In April 1938, President Franklin D Roosevelt sent a message to Congress in which he said:
Unhappy events abroad have retaught us two simple truths about the liberty of a democratic people.
The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is Fascism—ownership of Government by an individual, by a group, or by any other controlling private power.
The second truth is that the liberty of a democracy is not safe if its business system does not provide employment and produce and distribute goods in such a way as to sustain an acceptable standard of living.
There is obvious resonance in what he said for discussion on this blog this week because of the reference to fascism that he made.
His interpretation of fascism is worth noting. It is heavily influenced by the Italian understanding of fascism at that time. However, it should resonate very strongly at this moment. The idea that we have fascism when private power is more important than the state is of considerable significance.
So, too, however, is this idea when combined with his second team, which is that democracy is not safe if business thinks it acceptable to organise itself in a way that does not meet the needs of people.
Now, let me put this in the context of a current issue. As the Guardian notes this morning:
After regulator resists 40% increase in bills, [Thames Water] shareholders deny request for more money – raising prospect of nationalisation
The UK water industry is very clearly organising itself in a way that does not sustain an acceptable standard of living in this country. Roosevelt's second condition is met.
As significantly, so too is the first. Not only will the current Tory government not properly nationalise Thames Water, but neither will Labour. We know that the former is true because the Tories passed legislation, using statutory instruments, in January this year to protect the interests of shareholders in the event of the insolvency of a water company, with Thames Water clearly in mind. As the FT noted at the time:
[A] lawyer also warned that creditors might suffer bigger losses than they might have under the current regime.
Not only was it the Tory's intention to protect the powerful shareholders the Thames Water, but they were willing to do so at cost to creditors, including employees, pensioners, and those other businesses whose services it is essential that Thames Water retains if the company is to continue to meet the obligation to supply water to approximately one quarter of the people in the United Kingdom. The Tory indication was clear: in this power struggle, the shareholders of the dominant organisation have been deemed to hold all the cards, by law. This meets Roosevelt's first test.
I have two reasons to think that Labour will do nothing about this. The first is that yesterday Keir Starmer said:
I can't pretend that we could turn the taps on, pretend the damage hasn't been done to the economy – it has. There's no magic money tree that we can waggle the day after the election. No, they've broken the economy, they've done huge damage.
It so happens that he was talking about funding for local authorities, but he might just as easily have been talking about the supply of money for another essential public service, which is the delivery of water on which, quite literally, the life of the UK depends. What he made clear is that he does not think that a Labour government will have the desire or willingness to command the resources to make good the problems that the Conservatives have created.
It is, of course, complete nonsense that the resources to fund both local authorities and the rebuilding of our water supplies do not exist. As I have shown in the Taxing Wealth Report 2024, up to £90 billion of taxes could be raised a year by taxing the wealthy more, simply by changing existing tax laws. In addition more than £100 billion could be raised a year to fund capital investment if only the rules on tax incentivised saving were changed. That has nothing to do with finding a magic money tree. It has everything to do with a government's capacity to tax, which Labour is clearly not willing to use in the public interest.
I have a second reason for thinking that Labour will not act, which is that sources within the party tell me that they are absolutely refusing to consider nationalisation and that the only option that they believe to be on the table is some form of repackaging of the existing company to keep it within the private sector.
Put these two factors together, and we can see that Labour also meets Roosevelt's first condition for the existence of fascism. It believes that the power of the private sector is greater than that of the state, even when it comes to something as fundamental as the supply of water on which we are all absolutely dependent. Its belief is that there is nothing you can do in reaction to the failure of a private sector entity, but bail it out and return it to private ownership. This is despite the fact that it is now glaringly obvious from evidence around the world that the only successful model for the supply of water to a nation is that it must be under public control.
The situation at Thames Water is scary enough. Our major political parties' response to it is, if anything, much more worrying still. What they are confirming is that, as far as they are concerned, the state has withdrawn from the regulation of the private sector and from the regulation of the supply of services critical to the well-being of people in this country. They are, in that case, effectively heralding the onset of fascism, to which they say they have no answer.
Roosevelt declared in his message to Congress that it was essential that the State regulate the private sector. That, he thought, was a fundamental role of the state. He suggested how he would do so to require that the private sector serve the public good. He concluded his message by saying:
No man of good faith will misinterpret these proposals. They derive from the oldest American traditions. Concentration of economic power in the few and the resulting unemployment of labor and capital are inescapable problems for a modern "private enterprise" democracy. I do not believe that we are so lacking in stability that we shall lose faith in our own way of living just because we seek to find out how to make that way of living work more effectively.
It would now seem that we lack any modern politicians, at least within our major political parties, who can even imagine having such a vision, let alone having the ability to deliver it. And that is why we are in very deep trouble.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
This interview between Owen Jones (who has just cancelled his Labour Party membership), and ex-trader Gary Stevenson, is well worth a listen.
Stevenson reflects on trading, the economy and how it works (and more importantly, how it doesn’t). He also says:
“my big fear in this country is that Labor will win the election they will not do anything to stop inequality from growing. Living standards will continue to fall and a general public who has already lost faith in the Centre Right we’ll lose faith in the Centre Left and in 10 years we’ll be in fascism.”
Ex-City Trader Exposes Capitalism: Gary Stevenson Explains Why We’re Trapped In This Mess
https://www.youtube.com/watch?v=WwLjRZ-p5KI
Inequality as the core economic problem, completely ignored is his basic precept. The problem is that it is the economists who ignore it. Stevenson recounts his discussion with an Oxford economist the meaning of “exogenous shock”. Stevenson knew it was a meaningless phrase, waved by an economist to rationalise the exclusion of a critical variable from the economic model. When Stevenson suggested the economist should find out what it is (implicitly by observation and test), his dismissive reply was
“that is not what we do”.
The reason economists do not do that, is because economics is not what it claims to be. It is not a science, it doesn’t do predictions because it can’t, and it has no functional use to anyone, for anything of any human utility. It is a literally a game. A game played according to its own rules, that it makes up for no useful reason, played by economists; solely for themselves. But the economists do not pay to play their game. They expect you to pay them to spend their lives as amateur game players …. with tenure. They have persuaded politicians to pay them to play a game of no value to anyone in the real world; to tell politicians how to run the country. It really is as dumb as that.
Neatly put
Don’t forget being used to justify projects on the basis of ‘heroic predictions’ — from HS2, to privatisation …….
Stevenson also makes a good point about QE faking the inequality test. I would propose generalising his case by saying that QE and other measures have served ‘trickle up’ economics, not the trickle down that neoliberalism claims.
I meant failing the inequality test, not faking. But actually it does both: fake and fail
Regulate the private sector? Neither the Government nor Parliament are capable of regulating the public sector, or even themselves. We are going through another month of revelations about the appalling behaviour of the Post Office. C4 News and the BBC are again revealing documents or voice recordings that highlight the dates over a decade ago, that the Post Office knew of the failings of the Horizon computer system.
Apparently today Fujitsu, the Horizon developer, has received a new contract from the Home Office. It is unbelievable, but this is how we are governed; nonsense that idiots rationalise. The Postmasters/Postmistresses are still waiting for both justice, and 90% of the compensation they are due; and in some cases, their own money. For them this never ends. Some die waiting. The Postmasters are also relying on the Post Office to provide the Compensation – and I really fail to understand how any Government can be irresponsible enough, or frankly stupid enough – to leave the whole compensation process – in the hands of ……. THE POST OFFICE: the Party with a major interest in limiting liability is running the process, and checking the submissions for compensation; unbelievable. . That is unforgivable. It is appalling. It is itself a major scandal.
Demands are still being made that the police require to investigate the conduct of the Post Office. Given that they have had over twenty years for it to dawn on them there may be a problem worth pursuing, it isn’t good enough. Do not hold your breath.
Far more important, the Post Office is owned 100% by the Government. It couldn’t have undertaken any of the activities it has vigorously pursued, without the support and resources supplied – by Government. After the police have investigated the Post Office, the Police require to investigate Government and Parliament. For twenty five years only the Government and Parliament could fix this problem. The Post Office is their problem. The Government and Parliament is ultimately responsible for allowing this to happen. They failed to ask the right questions. They failed to manage the Post Office. They failed to investigate the facts responsibly. It is government, and the politicians – hopelessly inadequate people making decisions that are obviously beyond them; lacking any independence of mind, sufficient forensic skills, sufficient DISBELIEF to take responsible executive Government responsibility. That is not good enough.
Government and Parliament themselves require to be investigated by the police. That is how low our politics has sunk. These are the people you are sending to Parliament – to protect you and your rights. They don’t, they have failed the test and they need to be held responsible. I set the problem up in this way because it goes to the heart of the problem, which is contradictory (in the end the law carefully bends to politics; Parliament, in reality is sovereign in Britain); the pursuit of Parliament itself for potential criminality – because we urgently need to think about the real nature of the problem we have allowed our politicians to create for us.
You are right, John.
Spot on John: Labour Majority for 13 years, then Con-Lib Coalition, Conservative Majority, Con-DUP supply and Conservative Majority again. Neither the Government nor Parliament are capable of regulating the public sector, or even themselves.
People call for MOAR regulation, but they never explain how they will ensure it will be better. Nobody pays a price for incompetence.
I predict a crisis in Housing Associations in the next 10 years. Too many untouchable directors on more than the PM and too much maintenance getting neglected. A regulation which should come but hasn’t is tenants being able to show they can recycle, ventilate, and use the waste disposal correctly.
Very good points. Time for root & branch reform of Parliament.
It needs new people. I will leave the last word to a great Englishman and patriot speaking about another parliament:
“It is not fit that you should sit here any longer. You have sat here too long for any good you have been doing lately … In the name of God go.“
My near neighbour – 380 years ago
Look at what he did after gaining the power of the state.
Genocidal maniac, Richard. You wouldn’t have fancied being a near neighbour of his at the time.
I agree
In one word, Drogheda
“It is high time for me to put an end to your sitting in this place, which you have dishonoured by your contempt for all virtue and defiled by your practice of every vice. Ye are a factious crew and enemies to all good government”
Perhaps we should all channel our inner Cromwell.
There will be no genuine accountability regarding the PO scandal or any other because dominos. The Establishment have had plenty of time to get the wagons in a circle & so will be viewing events unconcerned. I can’t see how this state of affairs might be addressed by voting and am prepping for civil disorder accordingly.
Parliament taken over by a home-spun Mafia? Feels very close to the truth!
There is also the context today of further evidence of state owned business corruption with the Post Office and Fujitsu – both culpable, but with the PO lying in court repeatedly – which is why company law across the board needs major strengthening and policing, as discussed yesterday.
Why are Fujitsu still getting government contracts ?
Why are the water company shareholders having preferential treatment over creditors ?
Why are both major parties trumpeting business, business, business, and a future of more outsourcing, and lower regulation, especially of house building ?
And freeports ? aka a license to avoid taxes ..
Only three years after FDR invoked eternal vigilance, James Burnham was postulating the capture and exercise of controlling power both in public and private sectors by the managerial class, in “The Managerial Revolution” which then informed the Orwellian dystopia.
Then 20 years later “The New Industrial State”, Galbraith’s 1960s analysis, highlighted the increasing dominance and control of the economy by the corporate sector,with hegemony over both markets and government policy.
Those predictions of plutocracy and oligopoly seem to have only strengthened since then, with the business class calling the shots in both main parties in the USA and UK, and with more lobbyists than politicians in Brussels too, that pattern seems dominant.
It seems easy to exert control through leverage of centralised governments, and especially if your political class is drawn from the very same people.
Yet it also happens at devolved levels and the schmoozing between SNP and Scottish business has been evident for years, even if plutocrats like Ratcliffe, McColl and Trump have crossed swords with them.
Given the almost absolute dominance of business, especially the corporate sector, across all leading political parties, I’m very pessimistic indeed as to whether democracy can out manoeuvre plutocracy.
We live in a world where £1 or $1 has more pull than one vote, and the battles seem to be more between corporate cliques rather more than between public interests and private interests.
“There’s no magic money tree that…”
Mr Starmer, you know that is not true. The Tories know it is not true, they use it all the time to give money to their friends. The money is there, or can be raised, it’s a question of political will. Until you stop with the lies, there is no hope.
As an aside, I find the whole concept of “temporary re-nationalisation” an interesting one because, a) It shows that privatisation has not worked, the “free” market has failed, and b) If it is necessary to put things in order, then clearly nationalisation works. If it is then put back into private hands, what is the Government going to say to them, something along the lines of, “now, don’t be naughty again.”
One lesson Roosevelt was slow to learn was about balanced budgets. After his 1936 election victory, he wanted to balance the budget. The result was another recession. It was arms orders from Britain and France which provided the stimulus to the economy.
I see parallels with Starmer and Reeves.
https://www.nytimes.com/roomfordebate/2011/07/20/presidents-and-their-debts-fdr-to-bush/fdr-budget-hawk
True
But he realised in the end
At least Newsnight on BBC2 (soon to be scrapped in its present form) had Mazzucato on again – who managed to transcend the ‘speak your weight ‘ question that ‘Wales Water is not privatised and that doesnt work either.’
She showed that public ownership is essential but not sufficient – got to be proper planning and investment etc.
Richard’s Roosevelt quotes very telling in today’s climate – and also in the light of the Rise of the Nazis on BBC4 .
The Nazis took control of Government and spread their tentacles by brute force – but here, much of it has already been done by the ‘elected dictatorship ‘- the governing political party funded and controlled by corporate money , (which is corruption itself) , all the regulatory bodies are political appointments, the parliamentary committees funded by corrupt money and turned into lobbying groups, the judiciary, Electoral Commission, the BBC all controlled to a greater or lesser extent. Voting denied to some 9 million. John Warren must be right – govt and parliament must be called to accoun, but how?
The controlling power is not a Hitler or a Mussolini – but an idea – a thought box . No one and no political party can think that there might be ‘enough money’ to do what needs doing.
Doublethink , Newspeak, Thought Police, the Ministry of Love annihilates dissidents, Ministry of Peace wages war , Big Brother etc etc.
All so relevant .
But as you say Richard where are the politicians who even understand what’s happening, never mind how to get out of it?
Welsh Water is riddled with debt issued on the Luxembourg Stock Exchange….
Goverment debt is always cheaper that from the market so why has the goverment always choose the most expensive way. What is wrong with the governmet building and owning infrastructure I thought having an asset was a good thing.
Folks,
I think the ramifications of Richard’s assessment is much wider than the manifest errors/failings of the Post Office or the regulation of utilities – or the myth of the impotence of the state – though all these are concerns.
There seems to be no part of our system of governance or provision of services that has not been carved out by, or is managed by QANGOs, or outsourced. Even if people wanted to know where the buck stops, it is far from clear. Ownership / responsibility are often deliberately not transparent – even if governing bodies wanted to seek accountability. If we apply Roosevelt’s two conditions to any aspect of life, it shows that our state needs a radical overhaul. Let’s take some examples (at random): Healthcare, under 18/19 Education, universities, utilities (except Communications?), Local Government, Planning and development, land utilisation and ownership, military, police, food supply, …… Is it so much harder to manage / govern these issues now than say between 1945 and 1975?
Perhaps I’m being melodramatic — but it seems that our state has been well and truly emasculated and conditions have been established to make any remedial solutions very difficult. Roosevelt’s conditions for fascism are more of a concern than I had previously thought – and there seems no leader able to take on the huge challenge that seems necessary to address the spiral.
Maybe Keith Joseph’s plan has been much more effective than I’d thought ……….. but not sustainable for long?
Much to agree with
If it looks like a duck, swims like a duck and quacks like a duck. Corporate state capture. Conflicts of interest and the potential for corruption hardwired in making key actors and individuals vulnerable.
British Ministers and MPs operate with uniquely close ties the business and wealth. So much agenda seeing and policy design outsourced. Revolving doors between operators and regulaors. Opaque public appointments. One third of central government spending is outsourced. Influence is paid for….and, seemingly, publicly rewarded in full sight.
The democratic contract has been broken. Trust in government and politicians lost.
Is there a point when the neoliberal ‘experiment’, like communism, collapses. And that lead to the oligarchs….
Quack, quack.
History may not repeat, just reverberate.
The link below contains another part of Roosevelt’s 1938 speech: “Democratic socialism is a political force in countries like Denmark, Sweden, Finland, Norway, the Netherlands, sometimes Canada, and others. In these places, it means all the people in those countries get their taxes returned in the form of improved livelihoods, economic security, and peace of mind. Democratic socialism means better pay, universal healthcare, pensions, daycare, family sick leave, vacations, tuition-free higher education, robust public transit and parks, and many other amenities backed by stronger unions, denied the American people in the “land of the free and home of the brave.”
Notice that the UK (1938) is not among the countries listed above.
https://www.commondreams.org/views/2020/02/15/democratic-socialism-bring-it-corporate-socialists
Perhaps of some relevance here is Eric Blair/George Orwell, who cited his time working at the BBC during WW2 as part inspiration for “Nineteen eighty four” and that his description of the ‘Ministry of Truth’ is actually of Senate House, in Bloomsbury, London.
“During the Second World War, the building’s use by the Ministry of Information inspired two works of fiction by English writers. The earliest, Graham Greene’s novel The Ministry of Fear (1943), inspired a 1944 film adaptation directed by Fritz Lang set in Bloomsbury. The description of the Ministry of Truth in George Orwell’s novel Nineteen Eighty-Four (1949) evokes the Senate House. His wife Eileen worked in the building for the Censorship Department of the Ministry of Information.”
Orwell was always at pains to point out that “Animal Farm” was targeted at Stalin’s regime and “Nineteen Eighty-Four” was anti-totalitarian, not anti-socialist.
After the BBC’s formation in 1922 the first Director General, John Reith, ‘maintained that broadcasting should be a public service that aimed to enrich the intellectual and cultural life of the nation’. It has been argued that the BBC has played a prominent role in British life and culture. Its future impact remains to be seen.
Shaun
Very thoughtful post!!!
Perhaps if FDR had lived tgw world would be mucher better
https://en.m.wikipedia.org/wiki/Second_Bill_of_Rights
FDR also talked about the economic royalty and economic slavery
https://www.youtube.com/watch?v=071Wl0N1kAg
FDR’s anawer to radical political threats …
https://en.m.wikipedia.org/wiki/Second_Bill_of_Rights
May be gaining traction again
https://www.socialeurope.eu/universal-basic-services-road-to-a-just-transition
Interesting…