In search of the centre ground

In the FT, Robert Shrimsley writes:

Starmer is leading his party back to the centre ground and has positioned it where it needs to be and patently was not under Jeremy Corbyn….The problem in contesting the centre ground is that you do actually have to fight for it and the Tories will not lightly surrender.

This poses the question: what is this centre ground, and how can it be said that the Tories occupy it?

It’s a puzzle.

We could define the centre ground as being what the median voter believes. But the majority of voters want a £15ph minimum wage, higher taxes on the rich, and nationalization of railways and utilities. From this perspective, Starmer is leading his party away from the centre ground which Corbyn and McDonnell claimed – a ground which the Tories don’t occupy.

Clearly, Shrimsley doesn’t have this conception of the centre ground in mind.

But there’s another. It arises from the theory of valence politics.

This says that voters don’t judge parties by the entirety of their manifestos, which only cranks and obsessives read. Instead, they judge parties, and especially leaders, by their performance on what they care about most.

On this view it can be said that Corbyn abandoned the centre ground, despite having many policies popular with the median voter. Median voters saw him as unpatriotic and as unable or unwilling to get Brexit done, defects which outweighed his attractive economic policies. Johnson could thus seize the centre ground in 2019.

But there’s more to valence politics than this. As Peter Kellner has said, valence voters

judge parties and politicians not on their manifestos but on their character. Are they competent? Honest? Strong in a crisis? Likely to keep their promises?

Johnson does not occupy the centre ground on these criteria. But then, nor does Starmer. As Kellner wrote recently: “the average ‘valence’ scores of the two parties are dreadful.”

On this conception, then, nobody in England commands the centre ground.

And, perhaps, nor could they. Median voter theory assumes that voters are distributed along one dimension – traditionally left and right – and so there is some kind of centre: the theory is closely analogous to Hotelling’s Law.  But this might be changing. If voters are divided along other dimensions, such as culture or age, the centre ground becomes much harder to define – which is perhaps why the Lib Dems and ChangeUK lost so heavily at the last election. In 2019, Labour won among under-39 year-olds but lost heavily among older voters. It won the younger median voter but lost the older one. What does the centre ground mean here?

How, then, can Shrimsley be writing anything other than utter guff?

Simple. There’s a third conception of the centre ground.

Which is just the status quo, and minor tweaks thereto.

In the 60s and 70s, for example, the centre ground believed that utilities should be publicly owned. By the late 90s, it believed they should be privately held. And before 2016 the centre ground supported UK membership of EU single market. Now, it opposes them. It is in this sense that “Starmer is leading his party back to the centre ground” – by abandoning support for freedom of movement.

Centrism, then, is parasitic and deferential to the existing order.

These different conceptions of the centre ground explain the intellectual trajectory of centrists during my adulthood.  In 1983 the SDP manifesto wanted a fiscal stimulus to cut unemployment and raise welfare benefits, increased foreign aid and “a major extension of profit sharing and worker share-ownership.” Centrists today are just gimps for billionaires.

This transformation happened because the SDP were using a median voter conception of the centre ground; they tried to split the difference between left and right as they existed at the time. Today, though, centrists see no need to stake out a defined position between left and right. “Moderation” means accepting the status quo.

When columnists like Shrimsley speak of the centre ground, therefore, what they mean is merely “something that doesn’t scare me”.

From this perspective, Starmer is indeed returning to the centre ground, by not challenging the existing capitalist order. However, it is one thing to actively argue for the status quo and another to merely passively accept it without intellectual effort, as Starmer is doing. Worse still, defending capitalism when it is delivering rising living standards and better jobs (as centrists could plausibly claim in the 90s) is very different from defending it when it has delivered a generation of crisis, rentierism, and stagnation. The centre ground is now just a fetid swamp.

Comments

[Dave]

I think there's a 4th dimension of the concept. Most voters it seems to me instinctively shy away from things that are perceived to be 'extreme' and so even if something is supported by a majority of people, if enough people portray that thing as extreme, the act of asking for it is evidence of extremism, and therefore to be avoided.

Most voters therefore report wanting parties to not be extreme, and this turns into a self-fulfilling prophecy defining the centre ground as whatever the mainstream media can make peace with, as it is the latter who define who does and doesn't qualify as extreme. As ever, the inherent right-bias in the media does an enormous amount of work here in normalising right-extremism as sensible, and othering majority-supported politics as extreme.

[rsm]

Does attempting to dismiss financial innovation as merely "rentierism" miss the point that securitization bundles lots of future rent payments into an asset that can be bought and sold today, with created dollars (or pounds) that don't get destroyed even if the expected rents fail to materialize?

How many voters have Robinhood accounts, or the like,and trade options without charging any rent?

What if our blogger taught us all how to hedge energy price rises by buying natural gas calls? Could we all then benefit from inflation? Can our calls go up more than our energy costs inflate, until prices (for any arbitrary reason) go down, when once again we benefit from lower energy expenses and can exit our financial hedges?

[redpesto]

"However, it is one thing to actively argue for the status quo and another to merely passively accept it without intellectual effort, as Starmer is doing." - Thank you for this post. It's so tiring reading yet another tweet/below-the-line comment/reader's letter arguing for 'the centre ground', let alone pundits doing the same thing as if they are arguing some kind of universal truth.

[Nanikore]

"Worse still, defending capitalism when it is delivering rising living standards and better jobs (as centrists could plausibly claim in the 90s)"

I'm not sure about that. I think Piketty and Gordon had shown that problems in capitalism, including rising inequality started in 1980 or before. Historians such as Angus Maddison had long argued that it started even earlier.

You will not find a stronger supporter of a united Europe than myself, however, I am sympathetic to concerns that the country has become over-reliant on imported labour. This is not good for emigrating countries or host countries. And it is a consequence of pro-uber globalisation assisted by a lack of critical reasoning in the economics profession - particularly a problem during the 1990s. The costs of uber-globalisation were well known to other social scientists and many heterodox economists even before it intensified from the time of Thatcher and Blair.

The EU's problem was basically overly rapid expansion eastwards without safeguards. This was the direct cause of Brexit.

It was not austerity as Nicolas Craft argues. Had there been expansionary macro-policy, distortions leading to credit bubbles, real estate price rises, inequalities, and indeed inward economic immigration, would have been even higher. Any new jobs would have been met from increased supply from the highly elastic labour supply pool in the EU accession countries. Little would trickle down to jobs and increased wages for low paid native labour. As it didn't during the 1990s, it would not have reversed deindustrialisation or the weakening of labour and unions. In all likelihood it would not have improved the relative position of Britain's unemployed or underemployed. They have seen their relative plight deteriorate over a very long time, with expansionary macro policy or not.

[Nanikore]

... or over-employed but underpaid.

[Blissex]

This is one of the rare posts by our blogger where I am almost wholly unsatisfied, and it all comes from taking seriously Shrimsley, he seems to me a comical caricature of a "centrist" hack. As to "centrism" and how voters vote:

* The fabulously "centrist" LibDems (and the SDP time ago and ChangeUK mor recently) have not won a general election for 100 years, and comical "centrists" like Shrimsley never explain why they say that "centrism" always wins.

* "Centrism" used to mean "Butskellism", which was pretty much corbynism. It currently means "thatcherism plus BAME". That is what "triangulation"
means: https://www.jwz.org/blog/2019/11/centrist/

* Voters have different reasons to vote, but the most common one is their main material interest: they only have one vote, so they cannot mix-and-match, so they pick something that really matters to them and spend their one vote on that. For most "Middle England" voters that is property. As a commenter on this blog pointed out several years ago, english elections are property referendums, and the only times when a governing party has been defeated is when they let property crash.

The historical role of Keir Starmer is to ensure that if property crashes before 2023/2024 the main opposition party goes into government with a continuity thatcherism programme, as Tony Blair himself did.

[Blissex]

«Voters have different reasons to vote, but the most common one is their main material interest»

The best theory of voter choice I have seen is from the detestable but lucid Grover Norquist on the Republican coalition:

http://www.prospect.org/article/world-according-grover
«But on the vote-moving primary issue, everybody's got their foot in the center and they're not in conflict on anything. The guy who wants to spend all day counting his money, the guy who wants to spend all day fondling his weaponry, and the guy who wants to go to church all day may look at each other and say, "That's pretty weird, that's not what I would do with my spare time, but that does not threaten my ability to go to church, have my guns, have my money, have my properties, run by my business, home-school my kids.»
«Spending's a problem because spending's not a primary vote-moving issue for anyone in the coalition.
Everybody around the room wishes you'd spend less money. Don't raise my taxes; please spend less. Don't take my guns; please spend less. Leave my faith alone; please spend less.
If you keep everybody happy on their primary issue and disappoint on a secondary issue, everybody grumbles … no one walks out the door. So the temptation for a Republican is to let that one slide. And I don't have the answer as to how we fix that. But it does explain how could it possibly be that everyone in the room wants something and doesn't end up getting it because it's not a vote-moving issue.»
«Pat Buchanan came into this coalition and said, “You know what? I have polled everybody in the room and 70 percent think there are too many immigrants; 70 percent are skeptics on free trade with China. I will run for President as a Republican; I will get 70 percent of the vote.”
He didn't ask the second question … do you vote on that subject?»

The other main way voters choose their vote is "tribal", that is they vote for a party that "traditionally" supports their main material interests, as Tony Blair himself said:

http://www.britishpoliticalspeech.org/speech-archive.htm?speech=202
«You see, people judge us on their instincts about what they believe our instincts to be»

For example there is a hard core of tory voters who automatically vote for anybody with a blue rosette because they expect them to protect their property profits, and there is a hard core of labour voters who automatically vote for anybody with a red rosette because they expect them to protect their wages and jobs (and the Militant Mandelsoncy want to use that block of votes to do the opposite).

[Nanikore]

@Blissex " if property crashes before 2023/2024"

A very big question, I agree. It looks like the US will start either tapering back QE or raise the FFR some other way. There is no way the UK (or anywhere else) can buck what will be, if the Fed takes this action, a rise in worldwide rates. This could be the straw that breaks the camel's back.

This is being timed with the end of deflationary forces caused by mass immigration, large international capital movements (long and short), and cheap manufacturing in China and ex-communist countries.

While there were many things led to the Japanese crash; if I was to name the spark (not the fundamental cause) it was the decision to raise the BOJ rate. It was a minuscule increase but it was enough to send the real estate bubble into a free-fall.

We have a world dependent and flooded with cheap US credit. The transition could be hard. It will not just affect wealthy property owners, however. Many people with mortgages will be affected.

[Blissex]

«tiring reading yet another tweet/below-the-line comment/reader's letter arguing for 'the centre ground'»

For me those people are thatcherites who just want a less crass (in tone, not in substance) thatcherite party, something as slick and smarmy as New Labour rather than harsh and vulgar as the Conservatives.

I think that their main motivation is property: they want to be really sure that the prices and rents of their property portfolios continue to boom, which is in England the primary vote-moving issue of thatcherites.

But there cannot be a centre ground between renters and landlords, buyers and incumbent owners: property prices are purely redistributive.

There can be something of a centre ground between workers and employers, as in the post-war settlement, but that type of class struggle has not been the main point of english politics since Blair, and arguably since Thatcher herself.

[Blissex]

«normalising right-extremism as sensible»

One sign of that: Ian Duncan-Smith resigning as DWP Secretary of State because the Cameron-Osborne government was too far-right even for him.

[Blissex]

«There can be something of a centre ground between workers and employers,»

This probably needs explaining: workers are also the main customers of many (not all) employers. Every employer has an interest in reducing the wages of their own workers, but also (secondarily though) in increasing the wages of the workers of other employers.

This is pretty much what makes social-democracy ("Butskellism" and even stronger variants) politically feasible when the dominant class is employers.

One of the problems of english politics is that the dominant class is no longer employers, it is finance and property rentiers.

[Blissex]

«the Japanese crash; if I was to name the spark (not t«e fundamental cause) it was the decision to raise the BOJ rate. It was a minuscule increase but it was enough to send the real estate bubble into a free-fall.»

That is both right and a misdescription, the spark was the *motivation* for that small increase of the BOJ rate: the decision by the japanese elites to stop the property bubble as it interfered with the industrial development of Japan.

Since at that point the bubble had long reached the minskian "Ponzi" stage, where a lot of buying was done only in expectation of capital gains, all speculators who understood the change in political climate began selling as fast as possible. It is very hard to do a "soft landing" on a "Ponzi stage" bubble, as JK Galbraith already wrote in 1954 in "The Great Crash 1929".

Probably the japanese elites expected things to be less drastic, but they still went ahead, instead of doubling down on speculation, because they are more nationalistic than the english or USA elites and realized that property speculation was interfering with japanese industrial investment, as JM Keynes had described decades before:

“Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done”

In England today "centrism" is all about maximizing the profits from "the activities of a casino" as long as they can last, and then retiring to the caribbean or Dubai.

[Aaron Headly]

"Today, though, centrists see no need to stake out a defined position between left and right. “Moderation” means accepting the status quo."

We are having trouble with this one in the U.S. right now. Two supposed moderates in the upper house don't think they have to explain why they are unwilling to join their party (and their voters) in supporting an important piece of legislation. They think that guarding thee status quo is justification enough in itself.

Thanks for this post (and the discussion it has spawned).

[rsm]

《 It is very hard to do a "soft landing" on a "Ponzi stage" bubble, 》

Since central banks have realized, perhaps after Galbraith's time, that they face no survival constraint, is this true anymore?

As long as you ignore the financialisation of property such that non-land-owners profit more from securitization than actual landlords, will your views of things be hopelessly out-of-date?

[rsm]

《 When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done” 》

Can we separate the casino from the real economy, so that financiers can play and individuals will remain insured by central banks against their mistakes?

People love to play so why not let them play in financial markets with virtual goods while ensuring there is a basic income floor below which no one will fall?

[ltr]

Today, though, centrists see no need to stake out a defined position between left and right. “Moderation” means accepting the status quo....

[ However self-defeating such an acceptance is to the British middle class. Keir Starmer is actually a Tory, which was the point in undermining Jeremy Corbyn and choosing the leadership of Starmer. The government and Labour leadership are now thoroughly Conservative and the British middle class are increasingly limited:

https://fred.stlouisfed.org/graph/?g=HnKY

August 4, 2014

Real per capita Gross Domestic Product for United States, United Kingdom, Germany and France, 2007-2020

(Indexed to 2007)

[Blissex]

«Real per capita Gross Domestic Product for United States, United Kingdom, Germany and France, 2007-2020»

The Worldbank development indexes electricity consumption per head graphs are far more informative, and "ltr" won't like it, but most likely it was China's entry in the WTO that caused the collapse:

https://blissex.files.wordpress.com/2018/02/dataelectreuothersconsperhead1960to2015.png
https://www.google.co.uk/publicdata/explore?ds=d5bncppjof8f9_&met_y=eg_use_elec_kh_pc&idim=country:DEU:ITA:GBR:FRA:ESP:GRC:CHN:JPN:KOR:MYS:THA:BRA:MEX:URY:TUR:IRL:SGP:IND:ISR:USA

[ltr]

The Worldbank development indexes electricity consumption per head graphs are far more informative...but most likely it was China's entry in the WTO that caused the collapse.

What nonsense, but I suppose this is a British fretting over the end of colonialism and empire. Colonial and empire will not be returning, no matter the wish.

As for China, China developed dramatically and Britain could only benefit by accepting and respecting that.

[Blissex]

«British fretting over the end of colonialism and empire»

Most british "Middle England" voters are instead delighted that China's entry into the WTO has resulted in lots of offshoring which has meant that:

* Electricity consumption per head has collapsed, resulting in less pollution in the UK.
* They can import cheaper products made by much lower cost chinese workers, rather than "lazy, uppity, greedy" UK workers.

[ltr]

Most British "Middle England" voters are instead delighted...

[ This is just saying stuff.

The point is that China has in no way been an economic problem for the UK, rather the reverse in that trade has always been critically important for the UK. The Chinese market has offered immense opportunities for the UK, but the opportunities are not based on exploitation but sharing. ]

[aragon]

No doubt to ltr's bafflement, some of us disagree.

https://www.telegraph.co.uk/business/2021/10/04/west-has-handed-china-world-platter/

"There’s much work to do to, but perhaps in a century, historians will reflect that China had global hegemony handed to it gift-wrapped on a plate."

I beg to differ with the article that stronger Intellectual Property protection is a solution.
(See previous post on previous thread)

But Finance and Intellectual Property are the source of the problem.

See Boeing...

[rsm]

《 They can import cheaper products made by much lower cost chinese workers, rather than "lazy, uppity, greedy" UK workers. 》

And hardworking greedy City workers make sure financial returns for households well outstrip inflation?

[Nanikore]

Fantastic column by Monbiot

https://www.theguardian.com/commentisfree/2021/oct/06/offshoring-wealth-capitalism-pandora-papers

Interesting he mentioned West Papua. Grasberg is one of the environmental crimes you wish you never knew.

I didn't say it but neo-classical economics is also a British Empire era creation made to justify exploitation. A soft power tool.

[Blissex]

«neo-classical economics is also a British Empire era creation made to justify exploitation»

More precisely what we know now as neoclassical economics (as opposed to generic "marginalism") was created by J.B. Clark in the USA to counter georgism, that is to support real estate based speculation in the USA, rather than imperial exploitation, which was based more on "social darwinist" arguments(*).

https://www.project-syndicate.org/onpoint/economics-captured-by-neoclassical-magical-thinking-by-james-k-galbraith-2021-07
https://masongaffney.org/publications/K1Neo-classical_Stratagem.CV.pdf
https://masongaffney.org/publications.html

(*) A poem by Henry Belloq has these very "social darwinist" verses in "The Modern Traveller" (1898):

“Whatever happens we have got
The Maxim Gun, and they have not.”

[ltr]

"There’s much work to do to, but perhaps in a century, historians will reflect that China had global hegemony handed to it gift-wrapped on a plate."

At least recognize that this is racist rubbish that will only harm the British middle class if policy follows from it. The Chinese worked and worked to develop these last 40 and more years, and exploited no other people in developing. Middle class British would only benefit from a partnership with China.

[Nanikore]

@Blissex

Thanks for the superb reading list.

"we have got
The Maxim Gun, and they have not"

Economists think it is down to things like comparative advantage. But of course it is really about power, which they conveniently avoid.

[ltr]

https://newsaf.cgtn.com/news/2021-10-07/WHO-recommends-broad-use-of-Mosquirix-vaccine-for-children-in-Africa-149f8m0tLkk/index.html

October 7, 2021

WHO recommends broad use of Mosquirix malaria vaccine for children in Africa

The World Health Organization (WHO) has recommended the broad use of a malaria vaccine for children in Africa.

The WHO Director-General Tedros Adhanom said on Wednesday that the RTS,S, or Mosquirix, a vaccine developed by British drugmaker GlaxoSmithKline (GSK.L), could play a major role in the struggle to eradicate malaria deaths.

“Using this vaccine in addition to existing tools to prevent malaria could save tens of thousands of young lives each year,” he said....

[ Superb accomplishment. ]

[Blissex]

«But of course it is really about power, which they conveniently avoid.»

Ha! I can't find two quotes that I like on this, perhaps one day:

* Joan Robinson saying that most Economics textbooks by assuming that both sellers and buyer are price takers handwave away any notion of power in the political economy.

* Michael Hudson saying that he was in NYC taking an elevator to a meeting in the high floors or a famous bank, and then a policeman or a guard with a gun came into the elevator car, and this prompted him to think that was what ultimately the famous bank relied on.

Relatedly to the latter, it is little known that the Federal Reserve have their own police force which is quite strange (perhaps because the even Treasury's Secret Service [now moved to DHS] or the FBI are not trusted the FR confidential matters).

[Blissex]

«But of course it is really about power, which they conveniently avoid.»

BTW even within J. B. Clark's fantasies, where the "initial endowments" come from is never addressed or mentioned...

[Blissex]

https://www.jstor.org/stable/1884976
«Review: Clark's Distribution of Wealth, The Quarterly Journal of Economics
Vol. 15, No. 4 (Aug., 1901), pp. 578-602 (25 pages)»

It quotes J. B. Clark as claiming:

«“To each agent a distinguishable share in production, and to each a corresponding reward - such is the law of natural distribution. This thesis we have to prove; and more hinges on the truth of it than any introductory words can state. The right of society to exist in its present form, and the probability that it will continue to exist, are at stake. These facts lend to this problem of distribution its measureless importance [...] the indictment that hangs over society is that of exploiting labour”»

About which it comments:

«The author's argument relates wholly to functional distribution, and leaves the more vital question of personal distribution untouched.
The disciple of Henry George might therefore admit that that the land creates a definite share in the product, and at the same time deny that the landlord had any part in it. He might also admit that the land ought to be paid for on the basis of its productivity, and deny that the private landlord should receive rent. The alternative would be to allow the State to receive the share that is attributable to land.
The socialist might take the same position as to all instruments of production.
The right of the present social order to exist depends on the laws which govern not functional, but personal distribution.»

Another good comment:

«Probably the most unsettled question of economic theory at the present time is that of then nature and function of capital. It is upon this subject that Professor Clark is most startlingly original, and, in the opinion of the present writer, least satisfactory. The initial difficulty is to find out just what he means by capital. His first statement seems definite and concise enough. “Capital consists of the instruments of production, and they are always concrete and material. This fact is fundamental”. [...] Yet material things perish or wear out, while capital, according to the author, does not.
[...] Again: “We may think of capital as a sum of productive wealth, invested in material things that are perpetually shifting - which come and go continually - although the fund abides. Capital thus lives, as it were, by transmigration, taking itself out of one set of bodies, and putting itself into another again and again.” [...] From this it would appear that capital is the fund of _value_ which is embodied in capital-goods.»

[ltr]

Blissex:

More precisely what we know now as neoclassical economics (as opposed to generic "marginalism") was created by J.B. Clark in the USA to counter georgism, that is to support real estate based speculation in the USA, rather than imperial exploitation...

[ This is really excellent. I am so grateful for the references. ]

[rsm]

Daily financial transactions are in the trillions of dollars; what is the daily total of physically traded goods?

[ltr]

October 7, 2021

Coronavirus

United Kingdom

Cases ( 8,046,390)
Deaths ( 137,417)

Deaths per million ( 2,011)

China

Cases ( 96,335)
Deaths ( 4,636)

Deaths per million ( 3)

[rsm]

According to Goldman Sachs, real estate in the UK seems a relatively higher asset than in the US or Japan, so perhaps Blissex is generally right on that point; but at such low volumes relative to the US, does the UK have much relevance?

https://cms.zerohedge.com/s3/files/inline-images/china%20property%20market%20world%27s%20largest%20asset.jpg?itok=PLQqMVRK

[Shows UK residential property as the largest UK asset class at $10 trillion, whereas US property at $34 trillion lags US fixed income and equity asset classes]

[ltr]

Shows UK residential property as the largest UK asset class at $10 trillion, whereas US property at $34 trillion lags US fixed income and equity asset classes...

[ What is the significance of this? Please explain when possible. ]