The second crisis of capitalism (part 6)
This week marks the end of this series of blogs. It has focused on economic analysis, on the growing social inequality since neo-liberalism came to dominate the political landscape after 1980, and on possible remedies for the problems. It is time now to consider the political implications.
There is a case for saying that every age is characterised by reactions for or against the prevailing economic orthodoxy. From the mid-19th to the early 20th century, free trade defined the economic and political debate. After that, Soviet communism defined it. Post-war, democratic socialism defined it. Now, neo-liberalism defines it. In all these cases, the political divide largely followed the economic orthodoxy, whether for or against it.
It is a long while since the centre right considered where it stood. For decades, it mostly went along with the post-war consensus. Then it welcomed some of the Thatcherite change of direction, while never feeling comfortable with all of it. Since then, it has been marooned, coasting along on the tide of neo-liberalism without paying much attention to where the tide was taking it.
The same criticism can be made of the centre left. Socialism, and then social democracy, had appeared to offer a smooth road forward. Then the intellectual collapse of socialism in the ’80s, and its electoral eclipse, closed all the old doors without opening new ones. The Blair/Brown governments made a Faustian pact with neo-liberalism, but in the end it swept them away after 2008. It was a Labour politician, not a Conservative, who said “we are intensely relaxed about people getting filthy rich.” Peter Mandelson qualified his statement by saying “as long as they pay their taxes”, but that, in a nutshell, is one of the main problems.
The arguments put forward by Thomas Piketty cannot be ignored, however much Conservatives would like to ignore them. And the success of a dubiously democratic faction in capturing and controlling the Labour party cannot be ignored either, however much Labour moderates would like to ignore it.
We are going down a road that is rapidly making society less equal, that is freezing living standards for most people, that is making it progressively harder to fund social expenditure, and that has no end in sight. In tolerating this state of affairs, Conservative moderates are allowing their party to be turned into a British version of neo-liberal Republicanism. And Labour moderates are allowing their party to be turned into a Marxist clique.
This is a betrayal of the best traditions of both parties. Neither neo-liberalism nor Marxism offer agendas that the British electorate has ever shown an inclination to vote for. Yet these are the choices effectively on offer and there seems every likelihood that the country may see-saw between them for some time to come.
In the case of the Conservatives, they have sleep-walked into this situation. There is not a majority in the party, at Westminster or in the country, for a radical neo-liberal agenda. Yet the way that wealth is now being distributed, and the way that taxes are being avoided, are making this the inevitable direction of travel.
To say all this is not to attack wealth or the creation of wealth. A wealth tax could be used in a number of political ways, but one of them is simply to halt the vast imbalance that has arisen in recent decades. To do so – and to do anything that will reverse the neo-liberal agenda – will require commitment, stamina and new taxes. That is a big ask for the Conservative Party, which doesn’t like any taxes, let alone new ones.
It will also require intellectual muscle. History shows that a change of course of this magnitude will not occur unless the mindset is altered first. That, after all, is how neo-liberalism made its breakthrough. Who, on the right, are the politicians that might spearhead such a change? Who are the academics that might supply the ammunition?
Merely to ask that question is to reveal the paucity of talent available. Most politicians now aspire to be no more than competent managers, and frequently fail even in that. First Tony Blair, and then David Cameron, have helped to produce a political climate in which the long term consists of the headlines in next Sunday’s newspapers. The absence of sustained forethought is shattering.
The Conservative politician most likely to agree with the thrust of this series of blogs is in fact Theresa May. Her first words on the steps of Downing Street chime with everything written here. However, the chances of her leading such a change of direction, let alone being around long enough to implement it, are remote. In her absence, the two most likely to effect such a change are, astonishingly, Michael Gove and Boris Johnson.
Whether either would want to is another matter altogether. But Gove has the intellectual muscle to lead such a movement. And Johnson, however incompetent, narcissistic and obnoxious, still appears to retain an ability to sell to the country something it doesn’t yet know that it wants. That the future of the country might depend on Boris Johnson is a profoundly depressing thought. But it might.
On the academic front, the prospects are even bleaker. Intellectuals like clarity and they like certainty, which is why they like ideologies. Between Piketty on the left and the neo-cons on the right, there is a chasm. Which is why the centre-right needs to overcome its misgivings about Piketty. There is nothing in his analysis that they could not embrace if they could only get over the first hurdle.
The first hurdle is to accept that neo-liberalism is not only the enemy of social fairness, but ultimately the enemy of democracy itself. The argument is not about redistributing wealth from the top 50% of the population to the bottom 50%. It could be about that, but that is a separate argument and comes later. The urgent argument is about redistributing wealth from the top 1% to the bottom 99%. Almost everybody, by definition, should be able to support that objective. But they don’t.
Unless this changes, the future looks dire. The populist movements that have sprung up, in one form or another, in almost every developed country are not a fluke, and it seems unlikely that they will go away. In their inchoate way, these movements reflect the situation that has been charted in these blogs. However emotional, they are not irrational. But populist governments, whether of left or right, will not solve the problem. They will make it worse. In the process, much that has been most admirable in western societies may come crashing down.
It is time for the political centre to step up to the plate.