Liberal Democracy in Britain — now is the hour

     I spent my life assuming that the Liberal Party (becoming in time the LibDems) was my natural political home. But I was thinking of Gladstone, Asquith, and Lloyd George; thinking of a liberalism that extended the franchise, gave home rule to Ireland, massively taxed the landed magnates, introduced pensions and a heath service, and weakened the privileges of the House of Lords. I was taken with the idea that Liberals commanded the moral high-ground, unique in British politics and perhaps in world politics in that they fought not for their own pockets, but for other people's welfare, people less privileged than themselves. Liberalism was much more than laissez-faire free markets. 

     I trusted that Liberal policies would be well considered, and costed; by philosophers and economists. As I have grown older I have begun to doubt that superior moral and intellectual underpinning, and realise now that I have to do some radical thinking myself. I cannot rely on the Party line, but must shoulder my share of responsibility in forming the Party line. We must not let the LibDem label signify an empty reluctance to hold an opinion.

     I was brought up to the typically British notion that we have little or nothing to learn from other countries. It was a shock to find that, back in the seventies and early eighties, Germany and Scandinavia had already legislated for worker participation (Mitbestimmung, q.v.). More recently I came across the concept of Ordoliberalismus (q.v.), which emphasises the role of the state in actively ensuring that the free market produces results close to its theoretical potential. Germany evolved this vision back in the fifties; we seem not to have fully grasped it yet. 

     We have become mesmerized by the USA. There is the facile and lazy assumption that whatever works in the USA will work here, so we build shopping malls and BurgerKings, and watch Hollywood films, and abandon the adverb. But the USA has as maniacal a fear of socialism and trade unions as it has a love of firearms. Have we not yet grasped that we are different? We (I speak for myself and surely for many millions) are nearer to Europe than to the USA, geographically, climatically, emotionally, historically. 

     I think Capitalism is too rampant, in the UK. Are the current LibDems going to do anything about super-tax, wealth tax, off-shore accounts, money laundering, green energy, worker participation on boards of large and medium companies, curbing director salaries, reviewing student fees, and local government funding? If we stay in Europe have the LibDems got any policies to ameliorate real defects of the Europe project or to improve the way Europe is?
     In the history of the LibDem party this is a crucial 15 days. If we want to vote against the chaos of Brexit, we may have to vote with Labour in certain marginal constituencies. It would be an absurd vanity to expect a labour candidate to stand aside for a LibDem candidate if they are polling far more strongly. (In some few constituencies it should be the labour that steps aside.) 
     There will never be any future for the LibDems, and no proportional representation, till that is grasped. But absurd vanity seems to exist. Oh dear!

--

Ian West, 9 Thenford road, Middleton Cheney, Banbury, 

Yanis, and DiEM25

Dear Yanis, and DiEM25,

     A year and a half ago, the launching of DiEM filled me with hope, particularly in the context of the British referendum. Since then DiEM25 seems to have slipped off the main stage, which is a pity. I wish I could help it re-find its momentum.

    One way of seeing the problem is when we hear Yanis Varoufakis describe his confrontations with the central powers of the EU. They met, talked, listened. He left. They did nothing. My first analysis was that they did not understand. Indeed, I found it very hard to repeat the argument to myself;  about how it is all Germany's fault, so stubbornly bent on recycling money so that the Greeks can go on buying Mercedes cars. My second analysis is that Yanis does not understand. Oh yes, he understands the  economics; but the crux, the movable fulcrum, the point in the argument against which a popular movement might push and win — has he identified that? 

    Martin West thinks the single currency is a mistake. No single interest rate can suit both Germany and Greece. Put another way: how does it work in the USA, and how can Ecuador and the USA both use the same currency?  I believe there is an understanding in the USA that federal money must be returned to poor states if they are going to be kept in the union. I do not know how. There may, in that complex and subtle constitution, be a degree of political integration that is still missing in Europe. Or is it just the common language? But perhaps we do agree that something needs to be done about the Euro Currency Union.  

     Yanis Varoufakis suggests there is a democratic deficit? Before the Brexit Referendum, that sounded like a promising slogan, but we now see what a mess is made if complex issues are decided by simple people. It is not obvious to me that it is democracy that we lack. I believe it is education.  

     Can Europe be 'cured' by allowing more power to the EU parliament?  I doubt it. Or by curbing the EU civil service? Possibly. But we have to recognize that the origin of the EU depended on the dreams of a very few people; integrated Europe is not the product of a popular dream. Only by imbedding the guiding force in a hidden and inaccessible committee was it possible to get the project of a united and inter-dependent Europe off the ground.  It is true that we pay lip service to democracy, but I doubt we really believe in it, except to rally forces against flagrant corruption. I do not think we are quite there yet; I mean the corruption is not flagrant enough; people are not convinced that revolution would improve their situation. 

     I think the Pro-Europe lobby finds its greatest traction at present by showing that the EU is protecting workers rights, clean beaches, fish-stocks and, by instituting uniform production standards, is allowing economies of scale. These are the tangible and practical benefits of integration. For me, and for a considerable fraction of Europeans, there is some appeal in the thought that United Europe could be (would be) a great power. Britain being part of Europe would allow Britain to effect some control in world affairs.

     Arguably the most depressing sign at present is the resurgence of nationalism. The British seem to think they are special (which may be true), but special in a ‘good’ way; this, to any travelled person is clearly a delusion. 

     Yanis Varoufakis believes that right-minded people will spontaneously support socialism. In Britain, they do not; or they are too few. He suggested that all businesses subvert a fraction of their profits towards the public purse, to illustrate the principle that wealth is generated by a combination of capital and labour**. That suggestion sounds drastic and risky, and unlikely to garner mass public support. (Though admittedly, it is little different from our widely accepted but as widely resented corporation tax.) 

    But thank you DiEM25; please keep the ideas coming.

    Yours sincerely, Ian West

(**capital and labour — See http://occidentis.blogspot.co.uk/2012/09/pre-distribution.html)

Stakeholder Rights

Stakeholder Rights.

Professor Sir Tony Atkinson(*) has made 15 proposals for reducing inequality; and for good measure added 5 further ideas that he thinks could be worked up to become proposals. His thoroughness is impressive. But is he perhaps carrying things too far. He seems to have made it his objective that everyone in the country have the same spending power. I see in Britain a great variety of abilities and tastes, and conclude that this is natural; something to work with, rather than against. To level out the wealth of citizens completely would be highly artificial and constitute a massive interference. 

I believe our first objective should be to halt the slide towards inequality. There are too many ways (see below **) in which the rich (or smart) can take from the poor (or simple). I feel impelled to intervene, just as you would if you saw a big bully pounding a weakling. We clearly cannot rely on the ‘bullies’ having a sense of generosity or fairness. In Britain, though it is still regarded as unacceptably bad form to kill a person and take his goods, even that sense of justice may soon be challenged; and bare-faced theft become normal. We already accept taxes on alcohol, the promotion of gambling, tolerate lethal drugs, allow extortionate interest rates, and accept as inevitable the ‘collateral’ bombing of innocent citizens.  

So, leaving aside (for the present) the reasons why we must combat inequality, let us pass on to consider the means. I would like, here, to comment on only one of Professor Atkinson’s proposals. 

“Proposal 2: Public policy should aim at a proper balance of power among stakeholders, and to this end should:

(a) introduce an explicitly distributional dimension into competition policy;

(b) ensure a legal framework that allows trade unions to represent workers on level terms; and

(c) establish, where it does not already exist, a Social and Economic Council involving the social partners and other nongovernmental bodies.”

Stakeholders presumably include Labour and Capital as major players, with perhaps customers and government as minor players. For two centuries we have witnessed the tug of war between Capital and Labour. The public can see both sides of the argument, though dimly, and in tiny glimpses; and has made some attempt to maintain a balance  by siding at times with Labour and at times with Capital. This is a most unsatisfactory arrangement. The fair (or “proper”) balance is too ill-defined, too subjective, the mechanism too unwieldy and slowly-responding. Professor Atkinson may have cracked it with his “explicitly distributional dimension”, “level terms” and his “Social and Economic Council”, but I see these as little more than giving ponderous names to the agonising conflicts we all feel during a prolonged strike. What is the proper balance? How do we define it? How do we achieve it? 

In order to “aim at a proper balance of power”, we must first define it.  Of course, the market can decide one type of proper balance, when some businesses fail and others succeed. But that is destructive and painful to watch. 

Some years ago I suggested [1] looking, for each business in turn, at the ‘annual cost’ of Labour and the ‘annual cost’ of Capital. In many employments these are approximately in the ratio 1:2. It would be logical, and just, to have worker participation on management boards in a similar ratio.[2] At the very least this would lead to workers understanding better the economics of the business, and would foster a spirit of common purpose.  

    

Some decades ago the Germans introduced a law requiring some level of co-determination on the boards of large companies, and currently a majority of OECD countries and similarly of EU countries have a degree of such participation.[3] However, not the United Kingdom, nor the United States. Do you think this if from their superior wisdom, ignorance or arrogance?

    

References.

[1] https://occidentis.blogspot.com/2010/07/labour-versus-capital_01.html 

[2] https://www.blogger.com/[http://occidentis.blogspot.co.uk/2012/09/pre-distribution.html

[3] https://en.wikipedia.org/wiki/Worker_representation_on_corporate_boards_of_directors

*  Sir Tony Atkinson died 1st Jan 2017. Many good obituaries of this good man can be found at: https://www.tony-atkinson.com. 

** The rich can buy up the competition, or the food supply, or, with deep pockets, they can simply wait. They can sometimes even subvert justice. 

Labour versus capital

Strikes are back! 

It came as an unwelcome shock when British Airways cabin crews began their long running militant dispute at the beginning of this year (2010). It was like a ghost from the past. The political scene throughout the sixties and seventies had been dominated by the fundamental confrontation between labour and management; untill Thatcherism in the mid-eighties put an end to strikes. There seemed to be a changed mood in the country, an acceptance that strikes were either unnecessary, or counter-productive. There was, of course, the failed miners' strike engineered by clever stock-piling of coal; and there was legislation concerning strikes, ballots, pickets, etc.  However, strikes are back; we see once again militant labour confronting recalcitrant capital in an attempt to preserve wages and privileges.  This to the considerable detriment of all concerned, including the general public. 

When industrial battle-lines are drawn, the Conservative party naturally supports capital, and Labour traditionally supports labour. It was the inability of the Liberals to take sides in the nineteen twenties and thirties that led to the decline of the Liberal party [1]. I hope the same will not happen again to the detriment of centre-party politics. Surely the intellectually correct position is to occupy the middle ground, to see the strengths of both positions, and to resolve the issue rationally.

The neoliberal 'unfettered market' lobby will say that it is perfectly rational to establish the true value of labour by conflict in a 'free market', but there is conflict that is damaging and conflict that is non-damaging. We do not now practice 'trial by combat'; on the other hand we do determine the value of a manufacturing firm by the free operation of the stock market. The essence of resolving disputes must surely be to ensure that each side can see the true situation of the other side, and trust each other. If management says there is no money for wages, but increases share dividends and management bonuses, then labour is justified in protesting. Such management will ruin a company, and deserves to be sacked. If labour claim privileges that equivalent workers in parallel companies do not have, they must be shown the weakness of their position. A strike leader in such a position will bankrupt his union.

I am surprised that the German concept of Mitbestimmung (Co-determination) has not been taken up more widely. In 1974 it became a legal requirement in West Germany that every firm employing more that 500 workers have worker representation on the supervisory and management boards. A similar law was passed in Sweden in 1976. A white paper studying the idea was prepared for the Wilson government but shelved in the "winter of discontent" and forgotten in the subsequent Thatcher regime.There seems to be some objective evidence that co-determination does indeed lead to improved worker-management relations and productivity [2]; though it may simply be that sensible people produce sensible laws, rather than the other way about — sensible laws producing sensible people. 

There seems a clear rationale for determining approximately what relative strengths capital and labour should have on the board; simply examine the cost of each (per annum, or per unit of production). Suppose a factory producing goods can be rented for £10,000 per week, requiring a work force costing £5,000 per week and material of £2,000 per week to produce items worth £17,000 - £20,000 per week.  The relative value of labour versus capital is 5:10. Or take a power station  for which the capital costs M£9 per year, labour M£6 and fuel M£5 per year. The relative value of labour versus capital is here 6:9. In both these (rather typical) cases it would be ridiculous for labour to be left out of discussions concerning the running of the companies. Their stake is considerable, and their contribution should approach that of capital.

[1]  D. W. Runciman, London Review of Books, 25^th May 2010

[2] See also: http://www.theglobalist.com/storyid.aspx?StoryId=8239