The recent Joseph Rowntree Foundation Inquiry into Income and Wealth shows widening gaps both between social classes and within social classes.
At first sight, indeed, the figures suggest that the big divide in British society is not a Marxist class conflict, but one between a mass of poverty and a “privileged” layer, “privileged” only by having stable and moderately-paid jobs.
Closer examination of the data reveals the class categories: capitalist class, middle class, working class, “underclass”. It also shows that differences within the working class have increased enormously.
Those differences raise political issues. The left, and, to a lesser extent the whole organised labour movement, are based primarily in the better-off sections of the working class. Should we accept this limitation complacently, or fight against it? And how can we fight against it?
Rowntree shows a huge growth of poverty. Between 1979 and 1991-2, the top tenth of the population raised its income by 63 per cent (after housing costs), and the poorest tenth’s income went down 17 per cent.
“In 1979, 1.7 million individuals had incomes below 40 per cent of that year’s average (allowing for family circumstances and after housing costs). By 1991-2, 7.9 million people had incomes below 40 per cent of the average for those two years; of these, 3.2 million had incomes below 40 per cent of 1979 average income”.
Behind this inequality stands the class war waged by the Tories against the labour movement. Mass unemployment depresses wages and allows bigger profits, thus bigger investment income for the rich.
It also tends to depress low wages more than high wages. Wages for jobs which require little training, or for which replacements can easily be hired, can be pushed down to the minimum. Workers who cannot so readily be replaced, or whom the bosses want to keep anyway, for continuity and teamwork, can hold their own.
Average real full-time wages for cleaners, or for bricklayers, went up only 3 per cent between 1976 and 1994, while better-paid workers gained 50 per cent (Social Trends 1995).
If trade unions are weaker, bosses are less restrained by wage rates negotiated across the whole workforce, and can open the wage-gap wider.
Across the public services, low-paid jobs have become even lower-paid as they are contracted out, while ever-higher-paid managers have been recruited to dragoon workers into keeping the service going despite continual cuts.
There are now more employees in Britain classified as “managers” than as “production workers”. Fifteen per cent of all employees, and nearly one in five of male employees, are “managers”, though no doubt many of them are in fact just low-grade supervisors and administrators.
Will Hutton, the Lib-Lab economics editor of the Guardian, in his best-selling new book The State We’re In (p.105-9) sees modern Britain as a “30-30-40” society. Thirty per cent depend on pensions, benefits, government job schemes, or “scraps of part-time work”; 30% have “marginalised and insecure jobs”. The forty per cent who have stable full-time jobs or good part-time jobs he calls “the privileged”.
Labour Party leader Tony Blair has talked about extending Labour’s appeal from the “underclass” to the “middle class”. The working class? For Blair it has disappeared.
Some figures make such pictures look plausible. The top twenty per cent have increased their cut of total income (after housing costs) from 35% to 43%. The top forty per cent get 66% of total income. The top one per cent does own 18 per cent of marketable wealth, but gets less than 5% of total income — and is even 18% so much? To include the bulk (72%) of marketable wealth, we have to widen the range to the top 25%. It looks as if the position of the top one per cent is a minor question, and the important divide is between the relatively comfortable top twenty or forty per cent, and the rest. And quite a few “averagely-paid” or “low-paid” people come into the top twenty per cent.
A single person on average male adult full-time earnings of about £17,000 a year (all the figures are for the early 1990s) would be well within the top twenty per cent. Two workers living together, both on below-average wages of £12,000 a year, are also in the top twenty per cent.
“Average earnings” figures can be deceptive. If one person gets £1 million a year, and ninety-nine get £7,070 each, then the “average” is £17,000 a year, but 99 per cent get less than that average. In Britain today, about two-thirds get less than the average.
The lower 80 per cent of the distribution is dominated by unemployed people, pensioners, people on very low or insecure wages, and people supporting children or the elderly on moderate wages. Official figures even understate the case. The adjustment they make to crude income figures for children is very small — much smaller, for example, than the proportional allowance for children made in Income Support rates. A more realistic adjustment would put even more households with children into the lower ranges of the income distribution, and more medium-paid childless households into the top.
The top one per cent is, however, more significant than the crude figures suggest. Their total marketable wealth is £306 billion, or an average of nearly £1 million each.
Compared to the merely well-off, they Á have not only more wealth, but a different sort of wealth. The wealth of the other 99 per cent of us is almost entirely made up of houses, life insurance policies, and the like. “The top one per cent”, as Rowntree puts it, “are very different”: they, and they alone, own sizeable amounts of land and shares — the wealth that brings economic power.
Only 24% of shares are now owned by individuals or through unit trusts; but the top one per cent also control the social wealth represented by the means of production, even when it is owned by anonymous bodies like pension funds, insurance companies, and the state. They are the bosses of such bodies.
Moreover, the wealth and income of the top one per cent must be understated in the official figures, because we know that, to evade tax, the rich systematically disperse the formal ownership of their wealth to their relatives and to family trusts, take many of their luxuries under the guise of “business expenses”, etc.
The decisively privileged class is much smaller than 40 per cent. And, at the other end, the “underclass” is much smaller than 30 per cent.
The basic figures for income distribution are a snapshot. Nearly 40 per cent of those in the bottom 20 per cent in 1991 were out of it in 1992. Many people are poor: not nearly so many suffer the permanent, hopeless poverty of the “underclass”.
The crucial breakpoint here is between the low-wage working-class household which can and does still live from labour, and the “underclass” which has come to look to crime, begging, or dole, supplemented by scraps of work, rather than labour or property, for an income. According to the Social Trends report, one-third of the bottom 20% are in work. Of those in work one-half are skilled manual workers. A bricklayer on average wages falls into the bottom 20 per cent if he is supporting a wife and two young children. Another one-third are retired: though poor, they are mostly not part of the “underclass”.
Even including the one per cent (Rowntree’s estimate) who are not counted anywhere in the income distribution figures, not even in the bottom 20%, the “underclass” is probably at most four per cent of the population.
What of the 95% or so, standing between the upper class and the “underclass”? How do they divide into social classes?
Some ten per cent are self-employed. Rowntree figures show them concentrated in the top ten per cent and bottom ten per cent of the income distribution. At the bottom they are probably, in truth, insecure wage-workers, such as building workers hired as “labour-only subcontractors”, or mini-cab drivers. At the top they will be lawyers, doctors, dentists, business consultants, accountants, and the like.
Some people who are formally wage-workers come close to the economic position of these well-off self-employed professionals. The Rowntree Report remarks sourly that the media often cite £30,000 a year as “middle-income”. In fact it is very much upper-income. It seems “middle-income” to national newspaper and TV journalists, 65 per cent of whom get over £30,000 a year (“Journalist” supplement, March 1995)! On a similar level to those national journalists are many managers, senior civil servants, stockbrokers and other financial traders, university lecturers, etc.
These “professional and managerial” people have high incomes, but not only that. They do not do routine work, under the control of a boss, producing definite goods and services at a socially-imposed level of productivity. Karl Marx contrasted these “higher-grade” workers with ordinary labour. “With given conditions of production, it is known exactly how many labourers are needed to make a table... With many ‘immaterial products’ this is not the case. The quantity of labour required to achieve a particular result is as conjectural as the result itself. Twenty priests together perhaps bring about the conversion that one fails to make; six physicians consulting together perhaps discover the remedy that one alone cannot find... The number of soldiers required to protect a country, of police to establish order in it, of officials ‘to govern it’ well, etc. — all these things are problematical...” (“Theories of Surplus Value” part 1, p.174, 268).
In other words, the numbers and incomes of these people carrying out “the professional activities of the ruling class” (ibid p.285) expand to soak up the capitalist revenue available. Marx argues that when the bourgeoisie “has given recognition to the ideological professions as flesh of its flesh and everywhere transformed them into its functionaries...”; “when it want[s] also to consume ‘in an enlightened way’...”; then the revenue of these “ideological professions” will swell (TSV 1, p.301). He criticises the economist David Ricardo:
“What [Ricardo] forgets to emphasise is the constantly growing numbers of the middle classes, those who stand between the workman on the one hand and the capitalist and landlord on the other. The middle classes maintain themselves to an ever increasing extent directly out of revenue, they are a burden weighing heavily on the working base and increase the social security and power of the upper ten thousand.” (TSV 2, p573)
£30,000 a year, the benchmark salary for members of this middle class well-established in their professions, is the minimum income necessary to maintain a “top 20 per cent” standard with two small children and an unwaged spouse. It is a sizeable class, commanding a large part of the comforts produced by modern industry. Over the last 15 years it has certainly increased its relative income, and probably also its size.
No socialist should hesitate to demand immediate taxes which tap not only the maybe £50 billion income of the super-rich, but also the £150 billion of the well-off.
Historical figures included in the Rowntree report show that between 1938 and 1949 the slice of income after tax taken by the top 10% of “tax units” (couples or single people) went down from 34% to 27%. The Tories have worked a shift of similar size in the opposite direction: the top 10 per cent of individuals have increased their slice from 21% to 27%. A reversal would shift over £30 billion from those living in luxury or great comfort to the poor and to social welfare. This would be enough to restore the Welfare State and pay £40 a week extra to five million low-paid workers.
Each individual area of middle-class comfort is enjoyed by a wider layer than the middle class alone. The divisions are:
- Between the comfortable house with a garden, and the grim council flat or worse. By 1991, three-quarters of remaining council tenants were in the lowest-income 40% of the population, while fewer than three per cent of the top-income 40% were council or housing association tenants.
- Those on or near the level of the “professional” households who spent an average of £77 a week on leisure, and those on or below the level of the average single parent, who could spend an average £7 a week on meals out, drinks, cinema, and sport.
- The 25 per cent who had two or more holidays in 1993, and the 40 per cent who had none.
- The 25 per cent who have financial assets over £3500; 50 per cent who have assets below £500; and 12 per cent who have at least one crippling “problem” debt.
- The 30-odd per cent with credit cards, and the 60-odd per cent without.
- The 58% of those in work who can look forward to occupational pensions (or, more narrowly, those, maybe half of that 58%, who can expect substantial pensions from their jobs), and those who will have to rely on the ever-more-miserable state pension.
- The eight per cent who go to fee-paying schools at age 11 to 15, the one-third who get into higher education at 18, and the rest who don’t. (Another ten per cent or so will get to university full-time later in life).
No research is available on exactly how much these different measures of comfort overlap. Some people well-off on one count are of course badly-off on another. There cannot be more than 15 or 20 per cent who are consistently well-off on most counts. There must be another 20 per cent or so comfortable on several counts, at least.
The 75 per cent or so standing between the upper and middle classes, at the top, and the “underclass”, at the bottom, are united by the fact that they live by selling their labour-power (or, more precisely, are in households which live by selling labour-power or on pensions from previous sales of labour-power); they do routine work, producing definite goods or services, under the control of a boss; they own no substantial wealth beyond maybe a home and a life insurance policy.
They are the working class. The division between this working class and the upper class is fundamental because it is the pivot of the struggles that shape the movement of society: wages against profits, welfare against the rule of the predator, everyday democracy against privilege. The differences within the working class are, by contrast, relative and shifting. What is secure and well-paid now may be insecure and lower-paid next year. Moreover, between layers of workers there are differences, not clashes of interest, whereas the social positions of capitalists and workers are not only different but also opposed.
Yet the Rowntree figures certainly show that differences of living standard within the working class have become much wider. It says a lot about the limits of Establishment social thinking that Will Hutton can describe having a stable job at a moderate wage as a “privilege”, no matter what the alienation, exploitation, and inequality between worker and boss. It also says a lot about life in Britain today.
While the gap between the middle class and the “underclass” widens, many workers are close to middle-class comfort, and many others close to “underclass” misery.
Wage differentials have increased. The well-paid manual male worker (“upper decile”) who got about twice as much as the lower-paid (bottom decile) in 1978 now gets two-and-a-half times as much. The larger inequality among non-manual workers has increased; so has the gap between non-manual and manual workers. The median adult male full-time non-manual worker got 41% more than the median manual worker in 1992, as against only 30% more in 1981, and 23% more in 1971. By 1992 the well-paid (“upper quartile”) male non-manual worker got 3.3 times as much as the low-paid manual worker. The manual pay gap is the biggest since records began in 1886.
Household structures are another cause of inequality. If three workers, A, B, and C, do the same job in the same factory or office at the same wage — say £12,000 a year — but A and B live together without dependants while C has three small children and a spouse at home looking after them full time, then A and B are in the top 20% of the income distribution, and C in the bottom 20%.
Differences of this sort are becoming a bigger factor, for several reasons. People are having children later, and so there are more “dinky” (double-income-no-kids) households. Looking after children, or elderly dependants, has become more costly because the Welfare State has been run down, extended-family networks of aid have diminished, children have stayed longer at school, and frail elderly people have lived longer.
Large economic differences within the working class are, however, not at all new. Some of Karl Marx’s summary statements in the Communist Manifesto, for example, seem to envisage capitalist society splitting into two classes, with no middle class, and the whole working class on a uniform level of absolute poverty.
The picture he found and analysed after serious economic studies was different. When, in chapter 25 of Capital volume 1, he came to describe “the influence of the growth of capital on the fate of the working class” his conclusion was not simply that workers would get poorer. He recognised real wages could rise, but he predicted “the misery of constantly expanding strata of the active army of labour” (p.798, emphasis added). He differentiated between the “badly-paid strata” of the class (ch.25 section 5b) and the “best-paid section of the working class… its aristocracy” (section 5d). That aristocracy suffered cruel economic insecurity, like the whole working class, but in good times could reach lower middle-class standards. Meanwhile the section “with extremely irregular employment”, the “foundation for special branches of capitalist exploitation” outside up-to-date large-scale industry, the section who could not even command normal minimum wages, would expand as a proportion of the working class (p796).
Mass trade unionism, the Welfare State, and prolonged prosperity stifled these semi-pauperising, differentiating tendencies for a long while. Now we are back to Marx. And today’s labour aristocracy is mostly white-collar, with cleaner, more comfortable, quieter and safer work conditions than manual workers.
Like it or not, the permanent, stable organisations of the working class must depend — at least in quiet times — mostly on the workers with more education and leisure, that is, on younger, childless, and better-paid workers, members of the “aristocracy.”
Marxists like Leon Trotsky used to argue that trade unions under capitalism could not escape being limited mostly to “the more skilled and better-paid layers” (Transitional Programme). For some decades after World War Two, it seemed that trade unions in Britain and some other countries had driven beyond those limits. Now we are back near them. Trade unionists today (30% of the workforce) are more likely to have credit cards or own their own home than non-unionists.
The organised, more politically aware, workers are also largely those who have living conditions, as Lenin once put it, “tolerable in the petty-bourgeois sense”. Those conditions breed complacency, moderation, conciliation, a tolerant attitude to capitalism. Witness the Labour Party today, with the increasing weight of better-off white collar workers or middle class people in many constituencies. Plainly socialists have to organise among the active layers but also against this conciliatory bias.
Since youth play a large part in left politics, it is noteworthy that inequality has increased especially for young people. Many young graduates jump straight into the top ranges of the income distribution. The 16 year old school leaver has only the dole or a string of dead-end, very low-paid jobs. Over recent years low-paid young workers have had less chance of progressing to higher-paid jobs than any previous generation for which the report presents figures, back to those born in 1920. No wonder that many university students have drifted to the right, while the mass of young people have become bitter and alienated, if not yet political. Socialists must still try to recruit university students, as we try to recruit better-off workers, but we must be aware of the social and economic factors pulling them away from us.
Another lesson, as relevant but less obvious, is that “labour aristocratic” complacency has an “ultra-left” variant as well as the dominant right-wing one. Left-wing organisations based on better-off workers may escape reformism only to fall into sterility and arrogance. The revolutionary labour aristocrats disdain the petty pleadings of the conventional labour aristocrats, but also disdain the “not very political” concerns of the mass of the working class. Talk of “the working class” or “the trade unions” in general can cover up neglect of the majority.
The orientation of the Socialist Workers’ Party, for example, towards often-token militancy on whatever catches “the mood”, rather than sustained effort on basic working-class concerns, is not just a reflection of their base among university students, teachers, white-collar local government workers, etc. The whole philosophy of a very top-down leadership shapes this orientation. Yet it also “fits” the narrowness of their social base and their smug unconcern about it.
A Marxist left such as we have in Britain today — heavily concentrated in the unionised sectors of white-collar work — has a duty both to organise among that layer of the working class which is already active, in the trade unions and the Labour Party, and to turn a section of that “aristocratic” layer out towards the worse-off working class, especially the youth. “Colonisation” of ex-students into manual work, campaigns such as the Welfare State Network and efforts to build a working class youth movement are all part of this. The “labour-aristocratic” mentality helps hold most of the Marxist groups back from such work, and leaves them complacent about their lack of roots in the bulk of the working class.