Northern Soul Classics - Danger, Heartbreak Dead Ahead - The Marvellettes

Wow, Motown magic at its best.  Who can resist wanting to get up and move to this.  Just one of the great songs from the marvellous Marvellettes!

Wildfire

The Ottoman Empire in 1914

According to reports just released on RT, Turkish troops are amassing on Syria's Northern border, whilst Saudi troops are ammassing on the Southern border.  This looks like the beginning of a shooting war which will pit the forces of Sunni-Clerical fascism, and feudalism, backed by the US against the Alawite, Bonapartist regime in Syria backed internally by Syrian Christians, and externally by Russia, and the forces of Shia Islam based mainly in Iran and Iraq.  It comes on top of recent Turkish air incursions into Iraqi Kurdistan, and against the PKK, as part of what has been described as a move to Neo-Ottomanism, by the Islamist regime in Turkey.  It also follows the incursion into Syrian airspace by a Turkish jet that was at the least on a spying mission to look for information on air defences, or else was actively testing out those air defences.

The Assassination Of Archduke Franz Ferdinand
Sparked WWI

Any such shooting war holds out the danger of setting off a wildfire reaction similar to that which led to WWI.  The situation in Turkey itself is already fractious with fault lines between the Islamic regime, and the forces of the military.  It is not just that Turkey has historically stood at a cross roads between Europe and Asia, but that it has likewise stood at a cultural cross roads too dividing the Islamic East, and the Judaeo-Christian West.  It carries within it all of those conflicting forces.

The attack by Turkey on Iraqi Kurdistan, and the increased attacks on the PKK inside Turkey, also illustrate the potential sparks that could lead not just to a shooting war between Turkish and Syrian forces, but could spark a regional war, and possibly one that could spread way beyond regional borders.  The Civil War in Syria, has increasingly divided along religious lines, and spread into Lebanon.  Turkey, alongside the feudal, Monarchical, regimes in the Sunni Gulf States, have been sending in troops, special forces, money, and the latest weapons into Syria for some time.  That has sometimes even come into conflict with some of those Syrians who had their own reasons for opposing Assad's regime.  Some of these external forces have clearly been responsible also for some of the massacres that have occurred, such as the Houla Massacre, which was blamed on forces supporting Assad, but which its been shown were actually committed AGAINST supporters of Assad.

On a proportional basis more people have been killed by
the Bahraini regime, supported by Saudi Arabia & the West
than have died in Syria.

Any war launched by Turkey, and by the Sunni Gulf states will almost inevitably be seen by Alawites, Christians and Shia, as an attack on them.  Given the continuing protests by Shia in Bahrain and other Gulf states against their oppression by the Sunni rulers of these feudal regimes, the likelihood of this being intensified at the very least seems likely, and any attack by Saudi on Syria, could well be met by an attack on Saudi by Iran and Iraq, using a defence of oppressed Shia in Gulf states as their own cover.

The Kurds in Turkey, Iraq, Iran and Armenia are likely to see any such conflict as an oportunity to push their own claims for statehood, opening yet another front of the war into Central Asia, which directly affects the strategic interests of both China and Russia, who have their own Islamists to deal with.  With the on going Civil War in Libya, the potential for a Civil War in Egypt as conflict between the Military and the Muslim Brotherhood erupts, along with the existing conflict in Sudan, and Mali, the potential exists for the conflict to also spread in a southerly direction into Africa.

Most dangerously, however, with increasing tension in Turkey over the increasing islamisation of the country being carried out by the Government, any war against Syria that is seen as part of a sectarian civil war, is likely to result in the eruption of fighting in Turkey itself between Christians and Muslims, which then threatens to result in the historic tensions between Christian Greece, and largely Muslim Turkey to erupt.  That brings such a war not just into the sectarian bear pit that has always existed in the Balkans, igniting renewed fighting in Kosovo, Bosnia etc., but also then threatens to draw in Albania on the side of the Muslims, and Italy on the side of Christians.

There is no shortage of Nationalist and fascist demagogues that have crawled out of the woodwork over the last few years, as a consequence of the economic crisis who would have no qualms about fanning the flames of war to pursue their own political interests.  And some of them are located within the European centre, as well as in its periphery.

Euro String Refuses To Be Pushed Forward

EU politicians at the 20^th Summit over the debt crisis have come up with another deal. It seems to have exceeded expectations, which sent stock and bond prices higher, though on past experience they may well be down again by the end of the day. They have already lost about a quarter of the initial gains as I write. The deal does not resolve the real issue, but it may just about buy enough time to avoid the collapse of markets that traders were warning about earlier in the week.

What the deal does is to provide finance to prop up the Banks. Until now, where the Banks in any Eurozone country needed to be bailed out, as happened in Greece, Ireland and Portugal, it was up to the nation state to do the bailing. As happened in Greece, Ireland and Portugal, that meant that the bad debts of the private banks were transferred instead to the State, which meant that the sovereign debt of the State then rose. In all these cases, that meant that the borrowing costs of the State itself rose sharply. In turn they had to turn to the Eurozone to be bailed out, and under German and Northern European instruction, the cost of that was to implement draconian austerity measures, which then sent these economies into a death spiral of economic decline, which meant they were even less able to cover he cost of servicing their debts.

Now, the Eurozone has agreed to provide finance from its bail-out funds – the EFSF and ESM – directly to the banks, so that it does not go against the sovereign debt of the individual state. That is what Spain had been demanding recently in relation to its Banks, but had to eventually agree to go through the normal channels. It is one reason that the Yield on the Spanish 10 Year Bond recently spiked over 7% again. It appears that at the Summit, Spain, Italy and other countries demanded the direct funding of banks or they would not agree to any other proposals. Merkel seems to have blinked, but only with one eye.

For one thing, Germany is demanding that before any bank gets a direct bail-out, it will have to undergo individual scrutiny before any finance is provided. Moreover, probably to meet with German Constitutional law, any such funding will have to be discussed on a case by case basis by the German Parliament. In other words, Germany will gain a large degree of oversight over every Eurozone Bank. That is a precondition for establishing the now agreed Banking Union, that should be set up by January of next year. None of this is good news for the UK.

When Cameron stormed out of the EU meeting some months ago, he gave up any opportunity for the UK to have a say on these Financial matters relating to the Banks. That means that the Eurozone will be able to make these decisions, and organise affairs to its own convenience, which is likely to be contrary to the interests of the UK Financial Services industry. The centre of the Eurozone's finance industry is in Frankfurt, where the ECB is based. At a time when the reputation of the UK Finance industry is under sustained attack, because of the revelations over the manipulation of LIBOR rates, over yet further mis-selling and so on, and what that says about the inability of the UK state to regulate what looks like a version of the Wild West in the City, there will be increased pressure for regulation to move to a Europe wide body, from which the UK may find itself excluded.

What the Eurozone deal does, of course, though is not a great deal better than the kind of actions that the bankers themselves are being accused of. At the end of the day, it amounts to taxpayers giving money to Bank shareholders who made a gamble and lost. In stark terms most of the Banks throughout Europe – including in the UK – are bust. They are only being kept afloat on a raft of lies, and state provided life support. That was clear in Ireland. The Banks had lent irresponsibly to home buyers, and builders during the property bubble. Once the bubble burst, it became apparent not only that the borrowers could not repay their loans, but that the paper value of the properties against which the loans had been given, and which sat as assets on the Banks' Balance Sheets, were a complete fiction. The same is true with Spain, the same is true with the UK. The only difference is that the fiction has been exposed in relation to the property bubble in places like the US, and Ireland, it has partly been exposed in respect of Spain, which is why its banks have started to go bust, but it has not yet been exposed in relation to the UK, where property prices have been equally inflated, and where the fiction is yet to be properly exposed. But, Money Week has recently set out the extent of arrears on UK mortgages, for example, something which can only get worse as a developing Credit Crunch forces mortgage rates higher, and wages get forced lower. Once that begins to turn into defaults, repossessions, and forced sales it will lead to a catastrophic feed back loop, whereby prices fall sharply, and as prices fall so the Banks will seek to repossess more quickly and more ruthlessly to protect themselves against the destruction of their Balance Sheets.

Of course, we are continually being told that any such collapse would be terrible for the rest of us. But as I pointed out - What Happens If Greece Defaults – that is not at all necessarily the case. If many of these Banks went bust, the shareholders of those Banks who made bad bets would lose all their money. That is the risk they took when they bought their shares. There is no reason that workers/tax payers should bail them out any more than that I should get bailed out for choosing the wrong numbers in the last lottery draw! The reality is that like any other business, if these Banks went bust, other banks, other business, other Capitalists would step in to buy up their assets on the cheap. Having done so the conditions would then be established for them to make a higher rate of profit on their activities. As Marx puts it,

“This is one of the reasons why large enterprises frequently do not flourish until they pass into other hands, i. e., after their first proprietors have been bankrupted, and their successors, who buy them cheaply, therefore begin from the outset with a smaller outlay of capital.”

Capital Vol III Chapter 6

And as I pointed out in the above blog, that also means that workers themselves become potential buyers of these very cheap assets, using their Pension Funds etc., or using the funds already at their disposal through the existing Co-operative Banks etc. As Marx points out there is a significant difference between this fictitious Capital that rests purely on inflated asset prices, and real productive Capital. When real productive Capital is destroyed, real wealth is destroyed. Commodities remain unsold, and rot. Factories are closed down, and workers are thrown on to the dole, which means a further reduction in aggregate demand, and a further twist down in the economic spiral. But, just as the growth of fictitious Capital adds nothing to real wealth, so a destruction of fictitious Capital need not mean a destruction of real wealth either.

If fictitious capital is destroyed, and the fictitious values of assets it rests on – property prices, share prices, bond prices, various financial derivative prices – are slashed along with it, this can in fact lead to a significant increase in real wealth. If house prices are slashed, then all those workers currently frozen out of the housing market are able to buy houses. If land prices collapse, the builders can build more cheaply, and have an incentive to build rather than speculate on the land in their land bank rising in price. That means also that more people are employed in construction, but now on a more solid basis. Instead of speculating on rising share prices, there is an incentive to put money to work in real productive investment. In fact, under such conditions, share prices could fall as more new shares to finance this activity are issued, rather than money simply chasing after the same limited number of existing shares in the secondary market. The same is true with Bond Prices.

The fear has been generated because of the history of the 1929 Stock Market Crash, which is seen as causing the Great Depression. But, that is not true. In fact, Europe had been in a period of Long Wave decline from around 1914-20. It is what created the conditions for WWI. It is also what undermined the strength of European Labour Movements during the 1920's. It is what led to the continued attacks on workers wages during that period, which led to the General Strike in Britain, for example. It was the culmination of this process of Long Wave decline that resulted in the Depression of the 1930's, not the Stock Market Crash which was merely a symptom. In fact, by the later 30's, as the Long Wave reached its nadir, the introduction of new industries such as cars, consumer electronics, petro-chemicals etc. were already creating the conditions for the new Long Wave Boom, and the destruction of Capital, and other asset values – house prices collapsed during the Depression – created precisely those conditions Marx describes above, for Capital to make higher rates of profit, and provide an incentive for further investment in productive capacity.

There is no reason that we should support bailing-out the banks. Let them collapse, and then let workers buy them up cheap and run them as Co-ops. As the International Co-operative Alliance put it in their Open Letter to the G20 in March 2009,

“At the same time, those same world’s citizens know that there is an alternative secure, stable and sustainable model of business owned and controlled by 800 million people worldwide. It is true to its global values and principles of self-help, sustainability, community ownership and control, democratic participation, fairness and transparency. It is a model of business that is not at the mercy of stock markets because it relies instead on member funds for its value; and is not subject to executive manipulation and greed because it is controlled by local people for local people. It is a business where the profits are not just distributed to its shareholders,but are returned to those who trade with the business, thus keeping the wealth generated by local businesses in the local community for the good of the local environment and families.

This is the co-operative sector of the global economy which employs 100 million people worldwide. It is no coincidence that the world’s most successful and stable economies generally also happen to have the world’s most co-operative economies.

It is also no coincidence, that those co-operative businesses that have stayed faithful to cooperative values and principles, are the same businesses that in recent weeks have benefited from the flight of deposits and bank accounts from the failing and collapsing investment houses and banks – an acknowledgement of the continuing trust with which they are endowed by the general public.”

What is worse about the deal struck by Eurozone politicians is that whilst it bails out the shareholders of these Banks, it does nothing to address the real problems afflicting the Eurozone. As Joe Stiglitz has pointed out in recent interviews that stems from the fact that Germany is imposing the wrong diagnosis and, therefore, the wrong solutions on Europe's economies. What the European economies – including Britain – require is not austerity, but growth. That will require not the kind of monetary stimulus that is being provided in the latest bail-out of the Banks, but a fiscal stimulus that will directly begin to put people back to work, and begin to remove the fear and uncertainty that exists.

That doesn't mean a stimulus to simply finance consumption, but a stimulus to investment, that both puts people back to work, and creates the kind of efficient, globally competitive industries, and infrastructure needed to address the current trade imbalances, that are the root of the deficits, and accumulated debt. As Joan Robinson pointed out long ago, there is a world of difference between borrowing to finance investment, and borrowing to finance consumption. But, as Stiglitz points out, of the €150 billion growth package talked about, only about €10 bn. is new money. In reality, even the €150 billion is peanuts compared to the size of the European economy, and only a fraction of the kind of programme required.

Without, a fiscal stimulus to create growth, any monetary stimulus will be, as Keynes pointed out, like pushing on a string, the more you push the more it simply bunches up without moving forward.

In reality, the €100 billion that Spain says it needs for its banks is more likely to turn out to be at least €400 billion. The support needed by Italian Banks could be at least around the same, and the knock on effects to other Banks around Europe, let alone the consequences as the UK property market collapses, and its Banks are seen to be bankrupt, will soon drain the available resources of the EFSF, and ESM, long before they are needed to provide finance for the sovereign debts of European economies. The ECB could make up some of that difference by following the example of the Federal Reserve to monetise these debts, but it would only provide a short term solution, and one that would require massive money printing that would sink the value of the Euro, and push up European Bond prices in general, as Bond investors feared inflation devaluing the Bonds.

The only real solution is for Europe to finance a programme of fiscal stimulus based on productive investment and restructuring by issuing Eurobonds backed by all Eurozone countries i.e. by the power of the German economy. Increasingly, that is the message that is being given by European politicians and business leaders to Germany too, as well as by the US. What is stopping it, is the reality of German electoral politics.

Merkel Must Go To Save The Euro

It is now clear that if the Eurozone – and possibly the EU as a whole – is to survive, Angela Merkel and her Government has to go. The chorus of calls from international, and Big European Capital has become deafening, for the EU's politicians to sort out the Eurozone's political crisis. Obama and US politicians and bureaucrats have been demanding they sort it out, as a precondition for instituting the kind of Keynesian fiscal stimulus that has been implemented in the US. The IMF, OECD, and even some of the conservative Credit Ratings Agencies have made similar comments, saying that austerity is killing the patient, and a plan for growth is required. Even China has made similar comments. The views of the dominant sections of European Capital, are channelled through the EU bureaucracy, and they too have been demanding that steps be taken immediately to sort out the political crisis, and institute a plan for growth.

The ECB has notably stayed out of the Bond Markets in recent months, and has made it clear that it will not take on the role that the politicians themselves need to fulfil. The top bureaucrats from Van Rompuy, the President, through Barroso, and the Commission have set out the necessary plans for the establishment of a Banking Union, of Fiscal Union, of Eurobonds, and of Political Union. The bureaucrats put in place only months ago to act as the conduit of European policy into the nation states have either been replaced by elected Governments as in Greece, which now demand a change of emphasis towards growth, and away from austerity, or else, as in the case of Mario Monti in Italy, have themselves become advocates of such a change of policy. Monti, has most vociferously adopted this position in opposition to Angela Merkel and other German politicians and bureaucrats. But, similar views are being expressed by other recently appointed bureaucrats such as Mario Draghi at the ECB.

 

If that were not enough powerful voices such as George Soros over recent weeks have pointed out that unless the European politicians sort it out, and drop the austerity measures in favour of growth, there will be a catastrophe. Monti has said the same, arguing that the Eurozone had just this week to sort it out, meaning at the Eurozone Summit (the 20^th over the crisis) happening today. Monti has reason to take such a stand. The Coalition of forces in Italy that supported his coming to office to replace Berlusconi, is falling apart, as the austerity measures tank the Italian economy just as they have done in Greece, Ireland, Portugal, Spain, and Britain. Berlusconi is reported to be amassing his forces ready for a comeback, which is neither good for Italy nor for Europe.

The voices of international Capital, and of European Big Capital are being channelled not only through the European and Nation States (though not uniformly), and through sections of the media – hence the recent media attacks on the Tories in Britain – and through Social Democracy. Although, Syriza is presented as some kind of Far Left organisation, in reality it is merely a Left Social Democratic Party whose positions are wholly consistent with a continuation of Capitalism in Greece, and Europe. The same is true of Hollande, and the French Socialist Party, which is acting now as the political spearhead of these forces throughout Europe. Its position of essentially Keynesian stimulation to promote growth, has not only been supported by international Capital, which has lowered French borrowing costs, but is being supported by Social Democrats in Portugal, Spain and elsewhere.

Even so, none of this changes anything unless Germany comes on board. At the moment, Angela Merkel is following the example of Margaret Thatcher by an insistent “Nein, nein, nein” in response to calls for emergency assistance to save the Euro. Yet, its reported that in private, Merkel's position is not at all so rigid as the public pronouncements. She has already agreed to a number of moves that only months ago she was insisting were not acceptable. But, Europe does not have time for these political cat and mouse games. One trader said yesterday that if the politicans do not come up with a credible plan by the end of the week, they could come in to work on Monday to find that everything had collapsed.

Merkel does not oppose the idea of a Fiscal Union, or Political Union. On the contrary, she repeatedly says that she is in favour of closer European integration. The point is she is only in favour of that integration on German terms. That means she is only in favour of it, if FIRST, other countries, essentially the peripheral – and not so peripheral, like Spain and Italy – economies agree to make themselves more like Germany, and if Germany gets a veto over their spending. On one level, of course, that is not unreasonable. A Workers Europe would have to operate on some similar basis too. Otherwise what is created is some kind of huge Welfare State where workers in one part see large amounts of the Value they create transferred to another, rather than there being a rational plan to ensure that everyone has work that creates Value. But, in practical terms here and now it can never be a basis on which to proceed.

The example is often given that Germany underwent a ten year programme of restructuring its economy and labour market. That is true, but it did so under conditions of growing prosperity not of rapid economic decline in workers living standards! In fact, it was not just a ten year period beginning with Gerhard Schroder that brought about those changes. German Social Democracy ensured such a transformation continuously from the end of WWII. It was one of the most successful examples of the Fordist/Welfarist model that incorporated the Trades Unions and the Workers Party – including for example, within the Works Councils – that ensured that workers co-operated with Big Capital to introduce new technology and techniques, and the necessary labour flexibility to go along with it that ensured large increased in German productivity, facilitated the development of German high value production etc. in return for high wages, and high levels of social welfare provision.

The same was true in Britain in some ways. In the 1940's and 50's, the number of pits that were closed, and the number of miners jobs that were lost in the immediate aftermath of nationalisation, far exceeded those wrought by Thatcher. But, there was essentially no resistance to these changes. The main reason for that is that under the conditions of the Post War Boom, there was a high demand for Labour. Workers were paid off from the pit on a Friday, and walked into a new job on the Monday. In addition, the loss of jobs, and closure of the least efficient pits was necessary in order to focus on introducing new technology to raise productivity at those pits where it was worthwhile. The introduction of this new, expensive machinery, meant that Coal bosses had an incentive to protect their investments – in a way they did not have previously in respect of Miners – by introducing new Health & Safety measures to reduce the danger of collapses, and of explosions, flooding etc. In other words, the economic boom meant that workers had little reason to resist the changes, because they could see an immediate benefit for themselves arising from them. That's not to say that Capital didn't benefit even more, it did which is why it introduced the changes.

But, for the same reasons it is clearly ridiculous to believe that Greek workers, or workers in Spain, Portugal, or Italy are going to accept ten years of massively falling living standards, unemployment and everything that goes with it, in order to bring about similar changes and restructuring. Ireland is perhaps an exception here, because Ireland, unlike, many of these other countries has a sizeable, modern, efficient sector of its economy based on technology already. Moreover, such changes in the peripheral economies and in Spain and Italy, would only make sense in this context, if there were higher value jobs for them to go to. At the moment there seems little prospect of that, and the more uncertainty that surrounds the future of these economies, the less likely it is that anyone will want to invest there.

As I've set out before in economic terms solving the Eurozone crisis is not difficult. The problem is its not really an economic crisis, its a political crisis, and resolving the politics is the difficult bit. What is needed is a fiscal and political union, and the establishment of Eurobonds. That would provide the basis for the establishment of a real growth plan for the whole of Europe, which would remove the uncertainty, and begin to modernise the economies of the periphery, so that they establish high value, internationally competitive sectors of their economy – as for example, Ireland, Germany and some of the Nordic countries have done – that are able then to support the rest of the domestic economy – i.e. the large number of people who work in the service and commercial sector meeting the needs of domestic workers. Given the current Long Wave Boom in the global economy, there is no better time to achieve such a solution.

The problem is that Merkel and her Government cannot sign up to such a solution. That is not because, as is often portrayed, the German workers will not accept such a deal. The reality is that German workers understand that they have benefited considerably from the EU, and from the Euro. Merkel's standing in Germany has been falling, and her Party has been losing heavily to the German Social Democrats and Greens. But, both the SPD and the Greens, support the establishment of Eurobonds etc.! So, why doesn't Merkel adopt that position. The answer is quite simple. Its the same reason that Cameron and the Tories abandoned their position of outspending Labour, and adopted austerity. In order to retain the support of their core Conservative vote, and membership, they are forced to adopt these positions, because otherwise they would have no chance of election at all. Simply adopting some of the positions of the Social Democrats would not win them the votes of Social Democratic workers, but it would lose them the votes of their core supporters.

So Merkel is trapped by the dynamics of bourgeois democratic, electoral politics. That is why the only solution, the only way to save the Euro is for Merkel and the CDU to go, and for them to make way for an SPD/Green Government. They could at least set out in convincing terms a plan for Fiscal Union, and for Political Union i.e. for the beginnings of a United States of Europe, and could immediately put in place the mechanisms for selling EU Bonds, and for a growth strategy for Europe. That is not to say, that such a plan would not mean Germany also demanding oversight of national budgets etc. - though this would be framed in terms of EU oversight – in order to ensure that any monetary or fiscal transfers were not simply being used to finance consumption rather than investment. But, it would mean that these two things could proceed hand in hand, in a necessary and logical fashion in a way that currently they cannot.

It looks likely that as with Greece, Italy may also face early elections. It would be useful if Merkel were to announce the same in Germany. Indeed, it would be useful to have a General European Election to be able to debate and decide on all these issues in an open and democratic manner. But, then if they don't come to a decision by the end of this week, there may be nothing left to decide upon. The pictures from Greece, frequently dwell on the ruins of the Acropolis, a symbol of that long dead Greek democracy. European politicians show all the signs that they may be about to create a new lot of ruins of European civilisation. The political divisions that are preventing the resolution of the problems of Europe demonstrate that Capitalism has now long since gone beyond the bounds of the Nation State – which is why all those reactionaries who look to a solution in a return to it are wrong – but it may be that Capitalist politicians are not capable of going beyond it. In that case, the historic task falls clearly to the workers of Europe to achieve it, by establishing their own unity across borders, and moving forwards to a United States of Europe, and a European Workers Government. It is task we should be undertaking right now.

Dickens Would Have Loved This

Charles Dickens never tired of lampooning the hypocrisy, humbug and absurdity of the British Establishment. In Britain today he would have found enough material for several novels.

A Cabinet of multimillionaires tells us we are “All in this together”, as it pursues an illiterate economic policy of austerity, based on political dogma, which is directed almost exclusively at the working and middle classes of the country, and which has sent the economy into a downward tailspin, which will again most adversely affect those classes. Report after report details the extent to which living standards have fallen by around 8% as high rates of inflation, caused by Government and Bank of England policies, squeezes real wages, as nominal wages are frozen, or cut, as taxes and charges rise, and as workers are forced to pay more into their Pension Schemes, whilst they are told they have to work longer before they can receive them, and that they will be smaller when they do. Of course, the increased payments do not actually go to providing a better pension. For workers in the State Capitalist sector, the money goes into the State's coffers to help it cove the deficit it has run up to bail-out its friends in the Banks. And, as Panorama demonstrated a couple of years ago, the reason private sector pensions are so bad – where workers even have them – is because up to two-thirds of their payments into these schemes go not to providing for their pension, but go in Commissions and other payments to the Banks and Insurance companies running the schemes.

The FT yesterday had an article about how in addition to these vast sums being siphoned off from workers pensions there was also significant fraud occurring within them. The FT also had an article yesterday which showed that far from us all being in this together, whilst workers real living standards are falling sharply the cost of living for the rich is actually falling! In an article - Luxury Goods Prices Falling – it shows that the prices of the kinds of things the rich spend their money on has fallen significantly.

And, of course, whilst the wages of workers and the middle class have been frozen or cut, whilst their benefits have been reduced, and their taxes raised, the rich have seen the opposite. In the last year, the pay of British Chief and other Executives has continued to rise by around 40 plus percent. And, of course, as wages have been cut or frozen, profits have risen, which means that the incomes of the rich in the form of dividends, and Capital Gains has risen markedly too. If you have had a large part of your money invested in UK Bonds, then the percentage yield on those Bonds has fallen – though the interest you receive on your original investment has not – but you will have seen the actual value of those Bonds rise markedly, providing a sizeable Capital Gain.

In the meantime, David Cameron's intervention over the tax affairs of Jimmy Carr has acted once again only to emphasise the hypocrisy and incompetence of the Government. Firstly, Cameron decided to speak out about Jimmy Carr's tax affairs, but refused to say anything about Tory supporting Gary Barlow. Of course, he has said nothing about all the other Tory supporters whose tax avoidance is equally liable for criticism. As many punters have pointed out, not only does this demonstrate the Tories hypocrisy, but it also once again demonstrates their ineptitude and incompetence, because it opens the door for the newspapers to boost their readership over coming weeks with revelations about the tax avoidance of Tory MP's and supporters, in a repetition of the MP's expenses scandal of a couple of years ago.

But, for all the coverage of Jimmy Carr's tax saving, it pales into insignificance compared with the tax avoidance that the Government actually encourages for the very rich. After all, one of their first actions was to reduce the taxes on business, they have introduced measures to cut National Insurance payments for employers, but not for workers, and so on. They have cut the 50p tax rate on higher earners at the same time as introducing a massive increase in VAT, which falls heavily on ordinary workers who spend a large part of their income. And, once again demonstrating Cameron's ineptitude, his comments about tax avoidance being immoral came in the same 24 hours when he had encouraged rich French individuals to dodge paying French taxes by relocating to Britain! That is one reason why the attempts of Tories to wrap themselves in the flag of patriotism, as they have done more than ever this year during the Jubilympics, is particularly crass and hypocritical, because like Capitalists everywhere, they have no real commitment to Britain. They will move their Capital anywhere in the world in order to maximise the return on it. It is only workers whose movement they seek to restrict through immigration controls etc.

Over the last few weeks, the most popular blog post I have written has been - Liberal-Tory Incompetence – which has taken over from another post along similar lines - A Bit Of A Pickle – that I wrote in August 2010. Its not surprising. As I pointed out in 2010, the Liberal-Tory Government were already then marked by an obvious degree of incompetence and ineptitude. The 2010 article pointed out that they had taken on the very elements of the State that they needed to effectively push through their measures. Its not surprising that they have so often found themselves having to apologise for faulty information, badly presented or formulated policies, embarrassing leaks and so on. Nor is it surprising that although the economy has suffered from all of the damage to confidence – Keynes' “animal spirits” - that flowed from their dire warnings of collapse into a Greek tragedy, and consequent need to impose a bout of anorexia on the economy, in fact, the Government has so far only managed to implement around 6% of its austerity programme.

Having pointed that out two years ago, and in the more recent post, it now seems that the mainstream media have also now cottoned on to the fact that the Liberal-Tories are pretty inept and incompetent.

But, that is another reason that Dickens would have made hay under those conditions. Dickens whilst lampooning such absurdity never saw the real basis of it. The real reason for the hypocrisy is that Capitalist politics is, and has to be based on a lie, or a whole series of lies – as I pointed out in my post - Capitalism And The Importance Of Lying. In fact, some of the incompetence springs from that source too, because having set up a series of lies in order to win votes, Capitalist politicians then find themselves trapped and having to make at least a show of following through on some of the proposals they have made. Of course, it doesn't explain all of the incompetence of Cameron and Co., that just comes down to the fact that they are incompetent.

Another example of that was given this weekend with Cameron's interview with the Mail on Sunday. At a time when the media is full of stories about rich people avoiding millions in taxes, who on Earth would consider it the time for Cameron not to talk about that, but to focus on yet a another £10 billion round of attacks on Benefits??? Not even the rancorous diatribes of the Mail and Express can surely overcome in the minds of the vast majority the chasm of separation between the Liberal-Tories attitudes to multi-millionaires who avoid paying even minimal amounts of tax, with their attitude to poor people, who even when they do fiddle their Benefits, still barely manage to make ends meet on a day to day basis, let alone the vast majority who do not!

But, Cameron's proposal to deprive under 25's of Housing Benefit, is likely to have other unforeseen consequences. The Liberal-Tory proposals to cap Housing Benefit has already led to a sort of ethnic cleansing of London, as Boroughs seek to relocate families to other Authorities as far away as Stoke. In Liberal-Tory Britain in 2012, it is the under 25's who form a large proportion of the unemployed. Given the concentration of population in London, the Liberal-Tory proposals are likely to have a significant effect on the London private rental market, adding to the consequences of the Housing benefit cap. Whilst the latter is likely to simply lead to a denuding of workers from Central London, who provide many of the more mundane and low paid jobs, the latter is likely to see both an increase in the number of young homeless, and an increase in the number of young people who remain in their parents home. The latter is undoubtedly the Liberal-Tory intention as a means of saving on Housing Benefit. The unintended consequence will be a large reduction in housing demand. That will affect all those amateur speculators who have gone into the buy-to-let market over recent years.

They are seeing downward pressure on rents due to some of the other measures introduced by the Liberal-Tories, and because of falling incomes, they are also seeing steep falls in the value of their properties, as the bubble in UK property prices begins to pop. At the same time, Banks and Building Societies are being forced to increase rates both for ordinary mortgages and for buy-to-let mortgages because of rising funding costs due to the developing Credit Crunch in Europe, and because of the repeated downgrades of Banks such as that announced by Moody's last week. The FT, this weekend ha an article which looks at the way in which Banks and Building Societies are now tightening the screw on those with mortgages who, having found it impossible to sell their houses as the property market crashes, have turned to renting it out. Now the Banks and Building Societies, are telling them that if they do, they will have to switch to a buy-to-let mortgage, which means paying up to twice as much in interest!

The lies that Capitalism is based upon stem from the nature of class society, and the fact that exploitation is presented as merely an exchange of equals. Dickens saw the inequities of Capitalism as flowing not from this class division of society, but from the individual actions of the Establishment. By the same token, he saw the solution not in the collective action s of workers, but equally in individual action. In his only novel set outside London – “Hard Times” - for example, he is as critical of the Trade Union organiser as he is of the employer. In all of his novels the happy ending is one achieved by individuals, and often by individuals given a helping hand by some philanthropist, for example the Cheerybyl Brothers in “Nicholas Nickleby”. In other words, he never rises above a radical Liberal criticism of Capitalism.

But, that is the case today with the media coverage over tax avoidance, and other elements of Liberal-Tory hypocrisy. The media can easily take on the role of critic under such conditions, because in reality, it does not take me, the media or anyone else to point out to ordinary workers, under current conditions the hypocrisy of the Liberal-Tories. It is there for all to see. But, indignation at that hypocrisy ultimately goes nowhere unless the explanation for it is rooted in an understanding of where it comes from. All too easily can that indignation be simply translated into calls for individual action, for people to be moral in their tax affairs, for naming and shaming of tax cheats, for limits on high pay, or for changes in the tax regime. But, none of these things can make one iota of difference to the problem.

Calls for people to be moral in their tax affairs begs the question what is morality in this regard. It is likely only to result in the less well off feeling even more under pressure. In the meantime the billionaires, and the huge corporations will continue to avoid paying billions in taxes. Limits on high pay, will not affect those who receive tens of millions in dividends and Capital Gains. And, no change in the tax regime, as Marx pointed out will change the relation between Capital and Labour. No amount of individual action of the kind Dickens wrote about, nor even collective action by Trades Unions, or Labour Governments can change that reality. As Marx pointed out,

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

Critique Of The Gotha Programme

In other words, if we really want to get rid of these inequalities, and all of the immorality, the absurdity, the incompetence, and the lies that go with it, we have to get rid of the economic basis of them. We have to replace the ownership of the means of production by Capitalists, and replace it with the Co-operative ownership of the means of production by the workers themselves.

Northern Soul Classics - It Ain't Necessary - Mamie Galore

Another bit of Torch Magic.  Get down to a few backdrops to this one.

Egypt's Generals Follow The 1848 Playbook

When the Egyptian Revolution erupted in the Spring of last year I wrote about the similarities and differences with the Bourgeois Revolutions that swept Europe in 1848, in particular the bourgeois revolution in Germany described by Marx. In the series of posts, Egypt What Is To Be Done?, I pointed out that the revolution was a bourgeois revolution not a proletarian revolution.

Like the 1848 Revolutions, the material foundation lay in the bourgeois economic development that had created a sizeable national bourgeoisie, along with a sizeable, educated middle class, and working-class. The bourgeoisie sought to translate its economic dominance into political dominance through the introduction of bourgeois democracy. As Lenin described in “State and Revolution”,

“Another reason why the omnipotence of “wealth” is more certain in a democratic republic is that it does not depend on defects in the political machinery or on the faulty political shell of capitalism. A democratic republic is the best possible political shell for capitalism, and, therefore, once capital has gained possession of this very best shell (through the Palchinskys, Chernovs, Tseretelis and Co.), it establishes its power so securely, so firmly, that no change of persons, institutions or parties in the bourgeois-democratic republic can shake it.”

The bourgeoisie in all societies forms but a small proportion of the total population, and so is always dependent upon the masses to push forward its own political programme. In Egypt as with all other bourgeois revolutions, the bourgeoisie has the support of the middle class, and particularly the liberal, middle-class intelligentsia. That was manifest in both the German and the Egyptian revolutions by the role of the radical students. In Germany, those students and intellectuals like Marx and Engels, relied on the printed word, in Egypt they relied on social media and mobile phones. In both cases, and as in Russia in 1905 and 1917, the workers, who have their own economic grievances, also have an interest in the winning of bourgeois freedoms such as the right to assembly, to free speech and so on, which are necessary to their own organisation as a class.

Unlike, Germany in 1848, the ruling class in Egypt were already the bourgeoisie. That is to say, that the economic and social relations in Egypt were already dominated by Capitalist production, and bourgeois social relations developed upon it. The State itself was a Capitalist State whose role was to ensure the reproduction of those very Capitalist relations. In Germany in 1848, the old Landlord Class remained the ruling class, and the State remained a feudal/military state dominated by the Prussian Junkers.

In Germany what had to be won was a Social Revolution, which replaced feudal economic and social relations with bourgeois economic and social relations, and which enshrined that within a Capitalist State, within a bourgeois-democratic political regime. In Egypt, what was required was merely a Political Revolution, which replaced the Bonapartist regime with a bourgeois-democratic regime.

As I pointed out, in many parts of the world over the last 50 years, there have been numerous examples of similar societies that have made the transition from Bonapartist regime to bourgeois-democratic regime. Contrary to the expectations of some on the Left, such transitions have frequently been brought about with the active support of “Imperialism”. It has done so, for the reasons Lenin describes above. Once capital becomes dominated by multinational, industrial Capital, which spreads out, and industrialises more and more economies, it needs to develop bourgeois-democratic relations, which provide “the best possible shell” for its activities in extracting Relative Surplus Value from an industrial working-class. That is not to say that in each and every case, Imperialism acts in this way. It does not do so because it has some moral commitment to bourgeois democracy, but only for its own economic and political interests. Where in the particular case, bourgeois democracy does not fulfil that function it has no qualms about supporting even the most brutal dictators.

Over the last 20 years or so European Capital, in particular, has sought to integrate the economies of the Middle East and North Africa. It clearly had hopes of establishing bourgeois-democratic regimes in these economies in place of the corrupt, and inefficient Bonapartist regimes of Mubarak, Ben Ali, Gaddafi and so on. But, the Middle East and North Africa are not the same as the countries of Asia, or of Latin America, where industrial development led on to the development of bourgeois democratic regimes.

Bonapartist regimes arise, because the ruling class are not strong enough to rule openly in their own name. That can be because economic development itself is at an early stage – Britain under Cromwell, France under Napoleon – or because the delay in development means that the bourgeoisie is itself under threat from a sizeable, and rising proletariat. This allows the State to rise up above the contending classes. Usually, such regimes whilst forced to ensure the reproduction and interests of Capital, are themselves made up of representatives of the petit-bourgeoisie, they frequently rely on the Officer Corps of the Army, which is itself drawn from those social layers. It is usually, the Colonels, Lieutenants and so on that organise the coups that put these regimes in place not the Generals, who are drawn from the ranks of the bourgeoisie itself.

But, Bonapartist regimes can arise because the cross-cutting cleavages within societies do not just run along class lines. They run also along ethnic, tribal, and religious lines. Divisions of society on this basis can just as easily prevent any particular social group being able to establish a stable bourgeois democratic regime. The State once again rises up above these divisions with claims to rule in the interests of the whole of society. Although such regimes, usually ensure the domination of some particular group, they do tend to act in a way that does suppress Civil War between the contending groups, which entails making at least some concessions to subordinate groups. The regimes of Gaddafi, Saddam etc. were brutal and nasty, but they did largely prevent continual civil war and sectarian conflict.

These kinds of vertical cleavages – i.e. divisions of society that run through all classes on ethnic, religious, tribal grounds – were mostly not significant in Asia and Latin America. Economies such as Brazil were able to make a transition to bourgeois democracy on a similar basis to that which had occurred in Britain and other developed economies. That is a compromise between the interests of the workers and Big Capital could be achieved on a Social-democratic basis that provided concessions for the working-class, through which it was incorporated, and through which Capital also ensured the conditions needed for its own reproduction.

The fact that countries like Egypt had had secular regimes for a long time, and that other economies like Turkey, with their own sectarian divisions, had moved to bourgeois democracy, must have given Imperialism confidence that the large liberal middle class which headed up the revolution, would be able to ensure such a transition.

But, as I pointed out in that series of posts, there were, in fact, only two large organised groups in Egyptian society. One was the military that had control of the State, and the other was the Muslim Brotherhood. For a progressive resolution to occur, it would be necessary for the workers to organise themselves to advance their own interests, and in the process to organise within the ranks of the Army amongst the ordinary workers and peasants that made up its foot soldiers, in the way the Bolsheviks had done within the Tsarist Army in 1917.

As I pointed out, if the Army gave way early on, and possibly facilitated by Imperialism, the grounds might be established for a transition to bourgeois democracy. However, Bonapartist regimes such as that which had been in power in Egypt for 60 years, like the Stalinist Bonapartist regime in the USSR, accrue to themselves significant material advantages. On a subjective, superficial analysis, they appear to have many of the characteristics of a ruling class itself. That is what misled subjectivists to see the Stalinist bureaucracy as a ruling class.

But, like a ruling class, such an entrenched military-bureaucratic elite is not likely to give up its power and privileges easily. I warned that this was a danger in Egypt. If the military held on, then the revolution required to remove it would have to be more thoroughgoing, would take on more the aspect of a social revolution than purely a political revolution. Under those conditions, it would take on the characteristics of Permanent Revolution, as described by Trotsky. In other words, the history of the Revolutions of 1848, and how they were defeated would once again become relevant for the Egyptian workers.

It soon became apparent that the Egyptian generals were not going to simply cede power. As I wrote in Military Coup As Egyptian Workers Take To The Stage, what was being described as a victory for the Revolution, when Mubarak was forced to step down, was no such thing. It was, in fact, a military coup launched by the State against its own figurehead, the better to control the developing situation. That was manifest in the events of the following months, when that military began to adopt all of the kinds of tactics that the Prussian Junkers had used in 1848. They began to act against workers, and radical students, for instance. They made concessions on paper that were designed to sap the strength of the opposition. They began to divide up the opposition by doing deals with the Muslim Brotherhood.

Bit by bit, the opposition was divided, demobilised, and demoralised. Bit by bit, the military began to reassert its control, and to take back the concessions, or to neuter the concessions it had only promised. What we see now, is that the military has successfully driven a wedge between the liberal bourgeoisie and middle class on the one hand, and the Muslim Brotherhood on the other. The success of the Muslim Brotherhood in dominating the Parliamentary elections, clearly worried the bourgeoisie. When the military stepped in to close down the Parliament, the liberal bourgeoisie largely failed to protest against it. In the Presidential elections it became clear that rather than vote for the Brotherhood, the bourgeoisie, large sections of the middle class, and of the working-class preferred to stick with the devil they knew.

Whether Shafik or Mursi are eventually declared to have won the presidential election is now irrelevant. The military have stripped the office of all significance. If Mursi is declared the winner he will have no power. If the MB attempt to change that they will find no support within the ranks of the liberal bourgeoisie and middle-class, and much of the working-class. It was notable that many working-class women who were interviewed prior to the election made it clear that they had no desire for the MB to win power. As happened in Germany in 1848, all that will be left will be for the State to act as a Party of Order, and put down the MB rebellion, before reasserting control.