The New Serfdom

by Angela Eagle

  In The Myth of Ownership: Taxes and Justice, philosophers Thomas Nagel and Liam Murphy strongly contest the legitimacy of the neoliberal myth of taxation being the theft by the state of ‘my money’. They articulate a social justice model of taxation which is based on an ethical justification. What would actually constitute an entitlement to property and pre-tax income in a complex and interconnected society?

  They explain:

  If the political debate were not over how much of what is mine the government should take in taxes, but over how the laws, including the tax system, should determine what is to count as mine, it would not end disagreements over the merits of redistribution and public provision but it would change their form. The question would become what values we want to uphold and reflect in our collectively enacted system of property rights – how much weight should be given to the alleviation of poverty and the provision of equal chances; how much to ensuring that people reap the rewards and penalties for their effort or lack thereof; how much to leaving people free of interference in their voluntary interactions.

  In a complex and interconnected society, the equity of distribution of the social product between that which is in private control and that which is controlled by the government – and by analogy subject to the democratic decision-making of law-makers – is a wholly legitimate area for the government to concern itself with. We know that in Scandinavian countries more of this social product is provided collectively than is the case in low-tax Britain or the USA. That is a political choice, pure and simple. After an era in which we have witnessed the remorseless march of greater and greater inequality and the hoarding of vast fortunes in just a few hands, we are long overdue for the revival of a social justice model of taxation.

  A HEALTHY ETHICAL SOCIETY

  Tax is just one part of the economy. Throughout this book we have argued that the economy as a whole needs to review and renew its ethical base. We are not just individuals. We all have responsibilities to each other; the realm of public ethics cannot stop at the door to the boardroom. Market fundamentalism has erroneously tried to claim that a company’s only responsibility is to maximise the profit of its shareholders. This has inculcated a spirit of short-termism and rapaciousness that has itself changed the nature of the private sector. It has seen market sectors consolidate into oligopolies and, in some cases, monopolies of companies that are ‘too big to fail’. The world’s mega-corporations are now so powerful that they believe they can force governments to kneel before them. It is not too late to change direction. Their arrogant disregard could be challenged by reaching international agreements on tax and enforcing effective regulations for global companies. No longer would they be able to avoid their responsibilities by playing one jurisdiction off against another. Regulating the tech behemoths so that they cannot abstract themselves from responsibility for the content they disseminate is another crucial step. We also agree with the creator of the World Wide Web, Tim Berners-Lee, that we need a Magna Carta for the internet. A digital bill of rights which will support the freedom and privacy of digital citizens worldwide. This will protect us all from the tech giants’ commercial inclinations to control the internet and the mass surveillance – be it by companies or governments – which is currently technically possible and proceeding apace.

  We are firm believers in the ingenuity and inventiveness of British people. The complaint that Britain invents things and America then ‘monetises’ them, making them profitable, has more than a little truth to it. Penicillin, the World Wide Web, and countless other technological breakthroughs have been made in British universities and research facilities, but only successfully marketed when in foreign hands. That is in part because Britain has been poor at helping its inventors become entrepreneurs, and so they seek a foreign corporation or foreign capital to get going. A successful knowledge economy needs government to place a defensive fence around its inventors and smooth the transition to market so that our society benefits from its inventiveness. We need to manage our market sectors by challenging uncompetitive and greedy monopolies that take advantage of their workers and customers. We need strong unions and for the voices of workers to be heard in the boardrooms and in Parliament to ensure that the jobs created by the private sector pay well and are fulfilling and rewarding. An indebted, stressed, ill workforce – for that is what Britain is becoming – will not have the confidence or the resources to purchase the goods we produce or to prosper in the modern world. A resurgent, strengthened, emboldened Whitehall, intervening strategically in our economy more actively, nimbly and confidently, can help make our economy more effective and fairer during this time of profound change. Inclusive growth must help those who are currently left out first. It must rebalance our skewed economy and reach beyond the south. Government must leave behind the ‘private good/public bad’ dogma that has done so much damage. It sought to destroy the public-sector ethos of service and commercialise the provision of everything. Civil servants are urged to think like the private sector, with armies of management consultants bringing their incredibly expensive ‘wisdom’ into local and central government. In the insatiable search for ‘efficiency’, the other ‘e’s’ of government – equity and equality – are being abandoned.

  Democratic socialists will need to remake the case for these changes in the way we think of tax and the kind of society we wish to create. They are huge and fundamental. It will only happen if we work together to do it. Other European countries, like Germany and the Scandinavian economies, have created models of governance that produce greater harmony between labour and capital, with higher tax bases funding a better quality of life and happier, more productive citizens. In Germany, the trade unions and the private sector form collaborative relationships. Workers have a voice, they sit on company boards. More women need to be in the boardroom where key decisions are made, which fundamentally changes the nature of the debate within the key decision-making bodies of their companies. And governments need to act as confident conductors of the orchestra of modern life. Our behaviour matters. The way we conduct ourselves matters. We need to renew our veneration of knowledge and facts, of the expertise gained through hard work. We need to be motivated by a sense of shared nationhood, of simple love and empathy for all humankind. Competition is an important aspect of human behaviour but left in an ethical vacuum it can become destructive. The greatest societies create the context in which all their members can flourish. And as democratic socialists in the British Labour Party, we are committed to ending the New Serfdom. As our constitution states, we know that

  by the strength of our common endeavour we achieve more than we achieve alone, so as to create for each of us the means to realise our true potential and for all of us a community in which power, wealth and opportunity are in the hands of the many, not the few, where the rights we enjoy reflect the duties we owe, and where we live together, freely, in a spirit of solidarity, tolerance and respect.

  In other words, we need to organise our society ‘to secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof’.

  Now, that’s not a bad place to begin.

  ENDNOTES

  1 Indeed, homeownership is the primary component of wealth growth in Britain. The Social Market Foundation has found that more than 14 million working-age adults are not saving at all, and more than 26 million adults did not hold rainy-day or pension savings.

  2 http://www.endviolenceagainstwomen.org.uk/a-different-world-is-possible/

  3 Clause IV until 1995.

  4 https://labour.org.uk/about/labours-legacy/

  5 That figure rises to twenty-seven years if Labour’s participation in the National Government, which guided Britain through the perils of the Second World War, is included in the total.

  6 Organization of the Petroleum Exporting Countries.

  7 Accelerationist Manifesto: http://criticallegalthinking.com/2013/05/14/accelerate-manifesto-for-an-accelerationist-politics/ />
  8 For a compelling account of the activities of Hayek’s Mont Pelerin Society, see Philip Mirowski, Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown (London, New York: Verso, 2013).

  9 Though revisions to data may change this.

  10 The detail of the IFS report can be viewed here: https://www.ifs.org.uk/publications/8706

  11 Klaus Schwab, Executive Chair of World Economic Forum, Foreign Affairs, 12 December 2015

  12 Erik Brynjolfsson and Andrew McAfee, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies (New York: W. W. Norton & Co., 2014)

  13 According to Chris Mack, of VLSI Research, 400 billion billion (4x1020) transistors were made in 2015 alone. That is 13 trillion a second.

  14 Hermann Hauser, a tech entrepreneur and Fellow of the Royal Society, the Institute of Physics and of the Royal Academy of Engineering and an Honorary Fellow of King’s College, Cambridge. Darwin Lecture, 6 March 2015.

  15 The Common Era commenced after the birth of Christ.

  16 As of 21 February 2018.

  17 Andy Haldane, speech to the TUC, 2015.

  18 Ibid.

  19 Ibid.

  20 Bank of England blog, ‘Bank Underground’, 1 March 2017.

  21 The Guardian, 12 September 2017. https://www.theguardian.com/books/2017/sep/12/amazon-pays-11-times-less-corporation-tax-than-traditional-booksellers?CMP=share_btn_tw

  22 https://www.theguardian.com/technology/2017/oct/04/facebook-uk-corporation-tax-profit?CMP=share_btn_tw

  23 This paltry prosecution activity is despite analysis showing suspicious correlations of dealing in the market ahead of the announcements of profit warnings or attempted takeovers which impact the share price. It had to be obtained by a freedom of information request. https://www.thetimes.co.uk/article/city-traders-getting-away-with-abuse-of-markets-3czm07nkp

  24 For a superb discussion of this, see John Kay, The Truth About Markets: Why Some Nations are Rich But Most Remain Poor (London: Penguin, 2004).

  25 According to Josie Cox in The Independent: http://www.independent.co.uk/voices/worlds-richest-are-getting-richer-general-population-stress-be-zos-gates-facebook-zuckerberg-a8129936.html

  26 Irving Fisher, ‘Economists in Public Service: Annual Address of the President’, American Economic Review, Vol. 9, No. 1 (March 1919): 5–21. Quoted in Thomas Piketty’s Capital in the Twenty-First Century.

  27 The Panama Papers were leaked to the international consortium of investigative journalists and the German newspaper Suddeutsche Zeitung and can be searched here: https://panamapapers.icij.org/

  28 The International Consortium of Investigative Journalists has made the Paradise Papers available here: https://www.icij.org/investigations/paradise-papers/paradise-papers-long-twilight-struggle-offshore-secrecy/

  29 Deputy Commissioner of the Australian Tax Office, 16 January 2018: https://www.theguardian.com/news/2018/jan/15/paradise-papers-revealed-commoditisation-of-tax-evasion-australia

  30 The details of the Luxembourg leak of 28,000 pages of documents involving 1,000 businesses operating in Europe can be seen here: https://www.icij.org/investigations/luxembourg-leaks/

  31 Nikolaj Nielsen, EUObserver, 7 December 2016: https://euobserver.com/economic/136175

  32 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/655097/HMRC-measuring-tax-gaps-2017.pdf

  33 https://www.ukpublicspending.co.uk/uk_budget_detail_17bt12016n_20504070#ukgs303

  34 http://www.bbc.co.uk/news/business-19967397

  35 http://www.unionhistory.info/timeline/1960_2000_Narr_Display.php?Where=NarTitle+contains+ per cent27Anti-Union+Legislation per cent3A+1980-2000 per cent27

  Between 1980 and 2000, the TUC records that there were six hostile Acts of Parliament restricting trade union activity and making it increasingly difficult for unions to strike legally or effectively in defence of their members and smothering them in administrative burdens and red tape which would not be contemplated for any other organisation in society.

  36 See a discussion on this: https://link.springer.com/chapter/10.1007/978-1-349-25991-5_12

  37 Cameron Tait for the Fabian Society commenting on economists Alan Manning and Maarten Goos’s characterisation of the segmented modern labour market: ‘What’s really happening in the world of work?’ http://www.fabians.org.uk/whats-really-happening-in-the-world-of-work/

  38 TUC Budget submission 2017.

  39 TUC, ‘Living on the edge: the rise of job insecurity in modern Britain’, 2016: https://www.tuc.org.uk/sites/default/files/Living per cent20on per cent20the per cent20Edge per cent202016.pdf

  40 The TUC expresses its unease at the nature of the new ‘full-time jobs’ being created in 2017. ONS figures show that of the 118,000 new jobs created, 104,000 were categorised as ‘self-employed’. https://www.theguardian.com/business/2016/jul/20/jobs-self-employment-workers-rights-tuc-uk-economy

  41 As reported in detail here: https://www.theguardian.com/business/2016/jul/18/how-hermes-couriers-shoulder-insecurity-of-internet-shopping-boom

  42 Taken aback by the scale of the revolt, Deliveroo has claimed that they will now only trial the switch away from an hourly rate to a per-parcel payment. The general view is that the switch will be made, not least by introducing new contracts for new workers.

  43 See BBC: http://www.bbc.co.uk/news/business-38931211

  A plumber who had worked exclusively for the business for six years was ruled to have employment rights despite his apparent self-employed status. In August 2017, Pimlico Plumbers was given permission to appeal this decision to the Supreme Court. The case has been heard but at the time of writing no decision has been issued.

  44 Against this run of favourable judgments for workers, Deliveroo won a case at the Central Arbitration Committee which confirmed that their delivery staff were to be regarded as self-employed. This was because the company has enabled a capacity to swap jobs between staff and the court found evidence that it was used. https://www.theguardian.com/business/2017/nov/14/deliveroo-couriers-minimum-wage-holiday-pay. The IGWG has also submitted a claim for the national minimum wage to an employment tribunal; a decision is awaited.

  45 The Resolution Foundation: ‘A matter of time – the rise in zero hours contracts’ by M. Pennycook, G. Cory and V. Alakerson, June 2013: http://www.resolution-foundation.org/app/uploads/2014/08/A_Matter_of_Time_-_The_rise_of_zero-hours_contracts_final_1.pdf

  46 https://www.theguardian.com/business/2015/dec/09/how-sports-direct-effectively-pays-below-minimum-wage-pay

  47 http://economia.icaew.com/en/news/december-2016/fortnum-and-mason-proposes-staff-pay-cut-in-exchange-for-tips

  48 https://www.theguardian.com/money/2018/jan/02/members-club-backed-by-lord-ashcroft-seeks-to-cut-staffs-basic-pay

  49 Daily Mirror, 25 November 2017.

  50 The Taylor Report, ‘Good work: a review of modern working practices’, can be read here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/627671/good-work-taylor-review-modern-working-practicesrg.pdf

  51 The Transfer of Undertakings (Protection of Employment) Regulations 2006, known as TUPE, is a part of EU employment law which guarantees certain rights to existing workers in the event of a transfer of employment. It ensures that there can be no dismissals and that pay and conditions have to remain substantially the same. It also provides workers with the right to be informed and consulted before, during and after the transfer from one employer to another.

  52 http://www.labourexploitation.org/news/uk-falling-behind-labour-inspection-combat-modern-slavery-new-flex-policy-blueprint

  53 GLA annual report 2015/16. The latest available: http://www.gla.gov.uk/media/2834/gla-annual-report-and-accounts-2015-16-pdf.pdf

  54 Discovered by Labour and reported here: https://www.theguardian.com/business/2016/aug/14/employment-agency-standards-inspectorate-worker-rights-watchdog-labour

  55 This NAO report gives a good account of the work of the in
spectorate, including its relatively recent naming-and-shaming capacity: NAO: https://www.nao.org.uk/wp-content/uploads/2016/05/Ensuring-employers-comply-National-Minimum-Wage-regulations.pdf

  56 This is a TUC estimate.

  57 For a superb if somewhat technical discussion of the ratio between capital and labour, see Chapter 6 of Capital in the Twenty-First Century by Thomas Picketty, p. 199 (The Belknap Press of Harvard University Press, 2014).

  58 See TUC touchstone pamphlet, ‘How to boost the wage share’, especially Figure 1 on p. 6: https://www.tuc.org.uk/sites/default/files/tucfiles/How per cent20to per cent20Boost per cent20the per cent20Wage per cent20Share.pdf

  59 The economic case for trade unions: http://gala.gre.ac.uk/14102/1/PB052015_Onaran_etal.pdf

  60 Annex to ‘Industrial Strategy – First Review’, the second report of session 2016/17, HC 616.

  61 IFS response to the November 2017 Budget, 23 November 2017: https://www.ifs.org.uk/events/1538

  OBR: http://budgetresponsibility.org.uk/efo/economic-fiscal-outlook-november-2017/

  62 https://www.theguardian.com/business/2017/sep/18/britain-debt-timebombfca-chief-crisis?CMP=share_btn_tw

  63 The sobering report can be read here: http://www.oecd.org/edu/skills-beyond-school/building-skills-for-all-review-of-england.pdf

  64 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/34749/12-986-closing-rdas-lessons-from-transition-and-closure-programme.pdf

  It is notable that this document concerns itself with the process of closure. Never once does it attempt to assess whether the closure decision was the correct one or attempt to assess its effect on the prospects for regional development.