Thursday, 30 June 2011

More Pension Lies Exposed

As workers in the State Capitalist sector of the economy strike against attempts by the Government to make them pay for the crisis caused by the Bankers and Financial Capitalists, the Capitalist State, and the bosses media have stepped up their campaign of lies.
The Tory mouthpiece the Daily Telegraph has a piece of typical yellow journalism claiming that the average teachers pension is the equivalent of a private sector Pension pot of £500,000.

They claim that a worker, in the private sector, would have to contribute 20% of their wages for 40 years to amass a pension pot of this size. There are, of course, a number of falsehoods in this story. The biggest falsehood is this.
Private sector pensions are crap not for any reason associated with workers in the State Capitalist sector, but because of the huge Ponzi Scheme that is involved in providing Private pensions. In fact, during the 1980's when Thatcher deregulated the Banks and Finance Houses creating the basis for the Credit Boom and Bust we have just seen, the Insurance Companies were allowed to get away with all sorts of misselling of private pension policies, including persuading workers in the State Capitalist sector, to leave their Pension schemes, and take out a private pension, which they were assured would be MUCH BETTER, based on Stock Market returns. This was all, of course, in the interest of profit making, the same profit making that then led to the crash of the Stock Markets in 2000, and the subsequent demolition in value of all those private pension schemes people had been conned into joining.

As the BBC showed in October last year, the way these schemes operate is similar to the kind of scheme that has landed some financiers in gaol. It reported,

“In one HSBC pension plan, £120,000 paid in over 40 years would result in fees and commissions totalling £99,900.

The company said its pension product is competitive.”

So, it is no wonder that if you are a worker in the private sector, and you are having two-thirds of everything you pay in simply pocketed by the Pension provider rather than it being invested in your pension pot, then, of course, you will get very little out for what you have paid in!!!
But, why is it that the Government, the British Chambers of Commerce, and the Torygraph, who shed crocodile tears over the poor state of pensions in the private sector, do not tackle the real issue, which is the corruption involved in the provision of private pensions by the big Financial Institutions, Banks, and Insurance Companies? Could it be that it is these same companies – the same ones who also caused the Financial Crisis through their reckless speculation in the first place – are their friends, and often made up of the same people as owners and Directors of these companies?
Its certainly the case that the Tories are financed by these big Capitalist companies, so, of course, they are not going to do anything that seriously challenges their profit making activities are they?

In fact, as Panorama reported, in the Netherlands their Pension schemes return benefits 50% higher than in the UK, and that was solely due to the elimination of some of those backhanders, fees and commissions that the British private schemes squirrel away to pay the million pound bonuses of the Fund Managers, and other bureaucrats employed by the big financial institutions. Labour had proposed to introduce a similar scheme, called NEST, to that in the Netherlands, but it should come as no surprise that the Liberal-Tories have scrapped that proposal that could have provided better pensions for workers in the private sector.

But, as I've demonstrated elsewhere, even that is not as good as the average £13,600 a year pension that the Workers Co-operative scheme at Mondragon in Spain provides for its workers, showing that if workers themselves have control over the pensions, they can do much better for themselves than can either private Capitalist rip-off merchants, or the Capitalist State.

If workers in the privatre sector were not being ripped off by the Tories and the Telegraph's friends in the big Financial Services companies, then instead of the 20% the Torygraph speaks of, we would be talking about 6%, or about the same as the average worker in the State Capitalist sector contributes to their pension!!!

But, of course the Torygraph do not contrast this fictional £500,000 Pension pot with the latest figures from Income Data Services on the fact that the average pension pot of the average FTSE 100 Director now stands at £2.8 million.
It provides the average Director with a pension not of the average £7,000 for workers in the State Capitalist Sector, but of £170,000!!! And, of course that average figure hides the fact that some of these Directors will be getting many times that. According to IDS, half these Directors still were in Final Salary schemes, and of these the companies they worked for paid on average 25% of their salary into the Directors Pension Scheme. Also bear in mind that high rate taxpayers like this also get 50% tax relief on their contributions into a private sector Pension, so they are, in fact, being subsidised not just by workers in the private sector, but also by all those taxpayers working in the State Capitalist Sector, whose average pension is less than a 20th of that received by the Directors.
Bear also in mind that many Directors on these FTSE 100 companies are mere names. They are former MP's, Lords, or former Executives of big companies who do not actually do anything other than turn up to a Board Meeting every so often.

The Government has also repeated the lie about workers living 6 years longer now than they did in 1980, and that this means that the cost of providing Pensions for this additional 6 years is higher. But, this is what is called in Logic a Non Sequitir i.e. the conclusion does not logically follow from the premise. The reason for that is quite simple. It assumes that there has been no other change, during that time, other than the fact that people are living longer.
Compare it with a computer memory. If we think about the number of years Pension to be received as being the same as the number of megabytes of RAM, then it would be like saying that because a computer today has 100 times as much RAM as one ten years ago, it must cost 100 times as much!!! But, of course, that is far from the truth. In fact, not only do computers today have more than 100 times as much memory as those ten years ago – and many more advancements besides that – but the cost of those computers today is LESS than that of computers ten years ago. The reason is that increases in labour productivity during that time, have meant that the cost of producing that memory has continually fallen.

The same is true with pensions. Taking 1980 as their base year is completely arbitrary. The relevant year is, of course, 1925, when the current Pension age of 65 was established. Since that time, average male life expectancy has risen from 55 to 76 today. A rise of 50%. However, as I showed in my blog The Big Pensions Lie workers productivity has risen by that amount and more just in the last 30 years!
It has been rising at more than 2% p.a. on average for the last 100 years, meaning that, just as that means that computers with more RAM today than 10 years ago are cheaper, so each year of Pension provision today costs less in real terms than it did 30 years ago, and much less than it did in 1925 when the Pension Age was first set at 65!

To continue the computer analogy, consider the Pension not as a sum of money, which only confuses matters, because of monetary inflation, i.e. the value of paper money continuallly falls due to more of it being printed, and increases in credit money, but as a quantity of goods to be bought by that money. Economists call the sum of these goods, the wage bundle, or in this case the pension bundle. It can be aggregated to a given quantity of units.
So, if there are a certain number of units of this bundle per year, then like the quantity of RAM, it has a cost. The real cost for society is then the amount of average social labour that has to be devoted to producing it. If the average worker consumes 1000 units per year, and had an average retirement period of 10 years, then in total they would consume 10,000 units. Let, us say that these 10,000 units in 1980 required 1,000 hours of average social labour to produce. Now, if the average worker enjoys 15 years of retirement their total number of units rises to 15,000 units. However, if, due to the same rise in productivity that has cut the cost of RAM, the cost of these units has fallen by 75%, then instead of it costing 100 hours per year to produce the 1,000 units in 1980, it now costs only 25 hours. So, although the average worker now consumes 15,000 units in their retirement, the cost of producing these units has in fact fallen to 375 hours. So, even though workers are living longer, and therefore consuming a greater quantity of pension goods, the cost to society of producing them has fallen from 1,000 hours to just 375 hours. In fact, given the massive rise in productivity since 1925 on a cumulative basis, it is clear that the real cost has fallen much more than this. That is why, despite continually rising life expectancy, during the 20th Century, it was possible not just to afford pensions, but even to increase the size of the bundle of goods it bought!

The fact, that workers life expectancy has continued to rise, as it did during the whole of the twentieth century, clearly is not the reason for the demand for workers to work longer. The real reason is that British Capitalism is uncompetitive compared with newly industrialising economies like China.
During the 1980's, it failed to invest in new types of industry, instead using the North sea Oil bonanza to finance mass unemployment in order to destroy the Trades Unions, and force British workers wages down. During that time economies like Germany and Norway restructured and invested into new high value industries, that could pay high wages and sustain high levels of pensions and benefits.
British capitalism under the direction of Thatcher and the Tories instead de-industrialised, attempted to build a low wage economy, and directed investment in to Financial Services, Retail Parks (selling Chinese and other imported goods), and into speculation on property, shares and other unproductive activity. It is that, which has left Britain unable to compete in the global economy, and which has left the profits of British Capitalism low compared with its foreign counterparts. The drive to get workers to work longer hours, and longer working lives is solely to compensate for the inadequacies of British Capitalism, and the failed policies of Thatcher and the Tories in the past.

Wednesday, 29 June 2011

When 3% Is Actually 100%!

I was watching the news today, and heard once again it stated that Civil Service workers were to face a 3% increase in their Pension contributions. On top of the fact, that many of them are to lose their jobs, face having to work longer until they can get their Pension, and will get smaller pensions due to the switch to life time avergae rather than Final Salary, and the switch from indexing to CPI rather than RPI, this might be bad enough. But, the figure does not seem to match with the figures of 50% increases and more that the unions have been describing.

I had a look at the PCS website to try to find out the details, but it wasn't easy to see. They do point out that the Government's proposals are to increase contributions by 3% of salary. But, of course, this is far from the same thing as a 3% increase in contributions. For it to be a 3% increase in contributions, contributions would already have to be equal to 100% of salary!!! It is an increase of 3% points, not 3%.

Therefore, if currently, workers are contributing 6% of their salary to Pension, then a further 3% is indeed equal to a 50% increase in contributions. If contributions are currently 3%, then it would be a 100% increase in contributions. I think the unions ought to make sure that this information is made clear, and put out more widely to the Public, and that when the News channels misrepresent the real position they immediately correct it, or the Government will begin to win the propaganda battle.

One Is In It Together With One's Subjects

According to The BBC, Prince Charles received an 18% pay increase from the Taxpayer last year. That at a time when thousands of other workers are facing the sack, freezes on wages, longer working lives, and attacks on their pensions. They also reveal that his other income rose by 4%.

That is income, of course, largely from the estates such as the Duchy of Cornwall, the vast tracts of land that the Royals' ancestors robbed from the ordinary peasants of Britain.

Tuesday, 28 June 2011

Too Late For Plan B?

In recent weeks there has been a lot of talk about the need for a Plan B. If not for a Plan B to be implemented now as Ed Balls would advocate, then at least for a Plan B to be drawn up, just in case as the IMF have suggested things don't go as the Liberal-Tories expect, and we enter a double-dip. But, the question now is, is it too late for a Plan B. Moreover, what exactly would Plan B be?
The original idea of Plan B put forward by Ed Balls was that the Liberal-Tories should slow down their programme of spending cuts, and introduce something more in line with the programme of spending cuts that Labour had proposed. But, the IMF in its latest report suggested instead that Tax Cuts would have a more immediate effect, pumping quick additional spending power into the economy. Now Balls seems to have hitched himself to the IMF tax cutting wagon, proposing an immediate £51 billion cut in VAT, reducing the level back to 17.5%

Let's be clear about a few things. The Liberal-Tory argument about the crisis being due to a profligate Labour Government is nonsense, as I showed previously - Here - the vast majority of the debt was accumulated after 2007, when the Credit Crunch began. As I wrote there,

"Public Sector Borrowing and Repayments shows that, contrary to Mike McNair's account, in the period after 1999 up to 2002/3, Labour was actually paying down the debt rather than intervening with Keynesian stimulus under instruction from Capital. Between 1979 and 1997 borrowing accounted for 3.4% of GDP, between 1997 and and 2005 it averaged just 1.2%. Moreover, even when Labour did begin to act counter-cyclically, under Brown, the increase in the deficit was nothing extraordinary. It is clear from the data that the significant change DID come in 2008/9, when, even excluding the amounts pumped into the Banks, net debt rose from 36.5% of GDP, to 43.2%, a bigger cumulative rise than in the previous 7 years combined!"

But, it is also true that, precisely because the injection of all of this spending was an emergency, counter-cyclical measure, it would at some point have to be reduced. So it is true to say that the deficit has to be tackled, the question is how?
In reality, as I have shown in several blogs the Liberals, even during their Coalition discussion with the Tories, continued to believe that the issue of the deficit had been “hyped-up” - Liberal Economy With The Truth. They continued to believe that it would be a mistake to begin to introduce Cuts until the recovery had been secured, which meant not until 2011.

But, the problem is that although, in reality, the Cuts have not started until now, for more than a year, we have had both the Liberals and Tories telling us in the most catastrophic language that the deficit was a huge problem that needed to be dealt with immediately, that we were in the same position as Greece and so on. It was no surprise then that given this massive talking down of the economy, it has its effects last year on what Keynes called the “Animal Spirits”. Workers in the State Capitalist Sector told that they would have their pay frozen, that more than likely they would lose their job, and that they would have to pay more into their pension, not surprisingly pulled their horns in, and began to reduce their spending.
Workers in the private sector warned of tough times, and considering the effects that the Cuts would have on them did likewise. And, businesses reliant on the State capitalist sector for work, or for spending by its workers, also began to take a more cautious approach.

It was no surprise then that the growth that had been established and was beginning to take hold as a result of Labour's fiscal stimulus, began to quickly fade under the Liberal-Tory Government, and by the end of 2010, had actually already gone into reverse. Although, the preliminary figures for 2011 Q1 showed a modest rise in GDP, it only cancelled out the fall from Q4. Yet, all of that is before the cuts have begun to be introduced. All of that was at a time when the rest of the global economy was growing as a result of being pulled along by Asia, and the more dynamic economies, as well as from the fiscal stimulus introduced in the US and elsewhere.
By contrast, in recent months, China has introduced measures to slow down its economy for fear of it overheating. The US, as a result of similar animal spirits taking hold after the election of Republicans, and Tea Partiers, has also begun to slow down. Northern Europe has continued to grow strongly despite introducing its own austerity measures to reverse the fiscal stimulus they had introduced in 2008/9. But, those economies are also reliant to a degree on exporting goods within the EU, including the debt ridden periphery. If Greece defaults to a significant degree – and especially if it is an unplanned default – then EU economies will be sent into a tailspin, and their resources to deal with it, will not be the same as they were to deal with the consequences of the Financial Meltdown of 2008.
For one thing interest rates are already at rock bottom. In fact, as Paul Mason writes the BIS is already warning that global interest rates have to rise to avoid serious problems developing. Paul Mason says, that its unlikely that the Bank of England, under pressure from the Government to keep rates low, will raise rates any time soon. But, that assumes that Monetary Policy is controlled by the Bank of England. It isn't, its controlled by the private financial institutions that create credit, and who also determine market rates through their buying and selling of Bonds.

The Liberal-Tories have made a big deal over the low yields on UK Government Bonds. In fact, the yield on the 10 Year Gilt at the beginning of 2010 was not much different than it is today. It was, in fact, falling as UK growth picked up, unemployment was falling, and borrowing was coming in lower than expected. After the Liberal-Tories came in, the yield, after their June Budget, rather than falling, actually rose to over 3.8%. Today, yields in the UK, as well as in the US, Germany and other large economies are falling to new lows. But, the reason for that has nothing to do with fiscal restraint.
The US has the world's largest deficit, and could technically default itself in August if a deal to raise its debt ceiling is not reached. Yet rates on the 10 Year Treasury Bond are lower than on the 10 Year Gilt. The reason these yields are low and falling, is because there is so much fear about conditions in the rest of the developed world.

If you are a Capitalist, or a large financial institution, you have to invest your money somewhere. At current deposit rates that is even more necessary. But, if you think the European, and large parts of the global economy could be about to be thrown into crisis, you will not want to be over exposed to Equity Markets, where the value of your shares could drop 10, 20, 30 or more per cent, or be wiped out altogether of companies go bust. And, although the yield on Greek Bonds is as high as 30%, you will not want to invest in them if you think Greece will default on those Bonds. So lots of available Capital is being forced to buy UK Gilts, German Bunds, US Treasuries etc. It is also why, CNBC reported a few days ago, that central banks around the globe have stopped selling and started buying Gold. It is why as Paul Mason reports, Switzerland has reported a 50% rise in Gold watches exported to Greece, as people there fearful of a return to the drachma, which could have as much value as a piece of toilet paper, begin to hoard things of real value.

But, a look at the UK demonstrates the problem. The Yield on the 10 Year Gilt is currently 3.2%. But, inflation in the UK is already running at more than 5%. In other words you are paying the UK Government 2% to borrow money from you, because when the Bond is redeemed it will be worth 5% less than you paid for it in real terms. Sooner or later, Bond investors decide that is not a good deal.
The the so called Bond Vigilantes appear. These are the institutions that control huge sums of money that invest in Bonds. They can essentially go on strike, simply refusing to buy Bonds unless their price is substantially lower. A lower Bond price, means a higher yield, and consequently higher interest rates. With increasing opportunities to buy alternative investments through the development of Exchange Traded Funds, for things such as Gold, Silver, and other precious metals, there comes a point when an avalanche of money, a momentum trade simply sweeps out of one asset class such as Bonds, and into these other avenues. At that point, when the prices of UK Bonds falls dramatically – not because of the debt or deficit, but because of rising inflation – actual market interest rates, the rates that firms pay to raise money, the rates that Banks and Building Societies pay to borrow money to lend out as mortgages etc., will rise sharply, whatever rate the Bank of England sets its Bank rate at.

And herein lies the major problem for the UK Government. Its argument has been that by introducing the austerity measures, it could keep interest rates low, and this would facilitate borrowing and investment by the private sector, which would then employ workers from the State capitalist sector, and would generate business via exports.
It was never possible. The degree to which exports needed to rise was greater than Britain has been able to accomplish in living memory. To do so, when its main export markets in Europe, and particularly in Ireland, are themselves suffering economic contraction due to similar austerity measures, is totally unrealistic. But, at a time when the scare stories the Government was forced to tell for the last year to play up its austerity narrative, have already depressed economic activity, and now that the actual austerity measures are set to depress it even more, it is clear that the rash of high street store closures now being seen are just a taste of things to come.
In fact, just as austerity measures in Ireland led to a 60% housing price crash, and a renewed recession, which made paying back its debts even harder, and as we now see the same thing playing out in Greece on an even more acute basis, so the austerity measures in the UK will have a similar counter-productive effect.

When a group of leading economists wrote a letter setting this out a few weeks ago, the Government and others responded that economists had written a similar letter in 1981 in response to austerity measures by a Tory Government, but that in the months to follow the economy actually did grow strongly. But, this is a re-writing of history. In reality, although the Government in 1981 did announce Cuts, in reality it failed to implement them.

Source Data:UKPublicspending

Milton Friedman at the time expressed his frustration saying that, in fact, Tory Ministers had become hostage to their Departments, and the Departments were able to use the Ministers to fight their corner in Cabinet. We can see plenty of instances of Government Departments, already attempting to repeat the experience today, with almost daily stories coming out of the Ministry of Defence for example.
But, the early 1980's were not a period of rapid economic growth, but of rapidly rising unemployment, which is why the Peoples Marches for Jobs were organised. The Unemployment Rates were: 1979 5.1; 1980 6.6; 1981 9.9; 1982 11.4; 1983 12.6; 1984 13; 1985 13.2; 1986 13.3. It is why the Government introduced twenty changes to the calculation of Unemployment to try to reduce the official numbers.
It is why they introduced schemes to encourage older unemployed workers to cease seeking work in return for a higher level of benefit, and its why they introduced various schemes through the Manpower Services Commission, such as the Enterprise Allowance Scheme, which encouraged unemployed people to start up their own business, and in return paid them an allowance for a year that was higher than their Unemployment Benefit.

When growth did begin to increase in the late 1980's, and into the 90's, it was not stellar then, and was punctuated by crises every few years, such as the crash of 1987, and the recession of 1991. But, the reason for the growth that did occur was quite simple. In the late 1980's the Tories deregulated financial markets. They opened the monetary spigots, and encouraged everyone to borrow money as though there was no tomorrow. Coupled with what seemed like free money if you bought shares in the privatisation schemes, where share prices rose by 50% overnight, or if you bought your Council House with up to 60% discounts, and so on, this created a credit boom.
It could work, because at that time, very few people had any substantial amounts of debt. Part of the result was a house price bubble that continues until today, which in turn gave people the illusion that they were better off, and encouraged them to go into even more debt to buy more goods. In addition, many of these goods were falling in price rapidly due to them now being imported from China where costs were a fraction of what they had been when those goods were made in the UK.

But, the very opposite of that is true today, that trick cannot be repeated. In fact, at £2 trillion, private sector debt in the UK, tied up in mortgages, credit cards, student debt, store cards and so on, is more than twice the Public Debt. Instead of being able to take on more debt to finance consumption, households are needing to deleverage, to pay down the debt they have.
In fact, just as the problem for the Greek economy today, of the impossibility of repaying its debt, will lead to a default at some point – and in Greece too private debt is likely to be much greater than Public Debt leading to an even bigger default – so for individuals and families in Britain, a new recession or simply just stagflation is likely to result in those individuals defaulting, which in turn will have a cascading effect throughout the economy.

But, as I said at the beginning, it could be too late now for Plan B. If the Liberal-Tories were to turn around and perform yet another U-Turn, this time on the economy, it would confirm the view that has been quickly taking hold for the last year that this is a weak, inept, and incompetent Government.
That would be likely to send waves of concern through international markets, that would bring a sharp drop in confidence, and rise in risk premium for all UK assets. The only way around that, which is similar to what needs to happen, and, based on news coming out from France today, looks like might happen, in relation to Greece.

My guess, is that in the background the EU has been saying to the Greek politicians, particularly of the opposition, “Vote through these measures even if you have no intention of implementing them. Then we have cover to give you the money.” But, in fact, it looks like even if the Greek Parliament does not vote through the austerity measures, the EU will find a way to stump up the money. It has to because it cannot let Greece fail.
If Greece defaults – and to be clear a default does not mean not paying back all the money it has borrowed, it only means not paying it ALL back, or paying it back over a longer period than originally agreed – without arrangements having been put in place, that will cause panic that will spread throughout the financial markets, with dire consequences as no one knows where counter party risk resides. If, however, Greece effectively defaults, but in advance someone else agrees to pick up its tab, then no such panic results.

What is happening at the moment is EU capitalist States attempting to allow individual Capitalists, and Capitalist Institutions to get their money out, before they lose a large chunk of it. Lending money to Greece as even the Governor of the Bank of England has said cannot solve Greece's problems. But, it can solve the immediate problem of all those Capitalists, and capitalist institutions who hold Greek debt.
Transferring it to EU states, to the ECB, rescues the Capitalists, and leaves EU taxpayers i.e. workers instead holding the debt. But, the EU could then deal with that problem as I've stated before. It could establish something approaching a Federal EU state over the broken backs of the Tory Eurosceptics and their co-thinkers elsewhere in Europe. The irony is that the Eurosceptics were right at the beginning to say that the EU, and certainly the Euro could not survive without Fiscal Union, which also entails a Federal State. The representatives of Big Capital failed to address that issue head on, and instead settled for the usual bureaucratic fudge. Pretty much every Economist is now saying that the survival of the Euro means establishing Fiscal Union. And, its no accident that Tony Blair is talking about the need for a European President elected by popular vote across Europe. Every previous crisis like this in Europe has brought greater centralisation, and it is in the interests of Big Capital to push through such a change now, and once again that interest coiuncides with the interest of European workers. It could then sell EU Bonds, raising all the money needed on global Capital Markets to refinance, and recapitalise European Banks, and State coffers.
Essentially backed by the power of the German State such Bonds could be sold at prices not much lower than current German Bunds. It could then put in place the kinds of policies, like a modern day Marshall Plan, that is needed to invest in and restructure European capital, particularly in the periphery, so as to be globally competitive.

But, that could also be done as far as Britain is concerned too. If the IMF, for example were to stiffen its latest report, and to say that global economic conditions called for a global response from Governments, it could sanction a Plan B, based on fiscal expansion in the UK. It could then be co-ordinated with a similar expansionary policy in Europe.

But, in reality such a development would not be to abandon Plan A, for the kind of Plan B being currently discussed. It would be to go to Plan C or D or F, straight away.
Are UK and EU politicians up to such a move? Time will tell, but in considering their options they should consider the consequences of failing to act decisively and radically in respect of Lehman's.

Sunday, 26 June 2011

Greece And The Media

There was a very good piece on Al Jazeera about the role of the media in portraying the situation in Greece as though it was all the fault of lazy Greek workers.

As the film shows, in fact, the average Greek worker retires aged 61, which is older than the average in Germany or Britain. The average Greek worker also works more hours per week than in Britain. And, in reality, of course, everyone has known that the problems in Greece were not due to lazy Greek workers, or over paid Greek workers. A look at Greece shows that the majority of people certainly cannot be described as affluent. The real problem in Greece, similar to in much of Europe, is that at a time when Asian economies are out-competing much of the West, the lack of investment, and consequent lack of competitiveness of economies like Greece becomes even more obvious. The lack of competitiveness is not the responsibility of the workers, but a result of lack of investment, and an economy that has not been structured to meet the needs of Global Capitalist Competition. That now cannot be done by Greece alone. It will require an EU wide solution.

Thursday, 23 June 2011

Global Economic Meltdown Imminent

CNBC's, Guy Johnson has just reported that the Northern European Finance Ministers have given up on Greece. Apparently, he has been told, they were fuming at the fact that Greece's new Finance Minister turned up to the meeting expecting concessions. It may be a bluff to try to get the Greek Parliament to vote for the new austerity package next week, but it also appears that the attempts to get the Banks and Finance houses to go along with some voluntary rescheduling also hit a brick wall. Moreover, the Credit Rating agencies have also been playing hard ball.

At the moment, it looks likely that the Parliament will reject the new austerity package, as the Opposition have already said they will oppose it, and they only need seven other MP's to join them. It looks like global Capitalist powers were already aware this development was likely, because at the opening of US trading today, the IEA also announced that it was releasing 60 million barrels of oil from global strategic reserves to try to calm markets and reduce global oil prices. They must realise that if Greece effectively defaults next week, then global economic meltdown will begin. Someone once asked how bankruptcies occur replied "Slowly at first, and then all at once." This will be likely to make the 2008 Credit Crunch look like a blip.

In his blog the other day Paul Mason, asks if it really would be the end of the world if Greece defaults? Well, no, even in economic terms things are always recoverable. But, would Greece defaulting cause a crisis that has not been seen for 80 years? Probably.

It is not that Greece is an important economy. It is not even that Greece's debt is particularly big - though for Greece it is unsustainably big. The problem is that Greece's debt is held by Greek Banks and Bondholders, as well as by the ECB - in fact, the ECB holds so much Greek debt that it has bought in the secondary markets from private Capitalists, that if that debt became worthless the ECB would be insolvent - and by European Banks, and Bondholders. Besides that, the total Greek debt rather like the sub-prime debt in the US from 2008, has been packaged up many times over, various derivatives such as Credit Default Swaps, whose purpose is to insure against default. As in 2008, the problem is that all of the Banks and Finance Houses that own this debt and these derivatives are all potentially at risk, as this debt becomes worthless, and as calls are made for payment against the CDS's. But, as in 2008 no one will know which Banks and fiannce Houses are at risk of going bust - made worse because the Bank Stress Tests carried out over the last year were totally discredited.

The consequence is that no Bank will lend to any other Bank or Financial Institution for fear that it will not get its money back, if they go bust. That means that interbank rates go through the roof, effectively lending stops, and any Banks and Financial Institutions dependent on the Money Markets are likely to go bust too. It means that lending to businesses will grind to a halt, and whatever decisions the Bank of England takes on Interest Rates will be meaningless, because Banks and Building Societies will be unable to advance money for mortgages other than at high rates.

The US markets realised that there must be something serious going on when the IEA announcement was made as the DOW fell by 200 points at the open. Bond markets are also factoring in a serious economic downturn as Yields also fell, a reflection of institutions buying Bonds in supposed safe haven economies in anticipation that an economic slowdown will mean company profits fall sharply, and so share prices too.

As the above video shows, Central Banks have themselves stopped selling Gold, and started buying, a sure sign that they see trouble ahead as further economic declines are likely to see even more paper money printed, making it even more worthless. As in the 1970's such a trashiong of paper currencies leads to a return to Gold as real money. In the 1970's Gold went from $30 an ounce to $800 an ounce, and almost 24 fold increase. Yet, on the news of the oil releases, Gold fell by 2% or around $30 an ounce. That is probably a sign that someone in the amrkets has been tipped the wink that the IMF intends to sell some of its Gold reserves, a suggestion that was made some weeks ago. That would be both to try to staunch a rocketing Gold price, as well as to provide the IMF with short term liquidity to intervene in economies at immediate risk.

Benghazi Civilians Protest Atrocities Committed By "Rebels"

RT has been covering stories today from Benghazi civilians about the atrocities being committed by the Libyan "rebels". Already, the UN has been notified of War Crimes committed by the "rebels", including the use of rape as a method of intimidation, as well as the use of such crimes committed by Gaddafi's regime. One former Benghazi resident, escaped Benghazi with her family to a refugees Camp in the West of the country. She is quoted as saying,

“It’s not safe there anymore. It’s become dangerous. And that’s not only because of explosions and gunshots. One day, people from the government in Benghazi – you call them rebels, we call them terrorists – came to me and told me, ‘we have to arrest your daughter, because we know that she supports Gaddafi."

Her brother, a surgeon, also escaped from Benghazi, after three attempts on his life.

“They took him from the ICU and killed him in front of the ICU and hanged his body on the wall of the hospital. There is no opinion other than their opinion. You are either with them or against them. They talk about freedom and democracy but there is no freedom and democracy. They just want the power,” he said.

There have also been pogroms carried out by the "rebels" against black Libyans. It should be no surprise, as many of the leaders of the Transitional National Council are known reactionary figures. They are made up of former Gaddafi regime thugs, tribal leaders with an axe to grind amongst others.

In an analysis of the forces involved in the "rebel" Camp Mark at the Commune, concluded some time ago that,

"I think it is probably accurate to say that this rebellion has all the hallmarks of a tribal civil war, whatever its initial impetus, and which probably is deeply coloured by a conservative Islam. It’s dependence on Western intervention is likely to provide some interesting and contradictory factionalism within the Islamist camp. Whether the working class in the oil fields and the major cities can provide an alternative has yet to be seen but the call for western intervention on their behalf seems to be based on little understanding of the likely character of the rebellion."

Of course, Marxists should not provide support for such a movement, but should focus on building an independent, working-class response both to the oppression inflicted by Gaddafi, and the War being waged on Libya by Imperialism. The role of the AWL has once more been shown up for the disgrace that it is. Basing themselves on the principle that "My enemy's enemy is my friend," the AWL having identified Gaddafi as their enemy have been prepared to jump into bed with any reactionary force so long as it too is an enemy of Gaddafi. They have done this on every occasion. When the Soviet Generals launched their coup attempt, the AWL backed Yeltsin who was acting on behalf of Imperialism. In Iraq, having identified the Sunni clerical fascists as their enemy, they identified "Democratic Imperialism" as their friend, which then led them to identify the Shia clerical-fascists like Sistani as also their friend. Once again having identified "Democratic Imperialism" as their friend, they have been led to big up the rebels, to act as their apologists and so on. Now in one of their most nauseous contributions ever, the AWL even talk about the "Death Squads" being unleashed by the Libyan "rebels" - or "Free Libyans" as the AWL apologists now refer to them - liberating the people of Tripoli against their will!!! A piece of apologism that Stalin himself would have been proud of. But, of course, unlike the genuine Popular revolts such as that in Egypt, or in Syria where the population in all the main centres have continued to mobilise and grow despite massive military might used against them, in Libya, the "rebels" were never able to mobilise a majority of the population behind them. Even with the massive military might, and after 10,000 plus bombing raids by the Imperialists, and massive problems in Tripoli as the Imperialists try to starve the population into submission, the rebels have failed to make any headway. Is it any wonder that workres and the urban poor in Tripoli have no desire to be liberated by these Imperialist backed "rebels", even from the oppression of Gaddafi?

Whatever fantasy picture the AWL try to paint to cover their social-patriotic apologism, the reality is that the "rebels" can only make any headway if the ground has been cleared for them in advance by massive Imperialist firepower. Even then, and with the new military equipment provided for them, and with the assistance of the Imperialist Special Forces that everyone knows is already on the ground and helping them, they have made virtually no advance. EU Imperialism has already drawn up plans to install its own Protectorate to run Libya if they bomb the Libyan people into submission. It will be done udner the cover of preventing the country descending into chaos, and to facilitate the rebuilding of the country - a rebuilding which their massive bombing campaign is making necessary due to their destroying the infrastucture - though no doubt they will not deal with the legacy their use of depleted Uranium munitions will impose on the Libyan people for generations to come.

Why I Don't Oppose Grayling's New Private University - Part 2

In Part 1, I demonstrated that there was no basis in Marxist principle to oppose Grayling's new University. More importantly, by focussing on the issue of equality the opposition implicitly accepts the Liberal notions about Equality stemming from Distributional rather Production relations.
Consequently, it also then offers not Marxist but Liberal reformist solutions, whose main target is not Capital, but the Middle Classes, and better off sections of the working-class. This Fabian redistributive view of Socialism also fits with the statist view itself put forward in relation to the question of the nature of state owned institutions.

This brings me to the question of Marxists attitude to privatisation. Engels, in Anti-Duhring, sets out that State Capitalism is merely the logical conclusion of the process of concentration and centralisation that Marx had elaborated.
State ownership was not “progressive” because it was the State that was the Capitalist, which is the implication that all of the Statists make, but merely because it was the most developed, most mature form of Capital arrived at, in just the same way that a Monopoly, or a Trust is only progressive compared to free market competition because it too is a more mature form of Capital having developed out of that free market competition.

He writes,

“But the transformation, either into joint-stock companies, or into state ownership, does not do away with the capitalistic nature of the productive forces. In the joint-stock companies this is obvious. And the modern state, again, is only the organisation that bourgeois society takes on in order to support the general external conditions of the capitalist mode of production against the encroachments as well of the workers as of individual capitalists.

The modern state, no matter what its form, is essentially a capitalist machine, the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers — proletarians. The capitalist relation is not done away with. It is rather brought to a head. But, brought to a head, it topples over. State ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.” (ibid p360)

And he says,

“In the trusts, free competition changes into monopoly and the planless production of capitalist society capitulates before the planned production of the invading socialist society. Of course, this is initially still to the benefit of the Capitalists.

But, the exploitation becomes so palpable here that it must break down. No nation would put up with production directed by trusts, with such a barefaced exploitation of the community by a small band of coupon-clippers.” (Anti-Duhring p358)

But, of course, Engels was mistaken. Not only DOES society put up with such barefaced exploitation by one single Capitalist State Trust, but many of those who claim to act in his and Marx's name, advocate it to the workers as a solution for their problems!!!

I have quoted Engels from the 1976 Foreign Languages Press Edition of his book as the version contained at Marxists.Org is incomplete, and does not contain the passage about “coupon-clippers” for some reason.

Lenin in “Imperialism” sets this out as against Kautsky. We oppose the introduction of anti-Monopoly laws, Lenin says, because they imply that the problems arising out of Monopoly can be resolved by going back to free market competition.

They can't. The break up of the Monopolies would only mean the process commencing again – as happened when the US Oil Monopolies were broken up. As Lenin sets out, the Marxist position opposes the move back to a more primitive form of Capital, and instead argues for going beyond the existing Monopolies – including the biggest Monopoly of all that of the State – and forward to Workers Ownership and Control of the means of production.

Lenin quotes Hilferding approvingly,

““It is not the business of the proletariat,” writes Hilferding “to contrast the more progressive capitalist policy with that of the now bygone era of free trade and of hostility towards the state.

The reply of the proletariat to the economic policy of finance capital, to imperialism, cannot be free trade, but socialism. The aim of proletarian policy cannot today be the ideal of restoring free competition—which has now become a reactionary ideal—but the complete elimination of competition by the abolition of capitalism.”

He continues,

Let us assume that free competition, without any sort of monopoly, would have developed capitalism and trade more rapidly. But the more rapidly trade and capitalism develop, the greater is the concentration of production and capital which gives rise to monopoly.

And monopolies have already arisen—precisely out of free competition! Even if monopolies have now begun to retard progress, it is not an argument in favour of free competition, which has become impossible after it has given rise to monopoly.

Whichever way one turns Kautsky’s argument, one will find nothing in it except reaction and bourgeois reformism.”

Lenin – Imperialism

But, it would be ludicrous to go from the argument that we should oppose the break-up of Monopolies – including State Monopolies – to the argument that we should advocate the establishment of Monopolies, including the most complete form of monopoly that of State Capitalism, or to proscribe the creation of new private companies that compete with such Monopolies! In fact, nothing is more natural than that such competition to the Monopolies should arise as Marx pointed out to Proudhon in The Poverty of Philosophy,Ch.2

Marx writes,

“It must be carefully noted that competition always becomes the more destructive for bourgeois relations in proportion as it urges on a feverish creation of new productive forces, that is, of the material conditions of a new society.

In this respect at least, the bad side of competition would have its good points...

Thesis: Feudal monopoly, before competition.
Antithesis: Competition.
Synthesis: Modern monopoly, which is the negation of feudal monopoly, in so far as it implies the system of competition, and the negation of competition in so far as it is monopoly.

Thus modern monopoly, bourgeois monopoly, is synthetic monopoly, the negation of the negation, the unity of opposites. It is monopoly in the pure, normal, rational state.

In practical life we find not only competition, monopoly and the antagonism between them, but also the synthesis of the two, which is not a formula, but a movement. Monopoly produces competition, competition produces monopoly. Monopolists are made from competition; competitors become monopolists. If the monopolists restrict their mutual competition by means of partial associations, competition increases among the workers; and the more the mass of the proletarians grows as against the monopolists of one nation, the more desperate competition becomes between the monopolists of different nations. The synthesis is of such a character that monopoly can only maintain itself by continually entering into the struggle of competition.”

In other words, Feudal Monopoly leads to Capitalist Competition, which leads via concentration to Capitalist Monopoly, which leads in turn to Monopolistic Competition.

The only place where this Monopolistic Competition, and the benefits that flow from it does not exist, and where all of the limitations on development that Lenin sets out as flowing from Monopoly, is in the area of State Capitalist Monopolies. But, even here the laws of Economics as set out by Marx do not cease. If Competition is outlawed in one form, it springs up in another. Individual consumers respond to a Monopoly of Public Transport by switching to private cars. A Monopoly in Post is met by the development of E-Mail, and so on.

Just how ridiculous trying to impose such proscriptions on the development of new private companies is can be seen by looking at many of those things we see around us. When IBM had a virtual Monopoly in the Computer Industry, for example, would it have been sensible to apply the idea that any smaller companies in the industry were “less progressive”, and therefore to have proscribed their development, in order to protect IBM from such competition?

After all as Engels, Hilferding, Kautsky and Lenin set out there is no qualitative difference between a State Capitalist Trust, and a Private Capitalist Trust, except for the fact, as Kautsky set out, that the State has far more power to be able to exploit its workers than any private Capitalist. Had that been the case, then Microsoft would never have been established. In the same way, had Microsoft had such protection, it would have meant that Google, and all of its competitors would never have been established.

And, in fact, if we look back over the last 60 years, this process has been repeated over and over again with repeated waves of new small companies in new areas of production, that have sprung up, often in competition with existing large companies in similar areas of production, which have then grown to become large companies themselves.

And, what we have seen develop in the last 60 years, as part of a new regime of Accumulation, is increasing Monopolistic Competition, largely on the basis of Quality that has acted to massively improve the range and quality of production, whilst at the same time driving down the price of production, through continual and rapid innovation in the means of production, and in productive techniques.

In the last 30 years, the introduction of neo-Fordism and what came to be called “Flexible Specialisation” methods, meant that this process could be even more accelerated. Indeed, the FS methods made possible with CAD-CAM, Modularisation, and robotisation which were fundamental to industrial production, re-organisation and restructuring, are also highly applicable to service industries including things such as health and education, precisely because they facilitate services more particularly tailored to the needs of particular groups of consumers.

Of course, in part this requires a degree of size to enjoy the economies of scale that makes this possible. But, a look at any neighbourhood to look at the vast range of products available at competing TESCO, Sainsbury, ASDA, etc. demonstrates how this works, because in any particular neighbourhood, the particular range is itself determined by analysis of consumers purchases. Yet, all of that has been achieved whilst driving down costs massively, and driving up the quality of both the goods on offer, and the shopping experience itself. And, the Internet is a prime example of that with Search engines like Google able to examine each individuals on line activity so at to tailor searches and advertising to meet their perceived needs and tastes.

It seems crazy to me for Marxists to defend existing, in the main not very good – outside Oxbridge and a few more - and very expensive provision of Higher Education in the UK against the potential for a similar transformation.

I was looking at our local Universities and F.E. And Sixth Form Colleges recently in this light. It seems illogical to me that within the space of about five miles we have two separate Universities, and within ten miles a Faculty of Manchester University as well. On top of that around those Universities are nearly half a dozen F.E. Colleges, and in addition to that several Sixth Form Colleges. Each of these have their own Vice Chancellors, or Principals, their own quite large administrative staff and so on.

From an economic rationality perspective this is ridiculous. It is a huge unnecessary duplication of resources. No large private company would work in that way. It would have one central administrative centre, enjoying economies of scale. It would limit administrative staff in each location to a minimum, and would concentrate its efforts on core activities, decentralising non-core activities to external suppliers. A look at the huge salaries and attendant costs of each University's Vice Chancellor itself shows how much could be saved in this way. If all of the Higher Education in the UK were provided by two or three competing Monopolies, the savings would be huge, and the experience of Monopolistic competition, in the last 60 years, in every other area, indicates that this would be likely to both reduce costs – and therefore Tuition Fees – massively, as well as driving up the range and quality of teaching on offer to students.

After all, the Universities are the original type of Feudal Monopoly decried by Marx. They were set up under Royal Charter, and by restricting access they have acted to both mystify Education, and to keep up the Monopoly prices they are able to charge.

In fact, the writing is already on the wall, with a number of British students already deciding that if they are going to be asked to pay the £9,000 a year Tuition Fees that UK Universities are asking, they may as well pay that sum, or thereabouts to obtain a better quality of education at some overseas University. Far from decrying this kind of development, Marxists should see in it the same kind of progressive role of Competition that Marx identified in its break up of previous similar State Monopolies, and all of the evils that go with them. When he said,

“It must be carefully noted that competition always becomes the more destructive for bourgeois relations in proportion as it urges on a feverish creation of new productive forces, that is, of the material conditions of a new society. In this respect at least, the bad side of competition would have its good points...”

That these new productive forces are in relation to intellectual production does not change that.

But, that is not to argue FOR such a development, only to refrain from arguing against it. We would not for example, have argued FOR the establishment of Microsoft as a competitor to IBM. On the contrary, our task remains to convince workers of the need for them to take ownership of the means of production themselves, and of the necessity of establishing a Workers State to deal with the inevitable resistance of the Capitalists to such a transformation. In that respect it is like Marx's attitude to the debate over Free Trade or Protection. Marx takes apart the class basis of both options before concluding,

“But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favour of free trade.”

Marx – Speech On Free Trade

In the meantime, and as part of the process of convincing workers of that, we have to focus on establishing Workers Ownership and Control of the Means of Production here and now through Worker Co-operatives. But, that is also another reason NOT to oppose the establishment of Grayling's new University. In Spain, the workers in developing the Mondragon Co-operative, early on established their own Co-operative University to ensure the education and development of their workers.
A look at its Tuition Fees is also interesting, with the majority of courses costing less that 5,000 Euros p.a. or about £3.500. The Co-op in Britain from its first days, established schools and reading rooms over its shops. At the beginning of the 20th Century, rebelling against the restricted bourgeois education that Oxford University was providing for them, even at the supposed “Workers' College” at Ruskin, the British Marxists set up the Plebs League, and the National Labour College in London, as well as the National Labour College Network throughout the country.
If we oppose the establishment of new Universities outside the existing quasi-state system, on what basis could we follow these wholly admirable endeavours of workers and Marxists in the past?

Back To Part 1

Wednesday, 22 June 2011

Why I Don't Oppose Grayling's New Private University - Part 1

Most, if not all, of the Marxist Left have fallen in behind the Liberal objections to the new private University of the Humanities, being proposed for London, by A.C. Grayling and others.
In fact, there is no reason for Marxists to oppose it. Indeed, doing so, simply perpetuates the myth, propounded by Liberals, that there is something progressive, or egalitarian about the existing State Capitalist Education system. There isn't. It also misunderstands the issue of Marxists' attitude to privatisation.

Let's take the question of Education in general first, before looking at Higher Education specifically, and then look at Marxists and privatisation. Marx's attitude to Education was quite clear, and set out in a number of places. Marx was completely opposed to the State or Church being involved in the provision of Education. He called it “wholly objectionable”.

The only role for the State, he argued, was in the setting of Minimum Standards, and the employment of Inspectors to check they were being implemented, in the same way that was done with Factory Inspectors. He supported something along the lines of what existed in the US, where small communities got together to establish their own schools, and to finance and control them. Marx certainly did not believe that Education was a means of workers obtaining any kind of meaningful equality with Capitalists.

In the Gotha Programme the Lassalleans had raised the demand, accepted by the Eisenachers:

"The German Workers' party demands as the intellectual and ethical basis of the state:

"1. Universal and equal elementary education by the state. Universal compulsory school attendance. Free instruction."

Marx points out that “free” education existed in a number of places. In fact, of course, its not free. Its paid for by taxes deducted compulsorily from workers wages by the State, in the same way that employers used to force workers to buy from the Company Store via the Truck System. The Monopoly of the Truck System meant that provision was poor quality, limited in range, and high priced. It was one of the reasons workers got together to create their own Co-operative stores.

Whether Capital could facilitate such “free” education depended upon the extent of development, in just the same way that workers consumption of any other commodity depends upon the extent to which Capital has reached a stage of needing to extend the horizons of workers consumption. The more Capital is accumulated, as Marx points out, in the Grundrisse, the more it satisfies workers basic demands, and is led to develop an ever wider range of commodities, to sell to workers, in order to realise Surplus Value. Things such as education and healthcare are just such commodities. Moreover, as Capitalism develops, and its initial huge Reserve Army of Labour, created by the pushing of peasants off their land, is used up, and as Capitalism becomes more technological, it has a need for workers with a Minimum level of Education and Health in order to ensure itself with a secure Supply of Labour Power.

Capital has a direct interest in having its State take control of these functions to force workers into expending this Minimum level of their income, on these areas of consumption, and in controlling the quality and content of what is provided, via its large scale, Education Factories. Moreover, as I've demonstrated elsewhere, in creating large, State run, Health and Education industries, producing commodities for workers, (and as Marx points out in the Grundrisse simultaneously producing Labour Power itself) Capital also established the bases of Economies of Scale, in training, Research and Development, etc. that extends into the versions of these commodities it consumes itself, thereby massively reducing its own costs of consumption. If only Capitalists consumed cancer drugs and treatments, for example, just think what the unit costs of that for them would be? As Marx points out, to the extent that Higher Education was dominated by kids from rich families, free, State Higher Education meant workers subsidising the rich. In opposing the Lassallean formulation, Marx writes,

“"Equal elementary education"? What idea lies behind these words? Is it believed that in present-day society (and it is only with this one has to deal) education can be equal for all classes? Or is it demanded that the upper classes also shall be compulsorily reduced to the modicum of education — the elementary school — that alone is compatible with the economic conditions not only of the wage-workers but of the peasants as well?

"Universal compulsory school attendance. Free instruction." The former exists even in Germany, the second in Switzerland and in the United States in the case of elementary schools. If in some states of the latter country higher education institutions are also "free", that only means in fact defraying the cost of education of the upper classes from the general tax receipts...

"Elementary education by the state" is altogether objectionable. Defining by a general law the expenditures on the elementary schools, the qualifications of the teaching staff, the branches of instruction, etc., and, as is done in the United States, supervising the fulfillment of these legal specifications by state inspectors, is a very different thing from appointing the state as the educator of the people! Government and church should rather be equally excluded from any influence on the school. Particularly, indeed, in the Prusso-German Empire (and one should not take refuge in the rotten subterfuge that one is speaking of a "state of the future"; we have seen how matters stand in this respect) the state has need, on the contrary, of a very stern education by the people.

But the whole program, for all its democratic clang, is tainted through and through by the Lassallean sect's servile belief in the state, or, what is no better, by a democratic belief in miracles; or rather it is a compromise between these two kinds of belief in miracles, both equally remote from socialism.”

Critique Of The Gotha Programme Chapter 4

But, the point is not whether it could be provided free or not, the development of Capitalism, and change in the regime of accumulation, meant that not only could Capitalism provide it, but, as part of developing Welfarism, and to meet its needs for the reproduction of Labour Power it had an incentive to do so, which is why Bismark established a National Insurance Scheme in Germany in the 19th Century, and why his measures were copied by Tories such as Chamberlain, and Liberals like Lloyd George in Britain. It is also what formed the basis of "Fordism", the raising of workers wages by Henry Ford, and the provision for them of various forms of Welfare. It is marked a sharp change in the regime of accumulation from extensive to intensive accumulation.
The point is that such education could never be “Equal”. Even if it were not the case that education varies greatly from school to school, and, like healthcare, is better in more affluent areas, then the advantages that kids, from more affluent backgrounds, have, outside school, will always mean that they are advantaged in terms of their educational experience, and achievements.

But, also, the focus on this question, by the Left, itself is wrong. It suggests that inequality and access to wealth and power are a function of educational achievement. They are not. The ability to “consume” education, like the ability to consume any other commodity is a distributional issue, that is it is dependent upon the ability to purchase and exercise control over a portion of society's production. But, that ability, as Marx points out, is not determined by things like what job you do, or how clever you are, but by your ownership or non-ownership of Capital. As he puts it in the CGP,

“Any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves. The latter distribution, however, is a feature of the mode of production itself. The capitalist mode of production, for example, rests on the fact that the material conditions of production are in the hands of nonworkers in the form of property in capital and land, while the masses are only owners of the personal condition of production, of labor power. If the elements of production are so distributed, then the present-day distribution of the means of consumption results automatically. If the material conditions of production are the co-operative property of the workers themselves, then there likewise results a distribution of the means of consumption different from the present one. Vulgar socialism (and from it in turn a section of the democrats) has taken over from the bourgeois economists the consideration and treatment of distribution as independent of the mode of production and hence the presentation of socialism as turning principally on distribution. After the real relation has long been made clear, why retrogress again?”

Critique Of the Gotha Programme, Chapter 1

To paraphrase Marx, the ownership of Capital makes even the most dull-witted person into a genius, because the ownership of Capital, means that whatever skills or ability are required, can simply be purchased.
To suggest that it is access to education, which is the solution to workers problems is to leave the ground of Marxism, and to move to the ground of Liberalism. Workers problems do not stem from the fact that they do not have the same access to education as Capitalists, but from the fact that they do not have the same access to Capital! If every single worker in the country was the proud possessor of a good quality Ph.D., it would not change their position one jot, as a class. It would simply mean that the Capitalists had a huge number of very well educated workers to exploit in a much wider range of uses of their labour.

Unfortunately, also what it essentially does is again to focus on the wrong target. It focusses on the Middle Classes, and their marginally better access to Education, rather than on Capital. As such, the measures and demands raised, are then against the Middle Classes rather than Capital, and, like much of the rest of the Left's Fabian, redistributive, Socialism, acts to drive a wedge between the working-class, and its natural allies amongst the Middle Classes.
Its no wonder the Tories have such an easy job then in winning the support of those sections of society, and the sections of the working-class whose outlook, lifestyle and aspirations tend to mirror it.

The reality is that if the rich want to buy a better education for their kids they can already easily do it. They can send their kids to Eton, Harrow, Westminster or any of the other top Private Schools, as a conveyor belt into Oxbridge.
For those unable to get into Oxbridge, then they can simply go to one of the U.S. Private Universities such as Harvard. So what would be proposed then? Should we ban freedom of movement to stop them going to these overseas Universities? Perhaps we should build some kind of Berlin Wall to restrict movement? The reality is that these kinds of proscriptive solutions are not Marxist but Stalinist in nature. They aim to establish such proscriptions as a means of defending existing Monopolies, and the inefficiencies and deficiencies that go with them, rather than seeking to go beyond those Monopolies, and to generate something better, and more efficient.

Forward To Part 2