I confess to rather liking Russell Brand. His numerous detractors protest too much about his anti-intellectualism, economic ignorance, mysticism and egomania. What these reactions mask is the nervousness of professional commentators and economists that this self-described ‘autodidact’ is exposing the fact that they know a good deal less than they want us to believe. Last weekend, after his appearance on the BBC's Newsnight programme, Brand was likened to the revolutionary leader in the Woody Allen film, Bananas, who, intoxicated with power, orders everyone to wear underpants on the outside and learn Swedish. I don’t sense that in Brand at all but, in any case, I can think of worse fates than compulsory Swedish, and I don’t have to think very hard.
Brand’s Newsnight interview with Evan Davis supposedly provided prima facie evidence of his evasiveness and shallowness. But what it, in fact, showed was the paucity of the mainstream, ‘official’ narrative of the world; an interpretation of reality that can’t handle being challenged in a way that goes beyond what our two main political parties agree to disagree about.
Here are some examples of Davis’ protestations:
“It might be that your system is better or it might be that you haven’t had the imagination to think about the problems that the other system [capitalism] has”
When it comes to a dearth of imagination, you have to go some to compete with the mainstream appreciation of capitalist problems. When blaming ‘reckless bankers’ became rather passé, they settled on the fiction of out of control public spending and an over-abundance of workers’ rights (structural problems if you want to use technical language) in the Eurozone. John Humphrys, Davies’ former co-presenter on the BBC Today programme, saw the soup kitchens that have marked Greece’s descent into fourth worldism, as a consequence of a ‘failed state’. If in doubt, blame the government. The problems of capitalism remarkably vanish if you do.
But let’s assume we’ve got to plug into our brains and think of some capitalist ‘problems’. Is climate change a capitalist problem? It’s certainly a problem, now, under capitalism, emerged as a problem under capitalism and wasn’t around before capitalism. The environmental blight of capitalism’s historic rival, Communism, was chronic pollution, not global warming. Climate change is intimately related to the need of every capitalist firm to ‘grow or die’, to sell as many products as possible, invent new ones all the time, and expand before the competition does. Thus a major contributor to global warming is the transportation of consumer goods from East Asia (China, Vietnam, Cambodia for example) to western countries. In some cases, like the famed iPod and iPhone, parts are made in west, transported for assembly in Asia, and then transported back again for sale to Western consumers. What lies behind this convoluted and ecologically insane process is the need to hold down labour costs. In technical language, it is known as ‘global labour arbitrage’, a unique development of capitalism and globalisation. Apple, for example, enjoyed a profit margin on iPhones of 64% in 2009. If they were assembled in the US, that profit margin would drop to 50%. So they are assembled in China.
But it isn’t as if many people, capitalists included, have not been aware of the system’s problems and tried to ameliorate them. It’s just that they couldn’t resolve them. Geographer David Harvey says capitalism is constantly oscillating between the need to produce maximum profit at the expense of the consumer demand of employees, against the need to realise that profit through sales which means that the aggregate demand of workers cannot be held down. Our societies have followed the first path over the last 30 years and consumer debt has rocketed in parallel with falling real wages. The end result has been financial crisis and economic stagnation. But in the 1970s, crisis also resulted from incrementally rising wages squeezing profits. Another word for a problem that can’t be resolved is a contradiction. You could overcome this contradiction if there wasn’t an in-built conflict between those who receive profits and those who make them. If, as Brand suggested, people controlled their workplaces. But under capitalism, they don’t.
“You want to take General Motors from its shareholders. Do you know who owns it? The United Autoworkers owns it, the Canadian government owns a chunk of it. If you take it from them, they’re poorer”
It’s interesting that defence of capitalism instantly shifts to how widespread ownership is when, in truth, (to take the US as an example), the richest 5% of households own 70% of all shares and over half of Americans own nothing. But the recent history of General Motors is worth dwelling on. The United Autoworkers union ended up with a large share of stock in both GM and another bailed-out car company, Chrysler, because these companies could no longer afford health care and pension benefits to retirees. But, crucially, these are non-voting shares. They are controlled by an independently-managed trust fund whose influence on company policy is negligible. Management has continued in the same fashion as before.
Revealingly, the non-voting share route is identical to the one taken by the Obama administration when it bailed-out both GM and Chrysler in 2008 and took part ownership of them. According to the economist Ha-Joon Chang, “the US government deliberately took shares that do not have any voting rights – so that it would have not have any say in the management of the company.”
And why would you want any say over the company’s management when it has been so spectacularly successful? I was being ironic there. GM readied itself for bail-out by embracing every available corporate fad such as shareholder value maximisation, taking over other companies and creating a highly lucrative finance arm. And in 2014 alone General Motors has had to recall over 11 million cars in America because of faulty ignition, a safety glitch that has caused 30 confirmed deaths.
GM and the banks illustrate a golden rule of contemporary politics – that large capitalist concerns can engage in any amount of incompetence, debt-fuelled hubris or downright criminality and, although the personnel may change, the basic structure of management will be preserved. In contrast, when the UK Cooperative Bank got into trouble, the elected lay people on its board had to be sacrificed in favour of more experienced professionals. You get the principle.
The question that should be asked if not why GM’s management and ownership should be radically altered but why they should remain as they are. Or as Brand put it to Davis, “why don’t you answer some questions?”
Brand: “Are you suggesting that corporations like Monsanto, Vodafone, Amazon and Pfizer are operating on behalf of us ordinary people?”
Davis: “Sometimes yes, sometimes no”
Always no. Brand is right. There are obvious benefits that accrue to even modestly wealthy people from the activities of corporations. But these benefits are a collateral effect. Amazon does not exist because its owners get a warm feeling from delivering parcels to people. Pfizer does not exist in order to produce living-saving drugs for humanity. If it did, Ebola would not have killed so many people. They exist to make a profit. The benefits are a by-product. The idea that corporations sometimes operate on behalf of ordinary people is simply wrong.
But over and above this immutable feature of capitalism, the activities and products of corporations are a double-edged sword. Apple’s IPhones may be a marvel to use, but some of the people who have to assemble them have found the conditions they endure so awful, they have jumped to their death from first storey windows. The ubiquity of mobile phone and email are in some ways liberating but also mean that many workers in first world countries are never really free of their jobs. You can quite justifiably believe that the benefits of capitalism outweigh its downsides, but you need to recognise both sides of the coin.
Besides, many of the innovations of corporations stem from massive investment by governments (such as aircraft, computers, the internet, pharmaceuticals, iPods etc). This rather inconvenient fact needs to be acknowledged.
“If I gave you a button you could get rid of that down bit at the at very end, but you’d also get rid of a lot of the up bits [after showing Brand a graph illustrating wages going up for about a century but dropping like a stone in recent years]”
Sadly, in the real world, there aren’t any magic buttons. The stalling of wages is not something that affects the UK alone, but has been apparent in the US for a lot longer, and has spread to Canada, Australia and Germany amongst other countries. How you reverse this now well-established trend has been the cause of some serious scratching of beards in the last few years but the solutions, such as pre-distribution, seem lame in the extreme. The much lauded Thomas Piketty has argued that the rise in wages and fall in inequality evident for much of the 20th century was caused by abnormal factors, such as war, strong trade unions, high growth and taxation of the rich. Natural or ‘free market’ capitalism does not automatically let everyone share in the fruits of growing wealth.
In short, you can’t point to the hypothetical effects of some ‘year zero’ revolution on trends that happened in the past, and hope that no-one will notice you have no solutions to the problems of the present.
Brand: “I know you know that capitalism isn’t working”
Davis: “I think it’s got a lot of flaws”
I think I’ve spotted another golden rule of politics – that people who say, defensively, that capitalism is burdened with a many flaws never elaborate what those flaws are. I’d be very interested in hearing what Evan Davis thinks the flaws of capitalism are because I’m not convinced he believes there are many. One glaring flaw of capitalism is that democracy, should it be permitted to exist, is strictly limited to the political sphere, leaving the economic entities in which most people spend a heavy proportion of their lives as autocracies controlled by small elites. But I doubt that Davis would concur. His first book, Public Spending, argued (according to the publisher’s blurb) “that public services could be radically improved by hiring first-rate private service companies to supply them.” He presents the BBC Radio 4 programme The Bottom Line, in which he meets “influential business leaders for a roundtable conversation about the issues that matter to their companies.” There is something exquisitely ideological about the BBC’s former economics editor presenting a programme in which he relates the world-views of ‘business leaders’. So ideological, you have to blink to understand how wonderfully biased it is.
But Davis is most well-known for fronting the BBC TV programme, Dragon’s Den, in which budding entrepreneurs compete to get backing from venture capitalists. You may think this entails an unquestioning celebration of capitalism’s virtues, but it actually rests on a wildly inaccurate impression of what real world capitalism is. The world we inhabit is not populated by enthusiastic inventors scrambling to win finance for their latest innovation, but very large corporations that dominate particular markets. “In the last couple of decades,” says the definitively pro-capitalist economist, Ha-Joon Chang, is his book Economics: The User’s Guide, “through an intense process of cross-border M&A [mergers and acquisitions], virtually all industries have become dominated by a small number of global players”. Through a process known as the cascade effect, “even many of the supplier industries have become concentrated,” he adds.
The trouble with Brand is that writing a book entitled Revolution enables establishment commentators to ignore the manifest problems and flaws of capitalism and concentrate on deriding the absurdity of wiping everything out and starting again with a clean slate. But social change will not work like that. In order to move on, we need a sober assessment of what capitalism is, not just a celebration. But the BBC is incapable of providing such a clear-headed assessment. One BBC journalist, quoted off the record in Owen Jones’ book, The Establishment, describes the broadcaster as “set up to be the transmitter of mainstream ideology.” It has, according to Jones, a “deep-seated commitment to neo-liberal economics, fused with liberal views on issues such as sexuality and gender.”
Russell Brand should not be castigated for having the temerity to notice that the emperor is rather scantily attired.