Family and Clan: Refuge from the Failed State

The failure of our civilisation is likely to be when it fails to address the challenges of working as one people to survive climate change, resource depletion and how to live sustainably when there are so many of us. As much as these are very difficult challenges, the failure will ultimately be due to our inability to work together and to avoid the invitations of the powerful to turn us all against each other. To avoid this failure, we need to look again at the role and potential of family and clan.

Family is the basic political unit of our society. It has an economy, a social and cultural purpose and a role in the defence of its members from disease, hunger and violence. Families have networks of related families and family friends, together forming clans, but beyond clan, this intimate political system has no existence.

It is the life that we each lead outside of family that feeds, forms and shapes the other political system. This is civilisation. We go to school, we work for companies or the state and in return companies and the state provide the resilience to disease, hunger and violence, enabling the family structure to change and more flexible roles to develop.

This has been enormously liberating. Men's lives are no longer committed to the physical protection of women, children and the elderly. Freed from the daily fending off of rampaging neighbours, men no longer qualify for a full-time unpaid nurse waiting at home. People who want same sex relationships are no longer weak links in the family. Priests can no longer call on family leaders offering God's protection for their charges. The creative energy of everyone has the potential to contribute to the greater good.

This places an enormous responsibility on the companies and the state. Not only must people believe that companies and the state can be trusted to act for the common good, they do have to act for the common good if the civilisation is not to fail. This is why symptoms of serious corruption and collusion against the common good are such a serious concern. Where family is still strong, the instinct is to use it to protect its members when civilisation is failing. Where family is weak the vulnerability of individuals to the failure of civilisation to protect is a betrayal. Inevitably this is felt most by the poor, many of whom have learned from bitter experience that companies and the state are always willing to betray them if they are failing.

A result of this is that families and clans living on the edge of our civilisation, herded into social housing estates, struggle to reconcile the rules, obligations and values of family and clan with those of a wider society that tenuously supports them, but offers no right to participation.

Faced with the consequences of years of growing corruption and conspiracy to enrich the few, David Cameron's government has in effect started pogroms against this marginalised minority. Companies and the state have failed to manage our country so that it can offer everyone meaningful work, good housing, good education, good health services, secure pensions and a general sense of secure prosperity. Their response has been to decrease wages while forcing people to work. The persecution of the marginalised poor has little to do with saving money, but everything to do with forcing others, who previously had access to better jobs to accept what ever they can get, rather than be unemployed.

For many individual people who would otherwise have been stuck in the world of the marginalised poor, this policy presents them with a more accessible society. Staying on the margins is no longer as viable and the needs and expectations of family and clan can have less hold. For the majority of the marginalised poor though, these are years of real hardship. They are socially vilified for their poverty and for their culture. If they are of immigrant decent they are vilified for that too. Not being one of them is more important than asking why our civilisation is being managed by a complacent, self-interested elite, at a time when the people of the world need leadership with intelligence, courage and compassion, committed to working with the great challenges we face.

It is tempting to think that reform of the state is what is required. Conviction that the election of a better group of people into the high offices of government could ensure the reforms needed, is the rational for participation in democratic processes. There is in fact very little reason to have any such conviction. No political party can be said in any sense to have a power base that is built from the ground up. They are funded by the rich and powerful for the most part. They do not have a role in our communities. They do not have a place in our clans. They do not know our families. It is up to each of us to join them as individuals. They are not of 'us', but we can be of 'them', on their terms, with their rules, their power system. However, even if the political parties did and could reflect our interests and concerns, do they have the power? The answer of course is that they can not in a world where we are one inter-dependent family, all facing climate change, resource depletion and the challenges of being so many in a finite world.

What we can do is to change our culture and our values to recognise both our shared reality and our need to address it together. We have a corrupt system of money, administration and international relations and although we depend on it, it is a threat to us. Our response needs to be to develop alternative ways of working together where the rules and values are ours. We must again look to family and clan, but with an open mind and an open heart, seeking to build a society of clans that reaches across the world in a spirit of mutual support and tolerance.

This means taking back a level of responsibility we have delegated. It is not OK to have friends and relatives who are sexist, racist and homophobic. Its not OK to have friends and relatives who work in corrupt organisations and the organisations that dis-empower us. If we have money and resources we should invest them to benefit family and clan, but only where we know our family and clan are committed to working for our common good. People think of family and clan as being a problem, but it is being closed that is the problem. It is developing meaningful relationships that reach into all areas of our lives that is a problem. It is not respecting the values and ways of others that is a problem. If we think that humans can ever survive our current challenges without dealing with these responsibilities, we have a problem. What we all need is the opportunity to participate, fully and meaningfully and without compromise, in making so that we each belongs to a participatory society committed to the common good. If we can't entrust this to companies and the state, we must work with who we know. 

This though should not be to abandon the kind of political processes we are familiar with, but rather should aim to see the emergence of a political party of the clans. This party should demand of its member clans a commitment to principles and values and in return give true representative power to the elected spokespersons for the clans. Such a party could never go to war without the consent of the clans. The party could never work for others against the interests of the clans. In turn the clans could not conspire against the interests of the families without appeal to the party. All this would of course make daily life highly political, but that is the cost of being in a responsible society. 

We Have a (rather big) Money Problem and Nothing Will Get Sorted Out Until We Sort It

How money works is probably the biggest, least understood, threat to our civilization 

There was never a more powerful myth than money. To build a complex society, ordered through rights and responsibilities, many strategies have been tried, and each has ultimately explored its limitations. In slave based societies, there was wealth created by those with responsibilities, but no rights, but such societies could only develop by the state creating money that could be taxed and for the state to command the responsibilities of the people. This created public works, large armies and temples: the artefacts of the ancient civilisations. As a system for engaging the talents and creativity of people it was limited. As a system for encouraging risky investments by individuals it was limited. Patronage commanded.

The innovation of double entry book keeping created an alternative source of money: private credit. There were now two money systems in operation. Money created by the state, recoverable as taxation, and money created by banks, recoverable as interest and the repayment of debt. In both instances the value of money lies in the demands associated by its creator.

This creates a balance of power between the state and private finance. If the state constrains the creation of private credit, it can become the commander of the economy. If it lifts constraints on credit then the banks and commerce assume greater power. 

When the state controls credit and expands the extent of public works, it can find itself responsible for economic activities unsuited to an organisation whose purpose is its own power. Democratic control of the state can help to bring a public benefit focus to the state's purpose, but equally it can corrupt its purpose as it panders to the electorate's short term desires. This can easily become a process of creating more money than there is an intent to tax, with the result that there is inflation. 

By contrast, when credit controls are lifted, the bank's assume the position of being the primary source of money. They too have a weakness, for the banks are taking a risk with every penny of credit and unlike the state can not enforce their debt collection by threat of incarceration. In consequence they each seek to gain the security of assets of stable value, such as land, property and government debt. Inevitably this leads to these assets being over-valued. Further assets are then invented by manipulation of the law, such as on intellectual property, or by manipulation of trade, such as in financial instruments. This enables the expansion of credit and in consequence, the money supply, but with a corresponding demand for money for the repayment of debt. Inevitably though, the credit created for the purposes of asset inflation is unable to repay the its debt, other than by increasing rent. Since rent is the cost of utilisation of an asset, this means that the yields on inflated asset prices, become in effect a tax by the banks on the productive economy. In combination, the impact of these consequences of uncontrolled credit are highly distorting on the behaviour of both the economy and society. 

As a greater proportion of money becomes associated with inflated asset prices, the potential for further increases in the money supply as credit becomes limited. The resulting decrease in the rate of increase of credit is of itself a cause for deflation. The state can not use interest rates to control credit, because credit is controlled by the lack of assets that can offer a sufficient return to be regarded as security. 

This puts the state into a bind. If the state increases interest rates to increase the return on savings and to encourage the utilization of assets, the resulting asset deflation would put the banks into default. This would give the state no alternative, but to create money to acquire the deflated assets and make them available for productive use. In the process it would destroy the countries financial infrastructure and would have to take responsibility for its reconstruction. 

If the state were to create money to replace the decreased liquidity arising from the decrease in the rate of increase of credit, it would then need to create a corresponding increase in taxation if it were to avoid inflation. However in an economy operating as part of a global free trade system with capital mobility this is not an option. There would be downward trading on the currency, resulting in a rise in the cost of imports, including energy. This in turn would result in a contraction of the economy, including a decreased ability to repay existing debts to the banks and a collapse in asset values.

The states only other direction for action is to put its own existing capacity to create money and demand tax for the provision of public works and services forward as an asset for further private credit creation. This is what privatisation is in effect. The government creates a monopoly as a contract to deliver a service to be paid for by money raised as taxation. This can then be used as security for further credit creation. In this way a wide range of services are transferred to the private sector, with the general benefit of pulling the economy away from deflation.

This however is just feeding the monster. Just as pushing house prices up to the lowest viable yield ratio is a one off action, so is the transfer of public services to the private sector. After that economic growth requires rent income from other sources. This could be from exports, or from theft. 

Theft in this sense goes far beyond the legal meaning of the word. It means taking from some population, their accustomed rights either at home or abroad,. In the UK this has meant an attack on the accustomed rights of the poor and the disabled to benefits and public services. It has meant denying to immigrants the rights normally accorded to everyone. It has meant sending soldiers to fight the American imperial wars to force weaker countries to surrender their resources. It has meant surrendering our sovereignty to trade agreements that steal our right to decide the values by which we shall live. The humiliation of these thefts is increased by the bonuses the bankers pay themselves and the wage rises our politicians vote themselves. 

This though is a doomed game. Theft of this sort breeds discord and rebellion. It causes people to turn on each other, breaking the compact that delivers a peaceful society. It destroys the culture of the weak, leaving them without hope or a sense of belong. It throws the educated into confusions of cognitive dissonance that can leave them vulnerable to tyrants. Above all though it is unsustainable. 

The value of money can not be vested in either taxation or debt repayments in a global society that needs to work towards a global social equity and environmental sustainability. Money given value by taxation will create the tyranny of the state and if the state produces excess money there will be inflation. Money created by private finance as debt, creates the tyranny of the corporations and if there is too much credit causes deflation. Nor is there a balance to be had between the two, when taxation is a function of nation states and credit is global. 

The late economist Richard Douthwaite proposed that there should be a global currency linked to the demand for fossil fuels, with the pollution rights allocated across the world per head of population to each nation. The demand for the currency would distribute wealth to the least energy consuming, with the depressive effects of limited supply falling on the demand for fossil energy. This would both destroy the competitive advantages of maintaining a trading currency (for which easily traded debt instruments are required) and enable individual nation states to develop currencies for internal purposes. 

Much more thought is needed on the question of currency reform, but we can see at the moment a terrible contradiction in our current arrangements. Our generally accepted ideas about the aims and values of a modern society call for greater power for individuals and communities. This is at odds with a state of ever growing power and at odds with the ever growing power of corporations and finance institutions. Even more it is at odds with a combined system that is unable to address the larger social and environmental issues that all of us on earth are facing.

In a complex society we use money to describe our rights and responsibilities. Either we must be creative in the ways we develop money to reflect what these rights and responsibilities need to mean, or we need to create an alternative to money. Sadly time is probably not on our side, so for all the failings of money it makes more sense to focus on the evolution of money than on inventing something else. What, however, we can not afford to do is to fail to understand how our political, social, cultural and economic dynamics are being shaped for both good and bad by the money system we are using. Every day this issue is being neglected is a day when the poor and the weak suffer and a day less to get our management of our affairs on a sane footing. 

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.

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.