Rachel Reeves and social security – looking beyond the short term

Unlike a lot of people on the Left, I thought it worth waiting to read what Rachel Reeves actually said in her keynote speech on Labour’s social security policy before taking a view.  Indeed, it has been interesting to see large numbers of people who presumably are not among the Sun or the Telegraph’s most ardent supporters believing everything they read about the speech and rushing into cyber-comment.

It’s a mixed bag of a speech – one that offers some important and to me welcome pointers to Labour policy, some other proposals that are less so, and leaves huge longer-term questions unanswered.  It’s interesting that many of the criticisms on the Left seem to come from a misreading of some of the immediate proposals rather than considering the big questions.

First the good things.  Reeves talked about making work pay; and talked about low pay as one of the crucial issues of our time.  Real wages are falling, and have been so for some time; there’s now evidence that for the lowest-paid that has been the case for more than ten years, although the real whirlwind has occurred since 2010.  The majority of those living in poverty in the UK are in work, for the first time since records have been compiled.  The cost-of-living crisis is the defining political issue of our time.

Reeves also reiterated the Labour jobs guarantee pledge – with a welcome nod to the fact that small and medium businesses will benefit most –  and talked of providing those who need it with training in basic literacy and numeracy skills.  It is the latter that has given rise to the most adverse comment, largely because of the associated threat to sanction those who do not accept the training. I think this was gratuitous – the point here is not the sanctioning (and in any case I think the evidence that you simply cannot sanction people into compliance – for both ethical and practical reasons – is growing), but the provision of  training and support.  It’s almost as if the ghost of Liam Byrne was furiously rattling its chains in the background, trying to divert attention from the change in emphasis; my own view is that Labour is at its best when it avoids talking about sanction at all.  The important thing surely is the difference between what Reeves proposes and the Tory/New Labour consensus on workfare – the rejection of the idea that you provide companies with free labour and pay people benefits, while undercutting small and medium competitors, and the belief instead that you pay people a proper wage and actively support small businesses.  Get past the unhelpful rhetoric about sanctions – and I really wish the Labour Party would have the courage to drop that kind of language completely – and this is actually quite a big step forward.

The big question that this speech begs, though, lies in the opening section about the dignity of work.  At one level Reeves is absolutely right – meaningful activity is an absolutely central part of the human condition. Release from drudgery and exploitation is at the heart of what democratic socialism has always stood for; but that has never been a rationale for idleness.  But the circumstances of late capitalism mean that we have to ask some serious questions.  We have seen in recent years that most of the benefits of economic growth have gone to rentiers rather than those who sell their labour; and the relentless growth of in-work benefits suggesting that capitalism – even in boom times – finds it increasingly difficult to provide a decent standard of living for those who sell their labour.  It’s a development that Marx would have recognised; it’s also a world in which the language and ideology of sanction are desperately irrelevant.

And the question we have to ask is – what do we mean by work in the late capitalist era?  Keynes famously wrote that a successful capitalism was one in which we worked less, rather than more – he was of course referring to paid work.  Productivity gains and the need for environmental protection seem to me to suggest that in the long term we should be working less  for financial reward, rather than more.  Once again, it seems to me that we cannot ignore the arguments for a basic income – although the idea in its pure form is flawed and potentially reactionary (followers of Hayek see it as a rationale for dismantling the state); but whatever your views it seems that the fundamental idea of work expounded by Rachel Reeves at the start of her speech has to be revisited and reconsidered.  It seems to me that we are moving beyond it, and have to develop approaches to work that go far beyond paid activity.

And, as I’ve argued before, that kind of thinking will take us beyond the language of fecklessness and sanction, which I think damages us and hands control of the debate to the Tories – and start thinking much more creatively, generously and radically about work, social security and decent living standards

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2 thoughts on “Rachel Reeves and social security – looking beyond the short term

  1. The left would find it easier to not jump to these conclusion if Labour’s own press officers and special advisors weren’t the people spinning the sanctions-elements of these proposals to the Sun and the Telegraph; the foregrounding of the ‘wrong’ parts of the speech is a creation of Labour’s own, and has been their approach to social issues (welfare, immigration, asylum) where the right sets the frame for a generation.

    The hope has always been that Labour would, eventually, build a new frame around the things you stress towards the end of the post.

    The issue is who’s prediction is likelier to occur – yours that Labour are inching towards something looking more like decency, or mine that that the twin terror of neoliberal assumptions and terror at the thought of tabloid monstering will always prevent it. I really hope and wish you’re right, but have no faith whatsoever that the current generation are in any meaningful sense – a few honourable exceptions aside – that much different from their New Labour forebears.

  2. Why do those on the left of the Labour party never (exaggeration?) defend the welfare state by pointing out that deliberate unemployment is the means by which the wages of workers are controlled?

    Ever since August 2013 the Bank of England (BoE) been telling us that it will consider an interest rate rise when unemployment falls to 7%. The BoE is concerned that unemployment could fall below a level clumsily-termed the “Non-Accelerating Inflation Rate of Unemployment” or NAIRU for short.

    Increases in interest rates can be used to raise unemployment or (more topically) to stop it falling any further during a recovery. On 16th February 1999 (under a Labour govt. remember!) the Independent published a very candid article entitled “How wage inflation has been tamed”, which opened with an explanation of why the Bank of England had raised interest rates the previous summer:

    “EIGHT MONTHS ago the Bank of England was so concerned about inflationary pressures in the labour market that it hiked UK interest rates up to 7.5 per cent. Unemployment was unsustainably low, the Bank said, and would have to rise in order to keep inflation in check.”

    Source: http://www.independent.co.uk/news/business/how-wage-inflation-has-been-tamed-1071220.html

    Here`s how a rise in commercial interest rates triggered by a Bank of England base rate rise can affect unemployment:

    The only instrument the BoE Monetary Policy Committee (MPC) has at its disposal is the interest rate. A higher interest rate will, by degree, reduce the number of new business start-ups, will force more struggling businesses to the wall, and will reduce the number of businesses choosing to borrow for expansion. Additionally, consumers will also have less money to spend on goods & services if more of their earnings go into paying their mortgage & any other variable-rate loans. These factors combine to reduce the demand for labour and, all other things being equal, will lead to higher unemployment and thus greater downward pressure on real wages than would otherwise be the case. This ensures higher profitablility and prevents businesses from striving to increase their profits through price increases (inflation).

    It has been the policy of every UK government (and those of most other countries) for over 30 years to ensure that unemployment is prevented from falling below the NAIRU level (often described by economists as a “sustainable”, “natural”, “structural” or “equilibrium” rate of unemployment (these terms are interchangeable)).

    On the rare occasions that this policy is discussed in the mainstream media we find that economists, journalists, and politicians usually reveal themselves to be in favour of using unemployment to exert what is deemed to be the necessary “downward pressure on wages” in the name of controlling inflation.

    Rachel Reeves is a former BoE economist and is well aware of this despicable policy which means that the following extract from her speech is a blatant lie:

    “Our first and most fundamental challenge is to ensure that everyone who can and should be working is in a job.”

    At a time when the unemployed are being demonised like never before it is the duty of every decent person to expose this policy. The deliberate use of unemployment is impossible to defend while simultaneously stigmatising the jobless. The failure of the Left to explain what`s going on has meant that what should be a vulnerability for the Right – namely the phenomenon of persistent mass unemployment (even during a boom) – has in fact been a vulnerability for the Left.

    Irrefutable evidence of the intent of the ruling class to maintain “sufficient” (i.e.mass!) unemployment can be read here:

    http://thetruthaboutunemployment.wordpress.com

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