Flags and Fascism

If you want an indication of the madness into which British elite society has descended in the last few years, just consider its attitudes to two flags – the Ukrainian and the Palestinian.

Following the Russian invasion of Ukraine, the Ukrainian flag fluttered from public buildings across the land, alongside the Union Jack. It became almost treasonous – and a sign of a depraved fascistic mindset – not to unconditionally support Ukraine and the sending of whatever weapons it requested (including cluster bombs) for its fight against the indisputably evil Vladimir Putin.

Now, following the genocidal Israeli bombardment of Gaza, the completely opposite mentality reigns. Displaying the Palestinian flag is semi-illegal and a sign, according to our government and the ‘opposition’, of hate-filled venom and support for terrorism.

This is despite the fact that, in the words of British veteran Joe Glenton, the two cases, “they’re not exactly the same, but they are similar. There are people resisting an occupation.”

To explain the flagrant double standards, it’s easiest to look at Britain’s inveterate ‘how high’ Atlanticism, which means it automatically does whatever it thinks the US wants. But there are deeper, historical reasons – to do with Empire and who is considered worthy of support and who isn’t – onto which we should shine a light.

Universal human rights

In January 1941, when trying to get Congress to approve his lend-lease proposals, Franklin Roosevelt set out what would become war aims (even though it would be almost a year before the US entered WW2 and then explicitly because of Pearl Harbor). “Freedom,” he said “means the supremacy of human rights everywhere. Our support goes to those who struggle to gain those rights or to keep them.”

The speech formed the foundation of the famous Atlantic Charter (released in August 1941 still months before the US entered the war) whose third point emphasised self-determination to those deprived of it.

This set off a torrent of speculation that the right to self-determination should apply not only to those suffering under Nazi and Fascist tyranny but to the hundreds of millions of subjects of western empires across the world. Clearly they didn’t live under governments of their choosing. What about their freedom?

Winston Churchill, at that stage, in Orwell’s phrase “posing as a democrat”, went to great pains to make sure people didn’t lapse into error on this matter. The charter’s third point, he told the House of Commons, only pertained to the restoration of self-government to the states and nations of Europe “now under Nazi yoke”.

A lot of water has passed under the bridge since these words were uttered – including (often involuntary) decolonisation. But the attitude behind them, as shown by the black and white reactions to Gaza and Ukraine, has proved remarkably resilient.

Ukraine is an example of the unbearable sight of Europeans suffering from war crimes and human rights abuses. Gazans, clearly, don’t merit similar sympathy despite their plight being much worse. In fact, they are perpetrators, not really genuine victims at all. And to go back to the Churchillian distinction, you can’t restore self-determination to Palestinians because they’ve never actually enjoyed it – not under the British mandate, not under post-war Egyptian control, and certainly not under Israeli occupation since 1967.

People like us

This aliveness of this attitude can be seen in a myriad of ways. Ukrainian refugees are treated with the understanding due to people who we can, there but for fortune, imagine being. Refugees from the Middle East, by contrast, are seen as dangerous interlopers who we must keep out – either from Britain or continental Europe – by any means necessary. This ‘people like us’ mentality can even be discerned in something as apparently innocent as the inclusion of Israel and Australia in the Eurovision song contest.

In recent years, it has been common to suggest that post-Brexit Britain is in danger of “creeping fascism”. But the fascist temptation is, in my opinion, equally strong in both Britain and in the European Union from which it so tortuously parted company from just three years ago.  While pro-Palestinian demonstrations are denounced as “hate marchers” by Tory politicians in Britain, in Germany and France they are simply banned and Israeli Jews protesting against the slaughter are arrested.

Fascism is not Nazism

“Much against their will the British governing class have been forced into the anti-Hitler position,” George Orwell noted on the eve of the Second World War. These days, for the wealthy and powerful, the same impediments to realising your heart’s desire don’t exist. But I don’t want to suggest that a revitalised Nazism is the danger. The master race ideology, later annihilationist insanity, and the impulse to empire-build on the European continent, strictly limit its appeal. But classical Fascism – of the Italian vintage – is a different matter.

 

It’s little remembered that liberals, when forced in the 1920s to choose between Mussolini’s black-shirts and the workers’ movement they physically smashed, enthusiastically plumped for the former. And once in power, Mussolini’s economic policy, in its initial years, followed some eerily familiar patterns:

·        Fascism embraced austerity in the form of cuts to welfare spending and slimming down the civil service (reduced by 65,000 in 1923 alone). Just as in 21^st century Britain and Europe, austerity has been imposed for more than a decade with the exception of – just as with Mussolini – skyrocketing military spending.

·        Fascism increased VAT, a regressive tax because everyone – billionaire and disability claimant – pays the same. In Britain, VAT stood at 8% in 1979. Now it is 20%. Since 2008 around 80% of the member-states of the EU have increased their VAT rates. Mussolini also reduced tax on corporations. In Britain corporation tax stands at 25%. It was 51% in 1981. ‘Social Democrats’ in Europe have likewise sought to ‘stimulate’ growth through corporate tax cuts.

·        Fascism put technocrats in full charge of economic policy. In its first three years of power, liberal economist Alberto de Stefani, formerly of the Centre party, was granted “unprecedented  authority” as minister of finance. Today, the European Central Bank now oversees EU economic policy, ensuring the debt of member-states doesn’t rise above acceptable levels.  And the ECB and the European Commission have no compunction about imposing technocratic governors like Mario Draghi on recalcitrant countries. In non-EU Britain, the central bank – the Bank of England – is now ‘independent of political control’. In fact, a key neo-liberal reform across the world has been to remove economic decision-making from the hands of politicians and give it to unelected technocrats.

·        Fascism privatised state enterprises. Between 1922 and 1925, the fascist government implemented a “large-scale privatisation policy”, selling most of Italy’s state-owned telephone networks, for example. The aim was to balance the budget, a “core objective of fascist economic policy in its first phase”. Privatisation of utilities such as telephones and water was a signature policy of Thatcher in Britain and embraced by her successors. Since the 1980s, the privatisation mania has spread around the world, including to Europe.

·        Fascism was not initially anti-Semitic or at least no more so than other western ‘democracies’. It implemented policies of confiscating Jewish property and rounding up Jews as a result of its alliance with Nazi Germany but this attitude was not home-grown.  At first, being Jewish and Fascist was not some kind of hideous non-sequitur.  Fascism was, however, inherently racist towards non-white people from the get-go, employing poison gas on a wide scale in its 1936 invasion of Ethiopia, for example.

This indicates that elite liberalism of the kind represented by both Britain and the EU (which means liberties for the elite) is not, in principle, incompatible with Fascism. This is not to say everyone to the Right of Jeremy Corbyn is a Fascist itching to remove the mask, but many people will tolerate it if the only alternative is seen as worse  – for example some sort of socialism, which is regarded as far more inimical to freedom.

For instance, the election of the far-right Georgia Meloni in Italy – in her youth a member of a neo-Fascist party – was seen was by many as the trigger for a period of unbridled conflict with the EU. But it hasn’t turned out that way. Her “relatively conservative 2023 Budget law,” notes one assessment of Meloni’s first year in office, “quelled investors’ fears.” Maybe, in truth, if you are an investor (or a CEO, or someone of ‘high net worth’), there isn’t much to be afraid of.

The danger of Europeanism

Much-vaunted Europeanism is not an antidote to this. It can easily degenerate into the idea that we must protect our European culture and freedoms from outsiders, usually of a darker skin tone, who seek to destroy it. And, when all is said and done, the EU is a trading bloc for Europe. If you’re not lucky enough to live there – and the vast majority of the world’s population obviously aren’t – well, that’s tough luck.

Culture can easily serve as a synonym for the way race was used in decades gone by. For example, justifying the invasion of Abyssinia in 1936, Mussolini said he was putting an end to slavery in a “barbaric pseudo-state” and bringing the benefits of western civilisation. And slavery certainly existed under Haile Selassie. Naturally this civilising mission entailed wide-scale extermination of the native population.

Looking at the way the war on terror has been prosecuted in places like Iraq, Syria and Libya there are clear echoes in the way the immense cost to the indigenous populations of imposing allegedly morally superior regimes – or in the case of Libya no regime at all – is downplayed in a manner that simply wouldn’t happen if they were white and European.

All this is supremely relevant because the government our governments are giving carte blanche – and weapons – to, to bomb hospitals and commit ethnic cleansing is basically Fascist. In a letter to the New York Times in 1948, Albert Einstein and Hannah Arendt, among others, claimed that Tnat Haherut (the Freedom party) in the newly-created state of Israel was “closely akin in its organisation, methods, political philosophy and social appeal to the Nazi and Fascist parties”. Tnat Haherut was the forerunner of Benjamin Netanyahu’s Likud party. He is unquestionably “nationalist, genocidal, chauvinistic” and his coalition government, the most right-wing in the country’s history, contains out and out Fascists. One, Bezalel Smotrich, identifies as a “fascist homophobe”, lives in an illegal settlement, and denies that the Palestinian people even exist. Another, national security minister Ben-Gvir, was convicted in Israel of inciting racism and supporting a terrorist organisation.

Netanyahu’s government is, in classic fascist style, attacking the independence of the judiciary and is brutally cracking down on free speech among Israelis.

There are internal conflicts. The government contains a self-confessed “fascist homophobe” but the Israeli Defence Force, which is leading the attack on Gaza, proclaims a progressive attitude to LGBTQIA+ people unusual among the world’s militaries. But just as in the Ukraine, where the support for the Nazi Azov Battalion has gone hand in hand with allegedly advancing the rights of sexual minorities, these apparently intractable contradictions are not insurmountable.

Bringing it all Back Home

The classic ingredients of fascism – extra-parliamentary violence against the Left, cracking down on free speech, corporate-friendly economic policies, war preparation, and blatant racism – are already present in the UK and Europe, ready to be assembled into a coherent whole. Anyone who doesn’t the see connection between support for genocide abroad what happens domestically is engaging a fatal delusion.

Manchester United and the malaise of our time?

 

What do Manchester United and English water companies have in common? Not a great deal you might say beyond being not very successful at what they do. Once a football titan, Man U is now a has-been. Twice a recent winner of the Champions League and regular semi-finalist, the club now struggles to get out of the competition’s group stage. The winner of 13 Premier League titles since 1992, it now cannot compete with its rivals across the city of Manchester, not to mention numerous other clubs.

English water companies, meanwhile, are notorious for not doing their basic job of ensuring clean water in rivers and seas. Despite it being a legal requirement, they have not invested in infrastructure, preferring to pay out enormous dividends to their investors. And the real level of the pollution may be much higher than the firms admit.

But delve a bit deeper and there is something else that unites these two apparently disparate ‘businesses’*. They are both creatures of private equity (PE). Private equity is where a firm is taken off the stock market by a takeover. The new owners borrow the money to acquire the target company in what is called a ‘leveraged buyout’, in the process loading it down with massive debt. Once acquired, along with interest payments on the debt, large dividends are prioritised, either solely for the owners or for their investors/clients.

A family club

Manchester United, for example, had been a public limited firm (i.e. anyone could buy shares in it) from 1991 until 2005 when it was taken private by the Glazer family in a £790m leveraged buyout. Virtually debt-free since 1931, the club’s net debt now stands at £500m and has been much higher. Man U pays over £18m in annual interest on that debt and, unusually for a football club, £32m in yearly dividend payments to the Glazers.

Private Equity ownership is now more common for football clubs (think of Chelsea) but Manchester United provides an opportunity to observe the effect of PE ownership over time – and the picture is not a good one. This is not a financial crisis, which football clubs are especially susceptible to, but the mature consequence of a particular type of financial regime. No wonder fans are desperate for the Glazers to sell up.

Now consider the ten English water companies, all but three of whom have been taken off the stock market by their private equity owners. The commonalities with Manchester United are striking. When Thatcher privatised the ‘industry’ in 1989, it had its existing £5bn debt written off. Since then the debt pile has mushroomed to £60bn. The debt of the largest water company, Thames Water, rose from £3.4bn to £10.8 billion after it was acquired by Australian investment bank, Macquarie, in 2007 and now the firm is in danger of bankruptcy. Since privatisation, over £70bn in dividends has been paid out while bills have increased by 40%, while increases of a similar scale are forecast to deal with the sewage spills that have been allowed to happen.

In either case, what you might think of as the primary function – winning trophies or ensuring clean water – has taken a back seat in favour of maximising returns to the owners.

‘Public’ versus Private capitalism

Maximising returns, you might say, is simply what capitalism does and you’re not wrong as Walter from The Big Lebowski would doubtless attest. However, as English academic Carolyn Sissoko argues, the ‘old fashioned’ way of maximising returns through ‘public’ corporations at least sometimes had a collateral benefit in the shape of capital investment leading to products that people wanted to buy. What happens under private equity capitalism is an entirely valueless process in which the only beneficiaries are extremely rich people becoming even richer. Actually it’s worse than that. Private Equity destroys value for everyone else – consumers, workers, supporters, target companies – apart from the owners who make out like bandits.  As Sissoko puts it:

Whereas the corporate form is a win-win for the economy when it is used to facilitate the raising of funds for large projects that could not otherwise by completed such as railroads or trans-oceanic cables, the corporate form is transformed into a win-lose for the economy when it is used to impose huge debt burdens on otherwise successful corporations.

And this particular form of capitalism is on the march. According to Sissoko, private equity now controls more than 10% of the US stock market, up from 0% 40 years ago. And she says it is “positioned to continue displacing the public corporate form at a rapid pace”.

Where America leads, Britain dutifully follows and PE on these shores is, in the description of advertising sultan Martin Sorrell, “rampant”. Supermarkets such as Morrisons and Asda are PE-owned as was Debenhams before its demise. And in addition to water companies, many care homes have been taken over by private equity firms.

It is important to stress here that the critics of PE are not merely saying the practice is perverting organisations that have – or should have – a social purpose at their heart. It is doing that obviously but by loading down for-profit companies with huge debt – procured in order to take them over – PE is, in a supreme effort of self-destruction, warping capitalism itself. The frighteningly large level of global corporate debt, which has increased by double the rate of personal and financial debt since 2007 (which have also risen exponentially) can be attributed, at least in part, to the modus operandi of private equity. And while this debt mountain may have been manageable in the context of rock-bottom interest rates, as rates have risen, the debt-ridden concoctions of PE are – as shown by the travails of Thames Water – becoming more and more exposed.

No paradox

This is not a new problem though one that hasn’t been around for a while. In the 19^th century, Karl Marx bemoaned the existence of ‘usury capital’ – money lent purely to maximise the interest paid to the lender. This was in contrast to ‘industrial capital’ which had a social purpose in that it purchased shares in – and thus financed – enterprises which made new products or changed the way they were produced. The former, he said, “does not alter the mode of production, but attaches itself as a parasite and makes it miserable. It sucks its blood, kills its nerve, and compels reproduction to proceed under even more disheartening conditions.”

For usury capital in the Victorian age, read Private Equity today.

Brett Christophers, the Sweden-based academic and author of the exposé of PE, Our Lives in their Portfolios, has previously noted the interesting fact that Adam Smith – the darling of the Right and father of market economics and Marx – the pre-eminent left-wing critic of capitalism – shared “the belief that it was entirely possible for an activity to be revenue- and profit-generative without actually contributing to the creation of value. There was no paradox.”

And we are now in an era where value, once again, is not being created. As contemporary economist Michael Hudson has documented, PE is just one of several ways that ‘activist shareholders’, hedge funds and banks have, since the 1980s, increased looked upon public listed companies as cash cows to be looted regardless of the long-term consequences. Illegal until the Thatcher and Reagan eras, share buy-backs are now commonplace for corporations. In the US, Apple, IBM, Exxon Mobil, and Proctor & Gamble are some of the most famous exponents. In the UK, recent practitioners include BP, Shell, Diageo (Guinness, Smirnoff etc.), HSBC, and Unilever.

Share buy-backs are often undertaken under pressure from large shareholders and the company will, not infrequently, swallow a “poison pill” (in Hudson’s words), placing itself in severe debt to purchase its own stock. The effect of a share buy-back is to reduce the overall number of a company’s shares, thereby increasing capital gains and dividend pay outs to its existing shareholders. But its side-effect is to shrink the amount of capital the company has to invest in research and development and growing its own business.

But some companies, says Hudson, have stubbornly resisted the trend and concentrated on building up their business. He cites the example of Google, which, at least in its early days, aimed to use “corporate profits to expand the business rather than giving quick hit-and-run returns to the wealthiest One Percent.”**

Capitalism will eat itself

But this highlights a fatal flaw in the arguments of those who criticise private equity – and kindred financial innovations – for subverting capitalism. Google may have defied the financial bloodsuckers and concentrated on R&D but the effect of this, although good for Google’s health as a business (it’s worth over $1 trillion now apparently), cannot be classed as beneficial for society as a whole. Its innovations have consisted in myriad ways to beguile the attention-spans of billions of people so that they can be exposed to more advertising. If this is a “win-win”, in Sissoko’s description, I think we need to re-define what we mean by winning.

Google is also an intimate part of the whole Big Tech social media revolution which, because it is founded on getting people to compare themselves to others, is having a corroding effect on mental health. From 2018 to 2023, Norway, for example, fell from 3^rd place in the world happiness league table to seventh because of a decline among its young people. And – an assiduously cultivated – addiction to social media also certainly lies behind that.

Likewise, if oil companies want to buy back their own shares rather than putting all available resources into drilling for oil and gas deposits, thereby intensifying global warming, why should we try to talk them out of it?

Why, this time around, should we be the ones – in erstwhile Keynesian fashion – to ‘save capitalism from itself’?

It is a good question.

To be continued

* H/T to a friend who pointed out the link

** Quote from Hudson’s Killing the Host which is well worth reading

Waking up to Sonny and Cher again

In what I suppose can be classified an example of irony, they keep repeating Groundhog Day on TV. But in order to live in Bill Murray’s head and experience the same day over and over again you don’t have to switch on ITV4. You just have to reside in Britain and pay the barest attention to politics.

The latest example of the recurrent waking nightmare comes in the form of the Daily Mail demanding (in the person of columnist Andrew Pierce who’s also a regular on Good Morning Britain) action against “an army of shirkers” on sickness benefits “which the British taxpayers are footing the bill for”.

According to the Mail “a senior government source” only a million of the 2.4 million people on universal credit or ESA and not required to carry out work-related activity are “so disabled they are incapable of doing any work”.

If this rings any bells, it might be because of the 2007 ‘independent’ report by former investment banker David Freud – commissioned by Tony Blair just before he left office – which concluded that the 2.68 million people then on Incapacity Benefit should be reduced by 1 million.

Despite Freud getting “his numbers wrong” (he only looked at recent claimants, not long-term ones), his eponymous report became holy writ for different governments. Its thinking was at the heart of the Work Capability Assessment (WCA) – the “functional”, non-medical test for all Incapacity Benefit claimants introduced by Labour in 2008. The WCA was founded on deliberately ignoring medical history and the opinions of doctors.

Although it was Labour’s brainchild, the Conservative/Lib Dem coalition found the WCA very much to their liking when they assumed office in 2010. In fact, Freud switched sides – if he had ever had a side beyond that of the rich – becoming a junior minister in the Cameron government.

Sick consensus

Judged in terms of the amount of sheer human misery the WCA has generated – it was revealed in 2017 that the number of disabled claimants attempting suicide had doubled in its first nine years  – I think the assessment has no equal among post-war domestic government policies.

There is no reason to think, by the way, that the current moral panic over work-shy fakers is any more grounded in reality than Freud’s report was. As a result of Covid, lockdown and the near collapse of the NHS, Britain is a much sicker nation. But these factors will be completely ignored by propagandists eager to replicate past tricks.

But the depressing reality is that these tricks work – in the sense of guiding the ‘national conversation’ in a certain direction. Or, to be more exact, returning that conversation to the lines it took between 2006 and 2015. Welcome to Groundhog Day politics.

Sir Kier Starmer’s Labour party, for example, has signalled that it is right behind the government’s approach to sickness benefit claimants. In January, in a speech delivered at Iain Duncan Smith’s think-tank (now there’s symbolism for you), then shadow Work and Pensions secretary, Jonathan Ashworth, decried the “the huge economic cost” and the “the increased health-related benefit bill” the taxpayer is lumbered with as a result of severely disabled people not getting jobs. Ashworth was referring to claimants in the ESA Support Group – exactly those who, according to the “senior government source” with the ear of the Mail, are not so disabled they are incapable of any work. I think you call it being on the same page.

Being there

But in the brief interregnum between 2015 and 2019, then Labour leader Jeremy Corbyn was definitely not on the same page. In fact he was reading an entirely different book. Centrist Starmer fans love to claim that while Corbyn was leading an ineffectual protest movement, the very serious Sir Kier is determined to actually win an election and make a difference by being in power. The first part is very likely to happen.

However, discounting for a moment that sabotage from within his own party may have prevented Corbyn from becoming Prime Minister in the summer of 2017, it is interesting to note the degree to which he yanked politics in a more humane direction simply by being there; by being leader of the opposition for four years

For example, I don’t think it’s a coincidence that the percentage of Universal Credit claimants sanctioned fell from 9% in 2015 to 3% in 2019, the exact period of Corbyn’s tenure. With him safely out of the way, ‘Boris’ Johnson’s “way to work” policy severely intensified the sanctions regime in 2022.

In 2016, with Corbyn’s Labour committed to scrapping the Work Capability Assessment, the government eased WCA conditions, excusing those with severe conditions from reassessment. By contrast, with the putative opposition now reading from the same hymn sheet, the government is planning to tighten the fitness to work test – by removing lack of bladder or bowel control or the inability to access an outside location from the list of “descriptors” used in the assessment.

It’s remarkable just how many U-turns Corbyn – whose leadership was under almost permanent siege from within – did force the government to make. And these were not all extorted when the government was enfeebled after losing its majority in the 2017 election. Many happened before that.

That as Chancellor under Johnson Rishi Sunak could signal “a decisive end to austerity” had a lot to do with the fact that Corbyn implacably opposed austerity from day one of his leadership. Indeed, that’s why he was elected by the Labour membership. He was also integral to forcing the original austerian, George Osborne, to beat an embarrassing retreat on proposed tax credit cuts.

Now, by contrast, with Starmer’s Labour committed to abiding by Tory spending plans, the renewed austerity earmarked to begin in 2025, will happen regardless of which party wins the next GE. Any momentum behind a campaign to abolish the Tories’ two child tax credit cap has been asphyxiated  by Starmer promising to keep it – one of the many “hard choices” (the phrase parrots Hillary Clinton) he has pledged to make if he enters Downing Street.

This pattern has been replicated across the policy spectrum – from taxes on the super-rich, to the treatment of refugees, from the powers of the security state over citizens, to the disavowal of public ownership of utilities. Corbyn shot holes in pre-2015 cross-party mono-politics – extracting some, not insignificant, concessions – while Starmer has methodically rebuilt the ramparts.

Iron Man

To be fair to Sir Kier he does have a stellar record on U-turns. Unfortunately, they all apply to Labour’s own programme – the social-democratic policies that got him elected as leader but which he has systemically discarded in favour of enervated third-term Blairism.

Corbyn’s mere presence shifted British politics slightly to the Left. His successor has used his position to return it to the sterile trajectory it took before the unexpected elevation of the MP for Islington North. And by stopping Corbyn from even standing again as a Labour candidate – an act with no precedent in British political history – to ensure that that fleeting effusion of hope never recurs.

Regardless of whether Starmer wins the next election or not, that’s his role.