Tuesday, 6 May 2014

An Economy As If People Mattered

ANDREW FISHER argues in his new book that the failed economic model can be fixed by a transfer of power to workers

From the May Day edition of the Morning Star

Let me take you to a place you might like.  

The UK is more equal than at any point in its history. Not by coincidence, trade union membership is just over double what it is today and corporation tax is also slightly more than double what it is today. 

The share of national wealth going to workers’ wages is higher, unemployment is lower and for those out of work, unemployment benefit is substantially higher too, as is the basic state pension. 

Taxation is clearly redistributive, and only around three in 20 workers aren’t covered by collective bargaining agreements.

This was the 1970s. But you don’t often hear about it. Instead, the popular portrayal of the period is as an almost prehistoric era, before the dynamism of entrepreneurial creativity unleashed by the Thatcher government swept away a decade of industrial strife and inefficiency.

For Thatcher’s government, weakening workers was a key part of their programme. They wanted to take the force out of the labour force. 

To a large extent they did, and her successor governments have maintained her legacy.

But didn’t this make our economy more dynamic, make labour more efficient, and spark an entrepreneurial spirit in us all?

Well, no. In fact, as I show in my new book The Failed Experiment ... and How to Build an Economy That Works, the attack on workers under the Thatcher government was one of the causes of the economic crash and the continued inability of our economy to recover or to improve living standards.

We have to ask the question: what is the economy for? Think about that question, because until you can answer it, you have no political framework whatsoever. 

In all my years of canvassing for the Labour Party, from West Sussex to West Yorkshire, I’ve never heard a single voter express their concern for the FTSE or the level of GDP growth. 

Yet, if you beamed down to Earth from another planet, you would think that was the only thing that mattered. The BBC tells us hourly how the FTSE index is doing, and politicians of all parties are obsessed by whether the economy is up by 0.9 per cent or down by 0.2 per cent. 

But even on that latter measure our economy has got worse. Between 1955 and the election of the Thatcher government, UK growth averaged 3.0 per cent a year. From 1979 until 2013, it has averaged just 2.1 per cent. If growth is what matters, the modern UK economy is an abject failure.

So what has choked off growth? Essentially, we have seen capitalism become cannibalism. And part of what these zombie capitalists have been consuming is workers’ power to consume. 

By cutting workers’ wages in real terms, workers are less able to buy the goods and services that give us economic growth. 

As their wages fall they rely on credit to maintain spending levels, and if their job goes then they default on their debts, which is bad news for banks — and indeed was a large part of the reason for the crash.

In Tony Blair’s years as prime minister, a period of economic boom, the incomes of the richest 0.1 per cent increased by 83 per cent, while the 90 per cent at the bottom saw just 18 per cent growth. 

Today in the UK, the richest 10 per cent have an income 13.8 times larger than the poorest 10 per cent. That same figure for France is 9.1 times, in Germany it’s 6.9 and in Japan just 4.5. 

The accumulation of wealth at the top makes a mockery of free-market trickle-down advocates. Instead wealth has been sucked up in a vacuum effect. Like in the board game Monopoly, one player ends up with all the money and property leaving everyone else bankrupt.

So we need to transfer power from the boardroom to the shop floor or “from the wallet to the ballot,” as Tony Benn said. 

If technology means fewer work hours are needed there are two choices. The first is that the employer cuts the excess workers and increases profits.

The second option is that working hours are cut but pay rates maintained, and profits stay the same. You may never have heard of the second option.

We live in a society in which the right of profit is pre-eminent. Landlords can charge what they like but your benefits will be capped, employers can axe your job and make you lose your home but protest outside one of their homes and the government will set up an inquiry into the trauma your trade union tactics caused.

If we want something better we need an economy built as if people mattered. That means people having rights. Here’s three for starters:

1. Profitable companies cannot make people redundant; they can retrain them and redeploy them, or they can cut hours while maintaining pay levels
2. We all have a right not to live in poverty. That means the minimum wage becomes a living wage — as Bob Crow said, “anything else just institutionalises poverty and lets cash-rich companies and their shareholders off the hook.” It also means boosting the basic state pension and benefit levels
3. Workers should have the right to co-operativise their company by simple majority vote in a ballot. If the workers vote for it, the company becomes a workers’ co-op and the owners are either bought out or given Treasury bonds (which is how the Attlee government nationalised numerous industries).

You may ask who will deliver an economy as if people mattered? The answer is the same as it ever has been: we will deliver it together or it won’t be delivered at all. Trade unions win because of collective strength. The rich have vast wealth, the workers have vast numbers. If we organise, we can win.

Andrew Fisher is LEAP economics co-ordinator and author of The Failed Experiment...and How to Build an Economy That Works, published on May 20 and available to pre-order with a 10 per cent discount at: http://www.radicalread.co.uk/latest-titles

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