• Hegel, 1820

The education system in Britain is in the mud. That is scarcely news. But would Labour have the courage and values needed to revive it? The trouble they would have if they win the next General Election is due partly to their Party’s legacy and partly to a personal problem.

Education is, or should be, a commons. It belongs to all of us equally, in the sense that whatever counts as knowledge and learning cannot morally be made the property of anybody or any interest. It is a natural public good. If preserved as a commons, education is a superior public good, in that if everybody has good education, we all gain. A public good is one that is non-competitive, in that if one person has it, that does not or should not deprive others of it. So, denying it to some people, as when the price mechanism is used, is a denial of common rights.     

In the past 50 years, the educational commons has been shredded. Instead of education as liberating, as a public good and as a means of developing cultured citizens, it has been commodified to the point where higher education is the largest ‘industry’ in the economy, after finance. A progressive government will have to confront a systemic collapse that is far more than a matter of more public funding or one capable of being rescued by the sensible fiscal measures so far announced by the Labour leadership.

To appreciate the scale of the challenge, and its economic aspects, we must recall what education is all about. In ancient Greece, education was depicted as a means by which people became civilised. But a struggle evolved between the ‘authoritarian’ approach, in which wise elites conveyed truth to the masses, and the ‘liberal’ Socratic approach, in which teachers and students learned from each other, in common pursuit of truth.

The latter was the model for university education from the 12^th century onwards, crystallising in the views expressed by Hegel, Cardinal John Newman and J.S.Mill in the 19^th century. As Newman famously stated in 1875, ‘A university training is the great ordinary means to a great but ordinary end; it aims at raising the intellectual tone of society.’

In the UK, this liberal view was extended to workers in the early 20^th century with the formation in 1903 of what became the Workers’ Educational Association, set up by moderate reformists to broaden knowledge of society and politics. Seen as diverting energies from revolutionary Marxism, the WEA received the approval of the Conservative Balfour government and the likes of Winston Churchill.

Nevertheless, it advanced the liberating effects of education, conveyed in lectures and classes on the arts, social sciences, reading groups and nature study rambles. In 2003, in a book celebrating its centenary, Tony Blair wrote a Foreword. One abiding aspect of the WEA is a vision of education as a two-way process between lecturer and student. Among its formative lecturers were R.H.Tawney and Karl Polanyi.

However, it was the two World Wars that advanced the liberal model most emphatically. In 1919, a monumental statement was the Report of the Adult Education Committee of the Ministry of Reconstruction, known ever since simply as the 1919 Report. In his covering letter to the Prime Minister, the chair wrote that the ‘goal of all education’ should be citizenship, ‘that is, the rights and duties of each individual as a member of the community; and the whole process must be the development of the individual in relation to the community’. It stated that the objective of adult education should be the strengthening of democratic society, geared towards shared civic, social and economic values. Put bluntly, adult education should not be about just preparing workers for jobs.

As the Second World War approached its end, as politicians considered a new post-war social compact, the liberal Conservative ‘Rab’ Butler steered through the 1944 Education Act, which shaped state schooling for the next 44 years. Albeit in a segregated way, and with a foolish streaming through the 11+ exam, it established free secondary schooling for all. In doing so, it reiterated education as a commons, as a public good.

The zenith of the liberal perspective came in 1963 with the Robbins Report on higher education. It was chaired by Lionel Robbins, a right-wing economist at the LSE and a founding member of the Mont Pelerin Society in 1947, a society that was to produce all the economists who forged the neo-liberal economics revolution in the 1970s and 1980s. The irony lay in the fact that the Robbins Report was an eloquent restatement of the classical view. It depicted the university as a public good that should be accessible to everybody able to qualify to enter it. It was firmly in the tradition of Cardinal Newman and John Stuart Mill. This is captured in three statements in the Report:

‘Excellence is not something that can be bought any day in the market’

‘The essential aim of a first degree should be to teach the student how to think.’

‘We should deplore any artificial stimulus to research’.

The Report stated that universities had four tasks, ‘the promotion of the general process of the mind so as to produce not mere specialists but rather cultivated men and women’, ‘the search for truth’, ‘instruction in skills’, and the transmission of culture and common standards of citizenship.   

The liberal tradition was extended in the Open University set up by Harold Wilson in 1969, overcoming scepticism from Anthony Crosland among other Labour politicians. To this day, the Open University remains the largest university in terms of student enrolments, despite going through a difficult period after the sharp rise in student fees in 2012. A benign offshoot has been the U3A, the University of the Third Age. 

However, the establishment of the Open University marked the zenith of the liberal tradition. The erosion began with the arrival of Margaret Thatcher on the scene, as Secretary of State for Education, known as ‘the milk snatcher’ for ending free school milk for 7-11 year olds. Her lasting legacy came during her Prime Ministership. It began with her vandalism in selling off state school playing fields, clearly an illegitimate theft from the educational commons. But the attack on higher education was more strategically ideological.

In 1985, in the height of the neoliberal economics revolution, a new report was published, the brainchild of Keith Joseph, Thatcher’s political mentor. Known as the Jarratt Report, after its chair Alex Jarratt, it was drawn up by a committee biased towards financial interests, with the directors of finance of Ford and of an arms company among its members. The report recommended that universities be run like businesses, stating that ‘universities are first and foremost corporate enterprises’, to which academic departments owed their allegiance. Vice-chancellors, rather than being ‘scholars first’, should act like chief executives, with management, finance and business skills taking primacy.

The government’s adoption of the Report’s recommendations effectively ended the academic independence of British universities. Among the reforms were abolition of academic tenure, beginning the commodification of academics, the introduction of managerialism, with a dictate to earn from university assets, and an emphasis on ‘competitiveness’ as the guide to ‘the education industry’.

The Jarratt Report was followed by the 1988 Education Reform Act, a remarkably ‘regulatory’ measure for a government claiming to favour ‘de-regulation’. Its main features were, first, introduction of a national school curriculum combined with more use of exams to make sure more children left school with qualifications for the labour market, second, removal of control over schooling by local authorities, allowing individual schools to opt out and receive funding from central government instead, and third, a declared attempt to raise standards by giving parents more choice over where to send their children to school.

The 1988 Act was an act of enclosure, centralising control over content and choice, and preparing the ground for privatisation and commodification. For state schools, Thatcher herself wanted a national curriculum that was very narrow, leaving out all artistic and creative subjects as not functionally useful.

Since then, commodification, privatisation and financialisation have detonated what was left of the educational commons and the liberal tradition. Higher education became a zone of rentier capitalism. Students and degrees became commodities. Maintenance grants were replaced by student loans in 1990 and New Labour introduced fees in 1998. Government grants were formally ended in 2015. These measures turned students into instruments of the new debt-driven economy. Students were required to take loans to pay ‘tuition fees’, which rose from £1,000 in 1998 to £9,250 in 2018 (still that in 2023). On a per capita basis, student debt in the UK is easily the highest in the world. 

Universities have been turned into corporate entities plunged into market competition, with each other, with foreign universities and with other emerging purveyors of adult education. The government has steadily cut funding for universities, meaning that they must mobilise more money themselves, primarily by expanding the number of students, a tendency unleashed by the removal of the cap on numbers after 2012. The fetish of promoting economic growth was extended to universities, frontline of the ‘education industry’.

Universities began to sell themselves as ‘brands’, and accordingly devote more of the financial resources they could mobilise to selling themselves. Four developments stand out. First, they devoted more resources to making their ‘product’ an attractive package, with more lavish amenities and entertainment facilities. Second, they sought to sell their packaged product abroad by expensive sales campaigns and recruitment drives. Third, some opened up foreign campuses.

As a result of the second and third activities, today over three-quarters of a million students of British universities are studying outside Britain, and the total number of foreign students has grown to about 40% of the total. But it is the fourth outcome that implies fraud. As a result of devoting more financial resources to selling activities, much less than half the income from tuition fees is actually spent on tuition. Students are being cheated.

Meanwhile, a new trend is taking shape, which is predictable when a public good is commodified. Substitute competitors emerge to take, share and expand the market. In the UK, these are mainly MOOCs and educational brokers, both thriving with the aid of electronic technology and predatory financial capital.

MOOCs

MOOCs are Massive Online Open Courses. Politically, they have been given an easy ride so far. Increasingly, courses and bits of schooling are being packaged and sold to universities and schools instead of, or in addition to, teacher training in classes. There are now degrees based entirely on MOOCs.

Unsurprisingly, they tend to be cheaper than teacher-taught degrees. But to any progressive they should be concerning. They risk minimising the essence of liberal, dialogical education; they risk standardising learning and becoming instruments for indoctrinating millions in a hegemonic way of thinking. And they tend to be acquired by Big Tech and Big Finance, dominated by a few corporate giants able to extract rental profits.

MOOCs were expected to be disruptive of university education, but have proved to be mainly complementary, because as The Economist noted, students ‘are not buying education for its own sake, but rather a certificate from a respected institution.’ What has boomed most is a broker system, through ‘Online Programme Managers’, led by the firm 2U. They have gained from an increase in online second  degrees. Around one third of graduate education in the USA is online, reflecting the high wage premium associated with such degrees. One can predict that MOOCs will burrow away at taking profits from universities in Britain, further eroding the liberal tradition.

Education Brokers

However, it is another commodifying trend that should be given priority by an incoming progressive government. Generically, it may be called the ‘education disruptor’. If politicians forge an education ‘industry’ geared to preparing children and adults for jobs and for earning more, then it is likely that companies will emerge promising to do that more efficiently than universities. This is made more likely if the commodities produced by universities become ‘credentials’ rather than signals of occupational prowess. That makes it easier for competitors to offer near substitutes.                   

Enter the self-styled ‘education provider’. In April 2017, the government introduced the Apprenticeship Levy to boost apprenticeships. For large firms, this involves a 0.5% levy on the annual wage bill if it is over £3 million, with smaller firms paying just 5% of the cost of any apprenticeships, the government paying the remainder.

Just beforehand, a young employee in J.P.Morgan teamed up with a colleague to set up a company that has been able to take advantage of the scheme. It became Multiverse, in effect a labour broker. It places young jobseekers in firms as apprentices. The jobseekers do not pay anything directly, while the firms pay Multiverse for finding trainees. The business model is simple and risk-free. The firms that would have to pay the Apprenticeship Levy anyway can divert that to paying Multiverse, which undertook to provide nominally apprenticeship training, all online, for about 12 to 15 months.

Over six years, Multiverse has placed about 8,000 ‘apprentices’, bringing in a remarkable amount of revenue, declared to be £27 million for 2021-22 alone. Somehow, it has managed to declare a loss every year, leading to the firm receiving from the government millions of pounds of tax credits (£2.7 million in 2022). The head of Multiverse is Euan Blair, eldest son of Tony Blair. At the age of 38, he was awarded an MBE for ‘Services to Education’, although it is unclear what services he has provided.

Despite his company apparently making consistently large losses, Blair flaunted his plutocrat status when he splashed out over £22 million on a luxurious five-storey west London town house, with seven bedrooms, a two-storey ‘iceberg’ basement with an indoor pool, gym and multi-car garage. In 2022 as well, financial capital poured money into his company, turning it into a unicorn, valued at £1.7 billion; Blair apparently has a 50% stake.

There is an irony in that while universities have become more like job preparation factories, the son of the Prime Minister who promoted ‘Education, education, education’ as Labour’s mantra dismisses the relevance of university education for job markets. Blair told the digital media platform UNLEASH that ‘a university degree has become a stamp in the passport for young people seeking access to the best careers. But, more often than not, the education they’re getting at university isn’t relevant to the jobs they’re going for’.    

Blair was quoted in the Financial Times as saying: ‘One of the things that’s so broken about the current system is it tries to pretend a three- or four-year undergraduate degree is enough to see you through a multi-decade career. We won’t make the same mistake with apprenticeships. Our vision is for a system in which people can return to apprenticeships whenever they need to, to level-up their career.’ There is no evidence that anybody does ‘pretend’ any such thing. But this disparaging of university education comes from a neoliberal perspective that sees universities as simply preparing people for careers.

Then came the potential bombshell. In September 2022, Blair’s firm was granted a licence to award degrees without the need for a university or college, a huge break with historical tradition, marking a new phase in commodification and privatisation, the apprenticeship degree or ‘degree apprenticeship’. It is moot whether a 12-15 month on-the-job training course, done entirely virtually, would have passed muster as an apprenticeship at any previous time in history. It is even more dubious to call what Multiverse is offering a ‘degree’, entitling successful apprentices to the degree of B.Sc.

Although its growth has been rapid and its completion rate has been remarkably high, the scale of this education disruption is still modest. But financial capital and the Office for Students, the government regulator that approved Blair’s ‘degree’, have clearly decided that it is a model for the future on a grand scale. But it raises many ethical and economic issues. The most obvious is that it is an abuse of the idea of a degree as the embodiment of the liberal view of education. It is also a further move towards a ‘modular’ approach to skill and training undermining the apprenticeship traditions. It is also further shredding the idea of adult education as a commons, a public good.

Euan Blair’s disruption model (as he describes it) will pose a delicate challenge for Labour if elected as the next government. Labour’s Deputy Leader, Angela Rayner, has said, ‘Education is a public good and should be treated as such.’ Blair’s model is the opposite, as is the licence to issue degrees given by the Office for Students to James Dyson, the billionaire Brexit backer who promptly moved his headquarters to Singapore after the Brexit vote. They epitomise today’s rentier capitalism.

They also raise numerous questions. Should a commercial company be raking in millions of pounds by dispensing ‘degrees’? Should firms be able to divert the Apprenticeship Levy to pay a private corporation to recruit workers for apprenticeships paid for by the tax? Should Blair’s lightly regulated company, valued at nearly £2 billion, be receiving millions of pounds each year in tax credits, paid by the taxpaying public? Should Blair’s ‘degree’ be half the duration of a normal university degree? If Blair’s firm is allowed to issue degrees, should all its competitor online platforms be allowed to do so? The awkward questions can be multiplied. 

However, there are crucial societal questions that Labour should pose. First, should the education system be an ‘industry’ driven by the perceived demands of the labour market? The current commodifying trends are destroying a broad-based liberal education. Second, how can a progressive government restore the foundational principle of education, that of developing critical minds and citizens driven by values of empathy, altruism, ethics, creativity and social solidarity, rather than by competitiveness, narcissism and personal aggrandisement? Third: Given the trends towards superficiality and commodification, at what point will a degree from a British university not be recognised as a credible degree abroad because it has been so devalued? Alarm bells should be ringing. Following previous traumatic transformational national events, such as the two World Wars, there were radical reappraisals of the role of education. Whatever the political hue of the next government, it should set up a high-powered Commission to map out how to recover the soul of the educational commons.                  

The author acknowledges the helpful comments from Will Hutton and Danny Dorling on a earlier draft of this blog

photo credit: Flickr    

The post Can Labour de-Commodify Higher Education? It has a Minor Problem appeared first on The Progressive Economy Forum.

Guy Standing

If there is one area where the Labour Party should come together it is in the strategy to revive the economy of the sea. Under common law, going way back, the sea, the seashore, the seabed and all in the sea belonging to the country are part of the commons, that is, the property that belongs to everybody, equally. Yet the sea has been subject to a greater ‘enclosure’ than land, and has been subject to a process of privatisation and financialisation that nobody who calls themselves a progressive should accept. This will become even more important since the sea is projected to double its contribution to global GDP to over 10%.

Consider a few facts. Since 1982, the UK owns four million square miles of sea under what is called its Exclusive Economic Zone. That part adjoining Britain is three times its total land area. But successive governments have overseen the privatisation of the blue economy and given vast subsidies to corporations, costing taxpayers billions of pounds and enhancing the profits of foreign capital and financial firms.

Take the seabed. It has always been accepted as a commons, with the government and monarchy required to act as the Steward, expected to respect what is known as the Public Trust Doctrine, that is, to act in such ways as to ensure the commons is kept intact and in good condition. So, why has the left kept quiet while the Crown Estate has been auctioning off thousands of square miles of our seabed, earning an income flow estimated to be £9 billion, while selling rights to multinational capital? More auctions are planned. Details are given in my book, The Blue Commons: Rescuing the Economy of the Sea. Labour should make it clear that it will block further privatisation of our seabed.

Then there is fishing. Starting in 1967, the government operates a complex system by which it hands over what are private property rights as ‘fish quota’ to selected fishing companies. A trick played was that the amount of quota given to companies was based on recorded past catches. Until quite recently, small-scale fishers were not required to keep records of how much they caught.

So, when the current system came into effect, they were excluded from the main ‘pool’ of quota. A result is that today just 25 firms own over two-thirds of all the quota, and five families, all on the Sunday Times Rich List, own 29%. They are given virtual ownership of the fish, denying all small-scale fishermen the right to catch much at all. This was not the fault of the EU’s Common Fisheries Policy; the Leave Campaign lied that it was.

Making the situation worse, the government hands out £120 million a year in subsidies, most going to the corporates. And they have treated the law with contempt. Thirteen of the top 25 firms were caught clandestinely breaking the quota rules, catching 170,000 tonnes of illegal excess fish worth £63 million. They received fines but nobody was imprisoned because under British law it is merely a civil offence, not criminal. And they were allowed to keep their quota. The book gives later cases.

The government slashed the budget of the Marine Management Organisation, the body responsible for policing what happens at sea. And there are just 12 coastguard vessels to monitor 773,000 square kilometres – one for every 64,000. This is de facto deregulation. It should be seen in the context of one fact. Because economic growth has been given precedence over preservation of the commons, subsidies have helped fisheries become more ‘efficient’, meaning more fish are taken than is sustainable. As a result, the hourly catch today is just 6% of what it was a century ago. At current rates, our children will have no British sea fish to eat.             

Then there is aquaculture. Over half the seafood we eat today comes from onshore and offshore fish farming. This is another sphere where foreign capital has come to dominate. It is a form of enclosure. Giant fish farms are doing ecological damage, and big companies, most notably the Norwegian Mowi, only bear half the production costs. In Norway, the government is imposing a 40% levy on the cash-flow of such firms. Labour should match that.  

Then there are our ports and harbours. Thatcher privatised all ports, and most have fallen into the hands of foreign capital, much of it Chinese and much controlled by private equity, a form of finance notorious for seeking short-term profit maximisation, asset stripping and ecological disdain. At the time of writing, there is a scandal in the Teeside, where local fishermen have had their livelihoods destroyed by the port owners dredging and dumping 250,000 tonnes of sediment in the sea, killing off crabs, lobsters and other crustaceans. The port and the river authority are run by the subsidiary of a Canadian private equity company. All ports should be nationalised or at least mutualised.   

Then there are the giant cruise ships and container ships. They use the most polluting ‘bunker diesel’ and keep their engines going all the time they are in port. They cause more pollution than all the cars on our roads. Yet they are allowed to do it. A study showed that throat cancer and other ailments linked to their pollution mean that around Europe these boats are responsible for 50,000 premature deaths each year.

Then there are what will be two big ‘blue growth’ areas. Mining in the sea is very profitable and deep sea mining for minerals needed for electric batteries and much more is about to take off on a major scale in 2023, for reasons outlined in the book. Marine scientists are acutely concerned. But mining companies and big finance investing in them are lobbying effectively.

Here is a predicament Labour must address. Under the United Nations’ Convention on the Law of the Sea, adopted in 1982, the International Seabed Authority was to draw up a Mining Code and regulate what happens in the Deep Sea. The ISA was set up in 1994, but after 28 years it still has not drawn up the Code. This is significant, because the Code is meant to ensure that income from the deep sea is shared by all humanity, so that capital is not the sole beneficiary. Powerful interests have ensured the Code does not exist. Labour should demand it be drawn up without further delay.

Perhaps above all, the development of intellectual property rights in the sea should cause all of us alarm, as it relates to what will become a huge part of the global economy. There are already 13,000 patents in ‘marine genetic resources’, vital for future medicines among others, guaranteeing their owners monopoly profits for 20 years. Over 47% of the patents are possessed by one corporation, the German chemical giant BASF; 76% are possessed by three countries, Germany, the USA and Japan. Britain is nowhere. Labour must have a policy to redress that.

Finally, Labour should develop a strategy that combines revival of the blue commons with a shift to what could be called eco-fiscal policy, by raising revenue from levies on profits from activities that use and deplete common resources. The proceeds should be channelled into a Blue Commons Capital Fund, along lines of what has been done in Norway. From the Fund, Common Dividends could be paid out, as a form of common property right, a basic income by another name. It can be done.      

picture credit : Ed Dunens flickr      

Guy Standing is Professorial Research Fellow, SOAS University of London and a Council member of the Progressive Economy Forum. He is author of various books, including The Precariat: The New Dangerous Class and The Corruption of Capitalism: Why Rentiers thrive and Work does not pay.

The post Labour must Revive the Blue Commons appeared first on The Progressive Economy Forum.

The omni-shambles of Liz Truss was more than an ideological experiment backfiring. It was the culmination of 12 years of ineptitude, marked by the weakly opposed fleecing of the social fabric through austerity, and forty years during which rentier capitalism has become entrenched. While Rishi Sunak will delight his friends in the financial markets, the reactions to the crazy mini-budget demonstrated two realities: first, Britain lacks economic and social resilience, and second, fiscal policy is in disarray.  

For the past century, social democrats have supported a model of society in which high and progressive taxes on income and consumption have been justified as the means of reducing inequality and poverty while paying for a growing array of state benefits and public services. For many decades, that prescription served them well, assuring regular electoral victories.    

Since the 1990s, that has ceased to be the case. The political right may not have won the intellectual or moral argument, but their prescription of low income and consumption taxes has had increasing popular appeal, draining support for the left from those gaining from tax cuts, even if they still support public services and benefits.

It is no use the left lamenting the passing of that era. It must reinvent fiscal policy. To do so, it must recognise once and for all that the income distribution system of the social democratic decades of the 20^th century has broken down irretrievably. Whether there is high or low GDP growth, most of the extra income flows to the owners of property, financial, physical and intellectual, while less and less goes to those who rely on labour. That applies in countries where unions are strong as well as where they are crippled. This is an era of rentier capitalism.

Moreover, in the globalised economy dominated by finance, it is easy for high-income recipients to avoid income taxes. They just use tax havens, as has been happening to a growing extent, as the Panama Papers and other evidence shows.  Across Europe, offshore wealth is about 10% of GDP nowadays; in the UK about 20%. The wealthy hardly pay income tax whatever the rate.

Labour and the left are too defensive

However, in response to cuts in income, consumption and corporation tax, the left has been defensive. This was symbolically demonstrated by Labour’s reaction to the regressive ‘mini-budget’ the new Truss government introduced on September 23. The budget lowered the basic rate of income tax to just 19%, starting after a tax-free allowance of £12,570. Immediately, Labour said it would not reverse the cut. It accepted a tax rate so low that financing public services would become even more problematical. There was not even evidence that the public wanted such a low rate. On the contrary, a survey found that 52% of the electorate favoured tax increases. Nor is there any evidence that cutting income or corporation taxes increase economic growth; they merely increase inequality.  

The questions one felt inclined to ask Labour were: How low a tax rate would you be prepared to tolerate before you squealed stop? And how are you going to pay for good public services and decent state benefits if you do not tax incomes to pay for them?

The more general question for the left across Europe is how to make taxation popular, progressive and functional. The answer should be based on overcoming the right’s populist trick, that taxing income is ‘disincentivising’ and a reflection of ‘envy’ by the losers in society against supposedly dynamic entrepreneurs and energetic ‘workers’.

Facing this predicament, progressives should opt for an eco-fiscal policy, one designed to dismantle rentier capitalism. Accept that high progressive income tax is out of date. Make it clear that income and consumption taxes are mainly for public services and infrastructure, including transport, defence, housing, schools and other social needs. Beyond that, restructure fiscal policy so as to make it a means of common justice.

Fiscal policy for the commons

It may seem esoteric, but we should start by reviving the idea of the commons, that is, resources and assets that belong to all of us, as commoners. Ever since the Justinian Codex of AD534, common property has been the base of common law. The commons include land, air, water, minerals, the sea, seabed and seashore, as well as commons bequeathed to us by previous generations. Yet all forms of commons have been taken or eroded illegitimately, through enclosure, spoilage, privatisation and financialisation. The left should demand that commoners be compensated for that plunder.

Words and how the narrative is presented matter. The term “levy” should be used rather than “tax”, to indicate three distinctive features – that it is not a tax on labour, work or consumption, that it is designed to indicate it is a cost imposed on those taking from our commons, which belongs to everybody equally, and that the revenue from it will be recycled as Common Dividends on common wealth.

So, what should be covered by eco-fiscal policy? Start with a progressive Land Value Levy (LVL), which should start on landholdings of above the typical garden size, to avoid it being dubbed ‘a garden tax’, and thus politically difficult. A progressive LVL is further justified by the fact that the value of land has jumped as a share of non-financial assets, partly due to globalisation and speculation by global finance. Across the OECD, land now accounts for over a third of non-financial wealth, and in the UK has risen from 39% in 1995 to 56% today.  

Then introduce a Wealth Levy, probably instead of inheritance tax, excluding land if there is an LVL. In European countries, wealth is taxed much less than income, wealth inequality has risen relatively to income inequality, and a majority of wealth is inherited, definitionally unearned. Even a 1% wealth tax would raise huge revenue, and be harder to avoid than income.

Next, following Sweden’s lead, there should be a high Carbon Levy, a tax on carbon emissions that are causing climate change and acidifying the oceans. According to the IMF, only a fifth of global emissions are covered by proper pricing. A carbon levy would transform the atmosphere into a regulated commons. And we know that the rich cause most of the pollution, while low-income groups mainly bear the costs, including in ill-health. 

By itself, a Carbon Levy is potentially regressive, in that paying for emissions would be a higher share of a low-income person’s income. It would only become progressive if all the revenue were recycled to all commoners equally. The way to ensure that is to channel the revenue into what could be called a Commons Capital Fund, from which all usual residents would be entitled to equal Common Dividends. Here is not the place to go into details, to ensure independent governance and so on. The point is that progressive should shift to eco-fiscal policy and build mechanisms to ensure outcomes are progressive.

Next, eco-fiscal policy should target rental income gained by exploiting the commons. Here we should salute Norway, which has just announced a ground rent on industrial aquaculture, (salmon farming), as well as on hydropower. Given that major aquaculture firms only pay about 50% of production costs, the rest being borne by local communities and surrounding ecosystems, the proposed 40% levy could be copied in other European countries where fish farming is booming. As proposed in my new book, the principle could be extended to sea fishing, seabed mining and offshore windfarms.  

Among other levies should be a Digital Data Levy. The Big Tech corporations make billions of dollars from our work, in us providing them with information all the time we use electronic equipment. They are taking rental income from the information commons. That should be shared, justifying a Levy on their advertising revenue, put into the Common Fund, as it would only be fair if everybody received an equal share of the revenue.

The left should play on the right’s ideological contradictions. They justify shareholder capitalism by claiming that shareholders (principals) pressurise managements (agents) to pursue long-term growth. That had some veracity decades ago when the average time a share was held was seven years; today it is under six months and falling. So, a Financial Transactions Levy would incentivise what the right claim to want, and it would be progressive.

Similarly, a Market Concentration Levy would be a form of anti-trust measure. The right say they are opposed to monopolisation as contrary to a ‘free market’. But conglomeration has resulted in a sixfold increase in the average mark-up of prices over production costs. So, to combat conglomeration, a levy should be imposed on profits of corporations that take more than 20% of their market. This would be better than a ‘windfall tax’, since it would address a structural fault.                    

Regressive subsidies

There is also the other side of fiscal policy that receives remarkably little attention in progressive economic thinking, that is, government subsidies. These are really a ‘negative tax’, and are mostly regressive. A progressive fiscal policy would take an axe to thousands of selective subsidies that governments give to special interests. I have identified 1,190 in the UK. If the right claim to believe in ‘free markets’, then giving distortionary subsidies is hypocritical.

One sphere where subsidies are particularly damaging and regressive is fishing subsidies, mainly for fuel to enable industrial fisheries to carry out ‘long distance fishing’. The World Trade Organisation trumpeted an agreement reached in mid-2022, but all it did was ban some subsidies for ‘illegal’ fishing, which is an oxymoron. The WTO even removed reference to ‘harmful subsidies’ from the agreement’s final text. Globally, $35 billion is spent on such subsidies. They are causing fish population collapses. In Britain, the government spends £120 million a year on them, to no good effect.

The resort to subsidies during Covid was an opportunity for the left to be consistent, by applying a ‘progressive stress test’, that a fiscal policy should only be supported if it does not increase inequality. The job furlough schemes failed that test miserably. But most leftish parties vociferously supported them, as did unions. It was predictable from the outset that they would intensify inequality – giving far more to the salariat than to the precariat – and be subject to massive fraud. They also propped up numerous ‘zombie firms’.

More generally, progressive politicians have gone along with bail outs of companies deemed ‘too big to fail’.[i] In effect, commoners pay for the socialisation of investor losses. Worse, the left has not opposed the globalisation of the US intellectual property rights regime, which enables corporations to make monopoly profits for 20 years through patents and for much longer in the case of copyright and industrial designs, even when patents are the result of publicly funded R&D, which means the public bears the risk. This was brought out shamefully by the vast profits earned on Covid vaccines. At the very least, the public should have an equity stake in any patented product if public money is used to subsidise the R&D.          

Progressives should also oppose implicit subsidies to capital. Under the Investor State Dispute Settlement process, multinationals can sue governments if in their view reforms threaten their future profitability. So, as has happened, if a government introduces anti-pollution measures it can be sued for hundreds of millions of dollars. This should be scrapped, saving revenue that would increase the fiscal space.      

Similarly, the Energy Charter Treaty (ECT) should be scrapped. It dates to the 1990s and ironically was drawn up to help ex-Soviet countries by protecting investors in their oil, gas and coal industries, by obliging governments to compensate companies if reforms hit their potential profits. Today, five energy companies are suing European governments for almost E4 billion over restrictions being placed on coal, oil and gas projects. If they win, Europeans will see their taxes diverted to paying them, while further disincentivising energy firms from efforts to decarbonise. Progressives should be demanding a reform of the ECT.

In sum, in this potentially transformative moment, progressives in Britain and across Europe should reposition fiscal policy to dismantle rentier capitalism, contribute to ecological revival and reduce inequalities.

 Guy Standing is Professorial Research Fellow, SOAS University of London and a Council member of the Progressive Economy Forum. He is author of various books, including The Precariat: The New Dangerous Class and The Corruption of Capitalism: Why Rentiers thrive and Work does not pay.

[i] Consider British Steel, owned by Chinese capital. After receiving £780 million in subsidies, it is in negotiations with the new ‘free market’ Business Secretary, Jacob Rees-Mogg, over a new subsidy of £500 million, supposedly so that it can keep afloat. As an act of political expediency, one understands. But it shows the hypocrisy behind the ideology. Also, it is hardly pro-growth to prop up loss-making capital.     

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We are living in an age of chronic uncertainty, in which crises pile into one another, plunging millions of people deeper into insecurity, impoverishment, stress and ill-health. There was the financial crash of 2008, a decade of austerity, a series of six pandemics culminating in Covid, with more to follow, and now the ‘cost-of-living’ crisis as inflation mounts, possibly reaching an incredible 20% by the winter.

Nassim Taleb coined the term ‘black swans’ to designate shocks that were rare, unpredictable and had devastating consequences. Now, they are not rare. But they are uncertain in terms of when, where and why they occur and who will be adversely affected. As such, you and I cannot be confident that we will not be among the victims.

There is something else too. It looks as if a large proportion of the population will be affected. It is predicted, for example, that 45 million people in Britain will be suffering from fuel-related hardship this coming winter, bringing more deaths and ill-health. Natural disasters could hit numerous communities, and being in a job is far from a guarantee of escaping poverty or economic insecurity.

Three deductions should flow from this bleak scenario. First, feasible economic growth will not overcome the threats. Second, old policies are not valid for tackling the new crises. Third, we need to build societal resilience, a new income distribution system and a new social protection system. ‘Targeting’ on a minority would be futile and inequitable.

The post-war welfare state was built on a presumption of Full Employment of men in full-time jobs earning family wages, in which there was a need for compensation for ‘contingency risks’ or ‘temporary interruptions of earnings power’. It was always sexist. But the essence was ex post compensation. This is inappropriate today where the core challenge is chronic uncertainty, for which one cannot devise a social insurance system. What is needed is an ex ante protection system, one which gives everybody guaranteed basic security.

But our politicians are failing to appreciate the nature of the challenge and are resorting to yesterday’s answers to yesterday’s problems. First, the Conservative leadership contenders and the Labour leadership are making overriding commitments to maximising economic growth. Keir Starmer says that the Labour motif for the next General Election will be ‘Growth, Growth and Growth’, and that he will only consider policy proposals from the Shadow Cabinet if they promote growth. Meanwhile, an adviser to several Tory Chancellors says the next Conservative Prime Minister will commit to an ‘absolute priority of maximising growth’.

A phrase that comes to mind is the one used by Michael Gove to characterise Liz Truss: they are taking a holiday from reality. Both the Conservatives and Labour are misdiagnosing the nature of the recurrent crises. Both are chasing the mirage of high GDP growth, wishing away the awful ecological implications. Starmer says the free market has failed. But we do not have a free market. It is rentier capitalism, in which most income flows to the owners of property – financial, physical and ‘intellectual’. Economic growth has to be unrealistically high for the precariat and other low-income groups to gain anything. This is why real wages have stagnated over the past three decades, and why earnings have lagged GDP growth, the difference made up by rising debt.

The income distribution system has broken down. Across all OECD countries, financialisation has accelerated, and is fuelling inflation for its benefit. In the UK, financial assets of financial institutions have risen to over 1,000% of GDP, with most finance used for speculative activity rather than for productive investment.

A rising share of income is going to capital, and more is going in rent, in excess profits. Within the shrinking share going to labour, more has gone to the top, again in forms of rent. The value of wealth has risen sharply relative to income, while wealth inequality is much greater than income inequality.

All the time, the precariat grows. What should exercise progressive politicians is that for a growing proportion of the population income instability and insecurity have grown by more than is revealed by trends in average real wages. A result is that millions of people are living on the edge of unsustainable debt. People lack income resilience. Desirable as that is, raising the minimum wage will not solve that, and nor will trying to be King Canute in banning flexible labour relations.

So what are our politicians proposing in this context of chronic uncertainty, a broken income distribution system and a daunting ecological crisis? What marks all of what they are offering is ad hoc window dressing that seems deliberately intended to avoid the reality that we have a transformation crisis on our hands. Tax cuts would benefit the relatively secure, price freezes would cost the public finances and distort markets, raising the minimum wage would bypass the precariat and those outside the labour market, and targeting more benefits to those receiving Universal Credit would merely bolster an unspeakably punitive and inequitable scheme.

It brings to mind what William Beveridge wrote in supporting his 1942 Report that led to the post-1945 welfare state. ‘It’s a time for revolutions, not for patching.’ So far, our mainstream politicians seem to lack the backbone. The strategy should be one of dismantling rentier capitalism and recycling rental incomes to everybody. Above all, in the foreseeable future of chronic economic, social and ecological uncertainty, the base of social protection should be the provision of ex ante security. People – all of us – must know that, whatever the shock, we will have the wherewithal on which to survive and recover.

This is when politicians should be looking at ways of introducing a basic income for every usual resident. It would not replace all existing benefits, and would have to involve supplements for those with special needs. It would have to start at a modest level, but would be paid to each man and woman, equally and individually, without means-testing or behavioural conditionality. Legal migrants would have to wait for a period, which does not mean they should not be assisted by other means. And to overcome the objection that it should not be paid to the rich, tax rates could be adjusted to make them more progressive.

Before coming to how to pay for it, I want to emphasise the reasons for wanting a basic income for all. The fundamental justification is moral or ethical.

First, it is a matter of common justice. Our income owes far more to the contributions of all our ancestors than to anything we do ourselves. Even Warren Buffet admits that. But as we cannot know whose ancestors created more or less, we should all have an equal ‘dividend’ on the public wealth. After all, if we allow the private inheritance of private wealth, there should be a public equivalent. The Pope has come round to that rationale for his support for basic income. It is also a matter of ecological justice, since the rich cause most of the pollution while the poor pay most of the costs, primarily in diminished health. A basic income would be a form of compensation.

Second, it would enhance personal freedom, including community freedom. Although paid individually, that would not make it individualistic. Experiments have shown that when everybody has basic income, that induces stronger feelings of social solidarity, altruism and tolerance.

Third, it would enhance basic security, in a way that means-tested, conditional benefits cannot possibly do. Politicians seem reluctant to offer ordinary people basic security, which they would always want for themselves and their families. Insecurity corrodes intelligence and induces stress and loss of the capacity to make rational decisions. We are experiencing a pandemic of stress and rising morbidity. None of the existing policy proposals would reduce that.

Finally, there are instrumental reasons. Experiments with basic income around the world have shown it results in improved mental health, less stress, better physical health, more work, not less, and enhanced social and economic status of women and people with disabilities.   

Basic income is not a panacea, but it should be part of a transformational strategy, complemented by putting public utilities, most notably water, back in public hands and by rent and energy price controls. There must also be fiscal reform that would help in the fight against the ecological decay while helping to overcome chronic uncertainty. Progressives should accept that taxes on income and consumption should be raised, because they are relatively low in this country and because more revenue is needed to pay for our public services, and in particular reverse the privatisation of our precious health service.

The call for Universal Basic Services is state paternalism and would not help with the nature of the crisis. People need financial resources to overcome the economic uncertainty and lack of resilience. No government can know the particular needs of particular people, and so subsidising some services would be both arbitrary and distortionary.

However, in addition to higher taxes on income to pay for services, we should think of ‘the commons’, that is, all that inherently belongs to every citizen of the UK, beginning with the land, air, water and sea, and the minerals and energy underneath. Over the centuries, they have been taken from us illegitimately, without us or our ancestors being compensated. This includes all the land that has been ‘enclosed’, the forest and public spaces that are being ‘privatised’, the seabed that is being auctioned off, and the oil and gas sold for windfall gains given away in tax cuts for the wealthy.

This line of reasoning leads to the proposal that levies should be put on elements of the commons that we have lost, with the revenue put into a Commons Capital Fund, which would be charged with making ecologically sustainable investments, from which ‘common dividends’ would be paid out equally to every resident citizen.

The initial base for paying for a basic income would be conversion of the personal income tax allowance, which benefits higher-income earners and contradicts the view that in a good society everybody should be a taxpayer. If the revenue from that were put into the Fund, it would provide enough for £48 a week for every adult. Then add a 1% wealth tax, justifiable because wealth has risen from three times GDP to seven times, wealth inequality is much greater than income inequality and over 60% of wealth is inherited, unearned. A 1% wealth tax would be sufficient to pay a modest basic income. And more revenue could be raised by rolling back on many of the 1,190 subsidies and tax breaks given mostly to wealthy people. A modest Land Value Tax, based on size and value of land, is also justifiable on common justice grounds, especially as the value of land has grown from an already high 39% of non-financial assets in 1995 to 56% in 2020.

Then add a Carbon Tax, vital if we are to reduce greenhouse gas emissions and global warming, but which will only be politically popular and feasible if all the revenue from it is recycled as part of Common Dividends. Other levies into the Fund could include a Frequent Flyer Levy and a Dirty Fuel Levy on all those cruise liners and container ships that keep their engines going all the time they are in port, poisoning the atmosphere and causing widespread throat cancer.   

Here we have the basis of an income distribution system suited to the era, with supplements for all those with extra needs. It is an approach that would open up a vista of multiple forms of work, unpaid as well as paid, putting care at its centre. It would be an era in which basic security was regarded as a fundamental right, and it would be one in personal freedom would be enhanced while precarity would be reduced, the precarity that comes from dependency on a discretionary state and undignified charity. At this moment of omni-crisis, we need to march in that direction.            

Postscript:

In their response to the cost-of-living crisis, the New Economics Foundation proposes ‘free basic energy’ for all households. Besides penalising those outside households, this presumes that all households’ poverty and insecurity is due to high energy prices. For many that will be so, but for some other factors may be more important.

It would also raise moral hazards. Some people may not need the full free allocation, but would be inclined to waste what they did not need, because it was free. The amount given free would have to be based on some ‘average’ household. But many are in non-average households, or are outside them more, for whom the free allocation would be too little or exceed our basic need.

Some people might prefer to cut energy use a little if given the choice of spending on food, debt reduction or extra clothing. Better to enable them to make the choice that suits their particular needs.

The NEF also propose to top-up Universal Credit and legacy benefits. But we know these do not reach many of the poor, due to sanctions, the humiliating application process and long delays. What about the millions in need who would be excluded? Much better than relying on paternalistic measures and behaviour-conditioned targeted benefits would be a basic income, with supplements for those with special needs, coupled with a modest wealth tax and land value tax. 

Guy Standing is a Professorial Research Associate, SOAS University of London and a council member of the Progressive Economy Forum. His new book is The Blue Commons: Rescuing the Economy of the Sea, published by Pelican. He is a technical adviser to the basic income pilot being conducted by the Government of Wales.  

photo credit flickr

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The global privatisation of the sea

For most of human history, the sea has been seen as a commons. In the Justinian Codex of AD529-534 – regarded universally as the base of common law – four types of property were defined – private, state, nobody’s (res nullius) and commons (res communes). The sea was firmly included in the commons. As such, to the extent it belongs to anybody, it belongs to everybody equally.

However, since 1945, when the USA unilaterally asserted ownership of the continental shelf and parts of the high seas around its shores, much of the ‘blue commons’ has been converted into state and private property. In 1982, UNCLOS (the United Nations Convention on the Law of the Sea) endorsed the biggest enclosure in history, granting states Exclusive Economic Zones (EEZs) extending 200 nautical miles from their coastlines. This set in train procedures and institutional mechanisms that have expanded privatisation and financialisation to all parts of the marine economy. It also cemented neo-colonialism, granting countries such as the USA, France and the UK millions of square miles around their ‘overseas territories’.

It is hard to exaggerate the scale of the plunder of the blue commons in the period of neoliberal economic dominance since the 1980s. The seas have become the frontier of global rentier capitalism, and almost everywhere one can trace the spreading claws of financial capital, with a growing presence of private equity. Finance has steered the much-touted ‘blue growth’ perspective, fronted by the World Bank, promising the unlikely combination of economic growth, poverty alleviation and environmental improvement.

The result is a social, economic and ecological crisis that until very recently received woefully inadequate attention from politicians and economists. Bear in mind that the seas cover 70% of the earth’s surface, that 40% of the world’s population live in coastal communities, that nearly half the oxygen we breathe comes from the sea, and that the seas contain three-quarters of all life. Yet it is ‘green’ issues that have dominated political discourse, not ‘blue’. Were the seas a country, the income generated from marine activities would make it the world’s seventh biggest economy, and it is set to double in size by the end of this decade.

My new book argues that the only way to stop and reverse the destruction and depletion of marine resources is to revive the ethos of the sea as a commons, managed by those whose lives and livelihoods depend on the sea, for the benefit of all. Only commoners have a tangible and emotional vested interest in preserving the seascape and using the seas’ resources sustainably. And, as the blue commons have been turned into a zone of profiteering, commoners should be compensated for the loss.

Many of the critical issues affecting the blue commons are global in character, including the depletion of fish populations by subsidised industrialised fisheries, destruction of the seabed and vital coral reefs by oil multinationals, a threatened biodiversity wipe-out from deep-sea mining for minerals, and the reckless spread of financialised aquaculture. The recent UN Ocean Summit in Lisbon came up with plenty of fine words and promises, but nothing that would put these trends into reverse. Just beforehand, after more than two decades of negotiations, the World Trade Organization finally came up with a feeble agreement on fishing subsidies, in which the initial commitment to abolish ‘harmful subsidies’ was deleted from the final text.

British problems

However, some issues are particularly pertinent in Britain. Taken together, they justify a National Commission on the Blue Economy, to reset economic and social policy.

The UK government operates a regressive, weakly administered quota system that gives private property rights to commercial fishing companies. Most of the quota in high-value fish go to a handful of big corporations. Well over a quarter have been given to just five families, all on the Sunday Times Rich List, and just one UK-registered but Dutch-owned giant vessel has 23% of English quota. The system by which quotas are given is opaque and corrupt. But the government’s 2020 Fisheries Act, which regulates fisheries post-Brexit, retained it unchanged. It has led to chronic overfishing, often blatantly illegal, compounded by the fact that breaches are treated as mild civil offences, not criminal. Thus, in 2011-12 thirteen fishing companies with large quota shares were convicted in Scotland’s ‘black fish’ scam after landing 170,000 tonnes of undeclared herring and mackerel. They were allowed to retain their quota. Similarly, in 2015 the Dutch-owned trawler mentioned above, the fleet’s biggest at over 100 metres in length, was caught with 632,000 kilos of illegally caught mackerel. It was fined just £102,000 and then allowed to sell the fish for £437,000 and retain its quota share.

To compound this impunity, the Royal Navy and Scotland’s Marine Sea Fisheries Inspectorate have only twelve protection vessels to monitor fishing practices in a sea area three times the size of the UK’s land area. Meanwhile, the Marine Management Organisation (MMO), the regulatory body, had its budget slashed as part of austerity, leading to a sharp drop in inspections and investigations of fishery violations and a similar drop in warnings and prosecutions.

Unsurprisingly, it has presided over a collapse of major fish stocks, a collapse that has nothing to do with the European Common Fisheries Policy. In any progressive economic strategy, quota should be taken away from those convicted of breaking the rules, and serious breaches should be made criminal offences.

The British government has made much of its claim to be extending its protection of the sea and marine species through Marine Protected Areas (or Marine Conservation Zones), which cover nearly a quarter of its territorial waters. But most MPAs are poorly managed, with highly destructive fishing methods such as bottom-trawling and dredging allowed in many. Recently, the MMO brought a case against Greenpeace for tossing boulders into supposedly protected areas to disrupt trawling. The judge had the sense to toss out the case as ‘absurd’, urging the MMO to do its designated job, and not harass those induced to act in its stead. Meanwhile, BP was given the go-ahead by another regulatory agency to dump thousands of tons of steel pipes and cables from a decommissioned oil rig in a precious ‘protected’ area of the North Sea.

In another sell-out of the blue commons, the Crown Estate has been allowed to auction off large expanses of the seabed around Britain to multinational corporations for wind farms. The latest round in 2021 will raise £9 billion over ten years for the monarch and the British Treasury. Under common law, the monarchy and the government are supposed to be trustees or stewards, responsible for preserving the commons as such for future generations. Instead, they have handed over the commons for multinationals to exploit for profit, with minimal environmental protections or compensation for the commoners – the British public.

Deep-sea mining and ‘marine genetic resources’

Coming up are even bigger concerns: prospective deep-sea mining for minerals with potentially catastrophic damage to deep-sea ecosystems and the extension of intellectual property rights in the sea over ‘marine genetic resources’, substances that can have important applications, especially in medicine. UK Seabed Resources, a subsidiary of the US arms company Lockheed Martin, holds a licence to search for sites for deep-sea mining, which promises to be highly profitable. Yet the deep-sea mining regulator, the International Seabed Authority, has a pitiful budget with which to monitor what giant corporations are up to in over half the world’s ocean area, as well as a mandate to promote ‘the orderly, safe and rational management’ of seabed resources. It is charged with mitigating the damage from seabed mining but not with stopping or even limiting it, despite calls from leading scientists for a moratorium. Instead, unregulated commercial mining could start next year if ISA fails to agree a Mining Code after years of delay.

As for intellectual property rights, the UK has proverbially missed the boat. Astoundingly, one multinational, the German chemical giant BASF, owns nearly half the thousands of patents taken out on marine genetic resources, and over three-quarters of the patents are held by just three countries, Germany, the USA and Japan. Ownership of these patents guarantees monopoly income flows from the blue economy for many years and gives these rich corporations in rich countries private control over a key research and development agenda for the world.

Another concern revolves around the life-endangering use of the dirtiest form of diesel by luxury cruise liners, which keep their engines going all the time they are in port. In the port of Southampton, the air quality is so poor that it breaches international guidelines, while other research suggests that about 50,000 people in Europe die prematurely each year due to pollution from ships. Profits first!

In sum, the enclosure of the blue commons has led to the biggest privatisation of all, and yet has barely figured in progressive economic policymaking. What is needed is a Charter of the Commons to guide a future progressive government. It should include the construction of a Commons Capital Fund, from which Common Dividends could be paid to help local communities rebuild a sustainable blue economy. Such a progressive transformation is nothing less than vital.            

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US President Biden has called for ‘regime change’ in Russia, a statement that should recall previous US-led regime change crusades – in Chile (1973), Iraq and Afghanistan, among many. To put it mildly, they have not been unmitigated successes. But the regime change initiative that deserves our scrutiny today was the United States’ most ambitious and most relevant to the latest demand for change, which one would dearly like to see. This is because it embraced Russia and Ukraine thirty years ago.

Let me preface this article by saying that, fortuitously, I witnessed what the USA, the UK and others did on the ground. In 1990, on behalf of the International Labour Organisation (ILO), I organised an international conference on labour policy in Moscow, which emerged as a report just as the Soviet Union was dissolving. I was then appointed director of a programme set up by the ILO to advise governments in the region on social and labour policies in what was euphemistically called the ‘transition’ from ‘communist’ to a ‘market’ economy. 

Based in Budapest, for about four years I interacted with senior government ministers and officials of Russia, Ukraine and neighbouring countries while also having numerous meetings with economists and officials from the USA, other countries and international bodies such as the World Bank, the latter all committed to their version of regime change. It was a bizarre experience. I even met the Queen, the Duke of Edinburgh and the Queen of The Netherlands as they played walk-on parts in helping to legitimise the expensive regime change plans.

From the outset, I strongly opposed what was happening, and gave numerous speeches and published articles and several books to that effect. Today, I believe that the Russian invasion of Ukraine in 2022 is partly attributable to the neo-liberal strategy led by the USA in that period. The precise details of what has been happening were not predicted or predictable, but it was clear at the time that the fault lines leading to today’s quagmire lay in that strategy. One way of putting it is that it failed to lay the ghost of Stalinism, and created fertile ground for its resurgence. 

Shock doctrine

So, what was the foreign-directed strategy? Although different proponents had variants, it enshrined a doctrine fostered by economists at Harvard, LSE and elsewhere known as ‘shock therapy’, designed with one objective, turning Russia and Ukraine into capitalist economies. This was based on three premises. First, it was reasoned that pro-market reforms had to be introduced quickly, so that there was no time for ‘socialist’ forces to regroup and block reform. 

Second, a more technical premise was that priority had to be given to macro-economic policy, backed by aid conditionality to force the Russian (and Ukrainian) government to adhere to it, over and before micro-economic (structural) policy. This was based on the orthodox economic view that macro-stabilisation was a necessary prior for structural reform. This was the dominant reasoning of the International Monetary Fund. The third premise was that there had to be a particular sequencing of the macro-economic reforms. The combination of these three premises was literally the fatal, hubristic mistake.

Before describing what the shock therapy advisers prescribed in their frenzy of activities in Moscow, Kiev, St.Petersburg and elsewhere, I should mention that as soon as I was appointed to my ILO post we mobilised funds to conduct a series of detailed surveys of hundreds of industrial enterprises in Russia (1991-94) and in Ukraine (1992-96), and extensive household surveys covering many thousands of households in both countries. In effect, the data mapped the context and outcomes of the shock therapy doctrine. This seemed an essential task, but the shock therapy advisers charged ahead without worrying about evidence.   

Folly and hubris

It was an exercise of hubristic folly. The first set of reforms in the sequencing were price liberalisation, coupled with removal of price subsidies (except on energy). Bear in mind that production had collapsed, that strict price controls had existed for generations and that the production structure consisted of huge industrial enterprises with monopolistic characteristics, dominating whole sectors and regions. 

The effect of price liberalisation was thus an extraordinary burst of hyper-inflation. While we were working in Ukraine, in one year inflation was estimated at over 10,000%, and in Russia it was estimated at over 2,300%.^[1] The impoverishment was lethal. Millions died prematurely; male life expectancy in Russia fell from 65 to 58 years, female from 74 to 68; the national suicide rate jumped to over three times the high level of the USA. 

In a collective state of denial, the western economic ‘advisers’ were almost Stalinist in their zeal. Their second policy was to slash public spending, with the double objective of squeezing inflationary pressure by curbing monetary demand and weakening the state. This had the immediate consequence of intensifying the rising mortality and morbidity. But it did something else that is affecting the whole world today. Wages and salaries in the public sector fell so low that the state ceased to function. This created a vacuum in which the kleptocrats thrived. I recall government ministers asking for $50 bribes just so they could feed their family. They were easy prey to ruthless gangsters, who in turn were bedfellows with ex-KGB officers, led by the new First Deputy Mayor of St.Petersburg, a certain Vladimir Putin.

One cannot overemphasise the folly of the anti-state ideology, when what was needed desperately was the nucleus of a professional civil service, backed by a proper legal system. But all the RCAs wanted was full-blown capitalism, which they saw as leading to a ‘Russian Boom’, in which ‘democracy and free markets have taken root for good’.

Mass privatisation

The third plank of the shock therapy sequencing was mass privatisation. It began as a bit of a joke, with privatisation ‘shares’ being handed out like confetti. I still have one somewhere, given to me by the Mayor of St.Petersburg. But it soon became a wild-west plunder. The World Bank, USAID, the new European Bank for Reconstruction and Development (EBRD) in London and other foreign bodies allocated vast amounts to assist in speeding up the transfer to the new ‘entrepreneurs’. Over 15,000 state firms were sold off; kleptocrats became oligarchs overnight; their American and other foreign ‘advisers’ became multi-millionaires. This is when the criminality stretched across the Atlantic.

One still has to be circumspect in how one puts this. However, it was widely known that prominent economists in the ‘regime change’ community were linked to the rising oligarchy and making millions of dollars. Eventually, one case was brought to the Massachusetts High Court, where several professors pleaded guilty to insider trading. They paid modest fines, with Harvard paying much more, but the main one was allowed to continue his stellar career. Rest assured, he and others did very well.

Meanwhile, there was the awkward onset of the fourth phase of the sequencing, characterised as the ‘therapy’ after the ‘shock’. This was touted as building a new social policy system, based on standard neo-liberal lines, that is, a residual welfare state with as much privatisation as possible, beginning with pension systems and education. As some of us had argued from the outset, the erection of a universalistic social protection system should have been done before any ‘shock’ policies. Callously, implementing social policies was left to afterwards, and then only done patchily, with interminable delays.  

Carnage

The carnage was palpable. In this period, two personal events occurred that epitomised the madness of what was happening. In 1992, I was invited as a ‘labour market expert’ to give a lecture to Ministers of Finance and Ministers of Education from eastern European countries, organised by the World Bank in a Dutch castle, symbolically with its own moat. There I listened while the Ministers were told what policies they should be introducing if they wanted foreign loans or grants. 

The other event was even more bizarre. In 1993, I was chairing a small conference in France on minimum wages and basic income policies for eastern Europe when I received a phone call from a US Ambassador inviting me to Washington to give a briefing in the State Department. After doing background checks, I accepted and so found myself taken to the basement of the State Department. Sitting at a long table with a ‘minder’, I was surprised to find 12 men come in to sit on the other side. Chaired by an Under-Secretary of State, they identified themselves individually, and most said CIA.  

I told them that their policies were disastrous, that huge numbers of Russians and Ukrainians were dying as a result of shock therapy and that contrary to what they were reporting, real unemployment was about 25%, concealed by the fact that enterprises were retaining the work history books of workers to claim subsidies. I argued that the people with whom they were working at the political level were deeply corrupted, and that they should focus on providing direct aid to ordinary people if a lurch to neo-fascism was to be avoided.

I argued that restructuring of enterprises and the substitution of rules of regulation and law should take precedence over macro-economic reforms and privatisation. I poured as much scorn as I could on claims being made by the World Bank and prominent RCA economists that there was no unemployment, and argued that it was crazy for the Bank to withhold a large loan to aid the unemployed on the presumption that as one Bank report claimed, the unemployment rate was only 1%, backed by the statement, ‘Contrary to initial expectations, unemployment remains not only low but declining.’^[2]  

This was ridiculous. It was clear that the neo-liberal strategy was simply creating a kleptocratic capitalism, a virulent form of rentier capitalism that was taking shape globally. A new class structure emerged, with a plutocracy of oligarchs, a tiny salariat (including educated people trying to build a decent society), a lumpenised proletariat (ageing, atavistic) and a rapidly growing precariat. The oligarchs in Ukraine were split, with Russian-speaking heavies allied to their Russian counterparts in mafia-style conflict with Ukrainian-speaking oligarchs. There were also a few Bulgarians, Romanians and others in their orbit, and they all soon found they could mingle comfortably with the financial and other plutocrats in London, Wall Street and elsewhere. 

Venal kleptocracy

After the State Department meeting, I returned to Hungary. Several months later, I was invited back to Washington to brief the Department of Labor. Afterwards, they gave me a cocktail, and at the back I saw two of the CIA officers who had been in the State Department briefing. I asked them what had happened after the first briefing. One said to me, conspiratorially, ‘Quite frankly, it went right to the top….and he doesn’t believe you.’ He meant President Clinton. 

Several months after that, the Russian elections took place, and the new party of the neo-Stalinist ultra-nationalist Vladimir Zhirinovsky, who advocated invasion of Ukraine, gained 23% of the vote, with the US-backed neo-liberal party reduced to a rump. I sent a one-liner telegram to one of the CIA officers, ‘Does the State Department believe me now?’ I was told later that this caused some wry amusement.^[3]

In sum, the regime change strategy had generated a venal kleptocracy, and in line with that today we have globally a morally indefensible form of rentier capitalism where plutocrats are funding major political parties and politicians in their interest. It is the most unfree market economy ever conceived and it is not sufficient to see the UK as Butler to the World, however apt that description might be. The state is deeply corrupted, and we will not escape the quagmire until a new progressive, transformative politics emerges, one that could mobilise the precariat in all parts of the world. 

The evil being perpetrated by Russia will not be defeated by military means alone. Of course, we should all admire and support the incredibly courageous Ukrainians. But it is a transformation of our own societies that must be achieved. In response to the rush towards an ecological dystopia and a grotesquely unequal and insecure existence for so many, progressives in politics must have a coherent, well-articulated strategy for dismantling rentier capitalism.

Today, neo-liberalism is not the primary enemy. Today is the time for a new radicalism based on principled opposition to the global plutocracy and to the system of rentier capitalism that is based on rapacious plunder. We need a new Renaissance, to revive conviviality, commoning, republican freedom and equality. So far, in Britain and elsewhere, that transformative vision is being held back by excessive pragmatism by old-left parties. However, just as Nature abhors a vacuum, so does the human condition. We need a progressive revolt, one that crosses national boundaries and that is ecologically redistributive. One can see the green shoots, but must just hope there is time for them to grow. 

Guy Standing is Professorial Research Associate, SOAS University of London, a Fellow of the Royal Society of the Arts, and a councillor of the Progressive Economy Forum. His new book is entitled The Blue Commons: Rescuing the Economy of the Sea.

^[1] These and following statistics were collated for two books at the time. See G.Standing (ed.), The Ukrainian Challenge: Reforming Labour Market and Social Policy (Budapest, ILO-UNDP, 1994); G.Standing, Russian Unemployment and Enterprise Restructuring: Reviving Dead Souls (London, Macmillan, 1996).

^[2] This view was backed by leading shock therapy advocates, such as Jeffrey Sachs and Anders Aslund. For references, see my book. 

^[3] [Zhirinovsky remained in the Duma until his death from Covid, ironically on April 6, 2022, with his dream of invasion of Ukraine realised. His original party had been funded by the right-wing French politician, Jean-Marie Le Pen, with whom he remained close.]

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The policy is uniquely flawed, with multiple faults. Of course, if government throws over £60 billion of subsidies to a minority of firms and workers, that will be popular with the recipients. But a scheme should be judged by what it does for the many, not the few, and for its opportunity cost.

The government’s furlough scheme was possibly the most regressive social policy in modern history. Recall that it paid 80% of the wage of those earning up to £3,000 a month. So, it meant that somebody earning £3,000 received £2,400 only if they did no labour, whereas somebody earning £800 a month received £640. So, a high-wage earner received nearly four times as much as a low-income one. And for a low-income earner losing £160 would make it less likely they could service debts or pay the rent, risking homelessness and abject impoverishment. Under the scheme, those laid off or without employment contracts obtained nothing, as did those on Universal Credit or legacy benefits. My grandmother would have described this as ‘nutty as a fruitcake’.

If the Left believes in policies that reduce inequality and that increase economic security for everybody, the CRCS should be regarded with contempt. Perhaps, 11 million people gained income from it or the equally regressive scheme for the self-employed. That means only a minority of the labour force benefited, or a much smaller minority of the population. One could understand the IMF backing such a policy, because it props up capitalism. But why should the Labour Party, the TUC and progressive commentators do so? Surely, they cannot be indifferent to inequality

The inequities are also extensive. Suppose you worked in a firm struggling to survive and had your earnings cut by 30%. You were penalised relative to those furloughed, who only lost 20%. In which economics textbook or ideology would that be regarded as fair? The scheme was also unfair to those who lost jobs, who obtained much less in benefits, simply due to bad luck.

There is also something Labour and others should take up. With benefits for the unemployed and others in poverty, the government imposes strict conditions on those wanting help, or sanctions them by denying them benefits. In the case of help to firms, they do not apply any behavioural conditions. That is double standards.

So, for example, under the furlough scheme Donald Trump received over £3 million for furloughed staff on his luxury golf resorts, but his managers laid off hundreds of staff anyway. Trump is a multi-billionaire and surely could have afforded to cover the wages. No whiff of means-testing for corporations. Major multinationals making billions of pounds in profits gained from the furlough scheme, while the near destitute had to prove destitution before obtaining a pittance.   

Furlough schemes generate huge moral hazards. They pay people not to do what they might wish to do, creating a new ‘poverty trap’. If you did some labour, you would probably lose more than you would gain. And they pay high earners on condition they do not work, while welfare claimants receive a pittance only if they do everything possible to find work. How does that make sense?  

Immoral hazards are worse. When the CJRS was introduced, I predicted in the Financial Times that it would be subject to massive fraud. Even the head of HM Revenue and Customs said so. Sure enough, an early survey found that one in three on the scheme was actually working. Another survey suggested the figure was much higher. Later, the HMRC estimated that over £6 billion had been paid to organised criminals or fraudsters. In one case, a man was caught having invented a huge number of employees and fake national insurance cards, having received millions of pounds under the scheme. He was surely not alone. And, as is well known, high earners were more able to ‘work from home’ while receiving furlough support than low earners, further contributing to the scheme’s regressive character.

Belatedly, the HMRC set up a taskforce of 1,265 staff to try to combat fraud; there have been over 26,500 investigations so far, representing a waste of resources that could have gone to the impoverished queuing at food banks. Most who cheated will go undetected, because adequate evidence will be hard to obtain or not merit the cost of investigation. Confronted by the evidence, the government had the temerity to say the priority had been ‘to get money to those who need it as fast as possible’. That was not what the policy was intended to do. It gave nothing to those most in need. But what was meant was that the likelihood of fraud was tolerated in the interest of speed. It is surely amoral to support a policy that is prone to massive fraud. Any furlough scheme would have that feature. Yet progressive commentators seem indifferent to fraud.

Then there are the economic effects. If you pay people not to work at all, it encourages inactivity rather than merely reduced production and short-time working. Furlough schemes depress production more than it would otherwise be. And they prop up ‘zombie firms’. In the past two years, the bankruptcy rate has declined during what was a major recession. A German bank estimated that 2.5 million jobs covered by the UK’s furlough scheme were ‘zombie jobs’, i.e., were unviable anyhow. Sunak implicitly recognised that by introducing a ‘job retention bonus’ of £1,000 if firms kept employees once the subsidy ended.

Furlough schemes also discourage firms from restructuring in the face of the pandemic. They also deter labour mobility. If somebody is offered 80% to do nothing, why move to a firm in which they might earn 70% of what they were receiving? And there is bound to be ‘deadweight’ – paying for employees who would have been covered by their firm. The CEO of Bet365, who received £300 million in 2019, could easily have paid laid-off employees.  

In sum, a minority do well, but furlough schemes worsen inequality, are inequitable and contribute to economic inefficiency. Above all, by diverting funds from providing universal basic security they erode the societal resilience so vital in an era of pandemics. No progressive should support them. A new furlough scheme would ‘certainly make no sense’.

Guy Standing is author of The Corruption of Capitalism: Why Rentiers thrive and Work does not pay (2021). He is Professorial Research Associate, SOAS University of London, and a council member of the Progressive Economy Forum.      

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For three hundred years, care work and care labour have been woefully trivialised or ignored by economists. One is inclined to think this is partly due to the domination of the subject by men until recently. But it is also true that the subject is incredibly complex, partly because the very idea of ‘care’ is vague, with a multitude of meanings. Sue Himmelweit’s valuable foray steers clear of the many conceptual issues, but correctly highlights the proper objective of ‘enhancing the capabilities of those with care needs’. To reduce the risk of excessive paternalism, one should extend that to include ‘enhancing freedoms’.

I have no disagreement with Sue’s essay and merely want to comment on two additional aspects. Before doing so, I want to endorse her disgust at the permitted involvement of private equity capital in the British social care structure. The recent example of one foreign fund acquiring a chain of 450 mental care homes, loading the firm with debt while creaming off large profits, declaring ‘bankruptcy’ and then selling out to another foreign private equity body should have been enough to prompt political demands for reform and legislation to ban such action. Instead, it was one of numerous acts of rentier capitalism that have flourished in what has become the Covid era.

It is a disgraceful indictment of the social care system that the three biggest care home ‘chains’ are all owned by private equity – HC-One, Four Seasons and Care UK. As this termite form of privatisation has spread, amidst local council budget cuts during the austerity decade, over 400,000 fewer elderly are receiving social care due to restricted public budgets. Over 60% of people in care residences are ‘self-funded’, and on average they are paying much more than the costs incurred on residents funded by local councils, the latter much more often to be receiving a cut-price, low-quality residence. To declare ‘care residences’ homes is a misnomer.         

The other preliminary point I would like to make is that in a market economy dominated by rentier capitalism, there will always be a care deficit, due to a partially contrived demand for care linked to the constant extension of the commodification of care, the existence of an oligopsony market for most care services, and the resultant suppression of care worker wages.  

The two general issues that prompt this comment are, first, the need for Voice Regulation and second, the need for a radical restructuring of the Care Funding System. Both must respect the objective of enhancing capabilities and freedoms, as well as be an integral part of a progressive economic strategy.

Voice Regulation

All types of care recipients and care providers are vulnerable to several forms of oppression and exploitation, in most cases including ‘self-exploitation’. It would be naïve to suppose that care is simply a ‘gift relationship’ motivated by altruism, and it would be wrong to depict care as only involving two parties. Significant third parties are typically overlooked, and yet in certain non-rare cases they can be the most exploited and oppressed of all.

Because of the emotional nature of care, the complex character of care work and labour, and the intangible trade-offs between quantity, quality and costs of care, a good social care system cannot rely on statutory regulation alone or market forces. Rather, a progressive care system requires respect for a fundamental principle of guild socialism: There should be as many forms of representation as there are interests to represent.

A properly progressive government would make sure that adequate financial and institutional resources be made available to ensure that care recipients, their representatives, care providers and social workers and agencies linking providers and recipients all had equally strong Voice bodies to bargain and to defend the interests of those involved in care relationships. This is manifestly not the case today. Given the vulnerabilities of all those in the provision and receipt of care, one cannot overemphasise the need for Voice regulation.

Care Funding

What structure of funding for care would be optimal? The problems with answering this question are legion, and most have been well-rehearsed in the literature on care. Among the difficulties are determining the ‘need’ for care and determining what type and intensity of care is needed. After all, need for care is partly subjective, a matter of character and a matter of manipulated attitudes. Contrary to popular imagery, about half of the public budget on social care goes on working-age adults, not children or the frail elderly.

The choice of funding mechanism depends partly on the type of care one is considering. Take the starting point in life, infant care. Breastfeeding is the most important form of care that can be given to anybody in their infancy. Human milk is more important for an infant’s development than other milk, and breastfeeding protects women from later cancer problems. Yet enabling mothers to breastfeed is rarely regarded as a matter of care policy, even though credible estimates indicate that the social cost of premature weaning is huge. And it turns out that the amount of breastfeeding care varies enormously according to the welfare system.

In the USA, with its residual welfare system, in a baby’s first month only 77% of mothers breastfeed, compared with 99% in Norway; by the sixth month, only 47% of American mothers are breastfeeding, compared with 80% in Norway. This difference largely reflects the existence of statutory maternity leave in one country and its absence in the other combined with pressure to return to labour market activity.

This is a special type of care. More generally, a primary objective should be a financial system that maximises the opportunity for ‘self-care’, that is, to enable as many of us as possible to care for ourselves as much as possible in a way that we would like. In this regard, successive British governments have failed dramatically, even though the move to Direct Payments in the 1990s and the Care Act of 2014 were touted as moving in that direction. The latest round of reform announced in September does not confront this issue. A new means-tested scheme is to be introduced, to be funded by a lurch to hypothecated taxation, which should alarm progressives, since it ratchets up the utilitarian nature of social policy.

One problem with state aid for care is that most forms of care are fraught with moral hazards and immoral hazards. If desirable care is that which enhances capabilities and freedoms, how do the potential forms of financing rank? The options (not necessarily alternatives) seem to be subsidised institutional care (homes, etc), subsidised care workers, direct payments to non-wage unpaid carers (e.g., ‘wages for housework’), care vouchers (permitting the recipient or a surrogate to buy pre-specified commodities or services), care budgets (as in ‘personal healthcare budgets’ introduced in 2014), and care grants based on estimated needs and the costs of meeting them.

A problem with most of those options is that, while they automatically discriminate against other options, they raise moral hazards. For instance, if residential care is subsidised, to the extent that the price is lowered, that will give an incentive to place frail relatives ‘out of the way’ in an environment they would probably wish to avoid. It would also implicitly penalise families who continue to provide care themselves or who pay for some other form of care.

The last-mentioned of the policy options, care grants, has the virtue of trying to give all those in need of care an equal resource base from which to make ‘free’ choices. But it would still be paternalistic and would penalise those who provide unpaid care, typically women, and could leave in place one moral hazard that is a disgraceful feature of the current benefit system – that of determining ‘ability to work’ as a test of eligibility for the benefit or service, as in being able to walk unaided for 30 metres, which penalises anybody who makes the effort to be able to do so.

Most forms of care support provided by the British government are means-tested, and most are consequently made conditional on behavioural tests. As such, they generate poverty traps and have high exclusion errors. More problems lie ahead. Under the government’s announced reforms, people will be required to approach their local council to request a need assessment, which will lead to a lot of discretionary judgements. It can be predicted that financial pressure on councils in areas of fewer resources will limit eligibility. There will be no levelling up in care.     

Ultimately, the most attractive option for a progressive economy is to move towards an income distribution system in which every individual has a modest basic income with supplements for those deemed to have extra costs of living, such as those associated with disability, frailty or age. If this encouraged more people to care for themselves more, that would reduce pressure on the commodified care system. And if some wished to compensate family members for their care, the care recipient or surrogate would have the means of doing so. Of course, that would no replace the need for a public social care system, but it would help empower people in negotiating their way through the care economy.

It would be the least paternalistic mechanism and would be a barrier to the constant extension in the  commodification of care. That would not remove the need for strong Voice mechanisms, but it would help turn care into the emancipatory form of work that it could and should be.   

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For instance, the best way to produce a roll back of greenhouse gas emissions is to penalise those emitting them so that they will be forced to curb them. Impose high carbon taxes or levies. Why is that not being advocated and done? Because industrial lobbies hold sway in pro-capitalistic governments. But the UK government has rigidly maintained a freeze on fuel duty for eleven years in a row, costing about £4.5 billion in lost revenue if they had just adjusted it to inflation. But it needs to be much higher to have any positive effect on pollution. Talking of net zero when you are doing that is infuriatingly hypocritical. You cannot be serious!

The seas are being polluted and made acidic because horrendously large container ships, ghastly 13-story cruise liners and vast long-distance industrial fishing fleets from the rich countries, including China, are plundering the oceans, pumping out poisonous diesel and other fuel and waste, killing people as well as precious marine life. They are only able to do that because they receive huge subsidies from their governments and regional bodies. Those subsidies could be stopped tomorrow morning. Why are they not? Because governments are in cahoots with industrial fishing companies. Why are giant fishing factories allowed to trawl the seabed, destroying areas of natural carbon sequestration, the biggest on our planet? Because governments are representing the interests of their capitalistic industries, and choose ‘jobs’ and GDP growth over preservation.

The solutions being proferred are no less dishonest. For instance, governments boast, as the UK’s has repeatedly done, that they are protecting the marine environment through setting up marine protected areas (MPAs). These are mostly fraudulent, since in many of them industrial-scale seabed trawling is being allowed. Nudge, nudge, Jim, we will call it protected; don’t worry. An international study found that destructive industrial fishing was much more prevalent in MPAs than areas not protected. Indicative of the pattern, Britain slashed funds for monitoring the sea, and today has just 14 vessels to patrol millions of square miles it claims to own. 

Then there is the protection of nature through so-called ‘national parks’, where the air is supposedly fresh, the wildlife thriving and you and I are free to roam. In the UK, severe budget cuts under austerity meant the maintenance and retention of those and others suffered terribly. There are 27,000 parks in Great Britain, and a survey found that 92% of all park managers had been unable to maintain them during the austerity era. That is deliberate action by government. Do not weep crocodile tears. Put the money back, and if necessary (which it is) raise taxes on the wealthy.

That is what must be done. But sadly, we cannot expect pro-capitalistic governments, funded by affluent plutocrats who live a life of absurd affluence because rentier capitalism is allowed to flourish, to do anything serious. What we can expect is plenty of earnest statements about the desperate plight of humanity and nature. It is tantamount to St.Augustine’s prayer, ‘Please Lord, give me chastity and continence, but not yet.’ In this context, it means let me not be the instrument of what must be done.

One trick they should not be allowed to play with success in what is called the geo-engineering vision, the view associated with Bill Gates and others, that we need not be too worried because capitalism will find technological solutions. Something close to a variant of this is a Green New Deal and the view of a future of ‘green jobs’ and renewable energy. This is a version of having your cake and eating it.

The existing public rhetoric risks strengthening what is known as Sinn’s Green Paradox, named after the German economist who first raised it. This is something like as follows: If you state that society is going to cut pollution or global warming by some future date, with the intention of phasing out fossil fuel consumption over a period of many years, you give incentives to energy companies to increase their short-term production.

It is relevant to note that while the three major energy corporations in Europe – Shell, BP and Total – have committed to shifting into renewables, and to whatever is meant by net zero by 2050, if not earlier, they have actually been increasing their investment in oil and gas exploration and production. The reason is quite simple: That is where the big profits are. And they know that profits from gas and oil are higher than from renewables, one reason being that the latter rely on a natural commons that at present is still free for anybody – air, wind and sunshine. The economic return to oil and gas will remain higher and be less risky.

The paradox is made greater by the eerie fact that the major energy companies are saying that their investment and production of renewables will depend on generating more cash (profits) from hydrocarbons, as BP announced quietly in one of its financial strategy reports last year. So, we should produce more fossil fuel energy now so that we can switch to renewables later. There should be no need to explain how catastrophic such reasoning will be.

The answer must be to reduce profits sharply and immediately, through steep carbon taxes and much tighter regulations. Unless this comes out of Cop26 in Glasgow in November, we should judge it a dismal failure. What hope can we have with our pusillanimous political leaders, most in posts because of their links to financial capital and big industry? Promising a future of ‘green jobs’ and even a fossil fuel non-proliferation treaty, committing countries to no new coal power power plants, no new oil and gas operations and no airport expansions, may be laudable but will amount to kicking the ball into the long grass.        

Keynesians have their humble pie to eat as well. Trying to accelerate GDP growth and move towards so-called Full Employment will mean more resource-depleting labour – jobs – and continued high priority to industrial investment and consumption. What we all have to realise is that so-called green investment is actually contributing to the ecological collapse. Take offshore windfarms. They require vast amounts of steel and minerals to build and operate, and they destroy pristine seabeds. Yet they are being given the go-ahead without proper environmental impact assessments.

Unless we have public statistics on the carbon footprint and ecological cost of building giant wind turbines, the cost-benefit estimates of renewables is dishonest. Making the resins for the giant wind turbines requires huge amounts of crude oil, while the copper, iron and other ores needed requires a vast amount of mining. Similarly, solar panels require a huge amount of non-renewable raw materials. And there is something rarely mentioned, as far as I can see, which is that wind turbines and solar panels have relatively short lifespans, in the region of 20 years, so requiring ecologically costly replacement long before the arbitrary target date of 2050. As for the prospect of generalised electrification, the need for millions and millions of batteries will require vast quantities of lithium, which requires an extraordinary amount of water to produce. Lithium mining is ecologically lethal.

While vital, a key lesson is that energy switching cannot be the main answer. We need a society in which there is less demand for energy per se. It is a facile error to pin all or most of the blame and responsibility on the fossil fuel industry. It is the way we live and work in the 21^st century that must change as well. That means nothing less than the dismantling of global rentier capitalism and the income distribution system that it embodies. We must start by acknowledging that if most of the income from GDP growth goes to the owners of private property – financial, physical and ‘intellectual’ – we will continue to depend on high growth to raise living standards of those in poverty and insecurity, which will be fatally self-defeating. We need policies to capture the rent, to recycle the rent and to dethrone GDP growth from its pedestal of policy thinking. Nothing less will do.

Guy Standing is a Professorial Research Associate at SOAS University of London, is a PEF council member and a Fellow of the Academy of Social Sciences; he is author of The Corruption of Capitalism: Why Rentiers thrive and Work does not pay (London, Biteback, 2021). Email: guystanding@standingnet.com

photo credit : flickr Tony Salas

The post The Threat of Extinction: Dismantle Rentier Capitalism Now appeared first on The Progressive Economy Forum.

The Progressive Economy Forum is today publishing a short essay by economist Guy Standing on how the left can redefine its defence of the National Health Service – treating it not merely as a service provider for the unwell but a “socail commons” for the whole of society.

Guy argues that successive governments, both New Labour and Conservative-led, have expropriated the wealth of the NHS for private profits, leaving it the health service the victim of “encroachment, commodification, privatisation, neglect”. But by focusing only on the NHS’ role as a provider of health services, free at the point of delivery, the left has found itself on shaky ground in warding off privatisation under the guise of expanded funding. Instead, he argues, we should treat the NHS as a one of our social commons, reasserting our ancient rights to the common wealth of society.

Provocative and timely, Guy’s paper is available for download below.

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