Get a Life not just a Living Wage

I spent Saturday at a conference on the living wage organised by the regional TUC. It seems sad that you need to campaign for the right to earn enough money to live on but this is the reality of the living wage campaign. It was easy for me to agree with it since the Green party's policy is to raise the minimum wage to living wage of 60% of average earnings (currently around £8.10 per hour). The representatives from the Conservative and Labour parties present similarly supported and the living wage, although their parties do not have it as part of their national policy platform.

The idea that paying workers reasonably is good for everybody in the economy is neither new nor radical. It was the idea that enabled Ford's Detroit workers to buy the cars they were manufacturing, and forgetting this important lesson about capitalism is part of the explanation for the disastrous state of Detroit today.

My own presentation was focused on the living wage as a first step towards the end of wage slavery and needless to say I ranged rather more widely than the idea of bringing wages up to a liveable minimum. The beginning of my story was the way the Empire of Capitalism struck back at the end of the 1970s and the huge impact this had on the income dispersion. This is illustrated in the graphic taken from the work of Danny Dorling, which shows the share of total income going to the richest 1% of people between 1918 and 2005. The impact of trade-union activism and increased worker expectations is clear, as is the counter-effect of the Thatcherite ideology and attacks on union power.

My next graphic, based on ILO data, demonstrates clearly the importance of the Tina narrative in persuading workers not to ask for higher pay. It shows the clear indication of productivity increases on a global basis and the fact that the value generated by these workers working harder has been paid in profits rather than in wages. The argument around globalisation was used to persuade workers that they must compete with those in the lowest-paid economies in the world, and that asking for higher wages would destroy their own jobs. The inevitability of a race to the bottom when this ideology is played out is illustrated clearly in the graphic showing wage rates in different countries.

The great disparity of wages across EU countries which are part of the same single market is surely an issue that requires political debate. Why do we accept the very low pay offered to workers in central and eastern Europe? The deal we are offered is cheap goods rather than well-paid jobs, encouraging us to focus on our role as consumers rather than producers. The political economy underpinning this is not discussed but should surely be open for democratic debate.

The gains in wages illustrated in the earlier graphic were the result of solidarity across industries within a market. Globalisation undermined this but if we are to return to international solidarity in a globalised economy then surely a global minimum wage must be our ultimate demand, rather than a low wage, even if a living wage, subsidised by corporate welfare in the form of tax credits.

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How is the Chancellor Engineering a Pre-Election Boom?

After several years of dire economic news, suddenly, just about the time when parliament went into recess, the stories about the British economy changed. Almost overnight we moved from gloom to boom, with Osborne celebrating 0.6 growth and the euphoric tone of the journalists outstripping that of the Chancellor. With an election now just 18 months away, and it being certain to be an election dominated by arguments about the economy, this has made me rather suspicious about how this return to economic joy is being measured, and how the dark forces of monetary manipulation might be influencing it.

I am not alone in my suspicion that the happy economic news may not be all that it seems. The traditional left, however, limits its critique to the suggestion that the increase in GDP is being driven by the retail sector and is based on withdrawn savings by those who can no longer wait for their wages to rise. Frances O'Grady's claim that 'Britain's fragile recovery is being propped up by families raiding their piggy-banks' is supported by ONS data showing that the ratio of household spending to savings has fallen from 7.4% for 4.2% in the past year.

What first made me nervous about the 'return to growth' was Faisal Islam's excessive use of superlatives on his Channel 4 News report on Monday. He has Capital Economics predicting 1.5% growth in this quarter alone, with huge increases in both business confidence and business investment. This caused me to think back to the stories of companies sitting on cash (largely accumulated as a result of the government's loose monetary policy via QE) because of fear of investing it. There was much discussion of how the Chancellor might encourage companies to invest their cash-pile to revive the economy, including the suggestion that he might impose a levy on them for stagnant cash holdings.

Has the Chancellor somehow found a way of encouraging UK corporates to start spending the £750bn. they have in reserves (incidentially, a figure equal to half the UK's annual GDP)? Certainly his proposal for tax relief on smaller companies, who apparently hold around £120bn. of the total, which was included in last year's autumn statement, may be beginning of have an impact. But is there some other incentives for companies to invest, or threat do them if they do not?

The less subtle evidence of engineering is in the form of the incentives to restart the housing market, that well worn engine of unsustainable booms past. The Help to Buy scheme supports purchasers of new homes to take on mortgages that the banks think they cannot afford to pay. It is thus risky in two regards, since it will tend to keep house prices at the sort of excessive levels that led to the financial crisis in the first place, and at the individual level it risks households losing their homes if interest rates rise. It does appear to have stimulated a boom in house building which helps to explain the higher GDP figures.

The manufacturing and production figures illustrated in the graphic make it clear that the hype over recovery is seriously overdone. Production and manufacturing - the sort of real economic activity that the Conservatives claimed they wanted us to rebalance towards - is still struggling and nowhere close to the level it was before the financial crisis. The improvements we see appear to stem much more from monetary manipulation and the shuffling of cash between various elite players. This sort of wealth does not find its way down to those on average incomes who are struggling with the consequence of the capitalist disaster of 2008.

However, the Conservatives are playing the politics of this extremely cleverly. The Chancellor is likely to come out of his term in shared government with the public sector smashed up and Labour vowing to continue with these destructive and draconion cuts. The recession has also led to a culture of fear amongst employees, who are accepting reduced wages and appalling working conditions, as exemplified by the zero-hours contract. A success for George and his cronies but the real problems around the failure of manufacturing, the ongoing trade deficit and lack of resilience in our local economies and the iniquitous failure of the banking system are all yet to be addressed.
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A Politics for the Earth

Today is the day that Vince Cable launches the next salvo in the battle between capital and labour. This is the battle that has been central to our politics for the past 200 years or so, since the industrial revolution finally broke people's ability to create a livelihood by use of their own labour and on their own land. Interestingly, this is the word, a very green word, used by the TUC in their assessment of how the labour side is doing in this battle.

The TUC report shows that labour has been losing for several decades with headlines such as: 'The wages of middle income Britain grew by an average of just 56 per cent between 1978 and 2008, despite GDP increasing by 108 per cent over the same period, and for workers in some skilled trades incomes actually fell in real terms.' This is clear evidence that the consequence of globalisation and the neoliberal revolution in economic organisation has been the extraction of an increasing share of value by the interests of capital, and at the direct expense of labour.

The report frames the discussion against the background of a dichtomy between a welfare model of the economy and a model of finance capitalism. It argues that the consequence of a move towards a reliance on finance resulted in no extra jobs to replace those lost due to the movement of manufacturing overseas: 'Finance and banking created almost no net jobs in the 15 years to 2007, despite the industry’s greatly expanded share of the nation’s output and profits.'

In its proposals the report offers the beginnings of a revival of vision on the left, a vision which includes demanding that politicians pay more attention to equality and investment in manufacturing, reopen the question of the selfish and destructive design of the corporate business model, and of course the inevitable demand for more union involvement in economic policy-making. The report also provides the sort of information about who is gaining from the neoliberal model - the wealthy and the professionals - that has been so lacking in the debate about economic policy in recent years.

The most killing statistics of all are those that show that the economy has not thrived under this neoliberal model. Growth has been slower and recessions deeper. Even on its own terms the capitalist economy has utterly failed, and the most extreme version of it, with all the social costs attached, has failed most extremely.

The weakness of the report is that, in spite of using the word livelihood, the word is used in the predictable narrow sense that a 'labour' movement seems incapable of transcending. Hence the emphasis is still on the fight between owners and earners, while the object of that fight, the source of all true value which is the earth itself, is still left outside the debate.
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