Review: Left without a future?

July 20, 2013 9:27 am

Review: Left Without a Future?

Anthony Painter, in his blueprint for a new direction for the Labour Party, takes aim at ‘Vulgar Keynesianism’: The idea that while government can spend lots of money in the good times, it has the excuse to spend even more money in the bad, as a response to economic downturn.

But his real target is what could be called ‘vulgar Croslandism’ – the idea that the means of social democracy doesn’t matter, as long as that in the short term you get the job done.

In philosophical terms this means equality, and in practical terms it means leaving the post-Thatcher settlement intact while spending lots of money on poor people.

Followed to its logical conclusions, right and left in the party, or, to use Painter’s terms ‘realists’ and ‘populists’ come to be divided by how much money they want to spend on poor people.

What Painter points out is that the Left (of the political spectrum as a whole) should do this not just through cash transfers and public spending, but by building institutions that encourage collaboration in society.

By encouraging collaboration – to ensure that young people have the skills they need in the 21st century, or wages are decent, or cities can grow economically, these institutions will lift all boats – especially business – not just the poorest’s, increasing their legitimacy.

And, when we hit economic turbulence, these institutions will endure, unlike public spending, which is being washed away.

Painter identifies a number of areas where the Labour Party can either create new institutions or learn from institutional design to achieve social democratic goals. In addition to the areas outlined above: ensuring long-term economic growth and prosperity for the many; develop community cohesions; and develop a positive English identity.

These crucially may not just be public sector bodies but independent co-operatives. Concrete examples include: Work associations, that link business, local government and employees at a local level to set pay rates and link up schools, jobcentres and other public bodies; A government-backed investment bank to invest for the long term; empowered, but not uniform local governments based on regions old (for example, Cornwall) and new (city-areas).

There is much merit to Painter’s argument. Vulgar Croslandism has descended into a sort of conscripted altruism. Many of the conscripts are not happy. Often the non-conscripted consider themselves conscripts. To cap it all, many beneficiaries either do not recognise how they benefit, or are not too keen to be granted ‘victim status’.

However, now is not a very good moment for progressive institutions. The Agricultural Wage Board that set wages for farm labourers have been abolished. The jewel in the crown of the tradition that Painter is adhering to, the Co-operative Bank, is in the process of being lost to the mutual sector.

But I think that shows not that his thesis is not right, but that it is not radical enough. The book is couched in terms of co-operation, collaboration and the state at the local and national level working with the grain of the market.

But the other side is taking no prisoners, and Social Democrats not should do so either when necessary.

The Co-operative Bank is a case in point. Lloyds and Royal Bank of Scotland directly benefitted from government backing and nationalisations in 2008, and all other banks did so indirectly when it became clear that no bank would be allowed to fail or their savers penalised.

In addition to any mismanagement at the bank, the Co-operative Bank, with the government cheering in the background, took on the Britannia Building Society in 2009 and with it a mountain of bad loans.

It then, with government encouragement, poured millions into a failed merger with Lloyds. However, when the Co-operative Bank now runs into trouble, it is essentially forced to go private, despite potentially being in breach of the co-operative banking code. The general rule is ‘socialism for capitalists and capitalism for socialists’.

The Agricultural Wage Board had impeccable red Tory credentials, having union and employer membership and having escaped the general axing of wages councils by the Major government in 1993.

This points to the need for any new institutions to have the in-built power to resist demolition.

If they are state bodies they should be backed by referendum on the appropriate scale. If they are non-state, their function should be concerned as much by the building up of their own power as their stated aim.

When London Citizens is successful in any of its campaigns such as the Living Wage, it has not only achieved that goal, but mobilised so many citizens and enmeshed itself so firmly into civil society, that it becomes a potent political force.

There also needs to be more concentration on how to build up trade unions again, especially in the private sector, undermentioned by Painter other than in exploring their decline.

Although trade unions, like many other longstanding institutions, have been in decline, this arguably makes them stronger as they achieve last man standing status. Recent practical radical movements – from Jubilee 2000 to London Citizens, usually represent a coalition of unions and churches.

Painter’s moderation also shies away from completely deconstructing vulgar Croslandism, particularly its stated end – equality, also known as social justice. As long as that is the end of social democratic politics, we will keep falling into the traps outlined above.

The goal of social democratic politics should be, as reflected in the 1945 Labour manifesto, that a degree of planning and co-ordination improves everyone’s position, not just the poorest. Full employment raises all wages. Plentiful homes reduces homelessness, but also deflates rents and prices. Caring properly for those with disabilities makes the lives of the able-bodied more secure.

However, as long as the aim is only greater equality, then I fear that the siren call of limited cash and resource transfers from rich to poor as the sum of social democratic ambitions will be too tempting for many in Labour.

Painter is also too timid with his instinct to play nice with the market. We are told that we need ‘market-sensitive’ institutions and that ‘new institutions…must work with the market and not against it’. The implication – that in fairness the author contests elsewhere – that markets are natural and do their job fairly efficiently entails that intervention in them must be apologetic and ultra-careful.

But, the largest institution of them all, the state, is in fact logically prior to the market. It sustains a currency and decides on the price of money. It creates intellectual property laws that has to balance between rewarding invention and allowing the third-party tweaking necessary to create competition. It ensures that communication infrastructure is in place.

Yes, the market is very good at making pie. But, to paraphrase Matt Yglesias, if the state is going to go to all the bother of making sure this pie is created, why shouldn’t it also care to whom the pie goes?

The book does not quite present a grand theory of how the egalitarian collectivism of institutions can build a prosperous society in which we all have a stake – like, for example, you might find in GDH Cole’s Guild Socialism.

What it does is look at the various problems afflicting British Society – economic instability, the lack of social cohesion, the potential for radicalisation, the decline of party politics through the prism of institutions. This may reflect its genesis as having emerged to a large extent from a series of blog posts.

It has that style. Painter describes an interesting idea from an original thinker, applies it to a problem with modern Britain, or an unfortunate trend in recent British history and then proposes a possible remedy. But it doesn’t create a coherent whole. Hence why it’s hard to see why Painter’s institutions would not suffer the same fate as the Co-operative Bank and the Agricultural Wages Board.

Unless each institution functions in a way that ensures that self-preservation and achieving its goals are mutually reinforcing (like London Citizens, and unlike, currently, the Labour Party), the project is doomed to fail.

Left without a Future? comes out in the same week as David Coats’ Just Deserts, an incredibly policy-heavy document looking at how a range of institutions could impact on our society, from work councils to trade unions to co-operatives. The two volumes -the former theory-focussed, the other polic-focussed, make ideal companion pieces.

The Labour Party works best as a broad church, and it desperately needs loud voices that are fiscally conservative, but very radical about changing the institutions of British life in a way that locks in a more sustainable prosperity.

As many people as possible should read these books and then think about which institutions are really needed for a radical shift in British society that can be bullet proof against the inevitable onslaught of our opponents.

  • Daniel Speight

    However, as long as the aim is only greater equality, then I fear that
    the siren call of limited cash and resource transfers from rich to poor
    as the sum of social democratic ambitions will be too tempting for many
    in Labour.

    …aim is only greater equality… Only? Why does this sound like a straw man argument? I suspect that there’s an undercurrent of not wanting greater equality. I also suspect this is especially so from those who have benefited the most from the Thatcher/New Labour years. And these are not just the rich business owners and bankers, it’s also those holding down jobs, many in the public sector with wages approaching or above the £100,000 level.

    Here’s where it has gone so wrong. The poorest are being left too far behind. This is how you create problems for the future and almost guarantee what seem like mindless riots.

    • Daniel Speight

      It seems I am in agreement with the Archbishop of York anyway. See his article in today’s Guardian at http://www.guardian.co.uk/society/2013/jul/20/low-pay-scandal-john-sentamu

      One of the many shames that new Labour inflicted on the left, and no matter how clever they are, the likes of Painter and Marchant can’t hide, is that while the level of upper managerial salaries rose to new heights, the minimum wage was never a living wage and needed the bandage of tax credits to hold society together. When Byrne talks about caps, there is never a mention of caps on the salaries of his friends.

      • anthonypainter

        Sorry to be boring but I’d recommend reading the book…

        From ‘the like of’ Anthony Painter

  • Quiet_Sceptic

    “But, the largest institution of them all, the state, is in fact
    logically prior to the market. It sustains a currency and decides on the
    price of money. It creates intellectual property laws that has to
    balance between rewarding invention and allowing the third-party
    tweaking necessary to create competition. It ensures that communication
    infrastructure is in place.”

    That isn’t correct though, markets and trade existed before the modern state came into being and they continue even in the absence of the state or when the state breaks down.

    The state doesn’t sustain currency, precious metals, gems etc have served and serve as money. The state is necessary to sustain fiat money but then fiat money is a creation of the state and other non-state monies are available.

    I’d agree that the modern state does a lot to assist the smooth functioning of the market and state breakdown would have a hugely negative impact but it remains the case that markets can still function without the state.

    • anthonypainter

      I did wonder about that. But it’s difficult to see a sophisticated market economy functioning without the guarantee of certain inclusive institutions such as property rights, rule of law etc. In fact, it’s impossible.

      • Chris Cook

        Well, no it’s not impossible because it depends what you mean by sophisticated market economy and indeed by institution.

        Neither people-based (P2P) credit (which is nothing to do with Zopa/Wonga loans of existing money) nor asset-based (Peer to Asset) currency require either a public/central or private bank or even a Treasury.

        • anthonypainter

          But the contracts do require private property, rule of law….these are underpinned by state institutions.

          • Chris Cook

            With suitable associative agreements between consenting adults direct connections are possible which transcend – or maybe reinvent – both the State and the Property relationship.

            The key is the use of the ‘prepay’ credit instrument which pre-dates modern finance capital but which is now re-emerging in use.

          • swr22

            Great piece, Dan. Graeber’s new book on the history of debt looks back as to how markets emerged much later than most libertarians suspect. http://www.businessweek.com/magazine/david-graeber-the-antileader-of-occupy-wall-street-10262011.html

          • JoeDM

            The only fundamental function of the State is internal and external security. All else is nice-to-haves.

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