Friedrich Hayek

How Corrupt is Britain?

Reality on the island…



Peace to her soul ~ and Why I Loathe Mrs “T”

Poll Tax riotsI started working in the Midlands around 1978 for a small engineering firm that designed, manufactured and exported high-tech telecommunications equipment to the US.  Yes, that’s right to the US of A. The firm had been founded a few years back by ex-European Space Agency British engineers who were good at what they were doing, and not bad employers either.  There were then hundreds of similar companies around the Midlands and the North of England.  By the late 80’s they were all gone, sacrificed to the Hayekian non sense that underpinned “la Thatcher”’s philosophy in life.  Ignore the noises of sycophants and of her numerous inheritors – think about this:

The craddle of the industrial revolution destroyed, entire regions laid waste by a policy of deindustrialisation paid for by plundering the riches of the North Sea, the plunder of state, that is, people-owned organisations in telecommunications, transport, energy, water, the destruction of the Coal-Mining industry and of the communities that had lived for it through two centuries, and saved the country in two world-wars, the sell-off of most of the remaining industrial base to foreign interests, the beginning of the dismantlement of the welfare state…

Was Britain in decline in 1979? No more than any other European social democracy.  Capitalism had been in crisis then since the end of the Viet-Nam war in the mid 70‘s. Britain, obviously not immune, was however still a country of moderate inequalities, fair fiscality, good public services, and good prospects of making headway in the European concert of nations, thanks to the policy of Edward Heath, an enlightened conservative  by the standards of what followed, who a few years before had taken Britain to the Common Market, through the only referendum ever held on the subject in the UK.  A majority consensus had emerged to support Mr Heath’s policies.  “Mrs T” hated Edward Heath.  Her malevolent hatred would divide the conservative party before the full blast of her divisive and vindictive  personality poisened British politics for years to come.  Edward Heath was an informed, ethical and courageous politician.  She, the “grocer’s daughter”, was a crypto fascist of the basest kind: an admirer of Pinochet and of the Apharteid régime of South Africa.  Her class instincts were to fear and hate workers, their trade-unions, and the mass of their members.  Her ideal was the hayekian pseudo paradise of the worst reaction of the 20’s, laissez faire, anti universal suffrage, anti welfare state, a proto-fascist pre-industrial petty bourgeois lunacy.

Unemployment soared to levels unseen since since the 30’s and the great depression.  But Mrs T did not care: it did not matter since the future, fuelled by North Seal oil revenue, would be all about the hyper financialisation already underway in the US.

Yes, Britain and its inbattled labour government of 1979 was in the claws of the IMF and its neoliberal gurus.  Friedman and Hayek ruled OK.  In the US Ronald Reagan inaugurated his presidency by sacking the striking air-traffic controllers – the first of many, and a decision that may (or not) have haunted his ghost years later.  But who cared? Not Mrs T! The war against democratically elected local government started, armed with the new inquisition, the unaccountable “Audit Commission”, and the destruction of the fabric of local public services and unashamed “privatisation”…  Mrs T was, literally, on the war path, the class-war path.  Or indeeed pursuing a foreign war when things appeared not so rosy?  She ignored her friend Ronald’s offer of mediation, and went to war with Argentina!  Can one imagine a more absurd situation?  But it worked, for a short while. Forget the hundreds of casualties on both sides – worse would come in the Bliar’s years, evidently her spiritual son…

Enemies abound: the British working class, battered and humiliated but not forgetting, her personal foe, the emerging Union (“I want my money back!”), and of course the villains on her own side, intelligent people who dared see that disasters were looming.  So after riots, unprecedented and soaring levels of inequalities, the abject exit from the ERM, the loss of influence in Europe, and of course being overtaken on all fronts, bar speculation, by countries that did have a real industrial policy…  “they” finally kicked her out shouting and screaming.  She would not even spare her venom for her hapless successor, honest Mr Major…

But her legacy lives on.  Britain no longer exports anything much to the US, her influence in Europe is virtually nil, what remains of her car industry is in foreign hands, as far as India and China.  After many crises and collapses (1984, 1987, 1989, 2002 and finally the crash of 2008) the “financial sector” still holds on to its incredible privileges and unethical conduct… As for inequalities the country is now more divided than ever, North-South, the very rich and most of us, renewed assaults on public services, and, looming large, the exhaustion of the North-Sea bonanza and the dependence on foreign imports of gas and oil…  Indeed 11 years whose trail goes on forever…

Of four modern myths

“We are supported by the collective will of the world,” declared U.S. President George W. Bush as he launched the war against Afghanistan’s Taliban regime in October 2001. For many people, that collective will has a name: the “international community.” This feel-good phrase evokes a benevolent, omniscient entity that makes decisions and takes action for the benefit of all countries and peoples. (Foreign Policy Special Report)

US troops in Afghanistan Information manipulation, propaganda and the broadcasting of falsehoods are not new. The modern psyche, awash with consumer “dreams”, celebrity worship and, in the English speaking world, a curious mixture of self-deprecation and arrogance, seems now unable to discriminate, analyse, and form a real “opinion”. Others have acknowledged the “de-politisation” of the public sphere, exemplified by voters’ apathy, indifference and contempt for the political class and fragmentation into single interests politics, from climate change militancy to gay rights.

What may be a source of wonder for historians of the future is the emergence of relatively short-lived but apparently influential myths in our time – the first decades of the 21st century. Those myths are the products of media universally enslaved to the “owners”, meaning the various elites now ruling both the first – the “old” new world, to paraphrase Perry Anderson –  and the “second” world – to simplify, the growing powerhouses of Asia and South America, as well as an academic and political caste hell-bent in defending their privileges. Some are throwbacks from the pre-world wars world of bourgeois delusions (harking to a new “Belle Epoque”), some are central to the reigning neo-liberal ideology which translates as the “pensée unique” of the assets-owning classes and their henchmen. The 20th century, up to the 1979-1989 decade, had the “Soviet threat”, that fuelled anti-communist reaction, the industries of the Cold War, and the immense profits made out of plundering the resources of the then “third world”. It also saw money and weaponry flowing from the US and Europe to some the worse dictatorial régimes of modern history, from Chile’s Pinochet to Iraq’s Saddam Hussein, the Saudi empire, the Greek colonels and many others.

What of now? Well, I submit we have – to identify some of the most evident in the western press – “Al-Qaeda”, “9/11”, the “international community” and “there is no alternative”.

The myth of the “international community” is a good starting point. What is it? Who’s in it? How do we know? One can understand an international community of physicists, say, or of expert neurologists, or of science fiction writers. But “international community” on its own? What does it really mean? Yet “we” – whoever “we” are in it – have apparently justified, condoned,  called for, wanton destruction throughout the world, two wars against the impoverished people of Iraq, murderous bombings of Pakistan and Afghanistan, the destruction of Libya, mindless support to gangsters and neo-fascists in the former Yugoslavia and elsewhere – indeed the destruction of the country that had a historical role in the liberation of Europe from nazi tyranny, and countless armed interventions across the world, sometimes by proxy. An obvious statement is that no one is consulted on what the “international community” wishes! In 2003 millions of people demonstrated publicly in cities in the US and Europe against war in the Middle-East to no avail. Yet whatever the “international community” decides, or authorised its (well) armed proponents to enact, has consequences for all of us. Some of those consequences are predictable, and others “unintended”, from the casualties of the first Gulf war of 1991 to the spread of a militant, violent and distorted form of Islam, fuelled by Saudi money and the support of those exemplars of democracy such as Bahrain, the UAE and other Saudi’s sidekicks, through the ruins of western economies and the rise of private and unaccountable armies paid for by impoverished western taxpayers. Observations of those consequences does not appear to reach the consciousness of our “international community” or its media channels. Nothing has been learnt in Iraq – the continuing nightmare of violence and bigotry, the endless pursuit of wealth and power by an unaccountable class of despots – nothing in Egypt, and worst of all, nothing has been learnt from the quagmire of the Afghan wars. Nothing was learnt from the medieval treatment of “suspects” in Guantanamo Bay and dungeons in Afghanistan and elsewhere, which yielded not a shred of evidence on “terrorism” or any conspiracy against “freedom”. Yet the drama continues, today through an aberrant armed intervention from France in the Sahel, in support of a corrupt, hated and incompetent régime. The crisis in the Sahel is real of course, and as Kofi Annan has shown, a by-product of inept western policies, most recently towards Libya.

This takes us to the second “myth”: Al-Qaeda. The word was an invention of the US media, misreading, perhaps intentionally, a statement from Bill Clinton after attacks against US interests in Africa in 1998. The “Bin Laden’s network”, as it was then described, was chiefly motivated by the “occupation” of the Saudi empire by US forces during and after the first Gulf war in 1991: the same sentiment of religious outrage (the occupation by heathens of the holly land and sacred sites) would later provoke the outrage of 9/11, a purely US-Saudi event and development. This was therefore one of the unintended consequences of the folly of 1991. But of course the media frenzy would never stop from then on, and with the advent of Bush Jr and the “War on Terror” after 2001, Al-Qaeda was born, or reborn, as the “universal enemy”, justifying, first, indiscriminate bombing in Afghanistan – a country wholly unable to defend itself against technological warfare, and only related to Middle-East events through the flow of – yet again – Saudi money during the Soviet war, and soon exception laws in the name of “security”, and wholesale torture of suspects. After 9/11, the initial justification invented for the war against Iraq, was some mysterious involvement of the Iraqi state with “terrorists”, an implausible theory since the secular governments in the Middle-East were in fact at war with extreme Islamic agitators funded by the Saudis. Never mind the facts, the myth rolled on. Then we heard about “weapons of mass-destruction”, a fallacy soon proven to be utter bilge. Of course there was no shortage of falsehoods, blatant lies and posturing in the era of Bush and his acolyte Mr Bliar, supported by media empires soon to be proven highly unethical and flouting the law.

The tragedy of 9/11 was real enough, and was felt by all of us as an atrocious attack on the innocent. That sentiment was subsequently and shamelessly exploited. Few observers doubted the central motivation: outrage caused in Saudi Arabia by the continuing presence of US troops – including women – on Saudi soil. The actors of the drama were nearly all Saudis, living in Europe (chiefly Germany) and the US. The whole plan was a Saudi product, probably funded by Saudi benefactors of strong religious beliefs –  the same bankers of madrases all over Africa and the far East where militant Islam is taught relentlessly to this day. The episode had little if anything to do with Afghanistan, Iraq or any of the future targets of the “war on terror”. Yet the story of “international” terrorists was spun ad nauseam. It is, in a way, the other side of the “international community” coin. Black and white, a convenient “them” and “us”. The media ignored the role played by those countries (Saudi, Yemen, Qatar, Kuwait, Bahrain and others, and the then dictatorships of Egypt and Tunisia) supported militarily by the US and Europe. The continuing fault line caused by the Israeli government policies towards its neighbours and the Palestinian people was equally glossed over. A decade later Iraq stands in ruins, the entire the war in Afghanistan is lingering through countless suffering for its people, more trouble brewing up in Pakistan, thousands of maimed ex-soldiers damaged physically and mentally for life, and of course the colossal costs of the intervention for western countries on the brink of bankruptcy… I hesitate to mention Bin Laden himself, but enough is to say that the man who was a mere agent for channelling Saudi money to the Afghan resistance to the Soviet armies, had probably very little to do with events in the US. Already a sick man at the end of the Russian withdrawal in 1989 – after, incidentally, a pointless 10-year murderous war – his appearance on obscure videos served mostly to fuel the neo-conservatives’s propaganda machine. He may or not have died earlier in the caverns of northern Afghanistan, or in his jail in Pakistan as claimed later by the US government. Does it matter? Not to the victims of the “war on terror”, that is certain.

What matters to “us” is that – it is claimed – there is “no real alternative” to the criminal austerity policies imposed on the hapless people of the western hemisphere by government solely committed to the privileged 1% of society that is benefiting from the collapse of the post-war status-quo. I am writing about the whole episode of the rebirth of hayekian reactionary policies since the late 70’s, through the many crises of the 90’s, and the socialisation of the financial “losses” since 2008. The Chinese media called the rescue of the bankrupt financial sector in the US “Socialism with US characteristics”. Indeed. The transfer of speculators and gangsters losses to the larger public has sunk the fragile fiscal equilibrium of those nations, already hit by rising inequalities of income and unemployment. For how long will European and American public opinions tolerate the war on the poor and unemployed conducted by the various administrations of those countries is hard to predict. Revolutions are also made of myths, and unintended consequences…

Global Turbulence and History


 Citizens as Customers

It is now fourteen years since Robert Brenner dissected “The Economics of Global Turbulence”, still the reference work for any serious study of the advanced capitalist economies during the sixty years from 1945 to 2005. There has been no shortage, since Brenner published his book, of commentaries on the root reasons and consequences of the deep crisis of capital accumulation that gripped the “West” from the 70’s onwards, and of the hyper-financialisation and neo-liberal policies that heralded the worst financial crisis since the 1930s. However few observers have reflected on the fundamental questions that Brenner asked in the Afterword of 2006 to his work: what forces are making for the transcendence of the global downturn? What factors are contributing to its still further perpetuation? We know of course part of the answer to the latter: austerity policies now applied to most countries in the western world are depressing consumer demand to a level that makes “recovery” impossible and perpetuate the depression.

In the context of what Giovanni Arrighi described as “The Long Twentieth Century”, it could be argued that we are still living through the terminal crisis and death convulsions of the form of capitalism – to simplify, US-led industrial hegemony – born from the two world wars and the crisis of 1930. Yet there is, until now, a dearth of explanations as to the link between western economic decline, typified by the renewal of Asia to its millennial position at the economic pinnacle of the world, and western “politics”. Here I must confess that a simplistic ritual pillorying of the ineptitude of Hayek’s progeny and neoliberal economics may not suffice. Nor would the no less ritualistic execution of ineffectual and corrupt politicians on both sides of the Atlantic.

Wolfgang Streeck, Director of the Max Planck Institute for the Study of Societies (MPIfG, Cologne) and author of “Re-forming Capitalism” (2009), attempts in “Citizens as Customers” (NLR 76) to analyse the mechanism and effects of the new modes of production and marketing, that were part of capital’s response to the downturn. His “Considerations on the New Politics of Consumption” begin with a critique of an article in Public Interest titled “Public Goods and Private Status” by Joseph Monsen and Anthony Downs, who, in 1971, asked “why American society was, the phrase coined by John Kenneth Galbraith, ‘privately rich but publicly poor’”. Monsen and Downs’ explanation was rooted in “the differential allocation of goods between the public and private sectors”, and “a desire on the part of the consumers ‘for emulation and differentiation’”. Streeck then takes “a longitudinal view on the development of (the) mutual relationship” between the two modes of provision: “one, public and collective, administered by state authorities, the other private and individual, mediated by commercial markets”.  His observations are at times counterintuitive, but dovetail well with the classical analysis developed by Brenner who looked primarily at the manufacturing crisis.

First, Streeck observes that capital’s answer to the stagnation of markets for standardised goods (the staple of post-war Fordism) included making goods less standardised. This phase of reengineering of products and processes, “with the help of microelectronic technology”, rendered much (western) manual labour dispensable, “or at least enabled firms to relocate to other parts of the world where it was cheaper and more deferential” (my emphasis). Second, as “mass production gave way to something like large-scale boutique production”, consumers in affluent societies – initially the “rich” West, but increasingly Asia – turn out to be willing to pay, and borrow to “participate in the new paradigm of economic growth”. Third the customisation of commodities, and soon services, “was part and parcel of a powerful wave of commercialisation of the capitalist societies of the time”. This, in turn, amounted to a massive “invasion of social life by ‘market forces’ under capitalism, a process that Rosa Luxemburg… characterised as Landnahme, or land-grabbing, in the Accumulation of Capital”. The “land-grab”, as we know, translated itself, from the Reagan-Thatcher era onwards over the following three decades, into large scale plundering of public assets, waves after waves of privatisation of essential services. Streeck says that “what firms learned in the 1970’s was to put the individualisation of both customers and products at the service of commercial expansion”. He then observes that, at the same time, “traditional families and communities were rapidly losing authority”. The growing social vacuum was then filled by the “markets”. Streeck cites as typical example of commercialisation the fate of the Olympic Games, once the protected domain of ‘amateurs’, now a giant money-making machine. He makes several further observations on “sociation by consumption”, and the particular type of politics of consumption arising from it in affluent countries. The marketisation of the public sphere that “aimed to rescue capitalism from its late-Fordist stagnation” resulted from the unprecedented commercialisation of social life, and  has had a profound effect on “the relations between collective state and individual market provision”, transforming the relationship between citizens and states. Streeck argues that “as formerly public functions were moved to the private sector and the public sphere came to be simultaneously narrowed and discredited, with the support of reformist governments, the balance between private and public channels of provision shifted in favour of the former”. His conclusion is that this process leads in time to the decline of states’ political legitimacy, and since “citizenship is… less comfortable than customership”, eventually “motivation to contribute to the joint production of civic goods will dry up”. This is clearly the case already in the US,  as “the middle classes, who command enough purchasing power to rely on commercial rather than political means to get what they want, will lose interest in the complexities of collective preference-setting and decision making, and find the sacrifices of individual utility required by participation in traditional politics no longer worthwhile.” As a further consequence “what is publicly perceived of politics is increasingly reduced to self-centred power games, scandals and the egotistic antics of its remaining personnel”. This explains neatly why once affluent countries like the UK, may end up in a similar state as the “Nigerian state railway”: as privatisation and decline in state tax revenues continue, the increasing poverty of the public sphere will not only perpetuate the downturn, but make it unrecoverable.

Eric Hobsbawm

We mourn Eric Hobsbawm who died on October 1st. He was an admirable historian, a wonderful and interesting writer and humanist, and, perhaps the finest analyst, this side of the Atlantic, on the subject of the birth of modern capitalism though the European revolutions, the Age of Capital and Imperialism. He was a lucid witness of the 20th century, of its horrors and its hopes, and of the hesitant first steps of the 21st. I wish to quote the historian Martin Jacques who wrote this moving testimony for the Guardian last Saturday (October 6):

“The first time I met Eric Hobsbawm was at an annual gathering of the Economic History Society. As a fellow historian I had long admired his historical writing. But it was not until a couple of years later that I was to get to know him. By this time I had become editor of Marxism Today. Having read Eric’s articles in the now-defunct New Society, I was aware he had much of great interest to say about contemporary politics. I phoned him in autumn 1978, soon after commencing my editorial duties. I wanted to run a special issue on the 10th anniversary of 1968 and it was patently obvious that there was no better author to write the overview. He did not disappoint. The grand sweep of the piece was breathtaking.

A little later I heard he had given a lecture entitled “The Forward March of Labour Halted?” By the late 1970s I had come to the view that the labour movement was in historical decline. But Eric arguing such a contrary view was an entirely different matter. I asked him to send me a copy; drawing on the range of his historical repertoire, he contradicted the common sense of the time. It became a famous article that was to change the thinking of the left and marked the emergence of Eric as a major political figure, albeit a somewhat reluctant one.

He wrote numerous articles for Marxism Today, many of them classics. We had plenty of fine writers but Eric was indisputably the best and the most influential. Our editorial relationship could hardly have been more straightforward. I would meet him at Birkbeck, or later at his home, and suggest a theme. And always well before the deadline, he would phone and ask me to come round to his home and pick it up. I would read it with a huge sense of anticipation: you never quite knew what he was going to say.

It was difficult not to be in awe of Eric: the breadth of his knowledge, his analytical powers, his lucid writing style, his laser-like ability to get to the heart of the matter, and his originality. Over the 14 years of my editorship of Marxism Today that sense of distance steadily diminished, conversation flowed more easily and we became the closest of friends. When my wife Hari died in a Hong Kong hospital, Eric joined me at her bedside, gently trying to coax me to do what I could not bear to do: leave her for the last time. And just a few hours before he died in hospital, I stood at his bedside, holding his hand and gently thanking him for all that he had given me. He was an intellectual giant without compare. Politically and intellectually, he influenced me more than any other living person.”

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From Guadalcanal to Downing Street

Media-wise our household is eclectic. We are in turn Telegraph, Guardian, Independent, Times and even, occasionally (LOL), Daily Mail readers. As Lili Allen said: I look in the Sun, and look at the Mirror… Yet this reader tends to focus on Le Monde Diplomatique, and as you could guess from the blogroll, the LRB. Still yesterdays’ issue of The Telegraph had interesting insights.

Neil Tweedie spoke with Sid Phillips, one of the five survivors of H Company, 2nd battalion of the 1st US Marine Regiment, the one at Guadalcanal. Sid engaged in the US Marine Corps in 1942, on the wake of Pearl Harbor, aged 17. He’s now 85, and one of the four soldiers who inspired Steven Spielberg’s and Tom Hanks’ “The Pacific” tv series. I rarely have cause to regret not paying due to the Murdoch empire, but this is perhaps one such occasion. The battle for Guadalcanal raged from August 1942 to February 1943, coincidently also the pivotal moment in the battle for Stalingrad on the other side of the world. After the war Sid Phillips turned to the medical profession in his native Alabama . He returned once to Guadalcanal, in 1977, with other veterans: “Gads! This place still stinks”. Like in Verdun and Volgograd, the smell of Death never leaves the loci of its triumphs. We salute you, Sir.

The same issue opened its columns to David Cameron’s “personal manifesto”, My Vision, Your Choice. Although a distinguished great child of Hayek’s school of neo-liberalism that has now prevailed across western political life since the late 70’s, I respect David Cameron’s views, since, contrary to many, he is at least loyal to his principles. David writes that “from (his) mother, a magistrate, (he) got an enduring sense of community, responsibility, obligation.” David continues “it is unfashionable (sic) these days to talk about public service, but she taught (him) life was about more than making money.”

Can’t agree more, though the extent of public service talk being “unfashionable” depends of course on where you are born, and on your income… Regretfully I cannot concur with Mr Cameron that “the state” should not “infringe on the freedom of the individual”, if doing so is the only way to offset gross inequalities and injustice. This of course is why, even if I could, I would be unlikely to become a Cameron’s supporter. My party is that of Karl Polanyi and the Great Transformation, rather than that of the Road to Serfdom.