Posts Tagged ‘‘The Wealth of Nations’’

Jeremy Corbyn Suggests Capping Director’s Pay – Media Goes Ballistic

January 11, 2017

Mike yesterday put up a piece reporting on another good suggestion from Jeremy Corbyn, and the predictable response of outrage and sneering from the meejah. The Labour leader had said on an interview on Radio 4 yesterday morning that he believed that there should be a cap on the pay earned by company directors and senior execs. The media naturally responded by pointing out that Corbyn has an annual pay of £138,000 a year, and tried to draw him into giving a price figure for what the maximum amount earned should be.

The story got onto the One Show yesterday evening, where they did a brief survey of people in the street. Opinions were, as they say, mixed. One elderly objected to the cap on the grounds that it might take away the incentive for people rising to the top. Looking at the headlines on the various papers this morning, it was very clear that it had riled someone at the Torygraph, as this was the story they shoved on their front cover. Other newspapers, like Mail, led by claiming that Labour’s policy in immigration was ‘in disarray’. Mike’s also written another article this week showing that’s also rubbish.

Mike in his article makes the point that compared to some of the vast, bloated salaries awarded to company executives, Corbyn’s own salary appears very modest indeed. He suggests that it is stupid to try to lay down a particular set figure – it should be based on company turnover and the lowest wage earned by an employee at that company. He also makes the point that the casting of particular star actors can make a great difference to how well a movie does, and that when this happens, everyone else who worked on the movie should also enjoy the films’ financial awards.

http://voxpoliticalonline.com/2017/01/10/if-we-examine-who-is-complaining-about-corbyns-maximum-wage-idea-well-know-why/

This is all correct. And there’s something else that needs to be added:

Japan already has maximum wage legislation.

Yep, it’s true. Japan is one of the world’s five wealthy countries with a very capitalist economy. The centre right Liberal Democratic party has ruled the country almost uninterrupted since the Second World War. And it also has a cap on how much company directors may be paid. I think it’s set at about 20 times that of the lowest paid employee, but I am not sure.

And the limitation of wage differentials is not something that has been simply added on in the course of reform, but an integral part of the dominant, guiding vision of the nature of Japanese society. East Asian societies can be extremely collectivist, stressing group loyalty over individual opportunity or achievement. In Japan the goal was to create a harmonious, middle class society, where there would be no extremes in wealth or poverty. This isn’t quite the case, as the Burakami, an outcast group rather like the Dalits in India, and those of Korean descent are still subject to massive poverty and discrimination.

The Japanese have also tried to justify their collectivist outlook through racist pseudo-anthropology. One school textbook claimed that Japanese society was more collectivist and co-operative because the Japanese people were descended from agriculturalists, who had to forge strong links with each other in order to cultivate and harvest rice. We Westerners, however, were all isolated individualists because we’re all descended from hunter-gatherers.

As anthropology, it’s rubbish, of course. Some social historians have argued that agricultural societies are more prone to tyranny and absolute government, which would include the type of Asian absolute monarchies described by Western observers as ‘oriental despotism’. But all human societies were originally hunter-gatherers, including the Japanese. And European society has practised settled agriculture since the beginning of the Neolithic 6,000 years ago.

The origins of Japanese and East Asian collectivism probably lie more in the influence of Confucianism, which stressed the right relationships between the members of society, such as between the prince and the people, and between elders, parents and children, and the still powerful influence of feudalism in structuring social relationships. Instead of a samurai warrior giving his loyalty and service to a daimyo feudal lord, it’s now the sarariman – the corporate warrior – becoming part of the retinue of company employees under the lordship of the director.

And European individualism probably comes not from any vestiges of our hunter-gatherer deep past, but from the effect of Hobbesian Social Contract political theorising and the free trade economics of the French Physiocrats and Adam Smith. Hobbes has been described as the first, of one of the first philosophers of the emerging bourgeois society of the 17th century. This was the period which saw Cromwell sweep away the last vestiges of feudalism in England, and the emergence of modern capitalism. But Hobbes’ philosophy views people as social atoms, all competing against each other, as opposed to other views of society, which may stress the importance of collective or corporate identities and loyalties, such as family, feudal lordship or membership of trade and professional bodies. Similarly, the founders of the economic theories of modern capitalism, such as the Physiocrats in France and Adam Smith and in Scotland, also stressed unrestrained individual competition. They were also specifically arguing against the mercantilist system, in which the state regulated trade. For example, in the 17th and 18th centuries the British government enacted a series of legislation governing trade with its emerging colonies, so as to tie them to the economy of the home country, which would benefit from their products. Modern Western individualism come from these theories of capitalist society and the perceived operation of its economy.

The collectivist nature of Japanese society also expresses itself in other ways in the structure and management of Japanese corporations. Singing the company song in the morning is one example. Management are also encouraged or required to share the same canteen as the workers on the shop floor. Both of these practices, and no doubt many others, are designed to foster group solidarity, so that management and workers work together for the good of the company.

This isn’t a perfect system, by any means. Apart from the immense pressure placed on individuals in a society that places such heavy emphasis on the value of hard work, that individuals actually keel over and die because of it when doing their jobs, it has also made Japanese society and corporations extremely resistant to change. Confucianism places great stress on respect for one’s elders and superiors. While respect for the older generation is an admirable virtue, and one which our society in many ways is sadly lacking, in Japan it has resulted in a mindset which resists change or apportioning due blame for historical crimes and atrocities.

At the corporate level, the slow down of the Japanese economy in the 1990s meant there was no longer such a pressing need for company staff to work such long hours. However, so great is the corporate inertia, that staff still feel that they have to keep working past six O’clock in the evening, even if there is little or no work to do, because they don’t want to be seen as breaking with the approved practices of previous generations of employees.

And at the national level, it has been suggested that the exaggerated respect for one’s elders and ancestors is the reason why Japan has had such immense difficulty confronting the atrocities their nation committed during the Second World War. Japanese school texts and official histories have been criticised because they’d don’t discuss the atrocities committed by the imperial Japanese army. One school textbook even talked about the army’s ‘advance’ through Asia, rather than its invasion. The reason for this failure to admit the existence of these crimes, and criticise those who perpetrated them, is that respect for one’s elders and social superiors is so engrained in Japanese society, that except for a few extremely courageous mavericks, casting shame on those responsible for such horrors and, by implication, the whole of society during this period, is unacceptable. Even though many over on this side of the Eurasian landmass would consider that a failure to confront the atrocities committed by one’s nation to be even more shameful.

Japanese and Asian collectivism is not, then, perfect. But a maximum wage cap certainly did not hinder Japan’s advance to become one of the world’s foremost industrial countries. And the goal of creating a harmonious, co-operative society where there is little disparity in wealth is a good one.

The title of Mike’s article on Corbyn’s suggestion for a maximum wage states that the identities of those complaining about it reveal why they’re doing so. Indeed. The proprietors and leading executives of newspaper companies, like the Barclay twins at the Torygraph, have awarded themselves immense salaries. They’re multimillionaires. This wealth is increasingly not being shared with the hacks, who do the actual work of putting the paper out. The Torygraph has been particularly struck with declining sales to the point that Private Eye’s ‘Street of Shame’ column regularly reported further job cuts. Many of the big newspaper companies depend on the work of unpaid interns, particularly the Groaniad. And even if they’re not being threatened with the sack, conditions for the paid staff are becoming increasingly Orwellian. For example, the Eye reported a few months ago that one of the managers at the Torygraph had tried to install motion detectors on the staff’s desks to prevent them moving around too much, just like the staff at call centres are also monitored. The hacks were so annoyed, however, that management had to back down and the motion detectors were removed.

As for the film industry, the presence of big name Hollywood stars can sink a movie simply through the sheer expense of paying. For example, Arnold Schwarzenegger was paid $7 million for his appearance in the second Terminator movie. While that was a box office success, the presence of ‘A’ list celebrities in a movie does not guarantee that a film will be a success. One of the reasons why the film Ishtar became such a notorious flop in the 1990s was that the producers cast three major stars, who all commanded multi-million dollar salaries. This pushed the bill for the movie towards $20 million or so, even before the film had been shot. The film was thus under financial pressure from the start.

Apart from the Japanese, there are other, successful European nations that also deliberately avoid huge inequalities in wealth. One of these is Denmark. The newspapers have been full of articles analysing and celebrating the traditional Danish concept of ‘hygge’. This has been translated as ‘cosiness’, but it actually means much more than that. The way I’ve heard it explained by a Danish friend, it’s about being content with the homely necessities. I got the distinct impression that it was similar to the Swedish notion of ‘lagom’, which translates as ‘just enough’. You make just enough to satisfy your basic needs, but no more. And from what I’ve heard about Danish society, the social attitude there is that no-one should try to appear ostentatiously better off than anyone else. This is not to say that everyone has to do the same low-paid job, or that they should not earn more than anyone else. But it does mean that they should not be conspicuously more affluent.

This is the complete opposite from the values promoted and celebrated by Thatcher and the wretched ‘New Right’ of the 1980s. They demanded making conditions harsher for the poor, and giving ever larger salaries to management on the grounds that this would act as an incentive for others to do well and try to climb up the corporate and social ladder. The result has been the emergence of a tiny minority, who are massively wealthy – the 1%. Like the Barclay twins, Rupert Murdoch and just about every member of Theresa May’s cabinet. For everyone else, wages have stagnated to the point where a considerable number are finding it very difficult to make ends meet.

But wage caps and an attitude that discourages inequalities of wealth have not harmed Japan, nor Denmark and Sweden, which also have very strong economies and a very high standard of living.

The massive difference between the millions earned by the heads of the big corporations has been a scandal here in Britain, to the point where David Cameron and May made noises urging company directors to restrain their greed. Corbyn’s suggestion is eminently sensible, if Britain is to be a genuinely inclusive, prosperous society. The outrage shown by various media execs to it shows that the Tories are still committed to a policy of poverty for the many, riches for a very few. And all their concern at reining in executive pay is just platitudes to make it appear that they’re concerned when the issue becomes too embarrassing.

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Review: The Liberal Tradition, ed. by Alan Bullock and Maurice Shock

November 6, 2016

(Oxford: OUP 1967)

liberal-tradition-pic

I picked this up in one of the secondhand bookshops in Cheltenham. I am definitely not a Liberal, but so many of the foundations of modern representative democracy, and liberal political institutions, rights and freedoms were laid down by Liberals from the 17th century Whigs onward, that this book is of immense value for the historic light it sheds on the origins of modern political thought. It is also acutely relevant, for many of the issues the great liberal philosophers, thinkers and ideologues argued over, debated and discussed in the pieces collected in it are still being fought over today. These are issues like the freedom, religious liberty and equality, democracy, anti-militarism and opposition to the armaments industry, imperialism versus anti-imperialism, devolution and home rule, laissez-faire and state intervention, and the amelioration of poverty.

Alan Bullock is an historian best known for his biography of Hitler: A Study in Tyranny, which remains the classic work on the Nazi dictator. In the 1990s he produced another book which compared Hitler’s life to that of his contemporary Soviet dictator and ultimate nemesis, Hitler and Stalin: Parallel Lives. The book has an introduction, tracing the development of Liberalism from its origins to the 1930s, when the authors consider that the Liberal party ceased to be an effective force in British politics. This discusses the major issues and events, with which Whig and Liberal politicians and thinkers were forced to grapple, and which in turn shaped the party and its evolving intellectual tradition.

The main part of the book consists of the major historical speeches and writings, which are treated in sections according to theme and period. These comprise

Part. Fox and the Whig Tradition

1. Civil Liberties.

Two speeches by Charles James Fox in parliament, from 1792 and 1794;
Parliamentary speech by R.B. Sheridan, 1810.
Parliamentary speech by Earl Grey, 1819.
Lord John Russell, An Essay on the History of the English Government and Constitution, 1821.
Lord John Russell, parliamentary speech, 1828.

2. Opposition to the War against Revolutionary France

Speeches by Charles James Fox, from 1793, 1794 and 1800.

3. Foreign Policy and the Struggle for Freedom Abroad

Earl Grey, parliamentary speech, 1821;
Marquis of Lansdowne, parliamentary speech, 1821.
Extracts from Byron’s poems Sonnet on Chillon, 1816, Childe Harold, Canto IV, 1817, and Marino Faliero, 1821.

4. Parliamentary Reform

Lord John Russell, parliamentary speech, 1822.
Lord Melbourne, parliamentary speech, 1831.
T.B. Macaulay, parliamentary speech, 1831.

Part II. The Benthamites and the Political Economists, 1776-1830.

1. Individualism and Laissez-faire

Two extracts from Adam Smith’s The Wealth of Nations, 1776.
Jeremy Bentham, A Manual of Political Economy, 1798.

2. Natural Laws and the Impossibility of Interference

T.R. Malthus, Essay on Population, 1798.
David Ricardo, The Principles of Political Economy and Taxation, 1819.

3. Free Trade

Adam Smith, The Wealth of Nations,
David Ricardo, Principles of Political Economy,
Petition of the London Merchants, 1820.

4. Colonies

Adam Smith, The Wealth of Nations.

5. Reform

Jeremy Bentham, Plan of Parliamentary Reform, 1817.
David Ricardo, Observations on Parliamentary Reform, 1824.
Jeremy Bentham, Constitutional Code, 1830.
John Stuart Mill, Autobiography.

Part III. The Age of Cobden and Bright.

1. Free Trade and the Repeal of the Corn Laws

Petition of the Manchester Chamber of Commerce to the House of Commons, 20 December 1838.
Richard Cobden, two speeches in London, 1844.
Cobden, speech in Manchester, 1846,
Lord John Russell, Letter to the Electors of the City of London (The ‘Edinburgh Letter’) 1845.

2. Laissez-Faire

Richard Cobden, Russia, 1836.
Richard Cobden, parliamentary speech, 1846.
T.B. Macaulay, parliamentary speech, 1846.
Joseph Hume, parliamentary speech, 1847.
John Stuart Mill, Principles of Political Economy, 1848.

Education

T.B. Macaulay, parliamentary speech 1847.
John Bright, parliamentary speech 1847.

4. Religious Liberty

T.B. Macaulay, parliamentary speech, 1833.
John Bright, two parliamentary speeches, 1851 and 1853.

5. Foreign Policy

Richard Cobden, parliamentary speech, 1849;
Viscount Palmerston, speech at Tiverton, 1847;
Richard Cobden, parliamentary speech, 1850; speech at Birmingham, 1858; speech in Glasgow, 1858;
John Bright, letter to Absalom Watkins, 1854;
W.E. Gladstone, parliamentary speech, 1857;

6. India and Ireland

T.B. Macaulay, parliamentary speech, 1833;
John Bright, four speeches in parliament, 1848, 1849,1858, 1859;
Richard Cobden, speech at Rochdale, 1863.

Part IV. The Age of Gladstone

1. The Philosophy of Liberty

John Stuart Mill, On Liberty, 1859;
John Stuart Mill, Representative Government, 1861;
Lord Acton, A Review of Goldwin smith’s ‘Irish History’, 1862;
Lord Acton, The History of Freedom in Antiquity, 1877.
Lord Acton, A Review of Sir Erskine May’s ‘Democracy in Europe’, 1878.
Lord Acton, letter to Bishop Creighton, 1887.
Lord Acton, letter to Mary Gladstone, 1881;
John Morley, On Compromise, 1874.

2. Parliamentary Reform

Richard Cobden, two speeches at Rochdale, 1859 and 1863;
John Bright, speech at Rochdale, 1863; speech at Birmingham, 1865; speech at Glasgow, 1866; speech at London, 1866;
W.E. Gladstone, speech at Chester, 1865; speech at Manchester, 1865; parliamentary speech, 1866;

3. Foreign Policy

W.E. Gladstone, two parliamentary speeches, 1877 and 1878; speech at Dalkeith, 1879; speech at Penicuik, 1880, speech at Loanhead, 1880; article in The Nineteenth Century, 1878.

4. Ireland

John Bright, speech at Dublin, 1866 and parliamentary speech, 1868.
W.E. Gladstone, two parliamentary speeches, 1886 and 1888.

Part V. The New Liberalism

1. The Philosophy of State Interference

T.H. Green, Liberal Legislation or Freedom of Contract, 1881;
Herbert Spencer, The Coming Slavery, 1884;
D.G. Ritchie, The Principles of State Interference, 1891;
J.A. Hobson, The Crisis of Liberalism, 1909;
L.T. Hobhouse, Liberalism, 1911;

2. The Extension of Democracy

Herbert Samuel, Liberalism, 1902;
Sir H. Campbell-Bannerman, speech at Plymouth, 1907;
D. Lloyd George, speech at Newcastle, 1909;
H.H. Asquith, speech at the Albert Hall, 1909.
L.T. Hobhouse, Liberalism, 1911.

3. Social Reform

Joseph Chamberlain, speech at Hull, 1885, and Warrington, 1885;
W.E. Gladstone, speech at Saltney, 1889;
Lord Rosebery, speech at Chesterfield, 1901;
Winston S. Churchill, speech at Glasgow, 1906;
D. Lloyd George, speech at Swansea, 1908;
L.T. Hobhouse, Liberalism, 1911;
Manchester Guardian, leading article, 8th July 1912;

4. The Government and the National Economy

H.H. Asquith, speech at Cinderford, 1903;
Sir H. Campbell-Bannerman, speech at Bolton, 1903;
D. Lloyd George, speech at Bedford, 1913, and speech at Middlesbrough, 1913;
L.T. Hobhouse, Liberalism, 1911.

5. Imperialism and the Boer War

Sir William Harcourt, speech in West Monmouthshire, 1899;
J.L. Hammond, ‘Colonial and Foreign Policy’ in Liberalism and the Empire, 1900;
J.A. Hobson, Imperialism, 1902;
Sir H. Campbell-Bannerman, speech at Stirling, 1901.

6. Armaments

Sir H. Campbell-Bannerman, speech at London, 1905;
William Byles, parliamentary speech, 1907;
Sir E. Grey, two parliamentary speeches from 1909 and 1911;
Sir J. Brunner, speech at the 35th Annual Meeting of the National Liberal Federation, 1913.

7. Foreign Policy

House of Commons debate 22nd July 1909, featuring J.M. Robertson and Arthur Ponsonby;
Sir E. Grey, two parliamentary speeches, 1911 and 1914;
House of Commons debate, 14th December 1911, featuring Josiah Wedgwood and J.G. Swift MacNeill;
Manchester Guardian, leading article, 1 August 1914;

Part VI. Liberalism after 1918

1. The End of Laissez-faire

J.M. Keynes, The End of Laissez-Faire, 1926;
Britain’s Industrial Future, the Report of the Liberal Industrial Inquiry, 1928;
J.M. Keynes and H.D. Henderson, Can Lloyd George Do It? 1929,
Sir William Beveridge, Full Employment in a Free Society, 1944.

2. The League and the Peace

Viscount Grey of Fallodon, The League of Nations, 1918;
Gilbert Murray, The League of Nations and the Democratic Idea, 1918;
Manchester Guardian, leading article, 24th June 1919;
J.M. Keynes, The Economic Consequences of the Peace, 1919;
D. Lloyd George, speech at London, 1927;
Philip Kerr, The Outlawry of War, paper read to the R.I.I.A., 13 November 1928;
The Liberal Way, A survey of Liberal policy, published by the National Liberal Federation, 1934.

Epilogue

J.M. Keynes, Am I a Liberal? Address to the Liberal summer school at Cambridge, 1925.

In their conclusion, Bullock and Shock state that Liberal ideology is incoherent – a jumble – unless seen as an historical development, and that the Liberal party itself lasted only about seventy years from the time Gladstone joined Palmerstone’s government in 1859 to 1931, after which it was represented only by a handful of members in parliament. The Liberal tradition, by contrast, has been taken over by all political parties, is embodied in the Constitution, and has profoundly affected education – especially in the universities, the law, and the philosophy of government in the civil service. It has also inspired the transformation of the Empire into the Commonwealth. It has also profoundly affected the British character at the instinctive level, which has been given expression in the notion of ‘fair play’.

They also write about the immense importance in the Liberal tradition of freedom, and principle. They write

In the pages which follow two ideas recur again and again. The first is a belief in the value of freedom, freedom of the individual, freedom of minorities, freedom of peoples. The scope of freedom has required continual and sometimes drastic re-defining, as in the abandonment of laissez-faire or in the extension of self-government to the peoples of Asia and Africa. But each re-definition has represented a deepening and strengthening, not an attenuation, of the original faith in freedom.

The second is the belief that principle ought to count far more than power or expediency, that moral issues cannot be excluded from politics. Liberal attempts to translate moral principles into political action have rarely been successful and neglect of the factor of power is one of the most obvious criticisms of Liberal thinking about politics, especially international relations. But neglect of the factor of conscience, which is a much more likely error, is equally disastrous in the long run. The historical role of Liberalism in British history has been to prevent this, and again and again to modify policies and the exercise of power by protests in the name of conscience. (p. liv).

They finish with

We end it by pointing to the belief in freedom and the belief in conscience as the twin foundations of Liberal philosophy and the element of continuity in its historical development. Politics can never be conducted by the light of these two principles alone, but without them human society is reduced to servitude and the naked rule of force. This is the truth which the Liberal tradition has maintained from Fox to Keynes – and which still needs to be maintained in our own time. (pp. liv-lv).

It should be said that the participation of the Lib Dems was all too clearly a rejection of any enlightened concern for principle and conscience, as this was jettisoned by Clegg in order to join a highly illiberal parliament, which passed, and is still passing under its Conservative successor, Theresa May, legislation which is deliberately aimed at destroying the lives and livelihood of the very poorest in society – the working class, the disabled and the unemployed, and destroying the very foundations of British constitutional freedom in the creation of a network of universal surveillance and secret courts.

These alone are what makes the book’s contents so relevant, if only to remind us of the intense relevance of the very institutions that are under attack from today’s vile and corrupt Tory party.

Private Eye’s ‘The Directors’ Cartoon on Slavery

March 1, 2016

About a decade ago Private Eye ran a cartoon, ‘The Directors’, lampooning the squalid morality and the callous regard for human suffering of the titans of global capitalism. I found this piece from the issue for 13th -26th April 2007 particularly incisive.

Directors' Cartoon

If you can’t read it, the speech bubbles say, ‘Slavery must have been terrible!’, ‘Imagine those poor people … having to feed their workers all year round!’ ‘Hiring and firing is so much better!’

Now this was actually the argument Adam Smith, the author of The Wealth of Nations used against slavery: that it was more expensive than free labour. I also think it’s particular apt since the government is using workfare as a form of forced, unfree labour for the big corporations and Tory donors.