The financial crisis and its aftermath are often presented by the media as though they were as unavoidable as a natural disaster, a regrettable but inevitable consequence of market forces which offered only one ‘credible’ response from politicians. Andrew Fisher – co-ordinator of the Left Economic Advisory Panel and policy officer at the PCS union – succinctly explains how the crisis and the political response can be understood as the logical outcome of a series of political choices guided by an ideology which has gripped government economic policies of all major political parties since at least the election of the Thatcher government in 1979.
He demonstrates how the Keynesian/welfare state consensus had started to crack even before this point, during the 1970s, a decade in which workers took a relatively higher percentage of national income in wages – itself no doubt the product of stronger trade-unions, with greater collective bargaining power, and a relatively high level of militancy. With the global oil crisis and mounting social unrest, an enormous amount of ideological effort went into undermining public support for the previous social settlement, and behind a deliberate series of policies pursued in the interests of the rich and powerful by successive generations of politicians, most aggressively under Thatcher but no less steadily under New Labour.
The familiar ‘neoliberal’ policy menu – selling off public assets (even those generating steady revenues for the taxpayer) through privatisations; allowing manufacturing to collapse in favour of an economy built on financial markets and a deregulated banking sector; smashing the unions and restricting the rights of workers; undermining social housing and creating a crisis of supply; involving private finance at the heart of public investment in services and infrastructure via PFI/PPP deals, and all the rest of the toxic mix of neoliberalism are said to amount to the ‘failed experiment’ of the book’s title. The book offers a solid factual account of the extent of the dramatic redistribution of power and wealth away from ordinary people and into the hands of such a small elite of the mega-rich.
The financial crisis itself cannot be divorced from these political choices, Fisher argues, since the trigger for the collapse – the ‘sub-prime’ mortgage market, where banks lent money to people who would obviously not be able to repay them – was itself the consequence of an economic strategy built on burgeoning credit and its flip-side, unsustainable levels of consumer debt. Spivs and speculators played the money markets like a giant casino. Auditors, rating agencies, regulators and politicians allowed private profiteers to fill their boots irrespective of the manifest dangers of their behaviour, before offloading the cost of the losses back on to the public for the most part.
Nothing has really changed, even now. The present ‘recovery’ shows every sign of being reliant on another house price bubble, whilst the banking system has largely been allowed to go back to business as usual having taken a handout of billions from the public in the process. Working people have been left to pay a savage price in terms of poverty, low pay, unaffordable and insecure housing, cuts to public services, and attacks on social security.
Ironically, though it isn’t quite spelled out, the apparent ‘failure’ of this experiment – which left the banking system teetering on the brink of collapse without a massive transfer of public funds to private interests – is now allowing those same economic and political elites to successfully carry through a further dramatic extension of the very agenda responsible for the crisis. What looks like a ‘failed experiment’ from the point of view of the public looks rather successful to the hedge-fund managers, CEOs of multinational companies, non-domiciled oligarchs and bankers on colossal bonuses. Fisher calls for an economic model to be ‘overthrown’ in place of a ‘revolutionary and emancipatory change to build an economy as if people mattered’. Fisher’s language of democratising the economy, giving people democratic rights over how goods and services are produced and consumed in the economy, is reminiscent of the late Benn and points towards a modern and relevant conception of socialism, although – perhaps surprisingly – Fisher does not use the ‘s’ word itself.
The concrete options sketched out in the final chapter will be familiar for the most part to readers of Red Pepper (the right to a citizens’ income; modern forms of public ownership which avoid the simple ‘top-down’ state-managerialism of previous nationalised industries; a tax on land value etc) but nonetheless amount to a coherent series of viable alternatives.
Perhaps the most interesting is the idea of alternative ‘Right to Buy’ for private tenants, or to allow people struggling to meet mortgage repayments to sell their property back to the council with the right to remain in it under an assured tenancy. This is the kind of bold, imaginative measure which would mean readdressing public spending priorities and putting significant resources into democratic government at local level. I wouldn’t expect it to be in the party manifestoes any time soon.
The book convincingly argues for the urgent need for a fundamental democratisation of the economy, and recognises this will require a re-intensification of popular struggles. At the same time it provides a spur for consideration of the kinds of strategic steps which might help us make progress towards the vision of a better future it holds out.