To secure for the capitalists, by hand or by brain, the full fruits of everybody else's labour ...

Fresh from inflicting incomparable suffering on sick and disabled people (10,000 people have died shortly after the Con-Dem Work Capability Assessment) the incomparable Chris Grayling has warned of the terrible consequences of raising taxes on very rich people. Such a selfish, envious act, he counsels, would only come back to haunt us because we would “clobber” wealth creators.

It would be remiss, therefore, not to investigate this mysterious alchemy of wealth creation and the strange degree to which it believed to be the exclusive property of the very rich.

The very rich in the UK at the moment can be divided into three categories:

1. Major shareholders in corporations. Not small investors but large institutions owning hundreds or thousands of shares – other companies, banks, hedge funds, pension funds, extremely wealthy individuals. They all receive dividends paid out of the company’s profit. Theirs is an entirely passive role, they do nothing to create wealth; they just get it. The economist David Schweickart has called this a “tax on enterprise”

2. Large companies owning natural resources or monopolies such as water, electricity generation or the railways. They were frequently gifted these resources from the government or bought them for a song. They do all they can to sweat these assets as comprehensively as they can, clobbering (to use a current phrase) their largely captive market of customers for the benefit of their shareholders (see category 1). Wealth creation is not one of their activities.

3. Private landlords. Not all very rich but large companies are moving into this field and property companies are becoming darlings of the stock market. Landlords obviously make money through rent, the receiving of money by virtue of owning an asset in the first instance. As private tenants know all too well, they do very little, frequently sweet fanny adams, to maintain or, heaven forbid, improve these assets. Wealth creation, my foot.

Do entrepreneurs exist? Of course they do. But to deliberately equate them with capitalists is ideological subterfuge of the first order, and to downplay the immense contribution of workers (whose product is appropriated) to wealth creation, equally deceptive. "As any economist will confirm," writes Schweickart, "unless labour costs are less than the value added by labour, there will be no profit." Society needs new creations, new ways of doing things; it needs entrepreneurship that benefits everybody. What it does not need is the siphoning of the massive wealth it creates to tiny minorities.

It occurs to me that the late, socialist Clause 4 of the British Labour Party’s constitution is oddly suited, with some minor adjustments, to the modern-day Conservative Party. The Labour Party does not want it anymore anyway, so it’s going spare.

Here’s the original

And the new, improved 2013 version:

“To secure for the capitalists, by hand or brain, the full fruits of everybody else’s labour and the most inequitable distribution thereof  that may be possible upon the basis of the private ownership of the means of production, distribution and exchange, and best obtainable system of undemocratic and hierarchical administration and control of each industry or service.”

Succinct, catchy, and it captures the Conservatives’ USP perfectly.

A plague of depression or sadness rebranded - what's the truth about capitalism and mental illness?

An essay, published a couple of weeks ago by the novelist Will Self, caught my eye because it embodies an interesting conflict between two differing left-wing critiques of corporate capitalism. They appear to be making diametrically opposite points yet both stem from an anti-capitalist viewpoint, or at least display a healthy scepticism towards the “truths” of our corporate society.

Self, who has previously been a psychiatric patient, was concerned to take on the psychiatric profession and  (as the stand-first puts it) its “disease mongering”. Unable to cure severe mental pathologies, Self argues, psychiatry has instead turned to treating “less marked psychic distress”. Aided and abetted at every stage by pharmaceutical companies, doctors now create diseases to fit the drugs available. What used to be ordinary sadness has been rebranded as depression, an illness that can conveniently be combated by the prescribing of anti-depressants  - a dispensing of billions of pills to correct an alleged chemical imbalance in the brain that coincidentally makes fantastic profits for big pharma.

“The sad are becoming oddly co-morbid (afflicted with the same sorts of diseases) with the mad,” writes Self.

Selfish capitalism and it discontents

Contrast this with the claim by Mark Fisher, author of Capitalist Realism, that neo-liberal capitalism is generating a “mental health plague”. Depression is now the condition most treated by the National Health Service in Britain, says Fisher. According to clinical psychologist Oliver James the “selfish capitalism” of Anglo-Saxon societies is causing an acute intensification of emotional distress ; an epidemic of depression, anxiety, substance abuse and personality disorder. James cites World Health Organization surveys: 26% of Americans experience an episode of “mental distress” every year. In Britain, the number is one person in five.

Here is James speaking:

So one side identifies a contagion of mental illness, while the other says it’s all a plot to uphold the prestige of psychiatry and supply pharma corporations with a steady profit stream. Who’s right?

At the risk of being diagnosed with an incurable case of fence sitting, it seems to me that both of these positions, on the surface utterly incompatible, may be true.

Depression x 1000

There is undoubted evidence for the veracity of what Self is saying. The arrival of Prozac and other SSRIs in the late 1980s coincided with a thousand-fold increase in the diagnosis of depression. It would be extremely difficult to honestly argue this had nothing to do with efforts of drug companies to market anti-depressants. And this initial anti-depressant spurt has since become a biblical flood. In 2011, 46.7 million prescriptions were written for anti-depressants by the National Health Service in England, an increase of 9.1% on the previous year, and an avalanche of pills compared to the 9 million prescriptions signed off in 1991.  But though “psychic distress” - to use Self’s term - has clearly been turned into chemically treatable depression, that doesn’t mean the distress was a fiction, or that the distress hasn’t increased, or that it was simply sadness given a medical name. There is, it seems to me, a large space between sadness and full blown mental illness. And a lot has been happening, in the last twenty or thirty years, in that space.

Ordinary and extraordinary sadness

Self himself makes the distinction. “But what has made it possible for someone recently bereaved or unemployed,” he asserts, “to have a prescription written by their doctor to alleviate their ‘depression’ is, I would argue, very much to do with psychiatry’s search for new worlds to conquer, an expedition that has been financed at every step by big pharma.”

Bereavement and unemployment are, I would argue, two completely different states. Bereavement is ordinary, though it doesn’t feel ordinary, sadness. It’s impossible to go through life and not be bereaved and feel its emotional effects. Unemployment is, by contrast, very much a socially constructed state. In the first place, unemployment has only been around for 200 years or so. Secondly, it’s much more acute now than it was forty years ago (from 1950 to 1973, UK unemployment averaged 1.6%). Lastly, its effects on an individual depend very much on how society treats it. Post-capitalist economists such as Richard Wolff and David Schweickart have argued that, in a more humane society, people that have to be laid off by enterprises would automatically be offered jobs or training elsewhere. This is everyday practice now in the Mondragon federation of worker co-operatives, comprising 256 companies employing 83,000 people, located in Northern Spain.

By contrast, what British society does is to make unemployment the personal responsibility of the person who is unemployed. Unemployment – a social problem if ever there was one - becomes an individual problem. The result is self-blame and, in a society that is intensely comparative, all the ingredients for mental distress, not just sadness, are laid. It is interesting that the root causes of the emotional distress identified by Oliver James in 2008’s The Selfish Capitalist (a book written before the financial crisis) – stagnating real wages, the growth of short-term, service industry jobs (see the rise of zero-hours contracts) and an exaltation of the consumer habits of the rich – have only become more prevalent. So why shouldn’t mental anguish have got worse?

Diseases, disorders and effects

The key to understanding what has happened, I think, is to separate social effects from their pathologisation, the turning of states of mind and behaviour into a “disease” which can then be treated by drugs. This pathologisation may be entirely unjustified, just suiting the need of pharma companies to make lots of money from selling pills, and indeed the pills may not actually work (Self says that the chemical imbalance theory of depression, on which SSRIs are based, is “essentially bunk” – he may be right, I don’t know) But all that doesn’t mean the social effects are not real. “The vast number of ‘hyperactive’ children in the US prescribed Ritalin is so well attested that it’s become a trope in popular culture,” writes Self. True, but I’m not convinced that labeling trends as a medical disorder, means that the trends themselves – difficulty in concentrating and impulsive behaviour in this case – are not genuine. Likewise, I don’t believe that the rise in mental distress is a myth.

Valium nation

To take a historical example, millions of prescriptions were written for the tranquilizer, Valium, a predecessor of anti-depressants, in the 1960s and 1970s. The drug quickly gained a reputation for being “the housewives’ choice”. It provided a release from the psychic consequences of an extremely restricted life. The problems for these women were pathologised and the symptoms they suffered from chemically anesthetized. But that didn’t imply that the underlying issues – a life limited to motherhood and caring and confined to the home – didn’t exist, or that doctors somehow created them, as most people, now the vast majority of women go out to work, would recognise. Why can’t the same be said for anti-depressants?

The book, The Spirit Level, provides persuasive evidence that Anglo-American societies have become more anxious, if not more depressed. The authors cite the work of American psychologist, Jean Twenge, who looked at 269 studies measuring anxiety in the US from 1952 to 1993. She found a continuous upward trend. By the late 1980s, the average American child was more anxious than child psychiatric patients in the 1950s. Anxiety, as far as I understand, is related to depression, though not as extreme. You can’t explain away these findings by saying it’s all down to doctors, egged on by pharma companies, discovering anxiety where previously it didn’t exist. Prozac was first released in 1988, just five years before the period of study ended.

I’ve little doubt that Self is right and psychiatry and big pharma, have, for different reasons, created diseases and pathologised distress. But that is only half the story.

In praise of idleness, part 3. Democracy and the question of time

In July a college lecturers’ union in Britain released a survey of so-called ‘NEETS’- young people, aged 16 to 24 who are not in employment, education or training. There are estimated to be 900,000 NEETS in the UK. One third of the 1,000-strong sample said they had suffered from depression, 37% said they rarely left their home and 39% were beset by stress. One jobless 23 year old told the BBC: “I rarely go out and feel so down about myself. I’ve tried so hard to find a job but I feel no-one wants me.”

According to David Stuckler, co-author of The Body Economic: Why Austerity Kills, Britain is “one of the clearest expressions of how austerity kills”. Suicides were falling before the recession, Stuckler relates in an interview. Then they spiked in 2008 and 2009 as unemployment shot up, only to fall again when jobless levels declined.

Unemployment, it is clear, is terrible for your mental health; provoking feelings of isolation, unwantedness and a corrosive sense of not contributing to society. But unemployment – and underemployment - is a perennial blight in virtually all advanced capitalist countries. With onset of the ‘Global Financial Crisis’, the blight of joblessness has become chronic, reaching an eye-watering rate of 27% in Spain and Greece.

Sinister consensus

So a consensus has formed, in Britain, as elsewhere, that sees joblessness as the enemy and employment as salvation. Trade unions in the UK want stable and rewarding jobs, the British Labour party now brands itself as “the party of work” while the ruling Conservative party, in a move of cynical callousness, justifies the withdrawal of state benefits from the disabled on the grounds of offering “tough love” to people stranded at home, doing nothing, in order to “help them into work”.

There is something inherently wrong, indeed sinister, with this myopic consensus, as I hope parts one and two made apparent. Yet it derives its potency from a pervasive and genuine fear, that of the destructive effects of non-activity. This fear becomes all-consuming so that it is immaterial what work is for or what it entails, only that it exists. Zero-hour contracts – where an employee does not know how many hours they will be contracted to work in a given week – are mushrooming in Britain, while close to 80% of new jobs pay below £7.95 an hour (the minimum wage rate is £6.19). The overwhelming need is to be wanted by an employer, to avoid the predations of unemployment, to not be excluded from mainstream society. This consensus is both conservative and desperate.

Alternatives to exhaustion

There are innumerable advantages to the “organised diminution of work”, that Bertrand Russell advocated in In Praise of Idleness. Genuine choices would arise if your life was not dominated by the need to serve the interests of another. More time to spend on caring, child-rearing, studying or artistic endeavours, for example. It is not hard to compile such a list. A healthier, more relaxed and more interesting society would result. Russell himself estimated that at least one percent of the population – if not distracted by the requirement to spend most of their useful hours on activities designated by an employer – would produce works of public importance and “since”, he argued, “they will not depend on these pursuits for their livelihood, their originality will be unhampered”. It is, I feel, partly to block the emergence of such original thinking, a bubbling and multi-pronged challenge to mainstream explanations in economics and politics, that the boot remains firmly planted on the neck, as far as working hours are concerned.

But there is one activity which is both enabled by a radical reduction in working hours and also has the potential to substitute for the cohesive side effects of paid employment. I am speaking of democratic self-management. The English economist, Harry Shutt, has said that “in the absence of productive work opportunities … potentially the human race could rediscover the opportunity to practise direct democracy somewhat in the manner of the ancient Athenians – but without their need to depend on slaves to do all the menial work.”

Time for democracy

There are many modern forms of direct democracy – participatory budgeting, worker self-directed enterprises, citizen assemblies, random selection. They are all based on the idea that ordinary citizens have the competence to run their own affairs and that an outsourcing of power to representatives is not necessary for good governance. But what they require to thrive is an abundance of time. Genuine democracy is not possible in a time-pressed, hurried society. Democracy, to work, has to be learnt by experience, by practising it.

A famous ancient Athenian, Aristotle, remarked that excellence was a habit, not an act. You become good at something, he said, by doing it repeatedly. Democracy, in its classical sense, is not a habit for people in modern societies. When it does appear, sporadically, its practices have to be learnt all over again and fitted in with all the other demands of life. Work, by contrast, is a habit and one we are loath to shake off. Management is a habit, careers are a habit, consumption is a habit. The modern capitalist economy has been described as a “gigantic school” doting on and encouraging some skills and allowing others to atrophy.

Contrasting the practices of Athenian democracy with modern notions of politics, the social ecologist Murray Bookchin, wrote: “The ‘political process’, to use a modern cliché, was not strictly institutional and administrative; it was intensely processual in the sense that politics was an inexhaustible, everyday ‘curriculum’ for intellectual, ethical and personal growth – paidea that fostered the ability of citizens to creatively participate in public affairs.”

The promise of idleness

Some people may find the word “curriculum” vaguely threatening but I think it is very apt. If work is to fade in significance, as it is doing and will surely continue to do, then its associated blessings – a sense of belonging, validation and of making a contribution to society – will have to be replaced by something. The fear of a void of non-activity needs to be assuaged. We need a society attuned to post-scarcity, in contrast to this one which is in flagrant denial. John Maynard Keynes, writing in 1930, said the abiding problem for people once the economic problem had been solved, would be what to do with their freedom, how exactly to occupy their abundant leisure. Keynes, who was irredeemably elitist, could not answer his own question.

We, however, can. Democratic self-management, in my opinion, is both enabled by a post-scarcity society and vital to such a future society’s inner strength. The UK government, backed by the opposition Labour party, wants to create a “nation of entrepreneurs”. A genuine Left movement should have the opposite endeavour, to create a “nation of self-managers”, even if the phrase sounds horribly clunky. Once that commitment is made, through forms such as participating budgeting, citizen assemblies, participatory commissioning or worker co-ops, then the process, as Bookchin recognised, becomes as important as the end point. Skills such as public speaking, formulating positions, dissensus, disagreeing with the opinions of others whilst respecting them, need to be learnt and, as objectively as possible, taught. What passes for the Left nowadays seems only to know what it is against and cannot encapsulate what it is for. Economic stagnation and austerity has only further exposed this deficiency. The promise of idleness should be recognised as an opportunity to fill the vacuum.

To transform the world we must become dual personalities

Long time readers of this blog will be familiar with regular references to the famous Milgram experiment of the 1960s. This was a psychological experiment in which an unerring majority of subjects, from varying walks of life, displayed a willingness to inflict immensely painful, possibly lethal, electric shocks on strangers - when ordered to do so.

It was a microcosmic refutation of conservative efforts to attribute society’s ills to ethical deficiencies or people’s inner cruelty, recklessness or credulity. Subjective feelings did not matter. Cruel people did not inflict more shocks than kind people. Obedience, not personal disposition, was the deciding factor.

While conservatives such as Niall Ferguson chide that “we bay for regulation, though not of ourselves,” Stanley Milgram’s frequently replicated experiment shows that obedience to institutional drives, rather than wayward personal desires, explains human behaviour at the level of the economy and politics.

It follows that the economic stagnation we face, the “endless crisis” as it has been called, has systemic roots. It is not the result of human frailties but the collective outcome of people rationally pursuing the aims of the institutions they work for (you can blame bankers and CEOs if you wish but replacing them all will merely produce a new parade of faces to despise).

I still think Milgram illuminates where conservatives like Ferguson just kick up dust swirls of confusion. But the systemic/obedience explanation is not the whole story. As Milgram himself concluded, obedience, to work, has to be willingly entered into. Open compulsion just leads to resistance. People, in other words, have to want to be used.

The only thing worse than being exploited is not being exploited

And we do want to be used; increasingly so. The vast majority of people are materially bound to the capitalist system’s, smooth functioning. That’s an observation, not a judgement. We have careers, we covet advancement, we have families and dependants to support. This is all the more acute at a time of economic stagnation, when jobs are thin on the ground. There are 85 applications for every graduate job in Britain. It is in your rational self-interest to make yourself into the kind of person that will make an employer choose you, rather than a rival.

As Oscar Wilde might have said, the only thing worse than being exploited, is not being exploited.

Yet at the same time leaving the system to it own devices, a system that is driven by institutional impulses and is not the collective sum of human desires, is to invite disaster, looming and unending social, economic and ecological crises.

If it is economically rational to accede to the institutional aims of the organisation you work for and to obediently carry out its day to day tasks, it is also economically rational to attempt to rise within it, to not be poor. “Our first duty, a duty to which every other consideration should be sacrificed,” said the socialist playwright George Bernard Shaw, “is not to be poor.” But here lies an intractable rational problem. This explains how economic crises can happen regardless of personal motives, but it also explains how the ‘machine’ will just go on, dispensing its consequences, because there is no-one to intervene to alter or transform its inner workings.

There is a vague hope that somewhere along the line people will decide to rebel. Milgram in his book, Obedience to Authority, likened obedience to sleep. They are both states from which people can be shaken out of. But in Anglo-American societies, at least, it seems clear that it is forlorn to hope that economic decline, the economy pressing down more severely on people, will spark rebellion.

The personal is not the political

I think the first and crucial step in resolving this conundrum is to divorce the personal from the political. We have duties to ourselves and duties to society at large and they are often not the same. The one writer I have come across who has fully recognised our dual and conflicted nature in this regard is Dan Hind.

His 2007 book, The Threat to Reason, was primarily about how being “enlightened” was not about fearlessly denouncing fundamentalists, New Agers or postmodernists but seeking out the truth about our own societies, the real nature of the state and of corporations. But he also made a neglected, though profound point, in that book. In order to transform the word, we first must give up, he said, the idea of a unified self.

“Most of us cannot and will not sacrifice our careers and the welfare of our families for the abstract demands of universal truth and justice,” he writes. “But we are nevertheless confused and distressed by the contradictions inherent in the state and corporate bureaucracies of Britain and America.”

Here is Hind speaking:

The philosophical keystone that Hind makes use of is the work of the eighteenth century German thinker, Immanuel Kant. Kant said that our accustomed definitions of ‘private’ and ‘public’ need to be reversed. When ensconced in any institutional role, as employees, we reason ‘privately’, said Kant. It is only when we are free as individuals to think, unencumbered by any institutional ties, that we can hope to reason ‘publicly’.

It is Hind’s insight that, unless we are independently wealthy, we cannot hope to escape from this dual nature. “We do not have to renounce our private identities as employees,” he writes. “But we must recognise that the sum of our private identities does not constitute the full expression or our humanity.” There is a permanent tension, Hind says, between the requirements of our economic role and a wider commitment to an accurate description of the world and the possibility of radically altered institutional arrangements.

To fully express our humanity and a desire to understand and change the world, we cannot conflate the world-view of our employer with our own. The employer we must detach from may be a corporation. But it can also be a government, a university department, or an NGO. We have to accept our institutional life, but also step outside of it.

A deathly logic

Since The Threat to Reason was published in 2007, the demands of our private identities, the inescapable need to survive and prosper within the confines of this society, have intensified massively. This has trapped us inside a deathly logic which says because we are materially dependent on the success of our actual or would be employers, we should rationally give them everything they want. “What’s good for General Motors, is good for America,” as they used to say in the US. Mould yourself into the kind of person likely to succeed, ever-flexible, ever obedient - sell yourself. At the wider level, make sure corporate tax rates are competitive because the last thing you want to do, obviously, is frighten them away.

What Hind offers is a way to loosen this constricting grip. How we act and what we want on a personal level, are vastly different and often in conflict with, how we need to act and what we should want on a political level. To colonise everything with personal needs and desires, is social suicide.

“An active acceptance of our dual nature as private and public agents holds out the prospect of a world transformed.”

Re-post: How capitalism has become too successful for its own good

Given that the Guardian newspaper has belatedly cottoned on to the idea that stagnating wages, rather than reckless banks, are the ultimate cause of our never- ending economic troubles (and started quoting David Schweickart), I thought I'd repost an article from January 2012.

I think it encapsulates an integral part of the impasse we are now facing. Good that other people are now catching up, albeit two years late ....

"There are many kinds of capitalism. Free market capitalism, which easily morphs into the dominance of corporations. Or social market capitalism, in which there is a larger role for the state and workers are represented on company boards. There is even state capitalism, in which everybody works for state enterprises, which pass themselves off as socialist, but exploit people just the same.

But now perhaps there are only two kinds of capitalism which count. Successful capitalism and capitalism which is too successful for its own good. The consequences of each are different but equally horrible in their own way.

Back in the roaring nineties successful capitalism was thought to be the only game in town. In Britain, Tony Blair’s New Labour exemplified the social democratic acceptance of capitalism. The “market” would hum along unmolested in the background and the government would skim off the tax revenue. Labour spokespeople waxed lyrical about the wealth-creating genius of the private sector and spent the proceeds on tax credits for the working poor, the National Health Service – health spending went up by 30 per cent – and relieving child poverty. It was, in essence, a deal.

But, said Left and green critics of capitalism, this was a myopic accommodation, trading short-term advantages for long-term disaster. Growth – the social ecologist Murray Bookchin said expecting capitalism not to grow was like expecting a lion to become vegetarian – might support enlarged public spending but would eventually make the planet unliveable.

In 2007, a British professor of engineering worked out that, based on an economy growing at three per cent a year, we would consume resources equivalent to all those we have consumed since humanity began as a species by 2040. In 33 years. I think the word you are grasping for is unsustainable.

As the writer Mark Fisher has said, successful capitalism was based on a fantasy: “A presupposition that resources are infinite, that the earth itself is merely a husk which capital can at a certain point slough off like a used skin, and that any problem can be solved by the market”.

To believe in successful capitalism you had to stick your index fingers in your ears and sing “la, la, la” very loudly. But both celebrators and critics agreed that capitalism worked.

Oh shit

But just as capitalism was swaggering around the globe, assured in its invincibility, disaster struck.

The global economic meltdown happened, the worst economic contraction since the Great Depression. $14.5 trillion of value was wiped from global companies.

The former masters of the universe, who meet at Davos, now speak of a “dystopian future” destroying the gains of globalization.“For the first time in generations, many people no longer believe that their children will grow up to enjoy a higher standard of living than theirs,” they warn.

Something had gone badly wrong.

The conventional explanation was that investment banks were too reckless, financial speculation overreached itself and the economy became dangerously skewed. But, in truth, capitalism had become too successful for its own good.

In the US, where the crisis was hatched, wages had stagnated since the mid-70s, while productivity – worker ouput that the employer benefits from – raced ahead. The result was not only spiralling inequality (the US was actually more equal than many western European countries in early ‘70s) and burgeoning corporate profits, but an orgy of personal borrowing so that consumption could be maintained despite the fact that earnings weren’t going up.

A cursory look at recent US economic history shows a series of bubbles. A massive stock market crash struck in 2000. The price of shares is dependent on the expectation of future corporate profits so crashes occur when there is a realisation of total over-optimism about profits. The crash was stopped from turning into a recession by reducing interest rates to below the rate of inflation for three years. Borrowing doubled – the house price and house building bubble ensued – but when that burst so spectacularly in 2007 there were no more bubbles left. Reality – the reality of stagnating earnings – could be evaded no longer.

A dusty old critique of capitalism suddenly became remarkably persuasive. That held that capitalism was inherently self-destructive. Each employer tries to keep wages, which are just another cost, as low as possible. But if they are too successful in that endeavour, the same workers with the low wages won’t be able to play their other vital role in capitalism, that of consumers of goods. Economic health depends upon the employer impulse to keep wages down being frustrated by another countervailing power. Capitalism can be too successful for its own good.

Flatliners

Worryingly for economic health, the US capacity for stagnating earnings has proved a very effective export. In the UK, earnings grew strongly throughout the ’80s and ‘90s but have flat-lined since 2003, four years before the onset of the ‘great recession’. Worker productivity, meanwhile, has kept on steaming ahead. Post-downturn wages rises in Britain are currently half the rate of inflation. Average wages are forecast to be no higher in 2015 than they were in 2001. France and Germany have followed a similar trajectory. Researchers describe an acute “decoupling”of earnings from growth.

The UK Resolution Foundation, which has produced a series of reports on living standards, worries that a return to growth won’t necessarily mean rising wages. Stagnating earnings also ensure burgeoning inequality (yes, it can get worse).

But there is another larger, elephant in the room, problem. The US experience demonstrates that you can’t, to use the economists’ elegant term, “decouple” growth from earnings forever, without eventually destroying growth as well (in industrialised, western countries at least, the experience of developing, exporting countries like India seems to be different). Earnings are purchasing power, in economics-speak ‘demand’, and growth cannot survive indefinitely without purchasing power.

The economic vista in front of us is that of a tsunami of bank debt inexorably making its way to shore. At the same time, earnings power which could lift countries out of recession, is exhausted. The level of personal borrowing is huge and, as we have seen, earnings stagnated or declined even before the recession.

That last factor cannot be wished away, or undone by governments even if they were inclined to. The reasons for stagnating earnings are analysed by a Resolution Foundation report. Technological change has obviated the need for low-skilled workers, firms have given precedence to share dividends over the pay of ordinary workers, outsourcing has increased, and the bargaining position of workers has been diluted. None of these factors will be reversed given current trends and the balance of power politically and economically.

The globe stops warming

It doesn’t have to be this way, you cry. And you’d be right. The Resolution Foundation report, Painful Separation, finds that in some European countries, namely Finland, Sweden and Denmark, there has been only mild divergence between economic growth and median pay. It is no accident that in Scandinavian countries, they say, “Recession? What recession?”

They haven’t killed the goose that lays the golden egg. They, if it isn’t stretching the metaphor too far, nurture their goose. They have effective countervailing powers like strong trade unions. They haven’t left successful capitalism behind. But there is a catch.

Amid all the deleterious social effects of the great recession – the homelessness, the riots, the suicides, the divorces – there was one undoubtedly progressive, though unintended, result. The sudden drop in economic activity achieved something international protocols and protesters invading airport runways had failed to. The rate of global warming was arrested. For only the fourth time in 50 years, carbon emissions fell.

It is clear that the kind of capitalism that Anglo-Saxon societies have been living through for the past 30 years is an ineffective form of capitalism. Growth rates have been unimpressive, financial crises have become more frequent and earnings have been held down. Too much power has been given to or taken by corporations and the rich. Capitalism has become too successful for its own good.

The South Korean economist, Ha-Joon Chang, in his book 23 Things They Don’t Tell You About Capitalism, argues convincingly that what we call “free market economics” has been shown to fail spectacularly. He puts the case for more assertive government control, different forms of ownership, the outlawing of financial products like derivatives, and the rebalancing of the economy away from finance and into the long-term production of manufactured goods. Capitalism can work if the harnesses are placed back on and it is guided in the public interest.

In other words, a return to successful capitalism, a capitalism that is in rude health. Chang eulogises the “miraculous” performance of South Korea in the ‘80s and ‘90s, which grew at an average of six per cent year. China today, he says, illustrates what can be done if free market prescriptions aren’t followed.

The problem isn’t the economic reasoning. The problem is that the world, ecologically, cannot cope with the replication of the Chinese or South Korean economic success stories. If earnings in the US had continued to track GDP growth, as they had done from 1945 to 1973, the average household would have earned $80,000 a year, not $50,000 as they in fact do. Even accounting for the spike in borrowing, consumption has been suppressed in US as capitalism has become too successful for its own good. It is revealing that Chang mentions the word “environment” just once in his entire book.

Chang, like John Maynard Keynes seventy years ago, wants to save capitalism from itself. 

Post-capitalism

But the truth is that neither successful capitalism, nor capitalism that is too successful for its own good, presents a remotely desirable prospect.

The latter leads, in Ann Pettifor’s words, to “dramatically higher levels of unemployment, the loss of savings, home foreclosures, bankruptcies, emigration, suicides, divorce, social unrest and political upheaval – to name but a few of the consequences.”  The former provides a swifter route to the dystopian future of global warming.

Awareness of the awful consequences of both alternatives leads to the realisation that the only rational option left is some form of post-capitalism. It doesn’t mean, in the caricature of one British government minister, everyone running around in Maoist boiler suits, but it does entail an end to the growth fetish and ensuring a secure standard of living for everyone. What “post-capitalism” is like in detail is what we should be concentrating on now.

Last time it was different. A review of Ken Loach's 'The Spirit of '45'

If you listen, as I do, to the American economist Richard Wolff’s one man alternative news service, you’ll find one historical theme and name referred to with metronomic regularity. That of the New Deal and Franklin Roosevelt. During the last deep crisis of capitalism during the 1930s, Wolff relates, the American state didn’t react by embracing austerity but rather became prodigiously more generous. Even though tax receipts shrunk markedly as unemployment hit 23%, the government spent more money and reinvented itself as the guardian of public welfare. In the depths of the Great Depression, unemployment benefit and old age pensions were created and 12 million unemployed people were given jobs in state conservation or cultural projects.

Last time it was different.

Although the action takes place a decade or so later, Ken Loach’s documentary, The Spirit of ’45, provides, for Britain, a similar corrective to pervasive historical amnesia and the fatalistic assumption that austerity is the only conceivable response to economic hardship. The film is about the achievements of the Labour government elected in the immediate aftermath of the Second World War.

Here is the trailer:

Then the country really was broke. Britain, as government minister Douglas Jay relates in the film, had sold all its foreign investments, lost all its ships in war and run out of dollars. Yet there were no homilies about inescapable hardship and living within our means. Rationing continued but the government, in the six years of its lifetime, was still able to achieve a phenomenal amount. The National Health Service – free healthcare – was created, 2-300,000 council houses built a year and the transport system and gas and electricity were nationalised.

People came back from the war imbued with the spirit that “anything was possible” says one contributor. And so politics changed.

Where did the money come from?

But whatever the moveable limits of the possible, you can’t defy economic gravity. How were the accomplishments of the ’45 Labour government afforded?

One explanation is that many of its landmark policies didn’t cost a great deal. The NHS was formed, although it still lacked medicines, and the railways were nationalised. But neither cost the earth. By contrast, it has been estimated that the cost of creating a market in public healthcare, which current UK government legislation is doing, is a cool £20 billion a year. Nationalise the railways now in Britain, and you would save £1.2 billion annually and wouldn’t have to gift billions in subsidies to Richard Branson. Squirreling away tax in contriving private profit, is not, shockingly, a money saver.

But a more complete explanation would have to take account of the fact that the ’45 Labour government was not in thrall to supply side fixations and so taxed the rich and business. The highest rate of personal taxation back then was 97%, in contrast to 45% now. Corporations were taxed by a mixture of income tax and a tax on profit distributed to shareholders, set at 50%. Present corporation tax was created by another Labour government, in 1965. It was 53% in 1979. Now it stands at 20%.

Thus a lot of money was available to the ’45 Labour government that is now siphoned into consumption by the very rich and to the shareholders of large companies.

But tax rates are not set in a vacuum. The reason why they were so high after the war on corporations and the rich is that the holders of private economic accepted, for a time, that they were a price worth paying to escape a far worse fate. As the Conservative, Quentin Hogg, rationalised in 1943, “if you do not give the people social reform, they are going to give you social revolution.”

According to Richard Wolff, a similar modus vivendi was reached during the New Deal in the US. Roosevelt essentially gave an ultimatum to economic elites. Either you accept high tax rates – the highest band in personal income tax was 96% - and cough up the money for job and social insurance programmes, or the other people coming down the road after me – socialists and communists – will cut you a far worse deal. Enough of them accepted the bargain.

Now economic elites are not remotely threatened. There is no danger they can spy on horizon. So the result is austerity.

Sepia tinted history?

But though The Spirit of ’45 conveys the ‘where there’s a will, there’s a way’ post-war atmosphere, it also brushes over the limitations of the ’45 Labour government and embraces a deliberate amnesia of its own.

“The central idea was common ownership,” explains Loach in the insert that accompanies the DVD. “Production and services were to benefit all.”

Clause 4 of the Labour Party’s constitution (the part that Tony Blair abolished, anointing New Labour) is emblazoned on the screen.

“To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange.”

And there it ends. But Clause 4 doesn’t, in reality, end there. The film mysteriously omits the last phrase – “and the best obtainable system of popular administration and control of each industry or service”.

According to Wikipedia, Clause 4 is generally assumed to refer to nationalisation, but “close reading of the text shows that there are many other possible interpretations” – “common ownership” could mean municipal ownership, worker cooperatives or consumer cooperatives. But such a close reading is not possible from viewing The Spirit of ’45 because the viewer is given a truncated version of Clause 4.

The reason, I think, the film overlooks this element of Clause 4 is that the ’45 Labour government did precisely the same thing. The interpretation of Clause 4 it chose was state ownership. The public corporation in which ownership switched but, very often, the senior management remained the same.

This is very important. There are allusions to this in the film. “I’m not saying it wasn’t a better system because it was,” says Tony Benn, “but the idea that people who worked in an industry should have any say in how it was run was completely foreign.” A miner, in archive footage, says that the “same tyrants” were in charge after nationalisation.

But The Spirit of ’45 does not dwell upon these flaws and they were the very features that enabled the ’45 settlement to be overturned. By the 1970s, companies like BP, ostensibly nationalised, were not only intrinsically undemocratically organised, they were actively working against government policies when it conflicted with their commercial interest. 

The top down nature of these “public corporations” mirrored the way their private sector equivalents were organised. The only way the public could exert influence was very indirectly through electing a government, and even that method, as BP shows, was very much honoured in the breach. When Margaret Thatcher came along promising to abolish “socialism” the senior managers in these public corporations, encouraged by the prospect of mushrooming pay and share options, were very happy to oblige with the new project, while the wider public did not see enough to defend. There was something intrinsically wrong with British “socialism” and The Spirit of ’45 seems to want obscure what that was.

Then and Now

Nearly 70 years have elapsed since the election of that Labour government and while there are clearly analogies between then and now, in significant respects the situation we are facing in 2013 is vastly different.

“The economy had to grow very rapidly as the end of the Second World War,” says one interviewee, Raphie de Santos. Britain, not completely decimated by war, in contrast to continental Europe, had a vital role to play in producing things. “The world actually needed a lot of manufactured goods to be made,” de Santos goes on. Britain had to fill this gap in production and that is why full employment was an aspiration that could be fulfilled.

This situation is in wild contrast to now where there no dearth of manufactured goods. Quite the opposite, there is a glut of products. There is no lack, for example, of cars in the world. “Too many cars, too few buyers”, as The Economist magazine puts it. Last time really was different.

The government is indebted now as it was in 1945. In fact, the government was far more indebted in 1945 and still managed to achieve and create; the polar opposite of austerity. But corporate and consumer debt are inescapable feature of today’s landscape, absent in 1945. Real wages in Britain have dropped by 8.5% since 2009. There was scope for massive growth in the economy in way that doesn’t pertain now.

But The Spirit of ’45 is, ultimately, about an intangible, yet real, social atmosphere. You were your brother’s and your sister’s keeper, says one contributor. It was all for one and one for all, says another. If anything should be imported, unadulterated, from that age into this, it is surely that spirit. Because we need it.