UK - emergency call

On the one hand, Blair prepares to send troops into Iraq behind the coattails of the Americans to overthrow Saddam. On the other hand, he and 'two Jags' Prescott prepare to send in troops to break the picket lines of the firefighters. If you adopt the policies of capitalism abroad, inevitably you will adopt them in domestic policy.

On the one hand, Blair prepares to send troops into Iraq behind the coattails of the Americans to overthrow Saddam. On the other hand, he and 'two Jags' Prescott prepare to send in troops to break the picket lines of the firefighters. If you adopt the policies of capitalism abroad, inevitably you will adopt them in domestic policy.

There we have it. The British comrades of the heroes of 9/11 in New York are to be attacked and vilified as overpaid, underworked and just plain lucky to have a job. And on this occasion, it's not only Prescott and Blair who conduct this campaign, but also the silent man of New Labour - the man who stays who stays quietly in No 11 plotting the overthrow of No 10 - Gordon Brown.

Gordon has nothing to say about whether the UK should join the Eurozone. He has nothing to say about whether the UK should join the US in attacking Iraq (except that British capitalism can afford it). But he had plenty to say in parliament about how if the firefighters won their claim, it would encourage other public sector workers to do the same and then his struggle to drive down the national debt (by paying off the rich and keeping taxes for lower and middle incomes high and introducing the 'private finance initiative') would fail.

Along with the Daily Mail and the Sun, Gordon and the government trot out the story that there are 40 applicants for every vacancy in the fire service, so it must be a good job and firefighters should be happy with it. But who are these eager applicants? Almost certainly, they are the unemployed, those with poor, low-paid temporary jobs, and those with unsocial working hours, above all, those desperate to find a relatively secure job that is useful. One of the key features about firefighters, unlike many other public sector jobs in the health service or education, is that there is no academic qualification to join. After much training, you can become a skilled firefighter and you needn't have passed your GCSEs. Only the police are similar.

It is the rule under capitalism that the worst paid jobs are the ones most useful to society but least useful to making profits. So the low-paid are nurses, teachers, school and hospital ancillary staff, garbage collectors and firefighters. And it is no accident that the best-paid public sector service is the police. They are needed by capitalism to keep law and order (although their detection and conviction rate is abysmal). Indeed, they are vital to keep the trade unions under control, bust picket lines and carry out spying against British citizens.

The best paid in our society are those who manage big capitalist companies or bet on the stock market in the City of London (using our hard-earned pension savings and making a hash of it most of the time). But they contribute little or nothing to society. Indeed, they are positively damaging. Of course, these people are never the target of Gordon Brown's anger. Listen to the silence and wringing of hands from Brown and his Treasury crew as the pensions crisis and thievery of the pension fund managers go past unchecked.

Up to now, Gordon Brown and the government have been telling us that the UK economy is in great shape. It is growing faster than in Europe or even the US. Inflation and unemployment are low. Boom and bust is over. The only danger is with the rest of the world. If the world goes into recession, it will be difficult to resist joining them.

But the firefighters dispute reveals that this analysis of UK capitalism is just not true. Apparently, the British economy is so poor that it cannot finance a living wage for firefighters, or for that matter, for most public sector workers. There is rottenness in the state of Elizabeth and it is not just in the Royal House of Windsor (nee Saxe-Coburg) and its sleazy butlers.

We know that UK industry has been on its knees for some time. Manufacturing output is falling at a 3% annual rate, bringing overall growth in the economy down towards just 1%. Of course, the forecasts for next year remain optimistic. The economic experts expect 3% growth in manufacturing and 2.5% growth in the economy as a whole.

But leaving aside the likely economic recession in the rest of the world, there is little justification for expecting the UK to resume 2-3% growth next year. UK businesses resolutely refuse to invest in Britain.

Investment is falling at a near 10% rate and imports flood into the country to compete with UK industry. Gordon and his Treasury acolytes know the real truth about British industry. There has been so little investment over the last decade that despite working the longest hours and having the shortest holidays in Europe, the productivity of British workers remains well below that of France, Germany or the US.

The Treasury's own recent study shows this clearly. According to that, American workers are 30% more productive, French workers are 25% and German workers are 15% more. Only Japanese workers do worse. And things are not getting any better. In the last five years, productivity has improved by nearly 2% in the US and Germany, but only by 1.4% in the UK.

The reason for this is also revealed in the study. US capitalists invest 46% more in capital equipment per worker than British capitalists do. And in the high-tech sector they invest nearly three times as much!

The French invest 75% more and the Germans 50% more.

The other factor that drives productivity is the skills of the workforce. But British capitalists don't bother with that. They prefer cheap unskilled labour. According to the Treasury study, 57% of UK workers have no qualifications compared with 54% in the US, but only 32% in France and just 20% in Germany. No wonder the profitability of UK companies has fallen sharply in the last five years and is now back to the lows of the early 1980s.


Another of the big reasons that UK productivity and company profitability is so poor is that British capitalism and its politicians gave up on industry and manufacturing a long time ago. Investment is not into the productive sectors of the economy or even into the public sector to maintain the infrastructure (railways, roads) and services (health, education) that are vital to make the private profit sector work.

Instead, the UK has become a rentier economy. It is an economy that does not make anything any more. Instead, it sells things others make or it lends money to others to make them or it lives off the income 'earned' from investments it makes abroad. This is increasingly an economy that survives through business services and finance. That sector alone now contributes nearly 29% of each year's national income.

Financial services contribute 9% towards annual income and they now provide the single biggest area of employment outside the public sector.

The UK's success story under New Labour since 1997 was made possible by the great stock market boom of the late 1990s. That boom drove up the wealth of the rich massively. On average, the wealth of UK households reached four times their annual income. Of course, that ratio was much higher for the rich. With the rich and the middle-class feeling rich, they spent money and the economy went forward.

But the bubble of the stock market has well and truly burst. Stock market prices are down 60% since their peak in March 2000 and the bonuses of the fat cats in the City of London have been cut, while the big investment houses are sacking their workers (the lower-paid ones of course). That wealth ratio has fallen back to just three times, a 25% loss (on average and higher for the rich).

But there is still one bubble left in UK capitalism - the property market. While UK industry stagnates and the financial sector cuts its throat, house prices go on rising at a 30% rate. That helps to keep estate agents and other business services in employment and keep sufficient numbers of people willing to buy all those electronic gadgets and new cars.

But the firefighters of capitalism are worried. This cannot last. And while it does, in the words of the deputy governor of the Bank of England, Mervyn King, it is causing 'major imbalances' in the economy.

Every bit of surplus value created by British workers is being sucked into property speculation or investment overseas. Little or nothing is going into improving productivity and profitability in productive sectors or into exports. As a result, the Bank of England fears that inflation will stay higher than in Europe or the US because of the property boom, forcing the Bank to keep interest rates higher than in Europe or the US (UK 4%, US, 1.25% and Europe 3.25%). And these high interest rates will stop companies borrowing to invest, so economic growth will weaken.

Then jobs could be lost and the property boom could go bust. And all this could happen just at a time when the world slips into a new recession.

That's why the New Labour government and Gordon Brown are being so pigheaded about the firefighters. They can see the real fire coming. Next year we could have the Middle East in a mess with oil prices rocketing, the world capitalist economy slipping back into recession. Then the rentier economy of the UK will show that it is made of chicken legs. The firefighters must pay the bill for this coming mess in advance. The rest of us will pay to bail out capitalism later through rising taxes and disappearing jobs.