The Thieves Kitchen

A knife fight has broken out in the thieves kitchen. What started out as an investigation by a single dogged reporter, and a few individuals and M.P.'s who had suffered and were fighting back against the Murdoch Empire, has spread to reveal bribery and corruption spread throughout the British Power Elite.

Now, sections of that elite have begun to try to protect themselves, by attacking, and undermining the position of others who only yesterday they were allied with. Politicians, exposed by the media over the Expenses Scandal, and prosecuted by the Police for that and the Peerages scandal, have seen an opportunity to get their own back, and at the same time attack the Murdoch Empire that was seen to have been wielding too much power over them.

The Murdoch Empire, seeing itself attacked by the politicians, and increasingly by the Police, with whom it had close personal, and increasingly, it seems, financial relations, has responded by releasing information that exposes those relations. The Police whose relations with that Empire have started to be exposed, have been attacked by politicians, and found those politicians calling for the resignation of top cops. The top cops have responded, by pointing out that they were resigning, for having such relations, with Murdoch employees, whilst politicians, like Cameron, who are issuing those calls, had, and have similar, if not closer, relations with the members of that Empire who have been implicated.

The Government has responded to those attacks, by widening its inquiries into the Police, calling on the Independent Police Complaints Commission to carry out an investigation into Bribery and Corruption within the Metropolitan Police. The Murdoch Empire has responded to the arrest of some of its former top executives, by saying through the Sunday Times that there is “institutional corruption” within the Metropolitan Police, echoing the description some years ago of a Police Force suffering from “Institutionalised Racism”, after the Stephen Lawrence murder.

But, it has to be remembered that this is essentially not just thieves falling out amongst themselves after some of them have been caught with their hands in the till, it is at heart a fight between different factions of thieves, more like contending gangs in a turf war.

Some sections of the media have turned on other sections of the media, undoubtedly some sections of the Police, and of the wider Permanent State apparatus, have turned on other sections of that apparatus, some sections of the political establishment have turned on other sections of that establishment, and not just along Party political lines. There will be not a few Labour MP's who will be in no rush to defend the close relations of Blair and Brown with the Murdoch Empire, and there are right-wing back-bench Tory MP's, who have never liked Cameron, who see this as an opportunity, if not to ditch him, then to weaken him, and push the Government further rightwards, a development which would make life even more difficult for the Liberals, who are doing their usual trick of turning their previous irrelevance into a virtue, by pointing to the fact that Murdoch never bothered to try to buy their services. It would be unusual if all of this did not also reflect more deep going contradictions, and differences in interests within the ruling Capitalist Class itself. That is not just in relation to contending media Capitalists, but wider sections of the Capitalist Class in Britain, and globally, whose interests may not have been served by the power of a single company over the British – and possibly other – Governments, and by the kind of narrow nationalistic, and reactionary politics being pushed by the Murdoch Empire, at a time when international Capitalist Co-operation, and international state co-operation is required to solve the crisis caused by the Financial Meltdown of 2008, and its aftermath. Indeed, part of that may well be the contradictions that exist between large-scale,Industrial Capital, and Financial Capital.

In the last thirty years, Financial Capital has become extremely powerful. It has held considerable sway over Governments in Britain, where London acts as the global financial hub, and in the US, where New York comes a close second.

It would be amazing if a thorough investigation into the links between the Murdoch Empire, Politicians and Police did not also uncover similar close links between all three, and representatives of Financial Capital in London, and elsewhere. Yet, from the standpoint of Industrial Capital, Financial Capital, is seen as a parasite, leaching off the Surplus Value Industrial Capital produces. Worse than that, in the last thirty years, vast sums of Capital, though it has to be said, considerable amounts of it only fictitious in nature, has been diverted away from investment in productive industrial activity, and into pure speculation in the creation of ever more exotic financial products such as CD's, MBS's and so on. This at a time when from the perspective of Industrial Capital, what was required was capital made available for the restructuring of western economies into high-value production, in order that they could be able to move into areas of production where they could compete globally against, new rising dynamic economies in China and elsewhere. From the end of the 19th Century, when this Industrial Capital became dominant the role of Financial Capital was supposed to be to make the Money Capital for such investment and restructuring available when required. It was also to help create stability by creating Futures markets, so that sharp movements in prices could be smoothed out.

The role of the State was to ensure a degree of economic and social stability, by macro-economic control over the economic levers of Fiscal and Monetary Policy, smoothing out recessions, and through Central Banks, increasing Money Supply to ensure that the General price level did not fall.

Instead, Financial Capital took the development of Futures markets, and turned them into a casino, in which Capital could be invested, and which seemed to create profits out of thin air, something which was theoretically justified by the kind of Neo-Classical, and Austrian Schools of Economics, which has always been closely tied to the interests of Financial Capital, and the class of Stock market speculators.

Its fundamental thesis is that surpluses arise not in production, but in the act of exchange, and what more pure act of exchange is their than those which occur within Stock Markets, and Commodity Exchanges. And, as this kind of speculation bubbled up fictitious Capital, and fictitious wealth in property, share and other asset bubbles, and this fuelled a Credit Boom that kept western economies afloat during the Long Wave decline, Governments found themselves bound to this section of Capital. They introduced schemes such as PEP's, ISA's, and Private Pensions and so on, whose purpose was not to bring together individually small amounts of savings, and mobilise them into available productive Capital – as previously happened with workers savings in the Banks and Building Society - but to make these funds available for speculation by Big Financial Services Companies, Fund Managers, and Hedge Funds, which raked off huge sums in charges and commissions, out of which they paid multi-million pound salaries and bonuses to their top gamblers.

During the Long Wave decline the industrial Capitalists benefited from this, to the extent that this fictitious wealth, and credit maintained a level of consumer demand. But, the main beneficiaries besides the Financial Capitalists, were the Industrial Capitalists in China and elsewhere who increasingly produced the goods that these consumers bought, alongside the Merchant Capitalists, who have historically had close links with Financial Capital, who expanded their retail operations extensively to sell all these foreign goods.

But, when the Long Wave Boom began, in 1999, the problem for industrial Capital, in places such as Britain and the US, and other parts of Europe, was that the Financial Capitalists had become very powerful, and the Casino economy had become very important to Governments, and consumers had become addicted to spending financed by cheap credit. Only in places such as Germany, China and other parts of Asia, did saving continue to fulfil the traditional function of making funds available for productive investment.

As the Boom began, the Casino economy continued to drain funds away from productive investment, and into speculation, precisely at the time when those funds were needed to recapitalise, and restructure productive Capital towards those areas of high-tech, high value production that these economies needed to develop in order to be globally competitive.

Worse than that. Instead of creating stability, the functioning of the casino economy acted to continually blow up asset price bubbles in property and share markets. Each time those bubbles burst, the State was led to intervene to reflate them – what in the US came to be known as the Greenspan Put – by printing more money, and cutting interest rates.

The consequence instead of stability was repeated financial crises such as those in 1987, 2000, and 2008. But, worse than that, one of the functions of Financial Capital was supposed to be to help Industrial Capital – within which I include those areas of productive activity in the provision of services – provide their workers with Pensions. For Industrial Capital, Pensions are deferred wages, and as Marx long ago demonstrated wages fluctuate around the Value of Labour Power.

Pensions are an integral part of the cost of reproducing modern Labour Power. But, the Financial crashes had, in fact, not ensured that provision, but completely undermined it. Huge sums that should have been available to meet those pensions simply disappeared. That is why Industrial Capital has been led to cut, and abolish the Pension schemes it had put in place, it is part of the reason that Pensions in the State Capitalist sector are under attack. But, as Marx and Engels long ago demonstrated, when they showed that wages fluctuate around the Value of Labour Power, competition between Capitalists for that Labour Power will ultimately drive wages – including that part devoted to pensions – back up to its Value.

“The history of these Unions is a long series of defeats of the working-men, interrupted by a few isolated victories. All these efforts naturally cannot alter the economic law according to which wages are determined by the relation between supply and demand in the labour market.

Hence the Unions remain powerless against all great forces which influence this relation. In a commercial crisis the Union itself must reduce wages or dissolve wholly; and in a time of considerable increase in the demand for labour, it cannot fix the rate of wages higher than would be reached spontaneously by the competition of the capitalists among themselves.”

Engels - The Condition Of The Working Class In England p. 243.

If Pensions are reduced now, they will either have to be restored later, or else wages will rise to compensate. In other words, the ultimate cost will fall on Productive Capital, it will mean a sizeable reduction in its Surplus Value.

All of that should mean that the conflict of interest between productive, Industrial Capital, and Financial Capital is heightened. The further consequences, being played out with the sovereign debt crisis, in Europe, with problems in the US etc. could be added to that. It would be surprising if that did not find its reflection in the superstructure, in the political realm, and in the corridors of power of the Permanent State, of which the Police are an integral part. Not, of course, in some crude mechanistic, determinist manner, but in the kinds of views that are expressed, and picked up by different parts of that political and ideological superstructure. The State is, after all as Marx and Engels said, an Executive Committee of the ruling class, and it, therefore, reflects the divisions that exist within it.

The Financial Crisis of 2008, should, under those conditions, have led to a significant reduction in the power of Financial Capital, and for a time it did. Fred Goodwin decried the fact that the State had imposed a solution on them, when it effectively nationalised the Banks to prevent them going bust.

But, the size of the Financial sector was so great that, even in providing a solution for this immediate crisis, the State was forced to do so by bailing out Financial Capital. A similar situation can be seen now with the Euro debt crisis. There are a number of reasons for the dithering over providing a solution. Firstly, time is being bought so that private financial Capital can sell its peripheral sovereign debt to the State, so that it bears the cost not the private Capitalists.

Secondly, Merkel, and other Northern Europeans are seeking the establishment of something approaching a single EU State, in which they will be dominant, and through which they can implement a single EU Fiscal Policy, thereby exercising control over the Budgets of peripheral economies. But, also, Germany is insisting that, as part of any immediate planned default, for Greece, the private Capitalists SHOULD take a haircut. In other words that those US, and West European Financial Capitalists, who ploughed money into Greek debt, should have to lose some of it.

That Germany, whose economy is still heavily geared towards industrial production, and export, and is able to generate all of the Money Capital it requires internally, should seek to make the Financial Capitalists pay some of the costs, rather than it be borne by Industrial Capital, is then understandable. The longer they delay, the stronger the Germans become, and the more the peripheral economies which need to be bailed out will support the idea of a centralised State, and the more those other states such as the UK, will be forced to accept that development or risk the collapse of the EU itself, or their exclusion from it. Once again it would be surprsing if these considerations, which deeply affect the interests of Big, Multinational Industrial Capital did not find some resonance within the corridors of power, and to an extent the reactionary, nationalistic ideas pushed by the Murdoch Empire, and other sections of the gutter press are contrary to it. It would not be surprising to see this scandal spread to the other parts of that press such as the Daily Mail, and Express, which also create that kind of consensus of Public Opinion, which acts to constrain and shape the actions and programmes of politicians.

That is why the idea of having an Inquiry conducted by another part of that Power Elite, the Judiciary, is ridiculous. A thorough inquiry would no doubt find similar links between the top Judges, and the media and big business. Judges after all come almost exclusively from the ruling class, having been educated at Public Schools, coming through the top Universities, fraternising along the way with the top bosses, the top politicians, the top cops, the top military brass and so on.

Before becoming Judges they have worked as lawyers, most of whose business comes from representing those same big companies, those same rich bosses and so on. A real inquiry would also expose all of those links between the Judiciary, the Media, the Politicians, the Big Companies and so on past and present. But, likewise it is not just with the media that the top politicians have close links. The Tory Front bench are all multi-millionaires, whose wealth resides in large share holdings in those very companies.

Politicians of all stripes are put on the Boards of Directors of top companies, merely for their names, and in some cases for the contacts they can provide in the corridors of power. Simply for lending their name to these Big Companies, these politicians can be paid more than an ordinary worker earns in several years.

Look at Geoff Hoon, for example. According to Wikipedia,

“In May 2011 Geoff Hoon took on a role with AgustaWestland. The same company had been awarded a £1.7billion contract when he was Defence Secretary.

AgustaWestland was named as the preferred bidder for the Future Lynx project to deliver a new generation of helicopters to the MoD in March 2005 when Mr Hoon was Defence Secretary. No other firms were invited to bid, despite claims that other manufacturers could have provided an alternative more cheaply and quickly.”

Or take John Hutton. Before becoming a Labour MP and Minister he was legal adviser to the bosss organisation, the CBI. After leaving Parliament he was made a Director of the US power company Hyperion Power Generation, as well as being Chairman of the Royal United Services Institute.

This is the same John Hutton, who was used by the Liberal-Tories as cover for their attacks on the pensions of ordinary, hard-working, people in the State Capitalist sector, made necesssary by the Financial Crisis caused by the gambling of the Financial Capitalists.

And, in fact, in Britain and the US, and other Capitalist countries, the Boards of Directors are stuffed full of past Judges, Generals, Lords, and other members of the Power Elite.

The revelations about the links and corruption at News International, the Metropolitan Police, and with top politicians, is not an aberration, it is just lifting a corner of the lid on the real way in which Britain, and other Capitalist countries are really governed, who has the real power, and how it is exercised, whoever wins elections. If we really want to expose that truth then we need an inquiry into all these connections, and that will not be done by those who are part of that arrangement. It could only be done by a Workers Inquiry.

As I wrote in my blog, Boardroom Bourgeois Democracy, modern Capitalism works by delegating the work of day to day management of large companies to bureaucrats, professional managers, just as the ruling Capitalist Class delegates the running of its State to similar bureaucrats, with the elected politicians acting mostly for show, to make the masses believe that they can have some influence on events by voting periodically in elections. But, as Enron, and other corporate scandals showed, these bureaucrats can also have their own personal interests that they will try to further.

Every so often, when they get out of hand, the dominant Capitalists have to call them to account. What we have at the moment, is some of those dominant sections of Capital calling to account those who it has entrusted to protect its interests, and the links they have formed with other sections of the Capitalist Class, whose sectional interests threaten the interests of Capital as a whole. But, when thieves fall out, we should facilitate their blood-letting, and weaken their gangs.