Posts Tagged ‘Iron’

Vox Political on the Tories and Tata’s Proposed Sale of British Steel

March 31, 2016

One of the big stories in industry this week is Tata’s proposed sell-off of what remains of the British steel industry. Mike makes the point that while David Cameron is spouting about how the government is doing everything it can, their actions speak much louder than words. And their actions say that they aren’t concerned at all.

Cameron himself is on holiday in Lanzarote. The Business Minister, Sajid Javid, who one of the wags in Private Eye’s ‘Lookalikes’ column suggested looks like the Claw from Thunderbirds, was thousands of miles away Downunder appearing at a business banquet. It was left to Anna Soubry, the Small Business minister, to make a plea for more time. By contrast, Jeremy Corbyn was at one of the steelworks in Port Talbot, and issued a demand to Cameron to recall parliament and take steps to protect the British steel industry.

Mike also points out that other countries have taken steps to protect their iron and steel industries, and that during the financial crisis two banks were nationalised. This raises the question why the government isn’t doing the same for the steel industry.

See Mike’s article at: http://voxpoliticalonline.com/2016/03/31/these-images-show-how-labour-is-standing-up-for-steel-while-the-tories-are-standing-idle/

Cameron did fly back from Lanzarote yesterday. However, while Soubry had made a vague suggestion that the steel industry would be renationalised, Javid ruled this out. Mike, however, makes the point that by ruling out nationalisation, Cameron is most definitely not doing everything he can. See: http://voxpoliticalonline.com/2016/03/31/if-cameron-has-ruled-out-nationalising-tata-steel-hes-not-doing-everything-he-can/

Mike has also posted a further article showing how even the usually solid Torygraph has turned against the Conservatives for this. Osborne’s refusal to rescue the British steel industry seems to be to avoid antagonising the Chinese. He has for years resisted the kind of legislation the Americans have passed to prevent the Chinese dumping cheap steel to the destruction of their own domestic industry. It looks very much Osbo is deliberately sacrificing our steel industry in order to stay in favour with the Chinese, and encourage them to keep investing in Britain.

See: http://voxpoliticalonline.com/2016/03/31/britain-sacrifices-steel-industry-to-curry-favour-with-china/

I’m not surprised by Cameron’s blanket refusal to nationalise the industry. The Tories have been consistently against its nationalisation after it was first done by Clement Atlee’s government. Duncan Sandys, the Minister of Supply, proposed its denationalisation in 1952, claiming that privatisation would restore to the industry ‘independence, initiative and enterprise’ which was not possible under nationalisation. He was opposed by Sir George Strauss in the Labour party, who said that it was ‘indefensible for the control of this industry-on which depends our economy- the fate of townships and the livelihood of hundreds of thousands of employees-to rest in the hands of people with no public responsibility’. It’s a statement that still applies today at Tata’s announcement they want to sell the plant. The iron and steel industry was renationalised by Harold Wilson’s Labour government in 1966. The steel industry itself by that time had recognised the need for reorganisation. Moreover, Labour was in favour of nationalisation because iron and steel was one of the ‘commending heights’ of industry, and so should be occupied by Britain. The Tories started privatising the industry again in the 1980s under Ian MacGregor. Their aim was to cut the cost to the taxpayer, while at the same time they considered that the business of the steel industry should be to make steel, rather than create jobs. Clearly, that attitude has not changed.

The manufacturing industries also suffer from the perception, disseminated by neo-Liberal free-marketeers over the last thirty years, that Britain is now a post-industrial society. Deanne Julius, who was one of the chief wonks in the Bank of England under Blair, took this view, and stated that we should now concentrate on developing the service industries, and leave manufacturing to the rest of the world, and specifically America. This is another idea that Han-Joon Chang shoots down in his book, 23 Things They Don’t Tell You About Capitalism. He makes the point that manufacturing industry is still vitally important. It only looks less important than the service industries, because these have expanded far more and more rapidly than manufacturing. But that certainly does not mean that it’s unimportant.

Except to the Tories. Cameron is not going to renationalise the iron and steel industry, because as a neo-lib he’s devoted to the idea that government should not interfere – market forces and all that gibberish – and that if the industry goes under, well, that’s how it should be. Some how the market will magically correct the situation and another industry will somehow arise to replace it. This seems to me to be the fundamental attitude of the followers of von Hayek and the other Libertarians. He also won’t want to nationalise the industry, because it will mean not only a fundamental contradiction of Neo-Liberal economic doctrine, but also because it’ll mean more state expenditure. Which in turn will mean he won’t be able to give more tax cuts to his big business paymasters.

And lastly, he won’t want to nationalise the industry, because the last thing he wants is a rise in employment, and the revival of an organised and powerful working class, as it was when manufacturing was the dominant industry. Milton Friedman’s wretched Monetarism dictates that there should be a six per cent unemployment rate to keep wages low, and labour affordable.

And finally, there is the issue of class. Whatever Cameron and Ian Duncan Smith spout to the contrary, the Tories are not the policy of ‘working people’. They themselves admit as much. When the issue of the union’s funding of the Labour party came up again a few years ago, Labour made the point that the Tories were being funded by business. The Tories attempted to defend themselves by stating that this was perfectly acceptable, as they were the party of business. And in this case, business does not want state involvement in industry and the creation of nasty, old-style working class jobs that might actually empower the working class.

And also part of it is that the working class simply aren’t considered a concern, in the same way that the Tories are concerned about the upper and middle classes. Cameron’s a toff, as is Osbo and Ian Duncan Smith. The people, who matter to them are the same people as themselves – other toffs and members of the upper middle class. Those are the only people they see personally and interact with, except those they employ. And so ordinary people and their concerns simply don’t register with them in the same way as those of their own class.

And so, while Cameron has come back from Lanzarote, because this is a major issue, it’s not one that he really wants to solve by going back to nationalising the industry. Not when Maggie Thatcher and generations of Tories took so much trouble to privatise it.

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Corporate Influence and Staffing of Government in Britain and Pre-Revolutionary Russia

April 28, 2014

One of the features of post-Thatcherite British government is the strong influence of big business on government policy and even the staffing of government departments. Government officials are frequently drawn from corporations, where they have directorships or occupy other positions in senior management. The conferences of all three main parties are sponsored by businesses hoping to influence government policy and win contracts or other business concessions from their political clients, once they are in government. The parties increasingly formulate their policies according to think-tanks, formed by and representing the views of particular industrial or corporate interests. Private Eye for years, since as far back as the ‘sleaze’ of John Major’s administration, has documented the way corporations and their employees have permeated government institutions. This has most often been done with the specific intentions of reducing or blunting government regulation of industry. Thus you can find the presence of various senior employees and directors of the big accountancy firms in the Inland Revenue, presenting the government with schemes on how the rich can become even richer by avoiding a tax. Officials drawn from the City have entered the various government bodies regulating the financial sector, to argue that the City should be less regulated. The result of this policy was the massive corruption and trading in toxic debt that created the present international financial crisis. And an extremely large number of the present government have links to private healthcare companies hoping to benefit from the privatisation of the NHS. One of these is Jeremy Hunt, the current Health Secretary, and IDS. I’ve blogged before about how the Nazis had a similar policy of co-opting leaders from business to staff the Reich industrial combines and organisations.

And it was exactly the same in Russia in the decade immediately preceding the Revolution. Big business deliberately set out to influence government policy. Business leaders entered the government, while ministers, senior civil servants and officers of the armed forces moved into posts in private industry. The regime was compromised and ultimately discredited by massive corruption. Kochan describes the situation in Russia in Revolution (London: Paladin 1970).

Industrialists more and more put themselves at the service of the government in the economic development of the empire. An Association of Industry and Commerce, founded in 1906, and its journal Industry and Commerce, devoted themselves specifically to the purpose. The association was a federation of industrial organisations formed along geographic and functional principles, e.g. The mine owners of south Russia or the Baku oil producers. By the beginning of 1914 it embraced thirty-four banks and insurance companies, 251 industrial undertakings, eleven transport companies and nineteen trading concerns.

The association consistently advocated the further economic development of the empire through a policy of high entrepreneurial profits combined with austerity in consumption. It argued against free competition – ‘the anarchy of the market and a chaotic fluctuation of prices’ – and in favour of a five-, a ten- or even a fifteen-year plan, that would overcome Russian backwardness and free it from dependence on agriculture. It proposed cooperation between industry and the government in, for example, the irrigation of Turkestan for the cultivation of cotton, the construction of the Volga-Don canal, and the intensive exploitation of the Magnitogorsk iron deposits in conjunction with Siberian coal. … Planning from above, with the sympathetic stabilizing and regulatory intervention of the vast resources at the disposal of the Treasury would enable trade and industry to take their full share in industrial development, it was hoped. In the last resort, the association envisaged a type of corporate state in which industrial and commercial interests would play a co-determining role vis-à-vis the government in relation to economic policy.

For this reason the association scheduled its own congresses to take place during the Duma sessions – the membership overlapped in many cases – and ‘sometimes its debates were the more interesting and important of the two,’ noted one observer. The association functioned as a vast pressure group: ‘… Russian industry and commerce must, in the interests of self-preservation, ‘ declared an early initiator of the association, ‘express not only its broadly based views but also know how to present these views to those institutions and groups on whom will depend the putting into practice of this or that law or policy … Here lies the whole root and the whole meaning of the All-Empire congresses of the representatives of industry and commerce. (pp. 166-7)

What socio-economic influence was possessed by these conglomerates of power? This is not easy to analyse. It seems likely however, that they had a disintegrating influence in further corrupting and demoralising the Tsarist bureaucracy. An insider, V.I. Gurko, at one time assistant minister of the interior and member of the state council, avers that the integrity of the overwhelming majority of high officials was ‘beyond question’. But he must also admit that private concerns engaged prominent officials at ‘fabulous sums’ with a view to the man’s ‘official connexions and his knowledge of the methods necessary to obtain governmental backing … particularly to secure some state concession. ‘ The line between public and private interest became more and more difficult to draw. This applied particularly to the armament industry. Take Avdakov, for example, for some years the chairman of Produgol, then the Association of Industry and Trade and at the same time councillor in the ministry of industry and trade; or Lieutenant-General Brink, a former head of the department of naval construction and chief inspector of naval artillery, who became a director of the Putilov works; or Vice Admiral Bostrem, a former commander of the Black Sea fleet, who became president of the board of the Nikolaevsk naval construction company; or General Ivanov who joined the board of the same company; or General Miller, former head of the state-owned Obukhovo works, who became director of the Tsarizyn artillery plant.

Civilian official similarly moved between government posts and private industry, especially in they were engaged in the ministries of finance and trade and industry. There was Timryazev, for example, and Bark, Arandarenko, M.M. Fedorov, V.I. Kovalovsky, N.N. Pokrovsky, Langovoi, Litvinov-Falinsky – all these men moved at one time or another between their ministerial arm-chairs and an equally well-padded position in industry or industrial association. (p. 168).

This describes pretty much every government since Maggie Thatcher, including that of Cameron and Clegg today. And the Association’s policy of demanding high profits as well as austerity exactly describes the current government’s policies.

That all ended with the upheaval of the 1917 Revolution and the Bolshevik seizure of power. We don’t need a revolution with all its horror and bloodshed in Britain. But we do need proper government, where the public interest rules and where corporations are not allowed to corrupt, influence and direct government policy.