Supply and electricity crisis, an example of capitalist chaos in Great Britain

27 September, 2021

shortages

Supply crisis in Britain, closed gas stations, empty shelves, electricity sector bankruptcies, meat sector on the brink of collapse. Waste and unnecessary shortages are rampant everywhere as the contradictions of capital become exacerbated.

Table of Contents

Supermarkets are out of stock

Supermarket in Cardiff
Supermarket in Cardiff

Brexit came with a xenophobic catch-22: closing borders to EU workers, they promised, would raise wages for native workers. With the pandemic the exodus multiplied. 1,300,000 workers with EU passports left the country. But wages in the most migrant-labor-intensive sectors remained stagnant.

Truckers are a good example of the extent to which this was the case. Instead of wages going up, the departure of tens of thousands of truck-driving workers resulted in strenuous workdays and impossible journeys, but not a pound more at the end of the month.

The government, which had exempted 10,000 workers from lockdown in order to alleviate the lack of labor at the prices companies were willing to pay, reduced the training requirements to work in goods delivery, in a bid to increase the number of “native” workers available. In June, Asda, Tesco and Sainsbury’s supermarkets began asking suppliers for additional payments to increase the wages they offered delivery drivers. But despite all… supermarket shelves began to show more and more gaps and empty spaces.

But the absence of sufficient and available labor at the wages companies were offering wasn’t just happening in the delivery and transportation sector.

Meat farms, slaughterhouses and meat packing plants shut down

Cutting Room
Cutting Room

Pittance wages and poor working conditions in the midst of the pandemic had led to the abandonment of 16% of the meat industry’s workforce. This past August, the companies in the sector, which had been massively fed by low-paid migrant labor, refused to offer higher wages, asked the government to expand the quota of prison labor, slave labor after all, in order to make up for the losses.

The reduction in quartering capacity soon affected farmers who, in turn, threatened to slaughter tens of thousands of pigs and an even greater number of poultry.

Gas stations out of stock

Pumps closed due to lack of fuel last Thursday.
Pumps closed due to lack of fuel last Thursday.

To top it off, the lack of workers willing to drive trucks at the wages offered by the companies is not limited to delivery and food. We already are approaching two weeks of shortages at gas stations.

BP, which runs the country’s largest private network of gas stations began closing pumps in Greater London and the South of England. As the company reported to the government, the impact of a lack of workers willing to drive trucks for current wages had cut supplies to its gas stations by 20%.

The “solution”: militarize, give visas, train young people in a hurry… raise wages?

Time spent by companies to find a driver to replace a driver who is leaving
Time spent by companies to find a driver to replace a driver who is leaving

Meanwhile, the British government was divided on how to deal with the crisis. The environment minister was proposing to “open the government’s hand” and offer visas; the economy minister was proposing to “ride it out” because he said businesses would eventually raise wages and balance the market; the defense minister preemptively mobilized and censused all his soldiers with the ability to drive transport vehicles.

Finally, the government has offered 5,000 temporary visas for drivers of dangerous vehicles and 5,500 for workers in slaughterhouses and poultry factories as it races to organize training courses for new drivers before Christmas. But few believe they will fill even that meager quota. British chambers of commerce likened the move to “throwing a thimbleful of water on a bonfire” and transport bosses were not much more optimistic.

At the moment shortages are already reaching pubs, Macdonalds and new supermarket chains… but wages are still not rising. And let’s not even talk about the meat industry.

Why aren’t wages going up?

With absolute chutzpah, Johnson, from the front page of the Telegraph, was today trying to present himself as a champion of workers by calling for wage rises for hauliers. But, in reality, the situation exposes the “free labor market” discourse as much as it exposes the xenophobic shenanigans of Brexit.

The point is that under state capitalism pricing is not a game of independent supply and demand, individually incapable of twisting outcomes, no matter how much we are told about the “free market” as an autonomous and indomitable force. It is rather a game of equilibria between monopolies in which profitability rates are negotiated from top to bottom and in which the capital market and the rents distributed from the state end up determining prices.

To put it simply: the UK transport sector has no ability to change upwards the prices for its large customers. So it can’t pass on the costs of a wage rise to them, at least completely. So it can only raise wages at the expense of its margins, which have already been squeezed since the pandemic. And a reduction in margins would make it even less attractive as an application in which to place capital.

That’s what explains why the big retailers’ own transport and oil companies did raise wages: the impact on margins of a few more trucks with better-paid truckers is minimal for them and in any case preferable to the costs of destocking their stores. Also some medium-sized family or individually owned companies increased wages at the expense of margins because for them the alternative was to close and because their dependence on the capital market is smaller.

So the pressure really comes from the top-down: the big distribution and oil companies don’t want to hear about general cost increases, and even the state itself is beginning to fear that a general increase in drivers’ wages will make services such as garbage collection more expensive.

The result: obvious chaos with direct social consequences. One more capitalist chaos.

Bankruptcies and runaway electricity prices

Electricity Prices in Great Britain
Electricity Prices in Great Britain

In addition, Britain is also in a time of escalating electricity prices for reasons similar to those we have been following in Spain -for starters the establishment of an emissions market – although with its own aggravations.

Among them the oil companies’ move into wind and offshore wind production. Pushed by the British “Green Deal,” oil companies’ bidding drove up the prices of public concessions for new developments to unprecedented levels. In part they tried to pass this cost on to wind turbine manufacturers… which have not lifted their heads since. But the bulk has gone to prices. British offshore wind is more expensive than that of any other European country.

The solution? Bet on nuclear, displace Chinese capital and prepare the financing of Rolls-Royce to create a fleet of minireactors. In other words, more inefficient energy production with artificially guaranteed returns and the possibility of placing large capital. Waste, permanent human risk and possible armament derivations.

Another British peculiarity is that there are no price caps for the few existing generation companies, which is where the large capitals are placed, but there are caps for the less capitalized and more numerous distribution companies.

With costs that have reached €3,000 per KW, this means that the distributors work in some periods at a loss. Result: the less capitalized ones go bankrupt one after another. Not anecdotally, there are already 1.5 million households whose supply has been affected by the closure of their electricity distribution company.

Capitalist chaos and the workers

Evergrande headquarters in Hong Kong, another example of developing capitalist chaos.
Evergrande headquarters in Hong Kong, another example of developing capitalist chaos.

In both transport and electricity we see a pattern repeating itself: the big monopolists and more capital-intensive sectors set prices for the whole chain, relying on public regulations (the “Green Deal” or the migration policies) to ensure the profitability of the operation by converting it into a transfer of income from labor to capital.

The immediate result for workers is, on the one hand, a chaos of skyrocketing electricity prices, soaring energy poverty, and bankruptcies that leave a string of new unemployed; on the other hand, infamous working conditions and fuel and food shortages. All in the midst of an orgy of waste of meat, food resources and energy production sources.

And this is just a first warning of the developing capitalist chaos around the world.