While watching the prime ministerial debates prior to the election, inevitably there came the moment that I was awaiting, with a rather unhappy feeling of déjà vu. This moment was during the so-called economic debate and if you listened to what all the leaders of the main political parties were saying, it honestly sounded as though the vast majority of Britain’s economic woes were the result of lazy feckless unemployed people and illegal immigration. All three leaders of the mainstream political parties raised the question of the long-term unemployed, treating these people as though they were voluntary unemployed and argued that the solution was, of course, to make benefits contingent on willingness to work. Giving rising unemployment due to the economic crisis, I was left wondering to what jobs these three doyens of our political system were referring.
Given the blessed union that has led to rise of The Coalition government (to whom I will now refer to as the Twhigs ... a tiny bit of Tory and lots of good ole fashioned pre-Keynesian Whig), this question was undoubtedly going to be addressed asap. Sure enough, the Works and Pensions secretary (Ian Duncan Smith, Tory, MP for Chingford and Woodford Green) today called for a "root and branch" reform of Britain’s welfare system. According to the Twhigs (and New Labour and the Tories that preceded them) the problem is that too many people are on benefits and incapacity (known as disability in the US), that they are lazy and feckless and do not want to work and that is one of the main problems with the UK economy. According to the BBC, there are 1.4 million people that are on long-term benefit in the UK for 10 years. So, what is to be done?
According to the Twhigs, we need to create a "welfare to work" programme and to make benefits contingent on willingness to work; as though this has not been the policy of all preceding UK governments since Thatcher. Essentially, once again all we are hearing is the usual ideological and punitive attacks on the long-term unemployed and poor as though they had created the situation in which they find themselves.
Titling this diary with the response from Ebenezer Scrooge to people collecting alms for the poor in The Christmas Carol seemed to be the most appropriate response to the latest in a series of attacks on the poor and unemployed. Herein lies my bizarre feelings of déjà vu ... this was the exact same argument and analysis that led to the creation of the New Poor Law in 1834 (http://en.wikipedia.org/...). This Whig Act (passed along with the support of the Radical Party) lead to the suspension of outdoor relief and seasonal relief (for those working in agricultural production) and the poor were placed in workhouses (with families separated upon entrance to the workhouse) that adhered to the notion of lesser eligibility advocated by Jeremy Bentham in which the conditions of work and wages in the workhouses had to be worse than the conditions of work outside the workhouse. What underlies this latest attack (and all the others since Thatcher onwards) is the question of the rights of the poor in our societies and the movement from the notions of entitlement to relief (see the 1795-7 Poor Law Amendments, http://en.wikipedia.org/...) to eligibility for relief (New Poor Law of 1834) to entitlement and provision of jobs (Keynesian period up until the end of the late 1970s) and back towards eligibility and compulsory employment (work-fare, welfare to work programmes) that have characterised the social policy towards the poor under capitalist economies.
There is a lot wrong with this analysis that treats the poor as lazy, feckless, and morally inferior, but the primary problem is that it is based upon a completely inaccurate understanding of the causes of unemployment in a capitalist economy.
- The vast majority of people on disability and unemployment actually would love to work; they are neither feckless nor lazy. This argument relies on an understanding of unemployment as a voluntary phenomenon, which is an inaccurate reading of the reality of unemployment in a capitalist economic system.
- The vast majority of people are involuntarily unemployed. Long-term unemployment arises for several reasons all of which derive from the state of the economy and have nothing to do with people’s "immoral or unethical" decisions:
a) The deliberate destruction of industry/manufacturing (due to "inefficiencies and non-competitiveness" and part of an attempt to break strong industrial and manufacturing trade unions) and its shifting to 3rd world economies (where cheap labour means that less capital is needed for start-up and transfer and higher levels of profitability can be taken as compared to advanced capitalist countries). The UK cannot force its workers to compete with those in 3rd world countries, it is simply not feasible ... rather what is needed is pressure to increase wages in 3rd world countries to protect all workers and to provide a more coherent and just standard of living for all.
b) The use of more capital intensive techniques of production in advanced capitalist countries in manufacturing that still exists lead to increases not only in relative unemployment, but absolute unemployment (along with the deskilling of labour that was so apparent in the 19th and early 20th century and which was documented by Marx in Capital, vol I).
c) Linking into the second point above is the high levels of productivity in advanced capitalist countries. This means that unless the economy is sufficiently growing, essentially relatively less people are required to produce the goods and services of the country. Moreover, given point a) above, there is a significant decrease in multiplier effects in a service economy as compared to one in which there are significant levels of manufacturing (see Kaldor).
d) To belabour an old point (raised by Ricardo in Chapter XXXI of the Principles of Political Economy), Capitalists (of every stripe) are concerned with their net product (their profits) and increasing that; they really do not concern themselves with their overall output. In a service economy, in many senses this is magnified as they are not necessarily producing things that require consumption by the working and middle classes, so concern over their purchase of the product is lessened. Clearly, for those producing a product purchased primarily by working and middle class people, then ability to purchase and effective demand (and expected demand) is relevant as it will determine both level of output and future investment decisions.
e) In general, all of the above means that unemployment is a normal part of the capitalist economic system and that what we need to do is recognise this reality and actually provide for the members of society rather than punishing them and blaming the victims of the system.
- Economic reality is such that unemployment is rising (U3 is 2.5 million, up 43000 on the previous published measure; this does not take into account those who have fallen off of benefit; http://www.statistics.gov.uk/..., for a summary, http://www.statistics.gov.uk/...). Whatever recovery is happening is looking to be a jobless one. That means that they will also need to consider not only long-term unemployed, but also those that have been unemployed due to the economic crisis. One major problem is that current levels of unemployment benefit are insufficient and there are not many jobs being created to cover these people (whom may or may not be appropriate for minimum wage work).
- Given that the minimum wage in the UK is not a living wage (the minimum wage was not determined given costs of living) and that entering employment may actually lower your standard of living, what they are actually offering is poverty. In the UK, the vast majority of those living in poverty are the working poor. Of the working poor, the majority are those in part-time employment and in the service industry and the vast majority of those are women (http://www.poverty.org.uk/...).
- For those that would like to work, low wages, lack of child care, the costs of housing, electricity, water and gas, and the costs of living mean that it will cost them more in lost benefits (even though they are actually insufficient) than they will earn on the minimum wage. Is this government going to guarantee a living wage? Not that I have heard, in fact, neither Cameron nor Clegg accept the idea of a living wage in the UK (too much interference in the economy, introducing further problems with competitiveness, oh no!).
- The most obvious problem that I have saved for last is: what jobs? If they are insisting that people go to work, where are the jobs that are available for them to take up? You can insist that people go to work, but if there are no jobs, then how are they to work? If these jobs exist, why is short-term unemployment increasing? We know that the government is not going to create these mystery jobs; in fact, they are cutting jobs along with the budget (those are the inefficiencies that they keep referring to ... have you noticed that when they talk about workers and employment they always use the terms inefficiencies and non-competitive?).
We know from history that these punitive policies do not work. They do not eliminate unemployment, they do not eliminate poverty, they do not decrease inequality; all they achieve is nothing but punishment for the poor. If we are looking to the past for our solution, why not look at other solutions or ideas? Direct government jobs creation (either something like a WPA or creation of jobs in a government created green manufacturing) is a great idea, but for this Twhig government, which is all in favour of private enterprise carrying out this employment creation (again one wonders what planet they are living on), this policy is a non-starter. Another good idea that has been mooted and has its roots in the discussions of minimum wage legislation is the creation of a national living wage; again the London living wage has been rejected by both Clegg and Cameron, so forget the idea of a national living wage. Perhaps an idea that recognises the reality of unemployment in a capitalist system? One great idea that will actually combat poverty is a citizens’ income guaranteed to all irrespective of ability or willingness to work, but this obviously runs contrary to the notion of eligibility that underlies all recent discussions of social policy since Reagan and Thatcher.
Unfortunately, after listening to these all so-reasonable politicians, I am now waiting for the revival of the workhouse, privately run, of course, where the poor will be forced to turn up for lower than legal minimum wages, and charged for their inadequate room and board.