Revealing the truth about Anglo-Irish Bank – RTE censorship and ICTU complicity

David BeggThe release of the tapes recording the Executives of Anglo-Irish bank conspiring to rob billions from the Irish people has led to a clamour for an enquiry so that the full truth can be revealed.  In my last post I argued that this truth includes the plain and obvious fact that it has been the State that has made the reckless gambles of Anglo the burden of the people.  These Executives showed no great concern that the organs of the State would prove any barrier to their plans.  In this they were of course proved exactly right.

I argued that what is required is that workers should fight for their own inquiry to reveal this and other truths that remain obscured, not least by the media that presents itself as the vehicle for revealing the truth.  I suggested that workers should fight in their trade unions to launch such an inquiry.

I have just received an email that throws light not only on the role of the media but also that of the trade unions.  In particular it shows that the leadership of the trade union movement in the person of its General Secretary, David Begg, has questions to answer over his complicity in the complete and utter failure to regulate Anglo-Irish bank.

The text below recounts the intervention of a reader of the blog into RTE’s Liveline radio programme, which addressed the Anglo tapes.  She questioned the role of David Begg, which subsequently led to a complaint by him and the removal by RTE of the podcast of the programme.  The alacrity with which Begg moved to defend his reputation can be compared to his apparent inactivity in ensuring the Central Bank performed all the roles it was responsible for and which he presumably was on its Board to ensure were discharged.

Anne has written a draft letter of complaint to RTE and has asked for signatures to a petition, both of which are set out below.

This episode highlights the need for a workers’ campaign to highlight the full truth of the banking collapse and hold all those guilty to account.  Not least the system itself.

————————————————————————————————–

On Liveline 27th June I got the opportunity to speak about my reaction to the Anglo tapes. I mentioned the protests organised each Sunday by ‘Dublin says No’ and encouraged people to attend protests that are organized around the country by the ‘Say No’ campaigns. So listen in to a podcast for the item. It is the first on the play list. Overall it was a good programme and showed the anger people feel.

I mentioned a few issues. Firstly that in Feb 2009 a group of teachers picketed Anglo-Irish bank in protest against the bail out of the bankers/speculators and to show our anger at the massive cuts that were taking place in our schools and in public services. I said a group of us went into the bank briefly to ask workers to tell us the truth about the real state of the bank as we were supposed to own this bank yet we were not allowed to even know what was going on.

I mentioned that David Begg head of ICTU sat on the Audit Committee of the Central Bank during the most damaging years of the credit bubble. He had access to what was going on in the Central Bank and that Mr Begg knows the true story and should make a detailed statement of what went on. He was supposed to be representing our interests.  Either he was happy the way the Central Bank was fulfilling its obligation to oversee the banks or he was sleeping on the job and knew nothing. Either way he should RESIGN. Begg then should have acted like the whistleblower Edward Snowden today, and in that case we might not have the present devastation to our lives.

I also mentioned that at the time of the Anglo take-over public services were being massively cut; huge cuts in education, my area of work, in our pay and pensions and that at the time Waterford Crystal workers were occupying the company as it was closing but there was no rescue for them. Mr Begg did nothing to organize a national campaign to save a flagship company while the nest of thieves in Anglo was being bailed out by the organisation of which he was a leading figure.

I contrasted what had happened to 1913, when Dublin workers stood up against the employers. They were able to gain their dignity and build the trade union movement as a real force while today when we are being ground into the dust and the trade union leaders are committed to working within the injustice and tyranny of the Troika programme. I said it was time to stand up for our right for a civilized way of life for ourselves and our children and that people should come out and join the ‘Dublin says No’ to the Bailout protests. I commented on our small numbers and the thousands of Brazilians who were protesting on O’Connell St 2 weeks ago against corruption in Brazil. It was time for people to act for themselves.

I also said that the contracts of public sector workers were torn up and emergency legislation enacted to steal our pay while nothing is done to take the massive pensions off the politicians such as Bertie Ahern. He should be stripped of his pension and the assets of the perpetrators of the crimes against us seized.

Letter of Complaint to RTE

I wish to formally complain to RTE regarding the disclaimer statement carried at the beginning of the Liveline programme 28th June 2013. It stated that RTE accepted that comments on the Live Line programme of 27th June relating to ICTU General Secretary David Begg were wholly untrue and without foundation and we also accept that Mr Begg was never a member of the Banking Regulatory Authority. We want to make clear that there was no suggestion on Live Line part that David Begg  is or was responsible or aware of any of the wrongdoings of Anglo Irish Bank which he condemned in the strongest possible terms.

RTE in acting in the manner in which it has are neglecting their duty to deal with a perfectly legitimate call from me. They are curtailing an important discussion on the role of people who held senior positions on the Board of the Central Bank leading up to and during the nationalisation of Anglo. A major scandal has blown up regarding Anglo Irish Bank where we are learning day by day of the deeply scandalous behaviour of senior executives at the bank.

Mr Begg made his complaint on the narrow base that he was not a member of the Banking Regulatory authority but I made no reference in my comments on Live Line to this.   It is a matter of record that Mr Begg had a number of major responsibilities as a member of the Board of the Central Bank, of which he was a member between 1997 and 2011. These are outlined below and as such he should have been aware of what was going on in Anglo.

Report of the Central Bank and Financial Services Authority of Ireland for the year ended 31 December 2006

Board Procedures (Page 62)

The Board holds eleven regular meetings each year. A quorum of seven normally applies for all meetings. The Governor approves the agenda and papers, which are circulated to the Directors one week in advance of meetings. Additional Board meetings may be called by the Governor at short notice either on his own initiative or at the request of any two Directors.

The Secretary of the Bank keeps minutes of meetings.

The agenda for meetings typically includes:

_ Reports on monetary and financial developments;

_ Reports on various issues relating to the Irish economy, the European economy and the international economy;

_ Reports on regulatory developments to keep the Board informed on policy issues and where decisions by the Board are required;

_ Management of the investment assets of the Bank;

_ Substantial financial contracts to be placed by the Bank for the procurement of goods and services;

_ General management, planning and budgetary issues;

_ Quarterly and annual financial statements and results.

Board Sub-Committees

The Board established three sub-committees on 30 June 1994 as follows:

_ The Audit Committee; The Remuneration and Budget Committee; The Investments Committee.

Board regulations detail the terms of reference of each sub-committee and membership in each case is comprised of Directors — of whom one is appointed as Chairman — and a further member of the Regulatory Authority with observer status. The Secretary of the Bank, or a nominee, minutes all meetings of the subcommittees and, when approved, these minutes are circulated to the Board. The members of the sub-committees, as at 31 May 2007, were as follows:

The Audit Committee members; David Begg (Chair), Martin O’Donoghue, Deirdre Purcell*, Alan Ashe**

( *Members of both the Board and the Regulatory Authority. **Members of the Regulatory Authority who are not also members of the Board but who participate at meetings of the above CBFSAI Board committees with observer status.)

It is clear from the agendas of the meetings that the Board members had a responsibility in overseeing the state of the banks which would have included Anglo Irish Bank, the 3rd largest lender at that time.  It is inconceivable that Mr Begg was completely unaware of whether the Central Bank was fulfilling its obligation to oversee the banks considering the agenda of Board Meetings and also given that he was Chair of the Audit Committee.

As General Secretary of the ICTU he is expected to represent the interests of workers/ordinary tax payers and I called Liveline as a long time trade union member concerned at the devastating consequences of the bail out of Anglo and the shocking revelations in the tapes.

RTE as a public service broadcaster should be to the forefront in lifting the veil of secrecy that has surrounded the bail out of Anglo, instead it has in this instance censored an important discussion and is failing in its duty to investigate or allow discussion on how the members of the Board of the Central Bank have fulfilled their role the role.

The refusal to podcast the programme is a further example of failing in its duty

Furthermore the disclaimer statement is an attack on my integrity and the truthfulness of my contribution to the programme. As you can see from the above excerpt on the operation of the Central Bank, I did not stray from the facts surrounding Mr Begg’s role on the Board of the Central Bank.

I request a copy of the transcript of my comments on the Liveline programme as my good name has  been brought into question by the disclaimer.

I expect an apology for the aspersions cast on my character on national airwaves.

 

Statement condemning RTE censorship on the role of General Secretary of ICTU David Begg in his capacity as a Board member of the Central Bank

We the undersigned strongly condemn the censorship of discussion by RTE of comments and questions raised as to the role of the General Secretary of ICTU David Begg in his capacity as a board member of the Central Bank and chair of the audit committee of the Central Bank during the period covering the boom years and the subsequent collapse of the banking system.

This gross self censorship by RTE on these legitimate questions and the subsequent erasure of the podcast of the Liveline programme of 27th June 2013 is a shameful and disgraceful episode for RTE as national broadcaster.

The role of the ICTU in demanding a disclaimer on the narrow basis that David Begg was not on the regulatory authority, (a claim that was never made) is an issue of concern for trade union members and all those affected by the criminal activity within the banking sector.  The role of a senior member of the trade union movement in these catastrophic events should not be and cannot be censored.

BBC ‘Masters of Money’ considers Karl Marx (Part 2)

The BBC programme was called ‘Masters of Money’ and was ostensibly all about money but there was nothing said about Marx’s theory of money, which is fundamental to explaining the current economic crisis.

For mainstream economics money is essentially just paper that can be used to exchange commodities.  Provided it is not issued in too high a quantity it will maintain its value and is useful for this purpose.  Already we can see a problem.  What is the intrinsic value of pieces of paper or metal coins?  If it had an intrinsic value its issue would hardly be a problem. It becomes a problem because paper money cannot fulfil all the functions of money precisely because it does not have an intrinsic value.

The massive expansion of credit makes credit too look like money in that it is used to exchange commodities.  However at a certain point people want paid with money and not yet more credit.  When this happens credit stops being given to some people and we have a ‘credit crunch’ such as developed in the latest financial crisis when banks refused to lend to each other and Governments had to step in.

For Marx money is itself a commodity with an intrinsic value because it too is the product of human labour.  Historically it has taken the form of gold.  This is why commodity exchange is an exchange of equals because when money is exchanged for a commodity the money is either gold directly or indirectly if it is convertible into gold.  The end of such convertibility does not abolish exchange being one of equivalents.  Just as credit cannot become real money and this is proved during a credit crunch so paper money is exposed when it is over-issued and creates inflation and when in a crisis capitalist investors look to put their money into something that will preserve the real value of their wealth.

In fact this occurs during booms when speculation on one type of asset after another leads to bubbles – in high-tech company stocks, houses, commodities and now certain government bonds. The price of oil is one barometer of this activity.

Thus just as the massive expansion of credit is not a solution to the problem of capitalist crisis and the contradiction between a limited market and profitable production so also is the printing of money through quantitative easing not a solution.  Yet according to mainstream economics there is no reason why printing money should not be a solution.  The proof of the pudding is that while quantitative easing  has prevented collapse it has not abolished the crisis.

Many companies are sitting on piles of cash including US multinationals holding money outside the US and so evading US taxes.  There is an ‘investment strike’ because of the recession which has created unemployment, falling incomes, debt crises for many countries and austerity which promises not a recovery but continued recession.  All this is worse in Ireland because it is not mainly the policy of austerity which is the problem but a massive overhang of debt, which must otherwise be repaid, and shrinkage in demand due to lower wages, unemployment and emigration.

We are back to ‘solutions’ that are based on more investment and higher wagers but which ignore that it is the system based on profit which is the cause of the problems.

Two other issues occupied the last part of the BBC programme.  The first was whether capitalism would last more or less forever or would be temporary and replaced by something else. The programme accepted that Marx’s analysis of capitalism had a lot of sense to it but it did not, to no one’s surprise I am sure, think that he had any alternative.  In fact the very scarcity of his views on this was held up a number of times while recognising that no one else had much of a clue either.

This was more than a little disingenuous.  The programme started off with shots of the Berlin Wall being demolished and of pictures of Red Square in Moscow and of Stalin.  The presenter recalled that she was at university at the time the Berlin Wall came down and one thing she was aware of was that ‘communism’ had definitively failed. The programme she said would therefore not look at what Marx had to say about communism.  To return at the end of the programme and say that Marx had no alternative while excluding what he did say about an alternative is, well, not exactly fair.

Also unreasonable was the nonsense that Marx, although he had been poor, had towards the latter years of his life become a bit bourgeois.  This seemed to consist of such things as worrying over the future of his children and taking walks in the park in quite nice areas of London.  What a traitor!  He hadn’t even been down a coal mine, unlike the presenter who went down one for the programme.

That leaves me a bit conflicted as I worry over my children, like nice walks in the park (sometimes) but have been down a coal mine (once).

More importantly the programme argued that Marx had no alternative and implied that this explains the otherwise puzzling phenomenon, gleefully expressed by ex-Tory Chancellor of the Exchequer Nigel Lawson, that many people were not flocking to the banner of Marxism.  The latter is a fact, so is it the result of the former?

In an earlier post on the defeat of the opposition to the austerity referendum I asserted that the Left and the working class generally did not have a real alternative, as opposed to some theoretical one, and that this was fundamentally why many workers had voted for something that was against their interests and which some knew to be the case.  The programme actually expressed very well what is meant by an alternative, if I recall more or less accurately, it said that this would be when ‘a compelling alternative would appear.’  What is this ‘compelling alternative’?  If we are talking about the replacement of the political economy of capitalism we are also talking about its replacement by the political economy of the working class.  What is this?

Marx described the alternative to capitalism this way:

“But there was in store a still greater victory of the political economy of labour over the political economy of property. We speak of the co-operative movement, especially the co-operative factories raised by the unassisted efforts of a few bold “hands”. The value of these great social experiments cannot be overrated. By deed instead of by argument, they have shown that production on a large scale, and in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labour need not be monopolized as a means of dominion over, and of extortion against, the labouring man himself; and that, like slave labour, like serf labour, hired labour is but a transitory and inferior form, destined to disappear before associated labour plying its toil with a willing hand, a ready mind, and a joyous heart. In England, the seeds of the co-operative system were sown by Robert Owen; the workingmen’s experiments tried on the Continent were, in fact, the practical upshot of the theories, not invented, but loudly proclaimed, in 1848.”

(http://www.Marxists.org/archive/Marx/works/1864/10/27.htm)

The beginning of an alternative to capitalism arises only when the working class takes action, however small, and is not limited to creation of worker owned and controlled production.  The creation of its own organisations to defend itself against capitalism also foreshadows its future control over the whole of society.  The creation of its own workers party is the pinnacle of it being conscious of its tasks.  Many of the political organisations claiming the banner of the working class and the mantle of Marx replace the centrality of the working class itself with calls upon the state, the capitalist state, to take the action only the working class can take and only which if it does take, can it be considered any step towards socialism.

So the BBC programme on the alternative of Karl Marx got his essential teachings wrong but unfortunately, through empirical impressions, got the current weakness of the socialist alternative right.  The programme itself however is an indication that this alternative is as necessary as it ever was.

BBC ‘Masters of Money’ considers Karl Marx (Part 1)

BBC Karl MarxAs part of its ‘Masters of Money’ series the BBC 2 programme, which looked at the ideas of John Maynard Keynes and Friedrich Hayek, finished by looking at the economic ideas of Karl Marx.  The overall verdict?  It could have been a lot worse.

There were of course huge simplifications that erased exactly what Marx was saying.  These could have been avoided, and the dismissal of communism and what Marx had to say about it was on a par with cold war contempt, but despite this there was a coherent argument through the programme.

It was very much the creature of a mainstream bourgeois economist albeit one who thought there were important insights to be found in Marx, particularly his perspective on the inequality of capitalism and its instability.  It avoided some cheap shots and pointed out that Marx appreciated the revolutionising of production achieved by capitalism and its dynamic development across the world.  The presenter Stephanie Flanders repeated the often made observation that Marx’s description of capitalism is more true now than when it was first made.  She also correctly observed that profit is the soul of capitalism and made some correct remarks about the compulsive nature of the drive for profit within the system.

There were some strange observations which tried to tie the relevance of Marx’s views to particular periods which excluded the post war boom and included the 19th century but excluded the great depression of the thirties.  The whole point of the programme however was to assert the relevance of his views today and if it did no more than this then it must be judged positively.

There were some problems that, had they been addressed, would have made for a much better exposition of Marx’s ideas.  The first is that the programme avoided what Marx thought was his greatest economic discovery – the nature of surplus value.  This is the discovery that the economic value created by capitalism is the result of human labour and can be measured by the labour time necessary for its production.  The source of capitalist profit is the result of the difference between what the capitalist pays for this capacity to labour and what this labour actually produces.  This explains how a surplus can be produced and a profit arise when the exchange of commodities, including labour power, is the exchange of equivalents. It is not a question of workers being cheated when they receive a wage in return for their labour power or of unequal exchange of commodities.

This is not a particularly difficult concept to explain but it does very clearly reveal the exploitation of the working class and exposes all the hypocritical justifications of the system.

The second problem is not what was left out but what was included, that Marx held that the absolute level of wages would be held down under capitalism.  This doesn’t sit well with the programme’s acknowledgment of Marx’s view that capitalism develops the forces of production.  Who did Marx believe would buy the goods created by the development of these productive forces?  This of course was the central tenet of the programme: that for Marx this was precisely the problem.

Marx’s argument was held to be that the tendency to lower wages reduced the ability of workers to buy the goods they produced.  Increasing wages would only reduce profits, the objective of the system, so this is not a solution.  As a temporary ‘fix’ the system expanded credit to make up the shortfall in wages and allow all the goods produced to be purchased.  The explosion of credit therefore explains the current economic crisis emanating within the financial services industry.  The programme was actually quite good when it cut to the right-wing talking heads who pooh-poohed the idea that low wages contributed in any way to the crisis.  They looked neither comfortable nor convincing, or maybe that was just me.

The programme argued that Marx’s criticism went much deeper than any other but actually the programme didn’t go deep enough.  Not altogether its fault since there is widespread debate among Marxists about the causes of the current crisis and even about the fundamental mechanisms of what might be called ‘classic’ capitalist crises.

What can be said however is that the description of the crisis given in the programme and the role of credit and wages is only how the crisis manifests itself, not how it is caused.  To explain the latter would require one to start with the idea ignored – surplus value.

If low wages restricting the market were merely the problem the question would not be so acute.  The capitalists who had diddled the workers could simply purchase what the workers did not.  Everything would then be sold.  The problem is worse because the workers create added value over and above what they are paid, over and above what is required to maintain production and also above the conspicuous consumption of the capitalists, and this additional value produced must find a market.  Why can’t this too be solved by the capitalists buying the difference?

The answer is that it can but the question then is what is the result of this?  Additional value appropriated by capitalists can expand their luxurious lifestyles but the driving force of the system is not this but profit.  To increase this means expanding production both to garner extra profit and destroy competitors.  This means the capitalist must employ the additional value produced by the workers to further invest in more workers and also machinery, raw materials etc to expand output.  The problem is intensified as production increases, new markets are sought for the things that are produced and the amount of surplus value (unpaid labour) created is expanded.

In the longer term the rate of profit comes under pressure as the capitalists replace workers with machines in order to produce more cheaply or even to produce some goods at all (some high-tech ones for example).  However because profit comes from workers the value of production comprised of workers labour declines and so does the proportion made up of surplus value, from which profit comes.  Fewer workers will create proportionately less surplus value while the cost of machines and raw materials etc increases relatively, so reducing the rate of profit.  The capitalists with the lowest productivity and lowest profitability can be forced into bankruptcy.  Of course to some extent this too can be offset by lower wages but the increasing sophistication of production means that paying peanuts will not allow the ‘monkeys’ to engage in the skilled labour required.  This is a long term tendency but one we can see in operation through the economic history of the west and in the rapid economic development of Asia.  It implies that profit plays a smaller and smaller relative role in production which calls into question a system in which this is the whole purpose of its existence.

The regular periodic crisis, including the current crisis, is the route by which this longer term tendency operates.  The compulsion to produce more and more surplus value also produces these more regular booms and busts.  The drive to expand the creation of surplus value means increased accumulation of workers, machines and materials and the expansion of markets to purchase the additional production.  In an economy dedicated to the needs of the population such increased production can be consciously planned and coordinated and its limits set by society as a whole.  Under capitalism no such limits are acceptable.

The limits on production of surplus value are therefore not set by the needs of society or by the limits of the purchasing capacity of workers and capitalists.  To break from these limits credit is expanded to bridge the limitations on consumption that are the result of the limits of production.  Through credit capitalism seeks to satisfy the capitalist desire to expand production through the accumulation of more and more surplus value.  Credit expands the market for increased surplus value production.

This can produce fantastic economic booms of the sort we have seen in the last decade or so in Ireland and across much of the globe, from China to Brazil.  The attempt to expand real production and to create an even larger market for it must at some point necessarily collapse for the same reason that credit is originally introduced.  Just as increased credit is an attempt to increase profit so the collapse of credit is the result of credit no longer being able to expand profitable production.

Workers must pay back debt at some level and beyond a certain point this becomes impossible because of the limits to their real incomes determined by real production.  The same is true of the capitalists.  Ever more convoluted attempts to expand credit beyond the capacity to pay it back – through creation of yet more credit – is doomed to collapse as the ever expanding amount of debt requires greater and greater repayments to keep it going.  The fantastic expansion of the financial services industry is testament to how big such an exercise can become. A glance at the size of the balance sheets of the Irish banks in comparison to the size of the whole economy reveals the scale of the overproduction and credit expansion that can arise.

In Ireland and the US the limits were reached when workers could no longer pay for inflated housing or capitalists pay for inflated office and other building construction.  A surplus of such properties is eventually created, overproduction appears, prices collapse, capitalists cannot sell except at a loss and those who built the houses and offices go bankrupt, workers in construction are made unemployed and the banks which financed it all go bust.  At such points it can appear that the problem is that workers wages are not big enough to buy all that has been produced and that this is the problem.  Solutions are proffered by Keynesians who say that what is need is yet more investment to take the place of that which has just collapsed.  But as we see, these solutions do not address the underlying problem and provide a ‘solution’ only by postponing the collapse and stoking up a bigger tsunami when the boom busts later.

In these circumstances blame is also placed on the institutions which created the massive credit explosion – the banks – especially since such booms inevitably involve hugely speculative, criminal and stupid behaviour during a time when everyone thinks they should be getting rich quick.   No one needs regulation during a boom when money is being made and afterwards the call is made that we have to have stricter regulation when again, but for opposite reasons, no one needs regulation.  Regulation becomes the alibi for the systematic failures of the system.  Left wing critiques which focus on the banks play into the hands of those who want to ignore or are simply ignorant of the system itself being responsible for the bust.  That the bust is so spectacular is simply a result of earlier failure to burst the bubble.  For a longer and bigger boom the price paid has been a longer and bigger bust but either way capitalismproduces booms and crashes.  Keynesian solutions to extend the boom can simply create bigger crashes.

Forward to Part 2