The Cost of Living Crisis

The BBC recently reported that wages and salaries had fallen further behind the rising cost of living (16 August 2022). While average wages rose 4.7% between April and June that was outpaced by inflation - or price rises - which is growing at a much faster rate. As a result, the "real value" of pay fell by 3%, according to the Office for National Statistics. The gap between pay growth and inflation is the biggest since records began more than 20 years ago.

And in the GUARDIAN a report stated that two-thirds of all UK households will be trapped in fuel poverty by January 2023 with planned government support leaving even middle-income households struggling to pay their bills. It shows 18 million families, the equivalent of 45 million people, will be left trying to make ends meet after further predicted rises in the energy price cap in October and January (August 18 2022).

We are supposed to be going through a cost of living crisis with high inflation, rising energy and electricity bills and pressure on workers’ to be able to pay for a range of commodities on which they and their families need to live. The cost of living crisis is presented as an aberration; as something which is out of the ordinary. It is forgotten that capitalism is anarchic, unpredictable and prone to crises, social misery and suffering.

Of course the politicians will lecture the working class to be frugal, wear more jumpers and for the family to take a shower together. The Chancellor of the Exchequer, Nadim Zahawi, recently said “The reality is that we should look at our energy consumption. It is a difficult time” (GUARDIAN 29 8 2022). Well, not for Mr Zahawi and the class he serves. Zahawi has an estimated wealth of up to £1000m and was so concerned about energy consumption that he once claimed expenses to heat the stables of his horses. The luxury of a hot bath in the depth of the winter is only for the rich.

The cost of living crisis is not new. Workers have always struggled to makes ends meet. The problem is that most workers currently accept capitalism and the profit system. Workers may bitterly complain about the pressures placed on wages and salaries and misguiding look to politicians to solve their problems. It is a mistake to think that politicians can solve the problems facing the working class.

Politicians cannot solve the problems facing the working class for a very simple reason. Workers’ lives are constrained within the rationing of the wages system. Everything which is made is bought with money. And this includes food, clothes, heating, mortgage repayments, rent, and transport and so on. What workers and their families need and what their wages and salaries will buy are two entirely different things.

The Poverty of the Wages System

For the working class, the main way in which they can buy the commodities they live on is either through a wage or salary. And under capitalism, a system in which the means of production and distribution are owned by a capitalist class minority to the exclusion of the rest of society, workers are forced to sell their ability to work (their labour power) to an employer in exchange for a wage or salary.

Labour markets, employers, buying and selling of labour power, a wage and a salary are not questioned. The wages system is considered natural: a fact of life. The wages system is never questioned, that is, except by socialists. The wages system is why there is a cost of living crisis and the socialist’s answer is the abolition of the wages system. Workers should have direct access to what they need to live on. Under capitalism they are prevented from producing what they need and having direct access to what they want by the private ownership of the means of production.

However, to understand the cost of living crisis is to understand capitalism, something politicians will not explain to the working class. Politicians do not want workers to understand capitalism. Politicians want workers to remain ignorant, and to do as they are told. The overriding importance of the profit motive for sustaining capitalism is played down.

Capitalism is all about profit. The media have highlighted the massive profits of BP and the water companies. However, they do not explain where profits come from and who the wealth creators really are. The actual work of producing the wealth is undertaken by the social and co-operative labour of millions of workers, while the means of production and the commodities produced by workers belong to a minority capitalist class. Where social needs conflict with profit-making these needs will come second or not at all.

So for the working class it is hand outs, charity, food banks and now “warm shelters” for those in desperate poverty. Yet there is the potential to adequately feed, clothe and give heat to everybody. What stopping people getting what they need is capitalism: the profit system.

The Capitalist Class Produces no Social Wealth

The capitalist class produce no wealth. The source of the profits going to the capitalist class; the CEO’s and investors comes from the unpaid labour of the working class. Workers produce more in a day or a week than they receive in wages and salaries. Workers produce what Marx called “surplus value” the source of the unearned income of rent, interest and profit.

The rising cost of living has meant strike action and a struggle for higher wages. This is because there is a conflict of interests between the capitalist class and the working class. Employers want to pay as little as possible in terms of wages and salaries while the working class, within or without trade unions, try to get as much as possible under market conditions. It is struggle over the extent and intensity of class exploitation and this gives real meaning to the cost of living and the economic crisis facing the working class.

What should be appreciated is that wages are the price of labour power. The price of labour power or a worker’s ability to work is determined in the same way as the price of any other commodity. The commodity labour power is also subject to supply and demand. Nevertheless supply and demand tell us very little. The value of a commodity is determined by the amount of socially necessary labour that goes into its production and reproduction.

We are now able to give an account of the cost of living for the working class. Workers and their families must consume a certain amount of food; they must be clothed and sheltered and they must have access to gas and electricity to heat their homes. This has of course an historical element and must also take into account the education of the workforce. In essence, the value of labour-power is equal to the value of the commodities workers need to consume in order to maintain themselves at work and produce future workers.

Not all workers are paid the same just as not all workers are organised in trade unions. Different types of labour power require the expenditure of different amounts of labour power to train and maintain particular types of workers. Some workers are highly paid but most are not. All workers run the risk of being made unemployed in a trade depression.

The Politician’s Big Lie

The big lie told by politicians, whether Labour, Tory, Green or SDP, about the cost of living is that they tell the working class that they can, if elected and form a government, make capitalism run in the interest of all society. They cannot.

Politicians have one major function and that is to support the profit interest of the capitalist class. It will always be workers who are going to have to make sacrifices; to take a cut in income when inflation rises and lose their jobs when there is an economic crisis or trade depression. Under capitalism, workers suffer pain, discomfort and unnecessary poverty. When workers fight back in trade unions they are faced with anti-trade union legislation. Politicians cannot end the economic trade cycle, prevent war, and end poverty. Politicians cannot do any of these things. The problem for the working class is capitalism.

Abolish the Wages System

Fortunately the working class do not have to put up with capitalism, employers and their politicians. They do not have to scrimp and save; to worry how they are going to feed their children or heat their homes. Workers have the very real political possibility of democratically replacing the profit system for one based upon production directly for social use and meeting human need.

For the workers to abolish capitalism they must go beyond the day to day class struggle. Workers must form themselves into a conscious and political movement for the abolition of the wages system and the establishment of the common ownership and democratic control of the means of production and distribution by all of society.

Workers have not yet reached the position to abolish capitalism and establish socialism. Generations of workers have had to face a struggle to make ends meet; to have what they need to live worthwhile lives rationed by the wages system. Workers must come to understand that they are an exploited class; a world working class facing a world capitalism class. Until workers establish socialism they will face the pain, insecurity and unpredictability of capitalism and all the economic, environmental and social problems it causes.

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Object and Declaration of Principles


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.

Declaration of Principles


1. That society as at present constituted is based upon the ownership of the means of living (ie land, factories, railways, etc.) by the capitalist or master class, and the consequent enslavement of the working class, by whose labour alone wealth is produced.

2. That in society, therefore, there is an antagonism of interests, manifesting itself as a class struggle, between those who possess but do not produce and those who produce but do not possess.

3.That this antagonism can be abolished only by the emancipation of the working class from the domination of the master class, by the conversion into common property of society of the means of production and distribution, and their democratic control by the whole people.

4. That as in the order of social evolution the working class is the last class to achieve its freedom, the emancipation of the working class will involve the emancipation of all mankind without distinction of race or sex.

5. That this emancipation must be the work of the working class itself.

6. That as the machinery of government, including the armed forces of the nation, exists only to conserve the monopoly by the capitalist class of the wealth taken from the workers, the working class must organise consciously and politically for the conquest of the powers of government, national and local, in order that this machinery, including these forces, may be converted from an instrument of oppression into the agent of emancipation and the overthrow of privilege, aristocratic and plutocratic.

7. That as all political parties are but the expression of class interests, and as the interest of the working class is diametrically opposed to the interests of all sections of the master class, the party seeking working class emancipation must be hostile to every other party.

8. The Socialist Party of Great Britain, therefore, enters the field of political action determined to wage war against all other political parties, whether alleged labour or avowedly capitalist, and calls upon the members of the working class of this country to muster under its banner to the end that a speedy termination may be wrought to the system which deprives them of the fruits of their labour, and that poverty may give place to comfort, privilege to equality, and slavery to freedom.