Cooking the Books: No jam tomorrow either (2009)

The Cooking the Books column from the June 2009 issue of the Socialist Standard

There’s a story told about a barber who displayed a sign outside his shop that stated “Free haircuts tomorrow”. When someone came in the next day asking for a free haircut, the barber pointed to the sign indicating that the free haircuts were for tomorrow not today.

In the past politicians in power worked the same con. Work harder, pull together, make sacrifices today, they used to say, and in a few years you’ll reap the rewards. Of course tomorrow never came. They are no longer saying this now. At least the Tory Leader, David Cameron, isn’t. Addressing a conference of his party, he spoke of “the Age of Austerity” that we are entering (London Times, 27 April) and the effects this was going to have on our standard of living.

He is of course in a difficult position. This time next year he expects to be Prime Minister, but one presiding over an economy that will still be in a depression and which will require severe cutbacks in government spending. He knows it just wouldn’t be credible if he promised jam tomorrow.

Actually, despite Gordon Brown’s claim to be spending the way out of the crisis – actually, trying to print his way out of it – there’s already austerity today. As the Guardian reported on 27 April:

“More than half of British firms plan to freeze pay this year while one in eight are planning to cut workers' pay, the British Chambers of Commerce says today. The BCC says its survey of 400 companies across the country shows that 58% of businesses are planning wage freezes this year while 12% are planning actually to cut pay in response to big falls in inflation and falling profits. The survey hints at the danger of deflation in Britain, with prices falling on the retail prices index measure, which could tip into a downward spiral if firms cut their pay. Official data last week showed pay growth had plummeted to just above zero – the lowest on record.” (See here.)

Meanwhile, unemployment is continuing to rise:

“The UK unemployment total is now 2,215,000 – the worst figure since 1996. The Office for National Statistics also showed a fall in earnings by 0.4 per cent in the year to March, the first time this has ever gone negative” (Morning Star, 13 May. See also here).

The two are of course connected. Wages are a price, the price of the working skills that workers sell to employers, which like all prices is subject to the law of supply and demand. With growing unemployment and a stagnating economy demand falls while supply increases, so exerting a powerful downward pressure on wages. If the economic commentators were honest, they would hail this fall in wages as one of the “green shoots of recovery” they are desperately looking for, since one of the conditions for recovery is that wages should fall. That’s the way capitalism works and always has worked.