Wednesday 3 April 2013

Where have all the wages gone?

The following comment comes from the conclusion of the  TUC 'Touchstone' file 'Where have all the wages gone?' The full text of the whole document is here:

"...there has been a substantial shift from wages to profits in the UK economy and that this shift has a role to play in explaining why median wages have failed to keep pace with growth in GDP over the last 30 years (although rising inequality of wages is even more important in explaining this trend). In sectoral terms, the falling wage share has been largely driven by expansion of industries with relatively low wage shares (particularly financial services) and contraction of industries with relatively high wage shares. At the same time, increased profitability in the financial sector accounts for the whole of the upward trend in the profit share over the last three decades.

There is no evidence that the falling wage share and increased profit share have contributed to increased investment or innovation in the UK..."

Assuming that the statistical evidence cited earlier in the file is up to scratch (and I haven't seen any challenges to it), then this document explains what has been really going on behind all the bluster, hoax, jargon and bullying of the last 30 years of government.

We should remember that it is vast amounts of money or 'capital' that has real power in our society. However, those who own and wield it are constantly trying to make it easier and quicker to get more of it.  This is their job. This is business. One of the key ways they can do this is to keep wages down. Another, as I said in an earlier post, is to hunt around for what seem like quick returns on money.

There are problems in both strategies. Keeping wages down means that people have less money to spend. If you a capitalist trying to sell goods and services, it's hard to 'expand' (make more dosh) if people don't have enough money to spend. What's more, as a lone capitalist,  you can't keep wages down. There needs to be an alliance of capitalists to do this. Trouble is, capitalists don't usually get into gangs to arrange this. They need politicians to do this for them: step forward George Osborne and step forward the mass of propaganda peddlers from Iain Duncan Smith all the way through to the Sun and the Daily Mail, who do all they can to  get section A of the poor to blame section B of the poor as being responsible for making section A poor! The problem with rushing around trying to find quick returns on money is that a) you may well buy lousy means of earning interest (thus the financial crisis) b) you don't do slow investment in goods and services that people need, thereby setting up problems for 'the economy' because the country ends up buying more than it sells and relies on the crazies and crooks of the financial sector.

So, let's take this key issue of capitalists needing governments to keep wages down. What the Touchstone file is saying here is that this has been what has been 'achieved' over the last 30 years. The key point here is not a stat about where wages have risen or not. It's about a ratio: a ratio of wages to profits. What capitalists need is for wages to go steadily down in relation to their profits ie 'profitability'. This is a ratio or a rate of exploitation. There is a rule that flows from the fact that capitalists compete with each other: they each try to increase their profitability, or rate of profit in order beat the next guy. But they need help to do this and they beg, plead and bribe governments to step in and do this job for them.

Almost every move in the world of work taken over the last 30 years:  employment, unemployment, benefits, welfare, contracts, trade union organisation should be seen in the light of this. We have to ask ourselves of each move, each statement, each newspaper headline: was this about strengthening the hand of capital in its struggle to cut wages and increase profitability?

So, the whole disgusting saga of Iain Duncan Smith's policies and statements can be traced back to this. He, along with the rest of the crowd in government, are doing all they can to make 'labour' (that's the cost to capitalists of buying the time and abilities of people) cheap. They need armies of people so poor that they end up queuing up in their thousands for one job.

When you 'win' that situation, you can break trade unions (who tend to win small increases in wages for their members, secure better longterm security through contracts and better health and safety in workplaces), you can force people to accept lower wages and very insecure contracts of work, ie you can be sacked at very short notice with very little or no compensation; people will accept part-time work with no pension or sick pay deals included and so on.

This is the grinding daily reality of what that quote from the Touchstone file is really about. This is about the deliberate creating of poverty. When people like me bang on about 'the rich', this is what we're saying. The poor create the rich. That's to say, this process of increasing profitability - or trying to increase it, trying to up the rate of profit, is about trying to make each minute of work that a person does, give the owner a better return for the cost of that.

Again, the stats on this that count, are not simply whether capitalists have succeeded in amassing billions - they have, of course.  What counts is that the ratio of their billions increases in relation to the total secured in wages by people at work. So, we can express that ratio as people getting poorer while the rich get richer.

One reply that the defenders of all this make is that of course the rich and the superrich owners of capital have to do this, otherwise there would be no 'wealth creators'.

This assumes that the only people who are capable of organising human beings so that they can make and service and distribute  things are the people in our society who've ended up being superrich, or people who want to be superrich. We have seen in history that this is clearly not the case. In 1945, the government set up nationalised industries which were capable of producing and servicing things. In fact, one of the main reasons why they did this was because the superrich people who had run those industries and services weren't prepared or able to sink millions into them on the low rate of return they would get. They would probably have taken vast interest-free loans to do it but there was enough strength in the Labour movement and Labour government of that time to not fall for that one. Many years later, under New Labour, we weren't so lucky. With PFI and PPP schemes they ended up handing over billions of our money  to people to build hospitals, schools, railways and the like, with guaranteed returns on capital (our money) for many years to come.

To be clear then, the superrich aren't 'wealth creators'. The people who create the wealth are those whose work (bodies and brains) comes together to make the goods and run the services. Of course this needs organisation but there's no rule of nature which says that those who organise must be the superrich and/or at the beck and call of the superrich. They could be people who are good enough to have won the trust of those doing the work and of those who have been elected to run the country in ways that are good for all of us, and not just for the superrich.

If we don't do this, the superrich and their mouthpieces and agents (newspaper bosses,  governments) will go on plunging us into crises, pushing people into poverty and misery, setting up war machines, and wars.


For those reading this who are interested in education, what is going on fits what's happening with Michael Gove's 'reforms'. With is talk of 'rigour' and making exams harder, all that he's doing is guaranteeing that the school system pushes out a definite and clear set of failures. The economic system is desperate for failures. These are the people who can help secure for the big employers of low-grade workers, the low wage army. All that propaganda about 'dumbed-down' exams, the constant assault on teachers and the 'bad' job they're doing is in reality a means to turn back the achievements of comprehensive education and GCSEs in upping the levels of education and qualification of those who previously in the 1940s, 50s and 60s received less education and no qualifications.

The 'reforms' will be intent on forcing a definite proportion of 14-18 year olds into a fixed destiny of 'vocational' courses based on tests and exams that fix human beings in what are supposedly their fixed make-up or ability. They 'reforms' will force fewer people to benefit from university, whether these be 18-21 year olds or so called 'mature students' or 'adult learners'. The myth of 'alpha to delta' human types, segregated by exams, shunted into fixed courses that they can't get out of suits the low wage, profitability-is-all type of economy.

By breaking up the locally controlled education system, Gove is pulling away the last plank in the idea that we are collectively interested in educating all our children. The Academy-Free School set up is about each school manager (owner?) doing what he or she thinks is best for his/her school. This guarantees failure of children, failure of teachers and ultimately failure of whole schools, which will close (and open) at a faster and faster rate, creating armies of children and students, being decanted into newly opened schools. Meanwhile, the rejected and dejected are being shunted around institutions being run by the local authority, as the school managers don't want them in their schools, bringing down their schools' results, lowering their position in the league tables. Get them out, get them (eventually) into the economy on low wages, helping the superrich get their profitability.