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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21st Century Victorian Holocausts

By Daniel Margrain

 

Author Milan Kundera’s aphorism that “the struggle of man against power is the struggle of memory against forgetting”, might well have been written for the starving, poor, sick, mentally ill and disabled whose suffering the vast majority of the political-media class are attempting to wipe from the pages of history.

One rare exception is the Daily Mirror who occasionally report on the plight of world’s “unpeople”. I will never forget, for example, their courageous coverage of the Iraq WMD debacle or the fact they were the only corporate daily paper at the time to give prominence to John Pilger’s insightful journalism. Also, to their credit, shortly before the last General Election, they availed their readers of the attempts by the Tories to cover-up rates of suicide among Britain’s sick and disabled people who the government deem fit for work.

The Mirror’s revelations underpinned the Department for Work and Pensions (DWP) refusal to release figures highlighting the number of Incapacity Benefit and ESA claimants who had died between November, 2011 and May, 2014. It was only after concerted political pressure from below that the government were eventually forced into releasing the information by the Information Commissioner (IC).

The DWP Secretary at that time, Iain Duncan Smith, who admitted that his department have a “duty of care” to benefit claimants, disingenuously insisted that there was no evidence of a ‘causal link’ between the governments work capability assessment (WCA) and the subsequent 590 recorded deaths from suicide.

This was contradicted by the coroners findings which stated that all of the deaths “certainly aren’t linked to any other cause”. It was subsequently revealed that WCA assessors “used psychological ‘nudge’ techniques to push the mentally-ill and those with disabilities towards suicide in order to reduce the ‘burden’ on society caused by these “useless eaters”.

The recorded figures of avoidable deaths resulting from the attempts by WCA assessors to ‘nudge’ people off benefits towards work, almost certainly represents the tip of an enormous ice berg.

In an an attempt to humanize some of those who died in this way, concerned citizens have recorded the personal details of some of the individuals and the circumstances that led to their untimely deaths. This information can be viewed here, here, here and here. It’s particularly shocking to this writer that in Britain in 2017 many of those listed died of starvation.

Deception

The recent personal testimony of commentator Stewart Bailey provides a graphic insight into how assessors are encouraged to push claimants off-benefits towards serious hardship. Mr Bailey’s account which highlights a series of misrepresentations and falsehoods made by assessors in relation to his health condition, is supported by the findings of the Disability News Service (DNS) who have collected evidence as part of a lengthy investigation.

The DNS allege widespread dishonesty by assessors working for the outsourcing giants Capita and Atos. Claimants spoke repeatedly of dishonesty, “fraudulent conduct” and “lie after lie after lie” told by assessors in their reports, on which DWP decision-makers based their decisions on their eligibility for Personal Independence payments (PIPs).

This comes on top of the introduction (April 6, 2017) of the governments policy to reduce tax credits to families with two children meaning 116,000 households will be affected pushing an additional 387,000 children into poverty. Levels of welfare payments in the UK are so low that they have been described by the Council of Europe as “manifestly inadequate“.

The DNS findings also come a few days after their revelation of new plans which indicate that the Tory genocide against the sick and disabled is set to accelerate. The news service have revealed that new government reviews into PIPs means that disabled people are constantly in fear of having their payments cuts or, worse, halted.

The DNS point out that nearly half (45%) of PIP claimants who had a planned review of their award in 2016 either saw it cut or lost it entirely based on the absurd pretext that cutting benefits to the long-term disabled will help them into work.

Joe Whittaker, chair of Greater Manchester Coalition of Disabled People, said: “The imposition of yet another stage in the already oppressive process to ‘support disabled people into employment’, cynically named a ‘health and work conversation’, is another pernicious attempt to weaken the rights of disabled people.”

Caroline Richardson, one of the authors of a report on last years green paper for the Spartacus Network of sick and disabled campaigners published last month (March, 2017), said the plans show “a total ignorance of the level of sickness or disability that the claimant may be experiencing, and will subsequently lead to huge stress and deprivation at what may be a crisis point in people’s lives”.

The Spartacus report accused ministers of using the green paper as a “smokescreen” to disguise their intention to cut support and force sick and disabled people into inappropriate work.

Life unworthy of life

While all decent people rightly regard this ‘involuntary euthanasia’ strategy to be deeply shocking, it should be noted that it is far from being a new one. Years before moving towards explicit racial genocide, the Nazis developed the notion of ‘useless mouths’ or ‘life unworthy of life’ to justify their killing of ‘undesirables’ who like the Tories they regarded as a ‘drain on society’ whose value was measured solely in terms of their perceived negative impact on the ‘taxpayer’.

These ideas are a variant of nineteenth century ‘Social Darwinism’ and eugenicist theories, which adapted Darwin’s notion of the survival of the fittest to describe relationships within society or between nations and races as a perpetual evolutionary struggle in which the supposedly weaker or defective elements were weeded out by the strongest and the ‘fittest’ by natural selection.

Off benefits into coffins

Following Duncan Smith’s resignation over a scandal in which people are being pushed off benefits into coffins, many people were hopeful of a change in policy direction under his successor, Stephen Crabb. But these hopes were soon dashed after the latter announced a further six years of “welfare reforms” (euphemism for £12 billion of cuts to the most in need).

What independent journalist, Mike Sivier, correctly, in my view, described as a preventable “war of attrition” amounts to an ideological attack on those who are least able to defend themselves. This war is continuing under the current DWP minister, Damian Green, after it was recently revealed that the government reversed Tribunal rulings that would have extended financial support to 160,000 people with disabilities.

The attempts by the Tories to humiliate and inflict immense suffering on the weakest in society, is what film-maker Ken Loach described as the British governments “conscious cruelty” towards them.

Historical continuum

The ethnic cleansing of the poor by stealth is not, of course, limited to British citizens but forms an integral part of an historical continuum that extends throughout the world. The Nazi Genocide was an extreme version of the ruling classes attitude towards ‘undesirables’.

The symbiosis that exists between the UK government, M15/6, the vice-chair of the BBC Trust and British arms manufacturer, BAE Systems (ie the industrial-military complex or ‘Deep State’), is a contemporary expression of how this ‘conscious cruelty’ is being played out in relation, for example, to the killing fields of Yemen.

UK arms sales to Saudi Arabia exceed the amount given in aid to Yemen by a factor of ten and is indicative of how imperial power, whose corollary is the industrial-military complex, is actively complicit in a famine that is engulfing the country. As Chris Murphy, citing a Huffington Post article, put it: “I feel like a broken record, but please read this – we are plunging Yemen into famine – on purpose.” Even the Economist concedes that famine which is menacing millions of people throughout the country, is a consequence of war, not drought.

Not only is the UK government providing the Saudi regime with the BAE bombs that are being dropped on Yemeni civilians but, as historian Mark Curtis has shown, it has a long collaborative history of training and funding Jihadist Islamist groups in its various proxy wars in countries that include Libya, Iran, Pakistan, Kosovo, Afghanistan, Azerbaijan and Bosnia. The famine in Yemen is directly linked to the UK governments collusion with radical Islam as part of its strategy to extract resources from the country.

Expendable

In essence, the poor and weak are viewed by imperial power as nothing more than expendable objects to be dehumanized, stigmatized and exploited as part of the imperial game of profit maximization. Whether it’s the culling of ‘useless eaters’ in Britain, the historical asset-stripping of Africa, the contemporary conflicts in Syria and Iraq or the famine in Yemen, the principles and objectives are invariably the same – the theft of resources, the exploitation of the poor and weak and the undermining of basic human rights.

These ideas would not have come as any surprise to the politicians of the Victorian era who would have shared with Tory Work and Pensions Secretary, Damian Green, Chancellor, Philip Hammond and Secretary of State for Defence, Michael Fallon, an ideological commitment towards ending ‘welfare dependency’ and promoting ‘humanitarian interventionism’ and the ‘responsibility to protect’. Then, as now, lofty sounding morals are regularly evoked.

One of Hammond’s prominent 19th century counterparts was ‘India’s Nero’, Lord Lytton. Like Hammond, Queen Victoria’s “favourite opium-smoking poet”, vehemently opposed efforts to interfere with “market forces”. In 1877-78 Lytton rubber-stamped the export of a record amount of wheat grain to Europe rather than relieve starvation in India.

During the late 19th century, India, under Lytton, had effectively become a Utilitarian laboratory where millions of lives were wagered against dogmatic faith in omnipotent markets overcoming the “inconvenience of dearth”.

Free market zealot

A similar Utilitarian laboratory had been established by Britain in Ireland during this late Victorian period. Under the tutelage of free market zealot, Chancellor Lord Charles Trevelyan, the Irish famine ‘relief effort’ was put into place that resulted in a politically-induced genocide no different in principle to the ‘cheque book euthanasia’ policy of the modern day Tories.

The tragedy of the famine is commemorated each year by people from all over the world. Later next month (May 20, 2017), those gathered will descend on the beautiful County Mayo coastline in the west of Ireland to take part in the ten mile Famine Walk from Doo Lough to Louisburgh – the town where on the night of March 30, 1849, hundreds of starving people arrived seeking relief and workhouse shelter.

They were met at the shelter by the local Poor Law guardians whose role was to ‘inspect’ them as certification for their ‘official pauper’ status. This would then supposedly entitle them to a ration of food to be eaten the following morning at a fishing establishment called Delphi Lodge owned by the Marquess of Sligo, ten miles away.

Many didn’t arrive at their destination having died from exposure to the harsh elements or through starvation. The few that did make it were refused the relief they were told they were entitled to and they died on their homeward journey, with the bodies remaining where they fell.

Such tragedies were common in Ireland in the mid-19th century. By 1871 the population of the country had halved, with at least 1.5 million dead. Two million fled to America, many of them dying during the voyage or on arrival. The historian and critic, Terry Eagleton, describes the famine as “the greatest social disaster of 19th century Europe, an event with something of the characteristics of a low-level nuclear attack.”

In echoing the kind of detached but scornful class-based attitude the contemporary ruling elite have towards their working class minions Trevelyan, in a rather casually racist manner, said of the Irish:

“The great evil with which we have to contend, is not the physical evil of the famine, but the moral evil of the selfish, perverse and turbulent character of the people.”

Pleading

Lord Clarendon, an establishment Anthony Wedgewood (Tony) Benn, of his day, pleaded with the Liberal PM, Lord Russell to intervene, stating:

“Surely this is a state of things to justify you asking the House of Commons for an advance. For I don’t think there is another legislature in Europe that would disregard such suffering as now exists in the west of Ireland, or coldly persist in such a policy of extermination.”

Clarendon’s call for Russell to intervene wasn’t heeded and neither were similar calls to prevent famines in other nations during the Victorian colonial era – China, India, Egypt, Korea, Brazil, Russia, Ethiopia and Sudan. In the latter two countries alone, an estimated one-third of the populations died.

The European empires, together with Japan and the United States, rapaciously exploited the opportunity to wrest new colonies, expropriate communal lands, and tap novel sources of plantation and mine labour. As Mike Davis points out:

“What seemed from a metropolitan perspective the nineteenth century’s final blaze of imperial glory was, from an Asian or African viewpoint, only the hideous light of a giant funeral pyre. The total human toll…could not of been less than 30 million victims. Fifty million dead might not be unrealistic.”

Resonates

The famines of the Victorian era continue to resonate today throughout Africa. Then, as now, they were a symptom of social and economic policies that result in unnecessary deaths. Even in the 19th century this was well understood.

The radical journalist and humanitarian, William Digby, principal chronicler of the 1876 Madras famine, as well as famed naturalist, Alfred Russel Wallace, for example, both viewed mass starvation as an avoidable political tragedy not ‘natural’ disaster. Published in 1898, Wallace characterized the famines in India and China, together with the slum poverty of the industrial cities, as “the most terrible failures of the century.”

Millions died, not outside the capitalist system but in the very process of being forcibly incorporated into its economic and political structures. Indeed, they were killed by the theological application of the sacred principles of Smith, Locke, Hobbes, Bentham, Malthus and Mill in much the same way as hundreds, or perhaps even thousands, of today’s poor, mentally ill and disabled have, under the Tories, died as a result of the neoclassical economic Chicago School’s application of the sacred principles of Friedman and Stigler.

The consensus view among the ruling class of the Victorian era was that famine was deemed to be a morally justifiable “salutary cure for over-population.” Today, over three million of the world’s children die needlessly from hunger. Indebted countries are forced to export food as a “free-market” commodity while the producers are denied their own produce and many of them go hungry, and their children starve.

That is what happened in Ireland and India. In Trevelyan and Lytton’s day it was known as Liberalism. Today it is known as ‘neoliberalism’. “England made the famine”, wrote the Irish socialist, James Connolly, “by a rigid application of the economic principles that lie at the base of capitalist society.”

In essence, nothing has changed. The ruling class attitude towards the poor and sick who suffer as a result of the political consequences and actions of those who rule over them, is as deeply embedded today as it was a century and a half ago.

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.