In the Communist Manifesto, Marx argued that what distinguished “the bourgeois epoch from all earlier ones” was the dynamic of constant and pitiless change. In a poetic turn of phrase, he warned that under capitalism “all that is solid melts into air, all that is holy is profaned”. For Marx nothing in capitalism is ever ‘fixed’ or ‘frozen’. All is relentlessly subjected to revolutionary transformations that alter the means of production and with them “the whole relations of society”.

Rarely have the written words of an economist been so vindicated by subsequent history - all the way up to and including this latest stage of capitalism, in which the old certainties of easy credit, eternally rising house prices and never ever ascending living standards, have all suddenly been turned upside down. We now find ourselves entering the rapids of an economic recession that our economic and political masters never saw coming. Their promise that open, competitive, deregulated economies would secure the future for the many has turned to dust. Instead, this Christmas will see hundreds of millions of homes around the world haunted by the spectres of unemployment, homelessness and want.

There are, of course, consequences that flow from the collective failure of these masters of the universe. Many of the mega-stars of monopoly finance have been laid low. Alan Greenspan was widely acclaimed as a colossus who strode the economic firmament during nearly 20 years as chairman of the US Federal Reserve Bank. He was hailed as the father of a new economic age that was delivering ever expanding wealth and soaring profits. He was gratefully lionised by successive US Presidents, among them Reagan, Clinton and both Bushes. On this side of the pond, the second New Labour government first secured him an honorary knighthood from the Queen. Gordon Brown then invited him to deliver the Adam Smith lecture in Kirkcaldy, introducing him as “the world’s greatest economist”, before appointing him as honorary adviser to the Treasury. Greenspan was the guru of the New Economy, the lodestar by which New Labour and every other modernising government steered its economic policy. Now he stands condemned as the architect of the ‘Great Crash of 2008’. He takes the blame for protecting the dangerous derivatives market from regulation and leaving the markets to manage risk on their own. He carries the can for making possible the toxic mortgage-backed assets that brought the whole pack of financial cards crashing to the ground. He is accused of ignoring warnings about these financial weapons of mass destruction, of misreading the institutionalised greed and stupidity of banks and investment companies. Suddenly, no leading economist or politician wants to know him or to admit that they ever took him seriously.

Greenspan’s reputation for economic wizardry lies in tatters. In time, so too will the economic reputations of those politicians who followed and honoured him, among them Gordon Brown. New Labour’s claim to have broken with its Old Labour past, by showing that a Labour Government could successfully run a free market economy in the interests of the many, is now exposed as at best naively optimistic, at worst a cynical deceit. The idle boast of “no more boom and bust” echoes pathetically through the depths of the deepest recession in generations.

Capitalism, of course, is far from finished. As Marx argued, it has a genius for constant renewal. Ultimately, the process of capitalist accumulation will restart on the other side of this recession. In the process, the lives of millions of workers will be ruined. As ever, the poorest will pay the highest price. The rich who are responsible for creating the crisis will inevitably transfer the costs of their calamity onto the backs of workers through unemployment and through cuts in public spending and services. The capitalism that finally re-emerges will be different. There will be a new architecture of global economic regulation devised to ensure that 2008 can never be repeated. There will be claims to greater financial transparency and accountability. We will be assured that lessons have been learned and errors eradicated. But it will still be capitalism, driven by greed and the hunger for profit, characterised by elite rule, exploitation and endemic inequality. Capitalism will recover by mutating into a different form that is shaped by the new realities. So too must the Left that stands in opposition to capital. As capital shifts shape so must we, if we are to mount an effective resistance to its newly fashioned forms of exploitation. Our old ways will not be enough. The way we were during the second half of the twentieth century will no longer do for the first half of the twenty first century.

This is especially true of our political formations. For more than a hundred years, the most important relationship on the British Left has been the ‘great alliance’ between the trade unions and their creation, a Labour Party in the British Parliament. It is a relationship that in the past has changed to reflect the times. Initially seen as a necessary parliamentary defence for organised labour against anti-union laws, the Labour Party slowly metamorphosed into a people’s party that threatened, in Nye Bevan’s words, to “take over the commanding heights” of the economy and carry through a British transition from capitalism to socialism. At the height of its popularity, it won more than half of all the votes cast in the 1950 UK election.

That popularity did not last as first rising affluence and home ownership reconciled workers to a recovering post-war capitalism, and then an oil crisis and seventies style recession drove the last of the Old Labour governments on to the economic rocks. By the time another Labour Government re-emerged on the other side of 18 Tory years, globalisation was already changing everything, including the Labour Party and what and whom it represented. New Labour is now neither socialist nor a party of the unions. The toughest anti-union laws in Europe have been retained to signal that New Labour is a party of business. Repeated attacks on the public sector through privatisation and public sector pay restraint, demonstrate that it can now be trusted to take on and defeat organised labour. The relentless pursuit of wealthy donors and the campaign for state funding of political parties reveal the party’s longer-term goal of manufacturing a final break with the unions.

Some union leaders, of course, refuse to face this new reality. They try to pretend that we can go back to the future by salvaging from the current economic wreckage the hope that ‘our’ party can be won back from the New Labour hijackers and returned to its original working class roots. When Tony Woodley recently denounced John Hutton as the CBI’s man in the Labour Cabinet, he was trying to draw a distinction between the remnant of pro-business Blairites at the top of the party, and the rest of the Brownite majority who might yet be won back to the collectivist causes they supported in the 1980’s. Gordon Brown’s subsequent recall to the cabinet of Peter “I’m intensely relaxed about people getting filthy rich” Mandelson showed that neither he nor his supporters shared Tony Woodley’s delusion. Brown’s newly ennobled Business Secretary wasted no time in warning through an interview with the Blairite Progress magazine that there would be no New Labour return to the 1980’s and that it would be “absurd” for New Labour to reject the market.

Union leaders, who look to Brown to take on the role of a socialist Moses leading them out of the capitalist wilderness, are dreaming of a Labour leader and Labour Party that no longer exists. The exclusive concern of the current, and of any potential future New Labour leadership, is to save British capitalism and to resurrect the rule of the banks, hedge funds and private equity companies. New Labour is centred upon aligning a British-branded, free market democracy shoulder to shoulder with the likes of Berlusconi, Merkel and Sarkozy in defence of European and global capitalism. New Labour is part of the problem, not part of the solution. The New Labour project will not be overturned by the remnant of the Old Left still in the party. There will be no restoration of the old 1980’s style Bennite regime. More importantly, we all need to recognise that the traditional Left paradigm of a mass party of British workers rooted in a unified British labour movement and working to control the commanding heights of a British economy has long since been overtaken by developments in global capitalism.

Thatcher’s ‘Big Bang’ deregulation of financial markets in the 1980’s internationalised the City of London making it a centre of global rather than British capital. The city giants in Canary Wharf are now largely American players like Goldman Sachs, or genuinely global players such as HSBC with offices in 85 different countries. Our major energy companies are mainly foreign owned. Electricite de France is one of the UK’s largest energy suppliers and owner of Britain’s nuclear capacity. NPower is owned by the German giant REW. Scottish Power is Spanish owned. Germany’s E.ON owns Powergen. The ‘big six’ oil companies are all multinational companies that cannot be tied to any one national location. Our major supermarkets like ASDA/Wal-Mart and Tesco are international players embedded in countries around the world. Our largest communication companies like Nokia and Samsung, irrespective of their origins, are international players on a global stage. Even home-grown companies such as the Wood Group see themselves as having moved beyond the limitations of national boundaries.

International capital has moved beyond the control of single national states. The hard realities of late twentieth and early twenty first century capitalism has made irrelevant the Old Labour vision of delivering socialism through the British state. Today we face a capitalist foe that has long since broken free of its British shell. The labour movement too must begin to break free from its British chains. We need to face the fact that the British state has become a bulwark not of British but of global capital. We need to find ways forward that will by-pass rather than go through the centre of capitalist power in Westminster. That process has already begun. Progressive change is already being delivered through new political institutions in Scotland, Wales and London, and usually delivered in the teeth of opposition from the British Government and Parliament. It is a process that will gather momentum in the century ahead. The break-up of Britain has already begun. The nature of the coming change will depend upon whether the Left provides the necessary leadership to guide it towards progressive ends, or whether we remain mired in controversy around the ‘British Road to Socialism’. The unity of the industrial and political wings of the labour movement needs to be re-invented for the age of globalisation. Just as capital knows no national boundaries, so too must labour organise across those boundaries and learn to operate with a range of national players. Instead of spouting internationalism, the movement needs to become genuinely internationalist.

The tectonic plates of capitalism have shifted dramatically in the past generation and will continue to shift in the future. Unless we understand and react to capitals dynamic of constant change, we will be in danger of being swept away in the economic tsunami it causes.

 John McAllion is a former MP and MSP and is a member of the SSP