Posts Tagged ‘Investment’

No, Tweezer! It’s Not Labour that’s Attacking Investment, but Tory Privatisation

January 20, 2018

More lies from Theresa May, the lying head of a mendacious, corrupt, odious party. Mike put up another piece earlier this week commenting on a foam-flecked rant by Tweezer against the Labour party. She began this tirade by claiming that Labour had turned its back on investment. This was presumably out of fear of Labour’s very popular policies about renationalising the Health Service, the electricity industry and the railways.

But Labour hasn’t turned its back on investment. Far from it. Labour has proposed an investment bank for Britain – something that is recognised by many economists as being badly needed. It was one of Neil Kinnock’s policies in 1987, before he lost the election and decided that becoming ‘Tory lite’ was the winning electoral strategy.

The Korean economist, Ha-Joon Chang, who teaches at Cambridge, has pointed out that privatisation doesn’t work. Most of the British privatised industries were snapped up by foreign companies. And these companies, as he points out, aren’t interested in investing. We are there competitors. They are interested in acquiring our industries purely to make a profit for their countries, not ours. Mike pointed this out in his blog piece on the matter, stating that 10 of the 25 railway companies were owned by foreign interests, many of them nationalised. So nationalised industry is all right, according to Tweezer, so long as we don’t have it.

The same point is made by Stewart Lansley and Joanna Mack in their book, Breadline Britain: the Rise of Mass Poverty (Oneworld 2015). They write

The privatisation, from the 1980s, of the former publicly owned utilities is another example of the extractive process at work, and one that hs brought a huge bonanza for corporate and financial executives at the expense of staff, taxpayers and consumers. Seventy-two state-own enterprises we4re sold between 1983 and 1991 alone, with the political promise that the public-to-private transfer would raise efficiency, productivity and investment in the to the benefit of all. Yet such gains have proved elusive. With most of those who landed shares on privatisation selling up swiftly, the promised shareholding democracy failed to materialise. In the most comprehensive study of the British privatisation process, the Italian academic Massimo Florio, in his book The Great Divistiture, has concluded that privatisation failed to boost efficiency and has led to a ‘substantial regressive effect on the distribution of incomes and wealth in the United Kingdom’. Despite delivering little in the way of unproved performance, privatisation has brought great hikes in managerial pay, profits and shareholder returns paid for by staff lay-offs, the erosion of pay and security, taxpayer losses and higher prices.
(P. 195).

They then go on to discuss how privatisation has led to rising prices, especially in the electricity and water industries.

In most instances, privatisation has led to steady rises in bills, such as for energy and water. Electricity prices are estimated to be between ten and twenty per cent higher than they would have been without privatisation, contributing to the rise in fuel poverty of several years. Between 2002 and 2011, energy and water bills rose forty-five and twenty-one percent respectively in real terms, while median incomes stagnated and those of the poorest tenth fell by eleven percent. The winners have been largely a mix of executives and wealth investors, whole most of the costs – in job security, pay among the least well-skilled, and rising utility bills – have been borne by the poorest half of the population. ‘In this sense, privatisation was an integral part of a series of policies that created a social rift unequalled anywhere else in Europe’, Florio concluded.
(pp. 156-7)

They then go on to discuss the particular instance of the water industry.

Ten of the twenty-three privatised local and region water companies are now foreign owned with a further eight bought by private equity groups. In 2007 Thames Water was taken over by a private consortium of investors, mostly from overseas. Since then, as revealed in a study by John Allen and Michael Pryke at the Open University, the consortium has engineered the company’s finances to ensure that dividends to investors have exceeded net profits paid for by borrowing, a practice now common across the industry. By offsetting interest charges on the loan, the company will pay no corporation tax for the next five to six years. As the academics concluded: ‘A mound of leveraged debt has been used to benefit investors at the expense of households and their rising water bills.’
(P. 157).

They also point out that Britain’s pro-privatisation policy is in market contrast to that of other nations in the EU and America.

It is a similar story across other privatised sectors from the railways to care homes. The fixation with private ownership tis also now increasingly out of step with other countries, which have been unwinding their own privatisation programmes in response to the way the utilities have been exploited for private gain. Eighty-six cities – throughout the US and across Europe – have taken water back into a form of public ownership.
(Pp. 157-8)

Even in America, where foreign investors are not allowed to take over utility companies, privatisation has not brought greater investment into these companies, and particularly the electricity industry, as the American author of Zombie Economics points out.

Lansley and Mack then go on to discuss the noxious case of the Private Equity Firms, which bought up care homes as a nice little investment. Their debt manipulation shenanigans caused many of these to collapse.

So when Tweezer went off on her rant against Labour the other day, this is what she was really defending: the exploitation of British consumers and taxpayers by foreign investors; management and shareholders boosting their pay and dividends by raising prices, and squeezing their workers as much as possible, while dodging tax.

Privatisation isn’t working. Let’s go back to Atlee and nationalise the utilities. And kick out Theresa, the Tories and their lies.

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Counterpoint on the Stupidity of Boris Johnson as Foreign Minister

July 23, 2016

Counterpunch, an American radical leftwing magazine and site, has put up a piece by Brian Cloughey on the utter stupidity of Boris Johnson’s appointment as Foreign and Commonwealth Minister. He describes the political machinations and manoeuvrings of Johnson and Gove as they jockeyed for power, how Johnson stabbed Cameron in the back over Brexit for no reason other than that he thought it would bring him to No. 10; the many lies Johnson has spun over his career, and the ignorant, bigoted and sheer racist comments that have made him at once a laughing stock to the rest of the world, and a danger to Britain’s peaceful relations with foreign nations.

Cloughey states that Johnson was sacked from the Times because he made up a quote. In 2004, the-then Conservative leader, Michael Howard, sacked him from his job as front bench spokesman for lying about his adulterous affair with Petronella Wyatt, whom he made to have an abortion. Cloughey describes Johnson as

clever and has a certain juvenile attractiveness for some people because his private life is colorful and chaotic while he has a certain facility with words and gives the impression that he could be all things to all men and to a certain number of women…

The trouble for Britain is that although Johnson is a twofaced, devious, posturing piece of slime who can’t be trusted to tell the time of day, he was most effective in capturing the public’s attention and helping persuade a majority to vote to leave the European Union.

He describes how he lied about the amount Britain contributed to the EU, and notes how after Gove’s betrayal of the treacherous Boris, the Tories ditched him and elected Theresa May instead. He considers Johnson, and the poisonous, racist rhetoric of the Leave campaign to be responsible for the increase in ‘hate speech’ and attacks and harassment of Blacks, Asians and Eastern Europeans which rose to 3,000 incidents in the weeks before and after the Referendum.

Cloughey remarks on the insulting comments Johnson has made about other leading foreign politicians and heads of state. He described Shrillary as having “dyed blonde hair and pouty lips, and a steely blue stare, like a sadistic nurse in a mental hospital”, Obama was ‘downright hypocritical’, and Putin a ‘ruthless and manipulative tyrant’. As for Trump, he described the Donald as ‘out of his mind’ and suffering from ‘stupefying ignorance’.

He referred to the crisis in Turkey as ‘the crisis in Egypt’, declared that ‘Chinese cultural influence is basically nil, and unlikely to increase’. He also claimed that it was said that the Queen loved the Commnwealth “partly because it supplies her with regular cheering crowds of flag-waving piccaninnies.” He was no less sneering about the peoples of the Congo. When Tony Blair went off to visit the country, he declared “No doubt . . . the tribal warriors will all break out in watermelon smiles to see the big white chief touch down in his big white British taxpayer-funded bird.”

Cloughey writes that Johnson has tried to excuse his comments by saying that they were taken out of their proper context, without actually saying what the proper context was. And although many people would agree with some of what he said about the various foreign leaders, they are hardly the kind of comments that you want in a foreign minister, part of whose job is speaking diplomatically and trying to establish a good relationship with those with whom he’s negotiating.

Cloughey concludes:

Britain’s prime minister would do well to reconsider her decision to appoint this gobbet of slime to a position of responsibility in her government. He will not serve Britain well.

Boris Johnson: Britain’s Lying Buffoon

Johnson is a clever man, if only in the way he has skilfully creating an entirely false image of a rather Billy Bunterish, lovable buffoon. But his comments about Black Africans and the Chinese are likely to cause offence, and really don’t bode well for Britain’s relations with the rest of the world. Apart from the dated, offensive terms used, like ‘picaninnies’ and ‘watermelon smiles’, the ignorance behind his dismissal of Chinese culture really is stunning. The contribution of the Chinese to science and technology is immense. You only have to open a text book on the history of science to find that many of the most fundamental scientific discoveries, from printing, to paper, to watermills, rockets and so on were made by someone in the Middle Kingdom. The influence of Chinese culture is rather less, but it is there.

Let’s deal with the very obvious modern Chinese influences in British society. One of the most obvious are Chinese takeaways, restaurants and cuisine. It may not be high art or great literature, but it is a very obvious Chinese cultural influence. Very many people in modern Britain like Chinese food, and Chinese restaurants and chip shops are a very common feature of our modern high streets. Then there’s the influence of Chinese cinema. A few years ago the Chinese won critical acclaim for a number of art films, but probably far more influential are the Hong Kong Chinese action and martial arts movies, like Crouching Tiger, Hidden Dragon, ever since Bruce Lee sprang into action in the 1970s. This encouraged generations of children to learn the eastern martial arts. Many of those taught are Japanese, but they include Chinese techniques too, such as Kung Fu. And then there’s the influence of Chinese literature and religion. In the 1970s and ’80s a generation of British schoolchildren were exposed to the Chinese classics The Romance of the Three Kingdoms and Wu Chen-Ang’s Journey to the West through the TV series The Water Margin and Monkey. There were even two translations of Chen-Ang’s classic novel issued, both abridged, one of which by Denis Waley. The influence of the Monkey TV show and the novel behind it have persisted to this day. The BBC promotional trailer for the Beijing Olympics in 2008 were very much based on Monkey, and made by the same company that made the videos for the Gorillaz pop group. And I noticed that the other night on Would I Lie To You, Gaby Roslin’s response to a stuffed monkey produced by one of the other guests, as to do a mock martial arts move, and intone ‘Monkey’ in the type of strangulated squawk that characterised some of the voices in that series.

Going further back, there was the craze in the 18th and 19th centuries for chinoiserie, Chinese art and porcelain. You only have to turn on one of the antique shows to see at least one of the experts talking about 18th century pottery, exported to Europe, examining pieces of jade, reproduction Shang bronzes, or 18th century wallpaper, depicted with Chinese designs, usually of people going about their business. Quite apart from the very stereotypical images of the country’s art, like the paintings of the two loves on the bridge.
China has also, naturally, had considerable influence on the culture of its neighbouring and other Asian countries. This is clearly an area for someone who knows far more about these nations’ histories and culture than I do. One example of the Middle Kingdom’s considerable influence is Japan. Buddhism was introduced by Chinese monks, and for centuries the Chinese classics formed the most prestigious part of Japanese literary culture. Further west, many of the people depicted in Persian painting have a distinctive Chinese look to their features. This was because of the cultural links and exchanges between those cultures during the Middle Ages.

In short, a moment’s thought reveals that Chinese cultural influence is certainly not negligible. Nor is it likely to remain so. The country has turned into an economic superpower, and has made considerable inroads into Africa. And way back in the ’90s, its space programme was so advanced that the Quantum Physicist and SF writer, Stephen Baxter, published an article in Focus magazine predicting that the first person to walk on Mars was very likely going to be Chinese.

Now clearly, British industrialists and financiers are very much aware of how powerful China now is. You can see it by the way they’re desperately trying to encourage the Chinese to invest, or buy up, British industry, just as they were a few decades ago with the Japanese. No-one wants potentially advantageous trade deals to be scuppered through a few tactless comments from the Foreign Minister.

And BoJo’s comments may very well cause offence. Johnson made much about his suitability for the role on the world stage, because of his position as one of the British team negotiating with the Chinese during the Beijing Olympics. But his comments also suggest that he could well have the opposite effect as well. The Chinese are, as a nation, a very proud people, and I gathered from working in one of the local museums here in Bristol that there is still a considerable feeling of humiliation about their defeat and occupation by Britain and the other foreign powers in the 19th century following the Opium Wars. Many of Britain’s former colonies are very sensitive to what they see as condescension. A few years ago there were diplomatic ructions when one of the Developing Nations – I think it may have been India – accused Britain of showing ‘colonialist and imperialist’ attitudes towards it.

Johnson with his comments about ‘picaninnies’ and ‘watermelon smiles’ uses the rhetoric and vocabulary of 19th and early 20th century racism. If he uses them when he’s foreign minister, he will cause offence, possibly starting another embarrassing diplomatic row. Let’s hope he keeps his mouth shut, and leaves the talking to others better informed.

And just to remind you, here’s the opening and closing titles from the Monkey TV show. Which, even though it’s now thirty odd years old, definitely has more style and class than Boris Alexander de Feffel Johnson.

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.

Jim Callaghan and Andrew Shonfield’s Alternative View of the British Economy

May 8, 2016

Simon Matthews begins an article on the career of Jim Callaghan in government, ‘Jim Callaghan: the Life and Times of Solomon Binding’ in Lobster 49 for summer, 2005, with a discussion of Andrew Shonfield’s critique of the British economy in the 1950s:

It is still possible to find an interesting Penguin Special that appeared in 1958, British Economic Policy Since the War, by Andrew Shonfield, then economics editor of The Observer, remains a striking piece of work. Among his conclusions were: that the maintenance of a separate Sterling Area, giving the comforting feeling and appearance of great power status, actually hindered the UK economy; that the UK should be more closely involved with Europe; that UK governments and the UK private sector failed to invest sufficiently in their own country and invested instead elsewhere in the Sterling Area; the City of London had a poor and distorting effect on the UK economy; that public spending in the UK was more restrained than in other European countries for reasons that did not make much sense; that the Treasury possibly had too much power; that although industrial relations in the UK were poor, days lost through strikes were often no higher than in other countries, but too much power resided with individual shop stewards (a fact that some employers actually quite liked); that the national offices of the big trade unions had surprisingly little input in either planning or negotiation within significant industries, with matters being handled at a purely local level; that because of the low level of pay and facilities offered by major employers a better relationship with the trade unions was difficult to attain; an that the UK spent too much on defence.

In 1958 this was prescient. Shonfield anticipated the essential economic debates of the 1970s and 1980s, some of which remain unresolved to this day. (P. 21). He notes that ultimately Shonfield’s views had little effect, though that doesn’t mean they went unnoticed. He considers that Harold Wilson arrived at some of Shonfield’s conclusions independently.

These issue are still, with some caveats, very much with us. Britain does not invest in public services at the same level as the other European countries. Spending on the NHS, for example, in the 1970s was below what other European nations spent on their health services. The City does not like investing in Britain, and most of the investment networks are geared towards the Developing World. As for government investment, you can see how reluctant the British government is to support British industry by the desperate efforts to find a foreign buyer for failing British companies or factories. The most recent example of this is the closure of the Tata steel plants in Bridgend and elsewhere. However, Cameron is cutting the defence budget to ludicrous extremes, and we have been saved much of the chaos that has overtaken some of the Continental economies because we kept the Pound instead of joining the Euro.

Matthews also has a broadly positive view of Callaghan’s government in the 1970s, which has been blamed for the economic failures that led to the rise of Maggie Thatcher.

It is convenient for contemporary politicians to say that the Thatcher years were something that Britain either needed or could not have avoided. But had it not been for Callaghan’s decision to postpone the election from 1978 to 1979 Thatcher might never have got to 10 Downing Street; or, if she did, would have been ousted very quickly. It is also true that the 1974-1979 Wilson-Callaghan governments made a reasonable job of recovering from the inflation caused by Heath and Barber in 1971-1973. ‘Old Labour’ id OK. It was just a shame it didn’t have a better leader. (P. 23).

So much for the conventional Tory wisdom that Thatcher was needed to sort out the chaos Labour caused. In this view, Callaghan was needed to sort out the chaos Heath had caused.

Ha-Joon Chang on the Failings of Free Market Capitalism

March 30, 2016

Chang Capitalism Book pic

Ha-Joon Chang is a Korean-born Cambridge economist, who has popped up here and there because of his criticisms of Neo-Liberal free market economics. Mike over at Vox Political, for example, has reblogged a meme quoting him on how trickle down economics don’t work, and are merely there to transfer wealth upwards to the rich in the form of tax cuts. He’s also the author of a popular book on economics and the failings of the free market, 23 Things They Don’t Tell You About Capitalism (London: Penguin 2010).

Chang makes it clear that his book is not an attack on capitalism per se. He states in the Introduction

This book is not an anti-capitalist manifesto. Being critical of free-market ideology is not the same as being against capitalism. Despite its problems and limitations, I believe that capitalism is still the best economic system that humanity has invented. My criticism is of a particular version of capitalism that has dominated the world in the last three decades, that is, free-market capitalism. This is not the only way to run capitalism, and certainly not the best, as the record of the last three decades shows. The book shows that there are ways in which capitalism should, and can, be made better.

He is, however, very clear on the devastation that has been wrought across the globe by the doctrine of the unrestrained free market.

The result of these policies has been the polar opposite of what was promised. Forget for a moment the financial meltdown, which will scar the world for decades to come. Prior to that, and unbeknown to most people, free-market ideologies had resulted in slower growth, rising inequality and heightened instability in most countries. In many rich countries, these problems were masked by huge credit expansion; thus the fact that US wages had remained stagnant and working hours increased since the 1970s was conveniently fogged over by the head brew of credit-fuelled consumer boom. the problems were bad enough in the rich countries, but they were even more serious for the developing world. Living standards in Sub-Saharan Africa have stagnated for the last three decades, while Latin America has seen its per capita growth rate fall by two-thirds during the period. There were some developing countries that grew fast (although with rapidly rising inequality) during this period, such as China and India, but these are precisely the countries that, while partially liberalizing, have refused to introduce full-blown free-market policies.

Thus, what we were told by the free-marketeers – or, as they are often called, neo-liberal economists, are at best only partially true and at worst plain wrong. As I will show throughout this book, the ‘truths’ peddled by free-market ideologues are based on lazy assumptions and blinkered visions, if not necessarily self-serving notions. My aim in this book is to tell you some essential truths about capitalism that the free-marketeers won’t.

Which is more than enough to give the late Mrs Thatcher a fit of the vapours.

Ha-Joon Chang Pic

Chang states that his goal is to empower people to make decisions and have opinions on these issues, whereas they might otherwise leave them to the experts on the grounds that they don’t have enough technical expertise, and so become active citizens demanding the right course of action from decision-makers.

The book itself has a rather eccentric organisation. Instead of chapters, there are ‘Things’, meaning different topics, so the contents include the following

Thing 1 There is no such thing as the free market.

Thing 2 Companies should not be run in the interest of their owners.

Thing 3 Most people in rich countries are paid more than they should be.

Thing 4 The washing machine has changed the world more than the internet has.

Thing 5 Assume the worst about people and you will get the worst.

Thing 6 Greater macroeconomic stability has not made the world any more stable.

Thing 7 Free-market policies rarely make poor countries rich.

Thing 8 Capital has a nationality.

Thing 9 We do not live in a post-industrial age.

Thing 10. the US does not have the highest living standard in the world.

Thing 11 Africa is not destined for underdevelopment.

Thing 12. Governments can pick winners.

Thing 13 Making rich people richer doesn’t make the rest of us richer.

Thing 14 Us managers are over-priced.

Thing 15 People in poor countries are more entrepreneurial than people in rich countries.

Thing 16 We are not smart enough to leave things to the market.

Thing 17 More education in itself is not going to make a country richer

Thing 18 What is good for General Motors is not necessarily good for the United States.

Thing 19 Despite the fall of Communism, we are still living in planned economies.

Thing 20 Equality of opportunity may not be fair.

Thing 21 Big government makes people more open to change.

Thing 22 Financial markets need to become less, not more, efficient.

Thing 23 Good economic policy does not require good economists.

Conclusion: How to rebuild the world economy.

He also makes seven suggestions how you can read the book, to answer certain queries, reading selected chapters to answer such questions as what capitalism is, or if you think politics is a waste of time or if you think the world is an unfair place, but there isn’t much you can do about it.

And while the book isn’t an attack on capitalism itself, some of the solutions to its problems do involve an element of Socialism or worker participation. For example, in the ‘Thing’ about why companies should not be run in the interests of the people who own them, Chang points out that the ownership of a country by shareholders means in practice that these have less interest than traditional owner managers in it being profitable or viable, as they can always take their shares out and put them somewhere else. As a result, the countries which have some of the most stable, and hence, most profitable companies, are those which have encouraged long-term investment or encouraged their workers to have a stake in them. Such as France, where several companies are part-owned by the state, or Germany and Austria, which have a degree of worker’s control through works’ councils.

It’s a fascinating and very necessary critique of the free-market capitalism beloved by the Blairites in Labour, and the Tories. Economics is notoriously the ‘dismal science’, but this is well and engagingly written for the ordinary reader, and I hope it encourages more people to criticise and bring down this deeply flawed and iniquitous system.

‘Red’ Ken Livingstone’s Arguments for Industrial Democracy

May 7, 2014

Livingstone Book pic

In his 1989 book, Livingstone’s Labour: Programme for the Nineties (London: Allen Hyman Ltd) the much reviled leader of the GLC and bête noir of Thatcher and Blair, presented a case for the introduction of industrial democracy into British firms. This, he believed, would make state intervention popular, and increase the efficiency of the firms themselves. He writes

Once the idea of intervention is accepted, the question is how should it be done? No one in their right mind would wish to repeat the mistakes of previous forms of public ownership in Britain in which vast, remote, undemocratic, Morrisonian bureaucracies alienated the groups they were supposed to serve. Nor do we want some state-owned investment bank based in London and managed by a few well-meaning City bankers who have at sometime in the past been known to vote Labour in a good year. It would be a great mistake to recreate in our new system the inherent failings of the present centralised metropolitan financial system.

We must ensure that what Labour creates is based on the different regions of Britain and is inherently partipatory and democratic. If we can create an investment system which involves the workforce on an industry by industry, company by company, and plant for plant basis, it would not only be very difficult to abolish following a change of government but it would usher in economic rights for the individual citizen in addition to our traditional electoral rights.

I have no doubt that people in the future will look back at the present time and express amazement that private investors and accountants could intervene to contract and close firms based solely on a short-term financial decision, while the people and sometimes whole communities who had given their lives to that firm had no rights except to draw the dole.

It will no doubt come as a shock to those who wield power and influence at the top of great bureaucracies and corporations to suggest that their workforce should have control over the investment programme of their company, but in the long term they are the people who have the greatest stake in the success or future of the firm. Instead of the investment decisions being taken solely by a firm’s directors and accountants, who are so often only interested in the quickest short-term return and therefore decide to invest the company profits in stock market or property speculation rather than expanding production or developing new products, we should give the workforce in each firm a power of veto over all investment plans and the power to initiate an alternative strategy. The workforce would require access to all the relevant information about the firm or industry concerned, plus adequate research resources for it take part in any debate about future prospects. The most obvious way to provide such resources is on a regional basis and this would be the most important function of elected regional authorities, discussed in the next chapter.

All the evidence from other parts of the world and the more limited experience of Britain in this field, shows that workers in a firm take a much more long term, strategic view, if for no other reason than their jobs depend on the survival and success of the company concerned. I have no doubt that had such economic rights and responsibilities been introduced by the post-war Labour government under Attlee, then the British economy would by now be a lot closer to that of West Germany in strength and size.

These sentiments will seem alarming here in Britain where the class system is still so much more of a barrier to judging individuals on their merits than in the other more modern Western democracies. Indeed, there is no doubt that these reactionary and arrogant attitudes have been strengthened during the Thatcher premiership with the constant emphasis on the theme that ‘managers must be free to manage’. Given the gross mismanagement of our economy by our ‘managers’ over the past decades, there is little empirical evidence to suggest that British managers’ ability to run the economy is such that the rest of us should simply do as we are told whilst fervently hoping that their success rate improves. (pp. 33-4).

I’ve blogged about the West German co-determination system, in which workers are elected to the boardroom, and have wide rights regarding the supervision and management of personnel issues, though they don’t control investment or the business plan. The Fabian pamphlet ‘The Future of Industrial Democracy’ and the evidence presented to the Bullock Report in the 1970s noted the unanimous evidence that while workers generally say they don’t want to be managers, they do work harder and better when they feel that they have a say in the firm’s management. There are various systems of industrial democracy across northern Europe, including the Netherlands, Austria and Denmark. It’s only the British class system that prevents it from being adopted over here.

Lobster’s Robin Ramsay: Scots and Welsh Nationalism Not Anti-English, Just Anti-City of London

March 27, 2014

Lobster Logo

I found this comment about the non-racist, non-Fascist nature of Scots and Welsh nationalism by Robin Ramsay, the editor of the parapolitical magazine, Lobster, in his piece ‘Contamination, the Labour Party, Nationalism and the Blairites’ (Lobster 33, Summer 1997: 2-9) expressing his opinion that Scots and Welsh Nationalists are racists or even anti-English, but simply against the dominance of the City of London that has damaged their countries, along with the rest of England outside the metropolis.

At any rate, the British Left does not assume that qua nationalists, the Scots and Welsh Nationalists are racists and fascists; and never has, as far as I am aware. But it is my experience that this Welsh and Scots nationalism is not even anti-English. Scots and Welsh Nationalists don’t see the people in the North (or Midlands, or East of West) of England as their oppressor. Their oppressor is in London and the Home Counties – the English establishment, which at its core is the City of London, and what might be best described as the overseas lobby in Britain – the financial, political, administrative and cultural remnants of the British Empire.

Where this essay 9is going may now be apparent. For the financial interests of that overseas lobby in London and the Home Counties against which the Welsh and the Scots Nats are struggling, have all too frequently taken precedence over the interests of industrial, non-metropolitan England, as well as Scotland and Wales – most recently and most nakedly in the 1980s.

The rest of the article is an examination of the way the Labour Party in the 1980s turned to take its economic direction for the City of London, with the result that the City’s interests, and those of the overseas lobby, superseded that of domestic manufacturing, with the consequent devastation of British industry that followed.

Although much has changed in the 17 years since the article was written, it remains substantially true. The Scots SF authors, China Mieville and Ian M. Banks, stated in an interview that they voted Scots Nationalist, not because they really wanted independence, but because the Scots Nats had better welfare policies than Labour. One of the Left-wing bloggers and commenters on this blog, Jaypot, has stated that she supports Scots Nationalism because of the effects of Tory rule on her homeland and certainly not because she hates the English. Indeed, she has said several times that she hopes an independent Scotland would galvanise us in the south to throw them out. Unemployed in Tyne and Wear put up a piece on their blog describing Alex Salmond’s promise to the people of North-East England that he would develop trade relations with their region, including placing valuable manufacturing contracts with local companies, if Scotland became independent. Furthermore, the authors of Socialist Enterprise: Reclaiming the Economy, Diana Gilhespy, Ken Jones, Tony Manwaring, Henry Neuburger and Adam Sharples, have also pointed out that British domestic manufacturing has suffered from a lack of investment due to the orientation of the financial sector towards investing overseas, especially in the former colonies.

And the reaction this weekend of the Tory press to Wales’ campaign for better welfare and NHS services, rather than the austerity campaign, privatisation and misgovernment of the metropolitican Tory elite was a piece in the Daily Heil vilifying Wales. Mike ran a piece over at Vox Political pointing out how inaccurate the story was, and how it bore no relation to the Wales in which he lives. And we can expect such attacks to increase as more people in Scotland, Wales and the English regions begin considering that they might be better off without a government, whose sole aim is the enrichment of a very narrow, metropolitan elite.

In Defence of Nationalised Industry

March 12, 2014

National Coal Pic

Since the 1970s, nationalisation has had a bad reputation, caused by the inefficiency, poor performance and appalling quality of some of its products. The classic example of this was British Leyland, hit by a long series of strikes, producing cars of a poorer workmanship and much less attractive than its foreign, increasingly Japanese, rivals. Yet the authors of Socialist Enterprise: Reclaiming the Economy, Diana Gilhespy, Ken Jones, Tony Manwaring, Henry Neuberger and Adam Sharples show that in many cases this images is grossly unfair. They argue

The case for public ownership is as powerful now as it has ever been – just as it has never been more urgent to rethink the priorities for public ownership, the methods of achieving it, the accountability and internal structure of publicly owned companies, and above all, their responsiveness to consumer and community needs. Publicly owned companies should be a model for socialism in practice. Unfortunately, for many people, that is just what they have become: unresponsive, often inefficient and often just as brutal in cutting jobs as private sector companies.

In many ways, this public image is, of course, grossly unfair. Nationalised industries are major investors: over the past ten years they have invested three times as much-for every worker employed – as firms in the private sector; and investment per unit of output has been twice as high. Moreover, companies such as BP, British Aerospace, BL, British Steel and Rolls Royce are among Britain’s top export earners. Nationalised industries have also been highly profitable in recent years. Their productivity record has been impressive, outstripping the private sector. Without public enterprise Britain would have had no domestically owned company in sectors such as motor vehicles, aero engines, shipbuilding, microchips and computers.

The Tory government privatisation programme, on the other hand, means that only the most vulnerable companies starved of investment finance will be left in the public sector. Profits will increasingly reflect the abuse of monopoly powers, rather than the efficiency of the company, and the Government’s obsessive desire to cut public borrowing. These factors are, however, unlikely to win much sympathy for public enterprise. Popular opinion may not favour further privatisation but there is no positive desire for an extension of public ownership. This reflects a deep seated lack of confidence in publicly owned companies which predates the election of the Conservative government in 1979.

All of which is true. This was written in 1986, and after Thatcher privatised the nationalised industries we largely do not have domestic firms producing cars, aero engines and ships. And the sale of some industries to foreign investors was quite deliberate, like the helicopter company Westland and the defence technology company QinetiQ to the Americans. Britain’s economy has suffered, as well as her wider defence infrastructure.

As for public opinion towards nationalised industry, this is not as low as may have been the case when this was written. People emphatically do not want further industries sold off. This is most obvious in the case of the NHS, as two reports by the Conservative party have shown. The I yesterday reported that the people using the East Coast railway line do not want to see it privatised. Mike over at Vox Political has presented the statistics showing that most British people still support the public ownership of the utilities.

There is clearly a large number of people, who support traditional, ‘old’ Labour-style mixed economy. They are, however, ignored by all three of the main parties. Their voice, particularly in defence of the NHS, needs to be heard.

The British Financial Sector’s Role in the Promotion of Foreign Industry

March 3, 2014

Bank pic

In a previous blog post I mentioned the statement by the authors of Socialist Enterprise: Reclaiming the Economy (Nottingham: Spokesman 1986) Diana Gilhespy, Ken Jones, Tony Manwaring, Henry Neuberger and Adam Sharples, that one of the causes for the decline of British manufacturing industry was a lack of investment and the concentration on short term returns by British banks. Later in the book, the authors expand on this statement by showing how the lack of investment in British manufacturing by the British financial sector is actually a legacy from the days of the Empire. According to the book, most British financial institutions, in contrast to their German and Japanese counterparts, were geared to investing in and developing the former British colonies, at the expense of the ‘mother country’. They write

The City’s International Role

The British financial system has failed to meet the needs of domestic industry because historically it has been geared to financing trade, in particular within the British Empire. When capital was raised in London it was more often than not for foreign investment, such as the US railroads. The City is now an international centre for managing foreign currencies – ‘Eurocurrencies’. Banks operating in the UK lend vast amounts of money overseas, many of them foreign banks.

This international role has had far-reaching results. British investors divert more of the national income to overseas investment than any major nation. For example, the two largest insurance companies, the Commercial Union and the Royal, do 70 per cent of their insurance business overseas. Since the removal of exchange controls, 60 per cent of unit trust investment has gone abroad.

In Germany and Japan, by contrast, industrial reorganisation has been closely linked with the provision of long-term finance tailored to the needs of domestic industry. Financial institutions have accepted responsibility for industrial performance, and so developed a detailed understanding of the problems facing industry, both technical and managerial. This tradition of industrial banking laid the basis for special credit institutions. In West Germany, the Kreditanstalt fur Weideraufbau – owned by the federal and regional governments – concentrated on regional policies, with the banks focusing on industrial financing. The Japanese economy is dominated by large holding companies, which include both industrial and financial companies: these have worked closely with MITI, the main government department responsible for industrial policy.

This bears out the Austrian Marxists, Karl Kautsky’s observations about the role of British capitalists in developing and promoting overseas rivals to Britain itself from about the time of the First World War. If these policies have continued – and I really don’t expect they’ve changed much in the nearly thirty years since the book was written – there needs to be a complete revolution in the priorities of the British financial sector. One of the solutions the book proposes is the establishment of a state-owned national investment bank for domestic industry, as recommended by the Labour party and the TUC. I like the idea, but it would face strenuous opposition from the established, vested financial interests, who fear any criticism and encroachment on their domination of the financial sector and British industry.