The AWL really do have no shame! I'd given up visiting their site a long time ago, because I'd decided they really were beyond all hope. But, as Leftists, curiosity is one of our central traits. Even though over recent months they have deleted various of my comments, criticising some of their wackier ideas, even though these comments met their stringent criteria exactly, I'd started to post the odd comment.
Such was the case, over the last couple of days, in this thread Bolsheviks Come To Power. One of the reasons for commenting was precisely in support of Jason, who had himself had some of his comments deleted for committing the heinous crime of including in his comment a hyperlink, that was deemed to be "advertising"!!!!
In a short comment, I pointed out that the AWL were setting up an obvious Catch 22 here. They had replied to one query, about whether all links to other Left sites, would be classed as "Advertising" with the perfunctory - "yes". I pointed out, therefore, that, if the ideas you wanted to cite, in support of your argument, were contained in such another site, then, not being able to link to them rather places a serious constraint on rational debate. If you avoided that by setting out those ideas, in detail, in your comment, then you would fall fould of the AWL's other restriction, which is that they will delete comments they deem to be too long!
Jason responded, to this comment, by thanking me for pointing that out, and went on to add that, of course, the AWL could delete your comments, if all else failed, with the "catch-all" - concept of them being "inappropriate". He added that, at least, the AWL do allow comments. I responded to that comment, in turn. Having just gone back, to see if there had been further comments, I found that not only had BOTH of my comments been deleted, but Jason's own comment had been edited so that his initial remarks, to me, were removed!!!!!
They clearly have no shame, as well as no credibility or support. As I pointed out, in my second comment, the fact that they are afraid of critical comments, on their site, that force them to defend their politics, the fact that they are even afraid of comments providing links, to other Left sites, where there young comrades might be exposed to alternative ideas to the brainwashing of the AWL, speaks volumes about how little confidence they have in their ability to defend their ideas. The way they delete comments to their site, edit comments such as Jason's, to cover up their bureaucratic, Stalinist methods is mirrored in the way they selectively quote from the works of Trotsky and others, deleting entire sentences and paragraphs so that the meaning of what was written is reversed, in order to comply with the current version of the truth as made up by Big Brother. But, again, as I pointed out in my comment, if I'd just stood in the General Election and only got 75 votes - last place and even less votes than the other cranks standing - then I'd doubt more than just my politics, because almost anyone, including the cranks, could get more votes than that just from their family and friends.
Clearly, the AWL not only have no political support, but they are a Johhny No Mates as well. Given their behaviour, its no wonder.
Wednesday, 30 June 2010
Heading For A Crash
For the last year, I have been arguing that the Long Wave Boom means that the probability of the Financial Crisis, and subsequent recession, turning into a Depression, or even a more serious double-dip recession was low. I am in the process of a re-evaluation of that view. The reason is simple. As I suggested back in 2008, the problem of bank debt could turn into a problem of sovereign debt, as States were forced to come in behind those banks, some of which had Balance Sheets bigger than the economies in which they were situated. That sovereign debt crisis is not yet fully upon us, and sensible policies by States and Central Banks – essentially printing money to cover the debts, and not cratering economies and growth by fiscal tightening – could easily avoid it. But, then there is politics. One the one hand, there are political manoeuvres within the Eurozone, as different states attempt to gain advantage, and political parties seek to address the concerns of their voter base. At the same time, there is manoeuvring between European Capital and US Capital. European Capital is seeking to make the US and China do all the heavy lifting of increasing economic activity and trade, so that it can benefit from increased exports without committing its own funds to a global fiscal stimulus.
In the run up to the Falklands War, Maggie Thatcher and Galtieri both engaged in sabre rattling to garner political support within their respective nations. Both, after all, were facing severe criticism and opposition from their respective populations, at the time. Both were forced to continually ratchet up the rhetoric until eventually they were both backed into a corner, and were forced into a War that neither really wanted – there had been an agreement already reached between Britain, Argentina, the US and South Africa to divide up the Falklands in order to exploit potential resources – and out of which no one benefited. The situation in Europe today is similar, as Governments seek to present themselves as fiscally conservative, in an attempt to calm the nerves of the markets. In fact, their policies, in threatening the continuation of the recovery, have, in recent weeks, done the opposite. Markets are in a state of panic. In fact, as a consequence, renewed fears are emerging over the banking sector, and banks have once again begun to restrict lending to each other in a way similar to that leading up to the Financial Crisis at the end of 2008. Interbank rates are rising sharply again – which could actually mean that some of the smaller, regional banks like the Spanish Cajas actually are placed in jeopardy – and the US has had to re-open a $450 billion window again to European banks, because they were simply unable to get the dollars needed from each other to finance dollar trade.
I continue to believe that the Long Wave remains in place, and that, over the medium term, growth will resume as a result. In fact, a crisis now could result in even more robust growth later. However, even if, as again I believe to be the case, the permanent State acts to stifle the economic madness, of fiscal tightening, being attempted by various Governments, the policies that do get through, the measures already taken, may, even in themselves, be sufficient to cause a double-dip. On top of that, the fundamental problems I have referred to, in respect of developed Western economies – basically living standards are unsustainably high compared to those in developing economies like China, India etc. without a massive shift of Capital to higher Value production – and the disproportionalities arising from that creates its own dynamics that could cause severe problems. Some of those problems, of disproportion, are not just in the allocation of capital, but are intra-generational disproportions too, particularly in relation to housing wealth.
I quoted the other day the views of RBS in that regard - RBS warns Of Cliff-Edge. Today, the Independent has a lead story about the likelihood of a housing crash. How long Can The Housing Market Avoid A Crash. They point to a number of factors including the continued problems in getting mortgages, the difficulty some buyers have in raising necessary deposits, an increase in supply, and the difficulties households will have over the next four years as its forecast that wages will lag behind price rises. In fact, as I've repeatedly pointed out, the likelihood is that inflation will rise way above that being forecast – the real figure as opposed to the official figure being even higher still. The Independent quote the figure of 5.3% on RPI that is current today, and accept the official view that it will fall by year end, before pointing out that the VAT rise will send it up again in January. But, I do not believe that inflation will fall by year end. It has consistently moved against such predictions by the Bank of England over previous months, even when economic activity has been slow or even negative. There has been massive money printing that, in the past, has always resulted in inflation, two years down the road. Even with sluggish economic activity, inflation will rise, as that liquidity is soaked up by rising costs. The pound has fallen against the dollar in which oil, and many basic commodities continue to be priced, which means that the import cost of those items rises for Britain. On top of that, China has now sort of floated the RMB, and it is rising in value. China's costs have risen significantly, as the prices of raw materials and food have risen, on the world market – in large part because of Chinese and Asian demand. In addition, Chinese workers, with the support of the State, are demanding, and receiving, huge pay increases of between 30% and 50%, as the Chinese State seeks to shift the balance of its economy away from exports to the domestic market, and away from low value production towards higher value production. The consequence of that is that the masses of imported cheap Chinese goods, that have kept workers living costs down, in the West, for the last 10-20 years, are about to become MUCH more expensive, but without the potential for import substitution. Inflation is going way up. That was also the basis of the prediction I quoted the other day from Dennis Gartman that the price of Gold is going to go parabolic - Gold To Go Parabolic. It is that inflation will soar, paper currencies will get trashed, and there will be a flight to real money.
On top of the problems facing workers, from falling real wages, through inflation, we now know that the Tories policies, according to the Treasury, will lead to one and a quarter million extra people being unemployed, the majority of those from the private sector. Unemployment To Soar. In fact, if the Tories actually did manage to cut by £60 billion, the actual rise in unemployment would be more like two and a half million. Even the uncertainty arising from all this will have a negative effect on economic activity. No one is going to think about laying out large sums of money for a new house if they think they might lose their job, or their living standard is going to crater. No business is going to take on workers, or invest any large sums, if they think the economy is going to go down the tubes. That in itself will reduce effective demand in the economy, and lead to exactly those kinds of consequences. Already, we have seen some private companies hammered, as a result of the Tories announcements, even before orders from the Public Sector start being cancelled. Nor does it take account of the hundreds of thousands of actions that have the same economic consequences, like the Public Servant the other day who was interviewed having just bought his lunch, who said that in future he would have to resort to making sandwiches, thereby demolishing the businesses of tens of thousands of town centre shops, and their suppliers.
Under those conditions, the 5% fall in house prices mentioned by the Independent seems a gross underestimate, and the people it interviewed, who said they couldn't reduce the prices of their houses any further, are going to find they will have to do just that. Recently, economist Richard Koo was interviewed, from Japan, by Newsnight. He related how the Japanese Government had made the same mistake the Tories are making now, in 1997. They began a fiscal tightening when the economy was just starting to recover, and sent it into a renewed tailspin, from which it still has not recovered. On that occasion, property prices, in Japan – which had already fallen significantly during the early 90's – dropped by 80%! One of the disproportionalities that arose over the last 30 years was precisely this rise in asset prices – houses, and shares in particular – as the massive increases in liquidity, pumped into the economy, found their way into a series of asset price bubbles, whereas cheap imported goods from Asia, kept consumer price inflation low. In a “reversion to the mean”, that process is about to be reversed. Consumer price inflation will rise sharply, and as living standards are squeezed, the amount of disposable income, available for allocation to assets, will drop considerably. Whilst, rising profits for the rich may mean that the fall in share prices may be muted, and disguised by rising inflation, the one asset which the majority of workers spend their money on – housing – will tank. In 1990, house prices fell by 40%. Since then they have bubbled up again. It has created another of those disproportions, this time inflating the “wealth” of the older generation, who bought their houses decades ago, and immiserating young workers unable to afford the inflated prices. A fall in house prices of 50-80%, is quite possible if the economy enters a double-dip – a double dip, which, as Nouriel Roubina points out, governments are not now in a position to deal with, because they have used up most of their ammunition. That “reversion to the mean” would rebalance the intra-generational divide, and would begin to make housing affordable to young workers. The immediate effect would, however, be to give yet another downward twist to the economy.
In the run up to the Falklands War, Maggie Thatcher and Galtieri both engaged in sabre rattling to garner political support within their respective nations. Both, after all, were facing severe criticism and opposition from their respective populations, at the time. Both were forced to continually ratchet up the rhetoric until eventually they were both backed into a corner, and were forced into a War that neither really wanted – there had been an agreement already reached between Britain, Argentina, the US and South Africa to divide up the Falklands in order to exploit potential resources – and out of which no one benefited. The situation in Europe today is similar, as Governments seek to present themselves as fiscally conservative, in an attempt to calm the nerves of the markets. In fact, their policies, in threatening the continuation of the recovery, have, in recent weeks, done the opposite. Markets are in a state of panic. In fact, as a consequence, renewed fears are emerging over the banking sector, and banks have once again begun to restrict lending to each other in a way similar to that leading up to the Financial Crisis at the end of 2008. Interbank rates are rising sharply again – which could actually mean that some of the smaller, regional banks like the Spanish Cajas actually are placed in jeopardy – and the US has had to re-open a $450 billion window again to European banks, because they were simply unable to get the dollars needed from each other to finance dollar trade.
I continue to believe that the Long Wave remains in place, and that, over the medium term, growth will resume as a result. In fact, a crisis now could result in even more robust growth later. However, even if, as again I believe to be the case, the permanent State acts to stifle the economic madness, of fiscal tightening, being attempted by various Governments, the policies that do get through, the measures already taken, may, even in themselves, be sufficient to cause a double-dip. On top of that, the fundamental problems I have referred to, in respect of developed Western economies – basically living standards are unsustainably high compared to those in developing economies like China, India etc. without a massive shift of Capital to higher Value production – and the disproportionalities arising from that creates its own dynamics that could cause severe problems. Some of those problems, of disproportion, are not just in the allocation of capital, but are intra-generational disproportions too, particularly in relation to housing wealth.
I quoted the other day the views of RBS in that regard - RBS warns Of Cliff-Edge. Today, the Independent has a lead story about the likelihood of a housing crash. How long Can The Housing Market Avoid A Crash. They point to a number of factors including the continued problems in getting mortgages, the difficulty some buyers have in raising necessary deposits, an increase in supply, and the difficulties households will have over the next four years as its forecast that wages will lag behind price rises. In fact, as I've repeatedly pointed out, the likelihood is that inflation will rise way above that being forecast – the real figure as opposed to the official figure being even higher still. The Independent quote the figure of 5.3% on RPI that is current today, and accept the official view that it will fall by year end, before pointing out that the VAT rise will send it up again in January. But, I do not believe that inflation will fall by year end. It has consistently moved against such predictions by the Bank of England over previous months, even when economic activity has been slow or even negative. There has been massive money printing that, in the past, has always resulted in inflation, two years down the road. Even with sluggish economic activity, inflation will rise, as that liquidity is soaked up by rising costs. The pound has fallen against the dollar in which oil, and many basic commodities continue to be priced, which means that the import cost of those items rises for Britain. On top of that, China has now sort of floated the RMB, and it is rising in value. China's costs have risen significantly, as the prices of raw materials and food have risen, on the world market – in large part because of Chinese and Asian demand. In addition, Chinese workers, with the support of the State, are demanding, and receiving, huge pay increases of between 30% and 50%, as the Chinese State seeks to shift the balance of its economy away from exports to the domestic market, and away from low value production towards higher value production. The consequence of that is that the masses of imported cheap Chinese goods, that have kept workers living costs down, in the West, for the last 10-20 years, are about to become MUCH more expensive, but without the potential for import substitution. Inflation is going way up. That was also the basis of the prediction I quoted the other day from Dennis Gartman that the price of Gold is going to go parabolic - Gold To Go Parabolic. It is that inflation will soar, paper currencies will get trashed, and there will be a flight to real money.
On top of the problems facing workers, from falling real wages, through inflation, we now know that the Tories policies, according to the Treasury, will lead to one and a quarter million extra people being unemployed, the majority of those from the private sector. Unemployment To Soar. In fact, if the Tories actually did manage to cut by £60 billion, the actual rise in unemployment would be more like two and a half million. Even the uncertainty arising from all this will have a negative effect on economic activity. No one is going to think about laying out large sums of money for a new house if they think they might lose their job, or their living standard is going to crater. No business is going to take on workers, or invest any large sums, if they think the economy is going to go down the tubes. That in itself will reduce effective demand in the economy, and lead to exactly those kinds of consequences. Already, we have seen some private companies hammered, as a result of the Tories announcements, even before orders from the Public Sector start being cancelled. Nor does it take account of the hundreds of thousands of actions that have the same economic consequences, like the Public Servant the other day who was interviewed having just bought his lunch, who said that in future he would have to resort to making sandwiches, thereby demolishing the businesses of tens of thousands of town centre shops, and their suppliers.
Under those conditions, the 5% fall in house prices mentioned by the Independent seems a gross underestimate, and the people it interviewed, who said they couldn't reduce the prices of their houses any further, are going to find they will have to do just that. Recently, economist Richard Koo was interviewed, from Japan, by Newsnight. He related how the Japanese Government had made the same mistake the Tories are making now, in 1997. They began a fiscal tightening when the economy was just starting to recover, and sent it into a renewed tailspin, from which it still has not recovered. On that occasion, property prices, in Japan – which had already fallen significantly during the early 90's – dropped by 80%! One of the disproportionalities that arose over the last 30 years was precisely this rise in asset prices – houses, and shares in particular – as the massive increases in liquidity, pumped into the economy, found their way into a series of asset price bubbles, whereas cheap imported goods from Asia, kept consumer price inflation low. In a “reversion to the mean”, that process is about to be reversed. Consumer price inflation will rise sharply, and as living standards are squeezed, the amount of disposable income, available for allocation to assets, will drop considerably. Whilst, rising profits for the rich may mean that the fall in share prices may be muted, and disguised by rising inflation, the one asset which the majority of workers spend their money on – housing – will tank. In 1990, house prices fell by 40%. Since then they have bubbled up again. It has created another of those disproportions, this time inflating the “wealth” of the older generation, who bought their houses decades ago, and immiserating young workers unable to afford the inflated prices. A fall in house prices of 50-80%, is quite possible if the economy enters a double-dip – a double dip, which, as Nouriel Roubina points out, governments are not now in a position to deal with, because they have used up most of their ammunition. That “reversion to the mean” would rebalance the intra-generational divide, and would begin to make housing affordable to young workers. The immediate effect would, however, be to give yet another downward twist to the economy.
Tuesday, 29 June 2010
Its Begun
I've been saying for some time that the permanent State bureaucracy would frustrate the Liberal-Tories attempts to slash the size of the State, thereby sending the economy into a serious recession. Yesterday, the BBC headlines covered statements by senior doctors at the BMA Conference saying that cuts being introduced by Health Authorities were already resulting in decisions being made that impacted healthcare adversely. This in the NHS, which is supposed to be ringfenced under the Liberal-Tory proposals.
Today, the BBC headlines have highlighted statements by senior Police Officers that proposed cuts will inevitably lead to a drop in the number of Police Officers out on the streets. Its no coincidence that in opinion poll after opinion poll it is the number of cops out on the beat that the Public see as being most important. We can expect to see a flurry of such stories, intensifying in their description of the horrors that will result from any cuts to budgets.
Anyone that has worked in Local Government or any other bureaucracy will be familiar with this. The top bureaucrats when asked for cuts will look for the most unpopular, the most visible things to cut, and offer those up first. In Local Government, if you can find something to cut in some of the more influential Councillors wards, all the better. This opens the door to putting forward some smaller, more acceptable cuts as part of the negotiation. In most cases this works its way out as low status services, employing usually low-paid, low status workers being cut back or axed, and some reorganisation of departments and services as a result. The reorganisation usually requires some higher status bureaucrats to be seen to be taking on greater responsibility, and requiring a higher salary for doing so, usually accompanied by a bigger office, new equipment for it etc., and possibly a couple of lower tier bureaucrats extra to assist with the task.
For example, under CCT at the Council where I worked the Manual workforce of over 1,000 was decimated. Where a handful of fairly low grade Supervisors and one manager had been able to deal with this 1,000 manual employees the situation changed dramatically as the work was farmed out to private companies. Now a fairly high status "Contract" manager was required, as well as an equivalent "Client" manager. Considerable work was created for quite high status legal staff, to check Contracts, and similarly considerable work was created for simialrly high paid Accountants to ensure that the Contracts were kept within budgets, payments made properly and so on. But, in addition to that it was necessary to employ a clutch of middle ranking Supervisors whose job it was to monitor the performance of the Contracts, and so on.
The Manual workforce all but disappeared, but a sizeable management, supervisory and administrative bureaucracy sprang up in its place. All good for the top bureaucrat whose salary and status rose in line with the number of other bureaucrats he now had within his Empire. Expect the same here.
Today, the BBC headlines have highlighted statements by senior Police Officers that proposed cuts will inevitably lead to a drop in the number of Police Officers out on the streets. Its no coincidence that in opinion poll after opinion poll it is the number of cops out on the beat that the Public see as being most important. We can expect to see a flurry of such stories, intensifying in their description of the horrors that will result from any cuts to budgets.
Anyone that has worked in Local Government or any other bureaucracy will be familiar with this. The top bureaucrats when asked for cuts will look for the most unpopular, the most visible things to cut, and offer those up first. In Local Government, if you can find something to cut in some of the more influential Councillors wards, all the better. This opens the door to putting forward some smaller, more acceptable cuts as part of the negotiation. In most cases this works its way out as low status services, employing usually low-paid, low status workers being cut back or axed, and some reorganisation of departments and services as a result. The reorganisation usually requires some higher status bureaucrats to be seen to be taking on greater responsibility, and requiring a higher salary for doing so, usually accompanied by a bigger office, new equipment for it etc., and possibly a couple of lower tier bureaucrats extra to assist with the task.
For example, under CCT at the Council where I worked the Manual workforce of over 1,000 was decimated. Where a handful of fairly low grade Supervisors and one manager had been able to deal with this 1,000 manual employees the situation changed dramatically as the work was farmed out to private companies. Now a fairly high status "Contract" manager was required, as well as an equivalent "Client" manager. Considerable work was created for quite high status legal staff, to check Contracts, and similarly considerable work was created for simialrly high paid Accountants to ensure that the Contracts were kept within budgets, payments made properly and so on. But, in addition to that it was necessary to employ a clutch of middle ranking Supervisors whose job it was to monitor the performance of the Contracts, and so on.
The Manual workforce all but disappeared, but a sizeable management, supervisory and administrative bureaucracy sprang up in its place. All good for the top bureaucrat whose salary and status rose in line with the number of other bureaucrats he now had within his Empire. Expect the same here.
Monday, 28 June 2010
Budget Causes "Friendly-Fire" Casualties
The Liberal-Tories Budget was intended to look after their rich friends in business. But, even here their ineptitude has shown through. Before the ink is dry one firm that relies on Government expenditure Connaught through its involvement in Social Housing has been slammed. Its share price fell about a third yesterday, and has fallen another third today.
What was that the Liberal-Tories said about the Private Sector growing to take the place of the Public Sector.
What was that the Liberal-Tories said about the Private Sector growing to take the place of the Public Sector.
Gold To Go Parabolic?
Over the last few years I have been saying that Gold would continue to rise in price. Over all that time, with slight corrections, it has indeed continued to rise. In part, the rise is due to the normal course of Gold during the Long Wave, in part it also reflects the fact that huge amounts of paper money tokens, and electronic, and credit money has been pumped into the economy. Over the last few years, the dollar has collapsed in value for that reason, and because of the underlying long term decline of the US economy, of which it is a symptom, for a time the Euro benefitted from that as the Chinese and Japanese intervened to print more of their currencies to keep the value down against the dollar. Now the Euro is falling too. I suggested some time ago that all of the adverts encouraging people to sell their gold were an indication that the smart money was buying as much Gold as it could, wherever it could get its hands on it. At some point when supplies dried up, and prices began to rise, prompting a far wider range of people to become buyers, the price could go parabolic.
That is basically the scenario being put forward now by Dennis Gartman, who produces the influential Gartman Letter.
“The market starts slowly and takes several years to build.
Then, in the last 10% of the time frame you get 50% of the price movement. I've seen it time after time in 35 years of doing this. And I get the sense that gold is about to do that same thing."
Gartman also feels that gold has room to run because it's something he calls the anti trade. “It’s anti dollar, anti euro and anti the British pound,” he says.
CNBC comments,
"And if you're worried that we're looking at a bubble because retail investors are driving the run in gold, don't be. According to Gartman it's largely institutional money and not money from Main Street."
That is basically the scenario being put forward now by Dennis Gartman, who produces the influential Gartman Letter.
“The market starts slowly and takes several years to build.
Then, in the last 10% of the time frame you get 50% of the price movement. I've seen it time after time in 35 years of doing this. And I get the sense that gold is about to do that same thing."
Gartman also feels that gold has room to run because it's something he calls the anti trade. “It’s anti dollar, anti euro and anti the British pound,” he says.
CNBC comments,
"And if you're worried that we're looking at a bubble because retail investors are driving the run in gold, don't be. According to Gartman it's largely institutional money and not money from Main Street."
RBS Warn Of Cliff-Edge & Monster Money Printing
An article on the CNBC website details the extent to which analysts at RBS are becoming very jittery. They see a collapse of Equity markets and of Commodity prices. Banks and financial houses status is being talked up, and they see the need for a monster money printing.
The Cliff-Edge
The Cliff-Edge
More Fantasy Politics
The other day I wrote about the Fantasy Budget. It was a fantasy because most of it was based upon calculated savings that are completely outside the Government's control. They have announced that they are going to make cuts of 25% in non-protected budgets. But, no one seriously believes that will happen. They have no idea what they would cut to achieve that kind of figure, and so no idea whether they could actually get away with making such cuts without destroying services completely, without provoking unmanageable civil unrest, or without causing significant economic dislocation. No Government including Thatcher's has achieved cuts on that scale. They are not in the interests of Capital, and certainly not in the interests of the permanent State bureaucracy, which will do all in its power to frustrate them. On that basis alone the Budget calculations, and that for the deficit could be out by tens of billions of pounds.
The Tories have also said that they are going to make cuts in Welfare Payments. But, here too the only actual savings that the Tories can count on are the savings arising from scrapping particular payments, and the savings from indexing to earnings or else to CPI rather than to RPI, at a time when RPI is set to rip. In reality, not only do they have no idea how much they might save from Welfare Payments, but the consequences of their Cuts, and other deflationary measures in the Budget could push unemployment up by hundreds of thousands - in fact if they did actually push through those 25% cuts, unemployment would rise by around 2.5 Million -and as a consequence could send Welafe payments through the roof.
Now the Toies are coming out with more such guff in relation to Incapacity Benefits. over the last 20 years successive Governments have attempted to reduce the number of IB claimants by continually toughening the criteria, by introducing medical exams by hired-in private doctors and so on. But, the numbers have not fallen, which suggests that the reason is that people claiming IB are doing so for the simple reason that they are not capable of work. In fact, there have been many reported cases where people have been turned down who clearly were unfit for work, such as the woman who was told she was fit for work despite needing to be on oxygen for 14 hours a day, or the other who was awaiting a heart transplant! Its not surprising that the majority of people who appeal against being turned down win their appeals.
The Tories claimed that under Labour fraudulent claims were costing £80 per second. They said they would slash this by introducing a policy of stopping all benefit for three years to anyone cuationed or convicted of fraud three times. But the BBC's Mark Easton checked this out and found that the number of people who this would have affected would have been precisely zero!!!! Even if you took those only cautioned rather than convicted, twice, the number came to just 69 people last year.
So how much of that £80 per second would that save? Just 1 penny per second. Given the huge cost of trying to administer and polcie such a system, its certain that it would in fact mean greater cost rather than a saving. The only thing that could be saiud for it would be that at least it would provide some people with jobs in the bureaucracy administering it. But, didn't the Liberal-Tories claim they were going to reduce such bureaucacy and waste, not increase it?
If that is what they desire then rather than pick on a few poor souls reduced to scraping a living off Incapacity Benefit they would find that a cost-benefit analysis would show that putting the same resources into claiming the £120 billion of tax that is avoided each year by big companies, and the very rich would be far more effective. Greece has come in for considerable scorn for the fact that it is incapable of collecting taxes, but the reality is that in Britain taxes are only collected from the working class and middle class, and from those rich people who effectively volunteer to pay. The Liberal-Tories will not take action to collect in that tax from the rich - which would pay off the deficit in one year - despite the election propaganda of the Liberals, because the reality is that it is these uber rich who are the backers of the Liberal-Tories, and it is their interests they exist to cater for.
The Tories have also said that they are going to make cuts in Welfare Payments. But, here too the only actual savings that the Tories can count on are the savings arising from scrapping particular payments, and the savings from indexing to earnings or else to CPI rather than to RPI, at a time when RPI is set to rip. In reality, not only do they have no idea how much they might save from Welfare Payments, but the consequences of their Cuts, and other deflationary measures in the Budget could push unemployment up by hundreds of thousands - in fact if they did actually push through those 25% cuts, unemployment would rise by around 2.5 Million -and as a consequence could send Welafe payments through the roof.
Now the Toies are coming out with more such guff in relation to Incapacity Benefits. over the last 20 years successive Governments have attempted to reduce the number of IB claimants by continually toughening the criteria, by introducing medical exams by hired-in private doctors and so on. But, the numbers have not fallen, which suggests that the reason is that people claiming IB are doing so for the simple reason that they are not capable of work. In fact, there have been many reported cases where people have been turned down who clearly were unfit for work, such as the woman who was told she was fit for work despite needing to be on oxygen for 14 hours a day, or the other who was awaiting a heart transplant! Its not surprising that the majority of people who appeal against being turned down win their appeals.
The Tories claimed that under Labour fraudulent claims were costing £80 per second. They said they would slash this by introducing a policy of stopping all benefit for three years to anyone cuationed or convicted of fraud three times. But the BBC's Mark Easton checked this out and found that the number of people who this would have affected would have been precisely zero!!!! Even if you took those only cautioned rather than convicted, twice, the number came to just 69 people last year.
So how much of that £80 per second would that save? Just 1 penny per second. Given the huge cost of trying to administer and polcie such a system, its certain that it would in fact mean greater cost rather than a saving. The only thing that could be saiud for it would be that at least it would provide some people with jobs in the bureaucracy administering it. But, didn't the Liberal-Tories claim they were going to reduce such bureaucacy and waste, not increase it?
If that is what they desire then rather than pick on a few poor souls reduced to scraping a living off Incapacity Benefit they would find that a cost-benefit analysis would show that putting the same resources into claiming the £120 billion of tax that is avoided each year by big companies, and the very rich would be far more effective. Greece has come in for considerable scorn for the fact that it is incapable of collecting taxes, but the reality is that in Britain taxes are only collected from the working class and middle class, and from those rich people who effectively volunteer to pay. The Liberal-Tories will not take action to collect in that tax from the rich - which would pay off the deficit in one year - despite the election propaganda of the Liberals, because the reality is that it is these uber rich who are the backers of the Liberal-Tories, and it is their interests they exist to cater for.
Sunday, 27 June 2010
Soul Boy
A couple of years ago I wrote a blog Still Not Souled Out about the film my son was crewing on about Northern Soul, being made in Stoke at that time. At that time it had the working title, “Souled Out”. Tomorrow the film gets its Premiere in London. My son's going down for it, not just because he was crewing, but also because he had a minor part as a bartender.
The interesting thing here, and its not surprising given the nature of Northern Soul as a working-class phenomena, is that it combines the two things discussed on this blog – Soul Music, and politics. The film is after all set in 1974 during the great Miners Strike of that year that brought down the Heath Tory Government. The choreographer on the film is the guy who did the Northern Soul dancing on Duffy's “Mercy” video
In the meantime one of the lead actors Nichola Burley has appeared in another dancing film “Streetdance”. I still think the Northern dancers are better personally, but then I would. I wish I'd gone and done some dancing on it as an extra now, which I was offered the chance to do.
All On Our Bikes Together
Back in the 1980's, when the mass unemployment caused by Thatcherism led to rioting, the response of Tory Norman Tebbit (who was nicknamed by the press The Chingford Boot Boy) was to tell the millions of unemployed they should “Get On Their Bikes”, and look for non-existent jobs, non-existent because the Tories policies had destroyed them all, and encouraged their friends the bosses to go in search of cheap labour in other parts of the world. It was not surprising then that as the Liberal-Tories look set to try to take us back to 1980's Thatcherism, and a similarly disastrous economic situation, a proposal from Ian and Duncan Smith to encourage the unemployed to move would be compared to Tebbitt. Yet another example, of the ineptitude of the Liberal-Tories.
Labour leadership hopeful, Ed Balls, called the proposal “unfair” according to a report by the BBC. But, the Left has to be a bit careful here. That Ed Balls should oppose such a move is understandable, because as his position on Immigration Controls has showed he does not really favour the free movement of labour. But, the Left does. It is rather difficult to argue in favour of workers being free to move from one country to another in search of work or better living standards, and yet pooh pooh the idea that they should move WITHIN the same country to achieve the same thing!
There is actually nothing wrong with the idea that workers should be given assistance to move in search of employment or better conditions. In fact, such policies have been in place for decades. There has long since been a policy of offering Council houses to some Public Sector workers if they move to other parts of the country. It has tended to be less used over the last 20 years, because many workers have been owner-occupiers, and have wanted to buy houses, accompanied by a shortage of Council houses to offer. If there is unfairness in the Tories proposal it is this that in providing such housing for workers moving from high unemployment areas, it will by pass other workers in those areas who given the shortage of social housing, will have been waiting a long-time themselves.
But, what the Tories proposal shows is just how much they are out of touch with the real-life of the majority of people. On the proposal itself it was a common feature of Council Housing that tenants all along could arrange their own “Swaps”. That is a tenant in one area if they wanted to move to another, could arrange a swap with a tenant in that area, who wanted to move to their house. From an economic efficiency point of view it is what makes such social rented housing much more effective than owner-occupation, because a tenant does not have to wait until they have sold their house before they can move.
It is not this that makes mobility difficult. The Liberal-Tories proposal assumes that unemployed households are comprised entirely of people who are unemployed. In some areas of chronic unemployment that may be true, but in most cases there may be one person who is unemployed, but all other members of the family in employment. Or their may be one person in quite good employment but a number of other members of the family who are unemployed. What do the Tories propose that an unemployed husband should be encouraged to move, whilst his wife gives up her job to move with him? What then would be done to deal with the now unemployed wife? Or is the Tories proposal to split families up in the way was done with black workers in South Africa, the unemployed person being sent off to where the work was, and the partner left behind? Would that not mean then providing two houses?
But, the other point is that it is all very well and good moving home in search of work if you are reasonably well-off – or alternatively if you are virtually destitute you may have nothing to lose – because most of the jobs better off people tend to move to are relatively stable and secure. But, the jobs, that the majority of unemployed that the Tories are referring to, do are far from stable and secure. That is one of the reasons they are unemployed and living in Council housing in the first place. The jobs they do are, low status, low paid, often temporary, frequently part-time, casualised employment where you could be back on the dole the next week. You are not going to leave behind all of your family and friends, and the support network that provides, in order to take up a job at the other end of the country, that might disappear tomorrow leaving you not just back to square one, but in an even worse position, living in an area where the cost of living is higher, and with no one to turn to.
The Liberal-Tories want to tell us we are all in it together, but the reality is that they do not even understand the basics of working-class life. That was demonstrated by the story in the
Sunday Mirror about the £450 a head party that Cameron's Tories are holding. They say,
“Rich Tory backers can buy one ticket for an eye-watering £450, pay £4,500 for a table for 10, buy a “benefactor” ticket at £1,000 or blow £10,000 for a de luxe table for ten”
Apparently,
“Organisers have lined up 432 bottles of champagne – more than one each for the 400 guests, who will include City financiers and Tory donors. The event is expected to raise more than £1million for Conservative party funds”.
You can't imagine that unemployed workers living in those Council houses will be tucking into a similar Sunday lunch today can you? What was that about all in this together?
Labour leadership hopeful, Ed Balls, called the proposal “unfair” according to a report by the BBC. But, the Left has to be a bit careful here. That Ed Balls should oppose such a move is understandable, because as his position on Immigration Controls has showed he does not really favour the free movement of labour. But, the Left does. It is rather difficult to argue in favour of workers being free to move from one country to another in search of work or better living standards, and yet pooh pooh the idea that they should move WITHIN the same country to achieve the same thing!
There is actually nothing wrong with the idea that workers should be given assistance to move in search of employment or better conditions. In fact, such policies have been in place for decades. There has long since been a policy of offering Council houses to some Public Sector workers if they move to other parts of the country. It has tended to be less used over the last 20 years, because many workers have been owner-occupiers, and have wanted to buy houses, accompanied by a shortage of Council houses to offer. If there is unfairness in the Tories proposal it is this that in providing such housing for workers moving from high unemployment areas, it will by pass other workers in those areas who given the shortage of social housing, will have been waiting a long-time themselves.
But, what the Tories proposal shows is just how much they are out of touch with the real-life of the majority of people. On the proposal itself it was a common feature of Council Housing that tenants all along could arrange their own “Swaps”. That is a tenant in one area if they wanted to move to another, could arrange a swap with a tenant in that area, who wanted to move to their house. From an economic efficiency point of view it is what makes such social rented housing much more effective than owner-occupation, because a tenant does not have to wait until they have sold their house before they can move.
It is not this that makes mobility difficult. The Liberal-Tories proposal assumes that unemployed households are comprised entirely of people who are unemployed. In some areas of chronic unemployment that may be true, but in most cases there may be one person who is unemployed, but all other members of the family in employment. Or their may be one person in quite good employment but a number of other members of the family who are unemployed. What do the Tories propose that an unemployed husband should be encouraged to move, whilst his wife gives up her job to move with him? What then would be done to deal with the now unemployed wife? Or is the Tories proposal to split families up in the way was done with black workers in South Africa, the unemployed person being sent off to where the work was, and the partner left behind? Would that not mean then providing two houses?
But, the other point is that it is all very well and good moving home in search of work if you are reasonably well-off – or alternatively if you are virtually destitute you may have nothing to lose – because most of the jobs better off people tend to move to are relatively stable and secure. But, the jobs, that the majority of unemployed that the Tories are referring to, do are far from stable and secure. That is one of the reasons they are unemployed and living in Council housing in the first place. The jobs they do are, low status, low paid, often temporary, frequently part-time, casualised employment where you could be back on the dole the next week. You are not going to leave behind all of your family and friends, and the support network that provides, in order to take up a job at the other end of the country, that might disappear tomorrow leaving you not just back to square one, but in an even worse position, living in an area where the cost of living is higher, and with no one to turn to.
The Liberal-Tories want to tell us we are all in it together, but the reality is that they do not even understand the basics of working-class life. That was demonstrated by the story in the
Sunday Mirror about the £450 a head party that Cameron's Tories are holding. They say,
“Rich Tory backers can buy one ticket for an eye-watering £450, pay £4,500 for a table for 10, buy a “benefactor” ticket at £1,000 or blow £10,000 for a de luxe table for ten”
Apparently,
“Organisers have lined up 432 bottles of champagne – more than one each for the 400 guests, who will include City financiers and Tory donors. The event is expected to raise more than £1million for Conservative party funds”.
You can't imagine that unemployed workers living in those Council houses will be tucking into a similar Sunday lunch today can you? What was that about all in this together?
Saturday, 26 June 2010
Its Health & Safety Gone Mad
The number of British troops killed, in Afghanistan, over the last 9 years, has now reached the terrible toll of more than 300. We all know the stories about the inadequate equipment that the troops are provided with, in carrying out their duties. The fact, that the troops, killed or badly maimed, knew what they were letting themselves in for, in taking up the profession of War, is no solace to those who have lost members of their family. The repeated ceremonies for those killed, and the TV coverage of them are understandable, as are the TV interviews with those that have lost sons or husbands, wives or daughters.
Yet, year after year, even more workers are killed and badly maimed also doing their jobs. Last year 180 workers lost their lives due to industrial accidents. HSE Statistics. That figure was actually slightly down on the figure of 220, which was the average for the previous five years. Put, another way as many workers are killed by Capitalism in industry every 18 months, as have been killed by capitalism on the battlefield in the whole of the Afghanistan campaign.
The difference being that, although soldiers know, when they begin their employment, that their job is to kill, and to be killed, that forms no part of the job description of the ordinary worker. The least the ordinary worker should be able to expect is that the conditions under which they work are safe. Yet, despite the fact that there is this terrible loss of life for workers, there is no comparable coverage in the media of industrial deaths compared to soldiers deaths. We see no anguished interviews with the loved ones of industrial workers killed in the name of profit.
On the contrary, the gutter press, in particular, can only ridicule the need for Health & Safety in the work place, falsifying stories, sensationalising, and exaggerating those things which at root are extremely rational and necessary. In fact, when it comes to the real reasons why many practices HAVE been banned, it has nothing to do with Health & Safety legislation, and everything to do with the fact that organisations are afraid of being sued by individuals, egged on by an ambulance chasing culture of litigation, that has spread from the US, and which is itself a symptom of the kind of money centred, grasping culture that Capitalism itself promotes.
Its not surprising that, at the same time as demanding that workers work until they drop dead from old age, the Liberal-Tory government are also proposing to reduce workers protection by Health & Safety legislation. Perhaps we should demand that, just as they do with soldiers, who die for the greater glory of British Capitalism, Government Ministers should have to write to the families of those workers who die each year for the same cause in industry. Perhaps we should demand that, just as they answer for not providing the troops with adequate equipment, to protect their lives, they answer in person the question of why those workers who died did not need the protection of Health & Safety laws they now propose to axe!
Yet, year after year, even more workers are killed and badly maimed also doing their jobs. Last year 180 workers lost their lives due to industrial accidents. HSE Statistics. That figure was actually slightly down on the figure of 220, which was the average for the previous five years. Put, another way as many workers are killed by Capitalism in industry every 18 months, as have been killed by capitalism on the battlefield in the whole of the Afghanistan campaign.
The difference being that, although soldiers know, when they begin their employment, that their job is to kill, and to be killed, that forms no part of the job description of the ordinary worker. The least the ordinary worker should be able to expect is that the conditions under which they work are safe. Yet, despite the fact that there is this terrible loss of life for workers, there is no comparable coverage in the media of industrial deaths compared to soldiers deaths. We see no anguished interviews with the loved ones of industrial workers killed in the name of profit.
On the contrary, the gutter press, in particular, can only ridicule the need for Health & Safety in the work place, falsifying stories, sensationalising, and exaggerating those things which at root are extremely rational and necessary. In fact, when it comes to the real reasons why many practices HAVE been banned, it has nothing to do with Health & Safety legislation, and everything to do with the fact that organisations are afraid of being sued by individuals, egged on by an ambulance chasing culture of litigation, that has spread from the US, and which is itself a symptom of the kind of money centred, grasping culture that Capitalism itself promotes.
Its not surprising that, at the same time as demanding that workers work until they drop dead from old age, the Liberal-Tory government are also proposing to reduce workers protection by Health & Safety legislation. Perhaps we should demand that, just as they do with soldiers, who die for the greater glory of British Capitalism, Government Ministers should have to write to the families of those workers who die each year for the same cause in industry. Perhaps we should demand that, just as they answer for not providing the troops with adequate equipment, to protect their lives, they answer in person the question of why those workers who died did not need the protection of Health & Safety laws they now propose to axe!
Northern Soul Classics - Your Magic Put A Spell On Me - L.J. Johnson
Last week's offering was posted by Ian levine on Youtube, this week's offering from the days of Blackpool Mecca was produced by Ian Levine too following his success with Evelyn Thomas. There's interesting background in the comments on Youtube. I was looking for the instrumental version - "Spellbound" to post as well, but so far no luck.
Friday, 25 June 2010
How To Pay For The Deficit
The Liberal-Tories say they had no alternative to swingeing cuts and attacks on the poorest to pay off the deficit. There is a simple solution that requires no such draconian measures, that meets the requirements for fairness, and that does not impose taxes that might choke off consumption or investment. It does not even involve printing money that might lead to inflation, and higher interest rates.
The total value of shares listed on the Stock Exchange is way over a trillion pounds, but let us take a trillion as a round figure. If the Government passed a measure requiring that Companies create 10% new shares, and hand them over to the Government, the Government would possess shares with a value of £100 billion. It could sell these shares on the market through the arms length body it set up to handle its shares in the Banks, as and when the best moments arose to do so.
Because, the Government would take payment of this Tax on Capital in shares rather than cash it would mean that the profitability of the comapnies was not affected, and nor would be their ability to invest, nor would be their cash flow. Of course, by creating 10% extra shares the value of these shares might fall, as and when the extra supply came to market. However, whenever there are periodic stock market panics resulting from some unforeseen event, we frequently see in the newspapers that tens and even hundreds of billions of poiunds has been wiped off the value of shares. If such events occur naturally with no benefit, then surely it is worth the risk that shares might fall by 10%, for the "good of the country", given that we are "all in this together".
Besides, it is not at all clear that share prices would fall. Because, using this method would mean that the deficit would be paid off without actually taking money out of the pockets of consumers or businesses, it would mean that economic growth would be that much higher than it would otherwise have been. Indeed, it might mean avoiding a serious recession. Higher economic growth under all economic models leads to higher rates of investment, and Capital Accumulation. That means that the underlying value of Capital Assets rises, it means that the discounted future earnings of companies, on which share prices are usually assessed, will be higher, thereby justifying higher not lower share prices.
Not, only would such a strategy mean that any pain was placed firmly on those that are by far the most able to bear it, but as demonstrated above, it is not clear that there is actually ANY pain that would result from it. But, why will the Liberal-Tories not pursue such a measure. The reason is simple. Unlike, Income Tax, VAT, or even Capital Gains Tax, which fall unavoidably on workers and the middle class, this measure falls directly on Capital itself. It represents not a transfer of income within the working classes as all redistributive taxes do, but a transfer from Capital to Labour. The Liberal-Tories are the political representatives of Capital, whatever they say about ruling in the name of the people, or about us all being in this together. They will not propose such a policy.
But, they have said they want us to tell them how to clear the deficit. This tax on Capital could do it quickly, and simply, and fairly, with little if any economic cost.
The total value of shares listed on the Stock Exchange is way over a trillion pounds, but let us take a trillion as a round figure. If the Government passed a measure requiring that Companies create 10% new shares, and hand them over to the Government, the Government would possess shares with a value of £100 billion. It could sell these shares on the market through the arms length body it set up to handle its shares in the Banks, as and when the best moments arose to do so.
Because, the Government would take payment of this Tax on Capital in shares rather than cash it would mean that the profitability of the comapnies was not affected, and nor would be their ability to invest, nor would be their cash flow. Of course, by creating 10% extra shares the value of these shares might fall, as and when the extra supply came to market. However, whenever there are periodic stock market panics resulting from some unforeseen event, we frequently see in the newspapers that tens and even hundreds of billions of poiunds has been wiped off the value of shares. If such events occur naturally with no benefit, then surely it is worth the risk that shares might fall by 10%, for the "good of the country", given that we are "all in this together".
Besides, it is not at all clear that share prices would fall. Because, using this method would mean that the deficit would be paid off without actually taking money out of the pockets of consumers or businesses, it would mean that economic growth would be that much higher than it would otherwise have been. Indeed, it might mean avoiding a serious recession. Higher economic growth under all economic models leads to higher rates of investment, and Capital Accumulation. That means that the underlying value of Capital Assets rises, it means that the discounted future earnings of companies, on which share prices are usually assessed, will be higher, thereby justifying higher not lower share prices.
Not, only would such a strategy mean that any pain was placed firmly on those that are by far the most able to bear it, but as demonstrated above, it is not clear that there is actually ANY pain that would result from it. But, why will the Liberal-Tories not pursue such a measure. The reason is simple. Unlike, Income Tax, VAT, or even Capital Gains Tax, which fall unavoidably on workers and the middle class, this measure falls directly on Capital itself. It represents not a transfer of income within the working classes as all redistributive taxes do, but a transfer from Capital to Labour. The Liberal-Tories are the political representatives of Capital, whatever they say about ruling in the name of the people, or about us all being in this together. They will not propose such a policy.
But, they have said they want us to tell them how to clear the deficit. This tax on Capital could do it quickly, and simply, and fairly, with little if any economic cost.
Wednesday, 23 June 2010
Progressive Budget
The Liberal-Tory Government has claimed that its Budget was “progressive”. The Institute For Fiscal Studies has challenged that description. Not surprisingly. According to one analysis, although the top 10% of income earners are the worst affected by the Budget the next worst affected are the worst paid 10%. Moreover, the fact that the top 10% are worst affected does not take into account the fact that they are far better placed to suffer than are the worst paid 10%.
On the “Dispatches” programme the other night about how to save £100 billion, one Consultant said that it was quite reasonable for a Public Sector worker earning £25,000 to lose £3,000 in pay cuts, and additional pension payments. The question I would have asked her is, are you then prepared to hand over all of your income above that £22,000 for the good of the economy? If not why not, if we are “All in this together”.
But, this way of presenting things is in any case dishonest. The same is true about the proposals for withdrawing benefits from better off workers and middle class families. The fraud is perpetrated by confusing income with wealth. The wealthiest people are by no means those with the highest income as traditionally understood. The wealthiest people rather are those that own Capital, and whose wealth grows exponentially not from income, but from the growth in the value of that Capital. Unfortunately, sections of the Left that have abandoned the traditional Marxist position that real changes in wealth and power can only arise from changes in ownership of the means of production, and substituted it for it the old Fabian notion of redistributive Socialism have been accomplices in the Right pulling off this fraud. The reality is that this redistributive Socialism is not only Utopian, but what it really means is creating a division within the working class, and between the working class and its natural allies within the middle class, because rather than redistributing wealth and power from Capital to Labour, it merely redistributes within Labour, from better off workers and the middle class to poorer workers, and the underclass.
Consider the position with Universal benefits. There were rumours that the Tories intended to withdraw some Benefits from those who it was claimed did not need them. But hold on. If I pay my car insurance as I am required to do to cover the possibility that I might have an accident, I do not expect the insurance company to turn round and say, we'll have your premium, but we won't pay your claim, because you can afford to pay for the damage yourself!!! If I am likewise being asked to pay National Insurance to similarly cover unforeseen events, such as unemployment, ill-health, and so on, or to cover known events where an income or payment is required, such as retirement, or having children, why on Earth should I not likewise be entitled to a payment under that insurance scheme. If I can't, then I should have the right not to pay into such an insurance in the first place!
Of course, the left that has collapsed into a bourgeois redistributive socialism sees something progressive in such an idea, even if it generally opposes Means Testing. It has turned its attention from the real enemy Capital, into a short-sighted politics of envy against the Middle class, that ends up extending to better paid workers too. But, of course, the true rich, as opposed to the Middle Class are unaffected by this. They are so wealthy that paying for private healthcare or education are insignificant for them. And because their wealth is based on the ownership of Capital not on earned income, they are unaffected by income taxes, and largely by taxes on Capital too.
Forbes Magazine commented a few years ago,
“According to a newly published study by accountancy firm Grant Thornton and commissioned by the Sunday Times newspaper, U.K. billionaires paid income tax totalling £14.7m ($29.1m) on their £126 billion combined fortunes last year, and only a handful paid any capital gains tax.
Grant Thornton estimated that three in five billionaires paid no personal income taxes, although they would have paid indirect taxes such as value-added and council (local authority services) taxes. Business income would have been tucked away in offshore trusts and companies. Most of the rest who did pay taxes would have paid themselves in dividends rather than with a salary. Dividends are taxed at an effective rate of 25% rather than the 40% higher rate of income tax."
Forbes
Yet, the Liberal Tory Government – by the way why do the Liberals and Tories both get to put up spokesepeople against Labour on TV now they are effectively one Governing party? - did nothing to tax Capital in the Budget. The Liberals during the election had proposed a Mansion Tx to fund their increase in Income Tax allowances to £10,000. Not only did the latter not happen, but their was no sight of the former. The Tories had proposed a tax on “Non-Doms” to fund their Inheritance Tax giveaway to the super rich. Again there was no sight of that either. On the contrary, the Liberal-Tories have given money back to Capital in a number of ways. They have reduced Corporation Tax, which means that the asset value of Capital will rise accordingly increasing the wealth of the billionaires, and will also mean more profit is available to be paid out in those dividends referred to above that the billionaires largely pay no tax on either. In addition they have given employers a reduction in the National Insurance contributions they have to pay, but have given no such concession to workers.
The Liberal Tories claimed that they had no choice but to raise VAT, which will hit the poorest hardest. But, the above shows that they had lots of options. In Spain if you spend more than six months of the year in the country you become subject to Spanish taxes whether you live there or not. Spain has a Wealth Tax, which is payable on your Global Wealth, not just your assets in Spain. If the Liberal-Tories had introduced such a Wealth Tax at a rate of say 10%, they could have raised billions of pounds from all of those billionaires like Lord Ashcroft.
But, there was another way the Liberal-Tories could have raised all the money needed to pay off the deficit without affecting ordinary working class and middle class people. Regularly, we see that there has been a bad day on the Stock Exchange where the fall in share prices has wiped hundreds of billions of the value of shares. The total value of shares in the FTSE 100 is more than a trillion pounds. If the Government simply raised a tax on that Capital Value of 10%, it would raise £100, billion plus. It could do that quite easily. All it would need to do would be to require that every Limited Company, issue 10% more shares, and hand those over to the Government. The Government could then simply sell those shares, and pay off the debt with the proceeds. That would not affect the profitability of the companies, it would not affect their ability to invest and so on. It would, however, do what the Liberal-Tories claim they want to do, it would mean ensuring that those with the ability to pay did so, whilst protecting everyone else.
The Liberal-Tories say they want to involve all of us in determining what cuts should be made. We should take them at their word, as well as their claim to want to ensure that “We are all in this together”. The LP and Trade Unions, and the Co-operatives should organise Labour Movement conferences in each area to discuss the Cuts, and to place before the majority of working class and middle class people the facts, and the kinds of alternatives suggested above. The Liberal-Tories have already adopted the Thatcherite Mantras of the 1980's such as TINA (there is no alternative), and that unemployment is a price worth paying. Its nonsense there are always alternatives, and unemployment is only an acceptable price for those who are not going to be made redundant. The Liberal politicians, of course, who now make this argument, have been quick to ensure that they have lined themselves up with lucrative Government jobs. We should not simply respond in the way the left has done in the past by simply opposing the Cuts, which really meant defending the Capitalist status Quo. We should respond by providing our own, truly progressive alternative, an alternative that begins by challenging the power of Capital rather than looking for easy scapegoats within the middle class, or better off sections of workers, solutions that demand that real wealth and power in the means of production are transferred into the hands of workers.
On the “Dispatches” programme the other night about how to save £100 billion, one Consultant said that it was quite reasonable for a Public Sector worker earning £25,000 to lose £3,000 in pay cuts, and additional pension payments. The question I would have asked her is, are you then prepared to hand over all of your income above that £22,000 for the good of the economy? If not why not, if we are “All in this together”.
But, this way of presenting things is in any case dishonest. The same is true about the proposals for withdrawing benefits from better off workers and middle class families. The fraud is perpetrated by confusing income with wealth. The wealthiest people are by no means those with the highest income as traditionally understood. The wealthiest people rather are those that own Capital, and whose wealth grows exponentially not from income, but from the growth in the value of that Capital. Unfortunately, sections of the Left that have abandoned the traditional Marxist position that real changes in wealth and power can only arise from changes in ownership of the means of production, and substituted it for it the old Fabian notion of redistributive Socialism have been accomplices in the Right pulling off this fraud. The reality is that this redistributive Socialism is not only Utopian, but what it really means is creating a division within the working class, and between the working class and its natural allies within the middle class, because rather than redistributing wealth and power from Capital to Labour, it merely redistributes within Labour, from better off workers and the middle class to poorer workers, and the underclass.
Consider the position with Universal benefits. There were rumours that the Tories intended to withdraw some Benefits from those who it was claimed did not need them. But hold on. If I pay my car insurance as I am required to do to cover the possibility that I might have an accident, I do not expect the insurance company to turn round and say, we'll have your premium, but we won't pay your claim, because you can afford to pay for the damage yourself!!! If I am likewise being asked to pay National Insurance to similarly cover unforeseen events, such as unemployment, ill-health, and so on, or to cover known events where an income or payment is required, such as retirement, or having children, why on Earth should I not likewise be entitled to a payment under that insurance scheme. If I can't, then I should have the right not to pay into such an insurance in the first place!
Of course, the left that has collapsed into a bourgeois redistributive socialism sees something progressive in such an idea, even if it generally opposes Means Testing. It has turned its attention from the real enemy Capital, into a short-sighted politics of envy against the Middle class, that ends up extending to better paid workers too. But, of course, the true rich, as opposed to the Middle Class are unaffected by this. They are so wealthy that paying for private healthcare or education are insignificant for them. And because their wealth is based on the ownership of Capital not on earned income, they are unaffected by income taxes, and largely by taxes on Capital too.
Forbes Magazine commented a few years ago,
“According to a newly published study by accountancy firm Grant Thornton and commissioned by the Sunday Times newspaper, U.K. billionaires paid income tax totalling £14.7m ($29.1m) on their £126 billion combined fortunes last year, and only a handful paid any capital gains tax.
Grant Thornton estimated that three in five billionaires paid no personal income taxes, although they would have paid indirect taxes such as value-added and council (local authority services) taxes. Business income would have been tucked away in offshore trusts and companies. Most of the rest who did pay taxes would have paid themselves in dividends rather than with a salary. Dividends are taxed at an effective rate of 25% rather than the 40% higher rate of income tax."
Forbes
Yet, the Liberal Tory Government – by the way why do the Liberals and Tories both get to put up spokesepeople against Labour on TV now they are effectively one Governing party? - did nothing to tax Capital in the Budget. The Liberals during the election had proposed a Mansion Tx to fund their increase in Income Tax allowances to £10,000. Not only did the latter not happen, but their was no sight of the former. The Tories had proposed a tax on “Non-Doms” to fund their Inheritance Tax giveaway to the super rich. Again there was no sight of that either. On the contrary, the Liberal-Tories have given money back to Capital in a number of ways. They have reduced Corporation Tax, which means that the asset value of Capital will rise accordingly increasing the wealth of the billionaires, and will also mean more profit is available to be paid out in those dividends referred to above that the billionaires largely pay no tax on either. In addition they have given employers a reduction in the National Insurance contributions they have to pay, but have given no such concession to workers.
The Liberal Tories claimed that they had no choice but to raise VAT, which will hit the poorest hardest. But, the above shows that they had lots of options. In Spain if you spend more than six months of the year in the country you become subject to Spanish taxes whether you live there or not. Spain has a Wealth Tax, which is payable on your Global Wealth, not just your assets in Spain. If the Liberal-Tories had introduced such a Wealth Tax at a rate of say 10%, they could have raised billions of pounds from all of those billionaires like Lord Ashcroft.
But, there was another way the Liberal-Tories could have raised all the money needed to pay off the deficit without affecting ordinary working class and middle class people. Regularly, we see that there has been a bad day on the Stock Exchange where the fall in share prices has wiped hundreds of billions of the value of shares. The total value of shares in the FTSE 100 is more than a trillion pounds. If the Government simply raised a tax on that Capital Value of 10%, it would raise £100, billion plus. It could do that quite easily. All it would need to do would be to require that every Limited Company, issue 10% more shares, and hand those over to the Government. The Government could then simply sell those shares, and pay off the debt with the proceeds. That would not affect the profitability of the companies, it would not affect their ability to invest and so on. It would, however, do what the Liberal-Tories claim they want to do, it would mean ensuring that those with the ability to pay did so, whilst protecting everyone else.
The Liberal-Tories say they want to involve all of us in determining what cuts should be made. We should take them at their word, as well as their claim to want to ensure that “We are all in this together”. The LP and Trade Unions, and the Co-operatives should organise Labour Movement conferences in each area to discuss the Cuts, and to place before the majority of working class and middle class people the facts, and the kinds of alternatives suggested above. The Liberal-Tories have already adopted the Thatcherite Mantras of the 1980's such as TINA (there is no alternative), and that unemployment is a price worth paying. Its nonsense there are always alternatives, and unemployment is only an acceptable price for those who are not going to be made redundant. The Liberal politicians, of course, who now make this argument, have been quick to ensure that they have lined themselves up with lucrative Government jobs. We should not simply respond in the way the left has done in the past by simply opposing the Cuts, which really meant defending the Capitalist status Quo. We should respond by providing our own, truly progressive alternative, an alternative that begins by challenging the power of Capital rather than looking for easy scapegoats within the middle class, or better off sections of workers, solutions that demand that real wealth and power in the means of production are transferred into the hands of workers.
Tuesday, 22 June 2010
Fantasy Budget
The budget today reminded me of those things that were the fashion a few years ago where you drew up a fantasy football team and so on. It was a fantasy Budget in which the Chancellor listed a number of measures he'd like to see implemented, but most of which are outside his control, and will never happen. Even Norman Lamont, interviewed on BBC said that the proposal to cut unprotected Budgets by 25%, was only “an ambition”.
What is interesting in the Budget from that perspective is the Cuts that are within their control, and the main means by which those Cuts will be effected. So, one of the biggest savings will be through freezing Public Sector wages. Provided, of course, that the Government can impose such a freeze – and they have made that more likely both by putting the frighteners on Public Sector workers with the threat of huge job losses resulting from a 25% cut in Budgets, and by dividing the workforce by guaranteeing a flat rate pay rise for all Public Sector workers earning less than £21,000 a year – then the saving in real terms from that is a known figure. If, as I have been arguing for some time, the real means of reducing the deficit is achieved through a hefty dose of inflation, then the higher that inflation, the bigger the nominal saving achieved.
My belief that they intend to cut the deficit via inflation has been strengthened by other factors in the Budget. Firstly, they have made a big play of restoring the link between Pensions and incomes. But, of course, given that a large number of workers – in the Public Sector – will be experiencing a pay freeze, and wages in the private sector are unlikely to be rising rapidly, that is hardly something Pensioners should look forward to. Having suffered for the last 20 years or so as wages outpaced prices, they are now to get their pensions linked to wages just at the time when prices are going to outpace wages! Secondly, the Liberal-Tories have said that they are going to link Public Sector pensions, and benefits to the Consumer Prices Index rather than the Retail Price Index. All of these indices are a con, because they significantly understate the price rises most workers face, and understate the price rises faced by low-paid workers, and pensioners even more so. But, of the two the CPI is far more of a con than the RPI. It excludes many items that comprise normal expenses. As a result, whereas the CPI is currently at around 3%, the RPI is standing at nearly 5.5%! Given all those factors I have been warning about for months – and China has now effectively scrapped the peg of its currency to the dollar, which means that Chinese export prices will rise, sending the prices of all those multitude of things we now import from China soaring, especially as Chinese workers are now demanding with the support of their Government pay rises of between 30-50%! - which, with the loose money policy will send inflation much higher before the end of the year, and with the deliberate boost to that inflation that the Liberal-Tory VAT “Tax Bombshell” will now impose, pegging benefits and Public sector pensions to CPI will mean a huge real terms cut. The Liberal-Tories must know this, must know that inflation is going to rise, because the only reason for making this switch – and they have admitted that the switch will bring in several billions in savings – can only work if that is the case.
And, of course, the VAT rise, which is not a rise of just 2.5%, but is actually a rise of around 12%, will more than wipe out the small benefit for lower paid workers of the rise in the basic rate Tax Allowance. Before the election when the Liberals were campaigning against the Tories VAT tax bombshell, they said that it would take around £375 out of the average person's pocket. The change in Tax Allowances, which goes nowhere near the rise to £10,000 the Liberals had been asking for, will save them only £175. That is before the losses from all the other Benefits are taken into account. As I said before the main emphasis would be on hitting Benefits, because it hits people who are atomised, and in no position to effectively resist. But, the Liberal-Tories' VAT rise will also itself mean more people put on Benefits. They both opposed Labour's proposed National Insurance increase as a “Jobs Tax”, but any tax which takes effective demand out of the economy under such conditions is a Job's Tax. By increasing the prices of the things people have to buy every day, and transferring that money via the Government's coffers into the pockets of the bankers and financiers who lend to the Government – that's right those same people who caused the financial crisis inh the first place – it will lead to ordinary people buying less. Reduced demand will mean, reduced income for businesses, reduced work for those employed by them. In short it means directly raising unemployment, a fact that was even set out in the figures provided by the Government's new Quango, the Office For Budget Responsibility. In so doing, it will mean raising unproductive Government Spending in benefits, just as happened under Thatcher in the 80's, to pay people to do nothing, whereas previously they were actually producing new value – a consequence, which is also itself inflationary – at the same time as reducing the income received in taxes on profits, and from Income Tax. What it will do as was Thatcher's policy in the 80's, is that by raising unemployment it will act to put pressure on workers to accept lower wages, thereby boosting profits. So much for the idea that we are all in this together.
But, the other big feature of the Budget was the announcement of that 25% cut in non-protected budgets. Of course, the details of that are not to be set out until the CSR in the Autumn. Let's be clear, a 25% cut would be a big deal. But, put it in context. It in now way comes close to reversing the massive increase in Public Spending introduced by Labour even just over the last few years. Even at the most alarming estimate it would mean around half a million job losses in the Public Sector, whilst under Labour Public Sector employment rose by more than a million. Also to put it in context, it amounts to around a 5% cut per year. If as I expect inflation rises rapidly a large part of that cut could be effected by that means alone. But, the truth is, as Norman Lamont hinted at, there is no way in hell that such a cut is going to happen. In the 1980's under the rapacious Thatcher Government, at a time when year's of industrial disputes had left the Trade Unions isolated as the passive majority sought some form of “order”, with a Labour Movement subdued after a series of defeats culminating in the defeat of the Miners, and despite the public pronouncements of that Government that it intended to cut the State down to size, the opposite happened. The size of the State continued to rise, just as it did under Thatcher's evil Twin, Reagan in the US.
Yes, there will be attacks, there will be cuts in places, but the reality is that Capitalism needs a big State. Whatever, the intentions of the Government, the permanent State bureaucracy will frustrate any large cuts in the size of the State, which might threaten the economic recovery. Not only would such cuts not be in the interest of Capital under the current conditions, but they would certainly not be in the interests of that permanent State bureaucracy, which has its own vested interests, which it pushes whenever it can. If cuts come, whatever the intentions of the government, that bureaucracy will ensure that they come in frontline services where the most public opposition will be raised. It will ensure that at the same time it buttresses the back-room staff – who are usually higher status higher paid, and therefore, more significant in the process of Empire Building for the top bureaucrats. As in the past the consequence will be a bigger State in terms of more, higher paid, higher status bureaucrats employed, with a diminution in the actual services provided.
Of course, that is no reason not to oppose the Liberal-Tory plans. They claim to want to involve everyone in determining where those cuts should fall, though they didn't apply that to today's Budget. After last night's “Dispatches” Programme where in general there was support for defending most services etc., and support for reducing Britain's Defence commitment significantly down to the European average, the Liberal-Tories might decide that such involvement would not be a good idea. But, now they have proposed it, we should take it up. The Labour Party and the Unions should organise local Conferences in each area to discuss what should be cut, and what should not. But, more than that, if we really want to mobilise the majority of people, we have to address some of those real concerns that they have over the inadequacy, the bureaucracy and inefficiency of many Public Services like the NHS. We have to address those concerns by arguing that we need at least far greater democracy in the way such services are controlled. In truth we have to point out that such democratic control can only ever be achieved if we bring these services directly under our own ownership, and out of the hands of the bosses bureaucratic state.
What is interesting in the Budget from that perspective is the Cuts that are within their control, and the main means by which those Cuts will be effected. So, one of the biggest savings will be through freezing Public Sector wages. Provided, of course, that the Government can impose such a freeze – and they have made that more likely both by putting the frighteners on Public Sector workers with the threat of huge job losses resulting from a 25% cut in Budgets, and by dividing the workforce by guaranteeing a flat rate pay rise for all Public Sector workers earning less than £21,000 a year – then the saving in real terms from that is a known figure. If, as I have been arguing for some time, the real means of reducing the deficit is achieved through a hefty dose of inflation, then the higher that inflation, the bigger the nominal saving achieved.
My belief that they intend to cut the deficit via inflation has been strengthened by other factors in the Budget. Firstly, they have made a big play of restoring the link between Pensions and incomes. But, of course, given that a large number of workers – in the Public Sector – will be experiencing a pay freeze, and wages in the private sector are unlikely to be rising rapidly, that is hardly something Pensioners should look forward to. Having suffered for the last 20 years or so as wages outpaced prices, they are now to get their pensions linked to wages just at the time when prices are going to outpace wages! Secondly, the Liberal-Tories have said that they are going to link Public Sector pensions, and benefits to the Consumer Prices Index rather than the Retail Price Index. All of these indices are a con, because they significantly understate the price rises most workers face, and understate the price rises faced by low-paid workers, and pensioners even more so. But, of the two the CPI is far more of a con than the RPI. It excludes many items that comprise normal expenses. As a result, whereas the CPI is currently at around 3%, the RPI is standing at nearly 5.5%! Given all those factors I have been warning about for months – and China has now effectively scrapped the peg of its currency to the dollar, which means that Chinese export prices will rise, sending the prices of all those multitude of things we now import from China soaring, especially as Chinese workers are now demanding with the support of their Government pay rises of between 30-50%! - which, with the loose money policy will send inflation much higher before the end of the year, and with the deliberate boost to that inflation that the Liberal-Tory VAT “Tax Bombshell” will now impose, pegging benefits and Public sector pensions to CPI will mean a huge real terms cut. The Liberal-Tories must know this, must know that inflation is going to rise, because the only reason for making this switch – and they have admitted that the switch will bring in several billions in savings – can only work if that is the case.
And, of course, the VAT rise, which is not a rise of just 2.5%, but is actually a rise of around 12%, will more than wipe out the small benefit for lower paid workers of the rise in the basic rate Tax Allowance. Before the election when the Liberals were campaigning against the Tories VAT tax bombshell, they said that it would take around £375 out of the average person's pocket. The change in Tax Allowances, which goes nowhere near the rise to £10,000 the Liberals had been asking for, will save them only £175. That is before the losses from all the other Benefits are taken into account. As I said before the main emphasis would be on hitting Benefits, because it hits people who are atomised, and in no position to effectively resist. But, the Liberal-Tories' VAT rise will also itself mean more people put on Benefits. They both opposed Labour's proposed National Insurance increase as a “Jobs Tax”, but any tax which takes effective demand out of the economy under such conditions is a Job's Tax. By increasing the prices of the things people have to buy every day, and transferring that money via the Government's coffers into the pockets of the bankers and financiers who lend to the Government – that's right those same people who caused the financial crisis inh the first place – it will lead to ordinary people buying less. Reduced demand will mean, reduced income for businesses, reduced work for those employed by them. In short it means directly raising unemployment, a fact that was even set out in the figures provided by the Government's new Quango, the Office For Budget Responsibility. In so doing, it will mean raising unproductive Government Spending in benefits, just as happened under Thatcher in the 80's, to pay people to do nothing, whereas previously they were actually producing new value – a consequence, which is also itself inflationary – at the same time as reducing the income received in taxes on profits, and from Income Tax. What it will do as was Thatcher's policy in the 80's, is that by raising unemployment it will act to put pressure on workers to accept lower wages, thereby boosting profits. So much for the idea that we are all in this together.
But, the other big feature of the Budget was the announcement of that 25% cut in non-protected budgets. Of course, the details of that are not to be set out until the CSR in the Autumn. Let's be clear, a 25% cut would be a big deal. But, put it in context. It in now way comes close to reversing the massive increase in Public Spending introduced by Labour even just over the last few years. Even at the most alarming estimate it would mean around half a million job losses in the Public Sector, whilst under Labour Public Sector employment rose by more than a million. Also to put it in context, it amounts to around a 5% cut per year. If as I expect inflation rises rapidly a large part of that cut could be effected by that means alone. But, the truth is, as Norman Lamont hinted at, there is no way in hell that such a cut is going to happen. In the 1980's under the rapacious Thatcher Government, at a time when year's of industrial disputes had left the Trade Unions isolated as the passive majority sought some form of “order”, with a Labour Movement subdued after a series of defeats culminating in the defeat of the Miners, and despite the public pronouncements of that Government that it intended to cut the State down to size, the opposite happened. The size of the State continued to rise, just as it did under Thatcher's evil Twin, Reagan in the US.
Yes, there will be attacks, there will be cuts in places, but the reality is that Capitalism needs a big State. Whatever, the intentions of the Government, the permanent State bureaucracy will frustrate any large cuts in the size of the State, which might threaten the economic recovery. Not only would such cuts not be in the interest of Capital under the current conditions, but they would certainly not be in the interests of that permanent State bureaucracy, which has its own vested interests, which it pushes whenever it can. If cuts come, whatever the intentions of the government, that bureaucracy will ensure that they come in frontline services where the most public opposition will be raised. It will ensure that at the same time it buttresses the back-room staff – who are usually higher status higher paid, and therefore, more significant in the process of Empire Building for the top bureaucrats. As in the past the consequence will be a bigger State in terms of more, higher paid, higher status bureaucrats employed, with a diminution in the actual services provided.
Of course, that is no reason not to oppose the Liberal-Tory plans. They claim to want to involve everyone in determining where those cuts should fall, though they didn't apply that to today's Budget. After last night's “Dispatches” Programme where in general there was support for defending most services etc., and support for reducing Britain's Defence commitment significantly down to the European average, the Liberal-Tories might decide that such involvement would not be a good idea. But, now they have proposed it, we should take it up. The Labour Party and the Unions should organise local Conferences in each area to discuss what should be cut, and what should not. But, more than that, if we really want to mobilise the majority of people, we have to address some of those real concerns that they have over the inadequacy, the bureaucracy and inefficiency of many Public Services like the NHS. We have to address those concerns by arguing that we need at least far greater democracy in the way such services are controlled. In truth we have to point out that such democratic control can only ever be achieved if we bring these services directly under our own ownership, and out of the hands of the bosses bureaucratic state.
Sunday, 20 June 2010
Northern Soul Classics - Love On A Mountain Top - Robert Knight
What a gem, and a current video posted by legendary Producer,Ian Levine. A while ago I posted about the period during the early 70's when Northern Soul was at its height, and companies like Pye were reissuing songs on its "Disco Demand" series, that led to many singers who had taken up ordinary jobs, finding that all of a sudden they were topping the charts in England.
Robert Knight was one of those singers. I remember first hearing "Love On A Mountain Top" probably in the late 60's, or 1970. It was one of those records that everybody had to have after it started being played, and I duly went up to Bews in Burslem to get my copy. It was several years later before it got into the Top 10 in the UK Pop Charts, and a rather bemused Robert Knight came over to perform it. In fact, he had been better known, to the extent he was known at all in the UK, for another record, which I'm also posting, and which was in turn better known for its cover version by the "Love Affair" - "Everlasting Love", which was a big Mod sound in the 1960's.
I'd also suggest checking out the extended version of the latter on Youtube.
Robert Knight was one of those singers. I remember first hearing "Love On A Mountain Top" probably in the late 60's, or 1970. It was one of those records that everybody had to have after it started being played, and I duly went up to Bews in Burslem to get my copy. It was several years later before it got into the Top 10 in the UK Pop Charts, and a rather bemused Robert Knight came over to perform it. In fact, he had been better known, to the extent he was known at all in the UK, for another record, which I'm also posting, and which was in turn better known for its cover version by the "Love Affair" - "Everlasting Love", which was a big Mod sound in the 1960's.
I'd also suggest checking out the extended version of the latter on Youtube.
Friday, 18 June 2010
Buncefield
Three firms were found guilty over the Buncefield Oil Depot explosion three years ago as the BBC reported today - Buncefield.
At the time I wrote a blog about the events, which is as relevant today.
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I was watching the pictures, of the effects of the explosion, at the oil storage facility, in Henel Hempstead, today, like many other people. I don't know the area, where the storage depot was, but I guess its not a leafy, middle class suburb. I know, from having sat on a Planning Committee, that whenever applications, for anything that might be environmentally hazardhous, dirty or unsightly, comes along a strange red (or probably blue) mist seems to cloud the vision of planning officers and Councillors alike.
Whenever an application for something like this is submitted, for some area out in the country, planning officers reel out all the objections to spoiling the countryside, Tory Councillors, who are often elected from these areas by a few voters and some sheep, of course, are outraged that their constituents should have to come into contact with anything so working class, and Labour politicians, even if for the best environmentalist reasons, dislike the idea of despoiling the Green Belt too. Yet, despite the fact that, often, for facilities such as this oil storage depot, out in the wilds is the best place for them, where they pose little risk to anyone, the same planners and politicians have no qualms about siting dangerous facilities in the midst of, or at least close to, working class areas, where, presumably, they think people already have a completely shitty environement so shitting it up a bit more won't matter. The same is true about the Government's policies for cramming even more houses or businesses on to inner city, brown field sites, when, in fact, what needs to happen, to these sites, is for them to be greened up, to provide a better environement for people stuck inside built up towns and cities, to give kids somewhere to play, and to provide a "green lung" to improve air quality.
Its not even a matter of people being given a backhander by the firms that want to site these facilities in working class areas, its more a matter that the idea that workers can be shat on from a great height is taken for granted. The companies often have economic reasons for wanting to site them in these areas (e.g. because they are close to customers) as well as knowing they are more likely to get approval for an application there than in the countryside (because especially in run down working class areas, where residents have little history of organising and standing up for themselves, they will not put up a fight, whereas, out in the country, the middle class residents will, and the local Tory candidate will give the directors grief), and planning officers go along for many of the same reasons (plus they are more likely to live in the leafy suburbs than on a run down estate).
Workers should not count on any of these people having a change of heart. They have to organise on the etsates through their own organisations to oppose such developments through direct action if (as it usually is)necessary. They need to make links with the Trade Unions in the firms involved to gain support, to link up the concerns of workers in these industries over Health and Safety with their own concerns in that regard.
At the time I wrote a blog about the events, which is as relevant today.
----------------------------------------------------------------------------
I was watching the pictures, of the effects of the explosion, at the oil storage facility, in Henel Hempstead, today, like many other people. I don't know the area, where the storage depot was, but I guess its not a leafy, middle class suburb. I know, from having sat on a Planning Committee, that whenever applications, for anything that might be environmentally hazardhous, dirty or unsightly, comes along a strange red (or probably blue) mist seems to cloud the vision of planning officers and Councillors alike.
Whenever an application for something like this is submitted, for some area out in the country, planning officers reel out all the objections to spoiling the countryside, Tory Councillors, who are often elected from these areas by a few voters and some sheep, of course, are outraged that their constituents should have to come into contact with anything so working class, and Labour politicians, even if for the best environmentalist reasons, dislike the idea of despoiling the Green Belt too. Yet, despite the fact that, often, for facilities such as this oil storage depot, out in the wilds is the best place for them, where they pose little risk to anyone, the same planners and politicians have no qualms about siting dangerous facilities in the midst of, or at least close to, working class areas, where, presumably, they think people already have a completely shitty environement so shitting it up a bit more won't matter. The same is true about the Government's policies for cramming even more houses or businesses on to inner city, brown field sites, when, in fact, what needs to happen, to these sites, is for them to be greened up, to provide a better environement for people stuck inside built up towns and cities, to give kids somewhere to play, and to provide a "green lung" to improve air quality.
Its not even a matter of people being given a backhander by the firms that want to site these facilities in working class areas, its more a matter that the idea that workers can be shat on from a great height is taken for granted. The companies often have economic reasons for wanting to site them in these areas (e.g. because they are close to customers) as well as knowing they are more likely to get approval for an application there than in the countryside (because especially in run down working class areas, where residents have little history of organising and standing up for themselves, they will not put up a fight, whereas, out in the country, the middle class residents will, and the local Tory candidate will give the directors grief), and planning officers go along for many of the same reasons (plus they are more likely to live in the leafy suburbs than on a run down estate).
Workers should not count on any of these people having a change of heart. They have to organise on the etsates through their own organisations to oppose such developments through direct action if (as it usually is)necessary. They need to make links with the Trade Unions in the firms involved to gain support, to link up the concerns of workers in these industries over Health and Safety with their own concerns in that regard.
Clegg "Blooded"
We expect bourgeois politicians to be unprincipled, but, as professionals, the one thing they shouldn't be is inept. New Labour showed a significant degree of ineptness - accepting money from bernie Ecclestone, then exempting F1 from the ban on cigareete advertising; the 75p rise in Pensions; the abolition of the 10p tax rate. All are examples of actions, which unnecessarily drew criticism, and a subsequent loss of support. The announcements yesterday by the Liberal-Tory Government of a series of measures cutting programmes previously agreed by Labour are of the same order.
Some of the decisions seem just petulant. A number of hospital building programmes were agreed, but one for Hartlepool in deep Labour territory was scrapped, despite promises by the Tories and liberals prior to the election. None of the measures cut amount to a hill of beans in terms of the total amounts the Government proposes to cut, and so why these particular programmes is at first hard to fathom. Its one thing to simply reduce future spending that no one had been expecting, but to cut programmes that people had already thought had been agreed is to invite opposition.
The highest profile was the decision to scrap the £80 million loan to Sheffield Forgemasters, a decision which has already provoked the understandable reaction of workers within the City. The decision seems perverse. On Newsnight, last night, the Government did not even put up a Government Minister to defend the decision, but instead put up an old Thatcherite MP, Michael Fallon. His argument was ridiculous on a number of counts. Firstly, the Government line has been that these cuts were necessary because the books were worse than even they had thought they were. That is an obvious statement that any new Government is going to make to blame the previous Government. The trouble is that over the last few months the official data has been showing that actually things were BETTER than had previously been expected. To make that worse for the Government, the new Office of Budget Responsibility that they have set up as an independent assessor of how the Public Finances stand, has confirmed that view. The Government said it needed this £2bn of cuts, because they had found a further black hole, but the OBR had already said that actually the finances were £30 billion better than Alistair Darling had assumed in his calculations!
Worse, he repeatedly spoke about this not being sustainable because it amount to being a cost of half a million pounds per job. But, there was no such cost. It was n't a grant to the company, but a loan at a 3% rate of interest. Rather than it costing the Government money, they would have been receiving money from it! Rathger than there being a cost per job, there would have been income per job. That is before you consider the income that would be received in Tax from wages and profits, and so on. If this is the mathematical skills of the new Government let alone its grasp of Economics it does not speak very well for the prospects for the future! The decision seems perverse for another reason. The Government like Labour has spoken about the need to rebalance the economy to promote manufacturing, as well as to shift reliance in places like Sheffield, from the Public to the private Sector.
This is a company, which with assistance from the previous Government had done a deal with the giant US Westinghouse Corporation to produce equipment for the latest generation of nuclear power stations. Everyone knows that in thye coming years Governments in Europe, and around the world will be increasing their investment in such new nuclear power stations in order to meet their carbon reduction targets. This was an opportunity for an efficient British company to become a world leader in this technology, in a high value added sector, employing skilled labour. It is precisely the kind of industry Britain needs to develop to compete on the world market, and if British workers are to have any chance of avoiding a huge drop in living standards as they compete in the world market with low wage economies in Asia and elsewhere. For the Tories to withdraw this loan, to save just £80 million now, that they would have got back with interest seems inexplicable. But wait.
At first glance another factor also seems inexplicable, perverse, and inept. Sheffield is also the City in which Deputy Prime Minister, Nick Clegg is MP. Why would he shit in his own back yard? Remember another one of the Tories election promises - they promised to bring back fox hunting, one of the favourite pastimes of the Public School brigade whose members make up a large number of the Government benches. In Fox Hunting they have a ritual in which the young aristos, and aspiring nouveau riche kids, are inducted on their first hunt by being "blooded". That is they are daubed with the blood of the first fox killed. It basically means that they are no longer just along for the ride, but are as blood soaked as all the other chinless wonders. Clegg has been "blooded". By making this cut in his City, Clegg is now irrevocably tied to his Tory masters. He cannot claim, "it was all their fault Guv." The workers of Sheffield have been sacrificed on the high altar of Tory-Liberal ritual, in order that Clegg could be inducted into the club. That is no surprise, the workers are always the ones asked to pay the price for the rituals, dogmas, and adventures of the ruling class, from just an economic price to the price of their lives sacrificed on the battlefield when the ruling classes engage in some new pointless war.
Labour Leaddership hopefuls have begun to stand up verbally to the Tories assault. That is good. It would be more believable had they been standing up for workers over the last 13 years too. But, the fact they are standing up now is a start, and something that we can use. We need more than bold words from them, we need actions. After 1979, Michael Foot led massive marches in Cities around the country to oppose the Tories cuts, and attacks on workers. During that period Labour soared to over 50% in the opinion polls. We should demand these Labour leadership candidates do at least the same now. But, more than marches are needed. We need action committees in each area to resist the Tories plans. The government says, it wants to consult the people on what to cut. Let's take them at their word.
Local Labour parties and trades Councils, should immediately be organising local Conferences to discuss what we think should be cut. Here are some initial suggestions.
1. The Queen wants a 15% pay rise. The Tories say "We are all in this together." Okay then, instead of a pay rise, scrap the Civil List payments to the rich, royal scroungers, and let them pay their own way. Better still scrap the Monarchy altogether.
2. The Tories propose to cut Public Sector worekrs wages. Start at the top. All Public Officials, from MP's, to Judges, to the Military Top Brass to be only paid the average wage.
3. The Liberals argued in the election that they could pull in billions by collecting unpaid tax by the rich. Properly staff the tax offices so we can get in the estimated £120 billion in tax unpaid by the rich and big companies.
4. Scrap Trident. Again the Liberals said they would, so let's hold them to that.
5. Pull all the troops back from abroad not just from Afghanistan. Defence is one thing, but why do you need to be occupying other people's country for defence? Then we would need need all those billions of pounds worth of ships, aeroplanes, and so on either. We could sell them off to pay down the debt. The workers now employed building such useless things could be employed instead to build hospital equipment to treat the sick. And, if we really were concerned with defence that could be done by concentrating resources on developing an effective militia, with universal conscription into it.
6. Similarly, the Tories and liberals propose bringing in some democracy to the Police Force. But, the most democratic police force, would be one in which the whole population participated, in the same way that people participate in Jury Service. Everyone could be organised into local groups to police their own neighbourhoods, and each local group could employ its own specialists. That would save a fortune. If the rich and the bosses want a police force to protect their property, and to break strikes like they did against the Miners let them pay for it themselves, not have the cost covered by workers in their taxation to the bosses state.
7. The Tories say they are in favour of Co-ops to run Public Services. So am I provided those Co-ops have real control, provided workers in local communities can determine the level of service they want subject to national minimum requirements. But, in things like the NHS private companies rip them off big style inb payments for drugs, equipment and so on. If we are to have Co-ops to run Public Services, we should equally have Co-ops to run these private companies. There is £800 billion now in workers Pension Funds. Give us the basic right to demcoratically controlo those funds, so that we can take over the biggest, most important, strategic companies in the country and run them as Worker Owned Co-ops.
Now is the time to take the the fight to the Liberal-Tories. Now is the time for the labour leadership candidates to prove they are worth consideration.
Some of the decisions seem just petulant. A number of hospital building programmes were agreed, but one for Hartlepool in deep Labour territory was scrapped, despite promises by the Tories and liberals prior to the election. None of the measures cut amount to a hill of beans in terms of the total amounts the Government proposes to cut, and so why these particular programmes is at first hard to fathom. Its one thing to simply reduce future spending that no one had been expecting, but to cut programmes that people had already thought had been agreed is to invite opposition.
The highest profile was the decision to scrap the £80 million loan to Sheffield Forgemasters, a decision which has already provoked the understandable reaction of workers within the City. The decision seems perverse. On Newsnight, last night, the Government did not even put up a Government Minister to defend the decision, but instead put up an old Thatcherite MP, Michael Fallon. His argument was ridiculous on a number of counts. Firstly, the Government line has been that these cuts were necessary because the books were worse than even they had thought they were. That is an obvious statement that any new Government is going to make to blame the previous Government. The trouble is that over the last few months the official data has been showing that actually things were BETTER than had previously been expected. To make that worse for the Government, the new Office of Budget Responsibility that they have set up as an independent assessor of how the Public Finances stand, has confirmed that view. The Government said it needed this £2bn of cuts, because they had found a further black hole, but the OBR had already said that actually the finances were £30 billion better than Alistair Darling had assumed in his calculations!
Worse, he repeatedly spoke about this not being sustainable because it amount to being a cost of half a million pounds per job. But, there was no such cost. It was n't a grant to the company, but a loan at a 3% rate of interest. Rather than it costing the Government money, they would have been receiving money from it! Rathger than there being a cost per job, there would have been income per job. That is before you consider the income that would be received in Tax from wages and profits, and so on. If this is the mathematical skills of the new Government let alone its grasp of Economics it does not speak very well for the prospects for the future! The decision seems perverse for another reason. The Government like Labour has spoken about the need to rebalance the economy to promote manufacturing, as well as to shift reliance in places like Sheffield, from the Public to the private Sector.
This is a company, which with assistance from the previous Government had done a deal with the giant US Westinghouse Corporation to produce equipment for the latest generation of nuclear power stations. Everyone knows that in thye coming years Governments in Europe, and around the world will be increasing their investment in such new nuclear power stations in order to meet their carbon reduction targets. This was an opportunity for an efficient British company to become a world leader in this technology, in a high value added sector, employing skilled labour. It is precisely the kind of industry Britain needs to develop to compete on the world market, and if British workers are to have any chance of avoiding a huge drop in living standards as they compete in the world market with low wage economies in Asia and elsewhere. For the Tories to withdraw this loan, to save just £80 million now, that they would have got back with interest seems inexplicable. But wait.
At first glance another factor also seems inexplicable, perverse, and inept. Sheffield is also the City in which Deputy Prime Minister, Nick Clegg is MP. Why would he shit in his own back yard? Remember another one of the Tories election promises - they promised to bring back fox hunting, one of the favourite pastimes of the Public School brigade whose members make up a large number of the Government benches. In Fox Hunting they have a ritual in which the young aristos, and aspiring nouveau riche kids, are inducted on their first hunt by being "blooded". That is they are daubed with the blood of the first fox killed. It basically means that they are no longer just along for the ride, but are as blood soaked as all the other chinless wonders. Clegg has been "blooded". By making this cut in his City, Clegg is now irrevocably tied to his Tory masters. He cannot claim, "it was all their fault Guv." The workers of Sheffield have been sacrificed on the high altar of Tory-Liberal ritual, in order that Clegg could be inducted into the club. That is no surprise, the workers are always the ones asked to pay the price for the rituals, dogmas, and adventures of the ruling class, from just an economic price to the price of their lives sacrificed on the battlefield when the ruling classes engage in some new pointless war.
Labour Leaddership hopefuls have begun to stand up verbally to the Tories assault. That is good. It would be more believable had they been standing up for workers over the last 13 years too. But, the fact they are standing up now is a start, and something that we can use. We need more than bold words from them, we need actions. After 1979, Michael Foot led massive marches in Cities around the country to oppose the Tories cuts, and attacks on workers. During that period Labour soared to over 50% in the opinion polls. We should demand these Labour leadership candidates do at least the same now. But, more than marches are needed. We need action committees in each area to resist the Tories plans. The government says, it wants to consult the people on what to cut. Let's take them at their word.
Local Labour parties and trades Councils, should immediately be organising local Conferences to discuss what we think should be cut. Here are some initial suggestions.
1. The Queen wants a 15% pay rise. The Tories say "We are all in this together." Okay then, instead of a pay rise, scrap the Civil List payments to the rich, royal scroungers, and let them pay their own way. Better still scrap the Monarchy altogether.
2. The Tories propose to cut Public Sector worekrs wages. Start at the top. All Public Officials, from MP's, to Judges, to the Military Top Brass to be only paid the average wage.
3. The Liberals argued in the election that they could pull in billions by collecting unpaid tax by the rich. Properly staff the tax offices so we can get in the estimated £120 billion in tax unpaid by the rich and big companies.
4. Scrap Trident. Again the Liberals said they would, so let's hold them to that.
5. Pull all the troops back from abroad not just from Afghanistan. Defence is one thing, but why do you need to be occupying other people's country for defence? Then we would need need all those billions of pounds worth of ships, aeroplanes, and so on either. We could sell them off to pay down the debt. The workers now employed building such useless things could be employed instead to build hospital equipment to treat the sick. And, if we really were concerned with defence that could be done by concentrating resources on developing an effective militia, with universal conscription into it.
6. Similarly, the Tories and liberals propose bringing in some democracy to the Police Force. But, the most democratic police force, would be one in which the whole population participated, in the same way that people participate in Jury Service. Everyone could be organised into local groups to police their own neighbourhoods, and each local group could employ its own specialists. That would save a fortune. If the rich and the bosses want a police force to protect their property, and to break strikes like they did against the Miners let them pay for it themselves, not have the cost covered by workers in their taxation to the bosses state.
7. The Tories say they are in favour of Co-ops to run Public Services. So am I provided those Co-ops have real control, provided workers in local communities can determine the level of service they want subject to national minimum requirements. But, in things like the NHS private companies rip them off big style inb payments for drugs, equipment and so on. If we are to have Co-ops to run Public Services, we should equally have Co-ops to run these private companies. There is £800 billion now in workers Pension Funds. Give us the basic right to demcoratically controlo those funds, so that we can take over the biggest, most important, strategic companies in the country and run them as Worker Owned Co-ops.
Now is the time to take the the fight to the Liberal-Tories. Now is the time for the labour leadership candidates to prove they are worth consideration.
Thursday, 17 June 2010
Whither The Eurozone?
Europe will almost certainly face a recession next year which might generate "social unrest" and the kind of populist nationalism seen in the 1930s. "That's the real danger of the present situation – that by imposing fiscal discipline at a time of insufficient demand and a weak banking system... you are actually... setting in motion a downward spiral," George Soros warned yesterday. His comments follow those in a similar vein quoted in my last blog from Nouriel Roubini.
Today The Independent has a front page article on the crisis in Spain, which is now taking over from Greece, as being emblematic of the problems facing the Eurozone. In fact, according to some comments on CNBC yesterday, traders have known for some time that Spain was getting frozen out of international credit markets. Its likely that the success of some of the recent debt issuances has been down to purchases by the ECB. A few weeks ago the ECB began to do what I said was the obvious solution for the Eurozone - it began to print money to buy up the Bonds issued by the Club Med governments. Unfortunately, under pressure from Monetary hawks, particularly in Germany, it agreed to sterilise this money creation, by withdrawing an equivalent amount of money from circulation elsewhere, by taking money out of commercial banks. Its suspected though that it has not fully sterilised the money it has printed. If as seems likely Spain needs to be bailed out such sterilisation will not be possible. That is good.
Over recent weeks the problems of Spain's financial sector have become apparent. The problem does not lie with its main banks. Unlike the banks of Northern Europe, Spanish regulations appear to have prevented the big Spanish banks from engaging in the purchases of the various derivatives of US sub-prime debt that threw banks like RBS into turmoil. The problem in Spain appears to lie with the "Cajas". These are small local banks, similar to a Building Society in Britain, and with a similar function. Given the huge bubble in Spanish property that blew up over the last 10-20 years, it is not surprising that these Cajas had a lot of dodgy debt on their books. In essence the problem was the same as that with the sub-prime debt in the US, except this debt was not so sub-prime to begin with. Many of those who borrowed money to build houses for themselves, or as a speculation, were good for the money, and given that demand for housing in Spain continued to rise during all that period, lending money for such ventures or purchases seemed a safe bet. But, the Credit Crunch, and subsequent recession brought that to an end. The assets that sat on these banks Balance Sheets, suddenly did not look so solid as houses. The holders of mortgages might well have lost their jobs, or seen their businesses fold, as the construction boom ended in bust, with massive unemployment in the construction sector. Even now the value of property for sale in Spain is probably two or three times what it should be, as I wrote recently. When that reality makes itself felt, the crisis of personal debt in Spain will be crushing. If the Spanish Government, and the EU want to prevent a repeat of the crisis of 2008, they have to prepare for that now, and take action now, because as Roubini said the other day, if another major credit crisis is allowed to erupt now, states do not have the bullets left to fire that they had 18 months ago. It would mean something approaching a Depression, it could mean the kind of resort to nationalism that Soros speaks of.
But, that by no means HAS to happen. Back in 2008 I wrote of the possibility of this kind of development.
"The problem that could arise given the scale is that the same causes of breakdown of trust and relations between Banks, which led to the Crunch could simply be transferred to the relations between States now acting as banks. We have already seen that to some extent. It was seen over the actions of the Dutch, Belgian and Luxembourg governments over Fortis. It was seen in the scramble for advantage when Ireland stepped in to guarantee all Bank deposits, threatening a stampede out of deposits in other EU countries. Most classically, it has been seen in the conflict between Britain and Iceland over deposits in Icelandic banks, and which was reminiscent of the 1970’s Cod War. It is certainly the case that some of these banks such as UBS of Switzerland have Balance Sheets bigger than the GDP of their host nations.
If this problem does begin to materialise – and it is clear even now that the huge sums put in by States will have to be increased – there are essentially only three solutions. The first is the Libertarian/Free Market solution, which I saw presented on TV the other day by Peter Schiff. It is essentially for the State to withdraw and allow the market to have its way. The argument is that the Banks that brought this on themselves by their actions will go bust – those that make this argument never consider that the biggest losers will not be the bankers who made the decisions, but will be the workers who lose their jobs, but who never had any say in the decisions that caused the crisis – and those Capitalists – in Banking or otherwise – who acted responsibly will do well and pick up the pieces. The Capitalist State will never adopt that position under current conditions. Were this at the beginning of a Long Wave downturn it might have no choice, and would prepare to promote fascism as it did in the 1930’s, to beat down the inevitable social eruption. For now, it has no need of so risky a strategy. Rather, it will either simply pump even more money into resolving the problem – a few years ago Ben Bernanke earned himself the nickname “Helicopter Ben”, because he argued that the fed could defeat deflation by simpling printing dollars and dropping them from helicopters – or else it will seek to encourage the trillions of dollars held in various Sovereign Wealth Funds to come in and re-capitalise the collapsing financial system."
Where We Are Going
That is what the State in the US has done, and continues to do. As with the crisis in the Gulf of Mexico now, the US State is able to intervene to bail-out a single state, or in this case a number of states by mobilising its central resources that dwarf those of the individual states. Other States around the globe from China to Brazil, have done a similar thing in order to overcome the economic crisis, and to promote economic growth. If there were a single EU State, it would have done the same thing. But, currently there is not. Therein lies the problem. Capital has a need, and a tendency to concentrate and to centralise. It does that at the level of the individual firm, but it also does it at the level of the market. This is historically, a hugely progressive development. It is what subsumes all previous divisions between human beings, based on the ridiculous concept that they have some innate attachment to the place where they just happened to be born, and that this attachment ties them ineluctably to others who were also born there.
But, this concentration and centralisation like everything else within Capitalism, is a contradictory process, because like the functioning of Capitalism itself it is driven by a largely blind process. It is not a process that is thought out, and planned in advance, but proceeds on the basis of the needs of Capital becoming expressed via its own operation, and the interaction of various Capitals. As Marx puts it in Capital, Competition, begets Monopoly, and Monopoly begets Competition. Competition between firms leads to some becoming bigger, more efficient, and others eventually going bust. The bigger more efficient firms pick up their market share, and become even bigger, even more efficient. Then they can simply buy up even those efficient firms that are simply small, and lack the Capital to resist their advances. But, the same process that leads to the development of huge firms, with huge amounts of fixed capital tied up in production, requires ever larger markets so that this large scale production can be sold. That is why new economies like the US rapidly passed from the stage of segregated markets, to a single large domestic market. Numerous attempts have been made to do the same thing in Europe. World Wars I and II could be seen in that vein. The attempt to establish the EU after WWII, has been an attempt by Capital to bring it about without the need for a single national Capital to exert hegemony within it.
As I have written in the past these attempts at establishing such larger economic units, are in fact part of that historic drive of Capital to create a single World Economy. Imperialism & War. But, that process is racked by contradiction. That contradiction arises from the anarchic nature of Capitalism, and from the continued separate interests of individual Capitals, fractions of Capital, and the refraction of that through the competing interests of political elites. That process is what is being played out in Europe today.
The reality is that the debt problems of both the UK, and of the Club Med economies could be dealt with, without massive economic dislocation, and the social unrest that will flow from it. Some economists, and even some bourgeois politicians are themselves setting out that process now that I outlined several weeks ago. The first thing that is required is the recognition of the need for a strong centralised EU State. History suggests that the best political framework for Capital Accumulation, and through which Capital transmits its ideas to this State is that of bourgeois democracy - such a State could have arisen under the jackboot of German Nazism, for instance, but Capital would ultimately have had to replace it with bourgeois democracy. That means that the facade of the European Parliament has to be replaced with a body with real democratic credentials, with real legislative power, and control over the Executive. It means that this State must be the sole, or prime issuer of State debt, that it must have prime control over fiscal policy and so on.
That would enable such a State to implement policies that not only prevented bankruptcy in individual states, but which utilised fiscal and monetary policy to promote growth within the EU. Such growth, together with a monetising of the debt, would resolve the problem over a few years without any major economic crisis. But, such a policy removes control over monetary, and fiscal policy largely from individual states and hands it to such a central state. At the moment, individual EU countries, because of those contradictions referred to above, are not prepared to make that step. Even so, countries like the UK that retain control over fiscal and monetary policy, and over their own currency, could follow such a policy. The fact, that they are not proposing to do so reflects the political character of the governing parties, which are largely tied to the more backward, more nationalistic sections of Capital. The Tories, at least in their public pronouncements, for example, have to give vent to those kinds of concerns from the middle class, and small business people that make up the backbone of its membership, and of its core voters. But, the State as opposed to the Government is tied directly to, and reflects the interests of, the dominant sections of Capital, not these backward elements. The interests of big Capital, of multinational Capital are not to plunge Britain, Europe, or the World Economy into an unnecessary downward spiral - even if due to the Long Wave boom such a downward spiral would be of relatively short duration. It is likely to resist with all its bureaucratic might any attempts to pursue policies that lead to such a result.
At the end of the 19th Century, Tories like Disraeli with his "Young England" movement, reflected the reactionary interests of the past, of the old landed aristocracy, whereas the Liberals who represented the industrial bourgeoisie reflected the progressive interests of the future, of the breakdown of all of that old, statist, monopolistic and paternalistic society. Today, there is no difference between the Tories and Liberals. Sections of both parties reflect the interests of Big capital, for a more pro-Euro future, but the coalition is hog-tied by the reliance of the dominant Tory Party on its reactionary base. That is one reason that both parties will have to restructure down the lines of that fracture. But, just as at the end of the 19th Century, workers had an interest in forming an alliance with Liberals against the Tories, with a struggle for a progressive future rather than a reactionary past, they had no reason to simply subsume their particular interests within those of the Liberal bourgeoisie. The same applies today. The working class has a definite interest in replacing the remnants of those old national borders with a single European state. It certainly has an interest in opposing anything that fosters those "nationalist" sentiments referred to by George Soros above. To the extent that the Liberal bourgeoisie pushes through such measures, workers should welcome it. But, our task as Marxists is to point out that it will have carried out such actions for ITS benefit not for ours. Capital will not be able to carry through such an agenda smoothly, if at all, just as it cannot even guarantee bourgeois democracy consistently, because the logic continually throws up a contradiction with its own immediate interests. Our task is to argue for our own Workers Europe.
Today The Independent has a front page article on the crisis in Spain, which is now taking over from Greece, as being emblematic of the problems facing the Eurozone. In fact, according to some comments on CNBC yesterday, traders have known for some time that Spain was getting frozen out of international credit markets. Its likely that the success of some of the recent debt issuances has been down to purchases by the ECB. A few weeks ago the ECB began to do what I said was the obvious solution for the Eurozone - it began to print money to buy up the Bonds issued by the Club Med governments. Unfortunately, under pressure from Monetary hawks, particularly in Germany, it agreed to sterilise this money creation, by withdrawing an equivalent amount of money from circulation elsewhere, by taking money out of commercial banks. Its suspected though that it has not fully sterilised the money it has printed. If as seems likely Spain needs to be bailed out such sterilisation will not be possible. That is good.
Over recent weeks the problems of Spain's financial sector have become apparent. The problem does not lie with its main banks. Unlike the banks of Northern Europe, Spanish regulations appear to have prevented the big Spanish banks from engaging in the purchases of the various derivatives of US sub-prime debt that threw banks like RBS into turmoil. The problem in Spain appears to lie with the "Cajas". These are small local banks, similar to a Building Society in Britain, and with a similar function. Given the huge bubble in Spanish property that blew up over the last 10-20 years, it is not surprising that these Cajas had a lot of dodgy debt on their books. In essence the problem was the same as that with the sub-prime debt in the US, except this debt was not so sub-prime to begin with. Many of those who borrowed money to build houses for themselves, or as a speculation, were good for the money, and given that demand for housing in Spain continued to rise during all that period, lending money for such ventures or purchases seemed a safe bet. But, the Credit Crunch, and subsequent recession brought that to an end. The assets that sat on these banks Balance Sheets, suddenly did not look so solid as houses. The holders of mortgages might well have lost their jobs, or seen their businesses fold, as the construction boom ended in bust, with massive unemployment in the construction sector. Even now the value of property for sale in Spain is probably two or three times what it should be, as I wrote recently. When that reality makes itself felt, the crisis of personal debt in Spain will be crushing. If the Spanish Government, and the EU want to prevent a repeat of the crisis of 2008, they have to prepare for that now, and take action now, because as Roubini said the other day, if another major credit crisis is allowed to erupt now, states do not have the bullets left to fire that they had 18 months ago. It would mean something approaching a Depression, it could mean the kind of resort to nationalism that Soros speaks of.
But, that by no means HAS to happen. Back in 2008 I wrote of the possibility of this kind of development.
"The problem that could arise given the scale is that the same causes of breakdown of trust and relations between Banks, which led to the Crunch could simply be transferred to the relations between States now acting as banks. We have already seen that to some extent. It was seen over the actions of the Dutch, Belgian and Luxembourg governments over Fortis. It was seen in the scramble for advantage when Ireland stepped in to guarantee all Bank deposits, threatening a stampede out of deposits in other EU countries. Most classically, it has been seen in the conflict between Britain and Iceland over deposits in Icelandic banks, and which was reminiscent of the 1970’s Cod War. It is certainly the case that some of these banks such as UBS of Switzerland have Balance Sheets bigger than the GDP of their host nations.
If this problem does begin to materialise – and it is clear even now that the huge sums put in by States will have to be increased – there are essentially only three solutions. The first is the Libertarian/Free Market solution, which I saw presented on TV the other day by Peter Schiff. It is essentially for the State to withdraw and allow the market to have its way. The argument is that the Banks that brought this on themselves by their actions will go bust – those that make this argument never consider that the biggest losers will not be the bankers who made the decisions, but will be the workers who lose their jobs, but who never had any say in the decisions that caused the crisis – and those Capitalists – in Banking or otherwise – who acted responsibly will do well and pick up the pieces. The Capitalist State will never adopt that position under current conditions. Were this at the beginning of a Long Wave downturn it might have no choice, and would prepare to promote fascism as it did in the 1930’s, to beat down the inevitable social eruption. For now, it has no need of so risky a strategy. Rather, it will either simply pump even more money into resolving the problem – a few years ago Ben Bernanke earned himself the nickname “Helicopter Ben”, because he argued that the fed could defeat deflation by simpling printing dollars and dropping them from helicopters – or else it will seek to encourage the trillions of dollars held in various Sovereign Wealth Funds to come in and re-capitalise the collapsing financial system."
Where We Are Going
That is what the State in the US has done, and continues to do. As with the crisis in the Gulf of Mexico now, the US State is able to intervene to bail-out a single state, or in this case a number of states by mobilising its central resources that dwarf those of the individual states. Other States around the globe from China to Brazil, have done a similar thing in order to overcome the economic crisis, and to promote economic growth. If there were a single EU State, it would have done the same thing. But, currently there is not. Therein lies the problem. Capital has a need, and a tendency to concentrate and to centralise. It does that at the level of the individual firm, but it also does it at the level of the market. This is historically, a hugely progressive development. It is what subsumes all previous divisions between human beings, based on the ridiculous concept that they have some innate attachment to the place where they just happened to be born, and that this attachment ties them ineluctably to others who were also born there.
But, this concentration and centralisation like everything else within Capitalism, is a contradictory process, because like the functioning of Capitalism itself it is driven by a largely blind process. It is not a process that is thought out, and planned in advance, but proceeds on the basis of the needs of Capital becoming expressed via its own operation, and the interaction of various Capitals. As Marx puts it in Capital, Competition, begets Monopoly, and Monopoly begets Competition. Competition between firms leads to some becoming bigger, more efficient, and others eventually going bust. The bigger more efficient firms pick up their market share, and become even bigger, even more efficient. Then they can simply buy up even those efficient firms that are simply small, and lack the Capital to resist their advances. But, the same process that leads to the development of huge firms, with huge amounts of fixed capital tied up in production, requires ever larger markets so that this large scale production can be sold. That is why new economies like the US rapidly passed from the stage of segregated markets, to a single large domestic market. Numerous attempts have been made to do the same thing in Europe. World Wars I and II could be seen in that vein. The attempt to establish the EU after WWII, has been an attempt by Capital to bring it about without the need for a single national Capital to exert hegemony within it.
As I have written in the past these attempts at establishing such larger economic units, are in fact part of that historic drive of Capital to create a single World Economy. Imperialism & War. But, that process is racked by contradiction. That contradiction arises from the anarchic nature of Capitalism, and from the continued separate interests of individual Capitals, fractions of Capital, and the refraction of that through the competing interests of political elites. That process is what is being played out in Europe today.
The reality is that the debt problems of both the UK, and of the Club Med economies could be dealt with, without massive economic dislocation, and the social unrest that will flow from it. Some economists, and even some bourgeois politicians are themselves setting out that process now that I outlined several weeks ago. The first thing that is required is the recognition of the need for a strong centralised EU State. History suggests that the best political framework for Capital Accumulation, and through which Capital transmits its ideas to this State is that of bourgeois democracy - such a State could have arisen under the jackboot of German Nazism, for instance, but Capital would ultimately have had to replace it with bourgeois democracy. That means that the facade of the European Parliament has to be replaced with a body with real democratic credentials, with real legislative power, and control over the Executive. It means that this State must be the sole, or prime issuer of State debt, that it must have prime control over fiscal policy and so on.
That would enable such a State to implement policies that not only prevented bankruptcy in individual states, but which utilised fiscal and monetary policy to promote growth within the EU. Such growth, together with a monetising of the debt, would resolve the problem over a few years without any major economic crisis. But, such a policy removes control over monetary, and fiscal policy largely from individual states and hands it to such a central state. At the moment, individual EU countries, because of those contradictions referred to above, are not prepared to make that step. Even so, countries like the UK that retain control over fiscal and monetary policy, and over their own currency, could follow such a policy. The fact, that they are not proposing to do so reflects the political character of the governing parties, which are largely tied to the more backward, more nationalistic sections of Capital. The Tories, at least in their public pronouncements, for example, have to give vent to those kinds of concerns from the middle class, and small business people that make up the backbone of its membership, and of its core voters. But, the State as opposed to the Government is tied directly to, and reflects the interests of, the dominant sections of Capital, not these backward elements. The interests of big Capital, of multinational Capital are not to plunge Britain, Europe, or the World Economy into an unnecessary downward spiral - even if due to the Long Wave boom such a downward spiral would be of relatively short duration. It is likely to resist with all its bureaucratic might any attempts to pursue policies that lead to such a result.
At the end of the 19th Century, Tories like Disraeli with his "Young England" movement, reflected the reactionary interests of the past, of the old landed aristocracy, whereas the Liberals who represented the industrial bourgeoisie reflected the progressive interests of the future, of the breakdown of all of that old, statist, monopolistic and paternalistic society. Today, there is no difference between the Tories and Liberals. Sections of both parties reflect the interests of Big capital, for a more pro-Euro future, but the coalition is hog-tied by the reliance of the dominant Tory Party on its reactionary base. That is one reason that both parties will have to restructure down the lines of that fracture. But, just as at the end of the 19th Century, workers had an interest in forming an alliance with Liberals against the Tories, with a struggle for a progressive future rather than a reactionary past, they had no reason to simply subsume their particular interests within those of the Liberal bourgeoisie. The same applies today. The working class has a definite interest in replacing the remnants of those old national borders with a single European state. It certainly has an interest in opposing anything that fosters those "nationalist" sentiments referred to by George Soros above. To the extent that the Liberal bourgeoisie pushes through such measures, workers should welcome it. But, our task as Marxists is to point out that it will have carried out such actions for ITS benefit not for ours. Capital will not be able to carry through such an agenda smoothly, if at all, just as it cannot even guarantee bourgeois democracy consistently, because the logic continually throws up a contradiction with its own immediate interests. Our task is to argue for our own Workers Europe.
Tuesday, 15 June 2010
Roubini - Withdrawing Stimulus Would Be Very Dangerous
"The downside risk to growth is significant so taking stimulus away now is a huge mistake," Nouriel Roubini told CNBC today.
There will be "massive deleveraging" of the consumer and of the private sector in the euro zone and in the UK, according to Roubini.
See:, here .
Roubini's comments are in stark contrast to the macho cutting agenda being pursued by Governments around Europe like the Liberal-Tory Government in Britain. Of course, as I've written in the past whether the Capitalist State actually allos Governments to carry through such policies which are not in the current interests of Capital, is another matter. In the past even, Governments like that of Margaret Thatcher and Ronald Reagan, despite talking tough, did not actually reduce the size of the Capitalist State, even during a period when the issues were more stark than today. More likely is that easy targets will be picked off. Some attacks on Welfare payments, and attacks on Public Sector pay and pensions.
What much of the talk is about now is really the kind of trick that conjuuror's pull-off. It is to make the audience look the other way. So long as workers, particularly Public Sector workers, are looking at the possibility of massive job cuts, they will not see the real threat coming towards them - inflation. Last year Public Sector pensions did not go up, but RPI inflation is currently standing at over 5%. That already means a 5% cut in real terms. Workers will more likely accept a pay freeze if they think they have dodged the bullet of losing their job, or if they think that by doing so they might dodge that bullet. That is a significant factor in reducing the deficit by throwing the cost on to the backs of workers given the size of the Public Sector wage bill. Freezing workers wages when inflation is running at over 5% represents a significant wage cut. That is even if we don't believe that 5% significantly understates the inflation that many workers actually face.
Worse, in this months budget it looks certain that the Government will push up VAT, perhaps to 20%. That will give another powerful twist to the inflationary spiral at a time when the lax money supply means that there is plenty of money in circulation to monetise such increases. And as I have pointed out in the past, another big shunt to inflation is heading to us down the road. The Chinese Stalinists are pushing through and encouraging huge pay rises for Chinese workers - rises of between 30-50%. This is part of a move to shift the balance of the economy towards the domestic market, and also covers some increases in the prices of imported wage goods, particularly food. But, in addition the rapidly rising import prices that China is facing gives a big incentive to raise the value of the RMB as against the dollar. That would reduce Chinese Import prices significantly reducing manufacturing costs, and also reducing the costs of importing food etc. for its massively increasing workforce. But, it would mean that all of those very cheap Chinese manufactured goods that we have become addicted to will also rise in price significantly.
I have been warning for some time that the real means for the State to pay off the debt would be through a big dose of inflation. Everything I see at the moment tells me that remains the case, whatever the headlines about cuts.
There will be "massive deleveraging" of the consumer and of the private sector in the euro zone and in the UK, according to Roubini.
See:, here .
Roubini's comments are in stark contrast to the macho cutting agenda being pursued by Governments around Europe like the Liberal-Tory Government in Britain. Of course, as I've written in the past whether the Capitalist State actually allos Governments to carry through such policies which are not in the current interests of Capital, is another matter. In the past even, Governments like that of Margaret Thatcher and Ronald Reagan, despite talking tough, did not actually reduce the size of the Capitalist State, even during a period when the issues were more stark than today. More likely is that easy targets will be picked off. Some attacks on Welfare payments, and attacks on Public Sector pay and pensions.
What much of the talk is about now is really the kind of trick that conjuuror's pull-off. It is to make the audience look the other way. So long as workers, particularly Public Sector workers, are looking at the possibility of massive job cuts, they will not see the real threat coming towards them - inflation. Last year Public Sector pensions did not go up, but RPI inflation is currently standing at over 5%. That already means a 5% cut in real terms. Workers will more likely accept a pay freeze if they think they have dodged the bullet of losing their job, or if they think that by doing so they might dodge that bullet. That is a significant factor in reducing the deficit by throwing the cost on to the backs of workers given the size of the Public Sector wage bill. Freezing workers wages when inflation is running at over 5% represents a significant wage cut. That is even if we don't believe that 5% significantly understates the inflation that many workers actually face.
Worse, in this months budget it looks certain that the Government will push up VAT, perhaps to 20%. That will give another powerful twist to the inflationary spiral at a time when the lax money supply means that there is plenty of money in circulation to monetise such increases. And as I have pointed out in the past, another big shunt to inflation is heading to us down the road. The Chinese Stalinists are pushing through and encouraging huge pay rises for Chinese workers - rises of between 30-50%. This is part of a move to shift the balance of the economy towards the domestic market, and also covers some increases in the prices of imported wage goods, particularly food. But, in addition the rapidly rising import prices that China is facing gives a big incentive to raise the value of the RMB as against the dollar. That would reduce Chinese Import prices significantly reducing manufacturing costs, and also reducing the costs of importing food etc. for its massively increasing workforce. But, it would mean that all of those very cheap Chinese manufactured goods that we have become addicted to will also rise in price significantly.
I have been warning for some time that the real means for the State to pay off the debt would be through a big dose of inflation. Everything I see at the moment tells me that remains the case, whatever the headlines about cuts.
Monday, 14 June 2010
Northern Soul Classics - Friday Night - Johnny Taylor
I associate this tune with the dinnertime disco we used to organise in the Concourse Building of Cauldon College in Stoke around 1971. Johhny Taylor is better known for his classic "Who's Making Love", but this is a better record to my mind, and certainly a better Northern dancer. Johnny was, in fact, quite a profusive artist with quite a lot of succesful records in the US R&B charts. He was a stalwart of the Stax label which benefitted from the musical talents of Isaac Hayes and David Port in prouding some classic music, along with others like Booker T Jones, who wrote "Green Onions" when he was just 18, and whose band along with the other session musicians like Steve Cropper, Donald 'Duck' Dunn, and others comprised a whole series of bands going under the names of the MG's, the Markeys and so on.
Politics Of The Ghetto - Part 8
Part 8
Conclusion
“The problem is how we are to conceptualise these pre-figurations of socialism so that we can locate them. Purdy and Prior conceptualise them in terms of discretely distinct, determined socialist forms which co-exist in articulation with discretely distinct, determined capitalist forms. This means that they can only conceive of the struggle to build socialism in terms of an extension of already existing socialist forms. It is this which leads them towards a reformist gradualism, not their down-grading of the importance of a single revolutionary moment in which state power is seized.”
(ibid p. 112)
That is correct, but in this final part I want to examine where I think Elson's elaboration of this process is inadequate. For example, she writes,
“This approach means that we do not expect Capitalist social relations, Capitalist forms, to be completely, unmitigatedly, absolutely Capitalist. Rather we examine them for their potentially socialist aspects, socialist potential which is presently subsumed under, dominated by, their Capitalist aspects. The socialist potential does not therefore stand alone, as discretely distinct islands of socialism; its more like the flowers of a plant, still part of that plant, yet representing the potential for a different plant.”
(ibid p. 113)
True as far as it goes, but the flowers have to form seed heads, and before a new plant can be created, the seeds have to separate themselves from the old plant. Unless they do that, the seeds themselves degenerate, and die on the old plant without having fulfilled their potential. Elson, here I think, like most Marxists is afraid of the accusation of “Utopianism” that has wrongly been tagged to those proposing the establishment of such “Islands of Socialism”. The USSR was such an island after 1917. The argument was not should such an island have been established, but how could it be used to provide a practical example for workers, how quickly could such a forward base be used to help develop other such “islands”, how effectively could these “islands” be linked together consciously, and so on.
Of course, it is necessary to engage in struggles on bourgeois terrain. It is necessary to struggle for, and defend bourgeois democratic freedoms without which the workers struggle is at least made more difficult if not impossible. But, in conducting that struggle Marxists do not limit themselves to containing the workers struggle within the realm of bourgeois democracy, because it is a means to an end not the end itself. The Marxists represent the needs of tomorrow in the movement of today. Trotsky's “Action Programme For France” is a good example of that. He argues for defending those bourgeois freedoms against their removal by the fascists, but in doing so makes no concessions to bourgeois democracy itself. The means by which he proposes to organise such defence are not via bourgeois democracy, but via proletarian struggle, proletarian forms. He writes,
“15. The Struggle for the Workers’ and Peasants’ Commune
The alliance of the peasantry and the workers will be achieved only if the working class shows its strength, its decided initiative and its ability to carry out this program. This is why we must, above all, create conditions for unity of action.
The workers’ alliance of parties and trade unions must be organized, uniting all the forces of the laboring people without exception.
A national committee of the workers’ alliance, regional committees, local committees, should be organized. Creation of shop committees elected by the workers.
The impulse given by these workers’ alliance committees, their authority among the masses, will inspire the laboring people of the countryside to organize themselves into peasant committees.
In the struggle against fascism, reaction and war, the proletariat accepts the aid of petty-bourgeois groupings (pacifists, League for the Rights of Man, the Common Front, etc.), but such alliances can be only of secondary importance. Above all, the task is to secure the united action of the working class itself in the factories and the workers’ neighborhoods of industrial centers. The alliance of the important workers’ organizations (Communist Party, Socialist Party, CGT, CGTU [20], Communist League) will have no revolutionary value unless it is oriented toward the creation of:
1. Committees of struggle representing the mass itself (embryo soviets);
2. Workers’ militia, always united in action, even though organized by various parties and organizations.
To reinforce the struggle of both the workers and peasants, the workers’ committees should establish close collaboration with the peasant committees. Constituted as organs of popular defense against fascism, these workers’ alliance committees and these peasant committees must become, during the course of the struggle, organisms directly elected by the masses, organs of power of the workers and peasants. On this basis the proletarian power will be erected in opposition to the capitalist power, and the Workers’ and Peasants’ Commune will triumph.”
We are, of course, nowhere near such a situation in Britain, but the point is that this METHOD can be applied. In demanding a bourgeois democracy that is consistent, for example, building on the outrage over the expenses scandal, we can argue the need for the books to be opened not to those same elements of the establishment from which the political elites are drawn, but via properly constituted committees of Workers Inspection, just as ordinary workers are drawn at random to form Trial Juries. At a time when we are being told we are “All in this together”, the Queen has just asked for a pay rise of 15%. Let us have a Workers Committee to look into that, and the finances of the Monarchy. If the State will not agree to such Committees, let us argue for establishing our own through the Labour Party and Trade Unions. In so doing we can make the point to ordinary workers that bourgeois democracy is a fraud, that if they want real democracy they have to create their own democratic forums, their own committees of Inspection to get at the truth. We need such committees to look at the way money is spent by Local Councils and so on too.
The Tories have said they want to involve the whole population in discussing what to cut. Of course, that will be a fraud too, but in showing why it is a fraud, we should not be content simply to be be Oppositional, but to be transformational. We should mobilise through local Labour parties and Trades Councils the very debate the Tories say they want. Let us organise in each area, such discussions on every estate. Let us suggest some of the things that could be cut, such as Trident, the Monarchy, the House of Lords, reducing the wages of all functionaries down to the average wage, look at how the Public sector is ripped off by private contractors and so on.
Of course, where Councils are selling off Housing we should oppose the sale to private landlords. But, even before then it is necessary to be developing Tenants and Residents Associations so as to be not just oppositional bodies, whose only role is to respond defensively when the Council does something we don't want. Instead they should be developed into real Management bodies demanding control over all aspects of the estate, with powers to open the Councils books. Again, so long as ownership, and therefore, control, rests with the Council any such gains will be temporary and fragile, if achieved at all. That is why it is necessary to use the experience gained to show why the workers themselves will only be able to truly exercise that control if they become the owners themselves, by establishing their own Co-operative, but not a limited Co-op like that proposed by the Tories, but a Co-op tied into other such Co-ops in the area, tied to the Co-op Bank to ensure Finance for expansion, tied to a Workers Construction Co-op, to organise renovation and renewal and so on. In other words not an island of socialism, but a transformational, expansionary process.
Of course, it is necessary for workers to defend their wages and conditions, but for the reasons that Marx outlined in 'Wages, Price and Profit', there are severe limits to the extent that this can be done. The job of Marxists is not to simply act as oppositionists encouraging workers over and over again to simply respond with more militancy, but is to explain why that is, as Marx did, not by simply writing the occasional article about it, but through day to day, explanation in practice on the shop floor. Yes, as part of that process we can argue again for opening the books, but what when the books demonstrate precisely that point? What when the books show the boss actually cannot pay? Should we then settle for that other form of Economism, the replacement of one boss by another, the private Capitalist by the State capitalist? Or, having shown within the workers communities that a real alternative democracy, a real control is possible where Workers take ownership directly themselves, should we not argue, precisely that the real solution is for the workers to take over the means of production themselves by the establishment of a Workers Co-op, again not as an 'island of socialism', but again as part of a wider transformational movement.
Elson continues,
“Very schematically, the political problem is how to free the specific, conscious, collective aspects of a capitalist social relation from domination by the abstract elements. Thompson puts it rather more eloquently: it is to
'pass from process-determined 'necessity' to the 'freedom' of rational intentionality.' (Thompson, 1978, p.156)
As a starting point we need to locate the points at which the process of material abstraction is incomplete, the points at which 'objective' market forces break down and a 'subjective' element enters. This is the critical terrain of class struggle.”
(ibid p.113)
But, is this true? I think that Elson here simply replaces Purdy and prior's Economism with a fetish for Plannism. It is to identify what is crucial in creating the future socialist society not as being that workers actually do become the new ruling class because they become the owners of the means of production, but that the market is replaced by planning. But, of course, just as the State can replace private Capitalist ownership of the means of production without that in any way being socialist or even a movement towards socialism – in Nazi Germany it meant the opposite - so too can the market be replaced by even extensive planning without that in any sense implying a move towards socialism either. Many people would argue, for example, that the involvement of workers on the German Works Councils has not meant a move towards Socialism, but only towards a Corporatism, in which the workers economic interests are tied to a continuing Capitalist ownership, and its horizons limited by it.
As Marx pointed out if you establish Co-operative forms of production i.e. workers ownership here and now, then distribution changes too, fundamentally. Along with those changes in distribution go changes in social relations, in power relations. What is utopian is to believe that power relations, the extent to which the workers can exercise control, can change without first fundamentally changing those basic productive relations.
Even when Elson recognises the importance of ownership she doesn't seem to draw the appropriate conclusions. She writes,
“So long as control of the means of production and of the money supply is abstracted from the working class, there will always be severe limits to the power of Trade Unions to increase or defend the standard of living of the working class. For any increase in money wages can always be cancelled out by a rise in prices or unemployment. It is for this reason that it is quite futile to expect a wages offensive to preserve or improve the standard of living of the working class in a period of recession. When the working class standard of living rises, this is not simply the result of good trade union organisation and wage militancy. It also depends on objective factors, in particular the rate of accumulation. It should be the job of Marxists to explain these objective limits, and to insist that they are taken into account; not to encourage the illusion that the main limit to increasing the standard of living of the working class is state power expressed in the form of incomes policy...
The criterion of success of a wages strategy for socialists, should not be the size of the money wage increases. It should be the extent to which the scope for the subjective element in wage determination has been widened; the extent to which the social relations through which wages are determined have been transformed to strengthen their conscious and collective (not corporatist) aspects; the extent to which the wage bargaining process has been democratised; the extent to which the prerogatives exercised by the representatives of Capital have been eroded; and the extent to which the standard of living of the working class is liberated from dependence on the the wage.”
(ibid p. 114)
As an example of this she writes,
“The production of these 'ideal estimates' (internal accounting prices, the weights ascribed to different kinds of labour-time in job evaluation studies, etc.) is a material indication that it is possible to establish the social comparability of different concrete labours through conscious, collective action, rather than through blind market forces. The element of conscious decision in these estimates is pre-figurative of socialism, but it remains hidden, subsumed in accounting conventions or techniques of management 'science'. They remain instruments of capital's domination so long as the working class is excluded from the conscious, collective action in producing them; so long as they are 'ideal estimates' of Capital rather than labour, couched in terms of an 'objective' calculus, rather than a democratic decision.”
(ibid p.115)
But, there are several things wrong with this. Firstly, as she states these problems remain so long as the means of production remain in Capitalist hands. Of course, democratising the wage bargaining process, in a way that happened to some extent in the rise of militancy and the shop stewards movement in the 1960's, would be a gain. Indeed, I would argue that one of the reasons for advocating the establishment of Factory Committees, that organise workers across all unions, and those that do not even belong to a Trade Union, is precisely to break down inter-union rivalry, to weaken the power of officialdom (that frequently utilises such rivalry in its own interests), and to encourage such a democratic transformation on the shop floor across a range of issues. But, as the history of that shop stewards movement demonstrated – in fact even as the experience of the Combine Committees demonstrated – it is precisely that continuance of ownership in Capitalist hands that ensures that as soon as a period of weakness ensues, Capital as well as the union bureaucracy has ample means by which to incorporate such structures, or even to simply abolish them. A whole layer of Trade Union rank and file militants from that period were simply transformed into another aspect of bureaucracy sitting on the workers backs.
Secondly, there has been plenty of experience with job evaluation, including experience where workplace representatives were involved in the process. Iwas involved in such a process myself back in 2000/1. But, there are two clear problems. Firstly, the process can only develop relativities not absolute levels. It remained an Economistic struggle, and more so in so far as management argued that there was just one pot of money to be divided up. Secondly, this approach really represents that same Plannism referred to earlier. Local Government for a long time had some semblance of such a Pay Structure, yet the reality was that the market reality forced its way through, and rather like the experience in the Stalinist States, forced its way through in ways which ensured further bureaucratism and deformity. For example, when shortages of particular types of worker arose – for example Environmental Health Officers – because the wages were not high enough, exceptions had to be made, bureaucratic manoeuvres put in place, to offer, non-money wages, expense allowances and so on. In fact, a whole series of “Recruitment and Retention” packages had to be established to deal with such shortages. The problems of such an approach in a “Socialist” economy could be even more severe. No matter how democratic a decision is to set the wage for a particular form of concrete labour at a particular level, what do you do when the market breaks through and a shortage arises? Direction of Labour anyone?
When she writes,
“To summarise: I am suggesting that we approach class struggle by locating the points in social relations at which abstract forms of establishing social comparability break down. The aim is then to contest capital's prerogative to establish the forms of establishing comparability, while at the same time taking action to loosen the limits placed on this by the persistence of abstract forms of establishing social comparability.”
(ibid p.115)
this is both reformist and an application of that utopian plannism. Rather than dialectics it reminds me of Marx's criticism of Proudhon. Marx said that Proudhon's understanding of dialectics was that everything was made up of “good” and “bad” aspects. Proudhon's concept was to take the good and reject the bad. But, as Marx pointed out the concrete reality entailed both aspects – even to the extent the terms “good” and “bad” had meaning. It wasn't possible to retain the existing concrete reality without both aspects. Only a new reality could encompass the “good” without the “bad”. It cannot be simply transformed. Yet that appears to be precisely what Elson envisages. Secondly, as Marx points out, “Right” can never be higher than the Economic level of society. The market continues to exist for specific reasons. The kind of market based decisions over wages do not persist simply because of the existence of Capitalist Power, but because development has not yet proceeded to a degree to which the market can be replaced effectively with the kinds of non-market mechanisms that Elson refers to. In fact, here too, the establishment of worker owned property is a precondition for developing such non-market mechanisms.
That reformism is expressed clearly in her comment,
“The metaphor we need is not that of seizing state power, but of subverting state power. The struggle to transform the state can begin now.”
This is fundamentally wrong. It continues to stand the relation between state and civil society on its head. It assumes wrongly that the existing state can be simply “transformed” rather than that a completely new, completely different type of state has to be created in its place. It continues to see the process of transformation of society as springing from that well-head, whereas as Marx says in the Critique of the Gotha Programme, the state is a reflection of society. The transformation that has to occur is a transformation of civil society, of productive and social relations. But, of course, this process too is not a purely evolutionary process. Evolution itself does not proceed by just slow gradual changes, but is punctuated by the termination of such changes with sharp revolutionary leaps. That is the metaphor that we really need. A process of real transformation within civil society as workers property is built up, and upon it, workers economic and social power. Corresponding to it, the development of new democratic forms within the workplace and the community, forms which mirror the workers own self-activity through a direct democracy that combines both legislative and executive functions.
This is the process that Marx refers to in the Critique when he speaks of the working class being made fit to rule. In “State and Revolution” Lenin completely misunderstood and underestimated this process. He believed that after the revolution the process of running the State would be a simple matter, because Capitalism had reduced it to effectively a straightforward process of book-keeping. He was wrong, across the piece he had to bring back the old Tsarist officials to run the State supervised by a vast bureaucracy of Commisars. The same was true in industry where workers were neither trained nor anxious to exercise control over the means of production, and where the old bosses had to be brought back, again supervised by, and eventually merging with a vast Party, and then State bureaucracy. It is also what Gramsci refers to in the quote that Elson gives, where he states,
“What is needed for the revolution are men of sober mind, men who don't cause an absence of bread in bakeries, who make trains run, who provide the factories with raw materials and know how to turn the produce of the country into industrial produce, who ensure the safety and freedom of the people against attacks of criminals, who enable to network of collective services to function and who do not reduce the people to despair and to a horrible carnage. Verbal enthusiasm and reckless phraseology make on laugh (or cry) when a single one of these problems has to be resolved even in a village of a hundred inhabitants.”
(Gramsci, Political Writings 1910-20)
Conclusion
“The problem is how we are to conceptualise these pre-figurations of socialism so that we can locate them. Purdy and Prior conceptualise them in terms of discretely distinct, determined socialist forms which co-exist in articulation with discretely distinct, determined capitalist forms. This means that they can only conceive of the struggle to build socialism in terms of an extension of already existing socialist forms. It is this which leads them towards a reformist gradualism, not their down-grading of the importance of a single revolutionary moment in which state power is seized.”
(ibid p. 112)
That is correct, but in this final part I want to examine where I think Elson's elaboration of this process is inadequate. For example, she writes,
“This approach means that we do not expect Capitalist social relations, Capitalist forms, to be completely, unmitigatedly, absolutely Capitalist. Rather we examine them for their potentially socialist aspects, socialist potential which is presently subsumed under, dominated by, their Capitalist aspects. The socialist potential does not therefore stand alone, as discretely distinct islands of socialism; its more like the flowers of a plant, still part of that plant, yet representing the potential for a different plant.”
(ibid p. 113)
True as far as it goes, but the flowers have to form seed heads, and before a new plant can be created, the seeds have to separate themselves from the old plant. Unless they do that, the seeds themselves degenerate, and die on the old plant without having fulfilled their potential. Elson, here I think, like most Marxists is afraid of the accusation of “Utopianism” that has wrongly been tagged to those proposing the establishment of such “Islands of Socialism”. The USSR was such an island after 1917. The argument was not should such an island have been established, but how could it be used to provide a practical example for workers, how quickly could such a forward base be used to help develop other such “islands”, how effectively could these “islands” be linked together consciously, and so on.
Of course, it is necessary to engage in struggles on bourgeois terrain. It is necessary to struggle for, and defend bourgeois democratic freedoms without which the workers struggle is at least made more difficult if not impossible. But, in conducting that struggle Marxists do not limit themselves to containing the workers struggle within the realm of bourgeois democracy, because it is a means to an end not the end itself. The Marxists represent the needs of tomorrow in the movement of today. Trotsky's “Action Programme For France” is a good example of that. He argues for defending those bourgeois freedoms against their removal by the fascists, but in doing so makes no concessions to bourgeois democracy itself. The means by which he proposes to organise such defence are not via bourgeois democracy, but via proletarian struggle, proletarian forms. He writes,
“15. The Struggle for the Workers’ and Peasants’ Commune
The alliance of the peasantry and the workers will be achieved only if the working class shows its strength, its decided initiative and its ability to carry out this program. This is why we must, above all, create conditions for unity of action.
The workers’ alliance of parties and trade unions must be organized, uniting all the forces of the laboring people without exception.
A national committee of the workers’ alliance, regional committees, local committees, should be organized. Creation of shop committees elected by the workers.
The impulse given by these workers’ alliance committees, their authority among the masses, will inspire the laboring people of the countryside to organize themselves into peasant committees.
In the struggle against fascism, reaction and war, the proletariat accepts the aid of petty-bourgeois groupings (pacifists, League for the Rights of Man, the Common Front, etc.), but such alliances can be only of secondary importance. Above all, the task is to secure the united action of the working class itself in the factories and the workers’ neighborhoods of industrial centers. The alliance of the important workers’ organizations (Communist Party, Socialist Party, CGT, CGTU [20], Communist League) will have no revolutionary value unless it is oriented toward the creation of:
1. Committees of struggle representing the mass itself (embryo soviets);
2. Workers’ militia, always united in action, even though organized by various parties and organizations.
To reinforce the struggle of both the workers and peasants, the workers’ committees should establish close collaboration with the peasant committees. Constituted as organs of popular defense against fascism, these workers’ alliance committees and these peasant committees must become, during the course of the struggle, organisms directly elected by the masses, organs of power of the workers and peasants. On this basis the proletarian power will be erected in opposition to the capitalist power, and the Workers’ and Peasants’ Commune will triumph.”
We are, of course, nowhere near such a situation in Britain, but the point is that this METHOD can be applied. In demanding a bourgeois democracy that is consistent, for example, building on the outrage over the expenses scandal, we can argue the need for the books to be opened not to those same elements of the establishment from which the political elites are drawn, but via properly constituted committees of Workers Inspection, just as ordinary workers are drawn at random to form Trial Juries. At a time when we are being told we are “All in this together”, the Queen has just asked for a pay rise of 15%. Let us have a Workers Committee to look into that, and the finances of the Monarchy. If the State will not agree to such Committees, let us argue for establishing our own through the Labour Party and Trade Unions. In so doing we can make the point to ordinary workers that bourgeois democracy is a fraud, that if they want real democracy they have to create their own democratic forums, their own committees of Inspection to get at the truth. We need such committees to look at the way money is spent by Local Councils and so on too.
The Tories have said they want to involve the whole population in discussing what to cut. Of course, that will be a fraud too, but in showing why it is a fraud, we should not be content simply to be be Oppositional, but to be transformational. We should mobilise through local Labour parties and Trades Councils the very debate the Tories say they want. Let us organise in each area, such discussions on every estate. Let us suggest some of the things that could be cut, such as Trident, the Monarchy, the House of Lords, reducing the wages of all functionaries down to the average wage, look at how the Public sector is ripped off by private contractors and so on.
Of course, where Councils are selling off Housing we should oppose the sale to private landlords. But, even before then it is necessary to be developing Tenants and Residents Associations so as to be not just oppositional bodies, whose only role is to respond defensively when the Council does something we don't want. Instead they should be developed into real Management bodies demanding control over all aspects of the estate, with powers to open the Councils books. Again, so long as ownership, and therefore, control, rests with the Council any such gains will be temporary and fragile, if achieved at all. That is why it is necessary to use the experience gained to show why the workers themselves will only be able to truly exercise that control if they become the owners themselves, by establishing their own Co-operative, but not a limited Co-op like that proposed by the Tories, but a Co-op tied into other such Co-ops in the area, tied to the Co-op Bank to ensure Finance for expansion, tied to a Workers Construction Co-op, to organise renovation and renewal and so on. In other words not an island of socialism, but a transformational, expansionary process.
Of course, it is necessary for workers to defend their wages and conditions, but for the reasons that Marx outlined in 'Wages, Price and Profit', there are severe limits to the extent that this can be done. The job of Marxists is not to simply act as oppositionists encouraging workers over and over again to simply respond with more militancy, but is to explain why that is, as Marx did, not by simply writing the occasional article about it, but through day to day, explanation in practice on the shop floor. Yes, as part of that process we can argue again for opening the books, but what when the books demonstrate precisely that point? What when the books show the boss actually cannot pay? Should we then settle for that other form of Economism, the replacement of one boss by another, the private Capitalist by the State capitalist? Or, having shown within the workers communities that a real alternative democracy, a real control is possible where Workers take ownership directly themselves, should we not argue, precisely that the real solution is for the workers to take over the means of production themselves by the establishment of a Workers Co-op, again not as an 'island of socialism', but again as part of a wider transformational movement.
Elson continues,
“Very schematically, the political problem is how to free the specific, conscious, collective aspects of a capitalist social relation from domination by the abstract elements. Thompson puts it rather more eloquently: it is to
'pass from process-determined 'necessity' to the 'freedom' of rational intentionality.' (Thompson, 1978, p.156)
As a starting point we need to locate the points at which the process of material abstraction is incomplete, the points at which 'objective' market forces break down and a 'subjective' element enters. This is the critical terrain of class struggle.”
(ibid p.113)
But, is this true? I think that Elson here simply replaces Purdy and prior's Economism with a fetish for Plannism. It is to identify what is crucial in creating the future socialist society not as being that workers actually do become the new ruling class because they become the owners of the means of production, but that the market is replaced by planning. But, of course, just as the State can replace private Capitalist ownership of the means of production without that in any way being socialist or even a movement towards socialism – in Nazi Germany it meant the opposite - so too can the market be replaced by even extensive planning without that in any sense implying a move towards socialism either. Many people would argue, for example, that the involvement of workers on the German Works Councils has not meant a move towards Socialism, but only towards a Corporatism, in which the workers economic interests are tied to a continuing Capitalist ownership, and its horizons limited by it.
As Marx pointed out if you establish Co-operative forms of production i.e. workers ownership here and now, then distribution changes too, fundamentally. Along with those changes in distribution go changes in social relations, in power relations. What is utopian is to believe that power relations, the extent to which the workers can exercise control, can change without first fundamentally changing those basic productive relations.
Even when Elson recognises the importance of ownership she doesn't seem to draw the appropriate conclusions. She writes,
“So long as control of the means of production and of the money supply is abstracted from the working class, there will always be severe limits to the power of Trade Unions to increase or defend the standard of living of the working class. For any increase in money wages can always be cancelled out by a rise in prices or unemployment. It is for this reason that it is quite futile to expect a wages offensive to preserve or improve the standard of living of the working class in a period of recession. When the working class standard of living rises, this is not simply the result of good trade union organisation and wage militancy. It also depends on objective factors, in particular the rate of accumulation. It should be the job of Marxists to explain these objective limits, and to insist that they are taken into account; not to encourage the illusion that the main limit to increasing the standard of living of the working class is state power expressed in the form of incomes policy...
The criterion of success of a wages strategy for socialists, should not be the size of the money wage increases. It should be the extent to which the scope for the subjective element in wage determination has been widened; the extent to which the social relations through which wages are determined have been transformed to strengthen their conscious and collective (not corporatist) aspects; the extent to which the wage bargaining process has been democratised; the extent to which the prerogatives exercised by the representatives of Capital have been eroded; and the extent to which the standard of living of the working class is liberated from dependence on the the wage.”
(ibid p. 114)
As an example of this she writes,
“The production of these 'ideal estimates' (internal accounting prices, the weights ascribed to different kinds of labour-time in job evaluation studies, etc.) is a material indication that it is possible to establish the social comparability of different concrete labours through conscious, collective action, rather than through blind market forces. The element of conscious decision in these estimates is pre-figurative of socialism, but it remains hidden, subsumed in accounting conventions or techniques of management 'science'. They remain instruments of capital's domination so long as the working class is excluded from the conscious, collective action in producing them; so long as they are 'ideal estimates' of Capital rather than labour, couched in terms of an 'objective' calculus, rather than a democratic decision.”
(ibid p.115)
But, there are several things wrong with this. Firstly, as she states these problems remain so long as the means of production remain in Capitalist hands. Of course, democratising the wage bargaining process, in a way that happened to some extent in the rise of militancy and the shop stewards movement in the 1960's, would be a gain. Indeed, I would argue that one of the reasons for advocating the establishment of Factory Committees, that organise workers across all unions, and those that do not even belong to a Trade Union, is precisely to break down inter-union rivalry, to weaken the power of officialdom (that frequently utilises such rivalry in its own interests), and to encourage such a democratic transformation on the shop floor across a range of issues. But, as the history of that shop stewards movement demonstrated – in fact even as the experience of the Combine Committees demonstrated – it is precisely that continuance of ownership in Capitalist hands that ensures that as soon as a period of weakness ensues, Capital as well as the union bureaucracy has ample means by which to incorporate such structures, or even to simply abolish them. A whole layer of Trade Union rank and file militants from that period were simply transformed into another aspect of bureaucracy sitting on the workers backs.
Secondly, there has been plenty of experience with job evaluation, including experience where workplace representatives were involved in the process. Iwas involved in such a process myself back in 2000/1. But, there are two clear problems. Firstly, the process can only develop relativities not absolute levels. It remained an Economistic struggle, and more so in so far as management argued that there was just one pot of money to be divided up. Secondly, this approach really represents that same Plannism referred to earlier. Local Government for a long time had some semblance of such a Pay Structure, yet the reality was that the market reality forced its way through, and rather like the experience in the Stalinist States, forced its way through in ways which ensured further bureaucratism and deformity. For example, when shortages of particular types of worker arose – for example Environmental Health Officers – because the wages were not high enough, exceptions had to be made, bureaucratic manoeuvres put in place, to offer, non-money wages, expense allowances and so on. In fact, a whole series of “Recruitment and Retention” packages had to be established to deal with such shortages. The problems of such an approach in a “Socialist” economy could be even more severe. No matter how democratic a decision is to set the wage for a particular form of concrete labour at a particular level, what do you do when the market breaks through and a shortage arises? Direction of Labour anyone?
When she writes,
“To summarise: I am suggesting that we approach class struggle by locating the points in social relations at which abstract forms of establishing social comparability break down. The aim is then to contest capital's prerogative to establish the forms of establishing comparability, while at the same time taking action to loosen the limits placed on this by the persistence of abstract forms of establishing social comparability.”
(ibid p.115)
this is both reformist and an application of that utopian plannism. Rather than dialectics it reminds me of Marx's criticism of Proudhon. Marx said that Proudhon's understanding of dialectics was that everything was made up of “good” and “bad” aspects. Proudhon's concept was to take the good and reject the bad. But, as Marx pointed out the concrete reality entailed both aspects – even to the extent the terms “good” and “bad” had meaning. It wasn't possible to retain the existing concrete reality without both aspects. Only a new reality could encompass the “good” without the “bad”. It cannot be simply transformed. Yet that appears to be precisely what Elson envisages. Secondly, as Marx points out, “Right” can never be higher than the Economic level of society. The market continues to exist for specific reasons. The kind of market based decisions over wages do not persist simply because of the existence of Capitalist Power, but because development has not yet proceeded to a degree to which the market can be replaced effectively with the kinds of non-market mechanisms that Elson refers to. In fact, here too, the establishment of worker owned property is a precondition for developing such non-market mechanisms.
That reformism is expressed clearly in her comment,
“The metaphor we need is not that of seizing state power, but of subverting state power. The struggle to transform the state can begin now.”
This is fundamentally wrong. It continues to stand the relation between state and civil society on its head. It assumes wrongly that the existing state can be simply “transformed” rather than that a completely new, completely different type of state has to be created in its place. It continues to see the process of transformation of society as springing from that well-head, whereas as Marx says in the Critique of the Gotha Programme, the state is a reflection of society. The transformation that has to occur is a transformation of civil society, of productive and social relations. But, of course, this process too is not a purely evolutionary process. Evolution itself does not proceed by just slow gradual changes, but is punctuated by the termination of such changes with sharp revolutionary leaps. That is the metaphor that we really need. A process of real transformation within civil society as workers property is built up, and upon it, workers economic and social power. Corresponding to it, the development of new democratic forms within the workplace and the community, forms which mirror the workers own self-activity through a direct democracy that combines both legislative and executive functions.
This is the process that Marx refers to in the Critique when he speaks of the working class being made fit to rule. In “State and Revolution” Lenin completely misunderstood and underestimated this process. He believed that after the revolution the process of running the State would be a simple matter, because Capitalism had reduced it to effectively a straightforward process of book-keeping. He was wrong, across the piece he had to bring back the old Tsarist officials to run the State supervised by a vast bureaucracy of Commisars. The same was true in industry where workers were neither trained nor anxious to exercise control over the means of production, and where the old bosses had to be brought back, again supervised by, and eventually merging with a vast Party, and then State bureaucracy. It is also what Gramsci refers to in the quote that Elson gives, where he states,
“What is needed for the revolution are men of sober mind, men who don't cause an absence of bread in bakeries, who make trains run, who provide the factories with raw materials and know how to turn the produce of the country into industrial produce, who ensure the safety and freedom of the people against attacks of criminals, who enable to network of collective services to function and who do not reduce the people to despair and to a horrible carnage. Verbal enthusiasm and reckless phraseology make on laugh (or cry) when a single one of these problems has to be resolved even in a village of a hundred inhabitants.”
(Gramsci, Political Writings 1910-20)
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