Stagflation nation

James Meechan investigates the looming prospect of stagflation and its potential consequences for Britain's working class
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As we moved to the penumbra of COVID-19 restrictions, there was a veneer of optimism from the government. Insisting that ‘things would return to normality’ they wished to imply the economy would rebound, all that pent-up wealth denied from circulation by the pandemic would be unleashed onto us, and all would bask in capitalistic rhapsody of whole-percentage-point economic growth. Things certainly are shaping up to a return to normality –– the precarious and austere normality we have always known.

The Bank of England predicts the UK will enter a recession by Christmas, in concert with inflation levels surpassing 13%. Historically, when we enter recession, inflation levels remain relatively grounded; now, our class will face an economic disaster on a par with 2008, and all the diminishing prospects that entailed, compounded by rip-off energy and food costs. This is a particular form of economic crisis known as stagflation, and we’ll be hearing more about it in the news over the next year.

The ruling class can shrug their shoulders and wave their hands all-day in shiny TV studios, about how nobody could have predicted this situation, how this is all a result of Putin’s invasion of Ukraine, how workers need to put aside their own interests in order to let the Professionals tackle inflation. 

As many trade union leaders have pointed out, workers have been accepting real-terms decreases in wages, whilst inflation affected them all the same. The desperately needed industrial retaliation, led by the advanced section of the working class, is a renascent development of the post-pandemic economy that saw a fearsome invigoration as the cost of living crisis intensified.

The single constant that is to blame for this inflation crisis, but daren’t be uttered by our illustrious Bank of England governor or any of our Sensible political class, is profit. Energy giants Shell and Centrica report stratospheric payouts to shareholders, after raising energy prices and triggering the high-inflation crisis we are currently suffering. Supermarket executives vote to give themselves corpulent bonuses as they pay poverty wages to staff, set extortionate prices for groceries, and put security tags on baby formula and cheddar cheese.

The British ruling class once again leads the developed world in shafting the poorest of our society. Whereas energy bills in France have increased by 4%, as a result of her robust nuclear infrastructure and the nationalisation of EDF, the UK will see energy bills increase by a jaw-dropping 215%. 8.2 million British households will be in fuel poverty by the end of the year, if the government does not take decisive action. Recalling the lethargic coronavirus pandemic response should be a sufficient indicator for the paucity of intervention we can expect.

The ruling class has assembled a fractious, dysfunctional government, abjectly refusing to address this monumental crisis. Until the Tory party membership anoints either a Thatcher cosplayer or a ‘tech bro’ LARPer, the government claims to be curtailed from helping millions of Britons facing collapsing standards of living, because of some stodgy, gentlemen’s agreement in Parliament. It’s just not cricket for a government to act decisively in an emergency, if there’s going to be a new Prime Minister who must see it through, old boy.

Unsurprisingly, the equitable sportsmen’s conduct does not extend to anyone outside of Westminster. In a world of inflaming international tensions and environmental ruination, the two prospective premiers are of the same glibly neoliberal lineage, the architects of this grimly destitute land. Liz Truss, the likely winner, has signalled her intent to cut taxes in order to ‘alleviate’ the situation for working people. Aside from the fact that the poorest paid workers in Britain will not have enough of their income taxed for this to make an iota of difference on their household budget, this consensus around tax cuts that all of the Conservative party leadership candidates fundamentally agreed upon, reveals the ‘insurance plan’ of the British ruling class.

The incoming stagflation period will obviously impoverish working people, but that is not to say it has no impact on the capitalist class. The assets used by investors to cultivate fictitious capital have biases for certain economic conditions. For example, at times of low economic growth, you want to avoid having your capital tied to real estate. At times of high inflation, you want to avoid locking into financial products like stocks and shares, because every pound you expected to be rendered unto you will be worth significantly less than it would have been when you cashed-in.

The tax cut overtures are, effectively, collective demands from the capitalist class in order to insulate themselves from the inevitable losses they’ll experience, as a portion of their assets decrease in value. Some form of one-off, emergency cost-of-living payout may be politically expedient for the new Prime Minister to inaugurate the new government and win some popular approval, but the true, long-term motivation of their government will be to continue to shift the costs of economic decline onto workers and safeguard the wealth of the bourgeoisie.

This is hardly a new story, and many have drawn parallels between the incoming stagflation crisis and the last recession in 2008. As was the case then, the economic crash saw a huge increase in wealth concentrated by the ultra-rich of society, and the current political formation of Britain is such that this time is unlikely to be any different. Economic decline can, however, galvanise workers, and we are witnessing a fantastic effort helmed by the trade union leadership in promoting a class-conscious opposition to the ruling class.

But the political ramifications of recession –– nevermind this terrifying stagflation –– are wildly fecund, and not automatically a boon for the left. The 2008 crash, whilst it paved the way for the rise of Corbynism in 2015, also paved the way for the zenith of the BNP in 2009, the rise of UKIP, the rise of the SNP. Nothing can or should be taken for granted.

In the absence of any serious working-class voice in parliamentary politics, it is high time for the Young Communist League and Communist Party to seize this opportunity and offer our class an organisation that is going to make the rich pay. It is time to get our movement away from parliamentary politics and into the streets, into workplaces and into our communities. Unless we demand nothing less than a completely different economic system, controlled by and for the working class, our enemies will continue to plunder what little precious prosperity we have left, whether the gurning pillocks wear red, blue or yellow rosettes.

James Meechan, is a member of the YCL’s Glasgow branch

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