Editorial: Tinkering with the Cost of Living Index

So you can’t live on your pay, and want the Cost of Living Index altered? Forget it and start thinking about something that ready matters. Over forty years ago the British Government, encouraged by trade unions and the Labour Party, started an index to measure average changes in retail prices and rents, and with many modifications it is published now month by month, and many other governments do the same. It has well served the Governments and employers, but for the workers it has been a red-herring on which they have wasted and still waste an enormous amount of misdirected thought and agitation.

Is the doctor’s thermometer accurate ?
The general idea behind the agitation for a “better index” is that it is like the thermometer the doctor uses to tell him something about what ails you and to guide him in curing you. But this assumes that the doctor wants to cure you, and for what ails the workers the government and the employers are not seeking a cure, but only a dope to keep the patient quiet. What ails the workers is their poverty, caused by exploitation, the fact that they are producing wealth for others to own and getting back only a part, in the form of wages. The team of employing and governmental economic doctors are not looking for ways to end exploitation, but to perpetuate it. The class that has an interest in ending its own exploitation and introducing Socialism, the working class, must tackle the job itself; tinkering with the cost of living index has no bearing whatever on that task. It hasn’t even any helpful bearing on the problem of getting the best out of capitalism. Just as the patient knows very well that he feels ill without having a thermometer stuck under his tongue, so the poor know very well that they are poor without having to go to the index to find out. The employers and the government likewise do not have to consult that oracle before they could give higher wages or higher old age pensions, if they wanted to: but there’s the rub, they don’t want to. They will use the index when it suits them, to help prove that they should not give more than they are giving; and with equal facility they will, on occasion, find abundant reasons why they are “compelled” to give less.

Is the Index faked?
One supposition is that the index is faked. The idea that the poorly-paid civil servants who collect the figures and make the calculations fake them downwards is absurd. Their bias, if any, would, of course, be in the opposite direction, and all the more so between the wars when their own pay was related to the index. (And far from finding this satisfactory, they carried on year-long agitation to get away from it.)

There is another kind of faking, practised by the wartime Coalition Government and the succeeding Labour Government, but this was a sort of “open conspiracy” carried out in accordance with the policy of subsidies to keep prices down—a policy that had the enthusiastic approval of bone-headed Labourites and Communists. These governments subsidised or controlled the price of food and other items that went into the make-up of the index, but not the other essential items outside the index: they kept down the index but not the cost of living.

It is true that an index covering a large number of items could show different results from an index covering a smaller number, but this works both ways. An index largely dominated by food prices would understate the general rise of prices if food prices were relatively low, but would equally overstate them when food prices were relatively high in comparison with other prices.

Frequently the demand for a different index is in the form of wanting a universally accurate index. There is not, and could not be, any such thing: a measure of average price rises could not apply equally accurately to different groups of workers on different wage levels, and to pensioners on lower incomes still.

And, of course, those who think they have an interest in the index are talking with their tongue in their cheek when they say they want “accuracy”; what they want is an index that comes out high, the more it overstates the real position the better. Their wish is more like that of the man who hots up the thermometer to prove he is ill when the doctor doesn’t believe it.

Another kind of Index
The worker who blames the index for not being able to make ends meet on his wages does not understand what the index is and is for. It merely records the average movement of prices, up or down. It tells him, for example, that if he was slowly starving to death on £5 a week a year ago, it would require £5 5s. this year to maintain his same level of approaching starvation. It is his employer who pays him his starvation wage.

Some governments and private organisations maintain another kind of index in the form of a periodical assessment of how much is required to maintain a single worker or worker with a family. In this country the late Seebohm Rowntree produced a “minimum standard ” of this kind. And that is what it always is, a “minimum standard,” not how much but how little can a man live on. Coming back to our analogy of the doctor and the thermometer, it is designed to guide the government and the employer in their continuous endeavour to keep the worker’s standard as low as possible, to the point at which his physical capacity to keep up the good work of producing profits will not be endangered by under-nourishment The people who produce such assessments of how little wealth the wealth producers can live on are adding insult to injury.

What to do
The workers should give up the fruitless search to cure their poverty disease by demanding a different thermometer; recognise that their present interest is to take every opportunity that conditions allow to get higher pay. no matter what the index says. But above and beyond this should be the incomparably more important task of ending capitalism and its wages system for ever. Only by doing this and establishing Socialism will the latent and restricted production powers of society be unleashed so that a vastly increased productive of useful articles and the cessation of armaments and other forms of waste will enable all to enjoy the dazzling possibilities of a new social system.