Since the last issue of RP we’ve seen disaffected youths rampaging and looting through the streets of major cities as wild fluctuations in stock markets leave governments and central banks perplexed about what to do next. In the UK Prime Minister Cameron insists the spending cuts must continue while the Bank of England issues another £75bn of ‘quantitative easing’ and the budget deficit keeps on growing. As we write, anti-capitalist protests - mainly against the outrageous wealth accruing to the parasitic financial sector - have spread from Wall St to Canada and across the Atlantic to Rome, London, and at least 90 other towns and cities across the planet.

Biggest Ever Capitalist Crisis: How Will the Working Class Respond?

The capitalists themselves are openly admitting that their system is in the midst of the worst crisis since the 1930s. (Some economists are arguing that in the case of the UK the situation is actually worse today.) Talk of economic ‘recovery’ has turned to the ‘danger of stagnation’ and now ‘recession’. The intractable debt problem, itself the result of attempts to manage capital’s deeper crisis of the decline in the rate of profit by encouraging the gargantuan growth of financial speculation, is not limited to the euro zone nor simply to the public sector. Now this decades-long problem is coming home to roost in the shape of ‘absence of growth’, the euphemism for yet a further drop in profitability. Economic restructuring, globalisation of manufacturing and the financial markets, the unprecedented piling up of fictitious capital on the back of consumer credit and property speculation, all these measures helped to prolong and disguise the underlying crisis which today has reappeared sharper than ever.

Despite the fear and uncertainty about what to do next, the major powers are just about managing to maintain a unified front to ward off the implosion of the European banking sector, something they all recognise would have disastrous consequences for their own economies. At the same time, however, protectionist tendencies are appearing despite the bourgeoisie’s long-accepted lesson that there must be no return to the ‘beggar my neighbour’ policies of the 1930s. Ironically, the fact that the dollar’s nominal value is protected by its role in international trade while its real value has plummeted in the wake of the financial collapse and ‘quantitative easing’, has fuelled today’s incipient currency wars. In September the Swiss National Bank (SNB) reacted against the massive buying up of its currency by speculators looking for a ‘safe heaven’ by announcing it would defend a minimum exchange rate against the euro by flooding the market with its own currency. The net effect of such a policy is to import inflation and increase the cost of living for wage workers. Brazil has already been obliged to restrict the inflow of speculative capital aimed at making a quick kill by exchanging dollars for reals and now it is trying to defend its home market by imposing what it calls ‘anti-dumping’ duties which affects mainly Chinese imports (since the Chinese currency is linked to the dollar). Workers are striking for higher wages to keep up with increased inflation but the bosses, worried about their commodities being ‘priced out of the market’ by the inflated currency and wages rising ‘higher than the increase in productivity’, are threatening to move production elsewhere. Meanwhile, the US itself is toying with the proposal to unilaterally impose import tariffs on Chinese goods — under the banner of retaliating ‘against countries manipulating exchange rates’ as part of its strategy to force China to revalue its currency and therefore up the price of its exports on the world market. Currency wars, they say, are followed by trade wars.

At the moment these ‘classical’ signs of global capitalist crisis are over-shadowed by the equally traditional capitalist response to crisis: the attempt to get more work for less pay out of the working class. In the modern world this is not only about take-home pay and the number of hours worked, it is also about reducing the cost of maintaining the workforce to the capitalist class as a whole: the so-called ‘social wage’. This includes pensions, health and social welfare, schools and universities, etc. — in other words, the social and economic infrastructure necessary to provide what has come to be accepted as a civilised standard of living. Even though capitalist ideology disguises the fact, this social and economic infrastructure is not simply the result of wealth generated by capitalist growth. Since all (real) capitalist growth is based on the new value that only the effort of labour power can create then it is clear that whatever social and economic infrastructure exists has been ‘paid for’ out of the value created by workers’ labour. Capitalist historians often talk about the ‘post-war settlement’ when referring to the setting up of the welfare state. The settlement basically established that in the post-war division of wealth between capital and labour the working class as a whole would receive back a larger portion of the overall value they create than in the past. This was partly in return for the sacrifices of war but mainly on the understanding that a better paid and better kept workforce would have no need to resort to all-out class struggle: production could continue smoothly and, as productivity increased and wages grew, the capitalists began to see the possibility of a profitable expansion of the consumer goods market from the preserve of the wealthy few to the mass of the working class. As working class living standards rose and life became easier (we are referring to the advanced heartlands of capitalism) all sorts of theories abounded about the end of the working class and the permanent growth of a ‘crisis-free capitalism’. Yet capitalism is capitalism. By definition it is a system which exists to make profits: everything else is a side-product — the vast technological development, material abundance, expansion of scientific knowledge, all the benefits of capitalist civilisation which are so haphazardly and inequitably distributed. Once the system of profit-taking is in crisis: as it must be periodically because of the law of the falling rate of profit which determines that as capital extracts progressively more profit on the basis of fewer and fewer workers (working with more advanced technology) it undermines the basis of its own existence, then it cannot disguise its true nature. For the capitalists, there is only one way to go: up the rate of exploitation and reduce workers’ ‘share’ of the value that they create. (Even though this is no solution to the crisis itself.) As the crisis sharpens, we can see the capitalist class as a whole becoming more ruthless. Increasingly they are aiming for an absolute reduction in what for them is the ‘cost’ of labour power by means of outright wage cuts and also by cutting the cost of the social wage.

Despite the talk of how we are all in this together, this is what the present government’s running programme of draconian government spending cuts are about: using the state to protect the investments and property of a class who live off the wealth created by workers’ unpaid labour, just as it is was in Marx’s day. There is plenty of understandable outrage at the callous ripping up of social safety nets and the abandonment of any pretence at a guaranteed universal level of welfare or services. Local campaigns and protest actions abound as anything that does not make a profit, from bus services to day centres for the disabled, is liable to be axed. It would be surprising too if the accompanying onslaught against workers in the public sector had not provoked a response: According to a study published by the GMB union 100,000 local authority jobs have already been lost in England since the general election with more cuts in the offing. If the government sticks to its original plan a further 500,000 civil servant posts are due to be axed before the lifetime of this parliament is up. Obviously this means heavier work loads at the same time as the workforce will have to work longer and pay more to get a reduced pension. [More on this later.] In addition the government has imposed a wage freeze. When inflation is taken into account a wage freeze really means a pay cut. However, many local authority workers are facing an outright wage cut. There have been numerous walkouts and one day stoppages ever since the cuts were announced. One of the latest was in Southampton on 6 October where a thousand or so workers walked out for the day and some of them went along to the typical union ‘rally’ in the city centre to protest at job losses and a 5.5% pay cut. (This at a time when councillors had awarded themselves a pay rise.) As we predicted, notably after the TUC’s big demo in London in March this year, the unions have been ready to step in at the local level and define how workers should fight. It is difficult to say exactly how far the unions are acting as a safety valve and helping to tame an upsurge of class struggle or whether the majority of workers are generally at a loss as to how to do anything to resist and so passively accept their fate. In any case, despite protests the government’s austerity programme is well underway. Given the wider context - the fact that this is a global capitalist crisis of unprecedented proportions, that workers everywhere, not only state employees, are facing tremendous attacks on jobs and their general standard of life - the real puzzle is why the working class hasn’t put up a stronger resistance.

First of all, a glance at what that wider context means for the working class as a whole in the UK.

Condition of the Working Class

Far from the private sector mopping up redundant public employees, the total number of jobless increased by 114,00 during the last quarter. At 2.57 million, unemployment is at a 17 year high and set to rise further. More than 1 in five 16-24 year olds are without a job while low-paid part-time workers, notably in the retail sector, have been particularly affected. According to a TUC report

…the lowest paid workers have borne the brunt of job losses over the last three years. Sales and elementary service and admin jobs are responsible for 41 per cent of the claimant count rise since 2008, even though they represent less than 20 per cent of the workforce. The two job categories have the lowest pay rates of all occupations at just £6.55 an hour.
…The number of sales vacancies has also fallen by six per cent over the same period.Elementary service and admin occupations - such as labourers, bar and catering staff and cleaners - have had the second sharpest rise in claimant count unemployment, almost doubling from 86,250 in April 2008 to reach 168,015 in August 2011.
More than one in ten women work in sales jobs - where they outnumber men by two to one - so further losses in this sector will particular hit women's job prospects in the private sector, at the same time as public sector job losses are disproportionately hitting women...

From TUC Email Alerts - Press Releases

The growing threat of unemployment is one of capitalism’s most potent weapons for subduing the whole working class. Moreover this profile of current unemployment shows that the axe has fallen predominantly on the service sector and part-timers, sections of the workforce who are in the weakest position to resist.

By the same token the deepening pool of unemployment provides a sharp incentive for employers to reduce the wages and increase the intensity of workloads for those ‘lucky’ enough to have a job. Throughout the private sector, ‘take it or leave it’ changes to the working day, such as harsher shifts patterns, are being imposed on a piece-meal basis which sometimes evokes a piecemeal response from particular groups of workers who are rarely in a position to hold out on their own. However, the bosses are becoming more confident and ready to impose wholesale arbitrary changing of the rules so long as they can get away with it. Only this month (October) the government announced its plan to abolish the Agricultural Wages Board (AWB) which sets the pay rates as well as holiday and sick pay entitlements for some of the worst paid workers in England and Wales. Obviously this is giving the go-ahead for pay cuts. We can imagine what the 42,000 casual workers in fields and factory farms are going to have to face. In this climate, no wonder the TUC hadn’t the nerve to hold a so-called World Decent Work Day!

Outside the TUC’s endless posturing a more encouraging spark has come from sparks themselves: the electricians who work on building sites. They are doing their best to fight off a rather more than piecemeal attack in the form of the 8 leading electrical contract firms’ blatant decision to replace the wage rate of £16 per hour (the standard wage agreed by the Joint Industries Board [JIB]) to a graded scale ranging from £10.50 per hour to, £12 (wiring), £14 (terminating). In September Balfour Beatty issued 90 day termination notices to 890 site workers. Take it or leave it: if you don’t sign up by 7 December you are sacked. The electricians didn’t take it.

Co-ordinated unofficial industrial action kicked off at major construction projects across the country. Electricians and Pipe-fitters working for Balfour Beatty Engineering Services at Grangemouth in Scotland walked off the job. In London, police were forced to intervene after 150 electricians blocked the main entrance to the Olympics site causing rush hour travel chaos with vehicles backing up around the A12 Bow Flyover. Further action also took place at Balfour Beatty’s Papermill site in Manchester.

From an internet post by jointsitescommittee@gmail.com 2011-09-14

This is an ongoing battle. We reported more detail on how the sparks have formed their own rank and file committees and organised protests and pickets for themselves without waiting for the union (Unite) in a recent edition of our class struggle bulletin, Aurora. There is still plenty of illusion about which side the union is on and of the efficacy of putting pressure on the union from below and in fact Unite is being obliged to appear to be doing something when the workers are essentially organising for themselves. So far their efforts have given a practical example to others of how a wider fight might be organised. In practical terms one of the contractors, MJN Colston, has backed down but there is still a battle to be won. Even if it is, the electricians themselves are very well aware that they are losing out in real terms since the cost of living for everyone is going up. (Officially the consumer price index (CPI), the one they use for pension and benefit calculations, is up to 5.2% whilst the retail price (RPI) inflation rate has reached 5.6%.)

If there was any justice under capitalism the rising cost of domestic fuel bills alone would be enough to merit a pay rise. Energy costs have risen more than six times faster than household incomes since 2004. Already about 5.5 million households spend more than 10% of their income on fuel (the official definition of ‘fuel poverty’). With incomes declining, it has been estimated that by the time of the next election (2015) fuel poverty will be the norm with the ‘average’ (median) household having to spend at least 10% of their income on fuel bills. No wonder Cameron is looking to get the Energy companies to rethink their tariffs!

What this crisis highlights however is that there is no social justice under capitalism. And it makes no difference which of the parties is in office. One of the more recent reports on growing wealth inequality in Britain was commissioned by Harriet Harman when she was minister for women and equality(!) under the last Labour government.

Researchers for the 460 page Hills report analysed inequality according to a number of measures,

one indicates that by 2007-8 Britain had reached the highest level of income inequality since soon after the Second World War.

The new findings show that the household wealth of the top 10% of the population stands at £853,000 and more – over 100 times higher than the wealth of the poorest 10%, which is £8,800 or below (a sum including cars and other possessions).

When the highest-paid workers, such as bankers and chief executives, are put into the equation, the division in wealth is even more stark, with individuals in the top 1% of the population each possessing total household wealth of £2.6m or more.

Tim Ross, Telegraph 11 Oct 2010

The picture is the same all over the ‘democratic’ capitalist world, especially in the USA and the UK. Whilst real hunger and absolute poverty is growing at the bottom end of the pyramid, the peak at the top narrows so sharply that earlier this year the Sunday Times was moved to run a piece on the 1,000 richest people in Britain. It found that the number of billionaires has increased from 53 to 79; that the top 1,000 richest people own £395.8bn or the equivalent of one third of the national debt. In the twelve months from May 2010 to May 2011 nine people enriched themselves by £1bn. Meanwhile the minimum wage for adults has been increased by 15p to £6.08 per hour! What a joke to say we are all in this together.

Facts like these are the stuff of colour supplements but they are a reminder that capitalism is about class. It is about one small section of society exploiting the many. The illusion of a society where everyone gets progressively better off has been broken. Yet, in a world where individual ambition is paramount, and where working class identity and solidarity have been eroded in so many ways (from the propaganda that the working class died with the end of heavy industry to the privatised lifestyles epitomised by the housing makeover boom) workers are finding it difficult to face up to the idea that only serious collective action, not a token one day stoppage, can force capital even momentarily back in its tracks. This can change.

First Let’s Have Some Class Solidarity

In their own way the electricians have pointed the way. Let’s explain. The main public sector unions, Unison, Unite and about fourteen smaller bodies, are busy balloting their members and urging them to vote to join the one day strike and protests on 30 November. Dave Prentis, Unison leader, has boasted that his union has launched the biggest industrial action ballot in UK history (nothing like sticking to the bosses’ rules) and apparently claims to see a parallel with the 1926 general strike (in the number of strike days which will be lost if all goes to plan). This analogy has given the Financial Times industrial correspondent, Brian Groom, the “collywobbles”, since according to him the general strike “divided Britain bitterly along class lines” and no-one wants a return to that! Well, we beg to differ. Britain is already divided along class lines and the sooner the working class recognise this and start fighting back against the attacks by the capitalist class the more hope there will be for a better world. Unfortunately the 1926 general strike is not an example to follow. That story we leave for another day. All we can say here is that it is a prime historical example of how the unions will always prefer to lead the class to defeat when the only way to go is to challenge the capitalist political order. Perhaps there is more to Prentis’ analogy than meets the eye. The unions are trying desperately to restrict November 30 to a day of action by one section of workers over one issue (pensions). The sparks at least have an elementary sense of class solidarity and the need for a concerted response to blanket attacks. As one sparky posted on the internet

Seems Unite[are doing] everything they can to avoid a ballot so the time has come for mass walkouts asap and day of action for construction workers on 30th november a one day strike in support of our brothers and sisters in the public sector.

Construction worker rank and filer 11 Oct Steve Kelly - In fact he is Unite’s London construction branch secretary

It would be something. But it’s no good relying on the unions to lead a serious struggle. That is a recipe for the usual climbdowns and sell-outs. Which is what the electricians will find if they keep on the track of trying to push Unite into leading their battle instead of getting on with the fight themselves. Already the union manoeuvres are undermining the solidarity and strength of the struggle. Just lately Unite has announced it will organise a strike ballot, but only for Balfour Beatty site workers, not the others who are equally affected. This is clearly a divisive move. Like the author of the quotation above, many of the key militants in this struggle are active in the lower ranks of the union. The future that capitalism has to offer us is bleak. In the struggles that lie ahead elementary solidarity of wage workers and unemployed with each other because we are all working class must be the first step on the road to a new beginning. When workers forget about playing by the union rules and capitalist legality then we will know the tide is changing in the sharpening struggle between capital and labour.