Chris Bambery looks at a new report on trends in British capitalism in the light of recent developments in the independence campaign
Creeping across London on a bus on the day of a Tube strike gave me plenty of time for reading and an opportunity to catch up with a new report by Jeremy Green and Scott Lavery on how the economic crisis which began in 2008 has been used to further benefit capital at the expense of labour.
I’d also picked up my morning copy of City AM, which would be gladdened by this, unlike the report’s authors, and which carried a piece by James Frayne headlined “Business can help save the UK – but politicians must take Scotland’s vote more seriously.”
The two pieces contrasted in style – Green and Lavery’s paper is written in as an academic presentation, while Frayne is a communication consultant and blogger on Conservative Home and elsewhere. He bemoans the decision of the CBI to pull back from campaigning directly for a No vote in the build up to September’s referendum and argues big business needs to throw its weight into saving the UK, stating:
“Using credible, independent firms to deliver the message that an independent Scotland will be poorer is one of the most powerful things the pro-union campaign can do.”
But what Green and Lavery do is show that staying within the UK, given the current economic strategy shared by all three of the main Westminster parties and the Bank of England, will only see a further widening of the gulf between a rich elite and the majority of the population.
In the wake of the 2008 crash the Bank of England, following in the wake of its American equivalent, began a programme of “Quantitative Easing.” This was consciously directed to rescue and then increase the assets of the tiny few individuals and corporations who own assets, particularly the shares of the banks and other financial institutions (many of which were now owned by the UK government following Gordon Brown and Alastair Darling’s takeover of the ailing banks). It has also fed into the current property bubble, focused in the main on London.
The Bank of England is keen to stress that its policies benefit the economy as a whole, and by implication everyone in the UK. But as Green and Lavery point out,
“the Bank did concede that the benefits of increased asset prices are ‘heavily skewed’ towards the top 5 per cent of households that own 40 per cent of these assets.”
The former Governor of the Bank of England, Sir Mervyn King, specifically warned that while this was happening wages would have to be held down. The two authors sum up his thinking thus:
“The message is clear: we may not be able to control world commodity and energy prices, but we certainly can take measures to discipline a domestic wage-push. While QE ensures asset price inflation, continued attacks on trade union rights and the promotion of labour market flexibilisation provide the broader political context within which wage inflation is held in check.”
Between 2010 and 2013 real wages fell by 8.5 percent in the UK, the fourth largest decline in the 27 European Union countries. This is something Britain has not seen since the 1920s following the defeat of the General Strike. It was something Margaret Thatcher never achieved. It represents a major blow to working people.
Despite the much heralded “recovery” there is no sign that we will claw that back any time soon, not before 2020 our authors argue.
This “recovery” has been based on vigorous state intervention which has further accelerated the shift of wealth overall away from labour and into the hands of capital. Its been achieved Green and Lavery argue by, “i) an ongoing stagnation of real wages, (ii) an increasing concentration of jobs in ‘low pay’ industries, (iii) an aggressive use of ‘wage freeze’ and wage-cutting strategies by firms, and (iv) a rise in ‘precarious’ employment and ‘atypical’ working practices.”
Investment has stagnated, helping ensure Britain retains low productivity rates. Prior to the 2008 crash one study showed UK financial capital had invested just £50 billion in manufacturing but £100 billion in property.
77 percent of jobs created are in low productivity, low wage sectors such as retail, the care sector and food and beverages. In the catering industry 300,000 zero hour contracts had been issued by 2013:
“Precarious, temporary work has proliferated; trade union rights have been further eroded; and the relative weakness of organised labour has allowed firms – often sitting on huge financial surpluses – to pass the burden of economic adjustment onto their workers.”
And here’s where we come back to our friend James Frayne and his false warning that Scots will choose a cut in living standards if they vote Yes. They have suffered exactly that under Gordon Brown and David Cameron. Green and Lavery point to something else too:
“In Britain’s post-crisis political economy, it appears that a very similar growth dynamic is being re-engineered through the Coalition government’s economic strategy. Policies such as ‘Help-to-Buy’ have helped to stoke housing market growth, at the risk of blowing up another housing bubble; levels of household debt are rising again, currently at above 150 per cent of income; and the financial service sector retains its role as the dominant node in the British economy. The recovery has essentially placed Britain back on the same pathological trajectory as it was prior to the crash of 2007-8.”
In other words the UK economy is not experiencing a rebirth which will end the century plus of decline. It is itself highly precarious and vulnerable and if there is another crash we know who will pick up the tab again: us!
Having to spend an hour and a half on a bus was slightly annoying but the Tube workers are striking to save jobs and protect the public service they provide and deserve support. The problem is that they are exceptional in having the confidence and ability to take industrial action. If we are to reverse that picture we need to take into account some of the changes which have happened in recent years, as highlighted by Green and Lavery, and not ignore them.
On 18 September people in Scotland have a chance to quit the casino economy of the UK – grab it!
Chris Bambery is an author, political activist and commentator, and a supporter of Rise, the radical left wing coalition in Scotland. His books include A People's History of Scotland and The Second World War: A Marxist Analysis.
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