Friday, 31 October 2008
Mick wants a debate, Paulie wants a fight. & Mrs. Charlie is ex-World Service. So why do I pause before agreeing with them?
As I watch my children effortlessly scroll thorugh upteen digital channels, draw up old programmes through TV on demand and treat i-player as a birthright I seriously doubt that the old licence fee funded model - perhaps 'ideology' would be a better word than 'model' - of a public service broadcaster appealing to all of the community's various tastes and concerns can survive more than another decade.
I have a vague sense that the BBC - or public service broadcasting more generally - has to become more like a public library than a publishing house, whilst stimulating the production of a wider range of books. More like a web browser than a series of websites, but one which does 'point' to a wide range of content and ensures that it is available.Basically: more like the Arts Council in tis relationship with artists. But I struggle to imagine how we can give this a 'left' face.....
The 'old' public service broadcasting argument still applies to news and current affairs mind. There the argument is about independence from sources of money and power...
Wednesday, 29 October 2008
".... the issue is whether this is going to be an economic recession (a cyclical downturn of moderate length followed by a recovery taking the economy to a higher level - as seen most recently in 1973, 1979, and 1991) or whether there is going to be a depression (an economic downturn which is not followed by recovery taking the economy to a higher level in a medium time frame - of the type seen most severely in the world economy after 1929, or, on a lesser scale, in Latin America in the 1980s).
Although the beginning of the financial crash is genuinely on a 1929 scale nevertheless the overall balance of probabilities is that this will be a very nasty recession and not a depression. ...
The world economy today is in a different state [from 1929]. The Asian economies are genuinely dynamic. Therefore recession followed by recovery is the most likely scenario.
There is, however, an important risk. The outcome of this financial crisis will see a major reduction of the weight of the US in the world economy and therefore in world politics. It is possible that the US, in an attempt to stave this off, will engage in irrational actions that can prevent world economic recovery."
Phew, well that's a relief then. I mean, no one would expect the United States to engage in irrational actions now would they? But, of course, it wouldn't necessarily seem irrational - rebuilding that country's infrastructure can only be done with a modicum of protection from cheap East Asian imports.
Anne Pettifor of debtonation provides this wonderful graph. To me it suggests two things:
1. There is a lot of mileage in the Marxist/Left Keynesian idea that our easy credit economy has developed to head off what would otherwise have been falling demand as working class people have lost ground in respect of their share of the national cake.
2. The workers have never had it so good, at least relatively speaking, as in the early-mid 1970s. As the son of manual workers who hit puberty at that point I can't but help find this obscurely comforting. Things really have been downhill ever since...
Tuesday, 28 October 2008
Robert Peston said this morning,
"£5,000bn has implicitly or explicitly been made available by central banks and governments since April 2008 to support wholesale funding by banks.
That is a genuinely big number. It's equivalent to about a sixth of the total annual economic output of the whole world." & Reuters reports that the Chinese are beginning to cut up rough about the dollar,
"The United States has plundered global wealth by exploiting the dollar's dominance, and the world urgently needs other currencies to take its place, a leading Chinese state newspaper said on Friday.
The front-page commentary in the overseas edition of the People's Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies."
I ain't at all sure there is any easy way back from this. Governments aren't getting out of the banking business anytime soon: they're too deeply enmeshed to realistically be able to extract themselves. The Swedish Empire is here to stay. In such circumstances governments are damned if they get the banks to lend and damned if they don't.
How can the dollar - the currency of the world's biggest debtor in a globe collapsing with debt - possibly hold as the international currency of last resort? If the Chinese really do move out of dollars in any kind of big way hyper-inflation in North America - and therefore here - becomes a real possibility. That, surely, is what this call for a 'new Bretton Woods' is all about.
Time for a new political economy (pdf) indeed. But we face a problem here: even the mild reformism of the Compass document I've linked to is seen as wildly Utopian and electorally unpopular.
This crisis, at the moment, is like Hamlet without the Prince; we have no organised alternative to capitalism. Even those isolated voices on the libertarian socialist Left like Chartist who saw this coming, can only offer solutions which, at the moment, sound as if they come from a science fiction novel. The vast majority of ordinary people would find them ridiculous.
Well - they'd find them ridiculous for now. Let's see quite how bad this is going to be....
"Defining by a general law the expenditures on the ... schools, the qualifications of the teaching staff, the branches of instruction, etc., and... supervising the fulfillment of these legal specifications by state inspectors, is a very different thing from appointing the state as the educator of the people! Government and church should rather be equally excluded from any influence on the school."
Karl Marx, Critique of the Gotha Programme
Monday, 27 October 2008
(graphic via Paul Flynn MP: it's a detail from the Newport mural of the 1839 Chartist rising in that town - as far as I know, the last armed uprising on the British mainland.)
This is interesting: a group of what I imagine are anarchists, or possibly unusually imaginative Trots, calling themselves the New Chartists and/or the Campaign for a Debt Amnesty have started posting on obscure-ish websites calling for:
"...an immediate amnesty on all mortgages, personal loans and credit card balances. In addition, the debts of small and medium enterprises to the banks must be written off. Large corporations must be nationalised to prevent them from shedding jobs and their debts to the banks repudiated. Most are unprofitable and are in any case, one way or another, propped up by the taxpayer anyway. The few cash rich ones, such as the purveyors of rubbish food, are waiting to buy up their insolvent competitors, such as the purveyors of quality food, and either asset strip them or close them down all together. Unemployed workers must be absorbed into these large companies and into government and council departments. Hours, but not pay, should be cut in half in this new state sector to accommodate them. A new state bank, under the democratic control of the people, would then make cheap credit available to those individuals and enterprises that can demonstrate a need or are proposing social and environmentally beneficial projects."
In other words, "There is now only one way forward for Britain and that is to let the City go to the wall". They're calling for a demo in full Halloween regalia in Cardiff on October 31. Starting at the statue of Nye Bevan.
But if there is a total debt amnesty, who pays our pensions?
On one point they are hitting a certain button. Whatever happens during this crisis, the City of London is undoubtedly far, far too powerful a part of our overall economy. We need to decrease its importance. Indeed, if the Marxist Jeremiahs are correct we won't have any choice about this as the hot money will flee anyway. But - and I've asked this before - if one in five of us work in the financial sector and that's going to shrink - what else are people going to do for a living? All the key manufacturing has gone, never to return. As a country, we can't live on thin air and designing computer games...
Update: Larry Elliot agrees.
Friday, 24 October 2008
Capitalism is a very long standing and successful mode of production based on private ownership and control. Due to a recent financial problem its current owners wish to retire and appoint a:
(This is a full time position, but consideration will be given to matched job share applicants)
*Must be of a different class - both in themselves and for themselves.
*Needs to be strong 'self-starter' and show willingness to give hegemonic lead.
*No previous (revolutionary) experience required but must demonstrate keen willingness to learn (if necessary, by emptying dustbins bins of history and examining contents).
*Must be a 'team player'.
*International travel may be required.
* Needs to excel in outward facing customer contact role.
Apply via our website - or just turn up at the door carrying pitchforks and burning torches...
What are the Chinese going to do now there's no point in them investing in the bust American economy?
Blood and Treasure says the old men on the Central Committee, having gone through Stalinism and market orientated development, are being advised to try social democracy.
Caijing- which B& T calls " China's version of the Economist and " a kind of external brain of the Chinese economic apparatus" reports:
"The government's main priority will now be to introduce policies to prevent a hard landing and this will be the focus of the meeting of Communist Party leaders in November. Caijing notes that because of the US financial crisis a prolonged slowdown in export growth is to be expected. They suggest policies to strengthen domestic demand are the best and most likely option for the government. In particular they propose: 1. expanding medical insurance and constructing a rural health care network; 2. increasing the provision of affordable housing; 3. an end to control of food prices combined with food subsidies for poor people; and 4. a tax cut for middle income families to help boost domestic consumption. With these policies, GDP growth could be increased by 1.5-2% - enabling China to achieve GDP growth in 2009 of 8.5%-9.5%. "
Somewhere towards the end of 'The Great Crash of 1929', JK Galbraith makes the point that after a Crash all sorts of crimes and misdemeanours come to light. Rich and powerful men are revealed as low fraudsters and promoters of financial scams. In America, legal action follows.
Despite missing this news the first time round I'm very glad to see our native Probation Service is readying itself for this prospect.
Thursday, 23 October 2008
Time was Housing Associations were everybody's favourite puppy. Back in the day they were heralded as the original 'Third Way' for housing, sitting between the great, grey council estates and the serried ranks of owner occupied suburbia. Or so the rhetoric had it when I drifted into contact with them.
But that was a long, long time ago. Since the late 1980s Associations have had to raise capital monies on the markets to part fund the building new properties - or the repair and upgrading of properties they've acquired from former Council ownership. This has precipitated a cultural and managerial shift which one ex-Association manager caustically described to me thus,
"Once upon a time we wore jeans to be close to the tenants, now we wear suits to be close to the bankers."
These people will tell you, with some force, that this has transformed Associations into little more than private sector providers by a different name. I accept people should be able to stay tenants of the Council if they want to, without financial penalty or lack of hope of a repair programme, but I don't agree, not quite, with this characterisation of Associations as such. They may sometimes ape the private sector, but they can often be excellent landlords. & their original raison d'être often peeps through when they innovate in other areas – like sponsoring Credit Unions.
Increasingly, what Associations provide is not just socially rented stock but also shared ownership or low cost home ownership schemes. & that's good and proper and an advance – making it possible for people to move between tenures more easily is surely a Good Thing. In principle Associations should be well placed to help people during the recession by moving in with shared ownership schemes for people who get into mortgage arrears problems.
Should be - but probably aren't. Why? Because their capital funding regime is based on minimising risk and cost over-runs so that they can service their private loans more comfortably. It's usually less risk to build a new property than take on an existing building with unknown repair and maintenance obligations. Somehow, however, this 'scheme-by-scheme' caution has got caught up with a strategic throwing of caution to the wind, by some Associations at least. So they adopted business plans which depend on selling - in full or on a part-ownership basis -a sufficient quantity of housing to generate enough cash to fund the building or repair of other, socially rented stock. What could possibly go wrong?
Let me join the dots: when people don't buy enough houses, Association development plans become underfunded. If the building or repair contracts haven't been signed they get postponed - but if they have been signed there is a chance the Association goes belly up as they still have to make payments on the loans they borrowed to do this....
Rumours have been flying around for some time about one or more of the big Associations getting into trouble in this way. Now the housing press are reporting that the regulator is getting its' ducks in a row to organise an unknown but potentially significant number of bail outs.
Got some time to waste?
Glassbooth is a pretty cool web application through which you take a budget of points, allocate them among a set of policy issues to rank which issues are most important to you, and then state your policy positions on questions within those issues. Then you press the magic button and your choices show which candidates agree the most with your positions.
My responses matched positively against 85% of Cynthia McKinney's, 84% positively against Nader's and only 75% positively against Obama's.
Which does still rather raise the question of what's the back story to McKinney and Nader both running.
Especially as it seems McKinney lost the plot some time ago in a pretty unfortunate manner....
(Glassbooth link Via Knowledge Problem)
"In a system of production, where the entire continuity of the reproduction process rests upon credit, a crisis must obviously occur — a tremendous rush for means of payment — when credit suddenly ceases and only cash payments have validity. At first glance, therefore, the whole crisis seems to be merely a credit and money crisis. And in fact it is only a question of the convertibility of bills of exchange into money. But the majority of these bills represent actual sales and purchases, whose extension far beyond the needs of society is, after all, the basis of the whole crisis. At the same time, an enormous quantity of these bills of exchange represents plain swindle, which now reaches the light of day and collapses; furthermore, unsuccessful speculation with the capital of other people; finally, commodity-capital which has depreciated or is completely unsaleable, or returns that can never more be realised again. The entire artificial system of forced expansion of the reproduction process cannot, of course, be remedied by having some bank, like the Bank of England, give to all the swindlers the deficient capital by means of its paper and having it buy up all the depreciated commodities at their old nominal values. Incidentally, everything here appears distorted, since in this paper world, the real price and its real basis appear nowhere, but only bullion, metal coin, notes, bills of exchange, securities. Particularly in centres where the entire money business of the country is concentrated, like London, does this distortion become apparent; the entire process becomes incomprehensible; it is less so in centres of production."
Yeah, but I still can't work out prices/resource allocation decisions from the Labour Theory of Value...So, tempting as all this "Hey, We're BACK!" stuff is, I have yet to see anything thing from the Left which shakes me in my view that the Marxist tradition still has a lot to offer in terms of sociological and historical perspectives - even, stripped of the absurd blind alley of 'democratic' centralism, something to offer in terms of political theory - but it really, really isn't helpful when approaching directly economic questions.I'm with Dave on this one.
Wednesday, 22 October 2008
The man with the best blog strap-line in the world covered this business of the Humanist Association hiring some ad space on London buses to tell the world there probably is no God. He's right that it's a very 'Be Careful Now'/ 'Anglican-let's-not-offend-anyone-and –aren't –the roses-looking-lovely-this-year' kind of atheism.
But, blimey – it's taking off. At this rate the Humanists will be able to decorate a fleet of aircraft as well...
He carefully distinguishes between banking functions (like the operation of a national payment system and creation of credit) which have to be centralised, and therefore should be taken over by the State, and those functions, like deposit taking and investment, which might reasonably be franchised out to a number of operators to create some degree of competition and thus generate some consumer choice and 'alternate providers' in the event of any one of them crashing. Strong regulation would also be needed. In essence it is a similar kind of approach to the one New Labour have taken to much of the welfare state. I can't help laughing a bit at seeing it applied, even theoretically, to the banking industry.
But let's review the underlying arguments as to why New Labour use this kind of approach in the Welfare State: foremost amongst such justifications is the theory that without competition organisations are liable to 'provider capture'- that is to being run in the interests of their workforces, not their 'customers' or 'owners'(e.g. the tax payer).
Now this is mainly bollocks of course - but not quite entirely. The fact that in the Welfare State such arguments are used as cover for 'privatisation by devolution' and the creeping invasion of financial privatisation through PFI like arrangements does not mean that 'provider capture' never happens in any circumstances. My previous post waxed indignant on the subject of City bonuses - the size of these would seem to suggest provider capture has happened in that sector.( This would also fit in with Stumbling's ongoing worries about principal-agent problems, I think) In which case there would seem to be grounds for setting up a system designed to discourage it....Co-incidentally, it would be a very British form of socialism, but let's not go shouting that from the rooftops just yet, eh?
I'd be really interested in hearing others' take on this.
The TUC tell us that bonuses have doubled to £28 billion pound in the last 7 years: £16 billion of these bonuses are in the financial sector. The Office of National Statistics helpfully tell us only about one in five of the workforce work in this sector.The TUC says £16 billion amounts to £250 for every man woman and child in the country.
I just thought it worth posting that information as there's been an amount of New Labour euphoria about an OECD report saying the gap between rich and poor has narrowed. This seems to be down to a combination of rising employment (about to disappear as a factor), tax credits and small rises in the minimum wage. But the OECD also say,
"We are talking about a blip downwards and over the last 30 years there has been a very rapid increase in inequality...There is less social mobility in the UK than in Australia, Canada and Denmark. In this respect it is similar to the United States and Italy....What your parents earned when you were a child has much more effect on your own earnings than in more mobile countries."
A bit too much of the left blogosphere is reveling in the tawdry but minor issue of who's fit to board a plutocrat's yacht for my liking today. All good knockabout stuff no doubt, but hardly the key issue before us.
Why is it, after an unprecedented global financial crisis and a looming recession of uncertain dimensions, the Left is so very silent on what it would do differently? It's because we no longer have a vision of socialism I suspect. & we've even forgotten that we don't have one, so we busy ourselves with denunciations of this or that or, alternatively, the administration of things in what we perceive to be the most ameliorative manner available to us. The downfall of the Soviet Union casts a long shadow: when the '1917 moment' came to an end it left us all hesitant to speak convincingly of a different world. Who now know what a world 'built on meeting need, not generating profit' might actually mean?
Almost everyone is now against command-type centralised planned economies. So how much of the economy should be centrally controlled? Even the part anarchist-inspired advocates of parecon see the need for a balance of democratically generated 'nested' local and enterprise level plans coupled to some use of the market mechanism - but what should the balance be? Many people talk of workers control but the idea of constant meetings is some folks' idea of a nightmare. So how do we prevent super-democratic mechanisms turning into 'the dictatorship of the constantly committed': in other words, what kind of balance are we looking for between direct and representative democracy, whether in our political institutions or in any future forms of economic democracy? How do we organise to deal with disagreements over resource allocation - which are inevitable (e.g. between those that want higher wages, those that want shorter hours and those that more spent on welfare/educational functions) - if we get rid of a national plan completely. How do we close down whole industries - say nuclear power - on socially or ecologically progressive grounds if the workforce, impeccably working class quite often, oppose this?
God that last paragraph is naive, isn't it? What a bonzo, posting such 6th Form stuff I can hear the higher Theoreticians say. Fine. So tell me, someone. Because I can't really find anyone discussing this outside the rather sparsely populated discussion boards of Red Pepper.
Tuesday, 21 October 2008
"[Capitalism] "is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous — and it doesn't deliver the goods. In short, we dislike it, and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed."
A quote from Keynes, posted by Mick.
The Times- and therefore the blogosphere- are gnawing away at the old Marxist bone today. Stumbling even treats him like as proper economist but fairly points out that Capital itself didn't really deal too much with finance capital per se. That would be Hilferding's patch I seem to remember. Something about tending to create the conditions for war, and constantly seeking state help as I recall. Lenin nicked large parts of the theory to explain Imperialism.
So I'm not falling over backwards to resurrect ol' Karl. Saying that capitalism is unstable and unfair is not uniquely Marxist - as indeed Martin Jacques pointed out in the Times. Saying it can be replaced with a fairer system run by and for the majority of people is.
But right now we seem to have a gravedigger shortage. I blame the government's pathetic excuse for a skills strategy....
Monday, 20 October 2008
Oh,Sarah, why do you make this so easy?
Update: perhaps I got this wrong. The Useless Tree seems better versed in revolutionary theory than I, and assures me Sarah Palin is following an impeccable Maoist strategy. (H-T the ever illuminating Blood and Treasure)
Stumbling tells us the government is all over the place: the right hand doesn't quite know what, er, the other right hand is doing. It's probably true: a large ship of state is being turned round after many years of steaming in one direction and the crew have quite forgotten how to perform the manoeuvre. Underneath the headlines about Brown leading the world into a series of counter-cyclical Keynesian reflation measures are a whole host of more practical problems which New Labour is only weakly equipped to address in this new world. Today reported this morning that Lord Mandelson - now doesn't that name have a ring to it, like a title that was somehow always pre-ordained – was considering shelving the family friendly/flexible working extension proposals for small businesses. Meanwhile Brown and others still plough on in their quest to help 'hard-working families'. Something is going to have to give.
Perhaps some of this is inherent in the nature of politics itself: you deal with one problem and another one pops up somewhere else and you suddenly remember you used a different technique to deal with that one some time ago. 'Events dear boy, events'. But it is also due to the fact that New Labour abandoned politics per se, or at least politics as it was previously understood on the Left of the spectrum. They were and remain essentially technocratic managerialists. They ask not 'What is the Good Society and how can we edge towards it?' as old-style social democrats did, but simply," What Works?" A global recession makes it very, very difficult not to extend this into the obvious next question of "Who do you want it to work for?" and that's a political, not a managerial, question.
There is more than one historic model for Keynesianism. FDR tried it with infrastructure projects – but so did Hitler with his rearmament programme. Dave Osler reminds us that Keynesianism alone is not enough: we need policies for full employment. Will Hutton makes the striking observation that the quickest way to get the economy moving is not pulling forward large scale building projects but raising unemployment benefits. & the Green New Deal people want the infrastructure measures to be ones that leave us better off than before in terms of being able to face the challenge of climate change. But every one of these things involves some renegotiation of the relationship between state and economy, not just technocratic reflation.
New Labour will go down in the history books as the masters of spin - and the original spinmeister is back in the cabinet. But that's not going to be enough now. They need some politics now and I'm not sure they can magic it up without hurting their long time friends.
Saturday, 18 October 2008
"Financial workers at Wall Street's top banks are to receive pay deals worth more than $70bn (£40bn), a substantial proportion of which is expected to be paid in discretionary bonuses, for their work so far this year - despite plunging the global financial system into its worst crisis since the 1929 stock market crash, the Guardian has learned."
I'm against lynching. Actually, I'm against capital punishment of any sort, even with the due process of law. But somehow sending these people for a period of reflection on the naughty step just doesn't quite do it for me. Any suggestions?
Friday, 17 October 2008
Bugger- there goes my bet on the whole thing being postponed due to rain....
(*dodgy joke nicked from Splintered Sunrise)
I missed this. It's brilliant: the entire New Labour financial strategy for 'modernising' the Welfare State up in smoke.
"The government has acquired a major stake in the Royal Bank of Scotland. There is something extraordinarily perverse about this. RBS Isa supplier to the Public Finance Initiative (PFI). This is also true of other banks that have been offered support by the government. We are now in the absurd position that the government, local authorities and health trusts are paying a hefty premium on their financing costs to transfer risks to banks that are under public control."
Cameron's got his ducks in a row at last: it's back to the 1950s, apparently. We've had 'irresponsible capitalism and irresponsible government'. The Tories' motivating idea is 'not freedom but responsibility'. Brave move: he's abandoning the Austrian vote – which may not cost him much with the electorate but might well play badly amongst the younger constituency members. All those Ron Paul wannabees on the benches behind him are going to be fun to watch as they do a quick ideological softshoe shuffle to get in line behind him.
I think we'll be hearing a little less about the dreadful Nanny State with all its horrendous centralised targets that so discourage enterprise and initiative and a little more about the innate probity, frugality and all round wonderfulness of the traditional Officer class virtues that made the Empire the envy of the world that it is today...(hang on, that can't quite be right can it ?- Ed).
I can't see this working. It may well be that Brownanomics was completely irresponsible - but so was turbo-capitalism internationally. Brown has, albeit temporarily, acquired the kudos of the Man With A Plan. But shiny David - I think this is the end of 'call me Dave' -of Eton and Bullingdon Club fame suddenly looks just like a merchant banker....
What will the next set of polls say ?
Thirty years ago I was taught that of all the myriad of educational statistics – and my, doesn't the world of education like its' statistics – the one that best correlated to a child's final education achievement was the social class of the mother. But it looks like correlating them with which ever parent counts as the 'head of the household' still works pretty well.
Fascinating social class categories: I'll return to this.
Thursday, 16 October 2008
Ross McKibbin says,
""The relationship of housing to politics in both Britain and the United States is not fully understood even by those who transformed it. They don't understand it because that would require confronting awkward facts about Anglo-American democracy. Fundamentally, private housing has become a compensation for the increasingly gross maldistribution of income. Inadequate incomes mean that large numbers of people don't have access to the style of life that has always been the ultimate justification of neoliberalism and to which, reasonably enough, they now believe they have a right. What does give them access to it (in the short term) is credit. But credit has to be secured, and that's what housing does. However, it works only if house prices keep rising and people have enough income to repay debt. When prices stop going up and people can no longer repay what they owe, the financial system begins to disintegrate. This is what has happened; and it has happened because we have replaced something like social democracy with credit democracy, or universal access to credit, and credit is a thoroughly inadequate substitute because sooner or later it has to be repaid. Which means that people's incomes have to be sufficient to repay it, and in many cases they aren't. What we have put in place is a dynamically destructive cycle. The number of houses is rationed in order to force up prices; people buy houses in order to secure credit on the strength of those prices; this encourages a heady belief in perpetual profit and thus both risky lending and risky borrowing; this renders the banking system unstable; and lending both to individuals and among banks then collapses. Such a cycle involves a paradox. Since these credit democracies still hold elections, governments are forced to underwrite savers at the expense of creditors and stockholders. And if savers are also small shareholders, as many are, the price they pay for protecting their deposits is the devaluation of their shares. This is absolutely not what was originally intended. The rationing of house building has one other consequence: it means that many cannot acquire somewhere adequate to live."
The graphic is from the Economist.
Even Switzerland is on board it seems: the whole world has turned Swedish. To recap: the Swedish solution is to take failing banks into full or partial public ownership, re-capitalise them and then, when market conditions allow, sell off the government's stake ideally at a profit but certainly without any loss to the tax payer. There are national variations around all this, naturally. American nobel prize winners seem to be queuing up to tell us how dodgy the Bush/Paulson variant is. But the general outline is clear.
The British banks are having a little problem with this, as you might expect. They are the Bourbons of the capitalist world - arrogant, stupid and without the capacity to see themselves as others see them. I think they'd be demanding their bonuses and share dividends even if the cart was coming to take them to the guillotine...
But this new Swedish consensus might not last. I don't say this because stock markets continue to fall - all that would mean, if it goes on, is that we'd all become even more Swedish, in the sense that governments would have to go for full, rather than partial nationalisation. (Did I really just use the dismissive phrase 'all that would mean' in that last sentence? Christ, I am becoming blaise about global capitalist crises...). To some extent the national Treasuries, and certainly the IMF, have contingency plans for this, even if they passionately wish to avoid it.
No - it's the bit about selling the banks back to the private sector and getting at least a break even price that I'm beginning to have doubts about.Or at least doubts about it happening in the medium term. John Ross gives us this splendid graph: the Dow didn't recover its September 1929 value until September 1954: 25 years later.
So perhaps the one recession proof activity to get involved in might be Swedish language evening classes.
"About the Audit Commission
The Audit Commission is an independent watchdog, driving economy, efficiency and effectiveness in local public services to deliver better outcomes for everyone. Our work across local government, health, housing, community safety and fire and rescue services means that we have a unique perspective. We promote value for money for taxpayers, covering the £180 billion spent by 11,000 local public bodies...
Created in 1983, as the world around us evolves, so do we. As most public services continue to improve, we have pioneered ways of targeting our work at public bodies most in need. Working with other regulators, we will continue to reduce the burden of regulation on local public services. However, our primary focus will always be safeguarding the interests of taxpayers and promoting better outcomes for everyone using public services." (emphasis added)
Wednesday, 15 October 2008
Richard Murphy says not: I think, in the old days, Lenin (the real one) would claim state monopoly capitalism beckons, if Mr. Murphy is right.
But why isn't it over? Because no one knows where the debt actually is, according to the discussion on this American academic economists' blog. The banks are fine apparently - it's those pesky off balance sheet special vehicles which are causing all the problems. Now, who thought of them? Oh yes - the banks.
Still, don't worry if you don't understand all this. I don't, not really. But at least I can say I was there. I might even buy the celebratory T-shirt.
Hot news: today, like every other day of my life, capitalism didn't collapse. Which is perhaps just as well: I'm fairly certain now that there isn't a soul on the planet who would know what to do if it did.
The SWP remind us, in a Old Time Religion kind of of way, that Markets are Bad; Stumbling persists in his lonely but honourable quest to invent a sort of 'son of Yugoslavian style market socialism' by re-connecting collective ownership forms to market driven enterprise; and the parecon lot give us what the more hard-line Marxists would no doubt sneeringly refer to as 'utopian' socialism. More or less everyone else give us rehashed left Keynesian programmes of macro-economic policies, though often with an important Greenish twist.
I'm not sneering at any of this. I am attracted to aspects of all of these approaches, despite the fact they are clearly contradictory. But I am, wistfully, asking why is the Left so much better at analysis – as in this excellent Monthly Review piece – than prescription?
I think it is because we've lost an overarching story to tell, a meta-narrative as those clever folk who understand these things tend to say. The two traditions of 1917- not just the Bolshevik one, but the counter-veiling, legalist social democratic one that emerged in the West – are both effectively dead. I really don't think the material or historical conditions still exist to go back to the ways of that old, post 1917 Left in any of its 57 varieties, be they social democratic or Marxist. I'm still convinced by the New Times people on that one.
I'm reminded of the High Victorian period. A 'Left' disappeared, more or less, during the mid nineteen century – a Left driven by a democratic, ultimately post French Revolution agenda, about electoral arrangements and the franchise (cf Chartism). The 'Left' which re-emerged afterwards was different - more focused on industrial struggles, more concerned with financial as well as democratic equality, more 'socialist' (or at least incipiently socialist) in a sense those of us born in the twentieth century might recognise.
I've often wondered if we're currently living through a similar period. The ideological foundations of the Left of my youth have crumbled. Something new has yet to emerge. My longer term hope of the coming recession is that it can act as the midwife to a new way of looking at the world in terms of framing a coherent Red-Green response to changing conditions.
Because the neo-liberal spell is now broken. It's not the only way of doing things, it's not 'the natural order'. We have the conditions for politics again, not just marketing and management write large as per 'triangulation' and 'the Third Way'. & , yes, the questions now before us are creating the politics of running capitalism differently. But if we do this well, other, more basic questions may emerge along the way.
First Credit Crunch jokes I've heard, courtesy of a Facebook friend:
Q: What's the capital of Iceland?
A: About Three Pounds Fifty...
Latest new: the Isle of Dogs Building Society has collapsed. They've called in the retrievers.
Bradford & Bingley employees are dismayed they were given no notice of the takeover by Santander. A spokesman explained: "Nobody expects the Spanish acquisition."
A few short weeks ago I was predicting a near total melt down in the Labour Party's fortunes. They were all played out and the various segments of their core vote were drifting away. The Tories held an incredible 24pt lead in the opinion polls.
But Mr. Bean has been replaced by Dr. Finlay - the economic physician of choice to the Western world. Suddenly, Brownanomics is the new black throughout the chancelleries of the west. This, I submit, is a fairly bemusing development. Historians will struggle to explain it. In objective terms it might be the greatest comeback since General McArthur returned to the Philippines.
It seems to have given the government heart to begin to stop digging whilst in a hole. So we see the rapid abandonment of basically stupid policy positions- 42 days detention, key stage 3 SATS test – which only pride and unease about lurking ultra-Blairite reaction on the back benches had kept them wedded too. Sure, there are good policy specific reasons for both of these moves, but I really think what connects them is a political tactic rather than anything to do with the inherent nature of this government's attitude to either civil liberties or education. This is an attempt to regroup politically, and store up those sections of the core vote – the Guardian reading middle classes – most interested in these matters.
But the recession still looms. Inflation up to 5.2%, unemployment predicted to rise to 2 million by Christmas. Being praised by Nobel Prize winners and striding the international stage like a latter day Keynes is all well and good – but who will the electorate blame for the recession? Who, after all, was minding the shop in terms of City regulation?
The politics of the next few months will be a struggle to allocate blame. Brown and co and in a strong position in some ways - everyone understands that it is their prescription which the world is now taking and this will earn them kudos. But how convincing a story can the Tories – who have been all but invisible for a fortnight – make of the assertion that this is a home grown crisis?
Tuesday, 14 October 2008
The world shifts: even the Telegraph is moved to suggest it would be nice if someone from the banking world said 'sorry'. Ahh, isn't that nice....and John Redwood - he of the Ming the Mekon stare – busies himself with details of the government's action in stabilising the markets, rather than launching a blood and thunder ideological criticism.
"Brown needs a severe committee of those economists who were right when he was wrong - people to frighten the City, not to soothe its frightened feathers. Appoint the Richard Murphys, Will Huttons and Larry Elliotts not as City tsars but as City Savonarolas to flush out tax avoidance and evasion, to close down tax havens, to appoint honest non-executives to company boardrooms and institute a regime built on public trust." I take this to mean that the principled section of New Labour is now thoroughly disgusted with the City and, finally - finally – prepared to occasionally say 'boo' to this particular goose.
Chris Dillow continues Stumbling and Mumbling towards a theory of market driven mutual ownership. Will Hutton grimly explains how much remains to be done. Richard Murphy unpacks Hutton's idea of 'putting all the debt in a bad bank' might actually work: interestingly, given his association with the Labour Representation Committee, he does seem to call for a fairly rapid sale of the profitable bits of the banks back to the private sector. So we're still talking, even on the apparent 'extreme Left' of the public discussion, about a rebalanced mixed economy.
Which allows Lenin's Tomb to draw a thick red line between his position and mainstream discussion, based on the abolition of scarcity and workplace, rather than representational, democracy. By abolishing scarcity ,of course, one more or less abolishes the need for any kind of 'bourgeois' economics: it's a long way from agreeing that capitalism creates 'artificial' needs , a view which I agree with, and saying scarcity itself can be abolished...which is perhaps why there is only a very desultory discussion over at Dave's Part on whether Marxist economics offers any particular insight to the crisis.
So, all in all, I think John Lancaster is probably right: capitalism no longer has a global antagonist.Except, Monbiot tell us, capitalism and the globe may not be on speaking terms for very much longer...
(Hattip to L+C for the picture)
Harry Enfield is hardly the 'edgiest' comedian around. But there is something deeply symbolic about this sketch from his show last night. He was, after all, the man who brought us the Thatcherite plasterer 'LoadsofMoney' in the 1980s, the quintessential caricature of the 'get-rich-quick-devil-take-the hindmost-there-is-no-such-thing-as-society' vibe of the neo-liberal hegemony. & last night, as the Bush administration in Washington moved to part nationalise America's remaining banks, he did a sketch in which he, as Mandela, tips Thatcher over a cliff.
To the cheers of a adoring nation, no doubt.
Monday, 13 October 2008
John Lancaster in the upcoming LRB,
"So: a huge unregulated boom in which almost all the upside went directly into private hands, followed by a gigantic bust in which the losses were socialised. That is literally nobody's idea of how the financial system is supposed to work. It is just as much an abomination to the free marketeer as it is to the social democrat or outright leftist. But the models and alternatives don't seem to be forthcoming: there is an ideological and theoretical vacuum where the challenge from the left used to be. Capitalism no longer has a global antagonist, just at the moment when it has never needed one more – if only to clarify thinking and values, and to provide the chorus of jeering and Schadenfreude which at this moment is deeply appropriate. I would be providing it myself if I weren't so frightened."
There's too much truth in this for me to be comfortable. There have been - isolated - left commentators who have put forward emergency or long term economic recovery plans - but few who have go to the root of the matter in proposing a different kind of society, other than those who simply repeat the same old mantras of 'worker's democracy'. It's not enough.
Freemania captures the essence of the media's problems:
"The journalistic industry is perilously close to collapse after running out of days in the week to dub 'black' in the event of dire economic news.
Financial journalism has virtually frozen up after last week's so-called 'Black Friday', which exhausted the stock of slightly varied clichés. Reporters were close to panic last night at the prospect of having unimaginatively to sensationalise any further stock-market falls this week.
The Government has been considering opening the markets at the weekend, in order to provide two new potential 'black' days for the media to gibber in horror about, but industry insiders are calling for much more radical moves.
One broadsheet business editor said: "The only thing that can avert journalistic meltdown now is for the Government to create extra days. We've used the ones we have to full effect, and then some, but the need for just one more doom-mongering headline could bring the system crashing down around us. Just knowing there were more days available would steady nerves, whether we needed to use them or not."
Downing Street is understood to have commissioned a study of Norse gods to gauge the scope for new day names. But proposals for an emergency injection of days into the week have met with scepticism from Church leaders, schoolchildren and calendar-makers.
The recent American bailout plan, which involved holding the number of days in the week constant but associating several new colours with bad news, only led to further panic. And an Icelandic initiative, in which the country's Government proposed flooding the media with 50 trillion new days – more than have passed in the history of the universe – was poorly received.
Confidence in the media has fallen to record lows in the face of a string of near-identical reports shrieking about the economy's implosion. The Evening Standard has been hit particularly hard, having been reduced to using the front-page headline 'Black Yesterday' for four days in succession."
I was never a Trotskyist. In my youth I used to have to justify this politically, so I'd deploy arguments like this:
- Er - capitalism isn't in a death agony. How do I know? Because , er, most people seem to be much better off than their parents were. (Yeah, not my finest hour of socialist theory that one, I know...but true nonetheless).
- I never really cared whether the Soviet Union was a degenerated workers state, a deformed workers state, state capitalist or simply a form of 'actual existing socialism' I didn't want to replicate. The question was: is anything like that likely to happen here - and Gramsci helped me see that the West was different ....
- I always found the concept of Transitional Demands to be, well, simply a bit silly. As I understand it the idea behind them are to demand something which sounds reasonable but which capitalism simply cannot concede in a structural sense. In other words demand the impossible wrapped up as the possible. I never believed that was a good way of getting people to agree with you - they pretty soon worked out you were using them, not working with them in their own immediate interests.
- I was also always wary of the 'golden thread' style of argument - you know, "If Marx/Lenin/Trotsky were here today they'd agree with my group on everything...we are the true inheritors." Get a life I always thought – this is just Talmudic thought, not any kind of practical analysis about what to do next. But this 'golden thread' strain also prevented many - not all, to be fair – Trots looking critically at the wider inheritance. So , to take the most obvious example, in my day most Trotskyist groups were far keener on publishing loads of stuff showing Stalin wasn't, in fact, the true inheritor of Lenin than on challenging the dubious nature of, say, Leninist democratic centralism – or even his theory of Imperialism – in the first place.
But mainly I wasn't a Trot because it always, always ended up with this sort of silliness. The Socialist Party (nee Militant) and SWP having a row about demo expenses and other practical, organisational stuff, but drawing all sorts of 'political' points about each other in doing so. The subsequent discussion on the thread should be studied as an object lesson in the petty-mindedness and habitual venomous expression of a tradition in which all too many good people have sunk without trace. I really can't be doing with it.
No more Mr. Bean, no more Stalin:suddenly Brown and Darling have managed to make this government look like Dr.Finlay - that kindly and authoritative Scottish professional of impeccable probity and wisdom who knows and cares about his patients. Suddenly, improbably, they are world leaders in defusing crises of capitalism and the Eurozone and, somewhat less publicly, the States are queuing up to copy their policy proscriptions. Nobel prize winners laud Dr Finlay in the New York Times. Jackie Ashley in the Guardian is cock-a-hoop. Suggestions of a snap election to “re-affirm their mandate during the difficult times to come” can’t be far away.
Well, we’ll see. Richard Murphy is in no doubt: the respite is temporary and full nationalisation will have to follow. (He’s also warned of Ireland ‘doing an Iceland' btw).
Comrade Mason also warns that many economists say that this deal won’t hold and full nationalisation will have to follow across most of the Western world. Both of them are concerned about how governments now change previous commercial practice, whether or not full nationalisation occurs. Business as usual is what got us into this mess - so something has to change, despite Darling’s insistence on the radio this morning that the new state banks be run ‘on a commercial basis’. Murphy has a set of detailed policy proposals here which sound quite sensible to this non banker. Mason puts it thus:
“If you are, say the head of corporate social responsibility at a bank like RBS your main obsessions have been with responding to lobbyists on two of the great issues of our time: climate change and international development. I suggest that this will now lead to a reprioritisation to a third great issue of our time - ending rip-off banking.
Once the wing public realises these companies are being run in part in the public interest there will be an avalanche of campaigns: over small business interest rates, over rip off lending practices, over off shoring. The banks, in other words, will be required to show some social responsibility towards their actual customers.”
Suddenly, the efficiency, ethics and politics of running finance capital come to the fore: it’s not just a technical question any more. TINA is dead, whatever the efforts of Dr.Finlay....
Sunday, 12 October 2008
An extraordinary week best measured by the fact that the traditional Trotskyite Transitional Demand of nationalising the banks now appears to be the plan B of choice of the IMF. It may even yet come to that if only because G7 appears to be having problems agreeing on a Plan A and the situation is primed to run out of control.
The two most convincing analyses that I have run across from a broadly Left point of view come from Will Hutton and John Ross. Let me simplify horribly their different emphases: For Hutton is it about trust, for Ross it is about power. Hutton is also interested in power, of course -specifically the power of the nation state, and especially national states acting in concert - over unregulated capital, but his main explanation is a lack of trust in the market because no-one actually knows where the debt is and hence no-one will do business with each other. This is called a liquidity crisis. Ross on the other hand, thinks the fundamental problem is one of power – the fact that US (& by implication, British) assets really are overvalued – and have been for a long time because the Americans have been living way, way beyond their means (see graph). So the dollar has to be devalued – and surely that means a significant decrease in American living standards, and a decline in the relative power of American across not just the global economy but 'full spectrum dominance'. To be fair, Hutton also warns that failure to stabilise the current situation will result in a British devaluation of – this is a direct quote – '30 or 40%' - but I would draw the implication from his articles that stabilisation is possible, even at this late hour, and an orderly decline can be organised. In other words: the Anglo-Saxon world, possibly the whole of North America, EU and Japan – are going to have to get poorer. It's a question of at what speed, and whether basic services start 'falling over' if this happens too quickly.
But politics lags behind economics. The global elites may now be ruefully aware that the world has changed – the people clearly aren't. & no-one is going to tell the American people this during an election campaign. Here at home there may be a rising tide of disgruntlement- even the beginnings of real anger – at the actions of 'the bankers' – but we are a million miles away from people really understanding that the whole system is in danger
of collapse. So even as Brown shows an unexpected capacity for leadership in proposing anti-neoliberal stabilisation measures for capitalism, and as the Tories are reduced to 'me-too-ism', the political commentators are still saying, probably correctly, he is likely to get the blame for the unfolding crisis.
P.S. Comrade Mason says there is a power struggle going on between the governments and the bankers over the conditions under which the state(s) support them. This is class struggle behind closed doors. How long can it remain there...
Saturday, 11 October 2008
"I watched Digby Jones make a typical fool of himself on a news broadcast last night. He argued that he didn’t want to sit back.... and realise that all the financial services of world are in what from now on I will call the ‘Ais’: Shanghai, Dubai and Mumbai.
... he has not appreciated that the reason why these services have failed is simple: no one needs them. The activities that have caused the Crash are a giant Ponzi scheme that were, in the classical form of such schemes, dependent upon pyramid selling. That pyramid has now collapsed. No one will rebuild it: it has been proven to be without foundation.... he still does not realise that when these activities have brought our economy to our knees we should have no desire to recreate them. Isn’t that glaringly obvious?
Actually, I’ll suggest it’s so obvious that the Ais won’t want what we have created: they’ll realise that we created something wholly worthless in itself, but massively destructive to that which is of worth. And I’m going to credit them with the sense that they’ll not go near it with a bargepole.
.. Gordon Brown has kept him on his National Economic Council."
But this, ultimately, is moral revulsion, albeit well-informed moral revulsion. Surely there is a structural element to this: an inherent logic of capital?
Ken Livingstone calls for the total nationalisation of British banks - at market prices which means, currently, diddly-squat. Glad to see my 1940 analogy is being used by others. His economics advisor, John Ross, offers this analysis of the root cause of the current crisis, which Ken shares:
"The core of the present financial crisis is that the dollar is overvalued compared to the real competitive potential of the US economy, that is compared to any market equilibrium, and has been increasingly overvalued for approximately twenty years. Consequently all assets held in dollars are also overvalued. As those dollar denominated assets eventually begin to adjust downwards towards their real international values this means they no longer counterbalance the weight of debt which has been offset against them – this crisis, of course, logically breaking out in the weakest, that is most clearly overvalued, part of the asset chain, that is sub-prime mortgages. ‘Over indebtedness’ is then created as assets will no longer support the existing weight of debt."
This would seem to imply (a) there's no national solution to this problem, it's international; and (b) there's no international solution which doesn't involve a loss of American power and influence...
Meanwhile another economist popular with the Labour Left reminds that he called for this back at the end of September. (He also said we should get the troops ready to quell disorder and think about opening talks on forming a government of national unity - two proposals which the LRC might not give quite so much prominence as his call for full bank nationalisation...)
Broadly speaking, a period of slow or negative economic GROWTH, usually accompanied by rising UNEMPLOYMENT. Economists have two more precise definitions of a recession. The first, which can be hard to prove, is when an economy is growing at less than its long-term trend rate of growth and has spare CAPACITY. The second is two consecutive quarters of falling GDP.
A bad, depressingly prolonged RECESSION in economic activity. The textbook definition of a recession is two consecutive quarters of declining OUTPUT. A slump is where output falls by at least 10%; a depression is an even deeper and more prolonged slump."
From the Economist website
Friday, 10 October 2008
As I write Stock Markets all over the world are engaged in yet another round of freefall. This is being attributed to the fact that everyone knows that the US banking system is still broken (and some people are even calling for it be be rescued by, er, China), and the fact that as the credit crunch works itself through into the real economy firms will go bust and banks will start having to pay out on all the insolvency insurance deals they have sold these firms. The reception of Brown's recovery plan is still positive amongst the commentariat and, it seems, the Market itself - but everyone knows Britain is not an island in any kind of financial sense. Or if it is it is a kind of giant offshore deregulated haven. So the recession is coming, whether or not the Brown plan 'works' in the sense of avoiding major bank defaults.
The Left blogosphere is going bonkers with excitement at all this. & I do mean all sections of the Left. So we have my favourite Kautskyite gloating at the death of neoliberal free market ideology; we have a hugely fractious debate on Socialist Unity over whether the Brown plan is straightforward corporate welfare or a necessary staving off of an Icelandic situation; we even have dependable voices from the New Labour stable (who I don't regard as part of the Left under any possible definition) telling us the world has changed. What they all seem excited about, in their different ways, is that Left politics can once more 'hold its head up' in public debate and isn't simply crushed by the historic shift against us of 1989. The overwhelming feeling is "people will listen to us now, we always said this sort of thing was intrinsic to capitalism, and especially neo-liberalism". Some on the Red Pepper discussion boards are - albeit it very hesitantly – beginning to clear their throats and talk once more about the problems of the transition to socialism.
But what of ordinary people? I say they are, in the main, still experiencing all this as a spectator sport. Certainly that was the mood last night amongst a totally unrepresentative group of teachers, school governors and teaching support staff I ran into at a school reception. (Yeah, I know – I live a really rock'n'roll life, don't I?). People knew what was going on was important- but didn't understand the detail or comprehend the sheer scale of the problem implied by Brown betting a third of the national income on his recovery plan. No one was moving house, no one ran their own construction business and no one was being made redundant - so it was all a problem which felt somehow 'over there somewhere' and deeply mysterious.
So I do wonder how far this Left triumphalism is justified, as yet. I wonder how far the general population is actually, in reality, in an anti-capitalist mood. I regard this as an open question as most people won't feel the effects of mass unemployment and foreclosures for some months. There is anger - but it could be Brown corrals the anger into supporting him, on the grounds he seems so much more decisive than the Americans. Certainly Osborne and Cameron seem rather pathetic when interviewed. So I'd bet on a New Labour bounce in the polls – at least in the short term. I don't necessarily believe people, as yet, are willing to turn to the Left for answers. We still seem like a bunch of overheated losers with totalitarian instincts to the general populution I fear.
But over the coming 2 years there is much hay we can make.
Afterthought: If we're going to go to war with those despicable financial terrorists in Iceland can we please start by seizing Upton Park and holding a fire sale of Craig Bellamy & Co?
Thursday, 9 October 2008
The Telegraph reports that this clock has run out of digits,
"..when the total crept over 10 trillion on September 30, owners of the clock realised they had reached a watershed moment - they needed another digit, a fourteenth.
As a temporary measure, the dollar sign at the beginning of the total has been changed to a "1" so the digital billboard can reflect the amount of money the federal government currently owes - some 10.2 trillion dollars, or 10,228,388,628,932. "
Deliciously, the clock was installed in 1989 - the year of the unipolar world dominated by the American hegemon began.
Yesterday saw the largest scale government intervention in the UK Stock markets ever undertaken, plus a cut in interest rates on an unprecedentedly global scale. Brown and Darling were greeting with a wartime spirit in the Commons, and cheered to the rafters. There are calls for the US to follow the British plan. So has it worked?
Perhaps it is too early to tell. But the FT grimly records:
"News of the scheme failed to calm the stock markets. Amid massive share trading volumes, the FTSE 100 index of leading shares closed at 4,367, down more than 5 per cent, marking its worst three-day run since October 1987. Yet the cost of insuring the debt of Britain's largest banks against default dropped, suggesting that the credit markets had been reassured by the scheme."
Some technically well informed people on the left tell us that it's a wasted opportunity – we could have acquired more of the banks for this amount of money, and began the inevitable turning around of a failed 'business model', if that is quite the right way of describing how an economy should be run. Larry Elliot certainly agrees that it a plan to stabilise, not reform, the system which brought us the mess in the first place. But this hardly a surprise: no one imagined that Brown and Darling did this as a first step towards setting up a socialist economy. Nor, to be frank, is anyone suggesting that these moves alone will mean we avoid a severe recession if not an actual depression. Indeed some people – like VoxEU.org, with their frightening graphs - tell us we're still heading for a 1930s type crash.
Never mind, though: in his 'day job' Stumbling and Mumbling tells us at least some things are still working: outside the financial sector, corporate profitability is still healthy, at least in the US.
So – what's my gut feeling about all this? Simply that this is genuinely a '1940' moment for Britain. Either these moves stave off the 'threat of invasion'- for which read the collapse of the banking system - or they don't. Given the reception by mainstream economists I suspect there is a fair chance this will be realised. But 'staving off an invasion' is a long way from 'wining a war', as it were. The economy survives - we're not in the strange Icelandic world of national bankruptcy –but turning this around will require huge further shifts, which almost no-one in power seems presently to even be prepared to contemplate. What the economists call a structural adjustment is required - a different way of running the economy because it's broken for most of us. There is no way of getting there painlessly and we can certainly expect higher prices, more unemployment and lower standards of living.
The 1983 Manifesto was right: Britain as a country needs to use its financial sector to support the gainful enterprise of its citizens by directing investment to areas where meaningful jobs, ideally with a greenish tinge, are created . We need to move away from an economy based on casino capitalism because the net result is disaster. Yet the problem, 25 years on from 1983, is that all the metal bashing jobs have either migrated to the BRIC countries or been made redundant by the march of automation and technology. We need a new plan which not just socialises more of the economy, but projects a new vision of how we're going to make a living. In other words: a national-popular programme, however weird and old fashioned that sounds in what we've been told is a globalised world.
But we're not going to get it anytime soon.
Wednesday, 8 October 2008
"It is essential that industry has the finance it needs to support our plans for increased investment. Our proposals are set out in full in our Conference statement, The Financial Institutions. We will:
• Establish a National Investment Bank to put new resources from private institutions and from the government - including North Sea oil revenues - on a large scale into our industrial priorities. The bank will attract and channel savings, by agreement, in a way that guarantees these savings and improves the quality of investment in the UK.
• Exercise, through the Bank of England, much closer direct control over bank lending. Agreed development plans will be concluded with the banks and other financial institutions.
• Create a public bank operating through post offices, by merging the National Girobank, National Savings Bank and the Paymaster General's Office.
• Set up a Securities Commission to regulate the institutions and markets of the City, including Lloyds, within a clear statutory framework.
• Introduce a new Pension Schemes Act to strengthen members' rights in occupational pension schemes, clarify the role of trustees, and give members a right to equal representation, through their trade unions, on controlling bodies of the schemes.
• Set up a tripartite investment monitoring agency to advise trustees and encourage improvements in investment practices and strategies.
We expect the major clearing banks to co operate with us fully on these reforms, in the national interest. However, should they fail to do so, we shall stand ready to take one or more of them into public ownership. This will not in any way affect the integrity of customers' deposits."
Labour Party Manifesto, 1983 aka 'The Longest Suicide Note in History'
But however suicidal or otherwise it proved at the time it was, of course, the platform on which both Tony Blair and Gordon Brown were first elected to Parliament.
OK: so the government has part socialised the banks at a cost of £50bn. They've also made £200bn available as short-term loans in an attempt to thaw the frozen interbank lending markets, with yet another £250 bn on offer as guarantees.
In other words I think my family of 4 has just spent c£3300 to acquire a minority stake in some insolvent banks, loaned these same banks a further £13200 or so and suggested that if they pay me some trifling fee I'll insure them for another £16,500 worth of deals. Always glad to do my bit for the nation's economy.
Oh - and there has been a globally co-ordinated interest cut - here, in the States the Eurozone, Canada, Sweden and Switzerland. (Presumably Japanese interest rates are already so low it doesn't matter.Money is now cheaper, worldwide.
The immediate indications are that markets are now rising in response. But will they stay that way? The debt is still there: there is simply more money than underlying assets. A sea of money has come crashing into the market to try to make people forget about it. But will it work?
Let's be clear about what 'working' might mean: this is a massively inflationary move. The value of the debt will be diminished by an inflationary growth- as will savings of course. Not to mention wages. So 'working' means the City gets its' money back and we all embark on a re-run of the 1970s. But it might not work- in which case we'll still have the inflation plus a depression. Now that would be nasty.
It's not over yet, I can feel it in my bones. The markets may stall, there may yet be a bank run. There were significant ups and downs during 1929, and we'll see them again. It's still pass the parcel and it's not yet clear who is holding the debt...