The latest Tory attempts to smear Ed Miliband have centred on trying to paint him as an unreformed Marxist and a slavish follower of his father's academic teachings. Whenever Ed stands up for the man in the street it is denounced as a return to 1970s style socialism and the 'bad old days' of the state intervening in the free market. But what exactly have those free markets, unleashed by a tide of deregulation since 1979, actually done for us?
It is certainly the case that, in manufacturing industry at least, increased competition globally has resulted in higher productivity and falling real-terms prices, but at what cost? Since the 1980s, real incomes have been steadily falling for the poorer half of the UK population while the rich have been getting richer - both in terms of income and in wealth accrued (by the way, the situation is far, far worse in the USA which has been even more aggressive in embracing globalisation). This is exactly in line with Marx's analysis - there is a continuous struggle between capital and labour with each trying to maximize the return to itself and, on recent trends, capital is clearly winning. Deregulation has enabled freer movement of capital around the world and strengthened its hand in this struggle - demands for higher pay, shorter working hours, better conditions etc are met with the threat of capital upping sticks and moving abroad where production costs (and workers' protections) are lower. At the same time legislation has reduced the power of organised labour and eliminated much of the collective bargaining which in the past may have helped to maintain wages, instead leaving every man or woman to fight for him or herself.
David Cameron has talked about this 'global race' as though it is some previously unknown economic phenomenon which he has identified. It isn't; it is the same process Marx talked about. When it is described as a race to the bottom it is dismissed as 'pessimism' by Osborne, but nonetheless each nation continues to undercut the next to attract capital to its shores - look for example at Osborne's recent cuts to corporation tax and his plan for workers to give up workplace rights in exchange for shares estimated at a measly couple of grand in value. The argument presented in favour of this is that we have become uncompetitive so taxes and wages have to fall to boost productivity (while, strangely, board-level salaries have to rise to attract the best 'talent'!). It doesn't address the central point that even if we as a nation do succeed in winning the 'race' and staying in front it will be at the expense of ever lower wages. The Tories claim otherwise and that wages will rise as the economy recovers but this belies the lessons of the last several decades during which time in the USA for example real incomes have fallen so that the median male salary is now lower in real terms than it was in 1979, and Britain is not far behind. The pie may be getting bigger but it is not being shared fairly. And the costs of low wages paid by exploitative employers are immense - the taxpayer ends up subsidising these poverty wages through in-work benefits - tax credits, child benefit, housing benefit, etc. As these are needed due to the failure of employers to pay a living wage these benefits really represent a taxpayer subsidy directly to the bottom line of these businesses - more money being returned to capital rather than to labour.
One particularly simple and powerful point made by Joseph E Stiglitz in 'The Price Of Inequality' is this - we live in a world that has high mobility of capital and low mobility of labour. There are all sorts of barriers to the workforce moving to where the work is (ie. following the capital) - for instance, immigration controls, local support networks/ties to help families out, language barriers, cost of housing, exchange rates differences, etc ... whereas there is very little indeed to prevent capital moving to where returns are greatest. This leads to governments bending over backwards to attract capital - eg. cutting corporation taxes, deregulating the labour markets, squashing union power, removing or freezing minimum wages, etc. ie. the laws of the land are rigged to favour capital over the workforce. What would it look like if it were the other way around ie. we had a highly mobile workforce and low movement of capital? The result would be governments falling over themselves to attract labour into the country - and what kind of inducements would they be offering? Well I suspect it would be along the lines of better schools and hospitals, a decent minimum/living wage, reduced working hours, etc. It would be a very different country, and a far better one. Of course, that is not the reality, but it illustrates the extent to which we are all enslaved to capital in a globalised world.
So even though the policy prescriptions made in Marx's name may have proved disastrous that doesn't necessarily invalidate his analysis. Ed Milband should shrug off these latest insults and continue to highlight the tensions between the returns to capital and to labour as it is obvious that a better balance needs to be found.
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