The New Normal

After Russia conceded that its Soviet Empire could not sustain itself, the great espionage systems stood as lonely and as pointless as old second world war gun placements on forgotten shore lines. In that brief moment when history ended, a career at the cutting edge of global surveillance could neither beckon to the patriot nor the technical wizard hoping for unlimited budgets to fulfil undergraduate fantasies. From the pool of mathematical geniuses in Cambridge and MIT flowed a steady stream of inspired innovators into the great finance centres of London and New York, redefining the meaning and potential of uncontrolled global credit. Little noticed was that smaller stream, that steady trickle, who flowed from the same pool into the Cold War monsters of surveillance at GCHQ and the NSA.

Though now working in quite different worlds, these young people, together with others of that generation empowered a new, dark and secret search for wealth and power, with convictions born of cold calculation of the outcomes for a world choking on its vast consumption. The coming amorality of global systems failure, with the inevitability of war, mass starvation, pestilence and desperate migrations, became the justification for the ruthless amorality of wresting control of the levers of power from the fools that emanated from political process to govern nation states of diminishing meaning.

The conspiracy for this revolution was hardly spoken, but something understood. A pen drive in the post to an old friend's home address gives advanced warning of contracts to be signed and deals to be made. A minister of state, recently installed is briefed by a senior civil servant who makes clear that the minister's darkest secrets are safe with him. Regulators un-regulate. Judges make surprise judgements. Legislators vote against their voters interests. Monopolies and Mergers are un-hindered. News anchors collude to fold news seamlessly into public relations. New enemies are created, funded, given victories and defeats and at each turn the power of the money and the secrets grows, as ownership and control of true wealth flows into the dark corners where questions are not asked. Hedge Fund, Shell Company, Foundation, Trust, Private Equity, Shadow Banking, Sovereign Wealth Fund: the names we have for components of the unseen world, where the oligarchs and the lesser oligarchs conceal the meaning of their power.

And somehow, it all seems nearly normal. We vote. There is a government. Parliament debates the issues of the day. Criminals and perverts are sent to prison. The Christmas carnival and village fete proceed. Children go to school and pass exams, grown ups go to work and the rubbish is collected. There are cameras watching everywhere and Wikilealeaks and Snowden revelations, conspiracy blogs and arrests at protests, but everything is sort of normal. Doubting normal is just another product. Reasonable people debate reasonably. It is all very nearly normal, but not quite. Its the kind of normal that isn't normal described in films by Simon Pegg and Edgar Wright just before the mayhem. Its just that things don't feel right. Politicians seem to be doing what they are told and saying what they are told to say. New appointments to key positions seem to go to the same sorts of people. Laws are passed that no-one wants. Hatreds are being stirred up. Important issues and ideas are excluded from public debate. The weak and vulnerable are blamed for being weak and vulnerable. This is not normal. It is the new normal that is not normal at all.

No Celebrations For "Recovery"!

Looking at the limp recovery in UK economic growth I can't help but have a sinking feeling. Its the same sort of sinking feeling I can imagine a powerless wife might feel when her husband finally gets the clapped out, big old family car going again, when she had been hoping he would have to give up and get a new small efficient one. She knows that keeping that old gas guzzler going will leave less for the house keeping and she will have to live on, expecting it to break down again.

The financial systems failure was a grand opportunity to change the way the economy works and over the last few years there have been some interesting ideas going round, together with some excellent analysis of what has been wrong. When it comes to economic management, tinkering with the detail is usually a sign that the folk pulling the leavers are trying to manage macro economics as if they were the finance director of a medium sized business, trying to survive the job by juggling the survival of the business, while directors and shareholders compete to pocket profits or chase pet projects. Macro economics is another skill set. It involves understanding the dynamics of the system, not of its parts. If the system is set up with the right rules, it can be left to run - at least until people start to find the way to manipulate them.

The current macro economic rules have been put in place by the finance industry itself. After the financial collapse of the early 1930's there was an attempt to contain the ability of the finance industry to shape macro economic policy, but because Keynes's vital concept of creating a shared global reserve currency (the Bancor) was shunned in favour of the supremacy of the dollar, the new system unravelled from the mid '50's onwards. The upshot was that governments have increasingly lost control of the creation of money, with money creation being dependent on the willingness of banks to risk lending. Much of the world as we know it is a direct result of this.

Banks prefer investment in assets and government debts and services to anything else. This has driven property price bubbles. It has driven privatisation of services and utilities. It has driven a preference for government debt growth over taxation. Banks also like short term arbitrage investments, where the borrower is making a quick killing by cashing in on differences in value. This has driven the transfer of jobs and industrial production to the far east. The expansion of banking and debts beyond the real levels of risk being incurred has been mediated through the derivatives markets, which have effectively been a means of shifting liability away from the banks that created the debts and towards weaker banks, pension funds, businesses and of course governments (tax payers and benefit recipients).

At the heart of this system has sat the US dollar. It is the international currency, backed by oil and protected by the US military. Most trades between countries are conducted in dollars. This means that there is a vast amount of dollars held around the world by non-Americans. These dollars are the power behind the banks' dominance over macro economic policy. They are the money in the tax havens, used for secret and unregulated purposes, undermining the ability of sovereign states to steer an independent course. The risks this money can afford to take, be it as hedge funds, private equity funds, private investments, sovereign wealth funds, or parked business money, is greater than can be taken by investors in transparent, regulated and taxed jurisdictions. The unfair competitive advantage this money has, means it can make profits from investments others would consider too risky or unprofitable after tax. It can also fund investments that are illegal or immoral, such as arms trades and vulture funds, where debts are bought at massive discounts and recovered through the courts. 

It was these unaccountable dollars that stripped away the viability of the gold standard, by effectively creating new dollars outside the control of the US Federal Reserve. As the US government came to terms with this reality, it allowed the creation of the US as a tax haven, through the secret and low regulation company administration systems in Delaware and other states. This enabled the big US banks to fully benefit from the position of the dollar. With the connivance of the US Treasury and the World Trade Organisation, the ability of countries around the world to regulate banks effectively was undermined in the late 1990's, enabling the large US banks to export risk and accumulate profit and power.

Control of oil is essential to keeping the dollar's supremacy and it is this that has driven US policy in the Middle East. While creating profits for military and oil companies has been an added bonus, the priority has been to ensure that no major oil trades are conducted in currency that is not dollars or, less favourably  gold (which is itself traded in dollars).  For these purposes the Neo-Con agenda has been adapted, with its megalomaniac idea to keep the Middle East unstable rather than let Europe, China or any other emerging economy gain the ability to define any alternative to the dollar for oil trades.

This issue of the control of the trading currency was the cause of the two world wars of the last century. Initially Germany tried to challenge the pound, but was thwarted by the US, who understood that it would be harder for the dollar to unseat a currency backed by German manufacturing and the oil of the Ottoman Empire than to unseat the British Pound. Hitler's second attempt was based on the idea of combining a broader European Economy that included both Middle Eastern and Russian oil. Had his political power base not been the viciousness of the Nazi's, he might have succeeded, at least enough to ensure a more equitable post war settlement. As it was the US was able to gain years of advantage while the rest of the world struggled to recover from devastation, with the pound and the British Empire almost completely unseated.

The effective castration of the British finance system after the war was resisted by the Bank of England through the development of the off-shore banking system to use the dollars circulating outside the US to rebuild the City of London's position as a finance centre. With a web of tax havens around the old empire, London was able to suck in dollars, using its expertise in finance and investment to extend the use of the dollar beyond the imaginings or intentions of the US government. Progressively, after the end of the link between gold and the dollar, the US adapted to this reality, with the current model for a global economy emerging as a result and with the lead US banks in a dominant position. 

In the years since the 2008 financial crisis, these US banks have consolidated their position, vastly expanding their investments to include utilities and other secure assets. They were able to do this by exploiting the need of governments, particularly in the US, to stimulate economic activity even as the money supply was contracting as banks restricted lending. As governments created money through quantitative easing, the money was used by banks to buy assets, rather than to directly secure lending into the wider economy. Working closely with unregulated funds, the US banks were able to create further opportunities for asset acquisition, particularly in Europe, where the weaknesses of the Euro system was putting countries such as Ireland, Greece, Portugal and Italy into a debt stranglehold. 

One of the effects of this has been that countries like the UK and France, although not targeted for their vulnerability by the US banks, have had their sovereignty compromised and have to concede to the US trade and international policy agenda. It is no coincidence that it is these two countries that have been most willing to support the US government's drive to increase chaos in Syria. 

Meanwhile of course, around the world, ordinary people are suffering the consequences. The expansion of US power is describing the future of food production in much of the world, with the resulting threat to small farmers everywhere. North Africa and the Middle East are being kept in turmoil. Austerity grips the developed countries that had worked so hard to develop as social democracies. Throughout the democratic world, politicians are corrupted by those who have become super rich through the processes described. The dystopia of Jack London's Iron Heel appears to be becoming reality. Ruthless oligarchs rule with the support of mercenaries and minor oligarchs while society is divided into the oppressed and the crushed underclass.

Meanwhile the carbon clock ticks on ever faster toward midnight. The callous arrogance of the greedy and powerful excludes a change of direction and the sorry boasts of higher house prices and a nudge in the GDP figures occlude the prospect of a public clamour for real change. However all the recent events have given us a much better idea of the revolution needed. It is not so much a political revolution, but a revolution of ideas to overturn the tyranny of fractional reserve banking and all its fraudulent evolutions. It maybe that a change to 100% reserve banking and the creation of new money by a committee, combined with an international trading currency that is not any nations money, is all we need to gain our new smaller energy efficient car. First however we have to get rid of the clapped out old banger. That sadly, is looking a bit of a way off!

INDIVIDUALISM: OUR VOLUNTARY VULNERABILITY TO OPPRESSION

Although our main political parties cluster around the same policy chest, there are few who would consider that our political, social and economic systems are ideal or truly appropriate for the future challenges we face. The UK has an enormous dependence on imports of food, energy, raw materials and manufactured goods which it pays for, in large part, from precarious earnings from finance, weapons and medical drugs. It's economic model is driven in large measure by the need to generate turnover with doubtful added value in order to meet the demands of finance. This results in vast numbers of people being employed, often for low wages to create a delusion of added value that conceals wasteful consumption. The wasted resources and the wasted lives involved in sustaining this illusory system should under any circumstances be a concern, but when faced, as we are, with both the vulnerability of our economic model and all the challenges of sharing a resource finite world with a vast and growing population, it is madness.

Almost everyone is in a position to see some part of this madness. They can see it in the absurdity of their work systems. They can see it in the impulse ebay purchase flown in from Hong Kong and delivered by courier. They can see it in their supermarket packaging. They can see it in the quantity of cloths they buy and throw out. They can see it in the pointless gifts they feel guilt obliged to share at Christmas. They can see it in the courses they study to half gain unwanted skills. They can see it in the over priced coffee from Starbucks. It goes on and on.

Even though people can see that they are part of a madness, much of the madness is dressed up as cultural necessity. Through adverts and the media we learn how to express ourselves as social beings through our consumption. We learn what our homes should look like. What our cars say about us. What our holidays and interests say about us. We become unable to separate our passion to engage with the world in a particular way from the development and management of our self image. This is not a confusion that has evolved, so much as been constructed by a market economy that needs consumption in order to finance itself. This is not something that could have happened if the merchants had to negotiate with people with clear and strong cultural identity. It has required that the merchants have had the power to define cultural identity as a product that we consume. It has required that the merchants have the freedom to negotiate with each of us as vulnerable individuals, rather than as communities. This is the true meaning of individualism. Sold as a state of freedom and strength, individualism is in fact the means by which we become complicit in our own powerlessness.

Alongside the emergence of consumerism and individualism, we have seen the vast increase in the power of the centralised state and major corporations. This is not coincidental. It is part of the same process. The underlying drive has been to create the systems of production and distribution of goods and services needed to provide for a large population, while exploiting the advances in knowledge and technology. How to determine what constitutes need and the best way it can be satisfied has been one of the key idealogical battles between command economy communists and capitalists. Communists have argued that to allow the private profit motive to drive a supply and demand market for goods and services creates a society that is socially unjust and wasteful. Capitalists have argued that the complexity of competing needs and possible ways they can be satisfied requires a dynamic and fluid system and that government can intervene to manage social inequality.

The capitalist model has certainly proven itself capable of creating a complex dynamic system to meet the demand for goods and services, however, it has also undermined governments ability to effectively manage social inequality issues or address needs and priorities that are not marketable. While this may just reflect the low calibre of political leaders, it also reflects the powerlessness of individuals, be they consumers, workers or voters. The decline of trades unions has reduced the pressure for wages to keep up with living costs. The withdrawal of government from the productive economy has made maintaining full employment an impossibility, so creating a body of people effectively excluded from the jobs market and the cultural engagement that goes with it. The capitalist system has extended its potential for short term gains to the extent that it is in a state of perpetual instability, meaning that government has few policy options if it does not want to risk some degree of collapse. It therefore is not possible for individuals to exercise their vote to push for systemic change. And finally, as consumers, there is almost no infrastructure for collective action to challenge the corporate supply systems. As a consequence, the rational behaviour of individuals is to take the best paid job they can get, regardless of how boring or pointless the work is, not to vote and to develop a consumption pattern that follows the crowd.

This is what the majority of people have opted for and it is around this pattern that the capitalist system has shaped itself and taken itself to the point of instability. The government therefore has to see its role as being to keep people on this powerless treadmill so as not to add to the instability of the system. To this end it is increasing the fear of the consequences of unemployment by lowering benefits and increasing the needs for ever greater compliance. Instead of a political discourse to address the systemic problems, the discourse that is open to public debate is almost exclusively focused on creating social division, with benefit dependence and immigration topping the bill. Protest demanding systemic reform is increasingly dangerous and demanding if it is to go beyond ineffective ritual, with government armed with the legal and police infrastructure for selective oppression of dissent.

It would be easy to conclude that as citizens we are powerless, but this is not the case. Our powerlessness is derived from our willingness to comply with the expectation that we negotiate as individuals, not as large groups or as communities. It is derived from our acceptance that we need to manage our money through financial institutions. It is derived from our complicity. If instead we were to form buying groups to negotiate bulk purchases of the goods and services we all need and used our savings to invest in co-operatives that meet our shared needs, our dependence on both corporations and the state would begin to decline. If we used local currencies to decrease the amount of our wages that pass out of our local economy, we can create local jobs. If we use the autonomy that these steps could give us to define our own cultural identity, we can undermine the roots of our vulnerability. It is in the end our own lack of faith that we can work constructively together in a spirit of cooperation that makes us vulnerable and powerless, not just to the oppressive constraints of a capitalist market economy, but powerless to shape the kind of society that might survive the challenges the world faces in the years ahead.

Daily Mail Blaming Welfare State for Philpott Fire is Symptom of Real Problem

Today the Daily Mail has outraged people on the left by linking the tragic case of a fire that killed six children with the ills of the welfare state. The court found that the fire had been started by the children's father so that he could be the hero who saved them. Except he didn't. Was this a situation created indirectly by government policy, and if so which government policy.

It is certainly true that across the UK there are to be found thousands of households where mothers have large numbers of children by numerous fathers who don't take much responsibility and for which the state meets the costs. Households like these have always existed and are the product of poverty and powerlessness as much as wilful irresponsibility. The main difference that the welfare state has made is that the children can be reasonably dressed, reasonably fed and have access to the education that offers them some chance of living differently from their parents. In another time many of the children in such families would have died as infants and those that survived would have had no choice but to start earning a living at an early age by being exploited as child labour, criminals or prostitutes. The failure of the welfare state lies not in the support it has provided, but rather in the failure of other policies to ensure that there has been the quality of education and opportunity needed to encourage and enable people to avoid poverty in the first place.

As the country that pioneered industrialisation and global empire, the UK suffered in the longer term from out dated infrastructure and an economy that was designed to serve an empire that no longer existed. The country's history since the second world war has been about the adjustments it has had to make. It has also been a time when it has tried to progress from the brutality that characterised the previous two hundred years, during which people endured horrendous exploitation and hardship while the country developed from a primarily agrarian base to become a diverse industrial and knowledge based economy. Through this period of development people could see the progress and change and even those experiencing extreme poverty believed that in due course that people like themselves would benefit. Much of this was an act of faith and Christian faith played a large part in helping people to retain hope and dignity in the face of horrendous hardship. Some of this faith was transferred to unions and the political process and there was a steady improvement in work conditions, education and opportunities that reached into the poorest communities.

The depression in the 1930's came as a massive blow to undermine all faith. In particular though it reminded working people that, when faced with a threat to their own prosperity that the elite and the secure middle class would turn on the poor and deny them the basics needed to hold their households together with dignity. Faced with government officials snooping around their homes for saleable items before qualifying for a form of welfare that involved queuing up with pillow case for food handouts, many men lost faith and hope to charity. Brought up to believe that their role was to provide for their families, the depression and its welfare system made them failures as humans. Many who had been solid church goers became drinkers and gamblers with the little they had, adding to their families hardship. The war allowed a fresh start, building not only on a more powerful state committed to improving the lives of working people, but on a pride for having fought and won a terrible war.

There was though the very real problem of an economy that was in poor shape. Much of the productive capacity of the economy was in need of massive investment to reach competitive productivity levels and many of its products were designed for an empire that no longer existed. Similarly, the systems of management and finance were designed for a passing world and the state did not know what to do with its powers to intervene. Faced with change and uncertainty vested interests dug their heels in, making change all the more difficult. The result was the opportunity, exploited by the neo-liberals, to allow short term profit seeking in a weakly regulated economy with a global reach. Again the working poor were sacrificed, but not without a gentler welfare system that was never the less abusive in its effects. As money flowed in from overseas investments, finance, arms sales and the sales of pharmaceuticals, the working poor moved into service industries, including a bloated retail sector as consumption of anything and everything was encouraged to churn profits. Investment from pensions and other savings was used to finance asset value bubbles to enable a massive expansion of asset backed debt, with commercial banks being given the freedom to expand the money supply as debt so long as inflation was contained.

When the bubble burst and banks went bust, again it was the poor who were seen by the elite and the middle class as the constraint on resolving the economic prospects of the country. What is not gaining proper consideration is what economy we actually need. The elite, the middle class and the other powerful vested interests are trying to avoid change by holding on to what they have, while hoping that there will be a return to a 'normal' of wasteful and exploitive investments and get rich bubbles. As always the working people of the country are waiting and willing to work for a better future and as always, those with the power and control of wealth are looking for the next chance to line their pockets, without any sense of vision.

We live on a small, densely populated island and rely on food, goods, materials and energy from around the world to maintain our way of life. As the rest of the world struggles with its own challenges, it is becoming less and less dependent on the little we can offer in return for what we want. We need to be able to offer more that is of real value. We need to want less. We need to develop the social, economic and cultural systems that are compatible with living sustainably on a finite planet carrying billions of people who, if they had any sense at all, would be working out how to avoid the awful consequences of a collapse of the ecological systems that support us and the depletion of the natural resources on which we rely. This is the context for our economic direction and has been for years. The failure of our policy makers to engage with this bigger picture has much to do with continued existence of poor irresponsible households. If the elite and the middle class want to cling on to the structures of power and wealth distribution that have failed to enable us to come to grips with our real challenges they can not blame the poor and powerless for being left in a limbo land where most of the time it doesn't really matter what they do.


The days where exploitative capitalism is the right strategy for creating wealth are over. We need to consolidate our gains. We need to get on with ensuring that everyone lives in a decent home that is easy to maintain and requires the minimum of energy. We need to take a good hard look at our food and ensure that everyone has access to a sustainable supply of healthy food and is not being sold toxic industrial food that is undermining their health. We need to ensure that everyone has the opportunity to develop the skills for cultural and social inclusion, including how to prepare food, play music and other creative expression. We need to redesign our spaces to minimise the need for transport, while making our public spaces enriching. We need to make our energy supplies sustainable. The list goes on and we know what needs doing. The challenge is to create the structures and systems for this to happen and to liberate ourselves from absurd economic notions that we must first pile our energy, time and resources into competing for the profits from exploitation of people and planet. Our aim should not to be endlessly rich, but to be prosperously poor. When we see headlines like today's Daily Mail we should see them for what they are: blame culture distractions to conceal the very fundamental failure of our leaders to even face in the right direction, let alone get to grips how we can be liberated to get on with the work that needs doing.