Will Johnson Quit or Be Forced Out, Once He Has Wrecked the Country For Brexit?

Also in Lobster 80 for Winter 2020 is a very interesting piece by Simon Matthews, whose observations about Johnson’s real motives for running for PM and supporting Brexit I discussed in my previous blog post. Matthews has a piece, ‘Time for the Pavilion (or: there are 365 Conservative MPs)’ pondering whether Johnson will either retire as PM or be forced out by angry members of his own party, once he has successfully ruined the country with a hard Brexit.

And Matthews makes some very interesting observations. Johnson’s majority looks impressive, but is actually very fragile. 50 Tory MPs, for example, voted against the imposition of the second national lockdown at the beginning of November. And many of the 80 new MPs forming the Tories’ parliamentary majority actually have very small majorities in their own constituencies. He writes

Secondly, and less remarked upon, Johnson’s majority of 80 is actually quite fragile. No fewer than 78 Conservative MPs have a majority of 5,000 or less, and of these 34 have a majority of 2,000 or less. Indeed,
all the fabled ‘red wall’ seats that Johnson gained are in this category. Any MP in this situation would be aware that it really wouldn’t take much of an electoral swing to oust them.

Also, although the background of the typical Tory MP is privately educated, with a background in the financial sector, think tanks and policy groups, and is strongly anti-EU, there are still 102 Tory MPs who support the European Union.

Finally, and a puzzling anomaly, there are still 102 Conservative MP’s who were pro-EU in 2016. Admittedly, some of these may have been so at that time because it was party policy (i.e. now party policy has changed,
their views will have changed, too); and there will be others who were ‘pro-EU’ on the basis of Cameron’s re-negotiation of 2015-2016. But, nevertheless, amongst those 102 there must be some (40? 50?) who would much rather the UK stayed as close to the EU as possible, including membership of the Single Market, Customs Union and the EEA rather than exit everything, in its entirety.

BoJob’s position is very precarious. If things get very desperate, and the Tory party does decide it wants to form a ‘government of national unity’ in a coalition with Labour and the Lib Dems, it would only take 45 Tory MPs to oust him.

The article then goes to discuss the problems Johnson faces from Brexit, and particularly the challenge it poses to the integrity of the UK, and opposition from Northern Ireland, Scotland, Wales, the EU and the Americans, and members of both chambers of parliament. He’s also got severe problems with the Covid crisis, and the havoc this and the consequent lockdown has played with the economy. The sacking of Dominic Cummings could be seen as a warning shot to Johnson from Brady and the party’s donors out in the tax havens, who feel they are being ignored by the PM. But he notes that the donors and corporate backers really don’t seem to have an idea of the massive damage that Brexit will inflict on the UK economy. It will destroy 60-65 per cent of UK manufacturing, and although stockpiling of food and other goods has been going on since 2017, these supplies can only last for so long. So that Britain will return to the food queues of the ’60s and ’70s at the borders.

He makes the point here that the majority of British ports are foreign owned. In footnote 7 he writes

The owners of the UK’s main trading ports are Associated British Ports (owned in Canada, Singapore and Kuwait), Forth Ports (Canada), Hutchison Port Holdings (Singapore), Peel Group (the Isle of Man and Saudi Arabia), PD Ports (Canada) and Peninsular and Oriental Group (complex, but seemingly Dubai, China and Hong Kong). The latter group include P&O Dover Holdings Ltd, which operates most of the ferry services out of Dover, and is owned by the Peoples Republic of China. (The other ferry services at Dover, DFDS, are owned in Denmark). The intention post-Brexit of declaring many UK ports ‘free ports’, when so many can be connected back to tax havens anyway, is striking, and one wonders to what extent the owners of these ports have lobbied for that outcome.

Matthews concludes that Boris is on such shaky grounds that he may well decide to jump before he’s pushed.

The truth is that Johnson can now be ambushed by so many different groupings for so many different reasons, that the chances of him remaining PM after he has delivered the hard Brexit his backers require
must be doubtful. And why would he anyway? He looks bored most of the time and wants money. Leaving Downing Street – and the cleaning up – to others, gives him time to spend with his many different families, time to write his memoirs for a hefty advance, the chance of a US TV show and time to kick on, as all ex-UK PMs do, with earning serious money on the US after-dinner speaking circuit. The possibility that some formula will be devised to facilitate his exit, possibly a supposed medical retirement, looks likely.

After all, he’s been sacked from every job he’s ever had. Why would he wait until he is sacked from this one?

See: Time For the Pavilion (Winter 2020) (lobster-magazine.co.uk)

I found this interesting in that it showed that there is grounds for optimism amongst the gloom. The Tories have a huge majority, but it’s fragile. Very fragile. If Starmer actually got his act together and started behaving like a leader of real opposition party, he could start cutting it down significantly. But he doesn’t, perhaps because, as a Blairite, the only policy he has is stealing the Tories’ and winning the support of their voters, and backers in big business and the Tory media. Hence his silence and his determination to persecute the socialists in the Labour party.

It also shows just how much damage the ‘No Deal’ Brexit Johnson seems determined to deliver will do to Britain. It’s going to wipe out nearly 2/3 of our manufacturing industry. This won’t matter for the Tories or Blairite Labour. Blair took the view that British manufacturing was in decline, and that it could be successfully replaced by the financial sector. This hasn’t happened. Ha-Joon Chang’s 23 Things They Don’t Tell You About Capitalism argues very clearly that the British and other economies still depend very much on the manufacturing sector. The fact that it appears comparatively small to other sectors of the economy merely means that it hasn’t grown as much as they have. It does not mean that it is irrelevant.

And it also shows once again how this chaos and poverty is being driven by a desire to protect the Tories’ backers in the financial sector, and the foreign companies owning our utilities, as well as the British rich squirreling their money away in tax havens. Shaw pointed this all out in once of his books written nearly a century ago, condemning the way the idle rich preferred to spend their money on their vapid pleasures on the continent, while the city preferred to invest in the colonies exploiting Black Africans instead of on domestic industry. He stated that while the Tories always postured as the party of British patriotism, the opposite was the truth: it was the Labour party that was genuinely patriotic, supporting British industry and the people that actually worked in it.

Shaw was right then, and he’s right now, no matter how the Tories seek to appeal to popular nationalistic sentiment through images of the Second World War and jingoistic xenophobia about asylum seekers. The Tories haven’t backed British industry since Thatcher and Major sold it all off. The only way to build Britain back up is to get rid of her legacy.

Which means getting rid of Johnson, the Tories and Starmer.

Starmer Throwing Out Corbyn’s Policies to Gain Support of Business

Mike and many other left-wing bloggers have put up a number of articles showing that, despite his promises at the Labour leadership elections, Starmer is getting rid of Corbyn’s policies which were included in the party’s manifesto. Starmer’s a Blairite, and so it was to be expected that he’d try to remove Corbyn’s policies, just as he is doing his best to purge or push out members of the Labour left from the shadow cabinet and the party generally. He’s taking the party back towards Thatcherism, replacing traditional Labour policies of a strong welfare state and trade unions, workers’ rights, a fully nationalised NHS and mixed economy, with the welfare state’s dismantlement, privatisation, including that of the NHS, and the further destruction of employment rights designed to make workers easy and cheap to hire and fire. This is all being done to win over Tory swing voters and the right-wing political and media establishment.

A few weeks ago Starmer showed exactly where his priorities lay when he announced that Labour was now perfectly willing to accept donations and funding from industry. This was a sharp break with Corbyn, who had restored the party’s finances through subscriptions from the party’s membership. A membership that had expanded massively because, after Blair, Brown and Ed Miliband, there was a Labour leader at last who genuinely wished to do something for the working class and represented and promoted traditional Labour values and policies.

Starmer’s turn instead to corporate funding is a return to Blair’s policies, in which the Labour leader sought support from business. Under Blair, the party lost members despite its electoral success. The only reason it won elections was because the Tories were far less popular. And in return for corporate donations, Blair gave the chairmen and senior management of big companies places in government, and passed legislation that would benefit them, but very definitely not Britain’s working people nor the self-employed and small businesspeople.

Further proof that Starmer’s going down this path was provided a few days ago on Tuesday. According to an article in that day’s I by Hugo Gye, ‘Starmer courts business leaders’, for the edition of 3rd November 2020, Starmer announced at a meeting of the CBI that he was going to drop some of Corbyn’s policies to make the party more acceptable to industry. The article runs

Sir Keir Starmer has distanced himself from the Jeremy Corbyn era, suggesting he will drop some of his predecessor’s most radical policies as he positions Labour as the party of business.

Speaking to the annual conference of the CBI business group, Sir Keir said he wanted to lead “an active, pro-business government”. He added: “When a business is failing it is often because the management is failing. The Labour party is now under new management. We recognise that businesses with high standards are the only way to create a good economy.” Asked if he would keep left-wing policies Sir Keir replied: “In 2019 we suffered a devastating loss in the election.

“It’s important you don’t look at the electorate and ask: ‘What on earth were you doing?’ you ask: ‘What on earth were we doing?”‘ He has previously said he would seek to return to the 2017 manifesto rather than the more radical offering at last year’s general election. He also took aim at Rishi Sunak. He said: “The impact on business and jobs will be severe. The Chancellor’s name is all over this.”

This is twaddle. Labour’s policies weren’t unpopular. Indeed, quite the opposite. That’s one of the reasons the Labour right, the Tories and the media spent so many years and so much energy trying to smear Corbyn as a Communist and then anti-Semite. And the pro-business policies Starmer wants to replace Corbyn’s with won’t do anything for the country. It’s been said many times that business actually does better under Labour than under the Tories. And economists like Ha-Joon Chang have pointed out that privatisation hasn’t worked. It hasn’t provided the necessary and expected investment in the utilities. A traditional, social democratic mixed economy would therefore be far better. Thatcherism is, in the words of an Australian economist, Zombie economics. It’s dead, but still stumbling about.

As for asking what Labour did wrong, the answer is that Starmer himself was partly responsible for Labour’s defeat. He and the Labour right demanded that Labour should commit itself to a second referendum on Brexit, when the majority of the public – admittedly a slim majority – were all in favour of it. Corbyn’s initial position of respecting the Brexit vote, and only going back to hold a second referendum if they were unable to get an acceptable deal from Europe, was actually popular. But this popularity began to evaporate when Starmer and his colleagues demanded this should be changed.

Starmer’s leadership of the Labour party so far has been disastrous. He’s been using the anti-Semitism smears to purge the party of left-wingers and supporters of Corbyn, the party is losing Black membership and support thanks to his refusal to take BLM seriously, and many members generally are leaving the party because of return to Blair’s hoary, Tory policies, to paraphrase an old ’80s song.

Starmer isn’t leading the party to victory, but defeat. HIs policies won’t benefit working people, but as they are intended to enrich big business leaders, the British political establishment, of which he’s a part, aren’t going to be worried about that.

Was Mussolini’s 1931 Policy on the Banking Crash Better than Britain’s 2008 Bail-Out?

Here’s another interesting question posed by the changing policies of the Italian Fascist state towards industry and the financial sector. Fascism celebrated and defended private industry as the essential basis of the Italian economy and society. When Mussolini first took power in the early 1920s, he declared that Fascism stood for ‘Manchester School’ capitalism – privatisation, cuts to public services and expenditure and the lowering of wages and welfare benefits. But this changed with the development of the Fascist state through the establishment of the corporations – industrial organisations combining the employers’ organisations and the trade unions, which were supposed to take over the management of industry – autarky, which aimed to make Italy self-sufficient and the movement to a centrally planned economy.

This was partly achieved in the early 1930s when Mussolini set up two state institutions to buy out the Italian banks following the Wall Street crash of 1929 and the ensuing depression. These not only bought out the banks, but also the industries these banks owned and controlled, so that the Italian state ended up owning just under a fifth of the Italian economy.

This is described in a passage in the article ‘Industry’ in Philip V. Cannistraro’s Historical Dictionary of Fascist Italy (Westport, Connecticut: Greenwood Press 1982). This runs

Two public agencies were created to save banks and crucially affected industries: the Istituto Mobiliare Italiano (IMI) on November 13, 1931, which was to control credit; and the Istituto per la Ricostruzione Industriale (IRI) on January 23, 1933. IRI was by far the more radical solution, for it purchased all the shares of stock in industrial, agricultural, and real estate companies previously held by banks. (The banking law of 1936 prohibited banks from extending long-term credit to industrial concerns). Although the industrialists fully expected a return to “normalcy” and to private enterprise after the crisis had passed, Mussolini had successfully created an instrument for the permanent intervention of government in the economy. By 1939 IRI controlled a series of firms representing 44.15 percent of the capital of Italian stock values and 17.80 percent of the total capital of the country – hence, the Fascist government controlled a proportionately larger section of national industry than any other government in Europe except the Soviet Union. (p. 278).

This allowed the government to interfere and restructure the Italian economy leading to the expansion of the manufacturing economy and a reduction in imports. On the other hand, poor government planning and an inefficient bureaucracy meant that Italian domestic manufactures were frequently inferior and the country had a lower growth rate than many other western European countries.

But this contrasts very strongly with policy of Britain and America to the financial sector after the 2008. The banks were bailed out with public money, but were not nationalised and the government has continued with its ‘light touch’ approach to regulation. Meaning that the banks have been free to carry on pretty much as before. Public spending, especially on welfare, has been drastically cut. Despite the Tories claiming that this would boost the economy and they’d pay of the debt within a couple of years or so, this has very definitely not happened. In fact, the debt has massively increased.

This has added to the long term problems of Britain’s manufacturing industry. Left-wing economists have pointed out that Britain’s domestic industries suffer from a lack of capital because the financial sector is geared towards overseas investment. A situation that has no doubt got worse due to globalisation and the personal investment of many Tory and New Labour MPs in foreign industry and their savings in offshore tax havens. British industry has also suffered from the ignorance and neglect of successive prime ministers from Maggie Thatcher onwards. Thatcher couldn’t understand that her policy of keeping the Pound strong would damage British exports, and in any case did not want to rescue failing British industries. They were either to be allowed to go under, or else sold to foreign companies and governments. Tony Blair went further, and believed that manufacturing industry’s place in the British economy could be successfully taken over by the financial sector and the service industries.

But this has also been a failure. Ha-Joon Chang in his 23 Things They Don’t Tell You About Capitalism has pointed out that manufacturing industry is still very much of vital importance. It’s just that it has grown at a slower rate than the other sectors.

Fascist Italy was a totalitarian dictatorship where Mussolini ruled by fear and violence. There was no freedom of speech or conscience in a system that aimed at the total subordination of the individual, economy and society. Mussolini collaborated with Hitler in the persecution of the Jews, although mercifully this wasn’t quite so extreme so that 80 per cent of Italian Jews survived. The regime was aggressively militaristic aiming at the restoration of a new, Roman-style empire in the Mediterranean. Albania, Greece and Ethiopia were invaded along with Tripoli in Libya and Fascist forces were responsible for horrific atrocities as well as the passage of race laws forbidding racial intermixture with Black Africans.

It was a grotesque, murderous regime which was properly brought to an end by the Allied victory of the Second World War. It must never be revived and Fascism must be fought every where. But it does appear that Mussolini’s policy towards the banks and industry was better than that pursued by our supposedly liberal democracies. But the governments of our own time are also becoming increasingly intolerant and authoritarian. The danger of our country becoming similar repressive dictatorship under Boris and the Tories is very real.

We desperately need the return to power of a genuinely socialist Labour government, committed to investment in the welfare state and public services with a nationalised NHS, a mixed economy and positive commitment to democracy and freedom of speech rather than the illusion maintained by the mainstream media and Tory press.

And that will mean overturning over three decades of Thatcherite orthodoxy on the banks and financial sector, just as Mussolini changed his policies towards them with the aim of restoring and expanding Italian industry.

From 1996: Downsizing Guru Realises It Doesn’t Work

Remember the downsizing craze of the 1980s and 1990s, when Thatcherite economists all demanded that big firms should slim down through mass lay-offs and sackings? Firms were overstaffed, and it was all flab that needed to be cut out to make them ‘lean and mean’ in the marketplace.

Looking back through my scrapbooks of newspaper clippings, I found this article by the Daily Mail’s industrial correspondent, David Norris, ‘Guru of the job cutters admits downsizing has its down side’ in that paper’s edition for Monday, May 13, 1996. The article runs

‘An international economic guru who advocated massive job-shedding to make big business lean and fit has admitted he got it all wrong.

American Stephen S. Roach coined the word ‘downsizing’ in the early Eighties to sum up his philosophy that ruthless workforce pruning was needed to boost profits and productivity.

It was seized on around the world – not least in Britain, where hundreds of thousands of full-time jobs have disappeared over the last ten years.

His astonishing turnaround is certain to provoke more outrage against ‘fat-cat’ bosses, who have often used huge payroll savings to justify big salary rises for themselves.

‘Downsizing’ became a boardroom buzzword, with directors proudly telling shareholders that they were able to  pay higher dividends through redundancy-related cost-savings. The slick  term was more acceptable than talking of throwing people out of work.

Middle England has been worst hit, with thousands of white-collar jobs axed. High street banks have between them got rid of 90,000 staff since 1989. Downsizing has created a climate of insecurity which many blame for the still sluggish economic recovery. And the Government has lost millions of pounds in tax from workers axed from previously labour-intensive industries.

It emerged yesterday that Mr Roach, chief economist at the investment bank Morgan Stanley on Wall Street, announced his conversion in a memo to his firm’s clients.

He confessed he had now concluded that relentless cost-cutting was bad for business. ‘If you compete by building, you have a future. If you compete by cutting, you don’t’,’ the contrite guru said.

‘For years I have extolled the virtues of America’s productivity-led recovery. While I think it’s safe to say that such a scenario has become the new mantra for U.S. businesses in the 1990s, I must confess that I’m now having second thoughts.”

And he warned of a worker backlash ‘not on the shopfloor, but in the polling booths’.

That forecast was echoed by TUC boss John Monks yesterday.

He said: ‘Downsizing has done more than any other single business strategy to create the deep insecurity felt in Britain.

‘I hope this will herald a re-think in Britain’s boardrooms. Long-term success comes from steady investment and skilled, motivated staff.”

Around 38 per cent of Britain’s workforce – nearly ten million people – are now not in full-time permanent jobs. They are either in part-time or temporary work, or self-employed.

The main full-time job creation thrust has come from small firms, employing 20 staff or fewer. They have taken on 2.5 million extra workers in ten years.

Big retail chains have also taken on more workers. Tesco recently announced it was recruiting 4,500 to pack bags and generally assist shoppers. Last month it revealed record profits.

Late payment is still a problem for 45 percent of small and medium businesses.

The average time taken to be paid has risen from 52.8 days in 1994 to 53.2 this year, according to a survey by the Confederation of British Industry and accountancy firm Coopers & Lybrand.’

Ha-Joon Chang describes in his book, 23 Things They Don’t Tell You About Capitalism, how downsizing has literally driven firms bankrupt. They cut back their staff and plant so much in order to boost management pay and shareholder dividends beyond the point where they were economically viable. He argues that the most durable firms tend to be those where the state also has a stake in the firm, and so in maintaining it, or where the workers are also strongly involved in its management. Chang’s not anti-capitalist, but he states that shareholders are fickle – the moment they think a firm is no longer as profitable as another company, or is in trouble, they’ll sell their shares and go elsewhere.

Despite this attack on downsizing’s credibility and the loss of government revenue it has created, job insecurity has increased massively to the point where it is normal. Blair and Gordon Brown are as responsible for this as the Tories, as they accepted the neoliberal, Thatcherite dogma that the labour market had to be fluid and flexible. Which means that firms should find it easy to lay off staff and their should always be a supply of cheap workers waiting to be taken on.

Thatcherism has been a disaster. This clipping from a quarter of a century ago shows one of its central doctrines was recognised as such by the man who invented it even them. But it’s kept the rich richer, and the poor poorer, and so despite articles like this, it’s still being pushed.

And the result is a Britain of despair and poverty where working families, never mind the unemployed and disabled, are dying of starvation or forced to use food banks.

 

Haulage Industry Considers Nationalisation May Be Necessary

I found this very interesting piece in Wednesday’s edition of the I, for 8th April 2020. It reports that the head of the haulage industry believes that it might have to be nationalised in order to preserve it. The article, ‘Nationalisation may be needed, says chief’, runs

The haulage industry may need to be nationalised unless firms are given cash to avoid going bust, a trade association claims. Richard Burnett, chief executive of the Road Haulage Association, said around 20,000 companies have completely stopped operating, which is around 30 per cent of the sector.

Obviously, Burnett would almost certainly prefer those firms to be given cash by the government rather than nationalised. But this ties in with a comment on the BBC 10 O’clock news that evening, which is that there were some radical voices suggesting that the assistance given to industry must go further than the government’s present policy. According to the Beeb, they have suggested handing firms over to the banks, or part-nationalising them with the government as a partner.

I’ve also heard that some other countries are nationalising important industries in order to keep them running during the present crisis, a prospect that must surely terrify the Tories and their corporate backers over here.

Of the two options, I am massively in favour of nationalisation. The banks are too large, too powerful and too greedy and self-interested. Giving any industry to them will not guarantee that they will keep them running. Rather, I can see them doing to firms what the hedge funds have done to those they own – keep them starved of funds and running at a technical loss as a legal tax dodge. This works well until the company faces serious financial trouble, when the whole house of cards comes crashing down. As it has disastrously and scandalously with many care homes. Either that or the banks will simply use them as a cash cow, and the minute the companies experience trouble, will stop investing in them and try to sell them off or close them.

I’m massively in favour of the second option, partial nationalisation. The Oxford economist, Ha-Joon Chang, has pointed out in his book, 21 Things They Don’t Tell You About Capitalism, that those continental firms that are part owned by the state are more stable and long-lasting that those run for shareholders. It’s because the government has a vested interest in keeping them running. Unfortunately, with this lot in charge or the Blairites in the Labour party, I can see them selling the firms off at the earliest opportunity, and at a knockdown price below their market value the moment they decided that it’s safe to do so.

But for the moment, it seems that nationalisation is back on the agenda, if only at the fringes of the debate. And that means something else: Corbyn was right about the economy, as this crisis has shown.

Because, contrary to Thatcherite dogma, the free market isn’t going to preserve industry, and creates jobs and wealth. It never has, except for the rich. And this is shown very starkly in the present crisis.

 

Lobster on the Economic Damage Caused by the Financial Sector

Lobster over the years has criticised the dominance of the financial sector over the British economy, and attacked the way this has actively harmed other sectors, particularly manufacturing industry. Thatcher, Major and then Tony Blair favoured banking and financial services over the industries, partly from economic illiteracy and partly from the conviction that Britain’s manufacturing sector was doomed. Thatcher believed very much in a strong pound and didn’t think it would harm the manufacturing industries. One of the few businessmen from that sector in Thatcher’s government tried to tell her otherwise, and show her that it would damage our exports by making them too expensive over our competitors. But Thatcher wouldn’t hear of it. She was convinced that it wouldn’t have any effect on manufacturing because the Germans had a strong manufacturing base, and they had a strong Deutschmark. The businessman tried to explain to her that the Mark was strong because they had a strong manufacturing base, not the other way around. But it was too much for the Leaderene’s brain and she refused to listen.

Thatcher also made it very clear that she was not going to help failing industries. What help there was, was supposed to come from the privatisation of state utilities and the operation of market forces. This was supposed to open up new forms of private investment. If they didn’t, then that company or industry was uncompetitive and doomed to fail. Meanwhile, the thinking went that the financial sector would take over from the failing manufacturing industries as a new source of wealth and employment. Thus Blair, Brown and the late Mo Mowlam opened up the ‘prawn cocktail’ campaign to win over the City of London, promising light regulation. One of the chief executives at the Bank of England, imported from America, was Deanne Julius, who said that Britain should abandon its manufacturing industries and allow them to be replaced by America’s. Instead, Britain should concentrate on the service industries.

This is another load of neoliberal economic rubbish that has been conclusively proved wrong. The Oxford economics professor, Ha-Joon Chang, in his book 23 Things They Don’t Tell You About Capitalism shows that despite Thatcherite dogma, manufacturing is still crucially important for the British economy. It only looks weaker than the other sectors, because it has grown at a slower rate.

Now Robin Ramsay in the latest update to his ‘News from the Bridge’ column in Lobster 78 has published a piece actually describing the active harm the privileged position of the financial sector has done the British economy as a whole. It’s in a piece ‘The Future of Britain’s Crisis’, which begins with a few sharp observations about the impotence of the House of Commons Security and Intelligence Committee. This is supposed to supervise Britain’s intelligence services, but its lack of effective power is demonstrated by Johnson’s suppression of the report into Russian influence in UK politics. From leaks to CNN and others, it shows that rich Russians have purchased UK citizenship and poured money into Tory coffers. He states that this is just part of the price Britain has to pay for Britain being one of the leading centres of money laundering. He continues

The idea that there is a structural conflict between the interests of the manufacturing economy and that of the City has been around since the late 1970s in my experience, and probably much longer. The conflict was rarely articulated by public figures beyond the British left but in 1980, with Bank of England base rates lifted to 14% ‘to control inflation’, Sir Terence Beckett, director-general of the Confederation of British Industry (CBI), told its annual conference that they had to ‘to take the gloves off and have a bare-knuckle fight’ with the Thatcher government. But no such fight ensued, Beckett resigned and in the following decade while the City boomed, British manufacturing shrank by about 20%.

The focus these days is less on structural conflict than on what is known as ‘over-financialisation’: roughly, that the financial sector gets to be too big for the rest of the economy. Recently a trio of economists/econometricians (from the Sheffield Political Economy Research Institute at the University of Sheffield) have tried to quantify the cost of UK over-financialisation and have concluded:

‘Our calculations suggest that the total cost of lost growth potential for the UK caused by “too much finance” between 1995 and 2015 is in the region of £4,500 billion. This total figure amounts to roughly 2.5 years of the average GDP across the period.

The data suggests that the UK economy, may have performed much better in overall growth terms if: (a) its financial sector was smaller; (b) if finance was more focused on supporting other areas of the economy, rather than trying to act as a source of wealth generation (extraction) in its own right.

This evidence also provides support for the idea that the UK suffers from a form of “finance curse”: a development trajectory of financial overdependence involving a crowding out of other sectors and a skewing of social relations, geography and politics.’ [Emphases in the original.] 

On similar lines, Grace Blakeley writes in her On Borrowed Time: Finance and
the UK’s current account deficit, that

‘Rebalancing the UK’s international position requires moderating the significance of finance within the UK economy and bringing asset price volatility under control, while nurturing non-financial exporting sectors.’

Ramsay concludes the article by remarking that it would be a difficult job convincing the political establishment of this, never mind the electorate. The failure of people working within London to understand that the capital’s influence and share of the country’s wealth is harming the rest of the country has helped the rise of the Scots and Welsh Nationalists, along with less significant movements like the Yorkshire Party, the Campaign for the North and Mebyon Kernow.

See: https://www.lobster-magazine.co.uk/free/lobster78/lob78-view-from-the-bridge.pdf

£4,500 billion lost to the British economy between 1995 and 2015! 

And never mind the millions of jobs lost, the destruction of working class communities right across the country from Cornwall to Scotland and Northern Ireland, lost skills and damaged lives!

All that simply so that Thatcher’s, Blair’s, and now Boris and Rees-Mogg and their chums in the City of London could make a tidy profit.

This is proof that we need a Corbyn government that will do something for public services and manufacturing industry, rather than more of the self-serving Tory economic policies that benefits only the City.

What A Surprise! Anti-NHS Thinktank Funded by Tobacco and Fast Food Industries

One of the fascinating articles Mike put up yesterday was about an article in the British Medical Journal that reported that Institute of Economic Affairs, a right-wing think tank that funds the Tories and which demands the privatisation of the NHS, is funded by all the industries that actively damage people’s health: tobacco, gambling, alcohol, sugar and fast food. One of the major donors to this secretive think tank is British-American Tobacco. The report noted that the IEA had attacked campaigns against smoking, drinking and the obesity academic, and raised concerns that a future leader of the Tories would side with these industries against the interests of the British people.

Well, as Bill Hicks used to say ironically, ‘Colour me surprised!’

I don’t wish to sneer at the doctors and medical professionals behind this article, and am absolutely fully behind its publication. But I’m not remotely surprised. It’s almost to be expected that a think tank that demands absolute privatisation and deregulation in the interests of complete free trade, should be funded by those industries, which have the most to lose from government regulation. And in the case of the Tories, that has always included tobacco, alcohol and gambling. Way back in the early ’90s under John Major, when Brits were just beginning to get into the habit of binge drinking and the government was considering allowing pubs and nightclubs all day licences, there were concerns about the damaging effects of alcohol. People were demanding greater regulation of the drinks industry. But this was being blocked by the Tories, because so many Tory MPs has links to these companies. This was so marked that Private Eye actually published the names of these MPs, and the positions they held in various drinks companies.

As for gambling, the Labour government after the War tried to crack down on this, but it was the Tories under MacMillan, who legalised the betting shops. Later on, Tony Blair, taking his ideas from them, had plans to expand the British gambling industry further with the opening of ‘super-casinos’, one of which was to be in Blackpool, I believe. But fortunately that never got off the ground. Unfortunately, there has been a massive rise in gambling addiction, despite all the warnings on the the adverts for online casinos.

The Tories have also had a long relationship too with the tobacco industry, resisting calls for bans on tobacco advertising. Private Eye also reported how, after Major lost the election to Blair, former Tory Chancellor of the Exchequer Kenneth Clarke then got a job with British-American Tobacco. As did, I believe, Saint Maggie of Grantham herself. BAT was employing him to open up markets in the former Soviet central Asian republics. The Eye duly satirised him as ‘BATman’, driving around in a car shaped like a giant cigarette, shoving ciggies into people’s, mostly children’s, mouths.

The Institute of Economic Affairs is a particularly nasty outfit that’s been around since the mid-70s. For a long time, I think it was the only think tank of its type pushing extreme free market ideas. A couple of years ago I found a tranche of their booklets in one of the secondhand bookshops in Cheltenham. One was on how the state couldn’t manage industry. This looked at four examples of state industrial projects, which it claimed were incompetently run and a waste of money. One was the Anglo-French supersonic airliner, Concorde. The booklet had a point, as many of the industries they pointed to, like British Leyland, were failing badly. Concorde when it started out was a massive white elephant. It was hugely expensive and for some time there were no orders for it. But now it is celebrate as a major aerospace achievement. While the British aircraft industry has decline, the French used the opportunities and expertise they developed on the project to expand their own aerospace industry.

Looking at the booklet, it struck me how selective these examples were. Just four, out of the many other nationalised industries that existed at the time. And I doubt the pamphlet has worn well with age. Ha Joon Chang’s 23 Things They Don’t Tell You About Capitalism and John Quiggin’s Zombie Economics have very effectively demolished their shoddy and shopworn free market capitalism, and shown how, rather than encouraging industry and prosperity, it has effectively ruined them. Read these books, and you’ll see just why we need Corbyn, whatever the champions of free market capitalism scream to the contrary.

Oh yes, and ladies, particularly, be warned. This is an anti-feminist organisation. Mike mentions in his article that it has a spokeswoman, Kate Andrews, who turns up regularly on Question Time to push for the privatisation of the NHS. Or rather, its reform, as they don’t want to alarm the populace by being too open about what they want to do. Despite this feminine face, this is an organisation that has very traditional views about gender roles. One of the pamphlets I found had the jaunty title Liberating Women – From Feminism. The booklet was written by women, and I know that some women would prefer to be able to stay home and raise their children rather than go to work. And that’s fine if it’s their choice. But this outfit would like to stop women having a choice. Rather than enabling women, who choose to stay home, to do so, they would actively like to discourage women from pursuing careers.

The IEA really is a grubby organisation, and the sooner it’s discredited everywhere, the better. Like the Tories.

Now Tories Troubled by Split

Yesterday, a group of three MPs, Sarah Wollaston, Heidi Allen and Anna Soubry, defected from the Tory party to join the Independent corporation, that had split from Labour.

At their press conference they gave three reasons why they had left. Heidi Allen said she was disgusted with the suffering the party had inflicted and its lack of benevolence. For Sarah Wollaston, it was the harm the Tories had done to the manufacturing industry. And for Anna Soubry it was the way her former party had wrecked the country with their massively inept handling of Brexit. Or it might have been Wollaston, who was most concerned about Brexit, and Soubry about the destruction of Britain’s manufacturing sector under the Tories. This is how the reasons for their departure was presented on one of the short videos on YouTube, although I got the impression from listening to Heidi Allen speaking on the 45 minute long video of their press conference put out by Channel 4 News that she was also concerned about Brexit and the attack on manufacturing, as she also ran her own manufacturing firm.

The Tories, who had previously been gleefully exploiting Chuka Umunna and company’s split from the Labour party, were left outraged in their turn. Hunt gave a speech saying how much he regretted the departure of such valued colleagues. Other Tory functionaries demanded that the Splitters should now call a bye-election. Just like the real supporters and activists in the Labour party have been demanding Umunna and his coteries of bitter Blairites do.

I don’t know how sincere Allen and her two colleagues are about the suffering caused by the Tory party. She made a number of speeches saying how upset she was by the suffering caused by her former party’s wretched welfare reforms, but voted for them all the same. So in her case it was, as Mike pointed out, a case of crocodile tears. She may be genuine, and that after years of dutifully following the party line her conscience has won at last. Or it may simply be that, like some other Tories, she’s just worried that the electorate will punish the Tories for the misery they’ve inflicted at the next election.

I think the three’s statement that they’re concerned about British manufacturing and the devastating effects of Brexit are rather more genuine. Margaret Thatcher and Blair in his turn ignored the manufacturing sector. One members of Thatcher’s cabinet, who was the only member in it from that sector of the economy, described how he couldn’t get Thatcher to understand that a strong pound would harm British manufacturing by making our products more expensive. She also uncritically accepted as an article of her neoliberal, free market dogma, that failing firms and industries should be allowed to go under, and should not be given government assistance. Which contrasted with Labour’s promotion of the National Enterprise Boards and state assistance for British industry, where the government would help firms acquire plant and equipment.

And as a good Thatcherite, Blair also adopted her destructive attitude to British industry. He was also quite happy to see British manufacturing collapse. Instead, its place at the heart of the British economy would be taken by the financial sector and the service industries. Deanne Julius, a leading official at the Bank of England, recruited from America, actually said that Britain should give up its manufacturing industry, and simply concentrate on the service industries.

The result has been that vast swathes of traditional British industry have been destroyed by Thatcherism, including mining. Which was done simply to destroy the miners’ union, so they could never overthrow a Tory government as they had Heath’s. However, as Ha Joon-Chang has shown in his book, 23 Things They Don’t Tell You About Capitalism, manufacturing is still an extremely important part of the British economy. It looks weak simply because it hasn’t expanded as much as the other sectors of the British economy. But if it went, the British economy would collapse completely.

As for Brexit, the past few weeks have seen company after company leave the UK because of the Tory party’s incompetence. They’re leaving because we haven’t reached a trade agreement with EU, and so the tariff barriers that will be erected after Britain leaves will make it difficult for them to sell their products after our departure. The latest firm to announce it was closing down its British plant has been Honda in Swindon. When this goes, so do 3,500 jobs.

But I doubt that this will concern those in the Tory party demanding a hard Brexit, like the odious Jacob Rees-Mogg. The financial sector has also been hit, with various banks and international financial regulators announcing that they will leave Britain for Dublin, Paris and the Netherlands. But this doesn’t seem to dismay Mogg and his comrades. They seem to be all financiers, who make their money through investing in companies around the world. And so the destruction of the British manufacturing sector simply doesn’t affect them. They’ll get their money anyway.

The Tory party is seriously split over Brexit. It was to call the Eurosceptics’ bluff that Cameron called the referendum in the first place. He was so confident that people would vote ‘remain’ that he didn’t do any proper campaigning. The result was that he was astonished when the ‘Leave’ vote prevailed. But I gather that the Tories were on the edge of splitting years before, when Tony Blair was in power. Blair stole their policies, and indeed moved further right than the Tories had dared. The party was also split between the Tory paternalists and Thatcherites, and the rural sector, which believed that British agriculture and country communities were being ignored. I’ve heard it said that if Brown had won the 2010 election, the Tories would have collapsed completely, and would have tried to rebrand themselves instead as the English Nationalists. This has the ring of truth, as I do remember one opinion piece in the Heil actually recommending that the party thus rename itself.

I hope that the departure of Allen, Wollaston and Soubry will spark a series of other defections from the Tories and bring about the party’s much-need demise. It’s brought nothing but misery and poverty to Britain’s working people since Thatcher came to power in 1979. And even if the party doesn’t collapse completely, I want there to be so many defections that at the least it causes the collapse of May’s vile, malignant, destructive government.

Tory Health Minister Matt Hancock Receiving Donations from NHS Privatisation Think Tank

On Monday Mike published a very interesting piece revealing that Matt Hancock, the Secretary of State for Health and Social Care, has been receiving donations of between 2,000 and 4,000 pounds after his election in 2010. The donor is one Neil Record, a currency manager. Who is also the head of the board of the Institute of Economic Affairs. The IEA is one of the key think tanks behind Thatcher’s programme of privatizing everything that isn’t nailed down, and destroying the welfare state. All for the benefit of private industry, of course. It is very firmly behind the privatization of the NHS, and the IEA is campaigning to introduce a private medical service funded by private health insurance, as in the US. Where their system has broke down to such a level that 40,000 each year die because they can’t afford their medical care, and where 7 million Americans last year lost their insurance cover.

However, the IEA, according to Mike, has responded to critics of NHS privatization by saying that they’re opposed patients having a choice.

Ah yes, ‘choice’. That old Thatcherite canard. I can remember being told by one of the Tory students at College that private industry provided ‘choice’. It was one of the mantras of Maggie Thatcher. Someone once asked her what the essence of Christianity was. Her answer was simple: ‘Choice’. So, nothing about salvation from sin, the healing of a broken world, the moral duty to work for the public good and create a better society, provide for the poor, the sick, disabled and marginalized. No, nothing about that. Just ‘choice’. No wonder she fell out with Archbishop Runcie and the Scots Kirk. She had no idea.

Mike concludes his piece on Hancock with the words

In fact, privatisation would force patients into insurance schemes that are unlikely ever to pay out, meaning patients would end up with no choice at all.

The IEA is a firm fan of such insurance schemes.

And our Health Secretary takes its bribes cash.

We’ll need to watch this one carefully. Will he try to use Brexit to put through his real paymasters’ plan?

See: https://voxpoliticalonline.com/2019/01/28/how-can-we-trust-the-tory-government-when-its-ministers-behave-like-this/

It isn’t just the fact that the private insurance schemes the Tories and New Labour would love to force us all into won’t pay out that makes all the claims of ‘choice’ a farcical lie. It’s the fact that under Blair’s introduction of private medical care in the NHS, costs still have to be kept down. Blair’s reforms were based on those of the private healthcare group, Kaiserpermanente in America, which he wrongly believed provided better value for money that state-managed healthcare. Under their system, there was a special office that looked into the comparative treatment prices of different hospitals, and the patient got sent to the cheapest, regardless of what he or she personally wanted. There was no choice.

I’m not at all surprised that Hancock has been receiving money from the privatisers. All the Tories and New Labour have. The privatization of the NHS was heavily pushed by private healthcare firms like Unum under John Major and his wretched health secretary, Peter Lilley, and then under Tony Blair. Who was surrounded by any number of private healthcare companies desperate for some of that sweet, sweet NHS action. Like BUPA, Nuffield Health, Virgin Healthcare, Circle Health and others.

As for the IEA, I found a slew of their pamphlets in one of the secondhand bookshops in Cheltenham, and actually couldn’t believe how bad they were. There was one pamphlet arguing that the state can’t run industries, as shown by about 4-6 very carefully selected examples. One of them was Concorde, which did initially have a very difficult time selling the plane. However, while British aerospace companies have continued to be troubled, the French used the expertise they developed with the project to expand theirs. And Ha-Joon Chang in his book, 23 Things They Don’t Tell You About Capitalism shows very clearly that the state very much can run private companies very successfully. The examples in the IEA pamphlet are obviously very carefully cherrypicked.

And I don’t think it’s just in the economic sphere that the IEA is a backward influence. Along with this pamphlet was one Liberating Women from Feminism, which I think was basically arguing that the ladies should give up any hope of having a career or equality, and go back to running the home. I’m sure some women would like to, and that’s fine if it’s their free choice and they find it fulfilling. But the majority of women these days want a career and economic parity with blokes. And the IEA’s campaign against that would leave many women without any choice, as it was until only a few decades ago. Which all shows how much they really believe in ‘choice’.

Get the IEA and the other privatizing think tanks out of politics, and Matt Hancock and Tweezer out of government. We need a real, socialist Labour government to restore the NHS. A government that has to be led by Corbyn.

Tony Benn: Socialism Needed to Prevent Massive Abuse by Private Industry

In the chapter ‘Labour’s Industrial Programme’ in his 1979 book, Arguments for Socialism, Tony Benn makes a very strong case for the extension of public ownership. This is needed, he argued, to prevent serious abuse by private corporations. This included not just unscrupulous and unjust business policies, like one medical company overcharging the health service for its products, but also serious threats to democracy. Benn is also rightly outraged by the way companies can be bought and sold without the consultation of their workers. He writes

The 1970s provided us with many examples of the abuse of financial power. There were individual scandals such as the one involving Lonrho which the Conservative Prime Minister, Mr Heath, described as the ‘unacceptable face of capitalism’. Firms may be able to get away with the payment of 38,000 pounds a year to part-time chairmen if no one else knows about it. But when it becomes public and we know that the chairman, as a Conservative M.P., supports a statutory wages policy to keep down the wage of low-paid workers, some earning less than 20 pounds a week at the time, it becomes intolerable. There was the case of the drug company, Hoffman-La Roche, who were grossly overcharging the National Health Service. There was also the initial refusal by Distillers to compensate the thalidomide children properly.

There were other broader scandals such as those involving speculation in property and agricultural land; the whole industry of tax avoidance; the casino-like atmosphere of the Stock Exchange. Millions of people who experience real problems in Britain are gradually learning all this on radio and television and from the press. Such things are a cynical affront to the struggle that ordinary people have to feed and clothe their families.

But the problem goes deeper than that. Workers have no legal rights to be consulted when the firms for which they work are taken over. They are sold off like cattle when a firm changes hands with no guarantee for the future. The rapid growth of trade union membership among white-collar workers and even managers indicates the strength of feelings about that. Not just the economic but also the political power of big business, especially the multinationals, has come into the open.

In Chile the ITT plotted to overthrow an elected President. The American arms companies, Lockheed and Northrop, have been shown to have civil servants, generals, ministers and even prime ministers, in democratic countries as well as dictatorships, on their payroll. The Watergate revelations have shown how big business funds were used in an attempt to corrupt the American democratic process. In Britain we have had massive political campaigns also financed by big business to oppose the Labour Party’s programme for public ownership and to secure the re-election of Conservative governments. Big business also underwrote the cost of the campaign to keep Britain in the Common Market at the time of the 1975 referendum. (pp. 49-50).

Benn then moves to discuss the threat of the sheer amount of power held by big business and the financial houses.

Leaving aside the question of abuse, the sheer concentration of industrial and economic power is now a major political factor. The spate of mergers in recent years in Britain alone – and their expected continuation – can be expressed like this: in 1950 the top 100 companies in Britain produced about 20 per cent of the national output. By 1973 they produced 46 per cent. And at this rate, by 1980, they will produce 66 per cent – two-thirds of our national output. Many of them will be operating multinationally, exporting capital and jobs and siphoning off profits to where the taxes are most profitable.

The banks, insurance companies and financial institutions are also immensely powerful. In June 1973 I was invited to speak at a conference organised by the Financial Times and the Investors Chronicle. It was held in the London Hilton, and before going I added up the total assets of the banks and other financial institutions represented in the audience. They were worth at that time about 95,000 million pounds. This was at the time about twice as much as the Gross National Product of the United Kingdom and four or five times the total sum raised in taxation by the British government each year. (p.50).

He then goes on to argue that the Labour party has to confront what this concentration of industrial and financial power means for British democracy and its institutions, and suggests some solutions.

The Labour Party must ask what effect all this power will have on the nature of our democracy. Britain is proud of its system of parliamentary democracy, its local democracy and its free trade unions. But rising against this we have the growing power of the Common Market which will strip our elected House of Commons of its control over some key economic decisions. This has greatly weakened British democracy at a time when economic power is growing stronger.

I have spelled this out because it is the background against which our policy proposals have been developed. In the light of our experience in earlier governments we believed it would necessary for government to have far greater powers over industry. These are some of the measures we were aiming at in the Industry Bill presented to Parliament in 1975, shortly after our return to power:

The right to require disclosure of information by companies
The right of government to invest in private companies requiring support.
The provision for joint planning between government and firms.
The right to acquire firms, with the approval of Parliament.
The right to protect firms from takeovers.
The extension of the present insurance companies’ provisions for ministerial control over board members.
The extension of the idea of Receivership to cover the defence of the interests of workers and the nation.
Safeguards against the abuse of power by global companies.

If we are to have a managed economy-and that seems to be accepted – the question is: ‘In whose interests is it to be managed?’ We intend to manage it in the interests of working people and their families. But we do not accept the present corporate structure of Government Boards, Commissions and Agents, working secretly and not accountable to Parliament. The powers we want must be subjected to House of Commons approval when they are exercised. (pp. 50-1).

I don’t know what proportion of our economy is now dominated by big business and the multinationals, but there is absolutely no doubt that the situation after nearly forty years of Thatcherism is now much worse. British firms, including our public utilities, have been bought by foreign multinationals, are British jobs are being outsourced to eastern Europe and India.

There has also been a massive corporate takeover of government. The political parties have become increasingly reliant on corporate donations from industries, that then seek to set the agenda and influence the policies of the parties to which they have given money. The Conservatives are dying from the way they have consistently ignored the wishes of their grassroots, and seem to be kept alive by donations from American hedge fund firms. Under Blair and Brown, an alarmingly large number of government posts were filled by senior managers and officials from private firms. Both New Labour and the Tories were keen to sell off government enterprises to private industry, most notoriously to the firms that bankrolled them. And they put staff from private companies in charge of the very government departments that should have been regulating them. See George Monbiot’s Captive State.

In America this process has gone so far in both the Democrat and Republican parties that Harvard University in a report concluded that America was no longer a functioning democracy, but a form of corporate oligarchy.

The Austrian Marxist thinker, Karl Kautsky, believed that socialists should only take industries into public ownership when the number of firms in them had been reduced through bankruptcies and mergers to a monopoly. Following this reasoning, many of the big companies now dominating modern Britain, including the big supermarkets, should have been nationalized long ago.

Tony Benn was and still is absolutely right about corporate power, and the means to curb it. It’s why the Thatcherite press reviled him as a Communist and a maniac. We now no longer live in a planned economy, but the cosy, corrupt arrangements between big business, the Tories, Lib Dems and New Labour, continues. Ha-Joon Chang in his book 23 Things They Don’t Tell You About Capitalism argues very strongly that we need to return to economic planning. In this case, we need to go back to the policies of the ’70s that Thatcher claimed had failed, and extend them.

And if that’s true, then the forty years of laissez-faire capitalism ushered in by Thatcher and Reagan is an utter, utter failure. It’s time it was discarded.