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.