Why Tory News of ‘Full Employment’ Makes Case for a Socialist Manifesto
By Peter Kennedy
Background: Some might be forgiven for thinking they have slept through a neo-Keynesian revolution, should they be taken in by recent data from the Office of National Statistics (ONS). The ONS claims evidence of a ‘buoyant UK economy’ enjoying ever-higher rates of employment. This apparent virtuous employment cycle includes: a never higher UK working age population of 32.5 million 16-64yr olds, a rate of unemployment – 3.8% - that has never been lower since the early 1970s, a 75% rate of employment and rate of economic inactivity currently at their respective highest and lowest since the early 1970s[1]. The data also seek to persuade us that the 3.8% unemployed need not despair because there are another 846,000 job vacancies they can compete for, with roughly 40% classified ‘medium/high skilled’[2]. The message has been dutifully amplified through a national media eager to put down the threat of ‘Corbynism’ and find some good economic news, in amongst the madness and shenanigans of Brexit. Eager, that is, to persuade anyone willing to listen that capitalism is doing just fine and offer ‘further proof’ that delusions in the Labour Party’s Corbynista inspired ‘revolutionary manifestos’ can be dispensed with forthwith.
As we know, beneath the froth and hype of fake optimism lies the more grotesque reality of increased class exploitation, manifest in the fact that
30% of those employed are in insecure jobs – zero hrs, short hours, temporary contracts;
that the number of people working and in poverty [3] has doubled since 1994[4];
that more than 60% of workers are employed in businesses who’s productivity is below the UK average[5];
that growth in demand for skilled workers is stagnant[6];
that real average weekly earnings have stagnated since 2005[7];
that more than 14 million people are in poverty – 22% of the population[8];
that the rise in the number of people receiving a three day emergency supply of food from a foodbank is unabated - .9million in 2013/14 – 1.6 million in 2018/19[9].
Moreover, if 1970 is given an equality index of 100, then by 2018 inequality of income between the top 10% and the rest had risen by 43%[10]. Working people fill the gap in their income with debt set at higher rates of interest [11], the rich pile up what they already have and gorge on capital at near zero rates.
Of course, the more sober truth we face is one of an economic and political elite unwilling and unable to engage in what economists term ‘capital deepening’: the relative increase of the capital-labour ratio firing capital accumulation and so economic growth. We know their road is blocked by successive periods of capital-intensive accumulation that have generated more output with relatively less employment and less profitability, compounded politically by heightened class struggle over the fate of social democracy toward the end of the 1970s. Thatcher’s defeat of labour (anti-trade union laws/defeat of watershed strikes) and destruction of industrial capital (ending state subsidies/privatisation/deindustrialisation) ended any resistance. The defeat of social democracy ended resistance to a political economy of constrained capital-lite/state-lite investment and speculation in finance and property (in short hand – the victory of neo-liberalism). A somewhat old, very long, winding and well told tale, brought to a head in the period of stagnation post-2008 crisis, and making the present full employment mirage more the stuff of nightmares on Wall Street.
Capital is now increasingly siphoned out of production into speculative financial trading: a trend further amplified by post-2009 Bank of England policy to pour roughly £0.5 trillion into securing near zero interest rates to encourage consumption and investment (quantitative easing). The upward pressure on asset prices in stocks, bonds, property, which, a decade after the crisis, are soaring ever higher, bringing wealth to the few that is increasingly hard to imagine let alone quantify on a scale hard to grasp to the few (the fact that it is also generating ever lower returns is laying the seeds of another major crisis)[12]. Meanwhile, the primary business strategy of those businesses remaining within production is to intensify the use of low paid working people on insecure contracts, to supplement their relative lack of capital investment. This in turn, offers fertile ground for the new generation of small and medium businesses, whose very existence is built upon the use of intensive forms of low-paid insecure labour as their normal business model for maximising profit.
The result, as we are all too well aware, has provided launch pads for the recent resurgence of a number of populist, right and left-wing movements; all bearing very different perspectives. All share an anti-establishment sentiment; all are competitors to dominate a reconstructed centre ground of politics, including the rise of the Corbyn left within the Labour Party. Labour’s new political configuration is premised on a political economy of state intervention, designed to heal the developing polar opposition of capital and labour and set the relationship back on a course able to expand economic growth on a more durable, capital-intensive platform.
Meanwhile, the Labour Party’s manifesto’s tacit proposition is that the impasse between capital and labour can only be resolved by a reconnect between Labour and Socialist values. Manifesto policies are specifically targeted at redrawing the balance between capital and labour, inducing capital deepening: on the one hand (ending low pay, insecure work, transforming skills and the quality of work, reducing the exploitation of labour: on the other hand block off capital escape routes away from productive investment (closing tax loop-holes, redirecting capital invest in transport and communications infrastructure, research and development, redirecting banking capital towards community and public sector investment, and so on…).
The manifesto values are laced with hope that people will not only discern the brute reality lurking beneath the mirage of a virtuous cycle of full employment, but will also inspire attraction toward the socialist case for the implementation of interlinking policies combining strategic state interventions in the economy, nationalisation revolving around a national investment bank. Of course hope will need to be buttressed by power because the Labour Party once in office, is by no means immune to the power of capital. The business elite will only be dragged kicking and screaming to engage with the manifesto if they control the speed, direction and economic rationality of the state investment policies internal to it.
The political struggle with the capitalist elite, at the level of the state, will focus on how the Labour Party positions itself between capital and labour with respect to their proposed national investment bank with regional bases. Such a bank can be controlled in favour of capital or labour. The history of post war social democracy in the UK reveals how capital was able to eventually dominate the economic rationale when we consider that both main parliamentary parties induced various mechanisms to hold down wages (prices and incomes policies, tripartite agreements between capital, the state and the trade union leadership) and used the nationalisation of utilities as cheap energy to power industrial capital and state subsidies to underpin the profitability of capitalist enterprises across the wider economy. Hence capital found a certain, short-lived, peace with this form of socialism.
The labour movement also found their socialism for a time too: in the pickings of the welfare state, an arena where use values and social needs are given prominence, but were heavily policed by the state, and reigned in by the policy mechanisms of capital par-excellence – fiscal and monetary policies. The situation summarised above was highly volatile to put it mildly, eventually provoking what Habermas referred to as a ‘legitimation crisis’[13] and a period of ‘stagflation’; a term belying the deeper truth that the schizoid nature of ‘socialism for capital’ and ‘socialism for labour’ had come to a contradictory dead end, leading to the existential crisis of both. Evidence of the failure of social democracy, itself the expression of irresolvable class antagonisms.
A manifesto is necessary but hardly sufficient: History reminds us that it is only under conditions where a national investment bank is controlled by and for all of the people that it can play an essential role in reversing the degradations of labour, described above, and begin to readdress the grotesque impact they have on society at large. Put another way, only if money capital – the core instrument of any bank - is transformed and put to use to create use values, delivering on social needs and defined through dialogue within the wider population, can a national investment bank be a political mechanism for promoting the power of labour over capital and so a practical platform for advancing socialism. Anything short and it becomes a socialism: a form of class collaboration with an unstable trajectory and limited time horizon dictated to by capital accumulation: inducing a forced collaboration between the diametric interests of capital and labour, which will once more come to a shuddering end.
The manifesto, even in its present diluted form relative to post-1945, necessitates the labour movement and socialist groups prepare themselves and the Labour Party to win a political struggle against the capitalist elite. A successful socialist manifesto implies a broader sea change in the political landscape; a sea change in the political confidence of working people to take up responsibility for making key decision involving their lives. Afterall an investment bank for labour is not only an instrument for economic change but also for raising political visions about how society should work and political horizons as to what a good society is and what is required to bring it into being.
An investment bank will fail with regard to the latter if it is primarily concerned with the exchange value implications of funding ‘x’ ‘y’ and ‘z’ social projects. In other words, if the Labour Party narrows the scope of a national investment bank to recementing the links between capital and labour in ways designed primarily to secure more profitable landscapes for capital, it will become penned in, derailed and adulterated by the priorities and constraints of monetary and fiscal policies that have their logic in sustaining conditions for capital not working people.
In summary: the current ‘legitimation crisis’ belongs to the Tories and their paymasters, poking fun and fake news of bogus full employment futures. The truth is super exploitation by a capitalist elite that continue to stumble along a long process of stagnating capital investment harking back to the 1970s, which has since gone into overdrive in the wake of the 2008 economic crisis.
But what truths can a Labour Party in power and committed to socialism deliver to the working class? We wait to see. One truth we all no doubt share is that if the Labour Party is genuine in its recommitment to socialism, then it must be open to being propelled by a wider social movement capable of advancing the needs of labour, of deconstructing the political power of capital and of ensuring the Party evolves socialist policies that do not fall short of promises made in opposition. Only a wider vibrant movement committed to socialism, not more capitalism, can bring this truth to fruition.
References
1. ONS, 2019, ‘Employment in the UK’: May, https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/employmentintheuk/latest,
2. Cribb. J., et al, ‘The UK labour market: where do we stand now?’, https://www.ifs.org.uk/publications/9170
3. Defined as less than 60% of median income.
4. JRF, 2019, ‘UK Poverty Statistics’, https://www.jrf.org.uk/data,
5. Inclusive Growth Commission, 2017, ‘Inclusive Growth Commission Making our Economy Work for Everyone’, https://www.thersa.org/globalassets/pdfs/reports/rsa_inclusive-growth-commission-final-report-march-2017.pdf,
6. Henseke, G., et al, 2018, ‘Skills Trends at Work in Britain: First Findings from the Skills and Employment Survey 2017’, https://www.cardiff.ac.uk/__data/assets/pdf_file/0011/1229834/2_Skills_at_Work_Minireport_Final_edit.pdf
7. ONS, 2019, ‘Analysis of real earnings and contributions to nominal earnings growth, Great Britain: September 2018’, https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/articles/supplementaryanalysisofaverageweeklyearnings/september2018,
8. Full Fact, 2019, ‘Poverty in the UK: a guide to the facts and figures’, https://fullfact.org/economy/poverty-uk-guide-facts-and-figures/,
9. Russell Trust, 2019, ‘Foodbank Statistics’, https://www.trusselltrust.org/news-and-blog/latest-stats/end-year-stats/#fy-2018-2019,
10. ONS, 2019, ‘Household income inequality, UK: Financial year ending 2018’, https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householdincomeinequalityfinancial/yearending2018,
11. Institute for Fiscal Studies, 2017, ‘Characteristics of households in problem debt’, February, https://www.ifs.org.uk/publications/9831,
12. Wolf, M., 2017, ‘We’re in bubble territory again, but this time might be different’, March, https://www.ft.com/content/f5009470-c551-11e7-a1d2-6786f39ef675,
The New Statesman, 2017, ‘How the world’s greatest financial experiment enriched the rich’, October, https://www.newstatesman.com/politics/economy/2017/10/how-world-s-greatest-financial-experiment-enriched-rich,
13. Habermas. J., 1976, ‘Legitimation Crisis’. London: Heinemann.
