Saturday, 2 April 2011

Enterprise Zones - Part 4

On Wednesday, I heard Joan Walley ask a question at Prime Minister's Question Time, imploring the Prime Minister to look at establishing an EZ in Stoke. I have known Joan going back to the Miners Strike in 1984. She has the best interests of workers at heart. But, the reality is that what such an appeal amounts to is this. Stoke is characterised by its very low wages, and poor working conditions, as well as its history of poor educational achievement, and low levels of aspiration.
What the request for an EZ in Stoke amounts to is a request for the introduction of even more abysmal levels of all these things! The whole purpose of an EZ is to allow bad, or cheapskate employers to get away with paying even more abysmally low wages, to escape even the very limited employment regulations imposed upon them to protect workers, and to get away with this on the basis of employing workers who have little hope for the future!

The same was true in the 1980's. At a national level the NEC eventually came out with what was a relatively good statement. In August 1980, it produced the following.

“Britain at the time of the Industrial Revolution was the original enterprise zone, and it was the resultant human misery which was one of the main spurs of the Trades Union movement...the Labour Movement has in turn striven for years to rid the country of the pollution of our social lives that was caused by this 'enterprise zone'. We do not look with favour on its return”

(NEC Home Policy Statement)

But, the function of the policy as an ideological battering ram, able to divide the Labour Movement soon proved its worth. Shutt quotes Michael Brown MP for Brigg & Scunthorpe.

“Will my right honourable friend acknowledge that Labour controlled local authorities recognise that enterprise zones will be able to play a part in the regeneration of British industry?”

That provided Environment Secretary, Michael Heseltine with a perfect opportunity to reply.

“My right honourable friend raises an interesting dilemma for the Labour Party. While on its national platform it decries enterprise zones, when it comes to the real world, Labour authorities apply for them.” (Hansard, 15th November 1982)

In fact, there were only a few Labour Local Authorities that did not apply for or accept EZ's. All of them took part in the establishment of SRB areas that put them at the mercy of central Government to control their Capital Spending, and acted to divide Council Wards, and therefore, their Councillors one against another. It was a perfect utilisation of divide and rule tactics to weaken Local Authorities prior to the real assault upon them, and to prevent any possibility of any kind of united fight against the Tories Cuts.

But, they had a further function in acting as such a battering ram for capital. In their opposition to the EZ in their area, the Chairman of the West Midlands Regional Group of Chambers of Commerce, said,

“If this experiment is successful, then the lessons that have been learned should be applied to industry and business generally, and not just to the pre-selected sites dotted around the country. Acceptance of this view would see especially a firm ceiling to the rate liability on industry and commerce.”

Shutt quotes Doreen Massey, who wrote,

“it is not too much to claim that the enterprise zone idea helped to create the political space for the major attack being waged by the Conservative Government and much of industry on local revenue raising and local services.”

(Doreen Massey, ' Enterprise Zones:A Political Issue' International Journal of Urban and Regional Research, Vol. 6, No.4, pp. 429-434)

Part of the strength of the idea for the Tories was that in many ways it fitted neatly with the ideas of Social Democracy, which cannot see any means by which the interests of Labour can be furthered without at the same time, indeed as a consequence of, the furthering of the interests of Capital. If EZ's increased business activity, then this was seen as necessarily good. It was not just the Labour Party that at a local level adopted this approach. In Salford, the Labour Party in its 1982 Manifesto wrote,

“A programme to develop the docks area as an Enterprise Zone will be pursued vigorously. This will transform an industrial wasteland into a floursihing site, bringing hundreds of new jobs to Salford.”

(Salford Labour Party Manifesto 1982)

I can remember myself as a City Councillor in 1983, at every meeting of the Labour Group in Stoke, putting forward amendments to every decision to provide economic assistance to small firms, to the effect that such support be dependent upon the firm recognising and encouraging its workers to join a Trade Union. At that time not only was it a requirement for all LP members to be a member of a TU, but nearly all of the leading Councillors were TU activists themselves. Yet, every time, the amendments received the same handful of votes in support from the hard left caucus within the Group. But, it was not just at a local level that the Trades Unions attitude towards the EZ's was weak.
The TUC itself accepted the basic ideology about the need to provide incentives for small businesses to encourage them to exploit workers. Their only objections tended to be to present the argument that such employers would be anti-union.

The EZ's in the 1980's did not provide any solution to the problems of Britain's decrepit Capitalist economy, could not provide any answer to the rapid de-industrialisation under way at the time, as jobs flooded to rapidly developing, low-wage, and dynamic economies in Asia. They were themselves dependent upon not only large amounts of money from the Capitalist State in order to establish them, but also required considerable intervention by the Capitalist State in other ways, for them to function. But, they did not even succeed in providing any new jobs within the backward, inefficient, small capital sector they were aimed at.
They only succeeded in persuading some of these employers to move their operations from outside the zone to inside, thereby in themselves distorting the local market, and hence the objections to them even from small business itself.

Today, with the further de-industrialisation of economies such as Britain's, and the entrenchment of much industrial production in Asia, Latin America, and increasingly in Africa, as these economies themselves seek to outsource to even lower wage areas, there is no way that Enterprise Zones could provide a rational solution for British Capital. The most effective Enterprise Zones in Britain, have in fact, been those established on University Campuses i.e. the Science Parks.
But, these Science Parks are the very opposite of the EZ's. The science parks are based on high value production, and the employment of very highly skilled, workers. They are able to prosper precisely because they are able to utilise a relative comparative advantage within the global market. Creating a labour force in Britain that is characterised by such skills would take perhaps 50 years. At the very least it would require 15 years in order to raise the next generation of workers up to these kinds of levels, providing the kinds of resources that would facilitate a transition period, during which other workers could be supported and retrained. Yet, the cuts in HE, and the introduction of higher Tuition Fees, are the very opposite of the kind of policies required to bring that about!

It is possible in the meantime that some industries could be developed that could also utilise such an international comparative advantage. In areas such as Stoke there has been a history of creativity, and you do not necessarily have to be academically gifted to be creative.
In fact, some of those areas usually descried by the popular press such as Media Studies, if understood in the wider con text of such things as Video Game production, are precisely those high value added areas, which could prosper in the new global marketplace. There are no doubt, many kids in school today, who are disenchanted with traditional subjects, but whose enthusiasm for computer gaming could be harnessed in such an industry. Moreover, as I have previously pointed out Porn Free, these kinds of business can overcome the kinds of problems that normally beset small firms. That is there is no big advantage from economies of scale.
Moreover, they are the most suitable kinds of firms to establish as Co-operatives. In its recent adverts The Co-op is advertising its role in bringing about a new Revolution. It is proposing providing funding for such businesses. In fact, the Co-op, at a time when private capitalist firms have been struggling, the Co-op, like the worker owned John Lewis has had stellar results. The Co-op's profits have risen 50%.

It is unlikely that the LP and Trades Unions today will put up any kind of resistance to Enterprise Zones. They did not in the 1980's, and as already stated, the Labour Party is already competing to have them established in their areas so that they can exploit workers under even more oppressive conditions. It is necessary to think of a more intelligent means of responding to the Liberal-Tory policy. I would suggest that if EZ's are established, then Labour Local Authorities should be pressed by the local Labour Party and Trades Unions to ensure that where possible the firms established on them are Co-operatives. The Labour Party and Trades Unions should also get stuck into the Co-op, and ensure that some of those large profits, not to mention the £75 billion of assets sitting on the Co-op Bank's Balance Sheet, be used to invest in and develop these new Co-operative enterprises.
In that way, if businesses are to get advantages by setting up on EZ's, they will at least be workers enterprises. If cost savings are to be provided, in lower rates etc. then those saving should go to assist the workers in those enterprises, rather than subsidising the profits of small-scale, cowboy capitalists. In that way the policy can be turned to the advantage of workers, the new worker owned and controlled co-operative enterprises established can act to strengthen the economic position of workers, and can act to provide a model of pay and conditions to be copied by workers elsewhere, rather than the opposite that the Tories intend.

Back To Part 3


Jacob Richter said...

Why not go all the way to have coops in these zones exempt from all labour laws, including minimum wages, injured workers' compensation insurance, work day and work week limits, and even household child labour (not the sweatshop type stigmatized in anti-corporate works, but like kids working their butts off on their family farms, but only this time at the coops)?

Boffy said...

Because the worker-owned co-op should set an example in raising not lowering the standard of workers employed in.