Socialist Worker

Capitalism isn’t working

As billions of pounds are poured into a financial black hole Socialist Worker editor Chris Bambery says 'We won’t pay for capitalist chaos'

Issue No. 2122

This week

This week's cover

This week our front page declares “capitalism isn’t working” – a subversion of the Tories’ 1979 “Labour isn’t working” election poster that reflected anger at growing unemployment.

Contrary to popular mythology, this poster did not swing the election for the Tories. The sitting Labour government had lost even before the polling stations opened – because it had made workers pay the price for the economic crisis.

Unemployment stood at just over one million when Margaret Thatcher was elected. Today, before the current economic chaos has hit, it stands at 1.72 million. Unemployment is expected to rise by 350,000 during the next two years.

The scale of the crisis has reached every part of the financial markets, with governments from the US to Iceland bailing out and nationalising banks in the hope of preventing further chaos.

This is not the first time we have seen such a crisis, and the lessons of the 1970s must be learnt. A Labour government used its relationships with union leaders to drive through cuts the Tories could only dream of. This paved the way for Thatcher’s Tories to drive through the humiliation of the unions.

The turning point came in the mid-1970s when a Labour government was faced with a choice of either maintaining its commitment to full employment and the welfare state, or acting on the demands of the City of London and the International Monetary Fund (IMF) to let unemployment rip and drive down living standards.

They chose the second option. Thatcher approved – she just wanted more, much more.


In 1976, with inflation at 20 percent and the pound collapsing amid a growing international recession, the Labour cabinet called on the IMF to deal with a yawning budget deficit.

Chancellor Denis Healey told Labour Party conference delegates, “It means sticking to a pay policy which enables us, as the TUC resolved a week or two ago, to continue the attack on inflation.”

Healey had agreed to put bailing out Great Britain PLC above the interests of his party’s supporters.

This attack on workers’ pay won the backing of the trade union leaders, right and left.

Unemployment had doubled within the first year of wage controls.

Anger over Labour’s pay policy eventually broke through, with widespread public sector strikes in 1978-79 – the Winter of Discontent. But the mood was sullen rather than confident.

Racism was on the rise as people looked for scapegoats . The solidarity that had broken the previous Tory government had ebbed away.

Labour lost the 1979 election because its supporters could no longer bring themselves to vote for a government that had so recklessly betrayed them.

This is a warning from history. The crisis today is affecting economies worldwide.

Last November the United Nations found that Iceland was the best place to live in the world – based on income, education, healthcare and life expectancy.

Now, as its currency collapses and interest rates are hiked up, all of that could vanish in a puff of smoke. The government and trade unions in Iceland are expecting ordinary people to make sacrifices, touting the notion that everyone is in it together. But we’re not.

The poor will be forced to tighten their belts, but the rich in Iceland, and everywhere else, will be expecting to be bailed out of their crisis.


Here in Britain the question of who pays for the crisis has not been posed so brutally. But trade union leaders representing health and council workers have already agreed pay deals worth half of the official inflation figure. Some openly argue that a recession means you can’t fight on pay or even resist at all.

The compromises their predecessors made in the mid-1970s destroyed a vibrant working class movement. The resulting demoralisation paved the way for Thatcher’s election and the three decade love affair between British governments and the market.

Back in 1936 as the fascists bombed Madrid, the Spanish Republican government warned “If you tolerate this, your children will be next.” Those words stand today.

Across the country we need to take to the streets to demand, “No bail out for the bankers – we will not pay for their crisis!” From small acts of resistance we can craft a political force that can knock back those running this destrutive system.

March on the City
We won’t bail out the bankers
Friday 10 October 4-6pm
Assemble at the Bank of England, Threadneedle St, London EC2R

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Article information

Tue 7 Oct 2008, 18:07 BST
Issue No. 2122
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