Lovely recovery we’re having!

The jobs massacre gives the lie to New Labour’s spin that the recession is over. More than 1,500 workers are set to lose their jobs at catalogue firm Shop Direct. The company will close three call centres in Sunderland, Burnley and Newtown in Wales. Car company Toyota is cutting up to 750 jobs at its Burnaston plant near Derby. Jobs at the Deeside plant in north Wales could be at risk. Another 8,000 jobs worldwide are to go at AstraZeneca. Essex council is planning to axe 275 workers. 300 jobs are at risk in Swansea council and another 300 at Newport council. The Student Loans Company is cutting 150 jobs from its offices in Glasgow. The Warburtons bread factory in Bolton is getting rid of one in four of its 470 workers.
And up to 70 jobs could be under threat at coach maker Plaxton. Meanwhile French workers have shown the way to respond to cuts. They seized the chief executive and a former manager at the Pier Import store, north of Paris, in the latest case of “bossnapping”. They were demanding better redundancy packages; the bosses have now been released, sadly unharmed! As for the improved redundacy packages, there was no word to admit neither victory nor defeat, but the fatcat executives now know what fate will bring to them for their spite, avarice and heartlessness.

A new report shows that class and inequality continue to scar our lives - these divisions are structured into capitalism and cannot be reformed away. Inequality is alive and well in Britain, as a new government report has admitted. But although politicians and the media will accept that inequality exists, few acknowledge that class is the basis for that inequality. The National Equality Panel report, commissioned by deputy prime minister Harriet Harman, shows that Britain is a fundamentally unequal society.  And contrary to government talk of increasing “social mobility”, it is getting more unequal. The gap between rich and poor has increased dramatically in the last three decades. The top 10 percent in Britain are 100 times more wealthy than the bottom 10 percent. The report shows how class affects every aspect of our lives. It matters “before children enter school, through the school years, through entry into the labour market, and on to retirement, wealth and resources for retirement, and mortality rates.” The report concludes that, “Economic advantage and disadvantage reinforce themselves across the life cycle, and onto the next generation.”

Behind the statistics are the brutal effects that class has on people’s lives. For the working class it means poorer health, lower living standards, poverty, insecurity and stress. If you’re working class, you die earlier. It is workers who make everything, but the capitalist system doesn’t meet our needs – despite producing more than enough to do so. As Karl Marx pointed out over 150 years ago, “It is true that labour produces wonderful things for the rich – but for the worker, it produces privation. It produces palaces – but for the worker, hovels. It produces beauty – but for the worker, deformity.” Some commentators and politicians say that changes in society make class meaningless. They say that the decline in manufacturing jobs and the growth of sectors such as the civil service and IT have made the working class smaller. They claim that the people who work in these “white collar” jobs are middle class. There is a minority that remains stuck in low paid jobs or without a job, they tell us - they call this the “underclass”. This view of society has become mainstream – but it is wrong. Class is not about whether you do manual work or work in an office. It is not even about how much you earn. It is about where you stand in relation to how things are produced in society.

As Marx argued, there are two major classes under capitalism. The ruling class owns the factories, offices, railways and other workplaces – and working class people don’t. This situation hasn’t changed. Workers still have to sell their ability to labour to capitalists to survive, just as they did 100 years ago. Some workers may think they are middle class – but it’s not about what you think. Class is based on the reality of whether you own a workplace or have to work for a wage. This doesn’t mean that the economy never changes. Capitalism constantly revolutionises production, introducing new machinery and more efficient methods – although often at a brutal cost to workers. It is true that manufacturing plays a much smaller role in the British economy than it did in 1979 – though 10 percent of jobs are still in this sector. But this doesn’t get rid of class. The overwhelming majority of the people working in service sector “white collar” jobs are working class. They have to sell their labour power to get by. Marx did, however, recognise that there is a middle class. It is smaller than the working class but bigger than the ruling class. The middle class have more control and autonomy over their working lives.

This class – made up of doctors, headteachers, lower-level managers and small businesspeople – faces contradictory pressures; their wealth and social position mean that they can buy into the system. But they can come into conflict with those above them. At these times, especially if there is a strong working class movement, they can be pulled behind a collective challenge to the system. When people say that most workers are now middle class, they misunderstand what class means. Many of the workers that some people define as “middle class” are doing working class jobs. And some professions that were once seen as middle class have been transformed. In the past, groups such as teachers, lecturers and clerical workers enjoyed status and conditions that meant they were part of the middle class. This has changed decisively. Attacks on their conditions together with de-skilling has effectively changed their class status. The massive rise in inequality confirmed by the report results from another key element of Marx’s ideas – the constant struggle between the two main classes. The ruling class has had the upper hand in this battle over the last 30 years. The long economic boom that followed the Second World War meant that the system could afford an increase in workers’ living standards. State intervention in the economy became the accepted norm.

Remember the Third World debt crisis of the 1970s and 1980s? The First World debt crisis of the 2000s and 2010s may make it look like a tea party. In the US and Britain in particular, the economic booms of the late 1990s and mid-2000s floated on a vast pool of private debt. Borrowing by firms and households grew to several times the size of the US economy and drove the growth in demand for goods and services. Now this process has gone into reverse. Individuals and companies have reacted to the crisis by desperately trying to reduce their debts. They are spending less – and cutting demand. This is very similar to what happened during the Great Depression of the 1930s. The willingness of states to step in, rescue the banks, and increase spending has so far prevented a slump as severe as that one. But this extra spending has been financed by more borrowing. This has contributed to huge increases in governments’ budget deficits – in other words, the difference between what they spend and what they receive as revenue. So it is still debt that is keeping the world economy afloat, only now it is public rather than private debt.

In their recently published study of financial crises, This Time is Different, Carmen Reinhart and Kenneth Rogoff argue that “a build-up of government debt has been a defining characteristic of the aftermath of banking crises”, mainly because economic slumps cut state revenues. They also document in detail how common “sovereign default”—states stopping paying their debts—is during financial crises. Before the 1980s and 1990s, the last big wave was during the 1930s and 1940s. Even the US and Britain, by leaving the gold standard and devaluing their currencies, effectively defaulted on their debts as previously valued. Fear of sovereign default is now stalking the euro-zone. It focuses especially on the weaker economies and, above all, Greece. Weaker economies benefited from joining the euro-zone because it tied them to Germany, one of the world’s most powerful economies. This meant, among other things, that they could borrow at interest rates little lower than those at which the German government raises money. But now the financial markets are focusing on those states believed to be most in danger of default. This has forced up the interest rates that countries like Greece must pay on their government debt.

The abolition of their national currencies means that they can’t use devaluation to reduce their debts and improve the competitiveness of their exports. Some experts, for example the notorious “prophet of doom” Nouriel Roubini, believe the crisis of the smaller European economies could threaten the survival of the euro-zone itself. To appease the markets, Greek prime minister George Papandreou is under even more pressure than Gordon Brown to cut the budget deficit. Papandreou last week told the bosses assembled at the World Economic Forum in Davos he would “draw blood”. That’s exactly what they want. The Financial Times newspaper last week carried a piece from a Brussels think-tank calling for a ten percent cut in consumption in Greece and Portugal. The European Commission is demanding the Greek government force down public sector pay. Greek workers, who have the most sustained history of struggle of any European country since the 1970s, are unlikely to meekly accept attacks on this scale. Two days of strikes have been called next week. Hence the reports that Papandreou is manoeuvring for a bailout by the euro-zone, or even by China. All this should put in perspective the idiotic announcements that “the recession is over”. The Great Depression went through several stages and lasted ten years. What Reinhart and Rogoff call “the Second Great Contraction” still has a long way to run.

Politicians are squabbling over just how quickly public spending cuts should be rammed through after the general election. They argue about whether they should be merely devastating or totally catastrophic. Whoever wins the election will unleash an avalanche of cuts in order to pay the bill for the bankers’ and bosses’ bailout. Hospitals across Britain are still feeling the effects of past cuts, before the latest round bites. But unions and communities are resisting the assault.  It’s the same story in education. The government slashed more than £600 million from college budgets this week. This means that a third of people who want to be students could be denied a place on a degree course this autumn. There are similar cuts in further and adult education. But students and lecturers from Brighton to London, Leeds to Glasgow, are fighting back. And as workers face new attacks on pay and jobs, 270,000 civil service workers started a national strike ballot this week. The government was set to push regulations through parliament this week which will cut redundancy payments to low paid public sector workers. Tory prime minister Margaret Thatcher introduced this redundancy scheme but the Labour government is now saying it is too generous and wants to rob us. It will clear the way for privatisation and mass job losses. It is crucial that we are fighting the cuts now.

In the 1970s, economic crisis returned. Sections of the ruling class demanded a shift to free market neoliberal policies to increase profitability. They saw the strength of workers’ organisations as a key obstacle. Margaret Thatcher, elected as Tory prime minister in 1979, set out to destroy trade unions. After the defeat of the steel workers, the miners and the print workers, the market ripped through society. Public services were privatised and welfare attacked. These attacks hit workers’ confidence to fight. The rich grabbed everything they could while the poorest saw their incomes stagnate. Gordon Brown and Tony Blair both accepted this free market model; they effectively shifted the Labour Party further to the right. Instead of talking about abolishing wealth inequality they talked of promoting “equality of opportunity”. But capitalism is inherently unequal. It will always give the rich more “opportunity” to get ahead in life than the poor. The weakening of trade unions allowed the ruling class to go on an offensive that continues today. We need to strengthen the unions to fight it. It is class struggle that has seen workers win the biggest gains. This struggle also points to a different way of organising the world – one not based on running things for profit, for the benefit of a tiny minority. It is impossible to reform inequality away while leaving capitalism in place. We will need a revolution to overthrow capitalism and create a socialist society based on human need and co-operation. That would bring an end to the classes and inequality that scar our lives today.