State and corporate power are fusing almost everywhere on earth, but in Italy they have condensed into the stocky figure of a single man. Silvio Berlusconi, the prime minister, is worth around 10bn. He has interests in just about every lucrative sector of the Italian economy. His control of most of the private media (through his businesses) and most of the public media (through the government) means that he can exercise a dominion unprecedented in a democratic nation over the thoughts and feelings of his people. He has been convicted in the past for bribery, tax fraud and corruption but by amending the law has had those convictions overturned and his business activities legalised. His government is sustained by parties which describe themselves as "post-fascist"; he himself has spoken of the "superiority" of western civilisation.  This is the man who is now Tony Blair's closest political ally in Europe. After their meeting on Friday, Sr Berlusconi told the press that "we see eye to eye on all the matters that were raised". Blair added: "Some of these old distinctions - left and right - are no longer in my view as relevant as they were maybe 30, 40 years ago." Blair and Berlusconi are now the only European leaders who seem prepared to support a US attack on Iraq. Both men have introduced repressive legislation restricting civil liberties. Both have granted big business the concessions it demands. At the European summit in Barcelona next month, they will be forming an alliance with Jos Maria Aznar, the rightwing Spanish prime minister, in the hope of forcing France and Germany to accept new measures demanded by the corporations.   Among their proposals on Friday was the deregulation of employment. "Europe's labour markets," Blair wrote in Italy's Corriere della Sera, "need to be more flexible. Businesses are still encumbered by unnecessary regulation." The paper they published called on member states to introduce "more flexible types of employment contracts"; to replace labour laws with "soft regulation"; and to increase "the effectiveness of public employment services... by opening this market to the private sector".   This is just the latest means by which Blair has chosen to antagonise workers in the United Kingdom. Last week the steelworkers struggling to keep their jobs here discovered that the government has been helping a foreign company to secure and then to finance the acquisition of the vast steelworks in Romania. The Department of Trade and Industry appears to be about to renew the UK's exemption from the European working time directive, which means that this country will remain the only one in Europe that permits some employers to force people to work more than 48 hours a week.    Last year, the official figures for the number of deaths at work rose by 32%. For the past four years, the government has promised the immediate introduction of new safety laws and a new offence of corporate killing. Neither has materialised.   With Berlusconi's help, Tony Blair is seeking to prevent the European Union from banning the anti-competitive deals which permit the private takeover of public services. The result is that public sector workers will continue to lose pay, pensions and holidays as private operators change their terms of employment. The government is now proposing to deny agency workers the legal protections afforded to employees. Those who contest these policies, the prime minister suggested a fortnight ago, are "wreckers" and "small c conservatives".   So the abiding mystery surrounding labour relations in the United Kingdom is this: given that the government, both in declaration and in practice, is the enemy of workers' movements, why do they continue to fund it?   About one-third of the Labour party's funding comes from the unions. Many of their members are beginning to wonder what they are buying. Last summer the GMB halved its annual donation to the party, in protest against privatisation. Both Unison, the biggest donor, and the firefighters' union are currently reviewing their support. The election of Bob Crow as leader of the RMT last week may suggest that the unions are beginning to desert the party they built.   But this will happen slowly, if it happens at all. Most union leaders, while fiercely critical of Blair's policies, insist that they retain more influence over the government by lobbying from within. It is hard to see what the evidence might be.   In his foreword to the 1998 Fairness at Work white paper, Tony Blair insisted that the policies it contained would "draw a line under the issue of industrial relations law... Even after the changes we propose, Britain will have the most lightly regulated labour market of any leading economy in the world".   Blair has proved true to his word. The government will implement those European directives which it has failed to undermine. It may introduce a few concessions for workers in privately financed hospitals. But otherwise Labour, as Blair has warned, has nothing to offer.   The Confederation of British Industry, which does not give the party a penny, swings far more weight with Tony Blair than all the hard-earned millions scraped together by the people whom Labour is supposed to represent. It would make as much sense now for the workers to give their money to the Tories.   It is time, in other words, for the trades unions to embrace their role as wreckers. The party they created has disowned them, so they must disinherit it. They must destroy the system which guarantees that power remains the preserve of the parties of big business.   It doesn't really matter which of Britain's small progressive parties - the Greens, the Socialist Alliance, the SNP, Plaid Cymru, even the Liberal Democrats - they choose to support instead. What counts is that there is an effective radical opposition, which has the resources to start snatching millions of votes from Labour. Political parties, like companies, always move towards those from whom they wish to take trade. One of the reasons why Labour has crept so far to the right is that this is the territory on which it must fight its only serious competitor.   Damage limitation, which is the most the unions who work within government can hope to achieve, does not precipitate change. Workers' representatives will swing no serious political weight until they can force the government to respond to their agenda, as opposed to being forced to respond to the government's. Even the GMB, which is using the funds it has withdrawn from Labour to advertise its dissatisfaction, is wasting its money: Blair knows that he has nothing to fear from it as long as there is no radical alternative to this government.   It is not hard to see why the unions are reluctant to let go. Labour was their creation, and its construction was an extraordinary achievement. But the creature has lumbered away from them, and it works now for those they sought to oppose. Only by building a new one can they hope to lure it back.