Chris Harman

Thinking it through

A taste of things to come

(March 2005)

From Socialist Review, No.294, March 2005.
Copyright © Socialist Review Website.
Marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

New Labour is presenting its attack on pensions as a necessary response to the ageing of the population. But in reality something else is at stake – the latest stage in ratcheting up the stakes in intercapitalist competition

Three years ago the leaders of Britain, Italy and Spain established the Blair-Berlusconi-Aznar axis to give an added push to the copying throughout Europe of the attacks on workers’ conditions and rights pioneered by Reagan and Thatcher in the US and Britain. Aznar fell off the axis a year ago, but the push has been joined by the French government with its renewed attacks on pension rights and its rescinding of the 35-hour week, and by the German government with its slashing of unemployment benefits. It is also embodied in the neoliberal assumptions of the proposed European constitution.

Thirty years ago continental Europe’s capitalists exuded confidence. For a quarter of a century they had been catching up with their US rivals and showed every sign of overtaking them in the near future. A recent paper by Gwyn Hacche for HSBC shows how output per head in what is now the Eurozone had grown from 40 percent of the US figure in 1950 to 75 percent in 1975. It was this pressure on US capitalism that meant it could not sustain the burden of its war against Vietnam.

But then the Europeans seemed to get stuck. In 1995 annual output per head in the Eurozone had slipped back to under 70 percent of the US figure. This was not because European workers toiled less intensively. Hacche points out that in terms of output per hour:

‘European labour productivity growth was more rapid than that in the US until 1995. Indeed, by 1995, labour productivity was higher than that in the US in Germany, France, Italy, the Netherlands and Belgium.’

Compared to their US counterpart, the average German worker today is 2.5 percent more productive per hour, the French 6.1 percent, the Dutch 4.5 percent, the Irish 4.2 percent. Meanwhile, in the Blair-Brown miracle economy productivity per hour is 17 percent behind the US and 20 percent behind the big continental countries.

But this has not been good enough. No capitalist can ever rest on their laurels. Every success by one capitalist prompts rivals to increase their pressure on workers.

US capitalism carried through a massive restructuring of industry from the mid-1970s onwards in order to boost profits at the expense the workforce. First, there were increases in productivity per hour. Some came from increased investment. But this proceeded at a much slower speed than in Europe according to Hacche’s figures. The main factor was that US workers were forced to work harder.

The biggest slice of increased productivity in the US in recent years has come from the supermarket giant Wal-Mart, which boasts of the way it uses technology to keep its employees working non-stop and which has closed one of its stores rather than recognise unions in it.

But what has really given the US its lead over Europe has been the systematic lengthening of the working week and the working year. Today French and German workers work about 500 hours (or around six weeks) a year less than their US equivalents. By working longer, the US workers produce more (and are exploited more) overall than do the European ones, even though they produce less per hour.

Successive attacks on ‘welfare’ and the level of the minimum wage mean that quite a sizeable section of the population (particularly immigrants from Latin America, blacks and women) can be effectively coerced into working for very low wages – in some cases less than they would get if unemployed in Germany. Apologists for capitalism like Hacche speak of a lower ‘natural rate of unemployment’ in the US (supposedly 5 percent rather than 8 percent). What they are really saying is that in the US 5 percent unemployment is enough for the ‘reserve army of labour’ to exert a downward pressure on the wages of employed workers, while in Europe 8 percent unemployment is needed.

The sheer scale of the gains to US capitalists have been shown by two left wing French economists, Gerard Dumenil and Dominique Levy. In a recent article in New Left Review they point to the astonishing fact that only the top 10 percent of American households have had any increase in their real incomes over the last 25 years. ‘The real income of 90 percent of the US population actually stagnated since 1979, while for the top 0.1 percent real income quadrupled.’ And ‘the main burden of this growing income inequality fell on the lower half’ of earners. In other words, even the best paid workers have been working longer and harder to stay in the same place for a quarter of a century, while the majority have had to toil more for less.

The rate of profit of US corporations has benefited alongside the very rich. It has been recovering somewhat in the last couple of years on the back of the 3 million or more jobs destroyed by the recession of 2000-02.

This still leaves US capitalism with big problems. It is still borrowing massively from the rest of the world, and the recovery of the rate of profit still leaves it well below the level of the 1950s, 1960s and early 1970s. Against such a background, the Bush administration’s increased military expenditures will create problems for it, unless they are ‘balanced’ by more attacks on working class Americans. This is the logic of the administration’s attack on the ‘social security’ system that provides pensions.

The problems for European capitalism are not eased by US weaknesses. Every successful attack made by US capital on its workers increases the pressure on European capitalists and their governments to do the same.

The defeats inflicted on unions by Thatcher in the 1980s have meant that British employers have been able to force through massive increases in the tempo of work (especially in the public sector), to get away with the longest working hours in western Europe, and to destroy a million jobs in manufacturing. As a result, New Labour’s attacks have been round the fringes of the working class, while avoiding any direct confrontation with the living standards of employed workers.

But British capitalism cannot simply stand still as exploitation is ratcheted up in Europe and once more in the US. With lower per hour productivity than in Europe and shorter working hours than in the US, it is under long term pressure from two sides. British capitalism has to find ways of increasing exploitation still further. And at some point that means attacks on the mass of employed workers as well as single parents, students, the unemployed and those on disability benefits. The onslaught on pensions is a taste of things to come.

Last updated on 27 December 2009