Burberry applies the law of profit (2007)

From the March 2007 issue of the Socialist Standard

Last September Burberry announced that its Treorchy factory was no longer viable and would close this March with the loss of 309 jobs

Until the summer of 2006, it is probably true to say that the village of Treorchy was little known outside Wales – except to devoted enthusiasts of Welsh male voice choirs. Nestling in the shadow of steep and rocky hills, the village lies at the head of the Rhondda Valley and is typical of the abandoned communities that were originally established to mine the now worked-out coal of the South Wales valleys.

The Rhondda Valley is today an area of demoralising deprivation, characterised by dire poverty, poor housing and a drug problem that is almost out of control. Many of Treorchy’s ageing 8,000 strong community have chronic health and anxiety conditions. Unemployment is abnormally high and such local jobs as exist, mainly in retail, are difficult to come by. The village has one large employer of note – the factory owned by the iconic brand name Burberry.

Burberry was established in the middle of the nineteenth century when its founder Thomas Burberry invented a method of waterproofing cloth, which he called gabardine. Since the 1980s the company has successfully expanded the brand into a variety of luxury and fashion goods, including clothing, sportswear, watches, and perfumes and has enjoyed rapid international growth. Burberry’s first half results to September 2006 showed an increase in the company’s turnover of 10 percent to nearly £400 million and an increase in operating profit of 7 percent to £84 million. (burberryplc.com, 14 November 2006 .) The employees of Burberry in Treorchy had every reason to feel assured – after all, it had been their sacrifices that had contributed to the company’s startling success. But the events that were about to unfold showed their confidence had been seriously misplaced.

At the beginning of September Burberry announced that its Treorchy factory was no longer viable and that it would close in March 2007 with the loss of 309 jobs. The company said that rising costs could no longer be recovered by raising worker productivity and that skill shortages and a decline in the local supplier network meant that the factory no longer had a future. Burberry had been the community’s main employer for generations, and its workers, many of whom had been employed for 40 years, were stunned. Their union, the GMB, had received no warning of the closure or of company plans to transfer the production of designer polo shirts to China.

Outraged Burberry workers and their union organised themselves to resist the closure. While public protests against factory closures are not new, what was different about this campaign was its success in turning the threat of closure into a public relations battle that rapidly mobilised public opinion. They lobbied politicians and successfully sought the support of celebrities to keep the issue in the public eye to shame the company into reconsidering and to persuade customers not to buy the its products. The campaign quickly became a public debate about whether a successful company hailed as a British icon and already enjoying healthy profits should simply be ‘allowed’ to pack up and abandon a small community.

Burberry is heavily dependent on the sales of its goods in other countries. In these countries the company has always marketed itself as a quintessentially ‘British’ brand, an appeal that has been summed up by the journalist Janet Street-Porter with the words, ‘To many, Burberry is just as British as the Union Jack’. Burberry workers and politicians have endeavoured to exploit this connection to argue that if the company’s success is so dependent on its ‘Britishness’, then it has an obligation to take care of its workers in Britain and treat them ‘fairly.’ Such appeals to economic patriotism have invoked issues of corporate accountability and nurtured a view amongst politicians that, while this type of behaviour may be expected from ‘foreign’ companies, this does not mean it is acceptable from a British employer.

The support from celebrity figures, many representative of the kind of people who have the money to buy the Burberry brand, has been an important factor in keeping the closure in the news. Amongst those who have offered their support – promoting their ‘Welsh credentials’ and enhancing their own public image in the process – are Bryn Terfel, Emma Thompson, and actor Ioan Gruffudd, who until recently modelled Burberry fashionware. More recently the tax exile entertainer Tom Jones, who hasn’t lived in Wales for decades, has added his support and Manchester United’s Sir Alex Ferguson has also lent his name to the campaign. Other objectors include the Prince of Wales and interestingly the Church of England, which has investments in the company and has written to Burberry questioning its proposals to close its factory. There is no evidence, however that, as a shareholder in the company, the Church is offering to forgo its dividend if Burberry keeps its factory open.

The politicians – with an eye on this May’s Welsh National Assembly elections – have also been trumpeting their support for the stricken workforce. In October last year Leighton Andrews, Assembly Member for Rhondda, put a ‘Statement of Opinion’ to the Welsh Assembly deploring the closure, and Rhondda MP Chris Bryant put down an Early Day Motion at Westminster calling for Burberry to reconsider its decision.

In November 2006 the workers gained further publicity by staging a public protest outside the company’s prestige New Bond Street store in London. After he had seen which way the wind was blowing, muted criticism also came from Wales and Northern Ireland Secretary Peter Hain, who said such an ‘iconic British brand’ should not be made abroad.

The public relations battle continued in January 2007, when Burberry chairman John Peace and its chief executive Angela Ahrendts were called before the Commons Welsh Affairs Select Committee to give evidence to its inquiry on globalisation. This intervention followed criticism of Burberry bosses over the insensitivity of Christmas bonuses given to its Treorchy workers – a Burberry scarf and a £30 voucher to spend in its stores. As well as this, Chris Bryant MP is urging Parliament to revoke Burberry’s Royal Warrant if the company proceeds with the closure, asserting that these should only go to British companies with a ‘fair employment policy’ (http://news.bbc.co.uk/2/hi/uk_news/wales/6305703.stm). The issue has even gone to the European Parliament, MEP Jill Evans saying, ‘I will be calling for corporate social responsibility to be made legally binding’ (South Wales Echo, 9 January 007). It is hard, however, to see these activities as other than cynical and meaningless gestures designed to placate disgruntled voters who are threatening to give Labour politicians in Wales a rough ride in May.

Burberry, for its part, has continued to resolutely defend its ‘Britishness’, recently saying, ‘We are proud of our British heritage and we continue to design and manufacture in the UK’ (Observer, January). The company has been keen to point out that after the closure it will still employ some 2,000 workers at its Castleford and Rotherham factories in Yorkshire. Its third quarter results for 2006 (announced in January 2007), show, furthermore, that the high profile campaign against the brand has done little to dent sales and profitability. Chief executive Ahrendts said, ‘This outstanding quarter has been led by Burberry’s strong retail performance,’ prompting broker Merrill Lynch to hail the company as ‘one of the most promising stories in the sector’ leading to forecasts that Burberry revenue could exceed the £1 bn mark by March 2009 (www.yorkshiretoday. co.uk, January). Burberry’s management appears to have correctly calculated that the bad publicity arising from the closure of its Treorchy factory would not arrest rising sales and profitability. This is because Burberry is a brand that is aimed almost exclusively at an elite of shoppers who mainly live in other countries. Its products are outside the purchasing power of the average working class shopper and the company has nothing to fear from a boycott by workers on the minimum wage, including those employed at its British factories.

The anticipated closure of the factory bringing the prospect of hardship, misery and trauma to Treorchy should of course be condemned, not only in South Wales but everywhere where workers daily suffer a similar fate. But however well meaning and sincere this condemnation, it is not enough, and cannot alter the mechanisms that make such events an accepted part of the economic system in which we live.

The workers at Burberry are engaged in a battle against capital, which like workers everywhere they ultimately cannot win. Employment is created only when there is an expectation that the goods produced by workers will realise profit when sold on the market. Profit comes from the employment of working people and continued employment is dependent on continued profitability. Capital investment follows profitability, which means that if profitability cannot be maintained or the prospect of greater profit arises elsewhere, then the jobs upon which wage and salary earners are reliant will be terminated.

Like many other successful brand names, Burberry is looking to divest itself of its traditional productive workforce and, through sub-contracting mechanisms, to have the actual production of its goods take place in Asian sweatshops. Although labour costs represents a minimal proportion of its total costs, every penny saved in the production of its goods means a penny added to profits and more importantly improves the company’s attractiveness for future investment.

In capitalism such decisions are inevitable because profit is more important than people’s welfare. Decisions must be taken without regard for the social consequences or for patriotism, which amounts to a misguided notion that as a British registered company Burberry should have some allegiance to the country where it was established or where many of its employees live. The fact that Wales already suffers dire poverty and that comparable jobs will be virtually impossible to find is of no consequence on the balance sheet, where the only consideration can be the bottom line. Companies have but one goal – the maximisation of profits for their shareholders.

The proposed Burberry closure shows how the interests of wage and salary earners are everywhere diametrically opposed to the interests of the owners of the means of production. But it also shows something about capitalist politicians. The politicians do not condemn Burberry for exploiting the workforce that is the source of the company’s rising profits. Nor do they condemn a system that brings prosperity to the few by perpetuating the poverty and insecurity of the many, by reducing wage and salary earners to conditions not much better than slavery, and whose very wellbeing is dependent on how successfully they can be exploited. Legally binding ‘corporate social responsibility’ that would restrict a company’s ‘flexibility’ will not be allowed to happen because this would effect capital accumulation and lead directly to a migration of capital to other less restrictive and more profitable parts of the world.

The experiences of the Burberry workers have happened time and again in the past and will be repeated time and again in the future, for as long as the working class believes that there is no alternative to the capitalist economic system. Working people everywhere would do well to reflect on the fact that capitalism cannot operate in any other way and is incapable of being reformed to do so.

Steve Trott

Poverty, nationalism and the Wales Millenium centre. (2005)

From the January 2005 issue of the Socialist Standard

Friday 26 November was a ‘good news’ day. It marked the beginning of a three-day gala opening of the Wales Millennium Centre (WMC) in Cardiff, an event that was greeted by a media fanfare that relegated all other news in Wales to the back pages. Built in the Cardiff Bay area that was once home to the city’s red-light district, the WMC is a replacement for the Cardiff Opera House project abandoned for being too elitist almost ten years ago. The construction, plagued with funding problems and originally due to open on St David’s Day (1 March) 2001 was finally completed (after a £37 million Welsh Assembly grant in January 2002) at a total cost of £106 million.

Amongst the host of celebrities in raptures over the building, lovingly described by many as having looking like a cross between a giant computer mouse and an armadillo, was the patriotic Welsh baritone Bryn Terfel.  Gushing with adulation he exclaimed, “The eyes of the world will be on the opening this weekend, but it’s important that the good work continues over the next year and that we, as a nation, embrace it.” (Western Mail, 26 November)

Many, including Terfel, share a patriotic delusion that people born in the same country have a common interest, unique to their particular geographical location and a source of misguided pride. This nationalistic nonsense and talk about ‘nations’ disguises the actual division of the world’s population into two classes, the minority who own the means of producing and distributing wealth and the majority of working people who are compelled to work for a wage or salary in order to live. These two classes have opposing interests, since the wealth enjoyed by the owning class depends on depriving working people of the things they need and reduces them to a life of servitude, insecurity and poverty. Working people have no country or nation, only a place where they were born and where they are exploited for the benefit of the owners. The interests of working people in Wales are common to working people throughout the world and antagonistic to the world’s capitalist class, including those in Wales. It is class not nationality that determines your role in society.

So instead urging people to ‘embrace’ the ‘Theatre of Dreams’ Terfel and his nationalist friends might stop to embrace a few facts about people in Wales, with many of its three million population in dire poverty. Does he embrace the fact that NHS waiting list cause BMA staff in Wales to “weep in despair”? On the day of the gala opening, “Dr Calland spoke as new monthly figures showed 311,000 people were waiting for treatment – up 2,400 on last month.” (BBC Wales Ceefax, 26 November)  Or perhaps he might embrace the news that on the day of the gala opening reassurances that ‘Support Line Cymru,’ the teacher’s telephone support line, would continue to get Assembly government funding. The support line, set up in 2002, received no fewer than 650 calls from teachers suffering from stress last year (ITV Wales, Teletext, 26 November).

 

Or even the unpleasant facts about those victims of work related injuries, the subject of a TUC report also reported on BBC Wales news (Ceefax page 165) on the morning of the 26 November. The report concluded, “Wales is the worst place in the UK for injury sustained by people slipping and tripping in work.” Stress, repetitive strain injury and back strains are itemised as the top three health risks facing workers.

Perhaps it’s a little too embarrassing to consider the facts about Cardiff’s environment. On the morning of the gala opening, the WMC’s new neighbours, the residents of Leckwith were told to embrace the fact they must “take special precautions” after traces of arsenic, lead, nickel and mercury had been found in the soil in their gardens, stadium and local allotment. Council investigations revealed “unacceptable levels of contamination” prompting the issuing of a warning to children and pregnant women, “to limit the amount of Leckwith-grown produce they ate.” The area had once been a railway yard and later a landfill site but is now a place where working people live. (www.bbc.co.uk, 26 November).

Reviewing the facts about unemployment in Wales will probably be even less palatable. John Osmond, Director of the Institute of Welsh Affairs observed, “On the surface in Wales, unemployment appears to have reached tolerably low levels, but when combined with sickness and disability claimants, the proportions not working are higher than almost anywhere else in the UK. There are pockets of extreme poverty throughout. The Valleys pose particular problems, with their legacy of ill health, low skill levels and low employment activity rates. But there are also concentrations of poverty along the North Wales coastline, in south Pembrokeshire and in parts of Cardiff, Newport and Swansea” (www. jrf. org. uk /pressroom, 27 February). Nor the facts about the 55,000 inhabitants of Merthyr Tydfil, unless, of course, their quality of life has improved significantly since 2001. Then, 66 percent of homes had less than £10,000 income a year, 48.6 percent of people were in employment, 28 percent of homes receive housing benefit, 12.5 percent of homes are not fit for habitation, 44 percent of 16-60 year-olds had no qualifications and 30 percent of people suffered from long-term illness (Welsh Assembly Government, Mapping social exclusion in Wales, 1999; 2001 census)

Perhaps the plight of youngsters highlighted two years ago in a BBC examination of poverty in Wales that reported, “Youth unemployment in Wales is now the second highest in the whole of the UK” is worthy of being embraced by the nationalists. The BBC report showed that 14 percent of youth were jobless, 19 percent of the population received benefit and 700,000 people were below the low-income threshold, which meant that in the EU only Greece had more in so-called ‘official poverty.’ (news.bbc.co.uk, 30 July, 2002) In the period 2002-3, 27 percent of Welsh 15-year olds (10,000 children) failed to obtain any GCSEs above grade D and 8 percent obtained no GCSEs at all (3,000 children) compared to 4 percent in England (www.poverty.org.uk/intro/index.htm).

But, we shouldn’t let awkward facts spoil something as grand as the gala opening and many facts are best left unsaid. These might include the despair of thousands of people in Wales seeking help with debt problems, which three years ago had reached a total of £120 million. In September 2001, “The Welsh Consumer Council report+ reveals consumer troubles with loans, overdrafts, credit and store cards have risen by more than a third in the last four years. And trading standards officials are increasingly concerned about the activities of unlicensed loan sharks who use illegal or threatening tactics to collect cash. Today’s report reveals Citizen Advice Bureaux in Wales dealt with more than 56,000 debt inquiries” (Tom Badden, Liverpool Daily Post, 13 September 2001). Meanwhile, “the figures show there were 11,967 individual insolvencies in England and Wales in the third quarter of 2004. It was an increase of 6.2 percent on the previous quarter and 31.1 percent on the same period a year ago” (www.clearlybusiness.com).

Equally unattractive is embracing the knowledge that Shelter Cymru are “helping over 13,000 in housing need every year” and “estimate that 50,000 children are living in unfit housing in Wales according to the last house condition survey.” Or perhaps the estimated 33 percent of children in Wales who suffer asthma symptoms, more than three times the levels in Spain, Poland and Denmark. “The link between poor housing, homelessness and poor health are so obvious but they often seem overlooked when it comes to resources.” (www. sheltercymru, 7 July)

John Puzey, Director of Shelter Cymru had earlier warned that the housing ‘boom’ meant, “Fewer people are able to access the housing market with the average price of a home in Wales at £120,000. There is more pressure for social housing because people can’t afford to buy properties but social housing is less available due to lower levels of building and a continuing loss through the right to buy” (www.sheltercymru, 17 June).  During 2003-4 the number of homeless households in Wales rose to 9,147, while those in temporary accommodation rose to 2,890 by March 2004, an increase of 94 percent in a year. “Even more damaging are the increasing numbers of families with children with no alternatives but to stay in overcrowded bed and breakfast accommodation – the latest figures show almost 700 households in B&B with about a quarter having dependent children.” Puzey continued that housing children in temporary accommodation “can cause serious life long problems, disrupting education and arresting development.” (Shelter Cymru, 29th September 2004). The BBC noted, “It is estimated that £3 bn is needed to bring every home in Wales up to a decent standard”(www.news.bbc.co.uk, 26 October).

We can be sure that life in “The South Wales Valleys [who are] facing a drugs ‘epidemic’ with heroin dealers operating “every quarter of a mile,” is a fact that won’t be embraced. Assistant Chief Constable of South Wales Police, David Francis, said “The drugs problem is the biggest crisis that is facing our communities – people in these communities are being torn apart by what drugs are doing to their families and the crime that is related to it.” (www.bbc.news.co.uk, 25 October, 2002)

Wake up, Bryn and all those peddling delusions of  ‘nations.’ The only things that working people need ‘embrace’ are the undeniable truths that capitalism cannot work in our interest and the nationalist message is everywhere poisonous and divisive, embracing the notion that capitalism is somehow better when administrated locally. The socialist message is that working people everywhere must end the servitude, insecurity and poverty that capitalism is incapable of curing by embracing socialism, a world community without nations, class discrimination, production for profit or money. In socialist society each, according to their individual taste, will be freely entertained in venues like the WMC throughout the world, while the fear that we must sink back to a life of deprivation and misery after the final curtain falls will have become nothing more than a distant memory.

Steve Trott

The 50th Anniversary of the Warsaw Pact (2005)

From the May 2005 issue of the Socialist Standard 

This month marks the 50th Anniversary of the signing of the Warsaw Pact, the political and military alliance of the so called ‘socialist’ countries in Eastern Europe. Signed on 14 May 1955 it bound together in a ‘defensive alliance’ Russia, Poland, Czechoslovakia, Hungary, Rumania, Bulgaria and Albania. East Germany joined in 1956, while Albania started distancing itself from 1962 onward and withdrew altogether in 1968.

The Russian government claimed that the Warsaw Pact was established as a response to the incorporation of the Federal Republic of Germany (West Germany) into the North Atlantic Treaty Organisation (NATO) in 1955. In practice, however, it acted as a facade for maintaining political and military control over East European countries ‘liberated’ from German occupation and a cloak for intervention in the affairs of its ‘allies’ (in effect its satellites), as occurred in Hungary and Poland in 1956 and Czechoslovakia in 1968.

Norman Lowe points out that for many writing during the ‘Cold War’ era, NATO was “the West’s self-defence against communist aggression” (Mastering British History, p.529). But while there was great tension and antagonism after the war the notion that Russia was waiting for the opportunity to invade Western Europe, an action that would have achieved nothing short of total self-annihilation, must be viewed with scepticism.

President Eisenhower, for example, consistently held the view that the Russia posed no military threat to Western Europe. Instead, he saw NATO’s primary role as to ‘harden’ European people in their opposition to ‘communism’ and “to corral its allies and to head off neutralism, as well as deter the Russians” (Frank Costigliola, Kennedy’s Quest for Victory, p. 244).

In 1999, the Guardian reviewed newly declassified British government documents including a 1968 Foreign Office joint intelligence committee analysis. Its summary of the analysis states: “Russia had no intention of launching a military attack on the West at the height of the Cold War and in stark contrast to what Western politicians and military leaders were saying in public about the ‘Soviet threat'” (1 January 1999). But if the Russian military threat didn’t really exist what was the basis of the ‘Cold War?’

An important pre-condition for the perpetuation of capitalist class dominance is the unconditional ‘obedience’ of ordinary working people. In a non-authoritarian society perhaps the most effective way of sustaining obedience is by inducing fear of a perceived external threat that intimidates ordinary people into giving unquestioning support to their governments in return for protection from the apparent threat. Western governments conceived the ‘International Communist Conspiracy’ and the ‘Cold War’ as elaborate fairy tales, grossly exaggerating the threat of Russian military intentions to instil fear and intimidate Western public opinion.

These fairy tales have their origins in the Russian Revolution of 1917 when the Bolsheviks seized power and established state capitalism masquerading as ‘socialism.’ This event made conflict between Russia and western capitalism inevitable and within months of this seizure of power fifteen countries invaded Russia in what was hailed as a heroic mission inspired by a desire to secure self-determination for the Russian people. But on examination the motive behind this invasion had little to do with altruism, being instead driven by pure self-interest epitomised in three principal concerns. Firstly, the revolution had rendered a vast area – in excess of 15 percent of the world’s landmass – ‘off limits’ to Western capitalist expansion. Second, the new Russian State represented a dangerous example of an alternative to free market capitalism that threatened to inspire people to engage in struggles to establish ‘communism’ in other countries. Thirdly, the new Russian regime practising state capitalism would inevitably challenge free market capitalism in future spheres of influence.

Free market capitalism

The United States emerged from the Second World War as most powerful nation in the history of the planet and set about shaping a world in which capitalism and particularly US capitalism could flourish unhindered. The US State Department and Council of Foreign Relations constructed an image of the post-war world that comprised the regions “strategically important for world control” to be subordinated to the needs of free market capitalism. Each region was assigned a role with emphasis placed on Middle Eastern oil and on the economically underdeveloped countries to be permanently assigned the role of a source of raw materials, cheap expendable labour and markets. Vital to this vision was that post-war reconstruction should install foreign governments willing to embrace the ‘right’ business philosophy; a requirement that brought Western capitalism into conflict with the state-controlled capitalism of Russia and its newly-conquered Eastern Europe territories.

An expanded Russian Empire represented an unacceptable challenge to western capitalism and its plan for hegemony. The annexation of Eastern European countries barred free access of capitalist powers to whole regions expected to provide raw materials, investment opportunities, markets and cheap labour in precisely the same way as the 1917 Russian Revolution had frustrated earlier intentions to exploit pre-revolutionary Russia itself. State capitalism was an unacceptable constraint on capitalism’s free development, fostering an unwillingness to co-operate or complement capitalism in the established industrial countries. Its centralised  ‘command economy’ was incompatible with western and particularly US plans to construct a global model based on private investment and ‘free markets’ dominated by corporations. Free market capitalism prefers a stable, unrestricted world where countries are ‘open’ to the free movement of capital and conditions conducive to unfettered worker exploitation and the maximisation of profits.

The threat of ‘communism’

The existence of a ‘Soviet Bloc,’ claiming to be the ideological antithesis of capitalism was an anathema to the capitalist West. The source of concern lay not in Russian military strength, but rather the fear that working people might be seduced by the propaganda appeal of ‘communism’ and attempt to establish Russian-style state capitalism in other countries that would exclude Western capitalism and remove further territorial from their control. As US strategic planner George Kennan put it in October 1947: “It is not Russian military power that threatens us, it is Russian political power” (Strategies of Containment, pp.356-57). The ideological underpinning for a perpetual conflict was expressed by the United States National Security Council in its resolution 68, which constructed a vision of a world divided into two diametrically opposing forces representing ‘absolute evil’ on the one side and ‘absolute good’ on the other. ‘Communism,’ it asserted, was unimaginably evil, intent on world domination and must be everywhere challenged to defend the ‘free world’. The US was given responsibility for leading this struggle, thereby granting itself the absolute right to defend or advance the interests of free market capitalism anywhere in the world under the pretext that any intervention would be another phase in the struggle to prevent the ‘cancerous spread of communism.’

The ultimate objective of western governments was to force Russia and its satellites to return to their economically underdeveloped status, leaving vast new territories, raw material and cheap labour ripe for exploitation. But until this could be achieved the struggle for economic domination would continue in the undeveloped countries and the need to combat the evil of ‘communism’ would serve as a justification for action against any movement that might gain control over large masses of people, as happened in Vietnam. Such movements are dangerous to western capitalism if they are indicative of a preference for capitalist development independent of western control.

Limiting western aggression

Russia also represented one further challenge to free market capitalism. As well as excluding the ‘free market’ from its territories, Russia, like its western counterparts, seized every opportunity to exploit potential targets regularly using Warsaw Pact countries to offer support to targets of US subversion. These Russian ventures imposed unacceptable limits on Western aspirations in undeveloped countries, attracting widespread condemnation from Western politicians and media and excellent propaganda to sway public opinion against ‘communism’ and to reinforce the belief that US ‘protection’ was necessary to combat the Russian menace.

Essentially, the ‘Cold War,’ of which the Warsaw Pact and NATO were the visible symbols, set the parameters on a system of joint global management. The myth of the ‘Cold War’ enabled each of the two capitalist superpowers to control its real enemy – its own working people – by intimidating it with news of the transgressions of the other and as a justification for repression in its own sphere of control. But beneath the ideological rhetoric there was also a tacit understanding that each should be left to control its own sphere of influence. So while free market capitalism led by the United States would wage war and expand into what became known as the ‘Third World’, the Russians would maintain control over its East European satellites. This accounts for the West’s refusal to assist the people of Hungary and Poland in 1956 and Czechoslovakia in 1968, and explains why the Russians made no great effort to aid Vietnam or to assist the emerging nationalist groups that challenged US domination in Latin America. Despite the rhetoric, the alleged ‘war’ between the two power blocs was theatre, orchestrated to control public opinion.

Though the reasons for the final collapse of the Russia are complex, it was evident that by 1980 internal problems and economic stagnation were heightening and control over the Eastern European countries was rapidly dwindling. When the rotten edifice of Russian authoritarianism started collapsing in Eastern Europe in 1989 the facade of the Warsaw Pact shattered and officially dissolved in Prague on 1 July 1991.

The ‘Cold War’ ended in a perhaps inevitable victory of free market capitalism over state controlled capitalism. But while the ‘Cold War’ ceased to be a valid pretext, Western capitalism has been quick to discover new pretexts, of which the ‘war on terror’ is simply the latest, for a continuation of policies that are nothing more than an expression of its institutional needs. So though the justifications have changed the real struggle, driven by capitalist class interest, to secure the free movement of capital and unrestricted access to markets and raw materials continues unabated with working people everywhere the undisputed victims.

Steve Trott

The profit motive : a case study (2005)

From the April 2005 issue of the Socialist Standard

In January Sony, the multinational electronics corporation, announced it is to declare 300 redundancies at its two factories in south Wales – 80 from the Bridgend factory, producing cathode ray tubes, and 220 from the TV factory adjacent to the M4 at Pencoed –  a move that almost certainly signals the imminent closure of an operation that once employed 3,300 working people. This latest news will be of no surprise to those working in the two factories where Sony has been quietly shedding jobs since the late 1990s.

Production from these factories relies on ‘old’ tube technology and, as a spokesman explained, “The move away from CRT-based TVs accelerated last year with flat panel products now accounting for around half the UK market” (Guardian,  21 January). It is now evident that the managers employed in Japan to make profits for shareholders had decided by the late 1990s that investment to support flat screen televisions would go elsewhere and after 30 years have decided to call it a day in Wales. So where did it all go wrong?

Sony’s Bridgend factory, officially opened by Prince Charles in 1974, was the first major manufacturing venture in the UK by a Japanese multinational corporation. The main imperative of capitalism is to expand – a fact well understood in Japan where by 1972 the country had the largest television industry in the world producing in excess of 8 million sets a year and a domestic market on the verge of saturation. Japanese exports had already devastated the American television industry and while UK imports of Japanese colour TVs were rising, UK manufacturers found some comfort under a 1962 treaty that limited imports of Japanese televisions.

Sony needed unrestricted access to European television market and the UK government was on the verge of joining the European Economic Community (EEC). Assembling televisions inside Europe would circumvent the agreement limiting imports and end the stream of accusations from European manufacturers that Japanese televisions were being ‘dumped’ on the market at ‘uneconomic’ prices.

 

Welcomed

The British government was friendly to Japanese investment and politicians quickly warmed to the prospect of new jobs. This, combined with financial grants made available to ease job losses in traditional coal and steel industries, an established market and a region crying out for employment made Wales an attractive proposition. Bridgend was to be Sony’s assembly base to compete in the EEC, a venture viewed by Britain’s partners in Europe, particularly in Holland – the home of Philips – as a ‘Trojan Horse,’ an apt description for a company importing 90 percent of its components from Japan. In 1976 the British government, under pressure from the EEC and the European television industry, moved to protect  ‘home’ producers. It agreed that unless 50 percent by value of components had European origin, sets could not claim to be ‘British-made’ and would therefore count towards Japanese import quotas agreed between the two industries. By this time, however, Sony was operational and employing over 500 people and compliance with this ‘origin rule’ was quietly forgotten.

Other Japanese television manufacturers followed and by 1977 Britain had ‘overcapacity’ in both set and component manufacture. The Radio Industry Council made representations to government for protection and again policy was altered. In future inward investment was to be encouraged provided it either took over existing capacity or resulted in joint ventures with established manufacturers – hence Rank-Toshiba and GEC-Hitachi. But by 1979 it was apparent that British television manufacturers were unable to compete with Japanese design and manufacturing technology and in October 1980, Pye at Lowestoft was shut with the loss of 1,100 jobs. Despite the higher wages paid to Japanese workers, “the direct labour cost of a set made in the UK was almost double that of one made in Japan because the Japanese set took 1.9 hours to make and the British one 6.1 hours.” (Keith Geddes, The Setmakers, 1991) Japanese television sets incorporated 30 percent fewer components by making greater use of integrated circuits, and automatic insertion accounted for 65 percent of components against 15 percent in the UK. These advantages forced a spate of factory closures and ‘consolidations’ as European producers tried desperately to compete.

Sony’s output at Bridgend had now increased to a level that justified investment in a tube-manufacturing factory, built alongside the television factory and opened in 1982. This expansion was essential because Sony holds patent rights to a cathode ray tube – “Trinitron” – fundamentally different from its competitors and available only from Sony in Japan. Local production was needed to reduce enormous importation costs. Further expansion to tube manufacturing came in 1989 when the television factory was relocated to a site 3 miles away allowing the tube factory to double in size. The new television factory – hailed as Sony’s ‘European Flagship’ – was constructed on former farmland in Pencoed and opened in 1992 at a cost of £30 million. By the early 1990s Sony had a major share of the European television market and was locked in bitter competition with Philips. Output peaked at about 1.75 million televisions and computer monitors were added to the production line-up. The combined turnover of both plants was approximately £800 million.

But then things started to go sour. Intense competition from manufacturers producing high quality, low cost televisions and the collapse of a major market in Russia started to eat away at profits. The market demanded cost reductions, and Sony  –  which had traded for so long on a brand name that marketing gurus had made synonymous with quality and price premiums – could not deliver, at least in Wales. A further threat emerged as Sony’s recently opened television-factory in Barcelona, employing the latest technology, gathered momentum.

The ‘centre of gravity’ of the European TV market was moving eastwards and factories in Wales were no longer suitably placed. The company then negotiated generous grants and tax concessions and, eager to exploit cheap labour, opened new factories in Hungary and Slovakia to improve competitiveness in the growing east European market that had once been supplied by the Pencoed factory. The factories in Wales had served their purpose and utilising ‘old’ technology were now to be run-down while ‘new’ technology and investment went elsewhere. The workforce now lived under threat that production would be transferred unless profits improved, serving to keep wages and benefits fixed, while the trade union, effectively anaesthetised since the 1970s, collaborated with management on projects to increase profits. Desperate to cut costs, investment in manufacturing was slashed; internal component production contracted out, permanent workers were replaced by temporary employees and leavers not replaced. Discipline became oppressive and workers grew demoralised and indifferent to the continuous demands to improve performance. The company’s reputation as an employer plummeted and official redundancies were first declared in April 2000.

The bottom line

So who is to blame? Why did the bubble burst? It would be easy to blame local management employed to squeeze profits from working people or the working people who became dispirited or perhaps even market conditions. But all this evades the fundamental issue that we live in an economic system that demands that corporations must roam the world in pursuit of lower costs to remain competitive to increase profits for shareholders. Sony, like any other corporation with global aspirations, cannot stop to consider how its working people, many employed since the beginning in 1974, are to survive when the factories in Wales close, as they must surely do in the near future. The fact that Wales already suffers dire poverty and comparable jobs will virtually impossible to find is of no consequence on the balance sheet, where the only consideration can be the bottom line. It should not be forgotten that the social cost of Sony’s years of successful profit-making in Wales was achieved at the expense of forcing thousands from employment in factories across Europe with all the misery and trauma this entails. The wheel has turned full circle and it is now the turn of people employed by Sony in Wales to by abandoned, cast aside in the pursuit of greater profits. This is capitalism.

In capitalist society there can be no allegiance or loyalty to a workforce or community. Production is motivated solely by profit, regardless of the social consequences. As a recent article in the Economist states, ‘corporate social responsibility’ – “a kinder, gentler capitalism,” is a non-starter. Instead, we learn:

  “The goal of a well-run company may be to make profits for its shareholders, but merely by doing that the company is doing good works. Its employees willingly work for the company in exchange for wages; the transaction makes them better off” (22 January).

Now we are asked to shallow the outrageous proposition that capitalism has a benevolent social purpose – but try telling that to the people until recently employed by Sony or those formerly employed by the thousands of other companies that have shed working people when higher profits are demanded. The choice is stark; the working class either sells its labour power in return for wages or salaries or goes without the essentials of life. This is not willingness but compulsion. It is wage slavery. 

Capitalism has outlived its usefulness and must be immediately replaced by socialism. Capitalism divides the world’s population into two classes, the majority who sell their labour power in return for wages and salaries and those who own the means of producing wealth and live on profits. It is class struggle where workers will always be the losers, with the impending closure of Sony in south Wales a testimony to opposing class interests of workers and owners. As ex-Sony workers go about rebuilding their lives, they, and working people everywhere would do well to reflect on the fact that capitalism cannot operate in any other way and is incapable of being reformed to do so. Like millions before them, capitalism has condemned these workers to an uncertain future, breeding the stress and anxiety that is linked to a Jobcentre interview likely to lead nowhere.

Steve Trott

Global poverty and the UN: Natural disasters (2005)

From the March 2005 issue of the Socialist Standard 

If there’s one thing the UN is good at, it’s compiling authoritative figures, and the UN’s data on global poverty underlines the desperation of the world’s poor. But what chance do campaigners really have to make history, by making poverty history?

In January the United Nations Millennium Project published a 3000 page report entitled ‘Investing in Development: A Practical Plan to Achieve the Millennium Development Goals.’ The report calls on industrialised countries to assist  in “halving world poverty” by 2015 by increasing aid from its present level of £12 billion to a sum approaching £80 billion per year.  The Independent (18 January) reporting on the publication of this report carried the headline: “UN  unveils 10 year plan to lift 500 million out of misery. Many proposals are cheap, and could transform lives now.” The report concluded: “Only investment on that scale will help prevent 700 million slip further into preventable disease and extreme poverty.”

The strategy outlined in the UN report forms part of a wider set of initiatives agreed at the UN Millennium Summit  in September 2000, aimed at making the world a fairer place to live by apparently eradicating poverty. As a background  to world poverty, the Independent reported on the same day that 11 million children (mainly under 5) die each year, 6 million from preventable diseases, while “Every day, HIV/Aids kills another 6,000 people and another 8,200 become infected with the virus” and “Every 3.6 seconds, someone dies of starvation.”

The report’s author, Professor Jeffrey Sachs, candidly said in defence of his proposals:  “The system is not working right now – let’s be clear.” He explained: “There’s a tremendous imbalance of focus on  the issues of war and peace, and less on dying and suffering of the poor who have no voice. The overwhelming reality on our planet is that impoverished people get sick and die for lack of access to basic practical means that could help keep them alive and do more than that – help them achieve livelihoods and escape from poverty.” Sachs pointed out: “We have the world’s eyes focused on the tsunami of the Indian Ocean, but the world continues to overlook the silent tsunamis of deaths from malaria which take every month the number of people that died in the Asian tragedy. Every month, 150,000 children in Africa, if not more, are dying from the silent tsunami of malaria, a largely preventable and utterly treatable disease.” Elsewhere the article states that malaria can be prevented with a treated bed net costing less than £1.

Sachs’s concern that the Indian Ocean disaster has overshadowed permanent poverty and deprivation is echoed by pleas from charities working elsewhere in the world. The earthquake and resultant tsunami, killing perhaps up to 200,000 people in twelve countries, has siphoned donations away from these charities and threatens to end their money raising activities for good. But the tragic loss of life and devastation caused by the tsunami has been given so much prominence precisely because it was caused by a natural disaster, where no guilt can be apportioned.

Equally, as the Economist observed: “involvement in the disaster of so many resorts favoured by tourists from rich countries in the West and the richer parts of north-east Asia has given it more prominence in these countries than the sheer horror of the fatalities would have produced” (1-7 January) The class that lives by profit has no wish to be reminded of the loss of life and devastation attributed solely to the relentless pursuit of profit and is content to see attention deflected away such things.

Disasters – natural or otherwise – provide unexpected opportunities to those who live by making profits. As with the unnatural tragedy of the Iraq invasion where up to 100,000 people have been killed, companies engaged in the provision of food, housing, construction, energy, transportation, communications, engineering and so on, can expect to reap bumper profits. Aid and money cannot be injected into class society in a neutral way and is either directed to the working class or the owning class, generally the latter. We learn that money is urgently needed to restore the tourist industry and the profits it generates for the shareholders that own the hotels and tourist attractions, especially in Thailand where tourism generates 12 percent of GDP. Tourists have been urged to return to these holiday destinations with the lure that the only way to help the poor is by making them employable once more, which means making the tourist industry profitable once again.

The only consideration is profit. But while investors in Asian tourism may have lost, others have been more fortunate. The same issue of the Economist reported: “Insurers at least will be relieved that most of those whose livelihoods have been destroyed were not covered. Some hoteliers will make claims, as will families of western tourists who were covered by life insurance. Their bill, however, is likely to be far lower than followed the hurricanes in Florida and its neighbouring states earlier in 2004.”

Avoidable

It goes without saying that major disasters causing loss of life are always tragic. But while some disasters cannot always be avoided, as in the Indian Ocean, others are completely avoidable and there can be no excuse. The UN Report aims to significantly reduce world poverty without attacking its root cause. According to Sachs, “Billions more could enjoy the fruits of the global economy. Tens of millions of lives could be saved” (Independent, 18 January).  Millions of people, it seems, are to be lifted from poverty by trade arising from the globalisation of capital, a process that hitherto has been remarkably unsuccessful in doing anything more than spreading poverty from country to country and making enormous profits for investors. Globalisation is a particularly pernicious form of capitalist development, which has decimated the lives of millions of people in undeveloped countries.  Yet the UN plan is proposing more of the same, calling for initiatives that “involve both civil society organisations and the private sector,” and urging that “rich countries must open markets to exports from developing countries.”

Predictably the plan urges that ‘rich countries’ must “invest more in the very poorest countries through electricity supplies and roads.” (Independent, 18 January). In practice the report does no more than advocate concerted action by corporations and companies under the umbrella of their national governments to transform people into wage slaves. There are no poor countries, only poor people.

It can be no coincidence that both Blair and Brown have suddenly become interested in the continent of Africa – or rather the opportunities it can bring to the owning class they represent. Brown claims he will make sub-Saharan Africa his priority in 2005 while Blair says he will use Britain’s Presidency of the G8 to “focus on progress” in the eradication of African poverty as well as countering other potential but less desirable developments. Blair explains: “Famine in Africa will affect our countries because it will be a trigger for mass migration. Conflict, too, drives millions to flee their homes. Both create the conditions for terrorism and fanaticism to take root and spread directly to Europe, to North America and to Asia” (Economist, 1-7 January).

Like the UN Report Blair proposes ‘more of the same’. He writes: “We also need to tackle trade barriers

which push up prices to our consumers, prevent African countries exporting their products and see Europe spending more on subsidising its own farmers than on aid to Africa.” He concludes, as does the UN Report that aid will provide assistance in “building the infrastructure needed for private-sector growth.”

The forces are gathering and the strategy is in place. Capitalism is to make a concerted move into the African continent to provide opportunities for investment and profit from the glut of aid proposed by the UN and the resultant ‘opening-up’ of the continent. A market economy based on the domination of outside corporations or perhaps indigenous capitalists will obviate migration of cheap labour, forcing the indigenous people to become wage slaves, to join, in the words of the Independent, the “one billion people [who] live on less than $1 a day. Another 2.7 billion survive on less than $2 a day.” A further intention is to nullify the spread of religious fundamentalism that could interfere with profit taking. Like every other attempt to alleviate poverty it will fail. This is because the plan is less about poverty and more about profits. The plan’s success will be measured in dollars not lives saved.

If there was ever an indictment of capitalism it is world poverty. People die in Africa and elsewhere because there is simply no profit in saving them. Conversely, action to limit this barbarism only occurs when the companies and corporations owned by the capitalist class ‘sense a kill,’ an opportunity to expand profits. £81 billion in aid – if it ever arrives – is a good starting point. Many African countries have already a foretaste of foreign investment that directs that food be grown for export alongside a population on the brink of starvation. But this no inconsistency, simply market forces in action. We live in a world of plenty where scarcity and rationing through the market and money system is unnecessary and anti-human. It must stop.

The Independent editorial column hit the nail on the head. It reads, “The world must seize the opportunity and work together to fight the scourge of poverty, disease and hopelessness.”  But what it does not say

is that this can never be achieved under capitalism. The world’s working people must, as the editorial urges, seize the opportunity to end poverty — not by trying to reform an economic system that cannot be reformed but by abolishing it. The UN proposal that reinforces the institutional requirement to make and increase profits regardless of its human consequences is monstrous – a licence to make profit from human misery.

Steve Trott

A ‘Free’ Press (2005)

From the February 2005 issue of the Socialist Standard

  A free press is a de-facto sign of a liberal democratic capitalist state, and an independent media can often make things uncomfortable for those in charge. So why does the criticism persist that the free press is not really free, and that these champions of public opinion in fact collude in perpetuating not truth but capitalist mythology? 

  “The Primary Freedom of the Press lies in not being a Trade”

(Karl Marx, Rheinische Zeitung, May 1842.) 

   “Freedom of the press belongs to those who own one” (Anon)

For the last twenty years there has been increasing public awareness that journalistic integrity and the capitalist press are uneasy bedfellows. Various writers, particularly in America, have highlighted the incompatibility between a supposedly ‘free press’ and the production of a newspaper as a commodity for profit. Those who have criticised the press have every right to be scornful. But this is no breakthrough in investigative journalism; capitalism has always corrupted the press and led to it functioning as a mouthpiece for the ruling class, a point explosively demonstrated by Upton Sinclair in 1919 when he first published The Brass Check (republished by University of Illinois Press in 2002). In a timeless and scathing attack on the capitalist press Sinclair asserted “that American journalism is a class institution serving the rich and spurning the poor”, likening the journalist to a prostitute, enslaved in the business ideology of the owning class and functioning to work hand in glove with political leaders and big business to deceive public opinion.

Brass Check was written in the ‘Progressive Era’ at the beginning of the 20th century, a period that saw large swathes of US industry come under the sway of immensely powerful inter-linking monopolistic corporations controlled by a highly concentrated elite of powerful owners. The monopolistic ownership of the newspaper industry that spawned a new journalistic style that trivialised and sensationalised news, abandoning journalistic integrity and independence, caused particular outrage and was branded ‘yellow journalism’. But the essence of this condemnation was more seditious than a simple dispute over the presentation of newsprint. Critics argued that the newspaper monopoly strangled public awareness, censored all anti-business opinion and now served solely to express the owner’s class interests that operated, in Sinclair’s words, for the “hoodwinking of the public and the plunder of labour”. The press, it was argued, must be cleansed of corrupting class bias and function as a neutral conduit for the communication of meaningful information enabling the public to exercise informed democratic preferences.

Capitalist business

In Britain, a similar concentration of ownership had already dramatically altered the newspaper industry that stifled and later decimated the popular press. During the first half of the 19th century Britain had enjoyed a thriving and vigorous popular press that criticised appalling working conditions and was spurred on by the ‘betrayal’ of the 1832 Reform Act and anger at the 1834 Poor Law. The radical press produced numerous papers that “promoted greater collective confidence by repeatedly emphasising the potential power of working people to effect social change through the force of ‘combination’ and organised action” (James Curren and Jean Seaton, Power Without Responsibility: The Press and Broadcasting in Britain, p.24). The radical press was a major source of antagonism to government and the propertied class but neither libel actions nor stamp tax on newsprint were effective in subjugating it. Nevertheless, by 1865 the radical press was in decline, broken not by laws but by a combination of rising costs and market forces.

By the second half of the 19th century the rising cost of printing technology to support national newspaper circulation required major investment. Newspaper set-up costs in Britain rose from £1,000 to over £50,000 between 1840 and 1870 while in America these capital costs rose by 600 percent between 1855 and 1875, a huge investment that excluded all but the extremely wealthy. In addition to rising costs, the growing importance of advertising in Britain greatly disadvantaged the alternative press because successful advertising meant appealing to people who had money. The readers of the radical press were mainly working people on low incomes and advertisers discriminated against these newspapers because “their readers are not purchasers, and any money thrown upon them is so much money thrown away” (quotation from 1856, in James Curren and Jean Seaton, p.43). Advertising revenue acted as a subsidy enabling newspapers to be sold at a price below the cost of production and, once exposed to the realism of commercial capitalism, competitors without advertising revenue were forced from the market or sufficiently weakened to be taken over by larger companies. Newspaper production had become a capitalist business.

Sinclair too identified advertising as a main corrupting agent enabling wealthy advertisers to drive-out the US radical press and exert pressure on editors to mould content and editorial comment. “Everywhere in the world of journalism, high and low, you see this power of the advertiser,” Sinclair declared at a time when advertising, accounting for two-thirds of US newspaper income, greatly enhanced the concentration of ownership. Little has changed in an industry that allows little opportunity for new entrants to enter the market. Today, twenty-four inter-linking US corporations control over half of newspapers and most magazines, broadcasting, books and movies, while Britain is reputed to have the most highly concentrated newspaper ownership in the world, being dominated by five immense corporate groups.

Newspapers must appeal to wealthy corporations as a platform for advertising and to a readership with sufficient purchasing power to satisfy the advertisers’ selling aspirations. Making a newspaper attractive to advertisers is achieved by altering content to suit the values and prejudices of those who pay advertising revenues, as was pointed out in 1910 by US Professor Edward Ross: “When the news-columns and editorial page are a mere incident in the profitable sale of mercantile publicity, in it is strictly ‘businesslike’ to let the big advertisers censor both”(cited by Robert McChesney and Ben Scott, Monthly Review) A newspaper boasting a large circulation but lacking content that appeals to advertisers will rarely survive, a fact that provides an explanation for the disappearance of ‘labour news’ and the widespread growth of lucrative ‘business news’ aimed at a minority audience. The demise of the Daily Herald and Sunday Citizen in the 1960s also illustrate the point. In its final year the Daily Herald enjoyed 8 percent of daily circulation but attracted only 3 percent of the net advertising revenue while the Sunday Citizen received barely one-tenth of net advertising income of the Sunday Times. Both newspapers were considered hostile to business and therefore denied advertising patronage, while in the US the corrupting influences that Sinclair so scathingly criticised have free rein, frequently suppressing news carrying anti-business content by threatening to cancel corporate advertising accounts.

Self-censorship

But besides advertising other, less obvious, factors have also worked to make newspapers a willing mouthpiece for corporations and for government. Newspapers demand a constant flow of low-cost material from reliable sources that avoids expensive research. With budgets squeezed, newspapers must focus where ‘meaningful’ news is most likely to occur. Government, corporations, trade groups and business lobbies with press and PR offices feed the press with stories that are presumed accurate, with mutual benefit derived by delivering cost reductions to the newspaper while tending to mute criticism by limiting the access of alternative views. Similarly, purchasing news from enormously powerful agencies like Associated Press or Reuters has cut costly international newsgathering. Of course, not all news can be printed, but when reputedly less than 2 percent of the world’s news gathered by these agencies is actually passed on to the news media, it raises serious questions about the criteria used to filter news deemed fit for our consumption. News that seriously threatens the status quo is given scant exposure or will simply be omitted – as if it never existed. Clearly, not all capitalism’s misdemeanours can be simply ignored because the consequences cannot always be hidden. The press must be seen as criticising the behaviour of a company or government, for no other reason than to maintain credibility, though such incidents are generally quickly forgotten as the press moves on to the next story.

But although censorship by omission certainly occurs it would be wrong to assume that journalism, in Britain at least, is consciously censored or that a conspiracy amongst journalists exists to hide facts from public scrutiny. Instead self-censorship linked to the personal economic necessity to conform to institutional and company requirements make journalists, in Sinclair’s words, drift “inevitably towards the point of view held by their masters”. This is precisely what George Orwell meant when he wrote in his unpublished introduction to Animal Farm, that “unpopular ideas can be silenced, and inconvenient facts kept dark, without any need for an official ban” (Times Literary Supplement, September 1972.)

In capitalist society the production of a successful newspaper means journalistic integrity and editorial objectiveness are subordinate to the institutional requirement of production for profit. There can be no other way, for as Professor Edward Ross pointed out in Sinclair’s era:

  “To urge the editor, under the thumb of the advertiser or of the owner, to be more independent, is to invite him to remove himself from his profession. As to the capitalist owner, to exhort him to run his newspaper in the interests of truth and progress is about as reasonable as to exhort the mill-owner to work his property for the public good instead of for his private benefit.” (Edward Alsworth Ross, ‘The Suppression of Important News’, Atlantic Magazine, March 1910, quoted in Monthly Review May 2002).

More recent testimony to this enduring law of capitalist newspaper production was expressed by Piers Morgan, former editor of the Daily Mirror, when he stated, “I only judge a story on what sells and what doesn’t” (Guardian, 30 November 1996).

Unreformable

Today, newspapers perform in much the same way as they did in Sinclair’s time, precisely because they operate in the same economic conditions. They lock-in our views to prevailing ideology by playing on prejudices and aspirations, incessantly communicating messages that instil working people with beliefs needed to integrate them into a life of wage slavery, with advertising assisting to create a ‘virtual’ world conducive to buying. “Journalism,” Sinclair wrote, “is one of the devices whereby industrial autocracy keeps its control over political democracy; it is the day to day, between elections propaganda, whereby the minds of the people are kept in a state of acquiescence, so that when the crisis of an election comes, they can go to the polls and caste their ballots for either one of the two parties of the exploiters”.

Sinclair’s book is a penetrating analysis of the early US capitalist press. But it is also the work of an author who, despite his stinging criticisms of the capitalist newspaper industry, believed that the press could in someway reform itself to stand outside class struggle and be recreated as a neutral independent force within capitalist society. Sinclair held the views that capitalism and genuine democracy could co-exist and journalism could be freed from the economic laws of capitalism to give expression to popular demand and abstract ideas of ‘social justice’ and ‘fairness’ that were divorced from the actual material conditions. But the reality is that as long as newspaper production is a profit-driven business it can never be free from the corrosive economic influence of capitalism. We need not lament this fact – for the press can perform in no any other way in capitalist society. But nor should we waste our energies on bankrupt delusions of press (or any other) reform, as Sinclair did, that at best can offer only temporary respite. Instead, we should organise to replace a society that corrupts and debases everything it touches and build socialism where a free and equal people will enjoy a free and informative press.

Steve Trott

Marketing the suicide seed (2005)

From the July 2005 issue of the Socialist Standard

In the second week of February the United Nations convened a meeting in Bangkok that, despite its importance, failed to make newspaper headlines or feature anywhere in news broadcasts. The lack of apparent newsworthiness, however, belies the meeting’s significance, for in time the issue under discussion could well turn out to have profound consequences for the world’s food supply.

At this meeting the Canadian government attempted to overturn the 1998 international moratorium on the commercialisation of ‘sterile gene technology.’  The Canadian delegation, acting on behalf of the multinational seed companies as well as the US government – not a party to the UN Biodiversity Convention – fiercely attacked a UN report which urged governments throughout the world to ban this particularly nasty branch of GM technology. A reversal of the current moratorium would permit the unleashing of what is known as the Terminator seed with devastating consequences to farmers, particularly in the undeveloped world.

So why should this issue cause so much concern? The US Department of Agriculture first developed Terminator technology in conjunction with multinational seed corporations in the late 1990s. The primary inventor of this technology, Melvin J. Oliver of the United States Department of Agriculture, explained: “Our mission is to protect US agriculture and to make us competitive in the face of foreign competition. Without this, there is no way of protecting the patented seed technology” (www.earthisland.org). The avowed aim was to protect the investment in the production of superior genetically modified seeds. It gave scientists the ability to modify plants that would produce seeds that grow to maturity but would be incapable of germinating if planted. Put simply, this means that while farmers will get a good crop in the first year of sowing, if they try to save harvested seed for planting in the following year the crop will be sterile, hence the name ‘Terminator’.

When the discovery was made public in 1998 it provoked global condemnation, particularly from Asian and African countries and the UN Convention on Biological Diversity was compelled to impose a moratorium on its further development. To all intents and purposes, the issue seemed closed, although this did not deter the seed corporations from continuing their research and registering patent rights over areas of this technology.

Better than patents

Commercialising Terminator would have a devastating impact on an estimated 1.4 billion of the world’s poorest farmers who depend on ‘saved seeds’ and who exchange seed to develop new varieties suited to their growing conditions as a primary source of seed stock, and hence food. In practice genetically modified Terminator seeds will be neither affordable nor relevant to the needs of farmers in the undeveloped world. Terminator or ‘suicide seeds’ have been developed to prevent the successful sowing of ‘saved seeds,’ with a view to forcing farmers to purchase new seed every year and making them reliant on the seed market dominated by the gene corporations. As a means of controlling seed usage this biological solution is more permanent and infinitely more effective than patent or legal restrictions that seek to deny farmers the right to raise their own seed bank. In short Terminator has been  developed solely to maximise the profits of the seed industry.

Half of the world’s population cannot afford to buy new seed every year and typically depend on ‘saved seed’ and their skills to adapt a blend of varieties to suit growing conditions. Reversing the moratorium would enable the profit-seeking seed industry to enter completely “new sectors of the seed market — especially in self-pollinating seeds such as wheat, rice, cotton, soybeans, oats and sorghum” (www.earthisland.org). Until recently agribusiness had paid scant regard to crops grown in undeveloped countries, mainly because the industry had been unable to control seed reproduction. Those advocating sterile gene technology claim it could be a boon to undeveloped countries because the corporations that have developed new and better seed would then have the means of protecting their investment and could concentrate on the development of seeds suited to undeveloped countries, hitherto ignored, without having this investment undermined.

There can be little doubt that if Terminator is brought to market the logic of profit will mean the multinational seed corporations will seek to introduce genetic seed sterility into all genetically modified seeds offered for sale. Within a short time this could mean that the world’s two most important food crops – wheat and rice, on which three-quarters of the world’s poorest people depend – would come under the control of the seed monopolies. The notes to the first Terminator patent lodged by Delta and Pine Land explained that the company intended to make its technology widely available to competitors, but this was so as to penetrate the market with Terminator seed as quickly as possible and across as many varieties of crops as is feasible.  

Investment follows profits and if the staple crops of the undeveloped countries can be ‘tied up’ by Terminator, investment will pour into the seed corporations commercially producing seed where market sales can be guaranteed year on year. It can be no coincidence that the agricultural chemical corporations including DuPont, Dow Corning, Novartis, AgroEvo, and Monsanto have acquired major interests in the seed breeding industry where the ten largest corporations control 40 percent of the global seed market.

Not surprising

The UN Bangkok meeting did not, however, conclude in the way the seed corporations had expected. Governments nurturing GM industries not as advanced as those of the US and Canada intervened to thwart the intentions of Canadian government and the multinational corporations. We should not be surprised by the stance of the Canadian government because it is the role of governments to act in the interest of the class who live by profit and it is only doing what is wanted by its masters. But even though the de facto moratorium remains intact the Terminator issue is still on the negotiating table. It will be discussed at the next UN Convention of Biodiversity in March 2006 and the meeting of the G8 in Scotland later this year and every other opportunity thereafter. The multinationals smell blood and have moved up a gear to bring the ‘suicide seed’ to market.

It is unimaginable that in any sane society scientists in GM technology would wish to identify and develop a terminator gene – only a society motivated by profit could consider this worthwhile with no other conceivable purpose than to boost profits to those who sell it. But this is capitalism.

It is often claimed that science is neutral – being neither good nor bad. This is an abstraction that ignores the social relations, the social context in which science develops and fails to address the question – ‘who benefits’? Technology is almost always directed to the maximisation of profit and frequently has a detrimental impact on the environment or human well-being. With the pool of scientific knowledge reputedly doubling every twelve months people tend to be intimidated by ‘science,’ with no choice but to place reliance on so-called ‘experts’ who generally conceal a vested interest when urging a particular development. The real decisions that influence the world are made in secret and because we live in a society where the interests of the class that own the corporations and companies reign supreme, maximising profits will always head the agenda.

The prudent application of GM technology could be of some benefit to humanity and may be developed in socialism where food will be produced simply to feed people and not for profit. But like so many other scientific developments, the emergence of Terminator demonstrates that certain areas of science can become extremely dangerous when left in the hands of those whose only motivation is profit. In capitalism profit will always prevail over human need and research will normally be funded only into areas where profit can be maximised – regardless of the consequences on human welfare and the planet on which we depend.

Steve Trott

Guevarian Ideology (2005)

Book Review from the March 2005 issue of the Socialist Standard

Che Guevara Reader: Writings on Politics and Revolution. Edited by David Deutschmann. Ocean Press. £15.95  

The reader comprises speeches and articles that trace the development and implementation of Guevara’s theories from 1956 to a time shortly before his death in October 1967. The book falls into four sections covering the period prior to the Cuban Revolution, Guevara’s work in the Cuban government, international issues and selected letters.

Guevara’s ideology combined romanticism with elitism. He passionately believed that an enlightened conspiratorial minority could establish ‘socialism’ and use political power to free the ideas of the uneducated masses – a theory where mass political consciousness emerges after a revolution initiated by a small minority or vanguard. In this struggle, the vanguard is the “the catalysing agent that create[d] the subjective conditions necessary for victory” as well as the “generator of revolutionary consciousness.”

Guevara was essentially a guerrilla leader engaged in a war of national liberation. He believed that only violent revolution, waged in the countryside, could end colonial exploitation and introduce ‘socialism’ into Latin America. Urban areas were to remain essentially passive being vulnerable to betrayal and superior military force. The basis of this struggle was the peasantry, but his attitude is ambivalent, fearing that peasant ignorance, isolation and hunger for land makes them unreliable and in need of direction from “revolutionary intellectuals.”

In the second section on the ‘Cuba Years 1959-65’, we gain an insight into the difficulties of ‘Democratic Centralism’ and the organisation of the state-run capitalism that followed the Cuban insurrection. The economy is based on commodity production where imports are dependent on maximising exports at competitive market prices. As with the rest of Latin America the central problem is the “one crop economy,” with Cuba “slaves to sugarcane.” His speeches call for diversification and increased output prompting the introduction of ‘emulation,’ involving setting factory and individual output targets to maximise industrial output. His theories were greatly influenced by Lenin, who is quoted throughout his works. In the article entitled, ‘On the Budgetary Finance System’ Guevara uses a quotation from Lenin in an attempt to explain how state capitalism is a step towards an eventual ‘socialist’ society, necessitating the introduction of capitalist accounting methods, price setting, money, factory profit, bonuses and formal contracts with monetary penalties.

But increasing output means greater incentives and this conflicts with Guevara’s image of ‘socialist morality’ where work and achieving output targets is the workers moral obligation, his “social duty.” Cuba, he claims, is ‘on the road’ to ‘socialism’ while the transition to ‘communism’ a distant vision in the future. At the same time he is compelled to accept that trading with world capitalism necessarily imposed severe limitations on his action, in short acknowledging that the economic conditions dictate the country’s direction. National defence, nationalisation, industrialisation, agrarian reform and the development of foreign trade, particularly with Russia, are all urgent issues that have to be addressed if Cuba is to survive.

In the years following the Cuban Revolution his speeches impart increasing frustration as the vanguard attempts to impose ‘socialism’ on the ignorant masses that neither understood nor wanted it. In passionate speeches to students, cadres and trade unionists he repeatedly stresses the need for education to strive for the ‘socialist ideal’ and eradicate the bad habits from the “previous epoch.”

The third part of the book is a collection of Guevara’s speeches and articles on international issues. Not unexpectedly, the rhetoric is anti-Americanism and anti-colonialist and the message to the people of Latin America is to follow Cuba’s example and create “many Vietnams” to expel US imperialism and achieve economic independence. Other speeches demand fairness in trade and an end to dumping, price fixing, foreign debt and foreign bases – in fact all the things you might expect from a leader struggling to administer capitalism in an underdeveloped country surrounded by a hostile world.

A book of limited historical interest carrying a bankrupt anachronistic prescription for violent revolution to be orchestrated by a vanguard and leading inevitably to state-controlled capitalism.

Steve Trott

Enter the Dragon: The impact of China (2005)

From the August 2005 issue of the Socialist Standard

In 1978 the Chinese Communist Party under Deng Xiaping embarked on reforms that would steer China’s economy toward transition from state-run to free market capitalism.

Since then China’s Gross Domestic Product (GDP) has grown by an average of 9.5 percent per year, faster than any other country. China joined the World Trade Organisation (WTO) in December 2001 and now accounts for 13 percent of world output with a GDP likely to overtake Japan by 2016 and America by 2020, making China the world’s largest economy.

Economic “openness”

This prodigious growth is attributable to foreign investment that has utilised the country’s remarkably ‘liberal’ business climate to exploit low wage labour as a platform for the manufacture of goods and then their export to world at cheap prices.   Put simply, manufacturing has been relocated to China to undercut competition and raise profits – attracted by the almost ‘inexhaustible’ supply of cheap labour, well-developed infrastructure, tax concessions and brutally repressive state.

China’s economic ‘openness’ makes it the world’s largest recipient of foreign investment, which increased 35 percent in the year to September 2004 alone. It is further exemplified by the country’s import tariffs, which “have, on average, fallen from 41 percent in 1992 to 6 percent after it joined the WTO in December 2001, giving it the lowest tariff protection of any developing country.” (The Economist, 2 October 2004, p.6)

Joint ventures between Chinese companies and foreign multinational corporations produce 27 percent of manufacturing output (there are 4,000 involving UK companies alone) and a flourishing private sector accounts for 50 percent of Chinese GDP.

Rich v poor

Although most of the population still exists at basic subsistence levels, the purchasing power of a minority of better paid workers (but still measured in tens of millions) and the development of an indigenous capitalist class have nurtured a sizeable domestic market.  China in fact has the world’s fastest growing consumer market and sales are soaring. If income distribution remains unaltered, “by 2020 the top 100 million households will have an average income equivalent to the current average in Western Europe. This will open up a vast market for consumer goods.” (The Economist, 2 October 2004, p.11) An increasing number of American and European corporations are now investing to sell directly to this growing market.

China’s market has also encouraged the emergence of a Chinese capitalist class, comprising many who already have close ties with foreign capital and political patronage from Beijing. Within this class a small number have amassed staggering levels of wealth. 

This picture looks set to continue. Though productivity is still low compared with the developed world, running at approximately one-eighth of that in America, economic ‘openness’ is encouraging the rapid transfer of manufacturing technology that will enable China to use the industrialised countries as a springboard to raise productivity. Production will also rapidly climb the “value added” chain, utilising the 10 million graduates who join the Chinese working class each year.

But more important is the abundant supply of the resource essential to profits – human labour power. China has a population of 1.3 billion or 20 percent of the world’s population and the political elite has worked hard to mobilise this labour power to create the conditions to fuel capitalism. 

State industry has rapidly shrunk and thousands of enterprises have been sold or bankrupted and their workers sacked. An estimated 40 million have been made jobless to join the countless millions made redundant from native private industry by relentless foreign competition.

Town v country

In rural regions, where over 60 percent of the population still live, the free market deregulation of agricultural prices has driven millions from the land. Here, over 150 million destitute people are waiting to migrate and seek work at any wage, while farmers are often compelled to take unskilled temporary work between harvests to supplement meagre earnings.

It will take 15-20 years to absorb this labour power, which means that, unlike some parts of South-East Asia, where labour scarcity could raise wages, Chinese based capitalism can probably hold down unskilled wages for many years. 

To most the transition from state-run capitalism to the free market variety means low wages, poor living conditions and repression. While a minority of higher paid workers has access to consumable goods, the free market has devastated the lower paid who do not have money to buy those goods. Services including education and medical care, formerly provided by the state, are now ‘fee based’, while housing is controlled by private landlords.    

The main manufacturing belt lies in the region of Guangdong and along the Pearl River Delta, where workers slave 15 hours a day, seven days a week with mandatory overtime enforced by coercive factory regulations. Migrant labour is estimated at over 100 million, more than half women from impoverished inland regions. Industrial disputes are not uncommon. 

Contradictions

Sometimes disputes erupt into riots as happened at the Taiwanese Stella International factory at Dongguan in the spring of 2004. The factory, employing 70,000 workers, makes shoes for Nike, Reebok, Clarks, Sears and Timberland. Factory property was allegedly damaged and ten workers were subsequently jailed for 3½  years but later freed when the company, fearful of repercussions, secured their release.

Long-term disregard for poverty and the impoverished plight of working people and peasantry may well pose a significant threat to government authority. The government has been compelled to ameliorate worker conditions and in some places unemployment insurance has improved and minimum wages increased, while cities have endeavoured to increase employment – generally by offering assistance to new enterprises to employ redundant workers. But funding is still minimal and official corruption widespread.

Nowhere is the contrast between rich and poor more stark than in Shanghai, a city of 17 million and the centre of Chinese capitalism. Here poor living conditions, overcrowding and poverty are “…a far cry from the empty streets of the gated communities in the east end of Pudong, where high walls and a plethora of guards provide a safe, insular heaven for those living within.” (China Daily, 28 April 2005)

One of China’s main weaknesses is electricity generation and the rapid increase in demand, exacerbated by household appliances and air-conditioning, has caused shortages, blackouts and power rationing.  China’s electricity generation is 70 percent dependent on coal and miners were forced to increase output by 54 percent in the four years to 2003. Rudimentary safety is ignored and a twelve-hour day, 28 days a month is the industry standard. “There were more than 6,000 deaths last year from explosions, floods, cave-ins and other accidents in China’s mining industry, accounting for 80 percent of the world’s total fatalities. Independent estimates, however, say up to 20,000 workers are killed every year as they toil underground in poor conditions for little money.” (http://www.chinalaborwatch.org)

The ‘All China Federation of Trade Unions,’ is the only legal trade union and controlled by the Chinese Communist Party (CCP). Independent trade unions are banned and workers agitating for better conditions are routinely jailed. But despite the lack of organisation, skill shortages have enabled some to make gains after strikes, as in Shenzen in October 2004 and Panyu in November 2004. 

Knock-on effect

The ‘Chinese miracle’ has had a detrimental effect on many workers outside China. While the international class who live by profits has benefited immeasurably by transferring operations to China, many workers in other countries have paid the price with the loss of their jobs. Worst hit have been workers who barely survive in undeveloped countries where imports and exports mirror those of China.  The abolition of import quotas on textiles in January 2005, for example, is set to decimate jobs in Bangladesh and Cambodia where companies will be unable to compete. Another casualty has been the Mexican working class where an estimated 225,000 jobs, originally transferred from America after the introduction of the North America Free Trade Association have moved to China since 2001. Likewise, production transferred to South Korean and Taiwanese based corporations is ‘out-sourced’ to China for labour intensive assembly and then re-export.

But China’s capitalism is also influencing the world’s working class in other ways. Worker conditions in developed countries are under attack. As The Economist euphemistically puts it: “Individual countries can maximise their gains from Chinese integration and minimise their losses by making their own economies more flexible, increasing mobility between sectors and improving education.” (2 October 2004, p.12).

Political control

The development of capitalism in China looks set to remain firmly under the political dictatorship of the Communist Party. Although in practical operation for years, free market capitalism was officially reconciled with ‘communism’ at the 16th National Congress of the CCP in November 2002 when the Party’s constitution was amended to open membership to China’s ‘business elite’ to protect the “legitimate rights and interests” of business and property owners.  The CCP has become the instrument of multinational corporations and of this ‘business elite’ and seeks to perpetuate its rule with the support of those who benefit from the system of exploitation in the world’s largest sweatshop. The Party has warned it will make no concession to ‘democratic aspirations.’ At the Central Committee meeting in September 2004, Hu Jintao, China’s President and Party leader asserted that “China would never have its own Gorbachev,” or countenance erosion of the CCP’s ruling position. Denouncing those who “fly the banner of democracy and political reform,” he warned the Party would be “pre-emptive” and “strike when they rear their heads.” (Time 31 January 2005, p.45).

In practical terms the political elite is seeking to tighten control over local government to block independent legislatures and plans to “improve the political thinking of university students to elevate the Party’s ruling power” (People’s Daily, 19 January 2005). Websites exposing corruption have been shut without explanation. Newspapers are banned from publishing anything negative about the police, government or judiciary and journalists have been ordered to stop criticism.

In this way capitalism in China is an investors’ paradise and a workers’ prison camp. Enormous profits are attained at staggering human cost, and with the growing gap between rich and poor the class struggle is set to intensify.  The integration of China into world capitalism has also had profound effects. It has drained away jobs from other parts of the world, lowered global unskilled wage rates and eased pressure on wages in other countries by reducing prices of consumable goods. These world-wide reverberations will continue.

Steve Trott