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'Business is business'

In the days preceding the deal that saw Cadbury sold to Kraft yesterday, the leaders of the Unite trade union wrote to shareholders asking them to consider the wider “public interest” and prevent British jobs being transferred to production facilities in the United States. But major shareholders naturally had other considerations and Unite’s appeal fell on deaf ears.

Cadbury has been a global business for nearly a century. It started production in Tasmania in 1918. In 2003 it became the world’s largest confectionery group, for a time, when it acquired Adams, a chewing-gum manufacturer based in the US. Its caring, philanthropic Quaker days in Bournville, Birmingham have long been submerged in the welter of the worldwide competition for markets. For decades Cadbury chocolate has been made under license in the United States by Hershey, one of the companies in the takeover race.

The sale of Cadbury became inevitable when the company – formerly known as Cadbury Schweppes – “demerged” its US-based soft drinks arm. It is now called Dr Pepper Snapple Group Inc. Schh.. somebody should let Unite in on the secret. As Peter Cumming, head of equities at Standard Life, said: "Kraft is getting a good deal. It is sad that Cadbury is gone, but business is business." Also getting a good deal is chief executive Todd Stitzer, who stands to make £12 million from the sale.

Capitalist conglomerates hold no flags, apart from the ones carrying their own logos. And they are happy to sell them to the highest bidder, when the time is right. In 2007 Cadbury shut its factory in Keynsham, near Bristol (which used to belong to another long-disappeared competitor, Fry’s) and moved production to Poland. Cadbury is right now in the process of selling its Australian soft drinks company to Asahi breweries.

Companies are obliged by law – the law that has developed over 350 years to regulate capitalist society – to maximise the returns to shareholders. It’s a law written into statute in every capitalist country. It makes explicit that decisions and actions of the people that run companies must be taken in the shareholders’ interests.

But the most important law – as discovered by Karl Marx in the years between 1831 when John Cadbury opened his factory in Birmingham and 1854 when the company received its Royal Warrant as manufacturer of chocolate for Queen Victoria – is the law of the tendency of the rate of profit to fall. Dealing with its consequences obliges companies to “grow their business”.

It’s why the world is now dominated by globalising companies that have changed the role and nature of national governments. New Labour can say what it likes, but the takeover is beyond its control.

Unite leaders share their nostalgic fantasy with the extreme nationalists in the BNP, and presumably Gordon Brown with his infamous cry of “British jobs for British workers”. To rub salt in Unite’s wounds, despite Alistair Darlings insistence on holding Kraft to its commitments to British workers (it hasn’t made any), RBS, the bank he owns on our behalf is part of the syndicate providing the loan to Kraft to fund the deal.

Unite would do better living up to its name and make contact with workers in every country in which the new, larger group operates to defend and advance the interests of workers everywhere. And as the crisis deepens – one reason Kraft is buying Cadbury is to eliminate a competitor – those interests can only be served if workers worldwide take such capitalist conglomerates into social ownership and convert them to produce for social need, not for profit.

Gerry Gold
Economics editor
20 January 2010

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