Sunday, 24 June 2012

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?”

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.

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