Socialist Studies Socialist Studies

A “Living Wage” or Freedom from the Wages system?

A temporary albeit tiresome barrier to the establishment of Socialism is the activity of most of the 170,000 charities in the UK who produce policy reports to address social problems found in capitalism. These charities are well-funded; The Joseph Rowntree Foundation (JRF), for example spends around £10 million a year on its research and development programme. In comparison, Socialists are just able to proverbially afford the postage stamp to propagate a revolutionary alternative to the pressing problems of poverty, unemployment and social alienation.

Historically, charities have full-time staff, tame celebrities to front their campaigns and thousands of volunteers. Through PR agencies and advertising companies charities are as media-savvy as any capitalist political party. Nevertheless all charities hold the fallacious view that if an enlightened and compassionate government or employer adopted and enacted the charities’ particular policy the social problem would be resolved. It would cease to be.

However, governments are not neutral but are class institutions serving the interests of capitalism and the capitalist class, not society as a whole. And capitalists exist to make a profit not to raise wages as a mark of compassion, charity and humility.

In fact, historically, charities parasitically have fed off social problems to assuage the guilty conscience of the rich but bored do-gooder with too much time on their hands. Oh to be a capitalist philanthropist like Warren Buffet and Bill Gates using a portion of one’s wealth plundered from the working class to dispense charity around the world and bask in the glow of public self-esteem. And then there are those best-forgotten “celebrities” associated with Band Aid and Red Nose Day.

And charity is also a good career move; six figure salaries, access to government ministers and interviews on the television, a job no different than heading a large corporation or political party. And as for the millions or so workers employed by the charities; whether paid or voluntary, it is a job for life. Or not, so it seems, as charities have become just as ruthless in getting rid of workers as any profit-seeking business. For charities do not solve the intransigent problems caused by capitalism; these problems merely pass from one generation to the next.

It is said that charity is always with us because poverty is a natural state of the human condition; a consequence of the Fall. Yet the poverty facing the working class as capitalism emerged from Feudalism was social not natural. As soon as the working class were crowded together in the city slums, along comes the charity worker; Lady Bountiful handing out money to the deserving poor and clergymen straight from Oxbridge touring the underbelly of working life in the company of politicians to save women from “a fate worse than death”. The 19th century Prime Minister, William Gladstone, for example, was a co-founder of the Church Penitentiary Society Association for the Reclamation of Fallen Women parodied by Michael Palin in the1982 film THE MISSIOARY –“He gave his body to save their souls”.

Throughout the 20th century and on into this century, charities have become a growth industry. For those running the charities, it has become a rite of passage to becoming directors of think tanks and political office. Running a charity looks good on a political CV. What charities have demonstrably failed to do, though, is to resolve the question of poverty; a failure they share with the various capitalist political parties; Labour, Tory, Green and Liberal Democrats.

From Capitalist to Philanthropist: the Politics of the Rowntree Foundation

Joining the Church and politicians in the slums of 19th century Britain were the capitalist philanthropists; no more so than Joseph Rowntree. He made his fortune from exploiting the working class and looked upon the poverty and squalor of workers as something of their own making; particularly their “vices” and “large families”. Capitalism was never to blame; only the inability of the “undeserving poor” to help themselves.

The Joseph Rowntree Foundation was founded in 1904, ironically in the same year as The Socialist Party of Great Britain and is one of four trusts established by Joseph Rowntree. Then known as the Joseph Rowntree Village Trust, its original purpose was to build and manage the garden village of New Easrwick, York to improve “the body and soul” of the workers housed there.

Joseph Rowntree wanted his money to be used to tackle “the root causes of social problems”, rather than treating their symptoms. His Memorandum of 1904 stated:

I feel that much of the current philanthropic effort is directed to remedying the more superficial manifestations of weakness or evil, while little thought or effort is directed to search out their underlying causes ... [seek] to search out the under-lying causes of weakness or evil in the community, rather than ... remedying their more superficial manifestations (WIKIPEDIA).

Compare the misplaced piety of Mr. Rowntree with the OBJECT of The Socialist Party of Great Britain, written in the same year on how to tackle the root cause of social problems from the interest of the working class:

The establishment of a system of society based upon the common ownership and democratic control of the means and instruments for producing and distributing wealth by and in the interest of the whole community.

The JRF has now developed into a Social policy research and development charity that funds a UK-wide research and development programme. JRF, like its founder, still claims that it seeks to understand the root causes of social problems but the root cause of social problems is never accepted as being the private ownership of the means of production and distribution by the minority capitalist class.

Low pay has long been the champion cause of the social reformer. The minimum wage was a cry often heard in Labour Party circles when it was first established although it was Winston Churchill who introduced the first minimum wage legislation. During the last Labour government, new minimum wage legislation was introduced but it had little or no effect in addressing the poverty associated with low pay. The minimum wage only expressed a minimum level of poverty, often by-passed altogether by employers, particularly in the service sector of the economy. As a consequence of this failure, charities led by the JRF began to agitate for what they called a “living wage”.

The failure of the minimum wage policy led the Rowntree Foundation to look at a voluntary measure to be signed up to by “philanthropic” businesses to provide a “living wage” for those currently on the minimum wage. This is a figure calculated by the Centre for Research in Social Policy at Loughborough University, funded by the JRF. The figure currently stands at £7.45 per hour for the UK outside of London and £8.45 per hour in the capital - raised incidentally by a generous 10p for Greater London Authority workers in a blaze of media publicity by London mayor Boris Johnson whose own “chicken feed” income from his once a week DAILY TELEGRAPH article is £240K. These sums are said to be the minimum hourly wage required in order to live “in some degree of comfort” although the concept of “comfort” used by the academics from Loughborough University took no account of the real existence of workers living within a capitalist society. Capitalism was not criticised but taken for granted.

Politicians were quick to embrace the “living wage”. Ed Miliband opportunistically made it a plank in his social policy, while the Tories believed that it chimed well with their “Free market” values. David Cameron announced that it was an “idea” whose “day had come”. Fast behind the politicians came the trade unions. Unison, for example is pushing hard for the public sector to introduce the “living wage” so as to cut “the huge difference in wages found in the workplace”.

However, where do these figures supporting a “living Wage” come from? The Centre for Research in Social Policy at Loughborough University, derived the “Living Wage” from surveys of the general public on what they think are the necessary costs of living and working, plus a “socially acceptable minimum level of comfort” for those at the bottom of the labour force; hardly an objective research programme.

The nominal figure of “The Living wage” is also campaigned by the Living Wage Foundation (LWF), based in London, made up of the GLA and “philanthropic” citizens and corporate institutions which seek to get employers to pay their workers the calculated “living wage” rather than the lower national minimum wage.

The aim of the LWF was to ensure:

…everyone in work is paid enough to provide adequately for themselves and their family. The Living Wage campaign aims to make poverty wages history (London Living wage campaign, 2013).

Of course receiving a wage is a sign of poverty; wage slavery. However none of the charities, pressure groups or trade unions involved in the campaign has the slightest idea why earning a wage, whether it is high or low, is a characteristic of the poverty and exploitation faced by the working class as whole. The wage is considered by these groups as unproblematic as though receiving a wage was beneficial to the recipient; an unquestionable social good.

What is a wage?

It is safe to assume that the workers interviewed had no understanding of what governs the rate of wages while their notions of “comfort” was distorted by their own existence as wage slaves where “comfort” expressed in wages only signifies the ability to buy more commodities; a fetish at the heart of the wages system. Capitalism cannot offer workers comfort and nor can this comfort be expressed as wages.

The tendency is for capitalists to reduce wages, replace workers with machinery, out-source, move production to where wages are cheaper and to import labour to increase competition in the labour market. The trade cycle with its high levels of unemployment and competition with other workers is always discomforting. Wages not low wages is the hall mark of poverty and poverty can only be replaced with comfort when capitalism is replaced with Socialism.

So, what are wages? Wages are a price. Wages are the price of the worker’s ability to work, their mental and physical energies they have sold as a commodity to an employer. Wages are not a reward for having worked rather than stay in bed, as some of the cruder economic text books state. Neither is the wage a share in the commodity nor the price of the work carried out during a working day or week.

When workers sell their ability to work to a capitalist business it is a buying and selling transaction no different from the sale and purchase of any other commodity. The price of a worker’s ability to work – or as Marx called it in his analysis of capitalism, the worker’s “labour power” – is set in the same way as the production of a pair of shoes or a motor car. Marx showed that the price of a wage is set by the amount of socially necessary labour time used up in producing, maintaining and reproducing this peculiar commodity, i.e. by its value.

The value of the commodity is dismissed as irrelevant by academic economists who are only interested in its price. However, as Marx showed, without an understanding of value and what makes up the exchange value of a commodity you cannot understand capitalism. And this is precisely the case with academic economics. To borrow a phrase from Oscar Wilde, economists, like the cynic, know the price of everything and the value of nothing.

From an understanding of the value of a commodity, it is clear that a worker’s wage can never in the long run amount t at best to much more than will cover the costs they must incur to keep themselves fit for work, with additions to cover the cost of raising their family and ensuring future workers for the exploitive wages system. An architect, engineer or doctor with university qualifications receives a higher income than an unskilled worker because it costs more to train and keep the skilled workers although capitalism is always looking at ways to cheapen expensive labour through the process of de-skilling.

The Wages System

No one ever asked the working class if they wanted to be in the wages system. Workers were forced onto the labour market to sell their labour power. The so-called free market was an act of coercion; workers were free to find employers in the labour market but they were also free from the means of ownership of land and other means of production and distribution.

The wages system can be considered as a form of rationing. The wages system restricts the consumption of the working class to what workers need to efficiently produce and reproduce themselves as an exploited class. The imposition of the wages system denies workers not only what they need to live well but the wages system also denies them creativity because they are dictated to by the demands of capital.

There is nothing “natural” about the wages system. It is historical and like capitalism itself has its origins in the class struggle. The rationing imposed on workers by the wages system is totally unnecessary. The forces of production; technology and social and co-operative labour, could produce sufficient for all instead of condemning millions to a mediocre utilitarianism.

The wages System and Class Exploitation

Workers are exploited under capitalism. Exploitation does not only mean long hours, hard and unpleasant work or a vindictive employer. Exploitation has a precise scientific meaning.

Exploitation simply means workers receive wages less than the value of the commodities they produce. Marx gave a comprehensive study of exploitation in pamphlets like WAGES, PRICE AND PROFIT and in his three volumes, CAPITAL. We do not need to go into his analysis in detail, it is sufficient to point out that social wealth is produced by the mental and physical abilities of a majority who are forced to work. Consequently a minority in society enjoy unearned incomes from rent, interest and profit through their ownership of the means of production and distribution.

As a commodity, Labour power has the peculiarity of being able to produce a value greater than itself. And the buyer of labour power reaps the benefit. Capitalists buy labour power and put it to work in the factory producing commodities. Labour power produces not only value but a surplus value which is realised when the commodities workers produce are sold on the market for a profit. This surplus value, derived from workers’ unpaid labour, is the sole source of the capitalist class’s wealth and profits. And the class struggle rotates around this class exploitation.

Make the wages system history

In 1904 Rowntree issued a memorandum based on the myth that you can simultaneously effect a radical change in the circumstances of the working class but also retain the wages system of class exploitation and servility.

The persistence of poverty that Rowntree tried to resolve and one the Rowntree Foundation still pursues, demonstrates that you cannot apply sticking plaster, bandages and splints to the problems caused by capitalism.

Who would have thought in 1904 that in the second decade of the 21st century the Red Cross and others would still be handing out food parcels to thousands of workers who cannot afford to buy food and to heat their homes? If the Socialist object of the SPGB had been achieved in 1904 then the world we live in would be one of comfort, equality and freedom. And one freedom enjoyed in Socialism would have been freedom from the wages system.

The failure of charities and social reforms merely confirms that the only way to end poverty is to replace capitalism with socialism. The root problem for the working class is that production and distribution currently exists to make a profit not to meet social needs.

Rather than being recipients of charity and state hand-outs workers need to organise consciously and politically into a principled Socialist Party with a Socialist policy based on the recognition that capitalism can never be made to work in the interest of the working class.

If workers never voted for the imposition of the wages system they can at least vote for its abolition. Instead of making “poverty wages history” the working class should organise consciously and political into a principled socialist party and make the wages system history.

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