Cricket 2003 - Survival of the Richest (2003)

From the June 2003 issue of the Socialist Standard

Ideally, sporting activities are organized to entertain the public and indeed, in which the public participate. But in a profit-driven society, sports becomes an industry in which sportsmen, sportswomen and spectators are tools used by wealthy individuals and groups to make profits. Whereas competitors are hired and even drugged to squeeze out every exploitable energy and talent from them (of course it is officially called “performance enhancing”) the public are allowed to watch games only if they can pay. Many people don't realize this business aspect of sports or they simply overlook it. But this year's Cricket World Cup held in Africa embarrassingly betrayed the high profit considerations in sports.

The fixtures for the tournament were scheduled as far back as October 2001. England was billed to play against Zimbabwe in Harare on 13th February 2003. Now everyone knows that the local, mainly black, capitalists in Zimbabwe are locked in battle with the predominantly white capitalist farmers over land. The Zimbabwean and British governments are deeply involved in this intra-capitalist struggle on the side of the mainly black and predominantly white respectively.

The 13 February match in Harare therefore provided a 'godsent' weapon that the white commercial farmers, through the British government, decided to use against their adversary. So rising up to their role as a paid agent of people in big business, the government of U.K., started the machinations. The culture secretary Tessa Jowell and other Ministers in London urged the England and Wales Cricket Board (ECB) to boycott the match in protest against Mugabe's evil regime.

However the British government could not authoritatively order the ECB not to honour the match because the ECB is also a capitalist organization thirsty for profits. Thus the issue disgracefully degenerated into another battle between two of the British government's masters, the Zimbabwean commercial farmers and the capitalists in the cricket business.

The ECB was ferociously determined to go ahead with the match in view of the millions of pounds they would lose in fines and profits. They defended their intention to play with a capitalistically logical argument that there were no trade and sports sanctions against Zimbabwe and that if over 300 British companies were trading in Zimbabwe, the why couldn't the ECB also pursue its profit-oriented interests there?

It is not our concern which of the capitalists won the day. What concerns us as an exploited class of players and spectators is whether our miserable living conditions would change whether the match was played or not. Of course we would still remain a plundered class. Boycotts, sanctions, strikes, etc. present no solutions to the serious problems of war, famine and disease. Sometimes they are even counter-productive, as is is currently the case in Zimbabwe. Mugabe and his colleagues in the privileged class are not in any meaningful way affected by the sanctions. It is rather the poor who feel the pinch. Is it not a mockery that even though Mugabe is under a travel ban, French capitalists through the French government managed to get him to Paris in February for the Franco-African Summit where business and profits were discussed?

A genuine way to liberate the world from all its problems is to get it off this profit-oriented view of affairs. It is only then that cricket players and fans can cease to be used as a source of money for a tiny majority, and the sport returned to the domain of leisure activity in which ones enjoyment of sport, whether as a participant or spectator, is not dictated by the amount of money in their pockets.

Suhuyini

Cooking the Books: Negative Interest? (2016)

The Cooking the Books column from the September 2016 issue of the Socialist Standard

‘NatWest has become the first bank to warn business customers it may charge negative interest rates on money held in current accounts’, reported the Daily Telegraph (25 July). But how can there be negative interest rates? Why would anyone lend money for a period only to get less back at the end of it?

Interest is the price of borrowing money and is governed by supply and demand, more by demand in fact. The rate of interest (or, rather, rates as there are different ones depending on the risk of non-repayment) reflects the state of the economy. When business is slack, due to a lack of enough profitable investment opportunities, the rate is low because supply, as from companies not reinvesting profits, is more than what other companies want to borrow. In times of recovery and boom, when profit prospects are seen to be good,  it is the other way round. Demand exceeds supply and the rate tends to rise.

Governments and their central banks try to control the economy by varying the rate of interest up or down with a view to decreasing or increasing bank lending. The only rate they can directly control is the rate at which the central bank will lend money to banks as ‘the lender of last resort’, or Bank Rate.

After the Great Crash of 2008 the Bank of England tried to revive the economy by reducing the bank rate to 0.5 percent, a record low that lasted until this August when it was reduced to 0.25 percent. It is this that has raised the spectre of the banks paying negative interest. Banks are financial intermediaries whose income (their profits as well as money to cover their operating costs) comes from borrowing money at one rate of interest and re-lending at a higher rate.

An ultra-low, even more a zero or negative (as already in Japan and the Eurozone) , bank rate creates a problem for banks as there are only two ways that they can maintain the spread between the rate at which they borrow and the rate at which they re-lend, and so their profits. They can increase the rate they charge borrowers or reduce below zero the rate they pay depositors. As the Bank of England put it when it cut the bank rate in August:

‘[A]s interest rates are close to zero, it is likely to be difficult for some banks and building societies to reduce deposit rates much further, which in turn might limit their ability to cut their lending rates.’

To avoid this, at the Bank set aside £100 billion for a ‘Term Funding Scheme’ under which banks can borrow money from at 0.25 percent provided they increase their lending by the same amount that they borrow, explaining:

‘[T]he TFS provides participants with a cost effective source of funding to support additional lending to the real economy, providing insurance against the risk that conditions tighten in bank funding markets.’

Note, in passing, the matter of fact assumption that banks need funding to make loans. No nonsense here about their supposed ability to create money to lend out of thin air.

This policy is just pushing on a piece of string. It’s not the supply side that’s the problem but the lack of demand from businesses, who don’t see enough profitable investment opportunities at the moment to use up the supply. Until they do, the economy won’t fully recover from the slump, however much the government fiddles about with the bank rate.

Obituary: Eileen Smith (2011)

Obituary from the September 2011 issue of the Socialist Standard

On 24 April Eileen Smith spent the day at Ealing hospital, where a series of tests showed that she was suffering from cancer in her lungs and brain. Blind and frail, she could not care for herself alone so a place was found for her at a local nursing home where she died on 8 August.

Eileen joined the party – the old Ealing branch – in 1952. She was one of seven from the same family. Not cut out to be a speaker, she contributed to the Socialist Standard, for a while. She was branch secretary and a member of the Propaganda Committee. She showed an unusual talent for selling the Standard at outdoor meetings and on the doorstep – which helped the branch reach their sales target for the month. Clear and emphatic as a socialist, she was particularly passionate in denouncing the delusions of religion. She worked as a primary school teacher. She was also a Samaritan volunteer.

Many members of that branch are dead and others are scattered – but we remain united in our memories of her as a stalwart contributor to our work for socialism.

The Party sends its condolences to her sons, one of whom is a Party member.

RC