First published by Common Weal
Let me tell you a couple of stories about my experiences with customer services in Britain and what that means for the now clear decline of this country. If you want the fast summary it goes like this – cutting everything to the bone is great for equity capital but simply fails on every other count, and that drags the country down along with it.
To illustrate this, the first of my tales involves a dishwasher we bought two years ago. As a family, money is always extremely tight so we usually buy budget everything. But having just published the Common Home Plan we tried to do the right thing by buying better with the aim of buying less, saving money in the long term and saving the planet.
So we spent a fair bit more than we usually would, buying a Hotpoint dishwasher. Big mistake; a couple of months ago it suffered a full-on collapse when its digital control system just failed. This isn’t a wear and tear issue, this is a fundamental fault which has afflicted a lot of owners.
I’ll save you the odyssey (weeks long) of trying to find a way to communicate this to anyone who might be responsible. You can’t email anyone or write to anyone (or I could find no way) which means you have no written record of what has been happening.
What you get is either an automated computer system (‘artificial intelligence’ is way too generous) guessing what you’re asking and sending you pointless responses or a phone operator telling you you’re out of warranty and bumping you to their ‘partners’. They don’t have a script for ‘this isn’t covered by warranty but legislation on the sale of faulty goods’ so just bounce you anyway.
There you get a simple option – pay for repair or don’t. If you do it’ll cost you about two thirds of the cost of the dishwasher. Except there is no guarantee they can fix it. And a significant call-out fee whether they do or they don’t. It’s like a tombola where you may or may not get back a machine you already paid for by paying almost the same amount again.
The second story is with the AA. I’ve been a member for decades and although in rural Scotland you can wait a while for that yellow van to arrive, on every occasion in my life when it did that was the problem over – either you got fixed or they got you home. Not now it seems.
We broke down on the way home from the All Under One Banner demo in Edinburgh last month. We were on a blind hill on a country road meaning me, my partner, our two children and my nearly 80-year-old mum had to stand on a grass verge for that time. When the callout arrived it was a contractor. He opened the bonnet, checked the oil and water and told me we needed towed.
Now I’d already made that point on the phone, so this wasn’t news. What was new to me was when he drove off, leaving us on that blind hill and not even telling us what to do next. We had to phone and start all over again – they guy hadn’t even logged that we needed towed.
Another two hours later and I was back home having phoned a friend to get me, my mum and the kids home (I wasn’t feeling very well) and my poor partner phoned in a panic – it was now dark, the battery had died, it was pounding it down with rain, there was no shelter of any sort and she was still sitting at the top of a blind hill in total darkness and freezing cold.
And yet when the proper AA arrived shortly afterwards, here’s the thing – the guy was courteous, professional and got my partner home safely and promptly, enormously apologetic to her for the behaviour of the contractor.
Capitalism was converted from being a process of combining capital and labour to produce goods to being a process of applying financial instrument to existing economic activity to extract more wealth from it
This is not just an opportunity for me to moan – you will all have copious anecdotes of your own which will tell the same story. We need this story to be told, because until people understand why it is that the experience of being a consumer keeps getting worse, it will keep getting worse.
So what is at the heart of these experiences? You could give the answer ‘capitalism’, but that isn’t sufficient. In reality it is a particular form of post-Thatcher capitalism, though even that isn’t sufficient because it was New Labour rule that really let this stuff rip. The problem is equity capitalism.
There isn’t space to rehearse how this all happened here but basically capitalism was converted from being a process of combining capital and labour to produce goods to being a process of applying financial instrument to existing economic activity to extract more wealth from it.
Let me give you a key example, Boots the Chemist (this piece is really worth reading though it is long). Boots was a family business set up in 1849 and for over 150 years it was a business that made money by selling cosmetics, toiletries and medicines to people. Then in 2007 it became the first major business to be bought up by a private equity investor.
That investor did not make its money by selling products to customers but by dismantling Boots the Chemist. It took a ‘stretch and extract’ approach, identifying where Boots had assets and working out how to sweat those assets to make the maximum short-term profit. For example it sold off a lot of its own buildings and then rented them back to itself.
This released massive profits for the private equity owner but only by hollowing Boots out to a shell. The profit wasn’t made from productive activity, it was made from destroying the ability to deliver quality services on a productive basis. It has been sold again since and is up for sale again. But only once its value was extracted by the super-rich.
This mindset is everywhere. It was behind the demutualisation of the AA in 1999. It was the basis for Gordon Brown’s ‘buy three, get one’ hospital and schools deals of the 1990s and 2000s. Hotpoint is a ‘British brand’, with ownership split between a US company and a Chinese one. If value can be extracted by owners, the medium-term consequences matter little – value will be extracted.
What is making it look like things are getting better and better is the same thing that is actually making it worse and worse – equity capital extracting value
And that’s where we are now. The value that has been extracted results in a breakdown service which fails protect its own customers, a household appliance company that dares you to take legal action against it to hold it accountable for faulty products, a chemist chain no-one wants, care homes that are not fit to put your loved one in.
Worse still, it took over government. Its not only the endless outsourcing and privatisation, its the ethos of financial management of public services. The NHS is almost wholly run by political place-people and financiers. They were all convinced (because they all hang out with equity capitalists) that equity capitalism is how to run a hospital.
So they looked at their spreadsheets and asked ‘what’s this ten per cent under-occupancy figure? We’ll need to get that halved quick smart’. A medic could have told you that to meet weekend or seasonal demand you need some spare capacity during the week on during seasons of low demand. You can’t see that on a spreadsheet though.
Which means the Scottish Government slashed capacity in the NHS. When that started to go wrong it outsourced more and more NHS work (often by buying in locums who were actually former employees who could no longer cope with the appalling conditions the financiers had created). And that creates the doom loop which is bringing the NHS to its knees right now.
It is the driving force behind the SNP’s truly dreadful proposals for a ‘National Care Service’, outsourced to the prime facilitators of equity capital (the big accountancy firms) to design for their clients, the private equity firms that own care homes. It is a disaster waiting to happen. Dear goodness the Scottish Government’s proposals for how the country would be managed fiscally and monetarily after independence looks more like an equity capital buy-out than it does national liberation.
The next time you ask yourself why everything feels like it is just getting worse and worse, ask yourself this – how is it getting worse and worse and yet the indicators tell you everything is getting better and better? GDP and wealth keep rising, the economy keeps growing, things keep getting shinier.
The answer is that what is making it look like things are getting better and better is the same thing that is actually making it worse and worse – equity capital extracting value that used to go into driving the quality of goods and services (which meant into worker’s pockets). In the most literal sense possible the very rich are getting richer and richer by making things worse and worse for you but disguising it with marketing and PR.
If we don’t get off this path we’re in big trouble. There are moments when I fear it may be too late already. Reversing 40 years of the equity-financialisation of everything may take longer than the viability of the things equality capital has pillaged.
What I do know is that if we don’t start reversing immediately, you’ll soon find yourself over a computer typing ‘I am having severe pains in my chest and down my arm, can you send an ambulance?’ and some fuckwit helpbot will reply ‘I didn’t quite understand that – do you have a sore throat or a runny nose?’.