Working Class

A Working Class Alternative To Labour
A Return to Manufacturing

Our balance of payments is in deficit (£4bn per month, the second largest monthly deficit in the world). This
means we import more than we export. Germany and Denmark and Holland and Sweden, for example, are in credit. If
we don't ourselves make more of what we use, it can only get worse. For Britain to be able to pay its way in the future
we need a return to manufacturing.

Much of British industry (except, for example, aerospace and weapons, which still flourish), was pushed into decline
during the 1980s at great cost to the country, which now depends largely on financial services (investment banking) for
its balance of payments. This means that
we export money, we invest in foreign industry. One third of all profits  
invested is now invested abroad (£60bn per year; 2011 Treasury) A short term solution holding the seeds of long term

This process  removes money from manufacture in Britain, creating unemployment, (and creating very lucrative jobs
for the relatively few people involved in investment banking).

It will only get worse as foreign industries grow and ours shrink even further. Obviously it makes Britain extra
vulnerable to financial crises, as we have recently learned to our great cost. A conclusive banking collapse would spell
disaster for a country that relies, not on manufacture, but on investment banking for its balance of payments, which
accounts for £4bn pcm of our trade, as our actual
manufacturing deficit is £8bn

Because of the low wage message that has been drummed into us over 3 decades, since the dramatic decline of much of
British industry under the Tories, we tend to think that it is impossible to manufacture our own goods because the
economies of the far east do it cheaper. This obviously hasn’t occurred to the Germans, or even the Danes or Swedes
with their high wages, for they all have a balance of payments
surplus despite not having high finance for a large part
of their income as we do. The highly paid Danes and Swedes, whose working classes have long since kissed goodbye to
the kind of poverty ours expect, and who enjoy high standards of living, export more than they import; both they and
the Germans hold their own (and not only in high quality engineering), while we have largely given up due to poor
investment and poor education.

The hard truth is,
if we can't afford to make it then in the long term we can't afford to use it.

Isn't there a contradiction between the ideas of greater investment and higher wages?
It might seem that high minimum wage policies that effectively remove one third of owners' profits and give them out
in wages contradicts the idea of greater investment in British industry, because the money to invest comes from the
profits of industry.
But high finance is not doing the job of investing in British industry. Higher wages would mean taking away some of
the profits from big business and high finance; But it would make it possible for small account holders to save, and
those savings are what traditional banking used to use to fund local businesses (see Small High Street Savings Banks,

What is the meaning of imports when we have 3 million unemployed?- The role of banks

- Unemployment is the direct consequence of under-investment in industry. Capitalism works by there being
investment in industry; where there is none then there can be no industry. When British banks refuse to invest in
British industry, and invest abroad instead, then they are directly causing unemployment. When banks argue that they
have to invest where the growth is fastest in order to serve their shareholders, then we have to remember that those
shareholders are themselves banks and financial institutions. Banks' self interest spans national borders.

Meanwhile - twenty-one per cent of 16-24 yr olds are unemployed, 460,000 are seeking Job Seeker's Allowance.

Overall, there are 900,000 people who have been unemployed longer than one year (Source: Department of Works and

Long term unemployment is a social problem and an economic one. The social costs of young people being in
long term unemployment go towards making our society destructive and negative. The economic costs include housing
benefit, and unemployment benefit and other social security payments, also social services, prison services and other
attendant costs of long term unemployment. The other cost is wasted labour; wasted labour that costs money to feed
and house. Wasted labour that suffers a massive disappointment and disillusionment at the beginning of its working
life, a sense of being not needed, and not wanted.

This is because we have chosen to live the lie that we can somehow pay for what we use by high finance
investing in foreign industry instead of our own young people's lives.

In fact it is the unemployed, and perhaps especially the young unemployed, who are the key to our future recovery.
They are the unused manpower that can increase our collective wealth and prosperity. Theirs are the hands that can
manufacture the commodities that we need so that we don’t need to buy them from abroad.

But for that we need banks that will invest savings and profits into British industry. In capitalism, jobs
do not create themselves, they need investment.

Since we do buy commodities even though we don't make many of them any more, the policy of closing British
industries down and making ourselves unemployed has sent this country into long term decline that cannot be reversed
until we go back to making what we use. We hid the illogicality of the situation from ourselves until the banks crashed
and the balloon burst. Then it was shown that Britain was particularly vulnerable to a banking crisis, and that we
have too weak a manufacturing base to be able to expect a speedy recovery. Economies that had trade surpluses, such
as Sweden, were relatively unaffected by the banking crisis.

Competitiveness of British Industry with a high minimum wage
The successful economies are the ones with high wages. Foreign businesses are not at present necessarily attracted to
low wage Britain, as the past 50 years have shown.

The passive mode of trying to attract foreign businesses to Britain  by making ourselves cheap, was only ever likely to
lead to long term decline, as even when it works it creates a hemorrhage of money from the country and pushes British
firms further out of the field.  We need a well-paid and well-educated workforce who have the associated high
productivity rates (as opposed to a low paid and partially illiterate and innumerate one that we have now) for our own
industries, to create a strong domestic market as a launch pad for exports. Or we need high paying foreign companies
who want skilled labour. The very last thing we need is to attract low paying foreign companies, who import
components for an unskilled workforce to assemble.
When governments boast of 1000s of new jobs remember is important to know what sort of jobs they are;
how it works;
Foreign Companies in Low Wage Britain
For decades, desperate to see new jobs created as British manufacturing declined, governments have talked about
attracting foreign firms to Britain. But it is not a good long-term solution to unemployment if the workforce is
insufficiently skilled and is therefore low paid. The foreign-owned businesses are likely in that case to be nothing more
then assembly plants.
Mass production of cars for example, doesn't just require one big factory, there has to be a large network of
engineering works with skilled workers to make tools and components. When that network is gone, as it is in Britain,
then the high value work is done elsewhere and
all we do is to assemble the parts. Remember too that in an
assembly plant, where the parts that are assembled are brought in from abroad,
they are counted as imports, and
therefore count against us in the balance of trade.

So a £10,000 car assembled here brings very little value into the British economy, in fact it takes it out. The
£10,000 goes to the owner, say Fiat, and the £5000 or so imported parts count as a deficit on our current account.
The only benefit of each car assembled here is the low wages paid to the assembly plant operatives, and the tax on the
profits which is paid at one of the lowest in Europe, 23%. (
see table)

Education for Industry
This is why the kind of education we give ourselves is so important to our future prosperity. It's not about league
tables and awarding ourselves A grades for C grade work. Empty grades don't help when you are employed by the
precision tool manufacturer and can't do the job, as many small businessman will confirm. Small companies are having
to educate their employees themselves, even when they come equipped with university degrees in engineering.
Britain needs to develop that
support structure of skilled engineering works that would make it possible to
properly manufacture, for example cars, here in Britain.

That means investment, training and education. It means ensuring that school leavers are literate and numerate
and able to train as skilled engineering workers. At present it is doubtful that we have sufficient numbers of school or
college leavers of a high enough proficiency in practical engineering to enable us to have a car manufacturing industry
here. So we import cars, or assemble them. Meanwhile governments talk of British exports being 'high value, highly
skilled engineering'. This is because the exports we do have are typically of that nature, such as in aerospace and arms
manufacture. But those claims tend to gloss over the fact that we lack the ability to manufacture the majority of what
we use. Labour talks of "world class apprenticeships" One has to wonder what they mean.

A note on coal production
To drive down wages is to unnecessarily shrink the economy. In an economy based on consumption prosperity has to
be based on manufacturing. There are two things we need to do to pay our way - one is to produce for export, the other
is to produce more of what we use ourselves so we don’t have to buy it from abroad; this would leave money for fuel for
example, some of which we have to buy from abroad (until we re-open the pits to extract the coal that lies beneath
British soil; world reserves are 860bn tonnes and we have about 3bn of them. We produce only 30% of the coal we use,
and coal provides 38.4% of our energy. That’s a lot of imported energy).
Click here for a quick
explanation of the
National debt and Tax
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