Jim Mortimer | ukwatch.net

The Evil of Gross Inequality

Ellie Keen — Wed, 02 Apr 2008 00:00:00 +0000

This is not an article about the recent Budget but about a social issue that is relevant for every Budget. It also has wider implications for economic policy. The issue is the gross inequality which exists in Britain in the distribution of wealth, income and opportunity.

What makes this issue of special relevance at the present time is that the inequality has been getting worse. The cost of living is rising at a faster rate than for many years. This has a disproportionate effect on pensioners, the unemployed, the disabled and millions of workers who have low paid jobs.

This recent and continuing rise in prices, accompanied by serious instability in stock exchanges, fluctuations in rates of currency exchange and in the loans market for property of all kinds, has not been caused by the British government, except that its support for the invasion of Iraq has certainly added to costs in many directions.

Periodic instability in the economy is an inherent characteristic of capitalism. It is an unplanned system motivated by the drive for ever greater private profit. As part of this motivation it seeks to hold down the purchasing power of very substantial numbers of workers.

Defective demand, resulting from lack of consumer purchasing power, can be offset for a limited time by demand stimulated by expectations of growth in new directions. The lack of planning, however, which is a characteristic of capitalism, leads eventually to periodic disruption. This disruption may be prompted at different times by a variety of apparently dissimilar events. Nevertheless periodic economic setbacks of varying intensity are an inevitable feature of capitalism. The pain is felt by millions of working people through unemployment or attacks on living standards or even through war caused by economic greed for markets, for areas of investment for future profit or for the control of raw materials or other supplies.

There are a number of causes of the current world-wide rise in prices. There is increased demand for oil, attributable in part to the industrial expansion of China and India, but aggravated by war in the Middle East. There is a rising demand for consumer goods, including grain and other farm produce, again stimulated by the developing world. The lifting of millions of people from poverty and periodic famine is not a ‘calamity’. It is a welcome development.

Climate change has also already begun to affect the output of certain primary goods. Drought in some areas, excessive rainfall in others, turbulent weather and flooding have all contributed to uncertainties in the means of life for millions of the world’s population.

The economy has also faltered seriously in the USA because of the scramble for private profit in the market for property loans. The financial disturbance has spread to many other capitalist countries, including Britain.

It is at the very heart of the tradition of the labour movement to seek to eradicate the evils of capitalism. Gross social inequality is one such evil.

There are still far too many children in Britain living in poverty. It is to the credit of the government that they have acknowledged this fact and through the payment of family tax credits have reduced the number in poverty. Nevertheless it seems likely that the target of poverty elimination will not be achieved by the target date. More action is needed.

In 1997 pensioners were promised that Labour would defend the basic state pension, without means-testing, and would ensure that it remained the foundation of pensions policy. It also pointed to the ‘unfair lottery of community care’ and accused the Conservatives of betraying a generation of older people who were promised care from the cradle to the grave.

Means-testing for supplements to the basic state pension is now a strong feature of the system and the link to earnings in annual pension increases, originally introduced by Labour, has not been restored. There are many elderly people, other than in Scotland, who still have to pay for care.

Since 1997 the very rich in Britain have become even richer, whether measured before or after tax. A recent report of the Institute of Public Policy Research pointed out that over the past 10 years the average earnings of British employees have gone up by 45 per cent but for the lead executives of the top 100 companies the rise had been six times as fast. The rise had not been 45 per cent but 288 per cent. The richest one per cent have seen their share of total income double from 6.5 per cent to 13 per cent.

Labour must address itself to the gross inequality that disfigures British society.

The Democracy of Political Funding

Ellie Keen — Mon, 11 Feb 2008 02:11:27 +0000

Labour’s traditional form of fund-raising was an example of democracy in action. It depended overwhelmingly on very modest contributions from millions of supporters, the great majority of whom were working people and pensioners.

In the constituencies, money was and still is raised from members by subscriptions, donations, raffles and functions organised by voluntary supporters. Among the affiliated organisations the individual contributions are also at a very modest level but there are millions of contributors. Much of the money is collected through trade union political funds. Opponents of Labour often speak of this money as though it gives Labour some kind of unfair and undemocratic advantage.

How wrong these critics are! The right of working men and women, members of trade unions, to collect and distribute money to influence political and economic policies affecting their welfare, their employment prospects, their pension arrangements, education, health provision and the need for international action against war has a long and worthy history. It is part of our democratic heritage.

From the earliest days of the industrial system workers sought to protect themselves and their children against cruel exploitation. One obvious way was to seek legal protection. Hence the very early agitation for control of working hours of women and children in textile factories and for safety in mines and all industrial workplaces.

This struggle for minimum legal standards in employment continues to this day. Much has still to be done, for example, to achieve equal pay for work of equal value, an issue of special concern to women. Similarly, hundreds of thousands of workers have been adversely affected in recent years by changes or threatened changes in occupational pension arrangements.

Trade unionism in the workplace coupled with political action are the keys to progress. This is why millions of trade unionists voluntarily recognise the need to contribute to the political funds of trade unions.

An important stage in the evolution of trade union political funds was centred on the struggle in the early 20th century for the payment of Members of Parliament. This demand was in the Charter in the 1840s when the early working class were seeking the right of parliamentary representation. How could working people stand for parliament and, if elected, live as an MP without financial support? Trade unions raised money to sustain MPs who were seeking to promote legislation for the protection of labour.

In 1913 a Trade Union Act was passed, following sustained agitation against restrictions imposed by legal decision, which established the right of unions to pursue certain political objects. The law has been changed from time to time and the relevant legislation now dates from 1992.

Under the law as it now stands a union must, if it wishes to ‘further political objects’ as set out in the Act, get the approval of the membership in a ballot vote. If, and only if, a majority is secured, can it then establish a political fund. This fund must be separate from the normal union funds. Any member who objects to contributing to this separate fund has the right to ‘contract out’. They must not in any way be excluded from any other right of union membership. The existing law defines what is meant by ‘the furtherance of political objects’. Any expenditure of money for these political objects must be taken from the separate political fund and not from the general funds of the union.

It will thus be seen that the law on the political funds of trade unions is not an example of privilege. It is indeed restrictive, but it imposes restrictions which the unions have accepted and surmounted by their democratic endeavour. Thus even before a political fund can come into existence in a union, there is in real life a debate about it. If the policy-making body of the union decides in favour of taking a ballot the issue is then submitted to a legally controlled ballot vote of the entire membership. If, and only if, a majority is secured can a political fund be established. If and when the fund is established any member who objects to contributing has a right to ‘contract-out’. They must not suffer any loss of rights in the union.

Trade union political contributions are an example of democratic action. They are not to be confused with or placed in the same category as big donations from wealthy aristocrats or businessmen, irrespective of the political party they favour.

A Divided Society

Ellie Keen — Sun, 30 Sep 2007 09:10:54 +0000

One of the fundamental criticisms of capitalism is that it produces enormous inequalities in income and wealth. These inequalities are not the product of effort personally made in the course of labour but of the division in the ownership of productive resources and the commercial and financial structure that is part of this pattern of ownership.

To put it more bluntly, the great majority depend for their income on the sale to an employer of their ability to work. A much smaller number depend for their income on the surplus they gain from the employment of others. The difference in rewards can be, and sometimes is, enormous.

This is not to assert that everyone falls into this stark division. There are some within our society who combine modest ownership with consistent personal effort. There are many shopkeepers, small traders and farmers who fall into this category. They, however, are not the recipients of huge incomes.

There are also some within the professions who enjoy a very comfortable income and life-style as a reward for their special knowledge and contribution. Similarly, there are some — of whom a small minority of professional footballers and the stars of screen and popular music are examples — who receive high incomes as a reward for their very unusual talent often accompanied by a short career.

In addition to those in society who are counted as ‘actively employed' there are millions of others who are not in paid employment but who, nevertheless, make a very valued contribution to human welfare. Many combine more than one role. They go out to work and also work in the home, looking after a family or elderly or infirm relatives. Very few of the millions within these social categories have other than very modest incomes.

Finally, there are the pensioners, the unemployed and disabled people. The majority live on low incomes.

The stark fact about British society is that for many years now, including the years since 1997 when Labour was elected to office, the inequality of British society has not lessened. On the contrary, it has widened.

Only a few weeks ago it was widely reported that boardroom pay at Britain's top companies soared by 37 per cent last year. Full-time directors received big increases in basic salaries, bonuses and benefits from share allocation and option schemes.

The average total pay of chief executives in these companies was said to be £2,875,000 per year. The percentage rate increase in their total pay was reported in The Guardian as approximately 11 times the rate of increase of average earnings for all employees and approximately 20 times the rate of inflation as measured by the consumer price index.

It was also widely reported that in the City of London alone, annual bonus payments amounted to more than £14 billion. These increases were higher than in previous years. But they follow a long-term trend during which the rewards going to the people at the very top of British industry, finance and commerce have been rising proportionately much faster than the pay of working people, small owners and pensioners.

This social contrast between the very rich and the rest of society is indefensible. When asked about the rise in income at the very top of society the Prime Minister, Gordon Brown, did not defend it but he did not condemn it. His reply, in substance, was that the ‘top people' should exercise responsibility.

He offered this reply at a time when the government were denying the prison officers a very modest annual increase of 2.5 per cent recommended by an official pay review body. The government was insisting that this should be staged, the effect of which would be to reduce the annual increase to 1.9 per cent.

Pay review bodies, the members of whom are appointed by ministers, are normally set up where real collective bargaining is denied to the workforce — as, for example, the armed forces — or where the right to strike is forbidden by law. This latter provision applies to prison officers.

There is no justification for the government's attitude to the recommendation made for the pay of prison officers. By no stretch of reason can it be argued that the recommended increase is unjustified. It is less than the average annual increase of other workers and it is very much less than the top people in British companies have given themselves this year. Why does a Labour government act in this way? It is wrong and the whole labour movement should say so.