Wednesday, 20 April 2011

Whatever The Guardian says Jesse Norman is not brilliant

Jesse Norman, Tory MP and the intellectual of the Big Society (see the review of his book here))was described as brilliant by the Guardian newspaper this week. Anyone interested in the more imaginative aspects of modern Conservatism should follow him closely, writer John Harris recommends. The second part is true. Norman is certainly brilliant in that he shines a light, but the connections with that word end there. Here are three reasons why.

1 Businesses do not spring out of “human affection”

“What kind of association is a family? Or a football supporters’ club? Or a company?  … in very different ways they are based in and constituted in human affection.” Spotted the odd one out yet? The words are Norman’s in his book The Big Society: Anatomy of the New Politics. The kind of thinking that can equate renting yourself to a profit-making machine because you need the money to survive, with joining the Ipswich Town Supporters’ Club, is not brilliant, but intensely ideological.
It is a necessary fiction. It comes from the required belief that choosing between which employer to work for, is no different from selling your car in Exchange & Mart. They are both transactions that, in Milton Friedman words, are “bilaterally voluntary and fully informed 
That it isn’t voluntary, that the process is based on the coercion of material need, must be forever denied. But it is a fiction on which the whole of neoliberal and modern conservative thought, rests. Believe it and suddenly the only “concentration of power” you can see, is that of the state.

2 Ownership of corporations by corporate directors and pension funds won’t make them won’t make them serve the public good

Originally, says Norman, government only granted corporate charters if the purpose served the public good. But now corporations have owners that regard their shares as “betting slips”. The problem, like everything that comes under the microscope in the Big Society, is the result of ideas gone awry. The answer, in Norman’s eyes, is “independent” share ownership. I’ve no idea what he means by independent, but what he envisages, is share ownership by pensions funds, institutional bodies, and corporate directors. Quite how they would represent the public good is a mystery. Even an institutional shareholder like a charity is after the best financial returns for its own beneficiaries.
Even if shareholders interested in the public good could be located, why would corporate managers take notice of them and not the inevitably more numerous shareholders interested in maximum yield?  In any case, the Anglo-American form of corporate governance of “shareholder primacy” is, according to author Joel Bakan, gradually replacing other forms of capitalism across the world.
Like everything else in The Big Society, Norman comes up with a spurious solution to a real problem, while history calmly trots off in the other direction. Brilliant, it’s not.

3 Banks need more political interference, not less

The UK government, as we know, has an 84 per cent stake in The Royal Bank of Scotland and 41 per cent in Lloyds/HBOS. But, according to Norman, the banks are vulnerable to pressure from politicians, interest groups and the media, to make “politically helpful” decisions on repossessions and credit. They need to be protected from this political interference.
Actually Jesse, the political interference already happened when the government bailed them out and recapitalised them, costing, according to the Office for National Statistics, £1.5 trillion. That was a massive, unprecedented interference with the supposedly free market. If we had genuine capitalism, these banks should be in the dustbin of history.
As it is, the notable thing is how they’ve been nationalised without political interference, which if we lived in anything resembling a democracy, wouldn’t have happened. We should have got a quid pro quo – workers and consumers represented on banks boards – instead we got a quid pro nil.
As the explicitly not anti-capitalist economist Ha-Joon Chang has said, having taken over these banks using taxpayer money, the UK government should have the legal right and political duty to instruct them how to serve the interests of the electorate – by, for example, paying their managers less and lending to small businesses.
Even under pure capitalist terms, the government, as the dominant shareholder, should have the power to tell managers what to do. It should exercise shareholder sovereignty, of which Norman is such a strong supporter (see point 2). But it doesn’t.
“This is not even capitalism any more,” says Chang. “What is the point of owning a bank, when you have to negotiate hard, or (one suspects) even beg, in order to set the pay of your employees or make it lend more in the way you want?”
The nationalised banks do suffer from political interference. But it is not the interference of government, the electorate or interest groups. It is the undue political power of their managers and finance in general.

But if like Jesse Norman MP you are a former director of Barclays this must be hard to see. Especially if you believe the banks, like companies in general, owe their existence to human affection.

Tuesday, 12 April 2011

The Equality Illusion, a review of "Equality" by Noam Chomsky

The ironic thing about social mobility is that the only people capable of bringing it about shouldn’t believe in it – namely leftists.

The UK government’s social mobility strategy  rests on the same tired platitudes about raising the aspirations of young people from poor backgrounds. It will have the same success as John Major’s aim for a “classless society”. Even without obviously contradictory policies like tripling university tuition fees and abolishing the education maintenance allowance, it can’t possibly work

The reason is apparent from reading Walter Benn Michaels’ The Trouble with Diversity: How we learned to love identity and ignore inequality. For here is a person who does really believe in equality of opportunity and realises that to achieve it you have to restrict the liberty of rich people to keep and do what they want with their money. He believes in punitive inheritance taxes and abolishing private schools.

But, in realising this, Michaels falls into the ideological trap represented by the concept of social mobility. This is strange because The Trouble with Diversity is, in another way, a great unmasker of ideological illusion. The book attacks the way the American left has become the “human resources department” of the right. A rigid policing of the way companies recruit, and treat, racial minorities and women, has completely obscured what those companies actually do.

Everyone frets about discrimination, but exploitation is just fine. In fact, exploitation has virtually died out as a concept. If you are a female hedge fund manager and you earn $1.8m, while a male colleague doing the same job earns $1.9m that’s a huge problem. But if you are a (female or male) employee of Walmart and you earn $20,000, that’s just life.

But social mobility performs the same task of ideological obscuration. The very act of worrying whether poor people and women are able to climb the corporate hierarchy, justifies that hierarchy. Or makes it something you just don’t think about.

It is interesting that Michaels uses virtually the same language as the UK government in describing why equal opportunity is a good thing. “What ought to count is how hard you work and the skills and talents you possess, not the school you went to, or what your parents did,” says the government’s social mobility strategy. While Michaels thinks that “hard work and ability”, not background, should be rewarded.

But is it really “hard work and ability” that enables people to get a better job and income? There is, as these examples show, unanimity across the contemporary right and left about this. But this very unanimity should show that it is precisely here that ideology does its work. Ideology is an assumption, a crucial assumption, that remains unspoken. And therefore undisputed.

And it is the assumption that hard work and ability matter more than anything else that Noam Chomsky challenges in his 1976 essay, Equality, which you can read here.

What he says on social mobility is worth quoting at length:

“One might suppose that some mixture of avarice, selfishness, lack of concern for others, aggressiveness, and similar characteristics play a part in getting ahead and ‘making it’ in a competitive society based on capitalist principles. Others may counter with their own prejudices. Whatever the correct collection of attributes may be, we may ask what follows from the fact, if it is a fact, that some partially inherited combination of attributes tends to lead to material success. All that follows, as far as I can see, is a comment on our particular social and economic arrangements. One can easily imagine a society in which physical prowess, willingness to murder, ability to cheat, and so on, would tend to bring success; we hardly need resort to imagination. The egalitarian might respond that, in all such cases, that the social order should be changed so that the collection of attributes that tends to bring success will no longer do so.”

The preceding paragraph has the interesting quality of being true and unbelievable at the same time. Unbelievable is the sense of unacceptable if a person is to function, ideologically, in contemporary society. This is the ideological function of social mobility – to accept it you have to believe in fiction.