BEA’s hidden profits (1963)

From the December 1963 issue of the Socialist Standard

In case any of our readers should misunderstand the intention behind the phrase “ . . . B.E.A. pointed out how generous a deal its shareholders have got . . in October’s News In Review, we publish the following clarification.

There are no shareholders or stockholders in B.E.A. or B.O.A.C. so there are no individual investors who have an interest in whether the corporations make a profit or loss.

Under the Air Corporations Act 1949 Sections 9 and 10 the corporations were authorized to issue stock (subject to permission having been given by the Treasury) and the stock carried Treasury guarantee for interest and capital. Both corporations had issues of stock. For example, B.O A. 3% stock 1960/70, B.O.A. 2½% stock 1977/82. However, under a later act, the Finance Act, 1956, the corporations were permitted to raise money by means of loans from the Exchequer with the result that these Exchequer advances have replaced the old arrangements of stock issues.

But, even under the old arrangements there were no investors who had any interest in whether the corporations made a loss or a profit. Though the stock bore the name of B.O.A. or B.E.A., they were fixed interest stocks and the interest and capital were guaranteed by the Treasury. In this respect the air corporations were following the arrangements which are fairly general throughout the nationalised industries.

Editorial Committee.

Age of corporate greed (2025)

Book Review from the December 2025 issue of the Socialist Standard

Vulture Capitalism: How to Survive in an Age of Corporate Greed. By Grace Blakeley. (Bloomsbury Publishing) ISBN 9781526638069

The aim of this book is to demonstrate its idea that ‘Life under capitalism means living in a planned economy, while being told you are free’. As such, the author makes a strong case that capitalism is not defined by ‘free markets’ but by the existence of a class of owners and a class of workers.

As the author notes, most of this is not new thinking, and that she is drawing together well-known texts in academic circles and bringing them to a popular print market. Indeed, a concise bibliography, rather than scattering references in end notes, would have been useful.

Using many examples, such as Boeing, WeWork, Blackrock, she shows the mix of personal perfidy and structural power that characterises contemporary capitalism. She states ‘Large powerful firms are able, to a significant extent, to ignore the pressure exerted on them by the market and instead act to shape market conditions themselves’. As evidence, she shows the efforts these powerful firms go to control and influence political institutions to achieve these ends.

The nub of her case is that these corporations are practically monopolies. Monopoly does not mean the complete elimination of competition, but it does mean that price is not the only route to capitalists competing. She notes that monopolies appear not to have a totally free hand on pricing, and would rather cheapen the costs of labour they employ, rather than price-gouge the market.

This is a point she under-develops, and she could have noted that the class competition will always remain within capitalism: the capitalist class collectively exploiting the working class, and then fighting among themselves by various means (legal, financial, criminal) to get a cut of the profits raised. But this would have blunted her emphasis on monopoly capitalism.

She ends by looking at examples of ‘democratic planning’, finding real world examples of alternatives to the corporate capitalist planning. These range from Allende’s ‘Project Cybersyne’ in Chile, to Preston council, Jackson Missouri and Blaenau in Wales. Unfortunately for her argument, many of these examples rely on isolated powerful individuals, rather than mass movement; but her central point stands that there are real world examples of attempts within capitalism to engage in democratic planning that show how a different world could be organised.

She does acknowledge that, ‘More planning does not, then, equal less capitalism. The only way to get less capitalism is to constrain the power of capital,’ and that political action would be required to attain that (let alone abolish it).

The book is engaging and entertaining, and provides a useful contribution and perspective to building the case for common ownership. She is commendably clear, in her conclusion, that widespread consciousness of the need for change and our capacity to organise society for ourselves is needed in order to make the change.

Pik Smeet

Material World: Has Walmart laid the foundations for socialism? (2025)

The Material World column from the June 2025 issue of the Socialist Standard

In their 2019 book The People’s Republic of Walmart: How the World’s Biggest Corporations are Laying the Foundation for Socialism Leigh Phillips and Michal Rozworski argued that, contrary to appearances, modern capitalism is already succumbing to a process of central planning in such varied forms as large-scale businesses, the financial system and the welfare state. This could even imply that the growing dominance of large corporations in the economy, internally organised on the basis of a priori non-market allocation, might somehow herald the decline and, perhaps even, eventual eclipse of capitalism.

In an article in the Jacobin entitled ‘Yes, a Planned Economy Can Actually Work’ they wistfully maintained:

‘Mega-companies like Amazon and Walmart are already using large-scale central planning. We can wield that tool for good. Socialists need to renew our embrace of democratic planning and fight for a real alternative to capitalism’.

And that:

‘We need to use our vast productive resources to better ends – and through politics we can do just that. And as technology allows us to move to a discussion of what sort of planning, instead of whether planning, true democratic control of planning both at the enterprise and government level must be the non-negotiable foundation of our vision’ (tinyurl.com/345jbycw).

However, if a planned economy ‘can actually work’ on their terms, then it would be an economy that has nothing really to do with a post-capitalist society in any meaningful sense of the term.

Essentially, what they advocate is just a sort of democratised version of corporate capitalism. ‘Governments’ and ‘enterprises’ will continue to exist, and business will continue to operate as normal, churning out commodities for sale on a market.

The difference with today is that internally such business will become subject to ‘democratic control’. What enables this is the replacement in such businesses of internal markets by planning – something that Phillips and Rozworski said had already happened to a large extent:

‘Regardless, Walmart engages in large-scale planning without the direct intermediation of markets at scales to make Hayek bristle. Internally, like nearly all firms large and small, it is a dictatorial planned economy: managers tell workers what to do, departments realize goals from on high, and goods flow by fiat. Afloat in the market, Walmart is at once an “island of conscious power,” as Keynes’s collaborator D. H. Robertson put it, and an “island of tyranny,” as the social theorist Noam Chomsky rephrased it.’

According to them, the fact that a business like Walmart, the world´s largest company, operates without an internal market is precisely what makes it relatively more efficient than businesses with an internal market.

Walmart is, of course, a prime example of a large corporation. Its revenue in 2018 was $500 billion – exceeding that of the Soviet Union in 1970 (adjusted for inflation). As an organisation, it makes full use of sophisticated computer systems and comprehensive record keeping, to integrate and manage every aspect of production and distribution amongst its numerous outlets. Using big data analytics, it tracks and targets individual consumers – 145 million in the US alone – identifying patterns of consumer spending and anticipating future trends on the basis of past evidence.

These kinds of developments have been interpreted by commentators like Philips and Rozworski as clear proof that large-scale centralised planning is eminently practicable, contrary to the claims of Mises and Hayek. However, we should be wary of the all too facile way in which these commentators sometimes go about interpreting the evidence. Walmart’s is not an example of central planning in the sense of society-wide planning – obviously. Crucially, as just mentioned, it employs the principle of feedback and of course what Walmart is responding to is the market demand for its products. To its very core, Walmart is a market-based capitalist institution.

Whether a mega-corporation such as Walmart should be held up on purely technical grounds as some kind of template upon which a realisable alternative to capitalism can be built, albeit suitably reconfigured along democratic lines, is highly questionable for many other reasons too. After all, Walmart, like every other such corporation, is essentially a commercial or market-oriented entity and to draw attention to its enormous size and its ability to allocate inputs internally without reference to market principles is, in a sense, a red herring. What such thinking seems to imply is that a post-capitalist alternative will continue to feature something akin to ‘corporations’ – entities legally distinguishable from each other – and under whose aegis production will supposedly be ‘democratically organised’ unlike in capitalism.

This is missing the point completely. There won’t be, and cannot be, such a thing as a ‘corporation’ in a society based on the common ownership of the means of production. The very raison d’être of a corporation derives from its exclusive private or monopoly ownership of the productive assets in its legal possession and, as such, this is wholly incompatible with the very nature of such a society. Meaning it is nonsensical to talk of taking over an institution like a corporation and running it in a different, more democratic, way in a post-capitalist society, when such an institution would simply cease to exist.

Of course, what Philips and Rozworski describe is not society-wide central planning in the sense that Lenin might have had in mind when he talked of turning the ‘whole of society’ into ‘a single office and a single factory’. Nevertheless, just as Lenin´s approach via state capitalism comprehensively failed to deliver socialism in the traditional Marxian sense, there is no reason to think that their approach (via the democratic transformation of big corporations) would fare any better. Of course, one can redefine ‘socialism’ to mean something else, which is what Lenin did – but that doesn’t change anything.

Nevertheless, even granting their description of how Walmart works, we are none the wiser as to how the development of central planning within some corporate behemoth like Walmart is going to assist in laying the ‘foundations of socialism’ any more than the approach advanced by Lenin.

Robin Cox

Blogger's Note:

The People’s Republic of Walmart was reviewed in the June 2019 issue of the Socialist Standard.

These FoolishThings . . . (1995)

The Scavenger column from the March 1995 issue of the Socialist Standard

The basic contradictions in capitalism cause widespread death, destruction, pollution, poverty and waste. But this is to take the world view. Most of us experience day-to-day capitalism as a series of small stupidities, irritations and frustrations. Here are a few. If you encounter any worth a wry smile, please send them to The Scavenger, who will publish the best.

Corporate loyalty

“In El Segundo, California, just before Christmas, Mattel, the toy manufacturer, made some announcements. Dividends would increase, the company would have record sales and earnings for the sixth year in a row, the balance sheet was strong and getting even better.

“Also, the company would eliminate 1,000 jobs, about four per cent of its work force . . . The deal most workers thought they had — that their jobs would be safer and wages higher if thing were good at the factory — is over”. New York Times.

True courage

“I wore my fur coat to Salisbury's at the weekend and one lady came over to congratulate me on being so courageous,” says Aliza Claremont, director of a lingerie company. Robyn Opie, proprietor of a West End nail salon, says: “I have a full-length silver fox — a serious fur coal — that I walk to work every' morning, and I haven’t had the slightest bit of hassle". Mail on Sunday, 15 January.

Dazed and confused

Paratrooper Lee Clegg who was convicted of shooting and killing a joyrider in a stolen car in 1990, said: “The irony is that, if war broke out tomorrow I would have been willing to lay down my life for these pillars of society who have sent me to prison for life for acting in accordance with my training and regulations.”

Learning

From a local headmaster’s newsletter to parents: “Behind these crimes [junk culture] against education are the profits of big business — large firms and their shareholders . . . They are also the people whose voices are loudest in complaining about education standards. Hypocrisy rules.”

“It’s a free country”

“Britain’s prisons are behind the state of play in our security conscious department stores and town centres . . . Seeing how the outside is actually becoming more like an open prison, the prison system will have at least to try to catch up”. Nigel Burke, Guardian, 19 January.

The Scavenger

Early days of globalisation (2006)

Book Review from the December 2006 issue of the Socialist Standard

The Corporation that Changed the World: How the East India Company Shaped the Modern Multinational by Nick Robins (Pluto Press)

I often gauge how much I have enjoyed a book by the amount of highlighting and marginal notes I make in pencil. This book, like many on my shelves, will horrify those who prize pristine, unmarked first editions.

On 31 December 1600 a precursor of the modern transnational corporation came into existence. Its pioneering techniques in the field of trade and commerce, and downright murder and corruption, preceded by centuries the noxious business practices that we associate with today’s all-powerful corporations, many of whom have a higher turn over than small countries.

This book presents as a meticulous account of perhaps the most powerful corporation that ever lived, tracing how it came into existence, how it operated, its inner structure, the role of its own armies in its rise to supremacy, its part in the Bengal Famine when 10 million died as a result of the Company’s market manipulation, its militaristic role in the Opium Wars, its part in the Indian Mutiny and the Boston Tea Party and how, for the last twenty years of its existence, it ruled India as an agent of the British Empire. When it comes to downright exploitation, corruption, slaughter and sheer negligence and indifference to the suffering of others, perhaps no company that ever existed comes near the East India Company in its ruthless pursuit of profit, whilst refashioning the world commercial order in the interests of privilege and power for hundreds of years to come.

In its time the company had many critics, most notably Edmund Burke, “the real champion of India’s identity”, Adam Smith and Karl Marx. Burke fought long and hard to impeach the Company’s Governor General Warren Hastings for the devastation wrought on India in its endless search for profit.

Commencing his opening speech at Westminster Hall in February 1788, Burke said:

“I impeach him in the name of the people of India, whose laws, rights and liberties, he has subverted, whose properties he has destroyed, whose country he has laid waste and desolate . . . I impeach him in the name of human nature itself, which he has cruelly outraged, injured and oppressed, in both sexes, in very age, rank, situation and conditions of life.”

Despite Burke’s opening four day tirade against Hastings – one of the longest opening speeches in history – during which women were carried out fainting, at which the Speaker was “rendered speechless” and at which spectators were willing to pay ú50 for a seat, despite an ensuing trial that lasted from February 1787 to April 1795, Hastings was acquitted.

Considering the Company’s operations for the New York Daily Tribune in the summer of 1853, Marx noted five characteristics: 

“ . . . a permanent financial deficit, a regular over-supply of wars, and no supply at all of public works, an abominable system of taxation, and a no less abominable system, of justice and law..”

Satirising the Company’s administrative system, he commented how there existed “no government by which so much is written and so little done.” Marx furthermore viewed the company as a tool of British capitalism plc in India, observing how “the aristocracy wanted to conquer it, the moneyocracy wanted to plunder it and the millocracy to undersell it”.

The Second Opium War was, in Marx’s view, attributable to the Company’s operations in the East and its insistence that it had the right to swamp China with drugs in the name of profit, regardless of the addiction-induced misery its trade created or how the Chinese authorities felt. He wrote:

“While openly preaching free trade in poison, it secretly defends the monopoly of its manufacture. Whenever we look closely into the nature of British free trade, monopoly is pretty generally found to, lie at the bottom of its ’freedom’”.

In eight carefully researched chapters, Robins traces the Company’s operations from its inception as a trader in spices to its role in running the Indian sub-continent on behalf of the British crown, withholding, one imagines, very little regardless how gruesome, and there indeed are some stomach-churning passages.

In the final chapter, his analysis masterly done, Robins, contemplating the state of corporate play today, reflects how the Company’s legacy reveals the importance of taking on the mega-corporations who presently rampage across the planet unhindered, and this, for socialists, is the book’s one failing.

Robins’ remedy for curbing corporate power is simple:

“First of all, its market power and political influence must be limited . . Next, stringent rules are needed to ensure that management and investors do not use the corporation as a tool for their short-term interests . . And, finally, clear and forcible systems of justice have to be in place to hold the corporation to account for damage to society and the environment.”

Thus, a brilliant attack on unchecked power in the pursuit of profit is marred by the simple request that the capitalist class behaves and shows a little more respect when carrying out its obscene business, and that the executive arm of capitalism – government – hurries to the rescue of society and the natural environment. Smiley-faced capitalism is, for Robins, the only remedy. Warren Hastings laughs in his grave.

All said, if you’re into the study of corporate power gone mad, read this.

John Bissett

On Buying Out the Capitalist. (1907)

From the July 1907 issue of the Socialist Standard

[From “The Concentration of Wealth” by Henry Laurence Call, a paper read before the American Association for the Advancement of Science, at Columbia College, New York, Dec. 1906.]

The purchase of public utilities from the corporations is, indeed, now generally advocated ; and we presume the same alternative will be proposed with regard to the trusts, when the people shall have become thoroughly aroused as to what they mean, as also to the futility, as well as the inadequacy, of all attempts to curb or smash them. But this acknowledges the right in these corporations to insist upon such terms as they please, or even absolutely to refuse to sell until their franchises and privileges shall have expired ; thus postponing indefinitely, and rendering practically null, any attempt at a real remedy. The proposition is, moreover, in any just estimate, deliciously ludicrous. The simplicity of the countryman who “locked the stable door after the horse was stolen,” was sage wisdom by comparison. It is as though that countryman, with the thief parading his stolen horse in his plain sight, should have hypnotised himself into the belief that the possession of that thief was evidence of property, and sacred ; and while still in that hypnotic state, should have proposed to mortgage his farm and future labour in order to purchase back his stolen property.

If, through the misconduct of their public servants, the people have been defrauded of the possession of their public highways, as also of industry itself, then their right to repossess themselves of these properties and franchises is the same as that of the individual to repossess himself of his property, whether lost or stolen. The deprivations and wrongs of the past can never be remedied ; and all the wealth that has thus far gone to supply the lavish and sinful waste of these arch plunderers of the industrial world may not be restored to the people ; but all the plundered wealth that yet remains, including the franchises and properties, is theirs to recover and possess.

To attempt such purchase would, indeed, entail upon industrial society an impossible burden.

It is stated that the income of John D. Rockefeller is 72,000,000 dollars per year. If this is true, then the wealth of that individual alone, judged by its earning power, is to-day not far from 2,500,000,000 dollars; and before any reform can be effected will undoubtedly be 3,000,000,000 dollars. Now, inasmuch as the net earnings of the whole (American) people are only 3,000,000,000 dollars per annum, it would require all the earnings of all the people of the nation for a whole year, to satisfy the demands of this one individual alone, in the event of such purchase. But he is only one of thousands of the enormously rich ; and the class, of which he is representative, possess practically ninety per cent. of the 106,000,000,000 dollars given as our national wealth. Not all the labour of all the people would, then, suffice ; . . . as well might a slave, all whose toil belongs to an absolute master, hope to purchase its freedom, as industrial society to undertake such purchase, and then hope even to lighten its debt burden.

Aside from the contradiction it implies, and the hardship it must entail, the purchase by society of these possessions would perpetuate an aristocracy of wealth, having no occupation but the search for pleasure and power, and quite as formidable then as now. It would take all the profits from production and industry, leaving the whole of industrial society in the future, as at present, but “hewers of wood and drawers of water” for these lords of the industrial world. It would convert this into an immense corruption fund, in the hands of an idle class trained to ambition and power. Many might be content with this perpetual mortgage upon the labour of the whole nation, and spend their incomes upon pleasure ; but who can doubt that the great lords of finance who now dominate the industrial world, would still thirst for power, and, conversant with all the corrupt methods of our politics, would use the same criminal methods to build up a newer power, as those employed to build up their present possessions and power ?

Besides, such half-way action, or compromise, would be as wrong and unjust as it would be impolitic. All these possessions have been created alone by the labour of industrial society ; and to it, and it alone, they justly belong.

If, therefore, these possessions have found their way into the hands of the present possessors through unjust laws, through bribery, corruption, fraud, and other criminal misconduct, which the people could not see or prevent, then the people cannot do less than demand a full return both of the properties and all the accumulated wealth therefrom. Their right to this wealth is exactly commensurate with their right to take possession of the properties themselves. The return of the goods of which they have been despoiled is quite as important and altogether as just, as the prevention of further spoliation. It is enough that they have been so long defrauded of their just possessions, and compelled to toil in the service, and at the dictation, of the wrongful appropriators ; without assuming this voluntary and dangerous additional burden of perpetual toil, in order to come into possession of their own again, or rather into what would be but a hollow mockery of that possession. This wealth, thus plundered from a nation’s toil, either belongs to these plunderers or to the society from which they have plundered it; and to one or the other it must go in the end. Industrial society must make its choice between the two horns of the dilemma ; it must be the judge of its own rights, as also the enforcer of its own decrees ; and from its decision there is no appeal, as no recourse from its action.

The corporation, then, in all its ramifications, industrial, financial, and public service, should be taken from under the control of private interests, and made co-operative in the workers, by them to be administered for the common good; it should be, in fact, a social, not a selfish institution.

Not so democratic (2024)

Book Review from the June 2024 issue of the Socialist Standard

The Crisis of Democratic Capitalism. By Martin Wolf. Penguin £12.99.

The basic argument here is that market capitalism and liberal democracy belong together, albeit in a difficult relationship. Both supposedly involve equality of status: the right of people to a voice in public affairs and to buy and sell what they own. Market capitalism drove economic growth, we are told, and led to pressures for ‘universal suffrage democracy’. But in recent decades increasing inequality and personal insecurity mean that democracy has become fragile and been partly replaced by ‘demagogic autocracy’, as populism becomes more influential. Yet both democracy and capitalism can be renewed, resulting in a bright future again.

There is a great deal of useful information here, and Wolf sometimes reveals the true nature of capitalism. For instance, between 1980 and 2016, ‘the real incomes of the global top thousandth rose by 235 percent’, while real incomes have been stagnant for large parts of the population. Most people are just ‘one disaster away from ruin’, with very little by way of savings. Companies ‘possess enormous economic and political power’, and there is a ‘huge imbalance of power between footloose corporations and local workers’: this last refers specifically to multinational companies moving jobs abroad, but in fact applies far more widely.

The rise of the market economy is said to have led to pressures for election-based democracy. But there is nothing about ruling-class resistance, with no reference to Peterloo, Chartism or the suffragettes, for instance. Universal suffrage arrived fairly late, first in New Zealand in 1893, in the UK in 1928 and the US only in 1965. The valid point is made that democracy is a continuum, not an either–or matter, but it implies more than just the ability to vote, and capitalism has an inherent imbalance of power between the owning class and the working class. And has market capitalism (with competition and private economic initiative) really been the predominant version of capitalism over the long term? Wars were fought to open markets in other countries to Western trade, and slavery played a crucial role, as did protectionism. There was supposedly an era of ‘mixed economy’ from the 1950s to 1970s, which changed to free markets from the 1980s (with a concomitant increase in inequality, as noted above), but in reality the state always interferes in some way, in defence of the interests of the ruling class.

Unfortunately, Wolf has no idea about alternative systems. He thinks that socialism means state control over the economy, and the idea of degrowth is dismissed with little argument, since it could only be implemented by a global dictatorship and would supposedly mean reversing centuries of human history. His solution is to use ‘piecemeal social engineering’ to achieve aims such as a rising and sustainable standard of living, equality of opportunity, and the ending of special privileges for the few. But of course the last of these would not mean an end to the wealth, power and influence of the one percent, as the power of the capitalist class is built into all varieties of capitalism, a system that can never be truly democratic.

Paul Bennett

The Battle for Your Mind (2001)

From the February 2001 issue of the Socialist Standard

Does happiness reside in a bottle of perfume? Is your only concern the sweat under your arms? We take a look at the world of advertising

In 1969 the American Association of Advertising Agencies estimated that approximately 1,600 advertisements were aimed at each individual every day. That may seem a ridiculous number at first but the individual is not aware of most of them. The average person is likely to take momentarily notice of about 60 to 80 commercials a day with only 10 to 13 making a conscious impression. The number of advertisements hitting each individual today is certainly higher. You can now find advertisements regularly covering taxis, buses, toilets, envelopes, phone boxes and golf balls. In order to maintain sanity amongst this constant bombardment each individual has to erect a sort of sensory screen that can detect the oncoming signal and reject it.

On rare occasions advertisements are clever, entertaining and creative. Advertisements of this variety are few and far between, but they do exist and it would be incorrect to say that all advertising is “bad”. However, success in advertising is dependent upon the ability to manipulate the emotions, thoughts, and intelligence of the target audience to achieve the desired reaction—to get them to buy your product or service over that of your competitors. Typically, ads concern themselves with fantasy; a constructed world usually beyond the reach of our everyday experiences. They offer a vision of a world where happiness resides in a bottle of perfume, where your only concern is the sweat under your arms, and where a a low calorie drink could change your life (as part of a well-balanced diet of course).

Advertising has conditioned generations to accept it as an inescapable part of the landscape, as ubiquitous as night and day. There was a time, however, when advertising was widely considered an unwanted distraction. For example, editors initially thought ads were an intrusion upon the reader and would segregate all the adverts to the back of their magazine where they were out of the way.

“Fluff”

The roots of mass advertising lie in magazines and took off over 100 years ago when industries began producing vast amounts of consumer goods. Since broadcasting didn’t exist and newspapers were largely local, magazines were the only national advertising medium. The fact that you could produce high quality colour graphics on heavy paper, unlike newspapers, meant that magazines were much favoured by advertisers.

As soon as advertising revenue became important, at around 1890, ad agencies insisted that ads be moved from the back of magazines to the front. Inevitably, it wasn’t long before major advertisers were demanding that their ads appear opposite the opening pages of major articles. But it didn’t end there. Editors were soon selecting articles based not only on the basis of their expected interest to its readers but for their influence of advertisements.

As mass advertising grew, “liberal” and “radical” ideas in editorials became a problem. So did serious articles. A reader in an analytical frame of mind was unlikely to be enthusiastic about an advertisement for a trivial product. An article about genuine social suffering would certainly interrupt the “buying mood”. What was the solution? Easy, change the content. Better still, just fill the publication with material that will attract the readership the advertisers want. Before television emerged in the 1950’s, successful magazines were 65 percent ads. By that time, most magazines were fundamentally designed for advertising rather than editorial matter (see Vogue, Talk, Here’s Health, etc). Pick any random magazine off the newsagent’s shelf today and you’ll have a tough time trying to spot the difference between an article and an advertisement. Compare the differences between the styles, content and ideas. Most of the material claiming to be an “article” is in fact product promotion. Some writers call this “fluff”, a term used to describe material which is not news in any real sense but is non-advertising material supporting advertisers (see promotion sections in Vogue, Marie Claire, Woman’s Own, Muscle and Fitness, etc). Advertsiers want “fluff”, to create a buying mood.

One of the best examples to demonstrate the level of influence major advertisers now have over the contents of magazines is Vogue magazine. The January 2001 issue totalled 186 pages. Of those 186 pages, 87 were full-page ads. (In the first 66 pages there are 50 full-page ads.) Another 21 pages could be described as “fluff”, product promotion. The first “article” comes in at page 33. 17 pages consist of travel, food and horoscope sections. That leaves 61 pages out of 186 for article space. Of those 61 pages, 43 are full-page photographs. The main article entitled “Stars In Their Own Eyes” totals 28 pages, 27 of which are full-page photographs with 1 page of text. Richard Shortway, editor of Vogue, has said, “The cold, hard, facts of magazine publishing mean that those who advertise get editorial coverage”.

Another good example is Talk magazine. In the first 48 pages of the premier issue there were 46 full-page adverts! Unlike a few decades ago where editors would segregate ads to the back of the magazine on the grounds that it was an infringement upon the reader, the of bulk of adverting now appears in the opening pages—just where the advertisers want them.

Garbage

Advertising’s greatest effect on the mind is not so much its detail, but the mass conditioning attempted by the same basic themes occurring over and over as we slouch in a chair and uncritically listen to the garbage emitting from the box everyday.

Advertising likes to tell us how to think and how not to think. Some of the criteria we are told to use include how one should judge what is credible and incredible, what is success and failure, and how we should judge ourselves against others. Even though the advertisers are at war with each other for viewers’ and readers’ attention, the same themes keep cropping up again and again. That is because all advertising is born out of the same system, capitalism. Advertising does not exist in a vacuum; it is part of a system. Forget the three R’s taught in the education system; it is the 3 C’s in advertising that count—consumerism, conformity and competition.

Some advertisers aren’t shy to declare their support for capitalist ideas:

• “Business is the engine of society. Without it there would be no jobs. No products. No competition. No advancements.” (A 1996 Microsoft ad)
• “Of all human powers operating on the affairs of mankind, none is greater than that of competition.” (Mead Coated Papers)
• “You don’t win silver, you lose gold”. (Nike)
• “Identify yourself”. (Mitsubishi)

There are many researchers who believe subliminal advertising is being employed by a number of major advertisers to influence the subconscious mind of its viewers and readers. (Subliminal advertising is defined as images and messages that are below the threshold of conscious perception, but which will nevertheless affect the viewer on a subconscious level). The use of subliminal advertising may or may not be a reality. That is not the important thing. What we have to look at the reason for the existence of advertising in the first place, not necessarily the techniques advertiser’s employ.

Hype

The Vice President of Proctor and Gamble made a statement over 20 years ago which is truer today than ever. He said, “We’re in programming first to assume a good environment for advertising“.

In 1965 the Federal Communications Commission held hearings to determine how much influence advertisers had on non-commercial content of television and radio. Albert N. Halverstadt, then general advertising manager of Procter and Gamble, was particularly interested in the image of business and business people. He gave the FCC formal requirements for television programs:

“There will be no material on any of our programs which could in any way further the concept of business as cold, ruthless, and lacking all sentiment or spiritual motivation. If a businessman is cast in the role of a villain, it must be made clear that he is not typical but is as much despised by his fellow businessmen as he is by other members of society”.

The manager of corporate communications for General Electric has said, “We insist on a program environment that reinforces our corporate image”.

Far from being content with dominating the pages of popular magazines, major advertisers—BP, Pepsi, Levi’s, Cadburys, Ford, Nike and the rest—have set to conquer the almighty task of controlling the messages that emit from the black box in the corner of our rooms. Without doubt TV is the most effective advertising medium. Viewers don’t have time to examine or judge the messages. You sit and listen as the TV talks at you. Far from taking a passing interest, advertisers want to know exactly what time of day and in-between what programmes their ads will be shown because that will define the audience population they are buying. And there is no shortage of time. A double episode of the highly popular American sitcom “Friends” airs about 18 minutes of ads in one hour, which is nearly a third of the programming time. But don’t be mistaken in thinking the scripts of programmes are devoid of advertising influence. The ad agencies aren’t going to let them off that easily. TV executives (like editors) have surrendered to the altar of profit and are forced into the competition for viewer’s attention. Michael L. Buchenbeth has said: “The scripts are written to build tension before the commercials to hold the viewers attention during the commercials“. The basic strategy in programming is not merely geared towards satisfying the audience’s tastes but what is perceived as the most likely to attract advertisers. Like magazines, the difference between ads and programming becomes blurred. Flick the TV on . . . is it soap, a documentary, the news, an ad . . . who knows?

The motion picture has obvious advantages in immediacy, sound, colour over the still image. There is no end to the image and sound creation and manipulation possibilities; the ads with Steve McQueen in are a good example. However, the problem as far as the admen are concerned is the fact that you can only broadcast one message on one programme at a time. If an audience finds an ad boring, too long or too offensive they’re likely to commit the ultimate sin that haunts every ad agency and TV executive—they’ll switch the TV off.

The correct atmosphere is essential for advertising; which is a buying atmosphere. Short, half-hour programmes that are trivial, non-political and humorous are much favoured by advertisers. Coronation St, Star’s in their eyes, GMTV, Neighbours, She’s got to have it, Friends, TOTP, Blind Date (etc, etc) fit the bill well. Richard Lesser, then Vice President of the Grey Advertising Agency, in an article in Advertising Age (12 December 1957) wrote, “Advertisers for years have been studying the integration of the show and the commercials to see how the two can be married to each other“. It is no coincidence, for example, that Rachael and Monica from the American sitcom “Friends” have never appeared on air with anything less than perfect and immaculate hair since they have advertised L’Oreal hair products. Which ads most frequently appear in-between each episode? That’s right, L’Oreal shampoo ads that feature both Rachael and Monica.

What about the News? The fact that the Newsreaders’ scripts are interwoven with the advertisers’ interests is deliberately ignored. We are supposed to think that the ideas are the independent work of professional journalists detached from commercial bias. If the audiences were told that the ideas represented explicit demands of advertisers, the message would lose its impact. Sure, they can say what they want; as long they don’t conflict with the advertisers’ interests. The major advertisers can actually demand they report along certain lines by threatening to pull out their advertising.

Politics too

Advertising has also been used as a tool in the struggle for political ideas. Politicians, leaders and political parties alike have for some time exploited this effective medium. Political campaigns are increasingly looking and sounding more like advertising campaigns with each successive election. Sound-bites, slogans and style are very important considerations in any campaign now. The fact that a political party needs to spend thousands and thousands on advertising campaigns to improve its image just shows how shallow their message is, or the lack of one. Capitalist parties have long since ran out of anything intelligent to say and their only hope is to either re-hash old ideas or change the packaging they sell them in (see “New” Labour). Of course, the problem does not lie in the fact that they promote their political agenda but rather that they have nothing useful to say. Take away all the style and sloganeering and all you are left with is a bunch people who say very average things about very average politics; not worth voting for (see New Labour, again).

Would advertising still exist in with a society based upon common ownership? No. The inhabitants of a socialist society may well decide to have images and messages in the cities and outer environment but instead of being under the control of a profit seeking minority, they would be under the democratic control of the society, and will therefore benefit society instead of retarding it. When everyone has an equal say in what is produced and free access to it, there is no need to seduce people to choose one product or service over other. Of course, there may be a range of products which serve the same function but people will make choices free from the distortion and manipulation of advertising. The need for advertising only exists when different companies are competing over the same market for a bigger cut of the profit. A socialist society won’t require cities, towns, magazines and newspapers to be plastered with images and messages that serve no useful social function but contribute only to pollute the mental environment. There will be no profit to accumulate, no companies to exploit the workforce and no leaders to follow. Creativity, free from the constraints of profit making, can flourish and can be used to benefit society, and not be wasted on the anti-social aims of advertising agencies. Ideas, concepts and solutions will not be judged by their ability to realise a profit but by their value to its people.

T. M. Jones

Material World: Shareholder capitalism (2024)

The Material World column from the January 2024 issue of the Socialist Standard

In the last few decades the growth of institutional investors, in particular, in the guise of various kinds of funds – such as mutual funds, pension funds and, more recently, hedge funds – has been a powerful force in shaping the development of financialisation. Their large size has afforded them the leverage to impose a particular kind of financial logic on corporations with the focus very much on maximising ‘shareholder value’.

The CEOs – Chief Executive Officers – of big corporations have emerged as key agents in this trend, their commitment to the interests of shareholders having been firmly cemented and assured by means of such devices as stock options. This has had the effect of more closely aligning the interests of CEOs with those shareholders and is reflected in the astronomical rise in payouts to the former, an increasing proportion of which is, in effect, unearned income. Thus, whereas in the 1960s, America’s CEOs took home roughly 20 times what the average shop-floor worker made, today the figure is about 400 times or more.

Under increasing pressure to prioritise short-term results, managers are more inclined to make decisions that promote increased share value, such as mergers, acquisitions, and stock buybacks, rather than investment in physical production. Compliance is enforced by the threat of shareholders revolts, takeover bids by rivals or leveraged buy-outs by equity funds. The figures speak for themselves; more in the way of shareholder payouts means fewer funds available for investment, relatively speaking. According to Sam Pizzigati:

‘Between 1947 and 1999, non-financial U.S. companies shelled out an average 19.6 percent of their operating cashflow to shareholders, notes economist Andrew Smithers. The second half of that half-century saw stock options become an ever more dominant source of corporate CEO compensation. The 21st-century result? Between 2000 and 2017, the Smithers research finds, the average corporate cashflow to shareholders more than doubled to 40.7 percent’ (Sam Pizzigati, Aug 10, 2023 ‘Have Our Corporate Chieftains Become Expendable?’, Counterpunch).

Investment in physical production often involves certain immediate cost outlays and delayed benefits. That might require the board of directors to approve a request from the executive team to suspend dividend payouts (to the chagrin of shareholders) for the time being in order to finance this investment. Their reluctance to do this is a function of the shrinking time horizons (‘short-termism’) that businesses are subject to in an increasingly competitive world. All this has been aided and abetted by computerisation and the use of algorithms that have greatly speeded up decision making and made it imperative to adopt decisions that benefit a business in the short term with little thought of the long-term consequences.

Investing in the ‘real economy’ has the risk that in building up productive capacity one might exceed what the market is capable of absorbing – not least when your rivals might be wanting to expand output as well. Thus, it may sometimes be more prudent to simply buy up existing production capacity via mergers or acquisitions than increase that capacity yourself.

It is developments such as these that call into question the traditional image of the modern corporation as classically set out in Adolph Berle and Gardiner Means´s 1932 book, The Modern Corporation and Private Property. This seminal work helped to fix the image of the modern corporation in popular consciousness as an entity in which ownership is dispersed among numerous (and relatively inactive or powerless) and often small investors (thanks to the institutionalisation of laws such as those pertaining to limited liability that supposedly encouraged wider investment among the population by mitigating potential losses) with corporate control being decisively wielded in the hands of non-owning managerial elites.

Recent developments closely aligning the interests of CEOs with those of shareholders via the use of stock options and profit-based performance bonuses – major components in the compensation packages of modern-day corporate CEOs – have put the matter beyond doubt. Moreover, some of these compensation packages are on a scale that would certainly place their recipients in the ranks of the capital-owning class, even if only the lower rungs of that class, taking into account that a sizeable and growing chunk of that income is unquestionably ‘unearned’.

CEOs may ‘work’ but the mere fact that one works does not, of course, make one working class – any more than the possession of small amounts of capital makes one a capitalist. There is a certain point at which a change in quantity (in this instance, with respect to how much capital one possesses) translates into a change in quality or kind (from worker to capitalist).

In other words, and contrary to what the managerialist paradigm asserts, what we are seeing here is a convergence, not a divergence, of ownership and control. The top echelons of corporate management are, in effect, being steadily absorbed into the capitalist class. Alternatively, you could also see this as a case of members of that class taking on a more (pro)active managerial role in their companies for various reasons.

An extreme example of this would be someone like Elon Musk who, as well as having a personal fortune of $190 billion to his name, is said to have enjoyed a ‘compensation package’ involving performance-based stock options from the electric vehicle manufacturer Tesla, (of which Musk is the CEO), exceeding US$10bn in 2021. Clearly, this individual has no need to work whatsoever given the size of his personal fortune. It’s just that he chooses to do so for reasons we can only speculate on but are not, in themselves, important.

In short, then, capitalism has morphed from something like the kind of managerial capitalism that commentators like Berle and Means had in mind back in the early 20th century to today’s full-on ‘shareholder capitalism’.

Robin Cox

The Truth about Globalisation? (2003)

Book Review from the October 2003 issue of the Socialist Standard

Open World: the Truth about Globalisation. By Philippe Legrain. (Abacus £7.99.)

This book has been touted as the definitive response to the ‘anti-globalisation’ movement and writers such as George Monbiot and Naomi Klein (author of No Logo). Essentially, Legrain argues that globalisation is A Good Thing, delivering jobs and a better standard of living to poor countries and cheaper goods to the developed world. Coupled with free trade, and appropriate government action to prevent any unwanted side effects, it can benefit everyone.

Legrain begins by arguing that globalisation has not proceeded as far as many people may feel. For instance, three-quarters of the goods in British shops are made in the UK, and most people work for British companies; in the US, the corresponding figures are around 90 percent in both cases. He also has a genuinely useful chapter on the history of globalisation, suggesting that it was already well under way when the Industrial Revolution started.

But he then goes on to claim that workers in poor countries benefit from globalisation. In Vietnam, for instance, foreign-run factories pay around double the average local wage, and technology and management skills are transferred inwards. Yet sometimes he is astonishingly naive: he visits a Nike contract factory there, and describes it as “bright, airy, clean and safe”, but says nothing about the many other reports of low wages and appalling working conditions in sweatshops. He justifies the vast difference between what the workers earn per shoe ($2) and what the shoes sell for ($72) by noting all the other costs and the need for Nike to make a profit. In fact, this is his general argument: though he hardly uses the word “capitalism”, he is really defending globalisation as part of capitalism, and on the same grounds that capitalist supporters defend the profit system.

Nor, he claims, do brands really rule the world, as Naomi Klein implies. Rather, consumers hold the whip hand, as the brands have to cater to their whims. We still have a choice: if we don’t like Nike, we can buy Adidas (some choice!). Klein is described as virtually fascist for suggesting that ordinary people are manipulated into buying things they don’t really want, while she of course is intelligent enough to see through it all. It is true that people cannot be manipulated in any simplistic way, but they can certainly be influenced, which is why the global brands spend millions on advertising. Legrain also blithely ignores advertising to children, who are clearly far more manipulable than adults.

Equally, companies are supposedly not all-powerful, being at the beck and call of those who buy their products and call the shots. Some of Legrain’s arguments here are just plain silly. For instance, he states that Margaret Thatcher’s privatisation programme was introduced because she thought it made economic sense, “not because she was taking handouts from big business”. But capitalist politicians do what seems to be good for capitalism, and to suggest that such actions would only be taken if they were corrupt is missing the point completely.

Basically, Legrain’s book is a hymn to capitalism and to profit-making. If you think that capitalism is basically a nice, friendly system—though it may need a bit of adjustment from time to time—then it may well be logical to support its globalising aspect. After all, it means more customers, more profits. But the anti-capitalist or anti-globalisation movement, for all its confusions, is a sign that increasing numbers of people are rejecting the idea that profit is good for everyone and that a small number of parasites should control the Earth’s resources. Open World may make the capitalists and their supporters happy about what their system is doing to the world, but in truth it is no more convincing than any other attempt to defend the profit system.

Paul Bennett

Marketing the Revolution (2002)

Book Review from the September 2002 issue of the Socialist Standard

Marketing the Revolution by Michael Mosbacher (Social Affairs Unit, 2002.)

Before we can have socialism a majority of the world’s population will have to stop supporting capitalism and become pro-socialism. But what if the “anti-capitalist” movement proves to be a precursor, not of a fundamentally different form of society (socialism) but simply of another form of capitalism? If the “revolution” is de-fused, emasculated, diverted, usurped, hi-jacked, betrayed – if it is marketed by people who want, not socialism, but a reformed capitalism, then things will change a little but not much. Capitalism will have eaten “anti-capitalism” for breakfast.

According to Mosbacher, something like that is actually happening. Of course, he doesn’t put it quite like that. He writes for the Social Affairs Unit, a body that has good capitalism-supporting credentials. His main theme is that those who support the anti-capitalist movement (and in particular those who attack corporate brands) talk the language of capitalism because “it is the only game in town”. But arguably the most useful function his little book serves is to quote some dreadful statistics from The United Nations Human Development Report 2001 :

“. . . much of the world still lives in horrific poverty: in the developing world 1.2 billion people live on less than $1 a day . . . 2.8 billion live on less than $2 a day; 325 million children do not go to school; more than 8.5 million are illiterate; 11 million children under five die each year from preventable causes; nearly a billion people do not have access to improved water sources; and 2.4 billion lack access to basic sanitation” (p.71).

Mosbacher seeks to take the sting out of these awful figures by arguing that “the only countries in which we have seen large-scale poverty reduction in the 1990s are the ones that have become more open to foreign trade and investment”. He quotes some figures of poverty reduction which “may seem trivial to some in comparison with the overall scale of the problem . . .” Yes, they do.

Returning to the theme of marketing the revolution, the author lays into Naomi Klein’s No Logo. We, too, were under no illusions when we reviewed this best-selling book in our December 2000 issue: “Klein appears to believe that something worthwhile can be done within the system of capitalism.”

Mosbacher is scathing about the “success” that the anti-branding movement has achieved. He notes that Klein has been a star turn at international anti-corporate gatherings. Anti-capitalism and anti-branding are fashionable and popular but they aren’t daring, subversive, edgy. They take on board the culture, ethos, language and techniques of branding, and they use these to attack the brands themselves.

Mosbacher says the anti-capitalists have “no clear end-vision of where they want to be, except away from where we are.” But he likes being where we are, and doesn’t like or want revolution. For him, branding is a good thing: it “is an extremely useful invention in that it transmits a vast amount of information to the consumer in an instant.” So that’s all right, then.

Stan Parker

Corporate takeover (2001)

Book Review from the September 2001 issue of the Socialist Standard

Captive State. The Corporate Takeover of Britain. By George Monbiot, Macmillan.

The British state was traditionally seen by liberal commentators as one of the most “well-established” parliamentary democracies, relatively free of corruption. But this perception is changing, with much talk of a “disconnection” between the interests of the people and the activities of government. George Monbiot’s book is an important contribution towards this shift of opinion.

The reluctance of many a Labour voter at the recent election can quickly turn into outright regret, after a few minutes of picking up this book. Monbiot takes the reader beyond the run-of-the-mill media illusion of politicians’ and their supposedly all-important press conferences and five-point plans. This is about the incorporation of corporate interests into the machinery of government.

Monbiot shows many cases where the business agenda determines the ground rules to which government is expected to adhere. Large retail firms and construction companies, for example, are shown to have acquired a strong grip over planning and development policy. Nick Raynsford’s 1998 withdrawal of Labour’s pledged right of appeal against town planning decisions is one of numerous examples of broken promises and contradictions in Labour policy exposed by Monbiot.

This reviewer had a recent, first-hand experience of the absence of democracy in local government – at a council planning meeting to consider a proposed “development” behind the garden where I live (actually the removal of some old woodland to make way for a car park). All Labour party councillors voted in favour without any of them even bothering to speak in defence. Local residents had found out about the meeting in spite of it having not been officially publicised and scheduled during a holiday period. They expressed the many arguments against the plan: pollution, noise, environmental quality etc but the shameful-looking Labour councillors did not reply, knowing that they had a majority over the Conservative Party minority who opposed the plan. “And this is supposed to be a democracy,” said one resident afterwards. “It was all a stitch-up – planned weeks ago,” said another.

Monbiot shows that commercial interests are paramount at all levels of state decision-making. He shows how they influence government regulatory bodies and the research agendas of British universities (everything from the Environment Agency to the Biotechnology and Biology Research Council). The “Fat Cats Directory” lists many business people who have served industries such as biotechnology and petroleum, whilst also having a role in the government-run institutions that supposedly regulate these industries.

Socialists have consistently said that the State never did exist to represent the interests of the majority of us (even if a majority of voters did elect the governing party that resides within it). The picture from Monbiot of corporation-dominated government is really the logical outcome of a class-divided society where the state must serve the owning minority. So what do we do about it? Monbiot calls for

“the peaceful mobilization of millions of people in nations all over the world. Globalization, in other words must be matched with internationalism: campaigning, worldwide, for better means of government” (p.357).

“Better” government, for Monbiot, means government that is held “accountable” and actively regulates corporations. Monbiot envisages this democratisation of government as occuring on an international scale through multilateral agreements. This book still points to the willingness of transnational corporations to relocate to more favourable climates for profit-making, as well as their capacity to change government policies to suit their interests. Yet Monbiot does not reach the conclusion of socialists that the profit motive will undermine reformist attempts to restrain it.

Monbiot’s vision of a political culture of “permanent agitation” is, at least, an implicit recognition of this built-in tension within capitalism. It is outlined in the final chapter entitled “A Troublemaker’s Charter”. The international campaign against the Multilateral Agreement on Investment is offered as an example of a successful international campaign. (This was a World Trade Organisation proposal for reducing the scope for national regulation of investment decisions; it was eventually withdrawn.) Yet, just a few pages on, the more recent Transatlantic Economic Partnership (involving the US and the EU) is introduced; a more gradualist move towards the same kind of goal, says Monbiot. So, the trouble-making should not ease up. More of it is needed as the problems of capitalism continually spill forth.

Monbiot does not consider the possibility that, when peacefully mobilised, the people of this world might seek to permanently end the cause of the social divisions he describes.

Dan Greenwood

Quote . . . Unquote (1972)

From issue number 2 (1972) of The Western Socialist

We couldn't have said it better 

"Look at it this way. America is run largely by and for about 5.000 people who are actively supported by 50,000 beavers eager to take their places. I arrive at the round figure this way: maybe 2.500 megacorporation executives, 500 politicians, lobbyists and Congressional committee chairmen. 500 investment bankers, 500 commercial bankers, 500 partners in major accounting firms, 500 labor brokers. If you don't like my figures, make up your own. We won’t be far apart in the context of a country with 210-million people. The 5.000 appoint their own successors, are responsible to nobody. They treat this nation as an exclusive whorehouse especially designed for their comfort and kicks. The President of these United States, in their private view, is head towel boy. They prefer clever flunkies who. like most of the present White House gang, are so slippery they can enter a telephone booth and leave by the side door.

For most of us, the 210-million, the result is a tearing frustration. Frustration with unemployment, inequity, taxes and prices, to be sure, but under it all a rage at the giant, impregnable, impenetrable, anonymous, unaccountable. irresponsible,  immoveable bastions of power. And now, through the Naderites, through the blizzard of shredded documents at I.T.T., we get our noses rubbed in the whole sick operation of decadent power blocks.

The time has come to have dreams, hopes as tangible as an A.P. dateline and not far off." 

Robert Townsend in New York Times Book Review Section, April 30. 1972

Anti-capitalism or just anti-capitalists? (2001)

Book Review from the August 2001 issue of the Socialist Standard

Naomi Klein’s book No Logo has been widely proclaimed as a manifesto for the anti-capitalist movement. Klein herself disclaims any notion that she has written a manifesto, but the book is still well worth examining. It deals with the development of enormous global corporations and some of the resistance to this; the title reflects a general anti-corporate attitude.

It is common to observe that all high streets look very much the same nowadays, with Next, Virgin, Pizza Hut and McDonalds being found more or less everywhere, and not just in the UK. This illustrates the rise of the brand or superbrand, which is constituted by an image or a logo much more than just a range of products. Marketing gurus see the brand as crucial – companies should create a brand, not just sell a product. For instance, John Grant’s The New Marketing Manifesto argues that a brand is “a popular idea or set of ideas that people live by”. Brands “add value to people’s lives”, and are the new traditions (now that older traditions such as a sense of community have decayed). This kind of celebration of brands shows an uncritical acceptance of capitalism’s values.

In contrast, Klein looks behind the logo and the label to expose the darker side of branding. The logo has expanded in size and importance with items of clothing just being empty carriers for the brand. She quotes the boss of Nike:

“For years we thought of ourselves as a production-oriented company, meaning we put all our emphasis on designing and manufacturing the product. But now we understand that the most important thing we do is market the product. We’ve come around to saying that Nike is a marketing-oriented company, and the product is our most important marketing tool.”

Companies such as Nike, Gap, McDonalds, Disney and Starbucks are not simply multinational corporations (which would mean they have different brands and products in different countries), but are truly global corporations (with the same brands and marketing wherever they operate). Nike in particular has emerged as a real superbrand: its swoosh logo is an immensely popular tattoo in the US, among both customers and workers. Imagine flaunting your status as a wage slave by having your employer’s logo tattooed on your leg. Some American teenagers are quoted as saying that Nike is more important to them than their girlfriend is.

One theme of No Logo is the way in which advertising, sponsorship and the market have expanded into areas of life which were previously free of them, thus resulting in the loss of what Klein calls “unmarketed space”. A blatant instance of this is in schools, where companies sponsor lessons and TV programmes and all manner of equipment. Sponsorship of sporting and cultural events is now far wider than it has ever been.

But perhaps the biggest effect of the growth of the top brands is on employment. Increasingly, such companies are moving production to developing countries, especially in East and South-East Asia, in pursuit of cheap labour. Countries such as Indonesia, Vietnam, China and the Phillipines have been happy to provide so-called free-trade zones or export-processing zones, with tax breaks for companies and no right to union organization for workers, as a means ot attracting the global corporations. Sub-contractors are used, so that, when questioned about wages and working conditions, Nike, Reebok and so on can reply that they do not actually employ anyone in Indonesia or wherever. Their production becomes far more flexible, as they don’t need to own land or factories, and can respond more easily to fluctuations in demand. They will also happily move prodution ftom one developing country to another in pursuit of a cheaper and more docile workforce. Young workers are often drawn into these zones with promises of good pay, only to find appalling wages, long hours, dangerous conditions, and tyrannical bosses, who may lock workers up if they refuse to do overtime. Some of the descriptions are reminiscent of nothing so much as Engels’ accounts in Condition o/ the Working Class in England in 1844—sweatshop conditions have just been exported to the “Third World”.

Companies such as British Airways and Debenhams have relocated much of their call centre work to India, where wages are a fifth of the UK level. The workers are given crash courses in British culture, everything from soaps to football, so they can chat knowledgeably with the callers, who don’t suspect that they are speaking to someone in Delhi or Bombay

However, while workers in Indonesia or Vietnam can make clothes, shoes or whatever, they cannot sell them in North America or Western Europe. Here, the global corporations have led the way in the notorious Mcjobs – part-time or temporary work often on near-minimum wages. In coffee bars such as Starbucks, workers may have to work two or three shifts a day, to coincide with the busy periods. This gives the company the flexibility to cope with fluctuations in business without having to pay people to just stand around, but for staff it is, to say the least, extremely disruptive. In other companies, Microsoft for instance, jobs are contracted out to agencies who (surprise!) pay far lower wages. Again, this boosts flexibility and the ability to respond to booms and slumps in demand, avoiding such problems as redundancy pay. Many “permatemps” have been employed in this way for years, without gaining proper employee rights.

This, then, is the picture that Klein presents, of a world increasingly dominated by global corporations and their cultural and economic impact, where wotkers slave away in sweat shops for a pittance with little ability to fight back, and where temporary jobs hold sway. Profits soar, while the workers suffer.

The final section of No Logo deals with various kinds of opposition and resistance to the superbrands and the kind of society they represent. This can range from the fun but ineffectual – such as parodying advertisements or throwing custard pies at Bill Gates – to to the more substantive responses of Reclaim The Streets and the wider ‘anti-capitalist’ movement. Such activity Klein describes as “laying the foundations for the first truly international people’s movement”. Here are some examples:

• Exposing sweatshop and child labour, including school pupils discovering who made their uniforms
• Local councils entering into selective purchasing agreements, and refusing to buy from companies that (for instance) trade with Burma
• Secondary boycotts against cornpanics that supply other companies rather than the public directly
• Campaigns such as that against Shell in Nigeria
• Klein is well aware of the limitations of brand-based politics, e.g. that boycotts can be counter-productive and that such campaigns tend to miss the broader economic context. Her argument, though, is that “you’ve got to start somewhere”, so you might as well start with aiming your attacks at one big corporation, normally Nike.

However, the idea of “starting somewhere” naturally implies going on to address other issues in the fullness of time, and it’s here that Klein’s ideas become mundane and just plain disappointing For instance, she advocates enforcement of existing ILO treaties, and that employment codes of practice be drafted by the workers themselves rather than by the corporations. All this of course assumes the continued existence of employers and employed, and offers no vision of the ending of class division.

Global capitalism is not a new creature, it is just capitalism writ large and even nastier. A return to pre-global capitalism would be no altetnative, even if it were practical. But it should now be clear beyond dispute that national-based solutions to humanity’s problems are pointless, and that a world movement, leading to world socialism is urgently needed.

Paul Bennett

Blogger's Notes:

Though not listed in the contents of the August 2001 Socialist Standard as a book review let's be honest, to all intents and purposes, this is a book review. No Logo was also reviewed in the December 2000 issue of the Socialist Standard by Cyril Evans.

Does capitalism have a conscience? (2002)

From the August 2002 issue of the Socialist Standard

“When abuses like this begin to surface in the corporate world, it is time to reaffirm the basic principles and rules that make capitalism work: truthful books and honest people, and well-enforced laws against fraud and corruption. All investment is an act of faith, and faith is earned by integrity. In the long run, there’s no capitalism without conscience; there is no wealth without character.”

Thus spoke President George W Bush to Wall Street on 9 July in the wake of the biggest corporate fraud in history as stock markets around the world were reeling from the news that WorldCom, the US phone company, had admitted to a $4 billion hole in its accounts. As WorldCom’s share price fell from $60 to $2 it was further revealed that Xerox, the multinational photocopying and printing company had similarly overstated its profits by $billions.

 

At the end of last year energy multinational Enron, caused panic on the world’s stock markets when it emerged the company had hidden debts of $9 billion. Other financial scandals have involved Global Crossing, Arthur Andersen, Tyco and Adelphi Communications, prompting many investors and economists to wonder just how deep corporate malfeasance is and whether any company offering shares can really be trusted.

The truth is that there must be thousands of firms out there telling porkies about their profits in an attempt to raise their stock market rating. And there are reasons for this. Because capitalism is a ruthlessly competitive system, each company aims to maximise its share of its respective market and to get the better of its competitors. When a company inflates its profits its share price typically increases. More people are prepared to buy shares in profitable companies and “profitable” companies find it easier to borrow with a view to investing in newer technology that can win them a greater share of profits and undermine the efforts of their competitors. The problems, however, is that future profits are purely guesswork. No one can realistically predict demand (it’s not a natural science). And when a company can’t meet the expectations of its shareholders, panic sets in, with all concerned running away from the sinking ship with whatever they can carry.

Bush would do well to remember that it is not “truthful books and honest people . . . that make capitalism work”, but the drive to make profit, whether it be through the creation of false needs, warfare, artificial scarcity or planned obsolescence. And if there were “well-enforced laws against fraud and corruption” in the corporate world, Bush himself would never have become president and America’s prison population would be twice its present size.

More importantly, however, Bush’s speech focused on a few individuals, giving the impression that a few nefarious persons had tarnished the good character of capitalism – a move totally designed to distract from the real nature of the beast. Capitalism is an oppressive and exploitative system in which human needs come a poor second to the requirements of profit, a system that consigns billions to lives to abject misery. Its indifference to the hardship of the real wealth creators is evidenced in the present instance by the fact that while the “honest” bosses at WorldCom have pocketed $millions in the perpetration of their scam, the company now wants to sack 17,000 of its workers; the same workers it encouraged to invest their hard-earned retirement funds in company shares in the full knowledge those same shares would lose value. Prior to the recent scandal these retirement plans-cum-shares shares were worth almost $220 million; at the moment they are valued at $4.4 million. “No capitalism without conscience”, Mr Bush?

Neither was there room in Bush’s lecture on corporate ethics to Wall Street for mention of the practices of monopolies and oligopolies, of the market power of the likes of Exxon-Mobile, Ford or Wal-Mart, whose revenues are larger than the national budgets of many countries; whose power is such that even the US government is afraid to curtail their shenanigans. While Bush can lecture Wall Street on corporate “ethics”, given half the chance these bastards would apply for a patent on the very air we breathe. Where there are profits to be had, honesty and conscience, ethics and values are swept under the carpet and trodden upon.

So is the current crisis evidence that the capitalist system is about to come tumbling down? No – production for profit will continue apace and will still be impinging on every aspect of our lives for some time to come as no crisis lasts forever.

What the recent scandals reveal is that corporate greed is endemic to the system and that financial regulators were not regulating all that well. Indeed, it is possible that eventually US Capitalism PLC may come away from this fiasco stronger than before, with corporations (in the wake of Bush’s speech and the now widespread demands for tighter regulations) winning more confidence from investors.

So put away the bunting and party-poppers and calm down. Capitalism may be going through one of its periodic crises but it is going to have to be dismantled the hard way – with a class conscious majority bringing about its end by democratic means. Because in the long run, that is the only storm capitalism cannot weather.

John Bissett

The peril of moralism (2007)

From the August 2007 issue of the Socialist Standard 

The Guardian (5 June) ran a story by George Monbiot about pharmaceutical companies’ promotion of baby formula in the Philippines. The article, together with readers’ responses, is online at http://www.guardian.co.uk/comment/story/0,,2095325,00.html.

As in other underdeveloped countries, the majority of the population in the Philippines has access only to polluted water. As formula has to be mixed with water, its widespread use instead of breastfeeding kills thousands of children every year. Nevertheless, the corporations promote it in the most ruthless fashion. For instance, they encourage their saleswomen to dress as nurses to gain the confidence of young mothers. The Philippines government has tried to restrict the promotion of baby formula, but the Pharmaceutical & Healthcare Association of the Philippines (PHAP), representing the manufacturers and backed by the US government and Chamber of Commerce, has led a campaign to thwart the attempt, using lobbying, diplomatic pressure, legal action and (apparently) targeted assassinations.

All this is, indeed, horrifying, and indignation is a natural and healthy reaction. But against who or what should we direct our indignation?

Irrelevance of nationality

Often enough, indignation expresses itself as national hatred, typically as anti-Americanism. America Puts Profit Above Babies’ Lives – runs the headline over the print version of the article. Of course, the American government and American business do put profit above babies’ lives (and above everything else). But the same is true of other countries. Ordinary Americans tend to feel that accusations against “America” are aimed at them too and respond in like manner: “You British are just as bad!”

Nothing could be more irrelevant to the issue than nationality. The first target of activists opposing the promotion of baby formula in underdeveloped countries was Nestlé – a Swiss company. The members that PHAP represents include European, Australian, and Japanese as well as American companies. They are equally ruthless.

Bad guy approach

But blaming “America” – or the Jews or the Japanese, perhaps, or some other nation or ethnic group — is a form of the broader phenomenon called moralism. Alternatively, we might call it “the bad guy approach.” Track down the “baby killers,” the evil people responsible for the evil deeds and do something about them. Do what exactly? Here things generally get fuzzy, but one Guardian reader has an answer: “The world right now needs another Revolution like the Bastille when all these greedy, unprincipled, corrupt and criminal politicians/industrialists are rounded up and are summarily executed.”

That should do the trick! Or would it? The “revolutionary” remedy has already been tried – in France, Russia, China and other countries. And yet there are still plenty of “bad guys” around, in those countries as elsewhere. Why should more shootings help? The more adaptable “bad guys” survive the “revolutions” by switching to the winning side in good time, and any who do get shot are readily replaced. What we have here is obviously an expression of extreme feeling, a fantasy of revenge, rather than a carefully thought-out solution. The moralistic approach stirs up emotions so powerful that thinking is paralysed.

Evil deeds without evil people

Really evil people are few and far between. They are not the crux of the matter. Most of the people involved in making and selling harmful products are not truly or intrinsically evil. The saleswoman dressed as a nurse to sell more baby formula and earn her commission, the Chinese tobacco farmer, the Afghan poppy grower, the armaments worker making land mines that will maim and kill children as they play – they are all doing evil things. Their deeds are evil, but they themselves are not, for they have to make a living somehow. They have to feed and clothe their own children.

Even the corporation executives who organize the evil deeds are not doing evil as a free and deliberate choice. They are required by law to do whatever is necessary to maximize profits for their shareholders. They could, of course, give up their positions and join the working class, but you can understand why so few of them would want to do that! The shareholders, in turn, do not feel obliged to concern themselves with the morality of the businesses that provide their dividends. Everywhere we look we find moral ambiguity. Evil is certainly being done, but no one is clearly to blame – only the social arrangement that we refer to as a system.

Some of us are lucky enough to come by a livelihood that allows us the luxury of a clean conscience (more or less). Some are not so lucky. The appropriate target of our indignation is the system that places people in such excruciating dilemmas, penalises altruistic impulses, rewards ruthless egoism, and inexorably turns “good guys” (or potential “good guys”) into “bad guys.” It is only by understanding the system that we can devise a way of freeing people to heed the voice of their conscience and freely contribute their talents to society, without thereby jeopardising their families’ survival and wellbeing.

Stefan