Voice From The Back: Hard Times (2007)

The Voice From The Back Column from the July 2007 issue of the Socialist Standard

Hard Times 

Capitalism treats everything as a business. The Thomas Deacon Academy in Peterborough is a good example. Chief executive of the new ú46 million academy Alan McMurdo makes his aims plain. He will have no playground and insists that the school will be a business concern. “Dr McMurdo … says that he wants to run his school like a business, treating pupils as employees. Lunch will be incorporated into the third lesson of the day, when students will be escorted to the refectory and given 30 minutes to eat before returning directly to the classroom. … ‘It’s all about the investment of public money,’ he said.” (Times, 14 May) Charles Dickens’s tyrannical school teacher Gradgrind looks positively benevolent compared to McMurdo.

Moral Majority nonsense

The death of Jerry Falwell, the founder of Moral Majority Inc. marks the end of an obnoxious combination of rightwing politics, homophobia, racialism and US nationalism. In the 1980s he had a 21 million TV viewing audience and a church that was enjoying an income of £45 million a year. “While MMI was avowedly bipartisan, he claimed that Democrats were a ‘dangerous minority of homosexuals, feminists, socialists and freezeniks’. He said that anyone who was anti-Israel was anti-God, but later added that the Antichrist was Jewish, and that Jews, like Roman Catholics, had no place in heaven.” (Times, 16 May) His life is a sad commentary on the gullibility of many American workers. Eventually his MMI ended in financial bankruptcy to match its intellectual bankruptcy.

USA, fantasy and reality 

“At least 10 of the Republicans and Democrats hoping to run for U.S. president in the November 2008 election are millionaires, The Washington Post reported on Thursday. Collectively, the candidates are worth at least a quarter of a billion dollars, the newspaper said. Republican Mitt Romney, a former Massachusetts governor and founder of a private equity firm, is the richest of the field with personal assets estimated by his campaign at $190 million to $250 million, the Post reported. …The Post noted a long history of the very wealthy becoming president, from Theodore Roosevelt and John F. Kennedy to Ronald Reagan and George W. Bush.” (Yahoo News, 17, May) So much for the fantasy of “log cabin to White House”.

Merchants of Death

“The Government’s pledge ten years ago to act ethically and openly when licensing arms export sales has failed to eradicate corruption or stop weapons ending up in the wrong hands, a report says today.” (Times, 21 May) The report The Good, the Bad and the Ugly: a Decade of Labour’s Arms Exports is produced by Saferworld and reports that Britain has consistently approved military exports to countries accused of violating human rights, including Colombia and Indonesia. They make peaceful electoral promises, but in power – business is business.

Let them suffer

“Sick children who have been taking part in trials for a drug that has transformed their lives now face the prospect of being denied the treatment because of NHS cost-cutting. Doctors have condemned the NHS for inflicting misery on children who have the painful rare blood disorder sickle cell anaemia. Some children have gone from the agonising routine of having their parents insert a needle into their stomach for eight to 12 hours a night at least five nights a week, to taking two Exjade tablets daily. The drug cleanses their blood of life-threatening excess iron – a side effect of the frequent blood transfusions needed to treat the disease.” (Observer, 3 June) 10,000 people in the UK suffer from this condition, so why the delay in supplying this drug? It costs £10,000-£15,000 for a year’s supply for a sufferer. Need any other explanation?

Capitalism distorts science 

Two separate items from the same day’s newspaper illustrate the harshness of capitalism. “Several men were arrested in an organ-smuggling inquiry in Jordan for allegedly luring poor people to sell their kidneys. More than 80 cases have been uncovered in recent months. Each kidney can sell for up to $2,000 (£1,000).” (Times, 5 June)

“Clinical trials that compare two similar drugs are significantly more likely to favour the one made by the company that pays for the work, according to a study that sheds new light on bias in medical research. …The work, by a team led by Lisa Bero, Professor of Clinical Pharmacy at the University of California, San Francisco, raises fresh concern about the influence of pharmaceutical companies over research.” (Times, 5 June)

Growing old disgracefully 

The journalist Mary Riddell paints a dire picture of what it is like to be old when you are poor. “Some of the 31,000 pensioners who died of cold-related illnesses in the last five winters would still be alive, but for enforced frugality. … In its Spotlight survey out this week Help the Aged will present a disturbing picture of worsening old age. According to its findings, 144,000 people never leave their homes, 21 per cent live in poverty and more than one in 10 is chronically lonely, a figure up significantly in the past year; 73 per cent of adults say older people face routine discrimination.” (Observer, 10 June) After a lifetime of work and exploitation, this is the fate of many workers inside capitalism.

Editorial: The profit system must go (2007)

Editorial from the July 2007 issue of the Socialist Standard

Things are not produced today to meet people’s needs. They are produced to make a profit. And that’s the cause of the problems we face.

Under the profit system profits always come first, before providing basic services like health care and transport, before improving conditions at work, and before protecting the environment. At the same time it encourages a get-rich-quick climate where competition to make money takes over from cooperation and community values. Everything is reduced to its cash value and people are judged, not for what they are but by how much money they have.

Look at the results. The health service is creaking. The transport system is in chaos. Schools have become swot shops. Pollution is rife and the environment under attack. The poor have got poorer. Begging and homelessness have spread. Crime is rising. Racism is reviving. Business culture reigns supreme, with “market forces”, “competition” and “profit” as the buzz-words. Life is becoming more and more commercialized and empty. People are becoming isolated from each other, with drug abuse and mental illness on the increase. The standard of living may be going up, but the standard of life is going down. Under the profit system production is in the hands of profit-seeking business enterprises – some state-owned, but mostly private – all competing to maximise the rate of return on the money invested in them. Decisions as to what to produce and how much, and how and where to produce it, are made not in response to people’s needs but in response to market forces. For a business, its profits are the difference between its sales receipts and its production costs. Market forces act on both. Through competition between different firms, they force each firm to seek to maximise its sales and to minimise its costs.

Both these have serious consequences for the way we live.

Maximising sales turns society into one huge marketplace. Advertising, the hard sell and swindles to trap the unwary have all grown over the years, and are getting worse. At one time television was free from commercial ads. Not any longer. Then came commercial radio. Sunday selling has been allowed. So, now buying and selling can go on 24 hours a day, 7 days a week. All this represents a commercialisation and a degradation of our lives. Minimising costs so as to maximise profits has equally harmful consequences. When a firm has a choice between two materials or two methods of production, one cheaper and the other safer or less damaging to the environment, it has to chose the first. Otherwise its production costs would be higher and it would lose out in the battle of competition. Its profits would be less and it would eventually risk being driven out of business altogether. The health and welfare of the workforce and the effects on the environment take second place. That’s what minimising costs means. This why at work we suffer speed-up, pain, stress, boredom, overwork and accidents. This is why we have to work long hours, shiftwork and nightwork. This is why the food we eat, the water we drink and the air we breathe are all polluted. This is why the Earth’s non-renewal mineral and energy resources are plundered. This is why natural balances are upset and the environment destroyed.

The profit system can’t help doing this. It’s the only way it can work. Which is why it must go.

Letter: Panama canal (2007)

Letter to the Editors from the July 2007 issue of the Socialist Standard

Dear Editors,

The article in last month’s issue on the Panama Canal rightly points out that the reason for the canal at this site was political. Of nineteen possible routes this was one of the worse. A more attractive one was the San Juan River/Lake Nicaragua route, but as this formed the border between Nicaragua and Costa Rica would have been difficult to control.

The Panama Canal can now only be used by vessels of ‘panamax’ size, the locks being 1000ft long and 110ft wide. Very restricted for present and future use.

In the 1960s President L. B. Johnson wanted to build a seaway through the isthmus of Tehuantepec in Mexico using nuclear explosives. This would be maintenance-free when finished and very cheap to excavate. Fortunately he could not sell this “grand project” to the Mexicans.

The President of Nicaragua has pledged to build an all-Nicaraguan canal on the river Escondido/Lake Nicaragua route. The drive for huge profits may even see this constructed.

Fred Moore, 

Canterbury.

The Haves and the Have-Yachts (2007)

From the July 2007 issue of the Socialist Standard

The rich are not all equally wealthy. According to an article in Times at the end of last year (4 December), a rift is opening up among wealthy Britons between the merely rich, and the super-rich. The reporter went to a West London nursery school – £1800 a term, or £5400 a year – and found the conversation mainly about the forthcoming City bonuses. “According to the centre for Economics and Business Research, a staggering £8.8 billion will be paid out in this next round, with more than 4200 individuals receiving more than £1 million each. Much of that money (around £5 billion) will find its way into property, half of it in London; and of the overall bonus, between 60 and 70 percent will go to non-UK residents – i.e., foreign nationals working in London, many of whom will not be liable for UK tax.” Many of these latter are now the super-rich, whose expenditure is soaring above that of the rich: as Rachel Johnston put it in her book Notting Hell, it is now “the Haves versus the Have Yachts”.

One of the main reasons for the rise of the super-rich is the policy of the Labour government: Tony Blair and Gordon Brown and their friends do love the wealthy. “Britain has one of the most business-friendly tax environments on the planet, exemplified by the non-domicile (or ‘non-dom’) tax laws. In simple terms, these allow wealthy foreign nationals to hold their main liquid assets in tax-free offshore environments while operating freely within the UK – largely untroubled by the Exchequer (the same is not true of British nationals).” The result is that “London’s status as the place to make and take money has only been reinforced in recent years”.

With such competition, the merely rich feel jealous about the super-rich. One City fund manager (Eton and Oxford) said “Not only do they look down on us, they have made our lives more uncomfortable from a financial point of view too, by pushing up the price of traditional wealth assets – school fees, house prices, staff.” An investment banker said, “the super-rich are fine. They either don’t need to pay tax at all or find ways of avoiding it. I don’t have enough cash to employ a clever accountant.”

The Have Yachts – people “with more than £15 million to invest” – operate on a higher level. “These are people who think nothing of spending several million on a party, or having their children picked up from school by helicopter and transported to a waiting private jet for a weekend in Gstaad. They have so much money that they pay experts to help them spend it.” For example, “at Quintessentially, the global concierge service, their ‘elite’ membership is by invitation only and costs a basic £24,000 a year. For that, members have access to finders and fixers in every major city across the world, 24 hours a day.” Among the requests they have dealt with are “finding a premiership footballer to play with a member’s son; sourcing twelve albino peacocks for a party with just three hours’ notice; completely redesigning a London hotel room; and organizing a trip to Hudson Bay, Canada, during the one month each year when the world’s largest concentration of polar bears gathers on the ice”. One service in much demand is finding appropriate houses, usually in London, or by the sea in the west country.

A director of a Central London estate agency said “super-rich foreigners” were their best customers. “Between 70 and 80 percent of our top deals are with foreign nationals.” The steady injection of largely tax-free money by the super-rich into the London housing market (prices in the “most exclusive districts” went up by 31 percent in the year to February 2007) keeps all prices rising, because the cost of cheaper houses follows the market upwards; so ultimately all the young people trying to get their own property, or giving up in despair, are feeling the knock-on effects of the Blair/Brown romance with the rich. If the specially favourable terms for foreign magnates are thought to be under threat, prices decline. “House prices in Central London took a considerable dip in 2004 when ‘non-dom’ was last under serious review; but a sustained campaign from the City and the Exchequer persuaded” the Chancellor to relent, and the super-rich breathed a sigh of relief.

Tax Haven

The International Monetary Fund has decided that Britain is now an offshore tax haven, listing it “alongside the likes of Bermuda and the Cayman Islands – unregulated jurisdictions associated with illicit funds” (Observer, 22 April). The “non-dom” people save vast amounts by largely avoiding British income tax. “The accountancy firm Grant Thornton worked out that the UK’s fifty-four billionaires paid income tax totalling just £14.7 million on their £126 billion combined fortunes” (Observer 4 March). That makes a rate of about one-hundredth part the percentage that the merely rich, who can’t wangle this particular tax-exemption, have to pay on their incomes. Among the “non-dom” Londoners are Lakshmi Mittal, Roman Abramovich, and the Hinduja brothers. The Observer (22 April) has several times asked Sir Ronald Cohen, who was born in Egypt and is now Gordon Brown’s “senior City advisor” (Brown has appointed him to several “taskforces”) whether he is lucky enough to have this “non-dom” tax status; Sir Ronald has refused to answer. If he has this status, he has something to thank the Labour Party for, and he – like Lakshmi Mittal, who tops the Sunday Times Rich List this year (20 April) – is among those who have generously donated funds to the Labour Party.

If you think that the law says that foreigners cannot contribute to British party funds, you would be mistaken: the Inland Revenue (whose regulations are laid down by Gordon Brown) says that people living in Britain under the “non-dom” rules can still be counted as residents, who can thus legally give money to – for example – the Labour Party (Observer 18 February). So that’s all right then. The authorities are less than forthcoming when questioned about this “non-dom” dodge. When asked about a month ago, Gordon Brown’s front man Ed Balls said, “Estimates of the tax foregone in the UK . . . by those not domiciled in the UK are not routinely made” (Private Eye 8 June). But when Private Eye asked about it, “HM Customs and Excise confirmed the information does exist”. However, they refused to divulge it because if they did “it would lead to less robust policy development” (whatever that means). It seems that the ” ‘non-dom’ tax exemption saves the mega-rich billions. The last figure released showed that in 2003 ‘non-doms’ were saving around £1 billion a year; and use of the ruse has multiplied since then. The benefits to Britain of hosting more billionaires and bankers are uncertain.” But Brown, “who has received campaign donations from prominent non-doms, wants to keep them happy without revealing the size of their subsidy. So much for his promise of ‘open and accountable’ government.” It’s all a long way from what Keir Hardie thought he was going to do when he helped to found the party which – he claimed – was going to establish socialism.

Like nearly all the big issues of the day which are endlessly canvassed in the papers and on radio and TV, this unpleasantness arises out of a disagreement within the owning class. Should all the members of that class pay their due taxes, to help support the state which runs capitalism for them? Or should some be allowed to get away with much less taxation than the others have to stump up? For Socialists, there is only one issue: getting rid of capitalism and all the struggles and the dubious hanky-panky it inevitably engenders, both between classes and within classes. If the non-dom ruse was stopped tomorrow, the owning class would still be obscenely richer than the rest of us.

Alwyn Edgar

The Hanging Gardens of Bombay (2007)

From the July 2007 issue of the Socialist Standard

In India the Prime Ministers is worried about the way the rich flaunt it . . .

In India the rich are getting richer; the poor, naturally, are a long way behind. There are thirty-six “dollar billionaires”, and their combined fortunes add up to about £96 billion, according to an article in the Times (26 May) about the recent annual conference of the Confederation of Indian Industry in Delhi. Among the tycoons present was the sixth-richest Indian, who has nearly £5,000 million: and the article was accompanied by a photograph showing another tycoon, Yohan Poonawalla, an industrialist, posing beside “two of his Rolls-Royces”.

Yet another tycoon, Mukesh Ambani (oil, retail, and biotechnology), is building for himself in Bombay a “sixty-storey palace” (Guardian, 31 May). “Draped in hanging gardens, the building will house a floor for a home theatre, a glass-fronted apartment for guests, and a two-storey health club.” The bottom six floors are for car parking, and at the top is a place to land a helicopter. Ambani has six in his family, and a full-time staff of 600, making a satisfactory ratio of 100 servants to one Ambani. His new retreat will have more floor space than the Palace of Versailles.

Some of these rich Indians have come to live in Britain. The richest of them all, Lakshmi Mittal, currently lives here, carefully looking after his £19,000 million (other sources say it is in fact £32,000 million: no doubt it is difficult to count all that money exactly – by the time you had finished, there would be a lot more interest to add on). In 2002 Tony Blair kindly wrote a personal letter on his behalf to the Romanian government when he was trying to buy the Romanian steel industry. Mittal had recently given £125,000 to Labour Party funds, but Blair (the head of the Labour Party) did not know anything about that – he told us so. He said he was simply helping a “British company”.

Mittal, the head of the company, is an Indian citizen and intends to remain an Indian citizen; his company is registered in the Dutch Antilles (West Indies); his steelworks are in Eastern Europe, Asia, and Africa; and of his more than 100,000 employees, fewer than one percent are based in the UK. So what Blair called a “British company” was not actually all that British. However, after Mittal with Blair’s help got hold of the Romanian steel industry, and the Romanian steelworkers were making a sizeable contribution to his profits, he was properly grateful to Blair; in July 2005 he gave the Labour Party two million pounds, and in January this year he gave it another two million (Guardian, 16 January).

Admittedly those gifts were only petty cash to Mittal. In 2004 he bought a nice house in London for £57 million – then the most expensive house there, though now this record has been eclipsed by someone who paid eight-four million for a flat in Park Lane. Also in 2004, he spent thirty million on his daughter’s wedding.

Not all Indians are so fortunate. According to the same Times article, two out of every five Indians “live on less than a dollar [about 50p] a day and have seen little evidence of growth apart from rising food prices”. Bombay, where Ambani’s palace is being constructed, is said to be the sixth most populous city in the world,, and an academic report said that one half of the people there “live in slums or are homeless; they live in tenements and huts, on pavements, along railway tracks”, and “under bridges”, and there is “terrible poverty, squalor and deprivation”.

The lavish extravagance of the Indian owning class, as against the poverty of most Indians, has got Manmohan Singh, the Indian Prime Minister, very concerned. He made a speech at the conference, saying that “the electronic media carries the lifestyle of the rich and famous into every village and slum. Media often highlights the vulgar display of their wealth.” He went on: “An area of great concern is the level of ostentatious expenditure on weddings and other family events. Such vulgarity insults the poverty of the less privileged, it is socially wasteful and it plants the seeds of resentment in the minds of the have-nots.” In fact these inequalities of wealth “can led to social unrest”

Someone earning 50p a day would have to keep going for thirty-three million years to reach the amount of money owned by the chap in the audience at the Delhi conference. Faced with such absurdities, you could choose to work for a more just society; or you could ask the rich to make it less obvious how enormous the gap is. The Indian Prime Minister has chosen the easier option.

Alwyn Edgar

Cooking the Books: Who will verify the verifiers? (2007)

The Cooking the Books column from the July 2007 issue of the Socialist Standard

In his book on the dangers of global warming, Heat, George Monbiot endorses a scheme, thought-up by Mayer Hillman and called “contract and convergence”. The basic idea is that a target should be fixed for reducing average world CO2 emissions per person to a level much lower than at present. Countries above this average should commit themselves to reducing their emissions while countries below it should be allowed to increase theirs up to the average. The countries above this average will of course be the developed capitalist countries while those below will be developing capitalist countries such as China and India.

So, it’s a proposal that the developed capitalist countries should voluntarily shackle themselves in the competitive struggle with their developing rivals to produce and make a profit from selling goods on the world market. Which is why it will never be adopted. There is simply no way that the capitalist corporations of the West and the states that protect their interests are going to agree to this. Given capitalism – as Monbiot and Hillman assume – each capitalist state will defend its own in the battle to realise profits on the world market. No capitalist state is going to undermine the competitiveness of its capitalist firms by imposing more expensive energy on them while its competitors in the developing world are not subject to this. It’s just not going to happen.

A front-page article in the Guardian (2 June) gave another reason why it wouldn’t work even in the unlikely event of its being adopted. Headed “Abuse and incompetence in fight against global warming” and subtitled “Up to 20% of carbon savings in doubt as monitoring firms criticised by UN body”, the article concerned the Clean Development Mechanism (CDM) set up under the 1997 Kyoto treaty.

The CDM is a “carbon trading” scheme, which supporters of capitalism are lauding as the way to solve the problem within the profit system. Under this particular scheme, projects are started in the developing countries which are certified as reducing CO2 emissions; the firms carrying out these projects can then sell these “carbon credits” to firms in the developed countries for them to emit (a lesser amount of) CO2 instead.

But it hasn’t worked as planned:

“Within the world of carbon trading there are numerous cases of projects which are widely regarded as breaking CDM rules. Some existed long before the CDM project was launched: if they do happen to be producing fewer greenhouse gases that is the natural state and not a reduction which can be claimed and sold. Yet, such schemes have been validated by specialist companies and accepted by the CDM board; and the companies running them have been allowed to earn large amounts of money by selling unjustified Certified Emissions Reductions”.

These specialist companies are hired by firms who stand to earn big profits if their project is accepted. The Guardian quoted one carbon analyst: “The verifiers are being paid by the people they are verifying. If it turns out the verified is a bad guy, he is paying the policeman to sign him off as a good guy”.

Monbiot’s scheme would demand a far wider verification of carbon saving since accurate statistics would have to be collected and verified for every country (and every individual in every country). So, the problem uncovered by the Guardian would be multiplied many times, with every country trying to cook the books by understating the amount of its emissions.

Compared to “contract and convergence”, it would be much simpler to introduce socialism, the common ownership of the world’s resources with production to satisfy people’s needs not for profit, where vested capitalist interests and market forces would no longer conspire to prevent what needs to be done being done.