The contradictions of capitalism
It’s lazy, I know, to make my readers do the work but here are three things you should be read and watched together:
Robert Peston on the revival of financial trading, in currencies and various forms of derivatives. Once again, he suggests, a small number of people are getting very rich by pursuing activities which are of dubious value to the wider ‘real’ economy.
LSE Director Howard Davies on the failure of attempts at international reform of banking and financial trading.
David Harvey’s RSA Animate, arguing that the growing power of finance in capitalism is not an accident or a coincidence, nor is it simply a reflection of human frailty, it is an inevitable development of capitalism.
Two years ago there was much talk of regulating financial transactions and rebalancing the economy towards manufacturing. There is very little of that talk now. Arguably for good reasons, the Coalition Government is sceptical of the role of Government in supporting industry, and anyway there’s no money.
So, in a very short space of time, after the most dangerous and far reaching crises in the history of global capitalism, this country and others, like America, are going back. Back to being highly dependent on a finance sector many of whose instruments are good at making some people rich, but which mortgage the future and carry major risks of contagion, and which seem to have little or no effect on the wider economy or the livelihoods of those outside finance (apart perhaps from people who sell fine wines and yachts).
For an economic layman like me, it is difficult to avoid the conclusion that capitalism has become dominated by finance because its underlying logic dictates so. I am sure there is a way of achieving a more balanced and fair economy without abolishing capitalism but at the moment it doesn’t look like anyone knows what it is. Fortunately, my ignorance may be dispelled this evening with our fascinating event this evening with the development economics expert, Ha-Joon Chang, chaired by Larry Elliott.
The strange case of conservative progressives
One of the most interesting lines in Tony Blair’s revealing book comes in the introduction:
’…I was and remain first and foremost not so much a politician of traditional left and right, but a moderniser. I wanted to modernise the Labour Party so it was capable, not intermittently but continuously, of offering a progressive alternative to Conservative rule. I wanted to modernise Britain so that, while retaining pride in having worn the mantle of the world’s most powerful nation as the twentieth century began, it didn’t feel bereft and in decline as the twenty first century began because that mantle would no longer fit’.
The admission that Blair was not a man of the left – indeed he acknowledges that on economics and law and order he is on the centre right – may appal some in the Labour Party but comes as no surprise to those of us who worked for him.
Everyday it seems a Labour leadership candidate repudiates another aspect of New Labour doctrine and record. But behind this tactical posturing there is a more profound questioning, which is of wider relevance and interest than Labour’s internal manoeuvrings.
In this month’s Prospect, two former Brown advisors Nick Pearce (now back as Director of ippr) and Gavin Kelly write about the need for social democrats to tap into a sense of ‘social patriotism’:
‘Beyond eco-conservativism, the centre-left hasn’t worked out the strands of conservative thinking that should form a core part of its political identity in the 21st century. Only when it finds a sure footing on this territory will it find a way of responding to some of the cultural concerns of the electorate that currently find expression in hostility to immigration.’
And here is Jon Cruddas MP, one of Labour’s most original and respected thinkers, writing in a few weeks ago in the New Statesman:
‘Labour has to win back…terrain with a language that can encompass both cosmopolitan modernity and English conservative culture, linking them together in a sense of national purpose. It would incorporate all the things Blair dismissed as anachronisms: tradition; a respect for settled ways of life; a sense of local place and belonging; a desire for home and rootedness; the continuity of relationships at work and in one’s neighbourhood.
England once had this kind of conservative, common culture; it acted as a counter to the commodification of labour and to social isolation. Ruskin provided its rallying cry, “There is no wealth but life.” At one time Labour gave expression to this kind of conservatism. It need not be reactionary, right-wing, or sentimental, although it has been all these things. Its political character will depend on Labour’s capacity to articulate a progressive and ethical conservatism that embraces difference. It need not be parochial or conformist: England celebrates a rich tradition of volatile, creative cultures. ’
These ideas strike a chord. Here is an extract from an article I wrote last year in Prospect:
‘New ideas about human nature can contribute to a more substantive meeting of minds between left and right. Thoughtful conservatives are once again recognising the importance of social context, inequality and the limits to market rationality. Labour thinkers can use the research to make the case for collective action and social justice, but they may also become more cautious about the capacity of the central state to empower communities, and more interested in the role of social norms and civic institutions”
So as Tony Blair reminds us that he was above all a moderniser, some thinkers from the left are exploring how (small ‘c’) conservative perspectives can be incorporated in the social democratic story.
Call me a sad case, but I find this intriguing. The RSA is a strictly politically non-aligned organisation but that doesn’t mean we aren’t interested in politics. Indeed, over the last few years we have had fascinating events discussing currents in left, right and liberal thinking.
Usually when people talk about moving beyond traditional left and right it is seen as a political ploy – a form of triangulation. But exploring the possibility of philosophy and practical politics which seeks to reconcile the ideals of social justice with the insights of social conservatism is a fascinating intellectual exercise.
I see an RSA event in which social democrats and social conservatives (like Roger Scruton or Ferdinand Mount, for example) are invited to explore common ground. Any takers?
Small country big divide
A journey across England underlines the political and economic division in our small country.
I was a guest last week on Any Questions, hosted by the Workers Education Association in Newcastle . The other guests all tweeted their followers to get them to listen or send in questions, but I’m not that organised and sadly my tweeting is now restricted to an automatic notification of new blog posts.
Judge for yourself but I achieved the three key objectives I set myself:
- Mention the RSA
- Don’t make a fool of yourself
- Be reasonably politically balanced
I was helped in the final task by being sandwiched between Tory blogger Iain Dale and former Gordon Brown pollster and RSA speaker Deborah Mattinson. It may have simply been that her answers were better but Deborah was easily the most popular guest with the audience. The WEA is an organisation with roots and branches in the labour movement but even so the audience reaction underlined that the North East is systematically more left wing than most other parts of England.
It is also – and of course the points are related – the region whose economy is most dependent on public spending. So the future for the region is of deep and painful cuts which will be implemented with little or no public sympathy.
I have long thought that the North East needs to think boldly about how it can boost public service productivity both to improve services but also to exploit the commercial potential of cutting edge public services (after all, education, health care and security are all fast growing global markets). I tried to get something off the ground with ippr North but it turned into a damp squib. A more recent attempt to develop a project with a high tech health company specialising in remote heath care also came to nothing.
I know there is interesting work taking place in the North East, particularly through its universities (notable for the high level of regional collaboration). But the danger is that the region succumbs to a feeling of victimhood and victimisation in the challenging times ahead. I wonder whether the RSA in the North East can do anything to foster a more creative and positive response?
Boing!
This short post has three elements: self promotion, self indulgence and humour amusing only to its author (‘no change there’ I hear you chorus). If you have anything better to do with your time (eg watching paint dry, re-reading the Thompsons business directory, removing the Madonna or Queen songs which have unaccountably got on to your ipod playlist) I strongly advise you to do so.
On Tuesday I went to Leyton Orient to see the West Brom second string win 2-0 in the Inter-city Poundstretcher Vase (aka the Carling Cup). Apart from a great last minute goal from New Zealand wonder boy, Chris Wood, it was a pretty grim game, of which it could fairly be said ‘neither team deserved to win’. Still, at least there were two chances to go through the West Brom fans’ goal celebration ritual.
This comprises the supporters jumping from one foot to the other and punching the air out of time shouting ‘boing, boing’, followed by a discordant but strangely uplifting rendition of Psalm 23 (The Lord’s My Shepherd) and ending with the ungrammatical but elegant simplicity of ‘The West Brom’ clap, clap, clap ‘The West Brom’ clap clap clap. The whole thing lasts about a minute and has over the years occasionally been rudely interrupted by the opposing team equalising.
The next day, as is my habit, I visited Boing – the excellent unofficial West Brom supporters’ site – to see whether my player ratings matched those of other fans. As you will see if you visit it, Boing is to website graphics and technology what West Bromwich town centre is to urban aesthetics.
So…imagine my surprise and delight when a colleague at the RSA (presumably looking for a rise, clever girl) referred me to a link to my 21st century enlightenment talk (‘46,000 views and counting’ now you ask). The link is on what it turns out is one of the world’s most hip blogs (formerly a ‘zine and web site). Its slogan is ‘brain candy for happy mutants’ and its name is?
No really, this is worth waiting for…
Oh, how I laughed. Oh, how I patted myself on the head. Oh, how I marvelled at the inability of my long suffering PA Barbara to see this as the most exciting thing to have happened all week.
A comment on the ‘regressive’ budget
Channel Four on-line news contacted me about today’s IFS report showing that the Coalition’s budget measures are likely to be regressive. Of course, I wouldn’t say anything to Channel Four that I wouldn’t say to my loyal, clever and beautiful blog readers…..
Last November the RSA/2020 Public Service Trust published a pamphlet called ‘The Fiscal Landscape: Understanding contributions and benefits’. The top lines of this report were that:
* Taking tax, benefits and public services together public spending is very redistributive. One estimate is that on average across the lifecycle low income families with children are net gainers by nearly £13k pa while high income families are not losers by nearly £5k pa.
* The pivot point (the point at which people pay more that they receive) is higher up the income scale than might have been thought. Only between 30 and 40% of people pay more to the state than they receive.
* The pivot point for pensioners is even higher with fewer than 20% of pensioners paying more than they receive.
This is why it is very hard to reduce public expenditure without impacting more on the poor than the well-off. This is even harder when – as the Coalition has – you have made a blanket guarantee to protect the income levels of all pensioners.
And there is another factor too. If the Government were, say, to reduce the value of free health care to a rich family through cuts to the NHS this would represent a very small proportion of its family income. But the same cut would represent a much bigger proportionate reduction in the social income of a low income family.
Putting to one side the debate about the June budget, George Osborne will face a difficult choice in the October spending review. Either he genuinely makes the package progressive in its impact (which will mean hammering middle class entitlements) or he accepts that a cuts package is bound to be regressive (which threatens the Coalition’s centrist credentials).
The classic case in point is the proposed pupil premium which is intended to direct more funds to the poorest pupils. There are already several mechanisms in place which ensure poorer pupils have more money spent on them so the premium will have to do more redistributive work than the existing framework. But if overall pupil funding is flat this either means a generous premium – which will have to involve taking money away from better off pupils – or a small premium – which will be insufficient to compensate for the overall regressive impact of a cuts package.
This is very hard stuff. The Coalition needs to be clear in its aims, its policies and its message (a hesitant spokesman for the Treasury had at least three competing defences on the Today programme this morning).
But whilst sympathising with the Chancellor’s dilemma, there are two things I would advise the Coalition against strongly: don’t over-claim at budget or spending review time (something which dealt a heavy blow to Gordon Brown’s credibility), and don’t slag off the IFS (which is highly respected for its rigor and objectivity).
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