Socialists do not enjoy being the bringer of bad tidings, though it is a familiar enough role to us, especially during times of economic or social crisis. But facts are facts, and when they act as a further indictment of the capitalist system, we certainly do not shirk from saying so. The most recent dose of bad news for the working class has been hidden away by the newspapers, or more often simply ignored completely. It is that according to data released by the Central Statistical Office, wages have fallen to their smallest share of die British Gross Domestic Product since records began—forty years ago. Capital is king it seems, but it wouldn’t do for the capitalists to gloat in public in case the working class took offence.
The working class, as is so often the case, have something to be angry about. In the second quarter of 1995 statistics show that income from employment accounted for just 62.1 percent of GDP, down from about 72 percent in the mid-1970s after the “Barber boom", when trade union membership was nearing record levels. If wages had remained at this level of GDP, the gross income of the working class from employment would have been over £60 billion higher than it currently is. This amounts to an average of £50 a week for every worker lost to the capitalist class.
Officials acting for the Central Statistical Office explain this fall in the share of wages and salaries in GDP (a share which was still as high as 66.3 percent in 1992) by saying that the mini-recovery from the slump has led to company profits rising faster than wages, with this exacerbated by economisation on labour. Their recent report states that “companies are producing more from fewer staff. We are thus working for proportionately less per person". However, bad though the situation is, there are other factors at work too. One is that income from “self-employment” has carried on increasing in recent years, with a formal changing in the tax and benefit status of some wage workers as firms “contract out" jobs. Also, tens of thousands of unemployed workers have been encouraged to set up their own businesses by the Department of Employment providing services that real capitalists find unprofitable These workers existing often on the equivalent of poverty-line wages, topped up with Family Credit. There are now more window-cleaners and mobile hairdressers than ever, and if their average income is anything to go by, their lot is not a happy one. What their presence does do, though, is make the share of wages from employment lower than it would otherwise be, as they are not officially classified as wage workers at all.
That the fall in the share of wages over the last twenty years according to these figures had been bad—though not as catastrophic as first appears to be the case—is the silver lining. The real position of the working class is in actual fact worse than that presented by the official statistics. This is because the current figure of 62.1 percent as the share of wages in GDP is a gross sum which includes taxation paid by the workers. But wages—the cost of producing and reproducing workers’ energies—are a real amount intended to provide workers with enough purchasing power to keep themselves and their families in a fit condition for their jobs, given their skills, education, standard of training and so on. They are the real amount received for this purpose, not a “gross” hypothetical sum. A gross wage may be £15,000 per annum, but a large proportion of this is taken out in taxes, some of which—like income tax—the worker doesn’t really receive in the first place. When direct and indirect taxation are taken into account, the real wage income of the £15,000-a-year worker will be found to be substantially less—and by thousands not hundreds.
As was realised by economists as diverse as Adam Smith, Ricardo and Marx, taxation is in reality a burden on the capitalist class and not the workers—if it was abolished overnight the real consuming power of the workers would not increase at all. When this point is grasped it can be seen that the real share of the working class in British GDP is much less than 62.1 percent, even if we include the self- employed. And it should be remembered that these taxes which are nominally “paid” by the working class are higher now than ever before in the peace-time history of Britain. Real income from employment in Britain is now almost certainly well below the 50 percent mark.
The price to pay
The latest data on prices and incomes show that the position of the working class with regard to capital is worsening. The Retail Price Index, helped along by a continuing dose of currency inflation which has outweighed downward pressure on prices from the slump, is currently registering an annual rise of 3.6 percent, a figure which is slowly moving up. Average earnings meanwhile, are increasing by only 3.25 percent annually, with the majority of workers getting much less than this. Real wages, therefore, are currently falling.
While in Britain the workers’ share of the wealth they produce has been declining, in other countries the situation is worse still. In the United States, for example, many sections of the working class (like car workers and steel workers) receive lower real wages now than they did twenty years ago, let alone a smaller share of the product. Whether Britain and similar countries will go the same way is difficult to tell. Certainly, Britain’s comparatively high level of trade union membership will help mitigate against this, but the same forces unleashed by capital in America to maximise accumulation at the expense of the consumption of the workers are finding expression here: shift-work, union-busting, market deregulation and short-term contracts to name but the most obvious.
Workers must unite in the face of this onslaught from capital to protect their interests—the battle of wage labour against capital must be fought vigorously, and workers must democratically organise on the economic front to fight their corner. This struggle must be fought on a wider front than the economic battleground within capitalism, however. The market economy is based on an unfair and antagonistic system of income distribution which causes industrial disputes, economic crises and vast wealth amidst poverty as a matter of course. It tramples on the working class with impunity and continues to laugh in the face of the reformers. If the workers are really to have any lasting victory over King Capital worth speaking of, the whole system of wage labour most go, and the sooner the better.
Dave Perrin
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