The Great Austerity Magic Trick

A Review of Austerity: The History of a Dangerous Idea, by Mark Blyth, part one

If there was an award for the dumbest yet most bizarrely effective political idea of recent years, one candidate would be an absolute shoo-in. The notion that debt racked up by the last Labour government in the UK caused the financial crisis, doesn’t seem to suffer in the least from endless repetition, despite being economically infantile. Expect it to play a possibly decisive role in the General Election campaign early next year.

As Mark Blyth observes in his book, Austerity: The History of a Dangerous Idea, this stems from “a wonderful confusion of cause and effect”. The state gets the blame for a “quintessentially private-sector crisis”. In the UK and US, privately funded housing bubbles imploded, rendering insolvent hugely leveraged (indebted) financial institutions. In Europe even more vastly leveraged banks (in 2008 Deutsche Bank had assets that were 80% of German GDP) were left high and dry by either, as in case of Ireland and Spain, the bursting of a similar house price bubble, or, as with Italy and Portugal, too much lending to governments that suddenly went sour.

In no case, apart from possibly Greece, did wild public spending have anything to do with it. Spain actually ran a budget surplus prior to the financial crisis. In 2007, Ireland had a debt to GDP ratio far better than Germany’s – 12% compared to 50%.

“The fiscal crisis in all these countries,” writes Blyth in a statement of the obvious that shouldn’t be, but evidently is, painfully necessary, “was the consequence of the financial crisis washing up on their shores, not its cause.”

But that is not the way our politics has been able to rationalise what happened. “What were essentially private-sector debt problems were rechristened as ‘the Debt’ generated by ‘out of control’ public spending,” says Blyth. Cue homilies about the penance we all have pay for partying like there was no tomorrow in the boom years. And that penance takes the form of huge public spending cuts – austerity, “a deserved doomsday for the borrowing way of life” 

Here is Mark Blyth (a Scottish professor at an American university) speaking:

But I think Blyth is so concerned to nail the patent deceit and injustice of this subterfuge that he neglects one thing. We don’t actually have austerity. We have public sector austerity in spades, sure. Disabled people in Britain, who clearly spent the years prior to 2007 downing endless bottles of Moёt, are paying a wholly justified penance through the withdrawal of the Independent Living Fund, the Bedroom tax, the work capability scandal, the limiting of contribution-based Employment and Support Allowance to one year and the abolition of the disabled worker element of Working Tax Credit.

But private sector austerity, a penance for the sector of society that actually caused the problems in the first place? I must have missed that one. After the taxpayer funded bail-out that caused the debt to mount initially (£1.5 trillion in Britain and $7.7 trillion in the US), the private sector has been suitably chastised by successive bouts of Quantitative Easing, a subsidy to banks and other financial institutions that has amounted to £357 billion in Britain, all under the watchful eye a government run by the austerity evangelising Conservatives. Banks in the UK have also had to deal with the crushing blow of the £80 billion Funding for Lending programme, and a state guarantee of 15% of the value of mortgage loans made under the Help to Buy Scheme. All this has taken place in the context of near zero interest rates which makes borrowing money incredibly cheap and saving it kind of pointless. And the tough medicine has been topped off with a cut of corporate income tax from 28% to 20% (by 2015). I really don’t know how they cope.

It’s not as if you can say that debt isn’t a problem for the private sector and it is for the public sector. As Blyth says, we are dealing with “weaknesses internal to the private sector” and weaknesses that was transferred to the state’s books. According to a report by the consultants McKinsey in 2011, overall debt in the UK was 507% of GDP, making Britain the second most indebted country in the world, behind Japan. Government debt (and this is post-bailout remember) was the smallest component, at 81%. The debt of financial institutions made up a huge 219%, non-financial institutions 109% and households 98%. Overall debt is now down to 484% of GDP but it’s still enormous.

In November 2013, household debt in the UK reached a record level of £1.43 trillion.

But when confronted with a two decades-long bout of financial incontinence by the private sector, governments in the UK, US and Europe, in contrast to the unbending sternness with which they have imposed public sector austerity, have responded by … prescribing laxatives.

They certainly don’t make austerity like they used to in the old days. One of the attributes of Blyth’s book is that he delves into the intellectual antecedents of austerity, as well as critiquing its contemporary application. And here you get a rather different kind of austerity. Adam Smith, the father of market economics, was against “easy money” and thought merchants, unlike governments, were by nature savers. Early nineteenth century economist David Ricardo was adamant that states shouldn’t “cushion market adjustments.” Into the 20^th century and the ultra-free market Austrian school believed austerity meant “a flight into real values”. “The thing to do” wrote Austrian free marketeer Ludwig von Mises, “is to curtail consumption … the economy must adapt itself to these losses”. Another “austerity enabler”, late twentieth century right-wing economist, Milton Friedman, believed in controlling the money supply.

According to Blyth, Austrians like Von Mises and Friedrich Von Hayek (Margaret Thatcher’s favourite economist) thought that “the very worst thing that can happen is for the government to get involved. By flooding the market with liquidity, keeping the rate of interest low when credit is scarce, or attempting to stimulate the economy to smooth out the cycle, government intervention simply prolongs the recession”.

This is practically an instruction sheet of how our austerity-preaching governments have reacted. First of all they “got involved” from the outset through massive bail-outs of banks in the US, UK and also Europe (the difference with the European Central Bank is that they haven’t taken on toxic bank assets but there have been huge bail outs in Ireland and Spain and the ongoing suffering inflicted on Greece is to ensure that French and German banks never have to face up to their bad debts).

Next we have the mistake of “flooding the market with liquidity” which is the definition of Quantitative Easing, practiced by austerian Conservatives in Britain as well as the austerity-sceptics of the Obama administration. And the unwavering, government-toppling autocrats of the European Central Bank are not averse to a spot of Quantitative Easing, either. The Long-term Refinancing Operation undertaken for still massively indebted banks in 2011 and 2012 was, in Blyth’s words, “an unorthodox policy of quasi-quantitative easing.” Then there is keeping the rate of interest low when credit is scarce (like after a credit crunch). British interest rates are stuck at 0.25% and there is paranoia about what will ensue if they are raised. European, ECB, interest rates are also at a record low of 0.25%. The last thing any government wants to do is “curtail consumption” even if it is rooted, as the value of real wages fall, in borrowing. And as for Milton Friedman and controlling the money supply, as David Coleman once said, “if he were alive today, he’d been turning in his grave.”

In the real-world austerity experiments of the 1920 and ‘30s, we find governments not only slashed what public spending there was but also let busts run their natural course, an eventuality our governments desperately stopped from happening. The ‘liquidationist’ doctrine of the US government of the early ‘30s turned the Wall Street Crash and a series of bank failures from a “relatively minor budget deficit into a full-blown financial crisis and depression,” writes Blyth. Both the US and Britain aggressively raised interest rates, rather than sinking them to below the rate of inflation as current policy dictates. Japan’s civilian government of the early ‘30s, we read, raised interest rates into the teeth of the depression, paving the way for a Fascist military takeover that radically reversed course. In all cases, austerity was applied with the same vigour to the private sector, as the public.

Marxian economist Andrew Kliman has pointed out that the destruction engendered by the laissez-faire approach of the 1930s was far greater than governments had expected and led to momentous changes such as World War Two. “Policymakers have not wanted this to happen again, so now they intervene with monetary and fiscal policies in order to prevent the full-scale destruction of capital value,” he writes in his book, The Failure of Capitalist Production. “This explains why subsequent downturns have not been nearly as severe as the Depression.”

It also explains the special kind of austerity we have, which is only applied to the public sector. The private sector is treated with the utmost permissiveness and government intervention.

In the second part of this review, I want to discuss how Keynesianism, which Blyth says returned for a brief twelve month reunion tour, in fact never went away. And how Blyth’s conclusion – that we should, in retrospect, have let the banks fail – is a version of liquidationism the Left should embrace.

Reality-mongering about inequality will get you nowhere

Oxfam is a “thinly disguised left-wing lobby group” tweeted a Conservative Parliamentary candidate earlier this week after the British branch of the development charity reported that the five richest families in the UK boast more wealth than the poorest fifth of the population put together.

It’s an interesting definition of left-wing where your deep red political stripes are inadvertently displayed by the mere fact of relating what is actually happening in the world.

Charities can now so easily slip into the crime of “reality-mongering”. Last December, Christian food bank charity, the Trussel Trust was damned as “political” by Tory minister, Iain Duncan Smith, for daring to suggest that the government’s benefits sanctioning regime and the soaring price of food might have something to do with the fact half a million people are regularly forced to call on its services.

But there is, despite the brickbats, an unmistakable thirst for more reality, unencumbered by ideological blinkers. Manchester University’s “Post-Crash Economics Society”, for example, was formed by students last October, because they say orthodox economics “cannot explain the world we live in”.

“Neoclassical economics in the era of neoliberal triumph, beginning in the late 1970s,” say two Marxian economists, John Kennedy Foster and Robert McChesney, “promoted versions of economics that eschewed reality for pure market conceptions.” In their obsession with the fantasy battle of state versus market, conservatives simply cannot see inequality or the growing trend towards monopoly in contemporary capitalist society.

 The world won’t listen

Oxfam’s problem does not lie in its ability to discern the existence of huge inequality, but in its plaintive appeal for the British political system to do something about it. For long ago British politics forgot how to listen.

“The only effective design for diminishing the income inequality inherent in capitalism is the progressive income tax,” noted famed 20^th century economist John Kenneth Galbraith, in 1992.

“That taxes should now be used to reduce inequality is, however, clearly outside the realm of comfortable thought,” he went on.

To appeal to conservatives to raise taxes on the wealthy, is rather like imploring Michael Bay to embrace slow cinema. The tragedy of British politics is that the centre-left is almost equally resistant to causing the wealthy even mild discomfort. In this sense, as one economist has noted, Britain has an effective one party state.

The last Labour government, for example, slashed capital gains tax (the tax you pay, if you make money from selling shares) from 40 to 18%, a cut that was, ironically, partially reversed by the coalition. Labour did raise the top rate of income tax (on income above £150,000 affecting 1% of taxpayers) to 50% and has pledged to reverse the coalition’s cut back to 45%. But, in order not to appear “anti-business”, the party says a renewed 50% rate would only be temporary.

 Robin Hood in reverse

Corporate income tax was reduced by the 1997-2010 Labour government from 33% to 28% (it was 53% in the 1970s) and has been scythed down to 20% by the current government (at the same time as raising VAT which affects everyone). Labour has said – exposing an indelible stain of Bolshevism - that they will increase it back up to 21%!

By way of international comparison, Barack Obama, who has raised the top rate of tax in the US slightly, wants to cut the headline rate of American corporate income tax from 35% to 28% (the effective rate, taking into account all the exemptions that can be got, is 19%).

Corporate income tax is a tax on company profits and is frequently presented by politicians, who want to reduce or better abolish it, as a tax on economic growth. But these profits pay for all the dividends to large institutional shareholders, like hedge funds, and astronomical executive salaries and stock options – thus making a massive contribution to inequality.

Moreover, many wealthy people have, for tax purposes, transformed themselves into corporations to take advantage of the fact that the rate of corporation tax is so much lower than the top rate of income tax. Half as much, in fact, in the UK.

“The more corporation taxes are cut,” says the Tax Justice Network, “the more wealthy folk will shift their income out of personal tax category and into corporate forms, so as to pay the lower corporate tax rate. The more they do this, the more governments feel they must cut personal tax on wealthy people to stop it.”

It is worth recalling that when the profits tax (the precursor to corporation tax) stood at 50% in 1960s Britain, economic growth - at 3.27% - was more than double its current rate.

There is no appetite among the political class in Britain, for raising taxes on the wealthy in other ways either. While EU, led by Germany and France, is determined to introduce a financial transactions tax (a tax of 0.1% on the sale of shares and bonds, AKA the Robin Hood tax), a measure highlighted by Oxfam as a way to reduce inequality, the British government is opposed and the Labour opposition deafening in its silence on the issue.

Britain’s one party state on tax is so entrenched, it will survive even its dissolution. Scottish First Minister, Alex Salmond, is pressing for independence from Britain in September’s referendum, but is also in favour, should the yes vote win, of an even lower corporate tax rate than the UK – three percentage points lower, in point of fact.  In addition, Salmond parrots the UK government line that, while a financial transactions tax is eminently desirable, it can only be introduced if the whole world agrees, because unilateral implementation would damage the Scottish financial services sector. Isn’t consensus lovely?

 Don’t redistribute, distribute

But besides the futility of petitioning a deaf political culture, Oxfam’s inequality campaign is doomed for a more integral reason. For it rehashes the time-honoured method of reducing inequality through tax redistribution. At the risk of sounding simple-minded, if you don’t want the outcome of gaping inequality, perhaps you ought to alter how wealth is distributed in the first instance.

“If change is ever to occur,” writes Gar Aperovitz in his book, America Beyond Capitalism, “an assault must ultimately be made on the underlying relationships that have produced the inequality in the first place – especially those involving ownership and control of the nation’s wealth.”

There was acclaim across the political spectrum, including from Conservative MPs, for the 2009 book, The Spirit Level. Authors Richard Wilkinson and Kate Pickett showed how problems such as obesity, mental illness and violence were made worse by greater economic inequality. But what seemed to escape understanding was that Wilkinson and Pickett did not place all their faith in the traditional method of combatting inequality, tax redistribution. They placed greater importance in changing the “underlying relationships” through democratic employee-ownership of companies, as a way of addressing inequality at its root.

Capitalism produces inequality as surely as breathing produces carbon dioxide. And unsuccessful capitalism – the kind we have now – generates extreme inequality. According to French economist Thomas Picketty, if the rate of economic growth is below the after-tax rate of return on capital, inequality will spiral.  Those are precisely the conditions – insipid growth and capitalists demanding a high rate of return - that we have experienced in the West for the past 30 years.

To return to Alperovitz, he argues that the future of efforts to reduce inequality do not reside in tax redistribution but in worker and municipally controlled economic enterprises. “There is no way to achieve movement towards greater equality,” he writes, “without developing new institutions to hold wealth on behalf of small and large publics.”

Capitalism Deniers: The myth of 'market failure'

Nicholas (Lord) Stern, former World Bank chief economist and author of the 2006 British government-commissioned Report on the Economics of Climate Change, reared his ennobled head again last weekend to point out that the fact that roughly a third of Southern England lay underwater was “a clear sign” of climate change.

The flooding in England is likely to play a similar role to that of Hurricane Sandy in the US – nature’s way of cutting through ideological conceits in a fashion that no amount of rational debate can achieve. Milton Friedman’s “brute experience” is trumping ideological preference again, though in ways he never imagined.

Stern’s intervention was, nonetheless, seen as a rational retort to the angry band of climate deniers, and on a more unconscious level, a reassurance that, beyond the media flotsam, those in the higher echelons of power really do “get it”. However, despite his reputation as the voice of reason, Stern, I believe, is a leader of a different band of unreasoned deniers – those that deny the effects of capitalism. And, disturbingly for the future of the planet, this band has far more adherents than the ones who think the polar ice caps are melting because of increased heat from the sun.

“Climate change is the greatest market failure the world has ever seen,” proclaimed Stern famously in his 2006 report. The headline use of the phrase might seem, on the surface, to mark Stern out as an enlightened critic of capitalism. Indeed, since he effectively minted the term for general use, meaning examples of markets working against, not for human welfare, “market failure” has become a meme, trotted out with metronomic regularity whenever instances of markets damaging general welfare occur. And that means a lot of trotting.

In early February when revelations broke that a third of the food consumed in Britain may not be what it claims on the packet, the man in charge of the government’s review of the horsemeat scandal, warned that the nation was at risk of “market failure”. The spiralling of inequality, which has seen just 85 people in the world controlling more wealth than half the world’s population, is frequently portrayed as an outbreak of market failure. The neo-Keynesian economist Ha-Joon Chang says that the managerial classes “manipulate the market” guaranteeing themselves enormous executive pay rises that bear no relation to performance. Last October, the New Statesman magazine encapsulated falling wages, a few companies controlling the energy market and extortionate housing rents as “market failure on a grand scale”.

But, in truth, “market failure” is a superlative example of newspeak that would have made George Orwell proud had he coined it. For these market failures are not, as is implied, regrettable aberrations requiring governmental correction, but simple and predictable market outcomes.

Market outcome No. 1 – Climate change

“When free markets do not maximise society’s welfare,” opined an article in The Guardian newspaper in 2012, “they are said to fail and policy intervention may be needed to correct them. Many economists have described climate change as an example of market failure.”

The reason is that greenhouse gases are an externality. A company may produce a product people want but as a result of producing it, or transporting it, will emit greenhouse gases. And the effect of these emissions will fall on people on the other side of the planet or future generations. That is why Nicholas Stern said climate change was the greatest market failure the world had ever seen. The gaping hole in this argument is that externalities, of which greenhouse gases are a prime example, are not by-products of capitalism that can be washed away by government regulation. They are an integral and unavoidable part of its functioning. A report for the UN in 2010 found that one third of the profits of the world’s top 3,000 companies, some $2.2 trillion, would be wiped out if they were forced to pay for the use, loss and damage to the environment they cause. And more than half of that $2.2 trillion total, was attributed to damage caused by the release of greenhouse gases. Force corporations to give up a third of their profits and you will essentially destroy them – no-one will invest in them because the profits will be so meagre. That is why no government or pan-government authority, like the EU, will ever insist that corporations pay for all externalities, or they stop producing all externalities.

This has been brought into sharp relief by the immensely fragile state of the world capitalist economy. The priority of government policy around the world is not to impede economic growth, even if growth stubbornly refuses to return to anything like the levels of 40 years ago, which only, ironically, strengthens the desire not to impede growth. It is for this “reason” that the UK government has backed such fundamentally anti-environmental policies such as the car scrappage scheme and fracking. And most people, under this system, have clear incentives to support such short-term, growth friendly policies, overriding any concerns they have about climate change that is now happening all around them. Executives just work for the profit maximising interests of their corporate employers. The interests mean constantly inventing new needs and requiring consumers to upgrade to new technology. In 2006, the late Apple boss, Steve Jobs, the man who “anticipated technological desires you didn’t even know you had”, urged customers to buy an iPod every year to keep up with advancing technology.

The vast majority, meanwhile, simply need jobs and incomes so are materially dependent on the success of those corporations. “Economic growth is in the immediate interest of virtually every sector of society – growth in the straight-forwards sense as measured by GDP,” notes American mathematician David Schweickart in his book, After Capitalism. That’s why leftists say the problems caused by capitalism are systemic. They are not the result of greed or stupidity.

Growth is thus endemic to a capitalism that functions remotely effectively. It is illuminating that carbon emissions fell for the first time in 50 years in the immediate aftermath of the financial crisis, when growth stopped happening, but have since started rising again as a fragile recovery has taken hold. Growth of 3% a year means a doubling of the size of the economy every 23 years and, according to a professor at London’s Imperial College, “each successive doubling period consumes as much resource as all the previous doubling periods combined.” 3% growth may seem ambitious for western countries, but it isn’t for “emerging economies”. About a dozen have grown at around 7% a year for the past quarter century. Since 1978, since the beginning of its transformation from communism to capitalism, the Chinese economy has trebled in size.

The dangerous fiction peddled by capitalism deniers such as Nicholas Stern is that you can have economic growth and reduce greenhouse gas emissions at the same time. Stern says the world needs a low carbon industrial revolution, which is undoubtedly true, and that China is leading the way in developing low carbon technologies. But China also boasts 16 of the 20 most polluted cities in the world and chronic air pollution – two-thirds of urban residents in China are breathing air that is severely polluted. China occupies a pivotal place in the world’s capitalist market economy, whereby its factories assemble the parts and components made in other countries (like the iPhone) in order to export finished products back to the West. If you want to impede global warming, never mind halt it, that process, I would suggest, has to be severely curtailed. But it is at the crux of many corporations’ supply chains because Chinese workers are so much cheaper than those in the West. Under a globalised market, growth and global warming will inexorably continue.

Stern, who is chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics, would do well to listen to the man who founded that Institute, the investor (and arch capitalist) Jeremy Grantham. “There is no such thing as sustainable growth” he said in 2011. “You have to make a pick. You can have sustainability or you can have growth, but you can’t have both.”

Market outcome No. 2 – Inequality

A new book by the French economist Thomas Piketty, Capital in the Twenty-First Century, “defies left and right orthodoxy”, says the New York Times “by arguing that worsening inequality is an inevitable outcome of free market capitalism”. Analyzing data from over 20 countries, Piketty concludes that that the owners of capital inevitably become increasingly dominant over, and richer than, those that own merely their own labour. Only “confiscatory tax rates” can reverse this trend in mature economies. A division between those who own capital and those can only sell their labour (the system of wage labour), it should be noted, is the essence of capitalism.

Piketty says that inequality is driven by a structural feature, integral to capitalism: returns on capital exceed, usually, the rate of economic growth. The more “perfect” the market, he says, the higher the rate of return on capital and the greater the resultant inequality.

This analysis cuts through orthodox economic thinking in two ways. Firstly, it contradicts the conservative faith that the free market will naturally distribute “the fruits of economic progress among all people.” It won’t, as is becoming abundantly clear. Secondly, Piketty says that traditional liberal or social democratic antidotes to inequality – public spending, taxation and regulation – won’t dent it. Government can’t, even if it wanted to, reverse this form of market failure. You have to go, I would suggest, to the root of the issue; the lack of power most people have when bargaining for pay from employers.

Inequality has become extreme in many western countries, notably the US and UK, as trade unions have been edged out, or forcibly removed, from the picture. Trade unions are the grit in the ointment of pure free market capitalism. They entail collective, as opposed to individual, bargaining. Countries that have not destroyed trade union influence, and thus retained collective bargaining, have far less inequality. Chief executives in Norway, for example, earn less than double the average wage. 70% of workers are covered by collective bargaining there, compared to 29% in the UK.

So individual bargaining - the ‘tao’ of a free market - leads to grossly inflated inequality. While it is portrayed as paying people what they are worth, individual bargaining merely results in the wages and salaries that people are able to negotiate. Those at the top of society have the negotiating strength to insist they are paid, not what they are worth, but vastly more than their contribution to company or organisational performance. “When pay setters set their own pay, there’s no limit,” says Piketty. FTSE chief executives can negotiate ever-rising pay settlements, while wealthy investors sit back and receive the fruits of the returns on their investments.

This is not about the manipulation of the market, but a reflection of where market power lies. It is not a market failure, not a 'power grab' by the wealthy as Oxfam imagines, nor a “perversion” of the market, as right-wing journalist Charles Moore would have it. It is a market outcome. The same imbalance of power means that the “confiscatory tax rates” that Piketty posits as a redress to inequality will not be allowed to happen.

Market outcome No. 3 – Oligopoly

Oligopoly means the dominance of a small number of firms in particular markets that work to prevent smaller firms entering it, as a result of their strong position, and hike up prices to captive consumers. As the New Statesman magazine observed in 2013, the energy market in Britain is the epitome of an oligopoly. Six companies rule the roost and have presided over increases in electricity prices of 120% over the past decade. While energy costs have risen by less than inflation over the past year, the typical bill has shot up by more than £100.

The problem with ascribing this state of affairs to market failure is that it’s a pretty ubiquitous kind of failure. Oligopolies are also conspicuous in the UK in public transport, car manufacture, banking, outsourced government services and supermarkets – to name a few areas. The value of mergers and acquisitions, globally, hit a peak of over $4 trillion in 2007. The effect of mergers and acquisitions is to create larger and larger corporations and strengthen oligopoly. The process is, in other words, is getting worse. “The result of all this merger activity has been a decline in the number of firms controlling major industries,” write the authors of The Endless Crisis, a book about how monopoly capitalism causes economic stagnation.

It was one Karl Marx who first noticed the pronounced tendency towards concentration in capitalism. Competition leads firms to either drive their rivals to the wall or take them over and thus results in its antithesis, monopoly and oligopoly. It is possible for the government to insist that oligopolistic markets are broken up – the British Labour party wants to introduce more competition into a banking system in which five banks possess 85% of current accounts, for example. But should this fragmenting occur, the counter-veiling market trend will immediately kick in. Competitive markets are not natural to capitalism.

A strange philosophy

The market failure doctrine shines a light on the intellectual dead-end of European social democracy and American liberalism. They recognise – how could it be otherwise? - the anti-social impacts of markets but can’t surmount a fatalistic acceptance that those anti-social impacts, like the poor, will always be with us. Only a benevolent state, it is believed, can intervene to mitigate the situation. Social democracy is a ‘bonkers’ way of running an economy, Doreen Massey, co-founder of the Soundings journal, said recently. “First you produce a problem, then you try and solve it”. Is it too utopian to suggest that you should endeavour not to produce the problems in the first place?

This practical utopia requires radically re-organised systems of production and markets. I don’t want to underplay the problems. The externality issue that is central to the dilemma of climate change would not be resolved by worker-controlled firms or companies that involve the local community in how they are run. If the effects of global warming fall on people on the other side of the world or not yet born, there is no inherent reason why these firms should be attentive to them. But climate change will never be addressed by the globalised market economy of corporate capitalism. The interests of the environment and the interests of shareholder-owned  corporations, legally obliged to maximise profit, are in irresolvable conflict.

What the centre-left offers, at best, is the state as fireman, dousing the flames wherever they arise yet remaining oblivious to who is setting the world on fire. It is time to recognise that the fireman, even if he has an unwavering commitment to duty, is not up to the task.