New Communist Party of Britain
New Communist Party of Britain
adopted December 2015
THE EIGHTEENTH CONGRESS of the New Communist Party of Britain (NCP) meets when the British economy has still to recover from the economic downturn that began in 2008. Indeed, the recovery is going backwards with manufacturing output falling for the second consecutive month in May 2015 and was still 4.6 per cent below its 2008 peak. We should be under no illusion as to the importance of manufacturing as it contributes 25 per cent more to the economy than does the over lauded finance sector. It was the over‑production of luxury goods that nobody was able to buy that was the initial impetus to the crisis of 2008. Workers, the overwhelming majority of the population, were not able to buy back the luxury goods being produced, lost their jobs, couldn't pay their mortgages, lost their homes, they cut back on buying luxury goods so the crisis accelerated to other sectors of the economy including the collection of taxes.
The depression of the 1930s lasted for 16 quarters before Gross Domestic Product (GDP) recovered to its pre‑depression level, whereas seven years, 28 quarters, into this slump although real GDP has recovered to its pre‑crisis peak of 2007 it was only on the backs of an increased working population. With GDP per head predicted not to match its 2007 level until 2017 most workers will still be seeing their living standards cut, indirect taxes increased and services reduced.
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 falling wages relative to profits and inflation, benefits and pensions failing to keep up with inflation, zero hour contracts and benefit sanctions. The working class has also suffered through cuts in services with the NHS being particularly damaged as evidenced in the last quarter of 2014 where only 92.6 per cent of patients left accident and emergency departments within the government target of four hours.
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 decent and secure to live. Since 2008 it has been the speculative cheating bankers. More recently it has been the fault of the Eurozone, immigrants or at the beginning of 2015 falling oil prices! By mid‑2015 it was the Greeks. 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, they spend too little and they get sick too often or hide behind some disability and claim too much benefits.
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 workers living standards, by whatever means possible. The consequence is increased poverty, more foodbanks and stress for working people, with a widening gap in life expectancy between the two classes, in Kensington and Chelsea, a Borough in the wealthiest part of London, a man can expect to live to 88 years, while a few miles away in Tottenham Green, one of the capital’s poorer Boroughs, male life expectancy is 71 years.
This is what capitalism does, it has to increase profits, both absolutely and at the expense of wages, not for satisfaction of personal needs or the needs of society as a whole but as a necessary condition of the capitalist system itself.
Since 1999 the annual rate of return for British companies has been fairly stable in a range between 11.5 and 12.4 per cent, in the second quarter of 2014 when workers were have their wages cut, profits were at the higher end of the range experienced during the last five years. In 2014 the total operating surplus, which includes corporations’ gross trading profits, accounted for 31 per cent of GDP, £556 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. This is how the capitalist class has sustained and increased their luxury life style over the last few decades and also their life expectancy.
The Conservative government likes to pretend that we're all in one boat. We're not. In 1975, 62.9 per cent of Britain's GDP was paid in wages; by 2014 this had declined to 50.4 per cent, equivalent to a £138 per week pay cut for those on the average weekly wage and a £223 billion profit increase for the super‑rich.
Cutting workers' wages and jobs is a double‑edged sword as it is only the working class, the majority of the population, with wages, benefits or pensions to spend, who can buy the goods being produced or imported into Britain. It is they who buy and rent most of the houses that are built, 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, hospitals, banks, call centres and produce the food we eat.
As the capitalists continually drive down wages relative to profits the result is that there is less demand for the goods being produced resulting in a build‑up of inventories. In an attempt to sell these goods workers are encouraged to take on debt and spend future earnings. When this model of maintaining demand can't be sustained any longer companies respond to the reduced demand and cut back on production, leading to recession and economic slump. At the end of 2013 the real level of investment was still about 20 per cent below its pre‑crisis, 2007, peak whilst the FTSE 350 non‑financial companies were sitting on a £140 billion cash pile which they weren't prepared to invest as they had deemed that there weren't enough profits to be made. This is unlikely to change soon. With investors running scared equipment rental businesses also took a hit with the prospect of lower demand from energy‑related customers. Companies are not investing in new equipment and techniques but are redistributing the cash pile amongst themselves through share buybacks and dividend pay‑outs. The ruling class have turned their backs on the wealth creating sectors of the economy and instead are content with redistributing the cash pile amongst themselves whilst concentrating its control to an inner core of the ruling class.
Recent governments, having not wanting to notice this cash pile or the current fragile position of the British economy, have spent the last seven years announcing one initiative after another to give business access to finance in an attempt 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 them to borrow, the Labour, Coalition and the Conservative governments have made ineffectual efforts to impose targets on the banks to increase lending to small businesses.
The large companies don't need new money to invest as they already have stacks of it that they want to keep in reserve until they see opportunity to increase their market share by swallowing the smaller companies thus monopolising their market share and reducing the number of workers employed — not by investing in new production techniques.
In the first three quarters of 2014, the value of mergers and acquisitions were $2.66 trillion, a 60 per cent increase on the same period in 2013. Energy, power and healthcare companies have led the way in terms of value with $800 billion worth of deals done. In the 18 months to July 2014 British to British mergers and acquisitions were valued at £4.9 billion whereas cross border deals, involving British companies, amounted to £34 billion.
These can easily be dwarfed when the big players pile in such as British Telecom. In December 2014 BT confirmed that it intended to pay £12.5 billion in cash and shares for EE. The deal would mark the return to the mobile telephone market by BT in giving BT a leading position in providing fixed‑line broadband and mobile contracts in Britain. EE was itself a merger of T‑Mobile and Orange UK back in 2010. So BT which was once a state owned monopoly is regaining its monopoly position but this time as a private company acting in the interests of the super‑rich.
Monopolization 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, thus deepening the crisis. Monopolization reduces the number of available jobs and maximises profits at the expense of wages.
Instead of offering cheap loans to smaller companies and allowing the larger ones to sit on their cash piles the Government should force them to redistribute the cash to workers, or invest in more efficient manufacturing techniques, so that the money can start again to circulate in the economy. This can be done by dropping any impediments that restrict workers from fighting for higher wages and increasing company taxation. These two measures would increase government income allowing them to increase pensions and other elements of the social wage whilst reducing the taxes paid by workers.
It is only by substantially increasing wages that and demand and growth in the economy can be restored. It is not workers’ wages that are too high; it is that they are too low. The ruling class will never increase wages voluntarily, they must be forced to do so by workers striking or threatening to strike. Restrictions on collective bargaining should be removed to allow trade unions to demand, more effectively, higher wages for their members. This would allow the idle money to be used to improve the lifestyle of workers.
We welcome the decisions made by trade unions during 2015 to remove all rules from their rule books that restricted the pursuance of their aims and objects to those that were deemed lawful.
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. Though 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.