We all have our favourite blogs. I am well aware this is not the only one there is. One of my favourites is Common Space, which is published by Common Weal, which I think is probably the most innovative think tank on the left of British politic right now, but is very definitely Scottish through and through.
The themes it discusses are usually universal though. Take this, published today, from Robin McAlpine, Common Weal's director on what he describes as national companies:
The idea of 'national companies' is one Common Weal pushed quite hard in its Book of Ideas. The theory behind them is quite simple.
At the moment our economy is absolutely dominated by the myth of 'consumer as policy maker'. This myth is that the many deregulations, privatisations and policy changes (almost all to the substantial benefit of big business) were really driven by you, the consumer.
It was you-the-consumer who wanted the mass proliferation of lightly-regulated gambling all over British society, and had nothing to do with intensive lobbying of the Blair government by the gambling industry.
It was you-the-consumer who demanded poverty wages in the food service industry because you wanted pennies off your burger. The corporate lobbying behind this was all for you — the enormous profits of these corporations is incidental.
It was you-the-consumer who chose the mortgages you could never afford to repay (the so-called 'ninja loans'). The fact that you didn't know you wanted them until someone phoned you up and made them sound too good to be true is just capitalism.
The point here is that consumers do not set policy — they choose between what is offered to them, largely on the basis of very sophisticated and very expensive advertising and marketing strategies.
If big corporations are using their economic power to change markets, what can be done? One powerful option is to use publicly-owned companies to change markets in the other direction.
And then politicians have a gun held to their head being told that 'consumers won't accept it' to any piece of regulation or policy the big corporates don't like. If you've been in social policy lobbying for even a couple of weeks, you'll have heard this argument.
That is the point of neoliberal capitalism — corporations are set up as a direct challenge to the authority of government. Government has its voters but corporations have their customers, so democratic legitimacy becomes only one form of legitimacy.
There is more that builds very powerfully on this argument before he concludes:
I'm not suggesting we end market economics. I'm not suggesting that private providers wouldn't be free to compete with these companies. In some cases the private sector would be the only ones offering specialism. And there are people who may like permanently switching their energy supplier to take serial advantage of introductory teaser rates.
My point is this; why won't the market allow for those of us who want to choose a non-profit, pubic-good option which perhaps doesn't have the cheapest teaser rates but which, over five years, gives us the most secure, stable and lowest cost option for people who don't want to spend hours a month checking and shifting all their suppliers?
The answer is actually fairly simple; the corporates don't really want you to have 'free choice' at all. They want to make you choose between them so they control not only you and your cash but also the market as a whole and, by extension, have enormous influence over the policy and regulation of those markets.
National companies are our opportunity to choose something else.
And please note that I am open to suggestions on blogs worth reading: guest posts being entirely permissible on this theme, preferably if you have no link with the blog in question.
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What is interesting is Professor Werners analysis of ‘value adding’ bank lending that is put to use to improve products, make better systems and processes, training, more efficiency and encourages a steady longer term thinking from corporates. Such lending adds money to the system by adding value to the products.
The alternative is the asset buying banking system of property or a part ownership of a property or right eg derivative trading. That is a nil sum game as the assets beneath remain the same and really the only added value to the peddlars/salesmans pocket. The same with property buying (I exclude building and improvement). The stockmarket is just such a diversion as by now only about 3% of the value is from listing (until we get the ginormous Saudi Aramco £2Tn listing) the rest is reinvested profits.
The problem as I see it is also observe By Professor Werner in bigger banking institutions favouring fewer bigger deals rather than the many little loans to small companies that they grew from. Such a diseconomy of scale necessitates the greater reintroduction of small local banks with a similar specialist small bank regulator with less onerous form filling just like they have in America.
The FCA has to lessen the regulatory burden on a bank with two directors and 10 staff to enable is small safe operation to continue without being crushed by EUR mifid 3 etc. A small bank regulation unit would be just what is required for the UK. I hope the Bank of England and the FCA get on with having it prepared and operational to cope with 1,500 banking entities
The closing of many small national banking branches and the concentration of the businesses management of say 3,000 businesses in the corporate silos I call ‘the ghost of GRG’ renamed and rebadged Natwest . . . ‘GRG2’ reflects the gap of opportunity in the UK and a threat.
The Opportunity is to create a bundle of specialist local banks eg the Farmers Bank, the County bank, the Town Bank, that naturally appreciate the trust of their depositors and the safety of its borrowers. However the massive Trust deficit is the treat left by RB of S Natwest having no such qualms being backed or blackmailed vice versa it seems by the accounting firms, the Scottish political parties, Labour lords and other dark means of which some must of come from spy novels given what comes out of the stories of businesses leached into and by the ‘Grim Reaper Group’ GRG. Neither shareholders legal action (unpaid I believe to date despite the settlement of £200mil the lawyers go paid off for that), rejection of shareholder resolutions nor MPs letters and select committees make a difference.
That understandable trust deficit is a qualitiative factor rather than financial quantitative factor. Without criminal prosecutions of the top Directors and a large warning to those below the grim reaper lurks undermining the UK economy and business investment.
By how much does it affect the UK – a lot?
RBS Natwest have 40% of all SME bank accounts. SME are the biggest swing borrowers in the national financial system GDP (eg a £2mil new machine or £30mil new factory outweighs the light difference of 10 to 300 employees upping their bank/car loans.)
Solution?
The Breach of Public Trust
Breach of Trust Claims
Breach of trust claims are often overlooked by contractors and their lawyers. A breach of trust claim has several advantages over a breach of contract claim and even a lien claim.
“A breach of trust claim often allows you to sue an individual, rather than a company which may be insolvent. A breach of trust claim gives you the status of a secured creditor, should the defendant go bankrupt. By proving a breach of trust, you also have rights to trace the trust funds into other property that was purchased with trust funds. You also have more time to bring a breach of trust claim than the many short deadlines present in lien claims.” from an online google search source.
However such a succession of Breach of Trust legal claims would restore the direct accountability and profiteering that has occurred using warrants within the large bank and save the shareholders from further suffering when it is the individual that has done wrong. The RB o S Action Group would benefit and their business equivalent. The Public would at last see and hear of justice being seen to be done.
Q Why does the legal profession, police federations and forces and HM Government not take up aggressively this part of the body of legislation to force and cause the culprits to pay the price of the misfortune that they caused and spread?
Remember also that like slaves lining up for sale the beating up of their strongest and most asset rich neighbours company does not instil confidence in their master/overseer. That lack of business SME confidence and with Lloyds HBOS Reading Unit being similar the two big banks wipe out some 70% of SME confidence and also in the sector. Lloyds have acted well to address this acquired problem however the spectre of it repeating remains as the legal act changes in the Enterprise Act used for Railtrack, the removal of non accountants from being insolvency practitioners together with an utterly unresponsive captured accountants regulator have not changed.
The same regarding Pub companies debt loading and the shuttering and destruction of a social institution that cared for the lonely elderly. Here is an opportunity for HM Govt to use prepacked administration to correct a market failure of debt loading and its cash being taken out, prices raised, then forced closure to enable it to be sold into a residential development. I know of one London area of just 300meters diameter where of the 5 pubs they have now got 4 shuttered up at the same time. Demand didnt drop that much.
A compulsory purchase at 20% of market value as GRHG did of the pub property with a new set of banks specially created for financing for those of a military background. Why military well their discipline is good and they are poor. At that price refinancing is easy and a combined social good for ex servicemen as landlords and locals are created. They could be named after me if they gave me a title. The Campaign for Real Ale CAMRA might like it too!!! The breakeven sales would drop and allow the pub to give back to the local community with its improvements as has been shown by some of the over the top decoration on old pubs improved by their owners wealth being recycled! It has history too! Invictus Games and Prince Harry
Marquis of Granby: a general in the 18th century. He showed a great concern for the welfare of his men upon their retirement and provided funds for many ex-soldiers to establish taverns, which were subsequently named after him.
Currently with rising property prices/golden bricks and minimal rates costs versus a conversion to a block of flats the financiers can sit it out. Costing the community social care, winter warmth and conversations for easing and improving mental health. Adopting the Dutch solution of having small well ventilated smoking rooms for the patrons to use if the landlord smokes would also bring back the now solitary heavy drinker and smokers that supported many a pub. The benefits outweighing the disadvantages as the substituted regulars are far fewer and are of a different audience.
So there are some good ideas for the country courtesy of me truly.
Another would be in sorting out the selection of Directors however thats another long topic.
My opinions may be amiss however I would enjoy the discussion and interchange of views.
Very good article. Except for “My point is this; why won’t the market allow for those of us who want to choose a non-profit, pubic-good option which perhaps doesn’t have the cheapest teaser rates but which, over five years, gives us the most secure, stable and lowest cost option for people who don’t want to spend hours a month checking and shifting all their suppliers?”
Insofar as we want energy suppliers to do this I think the market offers a non-profit, pubic-good option. It’s just that they are not paying for advertising, or links, so suffer in consequence.
So – inevitably – links here:
https://robinhoodenergy.co.uk/
and
https://ebico.org.uk/
Their only trouble is they are not large enough to ‘administer’ the heating credit or whatever it’s called. A government handout of £150 mostly to those on pension credits who seemingly have to overpay before they get it! Only large companies are apparently worthy of offering this…
This is what’s referred to https://www.gov.uk/the-warm-home-discount-scheme and the lack of offer of it from other cheaper companies is a big factor in my still being with British Gas. I gather though the smaller companies are unable to offer it till they get enough subscribers. Come that day, BG will have to make a serious counter-offer to keep me and others I’m sure.
I’m a regular reader of CS. Richard D Wolff, a US Marxian professor has written extensively about Worker Self-Directed Enterprises, another possible model. I believe there’s something called Mondragon in Spain that is one.
He doesn’t like UBI though, (creates 2 classes, worker, non-worker) and suggests that instead companies simply cut workers hours, for example when a new piece of tech arrives that increases productivity, instead of sacking the surplus workers – but pay them the same.
http://www.rdwolff.com; http://www.democracyatwork.info
I like Wolff too but I think that he is wrong about UBI.
He will be right if we keep our current unrealistic and shitty attitudes to those who cannot find work because automation means that there is less of it. If UBI is sold positively it will be OK.
Wolff is also a big proponent of democracy in the work place. Making the workplace a nicer place to be would help people too and if working conditions uniformly improve there is no need for those working to be jealous of those who do not.
The other issue is the rate of UBI versus rates of pay for work. All I want the UBI rate to do is to end this awful desperate scramble for income that those without work have to go through and will go through under Universal Catastrophe (sic). I do not expect UBI to equal paid work. But I don’t want those on UBI going to loan sharks either to pay for food and utilities.
If UBI does equal paid work, then there will be only one area of blame in my view: the low pay culture in paid work and British business. Rather than resenting those on UBI, workers need to mobilise and join unions and legislation to improve the standing of unions in the workplace also needs be to be added in order to keep pay and conditions reasonable.
UBI will also work if we look at the gravitational pull on the costs of living of asset markets like housing and curb the excesses there.
I agree. I like the idea of UBI, but cutting hours seems worth considering. Why do we worship the god of efficiency? Is unemployment, zero-hours contracts etc efficient?
I like the idea of cutting hours
But as I pretty much choose my own (in that I work in excess of any contractual obligation) and fail to do so I wonder whether my sentiments are an honest reflection of what I really think
Richard,
I think that the point with cutting hours has less to do with personal choices and more to do with the length of the official working week. We have had no progress in this area since the acceptance of the 8 hour day / 40 hour week in the early 20th century.
What we have now is a situation were some work long hours and others are lumped with the prospect of unemployment or underemployment. That, coupled the threat of emerging automation technologies, would suggest that a shorter week is both timely and overdue.
The problem that I foresee in this area will be the old globalisation/ race to the bottom bullshit where leaders will say we can’t have that because we are competing with other countries that don’t have it. The historic role of the International Labour Organisation in establishing the 8 hour day is instructive in that regard.
Also instructive is this particular ONS figure for the three months to August this year:
“The total number of people employed full-time increased by 25,000 to 23.56 million, while the number of workers on part-time contracts rose by 69,000 to 8.55 million.”
https://www.theguardian.com/business/2017/oct/18/real-wages-fall-despite-low-levels-of-unemployment#comment-106991083
How’s that for an indicator of trend?
I tend to agree with you
Another thing to consider with public ownership of utilities.
There was no tax evasion or avoidance.
Not always true
There was no corporation tax abuse
There may have been other kinds
Fair comment. I have been over simplistic.
The virtuous player in a market moderates in my view the behaviour of the others. If one bank was good and the others dirty then the virtuous one grew and benefited in a transparent market. Bank runs taking money from the bad to the good for instance unless they were false rumours.
However when cartels threaten their regulator who may infact be policed by their ex employees the market fails to correct.
Neither the regulator nor the regulated wishing negative changes and the helpful politicians can be duped into approving some regulation that, inadvertently to the politician, makes matters worse. eg compulsory voting meant many more voted automatically as they were not interested in reading the documents and proposals. Thus the automatic voting with management was outweighing those active investors that were interested in sorting the businesses Directors out.
Gavin,
“The virtuous player in a market moderates in my view the behaviour of the others.”
In 1911 in Australia the federal government created its own bank, the Commonwealth Bank Of Australia As a bank it wasn’t extrordinary. It operated in fairly normal fashion, made profits and returned them to the Commonwealth. One thing that it did do however, in the context of a regulated banking system, was set a standard. Other banks existed and profited but they had to at least hold to the standards set by the CBA or lose business.
During the early neo-liberal era of the 1980’s-90’s. Banks were de-regulated and the CBA privatised
Since then a 4-player oligopoly has come to fully dominate banking in Australia and the ‘big 4’ are now famously hated by the public with calls for a new or re-nationalised Commonwealth bank becoming increasingly common.