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...continued from previous page 12 & Cooking the Books 1
Furthermore, home-ownership, whether true ownership or via Crown lease, is not all that it’s cracked up to be.It does not in itself remove a person’s status as a wage worker, and a mortgage is an enormous burden on most workers (witness the number of repossessions). Cahill asserts that increased home ownership leads to increased prosperity, but he never considers that the causality might be
the other way round, that higher wages might lead to more workers owning their homes. In fact, from a comparative viewpoint, there seems to be no necessary connection here at all: his figures for owner-occupation in Europe show that
Ireland, Spain and Greece have the highest rates (over 70 percent), while Sweden, Germany and France are at or just under 50 percent. Cahill’s bizarre description of Ireland as ‘the most advanced capitalist country on earth’ only makes sense on the basis of a very odd idea of how to measure such advancement.
He also goes wrong in describing a home as ‘capital’: the house you live in is not used for investment or productive purposes. And there is no such thing as a right to shelter, nor any point in putting such a ‘right’ in a country’s constitution.
What matters is the effective ability to buy or rent a house or flat, not some abstract unenforceable ‘right’.
Much of this book is directed at landowners, complaining about the kind of subsidies they get from the taxpayer, which means other members of the ruling class. The capitalists think that landowners are unproductive and merely monopolise something which is in short supply and can therefore receive massively high rents, which are a drain on the capitalists’ profits. The idea of taxing land values as a way of hitting landowners and cutting taxes on other capitalists has been around for many years and was recently revived as a way to ‘make the New Labour project actually work’ (Ashley Seager, Guardian, 8 January). Socialists
have always refused to take sides in debates about how the capitalist class distribute the paying of tax among themselves.
Cahill’s pro-capitalist views are clear from a throw-away remark about the unions having been out of control and needing to be tamed by Thatcher. He does at one point come close to seeing the real problem, when he writes that poverty is caused by exclusion, specifically by exclusion from ownership and use of, and
access to, land. However, there is an extra step (or giant stride) which needs to be taken, to realise that this exclusion must be seen in terms of workers being excluded from ownership and access in the means of production in general, not just land but also factories, offices, shops, warehouses, etc. It would be unreasonable in the extreme to think that one book, written by one individual, could have assembled information about the ownership of all this as well as the land. But increasing home ownership and letting people own land directly will make no impression on the capitalist class’s monopoly of the means of production, and that is what needs to be done away with.
Venture or
vulture?
According to the GMB and T&G unions,the Sainsbury supermarket chain is under threat. It’s reported that the Sainsbury family – including former Labour minister and Labour Party bank-roller, Lord Sainsbury – want to withdraw their capital and that “venture capitalists” are grouping to buy them out. That’s what they call themselves. Others have different names for them. A GMB official called them “plunderers” while one
from the T&G said they “do not create wealth; they extract it for their
shareholders” (Times, February).
A German minister once called them “locusts”. Other choice descriptions
are “corporate raiders”, “predators”, “vultures” and “asset strippers”.
Socialists apply some of these descriptions to all capitalists, but
what have these particular kind of capitalists done to earn such epithets
even from non-socialists?
Basically, they borrow money to set up a short-term fund (usually for
5 to 7 years) which they invest in other companies either to start them
up or take them over. The venture capitalists then run the business
hoping to make enough money over the period to pay a higher than normal
rate of interest to those who put up the money and to make a profit over
and over this for themselves. Rates of up to 40 percent a year have been
mentioned.
The immediate effect on the business they take over is that its
indebtedness increases. Ordinary shareholders only have to be paid a
dividend if the directors think enough profit is being made. Lenders have
to be paid interest irrespective of whether or not the company makes
a profit. Venture capitalists are in effect agents for lenders who take
over running the company to ensure that these get their pound of flesh
and over a relatively short period of time Then they move on to the next
company.
It is easy to see why the unions don’t like this since the main means
venture capitalists use to increase the short-term profits they are after
is to hive off or close down the less profitable sections of the business
with resultant job losses, so as to concentrate on the most profitable
ones. The screws are then tightened on the remaining workforce to extract
more work – and surplus value – from them than before.
The unions have promised an “ultimate showdown” with any venture
capitalists that might assume control of Sainsbury’s. It is not evident
that they have the industrial clout to organise and sustain the sort of
strike this implies. More probably this is just a bluff to try to deter the
venture capitalists from proceeding.
The unions are also lobbying to end the tax concession on the money that
venture capitalists borrow; in this they have the support of some ordinary
capitalists who feel discriminated against when it comes to taking over
other companies.
In the end, nothing much is likely to be done about “venture capitalism”.
After all, from capitalism’s point of view, they are not doing anything
wrong. In fact, they are only doing what comes naturally to capitalists:
trying to make the biggest profit they can.
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