Will the big three parties 'step aside' now please

As there now appears to be a new convention in public life in the shape of “stepping aside” while inquiries take place into incompetence and/or misleading broadcasts by the BBC, surely there are grounds for extending this practice into political circles as well.

So in the interests of probity, here is a short, sample list of malpractice and/or lying at Westminster that should, if we lived in a real democracy, lead to all the big three political parties “stepping aside” for the foreseeable future.

     New Labour years

1. Claiming that Iraq had weapons of mass destruction and using this lie as the basis of an illegal invasion and occupation of that country. The hundreds of thousands of deaths that followed are the direct consequence of this action and prosecutions for war crimes are in order.
2. The introduction for the first time in 1998 of university tuition fees on the spurious ground that this was the only possible way to continue to the sector. It signalled the end of free higher education.
3. Creation of the light-touch regulation of the City and finance through the hopeless Financial Services Authority, thus misleading the public into believing their money was safe in the hands of the banks. The financial collapse of 2007 showed this to be a lie.
4. Expansion of “public finance initiative” projects to build hospitals and schools on the basis that they would save taxpayers’ money in the long term. The recent collapse of several NHS Trusts shows this to have been deception on a grand scale.
5. Claiming that the expansion of the global market economy would benefit everyone. In fact, inequality grew faster, executive salaries soared and the ownership of wealth became more concentrated in fewer hands.
6. Using the spurious “war on terror” as the cover for a war on civil liberties and human rights through detention without trial, integrated national databases, interception of emails and the merging of criminal and civil laws through the notorious ASBO system.

2010 election and the ConDems

7. In the run-up to the 2010 general election, the three major parties consistently refused to divulge their plans to cut public spending if elected. As a result, the election was a massive fraud perpetrated on the electorate as a whole. The Coalition came to power without a mandate in a constitutional coup.
8. The claim that “we are all in it together” made by the ConDems has proved to be one of the greatest lies of British history. Spending and welfare cuts, inflation, the rise in VAT and other measures have fallen disproportionately on average earners, those in need and people with disabilities. The rich, as per usual, have got richer.
9. Lib Dems propping up the Tories by breaking their election pledge not to support a rise in tuition fees. Vince Cable, the business secretary, proposed the increase in fees to at least £6,000 a year. This alone disqualifies the Lib Dems from ever being in government again!
10.  David Cameron’s pledge that the health service was “safe in his hands” has become one of the all-time political lies. The NHS Act opens the door to privatisation by making hospital trusts ever-reliant on fee-paying patients and allowing GPs to commission services from the private sector.

We could go on and on, but no doubt you have your own examples of how the political system has become a conduit for misleading, misinforming and lying. There’s only solution – and that’s for the perpetrators to step aside.

Unfortunately, they intend to cling on to office for as long as possible. So it’s going to take one big shove to get them out of our hair to make room for a real democracy to take shape.

Paul Feldman

Communications editor

A corporatocracy in all but name

The scandal engulfing the Cameron government over ministers’ close links with the Murdoch media empire, as well as promises made about BSkyB before the 2010 election, is symptomatic of a wider political disease called corporatocracy.

How governments were “bought” by the corporations, especially the so-called investment banks, is the story of how the state became a direct mouthpiece, advocate and sponsor of big business.

It parallels the rise of a global economy dominated by transnational businesses that find national borders an irritation and are prepared to move capital to the region or country where it is most profitable without a second thought.

Murdoch was doing no more than what a shareholder-driven business has to do. News Corp lobbied to win support for its aim of buying up shares in BSkyB. It made use of its connections to culture secretary Jeremy Hunt and prime minister Cameron.

The fact that the plan coincided with the hacking scandal, leading to the Leveson inquiry, blew their strategy out of the water. With the BSkyB deal off for the indefinite future, the Murdochs have no further need to protect ministers.

Murdoch’s media empire is moving away from supporting the Tories and is backing the Scottish National Party north of the border. Now commentators like Peter Oborne are speculating that the government itself could fall over the scandal. The fact that Cameron is regarded as a traitor by traditional Tories for getting into bed with the Lib Dems and being too soft on Europe is only fuelling the flames lapping at the door of No.10

The Labour Party is making a great deal out of Cameron’s difficulties but let’s not forget that the previous Blair/Brown governments were politically responsible for perhaps the biggest scandal of them all – the creation of a deregulated banking industry.

Deregulation was not the prime cause of the financial meltdown of 2007 but played its part when the unravelling began. If Cameron had his Chipping Norton set with Murdoch employees Rebekah Brooks and Andy Coulson, then New Labour had its prawn cocktail circuit.

Blair and Brown assiduously courted the banks before and after the 1997 general election victory. They pledged “light-touch regulation” and Labour’s endorsement of the City and financiers in general.

Sir Fred Goodwin, who ran the Royal Bank of Scotland into the ground, by 1999 was actually in the government machine itself, chairing task forces on the work of credit unions (!) and the New Deal programme. In 2001, Goodwin attended a pre-election lunch for bankers at Chequers aimed at securing their support at an election. In 2004 Goodwin became one of eight bankers knighted under New Labour.

So when in 2007, RBS decided to take over the Dutch bank ABN Amro, no one in Whitehall or the Financial Services Agency demurred. ABN Amro was badly exposed to the US sub-prime market and RBS was severely weakened as a result. The rest, as they say, is history. Taxpayer bailouts followed by recession and spending cuts. Thank you Brown, Blair, Ed Balls (who in 2006 praised deregulation) and Yvette Cooper, chief secretary to the treasury.

The official report into the collapse of RBS identifies key moments between 2005 and 2007 when the Financial Services Authority created by New Labour backed off from challenging the bank’s low levels of capital and liquid assets.

Adair Turner, FSA chairman then and now, admitted recently: “Was there, however, a pervasive influence of assumptions about the City on the UK political dynamic? Yes, there was. There was a belief that light-touch regulation, or limited-touch, would make the City bigger, and that the City was a source of employment and tax revenue in particular. And therefore there was clear pressure on the FSA at times to say, go easy on the city. The FSA never used the phrase ‘light touch’, but politicians did, and they did it in speeches, which were directed at the FSA.”

Yes, the mainstream political parties are all in it together and have been for a long time. At our expense. The present state, the corporatocracy, is rotten to the core, undemocratic, beyond reform and ruling on behalf of the 1%.

Paul Feldman

Communications editor

They were all in it together, not just Goodwin

At last! Something we can agree with Labour’s former chancellor, Alistair Darling, on. Fred Goodwin (formerly Sir) should not be singled out by the establishment.

Goodwin certainly had a big hand in the virtual destruction of the three-century old Royal Bank of Scotland, but he was far from alone in his responsibility for the causal chain of events that brought the global financial system to the brink in 2008.

There’s an entire class of people whose positions should be on the line for allowing and encouraging the massive expansion of the system of credit and debt.

The Financial Services Authority, the toothless body created by the previous government, cheered from the sidelines as balance sheets more and more resembled a house of cards.

Darling’s New Labour government was at the forefront of ensuring London’s role as the base for the world’s banks and other gambling houses.

But can any of them be blamed for doing their jobs? Surely they were just doing what was necessary to keep the economy on the growth path? Yes indeed.

Having thrown in their lot with capitalism - the social and economic system that distributes profits extracted from the value-generating activities of those employed in the production of commodities to otherwise disinterested shareholders - they also became its playthings.

But it was their choice, and they are collectively responsible. And as the crisis intensifies it exposes more of those who constitute that collective web of responsibility.

Now the inner logic of the system has brought 25 of the 27 governments of the European Union together in a most terrible Faustian pact.

What they are calling a “fiscal union” is a drawing together of the otherwise helpless in an unprecedented assault on their populations. Their intention is to ensure that the entire population of Europe gets to experience the austerity conditions already wrecking the lives of the 50% of young people without jobs in Greece and Spain.

And all with the objective of a “return to growth” at some time in the distant future.

So what are the prospects?

Fresh from chairing the global economy session at the World Economic Forum in Davos, eminent Financial Times commentator Martin Wolf has this to say about the fiscal union:

“The IMF now forecasts a recession in the eurozone this year, with a decline of 0.5 per cent in overall gross domestic product. GDP is forecast to fall sharply in Italy and Spain, and stagnate in France and Germany. This is a terrible environment for countries seeking to cut fiscal deficits. Forecasts are far from satisfactory for other high-income countries. But the eurozone is the most dangerous part of the world economy: only there do we see important governments – Italy and Spain – menaced by a loss of creditworthiness.”

And in a chilling forecast, Wolf looks back to guess at the future:

“Just as it was not the dominant cause of the collapse, but rather sloppy lending and improvident private borrowing, so fiscal discipline is not the cure. This attempt to vindicate the catastrophic austerity of Heinrich Brüning, German chancellor in 1930-1932, is horrifying.”

A repeat of the ensuing events in Germany is indeed horrifying to contemplate. There can’t be such a repeat. The debt-fuelled growth that produced global corporations more powerful than any single country means that today’s crisis affects all countries simultaneously.

The capitalist system of production and its inseparable financial twin have been on life-support since 2008. It’s time to pull the plug.

Young, workers, the unemployed, students and older people must now draw together in a global network of People’s Assemblies. They can establish the power not only to settle accounts with those responsible for the crisis but build a society motivated by meeting human needs in place of the narrow interests of shareholders.

Gerry Gold
Economics editor

Morals, corporations and capitalism

Arguments are flying to and fro between the experts, as the fallout continues from capitalism’s biggest crisis in living memory. The greatest issue preoccupying them is this: is it possible to tame or control today’s global economy and its financial markets by forms of legal regulation?

Most critics and politicians from establishment figures such as Bank of England governor Mervyn King to Financial Services Authority Lord Adair Turner on the one side, to left-wing critics like Graham Turner and Prem Sika on the other – are united by the notion that further crises can only be avoided if “excesses” of one kind or another are curbed.

But it is not only the economists and politicians who have ventured into the fray. Enter the keepers of business morals. People like Church of England priest George Pitcher of St Bride’s church in the City of London (also of the Daily Telegraph) and Roger Steare, Corporate Philosopher in Residence at the Cass Business School in East London. He also works as a consultant for the accountancy and financial services giant PricewaterhouseCoopers.

Professor Steare occupies a special role in that “he manages to combine the hard world of commercialism with business ethics”, as a fellow consultant notes on Steare’s personal website by way of an endorsement. As the inventor and author of “ethicability®: How to decide what’s right and find the courage to do it” (note the registered trademark) he is well qualified for this position. Not only does he teach at the Cass Business School but he also helped prepare recommendations on rights and humanity for last April’s G20 summit in London.

Steare has added his pennyworth in a letter to the Financial Times. His research has shown, he says, that many people make moral decisions using a variety of philosophical and moral perspectives. He believes that “we have seen these moral philosophies working well for thousands of years”.

This rather serene view of human history (which conveniently ignores countless wars, colonialism etc) is then suddenly interrupted by “Frankenstein’s monster” – the corporation. He denounces the corporation as a “dysfunctional social construct invented during the Industrial Revolution by lawyers and politicians to further economic growth”.

Steare concludes that: “We must therefore dismantle the legal protections of corporations and reinstate full legal and financial liability for company directors and shareholders.” But is that a viable proposition? And is that really the problem? I think not.

In reality, corporations (or chartered companies) arose in 17th century Netherlands and England not as bizarre social aberrations, but as societies of merchants inseparable from the growth of capitalism as a national and international system, which both countries pioneered. As such, the corporation acquired a special status in law.

It is nonetheless true, as Steare says, that “like Frankenstein’s monster, the corporation and the artificial marketplaces created by lawyers and politicians have no persona, no soul and no conscience”. But is that not true of the capitalist system as a whole? Since when has capital had a conscience?

What society is oppressed by is not the brutal logic of the power of the corporation per se, but of corporations as the dominant part of a profit-driven capitalist system that is brought together by a state that reflects the predominant interests of the ruling classes.

The undiluted powers of the corporation therefore mirror existing class relations in society and cannot be changed or challenged in any significant way without overturning these. Paradoxically, Steare’s justified horror of the lawless nature of capitalism and its corporations – and his plaintive call for liability – is a powerful argument for putting an end to the system as a whole.

Corinna Lotz
Secretary, A World to Win

The horse has bolted

Current and former leaders of global agencies are leap-frogging each other with increasingly dramatic attempts to give expression to the scale and rapidity of the disintegration and collapse of the world’s financial and economic systems. Their warnings contrast sharply with the feeble efforts of national government agencies like the UK’s Financial Services Authority (FSA).

Michel Camdessus, former managing director of the International Monetary Fund (IMF) went large last week, declaring: “This crisis is the first truly universal one in the history of humanity. No country escapes from it. It has not yet bottomed out.” He was foreshadowing yet another of the IMF’s series of ever-more pessimistic forecasts published yesterday that calmly predicts that the global economy will contract this year for the first time since World War II.

Moreover, the impact in the UK will be more severe than in any other developed capitalist economy, the IMF warns. Figures on public finances confirm a rapid spiralling of state debt in the wake of the financial crisis, mounting unemployment and collapsing tax revenues. Next year, the IMF estimates that the Treasury will have to borrow a record 11% of gross domestic product – far more than has ever been borrowed before in British history and higher as a proportion of national wealth than in the United States.

Camdessus’s observation makes the otherwise stunning admission in the opening sentences of the report on the global banking crisis from Lord Turner, head of the FSA look pretty tame in comparison. “Over the last 18 months, and with increasing intensity over the last six, the world’s financial system has gone through its greatest crisis for at least half a century, indeed arguably the greatest crisis in the history of finance capitalism,” he writes.

After pointing the finger at New Labour for promoting “light touch regulation”, Turner admits that markets are irrational but then insists it’ll be OK, apparently, if we tighten regulations this time around. A phrase about shutting stable doors after the horse has bolted springs to mind.

In common with most observers and analysts, Turner mistakenly attributes the global production shutdown, with unemployment spiralling to new records in every country, to bad behaviour in the world of finance. The real source of the crisis actually lies in the system of capitalist production whose expansion is founded on debt of all kinds.

Following the 1929 crash, despite multiple failed attempts at government intervention, the crisis stretched throughout the 1930s becoming known in retrospect as the Great Depression. The Second World War reduced the no longer profitable pre-war surplus productive capacity to rubble and bloody corpses.

Then, and only then, credit expansion freed the insatiable self-movement of capital expansion in post-war spurts of growth. These produced the transnational corporations, built on cheap labour and the wreckage from a series of worsening crises, and spawned the global financial system which has now disintegrated.

Turner wants to get the carnival back on the road, replaying the same show, saying that the global economy needs “the existence of large complex banking institutions providing financial risk management products” which “inevitably involve at least some position taking”.

This is wishful thinking. The crisis is incomparably deeper than any other time in history partly because no-one knows the size of the balloons of credit which have yet to burst and the real state of bank finances. For example, no one in government can actually account for the vast sums allocated to bank bail-outs in America and the UK. They have disappeared into a financial black hole.

There’s an opportunity to discuss non-capitalist solutions and policies for this dangerous crisis at LEAP’s Capitalism isn’t Working conference next month.
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Gerry Gold
Economics editor