Category: economics

Neoliberalism: Manipulation of The Many to Benefit The Few

By Daniel Margrain 

 

Theresa May recently described free-market capitalism as the “greatest agent of collective human progress ever created”. But progress is an ideology linked to advances in technology and science, that since the emergence of industrial capitalism in the mid-19th century, has infected much of intellectual life (see, for example, Chris Harman’s ‘A People’s History of the Worldpp. 384-86).

What the obsession with the prevailing neoliberal socioeconomic orthodoxy of successive governments over the last 40 years illustrates, is that right-wing politicians like May proselytize, not on behalf of genuine free-markets, but an extreme form of crony capitalism in which the publicly owned assets of the state are systematically asset- stripped and the spoils distributed to the elite economic and political class.

Farm subsidies, public sector retrenchment, quantitative easing, share giveaways and housing benefit subsidies, are some of the ways in which neoliberal corporate welfare continues to greatly enrich the wealthiest in society. Figures reported in the Guardian indicate that the richest one per cent in Britain have as much wealth as the poorest 57 per cent combined.

More evenly shared

The growth in inequality during the neoliberal era contrasts with the thirty year “post-war settlement” period in which the wealth created by workers was shared much more evenly. For example, data indicates that the share of income going to the top 10 per cent of the population fell over the 40 years to 1979, from 34.6 per cent in 1938 to 21 per cent in 1979, while the share going to the bottom 10 per cent rose slightly. Meanwhile, other figures indicate that economic growth in the UK, adjusted for inflation, has grown over the last 60 years from £432bn in 1955 to £1,864bn in 2016.

The Tory exchequer in 2017, therefore, has roughly four times as much money at its disposal in real terms compared to six decades ago. Moreover, the ratio of national debt to GDP was approximately three times higher in the post-war years compared to 2017. Nevertheless, the then Labour government built hundreds of thousands of “homes fit for heroes” and brought the National Health Service into being.

Many decades later, Theresa May who leads a immeasurably wealthier country than was the case during the post-war period, claimed “there is no magic money tree” to fund public services. Whereas neoliberal fundamentalists envisage the market as an ideological manifestation of a notion of scientific and technological progress, Corbyn’s vision is a return to a more equal society in which improvements to the quality of life for the majority through investing in public infrastructure and social capital play a crucial role.

The evidence Jeremy Corbyn intends to break the neoliberal consensus marking a return to the kind of equitable redistribution of the spoils of growth of the post-war years, is an economic strategy that is worrying a Tory government bereft of ideas. May and her Chancellor, Hammond, continue to advance the notion that the aspirations of those at the bottom of the socioeconomic ladder are most effectively met as a result of economic trickle-down emanating from the top – a theory that has – given the subsequent growth in inequality – been comprehensively discredited. Under neoliberalism, wealth doesn’t trickle down. On the contrary, it gushes up.

Mixed economy in the right hands

Potentially, sustained economic growth that capitalism engenders can create the conditions for the mass of humanity to overcome poverty and pestilence and to meet its fundamental needs – but only in the right hands. Paradoxically, the neoliberal model is is likely to lead to the exact opposite: the extinction of our species and probably many others.

The poorest who can’t afford to enjoy the benefits of capitalism are, in the short-term, the most likely to be adversely affected by the climate chaos and wars it engenders. But the rich are not insulated from the process either since the affects of nuclear fallout and global warming are not undemocratic.

Theresa May’s notion that the ideology of progress, manifested in scientific and technological advancement, is indicative of the “greatest agent of collective human progress ever created”, is negated by the chaos wrought by global warming, the spread of wars, the growth in relative poverty and the lack of disposable income for millions of people.

Under neoliberalism, the impoverished and war-torn are unable to engage in the kinds of commercial and cultural activities the rich disproportionately benefit from. It is therefore not “collective” human progress that May is referring to when she espoused the virtues of capitalism.

For neoliberal ideologues, progress is measured in terms of the extent to which people are able to consume what the advancements in technology the market is able to deliver. While it is true that more people than ever have access to “luxury” technologies like flat screen TVs, mobile phones and computers, it’s still the case that the majority of the worlds population don’t.

Moreover, it doesn’t necessarily follow that those who do have access to them are not struggling to feed their families. There is no correlation between poverty and the amount of consumer goods people have access to. Poor and hungry people without money who do have access to consumer goods like mobile phones are not able to console themselves by eating them.

Absolute v relative poverty

The Prime Minister is right to infer that the historical inward tidal flow of capitalist development over time has corresponded to an overall reduction in absolute poverty. But if it were only absolute poverty that resulted in social resistance there would never have been general strikes or revolutions after the first years of industrialization. As John Rees in Imperialism and Resistance (pp. 102-3) remarked:

“Few people in modern Britain wake up in the morning to face a new day and content themselves with the thought that at least they are not living like 19th century weavers. They ask themselves different questions. Is my child’s life going to be harder than mine? Are we, the people, who do the work, getting a fair share of all the wealth that we see around us in this society?”

It is therefore not capitalism’s ability to reduce the level of absolute poverty, but it’s socially relative poverty measured in terms of the level of income inequality that counts. 

At the turn of the century, the Office of National Statistics provided a snapshot of relative poverty in Britain. In interviews with panelists selected from the General Household Survey, it drew up a list of items regarded as “necessities”: a bed, heating, a damp-free house, the ability to visit family and friends in hospital, two meals a day and medical prescriptions.

The study found that four million people do not eat either two meals a day or fresh fruit and vegetables. Nearly 10 million cannot keep their homes warm, damp-free or in a decent state of decoration. Another 10 million cannot afford regular savings of £10 a month. Some 8 million cannot afford one or two essential household goods like a fridge or carpets for their main living area. And 6.5 million are so poor to afford essential clothing. Children are especially vulnerable – 17 percent go without two essential items and 34 percent go without at least one.

With the massive increase in the use of food banks, the rise in zero hours contracts and in-work poverty; the adverse affects of the bedroom tax and cuts to council tax benefit for the poorest over the last decade, these figures almost certainly understate the extent of the current problem.

Wanda Wyporska, Executive Director of The Equality Trust, said:

“The cavernous gap between the richest and the rest of us should be a real source of worry…Extreme inequality is ravaging society…While many people’s incomes have barely risen since the financial crash, a tiny elite has continued to pocket billions. If politicians are serious about building a genuinely shared society, then they urgently need to address this dangerous concentration of power and wealth and tackle our extreme inequality.”#

System of enslavement

A world in which the mass of humanity is getting increasingly poorer while the rich are getting richer, largely as a result of the latter’s collective theft of state assets, is indicative of a form of inherent systemic corruption on a huge scale. This is reflected by the extent to which public enterprises are privatized for profit and private capital debt is socialized through subsidy by the tax-payer. This is the kind of “free-market” capitalism espoused by May – a vision of a system built on the principle of socialism for the rich and enslavement for the rest. 

Although many commentators point out, correctly, that this neoliberal socioeconomic model is not working for the vast majority of people, the point is, it was never intended to be that way. The purpose of neoliberal socioeconomic policy is not to improve the living standards or protect the jobs for the many, but to defend the short-term economic interests of the few.

In Spain, the Rajoy governments use of brute force against the people of Catalonia is an illustration of the extent to which the one percent are prepared to go in order to protect their corrupt neoliberal system of wealth usurpation. In theory the EU, as an institution, can be the catalyst for raising the living standards of the poorest, but under neoliberalism, it too, has become a corrupt extension of the sovereign state.

What Theresa May really means, is not that capitalism is the “greatest agent of collective human progress ever created”, but rather that neoliberalism is the best economic model through which her class is able to financially enrich themselves by manipulating the institutions of society.

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No Man Is An Island: Why UBI Would Benefit Society

By Daniel Margrain

survival-500-white

Last year the Dutch government introduced an experimental universal basic income (UBI) system which is paid to the residents of Utrecht and 19 other Dutch municipalities. Unemployed people receive the equivalent of about £150 a week. If successful, the pilot will include payments to all citizens whether working or not. The aim is not to penalize the unemployed for finding work because they will receive their employment income in addition to the universal income payment. The Finnish government is planning to roll out the latter comprehensive model later this year.

Chris Dillow has done rough sums for the UK and comes up with £130 a week (around $200). Charles Murray had a look at it for the US and went for $10,000 a year, a remarkably similar sum. These are the sorts of amounts that could be paid within our current societies and wouldn’t act as a disincentive to employment because, as Tim Harford argues, people would want to supplement it.

Writer and blogger Tim Worstall has posited that traditional welfare schemes create a disincentive to work, because they typically cause people to lose benefits at around the same rate that their income rises (a form of welfare trap where the marginal tax rate is 100 percent). He has asserted that this particular disincentive is not a property shared by basic income as the rate of increase is positive at all incomes.

Money-saving

In an era when intelligent machines will soon replace human workers in all sectors of the economy, the hope is that a UBI scheme will prevent the government having to spend extra money on the vast array of related services connected to the bureaucratic elements of the state that are dependent on the unemployed for their existence.

This covers everything from unemployed benefit snoopers to the administering of homeless shelters. Then there are the knock-on affects that stem from inequality such as health, poverty and crime. Writing in the Guardian, John O’Farrell astutely points out the benefits of such a system to the UK:

“Since the decline of the unions, workers have been increasingly powerless to refuse longer hours and less money with only the food bank to fall back on if they walk away from an exploitative job. With a guaranteed state income to keep the wolf from the door, employees would be given the bargaining power to demand civilized working conditions and reasonable rates of pay….Our labyrinthine system of benefits and tax credits would disappear and all the stigma of signing on with its degrading culture of blame and humiliation for those at the bottom of the pile.”

The benefit system currently in use in the UK is punitive. Humiliation is cast on those at the bottom of the pile enabling the majority in the middle, to feel better about themselves. O’Farrell  concludes:

“For all the apparent expense of the UBI, we would save the small fortune that the state currently spends mopping up the mess of social problems caused overwhelmingly by chronic poverty. Of course, there are complex reasons for increasing homelessness, for bulging prisons, for growing mental health problems – but desperate financial pressure is a major factor in all of them. Every decade sees us spending increasing billions trying to tighten the lid of the boiling cauldron. It might be so much cheaper just to turn down the temperature a bit.”

Nurturing talent

The long-term socioeconomic and health benefits related to the kind of progressive and enlightened policy adopted by the Dutch and Finns is palpable, not only to the poorest in society but it also has some benefits to those at the top. As Richard Wilkinson put it: “There seems to be some truth in John Donne’s “No man is an island.”

Rather than the punitive strategy of coercion adopted by the British and other governments by which the ‘stick’ is preferred to the ‘carrot’, the introduction of the UBI – based on economic pragmatism rather than state vindictiveness – will almost certainly result in the nurturing of talents and creativity that otherwise wouldn’t necessarily come to fruition.

It’s almost certainly no coincidence that what was arguably the peak of working class creativity in the arts occurred during the 1960s when, underpinned by a universal system of welfare provision, the class in question was at its most confident – a confidence that has been in decline from the mid 1970s onward marked by the ending of the post-war settlement between capital and labour.

Over the last 40 years, ordinary people have found it increasingly difficult to focus on doing things they really like because they tend to spend most of the productive part of their lives working at something they hate often for no other a reason than to maintain the necessities of life – namely securing a roof over their head and ensuring they have access to enough food.

Since the Callaghan government, punishment has been the overriding factor that has guided the social policy of successive UK administrations’ – both Conservative and Labour. The purpose has been to foster a lack of any sense of entitlement. This has involved the gradual removal of a social security safety net to enable the government of the day to maintain a level of social stratification in order that the demands set by unfettered capital be established.

The Dutch and Finnish models, intended to be correctives to the lack of universal provision, is in principle similar to that adopted by the Green Party as outlined in their previous General Election Manifesto. The rationale underpinning the introduction of a system of UBI is that it would not only end the kinds of state bureaucracy and inefficiencies described, but would also be cheaper to administer and hence save the tax payer money. Third, it would boost local economies because poor people would have greater income at their disposal with which to spend on goods and services.

Reduction in inequality

But arguably the greatest benefit is that such a policy would lead to a reduction in inequality whose affects, as Richard Wilkinson has shown, are divisive, harmful and socially corrosive. Research indicates that the world’s richest 1 percent of people own the same amount of wealth as the rest. As Oxfam shows this kind of extreme wealth confers political power that can be used to influence rules and systems in favour of an elite at the expense of everyone else.

However, the more equitable and egalitarian the society, the greater the control people have over their lives. More equal and fair societies provide the conditions by which a system of equality of opportunity can be put into place. Workers, as participants in a scheme of cooperation that contribute toward national income, would then have a claim to a fair share of what they have helped to produce.

Richard Wilkinson shows that a correlation exists between income inequality within countries (not between them) and social gradients in terms of a multitude of indicators. These include health, life expectancy, literacy/numeracy, infant mortality rates, homicide rates, proportion of the population in prison, teenage birthrates, levels of trust, obesity, mental illness – which in standard diagnostic classification includes drug and alcohol addiction – and social mobility.

What the data shows is that in the more equal countries – Japan, Finland, Norway, Sweden – the top 20 percent are about three and a half to four times as rich as the bottom 20 percent. But on the more unequal end – U.K., Portugal, USA, Singapore – the differences are twice as big. On that measure, the UK is twice as unequal as some of the other successful market democracies.

According to research measured by the Gini coefficient, which is widely regarded as the best measurement of income inequality, Holland is the fourth most equal society within the EU while the UK is ranked way down at twenty-one. What impacts on society does this level of inequality point to?

Wilkinson collected internationally comparable data on problems with social gradients – the kind of problems that are more common at the bottom of the social ladder of the kind outlined above – and weighted them equally by putting them all in one index. The data shows an extraordinarily close correlation between inequality and the kinds of social problems described. The same correlation equally applies to children who also perform worse in the more unequal societies.

Data, in its totality

What the data in its totality indicates, is that the average well-being of our societies is not dependent any longer on national income and economic growth. Wilkinson elaborates further:

“That’s very important in poorer countries, but not in the rich developed world. But the differences between us and where we are in relation to each other now matter very much. I’m going to show you some of the separate bits of our index. Here, for instance, is trust. It’s simply the proportion of the population who agree most people can be trusted. It comes from the World Values Survey. You see, at the more unequal end, it’s about 15 percent of the population who feel they can trust others. But in the more equal societies, it rises to 60 or 65 percent. And if you look at measures of involvement in community life or social capital, very similar relationships closely related to inequality.”

In terms of mental illness:

WHO put together figures using the same diagnostic interviews on random samples of the population to allow us to compare rates of mental illness in each society. This is the percent of the population with any mental illness in the preceding year. And it goes from about eight percent up to three times that — whole societies with three times the level of mental illness of others. And again, closely related to inequality.”

The overriding factor that emerges from Wilkinson’s research into inequality are it’s psycho-social effects and how this relates to the kinds of values inherent to a capitalist system in which society is driven by consumerism and competition that leads to status insecurity. The potential for the onset of chronic stress and depression from social sources in turn:

“affect the immune system, the cardiovascular system. Or for instance, the reason why violence becomes more common in more unequal societies is because people are sensitive to being looked down on….I should say that to deal with this we’ve got to…constrain income, the bonus culture incomes at the top. I think we must make our bosses accountable to their employees in any way we can. I think the take-home message though is that we can improve the real quality of human life by reducing the differences in incomes between us.”

With regards to social mobility, Wilkinson states bluntly that “if Americans want to live the American dream, they should go to Denmark.”

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Stepping into the mud with the barefoot economist, Manfred Max-Neef

By Daniel Margrain

Manfred Max Neef sits at a table near a notebook computer. On the wall behind him is a slide from a presentation.

The media’s trumping (excuse the pun) of economic growth over environmental concerns exemplified by their lack of any critique of the latter following yesterday’s (November 23) Autumn Statement announcement by chancellor, Philip Hammond, is a familiar, if rather depressing, narrative. The news from the government’s Office for Budget Responsibility (OBR) that growth forecasts for 2017 as a percentage of GDP are projected to fall by 0.8 per cent, largely due to Brexit-related affects, was perhaps expected.

But what is rarely questioned by the media are the consequences this prioritizing of growth as a central plank of the governments economic strategy has for the medium to long term sustainability of the planets ecosystems upon which the well-being, and even survival, of humanity depends.

The Green Party MP, Caroline Lucas raised her concern in the House of Commons that neither Hammond in his Autumn Statement – nor any of his Tory predecessors – “have ever mentioned the words ‘climate change’ in the year that’s the hottest on record and where parts of the country are under flood water.”

To all rational observers this is a particularly alarming state of affairs given that the government’s own 2015 National Security Strategy states that human-induced climate change is one of three tier-one threats – alongside international terrorism and cyber crime – that the UK currently faces. By subordinating climate change to a neoliberal economic growth model within a finite planet, amounts to willful ignorance and stupidity of the most serious and blatant kind, namely, because the consequences are potentially catastrophic for all living things.

Shifting the paradigm

Of all the recent discussions around the production of fake news, the inability of the mainstream media to bring the issue of climate change to the forefront of public discourse is probably the greatest dereliction of duty that can be brought to bear on the credibility of professional journalism.

But arguably just as unforgivable, is the media’s inability to bring political power to account in respect to the latter’s fetishization of the current growth model and to shift the discourse from a paradigm where this model is currently regarded to be a panacea among large swaths of the public, to one where it is widely regarded as the death knoll for society and the planet.

The November 22 edition of the BBCs current affairs Newsnight programme featured an extended piece on the current chancellor. Some of Philip Hammond’s former school friends were interviewed, all of whom described him as a highly intelligent figure who, after having completed his class work before everybody else, would often put his feet up on his desk in lessons. Hammond was portrayed by his friends as being so clever that he regularly outsmarted his teachers.

Having made large sums of money as a music promoter soon after having left school, Hammond fulfilled his youthful boast that he would become a millionaire by the age of thirty. But although well-educated, wealthy and well connected, this former Oxford graduate like so many other chancellors before him who have gone on to be the pillar of the political establishment, continues to promulgate the deluded notion that sustained economic growth is emblematic of societal progress.

Hammond is part of a Tory establishment that continues to perpetuate the myth that the current economic growth model is the best way to curtail the threat posed from the likelihood of further economic crisis as opposed to recognizing it’s the major cause. Consequently, Hammond will continue to systematically push for policies that fly in the face of all available scientific evidence.

Politician’s like Hammond know what is to be done but for ideological and dogmatic reasons they do the opposite. Rather than the global financial crisis of 2008 acting as a wake up call, Hammond and Osborne before him, continue with the same poisonous model until the next crisis comes along, by which time they will continue with it until the one after that. And so it goes on. This is the economics of the madhouse.

Radical visions – development not growth

What is required is a radical alternative vision for society – a break from the concept by which everything has become a commodity to be bought and sold for profit. But who, other than a handful of creative thinkers in the academic sphere, are proposing alternative, imaginative visions? One of the most ambitious thesis I’ve come across is that postulated by Pat Devine, who articulates in some detail, the processes by which the development of a democratically planned socialist economy can come into being.

Devine’s thesis is closely aligned to that of the Chilean economist, Manfred Max-Neef whose visionary holistic and philosophical appraisal of the existing model ought to go a long way in persuading people of the legitimacy of the planned socialist model. While recognizing the importance, geographically, of bringing production closer to consumption, Max-Neef argues that the root of the existing problem stems from how establishment economists perceive their academic discipline as being above, and separate from, nature and the biosphere.

For Max-Neef, economists know nothing about ecosystems, thermodynamics or biodiversity. “I mean, they are totally ignorant in that respect”, he said… “And I don’t see what harm it would do, for an economist to know that if the beasts would disappear, he would disappear as well, because there wouldn’t be food anymore. But he doesn’t know that we depend absolutely from nature. But for these economists we have, nature is a subsystem of the economy.”

Max-Neef argues that for the paradigm to shift, it is necessary for economics to be taught in a different way based in five postulates and one fundamental value principle:

1) The economy is to serve the people and not the people to serve the economy.

2) Development is about people and not about objects.

3) Growth is not the same as development, and development does not necessarily require growth.

4) No economy is possible in the absence of ecosystem services.

5) The economy is a subsystem of a larger finite system, the biosphere, hence permanent growth is impossible.

The fundamental value to sustain a new economy should be that no economic interest, under no circumstance, can be above the reverence of life.

For far too long, humanity and the natural world has been subordinate to the imperatives associated with an economic growth paradigm that’s perceived by economists and politicians as being separate and distinct from the former. What Max-Neef is saying in the first point above is that the dialectical relationship between economy and people has to be restored in order for society and nature to function properly.

The distinction Max-Neef makes between growth and development in point three, is particularly significant. As the economist from Berkeley points out:

“Growth is a quantitative accumulation. Development is the liberation of creative possibilities. Every living system in nature grows up to a certain point and stops growing. You are not growing anymore, nor he nor me. But we continue developing ourselves… So development has no limits. Growth has limits. And that is a very big thing, you know, that economists and politicians don’t understand. They are obsessed with the fetish of economic growth.”

This fetishization of economic growth is arguably explained, in part, by the fact that the monetary offshoots that accrue as a consequence of this growth have, since the onset of ‘trickle-down’ neoliberalism, increasingly ‘gushed upwards’ towards the top of the socioeconomic pyramid.

This is revealed by statistics which indicate that economic output (GDP) in the UK, adjusted for inflation, has over doubled from £687bn in 1979 to £1,502bn in 2011. However, over the same period, income inequality, as measured by the Gini coefficient, increased from 0.25 to 0.34. In other words, since the era of neoliberalism, working people who have created the sustained increase in wealth in society, have seen their slice of the pie reduced. Max-Neef understands that the ruling class obsession with the fetish of economic growth is underscored by the fact that this is the class that disproportionately benefits the most from it.

The threshold hypothesis

One of the later works Max-Neef authored was the famous threshold hypothesis, which says that in every society there is a period in which economic growth, conventionally understood or not, brings about an improvement of the quality of life. But only up to a point – the threshold point – beyond which, if there is more growth, quality of life begins to decline.

According to Max-Neef, the U.S, which he terms an “undeveloping nation” is currently at this point. The UK is not far behind. This is reflected in the growing concentration of wealth towards the one per cent at the expense of the 99 per cent. The logic of diminishing returns applies to other parts of the system that eventually results in net costs over the long-term.

These costs are quantified not only in strict monetary terms, but involve human capital too – something which the economic-growth fetishists rarely factor in to their cost-benefit calculations. Diane Abbot’s posting on Twitter yesterday (November 23) of an OBR sourced graph (see below) highlighting the impact of immigration on UK debt, is a case in point.

 

“OBR has also shown immigration reduces Government debt, because it is a net economic benefit.”

 

 

The ORB (and Abbot) present only a partial truth. While Abbot is correct in stating that “immigration is a net economic benefit because it reduces government debt”, the analysis doesn’t take into account other factors such as the uneven distribution of wealth described which negate the benefits accrued, or indeed, other (social) indicators such as reduced quality of life resulting from, for example, a lack of school places or other pressures on public services that mass immigration potentially brings.

Walking barefoot

It’s the apparent inability of politicians to view the economic growth paradigm as destructive that opens up spaces for alternative narratives of the likes of Max-Neef to fill. After winning the Right Livelihood Award in 1983, two years after the publication of his book Outside Looking In: Experiences in Barefoot Economics, the Chilean economist’s metaphor was inspired as a result of the ten years he spent working in extreme poverty in the Sierras, jungles and urban areas of different parts of Latin America. It was during this period that the economist from Berkeley began to view his profession in a different light. What subsequently happened was to change his life for ever.

“I was one day in an Indian village in the Sierra in Peru”, recalls Max-Neef. “It was an ugly day. It had been raining all the time. And I was standing in the slum. And across me, another guy also standing in the mud — not in the slum, in the mud. And, well, we looked at each other, and this was a short guy, thin, hungry, jobless, five kids, a wife and a grandmother. And I was the fine economist from Berkeley, teaching in Berkeley, having taught in Berkeley and so on.

“And we were looking at each other, and then suddenly I realized that I had nothing coherent to say to that man in those circumstances, that my whole language as an economist, you know, was absolutely useless. Should I tell him that he should be happy because the GDP had grown five percent or something? Everything was absurd.”

Max-Neef continued:

“So I discovered that I had no language in that environment and that we had to invent a new language. And that’s the origin of the metaphor of barefoot economics, which concretely means that is the economics that an economist who dares to step into the mud must practice.”

“The point is, you know, that economists study and analyze poverty in their nice offices, have all the statistics, make all the models, and are convinced that they know everything that you can know about poverty. But they don’t understand poverty. And that’s the big problem. And that’s why poverty is still there. And that changed my life as an economist completely. I invented a language that is coherent with those situations and conditions.”

The ‘language’ Max-Neef refers to relates to the way that we as human beings in developed countries have lost the capacity to understand. Despite our ability to accumulate knowledge, this capacity, in the absence of empathy, love and understanding, is according to Max-Neef, insufficient:

“You can only attempt to understand that of which you become a part”, says Max-Neef. “If we fall in love, as the Latin song says, we are much more than two. When you belong, you understand. When you’re separated, you can accumulate knowledge. And that is — that’s been the function of science. Now, science is divided into parts, but understanding is holistic.”

For Max-Neef, in order for professional economists to understand poverty, it’s necessary they live among people who are poor. Only then can economists understand that in such an environment there exists a different set of values and principles that are alien to world of academia that cannot be learned or understood their.

“What I have learned from the poor is much more than I learned in the universities”, said Max-Neef. “But very few people have that experience, you see? They look at it from the outside, instead of living it from the inside.”

The economist from Berkeley, continued:

“And you learn extraordinary things. The first thing you learn, that people who want to work in order to overcome poverty and don’t know, is that in poverty there is an enormous creativity. You cannot be an idiot if you want to survive. Every minute, you have to be thinking, what next? What do I know? What trick can I do here? What’s this and that, that, that, that? And so, your creativity is constant.”

“In addition, I mean, that it’s combined, you know, with networks of cooperation, mutual aid, you know, and all sort of extraordinary things which you’ll no longer find in our dominant society, which is individualistic, greedy, egoistical, etc. It’s just the opposite of what you find there. And it’s sometimes so shocking that you may find people much happier in poverty than what you would find, you know, in your own environment, which also means, you know, that poverty is not just a question of money. It’s a much more complex thing.”

What underlines Max-Neef’s message, perhaps more than anything else, is that the developed world that sees itself as sophisticated, educated and cultured, while pushing away to the margins the poor of the developing world by building walls, do so while failing to acknowledge that the kind of ‘progress’ the economists and politicians sitting in their plush offices aspire to, is in truth measured by the speed at which they are destroying the conditions that sustain life.

The Tories Brexit debacle

By Daniel Margrain

 

Theresa May’s announcement that the decision to trigger Article 50 of the Lisbon Treaty at the end of March at the latest, by-passing parliamentary debate, is a kick in the teeth for all those campaigners who argued that to do so would undermine due legal process in the wake of the passing of the 2015 Referendum Act. As I stated previously, in legal terms, the referendum decision to leave the EU was advisory not mandatory. What happened following the vote was therefore a matter of politics, not law.

However, the governments formal position was that it had no legal obligation to consult parliament on invoking Article 50 which gives Britain a two year period to negotiate the terms of its departure and insisted that every word of its defense had to be kept secret. But on September 23, crowdfunded group People’s Challenge lodged a court application to allow it to publish the governments argument. Six days later, the court ruled that the government must disclose the legal arguments on the procedure of Article 50.

The governments announcement to definitively invoke Article 50 while ignoring the rest of the process that Parliament set in train when it passed the 2015 Referendum Act, seems to be predicated on its ancient (archaic) use of the Royal Prerogative to trigger the process of the UK leaving the EU in the interest of the Government’s sectional and party political interest.

Indeed,  Teaching Fellow in Public Law and Jurisprudence at University College London, Thomas Fairclough concluded“it will be the Government, using the Royal Prerogative, who will decide if/when to trigger the Article 50 mechanism and take the United Kingdom out of the European Union.” By using the Royal Prerogative to trigger Article 50 of the Treaty of Lisbon this Government will be sweeping away rights at a stroke of a pen without the proper scrutiny of and a final decision being made by our Sovereign Parliament.

In announcing her proposed deadline for the triggering of Article 50 now, PM Theresa May said there will be time for preparatory work from all parties involved, which she hopes would lead to a “smoother process of negotiation”. May said that while she was willing to announce key landmarks in the Brexit timeline, she did not plan to continue sharing details during the negotiation process.“There’s a difference between not giving any commentary and giving a running commentary,” she said.

The lack of government transparency is bound to have implications in terms of whether foreign companies decide to invest in the UK. It’s incumbent on the government to be as open and transparent as possible in order to create the necessary conditions to allow companies to make an informed choice as to whether or not to invest in the UK.

According to the Telegraph, bosses of several of America’s banks and corporations have warned May that they will shift operations into Europe unless she can provide early clarity on the future shape of UK-EU relations. If the banks go, there will be virtually nothing left that the UK specializes in other than selling WMDs to whoever is prepared to meet the governments asking price, or making cars to sell to the Germans, Indians and Japanese.

The bad news was delivered to May in New York in a meeting with US investors, presumably intended to calm their nerves. According to an account by the Telegraph, May declined to provide information about how the UK government would approach the Brexit negotiations never mind when they would start. Neither May nor the government appear to have any idea about where the country is going or how long it will take to get their.

Try putting yourself, dear reader, into the shoes of the investors. If you had the best financial interests of your company and shareholders at heart, would you invest in a country that appeared to have no idea where it is going?

Estimates for job losses resulting from a “hard Brexit” range from 40,000 to 80,000 over the next decade. Furthermore, Chancellor, Philip Hammond has said that the retention of passport rights of bankers is highly unlikely given the constant calls from mainly Tory constituents demanding that immigration be curbed at any cost. As financial services are said to generate more than £66bn in tax in the UK, the consequences for society are potentially serious.

Meanwhile, EU leaders continue to harden their stance against the UK saying they will rule out any cherry-picking in relation to accessing the single-market. The negative consequences resulting from the UKs uncertainty surrounding Brexit is already happening. Job vacancies in the UKs financial sector have suffered a sharp decline since Brexit.

According to the Institute of Public Policy Research, for example, job openings in the financial sector have plunged 10 per cent across England, falling in every region during July and August. They attributed the decline to concerns whether the UK will retain its passport rights. London recorded a 13 per cent drop in job adverts.

Investment in infrastructure has also received a set back according to Standard and Poor, the ratings agency. In a note to clients, the agency said that private investment in infrastructural projects was under threat: “The biggest risks for infrastructural companies could be from an extended period potentially running for many years during which the terms of exit and replacement trade treaties with the UKs partners are renegotiated”, they said.

In other words, nobody wants to spend any money in a country where they don’t know where it’s going or how long it takes to get there. On the other hand, infrastructural assets might become cheaper as the pound sterling devalues. So we ought not be surprised if the Tories sell off what little infrastructure we have remaining to the Chinese and Saudi’s for short-term profitable gain.

The incompetence of people like Boris Johnson who led us into this mess and the mainstream media who failed to challenge him, have instead focused their ire on attacking Jeremy Corbyn, who argued in favour of the Remain position. How much longer Theresa May and her Tory government can insulate themselves from media criticism over the Brexit debacle, remains to be seen.

Why the travails of Apple are symptomatic of a much wider problem

By Daniel Margrain

In the wake of the democratic decision of the British people to exit from the EU, it would paradoxically appear to be highly probable that the UK government will give away the kind of sovereignty the ‘Brexiteers’ claim to covet by signing an unadulterated TTIP deal with the United States government. At a point in time in which the UK government appears set to extricate itself from the ‘bureaucratic and unaccountable’ EU, the multinational conglomerate Apple is availing itself of Ireland’s tax system, the most favourable national tax regime in Europe.

However, the European Commission ordered Apple to pay the Irish government £11bn of back-dated tax that it has avoided. The Irish Cabinet agreed to appeal the European Commission diktat. Irish PM, Enda Kenny, ordered his ministers back from their summer holidays after the European Commission accused Ireland of breaching state aid rules.

But Independent minister John Halligan initially said that the Irish government should take the cash owed by Apple in order to fund hospital services in his constituency before eventually agreeing to the decision to appeal the ruling. The European Commission alleges that Apple’s effective tax rate in 2014 was a mere 0.005 per cent which means that someone earning £30,000 a year at an equivalent rate would pay just £1 a year in tax.

Meanwhile, the reaction of the British government to the impasse, was not to support the EU in its noble endeavor, but rather to remain on the sidelines in the hope that the situation would play out to their advantage, thus providing them with a potential opportunity to entice Apple with a ‘sweetheart’ ‘investment’ deal. Meanwhile, as Alex Callinicos  pointed out “Apple is playing the EU and the US off against each other over which gets the taxes it hasn’t been paying.”

It’s precisely the logic that overrides these kinds of shenanigans that explains one of the reasons why wealth inequality continues to rise to stratospheric levels, and why governments are witnessing a backlash against globalization. Over the past 40 years, the productive capacity that capitalism has engendered, allied to the ability of successive governments to transfer assets and capital from the public to the private sphere, has created an enormous concentration of wealth at the very top of society.

Britain is a country where armies of lawyers and accountants sift through mountains of legal paper work in order to justify on a legal basis those at the very top paying as little tax as possible. This has happened as a result of the restructuring of rules and regulations which provide corporations with legal loopholes with which to jump through.

In the case of Apple, profits are funneled into a ‘stateless company’ with a head office which, according to EU Commissioner, Margrethe Vestager, “has no employees, premises or real activities.” In other words, Apple’s resident European office for tax purposes doesn’t exist. It has no staff and no location so it doesn’t pay any tax on most of the money it earns outside the United States.

Ireland has been told that it must claw back the £11 bn of back taxes from Apple even though Ireland’s ruling politicians say they don’t want it. This is money which could be spent for the benefit of an electorate who these politicians supposedly represent. Irish finance minister Michael Noonan intimated that individual states, not the EU, are responsible for individual taxation policies. “It’s an approach through the back door to try to influence tax policy through competition law.”, he said.

But what use is a tax policy if it is not intended to benefit human kind? If tax havens like Ireland behave in a way that negatively affects the well being of humans by reducing the resources available to fund services and infrastructure of which the functioning of civil society depends, then such a tax policy is not worth the paper it is written on. Does Ireland look like a country that doesn’t need £11 bn?

Apple’s billions worth of profits generated in Europe and the Middle East are transferred to Ireland where the company pays tax on just 50m euros worth. The rest is sent to their non-existent ‘virtual’ head office. As of 2015, the company’s lightly-taxed foreign cash off-shore mountain of $187bn is the biggest of any U.S multinational.

 

How can Apple defend this state of affairs whilst simultaneously maintaining the moral high ground by claiming that any attempt to prevent such an immoral situation will be bad for the societies in which they operate?

The activities of a virtually non-existent tax-paying company like Apple is already bad for these societies. The reason the masses, as opposed to companies like Apple, are subject to tax at a fixed rate, is because the former, unlike the latter, are not in the financial position to be able to avoid it. Those who are least able to pay taxes are the ones who have it deducted from their wages in full at source.

It’s not the overreaching arm of the EU ‘interfering’ with the tax laws of individual member states that’s the problem, but the fact that multinationals pit one country against another to avoid paying as much tax as possible while availing themselves of everything the rest of us pay for. The ‘race to the bottom’ is one in which corporations are constantly on the look-out to ‘up-sticks’ in the search for ever cheaper tax havens.

The end goal is a scenario in which the corporations pay no tax at all, while the masses pay for civil society because corporations like Apple, Google and Starbucks don’t have to. The upward spiral of money from the many to the few is increasing at a rate of knots due to a form of state-managed capitalism that perpetuates it. Moreover, it is happening to the detriment of the whole of the human race.

Widespread public anger towards this kind of systemic corruption is stymied daily as a result of the distractions associated with TV light entertainment and sports programmes. All this is aided by a largely uncritical corporate-based journalism. The ability of the rich and powerful to lobby governments in support of their own economic narrow interests, often to the detriment of the environment and society at large, exacerbates the problem.

Shortly before becoming the UKs unelected PM, Theresa May, intimated that the Tory government she would go on to lead would instigate greater transparency between government and big business and that she would no longer tolerate the undue influence of corporate power on domestic UK politics and the corruption through the power of lobbying that this implies. However, less than two months later, the Guardian revealed that a £3,150 payment to the government will buy business executives strategic marketplace influence.

The privileging of a tiny minority of the wealthy and corporations in this way, can be regarded as nothing less than the usurping of democracy. The mass of the working poor whose exploited labour creates the wealth from which the rich benefit and who often vote for corporate-funded politicians diametrically opposed to their own interests, is indicative of the propaganda power of a corporate and media-dominated political and economic system.

With a corporate tax rate levied at just 12.5 per cent, Ireland is effectively prostituting itself to Apple who can legally say that legally they are doing nothing legally wrong. The conventional argument goes that if Ireland failed to attract corporations like Apple, then it would be places like Belize, Bahamas or any of the British tax avoidance dependencies who would. But this zero-sum game means that while this situation is great for the CEOs of the corporations and their shareholders, it’s terrible for everybody else.

Because of the unfair competitive advantage the multinationals are able to lever, shops close, factories shut down and local businesses go under. Companies like Apple not only have governments on their side and can buy and manufacture on a vast scale, but they are not subject to the relatively higher rates of tax small businesses are forced to pay.

This situation is compounded by the fact that the typical consumer will tend to look for the cheapest goods and services available which, as a result of economies of scale, the big corporations will be most likely to provide. In such an eventuality, the role that corporations play in society becomes more prevalent at the expense of the small business.

The logical corollary to this is that eventually everything will be sold by a few giant multinational corporations who will come to dominate the marketplace resulting in less choice for the consumer, as well as its monopolization by private capital. This process was predicted by Marx who understood that capitalism was an inherently contradictory system.

In order to gain a competitive advantage over their rivals, capitalists either need to introduce mechanization to speed up the production process, reduce wages or replace their existing workforce with a cheaper one. Here’s where the contradiction comes in: If all capitalists are engaged in this process, their workers will have less and less money so they won’t be able to buy what the capitalists are producing to sell.

The capitalists, therefore, are effectively ‘creating their own gravediggers’ as a consequence of there being less demand in the economy. How has the system managed to have kept going when people don’t have money to buy things? The answer is the emergence and widespread availability of credit. However, the problems of capitalism are now so severe, so systemic, so global, that many people are wondering whether the system is coming to an end.

Is authenticity possible under capitalism?

By Daniel Margrain

williamsburg.jpg

The anti-capitalist slogans ‘The World Is Not A Commodity’ and ‘Our World Is Not For Sale’ which emerged out of the great anti-capitalist demonstrations from Seattle and which many of us take for granted, are tremendously powerful statements about the world. One of Karl Marx’s most profound insights was his understanding of how the workings of the capitalist system is bound up with the process of turning ‘things’ from the ‘productive sphere’ to a ‘consumptive sphere’ realized as commodity value.

For Marx, the notion of turning ‘use values’ into ‘exchange values’ is an inherent feature of capitalism’s drive for the accumulation of capital. Capitalism does not create commodities or markets and, similarly, it does not create money. The problems, as Marx sees them, is not that capitalism brings these things into being, but brings them into being in a particular way that expands and extends the process of capital accumulation through the extraction of surplus value realized as profit.

Over a century and a half ago, Marx grasped the existence of an inherently competitive struggle between rival units of capital to turn increasing spheres of life over to private production and therefore to extend the sphere of commodities which have come to dominate the people that produce them. Formally, capitalists and workers are independent of each other, but in reality inextricably connected.

From the 19th century, production no longer took place in the home but in factories where new systems of discipline operated. For the first time in history, humans came to be defined by how and what they consumed. By turning society and production over to the production of ‘things’ that the direct producers have little or no control over, means that capitalism is an alienating system.

The devaluation of public life increases in direct relation to the increase in the value of the world of things. Real social relationships are governed by an external power which attains control over the individual. In The Economic and Philosophical Manuscripts of 1844, Marx asserts:

“The alienation of the worker means not only that his labour becomes an object, an external existence, but that it exists outside him, independently of him and alien to him, and begins to confront him as hostile and alien.”

Although we make and buy ‘things’, the antagonistic nature of the capitalist market means we are detached and alienated from them and each other. The system produces a world of isolated and egoistic individuals, bound together by calculation and crude monetary terms rather than the establishment of community life. The capitalist system of generalized commodity production is so pervasive that it seems an inevitable and natural condition of humanity.

Commodities acquire social characteristics because individuals enter the productive process only as the owners of commodities. As Marx succinctly put it“the impact of society on the individual is carried out through the social form of things.” This adds another dimension to alienated relationships because “the characters who appear on the economic stage are merely personifications of economic relations. It is as the bearers of these economic relations that they come into contact with each other.”

The notion that human will is separated from the social organization that overrides it and where powers are conferred to inanimate objects, is what Marx meant by ‘commodity fetishism’. It is a process in which “the capitalist mode of production takes over the totality of the individual, family, social needs and, in subordinating them to the market, also reshapes them to serve the needs of capital.” In this way culture is packaged within what appears to be an era of all-pervasive globalization where:

“The local and exotic are torn out of place to be repackaged for the world bazaar. So-called world culture may reflect a new valuation of difference and particularity, but is also very much about making a profit from it.”

Commodities also take on a mystical character. As writer, Kitty S Jones has shown, under capitalism the world has become devalued and society debased. Under these conditions, rather than the state providing services directly, it’s role is to act as a purchaser of public services which are then farmed out to the private sector. Working conditions are unilaterally altered as a result, and the path of individual redress begins and often ends with automated answering services of the great bureaucracies.

The frustration has reached such epic proportions that in those services where staff have to confront the public, they either have to be physically protected by screens or notices have to be posted warning the public of the dire consequences of assaulting staff, as now happens on London buses and tubes. All this is compounded by market-inspired jargon that seems to promise the opposite of this frustration.

The dominance of the cash nexus and privatization within public life is such that trains now carry customers not passengers and nurses tend clients not patients. Bewildering consumer choice is offered by the same few large corporations. The near universal mechanisms supposedly designed to provide accountability and increase public trust through regulation, inspection, target-setting and audit are, in reality, making things worse.

Ira Katznelson outlines the all-pervasive and distorting power of capitalism in relation to cities:

“Capitalism creates the city; the city creates a consciousness that reflects its varied reality; yet that unconsciousness deflects attention away from the primal forces of the capitalist mode of production that underlie the production and functioning of cities. This is the great secret of the capitalist order. Not only does the city give the accumulation process the capacity to secure a spatial fix, it also misshapes class struggle by deflecting it into fetishistic dimensions.”

The result of the direct subordination of cultural production to the priorities of profitable accumulation can be witnessed daily on television. In Britain today – the European vanguard of neoliberalism – government ministers refer to the ‘cultural industries’ without any sense of paradox or discomfort, and the Financial Times has a regular supplement called ‘Creative Business’.

This understanding of culture as part of the profitable accumulation process, is very different from the understanding of cultural theorists such as Theodor Adorno and Max Horkheimer. When, for example, they coined the expression ‘the culture industry’, they intended it as an ironical and critical concept. Nothing seemed to them to be more absurd or contradictory than to reduce the creative process to an industry governed by the same logic of rationalization as any other.

Throughout the public realm, what appears to be the hegemonic subjugation to the market of communities and societies, means that many people are oblivious to alternative narratives which challenge the prevailing orthodoxy of neoliberalism. Postmodernism helps reinforce this consensus view because it seeks to prohibit a discourse of social criticism to the experience of neoliberalism. The high priest of the deconstruction of authenticity, Jean Baudrillard, for example, writes:

“All our problems today as civilized beings originate not in an excess of alienation, but a disappearance of alienation in favour of a maximum transparency between subjects.”

For Baudrillard, critical thought and political struggle have been rendered obsolete in society, not of the spectacle but of simulation where images no longer represent but now constitute reality. Marx’s concepts of alienation and commodity fetishism, however, infer a contrast between an authentic subject and existing social relations that deny it self-realization.

This contrast is implicit in the critique developed during the 1960s by the Situationists of ‘the society of the spectacle’. Situationist Guy Debord writes of “the global social praxis that is split into reality and image” and says that “within a world really on its head, the true is a movement of the false.” The tradition in which the Situationists built on Marx’s theory of commodity fetishism is one, therefore, that’s committed to the idea of pursuing the critique of existing reality as part of the struggle of what Marx called ‘human emancipation’.

The re-emergence of Marx’s concepts of alienation and commodity fetishism in recent years marks the breakdown of the hegemony that postmodernism has exerted over much academic thinking during the last few decades. For Alex Callinicos, postmodernism is predicated on a neoliberal ideological discourse that dovetails in with urban corporate spatial strategies designed to extract value by dissolving the aspiration to authenticity and community through identity politics.

According to Rosalyn Deutsche, corporate planning strategies frequently cast homogeneity and unanimity in the shape of ‘community’ with the goals of consolidating communities and soothing conflicts. The aim is to dissociate democracy from conflict. Conflict is “simultaneously acknowledged and disavowed, a ‘fetishistic’ process whose repercussions generate certitudes about the meaning of public space.” Thus the struggle for authenticity through recognition of identity and differentiation, and the effort to disembody ownership from representation in urban spaces, is the struggle for community and democracy itself.

The community in this sense appear as negative images embroiled within a discursive economy that both masks and legitimizes socioeconomic domination by obliterating difference, inequality and oppression. The merging of ownership and representation as a tool of statement production only serves to extend these operations of power and to further undermine the possibility of resistance.

In this way, corporate structures are able to appropriate representative claims for authenticity and embody them within a framework of ownership that privilege an integrated concept of space distanced from a discourse of threat and conflict. Thus urban spaces can appear to be abstract and neutral allowing urban planners to divorce the urban fabric from class content. So, for instance, the dominant response to the English inner city riots of the 1980s was for better ‘design solutions’ to control social problems rather than on focusing attempts to challenge entrenched socioeconomic relations that gave rise to them.

An inclusive Marxist vision of democracy is one in which, the ‘subject’ as opposed to the ‘commodity’ becomes the universal category. Marx, therefore, is able to transcend the capitalist totality by providing a theoretical basis by which authenticity can be realized without the need to turn to market-based objectified concepts.

In my next article I will examine how misplaced notions of authenticity have influenced the way many of us perceive the Cuban experience

The British establishment corrupt? That’s not cricket, old bean

By Daniel Margrain

A year ago last week (30 July) the then Prime Minister David Cameron met with Prime Minister Najib Razak of Malaysia to talk about corruption in the wake of allegations that nearly US$700 million ended up in the latter’s personal accounts. This followed on the heels of Cameron’s stated commitment to clamp down on corrupt money in the UK.

But on the same day he was lecturing the Malaysian’s about corruption, British corporations claimed that the Bribery Act effectively made it difficult for them to bribe people as part of their ‘normal’ export business practices. Thus, business leaders subsequently appealed to Cameron to reverse legislation that is ostensibly intended to prevent corruption.

The then business secretary, Sajid Javid, invited companies’ to comment on whether the ‘tough anti-corruption measures’ are a ‘problem’. Letters sent by the Department of Business, Innovation and Skills invited industry leaders to comment on whether the act has had an impact on their attempts to export. Does the government invite you to comment, dear reader, about regulations that prevent you from making more money? No, I thought not.

Widespread international criticism of the failure of the UK to reform its ineffective anti-bribery laws – which is regarded as one of the most controversial pieces of legislation passed by the last government – soon followed. The coalition boasted that the Bribery Act was the world’s toughest piece of anti-corruption legislation. But the CBI led fierce criticisms of the bill arguing it would restrict business growth at a time of economic recovery.

The potential impact of the legislation is likely to be felt primarily, but not exclusively by, businesses. Why? Because bribery and corruption is an inherent part of big business deal-making.

On Wednesday’s (August 3) edition of the BBC HARDtalk programme, host Stephen Sackur interviewed Nigeria’s Minister for Power, Works and Housing, Babatunde Fashola. During the interview Sackur repeatedly alluded that the Nigerian government was systematically corrupt. At one point Sackur related an ‘off mic’ incident in which Cameron was said to have berated Nigeria, describing the country as one of the two most corrupt countries in the world.

Apparently it hadn’t occurred to Sackur and Cameron that big business in the UK lobbied against the Bribery Act which was intended to undermine corruption, the implication being that corporations would rather be scraping around in the sewer if there was some money to be made among the filth. For the likes of Sackur and Cameron, corrupt practices are something restricted to what African’s and Asian’s engage in. By contrast, the British establishment thinks of itself as occupying the moral high ground.

Three years ago, Cameron visited one of the most corrupt and authoritarian countries on the planet, Kazakhstan. The leader of that country showered him with gratitude and praise. Kazakhstan’s former police chief is linked to the ownership of £147m-worth of London properties which forms part of the UKs status as a safe haven for corrupt capital. Then there was the Straw and Rifkind affair, the ongoing MPs expenses scandal and the long-running PFI saga that’s crippling the NHS.

Simon Jenkins summarized the malaise and hypocrisy at the heart of the British establishment

“The truth is that hypocrisy is the occupational disease of British leaders. They lecture Africans and Asians on the venality of their politics, while blatantly selling seats in their own parliament for cash. I hope some insulted autocrat one day asks a British leader how much his party has garnered from auctioning honours. The government suppresses any inquiry into corrupt arms contracts to the Middle East. And when does lobbying stop and corruption start? The Cameron government is the most susceptible to lobbying of any in history.”

Given these corrupt practices, the fact that the UK is widely perceived to be the world’s 14th least corrupt country in the world would perhaps come as a surprise to many. The gap between perception and reality is clearly indicative of the distorted way in which the media under report the subtle forms of ‘hidden’ systematic corruption that is embedded in the very fabric of the British state, camouflaged by legislation and cushioned by ‘gentlemen’s agreements’.

In bringing together a wide range of leading commentators and campaigners, David Whyte shows that it is no longer tenable to assume that corruption is something that happens elsewhere; corrupt practices are revealed across a wide range of venerated institutions, from local government to big business.

As Penny Green of Queen Mary University of London, contends, “the network of egregious state and corporate corruption in Britain rivals any in the developing world”. By observing our ‘impartial’ corporate-controlled mainstream media, it’s unlikely one would have arrived at the conclusion that one of the most advanced capitalist countries on the planet is also inherently corrupt.

 

A victory for Brexit is unlikely to change anything in the near future

By Daniel Margrain

 

For all those who thought that a Brexit vote in Thursday’s (June 23) highly anticipated and drawn -out referendum campaign will result in closure, might need to think again. In legal terms, the referendum is advisory rather than mandatory. What happens next is a matter of politics, not law – a determination that’s dependent upon whether the government decides to invoke Article 50 of the Lisbon Treaty.

To put it another way, the government doesn’t necessarily have to pay attention to what the British public says. What will happen on Thursday is that we, the British electorate, will effectively be advising and giving our opinion which doesn’t make the decision to leave, if that is indeed the outcome, necessarily legal. If we vote in a way that Osborne and Cameron disagree with, the government will almost certainly reconsider the result, particularly if the outcome is close.

Say, hypothetically, the turnout is 50 per cent and 51 per cent of that 50 per cent voted to leave, it would mean that 25.5 per cent of the electorate would have made the decision to leave which would adversely impact on the remaining 74.5 per cent. In other words, if something similar to this hypothetical situation did arise it would not, the government could argue, be indicative of a mandate to leave. Given how close the result is predicted to be, the vote tomorrow is unlikely to be the end of the matter, but merely the beginning of a long and drawn out process that will likely continue until the electorate arrives at a decision that Cameron and Osborne regard as acceptable.

As the Financial Times puts it:

What happens next in the event of a vote to leave…. will come down to what is politically expedient and practicable. The UK government could seek to ignore such a vote; to explain it away and characterise it in terms that it has no credibility or binding effect (low turnout may be such an excuse). Or they could say it is now a matter for parliament, and then endeavour to win the parliamentary vote. Or ministers could try to re-negotiate another deal and put that to another referendum. There is, after all, a tradition of EU member states repeating referendums on EU-related matters until voters eventually vote the “right” way.

What matters in law is when and whether the government invokes Article 50 of the Lisbon Treaty. This is the significant “red button”. Once the Article 50 process is commenced then Brexit does become a matter of law, and quite an urgent one. It would appear this process is (and is intended to be) irreversible and irrevocable once it starts. But invoking Article 50 is a legally distinct step from the referendum result — it is not an obligation.

There are three points of interest here in respect of any withdrawal from the EU by the UK.

First, it is a matter for a member state’s “own constitutional requirements” as to how it decides to withdraw. The manner is not prescribed: so it can be a referendum, or a parliamentary vote, or some other means. In the UK, it would seem that some form of parliamentary approval would be required — perhaps a motion or resolution rather than a statute. The position, however, is not clear and the UK government has so far been coy about being specific.

Second, the crucial act is the notification by the member state under Article 50(2). That is the event which commences the formal process, which is then intended to be effected by negotiation and agreement. There is no (express) provision for a member state to withdraw from the process or revoke the notification. Once the notification is given, the member state and the EU are stuck with it.

And third, there is a hard deadline of two years. This is what gives real force to Article 50. The alternative would be the prospect of a never ending story of rounds of discussions and negotiations. Once notification is given, then the member state is out in two years, unless this period is extended by unanimous agreement. It is possible that such unanimity may be forthcoming – but this would be outside of the power of the member state. Once the button is pushed, the countdown cannot just be switched off by a member state saying it has changed its mind, or by claiming that the Article 50 notification was just a negotiation tactic all along. That will not wash.

This said, what is created by international agreement can be undone by international agreement. Practical politicians in Brussels may come up with some muddling fudge which holds off the two year deadline. Or there could be some new treaty amendment. These conveniences cannot, however, be counted on. The assumption must be that once the Article 50 notification is given, the UK will be out of the EU in two years or less.

What happens between a Leave vote and any Article 50 notification will be driven by politics. The conventional wisdom is that, of course, a vote for Brexit would have to be respected. (This is the same conventional wisdom which told us that, of course, Jeremy Corbyn would not be elected Labour leader and that, of course, Donald Trump would not be the Republican nominee.) To not do so would be “unthinkable” and “political suicide” and so on.

And if there is a parliamentary vote before any Article 50 notification then there is the potential irony of those seeking to defend parliamentary sovereignty demanding that an extra-parliamentary referendum be treated as binding. But it must be right that the final decision is made by parliament, regardless of what the supposed defenders of parliamentary sovereignty say.

What is certain is that if there is an Article 50 notification then there will be immense legal work to be done. Over 40 years of law-making — tens of thousands of legal instruments — will have to be unpicked and either placed on some fresh basis or discarded with thought as to the consequences. The UK government has depended since 1972 — indeed it has over-depended — on it being easy to implement law derived from the EU. The task of repeal and replacement will take years to complete, if it is ever completed. Even if the key legislation — especially the European Communities Act 1972 — is repealed there will have to be holding and saving legislation for at least a political generation.

A vote for Brexit will not be determinative of whether the UK will leave the EU. That potential outcome comes down to the political decisions which then follow before the Article 50 notification. The policy of the government (if not of all of its ministers) is to remain in the EU. The UK government may thereby seek to put off the Article 50 notification, regardless of political pressure and conventional wisdom.

There may already be plans in place to slow things down and to put off any substantive decision until after summer. In turn, those supporting Brexit cannot simply celebrate a vote for leave as a job done — for them the real political work begins in getting the government to make the Article 50 notification as soon as possible with no further preconditions.

On the day after a vote for Brexit, the UK will still be a member state of the EU. All the legislation which gives effect to EU law will still be in place. Nothing as a matter of law changes in any way just because of a vote to Leave. What will make all the legal difference is not a decision to leave by UK voters in a non-binding advisory vote, but the decision of the prime minister on making any Article 50 notification.

And what the prime minister will do politically after a referendum vote for Brexit is, at the moment, as unknown as the result of the referendum itself.

Britain’s high-debt, low-productivity economy spells long-term disaster

By Daniel Margrain

The collapse of the Berlin Wall which was the trigger that brought the totalitarian dictatorships of the former Soviet Union and those of its satellite states to their knees, came to symbolize for many the triumph of capitalist free market democracy over tyranny and oppression. An adviser to the US State Department, Francis Fukuyama, received international acclaim in 1989 when he reiterated this message by declaring, no less, that the collapse of communism was ‘the end of history‘. Great social conflicts and great ideological struggles were said to have been a thing of the past. Numerous newspaper editors and television presenters agreed.

A little over a decade after Fukuyama made his famous declaration, Islamist terrorists attacked the Twin Towers in New York. The attack was, in part, the result of Wahhabism’s ideological opposition to Western imperialist hegemony. Numerous imperial wars have been launched against Muslim countries since. Thus, Fukuyama’s thesis was trounced on a single day back in September 11, 2001. Anthony Giddens, the former director of the London School of Economics and court sociologist to Britain’s then New Labour Prime Minister, Tony Blair, repeated a similar message to that outlined by Fukuyama in his 1998 book, The Third Way.

Giddens  said“We live in a world where there are no alternatives to capitalism.” He was accepting and repeating a widespread but unsustainable assumption. The earliest merchant-form of capitalism began to emerge in the 17th century and industrial forms of capitalist production developed from the late 18th century. The organizing of the whole production of a country by capitalist means is barely three centuries old. It only began to become a dominant feature in terms of the universal dependence on markets some 60 or 70 years ago. Yet modern humans evolved about 200,000 years ago. In other words, what Giddens argued is that a capitalist economic system which represents a tiny fraction of our species’ life-span is set to last for the remainder of it.

Leaving aside the possibility of global catastrophe resulting from climate change or nuclear war, the notion that capitalism will continue to exist indefinitely into the future, is highly improbable. As the saying goes, ‘forever is a long time in history’. In just under two decades following the publication of The Third Way, capitalism has transformed into a finance-based neoliberal variant predicated on a form of systemic corruption underpinned by booms that zap productivity. The reason why financial booms impact on productivity in this way is in part the result of too much capital being mis-allocated to low productivity sectors which crowds out real economic growth.

Company buybacks illustrate this practice. Take Viacom as an example. The company issued debts of £10 billion and then bought back the shares which had subsequently reduced in value by 55 per cent. Similarly, Amazon issued £5 billion of debt prior to announcing they would also engage in this highly unethical practice. Issuing debt in order to buy-back stock implies an inability to grow companies organically. Rather, increasingly, the approach seems to be to boost the stock price artificially by a process of financial engineering. The problem is that levels of industrial production, the latest figures of which indicate a 0.3 per cent fall from the previous month, are not sufficient to support these kinds of debts.

Another illustration of the mis-allocation of capital to a low productivity sector, is in the realm of housing. Essentially, the UK economy is based on speculative-based property booms that are sustained through zero interest rates. This means that banks have access to almost unlimited credit which enables them to finance enterprises risk-free, underwritten by the tax-payer. The Conservative government under PM David Cameron is not investing in the productive parts of the economy but in financial ‘bubbles’ of which housing plays a significant part.

UK Chancellor, Gideon Osborne’s ‘help to buy scheme’ in which the UK tax-payer provides 40 per cent of the deposit for first-time house buyers, is clearly a policy aimed at the potential Tory voter in London. Many of the properties purchased will be used for the rental market as speculative investments thus boosting the housing bubble. Meanwhile, people who are part of the productive economy and make London tick, are steadily being priced-out and socially cleansed from the city. This is contributing to the decline in UK industrial output which has seen its biggest fall since August 2013. More importantly, this has impacted negatively on the UK’s trade deficit figures which are one of the highest, as a percentage of GDP, of any country within the OECD.

To emphasize this point, the UK’s trade gap with the European Union increased to a record high of £8.6 billion. The government’s suppose aim of re-balancing the economy by allegedly supporting its productive parts, is contradicted by its creation of risk-free speculative property bubbles of the kind described. The concept of free-market capitalism is supposed to be predicated on incentives, not state sanctioned socialism for the wealthy as the means to prop-up unsustainable economic bubbles. Yet the corporate controlled media, with their lurid headlines, continuously promote the latter.

The government’s subsidizing of house purchases is unhealthy for the medium to long-term economic well-being of the country as a whole. The subsidized property speculation bubble outlined is part of a centrally-planned Tory policy, no different in principle, to the socialist planned economies of the former Soviet Union and its satellite states that ‘the end of history’ allegedly supplanted. Low productive sectors within the UK have a knock-on effect in terms of the broader economy which is destined to decline as a result. This is because more needs to be produced for the pound sterling in order to counteract the affects of subsidized speculation which adds no value to the economy.

This principle also applies under conditions in which global investors pour money into government bonds which currently result in negative yields to the tune of some $6 trillion and growing. The infusion of greater amounts of subsidized money into the London economy runs counter to the government’s stated argument that they intend to diversify the wider economy by spreading investment throughout the UK as a whole. As a consequence of the Tory policy of socialism for property speculators, house prices in London are the most over-valued of any major city in the world.

Nevertheless, as long as potential property buyers and those already on the ladder in London have a perception that their homes are worth more than is actually the case, they will more likely be inclined to vote for the kinds of politicians who will perpetuate the bubble by continuing to offer some first-time buyers an injection of a huge cash-free gift as part of their deposit. If this was indeed the Tory plan prior to the London Mayoral election in order to assist the Tory candidate, Zac Goldsmith, then the strategy failed miserably. Whether Labour’s newly elected Mayor, Sadiq Khan, will attempt to scupper any moves by Jeremy Corbyn to put a break on the Tory’s high debt-low productivity economy policy, in order to further his broader opportunistic political ambitions, remains to be seen.

SPeye Joe (Welfarewrites)

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