The spectre of inequality continues to loom across Britain. A new report by the Resolution Foundation notes that conditions are returning to those last seen under Thatcher. With wage freezes and austerity measures continuing to burden the poor and working classes, the gap between top and bottom is ever increasing. Capitalism isn’t working.
The spectre of inequality continues to loom across Britain. With wage freezes and austerity measures continuing to burden the poor and working classes, the gap between top and bottom is ever increasing.
The Resolution Foundation, a prominent think tank that measures economic sustainability, has said that a severe rise in inflation and falling living standards are set to cause economic strife for millions of people across the UK. The Foundation concluded that the fall in living standards would be the worse since the 1980’s, when the Thatcher government implemented similar draconian economic policies and attacks on the working class.
In the years following the 2008 crash, there had been a “mini-boom” that benefitted some more middle-class households. But those small gains have been offset by the harsh economic policies introduced by the Tory government over the last few years. The report presented by the Foundation has stated that the current government’s economic programme is one of the leading causes for the fall in living standards. Under George Osborne’s treasury, there was a massive £12bn in welfare cuts – a policy that has been furthered by Theresa May’s government.
The report does highlight improvements such as the national living wage, but says that such policies would do little to reduce the inequality brought about by welfare cuts. “Despite welcome policies such as the national living wage,” the report states, “the plans the new prime minister has inherited are likely to ensure that the proceeds of growth are shared unequally and many families made worse off.”
The think tank has projected that 2020 would be the year that sees the starkest inequality take hold, as measured by the 90:10 income ratio: the income of a household 90% up the income distribution scale, divided by that of a household only 10% of the way up. Wages for the poorest households are also set to drop by 2% over the next five years. And although the full effect of Brexit has not been realised, the rise in inflation brought about by a weak pound will only compound the economic hardships faced by millions across the country.
Labour Shadow Chancellor, John McDonnell has welcomed the report’s findings, saying: “Labour called on the government at the Autumn Statement to end the unfair cuts to in work benefits, while they were going ahead with tax giveaways to a wealthy minority, but Philip Hammond chose to carry on with the work of his predecessor.” McDonnell also warned about levels of inequality not seen since the Thatcher years.
The Resolution Foundation’s findings are unnerving, but unfortunately not all that surprising. The economic practices of big business supporting governments have inflicted harm on society’s most vulnerable citizens for decades. As the report mentions, the Thatcher government pushed through policies that have left an entire generation of working class families unable to build a decent life for themselves and their children. Tony Blair’s government did little – if anything – to reverse the policies of the Thatcher government, and in many cases expanded PPP and PFI programmes to ensure that that public spending was of secondary importance compared to private interests.
Across Europe, governments everywhere continue to act on the side of the capitalists, coddling the rich with tax cuts and deregulated markets to ensure bigger profits. The slashing of welfare and housing benefits, coupled with public wage freezes, has seen a fall in living standards for millions of poor and working class families across many parts of the UK and Europe. And there seems to be no end in sight. Even when there seems to be a breakthrough for the Left, such as SYRIZA’s election in Greece in 2015, the major capitalist institutions like the IMF are quick to crush the hopes and dreams of workers and youth.
The root of the problem is capitalism – a system that exists to meet the profits of the millionaires, rather than the needs of the millions. As the Resolution report highlights, there might be ‘mini booms’ in the economy that come along every so often, but these ‘booms’ are short lived. In the end, the crisis continues, and any so-called “green shoots” of recovery are quickly followed by recession and rising inequality.
Only through mass mobilisation and grassroots organisation can we take the fight to the Tories and their programme of austerity, inequality, and exploitation. The Resolution Foundation’s report has exposed the grave ills of capitalist society. Now we need to take heed of its findings and fight for a bold socialist alternative.
By Ed Swanepoel, Reading Marxists
No return to Thatcherism! Fight for socialism!
A report from the Resolution Foundation has found that inflation and pay squeezes could usher in a new level of inequality for the working class that hasn’t been seen since the days of Margaret Thatcher. The Foundation also says that the average income for the richest fifth of the population is due to increase by 5% over the next five years, whilst the poorest half are looking to lose even more.
This is not just the legacy of Thatcherism, but an integral part of the capitalist system as a whole: the working class bearing the burden for the crimes of the ruling elite and their broken system.
Thatcher, alongside Ronald Reagan, ushered in the so-called era of “trickle-down economics”. The idea was that, by giving the wealthiest in society tax breaks, they would invest the wealth created into jobs and the wider economy. Instead, however, this attempt to renew capitalism laid the foundations for a resurgence of inequality and poverty. Profits were hidden away in dodgy offshore bank accounts rather than invested into the economy, and the working class was forced to pay for the crisis through austerity and attacks – not just a crisis of neoliberalism, but a crisis of capitalism.
During the Thatcher years, these attacks on the working class were carried out by clamping down on trade union rights – rights that been continually and further attacked by every government since. Privatisation of essential industries and services, such as energy and transport companies, has benefitted a handful of fat cats and meanwhile hit the most vulnerable in society the hardest – resulting, for many, in the choice between eating or heating.
Thatcher boasted of creating a “proper-owning democracy”. By introducing the Right To Buy Act, working class families were encouraged to buy up former council homes and take on mortgages; credit was ramped up; and privatisation was sold to the public on the basis that they could own shares in these newly privatised businesses. In short, the working class were able to purchase property with money they didn’t actually have. This meant that they had to work harder to pay off debts. Fear of job losses meant an acceptance of deteriorating terms and conditions in the workplace. All of this is the economic, social and political context to the widening gap between the richest and poorest.
The ruling class now offer no way out from this crisis of capitalism. In the 1980s and 1990s, the system temporarily recovered over the backs of the working class, whilst the collapse of the Soviet Union and the entrance of China into the free market gave it a boost. Today, it is not globalisation, but protectionism that is on the cards. A new world slump is on the horizon. And the capitalists are once again trying to make workers and youth pay for the crisis.
There is no hope for the vast majority within the confines of capitalism. The only solution is socialism: a democratically planned economy, based on the needs of the many and not the profits of the few.
By Andrew Macknight, Newcastle Marxists