Friedmanomics took hold of the American and UK governments back in the 1980's and - aided by the collapse of the Soviet Union in 1989 - spread like an insatiable plague of greed-bugs throughout the world. Now - with the collapse of banks and the crashing of stock markets - we may be seeing its demise. Let's hope so.
Before the 1980's, the consensus in Britain was that sharing the wealth gave us stability, cohesion, prosperity and strength. This wasn't some radical hypothesis; it was a proven fact demonstrated by the experience of sixty years of national life.
For sixty years, since the early 1920's, social democracy had been in the ascendant in Britain, and life had improved. By the 1960's, people knew that social democracy, and the economic theories of John Maynard Keynes, worked because the evidence was all around them. Wealth redistribution improved infrastructure, provided health services, care for the elderly, sickness benefits, unemployment benefits, cheap housing and pensions.
The public ownership of public services - by removing the profit element - gave the British people cheap water, gas and electricity and affordable bus, train and postal services.
By the 1960's, Britain had become affluent following these policies - as had other countries in Western Europe.
But in the 1980's, the British ruling class changed direction. It abandoned Keynesian economics in favour of Friedmanomics - named after the economist Milton Friedman. Depending on who's writing about it, Friedmanomics is also known by other names, such as: Neo-Con economics, Neo-Liberal economics, Anglo-American economics, Reaganomics (after Ronald Reagan, the US President) and Monetarism.
Anyway, France still follows the Keynesian model (despite recent threats by President Sarkozy to "go American"), so most of her major companies are - either wholly or in part - owned by the French people. One of these companies is Electricite De France which not only provides France with the cheapest power in Europe but also has bought three major British electricity suppliers and all our nuclear power stations. Right now, Electricite De France controls more than 30% of Britain's electricity.
Equally disturbing is that a further 50% of our electricity is owned by Germany and Spain.
Friedmanomics - which insists on the selling of public services to the highest bidder - has crippled us. The high price we pay for electricity now subsidises the low price of electricity in France, Germany and Spain. These nations are our commercial competitors. We've muffed it up. Or rather, we haven't - our government has.
A state-owned company will always provide better/cheaper services than a private company because its profits are not absorbed by taxes, shareholder-dividends, or high executive salaries, bonuses and pensions. A government-owned enterprise also accumulates much greater asset value than a private company because its surplus value is ploughed back in. Also, in a genuine democracy, when a business is government-owned, it's answerable to the people. If the service is poor, or prices too high, the nation can use the ballot box to vote out those responsible.
Best of all, publicly-owned companies foster social cohesion.
Until 1972, things were progressing in the UK. We were prosperous and most of our wealth benefited most of our people. In 1972, the gap between rich and poor was its lowest in history. The average differential between the lowest and highest-paid worker was x5. So, if the lowest-paid person received £100 a week, the managing director received £500 a week. Today, the average differential is x24. If the lowest-paid worker receives £400 a week, the managing director receives £9,600 a week.
In 1972, the railways were owned by the nation; so were the coal-mines which provided 80% of our electricity. The steel industry was government-owned; a great advantage to Britain's commercial businesses which used metal alloys in manufacturing - such as our motorcycle industry (the largest in the world) and our motor-vehicle industry (the second largest in the world). Good, inexpensive British steel also helped our shipbuilding, aeronautics, telecommunications, defence, engineering and construction industries.
In 1972, education was free, up to and including university, and 94% of our schools were publicly-owned. Rents were low. Food was cheap, and our agriculture was strong because of subsidies to farmers and tariffs on imports. Health-care was free. Dentistry was free. Optometry was free. Balding men could even get free wigs.
After 1945, approximately half the wealth created by the population was taxed by the government and redistributed to benefit the nation as a whole. The majority of people believed this was a good thing.
Trade Unions, whose constitutions are more democratic than those of state institutions, fought the government over working conditions and wage rates, thus encouraging the growth of equality and social democracy.
The only downside to this Keynesian system was that it was difficult (though not impossible) for individuals to become super-rich.
All this began to change in 1973 when OPEC, the oil cartel, jacked up prices. The UK economy had become overly dependent on oil, so the abrupt price rise caused a recession. This was the first in several shocks which, throughout the 1970's, softened up the public for a change in economic policy.
During the 70's, the British government - lobbied by anti-Keynesian bankers and businessmen - reduced the funding of public services and caused double-digit inflation by increasing the money supply. Britain had come off the gold standard in 1971, so there was nothing to stop the government printing cash.
When public-sector workers demanded wage increases to keep pace with inflation, the government refused - precipitating strikes and hardship. By the end of the 70's, people felt battered and bruised. What the hell had gone wrong? Why had we fallen so fast and so far from the sunny uplands of the 1960's?
The optimism of 1969 had, by 1976, become a bewildered conviction that there was - as the punk slogan put it - "No Future". A terrible dark pessimism stalked the land.
In hindsight, the sensible course would have been to return to the Keynesian mixed-economy of the 1960s - and to have completed the reforms begun during Harold Wilson's second government.
Alas, it's against human nature to turn the car around and get back on the right road. We keep driving onward, hoping to find a new and better road.
We found it (not) in Friedmanomics.
Friedmanomics was American and America was rich, ergo Friedmanomics would make us rich too, right?
Wrong.
Although we weren't really to blame for being wrong. We didn't know that much of America's wealth was illusory. We didn't understand the boosterism of American culture. We didn't understand the New-World mindset which made money out of chutzpah, gambling, salesmanship and criminality. We didn't understand "spin". We didn't know that, despite the evidence of Hollywood movies, most of America was poor. We had no idea that, if you averaged out the states, America was at about the same level of affluence as Turkey.
The wealthiest nations in the world are actually Switzerland, Norway and Sweden - all social democracies which follow the Keynesian economic model.
But we didn't know this. We thought the way to get rich was by copying the Americans and singing the hymns of Friedmanomics - the dogma of the US Federal Reserve, the International Monetary Fund and the World Bank ("What's good for General Motors is good for America"). Margaret Thatcher believed this. The bankers and businessmen who financed the Conservative Party believed this too.
By the way, despite his readiness to take credit for it, Milton Friedman was not the author of Friedmanomics. What he was advocating was simply 19th Century Free-Market Capitalism (the same Free-Market Capitalism which worried Karl Marx) - expressed in different jargon.
In essence, Free-Market Capitalism is "buy cheap, sell dear."
Wealth is accumulated by manufacturing products and providing services as cheaply as possible, then selling them at the highest possible price. The profit is pocketed by the capitalist and his investors, making them rich.
The capitalists of the 19th century (most of them) replicated the behaviour of medieval lords. They treated their workers the same way medieval lords had treated their peasants, and fought wars against commercial competitors just as medieval kings had fought wars against rival monarchs.
The capitalists who did well in these wars, purchased the stately homes and estates of the previous century's aristocrats and placed their own men in government - just as their ruling-class predecessors had done before them.
When faced with competitors they could not beat, the capitalists did the same as their aristocratic forbears and formed alliances. They turned their rivals into friends. If you can't win a monopoly, secure a duopoly; if you can't get a duopoly, form a cartel.
In the mid 19th century, Benjamin Disraeli (later Conservative Prime Minister) wrote a book called "Two Nations" in which he observed that Britain was two countries: one small country of rich people supported by a second, very large, country of poor people.
The poor (impoverished by working for, and paying rents and taxes to, the ruling class) - needed to learn how to co-operate with one another in order to survive. Co-operatives, Friendly Societies, Trades Unions, and Christian and local community groups were organised to share what wealth there was in 'Poor Britain' to save them from disease, homelessness and hunger. This strategy of communal self-help was the basis of the philosophy which became known as Socialism.
Throughout the 19th and 20th centuries, the popularity of Socialism increased. Between 1848 and 1926 almost every country in Europe had a socialist revolution.
Britain was the only exception.
Terrified of revolution, the British ruling class made concessions to the poor. For example, the poor were permitted to vote in general elections (for candidates selected by the ruling class, naturally). In some cities, such as Manchester, government-funded health-care services were set up. A state pension was introduced. A Rent Act was passed to protect the poor from unfair evictions. Trade Unions were legalized and their leaders offered peerages. And so on.
The principle was (and still is) to grant concessions to the people when pushed, but never to give them a say in their own government. Power should always remain in the hands of the ruling class - who know best how to use it.
Maintaining the ruling class through the judicious use of concessions was espoused by the Liberal Party. The alternative body of government in our two-party system (the Conservative Party) favoured maintaining the ruling class without helping the poor.
By 1945, the Labour Party had replaced the Liberal Party. It had achieved this by persuading the poor voters that Labour represented the interests of the poor. But when Labour got into power, it abandoned its commitments to social democracy and adopted the same approach as the Liberals. It must be said, however, that Labour's concessionary policies - patrician though they were (such as the introduction of the National Health Service in 1946) - did help the nation towards a more affluent - and more equal - society.
By 1969, a popular topic of discussion had become: "the problem of leisure". Economic progress over the previous two decades had produced an expectation that everyone's needs were about to be met.
The combination of advances in technology, Keynesian economics, trade advantages conferred by the Commonwealth, light regulation on small businesses, and a cheap food/low rent policy were delivering prosperity and shorter working days. It was anticipated that soon we would be on 18 hours a week. What would we do with all our free time?
In 1969, the general view was that public schools were a curiosity from the past - like the Royal Family or the horse-hair wigs worn by high court judges. It was taken for granted that anachronisms like public schools, charity balls, debutantes, leaseholds, and the House of Lords, would soon fade into history. Although 6% of the nation's school-age children still attended public school (schools for the progeny of the ruling class), it was assumed they would soon be absorbed into the comprehensive school system - as they had been in the rest of Europe.
The future of British society was egalitarian and democratic - no question about it. No-one could imagine a return to 19th Century Free-Market Capitalism, inequality, class division, and Victorian Values.
But, ten years later, that's exactly what happened.
In the 1980s, Milton Friedman and the Chicago School persuaded the UK government to take every opportunity to turn back the clock.
Break the Trades Unions, de-regulate Big Business, demonise liberal politicians, bully and bribe professional associations, manipulate the media, mislead the masses into believing they could get rich in a 'free-market economy', and privatise everything which wasn't nailed down (and, if it was nailed down, pull out the nails).
Many admired Margaret Thatcher because she 'stood up for Britain'. In truth, she did the opposite. She sold Britain down the river by flogging off its assets to private companies and foreign governments. She part-authorized the destruction of nearly all our major enterprises - coal, steel, energy, agriculture, telecommunications, fishing, shipbuilding and car manufacture among them. As of now, there are only two major British industries left: Pharmaceuticals and Financial Services.
Margaret Thatcher did not stand up for Britain, nor was she The Iron Lady; she was a Trojan Horse who let our enemies in to steal our assets.
Let's look at the privatisation of the railways. British Rail (owned and funded by the British people) was a single entity providing passenger and freight transport for the nation. True, it was not as well run as the Swiss or French railways - and people used to grumble - but the trains were 95% reliable and fares were cheap.
The bankers and stockbrokers advising the government agreed to split British Rail into 25 easy-to-sell lots. This provided a festival of fees for lawyers and accountants and optimized profitability for the investment banks. The effects of this butchery on the integrity of the train service itself was not considered.
Before the ink was dry on the contracts, the new rail-owners sold off most of the land which came with their purchases, and turned an instant profit. Buying the railways cost them nothing.
The sale of railway land meant there was little space for freight depots or parking. Pork-pies made in Yorkshire, once freighted to London by rail, now had to be trucked by road. Thus began the age of the Heavy Goods Vehicles.
As time passed, HGVs grew bigger until they grew into the gigantosauruses we see today - jamming up our roads and belching out pollution. Even though rail-freight delivers relatively low levels of pollution, almost 90% of our goods are now transported by road.
The privatisation of British Rail also increased the price of consumer goods - including food - because moving goods by road was more expensive than by rail. Thanks to the Thatcher government's adoption of Friedmanomics, our cost of living soared.
Not unreasonably, given the nature of 'Free-Market' Capitalism, the aim of the new railway owners was to maximize profits. So fares went up and the quality of the service went down. Manning levels were slashed to make the railways 'more efficient' (for the directors and shareholders, not passengers). There was no longer a person to help little old ladies find their seat, or children to find the right platform, or porters to help with luggage. Guards were abolished. Baggage cars were removed so we could no longer take our trunks, suitcases or bicycles on the train. More seats were crammed in - and comfort sacrificed - to make the carriages cheaper to clean, and to squeeze in more passengers. And there was a vertiginous drop in punctuality.
A survey in 2005 (covering all the rail companies in the UK) found that one train in four failed to leave or arrive on time.
Today, according to an OECD study, we have the least punctual and most expensive rail service in Europe. How sad is that? We invented the train. We invented the railways. At one time, we had the best railways in the world. How the mighty are fallen! - or, rather, stabbed in the back by M. Thatcher and her ilk.
And then there were the train-crashes.
To save money, the track maintenance company (Railtrack) hired lowest-bidder contractors who, in turn, hired lowest-bidder sub-contractors. These poorly-supervised day-labourers did shoddy work resulting in train wrecks and scores of deaths.
Her Majesty's Judiciary ruled that the directors of Railtrack were not responsible because there was no corporate manslaughter law in the UK. There still isn't. (The ruling class is not keen to pass laws which inconvenience its members).
The Railtrack directors then played legal games with the injured survivors, and the families of the dead, to limit their claims for compensation. Can this privatisation saga get any worse?
It can.
For the past six years, the government has been paying more in subsidies to the private rail companies than it paid for running the entire service when it was publicly-owned. Let me repeat that: for the past six years, the government has been paying more in subsidies to the private rail companies than it paid for running the entire service when it was publicly-owned!
So we, the taxpayers, are paying for the railways. Why, if the public are paying for it, are the railways not re-nationalised? Why are we paying for an inferior service whose main purpose is to make profits for the ruling class?
Probably the worst thing about the rail-privatisation was not the damage it did (and is still doing) to the British economy and individual lives, but the damage it has done to our society. By destroying the standards, identity and culture of our once-proud national railways, the government has impoverished and brutalised the quality of British life.
The same can be said of all 'free market' (that is, rigged market) privatisations. The coal-mining communities destroyed by the privatisation of the coal industry comprised over a million individuals. The privatisations of our other national industries have also devastated communities. The on-going privatisation-by-stealth of the NHS has already destroyed its noble and happy culture, once so beloved by all. Even the trust between doctor and patient has been eroded - perhaps permanently.
The 'broken society' recently invoked (to much acclaim) in speeches by the Conservative leader David Cameron, was brought about by the policies of his predecessor Margaret Thatcher, and continued by the governments of John Major, Tony Blair and Gordon Brown.
Friedmanomics always results in broken societies. Russia is a case in point. The Russian Federation came close to total disintegration after Boris Yeltsin adopted 'free market' Friedmanomics. America, too, has been torn into strips by Friedmanomics and would be in dire straits today were the US dollar not the world's reserve currency.
For the past thirty years, the United States has been propped up by the rest of the world because global trade needs a strong dollar. If this changes - which it might (a new exchange-unit based on a basket of currencies has been mooted by China) - we will see the curtain come down on America's era of power & glory.
British Rail was wholly-owned by the nation, yet the views of the nation were not consulted when the government decided to sell it. There was no referendum. The government simply stole the nation's railways.
The late Quintin Hogg once described our government system as an "elected dictatorship". He was right. Theft on this colossal scale would not be conceivable in a democracy.
Friedmanomics produces oligarchs which beget a plutocracy which begets Fascist government. Fascism occurs when government and Big Business join forces.
The proper role of government is to act as an impartial referee between the businessman and the customer. If the government serves the businessman exclusively, the rights and freedoms of the customer are eliminated. The customer must obey laws made by the government to serve the interests of the businessman. He must work for the businessman at rates set by the businessman. He must buy from the businessman at prices set by the businessman. Naturally, people don't like this and rebel so, to prevent rebellion, the government toughens laws, expands surveillance, increases the police and security forces, and begins imprisonment without trial. All of these things have been done during past ten years.
We now have the highest number of surveillance cameras per head of population in the world. The national police DNA database is adding 1800 people per day, and it's now legal for the state to lock you up for a month without charge. Also, we are now increasingly (in London at least) being startled by the appearance of armed, paramilitary police.
This is all a consequence of Friedmanomics.
Downing Street claims the increased "security" imposed on us is due to the threat of Al Qaida. But these security measures were not imposed during the 1970's when Britain faced a far greater threat from the IRA. Why not? Because, in the 70's, governments were still aspiring to be socially democratic. Friedmanomics had not become the ruling doctrine.
The greatest obstacle to 'Free Market Capitalism' (i.e. Rigged Market Capitalism) is the Trade Union. A trade union can, by withdrawing its labour, stop the corporation from making money. Trade unions protect and serve their workers' interests, so they are enemies of Rigged Market Capitalism which serves the owners of capital. This is why the first directive of Friedmanomics is: crush the unions.
In the 1980's, Margaret Thatcher set out to crush the National Union of Mineworkers, one of the biggest unions in Britain. Her government sequestered (stole) the funds in the NUM's bank account; financed a new rival miners' union; criminalized secondary picketing; criminalized sympathy strikes, and commanded the police to work as strike-breaking thugs.
The miners and their leader, Arthur Scargill, fought hard but were defeated by an implacable government willing to flood the pits and destroy the coal industry in order to crush the NUM and intimidate the union movement. As a result, we are now compelled to import 70% of our coal (mostly from Russia and South Africa) even though we have plenty of coal under the ground.
Once Margaret Thatcher had cowed the unions, she was able to carve up and flog off Britain's publicly-owned industries. In 1997, Tony Blair's Labour government - indistinguishable from Margaret Thatcher and John Major's Conservative governments - continued the auction of our national assets. Today, there's little left to peddle - even many of the playing-fields of our state schools have been sold off. In 2005, the government actually began selling bridges (owned and paid for by the public) to private companies who now charge motorists a toll for using them.
There is, however, one big cash-cow left: the National Health Service.
Although the government churns out propaganda that it will never privatise the NHS, it has invested enormous sums of public money into preparing the NHS for privatisation. Over the past ten years, the NHS has been re-structured into a network of American-style Health Management Organisations based on the Kaiser-Permanente model. This has cost the taxpayer billions because it has necessitated:
1) the setting up of a retailing system - pricing every pill, bandage and medical procedure;
2) the splitting up of the regional health authorities into stand-alone, financially viable (and therefore saleable) 'Public Care Trusts';
3) the recruitment and creation of a massive hierarchy of accountants, lawyers, business operatives and administrators;
4) the training of existing medical staff in fiscal management and 'commercial awareness', and
5) the setting up of a comprehensive I.T. computer network to monitor and facilitate transactions.
The unauthorized selling of our infrastructure - built and paid for over more than a century by the British people - is a monstrous crime. The perpetrators should be prosecuted and sent to prison.
If someone steals your television and sells it, this is illegal. Government officials - in league with businessmen, bankers, and lawyers - have stolen entire industries, including the land and buildings that go with them, and sold them to the highest bidder. Even the land and properties 'owned' by Her Majesty's Revenue & Customs (actually owned by the British people) have been sold to a private property company based in a tax-haven.
To compound their crimes, these same government officials - after leaving office - have received opulent directorships from the corporations to whom they sold our assets. This is Treason. The duty of government is to serve the public, not rob them.
Why didn't we kick up a fuss when the government destroyed 90% of our coal industry and privatised the rest? Why didn't we kick up a fuss when our steel industry was sold off? Or British Airways? Or British Gas? Or the Water Board? Or the Defence Evaluation and Research Agency? Or Air Traffic Control? Or British Rail? Or British Leyland? Or British Nuclear Fuels? Or the Electricity Board? Or London Underground? Or British Telecom? Or the Post Office?
Why did we do nothing?
Lots of people complained. We're good at complaining - there's a nationwide whine going on all the time...about the shocking decline in public services, the loss of our manufacturing industry, the high cost of housing, the soaring gas, electricity and water bills, the incompetence and unaccountability of our obese government departments, the disappearance of legal aid, the interminable NHS waiting lists, the time-wasting burden of V.A.T., the loss of bus conductors, milkmen, rag-and-bone men, police on the streets, public swimming pools, playing fields, free parking, the overwhelming influx of foreign immigrants, cash-grabbing speed cameras, council tax increases, the avalanche of EU regulations, the government's involvement in illegal wars, the horror hospitals, stealth taxes, the ever-rising expense of dental treatment, the closure of mental asylums, the privatisation of care-homes, the dumbing-down of education, the rise in crime, and the unceasing gush of lies from politicians. But we do precious little about it.
What's wrong with us? Why won't we stick up for ourselves? Why won't we fight for democracy and justice? What's happened to our British Bulldog spirit? It seems the bravest thing people do nowadays is emigrate.
Above all, why did we allow our wealth to be transferred to private companies, foreign corporations and foreign governments? It seems incomprehensible.
But, actually, it's not incomprehensible. We were simply out-smarted. We were out-smarted by Friedmanomics. We were conned by a bunch of snake-oil salesmen from America.
George Bush Snr., one of the perpetrators of the scam, knew exactly what was going on. He even named it. He called it "Voodoo Economics".
We were conned because Margaret Thatcher was charismatic. We were conned because (for a decade or so) the media promoted privatisation as a good thing. We were persuaded that publicly-owned companies were inefficient; that productivity and services would improve when these companies were privatised.
We were assured that the increased productivity achieved by taking our assets out of the public sector, would not only improve our manufacturing industry and enhance services but also - because of the "trickle-down effect" - increase national prosperity. The claim was that, even though the profits produced by the privatised industries would go to private individuals rather than the nation, these private individuals would spend their profits "in the market-place" and thus the wealth would 'trickle-down' to the common people.
Not very likely.
But we believed it.
What happened (as you would expect) was that the wealth of a small gang of plutocrats went rocketing up, while the living standards of the rest of society went down and, by the year 2000, the gap between rich and poor had widened to an extent not seen since the Edwardian era.
We were fooled. We didn't know what was going on. It wasn't that we trusted the government - we didn't. We just couldn't imagine that our government would deliberately rip us off on such a monumental scale.
We didn't know (and most of us still don't) that, since 1913, the United States has been controlled by a banking cartel.
Since 1913, this cartel (currently 18 banks) has secured near-total domination of America's major corporations - the same corporations which control most of the industries in America - including the media - and finance the election campaigns of congressmen, senators and presidential candidates.
After World War Two, the banking cartel wanted to increase profits by venturing overseas. To facilitate this, they set up the World Bank and the International Monetary Fund. They also, incidentally, funded the University of Chicago Economics Department which gave us the 'Chicago School' and Professor Milton Friedman.
The United Kingdom of Great Britain and Northern Ireland was one of the cartel's first targets for expansion.
Although a few American corporations set up shop in Britain after the Second World War (such as IBM, Ford, Chrysler, Coca Cola and Xerox) it wasn't until the 1980's - when Margaret Thatcher was in power - that our government fell entirely into the trap laid by the US banking cartel.
No other European state surrendered to Friedmanomics as completely as Britain. Why not?Because in every European country except Britain, social democracy is enforced by a written constitution. These constitutions safeguard national assets, and guarantee they cannot be sold - or any constitutional change made - without a national referendum.
Britain is the only country in Europe without a written constitution. In Britain, the government can make major changes of policy without reference to the people.
But no-one can escape the law of karma - not even the bankers, the plutocrats and their government minions. Their greed has led to crashing stock-markets, failing banks and fears for the financial system itself.
Are we seeing the death-throes of Freidmanomics? I hope so. It's time to put our economy - and our society - back on a sound footing.
How can this be done?
1)....Renationalise our gas, water, electricity, telecommunications, railways, roads and bridges.
2)....Scrap the NHS 'internal market', abolish Public Care Trusts, restore the Regional Health Authorities, ban private medicine (including dentistry and optometry).
3)....Set up a decentralised democratic government system guaranteed by a written constitution.
4)....Abolish all public and grammar schools and raise the standards of our comprehensives to Finnish levels. (If the Finns can have 100% literacy why can't we?)
5)....Declare independence from the European Union and have a big bonfire of the regulations.
6)....Defend British culture and identity by mandating that 20% of all films exhibited in UK cinemas are British films.
7)....Abolish VAT and Corporation Tax.
8)....Restore anti-monopoly legislation.
9)....Legalize secondary strike action and picketing.
10)...Abolish Britain's iniquitous leasehold law and nationalise all land not entered in the Land Registry (about 35% of the UK).
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