An Enemy of the State

Bankers-or-Us-a-Derivative-MessThis is the second of a series of extracts from Scotland’s Road to Socialism – Time to Choose, edited by Gregor Gall and published by Scottish Left Review Press.


You have not only the right to choose, but the duty to choose and if you are not surrounded by poverty, by war, by oppression, by cruelty -that is what you have chosen. – Jean-Paul Sartre The Roads to Freedom

The UK state is one of the mainstays of world capitalism and a major barrier to any developments towards a socialist world. Scotland separating from the UK would weaken the residual state’s ability to engage in aggressive wars and hopefully fatally undermine its nuclear capability. Prospects for socialism would be enhanced not only in Scotland but ultimately in England and elsewhere. On these grounds alone all socialists in Scotland should vote ‘yes’. I have not always held these views.

I spent my first years in rural 1950s Ayrshire, where my father a Labour supporter, teacher and local historian regaled me with tales of Roundheads playing football with Covenanter’s heads along Galston Road; Bruce being cured of leprosy at Prestwick well; Wallace and other romantic individuals; the Enlightenment; as well as the benefits of the welfare state and by implication the Union. This syllabus was also reflected in school history books. For most of my school-days, I identified myself as a Scot who was British and remained in ignorance of wider social history or the true nature of Britain. My political awakening came with television pictures of the Prague Spring and Vietnam. Going to university in 1968, I joined protests against the Vietnam War then joined the Young Liberals and was elected to their national executive. In 1969, I helped organise protests against the South African Springboks team at Murrayfield. To my shock a female student next to me was beaten bloody and unconscious by a special policeman deliberately and without provocation, smashing her head against a steel scaffold. Peter Hain and I had to stretcher her out. Other friends had limbs broken in police vans. Fortunately, against the orders of an inspector, my police arrestors only twisted my arms and threw me out. This was my first encounter of the state as Marx described it as ‘a body of armed men’ being used for political ends, i.e., the defence of representatives of Apartheid, and marked the beginnings of my progress from liberalism to Marxism.

Over the next years, I developed as a student then community then union representative and read more history and theory. The effect of Heath government’s economic and social policies -rising unemployment, the UCS work in, the 1972 miners’ strike (at Longannet picket line, getting my legs severely bruised taught me why all the miners had brought newspapers and wrapped them round their legs as shin-guards) and ‘Bloody Sunday’ and its aftermath -all made me acutely aware that the government and wider state could deliberately create confrontation between classes for ideological purposes. The idea the state was a neutral servant of the people was frankly laughable.

In the autumn of 1972 at a Scottish Actuarial Society meeting I made a criticism of the speaker for ignoring the chaotic effect politics could have on investments. I was then invited to join four heads of Scottish Life Insurance companies for a pint. Their concern was the ineptitude of the Heath Government and all of them agreed that ‘we need a Labour government to sort the unions out’. The following week the Financial Times took the same line. The casualness of this encounter and its real effects (Labour won) made me aware how subservient the media and the British establishment were to the interests of finance capital and also how they believed they could and, indeed, had manipulated the Labour Party e.g. blocking nationalisation of insurance during the earlier Wilson government.

Around then I determined to oppose the UK capitalist state and attempt to change things. I joined the International Marxist Group (IMG) and was elected to its Central Committee (CC) and Scottish Committee. In 1972-1973 apart from union activity and Vietnam, the IMG’s main campaign was support for those struggling for civil rights in Ireland. This had developed into a war between the nationalist population and the British army and many British troops were being killed, some based in Stirling. Alongside Pat Arrowsmith and Finlay Binning, I spent months issuing leaflets and talking to soldiers telling them how to defect to Sweden to escape returning to potential death in Ireland.

Inevitably, in 1974 some Scottish IMG members demanded we also fight for Scottish independence. However, before the discussion had begun they left to form the Scottish Workers Republican Party (SWRP). Some peripheral supporters, who we suspected of being police agents, suggested a violent campaign. This resulted in my refusing to talk on the phone to these individuals, the phone being bugged and all mail to the house being opened by the post office and delivered without envelopes. My attitude to the UK state appeared to be reciprocated.

Lest I seem paranoid, note that as well as an ongoing Irish war, Allende’s government had just been overthrown in Chile, the Greek colonels were still in power, as was Salazar in Portugal and Franco in Spain, the IMG’s sister organisation, the Ligue Communiste, had been outlawed in France in 1973 for opposing fascists; Kevin Gately was killed by police on an anti-fascist demonstration in London; and many other IMG members houses were being raided and papers seized but no arrests. At this point, we notice that a ‘grain silo’ on Colonel Stirling’s lands outside Stirling was being protected by armed men with Alsatian dogs. Shortly thereafter, tanks encircle Heathrow airport in what we were later told was an exercise. We now know plans for a military coup were in place with Lord Mountbatten to replace Wilson (see BBC documentary The plot against Harold Wilson 16 March 2006). Democracy in the UK is optional for the ruling class!

A Scottish road

I consider capitalism the most infamous, bloody and evil system that mankind has ever witnessed.

John Maclean, High Court, Edinburgh, 9 May 1918

Marx and his followers held that whilst socialism cannot be achieved in one country, a break from capitalism can happen in a state (e.g. Russia, Cuba) or even city (e.g. Paris 1871, Petrograd 1905 and 1917). A decisive break Lenin, Trotsky and Gramsci believed requires a party with ‘hegemony’ over a major portion of workers. Creating or controlling such a party at the correct place in time is the hard part as well as the little matters of strategy and internal democracy. However, a break from capitalism in an advanced economy could spark a series of other breaks. Could Scotland prove the catalyst?

The debate started in the Scottish IMG by the SWRP led to a re-looking at the works of John Maclean and other Communists as well as a debate with the likes of John Foster and the Keynesian views of Gordon Brown in his Red Papers in 1975. A series of IMG pamphlets were produced under the banner Scotland, Labour and Workers Power. These analysed Scotland’s wealth -people and oil -as well as our rich tradition of strikes/workers councils and community support and Labour/communist electoral history. Whilst disagreeing with Maclean’s historically inaccurate view that primitive communism existed under the clans, we fully endorsed his call for a Scottish Workers Republic based on workers control and public ownership. The question was how to get there.

All agreed Scotland had the right to self-determination and most disagreed Scotland was ‘an oppressed nation’. In a wider context, there were differences in relation to the Labour Party -could it be used as a vehicle for entry-ism and influencing unions or should a party be created by a break from Labour. There was also the matter of the EU (then the EEC) -to join or not. Much of the debate related to the then situation of international capital and the union movement which has now changed significantly.

The majority view which I supported was to support a Scottish Workers Republic, campaign against the EEC, work for a Scottish Assembly, work in trades councils and unions and look for a break from Labour to the left. After a relatively successful Labour campaign against the bosses’ EEC despite losing the referendum in 1975, a major opportunity to present our views arose with Jim Sillars breaking from Labour to form the Scottish Labour Party (SLP) in 1976. All members of the IMG joined the SLP. I became secretary of Pollok Branch. The SLP tapped into a rich seam of opinion that wanted a radical social democratic agenda allied to a demand for Scottish Independence. Although there were differences in approach, Rowland Sherret and I pushed for the IMG to constructively build the SLP and saw its potential to replace Labour as the representative of unions and the wider labour movement in Scotland. Unfortunately, Sillars demanded everyone agree with him that Scotland should be in the EEC. Most disagreed so we were summarily expelled without a debate and the SLP was destroyed (see Henry Drucker’s Breakaway: The Scottish Labour Party (1978) for more).

Having seen the possibilities of a pro-independence left social democratic/socialist party in Scotland, constructing such a party has been for the last thirty five years and remains my goal. The rest -denied a parliament in 1979 despite winning the referendum; founding the Scottish Socialist magazine on a cross-party basis; fighting for the parliament; founding the Scottish Socialist Alliance with the ‘Independent Socialist Scotland’ slogan; winning the 1997 referendum; the SSP, the split, Solidarity, the independence convention and now the independence referendum -are all as they say history. But thirty five years on, what do I now think socialism is and are we closer to getting there?

Socialism and capitalism

Communism is socialism plus electricity (shortened from ‘Communism is the power of soviets plus the electrification of the whole country!’, Lenin Eighth Congress of the Soviets 1920)

Engels and Marx’s anticipated socialism coming into being after the replacement of capitalism worldwide when the state ‘withers away’ and all human needs are met through public ownership and democratic cooperative management of production. Would money then be used as a medium of exchange or of (labour) resource allocation? The productive forces and automation would need to have reached a point where all material needs/wants for each individual could be met without restricting another’s needs/wants. We are a long way from realising that ideal of socialism, and should take the lesson from the Stalinist regimes of Eastern Europe that in Lenin’s words ‘democracy is indispensable to socialism’. But can we replace capitalism with something better? There are positive signs!

Capitalism has greatly expanded the world’s productive forces and population, lifted billions out of poverty and ignorance, created a world intellectual and technological culture undreamed of by Marx. The means for democratic control over decision-making have been created. Governments and large corporations use computer techniques for forward planning and allocating resources which would have amazed the Soviet Gosplan and could be used to end poverty and hunger forever. Yet we are at best two bad harvests from mass starvation, global warming threatens our survival, wars for resources and over religion and ethnicity are endemic and a small group of billionaires control an unparalleled share of resources and monetary wealth. Marx predicted that at least!

The problem remains a world order of privately owned wealth and money as a means of exchange rather than use value, i.e., capitalism. But capitalism has, indeed, changed over recent decades and that has to be taken into account. In the mid-1970s, Keynes’ views of actively managed capitalism began to be replaced by Friedman and Hayek’s monetarism -no state intervention in the market. Within a few years, most academic economics espoused these dogmas and current day politicians were taught this new orthodoxy which has everywhere failed. The motivations for this ideological shift amongst academics at that time have been inadequately studied. In a contrary move in 1971, the US abandoned the gold standard. However, the US dollar largely remained the world reserve currency, so effectively the US could print money without inflationary effects. This role of the dollar was only partially threatened by the development of the EU and Euro-dollars then the Euro. In effect, Europe and the UK learned they also could print money without inflation.

The collapse of the Soviet Union and the development of kleptocracies in Russia, China and other states extended capitalisms hubris and the development of financial services and growth of debt rather than investment and production became the main forces for economic growth in the developed world until the crunch of 2007. This era of globalisation, i.e., American dominance and integrated markets, seems to be coming slowly to an end. Nevertheless it hugely influences UK policy. The week after 9/11, I was working in the City of London. At least 50% of those I was dealing with had been in the Twin Towers in the last two months. This brought home to me how closely Wall Street and London were integrated at a social level and why traders refer to the Atlantic as ‘the pond’. Nor should it surprise us that UK and US foreign policy have been closely aligned on Iraq, Afghanistan and on nuclear weapons. Remember the Falklands and the assistance the UK received from the US! A retired submariner told me he was in a nuclear submarine in the River Plate during that war. Does anyone doubt Thatcher would have bombed Buenos Aires if the Ark Royal had been sunk?

Crisis and change

In financial markets, the idea of ‘value’ has limited value.

Benoit Mandelbrot The (Mis)behavior of Markets (2004)

The boom in derivatives which led directly to the credit crunch was based on the idea that you could manage financial risk using mathematical formulae -CAPM, MPT and particularly Black-Sholes (Sholes won a Nobel for his work). Financial institutions were legally obliged to value investments using these formulae, typically using credit agencies to do the calculations. Mandelbrot, mainly known as the inventor of chaos theory, for decades had been highly critical of these formulae believing the data showed they massively underestimated risk and investment values were largely chaotic. In 2007, he was proven correct, but credit agencies live on.

World GDP is approximately $70 trillion, derivatives in 2007 were priced at 11 times world GDP. All these derivatives were valued by credit agencies, held on banks’ balance sheets and treated as equal in worth to other assets such as factories or materials. With the collapse of confidence in 2007, much of banks’ balance sheets were wiped out, i.e., their derivative assets had no ‘exchange value’ so banks stopped lending to each other or companies. Every bank in America and Europe was technically bust. Credit and other financial instruments, described by Marx as ‘fictional capital’, had actually become on a world scale ‘fictional’ and were unavailable.

Monetarism had no answers and instruments not used since the 1930s were exhumed by central banks. The UK and the US embarked on creating money from nothing, i.e., ‘quantitative easing’, and guaranteeing bank (worthless) debt at face value. Close to one year’s world GDP in money terms has been created in this way. Politicians have been miss-educated in monetarism. Most continue to believe in the clear separation of monetary and fiscal policy and, in the face of credit-led recession, espouse balanced budgets and ‘austerity’. Countries in the Euro-zone have been worst affected. These countries have given up the ability to devalue and print money and the Bundesbank and Angela Merkel refuse to hand over policy to the ECB or the European parliament, conscious that it benefits from exploiting the peripheral European countries. Unless fiscal austerity is abandoned by the Euro-zone, leaving the Euro or breaking from capitalism are the only options for Greece and other relatively undeveloped Euro-zone countries.

The UK can print money and through investments in the ‘real’ economy boost spending and consumption and GDP, but its politicians, Labour, Tory and sadly most of the SNP, remain wedded to failed policies such as hoping to resurrect zombie banks and looking to the private sector for recovery.

Other spokespersons for capital realise the risks of on-going recession and are examining even more radical options. When the governor of the Bank of England can in October 2012, openly discuss, but reject the merits: of simply writing off all Government debt; of ending the separation of fiscal and monetary policy; of handing out fivers outside the bank and using helicopters to dump money on poor areas – we can conclude they know not only monetarism but Keynes plan a), b) and c) have failed and ‘we ain’t in Kansas anymore’ as Toto was told in the Wizard of Oz.

New revolutions, new strategies

We must confront the privileged elite who have destroyed a large part of the world.

Hugo Chavez, 4 September 2002

Struggles of the poor and indigenous people of Latin America against corrupt elites tied to the US are not new. However, the achievements of Chavez’s Bolivarian revolution since 1999 are unique. Elected on a capitalist social reform programme to be financed by oil revenues, his government has moved steadily to the left despite US coup attempts, building close ties with Cuba, nationalising foreign companies, redistributing wealth to the poor, banning sexual discrimination, introducing a shorter working week and promoting community organisation. Since 2007, Venezuela has provided medical help and finance across Latin America and supported socialists and indigenous campaigners as well as setting up a Bank of the South in opposition to the IMF. Increasingly, Venezuela is showing that an alternative social model to free market capitalism is possible in large parts of the world.

The Arab Spring has been as yet confined to a liberation struggle against corrupt elites initiated by largely educated, unemployed youth. Increasingly bloody, it has already shown dictators have no hiding place in the digital age and has thrown up new forms of self-organisation via social media which are being copied across the world. The struggles against austerity across Europe have shown once again the unstable nature of a currency union which unites countries with widely divergent economies. The forces of combined and uneven development are accentuated and the weaker countries impoverished. Only radical wealth redistribution between rich and poor and rich country to poor country can save the Euro.

Across Europe, nationalist parties seeking to break from their existing states are seen as an alternative to austerity. Basque nationalist parties now have a majority in the regional parliament; Catalonia’s parliament is seeking an independence referendum; and both Walloons and Flemish seek the breakup of Belgium. Scottish people are not alone in seeking to control their destiny.

In October 2008, Alistair Darling, then UK chancellor, used anti-terrorism legislation to freeze £4bn of assets of Iceland’s banks including its central bank, in effect, holding the Icelandic people to ransom for the credit crunch. The Icelandic government capitulated but the Icelandic people sacked their government and refused to pay the UK compensation for the actions of private banks. They have since in a uniquely democratic fashion rewritten their constitution enshrining people’s rights and become a rapidly growing economy, largely debt free. Increased affluence, literacy, new technology and an increasingly multipolar world, have created new opportunities for social liberation across the globe. Latin America is one example but if Iceland with a population of 320,000 can be affluent, independent and democratic, why can’t Scotland?

Socialism in the UK?

Labour’s never been a socialist party, but it’s always had socialists in it. Tony Benn, Radio 4, 10 February 2006

I was in the Labour Party for 16 years, having joined when we were attempting to turn Labour to the left, by electing Tony Benn as deputy leader, in order to better fight the Tories. That failed. We then attempted to democratise the party and in Scotland to make the Scottish Labour Party autonomous. That also failed. What we got was less democracy, removal of conference power, keeping of Trident, abolition of Clause 4 -a symbolic act but the last token of Labour’s homage to socialism – and finally the Iraq and Afghan wars and the Labour Party embracing austerity. Labour has failed to abolish the Lords, failed to embrace voting reform, failed to tackle unemployment and poverty -but embraced billionaires like Ecclestone and city bankers. There is not a scintilla of evidence that Labour can be reformed, that significant forces wish it to be reformed or that any UK socialist party can emerge to replace it. One thing that may force left realignment in England is the loss of any prospect of a Labour government when Scotland leaves the UK. A yes vote in 2014 would necessarily bring to the fore a discussion about a democratic road to socialism in England.

A socialist Scotland

Democracy is the road to socialism -attributed to Karl Marx

All supporters of independence, irrespective of their vision for Scotland, should unite to win the referendum on a simple message of scrapping Trident and providing hope -for the future, for peace, prosperity and tackling unemployment, poverty and deprivation. Alex Salmond is right! Scotland has a similar GDP to the rest of the UK; it has abundant renewable energy which can be developed to make Scotland a green beacon within Europe; it has some of the best universities and research establishments in the world and a well educated population; it has successful companies and unique brands like whisky and exports across the world. For these reasons, Alex Salmond is right that without changing very much an independent Scotland can become a prosperous left social-democratic but capitalist nation. But Salmond’s vision is not of a truly democratic or socialist Scotland and these visions must also be presented to the Scottish people in the 2016 Scottish Parliament elections alongside his.

There are obvious inconsistencies in Salmond’s vision:

• How can we remain a monarchy and claim to be a true democracy?

• Why should a newly autonomous Scotland seek continued membership of the EU, an organisation which demands the interests of multinationals take precedence over Scottish workers and Scottish laws? As a non-member we can still embrace laws and projects that benefit all.

• Why should we commit to retaining the pound even if England and Scotland’s economic interests diverge? Economic autonomy is essential for independence and a separate Scots pound could better meet our needs.

• Why when we are committed to a Green Scotland and the fight against climate change, do we promote continued exploration for oil and gas in Scottish waters?

A socialist vision would also say:

• Unemployment is immoral! Provide jobs and training to all who need them, for all who need what they could do or produce. Cut the working week appropriately.

• Ensure those who can contribute and those who need get! Tax income, land and large mansions appropriately and prevent Scottish residents from using tax havens. Ensure the vulnerable are cared for and no one is in dire need.

• Take back into public ownership essential services! Nationalise transport, electricity, gas and telecoms companies. Introduce rules restricting foreign ownership of strategic resources.

Any socialist programme for Scotland needs discussion and extension, however, rejection of ‘the inconsistencies’ listed above must be shared by many in the SNP, Labour and Green party.

A new party for a new Scotland?

As the present now, Will later be past, The order is Rapidly fadin’, And the first one now, Will later be last, For the times they are a-changin’. – Bob Dylan, 1964

The SNP has always argued for an independent Scotland but encompassed many visions for how a ‘free’ Scotland should develop. Can free marketeers and socialists survive in the same party when choices have to be made? The Labour party in Scotland has always contained both nationalists and unionists, social-democrats, socialists and opportunists and had its policy decided by London. Can it reinvent itself as a left party in Scotland or will it seek to re-unite the UK -something with no successful precedent in other countries? Those of us who have consistently argued for a socialist Scotland have every expectation of a new socialist party rising phoenix like from the ashes of the Union.

bookcoverThis is the second of a series of extract from a new collection launched May 2013 – Scotland’s Road to Socialism
Seven years after Is There a Scottish Road to Socialism? was published, we return to the question: “Is a better Scotland possible – and how do we get there?”. In Scotland’s Road to Socialism: Time to Choose, 24 writers give their answers. £7.99 inc. postage.

Buy the book here.The book is also available via Word Power Books, Edinburgh.

Contributors include: John Aberdein, Cat Boyd and James Foley, Pauline Bryan, Maggie Chetty, Jim and Margaret Cuthbert, Neil Davidson, Stuart Fairweather, Neil Findlay and Tommy Kane, John Foster, Colin Fox, Lynn Henderson, Bill Kidd, Richard Leonard, John McAllion, Mhairi McAlpine, Robin McAlpine, Conor McCabe, Peter McColl, Gordon Morgan, Mike Small and Dave Watson.

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  1. Charles Patrick O'Brien says:

    A social aware and responsible population,to the needs of all,has to combat greed and work for the benefit of ,our country and our species.First must come independence,and by good example hope that others can follow.

  2. annie says:

    I find it quite surreal reading this ‘holistic’ article alongside Mandy Rhodes interview with Dennis Healey:

    Healey’s description of Tony Benn as being ‘a destructive innocence’ and declaring himself to having more of an “eclectic pragmatism with a strong moral streak” is quite remarkable. Was his ‘strong moral streak’ not twitching his conscience when he was lying through his teeth ‘underplaying the value’ of Scottish oil? And, moreover, the consequences his Labour Party lies had on an entire nation? It’s like some crazy, egotistical game they play with peoples lives!

  3. Hetty says:

    Mostly a very good article. A couple of things though, I don’t think we can yet broach the subject of the monarchy and it’s place in an Independent Scotland just yet, too many people would protest at even the mention of a republic. Thats’ for later. Also oil, the dirty stuff indeed, problem is, people are mostly not bothered about renewables and laugh if it’s mentioned…a few wind turbines, hydro power, just does not float their boat, in fact they see it all as a joke and a hippy type ideology. So, if Scotland does not make a case for oil, the dirty stuff, the westminster lot will be delighted, they want it anyway, so who would you rather manage that? I know who I’d rather see the revenues go to instead of the mismanagement continuing as the status quo and the spoils going to the bully boys in the South of England. Many countries with oil have huge gaps in wealth and are incredibly uequal, the UK is rapidly moving towards joining them if it hasn’t already. Independence is just the start, we can work on improving how things work and are managed once we have it, otherwise our well-made lifeboat will go down with the sinking ship, as in the UK. I don’t think the Scottish people will stand for more of the same should we vote YES, Independence would be the spring board, if I have the right term there!

  4. annie says:

    Yes, Hetty, I agree. I’m beginning to accept that there is more than one way to skin a cat. Let’s play the bastardos at their own game. I am now a ‘pragmatic socialist’… there, I’ve said it.

    PS Although not sure most people are laughing about renewables when taxi drivers are pointing out the correlations of ‘weird’ weather and climate change (in my experience). It’s becoming increasingly difficult not to notice it!

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