Posts Tagged ‘‘Socialist Enterprise’’

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

July 19, 2016

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

See Mike’s article: http://voxpoliticalonline.com/2016/07/18/labour-pledges-national-investment-bank-to-mobilise-500bn/

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

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

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

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

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

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The Bankers’ Party of True Working People (Rich Bankers)

May 13, 2015

Yesterday on the new, Cameron trotted out once again the line that his party was ‘the true party of working people.’ It’s the same line that was trotted out a few years ago by Grant Shapps, alias Mr Green. It’s supposed to appeal to the working classes, to show that the Tories actually represent their interests and aspirations, rather than the doctrinaire demands of elite Socialists like Ed Miliband.

I wrote an angry piece about it at the time Shapps first used it, making the statement that there was about the same amount of truth behind it as that Nazi’s inclusion of the words ‘Socialist’ and ‘Workers’. It was all propaganda, designed to give a populist appeal to a party which hated Socialism and the Trade Unions, and which represented the interests of the middle classes against the working class.

Unfortunately, there are some people, who will be taken in by it. The same people, who decided that Maggie was really working class, because of her tales of living above her father’s shop. I know people, who blandly believe that the NHS was set up by the Tories, rather than as it actually was, by Clement Atlee’s Labour party. These are probably the same people, who believe the Tories’ propaganda that they will find another £8bn for the NHS, rather than selling it off to their friends.

What actually came across most strongly was that this was a party of the usual Tory demographic – toffs, bankers and the minions of big business. Covering the new Tory cabinet ministers bustling to work, the BBC showed Javid, intoning that he was ‘the son of a busman’. This piece of working class cred was then qualified with what Javid actually does. He was, reported the Beeb, ‘an investment banker’. Ros Altmann, the new pensions minister? Banker. Lord Freud, another Tory stalwart, and the one who claimed that the working class should be more flexible than the upper classes as ‘they had less to lose’ from the recession? Banker. George Osborne? Toff and banker.

One of the major weaknesses of British politics is that ever since Thatcher, economic thinking has been geared to the financial sector, rather than manufacturing. One of the few high-ranking Tories under Thatcher noted that Thatcher had no idea how keeping the pound strong harmed British manufacturing by making our goods more expensive. The authors of Socialist Enterprise, as well as Ken Livingstone and Neil Kinnock, before he rejected Socialism for fundamentalist free trade, all recognised that the British financial sector was geared to overseas investment, rather than supporting domestic industry. They wanted to reform the financial sector so that it channelled more investment into the UK. The presence of so many bankers in the Cabinet represents the continuation of the present economic orthodoxy, so that we can expect British domestic industry to decline, no matter what the Tories will scream about being the party of business.

During the Revolutions of 1848, the revolutionaries in France, to show that they did represent the workers, included one – Albert – in their government. it was a token gesture, and the administration eventually fell. But it was there. There was not one solitary working man or woman in the Cameron’s new cabinet. Javid’s background is working class, but he long ago left that behind him.

There is actually no-one in the cabinet, who has actually done any kind of manual work, or who is a lower middle class employee, and certainly none from any working class organisations, such as the trade unions, which the Tories desperately wish to destroy. Cameron’s party is certainly not a party of ‘true working people’ by any stretch of the imagination.

I’ve no doubt, however, that some people will believe them, taken in by Javid’s supposedly blue-collar background, and Cameron’s endless refrain that ‘we’re all in this together’. The slogan’s empty, except for the way it reinforces the Tories’ anti-welfare policies. They claim to represent the ‘true, hardworking people’, who are threatened by the unemployed, who are, of course, all idle scroungers. It’s designed to play on the class insecurity and petty vindictiveness of a certain type of voter, who feels threatened by those just below them, and who feels they are already given too much. The average Daily Mail and Express reader, in fact, though the same line permeates the Sun, Star and Sport as well.

This needs to stop, and stop now. It needs to be shown to be the lie it is, a lie to justify putting further cuts and pressure on the working class, and demonise the unemployed under they’re starved to death under sanctions. We want a proper government representing the working class, with its members drawn from that class. A party, that believes in giving ‘hard-working people’ a living wage, proper free healthcare, and support to the unemployed, who are not idle scroungers.

A party, in other words, which is everything Cameron and his toffs and bankers aren’t.

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.

Third World Thatcherite Britain and the Grab for North Sea Oil

March 1, 2014

oil_rig

Last week both David Cameron and Alex Salmond held separate meetings in Scotland with the petrochemical companies in order to discuss the vital question of the ownership and future of North Sea oil. This is a vital issue. The Scots Nationalists I’ve talked to in the past have all been of the belief that not only should an independent Scotland have a right to the oil reserves off its coast, but that this would support the newly independent nation’s economy. Although this wasn’t mentioned in the news reports, Britain faces the same question. If Britain does not retain revenues from the North Sea if Scotland leaves the UK, then the British economy will plummet. It’s a question of economic survival.

I was taught at school that Britain has a ‘third-world economy’. This meant that Britain was like the various nations of the Developing World in that its economy was heavily based on primary industry. In the Developing World these industries were either mining – the extraction and production of diamonds, for example, or copper in the African Copper Belt, or the various nations around the world specialising in a particular agricultural product – groundnuts, bananas, coffee and so on. In Britain in the primary industry that fundamentally supports the country’s prosperity was North Sea oil.

The authors of the book Socialist Enterprise: Reclaiming the Economy (Nottingham: Spokesman 1986), Diana Gilhespy, Ken Jones, Tony Manwaring, Henry Neuberger and Adam Sharples, make exactly the same point:

Third World Britain

Under the Thatcher experiment, Britain’s underlying economic decline has continued and gathered pace. Only North Sea revenues now disguise its true extent. Without them it would be impossible to sustain the living standards which the working population currently enjoys. Britain’s present levels of employment, industrial activity and public services are all being paid for on borrowed time. (p. 20).

They then survey the way the Thatcher government effectively devastated the UK economy, while Labour unfairly got the blame for economic mismanagement.

It is worth emphasising how disastrous Tory economic policies have been for Britain in purely economic terms. The Tory Party has never succeeded in cultivating an image of compassion or concern for social justice: but at least, so the convention goes, it can be relied on to promote ‘sound’ economic policies and generally do the things that are in the interests of business growth. The Labour Party, by contrast, seems to have a acquired a reputation for economic mismanagement. The really remarkable achievement of the Thatcher Governments has been to find a set of policies which, while designed to make ‘economic efficiency’ the overriding objective in almost every sphere or our lives, has actually had the effect of making our economy less efficient – as well as having all the more predictable results such as a huge increase in social deprivation, inequality, injustice and division. As a result we are now in a situation where socialist economic and industrial policies offer the only serious hope not only of healing deep social divisions but also of reconstructing a viable and efficient economy.

Employment levels in manufacturing, construction and the public services plummeted after 1979. The international climate worsened, it is true, following the oil price rises of that year. All the major Western countries have faced increased unemployment during this period. But in Britain’s case, government policies have played an almost uniquely important part in creating a fall in national output and an increase in unemployment. By pursuing exceptionally high interest rates as part of the attempt to reduce money supply growth and inflation, and then letting the market determine the level of the exchange rate, the Tory Government precipitated a massive crisis in the manufacturing sector in the period 1979-81 – especially among companies which were relatively dependent on export markets or which had recently expanded investment or stocks in anticipation of sales growth. Meanwhile attempts to reduce public spending and borrowing resulted in a further deflationary effect: there was a particularly severe impact on employment as capital projects and welfare services were sacrificed to pay for the escalating costs of increasing unemployment – not merely a vicious circle but an insane one.

If we look at another traditional measure of economic success or failure, the balance of payments, we see a similar story. Since 1982, a surplus on manufactured goods has been replaced by large annual deficits – the first such deficits since the Industrial Revolution. Imports and import penetration have risen sharply in virtually every sector of manufacturing. These imports have, of course, been paid for out of oil revenues. But declining oil revenues will no longer be able to offset the growing manufacturing trade deficit in the late 1980s and 1990s.

They then go on to consider some of the contributing causes to British industrial decline, such as the price of British goods, lack of investment in research and development, and the lack of an education workforce, some of which is now extremely dated.

Nevertheless, I think the main point is still valid. Thatcher destroyed the British industrial base, and it is still only North Sea oil revenues, which is propping the economy up, despite the Tory and New Labour attempt to promote the financial sector. If Britain loses these revenues, then the British economy will collapse. My guess is that we would still be in the Developed World, but go from one of the most prosperous to one of the least.

The result of this would a further massive collapse in living standards, accompanied by bitter discontent. In the Developing World, mass poverty traditionally gave rise to extremist political movements – Marxist revolutionary groups, and the various Fascist dictatorships like those of General Pinochet, Manuel Noriega et cetera ad nauseam used to contain and suppress them. The same is likely to arise in Britain. This would effectively discredit all of the main political parties, as all of them have been influenced to a greater or lesser extent by Thatcher’s legacy. But those most effected would be the Tories as Thatcher’s party.

No wonder Cameron was up in Scotland last week trying to keep hold of North Sea oil. If that goes, then so does a large part of British prosperity and the Conservatives/ Thatcher’s image as the party of British prosperity.