City of London "the shocking study"
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From True Publica about a report published last October by Sheffield Political Economy Research Institute (SPERI) but given no publicity in mainstream media, supposedly because of the damage that would be done to the City and financial circles.
It’s well over my head but thought there are some of you who would probably have comments to make and maybe offer some context. ALB?
First thing, this is not cranky or conspiracy theory stuff but a genuine study (though the bit about the clerk from the City sitting at the table in the House of Commons is overdone; this is a historical leftover that shows that the merchants of the City did once have some special influence, but they don’t any more).
What goes on in the City of London (and other financial centres) is a redistribution of wealth (surplus value) produced elsewhere and so is a zero-sum game; no new wealth is produced so those capitalists and chancers who get wealthier do so at the expense of other capitalists and foolish workers who put some of their savings there who get poorer.
What I would challenge is the study’s view of the source of the wealth that is redistributed/gambled there. They suggest that it comes from the productive sector of the UK economy. Some will of course, but most comes from the surplus value part of wealth produced (mined or manufactured) in other parts of the world. The City is an international financial centre which attracts surplus value produced in all parts of the world and, in doing so, does contribute to increasing the UK’s GDP as a statistic.
The City has always done this but at one time UK capitalism also had a large manufacturing sector. This largely ran down in the 1980s when the then Tory government (under Thatcher) decided to give absolute priority to the City as a source of GDP income, mainly from abroad. This policy was continued by successive governments including that of Tony Blair and Gordon Brown (so the study is right to say Labour has been just as much responsible as the Tories for prioritising the City over manufacturing industry).
Corbyn and McDonnell are promising to reverse this. If they are assuming that they can simply divert to UK manufacturing industry the surplus-value sucked by the City from abroad they (and the authors of this study) are in for a shock. Capitalism doesn’t work that way and the money that now flows to the City will flow elsewhere, e.g. New York, Frankfurt or Amsterdam. If Labour gets elected and their policy fails (as it will) prepare for the blame to be put again on “the gnomes of Zurich” as Harold Wilson did for the failure of his Labour government in the 1960s. Unfortunately we’ve seen it all before.
Governments don’t run capitalism we have always maintained. It is a good piece Janet which is illustrating much of what we were saying about it being inter-capitalist financial versus industrial/manufacturing capitalists.
Trying to rely on a shaky memory here, but the emphasis in the 1960’s was more on ‘the white heat of technology’ changes within the uk economy, which saw various government led attempts to set up and fund manufacturing hubs and retooling failing industries eventually abandoned by the mid seventies.
It began surely back in Thatcher’s time and was consolidated by Blair/Brown government.
You beat me to it Adam.
Thanks, Adam, Matt.
Whether I’ll ever get my head around it well enough to converse effectively on this subject is the question! On a very basic level it feels that if the majority could really understand/grasp this then we’d be well on the way to our goal – simplistic, I know. – If only.
Actually Janet it’s not that complicated. You don’t need O level economics just common sense. Anybody can see that the only way that new wealth (things and services) can come into existence is by humans working on materials that originally came from nature. And that merely shuffling money, which is all they do in financial centres like the City, does not, cannot, create new wealth. All it can do is redistribute wealth that has already been produced by people working.
Whether an anachronism or not, the Square Mile ruled by the Corporation, is an example of real elite power. The City of London regardless of its historical origins remains a unique power-centre with special benefits, exemptions and prerogatives that has successfully defied attempts to reform its legal sanctioned status. The economics of it is the exact same as a den of thievery where the robbers divide up their spoils stolen from the actual producers of wealth – the workers of the world.
Our blog has highlighted its privileged position several times.
https://socialismoryourmoneyback.blogspot.com/2012/07/corporation.html
https://socialismoryourmoneyback.blogspot.com/2012/12/tax-heaven-is-tax-havens.html
https://socialismoryourmoneyback.blogspot.com/2013/11/the-square-mile-again.html
https://socialismoryourmoneyback.blogspot.com/2016/03/the-tax-haven-of-all-tax-havens.html
reply to Adam’s: yes, I get it at that level. My problem starts with the almost internal denial that most (?) people maintain. They would probably be shocked and outraged at reading such figures, and see the perpetrators as crooks BUT they still can’t see the basic common sense of abolishing money in favour of an egalitarian world society, etc. etc.
The flow of money out of the City has already begun:
That’s about 10% of banking assets in the UK. Financiers were split over Brexit with some funding Remain and others funding Leave, but in general the City favoured Remain. Those funding Leave were mavericks who wanted out to avoid further EU regulation of their often dubious activities. They won, but some of them too are moving their assets — and fiscal domiciles — out of the UK.
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