New Communist Party of Britain
This is the first section of the Main Political Resolution adopted at the 2009 16th Congress of the New Communist Party of Britain.
An index to the other sections can be found here -> [2009 Policy Documents]
THE SIXTEENTH CONGRESS of the New Communist Party of Britain (NCP) meets at the end of a year when Britain has suffered it’s worst recession in 60 years and manufacturing, the source of new wealth, is in it’s fifth recession since 1997.
The ruling class gives a whole range of excuses as to why these crises keep recurring. In the 1980s it was Japanese productivity rates; in the 1990s it was European productivity rates or that British workers don’t work fast or hard enough. In 2001 it was the destruction of the World Trade Centre; in 2002 and 2003 the high−profile corruption scandals in the US. In 2005 it was the high price of oil and the low wages paid to Indian and Chinese workers. In 2007 and 2008 it was the Chinese, for buying too much food and oil, or US workers wanting somewhere secure to live. In 2008 and 2009 it was rogue bankers not operating in a financially disciplined way. Always they blame the workers, claiming that their wages and pensions are too high, their retirements too early, their productivity too low, their jobs too secure, their working hours too short and they go sick too often.
What they never do is blame the capitalist system itself — it’s always the workers’ fault or some exceptional event, some corrupt practice or act of god. Well, now the ruling class have nowhere to hide, it is clear for all to see that the fault lies completely with them — their system — the capitalist system is the problem.
Capitalists and their governments only look for solutions that protect their own self−interest and that are paid for by the working class. Their solutions include general attacks on the working class where workers are forced, through threat of unemployment or loss of jobs, to work harder and faster and for lower wages.
Cutting workers’ wages and jobs is always a “double−edged” sword in that it is only workers with wages to spend who can buy the goods being produced. This contradiction is now exposed for all to see, the “highly productive” factories have produced too much for the market to absorb; workers are sacked who then cut back on consumption, exacerbating the problem even further.
The ruling class could reduce the worst effects of recessions by substantially increasing wages reducing taxation of the poor and increasing taxation of the rich. They resist doing this because implementing it would reduce their profits.
The ruling class can only be forced into giving these concessions by a strong trade union, labour and communist movement, which recognises the unity that can be achieved by demanding flat−rate monetary increases. A struggle to increase wages will be intense, as the fight is over a relative declining “pot”. But it is a necessary fight as otherwise it could mean the destitution of the working class. This is only a short term solution. There are no long−term solutions to the contradictions of capitalism except its overthrow, with workers capturing state control.
It is workers and their dependants who buy the bulk of the food and consumer goods produced or imported into Britain; it is they who buy houses and use financial services, whether they be banks or insurance companies. Also it is these workers who make the goods or provide these services that they ultimately purchase. However, in this process some of the value that is added to these goods and services is syphoned off to shareholders and speculators. In manufacturing Gross Value Added (GVA) per worker is £55,000, having increased from £22,000 since 1977. This is the source of the massive profits that were obtained by banks, car manufacturers , pharmaceutical companies and retail sector. Because workers get paid less than the goods they produce they cannot afford to buy back all the goods that are produced. One of the ways that capitalism tries to get round this conundrum is by encouraging credit−driven consumer spending.
In the most recent credit−driven consumer boom, personal debt in Britain rose to over £1,457 billion or £30,450 for every adult, having increased from £17,000 in 2000. The average family’s total debt accounted for 170 per cent of their annual income, the highest figure in the capitalist world, and the highest figure in Britain’s history. In 1997, the figure stood at 105 per cent. The annual interest repayments on this personal debt was £76 billion and even before the recession took hold, in 2008, £24 billion of this debt had been sold to debt collection agencies, because workers could no longer afford to keep up the interest payments let alone pay off the capital.
Though this delayed the crisis, there is always a limit to the amount of debt that workers can take on and it’s a limit that cannot be predicted. When the limit is reached workers stop spending but capitalists still continue to produce goods to sell, this results in a rapid rise in unsold goods. This is termed a crisis of over−production and can only result in recession.
Crises of over−production are now occurring more frequently. In the past manufacturers reacted in the first instance by reducing inventories and cutting overtime and then only as a last resort sacked workers. Now, with just−in−time methodss, smaller manufacturing inventories, a service industry and a finance sector with no inventories at all, any over−production quickly causes a loss of jobs. This loss of jobs brings about a cut−back in spending and further reduces demand in the economy; so the tendency of a just−in−time and a service/finance oriented economy has been to increase the volatility and frequency of repeating recessions.
This debt burden is also a big factor in Britain’s long−hours culture, as workers where possible, work more hours to service these debts. But as the recession started to bite fear of defaulting, especially on mortgages where there is a risk of becoming homeless, forced more than five million workers to work an average of seven hours and six minutes unpaid overtime every week in the hope they could curry favour with their bosses and secure their employment. This saved employers £27 billion a year in unpaid wages but further reduced the ability of workers to buy back the foods that were being produced. These debts also discouraged workers from taking industrial action to increase pay, which would have narrowed the gap between what workers produced and what they could buy.
In 2006 prices and interest rates started to rise because of the activities of currency and commodity speculators. This combined, with rising unemployment and reduced incomes, forced a reduction in the quantity of goods being bought by workers. In January 2006 the year−on−year growth rate in retail sales fell from 4.3 per cent to just 1.2 per cent.
By 2008 workers were no longer able to voluntarily or otherwise absorb any more debt, and were finding it increasingly difficult to service existing debt. This led to a rapid decline in spending which quickly, despite just−in−time, led to a rapid build up of inventories, especially in the motor industry. Manufacturers and constructors reacted quickly by cutting jobs and wages, which further compounded the lack of spending. The crisis then spiralled into the mega recession of 2008/2009 and this before the economy had recovered from previous recessions.
Disregarding the hype surrounding the importance of finance and business services, exports of manufactured goods still contribute 50 per cent more to GDP than does the export of services. But because of the run down of manufacturing, Britain imports more goods than it exports resulting in a negative trade balance with the rest of the world. This rose to £46 billion in 2008, up from £34 billion in 2002 and is running at its highest levels, as a percentage of GDP, since the end of the 1980s. Having once been the workshop of the world Britain exports less than the Russian Federation, Belgium, Italy, France, Netherlands, United States, China, Japan and Germany and just slightly more than Canada.
By the end of 2008 manufacturing employment had declined to 2.83 million — a drop of 1.3 million since 1998. Manufacturing doesn’t exist in isolation it needs banking facilities, insurance and uses business advisers. In Britain today, the Government seems to be believe that the finance and business advisers are all−important. This is not the case: out of a workforce of 31 million more than 17 million work in jobs that depend on manufacturing, extraction or construction including 5.5 million who work in the rural economy.
Six million work in finance and business services. But if nothing is made, what can the finance industry finance or business advisers advise? Therefore a large proportion of workers in this sector must be providing finance, business advice to the manufacturing, extraction and construction sectors.
A further eight million work in education, health and public administration. Again these must also be, on the whole, servicing the manufacturing, extraction and construction sectors .
By the end of 2007 corporate profits were at an historic 40−year high, mainly due to technological advances, reducing the workforce and the then falling energy prices. To generate more profits capitalists expanded production.
Manufacturing was investing heavily especially in car production. Nissan introduced a third production shift at its Sunderland factory. Honda increased its production capacity at its Swindon factory to 240,000 cars a year, whilst at BMW’s Hams Hall plant production of engines increased by 70 per cent in 2007. Rolls Royce built a new production line, increasing the manufacture of luxury cars by 250 per cent.
Then in April 2008 Mervyn King, governor of the Bank of England, issued his siren call that the economy needed to slow to the point where there was spare capacity in order to bring inflation under control. He went onto say that he wanted to create just enough job losses to lower inflation to the two per cent target rate.
Well they have certainly achieved that objective, as inflation was reduced to 2.3 per cent by May 2009 but at the cost of record numbers of unemployed.
By February 2009 car production had dropped by 59 per cent compared with the same month in 2008 and production of commercial vehicles had dropped by more than 70 per cent during the same period. There were hundreds of thousands of cars unsold and in storage around Britain, including 105,000 imported cars at the port of Avonmouth near Bristol. The car industry acted in traditional fashion — Nissan, in January 2009, announced it would axe 1,200 jobs at it’s Sunderland plant — about a quarter of the workforce. In Swindon, Honda closed their factory for four months from the end of January 2009, with over 1,300, 25 per cent of the work force losing their jobs permanently.
In retail during the later part of 2008, retailers desperate to offload stock slashed prices and then slashed tens of thousands of jobs when Woolworth, MFI and Zavvi (formally Virgin MegaStore) went bankrupt and closed. It’s not only the workers directly employed who loose their jobs; it’s also the workers who make the goods that are sold, and the transport workers who deliver these manufactured goods.
Traditional manufacturing areas that bore the brunt of previous recessions are again suffering disproportionately worse from unemployment than other areas during the current recession. In figures produced in April 2009 the Office of National Statistics (ONS) found that since October 2006, 576,000 jobs were lost in manufacturing and related industries, 176,000 in finance and business services and 70,000 in education, health and public administration. Unemployment rose 486,000 in the year to February 2009 to 2.1 million, the highest level since 1997, and is predicted to reach 3.2 million by the end of 2010 which would take the number of unemployed back to 1993 levels.
Young people are being hit particularly hard, with the number of 18 to 24−year−olds without work rising to more than 631,000. For the under 35s more than 500,000 are officially too sick to work and claiming incapacity benefits and of those more than 300,000 are suffering from mental and behavioural problems. One in five young people who found work under New Deal held a job for less than 13 weeks and more than 100,000 have been unemployed for more than 12 months. With the emphasis now on the knowledge economy and customer−facing service work, they are being forced into the latter type jobs and are unlikely ever to find stable employment. The customer−facing service sector is more vulnerable to the fluctuating spending power of its customers and has bosses who force the workplace to be run at a faster pace and employ on temporary short−term contracts — all of which makes work for most people more stressful and less secure.
Workers have started to take a more militant response to the threat of jobs losses by taking direct action; when Visteon sacked it’s workforce with only a moment’s notice and denying them redundancy pay and their pensions, the workers occupied the factories. Though they didn’t save their jobs or pensions, they did force the company to back down and pay enhanced redundancy payments. More could have been achieved if workers unrelated to Visteon could have been drawn into the struggle; for this to happen all anti−trade union legislation must be withdrawn. The Visteon workers have shown that bosses can be forced to back down by direct action and solidarity action
It’s not only workers who increased their debt; capitalists have also increased their level of debt, though they call this leverage. They do so to increase profits whilst reducing investment. The driving force behind this is not satisfaction of personal needs but a necessary condition of the capitalist system itself, namely competition and to attempt to reverse the declining rate of profit. Failure to do so would reduce a capitalist’s competitive strength in relation to other capitalists, resulting in their eventual elimination and their capital being absorbed or destroyed by their rivals.
So when interest rates, energy and raw material prices started to rise rapidly during 2007/2008, they found it increasing difficult to service their debts. Then when the banks hit their own crisis, and needed to rebuild their balance sheets, the banks either refused to renew overdraft facilities or called upon these indebted companies to repay in full any outstanding loans. This led to a total meltdown of the British manufacturing sector.
With the capitalists’ ceaseless quest for easy profits, capital has increasingly gravitated out of manufacturing to services, speculation and currency gambling. This is one of the reasons why the present Labour government is encouraged, by the ruling class, to continue with the previous Tory policies of deregulation of the finance industry and privatisation, especially in the health and education sectors and plans to sell of Royal Mail.
In recent times the ruling class’s preferred mechanism of privatisation has been the Private Finance Initiative (PFI) and private sector delivery of public services, which has resulted in an increased burden on local government and NHS resources. Though this form of privatisation is proving more difficult in the recession, as seen by the cancellation of the £711 million project for University Hospital Leicester and the £600 million scheme for Leeds Teaching Hospitals. In total £2.5 billion of hospital PFIs have been abandoned. However, under the guise of “Keynesian” policies, the Government is stepping in to provide the finance upfront by creating an "infrastructure bank" that will lend directly to companies and take stakes in PFI projects. This is effectively workers giving monies to the capitalists so they can make large profits from exploiting the services that should be used to keep workers in good health.
Capitalism is portrayed to be all about risk taking and whoever takes the risk should be rewarded appropriately. But who takes the risk? Not the directors with their large salaries, share option schemes and other perks. The risks have been transferred away from the boardrooms to the small shareholders, pension scheme members and, above all, workers. On the basis of this “success” directors received very substantial increases in real pay during 2007/2008. Average earnings for FTSE 100 chief executives in 2007/08 reached a record high of £3.5 million, up £365,000 on the previous year. The more lowly paid mid−250 chief executives saw a measly average increase of £150,000 to £1.4 million. The 2000−plus directors in the top 350 companies received an income equivalent to the combined wages of more than 133,000 workers on the median wage. Traders and bankers in the City of London shared £6.2 billion in bonuses during 2008, which is equivalent to the wages of 300,000 women workers on the median wage.
The New Communist Party (NCP) demands that the burden of taxation should be shifted away from workers and onto the wealthy. The new 50 per cent income tax rate, though welcome, is not high enough; prior to 1979 the highest rate of income tax was 97 per cent — this should be restored.
Although PFI, private sector delivery and FTSE directorships have proved quite lucrative for the capitalist class, these pale into insignificance compared with the privatisation of Qinetiq, the former Government department Defence Research Agency (DRA). The DRA was partly sold to the US finance company Carlyle for £42 million and renamed QinetiQ. When sold on in 2007, Carlyle made a £300 million profit, furthermore the top 10 managers at QinetiQ made £107 million profit from an initial investment of just £500,000 — a 20,000 per cent rate of return in just three years.
The NCP will campaign for those companies privatised since 1979 and for those services that have been subject to PFI or private sector delivery to be restored to the public sector.
During the same period incomes of workers barely kept up with inflation and they are now having their wages cut. It is not only that directors’ “earned” income is too high, it is that workers’ wages are too low.
Home ownership is proving to be a chain around the necks of the working class. The ruling class built the lie that when the value of houses increased year−on−year that society would become wealthier. On the basis of this lie the ruling class not only encouraged the purchase of houses through mortgages but also encouraged those with existing mortgages to increase them as a form of a cash loan. Either way it increased the indebtedness of workers. The truth is that when house prices increase, no extra goods are created, no extra services are provided and the overall wealth of society doesn’t increase by a single pound. Home ownership is a source of consumption, a house needs repairs, furnishing, maintenance, heating and the mortgage interest and debt needs to be repaid. By May 2007 the affordability of mortgages had fallen to its lowest level since 1992, with interest payments accounting for 18.7 per cent of gross income, having risen 22 per cent in the previous nine months. And with the increase in house prices during the same period the cost of buying a first home rose by more than 33 per cent in the year to May 2007.
Home ownership is not an investment, it is a scam which transfers wealth from the poor to the rich; the only people who gained anything were the ruling class. This is another reason why the profile of the financial service sector increased in the British economy, at the expense of manufacturing, by encouraging the take on of debt and then profiting from the servicing of the debt repayments. The servicing of debt repayments effectively reduced the overall wealth of Britain as it absorbed wealth with no tangible product being produced in the process.