Neoliberalism, the Grassroots and the People’s Assembly

by James Meadway

We are three years into the most determined assault yet mounted on the British welfare state, and, alongside it, a radical attempt to restructure British society. The Labour Party leadership has abandoned even a semblance of opposition to austerity, meekly conceding the ground the Tory-Liberal coalition has already claimed. Any serious attempt to halt the offensive, still more to offer positive alternatives, has had to come from outside the ranks of the official opposition.

Yet in these three years, which saw the biggest strikes for decades, huge protests, an unprecedented student mobilisation and, as a counterpoint, the riots of summer 2011, that unofficial opposition has failed to organise itself as a credible, national force, able to politically subvert Tory-Liberal arguments and gum up the relentless drive to cut. There have been local successes—a hospital closure delayed, a library remaining open—but victories on the national terrain have eluded us. And it is at the level of the nation that austerity will be defeated.

The People’s Assembly offers the potential to break out of the unhappy pattern of sporadic national protests and frequent, but disconnected, local demonstrations. There are, as of now, something over 3,200 registrations for the main event on 22 June; meetings held in the run up to it, across the country, have attracted the sort of crowds not seen for left meetings since the peak of the anti-Iraq war movement. The opportunity exists, through the Assembly, to build on local and regional struggles to pull together the kind of national movement that can match up to the immense political challenge of austerity.

The Assembly has provoked many responses on the left, prominent among them the demand for “bottom up” organisation. Critics allege that the Assembly is excessively “top-down”, and will be dominated by big name speakers ahead of grassroots organisations. Alex Snowdon has replied to some of the political arguments raised. But there are wider issues at stake here. At the centre of the debates on the left around the Assembly, and the possible responses to austerity, are a series of political problems facing the working class movement.

Politically advanced, economically retrograde

The problem of working class organisation in Britain today falls into two, contradictory, parts. It is on one side a problem of the advanced nature of British capitalism: of its rulers’ political ability to act as the vanguard of neoliberal reaction in the advanced economies over the last thirty years. On the other, it is a problem of its deep backwardness: of British capitalism’s inability to economically overcome its own archaic structures. At the head of the first industrial nation, Britain’s ruling class still suffers the “disadvantages of priority”. Its political sophistication is not matched by its economic capabilities—currently in some disarray, and with no exit strategy from crisis. Its domestic working class, once amongst the most combative and independent-minded in the developed world, has been politically defeated, and comprehensively so. Yet on the back of this political defeat, British capitalism has not been able to successfully launch further cycles of accumulation: restructuring has occurred, but the dynamism of earlier periods has not been revived. Investment remains low; productivity is, today, falling.

The contradiction is a direct result of neoliberalism’s fundamental failure to overhaul British capitalism. As a project for the reconstruction of the economy after the crisis years of the 1970s, neoliberalism proposed a return to capitalist virtues: free markets, tight money, a small state. But considered narrowly neoliberalism did not match up to its promises: an immense deindustrialisation occurred, with four million manufacturing jobs disappearing between 1979 and 2010 (of which two million went under Thatcher). This drove up measured productivity, as weaker employers were forced out of business, leaving a more productive rump. These job losses in manufacturing were not replaced, however, by private industry. Even Thatcher, for all the talk of “rolling back the frontiers of the state”, ended up creating one million jobs on the public payroll.

Deindustrialisation was matched by, not a shrinking of the state, but a shift in its functions. As the neoliberal offensive squeezed out “inefficient” manufacturers, the state steadily removed itself from a direct role in the management of the economy. Instead, it became a state for transfer payments: neoliberalism's failure to engineer a market-led return to an "industrial spirit" compelled, instead, increasing state dependency on direct cash payments in the form of assorted welfare benefits to those on the wrong end of the neoliberal offensive. The immense good fortune of North Sea oil covered the costs of this initially; North Sea tax revenues netted the Thatcher governments a (real terms!) total of £166bn. The decided failure of Thatcher’s economic policy could not have been disguised any other way.

Nonetheless, a new path was created for British capitalism: incapable of generating export revenues and its manufacturing base destroyed, it became permanently dependent on external sources of financing—initially through the North Sea, and latterly through the strategic position of London as a (perhaps the) global financial hub. Overseeing this was a passive state, content to tax one form of economic activity to pay for its absence elsewhere: transfer payments— direct cash transfers, as opposed to expenditure on capital or workers—rose from an average of 30% of total government spending in the 1970s to 43% by 1998.

The size of the state, relative to the economy, barely altered. State spending averaged 45% of GDP during the 1970s and 44% under the Tory governments of Thatcher and Major. The shift in function, then, implied real cuts in other areas of state activity: so that, for example, state expenditure on research and development (as a share of GDP) fell by more than half from 1979 to 1997, from 1.3 to 0.6%. State capital expenditure also plummeted, in part due to privatisation and the subsequent failure of privatised companies to invest.

The upshot was that, whatever the intentions of successive Tory governments to force through a market-led reconstruction of British capitalism, they were compelled to rely increasingly on the state as a provider of welfare as this strategy failed. New Labour aped the Tories in this respect, but where the latter had grudgingly paid up welfare as the necessary price for social peace, New Labour embraced it as a crude form of redistribution, particularly through the innovation of tax credits.

The British state was capable, in practice, of reshaping itself. It proved incapable of effectively reshaping British capitalism. It could destroy, particularly in manufacturing industry, but it could do little to create. Its impact on the economic transformation of the last few decades was fundamentally negative: compensating for the failure of strategy, rather than clearing the space for a new round of expansion. Underlying this failure, of course, was the wider decline of Western capitalism: growth rates have slowed everywhere since the peaks of the post-war boom, with debt-driven expansion providing only temporary respite.

The British working class, nonetheless, was transformed in this process. Manufacturing employment had peaked in the 1960s, and was already on the decline when Thatcher entered office. It has fallen virtually every single year since then, replaced by an increasing number of service sector workers. But the private sector proved weak at creating new jobs, with the state compensating: since the mid-1990s, the state has directly or indirectly paid for 57% of new jobs created. This, in turn, exerted further pressure on the state's capacity to invest, and to lead investment. As new jobs were created from a public purse, the space left in that purse for capital expenditure was sharply reduced. New Labour attempted to compromise on this through the Private Finance Initiative, an off balance-sheet wheeze that is only now revealing its real expense. The net result, nonetheless, was to leave a working class that was significantly less concentrated in manufacturing and productive industries (accounting for just over one-tenth of employment by 2011), and significantly more in the service sector, often in the employ of the state itself.

As the class has changed, so have its forms of organisation. 18 years of neoliberal offensive under the Tories were followed by 13 years of neoliberal consolidation under Labour. Throughout, the trade unions have retained a basic organisational coherence and solidity. But neoliberalism has seriously altered their functions.

Transforming the unions

In formal terms, trade union membership has declined from a peak of 14 million in 1979, when over half the workforce was unionised, to around seven million today, covering just over a quarter of those in work. This is a clear decline, but unions are a long way from disappearance. The largest amongst them are bigger than any other voluntary organisation in the country.

But this outward, formal appearance of a comparatively healthy existence disguises much. The divide between public and private sector membership rates is chronic: about two-thirds of public sector workers are in a union, but only 15% of private sector workers. While 93% of public sector workplaces have at least one union member, a mere 23% of private sector workplaces do. There is now a serious organisational divide across the working class: not only are workers in the private sector less likely to be organised than those in the public sector; they are less likely to have even a minimal union presence at their place of work. We can see this division most clearly in the strike statistics, where for over a decade the public sector has been persistently more strike-prone than the private.

But the issue is deeper than just the well-known public-private divide. The status and role of the trade unions has been transformed in the last thirty years.  Too often on the left, however, this has been glossed over.

There are two elements to this. The first is the decay of traditional “rank-and-file” organisation within the unions. Historically, this military metaphor refers to those inside a union but not part of its formal structures: paying money into the union, rather than being paid by it. It is usually counterposed to the bureaucracy, the full-time apparatus: all those being paid from the union, rather than paying into it. At certain points over the last hundred years, and in certain industries, powerful rank-and-file organisations have been created within the unions, capable of acting independently of the union bureaucracy. This happened in the period just before and immediately after the First World War; it happened again during the long boom of the 1950s and into the 1970s, building on a union recovery from the 1930s.

Shop stewards—elected from the shopfloor—were created to represent rank-and-file workers and, during the long boom, became powerful voices for the working class: closer to their workmates’ immediate concerns, more militant than their union leaderships, and often more politically radical in consequence. Their strength depended not just on the subjective political confidence and organisational abilities of the class; it depended, critically, on the objective conditions of full employment, in which the threat of unemployment—particularly for skilled workers—was hugely diminished.

From the mid-1960s onwards, successive governments attempted to deal with what they saw as the rising costs of unofficial organisation. The Donovan Commission of 1965 was the first, and relatively consensual in seeking to accommodate unofficial organisation; Labour’s 1968 In Place of Strife was more assertive; Edward Heath’s 1971 Industrial Relations Act nakedly aggressive, but broken by the threat of general strike during the annus mirabilis of 1972. The failure of these efforts, and the continuing boom, helped sustain an independent-minded shop stewards’ movement, and created a space for a small revolutionary left, orientated on workplaces, for perhaps the first time since the 1920s.

The eclipse of the rank-and-file

It was not until the decisive close of the long boom that unofficial union organisation was effectively broken. Mass unemployment returned, with three million manufacturing jobs lost under Margaret Thatcher’s government. Alongside this, a deliberate political offensive was launched on the structures of unions themselves. While resistance to this assault—most notably in the 1984-5 Miners’ Strike—was often heroic, the existing weaknesses of union organisation were exacerbated by clear failures of union leadership, enamoured especially of the “New Realism”, to effectively meet a determined ruling class offensive.

Alongside set-piece confrontations with well-organised workers, Conservative anti-trade union legislation from 1979 on constructed union weakness as a point of law. Successive Trade Union Acts crippled unofficial action, particularly solidarity and “political” strikes, and formalised power relations inside the trade unions, under threat of legal sanction. Legal requirements for ballots, with the bureaucratic complications involved, further centralised power in the hands of the bureaucracy who controlled the process. The rank-and-file was detoothed and declawed.

The effects were dramatic. The number of unofficial union representatives has declined by two-thirds since 1980, to around 100,000 today. That number is still large; however, it disguises the critical change in the function of those rank-and-file representatives. They have been pushed away from acting as the organisers of a collective towards something closer to an individual representative. Ask almost any branch secretary or shop steward now, and their day-to-day activity will consist, overwhelmingly, of case work. Should strikes occur—and mostly they do not—they will, virtually without exception be decided on a timetable created elsewhere in the union hierarchy.

The graph below, taken from this report, illustrates this transition. As the collective action of strikes declines, the individual processes of grievance procedures and employment tribunals rise. The relationship of the rank-and-file to their union has transformed in the last few decades, as unions have transitioned from collective organiser, at every level, to a form of insurance policy or legal assistance. Strike patterns reflect this: overwhelmingly in the public sector; often very large; but of only a day’s duration and undertaken at a timetable of the bureaucracy’s choosing with minimal organised pressure from workplaces.

British capitalism led the world in imposing neoliberalism from the 1970s onwards. From a position of great strength, working class collective organisations were broken, from top to bottom; and while the form of union organisation has survived, its content has been transformed. Unions have become neoliberalised.

Workplaces, particularly in the private sector, are now some of the most depoliticised spaces in British society. The effects of this on the class have been immense: alongside the change in its form of work, its forms of organisation have transformed. Unions, for many young workers, are simply now not part of the picture. They will know no union members, they will see no union members at work, and even for those radicalised over the past decade, the workplace will simply not be a point of reference for their politics.

The local and the particular

And yet in increasing numbers people have been radicalised, and are taking part in political activity. It's just that this has been divorced from workplace organisation. The successful campaigns and mass movements of the last twenty years have been largely separate from the traditional organisations of the working class. The anti-Poll Tax campaign is the best example of this. Locally-organised mass non-payment alongside political demonstrations culminating in the Trafalgar Square protests of April 1990 brought down first the hated tax, and then Thatcher herself. Stop the War is another example: here, of a long-running campaign able to consistently mobilise huge numbers, but without any direct reference to workplace organisation. Unions and union branches have, of course, consistently supported Stop the War, but it has not gained its strength directly from their organisation in workplaces.

In the absence of effective workplace organisation, and with national unions often perceived as distant and bureaucratised where they do have a workplace presence, it is little surprise that many have turned local organisation itself into a virtue. The need for “grassroots” organisation is stressed, in opposition to the national, as a means to maintain the radicalism of the movement. The particular character of the present crisis, seeking to dramatically exacerbate longstanding regional imbalances, can only serve to reinforce this politics of the local.

The local and the archaic

The post-2008 economic crisis is a direct reflection of British capitalism’s archaism. Capitalism here has always sustained what are, for a developed economy on a small island with mostly placid geography, disproportionate regional differences. Finance-led growth over the last few decades exacerbated those, leavened only partially—outside of the London region—through the creation of public sector jobs and benefits payments. The UK now has the worst regional inequalities inside the EU (see the graph below): while central London is the richest single place on the continent, and one of the most unequal, Wales is poorer than recent accession countries. That finance-led system was never stable; its collapse is now imposing itself most sharply outside of London as public-sector jobs are slashed and benefits removed.

National politics has not, to any meaningful extent, reflected this unevenness. Britain has operated as a basically unitary state, with national political life concentrated on Westminster. Devolution in Scotland and Wales has provided some degree of autonomy. This is most dramatic in the case of Scotland which, socially, politically, and economically, functions as a separate country. For England, however, deep regional distinctions are disguised in the smooth surface of national politics. Those divisions are worsening over time, as finance-led growth has meant (in effect) London-centric growth.

Regional output per capita, shown as distance from national average
  1989 1999 2009
North East -18.2 -22.7 -23.5
North West -10.5 -11.7 -15.6
Yorkshire and Humber -12.3 -12.1 -17.4
East Midlands -7 -9.2 -12.4
West Midlands -10 -10 -17.0
East of England -6.6 -3.9 -7.3
London 53.8 60.1 73.9
South East -1.8 6.1 6.3
South West -9.9 -8.2 -9.1
Wales -17.2 -23.3 -26.7
Scotland -5.9 -5.7 -1.2

Source: ONS

But their political impact is, if anything, diminishing. The concentration of national politics, at least as far as the mainstream press and media is concerned, on the operations of the Westminster village has narrowed steadily over time. Local authorities' capacity to influence local economic outcomes has been reduced to a bare minimum; they retain control of planning decisions, but little beyond that point. The more the gap between London—or rather, the rich in London—and the rest widens, the less we see of it politically. The willingness or even ability of current political leaderships, of any stripe, to reflect this appears to dwindle: New Labour, especially, has developed an uncanny ability to disguise the gap between its metropolitan leadership and its voters, concentrated as they are in the areas that fell on the wrong side of neoliberalism. Blairite king over the water David Miliband representing South Shields is a shining example.

It is no great wonder, then, that many have stressed the need to build grassroots or bottom-up organisations. Given a choice between bureaucratised national organisations in the unions, a national politics (now including Labour) that demands austerity, and maintaining local radicalism, it is little surprise many choose the latter.

The danger in this choice, however, is that it accepts the settlement we are offered. We face a nationally organised political campaign to impose austerity, organised by a national state. That campaign has its local manifestations—a library threatened with closure; children’s services removed; and, now, tenants evicted. But even if we successfully defend a particular service from the axe over here, we don’t stop the axe falling somewhere else. As long as the Tory-Liberals can win at least somewhere, they will still be winning. It’s not enough to stop our hospital ward closing if someone else’s goes. Focusing only on the local, and supporting only the grassroots, leaves us all open to divide and rule. We have to fight to overcome the geographic unevenness that marks the contours of this crisis. A national campaign on their side has to be met nationally on ours.

The inverse also applies. Local campaigns are weaker because of a lack of a national campaign. Resources and information can and should be pooled; but, more than this, the presence of national figures acting to support local campaigns strengthens them on the ground. Once, local MPs would readily have performed this function; now, decent Labour MPs are thin on the ground—itself a reflection of the Party’s decline. Figures with a national profile, like Owen Jones, have helped fill the gap. In the absence of effective organisation connecting the local to the national (and vice versa) we have to make use of those with access to the media or with a high profile.

National organisation

A national campaign cannot be willed into action, and nor will it appear spontaneously. It is precisely the austerity's unevenness, reinforcing already-existing regional disparities, which makes the spontaneous creation of a national campaign so unlikely.

Yet the institutions that might once have acted to effectively connect local, grass roots anger to a national politics have, as we have seen, withered. The trade unions alone cannot perform this function; the Labour Party probably cannot, and in any case does not want to.

Trade unions can and do act nationally. In the public sector we have seen a number of large national strikes, culminating in the pension strikes of November 2011. Similarly, we have seen a few large national demonstrations organised by trade unions in the last three years. These give a political expression to the discontent across the country. But they have remained as isolated incidents, detached from that anger. We have not yet created the national organisation and movement that is capable of pulling the trade unions, disability groups, library campaigners, opponents of the Bedroom Tax, and every other anti-cuts group together on a credible and consistent basis.

This is why the People’s Assembly is so important at this point. After a few attempts, of varying degrees of success, it presents the best opportunity since 2010 to begin to articulate the collective, national campaign against austerity that we have been sorely lacking.  We need to overcome local unevenness, developing a national foundation on which to oppose a national drive to austerity; and, in turn, drive that national campaign back into the localities and the regions. If there is to be a sustained trade union revival, it will require taking the radical politics of the movement and driving them into workplaces.

The unevenness of economic development forces an unevenness upon our campaigning. Austerity, and behind it the wider economic crisis, moves at a different pace across the country. In parts of London you can still delude yourself that the boom years have scarcely ended. Since late 2007, when the collapse began, London has added an extra 267,000 jobs. The rest of the UK has lost 284,000 over the same period of time. The clash between official politics, organised nationally, and economic differentiation in the regions is deepening under the impact of austerity and the crisis.

If official politics is attempting to manage a centralised national state against a fragmentary economy, we need an appropriate response: local political actions, drawing on the fragmentary effects of the crisis, need to be translated into a national political force. There is a distinctive relationship between the two that, if we can get it right, opens the possibility for a serious, and radical, breach in official, national politics of austerity and neoliberalism.

In practical terms, this means that the local and regional People’s Assemblies following the event on June 22 are of critical importance. The demand to end austerity, and to pose alternatives, will appear much the stronger if it can present a meaningful unity on the ground. With the organised working class at the core, the claims of (for instance) a “Newcastle People’s Assembly” or a “Nottingham People’s Assembly”, could pull in the wider spread of affected society at the local level andcreate, from this, a national, oppositional politics.

The potential is emerging for a radical break with the failures of neoliberal politics. The People’s Assembly can play a decisive role in realising that break. Whether it does will depend less on the day itself than on what happens afterwards. A politics that emphasises only the grassroots and the local adapts itself too closely to and is unable to overcome existing weaknesses. We have to close the divide between the local and the national.

James Meadway is senior economist at the new economics foundation

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First published: 20 June, 2013

Category: Activism, Economy, Employment & Welfare, History, Labour movement, Vision/Strategy

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1 Comment on "Neoliberalism, the Grassroots and the People’s Assembly"

By Jane Kelly, on 20 June 2013 - 17:09 |

A very informative analysis - especially on the wealth divide within Britain and the public/private sector division.

I think that the missing link in the way British capital has operated over the last decade or so is their ability to invest wherever labour is cheapest, taking full advantage of globalisation and doing what capital has always done - chasing profit over every other consideration.

But overall a very telling article.

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