Posts Tagged ‘’23 Things They Don’t Tell You About Capitalism’’

Another Fascinating Video from Ha-Joon Chang

August 17, 2016

I put up a piece yesterday about an interview Owen Jones made with Ha-Joon Chang, a South Korean lecturer in economics at Cambridge. Mr Chang’s the author of 23 Things They Don’t Tell You About Capitalism. He makes it clear in his book that he is not opposed to capitalism, but is very definitely opposed to neoliberal economics, the free market rubbish that has dominated global economic policies at the expense of the poor since Thatcher and Reagan. The book’s well worth reading, if you can find a copy. It’s written for the general reader, and so is written in clear, simple language to make a devastating critique of current economic dogma. He shows how states can make good economic decisions, constructing and managing efficient industries and planning the general economy. The welfare state does not make people lazy, but actually makes them willing to accept change. And western, developed nations are hypocritical and destructive in demanding that the developing world should open their countries up to free trade. He shows very clearly on this point that both Britain, America and the other industrialised nations actually industrialised under a system of very strict protectionism to keep foreign competition out and protect their nascent industries. He also goes on to disprove some of the twaddle that’s been talked about the difficulties Africa faces in industrialisation, such as tribal conflict and the supposed racial or national character of its peoples. He points out that there were also vast ethnic or regional friction in the developed countries of Britain, France, and even Korea, for example, until very recently. As for the supposed laziness of Africans, this was also said in the 19th century of a people, who now have a colossal reputation for hard work: the Japanese. It was also said of the Germans even further back in the 16th century.

Michelle also commented on the piece, and enclosed a link to another of Mr Chang’s videos. She wrote

Several years back when I used to blog I had links to Ha-Joon Chang’s writings, he’s brill! This recent RSA animate video of his perspective is also very much worth a watch, ‘ ‘Economics is for everyone’ (or thinking outside the matrix part one, to go with Beastie’s post):

When I posted both these links last week, a commentator rightly said “Neoliberalism is not a matrix it’s a crime against humanity.”

I haven’t seen the video, but anything by Chang is bound to be great. And I entirely agree with her last comment. Neoliberal has caused mass suffering across the globe. It is responsible not just for a growing number of impoverished people, both unemployed and in work, in this country, but also for wrecking the economies of whole nations in the Developing World. People are dying of starvation in this country. It’s contributed to mass starvation there. And this has also fuelled political and social unrest, from militant Islamism, to Marxist uprisings and piracy off Somalia and the South China Sea and Indian Ocean. In terms of the magnitude of the suffering it’s caused, it is indeed almost literally a crime against humanity.


Owen Jones Meets Critic of Neoliberal Economics, Ha-Joon Chang

August 16, 2016

Ha-Joon Chang Pic

In his series of videos on YouTube, Owen Jones, the author of Chavs: The Demonisation of the Working Class, goes to meet with various public figures. These include Jeremy Corbyn, Peter Hitchens and so on. In this video he talks to Ha-Joon Chang, a South Korean economics professor at Cambridge University. Chang’s interesting as he’s a critic of Neoliberalism, the free market economics that has been this country’s political dogma since the Margaret Thatcher. I put up a post a little while ago on Chang’s 23 Things They Don’t Tell You About Capitalism.

The conversation begins by Chang attacking the government’s decision to cut public spending in order to shrink the debt. He says that public debt represents public demand, and if you shrink it, the economy will also shrink, and you’ll still be left with a massive debt. This is what has happened to Greece. It’s far better actually to put more money into the economy. When Jones asked him if Osborne was stupid for pursuing this policy, Chang states very clearly that Osborne did it for other reasons – to undermine and destroy the welfare state, and make the country more like America.

The two then discuss whether it really is a case of capitalism for the poor, and Socialism for the rich. The welfare net for the poor is being destroyed, but there are massive subsidies for the rich. Chang makes the point that big business demands these subsidies, but when the issue of taxation is raised, that’s an entirely voluntary matter, and they’ll start an offshore bank account to avoid paying it. He also discounts the Libertarian attitude that ‘taxation is theft’. He makes the point that wealth is socially created. The attitude that taxation is theft may have made sense in the 16th century, when most people were independent farmers, but it doesn’t apply today, when you need a whole ranges of services to create wealth. They also remark on the double standards about the issue of inequality and greed. Libertarians and neoliberals like greed, because it supposedly stimulates the economy. But as soon the poor start resenting the excessive wealth of the rich, then they denounce them for being envious. Chang states that you can’t have inequality, as it means the poor and rich aren’t living in the same world. They might inhabit the same geographical area, but it’s like one was living in the 22nd Century and the other in the 18th and 19th.

Jones makes the point that whenever anybody discusses nationalisation, they automatically go back to the 1970s and the inefficiency of the services then. Chang states that nationalisation isn’t necessarily the answer, as if something is properly regulated you can have the benefits of nationalisation without it. However, there are examples where private enterprise, or at least unregulated private enterprise doesn’t work. He compares the British and Japanese rail networks. The British rail network now consumes massive subsidies, and is the most expensive in Europe. It doesn’t work, because you can’t have a competitive system on the same piece of railway.

Jones also tackles him about the welfare state. Isn’t it true that it’s bloated, and encourages people to be lazy and feckless. Chang states that there is one aspect to that question that he does agree with. He believes the welfare state does need some reform, as it was created in the 1940s-50s. Now people are living longer, nearly 30 years after their retirement. But he says there’s little evidence that it makes people lazy, and criticises the way people have stopped talking about it as an important form of social security. He makes the point that in countries with a strong welfare state, people are much more willing to accept corporate restructuring. Such as in Sweden, for example. This is not to say they prefer it, but they are willing to accept it. In countries like America where there is little in the way of a welfare state, workers, even if not unionised, are much more resistant to change because they can lose everything.

Chang also talks about the difference between classical liberalism, democracy and neoliberalism. Neoliberalism is a return to the economic doctrines of the 18th and 19th century, when the only form of liberty that mattered was the liberty to own and use property how you wanted. Initially, liberals weren’t democrats, because they feared that democracy would limit the freedom of the property-owners to do as they wished. Neoliberalism is a return to this system, with a bit of democracy. However, the political situation is altered so that democracy does not interfere with the liberties of the propertied classes. For example, they’re in favour of an independent central banks, as then it doesn’t have to be accountable to government over interest rates and the effect that may have on society. They’re also in favour of independent regulatory authorities, as that won’t allow government to interfere with private industry either.

Lastly, Jones asks him if he believes that the system will ever change. Chang makes the point that the past several decades have seen changes that people did not believe would happen. He talks about how Maggie Thatcher 25 years ago said that there would never been Black majority rule in South Africa. If you go back fifty years, then the leaders of the African independence movements were all hunted men in British prisons. It may not happen for decades, but eventually change will come. He quotes a proverb, which says that you must be a pessimist in your head, and an optimist in your heart. Above all, you have to keep fighting, as they won’t give you anything.

Here’s the video:

Vox Political: Real Wages Fall by Ten Per Cent Under Tories

July 30, 2016

Mike also published a piece last week on a report published on Wednesday by the TUC, which found that while wages had grown in real terms across the EU between 2007 and 2015, they had fallen in Britain by 10.4%. The average rise in wages across the EU was 6.7 per cent. In Poland, wages had risen by 23 per cent. In Germany wages rose by nearly 14 per cent, and in France by 10.5 per cent. The only countries across the OECD which suffered a fall in wages were Portugal, Britain and Greece.

Mike’s article has two illustrations – one is a graph showing the rise in real wages in various countries, while another is a meme showing the massive pay rises enjoyed by other, very privileged groups, in Britain. Like Bankers, whose pay has risen by 35%, directors of FTSE 100 companies, 14%, and MPs, whose pay has gone up by 11%.

Mike makes the point that New Labour must share some of the blame for this, as not only was Peter Mandelson and his chums very relaxed about people making money, they were also extremely relaxed about wages stagnating. He makes the point that the crash his the poorest the hardest, and the austerity launched by the Tories has been punishing and impoverishing the poor to bail out the bankers and the rich. He also makes the point that Owen Smith’s solutions are just cosmetic, and won’t do anything without concrete proposals for the redistribution of the extra money gained through the ‘wealth tax’ he proposes.

See the article:

Mike’s right about New Labour being very relaxed about wages stagnating. In fact, wage restraint has been a major part of the neoliberal consensus ever since Maggie Thatcher took power in 1979. Keynsianism tolerated high inflation – and in the 1970s at times the inflation rate in Britain was truly eye-watering – as it was coupled to an expanding economy. Both Labour and the Tories attempted to keep pay rises within certain boundaries nevertheless. Thatcher’s Monetarism was much harder towards inflation. It saw this it as the major obstacle to economic growth, and so demanded that it be ruthlessly cut, even if this meant shedding jobs on a truly massive scale, accompanied by a fall in real wages, and the dismantlement of various welfare programmes. It also meant abandoning the Keynsian commitment, pursued over 40 years, to full employment.

Robin Ramsay in a piece on his ‘News from the Bridge’ column in Lobster, made the point that when he was studying economics at Uni in the 1970s, Monetarism as an economic theory was so poorly regarded by his lecturers that they left it to the undergrads to work out what was wrong with it. Which shows you it was known even then to be totally rubbish and useless. He argues that it was adopted by the Tory party because it gave them a rationale for doing what they wanted to do on other grounds – destroy organised labour, dismantle the welfare state, including the Health Service, and grind the working class into poverty.

Now a number of economists are pointing out that, despite the emphasis by the Tories on wage restraint and very low inflation rates, the economy is not growing. I think Han Joon Chang is one of these in his 23 Things They Don’t Tell You About Capitalism.

The comparison with Greece is particularly chilling. Greece has been ruthlessly punished by the Troika with very harsh austerity policies, partly because the Greeks dared to defy the Eurozone authorities and elected Syriza, a radical anti-austerity party. Counterpunch has attacked the economic despoliation of the country by mainly German banks as a form of economic warfare. Greece was one of the countries that suffered from the effective collapse of the Eurozone. The result has been grinding mass poverty for its people. One recent programme on the country’s plight showed children picking rubbish off dumps to sale, just as they do in Developing Nations. The presenter looked on, aghast, and made the point that he had never seen this before in what was supposed to be a developed, European country.

Is this what New Labour and the Tories have in store for us? One of the books I found in one of the secondhand bookshops in Cheltenham yesterday was about how Britain would have a ‘third world’ economy by 2014. Clearly the book was written a little while ago, and the timing’s out, but nevertheless, the appearance of third world conditions in Britain is a real possibility. There are already 3.7 million people living in ‘food poverty’, and hundreds of thousands facing off poverty only because of food banks. I also remember how this was predicted on a BBC Horizon programme, entitled, ‘Icon Earth’, twenty years ago. The programme was about how the image of the Earth in space, taken from the Moon by the Apollo astronauts, had affected global religious, political and economic perspectives. That image had stimulated people around the world to realise that everyone on Earth shared a common home. One result of this, so the programme claimed, was globalisation. It discussed the growing campaigns against migration from the developing world with an Indian anti-racism activist. She predicted that as globalisation progressed, pockets of the third world would appear in the first.

She’s right. This has happened with Greece, and it is occurring in Britain, thanks to the Tories and New Labour. But unlike Greece, we cannot blame the EU. We never joined the Eurozone, and the deterioration in wages and conditions will occur because of Brexit. The cause of this stagnation ultimately is three and half decades and more of Thatcherism.

John McConnell Promises National Investment Bank and £500 Billion Credit for UK

July 19, 2016

Mike over at Vox Political has put up another piece today, which reports that Jeremy Corbyn’s deputy, John McConnell, has promised to set up a National Investment Bank, tied in with a network of regional banks, to regenerate Britain’s communities and revive Britain’s industries after years of neglect. The bank is based on the German Development Bank. In addition, he promised £500 billion of investment. This follows Owen Smith’s promise when launching his leadership campaign this week end, to introduce a British ‘New Deal’, and an investment programme of £200 billion.

See Mike’s article:

Both McConnell and Smith are right about investment in British firms by the British state being sorely needed. But McConnell is absolutely correct about the necessity of a special British investment bank to channel the money and provide the necessary credit. It’s been needed for decades. The authors of the 1s987 book, Socialist Enterprise, noted that the British financial sector was structured into investing abroad, and recommended the creation of such a bank. Neil Kinnock, in his 1987 book, Making Our Way, recognised the need for it. G.D.H. Cole, in his book, Great Britain in the Post-War World, written as long ago as 1942, recommended a similar radical reform of the banking industry. That should tell you how desperately it’s needed, and why McConnell is right.

Han-Joon Chang, in his book, 23 Things They Don’t Tell You About Capitalism, argues in one of his chapters that it simply isn’t true that we are living in a post-industrial society. Britain still has a manufacturing industry, and it’s still immensely important. It only appears unimportant, because it hasn’t grown as much as the financial sector. It is, however, still of fundamentally vital importance to our economy.

All of this, of course, will be unwelcome news to the Tory party and New Labour. Both of these turned to subsidising and supporting the financial sector as an alternative to, and at the expensive of, manufacturing. One of the functionaries Blair appointed to the Bank of England was an American banker, Deanne Julius, who stated that Britain should give up manufacturing products and leave that to America. As for the Conservatives, half of their funding at the last election came from the City of London. They have no interest and absolutely no desire to aid a British manufacturing revival. Not if it means having to spend government money, rather than rely on a bail-out by a foreign firm.

Way back in the 1970s the late Tony Benn tried something similar. The government set up various zones, and schemes in which firms could receive government grants to renovate and modernise plant and equipment. I don’t think it was taken up, and British firms continued to lag behind their foreign competitors. And the result has been the decimation of British industry in the decades since Thatcher took power.

McConnell and Benn stand for British industry, and investment to create real jobs and economic growth. All Maggie Thatcher did was cut, and hope foreign firms would come in to invest in what was left. All the while favouring the financial sector and her friends in the City. It also shows the hollowness of the Tories’ claim to represent British industry. They don’t. Labour represents industry, and the people who work in it. The Tories simply represent capital and those, who own it. The very people, who seem to enjoy increased bonuses and share options by cutting down to the point of destroying the very firms they manage.

John Strachey’s Socialist Programme

July 11, 2016

Strachey Socialism pic

The Socialist writer and activist, John Strachey, laid out his programme for a radical reform of society and the economic system in his 1940 book A Programme for Progress (London: Victor Gollancz Ltd). He was deeply impressed with Roosevelt’s New Deal in America, which formed the second part of his book. The third was devoted to Fascism, its connections to monopoly capitalism, and why it had led the world into war. He was acutely concerned with the way the banks and financial sector worked, not to benefit society, but to keep the whole capitalist class in power at the expense of the rest of the population. He therefore wished to see the banks taken over by the state, and subject to fundamental reform so that the operated a zero, or very low interest rate, which would benefit working people, and the country as a whole, rather than just generate profits for the wealthy.

He laid out his six point programme at the beginning of ‘Chapter XII: Conclusions’. These were

(1) The promotion of all kinds of public, or mixed, investment and enterprise, which is not, or is not wholly, dependent on the expectation of profit as its incentive.

(2) The lowering of the rate of interest to all intending borrowers, thus making investment and enterprise more attractive to all private borrowers at a given expectation of profit, and more possible to all public borrowers.

Both these expansionist measures should be financed, so long as general unemployment exists, by the methods which will be made possible by the fifth and sixth measures of this programme.

(3) The redistribution of income from the rich to the poor, effected by means of those kinds of taxation which are not mainly, or not at any rate not entirely, reckoned as a part of the costs of production (e.g. death duties).

(4) The payment of greatly increased pensions and allowances, and other social services, so long as general unemployment exists, out of newly created money rather than out of taxation.

(5) The development of a national, and public, as opposed to a commercial and profit-making banking system.

This is the decisive point in the programme. Unless this is accomplished, nothing else can be done. for the secure establishment of a genuinely national, public and non-profit-making banking system would mean that the main stronghold of that financial, and essentially monopolistic, interest which is to-day strangling the life of the community had fallen. That interest is the parent of Fascism. Leave it in control, and political reaction is bound to follow. Break it by united and well-directed popular action, and the road to progress is open.

(6). A strict public control over the balance of foreign payments.

This measure, too, though not so central as the fifth point is indispensable. For it alone provides an adequate protection against the counter-offensive which monopolistic finance is certain to loose against any progressive programme.

Without these last two measures of control it is not, then, possible to take the four former measures, designed to increase general purchasing power and so effectively to combat the curse of the unemployment of the working population.

It must be clearly understood that such a programme as this is not put forward as a substitute for the more familiar proposals of the progressive parties, such as the raising of wages, the shortening of hours, the institution of holidays with pay, the nationalisation of this or that industry, the democratisation of our political system, the development of a democratic foreign policy, etc. On the contrary, the above-described expansionist programme is submitted for serious consideration as providing an indispensable economic basis, without which all the other invaluable work of a progressive government will inevitably be wasted. (pp151-3).

Ha-Joon Chang in his book, 23 Things They Don’t Tell You About Capitalism, in one of the very first chapters shows that state industries can not only be profitable, they are also more stable than conventional companies, run for the benefit of the shareholders, as the state has a vested interest in their continued profitability and operation. Shareholders, on the other hand, are interested in immediate, short term profits, and will pull out if the company experiences difficulties. He notes specific cases where companies have destroyed themselves through their refusals to invest in new plant and machinery, and actually sold off their assets and shed staff, in order to keep the share price high, until they’ve killed themselves off through their own cost-cutting.

Strachey is also right about the financial sector. It is not geared to investment in the UK, as has been argued over the years by very many socialist politicians, including Neil Kinnock in his book, Making Our Way. The current austerity regime has been inflicted because of the massive incompetence of the financial sector, brought about through decades of right-wing administrations demanding greater deregulation, culminating in Labour’s ‘light touch’. The banks have been bailed out and their profits assured, at the expense of everyone else. In Europe, Greece is being looted and remains prostrate at the extreme of poverty because of ruthless austerity measures imposed on them by the European banking system. And then there’s the continuing scandal of the massive debt repayments demanded of the nations in the Developing World.

I don’t know if Strachey’s financial reforms would work, but we desperately need to curb the power of the banks and make sure they serve us, rather than the other way round.

Friedrich Engels: Principles of Communism

June 19, 2016

Engels Communism Pamphlet

Looking through one of the secondhand bookshops in Cheltenham last wee, I found a copy of Friedrich Engels’ Principles of Communism, published by Pluto Press. It was written in 1847, and is a very short introduction to Marx and Engels’ ideas of what constituted Communism. It’s 20 pages in length, and is written in the form of a catechism, Engels presenting their ideas as answers to the following questions: What is Communism? What is the proletariat? Proletarians, then, have not always existed? How did the proletariat originate? Under what conditions does this sale of the labour of the proletarians to the bourgeoisie take place? What working classes were there before the industrial revolution? In what way do proletarians differ from slaves? In what way do proletarians differ from serfs? In what way do proletarians differ from handicraftsmen? In what way do proletarians differ from manufacturing workers? What were the immediate consequences of the industrial revolution and the division of society into bourgeoisie and proletariat? What we the further consequences of the industrial revolution? What follows from these periodic commercial crises? What will this new social order have to be like? Was not the abolition of private property possible at an earlier time? Will the peaceful abolition of private property be possible? Will it be possible to abolish private property at one stroke? What will be the course of this revolution? Will it be possible for this revolution to take place in one country alone? What will be the consequences of the ultimate disappearance of private property? What will be the influence of Communist society on the family? What will be the attitude of Communism to existing nationalities? What will be its attitude to existing religions? How do Communists differ from Socialists? What is the attitude of the Communists to the other political parties of our time?

It’s basically the first draft of The Communist Manifesto, and Engels himself wrote to Marx saying the catechetical form should be dropped, and it should just be called the above.

What I found particularly interesting flicking through it was Engels’ discussion of modern industrial capitalism, which he saw as producing periodic economic crises. It was the task of the proletarian – the working class – not just to liberate themselves from capitalism by taking control of the means of production, but also to prevent further commercial crises occurring through the establishment of Communism, which would also be a more efficient economic system.

In answer to question 12: What were the further consequence of the industrial revolution? Engels writes

Big industry created in the steam engine and other machines the means of endlessly expanding industrial production, speeding it up, and cutting its costs. With production thus facilitated, the free competition which is necessarily bound up with big industry assumed the most extreme forms; a multitude of capitalists invaded industry, and in a short while more was produced than was needed. As a consequence, finished commodities could not be sold, and so-called commercial crisis broke out. Factories had to be closed, their owners went bankrupt, and the workers were without bread. Deepest misery reigned everywhere. After a time, the superfluous products were sold, the factories began to operate again, wages rose, and gradually business got better than ever. But it was not long before tooo many commodities were again produced and a new crisis broke out, only to follow the same course as its predecessor. Ever since the beginning of this (nineteenth) century, the condition of industry has constantly fluctuated between periods of prosperity and periods of crisis; nearly every five to seven years a fresh crisis has intervened, always with the greatest hardship for workers, and always accompanied by general revolutionary stirring and the direst peril to the existing order of things.

13: What follows from these periodic commercial crises?
That though big industry in its earliest stage created free competition, it has now outgrown free competition; that for big industry competition and general the individualistic organisation of production have become a fetter which it must and will shatter; that so long as big industry remains on its present footing it can be maintained only at the cost of general chaos every seven years, each time threatening the whole of civilisation and not only plunging the proletarians into misery but also ruining large numbers of the bourgeoisie; hence either that big industry must itself be given up, which is an absolute impossibility, or that it makes unavoidably necessary an entirely new organisation of society in which production is no longer directed by mutually competing individual industrialists but rather by the whole society operating according to a definite plan and taking account of the needs of all.

Second: That big industry and the limitless expansion of production which it makes possible bring within the range of feasibility a social order in which so much is produced that every member of society will be in a position to exercise and develop all his powers and faculties in complete freedom. It thus appears that the very qualities of big industry which in our present-day society produce misery and crises are those which in a different form of society will abolish this misery and these catastrophic depressions. We see with the greatest clarity:
(I) That these evils are from now on to be ascribed solely to a social order which no longer corresponds to the requirements of the real situation; and
(II) That it is possible, through a new social order, to do away with these evils altogether.

14: What will this new social order have to be like?
Above all, it will have to take the control of industry and of all branches of production out of the hands of mutually competing individuals, and instead institute a system in which all these branches of production are operated by society as a whole, that is, for the common account, according to a common plan, and with the participation of all members of society. It will, in other words, abolish competition and replace it with association. Moreover, since the management of industry by individuals necessarily implies private property, and since competition is in reality merely the manner and form in which the control of industry by private property owners expresses itself, it follows that private property cannot be separated from competition and the individual management of industry. Private property must therefore be abolished and in its place must come the common utilisation of all instruments of production and the distribution of all products according to common agreement – an a word, what is called the communal ownership of goods. In fact, the abolition of private property is doubtless the shortest and most significant way to characterise the revolution in the whole social order which has been made necessary by the development of industry, and for this reason it is rightly advanced by Communists as their main demand. (pp.10-12).

In practice, central planning of a large, complex industrial society is far too difficult, and the results are massive economic inefficiencies and an acute shortage of goods. It’s one of the reasons Communism fell. However, since the adoption of neo-liberalism as the economic creed of the main political parties in the West, we’ve seen the same kind of economic crises that afflicted 19th century capitalism return with the banking crisis in 2008, along with the ‘iron law of wages’ which Marx and Engels observed in the Communist Manifesto was forcing down more and more of the lower middle class into the ranks of the workers, and impoverishing the workers as employers tried to cut wages.

But if it’s impossible to plan a nation’s economy absolutely completely, nevertheless Ha-Joon Chang in his book, 23 Things They Don’t Tell You About Capitalism makes the point that governments still carry out some forms of economic planning, not least in supporting research and development, in which private industry is reluctant to invest on its own. Thus some form of state planning is nevertheless effective in avoiding and ameliorating the economic crises which neoliberal economics create.

Mikhail Gorbachev on Worker’s Control in Perestroika

May 31, 2016

One of the most interesting aspects of Gorbachev’s plan to restructure the Communist system in Perestroika was the re-introduction of workers’ control. Lenin briefly introduced this after the Bolshevik coup of 1917, but it was reversed when it was found that, contrary to Bolshevik expectations and dogma, the workers couldn’t manage industry on their own. Lenin himself was fiercely autocratic and intolerant, and the Bolshevik monopolization of power offended not only liberal democrats, but also other committed Marists, like Karl Kautsky and Rosa Luxemburg, who wrote articles denouncing it. Much of the intolerance and oppressive nature of the Soviet system came directly from Lenin and his doctrine of ‘democratic centralism’. This was the dogma that once the leaders of the Communist party had made a decision, no further discussion was permissible, and their commands should be carried out with any further debate or protest. Nevertheless, Gorbachev harkened back to Lenin and his supposed espousal of democracy in order to invigorate the moribund and sclerotic Soviet system. The reintroduction of workers’ control was part Gorby’s wider programme of democratizing Soviet society.

In his 1987 book, Perestroika: New Thinking for our Country and the World (London: Collins) Gorby writes

We are taking a new view of the correlation between one-man management and the participation of work collectives in handling production tasks. this is a topical issue. There will be no progress without workers’ involvement in management through the corresponding mechanisms – at the work team, factory shop, plant and integrated works level. Furthermore, a work collective must have the right to elect its manager. And the latter receives the right to one-man rule on behalf of the collective, uniting everybody by his willpower.

Elections of economic managers are direct democracy in action. Initially people were frightened by this, claiming that we had gone too far, that things could come to a bad end. But those who reason that way forget the main point, that common sense always prevails. Group interests, a practice of covering up for one another, will somewhere make themselves felt. But basically everyone wants his work team, factory shop, enterprise, collective or state farm to be headed by dependable, intelligent managers capable of leadership, of opening up vistas for improving production and life. Our people understand this, and they certainly do not need weak management. They need people who are talented, considerate, yet demanding in a fair way.

People want to see changed attitudes on the part of the plant manager, shop superintendent and foreman. People expect a moral example and they expect it particularly from their superiors. There are several such examples. Where there is a good manager, there is success. He takes care of people. Everyone wants to talk with him. He need not raise his voice in giving out orders. He may look quite ordinary, but he sees and can explain everything. It is now extremely important to be able to explain the situation. People will agree to wait if they see why some of their demands cannot be satisfied fully right away. (Pp. 103-4).

The former General Secretary of the Soviet Communist Party also wanted to restore greater powers to the trade unions. These did not have the same roles and responsibilities as western trade unions. As the Soviet Union was a workers’ state, the Communists reasoned that trade unions should have no power to block or interfere with the authorities, who were the workers’ representatives. Nevertheless, the Soviet system granted them vast powers. The were to be consulted on economic planning, and the sacking of employees was only legal if the union had been consulted. The trade unions were also given the responsibility for running the health, medical and leisure programmes in Soviet plants, factories and industry. Gorbachev was concerned that the trade unions were acquiescing too much to the demands of management. He wished to alter this situation by giving them the power to represent the workers’ interests against management as well as improving healthcare and leisure at Soviet workplaces. He wrote

What our country is undertaking and the issues it is tackling implies a re-evaluation of the role of trade unions in social affairs.

It should be said first and foremost that our unions are a formidable force. No labour law can be drafted unless endorsed by the All-Union Central Council of Trade Unions. On all questions concerning labour laws, their enforcement and the safeguarding of the working people’s right the trade unions have the final say. If a manager fires a worker without asking the union for approval, a court of law automatically makes the decision invalid without any deliberation, inasmuch as the trade union has not been consulted for its opinion. No economic development plan, for one year or five years, is submitted to the Supreme Soviet unless approved by the trade unions. When the plans are in the making, the trade unions participate as well at all levels.

Social insurance, the running of sanatoriums and recreation resorts, tourism, physical training and sports, and the rest and recreation of children are all the responsibility of the trade unions. Consequently, they wield real power. But, all, over the past few years there has been less trade union activity. On some issues, they have yielded their prerogatives to economic managers, while not enjoying some rights effectively enough.

So, having set about restructuring, we saw that the work of the trade unions could not be termed satisfactory. During my trip to the Kuban region, I reproached trade union leaders for pandering to managers, sometimes going so far as dancing to their tune. I asked them whether it was not high time they took a position of principle, and stood up for working people?

The new role of the trade unions in conditions of perestroika should consist primarily of giving a stronger social orientation to economic decisions, offsetting technocratic encroachments which have become widespread in the economy in the last few years. this means that the trade unions should be more active in elaborating the social sections of economic plans, and, if need be, setting forth and upholding their own alternative proposals.

Trade union committees should have teeth, and not be convenient partners for management. Bad working conditions at some enterprises, a poor health service, substandard locker rooms- trade union organisations have got used to all this. but Soviet trade unions have the right to monitor managerial compliance with labour contracts, the right to criticise management, and even the right to demand that director who fails to comply with the legitimate interests of the working people be removed from office.

It would be wrong to think that under socialism the working people do not need any protection. They should be protected even more, for socialism is a system for the working people. Hence the tremendous responsibility of the trade unions. All Soviet society is vitally interested in more vigorous work being undertaken by the trade unions. (Pp. 113-4).

All this was discarded during Yeltsin’s administration, when the economy was privatised and the voucher system introduced, which transformed the co-operatives Gorby had been setting up into bog standard capitalist enterprises. If Gorbachev had been successful, he would have created a democratic Socialist state, very close to the vision of the ownership of the means of production by the workers themselves that motivated Socialists as far back as the Owenite John Francis Bray in the 19th century. While not demanding the abolition of capitalism, Ha-Joon Chang states in his book, 23 Things They Don’t Tell You About Capitalism, that in countries where there is state interest in industry, or workers’ representatives on the boardroom, firms actually do better than when left simply to managers and shareholders. But unfortunately, that it what we are left with after thirty years of Thatcherism. And its continuing and accelerating under Cameron.

We need a change. British trade unionism needs to be revitalised, and we do need workers’ representatives in our boardrooms. As for Thatcher, her ideas were always bankrupt. They should have been thrown out before she ever took office.

Insults against Public and Lack of Training of DWP Staff

May 25, 2016

Mike yesterday carried the disgusting story of an elderly lady, who was insulted by a member of the DWP when she rang up to make an inquiry. The lady was Janine Clarke, a former NHS worker, who suffers from a form of dementia, Wernicke-Korsakoff Syndrome. She rang the DWP to alert them to her condition, and inquire about pension credits. However, she had a probably answering one of the security questions. She was asked the date of her wedding. When she repeatedly failed to remember it, the DWP minion on the phone called her a ‘f*** pig’ and hang up.

It’s a disgraceful story, and the DWP has rightly apologised for the behaviour of the civil servant, who gave his name as ‘Chris’.

See Mike’s article at:

Mike in his comment wondered how many others have been similarly insulted, but have not made a complaint, and so their abuse goes unrecorded. He also believes that such abuse is encouraged, in order to make sure that they do not call again.

This wouldn’t be the first time by a long chalk that a member of the public has been insulted by an employee of the DWP. I’ve had experience of their domineering and frankly degrading attitude towards claimants at one of the Jobcentres in Bristol, though I have to say that I was not insulted or abused like this poor lady was. I have, however, heard stories about how the ‘job coaches’, who are supposedly there to motivate the long term unemployed into finding work, operate by phoning them up to humiliate them. And by all accounts, the DWP itself is a hell of job insecurity and backbiting, with the employees fearing that they will be next in line to be laid off, and the higher ranks doing their best to humiliate their inferiors. So it’s nowhere near surprising that a DWP employee should treat a member of the public in such a grossly disrespectful manner.

It also seems to confirm what I’ve heard from various people about a severe lack of training in the Civil Service. I’ve heard rumours that it’s been cut down from nearly a year to 13 weeks. This has, of course, been carried out by Ian Duncan Smith, the sneering egotistical failure, who himself runs away and hides from the public at every opportunity.

It’s also in line with Tory attitudes to training. Ha-Joon Chang in his book, 23 Things They Don’t Tell You About Capitalism, criticises the attitude amongst many firms that training employees is essentially a wasteful activity. They dislike it, because such skilled employees can be poached from them by other companies, who need not invest in training them. They also dislike it, because of a deliberately policy in keeping employees as unskilled as possible, so that they can be sacked or replaced more easily. My guess is that this government sees training workers in exactly the same terms, quite apart from wishing to encourage the nastiest, most contemptible attitudes towards the public in their staff.

And so incidents like this are allowed to happen.

It’s disgraceful, as are the people who run this increasingly demoralised, shambolic mess: Ian Duncan Smith, now departed, and his successor, Stephen Crabb. Both should be called before parliament to explain their gross mismanagement of the DWP and their deliberate encouragement and promotion, through cuts and management reforms, of a culture of incompetence and casual insensitivity and gross contempt.

Shirley Williams on the Growth of Bureaucracy under Thatcher

May 25, 2016

SWilliams Book Pic

The great boast of Margaret Thatcher and the Conservatives is that private enterprise, unfetter by state control, somehow magically reduces bureaucracy. Apart from ignoring the fact that firms also necessarily have their own bureaucracies, the economic and social importance of many of the industries taken into state control means that even after these industries were privatised, there still had to be a state bureaucracy to make sure these industries continued to act in a fair and responsible manner. So there are a plethora of regulatory bodies supervising telecommunications, electricity, water and the environment. And one effect of privatisation was to make these regulatory authorities and the state supervisory bureaucracy bigger than they were under state ownership. Private Eye in the 1990s during John Major’s administration ran story after story noting the massive increase in such bureaucracy in the electricity, water and environment agencies. The Eye also noted how Thatcher’s successors attempted to cut down this bureaucracy by increasingly depriving them of their statutory powers and limiting their remit. Bureaucracy was reduced not be being more efficient, but by being deliberately cut down to prevent it interfering. And thus was public protection against the predation and mismanagement by the newly privatised companies removed.

Shirley Williams, the former Labour MP, who became one of the founders of the SDP also noted the growth of bureaucracy under the Conservatives before Thatcher in her book, Politics Is For People. She wrote

Another paradox can be seen in Britain, and no doubt in many other countries as well: the growth of administration. In 1970, the then Conservative government brought in the American industrial consultant, McKinsey & Co., to advise them on the reorganisation of the National Health Service. the reorganisation, in which professional interests were extensively consulted, led to a substantial increase in the number of administrative and clerical posts, and a higher proportion of administrators and clerical employees to doctors and nurses, the front line of the service. Local government reorganisation, under the same Conservative government, had similar consequences: more highly paid administrative posts, no evidence of improvement in local government services. Big government has its own impetus which is hard to stop, whatever the philosophy of the executive in charge. But opposition to it rubs off most on political parties identified with a substantial role for it. (Pp. 29-30).

Labour has suffered because, as the party most identified with big government and state expenditure, it has also been criticised by its Right-wing opponents as the party of waste. Yet the Tories have vastly inflated the bureaucracy involved in the remaining areas left under state control. Private Eye noted that the creation of the internal market in the NHS, and the PFI financing of hospitals, vastly increased bureaucracy in the Health Service. Successive governments have carried on the marketization of the NHS, with a further increase in bureaucracy. Within the BBC, the Eye also noted that John Birt’s administrative reorganisation of that once-great and respected institution resulted in the expansion of the upper management grades on vastly bloated salaries coupled with a damaging reduction in the production staff, who actually made the programmes people watch.

Britain’s public services and industries have been made increasingly inefficient through the creation of a corrupt and parasitic class of managers, who seem to serve only to perpetuate themselves at the expense of their own companies and their workers. Indeed, Ha-Joon Chang in his book, 23 Things They Don’t Tell You About Capitalism in one of the very first chapters describes the cases of several companies that actually went to the wall because their managers cut investment and wages, and sold of the companies’ assets, in order to increase their share price and their own salaries.

The Conservatives are the party of parasitic, useless bureaucracy. And the management consultants they have called in to advise them on how to reform British state administration have done nothing but wreck it. Arthur Anderson, later Anderson Consulting, destroyed the Benefits Agency and the Inland Revenue in the 1980s and 1990s. Their successors in PriceWaterhouseCoopers and the rest of the accountancy firms sending their senior staff to help both Tories and Labour draft their policies on tax and so on are part of the same poisonous trend. The Tories should be thrown out of government, and the management consultants and accountancy firms firmly excluded from the business of government.

Shirley Williams on Economic Disruption by Trade Unions and Big Business

May 21, 2016

Shirley Williams, the former Labour MP, who then went off to form the SDP in the 1980s, also discusses the alleged damage for which the trade unions were allegedly responsible to the economy, in her 1981 book, Politics Is For People (Harmondsworth: Penguin). She concedes that some industrial problems were due to inflationary wage demands by the unions, but also believed that big business was also guilty of the same policies themselves. She also argued that the unions’ pay policy also had a beneficial effect, and that where strikes broke out, it was because the workers were poorly treated, and not given sufficient information on their predicament by the management. She wrote:

Trade unions are held responsible for many of Britain’s economic weaknesses, but criticism of unions is by no means restricted to Britain.

The power of unions and their irresponsibility, so one would have to conclude from the pronouncements of neoclassical economics, business representatives and conservative parties, is the one single factor (apart, perhaps, from the greed of the OPEC countries) which explains most of what is presently wrong with western economies. By raising the price of unskilled labour beyond its market value, union wages are said to be the major cause of unemployment, and by exploiting the scarcity value of skilled labour, they are said to be directly responsible for wage-push inflation.

Thus writes Fritz Scharpf, Direct of the Wissenschaftszentrum, Berlin, in a paper entitled Capitalism of Yesteryear – and of Tomorrow?

Apart from their effect on wages, trade unions are alleged to disrupt production schedules and delivery dates by strikes, both official and unofficial. The growth and prosperity of industry are damaged by restrictive practices such as overmanning, fragmentation of jobs by craft unions, limits on the output of individual workers or of equipment, and burdensome conditions before agreement can be reached on installing new machinery or introducing new processes. ‘Productivity is now importantly hampered by overmanning and restrictive practices which, if they could be reduced or removed, would allow rapid increases in productivity,’ concludes the OECD’s 1980 Economic Survey of the United Kingdom.

But restrictive practices are by no means limited to the labour market, as the last chapter demonstrates. Much more than the United States, Western Europe has relied on cartels, pricing agreements, market-sharing arrangements and monopolies to limit and restrict competition. what has been true of labour has also been true of business. The strength of organised labour grew relative to that of business in the decades of full employment after the war, so that some trade unions were able to insist upon conditions for recruitment and particular qualifications for skill. In Britain, the folk memory of mass unemployment between the wars has been very slow to fade, perhaps because of the persistence of the class system, perhaps because of relatively low geographic mobility. Restrictive practices have often been adopted as a means of protecting jobs, which in the short run they may do. In some firms the workload during normal working hours has been limited so that workpeople have been able to work long hours of overtime as well. Overtime has become endemic in some industries and is quite often guaranteed.

Wages and Inflation

But trade union’s resistance to wage cuts during recessions, far from damaging industrial economies, has been an important stabilising factor. Wages and salaries constitute a very large part, usually about three fifths, of the national income. They are therefore the main element in domestic demand. Wage cuts, complemented by cuts in unemployment pay (the ‘dole’), helped to precipate the slump of the 1920s and 1930s. To quote Fritz Scharpf again:

Perhaps the most important [of the stabilizing factors] is the ‘downward stickiness’ of wage which are determined by collective bargaining. They have stabilised the income, and thus the demand, of the great majority of wage earners even in recession periods, and they have so far helped to avoid the vicious cycle of downward spiralling demand that caused the great depression. (Pp. 128-9).

Discussing the differences between trade union structure and membership in Britain and Germany, Williams states

The job of German trade unions is also eased by the amount of information on the state of the economy and of each individual company available to their members through the system of works councils. German workers know the effect that inflationary settlements will have on employment prospects and on prices because the facts are available to them. They also know when they are getting paid too little. This basis of consultation underpins West Germany’s bargaining system. In Britain, a heavy price is paid in suspicion and antagonism because so little information is revealed and so few companies consult their workers. (p. 131).

In other words, if you involve the workers in the management of their industries and economies, they will defend their own interests, of course, but in an informed and responsible manner. This is pretty much the exact opposite of what the Neoliberals, the CBI and the Tories have been claiming.

The argument that wages should not be cut, nor should unemployment benefit, because these actually stimulate the economy, whereas the money raised through the tax cuts given to the super-rich does nothing but lie in their bank accounts, has been time and again by economists and bloggers like the Angry Yorkshireman and Mike at Vox Political. Ha-Joon Chang makes the point that the tax cuts don’t work in his book, 23 Things They Don’t Tell You About Capitalism, in an entire chapter devoted to destroying the trickled-down argument. But such policies are popular, because they satisfy the greed and venomous contempt and fear the middle classes have for the poor.