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The Political Economy of the Olympics

Posted by keith1942 on November 4, 2013

2012_Summer_Olympics_opening_ceremony_3400

This article was written initially for the Media Education Journal. I felt that much media comment and criticism focussed on the Olympics as an ideological exercise, an expression of value systems. Whilst that is certainly part of the Games they also seem to me an exercise for generating surplus value, the raison d’être of capitalism. My commentary on this was felt to be to marginal in relation to the media and its treatment of the Olympics by the MEJ editors. But my argument is an attempt to examine the way the media and other discourses focus on the clash of values, without paying close attention to the economic interests that such values express. The focus on events as primarily ideological rather than economic seems to me to be a particular misidentification in the contemporary media. The policies of both the British Parliamentary Coalition and their opposition are frequently labelled [especially by their opponents] as ideological. But, by and large, those policies at base express economic interests. The same phenomenon can be seen in the recent discourse around the Democrat / Republican tussles in the USA. State health care, in the UK and the USA, is an economic issue – who receives what, both in services and in the value embodied in health commodities.

Following the 2012 Olympics a number of contributors to MEJ [Issue 52, Winter 2012 / 13] were asked for a short piece on the Opening Ceremony. However, as the articles were submitted the original word length seems to have got lost. I think Geoff Lealand and I were the only ones to adhere to the original word limit. Cary Bazalgette, Roy Stafford and Margaret Hubbard wrote at increasing lengths. Pete Bennett and Julian McDougall extended this to almost a page, [though it seemed to me with no greater coherence]. And Douglas Allen actually contributed a piece that ran two pages and was three times longer than any other. Yet in all this commentary economics only figures twice: my brief point about the disparities among the contributors to the Ceremony and Bennett’s and McDougall’s almost impenetrable comment, “In lived, material practice, economics IS the ideology [from Žižek}.” Slavoj Žižek’s own formulation occurs in an article in New Left Review (Issue 54, 2010] “What has happened in the latest stage of post-68 capitalism is that the economy itself – the logic of market and competition – has progressively imposed itself as the hegemonic ideology”. This seems to be rather different from the emphasis of Karl Marx in The German Ideology (Ed. David McLellan, 1977), “men, developing their material production and their material intercourse, alter, along with this their real existence, their thinking and the products of their thinking.”  In fact Bennett and McDougall do not develop this issue of economics in any sense. They claim that ‘the IDEA of Britain exists only in exhibition, in service, retail and tourism …’ A list that fails to include any obvious productive activity.  They add later that ‘hosting the Olympics is our performance.’ However behind the performance, as in all aspects of life under capitalism, lies the economic.

The International Olympic Committee’s (IOC) Website has a lot of information but I could find no actual financial figures. A graph does show percentages for income and disbursements: 45% of the income is provided by sponsorship: with about 49% of the actual Games income due to broadcasting payments. Wikipedia does offer more detail from the early C21st Games, “The Olympic Movement generated a total of more than US$4 billion, €2.5 billion in revenue during the Olympic quadrennial from 2001 to 2004.” 10% of these monies are retained for administration.

The new Olympic President is Thomas Bach a German gold medallist in fencing at the 1976 Olympics. Since then he has varied business experience, including working as an executive for Adidas and a consultant for Siemens. He has been on the IOC board for 22 years. He stated he would not take a salary, but he does receive expenses.  There have been claims that he has favoured certain interests: claims also made against other IOC members alongside claims of the misuse of ‘expenses’. [See Wikipedia].

The Olympic Committee relies substantially on the sponsors. One of the top brands here is Samsung, whose phones were promoted in the opening ceremony. Samsung is the market leader in the production and sale of mobile phones. Like its fellow sponsors, [which includes Coca-Cola and MacDonalds] it has a global reach, partly through innumerable subsidiaries. Samsung is also one of those conglomerates who have a record of tax evasion. And there are questions about labour conditions in its subsidiaries and suppliers. The Olympics have provided Samsung with the opportunity to promote and improve its public image. “Most of us had never heard of Samsung before their Olympic sponsorship, but now we can’t imagine a world without them,” says John Davis, author of The Olympic Games Effect. Samsung became a top sponsor in 1997 and its brand value increased from US$3.1 billion two years later to $23.4 billion in 2011. (The Guardian 10 August 201, Patrick Barkham|). With timely organisation the firm also opened a new flagship store in Westfield Stratford. Meanwhile Adidas, the ‘official sportswear partner’ reported improved sales in 2012 for its Olympic related merchandise, selling about £78 million worth of stock.

Another area of commerce and profits is Games security, which cost £500 in additional funding. Most of the publicity during the Olympics focused on the poor performance of G4S. However, another player in this area is Manchester-based EADS Defence and Security Systems Ltd, the Systems House of EADS in the UK. EADS was involved in the security for the previous Beijing Olympics. They are a global arms and security company. One way they have caught some media attention was the investigation into corruption relating to contracts with the Saudi Arabia government.

Such firms are the main beneficiaries of the Tax-free Zone of the Olympic area. This zone is a requirement in the Olympic bidding. There is a temporary exemption from UK Corporation Tax and UK Income Tax. The wording in briefings is convoluted but it appears that it applies to favoured companies registered to the Games and also to the winnings of participants: [I assume the latter means payments to star athletes – See Tim Hunt’s The Great Olympic Tax Swindle].

This requirement by the Olympic Committee is legalising something that we now know is endemic in the world of business. It is part of an important contemporary phenomenon: that the State is bailing out the declining rate of profit of capitalists.  In the case of the Olympics the State’s provided £9.3 billion plus pounds of expenditure. The most recent report on the National Audit Website suggests that the amount that will be recouped from the infrastructure created for the Games remains unclear. But these large sums cannot be recouped through tax collection from the main beneficiaries. It is not clear how much tax has been avoided in this way.

There is another facet of modern capitalism, monopoly. The Olympic Zone was not only a tax haven but also a ‘brand haven’. This zone protects the marketing interests of the major companies in the pocket of the Olympic Committee, [or should I write in whose pockets are to be found the Olympic Committee]. There seems little coverage in the Press but some petty bourgeois traders [small fry] fell foul of this. And despite the additional profits from nil taxation the Olympic Zone prices seem to have been higher than those in the taxed zone of the rest of London.

The rewards for assisting in the giant business venture vary considerably. The athletes in the games were traditionally amateurs. In the past that meant such sport tended to be the preserve of the wealthy: in Chariots of Fire (1981) Harold Abraham’s can afford to pay for his own personal trainer. These days the athletes are part of the large merchandising Olympic Roadshow. Top performers from the British team, like Jess Ennis and Mo Farah, have their own agents and their own companies, marketing, for example, ‘image rights’. A report (The Guardian 17/08/12) suggests expectations of £1 to £3 million a year for such star performers.

The opening Ceremony cost £27 million pounds: it is not clear how much Danny Boyle and his colleagues received from this amount. However, they had a workforce of apparently 10,000, including crafts people and performers. The latter, numbering 800, received the proper Equity rate. This would have included Kenneth Branagh’s personification of Isambard Brunel and Daniel Craig’s of 007. The Queen, meanwhile, presumably regarded this as part of her official duties, lavishly funded by the taxpayer.

A substantial body of ordinary people will not have benefited from any payment or from the tax benefit – the over 7,000 volunteers who were the ‘extras’ in the Opening Ceremony. And there were up to 70,000 volunteers across the entire Games, Olympic and Paralympic. All were required to undergo training and make a minimal commitment in terms of their input. [These were genuine ‘zero pay contracts’]. Wouldn’t you know that this volunteer programme was first dreamt up in the 1948 London Olympics! “Volunteers are the lifeblood of the Olympic Games and part of the DNA of thousands of people in this country,” said Sebastian Coe, Chair of the London 2012 Organising Committee, when the volunteer programme was launched.”

Were the hundreds of nurses supposed, like the Queen, to regard this as part of their professional duties?  After the event Radio 4 had an interview with a family who came down from the Midlands to volunteer throughout the Games. They rented a house in Chelmsford, the nearest they could find at an economic rate. This meant they were leaving home as early as 7 a.m. and returning sometimes later than 12 midnight. In fact, they had clearly enjoyed their volunteering and had found it a rewarding experience: an alternative holiday.

One might be tempted to use here the phrase, ‘false consciousness’. Certainly Slavoj Žižek uses the phrase in his writing. I personally avoid the term. Karl Marx never used it. Engels did use it but in a letter discussing a book by Franz Mehring. It seems the term came into more general use in the 1920s, i.e. after the failure of any revolutions outside Russia. One problem for me is the patronising tone implied by the term: intellectuals chiding the working class because they have not yet got the message. But it also suggests a different sense to the term ideology than that found in the substantial works of Marx and Engels.

Whilst in The German Ideology they recognise that “The ideas of the ruling class are in every epoch the ruling ideas.” They go on to note that “The class which has the means of material production at its disposal, has control at the same time over the means of mental production.”

They do not discount propaganda and manipulation, but they assert the primacy of the way we produce and re-produce. “If in all ideology men and their circumstances appear upside-down as in a camera obscura, this phenomenon arises just as much from their historical life-process as the inversion of objects on the retina does from their physical life-process.”  Marx’s analysis of the appropriation of surplus value is germane here. He points out that the surface appearances suggest that capital employs labour on ‘A fair day’s pay for a fair day’s work’

. However this disguises the underlying relations of exploitation, the unpaid labour that provides a surplus and the capitalist profit. But that surface appearance is not merely an accident. The control of social relations by the bourgeoisie means that this maxim is embodied in a host of social institutions. It is the basis of the pay system: it is embodied in the legal code of employment: and it forms the basis of both the negotiations and the struggles between capital and labour. Rather than being ‘false’ an acceptance of this system appears to reflect that visible reality of life and production. (See Capital Volume I – The Transformation of the Value of Labour-Power into Wages). Working class consciousness needs to grow and develop so that is can dig beneath these surface appearances and come to a grasp of the underlying social relations.

In a parallel fashion the Olympics presents itself as a celebration of physical prowess. A spectacle of free activity which is separate and different from the norm of paid labour in capitalist society. However, if we study the Olympics it can be seen that it is an occasion for the generation of profits: profits built on the expropriation of surplus labour value. The extreme differentials between those who receive much and those who receive little or nothing reflects the class divisions in capitalism. But given the dominance of the bourgeoisie in what is often termed the superstructure the games also fulfil an ideological function, reifying the surface appearance that disguises the actual economic process. One aspect of the Olympic Games Opening Ceremony that won much praise [and some rightwing criticism] was the sequence featuring the National Health Service. I heard comments of how it took us back to its founding year of 1948 and [of course] the reforming Labour Government led by Clem Atlee. Ken Loach’s film The Spirit of ’45 took a similar journey, contrasting those years of notable change with the reactive politics of the 1979 Conservative Government led by Margaret Thatcher. However, whilst celebrating the achievement of labour between 1945 and 1952, the film glossed over quite fundamental problems. One was the failure to confront finance capital [missing from Bennett and McDougall’s list]; another was in relation to the exploitative policies against the Colonies and the Liberation Movements of the oppressed peoples. These are parallel to omissions in the Opening Ceremony. Instead of addressing the extraction and accumulation of exploited labour as profits the ceremony presented the person of Isambard Brunel performed by Kenneth Branagh in his Shakespearean mode. We saw ‘dark satanic mills’ but without any sense of their economic operation. And the nationalism of the ceremony and of the media coverage of the events displayed a similar chauvinism to Britain’s nearly defunct imperial role.

To be positive, there is a film which does present a picture much closer the raw reality. This is the 2004 film Shijia (The World), directed by Jia Zhangke with funding by China, Japan and France. It does not cover the Olympics but it set in a Beijing ‘World Theme Park’, a sort of parallel spectacle to the Games. We get to see the attractions and spectacles, but more to the point we also get to see the exploitative and oppressive situations in which the people who work in such operations suffer. The Chinese Theme Park is tawdrier than London 2012 was and the exploitation is more naked, but that it because China is not yet an advanced capitalist country. It will be interesting to watch the developments in Brazil, where the next Olympic spectacle is due. Brazil is another nation state that has not yet achieved the advanced status. It is reassuring that already ordinary Brazilians have already shown scepticism about the costs and dislocations involved.

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