Thursday 28 October 2010, 19:13
We live in a time when all elites, whether on the left or the right, believe in rigid rules that say there is no alternative to the present political and economic system.
The latest rule is: you cannot have protectionism - otherwise you will get a world war. Other rules say you cannot have collective ideas that involve the surrender of the individual to the group - otherwise you get totalitarianism or, even worse, religion. And you cannot have the old welfare state because it doesn't follow the rules of the market - and thus leads to economic crisis.
But not so long ago the world was defined and divided by equally rigid rules. And no-one thought that could ever change.
I have discovered a lovely film from that time. Or, to be precise, from the moment when that rigid world was beginning to crumble, but no-one knew.
It is a documentary made in 1977 that follows two men from British Leyland on a visit to the Togliatti car plant in the Soviet Union.
Togliatti was the biggest car plant in the world. It turned out millions of the same car - the wonderful Lada.
I'm putting up two sections of the film. The first begins with Howard - a manager, and Bill - a trade unionist, saying goodbye to their wives (very good purple curtains and matching chair) and going off to Togliatti.
I love their enthusiasm for the means of production they discover in the Soviet plant. And also the weird and wonderful health cures that are revealed to them in the vast House of the Unions.
This next section of the film is fascinating. Howard and Bill go with Colin, the BBC reporter, to meet the plant managers and then the unions.
The union leader is called Mr Smekholin. He has a very frightening face. And there is a great moment when the Leyland man asks him how many strikes they have in the plant.
Mr Smekholin tells him bluntly. "There hasn't been a strike in the Soviet Union since 1917." The reason is simple. The Communist party thinks that strikes are bad for productivity.
Watch the face of the interpreter during all these interchanges. It is very revealing.
But first they go to see the Togliatti managers.
It is a very weird moment because, looking back now, we know that there was a completely other reality right in front of the British men that they couldn't see.
Colin is convinced that it is the unions and the Communist party committee that really control the plant. Not the managers. The managers, he tells us, in both commentary and questions, have no power any longer. This is because they have become trapped by the growing absurdities of the Soviet Plan.
But in reality the very opposite was true. The absurdities of the plan were actually beginning to allow the managers to become much more powerful.
They were using the chaos and incompetence of central control to construct their own alternative economic systems. Which they controlled for their own benefit.
In the case of Togliatti, senior managers were running an ever-growing shadow economy selling spare parts and even cars on the black market. It was supplying the needs that the Plan couldn't. And the "Red Directors" as they were called, were beginning to make a lot of money.
And around the time the film was being shot the Togliatti managers met a young academic from Moscow who had come to help on the computerisation of the car production.
He was called Boris Berezovsky.
Twelve years later - as the Soviet Union began to collapse - the Togliatti plant was brought to its knees and almost destroyed.
A number of journalists and historians have investigated what happened.
In 1989 Boris Berezovsky set up a company with the head managers of Togliatti. It was called LogoVaz. Initially it designed management software. But then it started to sell Lada cars.
What then happened is murky, but it is alleged that the managers in effect looted their own factory.
LogoVaz wanted Lada cars to sell. The managers of the Togliatti plant agreed to give tens of thousands of new cars to LogoVaz at a very low price. What's more, LogoVaz wouldn't have to pay for them for two and a half years. And, because of massive inflation, that payment would be a pittance.
It meant that Berezovsky would make millions. And so would other members of LogoVaz - who just happened also to be the directors of the Togliatti plant
But it also meant that there was no money left to pay the workers at the plant. They kept producing the cars - but for no money. And LogoVaz kept on selling the cars. And the old Red Directors became very rich.
And Boris Berezovsky began his rise to power.
At the time we in the west looked on in superiority. What was referred to as "gangster capitalism" could never happen here. But ten years later something rather similar did happen here - in the Midlands.
Starting in 2000, one of the few remaining bits of British Leyland - the giant Longbridge plant - was brought to its knees in very much the same way by its own senior managers.
They siphoned off money that was supposed to help rescue the plant, and instead used it to enrich themselves. They would be helped in this by a car salesman from Stratford on Avon.
In 1999 BMW had given up on what was now called the Rover Group. A Rover manager called John Towers dramatically announced he had created the "Phoenix Consortium" with a Rover car dealer called John Edwards and two other directors. Their aim was to rescue the company.
Here is Mr Towers being given a hero's welcome by the workers at Longbridge.
A government report that came out last year tells in great detail what in reality then happened.
The Phoenix directors systematically restructured the business. They did it in a way that ensured that many economic benefits flowed not to MG Rover and the thousands of workers, but to the directors themselves and the man they appointed chief executive of MG Rover.
The report is over 800 pages - and it is a fascinating snapshot of our time. It lists all sorts of schemes with names like "Project Slag", "Project Platinum" and "Project Aircraft" - all of them designed to try and bring profits not into MG Rover but into the holding company set up by the Phoenix consortium.
And then on the 8th of April 2005 it all collapsed. The DTI announced they were sending inspectors in to find out what had gone wrong. Hours later one of the heads of Phoenix went out and bought a piece of software called Evidence Eliminator. He then used it to wipe all sorts of interesting files from his computer.
Today's rigid rules about our society insist that the principles of the market must be applied to all sorts of areas that have nothing to do with the market.
But it seems that when the rules are actually applied to the market itself they often don't work as they are supposed to.
Here is Robert Peston on the News the night the report came out.
Meanwhile Vladimir Putin rescued Togliatti from disaster. Over the past five years he has pumped billions of roubles into the plant.
And in August of this year Putin decided to show his pride in Togliatti by driving a yellow Lada car across Russia.
Here is a video recorded by the Trans-Baikal Off-road Car Club. They proudly assembled by the road to record their Prime Minister's drive-by. But you can hear their scorn and hilarity when they realise that all the other vehicles in the convoy passing them were foreign made.
Behind the Prime Minister's Lada was a back-up Lada. And behind that (2 minutes 7 seconds behind) was a low-loader carrying yet another Lada.
They were there because the Lada has a terrible tendency to break down.
But it is still a wonderful car. I know because I used to own one.
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