Trade Unions, inflation and strikes

After World War II workers and trade unions had to face inflation – a continuous increase in the cost of living. In the Labour government 1974-79 the cost of living more than doubled, and the average price level in 1980 was thirteen times what it was in 1938.

Is it back to the 1970s? Many in the capitalist media believe it is. Journalists and others point to the apparent similarities – oil shocks, recession, seasons of discontent, inflation and austerity. If there is a similarity at all, it is the inability of governments and politicians to meet the needs of all society. In a class divided society governments and politicians exist to serve the interests of the rich and powerful not the working class. They would agree with a DAILY TELEGRAPH journalist who said that the rewards of the rich are “Natural and inevitable” but the “clamour” of workers for pay rises is “nothing but shameful opportunism
(Ben Wilkinson 28 June 2022).

With inflation now running at 9.1 percent (June 2022) workers are struggling for higher wages. Many workers, in the trade unions, are using the strike weapon as leverage for better pay and working conditions. In the 1970s there were 11.2 million trade unionists and 12.8 million by 1980. As of 2020, there were over 6.66 million workers that were in a trade union.

Under capitalism trade unions are useful in the class struggle in their attempt to get higher wages and better working conditions. They are not useful when affiliated to the Labour Party. There is no public support from the Labour Party for BT workers taking strike action but they are at ease with chief executive getting a 32% increase and shareholders received £700m in dividends (THE OBSERVER 03 07 22). David Lammy, Shadow Secretary of State for Foreign Affairs was against strike action, did not believe in it, and saw it as something wrong.

The strike weapon in the class struggle is not used by trade unions lightly. Gains made in higher pay have to be offset by losses made by workers during strikes. Whereas in the nineteenth century the negative effects of strike action was largely confined to the strikers and their families, strikes today cause hardship and disruption to the working class as a whole. The success or otherwise of strike action has to be weighed up against the inconvenience faced by other workers with no access, for example, to public transport or hospital services.

Socialists have always supported the use of the strike by workers as long as it was a democratic decision; a majority in favour of taking strike action and a majority voting to return to work. However, socialists have long pointed out the problems for workers of long strikes, particularly economic hardship to the membership and their families. Our late comrade Hardy used to say that the best strikes were those that did not occur because employers were ready to concede pay increase in order not to prevent the flow of profits which would have been caused cause by the strike.

The most publicised strike at the moment is the RMT union strike which has seen the railways closed over numerous days. The RMT is demanding 7% increase when inflation is 9%;, which transport secretary Grant Shapps calls “extreme”. Shapps, though is quiet on the 7% increase in pay last year for chief executive of First Group, Britain’s largest train operator last year.

Pay for most rail workers has been frozen since 2020. Here the union is not only demanding higher wages but trying to protect members from “modernisation” a euphemism for replacing workers with new forms of technology. Thousands of workers in ticket offices, for example, are to lose their jobs to new technology. Not that “modernisation” stops there. The new Elizabeth Line in London has the capacity for driverless trains as does much of the Underground. Replacing workers with technology is not new. Capitalists are continually striving to minimise costs and maximise profits by increasing the exploitation of labour and innovating by introducing new and better machinery.

To quote Marx:

...the restless never-ending process of profit making alone is what he [the capitalist] aims at...
(CAPITAL vol1. Ch. IV, p.152).

The problem for unions and the working class in general is not the threat of new machinery displacing workers but the fact that the working class do not own the means of production and distribution. How, where and how new technology should be used should be under democratic control by all of society. Under capitalism it isn’t. The introduction of machinery is primarily used by capitalists to give an edge in competition and increase the rate of profit.

Keir Starmer, the Labour Opposition and Strikes

For Her Majesty’s loyal opposition the railway strikes have come as somewhat of an embarrassment.

Starmer ordered members of his Shadow Cabinet not to go on RMT picket lines (many ignored him). He did not want the Labour Party associated with the strike for “tactical reasons”. He has been criticised for not supporting the strike although he has claimed that he supports “the general public” which is another way of saying the interest of employers.

Of course, Labour like the Tories, have to support the interest of business; that is the interests of the capitalist class. David Lammy, Shadow Secretary of State for Foreign Affairs, not only attacked “big pay claims” on the BBC SUNDAY MORNING SHOW but also defended Starmer’s warning to his shadow cabinet by claiming that a party of government doesn’t go on picket line! (26 June 2022)

However there were also practical reasons for Starmer not to support the strikers which Lammy did not want to be drawn on. If Starmer was Prime Minister, a Labour government might well use troops to break the Railway strike. They have used troops to break strikes in the past.

Starmer is currently being advised by Lord Mandelson (TIMES 14 Feb 2021), known euphemistically as “The Prince of Darkness” and former New Labour guru under the Blair government. Perhaps he turned Starmer’s attention to a quote by Tony Blair when he was Prime minister, when he said:

We will not be held to ransom by the unions...We will stand up to strikes. We will not cave in to unrealistic pay demands from anyone...Unions have no special role in our election campaign, just as they will get no special favours in a Labour Government
(FINANCIAL TIMES, 7 April 1997, quoted by Steve Ludlam, New labour in Government, 2001, p 115).

Mandelson, who has a net worth of $6 million had no problem with the capitalist class. He once remarked that:

We are intensely relaxed about people getting filthy rich as long as they pay their taxes

And when it comes to inflation, in 1977 Callaghan, the then Prime Minister, announced a wages ceiling of 10 per cent (inflation was running at 15.9 per cent) and then in July 1978 stated that wage increases would be kept to 5 per cent though the cost of living was rising at nearly 10 per cent. This was too much even for the trade union leaders who had hitherto backed the policy. Both the TUC and the Labour Party, at their annual conferences, refused to accept it.

This led to the so-called “Winter of Discontent”.

The Labour government faced the prospect of a whole series of strikes – in the private sector from oil tanker drivers and lorry drivers, and in the public sector from local authority workers, with specific problems from water and sewage workers and ambulance crews. Callaghan used troops to break the ambulance dispute. The Labour Government had used “Green Goddesses” and the army to break the fire fighter strike of 1977.

In the election of March 1979 Callaghan was voted out of power by an electorate who misleadingly saw the trade unions as the “villains of the piece”.

Starmer does not want to become another Callaghan. He wants to be seen as another Clement Attlee the architect of NATO and instigator of the Atomic Bomb in UK’s arsenal of death and destruction. He views those who do not support NATO’s expansion into Europe as “unpatriotic”. Clement Attlee’s government had no compunction of using troops to break strikes.

At the moment Starmer and his Labour Party are in opposition. Yet, if in government the Labour Party would behave no differently towards striking workers or towards trade unionists trying get higher pay than the Tories. A Labour government would have to oppose the interest of the working class. That is what capitalist governments do.

Do wage increases cause inflation?

Economists did not anticipate the recent rise in inflation. However, economically illiterate economists, including Andrew Bailey, the Governor of the Bank of England (salary £495, 000 per annum), were quick to tell workers not to struggle for higher wages to prevent “wage-price inflation". The Tory government have told workers to be “responsible” by not asking for high pay increases and to moderate their wage claims “if they want inflation to be defeated”. However, workers do not cause inflation.

In the meantime inflation seems not to bother the rich and powerful. They have no difficulty funding capitalist political parties from their wealth. They are not told by politicians to embrace austerity, pull the belt in and do with less. The Tory Summer Ball (£20k-per-table), recently held in June 2022, at the V &A Museum, saw one wealthy Tory supporter pay £120,000 to have dinner with Mr Johnson, David Cameron and Theresa May. Maybe not an act of embracing austerity but certainly a touch of political masochism, if you happen to like that type of thing!

Workers have largely ignored the economists and the Johnson government packed full with multi-millionaires. Local and central government workers, teachers, nurses and doctors in their trade unions are pressing for higher wages, threatening strike action. So too are workers in the airports and in flight cabin crews.

Should workers press for higher wages in a period of high inflation? Should they temper the class struggle? Does wage increases just put up prices and leave workers where they were? Such questions were answered in a lecture given by Karl Marx (published as a pamphlet, VALUE, PRICE AND PROFIT).

Marx showed that the theory that workers pay rises push up prices is at variance with the realities of capitalism.

Prices and wages are governed by economic laws inherent in the profit system. The prices of goods are not determined at will by the manufacturer or retailers who always sell at prices determined by market conditions, “as high as the market will bear”.

Unless market conditions change in their favour, the manufacturers and retailers cannot raise prices further simply because they have had to pay higher wages. If employers could recoup wage increase by raising prices, there would be no point in their resisting wage claims.

Marx went on to show that the effect of a general wage increase (or any wage increase) would be a corresponding reduction of profits. Though some prices might rise and others fall, a general wage increase would leave the average price level unchanged. In his lecture Marx was dealing with the situation as it existed in the UK at the time, when there was no inflation and the gold standard held. The case he put, however, is just as valid today, though inflation has made it more obscure.

If it seems reasonable when an employer says wage increases have raised his costs, it is no less reasonable for a worker to say that he needs higher wages be causes prices have gone up. It was Marx who showed that wages are themselves prices, the price for which the worker sells their mental and physical energies (their labour power); so that when prices rise generally due to inflation, wages go up just like other prices.

The attitude the workers should adopt is plain. Whether capitalism is operated without inflation as in Marx’s day, or with inflation as since 1938, after the Second World War and in the second decade of the Twenty First century, the interest of the working class lies in pressing all the time for wages as high as economic conditions permit.

This is the lesson that Marx taught: not forgetting his conclusion that the only real solution for the working class is to push the class struggle to its final limit and end capitalism itself and democratically and politically establish socialism: the common ownership and democratic control of the means of production and distribution by all of society.

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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.