Occupy movement complaining against centre-leftist corporatism not capitalism



Above: the OWS protest in Zuccotti Park, near Wall Street,
New York City
(Source:  http://www.city-analysis.net/wp-content/uploads/2011/11/zuccotti-park-ows.jpg)

This blog is a bit late because events were moving rapidly. It is about the Occupy movements that sprung up in America and around the world. It has been repeatedly claimed that the movement is entirely opposed to capitalism as a entity. However, it seems that a slight re-evaluation of this statement would perhaps be helpful.

The Occupy Wall Street movement, and its syndicates in various other nation states around the world, is primarily focused on a perceived greed of 'bankers' given the massive bailouts that nation states supplied to them during the economic crisis of 2008-2009. But that is exactly where a misinterpretation has taken place: the Occupy movement seems opposed to the bailouts themselves, and perhaps with some reason, rather then the principle of banking institutions. The bailout of banks, and in Britain's case the effective nationalisation of the banking system, increased national Government debts aroound the world massively. As Benito Mussolini once said:       

"Fascism should more appropriately be called Corporatism because it is the merger of state and corporate power"1      



Above: The Rt Hon Gordon Brown, former 
PM of the United Kingdom
(Source: http://www.bbc.co.uk/blogs/grahamstewart/gordon_brown_portrait.jpg)

 What many in the Occupy movement are opposed to is the use of public funds to bail out large, "capitalist", banking corporations. In effect, they want free market capitalism to work as it should do, not in its state-collaborating  current form. Capitalism, fundamentally, is not about propping up failed companies, banks or otherwise. The difficulty is that the way that the system was allowed to function, especially throughout the Brown Chancellorship in the United Kingdom. encouraged undue risks to be taken - and for banks to expand to become too big for any one state to control properly. 

It is now states that have borrowed too much who are forcing Banks into difficulty. Banks and Governments have become far too interlinked. There is now a realisation that the debt accrued by Banks lending to sub prime borrowers never really disappeared: it was merely transferred from Bank balance sheets to those of respective governments. The truth is that the corporate relationship between Banks and States - highlighted by acts taken by the previous centre-left government in the UK to prop up banks as a face saver after years of mismanagement of the sector - is going to be very hard to dissolve.  It is obvious that big was not best when it comes to the banking sector. Governments that now try to spend their way out of trouble are stuck: by spending they increase the debts held by Banks and end up back at square one or in a worse position.

The lesson, as pointed out by the Occupy movement, is that corporations have to be able to fail. Capitalism functions by creative destruction ('schöpferische zerstörung')2 as mentioned in The Communist Manifesto, but in a different context: out of the ashes of disaster arises success. The correct response to the global credit crunch would have been for governments to have allowed national banks to collapse into central banks, with central banks effectively taking over ownership. In this manner, debts owed to the Bank could have been removed, central banks would have actioned their responsibility as lender of last resort, and the crisis would have been contained to adlanticist countries.
 

Mao Zedong, Guerrilla Warfare, Osama Bin Laden and Al Qaeda




 Osama Bin Laden, former head
of terrorist network Al Qaeda

There seems to be a link that nobody is making - well, at least not until a lecturer of International Politics at Aberystwyth University, mentioned it in one of my recent lectures after I had already started this blog.                  

The idea, at least to me, seems very obvious indeed. Since the end of the Cold War, interstate relationships have improved markedly. Since 1990 we have moved from an era of duopolistic military power to having a hegomonic international system with one state, the United States of America having more control over the Westphalian state-system than any other, and trying to shape the world in its image of free-market liberal capitalism. It has become the status-quo, at least for the time being and the immediate future. No other state in the system can yet question America's military pre-dominance.

However, in much the same way as there were military rules of the game during the Cold War era, so there are a new - or a reinstatement of the old, depending on how you see it -set of rules under the new circumstances. States and non-governmental actors have realised that they cannot realistically compete with the United States through military means: in a conventional war, any ideological terrorist group, like Al Qaeda, that formed an army or state would be - metaphorically - flattened.  

Hence, terrorist groups like Al Qaeda have adopted a new method - guerrilla warfare. It is the only way that any NGO terrorist organisations can take on the United States's "force de frappe". Al Qaeda are using the same techniques against the United States in Afghanistan and Iraq as Mao Zedong used against the Japanese and nationalist government after the Second World War. What is even more embarrasing is that 

Mao Zedong, leader of the
Communist Revolutionaries
against Japan and the nationalist
government 


we were the ones who inadvertantly enlightened them as to how to fight this kind of war. During the Soviet Union's occupation of Afghanistan in the 1980's, Western powers spearheaded by the United States aided the Muhajadeen in agitating for a Soviet withdrawal. They achieved their aim but at a price for the West. Osama Bin Laden, the leader of Al Qaeda at the time of the attacks on the World Trade Centres of the Twin Towers in September 2001, must have been overjoyed when then President George W. Bush steped into the trap of declaring a War on Terror'. Declaring war on an a concept rather than a physical object, a nation state or even a single enemy. 


Mao-Zedong commented that his political goal was 'the complete emancipation of the Chinese people'. The concept of emancipation strikes an accord with the expressed aims of Bin Laden's organisation: they wish to remove Westerners, who they accuse of cooperating with 'zionist forces', from lands in the Middle and near East. They wish to create a Islamic calaphite under sharia law in the region. The organisation has become a franchise, a bit like a terrorist Macdonalds, or split into 'units' as Mao termed them, of guerrilla fighters.

An example of an Al Qaeda training camp
in the lawless tribal border lands of Afghanistan
Pakistan 

Al Qaeda in the Islamic Republic of Afghanistan and Mao in 1930s China are both in countries which are , in the words of Mao, 'politically, militarily and economically [deficient]  ' They are both following the principle of 'dispersion, concentration, constant change of position' in order to outwit their foreign adversary - the United States and NATO or the Japanese.   

The way to combat this kind of guerrilla warfare (or terrorism, if you prefer) will require an embellishment of current military tactics, a revolution in military affairs, which is woefully lacking at present. Mikhail Gorbachev, the former leader of the Soviet Union, has been fantastically enlightening in pointing out that America is experiencing a déjà vu of their adventure in Vietnam and the Soviet misadventure into Afghanistan in the 1980s. By killing one terrorist you create a thousand new recruits. Osama Bin Laden used textbook Mao,  of dispersing 'in order to promote mass movements over a wide area' and using the principle of 'the people are the water, our armies are the fish'. The west has not and obviously ugently  needs to find a cure for this type of warfare.
    

Legalise currently illegal narcotics and prostitution



Is there any logic behind keeping drugs illegal?

This article will look at the issue of illegal narcotics and prostitution in the United Kingdom and ask the question: is it really beneficial to maintain the ban on these two aspects of society? Does keeping drugs and prostitution illegal make us safer as citizens in the United Kingdom or create more problems than it solves?

There is an immense cost to the taxpayer in trying to police and punish those who carry drugs. This uses up valuable resources, especially in a time of economic hardship and fiscal retrenchment, which could be better used funding other more constructive projects in society, such as more funding for schooling and higher education or schemes to get unemployed people skilled and back into the workplace.

The battle against illegal drugs is one that simply cannot be won. It drains a lot of money and time with no perceivable benefit. By criminalising possession of drugs you make otherwise law-abiding citizens into criminals. Instead of dealing with the harmful effects that drugs have on communities, you are dealing with the consequences.                                                                                                                                      

Many who take drugs are forced into crime, which transcribes into a social cost for everyone, and makes neighbourhoods more dangerous. This acts as a vicious cycle. It can destroy already less advantaged areas of the UK, areas such as Hackney in London, Motherwell, Govan, in Glasgow, Small Heath and Sparkbrook in Birmingham and the Guernos, near Merthyr Tydfil. These areas do not need higher crime rates. From an economics perspective, restricting supply (adding an element of risk to the supply of drugs), puts the black market price for drugs above the natural market clearing price and increases the difference between the price of supply and the price that can be demanded. Consequently, this means that the drugs cartels can harbour artificially high profits, which then go into committing crime and adding an even larger social cost. .

Legalising drugs would allow the government to have more control over the industry. The government could regulate the sector through taxation: the social cost would become more socialised. It would put drug barons out of business: buy safe legal drugs from a high street shop or some dodgy stuff off a street corner at an exuberant cost?                 

Also, by legalising the sector, it can help those who find themselves wanting to give up but prevented from doing so for fear of being labelled a criminal, or facing a penal sentence. The government would be able to offer support to people that would be more compelled to come forward for help and advice. If the government legalised currently illegal drugs, it could ensure that minimum standards are complied with, making it safer for those who are addicted.

The argument that by legalising drugs more people would be attracting to drugs seems 'non-sensical'. Just because a product becomes legal does not mean the populace will suddenly start buying it?



Above: The Red Light district of Amsterdam,
the Netherlands

The second consideration is whether prostitution should be completely legalised in the United Kingdom (referring to English and Cymraeg/Welsh law, and not Scots law). In much the same vein as the previous argument, it seems that the government cannot help those who find themselves trapped in this profession without knowing who they are.

In completely legalising the profession, the government could do more for the women and men who are compelled into prostitution as a form of income. Instead of pushing the problem into the dark alleyways and background of society and forgetting it exists - effectively turning a blind eye - it would be more constructive to do much the opposite. By completely legalising the practise, the government could encourage these people to seek advice on retraining for a profession which offers more dignity and workers rights for the employee.

By making the profession illegal, it forces the abuse of rights, without the possibility of the vulnerable seeking help. Even for those who willingly partake in the profession, the illegal nature of the profession makes it dangerous, with a plethora of harmful consequences on wider society. Legalisation would allow government intervention to divert people from the industry.

This article, as I mentioned at the beginning, has been attempting to answer the question as to whether keeping drugs and prostitution illegal has any benefits for the nation. As I hope this article shows, it would appear evident that keeping these two aspects of society illegal has few benefits for either the citizenry at large or those directly involved.

        

Fair trade is compatible with centre right politics

Three years on, the world is still living through the mess that was the near complete implosion of the World banking system. Governments have had to intervene to keep the cogs of Western economies turning. They have had to give bailouts to the financial system in an attempt at damage limitation. The crisis though has moved on. The debt has not gone, it has merely been absorbed by states, and is now threatening their stability as well. States in Europe and North America are starting to have difficulties paying their own bills, highlighted by the crisis in Greece. With the crisis now threatening to spread to the Chinese housing market and other sectors in the BRIC economies, there is a question that needs to be asked. Is there a way of enhancing our economic system  in a way that can provide more global economic stability?

It seems that the market system is an effective way to increase general prosperity, or at the very least it is the best of a bad bunch. The market system has seen global rates of poverty fall continuously since the 1970s. However, given the recent economic turbulance, it would seem apparent that it needs to be enhanced, but by what mechanism?  

Fairtrade, advocated by the Fair trade foundation set up in 1992, is a compromise. It is not unregulated capitalism, that seems quite evidently to be experiencing some difficulties,  but a compromise which includes global rules governing an otherwise market economy. It does not require the government to take ownership of sectors of the economy but uses regulation to steer the global economy. It, therefore, keeps market principles, advocated by Ronald Reagan, Margaret Thatcher and Adam Smith, at its heart, but manipulates them to include a sense of social justice.

The concept of the market economy is consumer-led: it is driven by demand from the people. Therefore, any system that intends to boost that demand would be beneficial to the system. Fair trade seeks to increase the wages of the proletariat in developing countries above a subsistence level. If these individuals have an increase in their disposable income they are more capable of buying goods and have a higher standard of living. The firms they buy the goods from have more money to invest and create more jobs. It is a multiplier effect that grows the national economy.

An expansion in the economies of developing nations is likely to have a positive effect on developed nations. Over time it has the potential to expand the number of places that goods made in developed markets can be sold to, having a positive effect on lacklustre manufacturing industries in developed nations. An expansion of developed economy markets has the potential to increase the demand for fair trade goods and so the cycle goes on.

It is now plainly obvious that governments that attempt to structure their economies through a central planning system, like North Korea or Venezuela, do not deliver the promised economic prosperity for their workforces. They have never produced equality or high standards of living for the masses. With a bit of alteration, the market system, advocated by Margaret Thatcher, Ronald Reagan and Adam Smith, has the potential to continue to create prosperity not just in developed nations but in the developing world. Free trade has served the purpose of creating prosperity and reducing poverity well but it now seems that Fair trade has to take over the reins in order to create a more balanced world trade situation. In light of the financial crisis, a quote from Edmund Burke might be useful: "a state without the means of some change is without the means of its conservation". The global centre-right, notably in the UK and US, was right to advocate free market economics but now needs to embrace Fair trade as a way to further global prosperity. Far from being at odds with Fair trade, Fair trade seems a natural progression in centre right politics,  and is compatible with the market economics encouraged by many centre right parties.   


     

     

Is Western-style democracy really the best form of Government?

In light of the Arab spring revolutions throughout North Africa, and King Abdullah of Saudi Arabia's granting sufferage to women starting with the 2015 elections, it seems a good time to discuss the thing that so many people have been fighting to achieve this year: democracy. For most of the 20th and 21st centuries, the right to vote has been deemed something for which everyone should strive for. But is democracy really the best way to run a nation state?

From a European perspective, the consensus seems be that democracy is by far and a way the best way. The Second World War and the repression experienced under Adolf Hitler's National Socialists, Benito Mussolini's National Fascists and  Franco's Spain has convinced many that democracy,  representation by elected members of national parliaments, is the best system because everyone gets the right to chose who they desire to represent them, whether that be a right wing, centrist or left wing candidate.

However, a flaw of democracy is that, rather than simply doing what is morally right, politicians will do what is politically popular with their electorate - even if it is not in the long term interests of their citizens. Perhaps cynically, you could say that leaders in democracies are not driven by beliefs but by their electorates. It would have been in Greece's national interest to get its finances in order long before the financial crash, but pressure from the government's electorate to keep spending high stopped it from making the difficult decisions that it should have taken to get its house in order. George Papandreou, the Greek Prime Minister, and his Panhellenic Socialist Party would simply not have won the 2009 legislative election promising to do what was in the national interest, to dramatically and, at the time, prematurally reduce spending, because national interest and what is popular do not correlate. The unpopularity and animosity among many in Germany and France to bailing out Greece is understandable. Of course, the elected officials in France and Germany are echoing the hostility of their electorates to spending money on other countries. However, if Angela Merkel and Nicolas Sarkozy were  to appease their electorates and refuse to find some money for Greece they would violate their countries national interests. German and French banks would collapse if Greece defaults wholesale on its debts. The consequence of that? Well, working class German and French savers would lose all their savings. Leaders have to lead: however, in a democracy, leaders are sometimes forced to capitulate and not do what is right but what is popular or fashionable. 

On the contrary, dictatorships do not have an electorate to look out for. Dictators are not in a popularity contest for votes. Whilst history suggests that in some instances - and notably in European history- dictators have been a force for bad, in others dictatorship has actually been beneficial. China is an example of a dictatorship that seems to run rather silky smooth. In the last twenty years, China has seen phenomenal growth almost unparalled anywhere in the world. In the last quarter of economic activity, China continued to achieve a dizzyingly high 9.5% growth. This compares to 7.7% in India, the largest democracy in the world, and rather pathetic growth statistics in the countries of almost completely democratic Europe. Added to this, China is set to face years of double-digit wage increases which will help the Chinese proletariat: yet again, many workers in Europe and other democracies are unlikely to see such large wage increases in the near future despite high inflation in many countries.           

The attempts to enforce democracy in the Islamic Republic of Afghanistan is instructive as to the failings of the democratic model of governance. The people of Afghanistan simply do not want democracy: they deem it to be a foreign concept not congenial with their culture and their way of doing things. Many Islamic nations are dictatorships for a reason. It is the system that works well for them, a way of doing things that they can relate to culturally. The West just does not get it: the Western value system assumes that a peoples not under democratic rule are, therefore, an unhappy not contented peoples. However, in many of these countries, security trumps personal liberty and human rights. Freedom from state violence and a state where torture does not exist are perhaps desirable, but they are higher order demands: a political do not run before you walk. Ultimately, people are concerned about their personal safety: human rights are nothing if to inforce them means your citizens will be blown to smithereens?                       

The post- war consensus has been that democracy is good and, therefore, dictatorship is evil, and with valid reason to believe this given the horrific events of the Second World War in Europe and the wider World. Many rich liberal do-gooders and socialists of all degrees use the human rights argument to critize dictatorships. However, with the debt crisis and the need for leaders to lead and not follow, and the ascendancy and success of China, could dictatorship be right after all? I leave you with the following quote by Charles Bukowski: 'the difference between a democracy and a dictatorship is that in a democracy you vote first and take orders later: in a dictatorship you don't have to waste your time voting' (http://www.dumb.com/quotes/dictatorship-quotes/2/).           

Debt and the economic slowdown in the West.

With the imminent default of the Greek government, where the debt to GDP ratio is 140% and unsustainable,  this blog returns to the economic difficulties the World is currently experiencing, and their political ramifications. Many states in the developed world, including the United Kingdom, are having their prospects for growth extinguished by the burden of their debt. We have, in short, large economies that have become over indebted. As of the 24th September, the national debt of the United States had reached about $14.8 trillion (see http://www.usdebtclock.org/), with families in the US in debt to the tune of $16 trillion. More worrying for the long term prospects of the United States is its trade deficit to China, currently running at approximately $336 billion.

Many Western powers are in for a hiding to nothing in the coming years. The combination of  liberal capitalism and democracy has turned sour. In order to maintain support for their respective programs -specifically in more left-leaning welfare state Europe - many Governments, until the financial mess, had been in a bidding war for votes using public finances. Unfortunately, given the crisis in the Banking sector and subsequent recession, Governments, highlighted by Greece, Portugal and Ireland,  have found themselves in financial difficulties. The central problem comes down to the fact that in a market economy banks and government are inextricably linked. The banks fund government through bond purchases. In return, Governments keep the coggs of the economy churning by paying interest on their bonds and keeping banks' investment arms in the black and creating money. As a result of the 2008 banking crisis, tax revenues have been falling and spending has been rising. Governments have had to borrow more and more from already financially struggling banks. At the moment, the equilbrium between funds raised through government taxation and borrowing has been dangerously distorted. Government spending simply cannot grow economies fast enough to justify extra borrowing at current extortionate rates, hence the difficulties.

Adding to the difficulties is the dynamic of the Eurozone in a recession. The role of the European Central Bank is to set a single interest rate - and, therefore, run monetary policy - for the entire Eurozone. The economies of the Eurozone, however, are fundamentally different. The countries of Northern Europe - including France and Germany- are generally more fiscally stable and need higher interest rates to combat inflation. Inversely, the countries of Southern Europe - including Greece - are finding it difficult to make ends meet and, therefore, need lower interest rates. Trying to set a single interest rate for the entire Eurozone, therefore, is almost impossible. Without closer fiscal union between the members of the single currency it cannot work. The fiscal union needed to solve the problem, however, is very politically unpopular.

The world economy is not in balance. We have the BRIC countries exporting to developed nations and producing such vast trade surpluses that they are actually destabalising the market system. Wages have become so much higher in developed nations when compared to emerging markets that the developed nations simply cannot compete and export. The emerging markets need developed nations to continue buying their products and, therefore, it is mutually beneficial for all states in the world to find a more stable system of trading where countries do not produce such dramatic surpluses and deficits. Only if developed nations get their finances in order whilst achieving a more balanced trading approach with emerging markets will worldwide growth start again in ernest. With the economic backdrop I have described in these paragraphs, it is no wonder that Greece is now going to be forced into default. The system is clogged with debt and it is causing a global slowdown in the West, with the potential to effect developing nations. In the coming years, it is going to take some daring feats of political willpower to sort out the debt mess and get growth. Borrowing and more debt on its own simply will not work and only perpetuate the economic hardship. Solving the debt difficulties of developed nations is going to take some innovative and very bold political leadership and will inevitable cause much anger to put countries back on the path to prosperity.            

   


       

The Arab-Israeli conflict and the Treaty of Westphalia

In the coming week, Mahmoud Abbas is planning to use his speech at the United Nations in New York to call for a vote on Palestine becoming a member. Membership of the United Nations, by default, would create a state of Palestine. The United States, led by a President under pressure and with an election just over a year away, is vowing to veto the application in the security council. However, despite the position of the United States, the upcoming vote has brought the conflict between the state of Israel and the Palestinian authorities back into focus once again. It is a conflict which has been ongoing since the creation of the state of Israel in 1948, and inflamed further by the Six Day War in 1967. The Six Day War expanded the territory held by the state of Israel when it captured the Gaza strip and the Sinai Peninsula from Egypt, the West Bank (including East Jerusalem) from Jordan and the Golan Heights from Syria.

Israel is located in a very hostile part of the world. It is a Jewish state surrounded by Islamic nations who do not believe it should be in existence. The situation between Israel and Palestine is made more fraught by Palestine's refusal to recognize the state of Israel. The religious dimension only adds to the confusion. Jerusalem is a focal point for the three major Abrahamic religions - Christianity, Islam and Judaism. For Jewish and Christian people, the city is a spiritual homeland with deep-rooted connections with their respective religions, and for Sunni Muslims it is traditionally considered to be a sacred place visited by prophets. The religious dynamic confuses the already various cultural differences.

The territorial dispute, therefore, is both cultural and religious. Geographical divisions along clear cut ethnic, cultural and linguistic boundaries are blurred in the Middle East. The region is not like Europe - with distinctive cultural and linguistic boundaries fitting the nation state theory. Like many areas of the former British Empire, the boundaries that were put in place at the time of independence have caused tensions: little consideration was given to ethnic and cultural distinctions in different regions. This is very clear in Israel,  a state that was artificially created after the Second World War. The Treaty of Westphalia system of independent sovereign states simply does not work in Israel and that area of the Middle East. The region is a melting pot of different cultures, religions and ethnic identities. The solution to the Middle East conflict of interests in Israel will not come in the form of a two state equals two distinct geographical areas solution. The geography of the region and the aforementioned  differences make it almost impossible.  Some form of solution whereby two states share the same geographical territory or overlap will need to be found. The founding of a state of Palestine and putting it on an equal footing with Israel will not solve the difficulties in the Middle East. Legitimizing the state will only fuel tensions and territorial feuds. The vote in the United Nations is not a solution and further bi-party negotiations will be needed to provide long term peace in the region.  

Osama Bin Laden and the global financial mess. Is there a link?

On the 2nd May 2011, and after one of the largest manhunts ever undertaken, America finally caught up with and killed the leader of Al Qaeda, Osama Bin Laden, in Abbottabad, Pakistan. After ten years of searching, they had found the man whose organisation was behind the attacks on America on September 11th 2001, which killed 2,977 people from over 90 countries. However, has the immense cost of the two wars in Afghanistan and Iraq, a result of the attacks on America, financially crippled both America and the west? Was the financial strain of the wars one of the causes of the financial crisis? Has Osama Bin Laden achieved what he set out to do and made America 'a shadow of itself', as he said in an interview with Robert Fisk of the Independent newspaper.     

Well, the War on Terror, a phrase coined by former President George W Bush in a joint session of Congress on the 20th September 2001 and launched on the 7th October, was always going to be difficult for the United States. In the first instance, the phraseology is confusing: a war on 'terror' sets almost limitless perimeters, and, crucially, does not specify a set objective: therefore, how do you know if you are winning? Added to this, Clausewitz always emphasised that defense is stronger than attack, and America went on the offensive into territory with people who were likely to be sympathetic to Al Qaeda's aims.           

The War against Islamic extremism and related terrorist groups has taken a massive toll, both in terms of human loss of life, and on finances. The current budget for defense and wars for the United States stands at $7bn, and is the third largest item of expenditure. The War in Iraq has cost about $802bn, and the War in Afghanistan has cost $455.4bn .Therefore, taking in a few other factors as well, the wars are expected to have cost the US treasury $1.27 trillion  by the end of the 2011 financial year.  They have massively inflated Government spending in the US: the budget for defense has more than doubled compared with before the attacks of September 2001. Therefore, they have led to extra borrowing, pushing the US into deficit: the United States went from surpluses under the Clinton administration to large deficits because of the wars.

The borrowing as a result of the two wars and the banking crisis edged US debt towards its constitutionally mandated limit of 14.3 tn. Fraught negotiations finally led to an agreement between President Obama and Republicans to raise the limit on the 1st August 2010, a day before the debt limit was to be breached, causing a US default and probable economic meltdown. Many countries in Nato that have been involved in Afghanistan and, in the case of Britain, Iraq as well, are now facing debt crisises exacerbated by their military involvement. China now holds $1.17 tn in US debt, and greater sway over world affairs, many Eurozone countries are struggling to make ends meet, and America is facing the prospect of decades of spending reductions to get back on a sustainable debt track. So, Osama Bin Laden may not have defeated America militarily, but, at least financially, he has delivered them a lasting debt legacy and a financial crisis. The conflict in Afghanistan sped up the decline of the USSR: could it now take its next victim?      

Some general thoughts on Socialism and Marxism

Europe and the western world are continuing to be plagued by banking difficulties and debt. This is added to by a growing possibility of another winter of discontent by the British trade union movement. With this backdrop, it seems high time to give some thoughts on left wing politics. So where better to start  then by musing about the fundamental concepts of left wing politics: Communism, Socialism and Marxism. In fact it may be easier to boil down these three concepts into one which encapsulates them all: Socialism. The reason is that the term Socialism, and by extension the concept of the Socialist, have become increasingly confused and generalised since the time of Karl Marx. There has been the USSR, Union of Soviet Socialist Republics, the Nazi party, which is an abbreviation for the National Socialist Worker's Party (Nationalsozialistische Deutsche Arbeiterpartei in Deutsch)  and various 'democratic Socialist'  parties.  Each of these entities have used the term 'Socialist' in some form or another, but with widely differing concepts of what it is to be a Socialist.

Consequently, it is possible to say that Socialism, Marxism and Communism are all but interchangeable as conceptual ideas. At their fundamental cores, they all believe that it is possible to artificially create a society of people who are all equal in wealth and means. They believe that free trade is oppressive and creates a system of proletariat and bourgeois. They believe the bourgeois (wealthy business owners) and petite Bourgeoisie (small business owners) are deliberately attempting to force down the wages of the proletariat (the working classes). Socialists and Marxists, to varying degrees, believe that free enterprise can be tamed or even destroyed and with it class difference. Revolution is encouraged by some Marxists in order to create a 'dictatorship of the proletariat' followed by a disintegration of the state. The withering away of the state has never, however, been witnessed in reality, with perhaps the exception of Somalia, although this country does, at least in an official capacity, have a government - even if it does only control Mogadishu, the capital.

However, it seems that this whole argument goes against the fundamentals of nature. The world operates according to the law of 'survival of the fittest', more commonly known as Darwin's theory of natural selection. Regardless of how much we try to persuade ourselves that we do not, we are always looking after our own vested interests and those of our family before those of anyone else. It is innate and built into the way we are and act.

The other founding assertion by Marxists is that a system of 'from each according to his ability, to each according to his need' should be the founding economic principal of a state, and that the concept should spread to all countries. This concept is based on the idea that 'capital is reckless of the health or length of life of the labourer, unless under compulsion from society'. This last idea coincidently seems to be a reason often sited by those in favour of a strong trade union presence within an economy. However, it seems this interpretation is flawed: after all, what is the point of a business without customers having the ability to purchase the goods that are produced? Far from being in the interest of companies to reduce wages and maximise profits, it is in their interest to keep wages buoyant if, perhaps, for no other reason than that it causes a multiplier effect and means they can sell more products.

Hardline Marxist and Socialist economics suggests the abolision of the state and money and public ownership of the factors of production should be the desired political economic aims. Marxist economists are, therefore, effectively only proposing an elaborate form of subsistence bartering: one sheep for two cows etc: this is the only conceivable way of abolishing a market economy. Money is a store of labour, as pointed out by Adam Smith in the Wealth of Nations. However, by exchanging manufacteured goods instead of receiving a wage you bypass an employers ability to make a profit from their endeavour. Therefore the reality is that there has never been a truly Marxist government. So far, every country that has attempted to create a Communist system of government, with perhaps the exception of North Korea,  has been found wanting and had to resort to at least some kind of Capitalist model in order to appropriate goods in a market economy. Almost 200 years after Karl Marx's birth in 1818, the high hopes of many of the pioneers of the Socialist and Marxist ideology seem to fallen short of their aspirations. Many have come to the realisation that a politcal economy model that rejects market intervention completely has not been found. There will always be discussions about the best politcal economic model: whilst every system, Capitalism, Socialism and Marxism, has its merits, for the time being at least it would seem that Capitalism is the least bad option.      

Is Alex Salmond a chicken voting for Christmas?

With the rather spectacular success of Alex Salmond's Scottish National Party in the Holyrood elections of this year, 2011, the question of independence comes to the fore again. But, is an independent Scotland really in the interests of Alex Salmond? Scotland has a population of about 5 million people, or, expressed differently, about 8.5% of the British population. However, it spends 9.7% of total UK government expenditure, giving it a higher per head of population spending than other areas of the United Kingdom, including England. This addiction to the public purse in Scotland would pose some very harsh realities for any government of an independent Scotland.                                                                                                                                                    

The reality of the situation is that Scotland does not pay its way in the United Kingdom under the current system. As a result, Scotland receives a block grant from London of about £30 bn under the Barnet Formula.  In the accounting year 2004-2005, a breakdown of spending in Scotland shows that spending was £47.7 bn. Whilst it is difficult to get accurate regional figures for tax revenues, it was estimated that the net treasury tax revenues coming from Scotland over the same period were about 36.4bn: included in this figure, £1.28bn is petroleum revenue. This means that Scotland produces a yearly deficit of roughly £11bn.  That deficit is currently disguised in the UK-wide accounts. However, to join the Euro - presumably an aspiration of Mr Salmond should he achieve independence - a country requires a deficit of less than 3% of GDP: Germany has also insisted on a balanced budget approach. The current carnage in the Eurozone, and particularly with German anger at bailing out other Eurozone nations,  is likely to mean a country will have to strictly conform to this regulation in the future. The persistent deficit in Scotland would mean almost certain rejection if it applied to join the Euro - which may not even exist by the time Scotland achieves independence. The deficit, and the Copenhagen criteria which requires new countries in the European Union to join the Euro, may even rule Scotland unable to join the European Union. Even if Salmond's Scotland did convince fellow European states of its membership credentials, a glaring hypocrisy is that Salmond is proposing independence on the one hand and handing over sovereignty to the European Union on the other which would perhaps confuse his supporters.

So, what is Salmond's response? Well, the Calman's proposals. They suggest that income tax could be regulated in Scotland by Holyrood. The reason: quasi-fiscal independence is the first step towards full independence and an attempt to close this deficit. With quasi-fiscal independence will come a growing call for monetary independence. As has been made obvious with the Eurozone crisis, fiscal and monetary policy are inextricably linked.

This blog has attempted to prove that Salmond would be stupid to demand the one thing he desires most. By their nature, when in fiscal difficulties, small states will tend to lean to the right of centre. And the concluding point would have to be that the whole raison d'être of the SNP is independence. Why, in an independent Scotland, would you vote for an independence party (look only to Sinn Féin in the Republic of Ireland). The SNP would have no part to play in an independent Scotland. The SNP are the Scottish equivalent of a party like UKIP: if the UK were to leave the European Union, UKIP would disappear in the same manor as the SNP would in Scotland. They are both 'one trick pony' parties. It, therefore, seems blindingly obvious to me that Alex Salmond is a chicken voting for Christmas.  
            

The wars in Libya and Iraq and a lesson from history

So, with the Libyan conflict seemingly heading towards a resolution is it now time to compare the British endevour in North Africa to the Second Gulf War. The National Transitional Council (NTC) is now in control of most of the strategic cities: Sirte and Bani Walid are now the last remaining Gaddafi strongholds holding out in the vain hope that a miracle will change their fortunes. However, should Gadafi have been able to look at Iraq, his strategic position and history and realise that after 40 years in power the game was up?

It would be easy to conclude that the Second Gulf War and the Libyan war are both examples of invasions to impose western imperialism and are, consequently, doomed to failure? Well, it seems historic strategic theory of the likes of Clausewitz, would have it differently. Iraq and Libya are completely different militarily strategic engagements. The Second Gulf War was a war imposed from outside by the former President of the United States of America, George W. Bush and his companion former Prime Minister Tony Blair: in short, it was a war of agression. It was an attempt by an outside force to defeat another sovereign state by force. The situation was not provoked in any way by domestic violence caused by discontent within Iraq. The citizens of Iraq never desired their country to be forcefully invaded by a foreign force.

The experience in Iraq is in starck contrast to the NATO operation in Libya spearheaded by Nicolas Sarkozy of France and the coalition in the UK. The United Nations Security Council resolution 1973 that led to the activities, specifically to a no-fly zone over Libya and measures to prevent civilian lose of life. Critically, the measures kept the permitted boundaries of  involvement limited to a defensive position. Both Iraq and Libya followed the truism that 'the political object is the goal, war is the means of reaching it'. However, in Libyan it was realised that 'defence is a stronger form of war: the one that makes the enemy's defeat more certain'.  

The Iraq conflict was based on the a supposed nuclear threat. It was a cynical attempt to enforce the 'paradoxical trinity' of warfare including violence, hatred and emnity in order to invade another soverign state. The Libyan war was an attempt to prevent a very real threat of crimes against humanity being commited by Colonel Muammar Gaddafi during a popular uprising. The intervention was because of a realisation that 'the fact remains that a national uprising cannot maintain itself where the atmosphere is too full of danger'.                                                              

Both the wars in Iraq and in Libya attempted to interpret the lessons of Clausewitz about war between states. However, the widely accepted failure of Iraq and the relative success of Libya shows that it is easy to misinterpret these lessons.The resulting swift capture of much of Libya by the NTC, aided by NATO fire power proves that 'the greater the strategic success, the greater the likelihood of a victorious engagement'. The NATO emphasis on its role in defending civilians while allowing the NTC to continue its campaign against Gaddafi's forces was an example of the correct application of Clausewitz's advice. He advised that 'the natural course in war is to begin defensively and end by attacking'. In Iraq, the US and UK begun by attacking whilst in Libya NATO airplanes took on a defensive position of protecting civilians which had the support of many of the citizens of the sovereign state concerned. The masterminds of the Libyan campaign had learn't the lessons of history.  
   

The European debt crisis: something will have to give.

Well, we have had the banking crisis and now we are having the resulting sovereign debt crisis.  States have bailed out reckless banks that lent to the sub-prime mortgage market - risky borrowers on low incomes -and now nation states in the 'western world' are in trouble themselves. And recently the issue has come to the fore in the Eurozone: part of the difficulty is that a common monetary policy has prevented weaker economies within the monetary union from 'deleveraging', reducing their debt exposure, themselves by promoting inflation- led growth. The Eurozone has hit the buffers. During the years of growth, countries like Greece, Ireland and Portugal were propelled forwards by the availability of cheap credit and unable to calm down their booming housing markets because they had given away their interest rate independence. On the contrary, export orientated nations, including Germany, were not acquiring large amounts of debt. However, all the economies in Europe were moving in the same direction so the eventual crisis was not foreseen.  

The latest crisis has arisen because countries, primarily in southern Europe have been financially hit by the banking crisis, on top of already large amounts of public debt. The subsequent rate of growth, if it can really be called that, has not been sufficient enough to pay for the interest payments on their debt. The difficulties in Greece, Ireland and Portugal are contrasted with the relatively better situation in Germany and France - where growth recovered quicker, and deficits were not as large. The European Economic zone has fractured: economies mainly in northern Europe now require higher interest rates to combat higher inflation whilst southern Europe requires lower interest rates.  

The worry over the debt credibility of some southern European countries has lead to higher interest rates being demanded by its creditors, putting even more stress on the monetary union. So can the common currency survive this most recent blow to its credibility? Well, the constant bailouts needed from Germany, Finland and France among others are proving politically divisive. They are also only a stopgap which has no democratic consent. They now threaten to hurt economically stable countries, with Berlusconi's Italy and Zapertero's Spain in the firing line: and the simple fact of the matter is that Merkel's Germany and Sarkozy's France cannot even contemplate a bailout of these countries. It seems that British Eurosceptics have been vindicated in pointing out that monetary union without fiscal and debt union is quite simply unfeasible. The founding difficultly is, as Bank of England Governor Mervyn King has eluded, that the imbalance between net-exporting nations, for example China, Germany, Saudi Arabia and Norway, and net-importing nations, like the UK, is a contributing factor to Europe and the world's current woes. It has caused a rather dramatic crack to appear in the global capitalist mechanism which needs to be addressed for any prospect of growth in Europe and the world as a whole. In conclusion, doing nothing is not an option: if radical change and fiscal consolidation does not occur something will have to give.