Prem Sikka on the Thatcher revolution and the rise of a deeply unequal and increasingly repressive state
We live in troubled times. The right-wing reaction that began with the Thatcher government in 1979 has accelerated. In its current phase, workers’ rights, human rights, and rule of law have been systematically eroded. Why is this happening and what can be done about it are crucial questions of our times.
The evidence of erosion of rights is not hard to find. Workers’ share of gross domestic product (GDP), in the form of wages and salaries, has been systematically reduced from 65.1% in 1976 to around 50% in 2023. Despite economic growth since 2010, the average real wage is back to the 2007 level. Meanwhile, the richest 1% of Britons now has more wealth than 70% of the population combined, and no major political party is pursuing equitable distribution of income and wealth.
At the beginning of 2023, the Joseph Rowntree Foundation estimated that a single Briton needed to earn £29,500 a year to reach a minimum acceptable standard of living, and a couple with two children needed £50,000 between them. The median annual wage is £29,669 and therefore nearly 50% of the population has income below the level needed for an acceptable standard of living. Nearly 19 million adults have annual income of less than £12,570. Thirty-eight per cent of the 6.2 million claimants of universal credit are in work, and work does not pay enough.
Low incomes deprive families of good food, housing, pension, education and living a fulfilling life. Low and middle income families face the grim choice of eating or heating and rely upon around 2,600 food banks. The government’s own data show that homelessness has increased by more than 10% in the last year. In 2022, almost 11,000 people in England were hospitalised with malnutrition. Scurvy and rickets have returned. Each year, around 93,000 people, including 68,000 retirees die from poverty.
The above is an outcome of government policies. The right-wing coup has reshaped the political architecture and organisations representing the working class have been severely incapacitated. Trade unions are one such institution and weakening them was a necessary condition for enhancing corporate profits. The Thatcher government violently engaged with the coalminers and their unions in the early 1980s. This was followed by abolition of the closed shop; compulsory ballots for all strike action, an end to secondary picketing and the threat of damages against trade unions were key legislative steps. It should be noted that there were no equivalent reforms requiring corporations to undertake ballots before withdrawal of capital. The Thatcherite reforms were accompanied by a state-managed decline of the unionised manufacturing sector.
Government policies facilitated a decline of trade unions and with it workers’ share of GDP. In 1979, UK trade unions had nearly 13 million (or 55.4% of the workforce) members. By 2022, this had declined to 6.3 million and 22.3% of the work force. The current Conservative government has enacted the Strikes (Minimum Service Levels) Act 2023 to deprive millions of workers the hard-won right to withdraw labour. Despite legal ballots, workers will be conscripted and forced to work during a strike. Trade unions are required to ensure that their members named by the employer cross the picket-lines and break the strike. Those refusing can be sacked without compensation or right of appeal and their unions can be sued for damages by employers.
The right to strike is an essential component of Article 11 of the European Convention on Human Rights, but the current government is no respecter of rights and laws. Ever since the dawn of the industrial revolution, workers have sought to improve their pay and working conditions by exercising two forms of power. These are “market power” and “political power”. Market power is exercised collectively. Trade unions bring pressures upon employers through co-operation and conflict to increase their members’ pay and working conditions. Workers can withhold work through industrial action to strengthen negotiations with intransigent employers. That power has been severely eroded by continuing decline in trade union membership.
“Market power” is shaped by political resources or “political power” and outcomes of elections and power of civil society organisations. Assuming that employees’ interests are generally aligned with the political left, an electoral tilt to the left creates possibilities that workers may be able to secure an improvement in their condition. Similarly, a tilt to the right reduces possibilities of employee influence and an improved share of GDP.
Under the weight of corporate funding of political parties, the UK political landscape has tilted very much to the right and governments continue to erode workers’ rights. The Labour Party was in office from 1997 to 2010 and did not reverse any of the Thatcherite changes or seek to impose equivalent laws on withdrawal of capital. It remains to be seen whether the next Labour government would repeal the Strikes (Minimum Service Levels) Act 2023.
Any improvement in the workers’ share of GDP requires the development of new strategies for increasing worker’s market and political power. As so much poverty flows from low incomes, unions need to make common cause with other exploited groups, such as those representing the old, sick, disabled, children, women, consumers, environmentalists and the homeless so that broader social movements can be built. An electoral system based on proportional representation may also give worker oriented political parties a better representation in parliament.
The anti-worker policies of the state are also incubating a legitimation crisis. What is the point of voting when major political parties dance to the tunes of corporations and the rich, and offer virtually the same policies? The faces of ministers may change but anti-worker policies show little sign of change. Such feelings call into question the legitimacy of elected governments.
In capitalist economies, the systemic imperatives require the state to promote the long-term interests, whatever they may be, of capital. For ideological reasons, the state is not permitted to own means of production, but it needs revenues to finance the state apparatus and services, such as education, transport, healthcare, courts, police, military, bailouts and more. Such revenues are primarily derived from taxes on wages, profits and savings, which are primarily under the control of the private sector. So, the state leans towards capital.
However, at the same time the state must secure mass support by giving the impression that it is fair and not anti-worker. Therefore, depending upon the market and political power of workers, it exercises a degree of autonomy from capital and makes concessions to labour to secure an environment conducive to the long-term welfare of capital. These may be in the form of public services, the National Health, minimum wage, sick pay, paid holidays, the right to strike and so on. But depending upon the strength of competing discourses and power blocs, concessions made to the working class can also be withdrawn.
To legitimise capitalist ascendancy, apologists develop and disseminate common-sense discourses – such as the arguments that capitalists provide employment; that the opportunity to accumulate wealth is a fair exchange for risking capital and/or providing jobs; that everyone is free to set up in business, etc., that serve to naturalise and legitimise the status quo. Think-tanks funded by wealthy elites have promoted the idea that strikes are disruptive and must be banned. The working class is so wounded and weakened that the state does not even make the pretence of being a fair arbiter between capital and labour enacting anti-strike laws to weaken possibilities of improving workers’ share of GDP. Disgruntled workers may take to the streets and disrupt prospects of smooth accumulation of economic profits. In anticipation, the UK government has criminalised noisy and disruptive protests. Seemingly, a new phase of repression of workers’ rights has arrived.
The developments pose fundamental questions about the fairness of the state. The challenge is how to develop and amplify competing discourses to restructure people’s common-sense and the state, so that workers’ interests are prioritised. Up to a point even wiser capitalists must be concerned because households with low wages and purchasing power cannot buy goods and services to enable capitalists to make profits.