens of thousands of jobs in nationalised companies like British Leyland, British Steel and the coal mining industry started being implemented.

Thatcher and the Tories took over where Labour had left off. The attacks on the working class both by the government and the bosses carried on, but at first at a relatively slow pace. Just as it took Thatcher a few years to really start rolling back the public sector. There were many reasons for this. One was certainly a constant fear of a possible backlash from the working class, which was often perceptible at least until the defeat of the miners' strike in 1985. But, as far as privatisations were concerned, for instance, the main reason was probably that after years of underinvestment, the state industries were hardly attractive for the capitalists. The bourgeoisie waited for the government to meet the political and economic cost of slashing tens of thousands of jobs, closing down many unprofitable facilities and injecting finances in those which were to stay. Once this was done the big privatisations took place.

But having gobbled up the huge tax cuts and the many more or less concealed subsidies awarded by the government, followed by the massive profits of privatised companies like British Telecom, BP, etc.., the capitalist class pushed for more. And they were all the more forceful in their demands as the world economy looked increasingly stuck in a permanent crisis while the danger of a working class backlash seemed more and more remote. This led to the present period of piecemeal privatisation - the slicing up of the large public utilities, the smalltime contracting out of chunks of the civil service, the backdoor privatisations in the NHS - with the dual aim of generating more sources of profit, however small, for private capital, and cutting social state expenditure. And having tasted so many new sources of pickings, the capitalists are now determined to hang on to them.

Labour's acceptability problem

After Labour's 1979 defeat, the reconversion of its party machinery to adapt to the shift in the capitalist class was bound to be difficult, if only because Labour had no near prospect of getting back into government. Or rather, at least in the first years of Thatcher's regime, its only chance to get back into office depended on its usefulness to the capitalists, in other words on the Tories' possible inability to impose the required changes on the working class.

At that stage, Labour's only chance to be considered as a possible alternative to Thatcher was by proving it was capable of controlling workers' reactions to the Tories' austerity measures. And to retain that control Labour leaders could not afford to allow their image to be associated too closely to Thatcher's policies. Moreover they had to make workers forget the cuts and austerity enforced under Wilson and Callaghan. Such calculations were certainly instrumental in the leadership's choice to allow more space to the Labour Left and a more radical- sounding language in the party's official propaganda.

But at some point, Labour was bound to initiate its reconversion. Had they been re-elected early enough, this would have taken place while in government as had been the case with the 1929 Labour government. Things did not go that way, however, largely because the Tories were able to tighten the screw and to cope with workers' resistance. With the working class weakened and forced on the defensive, and the crisis biting increasingly, there was no incentive for the bourgeoisie and the better-off layers of the electorate, to want Labour back in office.

By 1983, Thatcher's success in winning an even larger proportion of the vote in the general election showed that the Tories were there to stay and that Labour faced a long period in opposition, at least another term in any case and possibly more. Older figures such as Michael Foot and Denis Healey, who had made up a kind of interim leadership, were pushed out by the party machinery which, this time, left no space for the left of the party. Neil Kinnock, a former soft-left supporter turned advocate of Labour's modernisation, became leader with Roy Hattersley, a former cabinet minister under Callaghan and a staunch right-winger, as deputy. The days of Labour's political normalisation had arrived.

The Labour leadership was now faced with a problem which, although not totally new, had never been so acute. For the foreseable future, Labour's traditional bargaining chip for being accepted into office, its control over the unions, was bound to be of little weight. The confrontational tactics used by the capitalists and their ruthless slashing of jobs showed that it would take a mighty resurgence of the class struggle for them to start worrying about it. All the more so as companies had enough reserves to be prepared to pay for the trimming down of the workforce - as was shown by the relatively large redundancy payments on offer - and, if need be, for defeating limited fightbacks. This left Labour empty-handed or rather with the need to find a new way of making themselves attractive again to the bourgeoisie.

As a rule of thumb, the bourgeoisie prefers to have the Tories in office - not so much for political reasons, since Labour has already been tested time and again in government and proved just as loyal in managing capitalist interests as the Tories - but for social reasons. The fabric of a Tory administration is the "old boy" network operating at the most elite layer of society. School friends from Eton and Harrow intermingle with others in Conservative associations at university. Traditionally this was at Oxford though current Tory ministers preferred Cambridge. Thereafter they disperse, mainly, of course, to the City and company boardrooms but others to Fleet Street or towards Westminster and Whitehall. Socially they are never separated. They eat at the same London clubs where ideas can develop into a concensus between businessmen, politicians and senior civil servants.

Labour have nothing to compare with this well-connected web despite the small group of their supporters in the City, people like Lord Hollick who remained isolated cases. The relationships between Labour politicians and individual capitalists are more formal, more dependent on the institutions and the committees in which they happen to sit together, and therefore more complicated and less reliable.

So why should the bourgeoisie bother to make things more difficult for itself by opting for a Labour government in circumstances in which a Tory administration will more or less do the same job without the hassle?

Gambling on the flaws of the two-party system

There is, however, one reason which could lead the bourgeoisie to want a change of government. And that is precisely the kind of development that we are witnessing today - the wearing out of the Tories after too many years in office.

The main function of the two-party system is to guarantee the best political stability while providing voters with the illusion that they have a choice. There is a trade-off however, since the very logic of the system results in squeezing together within the two main parties all sorts of factions which would probably otherwise have their own independent parties. As long as their internal rivalries can be kept private, either out of a common ambition to gain power or as a result of an agreement over the sharing-out of the government cake, this does not need to be a problem.

But the longer a party is in office, the more this generates ambitions within its ranks and the more it becomes difficult to control its internal squabbling. With time this may weaken a government to the point of it showing its weaknesses and appearing unstable. This is exactly what is happening now to Major's government as a result of a process which started in 1990 with Thatcher's eviction from government by her own colleagues. And this development could change the mind of the bourgeoisie to the point of considering a Labour government as the preferred alternative.

This was in fact the kind of opening that Labour chose to prepare for after the 1983 election. The debate triggered by Labour's defeat in 1987 about its "electability" considered this possibility as its starting point. And what that debate was really about was how Labour could convince the bourgeoisie and its associated middle-class layers, not just that Labour was dependable from the point of the view of the overall interests of the bourgeoisie - a fact already well-established - but also that Labour was prepared to go out of its way in order to adapt to the demands of capitalism in the present period - in other words that Labour would not only do the same job as the Tories, but would do it better.

This was indeed the objective of the "modernisation" process initiated by Kinnock from 1983 onwards - the Labour leadership undertook to prove its genuine acceptance of the new rules for the government game laid down by the bourgeoisie. Not only had Labour to show that it would not resort to its usual past trick of using state funding to smooth out the introduction of new austerity measures; they also had to show that they would resist the pressures and demands of the apparatuses on which their influence is based - particularly that of the union bureaucracy and local government - and that they would not trade their co-operation in exchange for various privileges as was the case in the 70s in particular.

But of course, to provide convincing proof was not just a matter of a few sentences in an election manifesto or a few motions at Party conferences. Nothing short of a high-profile shift would do. It involved reversing publicly- held long-established policies, at the risk of losing members. It also required overhauling the whole party structure. Not surprisingly, it was bound to meet with some resistance, from all sorts of quarters: from the grassroots, who objected to the dumping of traditional themes; from sections of the union bureaucracy, who resisted any hint at changing their relationship with Labour; from old time Labour politicians, who were unwilling to be pushed onto the sidelines for the sake of giving the Party a new face; from Labour councillors, who resented being trapped between the government's courts and the party's disciplinary committees. It is therefore not surprising that it took over eleven years for this process to be carried out.

Getting into the act in local councils

The Labour leadership started cleaning up its act in the large urban local councils which it controlled. These councils raised particular problems. Most of them were strongholds of the left of the party - who even played with the concept of what they called "municipal socialism" - and therefore were more difficult to keep in check. And yet they were the only institutions in which Labour was effectively in power and therefore in a position to implement its new course. The problem was compounded by the fact that these councils were the first targetted by the Tories' for cuts in social expenditure.

In the early 80s, the best known examples of these were in some London boroughs, Sheffield and Liverpool. Councils like Brent and Lambeth had a radical tinge and were often stigmatised by their detractors as the "loony left". In Sheffield, the Labour council took credit for expanding a comprehensive bus service across the city that enabled citizens to travel extensively for a few pence. While in Liverpool a council onto which a few Militant members had been elected as Labour councillors set great store by their efforts to improve the extremely run-down public housing stock.

Such policies were certain to lead to a confrontation with central government and they did when Thatcher decided that councils setting their rates too high would be penalised by lower central government funding. Far from siding with the Labour councils under attack, Kinnock launched into an outright and vocal, condemnation against them for putting themselves outside the law. And whereas Ken Livingstone in London and David Blunkett in Sheffield were rewarded for their timely cave-ins with safe Labour seats ahead of the 1987 general election, in Liverpool the councillors who had tried to resist Thatcher's threats were eventually witch-hunted out of the party.

By the end of 1985 the confrontation was finally over. But some yeras later came the introduction of the poll tax, which threatened local councils with more forced cuts on social expenditure and a possible backlash from the poorer tax payers due to the blatant injustice of the tax. There again, the policy of the Labour leadership was unambigous. While blaming the government for "making a mess of it" they condemned the many demonstrations which took place before the implementation of the tax and then ordered their councillors to comply with the law, in other words to set up a poll tax register and organise the collection. Non-payment was denounced publicly as playing into the hands of the government and dozens of councillors were expelled from the party for advocating non-payment, refusing to co-operate in the poll tax collection or sometimes for attending the meeting of an Anti-Poll Tax Union. Two MPs, one of them having gone to jail over the poll-tax, were also expelled from teh party. Soon Labour councils were sending court orders to thousands of non-payers, some of whom were imprisonned.

Labour had made their point. Their troops had fallen into line and all Labour councils had more or less complied with the Tories' law. Labour had shown that not only would they refuse to condone any direct action against the state, but that they were even prepared to discipline their own councillors, even if this meant risking losing support in the local elections. Kinnock had sent a strong signal to the bourgeoisie underlining his responsibility even when it came to implementing the most unpopular of all Tory legislation, and his determination not to give in to the pressures of Labour's local government machinery.

De-linking from the unions and dumping Clause Four

Having demonstrated its ability to tame its local councils, the Labour leadership proceeded to address the question of its relationship with the unions.

It is obvious that there is a current in the ranks of the Labour machinery, particularly among younger politicians, which is tempted to copy the model of the US Democratic Party. They would like Labour to retain the support of the union bureaucracy without having to pay any political price for it and without having to be accountable in any way to union leaders. Undoubtedly, such a solution would fit perfectly the leadership and its determination to show its independence from the union machineries.

However, things are slightly more complicated in the real world. For one thing because Labour still draws most of its material resources and a large number of its officers from the union bureaucracy. The Labour bureaucrats are quite willing to break their link with the unions, but not to the point of going bare foot! Besides breaking a link dating back to the very origins of the party is easier said than done with respect to rank-and-file Labour supporters. To root out this idea from among its followers will probably take many more years.

In any case, in the end, Labour has opted for a half-way solution. The introduction, at the 1993 conference, of the one-member-one-vote system, postal ballots for major party elections and reduced voting rights for members of affiliated unions, provided the basis for claiming that the union bureaucracy would no longer carry the same weight in defining Labour's policies. This, in itself, however, was unlikely to impress the bourgeoisie, as everyone knows that the party's actual policies were never decided by the membership anyway. The real decisions were always and still remain the privilege of top-level internal committees in which the weight of union leaders is probably the same today as it was yesterday.

But what may give more credibility to this move, are the parallel policies proclaimed this year both by Tony Blair and by the TUC general secretary John Monks. Thus when Monks went on record saying "we extend our hand in partnership to anyone - government, employers, political parties, social groups - who will take it", it was another way of saying that the TUC no longer wanted the Labour Party as its only partner and that it was open to closer contacts with the Tories in particular. And he proceeded to prove it by addressing as many business conferences as he could, including that of the CBI, and by engaging in regular private talks first with David Hunt and then with his successor, Michael Portillo. This announcement mirrors that made by Tony Blair in November to the effect that "unions do not want, and will not get favours from a Labour government" which is an unmistakable way of saying to capitalists that Labour is determined not to let the union bureaucracy interfere with, or benefit from the policies of the future Labour government.

At the same time, this partial dumping of the trade-union link is a way for the Labour Party to prove its willingness to get rid of what remains a strong symbol of its working class past. The same applies to the present moves to dump Clause Four from the constitution of the Labour Party.

This Clause Four states the Party's aims and objectives. It goes back to the days of 1918 when the Labour leadership chose to open the doors to individual members for fear of seeing the tens of thousands of workers politicised by the war and inspired by the example set by the Russian Revolution join another party to its left. In fact this Clause is not the revolutionary piece that is often portrayed. For instance, its paragraph 6 pledges co- operation "with the Labour and Socialist organisations in the Commonwealth overseas with the view to promoting the purposes of the Party", talks about promoting there "a higher standard of social and economic life", but says nothing about ending the exploitation of Commonwealth countries by British imperialism!

The subject of the debate is actually the famous paragraph 4 which reads: "To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry and service." If words have a meaning, and despite its confused formulation, what this paragraph talks about is "common ownership" rather than nationalisation, and "popular administration" rather than a Labour government in a bourgeois parliamentary system - nothing to do whatsoever with anything Labour has ever achieved or even aimed to achieve.

But it is a symbol. To quote The Economist, certainly an expert on what the bourgeoisie expects from the Labour Party ; "If politics were entirely about substance, this would mean nothing. Labour had no intention of putting Clause Four into practice. But in politics, symbols matter. Clause Four stands for Labour's intellectual debts to Marx, for its origins as a party of struggling proletarians, for the politics of protest and confrontation." If anyone wanted to know why Blair is so determined to get rid of Clause Four, even if it means going against a decision by his Party conference, here is the reason.

The New Model Labour Party

A replacement for Clause Four was adopted by Labour's National Executive in the last days of November. It says in particular: "We believe in an economy that works in the public interest. A competitive market economy, with a strong industrial and wealth generating base is in the public interest. So are well run public services. To achieve both, we need not just a thriving private sector but an enterprising public sector, where there will of course be a role for public ownership for reasons of efficiency as well as justice." Who, among British bourgeois politicians, would disagree with such a statement, except maybe the odd Thatcherite fundamentalist? But that is precisely its purpose. The reference to "public interest" is no more than a polite word addressed to Labour's membership, but the important part is the bit about the "competitive market economy". Another symbol again, since Labour has always been in favour of the market, but the kind of symbol that the bourgeoisie would prefer to see on Labour's membership cards rather than the present Clause Four.

This rewording of Clause Four provides a general idea for all the commitments made so far by Labour for its future policy in government.

In the financial sphere, there is no longer any question of increased tax, not even on the very wealthy. On the contrary, Labour now propose tax incentives for long-term investment in shares. This, they say, should bring stability into the market, reduce the pressure pushing up dividends and provide a protection against hostile takeover bids. What they do not say, but probably it goes without saying, is what their intentions are concerning the infinite number of tax incentives and rebates already enjoyed by those wealthy enough to play on financial markets.

But probably the most significant element of Labour's plans disclosed so far is the report of their Commission on Social Justice (though Tony Blair has gone to some lengths to stress that it is not a Labour manifesto and might therefore be watered down). In itself, the composition of the Commission set up two years ago by John Smith is significant of its aims. Its chairman, Sir Gordon Borrie is director general of the Office of Fair Trading. In addition to the chairman of Northern Foods and seven academics, one of whom is an ex-Labour member who joined the Liberal Democrats, the commission included two charity functionaries, the bishop of Guildford, the head of research for a major consulting firm and one senior Unison official - hardly the kind of crowd which can be trusted to know what social justice may be about!

Claiming to be a "new Beveridge" to "develop a practical vision of economic and social reform for the 21st century", it actually falls far short of its predecessor. Perhaps the most obvious difference is that whereas Beveridge insisted that his plan could only work if there was a commitment to full employment - in order to pay the contributions needed to fund its provisions - the Commission assumes that it will be "many years" before full employment is achieved. It is taken for granted that "jobs for life" are over (and since such jobs never existed for workers, this amounts to condoning the growing trend towards short-term contracts) and that a key purpose of welfare proposals should be to put pressure on people to take work.

How this will be done, can be gauged from proposals for a Citizens' Service which is designed to make the young more employable. The similarities with the government's own youth training schemes is more than passing. Participants would be paid £50pw - the same as youngsters currently doing a government training scheme. The report claims there would be more attempt at educating them, rather than just removing them from the statistics. But were not similar claims made by successive Tory employment ministers, none of which amounted to anything. Citizen's Service would not just include kids on the dole. Young employees could be seconded, students between school and university could accrue credits to pay for university grants. The Commission denies that this amounts to "National Service by the back door". Perhaps not, after all every young male had to do National Service whereas this seems to rule out those whom employers do not want to second or students rich enough not to need a grant.

In fact many of the proposals are aimed at removing the inflexibilities of the current means-tested welfare provisions with very low cut-off points. This can act as a disincentive to taking low-paid jobs. If benefits, for instance housing benefit or income support, were phased out gradually then people would not become "trapped", i.e. find themselves worse off working because they lose all their benefits. So the reforms would largely pay for themselves.

Far from being the antidote to the Tories's planned Jobseekers' Allowance which will merge dole and social security and reduce unemployment benefits from 12 to 6 months, Labour's proposals parallel them. In fact by taxing child benefit and making single young mothers go out to work, they might end up going further than the Tories would dare!

As for care for the elderly, the moves by the Tories to make old people make their own provisions are underwritten. Long term care will not be provided free. Insurance will be made compulsory for everyone to fund their own long term care with the proviso that the state will pay for those who cannot keep up premiums or whose insurance runs out.

As to what is probably the only issue on which many workers expect a Labour government to deliver some change - the introduction of a minimum wage - Labour has been using delaying tactics for ages, not wanting to fall out with the bourgeoisie over the issue. And if now, eventually, they are coming down on the side of setting a figure, it is likely to be only £3.50ph (down from £4.15ph previously), as proposed by the Commission for Social Justice. But even that level is not certain, nor is any time set for its implementation. There have been mentions of a possible phasing in of this minimum wage and even of regional differences. Nor will those on £3.50ph be exempted from paying taxes. One of the arguments being used for introducing it is that government revenues would be boosted by between £1.3-£1.6bn a year by increasing the numbers of those paying taxes and reducing those on benefits.

The proposals on offer from Labour suggest that although the welfare state will survive, its provisions will be pared to the minimum. As lower paid workers, let alone those faced with long-term unemployment, will be quite incapable of taking out fancy private pension and insurance schemes, they can expect a lifetime of drudgery to be followed by an old-age of penury. So much for the Commission's claim to be providing a "hand-up" rather than a "hand-out".

Lessons from abroad

To try to imagine what the policies of a Labour government could be, it is worth taking a look at the record of some of the Socialist governments which have been operating in Europe over the past decade. France and Spain had far-right or conservative governments during the 60s and 70s and "socialist" governments in the 80s.

With the election of President Mitterand in 1981 and general elections shortly afterwards, the Socialists took over. A budget deficit and a run on the franc quickly forced Mitterand to choose between taxes for the rich or austerity measures for the workers. He chose the latter and these remained in place until the end of the decade.

Despite the age of retirement at 60, compulsory schooling or training raised to 18 and hundreds of thousands forced into early retirement, there are now twice as many officially on the dole as in 1981, or over 3m. But the fortunes of French capital during the same period tell a completely different story. Under the slogan of the "fight against unemployment", the socialist government has been channeling vast sums of money to the employers. In 1990 the total cost to the public purse reached £23.5bn. And since then the amounts have continued to rise. In addition to money received direct, employers have also benefited from numerous tax reductions, not to mention low interest loans.

Ostensibly this has been to assist in job creation. In fact these subsidies have enabled French capital to undergo an enormous restructuring and make massive profits into the bargain. Early retirement schemes were financed by the state while employers were offered tax and National Insurance rebates for every new job that was created, even, if more often than not, for each so-called new job several others had been cut.

The most drastic blow dealt by the socialist government against workers' conditions was the introduction of many new schemes which allowed employers to bypass existing labour legislation on the national minimum wage and on redundancy and dismissal terms. In addition to temps, whose wages are not necessarily worse than those of regular workers, all major companies and an increasing number of smaller ones now employ large numbers of workers on short-term contracts - and short-term can mean as little as 24 hours in the case, for instance, of car rental companies.

Of course, Mitterand's governments are better known for carrying out a series of nationalisations in the early 80s - among them a few banks and some large industrial groups. The aim of these nationalisations, however, was clearly to allow shareholders to make a quick buck out of selling their shares at an overvalued price to the state, thereby releasing vast amounts of floating capital which immediately boosted the financial markets. At the same time, these nationalisations allowed the state to organise and finance large-scale reorganisations in industry on behalf of the capitalists.

Thomson, for instance, France's largest electronics group, gives a good idea of what these nationalisations were about, an example which is strikingly similar to that of companies like BAe under Thatcher. Roughly half of Thomson's workforce was slashed during the 80s, with large factories in suburban areas closed down and their land sold to developers. At the same time Thomson was buying up foreign operations. Electronics companies were acquired in the USA, Canada, Britain, Holland and Switzerland and led to wholesale redundancies as the plants were closed down or streamlined. Meanwhile Thomson was expanding its plants in Third World countries. Today Thomson assembles (mainly in kit-form) in Mexico, Brazil, Argentina, Burma, Thailand and St Kitts, while all television tube production is done in Thailand, Singapore and Burma. Finally with Thomson restructured into four divisions comprising weapons, telecom, computer components and high tech electronics, each division is to be sold off separately, thereby creating very profitable private monopolies in the process.

The cost of these policies for the French working class is not limited to high unemployment and lower standards of living. Trade unions and left political organisations have been hard-hit by demoralisation in their own ranks and in factories which used to be strongholds of left political parties. It is often difficult to find candidates for shop steward elections. The cynicism generated by the role played in government by socialist and communist party ministers has turned into hostility against politics. This climate has been instrumental in allowing the far-right National Front to win a seizable foothold in the electorate from the mid-80s, before eventually bringing back a coalition of right-wing parties into government, in 1993, with one of the largest majorities ever recorded in Parliament.

Spain, where the Spanish Workers Socialist Party has been in office since 1982, under Felipe Gonzales, provides a similar picture.

Again, government funds were used to provide subsidies and extremely generous tax breaks for industrial projects. Lenient planning regulations and low wage costs were another incentive. The result was an enormous inflow of foreign capital. Probably the most well-known success story has been the motor industry with manufacturers such as Ford and VW helping create an industry which for some years now has been larger than Britain's.

The basis for this growth, however, was the direct collaboration between left political parties and trade unions to keep wages low. This was achieved through the Moncloa Pact which set maximum annual wage increases. As result, even discounting the effect of unemployment, real wages have fallen far behind inflation. For example between 1982 and 1989 (when a protest general strike was held) railworkers lost nearly 20% of their purchasing power. The effects are all the more severe as Spain has some of the lowest wages in Europe.

As in the rest of Europe, unemployment has multiplied. The only difference is that in Spain it is much worse. Official figures register 20% but as so many categories are excluded, the real figure is much higher making it the worst in the entire industrialised world. And while in 1982, 75% of the Spanish unemployed received no unemployment benefits, by the end of the decade the proportion had risen to 83%. Not surprisingly this has been reflected in growing numbers of homeless and a rocketing crime rate.

Meanwhile, under the pretext of encouraging job creation, the Socialist government relaxed the constraints on firing and provisional hiring. While employers have received tax breaks, their contributions to Social Security have been reduced by between 50% and 100% for young workers aged between 20 and 25. Today Spanish workers are more insecure than ever, with fully 30% on temporary fixed-term contracts and bosses allowed to lay off workers without indemnity.

The other side of the coin is the growing ostentation of the "new rich" who this year have benefited from reductions in VAT on luxury goods and the lowering of the top rate of tax from 56% to 50%. For those with capital to spare, new investment possibilities will be created by the planned part-privatisations of the state sector in everything from energy and the utilities to air transport and financial services.

When a European-wide report analysing top businessmen's living standards was published a couple of years ago, it came to an remarkable conclusion. When adjustments were made, it was not in Thatcher's Britain or Germany or Switzerland that businessmen were best paid - but in Spain and France, the two countries in Europe with Labou-style governments!

The need to prepare the future

This is the kind of future that Labour has in store for the working class. In itself, despite Blair's claims to modernity, it is nothing new. The fact that Labour has swapped its left-wing packaging does not alter what has always been the fundamental nature of its policies. It only reflects the reality of the balance of forces - given the present demoralisation in its working-class electorate, which has no other choice in an election than to vote Labour, the Labour leaders feel free to display openly what they intend to do in office, thereby increasing their chances to be accepted by the bourgeoisie and the middle class electorate.

When and how Labour will come to power remains an open question. But there are now many indications that a concensus may be in the process of emerging within the ranks of the bourgeoisie not just on the acceptability of a Labour government but in favour of having one.

Thus, in addition to the enthusiasm for Blair displayed by the bourgeois press, large companies which have traditionally funded the Conservative Party are now making public openings to Labour. There have been top-level meetings between the Labour leadership and Marks & Spencer's management. Sainsbury, the supermarket chain, has made a donation towards Blair's leadership campaign in the Labour party. The money - £5,000 - was symbolic, but coming from a capitalist family which already has a member in Tory leading circles, such symbols have a particular significance. And no doubt, judging by the fancy titles of those in attendance at every business meeting organised by Labour, many large companies which are obviously careful to send top-level representatives are considering, or have already decided, to back a Labour bid.

There are other symptoms, like the fact that top consultancy and lobbyist firms are now desperately chasing Labour party members - in other words people who have access to Labour's top levels - to become part of their research or consultancy teams. But probably the most striking development was the announcement that for the first time in 80 years, Britain's most senior military chiefs had held a series of "frank and confidential" meetings with Labour's shadow Defence Secretary, David Clark. If even the military want to talk to Labour when they don't have to, it is more likely than not a sign that they are preparing for Labour's return to government and that they see it not as an unfortunate development but as an opportunity.

For workers, Labour's new clothes should provide a warning and a foretaste of what can be expected from a Labour government - nothing but more of the same, if not worse.

Many workers who are regular Labour voters do not expect any real change from Labour. But in fact most workers pay little attention to Labour's U-turns, to the cynicism displayed by Blair and his likes or to the plans they spell out already. What most workers have in mind is to get rid of the Tories once and for all. And while they expect nothing from Labour, they do not conceive of the possibility that Major's departure might fail to stop the rot and to give them a breathing space, even if only temporarily. Very few are prepared to acknowledge the possibility of things becoming even worse under a Labour government.

Against this very real threat, the issue is not to reverse the changes that have taken place in the Labour party. It is not, for instance, to fight for the defence of Clause Four, as left Labour figures like the miners' union president Arthur Scargill advocate. Doing this would only be fighting for the Labour Party to retain its old disguise, but it would not prevent the policies concealed behind it from being implemented. If the many Labour activists and supporters who are demoralised today by the new course of the party leadership were to allow themselves to be led down that road and fight over symbols, they would be pushed towards a dead end and threatened by even worse demoralisation.

On the contrary, what the working class needs today is above all to be lucid, to have a clear understanding of the situation. It needs to prepare itself consciously, so as not to be taken unawares when Blair, having taken over from Major, will start doing the dirty work of the capitalist class and doing it all the more zealously, as he will be keen to prove himself and the loyalty of his government to their capitalist masters. The downfall of the Tories will bring no respite to workers if they allow Tories dressed in Labour clothes to settle in office without making their voice heard to demand that the job and wage cuts of the past years should be made up by taking what is needed out of the profits piled up by the rich.

And this must be prepared today, not by encouraging illusions under the pretext of tuning into the wishes of workers to see the Tories thrown out, but on the contrary, by convincing ourselves and all workers around us that no improvement for the working class, no respite even, will come out of the ballot box and that only the collective force of the working class will change the balance of forces in its favour.

10 December 1994