Friday 11 September 2020

Covid-19, Capital, and the Conservative Party

We've talked about the dead, let us now consider the living. The new measures Boris Johnson announced on Wednesday were certainly, well, confusing. The Rule of Six, redolent of something half-inched from the Marvel Cinematic Universe, prohibits private gatherings of no more than six people. No more house parties, drinks out or a meal if participants exceed the magic number. You won't even have a socially distanced gathering in the park. And then we have the infection rate, which reported over 3,500 new cases on Friday and an official R rate of between 1.0 and 1.2. Local lockdowns are popping up quicker than Russian oligarchs at Tory fundraisers, and Johnson is musing a 10pm curfew. The measures are half arsed and, remember, don't come into force until Monday. You can imagine some, just like the weekend before lockdown, hitting the town one last time before restrictions are imposed - a blow out that can only blow up the positive tests and hospitalisations.

Incompetent and reckless, yes. Incoherent, yes. But isn't it funny how the loops and contradictions in the management of the crisis map onto the Tory party's coalition of interests? Perhaps we need to stop giving the Tories the benefit doubt by putting Coronavirus failures down to their hopelessness. It's time to start treating their decisions as deliberate and pre-meditated. They know what they're doing, and their first concern is not the health of those in harm's way: it's the wellbeing of capital and, in particular, the capital strategically allied to the Tory party.

This is a topic visited here on several occasions. The Tories are not simply the 'party of business', but - like the Labour Party - a coalition of (business) interests whose composition has adjusted over time. There is a certain continuity, however. Keeping the City of London the pre-eminent global hub for currency exchange, brokerage and share trading, and finance is a priority and touchstone of Tory statecraft (and, for that matter, Labour governments too). As such, the bankers, traders, and financiers in the City have tended to look to the Tories for political protection, while personnel flit between the City, the Treasury, and the Bank of England - not to mention around the Conservative social circuit - at a speed matched only by algorithms modelling derivatives. Since Thatcher's Big Bang in 1986, sections of the City closest to the Tories tend to be those who viewed its best interests served by repositioning the City as a no-questions-asked clearing house outside the regulatory reach of the European Union. Another section of the City, particularly those whose commercial interests are tied up with sourcing finance to EU-based firms, take a different view.

Additionally, a subset of the City - finance capital - is closely aligned with the Tories. Based on the creation of debt, this is big capital grown fat off the two property booms of the last 40 years. They simultaneously have an interest in inflating property prices and ensuring supply can never satisfy demand, which creates a synergy of interests with the small but politically important layer of landlords. Limited owner occupation ensures a healthy rental market for landlords, as well as avenues of investment for institutional investors, private individuals, and pension funds. All of a sudden, Tory failures and limited measures on home building and, as we've seen, help for renters, makes perfect sense.

The Tories have always been closely tied to the land. As Geoffrey Ingham notes in his masterful Capitalism Divided? The City and Industry in British Social Development, successful capitalists in Britain have tended to acquire the aristocratic habitus and the taste for a big pile and acres of land as signs of what we now call cultural capital. Jacob Rees-Mogg typifies this tendency. Despite his ridiculous affectations, neither of his parents were drawn from aristocratic stock and his fortune comes from his investments in the City, not inherited wealth. It's a confidence trick repeated by the well-heeled for three centuries, a conscious effort of cultural appropriation to associate one's lofty position not with contemporary money grubbing but the trappings of England's ancient past. In addition to city slickers-turned-country gents, farming, small scale and large, have traditionally looked to the Tories because of ties of loyalty and deference to landowners, but also protectors of the rural interest - above all the supply of cheap, non-union labour to do the labouring and picking. This was guaranteed by a combination of feeble protections for workers, and subsequently shielding them from above minimum wage rises thanks to migrant labour. This intensive use of labour also underpins Tory support from the service industry. The age differentials built into the minimum wage allows big chains and small businesses to simply hire in help cheaply, and the cheapest of workers are, of course, the young. Our good friend Tim Martin is an ideal typical personification of this tendency in capital.

It's worth remembering that capital is a social relationship, but one based on irreducible inequality and exploitation. Those at the commanding end of this relationship - the bosses, the managers, the owners - have a sense for what's good for the immediate interests of their businesses, but this is not based on perfect information and their recognition of their interests are filtered through lifetimes of prejudices and loyalties, many of which reinforced by their lived experience as owners and controllers of the means of production. In some cases, their attachment to the Tories can be viewed in terms of rational choice/rational actor theory, but not always.

But rather than seeing the Tories as the expression of these interests, we should see them as their articulators. The insights of Mao Zedong are not usually aired here, but his discussion of democracy and the mass line is useful for understanding this. He suggested democracy existed in as far as party militants and leaders have a feel for the diffuse currents and interests among the popular classes. These voices are condensed and distilled into slogans, demands, and programmes which are taken to and win over the masses. The democracy, he argues, lies in this process of dialogue, of listening to the people and feeding into strategy. The Tory party works in a similar way, albeit with smaller groups of people. Its reputation as the party of business is alone enough to draw in business support, but it does not need a cabal of the rich to tell them what to do at every turn. To keep the money flowing, it instinctively knows, has a collective feel for the sorts of people and interests it should be supporting - and this feel comes from the traditions, ideas, and the personnel of the Tory party itself. They're embedded in their class, or rather particular fractions of it, and away they go.

How does this work? The contradictions in the Tory coronavirus strategy is a perfect case study. The government's refusal to apply the rule of six to workplaces shows, as far as they're concerned, people are primarily profit fodder. The new control measures are to be enforced in what they regard as the ancillary requirements of labour. i.e. Life outside the purview of the capitalist. Indeed, all throughout lockdown the Tories have fretted over the consequences of furlough and refused point blank to issue a general business closure notice: for most organisations outside of retail and services, whether workers were required was down to the judgement of individual employers. And so, whatever measures the Tories consider over the next few weeks, telling people to stay home is never likely to feature. Labour discipline is at stake. The second is opening the service economy is the attempt to throw a bone to a key layer of Tory support, and it's this undoubtedly driving the newly-accumulating levels of infection. As we know with the panic about ghost city centres and the memes around dying for a sandwich, the Tories want people back in the office so the multiplying effects of passing trade and revive retail - a scenario uniting chain stores and the small newsagent. On top of this is an overall concern with the death of the office. In as far as the Tories have a properly thought out economic strategy, it is clustering as many businesses into big cities to drive up property prices, rents (commercial and residential), and provide a relatively stable property environment for finance capital and pensions funds to profit. There are further happy electoral consequences of doing so too. If this model breaks, those funds, the investments are in big trouble and property-led economics becomes more difficult to sustain. Desperate moves at getting people back into the workplace is to try and derail this move, and protect those vested in the model. But the result? Overwhelming support by business, ostentatiously sympathetic media coverage of the government's efforts to get Britain moving again, and a bedrock of unmovable support in the polls.

On the surface, what the Tories are doing is nonsensical and counter-productive. To get any sense of what's happening, we've got to stop treating Johnson's government as a bunch of incompetents responding to a health problem. The Tories have a political strategy, and their concern is the health of the class relationships they articulate and champion in this period of biopolitical crisis. Rising to the difficulties of Coronavirus demands we have a political strategy of our own that opposes and pressures the Tories, and this is only possible if we are fully aware of what the Tory party is, what they're doing, and why they're doing it.


Boffy said...

"Additionally, a subset of the City - finance capital - is closely aligned with the Tories. Based on the creation of debt, this is big capital grown fat off the two property booms of the last 40 years."

There are two clear and distinct categories here that have been conflated. On the one hand, there is interest-bearing capital that takes the form of fictitious capital, i.e. shares, bonds and derivatives. This is the form that private capitalists now hold their wealth since they evacuated their social function with the development of socialised capital. Because, the owners of this fictitious capital are ultimately dependent on the success of the large scale socialised capital whose creditors they are, and from which they obtain interest/dividends, they are dependent on social-democracy, and in the modern world international social democracy as represented by the EU et al. They are hostile to Brexit.

On the other hand, there are the fund managers, and other City spivs, who rather than being the main owners of this fictitious capital, are the people who make commercial profits, and speculative capital gains from trading in this fictitious capital. They are the type of Rees-Mogg, the ideas of Mises/Hayek/Rothbard are prominent amongst this group, whose ideology is, like that of M,H,R in itself petty-bourgeois, and reactionary, based upon an idea that society could somehow be turned back to a form of pre-monopoly capital - in this they also share the same reactionary petty-bourgeois ideology of the Stalinists and their fellow travellers - of free competition and the nation state. It is they that support Brexit.

Its an impossible delusion as the clock can't be turned back, and trying to do so will simply cause disaster. But, these two contradictory categories representing the interests of two contradictory forms of property socialised industrial capital on one side, and fictitious capital on the other is what is playing out over Brexit, and in society, and is also ripping apart the Tory Party along with it.

Blissex said...

«The Tories are not simply the 'party of business', but - like the Labour Party - a coalition of (business) interests whose composition has adjusted over time. There is a certain continuity, however. Keeping the City of London the pre-eminent global hub»

My usual somewhat different flavour of this analysis, which I think is both more precise and accurate:

* The Conservatives are indeed a coalition of interests.
* Those are the interests of *incumbents*, whatever their incumbency is, and that is the "continuity" factor.
* The main incumbencies in that coalition have indeed adjusted over time.
* The used to be mainly interests of agricultural land, then of imperial merchants, then also of productive businesses.
* They are current mainly the party not of incumbents in productive business interests, but of rentier interests, rentiers in finance and in urban land. Even if the interests of productive business are a close third.
* The common interest between finance rentiers and urban land rentiers is to increase leverage and private debt. Just like the Republicans and the Democrats in the USA and New Labour in the UK the Conservatives are now in effect mostly the "leverage party".
* There are also secondary conflicts of interest: most of finance rentiers prefer higher interest rates, all urban land rentiers want low interest rates, there are different interests between commercial banks, investment banks, hedge funds.
* The critical component for their electoral success is small rentiers in urban land in the south, who give the Conservative party a blank cheque as long as urban property prices boom.

Anonymous said...

How many deaths due to bad/ poor policy? We need an independent investigation.

Anonymous said...

Except 'business' is quite happy for people to work at home for tons of reasons, and in the long term will downsize.

But you're right, property-tied business is in crisis, and is likely to effectively collapse. I expect Canary Wharf to be a largely residential development in 10 years.

Boffy said...

"They are current mainly the party not of incumbents in productive business interests, but of rentier interests, rentiers in finance and in urban land. Even if the interests of productive business are a close third."

But, clearly they are not representative of those rentier interests, because overwhelmingly, other than for a few mavericks, the rentiers, i.e. the owners of shares and bonds in global, multinational companies are hostile to Brexit, and to any form of ultra-nationalism that limits the free movement of capital and labour, which, thereby restricts the ability of the companies to which they have loaned money-capital in exchange for shares and bonds, to produce and increase the profits out of which their interest/dividends are paid!

The interests of that class are represented by the Liberals, and by social-democrats, particularly conservative social-democrats. But, Labour under Starmer cannot even get that right, as it has collapsed itself into a reactionary petty-bourgeois Brexit nationalism for purely short-term, opportunistic electoral purposes to fruitlessly try to win back some reactionary votes, whilst hoping in vain that it will not cause demoralisation in its own ranks, and in the ranks of progressive voters by doing so! Totally pathetic, and almost as strategically inept as Corbyn.

Boffy said...

"most of finance rentiers prefer higher interest rates, all urban land rentiers want low interest rates"

Not true. Higher interest rates means lower capitalised asset value, i.e. a crash in bond, stock and property markets. Given that private capitalists own virtually all their wealth ion the form of such fictitious capital, any rise in interest rates will, and has repeatedly caused the paper wealth of those rentiers to be decimated, requiring central banks to step in, print money and buy up the paper to reflate its price, at the expense of the real economy and real capital accumulation.

The last thing those rentiers want at the moment is higher interest rates, because the absolute amount of addition revenue they would obtain would be miniscule compared to the capital loss they would suffer. The main source of revenues for such elements today comes not from actual revenues derived from the assets themselves, but from the ability to convert capital to revenue, by realising capital gains on those assets, a Ponzi Scheme that can only continue so long as asset prices keep inflating as a result of central banks printing money, and using it to buy financial assets.

Its why after 2008 not only did central banks print money to buy up financial assets, but governments introduced austerity once the economy had been stabilised so as to reduce the supply of additional bonds, and so inflate their price, and deflate yields, whilst also acting to slow economic growth and demand for money-capital to finance real capital accumulation, and thereby hold down real interest rates.

Blissex said...

«I expect Canary Wharf to be a largely residential development in 10 years.»

This kind of thinking seems to me inspired by the usual mistake when talking about the property markets: the imagination that people's choice of where they live is free of other considerations.

Actually most people choose to live within commuting distance of where most jobs are (and tory governments have always subsidised heavily jobs in and around London), and only choose to live elsewhere if they are rentiers, and in that case they choose to live where there are nice amenities, like beaches or ski slopes or good weather.

If Canary Wharf is no longer a concentration of jobs, because of remote working. why ever would people want to live in Canary Wharf to work remotely? Most english people's dream house is a scaled down manor house, they they can feel as if they are lords of their own micromanor. the 3 bed semi with a garden. There are pretty much none of those in Canary Wharf, and it has no ski slopes, no beaches, and the weather is not that awesome either. It is not that far from cultural amenities, but those interest mostly younger and older people without children, while families don't have much time for them.

However not to fear: a large part of the english financial system is heavily invested in London property, via mortgages or directly, and so are a large proportion of Conservative (and New Labour) voters, MPs, and "sponsors". Any Conservative (or New Labour) government will do whatever it takes to guarantee that the cost of London property will continue to double every 7 years "forever". Expect even desperate measures to ensure that remote working won't become common.

Blissex said...

«Except 'business' is quite happy for people to work at home for tons of reasons»

Some yes, some no. Working from home is an ancient tradition, called "putting out" (which usually involves also "piece work" compensation), and most businesses found that while it created a degree of legal separation between them and workers, that also made workers too independent, and harder to control, and as a rule control is more important to businesses, and in particular to their executives, than profits. Perhaps some businesses reckon that apps and video/voice conferencing will enable them to control tightly even remote workers.
An example: I was told by an acquaintance that in her research group their head now requires twice daily, morning and afternoon, all-hands videoconference meetings, in addition to the all-hands weekly progress reports and weekly 1-to-1 progress meetings they already did before the COVID switch to remote working.