Chris Sanders: Reflections On A Rainy May Day

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There is, nevertheless, something quite extraordinary in the fact that economics has evolved in this way, characterising human motivation in such spectacularly narrow terms.
- Amartya Sen ((1988) On Ethics & Economics, Oxford, Blackwell Publishers Inc., ISBN 0-631-16401-4, p.1

Deindustrial Blues

Not far from Sanders Research in the Chilterns outside London is the idle GM Vauxhall car assembly plant in Luton. More than 15,000 people used to work there. Originally established in 1905, the factory was the backbone of the community for nearly a century. The work in the end went to GM plants in Holland and Germany. The reaction of the British unions to the plant closure was disbelief as the reality sank in that the political party that used to represent them is the Labour Party in name only. The union spokesman who said that the closure could never have happened under a Conservative government was right. Only a Labour government could preside over the deindustrialisation of Great Britain. It is not for nothing that they call him Tony Bliar.

This undoubtedly explains the clear affection that exists between the Prime Minister and former US president Clinton. Both were hired to change the terms of engagement between their respective political parties and constituencies, which is to say they were both expected to betray them. The North American Free Trade Agreement was drafted by the Republican administration of George Herbert Walker Bush. It took a Democrat to push it through Congress, however, because only a Democrat could neuter the organised workers who had once been the backbone of the Democratic Party in the industrial states. They should have seen it coming. The politician who gave the keys of the Arkansas governor’s mansion to Tyson Chicken and Goldman Sachs had a track record long before he arrived in Washington.

Tony Blair’s theme park

The political destruction of organised labour is now a fait accompli in both the US and the UK. It is the inevitable result of the deindustrialisation of both countries by virtue of the simple fact that the industrial environment is one that is uniquely suited to the cooperative association of workers. Relatively small numbers of industrial workers can, if properly organised and disciplined, achieve negotiating parity with management. The closing of the factories is a political event on a par with the Highland enclosures of the 18th century or the Enclosure Acts and with similar results. In both cases a work force with intrinsic interests at odds with those of the ruling class were politically destroyed by simply removing the basis for those interests and their expression. A hundred years after the enclosures Lenin remarked with both wit and devastating accuracy that Scotland had been converted into a theme park for the idle classes. What we see in Luton today is unmistakeable evidence that the theme park is moving south.

There is no use, however, in being sentimental about industrial labour. Work on the assembly line was once widely thought, and with reason, to be dehumanising. This undoubtedly explains in part why the end of industrial work is not more widely opposed. As for unions, they are by their very nature associations that deny employment to non-members. They are expressions of self-interest, not charity. The union representative who defended an auto strike on national TV in the 70s while standing in front of his two-car garage and boat trailer (complete with boat) unwittingly and forcefully made the point. Management and owners are not uniquely selfish.

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Having said that, getting rid of high-end industrial work does not mean getting rid of either sweat shops or assembly lines, as any worker in the meat packing plants of North Carolina knows. The promise to replace those jobs with “high tech” work in the factories of the future is more often a cover for moving the actual work of manufacturing somewhere else where labour costs less, leaving nothing but an administrative and finance shell behind. Dell and Intel are not American industrial companies in any meaningful sense of the term, because they do not make anything in America any more. The United States and the United Kingdom have moved their supply and manufacturing chains abroad.

Comparative nonsense

This is frequently explained by recourse to the notion of comparative advantage with an obligatory nod to Adam Smith and David Ricardo. Doing so allows one to pretend that what is being done is a consequence of some immutable natural law or laws rather than a consequence of conscious choices made by real men and women. This is extremely useful politically, a fact that explains why the extremely limited utility of neo-classical economics has not impeded the widespread career success of neo-classical economists and academic departments to support them. Far better to tell the voters that foreign job outsourcing is just “another kind of trade”[i] than what it is, which is just another way of boosting quarterly earnings. In similar fashion the notion of economic “growth” and the shorthand expression for it, money gross domestic product, has become the yardstick by which we measure economic well being. A not inconsiderable and certainly not unintentional consequence of this is the reduction of all forms of economic activity to some sort of moral equivalence. Wal-Mart by this standard is no different than a locally owned retail store. Gutting chickens is as useful a form of employment as manufacturing machine tools, and government spending on ever more expensive weapons is no different than building ships for foreigners in privately owned shipyards.

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Of course this equivalence is entirely arbitrary and false. Wal-Mart’s competitive advantage is in large measure the consequence of sourcing product from Asian slave labour, and has allowed Wal-Mart and others that have followed in its footsteps to extract the locally owned and controlled equity represented by locally controlled and owned businesses and to divert the profit that would have been reinvested in those communities elsewhere. Similarly, relatively unskilled and repetitive work, whether it is gutting chickens as in our example or selling stocks and bonds, does not begin to confer the benefits on community and nation that building the building blocks of industrial life and production does. A dollar’s worth of machine tools is not the same as a dollar’s worth of gutted chickens or bond sales. And a tax dollar spent on the mechanics of destruction, even if it is of the highest order of technology, is not the same as a dollar of profit reinvested in the capacity to make things that are materially useful and productive to others.
These observations raise more questions than they answer, for if one accepts them at face value it is difficult to understand why any national leader would willingly support factory closures and the export of production. It is nevertheless possible to arrive at an understanding of this apparent conundrum, but to do so requires an unsentimental examination of the structure of the real political economy as opposed to the fictional construct that is the daily output of the print and broadcast organs of what has become the official apparatus of state propaganda.

A nation for workers, the world for owners

The basic political and economic unit in the official version of our world is the nation state, and over the last two hundred years a great deal of effort has gone into making sure that the citizens of those nation states not only accept this but think of it as the natural order of things. This has required not just persuasion but force to compel those reluctant to accept remote authority to indeed accept it anyway. This twin process of persuasion through control of education and media on the one hand and the control of the means of coercion on the other has been so successful that few people question the principle on which the idea of statehood and citizenship is founded, never mind the consequences of that acceptance. In a short century we have moved from a world in which travel anywhere was unobstructed by the requirement of documentation and a passport was something issued only to representatives of governments to one in which we are compelled to accept personal identity documents if we are to perform the most basic economic and political functions necessary for survival.

The levelling abstraction of citizenship serves a useful purpose by obscuring the basic fact that some “citizens” are more equal than others. Together with other abstractions such as free trade and democracy it conceals the basic fact that control of the state and its functions has ever been the road to wealth and power. That real accumulation of wealth is the fruit of the process of invention and production is of strictly secondary importance. JP Morgan did not have to know how to run a railway in order to control it, but he did need to be able to bribe politicians and judges. He parlayed that power into the grant of monopolies, not the least of which was the grant of control over the production of money in the United States with the passage of the Federal Reserve Act in 1913. Two world wars and countless regional and local conflicts later the result is that the US dollar is the commonly accepted unit of value and exchange world wide, enabling whoever controls the US government to exchange paper for the output of the world’s real economy.

Clearly it behoves one therefore to know who it is that controls this massive and historically unprecedented power, and while it may at first blush appear obvious, on closer examination it is anything but. The US Federal Reserve system is based on twelve privately incorporated banks. Thanks to this the Fed does not have to divulge its ownership structure, although a reading of the act of incorporation passed by Congress and a cursory look at the membership of the Board of Governors of the New York Fed probably gives a rough approximation.[ii] Even so ultimate beneficial control is obscure, and intentionally so. In government as well as religion, mystery is the sine qua non of exercising power: lose the mystery and you lose the power. It is not for nothing that the money changers operated from the Temple in Jerusalem, nor that the CIA was created by bankers and their lawyers nor that the hostile takeover of the British political economy by European bankers in 1688 is today known as the Glorious Revolution.[iii] Neither a revolution nor glorious, it was a coup d’état backed by an army and a fleet that dwarfed the Spanish Armada and was financed with an interest free loan of 2 million guldens enabling William to pay his troops a year in advance. William brought his bankers with him and with them they brought their skill in underwriting debt. What they ultimately enabled was the creation of an improved prototype for today’s Fed in the form of the Bank of England. The genius of this was that it allowed the government to assume the credit rating of the owners of the bank, and in one stroke allied finance and war more effectively than ever before.

Neither glorious nor revolution

The Glorious Revolution is interesting too for its trans-national character, which finds echoes in modern Washington where the far flung provinces of American empire in Japan, Korea, Taiwan, Indonesia, the Philippines, Britain, Israel, Pakistan and Saudi Arabia compete for purchase on the levers of power. After more than 50 years the result is a class of people denatured nationally, global in habit and mind, and with self interest consciously at odds with that of the majority of humanity. Their outlook is informed by the fact they although they number less than 1% of the globe’s population, they control virtually all of its wealth. Nationalism in view of this is only relevant as a methodology of government, not as a basis for loyalty, which instead is held by family and shared economic interest cemented by intermarriage. Serving them is a mandarin class of administrative, military and political professionals who by comparison to the rest of their fellow humans are paid as princes to rationalise and carry out the exploitation of the rest.

There is nothing particularly new about this view of affairs, but it has been a long time since it was fashionable to discuss it openly, for the very good reason that to do so could get you killed. What Churchill called “impossible equality” was and is the source of paranoia and fanaticism of Olympian proportions on the part of the ruling class, and the wellspring and inspiration of apparently endless mass murder, pillage and rapine to ensure nothing more than the perpetuation of what has become an impossible inequality.

Chris Sanders
csanders@sandersresearch.com

FOOTNOTES:

[i] Chairman of the president’s Council of Economic Advisers Greg Mankiw.

[ii]The Blackstone Group, Citigroup, Tishman Speyer Properties, Kraft Food, and AOL Time Warner are a few of the more prominent firms represented on the board: Finance, real estate, food and communications. See the 2002 Annual report of the New York Fed.

[iii]An interesting account of William of Orange’s expedition contrasted to the failed Spanish attempt to conquer England a century earlier appears in Geoffrey Parker (2002) Empire War and Faith in Early Modern Europe, London, Penguin, ISBN 0-713-99515-7, Chapter 2.

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