Cold as charity (2001)

From the December 2001 issue of the Socialist Standard

A brief look at the Guardian’s recent ‘Giving List’

The Guardian (5 November) issued a supplement entitled “The Giving List” detailing which companies in Britain gave most and least to charity. It comes as no surprise that business donated £0.68bn whilst the general public gave £4.3bn. The business of business is making money, after all – not giving it away.

Charity is big business in Britain with over 180,000 registered charities, but compared to the US it is petty stuff. In the US last year charities grossed $200bn. Foundations gave 12 percent, corporation 5.3 percent. Why such generosity? Well, it is not as great as it seems. Corporate giving was only 1.2 percent of pre-tax profits and on examination the apparent generosity has ulterior motives. In 1889 Andrew Carnegie, robber baron and philanthropist wrote in his essay Wealth, on the need for charity:

“The problem of our age is the proper administration of wealth, that the ties of brotherhood may still bind together the rich and the poor in harmonious relationships.”

More up-to-date though, the writer Mark Dowie in his recently published book American Foundations, An Investigative History says:

“The sad facts is that a majority of America’s 50,000 or so private foundations are mindless lawyer-ridden tax dodges that accomplish little beyond the transfer of riches to already wealthy institutions.” 

“Some capitalists do value private philanthropy because it creates countervailing force against socialism, others because it quells social unrest.”

Having quoted earlier that arch-hypocrite and exploiter Andrew Carnegie let us end with the words of Oscar Wilde, from a socialist perspective the definitive words on charity:

“They try to solve the problem of poverty, for instance, by keeping the poor alive; or in the case of a very advanced school, by amusing the poor. But this is not the solution; it is an aggravation of the difficulty. The proper aim is to try and reconstruct society on such a basis that poverty will be impossible.”

To give or not to give? 

Among all the league tables and the sport of naming and shaming there is a comparative newcomer – the Giving List. In the US since 1996 a league table known as the Slate 60 of the top American philanthropists has been published on the internet. An earlier list of Millionaire Givers ran into legal problems of confidentially and has not been published since 1994. The Guardian‘s Giving List offering us an insight into the generous and the stingy among the top corporations quoted on the London stock exchange.

Much effort is devoted to giving capitalism an acceptable face. A new industry has grown up around the idea and the practice of corporate social responsibility (CSR). Better to give back to the victims part of the proceeds of exploiting them than to be too greedy and to get a bad name.

It seems there are two views among supporters of capitalism about the best way to run it and secure its future. We may call these views hard-line and soft-line, although those terms are rarely used by the protagonists. The hard-liners date themselves back to Adam Smith, with extensions to his “invisible hand” by such as Margaret Thatcher, Milton Friedman and lesser-known luminaries in the “new liberalism”.

The basic proposition of the hard-liners is that the business of business is making money, not employing people or giving them charity. The task of companies is to maximise profit for their owners, the shareholders. Appeals for companies to feel responsibility for the welfare of other “stakeholders” – their employees, the local community, the environment—can only detract from the bottom line. It is argued that widespread adoption of CSR would undermine the foundations of the market economy.

The advocates of the CSR – the soft-liners – don’t want to abolish the market economy. They want to make it stronger by giving it a better image. Their basic motive is still the promotion of “wealth creation” – capitalist code for profit-making. Digby Jones, writing on behalf of the CBI, is frank about this: “Actions that affect beneficially on society create an environment where people feel safer, and this helps business” (Guardian, 6 November).

Socialists don’t take sides in any conflict between those who want “business” to accept more CSR and those who don’t. CSR is just one among many ways of reforming capitalism. Time and energy spent on discussing the pros and cons of CSR is, from a socialist point of view, wasted and deserves to be put in the dustbin of failed reforms alongside nationalisation, public-private partnership, “fairer” taxation, and so on.

But there is one thing about CSR that can be of use to socialists. The practice of social responsibility is at best an “add on” within capitalism (the system is more recognisable for its social irresponsibility). With socialism, social responsibility – concern for those doing the work, the local community, the environment – won’t be an “add on” to the system – it will be a central feature of it. With the pursuit of profit and the subservience of workers to capital off the agenda, we shall be responsible for the kind of world we want to build and live in.

Editorial: Brown’s No Different (2007)

Editorial from the November 2007 issue of the Socialist Standard

One of Gordon Brown’s first actions as Labour Prime Minister was to appoint as trade minister Digby Jones (former head of the CBI and trade unionists’ bête noir). He followed that up with appointments for Alan Sugar (of TV’s The Apprentice) and private equity chief Damon Buffini – who presumably doesn’t need the cash – to something called a Business Leaders Council.

On policy he has promised a raft of meaningless populist measures, including new powers to stop shops selling alcohol to kids (yeah, that’ll work), and more power to hospital matrons to get wards cleaned. Ten thousand laptops have been promised to help police cut down on increasing paperwork (presumably related to all the shops being prosecuted for selling alcohol to kids).

He also cornered the UKIP/BNP vote, making a speech about creating “British jobs for British workers” (which might explain the Digby Jones appointment ?), and still found time in his busy schedule to spend two hours in Downing Street with a previous resident, one Mrs Thatcher. He has of course been even more charitable to the current Tory leader, David Cameron, recently giving home to most of his policies.

So is there anyone left who really thinks that the Labour Party is different from the Tory Party ?

The Labour Party was not invented by the capitalist class. But it might as well have been. It offered a superficially attractive gentle path to social change, but has in reality acted for 100 years as a sop to the discontent of its core support in the majority (working) class.

When in opposition it used the language of democracy and freedom, fairness and equality. But its actions when in government throughout the 20th century speak far far louder. Anti-war campaigners gave it their support then watched aggrieved as Labour purchased expensive missile systems, or frog-marched millions into countless wars around the globe. Trade unionists financed it, then stood by as Labour introduced or extended anti-trade union legislation.

More recently, Labour hasn’t really needed to say much at all. No grandiose claims as to how they would nationalise the “commanding heights” of the economy or solve the housing crisis. No taxing the rich “until the pips squeak” For the last 25 years it has been considered enough to simply not be Thatcher, Major, Howard, Cameron… They didn’t put it on their manifestos and election posters but the inspiring message to voters has been “Well we might be bad, but the other lot are worse”.

The convenient explanation is to blame it all on “that bloody man” (Tony Blair) for supposedly hijacking the party. The reality however is that the Labour Party, its means and ends, have long since become discredited. Only the rhetoric has changed in the last 20 years. The Labour Party simply never were socialist: the difference now is that they don’t have to pretend.

Blair came to power on the basis of not being a Tory; he was allowed to cling onto power for ten years by a Party desperate for an orderly succession to let the next great hope take charge.

And so we come to Gordon Brown, minister’s son, radical student and Red Clydeside historian. Will he be any different? Of course he won’t. Do you want to bet?

Voice From The Back: Down the sink (2003)

The Voice From The Back Column from the August 2003 issue of the Socialist Standard

Down the sink

Angela O’Hagen, the campaign and communications manager of Oxfam in Scotland was so incensed by the plight of the poor in Mali and the Dominican Republic that she wrote to the Herald (26 June) about it. “Encouraged by Europe’s Common Agriculture Policy, Europe’s farmers are producing mountains of milk that no-one has the appetite for. Instead of pouring the milk down the sink, we dump our left-overs on the developing world undermining local dairy farmers in the likes of Dominican Republic and Mali who cannot compete against our artificially cheaper milk.” No, your eyes don’t deceive you, here is a spokesperson for Oxfam regretting that milk isn’t poured down the sink! Truly, capitalism is a mad house.

Hobson’s Choice

“Digby Jones, the Director-General of the CBI, yesterday argued for businesses to keep an opt-out on the European Working Time Directive that restricts the working week to an average of 48 hours . . . Mr Jones said, “This is about choice. People should have the right to say ‘no’ to long hours and the directive rightly gives them that protection. But they don’t want unions and politicians telling them when they can work, or for how long.” Times (26 June) Why would anyone want to work more than 48 hours? Could it be because they need the overtime pay? Could it be because they don’t want to be overlooked for promotion or, more likely, to be sacked?

It’s not funny

Bernard Manning is a stand-up comedian who has been accused of being a “foul-mouthed racist bigot”, but, as a report in This Week (28 June) of his trip to India shows, he is not stupid. “It was effin’ awful . . . You’re either wealthy in India or you’ve got eff all. The hotel was absolutely wonderful, and people were living high on the hog, beautiful meals, swimming pools, but you get out the front door and . . . effin’ poverty. There’s no in-between. You’ve got women queuing up for water and they’ve got an atom bomb! The last effin’ thing they need in India is an atom bomb! They want reservoirs and plenty of water coming through the tap. Effin’ upset me I can tell you.”

A voice from America

In the New York Times Magazine (6 July) there is a photograph of a woman wearing a flimsy looking plastic bag on her head. Underneath her photograph are the words of Darline Stephens of Anniston, Alabama. “ I live about 5 or 10 miles from chemical weapons. We’re over there searching for weapons of mass destruction in Iraq, but we have them here in our hometown. I didn’t know this stuff was at the Army Depot all these years. I just heard last year. It takes seven years to burn the chemicals to get rid of it all. We didn’t really believe they were going to burn something that could kill us until they told us to get our masks. My family lives payday to payday, so we sure can’t say, ‘Let’s quit our jobs and move.’ I wish we could. The government does some ignorant things – they just give us a plastic mask? If you could send our boys to war with real masks, I don’t understand why we can’t have the same masks. Everyone in the rescue squad and fire department has high-dollar masks. I just don’t understand why they think some people’s lives are worth more than ours. My son and I are Christians, so we’re saved. He knows where he’s going if he dies.”

Mind the gap

“Almost half the world’s population, or three billion people, live on little more than £1 a day and the gap between the world’s poorest 20 percent and its richest 20 percent has more than doubled since 1960, the International Labour organisation said.” Times (7 July) So where does that leave the notion that the market system would lead to prosperity for all?

Worse than Thatcher

The Labour MP Michael Meacher, formerly the environment minister, revealed in the Guardian (15 July) that the gap in income between the bottom 20 percent and the top 20 percent has increased under Labour. “The share of the bottom fifth has slipped back to 6 percent while the share of the top fifth has moved up to 46 percent. Therefore, the rich now have a bigger share of the nation’s post-tax income than at any time under Mrs Thatcher.”

Cooking the Books: Brown means business (2007)

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

In a bid to show that his administration of capitalism would be different from that of Blair, Gordon Brown handed out some junior ministerial posts to people from outside the Labour Party. One of these was Sir Digby Jones, former president of the Confederation of British Industry and a stalwart defender of the profit system, who is now the Minister for Trade and Investment. Not that he had to renounce any of his previous views to become a minister in a Labour government.

His boss, the Secretary of State for Business, Enterprise and Regulatory Reform (previously, simply the Department of Trade and Industry), John Hutton, is equally pro-business. At a news briefing shortly after his appointment, Hutton spoke of aiming to make Labour rather than the Tories “the natural party of business”, promising that his department would be “aggressively pro-business”. Echoing the sort of thing Sir Digby used to say when he was president of the CBI, Hutton stated:

“In the whole debate over more employment regulation, you have to be mindful of the costs to British business. You’ve got to be very careful and always take into account the impact and burden on business” (www.ePolitix.com, 3 July).

Meanwhile Brown’s successor as Chancellor of the Exchequer, Alistair Darling, was described by the journalists who interviewed him for the Financial Times (3 July) as making clear “his determination not to pander to leftwing Labour prejudices against big business and the City”. According to another journalist, “he hinted as clearly as a Chancellor ever can that foreign financiers living in Britain would continue indefinitely to enjoy their present very favourable treatment under the non-domiciled tax regime” (Anatole Kaletsky, Times, 5 July). Some MPs are not happy with this regime which allows capitalists with overseas interests living in Britain to avoid paying tax on their overseas profits. They want the House of Commons Treasury Committee to investigate the matter, but:

“It is understood, however, that ministers are reluctant to rush into action to try to capture extra revenue from non-domiciled residents, because of the risk of driving them entirely off-shore or to other, lower-tax jurisdictions, as well as potentially damaging the City’s competitiveness” (Times, 13 July).

As Darling himself put it in his FT interview, “I am very well aware that people who do business, and who contribute to business here, can go elsewhere”.

Darling also made it clear that he wasn’t going to do much about venture (sometimes pronounced “vulture”) capitalists or “private equity industry” as they call themselves, who specialise in taking over and asset-stripping companies considered not to be making high enough profits. How could he as Brown had just appointed the most prominent of them, Damon Buffini, to be a member of the new Business Council he set up to advise him of the desires of Big Business?

Labour, both in and out of office, has always upheld capitalism, but at one time they used to champion manufacturing capital as opposed to finance capital. That was the time when Harold Wilson talked of initiating “a white-hot technological revolution” and blamed “the gnomes of Zurich” for his failure. Now the Labour Party has abandoned such “prejudices” against financial capitalists and is embracing them with open arms.

Within capitalism, financiers play an important and essential role, helping to channel capital to where it can make the most profit. But as far as the actual production of real wealth is concerned, despite their ludicrous description of themselves as an “industry”, they contribute absolutely nothing. With the decline of manufacturing in Britain, the financial capitalists, home-grown and non-domiciled, have assumed a more important role in collecting a share of world profits for British capitalism, by sharing in the proceeds of the financial deals and speculations done in London.

Any British government has to take this into account. Being pro-financial capital is what being “pro-business” means these days. Labour has duly acknowledged this and continued its evolution away from the trade-union pressure group it originally was.

Voice From The Back: Never Steal Anything (2006)

The Voice From The Back Column from the January 2006 issue of the Socialist Standard

Never Steal Anything 

The owning class through their schoolrooms and churches are forever telling young workers never to steal, but in reality the capitalists turn out to be the biggest thieves of all. “Fraud is costing British business £72 billion a year, according to a report out this week. Despite the warning of recent corporate scandals involving Enron, WorldCom, Parmalat and Refco, UK companies are still estimated to be losing 6 per cent of their annual revenue to fraud and corruption, says a study by the Association of Certified Fraud Examiners and international lawyers Mishcon de Reya.” Observer (20 November) £72 billion a year! It seems to be a case of never steal anything .. small.

Room At The Top 

Good news for the homeless in France, according to a recent report on hotels that have some vacancies. “The least expensive room at the George V, is about £390 per night including bedroom, bathroom and breakfast. The most expensive suite at the Plaza Athenee costs almost £10,000 per night and includes four rooms and breakfast.” Times (30 November)

Old, Cold And Hungry 

Malnutrition amongst elderly Scots has soared in the past ten years and pressure groups blame the Scottish Executive for allowing pensioners to live below the poverty line. In 1995, 40 Scots died from malnutrition, but last year that figure had soared to 99.” Times (21 November) Even more alarming figures have been released for the UK by the charity Age Concern. “150,000 people over 65 have died as a result of the cold in the past five years.” Times (25 November)

The Slaughter Of The Innocents

Capitalism’s record of murder is even more horrific when looked at from a world perspective. “Nearly six million children die from hunger or malnutrition every year, The Food and Agriculture Organisation says. Many deaths result from treatable diseases such as diarrhoea, pneumonia, malaria and measles, the agency said. They would survive if they had proper nourishment, the agency says in a new report on world hunger.” BBC News (22 November)

Our Masters’ Voice 

The Confederation of British Industry expresses the views of the British capitalist class. Here for instance is Sir Digby Jones, the chairman of the CBI, on trade unions and international competition: “Trade unions in the private sector in the 21st century will become largely irrelevant…. There are 1.3 billion Chinese out there who want your lunch and a billion Indians who want your dinner.” Times (22 November). Sir Digby is of course indulging in wishful thinking, he knows that the British working class’s greatest protection against the profit-mad owners on the industrial front is the union. A greater threat to all the capitalists of the world would be the world’s working class uniting politically. (See Rigg’s view below).

Ah, Progress 

The rapid growth of capitalism in China and India has been greeted with acclaim by all its supporters. There is another side to the story though, illustrated by two recent developments as reported in the Observer (27 November)  The Chinese city Harbin, population 3.5 million, has had no water supply for four days because of the pollution caused by 100 tonnes of benzene – a colourless, odourless carcinogenic chemical – spilling into the river upstream after an explosion at the local chemical factory. “The poisoning of the Songhua river has exposed the murkier side of China’s spectacular economic growth; the emphasis on business rather than environment, the tendency to cover up health risks and splits within the government.” From India comes news of the exploitation of children to feed the rapacious growth of capitalism. 400 children were found working in factories in Delhi. “Housed in a night shelter for beggars, the embroidery workers, aged 5 to 14, were waiting yesterday to hear their fate.”

Cooking the Books: Value added, but who by? (2006)

The Cooking the Books Column from the January 2006 issue of the Socialist Standard

Sir Digby Jones, director-general of the employers’ organisation, the CBI, has his own economic theory. Interviewed in the Times law section (22 November) he expounded his view that British capitalism could no longer rely on just producing “commodity” goods which “sell only on price” (by which he seems to have meant basic material goods), but should switch to “value-added” services. Britain, he argued, cannot compete with countries such as India and China in producing cheap “commodity goods”, but should let these countries make money from doing this which they could then spend on buying “value-added” services from Britain.

But what does he mean by “value-added”? In Marxian economics it would mean the new value added by labour in the process of production to the previously existing value of the raw and other materials. And which is divided into wages (the replacement value of the workers’ mental and physical energies used up in production) and surplus value (which goes to the capitalist employer and is the source of profit).

In a talk to businesspeople in Birmingham last April, he did make a little clearer what he meant. There were“fewer and fewer widget makers in the region”, he said, “but we are creating more and more work in the higher value, quality, branded sector”. And he gave an example. We should not be worried, he said,

“if we went into Tesco to buy a Harry Potter toy for ú10 to discover it had been Made in China. Because of that £10 just £1 ends up in China. The rest stays in Britain via the likes of licensing and intellectual property rights, advertising, copywriting and marketing” (Birmingham Post, 27 April).

But neither advertising, nor copywriting, nor marketing add any value since there are concerned with selling not producing goods, while licensing and intellectual property rights are claims on profits, i.e. on value produced elsewhere.

So where does the £9, which Digby Jones calls value-added and which is the source of the income of the advertising agencies, etc. come from?

The workers in China who made the toy (and the transport workers who transported it to Britain) added a value of between £9 and £10 to the value of the materials from which the toys were made, out of which they received well under £1 (since the cost of the materials and the profits of their employers also had to come out of the £1 that ended up in China). The Chinese capitalists who exploited them had to pay licensing and intellectual property right fees to firms in Britain, which swallowed up a part of the surplus value they had extracted from their workers.

If they had had the facilities to advertise and market the toys they could have done this themselves and kept more of the surplus value. But, not being in this position, they had to sell the toys below their value – well below their value, it seems – to a whole series of go-betweens (advertisers, marketing consultants and the like) who each took a share of the added value, the last one (Tesco) selling it at its full value of £10 to the final consumer.

So, what Sir Digby calls “value-added” is rather “value-realised”. It is not the capitalists with money invested in advertising, marketing and other activities to do with selling who add new value to the goods made in China or India. It was added by the workers there, but sold below its value by their immediate employer to selling capitalists in Britain.

In capitalist terms, Sir Digby’s strategy for British capitalism could make sense: within a global division of labour, China, India and others produce the material goods and Britain and others sell them. But, if his figures for the Chinese toys are right, what a condemnation of capitalism: nine-tenths of the selling price of a good made up of non-productive on-costs to do with selling and only one-tenth with actual production! If that’s the figure for all goods, socialism – where goods would not need to be sold but would be free for people to take – would have no problem producing enough for everybody, in China and India as well as in Europe and North America.