LOOSEN YOUR BELTS!

Public sector workers are caricatured as an indulgent lot – always complaining about pay while raking in handsome pensions. I don’t imagine Council workers expected their decision to strike to go down particularly well with the Daily Mail, nor the “Taxpayers Alliance” (who have been curiously, perhaps demurely, absent from all those anti-war demos), but all this moralising misses the point.

The majority of lower-paid Council staff – the street cleaners, caretakers, housing officers, benefits advisors, receptionists etc – have seen their real-term salaries stagnate or even drop in the last decade. Such "prudence" was meant to be the vehicle for economic growth (low wages = high profits is as basic a formula for capitalism as you can get). But aside from the fact that this growth has only benefitted the most well-off (nearly half a million older people and children slipped below the poverty line last year), we are now seeing that its foundations have been very precarious indeed – effectively, a bubble balancing on another bubble.

For the majority of public and private sector workers on low to middling incomes, the cost of living is rising exponentially. The Government estimates inflation at around 3% (still almost double what the Chancellor thinks public sector workers should settle for next year), but the Retail Price Index tells a different story. On average, the price of food has risen by 8% and the cost of utilities by 10%. The cost of this lot alone has shot up by 5% in the last year. If the economic forecasts are correct, this same majority of low-earners will continue to get poorer year-on-year. It’s neither surprising nor unwelcome that people are not standing for it.

Capitalism is renting itself asunder because of its contradictions. Neoliberalism had to deal with a particularly knotty dilemma. On the one hand, profits depend on consumers having money to spend; but equally, profits depend on capping salaries. It solved this particular antinomy by the introduction of cheap loans. In Britain, real wages have for the last few years grown weakly, if at all, yet consumer spending has risen by 40% since 1998. Britain’s consumers are now £1.2 trillion in debt.

This has come back to bite the financial sector, with banks like Northern Rock seeing their reckless involvement in the sub-prime racket effectively bankrupt them. And before we’re won over by schadenfreude, the credit crunch is not the result of a few boardroom idiots. It’s symptomatic of a wider crisis. The spoils of capitalism always flow to capitalists, but its debts must be paid by workers. That’s capitalist justice for you – surely more worthy of hand-wringing than a few uncollected bins.