Striking workers are providing the opposition that Britain desperately needs

Andy Beckett in The Guardian

In Britain, more than in most democratic countries, going on strike is a risk. Your employer, the government, most of the media, much of the public and often the opposition parties are likely to be against you – or, at best, unsupportive. Your loss of income is unlikely to be made up by strike pay. Your behaviour on the picket line will be subject to what Tony Blair described approvingly in 1997 as “the most restrictive” trade union laws “in the western world”.

In very public ways, you will be breaking the rules of the modern economy: refusing to work, inconveniencing consumers, acting collectively rather than individually, and making demands for more money openly – rather than in private, as more powerful people do. If you are on the left, you are likely to be told again and again that your strike is politically counterproductive.

Such are the written and unwritten laws that have constricted British strikes for approaching half a century, ever since the walkouts of the 1978-79 winter of discontent inadvertently did so much to bring Margaret Thatcher to power and to provoke the counter-revolution against workers that still continues today. Many voters have long got used to the idea that strikes are a minority pursuit associated with a bygone age to which the country must not return. Boris Johnson’s government, with its especially strong intolerance of dissent, aims to demonise and marginalise strikes even further.

Yet this summer, more and more Britons are striking or considering striking regardless. From railway workers to barristers, firefighters to doctors, Post Office workers to teachers, nurses to civil servants, council workers to British Telecom engineers, an unusually large potential strike wave is building. Its social breadth, the range of occupations affected and the atmosphere on some picket lines all suggest that something politically significant may be happening.

At the first barristers’ protest, outside the Old Bailey in London this week, an already excited crowd of advocates in courtroom wigs and gowns burst into prolonged applause when they were joined by a few activists in shorts and jeans from the RMT. It’s not every day that you see such camaraderie between self-employed professionals who rely heavily on trains and striking transport workers carrying a banner that calls for “the supersession of the capitalist system by a socialistic order of society”.

The cost of living crisis, and the refusal of the government and other employers to raise wages accordingly, is the immediate reason for this summer’s “wave of resistance”, as Mick Lynch of the RMT union calls it. Yet the causes go deeper: more than a decade of stagnant or falling wages; the long Conservative squeeze on the public sector; and the whole transformation of the British economy since the 1970s, which has effectively taken money from workers and given it to employers, shareholders and the wealthy.


Public dissatisfaction with this model has been growing for years. In the latest British Social Attitudes survey, 64% agree that “‘ordinary people do not get their fair share of the nation’s wealth” – up from 57% in 2019, and far greater than the support for any party. As Labour leader, Jeremy Corbyn tapped into this discontent. But the end of his tenure, and Keir Starmer’s apparent lack of interest in its redistributive ideas, has created a vacuum where a movement with a radical economic agenda ought to be.

It’s possible that the strike wave could become one such movement. While support for the strikes has been stronger than expected - the pollster Savanta ComRes found that even 38% of Tory voters considered the highly disruptive rail strikes “justified”; among younger people this attitude was particularly prevalent. In the same survey, 72% of under-35s backed the strikers. Since few of them have ever been on strike themselves – less than a quarter of trade unionists are under 35 – then the likely explanation is not shared experience but shared disenchantment. Young people, like many of the strikers, have been particularly badly served by the status quo.

Many young people supported Corbyn for the same reason. And there are other similarities between the two movements. Former Corbyn advisers such as James Schneider, Corbyn himself, and the parliamentary Labour left all support the strikers. Green activists, once an important part of Corbyn’s coalition, have joined RMT picket lines. Like Labour’s 2017 election manifesto, Lynch uses clear, populist language – “every worker in Britain” should get a much better pay deal, he told Question Time – and its effectiveness has taken the media by surprise. Support for the RMT strike rose after his TV appearances.

Could the strikers succeed, not just in getting fairer pay deals but in beginning to change how the economy works? It’s an immense task, which Labour under Corbyn sometimes talked about compellingly but never came close to carrying out. And as the strikes widen and lengthen, public opinion may turn against them. Walking to work because of a train strike will seem less of a novelty and more of an imposition if that dispute drags on into the autumn. One of the obvious but often forgotten lessons of the winter of discontent is that voters often hate strikes in cold weather.

Excited union talk about building new mass movements has proved over-optimistic in the past, for example during David Cameron’s government. The proportion of British employees who are union members has stabilised in recent years, after decades of decline, but by historic standards it is still low: less than one in four. And the fact that Starmer is not prepared to support the strikers removes one of the main means by which their campaigns could be amplified.

Yet for almost a decade now, British politics has not followed the expected paths. It may be that an economy built on poor wages was politically and socially sustainable only while inflation stayed low. That relatively stable and docile era may be over. Recently, the leftwing website Left Foot Forward listed some of the pay rises already won this summer by the increasingly assertive trade union Unite: “300 workers at Gatwick get 21 per cent”, “300 HGV drivers win 20 per cent”. In post-Thatcher Britain, such transfers of wealth to the workers – not just matching but far exceeding the rate of inflation – aren’t supposed to happen. But they are.

Unlike in the 1980s, when the iron lady beat Britain’s last big wave of strikes, unemployment is low and the supply of labour is short. If strikers don’t like a pay offer, sometimes they can threaten to go and work for someone who pays more. You could call it an example of something the Tories talk less about these days: market forces.

The crisis of modern liberalism is down to market forces

Wolfgang Munchau in The FT 

When I think about the crisis of our liberal system, I am reminded of an encounter almost 20 years ago in Berlin with Wolfgang Kartte, a former president of the German cartel office. I asked why he and his successors often took such a conservative view on competition cases and in particular why they were so dismissive of economic arguments. 

Like the majority of economic policymakers in Germany, Kartte, who died in 2003, was a lawyer. He said he considered his job as helping the little guy to defend himself against the big guy. This was the job of a lawyer, not of an economist. Moreover, he said he was not interested in levelling the playing field, as the metaphor goes, but in tilting it in favour of the little guy. 

The crisis of modern liberalism has similar elements. We have our own version of the little guy versus the big guy problem today — except that there is no one to tilt the field in the other direction. Smaller companies pay more taxes relative to their income than large multinational corporations. The economic policies that followed the financial crisis ended up widening income and wealth differences. Large immigration flows created insecurity, as did the arrival of new technologies. When you call voters deplorable — or patronise them, as happened in the UK after the Brexit vote — you add insult to injury. 

Kartte was an old-fashioned German ordoliberal, a school of thought that originated after the breakdown of German democracy in the early 1930s. The macroeconomics of German ordoliberalism is somewhat dodgy. But they excelled at one particular thing. Their intellectual leaders explained better than anyone else how the German liberal order of the 1920s collapsed and how it drove a majority of the population away from supporting it. 

The short, flippant answer is that the Weimar Republic favoured the big guy. The macroeconomic shocks of the period — hyperinflation and depression — are well understood. They contributed to a large extent to the political alienation of the middle classes. But they were not the only causes. The period also saw an increase in industrial cartels that threatened the livelihoods of small merchants and entrepreneurs. 

When the ordoliberals finally came to power in postwar Germany, they began by tilting the playing field in the other direction by creating a corporate and financial infrastructure to support small and medium-sized companies. Germany’s Mittelstand is both a reason for German robustness, but also for stagnation. And one of the main lessons of modern economic history is we cannot be oblivious to the distribution of income and wealth. 

This is not an argument about redistribution. This is about actively managing capitalism’s playing field to ensure that the majority of the population stays on it. Recall Margaret Thatcher’s successful brand of entrepreneurial capitalism in the UK in the 1980s. Through privatisation, she turned ordinary savers into shareholders. Through the sale of council houses, she turned tenants into property owners. 

We cannot replicate this example: there are no council houses to be sold, nor companies to be privatised. But to save modern capitalism we will need to find ways to keep the median voter committed to the system, just as Thatcher did in the 1980s. I would argue that voters are still broadly content in places such as Germany, the Benelux countries and in Ireland. I am less sure about the UK, France or Italy. 

What often leads the supporters and defenders of modern liberal democracy astray in their analysis is their addiction to macroeconomic aggregate variables such as gross domestic product and the officially recorded rate of unemployment. The decade before the Brexit referendum was a decade of reasonable GDP growth. There was nothing in the data that would suggest the UK would vote to leave the EU. But granular information paints a different picture. Data based on the official family resources survey and from the Resolution Foundation, a think-tank, showed household income after housing costs stagnated for the 60 per cent of households towards the bottom of the income distribution between 2002 and 2015. 

The current wave of discontent in France also contrasts with relatively solid GDP growth since the financial crisis. But a study by the McKinsey Global Institute showed that income growth came to an abrupt halt for almost all households in the advanced economies. 

The main constituency backing the Thatcher revolution in the 1980s was the C2s — the demographic classification for skilled working class people. Thatcher looked after the median household. Her successors first lost the middle classes, and then pretended to be shocked by events such as Brexit. 

Any system that leaves behind 60 per cent of households will eventually fail. It is the ultimate irony: liberalism is failing because of market forces.

My fix for the housing crisis: ban ownership by foreign non-residents

'Politics never looks more pitiful or, frankly, animal crackers than in the housing debate – it’s almost a relief when they don’t discuss it.' Photograph: Helen Yates

 Zoe Williams in The Guardian


It is the one point on which all people and parties agree: Britain’s housing problem is one of supply and demand. The solution is to build more homes. It doesn’t matter who owns them: once we have more supply, the normal market – where perfectly equal individuals reach great deals through mutual self-interest – will resume. This orthodoxy on house-building is so ingrained that if you query it you are regarded as a person who doesn’t understand supply and demand.

Last week the economist John Kay argued that, at the current rate of building – 100,000 homes in 2014 – even to replace existing stock will take 270 years, given that there are 27m dwellings in the country. But this is not accurate – there were actually 141,000 built last year, I guess he was rounding down for ease of arithmetic. It is not enlightening – like a TV chef filling a bus with sugar and yelling “Milwaukee consumes this much sugar every quarter”, the extension is supposed to give a sense of scale, but instead bestows senseless impotence. Ultimately, it is misleading; houses aren’t people, or crops: they don’t have to be replaced every year. Indeed, if you make them really well, you might expect them to last 270 years.

But the supply argument is not a simple mistake; it is deliberated and dearly held. Once you accept it, other things follow: supply is too low because planning is too stringent, because people are selfish and they would prefer to have a large garden than to help their fellow man. It follows also that supply wouldn’t be a problem if demand were lower, so now there are people to blame: immigrants, baby boomers with their great big houses, divorcees who have perverted the supply chain with their toxic personalities, people living alone, whose atomised existences are unsustainable in our tiny jewel of an island.

Home ownership: how the property dream turned into a nightmare



Supply-and-demand turns this into a character weakness. We’re all a little bit too selfish and nimbyish; we’re inconsistent, wanting our house prices to rise but moaning when our kids can’t get on the property ladder; we want cheap labour but don’t want to accommodate the new arrivals who provide it; we’re just bad people who have created the market we deserve; those who’ve had no agency –the under-30s – should direct their ire towards those who have – their own parents and grandparents.

This depressing analysis is, fortunately, quite wrong. The problem of supply, for one thing, is not one of planning but developer incentives. Land value rises faster than the value of housing stock: expecting developers to crack on, to build and sell, is to expect them to get rid of an asset that would otherwise rise in value. This system would work fine if property development were a social enterprise. However, where the aim is maximising shareholder value, these incentives more or less guarantee that they will drag their feet: land with planning permission will remain undeveloped; when it is developed, the housing stock will be thrown up as cheaply as possible.

This is really easily solved, without having to undertake a mass reversal of the modern psyche. We could have a land value tax; the Labour proposal to compulsorily purchase land that was left idle would have worked. The Conservatives branded that “Stalinist”, while including in their own manifesto the proposal to appropriate social housing, then sell it. Politics never looks more pitiful or, frankly, animal crackers than in the housing debate – it’s almost a relief when they don’t discuss it.

But that isn’t the half of it. What we have seen over three decades is a rise in house prices far beyond what people can afford. This is thought of as a London problem, but that can apply only to things that do not infect the rest of the nation. Beards are a London problem – unaffordable housing costs have already spread to Reading, Cambridge, Oxford, Bristol, Brighton and beyond. GDP figures are mainly telling a story of housing costs in the south-east. Cities where housing is less expensive have no part in this economic growth but are expected to rejoice in it anyway. This could never have happened through simple shortage. “The housing market,” wrote Faisal Islam in the Default Line, “is driven principally by the availability of finance, mainly mortgage debt, but sometimes bonuses, inheritances, or hot money from abroad.” He is not, by the way, a Marxist; his career as a broadcaster relies on his impartiality.

To deal with those in reverse order: the money from abroad needn’t even necessarily be hot – 75% of inner London housing is never shown on the UK market, going straight to mainly Asian investors. Last week I shared a panel with a developer, Martyn Evans, and we were looking at a website’s illustration of a block of flats aimed at foreign investors. Apart from Canary Wharf showing up in the background – a scene of geographical impossibility – the funniest bits were the characters: a young man who looked like Prince William, on his phone; a kid with a bunch of balloons, running past in a blur.

This was actually the main point of difference between Evans and me. (It is amazing how many developers also think the system is completely broken.) He said investors look for exactly the same qualities as residents do. No (I insisted): residents want somewhere to live. Investors want somewhere where their investment will be safe. What could possibly be safer than a place where multiple balloons can be carried? Who last saw a child carrying a bunch of balloons?

It has become so normal for housing to be sold abroad that to complain about it sounds old-fashioned, almost racist. However, when anybody from anywhere can buy a flat in your city, sooner or later the people who live and work in it won’t be able to afford to. Rents will become difficult – last week the average monthly rent in London hit £1,500 for the first time. Soon after that, your population is in lifelong servitude to a landlord class, or it moves to Wales. The solution could not be easier: we could ban the ownership of housing by foreign non-residents, as they do in Norway and Australia.

Inequality has also played its part, as salaries in the financial sector have ratcheted up what sounds reasonable. Yet far more important has been the role of banks in extending credit.

This is how money is created – banks lend it to people, and it appears in the economy. Of this lending, 85% is on existing residential housing stock. Essentially, what looks like economic growth is simply the extension of credit to fuel a housing boom. Banks cannot lose: instead of being indebted to them for 20 years, it’s 30; or owing them three times our salary, it’s six; the very luckiest among us have wandered into a state of debt peonage to a high street bank, while the unlucky – who will never get on to the housing ladder – work to service the investments of the lucky. This is a bit more complicated and may involve an overhaul in the way we create money.

But when we look at how badly things are being done – the vanishingly small number of people served by the status quo, the huge numbers, entire generations, who will have to live differently because of what we’ve allowed – this can’t be allowed to stand. So sure, we can talk about supply and demand, and even create the political will to do something about supply. But the exciting bit will start when we allow ourselves to think bigger.

Marx takes on Keynes, Friedman and Schumacher

The ultimate Davos debate: 

If you could construct the best panel at a World Economic Forum debate, this would be it. But what would they say about present problems? Read on …

What if Karl Marx and Keynes, Friedman and Schumacher were at the 43rd World Economic Forum in Davos, Switzerland? Photograph: Laurent Gillieron/AP

Imagine that you could construct the ultimate Davos panel. From the annals of history you can choose any quartet that could put the world to rights in an hour-long talk, the format beloved of the World Economic Forum.

Klaus Schwab, the man who has been organising the forum since 1971, ensured there were plenty of stellar names strutting their stuff in the high Alps last week. Davos attendees could watch Nouriel "Dr Doom" Roubini cross swords with Adam Posen, recently a member of the Bank of England's monetary policy committee about the merits of quantitative easing. They could listen to Mark Carney, soon to take over from Sir Mervyn King at Threadneedle Street, warn that the global economy is far from out of the woods. George Soros held forth on drugs; Facebook's Sheryl Sandberg spoke passionately about sexual stereotyping; David Cameron called for the G8 to act against tax avoidance and corruption.

But how about this for a panel? Karl Marx, John Maynard Keynes, Milton Friedman and Fritz Schumacher, all no longer with us, kept in line by the IMF's Christine Lagarde, thankfully still alive and kicking, and one of the standout performers last week.

Lagarde kicks off our fantasy discussion with a few words of introduction. She says business leaders have left Davos in a slightly better frame of mind not because of the millions of words spouted in Davos, but because of three little words spoken by the president of the European Central Bank, Mario Draghi, in London in July. Those words were "whatever it takes", a commitment by the ECB to buy up the bonds of troubled eurozone countries in unlimited quantities. That has removed one of the big tail risks to the global economy – a chaotic break-up of the eurozone. But, she adds, any recovery in 2013 will be fragile and timid, and there is a risk of a relapse. "Turning first to you Karl, how do you see things".

Marx: "The capitalist class gathered in Davos has spent the last few days wringing their hands about unemployment and the lack of demand for their goods. What they seem incapable of recognising is that these are inevitable in a globalised economy. There is a tendency towards over-investment, over-production and a falling rate of profit, which, as ever, employers have sought to counter by cutting wages and creating a reserve army of labour. That's why there are more than 200 million people unemployed around the world and there has been a trend towards greater inequality. It is possible that 2013 will be better than 2012 but it will be a brief respite."

Lagarde: "That's a gloomy analysis, Karl. Wages are growing quite fast in some parts of the world, such as China, but I'd agree that inequality is a threat. The IMF's own research shows that inequality is correlated to economic instability."

Marx: "It is true that the emerging market economies are growing rapidly now but in time they too will be affected by the same forces."

Lagarde: "Maynard, do you think things are as bleak as Karl says?

Keynes: "No I don't Christine. I think the problem is serious but soluble. When we last faced a crisis of this magnitude we responded by aggressive loosening of monetary policy – driving down both short-term and long-term interest rates – and by the use of public works to boost aggregate demand. In the US, my friend Franklin Roosevelt supported legislation that allowed workers to organise. After the second world war, the international community created the IMF in order to smooth out balance of payments imbalances, prevent beggar-my-neighbour currency wars and control movements of capital. All these lessons have been forgotten. The balance between fiscal and monetary policy is wrong; currency wars are brewing; the financial sector remains largely unreformed, and aggregate demand is weak because workers are not getting a fair share of their productivity gains. Economics is stuck in the past; it is as if physics had not moved on since Kepler."

Lagarde: "I gather from what you are saying, Maynard, that you do not approve of the way George Osborne is running the UK economy."

Keynes: "The man has taken leave of his senses. Britain has a growth problem, not a deficit problem."

Lagarde: "I daresay Milton that you disagree with everything Maynard has said? You would make the case, presumably, for nature's cure?"

Milton Friedman: "Some of my friends in the Austrian school of economics would certainly favour doing nothing in the hope of a cleansing of the system, but I wouldn't. Unlike Maynard, I wouldn't support measures that would increase the bargaining power of trade unions and I've never been keen on public works as a response to a slump.

"But I would certainly support what Ben Bernanke has been doing with monetary policy in the US and would support even more drastic action if it proved necessary."

Lagarde: "Such as?"

Friedman: "Well, I think monetary policy should be set in order to hit a target for nominal output – the increase in the size of the economy unadjusted for inflation. If that growth is too high, central banks should tighten policy. If it is too low, the trend since the crisis broke, they should loosen it. In extreme circumstances, I'd favour policies that blur the distinction between monetary and fiscal policy. That's what I mean when I talk about helicopter drops of money into the economy."

Lagarde: "Fritz, you have been sitting there patiently listening to Karl, Maynard and Milton. How do you assess the state of the world?

Fritz Schumacher: "I am greatly disturbed by the way the debate is being framed. There is an obsession with growth at all costs regardless of the environmental costs. Climate change was rarely mentioned in Davos: this after a year of extreme weather events. It is frightening that so little attention has been paid to global warming, and almost criminally neglectful of governments not to use ultra-low interest rates to invest in green technologies.

"As has been the case in the past, recessions have pushed green issues down the political agenda. In good times policymakers say they are in favour of sustainable development, but the pledges are forgotten as soon as unemployment starts to rise. Then it is back to business as usual: more roads, expanding airports, tax cuts to encourage consumption. When scientists are warning that global temperatures are on course to rise several degrees above pre-industrial levels on unchanged policies, this is the economics of the madhouse."

Lagarde: "Maynard, what's your response to that?"

Keynes: "I agree with him. If I were advising Roosevelt today I would be calling for a Green New Deal. I find it hard to envisage a world without growth, something that is politically unacceptable in the developing world in any case. But Fritz is right, we need smarter, cleaner growth. As you yourself said last week, Christine, if we carry on as we are the next generation will be 'roasted, toasted, fried and grilled'."

Schumacher: "I couldn't have put it better myself."