According to Boris Johnson work is the way out of the cost of living crisis.
Like the Bank of England, Johnson claims the UK has a ‘red hot' labour market, with vacancies exceeding the number of people available to accept employment.
My appraisal suggests this is untrue. The jobs available seem to have three characteristics. They are low paid. They are zero hours, or something akin to it. And many are with agencies, with the intention that the employer assume no obligation to the person they'd rather not call an employee beyond the end of any working day.
The latest example I found was in discussion with a teaching assistant training to be a teacher. Right now is the time when this year's new teachers should be looking for their first jobs. But there are almost none available. Schools can no longer afford the commitment to permanent staff. So they hire supply teachers on temporary contracts to avoid the commitments required to a full-time staff member.
Older teachers cannot afford to work on the rates these supply contracts offer.
Younger teachers do not get the support they need.
Nor can they afford the rent. So they sometimes have to take a second job.
That also explains why vacancies exceed the number of available people: we live in a world where too many have to rely on multiple jobs to cover the basic cost of living. It's really not rocket science to work this out, but it's beyond Johnson and the Bank of England.
Teaching is not alone in being degraded in this way. Nursing is a long way down this route, with ‘bank' nurses covering an increasing number of shifts. I have no doubt it is to be found elsewhere too. It is far too commonplace in university teaching. The approach riddles the private sector.
Professions are being degraded. Security is being destroyed. The quality of service supplied is being undermined. Wages do not cover costs. Children, patients and so many others do not get the service they expect from people who cannot in any way be blamed for that. The casualisation of their work is meant to undermine employees, and it does. The people to blame are those who thought this a good idea, from Cameron, Osborne, May, Hammond, Johnson and Sunak onwards.
The simple fact is that there is no ‘red hot' labour market in the UK. There are just shit jobs on offer to those who in desperation have to eventually take them in the absence of any alternative.
This is not a solution to the cost of living crisis. It is all about the deliberate destruction of value in the name of increasing financialised returns, whether in state or private sectors, where that return is utterly indifferent to value, people, ethics or the long-term.
What to do about it? That's a harder question. I will have to come back to it more than once, I suspect. But unless we can restore the dignity of work - and the direction is continually in the other direction at present - we really are in deep trouble.
Ultimately the answer is in reducing the rents that extract value every day from working people, whether those rents be literally exploitative charges for living in houses; excessive house prices and now growing mortgage costs; forced membership of pension schemes that cannot pay a return as the funds are invested in environmentally bankrupt companies, or the exploitation of people's labour by employers who have been trained or forced to cease to care. All these crush the value of work.
In that case right now work provides no answer to the cost of living crisis, because that crisis has been created by the same monopoly empowered exploitative philosophy that is simultaneously seeking to destroy the value of people's labour.
The cost of living crisis is indication that our economy is shot to pieces, and needs a complete overhaul. I suspect nothing less will do.
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Anyone who falls for this latest lie deserves to go the way of the Dodo.
What a ruse.
A mixture of desperate and blatant untruth.
For how much longer will this ass of prime minister be tolerated?
They are just going to cling on it seems until the next election and then bribe us with tax cuts.
Tax cuts won’t do it for me or those I know. ABC should be the watchword of our times, especially on election day.
Surely the rioting will have kicked in long before then as conditions are increasingly intolerable for an increasing number of people. You can’t hold back the tide.
I’m afraid that what we are experiencing is the death throws of capitalism and its long slow death is causing misery and illness to tens of thousands of people.
It sickens me when I hear Tory ministers refusing to impose a windfall tax on companies that are making excessive profits. They explain this away by saying that it is “unConservative” to do this.
If a political dogma subjects the poor and vulnerable to hunger and exposure to the cold then such political dogma has no place in a decent society and under our present leadership we are well on the pathway to a non decent society.
@Chris k
The main argument against awindfall tax now is that it will stop investment. If you have noticed, all the North Sea oil companies are busy sayiing they will invest £2bn right away.
One answerit might be a tax with no rebates for investment.
Course if every country did this, the oil companies might claim to be really squeezed, and would cut their dividends so that “pensioners would suffer”. I am sorry to say but pensioners will just have to diversify their investments going, as they say, forward.
I remember a news report which featured Bush Jr talking to a young woman. It must have been his election campaign. The woman said that she had to work three jobs, getting to each by bus, to earn enough to support her daughter. It meant she barely saw the child. “Great!” beamed Bush. “That’s the American way!” It seems the ambition of the Tories is to make it the English way too.
I couldn’t agree more Richard, we appear to have returned to the era of the Ragged Trousered Philanthropists.
However, I do take it as a sign of hope that of the most benighted triumvirate the USA, Australia and the UK, the first two have at least taken the first step of ejecting the greedy, malicious crooks running their country.
I also wonder, now that their circulation figures continue to plummet, how much longer the newspaper barons can continue to bully the broadcast media into following their right wing news agenda.
Mr Langston,
A very well made point. The licensed terrestrial broadcasters (BBC, ITV for example), establish their claim to impartiality in the formation of the ‘news agenda’ that determines the negotiation of the public political discussion in the UK every day, by closely following and reflecting the Press agenda, set by ‘national’ newspapers that are owned and largely governed by individuals, corporations and editors with a disticnt political or ideological, neoliberal axe to grind.
Another lie, like “Arbeit macht frei”.
What is required is investment, upskilling, and increased productivity.
What we actually get is casualisation and rent extraction.
It can’t go on for long. People with nothing to lose – more particularly, people who can’t afford to feed themselves or their children – will not remain docile.
“It is all about the deliberate destruction of value in the name of increasing financialised returns”.
Minsky established the underlying operating principle: “Capitalism is essentially a financial system, and the peculiar behavioral attributes of a capitalist economy center around the impact of finance upon system behavior”. I write this because the underlying issues are illuminated with exceptional insight by the Minsky disciple Perry Mehrling’s “Money View”, see ‘Financialisation and its Discontents’ (Finance and Society, 2017), and I can do no better than reproduce his trenchant Abstract:
“Finance is not something separate from society. It is neither a Marxian superstructure nor a monetarist veil, but rather the very substance of modern social relations, a web of time-dated promises to pay that stretches from now into the future, and from here around the globe. Financial relationships are not about mediating something else on the ‘real’ side of the economy; they are the constitutive relationships of the whole system. Financial globalization and global financialization have produced a global Financial Society, hierarchical and inherently unstable. The problem confronting social analysts is not so much to find the social in the money grid – the money grid is already social – but rather to understand the dynamical operations of that grid on its own terms. This essay sketches the fundamental processes that produce and reproduce Financial Society – settlement and market-making – as an attempt to provide a realistic point of departure for any feasible project of reform.”
Understanding money requires us to understand it is only conceptually accessible “on its own terms”. Philosophically, the terms of money’s existence are its existence.
I should confess, this is my second attempt to bring Mehrling to the attention of readers here; I made the mistake of using a qute technical source work, his book ‘The New Lombard Street’ on that occasion. Okay, it does not seem to have gone down well, first time; it was returned with ‘groans’ of abstract and recondite obscurity (PSR), or more cutting still: silence (Clive Parry). I really believe Mehrling is a critically important modern monetary economist, however and thus will try here again.
Merhling’s ‘Financialization and its discontents’ (Finance and Society, 2017) is a short, crisp, trenchant, journal paper that beautifully expresses the ideas of ‘the Money View’ in a way that I think may be enjoyed by the general reader, even where the ideas may seem new, or unfamiliar.
Allow me to close with a paragraph from the paper (p.8) that I offer as an example of the clarity and simplicity of his expression of difficult issues:
“This fact of inherent instability [Minskyian systemic financial instability] is something we have an especially hard time confronting, since it goes to the heart of our existential dilemma. We don’t know the future but we are nevertheless required to behave as though we do. Indeed, the commitments we make to one another to perform in various ways in the future form the very fabric of the society in which we live. Marriage is like that, and so is credit. The fact of financial instability threatens that fabric, indeed constitutes a kind of unraveling of that fabric, as default on one set of promises undermines another set as well. As economists, we cling to conceptions of equilibrium, including intertemporal equilibrium, which have the reassuring property of excluding instability, but the resulting psychological comfort is bought at the price of abstraction from a fundamental feature of the actual system in which we live.”
Apologies John: I am distracted by the need to help a sick relative and am taking a break on the way to see them right now
A link to the Merhlomg article is at
http://financeandsociety.ed.ac.uk/ojs-images/financeandsociety/FS_EarlyView_Mehrling.html
John Warren
I have downloaded ‘The New Lombard Street’ and aim to read it after my excursion into Chinese economics courtesy of Isabella Weber and Christine Durant’s ‘Making Money’. I took a detour recently and read Simon Kuper’s book ‘Chums’ about how ex-Oxford Debating Society Tory students have dominated politics – it made me feel quite nauseous and rather murderous to say the least.
‘The New Lombard Street’ is a book I need to take slowly because of the way it is written. It’s a very personal thing – as much my fault as Merhling’s.
People swear by John le Carre for example as a novelist and story teller. I love the dramatizations of his novels and can sit enraptured listening to him talking for hours – but I just do not get on with his writing style at all – I literally just cannot read his books. Yet Graham Green or Iris Murdoch are no problem to me at all.
The things is John, what does Merhling say to you – what insights does he give you that others don’t? What’s his Unique Selling Point? How does he help us to understand money? When I read a book and want to share it here I try to say what the author has done to make it interesting and relevant and why others might want to read it.
What is you take on his views? – help us out here, if you would – help us to see what you see. Guide us in, so to speak in your own words and understanding.
PSJ,
On 29th April I wrote a lengthy comment (too lengthy) on another thread, in which I offered my take on Mehrling. I provided it in two sections, one was mainly an attempt at summary exposition of Mehrling’s themes in ‘The New Lombard Street’; dangerous, because I believe it is better to read Mehrling rather than my modest effort at over-summarising. The second section was mainly my subjective, very free interpretation of Mehrling, and I tried to do this by approaching it from Mehrling’s most user-friendly use of analogy in finance and banking: the ‘Jimmy Stewart’ tradition. He also refers to this briefly in ‘Financialization and its discontents’ (Finance and Society, 2017); read it, it is only 10 pages, and not over-technical. The long 29th April comment was not with Mehrling’s 2017 paper specifically in mind, but the principles I think generally apply, at least in the terms you framed your request to me.
More generally, it is, to me striking that Mehrling shows money works in a very low-key, insidious, subtle way, almost like dark energy – the nature of its power totally unobserved, seen only in its effects; quietly, relentlessly working in everyone’s life (from the use of your mobile to make a simple coffee transaction at Starbucks, to the acquisition of Twitter by the richest man in the world, or the UK Government issue of Gilts or even QE): in the form of IOUs of different complexity or time values in a hierarchy of money (and credit – whether it is money or credit depends where it is in the hierarchy, and the contingencies of future events); all achieved through nothing more than double-entry bookkeeping, that is time sequenced for performance of the IOU; how can something so simple, mundane, but absolutely universal in the commercial sphere create economic globalisation out of itself, or shadow banking (without anyone really adjusting the system to cope, or even it seems, to notice); and establish the hierarchy of economic power in the world, and yet so few observers, critics, economists or bankers appreciate, even partially, how it happens, as it happens or understands its far reaching consequences – before they fall on us as crises. Economists and bankers do not understand fully (the conventional wisdom scarcely seem to understand at all). Mehrling is modest, like most insightful, reforming thinkers – he knows reform is required, but does not pretend to all the answers, merely to have developed the tradition of Hawtrey and Minsky – and I dare say even Bagehot – to advance our understanding of the system as it is, and as it changes dynamically in the real word. He is simply describing the reality that drives our society. A system of extraordinary power that humans create and change, and use not just in society, but to determine its nature and how it works; yet a system we do not fully understand, and demonstrably fail adequately to control. It is inherently an unstable system (Hawtrey, Minsky), because it calls on us to treat a future we know almost nothing about, much as if it was as well known to us as the familiar, immediate present and past, yet we pretend an equilibrium in the system that does not and cannot exist; a belief pretended especially by the economists, and more nervously, the bankers.
If that does not help you here was part of my 29th April attempt at interpretation/exposition, which refers to ‘The New Lombard Street’ as a source.
Mehrling focuses his work on observation and description of how the monetary system actually works. The principle the money system relies on to work is double-entry. Every debit requires a credit. Mehrling uses a powerful American image to contrast the old banking system with the modern capital market system. The old system he terms the ‘Jimmy Stewart banking’ system (Ch.6, pp.116-123 of The New Lombard Street; presumably referring to ‘Its a Wonderful Life’, notably dated – 1946), which Mehrling emphasises was mythic, but powerful; Main Street banking with basic solvency and liquidity risks backstopped by deposit insurance or the discount window at the Fed was how America Main Street expected banking to work – for them. It doesn’t work for them now; they are incidental to the operation. The central banking system, in a crisis, historically acted as ‘lender of last resort’, (funding liquidity) but with the shift from a traditional banking model to the modern, current capital-market-based system (with dealers now playing a critical role) this is not enough to ensure the necessary liquidity: “in a really severe crisis, market liquidity is no longer a matter of the funding liquidity of private dealers but rather of shiftability to the Fed” (see Ch.5, p.106-7). This requires the central bank to act as ‘dealer of last resort’ (market liquidity), which de facto is what happened in the financial crash .
I focus narrowly on this because in exploring the nature of the relationship between the banks, central banks and the dealers in the system, a relationship Mehrling stresses; it strikes me that Mehrling’s reference to “not everyone has equal access to them” is both obviously true, and very revealing. Fixing the crisis, reconstructing the banking system and reformulating the theory may all work to a degree, but it works in a closed system; a system of insiders. The general public’s needs are not directly addressed, or fixed. This obviously has consequences, and we are seeing them in the cost of living crisis. The money system drives everything.
That will have to do.
What strikes me forcibly from reading and thinking about Mehrling is that the system of “insiders” (central banks, commercial banks, dealers, and the financial institutions with privileged access to the insiders system) is a network of insiders all there solely to make a turn (profit) by turning money (sovereign money at the top of the hierarchy) back into credit (the profit stream). The system is constructed by professional profit-takers to dissolve money into credit as quickly as they can. Historically, ordinary people relied on notes and coin to provide the continual free circulation of ready money. Note here, the great triumph of 18th/19th century Scottish ‘free banking’ was note issue. Even in recent decadesthe public could turn surplus money back into credit, in deposit accounts or bonds. Now, this is an invitation simply to lose money; and with the digital revolution the insiders have gobbled all the money, and used the instant convenience of digitisation to turn the money used by the public into credit at source. thre is no free circulation of ‘money’. Notes and coins have all but disappeared from the High Street. The modern money system is de-moneying money, and turning everything into instant credit. Ironically, everything is being rapidly turned into profit-making IOUs in an elaborate global banking business.
We now know from the hard lessons of Covid and the Ukraine war, that there is insufficient redundancy in global supply chains. In a crisis Just-in-time has failed the world. The corollary of that lesson goes un-noticed. There is no redundancy in the money system. We have de-moneyed money. The canary in the money mine is the public; and they are suffering from the cost of living crisis at the bottom of the money mine, because everything is credit, and credit is expensive to acquire; but for the public it offers zero return if they have any surplus. The insiders have cornered the market.
This is the essence of rentierism
Thanks for the pointer. I collected that article and will read it.
The best description I ever heard of capitalism came from the very country that started to kill it – the U.S.A – in one of those animated public public information films from the 1950s:
‘Capitalism is a system the delivers the greatest amount of social welfare to the greatest amount of people’.
By this I interpreted that to mean a reasonable sharing of the output in society from the means of production through wages.
Of course, I bet that environmental, work place condition issues etc., were not metrics also considered at that time, but I still find the notion about the fair sharing of output (and even resources) still most attractive. To update that with an environmental angle and to address other shortcomings would also be helpful.
The book ‘The Puritan Gift’ by Kenneth & William Hopper (2009) was the book that opened up for me at least the issues as to how financialization and new management fads had essentially destroyed American industry and led to a society that essentially pauperises people.
“Right now is the time when this year’s new teachers should be looking for their first jobs. But there are almost none available.”
The TES currently has 9,042 jobs advertised. 7,539 are listed as permanent.
How many for new teachers?
And only one in three schools have a vacancy?
Really?
Your claim was that:
“Schools can no longer afford the commitment to permanent staff”
Yet that’s clearly not the case.
As to how many are first time teaching jobs and how many schools are looking for staff, I don’t know – except that TES is of course only one place that jobs are advertised. After all, I only did two minutes research but that appears to be two minutes more than you did before claiming that schools are no longer committing to permanent staff.
I spoke to those looking for jobs
Your analysis certainly nails it as far as the reality that I have witnessed in my working life (I am 54). To Cameron et al you could add Thatcher, Major, Blair and Brown as they are all part of the same trajectory. The political culture of the UK, at the national level, is delusional and we need to sober up. What lies at the heart of this is, as you say, financialisation and the dominance of the honey pot of the City of London on our political elites. This isn’t where the majority of the population of this country live. Any serious attempt to formulate a suitable alternative that would gain popular support would start from an understanding of what you have laid out above.
A profession has responsibility beyond serving the immediate client. They have a set of ethics and standards.
The professions have been treated as though they are just part of the market. Education has been commodified. Something to be delivered to customers as economically as possible and which can be priced account to supply and demand.
The political economy they represent is a moral vacuum.
96% of the working-age population are already working, many as you point out in low wage and bad conditions. The only way to get more work to “solve” the cost of living crisis is to “use” this pool of spare labour. However many of the unemployed are considered “hard to place” by job centres and agencies and there are not the training and further education facilities to “upskill” or to get “job-ready” these clients. Also if the jobs are such low productivity due to lack of investment and training Johnson’s pie-eyed nonsense should be seen for what it is – pure fantasy.
Hi Richard
I recall your earlier analysis about the destruction of employment being hidden by focusing on people on PAYE following a PM statement on numbers employed. I wonder how those changes dovetail with the above? I suspect that the overall level of productive employment in the UK may have fallen if you do.
Keep up the good work. Sadly many of your observations echo Ece Temelkuran’s ‘How to Lose a Country’.
The number of self employed has fallen dramatically
Overall we are nearly 500,000 down
It is a complex picture, but some ONS stats from May 2022 here: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/employmentintheuk/may2022
As Table 1 shows, for people aged 16 to 64, comparing the latest period (January to March 2022) to the pre-pandemic period (December 2019 to February 2020), people in employment (employed and self employed) are down about 500k. Unemployment is also down about 100k, and economic inactivity is up by 460k. (The 140k gap is not explained, but perhaps represents an aging population, with more going out at the top than coming in at the bottom.)
Since “December 2019 to February 2020”, Figure 4 shows “full-time employees” are up
646k, but “part-time employees” are down 308k, and “self-employed” down nearly 800k. That is a net reduction in employment (employed and self-employed) of about 500k.
Figure 7 shows is it mainly people aged 50 to 64 who have ceased economic activity (280/460k). Earlier in the pandemic, it was more those aged 16 to 24.
And Figure 8 shows it is mostly not retirement. Retirement is up 50k, but the largest chunks of people becoming economically inactive are more students (up 180k) and more long term sick (up nearly 200k), and “other” (up 133k).
The number of people staying at home to care for others is down 100k.
Thanks
For some time now, or at least before Brexit, rural areas have been awash with ‘agencies’ providing on demand labour for harvesting and veg preparation purposes. More often than not these poor people, often illegal immigrants are paid badly, treated like cattle, forced to live in awful hovels and often have their wages intercepted a source. We all know the senario but many in the UK showed complete indifference. Well, folks, here it is again except now its happening to UK citizens.
George Monbiot wrote this in 2019,
https://www.monbiot.com/2019/07/19/private-taxation/
Certainly on the ball as far as renting is concerned.
I would certainky suggst that the Minimum Wage needs to be raised to cover rents, that woukd out the cat amongst the pigeons.
John Warren
As the Americans would say, you’ve knocked the ball out of the park on that one, particularly the additional paragraph at 08.29 that is the best of all for me at least.
I came to the conclusion some time ago that rentier capitalism had somehow captured the sovereign money supply but I could not put my finger on how they did this – how they gained and retained power over it. How else can something actually created by a sovereign Government be filtered away to the benefit of a small number in society?
Your synopsis (and its addition on 24th May) is very helpful at pointing out the ‘how’ – Merhling’s point.
So, once again, markets made up of ‘insiders’ and other unseen ‘hands’ cannot really be trusted to be the objective allocator of resources it claims to be like money because it is actually dominated by self interest/greedy actors – whatever one might call them – which leads to the maximising of money for themselves.
It is market failure really.
Answers?
Well, I think we need a state bank for a start to get over the mal-distribution system but also the sort of courageous Government that Richard has pointed out and the ‘Main street’ bail out as opposed to Wall Street bail of some kind (PQE and other investment). We need a way for the government to either change the BoE or just go around it.
Basically, money needs to be ‘re-sovereignised’ – put to work for the Government and for Government policy for its people. Or another way to put it is to ‘democratise’ money once again. It is a utility for all – not just the rich who get the greatest utility out of money – power.
And I think that is high time that we began to think about what money is used for and think more creatively about how we can deliver it to where it is needed most – not by using the private banking system for a start.
Nothing earth shattering there I know but much to think about going forward.
Anyhow, thank you John.
I wonder if our esteemed colleague Clive Parry would feel able to comment now?
And Richard – sorry to draw you away from you relations whom I believe to be excellent hands.
Thanks
It’s been a knackering day