I hate to admit this, but Hammond’s proposed increase in national insurance contributions (NICS) for the self employed wasn’t such a bad idea.
It would have been a modest, progressive increase in the national insurance contributions paid by the better-off self-employed while abolishing the £2.85 per week flat-rate contribution paid by those earning less than £16,250.
It would have raised a much-needed £2 billion in a relatively fair way, recognising that structure of NICs is a major driver in the growth of self-employment. An employer who can persuade a worker to become a self-employed contractor immediately saves paying 13.8% national insurance, while the newly self-employed contractors’ payments fall from 12% to 9%.
From the US SocialistWorker.org website (nothing to do with the UK SWP):
Trump has won some support among workers and even unions with his proposals around trade, but is this billionaire really on their side?
explains why not.
PERHAPS IT’S foolish to take anything Donald Trump says as an articulation of core principles or beliefs. But this passage from his inaugural address hit many like a bolt of lightning:
From this day forward, a new vision will govern our land. From this moment on, it’s going to be America First.
Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families. We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs. Protection will lead to great prosperity and strength.
I will fight for you with every breath in my body–and I will never, ever let you down. America will start winning again, winning like never before.
This appeal to economic nationalism is very much in line with his “Make America great again” campaign theme. But for those whose political memory goes back a little ways, “America First” means something very specific and very problematic.
In the late 1930s, the Roosevelt administration was increasing its support for an interventionist foreign policy that would assert the U.S. on a world level. After the Second World War started in 1939, the administration lent massive amounts of military aid to Britain, with the intention of drawing the U.S. into the conflict.
From the late 1930s up to the Japanese attack on Pearl Harbor, Hawaii, in December 1941, a substantial sentiment against U.S. intervention in the European war developed. While on the whole sincerely opposed to a repeat of the imperialist slaughter of the First World War, the anti-intervention mood also intersected with an isolationist, rather than internationalist, approach to the coming conflict.
So when a number of college students–including future Republican President Gerald Ford, future Supreme Court Justice Potter Stewart and future Democratic vice presidential candidate Sargent Shriver–along with leading capitalists issued a call to form an “America First” committee to keep the U.S. out of the European war, hundreds of thousands responded.
America First also called for a U.S. military buildup to defend the continental U.S.–a policy that came to be known as “Fortress America.”
The banner of “America First” was also embraced by supporters of the anti-Semitic “radio priest” Father Charles Coughlin, along with fascists and sympathizers with the Nazi regime in Germany. In speeches for the America First committee, the aviator Charles Lindbergh contended that Britain and Jews were the main advocates for U.S. intervention in the war, and that the interventionists’ main aim was to defeat Germany.
Other mainstream political figures–like Joseph Kennedy, ambassador to Britain and father of future U.S. President John F. Kennedy–shared the “America First” outlook. He contended that Germany was too strong, and that Britain and U.S. should make peace with the Nazis.
After the Japanese attack on Pearl Harbor and the subsequent U.S. intervention, America First organizations collapsed. The U.S. emergence from the war as a global superpower marginalized support for the “American First” outlook of staying out of foreign entanglements while building a “Fortress America.”
In the 1990s and 2000s, far right, anti-Semitic pundit and presidential candidate Patrick Buchanan carried the “America First” torch for a while. Then Trump came along.
– – – – – – – – – – – – – – – –
THIS BRIEF history of “America First” politics provides a context for Trump’s rhetoric. It also shows that, far from being a common sense advocacy for ordinary people in the U.S. versus global elite, the slogan drags along more than its share of historical baggage. It wasn’t accidental that Trump’s presidential proclamation on Holocaust Remembrance Day failed to mention the genocide of European Jewry.
Trump’s America First policy asserts that “[e]very decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families.”
That rhetoric sounds radical, especially when compared to that of the last generation’s status quo, when most decisions on trade and foreign affairs did little for U.S. workers and their families. For most of the last generation, politicians–both Democratic and Republican–have told us that global trade is like a force of nature, which the U.S. economy can only adapt to, not control.
This notion of globalization operating outside the influence of the world’s most powerful government was always false. U.S. state policy undergirded the bipartisan regime of free trade and the U.S. global military projection. As that purveyor of “flat-world” banalities Thomas Friedman once put it, “McDonalds cannot flourish without McDonnell Douglas.”
If Trump’s tumultuous first week showed anything, it showed just how much governmental action can shift the terms of engagement and debate on these questions.
Given that decades of corporate, governmental and institutional practices are invested in the neoliberal regime, it remains to be seen whether any or all of Trump’s actions will be sustained as new policies for the long run. But in the immediate term, they present our side with a tremendous set of challenges.
– – – – – – – – – – – – – – – –
THE FIRST of these is assessing whether they are reality-based or not. Millions of people–among them supporters of Bernie Sanders–would agree with the sentiment of protecting “our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs,” whether or not they agree with Trump’s rhetoric.
Yet the empirical evidence that trade arrangements–like the North American Free Trade Agreement (NAFTA) or China’s accession to the World Trade Organization (WTO)–are the main culprits in the decline of U.S. manufacturing jobs and workers’ standards of living is thin.
The liberal University of California-Berkeley economist J. Bradford DeLong calculates that of the decline in U.S. manufacturing employment since 1971 that is greater than that experienced by other industrial powers undergoing similar structural economic shifts, only one-tenth of even this extra amount can be attributed to NAFTA and trade with China.
Nevertheless, we know that during the same period, living standards for workers in the U.S.–and not just those in manufacturing–stagnated. In real terms, the median U.S. household income is no higher than it was in the early 1970s.
Clearly something is wrong in the U.S. economy, and no amount of statistical modeling is going to convince people that they should just accept it. So when figures as diverse as Trump and Sanders point to global trade deals as the culprit for declining living standards, they at least have the merit of relating to people who know–unlike the Friedmans and the Clintons–that not all is right with the neoliberal world.
Trump promotes the notion that other countries are “ripping off” the U.S. through unfair trade deals. But this inverts reality.
One drastic effect of NAFTA has been the destruction of small farming in Mexico when that sector was forced into unfair competition with U.S. agribusiness. By some estimates, more than 1 million farmers have been driven from the land. Many of the victims moved to Mexican cities or crossed the border into the U.S. without documents to find work.
“Free trade” agreements like NAFTA are engineered for the benefit of U.S. business, as levers to pry open sectors of other countries’ economies to investment and services in the first instance.
Second, they allow for the free movement of capital across borders, but not the free movement of labor. In fact, the era of NAFTA coincided with a huge increase in “border security” and repression that produced a record number of deportations–more than 2 million–under the Democratic Obama administration.
That aspect of “Fortress America”–repression at the border–is already in place. Trump proposes to increase it. But the record should show that free trade policies didn’t put out a welcome mat to immigrants, either.
– – – – – – – – – – – – – – – –
OUR SIDE will continue to analyze the economic ramifications of Trump’s policies, but we’re faced today with what to do about the political challenges they represent.
In this case, there is a more complicated test for the left. Trump’s protectionism and rhetoric about bringing manufacturing jobs back to the U.S. have already won praise from union leaders like Teamsters President James Hoffa. Hoffa and other labor officials likewise hailed Trump’s executive order aimed at restarting the Keystone XL and Dakota Access Pipeline projects that activism forced the Obama administration to shelve.
After a White House meeting with Trump, North American Building Union President Sean McGarvey declared, “We have a common bond with the president” and that “We come from the same industry. He understands the value of driving development, moving people to the middle class.”
In speaking to reporters, McGarvey and Laborers President Terry Sullivan–whose unions both endorsed Hillary Clinton for president–pointed out that they had never been invited to a White House meeting in the eight years of Obama’s presidency.
But there’s something else besides the Democrats’ neglect behind the labor leaders’ cozying up to Trump and his America First program: It gives them an alibi for their failures to do much of anything to reverse the long-term decline of their organizations and to protect their members from worsening conditions.
Those problems stem from anti-union U.S. employers and anti-labor U.S. politicians, not overseas competitors or immigrants.
Hoffa, for example, has a long record of cooperating with employers while bargaining away the rights and benefits of rank-and-file Teamsters.
For the likes of Hoffa, it’s much more convenient to blame international competition or Mexican truckers for eroding wages and conditions than to confront U.S. employers–even ones, like UPS, making record profits. Joining with Trump under the banner of “America First” won’t change Hoffa’s behavior at all.
Labor leaders like Hoffa give Trump the cover to paint his economic program–which in reality is based on tax cuts for the rich, allowing corporations free reign, and selling the U.S. as a low-wage economy–as “populist” and pro-worker. And they lend legitimacy to an administration intent on attacking whole sections of the working class, including immigrants and the undocumented.
Any labor union or worker who signs up with Trump’s “America First” program will find out that–rhetoric aside–Trump will put them last.
Thanks to Joe Allen for help with this article.
Illustration: Martin Rowson (Guardian)
By John Rogan
It amazes me that there are many Labour MPs who say there is a “Tory Brexit” and a “Labour Brexit”. The implication is that the present Govt can somehow choose and implement whatever Brexit conditions they want with the EU27. This helps feed the delusion, on both the Left (Corbyn) and Right (Watson), that Labour could, somehow, negotiate a Soft Brexit. That the EU27 would be much kinder to a Labour government for some reason.
A Soft Brexit is just not going to happen. The leadership of EU27 have enough internal headaches (Le Pen, AfD and Freedom Party) this year to ensure that, if they wish to hold the line against the eurosceptic Far Right, there will be no concessions to the UK. Brexit means Brexit means Hard Brexit.
Now we have Trump whose possible EU Ambassador, Ted Malloch, seems to gleefully want to see the EU finished. After all, a much weakened EU (or no EU) would help the “America First” agenda of Trump.
This would also help the agenda of Putin who wishes to exert greater control in Eastern Europe.
The Trump-Putin Pact (wanting to split, weaken and carve up Europe) is another perfectly good reason for EU27 sticking to a Hard Brexit – especially a need for the defence of Eastern Europe.
Theresa May is actually correct in her sucking up to Trump and Erdogan. If we leave the EU on a Hard Brexit (which we will) then grovelling for some crumbs at their tables is all we will be good for.
And that is the question Corbyn, Watson and McDonnell have to answer. After a Hard Brexit, who should the UK deal with in trying to get good trade deals? How will we be able to do it?
If you oppose Trump, you have to oppose Brexit.
2nd November, 2016
Above: Clive Lewis
Dear Rt Hon Greg Clark MP,
I am writing to request a meeting with you to discuss the details and broader implications of the assurances given to Nissan regarding their decision to build its new models in Sunderland.
In your statement to the House of Commons on 31st October 2016 you said that the company’s decision was based on general commitments with regards to skills, supply chains, R&D and tariff free access to the single market, set out by you in a personal letter to Carlos Ghosn, Nissan’s CEO.
Responding to my request that you publish this letter, you then said you were unable to because it contained sensitive information, the disclosure of which might harm Nissan commercially.
While I find it difficult to understand why you would be relaying such information to Nissan if all assurances given to them were general ones, I am prepared to take you at your word and respect your duty to prevent commercially sensitive information going public.
I also note, however, your call for a bipartisan approach to developing an industrial strategy to steer our country through the challenges of Brexit. I heartily welcome this call as a way to build on our mutual understanding of the challenges ahead, and realise our shared commitment to ensuring we meet them.
Labour have welcomed your Government’s recent acknowledgement that our economy is too heavily weighted towards the financial sector in London and the South East, and that we need an active industrial strategy to revive our regions and bolster our manufacturing sector by nurturing new technologies and taking advantage of new markets. Following the EU referendum, this must be achieved in the context of a radically changing business environment that potentially threatens our international competitiveness.
We have taken pleasure in joining you to celebrate Nissan’s decision to continue producing in the UK. But Nissan is just one in thousands of companies who will be deciding whether to invest in the UK in the coming months. Like Nissan, these companies make an incredibly valuable contribution to our economy, and their loss would have devastating consequences for employees and supply chains up and down the country. It is vital that your industrial strategy, and your Government’s handling of Brexit, satisfies the needs of these companies as much as they do Nissan’s. Subjecting these policies to close scrutiny by the public’s elected representatives will be key to ensuring that they do.
In light of this, I am sure you will appreciate the predicament I find myself in. In the last few days, you have hinted at vital aspects of your Government’s industrial strategy and approach to exiting the EU, but you have left myself, my party, and Parliament as a whole, without adequate information to do our job in opposition and scrutinise these crucial areas of policy effectively. It is the country as a whole that suffers from such a state of affairs.
I therefore ask you to meet me in person, as a matter of urgency, so that we can discuss the content and scope of the assurances given to Nissan in more detail. As part of this discussion, I do not think it is unreasonable to request a private viewing of the disputed letter, and would happily agree to the commercially sensitive areas being redacted.
I would like to reiterate that I was heartened by your invitation for our relationship to be a constructive and co-operative one, and very much hope that you agree to my request as a first step towards establishing that.
I look forward to hearing from you.
Shadow Secretary of State for Business, Energy and Industrial Strategy
Despite all the “gig economy” hype, Kim Moody argues, most workers are experiencing the rise of the crappy-job economy. But just-in-time production has created huge concentrations of workers—and vast potential for organizing. Photo: Nick Saltmarsh (CC BY 2.0)
From the US rank-and-file trade union magazine and website Labor Notes
Where’s our economy headed? Soon every factory worker will have to start driving for Uber, and the trucks will drive themselves—at least so the business press tells us.
But Kim Moody, co-founder of this magazine and the author of many books on U.S. labor, paints a different picture. Chris Brooks asked him to cut through the hype and describe what’s coming for working people and the opportunities for unions.
This is Part 1 of our interview with Kim Moody. Watch for Part 2, coming next week. —Eds.
Labor Notes: We read a lot about the “gig economy,” where workers cycle through multiple jobs using app-based companies like Uber, TaskRabbit [for everyday tasks such as cleaning or moving], and Mechanical Turk [for online tasks such as labeling images]. Is this really the future of work?
Kim Moody: One thing to notice is that, aside from outfits like Uber, most of these are not employers. They’re digital platforms where you can find a job.
The apps are not determining the hours and pay, or even the technology used on the jobs. It’s still employers that are calling the shots. So if jobs are getting worse, it’s not because people can find them digitally as opposed to reading them in the newspaper.
Also, discussions of the gig economy often assume that suddenly there are all these people who are multiple job-holders. But the fact is that the proportion of the workforce who have more than one job hasn’t changed much in 40 years.
The vast majority of them are people with regular full-time jobs who are also moonlighting, which is a very old thing. There are a lot of multiple job-holders, but there have always been a lot of them.
There’s also been talk of the “1099 economy.” Are we really moving towards a future where 40 percent of workers will be freelancing?
The idea that freelancers can become 40 percent of the workforce is science fiction.
There are two kinds of self-employed. The greatest number are the “unincorporated self-employed,” or independent contractors. Their numbers have been dropping for years.
The other group, the incorporated ones, are people who run a small business. They have grown somewhat, but they are still just 4 percent of the workforce.
You argue that the “gig economy” and “precarious work” concepts miss the mark because they don’t get at the most concerning change: the rise of the crappy-job economy. Can you talk about what’s changed for workers and why?
The first change is work intensification. Work has gotten dramatically harder in the last 30 years or so, and continues to.
That’s happened through lean production, which reduces the amount of labor to produce the same or greater amount of product or service and is tied to just-in-time production. Lean production began in the automobile industry in the 1980s, but now it is everywhere. It’s in hospitals, it’s in schools.
Another aspect is electronic and biometric monitoring, measuring, and surveillance, which allow employers to see how to get more work literally out of each minute. Another aspect is that the amount of break time has fallen dramatically since the ’80s.
Whether you are working full-time or part-time, in a precarious job or not, chances are you are going to experience some of this.
The other side is income. Wages have been falling since the early 1970s. More and more people are actually working for less, in real terms, than they used to. This also impacts everybody, although part-time and precarious workers are likely to get paid even less than full-time people.
And if you look at the Bureau of Labor Statistics projections for the fastest-growing jobs, millions of new jobs over the next decade or so, 70 percent are projected to be low-skill, low-pay jobs.
In other words, we are not heading for some big high-tech economy. Instead we are heading for a low-paid workforce with crappy jobs. The end of good jobs is nigh.
While app-based “just-in-time” gigs have gotten lots of media attention, far less attention has been paid to “just-in-time” production. Can you talk about why massive logistics hubs have emerged, and what they mean for union organizing?
In order for globalization to be efficient, low pay isn’t necessarily enough, because you have to move products from one location to another. That required a change in the way products are moved—the “logistics revolution.”
The time it takes to deliver a product to the point of sale is an important factor in competition. Like production, transportation now operates on a just-in-time basis. Products move faster.
The speed of trucks, planes, and trains did not change. What did was the way things are processed. Goods don’t stay in warehouses very long. Products arrive on rail and are cross-docked and moved out by truck in a matter of hours. This process has really only taken shape in the 21st century.
In order to make it work, the industry has created logistics clusters. These are huge concentrations of warehouses
where rail, truck, air, and water transportation meet and can be coordinated, usually electronically.
You might think, “Well, this is all very high-tech.” But it turns out that it still requires thousands and thousands of workers. In the U.S. there are 60 of these clusters, but three stand out: the Port of New York and New Jersey, the Los Angeles and Long Beach port area, and Chicago. Each of these employs, in a small geographic area, at least 100,000 people.
Now, the whole idea of outsourcing back in the 1980s was to break up the concentrations of workers in places like Detroit, Pittsburgh, or Gary. But what these companies have done now, inadvertently, is to recruit incredibly massive concentrations of manual laborers.
It has evolved in a way that might shoot these companies in the foot—because here you have the potential to organize vast numbers of poorly paid workers into unions. And there are attempts to do just that.
The other thing is that these clusters are tied together by just-in-time systems—which means you have hundreds, maybe thousands, of points in the transportation system that are highly vulnerable. If you stop work in one place, you are going to close down huge areas.
Media commentators and even presidential candidates blame the loss of millions of U.S. manufacturing jobs on trade and outsourcing. You’re skeptical. How do you explain it?
Outsourcing, if it is in the U.S.—which most of it has been—can break up the union, it can be very inconvenient to the people who lose their jobs, but it doesn’t necessarily eliminate jobs in the U.S. The jobs are just moved to a different, lower-paid group of workers.
Offshoring is another thing, but it’s not as widespread as people think. While moving production abroad has definitely impacted certain industries like steel, textile, and clothing, it cannot account for the loss of jobs we have seen. I estimate that between a million and 2 million jobs have been lost since the mid-’80s to imports and offshoring.
Manufacturing output, from the 1960s to just before the Great Recession in 2007, actually grew by 131 percent; the manufacturing sector more than doubled its output. If everything was going abroad, you couldn’t possibly have that kind of growth.
How can this be? I believe the answer lies in lean production and new technology, as we talked about earlier. Productivity literally doubled, and manufacturing jobs dropped by 50 percent or more. It’s the productivity increase that explains the loss of jobs.
It is very difficult for politicians to deal with this question, because it means attacking employers. It means saying, “You are taking too much out of your workforce.” And of course since most economists, politicians, and experts think that productivity growth is a wonderful thing, it’s beyond criticism.
There’s a lot of hand-wringing about the future of automation. Former Service Employees President Andy Stern has been making the media rounds claiming that driverless trucks are going to replace millions of drivers.
You can sell a lot of books with this pop futurology. It reminds me of the great automation scare of the 1950s. It was popular then to make predictions that there wouldn’t be any factory workers left.
And automation has reduced the number of factory workers, but there are still 8 or 9 million of them lingering around—despite all this technology, which is much greater than anything they predicted in the ’50s.
I have a shelf of books predicting “the end of work.” And yet we have millions more workers than we used to—the problem being that they are worse off than they used to be, not that they don’t exist.
There’s more! We also asked Kim Moody about workforce demographics and outsourcing to the South. Stay tuned for Part 2.
Read more: Everyone in this auto parts plant was a temp—until they all joined the union and threatened to strike.
Read more: The Cargo Chain is a beautiful poster/pamphlet that maps out how ship hands, longshoremen, truck drivers, railroad operators, and warehouse workers move goods across North America.
Based on a pamphlet from the Alliance for Workers Liberty:
There is a buzz about “Corbynomics”. That’s positive. For the first time in ages the neo-liberal economic orthodoxies insisted on by the Blairite Labour Party are up for debate and discussion.
What Corbynomics means, though, isn’t clear yet. It remains to be defined, not just in detail but even in broad outline. The left should plunge into the debate – and be bold.
There is a problem about the lack of left-wing Labour economic policy for Jeremy Corbyn and Shadow Chancellor John McDonnell to draw on. On ssues like the NHS, say, or renationalising the railways and Royal Mail, there is policy and they should do more to promote it – a lot more. On wider economic policy,there is more of a vacuum on the left, and a need for socialist ideas to fill it. But some of what Corbyn has said points in the wrong direction.
So, for instance, in the steel crisis, Corbyn and McDonnell said that if no capitalist buyer for Tata’s plants was found, they would support nationalising them – but only in order to find a buyer, and then sell them off again! Why didn’t they take the opportunity to argue to nationalise steel permanently, safeguard jobs, workers’ terms and conditions and communities, and run things differently to produce what we need for social purposes, like building housing, public service and public transport infrastructure?
In his speech on 11 March, John McDonnell talked about “fiscal responsibility” – presumably in order to buy space to attack George Osborne’s 16 March Budget cuts. But anxious promises that a future Labour government will balance current spending with current revenues – which Osborne had not done after six years as chancellor! – only feed the superstition that the economic problems since 2008 are due to the Blair and Brown governments overspending” on public services. They aren’t. The reason for the crash and the slump was giddy profiteering and speculating by the banks, not public spending.
Now, there is no special merit in a government increasing its debt burden. However, a rigid rule of balancing current spending with current revenues is foolish. As Simon Wren-Lewis, professor of economics at Oxford University and an adviser to McDonnell, has pointed out, “the rule is likely to make the deficit much less of a shock absorber, and so lead to unnecessary volatility in taxes or spending”. Also, since raising taxes is politically difficult, often slower in effect, and involves running uphill in times of economic crises which reduce the tax base, the rule has a built-in bias towards panic “volatility” (cuts) in spending. McDonnell has long campaigned against cuts. It looks as if he was pushed into these statements by the conservative elements in the Labour leadership office – part of a more general problem.
Who are the “wealth creators”?
Probably also a reflection of that section of the Labour leadership office were McDonnell’s off-key statements about “the wealth creators”.
“The Labour party are the representatives of the wealth creators — the designers, the producers, the entrepreneurs, the workers on the shop floor.” He claimed that his policy “has been welcomed this morning by [people] right across the business sector, business leaders, entrepreneurs as well as trade unions. The wealth creators have welcomed it”.
According to Mike Savage, a researcher at the LSE, inherited loot is 70% of all household wealth in Britain today, and is rising towards 80% by 2050. One of the most booming industries in slump-ridden Britain is the rise of “family offices”, where financiers work fulltime on managing and conserving the wealth of rich families. “Wealth creator” is conservatives’ pet term for capitalists. In fact capitalists’ riches come from the exploitation of the real wealth creators, the wage working class – or from active exploitation done not by the capitalists, but by their parents and grandparents.
McDonnell added “the workers on the shop floor” atthe end of his list of “wealth creators”, and put“designers” (i.e. some particularly skilled workers) at the start of the list. But the idea that a good economic policy can be pursued in alliance with the whole “business sector” is false. It can only prepare the way for a collapse when the CBI and other bosses’ groups denounce left-wing policies from Corbyn and McDonnell, which they will.
Is a National Investment Bank a left-wing policy?
Similarly, the leadership has focused on the call for a “National Investment Bank”, a publicly-owned bank able to borrow more cheaply than commercial banks because of its government backing, and lending for infrastructure and industrial projects.
The model must be the KfW, the German state’s federal investment bank, set up under the Marshall Plan in the 1940s and still going strong. It’s a safe, conservative model, maybe useful as a capitalist technique, but in no way anti-capitalist or socialist. The current chair of the KFW Supervisory Board is German finance minister Wolfgang Schäuble, Europe’s sternest austerity-hawk and central to the crushing of the anti-austerity rebellion in Greece.
There is nothing really socialist or even left-wing about the proposals for a Schäuble-bank in Britain. In fact it seems more like a way of avoiding a clear left policy about what to do about the banks.
Expropriate the banks!
Replacing capitalism with socialism requires public ownership, democratic and workers’ control and planning of the giant corporations and enterprises central to the economy. That is hardly even conceivable without an insurgent workers’ movement challenging the capitalist class on every level – which is what we must work for, rather than damping it down with appeals to “wealth creators”.
To even move in this direction requires transitional demands to campaign for. An obvious one to make central is public ownership and democratic control of the banks and high finance – a sector central to the economy’s functioning and to the economic chaos which has engulfed us over the last decade.
Banking should become a unified, democratically run public service providing banking, pensions and mortgages for everyone who needs them, and funds and resources for investment in public services and all areas of social need – instead of acting as an engine for devastating them while promoting inequality.
Public ownership of the banks has been official TUC policy since it was proposed by the Fire Brigades Union in 2012, but left dormant. We should fight to activate it, and make it active Labour policy too.
All this poses the question of what kind of Labour government we want. In place of an alternative capitalist administration, the left should set ourselves and shape our campaigning around the goal of a workers’ government, accountable to and drawing strength from the mass organisations of the labour movement, and willing and able to force through measures like expropriating the steel industry and the banks – and much more.
Motion for expropriation of the banks and a workers’ government, passed at Labour Representation Committee conference, 20 February 2016, here
By Phil Burton-Cartledge at All That Is Solid (first published 26 April 2016, and now even more relevant):
On global capitalism in Lenin’s day, the Bolshevik leader had this to say: “Imperialism is an immense accumulation of money capital in a few countries … hence the extraordinary growth of a class, or rather, of a stratum of rentiers, i.e., people who live by “clipping coupons”, who take no part in any enterprise whatever, whose profession is idleness …” If only the money men of 21st century Britain remained excrescences on the economy, of directing their stooges to invest capital and growing fat off the labour and talent of others. At the risk of being wistful, this ideal-typical view of your average capitalist is long buried and have gone beyond mere uselessness. Drunk on their parasitism, they are oblivious to how their appetites are not just imperiling the health of the enterprises they gorge upon, but threaten to kill them outright.
The latest example is the collapse of British Home Stores (BHS), a venerable department store that has graced the high street for 88 years. Not that I ever went there, which I suppose is a microcosm of the predicament it finds itself in. Lately, not enough of anyone have come through its doors to buy outfits and lampshades. Yet the Darwinist cut and thrust of the retail market can only shoulder so much of the blame. The reason why BHS is looking down a barrel, and its 11,000-strong workforce face uncertain futures is in large measure down to its erstwhile proprietor, the fly-by-knight Sir Philip Green. Acquiring the struggling BHS for £200m in 2000, Green and his family shook the firm down for a billion quid. All the profits, all the wage squeezes, every saving that could be wrung from the business passed through head office en route to Tina Green’s capacious purse in Monaco. And when there was nothing left, Green offloaded BHS on his tax-dodging wife’s behalf for a quid. The new owners, a ragtag-and-bobtail outfit going by the name of Retail Acquisitions, failed to raise the cash BHS needed to start turning itself around.
It goes without saying that Green’s behaviour was grubby and disgusting, and he could face action from the pensions’ watchdog amid suggestions that the firm dodged its obligations (this would be on top of the pensions holidays many large firms took in the late 90s/early 00s, all with a nod from Gordon Brown). Seemingly aware he could be on the hook for something, Green has offered to stump up £80m toward the BHS pension fund’s half-a-billion deficit. I hope the sop is rejected and he gets rinsed.
As you can see, Green went well beyond the “coupon clipping”. His ownership and running of the brand suggests little if any interest in preserving the business for the long-term, of increasing products, introducing new lines, investing in new technology, and battling it out for market share. You know, the things Max Weber told us capitalists are supposed to do. If BHS was in difficulty 16 years ago, self-evidently a business that has a billion pounds sloshing around is a business that was not a basket case. Instead of treating BHS like a bile bear with the tap left on full for the Green durée, the monies could have been used to add value by expanding its range, aggressively marketing itself, and venturing properly into online retail. Instead, Sir Phil was to his host a tax-dodging, celeb-stalking, yacht-bothering tapeworm.
Ah, but he’s a one-off, a bad apple, yes? In the interests of fairness, BHS’s problems can’t all be laid at his door. The so-called death of the high street is the result of policies pursued over the last six years. The cost of living crisis (remember that?) was always more than a soundbite for millions of people. As meagre wage rises/freezes have bitten, people don’t have as much cash to splash, hence middlebrow stores like BHS were always going to face what the experts call a “challenging retail environment”. The second is the brash new competitor, Amazon, have got away with ripping off the Treasury. Without as much of a tax liability, they have built an infrastructure on the back of exhausting, low-paid work, which has given them an unfair competitive advantage. Having got caught dithering over steel, the Tories are not about to invite more scrutiny of their complicity in this situation. Which probably helps explain why Anna Soubry’s been very quick to discuss the issue in the House and dampen speculation about redundancies.
There’s a wider point. Green is the “cultural dominant” of what a capitalist looks like in 21st century Britain, the sort valorised, flattered, and admired by the City and its helpers. The pursuit of profit, of realising returns on investment, comes not from building things but of tearing them down. As David Harvey points out, global capital from the 1980s on snapped up sold off state infrastructure and coined it from the introduction of markets into public services. New markets were conquered, but these were provided by governments as they let capital swoop in and profit from institutions under their stewardship. Capitalism ate the infrastructure that sustained it. As Britain is the epicentre of global finance, we find here these necrotising social relationships have achieved their fullest expression: an economy whose GDP is dependent not on production, but the selling of houses between buy-to-let landlords, a state bent on selling off what’s left of the public domain to politically suitable bidders (one doesn’t have to be the highest, as the Garden Bridge fiasco demonstrates), and a financial industry that sucks in Britain’s best brains to design fiendishly complex but socially useless “products”, “packages”, “vehicles”, and “instruments”. Funny how the intangible has annexed the language of the concrete. In sum, the owners of capital have become dysfunctional and decadent from the standpoint of British capitalism itself.
Green is not a one-off. He’s archetypal.
Above: Thatcherite Patrick Minford
By Martin Thomas (also at the Workers Liberty website)
88% of six hundred economists surveyed for The Observer newspaper (29 May) reckon that Brexit would reduce economic growth in Britain.
Economists often get things wrong, and the gist of the economists’ opinion is that Brexit would disrupt the regular flows of the global capitalist economy, thus pushing down trade and investment into Britain.
Most enlightening is what the pro-Brexit minority of economists say. The “Economists for Brexit” group led by veteran Thatcherite Patrick Minford has produced a report.
As ardent free-market ideologues, they argue that a capitalist Britain outside the EU will do well because it will have fewer constraints on the rapacity of the free market.
They object to the EU because “the EU has pressed for social legislation (such as the 2003 Working Time Directive and the 2004 Gender Equality Directive) that adds to companies’ costs”.
Their list would probably also include the Agency Workers’ Directive, TUPE, and redundancy-payment laws.
They also object because “European governments have been more emphatic than the global average about the dangers of global warming” and so the EU has pushed Britain to “adopt the renewables agenda with greater zeal… Coal-fired power stations have been closed down, offshore wind farms built and so on…”
The Brexit campaigners disagree among themselves on what trade deals Britain should do on quitting the EU. The economists go for a radical option: “What other trade agreements do we need? My advice would be: none”. Not the Norwegian model, not the Swiss model, not the Canadian model, not even the Albanian model favoured by Michael Gove.
The pro-Brexit economists argue that Britain should scrap all barriers to imports, and seek nothing more than World Trade Organisation rules for its exports. In their calculations the benefit of cheaper imports outweighs the consequent job losses.
On immigration, the economists differ from the Ukip-minded majority of Brexit campaigners in that they want more non-EU immigration and less immigration from the EU.
There, spelled out clearly, is the second core Brexit argument after the basic Ukip “hate-migrants” case. It is an argument for Britain as an offshore, low-regulation, low-social-overheads, environmentally-reckless site for global capital.
Whether their scheme would “work” in its own terms is doubtful. That it represents the way Brexit points, socially and economically, is not.
The way to fight the neoliberal policies of the EU leadership is by starting from the limited integration across borders created by the EU, and working for cross-border solidarity around demands for social levelling-up, democracy, and more open borders.
Letter published in The Guardian 10/06/16:
Polly Toynbee is right (There is still time for hope – Brexiters can be persuaded, 7 June). Brexiters can be persuaded if they realise what British politics could be like after a vote to leave. Here’s a realistic scenario.
On 24 June Brexit begins. Cameron resigns. Boris Johnson becomes prime minister, Michael Gove becomes chancellor. With Ukip’s role over, Nigel Farage and company join the Tory party. Scotland leaves Britain. The rump gets a new name (as it can’t be called the UK) – KEWNI – and a new flag
Anti-democratic developments begun under the pre-Brexit government are extended. The Tories form KEWNI’s governments for decades to come. The post-EU economic shock is compounded by the structural problems derived from KEWNI’s dysfunctional capitalism (low productivity, weak innovation etc) and its semi-feudal state. Excluded from the European single market, KEWNI is forced closer to the US and China. Having no choice, it accepts a version of the TTIP with the US. Having shunned the EU’s collective sovereignty, it has no power to insist on safeguards. US companies begin to take over the NHS; Chinese companies, manufacturing and real estate.
Accelerated economic decline inevitably follows. The Johnson/Gove response is even more austerity. The xenophobia currently directed at EU migrants becomes directed inward – against people of colour. Inequality and poverty escalate and dispossessed KEWNIs mobilise in struggle. The government response is repression, both covert and overt. Gradually, KEWNI becomes dominated by an ultra-rightwing nationalism: a version of fascism with “gentlemanly” English characteristics.
Is this what Brexiters seek for our country?
Professor of international development, University of Bristol
As the UK’s steel industry faces extinction, the Tories prevaricate over what – if any- state aid they are willing to offer in order to save the Tata operations at Port Talbot, Rotherham, Corby and Shotton (North Wales). At least 40,000 jobs are at stake.
Business minister Anna Soubry initially stated that the government was willing to consider “everything possible” – including nationalisation – in order to save the Port Talbot plant. But now her boss, business secretary Sajid Javid has ruled out nationalisation, arguing “if you look around Europe and elsewhere, I think nationalisation is rarely the answer.” According to the Daily Telegraph, Tata Steel have suggested that EU rules restricting state aid were to blame for its decision to sell the UK steel business – a claim that has been seized upon by campaigners for Brexit, including the supposedly “left wing” Morning Star, always willing to let the Tories off the hook by claiming (entirely falsely) that the British government “is banned by EU competition laws” from intervening to save the industry.
While it’s true that EU rules place some restrictions on using state aid to prop up industries, European governments with the political will have either turned a blind eye to the regulations or found ways round them. For instance, while the EU blocks support for “manufacturers in difficulties”, it allows national governments to nurture the “long term competitiveness and efficiency” of industry, and also to provide state funding to lessen the “social impact” of closures.
Even outright nationalisation is not barred by the EU: Article 345 of the Treaty on the Functioning of the European Union, states: ‘The Treaties shall in no way prejudice the rules in Member States governing the system of property ownership.’http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:12008E345
All across the EU states have majority shares or own and run their own transport and energy sectors. This is confirmed in this 2013 Estep report, commissioned by the EU: http://www.esparama.lt/es_parama_pletra/failai/ESFproduktai/2_UM_valstybes-valdomos-imones_2013-03.pdf
In particular the report states: ‘SOEs are entitled for public services provision, which can be broadly observed in utility sectors such as transport, telecommunications or energy.’
While nationalisation may be restricted it is not banned or illegal. This is a widely-believed myth, promoted, in particular, by the anti-EU “left”.
In Italy the government took control of the Ilva steelworks last year to save 16,000 jobs. Then the firm was handed £74 million for “environmental improvements” – ie direct state aid.
Germany also provides aid to its regional governments on the understanding that steel produced in the country is used on any German building or engineering projects. Germany also operates the part-publicly-funded Gesellschaft, a research organisation that provides applied science for companies that would otherwise find the cost prohibitive.
In 2012 French president Hollande threatened to nationalise Arcelor Mittal steel’s operations in the Lorraine plateau in order to save the blast furnaces of Florange and their 2,500 jobs. He didn’t seem to be particularly concerned about any EU state-aid rules. Ironically, Hollande’s threat was denounced by Boris Johnson – now a leading light of the Brexit campaign.
In a written answer to Labour Euro-MP Jude Kirton-Darling at the time of the Redcar steelworks closure last year, the European Commission confirmed that the UK Government could have given state aid to support the steelworks. Here are some of the ways that other EU governments have intervened to support their domestic steel industries, and other energy intensive industries. There are also examples of regional governments taking initiatives in Germany and Spain.
In early 2015, the Italian Government temporarily renationalised the Ilva Steel works in Taranto, Southern Italy. The Italian government cited the unabated toxic emissions and very poor environmental standards, which had led to unusually high rates of cancer in the area around the plant. It is estimated that it will cost €1.8bn to make Ilva compliant with the Industrial Emissions Directive’s standards. This decision is currently subject to a complaint from EUROFER (European steel industry association) under state aid rules.
Investment in strategic R&D facilities
The French government are providing state-aid to the ArcelorMittal plant at Florange, in France to support their ongoing R&D work, this follows on from a long running industrial dispute over the closing of two blast furnaces. This public support comes to a total of €20-50 million over 4 years, with a further 33 million been raised in public-private investment.
Support for energy efficiency/environmental technologies
In 2010, the European Commission accepted German state aid of €19.1 million for an energy-saving steel production project run by Salzgitter Flachstahl GmbH, a subsidiary of the Salzgitter AG group. The aid will allow Salzgitter to produce steel through an innovative production process, Direct Strip Casting (DSC), which consumes less energy than alternative processes. The aid is in line with EU guidelines on State aid for environmental objectives (see IP/08/80) because on balance, the positive effects for the environment largely outweigh potential distortions of competition.
In 2010, before the May elections (which saw a change in Government), the UK Labour government was willing to provide Sheffield steel producer Forgemasters with an £80m loan to develop new technologies as part of a supply chain for nuclear reactors. While ultimately the new government withdrew this offer, the reasoning for a change of heart was ideological and not related to European State-Aid rules.
Taking a public stake in a steel company
Following the sale of 20.5% of shares in ‘NLMK Belgium Sogepa Holdings SA’ for 91.1 million euros ($123 million), the Belgian public authorities have a shareholding in a new company producing steel which owns steel plants in Belgium, France and Italy. NBH employs about 1,000 people in Belgium, while the European division employs 2,530 people in total. The engagement of the Belgian public authorities has helped strengthen the commitment of the Russian group, and transformed the company carrying the steel business in public private joint venture with the financial support of the Walloon region.
Compensation for energy costs
A range of German Government industry policy interventions provide German industry as a whole, including its energy intensive industries, with a range of long established reliefs from energy and climate change-related duties, levies and taxes:
Over the period 2010-2012 Germany’s support for its EIIs were worth 26bn euros, or some 8bn euros (£6.4bn) a year (table 2).
Support covers thousands of firms. Unlike the UK package, support is not confined to specific sectors.
At company level, in Germany compensation is available for 90% (or in the case of larger and energy intense consumers, 100%) of electricity taxes.
In Sweden, the PFE programme aims to encourage, through incentives (reductions in the amount of energy taxes), energy-intensive industries to improve their energy efficiency. This is a long-term agreement involving the Swedish government, the energy-intensive industries and trade unions. The duration of this program is 5 years. 117 industrial companies are involved in this project (i.e. 250 plants). The Swedish Energy Agency monitors and controls the programme. The Programme Board, established in 2005, brings together representatives from government, business, trade unions and employers as well as research centers. Both with an advisory and regulatory purpose, the Board meets four times a year. After only two years of existence, more than 900 measures were implemented or underway. These measures cost the companies € 110 million but benefited from a rapid return on investment (two years on average). They have saved about 1 TWh per year of electricity, i.e. from 500 kT to 1 million tons of CO2, and a total of € 55 million. In 2010, it doubled its objectives.
Using the powers of the official receiver to support employment & attracting buyers for troubled plants
In November 2014, the Italian government agreed to sell Italy’s second-largest steelmaker Lucchini’s Piombino complex to family-owned Algerian conglomerate Cevital. Lucchini was previously owned by Russia’s Severstal but was declared insolvent in 2012 and placed into special administration. The company received two offers for its core assets in Piombino, one from Cevital and the other from India’s JSW Steel. The government administrator said the Cevital offer was more attractive as it foresaw full employment at Piombino. The Piombino complex employs about 2,000 people and can produce up to 2.5 million tonnes of steel a year.
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