Criticism is not enough

New Labour did not implement its policies of the past decade in a vacuum, says Jeremy Gilbert. The question now is whether the left has an alternative

January 3, 2009 · 13 min read

It’s hard not to feel a little cheered. The stock market has seen record falls, Keynes is back in fashion and Alan Greenspan is having an existential crisis. Does this mean we’ve won? The answer depends on which ‘we’ is asking. For ‘centre-left’ advocates of financial regulation, a long period at the margins of mainstream policy and academic economic orthodoxy may well be at an end. However, for those who would like to see a substantial revival of the social democratic project with which Keynesianism has been traditionally associated, or even a radical attempt to build up new democratic institutions for the 20th century, there is little to be cheerful about.

The key difference between the situation today and the aftermath of the great crisis of 1929 is the absence of any identifiable constituency or agency capable of acting as a countervailing force to finance capital. The willingness of governments to throw 30 years of neoliberal economic doctrine out of the window in the past couple of months attests to their absolute terror at the thought that finance might lose its hegemonic position. It seems clear that no other force is currently capable of exercising that role: of organising, ordering and stabilising a sufficient range of social spaces, actors and institutions to preserve some semblance of civilised order.

At local, national, and global levels, institutions that could even potentially act as democratic counterweights to the power of speculative capital are hard to discern. Contrast this with the middle decades of the last century, when communism, organised labour, and the strength and autonomy of municipal governments all posed serious challenges to capital and made it possible for governments to implement the very high levels of regulation and socialisation typical of ‘Fordist’ capitalism.

The weakness of the state

The importance of this observation is that it draws our attention to one always-salient fact: the relative weakness of all governments when faced with the dynamic and relentless force of capitalism. Capital’s capacity to innovate, to reinvent and reorganise itself, to circumvent regulation and to disaggregate opposition has been well understood at least since Marx. Unfortunately, many political actors, commentators and citizens seem even yet to underestimate it.

The experience of the mid-20th century has left a powerful residual memory of a time when great power was in the hands of the state. During that time, a particular configuration of late-industrial technologies (electrical grids, advanced railway systems, motorway networks, early broadcast networks, pre-nuclear advanced munitions) required unprecedented levels of centralised co-ordination and gave national governments historically unique capacities to control flows of resources, people and ideas.

There are two main points to observe here. One is that the kinds of control and regulation that could be exercised by national governments during that epoch were specific to an industrial-technological context that has long been superseded in the cybernetic age, when punitive tax regimes or stringent labour laws can be evaded at the click of a mouse. The other is that even under those favourable technological circumstances, governments were only ever able to discipline capital effectively in situations where capitalism itself was still relatively underdeveloped, or where powerful social coalitions could be consolidated and mobilised against it (such as the alliance of unions, government institutions and manufacturers that made Roosevelt’s New Deal possible).

Today, globalisation and the difficulty of effective labour organisation leave left-wing governments in a comparatively much-weakened position. Despite this, the great Fabian fantasy – the dream of benign and omniscient government re-ordering social relationships from the centre of administrative power – maintains a grip on the imagination of both ‘left’ and ‘centre-left’ that is crippling in its consequences.

The weakness of the left

Radical critics have consistently and correctly pointed to New Labour’s enthusiastic embrace of most of the neoliberal programme, and suggested possible alternative directions. But they rarely, if ever, do so with any attention to this fundamental question: what might have to happen first in order to make it politically possible for governments to pursue such progressive agendas?

For example, can anyone really doubt that if New Labour had attempted to resist the international imperative towards privatisation, as many wish they had, then the press and the City would have turned on them savagely? Does anyone believe that New Labour in 1997 had the kind of movement behind them that has enabled Hugo Chávez et al to stand up to the ‘Washington Consensus’? Even with regard to such a controversial policy as the Private Finance Initiative, New Labour is entitled to ask how else its critics would have funded a massive wave of capital investment in the public sector without drawing on non-existent treasury resources – resources which could in turn only be replenished by means of politically intolerable tax rises.

This is not to say that the Labour government first elected in 1997 could not have pursued a progressive agenda as an alternative to its uncritical implementation of neoliberalism. But it is to raise the question of what exactly it is that critics on the left think that ‘progressive’ governments ought to do under conditions that are clearly unfavourable to the pursuit of democratic objectives. Leftist criticism far too often falls into the same trap as centrist Fabianism: imagining, or implying, that governments simply act on the world in a vacuum, making things happen just because they want them to. A more sophisticated approach would be to ask why the government has done so little to act to change the broader political conditions themselves, and to think about what it would have looked like had it tried to do so.

The Fabian fantasy is generally a delusion of the left and the technocratic ‘centre’, while the right normally suffers from it only during periods of desperation. The recurring fantasies that ‘traditional’ values can be re-asserted by government diktat, or that building prisons will somehow reduce crime, regularly grip the Tories when they are presiding over a major recession or mired deep in long-term opposition, but are usually abandoned whenever actual policy programmes have to be implemented.

The Conservative tradition proper has always understood that political success was not just about government making the right decisions, but about the mobilisation and selective empowerment of multiple constituencies. Today, we are living with the consequences of one of the most brilliant strategic realisations of this insight in British history. Central to the consequences of the credit crunch in the UK is the recruitment of a large section of the population into the speculative economy over the past 25 years.

Securing (and deploying) cheap credit against rising asset values is not merely a typical behaviour of contemporary capitalists: it is, as Braudel showed, arguably the constitutive practice of capitalism as such, ever since its beginnings in medieval mercantile Italy. The transfer of vast quantities of social housing stock to the private sector (at below-market prices) in the 1980s, the attendant policy of restricting its replenishment by denying local councils the right to build, and the deregulation of the financial services industry, all had the long-term effect of both restricting the supply of housing in this decade and enabling large numbers of new homeowners to benefit in cash terms by borrowing against the rising market values of their homes.

The decade 1997-2007 saw an orgy of consumer spending and rising household debts fuelled by mass participation in the consequent bubble. The result is that a falling property market has potentially devastating political implications. But the long-term socio-political consequences are even more dramatic. In effect, a large section of the British public has, for the first time, seen its spending-power derived from assets exceed (if only for a short time) that derived from wages. The result is that for the first time, a large section of the public has had very good economic and emotional reasons to think of themselves as, in effect, capitalists: concerned more with interest rates than wage levels and benefiting from rising asset prices.

Whatever the outcomes of the current crisis, the point to take from this situation is that the Thatcher government knew very well what it was doing in the early 1980s. Despite the obvious potential dangers, it was creating a new constituency of speculative asset-owners drawn predominantly from the social group who had previously been the mainstay of the labour movement: skilled manual workers. In doing this, it was creating a new locus of power, which could be expected to pressure any government to pursue particular policy objectives – low interest rates, easy credit, low inflation, low levels of financial regulation – irrespective of that government’s nominal political identity. We are still living with the consequences.

An alternative strategy

The question is: what might a progressive government’s equivalent strategy be? What would be our equivalent of council house sales: a policy that would be relatively easy to effect, but whose long-term consequences would permanently alter the power dynamics of British political culture? It is to this question, and not to a shopping list of fantasy policies, that the left should turn its attention in the coming years.

From this point of view, there are several key areas in which no effective action has been taken by New Labour and which could have provided the basis for a sustained and strategic route out of the current crisis if they had been attended to earlier.

First, for example, it is only in the past three years that the government has made even insignificant moves towards encouraging a revival of organised labour, and its record on pushing for flexible working across Europe more than offsets this gesture. Yet there cannot be any meaningful democracy in a society in which the entire field of work is depoliticised. It may be that the trade union movement as it currently exists needs to be reinvented beyond all recognition, but this is the kind of process in which governments can take a co-ordinating role, and politically it would have been quite possible for government to promote the idea that trade union membership is a social good (encouraging social solidarity, a meaningful engagement between employers and employees, and so on), and to facilitate the full-scale modernisation of British trade unionism. This has not happened to any significant degree: if it had, then a revived labour movement could now be proving an invaluable ally to a government faced with financial crisis and Tory revival.

Second, the distorting effect of media monopolies on our political culture is very well known. The rise of blogging, social networking and alternative web-journalism offers unprecedented opportunities for the growth of a new media culture that is far more democratic in its structures and organising ideologies than the one that has prevailed for the past few decades.

Yet government has not even begun to think about the possibilities of strategically encouraging such a development. Instead it cowers before Murdoch on a regular basis and even makes threatening gestures at the BBC (that great relic of the late industrial age, and of its hierarchical but collectivist values) when it thinks that is what he requires of them.

Third, it is widely acknowledged that government has made no serious moves – outside of the special case of national devolution – to reverse the Thatcherite trend towards the evisceration of local government. Even the Greater London Authority has no serious power, and that of the London mayor is strictly limited. However, the prevailing critiques of this situation only reflect the persistence and ubiquity of the Fabian fantasy.

Almost invariably, the ‘new localism’ speaks the language of decentralisation, of Whitehall ‘giving up power’. What this discourse fails to grasp is the extent to which local government has not simply been weakened by centralisation to Whitehall, but by the same global processes that have weakened Whitehall itself. Local government is not weak simply because Thatcher and Blair took some of its powers away, but because the mobility and fragility of local communities makes it increasingly impossible to mobilise constituencies against the actions or wishes of international corporations, which work tirelessly to acquire the rights to develop land, take over public services and speculate on property in their localities.

The point is that Whitehall does not actually have the power the ‘new localists’ imagine it to have accrued at the expense of localities. Rather, the UK government has largely acted as a conduit through which the international neoliberal programme to dismantle layers of potential opposition to capital has been implemented.

This is not to say that government could play no role in enabling new, localised democratic communities to come into being. It could do a great deal to encourage and facilitate the development of new and more participatory forms of local politics from which new centres of democratic power might emerge.

But, as in the case of the labour movement and the media, it would be a mistake to imagine such developments in terms of central government ‘handing down’ power from a position of prior omnipotence. It would be much more useful to conceptualise the process in terms of government actively facilitating the growth of alternative centres of power which might (or might not: this is always a danger) prove useful allies in the struggle to contain, direct and re-organise the creative/destructive force of capital.

Could any of this happen? Maybe, maybe not. What is clear is that the left will be wasting its time, and will never recover any credibility, if it merely harps on about all that the government has done wrong without proposing a viable alternative strategy. This is a moment when the crisis of neoliberalism may well prove terminal, but we will achieve very little by crowing or by proposing unworkable returns to the policy strategies of the 20th century.

The question that will soon emerge is whether the route out of the crisis will involve some revival and reinvention of democratic forces, which might help to stabilise the world economy without concentrating still more power in the hands of unaccountable institutions like the WTO or the great investment banks; or whether a new phase of capital accumulation will simply see state institutions take on an increasingly authoritarian role in securing conditions for profitability and social stability, with Singapore – or even China – replacing the US as the world’s hegemonic model. Those who hope for the former outcome would do well to think carefully about exactly what to demand of beleaguered governments, at a time when still-powerful voices will be calling loudly for the latter course to be followed.

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