Redistribution can win the Squeezed Middle
Posted on Tuesday 1 March, 2011
Filed Under Economics, New Labour
IF PRIMARK is having trouble shifting jeans at £8 a pair, then the British economy really is up a well-known creek. But yesterday the company announced that UK sales had slowed for the first time in five years; some retail analysts believe that on the standard ‘like for like’ yardstick , they could even be falling.
Little facts like that that can sometimes tell you more than the macroeconomic headlines, but even by those lights, things are not encouraging. When it was provisionally announced that UK gross domestic product fell by 0.5% in last quarter of 2010, most market commentators believed that the final figure would be more encouraging. It was, at minus 0.6, even worse.
So Ed Miliband is entirely correct to focus Labour’s political attention on what he refers to as ‘the squeezed middle’, by which he seems to mean more or less the in-work working class. His address to the Resolution Foundation yesterday was laden with classic social democratic themes.
Rumour has it that Mandelson banned the use of the word ‘inequality’ in speeches by New Labour politicians. Yet there it was, together with the affirmation that rectifying inequality is why Miliband is in politics. While that will not strike most socialists as a particularly strong statement, it is a long, long time since a Labour leader has actually said as much from a public platform.
The SM makes up the mainstay of Primark’s punters, of course. If they are thinking twice about treating themselves to the odd new T-shirt, it is because the need to put food on the table and to run the car is forcing them to watch what they spend.
In the past, many of them would borrow freely to boost their consumption. Miliband also does well to highlight the important role played in recent decades by cheap credit as a means by which aggregate demand could be maintained without paying higher wages.
This has been tantamount to what some radical economised have dubbed ‘privatised Keynesianism’. The wheels coming off this wagon will spells the end of the model that has dominated recent decades, and the fall in the average standard of living will be noticeable.
But in order to reverse inequality at a time of economic contraction will require Miliband’s Labour to boldly go where New Labour never went before, and develop policies that implement another word that Mandelson tried to expunge from the party’s vocabulary: redistribution.
Yes, I have heard the argument that Gordon Brown masterminded a strategy dubbed ‘redistribution by stealth’. But in the end, the Gini coefficient doesn’t lie, and it is indisputable that inequality continued to grow between 1997 and 2010.
It might be that Miliband is thinking along redistribution lines, with references to ‘tax and benefit fairness’. But such terminology is so vague that even that is not a given.
Finally, he describes his ultimate goal as ‘more prosperous capitalism’. What the Labour leader should not forget is that capitalism is as prosperous as it ever has been for those at the top.
If he wants to convince the Squeezed Middle that things will be different under a Miliband government, the issue of redistribution is not one that can be fudged indefinitely.
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11 Responses to “Redistribution can win the Squeezed Middle”
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People just don’t want crap jeans any more, that’s all.
Miliband uses the word ‘inequality’! Wow, he must be one of us really. Just needs a bit more encouragement. Sorry, got to go, my sides have split.
Roy Hattersley tells a story when at the beginning of the Blair years when he suddenly found himself on the left of the party instead of the right without having changed his beliefs at all. The Blair spin doctors told him he wasn’t to use the word equality any more.
I see the Governor of the Bank of England warned today that living standards may never recover. They won’t like that in China or India.
The shit infested sewer remarked,
“I see the Governor of the Bank of England warned today that living standards may never recover.”
Tell that to the bankers! We are all in it together my arse!
Sorry, but redistribution will NOT win over the squeezed middle. Any reasonable definition of the Middle Class, would have to include people earning up to around £100k a year. If you are REALLy going to redistribute then it makes no sense to actually tax anyone earning up to that amount. But, in that case, who WOULD pay for the cost of a vast Capitalist State???
The idea that you could raise the costs involved by taxing the earnings of those earning above £100k is a non-starter. First, of all there is not a large enough tax base there to raise sufficient money. Secondly, the necessary tax could only be raised by a really serious attack not on earnings, but on Capital. This side of a revolutionary situation, Capital would respond to that kind of an attack with an immediate Capital Strike, and in a highly globalised world, the flight of financial Capital out of the UK, over the global electronic markets would be so fast that it would make an Olympic Sprint look like watching paint dry.
As Marx, argued against the Fabians and Lassaleans who thought that you could do anything progressive through the tax system, it is a massive step backwards in socialist theory, seeing Socialism as rooted in the sphere of Distribution rather than where it actually has to be in the realm of production.
“Any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves. The latter distribution, however, is a feature of the mode of production itself. The capitalist mode of production, for example, rests on the fact that the material conditions of production are in the hands of nonworkers in the form of property in capital and land, while the masses are only owners of the personal condition of production, of labor power. If the elements of production are so distributed, then the present-day distribution of the means of consumption results automatically. If the material conditions of production are the co-operative property of the workers themselves, then there likewise results a distribution of the means of consumption different from the present one. Vulgar socialism (and from it in turn a section of the democrats) has taken over from the bourgeois economists the consideration and treatment of distribution as independent of the mode of production and hence the presentation of socialism as turning principally on distribution. After the real relation has long been made clear, why retrogress again?”
Critique Of The Gotha Programme
Or as he further elaborated,
“That, in fact, by the word “state” is meant the government machine, or the state insofar as it forms a special organism separated from society through division of labor, is shown by the words “the German Workers’ party demands as the economic basis of the state: a single progressive income tax”, etc. Taxes are the economic basis of the government machinery and of nothing else. In the state of the future, existing in Switzerland, this demand has been pretty well fulfilled. Income tax presupposes various sources of income of the various social classes, and hence capitalist society. It is, therefore, nothing remarkable that the Liverpool financial reformers — bourgeois headed by Gladstone’s brother — are putting forward the same demand as the program.”
Sorry, Boffy, but £100k+ is not the middle, it is the top 2%. And yes, they should be taxed.
I think the confusion is caused by slapdash use of the term ‘middle class’. It has never really meant ‘the middle earning section of the population’. At first it was used to describe the wealthier sections of society outside of the land-owning aristocracy and gentry, for example the industrial and merchant bourgeoisie and the ‘professions’. Even with the extension of the term to groups of the salariat and petty-bourgeoisie it still only covered a minority of the population.
The problem has been that since the manual working population has decreased and a mass consumer society has developed, vulgar and amateur sociologists have decided that the vast majority of people are ‘middle-class’. This of course has been a deliberate attempt to distance the more affluent working-classes from the ‘underclass’. The term ‘squeezed middle’ is a complete misconception. It really only means that wider sections of the working population are suffering declining living standards as well as the groups of the poor who were with us throughout the New Labour years.
99% agree with Igor. I would add that the term ‘squeezed middle’ is quite an astute term to use in the current climate. People will really relate to the idea.
The problem it seems to me is that many many workers (and others) think those working in the public sector are lazy, useless, parasites on ‘productive’ society (an idea carefully cultivated by the ruling class over decades), while the Alan Sugars, Phillip Greens of this world are wealth creators. So when the system screws up the wealth creators are still great but the ‘unproductive’ workers are to blame and should be punished.
On the flight of financial capital out of the UK, that would be marginal for all sorts of reasons. One being that financial capital offshores almost as much as it can anyway. As the recent revelations about Barclays show. So I say let the socialist position include a redistribution of wealth from capital to labour and an increase of taxes on incomes over 100k. Saying to capital we will not touch you and we will bow to your every whim because we fear you is hardly in keeping with a revolutionary spirit now is it?
Dave,
The problem is as I have set out in my blog Who Are The Middle Classes, the skew of income distribution, let alone, wealth distribution, is such that talking about people earning £100k plus being in the top 2% is pretty meaningless. The other consequence is that ordinary working-class people such as train drivers earning £40,000 a year would then have to be considered part of the middle.
Clearly, so long as the vast size of the Capitalist State continues it will have to be paid for, and in the main it will be workers who will pay for it. But, that fact alone demonstrates Marx’s point about how impossible it is to redistribute to workers by such means. As Marx sets out in his debate with Weston, any attempt to redistribute to workers whether by winning higher wages or by taxation, which amounts to the same thing is doomed to failure, because Capital will simply respond by reducing its demand for Labour-Power, introducing labour saving equipment, or as it has in fact done for the last 30 years, by simply moving production to other parts of the globe.
The idea that Capital cannot respond quickly by moving Capital overseas can be quickly disproved by just watching the billions of pounds that are moved into and out of any particular Stock Market on any one day. It takes just the press of a button on a computer to sell millions of shares in British companies reducing their value by billions, and to invest that money in a French, German or US company. The only real means of dealing with that are through the seizure of the physical assets, the shops factories and ofices and all the equipment within them.
In otehr words the actual strategy requires not fiddling about with tax policy but a revolutionary overthrow of Capitalist property. The problem is I don’t see any credible Party advocating such a strtaegy, and the non-credible Parties that do advocate it are living in a cloud cuckoo land unaware that there is no chance of winning workers to such a perspective in the foreseeable future.
Here is a real Marxist on taxing the rich,
http://www.rdwolff.com/content/how-rich-soaked-rest-us