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The economy of the many is better than the economy of the few

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200 years ago today (16 August), a public meeting on St. Peter’s Field in Manchester was savagely broken up by government forces.

Rise like Lions after slumber
In unvanquishable number — 
Shake your chains to earth like dew
Which in sleep had fallen on you — 
Ye are many — they are few.

Percy Bysshe Shelley, 1819, The Mask of Anarchy, final verse.

Shelly’s famous poem ‘The Mask of Anarchy’ commemorated those who lost their lives at ‘Peterloo’ and urged the ‘many’ to rise up against the ‘few’.

The trade union movement was and remains the voice of the ‘many’ and the fundamental way workers assert their power against the few. At its most simplified, we argue that paying workers fairly and treating them decently is not only right but makes for a better society and a better economy.

History vindicates our claim.

The first chart below compares the strength of trade unions (the crimson line) with a labour market score (the blue columns, combining unemployment and real wages – see the second chart and the data annex). The sense is of a long march up a hill and then a rapid march part way down.

Work and unions

 

Graph: compares the strength of trade unions  with a labour market score
Source: ONS, Bank of England and TUC calculations 

Unemployment and wages
 

Graph
Source: ONS, Bank of England and TUC calculations

Gradually over the 1800s, trade unions began to form, and fights for legal status and the right to strike were won. As the first country to industrialise, it was perhaps natural that Britain was the first to fight back. But the few yielded only slowly. Backing the few (not for the last time), the economics profession warned “in the natural advance of society … the wages of labour will have a tendency to fall”.

Yet as the chart shows, these concessions to the many were gradually accompanied by moderately improved – or less bad – conditions.

But the decisive change followed in the wake of the disastrous economic policies of the 1920s that led to the great depression of the 1930s. After the General Strike of 1926, governments began to take more seriously the trade union voice on labour relations and even policy more generally. Perhaps partly reflecting this new status and the responsibility with which it was handled, the trade union leader Ernest Bevin was Minister for Labour in the coalition government of the Second World War. He ensured that the mighty productive effort to support the combat was accompanied by great advances in the conditions of labour. At the 1942 conference of the International Labour Organisation in London, he memorably asserted:

This is a people’s war; it must lead to a people’s peace.

Ernest Bevin, Minister for Labour and trade union leader

It did lead to a people’s peace: Clement Attlee’s Labour Party won the 1945 General Election by a landslide. For the first time in British history the government ruled on behalf of the many. Trade unions were elevated to equal partner status with business and government, and the economy was operated to serve the people not the other way around.

The Bretton Woods Agreement meant international arrangements were more (but not fully) supportive of this changed approach, and more progressive policies were to some extent global. In Britain, the subsequent Conservative administrations may not have shared Labour’s ideals, but were unable to break significantly with policies that were proving so successful.

As the scores indicate, for four consecutive decades the performance of the labour market vastly outstripped all other decades (though society had a way to go on gender and race).

But the gains did not endure.

Margaret Thatcher’s election in 1979 marked a decisive change in mindset that was global in nature. Trade unions carried the can for an inflation with multiple and complex causes. The interests of the few were reasserted. The rights of the many were set under siege with wave after wave of anti-trade union legislation, and once more violence was deployed – against the miners at the ‘Battle of Orgreave’.

As the figures (on the second chart) for the 1980s show, there were big rewards in pay (mainly and notoriously for the few). The price for the many was a terrible unemployment crisis, second only to the great depression over these two hundred years. Moreover, the combined effects of legislation, industrial recession and regressive economic doctrine began to gravely undermine union membership (on the first chart).

There was some relief in the labour market and economy over the 2000s, but the evident and deep-rooted dysfunctions of the wider regime ended up in the global financial crisis and global recession over 2007 to 2009.

Even despite this disastrous failure, the few continued to attack the many. In Britain the pernicious trade union act and austerity policies ensured that the present decade is overall the worst since the great depression. The worst crisis in real pay for two centuries , is accompanied by a still below average performance on unemployment – no matter the present boasts.

A backlash is inevitable.

Even while there are real concerns about declining membership, this year both membership and trade union density grew, and the trade union movement is still the largest public membership organisation in the country. Supranational organisations like the OECD are backtracking and coming to recognise that trade unions support not oppose prosperity.

Two hundred years of history shows why we need a new deal for workers – a deal that once more puts the interests of the many above those of the few.

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