Workers need a pay rise – how can we pay for it?

End poverty, inequality and capitalism


“Britain needs a pay rise” is the demand of the TUC’s demonstration on 18 October. The first question to ask is “Which Britain?” The bosses don’t need a penny more – they are gorging themselves, accumulating greater and greater piles of wealth through the sweated labour and poverty wages of working people.

It is the majority, the working class, which urgently needs immediate wage increases to compensate for rocketing rents and mortgages, escalating food prices, massive energy and utility bills. The evidence for this is not the invention of ’wicked socialists and Marxists’. It is there in the bosses own newspapers, on their TV, in what working people see with their own eyes in the workplace and their neighbourhoods.

One Daily Mirror headline read: “Staff on minimum wage will take 342 years to hit bosses’ salary.” The article sets out some of the irrefutable facts about the shameful level of poverty pay for the mass of workers, while the share going to the rich has reached stratospheric levels. The UK’s top executive salaries have soared by 243% while the minimum wage rate has risen by just 81%, since it was introduced 15 years ago. The local government unions have been forced to call a strike for £1 an hour rise!

The founder of the Independent, Andreas Whittam-Smith, writes about “the situation facing the nation’s poor. About 5.5 million adults go without essential clothing. About 2.5 million children live in homes that are damp. Around 1.5 million children live in households that cannot afford to heat their home. More than one in five adults has had to borrow in the last year to pay for day-to-day needs.”

Least bad alternative

There you have it; out of the mouths of the defenders of capitalism themselves comes a crushing condemnation of their system. They used to claim that the ’free market’ was the best possible system for delivering goods and services to the peoples of the world. However, since the economic collapse in 2008 and the mass unemployment and dislocation which followed in its wake, it has become difficult for the ideologues of capitalism to repeat the old song. Now capitalism is, for them, the ’least bad alternative’.

They claimed that the collapse of the ’Soviet Union’ marked the decisive triumph of this system over ’outmoded central planning’. What collapsed in 1989-91 after the Berlin Wall was brought down was not ’socialism’ but a gross caricature of democratic, liberating socialism. Yes, a planned economy existed, which had shown its superiority over the chaos of capitalism, in terms of rates of economic growth of the productive forces and a certain increase in living standards. Russia – a byword for backwardness and economic failure under Tsarism – was transformed from the India of Europe into an industrialised country.

But this was presided over by a one-party, totalitarian Stalinist bureaucratic regime, the direct result of the isolation of the Russian Revolution. This inevitably came into conflict with the needs of the Russian people, now highly educated and demanding elections, democratic control, freedom of expression, the right to demonstrate and hold meetings. The possibility of a political revolution through workers’ democracy on the basis of a democratically-planned economy clearly existed, as the Hungarian revolution of 1956 and other movements in Poland and Czechoslovakia showed. But when this movement was suppressed by the Stalinist regimes, the working class, confused and desperate at the stagnation that existed, turned to the model of capitalism. The capitalist economies of Western Europe and the US, with the economic fireworks of the 1990s, growth, seemed to offer a way out.

The masses of Russia and Eastern Europe were dazzled with the capitalists’ promises of achieving US or West German living standards if they opted for the ’market’. We pointed out at the time that it would not be developed capitalism that they would experience but conditions more akin to Latin America: mass unemployment, poverty, etc. Yet even this proved to be optimistic as the productive forces, through the return to capitalism, experienced their greatest economic collapse in human history, even worse than capitalism’s Great Depression of the 1930s.


We see the same kind of mass opposition movement in Hong Kong and tomorrow Chinese workers and youth, with a new, more culturally-developed population, will be demanding democratic and social rights. This struggle does not have socialist aims as yet but, in the process of the movement, workers and youth will see the need for such a change, not just in Hong Kong but throughout China. The scarecrow of Chinese Stalinism will not prevent the inevitable movement of workers in this direction.

What lessons can be drawn from this by British workers, particularly in relation to the prospects of a real alternative to capitalism, which is democratic socialism?

Capitalist representatives can no longer point to the alleged ’superiority’ of their system, as it collapses – through the ’Great Recession’ – around their ears. This does not stop them from seeking to dissuade workers and youth from embracing socialism as an alternative. They say that the experiences of Russia show that any attempt at ’planning’ will inevitably end in dictatorship, one-man rule like North Korea!

A bureaucratic degeneration along the lines of what happened in Russia and other states that broke with capitalism is not possible in Britain. We live in an advanced industrial country, with a high level of culture, access to computers, social media, etc. Moreover, we have a strong and educated working class with their own organisations, the trade unions and in the future new mass political parties.

Once working people in Britain or any of the advanced industrial countries carry through such a big social change, socialism, they will not allow a repetition of Stalinism, with a monopoly of political power and privileges concentrated in a few hands. It will be the working class and poor through democratic workers’ control and management that will be the real power.

Some workers, however, dispute this idea, particularly when they witness the vice-like control presently exercised by right-wing, undemocratic leaders of some trade unions. The latter increasingly appear to be incapable of defending their members’ interests and energetically frustrate these members’ desire for a fightback against the ravages of capitalism. “If this lot become the new guardians of a socialist society – no thank you,” is often the worker’s view, naturally reinforced by the capitalist media.

This is even more the case in relation to their experiences of right-wing Labour politicians who, when in power, seek to manage capitalism better than the capitalists and when deprived of office seek to out-Tory the Tories. Witness Ed Balls at the recent Labour Party conference promising that if Labour was elected the pension age will actually be raised, resulting in him being roundly booed by even this completely sanitised body.

They have abandoned the socialist perspective upon which the Labour Party itself was built in the early 20th century, once summed up in Clause 4, Part Four, of Labour’s constitution. This stood for the nationalisation – public ownership – of the commanding heights of the economy. Many trade unions stood, in their constitutions and inscribed on union banners, for the long-term aim of socialism. This was not mere tokenism but expressed the accumulated experience of workers, embattled in day-to-day struggles, but also convinced on the need to change society and establish socialism

Drive for profit

Capitalism is a system which cannot utilise the full productive potential of its own system. The wheel of history has been turned back during this crisis. Production during an alleged ’recovery’ is barely above the level prior to the crisis. Why? The defenders of the system are completely silent when it comes to explaining this. Yet it is very simple to understand, if you follow the analysis of Karl Marx. He showed that capitalism is a system based upon production for the profits of the few – a handful of monopoly capitalists – at the expense of the social needs of the many, the working class and poor, as well as the increasingly impoverished sections of the middle-class.

Profit is the “unpaid labour of the working class”, as Marx showed. There is much talk today, quite correctly, about ’inequality’. Yet inequality is woven into the very fabric of capitalism and will exist so long as the capitalist system still lives. The capitalists’ exploitation of workers means that each one receives only a portion of the value he or she creates in the form of wages. The surplus is divided into rent for the landlords, interest for the bankers and what is left is the profit for the capitalist owners of industry. Capitalism manages to go ahead by ploughing back part of the surplus into production which in turn can lead to a spiral of growth until the inevitable onset of crisis.

Even a stern defender of capitalism like Martin Wolf of the Financial Times is compelled to write: “It is increasingly recognised that, beyond a certain point, inequality will be a source of significant economic ills.” What “ills”? Martin Wolf understands what they are when he recognises “huge increases in the relative pay of executives, together with the shift in incomes from labour to capital”. He then goes on: “Up to the time of the crisis, many of those who were not enjoying rising real incomes borrowed instead. Rising house prices made this possible. By late 2007, debt peaked at 135% of disposable incomes.” In other words, the growth of capitalism worldwide before 2008 was debt fuelled, as we had always argued, and would inevitably collapse at a certain stage.

Them and us

People like Martin Wolf are ’concerned’ for the system that he defends because this inequality is itself becoming a barrier to the further development of capitalism. By cutting the ’market’, the incomes of the working and middle classes contract, plunging capitalism into stagnation. That is why some of the capitalist strategists – like the German central bank, the Bundesbank – actually urge the trade unions to fight for higher wages, which they envisage could ’stimulate’ the economy. However, the individual boss, primarily concerned with maintaining his profits and even increasing them, can resist increases in wages. They are more concerned about the fate of their company and income than about the general health and development of capitalism.

Inequality has already reached ’eye-watering’ levels, particularly in places like London which has now overtaken Hong Kong as the most expensive city in the world. There are more so-called ’Ultra High-Net-Worth’ individuals (UHNW) in London than anywhere else on the planet. These are defined as people with $30 million or more in assets. 4,224 UHNW families live in London: These, together with a few thousand more, exercise the real power in society. After a crackdown in Switzerland, London is the new preferred tax haven for ultra-rich global capital. But if the national minimum wage had kept pace with a FTSE 100 Chief Executive Officer’s salary since 1999, it would now be £18.89 per hour instead of £6.50!

We would support all measures to lift workers out of poverty by fighting for at least £10 an hour. This and more will be possible if the full power of popular opinion and the labour movement is mobilised. This was shown by the tremendous victory in Seattle in gaining a $15 an hour minimum wage. But it was only through the campaign and pressure of Socialist Alternative, the US co-thinkers of the Socialist Party in England and Wales, that this was achieved.

Class warfare

The colossal chasm between the rich and poor will remain, and will grow so long as capitalism continues to exist. The representatives of rich are quite clear on this. Warren Buffet, one of the richest men in the world, once put it bluntly: “There is class warfare all right, but it’s my class, the rich class, that’s making war and we are winning.”

Margaret Thatcher carried this out to the letter in her brutal attacks on the working class in the 1980s. Now, the Guardian has published the speech that she didn’t make to the Tory party conference in 1984 but wanted to. She was only prevented from doing so by the Brighton bombing. It was full of bile and hatred for those who were prepared to stand up against her and the government of rotten British capitalism, which she represented. The miners, the heroic Liverpool City Council, the labour movement as a whole were condemned as “the enemy within” and part of an “insurrection” against democracy. They were to Thatcher “as dangerous an enemy as the Argentinian dictator General Galtieri had been over the Falklands”.

She wrote in the intended speech: “Enemy without – beaten him and resolute strong in defence. Enemy within – Miners’ leaders … Liverpool and some local authorities – just as dangerous … in a way more difficult to fight … just as dangerous to liberty.” For good measure, then Labour leader Neil Kinnock, who stabbed Liverpool and the miners in the back, is condemned as a ’puppet’ leader of a Labour party that had been ’hijacked’ by the ’enemies of democracy’”.

In order to reverse the defeats of the past, workers need committed fighting trade unions with the same kind of relentless leadership that the boss class has. But we must also have a socialist vision of what is possible on the basis of changing society. There is no mystery in how a socialist planned economy would be organised and show in practice its superiority over outmoded capitalism.

Socialist alternative

Four years ago we wrote: “The output of the world economy is back to the levels of 1989.” In the 17 countries formally making up the eurozone, joblessness amongst young people totals over 25% with levels above 50% in Greece, Spain, and Italy. In Ireland and particularly Spain, ’ghost estates’ exist while millions lack even basic shelter.

Homelessness is on the increase while there are 11 million dwellings lying idle throughout Europe. One billion on the planet go to bed hungry every night, an increase of more than 150 million compared to 19 years ago. Half the population of India lack even a toilet – a basic requirement of a civilised existence. 800,000 people worldwide commit suicide each year – many of them like poor farmers in India, crippled by debt – who despair of any solution on the basis of rotten capitalism.

Capitalism has shown that it not only worsens global warming but is incapable of arresting the world’s looming environmental distaster. The Observer recently reported that unprecedented high temperatures will become the norm worldwide by 2047: “The best place really is Alaska. Alaska is going to be the next Florida by the end of the century” one geographer is quoted as saying.

But these kinds of conditions can be ended very quickly. A planned economy would use all the resources which now lie idle, as well as cutting out the colossal waste from unnecessary advertising, duplication of production, etc.

A few figures to illustrate what would be possible: of the hundred largest economies in the world, 52 are corporations and 48 are countries; the top 500 companies control 70% of world trade; the top 200 companies’ combined sales are equal to 28% of world GDP but only employ 0.82% of the world’s workforce. A handful of billionaires control what are, in effect, monopoly concerns, which determine what will and will not be produced.

The very minimum required is to take over these giant monopolies, giving compensation to those who require it on the basis of proven need. Then we can begin to organise production through a socialist, democratically planned economy for the benefit of all.

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