Miliband also in denial

If Colonel Gaddafi is said to be “delusional”, believing that all Libyans love him when clearly they do not, where does that leave Ed Miliband? At best he is in denial about 13 years of New Labour. At worst he takes no responsibility for his actions and ought to seek help.

In a somewhat astonishing – for the wrong reasons – speech yesterday, he reeled off statistics that confirmed the growth of inequality in the period 1997 to 2010. Can any of us forget that this was the period of massive Labour majorities under Blair and Brown, and where Miliband was in the cabinet?

Yet, ultimately, Miliband, apparently Labour’s present leader, could only tell his audience: “The task is to create a more prosperous capitalism but also one that is fairer than we had before the financial crisis.” Excuse me?

In the period we are talking about, capitalism was indeed “prosperous”. It was just that it was at the expense of working people’s wages and conditions. Bankers and CEOs of transnational corporations did not go hungry or homeless in this period, in which inequality grew apace.

As the power of globalised capital to dictate to governments and trade unions grew, so the share of wealth going to those actually working fell. The wage share of annual national income (GDP) rose to a high of 64.5% in 1975, falling to a record post-war low of 51.7% in 1996. From then it recovered slightly to reach 55.2% in 2001 before slipping back to 53.2 per cent in 2008 – close to where it was more than a decade before. In the United States, by the end of 2006, the share of national income going to wages and salaries in 2006 was at its lowest level on record, with data going back to 1929.

As the 2009 TUC report Unfair to Middling explained: “The declining wage share has been driven by the introduction of flexible labour markets since the 1980s (with the paring back of employment protection rules); economic liberalisation (including privatisation); the increasing constraints on collective bargaining; a reduction in the demand for unskilled labour resulting from technical change; and the global transfer of jobs triggered by globalisation.”

This is the new world order that New Labour embraced with enthusiasm. Instead of wages, workers could get easy credit in a modern version of living on tick. The whole growth system of capitalist production and finance became driven by debt until it went down in flames in 2008. Of this, Miliband had nothing to say. No apology for giving the financial sector carte blanche, for restricting union rights, for allowing inequality to grow. Just platitudes about how “our economy has become progressively less fair and the losers have been those on middle and low incomes”.

He warned, however, of an impending cost-of-living crisis as a result of rising food and fuel prices. These will further erode the wage share of GDP, which accelerated in the last two years of the previous government. This is how capitalism “solves” its crisis. It destroys jobs and living standards because that’s all it knows. With the global debt crisis still reverberating, the attack on living standards will intensify because that’s how the system functions.

Miliband did not contemplate how the soaring cost of living in Britain, alongside mass unemployment and short-time working, could easily turn into a movement for social change, much as it did in Tunisia and Egypt. Just as well, because Labour is a party of big business, making the cuts at town hall level, and will be just as much in the firing line as the ConDem coalition when the working people of Britain decide that enough is enough.

Paul Feldman

Communications editor