Written by Mark Kirby

It is unfortunately the case that the last Labour government left a problematic legacy not only with their involvement in the illegal war in Iraq, but also in terms of an image of economic incompetence, largely due to the failure of the Labour party to challenge the idea that they were responsible for the Financial crisis of 2008. Yes, Labour were in government then and yes, it is obvious they were too lax in their regulation of the financial sector BUT they did not force bankers to invent ever more risky derivatives to play casino finance with or to crash the world economy costing trillions to deal with the problems caused. Gordon Brown did do what was necessary to save the UK from an even worse fate. Even though there was talk of a resurgence of Keynesianism we soon returned to business as normal.

The biggest con in recent history was the way that the bankers got the state to pick up the costs of their crisis and then having lent them the money to clear up their mess by adding billions to state debt, joined in the general Tory chorus of state borrowing being out of control and ruining the lives of those trying to run businesses. These people should be up before a court of law for their actions and not allowed near the running of anything risky for the rest of their lives. They most certainly should be challenged at every step as should the Tory narrative on the crisis. The banks not Labour caused. Labour not the banks solved it. But in terms of the rich they did not suffer losses as a result of this quite the opposite even by 2015:
“Britain’s billionaires have seen their net worth more than double since the recession, with the richest 1,000 families now controlling a total of £547bn.
While average UK incomes have yet to recover from the worst economic crisis since the Great Depression, with thousands still flocking to food banks, the financial elite have emerged not only with their fortunes intact but holding a larger than ever slice of the cake.

Their assets have increased from £258bn in 2009, a rise of more than 112%, according to the 2015 Sunday Times Rich List. The past 12 months saw the biggest bounce for the UK super-rich in six years, and London now has 80 billionaires, up from 72 last year – more than any other world city.” https://www.theguardian.com/business/2015/apr/26/recession-rich-britains-wealthiest-double-net-worth-since-crisis
In 2018, the wealth of the richest 1,000 people in the UK is £724 billion which is greater than the poorest 40% of households combined (£567 billion). It might be objected that this is wealth, not income but obviously holding this amount of wealth is also a way to generate income whether in the form of rent, dividends on shares, interest on government bonds or bank interest.

That capitalism is based on the privatisation of gain and the socialisation of loss, is a clear lesson to learn from the last crisis (and indeed all the other ones) as well as the lesson that it leads inexorably to greater and greater levels of inequality with food bank demand at record levels along with the billions owned by the super-rich.
So clearly something must change. But for decades we have been told there is no alternative. BUT THERE IS.

However, to achieve this, we do need to ensure we adjust the way we think and talk about economics. Accepting no-liberal market economics leads you down a certain path. You must choose another path. Fortunately, although widely ignored, that path has always been there.

Ultimately at its simplest, it means a return to Keynesian and post-Keynesian economics that was taught as standard in the 1960s and even 1970s but has now largely disappeared from the economics syllabuses to be replaced by monetarism and neo-classical/neo-liberal nostrums that all turn on a simple idea:
THE PRIVATE SECTOR IS EVERYWHERE AND ALWAYS BETTER THAN THE PUBLIC SECTOR.

Well if the aim is to enrich a few and impoverish everyone else in massive amounts of debt which will frighten them away from taking any radical action then of course this is true. Other than that, it is not true. Marianna Mazzucato has shown quite clearly in her book The Entrepreneurial State (https://marianamazzucato.com/entrepreneurial-state/) that most of the inventions hailed as successes of the private sector in fact largely rely on state inventions and research prior to the private sector getting anywhere near them. Therefore, we should use the power of the state to generate economic benefits. But that is not the only possible aim.

Gosta Esping-Andersen of the University of Barcelona https://www.upf.edu/web/esping-andersen wrote a famous book in 1990 called The Three World of Welfare Capitalism. (Download a PDF copy at https://lanekenworthy.files.wordpress.com/2017/03/reading-espingandersen1990pp9to78.pdf) in which he talked about the very different models of capitalism on offer and the ways this impacted on the welfare state provision available. The details need not detain us here except to say that the most extensive provision was in the Scandinavian model.

The key is the concept he developed to explain all this, namely decommodification. It is no accident that Marx started Capital Volume 1 with a chapter on the Commodity because buying and selling is at the heart of the market economy and understanding its emergence and its role in the move from feudal society to capitalist society is central to understanding how we may transition to socialism.
Marx pointed out that a key problem with barter was that you not only had to find someone with whatever it is you wanted but also that they would want whatever you had in exchange. Not surprisingly, this caused problems and humans soon invented an intermediary in the form of money to deal with this.
This means we can exchange goods for money and use the money to buy something different.

In technical terms we have C – M – C1
Where C1 is something different but of equal value to C.
There is nothing inherently problematic in this (although with the extension of credit it does get a bit more complicated and lead you off, if you are not careful, in the direction of libertarianism, the Austrians and the Chicago School which are all best avoided) but neither is there a way for anyone other than the direct producers of a good to make a profit. (If you want to read more about these argument Marianna Mazzucato has recently produced a book entitled The Value of Everything https://marianamazzucato.com/publications/books/value-of-everything/ which covers all these arguments). To do that you need a different form of circulation which works in the following way:
M – C – M1 where the sum of money at the end (M1) is greater than at the start.
There are essentially two ways you can achieve this. Either you pay the people who produce C less than the value of what they have produced (exploitation of labour) or alternatively you charge the consumers of the good much more than it is worth (oppressive ripping off consumers).

When you read that of the average £2.20 price of a cup of coffee in one of these chains, less than 8p goes to the direct producer of the coffee, you can begin to see how this works.

So, the move from C-M-C1 to M-C-M1 is a shorthand of the emergence of market society and the wholesale transformation of society that came with it.
Commodities are valued not so much for their use but for their exchange-value and every so often we have price bubbles when people pay mad sums of money for tulips or houses and which are generally followed by a massive crash, which must be bailed out. In between the daily grinds means the owners of capital get richer and the workers and consumers get poorer.

So decommodification represents quite a powerful statement of intention to put this process of marketisation or commodification into reverse. Clearly the example of the welfare state fits this. The founding of the NHS in 1948, the establishment of free education to the age of 15 (later 16) in 1944, the establishment of benefits to help you if you were elderly or in poverty, social housing with subsidised rents were all ways of solving 4 of Beveridge’s 5 giants. The 4 were Ignorance, squalor, want, and Disease.
But there was and is a fifth and that is Idleness.
Keynes pointed out that a market economy does not necessarily arrive at an equilibrium at the most productive point but could and did exist in such a state where there was mass unemployment and as a result, much less production that could be achieved meaning lower living standards.
This model was accepted after WW2 and formed the basis of much higher levels of government intervention in the economy.

It is this that Thatcher rejected with her view that states are the problem and we need to reduce public expenditure. Famously she compared the state budget to that of a household and argued that we needed to live within our means. This appeared plausible but is economic nonsense. Unfortunately, it has not been consistently challenged and this is something that needs to be done repeatedly. Here is the key reason they are not the same:
If a household decided to reduce its expenditure to pay back some debt, it will not lead to a fall in its income. However, if a state decided to reduce its expenditure to pay back some debt, this is precisely what will happen.

If government decided to cut public expenditure or increase taxes to the point where they exceeded total govt expenditure then the effect of this would be that households would have less money to spend leading to a fall in VAT revenue, companies would have less income and possibly less profit leading to less Corporation Tax revenue, they may even lay people off leading to less income tax revenue and also those people now unemployed applying for welfare benefits. As a result, the balance sheet of the state would not improve as a result of these austerity measures, but it would make things worse.

It is for precisely this reason that we do not support Austerity in any form and reject not only the Austerity measures imposed by the Tories (and their Lib- Dem lapdogs) since 2010, but also the current Lib-Dem proposal that we should have a state of Permanent Austerity.

The concept of decommodification allows us to express all this transformative change in one simple concept. So, ensure we always use it to explain what we are going to do.
After all the 2019 Labour Party Manifesto is promising to do the following long list of examples of decommodification (over 25 examples of decommodification from the Manifesto):
Decommodification
• Free dental check-ups
• Scrap prescription charges in England
• Ending hospital car parking charges
• Ban fracking
• Stop the sale of County Farms
• Public ownership of energy providers
• Suspend ‘Right to Buy’ and allow councils to re-purchase private-rented homes
Public ownership of water and energy providers, as well as railways and Royal Mail.
• Introducing a National Care Service, linked in with our NHS
• Free social care provisions for all over 65-year olds.
• Reinstate free TV licenses for over 75s
• Bringing our railways back into public ownership and reopening branch line closures
• Free bus travel for under 25s
• Protecting free bus passes for pensioners
• Extending paid paternity leave from 2 weeks to
• Extending maternity pay from 9 months to 12 months
• Four new public holidays
• Scrapping university tuition fees and re-instating maintenance grants
• Introducing free school meals for all primary school pupils
• Bringing back the Education Maintenance Allowance for 16-18-year olds
• Making lifelong learning free: removing fees from adult learning
• Ending privatisation and bringing services back in-house
• Free social care in England for over 65s
• 30 hours universal free childcare every week
• A Sure Start centre in every community
• Abolish employment tribunal fees
• Public ownership of rail, Royal Mail, water and energy distribution and the national grid
• Free, fast Wi-Fi delivered to all homes with part-nationalisation of telecoms

By decommodifying things, we not only make our economy work for the many, we also make our society more democratic and fairer.
Services provided in the public sector are regulated by government and the power to elect governments is something held equally (one person, one vote) whereas services provided in the private sector are regulated by the market where the power is money which is most certainly not equally held. Moving things from the private sector to the public sector therefore has the structural effect of strengthening the power of workers and consumers compared to capitalists.

But there are ways and means of doing this. The Green Party and others argue that to consider the need to change the economy to deal with climate change and to move to a post-work economy, we need to introduce a Universal Basic Income (UBI). This would be an amount of money payable by all and effectively paid for by abolishing mean-tested benefits and tax-free income allowances. While this is an interesting idea, there are obvious problems with it in terms of practical application and its distributive effect with one model favoured by the Green Party having the effect of making the living standard of the poorest 30% of households worse not better. Equally, this view is often supported by neo-liberals like Friedman on the basis that it would enable them to abolish the welfare state and that is clearly something we would not wish to see. However, the universal idea is something of value and fortunately there is an alternative that allows us to use this idea, namely Universal Basic Services (UBS).

As an idea this has been developed by thinkers at University College, London (UCL) and the details can be found in the following publication www.ucl.ac.uk/bartlett/igp/sites/bartlett/files/universal_basic_services_-_the_institute_for_global_prosperity_.pdf

If you read it, you will see that they are proposing as a start-point the provision of 4 key services at an estimated cost of £42bn pa. One of these is free phone and broadband estimated to cost £20bn and now forming part of the 2019 Labour Party Manifesto

Hopefully in time, we will also be able to consider and include some of the others or even extend it further using the Green Industrial Revolution Fund to ensure that any such services also enable us to deal with the over-arching issue of climate change. More details of this can be found in the new book by Ann Pettifor.

You can listen to the details of this in a discussion between Ann and Grace Blakely in the clip below

So, to summarise

Decommodify

Decommodify

Decommodify

Decommodify

Decommodify

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