The intra-contradictions of capitalism, Part 147

Hat tip: Dave Osler's blog: apparently the picture above is doing the rounds at London's Private Equity houses.

My birthday Monday. Not 100% tip-top condition for this weekend's celebrations, but I'll survive. Looking forward to the end of 2007 & the start of 2008. Looking forward to doing absolutely sod-all over the Festive Period except eat, drink, sleep, meet friends and play scrabble on Facebook. My batteries need not so much recharging as taking back to the shop...I'm crawling towards the finishing line of 2007.

Anyway, saw this below a few days back. One thing I've noticed increasingly in the last year (apart from realising how much I really hate spoilt rich kids & why more roads should have pedestrian bridges to get over them) is how much the middle classes hate, and are getting screwed over by, the super-rich. If you want to see angry extended rants about the iniquities and general crapness of the UK banking, insurance and pensions' "industries", the Mail on Sunday financial section offers a lot more than Socialist Worker, I can tell you! I've mentioned it in a couple of my blog posts but this is a good one of what it's like on the front-line here: ie London and the Home Counties. I could say something about the bourgeoisie creating its own grave-diggers but...


If I had a little money...The rich are richer - and more ostentatiously so - than ever. The middle classes, unable to keep up, are becoming angry. Aditya Chakrabortty reports on a growing social divide
The Guardian, Saturday December 8, 2007

Special moments at Movida are heard before they are seen. They start when the usual nightclub music stops, and the theme tune from Superman or Rocky strikes up. Everyone knows what that signifies: a customer has just made a Big Spend.
This time round, some Tony Bennett comes on: "It's the good life, full of fun, seems to be the ideal." Sure enough, a procession of waiters marches into the VIP area. High above their heads, each carries a shallow white basin. Inside is a giant bottle of Cristal champagne, with a big white sparkler fizzing at its neck. Each costs £7,000. There are three of them. The man who appears to have shelled out £21,000 on designer booze stands on a sofa. "Oh the good life, lets you hide all the sadness you feel," sings Tony; but poignancy is not for this spiky-haired, T-shirted thirtysomething. Open-mouthed, he faces the dancefloor and jabs his arms roofwards: a triumphant striker in front of a home crowd.


Many of us have only ever heard about London's ultra-wealthy; Movida is where you see them: bankers and paunchy foreign businessmen, footballers and celebs. It also pulls in plenty of money, as evidenced by the silver Bentley and other expensive cars parked outside, and the £150,000 or so that routinely gets spent at a single VIP table in one night.

The club's next money-spinner is a Christmas cocktail. Some may think a Christmas cocktail means eggnog and lemonade, but this is a blend of rare cognacs and gold leaf in a crystal glass, complete with an 11-carat white diamond. It costs £35,000.

Plenty of their customers can afford that. After one especially big evening, a businessman was asked by staff if he felt at all guilty. Not really, he replied. "By tomorrow morning, I'll have earned more in interest than I spent last night."

In 1998, so great was the unease over pay in the Square Mile that the Mansion House held a debate: "This house believes that City salaries are totally fair and justified". Hundreds of banking grandees turned up and, after attacks on the fill-yer-boots brigade as "smug and complacent", voted against the motion.

The mainstream political response to such lavish rewards was, essentially, a shrug. "We are intensely relaxed about people getting filthy rich," said Peter Mandelson. Like other New Labourites, he believed that politicians should not get in the way of the people at the top, but help those at the bottom. Targets were set for child poverty, help was given to pensioners; but politicians did not tackle the inequality that had grown so much under Margaret Thatcher.

Less than a decade later, the consequences of this hands-off approach are apparent, nowhere more so than in London. There has been a boom in financial markets and years of runaway City pay; the city has turned into a favourite bolthole for the international business elite. This new, global class of financiers and business people, often lumped together as the "super-rich", has left everyone else far behind and very anxious.

The most affected group is the middle class, who have been used to keeping the upper class just within their sights. Now, however, the new rich are racing off into the distance - taking with them any hope the middle class might have had of also making pole position one day.

No wonder the mid-market Daily Mail attacks the super-rich, with headlines about "fat cats getting fatter" and "private equity pillagers". Such pieces give weight to the accusation that this is the politics of envy. Another thing that annoys the Mail - and others - is that many of the super-rich are "non-doms"; people of foreign descent who pay little tax here. Hence columns titled "Why I deplore the billionaires who contribute so little to Britain".

It's not just the jaunty souls on the rightwing press who are worked up. Philip Gould, the pollster and co- architect of New Labour, has noticed that the "wise people" in his focus groups are getting antsy. He says, "They talk about insecurity, migration and - in London - this phenomenon of the super-rich."

Once the man Tony Blair relied on to check the popular mood, Gould now describes the disquiet he has observed among middle-earners being asked to move down a bit. This is hardly Blairite talk, as he acknowledges: "I feel really uneasy about capping aspiration in any way." Yet if his diagnosis is correct, more tax on the super-rich is one policy prescription that could follow.

If you want to see how the discussion could develop, cast an eye across the Atlantic. US pundits coined the term "anxious middle" to refer to a middle class that feels not only unable to keep up with the rich but increasingly worried by economic competition from China, India and other developing countries. In the run-up to next year's presidential elections, leading Democrat candidates have all become very aggressive about putting an end to the Bush era of tax cuts for the rich. Middle-income America is in a far worse position than its British equivalent, but the "anxious middle" could be the next American import.

Swaths of London and its south- eastern hinterland have become so exclusive they might as well be declared off-limits to the middle class. It's not just the ultra-expensive nightclubs and restaurants; it's also the house prices that are far out of reach of anyone not already on the property ladder.

"There's segmenting along class lines," says the economic geographer Danny Dorling. "It's a return to an Upstairs Downstairs ethic where there are certain areas you just can't go. Except these aren't wings of a house; they're parts of a region."

Any ripple in the housing market spreads a long way, as those who can no longer afford their ideal go looking for the next best. The scruffy London borough of Newham is an unlikely home for a Russian oligarch, but house prices there have risen 240% in the past decade, while average wages have gone up by closer to 40%. Unless house prices fall a long way, Newham is unaffordable to most residents who haven't bought already.

The house-price boom has not all been due to the super-rich, but it causes two huge headaches for everyone else. The first is commuting times, as those who can't afford to live in a desirable area close to their work are forced to make longer journeys. The second big worry is about one's children: how will they get on the property ladder? According to the Conservative MP David Willetts, this was the insecurity his party picked up on this autumn when it proposed a cut in inheritance-tax bills - a policy the Labour government swiped.

"Smart politics is like being a good doctor," he says. "The anxiety about inheritance tax that we responded to was really the anxiety among the middle classes about how their children were ever going to afford a house."

Another area of middle-class angst the Conservatives are targeting, says Willetts, is education. Schools have become the subject of fierce competition between middle-class parents, increasingly either paying private school fees or premiums on property in good catchment areas.

But the politics of anxiety need not be Tory blue. There is also scope for progressives to tackle the cause of all the anxiety by actually reducing the wealth gap and taxing the super-rich more.

So how do the middle classes feel about those on the other side of the new wealth gap? Purley, in Surrey, is not a bad place to start. Part of the commuter belt, it's solidly Tory and so middle class it was picked as the home of the sitcom couple Terry and June.

Smug yet ambitious, the pair spent their time trying to impress Sir Dennis, the company boss, and win Terry a job on "the top floor". A lot has changed since the sitcom's heyday, and a real Sir Dennis would not be likely to come over for dinner these days; not now top company bosses earn 98 times as much as the average worker.

According to Jeremy Way, a long-time local estate agent, the self-satisfaction of Terry and June-era Purley disappeared a long time ago: "A lot of people around here are living on tick." Again comes the mention of school fees.

On to the local rugby club, with its carpark of muddy Renault Clios. Where Movida was full of dresses that came to a rather abrupt end, the uniform here is fleeces and beanie hats. Ian Martin is one of the few stood on the touchline. After more than 25 years in Purley, he's moved to a "hutch" in London for an easier commute. So what does he make of what's happened to the capital?

"London now is England offshore," he says. It's rich, it's lightly taxed, and it's increasingly foreign. "I don't mind that so much - it's the empty second homes that get me. It's when these people take a bolthole in London, which they leave unoccupied 10 months of the year: that pisses me off.'

He is not especially indulgent towards the new rich. "All these celebrities: what have they ever done? Shoot each and every one of them and the economy would motor on."

His comment illustrates a point that the sociologist Richard Sennett makes: "People used to believe that if you were on a good income you probably deserved it. But super-rich money is often seen as ill-gotten, unearned. When you see a Russian oligarch in a posh jeweller's like Asprey, you certainly don't think 'he must be better than me'."

Instead, you probably spend more of your own money in an attempt to keep up. The run-up to Christmas has seen newspapers littered with luxury gifts. The Times ran a How-to guide to tiaras, with the come-on line: "What? You don't have one yet?"

"Luxury is completely relative. It's something that makes you stand out from the pack," says Robert Frank, an American economist who has written about how the middle classes spend to keep up with the rich. "It starts when a company chief executive has a coming-of-age party for his daughter, 50 Cent comes to play, the daughter invites 400 of her closest friends - and they all leave with video iPods."

That surely doesn't apply to all luxury items, I ask, and tell Frank about Movida's £35,000 cocktail. There is a sharp intake of breath.

"No," he says. "That has 'Tax Me' written all over it."

Still looking for a New England?

Two recent pro-English pieces from progressive bloggers. First, from Paul Kingsnorth:

England for the English, Sunday, October 28

This is getting worrying. Fresh on the heels of their really rather excellent Quality of Life policy review, which contained some seriously interesting thinking about green issues in British politics, the Tories are giving me another reason to take them seriously. Where will it end?

This time it's their proposal, announced yesterday, to ensure that only English MPs can vote on English matters in the House of Commons. Sounds like traditional Tory Little Englandism? Not so. Here's why.

The English are uniquely ill-served by post-1997 British democracy. The Scottish now have a Parliament, with elected members, a large budget and significant powers to run their own nation in their own way. The Welsh have the same to a lesser extent, as does Northern Ireland. And a good thing too - democratic devolution is always welcome. But all of these nations also have representatives in the British Parliament at Westminster, where Scottish and Welsh MPs can make decisions about the future of England to which they will never have to answer to their constituents – though English MPs cannot do the same in those countries.

Thus Scottish, Welsh and Northern Irish MPs at Westminster can vote, and have done, to impose controversial policies such as university tuition fees or foundation hospitals on the English which their constituents at home will not have to suffer and for which they will not be answerable at the ballot-box.

England is the only British nation without any form of democratic devolution. It is the only nation in Europe without its own parliament or government. It has fewer MPs per head of population than the other British nations, and receives less money per head from the treasury than either Scotland, Wales or Northern Ireland. The British government has ministers for Northern Ireland, Wales and Scotland – despite devolution – but no minister for England. The Scottish enjoy privileges, from free university education to a lack of academy schools, which the English can only dream of but for which the English have to pay. Meanwhile, Scottish MPs can ensure the government gets its way in denying those things to us south of the border.

Don't get me wrong: I'm not being anti-Scottish, Good luck to them. Scotland seems an exciting place to be these days, partly due to its renewed sense of nationhood. All I'm asking is for the same thing. England remains subsumed within 'Britain' while the other nations forge their own way. This is making a lot of people angry, across the political spectrum. Legendary Labour MP Tam Dalyell, who first invented this so-called 'West Lothian question' back in the 1970s, says that the unfairness of the political settlement since devolution is causing 'smouldering and growing concern in England, not least amongst some English Labour MPs.' This may be why almost 70% of English people - including me - now support the creation of a fully-fledged English Parliament, to square the circle created by devolution. Alex Salmond of the SNP supports us, by the way. There's a man who know which side his bread is buttered.

What's the government's reaction to this? They scorn it at every opportunity. They even resort, without irony, to the argument the Tories used when they opposed setting up the Scottish Parliament in the first place - that it will 'break up the union.' To which I reply: maybe it will. And if that's what the union's people want, that's what they should get. The Labour Party is dominated by Scots, and knows damn well that if the injustices of the British constitution are redressed, their power will be reduced. They know which side their bread is buttered too. Our job is to stop the buggers eating it. They did buy it with our money, after all.

Second piece is by Charlie Marks:
What England means to me
Charlie Marks, Thursday, October 11, 2007

The British ruling class has not only tried to stifle the national culture of Scotland and Wales: the radical tradition of the English working class is in dire need of popularization. For example, I did not learn in school about the Diggers, the Levellers, the Luddites, the Tolpuddle Martyrs, the London Corresponding Society, or the Chartists, though the Suffragettes got a mention. Focus on events specific to England in the mainstream media did not stretch beyond coverage of sporting events.

It was no wonder that for a long time I confused England for Britain, and vice versa. Coming from an immigrant family further confused matters: could you be English if you were born in here but your parents were not? If my family came from Ireland but I was born here, did that mean I wasn’t Irish?

Unlike my Black and Asian friends at school, I did not face racism for being the child of immigrants, but I understood the hurt caused by jokes directed at the Irish and their use to divide people and prevent opposition to colonialism. Unlike my white friends, I knew a bit about the history of the British Empire, and could shoot-down claims that immigrants came to steal jobs or scrounge.

I have never experienced any animosity in Ireland for being English – and that is always the description, no one has ever said “Are you British?” upon hearing my accent.

As I grew up and became interested and involved in left-wing politics confusion over the issue of nationality returned. When New Labour allowed the creation of a Scottish Parliament and a Welsh Assembly, it looked as if the contradictions inherent in the dual English-British identity held by most people in England were about to become antagonistic.

To this day, the idea that those “British” people in England might choose an English identity is rarely countenanced. If it is considered at all, it is as a threat. The reason for the denial or denigration of identity is that the development of an English national culture discrete from that of “Britishness” does in fact pose a threat to the British establishment. As Richard Weight wrote in his book Patriots,

“Over the coming decades, everything possible will be done to ensure the survival of the British state, some of which we shall never know about. The Empire may have gone, but capitalism – the economic system which helped to give birth to it – remains in existence. So too does the matrix of power relationships which evolved out of that economic system. It is highly unlikely that those who benefit most from capitalism would lose their privileges if Britain were to break up. But very few are prepared to take that chance.”

I would argue that the break-up of Britain is likely to pose a threat to power of the capitalist class. Would the independent nations of England, Scotland and Wales combine to pursue imperialist wars and colonial occupation in the Middle East as a junior partner of the United States? Would they have remained in the EU, and signed up to the establishment of a European capitalist super-state? Would the ruling class have succeeded in selling off public utilities and eroding the public provision of housing, healthcare, and education? Would there have been the policy of “managed decline” of the productive economy? I don’t think so.

The “matrix of power relationships” that evolved out of the demise of the British Empire have insured that Britain remains an imperial power – the process of decolonization did not result in Britain losing influence over its former colonies, and the close alliance with the United States is not just in recognition for the assistance provided during the Second World War, which itself came at a price.

It should be needless to say that what is essential to capitalists is detrimental to working people, and Britain’s role as a junior partner to the US, its membership of the European Union, and continued interference in the political affairs of former colonies, are essential for the capitalist class.

As a socialist, I do not seek an imperial or capitalist England, or a nation defined by religion or race. The abandoned Clause Four of the Labour Party’s constitution is probably the most famous affirmation (in the UK, at least) of what socialists seek, namely, “the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service”.

In addition to this, socialists seek fraternal relations between nations and support the right to self-determination. At home, this should mean active support for the struggle to establish political representation at a national level for England – a cause which complements the movements for self-government in the other nations of the UK and would greatly improve the prospect of a united Ireland.

The nationalisms of Wales and Scotland are now reaching hegemony in the devolved institutions by implementing and supporting social democratic measures, stepping back from the neo-liberalism of New Labour.

The response to this from the capitalist press is to announce with outrage that inequalities in funding under the Barnett Formula allow this to take place, but to whisper that to increase the free provision of healthcare, etc., is simply not possible. In other words, their intention is not to see reforms that are beneficial to working class people implemented in England, but to see the reversal of these gains.

And there is a problem here – for as the former Prime Minister Tony Blair admitted before his departure, the Barnett Formula has been retained because it holds the union together. If funding is levelled down in Scotland in the next few years, the nationalist-led Scottish government would have a stronger case for independence.

The concept of England as a nation is unfamiliar to many English socialists, just as it is often imprecise for people in England. Socialist organisations encourage members to study the history of the working class internationally, often neglecting to examine and learn from the history of the working class in England, its radical traditions, and its struggle for political representation.

Just as the labour movement remains tied to the Labour Party, despite New Labour being recognized by workers as the party of capital, socialists in England (and some in Scotland and Wales) remain attached to the notion that the working class will come to power through the maintenance of the United Kingdom.

I hope that this will change, and that English socialists will come to realize that devolution completely rules out a multinational road to socialism and that devolution in England, far from being an irrelevant or reactionary development, would actually empower working people across the world.

Is New Labour Finished?

I still think we will have a hung Parliament next time around (and another prediction is that the next General Election will be held in June 2009, the same day as the European Elections) and the Cons will be the biggest party, though they will fall well short of an overall majority. I also think neither of the two main parties will get 40% of the vote. A coalition "National Government" pledged to "reform" & "modernisation" will take over.

However, such a "National Government" will see its main challenges as being based around questions of identity. That is, the threat to the UK from Scottish (and Welsh...and English) Nationalism; opposition to greater EU integration; and divisions along ethnic, religious and racial lines.

In the meantime...one wonders how New Labour will get out of this one. The best commentary piece I've seen so far is this:

Another fiasco, but Brown is forever a sucker for business: The funding scandal has a familiar reek for a party infatuated with finance at the expense of the ethos of public service
Simon Jenkins, The Guardian, Wednesday November 28, 2007

For the Tories it is sex, for Labour it is money. Financial scandal sticks to the latter like political napalm. From formula one to ministerial mortgages, privatisation contracts and cash-for-honours, the sign of a £50 note waving in the wind sends Labour politicians weak at the knees. Their only moral is don't get caught, yet they get caught all the time.

Last July a Tyneside jobbing builder, Ray Ruddick, and a secretary, Janet Kidd, were jointly seized by the urge to give £80,000 each to Gordon Brown. This startling summertime generosity was in addition to some £400,000 they had given since 2003. Along with two others, they had contributed a total of £600,000. "Mrs Kidd of Lindale Avenue, Whickham, Gateshead" was out-donated only by Lord Sainsbury and Mahmoud Khayami. No hair turned.

Walk into a high street bank with that amount of cash and men in dark suits will gather round and demand in no uncertain terms how you came by it, usually just before the arrival of the police. Walk into the Labour party and you get an invitation to dinner with the prime minister and talk of "a K or a big P". Murmur that you are "from Mr Big" and the general secretary hurries to the door. You whisper in his ear, he puts his finger to his nose and congratulates you on winning the pools. He of course will keep the good news to himself.

The whole thing is preposterous. Gordon Brown's explanation yesterday was like a Lord Gnome editorial in Private Eye. Not since the print unions signed on in Fleet Street as "Mickey Mouse" and "Lord Beaverbrook" has the system been taken for such a ride. Brown may have been rueful about a prime facie breach of election law, but he could not help hinting that the fault lay variously with Tony Blair, under whom these things "were going on for some time", and Sir Hayden Phillips, for not giving Labour more taxpayers' cash. He could add that Blair's fiendish Geordie allies have now cost him a general secretary and given him Northern Rock and the Inland Revenue fiasco, all inside 10 days.

Labour's third biggest donor of the year has turned out to be a David Abrahams, known to Durham planning officers as David Martin. He was selected to fight William Hague in the Yorkshire seat of Richmond but was deselected when his curriculum vitae, including a reference to a non-existent wife and son, proved less than authentic. Yet he was close enough to Blair to attend his farewell in Sedgefield earlier this year.

Abrahams has rightly threatened to sue anyone who links his donations with a controversial planning application by his Durham Green Developments for a business park in prime land off the A1. This was at first refused by Durham planners, then approved after intervention from Douglas Alexander's transport department. A second application is now under way. For those who suggest that owt is never done for nowt, Abrahams has gone to some lengths to ensure that the general public knows nothing of any link between his one hand and his other.

What is astonishing is that, with cash-for-favours going nuclear on all sides, Labour's finance department did not ascertain any risk that might lie behind the source of its largesse, especially when the general secretary, Peter Watt, must have given them at least a wink and a nod.

The truth is that New Labour has been a sucker for "business" from the moment in the early 1990s when Blair and Brown decided to curry favour with the City. Eager to seem business-friendly, Brown abandoned his pledge to reverse Thatcher's union legislation and privatisation. He decided never to raise income or business taxes, and bizarrely chose Geoffrey Robinson as his buddy. His only act of delegation, ever, was to the one profession he trusted, the financiers of the Bank of England.

The word business still mesmerises Brown. To most people the occupation is about making money. To Brown it is a mysterious priesthood of infinite competence. To build a school or hospital, run a prison or plan an urban renewal, you must pledge partnership with a "businessman". Private money is always good, public bad.

If business wants a new runway at Heathrow, Brown orders one. If business wants the planning regime collapsed, he will collapse it. If business worries over capital gains tax, it will be heard. Never was the maxim, what is good for General Motors is good for the nation, so enshrined in one man. Any theory that Brown is not a real Thatcherite is rubbish.

In Brown's Britain there is no longer a public service ethos, only a business ethos applied to public services. No longer do Presbyterians render unto Caesar the things that are Caesar's and unto God the things that are God's. Everything goes to Caesar under a private finance initiative.

After a decade of getting their fingers burned by business links to politics, Brown and his colleagues should surely have been streetwise. Apparently not. Despite reforms requiring openness in donations in 1997, despite the Political Parties, Elections and Referendums Act 2000, and despite the trauma of cash-for-honours, nothing was learned.

As Brown thrashed about yesterday he decided there was no rescue from within. He showed the depths of his despair when, as if on his deathbed, he summoned a lawyer and a priest, Judge McCluskey and the former Bishop of Oxford, Lord Harries, hoping for the umpteenth time to "restore trust in the political process". They may save his party from the courts and his soul from damnation. But what do they know of business?

Brown has been woefully served by his infatuation with high finance. Men and women whose sole skill is the pursuit of money have been corralled into the public sector and given tasks way beyond their vocation. They have been honoured with jobs, gongs and contracts. Their money has been taken under the counter. Civil servants have been demeaned and demoralised, and public service has rotted in the process.

One outcome of this fiasco must be stamped out without delay. Brown implied yesterday that the taxpayer should buck up and rescue politicians from their own sins by giving them a thumping great subsidy. This is outrageous blackmail. The public should not give these people a penny, other than in direct and accountable local subscriptions and open donations. How can Brown claim to run the country when each week he fails the whelk-stall test?

simon.jenkins@guardian.co.uk

Greg Palast also shows that some of the leading people in the saga have previous, to use police parlance...

Brown’s Fixer Explains How It’s Done: Jon Mendelsohn and the Secret Tape
Boasted £11 million donated by Tesco cut tax bill by £20 million
Greg Palast, November 29th, 2007

It was a stunning admission. Prime Minister Gordon Brown’s crony explained to the U.S. businessman, in evil detail, exactly how the fix is done in Britain.

Unfortunately, for Jon Mendelsohn and his partners, the “businessman” was, in fact, an undercover reporter for The Observer of London.

Today, Brown’s foes are calling for Mendelsohn’s resignation as chief fundraiser of the Labour Party for his admitted knowledge of £630,000 ($1.2 million) in dodgy, possibly illegal, campaign contributions to Labour.

What’s odd here are the protestations of shock at the behavior of Mendelsohn, described in the Guardian as an “ethical” lobbyist. “Ethical” my arse.

It was exactly nine years ago that Mendelsohn and his lobby firm partners were caught trading cash for access. How this Mendelsohn character ended up heading Labour Party fundraising and how he obtained the sobriquet ‘ethical’ is the real shocker.

I know a few things about this Mendelsohn. The “businessman” with the hidden microphone was me. In June 1998, joined by my recorder and a real US businessman, Mark Swedlund, who designed my elaborate corporate front, I met Mr. Mendelsohn at his tony Soho London office. There Mendelsohn confirmed what was already on tape from his partners in the lobby firm he founded, LLM.

I explained my corporate needs: some environmental rules needed bending. I hinted I was with Enron. Mendelsohn’s partner Neil Lawson told my recorder that, if I paid LLM £5,000 to £20,000 per month, “We can go to anyone. We can go to Gordon Brown if we have to.” Brown was at the time Chancellor of the Exchequer. Could the lobbyist provide concrete examples of a fix?

Easily. Here is a short list of LLM claimed accomplishments:

- Inside information on then-Chancellor Gordon Brown’s budgets.
- Tax avoided by a supermarket chain following millions donated to a New Labour pet project.
- A pass on anti-trust action against client Rupert Murdoch’s media empire.
- And for Gordon Brown, a favor that the Mendelsohn team expected to redeem.

Tesco Goes Tax-Free

LLM, which stands for the founders Lucas, Neil Lawson and Mendelsohn, were about to derail Brown’s plan for a tax on car parks (”parking lots” as we say in the States). This would cost Tesco, the supermarket chain, an LLM client, £20 million annually. LLM was holding secret meetings that week in June 1998 with Tony Blair’s Downing Street Policy Unit to get Tesco exempted from the proposed tax.

The tax threat went away after LLM advised Tesco to drop £11 million into funding for Blair’s odd Millennium Dome project.

[To my US readers: The Dome is a gargantuan tent costing $100 million - no kidding.]

“This government likes to do deals,” Lucas told me.

But this deal was complex, Mendelsohn said, not so simple as cash paid for a tax break. “Tony is very anxious to be seen as ‘green’,” Mendelsohn explained to me and my confederate. “Everything has to be couched in environmental language - even if it’s slightly Orwellian.” So LLM devised a set of cockamamie gimmicks for Tesco, like offering bus services to the elderly, which would paint the retailer green.

It worked. Tesco was spared the tax - though the company denies categorically that its cash dumped into the Dome bought any favors.

Message for Murdoch

The year of my paper’s original investigation (dubbed, “Lobbygate”), anti-trust authorities were looking into Rupert Murdoch’s companies’ alleged predatory pricing practices. LLM carried the word from Downing Street, according to Lucas, that, if Murdoch’s tabloids toned down criticism of new antitrust legislation, the law’s final language would reflect the government’s appreciation. On the other hand, harsh coverage in Murdoch’s papers could provoke problems for the media group in Parliament’s union-recognition bill.

The message to muzzle journalists was not, said Lucas, “an easy one in their culture” - journalists being a trying lot. However, the outcome pleased LLM clientele.

A Peek at the Budget

It also happened that on one of the days I recorded Mendelsohn’s partners, they boasted of informing an LLM client about details of Gordon Brown’s budget plans before the Chancellor’s announcement went public.

A lobbyist competing for my “business,” when asked to match the offer of inside information and deal-making held out by LLM and another New Labour firm said, “It’s appalling. It’s disturbing,” and added that he would refuse to match LLM’s services at any price.

If LLM appeared favored by Brown’s operation, Brown himself received favors from LLM. “Gordon Brown asked us to have our client KPMG [the consultancy] host a breakfast for him where it was pre-arranged that they would praise him for his prudent budgets.” Brown basked in this Potemkin praise-fest - a favor that would be returned with special access (for my own clients, if I paid the retainer).

Whether Mendelsohn, Lawson and Lucas actually pulled off all they claimed, I can’t say. Though just kids in their twenties, LLM had garnered millions in revenue, a lot of loot if for mere advice. No one seriously investigated; no one asked uncomfortable questions of Mr. Brown, Mr. Blair or the man at the center of several of these supposed “deals,” Mr. Peter Mandelson, now an EU Commissioner.

However, that Mendelsohn made these tawdry claims (or grinned at me while his partner made them), and that they were published on page one of every newspaper in the realm - part of an LLM tape broadcast on BBC’s Newsnight - one would think that the perspicacious Mr. Brown would have avoided Mendelsohn like the plague.

But the PM embraced Mr. Let’s-Make-A-Deal. The reason was made clear to me by Mendelsohn himself, a man as brainy as he is cynical and wealthy. Those many years ago, at the dawn of the Blair regime, Mendelsohn handed me a confidential manifesto he’d penned for LLM clients only. It was a map of the soul of New Labour.

Here was a chilling combination of Mendelsohn, Mandelson and Nietzsche. “AN OLD WORLD IS DISAPPEARING AND A NEW ONE EMERGING,” he announced in upper case. In the “Passing World” were “ideology” and “conviction” - which would now be replaced by “Pragmatism” and “Consumption.” “Buying” would replace “Belief.”

And ultimately, in this Brave New Labour World, style was all: “WHAT YOU DO,” wrote Mendelsohn, was passé, replaced by, “HOW YOU DO IT.”

So why demand Mendelsohn’s head now? Gordon Brown is a prudent man whom, I suspect, reads a newspaper or two - and knew exactly whom he had positioned to fill his party’s coin sacks. Mendelsohn is just a gun for hire, a forgettable factotum. I wouldn’t place the blame on the hired gun, but on the man whose finger is on the trigger.

The series “Lobbygate: Cash for Access” was originally published by The Observer (UK) in July 1998 by Greg Palast and Antony Barnett. For a complete history of the scandal, read, “Blair and the Sale of Britain” in The Best Democracy Money Can Buy (Penguin/Constable & Robinson 2004).

My own feeling is that although quite a few Labour MPs would willingly join a National Government, careerists as they are, the Labour Party itself will not survive being out of office. I've read stuff by "think-tanks" like the Fabians, Compass and Catalyst. None of it is very inspiring, coming across as happy-clappy managerialism at best. Not the sort of stuff to make one fight on the barricades, or even write out a cheque for...

Another Kevin Carson book review

In fact two reviews, of books by Sean Gabb and Chris Dillow. Both are scorching critiques, from heterodox "Right" and "Left" positions, of New Labour.

Two Book Reviews: New Labour and Managerialism in British Politics, Monday, November 05, 2007

Sean Gabb. Cultural Revolution, Culture War: How Conservatives Lost England, and How to Get It Back (London: The Hampden Press, 2007). 105 pp.

Chris Dillow. The End of Politics: New Labour and the folly of managerialism (Hampshire, UK: Harriman House, 2007).

These two books, seemingly from divergent ideological perspectives, are both critiques of managerialism in British politics--and perhaps not so divergent after all.

Sean Gabb, successor to the late Chris Tame as Director of the Libertarian Alliance, is very much a man of the Right: a composite of Burkean and Little Englander, roughly equivalent to the Old Right or paleolibertarians on this side of the Atlantic. In his critique of managerialism and the corporate state, however, he has much to say about globalization and corporate rule, among many other things, that left-libertarians will find of benefit.

Chris Dillow, a heterodox economist who owns Stumbling and Mumbling blog, attacks managerialism from a position decidedly on the Left. But it's a Left that's friendly to markets, decentralism, and self-management, and hostile to the New Class version of bureaucratic socialism that dominated Britain from the Webbs to Harold Wilson.


* * *


1. The chief villain in Gabb's book is the managerial New Class and the rentier capitalists whose main source of profit is their association with the corporate state:

It is clear that our ruling class--or that loose coalition of politicians, bureaucrats, lawyers, educators, and media and business people who derive wealth and power and status from an enlarged and active state--wants an end of liberal democracy. [p. 6]

Elected politicians never have the running of a country all to themselves. While undoubtedly important, they must in all cases govern with the advice and consent of a wider community of the powerful. There are the civil servants. There are the public sector educators. There are the semi-autonomous agencies funded by the tax payers. There are journalists and other communicators. There are certain formally private media and entertainment and legal and professional and business interests that also obtain power, status and income from the policies of government. Together, these form a web of individuals and institutions that is sometimes called the Establishment, though I prefer... to call it the ruling class. [p. 8]

Gabb's ruling class, like the mass base of Orwell's Ingsoc party, was "brought together by the barren world of monopoly industry and centralized government."

The new Britain he finds so objectionable was essentially described by Anthony Burgess some forty years before. Indeed I find the absence of any reference to Burgess somewhat remarkable. Tony Blair's Britain, with its near-total supercession of common law protections by administrative courts, and with the social pathologies symbolized by the ubiquity of yobs, happy-slappers and ASBOs (Anti-Social Behaviour Orders), under the watchful eye of the public surveillance camera, could have leapt from the pages of A Clockwork Orange or 1985. Burgess's Britain, terrorized by hoodlums like Alex and his droogs, in which "everyone not a child or with child must work," and where the Minister of the Interior sought to empty the prisons of common prisons because they'd "soon be needing them for the politicals"--is it really such a stretch of the imagination, these days?

The instruments by which the New Class is imposing this "new settlement" on Britain are the replacement of common law due process, civil liberties, and parliamentary government by the unaccountable rule of administrative bodies, and the use of multiculturalism as an ideology to divide, conquer, and reshape society.

Gabb sees the old institutional basis of liberal democracy being eviscerated by the New Class:

...structures of accountability that emerged in the 17th and 18th centuries are to be deactivated. Their forms will continue. There will be assemblies at Westminster. But these will not be sovereign assemblies with the formal authority of life and death over us all. That authority will have been passed to various unelected and transnational agencies. And so far as the Westminster assemblies will remain important, our votes will have little effect on what they enact. [p. 6]

I can find much to disagree with in Gabb's view of cultural (or rather multicultural) matters. For example, in principle I would view the shift in orientation of the National Maritime Museum in Greenwich that he describes, from a celebration of Empire and naval supremacy to a focus on slavery and "history from the position of the colonised," [p. 10] as a good thing. I consider insititutional racism in police forces, and the casual expression within police circles of racist attitudes toward the subject populations over which they are have been given near-unlimited power to coerce, in a much more alarming light than Gabb apparently does. In a country where the names Cory Maye and Katherine Johnson have recently figured in the news, where every week brings another story of someone murdered in a botched no-knock raid, or of someone being tasered to death for "resisting arrest" (who turned out to have been in a diabetic coma)--I can understand the reasons for rooting out such attitudes among our "protectors and servers" root and branch. I confess little sympathy for a uniformed beast of prey (or "filth," in the apt terminology of some across the Pond) who expressed approval for the murder of black suspects in police custody, and who joked about burying a "Paki bastard" under a railway line,-- regardless of how badly his life was "ruined" by exposure. [pp. 11-12] Although Gabb suggests the public reaction was "excessive" and expressed some doubt as to whether such views would affect their performance of public duties, [p. 12] given the background of police abuses in my own country I tend to think cops with absolute and unaccountable power are quite prone to act on such views, and that the public reaction isn't severe enough.

But the remarkable fact is not our disagreement on cultural matters, but that I concur with so much of his analysis of the effect of "political correctness" and multiculturalism as ruling class ideologies. Like Gabb, I see official multiculturalism in the hands of the New Class and its state agencies as an instrument of division and control, serving a ruling class that prefers a population without the cohesion to resist.

The ruling class seeks "the establishment of absolute and unaccountable power," to be achieved in part by coercion, but even more by the "reshaping of our thoughts." The significance of multiculturalism is not so much its objective content, or the often harmful and wrongheaded content of the older habits of thought it seeks to replace. It is the attitude of uncertainty and deference it seeks to create among the ruled: constant uncertainty and anxiety lest they be using a word ("crippled" or "handicapped" rather than "differently-abled," "black" rather than "African-American," "Indian" rather than "Native American") that has been superceded by the Eleventh Edition of the Newspeak Dictionary, and deference to the class of social engineers who decide the currently acceptable terminology. And the terminology is deliberately changed frequently enough to maintain this constant free-floating sense of anxiety and dependence.

As dangerous as virulently racist views may be when held by the lawless thugs whose "gang colors" are police uniforms, the nature of the ideas being stamped out is purely incidental for the social engineers; their real purpose could be served just as well by identifying any widely held belief, no matter its substantive content, as a "thoughtcrime" to be policed by themselves. And the assumption of such state power is even more dangerous when exercised against private citizens--as when plainclothes police agents visited Chinese and Indian restaurants to monitor the patrons for ethnic slurs against the staff. [p. 13] Criminalizing the expression of racist views by private citizens, no matter how abhorrent--it should go without saying for any libertarian--endangers the liberties of everyone else.

The ruling class's motivation in ideologically renovating museums and such is not to replace a worse with a better understanding of an objective truth, but to "weaken their ties with the past, or... to make them into vehicles for contemporary propaganda." [p. 10]

Every autonomous institution, every set of historical associations, every pattern of loyalty that cannot be co-opted and controlled--these must be destroyed or neuralized. [p. 25]

Their agenda, in rooting out and punishing private expressions of racist thought, is to seize on the abhorrence that many understandably feel for such views as a vehicle for putting power into the hands of a class of social engineers.

If borders and customs and other artificial barriers to the free movement of people are a bad thing, then so is the artificial mobility promoted by Empire and by subsidized global capitalism. The result, as described by Gabb, is to render impossible a recurrence of the liberal uprisings of the sixteenth and seventeenth centuries , "by promoting movements of peolles so that nations in the old sense disappear, and are replaced by patchworks of nationalities more suspicious of each other than of any ruling class." [p. 6]

Stripped of the Left's older preoccupations with economics and class, likewise, multiculturalism can be of immense service to the cartelized private sector in policing its wage-serfs and cubicle-drones. For one thing, the added inefficiency and overhead costs of an internal PC regime, as Gabb observes, are cartelized: that is, they apply equally to all large corporations and are therefore not a matter for competition between firms. [p. 48] For another, the postmodern, multicultural corporate culture described by Thomas Frank in One Market Under God is much closer to the worldview of David Brooks' "Bobos" who predominate in managerial ranks. In the U.S., for the managerialists and professionals who constitute the base of the Democratic Party, stagnant wages, downsizing, and all the other economic aspects of the new global economy are perfectly fine--so long as the people in the boardrooms who do the exploiting "look like America." Forty years ago in The Greening of America, Charles Reich depicted a hippie chic utopia in which the centralized, hierarchical power structures of the state and corporation were largely unaltered--but staffed by people with bell-bottoms and beads. What mattered was not the existence of concentrations of power, but that the people in power "had their heads in the right place, man." That "utopia" is, in essence, now a reality. Most importantly, in an age of increasing worker disgruntlement over stagnant pay and increased workloads, an internal PC regime serves admirably to promote resentment and divisions and reduce solidarity among workers, and provide trumped-up grounds for disciplining troublemakers.

A central part of Gabb's analytical toolkit is the work of Frankfurt School and neo-Marxist scholars on "ideological hegemony." Although he denies the applicability of their analysis to "liberal democracy," he sees it as well-suited to the ideological project of the new ruling class.

I should say, in passing, that I take issue with Gabb on the relevance of neo-Marxist thought to the old, "liberal" order. He denied the existence of any real "hegemonic discourse" under the old liberal regime, arguing rather that political leaders tended to legitimize their positions in terms of a value system which arose spontaneously from civil society and which they accepted as given. [p. 20] Likewise, he considers the Chomsky/Herman "propaganda model" of the media to have been inapplicable to liberal democracy. [pp. 31-32]

I think he is mistaken on this count. For one thing, the question of whether "liberal democracy" even existed in any meaningful sense is a very real one. The old liberal democracy was dominated by privileged capitalist and landed elites whose economic position resulted, not from the workings of a market, but from the state. And the old "spontaneous" ideological climate reflected, to a large extent, their interests. For another, the New Class and its ideology are nearly as old as corporate capitalism, and its managerialist world-view (eg. scientific management) has been incorporated into the service of the plutocracy since the corporate revolution first required a class of "professional" overseers. The New Class and managerialism, and the protective and nurturing state, have been integral parts of corporate capitalism since its beginning; and if we identify the full flowering of liberal democracy with the electoral reforms of 1833 and 1867 (let alone 1911), then liberal democracy was hardly even fairly begun and the Old Regime fairly ended, before the beginnings of state capitalism. Genuine "liberal democracy" was largely limited to a thin sliver of thought by Ricardian radicals like Hodgskin, assorted Cobdenites, etc., sandwiched in-between the Old Regime and state capitalism, which was quickly relegated to a few radical free market strands (the individualist anarchists, Georgists, Nock and Borsodi, etc.) fighting a rear-guard action within state capitalism.

And in more general terms, hegemonic ideology is coextensive with, and as old as, class society. As an individualist anarchist, I consider class power and economic exploitation the primary functions of the state; and just as there has never been a genuine free market, free from economic exploitation by state-privileged classes, there has never been a society without a hegemonic ideology serving such privileged classes. Hegemonic ideology, I should add, does not require any conscious, conspiratorial design--it is a largely automatic result of a society's normal tendency to reproduce the conditions for its own continued existence.

I also suspect Gabb's treatment of neo-Marxism as the ideology of the new ruling class is overblown. There may be something to his tracing of their political style to the New Left fashions of their formative years; Gabb cites Boyd Tonkin to the effect that while Nulab has abandoned most of the economic content of Marxism and social democracy, their "pattern-building, system-seeking cast of thought" persists. [p. 22] But stripped of their economic and political substance, the signficance of their style itself is tenuous at best (as also with explanations of the neoconservative "style" in terms of their alleged Trotskyite origins).

As an analytical tool for describing the ideological functions of the ruling class, as opposed to the content of their ideology, neo-Marxist concepts may however be quite useful.

And while I disagree with Gabb on the question of whether a hegemonic ideology existed under "liberalism" and the Old Regime, I do agree that it was much more feasible to argue against the hegemonic ideology from an independent base. The average person of the late twentieth century was far more conditioned by his televised matrix reality, than the average member of the working class by the hegemonic ideology of the nineteenth century. The very extent to which Marxism and assorted brands of anarchism spread among the working classes demonstrates as much. Contrast, for example, Thomas Franks' Kansas before WWI, to the same region in recent years. It was surely even more prone to Bible-thumping and Jesus-shouting at the turn of the twentieth century as it is now--and yet it was one of the prime constituencies for the Wobblies and Gene Debs, and home to a vibrant and independent working class press. Today, on the other hand, the populist resentment of the area is channeled by Rove's talking points and AM talk radio against a range of targets carefully selected by the ruling class. The turning point was probably the liquidation of the genuine socialist, working class, and economic populist movements during the reign of terror under St. Woodrow and A. Mitchell Palmer. We may finally be witnessing today, with the rise of the Internet and network culture as an alternative to the gatekeepers of the corporate media, the weak beginnings of a resurgence of something like the pre-WWI independent popular culture.

Gabb's revolutionary agenda deserves a great deal of attention. He rejects any gradualist program of scaling back one institution at a time. Such a strategy, he says, would just result in a pitched battle over each institution, with the anti-state coalition quickly losing its political capital to a war of attrition. The only hope is to gamble everything on electoral success and then to act quickly and decisively, in the brief window of opportunity, to dismantle as much of the ruling class' institutional base as possible, so that it cannot be quickly reconstituted if power once again changes hands. That means completely abolishing institutions like the BBC, and completely dismantling the administrative apparatus and records of the regulatory state ("An hour in front of a shredding machine can ruin the work of 20 years."), and--while leaving the state schools intact--completely abolishing teacher training colleges. [pp. 54-56, 60]

I am skeptical as to the prospects for any such all-at-once seizure of power, as opposed to gradually rolling back the state and supplanting it with alternative organizations (as per both the agorist agenda of building a counter-economy, and the Wobbly strategy of "building the structure of the new society within the shell of the old"). But I agree that, revolutionary or gradualist, the goal of any libertarian movement should be, not to control the state and other centralized institutions, but to dismantle them. I am very much a believer in Michels' Iron Law of Oligarchy. Genuine democratic control of centralized, hierarchical institutions is impossible. Our only hope for real democracy is to destroy as much of the infrastructure of the centralized state and corporate economy as possible, and replace them with loose political federations of local direct democracies and with a free market of competing worker cooperatives.

Along these last lines, interestingly, Gabb proposes something of an entente with the libertarian left.

...there are many anarchists and syndicalists and libertarian socialists who do not believe in this extended state. And so I will make it clear that when I talk about a free market, I do not mean a legal framework within which giant corporations are able to squeeze their suppliers, shut down their small competitors and socialize their workers into human sheep.

I have already said I would not defend the landed interests. I would very strongly favor an attack on the structures of corporate capitalism

Organisations like Tesco, British Pretroleum and ICI are not free market entities. They are joint stock limited liability cororations. The Company Acts allow them to incorporate so that their directors and shareholders can evade their natural responsibilities in contract and tort. They are, for this reason, privileged in law....

It is not true that big business has in any sense suffered from the public interventions in economic activity of the past hundred years. The truth is that big business has benefited from, and in many cases, promoted every agenda of big government. Employment protection laws, product safety laws, curbs on advertising and promotion, heavy taxes, and all the rest--these have served to insulate big business from their smaller competition, or have cartelized or externalized costs, thereby reducing the need for competition between big business....

The leaders of large corporations are nothing more than the economic wing of the ruling class. They provide taxes and outright bribes that enrich the political wing. They act as part of the ideological state apparatus.... In return for all this, they receive various kinds of protection and subsidy that allow them to make large profits.

They police their workers... Workers find themselves gently conscripted into large organisations that strip them of autonomy and suppress any actual desire for self-direction. Anyone who works for any length of time in one of these big corporations tends to become just another "human resource"--all his important life decisions made for him by others, and insensibly encouraged into political and cultural passivity. [pp. 63-65]

His description of the likely fate of the state-affiliated "private sector" corporate economy, after the revolution, is positively eloquent:

Our first big attack on the present ruling class should destroy most of the really dangerous government bodies, and the formally private bodies that now cluster round them would perish like tapeworms in a dead rat. [p. 61]

The tapeworm is to be killed through the elimination of all subsidies and protections, and above all the elimination of limited liability.

We should promote the emergence of markets in which the majority of players are sole traders and partnerships and worker cooperatives, and in which the number of people employed on contracts of permanent service is an ever-dwindling minority.... [This policy] would replace armies of ruling class serfs with beneficiaries of our counter-revolution. [pp. 65-66]

The welfare state he advises to leave pretty much alone for the near term. In so doing, the revolution would deprive the ruling class of its chief potential ally for an attempted counter-revolution. And, he points out, the main actual cost of the welfare state is the administrative overhead from supporting intrusive and authoritarian welfare bureaucrats in a comfortable lifestyle. As a first reform, he proposes eliminating the entire apparatus of case workers and redirecting the entire welfare budget to a guaranteed annual income. [pp. 57-59] Ultimately, it could be drastically scaled back as increased working class prosperity and a resurgence of voluntary mutual aid arrangements made it unnecessary. [p. 63]

His tax agenda--eliminating the income tax and VAT, and replacing them with a tax on land-value--should be pleasing to the Geolibertarian contingent of the libertarian left. [pp. 62-63]

In the legal realm, Gabb proposes dismantling as much as possible of the administrative state and its prerogative law procedures. In the restored common law, all regulations of vice and private behavior are to be eliminated, while making penalties for real crimes against person and property sufficient to deter. For the latter crimes, however, a maximalist reading of all common law due process guarantees is to be restored:


the right to silence under police questioning, the full right of habeas corpus, the full presumption of innocence, the full right of peremptory challenge of jurors, the rules against similar fact and hearsay evidence, the unanimity rule in jury trials, and all else that has been taken away. [p. 68]


* * *


2. The central focus of Dillow's critique of New Labour is managerialism. By that, he says,

...I mean an ideology which tries to eliminate political debate about the rival merits of competing ideals. In its stead, managerialism relies on a central elite which believes that it, and it alone, has the skill and know-how to devise policies to cope with the inexorable forces of economic change.... In short, New Labour believes it can run a country in the same way that executives run a business. [pp. 11-12]

...Managerialists like to pretend that we face big challenges in a fast-moving environment. They invite us to believe that they alone are equipped to address such challenges (in managerialism, problems are never solved, only addressed). And they like to present policies as necessary responses to external events--just as company bosses present mass redundancies as inevitable measures over which they have little choice. [p. 14]

The irony is that New Labour managerialists, for all their proclaimed technocratic competency, are so ham-handed in their "solutions" to the pressing needs of the changing economy. "Information technologies are transforming our lives," goes the Nulab slogan. "Fair enough," replies Dillow. But he points out that the organizational paradigm of the new economy is the substitution of networks for hierarchy, while the Blairite "solution" is even more hierarchy. [p. 16] An interesting point of comparison is Bill Gates, the fountain of so much superficially libertarian rhetoric about new economies and flattening hierarchies, but whose practical agenda focuses almost entirely on the use of state power to protect corporate hierarchies from the destabilizing effects of the new economy: the Digital Millennium Copyright Act, Vista Genuine Advantage, the recurring threat of infringement action against Linux distributers. Blair and Gates, faced with a technological and economic revolution against hierarchical institutions, attempt to domesticate the revolution and render it amenable to the control of hierarchical institutions.

This is especially disappointing, given Blair's Christian socialist roots and his early affinity for quasi-distributist ideas. The Cooperative Party, in an almost touching exercise in denial, have long persisted in celebrating their ties to Blair and Brown; until recently Blair's visage leered down from the banner of their website.

But despite occasional lip service to "a redistribution of power that offers people real control over the decisions that affect our lives" (Gordon Brown), New Labourites never consider any cooperative challenge to corporate hierarchy.

New Labour likes to claim that it is "pro-business." The significance of this is that one rarely hears that it is "pro-market."

The distinction is important. Markets are tumultuous, unpredictable and uncontrollable processes, which often make fools of the most esteemed expert.... Businesses, however, are hierarchical bureaucracies and their leaders are often more like senior civil servants than buccaneering entrepreneurs.

New Labour's preference for business over markets shows its managerialist bias--because to any managerialist, businesses, with their mission statements and their illusions of control, are much more congenial than the disruptive anarchic forces of the market. [p. 19]

Dillow, in denouncing New Labour managerialism, does not fall into the common pattern of considering its economic agenda a neoliberal departure from the older Fabian socialism.

We might observe, in passing, that almost from their first Fabian and Crolyite beginnings, New Class advocates of a mixed economy in the Anglophone world have been in fact the hired help of the corporate plutocracy.

And as Dillow points out, Blair's agenda was very much in line with the anti-labor authoritarianism of the old Fabian movement. Blair's "work not welfare" was a logical outgrowth of the Beveridge Report's aim "to make and keep men fit for service." [p. 9] C.S. Lewis' depiction of authoritarian social engineering in That Hideous Strength was a fairly plausible extrapolation from the most proto-fascistic tendencies of H.G. Wells and the Webbs (with their forced labor camps and sterilization for the underclass), and from the New Statesman agenda of the late 1940s.

There is one issue on which I probably disagree with Dillow: the necessary tradeoff between efficiency and equality. Dillow takes issue with the New Labour theme that we can have both efficiency and equality. Although that position may well be spurious as it is meant by New Labour, I think it is in fact quite possible to have dramatic gains in both equality and efficiency compared to the present baseline, with no tradeoffs of any kind. The reason is that most of the present inequality in income bears no relation to differences in efficiency, but rather results from privilege and exploitation. If by "equality" one means eliminating incomes that derive from privilege, and by "efficiency" tying income to productivity, the two are necessarily connected.

I suspect the problem with New Labour's idea of reconciling the two lies with their conception of "efficiency": a Schumpeterian/Chandlerian/Galbraithian monstrosity of centralization, false economies of scale, and Weberian rationality. Accordingly, their recipe for "efficiency" assumes the existing corporate institutional structure will be left intact with all its assorted forms of privilege, and then "equality" is achieved by redistributive taxation and welfare to distribute some of the surplus accruing from such "efficiency." The New Labour approach is to leave the hierarchical corporate and state apparatus untouched, and then promote both "equality" and "efficiency" through top-down social engineering: carefully tailoring taxes, benefits, minimum wages, and other incentives to maximize output and achieve the ideal distribution of income.

....governments know how labour supply decisions respond to tax and benefit rates, so they can design a tax and benefit system that encourages people to work. They know how to set the minimum wage at a high enough level to raise incomes, but not so high as to destroy employers' willingness to employ peole. They know enough about what determines companies' capital spending decisions, so they can promote investment by striving for macroeconomic stability. And they know how to improve education, and how education affects earnings, so they can use better schooling to reduce wage inequality and promote economic growth by providing a bigger supply of skilled workers. [p. 21]

But in fact the present corporate system is pretty bad from the standpoint of efficiency. It starts from the assumption of enormous concentrations of wealth in a few hands, the absentee ownership of capital by large-scale investors, and a hired labor force with no property in the means of production it works. Necessarily, therefore, the absentee owners must resort to the expedient of hierarchy and top-down authority to elicit effort from a work force with no rational interest in maximizing its own productivity. Such hierarchies necessarily result in the divorce of effort from reward, and of productive knowledge from authority. Each rung of authority interferes in the efforts of those who know more about what they're doing, receives only information filtered from below based on what they want to hear, and is accountable only to those higher up the chain of command who are even more unaccountable and out of touch with reality.

The obvious solution, the worker cooperative, by uniting knowledge with authority and reward with effort, would slice through the overwhelming majority of the hierarchical corporation's knowledge and agency problems like a Gordian knot. The problem of socially engineering the wages and benefits system so as to "encourage people to work" would disappear; the elimination of privilege and unearned income, and the receipt by labor of its full product, would tie reward directly to effort.

But this solution is ruled out by the system's structural starting assumptions of concentrated wealth and absentee ownership. So the hierarchical corporation is adopted as a sort of Rube Goldberg expedient, the most rational means available given fundamentally irrational ends.

I say above that I probably disagree because Dillow's own agenda, presented at the end of the book, consists of the very sort of program of economic democracy that would be perfectly designed for the coincidence of efficiency and equality. He is an enthusisatic supporter, for example, of worker cooperatives and self-management. He is also very big on the idea of the government introducing cooperative, decentralist and democratic principles into its own enterprises:

The salient fact about New labour is that it has done nothing whatever to equalize status within the organizations it runs. The civil service is as inegalitarian--lethally so--as it was in 1997. And there's been no effort to convert schools and hospitals into more egalitarianly managed structures. The state is far more hierarchical--far more opposed to the concept of equal status--than any investment bank. [p. 215]

Indeed, one of the planks in his agenda is titled "Turn schools and hospitals into cooperatives."

His case against hierarchy and for self-management is bolstered by extended arguments toward the end of the book. In Chapter 13, "The Rituals of Reason," he examines at length the fallacies and biases to which management is prone, in overestimating its own competence and underestimating the intractability of problems.

One might raise the question of whether managers are really unique in this respect; are not workers, also, prone to such conceptual biases? The answer, I think, is that (of course) everyone is prone to logical fallacies and conceptual biases. But their tendency to distort thought increases the more a decision-maker is separated from direct knowledge of a problem, and the more concrete practical knowledge is replaced by abstract considerations. The closer a decision-maker is to the subject of his decision, and the more it involves matters of familiar technique or personal experience, the more competent his decisions. A skilled laborer on the shop floor is apt to be the best judge of organizing production, or of handling the organizational problems involved in coordinating the activity of skilled workers like himself in his own work unit. If his work unit is a small factory producing for a local market, made up of people largely known to the work force, and with retail outlets that have maintained relations with the factory for an extended period of time, he and his coworkers are apt to be the best judges of the levels output required by the market and the product innovations likely to be demanded.

Dillow's critique of hierarchy, as a source of irrationality and knowledge distortion, is very Hayekian.

When the first factories were established by Richard Arkwright and James Watt, it made sense for them to control production with an iron hand, because they knew the production processes inside out--they had invented them...

Today management doesn't have this know-how. Products, process and markets are too complex for anyone to know as thoroughly as Arkwright or Watt did....

Instead, knowledge of the production process is scattered across the organisation. If you have a problem, it is often better solved by asking your fellow workers than asking the boss.

However, hierarchies can obstruct co-operation between workers. One reason for this is simply that pyramidal reporting lines often prevent workers from knowing and therefore using the skill of their colleagues. Another reason is that communication requires trust.... Worse still, the benefits of co-operation are often impossible to quantify, and so a management obsessed with budgets and targets does not encourage it. And the knowledge that such gains will flow to managers, rather than themselves, will inhibit workers from co-operating fully. [p. 278]

The hierarchical, authoritarian corporation is especially ill-suited to knowledge work, and other forms of production in which human capital is the most important factor.

It might make sense to give the order "be here by nine o'clock." But it's just gibberish to say, "be creative."

In an authoritarian environment, workers prefer (in the words of Kenneth Cloke and Joan Goldsmith) to "suppress their innate capacity to solve problems and wait instead for commands from above." [p. 279]

Dillow observes that excessively large government works contrary to the goal of income equality. The reason is that, when state expenditures eat up a large enough portion of the GDP, it becomes impossible to fund them by taxing the rich alone. A society in which the state consumes 50% or more of GDP will, of necessity, have a high tax burden on the middle class. [p. 69]

He is quite hostile to New Labour's social engineering approach to taxation. Rather than a complex, administration-intensive program of carefully targeted tax credits and cuts, it would make far more sense to institute a citizen's basic income which requires little administrative bureaucracy. [p. 85] In the American context, I have long cursed the lack of an alternative to the mainstream Democratic and Republican approaches to tax cuts. The Republicans, predictably, are wedded to the idea of "across the board" tax cuts that go overwhelmingly to the plutocracy. Democrats, as one might expect of such nanny statish social engineers, prefer carefully targeted tax credits for child rearing, health insurance, higher education, home energy efficiency, etc. The obvious alternative to both, as progressive as it would be libertarian, would be to simply raise the standard exemption to $30,000 or so.

The great size of political units, and the removal of the administration of welfare as a question for local self-government, has nullified the natural tendency toward mutual aid shown by humans in communities small enough for direct personal acquaintance with the disabled or unemployed. As a result, the working class tends to resent the underclass and to be vulnerable to anti-welfare demagogy by right-wing politicians. [p. 219] A decentralized society of small, self-governing population units might well contribute voluntarily to mutual aid arrangements on a scale sufficient to render taxation unnecessary (especially if laborers received a larger portion of their actual product).

In the process of writing his book, Dillow manages to attack many of the platitudes of establishment economists and neoliberal chatterers like Tom Friedman. For example, he points out that the natural tendency of technical change is to reduce the international division of labor. The increasing speed with which technology crosses national borders means that particular nations maintain comparative advantage for shorter and shorter periods. "that tends to limit the international division of labour and, with it, world trade growth." [p. 45] And as I recall someone else suggesting, a great deal of "comparative advantage" is the artificial result of "intellectual property" [sic] laws.

He is merciless in attacking the New Labour love affair with education as the solution to poverty (likewise beloved of social engineers in this country, both liberal and neocon). The real benefit of education, from the perspective of the corporate economy, is its function in signalling a "good attitude": educated workers have "a high marginal utility of income, a propensity for hard work, ...and an ability to identify with managers rather than workers."

If education works by changing our characters, and by straightening the crooked timper of humanity into something useful to bosses, prosperity is achieved by sacrificing liberty and diversity to managerialism. [p. 119]

What's more, as the impolitic Joe Bageant argued, the social engineering panacea of education depends on a fallacy of composition. While individuals can increase their chances of advancement by education, the entire population cannot do so. The Empire requires some 25% or so of the population to fill supervisory, administrative and technical slots. Increasing higher education beyond this share of the total population simply increases the competition for those slots and drives down salaries, while inspiring an authoritarian, dog-eat-dog attitude on the part of the winners toward the losers. It inspires, that is, the same status anxiety that motivated so much of the German lower middle class to support Hitler.

Eastasia News

For anyone who wonders what Eastasia has been doing to keep up with Eurasia (the EU) and Oceania(moves towards a North American Union are afoot).

Currency blocs fall into place
Andrew Wood, Financial Times, November 22nd 2007

Asian central banks appear to be adopting similar monetary policies in a way that suggests they could be preparing for an eventual currency union for the region, according to Deutsche Bank.

Twelve Asia-Pacific currencies – including the yen, the Korean won, the Indian rupee and the Australian dollar – have increasingly traded as a bloc since 2005, the bank’s research has found.

There is an increase in the correlation between the value of Asian currencies as central banks try to keep their export-led economies competitive internationally and also reduce foreign exchange volatility within the region.

This trend is a result of the wider use of trade-weighted currency baskets in India, China, Singapore and Malaysia, the bank says, adding that the patterns show similarities to movements in some European Union currencies in the years before the euro was created in 1999.

“Asia is beginning to look a lot like Europe in the 1980s and the start of the 1990s,” said Martin Hohensee, Asian head of fixed income and credit research, who led the analysis.

“Policymakers and politicians are talking seriously about the possibility of Asian currency union, even if there isn’t a single currency,” he told the Financial Times in an interview.

Asia has a thickening network of free-trade agreements, creating conditions similar to Europe’s single market that paved the way for the euro. “Intraregional trade within Asia accounts for a similar share of total trade as was the case in Europe in 1992,” he said. The Asian Development bank has outlined plans for a possible Asian Currency Unit, similar to the European Currency Unit that preceded the euro.

But Mr Hohensee said that, unlike in Europe, there is much less political will for integration. Nevertheless, this week leaders of the 10 members of the Association of South-east Asian Nations agreed to remove trade barriers by 2015 to create a European Union-style economic community.

“What seems to be happening in Asia is an economic process that might become a political one,” Mr Hohensee said.

He did not think Asian central banks were deliberately colluding in setting monetary policy, but that informal co-operation would grow naturally. “I think every time central banks get together and talk they realise that volatility is in no one’s interest,” he said.

Deutsche Bank says the trend offers investors the chance to use similar strategies to those popular in the run-up to the euro, by betting that interest rates for high-yielding currencies will converge to the regional average. “This informal kind of monetary union by stealth is throwing up good investment opportunities,” Mr Hohensee said.

The bank is launching two Asian Convergence indices to track the trend. One is based on the nine non-Japanese regional currencies most likely to take part in any Asian currency union, and another broader index which includes the yen and the Australian dollar, as both countries are likely to be affected by any Asian regional currency policy.

Patterns begin to emerge



The chart shows the correlation between individual Asian currencies against the dollar and a basket of those currencies from 2000.

Of the 10 currencies measured by Deutsche Bank, eight have shown increased correlations since 2005 than the previous five years. Five have shown correlations of greater than 90 per cent since 2005: the Chinese renminbi, the Malaysian ringgit, the Philippine peso, the Singapore dollar (which has jumped from 10 per cent since 2005) and the Thai baht. The yen and the Taiwan dollar’s correlation to other currencies have turned negative since 2005, however.

Beer Talking Once Again

Roger Protz- nice tie

The big British beer & pub companies are moaning that people are going down the pub less and less. Perhaps if you didn't offer people such bloody rubbish half the time you wouldn't be in such a hole would you, chaps?

It seems micro-breweries and pubs that offer something a bit different with character are doing fine. It's a bit like politics really- if you treat people with contempt don't expect them to support you 24/7.

For those who think the British Left cannot organise a piss-up in a brewery, there is the counter-example of Roger Protz. Editor of Socialist Worker in the early '70s(before being kicked out for not following The Party Line), he is now editor of The Good Beer Guide, which sounds like an extremely good job to have! This is his take on the recent moans of the British Pub and Beer Association.

Bright news for good beer: Plummeting pint sales reflect a struggle for the big brewers, but quality local ales are flourishing
Roger Protz, The Guardian, Wednesday November 21, 2007

The new edition of the Good Beer Guide heralds a "golden age" for beer. How does this square with this week's report from the British Beer and Pub Association that suggests our national drink is heading for the knackers' yard?

It's not difficult. The BBPA, which reported that pubs are selling 14 million fewer pints a day than they were in 1979, doesn't speak for all Britain's brewers. Excluded from its ranks are the bulk of Britain's 500-plus microbreweries, most of whom are enjoying a boom in sales. They concentrate almost entirely on real ale: living, natural, cask-conditioned beer. It's the producers of global lager brands - Stella Artois, Carling, Carlsberg and so on - that are witnessing a catastrophic decline in demand.

The reasons for the decline are complex. Many consumers are bored with "drinking the advertising". They are looking for new tastes and drinking experiences. Others are wary of mass-marketed beers that have acquired such dubious nicknames as "wife beater" and are believed to be packed with dodgy chemicals. There is a growing concern with provenance - a desire to know the ingredients used to make beer and whether hops are grown locally.

The BBPA is right to bemoan the punitive levels of duty in Britain. We are the second most heavily taxed country in the EU where alcohol is concerned. The French, Germans and Italians have duty rates that are a fraction of ours. But duty alone cannot explain the fall in beer sales in pubs. The most prominent members of the BBPA - the national giants Scottish & Newcastle, InBev, Coors and Carlsberg - allow their beers to be sold to supermarkets at such enormous discounts that the brewers make only marginal profits. But for unfussy drinkers, lager at 22p a can in a supermarket beats forking out £2.50 or more for a pint in pubs. So goodbye Dog & Duck, hello Tesco.

But there is good news, too. Sales of cask-conditioned beers are growing after years in the doldrums. They have caught the fancy of drinkers who want something that smacks of malt and hops rather than carbon dioxide and Ovaltine.

Adnams of Southwold in Suffolk and Timothy Taylor of Keighley, West Yorkshire, are substantial regional brewers, not micros. Both have invested around £10m in new brewhouses and warehouses to keep pace with demand. Black Sheep in North Yorkshire and Wadworth in Devizes are two more regional brewers who can point to a growing clamour for their beers. Caledonian in Edinburgh has built sales of its Deuchars IPA so successfully that it is now a national brand. Marston's, Greene King and Wells & Young's are classified as "super regionals", producing large volumes of beer, most of it in cask-conditioned form.

At the micro end of the industry, Wye Valley started life in a pub outbuilding in Hereford and has moved into the former Symonds cider factory at Stoke Lacy. It brews 15,000 barrels a year, more than some long-established, family-owned brewers, and has invested £1m in new plant. The former BBC broadcaster Alex Brodie gave up the day job to launch his Hawkshead Brewery in Cumbria and within a few years has had to move to a bigger site. In London, the Meantime Brewery in Greenwich has a superb range of bottled beers, including an IPA and a London Porter based on 19th century recipes.

It is the craft brewers that are breathing life back into beer through imagination and innovation. Innis & Gunn in Scotland has notched up remarkable sales for its oak-aged beer, matured in whisky casks. Waitrose offers Fuller's bottle-conditioned Vintage Ale that, at 8.5%, will mature like fine wine.

The BBPA may speak for the big volume brewers but, in the world of beer, size isn't everything.

Roger Protz edits the Good Beer Guide www.beer-pages.com

Disrespecting Respect, Yo

The head-to-head that never was...damn!

One consequence of Gordon Brown not calling a General Election this Autumn is the divisions in Respect between George Galloway and the SWP came out in the open. Civil war was averted when it seemed that GB was going to go to the country, but when the General Election was cancelled, all hell broke loose in the struggle between GG and the SWP.

Now there are two Respects: Respect and Respect Renewal. Both held big meetings on November 17th (also meeting on that day in London were the Socialist Party and the Labour Represenation Committee- whoever said the British Left cannot get their act together!). Respect 1 is basically the SWP. I cannot see them getting anywhere, as the SWP never prospers on its own- it always needs a front organisation or front people to work behind. I think it will be a case of "Back to the Campuses, Comrades!" and an abandonment of electoral politics before not too long. Just like the SWP operated back in the 1980s when I first came across them. Perhaps they will revive their old slogan "Vote Labour But Build A Fighting Socialist Alternative" in time for the next General Election too.

As for Respect Renewal, Galloway's Gang, there has been speculation that they could be a rallying point for a Left/Progressive fightback against New Labour. It would get support from Muslim areas, particularly in East London and Birmingham, but whether that will be enough to get George Galloway back into the Commons next election along with Salma Yaqoob for a Birmingham seat is doubtful. To be honest, the party RR reminds me of is Veritas, Robert Kilroy-Silk's breakway from UKIP. Both were founded by an extremely vain ex-Labour MP with a high-profile media career. If Galloway does not get re-elected (and I think Labour will throw everything except the kitchen sink into ensuring that GG is no longer an MP after the next General Election) Respect Renewal will be finished politically, though it might limp along, in the same way that Veritas limps along now sans Kilroy-Silk.

Frankly, I think supporting either side in the great Respect debacle is a waste of time. I think it would be much better to support something like the Socialist Pary, the Greens or the Independent Working Class Association, who have cast their jaundiced eyes on the car crash:

Respect’s demise deserves derision not sympathy
7 November 2007

Now that the third and possibly final effort by what remains of the Leninist Left to reinvent itself has crumbled, a variation of the fault-line evident in the predictable collapse of the Arthur Scargill’s Socialist Labour Party (SLP), and its unity successor the unlamented Socialist Alliance (SA), is again evident in the dual attempts to renew the Respect Coalition.

In case you haven’t being paying attention, there are now two ‘Respects’. One is run by maverick MP George Galloway and the other by the Socialist Workers Party. Why, is not really important. Suffice to say that a Respect party without the profile of George Galloway, and the attendant devotion to the exclusive concerns of Muslim communities, will quickly metamorphose back into the ‘Socialist Alliance’ in all but name.

Which is to say a political party without a national profile, without a day to day strategy and without the prospect of having a single candidate associated with it elected anywhere in the entire country. Ever.

The prospects of its Galloway led rival are hardly any better, if the appeal issued by the leadership is anything to go by. What did for the SLP from the outset was the one-eyed approach to the trade unions. Within the so-called ‘labour movement’, there was, Scargill believed, everything required to sustain a radical assault on the New Labour ‘project’.

What he ignored was that the majority of the working class were no longer organised in, or had any particular reason to show fidelity to this or that union, who for the most part had operated as ‘business unions’, (exclusively and solely concerned with the interests of their members) for more than twenty years previously.

That very same mistake (among others) is again being made by the Galloway version of Respect. In a statement of aims it states that it wants to "reach out to all those in the trade unions who feel betrayed by New Labour under Brown as under Blair.”

Of the many millions of working class people not in trade unions there is not a mention. And we can be sure this is no oversight. Because to reach them would require a very specific strategy and there isn’t mention of any. Indeed when the opportunity to reach out to the broader indigenous working class arises, the same blind-sidedness is evident. Amid the usual and predictable check list of liberal pieties there is one glaring indeed elephantine omission.

“Black, Asian and other minority ethnic communities who suffer racism and Islamophobia” are all referenced. As are “the dispossessed, the asylum seeker, the migrant worker and to all who defend them.” Not forgotten either are “those who want to fight against discrimination, whether or the grounds of religion, gender, sexual orientation disability or age.”

Entirely absent however are the principle victims of the system they sustain; the indigenous working class majority discriminated against on the grounds of their birth and the social class they are born into. This oversight can hardly be considered to be accidental. For after all, the multicultural strategy, from which the likes of the Socialist Alliance and Respect, like to draw inspiration continues to regard the white working class majority as little more than an enemy that ought to be made to bend the knee, or better still be defeated by the lovingly name-checked and more deserving oppressed.

Accordingly whatever electoral success Respect has had, has indeed come from inner-city Asian/Muslim enclaves (outside of Muslim dominated areas, candidate’s returns resemble that of the SA, rarely if ever reaching double percentages) which ought to have given pause for serious thought rather than celebration. But there was no evidence of any analysis of this and despite the pretence of an adherence to high-minded ideals by the SWP, the current split is certainly not the result of any such soul searching.

Instead the same deep and unremitting suspicion for the strategy followed by the IWCA, that from the outset consciously departed from the aforementioned orthodoxy in order to embrace the entire working class without fear or favour, will remain a cornerstone of any attempted renaissance. In little over a decade the SLP, SA and now Respect, despite a vast, indeed obscene (considering what use it could have been put to) financial investment, are no longer in contention to fill the political vacuum in the former Labour heartlands.

If the IWCA has undeniable limitations in this regard as well, the basic approach has proved to be sound and so unlike our Bolshevik detractors a lack of potential was never one of them. The brutal truth is that even prior to the implosion, Respect could not hope to have succeeded.

Indeed any party that deliberately fawns on a racial minority in the manner of Respect deserves derision not sympathy from the progressively minded, if for no other reason than that it plays in and legitimises the likes of the BNP, as the right-wingers were only too happy to acknowledge in the past. Indeed that the BNP, for self-serving reasons too, might if only briefly, be the only ones to mourn Respect’s passing says everything you need to know about the wrong-headed nature of the adventure.