James Meadway: very right and very wrong

I came across this March article in Novara Media by James Meadway – he of John McDonnell advisor fame – who writes:

What matters above all else is something central to the operation of capitalism today. As profits become harder to find through the textbook route of investment and the creation of new markets (whether for goods or services), capitalism in general is turning towards various forms of rent-seeking. It’s significantly easier to enforce property rights on what has been created elsewhere, and demand tribute for access, than it is go through the costly and risky business of creating new value yourself.

This rent-seeking becomes easier still if – as is the case with various platform companies – something close to a monopoly can be maintained in a market. The lines between rent-seeking and value creation are usually blurred: Uber’s software and data undoubtedly produce some additional value, but surely not the 25% cut it takes from its drivers. From the point of view of generating profits, though, it really doesn’t matter where the balance lies. There’s no moral case for pulling one way or the other. It’s all just money.

This is mostly spot on. But with the significant and major exception that there is indeed, I would have thought, a significant moral case for NOT rent seeking. It is completely and generally unproductive yet personally enriching – just as a start. So it is not ‘all just money’ – in itself rather an odd, indeed revealing, idea. It is just rent seeking…

He continues:

… we are going to run into a fight over payments systems and how the fundamental infrastructure of modern capitalism operates – and it is unlikely that the traditional socialist answer of demanding more control over a central bank will provide all the answers when money (and the institutions that handle it) are drifting steadily outside government control. We need to think more creatively about the issues of regulation and democracy as applied to markets, and how we can democratise payments and the money system itself.

This is nuts! Even more so in the light of Facebook’s new (rent seeking) payment system.

Why should any self respecting government not be taxing the last drop (should they so choose) out of these payment systems?

That should be – if not the traditional – then certainly the new, ‘socialist answer’. This will ensure that the government is in control.

Central Banks seem to get more control when the banking system they are in fact supposed to control, goes wrong. So why is he not ensuring that we are ‘democratising’ through legislation? Like making illegal everything that is not specifically permitted and going for an insurance based banking control?

James Meadway has surely now to realise that he was not advising the ex chairman of finance at the GLC!

And we have also to hope that that essential message that our government is, by definition, the sole currency issuer.

Facebook we are not.