Saturday, 26 February 2011

Northern Soul Classics - I'm Gonna Find Me Somebody - The Vel-Vets

A real roll back the carpets, 100 mile an hour bit of Northern from The Vel-Vets, not to be confused with the great Motown group, The Velvellettes

Friday, 25 February 2011

Economy Sinking Into The Mire

The revised figure for 4th Quarter GDP has come out even worse than the initial reading. According to the ONS, the economy shrank, in the last three months of 2010, by 0.6%
, as opposed to the 0.5% previously thought. When the initial figure was released a month ago, there was widespread shock. In fact, as I pointed out in my blog Tory Stagflation Returns, I had pointed out as far back as the end of October, in my blog Economic Theory & The Cuts, that “...I expect the economy to contract or be flat in the Fourth Quarter.”

In my later blog Economic Pressure Mounts On Coalition, I once more argued,

“In addition, economists are now expecting Fourth Quarter GDP to come in at just 0.4%, or about half the Third Quarter Figure. That decrease is an indication of how rapid is the slowdown. In fact, I would not be surprised to see Third Quarter GDP revised down again yet, and would also not be surprised to see Fourth Quarter GDP come in somewhere between flat and 0.2%. Even if the consensus figure is correct, it means that we are almost certainly heading for negative growth at the beginning of 2011, just on a trend basis. But, none of this reflects the fact that so far this dramatic slowdown is only a result of the Liberal-Tories talking the economy down for most of the year. It does not yet reflect the consequences of the Liberal-Tory Cuts programme, or of the tens of billions of pounds to be taken out of the economy in increased taxes from VAT, to Fuel and other duties, to National Insurance increases that they have been quick to impose on workers whilst giving employers a free ride.”

As suggested in those posts, the prospects for the First Quarter of 2011, do not look good. January could at best turn out to have been a wash. At the beginning of the month, Retail Sales appeared to pick up.
But, that mostly just reflects some borrowing of sales from December and the later part of January and beginning of February. In December, Retail Sales had been terrible, only in part due to the weather. At the beginning of January consumers, therefore, made up for some of the shopping they had not done before Christmas, and attempted to get in before the increase in VAT, from 17.5% to 20%. But, likewise, the sales at the beginning of the month, probably led to reduced sales towards the end of the month, more or less cancelling each other out.

There are good reasons why Sales will have declined, and continue to decline that have nothing to do with the weather or the VAT rise. In December, the UK Services PMI stood at just 49.7. Any figure below 50 indicates a shrinking economy. That was the worst figure for 20 months, back down to where it was at the height of the recession. In January, the figure did bounce back to 54.3. However, the average over the six months is only 52.5, which is consistent with pretty much flat economic activity. In reality, the January PMI figure, may turn out to be optimistic, based on a rebound in activity at the beginning of the month.

As set out in those blogs, the slow down in economic activity in the last half of 2010 was marked, compared to the unspectacular, but steady and rising growth of the first half, and compares badly with other economies such as the US, where large fiscal stimulus policies have been put in place, similar to that introduced by Labour. The reason for the slow down being so marked, even before the Liberal-Tories Cuts programme has been started, is to do with what Keynes referred to as “animal spirits”. In the run up to the election, and afterwards, as the Liberal-Tories hyped up the dangers of the deficit, ridiculously comparing the UK's position to that of Greece, and suggesting that the country was about to go bankrupt, with the bailiffs coming round to turn us all out, ordianry people understandably took fright.
If things are that bad, they thought, its time to batten down the hatches. For years, people had been encouraged by a consumer based society to think that there was something not quite right with you if you did not have a burning desire to engage in “Retail Therapy”, to have 100 pairs of shoes in your wardrobe, to just have to have the latest fashion with the latest designer label, the latest mobile phone, the latest gizmo of whatever kind, whether, your existing ones were still usable or not, whether you needed any of these things or not. And, with real wages stagnant for many ordinary workers, the way to pay for all these things was via increasingly available credit, and of course, there were no shortage of adverts encouraging you to take out a loan to buy a sit on mower to cut the grass on your couple of feet of lawn in front of the tiny house, you had been encouraged to buy, with the 125% mortgage, based on no proof of earnings, up to 6 times what you told them those earnings might be. That process had started in the late 1980's, when the Thatcher Government, had deregulated all Financial Services in the so called “Big Bang”, and had begun pumping out huge amounts of money to encourage such borrowing and spending to prop up the economy.
It was continued by the following Governments, afraid to stop the ball rolling once it had gathered momentum, and when every attempt to slow it down led to a crash on the Financial Markets.

But, after 2008, the ship had sailed. Now, telling consumers off for how frivolous they had been, borrowing all this money was the order of the day, and that fitted with the Liberal-Tory narrative of blaming Labour for deregulation, and for encouraging such wantonness. Again, it was not surprising that having been told all the borrowing and reckless spending had to stop, people took heed. Now was the time, to pay down your debts if you could, to put some money aside, as a precaution for the whirlwind that the Liberal-Tories, had been telling us for months would be coming along. Its no wonder that spending slowed down. And now, that has become self-reinforcing. Every day people see factories and shops closing.
They have seen jobs disappear, where they had been being created, and that is before the Liberal-Tory Cuts have begun.

But, even if Retail Sales were slightly higher at the beginning of 2011 the consequences of that for economic growth may not be much. A huge amount of the goods produced that are sold in those shops are imported, so the economic activity the sales produce is largely reflected in economic growth in China, or some other country, not in the UK.

Looking forward, things do not seem likely to get much better. According to ONS,

“The employment rate for those aged from 16 to 64 for the three months to December 2010 was 70.5 per cent, down 0.3 on the quarter. The number of people in employment aged 16 and over fell by 68,000 on the quarter to reach 29.12 million. “


“The number of self-employed people fell by 49,000 on the quarter to reach 3.98 million. The number of employees and self-employed people who were working part-time because they could not find a full-time job increased by 44,000 on the quarter to reach 1.19 million, the highest figure since comparable records began in 1992.“

The Employmnet Rate, as I've pointed out previously is more significant than the Unemployment Rate. In an expanding economy with more people being employed, it is still quite possible for the percentage of unemployed to rise. When the actual number of people being employed falls that is bad news, because it means that there are absolutely fewer people producing, paying taxes, and earning money to spend.

The only bright area of the economy is in manufacturing, but it now accounts for just 12% of the economy. Even if it were growing at 10% a year along the lines of a China, it would still add only a bit more than a tenth of a percentage point per month to GDP. Moreover, much of that growth has come from manufacturing exports that have grown strongly due to a 25% fall in the value of the pound. Even so, the growth in exports has not been anywhere near the kind of stella rise that the Liberal-Tory scenario for escape from the crisis requires, and, in fact, despite the falling value of the pound, the rise in Imports has almost matched the rise in Exports. Furthermore, the rise in Exports has come at a time when the world economy has once more been in a period of strong growth rebounding from the recession of 2008/9. It seems unlikely that that level of global growth will be sustained.
China is already tightening Monetary policy, and with rising uncertainty in the Middle East and North Africa (MENA), the revolution in Libya, and shut off of large amounts of oil sending oil prices well over $100 a barrel, a further large obstacle to growth has been laid down.

The UK's largest trading partner remains Ireland, and the consequence of Ireland's own austerity measures is to shut down a large portion of its domestic market to UK exports.
In fact, Ireland is itself attempting to resolve its problems by exporting to the UK, and another element of that will be to attempt import substitution. Moreover, it is apparent that the terms of the EU bail-out are too onerous for Ireland to comply with. Fine Gael is already saying the terms will have to be renegotiated, and its partners will push it harder to do so. Already, the idea that Ireland should follow Iceland's example, and simply default on its debt is being floated. That would almost certainly not be allowed by the EU, but if it happened it would have severe repercussions for Ireland within the EU, and for those UK Banks, and the UK Government that have lent it large amounts of money. But, Ireland is not the only economy suffering from austerity measures. The same is true in Portugal, Greece, and Spain. In the coming months, the consequences of that will be felt much wider than in just those countries, and the effects on the UK's potential exports will be one of the casualties.

At the same time, workers and those dependent on Pensions and Benefits are already seeing a significant reduction in their income as a result of stagnant or falling wages, and the sharp rise in inflation.
That means that alongside a challenging environment for exports, the major area of Aggregate Demand – Consumer Spending – is likely to be hard hit in the next few months. That is likely to be hit further as rising inflation feeds through into higher interest rates. As I reported a while ago, Fixed rate Mortgages for periods of more than 5 years – and there is litle point fixing for less than five years – have effectively disappeared. Increases in the yield on the 10 year Gilt are already rising sharply, and this is more significant than whatever the Bank of England does, because it is on these 10 Year Bonds, that the Banks and Building Societies borrow, and which determine their mortgage rates. I was talking to an old friend of mine the other day, who is a gardener. He works at a range of properties throughout the area, and is in a good position to keep an eye on what is happening. He told me that in one area, he was now seeing terraced houses up for sale for £35,000, whereas until recently they have been selling for closer to £80,000. He also told me about some new houses where one customer had complained that she had paid quite a high price, but the builder had been unable to sell the other hosues, and they were now rented out to people on Housing Benefit. A further problem that is arising now is that where people have taken out short term fixed rate mortgages, they are now finding that when they come to renew they are having to put down large extra amounts to cover the fact that the house is now worth significantly less than when they took out their mortgage a year or so ago.

With house prices already in a strong downward trend, the incease in interest rates will speed up that process considerably, and the wealth effect will mean tht people will cut back their consumption, and have to incease their savings even further.

In short, the GDP figure for the First Quarter of 2011 is not likely to show a great deal of improvement, on the Fourth Quarter of 2010. With the Liberal-Tory Cuts starting to take effect from the end of next month, with rising unemployment, large cuts in Capital Spending, and further increases in taxes to come, it is likely that the months into the Summer are likely to see an even greater deterioration.

Monday, 21 February 2011

Why Paul Mason Is Wrong

Paul Mason has provided a copy, on his blog, of a talk he gave at the Warwick Economics Summit.
Paul, once more, rehearses some of the themes he has covered, on his blog, over the last year, and concludes that the idea, that the various measures being undertaken by – and forced on - Governments, will result in a resolution of imbalances, is false.

“One school of thought sees this all leading to a resolution of the global imbalances - on capital flows, on trade, on current account. I don't. It is already leading to disorder - in North Africa rising food prices are just one factor in the unrest but they are a factor and they are in part the result of the wall of money flowing from the developed world into the Ems.”

He may be right. As I stated in my blog, A Momentous Change, which examined many of the points Paul Mason raises, and agreed with them, concluding that, if the austerity measures continued, then it would lead to a brutal restructuring of Capital, within the context of something that would, at least, look like A Depression, in Western Europe, and which would carry through the restructuring of Capital within a period of around 40 months,

“This analysis is different, because the kind of change I am discussing is a process that cannot so easily be placed into a timescale, and which is itself still possible of prevention, provided the current austerity measures are reversed. I have heard it said by some commentators that although Ireland, Greece and Portugal can be bailed out, Spain is too large, for example. That is nonsense. The US is a much larger economy, and yet it can and has been bailed out by the simple measure of printing money to purchase the debt. The same measure implemented by a centralised EU State, could overnight bring the economic crisis in Europe to an end, and put in place the basis of a reconstruction of Capital.”

Paul tells us that, over Christmas, he has been playing the military strategy game, “Hearts Of Iron III”, and he seems to have been led to believe from it that there are certain forces at play that govern and limit the range of possible outcomes in historical processes. To a degree that is true, but an important aspect of historical change is precisely what real human beings do, and how their actions change the material conditions, and how that, in turn, enters a feedback loop into human consciousness, so that what once seemed immutable charactersitics, suddenly become transformed.
That, after all, should be one of the lessons drawn from current events in the Middle East and North Africa (MENA). In short, Paul's analysis in undialectical.

Back in 1999, I began writing a novel, a political thriller, entitled “Revolution”. It started by taking some actual events, and facts of the time, and, using my Marxist method, to extend them into the future, to create a possible scenario that would be believable. I had mostly finished the novel by September 2001, when September 11th happened. In truth, although it caused me to do some re-writing, and certainly to weave such an important – and unforeseen – event into the story, it did not change any of the basic outline. I had finished the novel by early in 2002. The first Chapter can be found here. It predicts, in the years after 2000, a period of high volatility on the markets, a massive increase in the price of oil, the price of Gold rising to $1,000 an ounce, a massive global Financial crisis, followed by economic collapse, the outbreak of revolutions in the Middle East and China alongside the outbreak of massive social unrest across Europe, which is turned into a revolutionary struggle for power, in 2009. The only main aspect of the story, which, in fact has not been borne out, is that the Left would get its act together, and establish a new international, revolutionary organisation, which acted to transform those struggles. But, it is a work of fiction, and so even this most unlikely aspect could be justified for the sake of the story! But, it does show the problem with trying to draw conclusions about the future, because even one missing or changed factor, can alter the end result considerably. So for example, Paul writes,

“But by 1936 - if you are a country like France, Britain or the USA you do not have much to worry about: nearly all your trade is with your own currency bloc. Its an affront to the modern mind to propose - as France - a perfectly economically equal trade between Chile and yourself only to be rebuffed with the reminder: "Chile is a puppet of the United States".”

First of all, that makes assumptions about global trade relations, and, secondly, it assumes that, even if those assumptions were valid, they are not changeable in the short term. I don't think that is a valid premise.

Consequently, although Paul, is correct to say that current developments do not automatically lead to the resolution of imbalances, it is not correct to draw the conclusion that this must result in a crisis. It might lead to a crisis, as I have set out in my blogs, A Momentous Change, but, as I have pointed out there, even such a crisis is likely to be short-lived, precisely because of condensing the restructuring into a much shorter time-scale. But, that would probably require that Big Capital was unable to force a change of policy on West European Governments, unable to bring about political changes in the EU etc.
I agree with the comments Paul has made in a number of his blogs, where he talks of the nature of EU bureaucracy, and its inability to act quickly and decisively. But, in a global context, of rising revolutionary upheaval, across MENA, reports that China has itself been led to impose a crackdown and arrest opposition leaders, where this is manifest in other struggles, for example, in Catalonia, and of the possibility of that spilling over into Europe, I think that to work with the assumption, that such dithering will continue, is not justified. Certainly, I think that when the representatives of Big Capital talk on the phone, meet at a Bilderberg event and so on, they may be more exercised to press on the politicians and bureaucrats the necessity of more decisive action.

Of course, the way in which a modern Global Capitalism (Imperialism) works is complex. Not only are there overlapping and conflicting interests of Big Capital itself, but there are certainly such contradictory relations between such multinational Big Capital and its smaller brethren. And, as Paul himself has said, in one of his blogs, this Big Capital, does not have the problem that politicians have. It can set out its interests, and what it wants to do about them, and act accordingly, without the imposition upon it that politicians have – the need to get elected!
And, one of the contradictions that exists within this modern Imperialism, as I have set out in my blogs A Tale Of Contradictions, is that although the logic of Imperialism is the establishment of a World State, just as the logic of 19th Century Capitalism was the establishment of the Nation State, it is incapable of achieving that aim. It has to settle for a series of larger supra-national states, such as the EU, and the establishment of global state structures such as the IMF, World Bank, WTO, G20 and so on, which, in fact, replicate inter state conflict on a larger basis.
Consequently, although Capital, particularly Big Capital, may already operate as a global phenomenon, the “superstructures” as Marx described them, erected on the back of those productive relations, remain locked in a pre-global age with all of the conflicts and contradictions, which flow from that. As I have pointed out, in those blogs, this can be seen within the EU, itself, and the question of how to deal with the deficits of the periphery are an illustration of it.

So there are two main questions that have to be asked here. One is to what extent will Big Capital seek to impose its will on the politicians in order to resolve the current contradictions at least cost to itself, greatest advantage to itself compared to its smaller brethren – for one thing, how much will it see the current situation as an opportunity to bring about greater centralisation within Europe, as has happened in every previous crisis – and so as to minimise the risks from social unrest that could result from contagion from MENA linking up with the existing struggles of workers in Southern Europe?
The other is, to what extent will workers resist austerity effectively, and link their struggles in the way that the masses in MENA have done? The answer to the first is not at all separated from the answer to the second.

The reality is, as I have set out in the blogs above, that the current situation in relation to global imbalances is not at all as intractable as Paul makes out in his talk. Yes, its true that if China revalued the RMB by 40%, which is the extent some analysts believe it would rise if allowed to freely float, then the consequence would be that Chinese exports would tank, and severe disruption would result, including the likelihood of social unrest in China.
But, the Chinese Authorities are talking about a revaluation of around 6% in the RMB in the coming year. Not only will that not tank the Chinese economy, but it will be highly beneficial to it. Firstly, China is suffering considerable cost inflation from the costs of imported raw materials and foodstuffs . A revaluation of the RMB will reduce that imported inflation, taking pressure off wage demands in China. It will also feed through to some extent in its export prices. But, more likely, China will benefit from the so called J-Curve effect. That is, because contracts are already signed for several months ahead, and because importers of its goods will not in the short term be able to find substitutes for Chinese goods, the volume of exports will remain the same, whilst the RMB price of them will rise, providing a profit boost to Chinese exporters. China is also having to increase interest rates, and introduce quantative tightening measures to try to prevent an asset price bubble, particularly in property. A higher RMB, will make such measures less necessary.

A 6% revaluation will not remove the imbalances, but a number of years of such revaluations together with structural changes within western economies can. As I set out in one of those blogs above, one means by which western economies such as the UK, US, Ireland, Spain, etc. could immediately address the problem would be via the housing market, a solution that has also been put forward by Fathom Consultancy. The other day, a Government Minister, talking about the problems first time buyers were having raising deposits to buy a house, argued that the necessary deposit rules should be relaxed, and Banks and Building Societies should lend more!!!! This from a Government that attacked Labour for lack of regulation of the Financial Sector, that has attacked irresponsible lending and borrowing, and which uses a fatuous parallel with household budgets to talk about the country maxing out its credit card!!!!

The problem is not that house buyers cannot save enough to put down reasonable deposits on houses, but that house prices are way too high.
On an historic basis around 4 times too high, and in need of a 75% correction. If that were to happen abruptly rather than dragging on over several months or years as seems likely now, then the pressure on wages would be hugely relieved, first time buyers could begin to buy houses, and bring about a stimulation of the economy, and building land prices would be forced down, meaning that new housebuilding would be stimulated, creating thousands of new jobs. If the Government wants to do something positive, it should raise interest rates, and take other measures to prick the housing bubble, and crater house prices. Over a period of years, other measures, to reduce the Value of Labour Power, in the West, could be undertaken to compensate for the imported inflation that will result from increased costs in China, and the revaluation of the RMB.

Paul also refers to the rising cost of food, and how this has played into the current social unrest in MENA. But, there has been a lot of Malthusianism about the talk of a global food crisis. Marx set out why the Ricardian notion about diminishing returns was wrong.
Settling the US, and more importantly settling the mid-western plains, was very costly. But, ultimately, when population had grown, and demand had risen sufficiently, then this new production of grain and agricultural products, from these areas, could be undertaken not at a higher Marginal Cost of Production, but at a much lower one. The sharp rise in food prices is causing immediate pain, but the same cause is leading many African countries – and some MENA countries to buy land in Africa so as – to develop vast new areas of cultivation, using the latest techniques, and industrial scale farming that will lead, in the medium term, to a vast increase in Supply and reduction in the price of foodstuffs. That has been the case in every previous Long Wave cycle with every kind of primary product.

In a discussion a few months ago, on TV, Joe Stiglitz, argued that economies, such as the US and UK and Germany, could address their crises by fiscal stimulus.
Indeed, they should do so, he argued, in order to stimulate the global economy too. But, he argued, there were some economies such as Greece, Ireland, etc. who could not do that, because their economic future was not in their own control. That is true, and Paul is correct to say that some Governments have attempted to push some of the cost on to others i.e. Greece, Ireland and so on. But, this is why the EU has to operate as a whole rather than as competing national blocs, or else it will collapse. The reality is that the leading economies of the EU, rather than seeing social unrest spread throughout the EU, and the possibility of the EU break-up will have a considerable incentive to try to bring about a greater degree of political and fiscal union, and from there to act to reflate the EU economy.

If I were writing my novel today, and focussing on the immediate future, it would go something like this. The election in Ireland results in a mini political and economic crisis. Fine Gael has already said it wants to renegotiate the bail-out. After the election, in February, Fine Gael is pushed to take a harder stand by Labour, and Sinn Fein. The EU cannot agree to a renegotiation, because it would send the wrong message to others, and because Germany and France, and Austria seek a more centralised control system. They recognise they have a strong bargaining position.

Political revolutions continue to spread across MENA, and the problems already being faced by Italy, in relation to an influx of refugees, become replicated across Southern Europe. The contagion of revolt spreads, as those refugees link up with their compatriots in those countries, who, as immigrant labour, are facing similar economic and social problems, and also feed into rising social unrest from workers in those countries opposing austerity, as well as those who see a solution to their problems in greater regional control over their destinies, such as those in Catalunya.

The economic and social unrest along with the effects of austerity in the UK, Ireland, Greece, Spain, and Portugal drives down economic activity, which as inflation continues to rise, worsened by a rapidly falling Euro and pound, causes a rise in Bond Yields and risk premiums. Depressed housing markets in the UK, Ireland, Spain and Portugal are undermined further due to uncertainty and rising interests rates. Sharply falling property prices by the Summer further undermine economic activity, and in Spain lead to the firest Cajas going bust. The Spanish Government, like its foreign counterparts, seeks to resolve the problem by getting the Spanish Banks to take over the Cajas as part of a restructuring. The Banks, already having large chunks of the Cajas debt on their books, agree to step in. As with their counterparts, in other coutries, those Banks find that the Balance Sheets of the Cajas are a fiction, and more so as property prices continue to tank. The previously sound Spanish Banks, need to be bailed out by the State, which in turn needs to be bailed out by the EU. Even an expanded EFSF is not large enough to do the job. The EU, cannot respond in the way it should – by issuing EU Bonds – because of bureaucracy, inertia, and national interests. Germany essentially says, if you want us to pick up the tab, we want an EU state and central control. In the meantime, to prevent a complete collapse, the ECB is forced to print money, and buy sovereign debt in the secondary market on a huge scale.

The Bond Markets respond by seeing inflation and risk down the road, and Bond yields rise, and there is a flight to Gold, which hits $5,000 an ounce by year end. The asset prices – property and shares – that have bubbled up over the last 30 years, on the basis of huge amounts of liquiidty pumped into the global economy, collapse – a return to the mean, and more, a 75-90% collapse as happened in the 1930's, or as happened with the NASDAQ in 2000. Faced with economic meltdown, and widespread social unrest, the EU eventually agrees to the establishment of some form of political union short of the establishment of an EU Federal State, but enough to also establish Fiscal Union to work alongside the Monetary Union. It begins to issue EU Bonds, and to reflate the European economy within the context of a restructuring of Capital possibly along the lines of German post-war re-construction with an attempt to incorporate Labour through the Trades Union bureaucracy, via Works Councils and so on.

Sunday, 20 February 2011

Has Gaddafi Gone?

According to the latest reports coming out from Aljazeera, Gaddafi has fled to Venezuela.
Reports on Aljazeera Arabic are also talking of a gun fight between Gaddafi's sons.

During the day it was becoming clear that the regime was crumbing fast. Protesters in Benghazi succeeded in taking over a Garrison in the town centre after troops defected. Then a number of ambassadors and diplomats also defected, and despite what had been terrible violence inflicted by the forces of Gaddafi's State, and attempts to use the control over the media to prevent citizens knowing what was going on, the protests spread to other Libyan towns and cities, and then eventually to Tripoli itself.

Reports tonight say that the police and armed forces have disappeared off the streets, and the army are reported to have confirmed that Gaddafi has gone.

Meanwhile, in Bahrain, pressure from the US, and EU seems to have persuaded the Royal Family to pull the troops off the streets there, and to open negotiations. However, it seems possibly too late.
Opposition politicians are being told by the protesters that no negotiations should take place, and that the Royal Family, and the Government should go.

Every day the number of countries being pulled into the whirlpoor grows. Tonight, Aljazeera is also reporting that in Oman, the State has increased the Minimum Wage by more than 40%!. Protests are also taking place in Morocco.

Care needs to be taken in lumping all of these protests together, however, in Bahrain, for example, the struggle could be complicated by the fact that the ruling group are Sunni, and the majority of the protesters are Shia. In addition, it is clear that in Egypt, for example, the recent economic development has created a sizeable Middle Class, and large numbers of workers. These both form the basis of the establishment of bourgeois democracy, and the latter provide the basis of effective organisation and mobilisation, particularly given their economic muscle, and potential for armed resistance. It is not clear that in a number of the other economies that this is the case, as they continue to be highly reliant on Oil, rather than having extensive economic development.

Saturday, 19 February 2011

Northern Soul Classics - Freedom Train - James Carr, & Can't You See You're Losing Me - Mary Wells

Anoher stormer, this time from the fantastic Mary Wells, best known for her output on the Motown label, and of course, for the eternal "My Guy".

As a bonus track, and to fit in with the current events in the Middle East I've decided to include this week, a fantastic Northern sound from James Carr.

Yes, that Freedom Train is coming, can't you hear that whistle blowing?

Why The NHS Cannot Protect Our Health - Part 5

That such a system is quite compatible with the needs of Big Capital in an economy that focusses on high end production of quality goods, and requires an educated, healthy working-class, a look at Germany proves the point.
It has high levels of welfare for its workers, as well as relatively high levels of wages, and yet its big industries are some of the most profitable in the world, and until recently it was the world's largest exporter, able to compete adequately even with the low wage economy of China. As, most of western Europe, Germany operates a system based on compulsory insurance payments, alongside employer contributions, and State subsidies with the actual provision of healthcare by private doctors and hospitals and clinics, but mainly not-for profit hospitals. It is very similar to the system in France, which has the best healthcare in the world, and at a lower cost in terms of percentage of GDP than that in the US.

Both Britain and the US will need to move towards the model of France and Germany, if the cost and quality of healthcare is to be maintained let alone if the changes brought about by developing technology are to be accommodated. But, this provides a considerable adavantage for workers in the current climate. The efficient aspect of the current Health system in the UK, is precisely the collection of insurance premiums through the Tax, and National Insurance system i.e. the payment for healthcare out of State Funds. Moreover, moving to a Co-operative Healthcare system is not something that could be likely introduced overnight.
Yet, if actual healthcare provision were to be efficient, and capable of competing with private healthcare providers, it will need to be undertaken on a large enough scale to enjoy economies of scale.

Provided, payment for services could be guaranteed from such a State scheme, however, then workers in existing Hospitals, Clinics, and other establishments could take them over as Co-operatives, in the knowledge that adequate funding would be available. Moreover, the greater efficiency of Co-operative production , would ensure that these funds went further, and could be used to both raise workers conditions, and to provide necessary investment in new equipment.
In place of the existing bureaucratic hierarchies within the NHS and Department of Health, the existing direct links that exist resulting from the Trade Union organisation in the NHS, and Department of Health, could provide the basic democratic and direct links between workers in the Health Industry to ensure efficient decision-making.
It could also be linked with existing Co-operative provision, for example, Co-op Pharmacies, the move into biotechnology by the Mondragon Co-ops and so on, in order to enjoy even further economies of scale.

In short efficient large scale provision of medical care could be developed very quickly if the workers, and the trades unions in the NHS took that initiative. But, it would still mean that control of the purse strings remained with the Capitalist State, and how tightly it drew those strings would continue to be dictated by the year to year needs of Capital in relation to its needs for the reproduction of Labour-Power. However, once a Co-operative National Health System has been established in relation to medical care, it is a fairly simple matter from there to demand the right to establish Co-operative Health Care Insurance to cover the cost of that care, with the State paying the contributions of workers that Capitalism cannot provide employment for. The advantages of such a Co-operative Insurance Scheme, managed by local elected Commissioning Boards, is obvious. It means that it is workers who become the direct purchasers and providers of their own healthcare for the first time, taking that ownership and control out of the hands of Capital and its State. Rather than that healthcare being determine by the needs of Capital it becomes determined by the needs of workers, and those worekrs will have a direct incentive to ensure that their funds are used not only in the most effective way to meet their needs for healthcare, but in the most effective way to protect their health, including campaigns against unhealthy working environments, unhealthy food, unhealthy housing, and those campaigns as part of a class struggle against Capital open up wide vsitas for joint action with Trades Unions, Tenants and Residents Associations, Co-operative Housing, and the Co-op itself in relation to Consumer Rights.

The Ombudsman's report into the NHS spoke about an ingrained culture that led to the problems of lack of basic compassion etc. For the elderly patients left to lie in their own urine and faeces etc. That is partly to do with the phenomenon described by Marx known as “The Alienation Of Labour”. In other words, those producing the commodity, in this case healthcare, have no direct personal link with those who consume the product they produce. There is a lot of nonsense spoken about the idea that those who work in the state capitalist sector are driven by a commitment to the Public. Having worked in Local Government, and been a Councillor, as well as a customer of the State Capitalist Sector I have to say I've never noticed it. And, why would workers in the State Capitalist sector be expected to be different from their comrades working in the private capitalist sector? They have no more control ove their means of production, no more direct link with those who consume their product. In fact, in many ways they have less.

In the private sector, money plays an important role. At each stage of management and, indeed down into the workforce their tends to be a direct financial incentive to perform well, to sell more, to work more productively. No such imperative exists in the State Capitalist Sector. In its place has to come other forms of control, which is why additional tiers of management, bureaucracy and measurement have to be introduced, which in turn make control over the labour process less for the ordinary worker, make the relationship with management more paternalistic and oppressive. It means that whereas in private Capitalist businesses, much more freedom and possibility for initiative is granted to workers – that was particularly the case with the neo-Fordist, and the non-continuous flow systems introduced during the 1980's – in the State Capitalist sector, all such development is squashed. In fact, as was seen in Eastern Europe, this kind of oppressive managment control tends to have the oppsoite effect. Everyone does all they can to avoid initiative that might lead to criticism or hinder their promotion, or worse. And those at the bottom respond with sullen resignation, and find other means of expression, and revolt.

That's not to say that alienation does not exist in private Capitalism. In fact, all of the things said earlier about small Capital, make it similar in that respect to State Capitalism. It is Big Capital with its greater resources, its greater scale of operation that can introduce quality circles for workers and other such techniques to counter that alienation and promote and utilise the natural inventiveness of workers. It is Big Capital, which via Oliigopolistic competition, works on the basis of competition on the basis of quality not price, and which seeks to raise profits by ever new, more efficient means of production. Small Capital and State Capital in the end also responds, but its response takes place under different conditions, it is always lagging, and as a result never achieves the benefits of first-mover advantage when new methods of production are introduced.

By comparison, as Marx pointed out in relation to the Lancashire Textile Co-ops, and as James Connolly set out in relation to the Workers Co-op at Ralahine, workers have an even greater incentive to introduce new labour-saving machinery than even Big Capital.

“To those who fear that the institution of common property will be inimical to progress and invention, it must be reassuring to learn that this community of ‘ignorant’ Irish peasants introduced into Ralahine the first reaping machine used in Ireland, and hailed it as a blessing at a time when the gentleman farmers of England were still gravely debating the practicability of the invention. From an address to the agricultural labourers of the County Clare, issued by the community on the introduction of this machine, we take the following passages, illustrative of the difference of effect between invention under common ownership and capitalist ownership: –

“This machine of ours is one of the first machines ever given to the working classes to lighten their labour, and at the same time increase their comforts. It does not benefit any one person among us exclusively, nor throw any individual out of employment. Any kind of machinery used for shortening labour – except used in a co-operative society like ours – must tend to lessen wages, and to deprive working men of employment, and finally either to starve them, force them into some other employment (and then reduce wages in that also) or compel them to emigrate. Now, if the working classes would cordially and peacefully unite to adopt our system, no power or party could prevent their success.””

Even within the Capitalist Sector, the importance of a personal relationship between producer and consumer can be seen. In contrast with the report of the NHS Ombudsman, when my Mother was in a Private Nursing Home in the last few years of her life, our experience was quite different. But, hte home, which was within our Community, also employed local workers. Unlike, the NHS Report which commented on the fact that a patient would not often see the same nurse twice, due to the employment of agency staff etc., one of the nurses at the home lived in the same road as me, and one of the carers lived in the lane, just around the corner from me. It makes a clear difference when that day to day, more or less, personal human contact occurs, when it comes to those workers seeing the person in front of them as a human being, and not just a customer.

A Co-operative system of healthcare could ensure that those advantages were utilised by ensuring such local contact and control. Local democratically elected boards of Co-operative Health Commissioning, would ensure such personal contact between the workers sitting on those Boards, and the Workers in the co-operatives producing the healthcare. Locally elected Boards of Workers Inspection, visiting each establishemnt, would deepen that personal link, and undermine any tendency towards alienation of labour. In the meantime, a direct financial incentive, and the incentive described by the workers at Ralahine above, would ensure that where possible the producers of those services would introduce whatever new innovative means were available to lighten their load, improve the quality of provision, and reduce their costs in order to increase the profits of their Co-operative. In the meantime, the workers sitting on the Commissioning Co-ops would have an incentive in trying to ensure that such savings were also shared with the workers consuming those services, and in attempting to address those things, which led to workers needing to resort to healthcare in the first place.
Healthcare would then cease being a commodity provided to individual workers, apparently arising from their individual needs, but in reality determined by the needs of Capital, and would become absorbed inthe attempt to protect workers Health. The protection of workers health would itself cease to be seen in individualistic terms, but would be considered collectively by workers themsellves nd viewed in terms of their wider needs – Health & Safety in the workplace, and communities, decent housing, decent food, decent environments in which to live and work, decent education and so on. If workers want to protect their health, they should not expect that from the Capitalist State. They have to take ownership of the means of doing that for themselves, and they should do it now.

Back To Part 4

Why The NHS Cannot Protect Our Health - Part 4

After WWII, with a shortage of labour power resulting both from the number of adult males killed during the War, and the increased demand for Labour arising from the Post War Long Wave Boom, the importance of that became apparent. Capital was led to use a latent reserve army in the form of women workers.
As during WWI, women had been drawn into the labour force during the War. Now, on a scale unlike anything in the past, not just single women, but increasingly married women were drawn into the workforce, and their domestic labour was replaced by the introduction first of a range of new services such as commercial laundries such as that provided by the Co-op, and Laundrettes, and later by the availability of labour saving machines such as washing machines, spin dryers, vaccum cleaners, and so on, as well as the introduction of fitted carpets etc.
Additional labour power was made available by the encouragement of the Tory Government of the 1950's for immigration, particularly from the Carribean.

But, central to this strategy, and the needs of Capital, was that domestic workers who were increasingly being drawn into the more technological, new industries such as motor vehicle production, electronics, and petrochemicals – whilst the low paid, low status, unskilled jobs were assigned to the immigrants – needed to be better educated, and if that education was not to be wasted, enjoy better health. The improvements in Health and Education in the post-war period, including the raising of the school leaving age from 14 to 15, were a part of that strategy. The importance for this strategy of the State Monopoly should not be underestimated. It was important for several reasons. Firstly, as is the case with many major Public Goods – for example the provision of Motorways – the scale on which investment is required, and the uncertainty of demand means that private capital is unlikely to come forward to the required amount. Even in the US, it has to be remembered that alongside private healthcare, a substantial state run health system co-exists.
The investment required for an effective National Health System, including the amounts needed for the establishment of hospitals, the acquisition of the increasing amount of new equipment that was making its way into healthcare, and the training of thousands of nurses and other staff, would not have been done by private Capital. However, the State, not only could mobilise the Capital needed to finance that investment, but because of its legal powers of tax raising, it could ensure that the necessary minimum demand for those services could be guaranteed. In essence, workers were given no choice about the amount of healthcare they wished to purchase compared to other commodities, because the State deducted the requisite payment from their wages. If, workers chose not to visit the doctor, or the hospital etc. then the State did not lose out, because it had already received payment for those services whether they were used or not. But, by making them free, it could be pretty confident that workers would take up their entitlement.

Again, the importance of that should not be underestimated. We have seen the consequences of a total market solution for healthcare, when various charges for services have been introduced. Increases in dental charges led to a significant reduction in the number and frequency with which people visited the dentist. The same was true with opticians charges, which was significant given the number of other illnesses that can be identified by opticians looking into the eyes.
Given that Capital sought to increase the amount of available labour power, by improving workers health, and their longevity, it needed to ensure that workers would at least take up a minimum level of haelthcare, just as they were compelled to undergo a minimum number of years at school, to ensure that Labour Power was adequately reproduced. That is of course, one of the core functions of the Capitalist State.

The idea that Capital has such a strong incentive to ensure that workers health is maintained in this way, might not at first sight seem obvious, especially when we see the kinds of stories such as those at Stafford Hospital, the reports of the Patients Association or the Report of the Health Ombudsman.
But, in fact, what this shows is that in relation to Health all of the contradictions that apply to Capitalism in general operate here too.

In the 19th Century, the nature of Competition as Engels spells out meant that initially, the multitude of small businesses were led to try to make profits by driving their workers into the ground, squeezing every last penny out of them, by short-changing them wherever it could, as well as by all manner of dirty dealing in the selling of its products and relations with other Capitalists.
The Monopoly of the Truck System, meant that they could screw their workers by adulterating the products sold to them, for example. But, as Engels also points out, it was the very development of Capitalism, which created the conditions under which those “penny-pinching” methods not only became meaningless, compared to the much greater increases in profits that could be achieved by increasing relative surplus-value, through the introduction of new machinery, raising productivity etc., but were actually counter-productive. It should be remembered that a fundamental aspect of Fordism, was his recognition of the problems that arose when the workers on his production line kept leaving.
His answer was to increase their wages substantially, and to promote the idea thereby of “Company Loyalty”, with the introduction of other facilities for the worker. The increase in productivity more than covered the cost.

In the 19th Century the Retail Co-ops arose because workers were able to group together, and pool their small amounts of Capital, in order to open their own shops, and by concentrating on selling quality products at low prices were able to quickly develop a huge Retail Co-operative business, that dominated the Retail market by the end of the 19th Century, and had also developed its own Wholesaling business, as well as expanding into a whole range of other services including, Education, Healthcare, Undertaking, Holidays etc. that met all of the workers Welfare needs, decades before the Capitalists decided that they needed to undermine this workers' independent property and provision.
Once workers had been able to establish their own Co-ops, and especially after the Truck System was made illegal, workers could choose to use their own shops, and as a consequence the private Capitalists were forced to respond by raising the quality of their own products. The Co-op, developed its own scientific wing, which not only assisted in developing products for the Co-op, but was also able to test the products of private industry, and those sold in the private retail shops.
As a result it was able to organise campaigns for “Clean Milk”, for example. Although the Co-op had been producing pasteurised and sterilised milk in its own Dairies for a long time, it was not until 1949, that the Capitalist State introduced legislation that made private Dairies follow suit in order to end the damage to workers health due to brucillosis, which caused blindness. Even as late as the middle of the 20th Century, Tea sold in private retail shops was found to be being adulterated with lead filings to make up the weight!

Clearly, as Engels says, the Big Capitalists recognised the short-sightedness of such penny-pinching methods, but the continued existence of huge numbers of small businesses, didn't mean those practices didn't continue. Indeed, the more efficient the larger businesses became, the more the small businesses had to rely on those methods to stay afloat. Once more, as Engels argues the introduction of new laws and controls by the Capitalist State were not directly intended to benefit workers, but did act in the interests of Big Capital, by forcing the small capitalists to conform. In fact, this illustrates the point that Engels makes about those Big Capitalists adopting many of the demands and ideas that the workers themselves had been raising.
Particularly, after WWII, with the onset of the Long Wave Boom, it could be seen that the measures that the “Left-Wing” Attlee Labour Government had introduced, such as the introduction of the NHS, the nationalisation of those old bankrupt core industries such as Coal, Steel, Transport etc. were continued by the incoming Tory Government. In fact, this cross party agreement on these core policies continued into the 1960's, and even early 1970's, under the name “Buttskillism”, being a conflation of the names of Labour's Hugh Gaitskill, and the Tories R.A. Butler.
It was not just in Britain that this held true. In the US, similar developments occurred after WWII, and were reflected in L.B. Johnson's “Great Society”. Similar developments occurred across Europe, and a central part of the development in each case was the incorporation of the Trades Unions into the operation of the State, and of Capital. It was particularly marked in Germany, where the Trades Unions were directly incorporated via the establishment of Works Councils in which workers representatives sat alongside the bosses in discussing ways of raising productivity and profitability. Such “Company Unionism” was well established in the US, and there were attempts to introduce it into the UK too with demands for profit Sharing Schemes, the calls in the Alternative Economic Strategy and the Communist Party's “British Road To Socialism”, for the workers to join with the bosses in putting the interests of British Capital ahead of the workers international solidarity, and the calls for Workers Participation Schemes, or the regularistion of that via the State in the establishment of Planning Agreements.
It was typified by the “Social Contract” drawn up between the TUC and the Labour Government of the 1970's, by which the TUC and its union bureaucracy agreed to police their members on behalf of Capital, and to limit wage demands.

The converse of that could be seen in the early 1980's with the rise of Thatcher in the Tory Party, and the onset of the Long Wave downswing. In the 1920's, Neville Chambelain had developed all of those ideas which were to form the core of the Welfare State. But, the onset of the Long Wave downswing, most notably after the recession of 1921, and particularly in the depression of the 1930's, meant that the conditions faced by Capital, in the Capital-Labour relation were fundamentally changed. With mass unemployment, Capital did not face the problems it had previously of a lack of workers.
In parts of the country, such as in the Midlands and South-east, where new dynamic and profitable industries such as the car industry and consumer electronics were developing, the demand for labour-power remained high, and wages and conditions for workers in them, even during the 1930's improved considerably. But, these were infant industries, whose demand for labour-power was limited, and could be accommodated out of a rising population, of new better educted workers. But, there was no need for Capital to spend money in many parts of the country in improving the health and welfare of workers, when those workers were in plentiful supply. Only in 1938/9, as the preparation for War began, and capital once again found that the privations of the 1920's and 30's had again diminished the stature and physique of those it wanted to send off to die in foreign fields, did it once more begin to address that problem.

The same was true with Thatcher and the onset of the Long Wave decline that by 1980 was in full swing.
It is no wonder that during the whole period of the 1980's and 90's Tory Government, satisfaction with the NHS continued to decline. In fact, then as now, the nature of the Tory Party's membership base, and electoral base shows through.
Whereas, as Engels says, in general the Big Capitalists were happy to deal with the Trades Unions – for large firms with thousands and tens of thousands of workers it is the only rational means of conducting negotiations, and controlling the workers – it is the Small Capitalists, who are the most anti-union. They prefer to continue to squeeze the last drop of blood out of their workers, and with each firm only ever requiring a handful of workers they are always able to look to replenish workers who are not productive and profitable for whatever reason be it, ill-health, or simply a tendency to challenge management. Of course, that is not always true. Small very profitable, very dynamic firms, might treat their workers well, for the reason that they rely on their inventiveness, and hard work to develop the company. On the other hand there are companies such as Wal-Mart, who having developed from a small family business, continue to apply the principles that the family used initially. In Social Science, especially in Marxism, which emphasises the role of the dialectic – the truth is always concrete – there are no absolute laws. The Tory Party reflects that ideology of the small business, and Thatcher was its epitomy. It is no wonder that in the changed conditions that have applied since the 1970's, particularly, the Tory Party, has been the champion of the small business, that it has been at the forefront of demanding an end to all those rules and regulations that should make a civilised society – including now the demand to withdraw from the European Convention On Human Rights! - and which Big Capital has been able to accommodate, but which hits the profits of the small Capitalist.

The problem is that, especially in times such as those we are in now – of a new Long Wave Boom – those kinds of measures are problematic for Capital as a whole. The penny-pinching measures really are counter-productive for Capital as a whole. In the 3 Day Week of 1974, it was found, for example, that workers were producing as much output in 3 days, as they were previously in five.
That was not because they were being worked harder by Capital during the three days. It was down to the fact that having longer rest periods, they were able to work more productively during the other three days. The US, frequently criticises France, because where in the US there is a culture of long hours, few holidays, and work until later life, in France there is a much more relaxed attitude to work; early retirement, shorter working hours and longer holidays. But, the reality is that productivity in France is much higher than even in the US's most productive state California. That is the reality that Big Capital has been aware of for a long time, it was behind the introduction of Fordism and Taylorism and other methods of scientific management. But, it is only a reality that applies where production is undertaken on a large enough scale that this higher productivity can outweigh the costs involved.

The attempts to bring in changes into the NHS – and in the healthcare system in the US – are not about those “penny-pinching” measures to save money. There is no advantage for Big Capital in a Health Service that does not produce healthy workers, any more than it is interested in a machine that does not work. The changes are an attempt to reduce the costs that Capital faces in those countries from their existing Health Systems, especially compared with the costs faced by their European counterparts. In the US, it is a wholly privatised healthcare system, which has proved to be costly and inefficient for Big Capital, and led it to look towards some form of socialised system.
In the UK, it is the actual provision of healthcare by a huge, monopolistic, and bureaucratised NHS – as opposed to the Insurance Scheme that funds that provision – which has proved costly and inefficent for capital compared to socialised systems in Europe.

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Friday, 18 February 2011

Why The NHS Cannot Protect Our Health - Part 3

At the beginning of Part 1, I quoted Brecht's “Workers' Speech To A Doctor”. There are a number of reasons why it is particularly relevant to this discussion.
Firstly, it demonstrates the way in which within Capitalist Society, health is viewed in individualistic terms. The doctor does not see before him a member of society, whose health is largely determined by the society he lives in, but only sees an individual patient. Whilst, of course, the health of every patient is to a varying extent, a function of their individual physical make-up, to a much larger extent on average, health is not determined by that, or even by our own individual actions. To give, a stark example, of that I was told a long time ago by a scientist that the problems that the majority of people suffer from heroin addiction, are, in fact nothing to do with that addiction. There were, he told me, many doctors, for example, who used heroin recreationally, and who were able to do so throughout their lifetime. The reason was that firstly, they could obtain heroin that was not cut with all manner of harmful substances, which can occur with addicts who are forced to try to find it where they can, and at the lowest price they can. Secondly, as a result of being able to obtain it, and also knowing how to use it they were in less danger of doing themselves harm. Thirdly, as a result of that, and of their higher standard of living, their general health was better, whereas the normal addict forced to pay high prices, then ends up cutting their spending on other things such as food and so on, so that their general health deteriorates. It is usually from these other factors that the run of the mill heroin addict becomes ill.

But, we can see it in other ways. Every survey ever done, going back to the 19th Century, shows people who are more affluent living longer, and leading healthier lives.
Again, in survey after survey, including one done only a few years ago, it is demonstrated that a string of indicators, such as Educational Attainment, Housing, and Health are all related to the level of affluence, and all of these factors are reinforcing. That latest survey showed that children, from less affluent backgrounds, with above average levels of intelligence at the point they entered nursery had lost all of that advantage over less intelligent children from more affluent backgrounds, by the time they were just seven years old.
It does not take a great leap of understanding to see that contributing factors to that are indeed, missing school due to ill-health, or that like Brecht's worker that ill-health was in turn caused by poor housing conditions!

And, of course, again like Brecht's worker, it does not take a great leap of understanding to realise that asbestosis affected all of those workers who worked in the asbestos industry, or in industries where exposure to asbestos was common, whereas it was not at all prevalent amongst the Chief Executives of companies, including those in the aforementioned industries. It is no coincidence that coal miners suffered from pneumoconiosis whereas Bank Managers did not. Yet, in relation to asbestos, it was known for decades what the dangers were.
But, the industry, and the State Health and Factory Inspectors kept quiet, because for a long time it formed such an important part of the functioning of Capitalist industry, prior to the development of fire retardants and so on, that to have ceased production, or to have introduced the necessary safety measures would have been very expensive for Capital. On the other hand, the lives of the workers in the industry were considered expendable. The same is true with Coal Miners who could work for many years before the effects of the “dust” prevented them from being productive workers.

What Capitalism is concerned with, and what its Health system is there to achieve is not the Health of workers, but the reproduction of workers who are healthy enough, for long enough to be capable of working productively for Capital, and thereby of creating profits. Exactly, what that level of health is is itself determined by the needs of Capital at any particular time. At the beginning of the 19th Century, for example, life expectancy for the majority of people fell in half. Just a generation before the parents and grandparents of those factory workers, were peasants who enjoyed by comparison a reasonably healthy lifestyle. Marx quotes the relevant information in Capital.

The anonymous author of “An Essay on Trade and Commerce, containing Observations on Taxes etc.” 1770, comments,

”That mankind in general are naturally inclined to ease and indolence, we fatally experience to be true, from the conduct of our manufacturing populace, who do not labour, upon an average, above four days in a week, unless provisions happen to be very dear.”

The degree to which the workers were better off even in the 15th century compared to the 19th century is given by J. Wade in his “History of the Middle and Working Classes" . He remarks,

“From the statement above it appears that in 1496 the diet was considered equivalent to one third of the income of an artificer and one half the income of a labourer, which indicates a greater degree of independence among the working classes than prevails at present; for the board both of labourers and artificers, would now be reckoned at a much higher proportion of their wages.” (Pp 24,25, and 577)

As the peasants were expropriated and a growing number of landless labourers and paupers were created, Britain created its own version of the slave trade that was being carried on within the borders of the US at the time. People forced into the Poor Houses were gathered together and put on canal boats having been sold by the Poor Houses to the textile manufacturers in Manchester who could not recruit enough workers. This speech by a Member of Parliament gives a flavour of the time.

“This system had grown up unto a regular trade. This House will hardly believe it, but I tell them, that this traffic in human flesh was as well kept up, they were in effect as regularly sold to the (Manchester) manufacturers as slaves are sold to the cotton grower in the United States….
In 1860, the cotton trade was at its zenith…. The manufacturers again found that they were short of hands…. They applied to the ‘flesh agents’ as they are called. Those agents sent to the Southern downs of England, to the pastures of Dorsetshire, to the glades of Devonshire, to the people tending kine in Wiltshire, but they sought in vain. The surplus population was ‘absorbed’.”

William Ferrand’s speech in the House of Commons 27th April 1863.)

This last reference to “absorbed” relates to comments made by the cotton manufacturers in 1834. Ferrand in his speech gives details of the way in which the intolerable conditions of the workers was affecting their life expectancy. He commented,

“The cotton trade has existed for ninety years…It has existed for three generations of the English race, and I believe I may safely say that during that period it has destroyed nine generations of factory operatives.” (ibid.

Faced with this shortage of labour the manufacturers had applied to the Poor Law Commissioners that they should send the “surplus population” to them with the explanation that they would “absorb and use it up” to use their own words. Hence Ferrand’s reference.

The devastation that capitalism was wreaking on the population, in a period of just 90 years, was so great that even enlightened capitalists and their representatives were appalled at what happens when you let free market forces and laissez-faire run riot as the free marketeers would have us do.

This fact is shown by the actions of capitalists like Josiah Wedgwood, and his analysis alongside those of his fellow manufacturers is illustrative.
The condition of the Staffordshire potters was appalling. The life expectancy had been slashed, and disease was rampant amongst them. Had it not been for the intermarrying of the potters in North Staffordshire with members of the surrounding rural population the population of North Staffordshire would have died out. Faced with these circumstances, as much out of self-interest as anything else, (though Wedgwood having himself been originally a working man had some social conscience) they resolved to act. In 1863 26 firms owning extensive potbanks in Staffordshire, including Wedgwood, petitioned the government for legislative action to limit working time. And why did they need such legislation rather than voluntary agreement.

“Much as we deplore the evils before mentioned, (i.e. the length of the working day and poor conditions) it would not be possible to prevent them by any scheme of agreement between the manufacturers…Taking all these points into consideration, we have come to the conviction that some legislative enactment is wanted.” (Children’s Employment Commission Report 1. 1863 p 322)

The reason no voluntary agreement could be reached was precisely because free market competition would force each to cheat in order to gain an advantage.

As Engels was to describe these developments.

“The competition of manufacturer against manufacturer by means of petty thefts upon the workpeople did no longer pay. Trade had outgrown such low means of making money; they were not worth while practising for the manufacturing millionaire, and served merely to keep alive the competition of smaller traders, thankful to pick up a penny wherever they could.
Thus the truck system was suppressed, the Ten Hours’ Bill [2] was enacted, and a number of other secondary reforms introduced — much against the spirit of Free Trade and unbridled competition, but quite as much in favour of the giant-capitalist in his competition with his less favoured brother. Moreover, the larger the concern, and with it the number of hands, the greater the loss and inconvenience caused by every conflict between master and men; and thus a new spirit came over the masters, especially the large ones, which taught them to avoid unnecessary squabbles, to acquiesce in the existence and power of Trades’ Unions, and finally even to discover in strikes — at opportune times — a powerful means to serve their own ends. The largest manufacturers, formerly the leaders of the war against the working-class, were now the foremost to preach peace and harmony. And for a very good reason. The fact is that all these concessions to justice and philanthropy were nothing else but means to accelerate the concentration of capital in the hands of the few, for whom the niggardly extra extortions of former years had lost all importance and had become actual nuisances; and to crush all the quicker and all the safer their smaller competitors, who could not make both ends meet without such perquisites.”

Preface to the English Edition of “The Condition of the Working Class in England"

In fact, by the end of the 19th Century in England, the Long Wave Boom that lasted from the late 1880's to 1914, swallowed up the Reserve Army of Labour, and laid the basis for the development of mass Trades Unions, and the raising of workers real living standards. If Capital wanted to extract more Surplus Value from workers now it had essentially two options.
It could extract a greater amount of relative surplus value i.e. increase labour productivity by the introduction of more and better machinery, or it could extend the useful working-life of every worker. The first option entailed raising the educational level of workers, both in order to obtain the skilled workers capable of producing the more sophisticated machines, and also to a large extent, for example in engineering to be able to use those machines. The second required improving workers health, a need that was brought to light even more starkly during the Boer War, and First World War, when it was found that the workers recruited into the Army were not even fit to fight, and had to be fed and given physical training to raise their level of health and fitness! Associated with that drive was the idea of “Homes Fit For Heroes”, adopted by Capital after WWI, which along with Capital's further programmes for the introduction of a Welfare State developed at the turn of the Century, and particularly by Neville Chamberlain in the 1920's, were intended to learn the lessons of the War in order to create an effective Industrial Army, for the new more technological industries that were being introduced. In fact, the introduction of the Welfare State is an example of the way combined and uneven development works.
The establishment of the Welfare State in Britain, really followed the example that Bismark had set in establishing such a system in Germany in the 1880's, to meet the needs of a much younger German Capitalism. And, in fact, the analysis that has been done more recently has shown that the improvements in health and mortality that have arisen during the 20th Century, have almost all been attributed to improvements in general living standards, improvements in diet, in housing provision and so on rather than improvements in actual healthcare.
Yet, billions of pounds continues to be spent on healthcare rather than on further advancing these other aspects of worker's health and environment, and that is because Health is provided to workers as a commodity, it is sold to them by a State Monopoly, paid for by a compulsory deduction from their wages and via other taxes, and in turn huge, powerful, vested interests lie behind the continuation of that industry, from the State Bureaucrats in the upper reaches of the Department of Health, to their counterparts in the NHS itself, to the top Consultants paid huge salaries, and often with extremely beneficial links to private companies in the pharmaceutical industry, to those pharmaceutical companies themselves alongside all of the other companies from construction to ICT, to transport who also make huge profits out of the continued provision of Health as a commodity sold to workers, via a State Monopoly, and whose Supply can be adjusted up or down accordingly to meet the needs of Capital.

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