Note

This article will be lengthy and as a result I am experimenting with posting each part as I complete it. As I add to it I may also revise the parts already published.

Towards a New Society

By

Stuart Yates

Preface

This is in the nature of a first stab. It was supposed to follow on from an article about values but that suddenly disappeared from the computer's hard disk and the back up failed. So 3,500 words were lost and I haven't the heart to re-create it, although I did start to. My attention has been taken up with trying to perceive how politics, economics, the values of society might change for the better. I have been much heartened by reading John Ralston Saul's book The Collapse of Globalism in which he argues that globalisation is dead, even though the politicians and economists are not yet publicly admitting it. There remains the question of what replaces it. This is, as I said, my first stab at some thoughts in this area. Western societies in particular need a more humane and fairer way of organising their affairs: the end of globalisation provides such an opportunity. The principles are based on my professional code of ethics, which I used as basis for reflecting on a new political ethics. See Towards a new political ethics.

Re-defining the role of government

The present situation

For the last two and a half decades the West and therefore the world has been in the grip of an ideology which states that government should 'interfere' as little as possible in the affairs of its citizens. Note the use, as it has been used, of the word 'interfere' which is itself loaded. Substitute 'interfere' with 'govern' and take out the 'in' and you have an alternative perspective on that ideology, which reads 'government should govern as little as possible the affairs of its citizens'. Crazy? Yes, but it's the world in which we have all been living. The main reason for governmental strategy has been the need to be as competitive as possible in the globalised world, a world in which national governments have no power. The ideology is that 'the market' will sort everything out fairly and squarely. Governments in particular should

1. Tax people as little as possible.
2. Reduce direct control and management of 'public services' to a minimum - which follows from 1. You cannot maintain public services and reduce taxes. The claim that 'growth' will square the circle is a lie, pure and simple. The result, as we have seen in the UK, has been privatisation on a massive scale. 'Old Europe' as exemplified by France and Germany has resisted this trend and may just come through relatively unscathed as the tide turns.
3. Remove as many employee rights as possible to enable your companies to become/remain competitive.
4. Remove all restrictions on the movement of capital for the same reason.
5. Focus attention on foreign affairs, which enables defence expenditure to be maintained if not increased and provides a welcome (to the government) diversion to tricky moments at home.

By necessity, this is an abridged account of the situation and the way in which the UK government in particular has responded, but it may perhaps serve. What have been some of the consequences of this ideology? Well they include:

Let us start with defining what government is for, why we have governments.

The list is not very long:

1. External security

2. Affordable food and water

3. Adequate sanitation

4. Education

5. Health services

6. Essential energy

7. Protection from unfair treatment

8. Support for the disadvantaged

9. A basic transport system

10.A basic communications infrastructure

How a government provides such services is debatable. Direct provision is not necessarily the best way in all cases, but a government should ensure that they are provided. This means that, even if private provision is the best way to provide a service, government needs to regulate such a service closely and be willing and able to step in to maintain it if the private provision fails. It is this active responsibility which is essential, the government underwriting the provision even if private organisations actually carry out the service. It is not good enough for the government to wring its hands and claim it is not responsible when market forces act against the interests of the citizens.

The present UK government is fond of setting targets for services that it used to have direct control over. I suggest that how government operates would change significantly if government set itself targets against the headings above. There is all the difference in the world between setting hospitals waiting list targets - and penalising/blaming them if they fail, thus reducing their chances in the future - and the government accepting the primary responsibility and working with organisations to achieve them - and accepting the blame if they fail.

A Western government which set as its priority the welfare of its citizens in terms of basic services along the lines outlined above would be a catalyst in the development of a fairer and more humane society, a society which, given this example, might start to change into one which also starts to be compassionate to others, at home and abroad, and less concerned with individual prosperity and not caring too much if this is gained at the expense of others. Governments cannot change society by themselves but can act as powerful influences on culture.

Political behaviour

Political parties traditionally oppose each others' stance on just about any subject. That this is mere posturing is evidenced by the relative few measures that are repealed by a new party coming into office. In the UK, if you search the Conservative Party web site and the party's 2005 election manifesto you will have to look very hard to see promises of repealing Labour legislation. To be fair to the Liberal Democrats, repeal of legislation is mentioned e.g. the Prevention of Terrorism Act, tuition fees. The general rule however is to set out 'positive' measures, attack what the other parties have done or are proposing, then quietly, when in office, leave on the statute book what suits government, as opposed to what suits the country. In this way bad law, especially that which reduces individual freedoms, is left in force, as it may come in handy for any future government. It is this which makes the illiberal laws that Tony Blair has created - and is still creating - so dangerous. Unless repeal of such laws is specifically included in an election manifesto, they can be left in force. In this way, legislation grows and grows in complexity and citizens rights gradually eroded.

On the other hand, political parties are very eager to pass new legislation in some areas which effectively overturns legislation enacted by the previous government. There are areas where this is at least arguably beneficial, but there are other areas where some measure of stability is necessary, even if the current arrangements are less than perfect. Such areas include education, health provision, energy strategy, defence strategy, transport policy. These are used as political footballs and changes are made, sometimes every five years, for purely ideological grounds. The cost in implementing changes is enormous and the effects on staff working in these areas can be catastrophic. It is any nation's interest for these areas for policies to be formulated and implemented over a period of time longer than the typical life of a particular government. If we take education as an example, radical changes every five years means that every pupil has to undergo two or three changes over the period of his or her schooling. Teachers are subjected not only to the efforts of undestanding the new orthodoxy but of wholesale rewriting of teaching materials, let alone the learning of new teaching methods. The recent anger displayed at the Health Secretary also illustrates the toll that continual change takes on staff.

What is required is for political parties to agree the areas which require long term planning, agree on the limits to which each would go in furtherance of its own politcal ideology, such limits to acceptable to the other parties - in other words not too extreme. In short, to cooperate. Is this such a radical thought? In case it is thought that this excludes the electorate, such cooperative plans could be subject to a referendum, which would form a good basis for ensuring that each government sticks to its commitments.

I would imagine that the UK is not very different from other Western societies in the standards set by its political leaders. In the UK, the outgoing Conservative government was mired in one sleaze issue after another. Tony Blair promised transparency and honesty. Nine years later we have a Labour government mired in similar allegations. No fewer than three Cabinet ministers have recently faced allegations of breaking the ministerial code. When one, David Blunkett, was forced out on this issue Tony Blair still insisted that he had done nothing wrong. People will not respect politicians, will not turn out to vote, whilst politicians believe they can get away with unethical behaviour, indeed try to justify it. They could make a start by answering questions put to them, instead of talking about something else, often with a preliminary phrase such as 'What we have to consider...' or 'The really important thing to focus on....'. When we hear such phrases we know we can stop listening as nothing of any value or honesty will follow. Is it too much to ask politicians to be honest, to say what they mean? I think not. The other side of this coin is that when a politician or public figure does say what she means then retribution swiftly follows. Thus both Cherie Blair and Jenny Tonge were pilloried for expressing some understanding of the plight of the Palestinians.

Speaking of honesty, the evidence is that many (most?) politicians in the West are corrupt to some degree. I use the word 'corrupt' in a broad sense. Whilst perhaps few actually gain financially from acting in the interests of a pressure group (or am I being naive?), it is clear that policy is distorted by special interest groups, to the detriment of society as a whole. When this happens politicians are failing in their duty to serve the country as a whole and are allowing their function to be corrupted.

Politicians operate purely on the basis of getting or holding on to power. They have forgotten totally that politics and politicians are there to serve the people. When politicians start to behave with that in mind they will gain more respect and people will be prepared to make the effort to participate in the electoral process.

Nothing I have written in this section is remotely revolutionary or displays a new perspective on politics. It says much about how low political standards have fallen that it need to be written.

Electoral System

This section is short because it primarily links to a previous article Some Proposals on Electoral Reform in which I put the case for the UK to move to a system of proportional representation whilst still retaining the principle of having a local MP. Although the article is concerned with the UK situation, the issue runs across the Western world in that there is a need to engage citizens in the electoral process: one way in which this could be expedited is to have a system whereby every vote counts.

Since the original article I have been having further thoughts how an electoral system might strengthen democracy rather than, as at present in the UK, weaken it. When these thoughts take more concrete form they will either be added here or form a separate article.

Capital Movements

One lynchpin, if not the lynchpin of the globalisation movement has been the insistence on the free movement of capital. Politicians have lied about the way in which this has come about, citing technological advances and latterly that there is no alternative. Enabling capital to move freely across the world came about through a series of political actions, political actions which moreover involved complex negotiations and agreement between nation states, agreements which were and are intended to bind future governments, Examples are NAFTA (North America Free Trade Agreement) whereby Canada and Mexico agreed to a whole series of processes granting rights to private corporations across borders and thus weakening the power of each state to manage its economy independently; GATT (General Agreement on Tariffs and Trade) agreements; CUFTA (Canada-US Free Trade Agreement). All reduce a nation state's ability to adjust inflows and outflows of capital to manage their economies for the benefit of their citizens. There has been nothing natural, accidental or inevitable about these processes. Before we look at the effects of the free movement of capital, who gains (the few) and who loses (everyone else throughout the world), let us recap what purpose capital serves.

In order to provide goods and services, an organisation, whether private or public, large or small, needs two types of capital - investment and working. Working capital, after an enterprise is established, can and should be funded by the revenue from the business. Investment capital can be provided to a degree from profits, but at start up and at times of major change e.g. setting up a new facility, developing a new product or service, external capital investment is required. The ongoing capital value of an enterprise - as measured by stock market valuation - represents the accumulated investment in the company and what holders of capital view as the potential value of the enterprise. Legitimate use and transfer of capital is for investment, anything else is mere speculation, gambling, parasitic behaviour. Investment is related to time: return on investment (genuine investment) is not measured in weeks, days, hours, minutes, seconds, microseconds. Yet the free movement of capital enables individuals and organisations with capital resources to move capital in and out of organisations and nation states - because of the weakening/elimination of national controls mentioned above - at microsecond intervals. For what purpose? To gain immediate profit. For themselves. An example. Look up Goldman Sachs on the Internet. At the end of 2005, New York Magazine estimated that the size of the bonus pool for the year for Goldman Sachs at $11billion - the firm's profit by the third quarter was $9,25bn. That's an average of $500,000 per employee, although the bonusses are not divided equally of course. See Please, Sir, I Want Some More. This profit is gained just by moving money around, calculating that some stock is about to fall (sell it) and some about to gain (buy it), even if the longer-term prospects of that company are in the other direction, as , when the tipping point comes again, buying and selling at the right moment produces another profit. Note that the profit gained by the fund manager is not as a result of producing any goods and services, no physical changes take place, just entries in an electronic ledger. Fund management is of course much more complex than this, with hedge funds, derivatives, use of off-shore accounts etc, but the buying/selling example given above is the nearest to reality, ie connected with a corporation's actual value. The sobering thought is that most of us, that is most of us in the West, also gain by such gambling. Even if we do not actually invest in companies directly or via unit trusts etc, anyone with a private pension fund gains in that pension funds are amongst the largest participators in this casino. So we gain, perhaps marginally, perhaps more, from what is a parasitic activity. You may wonder where the money comes from. Well, it's a bit like the 'swing the bucket' game: swing a bucked of water fast enough and the water stays in, slow down and it all falls out. In the UK many thousands of people lost a good deal of money when endowment mortgages failed to gain sufficiently and many thousands ahve also lost their pensions when pension funds hit hard times. So there are losers at this game even in the West. In the developing nations they all (except the very few in positions of power and influence) lose. All the time.

The theory behind the free movement of capital is based on two falsehoods, one theoretical and one real. The theoretical flaw, which every first year economics student knows, is that free markets only work effectively and efficiently in market conditions known as 'perfect competition'. This is roughly defined as a market where there are so many sellers and so many buyers, together with the ability to increase and decrease supply and demand rapidly, that no individual seller or individual buyer can influence supply, demand or price. It is a theoretical hypothesis only, not achievable in the real world. Ironically, the free movement of capital comes relatively close to this theoretical position but this brings to the second, real, flaw is that capital is only one factor of production. The others are labour and raw materials. From these three - with appropriate land occupancy - businesses can be in, well, business. Labour however is not freely moving or movable, although there is the attempt to increase labour mobility, going under the name of 'flexible labour markets'. The freedom to hire and fire without penalty is what this actually means to you and me, as so many people have found out. In spite of buying and selling raw materials 'long' and 'short', ie buying them early, say at the country of origin or late, say at a warehouse in the corporation's country, raw materials are not very flexible, cannot be increased or decreased rapidly. So the free movement of capital, set against the relatively restricted flexibility of labour, raw materials and, ultimately, land, plant and machinery, offices etc distorts the so-called global market horribly. When we look further at the real world in which businesses operate, we see the drive, through fear, towards larger and larger corporations, in terms of market share, with constantly reducing costs - largely labour costs - so that the real world of business is always inexorably moving away from perfect competition, towards monopolistic competition or outright monopoly. It is significant that even in the US, which espouses the principles of the free market, anti-trust legislation is in place to stop this natural drive for a company to be the sole provider. Again we see the ability of the nation state to manage its economy by regulation/legislation when it so chooses.

So the nation state is not powerless. The present economic orthodoxy is not unchangeable. What might be done? Well, the first, obvious move is to return capital to its primary function, that of providing investment funds. Ther have been proposals to limit the instant movement of capital, for instance the s0-called Tobin tax whereby every capital transfer attracts a very small levy, insignificant when the funds are left for weeks or months, but mounting up when a trader buys and sells daily, hourly, by the second etc. Needless to say this meets with fierce opposition from those making money from capital. I would favour an alternative which would provoke even more opposition. It is to set a minimum time within which it is impossible to remove funds from where they are invested, thus honouring what the funds are actually for. There is nothing very novel about this. We are all familiar with minimum withdrawal times from savings accounts. The minimum time should be months, not weeks - I would set it at six months, it is easy to argue for a longer period. In this way, people making investment decisions would look at the real situation of the company/companies, not the likely minute by minute fluctuation of the capital market, fed by rumour and counter-rumour. Lots of financial managers would lose their jobs as the capital markets return to more sedate and realistic pace. Well, lots of workers have lost their jobs, viable, productive jobs, as a direct result of those financial managers' gambles, so I guess it's fair in this respect.

Secondly, nations should be able to manage the capital flows in and out of their nation. Transnational corporations and financial market gamblers have free rein at the moment and the herd instinct of the money markets - because once selling starts it can trigger off computer-generated mass selling - can and has bankrupted nations in a matter of hours. This usually results in going cap in hand to the IMF/World Bank for something which does not reflect the real condition of the nation's economy. The IMF/World Bank, dominated by the globalisation orthodoxy and holders of capital, duly insist on yet more 'liberalisation', thus weakening the nation's economy still further. Note that the US is exempt from the rules. The US, in terms of its trading position/balance of payments, has been bankrupt for some time, the indebtedness to China alone is enormous. 43% of the US public debt ($4.9 trillion) is held abroad. There is nothing unusual about this and in former times a devaluation would correct matters - not without some pain - but effectively wipes much of the debt out. Of course we cannnot allow developing nations to do the same. If nations could keep the capital they really need, rather than the financial herd stampeding off with it whenever it feels panicky, inward investment would again return to a basis of real prospects, of the strength or otherwise of the real economy. It is more difficult to regulate corporate investment in factories, offices etc. unless labour is either more organised - and hasn't the trade union movement taken a bashing since the 'seventies, all in the cause of globalisation anf profits for the few - or national legislation which makes it more difficult to hire and fire, move facilities to gain the advantages of cheaper labout costs elsewhere (for a short while). This does not mean mere protectionism, it means that changing facilities/countries is managed. It means that the contribution made by labour is honoured until and unless there are medium/long term advantages in changing. So we are again talking about time constraints, so that companies cannot up sticks at a whim. The reality is of ourse is that they do not do it at a whim. If the movement of capital were restricted to reflect genuine investment it would bring incalculable benefits to corporate management, who could then plan their business without the constant fear of distorting it to satisfy short term/instant increases in share prices demanded by those same fund managers.

Time constraints on capital movements, the restoration of a nation state's ability to regulate the capital held in in its country and time constraints in moving production/services across national boundaries would transform the way the world economy functioned. It would base economies on realities, not speculative gambling. It would benefit the developing nations as, if they are basically sound, they would attract investment and that investment would stay, rather than be likely to disappear at any time because of some ill-founded rumour or the ability for some to manipulate the market for their own personal gain.

It is time that capital was regulated so that it serves humanity, rather than the interests of the few, and that capital is invested on the basis of reality rather than electronic speculation. Make no mistake though. Any attempt to reduce the free movement of capital will be fiercely resisted, as those who have capital have power and the globalised market has increased their power. As we know, power cannot be given, it can only be taken. Nation states must be persuaded by their peoples that taking power from the owners of capital is in their, the politicians, interest. This brings us back to re-defining government. If politicians want to manage their country in the interests of their people - and I believe most do - and if politicians want to be re-elected - and I believe most do - then we, the people can start persuading them. No Western government is immune from the will of the people. It is up to us. We are not powerless.

Company Size

If we accept the principle of the market economy that there has to be sufficient providers to enable the market to operate effectively (as well as sufficient consumers), then it follows that a trend towards fewer and fewer companies in any market sector reduces, by definition, weakens the effectiveness of the market mechanisms. Yet this is precisely what has been happening at an accelerating pace since the 'globalised' or 'free market' orthodoxy took over in the 1970's and 80's. There is the paradox that business strenuously advocates the freedom to compete without any external, ie governmental fetters, yet uses this freedom to undermine the this basic principle by merging and taking over competitors. It is difficult to obtain historical figures but the following statistics from the London Stock Exchange illustrates the trend:

Stock Market Valuations, December 1998 and May 2006

Number of companies          Dec 1998          May 2006  &;        % Decrease

Over £50m                              928                    823                    11

£25m - £50m                          276                    143                    48

Less than £25m                       633                    194                    69

Totals                                   1837                   1160                    37

In the same period the total stock market valuation rose by 26%, so the reduction in the number of companies was not due to recession. The percentage share of the total market value also changed significantly. In December 1998, by market value, companies capitalised at over £50m accounted for 90.5%, those between £25m and £50m 3.9%, those less than £25m 5.6%. In May 2006 the corresponding figures were 94.3%, 2.6% and 3.1% respectively. Again there is a larger reduction in smaller companies. So the picture is of fewer companies and the largest companies taking an increased percentage of the total market value. All this weakens competition, not strengthens it, leading to the greater possibility of too much power (and therefore excessive profits) in the hands of too few companies.

So if we are to live in a free market, competitive society - no-one is coming up with an alternative, although I would love to - there have to ways in which genuine competition can be sustained and not be allowed to wither away with mergers and takeovers. One way would be to limit the percentage share of a market by any one company. This could be done by a number of factors: profits, turnover, sales volume etc. The actual formula would vary from industry to industry. When a company reaches the limit, it is sub-divided to maintain some element of competition. One immediate argument against this is that it would act as a disincentive for companies to grow. This could easily be negated by incentives for the directors of such a company: the reward (and prestige) for being so effective could be made sufficiently attractive. A further argument is that some market sectors require substantial research and development which can only be financed by large enterprises. This can be resolved by structuring research and development in a different manner and is dealt with in the next section. The same issue and its resolution applies to production facilities in some industries.

This principle also sheds light on the private vs public debate. The principles above could be applied to, say, water supplies, but there is a geographic element here which restricts the provision of a genuinely competitive market. It is not reasonable to contemplate water being shipped from one end of the country to another - except for the public good, ah there' a phrase we don't meet in the free market world. It makes sense for water to be managed locally and this by its very nature restricts the possibility of large scale companies actually competing effectively, ie. providing services at the lowest possible price for the consumer. or indeed any meaningful competition. The rather obvious solution, given also the vital need for this supply and the investment required to maintain it, is for such supplies to be publicly run. How public bodies could be overseen and made as effective and efficient as possible is another debate, which I may or may not cover in this article.

When one considers the prospect of companies competing, genuinely, and the more successful being divided up to form smaller, maybe more dynamic companies, it connects with the natural world. Bees for instance increase the population of a hive until it is too large. A new queen is then created and two smaller colonies are then created, both with the prospect of growing to the natural size limit. Breaking up companies that have become too large used to be done to some extent, but those two architects of the current out of control capitalism, Reagan and Thatcher, saw to it that the practice decreased. It is time to resurrect it in a different form. Not only would this generate more effective competition, to the benefit of the consumer, but also the likelihood of more dynamic companies. There is ample evidence that snaller companies communicate internally rather better than large ones and corporate aims and processes are rather easier to discuss, change and implement. Smaller companies are lighter on their feet.

Organisation of Research and Development and Production facilities.

In the previous section it was noted that some research and development (R&D) or production facilities need to be relatively large. For instance it would be uneconomic or even not possible to have many small steel making plants, the research into the causes (and cures) for diseases is specialised and costly. In this way it might be argued that companies in some industries have to be large in order to be viable. There are however many ways of organising R&D and production facilities, based on cooperation, not competition, but which paradoxically maintain genuine competition. Moreover, these alternatives are not new.

Over the last forty years I have worked in the following scenarios. A company producing car bodies for most of the UK car industry (including Rolls Royce), from bare metal to fully painted and trimmed models. A food company that produced its own brand of coffee and other products in the same plant that it produced coffee under the brand name of several supermarket chains. The UK car industry used to have - may still have - an R&D organisation, MIRA (Motor Industry Research Association) to which car manufacturers contributed and who used it to test their new models. I remember visiting its various test tracks in Warwickshire and having a hairaising drive around the high speed track: you were supposed to be able to take the bends at 100mph with no hands on the wheel such was the design.

Currently the clothing industry in particular tends to site its production facilities in the developing world, with Western brand name goods being made side by side in the same factory. Regrettably these facilities tend to be sweatshops in which workers are viciously exploited. (Read Naomi Klein's No Logo) Another current (forgive the pun) example is that of electricity supply. In the UK we 'choose' a supplier but the electricity does not come solely from that supplier's power stations - if indeed the supplier has any production facilities. All electricity generated flows through the national grid. The establishment of relatively small Sales/Marketing companies is touted by the government as providing competition and choice. Where this argument falls down is due to the fact that electricity is a homogeneous product - British Gas electricity and Scottish Power's electricity is the same product. Nevertheless, the principle is similar and workable. With differentiated products, genuine choice and competition can be provided. Incidentally, the fact that electricity is homogeneous, needs large-scale investment and is a basic commodity are all arguments in favour of a state-run or tightly state-controlled industry.

So there is nothing new or fanciful about sharing facilities. It would be perfectly possible, where appropriate, for companies to fund jointly industry-wide production and/or R&D facilities. Indeed it would more efficient, reducing the diseconomies of duplication. The level of funding would vary according to usage and Chinese walls could ensure the maintenance of commercial confidentiality. Companies would compete as usual on differentiated products and the principle of dividing conpanies above a certain size, as outlined in the previous section, applied in order to maintain genuine competition. Note that none of this - part from the limit on company size - is mandatory. If a company wants to source everything in-house it would do so. To effect such changes to a partly cooperative and shared use of facilities takes political will and the courage to face down the power of large transnational corporations in particular, with their anti-social monopoly profits and exploitation of labour.

The power and role of nation states

The power and autonomy of the nation state has significantly decreased as a result of the growing power of transnational companies. Large companies in the developed world not only exert power through their sheer size and their impact on the economy (and, therefore, ultimately, votes) , but also through direct lobbying of governments and the influence effectively bought by donations to political parties. Add to that the ability to move production facilities from country to country and the various binding international treaties regulating 'free' trade and capital movements and we see that the ability of nation states to regulate their economic affairs has been curtailed. This has a direct effect on the ability of the state to implement social policy. Services such as health, education, support for the disadvantaged, infrastructure for areas such as transport, the arts, sport, all depend (or have depended) on public funds which have been seriously depleted by the continuing fall in tax revenues from companies.

UK Corporate Tax after Set-offs (£m)

2001      2002      2003      2004

31,207   28,214   28,066   30,896 (Source: HM Revenue and Customs)

So in 2004 we were still not back to the 2001 figure and in the meantime the value of money decreases year by year.

Meanwhile companies are more profitable than ever, for the same period as taxation

Gross Operating Surplus, UK Non-financial companies £m

2001            2002      2003      2004

185,942   189,906   202,479   219,738 (Source: UK National Statistics)

The growth in company profits is even more impressive when we look at a longer period:

Gross Operating Surplus, UK Non-financial companies £m

1965      5,850

1970      7,213

1975      11,683

1980      34,065

1985      70,147

1990      104,943

1995      143,438

2000      185,942

2005      227,057 (Source: UK National Statistics)

The formulation of social policy is not just an abstract political debate. It creates the very culture of each nation state's society. In other words it is an integral part of the fabric of society.

Given that the reduction in available funding - even though companies are more profitable than ever before - governments make choices in terms of priorities. 'Defence' and internal security ie policing, prison facilities, tend to come high on the list: any government's wordt nightmare is to be vulnerable to external or internal strife. Not for the sake of its citizens, but for the sake of the government itself. Governments are toppled by external or internal strife that goes beyond a critical point, so they try to make sure that the critical point is not remotely reached. There is also another reason for this focus. Having lost control of so much to the transnationals, defence and especially law and order issues are areas that politicians think they can control. Add to that a convenient external threat - international terrorism, the scale of which has been grossly exaggerated ("if you don't support such and such repressive law, the big bad bogeyman of al-Qaeda will come and get you") - and you have a control freak's charter. Defence and security are, whilst necessary, essentially neagive and reactive. 'If you attack us, then you will be attacked'. Also, giving the lie to the term 'defence', 'If you do X, or do not stop doing Y, we will invade you'. Similarly, 'If you do A, we will imprison you', increasingly in the UK without a trial too.

Inevitably therefore governments are seen as controlling and negative. Speaking from a UK perspective, filling the gap in funding is desperately sought from the very source that governments dare not take from directly: companies. This takes two forms. Direct private investment eg. in hospitals by which government give up much control and the companies make profits directly from the investment and secondly sponsorship whereby companies provide funds but these funds are still within the control of central or local government. In order for companies to do this - being bound by law to maximise profits for their shareholders - there needs to be some marketing/advertising link which purports to affect profits. At the local level this results in some extraordinary schemes, for instance, whereas in the past local government would have funded street decoration, now you see pathetic signs on some roundabouts (traffic islands) saying 'Sponsor Me' where those roundabouts have not yet got a corporate 'sponsor'. Those which have are brightly flowered and festooned with signs such as 'Supajams - makers of fine food since 1857' etc.

Thus we see in the UK the government always looking towards private funding in most areas which provide a service to the public. Services which are inherently 'public', for instance the provision of passports are either sub-contracted to private companies or form discrete cost centres which have to be self funding. We see the results of this in the recent increase in UK passports of 29%, the second rise in twelve months. (The total increase in the year has been 57%) A spokesman blithely said that the additional costs created by more and more security data has to be paid for, ie. by the citizen. In these ways the government appears not only unable to provide public services but not to want to provide them. No wonder government and politicians are held in such low esteem.

There is another aspect to the nation state which is fundamental to its purpose and to the well-being of its citizens. It is the smallest unit of belonging. A sense of belonging is important psychologically, being the third human need ( after basic physiological needs and safety needs). Yes, people have a sense of belonging to a family, a town, state, region etc, but their nation state defines their position in the world. Whether we like it or not, the nation state represents effective power. It is to the state that we look for security, it is to the state that we pay our taxes, the state is the body which claims our allegiance. "My country, right or wrong" is a statement I abhor, but it illustrates the importance of the nation state. So what our nation state does, how it acts, is important to us. It follows therefore that politicians have a responsibility to their citizens to honour their needs and to respond to their wishes whenever possible. In other words, the governance of the nation state should be carried out in terms of a trust and not as an ego or power trip. Too often it appears to be the latter and the increasing emphasis on individualism and competition (perspectives which readers will recognise as being significant to me) forms part of this trend towards the politicians' disregard if not conrempt for the citizenry. This trend carries with it a clear danger of disaffection and fragmentation.

March - September 2006