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maritimecyprus · 5 years ago

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(http://www.MaritimeCyprus.com) The Lloyd’s Standard Form of Salvage Agreement (LOF) has existed in various iterations for over 100 years, with the earliest published form appearing in 1892. The form has been amended and simplified over the years to keep up with developments in the industry but the principles behind the contract have remained the same: to provide a simple and flexible legal framework for a Contractor to provide salvage services to property in danger.

The latest genesis of the contract has been produced following extensive discussions with various stakeholders in the industry including: the leading salvage companies, the International Salvage Union, insurers, arbitrators and the Admiralty Solicitors Group.

The changes in LOF 2020 do not appear to be significant in the first instance, however, the changes that have been agreed seek to address some specific concerns that have been raised by those who regularly use LOF.

In the rest of this article, we highlight the key changes that have been made to the contract and the implications that it will have for regular users of LOF. For ease of reference, a link to a marked up copy of the contract highlighting the amendments is provided at the end of this article, reproduced with the kind permission of the Lloyd’s Salvage Arbitration Branch.

The biggest change is probably the departure from the separation of the Lloyd’s Standard Salvage and Arbitration (LSSA) Clauses, Procedural Rules and Fixed Cost Arbitration Procedure. These have now been merged into a single document, the Lloyd’s Salvage Arbitration Clauses 2020 (LSAC), which combines the old clauses and rules so that everything is in one place. This addresses a common complaint from salved property interests (usually individual cargo interests who are unfamiliar with the old LOF contracts and their constitution) that it was difficult to “navigate”.

Clause H

The language in Clause H of the LOF has been amended to make it clear when the services are deemed to have been performed. Further commentary and a recent example of the operation of Clause H (albeit that the services were provided under LOF 2011) can be found in the recent decision in the “SAM LION”. The award and appeal set out in some detail the law in relation to when a vessel can be considered as being “in a safe condition in the place of safety”. Subscribers to the Lloyd’s Salvage Arbitration Branch website can download a copy of the award and reasons1.

Important Notice No. 4

The contract incorporates the ad hoc requirement that was implemented by the Lloyd’s Salvage Arbitration Branch for the Contractors to notify and provide a copy of “… any agreement that amends or varies the provisions or terms of this Agreement…”. This formalises the position in relation to side letters and any other form of agreement that seeks to circumvent the usual mechanics for determining the salvage remuneration due to the Contractors under the contract, i.e. in accordance with Article 13 of the Salvage Convention. For example, concern had been expressed that in certain circumstances the effect of such side letters could potentially prejudice the P&I Club’s position in relation to any SCOPIC claim, or otherwise operate to the detriment of cargo interests. The intention is to improve the transparency of the LOF procedure and allow the LOF Panel of Arbitrators to review these agreements and consider their enforceability.

Clause 1 – Introduction

This has been amended to include reference to the ‘old’ Procedural Rules which are now set out in Clause 8 and the Fixed Cost Arbitration Procedure which is set out in Clause 15 of the LSAC.

Clause 2 – Overriding Objective

The overriding objectives (which in our view are often forgotten or overlooked) maintain their prominence and are now located in Clause 2 of the LSAC.

Clause 4 – Provisions as to Security, Maritime Lien and Right to Arrest

These key provisions which are regularly relied upon by the Contractors have kept their position in the LSAC at Clause 4. These have been largely unamended, recognising the way in which the provisions have worked successfully since their last revision. However, subtle changes have been made to Clause 4.5 which specifies the form and format of security that should be provided by a salved property interest. Clause 4.5 requires that security shall be provided to the Council of Lloyd’s (via the Lloyd’s Salvage Arbitration Branch), that it is in a form approved by the Council of Lloyd’s and “… by person[s,] firms or corporations acceptable to the Council or acceptable to the Contractors”. There is no longer the requirement for the guarantor to be resident in the United Kingdom, which reflects the increasingly international nature of the marine insurance market. This does not however preclude the Contractors from stipulating their own requirements for guarantors in accordance with Clause 4.5(iii) which permits them to determine whether or not the identity of a particular guarantor is “… acceptable to the Contractor…”.

Clause 5 – Appointment of Arbitrators

This now provides an entitlement for the arbitrators and/or appeal arbitrators to seek security for their “… reasonable fees and expenses …” which mirrors the position of the Contractors to ensure that they are adequately secured.

Clause 6 – Arbitrators Powers

The arbitrators’ powers are conferred to them by virtue of the provisions in the Arbitration Act 1996 and any subsequent amendment to this legislation. Clause 6.2 sets out the additional powers that the arbitrators have at their disposal (bearing in mind the Clause 2 – Overriding Objectives) in addition to those contained in the Arbitration Act 1996. The Clause provides a non-exhaustive list and gives arbitrators wide discretion to “… conduct the arbitration in such a manner in all respects as he may think fit subject to the LSAC 2020 Clauses…”.

Any decision by the arbitrators in relation to the costs and expenses incurred by a Contractor in seeking and obtaining security, enforcing or protecting a salvage lien and securing the payment of fees and expenses of the Lloyd’s Salvage Arbitration Branch and the arbitrators, remains part of the arbitrators’ absolute discretion under Clause 6.3 of the LSAC.

The powers of the appeal arbitrators have been moved from the ‘old’ LSSA Clause 10 to the end of LSAC Clause 6 so that all the relevant provisions are in one place.

Clause 7 – Representation of Parties

This Clause has remained largely unamended save that under Clause 7.4, an owner of salved cargo is deemed to have received notice of the hearing and any relevant correspondence if the Contractor provides such notice or correspondence to the guarantor. This provision reflects the increasing costs faced by a Contractor when dealing with large container vessels with many hundreds or even thousands of cargo interests.

Clause 8 – Arbitration Procedure

This is where the ‘old’ Procedural Rules are now located within the LSAC. The amendments to these provisions are minimal.

Clause 14 – Special Cargo Provisions

This Clause has had a substantial overhaul and the ‘old’ LSSA Clauses 13, 14 and 15 have now been merged into one new clause. The old clauses set out a pragmatic framework for dealing with unrepresented container cargo, whereby an agreement between the Contractors and a large majority of represented cargo interests would be considered binding on all remaining cargo interests (subject to the arbitrator’s approval).

LSAC Clause 14 now applies to all salved cargo, and is no longer limited to container cargo. However, it provides that the arbitrator will have increased discretion over the process, allowing them to give such agreements as much weight as they may consider appropriate in assessing the salvage award against owners of unrepresented cargo.

The broadening of the provisions and the arbitrators’ discretion to evaluate any commercial settlements that may have been reached with other represented interests is a welcome development. This will hopefully allow matters to be concluded in a more cost effective manner and reduce the expense that is often incurred by the Contractors in dealing with the minority of unrepresented interests who fail to engage in the arbitral process.

Clause 15 – Fixed Cost Arbitration Procedure (FCAP)

The Fixed Cost Arbitration Procedure (FCAP) is now fully incorporated into LSAC, and is set out in Clause 15. FCAP has a wide application with the aim to cut costs of arbitral proceedings for smaller claims, and the LSAC provide for slightly amended thresholds. The procedure may now be ordered by an arbitrator where a security demand is less than US$2 million, or where the factual issues are likely to be straightforward.

The FCAP includes a variety of measures to simplify arbitrations and to reduce costs, such as (i) joint bundles not exceeding 100 pages; (ii) submissions capped at 4,000 words; (iii) fixed charges for arbitrators’ fees; and (iv) less detailed reasons for an award.

Clause 19 – Contractors’ Special Right to Terminate

Finally, Clause 19 of the LSAC introduces a special right to terminate salvage services for the Contractors in narrow and limited circumstances. The clause is intended to cover circumstances where the Owners of a vessel have decided to terminate their obligations to pay SCOPIC (in accordance with Clause 9(i) of the SCOPIC Clause) but the Contractors are then unable to exercise their own right to terminate SCOPIC due to the Owners’ failure to provide increased security under Clause 4(ii) of SCOPIC.

In these circumstances, the Contractors could find themselves on site and prevented from demobilising and without any ability to seek additional security for their SCOPIC claim, which would be inherently unjust.

In such circumstances, the Contractors may seek an Order from the arbitrators that they are no longer bound by the terms of the LOF and that the LOF shall be deemed terminated. This is without prejudice to their rights to recover any sums due under their SCOPIC claim and the Contractors’ (reasonable) costs of demobilisation and any sums due by way of an Article 13 award from the salved property interests.

Summary

The amendments to the contract and revisions set out in LOF 2020 are a welcome development. Hopefully, the changes will simplify the arbitration procedure and will go some way to restore the confidence in the contract. Whether the changes precipitate an increase in the number of LOFs that are agreed will have to be seen.

Source: Holman Fenwick Willan – HFW (a member firm of the Admiralty Solicitors Group)

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LOF 2020- an update to the world’s oldest and most commonly used salvage contract (www.MaritimeCyprus.com) The Lloyd’s Standard Form of Salvage Agreement (LOF) has existed in various iterations for over 100 years, with the earliest published form appearing in 1892.

#Lloyds #LOF #Scopic

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calprivatebank · 6 years ago

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Valuable Tips to Securing a Business Acquisition Loan

Buying an existing business or merging your existing business with a competitor is a big decision to make and a large undertaking. The biggest issue besides merging the businesses to become one or taking control of a business that is already running is coming up with the money to pay for it. Let's be honest, we don't all have hundreds of thousands if not millions of dollars lying around just waiting to be used.

Business acquisition loans are the leading choice, used by thousands of business owners each year to secure the business they want to purchase and to achieve long term success.

The first tip that you must keep an eye on is that your loan size should never be more than what you can afford. While this may sound obvious, remember that you are tying yourself down to a monthly commitment which will be carried out over an extended period, possibly even several years or more. You need to ensure that you are in the position to repay the loan with confidence, keeping your credit rating high to make it easier to be approved for financing again in the future.

The next tip worth noting is that you will need to do your research and find the best business acquisition loan providers in your industry. Ensure you use a commercial bank that has extensive experience in this sector to ensure you secure the loan you need with ease and confidence. Your provider should be able to discuss the options available with you to ensure you have the money you need to purchase your new business with peace of mind.

In addition to this, you need to ensure your cash flow is not affected when you take out this type of loan. Your cash flow should always be kept aside to manage daily expenses to ensure your business isn't forced to close its doors because you cannot pay suppliers, utilities or staff. This also frees up your cash. On a personal level, using your savings can leave you cash strapped while you take to your new role and start earning a salary from the business.

Further, you will find that one of the top tips for securing a business acquisition loan is to always have a contingency plan in place. This is an important tip to ensure that you don't find your business in financial difficulty due to nonpayment.

Depending on the size of the business you are purchasing, you may be able to apply and qualify for an SBA (Small Business Administration) loan. These SBA loans are solely for small businesses in an attempt to boost small business growth throughout the United States. These loans are backed by the government, which means the government is your guarantor. This improves approval ratings and reduces interest rates as the risk to the lender is dramatically reduced.

Your personal credit history will play a dramatic role in securing a business acquisition loan, especially if you are purchasing an existing business as a private individual. Remember that how you conduct yourself privately impacts your business. Good personal credit history can make it easier for the loan providers to make a decision and approve your application.

The final tip is to ensure that you have any documents ready that may be required during the business loan acquisition application to reduce the risk of unwelcome delays. Check with the banker before your meeting to identify what documents they may require. This will probably include your documents, bank statements, and identification along with the bank statements, business plan and profit and loss statements of the business you wish to acquire.

About Us: CalPrivate Bank, formerly San Diego Private Bank, is a leading private bank, serving clients throughout Southern California in the United States. This very well-established bank services high net worth individuals and businesses of all sizes. CalPrivate Bank's focus is to provide a Distinctly Different Banking Experience through unparalleled service and creative funding solutions for individuals and businesses with complex financial needs. They offer a wide array of financial services, including checking, savings, time deposit accounts, treasury management, and related tools. To find out more, visit www.calprivate.bank

#loans for business acquisition coronado #loans for business acquisition in coronado #san diego commercial banks #san diego commercial banking

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talhaghafoor2019-blog · 6 years ago

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The Man Who Broke the Music Business

One Saturday in 1994, Bennie Lydell Glover, a temporary employee at the PolyGram compact-disk manufacturing plant in Kings Mountain, North Carolina, went to a party at the house of a co-worker. He was angling for a permanent position, and the party was a chance to network with his managers. Late in the evening, the host put on music to get people dancing. Glover, a fixture at clubs in Charlotte, an hour away, had never heard any of the songs before, even though many of them were by artists whose work he enjoyed.

Later, Glover realized that the host had been d.j.’ing with music that had been smuggled out of the plant. He was surprised. Plant policy required all permanent employees to sign a “No Theft Tolerated” agreement. He knew that the plant managers were concerned about leaking, and he’d heard of employees being arrested for embezzling inventory. But at the party, even in front of the supervisors, it seemed clear that the disks had been getting out. In time, Glover became aware of a far-reaching underground trade in pre-release disks. “We’d run them in the plant in the week, and they’d have them in the flea markets on the weekend,” he said. “It was a real leaky plant.”

The factory sat on a hundred acres of woodland and had more than three hundred thousand square feet of floor space. It ran shifts around the clock, every day of the year. New albums were released in record stores on Tuesdays, but they needed to be pressed, packaged, and shrink-wrapped weeks in advance. On a busy day, the plant produced a quarter of a million CDs. Its lineage was distinguished: PolyGram was a division of the Dutch consumer-electronics giant Philips, the co-inventor of the CD.

One of Glover’s co-workers was Tony Dockery, another temporary hire. The two worked opposite ends of the shrink-wrapping machine, twelve feet apart. Glover was a “dropper”: he fed the packaged disks into the machine. Dockery was a “boxer”: he took the shrink-wrapped jewel cases and stacked them in a cardboard box for shipping. The jobs paid about ten dollars an hour.

Glover and Dockery soon became friends. They lived in the same town, Shelby, and Glover started giving Dockery a ride to work. They liked the same music. They made the same money. Most important, they were both fascinated by computers, an unusual interest for two working-class Carolinians in the early nineties—the average Shelbyite was more likely to own a hunting rifle than a PC. Glover’s father had been a mechanic, and his grandfather, a farmer, had moonlighted as a television repairman. In 1989, when Glover was fifteen, he went to Sears and bought his first computer: a twenty-three-hundred-dollar PC clone with a one-color monitor. His mother co-signed as the guarantor on the layaway plan. Tinkering with the machine, Glover developed an expertise in hardware assembly, and began to earn money fixing the computers of his friends and neighbors.

By the time of the party, he’d begun to experiment with the nascent culture of the Internet, exploring bulletin-board systems and America Online. Soon, Glover also purchased a CD burner, one of the first produced for home consumers. It cost around six hundred dollars. He began to make mixtapes of the music he already owned, and sold them to friends. “There was a lot of people down my way selling shoes, pocketbooks, CDs, movies, and fencing stolen stuff,” he told me. “I didn’t think they’d ever look at me for what I was doing.” But the burner took forty minutes to make a single copy, and business was slow.

Glover began to consider selling leaked CDs from the plant. He knew a couple of employees who were smuggling them out, and a pre-release album from a hot artist, copied to a blank disk, would be valuable. (Indeed, recording executives at the time saw this as a key business risk.) But PolyGram’s offerings just weren’t that good. The company had a dominant position in adult contemporary, but the kind of people who bought knockoff CDs from the trunk of a car didn’t want Bryan Adams and Sheryl Crow. They wanted Jay Z, and the plant didn’t have it.

By 1996, Glover, who went by Dell, had a permanent job at the plant, with higher pay, benefits, and the possibility of more overtime. He began working double shifts, volunteering for every available slot. “We wouldn’t allow him to work more than six consecutive days,” Robert Buchanan, one of his former managers, said. “But he would try.”

The overtime earnings funded new purchases. In the fall of 1996, Hughes Network Systems introduced the country’s first consumer-grade broadband satellite Internet access. Glover and Dockery signed up immediately. The service offered download speeds of up to four hundred kilobits per second, seven times that of even the best dial-up modem.

Glover left AOL behind. He soon found that the real action was in the chat rooms. Internet Relay Chat networks tended to be noncommercial, hosted by universities and private individuals and not answerable to corporate standards of online conduct. You created a username and joined a channel, indicated by a pound sign: #politics, #sex, #computers. Glover and Dockery became chat addicts; sometimes, even after spending the entire day together, they hung out in the same chat channel after work. On IRC, Dockery was St. James, or, sometimes, Jah Jah. And Glover was ADEG, or, less frequently, Darkman. Glover did not have a passport and hardly ever left the South, but IRC gave him the opportunity to interact with strangers from all over the world.

Also, he could share files. Online, pirated media files were known as “warez,” from “software,” and were distributed through a subculture dating back to at least 1980, which called itself the Warez Scene. The Scene was organized in loosely affiliated digital crews, which raced one another to be the first to put new material on the IRC channel. Software was often available on the same day that it was officially released. Sometimes it was even possible, by hacking company servers, or through an employee, to pirate a piece of software before it was available in stores. The ability to regularly source pre-release leaks earned one the ultimate accolade in digital piracy: to be among the “elite.”

By the mid-nineties, the Scene had moved beyond software piracy into magazines, pornography, pictures, and even fonts. In 1996, a Scene member with the screen name NetFraCk started a new crew, the world’s first MP3 piracy group: Compress ’Da Audio, or CDA, which used the newly available MP3 standard, a format that could shrink music files by more than ninety per cent. On August 10, 1996, CDA released to IRC the Scene’s first “officially” pirated MP3: “Until It Sleeps,” by Metallica. Within weeks, there were numerous rival crews and thousands of pirated songs.

Glover’s first visit to an MP3-trading chat channel came shortly afterward. He wasn’t sure what an MP3 was or who was making the files. He simply downloaded software for an MP3 player, and put in requests for the bots of the channel to serve him files. A few minutes later, he had a small library of songs on his hard drive.

One of the songs was Tupac Shakur’s “California Love,” the hit single that had become inescapable after Tupac’s death, several weeks earlier, in September, 1996. Glover loved Tupac, and when his album “All Eyez on Me” came through the PolyGram plant, in a special distribution deal with Interscope Records, he had even shrink-wrapped some of the disks. Now he played the MP3 of “California Love.” Roger Troutman’s talk-box intro came rattling through his computer speakers, followed by Dr. Dre’s looped reworking of the piano hook from Joe Cocker’s “Woman to Woman.” Then came Tupac’s voice, compressed and digitized from beyond the grave, sounding exactly as it did on the CD.

At work, Glover manufactured CDs for mass consumption. At home, he had spent more than two thousand dollars on burners and other hardware to produce them individually. His livelihood depended on continued demand for the product. But Glover had to wonder: if the MP3 could reproduce Tupac at one-eleventh the bandwidth, and if Tupac could then be distributed, free, on the Internet, what the hell was the point of a compact disk?

In 1998, Seagram Company announced that it was purchasing PolyGram from Philips and merging it with the Universal Music Group. The deal comprised the global pressing and distribution network, including the Kings Mountain plant. The employees were nervous, but management told them not to worry; the plant wasn’t shutting down—it was expanding. The music industry was enjoying a period of unmatched profitability, charging more than fourteen dollars for a CD that cost less than two dollars to manufacture. The executives at Universal thought that this state of affairs was likely to continue. In the prospectus that they filed for the PolyGram acquisition, they did not mention the MP3 among the anticipated threats to the business.

The production lines were upgraded to manufacture half a million CDs a day. There were more shifts, more overtime hours, and more music. Universal, it seemed, had cornered the market on rap. Jay Z, Eminem, Dr. Dre, Cash Money—Glover packaged the albums himself.

Six months after the merger, Shawn Fanning, an eighteen-year-old college dropout from Northeastern University, débuted a public file-sharing platform he had invented called Napster. Fanning had spent his adolescence in the same IRC underground as Glover and Dockery, and was struck by the inefficiency of its distribution methods. Napster replaced IRC bots with a centralized “peer-to-peer” server that allowed people to swap files directly. Within a year, the service had ten million users.

Before Napster, a leaked album had caused only localized damage. Now it was a catastrophe. Universal rolled out its albums with heavy promotion and expensive marketing blitzes: videos, radio spots, television campaigns, and appearances on late-night TV. The availability of pre-release music on the Internet interfered with this schedule, upsetting months of work by publicity teams and leaving the artists feeling betrayed.

Even before Napster’s launch, the plant had begun to implement a new anti-theft regimen. Steve Van Buren, who managed security at the plant, had been pushing for better safeguards since before the Universal merger, and he now instituted a system of randomized searches. Each employee was required to swipe a magnetized identification card upon leaving the plant. Most of the time, a green light appeared and the employee could leave. Occasionally, though, the card triggered a red light, and the employee was made to stand in place as a security guard ran a wand over his body, searching for the thin aluminum coating of a compact disk.

Van Buren succeeded in getting some of the flea-market bootleggers shut down. Plant management had heard of the technician who had been d.j.’ing parties with pre-release music, and Van Buren requested that he take a lie-detector test. The technician failed, and was fired. Even so, Glover’s contacts at the plant could still reliably get leaked albums. One had even sneaked out an entire manufacturing spindle of three hundred disks, and was selling them for five dollars each. But this was an exclusive trade, and only select employees knew who was engaged in it.

By this time, Glover had built a tower of seven CD burners, which stood next to his computer. He could produce about thirty copies an hour, which made bootlegging more profitable, so he scoured the other underground warez networks for material to sell: PlayStation games, PC applications, MP3 files—anything that could be burned to a disk and sold for a few dollars.

He focussed especially on movies, which fetched five dollars each. New compression technology could shrink a feature film to fit on a single CD. The video quality was poor, but business was brisk, and soon he was buying blank CDs in bulk. He bought a label printer to catalogue his product, and a color printer to make mockups of movie posters. He filled a black nylon binder with images of the posters, and used it as a sales catalogue. He kept his inventory in the trunk of his Jeep and sold the movies out of his car.

Glover still considered it too risky to sell leaked CDs from the plant. Nevertheless, he enjoyed keeping up with current music, and the smugglers welcomed him as a customer. He was a permanent employee with no rap sheet and an interest in technology, but outside the plant he had a reputation as a roughrider. He owned a Japanese street-racing motorcycle, which he took to Black Bike Week, in Myrtle Beach. He had owned several handguns, and on his forearm was a tattoo of the Grim Reaper, walking a pit bull on a chain.

His co-worker Dockery, by contrast, was a clean-cut churchgoer, and too square for the smugglers. But he had started bootlegging, too, and he pestered Glover to supply him with leaked CDs. In addition, Dockery kept finding files online that Glover couldn’t: movies that were still in theatres, PlayStation games that weren’t scheduled to be released for months.

For a while, Glover traded leaked disks for Dockery’s software and movies. But eventually he grew tired of acting as Dockery’s courier, and asked why the disks were so valuable. Dockery invited him to his house one night, where he outlined the basics of the warez underworld. For the past year or so, he’d been uploading the pre-release leaks Glover gave him to a shadowy network of online enthusiasts. This was the Scene, and Dockery, on IRC, had joined one of its most élite groups: Rabid Neurosis, or RNS. (Dockery declined to comment for this story.)

Instead of pirating individual songs, RNS was pirating entire albums, bringing the pre-release mentality from software to music. The goal was to beat the official release date whenever possible, and that meant a campaign of infiltration against the major labels.

The leader of RNS went by the handle Kali. He was a master of surveillance and infiltration, the Karla of music piracy. It seemed that he spent hours each week researching the confusing web of corporate acquisitions and pressing agreements that determined where and when CDs would be manufactured. With this information, he built a network of moles who, in the next eight years, managed to burrow into the supply chains of every major music label. “This stuff had to be his life, because he knew about all the release dates,” Glover said.

Dockery—known to Kali as St. James—was his first big break. According to court documents, Dockery encountered several members of RNS in a chat room, including Kali. Here he learned of the group’s desire for pre-release tracks. He soon joined RNS and became one of its best sources. But, when his family life began to interfere, he proposed that Glover take his place.

Glover hesitated: what was in it for him?

He learned that Kali was a gatekeeper to the secret “topsite” servers that formed the backbone of the Scene. The ultra-fast servers contained the best pirated media of every form. The Scene’s servers were well hidden, and log-ons were permitted only from pre-approved Internet addresses. The Scene controlled its inventory as tightly as Universal did—maybe tighter.

If Glover was willing to upload smuggled CDs from the plant to Kali, he’d be given access to these topsites, and he’d never have to pay for media again. He could hear the new Outkast album weeks before anyone else did. He could play Madden NFL on his PlayStation a month before it became available in stores. And he could get the same movies that had allowed Dockery to beat him as a bootlegger.

Dockery arranged a chat-room session for Glover and Kali, and the two exchanged cell-phone numbers. In their first call, Glover mostly just listened. Kali spoke animatedly, in a patois of geekspeak, California mellow, and slang borrowed from West Coast rap. He loved computers, but he also loved hip-hop, and he knew all the beefs, all the disses, and all the details of the feuds among artists on different labels. He also knew that, in the aftermath of the murders of Tupac and the Notorious B.I.G., those feuds were dying down. Def Jam, Cash Money, and Interscope had all signed distribution deals with Universal. Kali’s research kept taking him back to the Kings Mountain plant.

He and Glover hashed out the details of their partnership. Kali would track the release dates of upcoming albums and tell Glover which material he was interested in. Glover would acquire smuggled CDs from the plant. He would then rip the leaked CDs to the MP3 format and, using encrypted channels, send them to Kali’s home computer. Kali packaged the MP3s according to the Scene’s exacting technical standards and released them to its topsites.

The deal sounded good to Glover, but to fulfill Kali’s requests he’d have to get new albums from the plant much more frequently, three or four times a week. This would be difficult. In addition to the randomized search gantlet, a fence had been erected around the parking lot. Emergency exits set off alarms. Laptop computers were forbidden in the plant, as were stereos, portable players, boom boxes, and anything else that might accept and read a CD.

Every once in a while, a marquee release would come through—“The Eminem Show,” say, or Nelly’s “Country Grammar.” It arrived in a limousine with tinted windows, carried from the production studio in a briefcase by a courier who never let the master tape out of his sight. When one of these albums was pressed, Van Buren ordered wandings for every employee in the plant.

The CD-pressing machines were digitally controlled, and they generated error-proof records of their output. The shrink-wrapped disks were logged with an automated bar-code scanner. The plant’s management generated a report, tracking which CDs had been printed and which had actually shipped, and any discrepancy had to be accounted for. The plant might now press more than half a million copies of a popular album in a day, but the inventory could be tracked at the level of the individual disk.

Employees like Glover, who worked on the packaging line, had the upper hand when it came to smuggling CDs. Farther down the line and the disks would be bar-coded and logged in inventory; farther up and they wouldn’t have access to the final product. By this time, the packaging line was becoming increasingly complex. The chief advantage of the compact disk over the MP3 was the satisfaction of owning a physical object. Universal was really selling packaging. Album art had become ornate. The disks were gold or fluorescent, the jewel cases were opaque blue or purple, and the album sleeves were thick booklets printed on high-quality paper. Dozens, sometimes hundreds, of extra disks were now being printed for every run, to be used as replacements in case any were damaged during packaging.

At the end of each shift, employees put the overstock disks into scrap bins. These scrap bins were later taken to a plastics grinder, where the disks were destroyed. Over the years, Glover had dumped hundreds of perfectly good disks into the bins, and he knew that the grinder had no memory and generated no records. If there were twenty-four disks and only twenty-three made it into the grinder’s feed slot, no one in accounting would know.

So, on the way from the conveyor belt to the grinder, an employee could take off his surgical glove while holding a disk. He could wrap the glove around the disk and tie it off. He could then hide the disk, leaving everything else to be destroyed. At the end of his shift, he could return and grab the disk.

That still left the security guards. But here, too, there were options. One involved belt buckles. They were the signature fashion accessories of small-town North Carolina. Many people at the plant wore them—big oval medallions with the Stars and Bars on them. Gilt-leaf plates embroidered with fake diamonds that spelled out the word “boss.” Western-themed cowboy buckles with longhorn skulls and gold trim. The buckles always set off the wand, but the guards wouldn’t ask anyone to take them off.

Hide the disk inside the glove; hide the glove inside a machine; retrieve the glove and tuck it into your waistband; cinch your belt so tight it hurts your bladder; position your oversized belt buckle in front of the disk; cross your fingers as you shuffle toward the turnstile; and, if you get flagged, play it very cool when you set off the wand.

From 2001 on, Glover was the world’s leading leaker of pre-release music. He claims that he never smuggled the CDs himself. Instead, he tapped a network of low-paid temporary employees, offering cash or movies for leaked disks. The handoffs took place at gas stations and convenience stores far from the plant. Before long, Glover earned a promotion, which enabled him to schedule the shifts on the packaging line. If a prized release came through the plant, he had the power to ensure that his man was there.

The pattern of label consolidation had led to a stream of hits at Universal’s factory. Weeks before anyone else, Glover had the hottest albums of the year. He ripped the albums on his PC with software that Kali had sent, and then uploaded the files to him. The two made weekly phone calls to schedule the timing of the leaks.

Glover left the distribution to Kali. Unlike many Scene members, he didn’t participate in technical discussions about the relative merits of constant and variable bit rates. He listened to the CDs, but he often grew bored after only one or two plays. When he was done with a disk, he stashed it in a black duffelbag in his bedroom closet.

By 2002, the duffelbag held more than five hundred disks, including nearly every major release to have come through the Kings Mountain plant. Glover leaked Lil Wayne’s “500 Degreez” and Jay Z’s “The Blueprint.” He leaked Queens of the Stone Age’s “Rated R” and 3 Doors Down’s “Away from the Sun.” He leaked Björk. He leaked Ashanti. He leaked Ja Rule. He leaked Nelly. He leaked Blink-182’s “Take Off Your Pants and Jacket.”

Glover didn’t have access to big-tent mom-rock artists like Celine Dion and Cher. But his albums tended to be the most sought after in the demographic that mattered: generation Eminem. The typical Scene participant was a computer-obsessed male, between the ages of fifteen and thirty. Kali—whose favorite artists included Ludacris, Jay Z, and Dr. Dre—was the perfect example. For Glover, the high point of 2002 came in May, when he leaked “The Eminem Show” twenty-five days before its official release. The leak made its way from the Scene’s topsites to public peer-to-peer networks within hours, and, even though the album became the year’s best-seller, Eminem was forced to bump up its release date.

Every Scene release was accompanied by an NFO (from “info”), an ASCII-art text file that served as the releasing group’s signature tag. NFO files were a way for Scene crews to brag about their scores, shout out important associates, and advertise to potential recruits. Rabid Neurosis NFOs were framed by psychedelic smoke trails emanating from a marijuana leaf at the bottom:

The most important line was the rip date, which emphasized the timeliness of the leak. Kali drafted many of the release notes himself, in a sarcastic tone, often taunting rival releasing groups. “The Eminem Show” NFO ended with a question: “Who else did you think would get this?”

Who was Kali? Glover wasn’t sure, but as their relationship evolved he picked up some clues. Kali’s 818 area code was from the Los Angeles region. The voice in the background that Glover sometimes heard on the calls sounded as if it might be Kali’s mother. There was also the marijuana leaf that served as RNS’s official emblem: Glover thought he could tell when Kali was high. Most striking was the exaggerated hip-hop swagger that Kali affected. He only ever referred to Glover as “D.” No one else called him that.

“He would try to talk, like, with a slang,” Glover told me. “Kinda cool, kinda hard.” Glover suspected that Kali wasn’t black, though he sensed that he probably wasn’t white, either.

Glover was not permitted to interact with the other members of the group, not even the one who served as the “ripping coördinator.” His online handle was RST, and his name was Simon Tai. A second-generation Chinese immigrant, Tai was brought up in Southern California before arriving at the University of Pennsylvania, in 1997. As a freshman with a T1 Internet connection, he’d been in awe of RNS. After hanging around in the chat channel for nearly a year, he was asked to join.

He also applied for a slot as a d.j. at the school’s radio station. For two years, Kali cultivated Tai’s interest in rap music and told him to make connections with the promotional people at various labels. In 2000, Tai, now a senior at Penn, was promoted to music director at the station and given a key to the office, where he had access to the station’s promo disks. Every day, he checked the station’s mail; when something good came in, he raced back to his dorm room to upload it. Beating rival Scene crews was sometimes a matter of seconds.

Tai scored two major leaks that year, Ludacris’s “Back for the First Time” and Outkast’s “Stankonia.” With his Scene credentials established, for the next two years Tai managed RNS’s roster of leakers. Along with Kali, he tracked the major labels’ distribution schedules and directed his sources to keep an eye out for certain albums.

To find the albums, RNS had international contacts at every level, who went by anonymous online handles. According to court testimony and interviews with Scene members, there were the radio d.j.s: BiDi, in the South; DJ Rhino, in the Midwest. There was the British music journalist who went by KSD, whose greatest coup was 50 Cent’s “lost” début, “Power of the Dollar,” scheduled for release in 2000 by Columbia, but cancelled after the rapper was shot. There was DaLive1, a house-music aficionado who lived in New York City, and used his connections inside Viacom to source leaks from Black Entertainment Television and MTV. There were two Italian brothers sharing the handle Incuboy, who claimed to run a music-promotion business and had reliable access to releases from Sony and Bertelsmann. In Japan, albums sometimes launched a week or two ahead of the U.S. release date, often with bonus tracks, and Tai relied on kewl21 and x23 to source them. Finally, there were the Tuesday rippers, like Aflex and Ziggy, who spent their own money to buy music legally the day that it appeared in stores.

The only leaker Tai didn’t manage was Glover—Kali kept his existence a secret, even from the other members of the group. Glover resented the isolation, but being Kali’s private source was worth the trouble. At any given time, global Scene membership amounted to no more than a couple of thousand people. Kali was close to the top. A typical Scene pirate, bribing record-store employees and cracking software, might be granted access to three or four topsites. By 2002, Glover had access to two dozen.

His contacts made him an incomparable movie bootlegger. He built another tower to replace the first, with burners for DVDs instead of CDs. He upgraded his Internet connection from satellite to cable. He downloaded the past few years’ most popular movies from the topsites, then burned a couple of dozen copies of each. Expanding his customer base beyond his co-workers, he started meeting people in the parking lot of a nearby convenience store. Around Cleveland County, Glover became known as “the movie man.” For five dollars, he would sell you a DVD of “Spider-Man” weeks before it was available at Blockbuster, sometimes even while it was still in theatres.

Glover started selling between two hundred and three hundred DVDs a week, frequently making more than a thousand dollars in cash. He built a second PC and another burn tower to keep up with demand. He knew that this was illegal, but he felt certain that he had insulated himself from suspicion. All transactions were hand to hand, no records were kept, and he never deposited his earnings in the bank. He didn’t sell music, DVDs weren’t made at the Universal plant, and he was sure that his customers had never heard of the Scene.

Scene culture drew a distinction between online file-sharing and for-profit bootlegging. The topsites were seen as a morally permissible system of trade. Using them for the physical bootlegging of media, by contrast, was viewed as a serious breach of ethical principles. Worse, it was known to attract the attention of the law. Kali put the word out that anyone suspected of selling material from the topsites would be kicked out of the group. Thus, for most participants membership in RNS was a money-losing proposition. They spent hundreds of dollars a year on compact disks, and thousands on servers and broadband, and got only thrills in return.

Glover was an exception: he knew that he wouldn’t be kicked out of anything. With Universal’s rap acts ascending, Kali needed Glover.

Napster lasted barely two years, in its original incarnation, but at its peak the service claimed more than seventy million registered accounts, with users sharing more than two billion MP3 files a month. Music piracy became to the early two-thousands what drug experimentation had been to the late nineteen-sixties: a generation-wide flouting of both social norms and the existing body of law, with little thought for consequences. In late 1999, the Recording Industry Association of America, the music business’s trade and lobbying group, sued Napster, claiming that the company was facilitating copyright infringement on an unprecedented scale. Napster lost the lawsuit, appealed, and lost again. In July, 2001, facing a court order to stop enabling the trade of copyrighted files, Napster shut down its service.

That legal victory achieved little. Former users of Napster saw Internet file-sharing as an undeniable prerogative, and instead of returning to the record stores they embraced gray-market copycats of Napster, like Kazaa and Limewire. By 2003, global recording-industry revenues had fallen from their millennial peak by more than fifteen per cent. The losing streak continued for the next decade.

The R.I.A.A. tried to reassert the primacy of the industry’s copyrights. But civil suits against the peer-to-peer services took years to move through the appeals courts, and the R.I.A.A.’s policy of suing individual file-sharers was a public-relations disaster. To some at the music labels, Congress seemed disinclined to help. Harvey Geller, Universal’s chief litigator, spent years futilely petitioning legislators for better enforcement of copyright law. “Politicians pander to their constituents,” Geller said. “And there were more constituents stealing music than constituents selling it.”

Leaking was viewed differently. No one was advocating for the smuggler. So album leakers adhered to a rigid code of silence. Scene groups were the source for almost all of the new releases available on the peer-to-peer networks, but most file-sharers didn’t even suspect their existence. Civil litigation against such actors was impossible: unlike Kazaa, RNS did not have a business address to which a subpoena could be sent. Only criminal prosecutions would work.

In January, 2003, Glover leaked 50 Cent’s official début, “Get Rich or Die Tryin’,” to Kali. It became the bestselling U.S. album of the year. He followed that up with albums from Jay Z, G Unit, Mary J. Blige, Big Tymers, and Ludacris, and then began the following year with Kanye West’s début, “The College Dropout.” After a scare, in which Glover worried that a release might be traced to him, the timing of leaks became more and more a point of focus. Glover’s leaks began to hit the Internet about two weeks before the CDs were due in stores, neither so early that the leak could be traced to the plant nor so late that RNS risked being bested by other pirates.

The group’s ascendancy came during a period of heightened scrutiny by law enforcement. In April, 2004, the F.B.I. and foreign law-enforcement agencies conducted coördinated raids in eleven countries, identifying more than a hundred pirates. The R.I.A.A.’s anti-piracy unit was staffed with investigators, who hung around the chat rooms of the Scene and learned its language. They tried to infiltrate the Scene, and tracked the leaked material and its dissemination throughout the Internet. Their research began to point them to one increasingly powerful crew, RNS, and they shared their findings with the F.B.I.

Journalists poked around the fringes of the Scene, too. A December, 2004, article in Rolling Stone, by Bill Werde, introduced RNS to the general public. A photo caption in the piece read, “In a four-day period, one group leaked CDs by U2, Eminem and Destiny’s Child.” The article quoted a source close to Eminem: “The rapper’s camp believes Encore was leaked when it went to the distributors, who deliver albums from the pressing plants to chain stores such as Wal-Mart.”

The information was wrong. The CD hadn’t come from the distributor; it had come from Glover. Three days later, he leaked the U2 album “How to Dismantle an Atomic Bomb.” (Destiny’s Child’s “Destiny Fulfilled” had come from elsewhere.) Facing increased attention, Kali decided to strip the group’s NFO files of potentially identifying information; from now on, they would consist only of the date that the album was ripped and the date that it was due in stores.

Kali ordered the RNS chat channel moved from the public IRC servers to a private computer in Hawaii. He instructed members to communicate only through this channel, which was encrypted, banning methods like AOL Instant Messenger. And he reasserted the prohibition against physical bootlegging. But Glover refused to follow the Scene’s rules. He used I.M. whenever he felt like it, and kept his duffelbag of leaked CDs in his closet. He wasn’t as interested in music anymore, or in earning Brownie points from some Internet group. All he cared about was topsites. The more he could join, the more leaked movies he could get, and the more DVDs he could sell.

In a good week, Glover on his own might sell three hundred disks, and make fifteen hundred dollars in cash. Now he began to branch out. At the beginning of each week, he dropped off four hundred disks at each of three trusted barbershops in Shelby. At the end of the week, he returned to collect his share of the profits—roughly six hundred dollars a week per shop. His best salesman made more selling bootleg movies than he did cutting hair. Seeing the profits Glover was earning, other bootleggers began moving into his territory. But Glover retained a pronounced edge. “I had access to so much stuff,” he said. “No one on the street could beat me.”

Many of Glover’s best customers worked at the plant, and for those he trusted most he devised an even better deal. Rather than paying five dollars per movie, for twenty dollars a month you could buy an unlimited subscription—and you didn’t even need the disks. Glover had set up his own topsite, and once you’d bought an account you could download anything you wanted. There were current DVDs, plus the latest copies of games, music, software, and more. At the time, video on demand was the technology of the future, but, if you knew Glover, it had already arrived. He was running a private Netflix out of his house.

Glover began to make extravagant purchases. He bought game consoles and presents for his friends and his family. He bought a new off-road quad bike, then a second. He bought a used Lincoln Navigator, and upgraded it with xenon headlights, a hood scoop, and an expensive stereo. For years, rappers had favored rims called “spinners”—metal hubcaps on independent bearings, which continued rotating even when the car had stopped. Looking to switch up the game, Glover bought “floaters”: the weighted rims stood still even when the wheels were moving.

In 2005, RNS leaked four of the five best-selling albums in the U.S. The No. 1 and No. 2 slots were occupied by Mariah Carey’s “The Emancipation of Mimi” and 50 Cent’s “The Massacre,” and Glover had leaked them both. RNS leaks quickly made their way onto public file-sharing networks, and, within forty-eight hours of appearing on the topsites, copies of the smuggled CDs could be found on iPods across the globe.

By the end of 2006, Glover had leaked nearly two thousand CDs. He was no longer afraid of getting caught. Universal had sold its compact-disk-manufacturing holdings, which allowed the company to watch the deterioration of physical media from a comfortable distance. Although still on contract to print music for Universal, the new ownership treated the plant like a wasting asset, and stopped investing in maintenance. The musicians signed to Universal complained constantly of album leaks, but the label’s supply chain was as insecure as ever.

Although RNS was still wildly successful, many of its members were tiring of its activities. When the group started, in 1996, most of the participants were teen-agers. Now they were approaching thirty, and the glamour was fading. They outgrew their jobs at college radio stations or found more lucrative fields than music journalism, and lost their access to advance albums.

Listening to hundreds of new releases a year could lead to a kind of cynicism. The musicians all used Auto-Tune to pitch-correct their voices; the songwriters all copied the last big hit; the same producers worked on every track. Glover didn’t connect with rap in the way that he used to. Tony Dockery had been born again, and listened primarily to gospel. Simon Tai still hung around the chat channel, but he hadn’t leaked an album in years. Even Kali seemed a little bored.

Glover had been thinking about retiring from the Scene. He started leaking when he was in his mid-twenties. He was now thirty-two. He had worn the same haircut for ten years, and dressed in the same screen-print T-shirts and bluejeans, but his perception of himself was changing. He didn’t remember why he had been so attracted to street bikes, or why he’d felt it necessary to own a handgun. He found his Grim Reaper tattoo impossibly stupid.

Glover’s DVD profits began to decline. Leaks from the Scene were now publicly available within seconds of being posted to the topsites, and even those who were technologically challenged could figure out how to download them. Within a couple of years, Glover’s income from bootlegging dropped to a few hundred dollars a week.

Glover began to make his feelings known to Kali. “We’ve been doing this shit for a long time,” he said in a phone call. “We never got caught. Maybe it’s time to stop.” Surprisingly, Kali agreed. Though the plant’s security was increasingly loose, the risks for leakers were greater. Between foreign law enforcement, the F.B.I., and the R.I.A.A.’s internal anti-piracy squads, there were multiple teams of investigators working to catch them. Kali understood the lengths to which law enforcement was willing to go. Some of the targets of the 2004 raids were his friends, and he had visited them in federal prison.

Then, in January of 2007, one of RNS’s topsites mysteriously vanished. The server, which was hosted in Hungary, began refusing all connections, and the company that owned it didn’t respond. Kali ordered the group shut down. RNS’s final leak, released on January 19, 2007, was Fall Out Boy’s “Infinity on High,” sourced from inside the plant by Glover.

Dozens of former members flooded into the chat channel to pay their respects. Dockery, logging in as St. James, started changing his handle, over and over, in tribute to former members. “Even if we quit now, I’ll think about it always,” Kali wrote. “I don’t know about you guys, but why keep taking a chance.” Soon afterward, the RNS channel was closed forever.

Within months, Glover was once again leaking CDs from the plant, to a guy he knew as RickOne, a leader in a Scene releasing group called OSC. Though this was no longer as profitable for Glover, his desire for free media was undiminished. “To know that I could be playing Madden two months before the stores even had it—to me, that was heaven,” Glover told me.

Kali wasn’t able to give up, either. After RNS was shut down, he had continued sourcing and leaking albums, attributing the leaks to nonsense three-letter acronyms that bewildered even Scene veterans. In the summer of 2007, he contacted Glover and told him that there were two more leaks they had to have: new albums by 50 Cent and Kanye West, both with the same release date. The rappers were competing over whose album would sell more copies, and the feud had made the cover of Rolling Stone. 50 Cent said that if he didn’t win he would retire.

But, as Kali probably knew better than anyone, both artists were distributed and promoted by Universal. What looked like an old-school hip-hop beef was actually a publicity stunt designed to boost sales, and Kali was determined to get involved. RNS had leaked every release the artists had ever put out, and going after 50’s “Curtis” and Kanye’s “Graduation” was a matter of tradition.

The official release date was September 11, 2007, but the albums were first pressed at the plant in mid-August. Glover obtained them through his smuggling network and listened to both. “Graduation” was an ambitious marriage of pop rap and high art, sampling widely from sources as diverse as krautrock and French house music, with cover art by Takashi Murakami. “Curtis” played it safer, favoring hard-thumping club music anchored by hits like “I Get Money” and “Ayo Technology.”

Glover enjoyed both albums, but he was in an unusual position: he had the power to influence the outcome of this feud. If he leaked “Graduation” and held on to “Curtis,” Kanye might sell fewer records. But if he leaked “Curtis” and held on to “Graduation”—well, he might make 50 Cent retire.

Glover decided that he would release one album through Kali and the other through RickOne. He offered RickOne the Kanye West album. On August 30, 2007, “Graduation” hit the topsites of the Scene, with OSC taking credit for the leak. Within hours, an anguished Kali called Glover, who told him that he wasn’t sure how it had happened. He said that he hadn’t seen the album at the plant yet. But, he said, “Curtis” had just arrived. On September 4, 2007, Kali released “Curtis” to the Scene.

Universal officially released the albums on Tuesday, September 11th. Despite the leaks, both sold well. “Curtis” sold almost seven hundred thousand copies in its first week, “Graduation” nearly a million. Kanye won the sales contest, even though Glover had leaked his album first. He’d just run a controlled experiment on the effects of leaking on music sales, an experiment that suggested that, at least in this case, the album that was leaked first actually did better. But Glover was happy with the outcome. “Graduation” had grown on him. He liked Kanye’s album, and felt that he deserved his victory. And 50 didn’t retire after all.

On Wednesday, September 12th, Glover went to work at 7 P.M. He had a double shift lined up, lasting through the night. He finished at 7 A.M. As he was preparing to leave, a co-worker pulled him aside. “There’s someone out there hanging around your truck,” he said.

In the dawn light, Glover saw three men in the parking lot. As he approached his truck, he pulled the key fob out of his pocket. The men stared at him but didn’t move. Then he pressed the remote, the truck chirped, and the men drew their guns and told him to put his hands in the air.

The men were from the Cleveland County sheriff’s office. They informed Glover that the F.B.I. was currently searching his house; they had been sent to retrieve him.

In his front yard, half a dozen F.B.I. agents in bulletproof vests were milling around. Glover’s door had been forced open, and agents were carting away the thousands of dollars’ worth of technology purchases he’d made over the years. He found an F.B.I. special agent named Peter Vu waiting for him inside.

Vu, a veteran of the bureau’s computer-crimes division, had spent years searching for the source of the leaks that were crippling the music industry. His efforts had finally led him to this unremarkable ranch house in small-town North Carolina. He introduced himself, then began pressing Glover for information. Vu was particularly interested in Kali, and Glover gave him the scattered details he had picked up over the years. But Vu wanted Kali’s real name, and, although Glover had talked on the phone with Kali hundreds of times, he didn’t know it.

The next day, Kali called Glover. His voice was agitated and nervous.

“It’s me,” Kali said. “Listen, I think the Feds might be onto us.”

Vu had anticipated the possibility of such a call and had instructed Glover to act as if nothing had happened. Glover now had a choice to make. He could play dumb, and further the investigation of Kali. Or he could warn him off.

“You’re too late,” Glover said. “They hit me yesterday. Shut it down.”

��O.K., I got you,” Kali said. Then he said, “I appreciate it,” and hung up.

In the next few months, the F.B.I. made numerous raids, picking up RickOne, of OSC, and several members of RNS. They also found the man they believed to be Kali, the man who had cost the music industry tens of millions of dollars and transformed RNS into the most sophisticated piracy operation in history: Adil R. Cassim, a twenty-nine-year-old Indian-American I.T. worker who smoked weed, listened to rap music, and lived at home in the suburbs of Los Angeles with his mother.

On September 9, 2009, Glover arrived at the federal courthouse in Alexandria, Virginia, and was indicted on one count of felony conspiracy to commit copyright infringement. At his indictment, Glover saw Adil Cassim for the first time. Cassim was clean-shaven and wore his hair cropped short. He was stocky, with a noticeable paunch, and was dressed in a black suit.

A month later, Glover pleaded guilty to the charge. The decision to plead was a difficult one, but Glover thought that his chances of acquittal were poor. In exchange for sentencing leniency, he agreed to testify against Cassim. The F.B.I. needed the help; the agency had thoroughly searched Cassim’s residence, and a forensic team had inspected his laptop, but they had found no pre-release music. Cassim did not admit to being a member of RNS, though two pieces of physical evidence suggested a connection to the group. One was a burned compact disk taken from his bedroom, containing a copy of Cassim’s résumé, on which, in the “Properties” tab, Microsoft Word had automatically included the name of the document’s author: Kali. The second was Cassim’s mobile phone, which contained Glover’s cell number. The contact’s name was listed only as “D.”

Cassim’s trial began in March, 2010, and lasted for five days. Glover testified, as did several other confessed members of RNS, along with a number of F.B.I. agents and technical experts. In the previous ten years, the federal government had prosecuted hundreds of Scene participants, and had won nearly every case it had brought. But on March 19, 2010, after a short period of deliberation, a jury found Cassim not guilty.

After the trial, Glover began to regret his decision to testify and to plead guilty. He wondered if, with a better legal defense, he, too, might have been acquitted. He’d never been sure exactly what damage leaking music actually caused the musicians, and at times he seemed to regard it as something less than a crime.

“Look at 50 Cent,” he said. “He’s still living in Mike Tyson’s house. Ain’t nobody in the world that can hurt them.” He continued, “It’s a loss, but it’s also a form of advertising.” He paused. “But they probably lost more than they gained.” In the end, Glover served three months in prison. (Tony Dockery also pleaded guilty to conspiracy to commit copyright infringement, and spent three months in prison. Simon Tai was never charged with any wrongdoing.)

In their sentencing guidelines, the attorneys for the Department of Justice wrote, “RNS was the most pervasive and infamous Internet piracy group in history.” In eleven years, RNS leaked more than twenty thousand albums. For much of this time, the group’s best asset was Glover—there was scarcely a person younger than thirty who couldn’t trace music in his or her collection to him.

On the day that Glover’s home was raided, F.B.I. agents confiscated his computers, his duplicating towers, his hard drives, and his PlayStation. They took a few pictures of the albums he’d collected over the years, but they left the duffelbag full of compact disks behind—even as evidence, they were worthless. ♦

This content was originally published here.

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brettzjacksonblog · 7 years ago

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InsurePal Welcomes Bitcoin Pioneer Charlie Shrem as Advisor

InsurePal, a next generation, peer-to-peer insurance platform based on social proof endorsements, is successfully going ahead to revolutionize the insurance industry by blending blockchain technology with social proofing. To achieve its business development goals, InsurePal has welcomed Charlie Shrem on board as a business development advisor, who has joined the company just before the end of 2017.

Blockchain-based social proof platform to disrupt $7 trillion insurance industry

InsurePal disrupts the industry by introducing social proofing to reduce costs and eliminate redundant entities from the insurance pool. The video here explains how the platform works. InsurePal integrates social proof as peer-to-peer endorsements backed up by a financial commitment. The endorser, stepping up as a financial guarantor for someone, uses their own diligence when giving the guarantee at the risk of losing their investment. Such endorsements make InsurePal ecosystem less risky. Have a look at their car insurance model.

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At InsurePal, It’s all about dedicated team, industry experience and strategic partnerships

InsurePal aims to merge blockchain insurance with social proofing mechanism in order to cut costs and deliver a positive societal effect. The company is the change initiator in the traditional insurance industry. To harness the challenges and keep the development of platform running in the envisioned direction, it is critically important to deploy a team having visionaries and individuals who possess specialized, pioneering knowledge and high-caliber insights from a range of areas.

The InsurePal team consists of founders who have more than 15 years of experience. The dedicated experts are well-known in the industry and have contributed their efforts to make a partnership with industry principals and established blockchain setups like Mattereum and Hive. Meet the team in this video. Peter M. Moricz, the founder and CEO at Moricz.io, is also going to enter a strategic partnership with InsurePal.

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Charlie Shrem Joins as Advisor

Charlie Shrem is a Bitcoin pioneer, a digital currency trader, a social economist and crypto-insider. Advising over dozens of digital currency businesses, leading numerous launches, and partnerships between crypto and non-crypto entities before, Shrem brings a treasure of knowledge to InsurePal. The company believes that Charlie Shrem’s rich entrepreneurship journey in managing both crypto and non-crypto businesses will be a huge source of guidance to develop the InsurePal social proof platform for mass adoption.

Shrem stated that he found InsurePal holding a similar objective like his Crypto IQ, a media and advisory business backed by a team of Wall Street veterans. Both these entities are passionate to simplify the crypto world and form cryptocurrency economy by ensuring its wider acceptance, especially for new insurance services.

As Shrem says,

“I’m excited to join the advisory team on this project. InsurePal is a very interesting concept, and I like to get involved in blockchain projects that are not finance-related. I believe we can be the bridge between crypto and non-crypto insurance, which will be a very interesting thing”.

The Crowdsale is Coming After a Sold-out Pre-sale

With industry big names on the team, InsurePal leads the way to a disrupted insurance industry via social proofing on blockchain technology. The sold-out presale, achieving 70% of IPL tokens, is officially closed now.

Now you can contribute to developing the platform by participating in its public token sale, starting from January 16, 2018. To know more about the public token sale, please visit InsurePal official website or access its Whitepaper and Lightpaper.

You may connect with the team via Facebook, Twitter & Telegram.

The post InsurePal Welcomes Bitcoin Pioneer Charlie Shrem as Advisor appeared first on NewsBTC.

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michaelbennettcrypto · 7 years ago

Text

InsurePal Welcomes Bitcoin Pioneer Charlie Shrem as Advisor

Blockchain-based social proof platform to disrupt $7 trillion insurance industry

youtube

At InsurePal, It’s all about dedicated team, industry experience and strategic partnerships

youtube

Charlie Shrem Joins as Advisor

As Shrem says,

The Crowdsale is Coming After a Sold-out Pre-sale

You may connect with the team via Facebook, Twitter & Telegram.

The post InsurePal Welcomes Bitcoin Pioneer Charlie Shrem as Advisor appeared first on NewsBTC.

from Cryptocracken WP http://ift.tt/2CWEuYE via IFTTT

#IFTTT #Cryptocracken WP

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ourloanindelhi · 5 years ago

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#car loan

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deniscollins · 6 years ago

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French Strike Aims to Save an Envied, but Convoluted, Approach to Pensions

France’s pension system, which consists of 42 different public and private pension schemes negotiated with different unions, is staring at a potential deficit of 19 billion euros by 2025 if no action is taken. While France’s official retirement age is 62, but train drivers can retire at 52, public electric and gas workers at 57, and members of the national ballet, who start dancing at a very young age, as early as age 42. President Macron wants to merge the disparate systems, public and private, into one state-managed system by 2025. As a result there have been massive protests, including transport strikes that incapacitated France this week have now been prolonged through early next week. If you were President of France, how would you address this situation? Why? What are the ethics underlining your recommendations?

Stéphane Vardon has worked as a conductor on France’s high-speed and suburban rail network for 20 years. It is hard work, he says, and he’d like to retire before he turns 58, a privilege he now fears President Emmanuel Macron is going to strip away.

So this week, when nearly one million French citizens demonstrated nationwide to protect pension benefits that are the envy of much of the world, Mr. Vardon, 46, was among them, marching through the streets of Paris.

“People will have to work longer and have less money for their retirement,” said Mr. Vardon, citing a common fear of Mr. Macron’s plans. “Macron isn’t close to the people. We know he won’t do anything for the workers.’’

While France’s official retirement age may be 62, the actual age varies widely across the country’s labyrinthine system. Train drivers can retire at 52, public electric and gas workers at 57, and members of the national ballet, who start dancing at a very young age, as early as age 42. That is to name just a few of the stark differences.

It is this sheer complexity that Mr. Macron has vowed to untangle, aiming to standardize 42 different public and private pension schemes into one state-managed plan.

At stake in the continuing standoff — much of France remained shutdown on Friday — is nothing less than the future of the country’s vaunted social safety net.

Elected in 2017, Mr. Macron has faced fierce strikes and street protests before as part of his attempts to add dynamism to France’s economy and make it more business friendly. But the pension overhaul is his biggest and most daunting test yet.

Unions are calling for another nationwide demonstration Tuesday, just before the government is scheduled to unveil fresh details of the pension overhaul. The transport strikes that incapacitated France this week have now been prolonged through early next week.

As Mr. Macron moves to overhaul the pension system, it is precisely workers like Mr. Vardon — those with the most generous ‘‘special schemes’’ — that he would like to address.

The country’s postwar retirement system was founded by Gen. Charles de Gaulle, who was intent on establishing a social safety net in 1946 following the liberation of France.

Amid the postwar tumult, he bowed to demands by France’s mainly Communist-led unions to let different professions control their pension plans.

Instead of a centralized system, railway workers oversaw their retirement system, as did sailors, lawyers, notaries, teachers and, eventually, even ballet dancers and actors.

Because of the arduous nature of some professions, workers could retire early, a framework that persists today.

Mr. Macron has called the tangle outdated, unfair and unsustainable. France spends a whopping 14 percent of its gross domestic product on the pension system, more than almost any European country.

The system is staring at a potential deficit of 19 billion euros by 2025 if no action is taken, according to a landmark report issued by France’s pension czar, Jean-Paul Delevoye.

So Mr. Macron says he wants to merge the disparate systems, public and private, into one state-managed system by 2025.

He also wants to keep the deficit from growing, which Patrick Artus, chief economist of Paris-based Natixis bank, said could be achieved if every worker works at least another six months before retiring.

Whether Mr. Macron can succeed in his plans is an open question. No French president has managed to achieve a radical overhaul of pensions.

Mr. Macron says he isn’t seeking to reduce France’s pension spending — a point the government hopes will placate protesters.

Nonetheless, the changes he has proposed could alleviate the burden of some of the most generous pensions, which falls heavily on the government.

To get there, Mr. Macron plans to pivot to a centrally managed points-based system similar to one used in Sweden, where workers accumulate points over the course of their careers and cash them in.

Mr. Macron says the system would be simpler and fairer, and would create better funding security for pensions as the population ages.

Currently, the public pension fund is a pay as you go system that works like a group insurance, with workers and employers paying contributions from their income.

Pension benefits are currently calculated, in the private sector, based on a worker’s 25 highest earning years, and in the public sector on the last six months, when workers are likely to be at the height of their earning power.

Full pension benefits are earned after 41 to 43 years of contributions, depending on when workers were born, but workers can retire earlier, although those who do won’t get full benefits.

All workers are also required to pay into supplementary pension schemes to complement public pensions, which pay retirees an average of around 75 percent of pretax earnings — among the most generous in Europe, according to the Organization for Economic Cooperation and Development.

The state would remain the main guarantor of pensions, continuing to provide workers with a safety net that is unheard-of in the United States, where about half of Americans have no access to retirement savings plans, and have little or nothing saved for retirement.

French unions say Mr. Macron’s plan is little more than smoke and mirrors and will benefit private-sector workers at the expense of teachers, railway workers, nurses, and other public-sector employees.

By valuing pensions on a lifetime of work, instead of the last six months, those in the public sector fear they will see their pensions slashed.

Mr. Vardon, the conductor, is among those worried about taking a hit. His base salary of 1,800 euros a month is enough for a decent pension under the current scheme.

But under the points system, his retirement check calculation would include the lower salaries he earned when he started working 20 years ago, so he’ll get less.

“It won’t be enough to have a retirement where I can live well,” he said.

As things stand, Mr. Vardon would like to retire at age 57 and a half, the threshold permitted by the national railway scheme.

In reality, he said, he will probably need to work until age 62 to reap his full pension. Mr. Macron’s changes could force him to work even longer — a thought that fills him with dread.

“We have difficult working conditions,” said Mr. Vardon, who assists passengers and manages work crews while maneuvering constantly on his feet as he crisscrosses the country at high speeds.

“We don’t eat at normal hours, we have short nights of sleep, which means that I am more tired and my body doesn’t have time to adapt,’’ he said. ‘‘I will age faster than someone who had a regular job Monday to Friday from nine to five.”

“Many of my colleagues died between the ages of 60 and 65,” he added, “So I’m worried I won’t make it.”

Economists agree that the biggest winners are likely to be private-sector employees. Because pension payments under the point system would be indexed to France’s nominal gross domestic product, private-sector workers will have their pensions revalued and likely revised up, said Mr. Artus.

“There will be winners and losers,” Mr. Artus said. While those losing out will face a painful transition, France’s overall pension system will be sounder in the long run, because a points system will make it easier to maintain balanced finances, he added.

A recent poll by Elabe, a French polling agency, shows that over half of French people are concerned the current pensions system isn’t sustainable. Still, the political challenges to streamlining it remain enormous.

The demonstrations are likely to go on as long as the French fear their pensions might suffer or they will have to work longer under any new system. French presidents have tended to back down from reform efforts in the past in the face of fierce public resistance.

Mr. Vardon is among thousands who have vowed to continue the fight. While the demonstrations may look raucous to the outside world, “We want people to live without having to work longer to have a retirement,” he said.

“Yes, we have a good system, but we think our system should be a model,” he added. “It allows people who have accidents, who are poor, who didn’t have any luck in life, to climb the social ladder and to continue — after a long career — to live, to feed themselves, to take a well deserved rest.”

“It’s a shame that other countries don’t have this,” he said.

#France

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cakandivali · 6 years ago

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Mehul Choksi cheated Punjab & Sind Bank of Rs 441 million

Latest Updates - CA Mitesh MUMBAI: The public sector Punjab & Sind Bank (PSB) has revealed around Rs 441 million loan exposure to the absconding diamantaire Mehul Chinubhai Choksi, here on Saturday.This is the first time the 111-year-old bank has come clean on the default perpetrated by Choksi, who has now settled as a citizen of Antigua & Barbados, the West Indies.The New Delhi-based PSB has issued notices proclaiming him as a "willful defaulter" who owes the bank the amount for which it has initiated recovery proceedings against him.According to PSB, Choksi's company, Gitanjali Gems Ltd., including its merged entity Gitanjali Exports Ltd., had availed the loan from the bank.Choksi is a director plus a guarantor in the company and legal heir to Guniyal Choksi in the loan account.However, since they failed to clear the loan amount, the PSB declared it as a 'non-performing asset' on March 31, 2018, days after it dawned that Choksi and his family had already fled the country in February that year.The bank has now demanded that Choksi cough out the loan amount plus interest and other costs with effect from October 23, 2018 onwards.As he failed to comply, the PSB on September 17, 2019 declared him as a 'wilful defaulter'.With this, Choksi joins the bank's band of 27 other defaulters from different fields, based mainly in New Delhi, Punjab and Chandigarh, one in Lucknow, Uttar Pradesh and two in Chennai, Tamil Nadu, against whom it has filed recovery suits.The latest development makes PSB the third prominent government-owned bank to reveal its exposure after Oriental Bank of Commerce came clean of loan defaults by Choksi and his nephew Nirav Modi totaling to around Rs 289 crore. The 'chacha-bhatija' diamantaire duo shot into limelight in February 2018 after the Punjab National Bank revealed a massive fraud perpetrated by them running into over Rs 13,500 crore, sending shudders in the country's banking industry."Besides PSB, which has been a perpetually loss-making entity, several other banks have exposure to Choksi-Modi and their group companies. Why can't all the government banks come clean and jointly take legal action to recover their dues," former and Trade Unions Joint Action Committee (TUJAC), Maharashtra Convenor Vishwas Utagi said.Utagi said the other bigger questions are: What action has been taken against the departments and officers dealing in foreign exchange in Reserve Bank of India and other affected banks, how much of the outstandings from (Nirav Modi-Choksi and others) accused have been recovered so far and whether the details emerging now are under pressure' before the upcoming merger of banks.He has demanded a 'forensic audit' into all the accounts in all Indian banks held by the realty, gems & jewellery sectors on priority to reveal the extent of defaults and the collateral damage to society in the public interest.Earlier this year, the State Bank of India (SBI) had first bared its chest on a Rs 405 crore outstanding loan from Choksi and his family members.The SBI's disclosure had come barely two days after it became public that Choksi had surrendered his Indian citizenship and taken the nationality of Antigua & Barbados Islands.In March this year, millions in India were stunned to see a relaxed and well-dressed Nirav Modi sauntering down a street in London, and the subseqeunt furore led to his arrest by the United Kingdom authorities.Currently, India is making all-out efforts to get the uncle-nephew extradited from Antigua & Barbados, and UK to face the laws here. Chartered Accountant For consultng. Contact Us: http://bit.ly/bombay-ca

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katebushwick · 8 years ago

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These essays on the 'contradictions' of the welfare state appear at a time of considerable uncertainty about its future. Everywhere, and from all sides, there are mounting attacks on the orthodox welfare state policies of stimulating private investment, reducing unemployment, securing 'national defence' and administering various social needs. All that seemed settled and certain about these policies during the last four decades has become controversial. The conditions of international political stability· and profitable economic growth, upon which all West European and North American welfare states relied during this period, have been seriously eroded. At the same time, welfare state interventions have become the object of new types of social and political resistance. Nowadays, few are willing to project a certain future for the welfare state. The origins and consequences of this disruption of the post-war settlement are of central concern to Claus Offe, whose political writings appear here for the first time in one volume in English. 1* For readers unfamiliar with these writings, the following remarks may serve as a brief guide to several of their most important arguments. To begin with, it should be emphasized that this volume is not a work of nonnative political philosophy. Offe's critique of the welfare state does not take sides in the growing philosophical controversies about social justice, needs, rights and the state's responsibility for the welfare of the community.2 Although concerned to precisely define and critically analyse the growth and functioning of the welfare state at a rather generic level, he does not speak directly for or against the view that it is a guarantor of well-being and citizenship rights within a more 'just' and 'egalitarian' society. Nor

does Offe accept those narrowly descriptive approaches - strongly evident in much of the welfare state literature - which narrate the historical landmarks of state policies or specify their growth and <>peration using quantitative indicators of expenditures on particular public policies.3 Offe rejects these normative and narrowly descriptive approaches. His theoretical and empirical research is unique, in so far as it attempts to carefully analyse and explain the mechanisms and conditions that lead to systematic failures in welfare state policy-making and administration. Offe's desire to clarify the limits of the welfare state merges with his overall understanding of the role of social scientific inquiry. While social science is incapable of directly prescribing valid. political norms, he proposes that it can nevertheless engage in a form of 'indirect' normative criticism of the system of welfare state capitalism. Social scientific inquiry is capable of questioning the false 'common sense' beliefs that presently serve to sustain this system. Thereby, social science can promote an awareness among social groups of the need for more adequate and desirable decision-making arrangements. According to Offe, this form of indirect normative criticism is possible only in so far as the contemporary social sciences disengage from their present role as pragmatic servants of power. Charged with the function of stimulating democratic action and promoting public awareness of the deficiencies of the present system of welfare state capitalism, the social sciences must abandon their attempt to become providers of clear-cut advice and 'practical' information to policy-makers and administrators. They must instead orient themselves to raising discussion about crisis tendencies and, thus, to deliberately identifying more problems than the ruling elites in politics, administration and business are capable of accommodating and 'solving'. 4 Guided by this interpretation of the critical function of the social sciences, Offe uses a revised version of systems theory to analyse the present difficulties of the welfare state. This systems-theoretical approach, which draws upon Marxism and the work of the leading German systems theorist, Niklas Luhmann, is especially evident in his earlier writings (see essay one in this volume). Late capitalist societies are analysed as systems structured by three interdependent but differently organized subsystems. These subsystems include the structures of socialization (such as the household) which are guided by normative rules; the commodity production and exchange relationships of the capitalist economy; and the welfare

state, organized by the mechanisms of political and administrative power and coercion. The welfare state is interpreted, from this perspective, as a multi-functional and heterogeneous set of political and administrative institutions whose purpose is to manage the structures of socialization and the capitalist economy. Offe rejects the narrow and conventional understanding of the welfare state as the provider of social services. 5 He argues that, since the end of the Second World War, the political subsystem has performed a coordinating role which is central to the whole social system. Welfare states have been broadly defined by the goal of 'crisis management', that is, the regulation of the processes of socialization and capital accumulation within their adjacent or 'flanking' subsystems. For example, welfare states have sought to guarantee the survival of privately-controlled exchange processes by minimizing their selfparalysing tendencies. In tum, this economic strategy has depended upon the formal recognition of the actual power of trade unions in the process of collective bargaining and public policy-making and administration. Welfare state administrations have also sought to correct and regulate the processes of socialization through, for example, legal transfers of resources to various groups whose life chances had been damaged systematically by market exchange processes. Offe points out that the former popularity and effectiveness of these welfare state policies of crisis management has been derived, to some extent, from their multi-functional character and reliance upon various techniques of intervention, such as bureaucratic regulation, monetary transfers and professional expertise. This need of the welfare state to pursue many goals, often through conflicting strategies, has become one of its fundamental sources of weakness in the present period. Its vulnerability is highlighted by the critical systems-theoretical approach, which draws attention to the mutual 'interference' and conflict-ridden interactions between the socialization, economic and political subsystems of late capitalism. Simply stated, Offe's inquiries focus upon the persistent 'boundary disputes' between these different subsystems. The consequence of this analysis, to anticipate Offe's arguments, is that the 'epicentre' of the present contradictions of the welfare state is no longer traced back to the economy and its class struggles (as in many recent Marxist discussions) . 6 Instead, these contradictions are seen to derive from the antagonistic relationship between the three subsystems of late capitalism and, more precisely, from the inability of

the administrative-political system to separate itself from its 'flanking' subsystems in such a way that it can facilitate their undisturbed and independent functioning. Offe argues that welfare states are rapidly ceasing to be a viable solution to the socio-political problems generated by late capitalist societies because the systems of economic and social life are not in harmony with the requirements of the administrative-political system. The 'panacea' of state intervention and regulation itself becomes controversial. Welfare state systems generate more policy failures, political conflict and social resistance than they are capable of resolving; the crisis management strategies of the welfare state themselves become subject to new forms of crisis tendency. Decommodification This thesis, which has strongly influenced the writings of Habermas,7 proposes that the limitations of the welfare state are neither passing phenomena nor random events which have a contingent origin. On the contrary, their systematic and deep-seated character derives from fundamental contradictions within the mode of operation of all welfare state systems. These contradictions implicate welfare states in a process of cumulative self-obstruction. Of decisive importance - the 'primary contradiction' - is the fact that the various branches of the welfare state are compelled to perform two incompatible functions vis-a-vis the economic subsystem: commodification and decommodification.8 On the one hand, Offe argues, the policy-making and administering activities of the welfare state are constrained and limited by the dynamics of the sphere of economic production. Welfare state policies are supposed to be 'negatively subordinated' to the process of capitalist a ccumulation. The fact that property in labour power and capital is for the most part private means that welfare state institutions are unable to directly organize the production process according to political criteria. This independence of the capitalist-controlled economy is reinforced by the constant threat of private capital exercising its power not to invest- whose aggregate exercise, as we know from the present period, is synonymous with economic crisis. The administrators of the welfare state therefore have a 'selfinterest' in giving preferential treatment to the capitalist economy, because the healthy functioning of this economic subsystem (capitalist investment and 'full employment' of labour) is a crucial

condition of the 'mass loyalty' to the welfare state and, indirectly, the vital source of its revenues (which are generated through indirect and direct taxation, tariffs and borrowing from banks). Dependent upon the processes of commodity production and exchange, which are beyond its immediate power to control and organize directly, welfare state administrators must therefore be concerned with preserving the 'private' power and scope of these commodification processes. In sum, the welfare state is required to be a self-limiting state. Offe reasons that this imperative of respecting capital's independent powers of investment and control over the economy cannot in practice be realized. The Keynesian welfare state must 'positively subordinate' itself to the capitalist economy. It is required to both intervene in this subsystem and create, through non-market or decommodified means, the pre-conditions of its successful functioning. That the welfare state must play a more 'positive' and interventionist role vis-a-vis the capitalist economy is evidently a consequence of the latter's self-crippling, cyclical dynamics. In Offe' s view, the processes of capitalist accumulation cannot be reproduced through the 'silent compulsion of economic relations' (Marx). Rather, capitalist exchange processes exhibit a constant tendency to paralyse the commodity form of value; the likelihood that elements of labour power and capital will find opportunities for employment and exchange on the market is continually threatened. In view of the recent controversies about the present crisis of the capitalist world system, it is surprising that Offe does not analyse the self-paralysis of the commodity form in any great detail. Whether, for example, these self-paralysing tendencies are the product of squeezes on the rate of profit due to the improved bargaining power of organized labour, a consequence of monopoly capital's search for investment outlets on a global scale, or the outcome of demand saturation and declining rates of productivity resulting from the exhaustion of the potentials of scientific and technical innovation, remains an obscure point in his analysis. Referring generally to the 'cyclical dynamics' or . 'anarchic' character of capitalist accumulation processes, his thesis tends to rely upon a version of the familiar Marxian theory of the 'socialization of production' (essays two and three). Capitalist economic processes are said to accelerate the growth of forms of collective action to remedy the consequences of the operations of individual units of capital. In other words, the 'movement of private capital'

systematically produces collectively-experienced outcomes, such as the decay of inner cities caused by capitalist disinvestment and real estate policies, the pollution of regional ecosystems, and a rise in unemployment levels due to the capitalist 'modenrization' of industry. While these outcomes can obstruct or threaten the privately-controlled exchange process, they cannot be remedied or neutralized by the actions of individual units of capital. The implication is that the overall survival of the 'unregulated' sphere of capitalist exchange depends upon the continuous application of forms of 'collective regulation'. These self-paralysing tendencies of the capitalist economy also threaten the effectiveness, popularity and fiscal viability of state policies, which are thereby forced to transcend and therefore contradict their self-limiting character. The welfare state must seek to universalize opportunities for the 'free' or unregulated exchange of labour and capital by intervening within that exchange process. The maintenance and generalization of 'private' exchange relationships depends upon decommodifi.ed (i.e., non-market, state) policies which effectively and efficiently promote the investment of capital and the saleability of labour power through public infrastructure investment, mandatory schemes of joint decision-making and social policy, and the application of various administrative regulations and incentives. In a word, welfare state policies are required to do the impossible: they are forced to reorganize and restrict the mechanisms of capitalist accumulation in order to allow those mechanisms to spontaneously take care of themselves. This contradiction between commodification and decommodifi.cation helps to explain why very few areas of life are now outside the sphere of welfare state policy-making and administration. It also helps to explain why this state performs a multiplicity of roles, some of which have openly 'decommodifying' effects. At any one point in time, Offe contends, the welfare state seeks to maintain the economic dominance of capital, to challenge and erode its power, and to compensate for its disruptive and disorganizing consequences. The intrusion of decommodifying welfare state policies into the economic subsystem is a particularly significant development, for it indicates that the processes of commodity production and exchange are being directly eroded and threatened. Compared with the 'liberal' phase of capitalist development, and in relation to the total social labour power available, the scope and power of wage-labour-capital relationships have been considerably

decreased; processes of commodity production and exchange are both dominant and recessive. Within the economy, the freedom of capital to invest and deploy labour power in the interests of profitable accumulation has been weakened, because the 'factors of production' (nature, labour power, capital) once assumed as given have increasingly become the object of specific state policies. The exploitation of labour power and other categories of the population by market processes dominated by capital has become more complicated and, therefore, less predictable and certain. Offe does not consider whether the present transnational migration of industrial capital to the peripheral capitalist countries is a direct response by capital to this encroachment upon its power. 9 He prefers to indicate (essays four and six) that the welfare state has increased the 'means of resistance' that are available to social groups in their attempts to mmimize the exploitative effects of capital's control over the means of production. For example, statesubsidized housing makes it possible for low income groups to live in better (and otherwise unaffordable) accommodation; the universal provision of health or dental services weakens the significance of factors of chance, profitability or ability to pay in matters of bodily care; the corporate pollution of the local environment ceases to be a private affair, and instead becomes a matter subject to state regulation; various forms of labour protection legislation, unemployment insurance and social security benefits increase the chances of male and female workers successfully resisting their employers and the disciplinary effects of the 'reserve army of labour' mechanism; and so on. It can be suggested, in response, that this thesis is excessively generic, and that it therefore underestimates the importance of the new forms of social inequality and unfreedom instituted by welfare state policies. For example, the specification of minimum standards of social security provision for citizens typically depended upon the distinction between 'insurance' and 'welfare assistance'. Meanstesting, stigma and inadequate and uneven provision were important features of welfare assistance for the 'undeserving poor'. Second-class citizenship and 'poverty traps', in other words, have always been an endemic feature of the post-war extension of 'citizenship rights'. There is also some evidence that Offe understates the degree to which legal-bureaucratic and professional forms of state intervention weaken clients' capacity for self-help by continually redefining and monitoring their 'needs'. As a consequence

of state intervention, workers and other groups are indeed acknowledged to have the status of 'citizens' - citizens who are, none the less, expected to assume the role of passive objects of administrative care and surveillance.1° Finally, by making the welfare state coterminous with decommodified welfare provision in toto, Offe's thesis neglects the continuing importance of non-state forms of provision. Private enterprise, charitable and 'voluntary' forms of welfare regulation are not merely 'survivors' of an earlier age, and thus cannot be subsumed under the general rubric of 'state intervention'. The links between state and non-state forms of social administration often involve intricate relations of interdependency, and must be theorized as such. Offe's novel and suggestive thesis nevertheless remains plausible. He argues forcefully that policies of state intervention, designed to secure and enhance the capitalist-directed processes of commodification, in fact directly or indirectly threaten the collective power of capital. State policies considerably decommodify the daily lives of the population by replacing 'contract' with political status and 'property rights' with 'citizen rights'. This daring thesis has farreaching implications, and explains why he refuses to speak of the welfare state as a Leviathan-like instrument for the 'reproduction of the relations of production'. He argues that, contrary to the claims of state-derivationist and functionalist Marxism, welfare state policies do not necessarily or automatically 'serve' the 'interests' of the capitalist class. Indeed, in the contemporary period, the continuation of the capitalist economy is no longer vitally dependentas it was in the 'liberal' phase of capitalism- upon the creation and expansion of exchange relations vis-a-vis pre-capitalist 'remnants'. On the contrary, capitalist exchange processes are increasingly faced with the inverse problem of behaving defensively. They are compelled to shield themselves against the growth of forms of administrative and political power which are not immediately determined by the processes of commodity production and exchange. The fiscal problems of the state The entanglement of the welfare state within this contradictory development is deepened, Offe proposes, by several closely-related difficulties. At least three of these 'subsidiary contradictions' are identified in this collection of essays. They can be usefully introduced here, because they clarify his more general claim that the

effectiveness and legitimacy of the interventionist welfare state are systematically restricted. One important source of this ineffectiveness and illegitimacy, Offe explains, is the chronic fiscal problem of the welfare state. 11 This state's attempts to administer its economic and socialization subsystems has become extraordinarily expensive. The continuous expansion of state budgets is due indirectly to the fact that the viability of capitalist growth (especially within the oligopoly sector of the economy) depends upon ever larger investment projects, huge research and development subsidies, and a continuous rise in the costs of providing 'social overheads', such as health, transportation and energy systems. In order to encourage private capital investment, welfare states must 'socialize' these continuously increasing costs and outlays. One consequence of this is that the borrowing and taxation powers of the state. tend to impinge upon the profitability of the capitalist sector. The likelihood of permanent fiscal deficits also grows because there is a contradiction between the ever-expanding costs associated with the welfare state's 'socialization' of production and the continuing private control over investment and the appropriation of its profits. Under conditions of welfare state capitalism, thus, state expenditures persistently tend to outrun state revenues. The point may even be reached where capital openly resists the taxing and borrowing powers of the welfare state and where, consequently, it may be in this state's 'self-interest' to rationalize or 'cut back' its own expenditure patterns. These permanent fiscal deficits are evidently difficult to control or reduce. Offe does not consider whether the constant and dangerous growth of armaments production and militarism is partly responsible for these permanent fiscal problems of the welfare state- a lacuna, it may be added, that is symptomatic of his more general failure to analyse the external ordering of welfare states within the global system of nation-state power and conflict. Despite this weakness, his discussion of the inertia of welfare state overspending is highly provocative. In his view (which is also found among neo-conservative critics of the welfare state, as essay two indicates), the identification of the welfare state as an important socializer of the costs of production produces an addictive effect. Various power groups within the economic and socialization subsystems come to regard the state as if it were an unlimited liability insurance company. It is supposed to be capable of underwriting all possible risks, 'needs' and failures. This

addiction effect tends to be exacerbated by the difficulty of coordinating and controlling state expenditures centrally. The costbenefit accounting of these expenditures, a portion of which are used up in feeding state institutions themselves, is also a notoriously difficult task. Finally, attempts by state administrators to reduce the size of the public purse by increasing the effective rates of corporate taxation are also very dangerous.12 Any state strategy oriented to the diversion of greater portions of value into what business considers 'unproductive' expenditures runs the risk, particularly under the present conditions of economic stagnation, of producing flights of capital- of increasing the possibility that capital will engage in a general investment strike. Planning failures This ability of capital to exercise a private power of veto against the welfare state's policy-making and administrative activities continually endangers their fiscal viability. It also contradicts and threatens their coherence and self-consistency. Welfare state planning systematically produces unforeseen difficulties, 'bottlenecks', policy reversals and challenges to its effectiveness and legitimacy. Offe does admit that disjoined, incremental types of state planning may be a necessary feature of all 'complex' societies. Under the specific conditions of welfare state capitalism, however, the attempt by the state to 'finely tune' and co-ordinate its economic and socialization subsystems is typically marked by an excess of failures and unplanned outcomes. In some measure, this surplus of planning failures is a consequence of various forms of organized resistance to state power. In particular, long-range bureaucratic planning is continually pushed and pulled by social and political forces. Social turbulence and political resistance is continually internalized within the welfare state apparatus. Disputes over wages and conditions within the state sector; the international transfer of capital; the struggles of trade unions against capitalist enterprises; and the opposition of social movements to state decisions are specific and concrete forms of resistance that tend to hinder or 'privatize' attempts by the welfare state to engage in 'public' planning guided by general or synoptic rules. This limit upon welfare state planning is compounded by the typical lack of co-ordination between various state bureaucracies, and by the inability of the administrative branches of the state to

secure their independence from the rules and outcomes of representative democratic institutions and party competition. As a consequence of all these factors, welfare state policies are marked by clumsy and fluctuating patterns of intervention, withdrawal and compromise. This 'muddling through', which encourages state administrators to rely upon often ineffective discretionary policies and indirect controls and incentives, is only aggravated by the fact that one set of priorities of the welfare state (its attempt to maintain the privately-steered accumulation process) is typically accommodated within every other form of policy planning and public administration. Because the welfare state is committed to giving preferential treatment to the capitalist economy, there is a high probability of planning failures within other policy areas. Thus, there is a contradiction between the welfare state's attempt to rationally plan its 'decommodifying' activities and the continuing private control over capital investment within the economy. By virtue of their powers of (non-)investment, the elements of capital can define and limit the boundaries of 'realistic' public planning and administration. The guiding criterion of private control of production for profit is not easily subjected to external controls, and this means that state planning can only ever be partial and incomplete. The welfare state is supposed to fulfil all its self-designated tasks (recognizing the power of trade unions, ensuring economic growth, national 'defence', the provision of collective commodities, the amelioriation of existing patterns of social inequality, etc.) without encroaching upon the private power of capital, a move that would violate the logic of the capitalist economy as a profit-oriented system of commodification. In other words, the welfare state has to refrain from planned interventions within the privately controlled accumulation process, upon whose cyclical dynamics and disruptive consequences, however, this state's planning and administration continue to depend. Offe is convinced that this contradiction constitutes a serious limit to state policy-making. He therefore rejects those evolutionary accounts of the history of the welfare state which suppose that, in contrast with the erratic and inconsistent character of earlier state policies, the contemporary welfare state can be described as a coherent complex of measures guided by synoptic calculations.13 In his view, the welfare state cannot function in this self-consistent and comprehensive way. It is not a class-conscious political organ which self-consciously and comprehensively arranges its economic and

socialization subsystems, delivering planned gains to selected beneficiaries at the expense of selected losers. Welfare state institutions are incapable of becoming an 'ideal collective capitalist' (Engels). Victimized by an economic subsystem whose organizing principle is private control over investment and production, welfare state planning is marked by a surplus of 'compatibility problems' and disjointed and self-contradictory measures.14 It is this routine 'anarchy' and 'ineffectiveness' that encourages the administrative apparatus to become dependent upon powerful and organized social interests (for example, employers' associations, professional organizations, trade unions), whose co-operation is vital for social order and effective administrative planning. It is also for this reason (essays seven and eleven) that the traditional liberal-democratic institutions of conflict articulation and resolution - elections, political parties, legislatures, judiciaries - are increasingly supplemented or replaced by informal 'corporatist' schemes of functional representation and bargaining. According to Offe, the effectiveness of welfare state policies comes to depend increasingly upon informal and publicly inaccessible negotiations between state planners and the elites of powerful social interest groups.

Mass loyalty problems

There are good reasons for doubting whether the popular legitimacy of this latter form of welfare state policy-making can be sustained. Offe's concern with the contradictions of the welfare state forces him to re-examine a problem first raised in the German sociological tradition by Max Weber and the Verein fUr Sozialpolitik, namely, whether state policies can effectively legitimate the socio-political institutions of organized capitalist societies. He proposes that the contradictions of the welfare state mentioned above are in fact intensified by permanent and deep-seated legitimation difficulties. Under welfare capitalist conditions, mass loyalty to the existing system of administrative and political power tends to disintegrate to a serious extent. The normative rules and resources necessary for the functioning of this system of state power are not produced in sufficient quantities by existing processes of socialization. This thesis is rather incomplete, and it is for that reason not one of the most convincing arguments presented in this volume. Offe speaks of mass loyalty as a 'regulatory resource', as the ability of the

structures, processes and policy outcomes of the political-administrative system to be 'genuinely accepted' (essay one). It should be mentioned that the reference to genuine (as distinct from false or enforced) loyalty is not systematically analysed in these essays. Unlike Habermas, for instance, Offe is not concerned with the subject of moral-practical reasoning and the conditions under which 'interests' and normative validity claims can be considered as warranted or 'true'. 15 Moreover, Offe does not engage current advances within the analysis of ideology and discourse. This is one reason why he undervalues the contemporary importance of certain ideological discourses (for example, nationalism and militarism) and strategies of consensus building (such as plebiscitarian leadership). Especially problematic is his failure to systematically consider whether, in the present period of social and political disorganization, there can emerge widespread nostalgia for decaying ideological traditions, a nostalgia which can, in tum, be strategically nurtured and manipulated by the ruling groups of dominant institutions. Offe's thesis none the less remains important and provocative. He insists that welfare state capitalist systems can legitimate their relations of command and obedience only to a very limited degree. The welfare state is thereby caught within a further contradiction: the more its policies 'close in' on the systems of socialization and economic life, the more they tend to be regarded by various actors within those domains as heteronomous and illegitimate. Several explanations for this permanent legitimation problem are proposed in this volume. First, there is the suggestion that the 'liveliness' or meaningfulness of pre-modem traditions (such as Christianity and patriarchal family life) is seriously eroded by contemporary processes of commodification and decommodification. The operations of the economic and political subsystems destroy the 'naturalness' of these traditions. In contrast to the 'liberal' phase of capitalism, these traditions can no longer so easily serve as sources of mass loyalty to the welfare state (essay two). The probability of mass loyalty problems is further increased by the fact that the welfare state becomes systematically 'overloaded' with demands which it has directly sanctioned. Compared with 'liberal' capitalist state forms charged with fewer functions, the welfare state has in some measure raised expectations about what it can achieve. It visibly assumes responsibility for a much wider gamut of functions - from the management of human and physical resources to securing the

commodification process, weakening its scope, and compensating for its dysfunctions. As life increasingly becomes 'life by political design', these functions can no longer so easily be considered by electorates as inevitable or 'natural'. The claims of those who continue to advocate welfare state policies are subjected to direct 'reality-testing', especially when pressured by the decommodification, fiscal and planning contradictions mentioned above (essay nine). As a result, the potential and actual level of frustrations caused by policy failures tends to increase. Unable to effectively execute decisions for which they claim responsibility, welfare state administrators become victims of their own 'false promises'. This process of demand creation and frustration tends to be reinforced, or so Offe claims, by the fact that the decommodifying activities of the welfare state seriously weaken the convincing power of norms which were formerly associated with capitalist exchange processes. The decline of the ideology of possessive individualism or the 'achievement principle' is of particular interest to Offe. He argues that, throughout early modem Europe and the New World, this ideology legitimated the spread of commodified relations of production and exchange guaranteed by formal law and the constitutional state. Through the prism of this ideology, the everyday life of (male) individuals was seen to be properly determined by the ethos of competitive achievement, the pressure of status-seeking, and the unlimited accumulation of property guaranteed by law. In the achieving society, the power, wealth and status of individuals were supposed to depend upon their performance within the commodified sphere of production and exchange. Offe suggests that, when compared to the heyday of liberal capitalism, the achievement ideology is much less convincing to the populations of welfare state countries (essay four). Contrary to certain schools of modernization theory, welfare capitalist systems do not effect continuous victories for the achievement principle. In some measure this is because the welfare state's provision of transfer payments and 'compensatory' subsidies (to the young, old, unemployed or disabled) has contributed to a rupturing of old assumptions about the direction relationship between the achievements of individuals and their remuneration for those achievements by 'the market'. In many zones of social life, 'work' and 'pay' are less closely interrelated, as individuals find themselves temporarily or permanently outside the sphere of the labour market. These individuals' former dependence upon the vicissitudes of markets is

replaced by a sense of their growing dependence upon welfare state compensation. Offe suggests that the rationale of market exchange processes is further undermined by the direct intervention of state power into the economic subsystem. State policies which attempt to reproduce the commodity form (i.e., the profitable exchange of labour and capital) through decommodified means have the unintended effect of undermining both the institutionalized power and legitimacy of commodification processes. Within the state sector, for example, material conditions of life are determined only indirectly by the exchange relations which obtain in the competitive and oligopolistic sectors of the economy. While state-sector workers are dependent upon wages, it becomes evident to them that the state neither 'purchases' their labour power at an 'equilibrium price' nor 'sells' the products of their work. The welfare state's interventions into an economy which continues to be dominated by exchange values also facilitates the questioning of these exchange values by other social groups (essays seven, ten and twelve). Having considerably expanded the scope and power of decommodified institutions, welfare state administrators make themselves the possible focus of conflict over the social costs and utility of statesector labour power, capital investment and scientific research and development within fields such as military planning, nuclear energy and health. Alternatives to welfare state capitalism Embedded within the problems of decommodification and fiscal and planning deficits mentioned above, these legitimation conflicts have in the contemporary period become an endemic feature of welfare state, capitalist societies. They have provoked a growing debate about the achievements and limits of the welfare state - a debate which is, in tum, bound up with struggles to develop alternatives to welfare state institutions. Offe remains convinced throughout these essays that these controversies and struggles will not easily lead to the replacement of the welfare state by fundamentally new arrangements. This state has become irreversible, in the precise sense that it performs functions essential for both the capitalist economy and the life chances of many social groups. In the face of whatever remains of the blind optimism about the future of the welfare state, Offe nevertheless seeks to theoretically determine its limits. He is concerned, in other words, to indicate and

clarify not only what the welfare state has achieved but also what it cannot achieve. He therefore insists that the present contradictions of the welfare state are not merely 'dilemmas', if by the latter we mean problems which could be 'solved' or 'managed' by improved strategies of choice or temporary policy reforms. To be sure, these contradictions do not lead to the automatic, blind and irreversible collapse of welfare state capitalism. In his view, the contradictions of the contemporary welfare state are better understood as responsible for generating destabilizing situations or crisis tendencies, the deepening or overcoming of which continuously depends upon social struggles and political manoeuvrings. The very great importance of these present-day struggles generated by the contradictions of the welfare state is registered in several of the essays in this volume. It is significant that in his more recent writings (for example, essays six and eight), Offe considerably de �mphasizes or even abandons his earlier reliance upon systemstheoretical categories. The limits and future viability of welfare state policies are no longer analysed as the outcome of the contradictory interplay of anonymous societal structures and subsystems. Instead, state policies are viewed as dependent upon the existing matrix of social power, which in turn is seen to be constantly subject to transformations by the activity of social power groups and movements. Welfare state institutions are, thus, viewed as both the medium and outcome of struggles over the distribution of power within the realms of society and the state. At the most general level, Offe discusses three different forms of contemporary resistance to the welfare state. One obviously important source of this resistance is the so-called New Right. Supported by sections of large capital and the traditional middle classes, the goal of this laissez-faire coalition is the recommodification of social life. It seeks to decrease the scope and importance of decommodified political and administrative power by resuscita- , ting 'market forces'. Those sectors of the economic subsystem unable to survive within the commodity form, it is argued, should also be allowed to fall victim to 'market pressures' and, at the same time, urged to 'modernize' by transforming themselves into marketable commodities. Offe strongly doubts the viability of this laissez-faire strategy for depoliticizing the accumulation process and recommodifying the functions of the welfare state. It should be noted that his arguments neglect the considerable degree of success the New Right has had in

strengthening the power of the state and popularizing the ideology of the 'free' - patriotict lean, familial - society. Offe also fails to consider the possibility of an irreversible weakening of trade union power by the laissez-faire strategy of generating high rates of socalled 'natural' unemployment. He instead points out that the policies of the New Right are not universally favoured by big business, which frequently depends for its survival upon state contracts, special transfer payments and subsidies. Moreover, he claims that the policies of the New Right opposition to the welfare state are most strongly favoured by precisely that power group- the old middle class of farmers, shopkeepers and others - whose social base is at present very much in decline. Above all, Offe reaffirms his thesis that the frontiers of the welfare state cannot easily be 'rolled back' in the face of the self-crippling tendencies of the capitalist economic system. While the timing, scope and volume of state : policies can be altered, welfare capitalist societies cannot be remodelled into 'pure market societies' (essay three). Privatelycontrolled capitalist economies could not continue to function successfully (or even at all) without the extensive state provision of 'public goods' such as housing, health services and education. These state policies are an indispensable condition of an economy which for instance concentrates labour power in conurbations, weakens the independence . of households and persistently 'disorganizes' social life through its investment strategies. The New Right defence of 'reprivatization' is therefore impossible, because it is selfcontradictory. According to Offe, it fails to recognize that capitalism is both endangered and made possible by welfare state interventions. Given the probable failure of strategies of large-scale recommodification, a greater reliance upon state-supervised, 'corporatist' forms of policy-making and administration cannot be excluded as a second, and possibly complementary, response to the present contradictions of the welfare state. This strategy of corporatism, Offe contends, is concerned with reviving the commodification process and alleviating the fiscal and planning problems of the welfare state. It seeks to exclude 'excessively political' demands and to institute state-supervised and informal modes of bargaining between representatives of key interest groups such as labour and capital (essays eleven and twelve). Corporatist policies are designed to develop a consensus among power elites in order to readjust welfare state policy-making and administration to the requirements of the

economic subsystem. Corporatist mechanisms rely upon arcane and highly inaccessible elite negotiations and increased political repression and surveillance, rather than upon autonomous public discussion and accountability. They are supposed to strengthen the forces of discipline and constraint, especially through measures (such as statutory incomes policies) designed to contain the wage and social consumption demands of trade unions. Offe notes that the growth of corporatist or 'tripartite' forms of decision-making is encouraged by the relative decline of conventional liberal-democratic mechanisms (such as legislatures) which formerly functioned to articulate and secure agreement upon policy programmes. However, the strategy of restructuring the welfare state through greater reliance upon corporatist mechanisms is not without serious difficulties. Offe incisively points out, for example, that those corporatist mechanisms which are supposed to embody the principle of paritiitische Mitbestimmung (the equal representation of capital and labour) typically disadvantage organized labour and other non-represented social interests. This is because the outer limits of -what can become the object of 'realistic' bargaining and decision-making within a corporatist framework are strongly conditioned by the power of investment or non-investment of the representatives of capital. This power typically serves to define which issues or demands can be negotiated and which must be excluded as excessively controversial or 'unworkable'. Because of this 'class bias', which is frequently challenged as such by organized labour and other social groups, corporatist forms of policy-making tend to disequilibrium. They generate new patterns of conflict between organized labour, social movements, the state and capital. 16 These conflicts concern, for instance, the degree to which decisions reached through corporatist arrangements are equitable or equally binding. This tendency is strengthened by the permanent legitimacy problem of corporatist schemes of functional representation. These schemes are difficult to justify to the populations of welfare state countries. Apart from pragmatic necessity, it is unclear why certain groups or particular agendas or procedural rules are to be attributed a special status within the bargaining and decision-making process. This legitimation problem is only made more acute by the fact that corporatist schemes of functional representation and bargaining visibly erode the institutional boundaries between 'civil society' (the household, economy and social power groups) and the state. This increase of the social character of

welfare state institutions contradicts the classical liberal-democratic notion of politics as the struggle for organized state power. Spheres of life once considered as 'natural' or 'pre-political' become the possible object of state policy and social conflict. Under pressure from these problems of parity and legitimation, corporatist solutions to the present contradictions of the welfare state seem to be neither equitable nor viable. According to Offe, corporatist mechanisms are most feasible when national traditions of opposition by capital and labour to the state are weak, when there are high levels of political repression and, finally, where a 'positive sum game' between capital and labour is made possible by uninterrupted economic growth. However, these conditions are rarely, if ever, found together. These doubts about the viability of corporatist solutions prompt Offe to consider proposals for a third - democratic and socialist - alternative to the welfare state (essays ten, eleven and twelve). His stimulating discussions of democratic socialism are introduced through a question that is a mark of the socialist tradition: are there indications that the present self-paralysing tendencies of the welfare state are also constructive of a possible democratic socialist alternative to welfare state capitalism? Offe does not consider the international economic and political dimensions of this question. Once again, his account of the limits of the interventionist welfare state is too strongly bound to the single nation-state unit. Questions about the new international economic order and the perilous tensions within the nation-state system are inadequately considered. He does however suggest that an alliance of democratic-socialist forces is not altogether impossible under contemporary conditions. If such an alliance could gain the support of key sections of the trade union movement and the new middle classes, it might effectively reconstruct welfare state capitalism into an egalitarian 'welfare society', whose 'needs' would be autonomously determined through decentralized and publicly-controlled forms of social production and political organization. Offe contends that this goal of a democratic and socialist welfare society is in some measure facilitated by the growth of new social movements, such as feminism, environmentalism and pacifism. Frequently engaging in direct forms of social action, these movements articulate and defend such 'post-material' values as gender identity, democratic rights and environmental safety. Significantly, their support does not derive from peripheral or marginal social

strata but, rather, from groups whose co-operation is central to the overall management and functioning of welfare capitalist systems. The recent growth of these movements is seen by Offe as being not only a consequence of the general erosion of mass loyalty to welfare state capitalism. It is also the result of the relative displacement of political parties as an important focus of political consensusbuilding. This circumvention and loss of legitimacy of political parties is, of course, a complex development. In this volume, several important factors behind this development are analysed in some detail (essays eight and twelve). Offe considers the growing displacement of territorially-defined political institutions by functional (i.e., corporatist) forms of representation, as well as the de-activation of rank-and-file membership by the bureaucratization and professionalization of patterns of party leadership and recruitment. Consideration is also given to the transformation of governing parties into public relations agents for the particular government executive which they in fact only nominally 'control'. Finally, Offe points to the growth of the 'catch-all' party, whose overriding concern with 'winning a majority' is seen to produce a selective blindness towards controversial issues and particular demands, a loss of distinctive party identities, and a deepening sense among electorates that intra-party differences may be greater than differences between parties, or even that all parties 'fudge' the significance of particular issues. These factors tend to greatly diminish the trust popularly accorded to political parties. In tum, this cynicism and distrust tends to promote the growth of autonomous social movements, which address various problems and issues (urban renewal, sexual domination, peace, environmental decay) that have been marginalized or 'screened out' by official party and state procedures of consensus-building. Offe reasons that the democratic socialist potential of these movements is enhanced by the fact that, under welfare state conditions, there is a marked increase in the social character of politics (essay eleven) . As a consequence of its manifold interventions into the economic and socialization subsystems, the scope of state power is spread wider and thinner. No longer institutionally 'separated' from its social environment, the political system becomes highly differentiated and, therefore, potentially more vulnerable to interest group disputes, the withdrawal of compliance or active resistance by organized labour and the new social movements.

A socialist civil society? It can be argued that Offe's analysis of this 'withering away' of a coherent and strictly circumscribed apparatus of state power contains two very important implications for democratic socialist politics. On the negative side, it warns that dirigiste strategies of socialist transformation are not only undesirable - as the New Right ideologues emphasize - but also ineffective and unrealistic. His analysis provides the reminder that the political-administrative system has become so highly differentiated and complex that there is simply no single centre of state power which could be 'occupied' and used to radically transform the systems of socialization and economic life. More positively, Offe's discussion implies that the highly differentiated and disunified character of welfare state interventions renders non-statist strategies of socialist resistance and transformation more viable in the present period. It is not only that 'the welfare state' is sufficiently in one place to be 'seized'. In so far as this state penetrates all spheres of civil society, social resistance to its misformulated, inequitable and often repressive policies can and must also be everywhere. The 'parliamentary road' can no longer be seen as privileged, as occupying the centre .stage of socialist politics. Especially on the peripheries of the welfare state for instance at the level of the 'local state' - countervailing networks of democratic communication and mobilization are easier to develop and considerable advantage can be taken of the contradictions within welfare state policies. In these regions of civil society, decommodifying state institutions are accessible and highly vulnerable to the social initiatives of clients and workers. The expanding scope and power of these state institutions makes them more susceptible to redefinition and transformation by works councils, producer, health and housing co-operatives, refuges for battered women, neighbourhood organizations and other democratic, grass-roots institutions. No doubt, these spheres of democratic autonomy do not automatically secure more decentralized, horizontally-structured and egalitarian patterns of social life. It is also certain that vigorous political protection and legal recognition are necessary conditions of their survival and expansion. The recent emergence of these democratic initiatives nevertheless points to a paradoxical outcome of,the welfare state settlement of the past four decades. This self-paralysing settlement not only becomes vulnerable to the reactionary crusades of the New Right. It

also makes possible a new type of democratic socialism, which could effectively call into question the old uneasy compromise between capitalist production and administrative surveillance and control. In other words, welfare state policies of reform have the unintended effect of breaking their own spell. They encourage social struggles to develop new forms of mutual aid within a socialist civil society mobilized against the power of private capital and the interventionist, disciplinary state.

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