Rising profits for the rich, cuts for the rest of us - this must be stopped!

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17 Oct 2011

EDF Energy was the last of the "Big 6" utilities to apply the latest price hike. Overall, on average, prices will have increased by 20% for gas and 14% for electricity.

This prompted regulator Ofgem, to accuse these companies of making enormous profits on consumers' backs. What with the promise made by Energy minister Chris Huhne to deal with their profiteering, this was the least Ofgem could do. But so what? What do they plan to do to stop the sharks? Nothing. Huhne's and Ofgem's "solution" is that we, the consumers, should "shop around" to increase "competition" between the "Big 6"!

Ironical, when the justification they gave us for privatising the public utilities, back in the 1980s, was that "competition" between private players would cut prices for us. Well, it hasn't, since we're now paying more than ever before. The conclusion is obvious: utilities should be renationalised!

They're flush with cash

Predictably, the "Big 6" deny any wrongdoing and plead poverty, blaming the rising cost of oil and the need for massive investment. But their profit figures tell a different story altogether, with a combined £10bn last year!

In fact, the case of the big utilities is the norm among Britain's largest companies, not the exception. Since the beginning of the crisis, these companies have managed to maintain their profits by squeezing more sweat out of fewer workers on lower wages while hiking up their prices. What's more, instead of investing their massive profits in useful production which would have created new jobs, they have been hoarding their cash, mainly to gamble on financial markets, or wasting it in fat payments to their directors and shareholders.

In the three months between July and September, for instance, British companies paid £20bn out in dividends to shareholders - a record since the beginning of the crisis. For the whole year, it is estimated that they will pay a total of £67bn - a 19% increase over the previous year! What's more, the same companies are buying back large quantities of their own shares - which is just another way of returning large amounts of profits to their shareholders while boosting the price of their shares on the stock market.

And all of this is taking place at a time when the rest of us, the majority of the population whose work generates these profits, have to face massive cuts in jobs, pay, pensions and services, under the pretext that these are "hard times" and that we should all "share the pain".

Well, yes, except that we obviously aren't all sharing it!

Reclaiming our due

Last year, it was estimated that British companies were hoarding £600bn worth of cash in total.

This amount is the equivalent of what it would cost to build over 4 million new decent homes for rent for the 4 million households currently on housing waiting lists, with a lot of cash to spare to build vital facilities in health, education and transport, and pay the wages of the millions of workers needed to do the work!

Not only would this be an investment like any other for the capitalist class - since, after all, tenants pay rents and the operation of public services is paid for by income tax - but, for once, it would be a useful investment for society as a whole, since it would resolve the present housing and unemployment crises in one fell swoop, while reversing some of the public service cuts of the past decade.

But, of course, this is not the kind of investment that the capitalist class would ever consider. Nor is it even capable of conceiving that it could play such a role in society.

Indeed, the capitalists' profiteering is driven by short-term gains. Freezing their cash into the long-term investments that are vitally necessary for society, is quite simply, anathema, to them. As to planning ahead to coordinate investment on the scale of the whole economy, this is something which, by definition, goes against the frantic competition between individual capitalists on which their system is based.

This is why the only "solution" that this system has to offer for its own crisis is one in which the rest of us are meant to pay a limitless bill, while the capitalists themselves go on fattening themselves.

This is also why the only way for the working class to avoid paying this bill, is to inject some degree of rationality into the economy, by imposing control over its operation, at every level, despite and against the capitalists, as a first step towards getting rid of their profiteering once and for all.