Filthy rich

I have long cherished a vision of how a caring, sustainable economy will replace corporate capitalism. I imagine a hacienda set deep in the South American jungle. It is covered with graffiti and has broken windows--markers of previous violent attacks which failed. But the jungle is more persistent and powerful than the colonial power and green tendrils creep around the building and through the windows until it is completely overwhelmed by nature.

I was reminded of this vision when I first heard Rob Hopkins talking about bringing productive trees and plants into the city. Why shouldn't our verges and parks throng with whortleberries and wild strawberries? Here in Stroud the town council has agreed that in future trees planted in the town should be fruit-bearing. We already have one of our main cycleways planted as a linear orchard, preserving local apple species and providing fruit and conviviality in the autumn

Shortly after I read about Havana's organiponicos, or urban gardens, often roof gardens, I gave a talk in Birmingham called 'Who Will Feed the Cities?'. Walking back to the station through the urban moonscape that is central Brum I began to imagine the car parks filled with productive raised beds, and vines and fruit trees trained along the brick facades.

It has cheered me no end to see a similar vision being shared by advertising creatives. I first noticed the Baxters Farmers' Market soup advert, where the urban cat is replaced by a piglet and a bride's bouquet is made of carrots. This was followed by an advert for E-On where giraffes invade the office and a beaver is found in the water-cooler.

It seems to me that this is the opposite impulse to that which continues to drive well-paid executives into the countryside, which they immediately neutralise and suffocate with their 'city ways'. How welcome to see an invasion of the city by revolting peasants and their filth. Tweet

Buying at Rock Bottom, Darling?

In the industrial era the slogan was 'Where there's muck there's brass'. For the post-modernist entrepreneur this slogan has been replaced by 'Where there's risk there's brass'. For such a person Northern Rock is seeming increasingly interesting. This was the appeal for Philip Richards, who bought shares in the ailing bank at the bottom, sensing that the value of the stock would be determined by politics and not by the market.

Richards is Chief Executive of Hedge Fund RAB capital. This has a hugely profitable Special Situations Fund which Richards manages. The fund almost doubled in size during 2005 and by the spring of 2006 controlled more than $1bn. Richards identified a very special situation at Northern Rock and moved in for the kill.

He has now emerged into the media to exert political muscle. Unlike most of us he has the power to be able to produce a comment piece in the Observer and to have a chat with the BBC's business editor on the Today programme. His view that shareholders should have their investments underwritten by the government to allow the bank to continue as a going concern is in reality a request that we should pay him for an opportunistic business investment.

He argues that if shareholders are abandoned then 'the most important role of banking' which he defines as 'to take short-term deposits and lending and turn it into long-term capital and finance' would no longer be attractive because it would not yield sufficient secure returns. In other words, the government should use our money to prop up a financial system that works against our interests and those of the planet; if it does not, the credit/debt that is the lifeblood of a capitalist economy will drain away.

The affair of Northern Rock is becoming an object lesson in how financial value is fought over in a capitalist economy, a process that is usually concealed behind scenic drapery. As with most companies, the citizens of the UK are 'stakeholders' in Northern Rock, some of us as depositors and mortgage-holders. Unusually in this case many more of us (all those who pay taxes) because we have each loaned an average of nearly £1000 to the Bank. Without handy media contacts we have to rely on our elected representatives to ensure that we receive a fair share of the value we have invested.

The affair also makes clear that, in spite of all the rhetoric privileging the market above all institutions, in a democracy power still lies with politicians. When the shit hits the fan it is the job of politicians to make choices and, no matter how large the tent, somebody will be disappointed by those decisions. That is what politics means: either/or not and. Vince Cable for the Lib Dems has suggested nationalisation; in another blog I propose a mutual solution, but it is the Chancellor's job to decide which side his political bread is buttered.

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The Lean Economy?

David Fleming, one of my many illustrious predecessors in the role of Green Party Economics Speaker and inventor of the Domestic Tradable Quota, likes to use this phrase to refer to a post-carbon world where we are more careful with things. I dislike the phrase and can't help thinking it displays his cultural origins in the 1950s and probably a mother who saved margarine tubs. I remember clearing out hundreds of these and similar junk when my grandmother moved into a home some years back. Ok they were, in relative terms, highly useful items, and had considerable embodied energy, but in the high-consumption world we live in today they were just pointless clutter.

Perhaps that is partly Fleming's point. In response to a similar concern with ever-increasing consumption that does nothing to add to human happiness I wrote an article called 'Sen and the Art of Market Cycle Maintenance'. It was published in the same issue of the FEASTA Review as Fleming's piece but an editorial decision was taken to retitle it 'The Freedom to be Frugal'. I was distressed by the taming of what I considered a swash-buckling title, but more so because I just don't think leanness or frugality will sell well. The convivial economy is far more appealing, suggesting better relationships, more music and dance and sharing of meals; in short, more fun; less stuff.

The point I was making in my article is a simple one: the relative definition of poverty is itself a contributor to the cycle of economic growth, as it colludes with the advertising industry to persuade us that we are deprived if we do not have the latest consumer gadget. Poverty is measured in terms of lists of consumer goods, ignoring the most important aspects of the deprivation we face as we see our natural world devastated and the quality of food and other essentials deteriorate.

In the Thatcher years leanness was considered a laudable quality of 'efficient' companies, by which was meant companies who had removed as many jobs as possible from their operation and exported the remainder overseas to countries where poverty wages and Dickensian employment conditions are still acceptable.

The private sector was keen to slim itself down; the public sector, where unions were stronger, less so. Modernisation was called in to do battle against flab, leading to the agencification of the civil service and more swingeing destruction of jobs. Even before the disastrous evidence of incompetence emerging from HMRC this week it was obvious that the ever-shrinking number of public employees, downskilled and demoralised, were simply not doing an adequate job. Complex phone-switching routines and elaborate computer systems can never substitute for personal interaction, especially where, as in the case of so many government services, intimate and sensitive issues need to be discussed.

So, while the population grows ever fatter our workplaces are becoming increasingly lean. Could we perhaps suggest a relationship between the two? Might the days spent in lean and fit working conditions lead to such despair that we can find no comfort until we reach the relative safety of our homes to slump onto our sofas with fatty meals and cream buns? Ideas merchant though I am, I don't expect to find myself selling 'frugality' with much enthusiasm. I think have more of an affection for a little bit of slack.

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Currency for the Little Big Man

I've often been surprised by the many and varied radical economic initiatives coming out the USA which I have, in my Chauvanistic way, conceived of as the belly of the beast of global capitalism. Well, I suppose the latter is probably largely a correct view, and it is perhaps not surprising that those who live closest to the epicentre of the exploitation have been the most effective at resisting.


In his excellent book Money and Liberation, Pete North describes the struggle to maintain democratic control of the issue of currency in the post-Civil War US. Farmers organised against the 'tyranny of organised capital' and called for democratic paper money rather than the gold-backed money which allowed elites to dominate the economy. Their struggle culminated in the presidential race of William Jennings Bryan as Democratic candidate in 1896. He lost to McKinley, whose campaign had been supported by the plutocrats who reordered US capitalism and tied the dollar back to gold.



In the 1930s, following the collapse of this phase of capitalism, farmers in the South and West of the US again responded by producing their own currencies, known as 'scrip issue'. Nobel Prize-winning economist Irving Fisher supported this development, as did Upton Sinclair in California. His End Poverty in California movement promoted scrip issue as a means of exchange between co-operatives.

In the US today complementary currencies are more about ecological imperatives than poverty, but from Berkshares to Ithaca hours they are providing inspiration and underwriting alternatives livelihoods.

Given this history we should perhaps not be surprised that last week FBI agents raided the offices of the Liberty Dollar in Evansville, Indiana and confiscated the precious metals used to back this local currency. The activists who created it are reacting against the link between the dollar and global hegemony and war, as well as sharing the general loss of confidence in the dollar as reserve currency. Confidence in the dollar is falling globally and several of the nations who are bankrolling the US by buying government bonds could pull the plug on the whole US economy at the time of their choosing.

Aside from control there are sound financial reasons why bankers wish to keep control of the issue of the money we need to function in a complex economy. Conall Boyal has calculated that, if the Chancellor took the seignorage on money created by private banks there would be an extra £80bn. in the UK kitty. At present this money stays as bank profits. See more here: http://www.conallboyle.com/housing/SeigniorageBromsgroveoct07v2.ppt#22

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Rock and Roll Suicide

The immediate crisis at Northern Rock has passed, but only because the government has spent an estimated £40bn. of our money preventing the bank from collapse. This was a desperate strategy, only resorted to because of fears that the collapse of Northern Rock might lead to the failure of other banks and eventually the collapse of the whole banking system.

This is a huge public investment, of the same order of magnitude of the whole of health spending in one year, which is somewhere above £50bn. these days. It raises several questions about the meaning of a democratic society. Perhaps the most important is why a reckless financial institution, that produces nothing of value, can be bailed out in this way, while countless manufacturing companies which produce useful goods and employ many more people have been allowed to fold to conform to the iron law of the market. Clearly, the interests of capital carry more weight than the interests of labour.

The most important questions to be decided now are who should bear the loss of the bad investment decisions taken by the bank's board, and who should see the value of the assets it still holds. Should the British public really be asked to compensate shareholders who made poor judgements? They see the gains when their tricks pay off; what sense can there be in calling this a financial market if they do not also see the losses?

In terms of the assets the vultures are circling hoping to prey on the carrion at the expense of the British public. An offer to pay £1 for the bank is not a generous bid but rather a grab for the significant assets still owned by Northern Rock. Of the 'bidders', Branson and Flowers have both been the beneficiaries of government largesse in the past and scent the opportunity to make a killing. The fee for saving the government's political bacon can be a generous one, giving new meaning to the phrase 'laughing all the way to the bank'.

A financial institution that was once a staid and responsible building society, operating for the mutual benefit of its mortgage-holders and depositors was transformed by demutualisation into a victim of destructive financial speculation, mediated by greedy shareholders who believed in returns to-good-to-be-true and the wideboys to whom they relinquished control of financial destiny.

As an alternative to a state-sponsored corporate buy-out, nationalisation of the bank has been mooted. But rather than a nationalisation resulting in state ownership surely a remutualisation is a better solution. Shareholders, whether instutitonal or personal, can lose their stake as a lesson to themselves and others about rapacious expectations and dodgey dealing. The government can limit public investment to ensuring the value of depositors investments, while the remaining assets of the bank will be the homes of its mortgage-holders.

Governance can revert to an board elected from among the lenders and borrowers of the building society, as was traditionally the case. Calls for independent financial experts to play a major role have surely been utterly undermined by the disgraceful performance their have displayed thus far in this and other banks the world over.

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Competing definitions of a free market

The Competition Commission has found that supermarkets serve customers well. According to the limited economistic, marketistic mindset from which they see the world this is actually the correct conclusion. It is that mindset, and its political support, that we need to unpick in order to understand how they could have arrived at this frankly shocking conclusion.

The problem we face is that, as a society, we are undergoing a paradigm shift. For those of us living in the sustainable world of the future, diversity means a range of types of shopping, different shops or makers selling subtly different versions of the same product, or whose ownership structure or style suits our value system. To the Competition Commission diversity means four monocultural shopping outlets within which you can buy a range of 100 different fish all of which taste of very little. If you only have one of these you lack competition; if you have two the free market is functioning well for you.

For the proponents of supermarkets they are efficient places because you can buy everything you need as quickly as possible for as little time as possible, allowing you more time to make money to buy more. As a capitalist production-and-consumption unit supermarkets allow you to be as efficient as possible. The fact that they rely on global agribusiness which uses 10 calories of energy to make 1 calorie of food (according to Richard Heinberg) does nothing to undermine their claims to efficiency.

Although such reports can lead to unhealthy gnashing and grinding of teeth the real problem is a political one. We are building the new, sustainable, community-focused world we want to live in. Nowhere is this more evident that in the area of food, where most greenies use an alternative system of wholefood shops or have their own wholefood co-op. The producers and distributors, many organised as co-operatives themselves, provide a parallel food economy based on the values of the future.

The problem is that the political parties who operate at Westminster are united in their support of the old way of economics. An enlightened government might link support to local businesses with their positive outcomes in terms of community and sustainability. A restructuring of the market to support local businesses rather than the global businesses who free-ride on the infrastructure we all pay for, and the commons we should share, is politically possible, but only once the stranglehold of the uniformly pro-market parties is broken.

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The Fat of the Lambs

Half a million lambs will be slaughtered but not eaten as a consequence of the latest outbreak of foot and mouth (http://www.guardian.co.uk/animalrights/story/0,,2201110,00.html) Is this a moral, ecological or economic disaster?


In an attempt to increase the 'efficiency' of this process some of the animals' fat will apparently be rendered into biofuel. It is a wonder to me that anybody has the machinery standing idle to perform such a grisly task. Surely the recyclers of used chip fat cannot turn their skills to rapidly towards the unwanted carcases of animals formerly destined for dinner tables?


The anguish over the 'cull' (aka kill) of animals during the first round of foot-and-mouth was always a mystery to me. Why such an outcry over the deaths of animals bred to be killed and eaten? Where did this mawkish sentimentality come from when those who displayed it were not concerned about tucking into to roast lamb and all the trimmings of a Sunday lunchtime?



Aside from this parade of phoney morality there are some genuine ethical issues raised by this whole debate. First, whether it is ever acceptable to eat the flesh of an animal. I am happy to do that when I know the animals have enjoyed respected during their lives; in the case of my own meat I have known the animals by name and been able to interact with them. Counter-intuitively this makes it easier to eat them rather than harder.


Other difficult questions--as yet unresolved to my satisfaction--revolve around the question of whether a wholly vegetarian lifestyle is more ecologically sustainable. I have not yet seen convincing evidence that the UK could be self-sufficient in food grown without animal or oil-based fertiliser. Too many vegans in the UK today are forced to eat a large range of imported foods, especially beans and pulses.


Then there are the double standards of those who are vegetarian and continue to eat dairy, when the dairy industry is closely tied to the meat industry, since male calves can only be put into the food chain or destroyed (http://www.vegaresearch.org/foodnut_vegani_going.asp).


It seems to me that the central economic problem we face here is the setting of all these questions within an intellectual framework dominated by market and profit. The 'wasteful' slaughter of cattle and sheep during a foot-and-mouth outbreak is entirely market-driven. Vaccinated animals are not acceptable for the export trade, while animals that have survived foot-and-mouth (as most do) will weigh less and therefore generate less profit for the cost of raising them. Since they offer no threat to human health, they could otherwise pass into the food chain as they do in other countries.


In a similar way the Welsh and Scottish hill-farmers are involved in production on an industrial scale that cannot allow for flexibility in terms of the quality of product (slightly older sheep) or when it reaches the market. No doubt the lamb that will be produced over the next few weeks would be welcome to many hungry mouths in this country and abroad. But this would be to 'distort the market'. Similar arguments were made during the Irish potato famine when oats were being exported to feed horses in the UK while Irish people starved.


The story offers yet more reasons why we should explore the ethical underpinnings of the market within which food is produced, which was always a social construct and therefore open to a different system of values and to a radical reconstruction in line with the general welfare, rather than the profit margins of the large-scale businesses who have created the dubious and far-from-free market we operate within today. Tweet