Charting the class struggle

This is the graph we printed in Catalyst. The green line represents thousands of strike days and is read from the left y-axis, black represents inequality as measured by the Gini coefficient, and is read off the right y-axis (100 = one person owns everything and 0 = perfect equality. Worldwide, Gini coefficients range from approximately 23 (Sweden) to 70 (Namibia) although not every country has been assessed). Click on the charts for high-res versions.

We flagged up three main points of interest. (1) In 1976, as the wave of struggles which brought down Ted Heath's Tory government and forced up wages subsides, Labour call in the IMF. This seems to mark the end of the post-war settlement and is the beginning of rising inequality. (2) Workers respond with a wave of strikes, many of them unofficial. These culminate in the ‘Winter of discontent’ in 1978/9. (3) Thatcher’s Tory government smashes the workers’ movement, leading to a dramatic fall in strike days and a corresponding rise in inequality.

The graph tells a familiar story - industrial unrest was high in the 1970s, but was smashed by Thatcher in the 1980s leaving us with the very low strike rate we have today. But really we need a longer perspective to make sense of this. The next graph shows strike days since 1901 (inequality data only goes back to 1961 as far as I can find).

Two main things jump out at me here. Firstly, the historic highs of strike days in the first graph are put in context of a wave of struggles lasting roughly 1968-1979, with the '84/'85 Miners' Strike being a last gasp battle of that cycle of struggles. Before that, there was a long period roughly 1933-1955 of very low industrial unrest, following the previous cycle of struggles lasting roughly 1918-1926 (the pre-WWI spike is the 'Great Unrest', including the 1911 Liverpool General Transport Strike and the 1912 Syndicalist Trials). The 1926 spike is of course Britain's only national General Strike. This is an interesting counter to the fashionable tendency to consign the class struggle to history. I'm sure people were saying similar things prior to 1968. In fact, they were.

Secondly, these two cycles of struggle have an international character - the first includes the Russian Revolution, the German Revolution and the high points of Italian and American syndicalism, amongst others, while the second wave included Mai '68, the Hot Autumn in Italy (photos) as well as the Prague Spring, student revolts in Mexico and the US and more. It would be interesting to graph this unrest from around the world. I think Beverly Silver was involved in compiling a database of world labour unrest from newspaper reports - but stuff like this is a PhD-sized research project and this is just a blog post!

Without inequality data pre-1961 it's hard to say more on that. But we can use a proxy: wages as a percentage of GDP (the pink line, read against the right y-axis).

Now I can only find this data back to 1948, and it isn't an ideal proxy since it doesn't say anything about the distribution of wages and almost certainly includes senior management and maybe even directors' pay (I can't be bothered to check the ONS methodology for a blog post tbh!). But nonetheless the pink line does roughly inversely track the black one, suggesting it's a workable proxy: when wages make up a higher percentage of GDP, inequality is lower. The post-war period then seems to be one of stable or slightly falling inequality, coupled with relatively low and stable strike activity (although higher than today), which goes into crisis around 1968 with a wave of struggles (themselves responses to various things) pushing up wages and bringing down inequality, toppling governments and causing the IMF to be brought in.

Subsequently, Thatcher's government comes in and smashes the miners, allowing the rising inequality to continue unopposed. This looks quite a bit like punctuated equillibrium, with a relatively stable social democratic mode of accumulation from 1947-1968 going into a decade of crisis before being replaced dramatically with a neoliberal one, based on higher inequality and lower strike activity. Having mentioned Thatcher, it's probably worth considering what relationship this all has to political parties, before speculating a bit about what a crisis of the neoliberal mode of accumulation may look like. In the fourth chart, governing parties are superimposed - red = labour, blue = tory, yellow = liberal and grey = coalition/unity government.

Most strikingly, the longer term patterns seem completely indifferent to governing party. Inequality began to plateau in 1989 under the Tories, but has kept creeping up under both Tory and Labour governments. Strike days crashed after the defeat of the miners and Wapping, but stayed low under Labour too. It's only really in the shorter-term where there's any correlation at all. In 1974 the miners strike brought down the Tory government and ushered in a Labour one. Inequality fell and so did strike days - for a couple of years until they picked up again and the Tories swept back into power. So wherever there seems a correlation, the causality seems to be driven by the class struggle and not the other way around, since in the absence of increased struggles there's no obvious differences between the parties.

Speculation: neoliberal crisis?
Predictions are a fool's game, so here we go. I've suggested these charts show a punctuated equillibrium between modes of accumulation, with a relatively stable equilibrium going into crisis and transitioning fairly quickly into a new equilibrium. So what about neoliberalism? Are we in its crisis now? My gut feeling is we're nearer '1957' than '1968', seeing a small upturn but not yet a major crisis. The odds are the state will be able to force through austerity in most places and contain financial contagion from things like the Greek crisis (although of course, it could still all unravel spectacularly). My bet is the managers of the neoliberal regime will manage to keep the cat in the bag for now, and impose more neoliberal solutions, bottling up the contradictions for another decade or so. But some cracks are already beginning to show. Paul Mason notes:

The IMF and ECB are urging Europe to create a new bailout fund to operate thereafter in which private investors never take a hit, ever. (...) After three years of agonising about moral hazard we are basically creating a system where banks and pension funds can lend money to EU governments with a cast iron guarantee they will get their money back. It is great if you think we should be moving towards a new state capitalism, where the state becomes the permanent underwriter of financial profit, but it is not really a market.

This may well help reassure investors and keep a lid on the current crisis, but it's impossible to see how this isn't storing up big trouble for the future. Guaranteeing private financiers against losses is sure to encourage further creative manipulations like those involved in the sub-prime bubble, and contribute to an even bigger crisis down the line. We're getting highly speculative here, but that's what I'd guess will mark the '68 moment' of neoliberalism, with increasing austerity and financial instability provoking more social unrest and workers struggles and perhaps a capitalist backlash against deregulated finance. Lurking in the background here is the geopolitical power-play of the rise of China. A fair few commentators seem to think both China and the US are expecting a binding CO₂ emissions regime in 10-15 years time, and are now jostling for leadership position. China is now the world's leading producer of wind turbines for instance. So if I had to guess, I'd imagine neoliberalism will stagger on for another 10 years or so before financial instability and social struggles make it untenable, and there's a move to reregulate global finance within some kind of binding CO₂ emissions regime, probably with China finally shedding the 'sleeping' part of its giant moniker. But like I say, predictions are a fool's game.

SOURCES: Office for National Statistics (ONS) and the Institute for Fiscal Studies (IFS) Income and Inequality spreadsheet complied from ONS data.