BRITAIN continues to get poorer as wages are still outstripped by inflation and household bills have increased by around £350 since 2021/22.
The use of zero-hours contracts, that ever-present symbol of increasingly precarious work, has hit an all-time high, leaving huge numbers of working people at the complete mercy of their boss on a day-to-day basis, not even guaranteed a hour’s work.
And child poverty stands at record levels, with 71 per cent of children living in poverty in homes where at least one parent is working — children of the working poor.
This is the shocking state of Tory Britain in 2023. In the most significant transfer of wealth from working people to the super-rich in a generation, the people of this country get steadily poorer.
Meanwhile, the government they elected focuses its energies not on reversing, stalling or even mitigating growing inequality but on shackling the only organisations capable of halting the destruction of our living standards.
The obsession of the government with attacking trade unions, the largest democratic organisations in civil society, exposes the myth of neutrality and shows the state for what it is, an instrument for maintaining the domination of the ruling class.
In fighting back against this poverty for the many and riches for the few, we need to be clear on the causes of inflation. The hegemonic “common sense” that wages drive inflation and therefore we must all tighten our belts only makes economic sense if we ignore the existence of profit.
As we have seen over the last years, inflation can soar without wages rising at all in real terms and, when that happens, the increasing gap between prices and wages reflects a growing profit for some of the worlds biggest transnational corporations.
Shell made profits of £32 billion in 2022, while BP made £23bn. Centrica, the company which owns British Gas, made £3.3bn. Similarly, in the food retail sector, the “Big Three” supermarkets made £3.2bn profit in 2021/22.
So, what is driving inflation if not wages? The short answer is an imbalance of supply and demand in the economy. The global economy has received a number of significant shocks in recent years — Covid, the war in Ukraine, food instability due to growing climate crisis — each of which has had a negative effect on supply, causing restrictions, delays and inadequate supply, particularly of food and energy resources. This imbalance of supply and demand leads to increased prices — as demand outstrips supply, in the absence of economic intervention, prices rise.
These economic shocks have been particularly deep in Britain, due in part to ineffective government intervention in the economy — boosting demand during Covid without protecting prices, forcing real-terms wage cuts in a weak economy.
However, that is not the whole picture. The British economy was particularly badly affected due to underlying weaknesses in aggregate supply. Effectively, 40 years of neoliberal economic policies have left Britain heavily dependent on importing essentials, including energy and food, while our manufacturing industry has been destroyed and key infrastructure and service assets privatised.
This has left an economy heavily skewed towards services, in particular financial services via the City of London, with huge imbalances in economic power.
Tackling this crisis, and rebuilding Britain’s economy relies on three key measures:
First, wage rises that match or exceed inflation — this is the only way to maintain the living standards of the vast majority and can only be won through strong union organisation and rebuilding collective bargaining.
Second, curbing excessive profits — this is necessary to tackle inflation and will rely on the implementation of price caps to restrain the profiteers.
Third, investing in the productive economy — long-term, the route to economic recovery involves investing once again in British manufacturing and industry, rebuilding the British steel industry and expanding into green technologies through government subsidy and investment.
It is clear that the present government has no way out of the cost-of-living crisis it has led us into. We must work now to make sure that any future government is committed to an alternative economic strategy which replaces anti-union laws with a new deal for working people, based around support for collective bargaining and trade unions, price caps to restrain profits, and investment in our productive economy.
