What Regulators Are For

Last week the Financial Conduct Authority proposed as its contribution to solving the housing crisis to “look at the products and markets that are developing to ensure they work for consumers.” This week it was the turn of the Bank of England’s Financial Stability Committee to address the housing crisis. They were, however, no more concerned about the housing needs of working families than were the Financial Conduct Authority. Their concern was with “wider financial stability” which they saw threatened by bank lending to the buy-to-let market. “Wider financial stability” is banker-speak for avoiding another banking crisis. Fuelled by Quantitative Easing, the policy whereby the government prints money and gives it to the banks in the hope that they will lend it to UK industry, the banks chose, instead, to increase lending for buy-to-let by 40% since the 2007-8 banking crash and bailout. This increase has been a major factor in escalating house prices. The Financial Stability Committee is right to be concerned that another banking crisis could be triggered by a collapse in the buy-to-let market, but just like the Financial Conduct Authority, they are focussing on the wrong needs: those of banks and financial services providers, not the unmet needs of working families.

Needless to say, the Financial Stability Committee refrained from suggesting that the government should regulate or restrict bank lending even though it is effectively with our money. The role of a regulator in a market economy is to bestow legitimacy on markets and the accumulation of capital. Protection of ‘consumers’ is very much a secondary consideration and protection of workers completely out of the question. Appointed by ministers but supposedly at arm’s length from the government of the day, their true independence is as fictitious as that of the judiciary and the police. We should not be surprised when they represent the interests of the 1%, not the 99%.

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Crisis – what crisis?

The call this week by Lynda Blackwell, Head of Mortgages at the Financial Conduct Authority, for older people to downsize their homes in order to alleviate the housing crisis demonstrates just how out of touch the ruling class have become. Her employer quickly distanced itself from her lame attempt to blame the housing crisis on ‘last time buyers’ refusing to shuffle off to the care home quickly enough but it was unable itself to come up with anything better to solve the housing crisis than to “look at the products and markets that are developing to ensure they work for consumers.” This regulator’s gobbledygook translates as ‘Crisis – what crisis?’ I doubt, however, whether we have heard the last of Ms Blackwell’s analysis. After all, it is already being applied as the bedroom tax in the fast diminishing social housing sector. Ineffective as that policy has proved in solving the housing crisis, it does help the ruling class (or the 1% if you prefer) to stir up inter-generational strife and thereby draw attention away from the real cause of the housing crisis.

It is certainly true that the generation born immediately after the end of the Second World War have been exceedingly fortunate. Benefitting from free education and full employment, they were offered secure social housing to rent or could buy their homes with cheap, tax deductible loans from building societies. The next generation were deprived of access to such cheap finance – the government having abolished the tax relief on mortgages and allowed the banks to gobble up the building societies (the few that remain being forced to adopt the same profit driven strategies). Many in the next generation were, however, also able to build up significant equity in their homes, but this was more the result of escalating house prices than any sustainable policy. For the current generation of young people other than those born into the privileged 1%, conditions are much harsher. While some will benefit (eventually) from inheritance inflated by the sale of their parents’ homes, this benefit is eroded by too many siblings and step-siblings, increases in life expectancy and exorbitant care home costs. In the longer term this benefit too will melt away. For young people today, facing a ratio of national house prices to male average full-time earnings of 5 and average house prices in London of 33 times the annual full time earnings of £7 an hour, the first rung of the so called housing ladder is completely out of reach.

From the perspective of the 1%, this doesn’t matter. Housing is simply a valuable and valued part of their capital. Provided the rest of us can afford to rent in the private sector, however inadequate and insecure this may be, topped up where necessary with subventions to landlords to house those who cannot afford the ‘market’ rent, what’s the problem? These are secure investments, underpinned as they are by interest rates manipulated by an unaccountable Bank of England. Provided the rich on the way to the opera can still step over the homeless or, failing that, have them washed away with Mayor Boris Johnson’s water cannon, who cares?

One way to analyse the mess we are in is to compare it with how things would be done in a socialist society – one on the way to building communism where society is rich enough to meet everyone’s needs and class antagonisms and exploitation has melted away. In a socialist society, housing would be assessed by its usefulness, not as an investment to owners seeking a profit. An adequate stock of housing would be a social priority and provided by collective effort. Security of occupation would be ensured; and democratic control would be exercised by those living in a local community, whether it be a tower block or local neighbourhood. The continuity of local communities and familial ties would be prioritised.

What could be achieved under the existing social and economic structures? A massive programme of council house building, financed, as Jeremy Corbyn has proposed, by a peoples’ quantitative easing would be a start. Tough regulation of the private rented sector and more security of tenure for tenants would help. A ban on foreign ownership of London housing would help. Perhaps most important of all, attention should be given not to “looking at the products and markets that are developing to ensure they work for consumers” as the FCA fatuously proposed but to removing the props that underpin sky high prices in UK property and ensuring that when prices come down we are not asked once again to bail out the banks who were responsible for these prices in the first place.

If this cannot be achieved under capitalism, there is always the alternative solution.

Jeremy Corbyn and the Trade Union Bill

Jeremy Corbyn’s victory in the Labour leadership election has been warmly welcomed by the Communist Party although, given the composition of the Parliamentary Labour Party, no one in our Party expects his task to be an easy one. The immediate resignation of six members of the Shadow Cabinet and the universally hostile reception he received in the capitalist press and the BBC (with little to differentiate them these days) illustrates the difficulties he will face. Yet on his first day in Parliament as Labour leader Jeremy Corbyn will lead his party’s opposition to the Trade Union Bill. If the dissidents in the Parliamentary Labour Party cannot rally behind him on this issue, they will expose themselves for the Tories they are. Mass mandatory re-selection of MPs will be the only solution.

The Bill is pernicious. It will allow agency workers to be drafted in to strike break whether or not they are competent to do the job. Amateur train drivers? Longer notice of strike action must be given to employers of impending action (fourteen rather than seven days) and, more significantly, unions will have to publish, fourteen days in advance, a written plan of any intended protest and specific details about it, including social media use. Demonstrations will be severely circumscribed and simple majorities will no longer be sufficient to authorise strike action. In effect, and unlike other elections including those for parliament, an abstention will count as a vote against. On that basis, Scotland voted for independence and the Tories lost the last general election.

Yet there are trade union law reforms that are needed. Electronic voting by union members in the workplace would greatly enhance workplace democracy; firms that engage in blacklisting should be prosecuted; and police spying on trade unionists and left wing activists should end immediately. That the last activity is still going on was revealed by Dave Smith, a victimised trade unionist and author of Blacklisted (New Internationist, 2015), to Croydon TUC on Thursday.

Dave’s revelations did not come as a surprise to the significant number of Communist Party members at the Croydon TUC meeting. Anyone who knows our Party’s history knows that systematic efforts were made in the past to penetrate and spy on the Communist Party.  There is even evidence that the sanctity of the voting booth was systematically broken in order to identify and report the names of those even daring to vote for Communist Party candidates. Given the reduced scale of the Party’s electoral activity in recent  years, necessitated by the need to re-build the Party more or less from scratch in the 1990s, and the obstacles faced by smaller parties in parliamentary elections (the dominance and bias of our mass media including the BBC, the high cost  of lost deposits, the undemocratic nature of first-past-the-post  etc), it is unlikely that Special Branch expend much effort these days on this particular nefarious activity but other forms of spying on trade unionists, activists and communists continue and will continue until they are exposed and our reluctant authorities are forced to abandon them and legislate accordingly.

Now those would be sensible reforms! No doubt Jeremy Corbyn will propose them on Monday. Good luck, Jeremy!

Work ’til you drop? I don’t think so!

It’s worth reminding ourselves from time to time that, contrary to the establishment view, capitalism is not the permanent and definitive form of society, it is merely a transitionary phase in human development with a finite shelf life. There are a number of developments in the 21st Century that will make its survival into the 22nd highly problematical. These include:

  1. global warming and capitalism’s inability to deal with the cause – society’s dependence on fossil fuels;
  2. as predicted by Marxist economic theory (and largely ignored by non-Marxists), increasingly severe economic crises due to the over-accumulation of capital and a long-term tendency for the rate of profit to decline;
  3. increasing inequality and the failure of more humane variants of capitalism such as the Swedish social democratic model to survive; and
  4. demographics.

The last item is frequently overlooked. Growing world population clearly represents a threat to humanity’s survival but the greater threat to capitalism’s survival may come from its relative success in extending the average life of ordinary working people – assuming that is that the profits driven pharmaceutical industry doesn’t botch its response to the next pandemic or the equally profit greedy food manufacturers don’t kill us with obesity and diabetes generating food. Data published last week by the Office for National Statistics predict that a girl born between 2010 and 2012 can now expect to live until 82.8 while a boy is expected to live until 79. The previous predictions in 2005 were 80.6 and 76 respectively. The immediate response from the so-called pension ‘industry’ was that the state pension age will have to rise much faster than currently anticipated by the government “almost inevitably reaching at least 70 by the middle of the century”. Their motive, of course, is the huge profits they make peddling ‘personal pensions’, but there can be little doubt that the government will comply with their wishes.

What are we to make of this? By the middle of the century capitalism will have created an immensely wealthy 1% who own practically everything (where we live, the land beneath our feet, the services on which we rely) and who, apart from an ambitious, competitive minority, will neither wish nor have to work. For the remaining 99%, we will be required to work (or claim survival level ‘benefits’) well beyond any age at which we might be considered competent. Nonagenarian bus drivers? I don’t think so. Old people on jobseekers allowance? Much more likely!

The alternative is, of course, socialism which, in its fully developed form, has been described by Marx as from each according to their means, to each according to their need. While it will become immensely attractive to the exploited majority, it won’t, however, happen by itself. It will take organisation and effort. That’s where we in the Croydon CP and socialists and communists across the county and worldwide come in.