Peter Latham and Ted Knight: showing the way

In the wake of the resignation of Croydon Council’s CEO and now its leader Tony Newman, Croydon Council’s auditors, Grant Thornton, have issued a report about Croydon’s weak ‘financial resilience’. You can read the full report by following the link here.

The Council set its 2021/21 budget prior to the Covid-19 pandemic being declared. The auditors complain that there was insufficient challenge from councillors on the financial risks of the budget for 2020-21. From their lofty position and advantage of hindsight, they chide the council that budget setting and monitoring was simply “not good enough”. The pressure points, aside from lacking a crystal ball over Covid-19, arose in their view from over-spending on children and adult social care and the failure to deliver “real savings” in this area.  The auditors were miffed that their warnings in the two preceding years were ignored. It is the nature of the auditing profession, however, to seek to cover themselves by issuing such warnings while continuing to collect their not unsubstantial fees. As a profession their ability to predict real financial collapses is practically non-existent  and for which the collapse of Carillion in 2018 is merely the latest example.

The real problem with local government, including that in Croydon, is not over-spending on social services, it is the absence of tax raising powers and democratic control. As Peter Latham described so vividly in Who Stole the Town Hall, (Policy Press 2017), local government has been reduced to being a mere supplier of subcontracted services under control of a central government intent on lining the pockets of big business who, in return, finance their political party.

Earlier this year we mourned the death of Ted Knight. Ted was Leader of Lambeth Council when Thatcher imposed a cap on the local rate that councils could levy. Ted led a national campaign against the policy and in 1985 refused to set a capped rate because it would have resulted in large-scale cuts. As a result councillors were personally surcharged £125,000, removed from office and banned from standing again. Ted would have been bankrupted had not the surcharge been paid off by the local labour movement. Ted remained politically active for the next 35 years and ended his life as a leading light on Croydon TUC where I was privileged to work with him.

If we are to attain the kind of democratic local government that Peter Latham had in mind, we need more councillors and council leaders of Ted Knight’s calibre  – ones who are prepared to face down the government and set the budgets they know, as our democratically elected representatives, are needed  

WHY WE MUST EXPROPRIATE THE EXPROPRIATORS

While workers brace themselves for a tsunami of job losses, which the Chancellor’s Winter Economy Plan will do little to alleviate, it is notable that, according to Swiss Bank UBS, the world’s 2,189 billionaires have increased their wealth since the beginning of the pandemic by 27.5%  (Guardian, 7 October). This builds on a longer term trend in which the super wealthy have accumulated wealth at a dizzying rate. The same source reported in 2017 that billionaires’ average fortunes had grown by 70% in the preceding three years.

Conventional economics – the neoclassical variety they teach in our universities  and which failed to predict the Great Recession –  has no explanation for this growing concentration of wealth. Thomas Piketty came up with a partial explanation in his 2014 book Capital in the Twenty First Century: he attributed it to the private rate of return on capital consistently exceeding the rate of growth in income and output. He called this the “central contradiction of capitalism” but he didn’t explain how or why this differential persists. To explain it we have to turn to Marx and, in particular, his Labour Theory of Value. According to this, the central contradiction of capitalism isn’t a differential return, it’s the conflict between labour (workers) and capital (those who own the means of production). While this conflict remains unresolved, the latter can extract surplus value from the former provided they can sustain the current social order through their penetration and control of government.

Can conventional politics and conventional political parties such as the Labour Party address this contradiction and resolve it? No. Big business and wealthy individuals have too much influence.

Can we not let the super-rich become even richer provided living standards for workers gradually improve as they have over the last 200 years? No. Global warming has added a degree of urgency that has previously not existed, even at the height of the cold war and under the threat of nuclear annihilation. The super-rich, however, have insufficient incentive to address the urgent need to transition to a zero carbon economy. The world’s 2,189 billionaires own more wealth than the 4.6 billion people who make up 60% of the world’s population (see link below). They can protect themselves from global warming; and they have no wish to see fossil fuels remain in the ground as much of their wealth is invested, directly and indirectly, in them. Yet keeping fossil fuels in the ground, thereby rendering them valueless, is the only known means of halting the rise in atmospheric CO2 .

A condition of addressing global warming is, therefore, in Marx’s words, to expropriate the expropriators. Only then will we be able to start to address global warming.

Reference

https://www.oxfam.org/en/press-releases/worlds-billionaires-have-more-wealth-46-billion-people