LADA'S THEME

Thursday 28 October 2010, 19:13

Adam Curtis Adam Curtis

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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.

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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.

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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.

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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.

And worse.

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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  • rate this
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    Comment number 1.

    Great stuff Adam. Although I think you over egg some of your assertions; I don't think the elites say " you cannot have protectionism - otherwise you will get a world war", in fact I think some of them think the exact opposite. For example, in America there are plenty of politicians who would love to put up tariffs on Chinese goods and whatnot because China is a very satisfying punch bag for political frustations and popular with voters who think too many of their jobs are being exported overseas. If you do have protectionism you probably won't have a world war, but it would do a lot of economic damage and stir up all sorts of xenophobic sentiments. It's hard to know what you meant by that comment; do you think protectionism is good?

    On the other stuff, I agree completely, if only because it accords with my own biases ;). I would also like to note that the idea that the collective is bad extends beyond elites to ordinary people, who seem disillusioned with politics and seem mostly concerned with their own self interests.

    Last note: you have a spelling error in the paragraph beginning with "LogoVaz wanted Lada cars to sell.", it's in the next sentence after that. :)

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    Comment number 2.

    @Juan
    There is a lot of pressure for protectionism, yes, but you'll notice that there's not a lot of it happening. That's because the elites do indeed tell us horror stories about it and the dire consequences of closing our borders to imports.
    As to whether protectionism is good or not, I would counter with the question "Is it morally right to allow imports from countries where we know that the preferred means of production is basically slavery?"
    I think I'd also ask what you think is happening to the ordinary people of the UK if it's not "a lot of economic damage"? How would closing our borders to the produce of deeply evil production methods be worse than the mass unemployment that those imports are already causing?
    The real elites, the super high-flyers that have the ear of governments day in and day out, not just once every five years, know that selling school uniforms made in sweatshops by children who will never see the inside of a school is good for profits. Naturally they are against protectionism. But they're also against humanitarianism.

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    Comment number 3.

    fascinating as always. thank you, sir.

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    Comment number 4.

    We need protectionism because our so called captains of industry are more concerned with enriching themselves than protecting their fellow countrymen. The Phoenix group are absolute scum and typical of the people who let our country become an industrial wasteland. If you want to move your factory fine,but dont expect to reimport these goods back here. Jimmy Goldsmith at least knew what would happen to our society if you let it happen.

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    Comment number 5.

    The Western view of the Soviet Union, which grew out of the early Cold War, was that the USSR was a top-down, centrally planned society in which few individuals, workers or managers, had autonomy. This view was developed in part for political reasons; totalitarianism was a useful tool for linking the Soviet Union with the fascist regimes with which the US and UK had just fought a devastating war. This story is not necessarily false, but as we could see by the report on the Togliatti factory, it blinded Westerners to those aspects of reality that did not fit the story. This is a major part of why the CIA failed to see the growing instability in the Soviet system which led to its failure.

    Your second rule to today's political system, that we cannot allow collective ideas that surrender the individual to the group, is something that exists firmly in rhetoric, presenting Soviet style totalitarianism as a foil to Western values, but not necessarily in practice. In both the US and the UK, the economic crisis has brought about persistent calls for adherence to free market principles, deficit reduction, and lower taxes. Even though free market principles are cloaked in the rhetoric of individual autonomy--what Isaiah Berlin describes as negative freedom--the market itself can become an ideal to which the individual is sacrificed. Witness, for example, Republican insistence in the United States that unemployment insurance must not be extended because this would damage the economy. You explained Berlin's warning of this kind of abuse of the concept of negative freedom in The Trap, though in the context of neoconservatism.

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    Comment number 6.

    Can anyone tell me what music is playing in the of the last clip?

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    Comment number 7.

    @ dasfaha:

    http://www.youtube.com/watch?v=zDkvSKvzUBI

    Regarding the economics of 'the Leviathan', whether giant manufacturing, essentially monopolising, is the product of greedy capitalism or deluded utopian collectivism, my thoughts go to the humble slime mould:

    http://www.youtube.com/watch?v=bkVhLJLG7ug&feature=related

    The slime moulds are a collection of amoebae, that collect to form a mobile giant plasmodium group, when the immediate vicinity is deplete of food, or dangerous in some way. The plasmodium is the first line of action to find a better vicinity.

    If the slime mould fails to find a better 'solution', it then forms a fruiting spore, as the last desperate mode of survival; as only the 'select few' are gifted with the spore prize at the expense of the many.

    I hope you like the analogy; it may shed some light on to why individualism is only an ideal if the environment is amenable; otherwise monopolies and collectivism will spontaneously occur in times of strife.

    JimmyGiro

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    Comment number 8.

    Damn, somebody got there before me !!!:

    http://www.youtube.com/watch?v=duLTekqtkmk&feature=related

    :(

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    Comment number 9.

    I would hazard a guess that the directors at Phoenix knew very well what they were doing in syphoning off the interest from BMW's loan for themselves and also banking enormous salaries. They knew that when the company folded the Labour government would want to keep investigations under wraps.

    Labour was under pressure from the EU to help BMW get out of a very difficult situation that could have brought the parent company to its knees, as it had already put over £1 trillion into BMW UK. It wanted a solution that would help BMW save some of its future UK sales and also help Labour save votes in the Midlands.

    So Labour encouraged BMW to take Phoenix's offer over Alchemy's. Alchemy had a plan that would have resulted in more immediate redundancies but a greater chance of the company surviving, because Alchemy was to turn MG into a sports brand and not keep it as a mass production brand.

    From that point on the writing was on the wall; without massive state subsidies (something New Labour could not be seen to do) MG started into a headwind that all other European manufacturers (Renault, Peugeot, VW etc) are protected from, because of their own government's help.

    BMW and Rover/BMW UK/MG's suppliers lost a lot of money in the this sorry state of affairs and many jobs were lost. Much of the troubles could have been avoided if the UK manufacturing plant had been as efficiently run as its German counterparts. Unfortunately there was animosity towards the parent company from within its UK subsidiary and the national press. Or, in other words, a detrimental mindset towards the new Teutonic forces that now dominate, for good reason, Europe's manufacturing and economy. The UK was riding on a superficial wave of nostalgia and optimism at the turn of the millennium and Labour (in particular Mandelson) didn't want to undo all the work it was putting in to convince the electorate that things were getting better.

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    Comment number 10.

    This is great, nice one Adam. I also love the title.

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    Comment number 11.

    I think its useful to look for parallels, and to enlighten readers about Soviet failiures, including Berezovsky.

    However,

    1) Protectionism will lead to war. And the "elites" are both better informed about this, and correct.

    2) There is a difference between markets, and rhetoric. MG Rover has nothing to do with markets, and everything to do with political cronyism.

    If Markets become merely ways for other participating parties to abandon all oversight, the results remain constant. Markets presume institutions, not cronyism.

    To distinguish markets from rhetoric, one aught to consult the economics science, and not politicians spouting nonsense.

    3) One can make a very solid economic argument, that Markets have indeed eroded in some respects, and that key economic sectors are increasingly "Russified" in the sense that state participation in the economy has led to cronyism qualitatively similar to the later Soviet stage. But not quantitatively. Our economy is still market based as evidenced by those segments that your statements overlook. I.e. small and middle sized business, and commutative currency.

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    Comment number 12.

    I think the bird flying up indoors on 05:13 in the first film, says a lot...

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    Comment number 13.

    You might find this interesting. The Fertitta brothers, the actual owners of the UFC (the most visible MMA franchise), have a story similar to Rover and Berezovsky. They are mob tied figures, who used a few insider shenanigans to bankrupt their own business and make 660 million dollars. The story doesn't get a lot of attention in the states, but it might be worth your time.

    http://writingfortruth.blogspot.com/2010/09/station-casinos-labor-troubles.html

    watch at least a minute of the first video.

    Let me offer you my reading Adam. I think I am catching on to your approach. I think mine is somewhat different. I don't see the existence and persistence of Fertitta's as some failure of political thought, of the market, or socialism. I think it is the hand of nature forcing the idealists. It is a twist on the notion of "civil society" or bottom up organisation. Government and polite society, also have their limits.

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    Comment number 14.

    Why is the Lada a wonderful car?

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    Comment number 15.

    @ G

    I think you are showing signs of fatigue citizen. Maybe you should spend some time at the BBC Health Gulag, for the benefit of your mind; and to cleanse your soul of this toxic heretical doubt you have acquired.

    Relax in front of 8 hours of East Ender's each day, until you know the difference between right and wrong questions.

    JimmyGiro

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    Comment number 16.

    Slightly off topic.

    I'm not who has watched the Living Dead series, but I was rewatching it recently. In the first episode Adam interviews a guy called Horst Mahler. What he says is very interesting. But I looked into this guy and what he has become involved with since is quite scary. Does anyone know anything more about this man?

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    Comment number 17.

    Mr. Curtis,

    My sincere apologies for resorting to an off-topic comment on your blog, but I've searched for other ways to contact you with no success. My name is Emily O'Neill and I'm a Photo and Permissions Associate at Jones & Bartlett Learning. One of our authors would like to use a clip from your film, "The Trap" in one of our upcoming educational products. I'd be more than happy to discuss the details of this and to request formal permission. Please email me at eoneill@jblearning.com when you receive this message. Thank you very much for your time.

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    Comment number 18.


    @EmilyONeill

    Adam has been keeping his email secret for many years. Obvious to anyone who has tried to contact him if merely to engage him on his work.

    ...

    Dear Adam,

    I hope you don't mind a bit of criticism of your work, since I am a bit taken back by the sycophanty of your raedership, and honestly, just think it natural to share some criticism if I have it.

    First, you label yoru work personal opinion. This is nonsense. You present it from your perspective, but its not personal opinion. I don't know why everyone is now running scared of terms like Truth, Evidence, Reality, Objectivity, Fact, etc. But I guess you are scared as much as everyone else is.

    Second, your narrative/psychological approach. It is apparent that you try to present your posts and documentaries as merely looking at something. While you have an absolutely extraordinary ability to take psychology, and portray it as the questionable "science" that it is, and dissect its influences in ways that a historian would be proud - i.e. showing the psychological tendency towards historicising its subjects, I wonder if the end product of your approach isn't counterproductive. Aren't you finding yourself, just telling stories about stories?

    Third, when you try to tell us a story about a story, you strike this posture of not really knowing you are telling us a story - although you blatantly declare "this is a story" in virtually every documentary. If not exactly as I say, in the least you are trying to strike this pose in which you don't really "judge" whatever is going on. I think there is a point at which this turns into hopeless reductionism.

    Take for example a trope you often repeat - the displacement of real politics, of people's real interests disappearing in their discussions, or in the politicla debate in which they are somehow participating. Isn't thsi exactly what you do with your "Camera" (or "Eye")? You're the one who is reducing things to mere ideologies, to mere ideas, that are always shown to be disconnected with ...what? Reality? In which you do not believe?

    Let me give you specific examples - because I agree, theory without application becomes demagogy. In Madison Avenue you end by suggesting that feminism was co-opted. That consumption suddenly became a feminist expression. But wait Adam, if you are saying that freedom could be expressed through consumption, you need to either show us how this is untrue, or you are granting the Milton school its due. For there before you have a young female executive who is changing the way people shop, by giving them a greater choice, by increasing their freedom on the market.

    Now if you want to dodge this, I suppose you could cop-out by saying you really are an "Artist." The sycophants say this about you here, but don't tell me you really honestly see yourself as something like an Artist?

    What greater demagogue and pompous egomaniac exist in our days, in fact what greater Facsist, than the self-appointed Artists that carry the notions of Max Stirner to their logical absurd conclusions?

    Are you Adam, basically saying there is no reality on which politics and human life is based, and if not, are you then saying that you don't know what this Reality is, and that you are capable of judging the subjects you cover, in relation to the distance they find themselves to this Reality?

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    Comment number 19.

    Fascinating and ironic.
    So Robber Baron Boris now has to hide from his government in London, I would guess that the Rover crooks also spend a lot of time abroad, with all that money they looted.
    But the Rover bunch have no fear of the law.
    Never mind the now defunct USSR, could the Rover situation arise in any other Western European nation? I doubt it.
    Or in the USA either?

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    Comment number 20.

    Brilliant.
    Someone asked about the music - Dr Zhivago. Thought for a sec it was the Russians that added it (hilarious) but then noticed the title again. Nice one.

 

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