Come you Masters of War ... I'm just want you to know I can't see through your masks

The Peter Jackson edited Get Back Beatles documentary is a fascinating insight into the way the most famous band in the world worked together a year before splitting up for good. It forces a revision of the idea that their rehearsals were marked by a simmering acrimony as suggested by the contemporary – and now suppressed – film Let It Be, which was based on the same footage. The much longer Jackson compiled film suggests they actually got on quite well, despite George Harrison flouncing off at one point. We see the Beatles working as a group on songs – such as Harrison’s 'All Things Must Pass' and Lennon’s 'Gimme Some Truth' – that would later become some of their authors’ most famous solo efforts.

It’s easy to forget you are watching fly on the wall footage that is over half a century old. And some of the most innocuous scenes, on closer inspection, reveal their age. Take the debate in the film over the idea ؘ– proposed by original filmmaker Michael Lindsay-Hogg – that the Beatles should hire a ship to take them to Libya where they would perform in a Roman amphitheatre on the coast (the Get Back sessions were meant to prepare for a TV performance which would eventually morph into the rooftop concert). “How are you going to get a ship in a couple of days?” asks Ringo Starr. “We got the American Navy for How I Won the War” says John Lennon, a reference to a 1967 film he acted in. To which Starr responds, “Yes but they were passing by and you only got them for a few hours”. Cue images from the film of the actors disembarking from a D-Day style landing craft.

Toy Story

To utilize a popular phrase, that could never happen nowadays. Something that is made painfully evident from the documentary Theaters of War which shows how the US military now meticulously controls the content of films and TV programmes, to the extent of insisting on line by line script changes to make sure they appear in a desirable light. In 2023, the PR savvy U.S. Navy would never allow their ‘toys’ to be used in a film as subversive as How I Won the War. Director Richard Lester said the film was an “anti-anti-war film” in that it portrayed war as intrinsically hostile to humanity itself rather than just being against the war crimes of the other side. The plot shows the battalion coming to the conclusion they have to kill their commanding officer as his incompetence is leading them to their deaths (unfortunately they don’t and it does). The effect is rather muted by the fact that he is played by Michael Crawford, later to become famous as Frank Spencer in Some Mothers Do ‘Ave ‘Em (although to be fair people wanted to kill him too).

According to Theaters of War, thanks to incredibly persistent Freedom of Information requests, it’s clear that “thousands upon thousands” of films and TV shows have been “rewritten at script level” by the Pentagon and the CIA. If the filmmakers want military cooperation – access to all those aircraft carriers, fighter jets and troop extras – they have to hand over their entire script for vetting. If they don’t, they don’t get to use the military equipment, which is usually essential for box office success. If they do agree, they have to sign a contract and the Pentagon “are effectively like another producer”.

This ‘help’ is most obvious in blockbuster movies like Top Gun (which according to the Pentagon “completed rehabilitation of the military’s image which had been savaged by the Vietnam War”) and its 2021 sequel, Pearl Harbor, or The Hunt for Red October. And it’s evident in TV series like 24 and Homeland which bear the hallmarks of the CIA’s decision to follow the Pentagon’s lead and open an office to liaise with television and cinema in 1996.

The Pentagon Universe

The national security state is also integral to the greatest ‘cinematic’ innovation of this century – super hero movies. The original script for Iron Man, for example, had its hero, Tony Stark, battling against the arms industry. But by the time the film went into production this had entirely flipped. In the actual 2008 film, he inherits his father’s arms business and the subsequent franchise is “an outright celebration of the arms industry”.

In fact, super hero movies like Man of Steel or Captain Marvel are the perfect advertisement for new military ‘toys’. And the Transformers franchise is little more than a showcase for new weapons. Until 1988, rules stated that the Department of Defense should only help films achieve “authenticity” and “dignity”. Subsequently, however, these were enlarged to allow promotion of “public understanding”, help with recruitment and support of government policy.

And this mission creep has had tangible effects. Captain Marvel was “a recruiting bonanza, a vehicle for the Air Force to reach young women”, channelling, according to its star, Brie Larson, “the spirit of the Air Force”. 2021’s The Suicide Squad has an assortment of super-hero bad asses overthrow a fictional anti-American government in Latin America. Any similarity to actual events is strictly coincidental.

These are just stupid films for kids, you might object, and besides anti-war films do get made. Both demurrals have some validity but don’t erase the basic problem. Super-hero films have a cultural impact way beyond their immediate fan base. Apart from being some of the highest grossing movies of all time, they reach a far wider audience by being constantly repeated on prime time TV. Critical war films – for example Platoon, Born on the Fourth of July or possibly 2005’s Jarhead – do get produced but they are swimming against the current. Oliver Stone’s Vietnam films were delayed for years because of their “unacceptable themes”.

Rehabilitating Nukes

We are talking about a gradual cultural seepage. According to one interviewee, filmmakers are well aware their films are going to get vetted, so “they write their scripts in ways they know will ultimately please the Pentagon …. People self-censor and tone down any potential critical view.”  Much like journalists, you might say.

This process of cultural acclimation can be sent in a frankly scary (pun intended) segment about what happened to Godzilla. In the original 1954 Japanese film, Godzilla was literally created by hydrogen bomb testing and survivors of the monster’s attacks had radiation poisoning. Godzilla was “an allegory for the U.S. nuclear bombing of Japan”. This association survived in the 1998 Roland Emmerich version but by the 2014 iteration the U.S. Department of Defense was involved. A passage in the original script where a character recalls how their father survived the Hiroshima bomb was replaced by musings about the “arrogance of man”. And far from being the source of the mutation, nuclear weapons were the solution. Nuclear tests in the 1950s were actually attempts to kill Godzilla.

Revealingly, the 2019 reboot Godzilla: King of the Monsters was made without Pentagon assistance but stuck with the “nukes as heroes theme”. The filmmakers conclude: “It’s hard to imagine a more complete reversal. This long time warning about the dangers of proliferation is now an extension of the U.S. military and something of an advertisement for the bomb”.

Essentially, and terrifyingly for the future of humanity, nuclear weapons are being ‘rehabilitated’ and Hollywood is integral to that redemption. The subdued reaction to the possibility that nuclear weapons may be used in Ukraine may be evidence that it is having the desired effect.

That’s Entertainment

What Theaters of War unmasks is just how PR-saturated our popular culture is. With all due respect to Noam Chomsky, this is not about manufacturing consent through news and current affairs coverage. It is a form of propaganda that works through the slow accretion of subconscious associations and acquiescence with outwardly fictional, often absurd, depictions. “This is more insidious than state control and state-produced propaganda,” one interviewee notes, “because it passes off as just entertainment.”

As one internal Pentagon document observes, “Features films reach far greater audiences than any single news media story about the actual events. Audiences will voluntarily sit through a two hour ‘infomercial’ [about an army operation]”.

The contrast with the 1960s and How I Won the War could not be starker. That decade and the following one were laden with overtly critical, and fundamentally subversive, films about war. Paths of Glory, Dr Strangelove, The Hill, The Battle of Algiers, The Bed Sitting Room, Oh! What a Lovely War, The Charge of the Light Brigade, Catch-22, M*A*S*H and Apocalypse Now all reached large audiences. Sure, they were outnumbered by celebratory depictions of war (invariably involving daring exploits against nefarious Nazis), but the point is they existed and competed with standard fare. Nowadays, in an era when PR has hugely extended its tentacles, if they ever got made in the first place they’d be shunted off to the art house sector and only seen by people who attend film festivals.

This affects TV as well. In the 1980s the BBC could produce the nuclear war docu-drama Threads and the basically seditious Monocled Mutineer. Whereas now we are treated to The SAS: Rogue Heroes. For assorted cranks and weirdoes, the former are available on DVD.

It might seem strange to say in the aftermath of the Corbyn and Sanders insurgencies but, as Theaters of War demonstrates, the long march of PR is making our societies more and more conservative and averse to change. If the Left cannot find a way to counteract this tendency and reach mass audiences, it – and maybe humanity as a whole – will not have a future.

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate Socialism and the Capitalist Underclass

 

Politics now – witness Keir Starmer’s neo-Blairite recapturing of the UK Labour party – seems to inhabit a mental universe of its own creation rather than trying to deal with the inconvenience of reality. And occasionally the dissonance reaches comical heights of absurdity.

Boris Johnson, for example, when asked recently to justify the ending of the £20 uplift for Universal Credit recipients in October – which the government’s own internal modelling concedes will have a “catastrophic” effect – replied that it was his “strong preference” that people saw their wages rise “though their efforts” rather than through the taxation of other people.

Effort you say. Leaving aside that most people on Universal Credit are actually in work – and thus already are making an effort – the preferences of conservatives don’t seem to stretch to the most glaring welfare dependence affecting society today – the mammoth no strings giveaways to corporations and the immensely wealthy. Which curiously aren’t ending next month and necessitate about as much effort as turning a computer on.

Austerity in reverse

In the aftermath of the Great Financial Crisis of 2008, the world’s central banks (state banks like the Bank of England or the US Federal Reserve) literally created $10 trillion. In response to the Covid-19 pandemic, they created a further $9 trillion. For the past 18 months, central banks have generated $834 million an hour. This goes by the innocent sounding name of Quantitative Easing (QE for short).

QE is initiated by the central bank bringing into being a batch of new money (often called ‘fiat money’ i.e. money without the backing of gold – from the Latin meaning ‘let there be money’. Don’t picture a Fiat 500, that doesn’t capture its size). This is used to buy assets, usually government but also occasionally corporate bonds (debt), from banks, insurance companies or pension funds.

This has two main effects. One is to force interest rates down to very low levels, thus enabling heavily indebted institutions to survive. And the second is to create – by the buying of the assets – a huge mass of money ($13.9 million each minute) seeking investment opportunities and which is incentivised by the low interest on government bonds to go into other assets such as shares, property or commodities. As a result of this influx, their price increases.

QE is invariably presented as “pumping” money into the economy. In reality it involves pumping huge amounts of money into the financial system. Banks are not inclined to lend to the ‘real’ economy, which is the official story behind QE, if returns from buying and selling other assets (such as company shares) are higher. Corporations are not motivated to invest in plant or equipment if they can make more money from buying back their own shares, whose value is guaranteed by QE. Mergers and acquisitions – buying a company, asset-stripping it and selling it on – are also fuelled by the vast funds created by QE.

In theory, QE can be an emergency measure, helping the economy through a rough patch, and then being reversed so that ultimately no new money is created. But this is not how it turns out in practice. The Bank of Japan is still engaging in QE 20 years after it pioneered the policy. In 2018, the Federal Reserve started ‘quantitative tightening’ – the selling or retiring of assets on its balance sheet – but had to call a halt to the process less than a year later because of a negative reaction from markets. This was, it should be stressed, before the pandemic.

Rich bono

Unsurprisingly given how it works, QE has a hugely regressive effect on inequality. It’s not rocket science to understand that if the value of shares goes up, the prime beneficiaries are rich people because they are most likely to own shares. Additionally, banks and corporations benefit because they own shares in each other. “Owners of property have made out like bandits,” said hedge fund owner Paul Marshall in 2015. “In fact, anyone with assets has grown much richer. All of us who work in financial markets owe a huge debt to QE”.

The latest, Covid-inspired, rush to QE has massively exacerbated this inequality. Five million more millionaires were created during the pandemic, while the number of people worth more than $50 million increased by a quarter. Stock markets have hit record highs despite precipitous drops in GDP. In Britain, contrary to all previous recessions, property prices have continued their upwards trajectory. “The world is awash with central bank money,” says economist Grace Blakeley, “and it’s all flowing up rather than trickling down”.

Take from the poor and give to the rich

The QE reflex exposes just how right-wing – across the political ‘divide’ – our politics is, notwithstanding ephemeral lapses like Jeremy Corbyn’s Labour party. In 2019 the China-based economist Michael Pettis mused over two different ways to stimulate an economy – “giving to the rich” and “giving to the poor”. Giving to the rich involves tax cuts for business and the wealthy and policies such as QE “which tend to cause a rise in the prices of assets, most of which are owned by the rich.” Giving to the poor, in Pettis’s description, entails cutting taxes on the not wealthy, funding social safety nets, creating jobs or “setting minimum basic income policies”.

It’s revealing that the response of the British government – and other western governments – to the financial crisis and the Covid pandemic has almost exclusively centred on the first option. In addition to endless QE, corporation tax has fallen from 28% to 19% (it is slated to rise to 25% in 2023 but whether that will happen is a moot point). The top rate of income tax was also cut by George Osborne in 2012 and, if that wasn’t enough, capital gains tax (the tax you pay when you sell shares) was slashed by the soon-to-be newspaper editor in 2016.

As for the second option, it is not a question of giving to the poor but rather of taking from them. Taxes which affect poor people the most, such as VAT and now National Insurance, have been hiked. Social safety nets, by contrast, have been cut – witness the benefit freeze, sanctions, and the £30 cut in weekly payments to disabled people. Creating jobs has been left to the tender mercies of the private sector, and as for basic income policies, I think there’s been a pilot project in Finland. In Britain, destitution and food banks are the preferred course of action.

Boris Johnson’s “strong preference” for people to see their incomes rise “through their efforts” strangely only applies to folk without share portfolios. “The imbalance is unbelievable,” says Robert Reich, former labour secretary under Bill Clinton in the US, “Socialism for the rich, corporate socialism, but the harshest form of capitalism for most working people and the poor.”

The whimper of capitalism

 Of course, the notable feature of “corporate socialism” – apart from its colossal unfairness – is that it’s not capitalism anymore. QE is a massive distortion of the fêted free market. The theory of capitalism is that asset values are based on economic fundamentals – if stock prices rise that is because people believe, maybe mistakenly but genuinely, that the companies in question will generate profits in the future. Under the QE regime, they are rising because the state, in the guise of ‘independent’ central banks, is injecting huge amounts of money into markets.

Former Greek finance minister Yanis Varoufakis sees this as a momentous change. Pre-financial crisis capitalism (before 2008) may have been based on “daylight robbery” – the extraction of rent from a market controlled by Coca-Cola or General Electric – but it was still rooted in some kind of market and driven by private profits. That is no longer the case:

Then, after 2008, everything changed. Ever since the G7’s central banks coalesced in April 2009 to use their money printing capacity to re-float global finance, a deep discontinuity emerged. Today, the global economy is powered by the constant generation of central bank money, not by private profit.

To be more precise, the pursuit of private profit is still at the heart of the system – we haven’t socialised hedge funds – but the profit urge does not ‘make the world go round’. Central banks do.

 Market society, not economy

The supreme irony is that while the economic summit of society is changing into something that is not capitalist, capitalist values are penetrating ever more deeply into the texture of life. Economic and monetary values dominate politics and morality and we seem unable to value non-economic realms without assigning them a financial status, such as “natural capital”.  Individual endeavours, such as learning, physical fitness, volunteering, or nurturing ‘mindfulness’ are frequently seen in terms of their effect on our employability and careers, and undertaken for that reason.

In the 1980s, the social ecologist Murray Bookchin pioneered the idea that we don’t just live in a market economy, but also a market society. By the middle of the 20^th century, he said, “large-scale market operations had colonised every aspect of social and personal life.” The prognosis in the second decade of the 21^st century is that we seem to live in a market society without the concomitant market economy. Or possibly an irredeemably rigged market economy.

How long will it last?

The ultimate question is whether this regime of corporate socialism is sustainable. Japan, “the petri-dish” of Quantitative Easing, been following the policy since 2001 – several years before the rest of the advanced capitalist world followed in its wake. Indeed, it has deepened the practice considerably, coming to own around half the company shares quoted on the Tokyo stock exchange. “If this trend continues it is evident that the Japanese state will become the de facto owner of the bulk of what has been the hitherto privately owned enterprise sector,” wrote economist Harry Shutt in 2019.

However, from the point of view of the powerful and wealthy in Japan, the discernible effects don’t appear catastrophic. Profit has continued to be extracted, well-known corporate forms have endured and, if there has been a quiet revolution in ownership under the surface, it hasn’t resulted in a shift in power. In fact, inequality, low growth, ferocious competition for jobs and little prospect of pay rises, have, far from inculcating a spirit of rebellion, fuelled a culture of conservatism among Japanese youth.

The rulers of our society don’t have, despite the propaganda, a fervent ideological commitment to the free market, but merely a belief in private property. If that endures, they are satisfied.

The lingering question is, if Japan has indulged the QE fixation for two decades without presaging economic Armageddon, are western economies free to follow its example and practice QE for years, decades even, and emerge basically unscathed? Or are we preparing the ground for a financial collapse of mammoth proportions?

I want to address this question in the second part.

 

 

 

 

 

 

 

 

 

 

Cui bono? State capitalism comes to town

According to the investment bankers Macquarie, the “beating heart of Australian capitalism”, the reactions of world governments to coronavirus are a sure sign that “conventional capitalism” is being discarded in favour of a “version of communism”.

The view of the bank, which is famous for leaving Thames Water £2 billion in debt, seems to chime with the idea that the British government, following its promises to pay ‘furloughed’ workers 80% of their wages and support the incomes of the self-employed (in about 3 months), has undergone an overnight conversion to ‘socialism’.

In fact, if any conversion has taken place it is to state capitalism, not socialism, and it represents an intensification of previous trends, rather than their negation.

State capitalism, as a theory, is associated with Trotskyism and some anarchists and the idea that the Soviet Union, far from being socialist in any way, was actually a continuation of capitalism in which the nomenklatura extracted the wealth made by the rest of the population. Early on Trotsky predicted that, in a wave of privatisation, state capitalism would become conventional capitalism again. This is indeed what happened, though many decades later.

But I propose a simpler definition: State capitalism is using the power of the state to control, sustain, and, in some cases, own, private resources whilst leaving power and wealth in the hands of private corporations and high net worth individuals.

This can be seen in the ‘effective nationalisation’ that has occurred in the British railway system. 

While rail franchising has been ended, private train operators are being paid a management fee to continue to run services. The government is guaranteeing their income as long as the coronavirus crisis lasts.

The same is true of the unconditional bail out for bus companies.

In the health service, NHS England has temporarily assumed powers from the clinical commissioning groups set up by the 2012 Health and Social Care Act to buy services from the private sector but there is no indication that the government has changed its mind on outsourcing to the private sector or competition in the internal market. Trade negotiations with the US, in which medicine prices and the NHS are thought to be up for grabs, will still commence as soon as possible.

QE 2

However, the major way in which state capitalism is asserting its dominance in our allegedly ‘free market’ system is through quantitative easing. QE, which works by central banks buying government bonds and other debt from banks, is a form of massive state intervention which nonetheless leaves the most powerful private actors in the economy untouched – in fact it enormously bolsters their position.

Not only does QE hugely increase inequality as a direct result of government action, as economist Grace Blakeley observes, it inverts the way a free market economy is supposed to work. Theoretically a company’s share price should increase only if other people think it is a good bet to make profits in the future. QE, however, by reducing the yield on government bonds, ‘incentivises’ investors to switch their funds into other assets – primarily the stock market – regardless of whether such a switch is justified by underlying economic conditions. In other words, QE creates stock market booms – the appearance of economic health – where none should exist.

The world’s governments resorted to QE in the aftermath of the financial crisis with the desperation of an alcoholic grasping for another drink – the four largest central banks have created around $10 trillion in new money since 2010. This was an era presciently described by geographer David Harvey as defined by the “dictatorship of the world’s central bankers”. This was state control – central banks are an intimate part of national states and pan-national state organisations – but a type of state intervention insulated from democratic interference: since the 1990s central banks have invariably been made ‘independent’ of any meddling by elected governments.

However, the era we are now entering – I think it’s unarguable that March 2020 marks the beginning of new historical era – has and will see levels of quantitative easing that make the previous decade seem like the height of sobriety. And, moreover, QE that will take its inherent logic of expanding state ownership of the corporate economy to new peaks.

In Britain, £200 billion QE has been announced. The European Central Bank, which already was dabbling in QE to the tune of €20 billion a month has expanded the programme so that it will create €750 billion by the end of 2020. And the Federal Reserve in the US has unveiled “QE infinity” – unlimited quantitative easing – in addition to, for the first time, the purchase of corporate, as well as government, bonds.

In the last case, certainly, what this portends is not only the state massively intervening in the economy – in the interests of the rich and powerful – but also taking ownership of its commanding heights.

The new nationalisation

Because this is what has been happening in the birthplace of quantitative easing, Japan. Confronted since the 1990s with a stubbornly stagnant economy, the Bank of Japan has resorted to ever greater doses of QE. In 2013, it inaugurated Quantitative and Qualitative Easing (QQE), buying government bond and “other market assets” worth £1.8 trillion. In an article from last summer, entitled ‘Capitalism’s Silent Surrender”, economist Harry Shutt noted the “creeping nationalisation” occurring all over the world. The Bank of Japan, he wrote “is now estimated to own at least half both of all outstanding government bonds (JGBs) and of equities quoted on the Nikkei 225 Index of the Tokyo stock exchange”.

On the surface, Japan still appears to be a classic capitalist economy. The world-famous names of its economy – Toyota, Hitachi, Sony, Mitsubishi and so on – are all still alive and kicking and internally organised no differently to before. The country is as hierarchical as it ever was, as well as steadily becoming more unequal. But behind the scenes it is transforming, in terms of ownership, into something different. “If this trend continues,” Shutt concludes, “it is evident that the Japanese state will become the de facto owner of the bulk of what has been the hitherto privately owned enterprise sector.”

And, as current events show, this trend is continuing, in fact rapidly accelerating. If lockdown persists for 18 months, albeit with brief relaxations, it seems almost certain that the main capitalist countries of the world will follow Japan and become the effective owners of large swathes of the private sector.

State control is not socialism

But it won’t be anything resembling socialism, unless the suffix “for the rich” is added afterwards. This isn’t merely because, in the UK, Sunak’s massive package to pay 80% of employee wages will go to the companies that employ them not to the workers themselves. Or that support for businesses eclipses that for ordinary people (estimated in the US to be set at 2/3rds for business, in terms of cash and loans and 1/3rd to unemployed workers and the self-employed). Or indeed that the rescue package is conspicuously partial, passing over private renters – who can still be evicted – and benefit claimants for whom existing sanctions have not been rescinded.

It is mainly because the expansion of state control and ownership will be used to reinforce the power and control of the small minority at the top of the corporate economy. While small businesses will suffer, large corporate entities with enormous cash reserves, will survive and likely prosper, aided by state bail-outs and de facto state ownership.

As Blakeley wisely notes, the Left should not react to the massive rises in public spending in evidence across advanced economies as if its programme is being reluctantly enacted by those ideologically opposed to it. “The legacy of this crisis will be the concentration of economic and political power in the hands of a tiny oligarchy, composed of senior politicians, central bankers, financiers and corporate executives,” she says.

The question to ask is cui bono.

What Shutt said last summer in relation to another financial crisis may, in fact, be the end result of the coronavirus crisis: “… it may suddenly dawn on the public that it has already, by default, assumed ownership of most or all of what was once believed to be the private enterprise sector – without ever having taken control of it.”