Producer Capture:Turn the Ideological Guns Around

What's that then?

Let a former No.10 policy wonk explain,

"‘Producer capture’ is one of the key concepts imported by New Labour from the nostrums of neo-liberal economics. It describes the process whereby the goals of an organisation reflect the interests and prejudices of its employees (the producers) rather than those it is supposed to serve (the consumers, customers or citizens). More precisely, given that workers in a customer-friendly organisation will see their own interests served by serving the customer, capture is evident when producer interests are not aligned with those of the consumer and it is the former that predominate.

New Labour reformers in large part accepted the neo-liberal charge that public services – sheltered from the disciplines of competition or profit – were prone to producer capture. This insight contributed to some of New Labour’s most important public service reforms."

Sadly, though, at least according to Matthew Taylor*, it is, "...a difficult concept to apply to the private sector. .... many of us complaining are also shareholders in these same companies through our pensions funds, life insurance or savings. So where does the producer interest lie?"

Oh yeah? Falkenblog doesn't agree. According to him big financial firms have to pay their dealers excessive amounts, including obscene bonuses, 'cos otherwise the traders just have an incentive to 'give away' securities to friends thus 'building up a set of favors for his next position.' Management can't control this because they don't have the time or technical skills to do so, but, nonetheless, get awarded a cut of the 'alpha trader's**' performance in the form of their own obscene bonuses. By this account, then, the financial sector has fallen prey to wholesale provider capture and there is no obvious way out.

As someone who's spent almost all his working life in the not for profit sector I absolutely detest the theory of producer capture. Sure, I've seen it happen in practice occasionally - but only very occasionally: and I know the only way to shift it is to find a way of re-inspiring people with a notion of public service and communal solidarity. But under New Labour 'producer capture' has been the starting point for a whole series of so called 'public sector modernisations' which all focus on the marketisation of relationships. These have been carried through with a huge programme of procurement whose bureaucratic content has been disguised in 'four legs good two legs better' type language.

Perhaps the time has come to apply such a huge bureaucratic programme to control the financial sector. For this is one section of the economy which this particular socialist doesn't want to see under 'workers control....'

*To be fair, Taylor says he no longer agrees the idea of 'producer capture' can be applied indiscriminately across sectors.

**Apparently this ridiculous appellation is applied to people who make a lot of profits on trades. They're like 'movie stars' according to Falkenblog. Presumably usually starring in Hammer films in recent times...

"Another Year Older & Deeper in Debt..."

When I started blogging one of the seemingly best pieces of advice I read was to concentrate on what you know and don't get caught up in endlessly commenting on others' views. It still sounds sensible to me in the abstract - but given that very few of us, and certainly not me, fully understand the nature of the economic crisis it's been quite hard to adhere to.

Sometimes the function of a small time blog like this can be to merely repeat and spread around striking bits of info found elsewhere. So here (via) is a sobering graphic showing the current level of debt in the US financial system compared to the years of the Great Depression. Ann Pettifor gives a no-holds-barred Left Keynesian view of the implications of this graphic, and acidly comments:

"The implications are clear. It took years - from 1929 until the 1940s - and a World War, before the US cleansed itself of the 1930s debt sludge. Japan is still trying to purge itself of debts built up in the 1980s. 18 years after the Japanese ‘debtonation’ of 1990, the economy is still the weakest of all the OECD countries. Eighteen years after the property bubble burst, Japanese house prices are still falling!

Will it take 12-18 years for the US economy to recover...? On this reckoning: more than likely."

The original piece from which the graphic is drawn is by Dr. Krassimir Petrov. His is a more soberly written text - but one which seem to unequivocally point towards us actually being at the start of the second Depression.

The Power Strikes

So: the oil refinery strike spreads to Sellafield whilst England lies under a blanket of unexpected snow. (Someone, somewhere, on an Emergency Planning Committee is cracking some numbers about energy supplies, I’ll be bound....).

Meanwhile, it appears that the Socialist Party (SP - nee Militant) have established a foothold on the strike committee and played quite a significant role in heading off the possibility of the strikers’ further rhetoric developing along crudely chauvinistic lines.”British Jobs for British Workers” - BJ4BW seems the universally accepted abbreviation - remains a prominent slogan on the News footage, but not in the language of the strike committee. I think this is an Unqualified Good Thing: the BNP seem marginalised.

& the more I think about it the more I think that the idea of opening up jobs – or at least the chance to apply for jobs - on big construction projects to local people is a sound and not particularly revolutionary one. Almost every large scale regeneration bid I’ve ever seen will include some honeyed words promising to recruit local labour in depressed areas. So what’s with this weird interpretation of EU rules which says this doesn’t have to happen in the private sector? If a ‘social Europe’ is to have any meaning at all there is case law that now needs to be overturned by new European legislation. This is certainly within the bounds of the politically possible.

But there are still two aspects to all this which make me feel uneasy.

Firstly, I still think it’s a tiger the SP-influenced strike committee are riding. They may have formulated the strike demands in impeccably defensible language but I don’t doubt for one moment that some of the strikers, particularly those coming out in sympathy on secondary disputes, are not quite so enlightened. There remains a submerged ‘right-populist’ feeling – which is being given expression in many mainstream accounts of the disputes. It could yet rear up again. The underlying sullenness and resentment at the social, economic and cultural marginalisation of the manual working class really hasn’t gone away. Whether it can be diverted into Leftist channels remains to be seen.

Secondly, the actual demands of the strike committee include,

“Union controlled registering of unemployed and locally skilled union members, with nominating rights as work becomes available.” I read this as the Unions asking for the right to control recruitment – although, to be fair, it may merely mean the right to nominate for consideration, not to insist on particular people being given work. But in either event - or certainly in respect of the former, stronger possible interpretation - I think this is a bold demand. I don’t disagree with it – but I do think it runs 180 degree counter to the whole 30 year mantra of ‘allowing management the right to manage’ which we’ve all lived with for so long. Conceding this demand would fatally undermine the basic logic of New Labour and its endless calls for employment ‘flexibility’. It may be intended as a Transitional demand. It will certainly be resisted, bitterly, not just by the employer but also by the government.

As I understand it, a Transitional demand is 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 wonder, therefore, whether this is a winnable demand.

I have no contact with the strikers. I hope I’m wrong on both these points. Because putting them together leads to a vision of something pretty unpleasant and pretty combustible.

Dirigisme: Once More With Feeling?

I see Lord Mandelson wants to use the Post Office as a basis for setting up a 'People's Bank'. Good idea - and why don't we call it something snappy like 'Girobank'?

I can recall one keen young political whippersnapper, full of the joys of the Wilsonian 'white hot heat of technological revolution', who promoted that idea before. In fact I think he was Postmaster General when it was set up.

If I ever see Mandy drinking from a pint mug of tea or lighting up a pipe I'm going start feeling a bit uncomfortable...