The year of the bailiff

The extent to which we are cajoled, enticed, seduced and even tricked into spending more than we have – especially over the end-of-year holiday period – is revealed through startling figures. A poll conducted by the Norwich Union found that 73% people who responded said they would run out of money by today – several weeks before their next pay day at the end of the month.

Some 43% of people surveyed said this month was the most worrying time of year financially, while 19% did not think it was likely they could cover all their household bills during January. More than one in three thought they would go into debt this month. Some householders will dip into their savings or rely on credit and loans to make ends meet for the rest of the month, the Norwich Union said. It is estimated that Britons spent on average £781.86 extra over the festive period on gifts, socialising and sales shopping.

Global capitalism can only sustain itself by persuading people to buy increasing numbers of goods and services. It is the only way corporations can maintain rates of profit, which are what shareholders and stock exchanges are solely concerned about. Whether people need these commodities is irrelevant. What is absolutely essential is that they are sold so that the whole process can begin again and again and again.

This is not a new feature of capitalism, of course. But in the last 30 years of corporate-driven globalisation, the exponential growth in output has required an even greater growth in consumer spending – no matter how that is achieved. The deregulation of the financial sector paved the way for easy credit, cheaper mortgages, buy-now-pay-later deals and a view that if you got into debt you could always remortgage your house, which continued to soar in market value. Rampant consumerism went from a social phenomenon into a form of social compulsion, driven by advertising and marketing epitomised by slogans such as “Because you’re worth it”.

This has proved unsustainable at both a personal and at a corporate/financial level, where there is an unfolding crisis of insolvency as shown by the Northern Rock crisis. To sustain the level of expansion the economy demanded, the volume of credit and debt exploded. As we show in A House of Cards, this appeared in various forms as traditional banking assets, stocks, shares and bonds, and an array of exotic and increasingly toxic derivative products. The expectation of continued growth and profits to service the debt fuelled an impossible dream, now shattered.

Now desperate banks are refusing to pass on the recent cut in interest rates to hard-pressed home owners, despite pressure from the government to do so. Sharp rises in gas and electricity prices are on their way, along with council tax increases. Falling house prices and higher lending rates reduces the possibility for remortgaging to raise extra cash. Little wonder then that despite most people being broke today after splashing out at Christmas, retailers are announcing the end of the consumer boom. Marks and Spencer today reported a fall in sales over the Christmas trading period. Sales fell 2.2% in the last three months of 2007, M&S said. Sales of clothes and homeware declined 3.2%, while food sales dropped 1.5%. It was the firm's worst performance for more than two years.

Another, even uglier, side of capitalism is beginning to reveal itself – a world of home repossessions, bailiffs, county court judgements, job losses and pay cuts. Creating a more sustainable economy, based on producing what is actually needed rather than maintaining profit margins, is a practical question for 2008.


Paul Feldman
AWTW communications editor

Consumerism from cradle to grave

Not so long ago, I was amazed to find that my neighbour’s six-year-old boy knew more brand names than I did, as he swept around identifying every gadget in my flat, from Dell, HP, to Sony. I shouldn’t have been surprised at all. The average 10-year-old is now aware of between 300 and 400 different brands. Young people are exposed to about 10,000 TV adverts per year, as well as pop-ups on the Internet.

A number of new studies, including a report by the government’s own Department for Children, Schools and Families, point to the serious damage to children’s health and education resulting from over-exposure to marketing.

Britain’s biggest teaching union, the National Union of Teachers, accuses companies of using psychologists to target children in a way that seriously damages their health and well-being. The NUT’s study, the most comprehensive to date, has found that marketing strategies are highly damaging, leading to ill-health and unhappiness. Eating disorders such as anorexia and bulimia result from unrealistic expectations about what they “should” look like. NUT general secretary, Steve Sinnot says that teachers are increasingly concerned by the “lifestyle pressures exerted on children by the advertising and marketing industries…. There are dangerous consequences for the physical and mental health of young people.”

According to the media watchdog, Ofcom, 92% of advertising before 9pm is for products high in sugar, sale and fat. Perhaps most shocking is the fact that nearly three-quarters of seven-year-old girls want to be slimmer. More than half of children know that someone has been bullied for not owning the latest gadgets or clothing, and nearly a third are dissatisfied with the way they look.

Educationalist Sue Palmer, says, “Marketers’ interest in the under-10s is at an all-time high… They’re grooming children to be consumers from an early age – and since consumption doesn’t buy happiness, it’s not surprising that one in 10 children is now diagnosed with a mental disorder.” The only reassuring aspect of the wanton destruction of childhood by commercialisation is that children themselves are keenly aware of the damaging side of the pressure to wear the “right” labels and to conform. Nearly 70 per cent of them say there is too much pressure to look perfect and wear the latest fashions.

But none of this will deter the government, nor Brown’s right-hand man, Schools Secretary Ed Balls from his crusade to replace existing schools with “academies”, sponsored by big businesses, often with their own ideological agendas. In this, they are seamlessly aligned with pro-business councils, whether New Labour or Tory.

In Tory-controlled Westminster, for example, the iconic comprehensive, Pimlico School, is about to be handed over to a Tory party donor and venture capitalist, John Nash. Nash is a former chairman of the British Venture Capital Association, and chairman of a leading private equity provider, Sovereign Capital. The council is riding roughshod over the results of its own consultation about the future of the school which showed that 92% wanted it to remain a community comprehensive school, with 4% for trust and 4% academy. Pimlico School Association has also voted that the school should keep its current status.

Corinna Lotz
AWTW secretary
10 December 2007