Does Darling Think We're Daft?

On the Andrew Marr programme this morning Alistair Darling came out with the most appalling drivel I've heard from a politician in a long time. Asked about the current increase in inflation, and the Government's position, in relation to pay rises, Darling said,

"We don't want to get into a situation where workers push for pay rises, which are then fully absorbed by inflation!". 

Well, no workers don't want their real wages eroded by inflation either. Doesn't this mean that they are then right to push for wage rises to cover that inflation? Well, no according to someone who as Chancellor of the Exchequer is supposed to have some grasp of basic economic concepts. What workers must accept is pay rises, not in line with inflation, but "in line with the Government's inflation target of 2%."

Well excuse me, but if workers accept pay rises of just 2%, whilst even according to the Government's phoney figures prices are rising by more than 4%, doesn't that mean that not only is the whole 100% of that pay rise swallowed up by inflation, as Darling told us he didn't want to happen, but is swallowed up TWICE by inflation! Not only is 100% of the pay rise swallowed up, but 200% of the pay rise is swallowed up.

The other nonsense the Government has come out with, in the last few days, is a statement by Malcolm Wicks the Energy spokesman, who said that workers should not seek to be compensated for the likely 40% increase in energy prices, at the end of this year, because those price increases are only temporary!!! No they aren't. The increase in Gas and Electricity prices will not be reversed they will stay high. What Wicks means is that the 40% price increase, this year, will drop out of the annual inflation figure a year on, assuming there is no further huge increase then. But, that is not at all the same as saying the actual increase is only temporary.

If it were, then workers could equally well turn round and say we want a 40% pay rise, but don't worry it's not inflationary because its only temporary, we won't ask for 40% next year as well!

Do they think we are daft or what? They admit that the inflation is not the fault of workers, they say its imported. Actually, it isn't its home grown. Inflation does not arise as a result of increases in costs, but of increases in the money supply, issued by the State, to monetise those increased costs as a means of protecting bosses profits. If money supply is kept constant then rising costs can be accommodated in a number of different ways. Either the total volume of economic activity is reduced, or else the volume of activity can remain the same, and the total amount of work done to achieve it has to rise, because rising costs actually just means it now takes more labour time to produce things than it did previously. That extra work can itself be paid for in the short term, in two different ways. Either, workers pay for it in terms of lower wages - which is what the Government is proposing now - or else the bosses pay for it through lower profits, which is what socialists say should happen.

The oil tanker drivers have shown the way forward in Britain, just as German workers over the last few months have shown similarly that by militant strike action large pay increases can be won to cover rapidly rising prices. The real level of inflation is probably around 12% not the 4% the Government admits to. Over the last 25 years, companies have increased the rate of profit. In the last few years, as the new long wave boom has kicked in, they have been able to use that to increase their actual volume of profits massively, which is why they have lots of cash and have not been affected by the credit crunch. Now it's the time of workers to take advantage of the boom and the increased demand for labour-power to recover lost ground.

Last week showed that all the doom and gloom put out by the media, and even some sections of the left about recession etc. is ill-founded. Not only is the world economy booming, but the European economy, and even the British economy, remains strong. Last week it was announced that Retail Sales grew by 8% confounding pundits who expected a fall. In fact, the figures are not that difficult to understand. One consequence of the credit crunch has been that the housing market has seized up. But, that means that all those people who would otherwise have been spending a load of money on overpriced houses, now have that money to spend instead on other things. The money paid out on mortgage payments does not count in the figures for retail sales, but use the money you would have paid in mortgage payments to buy clothes or food, which were the biggest rises in retail sales, and it does.

In addition, British consumers had masses of credit card and other personal debt. If you have maxed out on your mortgage to buy some overpriced house, you probably had to buy the furnishings and even your clothes and other everyday items on the never never as well. With interest rates on that credit card debt ranging from 16% to 30%, that meant that people were frittering away up to £300 for every £1,000 of debt just on debt servicing! That debt servicing, as opposed to the clothes and other items it was run up on, also doesn't count in the retail sales figures. But, if a lot of people haven't bought the house they might have bought, if they have saved some of that money, and paid off some of that huge credit card debt, then the debt servicing charge falls too, releasing a considerable amount of cash for spending on actual goods and services, as opposed to just disappearing in interest payments.

Retail Sales in the US have also been quite robust as US consumers have begun receiving their tax refunds from Bush's large dose of Keynesian demand management, and US exports have slowly been rising as the Dollar has continued to fall, and Chinese consumers have begun to spend a little more out of their rapidly rising incomes. All in all, the long wave economic boom looks fully intact. Workers should not be scared off by the scare stories, but take heart at the rising prosperity of capitalism, and demand a share of it. But, nor should they forget the last 25-30 years, which will again return if capitalism continues. As Marx said, wage increases are not enough; what workers need is to replace the system based on wage labour itself. Workers need to use the capital locked up in their pension funds to buy up and convert into co-operatives the main capitalist enterprises so as to bring them under their own ownership and control; they need to demand that the State pension scheme, which is used for State financing, and reduced at the whim of capitalist governments, also be handed over to the workers, so they can control their own funds; they need to demand much larger contributions from the bosses, to their pension funds, in the same way that the bosses themselves siphon off huge amounts to their personal pensions; they need an Action Plan, geared to using workers funds to meet the pressing needs of workers, through their own independent class action, as opposed to a reliance on the capitalist state; things such as taking control over and running, on a co-operative basis, housing, and house building, the maintenance of estates etc.; they need to develop organic links between all the workers organisations, especially the workers cooperatives, in order to begin to develop an organic workers plan of production and distribution, to remove the potential for the recurrence of capitalist crises; they need to develop and extend the natural forms of workers democracy that develop on these cooperative forms, as an alternative to the rigged bourgeois democracy of the bosses. And they need to utilise the organisation of the Labour Party as a structure within and through which the political lessons of such development are channelled and codified so that the working class can confront the inevitable political challenge the bosses will mount to such a development, and thereby transform the Labour Party into a true Workers Party, not just made up of workers, but closely mirroring and furthering their interests, not just of today, but of the future.