Discussion:
Challenging capitalism in the UK and Wales – Len Arthur
Ed Miliband, in a recent speech in
the Google Big Tent, argued that it was now more relevant to talk about
‘responsible capitalism’ as opposed to replacing capitalism with socialism. As
pointed out in a commentary in the New Statesman, Miliband’s
speech refers back to the importance of Tony Blair’s change to Clause 4,
effectively re-burying the idea of socialism as distinctive system of
democratic ownership and control. Here is the core statement:
‘A choice
between an “irresponsible capitalism” which sees huge gaps between the richest
and the poorest, power concentrated in a few hands, and people are just in it
for the fast buck whatever the consequences.
And a “responsible capitalism”, and this is an agenda being led by business, where companies pursues profit but we also have an equal society, power is in the hands of the many and where we recognise our responsibilities to each other.
And my case is a “responsible capitalism” isn’t only fairer but we’re more likely to succeed as a country with it.’
And a “responsible capitalism”, and this is an agenda being led by business, where companies pursues profit but we also have an equal society, power is in the hands of the many and where we recognise our responsibilities to each other.
And my case is a “responsible capitalism” isn’t only fairer but we’re more likely to succeed as a country with it.’
He
uses this position to distance himself from the idea held by his father that a ‘fairer
society can be achieved through public ownership’.
This
is not even an argument for a mixed economy. There is nothing here about
re-nationalisation of basic utilities like water, let alone keeping the likes
of Lloyds and RBS in public ownership. Where the agenda of ‘‘responsible
capitalism” is ‘being led by business’ beats
me. He quotes examples like John Lewis, but they are not leading the trend.
Ed Miliband completely ignores the
problem of international corporate power and how to challenge it. Market
de-regulation and privatisation of state assets is a key agenda for these corporations
to prop up their rate of profit. Maurice Punch argued in his excellent book Dirty Business15 years ago that these
corporations had become crimogenic, chief executives operating beyond the
control of their shareholders, achieving profitability by ignoring the law of
the states they operate in. The current revelations about tax avoidance and
money laundering show that these tendencies are alive and well. In a recent
edition of Private Eye a special
report reveals how global capital is using the UK’s lax company controls to
systematically launder money. What is frightening is the use of UK Limited
Liability Partnerships (LLPs) as the vehicle of choice: a legal construct
introduced by New Labour.
These corporations are becoming more
powerful, not less. The only trend they are leading is toward crimogenic
capitalism; the end result of neo-liberalism is a convergence of mafia
capitalism from the east and the west.
If UK Labour is trying to avoid the
challenge of capitalism, can we do anything about it in Wales? Two recent
reports have begun to put this question back on the agenda. One is called Towards a
Welsh Industrial Strategy is by
James Meadway from the New Economics Foundation
and has been commissioned by the Wales TUC, the other is a Plaid Cymru publication
called Plan C . It is useful to consider these reports alongside the
Welsh Government’s current economic strategy, Programme for
Growth .
As socialists, what criteria should we
use to assess these reports and policies? Early posts in this blog tried to
make overall sense of the left economic arguments (see, in particular, ‘Is Marx now right?’) Michael Roberts’ blog has been compelling from a falling rate of profit
perspective. Engaging with both neo-liberal economists and radical Keynesians
on their own terms, Ha-Joon Chang’s
23 Things they don’t tell you about
capitalism and Richard Murphy’s the Courageous State are
superb. Now, the message for us
socialists that seem to come from this lot is the need to return to the idea of
a political economy, where we overcome the separation of the social from the
economic, in order to serve the needs of the planet and all the population, not
just profit. Ha-Joon Chang makes this point, in talking about the market, where
he describes the ‘free market’ as a political construct, which can be used to
serve narrow or wider social interests. For us in Wales, then, these arguments
provide us with the basis for changing the narrative, away from private
business growth, together with the domination of the market, toward asking
questions about how the wealth and value we create can best serve the
population and the planet.
The three documents place the Welsh
economy within the current troubled capitalist context. The NEF report provides
the most comprehensive analysis of the context, locating the crisis in the
shift of income from salaries to profits – with the expansion of credit filling
the gap – and the deregulation of banking and finance. In relation to Wales,
the report provides an interesting analysis of our contribution to the UK
balance of payments, suggesting that it is positive, due to our manufacturing,
but that we then have to pay the cost of the collapse in services, due to the
financial crisis located in the south east. After making reference to the
context of crisis, they go on to recommend steps that could be taken to try to
protect Wales.
All three approaches include similar
recommendations in relation to infrastructure spending on transport; the
importance of training and skills; the need to guide investment toward
renewables; the importance of the local economy; and the important role that cooperatives,
mutuals and social enterprise can play. Funding is, of course, a problem. Plaid
supports the first Silk report and NEF suggest the Welsh Government should have
borrowing powers. Both talk about raising money locally and borrowing. The
Plaid report suggests an arm’s length Business Bank for Wales, borrowing from
the private financial markets. What is missing from all three is how the issue
of ownership and control is related to growth that is – in all senses – sustainable.
First, the positive role of the public
sector is mentioned only with regard to the use of procurement to help Welsh
industry and services. With around one-third of the jobs in Wales directly
dependent on the public sector, together with those indirectly dependent and
with wider definitions, the real figure is possibly above 50%. This is a sector
of the economy which is about re-distribution, providing public services, under
public control, and is democratically accountable. The public sector is not
only the major part of the Welsh economy; it is using the resources available
for public benefit: need, not profit. As socialists we should cherish, protect
and project the role that the public sector plays in our society and economy.
For us, this is one key ‘sector’ that could – if we think beyond procurement to
the provision of high quality housing for all – be the foundation of an
alternative and challenging socialist political economy.
Second, cooperatives feature almost as
an add-on in all three documents, with a confusion of language and possible
role. The Welsh Government has established a Commission to evaluate
cooperatives in Wales, reporting in the autumn. I have argued elsewhere
that it is important that we, as socialists, clearly support cooperatives as a
method of collective ownership and control, not confusing them with other forms
of social enterprise. The International Cooperative Alliance definition provides for member controlled
organisations with each member having one vote. It is important to understand
this, as the model referred to both by the NEF and Plaid documents, Glas Cymru,
is not a cooperative. The board appoints itself and, after recommendations from
an independent committee, appoints the 50 or so members – a self perpetuating
oligarchy. It should become a real cooperative, with all who pay water rates to
it becoming members who then elect the board.
The ‘add on’ reference to cooperatives
indicates a lack of coherence about why they should be an important form of
organisation in the Welsh economy. Basically, cooperatives help to anchor
capital through collective ownership, which can be bolstered by legal
arrangements. It means that the value created remains geographically located
and less vulnerable to capital flight. Worker and consumer cooperatives also
have a track record of lasting longer than comparable privately-owned
businesses, largely due to the collective involvement and commitment of
members. As an organisational form, they are very flexible across all sectors
and are particularly useful as start-ups and when private organisations face
issues of succession. A key to a socialist cooperative strategy would be to
help organisations that have been privatised back into collective ownership and
to democratise the provision of public services whilst remaining in the public
sector. Finally, they are a form widely used to help ‘localise’ the economy, such
as through utility consumer cooperatives which not only help to stop local
economic leaks, but also can provide finance for locally owned provision of
renewable energy, such as wind power.
Third, the NEF and Welsh Government
documents stress the importance of government support for particular economic
sectors. This has been derided as ‘picking winners’ but, as Ha-Joon Chang
argues, it can be central to the economic development of the whole economy.
Auto and aero engineering are already recognised as key sectors of our economy
but others less so, such as food processing, which accounts for around 35% of
Welsh manufacturing and, as referred to above, the public sector. Moreover,
cooperatives as ‘knowledge cooperatives’ can provide a collectively-owned link within sectors between
producers and innovators (such as in universities) enabling the establishment
of knowledge intensive business services (KIBS). These can then compete internationally,
through establishing and maintaining a niche position in ongoing world leading innovation.
There are already examples in Wales, holding more promise than the current
Enterprise Zone strategy.
Fourth, as the NEF report points out, we
cannot rely on inward direct investment: we have to find ways of generating the
resources ourselves. Clearly, the Silk Commission’s first report, which is
embraced by Plaid, can help – but only if we have a socialist trajectory. Let
us be clear: devolved powers over some tax and borrowing rights will result in
pressure to reduce tax as well as to oppose borrowing; the debate will sharpen,
not go away. Private borrowing is also referred to – Glas Cymru has about
£2,700m tied up in private bonds against the income-stream of our water rates.
The Solidarity Funds in Quebec in Canada currently stand at around $8.5bn and have been
built up largely through small savings from trade union members. We could
establish a similar investment fund in Wales, using the cooperative and
building society laws, so that those that investing were also members and the
Welsh Government could use any new financial powers to provide initial support
and help offset risk.
Fifth, as socialists we should embrace
the idea of wealth being used for social purposes and not profit. In Wales, we
should aim to go beyond the simple measure of GDP and supplement it with
equally important social aims, such as providing work, housing, raising
household real incomes, reducing the carbon footprint, expanding ownership and
control and re-introducing trade union rights at work – thus, making a point of
a trajectory toward socialist political challenge to the UK and beyond by
example, and reaching out internationally. This represents a strategy of transitional actions and demands in operation. We could, in Wales, become as inspiring
as the Mondragon network of co-operatives in the Basque Country, just by using
a slightly amended devolution settlement – it is more about political will than
constitutional powers. In this way, we could provide a real challenge by developing
a trajectory toward democratic socialism, being an alternative in reality to
crimogenic capitalism, not a weak form of co-existence that relies on appealing
to capitalist businesses to be more responsible.
