The Problem of Surplus and the COVID-19 Pandemic.
‘Can we justify £16bn fortunes when nurses are poorly compensated, care workers are on zero-hour contracts and thousand are homeless?’
by Dr. Pete Stanfield
dirig ancient Assyrian term for surplus (Veenhof, K. R. 1972. E. J. Brill, Leiden)
Since the founding of the first city states, the question, “Who controls the surplus?” has been shrouded in kings, clerics and class. Claims to the riches created in large urban societies have been made and upheld by tiny minorities using religion and differential status, notably including slavery. As a consequence, radical inequality is the defining feature of post-nomadic society. Today’s political economy is haunted by the apparently humdrum accounts pressed into Sumerian clay tablets more than 3,000 years ago, recording the city’s inequitable transactions. The currency may have been beer at that time but paper promises and pixels do not mask our own radically unfair principals of the distribution of wealth within highly developed capitalism.
In the global economy of the 21st century, surplus has become concentrated in the hands of fewer and fewer super-rich individuals. Whether you inherit money or are a self-made entrepreneur, private ownership of the means of production enables you to extract value from a large number of wage labourers and accumulate capital which in turn can be increased to extremes through investment.
radical inequality is the defining feature of post-nomadic society.
The richest people in the UK have lost £54bn in the first two months of the COVID-19 pandemic. However, the top ten wealthiest still claim fortunes between £10bn and £16bn for themselves and their families. These individuals have control of the country’s finance and industries, including household technology, banking, brewing, real estate, media, music, internet, mining and retail.
Interestingly, most of their fortunes grew rapidly after the financial crisis of 2008 at a time when the vast majority of the population, in particular public employees such as National Health Service workers, were put under severe economic restraint through government policies of ‘austerity’. The bailing out of the banks through public funds after their recklessly greedy behaviour prior to 2008 was a classic case of privatising profit and publicising debt. Certainly, the tiny class of super-rich individuals has not suffered ‘austerity’. For example, in 2014 the Business Standard indicated that the Hinduja brothers (industry and finance) were worth £11.9bn whereas today the Express and Star states they are worth £16bn. From the same sources, the picture is similar for David and Simon Reuben (property and internet) who were worth £9 billion in 2014 and are now worth £16 billion; Sir Leonard Blavatnik (investment, music and media) who was worth £10bn in 2014 and is now worth £15.78bn; Alisher Usmanov (mining and investment) who was worth 10.65bn in 2014 and is now worth £11.68bn; Charlene de Carvalho-Heineken and Michel de Carvalho (inheritance, brewing and banking) who were worth £6.36bn in 2014 and are now worth £10.3bn; Hugh Grosvenor, the Duke of Westminster, (property) whose family were worth £8.5bn in 2014 and are now worth £10.29bn. Sir James Dyson, self-made inventor of the bag-less vacuum cleaner, and today the richest individual in the UK, saw his fortune grow by £3.6bn to £16.2bn in the past year alone.
The bailing out of the banks through public funds after their recklessly greedy behaviour prior to 2008 was a classic case of privatising profit and publicising debt.
In 2014 there were 104 billionaires in the UK with a combined wealth of £301bn. Today there are at least 147 billionaires in the UK (Profit – Pakistan Today, 17th May, 2020) with the combined wealth of the thirteen wealthiest individuals standing at about £160bn*. The combined wealth of the top 1,000 wealthiest individuals in the UK today is estimated at £743bn**.
Due to COVID-19, it is estimated that UK government debt will be £300bn by the end of 2020, partly as a result of paying the wages of private sector workers. Even 6 years ago, the top hundred wealthiest individuals in the UK could have paid off the whole of this projected debt; today, the top 1,000 wealthiest could pay it off twice over with money to spare. And yet, five of the top ten billionaires in the UK, including the Hinduja brothers, the Reuben brothers and Sir Leonard Blavatnik, own companies that have benefited hugely from government furlough schemes rather than pay down their immense personal wealth to protect jobs. As of 29th May 2020, the furlough scheme for private workers (not including self-employed) has cost £15bn. Sir James Dyson alone (whose company hasn’t furloughed workers) has the wealth to cover that cost with more than a billion to spare.
Who controls the surplus?’ ‘We all should!’
There has been at least one major step toward a more balanced distribution of wealth in the UK; the creation of the National Health Service. If we think it strange that the US, the largest capitalist economy on the globe, struggles to create such a universal care system for its citizens based on need rather than the ability to pay*, we should remember that it took decades of work to achieve in the UK and was often vigorously opposed. From the socialist Beatrice Web, who led the Royal Commission on the Poor Law in 1909, through working class reformers such as Dr. Benjamin Moore, who founded the State Medical Association in 1912 which foreshadowed the NHS, to the miner’s son, Aneurin Bevan, the post war Labour Government Health Minister who finally opened the NHS on 5th July 1948, the NHS struggled into existence.
This great experiment answers, ‘Who controls the surplus?’ with the socialist principle, ‘We all should!’ Cooperative policies that share wealth through the tax system to enable health have been shown to work as a balance to the private ownership of the means of production but in the past decade the balance has swung toward a capitalism that makes a fetish of the so-called ‘market’ as a means to generate wealth for all through job creation and the payment of tax to the treasury, when in fact the market is controlled by a tiny set of individuals who extract value from labour largely for their own benefit.
While some low paid workers deliberately try to keep their earnings to a minimum to avoid paying tax, the super-rich can afford to pay accountants whose primary role is to minimize their tax burden. Indeed, even in the early years of the NHS, the principles of, ‘free at the point of delivery’ through common taxation was challenged as cost and demand rose and since then the NHS has been through many similar vicissitudes. Although the Thatcher government continued to support the NHS it privatized most other areas of the economy including energy, water transport and, significantly for the current pandemic, social care.
Whilst the NHS has been a huge cooperative success and is among the most efficient health services in the industrialised world, spending 30% less then Germany for example, we must not take its existence for granted; for the past decade its financial situation has been under serious threat from laissez-faire capitalism that demonstrates a religious zeal for trapping down government, lowering taxes and reducing public spending (except of course when it is needed to bail out forlorn banks). The budget for the Department of Health and Social Care in England for 2019/20 is £140.4bn. In the ten years since the 2008 economic crash its budget has grown at an average of 1.4% per annum compared to an average of 3.7% per annum since 1948. There is a new 5-year plan injecting £33.9bn cash (unadjusted for inflation) to the NHS by 2023/24 but the focus is on day-to-day expenditure rather than long term capital investment in equipment and buildings. By comparison the wealth of the richest individuals in the UK has grown between 30% up to more than 50% in the same period.
[There is an] extreme contrast between the recent de-investment in Health and Social Care and the extraordinary growth of the wealth of a few individuals in the UK since 2008.
This sketch of the extreme contrast between the recent de-investment in Health and Social Care and the extraordinary growth of the wealth of a few individuals in the UK since 2008, makes it a little easier to understand why, in spite of a plethora of research articles demonstrating the urgency to prepare for a global pandemic and ongoing government exercises demonstrating its lack of readiness to deal with such a pandemic, little was in fact prepared for.
The government did not stock-pile ventilators, personal protective equipment (PPE) or body bags because the government’s role was considered to be taking a back seat and allowing the invisible hand of the ‘market’ to look after society; but the market merely allowed capital to accrue to the inventor of a bag-less vacuum cleaner. What strange values have emerged? The market is clearly driven by profit, not values; profit for its own sake rather than values that protect the health of the majority. Sure, Sir James Dyson offered £20m of his own vast fortune to build ventilators when the government was faced with a shortage but that was far too little far too late. Instead, the government removed COVID-19, the disease at the heart of the worst global pandemic for 100 years, from its status as a High Consequence Infectious Disease with the apparent justification that it no longer met the 5 stringent criteria, in particular that the case fatality rate was not high enough. It has been frequently reported in the media that insiders to the Special Advisory Group for Emergencies (SAGE) saw this as a rationalization of the situation where adequate equipment was unavailable so that downgraded PPE recommendations could be issued.
… allowing the invisible hand of the ‘market’ to look after society; but the market merely allowed capital to accrue to the inventor of a bag-less vacuum cleaner.
The situation with the social care of the elderly has been perhaps more traumatic than that of the NHS. The privatisation of care homes has led to them being serviced by some of the lowest paid labour in the UK, many of whom are on zero-hours contracts and will have felt compelled to work even if unwell, with the risk of infecting the elderly in their care. It has also led to a lack of coordination with the NHS and the tragic ‘seeding’ of homes with COVID-19 as elderly patients were returned to care homes from hospital wards. Such coordination is unlikely to be achieved through a heterogeneous private market of care homes; government funding and detailed control through local government would have been the best way to have prevented this tragedy.
The absolute number of COVID-19 related deaths in the UK is the highest in Europe and second only to the US. To date, the UK has recorded 59,537 more deaths than usual since the week ending March 20th. This indicates that COVID-19 has directly or indirectly killed 891 people per million (Financial Times; 28/05/20). This is second only to Spain which has recently updated its figures at 921 people per million. Excess deaths compared to similar statistics in other countries is the key statistic in measuring the success of disease control and this is understood by scientists and politicians alike, including the Prime Minister. The UK was fortunate in having plenty of warning about the consequences of COVID-19; it had weeks to get its house in order, but as John Ashworth, the Shadow Secretary for Health has said, the UK government was too slow to stockpile PPE, too slow to get a testing regime in place, too slow to lockdown and too slow to protect care homes (Financial Times; 28/05/20). Why?
the UK government has failed to respond appropriately to COVID-19 because it espouses and practices laissez faire, market capitalism
I believe the UK government has failed to respond appropriately to COVID-19 because it espouses and practices laissez faire, market capitalism; that it idealizes economic freedom and the profit motive in the mistaken belief that it incentivises hard work, entrepreneurialism, competitiveness and creativity. When it comes to an acute pandemic this belief has been exposed and undermined. The neo-liberal UK government is now paying billions of pounds in wages to private workers and the self employed. It has had to get its hands out from under its buttocks and order lenders to offer mortgage holidays, prevent landlords from evicting tenants, and take the homeless off the streets. The COVID-19 pandemic demonstrates that just such a more equitable distribution of wealth is possible. It can be possible going forward beyond the pandemic. Do we need bag-less vacuum cleaners when the NHS is under-funded and lacks basic PPE? Can we justify £16bn fortunes when nurses are poorly compensated, care workers are on zero-hour contracts and thousand are homeless?
It is time we moved away from ancient principles of accounting that allow capital to accrue to the few and developed a value oriented economy; one that prioritises core human needs and shares the social product more equitably. We must continue the struggle to maintain investment in the NHS for the long term and bring other essential services back into public, not private, ownership. The COVID-19 pandemic has a silver lining; it demonstrates that we do not need a ‘stripped back state (with) its underfunded engines spluttering on the corrosive oil of social inequality’ (Rachel Shabi, Independent 31/05/20).
We need a cooperative economic model.
We need a cooperative economic model that is not only possible but also essential if we are to face future global challenges such as climate change and indeed a new and more virulent pandemic. Global inter-connectivity, our increased close interaction with wild species and intensive factory farming of interbred, immune suppressed poultry and pigs makes another pandemic highly likely. From our knowledge of the 1918 influenza pandemic, the next one could destroy the lives not only of the elderly and vulnerable but also of the young and those in the prime of their lives. Only a cooperative economy, focused on long term goals, with wealth and power more equally distributed through fair taxation and profit sharing will enable us to overcome such a challenge.
*The Walton family in the US, owners of Walmart, are worth £160bn equal to the top 13 wealthiest UK individuals.
**The wealth of the richest group of individuals in the US has grown by a staggering 80% in the past 18 months. At the same time the wealth gap between the richest and the poorest in the US is at its highest level for 50 years (CNBC 13/02/2020).
Dr. Peter W. Stanfield
Peter was an ordinary post-WW2 working class kid who benefited from reforming policies of the 1945 Labour government which the subsequent Conservative administration largely continued. He particularly benefited from the socialist education policies of the 1960s and 1970s attending a comprehensive school with facilities and teaching that far outstripped the old-fashioned Grammar school in his area. This offered him a cruise around the Mediterranean at the age of 13, a tour that previously only wealthy families could afford. A bull-fight in Tarragona, an audience with the Pope, a Greek play in Adelphi, the Uffizi Gallery in Florence and the canals of Venice made life back home uninteresting and whetted his appetite for travel and adventure.
After studying at teacher training college he spent 3 years as music teacher in his home town before taking off to Iran, learning to ski in the Elburz mountains and hitch-hiking around the country during the 1978/79 revolution in a last ditch attempt to visit the great architecture of Shiraz and Isfahan and the ancient ruins of Persepolis. After unsuccessful attempts to settle back in the UK he left for the desert town of Al-Ain in the United Arab Emirates, climbing Jebel Hafit in the days before a road led to the top and learning to SCUBA dive in the Indian Ocean.
Returning to the UK to take a BA in Sociology and English Literature he then left for Kuwait, continued SCUBA diving the tiny Arabian Gulf islands and taking multiple trips to the Red Sea where Romance took him to Copenhagen. Sailing a wooden yacht from 1918 around Denmark with colleagues led to him building an Inuit kayak from wood and cloth and setting out on 2,000km journey from Copenhagen to the North Cape which he completed in 100 days paddling. He then spent several years working as a casual ski guide in Norway often skiing alone on Hardangervidda, enjoying the immense freedom of that seeming wilderness.
A kayak trip on the Urubamba river and Lake Titicaca in Peru went ahead but having lived for board and lodging for years, often relying on the kindness off others for support, Peter made a move to Oman working as a civilian for the Royal Air Force of Oman where he gained a passion for windsurfing, regularly riding the point break in Al-Ashkarah on the eastern coast in the monsoon and climbing the mountain ranges in the winter, twice entering the Majlis Al-Jinn, the second largest dome chamber in the world. During this time he studied for his Master’s Degree and then returned to Al-Ain teaching in the university for several years and getting married before moving to the Western Region of Abu Dhabi. Here he continued his adventures with a sailing kayak around the islands, read for his Doctorate in Education and became the father of 3 beautiful daughters.
Peter now lives in Somerset with his family, teaches, walks and cycles the Mendip hills and sails a modest yacht on the Bristol Channel. He is convinced that without the socialist policies of the 1950s, 60s and early 70s and the inspiring education this enabled, his life may well have taken a far less adventurous trajectory. This is why he continues to research and write about radically inequality. Everyone must understand that it is not inevitable. It is a question of power to create equal opportunities; knowing is empowering.