War and its beneficiaries

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The dire warnings about the impact of the war in the Middle East on the global economy are mostly valid, and the fault lies squarely at the feet of Trump for failing to foresee the obvious consequences of his actions. The longer it continues, the more we will all suffer. In strictly economic terms (a very important caveat), however, it isn’t all bad news. Capitalism thrives on destruction – using up all those munitions generates orders for replacements; every aeroplane lost requires a new one to take its place; violent demolition creates opportunities for redevelopment. I’m not suggesting that any of this is a good thing for humanity, it’s just that there have always been some who benefit from war, and current wars are no different. The euphemistically-named ‘defence’ industries and their owners will be amongst the beneficiaries, obviously.

For the rest of us, though, it underlines the folly of looking at anything in ‘strictly economic terms’. Production of munitions will certainly generate employment and economic growth, as will the rebuilding programs which will be needed after any war. But pure economics ignores the human and moral aspects. There’s a lesson there as well which goes much wider than a specific military conflict, or even war in general. Government and politicians who bang on about growth and jobs invariably ignore other aspects in pursuit of increased total material wealth (which inevitably accumulates in the hands of the few). Mechanistic economics pays too little attention to questions about the non-monetary value of activity, let alone the morality of it, and whether it really serves the needs of humanity.

There’s nothing mystical or divine about an economy – it’s a human construct, designed by humans and operating in accordance with rules laid down by humans. It’s our collective choice whether we design economies to facilitate the accumulation of wealth by a few, or to meet the needs of all. It’s our choice whether decisions are made on purely economic grounds or whether they’re made after considering whether humanity as a whole benefits. It’s a mark of the extent to which a social, human construct has been captured and placed at the service of a tiny minority that we live in the world we do. And it’s a measure of the success of the ideology underpinning it that so few understand that it is not the natural order of things, but the outcome of that capture.

Is poverty really the right way to save pubs?

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Not so long ago, I wondered whether capitalists and supporters of capitalism really understood the way it worked, a theme picked up again in relation to pubs in this post. Pubs, in particular, have been back in the news again over the last week, with Farage’s proposal that impoverishing 450,000 children and redirecting the money saved into pubs could knock 5p off the price of a pint and save thousands of pubs, and the suggestion from the First Minister, Eluned Morgan, that people should stop drinking wine and watching Netflix at home and get down to the pub instead. The opposition’s response to the First Minister was, sadly, more Farage than Morgan, claiming that the problem was for the government rather than citizens to solve, and lies in the system of rates and taxation. Both Farage and the opposition in the Senedd seem to be starting from the wholly unrealistic proposition – albeit a basic tenet of classical economics – that all consumer decisions boil down to cost comparisons. Under that tenet, people choose wine and Netflix over beer and pubs purely on the basis of relative cost.

Like much of theoretical economics, it’s utter nonsense. It is an established fact that young people, overall, are drinking less and that traditional pubs are considered increasingly unattractive to many of them. Cutting the price of a pub visit so that more people go, or encouraging people to drink more when they get there – which is what subsidies, whether direct or in the form of tax concessions, actually set out to do – might delay the inevitable, but if supply outstrips demand by an increasing margin, and if that falling demand is the result of demographic change rather than price considerations, then capitalism decrees that the supply should fall. Put another way, closing pubs is the natural and rational outcome of a change in consumer choices.

Whether that’s a good thing or not is another question. I’m certainly not a fan of leaving all decisions to the dictates of capitalist markets. There are some pubs – particularly, but not exclusively, in rural areas – which also provide a sort of community hub, and act as a centre for other (not necessarily alcohol-related) activities. There is a case, in terms of social cohesion rather than dry cost-benefit analysis, for government action to keep such places open. That, though, requires rather more effort in identifying criteria and assessing locations against those criteria than some sort of blanket aid to the sector (which is what changes to the taxation regime provide). Setting out to save all pubs may be popular with those who use them, but it’s not good policy, and nor is it a good use of resources. And proposing to impoverish children to achieve it is about the best illustration one can think of as to why it’s wrong.

Will the nuclear decommissioning model actually work?

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The story this week about funding the reclamation work at Ffos y Fran has wider implications than are immediately obvious. Whether the company actually has the money available to carry out the promised reclamation work is still to be determined, although some thorough forensic financial investigation suggests that it has. Whether that money has been deliberately moved around in an attempt to shelter it for the company’s shareholders is unclear, but goes to the heart of the dispute. Court proceedings will answer those questions in due course.

The underlying question, though, is how realistic it is for any company to be expected to set aside large amounts of profit during the operational years of a facility in order to pay for restoration work on completion. Clearly, the suggestion that it is a reasonable expectation was key to the consent for the site in the first place; it is the enforceability of that which is now in doubt. It doesn’t really fit the capitalist model of enterprise which involves initial capital expenditure to get a project operational and then maximum extraction of profit during the operational phase. Committing to several years of heavy expenditure requiring the time and attention of the company’s owners and managers for no return at all really doesn’t fit the model. It should be no surprise at all if any company in that position attempted to avoid – or reduce – its liabilities.

It’s a model, though, in which government seems to be placing blind faith when it effectively allows private companies to build and run major projects. In yesterday’s post, I referred to the long-term implications for an independent Welsh government of allowing Wylfa Newydd to go ahead. The assumptions around the Hinkley Point C project include that EDF will be picking up the full costs of decommissioning through a Funded Decommissioning Programme, and the agreed strike price for electricity provided by the plant includes an allowance for those costs. The problem, though, is that no-one really knows what those costs will be – and the decommissioning work will continue for decades, not just years, during which the company will no longer be receiving any income for the electricity produced. The probability of that actually happening seems to me to be vanishingly small, with the likelihood being that some or all of the cost will ultimately fall back on public funds. The same will be true for Wylfa Newydd, meaning a large potential liability for a future Welsh government. Ffos y Fran is an interesting case study, but nuclear decommissioning is on an enormously larger scale – billions rather than tens of millions. Is that being understood?

Who is really being subsidised?

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The hospitality sector is up in arms about changes to business rates which, they say, will make their businesses unsustainable, and are asking for changes which will reduce the amount of tax that they need to pay. They are saying, in effect, that they are unable to charge a price for their products which is sufficient to cover all their costs plus returning a reasonable profit. Looked at in hard market capitalism terms, as discussed here, that means that many of those businesses are simply not viable. Left to its own devices (which is what many capitalists claim to want), a capitalist market would force a reduction in capacity (some businesses would fail) such as to achieve a new balance between supply and demand at a (higher) price which makes the remaining businesses viable.

Now I’m not a huge fan of unfettered capitalism, and whilst markets are, in general, an efficient way of allocating resources, the idea that they are or should be completely unregulated is not a sensible way of determining social priorities. Governments have always interfered, in various ways, to moderate the impact of markets in pursuit of wider goals. And the government may well be right in thinking – for reasons of employment retention, or for reasons of social cohesion, that maintaining a higher level of provision of restaurants, pubs and hotels than the market can profitably sustain is a good thing, and thus decide to offer some sort of assistance. Those in the sector want to see that assistance in the form of reduced taxation, but it isn’t the only way of achieving the aim. Tax breaks are a form of subsidy. They don’t always look like that, because it involves taking less from the business rather than giving them a handout, but a tax regime which adjusts rates for some categories of businesses in order to keep otherwise unviable businesses in existence cannot be other than a selective subsidy.

It isn’t the only way of providing a subsidy. The government could, instead, decide to take the same amount of money and issue vouchers to each household, enabling them to enjoy a discount off the bill for food and drink – subsidising the pints not the pub. It looks very different, of course, but the effect is the same: people would be able to go out and enjoy a meal or a drink which they couldn’t otherwise afford, and the businesses would be receiving an income sufficient to make them viable. Better yet – for those who are greater fans of markets than I – it would enable the consumers to choose which pubs and restaurants received the extra custom and therefore money, rather than being a blanket subsidy for all.

For a number of reasons, I wouldn’t actually propose that, but it’s interesting to note that many of those demanding tax breaks would be furious at the idea of ‘giving’ people money to eat out. It’s a universal benefit which they are getting without working for it, they would argue. Yet, in economic terms, it’s exactly the same thing: the same amount of money produces the same effect in terms of people being able to afford food and drink and businesses remaining viable. It raises an interesting and more general economic question: when the government gives a subsidy, who is it actually subsidising? Is it the business, the owners of the capital involved, the consumers, the suppliers, or the employees? In practice, all of those people benefit in some way or another, regardless of the form in which the subsidy is paid or to whom it is paid. So why is a ‘tax break’ deemed an entirely valid approach, whilst a handout to customers is some sort of undeserved freebie? The answer, of course, lies in who sets the agenda and boundaries of debate. And it isn’t the customers.

Labour forgetting their roots. Again.

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In the late nineteenth century, around the time that Marx was busily writing his most famous work, the average length of a working week was around 62 hours, with the working day often as long as 12 hours and child labour commonplace, although from 1870 children aged 8-13 were allowed to work only half time in order to fit in the required 10 hours a week of education. The steady reduction in the number of hours which people have been required to work each day/week has been a long battle reflecting the power struggle between capital and labour.

The roots of the British Labour Party lie deep in the conflict between capital and labour over working hours, wages, and working conditions, but it’s a background whose shadow is almost imperceptible in today’s Labour Party. Take today’s broadside by ‘Labour’ minister Steve Reed against local authorities which are moving towards a four day working week. Councils which do not shackle their staff to their desks for seven and a half hours per day five days per week could be classified by him as ‘failing authorities’ if he perceives that the staff are doing “part-time work for full-time pay”. It’s an attitude which assumes that there is a ‘right’ number of hours to justify a full time salary. It ignores the fact that reducing hours without reducing pay has been a core element of the aspirations of workers for generations. And, even though he’s talking about the public sector here, it’s an attitude which puts him firmly in the camp of the capitalist class, which has always resisted any reduction in working hours. His party’s founders must truly be rotating at speed wherever they lie.

Do capitalists understand capitalism?

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The criterion for determining whether or not a capitalist enterprise is viable or not is, in essence, very simple. To be viable, an enterprise needs to be able to sell its wares for a price which enables it to cover all the costs of production (labour, materials, etc), to pay all applicable taxes, to comply with all relevant laws and regulations, and to make a reasonable level of profit. In a rational world, the definition would be extended to add an environmental sustainability requirement, but that’s for another day. The corollary is that any enterprise which fails to meet that criterion is not viable in the market in which it is operating.

It probably shouldn’t surprise me, although it does, that so many capitalists seem not to understand the criterion at all. Some claim that taxation is a problem; others that minimum wage legislation stops them making a profit; yet others say that regulation and what they like to call ‘red tape’ prevent them making a profit. But, provided that all the rules and costs apply equally to all, a company which can’t afford to pay a living wage to its employees, or which needs exemptions from taxation, or which can only work if it doesn’t have to abide by environmental or health and safety legislation is a company which is, bluntly, not viable in the market in which it operates. If a company really can’t increase its prices when its costs increase, then one of two things must be true: either there is more supply than demand in the market at a price which makes the business viable, or else its competitors are operating more efficiently. Either way, according to strict capitalist rules, it is not viable as a business and should close.

Now, I’m not really advocating that hundreds of businesses across Wales should close down – but then, I’m not a huge fan of untrammelled capitalist markets either. I’m merely pointing out that capitalism, left to its own devices, requires that non-viable businesses fail. It’s a feature, not a bug, of the system. In the real world, there are all sorts of reasons why government authorities might want to keep some enterprises operating, using subsidies and exemptions in the process. It’s a valid role for government to perform. What we should not do, though, is pretend that the companies being thus supported are successful capitalist enterprises, let alone allow their owners to extract profits and dividends on the back of a subsidised existence. Yet, in industry after industry, that is precisely what we do. Interestingly, some of those who benefit from such government intervention are also the people bleating about the cost of benefits, pensions etc. It seems as though state largesse is only a bad thing when it goes to other people.

Peas in a pod

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Yesterday, the owner and proprietor of Reform 2025 Ltd revealed that he thinks the national minimum wage is too high for younger people and should be cut.  He has also previously talked about cutting benefits. With their shared determination to reduce the income and spending power of those on the lowest income in society, in purely economic terms Reform, Labour and the Tories are increasingly looking like peas in a pod. There is another thing they all share as well – a belief that the answer to everything is economic growth. How they reconcile that desire with the desire to reduce the purchasing power of millions of people is one of life’s great mysteries. Because here’s the thing – if you want consumption-led growth, people have to be able to consume, and that means having the wherewithal to buy goods and services.

Instead, they share a strange belief that enabling employers to reduce wage costs and freeing them from regulatory concerns will enable them to cut prices, thus making their goods and services more affordable. They simply don’t understand that making the lives of more people more precarious is a restraint on growth. They also seem to be blind to the experience that shows that employers reducing costs are more likely to simply declare larger profits than to cut prices.

It goes to the heart of one of the big contradictions of capitalism itself. Whilst individual capitalists want to keep their labour costs as low as possible to maximise their own profits, they also need other employers to keep wages as high as possible so that people can buy those things from which the cost-cutting capitalists wish to extract their profit. The idea, which seems to be deeply imprinted into the capitalist brain, that workers and consumers are two entirely separate groups and that impoverishing one of those groups has no impact on the other is sheer madness. It’s also what drives UK economic policy.

Waving the people's flag

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Some people have expressed surprise at the support coming from Farage and Reform for the nationalisation of the British Steel plant in Scunthorpe. Based on the premise that nationalisation is a ‘left-wing’ concept, it would indeed be surprising for the most ‘right-wing’ party to be supporting it. The flaw, however, lies in the premise.

It's true that Labour historically (before Blair got his hands on the party’s constitution) called for “the common ownership of the means of production, distribution and exchange”, and that ‘common ownership’ has generally been interpreted as meaning the same as ‘state ownership’ (the two are not necessarily the same thing, but that is an issue for another time). It’s also true that, in pursuit of that goal, the immediate post-war Labour government nationalised the coal and steel industries in the UK. They also nationalised the railways, although the background to that is a bit more complex: in the aftermath of the second world war, the railway system was in a bad way and needed the sort of massive investment which a patchwork of private companies was never likely to be able to provide. By and large, the utilities - gas, water, electricity, communications – were never really nationalised in the sense of being taken out of private ownership and into public ownership. Most of them had grown out of municipal undertakings, and the re-organisation was more to do with a transfer between one part of the public sector and another. Beyond those few examples, where is the evidence for an ideology-based attempt to bring the means of production under public control?

In practice, nationalisation is a tool used by both Labour and the Tories (think Rolls-Royce under Ted Heath, or the banks under Gordon Brown) to bail out failing capitalist enterprises. And it has been largely a temporary measure at that, with the companies sold back into the private sector when they became profitable again. Once we recognise it as a tool to assist capitalists rather than to dispossess them, it becomes entirely natural that the political ‘right’ should espouse it too – if not even more natural. The real question is not why the ‘right’ should be such passionate supporters of nationalising failing businesses, but why the ‘left’ should be so passionate about doing the same thing, rather than, say, taking control of enterprises more likely to have a long term profitable future. Again, though, the flaw is in the premise. Labour has long-since lost any claim to be ‘of the left’.

Power still lies where it always did

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The UK Transport Secretary got herself into a little bit of trouble over the weekend. As far as I can see, her sin was to repeat in government what she – to say nothing of her party leader – had been saying whilst in opposition, somehow forgetting that the whole point of being in government is to do the opposite of what they said in opposition. The ultimate owner of P&O threw a brief wobbly, threatening not to invest its £1 billion in the UK unless Starmer did a bit of grovelling, and he duly obliged.

To the enormous surprise of almost nobody, the company then decided that making the substantial profit which they expect to earn on their investment was more important to them than some very slightly hurt feelings and agreed to go ahead with the investment after all. Some important lessons have been learned, though. The first is that politicians may huff and puff when companies treat their staff in an appalling way, but they won’t bite, and there will be no repercussions for such behaviour. Short term huffing and puffing headlines are an end in themselves. The second is that the interests of capital will always prevail over those of labour, even under a self-styled ‘Labour’ government. Humiliating Starmer into buckling down and acknowledging that publicly is just a bonus, to say nothing of a marker for what we should expect over the next five years.

Whose economy is it anyway?

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It has been calculated that people in the UK, on average, are living a ‘three planet lifestyle’, which is to say that if the entire population of the world lived the same lifestyle we would need three times the amount of resources available to us on Earth. Now there are, of course, a number of estimates and assumptions used to arrive at that conclusion, at least some of which are inevitably open to challenge. But, even if we quibble about the detail, the conclusion that some of the world’s population are using resources at a rate which could not be sustained if everyone lived the same lifestyle seems a reasonable one. There are choices we can make: we could reduce the population, we could reduce current living standards in the richest countries, we could find a way of sustaining the same living standards whilst using fewer resources, or we could prevent the rest of the world from ever attaining a similar living standard to our own. The third of those is likely to be more acceptable than the rest, although there are questions about how easy it will be to achieve. And the default position of the richest seems, by and large, to be about holding on to what we have.

The 'three-planet' analysis, surely, makes it clear that the debate about sustainability cannot be divorced from considering the size of the human population. As far as I’m aware, no one is suggesting, or ever likely to suggest, thankfully, a cull – although the appalling propensity of mankind for armed conflict might inadvertently have that effect, and unchecked climate change is also likely to add to the human death rate, along with misery and grief. There is, though, a much more benign effect of growing affluence which is likely to check overall human population growth at some future date, and which is already impacting the richest countries. Growing affluence and lower infant mortality lead to a falling birth rate, and some of the richest countries are already seeing a birth rate running below the replacement rate, leading to predictions of falling populations.

From a global and sustainability perspective, this is surely good news, even if the impact is still some way away. It’s not the way that capitalist economics sees the situation though. An economic system predicated on the necessity for growth in order to perpetuate capital accumulation requires a permanently growing population. And an economic system which assumes that wealth belongs to those who are economically active, whilst the rest of us are a ‘burden’ on the economically active cannot see a way of carrying the cost of that burden without a growing working age population, especially as the age profile of societies changes. Supporters of the system can only imagine responses which involve a higher birth rate, more immigration, increasing retirement ages, or higher taxes on those who work.

But what if we instead reimagine the economic system in different terms? An economic system is a human construct; there is no ‘invisible hand’, only a set of rules drawn up and operated by humans. Current rules work first and foremost for the benefit of those who own and accumulate capital and rent-seekers. That’s exactly what they were designed to do (and it’s no coincidence that capital accumulation and rentier income are taxed less highly than wages and salaries). The alternative is to see the economic system as a social construct, and design it to meet the needs of society as a whole. Human society isn’t only composed of workers and capitalists; there are also some unable to work, including the young, the old, the sick and the disabled. Those groups aren’t a ‘burden’; they are part of a complex social structure, and the productive output of any economy needs to meet the needs of all of its members, including those groups. It might be argued that taxation is simply the practical mechanism by which that is achieved, but capitalist ideology has created a belief that starts with an assumption that the productive output belongs primarily to those who are being taxed, and that taxation means that it is somehow being taken from them. The demand for lower taxes – and in consequence for less expenditure on meeting the needs of those considered to be a ‘burden’ – is a direct result of that ideological economic perspective. And those who claim that we are in a post-ideological politics have bought into that perspective, hook, line, and sinker.

Turning the unthinkable into the inevitable

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It was reported recently that the IMF expects Russian economic growth to be higher than that of all advanced economies this year. Despite all the sanctions imposed by ‘the West’ and the costs of the war in Ukraine the Russian economy is doing rather well. It helps, of course, that ‘the West’, including the UK, is effectively breaching those sanctions on a large scale both by continuing to buy Russian oil after it’s been processed elsewhere, and by selling manufactured goods to Russian allies which then pass them on to Russia. Sanctions may be well-intentioned, but the capitalist desire for profit is, as ever, finding ways of avoiding them in pursuit of its own interests.

But there’s more to it than that. One of the points noted by the IMF is that part of the growth is down to the very high levels of expenditure by the state. It’s not something that anyone who listened for a moment to the Labour-Tory financial consensus would expect. In the UK we are told, from the Labour-Tory shared ideological perspective, that state expenditure actually impedes economic growth and must be reduced in order to cut taxes and incentivise those paying less tax to invest in new capacity, even if it’s more likely in practice that the money will simply be transferred to offshore tax havens. But the empirical truth, as demonstrated by Russia, is that state expenditure can and does lead directly to economic growth, in some circumstances at least. It would be preferable – for the planet and most of humanity, even if not for capitalists and oligarchs – if that expenditure wasn’t on munitions. But ‘capitalists and oligarchs’ is a not insignificant caveat: in simple terms, war is good for capitalism. It helps address the problems of over-production by building large scale destruction into the economic mix. And it is almost always funded by the creation of new money by states, money which then flows into the pockets of those who own the means of production. Misery for the many leads to profit for the few.

It's part of the context for the announcement by Sunak this week that the UK will increase its expenditure on armaments to 2.5% of GDP over the remainder of the decade. Like anything Sunak says now, it’s not something that he expects to be around to deliver: making promises that he won’t have to keep costs nothing. In this case, though, it’s a promise which Labour seems keen to match, even if they caveat the timescale a little by talking about “as soon as resources allow”. There are, of course, multiple ways of achieving the stated objective. Causing a recession and reducing GDP whilst holding military expenditure at current levels would work mathematically, and I wouldn’t put it past either of them to be able to achieve that. Incompetent procurement – simply paying more for the same amount of munitions – is another; and that’s almost guaranteed, given the officially-admitted incompetent UK approach to military procurement. Purchasing armaments is not enough, though: capitalist logic requires not just their purchase, but their use and destruction so that more can be purchased, even if few will voice that sentiment aloud.

Let us suppose that, between Starmer and Sunak, they manage to sort out procurement, avoid recession, and increase military expenditure (probably by cutting expenditure elsewhere, given their joint commitment to the nonsense about balanced budgets), the question we should be asking is this: does that make war more likely or less likely?  History tells us that some wars are started entirely by design (even if the outcome is often not that which was expected) – such as the Russian invasion of Ukraine – whilst others happen more by accident. The politicians talk about ‘deterring’ enemies, but one person’s deterrent is another’s provocation; people who feel threatened can just as easily decide to get their retaliation in first rather than wait to be attacked. The danger is that talk of being in a ‘pre-war’ situation and needing to consider conscription makes a drift into war more, rather than less, likely. Individual steps which might each seem logical in themselves risk building into a disaster. They are leading us to the brink of a self-fulfilling prophecy with no obvious route back.

Watching the clock

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Tonight, most of us will turn the clocks back by one hour; some will inevitably forget. Those who live their lives according to what the hands of the clock say will feel obliged to stay in bed an extra hour, whilst those who follow their body clocks will just get up an hour early. In the dark. Most will just be slightly confused for a day or two.

Living our lives according to the hands of the clock brings me to the PM’s father-in-law. He has argued this week that young Indians should be demanding to work 70 hour weeks in order to boost the wealth of Indian billionaires like Mr Murty the Indian economy. His call revolves around the need for an increase in productivity.

‘Productivity’ is an interesting concept, and there is more than one way of measuring it. At its simplest, it’s just output divided by input: a widget-maker who produces 15 widgets per hour is more productive than one who only produces 10 per hour. But whilst increasing the number of hours worked will increase the total number of widgets produced, it does not in itself increase the productivity of the widget-maker. Someone who produces 70 in a seven hour day may well produce 100 in a ten hour day, but he’s still only producing 10 per hour; output divided by input is unchanged. In monetary terms, though, things might look rather different. If someone is willing to work 10 hours a day for the same pay as he previously received for working 7 hours a day, then the owner of the widget factory has 30 extra widgets to sell at no extra labour cost to himself. On that measure of productivity (number of widgets per £ of labour cost), it has obviously increased. And extra wealth flows to the owner of the widget-making machine as a consequence.

That in turn goes to the heart of why capitalists have always opposed reductions in working hours: they make most profit by keeping people chained to their machines (or their desks for many of us in the modern age). It’s the same attitude behind SirJake’s demand to see civil servants back at their desks, or Gove’s instructions to English local authorities to drop any thought of a four-day week. It should be obvious to them that what matters is output, not input, but their thought processes haven’t really advanced much since the days of the mill owners of the eighteenth century. Billionaires who have a great deal of agency over what they do, where, and when, and who see a direct financial return for their efforts, may well see 70 hour weeks as normal (although some of the activities which they class as ‘work’ may not look very much like work to the man or woman pulling the lever on the widget machine) but it is a demand which, in essence, sees working people as a resource to be exploited, as people who should only ever expect to live for their work rather than work to enjoy life.

There’s no doubt that Sunak’s household would benefit directly if Indian workers were to accede to the exhortations of their capitalist masters. That wouldn’t make Sunak the first PM to benefit from overseas slavery or something akin thereto, but that’s not much of an excuse. It wasn’t that, though, so much as the impact of the corollary (all economic dictums seem to have corollaries of some sort) on Sunak which struck me. If increasing the hours spent on producing things means that more things are produced, then decreasing the time spent on destroying things means that fewer things are destroyed. I don’t doubt that Sunak ‘works’ a large number of hours, but much of his work seems to be about enriching the few by impoverishing the many. Reducing the length of his working week would therefore have some clear advantages for the many in UK society. Preferably reducing his hours to zero. He should heed the unintended lesson of his father-in-law.

Seeking fulfilment, not just work

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Wales’ Education Minister, Jeremy Miles, told a meeting of business professionals in Wrecsam yesterday that children should start learning about the world of work from the age of three. He also argued that children should be helped to get off the educational ‘conveyor belt’ which sees progression to a university place as the natural aspirational outcome for the education system and look instead at more technical and vocational qualifications. The latter is a common argument, advanced by Tory and Labour politicians alike; and the idea of early contact with the world of work is hardly a strange one either, although whether it should start as early as three is open to rather more question.

They are both arguments which leave me uneasy, however, because they both raise questions about the purpose of education. Both seem to start from the point of view that the aim of the education system is – and should be – the production of ‘employment-ready’ workers; people with the skills, aptitudes and attitudes required for them to fit into the roles which employers have to offer. There is a lack of any understanding of the potential value, both to the individuals themselves and to society as a whole, of education, learning and a wider skillset not necessarily immediately applicable to any particular job. And although they skate round the issue and prefer to avoid facing up to it, the idea that some children should be encouraged to follow a more ‘vocational’ pathway is, in practice, to argue that higher education should be reserved for the privileged. We have decades of knowledge which tells us that it effectively means (with a few exceptions which enable people to talk vaguely about ‘equality of opportunity’ and ‘social mobility’) separating middle class and working class children into two different educational pathways. They always claim that such a separation is based on ‘ability’, but that ability is assessed on the basis of an educational system which consistently allows children from more affluent households to progress further than the rest. It’s not that I disagree with the notion that a university education might not be the right route for everyone, or the notion that there should be more parity of esteem between a degree and other forms of qualification; it’s just that the economic inequalities of the society in which we live largely predetermine which children follow which route and end up preserving those very inequalities as a result.

It would be far better to start encouraging children from an early age to think about what a fulfilling life might look like. For some – particularly the middle class children who enter the well-paid professions – their future employment might be a large part of that, but for many, work will be a necessary but largely unfulfilling part of their future life. Giving children the means and the skills to seek their fulfilment outside of their working life would be doing more for them than turning them into mere ‘resources’ for employers to exploit. It would also make for a more balanced society; not every worthwhile human activity has an economic value. There is, though, one other thing it would probably also do, which is why supporters of the current economic system – Labour and Tory alike – will shy away from it: it would lead people to question the whole basis of an economic system which sees children as young as three primarily as future workers whose role is to serve the system. Not all of us would see that questioning as a bad thing.

Understanding capitalism

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In response to the various apologies issued by water companies yesterday, the Prime Ministers spokesperson was asked yesterday if the PM thought it was fair that customers of the water companies would have to pay for this investment, and replied:

“We’ve been clear that we think water companies must put consumers above profits …”

Have the Tories really reached the point where they no longer understand how capitalism works?

Ideology hasn't gone away

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Something that this blog has touched on from time to time is the idea that ideology is no longer relevant, or that we live in some sort of ‘post-ideological’ world, as I’ve seen some politicians describe it. It isn’t true. Different ideological perspectives haven’t gone away at all; they are just not represented in the main political parties, and don’t form part of mainstream political debate. The two main UK parties have both bought in to the same ideology, and argument between them is more about whether, and to what extent, the effects of their common ideology should be mitigated than about whether the underlying tenets of that ideology should be challenged and debated. This article on Nation.Cymru a couple of days ago referred to the same issue, albeit that it wasn’t always clear about the distinction between principles and ideas on the one hand and underlying ideology on the other.

It isn’t easy to try and sum up an ideology in a few words for the purposes of a short blog post, but if I had to pick out some of the key elements of the capitalist ideology which constrains mainstream political debate in the UK, I would pick the following four points:

1.    Competition (between individuals, organisations, and states) is generally to be preferred over co-operation,

2.    The objective of the economy is the generation and accumulation of wealth, and the purpose of the state is to facilitate that aim,

3.    Success, whether for an individual, an organisation, or a state, is measured in terms of the amount of wealth accumulated, and

4.    The role of citizens is to serve the economy and the state in the generation and accumulation of wealth.

The difference between Labour and Tory isn’t about any of those underlying beliefs, it is about the detail of policy resulting from them – Labour want to make the distribution of the accumulated wealth a little less unfair, and want to help the least privileged to be better able to compete with others and to fulfil their allotted role in the economy. These may be worthy aims, but they don’t represent an ideological difference. They might argue that small, gradual, and incremental changes are all that’s possible in current circumstances, and making small improvements to people’s lives is worthwhile in itself. I don’t totally disagree with that: for the disadvantaged, even a small improvement is better than nothing. There is, though, no reframing of how things could be; no great vision for a better world. The difference is between sects within an ideology rather than between different ideological perspectives.

One alternative ideological perspective would be to re-write points 1 to 4 above as follows:

1.    Co-operation (between individuals, organisations, and states) is generally to be preferred over competition,

2.    The objective of the economy is to secure the fulfilment and happiness of the population, and the purpose of the state is to facilitate that aim,

3.    Success, whether for an individual, an organisation, or a state, is measured in terms of the extent to which people are happy and able to lead fulfilled lives,

4.    The role of the economy and the state is to serve citizens in the achievement of the above.

It would be silly, of course, to ignore the role of ‘wealth’ in its widest sense in enabling the alternative view. Money may not buy happiness, but its absence is a sure-fire way of making people unhappy. But the policy differences stemming from the second perspective are much more significant than a little bit of redistribution here, and a bit of extra help there. An education system aimed at developing people’s potential, and at having a well-educated population as a goal in itself, rather than a population only trained to do the work required is one. An understanding that ‘wealth’ ultimately boils down to ‘access to resources’, and that a resource-constrained world needs to agree on how to share those resources fairly for the benefit of all is another.

I’m not naïve enough to believe that we can get from where we are to where we could be overnight, although we certainly won’t get there by not trying. But the alternative vision isn’t even being presented; those for whom ‘there is no alternative’, to coin a phrase, have successfully closed the Overton window to a narrow interdenominational debate with the constraints of their own ideology. It doesn’t have to be that way.

Ultimately, it's our own fault

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In a capitalist economy, ordinary citizens serve only two functions – they can be a source of labour or consumers of products and services. That doesn’t preclude them from being both, of course, but those who are neither are, essentially, surplus to requirements. That’s putting it bluntly – and most capitalist economies are overlaid with at least an element of social democracy which seeks to mitigate and/or gloss over the worst effects of capitalism. But the core ideological debate within UK politics is about the degree of mitigation and gloss; not about the fundamentals. Labour is as wedded to the underlying ideology as the Tories, they just argue about the extent of mitigation.

Understanding that raw fact about the nature of capitalism is core to understanding the Tory attitude towards the unemployed, or those dependant on the state pension. They are seen as burdens, rather than full members of society. Whilst actively culling them is a step too far, even for the more extreme members of the current cabinet (although if a pandemic does part of the job, that’s just serendipitous), keeping them as poor as possible comes a close second. The fact that we have one of the lowest state pensions in the developed world is one illustration of the attitude; yesterday’s announcement of new benefit sanctions on the unemployed is another. The government’s ‘solution’ to a situation in which there are 1.2 million vacancies and 500,000 unemployed is to force people into whatever jobs are available, regardless of preference or skills, by driving them deeper into poverty if they are unemployed for more than four weeks.

It’s an oversimplistic mathematical approach to filling vacancies – an unemployed sales person in Devon is hardly going to be able to fill a brain surgeon vacancy in Aberdeen (and there are an awful lot of unfilled vacancies in the NHS); but essentially it will drive many people, regardless of their skills or experience, into minimum wage jobs in sectors such as care regardless of their suitability for such a role. A means of fixing the social care crisis is something which this is not. It probably doesn’t matter to them though – low wage labour helps the profits of private care companies, and keeps down the cost of looking after the almost useless people (in capitalist terms) receiving the care.

It’s not the only way of organising a society or economy; we could instead start, as some of us do, from the basis that the purpose of an organised economy is to serve the members of society as a whole rather than assuming that those members exist only to serve the economy. It’s an idea which we’ve largely lost sight of, as we’ve swallowed the tenets of capitalist ideology. But we don’t even need to be as radical as that to see the essentially short-sighted nature of the Tory approach. Decent pensions and benefits – as well as paying a proper living wage – allow those currently regarded as useless to become useful even to capitalists, as consumers. It means spreading ‘consumption’ more evenly and fairly, but I’m sure some genius could come up with a good slogan to cover it – something like ‘levelling up’, maybe? Whereas failure to do so has the effect of concentrating wealth in ever-increasing quantities in ever fewer hands.

They get away with it though. They have managed to convince those in the middle that the problem is the poor, and convince the poor that the problem is the even poorer. And to convince both that immigrants are the problem. They get away with it, in short, because enough of us allow them to.

It doesn't have to be like this

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The difference in approach to the pandemic between the English government and the Welsh government has been on display again this week, with the Welsh government inching cautiously towards further restrictions whilst Booster Johnson claims that there is no need for further action because the trend is in line with what was expected. It is, according to him, all going to plan. Drakeford’s caution is understandable; short of independence, he simply does not have the power to take the necessary economic steps to back up further restrictions to the extent which the situation requires, and in the absence of action by the UK Treasury, unilateral action in Wales would mean people here paying a high price. His unionist mindset prevents him reaching the logical conclusion, in the absence of which we are likely to end up with the worst of both worlds – continuing with the highest rate of infection as well as the tightest restrictions.

However, Johnson’s claims about everything being in line with the plan deserve rather more scrutiny than they are being given. The daily rate of premature deaths due to the pandemic is currently erratic to say the least, but the number of deaths per week has been 500 or more for the last three months, and is currently running at around 750. Johnson’s ‘plan’ effectively assumes that it will continue at that rate for the remainder of the autumn and winter. To put that another way, the UK government proactively planned to stand aside and allow more than 7,500 deaths over the last three months and is planning to allow another 10,000 or more preventable premature deaths over the next few months. Seen from Downing Street, these 17,500 people (on top of those who died during the earlier stages of the pandemic) are mere statistics, an ‘acceptable price’ to pay for maintaining the profits of the capitalists who fund the Conservative Party.

But each of those people is an individual, with family, friends and maybe others who depend on them. The death rate due to Covid may be an obvious example of government priorities, but it doesn’t stand in isolation – the government’s approach to benefits will plunge millions of people into poverty this coming winter. The surprising thing is that this callous approach to the health and wellbeing of ordinary citizens has not led to more dissent. Donald Trump famously said that he could stand on 5th Avenue in New York and start shooting people, and it wouldn’t affect his support. Boris Johnson is demonstrating the truth of the sentiment.

It underlines the extent to which capitalist ideology and the selfishness associated with it have come to dominate thinking. Trump’s supporters didn’t believe that they would be the ones being shot on 5th Avenue, and Johnson’s supporters don’t believe that they’ll be the ones dying or being impoverished by his actions. They see it, probably subconsciously without even really thinking about it, as being in their own interests to believe the lie that the poor have only themselves to blame, or that the victims of Covid have either brought it on themselves or would have died soon anyway. And it is in the interests of capital and those who own and control it to ensure that most of us never get to understand that we have more in common with each other than we do with them. It doesn’t help that the main opposition party at UK level basically buys into the same ideology; they might want to tinker a bit with some of the detail, but the basics are broadly accepted, along with the need to ensure that we remain divided.

It doesn’t have to be this way, though; there are other ways of organising an economy or a society. Where are the politicians brave enough to make the case? Anyone not making the case against the current system is effectively supporting its continuation.

Envisaging an alternative

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There is a spoof newsflash doing the rounds on social media, which claims that Priti Patel is setting up a taskforce to deport any EU lorry drivers who happen to be enticed by the option of temporary work in the UK on 24 December, when they will, according to the government, no longer be required. It’s almost credible; there does seem to be an attitude in government that the problem is not going to be attracting lorry drivers in permanent jobs to come to the UK for lower wages, worse conditions and a very temporary contract, but getting rid of them afterwards. I suppose that, for those who ‘know’ that the UK is the best place in the world, and that everyone everywhere else is desperate to come here, it is ‘obvious’ that getting them to go home on 24 December is far and away the biggest problem. The newsflash is a spoof, but that underlying attitude is very much in evidence, and the inability to understand why this amazing offer from the UK government really is not too good to refuse is the main reason why the scheme seems doomed to fail. And even if it were true, as they seem to believe, that EU lorry drivers will be queuing up (presumably not the ones who remember being on a certain disused runway in Kent last Christmas Eve) to come to the UK and take up the jobs, 5,000 for two months seems unlikely to make much of a dent in a longer term structural shortage of 100,000.

But that underlying attitude of the current government can also be generalised. Many of their policies clearly start from the assumption that ‘workers’ exist solely to meet the needs of ‘the economy’, where ‘the economy’ is a neutral-sounding term which is actually a euphemism for the interests of capital and those who control it. In policy terms, it means that the education system exists only to supply workers with the skills needed by ‘the economy’; the government response to a pandemic is governed first and foremost by a need to protect ‘the economy’ rather than people’s lives; people on benefits are expected to take whatever jobs exist, wherever they may be and regardless of personal preferences or find themselves without any means of support; and foreigners are expected to come here as and when required to fill any gaps and then depart promptly when no longer required. It is a world view which sees people as ‘resources’ and values them solely in terms of their economic usefulness rather than individuals with needs of their own, and which sees government as a means of facilitating that. It is a deeply ideological mindset, based around serving the interests of the few rather than the many.

It’s not the only possible view of the world, though. Imagine an alternative which sees ‘the economy’ as existing to meet the needs of people, education as a means of allowing people to seek knowledge and personal fulfilment, and government as a means of managing the economy towards those ends. The success of capitalist ideology is that so few seem able to envisage that alternative – even the official party of opposition. Much of what has come out of the Labour Party’s conference this week is about trying to put a very slightly kinder edge on the application of the ideology rather than offering any sort of alternative to it. But the truth is that the economic system under which we live is a human construct which doesn’t have to operate as it does. Humans built it, humans control it, and humans can change it. Just not the humans currently in control.

Do the Tories understand capitalism?

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It might appear a silly question, given that the Tories are generally regarded as being the party of capitalism, but some of the things they have said and done recently give rise to more than a vague doubt about the answer. And that’s not just a question about Brexit, legion though the examples might be in that regard.

One of the key features, allegedly, about market capitalism is that it promotes innovation. Sometimes that innovation is purely the result of intense competition, but at other times it’s a response to changing market conditions or external shock. In any event, according to the theory, the most innovative businesses will thrive as a result whereas those adhering to outdated business models will go to the wall. The idea that those working for those failing companies should be left to their fate is an uncomfortable one for many of those of us opposed to unregulated capitalism, but for the enthusiasts, it’s a necessary and indeed desirable feature.

One recent such external shock has been the Covid-19 pandemic. It forced many businesses to experiment with different working patterns and to employ already available technology to facilitate more flexibility. The best employers have seen the benefits of this for both themselves and their employees and are already looking to embed the new working practices in their future business models. Admittedly, it hasn’t been so easy for those employers who start from an assumption that they need to measure and rigidly control hours worked by their staff, none of whom can, apparently, be trusted further than they can be thrown, rather than consider productivity or output, but such companies are capitalism’s natural victims of innovation. However, it isn’t just the businesses adopting (or failing to adopt) new practices which have been impacted – as capitalist theory would suggest, there’s also been an impact on other companies in the wider economy. In this case, that includes businesses such as city centre shops, restaurants etc, all of which have seen a fall-off in footfall, and which are now facing the probability that they will never be able to fully recover. Market conditions have changed, and their scope for adaptation is limited.

The response from some Tories has been to demand that people must be forced to return to their offices in the city centres, as we saw from former Tory leader, Ian Duncan Smith earlier this week, in his case talking about civil servants. But to return to my opening question – does he understand the market capitalism he claims to espouse? Demanding that organisations return to working methods and practices which have been superseded by events in order to protect some old businesses which will otherwise be unable to survive in the new world seems to owe more to the thinking of Ned Ludd than modern market capitalism. The question for thinking capitalists (to say nothing of those of us who consider the system to be flawed anyway) ought to be about how we support people during the transition to a different type of economy, not how we resist changes which will benefit many as well as reducing carbon-expensive travel.

Fungible MPs

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The advert suggesting that ballerinas could retrain as cyber security experts has been widely and justifiably mocked, largely because of the belief that it reveals an underlying attitude by the current government towards the arts in general. But it also highlights two other aspects of the government’s attitude towards the labour market more generally.

The first is a dehumanising ideological belief that people are simply ‘resources’ whose main function is to serve the needs of the labour market, to which end they should be willing to learn whatever skills are required and to move to wherever those skills are required. From that perspective, people’s aspirations should be limited to what the market requires in order to serve the needs of capital (unless, of course, they are part of the capitalist class, in which case other people are there to serve them). The surprising thing is how generally accepted this assumption is, but then getting ‘buy-in’ to an ideological perspective is a highly effective method of controlling the masses by turning them on each other.

The second is the underlying high-level assumption of what economists call ‘fungibility’ – in this case, the ability of an available labour resource to fill a labour vacancy with just a bit of retraining. It’s a hopelessly oversimplistic assumption, but it’s one that many people make regularly. Another example is the assumption that eastern European fruit pickers can be easily replaced from the ranks of the UK unemployed. In the real world, things aren’t that simple; 1,000 vacancies for cyber security experts in Aberdeen can’t easily be filled by 1,000 unemployed ballerinas in Exeter. (Although, in practice, it’s probably easier to retrain ballerinas as cyber security experts than to retrain cyber security experts as ballerinas: adjusting people’s skills and knowledge to turn them into IT experts is considerably more straightforward than adjusting their body shape, gender and physical flexibility to turn them into ballerinas.)

It should be obvious why fungibility is a silly assumption to be making, but I suppose I can understand why it’s one which ministers and MPs might make. After all, there are few occupations in the UK which are more fungible than that of MP. This is a job which requires no special training, no particular skills, and no relevant experience. Anyone can get the job, and the only traditional barriers are membership of the House of Lords, bankruptcy, and insanity (although empirical evidence suggests the last of those is hard to define and impossible to enforce). And people who have been an MP (even those whom the cynical might suggest would be unemployable elsewhere) drift effortlessly into other jobs afterwards. (They assume it’s because of their skills and experience, but generally their list of contacts and assumed ability to open doors are more highly valued by their new employers.) If one’s personal experience suggests that transfer into another role is that easy, why wouldn’t they assume that it’s equally so for everyone else? After all, understanding the real world is another qualification which is not required to become an MP.