The massive drilling machine, in place and ready to dig Line 15 of the Greater Paris metro Photo: Tony Cross
Saturday, 3 February 2018
On a drizzly Saturday evening in February I joined a queue of hundreds to trudge through the mud of a building site. Not just any building site. The Grand Paris Express, which will bring the metro to millions of residents in the French capital’s famous banlieue, is apparently Europe’s biggest construction project. It will transform towns like mine, perhaps in unforeseen ways. And it will provide a boost to the French economy that will have more tangible effects than the supply-side dogma of this and previous governments.
The view from the queue Photo: Tony Cross
At 7.00pm, under arc lights and with a commentary broadcast across the site, a gigantic boring machine was lowered into place in a deep Piranesian pit that will be the starting point for drilling line 15 of the Paris metro, which – starting in our town, Champigny-sur-Marne – will eventually encircle the whole of Paris.
Still waiting … but there’s some pretty impressive kit Photo: Tony Cross
At least, I think that’s what happened. I was stuck outside with a couple of hundred other would-be spectators because too many damn other people had already gone in.
But we did hear the applause and were allowed in afterwards to see the beast in its lair, try the limited-production local wine – a pinot noir and not bad at all at 7.30pm on a chilly night – and eat gigot de bitume (more of that later).
Immigration and the banlieue
The crowd, in free fluorescent jackets created for the occasion, takes a look at Steffie-Orbival Photo: Tony Cross
It was all rather moving – parents showing their children a moment in history, civilians marvelling at a triumph of engineering that is dedicated to the common good, and a feeling of being part of a community that binds people of various origins together.
Although I would say there was perhaps less variety than at the regular festivals our Communist-led local council puts on during the course of the year. Fewer Turks, Maghrebins and Sub-Saharan Africans, I would say, but plenty of Portuguese.
The Portuguese presence is appropriate, poignant even, since the park out of which the pit has been gouged was the site of France’s second-biggest shanty town in the 1960s and it was populated by Portuguese immigrants – some refugees from the Salazar dictatorship, many more economic migrants, a category that had not then acquired the stigma President Emmanuel Macron is working so hard to give it these days.
Site workers with Steffie Photo: Tony Cross
Up the hill from where we were milling stands a recently constructed, and extremely kitsch, monument to Louis Talamoni, the Communist senator and mayor of Champigny who fought for the immigrants to be decently housed.
Down the hill is the industrial estate where two cops were beaten and one of them kicked outside an unauthorised New Year’s Eve party in a warehouse, leading some right-wing smart-arses to compare the good Portuguese immigrants of yore to the bad banlieusards of today, blacks and north Africans, according to the caricature, although one doubts if they had carried out a demographic survey of the assailants.
Happily, that prompted a group of people of Portuguese origin to publish an open letter in Le Monde newspaper, objecting to being exploited for racist ends and pointing out that their community had not actually been a docile bunch of grateful paupers.
Lamb baked in tar – great French tradition
The gigot comes out of the bitume Photo: Tony Cross
Anyway, back to Saturday’s soirée because I bet you’re all dying to know about the gigot de bitume.
… And handed to an assistant … Photo; Tony Cross
This is one of those only-in-France things. It’s known as the menu de Sainte Barbe in honour of Saint Barbara, who, even though she may well not have existed, is the patron saint of miners and other people who work with explosives. She bears this distinction because her father is said to have been struck dead by lightning after carrying out the pagans’ order to execute her (by decapitation, if you want to know).
… and cut out of its wrapping Photo: Tony Cross
French secularism notwithstanding, the menu de Sainte Barbe is apparently traditional when civil engineering projects finish. It consists of a leg of lamb, well-wrapped and plunged into hot tar to cook, fished out, dunked in cold water, cracked open and served to the horny-handed sons of toil.
… and passed on to the serving team Photo: Tony Cross
We, several hundred of us, ate it on paper plates, accompanied by small potatoes. What did it taste like? Delicious, although not quite as meltingly tender as I had expected.
… and served to the hungry masses Photo: Tony Cross
We partook of our rugged repast in the shadow of a huge piece of machinery, one of the cutters of the digger, if I’m not mistaken, named Steffie-Orbival after a female digger driver who has muscled her way into the masculine world of civil engineering – or am I out of date here? – and suspended – the machine part not the driver – from a gigantic crane, to the delight of selfie-takers.
Then, finally, we could mount a gantry and look down 20 metres at the beast itself, slumbering still but ready to rip into the soil, cutting what will become Line 15 all the way around the capital.
Some pretty impressive stats
Steffie the heavy machine operator about to be snapped by the press Photo: Tony Cross
I’m going to get a bit breathless here:
Thirty such machines will dig 170km of tunnels, the longest underground railway in Europe.
This one will dig up the equivalent of eight pyramids of Giza.
There will be 68 stations, the deepest of which, next door to us at Saint-Maur-Créteil, will be 52 metres beneath the earth.
The finished network will comprise 200km of line, as much as the actually existing metro.
Above all, the Greater Paris project will be a long-overdue recognition of reality – the reality that Paris is not just the increasingly socially cleansed city of 2,250,000 inhabitants within its now-notional walls but also the less aesthetically pleasing sprawl around it that is home to seven million people.
Travelling on a commuter train into the city, you catch a glimpse of a nightmare of overcentralisation and overcrowding.
At rush hour on the line I take to work, RER A, there is a train every five minutes. That’s on a line that splits in two at Vincennes and more trains come in on the other fork. It’s a tribute to the network’s staff and the technology that there aren’t collisions. To get to the station, I have already crossed a road – rue Louis Talamoni, as it happens – which will be jammed by 8.00am. Our train takes us over a motorway packed with cars coming from the east, which connects with another equally packed motorway coming from the north and the ring road, which is in a more or less permanent state of congestion.
So the new lines are essential to reduce that congestion and the plague of pollution that goes with it. The Greater Paris project, when the politicians have finished squabbling over how it will be put into practice, should begin to tackle the division between Paris and its outskirts. On the downside, it may get in the way of a serious effort to decentralise France and repopulate deserted rural and semi-rural areas, which should surely be possible in the digital age.
Changes – social and political
Workers attend to the machinery after it has been put in place Photo: Tony Cross
Meanwhile, we home-owners are obviously all wondering what it is going to do to house prices. Push them up, presumably, which is good news if you’ve bought but not if you’re thinking of buying, but by how much and when? And what will that mean for our towns?
Champigny has already seen some small demonstrations of anxious home-owners because property developers are buying plots on residential streets to build blocks of flats for future commuters. The householders say that will spoil the tranquil ambiance of their streets>. One suspects they also fear it will affect the value of their properties.
The local council has drawn up a very necessary plan to revamp the scruffy town centre, probably the only Place Lénine in France. But the Communist Party, struggling to keep one of the last major local councils it controls, may also be getting nervous at the prospect of an influx of yuppies, which may account for their eagerness to build more social housing. Although, with a recent opinion poll finding that 83% of under-40s think that capitalism is a system that doesn’t work well, maybe they should be optimistic about the prospect of an influx of younger voters, so long as they do a bit of work on their image.
Public spending v tax handouts
How the Grand Paris Express should look Map: Hektor/Wikimedia Commons
There has been a glitch.
Entirely predictably, the Grand Paris Express will cost more than predicted. Much more. The estimate has gone up from 19 billion euros to 38.4 billion, which has given France’s top financial authority palpitations, committed as it is to the EU’s austerity-inducing target of reducing public debt to 3.0% of GDP.
Fortunately, the government is going against its own economic doctrine and maintaining the project, particularly since some of the lines are needed for when Paris hosts the 2024 Olympics. But there may be some cuts in expenses and some lines may open later than planned. Not ours, fortunately.
And it’s all paid for from our taxes! Which is a good thing. Grand Paris Express will improve people’s lives, be good for the environment, create useful jobs and boost the economy. In fact, when the latest statistics showed that France experienced its highest growth for six years in 2017, there was no real evidence that it was due to tax cuts, labour reforms and the election of a president the bosses adore. But there was a confident prediction that the massive public investment in this project will ensure that the trend continues.
So it’s a worthwhile investment for our collective benefit. That is why the continuous propaganda against taxes, which offers bribes to the majority to go along with huge givebacks to the rich, is so dangerous. It is to the shame of mainstream social democrats that they have gone along with this ideological assault on collectivism and their own legacy.
French tax services netted a record 21.2 billion euros from tax dodgers last year. And the biggest culprit was big business, a result that should lead the government to dissolve the units responsible since, like most governments nowadays, practically its sole job-creation strategy is to let companies off paying their fiscal share.
More than a quarter of the tax-evasion haul – 5.8 billion euros – came from corporate tax fraud, up from 4.2 billion euros in 2014.
Individual tax-dodgers with secret bank accounts abroad, no doubt panicked by Luxleaks and the UBS investigation, fessed up to the tune of 2.65 billion euros.
“We have to lay to rest this idea that income from tax inspection comes from hammering small taxpayers,” Budget Minister Christian Eckert pointed out in a rare counter to the right-wing – sorry, “centrist” in establishment-speak – offensive against the state collecting its due. “It’s not true! Income from tax inspection comes essentially from big companies.”
The indiscreet junior minister probably won’t keep job for long if he carries on in that vein.
Because France’s Socialist government has pursued an energetic policy of cutting taxes to business, on the pretext that boosting profits will persuade bosses to take on more workers, with only a minor deviation this year in the form of a labour law pretty much drafted by the Medef bosses’ union.
The share of dividends in French companies’ operation profits
It’s a strategy that has proved startlingly unsuccessful. Unemployment remains at 10 per cent as companies have paid out the tax handouts in dividends, an international tendency to short-term gluttony that is particularly virulent in France.
Given that the 2014 Socialist government contained no fewer than eight millionaires, one can imagine that it feels more collective empathy towards those struggling to maximise their wealth than those struggling to survive on the breadline – even if the cabinet’s net worth must have taken a hit with the departure of the fabulously wealthy Laurent Fabius.
So the DVNI, the division responsible for chasing up companies with a turnover of more than 154.2 million euros at whose headquarters Eckert and Finance Minister Michel Sapin announced the good tax news, would be foolish to aspire to longevity.
If we follow the government’s logic, following the current economic orthodoxy, it should be closed down and those companies allowed to carry on fiddling their tax returns in the hope that they will be kind enough to employ a few more members of the lower orders with the gains made from their accountants’ creativity.
Indeed, the tax windfall, which has been one of the only positive contributions to the EU-ordered effort to reduce the deficit, seems to have been pretty much an accident.
The unit to pursue holders of secret foreign accounts was set up after budget minister Jérôme Cahuzac was found to be guilty of that very offence and forced to resign. His case opened last month and, the defendant having arrived lawyered up, been put off until September.
Successful though the tax inspectors have been, unions have complained that they could do better with more resources.
That’s certainly true if estimates of the level of tax fraud quoted by the ministry are true. They put the figure at 60-80 billion euros, so 20 billion should be just the beginning if ministers were serious about tackling white-collar crime.
Eckert’s statement is important – and not just in France – because campaigning against taxation has been the right’s most effective weapon in winning middle and working-class support for policies that have actually shifted wealth away from most of the population.
Tax is the Achilles’ heel of collectivism. Most of us want good public services but we’d all rather somebody else pay for them. At the very least, we’ll take any opportunity to reduce the amount of tax we personally have to pay. The right has played on that conflict between immediate individual interest and delayed collective gratification with enormous success.
An important component of most right-wing campaigning issues – benefits fraud, migrants, “wasteful” public spending – is an appeal to the wallet. And, although there seems to be growing scepticism about capitalism and a revival of some form of collectivism among the young, Donald Trump, or France’s Front National, are evidence of the kind of mass reactionary movements that will be whipped up and manipulated if the interests of the wealthy are ever seriously challenged.
Whether you agree with the result or not, the massive No vote in Sunday’s Greek referendum was a courageous choice. Nobody knows what will happen now – not the Greeks, not the troika … not even Angela Merkel. The majority of Greeks chose to risk more economic hardship rather than willingly undergo further humiliation at the Eurobullies’ hands. A few observations:
The Greeks said no to do-as-I-say-not-as-I-do: Jean-Claude Juncker and Christine Lagarde told them they were naughty not to have paid their taxes. He was finance minister and then prime minister of a tax haven from 1989 to 2013. Being employed by the IMF, she doesn’t pay taxes anywhere (as was, of course, also the case for her predecessor, the delightful DSK). I don’t think that any of us could swear, hand on heart, that we would insist on our contract being rewritten if offered tax exemption but why exactly do international pontificators on fiscal rigour have this status?
European unity is good … but at what price? I have to admit to a sentimental attachment to the European Union and the euro. Being able to travel across most of a continent without showing my passport or changing my money is a pleasing taste of a world without national borders. But how many Greeks should be made unemployed, have their pensions slashed or otherwise reduced to penury to afford me that pleasure?
Europe would look pretty stupid without Greece: Juncker and friends said that the Greeks were voting on whether to stay in the euro and maybe the EU. Grexit would be a big blow to the euro project but they may be ready to accept it for the sake of an example to the other southern European slackers. But what will become of all those speeches about Europe’s heritage and values if the country that gave us the words “democracy”, “philosophy” – not to mention “poliics”, “comedy” and “drama” – is no longer part of our Europe? What has Luxembourg’s contribution to our common culture been, remind me?
Opinion polls are crap: Thank God I resisted the temptation to write a headline about Yes and No being neck and neck on RFI’s website on Saturday following the last poll, which showed the Yes winning with 41.5% against 40.2% for the No. This is not the first time the pollsters have been spectacularly wrong or that partisan media and interested parties have tried to influence the result by seizing on the prediction that serves their purpose. What happened? Were those canny Greeks also plotting their revenge on pollsters, journalists and EU chiefs by lying about their real intentions? Of course, even if the pollsters are genuinely trying to get it right, they can’t avoid the fact that being polled is passive and going to vote is active. They include in their calculations the responses of people who won’t be arsed to go and vote, whose opinion, quite rightly, isn’t taken into account in a real democratic process. But still we write articles based on one poll as if it was a factual account of the public’s mood and politicians allow their results to influence policy. I think we do have enough evidence to say that François Hollande is not very popular in France at the moment but can we really be sure that 51% of French people don’t think very highly of Alexis Tsipras on the basis of one poll?
This is the beginning of an era of austerity, not the end: Austerity doesn’t deliver what’s promised and depresses demand, thus further damaging the economy. But the IMF, the EU and the German leadership have turned down Yanis Varoufakis’s kind offer to save capitalism from itself. Electoral considerations come into this for Merkel, although, as George Papandreou showed when he resigned as Greek PM, an establishment politician is prepared to fall on his sword for the greater bourgeois good if bullied enough. Please read my previous post Austerity the new normal on why I believe that the changes in the structure of the working class and the collapse of the Soviet bloc have lifted the restraints on unbridled capitalist accumulation and are likely to lead to all the social reforms of the 20th century being “reformed” away.
As I’ve just reported in a much-tweeted story on RFI’s website, the French government collected a record 19.3bn euros from tax dodgers in 2014, up from 18bn in 2013, and it expects to collect even more in 2015.
The government is claiming the credit for its anti-tax-dodging drive but there were earlier reports of people in that department complaining that they were understaffed, particularly given the number of tax avoiders who have come forward following the Swissleaks and Luxleaks revelations, and could collect far more.
Panic seems to have seized certain members of the accumulating classes, inspiring an unprecedented outbreak of honesty.
Unless I’m mistaken, the Greek government’s proposal to chase up tax dodgers has been pretty much pooh-poohed by the EU, IMF and other negotiators, for whom making the poor suffer seems to be a matter of principle – see my post Austerity the new normal, which also goes into the French experience and ventures an explanation as to why this is going to carry on indefinitely.
Anyone tempted to soap the rope for benefits scroungers might like to know that pursuing social security fraud, including employers’ unpaid contributions, only netted the French government 852.6 million euros.
In January 2015 Greek voters rejected the austerity policies imposed on them for their previous governments’ sin of accumulating billions of euros of debts. Democracy, whose defence is so often evoked as the reason for wars and restrictions of civil liberties, did not prove so dear to European leaders’ hearts when it resulted in the election of a left-wing government in the country of its birth.
The Syriza government has proved not quite as far left as some predicted, ready to negotiate, its ministers assuring their counterparts they don’t want to leave the euro, Finance Minister Yanis Varoufakis telling the world that he wants to save Europe from itself.
But Europe’s leaders, the “moderates” of mainstream-media labelling, have insisted it is austerity or nothing.
After Varoufakis visited the European Central Bank in February, the ECB responded to his conciliatory tone by effectively cutting off Greek banks’ access to short-term loans, doing all it could to bring speedy confrontation.
In March the European Commission opposed the government’s “humanitarian crisis bill”, telling it that helping the poor, the aged and the homeless would be “inconsistent with the commitments made”, as would its proposal to facilitate collection of the country’s massive tax arrears by allowing them to be paid in instalments.
Greek tax evasion is estimated to have been worth 20bn euros a year and has been going on for many decades, so pursuing it should provide a tidy sum for the government – France collected 1.8bn euros in 2014 and expects a further 2.2bn euros in 2015 after a number of tax evaders ‘fessed up, motivated both by the fear of exposure thanks to the Swissleaks revelations and a promise of clemency to those who came forward. It could have been far more since tax collectors complained that they did not have enough staff to deal with all the cases in reasonable time.
But collecting tax dodgers’ cash appears to be a low priority for the ECB, the European Commission and the International Monetary Fund.
The creditors’ conditions “are political”, comments Roman Godin in La Tribune, “the acceptance of ‘reforms’ of the labour market and pensions, which are not urgent economically speaking but which politically ‘cancel out’ the essential points of Syriza’s programme and message”.
Who really believes that Greece can clear its debts if government income is slashed by austerity policies that have led to a 26% fall in production, 26% unemployment and a 33% fall in wages, it is obliged to take out more loans with interest rates attached and, on top of that, it is discouraged from chasing up tax income it is already entitled to?
Anyone would think that for the EU and IMF leaders balancing budgets was less important than destroying what’s left of the welfare state!
French-bashing – the hidden agenda
In France we hear an awful lot about the need to reduce the debt – in fact, it has dictated the Socialist government’s economic policy since its election.
Following the French media is like having a friend who is given to self-flagellating criticism but takes violent exception if you agree with them. On the one hand French commentators get prickly about “French-bashing” (yes, that’s a real Franglais word now), on the other editorialists, analysts, politicians and business leaders insist that the country is locked in a spiral of decline with the working and middle classes frolicking in the sun of unaffordable privilege while employers, big and small, are weighed down by the twin burdens of bureaucracy and taxation. Adding its voice to the chorus of cutters, the European Commission has ordered the government to slash a budget deficit of 4.3 per cent of GDP in 2014 to 3.0 per cent in 2017, although France has gained no less than three extensions, unlike the poor Greeks.
The Socialist government has obeyed orders, drawing up plans to cut 50 billion euros from public spending over the next three years, on top of previous cuts and rises in VAT.
First among France’s autoflagellants is the main bosses’ organisation, the Medef. Of course, it is not really indulging in self-criticism as much as criticism of the state insofar as it is perceived to be indulging the lower orders. The Medef and its cothinkers latch onto what the French annoyingly call “Anglo-Saxon” critiques of the French economy, defending France from the French-basheurs with about as little enthusiasm as their forerunners defended la patrie at the end of the 1930s. But then patriotism, like taxes, is for the little people.
International comparisons don’t always bear out the image of the French being especially idle or particularly privileged, especially when one takes into account productivity, which in some sectors was actually boosted by bosses compensating for the 35-hour week by investing or changing working practices.
But the really puzzling question, for me at least, is how it is that France can’t afford to pay for improvements in social conditions conceded since the end of World War II when GDP, despite declining in the post-2008 crisis, has not just risen but soared in the past 100 years.
GDP per capita:
French total GDP in 1950 was 15.5bn euros. In 1990 it was 1 058.6bn and in 2013 it was 2 113.7bn.
Inflation has taken a chunk out of that, of course, but, if I’ve worked the online calculator correctly, 1950’s GDP was 284bn and 1990’s was 1,566bn in 2013 prices. http://france-inflation.com/calculateur_inflation.php. So we are more productive and vastly wealthier than we were 50 years ago, especially if you bear in mind that wealth has not only been created but also accumulated over the years.
True, public spending has risen – from 40% of GDP in 1947 to 56% in 2011. But, although the current crisis has cut government income and increased expenditure by raising unemployment, this is not a result of the government throwing money at the disadvantaged, in fact, according to social campaigners le Collectif pour un audit citoyen de la dette publique (CAC), government spending has actually fallen two points of GDP over the last 30 years.
Where does the deficit come from?
CAC finds three main causes:
Tax cuts – tax breaks, mainly for businesses and top income brackets, have cost the state 488bn euros, reducing its income by five points of GDP, over 30 years;
Interest payments – borrowing on financial markets, whose rates have fluctuated violently, has proved 589bn euros more expensive than borrowing from households or banks at a 2.0% interest rate;
Tax evasion – if wealthy tax dodgers with secret accounts in tax havens had paid their share the debt would have been 424bn euros lower in 2012, CAC estimates.
A symptom of France’s unbearable tax burden, perhaps?
Not really, in the tax avoidance stakes the country comes behind Switzerland, the UK, Venezuela and the US, none of whom have higher income tax levels than France – Bolivarist Venezuela actually having the lowest at 34%.
In the space of a few months a total of 180.6bn euros went through HSBC’s Geneva branch to be salted away in tax havens. The money came from all over the world with no apparent correlation between the top rate of income tax and rich people’s inclination to tell the truth to the taxman. The blunt truth is that no matter how much you cut tax, the rich – whether they’re arms traffickers, comedians, politicians, surgeons or heirs to family fortunes – will never be satisfied.
On top of which, they’re good negotiators – it’s a lot of what bosses do for a living – so they’re unlikely to say “Thanks, guys, that’s enough!”
“As long as you’re winning, keep playing,” comments Luc Peillon in Libération newspaper, when reviewing yet another set of demands put forward by the Medef last year.
Having already won “a historic reduction in labour costs” of 40 billion euros during the life of François Hollande’s government, the bosses’ union drew up a new shopping list that included cutting two public holidays, more exemptions for businesses on taxes and social security contributions, creating a loophole in the minimum wage, extending Sunday working and that old chestnut ending the 35-hour week, all under the pretence that it wants to create jobs.
After examining the Medef’s claim that their proposals would create up to 600,000 jobs, Peillon found that the real figure would be about 30,000. Except it wouldn’t. That last proposal would probably destroy jobs by expanding overtime working rather than creating new employment.
This medicine doesn’t work … have some more!
Given that right-wing parties the world over continually advocate “reducing the tax burden” and supposedly left-wing parties habitually cave in to the demand, you’d think that bribing the bosses to invest has a proven track record of job creation.
Except it hasn’t, has it?
Despite all those billions of give-backs, France now has record unemployment and it has risen even as Hollande’s government signed deal after deal that swapped real tax cuts for hypothetical new jobs.
But in France, as in the rest of the world, the pressure for more tax cuts goes on. The wealthy are cancelling their subscription to the state, while still calling on its services when they prove useful.
So where has the money gone?
Into investors’ pockets. Dividends have risen from 12-13% of French companies’ operating income in 1980 to 30% in 2013, according to state statistics unit Insee.
And whoops! There goes investment (it’s the grey line at the bottom of the graph below profit margins and self-financing rates from 1984 onwards):
Sums paid in dividends in France were half those invested in 1980. They are 2.5 times more today.
And it’s not just in France. All over the rich world companies are stuffing their shareholders’ pockets as if there were no tomorrow.
“Global dividends soared 10.5% to $1.167 trillion in 2014, a new record,” the Henderson Global Dividend Index (HGDI) reports with considerable satisfaction. “Underlying dividend growth – which adjusts for currency movements, special dividends, the timing of big payments and index changes – was still robust at 8.8%.”
Commenting on the international trend, investment fund boss Larry Fink is shown in Perrin’s documentary, Cash Investigation, warning of a threat to companies’ long-term survival if they carry on as they are now.
Here’s how investments has fared in the US and the UK:
The pressure to pay out not only means cutting investment in plant but also in training, one of French industry’s real weaknesses. While right-wing economists compare France unfavourably to Germany on many economic fronts, they rarely mention one crucial difference – in 2012 Germany spent 90bn euros on research and development while France could only rustle up 51bn euros.
Maybe French employers should be getting tax breaks for research. Well, actually, they already are. It’s CIR, the purple line in the graph, produced by the campaign Sciences en marche and it shows that they have pocketed nearly six billion euros this year. The blue line shows the number of jobs created in research. Yes, it’s actually falling as the payouts rise. What a scam!
And, as Cash Investigation shows with stories of employee suicides, boot-camp-style training programmes and factory closures, human capital is squeezed to boost the bottom line.
This search for immediate financial gratification is all part of the tendency to growing inequality, noted by Occupy campaigners, Russell Brand, Oxfam, Thomas Piketty (I’m on page 183 – apparently better than most ebook readers who don’t seem to have got much past page 26 – how far have you got?) … anyone with eyes to see, really.
According to Piketty, the trend in Europe and America is a reversal of a trend that lasted from 1770 to 1990.
The ideological justification for this, the self-serving greed-is-good rhetoric of the political right, has, as can be seen in the ex-troika’s dealings with Greece, become the dogma of the global elite, whether represented by the “Socialist” Dominique Strauss-Kahn or the Sarkozy-worshipper Christine Lagarde.
Today we see the same tendency to the reduction of public spending, stigmatisation of the poor and their increased impoverishment, rising inequality and a rise in the share taken by profit all over Europe and the US.
All this is accompanied by an ideological war on taxation – coopting the middle and working classes into the destruction of social solidarity – and social engineering – privatisation of social housing and the encouragement of home ownership, employee-shareholder schemes and other forms of non-salary pay, hierarchies in the workplace and career structures that pit workers against each other, all of which have the effect of undermining the concept of the collective.
But an ideology only becomes dominant if it suits those who call the world’s political tune.
The rich are reverting to type because they no longer fear revolution
The limited income redistribution that took place in the 19th and 20th centuries was no more an ideological decision than is its current reversal.
Nor were today’s “democratic values”, living standards and social welfare systems handed down by an enlightened elite, reared on a benign Western cultural tradition, as claimed by the political successors of the men who ordered the troops out at Peterloo, had union organisers murdered in the US, butchered the Paris communards and Lyon’s Canut insurrectionists and embarked on the “civilising mission” of colonialism.
Every social and political advance was bitterly resisted, usually with the same brutality that reappeared in the Thatcher government’s showdown with the British miners in 1984.
The modern social welfare state was the product of class struggle, its precursors created primarily by trade unions and other working-class organisations and adapted to capitalism’s needs when it proved necessary to take the edge of the class struggle.
But, according to Piketty’s graph, all this went into reverse in 1990. Why would that be?
To start with, and I know I’m not the first to say this, the labour movement in Europe and the US isn’t what it used to be.
I live in what used to be known as the ceinture rouge, the red belt around Paris, a bastion of the French Communist Party, whose political and trade union base was to be found in big factories like Renault Billancourt, now closed, its site now apparently destined to become an “isle of all the arts”. The factories are no more, the Communist Party has about 70,000 paid-up members, compared to 800,000 in 1946, and the unions, while still pretty shouty in that famous French way, are divided and weakened.
The British unions are similarly weakened and the Labour Party has had its class content surgically removed – no longer one half of a two-party system that reflected the struggle between capital and labour but a competitor in a political game show with an ever-expanding number of players.
Both in Europe and the US the unions have seen their power greatly diminished. The nature of employment in the most advanced economies has deprived them of the means to inflict serious financial damage on major employers with a few exceptions. The conditions that Marx said made the proletariat the gravediggers of capitalism – the collectivism that arose from the industrial process – have been substantially changed in these countries both by accident and design.
In the US today, according to Piketty, 18% of the workforce is employed in manufacturing and 80% in services, while in France the figures are 21% and 76%. Even if the big shift has been the decline in agricultural employment, manufacturing employment stood at 33% in both the US and France in 1950 and services at 50% and 35% respectively.
Of course, the working class has not been abolished. The “knowledge economy” is a fantasy dreamt up by people who apparently haven’t noticed that they are sitting in glass, concrete and steel offices, typing on computers manufactured from steel, plastic and rare earths. But the proletariat does to a large extent seem to have moved east and, even there, is more dispersed and more at the mercy of the movement of globalised capital than its predecessor of a century ago.
Here’s the trends on a world scale, according to MSS Research:
And more and more labour is going to be replaced by computerised technology, as John Lanchester indicates in The London Review of Books. He cites an Oxford University study that estimates that 47% of US jobs are “potentially automatable” . So it’s bye-bye telemarketers, insurance underwriters, mathematical technicians, sewers (hand) and title examiners, abstractors and searchers. It will be mainly low-wage, low-skilled jobs that will go, the study finds.
“So the poor will be hurt, the middle will do slightly better than it has been doing, and the rich – surprise! – will be fine,” comments Lanchester.
Given that Le Monde newspaper recently used a computer programme to produce some of its coverage of departmental election results and that Lanchester himself reproduces an article written entirely by computer, I find his prognosis a trifle optimistic so far as my own trade is concerned and the list of skills that are likely to vanish indicates that the middle is likely to be increasingly squeezed worldwide.
Of course, the replacement of human labour by machines, the squeezing of wages and the destruction of the welfare state will all vastly reduce markets and be against the long-term interests of capitalism as a system. But those markets were for the most part created by processes that the capitalists themselves resisted, both individually and collectively, and are being destroyed by the immediate concern for the bottom line that is the motor force of private enterprise.
Piketty attributes some of the 20th century’s redistribution of wealth to the effects of two world wars and the 1918 flu epidemic but I doubt if any of us are hoping for similar cataclysms to create labour shortages and disperse inherited wealth.
In my view the key constraint on capital’s unrestrained greed in the 20th century – the principal reason why the welfare state and the social-democratic compromise was conceded – is overlooked or understated by most commentators.
It was fear of revolution.
And, although its full implications are taking time to filter into the bourgeois brain, that fear is no more.
From 1918 to 1989 an alternative economic system to capitalism existed. It turned out not to lead to the liberation of humanity, to put it mildly, but, ironically, it did oblige capitalism to render itself more acceptable. The US’s propagandists even enrolled abstract expressionism and avant-garde theatre in their efforts to portray the West as the home of freedom but, above all, some of the massive wealth that was being created was invested in providing the mass of the people in the rich, metropolitan democracies with higher living standards than their Russian, east European or Chinese counterparts.
Those days are over. With the collapse of the Soviet bloc and China’s conversion to capitalism there’s no need to do that any more – hence austerity as dogma.
Although the 2008 crash brought an end to the post-1989 ideological euphoria, it has not stopped the austerity onslaught.
And why should it?
Consciously or unconsciously, the ruling elite does not feel that its hold on power is under threat, either ideologically or materially.
So maybe Marx’s theory of increasing misery – of all his predictions the one that seemed to be most definitively disproved by the reality of the 20th century – was not so daft after all.
