In September 1931, 1,000 sailors from the British Atlantic Fleet went into open mutiny, refusing to set sail from Invergordon harbour, one of the few mutinies in our naval history. Seafarers of all ranks protested the proposed general 10% wage cuts, but also the unjust decision to cut 25% wages for junior seamen and those who joined after 1925 – part of the then National Government’s doomed attempt to deal with the crisis, offset state budget and maintain the gold standard.
This attempt ended spectacularly. The 25 per cent cut could have been revoked to get the fleet back to sea – even the admirals admitted it was unfair – but international investors have concluded that after a decade of government efforts to lower real wages to keep British business competitive, the frontier has been achieved. Britain could not force its labor force into the financial straitjacket of ever-lower real wages imposed by the attempt to peg sterling to the price of gold. The run for the pound turned out to be unstoppable. Five days later, Britain gave in to reality and was forced to move away from the gold standard.
Humans have an innate aversion to inequality
Sailors proved what today’s behavioral psychologists believe. Humans have an innate aversion to inequality. Society is based on the assumption – underlying all major religions and philosophies of the world – that one should act as one would. My actions guarantee a proportionate, fair, reciprocal response on your part, and you expect no less from me. Babies as young as a few months will cry or smile to the extent that they feel their caregivers’ response to what they have done is fair and proportionate. Every parent knows the exclamation of their child: “It’s not fair!” The sailors on the flagship Hood and other battlecruisers in 1931 served their country loyally – but they weren’t dealt with what they would have done. They rebelled.
In 2023, our Tory leaders should tick and learn. Over 40 years of free-market Kool-Aid drinking has stripped the Tories of any concern for fairness, reciprocity, proportionality or fairness. These words do not enter his lexicon or influence his economic and social policies. Its language is based either on vague threats of rising public debt or self-perpetuating inflation, or on calls for greater individual and entrepreneurial freedom through tax cuts or less regulation and bureaucracy. Public agency is the last resort. Lowering taxes was elevated to the rank of sanctity, as was the sacrifice of a goat on the altar in the Celtic stone circle, in response to which the gods of economics would ensure growth. In the 1920s, the British public service and public sector workers were locked in a financial straitjacket to support the gold standard, culminating in a naval mutiny. In the 2010s and early 2020s, public services were chained in a self-destructing straitjacket to support the push for tax cuts that never come because they are impossible.
Hence the current wave of strikes in the public sector. The good news last week was that consumer price inflation fell for the second consecutive month to 10.5%. With the price of gas following the price of oil down, there is every chance that inflation has peaked. But core inflation – ignoring volatile energy, food, alcohol and tobacco prices – is stuck at 6.3%. However, look at the wage pattern. Private sector wages increased by 7.2% (excluding bonuses), while public sector wages without bonuses increased by 3.3%. In other words, the long-term reduction in real wages – wages adjusted for inflation to reflect what money can buy – that began after the financial crisis continues. However, disparities between the public and private sectors are becoming more acute. This is reflected in record vacancies in the public sector and the current wave of strikes. It’s the Invergordon effect.
The government is pretending to the point of lying about the affordability of offering public sector workers wages at least in line with 6.3% core inflation. Denying it is a fiscal ploy. During inflation, tax revenues automatically increase. Public spending will also increase by inflation, including wages. The arguments that proposing to raise the wages of one-fifth of the public sector workforce to compensate for core inflation risks unleashing a wage price spiral and is unprofitable are false. There is cash – and the wages of this fifth labor force, whose output is not sold in the market, must not cause a wage-price spiral. The money is being raised to appease the druids of their right-wing stone circle ahead of the next election.
Related: John Rawls: Can the Great Philosopher of Liberalism Come to the West’s Rescue Again?
In The theory of justice, the philosopher John Rawls argued that a good society is one in which every citizen is free to use the gifts they have received to the best of their ability, regardless of their circumstances, so no one cares where or who they were born. He took the warrant to do what we would do to his logical conclusion. Education, housing, pensions, access to health and opportunity, and everything else that makes life worth living would be the same for the underprivileged as it is for the underprivileged – what he called the principle of difference. The influence of mere luck and bad luck should be eliminated from our lives as far as possible.
Taxation should serve these purposes, Rawls argued, to make everyone equal, especially by providing high-quality public services. Inherited wealth should be heavily taxed – family dynasties built on inherited wealth exceeded his theory of justice – and the proceeds should be used to upgrade public infrastructure and public services, especially for those most needed.
Utopian? Perhaps, but I would argue that this is closer to the heartbeat of British values than the barren vision of today’s Tory cabinet. Rather than imposing minimum public service obligations on public sector unions in the event of a strike, Rawls would urge the government to accept its responsibility to create a just society by providing quality public services. Under these conditions, he would understand and support the strikes. So should we. Let’s do as we would.
• Will Hutton is a columnist for the Observer