New dawn for the workers

Migrant cleaners at rich banks are today organising for a living wage. It's reminiscent of the 1889

Canary Wharf, London, 2004

The woman holding the leaflets clutches them tight against her duffel coat. At street level, Can ary Wharf is like a wind tunnel. The small group of activists in high-visibility bibs is dwarfed by the skyscraping headquarters of investment banks: Morgan Stanley, Lehman Broth ers, Barclays and tonight's target, HSBC. The activists are not supposed to be here; this is the new financial heart of London and even the public space is privately owned by the development company. They know they can be thrown off the street.

By day, Canary Wharf teems with men and women in suits; the average salary here is £60,000. During business hours, upwards of 80,000 people come and go, surrounded by glass, steel and sky, and the picturesque waterways that used to be London's main docks. By night, it is deserted, except for security guards, cleaners and this small group of Living Wage Campaign leafleters organised by the TGWU and the East London Community Organisation.

Those the leaflet is meant for arrive in small groups, by bus. They are the cleaners who sluice the toilets, dust the desks, swab the telephone mouthpieces with antiseptic wipes and empty brown apple cores from thousands of waste baskets. They are almost all migrants - not from the settled Caribbean and Asian communities of inner London, but from among the new arrivals: Somalis, Nigerians, Sierra Leoneans, Kurds, Col ombians, Iraqis, Afghans, Bolivians, Cubans, Spanish and Portuguese. Benedita Gonçalves, a Portuguese cleaning supervisor at a major bank, describes the way the cleaners are treated by the office workers: "The cleaners clean the rubbish and we are like rubbish for them - apart from some who work at night and start to know us and sometimes say, 'Good evening.' For the rest, we are no one.We are rats, we come in the night."

Migrant cleaners always talk about being "looked through" by office workers who don't see them as people, let alone workmates. In most cases they work for subcontractors and are not part of the core workforce. Cleaners also say they are always the first to be accused of stealing if something goes missing, but their recurring problem is an absence of respect. "I started my battle in the first week I was there," says Bene dita, "because the management were horrible. They showed lack of respect to the employees. Everything you did was wrong. They sent people home for no reason - just because they didn't need them. Another thing is the shouting, calling names, saying, 'You are crap; you are no one.' Something like that happened with me and so I started my battle against them."

For Juan Rodriguez, the biggest issue is contracts, or the lack of them. He says when he started work as a cleaner at News International six years ago nobody knew what the official hours, wages or even status were. Now their employer, a cleaning contractor, has tried to get them to sign individual contracts but they have refused. "One hundred per cent," he says, "even the ones not in the union." For Juan, the problem is "respect and money" - respect first, but with the cleaners earning on average £200-£300 a week, money comes a close second. "Management harass the staff, blackmail the staff - and the worst thing is, which is very, very sad, people with no documents are afraid to make comments. Some of them are even against us - the ones who are afraid of the union."

Martin Wright, a black British cleaner at the Royal London Hospital, echoes the complaint. After three years of organising, he's managed to get the hourly pay raised from £5.50 to £7.50 an hour and the contract taken in-house so the cleaning managers have to answer to the hospital managers. But there are still problems: he's having to deal with constant tensions between workers from Nigeria, Ghana and Somalia. "Martin Luther King is my hero and I tell them we are all brothers and sisters; all our ancestors came from Africa." Juan and Benedita have both encountered similar conflicts. "Some people," says Juan, "because they come from a background where there is civil war, they still have in their mind just to kill! One guy working with us came into the room and said to another guy, 'If you were in my country I shoot you,' and we said (we were all shocked), 'What are you talking about?' And everybody in the room realised this guy, in his head, was still in the civil war."

When I ask them how they overcome these divisions, the word they all use is patience. "You have to be patient and very understanding with everybody," says Juan. "Try to learn from each one their background and then explain the difference between your country and their country." He says Africans are harder to organise than the rest, Latin Americans the easiest because they have a left-wing tradition. "One guy from Cuba thought he's gonna be shot for joining," says Benedita, laughing.

I ask Juan if he knows there was a major strike at News International, which publishes the Times and the Sun, and that it was a famous strike. "Long, long ago, way back, I heard that, yes," he says. His mouth drops open wide as I tell him the story of the year-long Wapping strike of 1986, when the power of the print unions was broken. In fact, it opens nearly as wide as my own mouth did back then when I saw a bunch of highly paid and supposedly "aristocratic" printers turn over a truck at the main gates and set it on fire. "This information you are telling me is very powerful information," he nods, still stunned. Up to now, this unassuming Spaniard with broken English has had no idea he is trying to organise a union in the very place the union movement suffered a symbolic and shattering defeat. The cleaners, by their own admission, know nothing about the history of east London; many are still struggling with the geography. But the organising team know the irony of what they're doing at Canary Wharf. Their union was born here; it grew by recruiting unskilled workers whom the unions at the time believed were too ignorant to be organised. And the strike that started it all began within yards of where the HSBC skyscraper stands today. It is small compensation to the activists, stamping their feet to keep warm as midnight approaches, but they are treading in the footsteps of Tom Mann.

London, 1889

Tom Mann has been blacklisted as an engineer and is so poor he's had to sell his violin; Victor Griffuelhes is a shoemaker trudging the lanes of southern France in search of work; Bill Haywood is a cowboy in Nevada; Eduardo Gilimón is wandering through the slums of Buenos Aires preaching the non-existence of God; James Connolly is an embittered British soldier in Ireland. The year is 1889 and working-class history is at a turning point. Between now and the outbreak of the First World War, the labour movement will go global, creating mass trade unions and popularising a new "union way of life". But the men who will make this happen are, in 1889, anonymous loners on the fringes of the workforce.

Over the next 20 years, their names will become well-known in the tabloid newspapers and police stations of the world. They will cross continents and oceans in pursuit of a twofold dream: trade unions for unskilled workers and inter national solidarity between them. The idea is known to history as syndicalism and is rough and ready, like the unplaned wood of the railway boxcars it is born in - and it will infuriate socialist intellectuals.

But why will it spread so fast? The answer lies in the giant transformation under way in business and politics in 1889. It can be summed up as the three Ms. Monopoly - the rise of heavy industry has created a few big companies which can swallow up the rest; these are companies with absolute power over suppliers, the workforce and even the politicians who are supposed to regulate them. Management - the generation of businessmen that will build the Eiffel Tower and the Titanic need scientific methods to run the workplace. They need control over it as well as harmony within it. They have started to think scientifically about ways to manage people at work. Militarism - the industrial powers are engaged in the scramble for colonies that will lead to war in 1914; everywhere nationalism is solidifying. Military face-offs and minor wars give warning of the storm ahead.

This is how globalisation looks the first time around; it is not the same as today's version. By 1889 a global system of trade, transport and exchangeable currencies has been created, making international solidarity between workers in different countries a practical question instead of just a high ideal. New Zealand wool makes shawls to keep the heads of British mill girls warm; Chinese migrants undercut the wages of white Dutchmen in the gold mines of South Africa; beef from Argentina ends up in the spaghetti of a Bolognese engineer. And there is mass migration. From Sydney to Seattle, workers are on the move, not just from the farm to the factory, but across land and sea. The footloose syndicalist agitators will always find an audience in the steerage class of ocean-going ships, or in the cattle trucks of trains.

Traditional trade unionism, born in a century of small strikes, small firms and local economics, cannot cope with this new world of giant things. Its power against monopoly is non-existent; scientific management is undermining its control over training and wage rates; and the vast mass of working people have no way into - indeed, see no point to - trade unions.

A small core of activists has struggled to keep alive the principles of anarchism and socialism but it's an uphill struggle. "Marxist ranters" pay fleeting visits to the Salford streets that had throbbed with republicanism at the time of Peterloo, but the reception is now hostile. Robert Roberts, who grew up there in this period, remembers: "We were battling, they told us (from a vinegar barrel borrowed from our corner shop), to cast off our chains and win a whole world. Most people passed by; a few stood to listen but not for long: the problem of the 'proletariat', they felt, had little to do with them."

The "class struggle", Roberts will recall acidly, is something that goes on within the working class: between the skilled, the semi-skilled, the unskilled, the unemployed and the irretrievably drunk. Sociologists are struck by this layer cake of misery, above all in that glittering central hub of global trade, the London docks. It is the mass strike there that will change everything.

It was the hot, late summer when trouble broke out. It was a pathetically irrelevant dispute over pay rates on a single ship. The men involved laid siege to the nearest union office they could find and pleaded for help. The man they found was Ben Tillett, and he sent for his mates Tom Mann and John Burns, both socialists who had been grumbling about union inactivity on the docks for months. Together they set about pull ing the whole of east London out on strike.

The docks had their own notorious class system: above the docker ranked the stevedore, who acted as a makeshift gangmaster. Better than the stevedore was the waterman - entitled to wear a ludicrous pink uniform while surviving on next to nothing. At the bottom of the pile were the women - little better than slaves. In normal times, you were lucky if you could persuade members of these urban castes to drink in the same pub together, but these were not normal times. Within a week, 30,000 dockers were joined on strike by an equal number from "allied trades".

There was a mass meeting every day, then the strikers would set off in an orderly procession around the banking district. The smart office workers of the Square Mile preferred their poor "deserving", and the dockers, with their liking for drink and violence, expected a hostile reception. So they staged tableaux and carried effigies to provide a visual sociology lesson. They carried effigies of a "docker's cat", which was thin, and a "boss's cat", which was fat; likewise the docker's child and the boss's child, both depicted by rag dolls on sticks. The watermen wore their pink uniforms. Tillett recalls collecting "pennies, sixpences and shillings from the clerks and City workers, who were touched perhaps to the point of sacrifice by the emblem of poverty and star vation carried in our procession". The Salvation Army - sternly anti-socialist but a potent force in its east London homeland - had no option but to support the strike. The Catholic Church also weighed in.

What tipped the balance was Australia. The powerful Australian unions used the issue of the London strike to inflame animosity against the English upper classes. By the end of the strike, a total of £30,000 - at least £2.7m in today's money - had been wired via the Australian dockers' union. Sixty thousand dockers were now joined on strike by another 60,000 of their drinking buddies and daughters from the rat- infested streets along the waterfront.

On 28 August, the strike committee issued a manifesto calling for a general strike across London - for the workers officially and purposefully to pull the plug on the "great machine". The call was withdrawn a day later for fear of losing public sympathy. A few days later, following the intervention of City bankers, shipowners and a Catholic cardinal, the dockers won. History records that they won the "docker's tanner"- sixpence an hour instead of five. But they had won much more. Burns wrote: "Labour of the humbler kind has shown its capacity to organise itself; its solidarity; its ability. The labourer has learned that combination can lead him to anything and everything . . . Conquering himself, he has learned that he can conquer the world of capital whose generals have been the most ruthless of his oppressors."

To the social reformer Beatrice Webb, the emergence of solidarity in the East End was "a new thought . . . modifying my generalisation on dock life". It dawned on a whole layer of middle class do-gooders that workers might not have to wait for betterment to be handed down through legislation and lectures. The same thought also dawned on tens of thousands of unskilled workers who rushed to join trade unions. The railway union grew from nothing to 65,000 in a year; the bricklayers' union doubled in size, the shoemakers' tripled; the miners formed a national federation. The movement was labelled New Unionism. Its aim was to draw the unskilled workers into industry-wide unions that would cut across the petty job descriptions that, in the strike, had been made to look irrelevant.

Paul Mason is business correspondent for BBC2's Newsnight. "Live Working or Die Fighting: how the working class went global" is published by Harvill Secker (£12.99)

This article first appeared in the 16 April 2007 issue of the New Statesman, Iran

MILES COLE
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The new Brexit economics

George Osborne’s austerity plan – now abandoned by the Tories – was the most costly macroeconomic policy mistake since the 1930s.

George Osborne is no longer chancellor, sacked by the post-Brexit Prime Minister, Theresa May. Philip Hammond, the new Chancellor, has yet to announce detailed plans but he has indicated that the real economy rather than the deficit is his priority. The senior Conservatives Sajid Javid and Stephen Crabb have advocated substantial increases in public-sector infrastructure investment, noting how cheap it is for the government to borrow. The argument that Osborne and the Conservatives had been making since 2010 – that the priority for macroeconomic policy had to be to reduce the government’s budget deficit – seems to have been brushed aside.

Is there a good economic reason why Brexit in particular should require abandoning austerity economics? I would argue that the Tory obsession with the budget deficit has had very little to do with economics for the past four or five years. Instead, it has been a political ruse with two intentions: to help win elections and to reduce the size of the state. That Britain’s macroeconomic policy was dictated by politics rather than economics was a precursor for the Brexit vote. However, austerity had already begun to reach its political sell-by date, and Brexit marks its end.

To understand why austerity today is opposed by nearly all economists, and to grasp the partial nature of any Conservative rethink, it is important to know why it began and how it evolved. By 2010 the biggest recession since the Second World War had led to rapid increases in government budget deficits around the world. It is inevitable that deficits (the difference between government spending and tax receipts) increase in a recession, because taxes fall as incomes fall, but government spending rises further because benefit payments increase with rising unemployment. We experienced record deficits in 2010 simply because the recession was unusually severe.

In 2009 governments had raised spending and cut taxes in an effort to moderate the recession. This was done because the macroeconomic stabilisation tool of choice, nominal short-term interest rates, had become impotent once these rates hit their lower bound near zero. Keynes described the same situation in the 1930s as a liquidity trap, but most economists today use a more straightforward description: the problem of the zero lower bound (ZLB). Cutting rates below this lower bound might not stimulate demand because people could avoid them by holding cash. The textbook response to the problem is to use fiscal policy to stimulate the economy, which involves raising spending and cutting taxes. Most studies suggest that the recession would have been even worse without this expansionary fiscal policy in 2009.

Fiscal stimulus changed to fiscal contraction, more popularly known as austerity, in most of the major economies in 2010, but the reasons for this change varied from country to country. George Osborne used three different arguments to justify substantial spending cuts and tax increases before and after the coalition government was formed. The first was that unconventional monetary policy (quantitative easing, or QE) could replace the role of lower interest rates in stimulating the economy. As QE was completely untested, this was wishful thinking: the Bank of England was bound to act cautiously, because it had no idea what impact QE would have. The second was that a fiscal policy contraction would in fact expand the economy because it would inspire consumer and business confidence. This idea, disputed by most economists at the time, has now lost all credibility.

***

The third reason for trying to cut the deficit was that the financial markets would not buy government debt without it. At first, this rationale seemed to be confirmed by events as the eurozone crisis developed, and so it became the main justification for the policy. However, by 2012 it was becoming clear to many economists that the debt crisis in Ireland, Portugal and Spain was peculiar to the eurozone, and in particular to the failure of the European Central Bank (ECB) to act as a lender of last resort, buying government debt when the market failed to.

In September 2012 the ECB changed its policy and the eurozone crisis beyond Greece came to an end. This was the main reason why renewed problems in Greece last year did not lead to any contagion in the markets. Yet it is not something that the ECB will admit, because it places responsibility for the crisis at its door.

By 2012 two other things had also become clear to economists. First, governments outside the eurozone were having no problems selling their debt, as interest rates on this reached record lows. There was an obvious reason why this should be so: with central banks buying large quantities of government debt as a result of QE, there was absolutely no chance that governments would default. Nor have I ever seen any evidence that there was any likelihood of a UK debt funding crisis in 2010, beyond the irrelevant warnings of those “close to the markets”. Second, the austerity policy had done considerable harm. In macroeconomic terms the recovery from recession had been derailed. With the help of analysis from the Office for Budget Responsibility, I calculated that the GDP lost as a result of austerity implied an average cost for each UK household of at least £4,000.

Following these events, the number of academic economists who supported austerity became very small (they had always been a minority). How much of the UK deficit was cyclical or structural was irrelevant: at the ZLB, fiscal policy should stimulate, and the deficit should be dealt with once the recession was over.

Yet you would not know this from the public debate. Osborne continued to insist that deficit reduction be a priority, and his belief seemed to have become hard-wired into nearly all media discussion. So perverse was this for standard macroeconomics that I christened it “mediamacro”: the reduction of macroeconomics to the logic of household finance. Even parts of the Labour Party seemed to be succumbing to a mediamacro view, until the fiscal credibility rule introduced in March by the shadow chancellor, John McDonnell. (This included an explicit knockout from the deficit target if interest rates hit the ZLB, allowing fiscal policy to focus on recovering from recession.)

It is obvious why a focus on the deficit was politically attractive for Osborne. After 2010 the coalition government adopted the mantra that the deficit had been caused by the previous Labour government’s profligacy, even though it was almost entirely a consequence of the recession. The Tories were “clearing up the mess Labour left”, and so austerity could be blamed on their predecessors. Labour foolishly decided not to challenge this myth, and so it became what could be termed a “politicised truth”. It allowed the media to say that Osborne was more competent at running the economy than his predecessors. Much of the public, hearing only mediamacro, agreed.

An obsession with cutting the deficit was attractive to the Tories, as it helped them to appear competent. It also enabled them to achieve their ideological goal of shrinking the state. I have described this elsewhere as “deficit deceit”: using manufactured fear about the deficit to achieve otherwise unpopular reductions in public spending.

The UK recovery from the 2008/2009 recession was the weakest on record. Although employment showed strong growth from 2013, this may have owed much to an unprecedented decline in real wages and stagnant productivity growth. By the main metrics by which economists judge the success of an economy, the period of the coalition government looked very poor. Many economists tried to point this out during the 2015 election but they were largely ignored. When a survey of macroeconomists showed that most thought austerity had been harmful, the broadcast media found letters from business leaders supporting the Conservative position more newsworthy.

***

In my view, mediamacro and its focus on the deficit played an important role in winning the Conservatives the 2015 general election. I believe Osborne thought so, too, and so he ­decided to try to repeat his success. Although the level of government debt was close to being stabilised, he decided to embark on a further period of fiscal consolidation so that he could achieve a budget surplus.

Osborne’s austerity plans after 2015 were different from what happened in 2010 for a number of reasons. First, while 2010 austerity also occurred in the US and the eurozone, 2015 austerity was largely a UK affair. Second, by 2015 the Bank of England had decided that interest rates could go lower than their current level if need be. We are therefore no longer at the ZLB and, in theory, the impact of fiscal consolidation on demand could be offset by reducing interest rates, as long as no adverse shocks hit the economy. The argument against fiscal consolidation was rather that it increased the vulnerability of the economy if a negative shock occurred. As we have seen, Brexit is just this kind of shock.

In this respect, abandoning Osborne’s surplus target makes sense. However, there were many other strong arguments against going for surplus. The strongest of these was the case for additional public-sector investment at a time when interest rates were extremely low. Osborne loved appearing in the media wearing a hard hat and talked the talk on investment, but in reality his fiscal plans involved a steadily decreasing share of public investment in GDP. Labour’s fiscal rules, like those of the coalition government, have targeted the deficit excluding public investment, precisely so that investment could increase when the circumstances were right. In 2015 the circumstances were as right as they can be. The Organisation for Economic Co-operation and Development, the International Monetary Fund and pretty well every economist agreed.

Brexit only reinforces this argument. Yet Brexit will also almost certainly worsen the deficit. This is why the recent acceptance by the Tories that public-sector investment should rise is significant. They may have ­decided that they have got all they could hope to achieve from deficit deceit, and that now is the time to focus on the real needs of the economy, given the short- and medium-term drag on growth caused by Brexit.

It is also worth noting that although the Conservatives have, in effect, disowned Osborne’s 2015 austerity, they still insist their 2010 policy was correct. This partial change of heart is little comfort to those of us who have been arguing against austerity for the past six years. In 2015 the Conservatives persuaded voters that electing Ed Miliband as prime minister and Ed Balls as chancellor was taking a big risk with the economy. What it would have meant, in fact, is that we would already be getting the public investment the Conservatives are now calling for, and we would have avoided both the uncertainty before the EU referendum and Brexit itself.

Many economists before the 2015 election said the same thing, but they made no impact on mediamacro. The number of economists who supported Osborne’s new fiscal charter was vanishingly small but it seemed to matter not one bit. This suggests that if a leading political party wants to ignore mainstream economics and academic economists in favour of simplistic ideas, it can get away with doing so.

As I wrote in March, the failure of debate made me very concerned about the outcome of the EU referendum. Economists were as united as they ever are that Brexit would involve significant economic costs, and the scale of these costs is probably greater than the average loss due to austerity, simply because they are repeated year after year. Yet our warnings were easily deflected with the slogan “Project Fear”, borrowed from the SNP’s nickname for the No campaign in the 2014 Scottish referendum.

It remains unclear whether economists’ warnings were ignored because they were never heard fully or because they were not trusted, but in either case economics as a profession needs to think seriously about what it can do to make itself more relevant. We do not want economics in the UK to change from being called the dismal science to becoming the “I told you so” science.

Some things will not change following the Brexit vote. Mediamacro will go on obsessing about the deficit, and the Conservatives will go on wanting to cut many parts of government expenditure so that they can cut taxes. But the signs are that deficit deceit, creating an imperative that budget deficits must be cut as a pretext for reducing the size of the state, has come to an end in the UK. It will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.

Simon Wren-Lewis is a professor of economic policy at the Blavatnik School of Government, University of Oxford. He blogs at: mainlymacro.blogspot.com

 Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt