The New World Order is Here... Or is it there?

The stability of modern societies rests on the principal that the state can be broadly trusted. It needs to be trusted not to have people dipping their mitts in the public purse. It needs to be trusted that it is being run in the interests of its own people. It needs to be trusted to help deliver the rule of law. It needs to be trusted that its officers are not colluding with people who can profit from its decisions against the public interest. This trust has been brought into question in recent years as evidence of wrong doing by both parts of the finance industry and the government come to light in the wake of the financial crisis. However, the underlying process may be the emergence of a new world order based on a harsh, greedy and manipulative oligarchy without loyalty to nation states.

The story that is emerging is that globalisation and deregulation of finance created an environment in which very large banks, corporations and financial funds have been able to systematically rob the countries they operate in, evading taxation, stripping assets and creating dangerous bubbles of debt for households, businesses and governments. The root of the problem lies in the difficulty of policing globalisation when the only effective institutions for doing so are competing nation states.

Britain was the first global super power, but with the loss of its empire faced the prospect of losing its role in international trade and finance. It responded by developing facilities for financiers and traders to operate supra-nationally using a network of offshore finance centres linked to the city of London that provide secrecy, low regulation and low taxation. These enabled the wealthy to land the profits from trade outside of any real nation state as well as to park wealth beyond the reach of national authorities, while benefiting from the investment expertise and special instruments available in London. As the dollar became increasingly used as the world's reserve currency this created a pressure on the United States to lower taxation and regulation in order to compete. When subsequently there was an expansion of international trade due to the work of the World Trade Organisation and other agencies to reduce barriers to trade, the stage was set for a competition for market share in which each nation wanted to have companies big enough to be global players. In this climate all the lessons learnt from the 1930's depression were forgotten.

Neo-classical economists revised Keynesian ideas until there was no reason to fear monopolies or the the expansion of non-government debt. This created the smokescreen needed to ignore what was happening.  Take overs and mergers in the finance sector were seen as building world players, but they turned out to be "too big to fail" banks that bloated themselves by creating every opportunity they could imagine to expand the money supply as debts. While households were being encouraged to take on debt to keep up demand, the businesses that benefited were competing aggressively and finding that their best advantages lay in avoiding taxation using the tax haven system and shifting manufacturing to low labour cost countries. The people of the developed world were getting themselves in debt to finance the export of their jobs and the destruction of their tax base.

As  the money flowed around the world, more and more of it landed in the offshore system, creating the opportunity  to be assembled into massive single management funds with the power to exploit opportunities in a wide range of markets. The profits to be made by these power funds were sufficiently large that they didn't need to take on high risks. Hedge funds are so cash rich that they can operate in a market, shaping its direction without substantial borrowing. The private equity companies became giant parasites, preying on businesses that carried assets that were not being used as security for debts and using this potential to carry debt to finance their take overs. They use their money to buy political connections and preferred status in obtaining government contracts. Always the profits are channelled offshore. These monsters could not have come into being without a chase to the bottom competition to deregulate finance and remove effective oversight that coincided with a vast expansion of the banks' ability to create money as debt, due to control systems that were not designed for an age of electronic money. Provided debt was increasing with sufficient speed, banks were able to increase the money supply by lending money they didn't have and using the profit from lending to expand their reserves.

The cold light of dawn came when it was realised that much of the debt was not repayable. What followed was a scandal that may never be fully revealed. The major US banks saw what was going to happen and obtained, in early 2007, the consent of the US government to enact a grand fraud. Trillions of dollars were leant by J P Morgan Chase to Lehman Brothers, creating a flush of liquidity that concealed the imminent crash. This bought time in which the leading US banks went on a selling spree, spreading the risk in the US housing market to London and Europe, while using financial instruments to effectively bet that the debts they were selling would not be repaid. When the crash came, J P Morgan Chase took on the part of Lehman Brothers that held its debt and quietly closed the position while across the world the banking system went into spasm. With the end of the expansion of debt the banks now required massive injections of money to replace the money they had been creating. Faced with the prospect of a collapse of financial services, governments threw themselves into debt  in order to maintain functioning economies.

Four years on the analysis of the crisis is still in process. In Europe the shared currency of the Euro Zone has been found vulnerable to the interests of individual states and this vulnerability has been exploited ruthlessly by the United States and the hedge funds. Was there malice-afore-thought in the work of Goldman Sachs in rigging Greece's entry to the Euro? Was the US government party to it? Certainly the US government set off the Greek crisis, lighting a fuse that may yet explode the Euro and with it the whole EU project. In 2009, the US government came under pressure from the Chinese for their careless attitude to the value of the dollar while they printed money to stimulate the economy. As one of the biggest buyers of US Treasury bonds, the Chinese did not want to continue investing in the US if they were devaluing the dollar and could see that they might need to invest more in Euros. The US responded by putting pressure on Greece to admit that they had been using a scam set up by Goldman Sachs to hide their true level of government debt. Hedge funds were tipped off to bet against Greek bonds and when the US based ratings agencies downgraded Greek government debt to junk, pension funds that held these bonds were obliged by their risk control rules to sell their bonds. The hedge funds walked off with the money the pension funds lost and the Euro crisis was born.

With the transfer of vast amounts of financial sector debt to governments through bail out programs and quantitative easing (what it is now called when governments create money from nothing), the public is being sold the idea of austerity. This is a grand dishonesty.  It assumes that there is a way out of the crisis if everyone shuts up suffers and works hard. This is not the case. Most of the debts that household's carry are owed to banks that are being sustained by money being given to them by governments. As public service jobs are decreased, private sector jobs are increasing at lower wages. Many of these jobs are for companies that use their international trading to both avoid tax and to channel profits outside of nation state controls. Even quite small companies have deliberately put themselves in debt, where the money they have borrowed is through their own interests in offshore based shadow banking vehicles or is to repay leveraged buy out loans where the buyers of the company are the same people as the sellers, but in different names and where the seller is offshore. The result is that large numbers of people are working for low wages so that profits can be sent out of the country with no corporate tax. With a high risk of unemployment and a shrinking safety net, there are plenty of willing workers for these jobs.

It is however the private equity companies that are the leaders in this form of exploitative employment, but as the UK government drives to contract out government services, it is these companies that have the expertise and the financial strength to become the winning bidders. Through their connections they are also major political donors and donors to the political think tanks that create the façade of intellectual respectability to corrupt policies. The same organisations that are actively working to decrease the national tax base are the ones that are now profiting from the privatisation of government services. Not only are they not contributing to the nations investment in its people, its society and its infrastructure, they are using their power and status to rob the state with the complicity of those put in place to defend the interests of the people. The trust of the people in the nation state has been betrayed by a class of people in business and government who identify their interests as being beyond the nation state.

There is a danger of confusing effect with intent and those that struggle to believe the scale of theft and betrayal would no doubt want to dispute the facts as presented and to argue that these were things that happened, but that there was not intent. The evidence however points to a class of people who conspired to undermine nation states in the belief that they had become parasites on wealth creation that were using welfare to create a dependent population. They saw the offshore banking system and  the globalisation agenda as a means to mobilise forces that would make the welfare state non-viable. Their strategy was to deliberately build up the amount of wealth outside the nation state systems such that nation states would be unable to act independently. They were aided in this by the development of Sovereign Wealth Funds as vehicles for money accumulated by trade imbalances. This money was added to the other large offshore funds to enable non-bank lending, or shadow banking, to exert a pressure for high risk lending on the regulated banks.

The Austrian economist Hayek and the Russian American pseudo philosopher Ayne Rand both advocated forms of capitalism in which the market rather than the state provided social services, accepting that this would create a highly competitive society in which losers would suffer in the short term. but would in the long term benefit from the increased wealth creation that was only possible if capitalism was free of the burdens and manipulations of the state. These are the views of a form of right wing extremism that is now ascending. Its power and interests should not be underestimated. They exert significant control over major media organisations. Through the kitchen economics of austerity and movements such as the Tea Party in America they are obtaining significant popular support. As they force down wages to generate the profits to pay off commercial debts owed to entities in the offshore system, and as they use speculation to drive up the cost of food and energy, they are effectively able to raise a vast tax on ordinary people that further diminishes the power of nation states.

The UK exemplifies the duality of purpose that this creates for nation states complicit in this process. On the one hand they have to conceal their betrayal with jingoistic parties to celebrate the Queen and the Olympics, while on the other they have to recognise the subservience of the British state to the offshore and supra-national entities that it has over the last sixty years done so much to create. In the United States the government has been trapped into a policy of using military power to ensure that the spread of the countries wealth creation capacity around the world does not result in its own demise. The central plank of this strategy is to ensure that oil is traded in dollars, creating a perpetual global demand for dollars that enables the US government to print money to keep its ransacked economy afloat. So far Iraq, Afghanistan, Libya, Syria, Sudan and Somalia have been the main victims of this strategy, with Iran now being being prepared as the next. However the US role in exposing the weakness of the Euro system has also been part of the same strategy.

When the history of this period is told with the benefit of hindsight and with at least some access to the documentary evidence, it is likely that the nation state and the rule of law as we know it will have passed into history. The robber barons that are creating the supra-national power will in due course become known and will have to face responsibility for the processes they have started. At Bretton Woods Keynes argued that enabling the dollar to replace the pound as the global reserve currency would be to commit the world's poor to a struggle they couldn't win. In effect the supra-national funds have been involved in a grand arbitrage, delivering jobs to people who ask the lowest wages and reducing the wages of those who have benefited most from the unjust trade advantages that the US and Europe afforded themselves. An arbitrage though, even on this scale is not a political and economic system that can enable humanity to address its challenges.

The steep climb in our numbers is a challenge for all peoples and survival will depend on our ability to collaborate rather than compete. We do not have the infrastructure for effective collaboration, but in the supra-national financial entities we have the seeds of a new global empire. The money and power of the hedge funds, the private equity companies, the major transnational corporations and the sovereign wealth funds will eventually be either dispersed as an aberration or will become the power to address global challenges. It is a power that will most certainly be exercised ruthlessly and with a cruel disregard for the suffering it causes. It will destroy cultures and languages and traditions. It will encourage ignorance and faith. It will sacrifice whole populations and only if it succeeds in creating a stable planet that meets human needs within a viable culture will we again see the expression of the enlightened compassion represented by the welfare state.

Should we in the UK be glad that our country is at the forefront of this change, or should we be hoisting our leaders from the nearest tree as traitors? Is the reason the left is unable to mount an effective challenge simply that the process has gone too far and there is now no realistic power capable of stopping the demise of the nation state with a democratic system rooted in the shared wealth of its people? The wealth has been stolen by the oligarchs and they are the as yet uncrowned rulers of the world. Unless we are ready to rise in revolution, we had better start getting used to it.

BIG MONEY NEEDS ETHICAL RATINGS AGENCIES TO STOP IT DOING HARM

Anyone who has large amounts of money under their control is in a position to shape the course of change and yet fund managers understand their responsibility to be only that they should maximise returns while staying within the law. Is this amorality immoral? Is it real or is it a convenient lie that hides an extreme right wing agenda?

People who run businesses that make and do things often have a vision that goes far beyond simply maximising profits. Often they want their work to help make the world a better place as they see it. This 'soft' motivation is not something they can ever dare to admit to unless they are either going for an ethical sales pitch or are just extremely successful. If they do they are likely to find they are cut off from finance. The money always wants a clean clear focus on profit and lets the law deal with the moral issues. Never mind that the money also lobbies the law makers not to take away profitable opportunities even if they kill people or endanger life on earth. It is against this background that we have food and drug companies poisoning people, arms and security companies creating the tools for mass murder and torture and mineral extraction companies trampling on both people and planet with near impunity. However, none of these horror enterprises could operate if they did not have access to the finance steered their way by fund managers. Their code of amorality within the law is not neutral. It is biased in favour of people and corporations that will put profit before the common good and yet these fund managers are the people we entrust with our savings.

This has been going on so long that many developed countries and sadly the UK in particular, have economies that would collapse if any meaningful moral standard were applied to investment. Governments are highly aware of this and have become increasingly complicit. Fiscal policy, regulations and enforcement as well as government expenditure are all distorted by the 'keep the cash cows alive' agenda. Tax on corporate profits and the very rich is increasingly voluntary. Big companies may be fined, but are not taken to court. The public purse is for bail-outs and creating corporate investment opportunities to protect immoral sectors that have become bloated in an environment of collusion and complicity with governments. The intellectual deceits to justify all of this have become the banal dogma of the established political parties, university academics, mainstream media and the corporate world itself.

For ordinary people living in this environment there is hardly an opportunity to gain a realistic perspective when this web of constructed meanings forms the language of everyday life. Only the key symptoms tell people that things are not as they should be: they are getting poorer while the rich get richer, the world is increasingly in conflict, freedoms are being taken away, debts are piling up and nothing effective is being done to address climate change or our dependence on the depleting fossil fuels that cause it. The idea that their problems are being fuelled by the money they invest in pensions and ISAs does not often cross people's minds. Nor does it often cross their minds that each time they borrow money, for homes, for student loans or on their credit card that they expand the mountain of private debt that is too big to be ever repaid, but which can be used to enslave them by depriving them of any choice but to always take any job regardless of how badly paid or how mindless or immoral the work is. What good does it do anyone to even think of these things, or to consider the vast funds that are created from the profits on oil and gas that sweep across the globe with the morality of pirates in search of booty? Each of us is dependent on this web of corruption and exploitation to keep us housed, fed and safe from the chaos that would ensue from its collapse. Never mind that in some respects our system is as full of lies and corruption as that of the Soviet Union.

If investment without moral consideration of the consequences of investment is a key component of the problem, is there a realistic way that fund managers could be held responsible for the damage that the companies they invest in do in the course of maximising profits? Just as we have ratings agencies for the credit worthiness of businesses, could we not also have ethical rating agencies?  Could fund managers be obliged to subscribe to a code of practice where their portfolios needed to have a calculated ethical mean score above a certain level. If such a system were in place, we would have seen a collapse in the share price of Barclays once they were found guilty of the Libor fix. GSK's shares would have collapsed after the company was found guilty of miss-selling drugs. Companies, particularly large ones, found guilty of bad practice would not just be able to pay a fine and carry on. They would become subject to a takeover by companies with a better ethical scores. The transition to higher ethical standards could be taken slow enough that the economy is reformed, not destroyed, with the score required rising year on year. Obviously, such a system would require enforced transparency and the ratings agencies would need a high degree of independence and moral authority, but if they were to be able to assure savers, investors and consumers that their transactions were not undermining their wider best interests, it might be a way forward.

BANKS, FALSE PROMISES AND THE ROAD TO TYRANNY

What is a bank but an agent. It will guarantee my promise to pay for goods and services I receive on credit. It will pay you to place your savings with it so that it will not be unable to pay if I default and it makes its money of the difference between what it can charge me and others for its loan guarantee service and the cost of paying for your savings and its other costs. It does not so much lend me your money, as use your money to cover the risk of my and others default. In practice the amount of loans guaranteed can be many times the amount of savings it holds on deposit.

However what I promise to repay for the goods and services I buy with my bank loan are goods and services of equal value. This being true for all borrowers, the amount of debt should relate to the amount of goods and services being produced. If all loans were for one year, the amount of debt that could be honoured would be the value of all goods and services traded in that year, less those that were traded for cash. This would be disastrous, for as the year end approached all loan notes would need to be matched with goods and services delivered and any debts outstanding would be in default. In practice though the process of making promises to pay with real goods and services in the future is constantly rolled forward, so there is no reason to panic that the loans will not be repaid because time has run out.

Well that is nearly true, but nearly true is a dangerous thing in banking. Suppose that the amount of loans made each year, together with loans from previous years still outstanding was 1% greater than the economy as a whole could produce real goods and services for (over and above those paid in cash or immediate barter) and that this was always the case, year after year. What would happen. Well to start with it wouldn't matter, but over time the amount of loans outstanding would get bigger and bigger relative to real goods and services. In fact this gap would grow exponentially. After about 20 years it would result in debt being the same as a whole years goods and services. Unchecked, after a few more decades the gap between debts and real goods and services  would be three times what could be produced in a year. In reality this would mean that the whole society was awash with promises that could never be honoured. This is what has happened.

To some extent this is inevitable. To give an example. The government decides to borrow to build a new road between two cities. It calculates that because of the new road people in both cities will produce enough extra goods and services that the increased tax will more than pay for the road. Meanwhile shrewd investors realise that the small towns along the road will also benefit and so borrow money to buy property in the small towns. Sure enough, the property in the small towns becomes a more profitable location for business and the speculators pay off their loans as they sell on the property at a good profit. The banks soon realise that provided the economy is growing that they make more money from this sort of speculation on future growth than on actually financing growth in the production and consumption of real goods and services. However, speculation does not itself increase real production. So the increase in debt relative to real production is driven by speculation.

Bankers are not stupid. They can see when this problem is growing. However they do tend to look at the position of their own organisation, not the economy as a whole. As the risk of default grew, they did not stop lending, but rather looked at how they could shift the risk away from themselves using insurance and other vehicles. When it became obvious that some banks had defaults they couldn't cover, there was panic that threatened the whole system and governments had to commit future tax revenues to guarantee the banks' ability to deliver the future goods and services that their borrowers were unlikely to deliver.

Stupidly, some governments, such as the UK, took this to mean that government now had less ability to buy goods and services. As a result the value of goods and services being produced decreased. As a result the demand for loans increased as both households and businesses wanted to borrow when they experienced what they hoped would be a short term difficulty obtaining the goods and services they needed. Banks were is a bind though. They didn't want to take on risky lending. This meant they could not pay savers much. From the governments perspective this was good and bad. If there was a decrease in borrowing then they could have very low interest rates. In theory this would support people producing real goods and services, but with the banks avoiding risk this made little difference. Low interests did make it cheaper for the government to borrow. On the down side returns on savings declined and the government had to start creating money to put into banks to replace savers' money. That is to say the government was replacing savers as the source of liquidity to underwrite the bank's promise that its debtors would deliver goods and services. While this helped the banks to appear viable it was of course a complete nonsense. The system is only working when sufficient goods and services are being produced that the people who sell them become savers interested in investing in the future production of more goods and services. If the amount of goods and services is in decline and the banks are not rewarding savers, apart from keeping banks alive for the sake of it, governments giving money to banks to keep going is like wanking - it might feel like sex, but its not going to be productive.

In the meantime the real underlying problem persists. There are more promises to deliver goods and services out there than there is any real prospect of being honoured. For a short while there is a justification for governments to stand as guarantors to stop a system collapse, but if they start believing that if they just keep rescuing the banks then the problem will gradually go away then they are badly deluded. There is a need for real action to rectify the problem.

The problem is too much debt. It doesn't matter whose debts might be better than others. It is the sheer quantity of accumulated promises that physically can not all be honoured. There is only one solution and that is to tear up the promises. It is to say to people that they don't owe money on credit cards and mortgages and overdrafts and bank loans and student loans. It is to say to them that they can go and use the money they were paying to get their lives working again. To get new clothes, to repair the car, to insulate their homes, to buy decent food, to learn new skills or what ever it is they need.

Of course in practice this can't be done quite like that. Firstly if it were done all at once it would flood the economy with a demand for goods and services that could not be met, sending prices through the roof and secondly not all debt needs to be wiped out to get the system working again. Further there is the difficult issue of savers. If the debts were wiped out so would their money be. The suggestion of the Australian radical economist Steve Keen would make a good starting point: he suggests that a sum of money be given to everyone. If they have debts they have to use the money to pay it off. If not its a bonus. For some it would be a crude (and no doubt unfair) compensation for the loss of value in their savings, for others with no debt and no savings it would be a bonus.

There are many details to sort out, but if nothing is done we are going to endure a slow misery of decline, with young adults in particular having their hopes lost as they try to survive in a land that is willing to sacrifice itself so that the holders of empty promises can accumulate the rights to everything. While the process of unrealistic debt accumulation has been going on, there has been another change taking place. Increasingly the ultimate owners of wealth have placed their assets in tax havens. This advantage has allowed them to become the winners in what is becoming increasingly like the the last stage in a game of monopoly. Awed by their wealth and power governments do their bidding. Government services are contracted out to them. Their taxes are reduced, Bank regulation is watered down. Laws are put in place to control the restless masses. With no change in policy, these owners of great wealth will gradually accumulate more and more, acquiring property and access to tax revenues. This tyranny has affected much of the developing world, it is now coming to haunt us.

IT IS TIME TO END THE TYRANNY OF THE BARONS

We are at one of those points in history when the assumptions about the organisation of power are being tested. These moments come around and in the crisis some truth is revealed, but usually the deeper lie is retained. The deeper lie is the right of individuals and groups of individuals to acquire great wealth and power at the expense of others. It is the collusion with this lie that makes most governments illegitimate, but is also invariably the root of their access to power. This is the biggest danger we all face.

Governments draw their power from their power of coercion, from their power to compensate and their power to manipulate the beliefs of the people. It is no coincidence that governments control a military bound by symbols of tradition or that god is invoked as the authority of the state. The cost of this power is always the complicity of the baronial class, be they landowners, mine owners, bankers or newspaper owners. In revolutions the baronial class has been guillotined, shot, starved and forced to toil the land, but never has a way been found to stop their re-emergence. It would be easy to conclude that they are an inevitable part of civilization, but this is to misunderstand the nature of the lie.

The proper role of government is to create and enforce a body of law for the good management of a country in the best interests of the people who live there in such a way that it does does not do harm to other countries or the broader global environment. Beyond the enforcement of the law, government does not have any specific duty. If it chooses to raise money to finance services that are needed, there is nothing that says that it must itself provide those services, however it should have due regard for the best interests of the people and this is not achieved by passing the money and the duty to the baronial class. By the same token, in choosing to provide such services itself, government should be honest enough to realise that the interests of the people are unlikely to be served by government itself acquiring baronial power.

The enemy of the baron is the anarchist. The anarchist would have it that the barons would not exist. The anarchist knows in his heart that there is nothing that is provided for the people by a baron that does not come but at the price of freedom. He cares not that the baron is the government or if the baron is a freelancer or a corporation. The baron knows that it is vital to his power to always deny the anarchist the opportunity to learn how to organise people in systems of equity and autonomy. This is the ruthless front line of politics. It is why Cromwell slaughtered the Levellers, it is why the Guardian was established after Peterloo, it is why one revolution after another has been betrayed, it is why the BBC and Fox News exist. It is the reason why for one thousand years Britain has been in a state of conflict with some country somewhere. It is why drugs are prohibited so as to justify a massive police and prison system. It is why Labour Governments centralize power. It is why the rich always buy land, control finance and block and manipulate local government. If it were ever demonstrated that we could organise ourselves without the baronial class the deep lie of politics would be unmasked.

This is the front line of the battle for a future for the people of Earth. As the energy, land and other resources that have enabled our population to rise exponentially go into decline we face a future of horror. The baronial class will let this happen to protect itself. What chance there may be to manage the decline in our numbers to levels that can be sustained is something we can only explore in a spirit of trust and co-operation. The barons have no part to play in this.They must go.

Agriculturaly Supported Communities - An Idea for Real Change

The "Land is Ours" is a slogan with many different meanings. For some it is a claim to the right to an affordable small holding, for others it is a challenge to the rich (who can in all honestly claim "the land is ours"), but for few does it mean what it should mean: that the land of this place is for, and is the responsibility of,  the people of this place. Perhaps the reason that notions of egality struggle to find place in the land rights debate is that the process of developing political awareness in a world that is so convoluted in its dishonesty is like peeling an onion. Not only does it make you cry, there is always a point of deeper understanding beneath another false assumption.

In our age one of the great lies of the western world is that pensions can provide most people with twenty years of relative comfort in old age, one generation after the next. This point does not apply to the basic state pension paid for by current contributions from workers, but to the idea that most people can and should pay into a savings scheme and so gain a right to bigger cut of the world's productivity. Few reflect that the billions paid into pensions are the same billions that bought privatised utilities, the same billions that financed Private Finance Initiatives, the same billions that bought securitized mortgages, invested in hedge funds and private equity companies and the same billions that have been systematically defrauded by the finance industry to pay for massive bonuses. Governments and the finance industry have known for years that pension funds were a problem. Over and again governments have looked for ways of passing tax money and inflated returns to pension funds. They could have financed hospitals and schools and trains much more cheaply with direct investment, but by borrowing from the pension funds they were able to ensure that tax payers money would flow into these funds for years to come. They sanctioned high rail fares and utility bills for the same reason. The sad truth is that there are very few investment opportunities that can realistically be so wonderful that they can fulfil the promises made to investors. Pensions are more like a tax paid to the finance industry.

All this constitutes a great miss-selling of investments. It has been the process through which disposable income has been channelled away from giving people a real choice about their future. On the one hand it has taken the money they might have deployed more usefully and on the other it has created an urgent need for big business and governments to create investment opportunities that at least appear to be viable. Ultimately though the promises of the pension funds can only be fulfilled by exploiting low paid workers, both at home and around the world and by exploiting the environment and natural resources. It makes a complete nonsense of any idea of sustainability and social and economic fairness.

Looking back in history, the transition from the exploitation and unjust power distribution of the feudal system and imperialism did require benign state intervention. When the large majority of people are oppressed  by poverty there is only limited scope for self help without government support, but that does not mean that there is much positive about replacing subservience to capitalist exploitation with dependence on the state. When, however, people are easily persuaded to relinquish that part of their income not needed for basic survival to a combination of frivolous consumption, excessive tax and false promise investments they become complicit in their own enslavement. The high returns on investment needed to sustain this deceit require that nations like the UK maintain large aggressive military systems as an explicit threat in international relations. They require establishing a network of secret, unregulated tax havens to serve as a system of financial piracy, channelling wealth from developing countries to the City of London. Maintaining the stable power hierarchy is more the aim of policy than the enrichment of the few, although the two are hardly in conflict. This objective is served by high tax on middle income workers and the channelling of some of this money to agricultural subsidies that ensure that land prices are high and that most of the land is held by a wealthy and powerful minority who identify strongly with both state and corporate interests.

This reality invites a very practical revolution. People should stop paying into their pension funds and start to invest in making their own lives more sustainable, more ethical and more secure. This requires a self-help land reform revolution at the end of which we could say with honesty "the Land is Ours".

Even in an age where individualism appears to have triumphed as the corporate world's unit of consumer vulnerability, the household remains in reality the basic unit of society and it is action at a household level that is required. Food, water, energy and to some extent clothes and entertainment are purchased and consumed by households, as too, by definition, are houses themselves. It is therefore households that take action to be greener, to buy fair trade, grow their own vegetables, prepare food and so on. There are though quite serious practical, cultural and financial limits on how far most households, particularly those with school age children, can change the way they source the things they need and how they live so as to live more cheaply and with less negative impacts. As anyone who has tried to live in a small town or village without a car will know, it is easy to feel that you are an anti-social lift bludger who selfishly deprives their children of access to their friends and more distant out of school activities. Not buying from supermarkets can be an expensive luxury. Turning your front garden into an allotment can test the understanding of neighbours. Even getting house insulation up to standard can be a squeeze on tight family budgets, let alone fitting solar thermal panels on the roof. When these factors flow together it can be easier to just accept the guilt, do the recycling (even when you know that some items don't really get recycled or re-used) and to console ourselves that others are not changing their lives either. However, if hundreds of households in the same area were to embark on a journey of change together then things might really start to change.

At the heart of the household is food. Taking food under household control is the key issue that unlocks the rest. Delegating food to corporate interests is perhaps the single most dis-empowering thing that people do and taking food back is the way to get the power to make other empowering changes. Food requires land and labour and these are the resources that households with working adults are usually lacking, but rather than using savings to address this most people give their savings for corporate investment. They need a sensible, practical and viable way to direct their savings to where the money can give them the benefit of the land and labour they don't have without losing responsibility and control over the food supplies they depend on. Thy also need ways of saving money on other areas of household expenditure so that they can afford the additional costs that good, local food usually incurs.

This can not be done alone. Households need to work together. This can be very difficult, because inter personal relationships are rarely easy and many have learnt the hard way not to mix friends and money, however this is largely because when time, money and effort are involved there is a need for the right structures to help us manage. This points to a need for working on a large scale.

Working on quite a large scale is also required for other practical reasons. If someone is earning a living growing vegetables, keeping poultry, or dairy or growing cereals, how much do they need to produce to be viable even if they are getting a retail price? The answer to this is obviously variable. Growing vegetables for one hundred households can support one family of growers, but to grow cereals or maintain a dairy would not be viable without a market of nearer five hundred households, even if the work were divided between a number of farmers, due to the cost of capital equipment. It would therefore not be unrealistic to think in terms of five hundred households needing to work together to purchase the land that they would need to meet most of their household food needs. The amount of land involved would need to be about an acre per household or five hundred acres.

Large farms under a single management are however not a good idea. People don't like working as farm labourers as much as they like to be responsible for their own farms. A five hundred acre farm producing a wide diversity of seasonal products and with on-farm processing would require a large amount of skilled and knowledgeable labour. It would not be realistic to ask those involved to commit themselves to this work, but that they had the freedom and security that goes with running your own holding. To produce the food required would involve the work of upwards of twenty people, including such processing as the making of dairy products, jams, juices, beer, cider wine and bread. A farm managed for this purpose would therefore best be divided into at least ten smaller holdings.

Making a living from small farms is notoriously difficult. Three particular problems are common: the farms are under-capitalised and so difficult to manage, they struggle to secure markets for their produce at a fair price and they lack economy of scale. In addition the work and location can be very solitary making it that much harder if things are not going well. There is a large amount of regulation, particularly for livestock and this brings both expense and a pressure to conform to what often is pointless, irrelevant interference. A strong cluster of holdings with access to a secure committed market and the necessary capital investment could avoid these problems or at least be better able to cope.

Imagine then that five hundred household in or around a rural town were to embark on a revolutionary adventure. Following meetings and parties to build a shared vision, they commit themselves to a promise: Each household commits to either invest £10,000 or to make monthly payments so as to repay a loan of this amount off over ten years. This raises £5 Million. This money is then used to purchase the five hundred acre farm. The local council responds to the community commitment and vision by granting all the necessary planning permissions, enabling the construction of a new eco-hamlet with the newly recruited tenant farmers being involved and contributing their own investment into the project. The tenants and the householders develop a contract that involves the householders agreeing to purchase produce at a fair price, the tenants contracting to supply and the householders agreeing a peppercorn rent and making available very low cost loans for the farmers to develop their enterprises. It is then up to the tenants to work out how they will co-ordinate their activities to meet the goal of providing for as many of the needs of the householders as they reasonably can. Meanwhile the householders get on developing other enterprises to meet needs they have in common. A large barn is converted into a store with frozen and refrigerated areas. Bulk purchase of common items enables the co-operative to negotiate good prices on everything from toilet paper, to rice, lentils, coffee and pasta. All the products, including those from the farm are listed on-line where households can place their orders. Each household is supplied with a secure drop off box where a delivery vehicle can place the orders that are all paid for by debit card. The supplying partner is instantly credited, so there is no delay on payment. Once the main food enterprise is established, the co-operative focuses on other ways to save households money. Using the existing expertise in the community, a household maintenance company is formed that also conducts a survey of all the homes. This includes a plumber, electrician and general builder. Again the households undertake to use this business as needed and in return the new business agrees to give its best rates. With a secured bank loan (secured against the farm land) the co -op is able to provide each household with low cost loans to make the houses more energy efficient. Following the purchase of land for a community biofuel woodland many households use the loans to put in combined heat and power pellet burner generators. Discussion on car use needs results in the co-operative purchasing a small fleet of vehicles for shared use. This enables some households to stop owning a car and others to reduce to one vehicle. The co-operative in due course develops its own insurance company that reduces car and household insurance significantly by agreeing to pay the first £3,000 of any claim. After three years the co-operative calculates that as a result of savings that the return on the £10,000 invested is over 15%pa. In addition the households benefit from improved community life and have benefited from access to the farm,s camping and leisure opportunities. Most members feel that they have gained improved social status, with friends, neighbours and family envious of their improved quality of life.

Please leave your thoughts and comments below and email 21stCenturyPeasant@gmail.com if you are interested in this idea. If there is enough interest and offers of help it can be a reality.

The Edge of Tyranny

In this essay I outline the crisis we are in, describing the way we got here and my fear for what happens next

In the 1930’s the collapse of a credit bubble resulted in a strong enough economic collapse that there was radical reform of the finance industry.  The reforms aimed to give government stronger control of credit, so that it was used to finance productive investment, rather than speculation on asset values and projected returns. These systems of credit control were steadily eroded from the mid 1950’s on, in large part because they were based on control of capital flows between countries. In practice it was unrealistic to have controls on the primary trading currencies. As the offshore banking of US dollars, in particular, expanded, so too did the opportunity to undermine the controls on credit put in place in the 1930’s and consolidated at Bretton Woods. This in effect gave rise to the low tax, low regulation, high secrecy jurisdictions often based on former colonial islands. This was no accident, but was actively supported by the Bank of England as a means of stemming the decline of London as a financial centre as finance became dominated by the US. In due course this led to the collapse of the Bretton Woods controls on credit, followed by the end of controls on the movement of capital. By the end of the twentieth century all remaining controls on banks were effectively removed as the US and the UK competed for dominance in global financial markets by offering lower and lower standards of regulation.

As regulation declined, speculation increased, particularly in asset values where speculative investment itself was the driver for higher values. The increased availability of credit enabled real wages to stagnate as workers were encouraged to use their income to finance debt to improve their lives, rather than financing expenditure only from income. Combined with other work place changes, this facilitated the decline of unionised labour. The result was a win for capitalism as more people consumed more while feeling richer if they had property investments. In the background however was the need to keep expanding production and consumption in order to enable the credit to be repaid. As the relationship between savings and credit became uncoupled, assessment of risk, rather than the banks’ capital reserves became the factor limiting the expansion of credit. The systems for evaluating the risks associated with financial institutions and their products had been set up when there was a high degree of effective bank regulation. They were and are, not fit for purpose, with the result that the liabilities held by the world’s leading financial institutions are a time bomb.

After the start of the crisis in 2008 there was a push to get banks into a safer condition by insisting on larger reserves on the grounds that governments and their taxpayers could not withstand covering more losses. There was not however a reintroduction of controls on the banks’ ability to extend credit for speculation rather than for productive investment. Once their economies appeared stable most governments affected by the crisis began introducing austerity measures to decrease government spending so as to repay debts, primarily accrued through bailing out banks and providing an economic stimulus to avoid collapse in the early stages of the crisis. The resulting decrease in demand as jobs were lost and wages were pushed down created an environment where investment in production offered low returns. This effectively has left a vast amount of capital and credit capacity, both in the banking system and the predominantly offshore based shadow banking system looking for a home.

Despite the emergence of China, India, Russia and Brazil as rapidly growing economies, there has to-date been no serious alternative to the US dollar as a reserve and trading currency. Investment in US treasury bonds has therefore remained strong, as they provide the only secure and tradable investment for countries running trade surpluses. The high price of oil and gas, in part driven by speculation, has resulted in vast sovereign wealth funds. Together with the funds of other winners from the bubble and its burst this has created a concentration of power within the financial markets that has no morality and no interest in the lives of people. The institutions involved in the management of this money, together with some of the wealthy individuals, appear to be very deeply involved in manipulating the decisions of political leaders throughout the developed world democracies. In the US this has resulted in the formation of highly militarised state with the most obscenely powerful war machine that has ever existed and a vast network of slave prisons incarcerating a greater proportion of the population than any other regime, either now or in the past. The UK is closely bound to this emerging tyranny. With fears that some countries can not meet the costs of their sovereign debts, particularly in the Euro zone where the tools of economic management are restricted, the effect is to undermine totally the ability of our politicians to take steps to write off debts that can never be repaid and to return the economies involved to proper functionality.

What is happening instead is very alarming. Governments fear unrest at home and their loss of power and influence overseas at a time when access to food, energy and other commodities is becoming increasingly competitive. They are not speaking out against the US, but are keen to be seen as on the same side. They are finding common cause with corporations keen to protect intellectual property assets vulnerable to free distribution on the internet (never mind that the value of these assets has been inflated by copyright protection that is not in the public interest) as they explore how to control the explosion of self education that the internet is enabling. To control unrest governments are engaging in inventing enemies and threats so that they can bring in restrictive laws. This abuse of the law reflects the shift of power away from ordinary people and to those who control wealth.

So what happens next? Will the sand castles of finance be washed away by waves of worthless debt and in the chaos that ensues will order be maintained at the end of a gun with the millions of CCTV cameras managing curfews. Will the views and networks we described ourselves by on Facebook become the evidence for our confessions in night courts. Will our release onto cold streets with our clothes stinking of our own piss and shit and our bodies and minds battered be the expression of how benign is the new regime. Will our young people find some pride in their recruitment to serve the nation either in some overseas horror or in creating order through terror at home as we adjust to the new dark age. And God help you if you are different for the compliance of the masses requires the “thank God its not me” sacrifice of some vilified others.

Or are we better than that. Can the meaning of being educated include the ability to challenge this emerging tyranny? Can we make it clear that this future is not and can not ever be an option? Not for you. Not for me. Not for brown people with beards or for people who protest. Not for anyone. Our politicians must understand that they must turn on the rich and their institutions, not on us. We can cope with the hardship, but only if we know that the power is coming back to us and that the systems that are then put in place are the systems we need to be able to look to our future with hope, confidence and pride.

WHY THE NHS IS BEING PRIVATISED

When governments used their borrowing capacity to bail out the banks they mortgaged themselves. Those, like the UK that already had large debts were more vulnerable, but those with only limited borrowing capacity (Ireland, Portugal, Spain and Greece) were particularly vulnerable to the kind of experience anyone who has taken on a mortgage that is too big will be familiar with. Just like many of us use a credit card to get today what we hope we can afford tomorrow, so do governments use their borrowing capacity as part of budgeting. Whereas we have to accept high interests rates though, governments expect to borrow cheap. When the ability to borrow cheap is under threat, governments are in big trouble. They need that AAA rating from the credit rating agencies. Without it they are in danger of being unable to pay public service wages. They know that if that happens they become a distressed creditor, and that the country will have to accept what ever terms bankers demand.

As is the way these things work, shrewd governments don't wait for this to happen. They try to buy off the bankers before the trouble begins. That is the UK strategy. They ask the bankers what they want. What the bankers want is what bankers always want; low risk investment opportunities. The UK is therefore playing the banks at their own game. By enabling as much government expenditure as possible to pass to the private sector the UK is trying to make itself (from the banks perspective) too big to fail. This is why there is such a push to privatise the delivery of the NHS. If the banks are heavily invested in UK public expenditure they will be less likely to threaten the UK government with higher interest rates,

Gordon Brown can be credited for this discovery, although his intention was quite different. In taking the view that he needed to take the debts for government infrastructure projects "off balance sheet" so as to avoid increasing the costs of government borrowing for revenue commitments, Brown developed the Private Finance Initiative. In practice PFI enabled private contractors to obtain the short term finance for the construction phase, before the debts were sold on to banks who used the "backed by the Bank of England" service contracts as leverage assets or sold them on to private equity companies. They effectively became, along with companies in the defence and utility sectors, the assets that underpinned the shadow banking system. When the crisis came in 2008, PF| was the UK insurance policy.

There are two types of insurance. There is insurance that you take out because you want to protect yourself against random events. There is also insurance that you have to take out because if you don't the insurer is promising to break your legs. Turning public expenditure into private contracts very much smacks of the second. Dressing it up as political dogma doesn't alter the equation: tax money is being given to organizations who will add their bung to the costs of delivering the service that we already have without their involvement. The people delivering the service will be the same, the wages and conditions will become gradually worse, while the quality of service will depend on how weak the government was when it signed the contracts.

So here in a nutshell is why the NHS bill will go through. Here also is an explanation as to why Nick Clegg is threatening the bill's real purpose. Cameron wants to be able to go to the thugs from the banks and say how it isn't easy, that they are asking too much, that he is doing his best, but he is up against real opposition. This is part of the negotiation. The bill has to go through giving the banks the opportunity to buy the NHS contracts in the end and this stage is all about enabling the eventual contracts to not be an open cheque book that will enable the gangsters to raid the UK treasury for evermore as a condition for having a health service.

We are in that stage of a game of Monopoly where the player with hotels on Mayfair, Park Lane and the orange set on the other side of the board  is slowly and painfully getting all the other players to demolish their hotels and houses and surrender everything they have. The difference between this and Monopoly is that here the government and the people are the losers. The government has the right to change the rules to stop it happening, but is so deluded by its own dogma and so scared of facing reality that it would rather pretend that somehow it is its duty to sell us all out.

Pension Funds Fuel Finance Corruption

Ever wondered what happens to that money that you never see that is marked on your pay slip as "pension contribution"? Its so easy not even to think about it. How much is it? £122 or £166 it doesn't matter, but if you think you are average, times that by twelve and times that again by fifteen million and you are in the right sort of ballpark for UK pension contributions. Now think about that year on year. Now think about what happens to the profits that you give oil and gas producers when you heat and light your home and fill up your car. All these add up to some of the biggest funds of concentrated wealth that the world has ever seen. You hear on the news about hedge funds and private equity funds. This is where your money is ending up. Sometimes the same money, particularly from oil and gas, is in sovereign wealth funds, but either way it all becomes the chips used in the great global finance casino. Every day about $4Trillion is exchanged on the foreign exchange markets. Most of this is gambling on small currency movements. This amount of money is equal to over $5000 for every person on earth. Whose money is this? Most of it doesn't really exist, its created based on risk assessment, but behind the fantasy its the money paid as pensions, its the oil and gas profits and its the money held by governments of countries like China that are winning on the balance of trade.

Does this matter? Of course it does. Behind this headline lies a whole chain of investments. Investments in food futures that drag up the price of food, putting hundreds of millions of people into risk of starvation. Investments in securitized mortgages  fuelled the house price boom that has left millions with debts they can not repay and millions of others who can't afford to buy a home. Investments in pharmaceuticals and weapons and copyright creative products need secrecy laws and patents to protect them. There are countless investments in products that are the result of manufactured demand such as cloths fashion and bottled water and so much other nonsense.

The truth is that there is far more investment money looking for a home than there are proper opportunities to invest it profitably. When oil prices went up in the 1970's the oil rich countries put their money on deposit with the big western banks. The banks didn't know what to do with the money so they lent it to developing countries fuelling an extravaganza of arms sales, engineering white elephants and corruption while leaving the poorest countries with debts they could never repay.

By the late 1990's the same problem was arising from the pensions and savings that people were making. There was simply not enough places that needed investment that could pay it back. At first the finance industry pinned its hopes on the dot com shares. They made a fortune in fees selling shares in companies they knew were rubbish. The market collapsed.

Then came 911 and the investment in all the military and security needed for a fake war on terror. Still this was not enough to swallow the constant flow of pension cash pouring into the casino. Meanwhile in the UK and the US the governments stripped out the safeguards to stop the finance industry from stealing from the pension funds. It became easier for money to be moved around the world as electronic cash. The gamblers worked out new ways to cream off fees and commissions and to pass their trading losses onto pension funds, dumping the loot in offshore accounts or paying it out as bonuses. They covered the holes in pension funds by inflating the value of property assets. Mortgages were bundled up and sold to pension funds as near zero risk investments. Then they laid bets that householders and governments would default.

What we have is too much money chasing opportunities that don't exist and corrupting everything it touches. It has corrupted democratic politics, making so that only the money matters not the vision for our future. It has corrupted international relations, making war part of arms sales investments. It has corrupted our civil society as utilities and railways have been sold to big money investors while tax payers subsidize these industries. Governments have become scared of people losing faith in their pensions and have spent tax cash to boost the profits of pension fund (and other) investors in railways, hospitals and schools.

In this climate of unreality our bankers have become out-right crooks. manipulating the law and politics to create an environment that favours short term greed over all other interests. They borrow money for nothing and lend out at high interest rates. They are too large to fail. They pay their senior people fortunes. They are holding governments to ransom while the national economies sink.

Meanwhile the United States calculates it can not win a commercial war with China and so has armed itself to be the most powerful fighting force in the history of man.

What does this all mean to you?  If you are of fighting age or have children of that age be concerned. If you are paying money into a pension think: there are not enough good investment opportunities for you to be able to live comfortably for twenty odd years doing no work. If the value of your fund looks like it is holding value despite the greedy fees that its managers have taken, then it is probably because they money has been used to inflate asset values.  House prices have not risen because of supply and demand, but because banks have agreed to lend more money. House prices have gone down in the last few years because banks have agreed to lend less money because governments have insisted they build bigger reserves. There is no real market.

Nor is there a real terror threat to justify war in Afghanistan or the restrictions on our liberty. We are far more likely to have our security disturbed by the police or by corporations and banks charging extortionate prices or taking possession of our homes than of being victims of non-state political violence. The real threat is from the state and from big corporations. We can't trust and believe the view of the world from the BBC and commercial news stations as they tell us what governments want us to think. They are very clever at this and can sound plausible unless you are also getting your news from more reliable sources and can compare


So what should we do to protect ourselves from the failure of the systems that we were told we could rely on? Firstly it is critical that we stop giving the finance industry our money in return for a promise of a comfortable retirement that they will default on. Pension funds are not going to pay out for most people at anything near what they might expect. Worse than that, the money is being used against our interests. We need to invest our savings for the future where we know the money is doing good, real and worthwhile things and that means investing it locally where we can see and benefit from what it is doing and where we can know the people involved.

Don't invest in the future, invest in what is needed now. Invest in land that feeds you, invest in joint buying groups to cut out supermarkets. Invest in other local mutuals for savings and loans and insurance. Invest in local businesses that support your household, like energy saving engineers and plumbers. Invest in other local businesses that you know are needed and make sense. What ever you do stop paying money into the monster that is the financial system. It has failed and will destroy our society if it is not put back into it's cage. Do not feed it!