'China’s BRI: Toward a Hybrid International Order with Socialist Characteristics?'

 'Will the BRI [Belt and Road Initiative] prove to be a platform that offers an alternative to the capitalist world order?...This world will be less Chinese, although the renminbi RMB) will be widely accepted as a reserve currency. '

The post-capitalist world Marx envisaged involved ‘abolition of buying and selling, of the bourgeois conditions of production’ (Communist Manifesto):  in China & Russia, in contrast, wage labour was extended to a much larger proportion of the population. Lenin wrote of Russia in 1918: ‘reality says that State capitalism would be a step forward for us; if we were able to bring about State capitalism in a short time it would be a victory for us’ (The Chief Task of Our Time). In his Report of an Investigation into the Peasant Movement in Hunan (1927), Mao admitted that the coming revolution would not be socialist: ‘To overthrow these feudal forces is the real objective of the revolution.’ Writing four years earlier Sylvia Pankhurst stated: ‘Socialism means plenty for all. We do not preach a gospel of want and scarcity, but of abundance. Our desire is not to make poor those who today are rich, in order to put the poor in the place where the rich now are. Our desire is not to pull down the present rulers to put other rulers in their places’ (Socialism, Workers’ Dreadnought, 28 July 1923). Does this sound familar? What follows is almost prophetic: ‘…We do not call for limitation of births…’!

 Mao stated in 1949 'China must utilize all the factors of urban and rural capitalism that are beneficial and not harmful to the national economy and the people's livelihood, and we must unite with the national bourgeoisie in common struggle. Our present policy is to regulate capitalism, not to destroy it.'

'In China, as elsewhere, how you live and what you buy depends on how much money you have. And who, it will be asked, has the money? The answer, as in the Soviet Union is: the privileged classes, officials, high-ranking officers, scientists, technicians, skilled workers and so on. But there must be added a small and peculiarly Chinese category: the Chinese capitalists. These, surprisingly enough, are the former owners of, for example, factories, whose enterprises have been taken over by the State and who receive annually from the State as compensation a percentage of the capital value of the enterprise. As they are also very often employed as managers of the factories, some of them are extremely well off' (Sunday Times, 9 Oct. 1963).

 Guardian (18 March, 1995) John Gittings  considered, among other things, where Deng's economic reforms are heading and why Mao's policies failed. He asked: "What is meant by Mr Deng's famous phrase, used to justify his economic innovations, of 'socialism with Chinese Characteristics'? It is simply code, many suggest, for 'capitalism under the Chinese party rule.'"

More recently: ‘China is now an integral and irreplaceable part of global capitalism’ (consortiumnews, 28 July 2020).  Last year, the Financial Times had this to say: ‘The very first line of the Chinese Communist Party’s constitution declares it is “the vanguard of the Chinese working class”. In reality, the last ruling Communist party of a major country has morphed into a conservative reactionary party bent on preserving the power of state capitalist elites and advancing a distinctly 19th century form of ethno-nationalist imperialism..’ (16 June, 2021).

Food poverty in sixth largest economy

The United Kingdom is listed as second richest in Europe with a GDP of 2.7trillion dollars (2020). The UK is the world’s sixth largest economy.

The Tressell Trust was featured in an article in the Socialist Standard, June 2023.

https://www.worldsocialism.org/spgb/socialist-standard/2020s/2023/no-1426-june-2023/material-world-food-another-banking-failure/

The latest report from the Tressell Trust highlights the extent to which food poverty is impacting on very many in the UK.

One in seven people in the UK faced hunger last year due to a lack of money, they say.

The survey said this equated to an estimated 11.3 million people.

About 7% of Britain’s population was provided with charitable food support in the year to mid-2022, while 71% of people facing food shortages said they had not yet accessed any such support.

‘... insufficient income is the fundamental driver for almost all people forced to use a food bank. The vast majority (86%) of people referred to food banks in the Trussell Trust network in mid-2022 have an income so low that they were experiencing destitution when they were supported by the food bank. These already low incomes are further destabilised by a lack of savings and having to cope with arrears and debt.’

Those most impacted are:

‘More than a third (35%) of renters experience food insecurity. This rises to 45% of people living in socially rented housing, with 29% for people in private rented housing. This compares to 6% of people who have a mortgage. One in four (24%) people from an ethnic minority group experience food insecurity, almost twice the rate (13%) for white people. Similarly, more than a quarter of disabled people (26%) experience food insecurity, nearly three times higher than the rate amongst non-disabled people (10%). Nearly a quarter (23%) of unpaid carers experience food insecurity, compared to 12% of non-carers. A fifth (20%) of people living alone experience food insecurity, compared to 13% of people who don’t live alone. 18% of working-age adults experience food insecurity, compared to 3% of people over the age of 65 Nearly a quarter (23%) of households with dependent children experience food insecurity compared to 11% of those without. This rises to nearly half (48%) of single adults living with children.’

In the report’s introduction the Chief Executive of the Trust says:

‘That means we know what needs to change if we’re going to build a more just society where everyone has enough money for the essentials. It is clear that we need a social security system which provides protection and dignity for people to cover the costs of their own essentials, such as food and bills.’

‘Because in coming together, and working together, we will build a future where none of us need a food bank, because none of us will allow it.’

https://www.trusselltrust.org/wp-content/uploads/sites/2/2023/06/2023-Hunger-in-the-UK-report.pdf

As noted in the June Socialist Standard article, we disagree with the first comment the Chief Executive made. Whist a capitalist society continues to receive support from very many including those globally who suffer badly under that system then sticking plaster solutions are not the answer.

We agree with the second sentiment which she expressed; working together we can build a future where none of us will ever need a food bank ever again.

Our solution is one that eradicates the problem once and for all:

‘What is the solution to permanently eradicating food poverty and poverty and inequality completely? It’s what we in the Socialist Party have been putting forward for over a hundred years – the replacement of capitalism with a money-free, wage-free, class-free society where goods are produced for use, not profit. Abolish charity. Abolish capitalism. You owe it to yourselves.’

Why Water is a Commodity continued

‘Britain’s model of privatised utilities is facing its biggest crisis since Margaret Thatcher was selling off the the family silver in the 1980s.

Thames Water, the UK’s latest water company, is in emergency talks with the water regulator Ofwat, ministers and government departments, amid concerns it needs a multibillion cash injection to keep operating.

The water company, which serves 15 million customers, could be put into temporary national ownership by ministers to secure a refinancing package.’

https://www.theguardian.com/business/live/2023/jun/29/uk-privatisation-thames-water-crisis-nationalisation-cost-of-living-economics-business-live

‘The government has “no true grasp on the costs” involved in preventing a collapse of Thame Water, with estimates presented to ministers and regulators suggesting the company could be facing a hole of £10bn in its finances, the Guardian can reveal.

The water company, which serves 15 million customers, is in emergency talks with the water regulator Ofwat, ministers and government departments after the departure of its chief executive and concerns over its ability to continue operating without a multibillion cash injection.

 Measures under discussion include placing Thames into temporary national ownership, in order to secure a refinancing package. That could mean public funds and higher bills for customers may be needed.’

https://www.theguardian.com/business/2023/jun/28/thames-water-in-crisis-talks-over-potential-10bn-black-hole-cost-possible-collapse

‘For decades, water firms, which were handed a monopoly with no debts at privatisation in 1989, have been loading up debt to pay dividends while failing to adequately invest in the infrastructure to fulfil their legal duty: to provide clean water to customers and treat their sewage. ‘

‘Signs of the precarious financial situation that many privatised water companies have put themselves in have been clear for many years, as they loaded up debt to pay dividends. ‘

https://www.theguardian.com/environment/2023/jun/28/mounting-debts-and-public-anger-could-finally-sink-uk-water-companies

The Sun reports, ‘Government plans to temporarily nationalise debt-ridden Thames Water should it collapse ‘

‘One option that emerged from contingency talks is to place it (Thames Water) in special administration, in effect nationalising it briefly…’

https://www.thesun.co.uk/money/22855842/government-plans-temporarily-nationalising-thames-water-collapse/

The call for nationalisation of Thames Water in particular and utilities in general will no doubt reach a crescendo. State ownership isn’t the solution.

The replacement of capitalism by Socialism is.

Let us not forget that clean, sufficient water available on demand is an issue for many millions across the globe.

Privatisation of water utilities isn’t the main problem. The problem is that water fulfils the necessary functions of a commodity and ‘Commodity production is a hall-mark of capitalism.’ The shareholders of Thames Water, and others, are aware that its primary function is to make profits and increase their dividends.

This Blog has posted separately a piece from the Socialist Standard, November 1989 which explains in depth why water is a commodity.

https://www.worldsocialism.org/spgb/socialist-standard/1989/1980s/no-1023-november-1989/why-water-commodity/

Why water is a commodity

 It’s outrageous”, Sara Parkin, the Green Party spokeswoman was quoted as saying, “that water should become a capitalist commodity”.

Commodity production is a hall-mark of capitalism and if Sara Parkin could be persuaded to dip into Volume 1 of Marx’s Capital the first words to meet her eye would be:

“The wealth of societies in which the capitalist mode of production prevails presents itself as an immense accumulation of commodities; our investigation therefore must begin with the analysis of a commodity.”

And what does this investigation show? That what makes a good (a use value) into a commodity (an exchange value) is its production for sale, with a view to profit. However, how can it be that water through our taps costs us £s a week whereas falling in a storm it is free? The answer lies in the analysis of a commodity. This brings us back to capitalist society, where water is a commodity possessing value (exchange value). All commodities must have two kinds of value: use value and exchange value. To be a commodity a good must have use value, otherwise it wouldn’t sell and so have no exchange value. Water down our necks in a storm is useless but we need water to do the washing or make a cup of tea.

So what is it that converts water from a useless nuisance into a valuable commodity? There is no shortage of water in the world. It is only unequally distributed in nature. The water is available but has to be brought to where it is needed, as to meet the demands of modern conurbations. As was well said by a World Health Organisation expert, “there is no shortage of water, only pipes“, and therein lies our answer.

Reservoirs, tanks, pumps, filtration plants and drains can only be produced by human labour, and it is only human labour which, in capitalist society, imparts exchange value. If value depended upon usefulness, water would be the second most expensive item (after air) on Earth. Rain irrigating crops is indispensable but contains no human labour and so is valueless (free), like the air we breathe. Installations to store, purify and supply water necessitate human labour and water thereby becomes a value-bearing commodity depending on the amount of socially necessary labour required.

Therefore, Sara Parkin’s idea that water could be somehow exempted from capitalist commodity production is a non-starter. Like so much of the Green Party outlook, it is the same old story of capitalism without commodity production, which Pierre Proudhon was advocating 140 years ago.

Under capitalism every useful thing containing human labour produced as a non-use value to its owner becomes a commodity, with a price. This is so whether the means for producing it are nationalised or privatised. Trying to except the water supply (or electricity or gas or transport) from commodity production under capitalism is like trying to run the Boat Race outside the river.

It is capitalism (commodity production) not privatisation which is the cause of water being a commodity. Only its complete abolition will end the situation which so outrages Sara Parkin.

https://www.worldsocialism.org/spgb/socialist-standard/1989/1980s/no-1023-november-1989/why-water-commodity/

Socialist Sonnet No. 103

Fall Out

 

Was there ever an unjustified war

In which profit and national vanity

Weren’t declared? The loss of humanity

Always, it seems, an acceptable score.

Slaughter becomes a mere mundanity,

Even as rhetorical voices soar

And conflicting ambitions would restore

Personal advancement through calamity.

Those who count themselves as superior

Visionaries, infallible succeeders,

Plot and contrive each other’s undoing.

Meanwhile those considered inferior,

The other ranks, could look beyond leaders

And determine they’re all worth eschewing.

 

D. A.

Prince William goes reformist

Yesterday the heir to the throne promised to solve the problem of homelessness within five years:

“Prince William has launched a major five-year campaign to end homelessness, which he says should not exist in a "modern and progressive society". 

What makes him think that he can solve this problem thrown up by capitalism when the politicians have failed to do so over the years? 

In 1994 a Labour politicians promised that “begging will be consigned to the history books under the next Labour government” (‘Labour to end begging’, Camden New Journal, 7 July 1994).

Labour won the following general election in 1997 and were in government for the next 13 years. When they were kicked out in 2010 there was still begging in the streets. And there still is.

Prince William maybe more sincere than that Labour politician but he too will fail. We confidently predict that in five years time homelessness will still be a problem.

Capitalism is a society where shelter is a commodity that has to be paid for and there will always be people who, for one reason or another, won’t have enough money to buy it. That’s the nature of the system and it can’t be reformed away either by parliamentary legislation or by royal wish.

Pasta a joke for Italians

 

‘European consumer groups have urged shoppers to stop buying products of large pasta manufacturers such as Barilla, De Cecco, and La Molisana in Italy, and Panzani in France, in response to what they claim are unjustified price hikes, according to a Financial Times report.

EU pasta producers are facing growing pressure to cut prices as Italian consumer unions have called for an investigation in to possible price manipulation, saying that the increases in costs have been “inexplicable.”

While manufacturers in Italy and France claim that the price rises reflect the impact of higher production costs sparked by the conflict in Ukraine, consumer groups insist that “reality is far different” from the companies’ narrative.

Food producers have been accused of profiteering and “greedflation” as the surge in pasta prices has been well above broader inflation rates across Europe even despite a sharp drop in the price of the wheat used to make it, the outlet said.

“Year-on-year price hikes measured on a monthly basis are two times the current rate of inflation,” according to Italian consumer group Codacons.

Another Italian consumer association, Assoutenti, has called for a week-long “pasta strike” starting next week, urging people to shun the product and make it at home themselves.

Although Italian inflation has cooled over the past few months, pasta prices were still 14% higher year-on-year last month, according to official statistics.

“For Italian families it’s a fairly existential crisis,” said Clive Black, an analyst at Shore Capital, as they are the world’s biggest pasta eaters, consuming roughly 23 kilograms per year.

In Britain, pasta price inflation reached 27.6% in April, while the figures were 21.8% in Germany and 21.4% in France, data showed.

Meanwhile, Luigi Cristiano Laurenza, general secretary of trade organization Unione Italian Food Pasta, claimed that pasta makers have been hit with higher energy, logistics and packaging costs in light of the Ukraine crisis.

Despite the decline in grain prices, it will take time for consumer prices to go down as producers are still using up the stocks of wheat they bought at peak costs, according to the CEO of La Molisana, Giuseppe Ferro.

Meanwhile in France, the government has threatened pasta producers with financial penalties. Finance Minister Bruno Le Maire said in May that companies will face a tax levy if they refuse to negotiate lower prices.’

Financially stretched Germans

 

‘A growing number of Germans have been forced to change their grocery shopping habits amid soaring prices, data from Deloitte’s Global Consumer Pulse Survey showed this week. According to the findings, many consumers are either buying cheaper food or dropping certain product groups from their shopping lists.

Around 37% of respondents said they now prefer to buy cheaper supermarket brands, while 35% said they are buying cheaper types of meat. A fifth of respondents said they are constantly buying less groceries than they want, while a fourth said they now buy only the essentials, cutting back on sweets and delicacies.

“The numerous crises and challenges of recent years have caused consumers to change their habits and routines in order to make do with the financial resources available to them. This affects a wide range of areas of everyday life – including nutrition. Our research shows: for many consumers, saving money on food purchases is the order of the day,” Deloitte states, adding that one in three consumers is “financially stressed” when shopping for groceries.

Researchers also noted that only 41% of respondents said they have an understanding of why the prices are at their current elevated level and complained of the lack of transparency when it comes to price formation. More than two-thirds of respondents (64%) said they feel that companies are raising prices more than their increased costs require, and are thus making additional profits.

Annual inflation in Germany was confirmed to be at a 14-month low of 6.1% in May 2023, down from 7.2% in the previous month, but remained well above the European Central Bank’s target of 2%. Food prices slowed their climb from the previous month, but remained in the double digits at 14.9%, led by dairy products (28.2%) and bread and cereals (19.3%).

Deloitte’s analysis is based on a representative survey of around 25,000 consumers from 25 countries, including around 1,000 from Germany. The survey was conducted on April 20-26, 2023. According to Deloitte, there was also a supplementary survey in June with an identical sample.’

Possible effects of interest rate hikes

There are caveats to this article; ‘may have to’, ‘could wipe out’. However, the general tenor about the effect that the rapidly rising bank rate increase will have on those with mortgages and other borrowers is apposite. Still don’t know what the only solution is?

‘British homeowners may have to pay 50% more on their mortgages by the end of the year as a result of the Bank of England’s (BoE) interest rate hikes, the National Institute of Economic and Social Research (NIESR) warned in a new report published on 22 June.

According to the findings, higher mortgage repayments could wipe out the savings of some 1.2 million British families, bringing the total number of insolvent households to 7.8 million, or 28% of the total in the country.

The analysts also calculated that the rising repayments in aggregate will erase 0.3% of the UK’s gross domestic product (GDP) and cost households with home loans a total of £12 billion ($15.2 billion) per year.

The warning from NIESR follows the BoE’s decision on Thursday to raise its base interest rate by 0.5 percentage points to 5% as the regulator tries to tame the persistently high inflation in the country. While annual consumer price inflation remained unchanged at 8.7% in May, core inflation, which excludes volatile energy, food, alcoholic beverages and tobacco, surged to 7.1%, its highest level since 1992.

“The rise in interest rates to 5% will push millions of households with mortgages towards the brink of insolvency,” Max Mosley from NIESR stated. He explained that many families who took out mortgages with interest rates of 1-2% may be in for a rate surge of 4 percentage points.

“No lender would expect a household to withstand a shock of this magnitude, so the Government shouldn’t either. Some investment should be done in forbearance agreements, giving households and lenders the ability to create payment plans that work for each other,” he said.

Since last year, the average variable-rate home loan in the UK has more than doubled from around 3% to 6.19% as of Thursday morning. This has affected around 4 million UK households that either have variable-rate mortgages or are facing the need to remortgage due to their fixed-rate deals ending.

For a household borrowing £300,000 on a 25-year mortgage, monthly repayments have already been pushed up from £1,400 to £2,000 , a nearly 50% increase, NIESR calculated, warning that with more interest rate hikes expected, these bills will only grow further’.

Chemical manufacturer’s ten billion dollar lawsuit

Chemical manufacturer 3M Co. will pay at least $10.3 billion to settle lawsuits over contamination of many U.S. public drinking water systems with potentially harmful compounds used in firefighting foam and a host of consumer products, the company said Thursday.

The deal would compensate water providers for pollution with per- and polyfluorinated substances, known collectively as PFAS — a broad class of chemicals used in nonstick, water- and grease-resistant products such as clothing and cookware.

Described as “forever chemicals” because they don’t degrade naturally in the environment, PFAS have been linked to a variety of health problems, including liver and immune-system damage and some cancers.

The compounds have been detected at varying levels in drinking water around the nation. The Environmental Protection Agency in March proposed strict limits on two common types, PFOA and PFOS, and said it wanted to regulate four others. Water providers would be responsible for monitoring their systems for the chemicals.

The agreement would settle a case that was scheduled for trial earlier this month involving a claim by Stuart, Florida, one of about 300 communities that have filed similar suits against companies that produced firefighting foam or the PFAS it contained.

3M chairman Mike Roman said the deal was “an important step forward” that builds on the company’s decision in 2020 to phase out PFOA and PFOS and its investments in “state-of-the-art water filtration technology in our chemical manufacturing operations.” The company, based in St. Paul, Minnesota, will halt all PFAS production by the end of 2025, he said.

The settlement will be paid over 13 years and could reach as high as $12.5 billion, depending on how many public water systems detect PFAS during testing that EPA has required in the next three years, said Dallas-based attorney Scott Summy, one of the lead attorneys for those suing 3M and other manufacturers.

The payment will help cover costs of filtering PFAS from systems where it’s been detected and testing others, he said.

“The result is that millions of Americans will have healthier lives without PFAS in their drinking water,” Summy said.

Earlier this month, three other companies — DuPont de Nemours Inc. and spinoffs Chemours Co. and Corteva Inc. — reached a $1.18 billion deal to resolve PFAS complaints by about 300 drinking water providers. A number of states, airports, firefighter training facilities and private well owners also have sued.

The cases are pending in U.S. District Court in Charleston, South Carolina, where Judge Richard Gergel is overseeing thousands of complaints alleging PFAS damages.

A trial of a complaint by the city of Stuart, Florida, had been scheduled to begin this month but was delayed to allow time for additional settlement negotiations.

Most of the lawsuits have stemmed from firefighter training exercises at airports, military bases and other sites around the U.S. that repeatedly used foams laced with high concentrations of PFAS, Summy said.

The 3M settlement is subject to court approval, he said.

3M’s website says the company helped the U.S. Navy develop foams containing PFAS chemicals in the 1960s.

“This was an important and life-saving tool that helped combat dangerous fires, like those caused by jet fuel,” the company said.

3M said its participation in the settlement “is not an admission of liability” and said if it was rejected in court, “3M is prepared to continue to defend itself.”

The cost of cleansing PFAS from U.S. water systems eventually could go much higher than the sums agreed to in the settlements, Summy acknowledged.

“I’m not sure anyone knows what that ultimate number will be,” he said. “But I do think this is going to make a huge dent in that cost … and you don’t have to litigate for the next decade or longer.” ‘

New York Post  23/6/23

Dr. Cornel West - more reformist quackery

 Chris Hedges in a recent interview with Cornel West, a third party canddate in the 2024 US Presidential election and supporter of Bernie Sanders in the 2020 race, described Patrice Lumumba as 'a real freedom fighter.'

In the Congo politicians like Lumumba were elected to power on promises of wage increases which the workers didn’t get. So they went on strike.   The American activist Fred Hampton was, like Hedge's hero, also assassinated, but was better at marshalling cogent facts:

'We got to face some facts. That the masses are poor, that the masses belong to what you call the lower class, and when I talk about the masses, I’m talking about the white masses, I’m talking about the black masses, and the brown masses, and the yellow masses, too. We’ve got to face the fact that some people say you fight fire best with fire, but we say you put fire out best with water. We say you don’t fight racism with racism. We’re gonna fight racism with solidarity. We say you don’t fight capitalism with no black capitalism; you fight capitalism with socialism' (Syria in Seattle: Defies the U.S. Regime, ICH, June 13, 2020).

UK rise in shoplifting: Cost of living crisis?

‘The UK’s cost-of-living crisis is fuelling a surge in shoplifting, according to a report published on Thursday by the British Association of Convenience Stores (ACS).

ACS data showed that more than 1.1 million incidents of theft were recorded at stores across the country over the past year – the highest level in a decade, and up from 970,000 the year before. The most commonly stolen items were meat, alcohol and sweets, which are typically considered high value items that can be resold.

James Lowman, chief executive of ACS, said the levels of theft happening daily were “unprecedented.” 

“Repeat offenders, known to the community and known to the police, are stealing without fear of reproach,” he claimed.

ACS, which represents small stores across Britain, estimated that shoplifting has cost retailers £125 million ($159 million) over the past year, which is about £2,574 per store.

Some retailers noted that theft rates were partly affected by an increase in gang activity and people with addictions stealing to fund their drug or alcohol habits. However, 79% of those surveyed said they believe that the cost-of-living crisis is the main driver behind the surge in theft, as a growing number of people are struggling to afford basic items while prices continue to rise.

The report by ACS came after official figures released on Wednesday showed that UK inflation in May stood at 8.7%. That was unchanged since April, when it fell to single digits for the first time since last summer.

Grocery price inflation dropped from a 45-year-high of 19.1% in April to 18.3% last month, although the cost of food itself in UK stores still rose 0.9% in May alone.

According to a recent forecast from the Paris-based Organization for Economic Co-operation and Development (OECD), the UK will have one of the highest inflation rates of any major developed economy this year.

The ACS survey was conducted between February 13 and March 31. The calculations were based on crimes faced by retailers over the previous 12 months.’

Bank Rate rise: It's all the fault of the workers!

Perhaps the governor of the Bank of England, Andrew Bailey, should get himself booked on to the next series of the radio comedy game show,

I’m Sorry I Haven’t A Clue. Except this increase in the bank rate is no laughing matter. How much pain, desperation and despair is it going to take before you shake off your lethargic support for this social system that is based upon the exploitation of the majority and you realise that capitalism doesn’t give a jot about you?

‘The British Tory government, like the New Zealand Labour government, believes that high interest rates reduce demand and therefore limit price rises. In March 1984 the bank minimum lending rate was 8 percent Since then it has risen to the present 15 percent. So prices ought to have stopped rising. Actually they have gone up by 43 percent since March 1984 and are now rising faster than they were then. Since higher interest rates increase the income of the lenders by exactly the same amount as they reduce the spending power of borrowers, why should demand be affected?’

Socialist Standard Editors August 1990

From the MailOnline, June 22, ‘Andrew Bailey today told Brits to stop demanding 'unsustainable' pay rises after the Bank of England ramped up interest rates in a bid to curb inflation.

The governor warned that the current level of wage settlements 'cannot continue' as he defended heaping misery on mortgage-payers by raising the base rate from 4.5 per cent to 5 per cent.

Speaking to broadcasters after the bombshell move - far bigger than the 0.25 percentage point hike analysts have expected - Mr Bailey denied that he actively wanted to trigger a recession.

But he made clear he will do 'what is necessary' to bring inflation back to the 2 per cent target - less than a quarter of the current reading.

High wage settlements are among the factors that have spooked the markets and forced the Bank's hand, although it has been heavily criticised for failing to act early enough to combat prices.

Asked whether people were asking for too much, Mr Bailey - who earns around £575,000 a year - said: 'Let me be very clear on this, because it's an important issue.

'We've got to get and we will get inflation back to its target.

'To do that I have to be clear – and we expect inflation to come down this year – to do that we cannot continue to have the current level of wage increases,

'And we can't have companies seeking to rebuild profit margins which mean prices continue to go up at their current rates.

'But what I would say to people is we expect inflation to come down, and it is important then that price setting and wage setting reflects that.

'Because the current levels, I'll be absolutely honest, are unsustainable.'

Amid mounting panic in Tory circles, Rishi Sunak voiced support for the Bank's tough action. He also tried to cool concerns with a folksy town hall event performance insisting he is '100 per cent on it'.

Chancellor Jeremy Hunt also offered gave strong backing to the Bank, saying controlling prices is the 'only long-term way to relieve pressure on families with mortgages'.

'If we don't act now it will be worse later,' he added.

Mr Bailey has been coming under intense fire for failing to respond to inflation earlier, with some Treasury advisers arguing that Threadneedle Street now has no option but to force a recession...'

https://www.dailymail.co.uk/news/article-12223281/BoE-chief-Andrew-Bailey-blames-unsustainable-pay-rises-rate-hike.html

UK capitalism's debt

 

‘Britain’s public sector net debt in May reached its highest level in over six decades and now exceeds the country’s annual economic output, the Office for National Statistics (ONS) revealed on Wednesday. This comes as government borrowing has outpaced expectations.

Public sector net debt excluding borrowing from state-controlled banks hit £2.567 trillion ($3.28 trillion) at the end of last month, which amounted to 100.1% of gross domestic product (GDP), the ONS said.

This is the first time that debt has stood above 100% of the country’s GDP since 1961, meaning that public sector borrowing is now larger than the UK's economy.

Government borrowing reached £20.045 billion ($25.5 billion) in May, down £3 billion ($3.8 billion) from April but still exceeding consensus expectations of £19.5 billion ($24.8 billion), according to the ONS. Last month’s borrowing figure was £10.7 billion ($13.6 billion) higher than in May 2022 and was the second-highest level recorded in the month of May since monthly records began in 1993.

The ONS released the debt figures along with the latest inflation data, which showed that consumer price growth remained persistently high in Britain.

“This will likely drive up spending through increased debt interest payments and inflation-linked benefits and tax credits,” PwC economist Divya Sridhar said.

Inflation in the country stood at 8.7% in May and exceeded expectations for the fourth month in a row.’

*CONSPIRACY THEORIES RIGHT, LEFT AND CENTRE *(Zoom)

 Friday 23 June 19.30 (GMT + 1)

*CONSPIRACY THEORIES RIGHT, LEFT AND CENTRE *(Zoom)

*Speaker: Stephen Harper*

Socialist Sonnet No. 102

Resignation

 

A prime minister losing confidence,

However self-assured he’s in the right,

Whatever misdemeanours come to light,

He will struggle to maintain the pretence

Of near infallibility, and then

Step down amidst bitter claims of betrayal,

Being far, far too grand to actually fail,

Unlike the general mass of men and women

Who prove fickle once they find they’re misled.

Yet there’s still a benefit behind the fuss,

A purpose to this political circus,

To distract from the rising price of bread.

And so departs the familiar face,

While leaving a prime minister in place.

 

D. A.

Boiling a frog: Higher prices the norm

Boiling a frog apologue has the frog frog put into lukewarm water and as the temperature increases the fog doesn’t notice that when the water boils the frog won’t survive. “It’s unlikely that prices will return to where they were.” When a rocketing commodity price drops by a few pence the relief consumers feel at a minimal saving engenders acceptance that the previous cheaper base cost will not reoccur.

Socialists are careful about making  predictions as to what a future socialist society will exactly be like. However, some things are self evident. There won’t be such a thing as inflation. Why? Because it will be a money-free society with goods and services produced for the common good, not for profit. There won’t be people being driven to despair because they can’t afford their rent, their mortgages, their energy bills or any other basic necessity of life which under capitalism is ‘can’t pay, don’t get.’

‘Grocery inflation in the UK has started to ease as two separate surveys suggest that food-price growth may have passed its peak, Bloomberg reported on Tuesday.

Food inflation in the country fell for the third consecutive month in June but still remains at 16.5%, down from 17.2% the previous month, according to data from market-research company Kantar.

Inflation stands at its sixth-highest level since the financial crisis in 2008, according to Kantar. Eggs, cooking sauces and frozen potato products saw the biggest price rises.

Another study, conducted by Lloyds Bank, said food-production costs in the UK declined for the first time in May since 2016.

Grocery-price growth reached 19.1% in April, which was the highest rate in more than 45 years, according to the Office for National Statistics (ONS).

Bank of England Governor Andrew Bailey earlier warned that the easing of inflation could take longer than expected.

“The ongoing squeeze is clearly weighing on the nation’s mind,” head of retail and consumer insight at Kantar, Fraser McKevitt, said. “Of the top five financial worries that consumers have, rising grocery prices is the only one that they are more concerned about now than at the start of this year.”

An index tracking costs for food and drink producers fell for the first time in more than seven years, a Lloyds’ survey showed. However, “it will still take some time before we see the benefit in terms of shelf prices,” according to Annabel Finlay, managing director of food, drink and leisure at Lloyds Bank Commercial Banking.

“This is, in part, due to the long-term nature of contracts between the manufacturers and retailers, as well as the broader segments of the production chain,” she added.

Earlier, UK officials reportedly met with supermarket bosses to negotiate price cuts, reassuring them that any scheme to help bring down food prices for consumers would be voluntary.

Last week Ken Murphy, CEO of Britain’s biggest supermarket chain Tesco, pointed to some signs of cooling grocery inflation after the company cut prices on bread, pasta and broccoli, but admitted that “it’s unlikely that prices will return to where they were.”’

‘The UK will have one of the highest inflation rates of any major developed economy this year, the Organization for Economic Co-operation and Development (OECD) reported on Wednesday.

According to the forecast, British inflation, which only recently fell to single digits for the first time since last summer, will be higher in 2023 than nearly any G20 member except Argentina and Türkiye.

Although headline inflation in the UK declined to 8.7% in April from 10.1% in March amid cooling energy prices, food inflation has been stubbornly high. Grocery price growth reached 19.1% in April, which is the highest rate in more than 45 years, according to the Office for National Statistics.

The OECD predicted that even as Britain is expected to narrowly avoid a recession in 2023, higher interest rates are likely to dent economic growth and incomes in the coming months.

"The high interest burden on public debt and the recent drop in average debt maturity leave the public finances exposed to movements in bond yields," the OECD said in its Economic Outlook.

The Paris-based organization expects the UK’s economy to grow by 0.3% this year and by 1% in 2024. It noted, however, that the forecast includes "significant risks."

Renewed increases in wholesale energy prices will “further squeeze real incomes given the United Kingdom's high dependence on natural gas. Faster-than-expected resolution of uncertainty regarding future trade relationships is an upside risk,” the forecast warned.

Responding to the OECD data, UK Chancellor Jeremy Hunt admitted that inflation was still “too high,” adding that “we must stick relentlessly to our plan to halve it this year. That is the only long-term way to grow the economy and ease the cost-of-living pressures on families.”

The inflation rate in Britain should average 6.9% by the end of the year, the report concluded.’

 

Unarguably Broken: Mortgage Misery Set To Increase.

 

The market is ‘arguably broken.’ It’s capitalism which is unarguably broken,

The economic and social misery that increased mortgage rates impose on first time house buyers, those who have still to pay off their mortgages, and private renting tenants (when landlord mortgage repayments exceed rental income). An important question that arises from the continuing damage that capitalism imposes upon the vast majority is why does the majority continue to allow this social system, - which has long outlived its historical usefulness as the necessary epoch which precedes socialism – to continue to exist when the obvious solution is ready and waiting?

The extracts below demonstrate the historical fallacy that higher interest rates reduce inflation:

“When this and other anti-inflationary tactics didn’t work, the eventual method settled upon by Thatcher and her Chancellor Nigel Lawson was to use interest rates as a policy instrument. In her memoirs, Thatcher stated that in her view ‘the only effective way to control inflation is by using interest rates to control the money supply

It is notable that interest rates have been used as the main policy instrument for controlling inflation ever since, by the governments of Major, Blair and now Brown. This is despite the fact that as a policy it not only arose by default, but has little to practically recommend it. The theory is that when interest rates rise, people borrow less and cut their spending. But this only takes into account one aspect of what happens. Interest rates are the price of borrowing and lending money and when interest rates rise, lenders are affected just as positively as borrowers are affected negatively. A movement in interest rates changes the terms of the relationship between borrowers and lenders in an economy and can create a short term economic disturbance, but it does not affect the level of purchasing power as a whole and can have no significant and persistent effect on the price level (for example, while those with mortgages and other loans are disadvantaged by higher interest rates, those with savings, interest-bearing investments, etc gain to a similar overall extent).

That raising interest rates cannot halt inflation – or even slow its rate of growth – has been demonstrated by a close look at economic history. During the time when Thatcher was Prime Minister the Minimum Lending Rate (as it was then called) for the banks rose from 9 per cent in 1988 to 15 per cent in 1989 yet the Retail Price Index (RPI) increased considerably across the entire period, having an average annual rate of 4.1 per cent in 1987 that had become 9.5 per cent by 1990.”

That raising interest rates cannot halt inflation – or even slow its rate of growth – has been demonstrated by a close look at economic history. During the time when Thatcher was Prime Minister the Minimum Lending Rate (as it was then called) for the banks rose from 9 per cent in 1988 to 15 per cent in 1989 yet the Retail Price Index (RPI) increased considerably across the entire period, having an average annual rate of 4.1 per cent in 1987 that had become 9.5 per cent by 1990.”

Dave Perrin. Crisis and Inflation: Back to the Future. 

Socialist Standard November 2008.

“The latest mortgage data from Moneyfacts reveals average interest rates hitting the 6% figure.

For residential mortgages, the average two-year fixed rate increased from 5.98% on Friday to 6.01% today, while the average five-year fixed rate increased from 5.62% to 5.67%.

The product count fell from 4,923 on June 16 to 4,683 June 19.

For buy-to-let mortgages, the product count fell from 2,589 on Friday to 2,515 June 19.

The average two-year fixed rate increased from 6.21% on Friday to 6.30% today, while the average five-year fixed rate increased from 6.17% to 6.23%”.

https://www.mortgagestrategy.co.uk/news/average-resi-two-year-fix-hits-6-moneyfacts/

‘In May, the Bank of England said 1.3 million fixed-rate mortgages were set to mature before the end of 2023, with a larger number up for renewal in 2024.

“The market is dysfunctional and arguably broken,”Martin Stewart, director of mortgage advisory London Money, told CNBC. “We have seen evidence where advisers are in queues alongside 2,000 others all trying to secure something that might not actually exist by the time they get to the front of the queue.”

The industry expert added that the last nine months have been “seismic” for the mortgage and housing sector, “on a par with the financial crisis,” although with different causes.

More than a quarter of UK homeowners on a fixed-rate mortgage are now projected to head for sharp increase in monthly payments, once their current deals expire.

Mortgage costs in Britain have been growing sharply in recent days, ahead of an expected interest rate hike by the Bank of England later this week. The regulator is likely to raise borrowing costs for a 13th consecutive time on June 22, in an effort to tame raging inflation’.

More than a quarter of UK homeowners on a fixed-rate mortgage are now projected to head for sharp increase in monthly payments, once their current deals expire.’

Summer School 2023

 There are still a few spaces available for Summer School, so bookings remain open for now. For more information about the event and details about how to book a place, click here.   The event will now also include a bonus session – a Saturday afternoon of mosaic-making!

Fire God given nuclear weapons to save the world says Russian

Whilst recognising the bias in articles published by Russia Today - all capitalist/state capitalist media is biased no matter where it emanates from – the extracts below are from a piece detailing a debate that occurred between five Russians in reponse to an article by Professor Sergey Karaganov, honorary chairman of Russia’s Council on Foreign and Defense Policy, and academic supervisor at the School of International Economics and Foreign Affairs Higher School of Economics (HSE) in Moscow. Karaganov, suggests that Russia should fire nuclear weapons at Western targets so that “By breaking the West’s will in imposing its aggression, we will not only save ourselves and finally free the world from the Western yoke of five centuries, but we will also salvage the whole of humanity. By pushing the West towards catharsis and the abandonment of the hegemony of its elites, we will force it to retreat before a global catastrophe. Humanity will be given a new chance to develop.”

“But what if the present Western leaders refuse to back down? Perhaps they have lost all sense of self-preservation? Then we will have to hit a group of targets in a number of countries to bring those who have lost their senses back to their senses.”

Demonstrating that neo-con evangelists and “leaders” of competing capitalist systems in America and elsewhere are not the only scarily insane ones whose irrational beliefs constitute a threat to the safety of all in the world, Karaganov invokes the ‘God’s on our side’ argument. A fan of Bob Dylan perhaps? Although in that song the sky dweller was supposed to be instrumental in preventing Armageddon. Those who subscribe to Historical Materialism would rather put heir faith -pun intended - in socialist minded human beings to prevent such catastrophes.

“I have spent many years studying the history of nuclear strategy and have come to an unequivocal, if unscientific, conclusion. The advent of nuclear weapons is the result of the intervention of the Almighty, who, appalled that mankind had unleashed two world wars within a generation, costing tens of millions of lives, gave us the weapons of Armageddon to show those who had lost their fear of hell that it existed. On that fear rested the relative peace of the last three-quarters of a century.”

“It’s a morally frightening choice – we would be using God’s weapon and condemning ourselves to great spiritual loss. But if this is not done, not only may Russia perish, but most likely the whole of humn an civilization will end. “

RT 14/6/23

https://www.rt.com/russia/578042-russia-nuclear-weapons/

From the debate:

Elena Panina, former State Duma deputy and director of the Institute of International Political and Economic Strategies:

“Sergey Karaganov’s article suggesting Russia should preemptively use nuclear weapons is intended to finally draw “red lines” so that the West gets scared and retreats. However, it looks like an extremely strange gambit, even beyond the provocative overtones. Nuclear war as a remedy for a global catastrophe is as helpful as a guillotine for a headache. (Our emphasis)

It is nuclear war that we are talking about, though in Karaganov’s article the term is replaced by the more streamlined formula “use of nuclear weapons.” Is there a line before which “use of nuclear weapons” is not nuclear war, and after which it is?

Is it not clear that the first use of nuclear weapons will immediately trigger a retaliation of much greater force?

Nuclear weapons are the last resort on the chessboard. When all other means have been exhausted, all resources expended, and defeat is inevitable. And even then, nuclear weapons can no longer be used to checkmate the enemy, but instead to overturn the tables and blow up the room. They do not let the enemy win by destroying it along with planet Earth.Police officers and criminals both know the rule: don’t show your gun unless you intend to use it. Don’t scare your opponent with it, because they might hit you or shoot you first. That’s why immature minds are not advised to carry guns – they don’t control the guns, the guns control them. It is a good thing that Mr Karaganov, who advises the use of nuclear weapons to scare the West, is not allowed to use them. And those who are allowed to have iron self-control and will not listen to such advice. 

Political scientist Ilya Grashchenkov, President of the Center for Regional Policy Development:

“Karaganov’s article is interesting because it shines a light on the impasse in which we find ourselves. Without reflecting on why this has happened, he suggests a simple solution: “It is necessary to scare the West into retreating and getting out of the way. To do this, we must strike. Somewhere. It’s not yet clear where.”

“It is a morally frightening choice – we use God’s weapon and condemn ourselves to a severe spiritual dilemma. But if we do not, not only will Russia perish, but all human civilization will probably come to an end,” is the conclusion Karaganov draws for some reason...

In fact, Karaganov’s article is similar to the line of thought of [ex-Preident Dmitry] Medvedev’s, but more serious. It is also in the schoolboy logic of “hitting first” and thereby beating the opponent in a berserk frenzy. Which is kind of frightening.

On the other hand, if you talk about something for a very long time, you begin to perceive the idea not as insane but as quite acceptable. Thus extending the boundaries of what is possible, first in your own mind and then in reality. So, what goes on in the heads of those who write about “God’s weapon” (though personally I am not sure that God has any weapon at all and apparently they have their own Saviour),- thinking of Joseph Stalin’s WW2 response when warned to be mindful of the Vatican; How many divisions does the Pope have? - is difficult to analyze and predict. Great Chinese prose compares such thoughts to “the dream of a severed head,” whose thoughts brew in a highly autonomous manner and are almost not subject to external comprehension. I would suggest that someone is trying to plant their fear in the West, fear as a new doctrine. We are the fearful!

To simplify the content of the article, it says that a “small scale” nuclear war is not that scary. And since we have nothing else, it means we have no choice – we must strike at Western Europe and then “in a few years take a stand behind China’s back, just as it is now behind ours, supporting it in its tussle with the US. For some reason, Karaganov seems to think that such an outcome is an outright blessing and a sign of prosperity, though one might perceive that such a position of battering ram and satellite of China looks rather humiliating.”

RT 17/6/23

https://www.rt.com/russia/578218-experts-respond-to-call-for-atomic-strike/