New Communist Party of Britain
THE SEVENTEENTH CONGRESS of the New Communist Party of Britain (NCP) meets when British economy has still has still to recover from the economic downturn that began in 2008.
Whilst media pundits and “economists” debated whether there was a likelihood of Britain entering a double dip recession, they failed to notice that Britain was already in a sustained slump. The depression of the 1930s lasted for 16 quarters before Gross Domestic Product (GDP) recovered to its pre-depression level, whereas four years into this downturn GDP is 95.7 per cent of its 2008 level or 14 per cent below the GDP that could have been achieved if growth had continued at the long term pre 2008 average.
It is the working class that has borne the brunt of this crisis and it has been the young and the old who have suffered the most, whether it be through the large increase in unemployment or the fall in wages and pensions, either though cuts or eroded by high inflation.
Why did this crisis come about? Why does Britain seem to be in a never ending crisis? The ruling class have their “answers”. In 2005 it was the high price of oil. In 2007 and 2008 it was the Chinese, for buying too much food and oil and forcing prices up, or workers in the United States (US) wanting somewhere secure to live. Since 2008 it’s been the speculative cheating bankers. More recently it’s been the fault of the Eurozone. But always they blame the workers, claiming that their wages and pensions are too high, their retirements too early, they don’t work fast or hard enough, their jobs are too secure, they are work-shy, their working hours are too short and they get sick too often or hide behind some disability.
What the ruling class never do is blame the capitalist system itself - it is always the workers’ fault, some exceptional event, some corrupt practice or “act of god”.
In attempting to solve the crisis the ruling class only look for solutions that protect their own self-interest and which maintain their lavish life styles whilst reducing the living standards, by whatever means, of the vast majority: the working class. The consequence is increased poverty and stress for working people, resulting in a widening gap in life expectancy between the two classes.
Cutting workers’ wages and jobs is a double-edged sword as it is only the working class, the majority of the population, with wages or pensions to spend, who can buy the goods being produced or imported into Britain. It is they who buy and rent the houses that are built and use the banks and insurance services. It is also these same workers who make the goods, build the houses and work in the factories, offices and call centres.
Capitalism is always seeking to increase profits, both absolutely and relative to Gross Domestic Product (GDP), not for satisfaction of personal needs or the needs of society as a whole but as a necessary condition of the system itself.
Between 1997 and 2011 the annual rate of return for non-financial companies has been stable, ranging from between 11.3 and 13.7 per cent whilst wages and pensions have declined in value.
In 1976, 65 per cent of Britain’s GDP was paid in wages; by 2010 this had declined to 55 per cent. In 2010 the total operating surplus, which includes corporations’ gross trading profits, accounted for 27 per cent of GDP, £393 billion, which is distributed amongst shareholders, speculators, landlords and other owners and controllers of British and foreign capital.
During the last 30 years the taxes they pay, corporation and capital gains taxes, have been reduced enabling them to keep more of their profits.
The cumulative effect is that by the end of 2010 the larger monopoly companies had accumulated a £600 billion cash pile and which by the end of 2012, the Confederation of British Industry (CBI) has estimated, will have increased to £700 billion. Whilst the monopolies are cash rich smaller companies are cash poor and are dependent on the money markets and banks to keep them afloat and to finance expansion.
As wages fall as a proportion of GDP there is less demand for the goods being produced which results in a build-up of inventories. In an attempt to sell these goods workers are encouraged to take on debt and spend future earnings. Eventually companies respond to the reduced demand and cut back on production, leading to recession and economic slump.
Since the start of the slump in 2008, half-hearted attempts have been made to create an economic stimulus. In return for the government bail-out of the British banks, and the creation of £375 billion in cheap government bonds available for the banks to borrow, both the Labour government and the Conservative, Liberal-Democratic coalition (Coalition) government have made ineffectual efforts to impose targets on the banks to increase lending to small businesses. The banks offered to set up a “Big Society Bank” known as Project Merlin, with a £1.5 billion fund for small businesses. But the banks later reduced this to £200 million, of which £70 million would be for small businesses. The project turned out to be a mirage and British bank lending is now 16 per cent below the early 2008 level. Now the Government has launched a new project, Funding for Lending, but this is widely expected to fail as many small companies are afraid to take on new debt when there is limited demand for their goods and services. Moreover recent experience has shown that the conditions and management of British bank loans have actually resulted in many small companies going out of business rather than growing.
The large monopoly companies don’t need new money to invest as they already have stacks of it and want to keep their money in reserve unless they see opportunities to increase their market share by acquiring smaller companies.
Since the start of 2011 Centrica, the owner of British Gas, has spent $500 million on acquiring market share in the US, during which not one new job has been created. In continuing this policy in July 2012 they made an agreement to buy two US gas and electricity suppliers for $110 million, which will add $35 million of earnings in the first full year of operation.
In the pharmaceutical industry Britain’s GlaxoSmithKline is to acquire the US company Human Genome Sciences for $3 billion which will allow GlaxoSmithKline to take full control of a number of drugs and make savings of $200 million by 2015.
In the 12 months to July 2012 over £12 billion was spent in Britain acquiring Information Technology companies. Predominantly the buyers were cash rich large North American companies.
Once the proposed relaxation of competition rules take effect, the 10 large water and sewerage companies in England and Wales intend to buy up the 11 smaller companies that supply water only to gain significant cost savings for the industry as a whole which will be passed directly through to increased profits.
Monopolisation doesn’t create new jobs, quite the opposite; jobs are lost, increasing the downward pressure on the ability of consumers, workers, to buy back the goods that are produced or services offered.
Instead of offering cheap loans to companies and allowing the larger ones to sit on their cash piles the Government should increase benefits and reduce the taxation on low paid workers. These companies should also be forced to increase wages.
Only by increasing wages substantially can demand increase and growth return to the economy. It is not that workers’ wages are too high; it is that they are too low.
The capitalist mode of production is about maximising profits at the expense of wages so the ruling class will never increase wages willingly, they must be forced to do so by workers striking or threatening to strike.
The struggle to increase wages is always intense as the ruling class will want to maintain, at all costs, their privileged position. They have the law, the media and huge financial reserves to resist the pressure from the working class. Whereas the workers have little in the way of savings they can, with solidarity and acting collectively through a strong trade union, labour and communist movement, find ways in which the ruling class can be forced to pay higher wages.
Whatever happens, it is a necessary fight as not to act would mean the destitution of the working class. But this is only a short term solution, the ruling class will always fight back and attempt to erode any gains made by workers. The only long term solution is by workers capturing state control.