God it’s bad. It’s really, really, really bad. Leave the argument for a moment, and just focus on the text. These people are professional writers and thinkers, and this is what they produce?
I wish there were an anti-Orwell award for political writing that piles up a slag heap of unrelated phrases and points that obfuscate whatever argument lies buried under the text. If such an award existed, this article would gain the laurels. It’s that bad.
In part it is confusing because the reader is constantly having to change gears. We switch topics incessantly; from political philosophy to internal party point scoring, from America’s election to Labour’s deputy leadership election, from backing socialisation to opposing nationalisation, from an attack on tribal party lines to the advocacy of the policy agenda of the Labour party fraction, Compass. Alan Milburn is snubbed, Philip Blond embraced. “Vested interests” are opposed, while the moral leadership of the churches is saluted (I suspect the authors are not talking about abortion). Obama is hailed as a rhetorical symbol, an icon of change – but not for any particular economic policy.
Yet deep within the piece there is an argument about Labour’s future, and it’s a row worth having.
To understand what the authors are saying we need to clear some of their textual rubble out of the way. So please bear with me while I do that.
The introduction asserts the authors belief that “neoliberal thinking” is responsible for the economic downturn and says that the Conservative and Labour analyses of this downturn are fundamentally the same in that both hope for a return to the status quo ante.
This is contrasted with the election of Barack Obama, which represents a shifting of the political centre so it now represents the “objective interests of the political mainstream”. A series of policies are then used to prove that politics in Britain is not reflecting the “objective interests” of the mainstream.
These include a 3rd runway at Heathrow, Royal Mail part privatisation, light touch regulation and the introduction of markets into public services. Other examples are littered throughout the text.
These non-objectively mainstream policies reflect the authors pre-existing views remarkably well. The world has shifted on its axis, and the new position reflects exactly what Neal Lawson and John Harris have been saying all along.
In a mere three extended paragraphs the authors then state the following: Things are bad in the economy, markets are too powerful and not enough is being done on the environment. Something new and different is required. If this different future is not delivered bad people will take advantage.
Two things prevent us from moving forward to this (as yet undefined) different future: “the current crisis of market fundamentalism” and the failure of those who have in the past been supporters of (or collaborators with) market fundamentalism to respond correctly to this crisis.
What is ”Market Fundamentalism”? It seems to be closely related to neoliberalism. It is the free market reforms of the eighties, but is also the guiding principle of New Labour (itself both in thrall to Market Fundamentalism and partially successful in building something completely different)
We learn that markets are useful tools: “The purpose of free markets is to maximise profits. This is beneficial for wealth creation and innovation…”. but that they are also dangerous: “Markets never contain themselves. Instead, they always look for new opportunities to make more profit. This leads to no end of disastrous and dysfunctional outcomes.”
Therefore markets must have limits placed upon them. “We must put in place the institutions that allow society to make the market its servant. We cannot graft our conscience on to capitalism, as it were; the point must be to direct it and constrain it in the interests of society at large.”
I have no idea what “we cannot graft our conscience onto capitalism” means, if it isn’t the same process of regulating, limiting and imposing moral standards onto markets that the authors propose.
I agree with them on this. The trouble is, everyone outside of the Ludwig von Mises liberatarian fanclub agrees with them too. “the point must be to direct it (the market) and constrain it in the interests of society at large” could have come straight from Tony Blair’s 1994 Social-ism pamphlet. David Cameron could have said it.
Stripped of the rhetorical devices, Lawson and Harris are arguing that the awesome power of capitalism is both creative and destructive, and so it must be tethered if it is to be used beneficially.
This is neither new, nor radical, nor exciting. It is a commonplace the authors have aerated and excited into froth.
What matters, under this rubric, is how much rope to give the elephant. Too little and it suffocates. Too much and we risk being stomped.
It is self evident that the political debate has shifted here. When Alan Greenspan complains that markets behaved irresponsibly, you can tell that the world has an appetite for a choke collar on this particular wild animal.
Part of the problem with this article is that it the authors have a very clear idea about how much the rope needs to be taken in but they don’t explain why their particular set of prescriptions are justified.
In a side box, the authors suggest we need to tax international transactions, mutualise banks, impose a working hours limit, tax land and set a maximum limit on salaries*. These policies may or may not be good ones, but they are almost entirely unrelated to the article.
Instead, in the section where we would benefit from an argument over why the Tobin Tax and a tax on land would help regulate markets without slowing recovery we get a long exposition on how many campaigning organisations want change and the assertion that what we must do is “tackle the causes of market fundamentalism” by transcending party lines and abandoning tribal allegiances.
Talking to Vince Cable is used as a specific example of the virtues of this approach. Now, I don’t know what causes market fundamentalism, but I do know that Vince Cable and the Liberal Demcrats have wanted to part privatise the Royal Mail for years. The authors state they regard this as “genuflecting to the forces of big business”. I think that means it’s Mrket Fundamentalism.
In health the Liberal Democrats expect “local health boards to ensure that patients receive(d) their treatment ontime, by commissioning services in the private sector.”
Is this not also a case of Market Fundamentalism since “private interests have been not just allowed, but encouraged, to eat into the public realm.”?
Of course it’s unfair to cherry pick. Lawson and Harris might point to education (where the Liberal Democrats will abolish academies) as an example of a more anti-market approach. I’d counter that the Pupil Premium is about as market based an approach as you can get in the public services.
But this tit for tat illustrates the problem. Lawson and Harris fail to argue for the things they believe in on their merits, and in place of that argument pray in aid a series of movements, bodies and politicians that don’t agree with large parts of their policy programme.
In essence, the argument is “We need change. We’re not getting change, These people also want change, but these other people don’t. Lets work with the ones who want change to get change”
Unfortunately the meaning of “change” is transformed each time it occurs. I can’t help but suspect that the reason for this rhetorical sleight of hand is that the authors are chary of making the case for the things they actually want to happen.
Why not simply argue for a land tax, a state set maximum income, more green jobs, an increased minimum wage, proportional representation, a focus on general well being and a 35 hour week?
I feel it’s because that the rhetoric of transformation is ill suited to the policies they advocate. Some of these policies are sensible, others seem ill thought out, or inappropriate at the moment and others yet don’t really seem to mean anything much. They’re hardly a rallying cry for a generational change in politics.
Besides, if we focus on the policies, the categorisation of “Change” versus “market fundamentalism” as the central issue of the moment falls apart. You don’t have to be a “market fundamentalist” to think a 35 hour work week is a bad idea. You’ve got to question the link between market fundamentalism and electoral reform. Is it market fundamentalism to think a legislated earnings cap is a bad idea?**
This article is obsessed by opposing “market fundamentalism” rather than explaining the solutions proffered for the current crisis. “Market fundamentalism” is the terrifying big bad. Some have tried to compromise with it and been corrupted. They must be exposed and dismissed from our counsels (that’s you, Milburn, and perhaps the “left Brownites” too). Accounts must be settled.
I don’t think that’s meaningful. Apart from anything else, it mistakes the problem.
It was not PFI or a lack of a land tax or “monopoly capitalists” that broke the system, but an interlinked series of massive gambles on a better future by finance houses whose exposure only became clear when that future looked less rosy. Fundamentally, it was a crisis of market over-optimism.
We didn’t understand that the elephant of the markets had slipped its collar in this way. Seeing markets work so well for decades, we enjoyed it’s strength and labours. Could the worlds leaders have tethered it more securely? Yes, but in the short term they would have hurt their communities by doing so.
That failure were not malicious, but well intentioned. Nevertheless, it was a failure, and that requires new policies, as every government leader recognises.
This policy response has many elements. First we have to stop the current destruction of jobs, homes, incomes and businesses. Then we have to repair the damage that has been done to our community by restoring demand. Finally we must use the opportunity to rebuild to make sure we do so in a progressive way.
I believe we need to regulate banks, but we also need them to help stimulate demand. We need to borrow now to prevent suffering today, so we need functioning financial markets. That doesn’t mean being soft on stock holders or executives. It simply means realising that even if we have to nationalise, mutualise or close bad banks, we’ll still want to create good banks.
At the same time we need to say clearly that those who bear the burden of market failure should not be the poorest and the most vulnerable. We need to protect peoples homes, invest in education and retraining workers and secure long term investment in research that will create jobs. We need the markets help to make that happen.
As we need to create demand, we should also invest heavily in social goods and progressive causes. To deliver that we’ll need to co-opt markets, firms and businesses to causes like green power, low carbon transport and better education.
Those are my progressive responses to the failure of markets we see around us today. I happen to think they’re more closely linked to the problems we face and the values of the Labour movement than those Lawson and Harris put forth.
But I might be wrong. Having that debate matters.
To be honest though, I’d rather not have it couched in the nonsense language of Lawson and Harris’s article. I don’t think I could take wading through another one of those.
*disclosure: I’m too ignorant to have an opinion on the Tobin Tax, think bank mutualisation is too complex to sum up in a sentence, am opposed to a 35 hour work week, am sceptical but not completely opposed to PR and “radical localism”, don’t understand how a land tax would help us now, support a gradual extension of the minimum wage, think a maximum wage and general well being indexes are stupid ideas and very much support a green new deal. I think thats the lot.)
**It’s not a new idea either. Huey Long proposed a wealth limit in 1932)