Of Course Workers Have Savings!
Keir Starmer has made the ridiculous comment that workers do not have savings. Of course, workers have savings, as Marx set out, even, 150 years ago, when they were far less affluent than they are today. Starmer’s comment is a reflection of the extent to which he has adopted the perspective and ideas of the reactionary petty-bourgeoisie, and its attendant layers within the lumpen sections of society, as he has gone crawling on his knees in search of their votes.
If Starmer reads “The Ragged Trousered Philanthropists”, by Robert Tressell, he will come across the passage in which the workmen, during a lunch break are engaged in conversation, and the socialist, Owen, explains to his workmates that these savings are built up during periods when economic times are good, and employment is at high levels, pushing up wages, but that the workers need these savings, precisely because, those good times are inevitably followed, under capitalism, by hard times, when unemployment rises, and so where they must use those savings to compensate for having no wages, or reduced wages, which do not cover their outgoings. In China, where there is no comprehensive socialised welfare system, workers typically save half their wages, precisely for this purpose, as an insurance fund to cover not only their requirements in old age, but to cover periods of sickness and unemployment, as well as unforeseen health or social care costs.
Even in Britain, the DWP allows workers to have savings of up to £6,000 without it affecting the payment of means tested benefits, and that figure has been at around that level for about twenty years, meaning that, just to adjust for inflation, it should, today, be around £20,000.
It was always the case, prior to Thatcher removing credit controls, in 1987, so as to blow up asset price bubbles, and the attendant debt, that workers had to save significant sums, in order to accumulate around a 10%, deposit on a house, before a building society would give them a mortgage. Of course, prior to the asset price bubbles created by Thatcherism in the 1980’s, the consequence was, also, that the average house price was itself much lower, making it easier to accrue that 10% deposit in absolute terms. When I bought my first, house, in 1977, for example, it cost £5,500, which was about the average, and was equal to approximately 2 years wages. Today, the average house price is around £300,000, and equal to around 10 years wages! That is a direct result of that asset price inflation, and Starmer’s current housing policies of continuing with the Tories Help To Buy scam, will only make it worse.
The reason, we have a housing problem, stems from this asset price inflation, and treating houses as an object of speculation, rather than as a durable consumer good, needed for shelter. The problem is not one of supply, but of this speculative monetary demand. Compared to the 1970’s, for example, there are 50% more houses, per head of population, today, which also demolishes the racist arguments of Reform et al, that housing shortages are a result of immigration. In 2017, the FT reported on the findings of Oxford Economics,
“that net additions to the housing stock have exceeded the growth of households.”
And,
“house prices have jumped especially in the capital as interest rates fell and not because there is insufficient housing.”
It is not the lack of supply that has pushed up house prices, but inflated monetary demand. That comes from those who buy houses, specifically for speculative purposes, but also, because single people who, prior to the 1980’s, would never have considered acquiring their own home, rather than living with their parents, until they married, in their mid-twenties, now feel they must do so, or see the price of those houses, rise ever higher out of their reach, and so, by adding to that demand, at current exorbitant prices, contribute to the further inflation of that bubble. Even as late as 1971, married couples made up 70% of households, with single person households making up just 21%. Today, households made up of married, or co-habiting couples, comprise only 52% of households, whereas the number of single person households has rocketed to 41%.
The Tory media have claimed that the motivation behind Starmer’s statement is that he is coming for workers’ savings to tax, as he has cut off all other avenues of taxation, even to fund his rather feeble spending plans, which already imply real terms cuts in government spending. Maybe, but unlikely, and doomed to failure if that is the case.
As a result of western governments already undermining the security of global financial deposits, by first freezing Russian and other assets, and then, seizing the interest on those assets, they have created a deterrent to purchasing their debt instruments, leading to an increase in demand for gold, and other physical assets. Already, foreigners, in London, are moving out, and moving their financial assets out, ahead of the election. That means that the supply of potential money-capital is reduced, at a time, when global interest rates, and UK interest rates, in particular, are rising, as the demand for that money-capital rises faster than supply. The last thing a Starmer government will want is to exacerbate that by encouraging UK savers to withdraw their savings, and buy gold, or other such physical assets, whose prices are rising.
More likely, is that, on the basis of his argument, rather than raising, to adjust for inflation, the amount of savings that workers can have, before they are denied means tested benefits, he will reduce it, or remove it altogether. That would deny large numbers of workers entitlement to benefits, which would save the government a huge amount, as they seek to cut public spending, especially as, the number of workers claiming sickness benefits has risen dramatically, due to the results of austerity on the health service, and the consequences of lockdowns on denying workers required treatment for chronic conditions, such as cancer and heart disease, not to mention the crippling effects of Brexit, on the health service, effects that the Brexit supporting Starmer is set to continue.
The idea that workers do not have savings is nonsense, not only for the reasons set out above, but, because as Marx sets out, in Capital I, II, and III, it is necessary for them to have such savings. Wages are the phenomenal form of the value of labour-power, that is to say the form it takes, in the real world, based on the supply and demand for it, and the consequent determination of a market price for it. Taken, in aggregate, it is then true that this value of labour-power is equal to what the worker must spend, over their lifetime, which leaves no surplus as savings. But, in just the same way that, as Owen described, in the passage cited above, workers must save during the better times, to cover their expenses during the lean times, this applies more generally, over the workers’ lifetime.
As a child, the worker has no wages, but must consume. Indeed, that consumption tends to be proportionately higher, because, in addition to food, shelter, and clothing they require childcare and they require education. These expenses are paid out of the wages of their parents, i.e. the wages of these adult workers must exceed their own consumption, in order to fund the consumption of their children, who physically represent the reproduction of their labour-power as the next generation. In turn, those children, who have consumed more than they earned (and so were in debt), when they become adults, obtain more in wages than required for their own consumption (have savings), which finances the consumption of their own children.
Similarly, when workers are too old to work, and so have no wages to cover their consumption, they must have savings in order to be able to continue to consume, as we do not expect workers to simply be killed off or scrapped, like a useless machine, when no longer working. Indeed, again, those savings need to be considerable, because, the older worker tends to require more for health and social care, as well as more for heating the home, and so on. It does not matter whether this saving is their own, held in bank deposits and so on, or is held by some private or social insurance fund.
The point is that it is savings, an excess of wages over current consumption, that the worker must accrue during earlier parts of their life. In fact, given the tendency of the capitalist state to purloin such social insurance contributions, and taxes from workers, and to not keep its end of the bargain when it comes to paying out pensions and benefits, its no wonder that Marx and Engels recommended that workers not trust it, and its welfarist systems, but to build up their own labour movement owned and controlled social insurance funds. Again, what can be seen behind Starmer’s words, is the idea of utilising that welfarism, and benefits system as a means of disciplining workers, at a time when they have been rising from their knees. Welfarism is a means of ensuring that a section of the working-class is reduced to a state of serf-like dependency on the state.
Even in terms of current consumption, it has always been necessary for workers to have savings, as Marx described. The first industrial wage labourers, like all labourers since, were paid their wages in arrears. But, they had to consume in the intervening period. How could they do that? They had savings, because they did not simply come into the world, ready-made as wage labourers. Prior to that condition, they were independent commodity producers, or self-sufficient peasant producers.
As Marx sets out in Capital II, it is this, which means that they have “savings”, in the form of either money, or stocks of consumption goods, on which to subsist, until such time as they are paid their wages. Indeed, as Engels describes in his Supplement to Capital III, the reason that these independent commodity producers, are forced to become wage-labourers, in the first place, is not an inability to reproduce their own means of consumption, but an inability to reproduce their own means of production. That is why capitalist production begins in those spheres where the organic composition of capital is high, because either it requires a lot of expensive fixed capital, or a lot of circulating constant capital.
The independent commodity producers, even in the towns, continued to have small plots of land, so that they could continue to provide themselves with food and shelter, and so on, from their own and family labour, but what they could not reproduce, when they could not sell their commodities, was the value of the constant capital. The merchant capitalists that previously sold these means of production to them, now provided them free, whilst only paying the labourer for the value of their labour-power.
Its for this reason that capitalist production commences in the towns, rather than in agriculture. Eventually, of course, the petty-bourgeois producers, the small independent commodity producers, lose all possibility of, also, reproducing their own means of consumption, as Lenin describes, in relation to Russia. The small plots of land, and so on, attached to their cottages disappear, and they must sell all of their output, not only to reproduce the means of production contained in it, but also to reproduce their own labour-power/means of consumption.
Always struggling to do so, and to compete against bigger, more efficient capitals, it is this which creates the miserable condition of the petty-bourgeoisie, always facing failure and collapse into the proletariat, which determines its outlook, and its that class outlook that Starmer and Blue Labour has adopted, as it has abandoned the actual working-class, and gone in search of the votes of that reactionary petty-bourgeoisie, and its attendant layers amongst the lumpen proletariat, and backward, atomised, declassed sections of the population.
It is why that petty-bourgeoisie, and those attendant layers pushed through Brexit, and supports all of those elements of the ideas of Truss that came to grief when they confronted reality, and its why Starmer has also collapsed into those reactionary and delusional ideas. That my contemporary Stokie, John Caudwell, who started off with a similar working-class background to my own, but who became a petty-bourgeois businessman, and imbued its world-view, long before he struck lucky with selling mobile phones at just the right time, made him a billionaire, still holds those same reactionary, petty-bourgeois views, and feels at home with Starmer and Blue Labour, is, then, no surprise.
Originally published at https://boffyblog.blogspot.com.
