The History of Mr Crank

The slur ‘crank’ is enjoying something of a renaissance in these red-baiting times. The ‘crank left’ is a general term of abuse directed at those who don’t accept the increasingly shaky presuppositions of mainstream debate, with the advantage of course of not having to deal with their objections. Such weird people typically read ‘crank’ news websites, such as The Canary or Skwawkbox. Then there are ‘crankademics’, a wonderfully witty neologism trained at academics who insist on pointing out the painful lack of evidence justifying the purge of Labour party members in the name of anti-antisemitism.

There is something quintessentially English about the barb ‘crank’. It means an eccentric who is obsessed with the minutiae of a specific subject, a fixation ‘normal’, well-balanced people don’t share. In the U.S., such people might be called oddballs or weirdos but not cranks. In America ‘cranky’ is used to designate bad-tempered people but that is something different. Cranks aren’t necessarily cranky.

And ‘crank’ is unusually employed against the Left, in particular the anti-imperialist Left. To be sure there are ‘crank scientific theories’, such as that Covid-19 is caused by 5G phone masts, which originate with the Right. The vectors of strange Trumpian obsessions might be labelled cranks. But generally the Right is not assumed to be outside the pale of civilised, ‘normal’ debate in the way the ‘crank Left’ is.

As far I can tell, crank was first deployed to any great effect during the First World War. Conscientious Objectors were contemptuously derided as cranks and female pacifists shared the same fate. “I can’t stand cranks,” barks Captain Mainwaring in Dad’s Army when a member of his platoon confesses to have been a Conscientious Objector during the last war. “Imagine not wanting to fight … it isn’t normal.”

But the person who really forged an indelible link between cranks and the Left was George Orwell, ironically an unashamed radical socialist himself. “[T]here is the horrible – the really disquieting – prevalence of cranks wherever Socialists are gathered together,” wrote Orwell in The Road to Wigan Pier. “One sometimes gets the impression that the mere words ‘Socialism’ and ‘Communism’ draw towards them with magnetic force every fruit juice drinker, nudist, sandal wearer, sex-maniac, Quaker, ‘Nature Cure’ quack, pacifist and feminist in England.”

Leaving aside the fact that undercover nudists and sex maniacs are not, as far as is known, overrepresented at Labour party meetings (nor, soon, will socialists it seems), there is the disquieting fact that some 1930s cranks – for example feminists – were clearly ahead of their time. Orwell also had a particular bugbear about vegetarians, and vegetarian options on menus. Yet anyone now branding feminists and vegetarians as cranks would themselves be open to the very same insult. Crankdom, as was noted long ago, is not a static concept.

A loyal Orwellian might retort that a being ahead of your time is scant consolation for being unelectable, or unpopular, during it. But it is also true if you accept the entire common sense corpus of your age, you end up not wanting to change anything for fear of stepping out of line. It’s also worth noting that a socialist Labour party, doubtless still replete with its fair share of cranks, won the 1945 election by a landslide.

Nonetheless, Orwell certainly started a trend and, since his time, left-wingers who strayed too far from the conventional wisdom of their epoch soon heard the epithet ‘crank’ ringing in their ears. The Campaign for Nuclear Disarmament in Britain could never shake the crank label. Gandhi was accused of “sheer crankiness” by right-wing historian Paul Johnson. More recently, in 2014, famed Conservative ‘moderate’ Kenneth Clarke urged Greeks not to elect the “cranky extremists” of Syriza. They didn’t listen, although presumably when the putatively left-wing Syriza utterly caved and implemented an even more ruthless austerity programme than the original, Tspiras and co. became normal adults.

Of course the most perfect crank of our age is undoubtedly Jeremy Corbyn. He had all the requisite qualities, personal and political. He was a resolute anti-imperialist and thought – erroneously actually – to be a pacifist. He also made jam, had a hobby of taking photos of manhole covers and possibly wore sandals on occasion.

Yet although he should have been an easy target, the British establishment had to strain every sinew to finally defeat him. He was subject to the most vicious and dishonest character assassination in British political history, relentlessly accused of being a spy, terrorist sympathiser and anti-Semite. Unbelievably, the campaign is still going on even after he was comprehensively defeated at the polls.

The enormous effort that needed to be expended, including within the Labour party, reveals, I think, two important things. One is that throughout the first two decades of the 21^st century, the cranks have been proven right on most important issues and the ‘sensibles’ wrong. The Iraq War was a terrible mistake, Iraq didn’t have – or claim to have – WMD and over two million Iraqis have subsequently died. The economic boom of the first years of the century was revealed to be built on sand, the bursting of which caused immense repercussions we have still living with. Austerity, supported at the time by all major political parties in Britain, but not the crank Left, was not only economically wrong-headed but imposed needless suffering on millions. Quantitative Easing – the main method of dealing with the old economic downturn and the new one – has merely increased inequality and augmented the wealth of the already wealthy. A strategy of confronting Covid-19 based on hoping it would quickly go away has prolonged the economic pain and resulted in innumerable excess deaths.

The role of ‘moderates’, of the sensible mainstream, in the 21^st century has mainly involved trying to plug holes in a dam that is springing leaks in so many places it is impossible to catch up.

The second revelation is that despite cranks residing on the farther reaches of acceptable debate, there is something inherently repellent about their main adversary, the professional politician. Politics is now a career, prepared for by a stint in student politics, followed by a sinecure in PR or the media and the obligatory role as a Spad (special advisor to a minister). It is its own world, sealed off from common experiences. As a result, most politicians, devoid of any ideas of their own, try to toady to what they perceive as public feeling without really understanding it. There is a desperate attempt to appear ordinary or normal, someone you’d want to go for a drink with. The most accomplished at this act – Boris Johnson for instance (who, it will be recalled, originally couldn’t decide whether to be pro or anti-Brexit) – are the most successful politicians.

By the contrast, conviction politicians – Thatcher or Corbyn – might appear obsessive, and thus strange. But because they see politics as fulfilling an ulterior purpose, rather than being something to be immersed in for its own sake, they come across as more human.

Yet, it has to be said there is some truth to Orwell’s accusation that the average socialist adherent is rather “out of touch with common humanity”. Partly this is due to the fact that socialists are intensely interested in politics and changing the world, passions which most people don’t share. But this trait is exacerbated by the fact that both the Corbyn movement in Britain and the Sanders equivalent in the U.S. were overwhelmingly political campaigns. They involved people signing up to organisations dedicated to changing the political sphere. Something they were incredibly successful in doing – in January 2018 the Labour party had 552,000 members.

However, they lacked an analogue in the economic sphere. They weren’t accompanied by a palpable rise in industrial unrest or trade union recruitment, features that invariably occurred in the past – for instance during the Great Depression – when left-wing movements started to take hold.

And, revealingly, the crank insult is rarely, if ever, applied to strikers or organised labour. This is not for reasons of timidity or acquiescence. Workers prepared to fight for their rights have been called ‘the enemy within’, work-shy, harbingers of mob rule or the naïve puppets of far left agitators. They are clearly seen as dangerous. But calling them ‘cranks’ just wouldn’t be taken seriously. And this, in a back-handed way, highlights the fatal flaw in Corbynism. It never overcame the Labour party’s fundamental weakness among private sector workers. And this, remember, was a party specifically founded to advance their interests. The 2019 electoral collapse had other, proximate causes – notably Brexit – but the exclusively ‘political’ character of the Corbyn surge was a major reason it was so ephermeral.

An alliance between the crank Left and a movement of alienated private sector workers would be some people’s worst nightmare.

 

 

 

 

 

 

 

The Nazis and socialism

Various shades of conservatism on both sides of the Atlantic are reawakening to the dangers of something called ‘socialism’. Last month the Trump White House published an assessment of the ‘Opportunity Costs of Socialism’, sternly warning that a pick-up truck is much more expensive in Scandinavia than the US. Coincidentally, it has become a right-wing trope – erupting somewhere on social media every couple of weeks – to point out that the Nazis were really socialists. So not only will socialism crash the economy and make pick-up trucks prohibitively expensive, it also shares as its intellectual kin the most barbaric, genocidal regime in history. All told, better stick with mass exploitation and craven submission to corporate power.

It’s very easy to type five words on a keyboard, no matter how ignorant. But this particular meme has gone a lot further. Last month, senior Conservative MEP Syed Kamall claimed in the European Parliament that Nazism was “a strain of socialism” and a “left-wing ideology”. So I think now it’s high time to take a considered trawl through the historical evidence and sift fact from fiction.

What’s in a Name?

The case that the Nazis were really socialists usually starts and finishes on the fact that they called themselves ‘National Socialists’. Adolf Hitler was the 11^th member of an entity called the German Workers’ Party, which changed its name in 1920 to the National Socialist German Workers’ Party (NSDAP). But its reason for including the word ‘socialist’ was to appeal to working class Germans to whom it had considerable allure – this was only a year after the aborted German Revolution. Still, according to historian, (Samuel W. Mitcham in Why Hitler: The Genesis of the Nazi Reich, p 68), “Hitler did not like the addition of the term ‘Socialist’ but acquiesced because the executive committee thought it might be helpful in attracting workers from the left.”

What is true is that the NSDAP had a socialist wing – or at least a wing that believed in widespread nationalisation. But this faction – represented by Gregor Strasser and initially Josef Goebbels – was decisively defeated in the mid-1920s, when the Nazis were electorally insignificant and years before they came remotely close to power. The occasion was a referendum* on whether to transfer the landed estates of German royalty and princes to the Weimar Republic (the country was a monarchy until 1918). The Social Democrats and Communists were in favour and Strasser and his followers thought the Nazis should be too. He called a meeting of the Northern German Nazis to make sure the party was behind the expropriation drive and to put in place a new, more radical economic programme. According to William L Shirer in The Rise and Fall of the Third Reich:

Hitler was furious. Several of these former rulers had kicked in with contributions to the party. Moreover, a number of big industrialists were beginning to become financially interested in Hitler’s reborn movement precisely because it promised to be effective in combating the Communists, the Socialists and the trade unions. If Strasser and Goebbels got away with their plans, Hitler’s sources of income would immediately dry up. [160-161]

So in February 1926, Hitler called another conference in Bamberg, Southern Germany, which was packed with his supporters. “And at the Fuehrer’s insistence they [Strasser and Goebbels] were forced to capitulate and abandon their programme”.

So the Nazis decisively ended their dalliance with anything resembling ‘socialism’ in 1926.

Some recalcitrant members remained, however. One such was Gregor Strasser’s brother, Otto, who supported nationalization of industry and some strikes called by socialist-supporting trade unions. But, in May 1930, Hitler insisted he recant, accusing him of indulging in ‘democracy and liberalism’. When he refused, he was expelled from the NSDAP.

Otto Strasser responded by forming a ‘Union of Revolutionary National Socialists’, known as the Black Front, which took part in national elections. Tellingly, however, this ‘left-wing’ Nazi rival to the main Nazi movement failed dent Hitler’s support in any way.

The following year, 1931, Hitler began a concerted attempt to court influential business owners who could provide the movement with vital funds. According to Walther Funk, the intermediary between Hitler and business, “The Fuehrer personally stressed time and again during talks with me and industrial leaders to whom I had introduced him, that he was an enemy of the state economy and of the so-called ‘planned economy’ and that he considered free enterprise and competition as absolutely necessary in order to gain the highest possible production.”   

Supporters included Emil Kirdorf, a “union-hating coal baron” from the Ruhr, to whom the Nazis gave a state funeral when he died in 1938, the steel magnate Fritz Thyssen, directors of pharmaceutical conglomerate, I.G. Farben, and several banks. Among the backers were companies that still prosper today such as Deutsche Bank and insurance giant, Allianz.

However, according to Shirer, the identity of these people was a secret, “kept from all but the inner circle around the Leader. The party had to play both sides of the tracks. It had to allow Strasser, Goebbels and the crank Feder to beguile the masses with the cry that the National Socialists were truly ‘socialists’ and against the money barons. On the other hand, money to keep the party going to had to be wheedled out of those who had an ample supply of it.” (181)

In February 1933 – after he had been appointed Chancellor but before Germany’s last multi-party elections the following month – Hitler called a private meeting of well-known industrialists, telling the invited audience that “private enterprise cannot be maintained in the age of democracy; it is conceivable only if the people have a sound idea of authority and personality” (Shirer, p 238). He promised to “eliminate Marxism”. He collected three million marks in donations.

The lesson is that not only were Nazis not socialists but, had they been socialist in any genuine way, they would have remained a complete irrelevancy. In much the same fashion as its precursor, Italian Fascism, German National Socialism had to expunge its socialist side (or confine it to mere rhetoric) in order to win the support of the powerful and get anywhere near power. All that followed – the creation of totalitarian state, the Second World War, the Holocaust – stemmed from the fact that the Nazis were not socialists.

The Nazis in power

When in power, the National Socialists remained true to their (private) word. Hitler abolished trade unions, collective bargaining and the right to strike. A law, known as the ‘Charter of Labour’, was introduced in 1934. According to Shirer, the charter:

… put the worker in his place and raised the employer to his old position of absolute master – subject, of course, to interference by the all-powerful state. The employer became the ‘leader of the enterprise’, the employees the ‘following’ or Gefolgschaft. Paragraph Two of the law set down that ‘the leader of the enterprise makes the decisions for the employees and labourers in matters concerning the enterprise’. And just as in ancient times the lord was supposed to be responsible for the welfare of his subjects so, under Nazi law, was the employer made ‘responsible for the well-being of the employees and labourers’. In return, the law said ‘employees and labourers owe him faithfulness’ – that is, they were to work hard and long, and no back talk or grumbling, even about wages. (327)

Wages were set by ‘labour trustees’ who were appointed by the Labour Front, the organisation that had replaced trade unions. “In practice,” writes Shirer, “they set the rates according to the wishes of the employer – there was no provision for workers even to be consulted on such matters”. Hitler declared himself against annual increases in wage rates – wages were to rise only if performance did.

Unsurprisingly perhaps, the German worker share in the national income fell from 56.9% in 1932 (before the Nazis took power) to 53.6% in 1938. Simultaneously, the share going to capital and business rose from 17.4% to 26.6% (Shirer 328). Nazi anti-capitalism is a complete fiction:

All the propagandists in the Third Reich from Hitler on down were accustomed to rant in their public speeches against the bourgeois and the capitalist and proclaim their solidarity with the worker. But the sober duty of the official statistics, which perhaps few German bothered to make, revealed that the much maligned capitalists, not the workers, benefited the most from Nazi policies. (329)

As the economy became more directed towards war, labour conscription was introduced and workers who left their job or didn’t turn up for work with good reason were fined or imprisoned.

It should be pointed out that, though capitalism was strengthened not overthrown under the Third Reich, the Nazi stance towards the working class actually mimicked in many respects practices under the Communist totalitarian governments. Under Stalin’s Five Year Plan in the Soviet Union, for example, factories kept records of workers’ absenteeism, lateness and shoddy work. “If the worker’s record was poor,” wrote American journalist Eugene Lyons, “he was accused of trying to sabotage the Five Year Plan and if found guilty could be shot or sent to work as forced labour on the Baltic Sea Canal or the Siberian Railway.”

However, what both had in common was an unwavering hostility to an independent labour movement. In many ways, what Nazism was fixated against was workers’ control or syndicalism, which was still a palpable threat in those days – the Spanish Revolution, with its worker-controlled factories, restaurants and barber shops, happened in 1936 – and industrial democracy was implicit in collective labour action such as general strikes. Robert Ley, head of the Nazi Labour Front, proclaimed, “We are all soldiers of labour, amongst whom some command and the others obey. Obedience and responsibility have to count amongst us again … We can’t all be on the captain’s bridge, because then there would be nobody to raise the sails and pull the ropes.”

Nazism and Capitalism

What is still quite startling about Nazism is the degree to which profit-making and capital accumulation were inserted in the very heart of a state-controlled war economy. Nazi extermination camps were privately insured and, as Hannah Arendt pointed out in Eichmann in Jerusalem, famous firms such as I.G. Farben, Krupp and Siemens-Schuckert had plants in the vicinity of Auschwitz and other death camps in which they ‘employed’ slave workers. “Cooperation between the S.S. and the businessmen was excellent,” Arendt noted … “As for working conditions, the idea was clearly to kill through labor … at least 25,000 of the approximately 35,000 Jews who worked for one of the I.G. Farben plants died.” (p 79)

So entwined was the relationship between the Nazis and business, that the Nazis instituted the first privatisation programme in history (sadly that accolade does not belong to Augusto Pinochet or Margaret Thatcher). They called it ‘reprivatisation’ and sold public ownership in a number of firms in the mid-1930s – in sectors such as banking, steel, mining, ship-building and railways. The motivation was both to raise money and to solidify support among business leaders.

No, the Nazis were not socialists. But they did diverge from today’s liberal-capitalist orthodoxy in significant ways. I will examine how in part two of this post.

*The referendum did take place in June 1926. The NSDAP, purged of left-wing ideas, proposed that Jewish immigrants, rather than the princes, be expropriated. Actually, a very large majority voted in favour of expropriation but because of a boycott and a ruling that 50% of the population had to support the ‘yes’ option for it to be valid, nothing happened.

Debt: The Last 30 Years

We are marginally less constipated than before. Ideologically speaking. Thanks in large part to Jeremy Corbyn British politics has begun to move on from the mendacious obsession with public debt being the cause of the last financial crisis (and the harbinger of future ones).

Political conservation has started to appreciate the seriousness of enormous levels of private debt, which was always the elephant in the room. The Bank of England has warned of a ‘spiral of complacency’ about growing household debt, while the IMF has cautioned that the ‘rapid growth in household debt – especially mortgages – can be dangerous’. Anthropologist David Graeber says ‘the household sector is a rolling catastrophe’. Around 17 million Britons have less than £100 in savings.  And with the BoE making noises about raising interest rates from rock bottom levels, there are worries that some mortgage-holders could default, precipitating a US-style sub-prime crisis.

The problem is that all attention is directed at one kind of private debt – personal debt. And while its seriousness should not be minimised there are other sorts of private debt that merit just as much, if not more, concern:

Personal debt is not the most extreme form of private debt

Private debt can be divided into three types – financial sector debt (i.e. banks & insurance companies), corporate debt and personal or household debt. All three have grown exponentially since the start of the 1990s. According to economist Michael Roberts, what he terms ‘global liquidity’, a combination of banks loans, securitized debt and derivatives, mushroomed from 150% of world GDP in 1990 to 350% in 2011. And while in some countries, colossal financial sector debt has declined to a degree following the financial crisis, and household debt levels fell before rising once more, corporate debt, nourished by near zero interest rates, has just snowballed over the last nine years.

According to figures released by management consultants McKinsey in 2015, all forms of private debt have grown since 2007 but corporate debt has increased by double the rate of both household and financial debt, which nonetheless rose but in a more subdued manner than before the crisis (see the graphic in this article). Government debt has also exploded as financial debt was transferred to state coffers. “Nonfinancial corporate debt remains the largest component of overall in the advanced capitalist economies at 113% of GDP,” says Roberts, “compared to 104% for government debt and 90% for household debt.”

The forms that corporate debt takes vary but one of the most common is for companies to use debt to buy back their own shares. This practice, which was illegal in the United States before 1982, increases the firm’s share price in a totally artificial manner, giving the appearance of financial health and success in the marketplace. Frequently, it also personally benefits the corporate executives who authorise it as they are paid partly in stock options. In fact the corporate sector has been the main buyer of US equities since the market meltdown of 2008, engaging in what has been described as ‘the greatest debt-funded buyback spree in history’. It was estimated that in 2017 the largest US companies would spend a record $780 billion on share buy backs, though, in reality, the forecast bonanza has apparently hit a snag.

Or possibly corporate debt takes the form of shareholder loans, the practice by which one company deliberately loads another company that they own (they are the main shareholders) with huge amounts of debt which the captive company is then obliged to pay back at high rates of interest; 15 or 20% for example. The Financial Times recently highlighted the case of Arqiva which owns 9/10ths of the UK’s terrestrial TV transmission networks and, in the three years to June 2016, paid around £750 million in interest to its controlling shareholders, payments financed by borrowing.  It is now £3 billion in debt. And that’s just one company.

Household debt did not cause the 2007-8 Global Financial Crisis

What household debt did was light the touch-paper. The nationwide implosion of the housing market in America after interest rates were raised signalled the demise of all those mortgage backed securities and collateralized debt obligations but the reason it proved so devastating for the US economy and spread the crisis around the world was because of the fatal combination of household debt with gargantuan financial sector and corporate debt. The Global Financial Crisis was sparked in August 2007 (‘the day the world changed’) when French bank BNP Paribas froze its funds because of its exposure to the mortgage backed securities of the US sub-prime market. The problem wasn’t defaulting French mortgage-holders but the effects were being felt by a French bank. BNP was one of three major French banks who were collectively overleveraged to the tune of 237% of French GDP. That level of indebtedness caused the crisis to spread to Europe as hugely indebted, and now effectively insolvent, European banks called in the loans they had made to southern European governments.

Nobody can say with any assurance what the trigger will be for the next financial crisis. It might be heavily indebted US college graduates or UK credit card borrowers or Australian consumers or Dutch mortgage holders (a country which has the most indebted households in the euro area).

But it’s equally possible that the fuse will be lit from another sector of the economy entirely – massively overleveraged corporations being unable to repay their creditors when interest rates rise, for instance. In that case, households will simply be spectators to the unfolding events.

All the focus is on personal debt because it represents a morality play

In Debt: The First 5,000 Years David Graeber points out that in Sanskrit, Aramaic and Hebrew ‘debt’, ‘guilt’ and ‘sin’ are all the same word. In modern German, the word for ‘debt’ – schuld – also means guilt. “If history shows anything,” Graeber writes, “it is that there’s no better way to justify relations founded on violence, to make such relations seem moral, than by reframing them in the language of debt – above all because it immediately makes it seem that it’s the victim who’s doing something wrong.”

The existence of enormous level of personal debt in advanced capitalist countries is a sure sign that the individual freedom these societies claim to uphold is skin deep. In reality, they are founded relations of coercion and control. To be in debt is to have someone’s boot on your neck. In the UK, high rates of personal debt are intimately related to the fact that real wages are 10 per cent lower than a decade ago. Rising personal debt is also strongly correlated to mental health problems like depression and anxiety.

From another perspective, personal debt is the symbol of our fatal addiction to consumerism, the consequence of an all-embracing need to maintain a modern lifestyle, decorated with the latest products, no matter what the cost to ourselves or the environment. Either way, personal debt unmistakably says something about the current state of society – what drives it and who is in control.

Corporate and financial sector debt, by contrast, is not only opaque, it is frightening neutral. Debt has simply become the way of doing business over the last 30 years. Debtors are frequently also creditors and companies may simultaneously indebt themselves and hoard cash. Indeed, increasing ‘leverage’ (to use the technical term) or loading debt onto captive companies (as in the Arqiva case) is often the primary means by which profits are made. No sense of shame or ‘doing something wrong’ attaches to it.

The question that should arise is why the corporate sector – financial and otherwise – has become so addicted to debt? Why is old-fashioned investment in new products or new technologies comparatively shunned?

It is possible to reduce personal debt but corporate debt is far more of an intractable problem

Theoretically it is possible to cut personal debt to more manageable and less dangerous levels.  Ending austerity, strengthening trade unions, instituting rent controls and directing efforts to raising the level of real wages should see the rates of payday loan and credit card debt diminish. I say theoretically because, interestingly, some of the highest quantities of personal debt, as a proportion of GDP, are in Scandinavian countries – nations that have impressive rates of trade union membership, collective bargaining and high personal incomes. However, those in debt in Nordic countries tend to be higher earners. In the US and UK, by contrast, personal debt often afflicts people much lower down the income scale – people who are much more likely to default given a slight change in the economic winds.

Corporate debt is a different matter entirely. The massive government bail outs of 2008 only succeeded in transferring debt from the financial sector to the state and, even then, only denting marginally the indebtedness of the banks. Corporations, whose debt had risen markedly over the previous twenty years, merely took advantage of the lower interest rate environment, to become even more indebted.

The writer and broadcaster Paul Mason says governments have to do something ‘clear and progressive about debts’. He advocates a policy of ‘financial repression’ – that is stimulating inflation and holding interest rates below the rate of inflation for 10 or 15 years as a way of writing off debt. But we can see the problems that a mild rise in the rate of inflation to the historically low level of 3% is currently causing people in the UK, with wages unable to catch up. Deliberately stoking inflation for a decade or more would surely precipitate the household debt defaults that so many people are warning about – inflation would erode the total amount of people’s debt but interest payments would still need to be met as real incomes plummeted. And if interest rates are below inflation – as they are now – the incentive for corporations to take on more debt is still there.

It is difficult to imagine how this system can gradually and progressively resolve its problems without provoking the economic collapse that everyone is so desperate to avoid.

Addendum

It's probably worth re-emphasising that when I speak about corporate debt, I'm not referring to the borrowing a company naturally needs to do to keep going and expand its operations. See - https://www.touchfinancial.co.uk/knowledge-centre/blog/4-reasons-why-successful-businesses-borrow-money

What's happening now is massive borrowing to either appear successful (share buy backs) or invest in debt to make more money. They're nothing to do with how capitalism is meant to function in the textbooks.


 

What about the workers? Jeremy Corbyn and the private sector

Here's a disturbing fact. In May’s UK General Election, if only workers in the private sector had been allowed to vote, the Conservatives wouldn’t have just scraped a majority, they would have absolutely romped home. Labour got a paltry 26% of the vote (and the Tories 43%). How is this possible for a party that was created, at the start of the last century, as a party of private sector workers? And will the Blairite nemesis, Jeremy Corbyn, be able do anything about it?

To understand Labour’s steady diminution on this issue and the fact people manage to maintain a straight face when the Conservatives now present themselves as a ‘workers’ party’, you have to look at history and the Labour party’s gradual surrender to the forces of corporate Britain and the inexorable decline of organised labour.

A brief of history of Labour and work

When Labour was formed in 1900 it was as a political party representing the interests of trade unions - with a socialist wing attached. Given that Britain at the time was a resolutely industrial society, trade unions could justifiably claim to represent something approaching a majority of society. The socialist wing of the Labour Party became dominant with the adoption of the party’s Clause 4 constitution committing it to ‘common ownership’ in 1918. The fact that the Labour party was officially socialist did not mean that it was about to institute socialism. In the late 1920s and early ‘30s when it finally got it hands on power of some sort, Labour was spectacularly conservative, supporting austerity and welfare cuts. But there was nevertheless an assumption that the current autocratic organisation of private sector work (there wasn’t a public sector to speak of at the time) was living on borrowed time.

It was only after the Second World War, when Labour was elected with a massive majority, its so-called ‘High Noon’, that the party could make the kind of society it desired a reality and change the character of work in the private sector. Writing in 1947 the American political scientist, Robert Dahl, said there were two contradictory schools of economic thought about which way Labour should go: “one advocating central control of the economy in the hands of the state, and the other advocating workers’ control, where “workers will no longer be merely passive victims of the productive process, but direct participants in the control of productive enterprises”. The Labour government decisively choose the first option: industry was controlled by civil servants and appointed managers. Ownership may have changed but the new organisation merely mimicked the old, autocratic form of private sector organisation. In archive footage from the film, The Spirit of ’45, one miner laments that the ‘same tyrants’ remained in charge after nationalisation.

Though few realised it at the time, the roots of the Labour party’s alienation from private sector workers were laid here. But for a long time Labour’s model of nationalisation held sway. For 30 years the economy was resolutely mixed; even the travel agent Thomas Cook was in state hands. The interests of workers were thought to be sufficiently represented by strong trade unions, either in the now much larger public sector or the private sector.

This changed utterly with the arrival of Margaret Thatcher. The power of trade unions was destroyed and state industries privatised. In retrospect, talk of a property-owning democracy now feels like a transparent fraud, but Thatcher drove a tank through the mixed economy, post-war consensus - helped enormously by fact that the City of London, media magnates and other owners of private sector capital backed her the hilt.

The reaction of Labour was first to resist this new dispensation, then reluctantly accept some of it (Labour under Neil Kinnock was still in favour of some ‘social ownership), then to wholeheartedly embrace it all under Tony Blair. The Labour Left, of which Jeremy Corbyn was a part, merely defended the old approach from these multiple onslaughts.

New Labour and ‘the big end of town’

Tony Blair’s genius in winning elections was entirely the product of convincing the City of London and media moguls like Murdoch and Richard Desmond that New Labour wouldn’t interfere with their power. Originally interested in Will Hutton’s stakeholder democracy idea for the running of companies, Labour backed down the moment they discovered ‘the big end of town’ didn’t like it. The result was that New Labour’s view of the private sector – a part of the economy employing about two-thirds of society – was entirely determined by the desires and interests of those who owned those companies. Yes, the Labour government made it slightly easier to get trade union recognition, but, in a complete reversal of what the Labour party was originally about, the assumption became entrenched that the interests of the owners of companies and those that worked for them were identical. Both wanted ‘success’ and, in practice, what that entailed was left to the owners to define. To even whisper about nationalisation, or, heaven forbid, workers’ control, was to immediately place yourself beyond the pale.

When Ed Miliband lost May’s general election, the idea instantly sprang up amongst the Blairites that a primary reason was that he was anti-business. Yvette ‘Work Capability Assessment’ Cooper recalled going to a CBI conference after the election and being confronted by a businesswoman who told her, ‘You pushed me away. I felt like you did not want my vote. My staff felt the same.’” Note the location and the trademark assumption that that interests of owners of capital and employees were indistinguishable, although only the owner gets to articulate them. Added to this was the specious and, politically dumb, assumption that wealth creation was a gift generously bestowed by the owners of businesses and entrepreneurs.

But though the Labour Left may not have liked these associations or conclusions, it had very little to say about the private sector. This was, now that the trade unions in the private sector had been decimated, decisively ‘enemy territory’. The public sector, however, palpably needed defending, first from the import of private sector techniques under New Labour, and then from austerity. This turn inwards was disastrous. The envy that has underpinned hostility towards benefit claimants stems in part from a perception that private sector workers feel abandoned by an official Left that doesn’t seem remotely interested in them, or their problems. With the desertion of the Left, the private sector is perceived as an homogeneous mass, not the locus of conflicting interests, desires and outright coercion that it is.

All the new thinking about how private sector businesses should be organised has come from outside the Labour party. American economist, Richard Wolff, is trying to forge a social movement in favour of worker self-directed enterprises. In the UK, the authors of the influential book, The Spirit Level, Kate Pickett and Richard Wilkinson (who have backed Corbyn), advocate the development of workplace democracy, along the lines of the famous Mondragon group of cooperatives, throughout the economy.

The major stumbling block, sturdily erected by New Labour, is that it would be suicidal to focus on anything but the success of private sector companies, for the sake of workers as much as anybody. But the obsession with conflating success with the interests of owners, though deregulation and tax cuts, has led to its complete opposite – an endless financial crisis and insipid economic growth.

Beyond neo-syndicalism

However, before advocating that a Corbyn-led Labour party embraces a neo-syndicalism, it is necessary to remind ourselves that the nature of work has dramatically changed in the last 40 years. In the 1970s, it could be said that workers were still essential to the way production was carried out, and to ignore them was to invite disaster. Workers’ control was possible and, in some places, implicitly happened. Forty years later, the UK is largely a de-industrialised country and workers live with the ever-present threat of abandonment. If they are not necessary to produce profit, they won’t be used. Around 15% of UK workers are now self-employed anyway. Moreover, whereas manual labour was a source of pride and identity, today work is often characterised by just going through the motions to get a wage. According to a 2013 US Gallop survey, seven out of ten workers are ‘actively disengaged’ from their jobs. In Britain, 37 per cent of employees think their jobs are meaningless. Democracy at work won’t alter the fact that many people want to get away from their jobs, to many they are a necessary evil.

This is where an unconditional basic income could come in. A basic income could enable activities unrelated to work but vital for a flourishing society – such child-rearing, caring or artistic pursuits, but also facilitate small-scale economic activity that could breathe life into areas that the conventional corporate economy has left behind. The formation of thousands of cooperatives, social enterprises and other small businesses would become possible if they did not have to maximise profit. Both as an economic strategy and a way for the Labour Left to escape from its public sector ghetto, a basic income could be invaluable.