Move Your Money!

At last - something you can actually do to show your revulsion against the destructive behaviour of bankers and financial engineers. Today the Move Your Money campaign is launched. Its aim is to recreate the enthusiasm for an entirely alternative, non-capitalist economy that was typical of the early days of co-operative - beginning with the finance sector.

As Ed Mayo, Secretary-General of Co-operatives-UK says, 'Move your money is the new fair trade. It is THE campaign for our time.' So if you still have a bank account with a bank it really is time to change that. And then you can move your mortgage into the mutual sector as well.

Once you've started there is no stopping: mobile services, internet, phone, insurance: they are all available via mutual or co-operative providers. With the launch of Co-operative Energy you can sign up to electricity and gas tariffs that don't line the pockets of any shareholders. And of course there have always been The Co-operative food shops and John Lewis for household goods.

This is an important step on the road to defeating capitalism: not by a revolution but by just deciding we don't want to play along any more and using the alternative, co-operative economy that has always been there.
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From Democracy to Plutocracy

Davos is over: the corporate power-brokers have returned to their notional national boundaries and their over-priced lives, leaving the rest of us to struggle through the disaster that their version of a global economy has bequeathed to us. More than anything else, this annual ritual of the wealthy on the piste makes clear where real power lies in the 21st century world.

It is in Greece, however, that we will see the battle for power, the battle between the ideas of democracy and capitalism, fought out in the coming days. The struggle for the future of Greece is too symbolic to be other than a cosmic joke: the origin of the word 'democracy' becoming the site of its demise. Although since Athenian democracy vested power in the hands of a tiny elite supported by slaves may mean that it is apt that it is also the backdrop for the global challenge to a system of rule by the people for the people.

The decision by Brussels that Papandreou should not be allowed to hold a referendum, followed rapidly by the replacement of democratically elected politicians with bankers, and the agreement reached by 26 EU members that they would allow unelected European officials to control their domestic economic policy have all made clear that the interests of finance are taking power away from the people who vote and the politicians they choose.

Over the weekend the German economy minister Philipp Roesler took the dangerous next step along this path by proposing that Greece should explicitly give control of its economic policy to European bureaucrats. This is just a natural extension of what happened in Marseilles and might be a threat that is coming the way of other countries soon. In spite of its historical resonance it is not the fact that this proposal was made by a German that matters, but the fact that democratic politicians are to be replaced by technocratic lackies of the financiers.
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Squandering the Wealth of Life

In the immediate aftermath of the 2008 financial crisis, Bank of England staff attempted to estimate the financial costs to the UK economy. In 2009 Andrew G. Haldane, Executive Director for Financial Stability at the Bank estimated that the permanent loss to the UK economy from the banking crisis was anywhere between £1.8trn. and £7.4trn.

The softer, less measurable, more human consequences are only just now becoming clear. A paper in the Lancet in July 2011 began to measure the impact of the 2009 crisis on health, and specifically on suicide rates. Economic crises unsettle people in various ways, but the most obvious, pressing and observable is the loss of employment, which quite literally kills. The authors of the paper considered the pre-2004 EU members and the more recent members separately.

The graphic from the paper reproduced here compares unemployment rates amongst adults with rates of suicide across the EU. Unemployment began rising rapidly in 2009, with a 35% increase over 2007 levels. Shockingly, however, the increase in suicide preceded this, suggesting that it results from fear of unemployment and general rise in anxiety as a result of the instability caused by financial shock. As the authors conclude:

‘the steady downward trend in suicide rates, seen in both groups of countries before 2007, reversed at once. The 2008 increase was less than 1% in the new Member States, but in the old ones it increased by almost 7%. In both, suicides increased further in 2009. Among the countries studied, only Austria had fewer suicides (down 5%) in 2009 than in 2007. In each of the other countries the increase was at least 5%.’

The fact that it is fear and uncertainty that causes suicide, as well as the reality of unemployment and poverty, indicates the irresponsibility of the Coalition strategy of creating an aura of austeria in order to make it easier to impose their draconian cuts. This undermining of social confidence can itself cause increased rates of suicide, which are only a marker of more general social dis-ease.

Greece gives us an indication of the future for the people of Europe if these desperate austerity measures are continued, a policy that Cameron recently argued for at Davos. Official statistics for that country indicate a 40% rise in those taking their own lives between January and May of 2011. Studies of rapid social change repeatedly indicate that the increase in uncertainty and the fraying of the social fabric are not only politically dangerous but also very destructive to human life and health.
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Institutional Racism

The indifference of the Metropolitan Police to the murder of Stephen Lawrence rightly led to private soul-searching and public examination of procedures, and we have to hope that our country and particularly our police service is better as a result. But there is a more insidious form of racism that goes unquestioned and causes the death of far more people. This is the racism of an economic system that values the lives of the poor differently from the lives of the rich.

According to a recent blog post, such an attitude was subscribed to back in 1991 by Larry Summers, tipped to become the boss of the World Bank, and therefore one of the most powerful people in the global economy. According to the totally undemocratic procedures by which the global financial institutions are run, the Europeans choose the head of the IMF while the head of the World Bank is a position virtually in the gift of the US President, and the rumour is that he is thinking of giving the job to Summers.

US blogger Doug Henwood cites a memo issuing from Summers's office back in 1991, when he was the Bank's Chief Economist. The memo explains why Africa is seriously under-polluted and argues for the Bank to encourage highly polluting industries to move to Africa because this would be so much more efficient. The efficiency arises from the fact that paying compensation for the deaths of Africans is so much less costly than paying for the deaths of US citizens.

The author of the memo writes that 'I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.' The argument is that should there be a claim for damages, the costs would be based on the economic value of the people who died, that is to say their potential lifetime earnings. Since Africans earn so little their deaths would cost polluting companies relatively little.

In spite of the morally outrageous nature of this reasoning, and the blatant racism that lies behind it, this sort of costing of human lives is fairly routine amongst neoclassical economists. A seminal paper in the field cites that value of human lives, based on earnings potential, as ranging between nearly $10m. if you are Canadian to a mere $0.8m. if you are South Korean. The African countries favoured for pollution dumping by Summers and his ilk do not have enough money to invest to be part of these studies.

The estimates vary widely, suggesting that the methods as well as the morality lying behind these sorts of studies is grossly unreliable. Yet it is on this sort of basis that decisions are made about the siting of factories and the disposal of the noxious effluent of Western lifestyles. Those debating the future of capitalism should take note: the challenge to values needs to run much deeper than merely questioning relative wage differentials in the wealthy economies of the West.
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Community Currencies Invade Dark Towers of Davos

The global elite, the men we have come to know as the 1%, will be assembling soon in Davos, Switzerland to discuss the global economy over which they have so much power. This year's conference is organising under the rubric 'The Great Transformation: Shaping New Models'. It the reference to Polayni intended or accidental? It certainly gives intellectual scope to those of us who who seek to unwind some of the worst consequences of the original transformation from an embedded to a capitalist economy.

One idea that they will encounter is certainly a challenge to the centralised finance that has been such an important driver of the economic crisis. John-Paul Flintoff has published an article about alternative currencies in the mainstream business magazine CNBC Business, which he assures me will be distributed in hard copy to all Davos delegates.

Is capitalism compatible with barter? I would suggest not, but if there is a way to extract an unfair share of value from others' work, the Davos delegates are certainly the people to find it.
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Clegg Stuck on the Capitalist Fence*

As we seek to find an alternative to the discredited corporate capitalist model of enterprise it is vital that we understand clearly the range of options on offer, which is why Nick Clegg's confusing statement about the John Lewis economy is particularly unhelpful.

John Lewis is a company without shareholders, whose value is vested in a Trust and can only be shared between the company's employees. This is quite distinct from a standard corporation which allows its employees to buy some of its shares while its management is free to inflate profits by risky endeavours or extract value in bonuses. While John Lewis employees receive a share of the profits they generate, employees of share ownership schemes might find, like the employees of Enron, that they lose not only the value they created but also their jobs and their pensions.

Understandably, those who currently profit from others' work via their share ownership are nervous about the suggestions that workers might keep all the value of their work themselves. The response to Nick Clegg's speech from the Financial Times includes the expression of these views from the side of capital, skilfully woven in with the completely distinct anxieties expressed by Charlie Mayfield, chair of the John Lewis partnership.

Unsurpsrisingly, most of the discussion entirely avoids considering the option of a full-scale co-operative business, where risks and rewards are shared between those who work in the business, who are also its owners. The suggestion that workers might own and control their workplaces is part of the real alternative that may not be articulated. Whether we look to the Basque Mondragon Group or our own Suma Wholefoods co-operative we see a model that is stable, sustainable and just: a model that could form the basis for a national economy we could all buy into.

*An edited version of this letter was published in today's Guardian.
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Currency Warts and All

As the struggle for dominance in the 21st century global marketplace intensifies the battle over which currency that economy will be denominated in is becoming more explicit. Can we see Osborne's appeals to China to use London as its banker to Europe and the world as the final betrayal of the dollar empire?

This blog has been following the currency wars and I have long been calling for a globally agreed trading currency. This is also the preference of the Chinese, who understand the risks that come with being the banker to the world and are apparently not seeking to take over from the US the role of global hegemon and global policeman that so often accompany the role of banker to the world.

More importantly, the renbinmi is not a convertible currency but is still controlled by the Chinese government. Although this value of external trade balances settled in the currency has increased rapidly in the past couple of years, this is a fraction of the global trade in dollars. Since the currency is tightly controlled it is also not held in reserves – the other key feature of any candidate for status of global currency.

China has long been calling on the IMF to extend the role of SDRs (special drawing rights) so that they can become a de facto global currency. In this context perhaps we should interpret today's intervention by Osborne as not only an attempt to tout for banking business but also an attempt to pressurise China to take on more of this role itself. Such a decision deeply affects the peace and stability of the world and should be taken, rather than via press release and bilateral discussions, in a full-scale global conference to remake the world economy and to focus on the need for stability, sustainability and equality.
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