The Cost of Living

The crisis impacting working people isn’t a result of blind economic forces — it is the result of a class war waged from above.

A flare tower rises above the ConocoPhillips processing plant at the mouth of the River Tees on 7 February 2022 in Teesside, England. (Ian Forsyth / Getty Images)

The year 2022 will, in all likelihood, be the toughest one for working people since the immediate aftermath of the 2008 Financial Crash.

After years of flatlining wages — the longest stagnation since Victorian times — workers face an all-out assault on their living standards: from heating homes to filling fridges, paying taxes to travelling for work, almost every aspect of day-to-day life is about to get harder.

In its response to rising inflation, The Bank of England was quick to lay the blame on workers, calling for wage restraint. But this crisis hasn’t been caused by an increase in demand. The proximate cause is a crisis in supply, chiefly of energy but also in the structure of the supply chain itself, against which the only protection that workers have is the fight for higher wages.

As is so often the case when it comes to the economy, the media has treated this crisis as if it was a force of nature — unfortunate, but unavoidable. The mechanisms of decision-making which create our economic realities have been obscured from view.

In the end, prices are not set by workers or by consumers, but by firms. This is one of the entitlements afforded to capital by the private ownership of the economy. So, when those prices go up, a decision is being made. In the case of Tesco, for example, Britain’s largest retailer, their decision is to increase the cost of food while sitting on an annual operating profit of £2.6 billion.

Much the same is the case in the energy sector, where the so-called Big Six raked in over £1 billion in profits on the eve of a truly astronomical hike in bills for their customers. British Gas alone saw a 44 per cent jump in its profits. And it isn’t only consumers who are sacrificed on the altar of these profits: they come months after British Gas forced through fire and rehire reforms that hammered the pay and conditions of its engineers.

When a crisis like the one we’re experiencing emerges, there is always a question: who pays for it? If the cost of production rises, will workers and consumers bear the brunt or will profits be squeezed? In an economy dominated by private ownership, this is in reality not much of a question at all. Profits will be protected; everything else is a lower-order concern.

The contrast between Britain’s privatised energy sector and one with some degree of public ownership and accountability can be seen next door in France. While Ofgem raised the maximum amount suppliers could charge for energy here by 53 per cent — and many people are likely to see bill increases far in excess of that — the French government has capped price increases at just 4 per cent. Its largest electricity provider, EDF or Électricité de France, remains largely state-owned.

The only answer to the cost-of-living crisis is fundamental economic change. A government that truly represented the public interest would today be intervening in any number of ways to prevent living standards from dramatically deteriorating.

It would be restoring the old cap on energy prices and bringing the sector into public ownership. It would be imposing a cap on the record levels of rent for private housing and committing to buying up and building extensive new supplies of public housing. It would be increasing the minimum wage and repealing anti-union laws to ensure that workers could fight for the wages they needed to survive.

The Tory government, of course, is doing none of this. In fact, through its recent tax reforms, it is shifting yet more of the national burden onto workers while almost one in five of Britain’s biggest businesses pay no corporation tax at all. For decades, the mainstream media has accused socialists of being out of touch with our use of terms like ‘class warfare.’ But there really is no other way of describing the prevailing economic conditions in this country.

But it isn’t just the Tories who are siding with capital in this crisis. Keir Starmer’s Labour Party, riding high as it is in the polls after Partygate, is more determined than ever not to utter a word about fundamental economic or political change, lest it might spook their new-found friends in establishment political, business, and media circles.

Those who defend this approach — which has recently included refusing to back substantial pay increases for workers, remaining silent on a series of strikes over wages, and abandoning its previous commitment to the public ownership of energy — argue that it is the path to power in a future election, which might after all be just around the corner.

The first objection to this argument is that any government which might win an election on these terms — trying, at times, to appear like an even safer pair of hands for big business than the Tories — would never simply volte face and become serious reformers when their hands were on the levers of power. The same conservative instincts would respond to even greater pressures of moderation when they were in government.

By far the more serious objection, however, is that workers can’t wait around for years to see what a putative Labour government might (or might not) do. The government’s own figures showed that 14.5 million people lived in poverty even before the Covid-19 pandemic. Britain has more food banks than it does McDonald’s chains. And now the cost of living is about to skyrocket without the prospect of serious wage increases or government support.

The need for solutions to this crisis are urgent. And not just tweaks around the edges on VAT or with loans, but real solutions like restoring the old energy cap or nationalising the sector. Every time Starmer and the Labour leadership refuse to adopt these proposals, they deny them a substantial hearing in Parliament — and in the process allow the government to escape the public pressure that hundreds of extra pounds of outgoings per month will bring.

Under Jeremy Corbyn, that pressure from below at least had some expression in Parliament and therefore in official politics. The media was forced to take seriously the idea that a government could intervene on behalf of the public. He did not win an election, alas, but time after time the government was forced to retreat — and ultimately to largely abandon its support for austerity. The same approach today could yield similar results.

The reality, however, is that pressure does not now find expression in Parliament, with even the socialist MPs that are prepared to take up an agenda for change now utterly marginalised within the Labour Party. Official politics is not going to change course and deliver for the people — we will have to force them to.

This situation puts a particular focus on extra-parliamentary politics, from trade unions to social movements and campaigns. These are now the only ways that pressure felt in working-class communities across the country can be expressed in an organised form. And, in turn, the only way that pressure can be directed against the business interests profiting from this crisis and the politicians doing their bidding.

That is the context of the recent raft of legislation which has been introduced in Parliament — from the Spy Cops Bill to the Police, Crime, Sentencing and Courts Bill and beyond. The Left has been defeated at the parliamentary level, now the establishment is determined to prevent our re-emergence on the streets as well. The cost-of-living crisis and the growth of a new authoritarianism should not be seen in isolation, they are part of the same process.

It is a process which has been under way across the capitalist world for decades. As wealth inequality has grown, so political parties have increasingly become captured by elites and disconnected from the public at large. The economic models that these elite parties preside over enjoy less and less public support as their outcomes see already chasmic inequality grow larger by the year.

This means that government by consent is fading and, in its place, government by force is becoming more commonplace. As the cost-of-living crisis deepens this year, and millions of people who were already struggling realise that their living standards will decline even further, the anger will be difficult for the government to contain. And so, they are providing themselves with the tools necessary for a crackdown.

But that anger by itself will not produce change. Like steam, even great quantities of anger can soon dissipate. It is only when that steam is gathered in a structure that the pistons move and the wheels of history can begin to turn.

Our mission as socialists is to organise that anger. The first step will be to convince people that this crisis is not inevitable and that there is an alternative. This means preaching what a great labour leader, Jim Larkin, once described as the divine mission of discontent.

So when workers see hundreds of pounds extra on their energy bill, or find their benefits no longer stretch as far as they once did; when people see that extra national insurance or rent money costing them the ability to do the things they want in life, we must be clear: ‘it was not an act of God that hit your pay packet; it was not a bolt from the blue. Those are the consequences of political and economic decisions you see in front of you — in ones and zeros.’

We must set out our alternative of wage rises, price caps, and public ownership, and of a fundamentally different political and economic system which serves a different set of interests. But we have to be honest with people: this can only come about if we are prepared to organise and fight for it. Workplace by workplace, community by community, until the dreams of a better world aren’t words on a sheet of paper but a force in society once again.

A great wave is about to come crashing down on this country, and the only thing which can protect us from it is class struggle.