Changes in Material Conditions of Working and Middle Classes

At the most general level, the period covering the lives of older people today, and the social memory of others, begins in 1945, a high point of working-class inclusion with the election of a Labour government which aimed to change society radically in favour of ordinary working people:

The post-war government of Clement Atlee came in... on the crest of a wave. Hugh Dalton wrote in his memoirs: ‘That first sensation, tingling and triumphant, was of a new society to be built; and we had the power to build it____We felt exalted, dedicated, walking on air’. (Williamson 1998: 162)

It was also the beginning of a period in Britain which established, across both main parties, a political consensus on the aims of full employment, social security, universal education and decent living standards; this was a consensus which was to last thirty years. By the mid-1970s, much of the immediate post-war settlement was under threat; the British Empire had all but drawn to a close, British world eminence in manufacturing industry was no more, and there was a general air of gloom about British economic fortunes, marked by the call to the International Monetary Fund for an intervention in 1976 (Burk and Cairncross 1992).

In this period, in the UK and elsewhere, there was a widespread perception among middle classes that they were ‘losing out’ in the face of working-class gains and ‘excessive’ union power (Bechhofer et al. 1978). At the same time, think tanks and pressure groups were forcefully restating the case for capital, framed as a reassertion of ‘enterprise’, ‘freedom’ and ‘individual responsibility’; chief among these was the Centre for Policy Studies, founded in 1974 by Keith Joseph and Margaret Thatcher and a source of right-wing thinking which came to be expressed in the subsequent Conservative regime (James 1993). This was, in relation to what went on in the decades before, a right-wing revolution; in the longer run it can be seen as a reassertion of the prerogatives of capital over labour, with consequences for industry and manufacturing in particular, for the rise of finance, the decline of unions, the loss of employment rights and escalating inequalities in housing, income and wealth. The five or six decades preceding this restatement of the power of capital were subsequently seen to be an interlude in the long march of capitalism. Speaking of the USA but relevant elsewhere, Thomas Palley wrote:

The commitment to full employment was abandoned as inflationary, and instead controlling inflation was made the primary concern. That justified tight monetary policy and attacking unions...and other worker protections. Side by side, neo-liberal economic policy promoted a new form of globalization that brought increased foreign competition from low-wage economies. (Palley 2011)

He went on to say that the ‘electoral victories of Thatcher and Reagan symbolized the triumph of neoliberal economics’ and indeed neo-liberalism

became the most commonly used term to describe the ideas underlying this fundamental change in the political and economic character of the West generally and the UK in particular. Saskia Sassen also writes of this distinct break in the character of contemporary capitalism. Writing in 2010 she says:

This paper is part of a larger project where I develop the thesis that the postKeynesian period has now taken on a clear systemic shape. Briefly put, where the Keynesian period brought with it an active expansion of the population systemically valued as workers and consumers, this latest phase of advanced capitalism does not. In the last two decades there has been a sharp growth in the numbers of people that have been ‘expulsed’, numbers far larger than the newly ‘incorporated’ middle classes of countries such as India and China. (Sassen 2010; for more on this see also O’Brien and Leichenko 2003)

One of the first visible consequences of the new regime was the decline in manufacturing in the UK. As Kitson and Michie summarise:

Broadly, for almost a century, from 1870 to I960, manufacturing played a key role in the development of the economy, under-girding success in other sectors of the economy and securing rising living standards. The subsequent fifty years, from I960, have witnessed a relative decline of the UK manufacturing sector—relative to other sectors of the economy, and relative to the manufacturing sectors in other countries. (Kitson and Michie 2014)

With the demise or decline of former leaders in manufacturing in the UK, employment in the sector fell from around 40 % of all employment in the 1940s to around 11 % in the twenty-first century. In the first few years of the Thatcher government, up to two million jobs were lost in manufacturing in the UK. What has remained is a high-value, high- technology industry with a skilled workforce and high rates of pay. But the large employers in engineering, shipbuilding, textiles and chemicals, as well as high levels of employment in mining, have receded, leaving behind whole areas of the country in the North East and North West of England, Wales and Scotland, where little remains of the former lifeblood of cities and communities.

The British government also embarked on a campaign against labour unions, weakening them and defeating strikes, most notably in the grim and brutal battle with miners in the years 1984—1985. As well as government interventions to weaken unions, the decline of types of employment in which union membership flourished led to a large fall in the proportion of the workforce which was unionised. In 1980, establishments with ‘a union recognised for collective bargaining purposes’ were 64 % of the total, and in 1998 this was 42 %; in 1980, 62 % of workers were union members, and by 1998 this figure was 36 % (Machin 2000). By 2014 the percentage of the workforce who were union members had fallen to 25 % (Department of Business Innovation and Skills: Trade Union Membership, Statistical Bulletin, 2015). Many of the newer types of employment were unlikely to be unionised and therefore subject to greater job insecurity. One of the means by which corporations sidestepped unions or worker—employer agreements was through mergers and acquisitions. Typically a company showing poor results threatens to close a plant; investors move in and offer to buy the company and keep business going, but only in return for ‘changes in working practices’. In January 2015 a report in the Financial Times provided a characteristic example. The report noted that ‘Cadbury’s US owner will invest ?75M in exchange for changes in working practices’ (Brown 2015, Financial Times).

Along with the decline in manufacturing employment in the UK came, of course, steep declines in manufacturing output, which fell through the 1970s and 1980s. This has left the UK with a trade deficit in manufacturing and, as Kitson and Michie (p. 30) observe, ‘an over-reliance on the banking sector’. Indeed, the rise of finance is not simply as a ‘sector’ in the UK economy but also as a primary characteristic of contemporary capitalism, a change referred to as ‘financialisation’ (Peters 2011). This refers to the greatly heightened role of financial instruments, especially with reference to the deployment of debt and hedge funds, in the ownership of business, and renewed pressure from shareholder interest in profits and wages. This again, in a theme we referred to earlier, marks a signal break from the post-war system.

‘Current developments in finance and corporate governance mark a fundamental break with post-war developments. Capital has re-asserted its power over organized labour and labour markets not only in the US and UK but throughout Western Europe as well’ (Peters 2011: 73). Peters identifies three important changes as being the ‘rise in finance and shareholder systems’, the ‘expansion of mergers and acquisitions’ and ‘financial pressures on collective bargaining’ (p. 73). Managing officers and chief executives are incentivised to cut costs and generate fast-return profits by having elements of their own pay tied to the market value of the business:

Under pressure from shareholders and hedge funds for better earnings [and] directed by Chief Executive Officers on short term contracts with compensation tied to share prices and bonuses, the vast majority of companies have adopted more aggressive.. .investment and management strategies. (Peters 2011: 74)

In July 2015 the Guardian reported that the chief executive of Amazon, Jeff Bezos, had benefited from a share price of the company which had risen by 18 % in a very short period. The share price rise added more than $7 billion to his personal fortune in less than 20 minutes (Kasperkevic 2015, The Guardian). Of course, he is the founder as well as the chief executive of the company, but it illustrates the extraordinary gains which can be made.

One constant theme in Peters’ observations, and that of others in this field, is the reference to the pressure on workers, the defraying of union power and the downward pressure on wages. In his discussion of ‘postfordism’, Vidal, like Peters, emphasises the ‘shareholder value model of the firm’ and the consequent strategies of managing executives (Vidal 2013). But he also cites the significance of ‘outsourcing and de-unionisation’ and the extension of the financial model and strategies of management from manufacturing (most open to outsourcing and offshoring) to ‘retail sales, leisure and hospitality’, which are less open to outsourcing (Vidal: 459). Managers, he argues, ‘

attempt to gain more mental effort and commitment from workers to engage in flexible work practices, but are unable to reciprocate commitment and provide security because of increased market pressure due to the rise of shareholder value, deregulation and internationalisation (Vidal

2013: 453).

All these changes are facilitated by rapid advances in digital technology, which influence the high-speed deployment of financial instruments and investments at the corporate level and the now mundane credit card use at the personal consumer level (Froud et al. 2007). In currency markets investors can move funds at the speed of light; daily trading ‘on world currency markets sky-rocketed from $18bn in 1977 to $1.8tn per day by 2008’ (Vidal 2013: 459). These features of capitalism, often referred to politically as ‘neo-liberalism’, showed themselves not only in production and services, but also in housing. In what they call ‘the financialisation of the social project’, Forrest and Hirayama suggest that, whilst in the Keynesian era ‘home-ownership systems ’ were guided by public policies and the principle of ‘social cohesion’, now they are entirely subject to ‘markets and market principles’ (p. 10). And thus, they conclude,

‘the neoliberal solution to the housing affordability problem involved the progressive financialisation of home ownership and the distillation of tenure to its essentially monetary elements (Forrest and Hirayama 2014: 242).

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