“There will be no ‘glad confident morning’ for free market principles for a long time to come.”
So sadly conceded Samuel Brittan, one of the architects of neoliberal ideology back in the 1970s and 1980s, writing in the Financial Times on Friday of last week.
Brittan was reacting to the dramatic intervention by the US state, which took on debt equivalent to two fifths of its economy by nationalising the mortgage giants Fannie Mae and Freddie Mac.
This is the clearest sign yet of how afraid even the right wing Republicans in Washington are of a collapse of the global financial system – fears reinforced when Lehman Brothers, the fourth biggest bank on Wall Street went bust last weekend.
The world is being sucked into an economic slowdown by a toxic combination of the credit crunch that has paralysed financial markets and a rising rate of inflation.
But this developing recession interacts with rising geopolitical instability.
The Russian president Dimitri Medvedev last week compared the outbreak of the war between Russia and Georgia on 8 August to the 9/11 attacks on New York and Washington.
In the sense that it represents a significant turning point he’s right. The Georgian war made visible the growing conflict between the two most powerful nuclear-armed states in the world, the US and Russia.
The response of the Bush administration is to stoke up even more tensions.
The US is openly mounting commando raids across the Afghan border into Pakistan to attack what it calls the “safe havens” of the Taliban and Al Qaida.
The decisions of the left wing governments of Venezuela and Bolivia to expel the US ambassadors to their countries show their fears of right-wing coups backed by the US.
Meanwhile, amid growing economic and geopolitical instability, Gordon Brown’s government is sleepwalking to electoral disaster.
His total failure to squeeze money out of the energy companies to help cut household fuel bills shows that he is trapped by the neoliberal ideology at the heart of New Labour.
The government’s disarray and the prospect of a Tory victory in the next general election are causing despair throughout the labour movement.
Last week’s Trade Union Congress was marked by the open attacks on Brown by figures in the very mainstream of trade union officialdom.
New Labour’s deep malaise means that, despite the disastrous split in Respect, there will be fresh opportunities to build a political alternative to the left of Labour that can win broad support.
But these opportunities will probably take years to develop. The most important development for the left in Britain today is the revival of militancy over pay.
Ever since the defeat of the Great Miners’ Strike of 1984-5, workers’ resistance has been weak and fragmented. The balance of power in the trade unions has been firmly in favour of full time officials, most of whom are committed to propping up the Labour government.
This situation is beginning to change. The government’s attempt to keep public sector pay at 2 percent at a time when prices are rocketing has produced a real upsurge in strike activity.
This is reflected in the strike figures, but more importantly in the militant spirit with which many workers now take action.
And at the top of the trade union movement we see the emergence of an alliance of public sector unions pressing for joint action around their demands.
None of this means that the debilitating effects of a generation of defeats will be quickly and easily swept away. But the evolving politics of recession creates a new environment for socialists.
We need to continue to build the anti-war movement, for example, through the demonstration in Manchester this Saturday.
The situations in Georgia and Pakistan demonstrate that the offensive waged by US imperialism since 9/11 will continue – irrespective of whether Barack Obama or John McCain wins the election in November.
But we need also to throw ourselves into the movement of resistance to Gordon Brown’s pay limit.
In particular, we need to seize every opportunity that offers itself to build fighting unity that brings together activists of any or no political affiliation.
It is from the success of such initiatives that a real alternative to New Labour can emerge.
Alex Callinicos is the author of The New Mandarins of American Power available from Bookmarks, the socialist bookshop. Phone 020 7637 1848 or go to » www.bookmarks.uk.com