Monday, June 27, 2016

Spain: further stalemate

by Michael Roberts

I flew back from Spain (where I was at a conference) just as the results of the second Spanish general election of the year came out.  The incumbent conservative People’s Party improved its number of seats, while the opposition Socialists managed to finish second ahead of the Podemos-UL leftist coalition.  The turnout was just under 70%, one of the lowest in the post-democratic period.  It was expected that Podemos would move into second place, but it appears that the rush to the left had faded at the last minute.  Nevertheless, the PP cannot form a majority government unless both the pro-market, pro-EU Citizens party (which lost ground) and the Socialists back PM Rajoy.  Last time, they refused to do so.

votes

But last time, the Socialists also refused to join with Podemos to form a leftist government, because that would mean confrontation with the EU over public spending and budget deficits, would encourage separatism in Catalonia and the Basque country (where Podemos finished first) and also might mean they could be swallowed up by Podemos.  So it is political stalemate again.  The most likely outcome is that PM Rajoy will form a minority government with the tacit backing of the Citizens and the Socialists for a fixed period and on certain terms.  The uncertainty in Spanish politics may not match that of Britain after the Brexit vote, but it is still there big time.

Despite its well-documented corruption (party kickbacks for government contracts both national and local), enough people have been prepared to vote for the PP, partly because the rich know that they are the party of big business and the banks and will protect their interests and partly because they were expected to revive the economy after the miserable failure of the previous Socialist government.
But although there have been some signs of economic recovery under Rajoy, it has been mixed at best and, at worst, has offered no relief to the majority.  The Long Depression since the end of the global crash in 2009 has exerted its icy grip over the Spanish economy as well, at least for most people.

Despite a decline in 2015, the youth unemployment rate remains among the highest in the EU. Total unemployment is now 21% but still almost one out of two of active people aged between 15 and 24 remain unemployed. And long-term unemployment remains double that of 2008.  The unemployment rate would be even higher except that Spaniards have left the country to look for work elsewhere in Europe (the UK and Germany) or even Latin America. The rate of net emigration has reached 250,000 a year, draining the economy of some of the most educated and productive young citizens.

Indicators measuring poverty and social exclusion are very high compared to the EU average, and deteriorated further in 2014. The IMF reported that “the improved labour market conditions during 2013 and 2014 did not translate into an improvement in social indicators in those years. The crisis led to a sharp increase in the share of the population at-risk-of-poverty and at-risk-of poverty or social exclusion). These poverty indicators deteriorated even further in 2013 and 2014 despite the amelioration in labour market conditions. The rise in the proportion of workers in part-time (from 14.5 % in 2012 to 15.6 % in 2015) and temporary jobs (from 23.4% in 2012 to 25.7 % in 2015) in recent years went hand in hand with an increasing risk of poverty among part-time workers (from 18.7 % in 2013 to 22.9 % in 2014) and temporary workers (from 17.5 % in 2013 to 22.9 % in 2014). Together with moderate wage developments, this contributed to the overall increase in in-work poverty observed between these two years.”

And as the EU Commission put it: still high unemployment and the risk of labour market exclusion, affecting in particular young and low skilled people, hampers adjustment and implies high social costs. Furthermore, low productivity growth makes competitiveness gains hinge upon cost advantages, also affecting working conditions and social cohesion. If protracted, it hampers the transition of the economy to a more knowledge-intensive growth model.”  In other words, the only way things have improved for Spanish capital is by keeping wages down and employing cheap labour rather than making investments for new technology and higher productivity.

The EU Commission added that “Spain’s R&D intensity and innovation performance keeps declining, against the backdrop of a relatively low number of innovative firms…The average low skills’ level of the labour force hampers the transition of the Spanish economy towards higher-value activities. This in turn limits the capacity of the labour market to provide opportunities for the high number of tertiary education graduates in knowledge-intensive sectors.” That means no jobs even for those with degrees.

The IMF admits that economic growth in Spain during the last 15 years has been largely due to investment in property – fictitious capital, as Marx called it. Spain’s much-heralded economic boom saw 3.5 percent real growth a year during the 1990s; it stopped being based on productive investment for industry and exports in the 2000s and turned into a housing and real estate credit bubble, just like Ireland’s Celtic Tiger boom did. House prices to income peaked at 150 percent, nearly as high as in Ireland. It has fallen back to 120 percent, but Ireland has dropped to 85 percent. Housing construction doubled from 1995 to 2007, reaching 22 percent of GDP in 2007.

During the property boom, credit grew at 20 percent a year, much faster than nominal GDP at about 7 percent a year.  Household debt reached 90 percent of GDP. Nonfinancial corporate debt, including that of the developers, reached 200 percent of GDP, the highest in the OECD.

The financial crash exposed that big time.  Productive investment in technology was below the euro area average before the crisis and is still below the EU-28 average. The fall in investment between 2007 and 2015 entailed a drop in potential growth of nearly 1.5 pp. a year of GDP for Spain. The total stock of private sector debt amounted to around 175 % of GDP in non-consolidated terms in the third quarter of 2015 (68.6 % of GDP as household debt and 107.2 % of GDP as non-financial corporation debt).

While this remains above the euro area average, it is about some 40% of GDP lower than the peak observed in the second quarter of 2010. Most of the reduction is due to the fall in debt of non-financial corporations since the peak. However, this ‘deleveraging’ by both households and corporations has weighed on investment.  “In particular, high private and public debt, reflected in the very high level of net external liabilities, exposes the country to risks stemming from shifts in market sentiment and is a burden for the economy. While the still negative inflation environment supports households’ real disposable incomes and domestic demand, it also hinders faster deleveraging.” (IMF).

The Achilles heel of Spanish capitalism is the long-term decline in its profitability. Spanish capitalism was not a great success under the military rule of General Franco in the post-1945 period.

Profitability fell from the great heights of the golden age of postwar capitalism, as it did for all other capitalist economies from 1963 onward, in a classic manner, with the organic composition of capital rising nearly 30 percent while the rate of surplus value fell by about same.
Spain ROP
After the death of Franco, Spanish capitalism temporarily reversed the decline as foreign investment flooded in to set up new industries, relying on a sharp rise in the rate of exploitation brought about by plentiful surplus labor and a system of temporary employment contracts (while freezing permanent employment), the so-called dual labor policy.
Spain ROP change

The rate of exploitation rose over 50 percent to 1996, accompanied by the foreign-led investment boom in the 1990s. This drove up the ratio of capital to labor (by 19 percent), as German and other capitalist companies relocated to Spain in search of cheaper labor and higher profits. That eventually put renewed pressure on the rate of profit. From 1996, profitability dropped sharply as wages squeezed profits in the boom of the 2000s. Spanish capitalists switched to investing in property and riding on the cheap credit boom that disguised weakening profitability in the productive sector.

As the IMF summed it up: “The pre-crisis period was characterized by decreasing productivity of capital, measured as output per units of capital stock, both in absolute terms and relative to the euro area average. This is because capital flew to nontradable sectors, in particular construction and real estate, characterised by higher profitability but lower marginal returns. By contrast, investment in information and communication technologies or intellectual property remained below that of other euro area countries.”

This long depression is also beginning to break up the Spanish state. Regional governments are deeply in debt and are being asked to make huge cuts. Richer regional areas with their own nationalist interests, as in Catalonia and the Basque Country, are making noises about separation from Madrid.  The Spanish depression is a result of the collapse in capitalist investment. To reverse that requires a sharp rise in profitability. Until investment recovers, the depression will not end.  And there is the probability of a new economic recession in Europe ahead, while the political leadership of Spanish capital is still uncertain.

Sunday, June 26, 2016

Britain and the Labor Party: At last! The battle begins


By Roger Silverman

It's not the risk of defeat in a coming general election that the Blairite MPs are afraid of; what terrifies them is the prospect of victory under a socialist leadership.

Jeremy Corbyn was elected leader of the Labour Party with the biggest mandate of any political leader in British history - a quarter of a million votes. Hundreds of thousands of people were inspired to join the Labour Party to support him. Since his election, Labour has had spectacular success in recovering from years of decline under Blair, Brown and Milliband.

Who are the Labour right to offer advice? It is eleven years since they last won an election. Remember that since the 1997 election, under Blair and Brown, Labour lost four million votes.

In contrast, under Corbyn's leadership, Labour gained the biggest share of the vote in local council elections around the country; won the Oldham and Tooting bye -elections with increased shares of the vote; and won the London mayoral election with the highest ever vote for any individual candidate: 1.1 million votes.

The imminent split in the Labour Party is long overdue. Two classes cannot share one party. The mass of trade-union rank-and-file Labour activists and the parasitic clique of New Labour crypto-Tory MPs who have made their nests in the parliamentary party could not preserve for long their uneasy cohabitation.

These are not just a new generation of the old-style reformist Labour leaders of yesteryear – tainted individuals perhaps, cowardly, treacherous, bribed or intimidated, but with roots firmly implanted in the labour movement.

During the 1990s, an openly pro-capitalist clique assumed the leadership of the Labour Party. Mandelson openly boasted: “I am supremely relaxed about people getting filthy rich, so long as they pay their taxes”. They tried to eradicate Labour’s socialist and trade-union traditions and proclaimed a new identity, calling themselves “New Labour”.

New Labour served a very specific historical purpose for the ruling class: to carry through to a conclusion the Thatcherite counter-revolution under new wrapping, once the Tories had become so discredited that they were no longer capable of finishing the job under their own banner. It was the product of a conscious conspiracy. Only in the wake of the financial crisis of 2008 was New Labour deemed to have outlived its usefulness; once having served its purpose in government, it was unceremoniously ditched, and the reins of power firmly grasped by Britain’s traditional masters.

The Blairite MPs have no allegiance to the labour movement, nor any aspirations to a new society. They are plain careerists who at a certain time found it opportune to jump on the New Labour bandwagon – an alien force hostile to the workers’ interests.

Hundreds of thousands of Labour activists will be ready and waiting to defeat this coup by a clique of embittered failed careerists, and restore to Labour its socialist traditions.

The UK Referendum: The Left's Disastrous Mistake



by Finbar Geaney

Those on the left who supported the campaign for Britain to leave the European Union have made a disastrous mistake. As a direct consequence of the Referendum result, right-wing forces within UK politics have received a considerable fillip. The further right of the Tory Party are now in the ascendant, and Farage’s UKIP, which in last year’s General Election won only a single seat, has found itself centre stage in this current jamboree of nationalism, xenophobia and delusionary imperial grandeur. And this consequence is not confined to Britain. Already LePen in France and Wilders in The Netherlands have expressed their enthusiasm for what they see now as the potential break-up of the EU; and Frauke Petry of the Alternative für Deutschland has welcomed the UK result as a defeat for what he called the ‘quasi socialist’ measures of the EU. A second direct result of Thursday’s vote is a serious attempt by right-wing Labour Party MPs to now remove Jeremy Corbyn as leader.   

There can be no argument about the scandalous role of the EU bureaucracy during the crisis in Greece. And it was not just in Greece that they insisted upon punitive austerity measures. The same thing happened in Ireland, Portugal and Spain as financial and industrial capital tried to make workers’ pay the price for sustaining their system of exploitation. But to argue that the way to defeat this programme of austerity is the leave the EU altogether is wrong on many counts. The institutions of the EU reflect the interests of the conservative and right-wing political parties that currently predominate in Europe. These parties have to be fought on home ground. Some of the institutions of the EU are bureaucratic and do not reflect the needs of Europe’s citizens, but it is not in the best traditions of the labour and socialist movement to walk away from a battle for democratic accountability.

When the question of Brexit was raised I would have thought that any socialist would firstly have considered what forces were lined up in this combat and what class interests these forces represent.

The campaign to leave the EU was always driven by the forces on the right of politics. For example the basis of Thatcher’s opposition to Europe was her anxiety to prevent measures that protected workers’ rights from being forced on British employers by the European Court of Justice. It is true that some organisations on the left also argued that Britain should leave the EU, but the left perspective was never more than a minor aspect of it all. Focussing on the issue of national sovereignty some left MPs argued that progressive legislation was being impeded as a consequence of EU membership. This is a gross oversimplification.

The failures of the Blair and Brown Labour Governments to carry through a socialist programme, or for that matter those of Wilson or Callaghan in earlier years, cannot be blamed on the European bureaucracy. Incidentally, the seven hereditary monarchies in the EU (including Britain until yesterday) are hardly the result of directives from the ‘unelected’ European Commission!

Some within the British Labour and trade union bureaucracy have tended to use the EU as a scape goat to cover their own failures, just as Johnston, Farage and Gove use it as a lever to elevate their own right-wing agendas. It is foolish to argue that, now that the UK is out of the EU, these three Musketeers – and others like them – will be exposed and their politics discredited. Last Thursday a train has been set in motion that will not be easy to stop. A lot of damage will in the coming period be visited upon workers, immigrants, minorities and the poor.   

The Tory Government will probably begin the process of withdrawal from the EU by repealing the European Communities Act, and then by another Act of Parliament that will enable them to filter all EU laws, directives and recommendations. Does anybody have the slightest doubt about which legislative provisions of the EU the Tories will keep and which ones they will discard! Or which decisions of the European Court of Justice will be incorporated into British law and which ones will be consigned to the dustbin!

The Westminster Parliament will shortly witness the farcical situation where Labour MPs, who believed themselves to be on the left by campaigning for Brexit, fighting to maintain legislative provisions that were introduced by the hated EU.

It is probably the case that those small left-wing organisations in Britain that supported Brexit now realise their serious mistake. A few such organisations in Ireland made a similar error. But all is not lost. Recognition of past mistakes, difficult though it might be to admit them, is not a hanging offence. What is essential is that trade union, socialist and labour organisations across the continent unite to fight austerity, xenophobia and the rise of nationalism.

Unfortunately the UK is now outside the EU, or will be shortly. Consequently some obstacles have been created in terms of building an effective Europe-wide opposition of progressive forces, yet that is what must be done. There are no short cuts. It is also essential that socialists argue now that separation of Scotland from the UK will not solve Scotland’s problems either. One of the conundrums that could cause a political hernia to those socialists who argue now for Scottish independence is that such independence will be predicated on Scotland remaining within the EU, itself apparently the source of all evil!

Friday, June 24, 2016

Right wing xenophobes celebrate Brexit victory

Right wing UKIP leader Nigel Farage celebrates victory. Taking our country back!
by Roger Silverman

The vote for Brexit has sent Britain and Europe spinning. The instant reaction of the EU has been an insistence on immediate and irrevocable withdrawal and a point-blank refusal to negotiate a single concession. They see clearly ahead the nightmare of an unravelling of the entire project, with Brexit followed by Dexit, Swexit, Frexit, Spexit…

To their honour, Scotland and multi-ethnic London strongly voted REMAIN. But England, Wales and the Protestant community in Northern Ireland mostly voted LEAVE by significant margins. All the passion, the rhetorical tricks and the emotional manipulation had come from the LEAVE side, while the sole argument of Cameron and the establishment was: membership of the EU gives us access to a market of 500 million people; in other words, "we can make lots of money out of Europe, so to hell with your problems". Corbyn, to his credit, did rightly defend free movement of labour, and stress the threat posed by Brexit to the minimal workers' rights wrested earlier from the EU (which had been conceded as a means of protecting German and other employers from the risk of being undercut by weaker competitors). However, his voice was drowned out as usual by the media.

Cheap demagogues like Johnson and Farage have used outrageous jingoistic bombast to conjure up the faded glory of British imperialism 150 years ago, when Britain was a "great trading nation" and "the workshop of the world". It is a ridiculous fantasy.

Ever since the wilful destruction of British industry by Thatcher's government in the 1980s, used as a deliberate policy to smash the power of the trade unions (a policy cheerfully maintained under Blair's subsequent "New Labour" government), the old manufacturing base of the British economy has gone. There are virtually no shipyards, coal mines, steelworks or car plants left. What then will be the basis of Britain's revived role as a "trading nation"? What can Britain offer for sale? All that is left is the banks, whose crooked practices already so recently plunged the economy into catastrophe. Britain is now little more than just another money-laundering tax haven offshoreisland, siphoning up the dirty money of the world's oligarchs and gangsters into a booming property market that shuts out the local population from any hope of ever buying or even renting any living space.

One EU bureaucrat scoffed that Britain would end up as just an island off the European coast like Guernsey. Maybe its main attraction will be as a theme park, living off visits to Stratford-on-Avon and the Tower of London.

The only heavy industry that still barely survives in Britain consists of a handful of factories owned by foreign companies like Honda, or - until its recent announcement that it was shutting it down - Tata Steel. These companies had strategically targeted a British location for no other reason than precisely as a stepping stone into the European market. Once Britain leaves the EU, these companies will inevitably pull out. Meanwhile, the sharp fall in the value of the pound will send the price of fuel, food and other essentials sky-high. So Brexit could well bring in its wake the added horrors of mass unemployment and soaring inflation - both of them problems which the British economy had avoided up to now since the start of the 2008 recession.

The victorious Brexit campaign has already in effect legitimised widespread moods of xenophobia and bigotry which had previously been largely muted. In conditions of intensified economic hardship, these could well now erupt into a huge rash of verbal and physical street attacks on immigrants, and - especially in the aftermath of any successful atrocities by Islamic terrorists - in outright race riots.
To their lasting dishonour, nearly all the left groups had opportunistically jumped on the Brexit bandwagon, using as justification their quite justified abstract characterisation of the EU as an instrument for naked rule by the multinational monopolies. At the same time, they shamefacedly brushed aside its increasingly blatant xenophobic character.

They argued, correctly, that the vote to leave the EU represented a revolt against austerity; but it was a blind and perversely misdirected outcry against years of low wages, zero hours dead-end jobs, homelessness, welfare cuts and unremitting cuts. It was a classic case of the same old diabolical "divide-and-rule" manoeuvre. The media had succeeded in diverting their despair into safe channels by scapegoating immigrants: largely migrant workers from Eastern Europe and the handful of refugees allowed in from current war zones. In the process, like every authoritarian regime in the world, or in the best traditions of British imperialism (as practised so skilfully over the ages in Ireland, India, Palestine, etc.), the rage of the poor was neatly deflected from the ruling class to attacks on a despised minority.

Britain has entered into a dangerous, volatile period; a period of sharp and sudden shocks. It has witnessed huge trade-union demonstrations, student upsurges, youth riots, political instability, even a political assassination. Both the traditional political parties are on the verge of splits. The only certainty is that more such events are imminent, probably still more shocking and more violent.

Sanders: The hero of the Democratic Party


by Richard Mellor
Afscme Local 444, retired

After all the hullabaloo and the rhetoric, the real Bernie Sanders steps forward. When asked on NBC’s Morning Joe show if he will vote for Hilary Clinton he gives an emphatic “Yes”.  His reason for his decision he explains, "I will do everything I can to defeat Donald Trump."

Sanders hasn’t yet endorsed Hillary Clinton but barring her arrest by the FBI, he will.

Here’s a bit of useful information for Sanders’ enthusiastic young supporters who, tired as they are with politics and political parties that do not represent them, have now been abandoned by him: We have seen all this before.  Simply replace the Trump name with Reagan, Bush senior, his imbecile son George W Bush and on and on. We have to support the person who will harm us least and in this case that may well be Clinton not Trump. It’s the old lesser of two evils argument that we have heard time and time again.

Sanders is fundraising for his Democratic Party colleagues and has raised more than $2 million in the past few week. “He has been signaling the transition of his movement from a presidential run to one aimed at bolstering liberal Democratic candidates for Congress and offices up and down the ballot”, AP reports.  His tactic, his reason for holding back on the endorsement is to gain some leverage at the convention in his campaign to “change” the Democratic Party and make it a party of the people. Like a pied piper, he leads his supporters in to the Democratic Party, that graveyard of social  movements.

He is also no fool in one aspect, he knows that Clinton is despised by most of his young supporters including women, so he makes clear he is a campaigner for the party not the individual.

His political revolution is only just getting started says Sanders and that, "My job right now is to fight for the strongest possible platform in the Democrat election,"
It is important to remind ourselves what Sanders means by “political revolution”. In his own words it is drawing people in to the democratic process.  And to which political organization should these millions direct their activity? Well the Democratic Party of course, the party of Goldman Sachs, Wall Street and the billionaire class that Sanders has railed about for a while.

To be honest, Sanders is a fraud, he is certainly not a socialist. He tapped in to the righteous anger that exists in US society and the response surprised even him.  His efforts now and the reason for holding out on the endorsement is the party platform. Big deal. As if the millions of young people that looked to him for real change did so on the basis of getting some nice sounding phrases in the Democratic Party platform.

As Bruce Dixon of the Black Agenda Report
pointed out with regard to the Democratic Party platform: *

“Take the
Democratic party platform of 1992, the year Bill Clinton was elected. It promised targeted jobs programs to reduce inner city unemployment, the building of affordable housing, funding of urban mass transit, measures to begin weaning the economy off fossil fuels. It promised a peace dividend, the investment of some of the former Cold War military budget into the civilian economy to create jobs and opportunities. It pledged new environmental protections and committed Democrats to rolling back carbon dioxide emissions to 1990 levels by 2000. Every bit of this was garbage. On the other hand, the one percent were promised the end of welfare, so that millions would be thrown out onto the low wage labor market, and NAFTA. Those were among the promises that were kept.”

As a friend said to me the other day when we were discussing Sanders platform boasts:

“You know what they say about the platform don’t you?”

“No” I reply innocently.

“It’s what’s left behind when the train leaves the station.”

*
At the time of writing I find that the Black Agenda Report website is down so the link above may not be functioning. Hopefully it is a temporary issue and nothing serious, This is an excellent source of political news and analysis.

The impact of Brexit

Source: Mother Jones

by Michael Roberts

Well, I got it wrong. I thought that the British people would vote to stay in the EU, if narrowly.  Instead they have narrowly voted to leave.  The turnout at 72% was much higher than the last general election in May 2015 (67%) that saw the Conservative party narrowly returned to office with a small majority of just 12 seats over other parties.  PM David Cameron had managed to squeak through to victory by agreeing to call a referendum on EU membership.  This sufficiently weakened the burgeoning vote for the euro-sceptic UK Independence party (UKIP) which had been polling over 20% in the EU and local elections.  By agreeing to a referendum, Cameron managed to reduce UKIP’s representation to just one seat in parliament. But this political tactic has now backfired.  Cameron has lost the referendum and has announced that he will resign and give way to a pro-Brexit leader as PM to conduct the fraught and tortuous negotiations with the EU leaders in the autumn.  Winning the election has turned out to be a poisoned chalice as I suggested.

It seems that sufficient numbers of voters believed the arguments of the pro-Brexit Tories and UKIP that what was wrong with their lives was ‘too much immigration’ and ‘too much regulation’ by the EU (although Britain is already the most deregulated economy in the OECD).  It was not to do with the global capitalist slump, the ensuing Long Depression and the austerity policies of Tory government.

Yes, many voters did not swallow the immigration and regulation arguments; but these were mainly the young; those who lived in multi-ethnic areas like London and Manchester and the better-off households in the urban south.  They were not enough compared to those who voted to leave.  They were older, lived in small towns and cities mainly in the north or in Wales far away from London and from the sight of any ‘immigrants’, but who have suffered the most from low paid jobs, public sector cuts, run-down housing and high streets and general neglect.

Along with these were the die-hard racist elements of the petty-bourgeois small business who gain nothing from EU trade or its financial largesse.  They reckon that in some way a return to the good old days of British imperialism standing on its own (“taking back our country”) will be better.  Only it won’t because, it looks very likely that the Scots, having narrowly rejected the call for their own independence in September 2014, and who voted heavily to stay in the EU, will now insist on another vote to leave the UK and stay in the EU as an independent state.  Going back to the good old days of British imperialism is more likely going back to the time before union of 1603 when England/Wales and Scotland had separate kings!

So what now?  Well, the financial markets have naturally reacted with panic, with the value of sterling plummeting against the dollar to its lowest level since 1985 at the time of (another) oil crisis.  Stock prices have also dropped sharply.  But this is just a shocked reaction to the unexpected.  How financial markets react in the coming months will depend on how the negotiations go (and they could take two years or even more!) and what happens to the UK economy.

In previous posts, I have highlighted the near unanimous view among mainstream economists that Brexit would damage the UK economy both in the short and long term.  Most now reckon that the UK will drop into recession before the end of the year.  Why?  After all, with a weaker pound, British exporters will be able to compete on price in world and European markets.  Surely that will reduce the dangerously large external deficit (now 7% of GDP) that British capitalism has been running with the rest of the world?  And the Bank of England is to provide as much credit as banks and companies want and may even cut interest rates towards zero to help households with their mortgages and companies with their debts.

Well, maybe – except that history has shown that devaluation of a currency is seldom successful in turning round the economic growth, productivity and even trade of a country.  I have cited before how the Keynesians were wrong when they reckoned the devaluation of the peso in Argentina would turn that economy around in 2001 – the Great Recession soon disabused that claim.

And in the Great Recession, the UK dramatically let the pound drop.  But the recovery in exports remained muted and the recovery in the domestic economy driven by cheap interest rates and a housing boom only led to a wider current account deficit.

And this deficit has to be financed by capital inflows – foreigners investing in British industry; buying British company stocks and government bonds; and depositing cash in British banks to earn interest or re-invest.  That funding had already started to dry up with the fear of Brexit – now Brexit is a reality.  The only way the deficit can be financed will be by raising interest rates on deposits, not cutting rates.

But the external deficit may actually shrink, not because exports will improve, but because imports of foreign goods and services will drop.  That’s because if the British economy shudders to a halt, companies and households will buy less from abroad, particularly as import prices will rise with the fall in sterling and inflation may come back.  That will squeeze real incomes in the average British household.

And the benefits of a weaker pound also depend on demand elsewhere in the world. If the Eurozone and US economy are struggling, then lower prices may be insufficient to lead to big increase in UK export demand.  Also, in recent years, British exports have proved to be quite inelastic. (British goods tend to be higher value goods and services – less sensitive to price change than manufactured clothes).

And here is the real point.  Devaluation only really affects demand. The other side of the equation is supply and productive capacity. Devaluation doesn’t necessarily do anything to promote investment and higher productivity. Some even argue that devaluation can reduce the incentive to be efficient because you become competitive without the effort of increasing productivity.  What really matters is what is going to happen to business investment and profitability.

Higher production costs from imports, weaker demand at home and abroad are likely to discourage UK companies from investing at home and foreign investors from stepping in.  And overall profitability of UK companies at the end of 2015 was still below the peak of 1997, while profitability in the key manufacturing sector for exports was half that of 1997.

If the UK tips into recession, the demand for EU exports (German cars, French wine, Italian clothing etc) is going to weaken.  And so a recession in the UK could push the EU back too.  And this is in an environment where global economic growth has slowed to its lowest rate since the end of the Great Recession, where global corporate profits are at zero and business investment is dropping in many economies.

Brexit in the long run may not make a huge difference to the health of British capitalism, but right now it could help accelerate a new global recession.  And that would have a much bigger impact on the lives of those who voted for Brexit than the perceived problems of ‘overcrowding’ from immigration or regulation from Brussels.

Thursday, June 23, 2016

The Democrats' disgusting Sit-In photo op.


That's a bit hard on a $60 million bum.
By Richard Mellor
Afscme Local 444, retired

I don’t know whether to laugh or cry as I flip through today’s Wall Street Journal and New York Times online, both prominent journals of the US ruling class.  The Journal article has a large picture with it of some of the well-dressed and well-heeled Democrats sitting on the House floor to try and force votes on expanding background checks for gun purchases and to close some loopholes.

Anticipating accusations of being a gun nut, I’ll make it clear that I believe no serious gun owner would object to laws that ensure that weapons don’t fall in to the hands of violent criminals or other people mentally unfit to own them. But it is overwhelmingly a good thing that working class people have the right to own guns. The issue of gun control is used though, to avoid a serious discussion on the crisis of the system, of the madness of the market and capitalism.

In the front of the WSJ image is Nancy Pelosi, the multi millionaire member of a prominent US bourgeois family. Pelosi is worth about $60 million. Her and her investor/speculator husband also have huge real estate investments. Save us all Nancy, please save us all.

John Lewis, the veteran of the Civil Rights movement is right there with her. “John Lewis says stay after the votes and we will stay.” Pelosi announces to the media as if Lewis has any real power over what she or her party does.  What’s even worse is these politicians of the 1% are in there singing We Shall Overcome and adding the lyrics, “We shall pass a bill someday…”

It’s the sort of photo op we see during strikes when members of the labor hierarchy suddenly appear with a Democrat in tow and sit themselves down for a planned arrest by their favorite police department, “Careful now, don’t mess up the Congressman’s suit.”.

Pelosi described this photo op and the subject matter that it is directed at as “discussion heard around the world.”  What arrogance. Yes Ms Perlosi, the women of Afghanistan, Syria and Iraq are all ears. As are the Cambodian workers in the factories that produce WalMart’s profits and the millions of workers in the former colonial world starving to death under the weight of World Bank and US imposed structural adjustment programs.

And let’s not forget, as it is never mentioned in the mainstream media, that the so-called “migrant” crisis in Europe is not a migrant crisis at all but a refugee crisis as people flee US wars, bombing, in short, US state terror in the Middle East. US imperialism’s foreign policy is not only the starting point if we are to discuss the refugee crisis but also what the media describes as “terrorism”. No sit ins from the liberals about this.

But we don’t have to look too far to recognize this shameless theatre for what it is.

There’s been no such Democratic Party disruptions or sit ins around other issues that are of a serious concern for American workers.  Five million lost their homes in the market induced crash. There’s the issue of student debt. What about the massive poverty and economic crisis that is destroying working class communities here? There are urban communities, what we always refer to as ghettos as if there’s something fashionable about them----things never really change in these communities except their continued decline. Areas like West Virginia are a basket case as the determination whether one has a job and a future or not is determined in the boardrooms of major corporations and the meetings of speculators and investors whose sole interest in the process is profit margins.

Katrina was a far worse disaster then 911 but that was due to domestic enemies, domestic terrorism really as decisions were made that were known to be harmful to people.  No massive media celebrations about that every year. No war on the terrorists responsible for that.

The issue behind gun control now is to “expand background checks for guns and prevent terrorists from buying firearms.”, the Wall Street Journal writes.  It seems the motive for the call for more control over the firearms market is terrorism. But who or what force determines someone or some group are terrorists? And what is a terrorist?  Well, the same people that own the media determine what a terrorist is and they formulate the language that we read in their media. Is the Klu Klux Klan a terrorist group? I don’t think so otherwise they’d be kidnapping “suspected” Klan members on the streets, taking them to hot spots and applying a good old dose of CIA/FBI interrogation techniques on them, waterboarding a lot of them, sticking objects up their rectums, keeping them awake all night, making them stand naked or pouring menstrual blood over them. They would be getting Chelsea Manning treatment or the treatment normally reserved for Muslims, Arabs or anyone they consider an obstacle to US imperial global interests. The Klan on the other hand are useful terrorists.

Is it an accident that the only people the World Court has convicted of war crimes are Africans?  And we have Bush, Rumsfeld, Kissinger, Wolfowitz, and drone king Obama living among us. Hilary Clinton is a war criminal and she’ll likely be the next president.

There’s an election coming up when the two parties of big capital vie for which section of the US ruling class will have the opportunity to govern and plunder society for four years. It’s insulting that these politicians are using the victims of a deranged man’s killing spree, and in particular their relatives’ sorrow, as an excuse for a photo op.

And the millionaire in the party that denied Fannie Lou Hamer a seat at a Democratic Party convention, sings “We Shall Overcome.”. That’s an insult to Martin Luther King and those who fought and died in the Civil Rights movement. Makes me want to throw up.

If you want to shake them up this election cycle, vote for Jill Stein, the Green Party candidate for president. A massive turnout for this party will cause serious concern to the duopoly. I can’t say where the Green Party will lead or end up for sure, but becoming involved in the party and helping shape its orientation can determine that.

Tuesday, June 21, 2016

China’s rising strike wave

 June-July 2016 - Volume 37, No. 3
Linda Averill
June 2016

Tens of thousands of angry workers strike at Nike and Adidas plants in southeastern China. Photo: Diego Torres / Demotix

If one believes the propaganda peddled by U.S. politicians and the media, China’s workers are unfair competitors and job stealers. In reality, this vast working class is fighting like hell against the very same forces of world capital responsible for the fears and insecurity of their U.S. sisters and brothers.
Exploited and mad as hell. Thirty years into market “reforms” that gradually restored capitalism, strikes are at an all-time high. Many of the targets make products for companies whose names are familiar in the Americas — Honda, Nike, Apple, Foxconn.
In 2015, China’s workers waged 2,774 strikes and labor protests. This doubled the 2014 number, which in turn was a marked increase from the total of 1,200 actions between 2011 and 2013. Strikes are illegal in China, which makes them especially significant. Today, the unrest continues apace.
The Pearl River Delta region is the heart of the strike wave. The province of Guangdong, known as “the world’s factory,” is China’s export center and economic engine. Construction and manufacturing are the predominant sectors and are host to more than 70 percent of the protests.
An estimated 274 million rural migrant workers are the backbone of China’s labor force. The figure includes not only people who have left rural homes to earn wages to send back to their families, but also city dwellers with family roots in the countryside.
Conditions for migrants are brutal; workdays of 10 or 12 hours are common. And migrants pay another price as well. In moving to places where there are factories and jobs, they leave behind a social benefit package that the government ties to their traditional family place of residence.
Known as hukou, the household registration system provides healthcare, pensions, insurance against injury on the job and more. But the benefits of hukou don’t follow the individual. This puts people leaving the countryside, or who come from rural families, in a precarious, super-exploited position, similar to that of undocumented workers in the U.S.
During China’s years of spectacular growth, strikes were often about wage raises. But stagnation in the global economy is affecting China; exports are down. When the Chinese economy slowed and the stock market crashed in 2015, factories shed workers or closed shop entirely. Now, disputes most often center on back pay — millions of workers are going unpaid — and on compensation for layoffs.
In the past, the ability of migrants to return to the land provided an important safety valve to calm the turbulence generated by China’s return to capitalism. But the continuing loss of rural areas to urbanization is curtailing this option, and the government is feeling increasing heat.
Rising up, cracking down. Recognizing the crisis, Communist Party (CP) government officials are crafting plans that would allow migrants to carry hukou with them to mid-sized cities. But schools and services there are vastly inferior to the services provided in China’s largest cities, especially along the eastern coast. Only the most elite workers are able to qualify for status in these wealthier locations.
To make matters worse, officials are planning to shed 1.8 million workers by downsizing state-owned enterprises in the coal and steel industries.
With the need for a fighting labor organization so clear, the bankruptcy of the All-China Federation of Trade Unions (ACFTU) is being thoroughly exposed.
Officially, the federation represents 280 million Chinese workers. In practice, it represents instead the same CP government that is subjecting the working class to market reforms and their attendant misery, pauperization, and uncertainty. ACFTU officials who negotiate for the workers are frequently chosen by the employers that workers are on strike against.
In a major breakthrough, during a vibrant walkout at Honda plants in 2010, workers raised the need for democratically elected union leaders.
Of necessity, most strikes are organized outside the federation’s official channels. The consequent lack of centralization makes it difficult for the working class to build on the power, organization, and lessons gained from each strike.
Facing severe government repression, labor leaders are forced underground and compelled to seek new forms of resistance and organization. Several were arrested this past winter on charges of “disturbing social order.” Nevertheless, the strikes continue — not only by factory workers but by teachers, bus drivers, and others as well. So do road blockades, factory occupations, and other forms of protest.
The need for solidarity. This spring, Chinese labor activists Mi Tu and Fan Gang toured the West Coast to publicize the fightback and build solidarity. Factory workers themselves, they contributed interviews with fellow workers to the book China on Strike. In Seattle on April 11, the two discussed the current situation and the challenges ahead.
The consciousness of workers is evolving, Mi Tu said. As their demands grow more complex, embracing issues like factory closures and social welfare guarantees, the difficulty in getting these demands met through one or two strikes is also growing. Workers are coming to understand that they need organizations of their own, she said.
Government opposition, however, makes the organizing of independent unions a decidedly uphill battle. So what can be done?
China does not exist in a vacuum. The harsh difficulties suffered by the people are products of the international economy, and the solution must be international as well. Chinese workers need the support of a militant international labor movement.
In the U.S., workers can take a step toward building such a movement by challenging the “America First” mentality prevailing among politicians and union officials. Far from benefiting U.S. workers, this perspective holds them back. Because whether big business operates under the Chinese flag or the U.S. Stars and Stripes, it profits most when the world’s labor forces see each other as enemies, not allies.
Send your feedback to the author at FSnews@mindspring.com.

The CIA: The world's leading terror group.


Khaled El Masri
By Richard Mellor
Afscme Local 444, retired

With all the fuss about Muslims and their so-called violent US hating tendencies, I was reminded of the German Muslim, Khaled El-Masri. Remember him?  No? I didn’t think so.

He was abducted in Macedonia and turned over to the CIA as part of the its rendition program, a somewhat less offensive term than kidnapping.  I was in Macedonia just a few years earlier and the population was elated that the Bush Administration had recognized the country as the Republic of Macedonia; Macedonia was formerly the southernmost province of Yugoslavia.

There were huge rallies when I touched down at Skopje airport and people were handing out buttons with Thank You Mr. President on them. I couldn’t imagine why anyone would produce a button like that for Bush until I understood the nation was officially recognized by the world power with the “big stick” as my friend put it. The Greeks across the border were demonstrating against the recognition as they also consider themselves Macedonians.

Anyway, I had a dodgy experience there being followed by two shady characters who I assumed were either CIA or US flunkies in the Macedonian government. Fortunately, I had made the local police aware of my presence and I don’t think that hurt.

In El-Masri’s case, the Macedonians, eager to please their American handlers handed him over to the CIA who then flew him to Afghanistan where he was “imprisoned and tortured.” CIA men allegedly beat and sodomized El-Masri in an airport facility.

Al Masri also wrote of his ordeal in the LA times in a piece titled, I Am Not a State Secret. The title refers to the US government policy of declaring information about abuses by its military, the CIA and other agencies, as state secrets.

El-Masri wrote that he, “ was stripped, severely beaten, shackled, dressed in a diaper, injected with drugs, chained to the floor of a plane and flown to Afghanistan, where I was imprisoned in a foul dungeon for more than four months”

The CIA eventually realized they had the wrong man. Masri writes, “Long after the American government realized that I was an entirely innocent man, I was blindfolded, put back on a plane, flown to Europe and left on a hilltop in Albania — without any explanation or apology for the nightmare that I had endured.”

With the help of the ACLU, El Masri eventually sued the then director of the CIA, George Tenet, as well as other CIA agents involved in his kidnapping. The main thing for El Masri was a “…public acknowledgment from the U.S. government that I was innocent, a mistaken victim of its rendition program, and an apology for what I was forced to endure. Without this vindication, it has been impossible for me to return to a normal life.”

In these types of cases, and there are literally thousands upon thousands of them, the US doesn’t deny its guilt. It simply claims that they should be thrown out because to litigate them would mean exposing state secrets; very handy.

Indeed, El Masiri’s case was eventually thrown out and he wrote in the Times, It seems that the only place in the world where my case cannot be discussed is in a U.S. courtroom.” (my added emphasis)

As Julian Assange explains in his book, The Wikileaks Files, German authorities, who were also attempting to “arrest and prosecute thirteen CIA operatives involved with the case.” were also under massive pressure from the US government to back off.  It is standard practice for US torturers and murderers abroad to be shielded from justice in the country they commit their crimes should they be caught.

El Masri did win a victory against the government of Macedonia in 2012 when the European Court of Human Rights found in his favor accepting his version of events. This marked the first time that the CIA activities against detainees was formally declared 'torture.  The US is exempt from such justice. The reader can hear an interview with Derian Pavli a senior attorney with the Open Society Justice Initiative  on WBAI here: http://www.wbai.org/articles.php?article=769

I cannot stress enough that US workers should make a special effort, put aside the time, to read Assange’s book because the details in it come not just from someone asserting the corrupt nature of the US state apparatus, especially its secret surveillance machinery that makes the old KGB look like amateurs, but from private messages US officials sent to each other, from cables and other communications between agencies and also from foreign missions to the state dept. It exposes their phony diplomacy as nothing but lies and deception with horrific consequences for the victims.

If anything should convince US workers of how important it is to read these details it is the throwing out of the court case on the false grounds that litigation will expose the US population to state secrets. The rest of the world are more informed than we are and that should tell us something, that our own government does not want us to know what it is doing or has done. American workers, and indeed all workers, owe people like Chelsea Manning, Edward Snowden and Julian Assange a debt of gratitude, they are all incarcerated in one way of another for bringing us information we should have freely.

But it would not be so easy for them to convince us that their actions abroad are justified as a response to potential terrorist attacks on the American people and our way of life if we knew the truth. Terrorists hate us we are told and all because we are free and they don’t want to be free. It’s almost laughable were the consequences no so tragic.

How many more El Masiri’s are there? What do Iraqi’s, Muslims, the worker’s of the Middle East feel like when Madeline Albright, a former senior US government official claimed the deaths of 500,000 Iraqi's mostly women and children due to US imposed policies through the UN were “worth it.”

How will the friends, relatives and siblings of El Masri and the thousands of other innocent victims of US aggression respond? I know how we would. We would have no love for the perpetrators of such brutality and we’d be looking for a way to avenge it.

Monday, June 20, 2016

The Sharing Economy and the Future of Capitalism


The Collaborative Commons, the Sharing Economy and the Future of Capitalism
By Mick Brooks

The commons associated with the traditional village economy are long gone. There is much talk nowadays of a new collaborative commons of ideas, provided by the Internet.

The Enclosure of the Commons
One of the fundamental processes of primitive accumulation in the creation of capitalism was the enclosure of the commons, the transformation of common land into private property. Unfettered private property right is the foundation of capitalism. Though not usually suited to growing crops, the rough ground surrounding the crop-growing area was a vital part of the medieval village economy.

The commons provided grazing land for their animals, were often the only source of fresh water and fish, gave a supply of firewood or turf as fuel and had many other uses. They were usually regarded as the common property of the villagers. The point about the pre-capitalist commons was that the villagers could not live without them. The rising capitalist class realised that enclosure of the commons would enforce the proletarianisation of the peasantry.

By the late nineteenth century in England, after much of the damage had been done, there was a movement to protect what was left of this common land. The remaining commons were to be preserved as recreational spaces.

Two conclusions follow: Capitalism and unfettered private property rights, as Karl Polanyi recognised in his book ‘The GreatTransformation’, were regarded as profoundly unnatural. They had to be enforced upon the population.

The existence of the commons was supported by the ideology of the ‘moral economy’ embodying the principle of solidarity, the common sense of the pre-capitalist era. This ideology was smashed after a long struggle.


Public Goods
How does neoclassical economics analyse the commons?  It regards capitalism and private property as natural and eternal. The traditional justification for private ownership of private goods is that they have been earned by the sweat of one person’s brow. This is never the case in twenty-first century capitalism. Use values are produced by collective labour, not just in the workplace but through the entire complex division of labour in modern society.

Neoclassical economics classifies the commons as a kind of public good. Official economics has to admit the acceptance of ‘public goods’, but only as a weird exception to the general rule of private goods. Public goods in their sense do not mean all goods provided by a public body, such as the National Health Service.

Samuelson, and others following him, define public goods under capitalism very narrowly. The usual examples they give are a lighthouse and national ‘defence’. The light from the lighthouse shines on those who pay and those who don’t. Likewise we all share the ‘benefits’ of national defence. These goods are therefore described as ‘non-excludable’.

They are also ‘non-rival’ in consumption. If I eat a chocolate bar, you can’t eat the same bar. It costs more to make more chocolate bars. This is not the case with important commodities. It costs no more to pass information to one person than to a million. So the whole world of ideas and information should naturally be a common treasury. Other examples of things with public goods characteristics are the streets around us and radio and TV programmes.

To sum up: in the case of a public good nobody can stop you using it, and in any case there’s no harm done since everyone can enjoy it without wearing it out or using it up.


Zero Marginal Cost
The most obnoxious area of neoclassical economics is called welfare economics. It claims to evaluate the well-being of economic activities. Its central principle is that price should be equal to marginal cost.  The argument is not that we have to pay for things because capitalists are greedy people determined to make money out of the rest of us. Heaven forbid! Providing a private good such as a bar of chocolate diverts resources from elsewhere. (As if all resources are fully utilised under capitalism!)

What is the marginal cost of lighting the way of another ship from a lighthouse? Nothing. If marginal cost is zero, then the price should be zero. So the light should be provided free. But this won’t happen under capitalism. Welfare economics is hoist with its own petard. It is intended to justify capitalism but shows that, for a whole range of commodities, capitalist provision doesn’t work at all or will not provide optimal quantities. That is why the official economists are anxious to banish public goods to a footnoted exception to the general rule.


Free Riders?
Garrett Hardin, in his article ‘The tragedy of the Commons’, viewed the commons as a public good. He did no research whatsoever and just applied the precepts of neoclassical economics, and Malthus in particular, to the issue. Since the commons were assumed to be free to all, he claimed there will be a ‘free rider’ problem. Too much of a free good will be consumed because people are greedy. The commons will be overstocked and overgrazed.

Harvey neatly inverts the question in his essay ‘The Future of the Commons’. If the cattle were owned in common it would not be in the interests of their communal owners to overgraze the commons. They would introduce an optimal number of beasts on to the commons. The real problem is private ownership of cattle.

In fact the commons were not open for every passer-by to use. Usually their use was regulated and access restricted, but Hardin ignored all this. Elinor Ostrom, who has won a Nobel Prize in economics studying the subject, emphasises that common resources, such as water in California, are not available to everyone, but only to a selected group such as farmers. They in turn collectively decide optimal use.


So ownership of the commons can be exclusionary as well as inclusive. The most grotesque example of this is St. George’s Hill in Surrey, part of which is a gated community affording luxury spas and golf courses, tennis clubs  etc, to the privileged residents within, while keeping hoi polloi firmly out.

The irony is that St. George’s Hill is the place where in 1649 Gerrard Winstanley, leader of the communist diggers, declared the earth to be “a common treasury for all its people.” Now it is a commons for rich people only!

There are many examples of commodities with public goods characteristics, commodities that will not easily be provided under capitalism. The air we breathe and the languages we create are public goods, totally ignored by neoclassical economics since nobody had found a way of making money out of them so far. Who would have thought, twenty years ago, that genetic materials such as DNA sequences could be claimed as private property and patented, as is the case with the EU Biotech Directive? Life in the city would be intolerable without open spaces such as parks. The countryside and views like that from the top of Ben Nevis are all public goods that can’t be taken away from us. (Though they’ll try and try.) Public education benefits us all, as we can all communicate with one another more effectively, as does infrastructure such as sanitation and public health facilities, paved roads and innumerable cultural assets.

We can allow, along with the economics textbook writers, that chocolate bars and underpants are pure private goods. The area of commodities with public goods characteristics is much wider than economists suppose. The NHS is not defined as a classic public good. People’s complaints and illnesses are dealt with individually, but after all it is not in our interests that our neighbours walk around infected with disease. We all share the benefits of a healthier society.

Unless a bus is choc-a-bloc it doesn’t cost the bus company a penny more to pick me up and take me where I want to go. So I should go free. That’s a classic argument for free urban public transport.
Even privately owned goods such as cars can have public good characteristics. Unless it’s full (and cars are seldom full) there is space for others. This is the case for the ‘sharing economy’. This has been known for a long time. Student noticeboards have advertised for decades that you can share a lift home for the weekend as long as you go halves on the petrol costs.

The different is that nowadays computerisation and the internet allows us to identify all the empty seats in cars and where they are going. Potentially this is an enormous benefit to humanity, but I will try to show that the ‘sharing economy’ under capitalism as manifested by the likes of Uber is a fraud.

Likewise houses are normally regarded as pure private goods. Airbnb was originally boosted as a way of using that spare bedroom to put up a visitor, another instance of the ‘sharing economy’. Where a commodity has public goods characteristics then there is the prospect of sharing.

Capitalists have been aware of the widespread nature of the public good characteristics of items they sell for centuries. They have found ways of limiting access to them and making money thereby. This, of course, is not in the wider social interest. Intellectual property rights such as patents and copyright are ways of limiting the free flow of ideas in the interests of profit.

In the case of radio broadcasts and TV programmes, one solution is for capitalist providers to sell advertising to pay for them. It is impossible to prevent listeners from buying cheap radios for £10. They still get to listen for free, but have to put up with the ads. Another solution to providing public goods is to accept that capitalists won’t provide them, and for the central government or local authority to supply them instead. This is the case for street lighting, the streets themselves and all the rest of the infrastructure without which capitalism couldn’t function. Public goods are pervasive because we all live in society and are all interdependent.


The New Collaborative Commons
The commons have been a subject of renewed interest among wider layers than just Marxists and economic and social historians. The reason for this is the emergence of the internet as a common resource. One instance of this renewed interest is ‘The Zero Marginal Cost Society’ by Jeremy Rifkin. Rifkin comes across as a technological determinist. A previous book by Rifkin proclaimed ‘The Third Industrial Revolution’.

Rifkin’s book ‘The Zero Marginal Cost Society’ is subtitled ‘The Internet of Things, the Collaborative Commons and the Eclipse of Capitalism.’ Rifkin has identified the internet as the potential site of an intellectual commons. The opening sentences read, “Capitalism is giving birth to a progeny. It is called the sharing economy on the Collaborative Commons.” The prospects for this new commons are provided by the onrush of technology. “The internet of things – is giving rise to a Third Industrial Revolution.” (p.13)

His thesis is as follows: “What is becoming increasingly clear is that the capitalist system that provided a compelling narrative of human nature and the overarching organizational framework for the day-to-day commercial, social and political life of society – spanning more than ten generations – has peaked and begun its slow decline.” (p.2)

Technology has produced the situation where, “The cost of producing each additional unit – if fixed costs are not counted becomes essentially zero, making the product nearly free. If that were to happen profit, the lifeblood of capitalism, would dry up.” (p.4)

He concludes, “It is these design features of the IoT” ((Internet of Things) “that bring the social commons out of the shadow, giving it a high-tech platform to become the economic paradigm of the twenty-first century.” (p.13)

In effect Rifkin is arguing that capitalism will be bypassed on account of new technology. Though insightful in some ways, his optimism is profoundly misplaced. How does this projection of the future connect with our concerns with the medieval commons?


A Sharing Economy?
In recent years the ‘sharing economy’ has become a buzzword. It has been pointed out that the average power drill is only used for 15 minutes. When you have to put up a set of shelves you really need one. The solution is surely to share rather than own. A genuine sharing economy has been going on for far longer than capitalism. It is a vital cement to our existence as social beings. People share childminding duties, garden produce and countless other things without thinking anything of it, even under the capitalist system.

Computerisation and the internet allow us to match those who need something with those who have resources going unused. What is different now is that to match ‘supply’ and ‘demand’ needs an electronic platform, and that gives the platform owner enormous power. Markets are supposed to emerge spontaneously in response to social need. The ‘sharing economy’ platforms such as Uber and Airbnb have been created and brought into existence artificially by big profit-seeking corporations.

These platforms are a form of intermediary. Other intermediaries include Google and Facebook. We regard these services as free to use, and indeed they have public good characteristics. How does Google make money? It makes billions in profits. It sells advertising. Its advertising is expertly targeted on us as individuals, because we give away quite intimate details of ourselves, our interests and our circumstances every time we search on Google. Nobody asked our permission as to whether it is OK to collect this information. In effect Google is spying on us via its algorithms.


In When Google Met Wikileaks’ an account of a meeting Julian Assange had with Google head, Eric Schmidt, Assange comments: “For Assange, the liberating power of the Internet is based on its freedom and statelessness. For Schmidt, emancipation is at one with US foreign policy objectives and is driven by connecting non western countries to western companies and markets. These differences embodied a tug-of-war over the Internet’s future that has only gathered force subsequently.” *


Julian Assange is quite right to point out that there is a tug-of-war going on for the soul of the internet, a struggle between the emancipatory possibilities of unlimited access to information and ideas and the power of sinister snooping that it gives to big corporations, allied, in the case of Google, to their co-operation with the US capitalist state.

The problem is not technology, which can give us the prospect of freedoms never dreamed of by Marx. The problem is capitalism which is desperate to enclose the intellectual commons against us. Apart from the big companies that try to monopolise our access to knowledge, we have another new enemy. These are the electronic platforms set up to establish ‘markets’ like Uber and Airbnb for the ‘sharing economy’. Studies have noted that there is a ‘winner-take-all’ effect as the successful first mover drives out rivals in one market area after another.

In effect these platforms act as landlords, monopolising access to their created market, and are therefore able to dictate terms to both the suppliers and their customers.  In the same way markets in the Middle Ages often developed on church lands, since Sunday was a day off for the peasantry after attending a church service. The church was therefore able to levy a charge on stall holders at these markets.


The Case of Uber

Uber shows us where the rhetoric about the ‘sharing economy’ really leads.  There are genuine advantages in the platform’s ability to match drivers with passengers. Traditionally cabbies have spent a lot of time hanging around or driving around waiting to be hailed. In New York Uber drivers’ idle time has shrunk from 36 to 20 minutes per hour.

That’s not the whole story. In the first place Uber has gained its global prominence by using blatantly unfair competition against existing taxi services. For instance London black cab drivers have to acquire ‘the knowledge’ over years, compendious information on the network of London streets. Uber drivers are deemed not to need that. Many city administrations require registered taxi services to provide facilities to transport disabled passengers. Uber makes no such provision.

“Uber has been accused of breaching regulations in France, Belgium, the Netherlands, Germany, Canada, Australia, New Zealand and Brazil. In the US Uber faced 50 federal lawsuits alone in 2015, in cases that tested the company’s liability for assaults by its drivers, ‘deceptive pricing’ and alleged discrimination against disabled people.” (Guardian, 27.04.16)

The article goes on to point out that Uber has a strategy of flooding the market of a city with drivers. Then the company starts to cut prices and squeezing its ‘agents’. Uber does so by stealth, for instance by upgrades to the app and changing fare and payment rates.

Despite the hippyish talk sometimes used to justify the ‘sharing economy’ Uber, and other platforms such as Airbnb, are hardnosed big business enterprises. They have been funded by liquid venture capital funds from California.

In conversation with potential investors Uber CEO Brent Callinicos boasted that Uber could raise rates taken from the drivers from 25% of the fare to 30%. He was asked, “You’ve got happy employees, you’ve got happy customers, you’ve got happy shareholders. The holy triumvirate are all really excited about your company. Why are you going to risk that and push the employees’ salary down 5%. Callinicos replied simply, “Because we can.”

This is quoted in ‘What’s Yours is Mine: against the Sharing Economy’ by Tom Slee. The title is a reply to ‘What’s Mine is Yours: the Rise of Collaborative Consumption’ by Botsman and Rogers.

Of course the Uber’s drivers are not actually employees.  Andrew Calloway continues the narrative of working in the sharing economy: “I was never an employee; I was a ‘partner’, or a ‘hero’ or  even a ‘ninja’, depending on the app. Sharing economy companies are just middlemen, connecting independent contractors to customers.” He concludes, “We still do have a boss. It just isn’t a person. It’s an algorithm.”  (Monitor, January/February 2016)

Uber spies on its drivers. Passengers are asked to rate their ride from one to five. The crucial number is 4.6. If a driver falls below that satisfaction rating Uber does not hesitate to boot them off the platform.


Casualisation of Labour
Under capitalism the sharing economy is a method of accelerating the casualisation of huge chunks of the workforce. Since the crash of 2008 in particular, millions of workers all over the world have lost what they thought were secure jobs. Many adults can drive and own a car; and they have become desperate to make a living. Uber takes advantage of that. If you’re an Uber ‘associate’ you don’t get sick pay, holiday pay, a pension or any income guarantee. It’s a life of complete insecurity.

Ursula Huws, Professor of Labour and Globalisation at Hertfordshire University, reports: “It is known by many different names: ‘gig economy’, ‘sharing economy’, ‘crowd working’, ‘platform capitalism’ and even ‘uberisation’. But one thing is clear: we are witnessing a phenomenal growth in new forms of work organised via online platforms.

Up to now there has been little accurate information about its extent in the UK but, according to the latest research into the scale of this far-reaching change to national work culture, around 11% of online adults aged 16-75, equivalent to up to five million people, are being paid for work through online platforms like Upwork, Uber and TaskRabbit.” (http://phys.org/news/2016-02-million-crowd-workers-uk-gig.html)

This is the reality of the ‘sharing economy’ under capitalism. What it also shows, though, is that capitalism has become completely redundant. The economy is increasingly powered by the achievements of what Marx called ‘the general intellect’, more and more commodities that we need can be provided free, since the cost of providing extra ones are zero, and we can match people’s needs to our resources to provide a genuine sharing economy, a socialist society. Only capitalist ownership of the means of production, including the electronic platforms which allow them to control and super-exploit labour, stands in the way. 


*In an earleir version there was an typo in this paragraph. It has been changed to read correctly.