Big Capital May Punish the UK For Corbynomics
City of London financial expert and Marxist economist Michael Roberts says much is to be gained from the economic proposals of Jeremy Corbyn. However, Big business is likely to punish any government seeking to move away from the “Neoliberal consensus”
SHARMINI PERIES: It’s The Real News Network. Sharmini Peries coming to you from Baltimore. The Office of National Statistics in the UK has reported highest levels of employment since comparable records first began in 1971, with 75.3% of the people aged between 16 and 64 in some form of work. However, this apparently positive news betrays a far darker experience for millions of people living in the UK. The construction industry is contracting. Inflation in the UK is the highest out of the world’s top economies, according to the OECD. The British households have the highest household deficit recorded in over a century, so much of the increase in employment appears to be in precarious and non-secure jobs, and at least 10,000 people have died or committed suicide due to changes and cuts to Social Security system since 2011.
Joining us today to discuss the UK economy and Labour Party’s proposals that were recently outlined by the Labour leader Jeremy Corbyn is Michael Roberts. Michael has been working in financial services in the city of London for over 30 years and is the author of several books including The Great Recession and The Long Depression. He has a blog providing Marxist views on economics and the world economy at thenextrecession.wordpress.com. Thanks for joining us today, Micheal.
MICHAEL ROBERTS: Good afternoon.
SHARMINI PERIES: Michael, I know this is a tall order to ask you just right off the bat, but can you give us a brief overview of the state of the UK economy and how things are going, particularly in relation to these numbers in terms of employment?
MICHAEL ROBERTS: Yes. Well, like other top economies, since the Great Recession ended in 2009, economic growth and recovery from that deep recession that we saw now nearly nine years ago has been very gradual, indeed, around about 2% growth in the UK economy in real terms. That’s after inflation each year. About the same as has happen in the United States, as well, but in the last year, things have really deteriorated. After the vote for, so-called Brexit vote, the referendum over a year ago, when the British people voted narrowly to decide to leave the European Union, there’s been a significant decline now in the growth rates. Now, the UK is growing the slowest of the top seven economies in the world. Although employment seems to be very strong and, as you say, seems to be at the highest level we’ve seen since records began, actually, as you point out, it’s not the case for a whole layer of people. Many people are working part-time. Many people are working on quite low wages at jobs without much skill prospects or promotion.
Above all, a huge number of people are now self-employed. In other words, they can’t find proper jobs, so they’ve tried to set up their own companies, one person companies, trying to sell a service or some commodity or do taxiing or whatever it is in order to try and make a living, and these people are earning way less than they did before when they had a proper job. There’s a whole layer of people, also, who have only got jobs based on on-call, what we call zero hours contracts. They have no contract. They’re on call from the employer at any time of day or night to go and work, say, one or two hours to make a bit of money, hardly anything in which to live upon. There’s two million of those in the UK now, so there’s a whole layer of people who are in, as you say, precarious employment and often in and out of any sort of paid work at all, apart from many people who have just given up trying to look for a job.
It’s not as great as the figures show. What we have in the UK, and this is a really interesting fact, high employment but falling real wages. The UK, of the top seven countries, major economies, has the biggest fall in real wages compared to anywhere else, and, in fact, real wages are still below where they were 10 years ago in the UK. The Bank of England reported that this decline in real wages is the worst and longest period for average workers in the UK for 160 years. That tells you how difficult it has become for the average person to make a living and make ends meet.
SHARMINI PERIES: Now, Michael, give us a sense of what’s causing this kind of fractionalized, disjointed work environment for so many people.
MICHAEL ROBERTS: Well, I think the main reason is that the owners of the big businesses in the UK, both foreign and those owned by the British, have concentrated on just employing cheap labor. There’s been a lot of immigration from the European Union of young people and others just to fill in cheap jobs, particularly in our public sector services like teaching and hospitals and so on. There hasn’t really been any attempt to raise the skill level of the population or to introduce a lot of investment in new technology and in new businesses that could provide extra jobs around the country so that the British industry could start competing on the world. In fact, British industry, business investment in the UK is flat, and it’s at the lowest level as a share of GDP compared to most of the other countries in the European Union and most of the other top seven economies. It’s very weak business investment.
If you’d like, you could describe business in the UK as being on strike as far as investment and providing skilled work is concerned. If you compare Germany, for example, huge amounts of apprenticeship schemes where workers sit on councils of companies and ensure that workers get proper skills and decent conditions. Those sort of conditions, those sort of organizational, that sort of apprenticeship and training just does not exist in the UK, so people stay in low wages and with little prospect of getting better skills and opportunities for themselves or their families.
SHARMINI PERIES: Right. Now, Labour leader Jeremy Corbyn has proposed nationalizing utilities and public banking. Does this seem to be something that the Labour Party should fight for and advocate for, and would these proposals actually change the working conditions for people in the UK?
MICHAEL ROBERTS: Well, I think it’s a very important step forward that the new leadership in the Labour Party, which has only been in position for the last two years and did reasonably in the last snap general election we had earlier this year should propose these measures, because there is a clear failure on the part of the major utilities. You think about it in the US, you’re thinking of your water. You’re thinking of your electricity. You’re thinking of your gas. You’re thinking of your transport system, particularly, in the case of the UK, the railway systems. All these have become either broken to bits, when they used to be one integrated system in the case of transport, or run completely by private monopolies.
People complain about the state controlling an industry, but here we just have one company controlling water, controlling electricity, controlling gas and making huge profits out of it. The managers of those companies are massive, grotesque salaries, and yet they’re not investing to provide decent sewage and water management or electricity and gas. Above all, the prices in the utilities is very, very high. We have, for example, in transport in the UK, the highest prices for transport, whether it’s rail, bus, or metro, in the whole of Europe. This situation is a real squeeze on the living standards of ordinary people and totally inefficient. The measure of returning to public ownership these utilities and the railways so that they’re run efficiently with some measure of accountability and democratic control in the interests of the taxpayer and the people in the street would be a tremendous step forward. From that point of view, it’s a big, big gain, I think, if that’s achieved, if Labour comes to office to do that.
SHARMINI PERIES: Does the conditions exist in the UK to make this kind of transition? We spoke with Leo Panitch here at The Real News about Corbyn’s proposals, and he clearly said “These are not socialist proposals. They are a good start.” Do you think Corbyn’s proposals go far enough to tackle the problems within the UK economy, and if so, are the conditions there for him to be able to make these kinds of transitions?
MICHAEL ROBERTS: These measures will be a big step forward if they’re implemented by Labour government in the future, things like making sure that our universal health service, we call it The National Health Service, is operating in the interest of taxpayers and the people working in it and the patients and not just being leeched on by the profitable companies which are leaking out that system and reducing it. All these measures will be a tremendous step forward, and they’re not very radical. They’re very modest measures to restore our transport system, our utilities, our hospitals, and our National Education Service, which he’s proposing. All that’s very modest, and I can’t see how anybody could really oppose it, but interestingly, such modest proposals are now very difficult to get through the powers that be, the Capital, big business, and the city of London, who oppose them all the way down the line, and the conservative government, too.
Maybe 40, 30, 40 years ago, such measures were regarded as pretty modest and were standard, really, in many countries, particularly in Europe, but even in the US. Now, to return to such, what used to be called a social democratic or welfare state is regarded as really radical. That shows how bad things have deteriorated for the average person. It’s going to be a major struggle. If we have a Corbyn Labour government, say in the next year or two or three, attempts to implement that will be a major struggle to get that through, and there’ll be tremendous opposition by the media, by international capital, not just the city of London and the banks here. Also, down the road, the real problem, I think, is that, will the British economy not suffer as big business and capital tries to take its money abroad and cause an economic crisis?
SHARMINI PERIES: Under Theresa May government currently, you have a situation where … Actually, let me rephrase this. Robert, the UK has been privatizing a lot its corporations, its previously public held entities and so forth, like many other European and Western developed countries. There’s been a long history since Margaret Thatcher days. Now, in order to undo this now, and if the Labour Party and Corbyn is successful in beginning to turn this over, and you say these aren’t radical proposals, how likely is it that he’s going to be able to achieve such a tall order at this point? Because there isn’t much public appetite, as you said, in the corporate sector or within the international capital to let this happen. How hard will it be?
MICHAEL ROBERTS: Well, it could be hard, but there are two things in his favor. First of all, there may not be any support for these measures, which, as I say, are modest and used to exist 30 or 40 years ago, before we had what was so-called neoliberal counter-reforms by the likes of Reagan and Thatcher and so on. These are very modest proposals, and they’re, may well be opposed by the city of London and big business, but there’s a lot of public support. The mass of the public support’s there. Recent polls have shown, for example, that 70 to 80% of people asked are in favor of bringing back into public ownership the water utilities, the electricity utilities, the gas utilities and that there’s massive support for getting the profit motive and the market out of our universal care system, The National Health Service. 90% of people are in favor of making sure that that happens.
There’s even up to 50% of people asked are in favor of taking over the major banks in the UK, which have been shown to have been totally rotten and unfit for serve a purpose over the period of the last 10 years, speculating in derivatives and all kinds of other exotic and dangerous, what Warren Buffett used to call “financial weapons of mass destruction,” rather than providing a public service in loans and deposits for households and businesses. These measure that Corbyn and the Labour Party are advocating have massive public support, and that’s always a powerful weapon against the desired and motives of just big business and the elite. As long as we have a parliamentary democracy in the UK and Labour has a majority in Parliament to carry these things through, then they can and will be implemented.
SHARMINI PERIES: Michael, there’s so much more to discuss when it comes to Corbyn. Let’s take that up another time. I thank you so much for joining us today.
MICHAEL ROBERTS: Thank you very much.
SHARMINI PERIES: Thank you for joining us here on The Real News Network.