By Steve Dobbs

Only weeks ago, according to the bourgeois press and some of the jaded Marxist sects, Labour were set for electoral wipeout. ‘Labour facing election wipeout as polls suggest Tory majority of up to 150’ claimed the Telegraph. CPGB members, reporting in their paper Weekly Worker, claimed ‘the result of the [coming general] election was not really in doubt, as shown by the May 4 local elections’, and they ‘pointed out … the left’s false optimism about the likely general election outcome’.

Yet Labour’s popular reformist manifesto, Corbyn’s genuine warmth and compassion, coupled with Theresa May’s awful/no-show performances and policy U-turns has shown that Labour have a real chance. The Tories’ double digit lead in the national polls only last month has been reduced to a few percent, and the polls in Wales and London suggest Labour is set to make real gains in those places. The election is on a knife edge. This article considers the immediate challenges that Labour, Corbyn and socialists will face after Election Day.

Challenge 1: Hung Parliament
It is possible the Tories will lose their majority in parliament. If Labour does not secure enough seats in parliament for a governing majority, then we have what is called a hung parliament. In this scenario, Labour would be under huge pressure from the establishment, and indeed many Labour supporters, to form a coalition with one or more other parties – mostly like the Scottish National Party (SNP).

As Marxists we need to be clear that we utterly reject such a coalition with pro-capitalist parties. Whilst it would be correct to argue that Labour is not a socialist party and that its current programme represents a reformed model of capitalism, the point is that Labour has a mass working class base and carries the hopes and aspirations of many looking towards ‘socialistic’ solutions to the crises we face. Labour is a bourgeois-workers party, a contradictory formation, and it is in our interest to push the contradiction as far as it can go in order to drive forward the class struggle inside the Labour Party, expose the limitations of reformism and lay the foundations for a new revolutionary formation. At this stage, it seems that only when Labour has ‘run out of steam’ in the eyes of the masses will the question of going further (or, pessimistically, retreating) be posed.

To be clear, we are not suggesting that this is the only way the working class will break from the Labour Party, like in some kind of rigid and schematic way of thinking. It is also possible that, whilst out of power and under the domination of a right-wing leadership and with a massive increase in class struggle on the ground, the working class can bypass the Labour Party completely. This was shown in developments in Greece over the last decade, where Syriza overtook the social democratic PASOK as the main left opposition party while PASOK was out of power and failed to give a lead. Our perspectives are therefore conditional, given the current political leadership of the Labour Party and the balance of class forces in society at this time.

A coalition with a capitalist party like the SNP would not only act as a brake on some of the more far-reaching reforms proposed by Labour, such as nationalisation of public utilities and exiting the neoliberal EU from the left. It would also take the focus away from the contradiction and struggle inside the Labour Party between the different wings, and instead externalise them so that class struggle appears only outside the Labour Party. Any failures of Labour’s reformism would be blamed on the SNP, rather than the reformist policies themselves and lack of a revolutionary socialist programme.

In the scenario where Labour had the most seats but no absolute majority, the best course of action would be to form a minority government. Jeremy Corbyn could call on SNP MPs to support Labour’s proposed budget and policies, without any formal deals or concessions to the left policies in the Labour programme – the one exception being indyref2 which we would support. This would put huge pressure on the SNP, since the Scots have no desire to be ruled over by a Tory Westminster government. Relying on the SNP to carry through policies would be unstable, but it would also put Labour in a better position to call another General Election in the eventuality of the SNP exposing their (bourgeois) class character as ardent defenders and representatives of the Scottish capitalist class.

It could be a similar scenario to Harold Wilson’s minority Labour government which took office on 4 March 1974. Upon assuming office, Wilson was able to carry out some popular reforms, such as an additional £2,000,000,000 for benefits, food subsidies, and housing subsidies, including a record 25% increase in the state pension. Wilson then used his popular platform to call another general election for 10 October, resulting in a narrow victory for the Labour Party with a majority of three seats.

Challenge 2: Blairite traitors and political realignment
As we’ve already reported, the Blairites, who make up the majority of the Parliamentary Labour Party (PLP), are unlikely to sit idly by and vote for Corbyn’s reformist programme. There is no doubt they will plan to sabotage Corbyn and his programme at some point. This could mean refusing to vote for Labour policies deemed unacceptable to the ruling class, or even going so far as to form a distinct parliamentary grouping – in effect splitting the Labour Party!

The capitalists recognise this split in the PLP – after all, the Blairites are their representatives who happen to wear red ties instead of blue. For example, on the basis of a Labour majority government, an investment director writes ‘It seems extremely unlikely such a transformative programme could be enacted… as Corbyn has much less support among Labour parliamentarians than the party’s electoral base’.

Furthermore, various sources have dropped hints about a new political formation: an anti-Corbyn, anti-Brexit alliance: ‘Frank Field said MPs could form a “People’s Labour Party” if Corbyn is defeated on June 8 but seeks to stay on in the top job’. In the Huffington Post, ‘Vince Cable Says Creation Of New Political Party Depends On How Lib Dems Perform At The Election’. Such a formation could involve the bulk of the PLP, the Lib Dems, the SNP and the ‘liberal’ pro-EU tories.

Some on the Left have dismissed this perspective of the Right splitting from Labour as unrealistic. But it happened before in 1981 when 4 Labour MPs (known as the ‘Gang of Four’) formed the Social-Democratic Party (SDP), citing Labour’s commitment to nuclear disarmament and withdrawal from the European Economic Community (now the EU) as evidence it had been taken over by ‘hard-left’ Marxists such as the Militant Tendency, the forerunner of the Socialist Party. The SDP went into alliance with the Liberal Party to contest the 1983 general election, gaining a respectable 25% of the vote, but failed to win many seats due to the first-past-the-post electoral system. In the next general election of 1987, they failed to make a breakthrough and lost a seat. Following their lacklustre performance, they formally merged with the Liberals and became the ‘Social and Liberal Democrats’, and then finally the Liberal Democrats we know today.

Commentators have suggested the electoral failure of the SDP means that such a split would not be contemplated by the Right again. But this misses the point of why the Right split from Labour in the first place! The purpose of the SDP split was never to replace the Labour Party as the main Left party in the UK, regardless of the rhetoric spouted by the splitters themselves. The main purpose of the split was to undermine the Labour Party during the period when the Left had a strong influence. Later on, following the crushing of the Left by then leader Neil Kinnock, in alliance with the turncoat ‘soft left,’ the SDP splitters were welcomed back into the party by the new right-wing dominated Labour. All formal commitment to ‘socialism’ was dropped and this laid the basis for Blairism and ‘New Labour’.

In the scenario of a split, the Labour membership must mobilise in support of the democratically elected leader of the Labour Party, to immediately expel the right-wing splitters and fight to adopt a revolutionary socialist programme.

To achieve this, the Left needs to come together and draw up lists of left-wing candidates to replace the positions vacated by the departure of the Blairite splitters. Revolutionary Marxist candidates should be put forward where possible. However, where no such candidate exists or they lack the support from their local Labour Party, critical support should be given to principled left reformists around a minimum of demands:

  1. Support for the left policies in Labour’s manifesto
  2. Support for the ongoing process of the democratisation of the labour party
  3. Opposition to formal coalition with capitalist parties
  4. Opposition to rejoining the neo-liberal EU, which would mean in practice ditching Labour’s limited reformist program

This process will be complicated by the role of Corbyn’s soft left fair-weather friends, some of whom have been performing their own u-turns since it seemed Corbyn was in with a serious chance in the election. They will be pushing for any such vacant seats to become occupied by soft left candidates whose commitment to Corbyn’s programme is lukewarm at best. They would not hesitate to work out a deal with the Blairite splitters behind the backs of the membership in order to oust Corbyn at a later date and replace him with a more ‘moderate’ leader. The role of Momentum will be key in this process, which has been brought under the firm control of the reformist Jons Lansman and a soft left clique around him. They will use Momentum to act as a left cover for the various moderate soft left labour candidates they want selected.

It is therefore crucial that the forces of Marxism within the Labour Party, while still small at this stage, unite with other socialists and build a revolutionary broad Left, welcoming the various organisations and tendencies that exist. There should also be a renewed effort to bring Marxist education into the Labour Party and help develop the best activists and intellectuals in the movement.

Challenge 3: Reformism, keynesianism and the falling rate of profit
Even assuming the political challenges from the Right are answered, the ultimate barrier a Labour government would face is capitalism itself. Labour’s programme is for a reformed model of capitalism based on Keynesian economics.

Developed by liberal 20th century economist Maynard Keynes, Keynesianism is based on the premise that the capitalist system of production is rational and exists primarily to meet the needs of the population. If capitalism goes into crisis – the Keynesians say – then it is because the needs of the population are not being met through sales of commodities. In other words, the system is not functioning properly due to a lack of demand from workers, caused by low wages. Their solution is therefore a redistribution of wealth to the working class in order to increase wages and thus demand for goods which they believe would in turn stimulate investment and economic growth. They believe that capital investment decisions are based on consumer demand, and so it would lead to more job creation, more investment, higher profits from the sales of goods (or at least sustainable profits) and simultaneously higher wages for worker.

Unfortunately the premise of Keynesian economics is false. The aim of capital is not to rationally distribute and sell goods, but to expand in value by extracting unpaid labour out of the working class during production – the source of profit. Therefore profit is ultimately derived from paying workers less, not more!

Of course, commodities have to be sold in order for profit to be realised, but workers aren’t the only consumers; Capitalists also consume when they purchase capital investment goods. If the crisis was simply caused by lack of demand, why couldn’t the capitalists buy up the unsold goods and continue investing? Lack of demand or ‘underconsumption’ is only the descriptive appearance of the crisis. It does not explain what caused it.

Capitalism goes into crises when it is unable to extract sufficient surplus value out of the working class, i.e. when the rate of profit is insufficient to warrant continued capital investment. This is a law of capitalism, the secular tendency of the rate of profit to fall, as described by Marx in Capital Volume III. This falling rate of profit in production is what caused capitalists to gamble their money in the unproductive financial sector in such spectacular fashion in the 2000s, borrowing money and hoping to create profit based on notional values of stocks, shares and other financial instruments. But the success of finance is ultimately tied to the profitability of the productive sector. Finance, like an elastic band, can only be stretched so far before it snaps back into its normal place, which happened in 2008 when capital value to the tunes of trillions was wiped off the stock market.

So why is capitalist investment so low? The main fundamental factor is the high value of previous investment in production which makes return on existing investment (the rate of profit) low. Only a projected higher rate of profit can create the necessary conditions for a higher rate of investment. Because the state bailed out the banks in 2008 and propped up failing businesses with Quantitative Easing, the crisis mechanism of purging and devaluing capital did not fully take place. This is not to say that we want crises to occur, since they always harm the working class through unemployment, wage cuts etc. Rather, as Marxists, we point out that booms, slumps and crises are an integral part of the way capitalism functions and, to some extent, ‘self corrects’. The notion you can end ‘boom and bust’ (a la Gordon Brown) within the framework of capitalism is a fantasy.

Without state intervention, a crisis such as 2008 would have left the relatively profitable corporations standing, and they would then be able to buy up the bankrupted companies at bargain prices.  Such a process creates the necessary condition for which profitable investment can take place; a rising rate of profit. Instead, we are left with a ‘zombie’ capitalism bumbling along on low profitability and relying on corporation tax cuts and wholesale privatisation to stay afloat.

Higher wages and increased corporation taxes, as proposed by Corbyn, will reduce corporate profitability, not increase it. Corbyn also wants the state to play a role in capital investment to compensate for the lack of private investment. But this can only be funded through taxation or borrowing, which both ultimately eats into capitalist profitability, exacerbating the problem. This is recognised by financial investors: ‘Many of [Corbyn’s] party’s manifesto pledges are specifically designed to reduce the profitability of the UK corporate sector and to capture a greater share of GDP in taxation to fund public spending’.

The reformists hark back to the post-war ‘golden age’ period of British capitalism, but this was a time of relatively high capitalist profitability when reforms could be afforded through high taxation. When profitability collapsed in the 1970s, so did the material basis for Keynesianism, leading to the neoliberal counter-reforms and the outsourcing of production abroad.

Others on the Left claim that the money exists for increased social spending in the form of ‘cash hoards’ held by the rich and corporations, and all a Labour government needs to do is a one-off wealth tax, or the more radical keynesian policy of nationalising the banks. There are several problems with this. Firstly, a one-off wealth tax is literally a one-off move. Once the money has been seized and spent, it’s gone, and you’re back to where you were before. But more fundamentally, most of the cash held by corporations is balanced against debt. Corporate debt is at an all-time high, and so it is highly misleading to claim that the corporations are ‘drowning in profits’ and ‘hoarding cash’. It might be an easier argument to make to claim that the capitalists are hoarding the money and so all we need to do is seize it and redistribute it, but it’s a false one and sows illusion in a reformist solution to capitalism. To paraphrase Thatcher, the problem with Keynesianism is that you run out of other peoples’ money. The problem is not in distribution or the market. The problem is in the very social relations of capitalist production itself which takes the form of monetary value. A socialist society must ultimately abolish value if it is to overcome the tendency of the rate of profit to fall and recurring crises.

This is not to say that Marxists are against higher wages and increasing taxes on the rich. On the contrary, we fully support any measures that increase the share of wealth and power for the working class. It is also possible that Labour’s Keynesian measures help sales in the consumer goods market and thus raise profitability for that sector, but this can only lead to a short term economic boost at best. These measures will very quickly come up against the fundamental structure of capitalist society: the private ownership of the means of production, distribution and exchange, and the ruling class’s pursuit of profit. The capitalists will refuse to entertain having their profits taken away and will cut jobs and wages in order to restore profitability. Some will threaten bankruptcy, and some will go bankrupt. On the basis of capitalism, there is no lasting solution.

A Labour government, even under someone like Jeremy Corbyn, will not take the necessary measures to abolish the capitalist profit-driven system. A parliamentary government, lacking a revolutionary programme and instead basing its rule on the basis of capitalist society and the bourgeois state, would ultimately capitulate to the ruling class and implement more austerity measures and privatisation. Greece’s Syriza is just the most recent example of this.

The movement to achieve socialism has to be class struggle from below, in the workplaces, in the streets and across the country. Only the working class, organised and prepared for major struggle, can wrestle control from the ruling class by taking power and expropriating the banks and major corporations that control the economy, allowing production and distribution of goods and services to be consciously directed by society rather than the need for profit.

This election has been extraordinary and historic in many ways, creating massive opportunities for the Marxist Left. The election of a Corbyn-led Labour government would undoubtedly be a welcome boost to the socialist movement in general. That’s why Marxist World call for a Labour vote in England and Wales tomorrow – but have no illusions that Labour’s programme in itself is capable of solving the crisis of capitalism. The real struggles begin after 8 June.


Leave a Comment

Subscribe to Marxist World

Enter your email address to receive regular updates via email.

Like Marxist World

Donate to Marxist World