Friday, October 10, 2008

Who cares about the poor ?

Our hearts bleed for them ...i think not . More than £100 billion will be wiped off the personal fortunes of Britain's wealthiest industrialists and entrepreneurs in the coming months as tumbling stock markets and sliding property prices take their toll according to The Times . What will the effect be on those super-rich , i wonder . One less house in their tropical paradises , one less luxury limosine ...

Certainly it will not the same as the consequences the Credit Crunch will have on the working class .

The number of people seeking advice from the Citizens Advice Bureau about how to manage their debts has surged by a third in the past year according to this BBC report. 77,000 new callers in England and Wales with mortgage and loan arrears.

"These figures show how the current economic situation is hitting vulnerable and low-income households the hardest."

Mortgage lenders, on average, started repossession action when people were four months into their arrears. No government bail-out or rescue for the poor .

House repossession was rated as the event most likely to cause mental health problems according to a survey.

"Even for people lucky enough to hang on to their home, the stress and worry of arrears building up can be enough to harm your mental health - this survey shows it worries millions of us."

Thursday, October 09, 2008

CAPITALIST PRIORITIES


We live in a society where millions try to survive on a $1.25 a day, where children die for the lack of clean water and yet this society spends billions of dollars trying to find more efficient ways to kill people. The priorities of socialism would be to feed, clothe and shelter its citizens but capitalism has other priorities. "Top U.S. Army officials on Monday said a $160 billion Future Combat Systems modernization program managed by Boeing Co and SAIC Inc was "on budget, on track," but could see changes over time. Army Chief of Staff Gen. George Casey said the Army was going through a detailed review of 14 separate weapon systems included in the program to ensure that the technologies involved were on schedule. "We're committed to Future Combat Systems. It's just a question of adjusting as the world changes, and as the need changes," Army Secretary Pete Geren told reporters at the annual Association of the U.S. Army meeting. ...The Army's FCS program is a family of 14 manned and unmanned aerial and ground systems, tied together by communications and information links."
(Yahoo News, 6 October) RD

PUTING HIS FOOT IN IT

Last year when he was Chancellor of the Exchequer Gordon Brown outlined his annual budget speech with these words - "Britain's growth will continue into its 60th and 61st quarter and beyond ...Inflation has fallen from 3% to 2.8%, and will fall further this year to 2% ...Looking ahead to 2008 and 2009 inflation will also be on target. And we will never return to the old boom and burst." (quoted in Time, 13 October)
He was warmly applauded by the Labour benches and praised by the press for his sagacity and prudence. What a difference a year makes. Inflation stands at about 4.7%, mortgage lender Bradford and Bingley has been nationalised and a deep economic recession looks likely. Capitalism is an anarchic, uncontrollable system. Boom and burst are the very foundation of capitalism. No doubt a future Conservative Chancellor of the Exchequer will in turn pretend that he can control this mad profit system. RD

A MUCH BETTER IDEA

Robert Reich, former US secretary of labour, commenting on the recent economic crisis showed that he understood that China was a capitalist country when he said "There are still only two kinds of capitalism. There's authoritarian capitalism as in China and Singapore, and there's democratic capitalism as in US and Europe. If there's anyone out there who has a better idea, I'm sure the world would love to hear it." (Newsweek, 13 October)

If someone can get us Mr Reich's address we will send him a subscription to the Socialist Standard so he learn about the socialist alternative. RD

Wednesday, October 08, 2008

SOUTH AFRICAN NIGHTMARE

The end of Apartheid and the election of the ANC to power was supposed to see the grinding poverty of the townships ended, but the ANC have turned out to be powerless to run capitalism in a way that would end exploitation and poverty. Despite 14 years of power the ANC are just another political party dedicated to running capitalism. "A dusty maze of concrete, sheet metal and scrap wood, Diepsloot is like so many of the enormous settlements around Johannesburg, mile after mile of feebly assembled shacks, the impromptu patchwork of the poor, the extremely poor and the hopelessly poor. Monica Xangathi, 40, lives here in a shanty she shares with her brother’s family. “This is not the way I thought my life would turn out,” she said. Her disappointment is not only with herself; she is heartsick about her country. Fourteen years after the end of apartheid, South Africa — the global pariah that became a global inspiration — has lapsed into gloom and anxiety about its future, surely not the harmonious “rainbow nation” so celebrated by Nelson Mandela on his inauguration day." (New York Times, 5 October) RD

THE JOYS OF FREEDOM

"Two Turkish immigrants who were reduced to begging on the streets after being released from prison are pleading with authorities to send them back to jail, judicial sources said Wednesday. Sahin Eren and Erden Vardar were arrested in July, 2006 in southern Spain in possession of 11 kilogrammes (24 pounds) of heroin. But confusion over their date of arrest forced a judge to release them in July as the two-year legal period of preventive detention had passed. Since then, the two men have begged on the streets of Madrid, where they sleep in a Red Cross hostel. They have pleaded with the judge to send them back to prison, a request he denied as they have not been convicted and sentenced." (Yahoo News, 1 October) RD

The Crunch of the Matter

From one of our comrade fellow bloggers

Quoth Alistair Darling:
"The Financial Services Authority has announced a further increase from tomorrow to the compensation limit for retail bank deposits to £50,000 per depositor, which means £100,000 for joint accounts. That measure will ensure that 98 per cent. of accounts are fully covered."

Now, quoth Iain Duncan Smith:
"At the Dispatch Box, the Chancellor mentioned, quite rightly, that our protection covers about 98 per cent. of all depositors, but he will also recognise that we have significantly more money on deposit than Germany does. The reality is that that 2 per cent. represents a very significant amount of money. What concerns me right now is that, given the febrile nature of the markets—watching little things and then panicking—if they see any flight of capital, even that 2 per cent., towards Germany, it could cause another stampede and another crisis. I recognise the Chancellor's problem about indicating what he may or may not do, but does he not recognise that that 2 per cent. alone is perhaps enough to tip over the markets if they saw a flight of that money to, say, Germany or even Ireland?"

So, what they are saying is that the vast majority of accounts in the UK hold less than £50,000 (£100,000 for joint accounts) in retail banks.What they are saying is that there is an incredible disparity of wealth - but that the very wealthy have the capacity to cause crises by the overwelming might of their money.

Let's be clear, what this means. Economic crises are not natural phenomena, they are the results of the owners of society exerting their influence. They are profoundly political - the wealthy making us dance to their tune. The wealthy on strike.
Capitalism causes a crisis by its very existence, starvation, starvation related diseases, gross poverty, curtailled life-spans, wars - they are all ignored as background noise.
When the capitalists feel the pain, then we are all made to jump.
This isn't a case of being for or against bail-outs - after all, who can blame the man with a gun to his head - but a matter of being for or against capitalism.

Our only demand must be: "End class society!" else this will all happen again. It is not a glitch, it is politics, the political decision of the real voters to vote with their feet.

From our discussion forum
Robert Reich, former Labor Secretary under Bill Clinton has an interesting article in the current New Statesman:http://tinyurl.com/4h4ss8
"The problem lies deeper. Most Americans can no longer maintain their standard of living. Remember, Wall Street's near-meltdown originated with the bursting of the great housing bubble. That bubble had allowed millions of Americans to take money out of their homes byusing their rising home values as collateral for loans. But now the bubble has burst, those homes can no longer be used as piggy banks.…The bubble masked this basic reality: for most Americans, earnings have not kept up with the cost of living. The earnings of non-government workers who are paid by the hour - and who comprise 80 percent of the American workforce - are lower today than they were in 2000, adjusted for inflation. They are barely higher than they were in the mid-1970s"

This fact is so undeniable, that even the `CIA world fact book' (a US foreign policy reference guide - http://tinyurl.com/33l9f8) describes the situation in the US as:
"The onrush of technology largely explains the gradual development ofa "two-tier labor market" in which those at the bottom lack theeducation and the professional/technical skills of those at the topand, more and more, fail to getcomparable pay raises, health insurance coverage, and other benefits.Since 1975, practically all the gains in household income have goneto the top 20% of households."

Now, for Reich this becomes a basic under consumptionist theory –that Labour was unable to buy back its produce. In simpler terms, it shows the basic failure of the sub-prime lending model. Lending to labour when wages aren't rising meant the whole of that lending relied on continually rising house prices, as soon as the rise stopped, the pyramid scheme failed.I think the most significant part of this crisis is that it shows how capitalism cannot meet workers' needs. All the talk of irresponsible lending masks the fact that in order to get and keep a roof over their heads, workers resorted to massive quantities of debt... this is where our focus should lie.
Obviously, upping wages would not simply end the problem, because cash strapped firms would be unable to pay them. But I think thisdoes confirm a class centric view that a weak working class is actually bad for capitalism – certainly, for advanced markets. I once read that the US industrialised so rapidly due to the small sizeof its skilled working class – this compelled industrialists toinnovate and improve the intensive exploitation of capital. The converse is true if skilled Labour is plentiful.More pertinently, if productivity has been rising without wage rises to compensate, this too could affect the quantity of money capital kicking around, hence feeding the stock market/banking bubbles...As I say on my blog today, the crisis is nakedly political - what weare calling a crisis is tantamount to strike action by the owners of the world, as they try to protect their investments and their income.I think we need to avoid giving the impression that it is a mechanistic problem, rather than the result of conscious human action in an unequal society...[An] interesting factoid from Alistair Darling's statement yesterday, by guaranteeing accounts up to £50K (£100K in joint accounts) they are guaranteeing 98% of deposits. That's a gross amount of inequality,because the remaining 2% contain collosal amounts of cash, sufficient to cause bank runs by their chasing security and returns.

That 98 per cent of deposits contain less than £50,000 but of the 2 per cent that were above this, they accounted for about half of the total amount desposited. In other words, the top two per cent have as much on deposit as the other 98 per cent put together, yet another confirmation of the Party's case over the years.

Monday, October 06, 2008

MORE RELIGIOUS NUTCASES

"In Israel's ultra-Orthodox Jewish community, where the rule of law sometimes takes a back seat to the rule of God, zealots are on a campaign to stamp out behavior they consider unchaste. They hurl stones at women for such "sins" as wearing a red blouse, and attack stores selling devices that can access the Internet. In recent weeks, self-styled "modesty patrols" have been accused of breaking into the apartment of a Jerusalem woman and beating her for allegedly consorting with men. They have torched a store that sells MP4 players, fearing devout Jews would use them to download pornography."
(Yahoo News, 4 October) RD

DAFTER AND DAFTER

"A Muslim cleric in Saudi Arabia has called on women to wear a full veil, or niqab, that reveals only one eye. Sheikh Muhammad al-Habadan said showing both eyes encouraged women to use eye make-up to look seductive. The question of how much of her face a woman should cover is a controversial topic in many Muslim societies. The niqab is more common in Saudi Arabia and the Gulf, but women in much of the Muslim Middle East wear a headscarf which covers only their hair. Sheikh Habadan, an ultra-conservative cleric who is said to have wide influence among religious Saudis, was answering questions on the Muslim satellite channel al-Majd."
(BBC News, 3 October) RD

old and in debt

After a lifetine of labour and drudgery what do we hve to look forward in thetwilight of our years - more debt .

A study of over 60s who sought help from CAS found debt levels had risen to £17,767 since 2004, but more than a quarter had a debt of over £25,000. The report, Growing Old Together: Older CAB Clients and Debt, claimed that average debt levels for this group were 29 times their monthly income.

The research found that household bills, such as council tax and utility bills, created the most anxiety for older people and that they were using credit to pay them

Saturday, October 04, 2008

City scandals

INSIDERS AND OTHERS

We can see today how easily stock mar­kets can tremble when investors get the jit­ters over, say, the mere rumour of a small increase in interest rates or some other trivial matter. Imagine what those jitters will be like when the socialist movement begins to grow. V. V.

A Glasgow comrade gives an insight to share dealings of yesteryear.( or “Is it this year?” )

Did you get your British Gas shares ok? What's that, you didn't bother? Well, neither did most other workers who had the chance, and no one knows how many of those who did buy the shares will hold on to them. It was estimated that on the day after the sale, around one tenth of the shares had already changed hands as small-time buyers sold out to the big institutions like insurance com­panies and pension funds. This is what hap­pened with British Telecom shares. When they were first sold in 1984 the number of individual shareholders was 2.3 million. By May 1986 the number was down to 1.6 mill­ion, a drop of over 30%, and this figure is cer­tain to fall still further as time passes.

Nevertheless, interest in the stock market is a lot higher than ever it was before. Until recently most people only ever saw the stock market quotations in the newspapers if they accidentally turned over two pages at once, but the saturation coverage by the media of the government's privatisation programme has changed all that. Also, the fear of unemployment has ensured that many employees of quoted companies follow the share price of those companies as a guide to their job prospects.

However, the workings of the stock mar­ket remain a mystery to the vast majority of people and this helps preserve the silly notion that financiers, stockbrokers and the like who do understand it are brainier than the rest of us. Actually, it's not nearly as difficult as it seems One of the main reasons why someone not involved in finance finds it baffling is the frequent use of several different words to describe one item. For example, government "stock , which pays a fixed rate of interest, is also called "gilts" (gilt-edged) or "consols" (consolidated) while "securities" is simply the a11-embracing name for stocks and shares of all kinds.

Different types of shares have different rights and rewards. The "ordinary" shares are the ones which actually own the com­pany. Holders of these have full voting rights and receive a variable dividend depending on the company's profits, if any, and what the directors decide to pay out. These shares are also referred to (more confusion) as "equities". "Preference" shares usually have no vote but entitle holders to a fixed dividend ahead of the ordinary shareholders assuming there is something to pay out. "Deben­tures" are loans made to companies by investors who receive fixed-interest whether the company makes a profit or not.

Until October 1986 members of the Lon­don Stock Exchange had to be British-born. And although they would angrily denounce "who does what disputes in factories, ship­yards, etc.. they had their own restrictive practice. This meant that only those who were brokers could buy and sell securities for the public and they made their money by charging clients a fixed commission. "Job­bers", on the other hand, bought and sold on their own account but could only deal with the public through the brokers and made a living from the difference between the prices at which they bought and sold. So brokers couldn't act as jobbers and vice-versa. Since October membership of the Exchange is open to other nationals and the difference between brokers and jobbers is abolished along with fixed commissions. Now the price on deals is negotiable

All of these changes, known as "de-regu­lation", are the result of the Big Bang" we have all heard so much about. The idea is to make the London Stock Exchange more competitive with its main rivals in New York (Wall Street) and Tokyo. After all, if custom­ers can have their business carried out more cheaply in New York or Tokyo then that is where they will make their deals and the new computerised communications technology makes that easy to do. This new technology also means that dealers in London will now transact business in their offices and the Stock Exchange floor will be almost deserted from now on

Any stock market must protect its reputa­tion for honest dealing If investors think that they may be ripped-off then they will take their business elsewhere and this is why the New York and London Stock Exchanges are trying to curb "insider dealing". The most notorious insider is the Wall Street speculator, Ivan Boesky, who for years had apparently anticipated the rise in price of var­ious securities which he bought on a huge scale. Hailed as a genius, Boesky had simply been using confidential information passed to him, for a cut, by people who were profes­sionally engaged in takeover bids which would push up the price of the shares involved.

It is hard to imagine that Wall Street didn't know what Boesky was up to. No one can consistently tell in advance what the market will do. The anarchy of capitalist production sees to that. When every company in every industry is making its plans independently of all the others, and when all of them are sub­ject to forces beyond their control such as decisions taken by foreign governments or even their own, then how can future market trends be forecast with any certainty? The truth is that large-scale insider dealing has been the norm for a long time and will con­tinue in the future whatever steps are taken to eliminate it. So much for the claim fre­quently made on behalf of the capitalists that their high returns are justified because they are the risk takers''. Not if they can help it, they're not!

What about the other claim that the capitalists are the wealth creators" because of their activities in the stock market? The real wealth of society consists of human beings using their physical and mental energies plus the resources of nature to produce the goods and services society needs. This wealth is legally owned by the owners of the enter­prises whose workers have produced it. All the workers receive in return for their efforts is a part of the total value produced in the form of their wages and salaries. The remain­der, surplus value in the form of dividends and interest, belongs to the owners of the various stocks and shares. These securities are merely legal title to this surplus and it is this title which is being traded when sec­urities are bought and sold. So capitalists create not a scrap of wealth and stock exchanges are only the places where surplus value is divided between them.

Even so, the enormous power of the capitalists makes them seem invincible and many workers, even against their wishes, cannot see how capitalism can ever be top­pled. But the power of the capitalists does not lie in the amount of pounds, dollars and francs they own. It lies in the fact that the vast majority of workers still see production for profit as the only possible method of produc­ing and distributing society's wealth. If that idea should weaken due to the growth of socialist consciousness in the world's work­ing class then the power of the capitalists would not look so invincible at all.

We can see today how easily stock mar­kets can tremble when investors get the jit­ters over, say, the mere rumour of a small increase in interest rates or some other trivial matter. Imagine what those jitters will be like when the socialist movement begins to grow. Who will be willing to invest then? Capitalism depends for its continued exis­tence on working-class support for it. When that support crumbles then so too will the power of the capitalists. V. V.

Socialist Standard February 1987

Reading Notes

- More definitions from the Devil’s Dictionary:-

- Infidel – In New York, one who does not believe in the Christian religion. In Constantinople, one who does.

- Idiot – A member of a large and powerful tribe whose influence in human affairs has always been dominant and controlling.

- History – An account mostly false, of events mostly unimportant, which are brought about by rulers mostly knaves, and soldiers mostly fools.

- Heathen – A benighted creature who has the folly to worship something that he can see and feel.

-for socialism John Ayers

Friday, October 03, 2008

GOD AND MAMMON

"God squared up to Mammon last week as the two most senior figures in the Church of England rode into battle against City traders. John Sentamu, the Archbishop of York, condemned as "bank robbers and asset strippers" the dealers who made millions by betting that shares in HBOS would fall in price. ... In The Spectator, Rowan Williams, the Archbishop of Cantebury and a self-confessed "hairy lefty", praised Marx for his attacks on capitalism and said more regulation was essential. Was all this criticism a little hypocritical, though? Ekklesia, the liberal Christian think tank, pointed out that the Anglican church used speculative methods for its own investments when it set up a currency hedging programme in 2006, in effect short-selling sterling....This year the church, with billions invested in stocks and shares, returned a record profit of 9.4%." (Sunday Times, 28 September) RD

BABY, IT'S COLD INSIDE

"The number of households in fuel poverty in the UK rose to 3.5 million in 2006, government figures show. The figures from the Department for Environment and the Department for Business show this is an increase of one million on 2005 levels. Fuel poverty is defined as households who spend more than 10% of their income on fuel. The Unite union said thousands more people are likely to suffer from fuel poverty this winter. The figures include around 2.75 million homes classed as "vulnerable" -containing a child, elderly person or someone with a long-term illness. The number of homes in fuel poverty in England rose from 1.5 million in 2005 to 2.4 million in 2006, including an extra 700,000 vulnerable households."
(BBC News, 2 October) RD

Thursday, October 02, 2008

Food for Thought

- The current market meltdown is no mystery to socialists, just the normal operation of the capitalist mode of production. Booms and busts are created by the anarchy of production and will continue as long as capitalism lasts. Still, it’s amazing to see the wild market gyrations,and even more to witness the attempted bailouts. During the week of September 15-19, The Toronto stock exchange lost 515 points on Monday, lost 27 points on Tuesday, lost 349 points on Wednesday, gained 186 points on Thursday, and gained 848 points on Friday, after $180 billion had been pumped into the global financial system by the world’s central banks.Unfortunately, by September 29th., the markets lost $1 trillion, making $4.2 trillion in losses for the year and the American government is considering a $700 billion bailout, and that’s on top of several rescue attempts for large financial institutions.(AIG Insurance CO. got $85billion). Of course, that’s all in the casino economy, not the real one, but the worker will get hit again through job losses as the recession deepens and through his/her small investments or pension fund losses. Even Sir Isaac Newton was moved to remark, after losing a fortune in the South Sea Bubble,
I can calculate the movement of the stars, but not themadness of men.”

- Meanwhile, the excesses continue. CEO of the failed Lehman Brothers Walked away with $34 million in salary this year, and the CEO of AIG collected $14 million for overseeing the demise of his company (CBC radio). Richard Gwynne (Toronto Star, 26/09/08) reported that the pay of corporate executives increased from 27 times that of an average worker in 1973 to 400 times as much today. That means the executive has earned, by afternoon tea on the first day of the year, as much as the worker will get for a year’s toil!

- In Dubai, they have created a $1.5 billion tourist island, shaped in the form of a palm tree and with hotels that have $25 000 per night rooms.- Against all this talk of trillions and billions we learn that the UN has finally committed $3 billion over the next seven years, about $400 million per year, to the elimination of malaria. Malaria kills one million peoplea year, mostly infants, none of whom have any shares on the stock market and thus do not qualify for a trillion dollar bailout.

- The bleeding of manufacturing jobs in Ontario continues apace as Toyota cuts a shift and 1200 jobs its Woodstock plant. They may get something but it won’t compare to the CEOs parachutes.

- An article in the Toronto Star (19/09/08) reported that a national poll showed that nine out of ten Canadians thought it was “very” or “somewhat” important that the federal budget help the poor. Yet, Canada’s percentage of low-income people has never been lower than 10 percent in the last 40 years, and 150 000 to 300 000 people sleep on our streets or in shelters.They are still waiting for the ‘trickle down effect’ from the rich and famous.

- Haiti, battered by several hurricanes in the past weeks has to rely on star power to get aid. Actor Matt Damon and musician Wyclef Jean flew in to publicize the plight of the islanders. Give them credit for trying but if they have to wait as long as the Make Poverty History campaign, it will be a long recovery.

- Prisoners appearing in court in Durham Region (just east of Toronto)have had their cheese sandwiches cut to a granola bar and juice box to save money. They are finding it hard to concentrate on proceedings. A lawyer commented, “ In a 12-hour period, the prisoners are being fed the nutritional equivalent of what I scatter in the yard for the birds in the morning.” (Toronto Star).

- Ontario Premier, Dalton McGuinty has made bold strides to fight the economic crisis. After making poverty a priority, but doing next to nothing, he announced last week that trying economic times mean ‘adjustments’ to the programme. Say no More! - An agency to help new immigrants to settle in our region and servicing 40 000 people has had its funding cut by the federal government and two thirds of its workers laid off. The foregoing is to emphasize the fact that when the needy are in trouble, there is never any money, but when the multi-billionaire corporations are mired in a mess of their own making, trillions magically appear to their rescue, somewhat similar to the vast amounts of money that appeared at the outbreak of WWII after a decade of deprivation and starvation for the workers who were constantly told there was no money for them and their families. As I said at the beginning, this is the normal operation of the capitalist mode of production.
John Ayers

Wednesday, October 01, 2008

COMPETITION

As a follow up on Williams' words, I recommend this article from the Socialist Standard on Competition, a view from a Glasgow member.



THE FREE MARKET
Competition
Some comedian once asked "If it's true that all the world loves a lover, why are there so many policemen in Hyde Park?" A good question but a better one for workers to ask themselves is "If competition is such a wonderful and desirable thing, why does every­body try so hard to avoid it?". For example, when solicitors lose their monopoly in house conveyancing, opticians lose theirs in selling spectacles, or shopkeepers hear that a super­market is to be built nearby, do they say "Good! Just what we need: the icy blast of competition"? They do not, instead they pro­test bitterly and do everything they can to preserve the status quo.
This dislike of competition is shared by all business, big and small. In 1980 the world's largest corporation, American Telephone and Telegraph Company (AT and T) lost an anti-trust action brought against it by a much smaller rival, MCI, who were awarded 1,800 million dollars. AT and T have a near monopoly in the manufacture of vital equip­ment which MCI needed but they refused to sell them any. In Britain the giant British Oxy­gen Company, which had a turnover of £ 1,700 million in 1983, was exposed for try­ing to close down a small competitor whose turnover was only £150,000 - less than a third of the salary of BOC's chief executive. The competition of even such a minnow was more than BOC could tolerate.
The big three in the British drugs industry, ICI, Glaxo and Beecham's, are putting every obstacle in the way of small competitors who want to market half price, unbranded ver­sions of some of the big three's most profita­ble drugs. Although these drugs are patented the law provides for “licences of right” to be available to other companies but does not specify what royalties are to be paid. The big three use this loophole to ensure that would be competitors have to sell for little less than themselves.
The airline industry is notorious for ­eliminating competition. Remember how big Atlantic carriers, including British Airways, forced Freddie Laker out of business? Now they have a new target in their sights. Richard Branson's one-aircraft Virgin Atlantic airline. Branson's attempt to take over where Laker left off by providing cut-price fares between Britain and America was countered by BA, Pan-Am and TWA who all reduced their fares to equal Virgin's. Predictably Bran­son howled "unfair" but why should the game be played by his rules? If he really believes in free market competition then he cannot complain if the big airlines slash their fares too. Branson's problem is that his rivals have much greater resources than he has and can easily outlast him in a protracted fares battle.
Dislike of competition has also been shown by the cross channel ferry com­panies. They are trying to persuade the gov­ernment and potential investors that the channel tunnel will be unsafe to use and unprofitable. If the tunnel scheme goes through then these champions of the free market want to remove competition
between themselves by integrating their ser­vices in order to offset the expected loss of business. If this is not allowed then they will seek compensation from the government. Whatever happened to "standing on your own two feet"?
Although governments try to encourage competition within their own frontiers they assist their own industries to avoid it in inter­national trade by loading the dice in their favour. The governments of the EEC protect their own farmers from competition from abroad by erecting tariff barriers and sub­sidising their production. These subsidies produce such mountains of food that the EEC can sell it on world markets at rock-bottom prices­---butter sales to Russia are an obvious case. The American government denounces these subsidies because they keep inefficient EEC farmers in business whereas American farming is extremely efficient and could easily undercut EEC farming if only it were given the chance. In 1983 the American government played the EEC at it’s own game by using subsidies to sell flour to Egypt which had been an EEC market. Did the EEC say “fair enough”? It did not, instead it threatened to retaliate by dumping farm produce in American markets in Latin America. Does this mean that the United States is all for free trade? Only in those industries where it can win, such as farming. It is a different story when it comes to steel and textiles so they protect those industries with barriers against Imports. Most serious is the penetration by Japan of American home markets in cars, electronics and consumer goods. The United States’ trade deficit with Japan was over 50 billion dollars last year and members of Congress, business leaders and trade unions are demanding legislation aimed at reducing Japan’s exports to the United States.
Needless to say the Japanese are not in favour of this but they want to have it both ways - free trade for their exports but every obstacle placed in the way of imports from other countries. For example, Scotch whisky is subject to a level of taxation which makes it much more expensive than home pro­duced spirits. Why don't these other coun­tries simply keep out Japan's exports? They are afraid that such a move would spark off worldwide tit-for-tat protectionism with the resulting collapse in world trade. The cure would be worse than the ailment and the Japanese government is taking advantage of this fear.
Groups of governments sometimes band together into a cartel or price-fixing ring to avoid competition among themselves. For years the Organisation of Petroleum Exporting Countries (OPEC) shared out most of the world oil market. Each member-nation was allocated an agreed production quota of oil and no more. This year there has been a drastic fall in oil prices caused by the world slump, resulting in a sharp fall in demand, plus the entry of North Sea oil which is not controlled by OPEC. This fall in price has meant less income for OPEC members and some of them have been breading the agreement by increasing production to try make good the lost revenue.
This is what usually happens with governments or companies which organise themselves into a cartel. They are all for cartel when trade is booming and they can carve up the market but when trade is bad they will break ranks and look after themselves. OPEC has just reached a temporary agreement and the price of oil has started to rise again but no one knows what will happen in 1987.
Nevertheless, western governments do try to avoid monopolies within their own countries. As the executive committee of the national capitalist class a government must look after the interests of that class as a whole and not just one section of it. If a monopoly was allowed in an industry then the other capitalists will feel that they may be held to ransom when they purchase from the monopoly. But surely the soon-to-be­ privatised British Gas is a monopoly, the very thing the government wants to avoid? There are two reasons for this contradiction. The first is that the gas industry cannot really be split up into several competing companies for practical reasons, among them the cost of setting up alternative nationwide installa­tions. The second is the political factor which is that the government sees wide share own­ership as a vote catcher at the next general election end the privatisation of British Gas gives it the opportunity to achieve this aim.
This episode has provided an example of the double standards used by politicians. Tory MP Michael Forsyth, a free market zealot. argued that privatised gas would not be a monopoly as it would have to compete with electrcity, oil and nuclear power. This is like arguing that if some company owned the entire meat industry it wouldn't be a monopoly because it would have to compete with fish and chicken.
Both the American and British govern­ments think they have a method of reversing what they see as the drift towards monopoly by stimulating competition. This is called de-regulation and is aimed at providing the incentive and opportunity for new com­panies to come into the market by removing whatever obstacles stand in their way. This has happened in the American airline indus­try since 1978 and the initial effect was an explosion of new, small companies and a drop in internal air fares. But the drift towards what is actually fewer and bigger economic units cannot be permanently reversed. Since 1978 sixty-three American airlines have gone bust and the big airlines are swallowing up the small fry in order to add the busy and profitable internal routes to their shakier international operations. The result is that air­fares in America are on the increase again. This is what happens with cut-throat com­petition. It cuts profits to the bone so that when business drops off companies get into trouble and the conditions are created for the very thing de-regulation is supposed to curb - mergers and the drive towards bigger and fewer companies.
Companies sometimes need to grow if they are to survive. How could a company meet its competitors if it merely stands still while they grow? This need partly explains the recent merger-mania which saw huge companies being taken over by others. Guin­ness, the British drinks giant, justified its plan to take over Distillers in order to meet the challenge of American and Japanese rivals like Seagram's and Suntory with full-page newspaper adverts which said "It will take our combined strength to defeat adversaries such as these"
This is also why Britain's biggest elec­tronic engineering company, GEC, wants to take over its main British rival, Plessey. James Prior, GEC's chairman, explained that although GEC is Britain's biggest private employer with 180,000 workers, it is dwarfed by the likes of General Electric in America and Siemens in West Germany. Plessey rejected GEC's bid and instead offered to buy GEC's interest in the System X digital telephone exchange system. Their chairman pointed out that neither company had won any worthwhile export orders for the system and since 10 per cent of the world market is required to be profitable it would, he added, make sense to merge the two interests --- under Plessey, naturally -to meet international competition.
How does this fact of life in capitalism square with the government's obsession with promoting small businesses and its fre­quent use of the Monopolies Commission to prevent the mega-mergers which are neces­sary to enable British capitalism to compete internationally? The simple truth is that many of those who are heavily into capitalism, like some of the free marketeers, don‘t under-­stand the basic laws of the system, one of which is that while small may be beautiful in business, big is infinitely more successful.
The supporters of competition claim that it is of benefit to society because it eliminates wastefulness. In fact it is the cause of mas­sive waste of humanity's time and energy. For example, thanks to the elimination of their competitors, there are now only three makers of large jet aircraft engines in the world outside of the so-called communist bloc. They are Rolls-Royce and the two American companies, Pratt and Whitney and General Electric. All three employ numerous scientists and technicians in the competition to produce an engine for a particular type of aircraft. Of the three engines produced one may be a little cheaper in price, the second may use a little less fuel and the third may need a little less maintenance but really all three engines are practically identical. So true is this that the one which wins the orders is probably chosen more for political reasons than any other and this is why British Airways have recently chosen Rolls-Royce engines for its new aircraft.
And just look at the hordes of companies eagerly competing to supply us all with dou­ble glazing, fitted kitchens, and the like, with armies of salespeople chasing after the same order and all of them selling exactly the sarne product. This spectacle is repeated all over the world as millions of useful human beings engage in this wasteful duplication of effort. just how does this benefit society?
So competition isn't what it's cracked up to be. Even the capitalists and politicians only regard it as a necessary evil in the scramble for profit and avoid it whenever they can. Certainly it has nothing to offer the workers except the opportunity to become one another’ s enemies over their exploiters' quarrels and which have nothing to do with them. Socialists work for a society in which the watchword will be co-operation and where capitalism’s competition will seem as strange and awful as we regard cannibalism today.
V.V.
Socialist Standard January 1987

William’s Words

William Morris on competition in the capitalist mode of production.

“And first, please to understand that our present system of society is based on a state of perpetual war. Do any of you think that this is as it should be? I know that you have often been told that the competition, which is at present the rule of all production, is a good thing, and stimulates the progress of the race; but the people that tell you this should call competition by its shorter name of war if they wish to be honest, and you would then be free to consider whether or no war stimulates progress, otherwise than as a mad bull chasing you over your own garden may do. War, or competition, whichever you please to call it, means at the best pursuing your own advantage at the cost of someone else’s loss, and in the process of it you must not be sparing of destruction even of your own possessions, or you will certainly come by the worse in the struggle. You understand that perfectly as to the kind of war in which people go out to kill and be killed; that sort of war in which ships are commissioned, for instance, “to sink, burn, and destroy”; but it appears that you are not so conscious of this waste of goods when you are only carrying on that other war called commerce; observe, however, that the waste is there all the same.”(From the pamphlet. “How We Live and How We Might Live”, page 19) John Ayers

A SCAREY FUTURE?

"In Norway the anti-immigrant Progress Party is now the largest in the land. Like other right-wing parties in Scandinavia, it has enjoyed surging support since the Islamic cartoon affair two years ago. In Switzerland, Christoph Blocher's Swiss People's Party won the general election last year after a campaign condemned as racist by UN monitors. In Poland the League of Polish Families, a member of the coalition government until a year ago, campaigns for the elimination of Jewish influence in business and the professions. The Vlaams Belang in Belgium is strongly anti-immigrant. Even in ultra-liberal Denmark, the nationalist and anti-immigrant Danish People's Party is now the third largest party. In Italy, Silvio Berlusconi's Party of Freedom is sandwiched in the ruling coalition by the anti-immigrant Northern League and the post-Fascist National Alliance." (Independent, 26 September) RD