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.
Help me improve my performance before it’s too late, please
I am due tomorrow to give the keynote address to the annual conference of the Centre for Public Scrutiny. Actually, it’s only me calling it ‘keynote’. This is a private joke going back to 1996 when part of my job for the Labour Party was to enforce the rule than no shadow minister should make any spending commitments. It didn’t take long for people to get the message, so the enforcement job soon became nugatory. All except, that is, for a very fastidious, and more than slightly self-important, junior spokesman.
I remember one Friday night having to go back to Millbank at almost midnight because the shadow minister was insisting that I check his speech. No matter that I assured him I trusted his judgment: being such an important figure making such a newsworthy speech, he feared that any gaffe would grab the national headlines and jeopardise the General Election (in truth, he could have run naked through the streets shouting ‘I’m a teapot’ and made not a dent in Labour’s prospects).
So it was that I left my dinner party and found myself standing in a deserted Party HQ as the fax machine started to churn out the very lengthy speech. There was something so ‘Pooterish’ about the wording of the front page that I have kept it to this day:
‘Keynote address to the Gwent Community Safety Conference (morning session)’.
Anyway, back to my big moment tomorrow. I am finding it a bit challenging to get back into speech mode after my annual lecture, so I would be grateful for any advice.
My current thinking is that formal scrutiny and accountability will be subject to a fourfold assault:
1. On grounds of efficiency, deregulation and decentralisation the Coalition Government is committed to dismantling much of the apparatus of target and inspection, see for example the abolition of the Comprehensive Area Assessment.
2. Deep public spending cuts will make many public services feel like battle zones with services and staff fighting for their survival. In such an atmosphere not only will corners be cut, but those who complain may be seen as unrealistic or irrelevant.
3. Devolving power to individual services providers, users and communities and giving them a greater right to run their own services can be seen as an alternative form of responsiveness and empowerment to that offered by the sometimes blunt and bureaucratic methodologies of formal accountability.
4. The opening up of public information, for example the COINS database on public spending will offer more opportunities for ‘DIY’ scrutiny and accountability. There may indeed be an argument that accountability can now be left to the whistle blowing of public spirited or anti-establishment individuals.
All of which leads me to conclude that the champions of scrutiny need to strengthen the links between this concept and two others: evaluation and deliberation. Scrutiny must be seen, on the one hand, to offer a more rounded and in-depth exploration of performance than can emerge from on–line data mining. While, on the other hand, scrutiny needs to be linked to more participative forms of decision making so that it is less about questions like ‘why was this done?’, ‘how did the service perform?’ and ‘who is to blame for failure?’ and more the basis for better decision making about future policy.
Most of all – and regular readers won’t be surprised to hear me say this – we need to get behind the tendency for scrutiny and accountability to reinforce the idea that service outcomes are simply a reflection of the performance of politicians, managers and staff. A more forward looking and participative model of scrutiny enables the focus to move towards asking ‘what do we – the public service provider and the wider community – need to agree to do together to protect and improve service outcomes?’
I am making the speech in 22 hours so if no one gives me helpful comments and I flop I will make sure to share the blame with you, my dear readers.
A day for resentment?
If anyone’s interested and not watching the footie, I am at 9.15 this evening taking part of what may be an interesting conversation on Radio 3’s ‘Night Waves’ about ‘resentment’. I think we will start off talking about the nature of resentment and how it is different from, say, a sense of injustice. The conversation may then turn to today’s budget and ask where in British society we might see resentment emerge as we move into a four year period of higher taxes and service cuts.
Probably the last thing readers want is more budget analysis, but as it is such an important statement and, as I wrote about it yesterday, I thought I might share my top lines.
The budget can be looked at socially, economically and politically.
Socially, it is fair in one sense and unfair in another. Fair in that the tax and benefit pain is reasonably evenly distributed, although even the Treasury’s own figures show the poorest ten percent being the second hardest hit decile overall. Unfair in that some will argue we should give extra protection to the poorest in hard times, and because the public spending cuts to come are almost certain to impact the poorest hardest.
Economically, the whole package rests on the expectation that the private sector will grow steadily and strongly. If this is the case then the Coalition may well be in a position to reduce and even halt planned expenditure cuts in years 3 and 4 of the plan. If the private sector doesn’t grow, then not only might it be that the plan is judged to have been misguided (as Labour is arguing) but the consequences of cuts – especially on overall unemployment – will be much worse than today’s Treasury predictions
Politically, as I said yesterday, I suspect the Coalition will get reasonable support for its boldness for some time, maybe 18 months or so. But by the time we get to autumn/winter 2011 the Government will be badly in need of good news to maintain its cohesion and its support in the country. Of course, a lot depends on how Labour behaves. Its response today was, to my mind, too shrill and short-termist. Most voters do blame Labour for the state of the public finances, and if there isn’t a second economic downturn (most economists don’t think there will be), then Labour will have its dire predictions thrown back in its face.
The final note is that I am non-plussed about how the Coalition is going to reduce education expenditure by 4-5% a year for each of the next four years while at the same time introducing a generous pupil premium and funding an expensive policy of supporting free schools (something which relies in the short term on allowing more surplus capacity in the system). Michael Gove is not stupid and he is a powerful figure in the Coalition. It will be fascinating to find out how he hopes to pull this off.
Local collaboration will be even more necessary in the tough times ahead
What does the Coalition programme mean for local government? Some of the most specific of the 28 points in the ‘communities and local government’ section focus on planning where the thrust is double devolution. Councils see the return of local planning powers, a measure which will presumably be used to block new housing developments where there is local opposition. But there will also be steps to give neighbourhoods an enhanced role in very local place shaping.
Beyond this there are three sets of issues. The first is a commitment to ‘a radical devolution of power’. Beyond planning, the main specific measures are a general power of competence, cutting local government inspection, scrapping ring fenced grants and the abolition of the Comprehensive Area Assessment. However, as local government has a minimal place in the NHS, crime, schools and ‘social action’ sections, and as there is no mention of Local Strategic Partnerships or any other co-ordinating body, it doesn’t appear this devolution of power will include a wider strategic function across local public services.
Indeed the opening up of schools to new providers, the strengthening of the right of local communities ‘to save local facilities and services threatened with closure’, the direct election of local police chiefs, the freeze on council tax for one (and possibly two) years and the enhancement of rights for residents to veto ‘excessive’ council tax increases, could all be seen as measures that will make it harder for councils to get their way. In this sense the agreement confirms the impression of all the party manifestos which is the absence of a coherent framework for local governance.
It is difficult to know what will be the outcome of the second theme; the reform of local governance. Councillors will no doubt be pleased to see the back of the Standards Board, have some fun with the right to vote on remuneration packages for chief officers but possibly be less enthusiastic about publishing every item of spending over £500. But how many will vote to return to the committee system, and will the 12 big cities take up the opportunity to have mayors, or fight for a ‘no’ in the ‘confirmatory’ referendum?
The third theme isn’t in the local government or public services sections but in paragraph three of the introduction by the two leaders: ‘We are…agreed that the most urgent task facing this coalition is to tackle our record debts’ and in the pledge to ‘significantly accelerate the reduction of the structural deficit….with the main burden…borne by reduced spending’. It is this issue which is certain to be the most important for councils.
In all the talk of the £6 billion savings package, which George Osborne will unveil next week, it is easy to forget this is just the tip of the iceberg. We will have to wait for the budget and the autumn spending review to see the full scale of mainstream budget reductions. But the likely pressure on local government budgets looks even greater in the context of other Coalition spending pledges, including major areas like the NHS, schools and overseas aid which are to be safeguarded from any reduction. With councils apparently having less scope to raise money locally and with communities having more power to slow down or block unpopular cuts, to say councils are between a rock and a hard place is an understatement.
Unless I have missed something, there is little to suggest the Coalition is interested in supporting – let alone incentivising - initiatives like Total Place (perhaps this is just too humdrum for these heady days). But local collaboration and budget pooling is surely vital to minimise the impact of the coming cuts on the most important aspects of local life and the most vulnerable local people. Maybe, in fact, the most important message of the Coalition programme for local public service leaders is actually page seven where we see the photogenic Dave and Nick sitting together committed to overcoming old rivalries for the good of the nation.
My demon diary
I used to take great pride in posting a blog every day. But now I seem to fail at least once a week. It isn’t a loss of enthusiasm; merely that my diary has become a voracious beast from which I can neither run nor hide. I’ve also been tardy in responding to comments even though I am always rather touched that people take the time to respond to my ramblings.
In a desperate attempt to fight back I have written a piece for today’s Times which should relieve at least some of the pressure by discouraging any speaking invite for a public sector conference.
I am writing this at Heathrow on my way to give a lecture in Northern Ireland.
My long term reader (sorry mum, we really must book up a drink after work soon) may remember my enthusiasm for cultural theory and its four paradigms of social change; the egalitarian, the individualistic, the hierarchical and fatalist.
A few months ago, after a conversation with RSA Trustee Lord Richard Best, I foolishly asserted that I could use cultural theory as a useful way of thinking about the continuing problem of social segregation in Northern Ireland.
Actually, I might even have been right. The theory can be applied; seeing segregation driven primarily by egalitarian solidarity within the different religiously affiliated based communities, suggesting that individualism might be the most powerful force driving against segregation (if, for example, the only new build homes are in integrated neighbourhoods), and recognising that there is little hierarchical drive behind greater integration.
The problem is that the whole thesis can be summed up in five minutes and I’ve got thirty to fill. At this point my lack of detailed (OK, ‘any’) knowledge about the nature of segregation, or of past attempts to solve it, come into play. ‘Ah’ I say to myself ‘looks like I’m going to have to do some research’. At which point, with a malicious sparkle in its eye, my diary (which has by now become an imaginary demon with gap teeth, red eyes and bad breath) replies ‘jolly good, you’ve got a window in June 2010’.
Fortunately for me I fastened like a barnacle on to a patient and wise advisor at the Northern Ireland office of the Chartered Institute of Housing. When I first explained my predicament she recommended books, then, as my appeals became more pathetic it was articles, and then finally she started to send me selected quotations (not long complicated ones, mind you).
I have no idea how it will go. I could ask you to remind me to tell you next week. But my diary tells me that by Monday I will have to have become an expert on parenting policy (thankfully, my sons don’t read my blog) and how the civil service should manage the transition between administrations.
I don’t even have time to develop my new idea for a film; (working title ‘Appointment book with the devil’, about a man who despite his external show of self confidence and control has become demonically possessed by his own diary.
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