WOOLWORTHS - IS NEW LABOUR DEAD?
Two major retail companies, MFI and Woolworths have been placed into administration – which is a technical measure that potentially allows a company to trade its way out of a crisis, but the administrators are legally bound to put the interests of creditors first. And there is a lot of debt, Woolworths owes £385 million. They have been squeezed by a downturn in consumer spending, and the concern by the banks that they were a poor risk, which meant that their suppliers have recently insisted on pre-payment of invoices, which is the immediate cause of their crisis.
This represents a significant development with the storm centre of the recession moving from the banking sector to the real economy. There are several dangers, every high street has a Woolworths, and they employ a lot of staff. If they actually shut then this will be a visible manifestation of economic crisis destabilising confidence even further, as would a big increase in unemployment – in addition to the obvious problems for the workers concerned and their families. There is also a danger that Woolworths’s administrators may seek to improve the cash flow with a pre-Xmas fire sale, that would start a deflationary price war and push other weak retail firms out of business.
So what should the left and the trade unions be demanding of the government?
Firstly, we need to recognise what a sea change there has been, with the New Labour project substantially on the rocks.
The New Labour project was built on two foundations: one was a commitment to neo-liberalism; the other was the belief that electoral success could come through winning over swing voters in marginal seats by triangulating around the Daily Mail driven socially conservative agenda.
The Crewe and Nantwitch and Glasgow East by-elections destroyed the authority of New Labourism as an electoral strategy; and the banking collapse has forced the government to change direction over neo-liberalism. What is more, it has opened a clear ideological divide with David Cameron’s Tories revealing themselves as hard core Thatcherites in the economic field.
The remarkable thing is that despite most of the press backing the Tories, the Labour Party has recovered its fortunes. What was previously a 20% Tory lead has been slashed to 4% - one which basis Labour would narrowly win the next general election.
The contrast with Crewe and Nantwitch and Glasgow East is striking, elections fought by Labour on their right wing, authoritarian agenda were decisively lost. Now Labour is concentrating on the economy, and has made a tentative shift back towards redistributive policies, its popularity has risen. The pre-budget was progressive in both seeking to keep up consumer demand, and also in being a more socially just budget than we have seen for many a year.
Of course the architects of New Labour are still at the helm of the party and of the government; but their project has been derailed. This opens a very important space for the left - particularly in the affiliated trade unions. But to take that opportunity we have to be more strategically and tactically nuanced than just denouncing the Labour party for not being left wing enough.
Neo-liberalism was completely corrosive because it de-legitimised the whole idea of state intervention in the economy, and promoted a form of fatalism towards the market. In contrast, the advantage of the government’s current interventionist stance is that it opens the door to discussing what type of intervention we need. It is unambigoulsy Keynsian, and as such represents a clear ideological break with a fundamental tenet of New Labour
In particular, the intervention in the financial sector has raised a serious question about state ownership of the banks. The public row between the banks and the government was reported last week in the Financial Times and the Independent. Having invested so much in the banks, the government are now confronted by the failure of those same banks to respond with loans, mortgage rates or credit lines to their customers; as we see with the current crisis for Woolworths.
As the Financial Times says: ‘If bankers do not start lending of their own accord, governments will force them to…. Faced with this prospect [of lack of adequate lending], governments will have no choice but to step in.
‘Politicians may attempt to lend directly, taking on credit risk to stimulate certain categories of lending and insurance. But banks, which have always been dependent on the largesse of taxpayers, could be forced to adopt central targets for new lending. This would overcome the problem of no institution wishing to be the first-mover. And banks would have little choice but to obey; if they are uncooperative, they could end up in public ownership.’
The government was very effective in pushing the banks to pass on to their customers the 1.5% cut in bank of England base rate through a combination of astute political pressure (spinning to the press - but this time against the banks), and also using its ownership of Northern Rock to set the pace.
This weeks pre-budget statement was an important turning point in both seeking to boost the economy with a progressive and redistributive cut in VAT, and also by establishing the principle that there should be a higher rate of tax for top earners. Generally the overall thrust of the pre-budget favoured those on lower incomes at the expense of those earning more. This legitimises the argument from the left that more redistribution and higher rates of tax would be even more effective.
But without state ownership, the powers of government are limited to fiscal manipulation of consumer spending power, and direct government spending. In a recession the key issue is how to stimulate investment. To a certain degree old fashioned Keynesian public works can prime the pumps, but the real problem is the strike by private sector investors. Therefore to really get out of the recession raises the demand for public ownership – because the state can invest without being deterred by concerns of risk or low profitability.
With ownership comes control, and public ownership can not only be more efficient, it also allows the economic and social priorities to be decided by democratic debate. There is a crying need for the trade unions to popularise the cause of public ownership, and to campaign for a growth of the real economy of manufacturing, distribution and retail, instead of concentrating on the financial sector.
Recently I moved a resolution calling for nationalisation of the banks with labour movement representation on the boards at the Southern regional council of the GMB, and it was passed unanimously. That wouldn’t have happened just six months ago.
The left also needs to modernise the language it uses. The tired mantras of nationalisation “without compensation and under workers’ control” belong to the Jurassic era. What do they even mean?
“Nationalisation without compensation” implies confiscation, which is politically very difficult to sell – particularly when large numbers of shares are owned by pension funds. But there are alternative, cost effective ways for firms to be collectivised: under the model proposed by the Swedish wage earner funds in 1976: firms over a certain size (employing 100 people or more) would be required each year to issue new stocks corresponding to 20% of annual profits, that would then be owned as an accumulating share of the company by wage earners as a collective group. The idea was that the most profitable firms would be the quickest to be collectivised, and the worker cooperatives owning controlling stakes could align the company with an economic plan by government, or pass ownership to the state, so that the economic power of the capitalist class based upon ownership was neutralised.
In the immediate circumstances, the left should be calling on the government to force the rescue of the retail sector by pressurising the banks not to restrict credit, and if necessary by direct nationalisation. The trade unions must be involved in the negotiations, and defence of jobs must be seen as the top priority.
The biggest mistake the left could make would be to simply assume that the current economic crisis is going to lead to a revival of the left through class struggle. There may well be strikes and disputes, but they will be sectional and defensive unless they feed into a wider ideological and political climate that the economic and social system should and must be changed. We should not underestimate the impact of the Labour Party being derailed out of the channel of neo-liberalism, and the opportunities this creates for the left – particularly through the trade unions – to put talk of alternative left policies back into mainstream political discource.
“This weeks pre-budget statement was an important turning point in both seeking to boost the economy with a progressive and redistributive cut in VAT, and also by establishing the principle that there should be a higher rate of tax for top earners. Generally the overall thrust of the pre-budget favoured those on lower incomes at the expense of those earning more. This legitimises the argument from the left that more redistribution and higher rates of tax would be even more effective.”
Firstly, read Graham Turner on Darling’s supa dupa giveaway….er, not!
http://leap-lrc.blogspot.com/2008/11/this-slump-will-overwhelm-brown.html
What, precisely, was progressive about Darling’s pre-budget report? The taxing of the top 1% won’t happen until 2011…and by then, who knows, there will be possibly be a Tory government and somehow…I doubt if they will be taxing the people who represents their class interests!
Why couldn’t Darling and Brown implement that sooner as opposed to later…Simple: politically gutless and cowards that is what NL is!
And the extra help to families and pensioners are a mere financial drop in the ocean. Child poverty and pensioners’ orgs utterly angry at these crumbs thrown at poorest in this society. If NL were serious then they would have upped the personal allowance and increased benefit rates because working class people will be likely to spend the money they get and that helps reflate the economy. And in parallel you can have a system of public works.
Darling doesn’t want to upset the rich and powerful and certainly working class people won’t be benefiting from this billion pound giveaway, maybe a few crumbs here and there. Oh, and they spent more cash bailing out the banks and the banks have kept it.
Comment by Louise — 27 November, 2008 @ 1:17 pm
The left also needs to modernise the language it uses. The tired mantras of nationalisation “without compensation and under workers’ control” belong to the Jurassic era. What do they even mean?
Hang on, “under workers’ control” belongs in the Jurassic era?
What model do you have in mind for the nationalised banks then? Surely nobody is suggesting going back to the old Morrisonian British Rail or CEGB structures?
Comment by Rory — 27 November, 2008 @ 1:18 pm
well what does “under workers control” mean them?
in the case of the banks, does it mean control by only the workers who work in the banks? All of them, or only the ones in trade unions? How are decisions made? Or does it mean the whole working class? All of them, or only those in trade unions? How are decisions made? How are disputes resolved?
Currently the language of “under workers control” is just a half understood mantra from a previous political era - it means nothing to people who have not been schooled in the far left.
Comment by Andy Newman — 27 November, 2008 @ 1:24 pm
I will miss Woolworths… the one on Birmingham New Street has a warm place in my heart, I remember getting on the balcony above the entrance wearing an ‘IRA style’ balaclava and holding a ‘SMASH the H Blocks- Britain’s Concentration Camp’ Banner with a mate Micky Breen…
For some reason West Midlands Police didn’t seem to appreciate our protest.
It was also an easy place to rob from [so I was informed by some people I know who were in favour of radical wealth redistribution measures].
I will also miss the Woolworths Christmas TV Ads… always entertaining.
Woolies used to have a strong tradition of Unionisation in USDAW, i think, although I might be totally wrong.
Maybe, Woolies Workers could carry on keeping the Shops going…. you know occupations and when the stock runs out just turn them into indoor car boot style markets were unemployed people in the recession can set up their own stalls selling the detritus of consumer society. I mean this climate change is setting us up for a long cold winter… so the new unemployed can keep warm in Woolies swapping DVD’s and PC components or even selling the organis veg from there ‘allotments’.
If we are going to start preparing for the coming civil war each town will need a co-ordinating centre for struggle, the occupied branch of Woolworths would be an idea base.
Thats wonder of woolworths!
Comment by mark anthony france — 27 November, 2008 @ 1:37 pm
#1 Louise, the summary of the pre-budget by LEAP was that it was “moderately redistributive”
http://leap-lrc.blogspot.com/2008/11/verdict-on-pre-budget-report.html
That seems a fair judgement, and doesn’t contradict what I have written here.
Graham Turner writes about the US economy in the article you reference, and he doesn’t address at all whether or not the fiscal balance of darling’s pre-budget was socially progressive or not - he just doesn’t think the measures will be economically effective in getting out of recession.
But that doesn’t contradict my point either, the government has been forced off their doctrinaire assumptioon of neo-liberalism, and so there is a space for the left to argue what would be mre effective within the affiliated trade unions and in the party that didn’t exist a few months ago. But in order to do so, one of the first things we need to understand is how far the givernment have shifted their economic assumptions, and how damaged the new labour electoral strategy is.
In contrast, you seem to make no distinction and seem to think that it is New labour business as usual - which comes back to the fact that I cannot see what your strtegy for the left inside the LP is at all.
you think the the government are “not serious”, but I am not sure what you mean by that.
Comment by Andy Newman — 27 November, 2008 @ 1:44 pm
well what does “under workers control” mean them?
in the case of the banks, does it mean control by only the workers who work in the banks? All of them, or only the ones in trade unions? How are decisions made? Or does it mean the whole working class? All of them, or only those in trade unions? How are decisions made? How are disputes resolved?
Currently the language of “under workers control” is just a half understood mantra from a previous political era - it means nothing to people who have not been schooled in the far left.
Well the details are something which it is important for those of us who advocate nationalisation to debate.
I would suggest that in this case decisions should be made by elected and recallable representatives of all bank staff and all bank customers with, if necessary because of state shareholdings, some representatives of central government as well. This is the most direct and responsive way of running an institution in the interests of its staff and others who have an interest in it.
For example, the RMT advocates nationalising the railways under the control of tripartite boards of workers, passengers and government.
Those models may not be the best ones, and I’d be interested in hearing other suggestions, but workers’ control is what socialism should be about and the worst mistake a Labour government could make would be to nationalise enterprises and return them to the shambles which pre-privatisation public utilities were when not directly run by the workers.
The ‘mantra’ is a very important one if we are to persuade people that we are not interested in returning those industries to the way they were run in the past and whose incompetence allowed Thatcher to justify in the eyes of many voters their privatisation.
Comment by Rory — 27 November, 2008 @ 2:09 pm
BTW Louise
Thanks for reminding me agains to look at the LEAP web page, that allng with the Livingstone aligned Socialist Economic Bulletin blog is an invaluable source.
You are wrong to be quite so cyncical for example in terms of the government shutting down off shore tax evasion in crown dependencies, LEAP member Richard Murhy writes: http://www.taxresearch.org.uk/Blog/2008/11/24/more-on-the-crown-dependency-review/
“In the light of comments Alastair Darling made about the Isle of Man a week or so ago I do not think there is anyone who can doubt his intentions: the mood of Barack Obama has reached Whitehall.
This is not a token: this is an indicator that real change is on its way.”
Comment by Andy Newman — 27 November, 2008 @ 2:10 pm
Nationalising the banks tomorrow would make very little difference - the banks are still holding (£)trillions of near worthless, paper assets and the freeze in interbank lending is essentially transnational.
The system is leveraged beyond capacity, with every one pound(£) of real wealth providing a basis for up £32 of fictional capital.
When a pyramid or ponzi scheme collpases there is no real way of preventing a melt down.
With nearly 98% of money in circulation created as debt the room for maneouvere is even more limited.
Thank you New Labour, for enthusiastically embracing a de-regulated system of ’structured finance’ that legalised fraud and subsequently destroyed the economy.
The only real, long term solution lies in siegniorage reform - a prohibition on commerical banks lending money they don’t possess as interest bearing loans.
Comment by Greenback — 27 November, 2008 @ 2:18 pm
Rory ‘#6
So for you “workers control” means: “under the control of tripartite boards of workers, passengers and government.” ????
This just reinforces the fact that “workers control” is used like a shibboleth, without people thinking what is means.
The RMT policy that the staff should be a stakeholder is an excellent one, it is by definition NOT “owrkers control”, it would be “workers, passengers and government” control
Comment by Andy Newman — 27 November, 2008 @ 2:29 pm
Not necessarily; if you read carefully I use the words “in this case”
I’m suggesting that is one possible model. In a firm where the government had no stake, it would be unnecessary to have government representation, and aside from essential public services like transport and banking there is no need for customers to have representation.
The point is that in all situations workers would have controlling or significant status in the direction of an organisation. That is what workers’ control means and it’s a broad concept hence the need for an overarching concept which can be adapted as necessary to individual circumstances.
Given that passengers and customers are workers as well, this is quite clearly workers’ control as opposed to the current situation, which is capital owners’ control.
You didn’t respond to my main point. What is your suggestion then for the rest of the economy apart from railways? Are you advocating a return to the Morrisonian model? If not, what?
I’ll agree on one thing. The slogan is not the most important thing. Call it nationalisation, socialisation, workers’ control, whatever you like.
Comment by Rory — 27 November, 2008 @ 2:35 pm
#10
“That is what workers’ control means ”
No - that is what you are intepreting it to mean, to someone else it might mean something very different.
For example, this statement “in all situations workers would have controlling or significant status in the direction of an organisation” woudld certainly apply to enterprises in the former FR Yugoslavia or the DDR.
Not everyone would accept that as an example of workers control.
Comment by Andy Newman — 27 November, 2008 @ 2:41 pm
I suppose some people might try to claim that those enterprises were under workers’ control. Fortunately I have not tried to exclude any model from the broad spectrum of opinion on what constitutes workers’ control. However, my understanding is that they were centrally directed state enterprises, not under the direct democratic control of the working class.
I’m going to repeat my question: what model would you suggest? and what would you prefer to call it?
Nationalisation is no less of a broad concept than workers’ control. Do you think we should drop that term as well. In fact, socialism has plenty of different ‘versions’. Maybe we shouldn’t use that word either? After all, maybe it’s just a shibboleth.
Comment by Rory — 27 November, 2008 @ 3:05 pm
Workers Control means that the workers who work in an enterprise have a veto over all management decisions. No more, no less. This has to be distinguished from workers management, which is where state owned industries are run by recallable worker-officals elected from those who work in them.
The formula ‘nationalisation under workers control’ was always a bit odd; a better slogan would have been ‘nationalisation under workers management’, workers control is a peculiar and unstable situation where the working class is strong enough to impose a veto against management decisions it does not like but not strong enough to get rid of the capitalist management completely. Workers control, therefore, cannot be insitutionalised in the manner that the slogan ‘nationalisation under workers control’ implies.
However, it is essential to raise demands for working-class democracy in the context of demands for nationalisation, the only question is prescisely how to formulate this. If you fail to call for this, you are seen to be calling for nationalised industries to be run as state-capitalist enterprises, i.e. using the state as an alternative means of benefitting the class that dominates the state, which of course is no more about democracy than classic ‘private’ capitalism is about democracy.
“the organisation of society in the most open, participative, and accountable way practicable based on common ownership and democratic control” says the constitution of Respect. I don’t think this is from the age of the dinosaurs.
http://www.respectrenewal.org/content/view/58/
A nationalised economy where the productive forces are operated under the democratic direction of those who labour using them and produce them, that is the essential thrust of the demands Andy is consigning to the age of the dinosaurs. There are all kinds of tactical questions about how you advocate them or formulate them, but these demands are not obsolete at all, they are basic to the socialist project.
Comment by ID — 27 November, 2008 @ 3:23 pm
Woolies is being refered to as a “lame duck” which should be allowed to go to the wall. Unlike the banks, which were bailed out because they were “too big to fail”. But is Woolies not too big to fail? If it goes under the government will have to pay unemployment benefits to thousands more workers unable to find employment.
Since the management has got the company into greater debt, rather than attempting to establish a USP for the chain, we should be arguing for the workers to be given a say in the future of the business.
Comment by Charlie Marks — 27 November, 2008 @ 3:43 pm
There is (or rather would have been) no need for nationalisation with compensation. The government could have made it perfectly clear that the banks are going to be all allowed to go to the wall and the state will pick them up for nothing, a la Northern Rock.
Even better, the government could have said to the banks: “You are in absolutely no position to negotiate anything. We are going to save you. However, we are going to take a 51% share. The boards will tender their resignations. There will be *no* bonuses at all. We will run the banks ourselves. The banks will be investigated by the police for criminality and many of you will go to prison. If you do not accept these terms, we will let you go to the wall.”
It is clear, however, why none of this was chosen: it would prove that banks run by state-appointed officials are an order of magnitude better run than by bankers. And people would want more of it. This has a very slight of whiff of socialism about it and so must not be allowed to succeed. Yes, this is not workers’ control but it would have been the best leftwing alternative.
Comment by Tawfiq Chahboune — 27 November, 2008 @ 3:52 pm
ID and Rory
I a quite happy for calls for nationalisation to be linked wih a refreshing debate over what frms of social ownership are appropriate - myoriginal point was (and remiansd) about archaic and jargonistic language.
to a certain extent the term “workers control” has become a substitute for thinking about how social ownership could be deomcratic.
Incidently, in the FRY, all enterprises were run as worker cooperatives under a general centrally planned economy.
I am not so sure about formal legal ownership in the DDR, but each enterprise was in effect self-managing, and becasue of the inbuilt tax benefit of being a productiev worker, the management were often paid less than the shop floor - especially as managers who were also SED party members were unable to work the black marekt system to their advantage.
Comment by Andy Newman — 27 November, 2008 @ 3:55 pm
But isn’t calling for nationalisation also sometimes “a substitute for for thinking about how social ownership could be deomcratic”?
I appreciate what you are saying about language sometimes needing to be considered but it seems you’re in danger of throwing the baby out with the bathwater.
If we’re just talking about language I prefer the phrase ‘workers’ control’ as less associated with the past failures of state-run enterprises than ‘nationalisation’.
Comment by Rory — 27 November, 2008 @ 4:05 pm
BTW - why are you repeating the Thatcherite argument that nationalised industries were failures?
Comment by Andy Newman — 27 November, 2008 @ 4:07 pm
Erm, because they often were. It was the problems with the running of those industries that allowed Thatcher to get away with saying “privatisation will save the state money and improve services”.
Obviously Thatcher was talking bollocks, and the industries have not improved since privatisation. Many have got significantly worse. I presume everyone on Socialist Unity can agree with that.
But the decision to shut the mines and lay off the miners was made by a nationalised industry. The decisions to close power stations and lay off staff (including my dad) were made by a nationalised industry. The decision to raise gas prices sharply in the early 80s to help the government was made by a nationalised industry. The decisions to impose wage restraint on workers in the 70s were made by nationalised industries. In no way can you claim those decisions were made in the interests of the working class. And that’s before you ask any questions about day-to-day service to the people who used them.
I don’t believe you really think I am claiming privatisation was an improvement, hard though you tried to hint at it in #18.
Comment by Rory — 27 November, 2008 @ 4:22 pm
No I am not implying that you thjough privatisation was an improvement, but the argument you are making doesn’t stack up.
Thatcher was arguing that state ownership was less efficient than private ownership, and this is what the common place argument is that nationalised industries were a failure.
If on the other hand you are arguing that nationalised industries in a predominantly capitalist economy had to adopt the rationale of capitalism that is not really the same as them being a failure is it?
Comment by Andy Newman — 27 November, 2008 @ 4:28 pm
I am arguing that the way they were structured i.e. the model used in all cases I’m aware of caused the failures/problems/shortcomings/whatever which anyone who used those services was aware of.
This flawed attempt at nationalisation and the absence of any high profile suggested collective alternatives subsequently enabled Thatcher to claim that common ownership per se was flawed.
Comment by Rory — 27 November, 2008 @ 4:36 pm
but that narrative was largely challenged by the left at the time, and the privatisations were only possible on the basis of the initial share price being much lower than value, effectively giving away a lot of money to people who bought shares.
hence the huge advertising, alng the lines of “If you see Sid, tell him”
Comment by Andy Newman — 27 November, 2008 @ 4:43 pm
Of course it was, and it was a bullshit narrative, to suit the interests of the right and the wealthy.
My point was just that, with the benefit of hindsight, had the nationalised utilities been under genuine workers’ control (or workers’ self-management) they would not have been such an easy target for privatisation and it would have been much more difficult to effect any privatisation.
Comment by Rory — 27 November, 2008 @ 5:07 pm
#13 “Workers Control means that the workers who work in an enterprise have a veto over all management decisions. No more, no less. This has to be distinguished from workers management”
Glad to see that someone is using the correct formula for a change.
The point being, that workers managemement implies:-
1) A mechanism for electing workers representatives to a managing committee.
2) Sufficient time for them to carry out their role and report back to mass meetings.
3) Training and education in carrying out the necessary accounting and supervisory role.
In the meantime a workers veto implies a situation of “dual power” within the economy, in which the former owners representatives still have a big role in running the industry, but the workers are in a position to bloc decisions they don’t agree with.
Making that distinction allows for a transitional period of weeks, months or years, depending on the situation, before moving to a position of full workers administration.
In the case of the Banks the situation is already so advanced that calling for full nationalisation is even seen as a necessity by sections of the ruling class in order to save capitalism. But the TU’s haven’t pushed for representation rights, or challenged the right of private bankers to receive money without being bound by agreements made with the government to use it for socially needed investment.
The recession is now moving inexorably into production and retailing with car makers and outlets like Woolworths, PC World, MFI and others in trouble.
Each of these situations needs to be looked at seperately, but the unions should be arguing for a maximum enforceable working week of 40 hours and an average of 30 including part timers.
The aim should be to defend jobs, but not necessarily the particular form an organisation takes.
Woolworth’s is touted as part of the “British Landscape”, but in fact has only been “British” since a management buy-out in 1982. It was set up by the US Five and Dime retailer FW Woolworth after a visit to the “old country” in the 1900’s.
The format is now well out of date, with a strange mixture of pick and mix, CD’s and DVD’s and cheap kids clothes competing with tinny kitchen ware.
Rather like Chelsea tractors, gas guzzling MPV’s and diesel buses,the economic crisis presents the unions with an opportunity to show that they are more progressive than capitalism by pushing alternative production and reorganisation that conforms to a socialist and environmentalist agenda.
It’s time to get radical over this issue and good place to start would be to take a look at the ideas pioneered by the LUCAS alternative plan in the 1970s.
Just handing money to desperate managements for them to lose even more will be a disaster. Keynesianism won’t work.
Comment by prianikoff — 27 November, 2008 @ 5:27 pm
#23
yes Rory, I largely agree. But it is still a litle more complicated than that.
One area where the nationalised industries were “less efficient” from a capitalist point of view is that they had a higher density of trade union membership, and better working conditions.
the same phenomenon occured in the DDR, where there was no fear of the sack, and little individual careerism, and there was relatively slack work discipline.
So part of the relative lack of economic dynamism of the DDR was because workers were not incentivised by the stick, and therefore they didn’t make better and better carrots.
The studies show that at the enterprise level, management often coluded with the workforce in slowing dowm production in the DDR, within an economy where there was considerable enterprise level autonomy.
So the question is - without the market incentivisation of being sacked and consumerism, how do you stop stagnation and torpor.
the DDR failed because it lost its sense of purpose, due to the control freakery of the SED leadership that disempowered people, and the self delusion of the SED leadership that they could get the people to love them if they tinkered around to get some magic combination of consumer goods on the shelves.
Wheras if they had had the confidence to actially defed the record of the DDR in terms of its real acheivements in women’s rights, work life balance, they might have succeeded
So worker management and control of enterprises is only really better if it is part of a planned and democratic society.
Comment by Andy Newman — 27 November, 2008 @ 5:46 pm
“under the model proposed by the Swedish wage earner funds in 1976: firms over a certain size (employing 100 people or more) would be required each year to issue new stocks corresponding to 20% of annual profits, that would then be owned as an accumulating share of the company by wage earners as a collective group.”
this is definitely an interesting idea, but of course the Meidner Plan was actually put into force but never achieved its goal. also there’s a big question mark over what happens when the funds own all, or most, of the businesses. can they/do they trade the shares? and it’s not clear that the employees covered by the wage earner funds woud want to to just had their ownership over to the government. Robin Blackburn’s stuff on this is worth a read.
Comment by Tom P — 27 November, 2008 @ 6:00 pm
Something I wrote in a letter to a paper today:
With the demise of Woolworths it is clear that the government is prepared to allow the real economy to go to hell in a shopping trolley. Like the Tory opposition they have chosen the City over the High Street. While banks are being bailed out in the most profligate manner imaginable the people really paying for this crisis are ordinary workers and small businesses. Brown and Mandelson may wag a scolding finger at the bankers and threaten to nationalise them if they don’t start lending but nobody is fooled. To nationalise the banks would be to take on levels of public debt that no country could possibly sustain. The banks are bankrupt and owe trillions in debt `cannily’ bought from the USA and the hollow threat to nationalise is a desperate and doomed attempt by New Labour to feign confidence and bolster their share values. If these lackeys had announced instead that they are now prepared to allow the banks to go under that might have more chance of getting them to release urgently needed credit and Woolworths might still be with us. Ideally, the banks should be allowed to sink and then be nationalised debt free so that it can lend at the Bank of England base rate. Cut out these rapacious middle men some of whom are now paying 14% to external investors which they are extracting from our beleaguered economy rather than do the honourable thing. Bail out the people, nationalise Woolies and let the banks go hang. Depositors have had plenty of time to move their assets to safer institutions by now.
Comment by David Ellis — 27 November, 2008 @ 6:23 pm
Well said David, The government should have stepped aside and allowed the banks to collapse in the first place, while recapitalising/recreating public-sector financial institutions.
No risk - total ownership - 100 per cent security.
It aint rocket science!
Comment by Karl Stewart — 27 November, 2008 @ 8:33 pm
Tom points out that “it’s not clear that the employees covered by the wage earner funds woud want to to just had their ownership over to the government”.
But would this even be the case? Surely the logic would be for a transition to a form of cooperative ownership -democratisation rather than control by civil servants.
This is just like how the railway unions favour renationalisation - this doesn’t mean they want to go back to the old form of management in which workers and consumers were disempowered.
Comment by Charlie Marks — 27 November, 2008 @ 9:04 pm
Karl, what about Woolworths or GM and Ford in the US? Genuinely interested to hear what you think. Should they be bailed out?
I would point out that I mentioned at the end of my comment that depositors in the banks had had time to find new places to put their money during the course of the crisis. That is, I think, important. Not letting these deposits disappear with the banks was important to NL’s resurgence in the polls more than anything else whatever other crap they’ve done. A week is a long time in politics. The tories, had they been in power, would have done the same of course which shows the importance of triangulation as long as it’s done right but I don’t think the let it rip philosophy was right at the outset and nationalisation is still the most important slogan.
Comment by David Ellis — 27 November, 2008 @ 10:52 pm
Once again, completely agree with this post.
Comment by Miller 2.0 — 28 November, 2008 @ 4:13 am
Good post! We should look at various ownership structures depending on the size of the enterprise. Nationalisation, can become a beaurocratic nightmare with little benefit for the workers involved. Worker co-ops would be a more suitable model for many firms and industry.
Compensation should only be based on proven need, payoffs for the super rich forget it!
Comment by Green Socialist — 28 November, 2008 @ 7:34 am
Yeah, but Green you wouldn’t oppose the nationalisation of HBOS today would you, a very significant event, or oppose its future sell off. A state bank can potentially operate under the democratic control of the people workers co-ops may not. A state bank can be safely mandated to help create a socially and environmentally responsible econoomy. Let’s face it, if there was a profit in it private banks would lend money to a business that poured raw sewage down the throats of new born babies, oh there is, it’s called the Third World, regulation or no regulation. Nationalised it can operate responsibly because it wants to not because its told to. But of course that begs the question of the nature of the state which is good, isn’t it? Your position seems a bit apolitical and anarchistic.
Comment by David Ellis — 28 November, 2008 @ 8:12 am
Hi David,
At (30) you ask: “What about Woolworths or GM and Ford in the US? Genuinely interested to hear what you think. Should they be bailed out?”
In my opinon, no. I don’t think government should ever bailout private companies with public funds. Of course capitalist governments like ours will do this because such governments exist purely to serve the interests of capitalism, but a socialist government should not and socialists and communists should be urging governments, of whatever hue, not to do this.
What we should be arguing for, along the same priciples of what I argued at (28) with regard to the financial sector, is for the creation/expansion of wholly publicly owned institutions to maintain the service/production and defend jobs etc.
In the case of the GM company in the US, this would mean the creation of a publicly owned vehicle manufacturing company and, in the case of Woolworths a publicly owned high street retailer.
No need for any bailout and no need for any nationalisation. Just the use of public funds, by government in the public interest.
Comment by Karl Stewart — 28 November, 2008 @ 10:22 am
God Bless Andy:
“So part of the relative lack of economic dynamism of the DDR was because workers were not incentivised by the stick, and therefore they didn’t make better and better carrots.”
Really, my impression was that they were ‘de-incentivised’ by living in a rather dreary stalinoid dungeon controlled by a gang of technocratic non-entities with no respect for workers, or anyone else outside of The Party.
Comment by Karl B — 28 November, 2008 @ 11:39 am
I don’t know if anyone saw Question Time last night, but Douglas Alexander suffered a real battering over the govt’s puny 2% reduction in VAT and 5% tax rise on high earners to take place after the next election. The anger in the audience over the failure of the banks to pump liquidity back into the economy, after receiving billions in taxpayers’ money, and the govt’s impotence in persuading them to do so, was great to see. Osborne for the Tories advocated underwriting loans by the banks, a measure agreed to by one other panellist in the shape of the CEO of Sainsbury’s. Of course, such a move, ideologically driven, would in effect socialise the risk but privatise the bank’s profits. It’s glaringly obvious to inreasing numbers that the way ahead is public ownership.
I’m not sure we need to focus on the minutiae of what that will mean in reality at this point. The important thing now is to push the concept. It is back on the agenda as a viable alternative to the status quo and we should focus on making it part of the public discourse.
The govt has dropped the ball in its PBR with a puny package of economic reforms that only just skate the surface of the crisis. The top rate of tax should have gone up at least 10% and the bottom rate down by the same margin. At the same time a windfall tax on the profits of energy and utility companies would have met with wide support also, given the current state of public consciousness. The housing crisis affords the opportunity to tackle the current crisis on two fronts if a national programme of govt funded council housing was introduced. It would create jobs, pump up retail spending again, and help alleviate the effects of repossessions and overcrowding.
The problem is that the current govt, as Andy rightly says, is wedded to the spurious Third Way philosophy of triangulation that should now be relegated to history. You really get the sense that something of an ideological interregnum now exists, with the truth that dare not speak its name - public ownership - lurking in the background.
Comment by John — 28 November, 2008 @ 12:12 pm
Karl S,
I think you are avoiding politics and that is where we part company. Nobody who doesn’t call for concrete job defending measures in the here and now can possibly be taken seriously. Allowing Woolies to go under is like saying sod the workers. We might not want to see a bail out of GM and Ford in the US because they are privately owned but anyone who opposed it without a serious alternative such as nationalisation of those very companies would rightly incur the wrath of the workers. Also, a defeated working class will not be in a position to build your utopia. Your position is an anarchist one slightly to the right and more coherent than the SWPs true, hampered as they are by the apolitical state cap theory, but not really a serious socialist perspective. I’m not saying this to antagonise you by the way. I think you talk a lot of sense normally.
Andy seems to have taken the opposite tack in this article in which there is a lot to agree with especially on sectarianism and formal thinking. Unfortunately, and I don’t want to overstate this, he gives the impression that NL will somehow be forced to become `proper’ socialists under the objective pressures of the financial crisis. The opposite is true. They will and are being forced inexorably to the right and towards a genuine assault on the working class (whilst incientally actual reformism is becoming more and more centrist). There is no mention of mobilising the working class except in the most general way in the article or how this can be done, (just mention of a passive vote for bank natioinalistaion that presumably everybody thinks somebody else is going to do), in opposition to the policing role of the Labour and TU bureaucrats. Andy says, and I agree to a point, that the biggest mistake the left can make would be to assume that the crisis will automatically lead to a revivial in class struggle. I would say an even bigger mistake would be to have any faith whatsoever in New Labour. The Labour Left is a different matter. The reliance on Keynesian economics doesn’t help. Keynesian policies would just force unemployment up right now as public sector spending on public works would throw everybody in the private sector out of work. Again the nationalisation slogan comes up. There is too much capital. That is the nature of this crisis. A certain amount of capital destruction is inevitable and necessary and desirable. If it is done to the benefit of the working class ultimately we will have shorter working days if to the benefit of the ruling class, massive job cuts and unemployment.
I’ve probably managed to be unfair to both Karl and Andy and apologies for the rambling nature of this very, very hastily written comment but the discussion needs to proceed.
Comment by David Ellis — 28 November, 2008 @ 12:34 pm
`I’m not sure we need to focus on the minutiae of what that will mean in reality at this point. The important thing now is to push the concept. It is back on the agenda as a viable alternative to the status quo and we should focus on making it part of the public discourse.’
Well said John. I think every socialist tendency should produce something along the lines of `Socialism and Nationalisation: What we do and don’t mean by it.’ It may help separate the wheat from the chaff.
In the meantime we need to put forward mobilising slogans and plans of action. Nationalise Woolies, One State Bank, Debt Amnesty Now. That sort of thing.
Comment by David Ellis — 28 November, 2008 @ 12:44 pm
David,
Thanks for your comments.
I don’t think I ever said or implied anything that could be interpreted as “sod the workers.”
I think everyone here is saying that workers’ jobs need to be protected.
The difference is that those who back bailouts to these companies are saying: “Protect jobs by giving money to capitalists.”
You and the pro-nationalisation people are saying: “Protect jobs by buying these failing companies off the capitalists and then employing the workers direct.”
And I’m saying: “Create new, or expand existing wholly publicly owned institutions and employ these workers direct.”
We’re each arguing to protect jobs, but with different psoposed methods of doing so.
In my opinion, my suggestion is the least expensive to the public purse, the least complicated and the easisest to explain to people.
Comment by Karl Stewart — 28 November, 2008 @ 1:21 pm
#7
Andy
“In the light of comments Alastair Darling made about the Isle of Man a week or so ago I do not think there is anyone who can doubt his intentions: the mood of Barack Obama has reached Whitehall.
This is not a token: this is an indicator that real change is on its way.”
Yeah, but nowt wrong with being cynical. They have known about tax havens for how long…? They coulda shoulda done something about it before but didn’t. This isn’t their own initiative it is possibly due to the fact they have no choice.
Comment by Louise — 28 November, 2008 @ 3:07 pm
David Ellis,
It’s always amusing to hear ‘anarchism’ and ‘utopianism’ conflated in the same sentence. It reminds me of the analysis provided by a particular Lenninist group, (I forget which one) bemoaning the absence of a ‘Vangauard Party’ during the Cohabamba uprising in Bolivia.
To paraphrase:
“Comrades, the worker’s councils have taken over the factories, the people are reaching democratic decisions in their neighbourhood assemblies, the state has been liquidated by popular action, but where is the role of the Leninist Party, this can’t continue!”
Where indeed?
Comment by Karl B — 28 November, 2008 @ 4:29 pm
Karl B: so you are an anarchist?
Comment by David Ellis — 28 November, 2008 @ 10:39 pm
The Ghost of Christmas future?
“Thousands protested in the Icelandic capital Reykjavik last Saturday, calling for the resignation of the government and for early elections. The protest follows weeks of unrest on the streets, in the aftermath of the banking collapse last month that left the economy in meltdown.
Protestors gathered to demand the release of a fellow demonstrator who had been held by police from the previous day. After demonstrating in front of the parliament (Althingi), several hundred protestors proceeded to the main police station where violent clashes took place. Police used pepper spray against demonstrators, and it was reported that at least five people were taken to hospital with injuries.
Days before, the government reached a negotiated settlement with a number of European countries to determine the terms by which savers’ deposits in Iceland’s banks would be reimbursed. The deal meant that the loan to be made to Iceland by the International Monetary Fund (IMF) of US$2.1 billion could be finalised. The loan will be conditional on “reforms” to bring the government’s soaring public debt under control, which will inevitably mean deep cuts to public services. Having assumed responsibility for the debts of Iceland’s three main banks, government debt is set to rise to a staggering 130 percent of GDP next year.”
“Opposition to the IMF was evident at the protest, with one sign reading: “The IMF will crush education, welfare, healthcare and democracy.” A number of those who spoke at the protest indicated their fears that many of these services could face privatisation.”
“Predictions suggest that Iceland faces an economic contraction of at least 10 percent in the coming year. A third of the total population of 310,000 face the loss of their home and life savings, with the government refusing to guarantee that domestic depositors in the failed banks will receive their money back. Job losses will also rise dramatically in the coming months.”
full:-
http://wsws.org/articles/2008/nov2008/icel-n29.shtml
Comment by prianikoff — 30 November, 2008 @ 9:39 am
Just a quick note here, you raise the potential problem of a ‘deflationary’ price war.
In this particular instance deflation may have naegative consequences, but the power of monopolies now is so great that many firms will keep prices high, leading to a dramatic downturn in sales.
Where i work, a large retailer, our response over the last year has been to raise margin targets from 40% to 50%.
There is a good ref in Chris Harman’s ‘explaining the crisis’ to research that shows that since 1981 prices have risen during recession.
This is the base reason behind the phenomenon of stagflation.
In general this monoploly power makes things worse as a reduction in prices tends to increase effective demand and ensure high capacity utilisation and employment.
Even supermarkets take on more casual shifts to set up sales, restack shelves when they sell more etc.
There is also some very good stuff on the 1930’s , where output fell most sharply in the most monopolised sectors of the US economy, i think tractor production (a duopoly) fell by 80%. Farm output fell by not much at all, as there was more than a million small farms.
Comment by Kieran — 2 December, 2008 @ 12:55 am