Why Karl Marx was right

Lee Sustar explains why mainstream economists are referring to Karl Marx in discussions of the world economy--and why they won't talk about the whole Marx.

September 13, 2011

ECONOMIST NOURIEL Roubini, whose predictions of the financial crash of 2008 earned him the nickname "Dr. Doom," has referred his patients to a specialist in capitalist crisis: Dr. Karl Marx.

In an interview with the Wall Street Journal, Roubini said:

Karl Marx had it right. At some point, capitalism can destroy itself. You cannot keep on shifting income from labor to capital without having an excess capacity and a lack of aggregate demand. That's what has happened. We thought that markets worked. They're not working. The individual can be rational. The firm, to survive and thrive, can push labor costs more and more down, but labor costs are someone else's income and consumption. That's why it's a self-destructive process.

For several hours on August 12, the Journal website ran the video of the interview as a top story, under the headline, "Roubini: Marx was Right."

Considering that the first edition of Marx's three-volume masterwork Capital appeared in 1867, Roubini's revelation isn't exactly news to socialist opponents of capitalism. But given the intractable nature of the current crisis--a deep global recession, a weak recovery in the traditional core of the system in the U.S. and Europe, and now the possibility of a lurch into a second recession--mainstream, or bourgeois, economics has been exposed as ideologically driven and incapable of offering solutions.

Stimulus spending, championed by liberal followers of the economist John Maynard Keynes, was in full swing two years ago. It staved off total economic collapse after the financial crash, but failed to produce a sustained boom and led to big government budget deficits.

That opened the door to the free-market champions of the so-called Austrian economic school of Friedrich von Hayek, who argued that slashing spending was key to an economic revival--only to see such measures choke off growth in Europe and, more recently, the U.S.

But in August, stock markets gyrated worldwide amid a worsening European debt crisis, a near-stall in U.S. economic growth and a slowdown even in China, home of the world's most dynamic big economy. Suddenly, the ideological crisis that accompanied the 2008 crash was palpable once more as the world system appeared on the brink of a new recession.

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ROUBINI, A professor at New York University, made his name--and quite a bit of money--by telling the unvarnished truth to Big Capital before the Wall Street meltdown hit. He's done so once again, this time referring to Marx for an explanation.

In his interview with the Journal, Roubini argued that the U.S. economy is flagging because business is hoarding cash--more than $2 trillion by one estimate--rather than investing it in factories, new equipment and hiring workers. As he put it:

If you're not hiring workers, there's not enough labor income, enough consumer confidence, enough consumption, not enough final demand. In the last two or three years, we've actually had a worsening, because we've had a massive redistribution of income from labor to capital, from wages to profits.

That shift has taken place not during the crisis, but during the recovery, as economist David Rosenberg pointed out earlier this year when he noted that the "labor share of national income has fallen to its lower level in modern history," 57.5 percent in the first quarter of 2011, compared to 59.8 percent when the recovery began. While that might seem like a small change, given the $14.66 trillion size of the U.S. economy, it's huge.

In alluding to this trend, Roubini is apparently referring to Marx's observation about a central contradiction of capitalism. "The consuming power of the workers is limited partly by the laws of wages, partly by the fact that they are used only as long as they can be profitably employed by the capitalist class," Marx wrote in Capital Volume 3. "The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses."

It's wrong to assume, Marx contended, that capitalists limit their investments during a crisis because "the absolute consuming power of society" has reached its limit. On the contrary, the unemployed want jobs and workers desire a higher standard of living as the slump wears on.

But during crises, capitalism can't deliver, even when business has plenty of capital to invest. That's because capitalists won't put their money into building factories and offices and hiring workers--as Roubini pointed out--unless they have a reasonable chance of making a profit. Otherwise, they sit on their money.

"The capital already invested is then, indeed, idle in large quantities," Marx explained. "Factories are closed, raw materials accumulate, finished products flood the market as commodities. Nothing is more erroneous, therefore, than to blame a scarcity of productive capital for such a condition."

The result, Marx wrote, was both a "superabundance of productive capital" and "paralyzed consumption"--a fairly accurate description of recent trends in the U.S. economy.

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THE BIGGER questions are these: Why do such capitalist crises come about at all? And why are some downturns in the economy mild recessions, while others generate protracted crises, like the Great Depression of the 1930s or the "depression-with-a-small-d" that's gripped the world economy since late 2007?

Marx wasn't the first to observe what today's mainstream economists call the "business cycle"--the economic slumps that take place every few years. His contribution was to delve into the reasons for that pattern. He concluded that the internal contradictions of capitalism doomed the system to periodic, highly destructive crises.

The root of these crises is in the unplanned and competitive nature of capitalist production. For the capitalist, what matters isn't meeting social needs, but obtaining the maximum profit. If obtaining profit is possible from producing a life-saving medical device like a heart pacemaker, that's fine. But if more money can be made by producing junk food or nuclear weapons, greater investment flows into those industries instead.

Meanwhile, competition puts capitalists under constant pressure. They have to make sure that workers produce goods in as little time as possible--at what Marx called the "socially necessary labor time" required to produce a particular commodity. Otherwise, more efficient capitalists will drive them out of business. Thus capitalists are constantly compelled to invest in labor-saving machinery to cut production costs.

That is the secret of capitalist profitability. For example, new technologies may allow workers to produce enough to cover the costs of their wages in, say, just three hours instead of the four needed previously. The result is an increase in labor time spent working just for the capitalist--increasing what Marx called "surplus value," which is the source of profits.

But a portion of surplus value must also be reinvested in the production process. Refusing to do so is not an option for capitalists--who live by the rule of eat or be eaten. To the capitalist, Marx wrote in Capital Volume 1, the motto is:

Accumulate, accumulate! That is Moses and the prophets!...save, save, i.e., reconvert the greatest possible portion of surplus-value, or surplus-product into capital! Accumulation for accumulation's sake, production for production's sake: by this formula classical economy [the original bourgeois economics] expressed the historical mission of the bourgeoisie, and did not for a single instant deceive itself over the birth-throes of wealth.

The drive to accumulate is blind and chaotic. As Roubini recognized, "markets aren't working" because what is rational for an individual person or corporation--the maximization of profit by pushing down labor costs--can be irrational for the system as a whole.

During the upswing of the business cycle, the problems are largely hidden. As long as profits are high and credit is available, companies can borrow to invest in new production and hire new workers. Pundits proclaim that recessions are a thing of the past.

But even as production expands, profits are squeezed as new entrants flood the market. Companies go bust, which hits their banks hard. The banks, in turn, raise interest rates or simply refuse to lend, which triggers further bankruptcies. Factory closings and mass layoffs ensure--and, in the modern era, job cuts hit the public sector as tax revenues decline.

In the section of Capital Volume 3 quoted above, Marx described how the crisis can seem to erupt out of nowhere. Thanks to the extension of credit, he wrote:

[E]very individual industrial manufacturer and merchant gets around the necessity of keeping a large reserve fund and being dependent upon his actual returns. On the other hand, the whole process becomes so complicated, partly by simply manipulating bills of exchange [i.e., checks and promises of future payment], partly by commodity transactions for the sole purpose of manufacturing bills of exchange, that the semblance of a very solvent business with a smooth flow of returns can easily persist even long after returns actually come in only at the expense partly of swindled money-lenders and partly of swindled producers. Thus business always appears almost excessively sound right on the eve of a crash.

Marx's description of how credit could delay, but then exacerbate, a crash applies to the financial debacle of 2008, which involved no small amount of the kind of manipulation and swindling Marx saw in his day. Set aside the toxic alphabet soup of today's financial assets--CDS, CDO and MBS--and Marx's analysis of the role of bankers sounds familiar: "the entire vast extension of the credit system, and all credit in general, is exploited by them as their private capital."

The development of credit, in turn, helps expand capitalist production beyond the capacity of the market to absorb new commodities: "[B]anking and credit...become the most potent means of driving capitalist production beyond its own limits, and one of the most effective vehicles of crises and swindle."

But Marx also stressed that the credit crunch is actually a symptom of problems in the underlying productive economy. He wrote in Capital Volume 2, "[W]hat appears as a crisis on the money-market is in reality an expression of abnormal conditions in the very process of production and reproduction."

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THERE ARE longstanding debates among Marxist economic theorists about just how capitalist crises play out in general and their manifestation in different historical periods.

Marx identified a long-term tendency in the rate of profit to fall--the result of the constant pressure to invest in technology to replace workers, who are the source of surplus value. But capitalists have been able to counteract the falling rate of profit in various ways--for example, by destroying unprofitable capital through highly disruptive means, ranging from bankruptcies to wars like the Second World War, which ultimately was the most important reason the system finally overcame the Great Depression and was launched into a postwar boom.

In the 1970s, severe slumps returned to the world system as a revived Europe and Japan, along with several newly industrialized countries, emerged as more effective competitors to the U.S. But the restructuring of uncompetitive industries, free-market policies and corporate globalization opened the way to a new boom in the 1990s, when the U.S. declared that its "miracle economy" was the model for the world.

Ultimately, however, the economic expansion of the 1990s set the stage for a new crisis--one that Marx would have recognized. In the Communist Manifesto, written in 1847, years before he undertook a systematic study of the system, Marx and co-author Frederick Engels noted that capitalism's drive to expand led to crises of overproduction--of too many goods to be sold at a profit:

In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity--the epidemic of overproduction. Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation, had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed; and why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce...

And how does the bourgeoisie get over these crises? On the one hand by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.

That passage still has the ring of truth. It was capitalist overproduction on a world scale in the 1990s that set the stage for the 1997 East Asian financial crisis and the recession of 2001. But by dropping interest rates to rock bottom, the Federal Reserve was able to postpone the real day of reckoning for the U.S. for nearly a decade. Cheap credit and the housing bubble kept American consumers spending and the number of Asian factories growing, even if the number of manufacturing jobs in the U.S. continued to decline during the 2002-2007 expansion.

As we now know, banks were happy to make the loans for mortgages and then pass them along to Wall Street, which bundled them into securities that later turned toxic. When even a limited number of sub-prime loans started to go bad, a credit squeeze quickly destroyed investment banks Bear Stearns and Lehman Brothers. Nouriel Roubini, who had been warning about all this for years, was suddenly a business celebrity--and even Karl Marx made the financial press.

The bad debts of that era of casino capitalism continue to weigh down the world economy. Yesterday's toxic assets held by private banks have morphed into today's government budget deficits, thanks to the no-questions-asked, multitrillion-dollar bailouts in the U.S. and Europe.

And the global crisis of overproduction is still unresolved. In the U.S., the capacity utilization rate for total industry was 77.5 percent in July, some 2.2 percentage points above the rate a year earlier, but 2.9 percentage points below the average for the period between 1972 and 2010. That's unmistakable evidence of a depressed economy--and it's what Roubini was talking about when he cited "excess capacity" and mentioned Marx.

With mainstream economists fresh out of ideas about how to overcome the crisis, perhaps it shouldn't be surprising that Marx made news even in Rupert Murdoch's Wall Street Journal. But don't hold your breath waiting for a follow-up Journal headline: "Capitalism Isn't Working: Socialism is the Alternative." That part is up to us.

Thomas Piketty's bestselling post-crisis manifesto is horrendously flawed

Allister Heath in The Telegraph

Given that today’s fashionable economic ideas tend to become tomorrow’s government policies, it’s not looking good for the future of free-market capitalism. Consider the current bestselling book in America, Capital in the Twenty-First Century, a hugely important work that has already become the defining post-crisis manifesto. Its ground-breaking research on historic patterns of wealth ownership is second to none, but its conclusions are horrendously flawed.

Its author, the French economist Thomas Piketty, advocates an 80pc income tax rate for those earning more than £300,000 a year. For good measure, he also floats a range of other even worse ideas, including an internationally coordinated progressive wealth tax, hitting anybody with at least £165,000 in assets and peaking at a crippling 10pc a year on billionaires, a windfall tax on private capital, a dose of inflation and a war on inherited wealth. It’s the kind of hardcore message to warm the hearts of your average British socialist, circa 1976 – and yet it is being embraced as the latest, cutting-edge thinking.

Even more fantastically, this assault on private property and wages would supposedly have no meaningful negative side-effects. Piketty writes that “the evidence suggests that a rate [of tax] of the order of 80pc on incomes over $500,000 or $1m a year would not reduce the growth of the US economy but would, in fact, distribute the fruits of growth more widely while imposing reasonable limits on economically useless behaviour”. Instead of being laughed out of town, Piketty is being treated with the sort of adulation usually reserved for a rock star.

At this point, I could cite some of the many peer-reviewed studies that show — unlike the author’s own research — how high marginal tax rates reduce work and effort, remind readers that eating capital is the best way to impoverish a nation, reduce productivity growth and keep wages down, or point out that societies where the most successful entrepreneurs are rewarded by the state seizing their assets don’t prosper.

Instead, let me consider Piketty’s big idea, which he believes justifies his policies of “confiscatory” taxation – to him, a positive term. He believes that in a peacetime free-market economy, the returns on capital — dividends, interest, rents and capital gains — inevitably grow faster than the overall economy. The owners of capital will therefore end up grabbing an ever-greater slice of the pie, leaving workers with less and less.

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I buy neither the prediction nor the proposed solution. For a start, João Paulo Pessoa and John Van Reenen from the LSE have shown that the share of UK income going to labour is largely the same now as it was 40 years ago, unlike in America. And if the returns to capital do go up, more money will eventually be invested to reap the rewards — and that, in turn, will increase productivity and hence wages, and keep down capital’s share of GDP.

There are other problems. Try telling pensioners that “rentiers” always end up ahead. The rate of interest on many bank accounts is close to zero, and therefore negative after inflation, and returns on gilts have been awful over the past couple of years. Of course, share prices have shot up — but risky assets come with a premium, and total returns on UK equity markets haven’t exactly been stellar over the past 15 years.

Capital is an amorphous concept; it keeps changing, as does its ownership. Entire industries are being decimated by technological progress; the whole point of capitalism is creative destruction, which means that old capital becomes obsolete, wiping out its owners, and is replaced by new capital, enriching its creators. It is also easy to destroy assets by consuming them — and that is what happens, in most cases, when money is passed down generations.

The fact that Piketty’s book is selling so well busts several myths.

The first is about American intellectual exceptionalism: the idea that US Left and Right differ only marginally in their support of capitalism, unlike in Europe. That certainly isn’t the case today. Parts of the US intelligentsia now advocate the same ideas that are to be found on Europe’s Left-wing fringes; Piketty and his adoring fans would go much further even than Ed Miliband.

The second incorrect idea is that the recent episode of banker-bashing from Occupy Wall Street et al was merely a reaction to the bail-outs, or to the financial sector’s role in the crisis. It was perfectly possible, we were told, to slam bankers but to embrace entrepreneurs. It was a case of Wall Street bad, Silicon Valley good; money accrued through finance was supposedly “undeserved” and that accrued by building a business wasn’t.

The truth, as I long suspected and as the almost delirious reception that this book has received confirms, is altogether different. Envy is back, disguised as a concern about “inequality”, and the bail-outs and QE were merely a convenient excuse to bash the rich. It is shocking how many intelligent people now support seizing most of the wealth created by entrepreneurs, including the founders of the great software companies (which is what a 10pc annual tax on the assets of billionaires would soon achieve).

The third myth is that there is such a thing as the “1pc”. This was always nonsense: someone earning £150,000 a year (the threshold at which a UK income taxpayer joins the club) has nothing in common with a billionaire. The Left now has another enemy, the top 0.1pc or even 0.01pc, which is just as well given that plenty of those waxing lyrical about Piketty are in the lower reaches of the top 1pc themselves. It is a case of the rich waging war on the extremely rich.

One reason why many believe Piketty’s claim that returns to capital will continue to outpace GDP is the experience of the past three to four years. Share prices have bounced back, and house prices have outperformed; meanwhile, wages are down in real terms. Yet that doesn’t mean this will continue indefinitely.

Regardless of whether Piketty’s key prediction is true — and I’m sure it isn’t — a much better solution is to encourage an ownership society so all can enjoy returns from capital. In the UK, auto-enrolment means that nearly everybody will begin to accumulate financial assets in pension pots.

Housing policy needs to change. In London, New York and San Francisco, house prices have rocketed because of planning rules that limit supply growth, pricing many out of the market. The best way to refute Piketty’s law in this area is to make it much easier to build new homes.

We also need a normalised monetary policy, not one designed to keep the price of capital assets as high as possible, thus artificially (but temporarily) boosting the wealthy.

Last but not least, supporters of capitalism need to get their act together. They are being slaughtered on the intellectual battlefield by opponents who are finding sexy new justifications for their old arguments. We need more and better defences of the free enterprise system, and we need them now.

The Downfall of Max Clifford - the ultimate PR guru for the guilty

Hubris had been his metaphorical middle name for decades, a strain of madness was apparent from the way he virtually invited prosecution, and nemesis duly delivered her payload at Southwark Crown Court on Monday. Yet however familiar from Greek drama that progression may be, it would require a public relations operator of warped genius to portray Max Clifford as a tragic hero. And the only one with the malign chutzpah to attempt such a task is the one now awaiting sentence for eight counts of indecent assault.

I could have a feeble crack myself, by pretentiously pointing out that the distinctive hallmark of the tragic hero is the inability to see in himself the flaws that are blindingly obvious to everybody else. It took lack of self-awareness on a cosmic scale for this self-proclaimed profiteer from outlandish falsehoods to accuse his accusers of being“fantasists and opportunists” who told “a pack of lies” and “fairy stories” in the hope of selling their alleged confections to the tabloids without noticing an irony. Could you imagine a more perfect example of projection than this?

Yet all anyone charged with writing about Clifford could honestly wish to do is find that a waterproof lap top cover has magically materialised on the doormat. This is one of those columns that should be written in the shower, followed by the kind of skin-breaking scouring Karen Silkwood had to endure after being contaminated by a radioactive leak.

The detail that coats you in an especially thick film of voyeuristic filth is the one that led to this overdue corrective to the foolish misapprehension that, because of various acquittals, the justice system had no business chasing down ancient sex crimes. In the wake of the Jimmy Savile revelations, Clifford went on television and cockily predicted that that there was much more to come. It came for him when police raided his Surrey home, and found a letter in which a woman reminded him graphically of the abuse he visited on her 35 years ago, when she was 15 and he promised to make her a star if she pleasured him.

“I had no one to turn to,” she wrote. “You were very clever. A+ in grooming children.” He bullied her into fellating the penis that incited such contradictory evidence about its size. He had persuaded her, falsely, that he had commissioned a photographer to record the incident with a long lens. “I thought my life had ended,” she said. “I was going to jump off a bridge.”

However repugnant the facts, more shocking was this. Detectives came upon that letter in the drawer of Clifford’s bedside table. My rationale for that geographical fact is brought to us in association with a family-size box of Kleenex. What are we to make of a man to whom an anguished reminder of how he wrecked a human life is not itself a source of anguish, but a masturbatory aid?

All I can make of it is that some people, usually male, are born missing that part of the brain’s structure of psychochemistry which confers the gift of empathy. Nothing known of Clifford’s early life suggests any environmental reason for him finding the torment he inflicted sexually arousing rather than desperately shaming. If that perversion is a random genetic accident, perhaps one should try to see it is a curse and such people as victims. There are limits to the cardiac blood flow of even the most bleeding heart liberal, however, and Clifford seems to delineate those. While the sight in which he hid was not as plain as Savile, and his crimes were neither as many nor heinous, it feels venal even to hint at a ranking formula for the psychological destruction of the vulnerable young.

Clifford, who after destroying David Mellor with the Chelsea football shirt invention piously announced he would expose the sexual hypocrisy of other Tory ministers in revenge for their maltreatment of the NHS, and whose web site continues to advertise his patronage of children’s charities, was as rancid a hypocrite as even the PR-red top interface could produce.

He bragged about earning a fortune from suppressing stories, but failed to perform that protective role for himself. Having enriched and aggrandised himself by exposing the private lives of other, he was belatedly brought down by the exposure of his privates. Poetic justice comes no more unpoetic. But it is justice that efforts to punish ancient sex crimes were vindicated. And it is justice that Clifford has been deposited, by the giant tongs of public disgust, into the dustbin of history, to rot alongside Savile as an emblem of that grotesque era when rapacious predators destroyed young lives with what for so scandalously long seemed  impunity. 

The Privatisation of Royal Mail: how hedge funds cleaned up

OLIVER WRIGHT  , JIM ARMITAGE , MARK LEFTLY

 The Independent

Tuesday 29 April 2014

The Royal Mail flotation scandal has deepened after officials finally admitted that hedge funds were among the “priority investors” sold hundreds of millions of pounds of shares.

The Business Secretary, Vince Cable, has repeatedly insisted that the handful of key investors offered Royal Mail shares on preferential terms were long-term institutional investors. This was to ensure the new company started with “a core of high-quality investors” who “would be there in good times and bad”. He promised to marginalise “spivs and speculators”.

But sources in the Department for Business have confirmed to The Independent that around 20 per cent of the shares it had allocated to 16 preferred investors had gone to hedge funds and other short-term investors. This would equate to around £150m of Royal Mail shares – 13 per cent of the entire stock sold by the Government. The companies bought in at the float price of 330p a share. The shares shot up within seconds of trading, eventually peaking within weeks at more than 600p, allowing the hedge funds to bank vast profits at the taxpayers’ expense.

Mr Cable is now under mounting pressure to name the priority investors given preferential deals in the form of extra-large share allocations, which his department has so far withheld citing commercial confidentiality. Unions have called for his resignation over the “botched” handling of the sale.

A recent National Audit Office report revealed that of the 16 priority investors, half had sold their shares within weeks of the flotation.

Vince Cable refuses to apologise over the losses, and says Royal Mail remains fragile (Getty)
Sources close to Mr Cable told The Independent that hedge fund involvement had been necessary to give the new stock “liquidity” and that the practice was entirely normal in share offerings. They added that they made up a small minority of the total share allocated to institutional investors.

But the revelation contrasts with Mr Cable’s previous statements on the sale. He has said institutional demand was so strong that the Government would be able to allocate shares to “responsible long-term institutional investors” rather than speculators.

An analysis of Royal Mail’s share register shows that Och-Ziff, an aggressive US-based hedge fund, had a holding of 10 million shares on 15 October, the day the company’s shares started trading. A week later it had reduced its holding to 3.5 million shares. It is not known if Och-Ziff was allocated shares or bought its holding from other institutional shareholders who sold out as soon as shares started trading.

Lansdowne, another hedge fund which is known for its close links to the Conservative Party, also appears to have received an allocation of around 18 million shares, at a cost of just under £60m. Lansdowne said the owners of the shares are Lansdowne’s clients not Lansdowne. It is understood that Lansdowne has not sold any shares.

The revelation that the Government knowingly sold off Royal Mail shares to hedge funds is likely to come under scrutiny today when the Public Accounts Committee questions the Department for Business’s Permanent Secretary and representatives of the investment banks who handled the sale on behalf of the Government.

The PAC will examine what advice was given by investment banks including Goldman Sachs, UBS and Lazard and why the shares were priced so cheaply. It will also demand to know why Lazard has been appointed to run the vast majority of major privatisations under the current Government following previous revelations by The Independent.

Shares in Royal Mail were floated on the London Stock Exchange last October (Getty)

Today in openly hostile exchanges with MPs on the Business Select Committee, Mr Cable refused to apologise over accusations that the Government sold Royal Mail on the cheap. He argued that the 360-year-old postal service remained “a fragile company”, despite becoming a City favourite since shares debuted in October.

Conservative committee member Brian Binley said that government advisers had underpriced the shares out of the “fear” of being unable sell them at a higher but more accurate valuation. “I don’t understand why you are being so obstinate about getting this right when you so palpably got this wrong,” Mr Binley admonished William Rucker, the chief executive at lead adviser Lazard.

Business minister Michael Fallon insisted that the Government had sold the shares “at the best price we possibly could have got at that particular time”. Committee chairman Adrian Bailey mocked this claim as “absolutely Alice in Wonderland”.

Mr Fallon also indicated postmen and women were partly to blame for the suppressed price of the sale, because the unions had “no interest in lifting the threat of industrial action”.

However, the Business Secretary conceded that he would have to take a close look at whether selling shares in the markets was the best way of privatising public assets.

He also promised to “reflect” on whether the full list of the 16 major institutional investors should be revealed. Mr Cable has agreed to privately hand the list to Mr Bailey.

Then and now: What Cable said

“We are in a position to ensure we do get the right type of investor community – pension funds, insurance companies that hold the savings of millions of people. That’s the type of community we want.”

Vince Cable to MPs in  October 2013. (At the same hearing he said the Government would be able to block shares from going to “spivs and speculators” in favour of “responsible long-term institutional investors”.)

“We wanted to make sure that the company started its new life with a core of high-quality investors who would be there in good times and bad, interested in  Royal Mail and the universal service it provides for  consumers over the long term. We were told if we sought a higher price, these investors would have walked away, leaving the company exposed to short-term  hedge funds with different objectives.”

Mr Cable in an interview in December 2013

“Having a long-term investor base remains a basic objective, and we  have achieved that fundamental objective.”

Mr Cable in the Commons on 1 April 2014

Can a sportsman's life explain his career?

Ed Smith in Cricinfo

Can a sportsman's life entirely or satisfactorily explain his sporting achievements? © Associated Press

Do great sportsmen have interesting lives? Does that matter? In searching their autobiographies, do we learn very much about what makes them so good on the pitch, or are the important truths already out there on the field, clear for all to see?

I recently bought a bunch of sporting biographies and autobiographies. They were all okay, but I began to question the methodology. One player claimed his childhood poverty made him a great player, another thought his parents' relative affluence gave him a crucial head start. One player thanked his loving family, another felt his fractured home life provided the hunger to succeed. One player argued his incessant practising as a child made the difference, another believed he had been helped by not practising too narrowly and by retaining a sense of play.

Of course, each narrative might be true: what works for one person doesn't necessarily work for another. But surveying all the books together, a rival explanation seemed more true to me: none of these back-stories, none of these paths to greatness, had any real relevance. The harder each book tried to use biography to "explain" the career under review, the less it succeeded.

When I was working for the Times, I once shared a lift with a journalist who had just returned from interviewing a major film star. She was complaining about how unforgivably boring she was. The presumption, of course, was that famous people had a responsibility to have interesting lives. Being an excellent actor was not enough; they had to entertain the media as well - the life had to be the equal of the work. But why? Shouldn't we just be thankful for the great performances?

I've written here before that I am sceptical about the expectation that sportsmen ought constantly to explain to the media how and why they play sport, that they must decode their competitiveness and creativity. That column was written from the perspective of an ex-pro: players should be given some space to live and breathe.

I write now wearing a historian's hat. I have lost confidence in the idea - widely held - that the way to understand what makes sportsmen excel can be found in a catalogue of biographical details. The presumption of modern sports coverage is that we learn about a great athlete by using a zoom lens to follow him off the pitch, down the tunnel that leads to the locker room, then track his car journey home, all the way back to his home town and family life - on and on, until we know the "real man" and understand "what makes him tick", as though his life is a just a jigsaw puzzle with a given number of pieces.

	As an ex-sportsman, who has lived inside the dressing room, I know how normally unexceptional people can do remarkable things out on the pitch

There is a rival view. To reach the top in sport, with all the exceptional discipline and sacrifices that are called for, sportsmen often have to accept a sublimation of their civilian lives. Pursuing and achieving greatness on the pitch comes at a cost. The force that feeds their life must be channelled relentlessly towards the pursuit of victory, the honing of a craft and the nurturing of competitiveness. Often there is not much juice left in reserve.

In this respect, sportsmen have much in common with artists. The poet Edward Thomas, killed in the First World War, captured this brilliantly: "Most lives of poets stand to their work as a block of unhewn marble stands to the statue finished and unveiled… We read their lives after their poetry and we forget them. It is by their poetry that they survive."

Thomas' point is that the relationship between "life" experience and artistic output is complex: some mysterious alchemy turns the former into the latter. That is where the magic lies. I am beginning to suspect the same applies to great sportsmen. Of course, they must have a life that feeds their sport. But the life does not entirely or satisfactorily explain their sport. In fact, looking to autobiography to explain how sportsmen play obscures the truth more often than it illuminates it.

There are always exceptions, players whose lives are central to every move they make on the pitch. You cannot tell the story of Muhammad Ali the boxer without devoting space to Muhammad Ali the man. It is impossible to explore his bravery and resilience in the ring without acknowledging there is another story, even greater, about race and civil rights, Vietnam and American identity. His great life is as interesting as his great sporting deeds.

But how many Alis are there? Very few. Far more often, the sport emerges from an apparently routine and mundane life. As an ex-sportsman, who has lived inside the dressing room, I know how normally unexceptional people can do remarkable things out on the pitch. They are two different people, the man and the player.

This is one of the reasons I still watch great sport with a sense of wonder. When I see a sportsman at the limit of his defiance, bravery and self-belief, I know there is very often a normal, flawed human being coexisting with the apparently invulnerable champion. Rafael Nadal, one of the world's toughest and most unblinking sportsmen, calls himself "the Clark Kent of tennis". (To be fair, though it runs against my opening paragraph, he made the comment in an autobiography.) Nadal might be Superman on the court, but he remains as shy and unconfident man in the rest of his life.

How? Because he is a great sportsman - unremarkable and exceptional, all at once.

The Law of Unintended Consequences - How well-intentioned laws, courts cripple growth in India

S A Aiyar in Times of India

A key reason why India’s economic growth has halved from 9% to 4.5% per year is that, in search of inclusive growth, the courts and legislatures have increasingly made legitimate business difficult. It now takes 12 years to open a new coal mine. This is not inclusive growth but paralysis and stagnation. 

The new land acquisition law aims at quick, fair acquisition . But the secretary of the department of industrial policy and production says the Act has made it “virtually impossible” to acquire land for roads, ports or other infrastructure. Higher compensation provided in the new law is welcome, but it also mandates a social impact assessment for each project, followed by expert group clearance, followed by an 80% vote of affected persons. Legal challenges are possible at each stage. Instead of quick, fair acquisition, we have dither and delay. 

India has become a major global player in clinical trials for new drugs. But complaints have arisen against malpractices by some companies — not informing patients of the risks, not giving insurance cover or compensation, negligence leading to deaths. The obvious answer is to prosecute and jail the guilty, deterring further misdeeds. 

But in India the courts take forever to conclude cases, so misdeeds are not deterred. Instead of focusing on quick justice, the Supreme Court has decreed lengthy new procedures for clinical trials, causing huge delays and costs for legitimate activity. 

The Serum Institute of India, a top global vaccines producer , has suffered delays of over a year in clearance for Phase 3 trials of a rotavirus vaccine. So, it is shifting clinical trials to other Asian countries for this, and for a dengue vaccine too. 

Lupin Pharmaceuticals, a top drug company, has a research park in Pune. But delays in clearances have forced it to shift clinical trials to Europe and Japan, despite much higher costs there. If Lupin’s procedures are good enough for Europe and Japan, they should be good enough for India. But our courts are under the illusion that good practices are created by a jungle of rules. Sorry, they are actually created by swift punishment that deters the guilty. That’s why clinical trials suffer from fewer malpractices in Europe or Japan.

The Supreme Court should focus on speedy convictions, not ever more regulations. 

Despite having the world’s third biggest reserves of iron ore and coal, India has begun importing both. The courts have banned iron mining in some states, and court inquiries into corrupt coal block allocations have frozen fresh mining. Now, illegal mining surely should be stopped. But the right way is to nail the guilty, not stop all legitimate activity. No illegal miners have been convicted beyond appeals, but many legitimate miners have suffered huge losses. 

Illegal sand mining is rampant. Sand is essential for making concrete for construction. But the courts have passed increasingly stringent rules, curbing mining from river beds on environmental grounds. This has created a huge shortage of sand, which in some states sells at Rs 1,800/tonne, more than the price of coal some years ago. Cowed by court strictures and threats of prosecution, many Collectors are playing safe by simply not issuing new sand licences or renewing old ones that expire. Faced with public outrage over illegal mining, the Green Tribunal has mandated environmental clearance (and hence delays) for even the smallest patches of sand. Will this check illegal activity? No, but it will reduce legal mining, making India even more dependent on the sand mafia for supplies. 

These examples are just the tip of the iceberg. Our courts are not designed for making policy: they are designed to judge whether actions are in accordance with the law. They are not experts in the essentially political function of balancing the needs of production and social protection.

Politicians are accountable to voters for bad policies, like those on land acquisition. But the courts are accountable to nobody for causing administrative paralysis, bankrupting honest companies , or increasing poverty by checking economic growth. 

That’s why court activism should be limited to extreme cases where governments are so corrupt that intervention is essential. There’s an old judicial saying that it’s better to let many crooks go free than jail an innocent man. Yet much judicial activism penalizes innocent entrepreneurs and bureaucrats. 

Misgovernance in India is not just the result of crooked politicians and businessmen. It is also the result of wellintentioned but badly designed laws. Above all, it is the result of a dysfunctional police-judicial system. Unending legal delays encourage law-breakers in every walk of life. The solution is not policy takeover by the courts, but quick justice.

The high-wire act of modern coaching

 Russell Jackson in Cricinfo

Peter Moores now gets a chance to redeem himself after a short-lived first term as a national coach  © Getty Images

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Sometimes the harder you look at something, the more confusing it seems. Thirty years ago we didn't even have national cricket coaches. Now their appointments, successes, struggles and everything in between are endlessly dissected and considered every bit as newsworthy as the comings and goings of players themselves.

At times we're overly critical of them and at times we probably don't look clearly enough or with sufficient perspective when we shower them with praise. England's recent appointment of Peter Moores is interesting from a number of perspectives and probably encompasses everything that is good and bad about the way we discuss modern cricket coaching. 

Here you have a guy who is widely acknowledged as an excellent technical coach, who in his previous attempt at the top job made the mistake of spectacularly failing to manage his relationship with his captain and star player. This kind of personality clash can be inevitable in the workplace but it's poison for coaches, especially when the other guilty party is a once-in-a-generation talent. The buck always stops with the coach, so much so that it almost makes you wistful for the days before they even existed to be blamed by players, fans and media.

On the ABC's Offsiders programme earlier in the year, Gideon Haigh wondered whether Australia's football league, the A League, was "addicted to the smell of death" when it came to the frequent dismissal of managers. Haigh noted, "The attrition rate amongst coaches is very high. It's almost like it's become ritualised, the sense of, 'Who is in the hot seat?' and 'Who is in the tumbrel next?'" The media and fans feed off one and other in that regard and while football codes are still far more susceptible to this mentality than cricket, the curve is trending rather worryingly in the same direction.

It's a bleak situation to ponder, no matter how high the financial rewards offered to modern coaches or the economic factors that hinge on the sustained high performance of their teams. Though it's easy to draw certain parallels between coaches and the cult that surrounds high-powered CEOs, it's with some irony that you have to note that even the most scandal-plagued among the latter rarely receive the same amount of heat in the media as sports coaches. Failures of big business are abstract in some ways, even when they tug at our purse strings. We take sporting failures far more personally.

When speaking of his former national coach Bob Simpson, the first man to fill that position full time and a cornerstone figure in Australia's emergence from the doldrums of the mid-1980s, David Boon theorised that coaches shouldn't stay in their positions for longer than four to five years. Any longer than that and fatigue, complacency or staleness might make lethal encroachments. In modern terms Boon might actually revise that estimate down even lower, because the spiritual toll taken by the relentless demands of coaching at the highest level must be wearying.

Perhaps Andy Flower's brand of dull, robotic, computer-driven managerialism is something closer to a defence mechanism against all of the forces that come bearing down on the modern coach. In that sense, each piece of impersonal protocol and procedure actually places the coach at incrementally farther distances from outsiders, from negativity, but also, it must be acknowledged, positivity and new modes of thinking.

Of course the flip side of the coin that tells us it's the coach's fault when everything is going wrong is that when a team is a raging success, little or no credit is generally attributed to the gaffer. John Buchanan's reign as Australia coach is the best example, obviously. There's no doubt he had a mighty group of players at his disposal but there's also every chance that he, to paraphrase Steve Waugh, got the extra couple of per cent out of them that pushed them on to greatness.

To be positive, I guess there is now the sense that with Kevin Pietersen out of the frame, Moores might now achieve some of the unfinished business from his short-lived first term at the helm of England. What will inevitably nag at him, though, is that at some point he'll be sacked again. Nearly every coach is, eventually. His methods probably won't change dramatically at any point. England will have successful patches and they'll also have unsuccessful patches. In a purely mathematical sense, Moores' fate and the length of his second tenure really hinges on how India and Australia, England's most frequently encountered opponents, develop in the next couple of years.

The same goes for Darren Lehmann, who famously brought the fun back into the Australian dressing room and was one of a team of staff who coaxed the best out of Mitchell Johnson for one golden summer. Sometime in the next few years there'll probably be a slump and he'll be discarded too, just like Mickey Arthur and Tim Nielsen were before him. Hopefully he'll go with a little more dignity, sure, but he knows they'll get him at some point.

All of this really begs the question: if you're a high-level cricket coach with aspirations to maintain a lucrative and lasting career, why would you not do as Victorian assistant coach Simon Helmot recently did and step away from the first-class arena altogether to specialise in the burgeoning T20 format? Jobs are seemingly easier to come by, pay rates range on a scale between handsome and obscene (probably better than all other coaching jobs) and the time away from home is far less demanding.

Say what you like about the IPL and the BBL and the CPL, but loyalty can't be any thinner on the ground there than it is in the international coaching ranks.