YESTERDAY saw the start of the Labour Party conference. It also marks the 50th anniversary of the then Labour government going cap-in-hand to the International Monetary Fund (IMF) begging for a multi-billion bail-out to avoid the UK from collapsing into bankruptcy.
British capitalism in 1976 was reduced to the humiliation of applying for funds from the IMF to ‘rescue’ it from spiralling inflation, along with the complete collapse in confidence from the international investors that bought up government bonds.
The crisis led to the pound sinking and along with it the Labour government of James Callaghan.
It was Callaghan who famously declared: ‘We used to think you could spend your way out of a recession … that option no longer exists.’
The option for the Labour government was to beg the IMF – world capitalism’s ‘lender of last resort’ – for a ‘loan’ of $3.9 billion, the largest in its history.
In return the Labour government handed the IMF complete economic sovereignty over the UK economy.
The IMF demanded brutal austerity cuts to spending, fiscal ‘discipline’ and savage cuts to the public sector, forced through by a Labour government that reassured workers that this ‘medicine’ was necessary to rescue the pound and restore market confidence.
The Labour government, under instructions from the IMF, cut £2.5 billion from public spending with wage freezes in the NHS while hospitals were starved of funds. Wage restraint became the official policy and workers, already suffering from spiralling cost of living, were told to simply accept low pay as the price to keep British capitalism from collapse.
While this may sound very familiar to workers today, there are crucial differences between the crisis engulfing British capitalism today than that of 50 years ago.
An article in The Daily Telegraph by Jeremy Warner points out that ‘Britain’s fiscal predicament is today about as bad as it has every been since, but that doesn’t mean the country is in imminent danger of collapsing back into the arms of the IMF.’
Warner goes on: ‘For one thing, the IMF no longer has the capacity for the scale of support that might today be required.’
In other words, the ‘lender of last resort’ doesn’t have the money to bail out the UK, currently drowning in £3 trillion of national debt and engulfed by inflation driven by the imperialist war against Iran.
Also unlike in 1996 British capitalism is no longer alone in facing economic collapse.
As Warner says: ‘There is a long list of others whose fiscal circumstances look equally dire – France, Italy, Japan, the United States … I could go on.’
Despite this, Warner insists that ‘what Britain very desperately does need are the disciplines of a punishing, full-throated IMF programme – the sort of thing the IMF used to insist on when they lent money to nations in distress.’
He laments the fact that the IMF is reduced to ‘dishing out advice on how the UK and others should run their affairs’ and the ineffective pleas from Kristalina Georgieva, IMF managing director, issued last week calling for countries to cut their national debt.
Faced with an international economic collapse of capitalism, Burnham’s Labour government has made it clear that it intends to carry through a savage austerity war on workers under the slogan of ‘hard choices’ that the working class must accept as the price for keeping the capitalist class clinging on.
The brutal austerity carried out in 1996 was met with a massive wave of strikes, the famous ‘Winter of Discontent’, which the trade union leaders worked day and night to contain, avoiding at all costs a general strike that would have posed the issue of the working class taking power.
Today, with capitalism across the world diving headlong into collapse, the powerful working class will never accept treachery by the Burnham government propped up by the TUC.
The burning issue today is the building up of the WRP and Young Socialists to provide the leadership required to organise the working class in a general strike to bring down the Labour government and bring in a workers government and socialism.
This is the only way forward.