Stumbling and Mumbling

Some defunct economist

"To understand the man you have to know what was happening in the world when he was twenty." Napoleon's claim helps explain one of the big problems with centre-left economic policy.

He was right. We now have strong evidence that economic conditions in our formative years shape (pdf) our outlook much later in life. People who experienced recessions when young are less likely to own risky assets when they become old and rich enough to do so. Chief executives who saw hard times in their youth run their companies more conservatively (pdf) than others; and central bankers who saw high inflation when young are likely (pdf) to be more hawkish when they are in office.

And here's the thing. For most of us over 40, our youth was characterized by mass unemployment or the threat thereof, something we know to be a cause of great misery (pdf): the jobless rate was over 11% when Starmer (and I!) turned 20, for example. This means the economic thinking of well-meaning people throughout their lives has been dominated by one question: how to create jobs. It's no surprise, therefore that despite scaling back the Green New Deal, Starmer is still promising to create tens of thousands of good new jobs.

But, but, but. The ideas of one era are not always well-suited to the next. As Maynard Keynes famously wrote:

Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.

This is true today - and that "defunct economist" is Keynes himself, and in particular this:

I see no reason to suppose that the existing system seriously misemploys the factors of production which are in use...When 9,000,000 men are employed out of 10,000,000 willing and able to work, there is no evidence that the labour of these 9,000,000 men is misdirected. The complaint against the present system is not that these 9,000,000 men ought to be employed on different tasks, but that tasks should be available for the remaining 1,000,000 men. It is in determining the volume, not the direction, of actual employment that the existing system has broken down.

This passage is pretty much wholly inapplicable today. The volume of employment is satisfactory: we are not quite at full employment, but close to it, especially for skilled workers.

In this context, creating good jobs would be inflationary. Yes, vacancies at decent pay for home insulators, housebuilders, care workers, solar panel manufacturers, nuclear weapons producers and so on would attract applicants. But they'd come not so much from dole queues and the economically inactive as from workers in other jobs. In an attempt to retain their staff their employers would raise pay. The result would be inflation.

Of course, macroeconomic policy can prevent this by either raising taxes or interest rates, both of which destroy jobs as a means of curbing inflation. At near-full employment, such destruction is the necessary counterpart of shifting labour towards a Labour government's higher priorities.

There's another reason why we need job destruction. It's a necessary part of raising productivity. As Jonathan Haskel and colleagues have shown (pdf), a lot of productivity growth comes not from existing firms improving their efficiency but from inefficient plants shutting down and better-performing ones opening. This is why more market competition must be part of any strategy to raise productivity: it encourages the entry of better firms and exit of worse ones.  

Which poses another problem: which jobs do we want to destroy? Higher interest rates hit hardest the construction sector - meaning you can say goodbye to Labour's hope of "getting Britain building again." Which suggests that, as Simon says, Labour should break its commitments and raise income taxes, thereby destroying jobs in consumer-facing industries such as retail and hospitality.

These jobs, however, might not be the only ones we want to cut. Keynes was flat wrong. The existing system does seriously misemploy factors of production.

In some cases, this is because of bad policy choices. An excessively complicated tax and benefit system has created unnecessary jobs for lawyers, accountants and DWP bureaucrats. The fact that policy is up for sale has created a big lobbying industry. And our regulatory agencies have been more effective in expanding bureaucracy than in reining in the industries they nominally oversee: Ofgem and Ofcom have over 2500 employees between them.

In other cases, it's because of standard market failures. Asymmetric information means that “genuinely unskilled” fund managers stay in work at the expense of their clients. Unpriced externalities mean that polluting industries are too big - be it the environmental pollution of carbon producers, the risk polluters of the financial system or the intellectual pollution of the legacy media. And agency failures and monopoly have led to the creation of bullshit jobs and excessive workplace surveillance. Friedman was right to say that "if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get" but he should have added that this problem isn't confined to the public sector.

None of these government or market failures will be solved by the standard macro policies of higher taxes or interest rates. They require microeconomic policies which few people other than some "degrowthers"* are thinking about. As Jason Hickel has written:

What industries are already big enough and shouldn't grow any larger? What industries could be usefully scaled down? What industries do we still need to expand? We have never asked these questions. (Less is More, p220)

In this context, we encounter some more defunct economics - the notion that a high wage equals a good job. This is not necessarily the case, even in those cases where wages are equal to marginal product. For one thing, it is the private marginal product that sets wages not the social product, and the two can differ: contract killers (pdf) often have high wages (pdf) but we wouldn't want to create these "good jobs". In the same way, we should aim to reduce, not increase, jobs in socially useless finance, in advising on tax avoidance or in producing pollution.

What we need, therefore, is job destruction. Not just the creative destruction that increases productivity in well-functioning markets, but also the destruction of some jobs to shift labour to higher priorities. Right now, we need less Keynes and more Schumpeter.

Here, however, we run into an unavoidable trade-off. Rachel Reeves has rightly spoken of economic insecurity being "corrosive of individuals’ physical and mental health": those of us who spent our formative years in such insecurity are well aware of this. But such insecurity is the flipside of much-needed job reallocation. A big policy question is how to ameliorate this trade-off. A more intelligent welfare state and active labour market policies are part of the answer. What's not part of the answer is the pretence that creating jobs is the whole of the story. It's not 1982 any more.

* A bad word for a possibly good thing.

On classical music

Classical music is in crisis. Those who should be promoting it seem embarrassed to do so; some universities are closing music departments; and Alexandra Wilson and Ian Pace fear that it is being sidelined because of concerns about elitism and its associations with colonialism.

The latter, however, puzzles me. Classical music can be seen not as the ally of imperialism and capitalism but as its antithesis. Marx himself regarded it as an example of free, unalienated labour. And in the 50s and 60s its devotees thought it a pure art form in contrast to commercialized and capitalistic pop music. Anthony Burgess (himself a composer as well as author) spoke for many when he said that pop songs were "foisted on [young people] by middle-aged entrepreneurs and exploiters who should know better."

Some of its supporters have also argued that classical music is democratic. Whereas a successful pop career often (but not always) requires the backing of a big record company, anyone can make their own classical music. In the liner notes to Bach Trios by Yo-Yo Ma, Chris Thile and Edgar Meyer, Timo Andres writes of Bach's music:

That everyone has access to this trove - and can, with a little experience, will these same creations into being - is one of the most profoundly democratic facts I know of, and stands as a great equalizer in an unequal world.

Of course, it is not often seen this way. One reason for this is that state schools do not inculcate that experience, preferring to be mere ideological state apparatuses preparing us for the world of drudgery. It is for this reason that pop music, like classical (pdf), has a problem with its performers coming from a narrow demographic : as the Sutton Trust points out, pop stars are disproportionately privately educated, as it is private schools where are more likely to provide a musical education. The fault here, though, is not with the music but with our class-scarred society.

In this context, it shouldn't be surprising that many leftists have loved classical music. One of the most interesting of these was Lenin. You would expect him of all people to be alert to music being tainted by capitalism and imperialism. For him, however, the problem was the exact opposite - not that it was associated with a brutal system but rather that it was too humanizing. Here's Georg Lukacs:

Gorky recorded Lenin’s very characteristic words spoken after he listened to Beethoven’s Appassionata sonata: “I know the Appassionata inside out and yet I am willing to listen to it every day. It is wonderful, ethereal music. On hearing it I proudly, maybe somewhat naively, think: See! people are able to produce such marvels!” He then winked, laughed and added sadly: “I’m often unable to listen to music, it gets on my nerves, I would like to stroke my fellow beings and whisper sweet nothings in their ears for being able to produce such beautiful things in spite of the abominable hell they are living in. However, today one shouldn’t caress anybody - for people will only bite off your hand; strike, without pity, although theoretically we are against any kind of violence. Umph, it is, in fact, an infernally difficult task!”

Lenin's fears have of course since been refuted. The fact that Nazis murdered millions whilst listening to Schumann and Mozart showed that classical music does not humanize people. That was Burgess's point in having Alex listen to "Ludwig Van" whilst fantasizing about murder.

It's unsurprising, then, that fans of classical music are often racists, sexists and snobs, as evidenced in the risible Michael Henderson's objection to any northerners appearing on Radio 3. Such bigotry is merely highlighted by the tendency of some listeners to use it to press for their own moral superiority: "Look at ME emoting to this. Don't I have such sophisticated sensibilities?"

What we say of football, however, is also true of classical music: it has a racism problem because society has a racist problem.

It's in this context that we should interpret the claim that classical music is associated with colonialism. It could not be otherwise. Some of it, most famously Rule Brittania, is an outright celebration of that. Others are part of that mindset, such as Saint-Saens use of African rhythms or Bartok and Vaughan Williams's "cultural appropriation" of folk music. And of course, music was disproportionately written and performed by affluent white men simply because it was they who had disproprtionate access to time and opportunities.

But, but, but. When Marx said "the mode of production of material life conditions the general process of social, political and intellectual life" he did not add "except for the stuff you like." Yes, a lot of classical music arose from imperialist societies, but so too does modern music arise from neoliberal ones. Quite a bit of it celebrates hyper-individualized consumer capitalism; Beyonce advertising Lexus is perhaps not the worst example of this. If we're going to find Beethoven guilty by association with capitalism, we must also find Nicki Minaj so. Or, of course, we could just lighten up.

This does, not, however, mean we should "cancel" (ugh) it. As Edward Said noted in Culture and Imperialism (pdf), recognising that culture is "manifestly and unconcealedly a part" of the imperial process does not mean we should reject its artefacts. Instead, he said, appreciating the connections "actually and truly enhances our reading and understanding of them." You can both deplore imperialism and at the same time celebrate the greater achievements of western culture, as indeed C.L.R. James did. And we can do this whilst recognizing that these achievements are not confined to dead white men. The better talk of "decolonizing music" is merely about recognising that classical music does not have a monopoly of great music - which is surely obviously true.

Here, I'll make a personal point. I came to classical music late in life. I didn't hear it at home and school was a Gradgrindian ideological state apparatus relieved only by the incompetence that caused it to employ one or two inspirational teachers. Instead, I discovered it after I started playing the guitar, and when, to improve that playing, I learned music theory. For me, the gateways to classical music were Barrios and Villa-Lobos. This means that I don't associate the music with nostalgia, and am left cold by a lot of emoting about it: for me, music is a technical process.

It also means that I can't see a clear distinction between classical and non-classical music: I'm not sure there's an iron curtain between Max Richter and Low or Brian Eno, for example. Better men than I share this view: Chris Thile plays Bach sonatas alongside bluegrass and Richard Thompson has played Henry Purcell and Britney Spears on the same album.

Which is why I'm saying all this - because it is not often said anywhere else. There are perspectives on classical music which are neither white liberal guilt nor facile snobbery.

A case for fiscal austerity

The Labour party's talk of maxxing out the country's credit card is an obnoxious lie. But this does not mean the party is wrong to want a tight fiscal policy. There is a good case for it to do so, and it's got nothing to do with arbitrary fiscal rules or the Tories having "spent all the money."

Labour itself isn't going to make this argument, and why should it given that politics is about power and not persuasion? So I'll try.

It starts from the brute fact that unemployment is close to a 50-year low, at just 3.8% of the workforce. Granted there are another 1.9 million people (equivalent to over 5% of the workforce) out of the labour market who say they'd like a job, but many of these are unwell or have caring commitments and so are available only for lighter or more flexible work. The question "where will the money come from?" is a stupid one. But "where will the workers come from?" is certainly not.

Yes, there are some answers: immigration; some early retirees could be tempted back to work by better working conditions; and cutting NHS waiting lists would also get some back to work.

Nevertheless, the fact is that the pool of available labour is small. Yes, there are some GPs out of work, but fewer builders and skilled workers than there were a few years ago.

Which means that any significant rise in public spending and hence demand for labour is likely to bid up wages. The Bank of England will see that as potentially inflationary and would raise interest rates. This wouldn't wholly be disastrous: higher rates would help bring down house prices and reduce some of the more egregiously socially useless financial activities. But it does mean you could kiss goodbye to big housebuilding, as this is the most interest-sensitive sector of the economy.

Yes, Labour could prevent this by raising the inflation target. But nobody in politics is arguing for this. And whilst there's a case for doing so, it doesn't solve the physical constraint, of there being just not enough doctors, housebuilders or skilled workers in the green economy.

You might object that there's an obvious solution to all this: to raise taxes. The need to do this is not to raise money: governments can do that anyway by printing or borrowing. Instead, it is to free up real resources. Higher taxes would cut consumer spending thereby depressing demand for labour in retailing and hospitality, thus releasing workers to go into social care, construction, decarbonizing and the other things we want to do.

There are, however, big problems with this.

One is political. There's been no preparing of the ideological ground - no campaign to say that taxes are the "price we pay for a civilized society" or even that they are an economic necessity if we're to have good public services. From this background, tax rises would look like Labour going back on its word, being duplicitous.

And even if taxes were to rise, there'd still be issues.

One is that the mega-rich don't spend much and so higher taxes on them would not free up many real resources. Justice requires that we tax the mega-rich more and help the worst-off. But this does little to achieve the economic aim of shifting resources towards the public sector and away from the private. That requires tax rises upon those who will cut their spending as a result. If we want better public services, we must pay for them ourselves.

But there are problems with this, even aside from the unpopularity.

One is that higher taxes will cut jobs in retail and hospitality but do little to destroy the many socially unproductive but often well-paid jobs: the bullshit jobs created by managers who expand their empire (or promote an image of "wokeness"!) at the expense of shareholders; the lawyers and tax advisors who exploit an overly complicated tax system; bureaucrats who administer a repressive benefits system; fund managers who rip off investors; and producers of various forms of pollution, be they carbon emissions, financial risk which taxpayers pay for; or the intellectual pollution of the media. To destroy jobs such as these requires microeconomic policies which nobody is even thinking about.

And then there's the fact that, quite simply, reallocating labour takes time.

My chart shows this by plotting a measure of labour reallocation. To see how this works, imagine an economy of five workers in each of two sectors. If employment in both sectors grows at the same rate then net labour reallocation is zero; for any worker shifting from one sector to the other another must go in the opposite direction. If, however, the sectors grow at different rates, labour is being reallocated. If employment in one sector falls from five to four and that in another grows from five to six, net reallocation is one. My chart measures this process across 16 main sectors, with net reallocation expressed as a percentage of the labour force.

This shows that reallocation is typically small - usually not much more than 1% of total employment, or less than 400,000 people per year.

The economy, then, is sticky and slow to change. Most people prefer to stay in jobs they know; employers prefer relevant experience; it takes time for people to discover opportunities in different industries; to decide to make a radical career change; and to retrain. It is only times of distress that force many people into such change; note that the highest reallocation rates were in bad times such as the 2009 recession and 2020 Covid outbreak.

We can't therefore merely flick a switch and move tens of thousands of workers quickly from retailing to healthcare, construction or the green economy. The world just doesn't work like that. Change has to be gradual. Reeves is right to say "we’re not going to be able to turn things around straight away."

There is, therefore, a case for Labour having a tight fiscal policy.

You might object that all this seems to contradict a great point made years ago by Dan Davies: good ideas don't need lots of lies told about them.

I think there's an answer here. Dan's point applies when the audience is intelligent and informed. Which is not the audience for Labour's drivel about the credit card being maxxed out. When Jones, Reeves and Starmer use such language they are speaking not to economists but to political reporters who are institutionally stupid. The arguments they use to other audiences would, I would hope, be a little like the one I've made.

And it is emphatically not a right-wing argument. Macroeconomic policy must not be a matter of ideology but of empirical fact: you should run a loose policy when there's spare capacity in the economy and a tight one when there isn't. Truss's unforgivable error was to not appreciate this.

What's more, a tight fiscal policy is entirely compatible with radical economic policies elsewhere: land value taxes, a basic income, a maximum wage, planning reform, economic democracy, proper regulation of monopolies and so on. And don't think such measures don't address the pressing need to improve public services. They do: anything that gets the economy growing will boost tax revenues.

One of the great failings of social democracy has been think of economic policy too much in terms of public spending and not enough about other policies to foster equality and efficiency. The big failing of Starmer's Labour is not that it is offering fiscal austerity, but that it is offering nothing else.

On lazy moralizing

Politicians prefer lazy moralizing to intellectual enquiry.

I say this because of Sunak's speech last week in which he condemned far-right extremists "who are hostile to our values and have no respect for our democratic traditions." What he did not do in that speech is ask: why has right-wing extremism increased from a nuisance to something more troubling?

His opponents were quick to point out that Sunak's Tory colleagues have been promoting it. But that's only part of the answer. Anderson and Braverman have been sowing their seeds in fertile ground. We now have abundant evidence corroborating Ben Friedman's 2006 finding that economic stagnation breeds illiberalism and hostility to democracy. Ana Sofia Pessoa and colleagues have shown that "fiscal consolidations lead to a significant increase in extreme parties' vote share." Markus Brueckner and Hans Peter Gruener have described how "lower growth rates are associated with a significant increase in right-wing extremism". And other researchers have shown how deaths of despair - which are symptoms of underlying social problems - are correlated with higher support for Brexit and Trump. 

Sunak, however, like Starmer, omitted to mention all this evidence. Public opinion is not an exogenous datum. It is shaped by socio-economic conditions and political activity. Intelligent politics wouldn't merely condemn some beliefs, but inquire into their origins.

This, however, is by no means the only sign that Westminster is divorced from social science.

Another example is the demand from many Tories for tax cuts and a smaller state. What this misses is that achieving this cannot be merely a matter of ideology and will-power. A smaller state requires particular socio-economic conditions, one of which is an economy healthy enough to provide decent public services with a lower tax take*.

Yet another example was Liz Kendall telling youngsters that there'll be "no option of a life on benefits". This is mere punching down which not only begs the question of how many people actually want such an option, but also deflects attention from much bigger economic issues, such as how to end our 15 years of stagnant productivity and real wages.

What we have in all these cases is vacuous moralizing where there should be serious thinking about the social sciences. Gary Younge is dead right to say that the commentariat is "more interested in denouncing what is happening than understanding why it is happening." And Phil Burton-Cartledge is right to say that political commentary is "superficial" with no grasp of the social relations, the articulations of interests". And what's true of commentators is true too of politicians. As Lewis Goodall recently tweeted:

The Westminster (and much of the internal Conservative) conversations continues to miss everything which is driving [the collapse in Tory support] - the quietly radicalising effect of a collapsed NHS, a broken housing market, near bankrupt local government, a still sclerotic economy.

In one respect, this ignorance is unusual. Thatcher and Blair both entered office with some ideas about society and the economy - Thatcher about how we needed to curb trades union power and bring down inflation and income tax rates down and Blair about how social democracy could be updated to tackle late 20th century social problems. Starmer's Labour, by contrast, shows no similar sign of engaging with social or economic analysis. There is, in media-speak, no "narrative."

Why is this?

Partly, it's part of a general decline in intellectual standards, which has seen the expunging of intellectuals from public prominence. It's always easy to prefer lazy moralizing to serious thinking: such moralizing, of course, has as much connection to serious moral philosophy as economicky talk has to proper economics.

One reason for this decline lies in the dominance of the worst sort** of journalist, the Westminster political correspondent who views everything through the single lens of what plays well to their own tiny minds. Starmer can get away with drivel about the Tories maxxing out the nation's credit card because it is a good "attack line". The truth? Well who gives a damn about that?

The dominance of that sort of journalism has another effect. Politicians' priority is to respond to 24-hour news, and news itself has a bias in favour of salient individual events and against slower-moving trends. This means that important emergent trends - those underlying forces shaping public opinion - are neglected: the rise of immaterial labour which has contributed to liberal attitudes among the young; the economic stagnation that's led to illiberal reaction among others; or the rise of an unpropertied graduate cohort that feels alienated from politics.

Such ignorance is of course reinforced by the media's class bias: although most journalists are poorly paid the most dominant media figures are not, and come from a privileged elite (pdf) which feels little need to understand society and economics.

Such insularity and incuriosity means that the political class has been systematically surprised by important developments such as Brexit, the popularity among the young of Corbynism or the sudden collapse in support for the Tories.

But there's something else. Labour and the Tories are scared to look at the economy for fear of what they might find. It's unlikely that productivity and real wages can be raised much by mere tweaks acceptable to the forces of conservatism and their gimps in the media. Instead, thinking people who are not especially leftist now realize that promoting growth requires changes in property rights: higher taxes on landlords; less power to nimbys to block new building; the break-up of big companies; less restrictive intellectual property law; and tax simplification. All of these measures would be opposed by powerful interest groups. And that's before we even consider the possibility that inequality and even capitalism itself might be barriers to growth.

Attacking benefits claimants or migrants is easy. Attacks upon the powerful - land-owners, financiers, rentiers and monopolists - are not.

Taking the easy line, of course, runs into the dilemma: either we see public services decline even further, or taxes have to increase still more. Either risks further enflaming hostility to the political class - a hostility which will not take an intelligent or enlightened form.

You might think there's a way out of this dilemma: politicians should show some intellect and courage. But then, to call for this in the absence of socioeconomic conditions that produce such people is itself another form of lazy moralizing.

* There are other pre-conditions. Marxists would point to an absence of class struggle, whilst the right might point to a society and culture of individual or community self-help. All agree that a smaller state is the product of social conditions, not merely a moral desideratum.

** There's stiff competition, from financial journalists who can't distinguish between expertise and vested interest or from music journalists who don't know an ostinato from off stump.

You're a Marxist!

Many of you are Marxists - even though you might not realize it.

To see what I mean, consider the following:

One reason for Britain’s high costs in construction may be the result of NIMBY power. We need therefore to reduce this power, perhaps by allowing home-owners to vote (pdf) on schemes that would enable higher-density building. We also need to reform the tax system by replacing business rates with a commercial land value tax, which would be payable by the landowner, not the business. We need also to rethink intellectual property laws as the present patent system restricts growth and innovation. We must break up inefficient monopolies such as Openreach to foster more competition. And we must enforce the end-to-end and right-to-exit principles in order to weaken big tech and so foster new tech start-ups and the development of the internet.

There's a common theme behind these proposals. It's a belief that we need to restructure property rights - reducing those of patent-holders, landlords and monopolists and big tech - because existing ones constrain growth. Which is just what Marx thought happened:

At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or – this merely expresses the same thing in legal terms – with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters.

Those calling for these changes, however, don't think of themselves as Marxists: I've quoted Sam Dumitriu, Sam Bowman, Ben Southwood, Stian Westlake and Cory Doctorow*. But in claiming that property relations have become fetters on growth, they are thinking in terms consistent with Marx.

And not just on this point. They presume that their proposals are feasible. They believe therefore that when there is a mismatch between what economic growth requires and actually-existing property relations it is resolved by the latter changing rather than by us having to accept stagnation**. This is what G.A. Cohen, in his Karl Marx's Theory of History: A Defence, called the primacy thesis: "the nature of a set of production relations is explained by the level of development of the productive forces".

This is historical materialism. I therefore welcome our new Marxist colleagues.

In being Marxist in this sense without knowing it they have an illustrious predecessor - Mrs Thatcher. The defining feature of her government was the belief that production relations had become a fetter on growth, and that these had to (and could) change. Hence the cuts in income tax - increasing income-recipients' property rights - and reductions in trade union power, which shifted the balance of power within production relations in favour of capital.

Thatcher was a better Marxist (and more successful politician!) than most of her Labour critics. Except for a short-lived sign of intelligence under John McDonnell, the party has not had in recent years a well-worked theory of how property relations must change to facilitate growth. Marxists and Stian and colleagues know something that social democrats often miss - that fostering economic growth sometimes requires more than merely looser fiscal policy.

Of course, accepting one Marxian proposition does not make you a Marxist, any more than my accepting Burke or Hayek's points about bounded knowledge and rationality make me a Burkean or Hayekian***. You can accept Marx's historical materialism which rejecting some of his other ideas such as alienation and reification; ideology; the labour theory of value; tendency for the profit rate to fall (pdf); and the centrality of economic class. I suspect you'd be wrong to do so, however, but then I also suspect that many non-Marxists haven't so much considered these ideas and rejected them so much as they just haven't thought about them at all.

Equally, of course, we Marxists aren't so confident that the incompatibility between the development of the forces of production and current property relations can be solved merely by moderate tweaks to the latter. It's possible that low profit rates (and expected profits) are stifling innovation and investment; that the crisis-prone nature of capitalism is also doing so (we're still living with the legacy of 2008); and that capitalist hierarchies are also inefficient. If so, more radical changes are needed than Dumitriu, Bowman, Southwood and Westlake are calling for. My view on this is merely empirical: we should go down their road and then see if we need to go further.

The fact that so many people are historical materialists in a loose sense does not of course make the theory true. Many of us would resile from its teleological element - the idea that it must inevitably lead to socialism. Others have questioned Marx's idea that production relations will change to enable the forces of production to develop on the grounds that it invokes functional explanations which can sometimes be suspiciously like just-so stories****: Wright, Levine and Sober's Reconstructing Marxism is good on this debate. And yet others might question whether we need big organizing theories at all: what's wrong, they say, with small-scale granular ideas of history or economics?

These are open questions. My point here, though, is to emphasize something that's often forgotten. Marxism is not just a normative theory of what should happen and it's certainly not, as Tories want to claim, some sinister conspiracy of loons. Instead, it is part of the western intellectual tradition - a set of ideas (many derived from Marx's predecessor's) which can help organize our ideas today. Non-Marxists shouldn't be so squeamish about borrowing his ideas or acknowledging his influence upon them.

OK then: some people distinguish between Marxians (those influenced by Marx's ideas without subscribing to revolutionary socialism) and Marxists. If you like this distinction, the Sams and Stian are Marxian. But, hey, why spoil a good title?

* I suspect, however, that Cory Doctorow, who advocates breaking up big tech firms, wouldn't be so surprised or alarmed to be called Marxist.

** Yes, dear reader, I am eliding here the distinction between what should happen and what does happen. But then, I'm not sure Marx wasn't doing the same.

*** Perhaps the difference between me and some others is that I acknowledge the fact that I think within intellectual traditions and make no claim to originality.

**** It's possible that the process is a little like natural selection in biology. "Goodish" production relations do eventually get selected for because people with an interest in developing the productive forces sooner or later get the power to change them. Such a process is consistent with there being long periods of tension between the productive relations and productive forces, just as somewhat maladapted species can survive for a while.

On unequal sympathy

It's easy to see why so many people accuse the west of hypocrisy. Joe Biden's condemnation of the murder of Alexei Navalny whilst bombing Yemen, Syria and Iraq and condoning Israel's attacks on Gaza suggests that he - like many western politicians - regards some lives as more worthy than others.

This apparent inconsistency recalls Adam Smith's idea of sympathy. "The source of our fellow-feeling for the misery of others," he wrote, is our imagination; it arises "by changing places in fancy with the sufferer."

Our imagination, however, is limited. It is easier to put ourselves in the shoes of some people than others, and so our sympathy is spread unevenly.

One source of this difference is simply that it's easier to "change places in fancy" with people like ourselves. Politicians find it easier to imagine themselves in the place of another politician than in that of a young Muslim in a poor country - hence their greater sympathy for Navalny than for the victims of Israel's attacks or western bombing raids. This tendency isn't always malign: it can be a reason for class-consciousness.

This helps explain why opinion about the Israeli government's attack on Gaza is dividing Jews and Muslims even thousands of miles away: Jews are more able to sympathize with other Jews facing antisemitic attacks, whilst Muslims are more able to sympathize with Muslims. Yes, there might be antisemitism on one side and Islamophobia on the other, but even if there were not we would still see this division.

There's another source of unequal sympathy. It's what Thomas Schelling called the identifiable victim effect. The death of a known person, he wrote, invokes “anxiety and sentiment, guilt and awe, responsibility and religion" but, he added, "most of this awesomeness disappears when we deal with statistical death.” As Dan Ariely wrote, "once we have a face, a picture, and details about a person, we feel for them.” (The Upside of Irrationality, p 241).

We have scientific evidence for this. Deborah Small and George Loewenstein gave (pdf) people $10 and offered them the chance to pass some of it onto someone else. When they were told that other person would be drawn randomly from a list, they gave an average of $2.12. But when they were told that the person had already been chosen they gave an average of $3.42 - more than half as much again even though they knew nothing else about the person. Which shows how statistical people are morally discounted.

In similar experiments James Andreoni and Justin Rao found (pdf) that when potential recipients could speak to the potential donor, the donor gave an average of 24% of the money compared to only 15% when neither party spoke. "Communication dramatically influences altruistic behaviour, and appears to largely work by heightening empathy."

Stalin might not have actually said "if only one man dies of hunger, that is a tragedy. If millions die, that’s only statistics", but if he did he was uttering a truth. We knew Navalny as an identifiable person, and this alone generates sympathy for him. By contrast the 29,000+ killed in Gaza are statistical deaths. This is why opponents of Israel's attacks want to put names and faces to the victims - because it humanizes them and so generates sympathy.

This same thing helps explain why MPs who were so relaxed about deaths caused by austerity are so agitated by death threats (assuming this to be what they are) against their colleagues. Not only are their colleagues like them and therefore easy to sympathize with, but also they are identifiable victims, whereas the victims of austerity are mere statistics: this asymmetry is reinforced by the fact that our political system actually selects for psychopathic traits.

The victims of austerity, like those of the Israeli attacks, are poor and obscure. Which was Smith's point: the rich and powerful are more visible to us, he said, and better known and so we sympathize with them more:

When we consider the condition of the great, in those delusive colours in which the imagination is apt to paint it, it seems to be almost the abstract idea of a perfect and happy state. It is the very state which, in all our waking dreams and idle reveries, we had sketched out to ourselves as the final object of all our desires. We feel, therefore, a peculiar sympathy with the satisfaction of those who are in it...Every calamity that befals them, every injury that is done them, excites in the breast of the spectator ten times more compassion and resentment than he would have felt, had the same things happened to other men....All the innocent blood that was shed in the civil wars, provoked less indignation than the death of Charles I.

The corollary of this, he said, is that:

We frequently see the respectful attentions of the world more strongly directed towards the rich and the great, than towards the wise and the virtuous. We see frequently the vices and follies of the powerful much less despised than the poverty and weakness of the innocent.

There is, therefore, a hierarchy of concern, with the rich, powerful and well-known at the top and the poor and obscure at the bottom. When John Donne wrote "Any man's death diminishes me Because I am involved in mankind" he might have added that some men's deaths diminish us more than others.

You might say all this is natural, even obvious. Maybe. But natural does not mean immutable. If there is an "expanding circle" of concern for others as Peter Singer has claimed, it's because we have learned to sympathize with more people than we did centuries ago. And our identities - and hence whom we sympathize with - vary with socioeconomic conditions and campaigning: much of bourgeois politics consists of an effort to reduce the salience of class by increasing that of anything else.

Herein lies a problem. D.D. Raphael writes that "Smith thinks of sympathy as the key to understanding moral judgment" (The Impartial Spectator, p 117). It is this that determines what and whom we condemn or condone. And yet sympathy arises from factors which, as he saw, are morally arbitrary: power and fame get more acclaim and sympathy than virtue or obscurity.

Which is why our moral judgments might seem absurd or hypocritical to outsiders.

To some extent, this is inevitable. All codes seem odd from the outside: try explaining to a non-fan why cricketers applaud a bowler aiming a 90mph projectile at a man's head but find it disgraceful if he scratches the ball.

Few people in politics, however, even try to step outside and question their own moral judgments. Moral claims often owes more to narcissistic self-righteousness than to detached thought. I've often criticized unthinking technocrats, but unthinking moralists are at least as detrimental to a healthy politics.

Labour: office vs opposition

"Men make their own history, but they do not make it as they please." Marx's words should give a little encouragement to those leftists despairing of whether a Labour government could do any good.

Of course, there are reasons for despair. The abandoning of the promise to invest £28bn a year in greening the economy suggests, says Grace Blakeley, that "if current policies are maintained in office, we will see basically no changes in macroeconomic policy under a Labour government."

Which is a big problem, because we need different macroeconomic policy if not to restart growth (something best done by supply-side reforms given that we're near full employment) then at least to repair our broken public services.

And history offers us a bleak warning: there are few examples of a government being more leftist in office than in opposition. Hence Grace's words:

The relentless shift towards the right we’re seeing within the Labour Party in opposition will not slow when the Party goes into government. If anything, it will speed up.

Nevertheless, I - very warily - disagree with such pessimism. I suspect there are pressures which will force Labour to be more radical in office than it is promising to be.

One is that the Westminster environment will be very different next year if - as is possible - the Tories are reduced to a few dozen seats. Hundreds of new Labour backbenchers will not want to go to their constituencies and tell people the government is doing nothing to stop their school falling down or to help them see a doctor. They'll be yapping at ministers to do something. And at least some will have the wit to point out that the annihilation of the Tories was not just a rejection of corruption and incompetence but also as a rejection of the ideology that has given us economic stagnation and wrecked public services.

What's more, if the post-1997 precedent is any guide, the rump of the Tory party will turn inwards and focus on its pet obsessions. Gibber about wokery, cultural Marxism and the left's capture of our institutions will only remind Starmer that the Tories are simply irrelevant.

In this context there'll be no excuse for the BBC to continue to invite the Tory party's outriders onto its shows. The IEA-Telegraph-Spectator crew will be seen for what it is - a handful of cranks cosplaying at a deluded image of Thatcherism and representative only of anonymous billionaires.

The voices around Westminster will therefore be very different from what they now are. Which means the influences on Starmer will change.

Such voices will, though, merely remind him of the truth outside Westminster - that changing policy isn't some leftist pipedream but a brute necessity. As John Harris says:

Even if Labour’s belief that it can only win by staying quiet is correct, arriving in government – and remaining there – will surely demand something very different.

The demand is not merely that we must get NHS waiting lists down; save councils from bankruptcy; repair schools; fix the railways; restore the criminal justice system to some sort of functionality; and get the economy growing. Even if Starmer didn't care about any of this, he would still need to do something.

This is because failing to address these problems would foster hostility to the political system and political class. Five more years of economic stagnation and declining public services will lead people to believe that neither political party can do anything for them.

And the backlash this creates won't be an intelligent one. Back in 2006 Ben Friedman showed that economic stagnation led to illiberalism and a revolt against democracy. Subsequent events have vindicated him. Markus Brueckner and Hans Peter Gruener have described how "lower growth rates are associated with a significant increase in right-wing extremism". And Ana Sofia Pessoa and colleagures have shown that "austerity-driven recessions amplify the political costs of economic downturns considerably by increasing distrust in the political environment."

Even if Starmer wanted to do no more than preserve the legitimacy of the existing political system (and capitalism) and prevent the rise of the far-right, he would therefore need to rescue the economy and public services.

There's something else, hinted at in Starmer's recent speech to the Scottish Labour conference:

I grew up working class in the 1970s. And while I don’t plead poverty, I know what a cost of living crisis feels like. I know what it feels like, to be embarrassed to invite your friends round, because the carpet’s threadbare. There’s a hole in the window. The phone’s been cut off. Because your family can’t keep up with their payments. The cloud of anxiety that hangs over a house. The “what next” fear of the postman coming down the path. Will he bring another bill we can’t afford? I remember that....How can you talk about changing inequality, or racism, or any other structural injustice in this country, without an account of class.

No recent Tory PM could have said this. And it matters. Starmer's (and Reeves') upbringing has instilled in him a sympathy (to use Smith's word) towards working class people to a greater degree than most Tories have. It might be no accident that Labour's promise of more workers' rights has (do far?) survived the lurch to the right. 

This does more than merely increase the chances of redistributive taxation, given that revenue-raising is necessary. It also means that Labour's instincts are not on the side of the opponents of economic growth: nimbys opposing new-builds and infrastructure investment; incumbents and monopolists opposing competition policy; rentiers opposing land taxes; lawyers and accountants opposing tax simplification. And so Labour is less likely to continue with policies that favour these vested interests and stymie the economy.

The incentives and constraints facing a Labour government will therefore be very different from those now facing it in opposition. We should not therefore be confident that the party's words now are a good guide to its actions in office.

There's a recent precedent here. When Theresa May entered Downing Street in 2016 she promised to fight "burning injustices". But little progress was made in doing so, because her time in office was consumed with Brexit. Which tells us that a Prime Minister's intentions are not necessarily a guide to their actions. As the man said, people do not make history as they please.

Sadly, however, there are big caveats here. One was pointed out by Robert Cialdini:

Once we have made a choice or taken a stand, we will encounter personal and interpersonal pressures to behave consistently with that commitment (Influence, p 57).

This, he says, can cause us "to act in ways that are clearly contrary to our best interests". Starmer and Reeves might know now that talk of "the nation's credit card" is gibberish, but they could come to believe it. There's a famous episode of Colditz in which a POW feigned madness in the hope of being sent home only to actually become insane. Labour faces the same danger.

There's also the fact that money talks. Even a small donation helped Reeves drop Labour's popular commitment to spend £28bn on decarbonization - and there'll be more where that came from.

And then there's the possibility that the causes of economic stagnation are so entrenched that even more radical policies than Labour is currently promising will not overturn them. Even if Labour does move leftwards, it might not be able or willing to move sufficiently so.

I can't say how great these dangers are: none of us can foresee the future. But I can say something. Even if a Starmer-led government offers only the small chance of sensible policies, it's a bigger chance than the Tories offer. And even out-of-the money options are worth something.

Psychopath politicians

Do politicians have psychopathic tendencies?

I ask because there's for years been talk of how companies select for psychopaths. One study by Paul Babiak and colleagues found that psychopathic traits are around five times more prevalent among senior executives than they are among the general population, and some notorious bosses have had nicknames indistinguishable from those of killers, such as "Fred the shred" and “Chainsaw Al” Dunlop. As Manfred Kets de Vries says:

Not all psychopaths are destined for prison; some may even be in top executive positions. Wherever power, status, or money is at stake, such individuals will be around.

But of course, there's power and status in politics too, so shouldn't we expect psychopaths to be around there too?

One reason to think so is that, as de Vries says, "the power games that typify organizational life come naturally to them." The psychopath’s attributes, he says, are needed in decision-takers:

Many of the qualities that indicate mental problems in other contexts may appear appropriate in senior executive positions, particularly in organizations that appreciate impression management, corporate gamesmanship, risk taking, coolness under pressure, domination, competitiveness, and assertiveness. Even those traits that reflect a severe lack of human feeling or emotional poverty (lack of remorse, guilt, and empathy) can be put into service by SOBs in situations where being ‘‘tough’’ or ‘‘strong’’ (making hard, unpopular decisions) and emotional slickness work in their favor.

Babiak and colleagues add that "some psychopathic features (e.g., callousness, grandiosity, manipulativeness) may relate to the ability to make persuasive arguments and ruthless decisions."

There's more. Psychopaths, says Babiak, have a "grandiose sense of self-worth". This too helps one succeed, simply because hirers - and we might add voters - often mistake overconfidence for actual ability. The superficial charm and glibness of the psychopath also helps in politics: people want to know that their politicians have the answers, not that the world is a complex, unmanageable place with nasty trade-offs.

What's true in corporate life, then, might also be true in politics - that psychopathic traits (or "psychopath-lite" in de Vries' words) facilitate success. As Brian Klaas has written: 

Psychologists refer to a particularly toxic set of personality traits as “The Dark Triad,” and as the name suggests, it has three components: Machiavellianism; Narcissism; and Psychopathy (being a psychopath). When you pause and consider it, it seems particularly obvious that people with these traits would excel as politicians...you’re more likely to encounter a psychopath in the halls of Congress or in Parliament than you are in your local supermarket.

In fact, there's one thing that helps psychopaths more in politics than in the corporate world - the media’s valuing of “strong leaders.” Starmer’s ruthlessness, for example, is reported as being a matter of congratulation rather than as a possible symptom of a disorder  albeit, perhaps, because it is directed towards the enemy.

We’ve reason to suspect, therefore, that politics, like business, can select for psychopathic traits. A lot of political behaviour becomes more comprehensible once we realize this.

For one thing, there’s the persistent pattern of coercive control, in the urge to restrict freedom – be it wanting to ban under-16s from social media, banning disposable vapes, restricting the right to protest, and limiting our freedom to live and work in the EU. The kneejerk attitude of our ruling class - both main parties and the media - is to say no.

Closely related is the desire to preserve status inequalities. Opposition to devolution, to worker democracy and to well-functioning markets are usually seen as three different things. But they have a connection. All three help to preserve existing inequalities of power. That betokens the psychopath’s concern with status hierarchies.

Another feature of psychopaths is their dishonesty and manipulativeness and ability to form and dissolve alliances as their interests require. As de Vries puts it, for the psychopath “after people serve their purposes, they are quickly cast aside.” This is consistent not only with Starmer’s treatment of Corbyn, being both an ally and opponent as his career required, but also with those Tories who claimed to be Thatcherite only to pursue violently anti-Thatcherite policies such as erecting trade barriers, restricting home ownership, increasing business uncertainty, complicating the tax system and generally fucking business.       

And then of course there’s the lack of empathy. George Osborne liked to speak about “tough choices” (which were of course always tough on the poor rather than rich), without caring about the deaths caused by austerity and benefit sanctions. Such callousness is another hallmark of the psychopath.

We can see the obsession with bombing countries in this context: Yemen, Afghanistan, Iraq, Libya, Syria. Given the lack of efficacy of so many of these ventures, one might wonder whether “collateral damage” is a feature rather than a bug.

You might object there that there’s another symptom of psychopathy which should disqualify people from positions of responsibility: a lack of impulse control and inability to make good long-term plans. “Should”, however, does not mean “does”, as the fact of Boris Johnson becoming Prime Minister demonstrated.

His elevation was not, however, an isolated example. Wanting to leave the EU without a plan on how to do so was a classic example of such impulsivity and a lack of planning, as were the on-off decisions about HS2. Both of which are part of a pattern noted by Sam Freedman:

[An] incredibly short-termist approach to public spending infects every area of policy-making. From endless expensive delays in defence procurement, to the refusal to invest in preventative programmes across education, health and crime that could ensure better outcomes and future savings across the public sector. The phenomenon is known across Whitehall as ‘Treasury Brain’.

Now, I know that psychiatric diagnosis at a distance is bad practice. But I’m not trying to diagnose individuals, because my point isn’t about them. It’s about the system, the structure. Its functioning is consistent with politicians being selected for psychopathic traits. This isn’t to say that all politicians are psychopaths, any more than the claim that the police are institutionally racist means that all policemen are racist. It’s merely that there are systemic forces facilitating a tendency.

It’s easy to get angry at politicians’ dishonesty and callousness. When you get to my age, however, you need to reduce your blood pressure. One way to do so is to recognize that such characteristics are not so much isolated individual failings as the nature of the system.

And this is not always a bad thing. Sometimes, we really do need someone to take tough decisions, to choose whom to throw under the bus. When Starmer says "sometimes you have to be ruthless to be a good leader" he is echoing a better man, the great Alan Sparhawk: “You may need a murderer, someone to do your dirty work.” It's true. But like many great truths, only a partial one. The question is: do we need psychopaths here, and now? And do we want the choices that they make?

How our institutions work

The post office scandal is not merely a matter of a few bad bosses. It should raise questions about the very structure of our society.

It's easy to say that Paula Vennells was corrupt and/or incompetent and that the Horizon system was faulty. But this is trivial. Anyone who has switched a computer on knows that software is buggy, and countless thousands of people are stupid and dishonest: you could throw a brick from your house and hit a dozen of them - more in some parts of London. A well-ordered society has mechanisms which prevent such people getting power or doing much damage if they do get it. The Post office scandal shows that we lack such mechanisms, in at least four respects:

 - There's good evidence that companies actually select for psychopaths. People who are unusually concerned with status and power are precisely those who aim for the top of hierarchies (whereas many others of us just want to get on with our jobs), and psychopaths' superficial charm and fluency appeals to hirers. As David Allen Green says, "the likes of Paula Vennells are always with us and will always somehow obtain senior positions." This is consistent with a finding by Luigi Zingales and colleagues, that a lot more corporate fraud occurs than is actually detected. What's more, companies also select for over-confidence as they mistake "competence cues" - the right body language or the illusion of knowledge - for actual ability. (All this might also apply to politics).

 - Ministers failed to control or to replace Post Office management, believing - in a remarkable example of not understanding the function of ownership - that it "has the commercial freedom to run its business operations without interference from the shareholder." Ed Davey distinguishes himself from the other ministers merely by being so uncouth as to have blurted this out in public.

 - Police for years did not investigate the likely fraud and perversion of the course of justice by Post Office bosses. The fact that they have begun to do so since the screening of the ITV drama reminds us that the Met is more concerned with PR than with justice. 

 - The courts failed to acquit innocent sub-postmasters, for systemic reasons discussed by David Allen Green. This was not an isolated miscarriage of justice; it occurred over 700 times.

We should think of our main social institutions - markets, the democratic process, the legal system and so on - as selection devices. What we have here is evidence that these do not operate as you might think they should, not in one or two instances but systematically and persistently. The Post Office board and government ministers did not select honest or competent bosses. The police did not choose to investigate serious crimes. And the courts failed to correctly distinguish between the guilty and the innocent.

These, however, are by no means the only selection mechanisms which don't work as one might imagine they should. Politicians are selected for fanaticism rather than competence. Financial markets often do not select the best investment opportunities, which is why we have asset price bubbles and under-performing fund managers. Product and labour markets do not eliminate the "long tail of extremely badly managed firms" described (pdf) by Bloom and Van Reenen. Peer review often does not select the best academic research. And the media does not select for informed expertise.

Society's main social institutions, then, very often do not select the best or filter out the worst. Often, they do the opposite. What should we make of this fact?

One reasonable inference is that it is just really difficult to make good decisions with limited information and so there will always be a great deal of ruin in the nation.

If this were all, though, we'd expect to see political activity and debate focusing upon how we might improve such mechanisms.

But it isn't. Instead in recent years politics has been consumed with Brexit and other culture war issues. Which is of course yet another example of a selection mechanism: politics selects to focus on irrelevancies rather than more important matters.

This is part of a pattern. It's normal for people to neglect structural and societal forces and to pay more attention instead to individual humans. Which is why public anger is focussed upon Paula Vennells rather than the mechanisms that recruited and enabled her. People like a witch-hunt and are attacking Vennells in the same way that criminals attack nonces - to remind themselves that they are morally superior to at least somebody.

Even good people can inadvertently reinforce this tendency. In exposing the detail of the Post Office scandal there's a danger of missing the big picture. Both journalism (even when done well) and drama look more at human interest stories than at social structures.

And this suits the ruling class. It has long flattered itself that the system works because "good chaps" will be in charge. The fact that "good chaps" so rarely are - and that the Post Office merely joins a list of systemic injustices such as Hillsborough, Windrush and Grenfell - doesn't seem to undermine this complacency.

Which brings me to a concern. You might have noticed that I've avoided using the word "failure" to describe all these different selection effects. This is because they might not be failures at all. The fact that the powerful can enrich themselves at the expense of the powerless; that markets permit the incompetent wealthy to stay rich; and that politics is a clownish sideshow that avoids substantive issues all suit the elite perfectly well. Prem Sikka is right to say that the Post Office affair "has once again shown the UK to be a hotbed of corruption and cronyism where in pursuit of profits and private gains innocent people are bludgeoned to silence and submission."

It has thus shown what Marxists have long known - that law and justice are veils behind which lay exploitation and cruelty. The question for the establishment is how they might bring these veils back down.

On high-wage jobs

Everybody wants to create well-paid jobs. But this is not necessarily a good thing.

To see why, imagine a simple economy comprising farmers each of whom is comfortably above subsistence, enjoying both leisure, the ability to store food, and a few luxury foods. One of our farmers  then discovers a more efficient technique allowing him to produce more food with less effort. He's better off. And if he can sell this knowledge to others, he'll become even richer. In this case, economic growth and the creation of a high-wage job are indeed the same thing: our new economy comprises a well-paid farming consultant as well as more productive farmers.

But what if he cannot sell his know-how? What if other farmers can learn his techniques simply by looking over the fence? We'll then have a transition to a high-wage economy without the creation of a new job. This isn't a fanciful case. William Nordhaus famously found that innovators capture only a "minuscule fraction" of the social benefits of their discoveries in large part because they are indeed copied.

Our innovative farmer could get a high-wage job as a teacher and consultant only if he could prevent others from learning freely - by building a high fence (erecting a paywall) or by taking out patents and copyrights. Such devices would boost his pay but at the expense of lowering others' productivity relative to what it could be. Creating or preserving high-wage jobs, therefore, isn't the same as raising productivity.

Let's take a second example. One farmer then develops musical skill, so much so that the others happily trade some of their excess product to listen to his songs. In this new economy, everybody is happier than before. Farmers are getting something they value more highly than food - music - and the musician wouldn't be performing if he didn't enjoy it more than farming.

This illustrates an important point made by Eric Beinhocker in The Origin of Wealth. Economic progress, he says, doesn't consist merely in producing more of the same but in producing greater variety - a finer division of labour with a more complex economy. We are better off than we were in the 1950s, not because we have more lard and haircurlers, but because we have things people then couldn't get at any price - colour TVs, mobile phones, the internet and so on.

Note also that GDP does not necessarily capture this fact because it doesn't accurately measure some of the things we have that our grandparents didn't: think of our visits to Youtube and Wikipedia for example.

In this example the musician's job needn't be a high-wage one. If he prefers it to farming he'd accept less remuneration than he could get as a farmer. Even so, people prefer this economy to the one they had previously. Which tells us that economic progress can happen without the creation of well-paid jobs.

Now let's take a third example. Our society suffers a breakdown in social norms and rise in crime. One farmer then charges the others to protect them from theft and violence - so much that he earns more than he did as a farmer. A high-wage job has been created. But must of us would prefer the old society in which protection was unnecessary. Which shows that high-wage jobs aren't necessarily a sign of success*.

Again, this isn't a fanciful example. It describes the guard labour discussed by Samuel Bowles and Arjun Jayadev. Some lawyers, policemen, supervisory staff and middle managers exist only because of agency failures and conflict that would be diminished under different social arrangements.

Now take another example. A clever farmer finds a loophole in the contract with the protector which allows him to enjoy the benefits of protection without paying. He then sells advice to others on how they too can exploit this loophole. He has created a high-wage job for himself. But our society in aggregate is no better off. Those who don't use the loophole must either pay higher taxes to provide protection or get less of it. Our tax advisor hasn't created wealth, but merely diverted it to himself and his clients. Society would be better off if he were to direct his talents elsewhere, as the musician and more skilled farmer do.

It should be obvious that this example is also all too realistic: many tax advisors, accountants and lobbyists fit this model.

The point of all this should be clear. Creating high-wage jobs and economic progress are different things. Sometimes, we can have progress without a new well-paid job, as in my example of the musician or farmer whose innovations get copied. And sometimes high-wage jobs do not represent progress at all, as in my examples of protection workers or tax advisors. (The example of the innovator benefiting from intellectual property laws is a mixed case: if such laws are necessary to incentivize innovation the high incomes and progress go together, but if they are not the two are separate). Yes, wages are at least sometimes equal to marginal product, but it is the marginal product to the hirer not to the wider society.

All this is not to mention other cases of high-wage jobs that are inimical to progress. These include those which exploit information asymmetries such as fund managers who are, in David Blake's words, "genuinely unskilled." And they also include those who generate unpriced negative externalities such as bankers' risk pollution, carbon producers' environmental pollution or the media's intellectual pollution.

Of course, high-wage jobs would be a good thing if they are the result of genuine improvements in productivity. But not all such jobs are. Think about this statement:

If an economy is successful it has lots of high-wage jobs. We have lots of high-wage jobs. Therefore we have a successful economy.

Sounds reasonable? It shouldn't. It has the same structure as:

If an animal is a dog, then it has four legs. My cat has four legs. Therefore, my cat is a dog.

It's the fallacy of affirming the consequent. And it's the mistake that some advocates of a high-wage economy make. High-wage jobs must be the product of a thriving economy, not a cause of one.

* Of course, one could tell a story in which the protector extorts food from others whilst failing to protect them. Whilst plausible, I don't need this to illustrate my point, that even in a free society high-wage jobs aren't necessarily a sign of success.

Another thing. I've tried not to use words such as GDP, productivity and value. In my context (and many others!) these merely introduce unnecessary complications.

Centrist utopianism

When I was a young leftist, older Tories would tell me that I would lose my idealism as I got older. Now I am old, I see that they were right. The problem is, though, that it is now the right and centre who are now the dreamy idealists and not me.

Take, for example, criticisms of the Bank of England for failing to prevent inflation. What these insufficiently appreciate is that policy errors are inevitable. This is simply because it takes two or three years for interest rates to have their full effect upon inflation, which means that rates must be set on the basis of a forecast of inflation. But forecasts will often be wrong. Which in turn means that, with hindsight, policy will be wrong - either too tight when inflation proves to be lower than expected or too loose when it proves to be higher.

The problem here is not a particular failing of the Bank of England, although it might well be the case that more cognitive diversity on the MPC would help. Instead, everybody gets forecasts wrong. My chart shows the point. It plots average private sector forecasts for CPI inflation made in December for Q4 the following year (for example, in December 2005 for Q4 2006). You can see that forecasters have generally failed to foresee big moves in inflation - such as the rises in 2008, 2011 and 2021-22 or the falls in 2014-15. Between 2004 and 2019 (that is, before the pandemic) the average error regardless of sign was 0.8 percentage points.

What's true of inflation is also true of economic growth. As Prakash Loungani has shown, forecasters have - on average - an almost unblemished record of failing to foresee recessions (pdf).

These errors* don't happen because forecasters are daft or under-incentivized. They occur because economies are complex and emergent and because shocks (such as Russia's invasion of Ukraine) happen. Economic outcomes are unpredictable, so the Bank of England is bound to make policy errors sometimes even with the best possible policy-makers. Saying that the Bank made a policy error is as insightful as saying that MPC members are human. 

The notion that we can have stable inflation is idealistic, utopian.

This, however, is not the only example of how the centre and right are too optimistic about what policy can do. Here are others:

 - NHS reform. History tells us that this is a difficult job: the last two big attempts (of many) to reform the NHS - internal markets and the Lansley reforms - were such failures that they have since been scrapped. Every addict knows that the definition of insanity is doing the same thing over and over and expecting different results. Wes Streeting, on the other hand, does not know this.

 - Benefit reform. This is motivated by an attempt to distinguish between deserving cases and the workshy. But such a distinction is very hard to make with limited information and finite administrative resources and any attempt to do so risks hurting the genuinely ill, especially those with mental health problems such as anxiety; criminals can game the system but the genuinely vulnerable cannot. The belief reform is possible without hurting the worst-off is another example of centre-right idealism**.

 - Immigration. Reducing immigration entails a loss of liberty, not just of the migrants themselves but of employers and those who want to bring a partner into the country. It also means higher taxes to attract domestic workers into public sector jobs such as care work. All these are costs we must pay to placate those who feel discomfort at social change. Which just illustrates Isaiah Berlin's point (pdf):

Some among the Great Goods cannot live together. That is a conceptual truth. We are doomed to choose, and every choice may entail an irreparable loss.

MPs - be they Labour or Tory - who promise lower immigration don't however frame it this way, as the tragic choice it is. Which is idealistic and unrealistic. As Berlin wrote:

Those who rest on such comfortable beds of dogma are victims of forms of self-induced myopia, blinkers that may make for contentment, but not for understanding of what it is to be human.

 - Boosting economic growth. The economy is large (£2.7 trillion) and complex and therefore difficult to significantly improve. Unsurprisingly, therefore, scholars such as Dietz Vollrath and John Landon-Lane and Peter Robertson have shown that reforms rarely do greatly raise GDP.

You might think this too pessimistic. Given that the UK is poorer than many of its comparators it should be easy to catch up. But this brings me to another example of centrist naivete - a failure to appreciate that politics is about power, not intellect.

Certainly, there are many policies we could try that might raise growth: tax reform; rejoining the single market; better competition policy; better vocational education; better planning policy; better financing for new and expanding businesses; and so on. Talk of these, however, omits the important fact - that boosting economic growth isn't so much an intellectual challenge as a political one. How do we face down the forces of conservatism that block growth: nimbys, landlords, financiers, incumbent monopolies and their mouthpieces in the media?

There's a common theme to many of these examples of centrist idealism - an over-optimism about how much management skill the country has, and how much top-down decision-makers can know (pdf). It is such optimism that has given us things as otherwise diverse as the Iraq war and cost over-runs on infrastructure projects.

Just as fish don't know they're wet, so centrist ideologues don't realize they have an ideology. Which is why their supporters set so much store by the "competence" of Starmer, Reeves and Cooper. True, they seem to be compared to the Tories, but that's a low bar. Instead, the actual bar is much higher: are they sufficiently competent to improve large complex structures? Just as "hire a genius" is not an effective strategy in business, nor is it in politics.

So, what's the alternative?

I'd suggest - more as a way of highlighting what I've said rather than as a concrete proposal - the need for policies and institutions that are resilient to failures of judgment. This means having strong automatic stabilizers rather than relying so much upon macroeconomic policy: I'm thinking here of a high welfare safety net, progressive taxation, a sovereign wealth fund or Shiller-style macro markets (pdf). Similarly, one argument for a universal basic income is that is removes the need and administrative burden of deciding who is deserving and who not.

By now, some of you might be shouting "tu quoque": isn't it hypocritical of a Marxist to accuse others of utopianism?

No. Marx was much more of an analyst and critic of capitalism than he was a writer of blueprints, and he was critical of those utopian socialists who tried to build "castles in the air." Instead, he said, "the emancipation of the working classes must be conquered by the working classes themselves”, in part because he didn't trust top-down plans. James Scott's Seeing Like A State is quite compatible with this strand of Marxism.

Of course, some Marxists have been idealistic utopians. But this has less to do with Marx than the human condition. Human kind cannot bear very much reality, so we retreat into dreams. Centrists and rightists are just as prone to do this as the left. The problem is that they get to inflict their dreams onto the rest of us.

 * I don't like the word "error" in this context. It carries implications that one could do better, when the point in this context is precisely that one cannot.

** I'm assuming that such reforms are motivated by good faith. In at least some cases, this is not so and hurting the unwell is a feature not a bug.

The class base of bad government

Everybody from the centre-right leftwards agrees that we have been unusually badly governed for the last few years. As Ian Dunt tweeted.

Quite a thing, isn't it. Reading about someone of the stature of Alistair Darling while watching someone as minuscule as Matt Hancock. A testament to how far we've fallen.

But why have we so fallen?

There's a tendency among some centrists to attribute it merely to bad people doing stupid things; the word "cockwomble" occurs with worrying frequency. This is too superficial. It's what I've called schoolteacher politics, the notion that bad policy is mere intellectual or moral error that could be avoided if only we had better people in charge (where, of course, "better" means more like us).

Instead, bad government is endogenous. It's the product of dysfunctional capitalism allied to our unusually toxic class system.

Let's start with the rise of illiberal reaction and the Tories' perceived need to appeal to the far-right. This hasn't occurred because the British people had a bang on the head, or were fooled by media barons, or succumbed to the elegant wit Tommy Robinson. Instead, it's yet another example of what Ben Friedman pointed out in 2006:

The history of each of the large Western democracies – America, Britain, France and Germany – is replete with instances in which [a] turn away from openness and tolerance, and often the weakening of democratic political institutions, followed in the wake of economic stagnation.

His point has since been corroborated by many others. Thiemo Fezmer has shown that - at the margin - austerity caused Brexit. Markus Brueckner and Hans Peter Gruener have shown that "lower growth rates are associated with a significant increase in right-wing extremism." And Ana Sofia Pessoa and colleagues have shown how "fiscal consolidations lead to a significant increase in extreme parties' vote share." This could be because a weak economy breeds discontent with the incumbent parties; or because people look for somebody to blame and that somebody is often the outsiders and marginalized; or because bad times generate a yearning for a past, one in which minorities were quieter. Whatever the reason, Marx was right:

The mode of production of material life conditions the general process of social, political and intellectual life. It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness.

The far-right has tapped into this richer seam of reaction and illiberalism.

But why have we got stagnation? Austerity is part of the story. But austerity was endogenous - a reaction to the increased public debt caused by the financial crisis. As the late Nick Crafts said, "Brexit is a legacy of the banking crisis."

And that crisis was also endogenous.

To see why, imagine that there had been an abundance of profit-making opportunities in the early 00s. The fall in real interest rates we saw then would then have led to rising capital spending and R&D and to greater productive capacity. We'd have had faster GDP growth.

Which didn't happen. Growth was actually slowing even before the crisis. There was, as Ben Bernanke said, a "dearth" of such opportunities. That meant that lower rates fuelled not faster sustainable growth but rather a boom in housing and in illiquid mortgage derivatives and stretched bank balance sheets, which led to the crash. In this sense, that crash was a symptom (pdf) of a stagnant economy, not (just) a cause.

Exactly why the economy has been stagnating since the early 2000s is a matter of debate: an ageing population; difficulty in adapting to the rise of India and China; lack of innovation; falling profit rates; and so on. For my purposes now, however, this debate doesn't much matter. The fact is that capitalism is not working as well as it once did, and this is shaping the political climate by fuelling antipathy to migrants and benefit claimants and by stoking up culture wars.

Of course, in theory such reactionary politics could be led by politicians of substance rather than the charlatans and inadequates we've actually had. But the low calibre of politicians isn't mere bad luck. It's another effect of our class system.

One reason for this is simply that high pay in the financial sector attracts talent away from politics. If we're lucky, this leaves the profession open to those with a sense of public service. If not, it attracts second-rate egomaniacs. Also, private schools inculcate more confidence than ability - people who, in the American phrase, were born on third base but think they've hit a triple. David Cameron, for example, wanted to become PM because he thought he’d be “rather good” at it - an opinion not shared by posterity. And the Covid inquiry has heard how Johnson was "bamboozled" and "confused" by statistics. Sir Patrick Valance wrote:

Watching the PM get his head around stats is awful. He finds relative and absolute risk almost impossible to understand.

Such ignorance matters. Being Prime Minister isn't like being a newspaper columnist. It's about taking decisions under uncertainty. To do that doesn't require one to be a great statistician. But it does require that one be awake to the most common ways of misunderstanding numbers, which requires a basic statistical literacy.

That Johnson thought he could be PM without such habits of mind shows his arrogant overconfidence. And that other people thought he could is another effect of class. Like attracts like. To a media dominated by public schoolboys, Johnson seemed a familiar jovial figure ("Boris") rather than someone with profound intellectual and moral defects.

Of course, this is not to say that class is the only explanation for our bad politicians. Our mechanisms for selecting them are also dysfunctional; politicians must now appeal more to a handful of cranks be they party members or journalists; the disappearance of public intellectuals has deprived us a a benign influence on the political class; our narcissistic age demands that politicians echo our own prejudices rather than display competence or independence of mind; and so on.

Even if politicians weren't overconfident inadequates, however, there'd still be a problem. The Tories have no economic offer to make to voters because to do so requires them to address difficult questions: how do we kickstart the economy when doing so requires more than the state stepping back? What if inequality is itself a barrier to growth? How do you increase growth when so many of your supporters (financiers, nimbys, monopolists, Brexiters) are opposed to it? Faced with these questions, even the ablest of Tory politicians would struggle.

That last question brings us to a further problem. A lot of powerful people have an interest in sustaining bad and corrupt government, and the power to do so. I'm not thinking only of the media here, or those who exchange for party donations for government money. Businesses also buy MPs (and regulators) through donations or the prospect of cushy jobs after leaving office. And as Michal Kalecki noted, "everything which may shake the state of confidence must be carefully avoided because it would cause an economic crisis”: one (albeit bad) justification for fiscal austerity was the fear of a bond market sell-off if debt were not being seen to be reduced.

We can put this another way. In the post-war decades government achieved some worthwhile things: full employment; a better welfare state; and decent economic growth. This wasn't merely because politicians were of greater moral and intellectual calibre back then. It was because full employment was in the interests of much of capital - mass producers needed a market for their goods whereas financial capital require low interest rates - and because capital's more rapacious instincts were constrained by powerful trades unions. In the absence of these conditions, we have what we have now.

And as if all this were not enough, Tories have also sustained in office by simple deference - the habit of mind which leads people to atrribute merit to those in power. You don't need Marxian theories of ideology to believe this (though they help!). It was Adam Smith who wrote:

We frequently see the respectful attentions of the world more strongly directed towards the rich and the great, than towards the wise and the virtuous. We see frequently the vices and follies of the powerful much less despised than the poverty and weakness of the innocent…The great mob of mankind are the admirers and worshippers, and, what may seem more extraordinary, most frequently the disinterested admirers and worshippers, of wealth and greatness.

All these things mean that the feedback mechanisms whereby bad governments are kicked out and bad policies reversed are not as strong as they might be.

My point here is simple. There's more to politics than the mere assertion of one's own moral and intellectual superiority. We must also understand why we are badly governed, and this requires us to appreciate that politics does not exist in a vacuum but instead is shaped by socio-economic conditions. You can't understand politics without understanding capitalism.

Of course, it's likely that we have only a few more months of this awful government: there are limits to how far reactionary rentiers can sustain an egregiously incompetent government in office. But many of the pressures that gave it us will still be in place: economic stagnation and the power of the media, finance, and other regressive sections of capital. And they will constrain even the most competent and best-intentioned Labour government. The idea that we can have good government if only good people were in charge is too hopeful. Centrists, at least as much as leftists, are prone to utopian fantasies.

Two types of politics

There's an under-appreciated division in politics. It's expressed in this tweet from the Sleaford Mods:

Don’t be asking me to pick sides for something I ain’t got any real idea about, at a gig. I’m a singer. My job is music. The only real thing I know about War is that I’m sick and tired of premature death like we all are. Of the murder of anyone, under whatever fucking belief grid.

Now, the thing is that the Sleaford Mods are a political band. So why are they loath to express a political opinion about Gaza?

It's because their politics arise from lived experience, of struggling to get by in crap towns. (Jason Williamson comes from Grantham and is thus an expert on the latter). Such a politics can be contrasted to that which arises from abstract thought, be it academic reading or, more often and much worse, the media. All most of us know about Gaza is what we get from the latter, which gives us only a partial picture even with the best journalists. Hence the Sleaford Mods saying "I ain’t got any real idea about" the conflict*. They are channelling Charlie Munger's wise words: "one skill is knowing the edge of your own competency."

The diametric opposite of their attitude is that of the talking heads on poshcuntstalkshit shows who spout off on all subjects (or at least all of those deemed acceptable by pro-capitalist ideologues) and whose views are drearily predictable: if you know their opinion on, say, Israel you know their view on austerity, "wokeism", Brexit etc**. The edge of their competency is a mystery to them.

We see the contrast between the two types of politics more broadly. The politics of lived experience arises from having bad jobs, stagnant wages, long waits for one's court case or difficulties in seeing doctors. The politics of abstraction, on the other hand, is that of "stop the boats" or fretting about "wokesters"; very few people outside coastal towns have actual experience of being inconvenienced by migrants arriving in small boats, and even fewer have lived experience of being seriously incommoded by "wokesters".

Of course, sometimes the same political position can arise from either. Hostility to trans people, for example, can be the result of being harassed in a changing room by a man in a dress or it might arise from theorizing about what it means to be a woman. And, of course, smarter people combine lived experience with theoretical learning.

Lived experience does not necessarily push one to the left. Much of Thatcher's support in the 70s and 80s came from people having personal experience of being inconvenienced and harassed by striking workers, or from them profiting from having bought their council house cheaply. Yes, most of the press supported Thatcher, but many didn't need to look at a newspaper to tell them to vote Tory; they only had to look at their bank balance.

Similarly, a good portion of support for Brexit - enough to tip the balance - wasn't based on abstract arguments about the EU but upon the lived experience that things weren't going well.

The outcome of the Brexit referendum took most of the political class by surprise. That was because much of that class was detached from individuals' lived experience and better keyed into the chatter of talking heads. The rise of Corbynism was also a surprise for the same reason: journalists, politicians and "commentators" (the fact they are a thing at all is revealing) talked among themselves and under-appreciated the lived experience of young people with high debt, unaffordable housing and bullshit jobs.

Lived experience is not always articulated, or even articulable. It can take the form of what Polanyi called "tacit knowledge", a gut feel that something is wrong. Just as successful entrepreneurs can have a hunch that a new product will sell well or investors an inarticulable sense that an asset is overvalued so too can voters have a feel that things aren't right.

Which brings me to the problem with basing politics on lived experience alone. It generates only local and circumscribed expertise: people might be experts on the performance of their local GP surgery but not that of the NHS in general, or experts in how their own business is performing, but not the economy as a whole. And so on. And of course expertise in diagnosing a condition does not mean knowing the cure.

In principle, this needn't be a problem. A sensible polity would aggregate fragmentary and sometimes inarticulated particular information into genuine knowledge in the way that Hayek supposed that a well-functioning market aggregated dispersed information. Technocrats - genuine technocrats not vacuous centrists - could then get to work on solving those problems.

But of course, we don't have such a polity, which is why we have opinion polls and not fact polls. Part of the professional deformation of the political-media class is to overvalue the mere verbal fluency of people like themselves and undervalue the dispersed tacit knowledge and local expertise of outsiders. Worse still, that class exploits people's anger at their lived experience of economic stagnation and failing public services and misdirects it into support for Brexit, hostility to migrants or antipathy to the sort of "elite" which comprises youngsters who can't afford a house but not millionaire cabinet ministers or newspaper barons.

I'm not offering solutions here; there's no point writing recipes when you don't have a kitchen. I'm just pointing out what the distorted perception of many journalists and politicians doesn't see - that there are ways of thinking about politics which are not heard in TV studios.

* You might reply that you don't need especial expertise to know that bombing children or murdering teenagers at music festivals is wrong. True. This does not, however, help us solve the more difficult problem of how to stop it.

** It needn't be so. One of my friends describes his politics as Thatcherite economics and Corbynite foreign policy. This might seem odd today, but it would have made perfect sense to, say, Richard Cobden.

Management in question

Can we rebuild public services without massive extra spending? Can we really implement the new technologies necessary to get us to net zero? Can we build infrastructure projects on budget and on time? Can we increase housebuilding quickly? How can we reverse the UK's lamentable productivity performance?

These important policy issues have something in common. They all pose the same question: do we as a country have the management ability to achieve what we'd like to?

Casual evidence suggests not. We have some of the most expensive electricity in the world; water companies cannot, it seems, make a profit without polluting our waterways; trains are unreliable and overpriced; infrastructure projects cost vastly more in the UK than elsewhere; and new-build houses are of appalling quality. All of which are signs that managers just don't deliver the goods at acceptable prices and quality.

This isn't the only evidence. Nick Bloom and colleagues have shown (pdf) that there is "a long tail of extremely badly managed firms." Staffan Canback has described how diseconomies of scale often set in quite quickly, suggesting that managers can't easily overcome the inefficiencies caused by expansion. Alex Coad has shown that there's a large random element to firm growth, implying that bosses contribute less to corporate success than they claim. And Paul Ormerod and Bridget Rosewell have shown (pdf) that "firms have very limited capacities to acquire knowledge about the likely impact of their strategies", perhaps because, as Kenneth Boulding said, there is a high chance that "top decision-makers will be operating in purely imaginary worlds."

Is it really plausible that the UK's low and stagnant productivity has nothing to do with the calibre of the people running businesses?

Maynard Keynes famously said: "Anything we can actually do, we can afford." But perhaps we cannot actually do very much because we just don't have the management skill to build things, provide decent services or increase efficiency.

Why not?

One possibility is that bosses haven't had the incentives to do so. If they can make millions even from failing businesses such as Wilko, why should they bother trying to do a good job?

There's evidence for this. The internet has become enshittified not because tech bosses lack ability but because they can make more money from ad-riddled sites than from ones pleasing to their users. And Bloom says that a big reason for that long tail of poorly managed firms (around the world) is that a lack of product market competition relieves them of the pressure to up their game.

To the extent that this is the case, the policy solution is to change incentives. In the case of utilities and transport, this requires - at least - more rigorous regulation of prices and quality. In other cases, we need that other regulator, the market. I'm not just thinking here of beefing up the Competition and Markets Authority. We need also to strengthen competition by reducing barriers to entry such as lack of finance or restrictive intellectual property laws.

In this context, we should welcome falling house prices. They send the signal that if you want to get rich you should try producing goods and services rather than relying on asset price inflation, and could therefore increase the supply of entrepreneurs and managers.

There is, however, another reason for bad management. It's that the job of senior management has ceased to be what it should be - that of humble technocrats (pdf) improving corporate engineering - but has instead become a cargo cult ideology in which wannabe heroes express "leadership" and "vision".

Managerialism has, in many places eclipsed management. And there's a big difference between the two. Managerialism has a messiah complex and belief in great leaders, whereas management looks for good fits (pdf) between bosses and roles. Managerialism tries to apply the same methods everywhere, whereas management knows it is domain-specific; what works in (say) supermarkets might not work in universities. Managerialism valorises top-down control whereas management believes in listening and feedback. And managerialism speaks of vision and strategy whilst management focuses on empirical detail and ground truth.

If we are to have better management, we need to replace managerialism with management: more worker democracy might be part of this.

Now, you might or might not agree with all this. Whether you do or not, I hope you'd agree that there is at least an important issue here. But you wouldn't guess so from Westminster politics, where this question is not on the agenda at all. How often, for example, is it discussed on those poshcuntstalkshit shows that pollute the airwaves?

Whilst the management question is not discussed in mainstream politics, however, labour issues very much are. Whether it be efforts to weaken trades unions or to "strengthen work incentives", both Labour and Tory governments have for decades seen their task as ensuring an adequate supply of quiescent labour. Ensuring an adequate supply of good management, by contrast, has barely figured as an objective. In this respect, the state not so much an empirically-based solver of genuine economic problems but rather an embodiment of Marx's point: "the executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie."

In defence of Labour

There might be more to be said in defence of Labour than many on the left suppose.

True, on the face of it the party seems to be willing the ends but not the means. Rachel Reeves promises faster growth, higher investment and the creation of good new jobs around the country, but without having a detailed plan to achieve any of these and apparently oblivious to the fact that the forces of capitalist stagnation militate against faster growth. These forces aren't just the economic ones of lack of big innovations, ageing population, falling profit rates and so on but also political ones: there's a large constituency of nimbys, financiers and monopolists opposed to faster growth.

Reeves' failure to appreciate the scale of her task is however not a personal failing. Part of politicians' professional deformation is to be over-optimistic about the transformative potential of small policy tweaks, and social democrats have traditionally been over-optimistic and incurious about capitalism. We shouldn't blame Reeves for these failings any more than we should blame the elephant for having big feet: it's the nature of the beast.

She is, however, doing something right. In merely calling for faster economic growth she is facing in the right direction, which could be a preparation to moving in the right direction.

What if better planning regulations and less policy instability don't significantly improve growth? A party that is sincere about wanting this would then have to focus on other obstacles to growth. Failing high streets might require a land value tax to deter landlords from keeping premises empty. High utility bills, in light of Reeves promise to cut household bills, would require tougher regulation - perhaps to the point of driving companies into bankruptcy and the public sector. Poor transport would require harsher penalties for incompetent rail companies and more infrastructure investment. The inability of capitalism to invest might require more socialization of investment along the lines of the original green new deal. And decent trading arrangements with the EU might lead to rejoining the single market.

In these ways, simply trying to solve the problem Labour is looking at might propel the party in a sensible direction.

There's something I've left off this list - fiscal policy.

There's a good reason why the party is promising fiscal discipline. It's that it might well inherit a labour market that is quite tight - albeit not as much so as a few months ago. There's a limit, therefore, upon how much the party can fulfil its promise to create "jobs for plumbers, builders and electricians...for scientists, designers and engineers" merely by adding to demand. Beyond quite a narrow point, any attempt to do so would bid wages up which the Bank of England would see as a reason to raise interest rates. And if that happens, you can say goodbye to hopes of much more housebuilding.

"Bond vigilantes don’t exist" as a constraint on how much governments can borrow in recessionary times, such as during the pandemic, but they do exist as a constraint on how much governments can fuel inflation, as we discovered with the Truss Budget.

We all know that the question "where will the money come from?" is asinine imbecility. But "where will the workers come from?" is certainly not. More "jobs for plumbers, builders and electricians" must therefore mean fewer jobs elsewhere.

For now, Labour isn't addressing this question - understandably because it's a nasty one. Traditionally, governments have diverted labour away from some jobs is by raising taxes or interest rates. But these methods might be insufficient. Instead, we might need more radical interventions for example to reduce the bullshit jobs and guard labour arising from private sector agency failures; or the excess labour created by policy failures such as excessive tax and benefit complexity; or the jobs that owe their existence to environmental, risk or intellectual pollution; or those (such as some managers) which exist because of a mistaken ideology.

It is a crude social democratic error to identify policy radicalism with a loose fiscal stance. The truth is that fiscal conservatism is entirely compatible - at least in logic - with economic radicalism.

Again, Labour is at least facing in the direction of sensible policies. It doesn't have a coherent fully-worked economic policy. But it has a hint of a trace of the beginnings of a clue, which is more than can be said for the Tories.

It's in this context that Starmer's support for Netanyahu makes sense. As a description of events in Israel-Gaza it is indefensible. But we shouldn't regard it as that. Nothing Starmer says will make a jot of difference to the region. Instead, he is talking to a domestic audience. Any support for Palestinians would be exploited by the Tories and the media to stoke up a culture war with which to distract attention from 13 years of failure. In supporting Netanyahu Starmer is thus keeping the focus on economics. Which is where it should be, because this might lead somewhere intelligent.

Now, you might think that in saying all this I'm ignoring the advice of my previous post because I'm failing to test my ideas against the empirical evidence. And the evidence that Labour is thinking along radical lines for its third or fourth move is lacking, which is why the pro-capital, anti-welfare Anna Soubry feels comfortable supporting Labour.

This, though, isn't necessarily a clinching argument. It shows that Starmer is succeeding in marginalizing the Tories, in reducing them to a rump of deluded fanatics detached from the real world.

And we must remember that parties never enter office with fully-worked plans. The Tories' 1979 manifesto, for example, made little reference to privatization or to using mass unemployment to smash the unions. It is possible that the clash between the desire to raise economic growth and the reality of sclerotic capitalism will push Labour in the correct direction.

One thing suggests this isn't wholly fanciful. It's Starmer's and Reeves' claims to come from modest backgrounds. Such talk isn't trivial. Your upbringing influences your sympathies, to use that great Smithian idea; this is why many people from poor families remain left-leaning even after making money. Such sympathies suggest that when the chips are down, Labour will pay more heed to the needs of the working class than the Tories would. Its "new deal" for workers rights is a genuine and important difference with the Tories.

I concede that in writing all this I might well be engaging in wishful thinking and clutching at straws, and I'm underplaying the strength of the forces of rentier capitalism opposed to pro-growth policies. What Labour offers is not so much an attractive substantive platform as the possibility of one. But options, even out-of-the-money ones, have some value. Which is more than can be said for the Tories.