But when the Chancellor presented his November pre-Budget report it was against the backdrop of some apparently impressive economic indicators. Unemployment was at a 20 year low of 4.2%; the public spending budget showed a surplus of £9.5bn. The OECD produced a glowing report on the health of the British economy, holding out the prospect of higher economic growth of 2.7% coupled with lower unemployment and inflation despite strong increases in household wealth and pay. Indeed, "The forecasts paint a golden scenario for the Labour government moving towards the next election" (Financial Times, 17/11/99).
Just like the USA, Britain is heading towards a 'Goldilocks' economy, wards a 'Goldilocks' economy, a land of free porridge for all. For some people in Britain this is already true! Figures released at the end of October on chief executive pay showed that, "nearly a third of chief executives in the FTSE 350 secured remuneration package increases of more than 20%." (FT, 27/10/99, p4). This is five times the national average. The highest paid bosses are in the pharmaceutical sector where on average they 'earn' £3.64m each a year. Contrast this with the news that next year the state pension is going up by 75 pence a week and you get some idea of the state of capitalist society in Britain today.
So was all the talk of a new recession misguided? Is capitalism now out of the woods? Is Britain following the USA down the road of growth without inflation? This is what the bourgeoisie would like workers to think, that with the 'death of communism' capitalism is triumphant. Once again we are being treated to a new sleight of hand. The claims of renewed growth and stability hide profound underlying contradictions. As we note in the latest International Review,
"These growth rates hide this fragility, just as they mask a new historical aberration - from the economic standpoint: the fact that today, the rate of savings in the USA is negative, in other words American households overall have merican households overall have more debts than savings!"
This has not escaped the 'specialists'.
"American industry is on the verge of bankruptcy. This is incompatible with the rise in share values on Wall Street, whose valuation is at its highest since 1926: expected profit is higher than at any time since the war. All this is untenable, but vital in maintaining the confidence of households and the impression of wealth which encourages them to consume more and more on credit. The savings rate has become negative, a phenomenon not seen since the Great Depression. How can the (inevitable) touchdown be made a soft one?" (L'Expansion, October '99).
"The official indicator of recession - the negative growth of production - has once again been hidden, the recession has been pushed back with the same palliatives: debt, a headlong flight into credit and speculation...The situation of the world economy is thus more fragile and pregnant with the next 'purges' which will once again leave masses of workers on the streets." (IR99 "Economic Crisis: The abyss behind 'uninterrupted growth'").
Growing exploitation of the working class
At the same time we are being told that the unlikely driving force behind the British 'recovery' is the manufacturing sectecovery' is the manufacturing sector. A report released by the Institute of Manufacturing is given as further evidence that this sector, hit hard by the strength of the pound, is turning around, and goes on to explain how.
"Wage growth in manufacturing in the year to July was almost entirely paid for out of productivity increases. Annual growth in manufacturing productivity has risen above 3% this year. This has helped to drive the annual growth of unit labour costs - the cost of labour per item of output - below 1% from 4% in 1998" (FT, 15/1/99, p5).
Another set of figures from the Office of National Statistics has revealed that in the year to September the manufacturing sector shed 156,000 jobs with the AEEU engineering union predicting another 50,000 to go next year. Taken together these two facts show another way the bourgeoisie has been able to avoid open recession, by making less workers work harder. Once again the proletariat is being forced to pay for the crisis through higher rates of exploitation.
For those workers thrown onto the dole things are about to get even worse. The Labour government are proud of their record in reducing unemployment, and especially of the New Deal scheme where 18-24 year old claimants are offered the 'choice' of work experience, training, education - or having t training, education - or having their benefits stopped. In his pre-Budget report Gordon Brown announced the extension of the New Deal to all long-term unemployed from April 2001. The aim is to fill the "...one million vacancies spread around the country. We want better matching of the unemployed to these jobs and we want people to take up the opportunities available." (FT, 10/11/99).
But the government's own figures for the New Deal show that only 43% of people leaving the scheme find "sustained, unsubsidised jobs", 17% leave early due to legitimate reasons and 13% are transferred to other schemes. Meanwhile the remaining 28% "disappear". No wonder unemployment is falling - it’s the old trick of calling the unemployed "job-seekers", of taking the long term unemployed off the official lists, of counting people with short-term, part-time, precarious jobs as part of the active workforce. In short, of making the unemployed disappear.
It has not escaped the attention of bourgeois commentators that
"...it is clear that a revolution has taken place during the past two years. Britain now operates workfare...It's a huge cultural - and economic - change; and one that successive Conservative governments never dared attempt." (FT, 10/11/99).
New Labour have been able to continue and escalate the attacks on the living and working conditions of the working class. This is why they were put in power and it shows that they are the faithful servants of capital and the enemy of the proletariat.
Finally, the Chancellor announced increased incentives for investment in new technology sectors such as the internet and telecommunications. This is touted as one of the most dynamic and growing sectors of the economy, one that fits the vision of a modern Britain leading the way into the new millennium. The computer company ICL has announced the creation of 1,000 new jobs in the e-commerce sector. In Liverpool a new technology park promises to create 4,000 jobs. The Bank of Scotland has a call centre there already, employing 1,300 workers. In fact, call centres now employ nationally some 400,000 workers.
But the very growth of such a sector is symbolic of capitalism’s real plight: increasingly, capitalist trade is based on selling air, whether in the form of speculation on the future or the development of largely unproductive ‘service’ industries. This does not alter the fact that those who work in these industries experience all the realities of the proletarian condition. The strike by 4,000 BT call centre staff at the end of November - the first national strike at BT for 12 ynational strike at BT for 12 years - was proof of that. The strikers complained of the management culture of intimidation, bullying, threats of disciplinary action if targets are not met, understaffing and increased use of contract agency staff.
The BT strike is also part of a more general increase in combativity amongst workers. In the last few months we have seen a number of strikes involving postal workers, electricians, the Ford car workers, bus drivers in West London etc. A number of these struggles have begun as spontaneous movements, not as tame affairs manipulated by the trade unions. They come as a timely reminder that the class struggle is the workers’ only means of defence. Illusions in the well-being of the capitalist economy can only paralyse the struggle. The perspective facing workers everywhere is the intensification of attacks on their living and working conditions; the only valid response can be to intensify their own class resistance.