Small but Mitty

The trailers for Ben Stiller's Mitty (which looks pretty awful, in truth) remind me that the irresistible rise of Grant Shapps to the heights of Conservative Party Chairman has been one of the more amusing sub-plots of the coalition government. The arch-fantasist has become the champion of small capital, not to mention the hammer of Labour and the BBC. If you wanted to construct a fictional dodgy-dealer - part Arthur Daley, part Kim Dotcom - to give the small business sector a bad name, then you'd probably reject Shapps's history of inept content-scraping, sock-puppetry and multiple pseudonyms as way too implausible. Though he escaped prosecution for fraud, he is clearly an unscrupulous idiot with a cavalier attitude towards the truth. He makes the delusional psychosis of Jeffrey Archer, a former Tory Chairman, appear almost benign.

Shapps's fast-and-loose style is in evident in his latest thoughts on the positive role of small businesses, where he expands on the traditional myth that SMEs power the economy (they don't) to claim that they are also the facilitators of social mobility: "[it is] flourishing businesses – the opportunity of owning, running or working in one – that ultimately help people to escape the circumstances of their birth" (that use of the cliché "circumstances of their birth" had me thinking fondly of the Master of Granchester). In support of this bold claim, he refers to a World Bank study that links "the rise of small business ownership among women in India with greater legal and political rights" and also points to Eastern Europe, "where small firms are repairing the damage left by decades of socialist stagnation".

No link is provided for the Indian "study", though it is likely (if it exists) to relate to the growth of micro-finance. Though this can provide the seed-corn for a new business, most loans are used for consumption - i.e. this is mainly micro-credit rather than capital investment. The growth of the Indian economy over the last thirty years has been powered by globalisation, beneficial demographics, and improvements in productivity. Flourishing SMEs are a consequence, not a cause. The claim in respect of Eastern Europe is simplistic, ignoring the existence of small businesses in Hungary and Yugoslavia before 1989, as well as the mixed economic record since. The reparative contribution of SMEs in Russia in the 90s was negligible, in the face of oligarchic looting, while the story of the former GDR is of West German corporations buying up and often dismantling large businesses, with the countervailing growth of SMEs dependent on state-directed investment, notably via the KfW development bank.

Shapps's fairy story also ignores the reality of how small businesses are formed. While some skilled workers are able to translate their experience (often acquired working for a large business) into self-employment, this rarely leads to the employment of others. 75% of the businesses in the UK in 2012 had zero employees (see table 1, page 3). SMEs with employees tend to require working capital to start and grow, which immediately gives an advantage to the already wealthy or those with access to credit (i.e. possessing assets for collateral or having guarantors). The stirring tale of "entrepreneurs and inventors who work all hours in their own garage [and] ex-apprentices who start out with a mobile business" is a consoling fiction for wage-slaves. Most SMEs fail, and those that start without premises or in a garage tend to fail faster.

To be fair to Shapps, even Labour MPs are suckers for tales of the little guy beating the odds: "There are countless examples of working-class people climbing a ladder of opportunity through high street businesses that have gone on to become international success stories". They seem unable to understand that once a business expands it denies market share to others. An "international success story" is usually a chain store that drives out local variety. This is not necessarily a bad thing - so long as the better drives out the worse - but it does not grow the population of successful entrepreneurs who started out as market traders, it actually shrinks it.

Small businesses are inherently inimical to social mobility, if viewed from the perspective of someone seeking to advance from the working class to the middle class, though they can provide a route for progression through the various levels of the middle class - i.e from the petit bourgeois to the bourgeois, in classical terms. A talented working class kid is more likely to progress to the middle class by working for a large company, e.g. by reaching middle management or a professional role, than by working for or founding a small business. The great enabler of social mobility in the 1945-75 era was the expansion of the public sector.

At times, Shapps's chutzpah can only be admired. For example: "Businesses create every penny of the wealth we need to pay for our nation's schools, our NHS and our pensions". The obvious rejoinder is that wealth is created by people, i.e. workers, not by businesses. Businesses create nothing, because that is not their purpose. Their function as legal entities is to distribute wealth. This is why company law deals with shares, dividends, limited liability, and social obligations such as tax and externalities like pollution. This is not a pedantic point. By privileging businesses (wealth distributors) over workers (wealth creators), we privilege business owners (capitalists) who are in a position to secure the lion's share of profit.

Shapps ends his eulogy thus: "Conservatives don't love business for some abstract reason. We love it because of what it offers our children. Hope". If you substituted "inheritance" for the last word, you'd have a more honest statement of the Shappsian worldview.

Blood and Honour

The consensus is that last night's game against Chelsea won't live long in the memory. A combination of difficult weather, a negative opposition and some indulgent refereeing made it an unattractive spectacle. Putting John Terry on the pitch was just rubbing salt in the wound. The only fun to be had was the subsequent sight of Jose Mourinho auditioning for UKIP, with his "English blood is best" speech. If Sam Allardyce came out with that, he'd be crucified. Of course, the Portugeezer's chief attraction for many is not his ability to grind out the points, but his talent for distraction, not least in respect of the failings of owners and players. Chelski were thuggish on the field and off it (their fans singing about 96 dead scousers was particularly classy). Mourinho's jibe that Arsenal players "cry" was bizarre - the only time a player kicked the ball out of play was when Ramsey did so after Ramires collapsed in a heap. Of course, bullies always see compassion as weakness.

17 games in is just short of the half-way mark, but I thought an update on my clairvoyant powers would be appropriate now, before the commentariat herd gather at the halfway waterhole. Liverpool and Arsenal are on 36 points. A straight-line extrapolation would suggest that the champions will finish on 80 points, which is in line with my prediction after 11 games. At this stage last season, Manure had 42 points, while City were second on 36 and we were on 27. We then produced 46 points from the remaining 21 games, which, if repeated, would deliver a total points haul of 82. In the 2011-12 season, City were top with 44 and Manure second on 42. We made 38 points from the remaining 21 games. If repeated, that form would get us to a total of 74, which would at least ensure another season in the Champions League. I think we can dare to dream, so I'm still predicting a final tally of 78-80 points.

While there are plenty of tough periods ahead - Liverpool and Manure back to back in February and Chelsea and Man City back to back in March - I think we'll do reasonably well in these "big games", probably 6 points from 12, which will keep us on track. We owe both the Manchester teams a strong performance at the Emirates, while our track record at Anfield and Stamford Bridge has improved in recent years. The cups are likely to be less of a distraction than  usual. Few expect us to progress against Bayern, though I fancy us to squeak through on away goals, which will be deliciously ironic given Wenger's recent comments, probably by winning 1-0 at home and losing 2-1 away. The FA Cup is in the lap of the comedy gods. Spurs under Tim Sherwood may discover their roots, which means beating us (Adebayor to score), getting to the final and losing, and finishing mid-table.

In terms of the squad, a number of players have seen a dip in their performance over recent weeks (Giroud, Ramsey, Wilshere and Ozil), while others are only starting to get back to their best (Walcott and Cazorla). Podolski and Oxlade-Chamberlain have yet to get their season started. It was interesting that Wenger chose not to make any substitutions last night, suggesting that he doesn't think any players are approaching the "red zone" of exhaustion yet. As the training regime is geared to reaching peak fitness and stamina in the New Year, this suggests that we're in good physical shape. I suspect Ozil may get a couple of games off over the next fortnight to recharge his batteries, while Podolski should allow Giroud to limit himself to 60 minutes for a few matches. Once we get past game 19, transfer speculation will go into over-drive, which might be the Frenchman's cue to start banging in the goals again.

Overall, we should be pleased with the way that the season has gone so far. We're better than we were last year, and there are signs that we can be better still. 2 points from the last 9 is obviously disappointing, but against tough opponents we were only outplayed once, and the 6-3 scoreline against Man City reflected an atypically poor defensive display by us rather than their habitual free-scoring. They look like the one team that could draw away from the chasing pack, but they also look vulnerable at the back - a classic City team, in other words. They, rather than Manure, Chelski or Liverpool, remain the obvious threat to our ambitions. If we're still in the mix come our return fixture on the 29th of March, then we'll have our destiny in our own hands.

There's a definite retro air to the Premier League at present: ugly Chelski, inconsistent Citeh, efficient Liverpool, struggling Manure, tough Everton, laughing-stock Spuds. Arsenal look like a squad that is gelling, with an improving defence, an inventive midfield and an under-appreciated striker. It's just like 1989 all over again. The shit-for-brains Chelsea fans who sang about Hillsborough don't know what spirits they may be invoking. My money's on the honourable Aaron Ramsey to provide the Michael Thomas moment when we get down to the wire.

The Big Boy Made Me Do It

Tuesday's meeting between Barack Obama and the technology companies was an object lesson in corporate manipulation. The hot topic was always going to be government surveillance, given a federal judge's ruling on Monday that the NSA's activities were probably illegal, but it suited the companies' purpose to claim that Obama's decision to start the session by announcing the appointment of a senior Microsoft guy to help with the healthcare.gov site, i.e. an inspiring example of cooperation, was an attempt to avoid the subject.

The reality was a guest list, prepared by the White House, that included almost no companies that could meaningfully contribute to a debate on a systems integration challenge. Microsoft, who could, sent their chief legal officer, while Oracle and Cisco, who had attended the first "tech summit meeting" in 2011, were absent. It strains belief to think that the White House was dumb enough to imagine the best brains to pick in respect of healthcare.gov would be the CEOs of Apple, Twitter, Yahoo, Google, AT&T, Facebook, LinkedIn, Dropbox, Netflix etc. If they really wanted to hijack the meeting, they'd have done better to invite Larry Ellison back. The NSA fallout was always going to be the main topic of debate.

The media spinning was intended to suggest that Obama is being dragged reluctantly to the negotiating table by Silicon Valley, this despite the fact that a Presidential panel would report on Wednesday recommending curbs on the NSA. The New York Times quoted the non-attending CEO of CloudFlare, a website optimisation company, to the effect that both "sides" were suffering from a loss of trust: "If you’re on the White House side, the issue is they’re getting beaten up because they’re seen as technically incompetent. On the other side, the tech industry needs the White House right now to give a stern rebuke to the N.S.A. and put in real procedures to rein in a program that feels like it’s out of control." The suggestion is that the tech industry is making the running on curtailing surveillance abuses, rather than being an accessory to the crime.

The relentless propaganda of the right, endorsed by Silicon Valley ideologues, is that government cannot be trusted to act in the best interests of citizens and that it is inherently incompetent. In contrast, private businesses spend a lot of advertising money extolling their own trustworthiness and insisting that the need to serve customers keeps them honest (their anxiety about reputational damage is largely PR, as customers rarely exercise effective sanction). The Snowden revelations have given the lie to this, both in the evidence of industry connivance and the competency of government. The current campaign seeks to paint a picture of a freedom-loving industry facing-off against an intrusive state. David bullied by Goliath.

Following the meeting, the tech titans issued a statement to a grateful world: "We appreciated the opportunity to share directly with the president our principles on government surveillance that we released last week and we urge him to move aggressively on reform". Those high-minded "principles" naturally do not question the rights of the technology companies to exploit personal data, and even go so far as to insist that states should harmonise "conflicting laws" and reject "Balkanisation" (i.e. support global monopolies). In other words, the usual neoliberal agenda. The peremptory nature of the wording ("The undersigned companies believe that it is time for the world’s governments to address the practices and laws regulating government surveillance of individuals and access to their information") is telling. They'll be demanding a Nobel Peace Prize next. After all, Obama's got one.

While there is a sense that the debate in the US is predicated on the assumption that people are idiots who can't distinguish between the rights of citizens and self-interested corporations, this remains a significant improvement on the level of the debate in the UK, where the attitude of the state is that we are not merely stupid but untrustworthy too. Alan Rusbridger, the well-known country-lover, highlights the irony: "This muted debate about our liberties – and the rather obvious attempts to inhibit, if not actually intimidate, newspapers – have puzzled Americans, Europeans and others who were brought up to regard the UK as being the cradle of free speech and an unfettered press". Of course, Rusbridger is a romantic liberal, so he actually believes in such unicorns as "an unfettered press".

The crudeness of the British state's attitude towards digital surveillance, exemplified in the view of the former Head of GCHQ that the security services should not be accountable to Parliament, is not the result of the lack of a constitution or formal rights, but the consequence of the irrelevance of the domestic IT industry (Silicon Roundabout isn't demanding a summit with David Cameron) and the waning power of the press. Rupert Murdoch's baleful legacy is not simply page 3 and phone-hacking but the corrupt interconnectedness of journalism, police and politics. The press has become an ever more obliging propaganda arm of government, and exposés of expense-fiddling parliamentarians are little more than spiteful attempts to assert their nominal independence.

The purpose of Tuesday's meeting was to get the US government to agree to rein in state surveillance, but not to go so far as to challenge the right of the technology companies to exploit personal data. Neither "side" wishes to jeopardise Silicon Valley's global dominance, though they recognise that some concessions will have to be made to neoliberal power blocs elsewhere, notably the EU. Once a satisfactory protocol is agreed, the "debate about our liberties" will become as muted in the US and Europe as it is in the UK today. Our proud boast in Britain is that we are "open for business", which means that we have no significant domestic Internet industry to champion and an aversion to prosecuting multinational technology companies for tax dodging. We are well ahead of the game in terms of neoliberal compliance.

No More Triumphs

David Cameron has apparently declared "mission accomplished" for British troops in Afghanistan. Pedants might point out that he was responding to a journalist's prompt, so the term is a plant with an eye to a headline, but this is incidental. The meaning of the spectacle is captured in the use of the word "declared", with its cricketing connotations of the captain's judgement. The Prime Minister has decided that we have done enough and it is time to quit the field. Just to reinforce the point, he was even accompanied by a celebrity retiree in the person of Michael Owen.

In an earlier age, the term "mission accomplished" would have been voiced by a military leader reporting to the civil power that had commissioned him. This was not merely confirmation that the will of the state had been successfully executed, but that the powers temporarily vested in the military had now been formally returned. The model for this was the practice in classical Greece and Republican Rome of treating warfare as an episodic activity requiring limited sanction. In the modern era of citizen armies, conscription and demobilisation became the ceremonies that marked these power exchanges, with triumphal processions and laurel wreaths going out of fashion in democracies in favour of impromptu kissing couples in public squares.

The ragged wars of the post-1945 period could not be characterised as successes by the West, and usually lacked call-ups and demobs, so there were few opportunities to claim "mission accomplished" until Thatcher decided to buck the trend with a Roman triumph as the armed forces marched into the City in 1982 to celebrate victory in the Falklands. But if that was a throwback in style, it also marked a return to the celebration of political will as much as military accomplishment. For all the praise of the fallen and the scarred, the chief message was clearly "we were right, and don't anyone say otherwise". The triumph was less a military conclusion than a political validation.

This neocon fashion reached the height of unintentional parody in 2003 when George W Bush did his Top Gun impression on the USS Abraham Lincoln beneath a banner with the legend "Mission Accomplished". The irony was that the military (rightly) did not consider that the mission in Iraq was anywhere near accomplished. The White House subsequently claimed that the banner's meaning was taken out of context, but their failure to spot the obvious hostage to fortune was a pretty good indication of both their hubris and the casual contempt for facts in the "war on terror".

Cameron's declaration is less vainglorious, but it is no less of a stunt. It is not difficult to make the case that the original objectives of Britain's involvement in Afghanistan have not been met, but the government has now reframed the brief to match the current reality, specifically bumping the Taliban training camps into Pakistan. According to the Prime Minister: "the purpose of our mission was always to build an Afghanistan and Afghan security forces that were capable of maintaining a basic level of security so this country never again became a haven for terrorist training camps". Job done. Let's get out of here before that "basic level" crumbles.

Given the current cuts in military spending, and the determination of most politicians to spunk an increasing slice of what is left on a Trident replacement, not to mention the emerging money-pits of cyber-warfare and drones, British troops aren't likely to see much action over the next decade or so (bumping the al-Qaida franchise out of Syria will be pursued via proxies). The current sentimental mood of Help for Heroes and tabloid-sponsored award ceremonies will linger on, but we'll gradually revert to the British tradition of seeing squaddies as crypto-hooligans whom it's best to steer clear of.

Just as Obama's kill-list symbolises the increasing bureaucratisation of war (and the militarisation of the bureaucracy), Cameron's downbeat triumph symbolises the increasingly trivial nature of the decisions taken to enter and exit wars. It's just business. With the ever-present background hum of total surveillance and cyber-warfare already in place, we are now in an era of permanent, low-level conflict, preferably at arms-length. The exceptional powers of the military have been abrogated by the state as a none-too-subtle way to bypass democracy. In such a world, we have no need of triumphs.

Walter Shows the Way

The big news in the world of wacky baccy this week was the decision of Uruguay to partially legalise marijuana, which has resulted in apparently sober calls for the nation to be awarded the Nobel peace prize (I love you too, man). Ultimately this is a sideshow. Perhaps of more significance is the suggestion that the UK government may look to regulate rather than ban synthetic drugs, though I suspect they'll pass up this opportunity in the short term. The emblematic role of drugs in the tabloid press (see Nigella Lawson) means that we'll probably be a late adopter as far as liberalisation or decriminalisation is concerned, but the fact that it is being considered indicates that a shift in attitude is under way. The key word is "regulate".

Perhaps the most overt sign of this change in popular culture has been Breaking Bad. Because of their length, TV drama series tend to require a lot of supporting comment - the auxiliary of constant blather intended to make you watch the programme and thus the adverts. Drama provides more grist for this than comedy, which suggests that the rise of social media has been decisive in creating the current "golden age of TV". With the exception of those aimed at knowing niche audiences (The IT Crowd, The Big Bang Theory), sitcom has been on the slide since 2006 and the birth of Twitter. If we'd imagined microblogging in the 90s, we'd probably have thought that the dissemination of jokes would be a killer app, but it turns out that the TV cheese for this particular wine is the traditional water-cooler guff of dramatic reveals and shouting at talent shows and politicians. It's reassuringly like Drury Lane in the eighteenth century.

Though much ink and many bytes are spent explicating the "narrative arc" and the moral quandaries of the central characters, the key meaning of these dramas can be found in the mise en scene, which doesn't tend to change much from beginning to end. Thus The Sopranos was a study of an SME in self-destructive and terminal decline, while The Wire looked more widely at institutional failure. Breaking Bad suggests that drugs might be a domestic manufacturing industry of the future, with a bit of luck. Despite the thick icing of morality and symbolic violence, all of these series are worrying away at industrial decline in the US and its social consequences. In Walter White's fall from grace as a chemistry teacher, there is a recognition that recreational drugs are the misapplication of a noble calling. The implication is that a small shift in the law (remember prohibition) could make this a respectable business.

The background to this spectacle is international economic negotiations, both the global efforts coordinated by the World Trade Organisation and regional initiatives such as the Transatlantic Trade and Investment Partnership and the Trans-Pacific Partnership. The WTO was created in 1995 as an institutional upgrade on GATT, the General Agreement on Tariffs and Trade, a rolling series of negotiations that was started in 1947 with the aim of avoiding the protectionism and autarky that had scarred the 1930s. Though GATT remains active, in the form of the outstanding Doha round, the global focus has long since shifted from the reduction of tariffs towards the harmonisation of regulations, notably in the areas of commercial services, intellectual copyright and foreign investment. The last GATT agreement before the creation of the WTO was, coincidentally, the Uruguay round, which ran from 1986 to 1994 (the duration, longer than the Congress of Vienna, is indicative of the scope and detail of these negotiations as much as the difficulty in securing agreement).

Despite the regular use of the words "trade" and "tariffs", and the implicit valorisation of "free trade", international agreements since the Uruguay round have had less and less to do with the traditional exchange of raw materials, agricultural produce and manufactured commodities. The objective in the neoliberal age has been to extend the rights of multinational corporations in the areas of intellectual property, investor-state dispute settlement (ISDS, i.e. the rights of foreign investors to trump domestic legislation), and the regulation of regulation (i.e. ensuring that domestic laws are harmonised to the satisfaction of global capital). As Dean Baker says, "the dirty secret about most trade negotiations today is that they aren’t really about 'conventional barriers to trade' any more. 'Non-tariff barriers', which get most of the attention in trade talks these days are a euphemism for differing national approaches to regulation".

While a lot of the criticism directed at these negotiations focuses on the anti-democratic implications of ISDS, the really big issue is intellectual property. The Trans-Pacific Partnership (TTP) is in large part targeted at extending US IP rights in South East Asia, where a large proportion of the world's "knock-offs" currently originate. But the scope of this goes beyond bootleg copies of The Hobbit. As Walter White has shown, we now have the technology to create knock-off drugs. As well as crystal meth, we can safely produce mildly psychoactive agents with minimal harmful effects (certainly less harmful than alcohol). If Big Pharma doesn't do this, then the market will be left to "unregulated" and "unscrupulous" producers in Vietnam and Mexico. It should be obvious that the gradual extension of IP rights is preparation for the decriminalisation of drugs, not to mention the ubiquity of high-profit GM.

There are many who cheer the Uruguay decision because it proposes nationalisation, rather than the regulation of a free market, and thus the adoption of a more socially-embedded response to the collateral damage of the drugs trade, but what they fail to appreciate is that this is only possible because there is no patent on cannabis or THC. In the future, the rights of nation states to manage their drug policy and direct their drug industries will be constrained by the rights of Big Pharma, who will own the "good stuff".