Labour and inequality posted by Richard Seymour

Gordon Brown is 'sobered' by a new report showing the growth of inequality in the UK. He has to be because, while New Labour formally disavowed the politics of redistribution, insteading on poverty and exclusion, it was a tacit goal of the government to reduce inequality. Numerous changes in taxes and benefits were designed to shift a small amount of wealth from the rich to the poor. Moreover, this was supposed to be an important part of achieving greater 'equality of opportunity'. Opportunity, as any fule know, comes with wealth and income. Everything from access to education, healthcare, and jobs, is structured by inequality, hence the importance of ameliorating its effects. Today's results show, however, that the richest ten percent are 100 times richer than the poorest ten percent. If anything, in detecting a marginal narrowing of earnings inequality over the last decade, this study is slightly more friendly to Labour than previous efforts have been. According to another report by the Institute of Fiscal Studies, inequality in 2007/8, as measured by the Gini coefficient, was higher than at any point since records began in 1961. The very modest dip in the early part of the decade, moreover, matched a similar dip in the mid-1990s under the Major administration.

There is another finding in the report that ought to 'sober' New Labour. When John Denham claims that Labour has substantially reversed racism, that you're not necessarily discriminated against any more if you're from an ethnic minority - a shocking claim in itself, given the trends of the last decade - he should be pointed toward this study. It shows, for example, that Muslims and black African Christians receive 13-21% less income for the same job with the same qualifications than their white counterparts. White families earn, on average, twice the income of ethnic minorities. This is the least that could be said about Denham's ridiculous boasting.

New Labour has run, in many ways, the most right-wing administration since the Second World War. This is true in terms of its privatisation of housing and public services, in terms of its tax cuts for the rich and services to the City, in terms of its warmongering, and on any number of other axes that you could name. It has adopted neoliberal economics, neoconservative foreign policy, and the New Right's agenda on race relations. Yet, the party still depended on the backing of the trade union bureacracy, and still had to deliver something in the way of improving the situation of at least some workers. Hence the minimum wage, some welcome reforms of trade union laws, higher public spending, and new tax credits for the poor. Modest reductions in child and pensioner poverty resulted, though these started to reverse after 2004/5. Even so, the massive inequality unleashed by Thatcherism has barely been touched and, according to some studies, has now reached record levels.

The government's response to this is necessarily two-fold. The first retort is to say that there isn't a viable electoral coalition in more radical egalitarian politics. Here, a bit of psephological quackery is deferentially invoked, as if no one had ever thought of fighting for public opinion, and winning the argument for change. I would be more impressed by this if New Labour's electoral coalition wasn't actually rather flimsy - only a well-founded hatred for the Tories has ensured three terms for Labour, on depressed turnouts, the last one with a puny plurality. It would also be more convincing if New Labour pursued only such policies as were approved of by the British public. In truth, core New Labour ideas and policies are extremely unpopular. Moreover, for New Labour to protest that there isn't an electoral coalition in egalitarian politics is uncharacteristically modest - it has been instrumental in undermining support for redistributive politics. The public consensus explicitly favouring redistribution in the early 1990s was squandered by New Labour's explicit abdication of such politics. The government's high-profile targetting of welfare recipients - the word 'bogus' or 'fraud' comes up a lot - has fed a perception among some in the public that the general function of the welfare state is to channel money to layabouts and criminals. Even so, polls tend to show that people would favour higher taxes on the rich to fund public services. Gordon Brown is a beneficiary of this, and his recent 'class war' attacks on the Tory front bench suggests that he is aware of the public contempt for millionaires.

The second retort is to point out that the existing dynamics in the global economy (one doesn't say 'capitalism') tend toward greater and greater inequality. To slow, or marginally reverse, this trend is an achievement of social democracy. This is true, and we are entitled to consider what the state of affairs would be had the Tories still been in office. Worse, I'm sure, though I can't say by how much. However, it is a feeble answer when the government has always known that capitalism, under normal circumstances, generates inequality. Whatever New Labour ministers say in public, they know perfectly well that capitalism is an exploitative process, in which profits are accumulated by the rich through the labour of the majority. The appropriate response would be to move swiftly to bolster the bargaining power of labour in this transaction. This government, its few meliorist measures to one side, has largely gone out of its way to bolster the position of capital, maintain flexible labour markets, keep wages low, and cut corporation taxes. This isn't because such a policy mix is actually popular. It is because New Labour is committed to the efficient administration of capitalism. Only on the basis of capitalist growth, therefore, can it accumulate the tax base to deliver its meager reforms. But since capitalist growth is precisely what generates more inequality, this leaves social democracy complicit in a process that it can do nothing other than slightly humanise. Worse, when it comes to a crisis involving the deepest economic contraction since 1921, the government finds itself in the position of redistributing public wealth to the richest in the form of massive bank bail-outs - which we will have to pay for through deflationary spending cuts that will create higher unemployment, reduced wages, and increased poverty.

Labels: capitalism, class, inequality, labour, new labour, privatisation, public spending, taxation