THE FIGURE on the Labour left who has so far best understood the significance of the stock market crash is KEN LIVINGSTONE. His speech at the Socialist Conference in Chesterfield was the highlight of that gathering. He has produced a major article in the Guardian, clearly based on Chesterfield speech, outlining the consequences of the crash for Europe.
Livingstone spoke on the stock market crash and its political consequences, with Diane Abbott, at Socialist Action an Alliance for Socialism' weekend on 8 November. We reprint here Livingstone's speech with response by •REDMOND O'NEILL.
WE HAVE to look at what has changed in the space of the last few weeks, which will have a dramatic impact on the struggle for socialism throughout the rest of our lives: that clearly is the impact of the crash of the stock market. It did strike me as quite interesting that many people on the left have been predicting the demise of capitalism, and the great crash that was coming, decade after decade. Yet an awful lot of people seem to have taken a long time to wake up to the fact that we are now living through one of these dramatic economic changes that will recast the nature of national and international politics.
It wasn't just some elements on the left. Right across the whole of politics in Britain people have been very slow to take on board the scale of what has happened and what has changed.
I saw it most dramatically, as I'm sure Diane Abbot did, with the Tory MPs clustering around the ticker-tape machine . in the House of saying 'I don't understand what's going on. Why couldn't she have seen all this a year ago? Why weren't we warned this was going happen?' through these last three weeks there's THE the Commons right been Lawson immovable object sitting on the front bench - saying it's just a temporary correction, don't panic, and that it was all Reagan's fault.
One has to say there hasn't beén an adequate response irom our bench either. Having spent a large part of the last four years, saying to Thatcher 'why can't you have a huge deficit in your budget like President Reagan's' — and just spend it on nice things like hospitals instead of nasty things like star wars been cut away that could have been used to launch a real attack. Trigger There is no doubt that the actual trigger for this crisis is the budgetary policies the United America. But, it's not the real cause. The underlying causes are endemic to the way capitalism operates. But was the consequences of this enormous deficit that has been built up 4842C1 because Reagan wanted to have an armaments programme on a bigger scale - a great, complacent, front to defend them.
gramme some of the ground has deficit, crisis.
Armaments States BERNE even than the military programme that was necessary to fight the Vietnam war.
Reagan wanted to avoid putting the since the crash. cost of that programme onto American families. The only way you can actually hold back the development of a real party of labour in the United States is the by creating the illusion among workers that they don't need a party of labour Had Reagan tried to fund the cost of that armaments pro- by the United sang the balance payments taxation, would have cut the living to the US budget. standard of average US households by $2500. Reagan wouldn't have survived that and the American political system as a whole would have faced a deep White House Instead, the mechanism of using interest rates and exchange rates on the money market to suck the money from the rest of the world spread the burden of that armaments programme across the rest of the world. This was the trigger, although not the underlying In lerms of recession than period to 1987 cause, of the crash. But we should now look at events as they have emerged Faced either with a massive cut in public spending and massive tax increases or a devaluation of the dollar, Republicans have decided devaluation as the major way of solving pened this crisis. This means they are going to try to let the strain of the crisis be taken States' rivals through competitive dollar devaluation rather than going for any serious adjustments Ine Facing an election in a year, determined to maintain US military spending, and determined to hold onto the that clearly is the only real strategy they can go for. Massive tax increases and cuts in public spen- That ding would most probably make any US party unelectable. As the adjustment in the international value of the dollar may take the best part of a year to work through into the US economy inflation, it means the Republicans may just about hang onto the White House. But it's an extremely risky strategy and managing of this might be so incompetently done that it does precipitate a recession on a much greater scale than we are already inevitably locked into.
Those people who are saying that 'the stock market crash was just a fluctuation on the money markets, that it won't effect the real economy, are talking absolute drivel. Given what ha already occurred, we are already locked into a recession that will rank with the worst we've seen since World War II. And fit's of beied, as there seve ly possibility of it being mismanaged could then be much more dramatic anything we've •known since World War II. And it will be still more important in the shift it brings about between the United States and Europe.
All this will change politics in its We've just gone through a long it's not recent, it's not something that happened in the general - of leading figures in the labour movement saying we have to adjust to a new reality. First, in the aftermath of 1983, it was trade union leaders saying we have to adjust to the fact that we face another term of Thatcher. They said trade unions must start working with Thatcher. They went through a great debate to junk TUC policy, which was not to cooperate with Thatcher They turned the whole of the trade union movement through 180 degrees - and then were told that she didn't want to deal with them anyhow, they could just sod off Leadership Since the 1987 election defeat the attitude has been much more dramatic and more noticeable in terms of the Labour Party leadership.
The view is being put forward thai after thee election defeats the world has changed in some permanent and fixed • way that we have to relate to. It is going to change the way politics operates the rest of our lives.
I think that many leaders of the right in the Labour Party saw the 198l period as equivalent to the politics of the shift that took place in the five or six years after World War II.
• what they thought was ar • I ney saw historical parallel, a mirror image of the 1945 Labour government which so captured the intellectual ground of British politics that all the other parties, the whole of the establishment, had to accept the changes that the Labour government had brought about.
other parties had to accept full employ.
ment and the welfare state if they were to have any chance of taking power And for a generation after 1945 thai That was what actually hap•was truc Whatever the weaknesses.
whatever CLUSIN would have about the 1945 government, it did mark a major step forward in retormism and a transformation of society which lasted for a generation and brought ver real material benefits to workers. The whole of British politics, the whole of had to adjust demands that had built up between the two world wars and we were locked into a new system of politics for a generation by that government.
I think many people on the right thought the last two terms of Thatcher had done the same thing in Britain.
the Thatcher experiment had transformed people's perceptions the world and given them new sets of goals, and new sets of individualis identities to replace the collective proach of much of working Continued on page 6
Socialist Action 20 Nov 1987