Our real wages and pensions are currently undergoing a precipitous fall. They are being devoured on one side by low wage growth, and on the other, by high price rises. Add to this household energy bills doubling, petrol prices skyrocketing, and increased mortgage costs. All these and more make up the ‘cost-of-living crisis’, which the government’s Office for Budget Responsibility (OBR) has warned constitutes ‘the largest fall in living standards since ONS records began in 1956-57’.

In addition to these attacks, private companies have also heaped pressure on workers, enacting a ruthless campaign of “fire-and-rehire” in workplaces. One of its most savage manifestations was the mass sacking without warning of 800 P&O ferry workers. These jobs were then contracted out to foreign seafarers at a fraction of the minimum wage. This happened barely a week after DP World, their parent company, reported an almost £700m profit in 2021, up 5% from 2020. Lawmakers have fulminated against the P&O sackings, accusing the bosses of being 'criminals’. But at the same time, they have torpedoed an attempt to outlaw “fire-and-rehire”, showing that they fundamentally approve of what the P&O bosses are doing. The P&O bosses, for their part, said they were powerless to do otherwise because of the forces of the market. In other words, they admit that the capitalist system left them with no other option than to screw the workforce. Of course, this is generally true worldwide. It’s only that the bosses don’t usually dare to say it.

Despite promising to ‘stand by’ the British people, as he claims to have done in the past two years, the measures introduced by the Chancellor of the Exchequer to help with the soaring energy bills are so derisory that one could have been forgiven for thinking that he had mistakenly read out his wife’s self-assessment tax return. The combined effects of a National Insurance allowance increase, council tax rebate, and temporary fuel duty cuts amount to savings of £21/month for someone on a salary of £30k/year. Such a small amount can do nothing to soften the blow of cost-of-living increases which, for the average family, will amount to £1,200 annually.

The cost-of-living crisis is the name for a many-headed attack on the working class. Yet despite its varied appearances, this crisis has one singular cause: that of the desperate measures that capitalists are forced to take to chase profit in ever more inhospitable conditions.

The ruling class looks for scapegoats

Official government outlets have blamed the crisis on Russia’s invasion of Ukraine in February, and while this has certainly made the situation worse by reducing energy supplies into Europe and increasing market volatility, inflation was already high during 2021, and energy prices had already spiked in September of that year.

High inflation has been erroneously linked to over-generous Covid-19 financial assistance schemes that the government was forced to introduce in the opening months of the pandemic in order to prevent economic collapse. It is typical that during periods of low growth the ruling class will blame working people for not spending more of their wages in order to stimulate the economy, but when inflation runs high, they will be blamed for being reckless with their money. In fact, this has not happened. Consumer spending has barely returned to its pre-pandemic level, and inflation is 7% and rising. The only notable effect of Covid-era relief programmes has been a slight increase in levels of savings which have been mostly concentrated in the savings of the wealthy.

The other side of the pandemic’s effect on the economy has been the disruption caused to supply chains. The average cost of shipping a standard container from Europe to Asia has increased from around £1,500 in 2020 to over £7,600 last year due to worker shortages and shipping backlogs. This price increase has been passed on almost completely to consumers. It is a strange indictment of our massively interconnected global supply network that small disruptions can completely gridlock it. The use of just-in-time inventory management, a successful means of scraping pennies off transportation costs, has led to a global supply network highly sensitive to even short-term supply constraints and labour shortages.

The ruling class escalates the class war

The move by central banks to raise interest rates is an attempt to make up for the fall in capitalist profits by farming debt in the form of payments on liabilities, a large part of which is held in the form of property mortgages, PCP car finance, and mobile phone contracts. Any significant rise in interest rates is extremely dangerous because of the massive amount of debt in the system and the chain of bankruptcies this could cause. It is also bound to reduce productive investment, the only investment which produces surplus value and the only way profit rates could be increased. Many capitalist critics see these moves as not addressing the root cause of the current inflationary crisis, which they claim is supply chain failures. However, whichever way interest rates travel, the working class will come out worse by losing more and more of their stagnant wages to interest payments, to higher prices, or to both at the same time, which is what we currently have. The only means we have of resisting these forces is to organise ourselves and struggle against employers for wage rises and other concessions which lessen our burden. But never will this system, however humanely managed, work for our direct interests. Capitalism is inherently based on the unceasing extraction of surplus value from the working class. In the wake of the destruction this brings, we will see our wages cut, our skies polluted and our quality of life plummet. This decline is a result of the contradictions of the system itself and will only get worse. Even formerly sober capitalist commentators, such as financial journalist Martin Lewis, are warning of civil unrest due to such dire conditions. These events are not caused by unforeseen circumstances or regrettable errors. They are an integral part of a campaign of class war unleashed on us, as demanded by a capitalist system in crisis.

But we do not have to knuckle under and accept this! Our rulers are telling us we must accept sacrifices, to pay for Covid-19, to pay for the war in Ukraine, or to pay for climate emergency. But all these things are products of the crisis of the capitalist system itself. We should fight all attempts to make us pay for the failings of this rotting system. Instead we should demand pay rises above inflation, support the struggle with strikes, spread the struggle to the millions of workers facing the same attacks and control our struggle with strike committees and mass meetings.

But even if we win short term victories, the bosses will find ways to take back whatever we have won and demand more sacrifices. In the long term, this system which produces only for profit needs to be destroyed and replaced with a global system producing for human need. We need to fight to build a global organisation which can give a lead in this struggle.

The above article is taken from the current edition (No. 59) of Aurora, bulletin of the Communist Workers’ Organisation.