Posts Tagged ‘‘Politics Is For People’’

The Discreet, Poisonous Corporatism of the Labour Party Quitters

February 19, 2019

Yesterday, a group of seven MPs formally split from the Labour party. Now going independent, this glittering array of third raters, has-beens and deadbeats were supposed to form the nucleus of this new, shiny Blairite ‘centrist’ party that has been mooted for the past year or so. The group included such luminaries as Gavin Shuker, Luciana Berger, Chris Leslie, Chuka Umunna, Angela Smith, Mike Gapes and Ann Coffey. They were all Blairites, who had been trying to overthrow Corbyn or undermine his leadership since he was elected head of the party. Or else had been threatening to quit.

Comparisons have been made to the Labour split in the 1980s which saw the notorious ‘gang of four’, including Roy Jenkins and Shirley Williams form the short-lived Social Democratic Party. They ended up shortly forming an alliance with the Liberals before finally merging with them to form the Liberal Democrats. At the time there much verbiage in the press about the SDP ‘breaking the mould’ of British politics. It didn’t happen, despite the TV critic Clive James in his Observer column sneering at Tony Benn, who said that support for the SDP had peaked. But, as Zelo Street has pointed out, the comparison also doesn’t do the Quitters any favours in another way. Some of the MPs, who formed the SDP were actually first rate politicos. As Home Secretary in the 1960s, Roy Jenkins oversaw some profound changes in the liberalization of British society. Like the partial decriminalization of homosexuality, for which, among other things, he’s still bitterly resented by the Tory right today. Reading Shirley William’s 1979 book, Politics Is For People, it’s clear that she did have a powerful mind with strong, distinct views on how socialism should improve British society and industry.

This bunch, by contrast, don’t seem to have any distinct views or anything more to offer than rehashed, warmed up Blairism. Before their website crashed yesterday, Zelo Street was able to get on it and read what they had to say. Which seemed to be a lot of flannel. More fine-sounding words about democracy which didn’t actually come down to meaning very much. The website said

Our primary duty as Members of Parliament is to put the best interests of our constituents and our country first. Our free media, the rule of law, and our open, tolerant and respectful democratic society should be cherished and renewed. We believe that our Parliamentary democracy in which our elected representatives deliberate, decide and provide leadership, held accountable by their whole electorate is the best system of representing the views of the British people. Zelo Street remarked that the first part of this statement, about cherishing and renewing free media, rule of law and democratic society doesn’t actually mean anything, while the second – about parliamentary democracy being the best method of representing the views of the British people – is just what every MP in the House believes.

But what the group really stands for is best shown by the group’s legal organization and its members’ very cosy relationship with private enterprise. The group’s website was set up in 2015 in a tax haven. The new party actually isn’t a party. It’s been registered as a private corporation, Gemini A, which means that it doesn’t have to identify its backers. This also, apparently, makes it exempt from the spending restrictions on campaigning which apply to genuine political parties.

And then there’s Angela ‘People of funny tin…’ Smith’s connection with private water companies. Smith is chairman of the all-party water group, which is mainly funded by private water companies like Wessex Water and Affinity Water. Talking to Smith on This Morning Yesterday, Ash Sarkar pointed out that her group were some of the very few people left, who still believe in water privatization. She predicted that people would like at Smith’s leadership of the group and say, ‘You know what, that stinks of corruption’.

Sarkar isn’t going to be wrong either. The Canary in their article on this pointed out that 83 per cent of the population want the water companies to be renationalized. And Blair’s very strong links to private industry were very heavily criticized when he was power. Blair was a corporatist, who gave business leaders and senior management key positions in government in exchange for donations. This whole, nasty web of corporate links was exposed by the Groaniad’s George Monbiot in his book, Captive State, which lists various businessmen and the government positions Blair gave them. Even at the time Blair’s government was notorious for doing political favours in return for donations, as Blair did for Bernie Ecclestone, the Formula One magnate, in return for something like a million pounds of corporate dosh.

‘Bevan Boy’ described what other Blairite policies this crew probably also stand for in this tweet, quoting by Mike in his article on them:

What will this new “Centrist” party stand for?
More Austerity?
Rampant marketisation & uncontrolled capitalism?
Neoconservative Thatcherism?
I suspect all of the above under a pro EU banner. The policies are being rejected & thank Christ they are.
We need a socialist LAB govt!

And what the splitters really think of democracy is shown by the fact that none of them actually want to hold a bye-election and give their constituents a say in whether they want them to represent them in parliament. It’s been pointed out that only one per cent of voters say that they actually vote for the individual MP, rather than the party. But these avowed democrats really don’t want to give their constituents the opportunity to decide whether they want to keep them as their MP or whether they want to elect someone else.

Which is what you could expect from a group that includes Luciana Berger. Berger, or should that be Lucrezia Borgia?, was facing a vote of no confidence from her local constituency. She then declared that they were bullying her, and demanded Jenny Formby expel the constituency party from Labour. Formby told her that she had no cause to do this and refused.

But Borgia, sorry, Berger, has carried on whining about bullying and intimidation nonetheless. Just as all the Quitters have moaned about anti-Semitism. The truth is, anti-Semitism is not the reason they’re splitting. It never has been. It has only been a convenient stick with which to beat Corbyn and his supporters. In fact anti-Semitism in the party has fallen under the Labour leader. It is lower in the Labour party than in the others and in the general British population. And the anti-Semitism accusations against him and the majority of those accused are nothing but contrived smears.

The real truth is that Berger, Umunna, Shuker, Leslie, Smith, Coffee and Gapes are corporatist anti-democrats. They wish to hang on to power against the wishes of their constituents, in order to promote the power of private corporations. Just as Mussolini and Hitler promoted private industry and gave it a seat in government and the management of the economy in Fascist Italy and Nazi Germany.

For further information, see:
https://voxpoliticalonline.com/2019/02/18/mps-split-off-from-the-labour-party-voters-say-good-riddance/

https://voxpoliticalonline.com/2019/02/18/mps-split-off-from-the-labour-party-voters-say-good-riddance/

http://zelo-street.blogspot.com/2019/02/the-independent-group-on-way-out.html

https://www.thecanary.co/trending/2019/02/18/ash-sarkar-takes-down-a-resigning-blairite-mp-so-brutally-a-bbc-host-intervenes/

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Shirley Williams on the Industrial Democracy

January 5, 2019

Before she left with other members of the Labour right to form the SDP, it seems that Shirley Williams did have some genuinely interesting views on socialist issues some would associated more with the Labour left. Like industrial democracy.

The ’70s were the decade of the Bullock Report, which recommended putting workers on the management boards of Britain’s major industries, and this was still an issue a couple of years later. In her 1981 book, Politics Is For People, Williams discusses some of the problems of industrial democracy. She acknowledges that the trade unions were divided on the issue and management positively feared it. She also recognized that there were problems about how it could be achieved, given the complexities of the representation of the different trade unions in British workplaces on management boards. But she supported its introduction in Britain’s businesses, and suggested that it would be made easier through the information and computer technology that was then also appearing. She wrote

Through the need for participation in the introduction of new technologies, management and unions are having to establish consultative machinery where none exists. Those firms who want to move ahead quickly will achieve trade union cooperation if they offer participation in exchange; otherwise they will face resistance and obstruction. The new technologies offer an opportunity to widen industrial democracy at the plant and office level, where it matters most. Whether joint consultation at that level leads on to participation in the boardroom is a matter that can be left to each company and its unions to decide.

More difficult is the question of how the workforce in each firm should be represented. In the Cabinet committee which drew up the 1979 White Paper on industrial democracy, there were differing views on whether workers should elect their representatives to plant and company committees or whether they should be nominated by the trade unions (the ‘single channel’). The issue is far from simple. In Sweden and the Federal Republic of Germany most firms have only one trade union,, so there is no need to secure agreement among them before candidates for election can be put forward. In Britain, as many as twenty unions may represent the employees of large firms, and four or five unions in a firm are commonplace. In these circumstances, a straightforward election would be likely to lead all the representatives coming from the biggest unions, the rest being unrepresented.

But the nomination of a single list by agreement between the unions in a plant or firm offends the principle of democratic choice. The workers may object to one or more of the people selected to represent them, yet they would have no power to reject him or her other than by the rejecting the whole slate and jeopardizing participation itself. One way out of this dilemma would be for the unions in a multi-union plant to agree on constituencies representing each union on a weighted basis, with an election based on a secret ballot between candidates who were members of the appropriate union, some of whom might carry official endorsement.

Industrial democracy has not attracted consistent support from most trade unions, and the trade unions themselves are profoundly divided on the form it should take, many preferring a consultative structure to one statutory participation on the lines proposed in the Bullock Report. If the unions are divided, however, much of management feels threatened by the idea of industrial democracy. So for years there has been a stalemate on the subject, and government intervenes at their peril. Yet, if only beca8use there has to be effective consultation on technological change, the position cannot be left where it is. Indeed, in my view industrial democracy could usher in much better relations in industry, greater cooperation in improving the productivity of all factors of production and a better understanding of the need for voluntary incomes and prices policies to combat inflation. Many of Britain’s economic problems are rooted in institutional rigidities or, as in this case, institution conservatism. This one reform could bring in its wake a long-delayed rejuvenation. We should not be daunted by the difficulties, but rather invigorated by the possibilities.

Shirley Williams, Politics Is For People (Harmondsworth: Penguin 1981) 139-40.

Some of the issues Williams talks about here are very dated. Inflation is no longer the critical issue it was in the ’70s. It’s now very low, and this has caused problems in its turn. Profits and management pay have risen immensely, but this is not reflected in the salaries of ordinary workers. Quite the opposite. Their pay is still below inflation, and the result is that many of the quarter of a million people using food banks are actually in work. Mike has also today posted up a piece about how parents are starving themselves in the week because there isn’t enough to feed both them and their children on their wages. And this is not a recent development. Mike has published a number of articles about this over the past few years since the Tories took power under Cameron.

And the new technology to which Williams looked forward also hasn’t been an entirely liberating force. Some businesses instead are using to restrict and spy on their workers. Private Eye in their ‘Street of Shame’ column printed a story about how the weirdo Barclay Twins, who own the Torygraph, tried to fit the motion detectors used in call centres to monitor the movements of staff there to check to see if there hacks were leaving the desks. Other firms are fitting devices to their workers ankles to monitor their movements. And the spectre of Big Brother-style surveillance loomed even larger a month or so ago, when the I reported that a Swedish firm had developed an implantable chip that could be inserted into a firm’s staff.

British workers also don’t have the strong unions they enjoyed in the 1970s, which have left British workers vulnerable to low pay, the removal of employment rights and job insecurity.

However, Williams is right in that industrial democracy offers a genuine opportunity to empower working people, and benefit industry through proper cooperation between workers and management. It’s proper implementation won’t come from Williams and her fellows, who are now part of the Lib Dems, and who seem to have thoroughly forgotten it. It will only from Jeremy Corbyn and the Labour party.

Helping Labour to Win in the Countryside: Encouraging Rural Industry

December 16, 2018

As well as helping to bail out farmers, Labour could also help to reverse the decline of the countryside by encouraging businesses to relocate there. Shirley Williams, the former Labour politician who defected to found the SDP, which merged with the Liberals to form the Lib Dems, discusses this possibility in her 1981 book, Politics Is For People, published by Penguin as an example of what may be done to promote small businesses. She writes

The Wilson Committee jibbed at setting up a Small Business Agency, though the case for its seems strong. What the Committee did propose was a loan guarantee scheme, under which loans to small businesses would be partially underwritten by the banks, and an English Development Agency with similar powers to those of the Scottish and Welsh Development Agencies in relation to small firms. Thresholds for government support schemes which small firms are unable to cross, the Report said, should be reviewed.

This would be a useful start, but if the long drift towards concentration is to be reversed, much more is needed. The new agency should positively go out and look for products and services which small firms can produce, as COSIRA (Council for Siting Industry in Rural Areas) has done so successfully in rural areas. New firms should be able to qualify for capital loans at a subsidized interest rate, and they should be entitled to similar help when they reach the breakthrough point of rapid growth. This is the stage at which many small innovatory firms go under, because they cannot finance expansion on the scale needed to meet demand. Good legal and accounting services should be readily available through the new agency, which should also offer advice on government schemes that may be helpful. Red tape and form-filling needs to be kept to a minimum, since small firms rarely have the bureaucracy to cope with complicated application forms. The Microelectronic Applications Project introduced by the Labour government of 1976-9 has been successful in attracting several thousand requests for its consultancy scheme, not just because the government met the first 2,000 pounds of the consultant’s fees, but because the procedure for applying is so simple. (p. 121).

Williams is far from my favourite politician because of her role in founding the SDP and its subsequent move to the right. She is also personally responsible for helping the passage of Andrew Lansley’s Health and Social Care bill, which is part of the Tories’ continuing privatization of the NHS, through parliament by voting for it when others, like Dr. David Owen, voted against. But the book has interesting ideas. It struck me that IT is industry that could easily me moved to the countryside, if only in the form of software developers, who may not need quite so much expensive plant.

Many working people have dreams of running their own businesses, and G.D.H. Cole in one of his books on socialism argued that socialists should make common cause with small businesspeople against the threat of big business. And it is big business that is also threatening the countryside. As George Monbiot has described in his book, Captive State, the big supermarkets drive out the small businesses in their areas. This has a devastating effect on the area generally, as these industries employ more people than the supermarkets themselves. Furthermore, the supermarkets use very exploitative contracts to force their suppliers to provide them with goods at very low prices. New Labour and no doubt the Tories after them have done much to harm the country generally as well as rural areas by supporting the big supermarkets, like Sainsbury’s, against local shops like grocers.

Shirley William on Demands for Cutting Tax and the Myth of the Social Security Scrounger

May 26, 2016

SWilliams Book Pic

Yesterday I put up a couple of pieces from Shirley Williams’ book, Politics Is For People, in which she attacks the free market ideology of Milton Friedman, and notes how bureaucracy actually grew under the Tories, despite their declared concern for cutting it in the name of efficiency.

The former Labour MP and founder of the SDP also has a few critical observations of the various campaigns to cut taxes, and the myth that people on social security/ jobseeker’s allowance/unemployment benefit/the dole are scroungers.

She writes

A second line of attack, clearly closely related to the reaction against ‘big government’, is on the high public expenditure necessitated by the welfare state. The taxpayers’ revolt began in France with the Poujadist party, wand was later taken up in Denmark, where Per Glijstrup’s anti-tax party had a remarkable, if brief, period of success. it was an element in the 1976 defeat of the Swedish socialist government, and then reached its high-water mark in the triumphant passage of California’s Proposition 13 in 1978. Proposition 13 tied local property taxes to their 1976/7 level, and imposed a 1 per cent maximum on the annual increase, effectively halving the property tax yield. But as the effects of Proposition 13 have been felt on education and other publicly financed services, public enthusiasm for tax cutting has waned. An attempt to pass a similar proposal, known as Jarvis Two, to halve California’s state taxes was heavily defeated in June 1980. The recent history of anti-tax movements is one of dramatic advances which are not then sustained.

One particular form the attack on high public expenditure takes, one that is popular and easy to get across in electoral terms, is the allegation that many people are living off the welfare state who could perfectly well survive on their own. Popular newspapers on both sides of the Atlantic give a lot of space to individual cases – and there always are some – of people proclaiming how they have milked the social security system of thousands of dollars or thousands of pounds. Everybody has heard of somebody who can’t be bothered to get a job, or who stays at home living on welfare because his wage in a job would be little more than his welfare cheque. The ‘poverty trap’ – incomes-related benefits which are lost or reduced as the breadwinner’s income rises – provides a rationale for ‘scrounging’. It really is true that some heads of large families may be better off not working.

Yet the evidence for large-scale ‘scrounging’ is thin; most people much prefer a job to enforced leisure. Nor is the popular hostility against scroungers a by-product of the welfare state. It has a much older history. Ricardo himself inveighed against the Speenhamland system, under which wages were subsidized by the parish if they fell below a minimum level which was linked to the price of bread. ‘The principle of gravitation is not more certain than the tendency of such laws to change wealth and vigour into misery and weakness’, Richardo wrote in On the Principles of Political Economy and Taxation (1817). It might be Professor Milton Friedman speaking. At the end of the eighteenth century, the indefatigable Utilitarian Jeremy Bentham turned his mind to the rehabilitation of convicts, many of them indigent people without work. He proposed to establish a panopticon, a sort of multi-industry establishment, which he described, chillingly, as ‘a mill to grind rogues honest, and idle men industrious’. Similar wishes are still expressed on the floor of Congress or the House of Commons by ardent Conservatives; only the language alters. (Pp. 30-1).

Williams here is exactly right. Mike over at Vox Political, the Angry Yorkshireman and many other bloggers have noted that Thatcher and the Conservatives have consciously adopted the Victorian principle of ‘least eligibility’ in their welfare reforms in order to make living on benefit as humiliating and degrading as possible for those on it, such as the disabled and the unemployed. The incident Mike reported on his blog on Tuesday, in which a woman with dementia was insulted by a member of the DWP, when she failed to answer a security question due to her disability, is an extreme example of this attitude. This just shows how long the Left have known about the extremely illiberal attitude to poverty at the very heart of Thatcherism and its explicit Victorian antecedents.

As for the Poujadists, they were a petit-bourgeois, anti-Socialist, anti-trade union party founded in the 1950s. Poujade was a French shopkeeper, who launched a campaign encouraging shopkeepers not to serve striking workers. One of the books I read a few years ago on Fascism included them as one of the forms it took in the post-War period. And Michael Heseltine was less than impressed with them, and used them as an insult in his spat with the Leaderene when she was goose-stepping around Downing Street. He called her a ‘Poujadist’, which accurately reflects her socio-economic background as the grocer’s daughter, and her petty hostility to the organised working class. It was a reference lost on the gentlemen of the press, however, who thought he meant she was a ‘putschist’. Well, that too, when it comes to petty Fascism.

Williams in her book has many good ideas. It was too bad that she and the rest of her cronies were more interested in splitting away to form the SDP and attacking Labour than squaring up to the Tories.

Shirley Williams on the Growth of Bureaucracy under Thatcher

May 25, 2016

SWilliams Book Pic

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

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

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

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

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

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

Shirley Williams on Milton Friedman and the Failing of Free Market Capitalism

May 25, 2016

SWilliams Book Pic

The supposed benefits of free market capitalism and deregulation are at the heart of the ‘New Right’ doctrines expressed in Thatcherism and Blairite New Labour. Thatcher took her credulous adulation of the free market from the American Chicago school of economics, most notably von Hayek and Milton Friedman. These doctrines became New Labour orthodoxy under Tony Blair following Labour’s defeat in the 1987 general election. Despite Gordon Brown, Blair’s successor, having lost the 2010 election, and the rise of Jeremy Corbyn from the Old Labour Left as leader of the party, Thatcherite ideals are still espoused and promoted by the Blairite faction in the Progress ‘party-within-a-party’ in Labour.

Yet even at the time Thatcher was implementing the free market reforms that have devastated the British economy and society, it was obvious to the majority of people on the Left that the free market simply didn’t work. Shirley Williams, the right-wing Labour MP, who left to form the SDP with David Owen, now merged with the Liberals, was one of them. In her book, Politics Is For People (Harmondsworth: Penguin 1981), she makes the following remarks and criticisms of Friedman’s grand notions of the effectiveness of the free market.

Professor Friedman, however, overstates his case – often to a ludicrous extent. There are many needs the market is incapable of meeting, because they are collective needs – for clean water, clean air, public health, a good transport system. The market is geared to individual demands and to individual purses; in meeting them, it does not count social costs or social consequences. Furthermore, there are individual demands that cannot be made effective because the individual cannot afford to satisfy them, typically, treatment for serious illness, chronic invalidism, care in old age. The market is a mechanics ill-adapted to the cycles of an individual’s life history, which move from dependence through independence back to dependence again, and also to the cycles of the economy. In his recent book, Free to Choose, Professor Friedman asserts: ‘Sooner or later, and perhaps sooner than many of us expect, ever bigger governments will destroy both the prosperity that we care for in the free market and even the human freedom proclaimed so eloquently in the Declaration of Independence.’ In an obvious sense, the Professor must be right. Total government, controlling the whole economy, would indeed be likely to destroy both prosperity and human freedom. But again his case is hopelessly overstated. In many European countries public expenditure constitutes 40 per cent or more of the gross national product. yet who is to say that Sweden or Denmark or the Federal Republic of Germany are less prosperous and less free than Spain, Argentina or Brazil, in which a much smaller proportion of the gross national product goes into public expenditure? Indeed the extremes of income and wealth characteristic of societies dominated by free market capitalism are not conducive to human freedom or to democratic political systems. Men and women without access to decent working conditions, education, housing and health do not fully share in their society. They are not accorded the human dignity that is intrinsic to the democratic process. their opportunities and their choices are crippled by the unequal distribution of resources. Even if such as country has some form of election, ostensibly based on a universal and secret franchise, the great disparities in economic power will influence the many who are weak to bow to the wishes of the few who are strong. (PP. 16-7).

And this is exactly what has happened. Britain has become much less democratic. Our leaders are rich and middle class elitists, isolated from the mass of the working poor in their own, sealed enclaves. The poor have become much poorer, and are increasingly seeing what few rights they have left stripped from them through Cameron’s reforms of the judicial system, trade union legislation and his assault on workers’ rights. Two decades ago there was a storm when someone announced that Monetarism had failed. Friedman’s free market economics are also an abject failure. They survive only because they sustain and empower a parasitical managerial class, ruling through elite privilege and toxic capitalism. It’s high time Friedman’s discredited ideas were very firmly dumped.

Shirley Williams on Economic Disruption by Trade Unions and Big Business

May 21, 2016

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

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

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

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

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

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

Wages and Inflation

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

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

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

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

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

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