Cooking the Books: Go on, ask for a pay rise (2022)

The Cooking The Books column from the March 2022 issue of the Socialist Standard

‘Don’t ask for a pay rise, workers are told’ was the headline in the Times (4 February) referring to the Governor of the Bank of England, Andrew Bailey, who had said. ‘While it will be ‘painful’ for workers to accept prices would rise faster than wages, some moderation of wage rises is needed to prevent inflation becoming entrenched.’

According to the Independent:

‘Mr Bailey, who is paid around £500,000 per year, reiterated his assertion that workers should show ‘restraint’ when asking for salary increases. The governor encouraged companies not to give staff big pay rises, warning it could lead to a spiral of higher prices being followed by higher wages, pushing inflation higher’ (bit.ly/3sCFkBH).

The assumption here is that wage increases can spark off a ‘wage-price spiral’, but wages are a price and go up with the prices of what workers need to consume to recreate and maintain their labour-power. Wages follow prices, not vice versa. So, if you want to talk about a spiral, ‘price-wage spiral’ would be more accurate.

The February report of the Monetary Policy Committee of the Bank of England that Bailey was commenting on estimated that, due to the increase in price of gas and some other imported goods, by April the annual rate of increase of the Consumer Price Index will be 7.25 percent. The Times again:

‘The last time that inflation reached the levels forecast for April this year was in 1991, when it hit 7.9 per cent. The committee expects inflation still to be above 5 per cent in a year’s time. People will face the worst hit to real incomes since comparable records began in 1990 as take-home pay falls by five times the amount it did during the 2008 financial crisis.’

The report also pointed out that, with unemployment comparatively low at 3.8 percent, there is a ‘tight’ labour market.

All this means that workers both need a compensatory wage increase and are in a good bargaining position to get one. So why shouldn’t they go for it? They would be mugs (or masochists) not to. So good luck to them.

It is significant that, while the Governor told workers not to ask for a wage increase to cover the rise in prices (ie, to accept a cut in their real wages), he did not ask those capitalist employers in a position to do so, not to increase their prices (ie, to accept a cut in profits).

The effect of workers not getting a wage increase would be to increase profits. Maybe this is what Bailey had in mind. More likely, however, is that he really believes that wage increases can cause prices to rise and that wage restraint can prevent ‘inflation’.

These days (as in the quote above from the Times) ‘inflation’ has come to mean any increase in the level of prices as measured by such indexes as the CPI. But this fails to distinguish between two different ways in which this can happen. One is classic inflation where the monetary authority issues more money than is required by the economy, ie, over-issues, or ‘inflates,’ it. The other is when the index goes up due to an increase in the price of some key good (as currently gas) or in the prices of a whole range of goods. The Bank of England is in fact charged with trying to ensure that prices go up by around 2 percent a year, ie, that real wages go down by that amount, other things being equal.

For socialists there is a wider question. Why is there a ‘cost of living’? Why do we have to pay for the things we need to live?

The rules of capitalism (2022)

From the March 2022 issue of the Socialist Standard

The basic rules of capitalism are quite easy to understand. And so are the consequences of those rules. It really isn’t rocket science. And once you understand what the rules are, you’re then in a position to ask yourself a novel question whether you actually agree with those rules.

Let’s have a look at some of these rules, or facts of life.

Rule number one: very roughly speaking, five percent of the world’s population own 95 percent of the wealth, the land, the resources, the lot. That’s one person in 20. One person has all the wealth and power, 19 have nothing very much at all. That’s called the unequal distribution of wealth. It might sound unfair. It might seem unjust. But it’s a fact of life and it’s legal.

Here’s another rule, a golden rule. The people who have the gold make the rules. That’s why it’s all legal, in case you were wondering about that.

Rule 3 is, the more money you’ve got, the more you can make.

Rule 4 is, the less money you’ve got, the less you can get.

Rule 5 is, the poorer you are, the more expensive everything is.

Rule 6: the poorer you are, the iller you’ll be, the sooner you’ll die, and the worse off your kids will be.

Rule 7: the poorer you are, the worse your education will be and the worse your job will be.

Rule 8: the worse the pay, the harder the job.

Rule 9: the opposite of rule 8, the higher the pay, the easier the job. For example, company directors get paid, say, a hundred times what a warehouse worker gets, but who goes home most exhausted?

Rule 10: if you’re really rich, you’re a capitalist, you don’t need to do any work at all.

Rule 11: the poor pay for every mistake made by the rich.

Rule 12: rich people start wars that poor people have to fight.

Rule 13: most rich people get rich by inheriting. Occasionally there’s a rags-to-riches story, but they’re vanishingly rare.

Rule 14: most poor people stay poor through hard work, thrift and sacrifice.

That’s enough rules. You decide. Have we made these up? Or do they sound like things you’ve thought too?

50 Years Ago: The Thirteen Derry Dead (2022)

The 50 Years Ago column from the March 2022 issue of the Socialist Standard 

On Sunday 30 January thirteen men were shot dead in Derry as the British Army moved in to halt a march held in defiance of the Stormont government’s ban. The immediate result was an upsurge of Irish nationalism, both in the South and amongst the Catholic minority in the North.

The thirteen Derry dead has completed the alienation of the Catholic population of Northern Ireland from the regime there. After fifty years of passively accepting the role of what its first Prime Minister called “a Protestant parliament for Protestant people”, they are now actively rejecting its authority—to the extent of regarding the IRA as a useful counter to the British Army which is virtually occupying their ghettos in Belfast and Derry as well as whole towns such as Newry and Strabane where they form the overwhelming majority of the population. (…)

The tragedy of Northern Ireland is that the present political division of the working class there reflects yesterday’s divisions amongst the Irish capitalist class, divisions which now have no relevance even for capitalism since both Britain and Ireland are about to join the Common Market and since the same international companies have investments both sides of the Border.

Our advice to the worker in Northern Ireland is, first: Do not do anything, in word or deed, which might encourage further killings of your working-class brothers, whether Protestant or Catholic or, for that matter, British soldiers. And, secondly: Think carefully about the situation to see if the issue of a United Ireland versus a British Ulster is worth a single drop of working-class blood. (,,,)

Would the working class be worse or better off under one or the other? Would there be anything to choose between the two “solutions”? Surely, in both a British Ulster or a United Ireland, the workers’ standard of living would be much the same. So would the slums, the unemployment and the other problems of capitalist society. And world Socialism would remain the only solution to these problems. The only difference would be the colour of the flag that would fly over the government buildings in Belfast: Union Jack or Irish Tricolour? Is this an issue worth killing and being killed over? No, Socialists reply, a thousand times No!

(Socialist Standard, March 1972)

Editorial: The cost of living crisis (2022)

Editorial from the March 2022 issue of the Socialist Standard

Now that capitalist society appears to be slowly emerging from the pandemic with its devastating lockdowns and excessive job losses, we are about to be hit by a soaring cost of living crisis. The price of gas on the wholesale market has been rising sharply, which is believed to be caused by a steep rise in demand from countries emerging from the pandemic. As fuel is essential to the manufacture of other commodities, prices of basic items like food will also go up. In the UK the energy price cap, the maximum price suppliers are allowed to charge their customers, is expected to rise substantially in April. At the same time, workers will be facing an increase in National Insurance contributions. Workers on benefits and low incomes may face a choice between eating or keeping warm.

However some groups of workers are not taking this lying down. Academic staff have been on strike for better pay, on top of other issues such as cutbacks to their pension scheme and the casualisation of the workforce. Workers at the logistics firm Wincanton have gone on strike after rejecting a pay offer of 2 percent . For many workers the latest attack on their living standards is the last straw. Faced with over a decade of declining real wages, worsening working conditions and reduced job security, workers have had enough.

Labour shortages, particularly in the retail, hospitality and construction sectors and also among HGV lorry drivers, have placed many workers in a strong position to press for higher pay rises, although they may still struggle to keep up with the rising cost of everyday items. Employers have even been offering pay increases to retain staff.

There have been a wide range of proposals to combat this crisis. The Labour Party, supported by some Tory MPs, called for the scrapping of the 5 percent VAT rate on fuel bills. Energy companies and Tory politicians wanted the green levies removed. There were also calls to abandon the National Insurance rises in April. The government chose to postpone payment of £200 on electricity bills and to cut the Council Tax bills for those in lower band houses.

Of course, none of this addresses the real problem, which is the capitalist system itself. It’s an economic system in which the sole reason to produce anything is profit, so that everyday necessaries like food and housing are pay-walled and subject to the vagaries of the market place. Profit-driven production is anarchic, making economic crises inevitable. In a class-divided society the majority working class, who depend on a wage or salary, will always bear the brunt of them.

We support workers in making a fight-back against the assault on their living conditions, but we also urge them to go further and organise collectively and democratically to get rid of capitalism and establish a socialist society without markets, money or wages, where production is for human need.