As we ponder the shape of post-crash politics, we should not lose sight of the wider aspects of the crisis besetting neoliberal capitalism, nowhere more evident than in Britain. It is not just that our long consumer boom depended on inflated house prices, reckless mortgage lending, debt-fuelled spending, record balance of payments deficits, misbegotten financial ‘innovation’ and inept regulation. The whole consumer confidence trick rested on a body of ideas about freedom and the market that have guided the policies of successive Conservative and Labour governments over the past 30 years, but which experience shows to be deeply inimical to personal well being, social cohesion and environmental sustainability.
Neoliberalism was forged in opposition to Keynesian social democracy, the fusion of social democratic politics and Keynesian economics that governed public policy during the ‘golden age’ of post-war capitalism from 1945 to 1975. But neoliberalism was always more than a recipe for quelling inflation, corralling the public sector, replenishing corporate profits and restoring the primacy of market forces in economic life. Behind its harsh remedies for the economic failings of the old regime lay the idea that the good society is one in which individuals enjoy maximum (and, in principle, equal) freedom to seek their own salvation in their own way so long as they do no harm to others. According to neoliberals, the form of society that best enshrines this ideal is one based on private ownership of productive assets, free contracts, competitive markets, commercial money and generalised commodity production. The only legitimate role for government is to establish (or re-establish) the institutions and norms that underpin these conditions.
The bursting of the house price bubble, the near collapse of the financial system, the onset of global recession and the emergency measures improvised by governments around the world to bail out banks and shore up spending – at heavy cost to the public purse – offer a stark reminder, if one were needed, that capitalism is plagued by boom and bust. But what makes the economic crisis so intractable in Britain is the human and social damage caused over the past 30 years by the neoliberal model and its continued hold over policymakers. Unhampered by this crippling legacy, government could set about rallying public support for a green new deal aimed at promoting economic recovery by combating climate change. As it is, our society lacks the cohesion and confidence needed to escape from recession, begin the transition to a low-carbon economy and restore faith in government.
The state we’re in
Even before the crash, there was abundant evidence that rising per capita income had failed to improve people’s sense of well-being. On average, people felt no better off than 30 years before, and growing material prosperity had been accompanied by a range of personal and social disorders: family breakdown, mental illness, personal insecurity, social inequality, declining trust, addiction, obesity and crime.
Perhaps the most telling evidence that Britain has become a stressed and dysfunctional society comes from international comparisons of child welfare. In a survey of 21 rich countries based on 40 indicators, ranging from babies’ birth weights to how often children talk to their parents, Unicef placed Britain in bottom place, just below the United States (Child Poverty in Perspective: An overview of child well-being in rich countries, Unicef 2007). Young Britons fared badly in each of the six broad categories into which the data were grouped – material prosperity, family and peer relationships, health and safety, behaviour and risks, education and subjective well-being – and fared worst of all in the sections on their social lives. Only 43 per cent were willing to describe their peers as ‘kind and helpful’. Britain’s teenage pregnancy rate is five times that of the Netherlands, whose children fared best overall.
The poor shape of British society is matched by the decadence of our politics. Spin, sleaze and smears are merely sordid surface symptoms of a deep-seated disease. The triumph of neoliberalism has pulled the entire political spectrum to the right, leaving a desert on the political left while the mainstream parties cluster around a narrow range of variations on a common commitment to global competitiveness, job-centred consumerism and perpetual economic growth. Historically, the division between left and right centred on the causes and consequences of social inequality and the scope for overcoming it. These ethical and philosophical issues have lost none of their bite, but they are no longer reflected in our politics. There is a gaping hole where the democratic green left ought to be.
Our political institutions too have been hollowed out. As the battleground of politics contracts, the techniques that parties use to poll or target voters grow ever more sophisticated, while the messages they communicate grow ever more manipulative. In the digital age, the career politicians and professional functionaries who control our parties no longer need activists to fight elections or argue a case. No wonder party membership has dwindled, party funding is a disgrace and the political class is discredited.
First-past-the-post voting makes things worse. Critics of this system have long argued that it exaggerates the winning margin, handicaps minor parties and forces millions of voters to choose between voting for no-hope candidates, voting tactically or not voting at all. Now a fresh charge can be added: that the system leads to tactical electioneering in which the parties effectively ignore most of the electorate and target swing voters in key marginals. The combined result of all these factors – elite consensus, deracinated parties, media-led politics and disproportional representation – is a rumbling crisis of legitimacy. When the two main parties each receive roughly 35 per cent of the vote on a turnout of 60 per cent, it is perfectly possible for one of them to win a working parliamentary majority with the support of little more than 20 per cent of the electorate.
The one source of hope in an otherwise bleak political landscape is that with nationalist parties in office for the first time in Scotland and Wales, the UK is ceasing to be a centralised, Union state, and even in England the old system of two-party politics has started to dissolve. With the Conservatives back in power at Westminster, as seems increasingly likely, whether alone or in tandem with the Liberal Democrats, and with the SNP returned for a second term in Scotland, a further loosening of the Union is a strong possibility and the strange death of Labour England cannot be ruled out. In these circumstances, space would open up for a new political formation of the left. Before examining this prospect, however, we need to consider how Britain arrived at its present sorry plight and what needs to be done to revitalise the left.
The fall of the post-war settlement
The post-war settlement rested on three pillars: the maintenance of full employment by means of counter-cyclical demand management; a mixed economy with a major role for public ownership, national planning and market regulation; and a welfare state that provided a range of tax-financed social services and cash transfers, the former available to users mostly free of charge, the latter subject to various qualifying conditions or means tests. At the same time, the ongoing management of the national economy became the joint responsibility of government and the corporate organisations of employers and workers. This tripartite system of ‘industrial politics’ was largely informal and operated behind closed doors, in contrast to the open forms of ‘social partnership’ that flourished elsewhere in western Europe but in keeping with the paternalistic and technocratic character of the British state.
Prior to 1945 capitalism had relied on periodic mass unemployment to contain wage pressure and maintain work discipline. With wages determined by collective bargaining, the consequence of removing this built-in stabiliser was that the growth of money wages persistently outstripped the growth of output per worker, pushing up labour costs per unit of output. Typically, employers sought to claw back the wage increases they had conceded by raising their selling prices in order to protect their profit margins. In the 1960s, though, as the pressure of international competition intensified, profit margins were squeezed, curtailing investment and hampering firms’ ability to compete with rivals overseas. Higher prices simply provoked fresh demands for higher money wages. Thus, as long as fiscal and monetary policy was dedicated to preserving full employment, wages and prices went on chasing each other upwards in an endless spiral.
There were two, but only two, solutions to this problem. One was to abandon the wages ‘free-for-all’ and introduce some form of pay policy, not as a temporary expedient, but on a permanent basis. The other was to abandon the commitment to full employment and institute an old-fashioned deflationary purge. The former offered the labour movement the chance to exchange concessions on pay for advances in economic democracy, at economy-wide, enterprise and workplace levels. Tragically, the chance was spurned. The idea of tackling the country’s pressing economic problems by extending democracy into the citadels of economic power held little appeal for most of the left and the labour movement. Thus, initiative and responsibility for resolving the crisis passed to the right, which seized them with alacrity.
The first wave of the neoliberal revolution, presided over by Margaret Thatcher, was largely concerned with dismantling the old regime. Incomes policy and demand management gave way to monetary discipline and fiscal retrenchment; nationalised industries were privatised; financial markets were unshackled. The voluntary system of industrial relations dating back to the days of Lloyd George was replaced by a legal framework, emasculating the unions, deregulating the labour market, expelling the TUC from the corridors of power and undermining the position of the labour movement as an ‘estate of the realm’.
The aim of the second wave, initiated under John Major, but pursued with missionary zeal by New Labour, was to build a market state. On the macroeconomic front, Tony Blair and Gordon Brown consolidated the work of their predecessors by handing over responsibility for setting the base rate of interest to the Bank of England and introducing fiscal rules designed to keep public borrowing within ‘prudent’ limits. It was in the field of social policy, however, that New Labour broke new ground, seeking to embed the ideal of homo economicus more deeply into everyday life.
To reduce welfare dependency and avoid inflationary labour shortages, the government launched a series of welfare-to-work programmes targeting groups who were or risked becoming disconnected from employment. To promote self-reliance, it sought to shift provision for retirement pensions away from the state and towards the private sector; it also introduced student loans and top-up fees. Above all, New Labour set out to reform public services by separating finance from provision, creating quasi-markets, expanding consumer choice and encouraging managers to adopt commercial norms and practices.
The overall result of this sustained exercise in social engineering was to unleash capitalism, just as its architects intended. What they did not reckon with were the human, social and environmental consequences. If I am persuaded to dedicate myself to owning, earning and spending, no one should be surprised if I end up caring only for me, more, now. If the scope of the market is extended into areas of economic and social life from which it should be excluded, from public utilities and social services to unpaid care-giving and mutual self-help, we increasingly experience and think of ourselves as atomised market participants – employees, customers or consumers, as the case may be, rather than as citizens, neighbours, colleagues and associates. And if we buy into the fantasy of boundless economic growth, we put both human civilisation and life on earth at risk.
The story of Britain over the past 30 years echoes Karl Polanyi’s account of the development of capitalism during the period from 1815 to 1845, when a similar drive to establish a ‘self-regulating market’ gave rise to similarly destructive consequences. (The Great Transformation, 1944, Beacon Press edition, 2001). Modern economists, Polanyi noted, study market systems in abstraction from culture, society and politics. But all economies, including those based on the supply-demand-price mechanism, are embedded in specific forms of social life. The vision of a free-floating, self-regulating market system is an impossible object, like one of Escher’s images. Attempts to bring it into being are both futile and destabilising, for they provoke protest and resistance, though the forms these take and the ends they serve are diverse. After the Wall Street crash of 1929, for example, when laissez-faire was discredited by the Great Depression, three rival political projects battled for supremacy: fascism, an authoritarian collectivism of the right; communism, an authoritarian collectivism of the left; and a liberal collectivism of the centre-left, exemplified by Roosevelt’s New Deal and Sweden’s ‘historic compromise’ between capitalism and socialism.
The lesson of the 1930s, as of the 1970s, is that in periods of organic crisis a progressive outcome is by no means guaranteed. To be sure, fascism was eventually defeated and, in the west, Keynesian social democracy gave capitalism a new lease of life, but only after ten years of worldwide economic carnage and six years of total war. And both the 1930s and the 1970s highlight the importance of moral and intellectual leadership in framing new policy paradigms and mobilising support for radical reform. In the end, the reason the British left failed to counter the rise of neoliberalism is that it had no alternative hegemonic project of its own.
What is to be done?
The British left today is a shadow of its former self, a diffuse and amorphous body of opinion with no organised presence in mainstream politics and little impact on public affairs. How can it become a serious political force? In thinking about this question, we need to be clear about timescales and distinguish carefully between policies and projects. In a world where questions of economic and social organisation impinge on the very future of our planet, four timescales are relevant:
the short run – roughly speaking, anything up to 12 months ahead;
the medium run – up to about four years ahead, the length of a ‘normal’ parliament;
the long run – extending over several parliaments up to, say, a generation or 25-30 years; and
the very long run – subdivided into the human lifespan, as measured by the expected lifetime of a child born in the west today; and eco-time, the timescale appropriate for thinking about eco-systems and the impact of human activity on the biosphere, measured in centuries and millennia.
The project of rebuilding the left spans all these timescales. Conventional politics deals only with the short and medium run. This is what preoccupies the political class and the media, their eyes fixed firmly on the next election. Inevitably, if this is your time horizon, you will be mainly concerned with trying to cope with the issues that are thrown up by the ongoing development of capitalism and the exigencies of party political conflict. It is the timescale natural to anyone who is primarily concerned with managing the existing social order. Of course, managing the system is difficult enough and may be done well or badly. But ever since the French Revolution, the left has aspired to transform society, an even harder task. And for socialists – once the core of the left, but now in the west almost an endangered political species – this has meant working towards a post-capitalist civilisation.
Some of us believe that this should still be our aim. It will not, of course, be achieved any time soon, but this does not mean that the idea of post-capitalism has no relevance to the problems we face today. The reason we need to look beyond the short and medium run and think about life after capitalism is that if we do not, we shall simply be buffeted about and carried along by the prevailing winds and tides, rather than steering towards a goal of our own choosing. In other words, the left needs not only policies for the short and medium run but also a project oriented towards the long run and the very long run.
Naturally, policies and project must connect. It’s no use proclaiming long-term goals as the solution to today’s problems, because that gives you no purchase on the current situation and simply means that other political forces will take charge and decide what actually happens. But neither can we afford to ignore the long run and respond to today’s problems on a purely pragmatic basis – ‘doing what works’ in the current vogue phrase – because that does nothing to change prevailing social institutions, cultural patterns and power relations.
The distinction between the long run and the very long run turns on the difference between transforming capitalism and transcending it. At a time when US global supremacy is coming to an end and the neoliberal temple is badly damaged (though certainly not destroyed), transforming capitalism involves, above all, a concerted effort to replace neoliberalism with a new regulated ‘social market’ policy regime. Transcending capitalism means, quite literally, building a post-capitalist society.
Undeniably, a wider range of forces can currently be mobilised in support of a change in policy regime than are prepared to work for the end of capitalism. But just as the left in general needs to look beyond the short and medium run, so serious opponents of capitalism need to convince their allies in the struggle against neoliberalism that if the beast is merely caged and not killed, pressure will eventually grow for the bars to be removed and the cycle of crisis, regulation and deregulation will repeat itself.
Hegemony, agency and alliances
It remains to consider what is usually known as the problem of agency. There are really three questions here. What social forces have an interest in dethroning neoliberalism or transcending capitalism? What kind of organisation is required to promote the development of these forces into a stable historic bloc?
And what are the sources from which such an organisation, a ‘Modern Prince’ as Gramsci called it, might emerge? It is not difficult to identify the potential components of a progressive historic bloc: trade unions; the poor and the dispossessed; environmental groups and campaigners; secular and religious critics of consumerism who are looking for a more meaningful social relationships and a better quality of life; movements seeking to uphold human rights and challenge social divisions, whether of gender, race or sexual orientation; and movements seeking to create a fairer, less divided global order.
Social forces such as these have always offered resistance and looked forward to another world. And from Gerard Winstanley and the Diggers in 1649 to the Lucas Aerospace shop stewards in the 1970s, they have sometimes offered radical democratic and egalitarian alternatives to prevailing forms of economic and social organisation, albeit on a temporary and local basis. The problem is how to persuade these disparate groups to rise above their particular sectional standpoint. How can they be brought together in a common national (and international) struggle aimed, in the first instance, at replacing neoliberalism and, in the long run, at building a new, post-capitalist civilisation?
This problem will not solve itself. It calls for moral and intellectual leadership from a committed body of people who are themselves rooted in popular movements and whose primary aim is not to contest and win elections but to articulate a hegemonic project covering society as a whole and to develop a programme around which a broad alliance can coalesce: in short, a political party that is neither an election machine nor a Leninist vanguard. Such a party would need to take cultural and intellectual work seriously. It would also need to be scrupulously democratic in its internal procedures and resolutely non-sectarian in its dealings with other organisations, striving to uphold the highest standards of honesty and integrity, to win public respect and to reach agreement on common positions and policies, while finding non-antagonistic ways of living with disagreement.
No existing party comes anywhere near meeting these requirements. The best we can do is set in motion a process from which a ‘Modern Prince’ might eventually emerge. One way forward is to work towards the formation of a loose-knit electoral alliance drawn from the remnants of the Labour left, former communists and Trotskyists, greens, Scottish and Welsh nationalists, disaffected Liberal Democrats and unaffiliated activists, united in opposition to the neoliberal mainstream and dedicated to campaigning for electoral reform and a green new deal.
The alliance could not hope to make much headway at Westminster until some form of proportional representation is achieved. However, local elections offer more fertile ground, as demonstrated by the modest success of the Green Party. There is also scope for progressive alliances in Scotland and Wales, which would help the cause of political realignment in England, whatever happens to the Union. And even where there is no point in contesting parliamentary elections, prospective alliance partners can still engage in talks, not just about goals and strategy, but about how the left might intervene in elections around a platform that puts measures to combat climate change at the heart of a programme for economic recovery.
In times of recession, public spending and borrowing must increase, to compensate for the downturn in private spending. Faced as we are with climate change and other pressing ecological challenges, the increased public spending must be focused on programmes to address these. But in the course of responding to the present crisis we need to lay the foundations for moving to a very different society, one that is socially just and ecologically sustainable.
Far from aiming to restore GDP growth and resuming business as usual, as current forecasts assume, we need to move towards a slower material growth rate and in the longer term a steady state economy. We need to concentrate on the quality of life, on the well being of our citizens and also those of the rest of the world. There is now overwhelming evidence that happier, healthier societies are more equal societies.
As Polly Toynbee has recently pointed out, Scandinavian levels of health, education and social services depend on Scandinavian levels of public expenditure and taxation. And to the extent that the level of public debt really is a problem, this should be dealt with not by cutting expenditure (apart from dangerous or useless items such as Trident, aircraft carriers and now mini-Titan prisons), but by a proper system of progressive taxation.
There is no shortage of ideas and vision, or of evidence that these ideas would work, if only they could be implemented. Rather, our problem is political. For the moment green new dealers are a minority with little influence on mainstream politics.
We must, therefore, do what we can to change the terms of public debate and shift the balance of political forces. It will be hard work, but what is the alternative? The old left has no new hegemonic national project, New Labour’s project is not of the left and the non-Labour left is lost in the wilderness.
The time has come to learn the lessons of our history and reclaim the future.
This article is based on Feelbad Britain: How to Make it Better, edited by Pat Devine, Andrew Pearmain and David Purdy (Lawrence and Wishart, 2009)
David Frayne writes that the shorter working week promises more freedom and
A new report from Autonomy proposes a radical set of policies to boost the economy and improve quality of life by shortening the working week, writes Eleanor Penny
We need democratic control of the financial sector. An interview with Saskia Sassen
We can harness the power of public finance to bankroll a better future, writes Lavinia Steinfort
The radical economist outlines how she'd overhaul the UK's broken economy.
Grace Blakeley dissects the failure of finance capital and calls for radical measures to take it back under democratic control