Labour’s interim report on the UK economy

John McDonnell, the finance spokesman (‘shadow chancellor’) of the British opposition Labour Party, recently commissioned a report on the state of the UK economy and what is to be done.

McDonnell is characterised in the British capitalist media as a die-in-the-wool Marxist and his commissioned report was carried out by GFC economics, founded by Graham Turner since 1999. Turner wrote No Way to run an economy back in 2009 which drew on the ideas of both Keynes and Marx for his analysis of the crisis in global capitalism.

The report presented by GFC, Financing Investment: Interim report, provides us with a meticulous investigation of the failure of British capitalism to invest productively to deliver better productivity, incomes and employment.  The report exposes the failure of the UK banks to direct lending into productive sectors instead into speculative financial and unproductive property assets.  Thus, UK productivity performance is extremely poor, R&D spending is low and innovation is limited.

The capitalist sector of the British economy has failed to deliver for the needs of people, although it has delivered higher profits and house prices and a booming stock market.  Real disposable income per head has not risen since the end of the Great Recession.

And yet house prices have rocketed.

The GFC report echoes what other recent reports on the UK economy have pointed out (Time for Change: A New Vision for the British Economy,The Interim Report of the IPPR Commission on Economic Justice).

Both the GFC and the IPPR show that UK productivity has stagnated since the global financial crisis. Real output per hour worked rose just 1.4% between 2007 and 2016. Within the G7, only Italy performed worse (-1.7%). Excluding the UK, the G7 countries have experienced a 7.5% productivity increase over this period, led by the US, Canada and Japan. In addition, the ‘productivity gap’ for the UK – the difference between output per hour in 2016 and its pre-crisis trend – is minus 15.8%; while the productivity gap for the G7 ex-UK countries is minus 8.8%.

The GFC report confirms that British capitalism is a rentier economy , concentrated on finance, property and business services.

Tony Norfield in his book, The City, reveals the dominant role of finance in the history of British capital.  Now this seems to be at the expense of productive sectors like manufacturing and hi-tech. UK’s output of high-technology industries has fallen by an average of 0.4% y/y over the past ten years.  Only Sweden has experienced a bigger decline.

Overall business investment languishes at the bottom of the 34 OECD economies.

As a result, British workers are increasingly employed in low wage sectors (or self-employed), particularly for those regions outside London and the South East.  Britain has a distorted economy, relying on finance over technology and concentrated in the south-east.

Business enterprise R&D also experienced a secular decline relative to GDP during the 1980s and 1990s, dropping from 1.41% in 1981 to a low of 0.96% in 2005. Successive governments have failed to invest in the UK’s long-term future. R&D performed (i.e. undertaken) by the government (including research councils) declined from 0.46% of GDP in 1981 to 0.11% in 2016 (chart 11).27 The UK’s share of government spending is well below the European Union average (0.23%), for example.  The UK’s educational performance is mediocre.

The GFC report points out that Britain’s banking sector has dismally failed to support productive sector investment and growth.  This  is the same conclusion that the report on banking by the UK Firefighters Union (authored by Mick Brooks and myself) reached back in 2013.

As the GFC report puts it: “A dearth of lending to key industries indicates that banks are failing to help UK businesses to invest.” The outstanding stock of loans to smaller companies has dropped from £197.8bn in April 2011 to £165.4bn in October 2017

Instead bank loans have poured into real estate.  The productive sectors of manufacturing, professional scientific & technical activities, information & communication and administrative & support services account for 28.7% of real GDP. But loans outstanding to these four sectors total just £108.82bn, or 5.5% of GDP.  This is less than the total of loans outstanding to companies engaged in the buying, selling & renting of real estate (£135.97bn or 6.9% of GDP).

The message from the GFC report’s analysis is that, while the media goes on about the impact of Brexit and austerity on the UK economy, there are other even more serious long-term structural defects in the model of British capital that even an end to austerity or a reversal of Brexit would not overcome.

So what is to be done?  The GFC’s interim report says that a Labour government should set up a Strategic Investment Board to coordinate R&D, commercialisation and information flows.  This board should be situated outside London and the Bank of England should also be relocated to Birmingham, England’s second largest city.  This would concentrate efforts to revive productive industry and rebalance the economy regionally.

Now the latter idea has captured the media headlines, as has the proposal to widen the ambit of the Bank of England to beyond just an inflation target to include growth and employment (similar to the objectives of the US Federal Reserve).

But that’s it.  The question to be asked is whether setting up an investment board and moving the Bank of England is in any way sufficient to raise productivity and growth and boost real incomes, education, training and decent jobs.  The GFC report comments that “Existing banks left to their own devices may struggle to change. Politicians and regulators have failed to prepare the existing banks for the challenge posed by a new era of technology. They have not ensured that banks play their part in supporting the growth of new businesses. Instead, banks have entrenched their focus on unproductive lending.”  But there is no call for public ownership of the major five banks, let alone the key strategic industries in the productive sectors.  That would surely be needed if any plan for investment and innovation could be effectively implemented.  If the capitalist sector remains dominant, then the state investment bank will be insufficient.

Worse, even the less than radical policy of a state investment bank has been greeted with hostility by the big investment banks in the finance sector.  Morgan Stanley, the American investment bank, reckoned that a Corbyn-led government would be a disaster for British capital.  As it put it: “For much of the past 30 years and more, a change of government ultimately had a relatively limited impact on the UK equity market, as policy settings didn’t change too dramatically. However, this may not be the case if we see a Labour government take power under its current leadership, given its very different policy approach.”  In other words, up to now, a Labour government has been no threat to the established order, but a Corbyn government could be.  “It is certainly plausible that the Labour party could ultimately moderate some of its more radical policy ideas; the alternative could be the most significant political shift in the UK since the end of the 1970s.”

Corbyn responded by agreeing with Morgan Stanley that it was right to regard him as a threat, pointing out that it was the likes of Morgan Stanley who were the same “speculators and gamblers who crashed our economy in 2008”… Nurses, teachers, shopworkers, builders, just about everyone is finding it harder to get by, while Morgan Stanley’s CEO paid himself £21.5m last year and UK banks paid out £15bn in bonuses,” Corbyn said.

But, ironically, some of Corbyn’s economic advisers went out of their way to argue that Labour’s investment plans were not damaging at all to big business.  Indeed, they could help capitalism save itself.  Ann Pettifor, director of Policy Research in Macroeconomics (PRIME), a Keynesian think tank and author of a recent book advocating ‘breaking the power of bankers’ through the injection of more money credit with people’s QE, wrote that the GFC report shows that business could prosper under a Corbyn government.

Pettifor reckons that “Labour’s public spending plans will boost investment, with contracts that largely benefit the “timid mouse” that is the private sector. In other words, the “roaring lion” that is a government backed by a central bank, will, under Labour, at last take action to stimulate a private sector that has significant spare capacity; one not yet fully recovered from the catastrophic impact of the great financial crisis and that still lacks confidence.”

In other words, more public investment and BoE monetary support can help Britain’s capitalist sector get going and deliver on investment and growth.  Thus we are back with the same old Keynesian reformist view that capital just needs a helping hand from government, not its replacement.  As Marxist economic blogger, Chris Dillon commented, “The difference between Marxists such as me and social democrats such as Ann is, I suspect, that we are more sceptical than she is of governments’ ability to fix capitalism.”  Moreover, as Geoff Mann showed in his recent book, Keynesian policy prescriptions dominate labour movement thinking because they appear to offer a way out short of a revolutionary transformation.

As usual, the question that is not asked is why British capital does not invest enough to boost productivity.  Yes, it is partly because the UK is a rentier economy that aims at unproductive parasitic accumulation of surplus value from others.  And yes, it is partly because British business in particular has preferred to employ young and cheap immigrant labour in ‘precarious’ employment of zero hours, short-term, temporary and part-time contracts rather than invest in training long-term staff.  It’s been a cheap short cut to more profits.  But that shows the basic contradiction of capitalism.  Capitalist production is for profit not for need; for profitability not productivity.

And profitability in the productive sectors of the British economy remains low relative to before the Great Recession and even back to the 1990s.  Profitability reached in peak in 1997.  Since then, overall profits have risen in nominal terms by about 60%.  But despite the credit boom of the early 2000s and the recovery since the Great Recession, profitability (ie profits per the stock of capital invested) remains below that peak.  As a result, British capital has invested in financial assets or hoarded cash in tax havens or invested abroad rather than in the UK.

Thus it should be no surprise that UK businesses stopped investing in productive capital.

A National Investment Board will do little to alter that.  As I have argued before, the ratio of investment in the capitalist sector compared to the public sector is 5 to 1.  The NIB could raise public investment as a share of GDP by 1%. But An investment strike by capitalism will not be compensated for by a government-led investment programme that just adds 1-2% of GDP in investment when the capitalist sector invests over 15% of GDP.  And the latter will not be touched.  Contrary to the view of Keynesians like Ann Pettifor, the chair of JP Morgan, the US investment bank put it: “I would put quantitative targets on things that are under governments’ control and national GDP growth is not,” Dr Frenkel said. “As much as you’d like to jump 5 metres without a pole you will not be able to.” 

Surely the obvious conclusion from the defects of British capital exposed by the GFC report is that the major banks and strategic sectors of the British economy (transport, pharma, aerospace, autos, telecoms and utilities) need to be brought into public ownership to make any investment plan really work in delivering higher productivity and good secure wage jobs?

Yet that is not the programme (yet) of the Labour leaders. If a Corbyn-led Labour government should come to office in the next year or few, it will be faced with the wrath of the right-wing media and the likes of Morgan Stanley, but without the economic programme to defeat them.

35 thoughts on “Labour’s interim report on the UK economy

  1. You write:
    Surely the obvious conclusion from the defects of British capital exposed by the GFC report is that the major banks and strategic sectors of the British economy (transport, pharma, aerospace, autos, telecoms and utilities) need to be brought into public ownership to make any investment plan really work in delivering higher productivity and good secure wage jobs?

    But how do you get from where we are now to where you want to be?
    The statement implies either:
    1 the state raises money to buy out these corporations at some agreed price
    2 the expropriation or purchase at below the price the present owners want.

    The politics of both measures look challenging, to say the least.

    Perhaps there needs to be a transitional step;
    1 Require all companies doing business in the UK to have a firm incorporated in the UK. That will cut out all goods and services providers that at present supply buyers in the UK without having a UK base
    2 Stipulate that all corporations must maintain a minimum ratio between sales in the UK and the assets of its UK firm (say £1 of balance sheet assets for every £1 of annual sales)
    3 Require all UK incorporated corporations to hold a minimum proportion of their balance sheet assets in tangibles (buildings, machinery and other equipment). At present, the largest corporations listed on the London Stock Exchange hold on average only about 10 per cent of their balance sheet assets in tangibles. Perhaps it could be set initially at 50 per cent.
    This would require the 25 most valuable corporations listed on the LSE increasing their holdings of tangible/physical assets in the UK by about £2.4trn from about $500bn (some of the FTSE25 firms are operating mainly outside the UK, so the figure would be significantly lower). But (at a guess) the FTSE250 firms would increase holdings of physical assets by at least £2trn. That’s roughly equivalent to UK GDP.
    The alternative is to allow corporations to invest instead/as well in government infrastructure bonds used to raise finance for investment in the physical and social infrastructure (roads, schools, hospitals, housing).

    There are a number of advantages:
    1 It can be achieved through parliamentary legislation
    2 It would promote investment in physical assets, the manufacture of which create employment and promote skill development
    3 It would facilitate tax measures since a higher proportion of corporate assets will fixed and identifiable and a lower proportion will be in an electronic (intangible) form
    4 It would tend to reduce the rate of return on corporate investment and consequently exercise downward pressure on borrowing rates generally.

    An option is to give corporation tax breaks to firms that :
    1 Hold more than 50 per cent of their balance sheet assets in tangibles
    2 Invest in physical assets in targeted regions of the UK.

    The tangible/total asset target could be increased steadily over time.

    Having nailed down corporate assets and reduced the corporate rate of return, nationalisation with or without compensation would be less political contentious.

    But since the state could actually directly manage/control all private corporate capital in the UK, would it need to?

    1. The politics of the measures are challenging. But then so will a more moderate policy. Even yours would provoke a strike of capital and I foresee your policy quickly having to move onto full control or back down. But tactics can vary depending on the balance of forces. I really only deal with the economics.

    2. The politics of privatising them in the first place was challenging but they went ahead and did it anyway.

      Why wouldn’t nationalising these industries be expensive? I would expect cheaper prices for consumers, so huge national saving from such things as drastically reduced manager salaries and bonuses?

      1. Edgar,

        I set out a brief explanation of why there is no real cost of nationalising various industries, in a blog post answering these criticism raised by Andrew Neill. I also dealt with his criticisms of the cost of Labour’s programme for infrastructure spending, in the same post.

        However, as I set out in that post, and as I have set out in a comment below, I see no reason to engage in such action, because it would be far better for Labour to simply change the law on corporate governance to remove the right of shareholders to have a say on company policy or to elect Boards of Directors, and instead to make it the job of the company itself to organise democratic control over its operation by handing the decision making and election of Directors to the workers and managers within the firm, with the shareholders retaining only the right as money lenders to obtain the market rate of interest on their shares.

      2. Boffy,

        yeah I like that approach! However who would be willing to provide the capital when they have no control? Or do you assume the only interest for the major shareholder is the interest rate?

      3. Edgar,

        Commercial bondholders have no control, banks have no control (technically) when they make a business loan, even non-voting shareholders have no control. Someone who buys a government bond has no control over what the government does with the money they borrow.

        As Marx describes in Capital III, capital – the social relation, the use value of capital to produce the average rate of profit – has no value because it is not a product of labour. But, it does have a price, i.e. the rate of interest. So, how is it that it has a price? Because marx says, in the same way that land has no value, because it too is not the product of labour, it is still a use value. Land is a use value, because it is a required part of every production process, capital is a use value, because it possesses the use value of producing the average rate of profit.

        On the one hand, the owners of landed property will not lend it to capitalist farmers, or other capitalists (for example to site shops, offices and factories, or on which to build houses) unless the capitalist pays them a rent (or buys the land from them at its capitalised price. On the other hand, a capitalist will not pay a rent/price for the land that results in their profit being reduced to below the average rate of profit.

        In the same way, a capitalist that owns loanable money-capital will not lend it to a productive-capitalist for free. They want to be paid for the fact that they have given up themselves the use value of that capital to be able to make the average rate of profit. As Marx and Engels say, they are prepared to do that, for various reasons, including they want to relieve themselves of the mucky and tedious business of engaging in production themselves, and so are prepared to accept a lower return, in the form of interest.

        Similarly, the productive-capitalist who needs to borrow this money-capital will not pay such a high rate of interest on it that it reduces their rate of profit below the average. So, as with the rent of land, the rate of interest comes down to the supply and demand for this particular use value. Its price (rent, interest) is set at a lower bound of zero, below which the owner has no reason to make it available), and the rate of profit, because no capitalist will want to rent land, or borrow money at a price that wipes out all of their profit.

        Shares are just one form of legal document by which such lending of money-capital is undertaken. Ultimately, all the owner of such shares should be interested in is obtaining the highest yield on the money-capital they have loaned. A share owner has the advantage over a bond holder, or a bank that makes a business loan, in that the dividend on shares is paid at a variable rate, so if the company does well under the management of its workers and managers, and makes bigger profits, it is able to pay out higher dividends to shareholders, and the value of the shares will then ris, so that shareholders might also obtain a capital gain when they sell their shares, as well as having obtained interest/dividends on those shares.

        But, likewise, if workers managers have control over their companies/socialised capital, there is no reason that they would pay out to those shareholders more in dividends or other capital receipts, more that they have to to be able to attract the money-capital they need. The owners of money-capital would be forced to continue to lend to companies by buying newly issued shares, and bonds, because that is the only way they would be able to obtain interest on that money-capital.

        In fact, they are in a worse position than the owners of landed property in that respect. The Prince of Wales or Duke of Westminster, with their hundreds of thousands of acres of land can always keep their land off the market, and use it for their own leisure pursuits if they so choose – and frequently they do – but the owners of vast amounts of loanable money-capital cannot consume it all unproductively. They are forced to loan it out, by buying shares, bonds or else they have to use it themselves to turn themselves back into private capitalists, which might be possible for a Bill Gates or Elon Musk, initially, but even they tend to set up corporations with shares, rather than to simply directly buy productive-capital.

        So, the owners of loanable-money capital are forced to lend it out by buying shares or bonds, in order to obtain interest, and the owners of the socialised capital, who borrow this money-capital have no reason to pay anything more, nor less than the market rate of interest for the money-capital they borrow.

        Now, of course, the limitation here is that such a programme cannot work in a limited area, any more than Socialism In One Country is a viable project. If Britain made such changes, the owners of money-capital could simply press a button, and sell their bonds, and shares in British companies, and buy bonds and shares in French, German, US or other companies. It is why any programme for socialism, and even progressive social-democracy is only possible on an international scale.

        But, that is true of all the other policies put forward by a Corbyn or even a communist government. Socialism in One Country is not possible, which is why the Greek workers were smart enough to realise that although the austerity programmes being imposed on them by conservative politicians were crushing, leaving the EU and Eurozone would be even worse.

        Its why Corbyn needs to be leading an EU wide movement to develop such radical social-democratic strategies on an EU wide basis, and why socialists should seek to extend that further into an EU wide struggle for workers power, and the development of a European Workers Government, on the road to a Socialist United States of Europe.

      4. Edgar,

        I forgot to add that in my posts on socialist strategy some years ago, and on how co-operatives could be developed, I pointed out the point that Marx and Engels, and their adherent Ernest Jones had made, in his letter to the Co-operators Conference, which was that if you establish a large centralised Co-operative Bank, workers and managers can deposit all of their savings (workers temporary savings, unused profits) into this Bank.

        I suggested that such a Bank might establish long-term stable rates of interest for its lending to co-operatives, and demonstrated how that might work. Of course, if as I have suggested elsewhere, the £800 billion or so of workers funds in their pension funds, which they do not have control over, were deposited in such a Bank under workers control, that would provide a large amount of funds available for such lending. If the even larger amount of money that should theoretically exist within the state National Insurance Fund, to cover pensions and other welfare benefits were transferred to such a Bank, it would provide even greater resources for workers to undertake such a programme.

      5. Boffy. Your suggestions are constructive, but have you considered the impact on them of the radical change taking place in the banking industry as a whole?
        Banks as managers of the payments of the payments system are in decline. It surely won’t be long before people paying bills will do that directly using the internet rather than working through banks.
        The reality is that all retail banks have failed to invest sufficiently in electronic systems (at least in part because they’ve focussed so much on making money from savers rather than improving services).
        There’s is no evidence they have the capacity to catch up with the new players in this market: Google etc.
        What’s happening is that in due course all savers are borrowers will be directly linked without the mediation of banks.
        Rather than seeking to replicate their failing systems or seeking to reform institutions that are dying anyway (RBS and Lloyds would be dead now if it wasn’t for state support), perhaps the focus should be on breaking the control over the payments system exercised by profit-seeking institutions and replacing it with a national system run on a non-profit basis (or nationalised).
        The electronic payments system is a utility that should be run in a way that makes it freely available (and preferably for free at point of use) to users. A bit like the road system.
        This would facilitate monetary management and make central banks unnecessary.

      6. Edmund,

        “What’s happening is that in due course all savers are borrowers will be directly linked without the mediation of banks.”

        That is what I meant in the reference to the role of blockchain. However, at the moment, even as transmission systems, the banks continue to play a significant role, because even Internet and other forms of electronic payment currently take money from one bank account, and transfer it to another, still usually some form of clearing system.

      7. Thank you.
        But I don’t see any need for retail banks to be involved when there’s a secure payments system that allows people to pay other people electronically.
        If there’s any future for retail (or any other banks), it’s purely in an advisory capacity.
        In the future. banks should be confined to helping people become better off than they are. Their income should solely come from fees payable on results rather than from running/manipulating the payments system.
        The Libor rigging scandal is just one example of how that was done.
        No profit-making institution should be allowed to gather and distribute savings.
        This was demonstrated by the abuses committed by the banking industry in the run up to the financial crisis–and after.
        They’ve been misusing their role as “guardians” of the payments system (including in taking three days to clear a transfer I’ve just made to someone outside the UK).
        The only reason most people have bank accounts is to facilitate payments.
        The payments system is a natural monopoly and a utility that should at the very least be run on a non-profit basis and, probably, should be publicly-owned (like the roads and railways are now).
        This would also eliminate the need for central banks and the host of regulations (which banks are nearly always trying to get around) which increase costs and inefficiencies in the payments system.

      8. Edmund,

        The requirement for retail banks resides in the fact that with any payments system it is a payment of money/exchange value from one location to another. In a purely cash economy, without banks, I would hold my cash under my bed, or in a box hidden in the garden, and periodically take cash from it to hand over in exchange for the goods and services I purchase. The seller would then take the cash, and deposit it under their own mattress, on in their own box hidden in the garden.

        But, it involves a series of different hoards of cash, with this cash flowing by some transmission mechanism from one to another. The cash is never just somehow floating feely out their, and that applies to crypto-currencies too. Your own store of Bitcoin, must still be held somewhere, in order for it to be transmitted to somewhere else.

        Now, you might be happy about that or not. There is an episode of The Big Bang Theory where the memory stick on which tens of thousands of dollars of Bitcoin were stored, gets lost, and is picked up by the guy in the Comic Book store, who decides he can wipe it, and sell it for a few bucks! In other words, the problem remains of money as a store of value. People began putting their store of value in banks for security, rather than keeping it under the bed. It was the fact that the development of credit means that these hoards of money can also be utilised by the bank to lend, out at interest which causes the money-dealing functions of banks to get merged with the money lending, and investment banking function.

        It would be possible to use the central bank as a depository of this value, with all payments being undertaken via blockchain, I suppose. But, there is still then the question of savings. What is actually required is the separation of the banking system into three parts. Firstly, the money transmission mechanism, i.e. reducing those involved to being merely money-dealing capitals, such as PayPal, or the various Bureaux de Change, secondly savings banks in which anyone can deposit savings, individuals or companies, and whose lending activities are heavily circumscribed, and finally investment banks.

        I don’t see any reason why, so long as capitalism exists, any of the firms engaged in such activity should not be profit making. As Marx sets out, in relation to money-dealing capital, it is only a form of merchant capital. Its profits derive from the extent to which it can reduce the cost of money-dealing, and that implies the same kind of drive to raise productivity and efficiency as applies with any other form of capital. The same is true with a savings bank. It is really just another form of money-dealing capital, that acts as a transmission belt, and intermediary between savers and borrowers. Its profit depends again on the extent to which it can minimise the costs of such intermediation, thereby obtaining the profit from the difference between the interest paid by borrowers, and the interest it pays out to savers. This is different to where the bank itself acts as a money-capitalist using its own money-capital to obtain interest, or to engage in speculative activities, as with investment banking.

        I have no reason to think that state-capital is superior to these private sector capitals in achieving any of these goals, and in fact experience suggests the contrary. Moreover, I would much prefer, as did Marx and Engels that it is workers that directly own and control such capitals rather than the capitalist state.

      9. There’s a lot to digest in your post. But there’s one issue worth considering.
        Money should only be used as a medium of exchange and never a store of value. If it’s a store of value, then it’s possible to make money out of money.
        A nationalised, national electronic payments system that allows people to make payments to anyone else costly and instantly will facilitate the elimination or minimisation of the use of money as a store of value.
        One option is to charge people for holding money. So if you have a unit of money for more than a month, it automatically depreciates.
        Anyway, there’s a huge intellectual hole where monetary theory is. It’s indisputably the most incomprehensible and incoherent part of economic theory as anyone who has spent time trying to make sense of it will testify.
        But there’s still no case for profit-seeking institutions to be involved in any way with the payments system.

      10. “One option is to charge people for holding money. So if you have a unit of money for more than a month, it automatically depreciates.”

        This is where the left scare me, in solutions like this! It almost forces people to consume when in fact they don’t want or need to. It doesn’t allow the poorer paid to save for next years holiday. It doesn’t allow for anything to be put away for a rainy day, you are thrust into endless forced consumption.

        For anything even remotely resembling this to exist capitalism needs to have been dead in the ground for a fair period of time and a whole radically different way of living created.

      11. Edmund,

        Its impossible for money not to act as a store of value. If I work for a week, and get paid my wages, I do not want to have to spend all of those wages the instant I am paid them. I will want to buy commodities on each day of the following week, and the money I have in my wallet, in my bank account is a store of value for all that time.

        Even were we talking about a socialist society such as Marx describes in The Critique of the Gotha Programme, where everyone receives a certificate proportional to the labour-time they have provided to society that would be true, because again no one would exchange all of the certificates on the instant of receiving them. They would act as a store of value. The difference is that they would not be exchangeable.

        It is not that money functions as a store of value that is a problem, but that such hoards can be turned into capital.

        There is just as much a case for profit making companies in money-dealing as in any other sphere. As a socialist I want to abolish it in every sphere.

  2. It strikes me that the most surprising datum in your report is that real incomes per head doubled between 1984 and 2004. Can you identify any other economy which achieved such an astonishing record? And perhaps you could clarify whether “per head” means “per capita” or “per head of household”?

    1. Yes it does seem surprising. But remember the compound growth rate is less – at 3.5% a year. That still looks good but real disposable income per head is not the same as real average wage income per worker. It includes (after income tax and inflation) all income not just from work but income from capital (rent, dividends and interest) and all benefits (pensions). If we just looked at real average wage income per head, the growth would not be so impressive. The graph just shows that everything stopped from 2004 onwards.

  3. Big firms will not invest so long as the policy making of those firms is controlled by the representatives of shareholders, who are interested in dividends, and more significantly in capital gains from speculation. Smaller, privately owned firms, including many in highly profitable areas, such as in technology, cannot get access to finance for investment, in the way you have described, here and in your 2014 analysis.

    For these latter firms to get finance they have often resorted to using loans from family, to using credit cards, and to using peer to peer lending, all of which are at much higher rates of interest than would generally be the case if they could borrow from the bank, and certainly if they were able to borrow in the bond market. That in itself also acts to reduce the UK average rate of profit, though I suspect that measured on the basis of a Marxist Average Annual Rate of profit, it is significantly higher than the estimates you have cited above.

    Having a National Investment Bank will not persuade the big companies to invest – they have the resources anyway if they chose to use them – though it might be a source of cheaper finance for the smaller companies. But, they would need to grow significantly, compared to the growth of the large companies to make a significant impact.

    If the large companies are to invest on a substantial scale, the role of shareholders in controlling company policy needs to be removed. In Germany, the co-determination laws provide for 50% of company boards to be elected by the workers via their trades unions, and the BUllock Report in 1975, as well as the EU Fifth Draft Company Law Directive, made similar proposals. But, as John Kay and Aubrey Silberston wrote several years ago, shareholders do not own these companies. They
    only own shares. There is no more reason that a shareholder should have say on corporate policy or be able to elect Boards of Directors than a bondholder or other creditor to the company, or any more than just because a bank gives you a mortgage to buy a house, it has a right to tell you what colour to paint your living room.

    Labour should change the laws on Corporate Governance to remove that ability of shareholders, and they should join with socialists across Europe and in the US and other developed economies to bring about similar changes across the globe. They should take the principles set out in the German co-determination laws, Bullock Report and so on, and take them to their logical conclusion, to hand over the control of the socialised capital to the associated producers in the company, i.e. to its workers and managers. Those workers and managers would have every incentive to use the company’s profits to accumulate real capital, within the limits of what they determine the company can sell profitably. They would have every incentive to do so rather than ship jobs and capital overseas etc. They would have every incentive to establish fraternal relations with workers in other companies and countries, starting first with their suppliers and their customers, so as to co-ordinate and plan their future production and investment.

    Of course, the owners of fictitious capital, the shareholders would have every reason to oppose any such changes, which is why it is necessary both to fight for such a change on an international basis, and also to develop the political organisation, and other means of resisting the political offensive that would inevitably be unleashed by the bourgeoisie.

    However, the reality, is that stripped of their undue influence in the boardroom, these shareholders would be reduced to being able to obtain only the average rate of interest on the money they lend, which would be likely to be significantly less than their total returns currently. Yet, to the extent that the workers and managers accumulated capital, and ran these firms more efficiently, the potential for paying higher dividends might actually increase. The existence of co-determination in Germany, for example, certainly has not reduced German profits, and so potential for dividends, whilst it has, as the above charts show led to a much higher level of real capital investment than is the case in the UK, and I suspect in the US too.

  4. This is a much better debate. This site is valuable and it requires decorum. Our ability as Marxists to critique the economic plans of left reformists is the unavoidable path to re-establishing Marxism as a living current in the working class. The hundreds of thousands who joined the labour party are not revolutionaries. They want to see a reformed capitalism that serves the interest of the many not the few. It is not simply the case of arguing them out of their illusions. It is a case of working with them, showing them that Labour cannot deliver, that it cannot serve two masters/mistresses simultaneously that in the end will convince them that our criticisms and warning are correct. What is missing from this post is the question of interest rates. In a highly financialised and leveraged economy such as the UK, (other examples are Japan and the USA) any hike in interest rates could bring down the housing market and with it the banking system. Such a hike in interest rates is unavoidable if Labour win a majority. From the outset then, Labour will be firefighting rather than planting a new forest. It is these developments and these undeniable experiences that will allow us to deploy our arguments showing the limitations of the reform project of the Labour Party.

    1. I don’t think saying Labour won’t deliver is the correct approach.

      Personally I have always been more than a little troubled with the reformist and revolutionary debate.

      Corbyn is better for the working class, there is no debate to be had about that in my opinion.

      Lets try and just empower them with Marx’s analysis and take it from there perhaps

    2. ” In a highly financialised and leveraged economy such as the UK, (other examples are Japan and the USA) any hike in interest rates could bring down the housing market and with it the banking system.”

      I think bringing down the housing market, and the stock and bond markets would be a great thing. And, as marx and Engels set out, there is no reason that such a financial crash should bring down that element of the banking system that is actually about the transmission of funds, so as to be able to circulate commodities and capital, as opposed to that element of the banking system that is purely about investment banking, and speculation. In fact, whilst I have no time for Bitcoin and other crypto-currencies, which have no value, and simply are the latest aspect of the huge financial bubble that has been blown up (and which the housing market and stock and bond markets are more established examples of) the block chain technology that underlies them is a different matter altogether.

      In fact, even apart from that all that is required to ensure that currency is available as means of circulation and means of payment is the existence of money-dealing capital, such as exists with companies such as PayPal. They merely take money, i.e. exchange value in the possession of A, and transfer it to B who sells commodities of equal value to A. There is absolutely no reason why such transmission mechanisms should in any way be affected by a financial crash. Its only because the banks have monopolised such transmission mechanisms, and because those banks activities are dominated by investment banking and speculation that they can be so.

      In fact, as I have set out on a number of occasions, if the current huge property bubble bursts, workers will again be able to buy houses at reasonable prices. I expect UK house prices to drop 80% in real terms from their peak. That will reduce rents, and it will reduce land prices, which have been forced up by this speculation. Lower land prices – its estimated that development land is about 3 times the price it should be due to speculation, and the ability of large landowners to hoard it in the expectation of future capital gains – would mean that new house building costs would tumble, because land currently account for about 70-80% of the cost of building a new home in the UK.

      Lower new home prices, would mean more people could buy them, which would mean builders would find it profitable to build more of them, a fact that neither Tory nor Labour politicians seem to grasp when they keep imploring builders to build more houses they currently can’t sell. Lower house prices and rents would reduce the value of labour-power, which would push up the rate of surplus value, which would in turn raise the rate of profit, which in turn would mean more surplus value available for real capital accumulation rather than surplus value disappearing as unproductive revenue as rent and interest payments into the pockets of landlords and money lenders.

      A crash in share and bond prices, would mean that the cost of providing for workers pensions would be massively reduced. The reason for the black holes in pension funds is the astronomical rise in stock and markets over the last 30 years, which meant that every pound of pension contributions by workers bought fewer and fewer bonds and shares to go into their pension fund, which meant that the capital base of those funds was undermined along with its ability, therefore, to produce future revenues from which to pay pensions. That was further exacerbated by the short term and destructive tendency to utilise the resulting capital gains from those price rises to fund pension liabilities from capital gain rather than revenue. It further undermined the capital base, and turned the pension funds into Ponzi Schemes.

      A crash in share and bond markets would mean that workers pension contributions would be a much larger number of bonds and shares, thereby reducing the cost of their pension provision. It would be a powerful means of transferring the ownership of those bonds and shares out of the hands of the money-capitalist, and putting them in the hands of workers, and their organisations. Again, that would reduce the value of labour-power, raise the rate of surplus value, and rate of profit, and would make capital available for real capital accumulation, was transferring wealth from the hands of landed property and the financial oligarchy.

      1. Here I have to disagree with your prognosis. My latest posting details the extent of the bubble.
        It exceeds by most metrics the bubbles that preceded 1929, 2000, and 2008. Any crash will lead to mass unemployment making house price affordability irrelevant. I read today that world stock market prices are about to exceed $100 trillion or 120% of world GDP. I note as well that China has retreated from tightening on liquidity and turned the credit spigot back on. Perhaps they were worried about their Minsky moment. I am unclear whether we are at the terminal phase of the recovery beginning in 2009 or in a second phase of the recovery which began in Q2 2016. Whatever the case the scale of the bubble is unprecedented and we will see if the banking system can cope with it let alone a Labour Government.

      2. Now I understand that Ucanbe thinks propriety and decorum are essential, but in that case, let me be the first to point out exactly how improper, messy, and rude actual revolutions are. And for good reason.

        Meanwhile we get this from Boffy:

        ” And, as marx and Engels set out, there is no reason that such a financial crash should bring down that element of the banking system that is actually about the transmission of funds, so as to be able to circulate commodities and capital, as opposed to that element of the banking system that is purely about investment banking, and speculation.”

        Again, rude as it may be, does that view have any contact with the reality of what occurred in the housing market implosion of 2007-2011? Did it not bring down bank after bank? Did it not cause the US Fed to become the lender of first resort, and to other central banks in order to keep world markets and world trade from literally shutting down?

        Not that I have any interest in preserving markets, or “wishing” that capitalism not implode. Rather, it’s vital to recognize the real impacts of such an implosion as a basis for revolutionary action rather than imagining it improves the condition of the working class.

        And there’s this:

        “In fact, as I have set out on a number of occasions, if the current huge property bubble bursts, workers will again be able to buy houses at reasonable prices. I expect UK house prices to drop 80% in real terms from their peak. That will reduce rents, and it will reduce land prices, which have been forced up by this speculation. Lower land prices – its estimated that development land is about 3 times the price it should be due to speculation, and the ability of large landowners to hoard it in the expectation of future capital gains – would mean that new house building costs would tumble, because land currently account for about 70-80% of the cost of building a new home in the UK.”

        This is where and why I say, what planet is this guy on. In the last housing bust where more workers able to buy houses at reasonable prices? Did homelessness increase 2008-2017 in the US or didn’t it. Did workers find themselves out of jobs, out of their houses? Did foreclosures skyrocket or not.

        And then there’s this gem: ” A crash in share and bond prices, would mean that the cost of providing for workers pensions would be massively reduced. The reason for the black holes in pension funds is the astronomical rise in stock and markets over the last 30 years, which meant that every pound of pension contributions by workers bought fewer and fewer bonds and shares to go”

        What bollocks. The last crash in share and bond prices left pension plans all over the US, including those of state and local govt employees grossly underfunded. This is just baloney. Look at what has happened to pension funds in the US. Check the website of the US Pension Benefit Guaranty Corporation. That’s on the planet earth, of course.

      3. Ucan,

        I disagree. Here’s why. Let’s look at what Marx and Engels said about financial crises as opposed to economic crises. In Capital I, as I have cited before, Marx writes,

        “The monetary crisis referred to in the text, being a phase of every crisis, must be clearly distinguished from that particular form of crisis, which also is called a monetary crisis, but which may be produced by itself as an independent phenomenon in such a way as to react only indirectly on industry and commerce. The pivot of these crises is to be found in moneyed capital, and their sphere of direct action is therefore the sphere of that capital, viz., banking, the stock exchange, and finance.” (note 1 p 137)

        In other words, as I said, such a crisis is not the same as an economic crisis, but such a financial crisis CAN lead “indirectly” to a crisis, if it is ALLOWED to also impact the economy. The 1847 financial crisis, for example, led to a 37% drop in UK economic activity, as a result of the credit crunch it created. But, that credit crunch was the consequence of the 1844 Bank Act, which meant that when additional liquidity was required in the economy, in 1847, to circulate commodities, it was denied because of the terms of the 1844 Act. Had the Act, not denied the economy that liquidity, then the bubble in share prices, particularly railway share prices, which had nothing (or very, very little) to do with actual investment in railways (because it was, as with all bubbles about driving up shares in the secondary market) would have burst without any affect on the ability of commodities to be circulated in the economy, and so without, thereby leading to a secondary crisis in the real economy.

        The proof of that, as Marx and Engels set out is that, as soon as the Bank Act was suspended, the credit crunch ended, and the economic boom continued within months. It was the fact that the Bank Act caused this credit crunch that caused the payments system to seize up that was what impacted the real economy, as they set out,

        “The rapid and easy flow of payments was obstructed, first here and there, then generally. The banking discount rate, still 3 to 3½% in January 1847, rose to 7% in April, when the first panic broke out.”

        And when that was removed the crisis ended.

        “The general cessation of payments caused the failure of several leading and very many medium-sized and small firms. The Bank itself was in danger due to the limitations imposed by the artful Bank Act of 1844. The government yielded to the general clamour and suspended the Bank Act on October 25, thereby eliminating the absurd legal fetters imposed on the Bank. Now it could throw its supply of bank-notes into circulation without hindrance. The credit of these bank-notes being in practice guaranteed by the credit of the nation, and thus unimpaired, the money stringency was thus instantly and decisively relieved. Naturally, quite a number of hopelessly enmeshed large and small firms failed nevertheless, but the peak of the crisis was overcome, the banking discount dropped to 5% in December, and in the course of 1848 a new wave of business activity began which took the edge off the revolutionary movements on the continent in 1849, and which inaugurated in the fifties an unprecedented industrial prosperity, but then ended again — in the crash of 1857. — F. E.]”

        A similar financial crisis is described by Marx and Engels in relation to the 1857 crisis, and again it came down to the impact of the 1844 Bank Act. Engels notes,

        “By such artificial intensification of demand for money accommodation, that is, for means of payment at the decisive moment, and the simultaneous restriction of the supply the Bank Act drives the rate of interest to a hitherto unknown height during a crisis. Hence, instead of eliminating crises, the Act, on the contrary, intensifies them to a point where either the entire industrial world must go to pieces, or else the Bank Act. Both on October 25, 1847, and on November 12, 1857, the crisis reached such a point; the government then lifted the restriction for the Bank in issuing notes by suspending the Act of 1844, and this sufficed in both cases to overcome the crisis. In 1847, the assurance that bank-notes would again be issued for first-class securities sufficed to bring to light the £4 to £5 million of hoarded notes and put them back into circulation; in 1857, the issue of notes exceeding the legal amount reached almost one million, but this lasted only for a very short time.”

        As they put it,

        “Ignorant and mistaken bank legislation, such as that of 1844-45, can intensify this money crisis. But no kind of bank legislation can eliminate a crisis.”

        Now remember that at this time, it was only effectively business to business transactions that were conducted using commercial credit, or when credit conditions tightened, a resort to bank credit. Most transactions were conducted using money tokens in the form of coins or paper notes. In fact, as Engels describes it is precisely by restricting credit that an artificial demand for money tokens is created, because the role of credit as currency is reduced, so the demand for money tokens as currency rises to fill its place. Those who previously offered credit, now demand cash payment, everyone who has cash hoards it, and so on. The same thing could be seen in Greece, when the ECB threatened to withhold Euros. But, in an economy, where all transactions are made electronically it makes no difference whether actual money tokens are available within the economy.

        If my wages are paid directly into my bank account by electronic transfer by my employer, and if I pay my bills electronically by direct debit each month, whether actual notes and coins exist in the economy is neither here nor there. Provided, my employer continues to be able to sell the widgets the firm produces, and if every other worker receives their wages by electronic transfer in the way I do, if every other revenue recipient similarly receives their revenue electronically, in the same way, there is no reason why they will not, at least not due to a lack of currency, then my employer can continue to pay my wages, and likewise, I can continue to buy goods and services with them, paying for them again by such electronic transfer.

        It is then as though money has been taken out of the equation, other than to act as unit of account, and store of value. Provided this transmission mechanism of electronic payments, is thereby allowed to function, transferring exchange value from A to B, as commodities move from B to A, there is absolutely no reason why a financial crisis should cause an economic crisis. As Marx puts it,

        “As regards the fall in the purely nominal capital, State bonds, shares etc.—in so far as it does not lead to the bankruptcy of the state or of the share company, or to the complete stoppage of reproduction through undermining the credit of the industrial capitalists who hold such securities—it amounts only to the transfer of wealth from one hand to another and will, on the whole, act favourably upon reproduction, since the parvenus into whose hands these stocks or shares fall cheaply, are mostly more enterprising than their former owners.” (TOSV2 p 496)”

        And, the reason is, as Marx sets out here, these financial crises have nothing to do with the value of real productive-capital in any sense. Not only do they have nothing to do with the value of the commodities that comprise the productive-capital, i.e. the value of machines, buildings, materials etc, or the value of variable-capital, but also nor do they have anything to do with the use value of capital itself as a commodity, i.e. the use value of capital as a social relation, its ability to produce the average rate of profit. That is itself a function of the value of commodities. In other words, if the value of the commodities that comprise the productive-capital – constant capital and variable-capital – remains the same, and the new value produced by labour, and represented in the commodities that labour produces remains the same, then the rate of profit remains the same. If the former falls, or the latter rises, then the rate of profit will rise, and vice versa. But, the value of those commodities has absolutely nothing to do with the prices of fictitious capital, which is what gets inflated during a bubble, and which gets deflated when the bubble bursts.

        There is no reason why such a crash in the prices of fictitious capital or property should have any effect on the real economy, other than as Marx and Engels set out, the extent to which the role of banks in investment banking impacts upon their role as money dealing as opposed to money-lending capitals. In fact, as Marx sets out, in the quote above, and as I have set out above, there is every reason why it should have a beneficial effect. The 1929 stock market crash was not a cause of the mass unemployment, and economic stagnation. Europe had already been experiencing a period of stagnation from 1921, and in fact by the early 1930’s, the stagnation was starting to come to an end, In Europe, as new industries started to expand. In Britain, those new industries in car production, and electronic consumer durables that were created in the Midlands and South-East, were highly profitable and paid high wages, and also led to the development of new housing developments in those areas. In part, the Jarrow Hunger Marches were undertaken, to go through those areas, to remind the workers there of the appalling condition that workers in the North-East still faced.

        The 2000 Stock Market crash certainly did not lead to mass unemployment, and the economic shock of 2008 was quickly reversed, as liquidity was pumped into the system. The “V” shaped recovery, prior to the imposition of austerity shows that in the US, UK and EU. The economic stagnation since 2008, where that has occurred – and in China and elsewhere, even that has largely been absent – is a direct consequence of conservative policies of austerity imposed on economies, to deliberately limit economic growth, so as to prevent market rates of interest rising, which would have cratered the prices of fictitious capital, and by the continued measures of QE, which have quite openly been conducted to inflate asset prices, and thereby protect the paper wealth of the top 0.001%.

        As I said above, a collapse in house prices will be a good thing, because it will also reduce capitalised land prices, thereby reducing the prices of new build housing, and reducing rents, thereby reducing the value of labour-power, and raising the rate of surplus value and profit. It will take money out of revenues going unproductively to landlords, and put in in the hands of productive-capital so thereby facilitating increased accumulation and economic growth. In Capital III, and Theories of Surplus Value, Marx also describes the phenomenon we have seen of capital consuming itself. As Marx says, if a farmer does not replace the seed consumed in their production, out of that production, but instead, consumes some of it, as revenue, their capital is thereby reduced, and they reduce their capacity for future output. Similarly, if an owner of money-capital, consumes part of their money-capital, rather than simply consuming the revenue/interest produced by that money-capital, they thereby destroy the capital base upon which they rely for the generation of future revenue.

        That is what has been seen as ever larger proportions of profits have been paid out as dividends, as soaring asset prices have thereby reduced yields. But, it is also what has been seen with workers pension funds, which used soaring asset prices, and the resultant capital gains, as the means to meet their pension liabilities, rather than meeting them from revenues. It meant that this could only continue so long as those asset prices continued to rise to the moon, just as the provision of NINJA mortgages, and mortgage backed securities, and CDS’s could only continue to rise in price so long as paper house prices continued to rise to the moon. It was not the collapse of that fiction that was a problem, but the blowing up of the asset price bubble in the first place! The collapse of the bubble simply exposed the fact that for decades, that asset price bubble had prevented workers being able to buy houses out of their incomes, and in the same way it had reduced the amount of shares and bonds workers pension contributions bought each month, and ultimately, in respect of the latter even the capital base itself was being undermined, as assets were sold to cover liabilities exacerbated by the fact that employers had taken pension holidays themselves on the basis that the capital gains on pension funds were able to be used to meet pension liabilities.

        It was not the fact that those asset prices fell sharply that prevented the pension funds being able to meet liabilities, but the fact that the quantity of shares and bonds in those funds was inadequate to provide the revenue required to meet liabilities. It is not the price of the shares and bonds in a fund that determines the revenue they produce, but the quantity, just as Marx demonstrates it is not the price of the material used in production that determines the amount of surplus value produced, but the quantity, because it is that quantity that determines the quantity of labour used, and so the surplus value produced. The amount of material that a capital can employ depends upon its price, and the available capital. As Marx describes in TOSV Part II, in fact, the higher the price of the material, the less any given capital can employ of it, and so also the less labour-power it can set to work, and consequently the less surplus value the capital can produce.
        Similarly, with shares, or bonds. It is not the price of the share or bond which determines how much interest it pays.

        Ultimately, that depends on the profit produced by the underlying productive-capital. The higher the price of the share or bond, the lower, therefore, the yield. The higher the price of the share or bond, the less of these shares or bonds, any given amount of money will buy, and consequently, the less revenue that money-capital will generate. That is why a fall in share and bond prices brings about an appreciation in the value of money-capital, it makes the pension contributions of workers capable of buying more shares and bonds, and thereby of producing larger future revenues from which to pay future pensions, and it thereby reduces the cost of such pension provision, again thereby reducing the value of labour-power, raising the rate of surplus value and rate of profit.

        “Whatever the case the scale of the bubble is unprecedented and we will see if the banking system can cope with it let alone a Labour Government.”

        This implies that workers are simply passive within this process. Back in 2007, when Northern Rock collapsed, I argued that the government should not have nationalised it. I argued that it should have been allowed to go bankrupt, and then the Northern Rock workers, having occupied all of their workplaces, should have taken it over and demanded, as Argentinian workers had done, that the government rubber stamp their de facto take over of the company. I argued a similar position in relation to the collapse of Anglo-Irish Bank, and other banks. The collapse of the money-lending, and investment banking operations of these banks is no reason that the bank cannot continue to function as a money transmission mechanism, thereby enabling payments and circulation of commodities to continue.

        Similarly, with the conditions that Marx describes of companies that have found themselves in trouble because they have engaged in speculation, there is no reason that workers should allow the financial crisis of a firm from such activity to affect the economic activity of the firm. It is yet another reason why, as far as socialised capital is concerned, the control of that capital should be exercised by its workers and managers, and not by executives appointed to represent the interests of shareholders. In that way, if the shares of companies fall sharply because of a financial crisis, it makes it easier and cheaper for those workers to buy back those shares, and thereby reduce the amount of their future profits they have to pay out as interest to money-capitalists. It would be a reversal of the current situation where the executive representatives of shareholders utilise company profits that should go to capital accumulation, instead to buy up shares, so as to boost share prices, and flatter earnings per share figures, which is another means by which capital is consumed rather than expanded.

  5. Interesting Boffy, a few questions:

    Apparently companies like Apple and Microsoft have huge cash reserves and UK companies expect cash reserves to increase due to Brexit uncertainty, so why are you arguing there is a shortage of funds for investment and accumulation – or why do you assume a slump in share prices will lead to increased investment when investment is about future expectations and competition? And do you agree with the approach of Trump who argues that by reducing tax rates some of the cash will come home (to the US)?

    If the banks had been allowed to go bankrupt does that also mean all the savings along with it? Are you against the bank deposit protection legislation?

    Regarding the Bank act of 1844, I may have made this up and can’t find it but I seem to remember reading Marx where he said that the 1844 act didn’t really do anything in normal times but in difficult times, such as the ‘commercial crisis’ of 1847, it exacerbated the problem and created panic, for example by increasing the interest rate more than would have been the case. So Marx was not arguing 1847 was a simple financial crisis.

    1. Edgar,

      I don’t think I have ever said their is a shortage of funds for investment. What I have described is that, as you say, large socialised capitals like Apple and Microsoft have huge cash piles extending to tens of billions of dollars sitting on their Balance Sheets. Many of these companies, have also taken advantage of QE, and its effect in pushing up the prices of bonds, to issue additional bonds to raise even more cash, which they have been able to do, at interest rates no more than 3%.

      What I have said is that, what QE does is to inflate the prices of bonds, and other financial assets and property, and that, therefore, an incentive is created, for those with money – potential money-capital – to use it speculatively to buy these assets, in the reasonable expectation that within a short period, they will make a sizeable capital gain. The Dow Jones has more than tripled since its low point in 2009 (around 7500), to today (around 24,000) whilst the US economy has only grown by around 20%. In other words about 15 times the rise in US GDP. To put that in perspective, in the post-war boom period, between 1950 and 1980, US economic growth increased more than double the rise in the Dow Jones, by contrast, between 1980 to 2000, when the asset price bubbles were initially inflated, the Dow only rose by around 4 times the the rise in US GDP. Yet, recently, on Fareed Zacharia, Abby Joseph Cohen of Goldman Sachs, argued that US stock prices were not inflated, because she said, in 2009, they were at a very low level!

      Because, the executives of these large socialised capitals act in the interests of shareholders – and as Enron, Tyco etc. demonstrate even against shareholders interests, and purely in their own interest when they are able to get away with it (see Marx’s comments about that above) – rather than in the interests of the company itself, they see these more or less central bank guaranteed opportunities to make huge capital gains as an opportunity that it would be negligent of them not to take advantage of. So, they have borrowed huge amounts of money, by bond issues, and then used this money not to accumulate real capital, but to buy back shares, thereby both boosting the share price (often thereby also boosting the value of their own unused share options) and also artificially boosting the earnings per share figures, which acts to further boost the share price, because the speculation news channels like CNBC and Bloomberg present these EPS figures as good coin illustrations of how much profits have risen, and how brilliant the executives have performed.

      They also have used these funds to buy the shares of other companies, which boosts those share prices, and it is that which Marx refers to in the quote above about where a financial crisis might extend into an economic effect on the real economy, where it acts to affect the credit worthiness of such companies. As Engels points out in relation to the 1847 financial bubble, it was the owners of textile companies etc. who used their companies cash to speculate in rapidly inflating railway and other shares, who thereby drained their own company of cash that would have been used for real capital accumulation, and who when they faced calls – like people today buying on margin – found that as a result of the credit crunch caused by the Bank Act, those funds were unavailable.

      Marx and Engels describe how in fact, it was often not even that they were insolvent that was a problem. They had assets sufficient to cover their cash requirements, but those assets were in illiquid form. So, they had to sell of those assets at markedly reduced prices, just to get cash, including sell their own production at reduced prices and so on. I described a similar situation, in 2008, when I noted the sharp sell off in oil futures prices, and concluded that it was an indication that banks and other big financial institutions were having to sell off valuable assets, just to get cash. It was the basis of my prediction that the Financial meltdown was about to happen.

      By contrast, all of those millions of small private capitalists are concerned with trying to undertake real productive investment in their companies. Even there you can see examples of how the huge speculative bubbles that have been created has an effect in draining potential money-capital into speculation. In China, when the stock market bubble was rising massively a year or so ago, there were news reports of small Chinese farmers, who were using their profits, not to invest in expanding their farms any more, but to bet on the stock market. But, in the UK, for example, those millions of small businesses, that do not have the advantage of economies of scale in borrowing that an Apple has, who cannot issue commercial bonds, and in many cases cannot issue shares, are dependent instead on obtaining bank loans.

      But, as Michael described in his work in 2014, and he has referred to again recently, the UK banks have no reason to make such loans, and they haven’t. Just as with the sub-prime crisis in the US, the banks have been given a massive incentive by the state to simply finance property speculation. The state has created all of the various scams for subsidising house purchase, and has shown at each stage that it will continue to put money into ensuring that house prices do not drop. It is a one way bet for the banks. Even if a house buyer defaults, the bank expects to repossess the house at a higher price than it has loaned out. That is particularly true in London. In addition the state has encouraged people to engage in buy to let landlordism, even promoting it via the media, and all the property porn programmes as the sensible means of providing for your pension. That too also acts to inflate property prices whilst preventing millions of people buying houses to live in themselves rather than renting them out to others. The Buy to let landlords get tax relief on their mortgage interest payments (still), though Osborn halved it, from what it had been. And, they get a direct subsidy of £9 billion a year, from the state in Housing Benefit payments, as millions of people unable to buy at these ridiculously high house prices, are forced into privately renting their home.

      So, the two things exist side by side. Big socialised companies have huge amounts of cash that could be used for productive investment, but the state has made such investment (because productive investment still involves some risk, and why would you invest to produce more of something, and increase its supply, when the austerity measures of the government are reducing aggregate demand in the economy for all commodities, or at least limiting the increase in that demand, which must then mean you would be selling your output at lower prices, and thereby making less profit?) unattractive. Its far easier for these large companies to simply engage in state underpinned financial speculation in the stock, bond and property markets.

      But, the smaller and medium sized companies, particularly the privately owned ones, have found it difficult to obtain loans to use to invest in actual capital. For the 150,000 UK zombie companies, who are unable to produce enough profit to be able to repay their existing loans, three is justification for banks not making further loans, but that leaves nearly 5 million more for whom that is not the case. They have had to rely on credit card borrowing, borrowing from family, mortgaging their houses, and increasingly peer to peer lending, all of which involve market rates of interest above 10% (other than mortgaging their house) compared to the 3% interest the big companies have been able to issue commercial bonds at.

      The reason a slump in asset prices would be likely to lead to a rise in actual investment, is that the incentive to engage in speculation in the expectation of guaranteed capital gain disappears when the idea that these asset prices can only ever move in one direction is shattered. Instead of using profits, rents and interest to finance such speculation in bonds, shares, property, if the expectation is that all of these things are likely to fall in price, there emerges instead and incentive to invest that money-capital in real capital, in building factories, buying machines and material, employing labour-power so as to produce surplus value. And, because as I have said, that collapse in asset prices also acts to reduce the value of labour-power (just consider that £9 billion of Housing benefit subsidy alone that goes to landlords), and so to raise the rate of surplus value and profit, and because workers no longer pay out such a lot in rents, and interest payments, they have that money available to purchase actual commodities, that increases aggregate demand for wage goods, there is an additional incentive for firms to expand production to meet this additional demand.

      I said at the time that if the banks went bankrupt it should have simply meant that the banks share and bondholders should have lost their money, along with all those other financial institutions who made loans in the money market to finance its speculative activities. The savings in the bank should have been wholly protected, and the bank should have been able to continue to receive the interest on the loans and mortgages it had issued.

      Your memory is correct in relation to Marx’s comments about the Bank Act. What he and Engels say is that in “normal” times the Bank often did not even put into circulation the amount of notes it was permitted to do. But its not correct to say that in 1847, it only exacerbated an existing commercial crisis. It created that crisis, by its own functioning.

      By its nature, capitalism always has some form of “crisis” going on. Demand and supply for each firm never balance other than by accident. There is then always a “crisis” for each firm of overproduction or underproduction. But, as Marx says, for each capital these periods of over or under production, periods when their market prices are either above or below the market value/price of production of their output balance out, and each capital takes this into account. For example, mineral producers know that there can be periods running into years when they will be overproducing, and prices and profits will be lower than the average, but they also know, for example, as with the period after 1999, that there will be periods when demand will exceed their supply, and their ability to quickly raise supply, and so prices will be above the average. Shipping and other transport companies know that similar conditions apply to their businesses, and even microchip companies know that such a similar cycle exists for their products. These cyclical variations are not what Marx analyses in analysing general crises of overproduction.

      In fact, as Marx sets out overproduction is a vital aspect of any mode of production, because it is only via overproduction that any society can accumulate additional means of production. I recently wrote a comment on this in reply to an article by Ann Pettifor that wrongly claimed that saving is not necessary for investment. And, as marx sets out in Capital II, a socialist society will need to routinely overproduce not just for this reason, but also because fixed capital wears out only gradually. As he sets out essentially describing one of the foundations of the long wave cycle – though he didn’t call it that – it is the fact that machinery lasted for around 10 years, that acted as a major determinant on the length of the economic cycle. For all of those larger investments of capital, with longer duration, the basis for an even longer cycle is established. For example, in TOSV II, Marx basically gives one of the first analyses of the long wave cycle, where he examines the 50 year cycle of agricultural prices in the 18th and 19th centuries, and shows precisely how this cycle was affected by a long period in which capital was being invested in the establishment of new farms, during which time the invested fixed capital had to be amortised, and incorporated in the fertility of the land, and where prices were then higher, and a subsequent 50 year period, during which that invested capital had been amortised, the fertility of the soil had been raised, and prices fell.

      The crisis of overproduction that Marx describes is different. It is a short-lived temporary phenomenon that arises, because technology has led to a rapid increase in productivity, so that a large increase in the quantity of use values is thrown on to the market, in greater quantity than the market can cope with. It also involves a sharp increase in demand for the material that is processed, as a result of this rapid increase in production, so that input prices of raw materials rise, sometimes to levels that cannot be recouped in the price of the end product, and rises in the demand for labour-power that causes wages to rise, and causes a squeeze on the rate of surplus value and profit.

      Because each different sphere of production uses different technologies, and some are engaged in such transformations whilst others are not, in addition to the normal business cycle fluctuations referred to above, there is also what Marx describes as partial crises of overproduction, where one or more spheres might be experiencing such conditions.

      Taking 1847, the situation was as Engels describes there was no general crisis of overproduction. The rate and mass of profit was at record highs, there was masses of gold in the bank of England vaults from all of Britain’s exports of manufactured goods and so on. The problem was that there was a crop failure, whose most noted feature was the Irish Potato famine. As Britain’s industry boomed, and the industrial workforce grew, and used its rising wages to demand more food, so Britain had to import additional food from Europe to meet this rising demand. It paid for the food imports with some of that huge mass of gold in the Bank of England. There was absolutely no reason why that should have caused any problem.

      But, the Bank Act tied the Bank of England’s note issue to the amount of gold in its reserves. So, because gold had gone out of its reserves to pay for this imported food, it reduced its note issue accordingly, just at the precise time when if anything more currency was required in circulation, because the booming economy, and higher value of commodities being circulated – due to higher agricultural prices, and higher value of wages – required a greater amount of currency.

      The consequence was that as the note issue declined, three was a greater need for credit, but the reduction in note issue, meant that firms were less likely to provide credit, because they wanted to ensure they had sufficient cash themselves. As commercial credit gets reduced, so a greater resort to Bank credit is required, and the bank credit means the bank charges a discount rate to turn a Bill of Exchange into cash, and as the Bank of England reduced its note issue, so this discount rate rose, because the Discount Houses, and merchant banks found that they had to pay more to get their own bills discounted by the BoE.

      At the same time, all of those capitalists who had used their frms own cash to speculate in railway and other shares, as part of the stock market bubble, found that this rising interest rate, and inability to obtain credit, affected them as they tried to replace the cash for their businesses they had used for speculation, and to provide the cash they required to pay the future calls for payment on the shares they had bought. Some had also speculated in the purchase of land and plantations overseas, so that, Marx says, they were not insolvent, but could not readily realise the value of these assets in time to provide the cash they required immediately.

      This meant that large quantities of assets and commodities got sold off at knockdown prices as they scrambled for cash, and this led to both overproduction, and a payments crisis.

      Had the Bank Act not existed, the crop failure would have caused agricultural prices to rise – as Marx puts it there was underproduction in agriculture – but such disproportions exist all the time without it leading to a crisis, there is always underproduction in some spheres, and overproduction in others, but the rise in agricultural prices would have been limited by the fact that food would have been imported. Had the Bank not reduced the note supply it would not have led to money hoarding and a credit crunch, and so commodities would have continued to circulate at the expanding rate they were already doing, and as they continued to do, after the Act was suspended, because there was no underlying economic problem, commodities could be sold at good profits. Had the Bank not caused the credit crunch, the Stock Market bubble might have continued for a while, as speculators were able to make their calls, but would have burst sooner or later, but its only effect would have been to reduce he wealth of one group of speculators, and increase the wealth of another.

    2. Thanks for the detailed response Boffy.

      Can I put it this way in regard to investment, firms like Apple, Microsoft, Amazon are in fact investing ‘productively’, see for example the developments in cloud computing etc. I don’t see how a company involved in information technology can afford to rest on its laurels, take the interest payments thanks very much and let their competitors, admittedly take the risk, of investing productively. I would note at this point that this investment by firms such as Amazon have led to some dreadful working conditions, where HGV drivers are forced into a work and sleep existence, warehouse workers are driven to mental breakdown etc. On that note when I read Marx I see this aspect in the analysis, i.e. great technological leaps go hand in hand with terrible working practices, yet when I read your stuff I only see the great leaps.

      I am proposing that there is no dearth in investment at all, just not enough new ideas to invest in, at least productively. Therefore your policies will not have any dramatic affects on the decisions of firms.

      My other point is this, what do you think about the idea that states often take the risk of R & D and that once the risk is taken firms use this research to develop their own products and cherry pick from the brightest university students etc?

      1. Edgar,

        Life is never painted in shades of black and white. Of course, I was never saying that these huge socialised capitals do not engage in ANY productive investment. Clearly, they do, otherwise we would not have had new generations of iPad, iPhone, or Amazon expanding into additional areas of retail, or looking at introducing drones and so on. The question here, is what proportion of profits is getting put back into investment into productive capital, and what proportion is getting put into paying dividends, or giving back capital, or being used for speculative purposes by the company in buying back its shares, or buying the shares of other companies.

        Andy Haldane has pointed out that in the 1970’s, companies only paid out around 10% of profits as dividends, whereas today that figure is around 70%, and Hillary Clinton pointed to a similar figure in the US. So, what do the shareholders then do with the revenue? A large part of it goes into further speculation, buying bonds and shares in the secondary market, thereby blowing up an asset price bubble – and of course, buying shares in the secondary market has nothing to do with providing finance for additional real capital, any more than buying buying existing houses has anything to do with creating additional houses, it simply inflates the prices of those existing houses, bonds, and shares – and also goes into buying other speculative assets, such as property, art, gold, bitcoin, wine and so on.

        Now, of course, therefore, these firms, in so far as they do engage in productive investment with a portion of their capital, its necessary to look at the motivation behind that. Its where I agree with Marx’s analysis in respect of that motivation, as opposed to the argument put forward by Ricardo, and which today is put forward by Michael. In Capital III, and in TOSV, Marx argues that the argument put forward by Ricardo and Michael, that additional investment requires higher prices/profits is wrong. Farmers do not require higher agricultural prices or profits to persuade them to increase their output, Marx says. They only require the knowledge that as population expands/living standards rise, the demand for food/raw materials rises year on year, and so they will be able to make additional profits, even at the same level of prices/profits, simply by selling more, at the same rate of profit. The same is true for the yarn producer, and so on.

        If there is some large rise in demand, which leads to a sharp rise in demand, which causes prices/profits to rise, that is likely to make them step up their investment to take advantage, just as some large fall in demand is likely to cause prices/profits to fall sharply, and lead them to reduce their investment, but setting those events aside, they are going to invest in the expectation of this overall rising trend in demand. The ability of modern large companies to undertake large sophisticated market studies, and demographic studies, and the fact they plan their investment over long time periods, enhances that tendency.

        You are quite right that in terms of the investment they see as necessary – not resting on their laurels – the simple driver for this, as Marx sets out with the farmer, is that if the assumption of rising demand, and therefore, rising mass, even if not rate of profit, is made, each company in any particular sphere is led to have to invest, because if they don’t, their competitors will, and those competitors will thereby gain market share, and also obtain economies of scale etc. My argument is that, despite the attempts of the state to curtail the rise in aggregate demand via the imposition of austerity, and the encouragement of money into speculation as opposed to real capital accumulation, the strength of the underlying long wave economic fundamentals is such that productive-capital has still been led to have to accumulate, it has only been slowed rather than prevented, by the policies of austerity etc.

        In addition, as the pumping up of asset price bubbles have reached a stage where it becomes ever harder to prevent them bursting, the incentive for speculators to put money into them gets reduced, as they start to worry about the possibility of the bubble bursting, especially when central banks decide they cannot provide any further assistance without completely undermining the stability of the financial system. It is only the capital gains that tend to drive the speculators, because yields have been driven to such low levels, in absolute terms.

        It then becomes more attractive for capitalists like Bezos, or Musk and so on, to use their money-capital to invest in real productive-capital, such as with Spacex, rather than to simply act as money-capitalists living off the revenue from buying existing shares. The more that happens, the more workers tend to get taken on, and the mass of wages rises, so the demand for wage goods rises, so even if more fixed capital investment doesn’t occur – because as Marx points out such investment and use of existing fixed capital is very elastic – more capital is accumulated as circulating capital, labour-power, materials, and that in turn increases aggregate demand, and so on, setting in place the process of expanded reproduction, as described in Capital II.

        My argument is that this process will reach a tipping point where this additional capital accumulation reaches a point where interest rates start to rise, and the one thing propping up the speculation in financial assets – low interest rates – is thrown into reverse, causing a crash in asset prices, and providing an incentive for that money to go instead into real capital investment. I see no end of opportunities for new industries and products to be developed that are highly profitable, as and when the restriction on the growth of aggregate demand caused by austerity, and the incentives for speculative use of money, are removed. Indeed, I think the period since 2010 has been an artificially imposed anomaly to restrict growth so as to prop up those asset prices, and the consequence is likely to be that the current phase of the long wave cycle gets pushed out for an additional ten years, as that limitation on the development of new spheres of production gets unwound.

        There is not a lot of difference between Amazon et al, and the situation of large capitals in the 19th century. In the 19th century, it was also common for large companies to feed work out to sweatshops. Again, nothing in life is painted in black and white colours. It comes down to the value created by each particular kind of labour, and of supply and demand. Big technological companies require a lot of highly skilled, high value creating labour, and it tends to get paid higher wages. But, other aspects of those companies activities also requires semi-skilled or unskilled labour, and it tends to be in more than adequate supply so it gets paid very poorly, and has poor working conditions. It often gets farmed out to other firms, in the same way it was farmed out to sweatshops in the 19th century.

        The reason I focus on the technological development is that it is ultimately that which is decisive in terms of an analysis of the dynamic of capital. There are plenty of people narrating the awful conditions etc that capitalism creates, and that can be taken as read. But, as Marx sets out, in Value, Price and Profit, rather than focussing on those conditions which lead to trades union responses, it is more important to focus on the potential that capitalism provides for workers to utilise those technological developments, and the forms it engenders to be able to move forward to socialism. Moreover, the history has tended to be that as the cycle progresses, and the demand for labour-power rises, so the competition that engenders between capitals, causes them to have to raise wages, to improve conditions, and the state itself is led to intervene to impose such restrictions. The rulings in regard to Uber are an example, and as Marx points out the Factory Acts were as much a product of capitalist development as was the self-acting mule.

        I disagree that if workers and managers controlled corporate policy it would have no effect on investment decisions. I think that workers and managers in a whole range of industries would have been putting money into new ranges of goods and services rather than using profits for speculation, and that process in itself would have caused aggregate demand to rise, thereby facilitating the realisation of the surplus value created in those commodities. A Labour government that having handed such decision making to workers and managers,and stripped it from shareholders, and which then scrapped Corporation Tax, whilst imposing much higher taxes on unearned income, and Capital Gains, would create a much greater incentive for such capital accumulation. (Quite the opposite is being done by Trump).

        Yes, quite often the state does undertake the investment in R&D, and also the capital investment in those areas where a very long term horizon exists. Marx describes the situation in forestry, which historically had to be undertaken by the state, because individual capitals were not prepared to wait a century, before trees had grown and could be harvested. But its also the case that large socialised capitals can now take on this activity, because a socialised capital has a lifespan extending long after that of a human being, and often these corporations are able to mobilise resources even greater than that available to the state.

        We also see things like the Co-operative University developed by the Mondragon Co-operatives, and the Dyson University, as well as all the private investment in Science Parks on University campuses, which has a symbiotic relation with the academic and pure research.

      2. I agree with you re investment motives and don’t think I am in that much disagreement with your analysis here.

        “I disagree that if workers and managers controlled corporate policy it would have no effect on investment decisions.”

        Apologies I didn’t realise this was your argument. Well I would agree that if a revolution occurred and workers were put in control of this ‘socialised’ capital a great variety of things would follow, from investment decisions, to pay settlements to well everything. My understanding is that your argument was not this radical. Incidentally I don’t think managers really control, they are more an enforcement of policy set by the controllers. For example in Mondragon the policy is set by the general assembly and then management do what management do, ensure policies are being implemented, check on performance etc etc. So it would really be a case of workers control and not workers and managers control, or maybe the 2 would not be so separated if workers took control.

        From what I have read of Marx he goes into great detail to bring some of the horrors of capitalism to life, as of course famously did Engels. It is a fundamental aspect of their work. Didn’t the first international periodically send out surveys to gauge the conditions of the working class, saying these surveys were to gauge the real conditions and not what was written in law or presented by the bourgeois? Also with Amazon their promise of next day delivery is not a technological achievement but one of horrific working conditions. I have personally heard awful first hand testimony on the price of next day delivery with HGV drivers working 15 hours and then being forced to sit in cages with no refreshments, and being treated like shit.

        Hopefully if workers were in charge of Amazon these working practices would disappear along with the promise of next day delivery, which given the triviality of the goods in question would be no loss to anyone. If workers were not prepared to wait that extra day or two for goods they don’t really need and would sacrifice the mental well being of fellow workers for the promise of next day delivery then I guess the whole point of socialism would disappear! So yes one hopes that worker control will lead to very different priorities!

      3. Edgar,

        I was not even talking necessarily about a “revolution”. In Germany, the co-determination laws give workers the right to elect 50% of supervising boards, and in Germany there has been a far less marked tendency to use profits to simply inflate dividends, and a greater investment in production, demonstrated by the extent to which Germany remains an efficient manufacturing producer, and major exporter of manufactured goods.

        My point was that if that principle was extended so that shareholders had no right to appoint boards, and so on, that would be even more likely the case. In theory, as Germany shows, there is no reason why this is incompatible with the long-term interests of shareholders, because increased investment and increased profits means increased potential for dividends in the longer-term, and higher share prices based on a sustainable basis rather than on speculation. In practice, of course, shareholders would resist any such change tooth and claw, because they would see it as an immediate attack on their dividends, on the price of their shares, and on their control over capital in general.

        They would oppose it in the courts and by every other possible means. Its like a discussion I had with Mike McNair of the CPGB some time ago in relation to workers having control over their pension funds. He said it would require a “Judicial revolution” ,meaning that whole swathes of judges would have to be replaced etc. But, remember the EU proposed extending co-determination across Europe, and the Bullock Report proposed something similar undr Harold Wilson in the 1970’s. It would require a big social movement behind it, and a determined government, but it remains essentially a social-democratic rather than socialist measure. There is after all no bourgeois democratic or juridical justification for shareholders exercising control over capital they do not own.

        And, yes, of course, even under such conditions its not just that workers and managers would take different decisions over investment, but over wags and working conditions. Moreover, as Adam Smith noted such decisions themselves which raise wages and improve conditions usually result in higher levels of productivity, better quality, more efficiency and higher profits. As for workers and managers control, the managers I am talking about are managers, and the control is a democratically determined control.

        Marx’s analysis of working conditions is mostly contained in part of Volume I of Capital, out of 6 volumes in total including Theories of Surplus Value. I am trying to describe and analyse the underlying dynamics of capital, and of the potential for socialist transformation, not provide a narrative description of capitalism. Lenin was fond of saying that when all of the narrative is in one direction, its necessary to bend the stick in the other direction. There is no shortage of Left commentary on the horrors of capitalism, and in fact, it tends to a facile “anti-capitalism”, just as there is a tendency to a facile “anti-imperialism”, rather than any kind of analysis of the actual progressive elements of capitalism which create the possibility of Socialism.

        My nephew is a truck driver working for a large international parcels delivery firm. My sister told me a story a while ago, about how he has continued the family tradition of standing up to bosses. Modern trucks are largely computer controlled, and one day his new boss had complained about the level of fuel consumption on his truck. My nephew explained to him that it was largely out of his control, because the trucks route was determined by its satnav system, and things like speed etc. were also mostly controlled by the trucks computer system. Some days, later, the boss had him in again to say that he had noted that there had been a marked improvement in the truck’s fuel consumption.

        “Yes, my nephew replied, that’s because whenever its been going downhill I’ve let it roll down, but I’ll be buggered if you think I’m going to push it when it come to the uphills.”!

  6. Michael

    I regularly read your blog. Graham Turner is a very bight fellow, I knew him a few years back and published a book of his.. I have been intrigued for years , why economists do not analyse structure, and especially banking structure. British banks are a reflection of a. The colonial past, and b The City of London. Both look outwards and leave small and medium sized capitalist business bereft of a development partner. Germany was given a gift by the USA of a development bank after 1945, which no other country to my knowledge has copied. In Germany this bank remains to this day, owned by the State.

    I would love to see your analysis of this scenario, comparing and contrasting different structure of different country banking system….. including China

    Roger Roger van Zwanenberg Dr


  7. I strongly recommend that those interested read for themselves Marx’s comments on the 1847 crisis in chapters 25, 26, 28, 34, 35 of volume 3 of Capital. There Marx makes it quite clear that the Panic was a result of an actual crisis, and not the cause.

  8. MIchael–

    There’s an advert that’s been superimposed over your “best books” piece, and part of the UK piece

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