Economic crisis deepens
Two Johns agree: keep down pay more successful when it has concentrated on the earlier links instead of going bald-headed for pay itself. (FT April 26)
In any event most employers are quite happy to live with a controlled element of inflation, which they can use to nibble away at the living standards of they their workforce while protect their own profits through price increases.
Employers are concered about pay settlements because they focus on the key issue of profitability - the level of exploitation of the workforces as shown by the share of created value that is retained by the employer as profit. This is the very crux of the class struggle, and the bosses are beginning to grasp just how temporary was the change in the balance of forces brought about after the defeat of the miners' strike.
Once more even some notoriously timid unions are pushing for - and often winning
- much larger pay settlements, goaded into action to placate a rank and file that has been angered by years of concessions, job losses and now by acceleratthem against the working class.
wretched line of the Kinnock team.
way as did Callaghan for a new Tory resurgence.
fightback are the best ways to guard against defeat - and betrayal.
ing inflation. A few sections - headed by
Fords and the power workers - have just exceeded the current
9.4 percent level of inflation; but few private sector settlebelow ments are eight percent, and this is now putting the pressure onto public sector management.
NALGO local authority staff and even the usually pas. John Smith MP: no friend of the workers sive NALGO NHS white collar staff are moving towards strike ballots.
Alarmed at this evidence of a new combativity and resistance to further cuts in the realk value of pay packets, the employers and ministers have begun a predictable chorus of warings that excessive' pay rises could cause job losses. Early in April, the
Govemor of the Bank of
England, Robin Leigh-Pemberton, admitted that:
over the past two or three years something has gone quite badly wrong. policy mistakes the main enemy is removed: more groups will feel confident enough to embark on industrial action and mass struggle. The scenario of the 197879 winter of discontent could be re-run as easily as the bankrupt policies which produced it. This helps explain the Labour leaders' reluctance to repeal Thatcher's anti-union laws: they are getting ready to use
First steps in preparing the political leadership that will be needed for in these confilcts to come have already begun. The Socialist Movement has held several successful conferences and begun to organise a socialist opposition in the trade unions and, most recently, in the Labour Party. Its discussions on policy and programme go beyond the abstractions of a debate on what we want from the next Labour goverment, and spell out the need to link up now with the struggles of the working class against the Thatcher government, and to organise a class struggle current ready to oppose the right wing policies on offer from Kinnock and Smith. Socialist Outlook has consistently argued the need for a Socialist Campaign for a Labour Victory that will spell out genuine alternatives to the
Of course we want a Labour government to replace Thatcher. No socialist wants to see the Tories allowed back for a fourth term: but neither do they want another cringing, right wing Labour government that quickly discredits itself and the name of socialism, and which paves the
Opposing Kinnock's preparations for government, and challenging the policies he is seeking to impose, while building the widest possible and forecasting errors played a pant. Who should pay for these mistakes? The workers! He called for a light monetary policy and wage restraint - the old formula under which the workers are once more urged to tighten their belts to bail out the bosses. The panic grew. By the end of April the Tory chair of the Commons Treasury Committee was demanding the publication of a Treasury document that predicted British labour costs would double this year. In early May the CBI joined in the effort to intimidate
workers: Director General John Banham warned that:
*Higher interest rates and the uniform business rates mean that employers' ability to pay high wage settlements without job losses and unemployment is diminishing.'
Interestingly Mr Banham also criticised the fact that company dividends are rising twice as fast as corporate earnings, meaning = ing and spending the profits almost faster than the workers can create them, and opting for inflated life-styles ra sage has been studiously av
The hectoring of the W = cent leap in the Retail Price Index during April. Labour's John Smith pointed out that even the phony figures for the underlying rate' of inflation (favoured by Nigel Lawson because it excludes mortgages) is now at 7.9 percent, and that even if poll tax is left out of the sums it is still 6.5 percent -well above the European average.
Nevertheless Chancellor John Major told a guzzling crowd of capitalists at the CBI's annual dinner that they must hold down wage increases for their workforce and boost exports if 'we were to beat inflation, which *could destroy all our hopes for the coming years. Major apologised to many of the people who regard themselves as the government's natural supporters - in particular small businesses and homeowners on modest incomes, saying 'a painfree cure for inflation simply does not exist.
Thatcher herself joined the fray, with familiar threats that workers could price themselves out of a job; meanwhile figures showed productivity actually fell in 1989, while wage costs per unit of output rose to an average 10.1 percent.
Not a moment before John Major wanted it, came the first real signs that the squeeze he has been applying through punishing interest rates had borne fruit in a new round of job losses unemployment edged back up in
UPDATE ers are not Impressed by John Major's effect on April for the first time in nearly four years. There were announcements of jobs axed at Ford, British Telecom and the steel industry, and the CBI declared 50,000 jobs would be slashed in manufacturing in the next four months.
The financial whizz-kids actually welcomed the rise in unemployment (which of course is ludicrously understated in government figures: after more than 30 "adjustments' in eight years, the Unemployment Unit calculates that the real level of jobless people seeking work is almost a million higher, at just under 2.5 million).
The "company dividends are rising employers, t00, see unemployment, and the limited evidence of a slide back towards recession, as a positive help in their efforts to contain the working class. It is a pressure to hold down pay settlements, especially when used to frighten 'new realist union leaders. However the poll tax - a flat rate tax falling most heavily on the lowest paid - has radicalised new layers of workers, to the extent that even the anti-union laws are not having the expected effect: instead of producing votes against strike action, ballots in favour of action are delivering a weapon into the hands of surprised union negotiators.
their wage packets
Meanwhile the level of sterling in the money markets also takes account of the wages strug gle as a guage of the balance of class forces and the likely profitability of industry, as well as the balance of payments situation and interest rates. The Thatcher goverment has shot itself in the foot on every count: its own policies have stoked up inflation; the balance of payments are showing their second worst deficit in history, with exports almost static and imports still rising; and the working class is fighting back.
As a result, interest rates have to be kept sky high in order to twice as fast as corporate attract sufficient earnings: the capitalists are specula -sharing the profits faster than the tive inworkers can create them"
vestment to keep sterling afloat. These rates could be forced up again as the West German govemment carries out its hugely expensive and inflationary unification with the GDR.
While the two Johns - Major and Smith - appear agreed on the desirability of 'stabilising' sterling by entering the European Monetary System, this would only be at the expense of the working class and weaker sections of capital. John Smith points out entry into EMS would be 'counter-inflationary' in that it would prevent any competitive devaluation of sterling that might allow companies to pay wage in-
POR GOE reases more easily.
For John Major and the dominant sections of capitalists, the best scenario would be a relatively swift, sharp pinch of recession to "discipline' the labour force, reduce spending power and thus imports, and allow a relaxation of interest rates to create the semblance of a pre-election "boom'.
Nothing could more clearly show the opposing class interests of workers and employers: yet John Smith, spelling out Labour's "alternative" economic policy, calls ludicrously for a "partnership' of labour with capital. Not waiting for the IMF to force a Labour govemment to cut public spending and workers' living standards, Smith is already volunteering to do so from day one. This is what Kinnock means when he says 'Capitalism is the system we live under; we must make it work better'.
The job of the trade union and labour movement is not to defend employers' profits but to improve the living standards of the working class. As the tide of inflation swells, there is an urgent need to include a demand for wage settlements to be protected through cost of living clauses to provide regular adjustments to keep pace with price rises. There must be new trade union efforts to defend jobs and halt closures.
All this sounds grimly familiar. Despite the hype of a Thatcher "revolution', not much has changed: and if Kinnock gets his way, not much will.
SOCIALIST OUTLOOK no 25, June 1990 John Harris (NUJ) Page 3