Jeremy Corbyn’s economics 2

o-JEREMY-CORBYN-THE-FACTS-facebookIt would appear that Newton Emerson doesn’t buy the view that quantitative easing might be about investment in real activities that promote growth but his disdain for the economic rationality of Corbynomics and his arguments opposing it are full of contradictions and holes.  So for example while he appears to see it Corbyn’s approach as dangerously radical he notes other, apparently more radical, alternatives such as giving out unfunded tax cuts or rebates, which have come from decidedly mainstream quarters such as George Bush or the head of the Financial Services Authority, who noted that the Bank of England had considered something similar.

The rationale behind Corbyn’s proposal is that the British economy needs sharply rising investment to boost economic growth.  This would produce higher levels of employment with people paying more taxes and taking fewer benefits, in the process reducing the public sector deficit and debt while realising better public services.

Newton Emerson however sees only the prospect of increased inflation because it would mean printing money and giving it to the government who would waste it, leading to rising prices.  He compares this unfavourably with simply handing out money through unfunded tax reductions (characterised as dropping money from a helicopter)or the Bank of England’s own quantitative easing explained in the first post, although he favours each of these for totally different reasons!

So, simply handing out money is good because “it is spent immediately on the high street” while the existing quantitative easing is even better because it “is a more effective and responsive version of the helicopter drop, where the cash is handed out under circumstances that ensure it will be hoarded by the banks.”  So if it’s spent that’s good and if it’s not that’s even better!

I don’t think I’m sticking my neck out very much by saying that most commentators think that the banks not lending the money but hoarding it, as explained in the last post, is a problem with quantitative easing as practised by the Bank of England and not a plus.

Of routeing the money through the banks, he says: “Better still, the moment prices start rising, the made-up pounds can be recalled and lending will instantly shrink by a factor of 20, reversing inflation in its tracks”.  Yes indeed, monetary policy usually takes around 18 months to two years but one that works instantly would be even better, except that if it worked by reducing lending instantly and by a factor of 20 the effect would be a catastrophic depression.

Emerson is right when he says that capital investment projects might take two to five years to get off the ground while the money paid on wages and to suppliers starts to be spent right away but this is an effect of any investment, state or private, so why is this only a problem with state investment?

If there were already an investment boom and a cyclical upturn that might shortly lead to overproduction and a glut of goods that cannot be sold profitably because of saturation of the market there would be a point to Emerson’s objection.  But preventing this would require some sort of economic planning, basically an end to capitalism, and he definitely doesn’t favour this.  In circumstances of a meagre upturn after a long recession it is unlikely there is constrained capacity that would lead to rapid inflation if additional money was pumped into the economy in the way proposed.

Emerson shines his Tory credentials by recalling the economic crisis in Britain in the mid-1970s in which deficit spending by the Labour party Government in 1976 led to the IMF being called in to give Britain a loan.  This shows that this sort of Keynesian policy leads only to inflation.  Four decades on, he says, the Corbyn supporters dismiss this lesson.

But his problem is two-fold.  What exactly is the lesson to be learnt and is the situation today the same as that in the mid-1970s?

The lesson drawn by certain advisors to city traders in the mid-1970s was that too much money was being created which was causing inflation and that Governments should target measurements of money supply to ensure that they do not exceed predetermined levels.  This monetarist policy was taken on board by the new Thatcher Government and dropped when it didn’t work.

But even his quoting of Labour leader Jim Callaghan in the 1970s ignores the admission in it that this policy had previously worked.  Post war recessions were shorter and less severe because of Keynesian policies.  Today’s critics of these policies now proposed by Corbyn ignore this, while Keynesians forget that it cannot solve underlying problems.  So yes these policies did lead to inflation, which increased over the post war period and eventually took off, but this brings us to the second question whether conditions today are the same as those of the 1970s?

The ‘money printing’ carried out by the Bank of England etc., which Emerson supports, is not free of inflationary consequences itself, it’s just that he fails to notice because they appear in rising property, share and other asset prices.  The policy of investment by the state at least promises investment in activities that support real production.

The Corbyn alternative is not madcap economics and is more supportive of working class interests than stuffing money into banks whose Directors were only yesterday appearing in parliamentary hearings explaining how they didn’t really know what they were doing.

Nevertheless the Corbyn policy of infrastructural investment by the state is limited in two senses and isn’t itself socialist.  First it’s investment in infrastructure where private capitalist initiative has failed.  The investment proposed is not therefore the sort that would be in competition with private capitalist production and in so far as it will be private capitalist concerns that pick up the contracts, such state investment will be a big boost for them.  Emphasis on state investment in infrastructure is something Corbyn shares with the many left electoral alternatives that have decried the desertion of old labour from its past.  They are pretty naked now it may be back.

The second way it isn’t socialist is that it is the capitalist state that is increasing its role in the economy not worker owned cooperative production, in which workers can democratically take the initiative and learn to run things themselves.  This could lay the economic and social grounds for a political challenge to the system as a whole where workers to decide they should own and run the whole lot.

There is nothing very democratic about current state ownership and the workers within it still answer to a boss.  The success of state led investment in efficiency terms is very much dependent on the developmental capacities of the state itself but when private capitalist intervention has failed it’s not a very strong argument for the likes of Emerson.

Like the rest of the shrill and desperate attacks from the right the local criticism of Corbyn doesn’t hold much water.  Others in the mainstream have recognised openly the limited radicalism in what is being proposed, which may actually be understood by those venting their disapproval.

Their opposition may therefore be motivated by fear that what is being proposed opens other more radical vistas for those seeking an alternative to austerity.  That this may well be the case is a reason why Corbyn should be supported.

Jeremy Corbyn’s economics 1

corbynimages (12)I hadn’t even gotten out of my scratcher yesterday morning when I looked at my mobile and the BBC news web site to see what was happening in the world, only to see yet another attack on Jeremy Corbyn’s campaign for Labour party leader.  This time the Brlairite was Blair himself, looking skull-like and definitely not very well – all that chasing after money mustn’t be good for his health.  “Labour must come to its senses” he apparently said.  I didn’t read any more.

Corbyn has been criticised in just about every way imaginable, from the Mail prophesying a return to the “dark ages”, riots and intervention by international peace keepers, to the oh so condescending approach of Janen Ganesh of the ‘Financial Times’: that Corbyn’s policies, “eccentric” and a “joke” as they are, are not really the problem, it’s the “soft left” and Andy Burnham and Yvette Cooper who are the ultimate problem.  Poor Jeremy, he’s either responsible for a new dark ages or he’s such a joke he doesn’t deserve consideration, even as a problem.

At the centre of all this dismissal is contempt and ridicule of Corbyn’s economic proposals for “quantitative easing for people instead of banks.”  Our local biggest daily ‘The Irish News’ had its own columnist to hurl his own critique, this time mixing both dire prediction and condescending ridicule.

The author, Newton Emerson, thinks that fewer than 1% of the population will understand “why Corbynomics is ridiculous” even though “it takes little more than an A-level to understand why.”

Emerson is normally an acute commentator on politics in the North of Ireland, frequently exposing the hypocrisy of political culture here and the rottenness of the political arrangements.  Unfortunately he has two problems.  First, when it comes down to it he actually supports the rotten political arrangements, and secondly, he gives every indication of having been educated in the dismal science of economics as taught in the universities.

He is undoubtedly correct that the general population is seriously under-educated in economics and this is a real problem for them identifying their interests in any debate.  On the other hand I don’t believe that Corbyn’s ideas are very radical and certainly not ridiculous, so going to university or doing an A-level really isn’t the answer.

So let’s see if we can understand what the issues are in this case.

Quantitative easing as practiced by the Bank of England involves the bank loaning newly created money (created as an electronic entry in the bank’s accounts) to a fund which has to pay it back, so theoretically it’s a loan and not just giving away newly created money.  This fund then uses these loans to buy government issued bonds (IOUs payable by the Government) that are held by pension funds.  These pension funds now have money instead of these bonds.

The theory is that these pension funds will then want to use the money to buy other assets from banks such as bonds to replace the ones just sold back to the government or buy other sorts of securities such as private debt instruments (IOUs issued by private corporations to raise money for investment).

The end result is that money has been created electronically by the Bank of England and it now rests in the banks which, it is hoped, will use the new money to buy debt issued by private firms that will in turn help them invest directly through the money just received.  This investment will create jobs and economic growth.   That’s roughly the theory anyway.

However, once the banks have the money they can do what they want with it.  They could buy bonds or securities issued by other countries; they could buy existing shares or securities which would give no more money to firms to invest but simply increase the price of these pieces of paper; they could buy commodities or property and cause inflation in these assets or they could simply sit on the cash.  In each case there would be no increased employment or contribution to economic growth.

Even if they bought newly issued debt from private companies, these too could decide not to invest the money in new factories, offices or equipment and instead do any of the above and join in the great speculative boom in property or share prices etc.  Many banks and companies appear to have done just this, which has made them richer but not helped economic growth.

In other words the ‘money printing’ that has been carried out has helped the banks and made the rich who hold financial assets richer by increasing their price.

Hence the alternative proposed by Jeremy Corbyn in which the newly created money, which is also in the form of a loan, is given to a State investment bank who then loan it out to state agencies which would invest in state-owned infrastructure such as “housing, transport , digital and energy networks.”  The objective would not only be to create jobs in the short term and promote economic growth, so reducing the debt burden, but also contribute to the longer term productivity of the economy, which is recognised as going through something of a productivity crisis.

To be continued.

The politics of murder in Belfast

images (11)The murder of Kevin McGuigan on 12 August in East Belfast is widely seen as revenge for the former’s claimed involvement in the earlier murder of Provisional IRA leader Gerard ‘Jock’ Davison.

The Police Service of Northern Ireland (PSNI) have done their bit to protect the Provisional movement by claiming that although Provisional IRA members were involved there is no evidence that it was authorised by the leadership.  Since complete denial of Provo involvement would stretch credibility to breaking point and reflect on the PSNI as well as the Provos, this was as much as they could do.

Of course this makes no sense, although it was notable that some nationalist commentators were prepared to swallow it.  Much amazement was feigned by unionists that an IRA even existed, so ‘answers’ were demanded.  The British Government said that of course it knew the IRA existed but that what was important was what Sinn Fein said (i.e. not what the IRA actually did) and especially that it continued to express support for the ‘principles of democracy and consent”.

The Garda in the South had previously claimed that the IRA had no military structure but are going to look at it again and the PSNI claimed it was a lobby group for “peaceful, political republicanism”.  Sinn Fein spokesmen claimed that of course the IRA was not involved, that it had “gone away” and all allegations to the contrary were ‘palitics’.

So the Provos continue to support the police but not as far as allowing them to get in the way of taking revenge or protecting themselves and their enormous financial empire. Support for the police is therefore purely ‘palitical’.

In the hypocrisy and lying stakes each out-does the other.

So the British Government and PSNI are claiming that while a much slimmed-down ‘peaceful’ IRA exists there is no evidence that it sanctioned the murder of McGuigan; although investigations will continue, which means that if it suits the political purposes of the British Government such a judgement can be easily changed. And easily justified – a ‘peaceful’ IRA with guns, that murders its enemies, and which by its very reduced size and tightness makes inconceivable the idea that the murder was not approved from the top.

The meaning of this is obvious: the British state and its police force doesn’t care if the Provisional IRA kills people it doesn’t like.  It doesn’t care if loyalist paramilitaries kill people they don’t like. Round the corner from where McGuigan was killed a young woman was almost killed by the loyalist Ulster Volunteer Force but the PSNI refused to blame the UVF who were responsible.

Today it is reported that the murder of another Short Strand man Robert McCartney by the Provos was subject of a secret deal between the PSNI and Provos, with the cops offering not to go after those who cleared up the murder scene, in exchange for Provo information on the less important hands-on killers.  No one has gone to jail and the Provos kept their mouths shut.

The political import of the killing is the following:

The Provos can kill and the state will give them impunity but it will expect a price to be paid.  Anyone who thinks that the end of Sinn Fein’s meagre opposition to austerity through opposition to some welfare cuts will not form part of the price probably believes that everything that the British Government, police, unionists and Sinn Fein has said about the murder of Kevin McGuigan is 100% true.

A message has been sent to all enemies of the Provos, political or criminal, that they are willing and able to kill, no doubt under some new set of initials such as AAD (Action Against Drugs).

The slow crumbling of the architecture of the political peace settlement has speeded up and now threatens the current arrangements.  The Ulster Unionist Party has withdrawn from the all-party Executive, putting pressure in its supposed more rabid rivals in the DUP to follow its lead.

The DUP has now proposed that Sinn Fein be expelled from the Executive, although Sinn Fein can prevent it, and only the British Government can do this.  If the British do not support such a move the DUP would then be forced to either put its money where its mouth is and walk themselves, bringing down the Executive, or reveal themselves as joined at the hip to the Provos in the great gravy train on the hill.  It might then start losing support.

As the pro-settlement ‘Irish News’ editorial put it today, the Executive is so discredited most will not care if it remains or goes.  And as I have noted before, the current Stormont regime is so rotten it has little credibility left.

The peace process has been built on the lie that the rotten sectarian arrangement brought about the absence of widespread political violence.  In fact the defeat of the Provos and the ending of widespread violence preceded the creation of the rotten sectarian arrangements.  Again and again the sectarian political settlement has been defended by the claim its overthrow would bring us back to the troubles.

The recent killings demonstrate precisely the opposite.  The existence of the sectarian Assembly and Executive is now justifying collusion between the state, Provos and loyalist paramilitaries in violence, intimidation and large scale criminality.  The message from the British pro-consul has been explicit:  as long as Sinn Fein supports the sectarian settlement and police that is what counts.  What it actually does will be excused and glossed over if remotely possible.  The so-called peace settlement and its preservation is now the justification for allowing political and criminal violence.

Socialists must continue to oppose this rotten settlement.  They should continue to oppose the PSNI and expose its collusion with the Provisional IRA and loyalist paramilitaries.  They should oppose the austerity imposed by the British Government and the Stormont parties, especially Sinn Fein and its phoney anti-austerity posturing.

It should likewise refuse to offer political support to any opposition by Sinn Fein to its exclusion from Government should this occur.  The Provisional movement is an obstacle to working class people in the North and South of Ireland identifying their own interests and defending them.

Teaching entrepreneurship to children

entrepreneurdownloadWhen a front page article in ‘The Irish Times’ reported that the Irish Business and  Employers Confederation (IBEC) is calling for entrepreneurship to be taught in schools my first reaction was  a sort of harrumph – brainwashing kids.  Then I thought that maybe it wasn’t such a bad idea after all.

The content of the subject would have to be wide enough to cover the full range of knowledge and skills necessary to teach children how to make money.  And let’s be clear, that’s what the objective of entrepreneurship is.  Nobody starts a business to make less money than they currently are making and losing money is a quick way to not being an entrepreneur at all.  So I think we are on safe ground saying that making money is pretty fundamental to the subject.

Secondly, it would be necessary to explain something obvious to adults but not to children.  I read recently, I can’t remember where, that it is only by the age of twelve that children can reason logically and handle abstract concepts.  This means that when it is explained to them that entrepreneurship means making money, this does not mean it is part of the art class and doesn’t actually mean getting pieces of paper from teacher and marking it.

Later in the course syllabus it will unfortunately be necessary to row back on this a little, if not actually quite a lot, by explaining that money can actually be made by pieces of paper, that is by other pieces of paper that are already money.  This will be called investment and will be a difficult concept for the younger child to grasp.

It is of course sincerely to be hoped that sometime later these children come across an entirely different subject called Marxism, which will explain to them that in fact real wealth is a result of work and that (paper) money is only a symbol or token of this wealth.  At this stage it will also be explained that investing is not actually hard work and that therefore the real wealth received from investments (such as stocks, shares, bonds etc) is not actually produced by simply buying and selling these pieces of paper.  It is a result of someone else who doesn’t own these pieces of paper working hard to make the things that make up real wealth – like houses, cars, clothes and nice food, including sweets.  This can be easily demonstrated by role play in which the children sell pieces of paper in class and note the additional wealth that has been created or not created at the end of the exercise.

It will also be explained that although they will have learned that the interest that is received from their investment is a reward for their abstaining from consumption, i.e. doing nothing, they do not actually have to abstain from consuming and that a lot of capitalists, sorry entrepreneurs, actually consume quite a lot more than the rest of us, sorry, I mean more than them.

Similarly they will have been taught that doing nothing is not what investors do but is what poor people do and on no account can those who live on their investment income be accused of doing nothing.  Quite the contrary – they invest.  Marxism will then teach them that this is bollocks, which will probably have to wait until mild sweary words are deemed to be an appropriate teaching aid.

If the subject goes beyond pure entrepreneurship and includes modules on applied entrepreneurship the children will have to learn how to apply the theory of creating money and a business to a real world situation.  Earlier summary presentations about the marginal utility function of consumption will have to give way to appreciation that perfect information on the part of consumers may well be a necessary feature of perfectly competitive markets but that the last thing that real entrepreneurs want is a perfectly competitive market.

Teaching this to children will have its obvious difficulties and their heads will seriously spin when forced to accept that this is because, if there is a perfectly competitive market, there is actually no profit – so what’s the f*****g point they might ask?  They will find that they have created a business that only makes money for investors who have lent them the money and do nothing, or whatever.

If the brightest pupils demonstrate that they are able to retain these conflicting ideas in their heads they should nevertheless be discouraged from retaining any memory of their earlier lesson on free markets, which is that it’s probably not worth their while starting a business with their wizard new idea in the first place because the efficient market hypothesis implies it’s probably already been done.  And yes, that’s even if you think you’ve invented a time travel machine.

You can see how such abstract concepts might be difficult for the average child to grasp but it has been demonstrated that having been grasped it is incredibly difficult to shift these ideas, even among the brightest children who have advanced to be really good at maths.  These children might go on to be economists although this is difficult to encourage, being similar to telling a child that they can’t be a footballer but can aspire to write for the back page of ‘The Independent’ or, god forbid, the ‘Daily Record’ in Scotland.

Applied entrepreneurship, however involves not just theory, as we have said, but the rough and tumble of the real world of business.  Specifically for IBEC this means Irish business.  Being a real entrepreneur therefore means hard choices.  Do you want to be a small entrepreneur, in which case you might end up feeling that you are exploiting yourself?  Or do you want to be a BIG entrepreneur and be famous.

In the latter case knowing a bank manager will be indispensible in getting access to funding so playing golf might be of great assistance here.  Similarly, access to lucrative contracts and access to some newly created incentive scheme (you need these to incentivise making money because this doesn’t happen by itself) will be greatly assisted by knowing a politician.  If you don’t know one the child should be encouraged to get a brown bag and practice giving it to their local councillor.

Newspapers love small people acting like adults without really be aware of what they’re doing.  Very small children will no doubt forget the experience but this will be invaluable training and education for future life as forgetting what you’ve done and claiming not to know what it was you’ve just done are  a feature of applied entrepreneurship in Ireland, especially in dealings with politicians and appearing at tribunals of inquiry.

Applied entrepreneurship also often requires not paying taxes but for goodness sake don’t let the child worry about how their teacher is going to get paid or the next generation of entrepreneurs educated.

So, having thoroughly reconsidered the idea of teaching entrepreneurship I think is has some very positive implications:

  • The teaching of neo-classical economics would have to be discontinued in order for one of the subjects not fall into total disrepute.
  • Teaching children that they should aspire to own the means of production and not just work for them might spur the quite logical question why workers shouldn’t own their own firms by creating workers’ cooperatives.
  • In the spirit of social partnership the role of trade union representation should also be taught and in order to gain access to the syllabus as a subject in its own right will have to include identification of workers separate interests and the various means to represent and promote them (that is: simply agreeing with the employer would invalidate it as a separate subject of study)

The next related lesson will involve moving on to a post on A level economics and why that man Jeremy Corbyn could really do with having studied it.

Visiting Avignon

DSC_0373This year I went to Southern France for my holidays, including Avignon, famous for its song ‘Sur le Pont d’Avignon.’ I was there just at the end of its annual arts festival so it was buzzing with life, hosting some fantastic busking musicians who could keep you entertained for hours while licking ice cream.  At least that’s what I did quite a lot of the time.

It’s also famous as the site of exile from Rome of the Popes, from 1309 to 1376, and has a very impressive Palais des Papes, which was their residence and is now a major tourist attraction.  As the audio guide to a visit explains, the palace demonstrated the secular as well as the spiritual (ideological) power of the papacy but the history untold is not one of the rise in the secular power of the papacy but of its decline from its zenith a century earlier.

DSC_0378

Boniface VIII, pope from 1294 to 1303, who liked to wear a crown, declared papal authority over the clergy and threatened France and England with excommunication. In 1300 he also pompously staged a Holy year, selling indulgences to finance his worldly domain. Overreaching himself however he planned the excommunication of the French king, who promptly arrested and imprisoned him in his castle in Anagni.  Even though subsequently freed by the people of the town he was a broken man and died a few months later in Rome.  The second next pope was enthroned in France and eventually establishing his seat of power in Avignon, the start of a series of French popes all largely dependent on the French monarch.

The Catholic theologian Hans Küng remarks that though such events might lead one to assume a tempering of papal claims, this was not the case.  Indeed the guide to the Palais deals a good deal with its vast system of financial management, required to finance building of the Palais and development of the papal bureaucracy:

“In the late Middle Ages, the Roman papacy increasingly lost its religious and moral leadership and instead became the first great financial power of Europe.  The popes claimed a spiritual basis for their worldly demands, of course, but they collected revenues with every means at their disposal, including excommunication and bans” (The Catholic Church)

It was in this period also that saw creation of the doctrine of papal infallibility, originally propagated by an eccentric Franciscan previously accused of heresy.  Apparently this early claim was not taken particularly seriously and was eventually condemned as the work of the devil and the ‘father of all lies’, only to be resurrected later in the nineteenth century.

For political reason the papacy moved back to Rome in 1377 but the next pope showed “such an excess of incompetence, megalomania and outright mental disturbance that there was reason for an automatic dismissal.” (Küng) So another pope, Clement VII was chosen except that the incompetent, megalomaniacal and mentally disturbed pope – Urban VI – didn’t accept this result and so they had a fight over it.  Upon defeat of his troops Clement VII took up residence in Avignon again.

Now we had two popes who excommunicated each other.  You can’t have too much of a good thing; so you had two colleges of cardinals, two Curias and two financial systems.  Clement was supported by France, Aragon, Sardinia, Sicily, Naples and Scotland plus some Germans while Urban was supported by the German Empire, parts of Italy, Flanders, England and some others.

In order to sort this mess out the cardinals met at a general council in Pisa in 1409, deposed the two popes and elected a new one.  Except neither of the existing popes accepted this result either, so the Catholic Church now had three popes! You really can’t have too much of a good thing and we now had a new holy Trinity.

Of course this couldn’t last and eventually the Church managed to get itself just the one pope.

I’d forgotten all this history while doing the tour of the Palais and it would really make for a ripping yarn if it was included in the audio guide to the tour.  But unfortunately some people don’t like the story history tells us.

Another thing I didn’t know was that the area of Avignon continued to be owned and governed by the papacy until the French revolution, only joining the rest of France in 1791.  In the meantime (the Michelin ‘Green’ Guide explains) Jews were confined to a ghetto, locked in at night, compelled to wear a yellow cap, pay dues to their Christian rulers and listen to sermons designed to convert them.

The incorporation of Avignon into a unified French state reminded me of another book I had read some years ago, ‘The Discovery of France’ by Graham Robb.  He noted that at the time of the revolution there were hundreds of small towns, suburbs and villages all more or less independent of any national state.  France was a name often reserved for the small ‘mushroom-shaped’ province centred on Paris.

DSC_0352

There was little common French national identity and no common language among ‘the French.’   As late as 1863 a quarter of recruits to the army spoke ‘patois,’ a ‘corrupt language’.  French seemed to be declining in some areas so that children forgot it when they left school.  Even half a century later some recruits to the French army in the First World War couldn’t speak French and there were reports of Breton soldiers being shot by their comrades because they were mistaken for Germans or because they failed to obey incomprehensible orders.

Most people in the 18th century didn’t travel far and their identity was a local one.  Robb quotes records of 679 couples from 1700 to 1759 showing that almost two thirds of the brides came from within shouting distance of their bridegroom: – “In Saint-Jean-Pied-de-Port, all but four of the fifty-seven women had married less than five miles from home. Only two of the six hundred and seventy-nine were described as ‘foreign’. This was not a reference to another land.  It meant simply, ‘not from the region.’”

Some of these towns and villages were “flourishing democracies” when France was an absolutist monarchy.  In one village, Salency, the children were never sent away to become servants, all were considered equal, and everyone worked the land. The village was conspicuously clean and tidy, harvests were abundant and crime was unknown.  Of course horizons were limited and no one was allowed to marry outside the village, which had only three surnames.

In another set of villages covering many square miles a clan called Pignou occupied an area in the northern Auvergne. All men over twenty elected a leader, there was no private property and all children in one village were brought up by a woman who ran the communal dairy.  Again people were forbidden to marry outside the clan and those who did were banished forever, “although they all eventually begged to be readmitted.”

So while the destruction of papal control over the mini-state of Avignon was obviously a progressive outcome of the French revolution the destruction of the much loved independence of many small communities by a remote, centralised state with its demands for standardisation, inevitable destruction of local customs (including language) and imposition of oppressive requirements, such as conscription into massive bloody wars, was not.

But such is capitalist progress.  Marxists understand its positive and negative aspects.  In fact understand that capitalist progress is a function of the contradictions and antagonisms within society that does not allow for real separation of good and bad.

Should it be rejected by seeking to go back to the past?  Obviously we can’t now go back to isolated village communities with no private property in the means of production in France or anywhere else but that is not how the question is posed today.

Today it is posed in terms of rejecting capitalist progress at the international level, also characterised by standardisation, centralisation and lack of democracy in favour of a return to more local, nation-state democratic forms.

Unfortunately much of the Left today is no longer confident about the future so seeks solace in the past.  But as we see, this past in the form of nation states was built upon its own brutality and disregard for peoples’ choices.

But just as the development of the nation state also heralded undoubted progress for humanity so also does the internationalisation of capitalism promise the grounds for a new and better society, a socialist one.  This is the ground upon which we must fight and seek to build an alternative.

Nationalist answers 2 – Greece

Greece imagesIn the last post I noted that one view on the Left in Scotland was that it was not possible to call for a vote or support for a reformist SNP because, through being reformist, it could not face down the intransigence of international capitalism when it tried to introduce reforms.

This would seem to be confirmed by the experience in Greece in which a reformist formation Syriza has just performed a humiliating U-turn and supported a third bailout that will impose greater austerity than that which it had previously opposed.

One of the many evaluations of this experience is here, which is also written by someone from the SWP tradition and which is based on the same political assumptions.  Unlike Davidson, who claims that the distinctions between reformists, revolutionaries and centrists are only understood by a relatively few revolutionaries, Kieran Allan argues that understanding such distinctions is vital:

“Ever since the crash of 2008, there has been an increasing call among activists to forget ‘old’ debates about reform or revolution. Yet the betrayal of Syriza re-opens this very question.”

One line of argument in response might be that Kieran Allen doesn’t actually advance a revolutionary programme himself – the SWP in Ireland doesn’t stand candidates in elections under a revolutionary banner but consistently stands as part of alliances that exclude it.  His definition of reformism applies equally to the various electoral projects of the left in Ireland over the past number of years:

“Despite opposing neoliberalism, Syriza embraced a reformist strategy. The term ‘reformism’ is not meant as one of abuse but it describes a strategy of using the mechanisms of the state to effect substantial changes on behalf of working people. It operates within the framework of capitalism and uses Keynesian economics to increase demand – rather than proposing the outright expropriation of capital.”

His criticism of Syriza can be made just as cogently against the United Left Alliance, People before Profit or Anti-Austerity Alliance:

“Some object to describing Syriza as a reformist because a) it leaders used a rhetoric about moving beyond capitalism and b) because there were avowed anti-capitalists elements within its coalition. However, this objection is somewhat facile as it was only in Bad Gotesberg programme in 1959 that the German SDP dropped their formal adherence to Marxism. In the early twentieth century many reformist parties combined a rhetoric about moving beyond capitalism as their maximum programme with a practice of seeking social reforms as their minimum programme.”

While he criticises the view “of democratising the apparatus of the capitalist state, transforming it into a valid tool for constructing a socialist society, without needing to destroy it radically by force’,” this is the alternative put forward by all these left alliances in Ireland.

This is certainly a problem but not the one I want to address here.  The latter is the problem of the strategy Allen puts forward as the alternative to Syriza’s reformism, not the similarity of this reformism to the SWP’s actual political practice.

Allen criticises “Syriza’s strategy of working exclusively through the state and through negotiations with the EU [which] could not match the courage of the Greek electorate.  This historic defeat, therefore, arose from a belief that control of the Greek state apparatus and appeals to EU solidarity was the method for bringing change. It never entered their heads to think about how the NO vote could be mobilised within Greece to physically face down EU efforts at blackmail. The sole agency was the Greek cabinet and its ability to negotiate with the EU bullies.”

Allen says that “they [Syriza] placed little emphasis on the role of Greek workers themselves taking action to break from capitalist control. . .  The mobilisation of workers in every area of society can stop the power of money and market forces.  Against the economic terrorism of the EU, people power and workers action is the only way to achieve change.”

When discussing lessons for Ireland he says that “In recent months there have been discussions about the need for a ‘progressive government’ in Ireland and interesting debates have occurred about policies. But there has been little talk about the methods by which such aspirations might be achieved.”

Unfortunately in reality neither does Allen, although this is the centre of his critique.  There are plenty of evocations of the need to mobilise workers to “face down the EU” but what does this mean?  What methods does he propose by which the aspirations of progressive change could be turned into reality?

What we have are calls to take action but total lack of clarity as to what action should be taken.

The first question is to identify the problem. And it’s not Syriza’s reformism.  Why is there a crisis in Greece in the first place?  Why not in Italy or Belgium – both have large debts?

The answer is well known.  Greece is relatively poor with a weak and not very productive capitalism. This makes not only Greek capitalism weak but its working class also weak, in a manner for which an increase in class struggle cannot compensate, or at least not very quickly.  This doesn’t enter Allen’s analysis.

The second question concerns the EU: “After the Greek crisis, the Irish left needs to drop any idea about the progressive nature of a social EU. It should note that Syriza was wrong to believe that it could combine an anti-austerity programme with support for the EU.  The reality is that the EU combines a soft rhetoric about ‘inclusion’, ‘solidarity’ and ‘respect for human right’ with a hard core neoliberalism that is embedded into its institutions.”

“The Irish left should, therefore, fully break with a ‘we will stick to the EU at any cost’ mentality because it was precisely this approach that gave the EU leaders a stick to beat Tsipras. Instead the left should advance its demands for a write down of debt, for nationalisation of natural resources, and a reversal of privatisation regardless of whether or not this is acceptable to the EU. It should indicate that it will not be bound by the rules of the Fiscal compact and that electoral support for the left means a mandate to defy such rules. It should make it clear that it favours the break-up of the EU in its current form and will seek its replacement by a federation of peoples based on democracy and control of capital.”

The EU is unreformable but if Allen has pretentions to Marxism he will also agree that the Greek State is also just as capitalist as the EU and also just as unreformable, yet he sees it as part of the solution through “a write down of debt, for nationalisation of natural resources, and a reversal of privatisation.”  Why would a capitalist Greece do this?  Is this not precisely the reformist approach that Allen excoriated earlier in his article? Or if an unreformable Greek state could do it why not a similarly unreformable EU?

He says that “Most modern European states are embedded in a network of EU institutions and so a strategy of working through the state also means working within those institutions. Syriza leaders correctly assumed that in an era of globalisation, there could be no purely national solutions to the crisis within capitalism.”

Yet in the proposals he advocates where is the recognition and incorporation of this impossibility of a “purely national solution”?

What we have in fact is the very opposite.  He proposes “A break from the euro [which] would have to be accompanied by a major programme to re-distribute wealth so that the costs of the change fall on those who can most afford it.”  But this is just the reformist programme he criticises while acknowledging that a new national currency cannot by itself be a solution. Yet a new national currency plus redistribution of wealth wouldn’t do it either.

Allen is right that any left Government “should [not] pretend that a different currency –such as the punt- can in itself solve problems. . . .  the key issue is not the currency but control of the economy.”  The problem, as we have seen above, is first that this economy is weak and second that the answer provided by Allen is always action by the state or rather by the national state, not internationally by the EU.

The nationalism that infects all inherently reformist projects appears explicitly in Allen’s perspective not just in rejection of the Euro or in rejection of the EU but in his support for “the break-up of the EU in its current form and . . . its replacement by a federation of peoples based on democracy and control of capital.”

This is something he “will seek” but as a policy it has no practical worth or educational propagandist value.  It simply states that a return to nation states and an end to capitalism is the answer and while the second is right and the first is wrong neither amounts to even the start of a strategy and adds nothing to any discussion of it.

This national road to socialism is made explicit in his statement that “it is possible to organise an advanced economy without a permanent need for substantial credit transfers. Ireland already has a high level of wealth but, unfortunately, its control lies in a few hands. Re-distribution of that wealth provides an alternative avenue to seeking ‘support’ from foreign creditors. Such a strategy does not preclude individual arrangements to access credit . Rather it suggests that a transitional economy that goes beyond capitalism would have to overwhelmingly rely on its own resources – rather than the type of EU ‘support’ that hung Greece.”

This in effect denies the international character of production from which there can be no going back and repudiates his statement that “in an era of globalisation, there could be no purely national solutions to the crisis within capitalism.” It asserts the opposite of everything that Allen professes to stand for.

He ends up arguing that “a transitional economy that goes beyond capitalism would have to overwhelmingly rely on its own resources” because the Greek crisis has not only tested and found wanting the reformism of Syriza but also exposed and found wanting the reformism within his own political conceptions based on action by the nation state.  In fact if anything, in its lack of any international perspective, it is worse than Syriza’s.

Nationalisation, redistribution of wealth and left governments astride capitalist states are not socialist solutions, even if in certain circumstances their effects can be welcomed and supported.  The example of Greece shows how one variant of such a solution can fail but the weakness of Greek capitalism placed major constraints on what could be done even if more could and still can be achieved.

Neither is nationalisation and redistribution by the state after a workers’ revolution socialism unless this state is the creation of workers themselves and not some minority party or group within it.  Freedom, as they say, is taken not given.

Socialism is the action of the immense majority of society, those who work and those rely on the wages of those who do so.  It is the actions of the working class that involve socialism.  It is not state ownership of production that is socialist but working class ownership that is socialist.  Before the political overthrow of the capitalist system and its state this must take the form of workers’ cooperatives.

The strategy of a purely political revolution, only after which comes social revolution; that is the strategy of seizing state power in advance of major gains in the economic and social power of workers achieved through workers ownership, leaves open the problem illustrated by the isolation faced by workers in the Russian revolution.

The alternative of more or less simultaneous revolutions in a number of economically advanced countries could only be conceived on the basis of a prior development of the economic and social strength and power of the working class on an international level.

This problem of isolation was and is faced by Greece but the socialism in one county approach of Kieran Allen is the wrong answer.

Seeking solutions at the level of the state in advance of the development of working class organisation at an international level provides the rationale for a programme which seeks not to advance beyond capitalist internationalism, which is what the EU is, but to regress from it mouthing fatuous phrases about international federations of peoples based on democracy and control of capital.

Nationalist answers 1 – Scotland

scoty images (11)A common analysis on much of the left is that the EU is a capitalist club that pursues an imperialist agenda, just confirmed by its brutal treatment of Greece.  The socialist answer is therefore to be in favour of leaving it.

Many of these same people argue that the UK is a capitalist state that has just re-elected a Tory Government committed to further austerity.  The election has shown that it too, just like the EU, is unreformable and should be split up; so for example Scotland should separate from it.

The answer to both is therefore a nationalist one.  Let’s not be distracted by the bells and whistles attached.  The objective is a change in the nature of the state but in both cases this means a return to the nation state, a smaller state, is the answer.

Ironically, as a recent post I read noted, while the treatment of Greece by the EU in the name of austerity has been acknowledged by more or less everyone to be brutal, the reaction of some nationalists has been much more muted.

Thus the SNP who are portrayed as opponents of austerity have rallied much of the British left around its nationalist argument for separation on the basis of its opposition to UK austerity.  It argues that any move to get out of the EU will see it demand a new indy referendum so Scotland can stay in.  Yet the austerity inflicted by the EU on Greece is of a magnitude many times greater than that directed from London.

From a socialist point of view it gets worse.  Their answer to this exposure to the contradictions of nationalism is to be even more nationalist than the nationalists.  Many of them demand that the UK (or the Irish State for that matter) leave the EU.  Of course it is claimed all the new states created will not be like their old incarnations  but progressive, if not socialist, but if they were there would be no need for them to be separate and if they are separate they will be in the position all nation states are in, which is in competition with each other.

We see such competition in the proposals of the various nationalists and left nationalists to reduce corporation tax.  Sinn Fein and the left in Ireland want to keep the low 12.5% rate but want it to be the effective rate while the SNP want a lower rate than the rest of the UK, whatever it is, and the Tories have just cut it to 18 per cent, so it now has to be lower than this.  When the Tories took office with the Liberal Democrats it was 28 per cent.  If my sums are right I think this makes Sinn Fein, the Irish Left and the SNP softer on the big corporations than Tony Blair.  But this doesn’t fit the narrative so let’s stick with it.

In an earlier post I promised I would look at an article notified to me by a friend, on the Left’s attitude to the SNP, just before the UK General Election so I’ll do that here.  I’ll also look in a second part at one of the many responses on the Left seeking to learn the lessons from the Syriza U-turn in Greece.  What they have in common is an accommodation to nationalism.

What they also have in common is being written from the Socialist Workers Party tradition.  As I noted before, this tradition, through their forerunner of the International Socialists, used to have much better positions on both the EU and Scottish nationalism.  However the two articles show that accommodation has not yet become capitulation.

The article in ‘Jacobin’ is in the form of an interview and it is revelatory that the first question doesn’t ask the interviewee why he supported Yes in the independence referendum but “what did you see in the movement that made it worthy of support?”

As I noted during the campaign, many on the left voted yes because they liked the campaign for it rather than any very compelling reasons for having a campaign for such an objective in the first place.

In this sense they were guilty of what Marx warned against – “Just as one does not judge an individual by what he thinks about himself, so one cannot judge such a period of transformation by its consciousness, but, on the contrary, this consciousness must be explained from the contradictions of material life. . “  Instead the Left supported a nationalist campaign, driven by social and economic concerns and desire for an alternative, and having done so declared it left wing.  It looked at itself in the mirror and liked what it saw.

Just like Sinn Fein in Ireland it does a grand job at telling itself and anyone else who will listen how great it is.  It might be something about nationalism.

I am also reminded by another less glorious figure in the history of the socialist movement who once declared “the movement means everything for me and . . . what is usually called “the final aim of socialism” is nothing.”

I exaggerate?  Well let’s look at the interview.  Davidson gives three reasons for changing his view to now supporting independence and, in his own words, he says that “the most important change was simply the nature of the campaign itself”

He says that “for many people it wasn’t about nationalism of any sort”. .  “It was about how to realise various social goals: an end to austerity, the removal of nuclear weapons, defence of the National Health Service”.  The fact that the answer to each of these problems is nationalism seems not to make the movement for it nationalist.

That the problems are not nationalist ones appears to mean that when the solution is national separation (“independence will improve their [workers’} situation immediately”) we don’t have to call it a nationalist solution.   Ironically if the problems were nationalist ones (like national oppression for example) a nationalist response might make more sense.

This self-regard leads to an exaggerated view of the role of the Left in the independence campaign, which, he says, dramatically changed its dynamic and drove the entire discussion of independence to the left.

In fact the landslide for the SNP in Scotland in the General election showed just who drove the campaign, who put independence on the agenda for decades before and who then benefited.

That the campaign for independence won the support of many working class people for a party Davidson admits is “on the extreme left of what I call “social neoliberalism” and “which broadly supports the neoliberal economic settlement”, i.e. austerity, is such an admission that it is simply staggering.

He supported separation because of the independence referendum campaign that led a neoliberal party to a landslide on the basis of that party claiming to lead opposition to austerity!

Davidson goes on to say that the SNP has moved to the left in economic terms “above all in rejection of austerity” and “is offering reforms” but also says they took up their “social democratic” position “in order to win votes” because “it would have been difficult to compete with New labour from the right”.

He accepts as good coin SNP claims of opposing austerity but fails utterly to examine its actual record in the Scottish Government, which would blow such claims out of the water.  Such an examination doesn’t fit the narrative.

In fact this narrative clashes obviously with reality.

He claims that the SNP sought an alliance with the Labour Party against the Tories, when in reality their strategy depended on destroying Labour in Scotland and keeping it to their right everywhere else.  Does he think the SNP would welcome a Jeremy Corbyn victory in the Labour leadership contest?

Why would it, since this would immediately demonstrate the efficacy of fighting together, that the Labour Party was not quite a dead loss and that there did actually exist a labour movement undivided by nationality.

He congratulates the SNP on their honesty, they’ll  never do a deal with the Tories he says, which means we can forget the one it had with them when in a minority administration in 2007 reliant on Tory support.

By supporting separation the pro-nationalist left has already separated itself from wider struggles.  In so far as there is a fight about austerity and its alternative in Britain today it is centred around the Corbyn campaign for leadership of the Labour Party.  I wondered on this blog whether the British Left would be part of it.  Were the unthinkable to happen and Corbyn actually win it could hardly be ignored.  Would an all-British movement against austerity in such circumstances be better than a purely Scottish one or would the Left insist on introducing national divisions where none were necessary?

It would appear that Davidson would answer the latter in the negative. “We must not give up the question of independence.  Unless a revolutionary situation emerges in England . . .”.  And of course Corbyn is far from being a revolutionary.

So it looks like English workers will have to deliver a revolutionary situation in England before the Scottish Left will be interested in political unity within one state.  (Talk about playing hard to get!) Not, mind you, that they are steaming ahead in the creation of a revolutionary party themselves because, Davidson says, “we are not in a position in Scotland to immediately set up a revolutionary party.”

Of course there are the ritualistic claims of wanting “solidarity” with English workers against the British State but not solidarity with English workers against a Scottish capitalist state which would replace the British one lording it over them come separation.  Joining with English workers to overthrow the Scottish state?  Now that really doesn’t fit the narrative.

Instead solidarity with English workers will mean we’ll demand the removal of Trident, which means moving these weapons to . . . err, England maybe?

And if the English follow this example and say that we’ll take the same position as you in Scotland and demand they’re not sited in our country, they can stay. . .err, in Scotland maybe?

What a splendid recipe for solidarity!

I mentioned that Davidson has accommodated to nationalism but not capitulated.  This is because although the article asks the question how the Left should relate to the SNP in advance of the General election he nowhere calls for a vote for the SNP.  The problem is, given what he says, I can’t see the reason for him not to.  Why not? given that he claims it opposes austerity, wants to introduce reforms, has moved to the Left and is now full of left-wing working class people who are ‘consolidating’ its position there.

It would be some slight comfort if it could be hoped that the reason for this is that, as a relatively recent convert to Scottish nationalism, at some level he just doesn’t quite believe his own argument.

Unfortunately the real reason may well be political sectarianism.  His reason appears to be that an SNP Government bent on reforms would face pressure and intransigence from capitalism when it would try to introduce its reforms.

He doesn’t say how this would not be the case in any other circumstance.  He doesn’t say how, what he might call a revolutionary party, would not face the same if not greater pressure.  He doesn’t say how it should be dealt with.  He doesn’t say why nationalist division prepares workers for such international capitalist intransigence and he does not say why this means that denial of support to the SNP now is justified by a future need for a revolutionary break, especially when he says the alternative party to be built now must not be revolutionary.  So how does he prepare all those inside and outside the SNP who must be prepared for this revolutionary break?

But what’s wrong with all this is not that Davidson should follow through on the implications of his analysis of the SNP and join it, but that his view of what is required of revolutionary politics now leads to a nationalist blind alley of supporting nationalist separatism now and being just as exposed to nationalist limitations when the grand day of revolutionary rupture might break out in the future.

His argument for national separation and endorsement of the SNP demand for independence falls apart because he refuses to support that party on the grounds that when it will be faced with international capitalist pressure it will be in no position to resist, most importantly because the working class will be divided by nationality whilst the capitalists won’t.

A convincing narrative or what?