Capitalism’s New Economy - The Case of the UK

Part Five: The Working Class

A knowledge of proletarian conditions is absolutely necessary to be able to provide solid ground for socialist theories, on the one hand, and for judgements about their right to exist, on the other; and to put an end to all sentimental dreams and fancies pro and con.

Engels, Preface to the German edition of ‘The Condition of the Working Class in England’, 1845

With this final part of the investigation into contemporary capitalism’s self-styled ‘service’, supposedly ‘knowledge-driven’ economy it is time to turn to the current situation of the working class. By necessity this can be no more than a broad overview of a picture which will become clearer as we supplement what we have already written (for example on themes such as pensions) with more detailed exploration into the changing circumstances of working class life and work.

For revolutionaries it is not enough to understand that, despite capital’s carefully orchestrated avoidance of the term, the working class still exists, nor even that the class struggle is intrinsic to capitalism’s existence. The basic tenets of the communist programme have not changed over the past thirty years nor has the central aim of the revolutionary organisation to establish its political presence inside the class. However, after more than three decades of capitalist crisis and turbulent change it would be naive to suppose that the way we approach this task remains unchanged whatever the situation of the working class. Our interest in the current condition of the working class is more than sociological. Without an accurate picture of the working class today any attempt to remind workers of the significance of the communist programme is liable to fall on deaf ears. Despite the pitfalls involved, we have no alternative but to rely on official statistics and capitalist financial and business surveys - which are often more significant for what they reveal in passing than for their original focus and in any case which we interpret from a totally different class standpoint. Here, then, is a reminder of some of the significant changes in the situation of the working class touched on during this survey of the ‘new economy’.

Restructuring the Working Class

As we have seen, the financial and retail sectors now dominate the UK economy. So-called business and financial services now account for about one in five jobs in the UK, compared, for example, with about one in ten in 1981. The statistics of course do not reveal the devastating series of attacks by capital on the whole working class which were necessary before this situation could come about. The official figures tend to draw attention merely to the relative decline of manufacturing employment but the triumph of the new economy involved much more than workers simply being re-employed or even retrained to do one job rather than another.

Many workers who found themselves unemployed were encouraged to set up their own business or else managed to find work, often doing the same job as before, contracted as ‘self-employed’. - In other words, they were now responsible for paying their own National Insurance stamp and finding their own means to supplement the declining state pension. Between1980 and 2001 (the last Census) the number of self-employed rose from 2.3 million to 3.4 million, or 13 per cent of the workforce! Interestingly enough, a study for the DTI (Department of Trade and Industry) found that,

The increase in the total number of enterprises since 1980 has been similar to the increase in the total number of self-employed, “this shows most of the growth has been in one and two person businesses”.

This in itself is telling evidence of the domination of existing monopolies in the new economy. For workers who embark on the course of setting up their own firm, it is a precarious business since,

... roughly 10 per cent of all new businesses registered for VAT fail within a year, and about 35 per cent fail within three years. (1)

This confirms the impression that for many workers self-employment does not so much mean their permanently joining the ranks of the petty bourgeoisie as their sliding between self-exploitation and becoming even more precarious wage workers. (Especially since an unspecified number of self-employed never even dream of setting up their own business.) Nevertheless a significant part of the proletariat has been ‘privatised’ and removed from the collective existence of the working class.

Where workers did not lose their livelihoods through outright closure of firms or plants they were obliged to submit to a significant deterioration in their conditions of employment as their bosses reneged on long-standing terms of agreement on everything from pensions to overtime pay and the structure of the basic working week. Moreover the privatisation of public utilities (gas, electricity, telephones, water) and the state’s withdrawal from hitherto protected heavy industries (steel, shipbuilding, coal) swelled the ranks of the unemployed far beyond the factory production line. By the mid-Eighties even the official unemployment figures registered more than three million. Many of these workers were men whose wages had been based on the standard post-war wage negotiation concept of the ‘family wage’, who were used to seeing themselves as the household breadwinners, and who would never have a job again. Employment in the coal industry, for example, has fallen from 220,000 at the time of the miners’ strike to 7,000 today. According to a recent report on the progress of economic regeneration in the old coalfield areas “sixty per cent of the coal job losses since the early 1980s have now been replaced by new jobs for men in the same area”. (2) Which means that 40 per cent - or 90,000 such jobs - have not been replaced. Nor do these figures tell us what kind of new jobs have been created by the various regeneration schemes with their range of tax breaks and other inducements for companies to invest. (Although the springing up of retail parks on bulldozed industrial sites gives us some indication.) What we do know with certainty is that the whole idea of the family wage is out of the window along with the heavy industrial jobs which were at its core.

This situation is reflected in the higher employment rates for women in the ‘new economy’. With 53% of all women, or around 75% of females of working age now wage workers, the gender composition of the workforce is just about fifty-fifty. Even now, more than thirty years after the Equal Pay Act, the prime advantage for capital in the employment of women is that their labour power is cheaper. The official line on the situation of women workers is that the gender pay gap is improving. According to the Office of National Statistics, in 2002 the average hourly earning of a woman in full-time employment in the UK was 82% of that of the male average (compared to 74% in1986). (3) Again, however, this ‘fact’ says nothing about what has happened to the average male wage (in terms of actual purchasing power, for example) while it glosses over the fact that poorly paid women workers predominate in the 26% of the workforce who work part-time. Nevertheless, for many sectors of the new economy - such as the 375,000 who work in call centres - the injunction of ‘equal pay for equal work’ suits capital very well since men and women are simply employed at the same levels of low pay. - Or rather, the subtle differences in rates of pay are increasingly based on assessments of individual ‘performance’ rather than traditional categories of length of service or the entitlement of a higher wage rate for the male worker. Nowadays the typical family no longer survives principally on the wages of a single breadwinner but is dependent on the combined wages of both man and woman. Combine this with the acknowledgment that “British workers work longer hours and have shorter holidays than any other country in Western Europe”, (4) what does this tell us about the emancipation of women? Instead of all workers, both male and female, enjoying more relaxed lives as the number of hours they worked for capital were reduced, the tendency towards a shorter working week has been dramatically reversed over the past two or three decades.

In short, without being able to pursue the details here, there is plenty of evidence to show that the economic ‘restructuring’ which heralded in the new economy and which has been capital’s response to its own profitability crisis, has resulted in wage workers selling their labour power on worse terms than in the period of post-war prosperity. This is not an argument for workers to build new trade unions. The increasing prosperity of the working class in the post-war period was not the result of union negotiating power, rather the latter stemmed from the bosses need to have controlled limits to workers’ demands. However, we must not lose sight of the fact that for this new generation of workers that period is no more than one of historical hearsay, a period which the media are happy to hark back to as a time of rampant trades union power, of disruption to production and anarchy on the streets. In this context we have to be careful to separate our own critique of the unions and their role in leading workers to defeat from the reactionary capitalist press which presents the unions and the working class as one and condemns any sign of resistance by workers as threatening a return to the ‘union power’ of the Seventies and Eighties. As it is, the decline of the unions since the late 1970s when 58 per cent of workers were union members to today when membership stands at around 7.4 million, or about 26.6 per cent of employed workers, is by no means complete. (5) Unions are still playing their role of sacrificing workers’ interests as they negotiate terms acceptable to the bosses, notably in the public but also in the private sector. If their role is not more prominent it is because, for the moment at any rate, capital has more effective weapons preventing workers from embarking on collective struggle.

‘Life is not determined by consciousness but consciousness by life’ (6)

It is tempting to explain the current passivity of the working class entirely in terms of the weight of capitalist propaganda with its perpetual claim that socialism (meaning old Labour and state-run industries) is dead and communism (meaning a Stalinist police state) is not a viable option and in any case this is thankfully also dead, along with the cloth-capped working class. However, there are other, more material chains reinforcing this current generation of wage workers’ reluctance to struggle.

First there is the weight of debt hanging round the necks of the larger part of the working class. With borrowing against mortgages at a record high and the level of personal debt exceeding annual income even the prospect of a single day of strike action is a formidable step for the home-centred, consumption-oriented worker.

Next, there is the not-so-hidden reserve army of unemployed. There have been so many changes to the official claimant-count based definition of ‘unemployed’ that even the state itself does not believe its own figures. Nowadays even the Office of National Statistics releases a double version of the unemployment rate: the first based on the number of ‘claimants’, i.e. those who have jumped through all the bureaucratic hoops and who have managed to qualify for benefit. This is always the lowest figure. The second “internationally preferred unemployment measure” (7) supposedly shows the total number of jobless and this is always the higher of the two. At the beginning of the year the Financial Times reported the fastest quarterly(!) rate of increase in UK unemployment for thirteen years, with the ‘preferred’ measure showing 1.53 million out of work by the end of November 2005. (Up by 111,000 in three months.) As for the claimant count rate, this had gone up by more than 84,000 over the year and stood at 909,100 by December. The gap between the one and a half million officially recognised as being out of work and the nine hundred and nine thousand ‘claiming’ (not necessarily receiving) benefit gives some idea of just how much of a threat to existence the prospect of becoming unemployed can be.

Even so, these figures themselves disguise the real level of unemployment. When ‘economic inactivity’ amongst those of working age is measured then the figure is far higher, and growing: from 7.8 million in April 2004 to 7.9 million in December 2005. In other words, more than twenty per cent of the labour force is ‘economically inactive’, including students and people on training schemes and the much-publicised 2.7 million or so who are on incapacity benefit. Today the government is preparing to attack people on incapacity benefit but it is not sure how to go about it. During the initial period of the dismantling of heavy industry it was used as a means to disguise the extent to which workers had been thrown on the scrap heap and it still serves this function today. For example, former coalfield areas still rank amongst the highest for take up of incapacity benefit, especially amongst men and particularly amongst men over fifty years old.

In fact 30 per cent of all workers over fifty are outside paid employment and classed as ‘economically inactive’, as are a growing number of young people for whom school days never seem to end. 75% of 16 year olds, 66% of 17 year olds and 40% of 19 year olds are in full time education. Another 20% of 17 year olds are on some sort of government training scheme which leaves 10% in full time work and 4% in part time and 3% ‘doing something else’ so that the official rate of unemployment for 17 year olds is 6 per cent! Similarly with 19 year olds: 40% are in full time education and 35% are in full time work, yet the unemployment rate for this bracket is 6%. However, exclusion from the wage labour force extends to all ages and both genders but whereas more women have entered employment over the last two decades a growing proportion of men have joined the ranks of the ‘economically inactive’. The disappearance of whole sectors of traditional male jobs is reflected in the fact that by 2001 8% of working age men under fifty were classified as ‘inactive’. This compares with less than 1% in the mid-1970s. (8)

Perhaps the clearest single indicator of the extent of unemployment in the UK is the percentage of workless households. The overall average is no less than 16 per cent. Of course this figure hides regional variations - from 23% in Northern Ireland to 11% in the South East and hides the fact that the highest unemployment rate in Britain is in the London borough of Newham.

The point here, however, is that the threat of unemployment is a real one. Combine this with the fact that more workers are joining the black economy which “accounts for anything between £53 billion and £137 billion a year and could involve from 1.4 million to 3.6 million workers” (9), with the state’s ‘welcoming’ of hundreds of thousands of migrant workers from Eastern Europe, the real purpose of which was revealed last year in a speech by the Governor of the Bank of England who noted that “the inflow of migrant labour, especially in the past year or so from Eastern Europe, has probably led to a diminution of inflationary pressure on the labour market...” In other words, wages are being held down.

In this context it is unsurprising that the working class has not returned to the money militancy of a previous generation. What is surprising is that capital has not launched a more comprehensive attack on wages and conditions. - That is, until we remember the contradiction capital faces in this globalised world where the ‘consuming power’ of the proletariat in the rich imperialist heartlands is supposedly the engine for global growth. So the attacks are less direct, with the state and the bosses steadily eating away at pensions and the social wage while workers spend and extend their credit today and hope something will turn up for the future.

This situation cannot be maintained indefinitely. When the ‘giant hedge fund’ - which is how the Financial Times recently described the UK economy (10) - eventually collapses there will be massive repercussions for the working class, not only in terms of job losses but in terms of the collapse of a whole consumerist way of life. The situation will demand a response from the working class as a whole and there will be no shortage of reactionary nationalist parties ready to lead workers further down the road of capitalist barbarism. Only a political organisation that genuinely stands for workers’ interests will be able to halt that course. Those interests are none other than the communist programme of international solidarity for the overthrow of capitalism and the establishment of a global community which produces directly to meet human needs. This is the only practical way the working class today can look towards a better future.



(1) From a TUC Economic Report: Small Firms - Myths and Realities, see Trades Union Congress website.

(2) Report on the work of Sheffield Hallam University’s Centre for Regional Economic and Social Research in the Sheffield Star, 4.3.2005

(3) Office of National Statistics (ONS), ‘The Jobs People Do’, at: .

(4) See ESRC (Economic and Social Research Council) website: Society Today. Another report by the TUC reckons that 4 million workers in Britain regularly work 48 hours per week.

(5) The figure is for 2003, ONS figures quoted by the ESRC ibid.

(6) The German Ideology.

(7) See Financial Times ‘Unemployment’s fastest rise in 13 years’, 19.1.06.

(8) Information from the ONS ( and and The Financial Times, 21.6.01.

(9) Professor Colin Talbot, ‘Black Economy Goes Far Beyond Illegal Immigrants’, University of Nottingham .

(10) Martin Wolf, writing in a series on ‘New Britain’, 18.9.06.

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