The firefighters’ fight

This is not to say that the firefighters should give up and just roll over. Blair may be bluffing, merely trying to undermine the bargaining position of the firefighters in relation to their employers. This needs to be tested, and the only way to test it is to continue with the strike for a while. At some point, however, if it turns out that the government really is determined then the firefighters will have to take this into account and settle on the best terms they can get in the circumstances.

Blair—good caretaker of the general interests of the British capitalist class that he and his Labour government are—has already made it clear what these terms are going to be: no wage increase above four percent without a corresponding worsening of working conditions. For that’s what he—echoed by the tame media—means by “modernisation”. Not the introduction of new, state-of-the-art equipment to help fight fires and save lives, but abandoning working practices built up over the years to protect the life and limb of firefighters as well as to limit their exploitation.

Lies about inflation
The other argument against the strikers used by the government and the media is that their wage demand is “inflationary”. This is the old, old lie that wage increases cause inflation. Actually, wage increases generally follow inflation, properly understood as a rise in the general price level caused by an over-issue of an inconvertible paper currency. As governments, not workers, alone control the amount of currency in circulation they alone are responsible for any inflation. Workers merely react to it, by demanding that the price of what they have to sell—their working skills—should go up in line with the rise in the prices of all other goods and services.

If the market conditions for their particular working skill are favourable they may be able to push up their wages more than the rise in the general price level. But this does not cause inflation. It merely brings about a change in the price of one particular good (the skills of the workers in question) in relation to all other goods without affecting the general price level. On the demand side, it merely means that some workers have more to spend while their capitalist employers have less, the overall level of demand remaining the same. No wage increase has ever caused inflation nor ever will; it couldn’t, because inflation is a purely monetary matter and control of the money supply is in the hands of governments not workers.

So Gordon Brown was talking nonsense in his 27 November pre-budget speech when he said:

“When inflation is around two percent, we should not put our hard won stability at risk by yielding to inflationary and unaffordable pay settlements—whether in the private or public sector—that would put low inflation and low interest rates in jeopardy and damage the wider economy. To continue to steer a steady course we must hold firm in our demand for discipline in pay setting across the economy”.

Of course this was partly propaganda aimed at discrediting the firefighters in the eyes of other workers. If we give them a wage increase of over four percent without them agreeing to a considerable worsening of their conditions, Brown was saying, this will cause the rate of inflation to go up; which in turn will cause interest rates, including on mortgages, to rise; so, we’re standing firm on your behalf, to stop you having to pay higher mortgage payments on your home.

Daily Mail and Sun readers might fall for this, but a little thought, painful as it might be for such readers, will reveal that that’s not Brown’s real concern. Firefighters are paid out of state funds and state funds can only come from two sources: taxes (which ultimately fall on profits) and borrowing (the interest on which can also only come from taxes).

Running capitalism
A government’s job is to preside over the operation of the capitalist economy but capitalism is an economic system that can only run as a profit system. Making profits is the purpose of capitalist production and the pursuit of profits is the mechanism that drives the system. Governments have to recognise this, even if they come to power thinking that they can humanise the system a little or make it serve some other end than profit. Some Labour governments had to learn this the hard way. But the Blair Labour government, elected in 1997, didn’t need to. Right from the start, they knew on which side their bread was buttered and set out to protect profits and promote profit-making.

In a sense their position was logical: if profits make the capitalist system go round (as they do) and you’re elected to preside over the smooth running of the system, you have to give priority to profit-making over everything else. Which Blair, Brown and the others set about doing with the same enthusiasm as the Tory governments of the previous 18 years, except that they took a longer term view than Thatcher’s policy of encouraging a “Get Rick Quick” attitude. Sometimes, as the Financial Times which supported Labour in the 1997 (and 1992) election used to remind the Tories, you can make bigger profits in the long run by being less greedy in the short term.

The Labour government elected in 1997 promised the capitalist class that it would not increase taxes to pay for social reforms but would in fact reduce them, so allowing capitalist enterprises to retain more of their profits. As a gage of their sincerity the new Labour government undertook to continue for two years the restrictions on state (i.e. tax-funded) spending proposed by the previous Tory government. Since then they have considerably reduced both direct and indirect taxes on profits, directly by reducing corporation tax and indirectly by reducing taxation on wages and salaries so reducing pressures for pay increases.

The capitalist class in return has accepted the need for doing something about public services—the education and health of workers for them to exploit—which had fallen to dangerous levels under Thatcherite “short-termism” (i.e. the pursuit of short-term profits without regard for longer term profits). But with some provisos. First, that any wage increases for public employees should be at the expense of their working conditions. And second, that private capitalists should be allowed a slice of the action via profit-making public/private ventures.

Bashing public sector workers
The Labour government duly obliged but they may have pushed public sector workers too far. Workers are always on the receiving end under capitalism but, fortunately, there are limits as to how far we will allow ourselves to be pushed around. Knowing that more money is being used to “improve” (actually to stop getting any worse) public services, workers such as the firefighters, but not just them since teachers and other public service workers have been out on the streets recently, are beginning to flex their muscles.

The Labour government—as any government of capitalism, which they have always willingly accepted to be, must—is resisting this and seems determined to beat the firefighters so as to discourage the others. Hence the dirty campaign that’s been launched against them, attacking their “privileged” working conditions and accusing them of working to increase mortgage payments and, apparently, referring to them in private as “fascist bastards”.

Blair and Brown claim they can’t afford to meet the firefighters’ claim. A 40 percent increase was perhaps a bit exaggerated even if alright as an opening negotiating gambit—not that everybody doesn’t deserve a wage of £30K—but the money to pay the lesser claim of 16 percent could be there if the government decided to find it. The fact is, for the reasons just explained of not wanting to concede wage increases to public employees which could only come out of taxes that would ultimately fall on profits, the government doesn’t want to make the money available.

When governments want to find money for something they—as guardians of the general capitalist interest—consider vitally important they find it. To make war, for instance. Thus, hidden away right at the end of his pre-budget speech, Brown announced:

“ . . . it is right in the new figures presented today, consistent past Treasury practice, to set aside to meet our international defence responsibilities—a provision of £1 billion to be drawn on if necessary”.

A billion pounds! Nothing like that much would settle the firefighters strike. But then preparing for a war to protect supplies of Middle East oil to capitalist industry is a higher priority, a much higher priority, than paying public employees higher wages (which, in fact, is not a priority at all).

A naïve question: if settling the firefighters strike—for far less than £1 billion—would be “inflationary” why isn’t spending a billion on preparing for war? Why won’t this also put up prices, interest rates and mortgages payments? In fact, as long as it’s paid out of taxes or borrowing and not by recourse to the printing press, it won’t, any more than paying higher wages to the firefighters would. But it rather exposes Brown’s insincerity , not to say hypocrisy, that he used the inflation argument in the one case but not in the other.