Saturday 23 December 2017

Some Books #2

These are some of the better books I have read in the past year, and ones to look for if you want to find out about …

The British Labour Movement and Ireland

Geoffrey Bell, Hesitant Comrades: The Irish Revolution and the British Labour Movement, Pluto Press, 2016
This book is an interesting study that undermines the notion that the British labour movement was ever progressive when faced with a challenge to British imperialism. Its focus is on Britain and Ireland in the early 20th century, and it shows there was only some limited support for Irish freedom from British rule in British cities where there were many Irish workers. Neither the mainstream workers’ organisations, nor the more radical ones, took up the issue in any substantial way. This leads Bell to his book’s title of ‘hesitant comrades’. The Catholic Herald summed it all up in March 1920: ‘Ireland is in the throes of a national agony, a victim of merciless militarism, and British Labour remains quiescent and inactive’ (p. 218).
William O’Brien of the Irish TUC and Labour Party had made a similar point a year after the 1916 Easter Rising. Addressing delegates at the Leeds Convention in 1917, he said: ‘In Ireland you have a small nationality at your door which is demanding the right of its own life, … I gather from reading some of the capitalist papers that revolution is popular nowadays. Twelve months ago you had a revolution in Ireland. The papers and politicians that acclaimed the revolution in Russia did not acclaim the revolution in Ireland whose leaders were taken out and shot like dogs’ (pp. 217-218).
Even Sylvia Pankhurst’s Workers’ Dreadnought sidelined the issue of Irish freedom from political oppression by belittling the Sinn Fein-supporting nationalists. It promoted hopes for the class struggle instead. It is tricky to follow the development of inconsistent comments by labour movement radicals. But while some, like the Communist Party of Great Britain (CPGB), ended up being more ‘theoretically’ correct, they still did next to nothing about the issue, or even wrote much about it.
All the workers’ organisations wanted to avoid the question of sectarianism in Ulster, which was replicated in the working class in Liverpool, Glasgow and elsewhere. Confronting sectarianism would also have caused problems for the trade unions. So they blamed sectarianism on Unionist politicians, like Carson, and on the British Government, and downplayed the material basis for the support of anti-Catholic policies among the Protestant-Loyalist working class.
In the second half of 1921, after anti-Catholic pogroms by the Ulster Loyalists, CPGB member William Paul, in his pamphlet Irish Crisis, said: ‘The peculiar psychology of Orangeism … with its fierce and violent hatred against its enemies will be easily diverted against a capitalist class during a revolutionary crisis. It was Carson who taught them how to arm against the status quo … When the workers move against Capitalism, the revolutionary movement of Ulster will have good reason for thanking Carson for his magnificent work’ (p. 191). This view rested on the delusion that somehow the loyalist workers’ ‘fierce and violent hatred’ towards Catholics would be overcome in a ‘move against Capitalism’. It dishonestly used the mirage of future workers’ unity to avoid dealing with the ugly reality of the day.
The left sometimes recognised how Ireland’s struggle was a political embarrassment. For example, in June 1920 the British Communist paper, The Call, said: “The suppression of Ireland is one of the world’s great crimes; the silence of Englishmen is one of the tragedies” (p. 111). But despite this, and other, similar statements by the CPGB in 1920-21, they did little about it. To say the least, they would have scored few points when measured on the Bolshevik reckoning of how many Communist supporters had been imprisoned for their agitation on Ireland.

The British and India

Shashi Tharoor, Inglorious Empire: What the British Did to India, Hurst & Co, 2017
Tharoor is an Indian politician, and a good polemicist. Two points stood out for me in this well-written book. Firstly, he does a good job of confronting Niall Ferguson, the historian and apologist for British (and American) imperialism, on the subject of India. This illustrates how a polemic can provide a useful theme for guiding the exposition of an argument.
Secondly, and for me the most interesting parts of the book, were not where he detailed how the British destroyed the Indian textile industry to promote India’s imports of British textile products – often woollen clothes that were completely unsuited to India’s climate. This has been covered many times by others. The new point for me was where he showed how British domination undermined India’s commercial shipping sector and its shipbuilding industry, an industry that, at the time, was at least as advanced as the British one. This resulted from British commercial power, setting the rules on what ships could be used between British controlled ports and also who could run that business. Commercial power is often greatly underestimated by those who focus only on industry, and these examples help explain more fully Britain’s exploitation of India.

Machinations in the Middle East

Christopher Davidson, Shadow Wars: The Secret Struggle for the Middle East, One World, 2016
This book is a good, easy to read, although lengthy review of events in the Middle East and Northern Africa. It will help a lot in understanding the background to present day news stories, since it details the actions both of the major powers – the US, Britain and France in particular – and of the different political groupings in the region. There is a welcome coverage of countries from Nigeria, to Libya, to Saudi Arabia, Syria and Turkey, with comprehensive information on the supporters of ISIS, Al-Qaeda, Al-Nusra, Boko Haram, etc.
Davidson has incorporated a mass of material into the book, providing some important details that even close observers of these events are likely to have missed. His 2,500 footnotes are encyclopedic, even to excess, covering 121 of the near-700 pages, but they do give useful documentation for anyone doing research on these issues. However, although in many places the book gives a useful summary of the relevant historical background, its disadvantage is that it reads more like an extended news review. This is at the cost of giving a more theoretical assessment of what is going on and explaining how this results from the latest phase of imperial disintegration.

The Balfour Declaration, British Support for Zionism

David Cronin, Balfour’s Shadow: A Century of British Support for Zionism and Israel, Pluto Press, 2017
This book does what it says in the title, and reviews British government policy towards Palestine and Zionism from the time of the Balfour Declaration in 1917 up to the present day. There are more twists and turns in this story than it is easy to summarise here, but I would recommend Cronin’s work as well-written, well-documented and mercifully concise!
Although it covers some similar ground, I would also recommend reading John Newsinger’s telling critique of the British Labour Party and Zionism, available here.

Tony Norfield, 23 December 2017

Tuesday 21 November 2017

Mugabe, Land, Thatcher, Blair & Imperialism

So, farewell then, Robert Mugabe, ruler of Zimbabwe for 37 years. As the western media celebrate your demise, and Zimbabwe’s people wonder what will happen next, it is worth making a note of some forgotten events that helped pave the way for your country’s crisis. As one might expect, this involves the Brits. Perhaps less anticipated, it also involves the Labour Government from 1997.

One key question for an African country like Zimbabwe fighting off racist colonialism was that whites had held all the best land. This made land reform critical for some version of economic justice and liberation for the mass of people. But the Lancaster House agreement, managed by the British in 1979 to oversee the transition from white minority rule, pressured Mugabe into delaying any serious land reform for another 10 years. The British and American governments, worried about Soviet influence in the region, offered to compensate white citizens for any land they sold and a fund was established, to operate from 1980 to 1990.
Lack of money to assist agricultural investment, with funds only available to compensate the white landowners, meant that Zimbabwe’s land reform was doomed to fail. Thatcher’s government from 1979 allocated those funds for compensation and many landless people were resettled, but in 1997 Tony Blair’s ever-so-progressive New Labour stopped even that. Clare Short, Blair’s Secretary of State for International Development, told Mugabe’s government in November 1997 that while Labour might be willing to assist in some ‘poverty eradication’ it would not continue to help with land reform. Blair repudiated all commitments to help on this, so Mugabe responded by forcibly confiscating white farms without compensation. While this got popular support, it exacerbated Zimbabwe’s economic problems. These were worsened from 2001 by economic sanctions the ‘British Commonwealth’ and other imperialists imposed on the country.
This is not to excuse Mugabe’s politics. It is just to illustrate a more general rule that imperialism, even in its ‘Labour’ forms, cannot be trusted.

Tony Norfield, 21 November 2017

Wednesday 8 November 2017

End of the Anglosphere

Big Ben no longer chimes, Trump tweets every quarter hour
Silence and media noise mock the fading imperial powers.
Governments of fools, though few fools can now be found
Brave enough to smirk at the turmoil all around.
Undone by popular will to revive their imperial benefits
Trump tears off the US veneer, and Brexit befuddles the Brits.
Comfort reigned for few while the Anglosphere held sway
War and chaos summon all as the Anglosphere decays.

Tony Norfield, 8 November 2017

Thursday 26 October 2017

The British Labour Party and Israel

Why was Moshé Machover expelled from the Labour Party on 4 October for anti-Semitism? Machover, an emeritus professor of mathematics, was born in Israel and has been a lifelong socialist, anti-racist and critic of Israeli policy. For the Labour Party’s Legal Queries Unit to allege that he has been anti-Semitic is ludicrous, so much so that there has been widespread support for Machover from within the Labour Party itself. But this absurdity reflects two things that stem from a third: imperialist politics.

Israel and imperialist politics

Firstly, there is the attempt by supporters of Israel to label all critics of that 1948 creature of imperialism as being anti-Semitic. This is a longstanding policy of Israeli governments, their foreign embassies and support groups. But this Israeli policy has become more hysterical in recent years as opposition to their oppression of Palestinians has become more widespread, and as Israel has found itself facing a more uncertain future. A series of disasters in the Middle East for imperial policy – from Iraq, to Libya, Syria and the rise of Islamic State – has led the major powers to play a more direct role in the region, a development that threatens to sideline the traditional Israeli role as policeman for these powers.
Secondly, a keystone of UK foreign policy has been to support Israel. This has been based upon Israel’s value in helping undermine Arab nationalism. An early example was the 1956 Suez fiasco, a deal between the UK, France and Israel to stage an invasion of Egypt to try and depose Egypt’s President Nasser. Another little noted example is how Israel fostered the growth of Hamas in the 1980s to undermine the Palestinian Liberation Organisation. This promotion of an Islamist group to defeat an enemy has backfired, as have similar imperial enterprises like backing Al-Qaeda (in Afghanistan, etc) and Islamic State (in Iraq, Syria, etc).
That Israel could play a role for different major powers was evident even before the state’s foundation in 1948,[1] following a resolution from the United Nations to replace the former British Mandate over Palestine and partition the territory.[2] But the creation of Israel was based upon a fundamental injustice: Palestinians were made to pay the price for the European slaughter of Jews in the previous decade![3] From its birth, the military and terror forces of the new Israeli state seized Palestinian land and property, through mass expulsions and murder.
The razing of Palestinian villages and destroying signs of Palestinian culture and society, even uprooting olive groves, tries to construct the Zionist myth of ‘a land without people for a people without land’. These crimes were prettified by the Jewish National Fund, a ‘charity’ that gives Palestinian land to those who claim to be Jewish. Many UK Conservative Party and Labour Party leaders have supported this organisation – most recently Tony Blair, Gordon Brown, David Cameron and Theresa May.[4]
The British Labour Party’s links to Israel were acknowledged in the autobiography of a senior Labour politician, Denis Healey, The Time of My Life, published in 1989. He noted that ‘the Labour Party was overwhelmingly Zionist, and had far closer relations with Israel than the Conservatives – apart from a small group of Tory Zionists such as Churchill himself, Julian Amery and Hugh Fraser’. This relationship was often based upon Labour’s racism towards Arabs, and was supported by Labour’s notion that European Jews could bring ‘civilisation’ to the Middle East in a way that would also be aligned with British interests.[5]

Supporting the Palestinians?

One political party leader for whom endorsing the Jewish National Fund is off limits is Labour’s Jeremy Corbyn. But, to go back to my opening question, how then did Moshé Machover’s expulsion from the Labour Party occur when the leader of the Labour Party supports the Palestinians?
Denials of Palestinian rights by the Israeli state have been so outrageous that one would have to be an accomplished ignoramus, an anti-social psychopath, or an ardent Zionist, not to have any sympathy with the Palestinians. The Israeli oppression of the near two million people in Gaza, which has become the world’s largest prison camp, possibly stands out most. These things have now led to a smaller number of Labour MPs to sign up for membership of the Labour Friends of Israel lobby group.[6] But what form does that sympathy take for Jeremy Corbyn? It is the ‘two-state solution’ and an acceptance of the 1948 deal that set up the Israeli state in the first place.
At the Labour Party conference in September 2017, Corbyn said: ‘Let’s give real support to end the oppression of the Palestinian people, the 50-year occupation and illegal settlement expansion and move to a genuine two-state solution of the Israel-Palestine conflict’.
For Corbyn, the ‘50 year’ point only refers to Israel’s extension of its borders to seize yet more land in the 1967 war with other Arab states. Similarly, the ‘settlement’ point refers only to the further seizure of land that has continued since 1967, ones that are illegal even under United Nations law – but violations of which have gone unpunished, given the service that Israel has provided for the major powers that run the world. The failure to recognise the crime of 1948 and the setting up of Israel in the first place – on the majority of Palestinian land – reflects an all-too common view, even among those sympathetic to the Palestinians, like Corbyn.
Getting back to the 1948 set up would endorse the UN decision for the two states, one led especially by the US, but also by the Soviet Union (despite the Balfour Declaration, the UK abstained in the UN’s 1947 vote on partitioning Palestine, not wishing to damage its position with other Arab countries). A 1948 starting point would also leave unchallenged the additional Zionist seizure of land at that time, beyond what was envisaged by the UN’s calculation, let alone the additional annexation of land in later years.
Corbyn’s endorsement of a ‘two state solution’ does not recognise that one of the parties has the imperial jackboot on its neck and a gun to its head in any negotiations. It is also out of bounds for Israel, given the nature of the Israeli state. A state that cannot even define its borders, a state that has an ethnic definition of citizenship, a state that has promoted the influx of hundreds of thousands of subsidised settlers on Palestinian land – that state is hardly likely to agree a return to pre-1967 borders. Nevertheless, a minimum demand on the Israelis to achieve some justice for the Palestinians remains: Give back the land you have stolen!
The imperial modus operandi is that when people rise up against injustice they are killed, or at least prevented from upsetting plans, perhaps by co-opting their leaders. Palestinians have rarely been in the latter, more ‘lucky’ situation, so they remain terrorised and defamed. However, the image of continual Palestinian oppression can still be an embarrassing bloodstain on those who talk about the values of western democracy.

Changing times

For Jeremy Corbyn to raise the issue of Palestine in his Labour Party conference speech might be seen as a breakthrough. Until now, there has not been the slightest indication that the Labour Party would move from its faithful backing of the global power structure that has Israel as its armed guard against Arab nationalism. But the rise to prominence of Corbyn’s view reflects a subtle change in how Israel is now seen by the major powers.
Israel’s increasingly reactionary policies have become a problem for politicians claiming to hold a progressive view, especially under Netanyahu’s Likud Party. No longer can pro-Zionist Labour politicians point to those Potemkin villages, known as kibbutzim, as examples of socialism in action. For every celebration of rejuvenating desert land, there are dozens of Israeli bulldozers destroying Palestinian homes, and systematic brutality meted out to Palestinians by Israeli police, soldiers and settlers. For those of a more conservative outlook, who do not worry about such things, Israel is also beginning to be seen as more of a troublemaker than a useful ally.
The structure of imperial support for Israel was built upon acceptance of its immunity from UN resolutions, no matter what it does, an immunity backed especially by the US. That has worked well before, but now less so, given that a more overtly pro-Israel Donald Trump also tramples liberal opinion in the wider world. If this US backs Israel, and the US is overturning the established order with an ‘America First’ policy, then it indirectly also helps to undermine acceptance of Israel’s policies by the other powers. For now, although maybe not for much longer, the traditional political support for Israel stays in place. But its foundations are being eroded.
These crumbling foundations are the reason the Labour Party machine is now accusing Moshé Machover, a committed socialist and anti-racist, of anti-Semitism. With support for Israel under threat, it is urgent for pro-Israel advocates to argue that being anti-Zionist is also to be anti-Semitic. One lesson from World War Two is that this version of racism is not acceptable in polite company, so this smear is a way of indirectly sustaining support for Israel.
The role Israel plays for imperialism has probably not yet diminished enough to lead UK political parties to criticise its policies in any way that has consequence. In line with this, I would not expect Jeremy Corbyn to reject the absurd allegations against Moshé Machover. The issue is one of imperialist politics, not common sense. Even if Corbyn did, a socialist should not look for a place in the pro-imperialist Labour Party.

Tony Norfield, 26 October 2017

[1] For example, the French assisted Zionist militias in their war against the British prior to 1948, reflecting the rivalry of the two powers in the region. See James Barr, A Line in the Sand: Britain, France and the Struggle that Shaped the Middle East, 2011.
[2] Just to make clear, I do not accept that the United Nations, dominated by the major-powers, can be considered as some kind of neutral or fair arbiter of justice. The British state, much weakened by the mid-1940s, was in no position to manage its Palestine Mandate any longer, which was why it left the decision to the UN. The decision to set up a ‘national home’ for ‘Jewish people’ on Palestinian land was based partly upon Britain’s 1917 Balfour Declaration, a deliberately ambiguous and deceitful document that promised both a Jewish state and that the rights of the local non-Jewish population in Palestine would not be harmed. Labour had the same idea for a Jewish state before this declaration and also fully supported it when it was published.
[3] Germany has been singled out for this slaughter, but this ignores the other western and eastern European countries who also took part in the crime. The refusal of the US and the UK to accept more than a token number of Jewish refugees in the 1930s and 1940s should also be noted.
[4] The notion that Israel is the ‘ethnic homeland’ of people calling themselves Jewish is rubbish. For example, historians such as Shlomo Sand (see his Invention of the Jewish people, 2009) document how followers of Judaism were ardent proselytisers and converted Europeans and Asians, and others, to their faith over many centuries. So, far from all current ‘Jews’ being able to trace back their ethnic heritage to ancient Israel, they mostly come from elsewhere. In any case, the point comes down to imperialism – where the political institutions stand in relation to the major powers – not to ethnicity.
[5] For more on this point, see the excellent article by John Newsinger detailing the historical relationship of the Labour Party to Zionism and anti-Semitism here
[6] Al-Jazeera did an exposé of how such groups are used to whitewash Israel and bring down any critics, see here. One of the key Israeli embassy officials involved was recorded as complaining that not enough young people or MPs were now joining Labour Friends of Israel.

Friday 20 October 2017

Dimensions of Economic Power: Today's Key Corporations

The images below are from a lecture I gave at SOAS, London University, on 18 October. This was part of a series organised by the SOAS Economics Department, and my lecture covered the forms taken by corporate power today, focusing on Apple, Google/Alphabet, Facebook, Amazon and Alibaba.

The lecture was a little longer than planned because the projector repeatedly turned itself off, probably due to a loose cable! Both the 45 minute lecture and the following 30 minute discussion can be heard here.

You are welcome to make use of the slides, although do cite the source of the information you use.*

Tony Norfield, 20 October 2017

Note *: The images below have my name, the lecture title and the date running through them because on previous occasions some websites had simply used my lecture slides with no attribution.

Sunday 1 October 2017

Google Eyed

The Hoover Company’s vacuum cleaners once so dominated its market that people often still describe using any make of vacuum cleaner as ‘hoovering up’. Similarly, people ‘Google’ information from the Internet, even if they do not use Google. The only difference is that Google’s dominance of the Internet search market is far greater than Hoover had ever achieved with its vacuum cleaners. Earlier this year, Google’s search engine had an astonishing 92% of the market, with Bing, the next in line, owned by Microsoft, having barely 3%. This underpins its position as the world’s second largest private company by market capitalisation, at a massive $670bn on 29 September, and backs its seventy offices in forty countries. [1]
Google’s success in Internet search has been based on its speed and efficiency, things that have been supplemented by its maps and other products such as Gmail and Youtube. As with other Internet-based companies, these services are free to use, but come with a downside: as you use them, you build up a personal profile within Google’s system. This not only ends up delivering different search results to you than other people would get. More importantly, for Google at least, your profile is also used as a marketing tool for companies advertising their products.
Worldwide advertising expenditure last year was just under $500bn, with 36% of that, nearly $180bn, being taken up by digital adverts. Of the digital advertising, Google and Facebook together account for 54% of the global market, with Google the bigger player of the two, and alone accounting for more than half of the US market. Digital advertising is growing faster than for ‘offline’ advertising on television, radio and in newspapers, helping boost the value of Google on the stock market.

The Google base

Entering popular vocabulary has its commercial benefits. They have expanded this company so much and given it economic power so that it has changed its corporate structure twice in the past two years. In October 2015, Google was reformed as Alphabet, a holding company that had Google as its main component, the one acting as an umbrella company for its Internet operations. In September 2017, Alphabet created a new holding company, XXVI Holdings Inc, which now holds the Google operation and others. The rationale for these moves is varied, and will reflect its expanded operations and business strategy, but I will not cover this further. The Google Internet operation remains the predominant business, providing 99% of revenues, so is the relevant one to investigate
Google operates differently from Facebook. Facebook has two billion users signed up worldwide,  people who have supposedly given it their personal details, including their age, gender and location, and likely others, including their friends, relations and interests. Google, however, works at a more abstract level. It uses all aspects of a person’s Internet searching to build a profile that can be sold to advertisers.
Given that it also owns Youtube and Gmail, among other things, its ability to delve into an individual’s inclinations go well beyond simply figuring out if you might be in the market for a particular product. However, the vast volume of data at its disposal also argues against the notion that it is monitoring what an individual person is doing. It handles more than three billion searches per day! Of course, it could hand over your information to the state security services, like other Internet companies.[2] But its modus operandi is to use its huge mountain of data to feed the machine that offers advertisers on its system a likely audience of many millions of people.
In 2016, 88% of Alphabet’s total revenues – $79.4bn out of $90.3bn – came from advertising. These advertising deals, although generating larger revenues than for Facebook, ‘can be terminated at any time’. This shows a similar business vulnerability to Facebook, and one that has not been allowed for by capitalist markets. As usual, these markets find it difficult to imagine how a company that delivers your Internet ‘daily bread’ might be hit by a new trend among Internet users to use gluten-free products or switch from bread completely.

New technology

Developments in information technology have facilitated the growth of the Internet giants, but they also force these companies to move beyond their traditional revenue sources to maintain their prominent position. Who knows how the market might develop? So they buy up potential rivals – often using their own shares as the means of payment when the bill gets beyond a few hundred million dollars.
This is a game where bright sparks in the relevant area of technology advance what looks like an innovative application and wait for a Google, or Facebook, or Amazon, or Alibaba, or whoever, to show up with an attractive bid for their business, in the process making them multi-millionaires or better. Google has bought more than 200 technology companies from 18 countries since 2001, although most were from the US. These forays were into online advertising software, travel technology, artificial intelligence, facial recognition, visual search, robotics, photography, video, map analysis, mobile devices and many other fields. The reported value of these takeovers is some $30bn, and likely closer to $40bn, or more, allowing for the undisclosed amounts paid in many deals.
One of the Google takeovers reflected its links with the US security establishment. This was of Keyhole Inc in 2004, a company owned by the CIA-linked In-Q-Tel. Keyhole specialised in satellite mapping software, funded by the CIA, and went on to become Google Earth in 2005.
Such takeovers are one way in which an existing monopolist is able to use the financial system to consolidate and extend its market power. This is just as well for Google, since it recognises that getting extra revenues from its traditional search business is under threat.

Revenues, profits and no dividends

As a relatively new business, Google/Alphabet has had strongly growing revenues and net income. Both nearly doubled in the four years to 2016: revenues to $90.3bn and net income to $19.5bn. But this kind of growth is necessary for a company that, as a matter of policy, has never paid any dividends to holders of its common stock and does not plan to do so. Capitalist investors in Google/Alphabet shares must be satisfied with the growth of the business if they receive no direct income from it, hoping that such growth will encourage the share price to rise. In other words, the capital gain from just holding the shares must look good enough to offset the lack of income from them.
So far this has worked. From around $160-170 in early 2009, the share price rose to just over $1000 by June 2017, and was still around $960-970 last week. Nevertheless, the prospect for future rapid revenue growth does not look as good. The Google/Alphabet 2016 annual report notes that advertising revenues from Youtube ‘monetise at a lower rate than traditional desktop search ads’ and that ‘we generate our advertising revenues increasingly from mobile and newer advertising formats, and the margins from the advertising revenues from these sources have generally been lower than those from traditional desktop search’.

Larry and Sergey gave Mark some ideas

Google/Alphabet has some similarities to other Internet-related companies. The lack of dividend payments and reliance on capital gains through a rising share price matches what Facebook and Amazon do, although Amazon was ahead of Google with the ‘initial public offering’ (IPO) of its shares in 1997, compared to Google’s IPO in 2004. The Facebook IPO was in 2012. However, Google appears to have set the precedent for Facebook’s ownership/voting structure.
The two main founders of Google were Larry Page and Sergey Brin, former PhD students at Stanford University in California. While they had to attract funds from other investors by issuing shares, they still ended up maintaining control of the company. Now they may own only around 12% of the total stock, but that includes the most important shares – the ones with the special extra voting power. In the same way as Facebook, some years later, they own most of the 'Class B' shares, which have 10 votes each and are held by the company’s initial founders, compared to the A shares with one vote and the C shares with no votes at all.[3] Hence, ‘Larry and Sergey’ together control around 57% of the voting power of all shares in the company, despite owning barely one-eighth of the total shares outstanding.
Facebook’s Mark Zuckerberg has also built a big personal mountain with other people’s money. He alone controls 60% of his company's votes while owning less than one-third of the shares, a feat enabled by him having a big chunk of the B shares that also give 10 times the voting power of the A shares!
You would think that people with loads of money to invest would have the nous to recognise that B might be better than A. Maybe they do, but the B shares are not traded on the stockmarket, so capitalists wanting to get in on the action can do little about it if they are not one of the founders already owning B shares. They can only buy the A or C shares. To the extent that they realise that C is worse than A, this is currently reflected in a discount of just 1-2% for the zero-vote C shares compared to the one-vote A shares. But that small discount also shows how money capitalists are mainly bothered about getting a return on their investment – in this case via share price gains only – rather than really wanting to get involved in voting on, so deciding, what the business actually does.


This article completes my review of some of the world’s major corporations. Probably. Earlier articles have covered Alibaba, Amazon, Apple and Facebook, each of which is currently among the top six or seven world companies by market capitalisation. What they all have in common is their distance from what is normally considered to be the productive sphere of the economy, the one producing goods and services that people need.
That may seem incorrect or unfair. After all, Apple produces smartphones, among other things. However, Apple’s ‘production’ turns out to be more a way to design a set of products that others produce and that it can sell within a monopolistic and tightly controlled marketing structure, one buoyed by a huge financial operation. Alibaba and Amazon are more simply in the commerce business, acting as a platform for selling what others make and taking a cut from the producers, although Alibaba has a big subsidiary in finance, while Amazon is also big in cloud computing services. Google/Alphabet, like Facebook, has provided Internet services to attract advertising revenues, with their ‘raw material’ provided by the users of their systems. All these companies also build on their resources to branch out into other areas.
What they have in common too, with the exception of Alibaba, is that they are based in the US. The predominance of the US as a home for these top companies is based upon its large, relatively prosperous population. It offers both a big market in which a ‘start up’ can evolve into a major corporation and a ready supply of very rich individuals able to advance money to what looks like a good idea – and one that will enrich them further. Even today, the US accounts for nearly half of Google/Alphabet’s revenues. Here is one mechanism by which existing privilege helps secure future privilege. Alibaba’s China has a much bigger population, but this is offset in many respects by the relative poverty of its audience.
These reviews should offer some insights for those interested in analysing imperialism today. Hopefully, they will also be of interest to the more general reader who wants to find out how the world economy works.

Tony Norfield, 1 October 2017

Note added late on 1 October: the above text has been amended in some places more clearly to express what I wanted to say, although no point has been changed.

[1] This is the market capitalisation for the Alphabet holding company, not just Google. See below for the company links, but the key point is that Google accounts for the vast bulk of Alphabet’s revenues. In what follows below, I will use the term ‘Google’ to refer to Alphabet’s core business in Google, unless otherwise stated.
[2] The official statement is: “Google cares deeply about the security of our users’ data. We disclose user data to government in accordance with the law, and we review all such requests carefully. From time to time, people allege that we have created a government ‘back door’ into our systems, but Google does not have a backdoor for the government to access private user data.”
[3] At the end of 2016, there were only 67 ‘holders of record’ for the Class B shares, compared to more than 2,000 for each of the Class A and Class C shares. Outstanding shares held were: A, 294.2m; B, 48.9m and C, 344.7m.

Tuesday 19 September 2017

Das Kapital, Finance & Imperialism

Below are copies of slides from my presentation today to the conference in London on the 150th anniversary of Marx's Capital.

Use them as you wish, but do the decent thing and credit your source if you republish this information elsewhere. The telegrammatic points below are more fully elaborated in other articles on this blog, especially in those on Apple, Amazon and Facebook.

Tony Norfield, 19 September 2017

Friday 1 September 2017

Facebook’s Advertising Machine

When Mark Zuckerberg is interviewed, the founder of Facebook can barely put a sentence together without using the word ‘connect’. This looks like a case of Tourette’s syndrome that spouts business buzz words not curses. But it is based on his understanding of the source of his company’s revenues and almost all of these come from advertisers. They pay to put their offerings to Facebook’s two billion users, since it claims to know about these people and what they like. This is Facebook’s business model: to monetise connections to its platform.
In this way, Facebook has made it into the top 10 of corporations on global stock markets. Its business throws light on the way the imperialist economy works.

The advertising game

It is not much good making a product or service for sale if people do not know about it and buy it. Hence, advertising. From TV commercials and sponsorships, to pages in newspapers, to the ubiquitous logos on sportspeople, on billboards, on the clothing people buy and on images online, this is no small business. Global advertising expenditure in 2016 was estimated at $493bn.[1] A huge sum of money is available for the right destination.
Advertising is key feature of the capitalist market, especially when that market is global and not just down the road. Major corporations use advertising to put their brands in the public eye and fight for their market share. Spending millions or billions on advertising is a necessary part of becoming, and staying, a monopolist, since economic power is about market domination.[2]
But the right destination for advertising spending can still be difficult to determine. In general, the bigger the audience for advertisers, the better, although it still might be the wrong audience for what is being sold. As the business cliché puts it: ‘half of our spending on advertising is useless, but we don’t know which half’. This is where the growth of online media has become more important in the past decade or so: it can claim to provide a better answer to that question.
Television, with the largest audience coverage, still dominates ‘offline’ sales of adverts, totalling $186bn in 2016. A long way behind television advertising revenues are those for print media and radio. Offline advertising also accounts for the bulk of total revenues, with last year’s share estimated at 64%, or $315bn. But offline advertising growth has been stagnant in recent years, and is being rapidly caught up by the newer digital media.
From a small starting point, spending on digital media has been growing quickly. Digital advertising now accounts for 36% of the total spending, at $178bn, and its share will grow further, especially on mobiles and especially via search, such as Google, and on social applications, such as Facebook.
The economics of those media companies relying on the offline advertising market is being slowly undermined by digital communications, especially in the case of newspapers. In the digital advertising world, Google and Facebook are the dominant forces, together having more than half the digital advertising revenues. Google has a much bigger share than Facebook, and also has a stock market capitalisation of around $650bn compared to Facebook’s at just below $500bn, helped by the fact that its system accounts for 90% of all Internet searches. But Facebook is a sizeable member of this giant duopoly.[3]
Facebook has two big advantages over offline media. It can just provide a platform, and rely upon other people to produce the content that is shared on its system, rather than having to produce that content itself. It also has a more detailed view of the profile, likes and inclinations of its users than is possible for television companies or newspapers. This is the core value it offers to potential advertisers: not just a big and growing audience, but one differentiated by age, gender, location and likes.

The big connector

Facebook differs in a number of respects from the other major corporations covered on this blog in recent months – Apple, Alibaba and Amazon. It has far less investment in financial securities and derivatives than Apple, and I will not cover these aspects here.[4] It also has a more geographically diverse client base than either Alibaba or Amazon. However, one feature of its business that is critical, as for Apple and Amazon, is that it was founded in the large and rich US market.
In mid-2017, Facebook’s average revenue per user in the US and Canada was $19.38, nine times that for Asia, which was just $2.13. But Facebook’s audience in Asia is growing fastest, and accounted for 34% of the average daily number of users by mid-2017, compared to 14% for the US and Canada and 20% for Europe.
The US market evidently has a powerful influence on social trends elsewhere in the world. It has been shown not only by the popularity among youth of wearing low-hanging trousers and baseball caps backwards – although, thankfully, these trends have, like, faded – but also by how a system designed for an elite US university, Harvard, could end up becoming the world’s largest social media site. The Bullingdon boys of Oxford University in the UK have not come anywhere close to this, although they have distinguished themselves on a much smaller scale by providing politicians who help fill the UK news media.
With 97% or so of Facebook’s revenues derived from advertising, and with the bulk of those advertising contracts being subject to cancellation within one month, one would think that financial markets would look upon this business model as very shaky indeed. That impression would be endorsed by the fact that Facebook has not paid any dividends on its shares since these were issued to investors in 2012. But the share price has nevertheless risen dramatically and an early investor would have made a stupendous capital gain from holding them. When they were first sold publicly in May 2012, the initial share price was around $18; it rose to more than $50 by early 2013 and was over $160 in the past week or so.

Valuing people

Facebook had less than 500m monthly active users of its system in 2010; by mid-2017 it had hit two billion users. Even if one allows for duplicate/fake profiles and for company accounts, that is almost a quarter of the world’s population and the number is still growing rapidly. Those figures do not include many users of other Facebook-purchased companies, WhatsApp and Instagram, although there will be some overlap. While the popularity of social media websites can be short-lived, especially among young people, there is no sign yet that this is happening to Facebook.
Strong customer growth and potential market domination have been features of several big, US-based, tech-related companies. Since the 2007-08 financial crisis, low interest rates have helped boost all equity prices, because low yields on government bonds and low interest rates from bank deposits look less attractive to investors by comparison. But these companies’ valuations have also jumped more than the market average. The returns from the equities of established blue-chip companies – from their dividends and share price growth – cannot compete with the prospect of buying into a relatively new global market winner. That applies even for one that pays no dividend at all, as has also been true for Amazon.
Facebook has a similar value on the stock market to Amazon. Amazon is favoured for its potential to be the market in which goods and services are bought and sold, setting the price and taking a cut from suppliers – although it also has a key revenue source from its web services operation. Facebook, like Amazon, has to expand its clientele, and this is an even bigger imperative since almost all its revenue comes from selling advertising based upon this audience, one investigated and filtered by its algorithms. Hence Zuckerberg’s focus on how everyone should ‘connect’ via Facebook, which is Facebook’s attempt to maximise market coverage.

Business growth and WhatsApp

Facebook’s business growth shows the success of the company’s strategy so far. Revenue jumped from $7.9bn in 2013 to $27.6bn in 2016. Net income after various costs and taxes grew more than sixfold, from $1.5bn to $10.2bn over the same period. The background to this growth reveals some interesting points.
As one might expect, Facebook has invested a lot in research and development, committing more than 20% of its total revenues to this, amounting to nearly $6bn in 2016. Like other large corporations, Facebook has also tried to secure its market position through takeovers of companies that could complement its business, or ones that might in future be troublesome competitors in areas that it needs for further growth. Since 2005, Facebook has taken control of more than 60 companies in 10 countries – including India, Israel, Canada, the UK and Ireland, although most were from the US. These company acquisitions cost anything from a few hundred thousand to many billions of dollars.
Facebook’s biggest acquisition by far was in October 2014, of WhatsApp, the smartphone messaging, voicecall and video service. This underlined Facebook’s aim to get into this rapidly growing form of social connection – and of potential advertising revenue.
There have been conflicting media reports of the total price paid for WhatsApp, but it spent ‘only’ $4.6bn in cash. A much larger amount was also paid for the takeover in terms of Facebook shares, probably worth close to $15bn, giving a total of around $19-20bn. This shows how a key ‘social media’ company was well versed in using the financial system to establish its market power. That might surprise those who are critical of capitalist financiers, but who pay little attention to how the capitalist system actually works.
The WhatsApp acquisition was striking in another way. Facebook’s extravagant price for WhatsApp was despite that company having made losses in previous years. At the end of 2014, the ‘acquired users’ of the WhatsApp system were valued at $2bn, ‘trade names’ were valued at close to $450m and ‘acquired technology’ was nearly $300m, but there were tax liabilities of around $900m that made the net assets acquired equal a mere $1.9bn. The remaining $15bn or so that Facebook paid was accounted for as ‘Goodwill’.
Goodwill is a feature of company accounts that reflects the value of something that cannot be pinned down in terms of the business assets acquired. It is defined not as a physical asset, eg buildings and equipment, or even technology and existing customer business. It boils down instead to the ‘business reputation’ or ‘brand value’ of the company, and basically to its ability to generate revenues as a trusted enterprise. More precisely, it represents the capitalist market’s valuation of a company’s market presence and potential power, one that is especially highly valued as a takeover target by a budding monopolist with access to funds, like Facebook! The term Goodwill sounds like a transient favourable opinion; it reflects the monetary assessment of contemporary imperialist markets.

Staying on top of the sugar mountain

Business books have long discussed how managers might control a company although they do not own it, or perhaps have only a small stake in its equity. Marx raised this point in Capital and it was popularised in James Burnham’s 1941 book, The Managerial Revolution. Mark Zuckerberg offers an interesting take on this phenomenon.
Zuckerberg has managed to overcome the usual capitalist norms, where the money invested in a company’s shares determines how much power the owner has in company decisions. Such capitalist rules still mean that a small group of larger shareholders can determine the outcome if they can get more than 50% or more of the total. This is not difficult when there is often a very large group of very small shareholders who have negligible voting power. But Zuckerberg has gone much further, as shown by Facebook’s issuance of different kinds of shares with very different votes, something also done by other capitalists in the technology sector and elsewhere. [5]
Zuckerberg owns mainly Class B shares, with 10 votes each. The bulk of Facebook’s marketed shares, the ones listed for trading on Nasdaq, are Class A shares. These might sound better, since everyone prefers A to B. However, the A shares have just one vote each. The outcome is that Zuckerberg controls 60% of the voting power of Facebook shares although he owns ‘only’ 28% of the company. Facebook’s 2016 annual report is at least honest enough to spell out that he is
“able to exercise voting rights with respect to a majority of the voting power of our outstanding capital stock and therefore has the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation, or sale of all or substantially all of our assets.”
So, the owner with 28% of the shares has complete control of all company decisions! If this were not enough of a challenge to the capitalist market’s supposed ideology of equal status before money, Facebook/Zuckerberg managed to top this in 2016. Helped by Zuckerberg’s own voting power, Facebook took the decision to issue a new class of shares with no voting rights at all. These were Class C shares, ones that, this time, should give investors a clue that they will now be sitting in the bad seats.
Zuckerberg’s plan is to issue these new Class C shares in exchange for Class A and B ones, including ones that he holds. This would allow him slowly to sell his shares and thus, piece by small piece, to donate funds to his Chan-Zuckerberg charity, so chipping away at his $100bn-plus mountain of wealth, but still retaining control of decisions at Facebook. The latter charity is his family’s philanthropic initiative; based upon him having more money than any sane person could ever possibly spend.
Zuckerberg’s charity scheme is one of many examples where a few of the ultra-rich ‘give something back’, from John D Rockefeller, to Howard Hughes, to Bill Gates, George Soros and Warren Buffett. The donations go to what the plutocrat happens to like, not according to what society needs.

Adverts, just for you!

The personal details of its two billion users are the raw material from which Facebook creates an attractive platform for advertisers. Filtered further by Facebook tracking ‘likes’ and clicks into other Internet sites, it can offer a defined audience far better than news media and TV companies, so it can claim to focus more than others on the relevant age group and inclinations of consumers.
The traditional media has not managed to keep up, even when it has gone online, as shown in the problems newspapers have had deciding whether to set up paywalls for their content, or whether to try and maximise viewers and boost advertising revenues by giving free access to that content. Even though Facebook’s ‘click through rate’ from the advertisements it shows is very low, with younger people better at ad blocking, so far that has not been a problem for the growth of its advertising revenues.
Nevertheless, Facebook does worry about future revenues. Has the core site now reached ‘saturation point’ for advertising? Will new ventures into virtual reality products, via its acquisition of Oculus for $2bn in 2014, help out? Can the WhatsApp acquisition generate enough money when it starts charging users?


Facebook’s core area of business has been the US and Canada, from which roughly half its global revenues are generated. The availability of wealthy US investors to fund Facebook’s early investments and growth has also been critical for the company.[6] As in the case of Amazon, this highlights how the global success of a commercial enterprise is boosted by it starting up from a big, rich country, with the US having the pre-eminent position.
Facebook's growth has absorbed some of the advertising revenues of other businesses and helped undermine them. But it is a better example of capitalism’s conflict between the forces and relations of production. The forces – the development of an easy global transmission for all kinds of data, ideas and information – are channelled by a system that accumulates the personal and social information of billions of people for private profit. Facebook is basically an advertising platform, and advertising is intimately related to the rise of mass production and the generation of monopolies, even in areas of new technology.

Tony Norfield, 1 September 2017

[1] See the MAGNA Global Advertising Forecast report, December 2016.
[2] Even the advertising sector, paid to publicise the goods and services of industry, commerce and finance, has become monopolised. Just five big players run it. In order of size by revenues, they are: WPP (UK), Publicis (France), Interpublic Group (US), Omnicom (US) and Dentsu (Japan). Each of them has tens of thousands of employees and lots of subsidiaries in many countries.
[3] In the text here I use the better known company name ‘Google’, although the company was reorganised in 2015 and its holding company is now called Alphabet. Google takes more than half of the digital advertising revenues in the US in 2016. Facebook is the junior partner in this game, with just 20% or so of US revenue, but it has been growing at least as fast as Google.
[4] Nor will I discuss the question of ‘fake news’ on Facebook, its abuse of privacy or its filtering of news. These issues have been covered in many reports, ones that often miss the more important points about what Facebook represents.
[5] Facebook is far from being the only company that has sold shares with different voting rights. News Corp, for example, runs a similar scheme so that Rupert Murdoch’s family has a higher percentage of votes on decisions than its share ownership would indicate. The Facebook/Zuckerberg ploy seems to follow the 10-1 scheme of Google/Alphabet’s founders.
[6] See the 2012 report,

Sunday 27 August 2017

The Military Transport Network of Azerbaijan

If you are a jihadist or a rebel needing some military hardware, then you have two problems. Countries that would be very happy to buy the equipment for you, such as the US, Saudi Arabia and the UAE, do not want to be identified. It can also be trouble to get the supplies through, unless the mechanism can be hidden. Is there a solution? Step forward Silk Way Airlines, a state-run cargo airline based in Baku, Azerbaijan!

A fascinating report from a Bulgarian journalist, Dilyana Gaytandzhieva, documents how Silk Way did more than 350 flights delivering hundreds of tons of weapons. The weapons were mainly from East European states, including Bulgaria and Slovakia, and also from Israel. The destinations were mainly into Iraq and Syria. Flights were given diplomatic status, so that the 'luggage' would not be checked or stopped, and the financiers of these operations were principally the US and Saudi Arabia, but also included the UAE (and, I would guess, other Gulf states too). A key country in which the weapons were unloaded for later shipment on to Syrian and Iraqi rebels was Turkey.

US military-related companies were often involved in the transport deals, but they were facilitating the delivery of non-US origin weapons - an advantage to cover up the US role. Bulgarian weapons were found by the journalist to have turned up in an Al Nusra Front (the Al Qaeda affiliate) arms cache in Aleppo, Syria, and the Iraqi army also uncovered an ISIS warehouse of these weapons in Mosul, Iraq.

Tracking such a supply network is difficult, but the observations are supported by documents and also by other corresponding sources. This was just one network, based mainly from Bulgaria and Azerbaijan; others will also be used by the various powers involved in this deadly game, including those from Libya.

Gaytandzhieva's report was filed on a Bulgarian newspaper site in early July. This led to protests from Azerbaijan and to her questioning by Bulgaria's security services. She was dismissed from her job a few days ago, according to her interview on Al Jazeera news network today, a report from which is here.*

Tony Norfield, 27 August 2017

Note: * Al Jazeera was happy to make a lot of this report since its focus directly implicated Saudi Arabia and the UAE in financing terror networks but had no mention of Qatar's role in such things.