Poverty rises as profits accelerate
Build for 18 June TUC demo
The UK cost of living crisis is out of control, declining living standards hits every worker, especially the low paid and all people on social benefits. Inflation reached 9% in April, and it is expected to reach 10% soon. However, it can go much higher.
By Martin Ralph – ISL (Britain)
Inflation is across the world not only due to the Russian invasion of Ukraine, the Covid lockdowns in China and supply chain problems that began from Covid, but also (and this huge problem is ignored by the political pundits) profiteering.
Increases have been felt for years such as Council Tax increases at 5%, low or frozen wage increases, low or reduced social benefits and rising transport costs. And stories abound about the number of families going without food, even switching off pay-as-you-go electric or gas supply – the most expensive and yet the way millions of poor people pay for energy.
Poverty is inbuilt in capitalism
The value of UK unemployment benefits had its biggest fall in 50 years in Aprili, the state pension and most other state benefits increased by 3.1%, while gas and electricity bills almost doubled.
The increase means that the rise in basic state pension is £4.25 to £141.85 per week, while the full new state pension rises from £5.55 to £185.15. A single person aged 25 has a universal credit allowance rise from £324.84 to £334.91 per month, totalling £4,019 a year. Child benefit rises 68p per week – only for the eldest child.
Before Covid and Ukraine, several reports (such as Institute for Fiscal Studies) suggested child poverty would reach more than 5 million by 2022, it is more now. More than two million adults in the UK have gone without food for a whole day in April.
In April households saw charges on their bills spike after Ofgem increased the energy price cap by 54% and now instead of being able to increase the cap twice a year they will increase it three times a year. The energy cap is forecast to rise again from £1,971 to £2,395 for the average household in October and prices.
The total profits of Shell, BP, Exxon Mobil and Chevron rose by $27.3bn (£22bn) during the first three months of this year. Exxon Mobil, Shell, BP and Chevron have made almost $2tn in profits in the past three decades. Energy suppliers have also enjoyed bumper earnings, such as British Gas owner Centrica.
So, profits can accelerate and are prioritised by Boris Johnson, while his legislative agenda for 2022 excluded any adequate consideration to tackle the cost of living crisis.
Increasing poverty means local authority and health services are needed more than ever, but 12 years of austerity and years of running down NHS undermines or prevents access to health or – unless you have the money to pay.
We must demand the restoration of all services that have been cut, destroyed, or privatised and build a system of provision that meets the needs of the population including health, education, jobs, wages and council houses.
But the government now has legal powers to put the NHS much more directly into the hands of private business that allows the possibility of charging patients for health services.
There are calls for price controls, and prices should be controlled. But to do that we need workers and community inspection committees that have control over production and distribution and that can expose profiteering. That means nationalisation with workers control of all the energy companies, the multi-national food retailers, the NHS, and all public services including transport.
Wages, not profit
Capitalism wants wage control instead of price control. The Governor of the Bank of England, Andrew Bailey, who earns £575,000-a-year, recently said that “I’m not saying nobody gets a pay rise, don’t get me wrong. But what I am saying is, we do need to see restraint in pay bargaining, otherwise it will get out of control.”ii
The FT columnist and Keynesian Martin Wolf puts it, “What [central bankers] have to do is prevent a wage-price spiral, which would destabilise inflation expectations. Monetary policy must be tight enough to achieve this. In other words, it must create/preserve some slack in the labour market.” In other words, the task must be to create unemployment to reduce the bargaining power of workers. Full employment and wage increases are to be opposed. Wolf and BoE governor Bailey claim this is to stop runaway inflation. It is to preserve profitability.iii
Inflation is not caused by wage increases. It is a world factor today, not a problem in one country but because of an unbalanced and malfunctioning capitalist world. The idea that wages create inflation is false, but this is the main line from the USA to Europe.
Karl Marx on wages and inflation
Karl Marx refuting the trade unionist Weston (in the debate inside the I International) who argued that wage rises would cause inflation said, in Value, Price and Profit, that:
“a struggle for a rise of wages follows only in the track of previous changes, and is the necessary offspring of previous changes in the amount of production, the productive powers of labour, the value of labour, the value of money, the extent or the intensity of labour extracted, the fluctuations of market prices, dependent upon the fluctuations of demand and supply, and consistent with the different phases of the industrial cycle; in one word, as reactions of labour against the previous action of capital.”
“By treating the struggle for a rise of wages independently of all these circumstances, by looking only upon the change of wages, and overlooking all other changes from which they emanate, you proceed from a false premise in order to arrive at false conclusions… a general rise in the rate of wages would result in a fall of the general rate of profit, but not affect the prices of commodities.”
Wages are ‘restrained’ primarily to increase profits. For 12 years there has been wage restraint caused by austerity policies and by 2019, workers’ wages were at an all-time low. The decade of the 2010s saw a stagnation of average real wages in most major economies.
Central banks hiking interest rates to ‘cool down’ labour markets and reduce wage rises will have little effect on inflation and are more likely to cause stagnation in investment and consumption, thus provoking at least a recession.
The Labour Party
Keir Starmer calls for a windfall tax on energy firms but has no programme to mobilise workers in the fight against capitalism and against austerity. The local elections show that workers in many areas are angry, disillusioned, or unconvinced with Labour (Labour only got a net gain of just 29 seats in England, but the Liberals gained 191). Starmer avoided the central question of services and how workers have been sacked in their thousands over the last ten years. The windfall tax was an empty pledge outside of calling for a mass struggle to force local authorities to deal with the energy crisis by building a national movement of struggle with all the trade unions and working-class communities.
Build for the national TUC 18 June demo and national strike actions
In calling a demonstration on 18 June the TUC says, “Working people have had enough. Everything’s going up but our wages. Join the trade union movement in London to tell this government: we DEMAND better!”.
What a weak slogan! We say mobilise on 18 June and fight for a coordinated national strike against the cost of living and all the problems facing workers, families and children. Build the resistance in the working class and oppressed communities.
Labour and a new workers Party
The Bakers’ Union, BFAWU, chose to disaffiliate from Labour during the party’s conference in September 2021. Train drivers’ union ASLEF has also threatened to disaffiliate from Labour at its own annual conference, on 16 May. “The executive committee of ASLEF, which does not include the general secretary, is estimated by some to be 5-3 in favour of disaffiliation.”iv
The Labour leader has been criticised by Labour’s biggest affiliate Unite and by GMB general secretary Gary Smith, as well as the smaller affiliated unions TSSA and CWU.
At the firefighters’ union FBU conference in May, 25% voted to disaffiliate from Labour. The motion from Merseyside says that Keir Starmer’s Labour has “seemingly attempted to purge itself of socialists, actively distance itself from working men and women and sought to align itself with big business”.
In Tower Hamlets, London Labour lost to the new Aspire Party because it promised to do more for workers, Black people, and immigrants. In Liverpool Labour has lost nine Labour councillors to a new party Liverpool Community Party.
In Wakefield, Yorkshire a byelection will take place triggered by the resignation of Imran Ahmad Khan, the former Conservative MP who was convicted of sexually assaulting a 15-year-old boy. The Wakefield Labour party executive walked out of the final selection meeting in protest at Starmer’s imposition of the choice of candidates, which excluded all local candidates (according to the local executive). Only 25% of the local membership participated in the selection vote.
Labour’s right-wing is fully in control, they are a bourgeois leadership pro-business and pro-NATO. No one who thinks of themselves as Socialists should be part of Labour. Since WWI, Labour is a bourgeois workers’ party (as Lenin defined it). Today, as Blair did, the leadership supports: imperialism to the hilt, UK big business, immigration controls, anti-union legalisation and opposes internal democracy.
Workers and oppressed people along with the combative youth need to build a workers’ party that can give a new orientation to this cost of living crisis and unite all those who are living in poverty, fighting for rights at work and the combative trades unions and communities.
Only a party based on full internal democracy to develop a programme of struggle and help lead the fight against capitalism based on class independence against exploitation and oppression can deal blows against Johnson’s authoritarian government.
To do that we need to build the International Socialist League to assist in this process of class struggle against capitalism. We must not be made to pay for the crises of the capitalist system.
- For a combative and democratic workers’ party based on the struggle of oppressed people, unions, and workers
- A sliding scale of wages and benefits linked to inflation and agreed with trade unions
- Minimum wage to £15 an hour
- Freeze council tax for poorer households, expand free school meals provision, rent control against rent hikes
- Nationalise energy, transport, and retail under democratic workers’ control:
- End all anti-immigrant laws, the new police law and the privatisation of the NHS.