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Wales and the Capitalist Crisis

[October 1984; internal south Wales Socialist League discussion document. The concluding section of the document, concerned with short-term tasks, has been here omitted]

Wales and the Capitalist Crisis

Capitalism and Wales

Capitalism in Wales has never been independent of either English capital or the British imperialist state. The feudal conquest of Wales prevented the emergence of an independent Welsh bourgeoisie able to compete effectively with that of England. The mid-Wales textile industry was subordinated to that of Manchester. The Welsh iron industry was developed by English iron-masters, largely out of the profits of the Bristol slave trade. Coal was also dominated by English capital, although here the smaller limited capital requirements allowed indigenous Welsh capital to stake its claim. But coal - like iron before it - depended, in the absence of a broadly-based Welsh economy, on exports. And exports in the nineteenth century depended above all else on the strength and influence of British imperialism

This combination of a weak Welsh bourgeoisie and the declining power of British imperialism has had grave consequences for the Welsh economy in the twentieth century. The declining importance of steam power, the collapse of export markets after the First World Wars and the effects of over-exploitation of Welsh mineral reserves made a sever contraction of the coal industry inevitable between the wars - capital produced by the efforts of generations of Welsh workers was not re-invested in Wales. Instead it found its way into the growth industries of the south of England and into the exploitation of a cheaper workforce in the colonies. Wales was left with the consequences of mass unemployment and forced depopulation of the valley communities.

After the Second World War, the long boom in the international capitalist economy made Welsh labour-power valuable again. But, even so, private capital was unwilling to undertake the costs of restructuring the Welsh economy in order to allow effective exploitation. This task fell to the British state. The major industries of Wales were nationalised, communications to English markets improved and a mixture of bribes and legal restrictions were used to encourage private industry to invest in Wales. Public sector services and administration underwent major growth. In these circumstances unemployment fell dramatically (though still staying above that in England) and new layers of workers, particularly women, were drawn into paid employment. But the weaknesses of the Welsh economy remained. The new investment depended overwhelmingly on markets outside Wales while the high proportion of investment carried out by US and then Japanese multinationals reflected both the continuing feebleness of Welsh capital and the reluctance of English private capital to invest in Wales.

The Crisis of Capitalism

The current crisis of the international capitalist system takes the form of a crisis of over-production. Capitalism produces not to meet human needs but to make profits and in order to realise these the goods it produces must be sold. The inadequacy of wages and the poverty of the neo-colonial countries limit the ability of capital to sell to these markets. It depends also on the willingness of capitalist firms to invest, which they will only do if the expect adequate profits. Hence, any downturn in capitalist profitability leads to a crisis of over-production in which the ability of companies to produce exceeds their ability to sell. Capital's solution to this crisis is to cut production and attempt to increase the rate of exploitation through rationalisation and wage reductions. But these measures further reduce markets and a new upturn can only be achieved after great suffering.

The Effects of the Crisis on Wales

The effects of the international crisis are accentuated by the specific weakness of British industry. British capital remains strong, but its strength is increasingly dependent on its international investments and its financial institutions. Indeed, its strengths in these areas are the primary reason for the declining position of British industry which is starved of necessary investment because of the easy availability of more profitable alternatives. Oil has not fundamentally changed this, only accentuated the shift out of manufacturing industry that now leaves the one-time 'workshop of the world' with a deficit on manufacturing trade for the first time in 200 years.

It is this context that vie must understand Thatcherism. Thatcher's basic policies conform to the main interests of the British ruling class. Mass unemployment is both a consequence of the crisis and an essential weapon in forcing British workers to accept the costs of rationalisation. The removal of restrictions on the export of capital opens new fields for investment and the cutback in state expenditure leaves more profits in the hands of capitalist firms. The aim is not the destruction of British industry: no capitalist class can survive purely on overseas investment. Instead, the objective is to remove all the areas of dubious profitability, leaving a small competitive industrial sector. The consequence of this is the destruction of millions of manufacturing jobs as a result of cutbacks in output and new technology.

The effects of this on the Welsh economy are devastating. Its massive dependence on the spending power of the British state leaves it especially exposed to Thatcherism. Today, the British state acts not to support the Welsh economy but to force it to bear the costs of the crisis. Capacity in the nationalised industries has been savagely cut, reductions in regional aid have accelerated the decline in private investment (including that by foreign multinationals) and cuts in national and local government spending both hit living standards and cut jobs. Official unemployment in Wales is now l7 per cent. In reality it is much higher.

The crisis in the coal industry illustrates those affecting the whole of Welsh industry. The effects of the crisis of over-production are here visible: world coal consumption has increased 25 per cent in the last ten years but coal-producing capacity is now 20 per cent over demand. It is this fact that has thrown the 'Plan for Coal' into disarray. The response of the NCB is that natural to any capitalist corporation: cut productive capacity and rationalise. The need to do this is increased by the reluctance of the British capitalist class to invest in domestic industry that does not guarantee large profits. This reluctance is magnified when it comes to state-run industries where political pressure can more easily divert any profits into social expenditure. The cutback in NCB investment has hit the South Wales Area particularly hard as the demands of rationalisation imply concentrating production in the Yorkshire/Midlands coal belt. Nor will the government consider subsidies easily: one of the effects of the crisis is to force down prices of coal imports, making subsidies of little value to British industrial consumers. In fighting the rundown of their industry, the miners are fighting not just political vindictiveness but the logic of the capitalist system and the attempt to resolve the crisis at the cost of the working people of Wales and, indeed, of the world.

The Prospects for the Welsh Economy

The prospects for the Welsh economy under capitalism are extremely grim. A sharp new downturn in the world economy looms, with British industry badly placed to survive the shock. Wales has acquired barely a toe-hold in the financial and new technology sectors. In particular, we can expect further attempts to reduce state expenditure within Waits. But such an attempt will not be a simple matter of economics but also of political struggle.

Which Way for Wales?

The Politics of Capitalist Crisis

Crises under capitalism are never purely economic. They are also social and political crises. Under the impact of the crisis, all the aspects of human life are thrown into question. During the prolonged crisis of capitalism in the first half of this century, humanity was forced to suffer mass unemployment, fascism and two world wars. Wales went through a shattering collapse of its urban and rural communities. But not all was negative: the Russian and Chinese Revolutions also came out of this political furnace.

Today a similar process is visible. Tens of millions are out of work in the imperialist countries. Systematic starvation and chronic malnutrition are killing (on UN figures) at least 30 million people, mostly children, a year. Social gains such as those made by women are under constant attack, as are the democratic rights built up over the years. The threat of nuclear war hangs permanently over our heads. But the prospect of a socialist alternative is also there, alive in the revolutions of Central America and in workers' struggles everywhere.

The Alternatives for Wales

One of the alternatives for Wales is that British imperialism will succeed - at least temporarily - in its plans for the restructuring of the British economy. The effects of this would be devastating. There is little place for Wales in Thatcher's internationally competitive economy. The effects seen in recent years would be multiplied. Either Llanwern or Port Talbot (or both) would be closed, the majority of pits closed and much of the public transport network closed. The spiral of redundancies in private industry would continue and Welsh agriculture would decline as well. Unemployment could double and wages for those in work would be forced down. Young people would be driven in ever-increasing numbers from their communities in a desperate search for work. Schools, hospitals and other public services would be closed. The tool for achieving thin will be the British state using the means at its disposal - including increased police repression - to break the resistance of the Welsh working class. For resistance there will surely be.

An awareness of the role of the British state in this process can lead to a nationalist illusion. Could not an independent Welsh state avoid the consequences of the capitalist crisis? This is a delusion. Firstly, no country - not even a workers' state with a planned economy - can wholly avoid these consequences. The problem is one of the world economy and demands an international solution. Secondly, despite certain similarities, Wales is not a colony of England. It is an increasingly integrated part of the British economy and its problems are essentially those of a depressed region within an imperialist state. Hence, the gains of independence would not be comparable to those that could be expected by a genuine colony such as Ireland and the costs of disruption would be far greater. Thirdly, which class would form this state? The Welsh bourgeoisie is incapable of even thinking of it, while the Welsh working class is too integrated into that of Britain to either be able or willing to struggle for such a goal.

The solution to the problems faced by the Welsh working class rests at the level of the British state. But not in the sense of the reformist fantasy that this state, which with its police, courts and capitalist accountants is today the main instrument of oppression of the working class in Wales, can somehow be used in the interests of our class. It cannot. It is only the breaking of the power of this state and its replacement by a state of, by and for the working people that could create the conditions for the proper planning and development of the economy and society of Wales. It is this alternative of a struggle against the British state as part of the international fight for workers' power which is our perspective.

Welsh Politics in the Eighties

Labour's Historical Dominance

The weakness of the bourgeoisie in Wales has reflected itself in the historical weakness of the Tory Party. In the nineteenth century, the Liberal Party dominated Wales, resting partly on the local bourgeoisie and partly on the emerging labour bureaucracy. The wave of struggles in and around the South Wales coalfield from the end of the nineteenth century destroyed this and created the basis for a mass workers' party. The bureaucracy that dominated the Labour Party in Wales from the beginning had no stomach for an all-out fight against the coal barons and their friends. Instead they hoped for reforms to placate their members, reforms that could be obtained only from the British state. The dependence of the Welsh economy on this state is the material basis for the particularly right-wing nature of the Labour Party in Wales despite the militant record of much of the Welsh working-class.

The bureaucracy's dominance was not unchallenged. But the strength of the apparently invincible British state and the political weakness of the opposition proved sufficient for it. What were those weaknesses? Syndicalism - as expressed in The Miners' Next Step of 1912 - based itself on the industrial struggles of the working-class and was the main left current up to the First World War. But its failure to recognise the necessity for political struggle disarmed it. After the Russian Revolution, the young Communist Party was formed in Wales: on a much firmer political foundation as the success of the Bolsheviks had made clear the need for a political struggle for state power. The CP began to gain a base for revolutionary politics in Wales but the defeat of the 1926 miners' strike led to mass demoralisation, while the effect of Stalinisation reduced the CP to the role of hangers-on to the bureaucracy by the 30s and open betrayals of workers' struggles in Wales during the Second World War.

The 1945-51 Labour government consolidated both the Labour Party's hold over the Welsh working class and the bureaucracy's hold over the party. The deal made by Atlee and Bevin whereby the essential interests of British capital (notably the British atomic bomb and membership of NATO) were preserved in return for reform which all but a handful of backwoodsmen in the Tory Party had come to recognise an inevitable apparently proved the value of integration into the British state. It was the practical gains of the NHS and NCB which remained in the memory of the masses, not the lost dreams and aspirations.

A Decline of Labour?

Labour's hold was not confined to the proletarian heartlands of the South Wales coalfield but extended throughout Wales. In the 1966 election Labour won 60 per cent of Welsh votes and 32 out of 36 seats. But Wilson's government ran into the developing capitalist crisis and increasingly obvious British industrial weakness that have removed the possibility of wringing significant concessions out of the state. Wilson repaid the loyalty of the Welsh working class by closing dozens of pits and hundreds of miles of railway. Illusions began to shatter. Labour's hold began to fracture at its weakest points: socially amongst the layers at the edges of the working class and geographically in rural Wales. Plaid Cymru were the first beneficiaries. The 60s saw the re-emergence of the national question throughout western Europe as it became clear that problems of national and regional development would not be resolved spontaneously. The failures of Labour to resolve either the economic problems of Wales or its social and cultural aspirations have allowed Plaid to gain a firm base. The Wilson-Callaghan government of 1974-79 compounded the errors of a decade earlier, allowing the SDP to be formed out of the debacle. In the 1983 election, Labour's vote was the worst for two generations with the inroads made by the Alliance even in South Wales allowing the Tories to gain a dozen Welsh seats.

The Impact of the Miners' Strike

The appearance, then, is or a long-term decline in Labour's support in Wales but this is far from the full story. Firstly, a deep hatred of the Tories exists within the Welsh working class. Despite the evident failures of Labourism, the Tories have been able to make no serious dent on Labour's support. That could only be achieved by Plaid Cymru and the Alliance. Secondly, the decline in Labour's support does not reflect either a 'deproletarianisation' of Wales or a fundamental weakening of working-class organisation. Although the proportion of Welsh workers employed in industry has declined, it remains higher than in the British economy as a whole. Further, the post-war period has seen a process of rapid prolotarianisation beyond the core industrial sectors and the main non-industrial sectors of the Welsh economy are precisely those low-paid, often largely female, public sector services in which this process is most advanced. The miners' strike has confirmed the continuing strength of Welsh working-class organisation. Instead, the essential reason for Labour's decline is the failure of its leadership to answer the pressing problems of the Welsh working class.

The fact that the cracks in Labour's support are most evident on the fringes of its working-class base does not disprove this analysis. A mass workers' party can consolidate amongst semi-proletarians or even petty-bourgeois only on the basis of the strength of the working class, not its weakness or political confusion. The collaboration of Labour's leadership with the British state in attacking the fabric of Welsh society has demoralised its working-class base and narrowed its electoral appeal.

Fortunately, the strength of a mass workers' party does not depend solely on the policies of its leadership but also on the reality of the class struggle. Today, the seriousness of the miners' fight for jobs and for the future of the mining communities is regenerating a wave of class solidarity across Wales and particularly in the South. The effects were seen in the June elections to the European Assembly: a collapse of the Alliance vote throughout south Wales as the Welsh working-class responded to the crisis by turning back to its only mass party.

The National Question in Wales

Support for Plaid Cymru has not, however, significantly declined under the impact of the miners' strike. This is because the existence of Plaid Cymru has a genuine base in the unresolved Welsh national question. and the failure of the Labour Party to respond to this. While Plaid is undoubtedly a petty-bourgeois party in terms or both programme and leadership, it has a mass base of support (and a significant layer of often militant activists) that extends into the Welsh working class, even in the overwhelmingly English-speaking South. The winning of this base to socialist politics and class struggle is important.

The bureaucracy's response to Plaid Cymru is to deny the validity of the Welsh national question which is alleged to divide the Welsh working class. This attitude is shared by groups such as the SWP. It is greatly mistaken. It is the reality of the profound distortion of the Welsh economy and near-destruction of the Welsh language and culture in the interests of English capital that is the problem, not the resistance to it. It is the subordination of the Welsh working class to the British state that allows divisions to develop. A genuine unity of the Welsh working clash can only be forged in the struggle against the British state. For this, recognition of the right of the Welsh people to self-determination, for an effective Welsh Assembly and the defence of Welsh language and culture are essential. A genuine struggle for these legitimate rights by the labour movement will be the best defence against the illusions of Welsh nationalism and the division or the Welsh working class.

The Labour Movement in Wales

Trade Unions and Labour Party

The traditional division of roles between the trade union and Labour Party bureaucracies is well known: the unions negotiate at the level of the plant or firm over wages and conditions; the Labour Party attempts to win a Parliamentary majority in order to institute certain reforms through the institutions of the British state. This division shows up in the idea that 'the unions should not discuss Politics'. Its role is a simple and important one: to depoliticise the class struggle and ensure that it never threatens the fabric of the British state, the ultimate guarantor of the rights and privileges of British capital. Historically, the British bourgeoisie has gone to great lengths to isolate the state from the impact of the class struggle. Its main weapon in achieving this has been to use the super profits obtained firstly from the initial supremacy of its manufacturing industry and then from overseas investment to - when necessary - make sufficient concessions to allow the bureaucracy to maintain its credibility on the basis of a limited struggle. This bureaucracy could then be relied on to support the capitalist state when it was severely threatened, as in the l926 General Strike.

Within Wales, this division has been accentuated. The specific weakness of private capital in Wales since The First World War has meant both heightened struggle against the consequences of this (e.g. unemployment) and greater dependence on the British state by the bureaucracy. At all costs, the inevitable politicisation implied by struggles such as those for the nationalisation of the coal industry or against reductions in unemployment benefit had to be contained. The class struggle was seen as a legitimate means of pushing for policy changes but not for forcing a change of government. Hence, left union leaders (e.g. within the NUM) have tolerated the most right-wing Labour MPs and councillors. The CP has also played within these rules, restricting its activities to trade unionism and vague political propaganda. It is a central weakness of the syndicalist tradition in Wales that it fails to confront this division.

But the division between economics and politics is being rapidly eroded. The decline of British industry has reduced the room for traditional manoeuvres and compromises. The success of the miners in forcing the removal of Heath in 1974 was a practical lesson in the value of industrial action for political ends that has not been forgotten. Today, the open use of the police against striking miners (in a way not seen since the period of comparable crisis around the First World War) is opening a Pandora's box of awkward questions. Scargill's denunciations of police violence are a body blow to the traditions of the British bureaucracy.

The Currents in the Welsh Labour Movement

The perspectives adopted by our national conference identified three broad currents within the British labour movement: the openly coalitionist right around Chappel, the Kinnockite mainstream and the broad leftist current looking to Benn and Scargill. These currents can be seen within Wales. The open right is most visible within the EEPTU and the ISTC. Here, the combination of the carrot of apparently secure jobs and the threat of the dole queue plus the demoralising effects of recent major defeats (particularly that of the 1980 steel strike) have allowed the negotiation of effectively no-strike agreements (e.g. Inmos and Hitachi) and open scabbing on the miners' strike. This current is, however, a minority in both the unions and the Labour Party. It is the Kinnockite wing that dominates the labour movement in Wales. Unable to openly oppose the miners' strike because of the loss of credibility this would imply, they are nonetheless desperate for the strike to end - on any terms. Their pressure for compromise is a major threat to the miners' struggle for the decisive victory needed to ensure a future for their communities.

The Left Wing of the Labour Movement

The left wing of the labour movement is today defined by its open support for the miners and by its stance on the other major issues that divide the movement today, notably unilateral nuclear disarmament, the right of local councils to defy Tory spending controls and reselection of MPs. Within Wales, this wing has a firm base within some of the major trade unions (NUM, NUPE) but is noticeably weaker within the structures of the Labour Party than in the main urban centres of England. This is not surprising. The right-wing nature of the party has been accentuated by its electoral dominance. This has simultaneously transformed many local Labour parties from organs of struggle (even if only in elections) into tools of administration of the bourgeois state and made the local party bureaucracy independent of the layer of activists needed in many English cities if elections are to be won. The left union leaders must also take responsibility: they have moved too slowly against the old tradition of 'non-interference' with Labour Party affairs.

However, the 'left' is far from being homogenous. At Conference, we termed this left 'Bennite'. This confused two distinct things: firstly the broad left wing described above which gave its support to Benn in the 1981 Deputy Leadership campaign and which is united by its desire for 'No more Wilson-Callaghan governments' and, secondly, the specific reformist projects advocated by Benn and his supporters. Benn's strategy is that of electing a left Labour government which could carry out radical reforms both economically and to the structure of the bourgeois state, calling for mass demonstrations of support as necessary. Benn's errors are twofold. Firstly, he fails to grasp the class nature of the bourgeois state in its entirety (including Parliamentary elections), which cannot be taken over and reformed but which needs to be destroyed. Secondly, he does not understand that popular mobilisations have their own dynamic and cannot be constrained to the requirements or the manoeuvres of a government. These errors are not merely intellectual. They reflect the interests of a bureaucracy which rests on its ability to mediate between the struggles of our class and the bourgeoisie and its state. Benn's position within the bureaucracy is clear from his failure openly to challenge Callaghan while a member of the Cabinet or to organise against Kinnock today.

The Emerging Class Struggle Current

In reality, as the crisis of capitalism deepens and the class struggle intensifies, the fundamental conflict between mass working-class actions in defence of their rights and the institutions of the capitalist state becomes ever sharper, throwing the cosy conceptions of the bureaucracy into disarray. This process is occurring today in the miners' strike and is increasingly evident in all popular mobilisations, e.g. Greenham Common and the black communities. It is causing a profound differentiation in the left of the labour movement.

This differentiation is clear in Wales around the miners' strike. The 'left' NUM bureaucracy around Emlyn Williams has repeatedly failed to organise the mass picketing necessary to stop the movement of coal within South Wales. The strike itself has been more solid in South Wales than in any other coalfield but this alone will not win the strike. If coal can be moved to steel plants, it can also be moved to power stations. Bureaucratic negotiations alone will not persuade the ISTC and EEPTU to stop scabbing; only mass mobilisation can do that. The stance of the NUM bureaucracy in South Wales is a major obstacle to winning. Against this, an authentic class struggle current is emerging. Based on the militant activists within the NUM and their supporters this current (which has a small but real mass base) is determined by its commitment to the struggle and to the means needed to win it. It is where the future or our movement in Wales lies.

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