Centrists & capitalism

James Kirkup in the FT has a nice piece saying that the centre-left needs more than just whines about Brexit and Corbyn, however justified these might be, but also needs a new economic model. I agree.

Successful political parties need an analysis of capitalism or – if you prefer – an economic narrative: Thatcher in the 70s had one, as does Corbyn today.

And to its credit New Labour also had one: some leftists tend to forget there was much more to the party then than “Bliar/war criminal”.

New Labour believed that globalization and technical progress were tending to increase inequality by depressing demand for unskilled work and raising demand for skills. This lay behind policies such as tax credits and the minimum wage (to top up wages that were being driven down by globalization whilst preserving work incentives) and the expansion of higher education.

Such a project had much validity. From today’s perspective, however, it is incomplete in at least three ways:

 - It is insufficiently critical of the uber-rich. Peter Mandelson was famously “intensely relaxed about people getting filthy rich as long as they pay their taxes." And Gordon Brown fawned over top businessmen. What they didn’t see was that top-down managerialism can worsen economic performance, and not just by contributing to financial crises.

 - It failed to see that a degree, whilst perhaps necessary for a decent job, is not sufficient. The universities’ strike reminds us that even educated erstwhile “middle class” workers face oppressive management, stagnant wages and little hope of owning property.

 - It took for granted capitalist and failed to anticipate (as in fairness did almost everybody else) that productivity would stagnate for years. It is now no longer sufficient – as Gordon Brown thought it was – for governments to merely offer a stable policy framework and supply of skilled labour. We need more than that to raise growth.

Blair’s achievement in the 90s was to recognise that Labour must adapt to a new economy. It must do so again today. But it is John McDonnell who recognises this fact whilst centre-leftists seem not to. Admirers of the Great Modernizer seem to be living in the past.

Which brings me to an issue. James writes:

Ownership… should be wider. You cannot ask people to back an economic settlement in which they have no stake. And this is about more than houses. The UK needs a real stakeholder economy for the 21st century: more tax breaks to encourage more employee share schemes to mirror those for senior executives. If it’s good enough for the board, it’s good enough for the rank-and-file. Community ownership trusts could hold equity issued by public companies and handed to their customers.

This is good. More ownership for the “rank and file”, however, means less for existing owners. To justify this, you need to show that their ownership is unwarranted. And that requires a deeper critique of capitalism than the centre-left currently seems to offer.

But there’s something else. The difference between a “real stakeholder economy” and full socialism is one of degree only. There’s a perhaps indefinable point at which one shades into the other. James can support such policies as ways of improving capitalism, but I can do so as a form of interstitial transformation (pdf), or accelerationism, of the economy towards socialism.

Of course, there’ll be disagreements about how far and how fast we travel down this road. But let’s get on the road and find out just what these are. It’s not clear to me that such differences of degree justify splitting the Labour party.

Comments

[Luis Enrique]

I think you could argue that the 'technocratic centre' has already taken positions that would be regarded as quite far-left, in British political terms - I am thinking of things like IMF research on inequality, redistribution and growth, or research done by promarket.org and the Washington center for equitable growth on monopoly and monopsony power, the Roosevelt Institute on financialisation, ideas like basic income, early childhood investments, job guarantees, wealth tax, land tax, renters' rights, etc. and the view that fiscal expansion (including perhaps money-financed) can be pushed further before inflation becomes a concern, the importance of hysteresis, scarring etc.

I really hesitate to write what could be derided as a centrist fantasy, because I recognise how far centrists have fallen and how genuinely popular Corbyn & co are, but in such a fantasy a non-threatening character (like Blair or Macron) that the mainstream media would 'take seriously' could assemble what would actually be quite a radical left platform, by past standards, but all supported by work by technocrats, such as IMF economists, that it would be hard to paint as loony left.

I better stop before I get carried away and propose the gradual global nationalisation of tech giants via taxes payable in their equity (and my pet idea of the BoE targeting flat nominal house prices).

[Peter K.]

What do you make of:

http://mattbruenig.com/2017/07/28/nordic-socialism-is-realer-than-you-think/

which is about Nordic "socialism?"

Lately I'm been thinking about socialist "reforms" which point towards socialism.

UBI is socialist. A worker's cooperative is socialist. Those who think of "socialism" as a utopia founded after the revolution won't agree with this, but what if we were able to "reform" our way to socialism (even if there are big jumps, say after a Depression or failed counter-revolution)

I'm finding Bruenig's focus on sovereign wealth funds more and more interesting. The government can influence corporate governance and can "own" and "tax" much of the means of production via investments. This can be used to fund a UBI.

Then there's a matter of how democratic the government and how democratic the workplace is.

I've been debating liberals who see socialism as conservatives do: Venezuela and incompetently government-run enterprises. The DMV. I've also been debating anarchists who see social democracy and welfare state reforms as having little to do with socialism as it will appear.

Bernie Sanders calls himself a "democratic socialist." DSA chapters across America are seeing large growth in membership. Corbyn is seen as a hero among American self-described socialists. (Even if the BBC pictures him as a Russian Soviet.)

Socialist in this context can be seen as a way to distinguish the left from the center left and "liberals" who are okay with market-based reforms, charter schools and mean-testing, all of the New Labour triangulating ideas that haven't worked.

I've skimmed your links and will read them more thoroughly.

[cjcjc]

Owners take risks. Undiversified owners take high risks.
Many businesses fail. Even the most successful ones will at times have to shrink, or change their focus, requiring different sorts of skills. At other times businesses can require large capital injections.
How well equipped are worker-owned firms to deal with such challenges?

[Blissex]

«the centre-left needs more than just whines about Brexit and Corbyn, [ ... ] And to its credit New Labour»

Ah memory can fade, so a reminder is needed that the so-called centre-left was in their own (P Gould as reported by L Price in 1999) words "quasi-Conservative" and some academics who estimate political positionings tend to agree:

“Philip Gould analysed our problem very clearly. We don’t know what we are. Gordon wants us to be a radical progressive, movement, but wants us to keep our heads down on Europe. Peter [Mandelson] thinks that we are a quasi-Conservative Party but that we should stick our necks out on Europe.”
https://www.politicalcompass.org/uk2017#ukhistorical

«much more to the party then than “Bliar/war criminal”»

Well New Labour was not just "neocon" far right, but also fairly centre-right to right as to implementing neoliberal economic policy: anti-union laws untouched, right-to-buy neutered by cutting the discount, but not new council houses, massive upward redistribution engineered via a colossal housing debt bubble, tax credits that eventually benefit employers rather than workers.

[Blissex]

«New Labour believed that globalization and technical progress were tending to increase inequality by depressing demand for unskilled work and raising demand for skills.»

Other people remember quite different attitudes... According to Roy Hattersley, New Labour believed that in the dog-eat-dog globalised economy that they wanted to inflict on the UK only a small number of the most talented poor should be allowed to escape poverty and deprivation:

http://www.theguardian.com/politics/2001/jun/24/labour2001to2005.news
«Tony Blair discovered a big idea. His destiny is to create a meritocracy. Unfortunately meritocracy is not the form of society which social democrats want to see. ... A Labour government should not be talking about escape routes from poverty and deprivation. By their nature they are only available to a highly-motivated minority. The Labour Party was created to change society in such a way that there is no poverty and deprivation from which to escape. ... The certain knowledge that the Conservative Party would be a worse government than Labour is not enough to sustain what used to be a party of principles. ... At this moment Labour stands for very little that can be identified with social democracy»

«Blair’s achievement in the 90s was to recognise that Labour must adapt to a new economy.»

Blair's message seemed to me rather that labour (as in workers) needed to adapt to poverty unless they were very talented super-achievers, for example here as interpreted by J Hutton on running faster in the "race to the bottom":

www.yorkshirepost.co.uk/news/main-topics/local-stories/crackdown-on-benefits-scroungers-1-2412296
«He said that benefit claimants needed to compete for jobs with migrant workers, many from Eastern Europe. He went on: “We cannot reasonably ask hard-working families to pay for the unwillingness of some to take responsibility to engage in the labour market.”»

That is a very clear and terse exposition of the principles of blairism.

[Blissex]

«James Kirkup in the FT has a nice piece [ ... ]writes:
“Ownership… should be wider. You cannot ask people to back an economic settlement in which they have no stake. And this is about more than houses.“»

That's just the standard right-wing recipe for turning workers into thatcherites: car ownership (of little crap cars in congested roads) instead of public transport, house ownership (of tiny badly built properties whose rises in price are paid for by those poorer than the owners), and share ownership (of minuscule symbolic non-controlling minority stakes as passive investors).

«“The UK needs a real stakeholder economy for the 21st century: more tax breaks to encourage more employee share schemes to mirror those for senior executives.”»

Just the usual far-right talk to cut taxes on property, and to fund with taxpayer money the bribing of workers into voting Conservative.

It is surprising that our blogger seems to be unaware of the political consequences of such schemes.

[Blissex]

«market-based reforms, charter schools and mean-testing, all of the New Labour triangulating ideas that haven't worked.»

But they have worked for a large minority: house prices have got much bigger, and immense amounts of income and wealth has been redistributed from workers and taxpayers to the property and business owning upper-middle and upper classes.
Just one good PFI deal has meant some people could retire at 40-45, and many years of property price bubble have meant that some other people could retire at 50-55, to a life of secure (profits moved to tax-free in offshore nominee accounts) luxury.

[D]

- It took for granted capitalist

Typo?

[D]

Centrists and rightists might see your agreement with this as a step on the road to full socialism as a bad thing. A slippery slope to failed socialism/communism of the past.

How could we make the slope less slippery or slopey and ensure, to some extent at leadt, that we either stick where discussed policies take us but no further, or move on only towards good socialism?

[Ben Philliskirk]

"New Labour believed that globalization and technical progress were tending to increase inequality by depressing demand for unskilled work and raising demand for skills."

Well this is evidence of a terrible lack of judgement. What skilled work there is tends to be focused on a diminishing minority, as increased technical progress has made many jobs either obsolete or less difficult to perform. Globalisation has actually increased the amount of labour-intensive work on a world scale while 'pricing out' less-skilled UK manufacturing workers.

These features have been obscured by the rise of 'credentialism', where the entry requirements for many jobs have been embellished because there are more graduates, or because more jobs require prospective workers to spend their own time and money acquiring qualifications rather than offering on-the-job training.

The reason that employment has not dropped markedly in the UK is that the service sector has created a lot of semi-skilled and low-paid jobs with the money that 'trickles down' from the financial sector. Little to do with 'demand for skills' which only affects a very small group of workers.