Tag Archives: Jeremy Corbyn

Sensible economics and other nonsense spoken by politicians

Economics, Neo-Liberal economics, Philosophy, , , , , , , , ,

Recently a speech given by our former Prime Minister on the topic of sensible economics caught my attention. There is growing agitation in the country for the end of austerity. An economic policy that has failed to achieve any of its targets. Realising his heritage was at stake he gave a speech explaining why it would be foolish to abandon this sensible economic programme which he had initiated. For this man and all practitioners of sensible economics, the growing numbers of people using food banks,  stagnant or falling incomes etc. are not a sign of policy failure. What people failed to understand he said was that these sacrifices were necessary for the greater national good. Sacrifices which were necessary to rectify the failings of past governments.The problem was not bad economic policies but the impatience of the ignorant majority.

Sensible economics is convincing because all the words in which it is spoken are suggestive of  good sense. It is so convincing that it has become the accepted dialogue in which the economic debate is conducted. Who could be against sensible economics when it states that the ‘books must be balanced’ and that we should guard against ‘paying ourselves more than is prudent’. Any deviation from the path of sensible economics such as a return to ‘tax and spend’ threatens to return the UK to the bad days of the past. However sensible economics is not economics, its just a number of moral and commons sense phrases that one would hear in conversations at the golf club bar or at the dinner parties in Notting Hill, which have become the authoritative dialogue in which all matters economic are discussed.

Sensible economics does appear to offer a number of simple policy solutions to today’s problems that all can understand. Everybody knows that civil servants contribute little of value to the economy, so the best policy is to reduce their numbers to reduce costs. An argument that is so convincing that all governments over the past thirty years have done this. A good government is one that employs less civil servants than it did than when it first came into office. Ignored by the various governments is that these civil servants provide an invaluable source of expertise necessary for good government. Our rail industry’s record over investment decisions is one of constant failure. Projects have been badly managed with so many cost over runs that they government has been forced to cancel a programme of electrification of the rail network, because it the funds for this programme have been squandered on other projects. While the government can blame incompetence in the railways on others what it cannot do is shift the blame for other major failures. Regardless of reforms implemented as part of sensible economics programme the economy is preforming as badly as ever or even in some examples worse than ever, as is demonstrated by the trade deficit. The UK’s trade deficit is not only the highest as proportion of GDP for a developed country but it is worsening.

I can quote an example of this thinking from my local community network. When I expressed concern about an overly slow response time (30 minutes) by the police to a serious crime in which a member of my family was involved; I was told by a number of correspondents that this was not due to a lack of police numbers, but bad police practices. According to them the police did not respond to a young man threatening shop staff and customers with a hammer;  because they were too busy completing their paper work, too which they gave priority. Sensible economics has permeated throughout society so thoroughly that even the most nonsensical of statements such as this one are believed. In fact the reason for the delay was that the police needed time to assembly a team armed with tasers. All such teams at the time of the incident were otherwise engaged.

Perhaps the best explanation of the sensible economics being the only dialogue in which the economic debate is conducted comes from the writings of Foucault. Risking over simplifying his work, what he states is that control of society comes from the control of language. Language is the language of the powerful, as the meaning of the words used in the public debate are  given them by the powerful. Such as the following: the poor are welfare scroungers, poor because they are indolent  and lacking in initiative. It is their personal failings that explain their poverty. Welfare programmes only encourage this indolence and should be cut back.  If welfare programmes are wasteful it provides a reason for the wealthy to avoid taxes, as there taxes will only wasted on the useless poor.  When this becomes the authoritative dialogue in which public debate is held  it becomes the prism through which any thing of any significance is viewed in society. Only yesterday I read in the papers that public servants have lost there public service ethos. What nurses today lack it is  the care and compassion that motivated their predecessors. When the public debate is conducted in terms that vilify them, it is easy to deny nurses their claim for a living wage.  This is the stuff of sensible economics, it nothing more than a means of entrenching the power of the rich and powerful, through denying a hearing to the alternative view.

Sensible economics or Neo-liberalism has had an easy ride. Rather than challenging the tenets of this dialogue, social democratic and opposition parties have been over impressed by the electoral success of the right and adopted its language. They remain the opposition in name, as they believe that elections can only be won by adopting the policies of sensible economics. It was the former social democratic government that introduced the unfair mean testing that the current government uses to deny the poor and disabled their welfare claims. When the opposition adopts the language of its opponents, it is signalling that it has lost the argument, its surrendered to its opponents.

What Foucault failed to understand is that the dialogue of the powerful is not all pervasive. There are other ideologies and dialogues in society.* Perhaps best described as the dialogues of the loser. Sociologists have a term that describes these dialogues, soteriology. These are dialogues that explain why certain groups are unfairly disadvantaged and discriminated against. Socialism is one such soteriology which was accurately described by Durkheim as a ‘cry of pain’.

These subordinate or challenger dialogues appeared to disappear because of the all pervasiveness of sensible economics. The media is largely controlled by billionaires who could deny a voice to any alternative messsage. The parliamentary left having adopted the ideologies of sensible economics for fear of losing the access to power have been a useful ancillary in suppressing the alternative dialogues, as to admit the validity of other dialogues would demonstrate the falsity of the current policies.

However as the failures of sensible economics has become more apparent, this dialogue has been losing its grip on the popular imagination. When the Prime Minister dismissed a nurse’s claim for a living wage, as there being no money tree, she stretched credulity too far. The narrative of nurses being forced to go to food banks because of low pay was to well entrenched in the public imagination to be so easily dismissed. Also a dialogue that claims to be authoritative discredits itself when it resorts to childish language borrowed from fairy tales.

Once a challenger dialogue or ideology is giving public space it becomes harder for the dominant ideology to maintain its dominance. Sensible economics strength comes from it being the authoritative source of truth. Once it is questioned its authoritative voice seems to become less authoritative and truthful. It cannot stand public scrutiny. This public scrutiny has come from the opposition party which has become infected with a challenger ideology. No longer does the opposition repeat the truths of the governing party but it challenges them. Often demonstrating that the ‘emperor really has no clothes’, the new social media gives a voice to these new challenger dialogues. They have been so effective that a media baron who considered himself the kingmaker, a man who believed that politicians could only succeed if they had they his support, discovered that social media had destroyed his power. He ran a sustained campaign of invective against the socialist leader of the opposition in his media outlets but failed prevent the opposition taking effective power away from his nominee.

This essay is not intended to argue the superiority or otherwise of challenger ideologies such as socialism but to suggest that when there is a dominant unchallenged dialogue the result is poor government policy making. If decisions are made in accordance with the established truths of sensible economics and are never subject to challenge from believers in alternative dialogues silly decisions can be made. The government as an economy measure reduced the naval planning and ship design departments to a bare minimum. Consequently when the navy wanted to build a fleet of modern warships they lacked the ship design expertise and had to buy in help from the Americans. Unfortunately the poor standard of oversight meant these billion pound ships when delivered to the navy proved to be faulty, they were prone to engine breakdown. At one time the new Type 45 destroyers were in dock together, unable to put to sea because of faulty engines. If there was a strong political opposition either inside or outside parliament such poor decision taking would be less likely to occur as policy decisions would be subject to criticism. In such circumstances the folly of dismissing nearly all of the navy’s ship design staff would have been highlighted. When sensible economics dominates the political debate, it being nothing more than a collection of common sense phrases it encourages policy making made in ignorance. It is a doctrine of no expertise, any politician can grasp its essence so why need to consult experts.

  • This idea of different ideologies competing for dominance I have borrowed from Antonio Gramsci
Advertisement

Contemporary Britain, a country dominated by Nietzsche’s untermensch (under men)

Economics, Neo-Liberal economics, Philosophy, scepticism, , , , , , , , , , , , , ,

Nietzsche hated democracy because it makes possible the rule of the common man and the suppression of the superman. A term that Nietzsche uses to describe the common man is untermensch or underman, a term which was open to misunderstanding and abuse. What he meant by the untermensch was a man who lacked the potential to live the life of a ubermensch or superman. What was never understood was that for Nietzsche the distinction was based on intellect and character, not power or physical strength. Originally he named the saint, artist and philosopher as his supermen. Even his dislike of Christianity as the religion of slaves did not stop him admiring Christ as a possible superman. He admired Christ as a founder of a religion but despised Christians for slavishly following the beliefs of another. What I think is most useful is his description of the untermensch as those in thrall to a slavish culture. People incapable of independent thought. When I look at the British parliament and the legislatures of other Western nations it seems obvious that we live in an age of the untermensch.

What the untermensch share is a slavish adherence to a common culture which means that politicians of whatever political stripe, will all give the same replies to questions on policy. These are a few examples which demonstrate this clearly.

In Britain the housing market is broken and many people are forced to live in private rental sector. Properties in which they have no security of tenure and for which they pay ever increasingly exorbitant rents. Whenever it is suggested that these tenants should be given security of tenure or have their rents controlled, the same parrot cry comes from politicians, whether of the parliamentary left or right, that such controls would only make matters worse. They claim that such controls would force landlords to withdraw from the market, reducing the number of properties for rent and so making the situation worse for tenants.

Britain’s railways are the most expensive and some of the least efficient in Europe. When it is suggested that these railways should be taken out of private ownership and returned to the state, it meets with howls of derision from the collective parliamentary body. Everybody in parliament knows that the state is peculiarly unfitted to run business and businesses such as the railways are best left in private hands. The solution to the problem is as every parliamentarian knows is to transfer the railway franchises to more efficient private owners.*

There are many other examples of the politicians collective thought that could be mentioned. What is common to these practitioners of politics is a hatred of those that think independently, they expel or seek to suppress from the collectivity of politicians those who think differently. At present the parliamentary Labour party is seeking to purge itself of a leader who thinks differently. A glance at the politics of contemporary Europe provides evidence that those who think differently have no place in the mainstream political parties, they have to come from insurgent parties such as Podemos in Spain or The Five Star movement in Italy.

One common place truth of contemporary political analysis is that the political elites have lost touch with the people. It is a resentful and sullen people that turn to the populist parties of the right. These parties at leas recognise the pain of the people, something that the political parties of the left fail to do. Durkheim called socialism a cry of pain, the parliamentary socialist parties of today no longer this truth. Rather than ignoring the people, parliamentarians are following a culture that denies the validity of other expressions of the truth other than its own. Truths that might appear obvious to the people are to politicians merely uninformed opinions.

Another demonstration of the untermensch mentality is the slavish following of opinion polls. Rather than leading, politicians prefer to follow, all to often they are prepared to abandon their principles because the people as expressed a different views to theirs in an opinion poll and the peoples will  must be respected. Never do they consider that they are elected to lead the country, they prefer to follow.

The language of politics is so often that of the untermensch. One of our most popular newspapers is said to ensure that all of its content can understood by the average thirteen year. It does not tax its readers with difficult text or content. Similarly our leading politicians prefer the language of the thirteen year old which are  expressed in what are meaningless phrases or slogans. Our current Prime Minister is campaigning for re-election with a series of simple phrases, such as that she will provide ‘strong and stable government’ as opposed to the opposition who represent a ‘coalition of chaos’. She it seems feels no need to present a detailed and reasoned manifesto to the electorate.  A vague and rather meaningless manifesto will suffice and that is all she and her advisors believe is necessary is a few repeated slogans to get out the vote.

Defenders of the present political system will argue that the overwhelming majority of parliamentarians not only went to university, but elite universities and got good degrees. However the very intelligent can be members of the untermensch, as its a mentality or way of thinking and it is as much about  character as intellect. Politicians rarely stray beyond the party line or parliamentary consensus of views, they sacrifice their individuality on the altar of group think. What Nietzsche’s supermen do is to challenge the conventional thinking of the time. When politicians continually speak and think in the language of the average thirteen year old, it cannot but deform their personalities. What at first becomes a means of communicating with the masses through does through constant repetition become incorporated within their personality. They take some of the characteristics of what they affect to despise, the common or under man.

While I think that Nietzsche’s understanding of British democracy is correct today, it has not always been the case that the British parliament promotes the mediocre at the expense of the talented. Today parliament has been overtaken by the culture of the untermensch, whether its expressed in terms of loyalty to the one’s party, obedience to the will of the people or submission to the dominant Westminster belief system. In previous times there has been a much more vigorous culture at Westminster, one in which individualist thinkers could thrive and even achieve the highest office. What is needed is an ending of the stranglehold on Westminster culture of the parties of the consensus, then politicians of an independent mindset will begin to flourish there.

There are those who will have a different understanding of Nietzsche’s concept of the superman. Mine derives from the earlier writings of Nietzsche, as his understanding of the superman did change in his later writings. Obviously those who have read ‘The Will to Power’ a book created by his sister out of his notes will have a very different understanding. Personally I think that this understanding of Nietzsche’s superman is invalid and of little intrinsic merit.

* Any independent minded economist could easily expose the flaws in such thinking.

New Economics – a new approach to policy making

economic history, Economics, Politics, , , , , , , , , , ,

As a sceptical economist it is all to easy demonstrate the failings of contemporary economics, what is much harder is to suggest an alternative to the current practice of economics. However it is not so difficult as it appears as history suggests an alternative approach to economics.

Economists generally take the individual as the basic building block from which society is constructed. In most textbooks there is a very tedious chapter on how primitive man built up a chain of exchange networks that were to become the rudimentary economy. From this starting point economists develop a theory which demonstrates the superiority of the free market. However this is erroneous as the basic building block that makes up the economy is the community, it is communities that exchange goods and services. In Celtic Britain it was the local top man (as representative of the community) with whom traders from the Mediterranean dealt. They exchanged their goods for British tin but it was a very ritualised transaction. Obviously there was bargaining but not as the economists imagined, there was no protracted bargaining to establish the equivalence of one unit of tin for one amphora of wine. Even the local market where individuals exchanged goods was not as one as economists imagined where individuals freely bargained for goods, it was a market that was regulated by the community. The local rulers realised how disruptive an unregulated economy could be, as traders would seek to exploit times of famine or shortage by pushing up the exchange value of their goods and so leaving the poorer members of the community to go hungry. The anger this generated could lead to food riots and threats to the established order. When the Bible explains that Joseph built store houses in which to keep grain in the years of surplus for distribution in years of shortage, this was not as the Bible suggests an unusual practice, but one common to all established societies of the time. Rulers were above all interested in social stability and maintaining social order.

There was discovered in Babylon the code of Hammurabi (1157 BC). It was a pillar which set out the prices of the goods to be exchanged in the local markets. Economists have claimed that it would be honoured more in the breach than in practice, as its impossible for the state to control prices, as these prices would fluctuate of their own accord with changes in the market. In years of plenty prices would fall and in years of shortage prices would rise. However this is to misunderstand Hammurabi’s intent he wanted to ensure a reasonably equitable distribution of resources to maintain social order. There would have been a number of inspectors to check that traders were abiding by the regulations and failure to abide by them could result in severe punishment. What economists fail to understand is that economic power must always take second place to political power as the latter has the monopoly of violence. Threats to life and limb would ensure that Hammurabi’s traders observed the law.

Today societies in the Middle East have continued this practice by supplying their peoples with supplies of cheap flour. Economists deplore this wasteful habit, but what they fail to understand is that cheap flour is the means by which the governments of these countries maintain social order. Without the cheap flour there would be food riots and regime change. When economists from the International Monetary Fund and the World Bank try to force these governments to put into policies that end the practice, they are forcing on these governments politics that will lead to widespread discontent. What these economist fail to see is that in these poor economies the economy does not work as is described in the textbooks and the same is true of advanced economies.

Hard as it must be to accept the Arab strongmen that distribute free or cheap flour to their people have a better understanding of economics that most economists. Economist tend to believe that the free market is the best mechanism for ensuring a fair and equitable distribution of resources. However this is fallacious as it ignores the existence of power and how the powerful can abuse the market to best benefit themselves. Hammurabi recognised that the great landowners if given the opportunity would manipulate the market by holding back supplies to increase their price and so to maximise their income. He denied them this opportunity by threatening those that tried to manipulate the market in their own interests with dire punishments. In such societies it was easy to attract the anger of the government and suffer severe consequence which would include bodily mutilation or death. Our current leader David Cameron has a much more naive view of the economy he does not believe that those with the most economic power will abuse that power to benefit themselves at the expense of the majority.  Instead he believes that those businesses that conduct such abuses will be stopped from abusing that power by the market. If there prices are too high or they withhold supplies to the market consumers will switch to other suppliers so forcing the abusive business to mend its ways. This view ignores the realities of power, the abusive supplier has the power to manipulate the market so that consumers are forced to buy their goods. They can use a variety of means to deny entry to the market to alternative suppliers. David Cameron is not alone in his naive view of the economy, it is shared by the political class as a whole.

The iniquities of the free market are best demonstrated by the private rental market in the UK. In this market there is a great inequality of power, there are the tenants who if they cannot find accommodation will be forced on to the street and the landlords that can choose who if anybody shall be a tenant. The desperate tenant is forced to accept the price for tenancy chosen by the landlord, so now there are many examples of well paid professionals being forced to pay up to 50% of their income in rent. The landlord can choose not to let his property until he finds a tenant willing to pay the high rent he wants for the property. The tenant only has a choice between paying the high rent or homelessness. One consequence is that there is an increasing proportion of the population that is homeless or forced to live in inadequate, squalid and unhealthy living conditions. The only response by the political classes to this crisis is to promise to build more houses sometime in the future. It goes without saying that governments have promised this for the past twenty years but there is little evidence of a substantial increase in the number of houses being built. Not one British politician has the wit of a Hammurabi.

What economists and politicians must recognise is that the free unregulated market works to the benefit of the most powerful players within the market. The market left to its own devices will always leave many people hungry and poorly housed, if housed at all. From the view of the majority the free market system is dysfunctional it works to deny them a good standard of living and instead works to keep them poor. Until a government legislates to prevent the abusive practices of the most powerful players in the market the people will continue to suffer a decline in there living standards. Now in Britain for the first time in decades the young will experience a poorer standard of living than their parents. The economy is just not working for the majority of the people.

This is a truth largely unrecognised by the political classes. Discontent so far has been limited to supporting the few politicians that recognise this truth. Politicians that are on the fringe of the political class. In Britain it is the former back bench MP Jeremy Corbyn and in the USA Donald Trump and Bernie Saunders. However if politicians continue to fail to recognise the failings of the current system the discontent won’t be limited to voting for politicians but it will take a more serious and aggressive form. In the last century troops appeared on the streets of Britain and the USA to maintain order. The first combat that the commander in chief of land forces in Europe, General Eisenhower experienced was when he commanded troops to shoot at unemployed ex soldiers protesting in Washington.

What politicians don’t understand is that the economy does not work as described in the textbooks. The unregulated free market rather than deliver the greatest possible wealth to the community, functions instead to meet the demands of the most powerful players, the business corporations. The free market is a dysfunctional economic system in that it fails to maximise the welfare of the people. Hammurabi was right in 1157 BC the market needs regulating so it operates in the best interests of the majority. The state has to ensure a reasonably fair distribution of wealth and to do this must prevent the abuse of power by the most powerful players the big that will prevent this happening. While inflicting bodily harm on the corporate offenders is inappropriate in the 21st century there have be legal sanctions to ensure that company bosses don’t abuse their power. A start would be a recognition that there is such a thing as economic crime and for which the most appropriate sanction is a prison sentence. Why should it not be an offence when company bosses take money out of a failing company to ensure that when it fails they will have a substantial nest egg to cushion them during their brief period of unemployment.

Economists complain that government regulation impedes the workings of the free market, while ignoring that this is precisely what the large corporations do. Microsoft, Apple and Google have all exploited their monopoly power, to rig the market it their favour. The same applies to the privatised transport and energy giants in Britain. Perhaps the best example is the energy company EDF securing a deal that will guarantee them energy payments which most experts agree will be three times the average price paid for energy from their proposed nuclear power station at Hinkley Point.

Economic policy making should be based on the recognition that the market fails to deliver. The priority for government policy should be that of Hammurabi and the various Middle Eastern dictators  and the Social Democrat states of the Europe of the 1960s that is to ensure a reasonable distribution of economic wealth.  A distribution policy that would ensure that even the poorest paid are not short of the essentials needed for the good life. Such a policy would require state intervention in many forms to achieve this end, it might for example involve competition regulation* that would prevent monopolies from abusing their power or changes in the law that equalised the power relationship between employee and employer. Governments must realise that their role is to ensure that the economy is run for the benefit of all not a small minority. They cannot claim as they do at present, that this is an unrealistic aim as history is full  of examples that prove the contrary.

*Britain does have a competitions policy but it is so ineffective that is fails to prevent monopolies or cartels abusing their power. It is as effective as the human rights laws in the old Soviet Union, which failed to prevent millions being sent to labour camps.

Fear of the outsider. moral panics – why governments alway fail to respond to the impending crisis

economic history, Economics, Politics, , , , , , ,

Colin Wilson wrote a book in the 1950s which became a sensation, it was titled ‘The Outsider’ and it caught the mood of the time. This was the era of the beatnik and French existentialism and his account of how he became an outsider through dropping out of society and rejecting the culture mores of the time captured the sense of angst of the time. It was a book of its time and is no longer read. Although Colin Wilson claimed a uniqueness of view, viewing society critically from the imagined position of an outsider has a long tradition. The tradition is demonstrated most clearly in the Christian religion as human society is constantly judged as failing from God’s perspective. Jeremiah the Old Testament prophet gave his name to a pessimistic philosophy of human failing.

Society needs the outsider as the stranger to society is the best person to question its mores. Too often a complacency sets in amongst the classes that make up the leadership of a society. They develop a fixity of view and regard anything outside the consensus of agreed thinking as heretical. While it may be unfair to claim that they view society as the best possible of all societies, it is they believe the best that can be achieved given the limits of human nature. In Britain the growing impoverished underclass can be ignored, as they are the price that has to be paid for the attaining of the good society. If all the members of this elite group of leaders have a similar background, this consensus of views is unlikely to be challenged. Britain provides an exemplar of this closed group think, the majority of our political leaders, lawyers and journalists have been to one of the elite colleges all having studied for the same degrees, whether intended or not Oxbridge does impose a fixity of views on our elite. From within this elite there may be critics but their criticisms are very muted. Only the outsider or stranger can question the views of this elite group as they are not bound into the group think.

jeremy_corbyn_stwc_460

The outsider or stranger does not have to be a foreigner just somebody from outside the elite groups. In America this outsider status is so highly valued that even insiders such as the billionaire Donald Trump claim to be outsiders. However when this claim to outsider status is real, the political establishment can become upset over the perceived threat to their status. Jeremy Corbyn a serial outsider in British politics has become the leader of the Opposition Labour Party. The reaction from the political and media class has become hysterical, he is challenging their world view. No greater threat can be conceived than a non sharer of group values being leader. Horror best describes their reaction, last week a popular tabloid stated that he intended to abolish the army, then rumour had it that all the senior leaders in the armed services threatened to resign if he became Prime Minister, threatening mutiny in the armed services. All Jeremy Corbyn has done is to question the unfairness of the current social system and why the . He is not an armed terrorist yet the modest threat poses to the existing inequality, demands that he be treated as one.

A similar tendency is demonstrated in Europe where the elites have thought it necessary to demonise Tsiparas and Syriza the Greek outsider and his outsider party. They are criticised as being naive, unrealistic and even childish. The purpose of the negotiations over the Greek debt was to nullify the threat posed by the outsider. Tsiparas it goes without saying was not a member of the existing political class but an outsider and as an outsider he had to be marginalised.

Outsiders may not always be correct but in not subscribing to the group view of the majority they ask the questions that will force the “insiders“ to reconsider their policies. There is in British politics one question the outsider would ask would cause a significant shift in policy. At present all the main three parties are agreed on the need to reduce the government deficit. Yet there is a much larger deficit which is never mentioned, the banking sector deficit which is five times greater than the government deficit. An outsider would ask if debt reduction is so important while is all political debate and decision making focused on the one smaller debt. A debt is a debt, whether its run up by the government or the banks. Interestingly this is a question that never asked in other European countries. Germany for example has a banking deficit of 324% of GDP, yet German politicians never question whether this is sustainable.

Fear of the Outsider

However all too often the outsider is feared and disregarded by the governing classes and the much needed change in the policy direction does not happen. Maynard Keynes a respected academic but an outsider to the conventional economics of his time (1930s) was at first ignored and later accepted. His outsider views of how to manage the economy had become the views of the insider by the 1950s. More usually the governing classes react with horror and fear towards the outsider, ignoring the very valid claims they make for change.

mods-and-rockers

The fear of the rich and powerful insiders can be understood in the sense that outsider groups threaten their wealth and privileges. Naturally they would act against any such threat, however the reaction of the rich and powerful insider groups to the outsiders goes beyond this and borders on hysteria. One British army general was reported in the press as saying that there would be a mutiny in the army if Jeremy Corbyn the radical Labour leader became PM. Given that this nameless general was not exposed and dismissed, it seems likely that his views are shared by many senior officers. Yet this can only be seen as an over reaction, as the policy changes proposed by Jeremy Corbyn are quite modest, he is not advocating violent revolution.He is a Gandhi rather than an al Baghdadi (leader of Isis). A man who seeks to persuade, pacifists don’t tend to practice violent revolution. All abuse and fears expressed in the reaction of the insider groups seems out of all proportion, however there is an explanation for this behaviour.

One is that there is a moral panic developing amongst these powerful insider groups. The best example of a moral panic comes from the writings of Stanley Cohen (Folk Devils and Moral Panics). There were he said a small number of shuffles between two youth sub cultures on popular holiday beaches. The two groups where the mods and rockers, while there was plenty of noise there was little real violence. Yet the press wrote up the story, these young men were a feral group threatening the existing social order. What disturbances there were few and easily put down by the police. Similarly the press particularly the tabloid press have conjured up a folk devil in Jeremy Corbyn. He is seen as an agent of anarchy and disorder who threatens the very fabric of society. This fear justifies a variety of measures to disempower the social movement he represents. In this atmosphere the general who threatens an armed insurrection to prevent this radical coming to power is applauded. Other plots will develop to prevent this radical ever becoming Prime Minister, such as a parliamentary coup which removes his as leader. Just recently one senior party was reported as discussing when would be the best time to remove him through a parliamentary coup.

This over reaction by the political, financial and industrial elites will prevent them from acknowledging that his support comes from a mass movement that has a number of very justified discontents with the contemporary social order. A disproportionate number of his supporters are young and they are the group that has been dispossessed of the greatest wealth. The politicians have imposed high tuition fees on those going to university, so ensuring that they will be in debt for the rest of their lives. They have presided over a growing dysfunctional housing market in which it is increasingly impossible for the young to buy a home, leaving them at the mercy of rapacious private landlords. Just as the aristocratic elite were deaf to the cries of the impoverished poor in the 18th century, so the parliamentary class of today are deaf to the cries of the young. This deafness is not just simple callousness, but having created a folk devil out of Jeremy Corbyn and his supporters they are incapable of dealing rationally with them and their demands for change.

This moral panic is not just limited to the British elites and insider groups but this fear is widespread throughout the governing classes in the West. The horrified reaction of the European Union politicians to the leaders of Syriza attempts to ameliorate the harsh bail out terms imposed on Greece was typical of those in the grip of a moral panic. The politicians of Syriza were childish, naive, unrealistic dreamers. Once having demonised these politicians they did not need to treat them as equal negotiating partners. Instead they could abuse the power they had to compel the Greeks to accept the harsh austerity terms they wanted. This was done through the simple expedient of denying Euros to Greek banks forcing the country into near total collapse through the collapse of its banking system.

The leadership groups in society are often gripped by these moral panics, panics which blind them to the real nature of their opponents. Perhaps the McCarthyite panic that gripped the USA in the 1950s, when the country was gripped by the fear of a non existent communist conspiracy is the best example. What this fear does is to prevent the governing classes from coming to terms with the outsider groups and never dealing with the very real problems that have caused these movements to form. Whatever very real problems Britain faces the major problem is getting the governing classes to admit there is a problem, to accept that the outsider groups have a valid viewpoint and that they should listen and not suppress them. Our governing classes have seen the ‘canary in the mine die’ yet they ignore the warning signs of imminent danger.

Les Miserables and the economics of revolution

economic history, Economics, politics, , , , , ,

  
http://www.dailytelegragh.co
Towards the end of the film ‘Les Miserables’ there is a very moving scene in which the young radical students who rose in revolt against the government are shot by the police. The revolt is doomed to failure as they fail to gain the support of the wider Parisian population and the authorities are easily able to suppress this uprising. This is the popular perception of revolution, that is a futile uprising by the young against the tyranny of the old order one that is easily put down by the authorities. Any history of the 19th century consists of a long list of failed uprising, the Poles in particular participated in number of uprisings against their Russian overlords, all of which ended in its participants being imprisoned or going into exile. However this is a misunderstanding of the nature of revolution, the successful ones usually don’t involve violence and generally take place over a number of years. What I mean by revolution is the shift in people’s attitudes that can be best described as a sea change in their behaviour and attitudes. 
Revolution of the Right
Often this type of revolution is initiated by the right, as instanced by the successful revolution by the right against the welfare state. If Britain is taken as an example when the welfare state was introduced it was seen as a bulwark against the twin evils of sickness and unemployment. It was seen as an individual right that the state should provide an income for those unemployed through sickness or bad luck. The political right in Britain never really concealed their dislike of the welfare state principally because they saw it as an injustice, that the rich were expected to pay more tax than the poor to fund welfare programmes. They ceaselessly campaigned against the iniquities of the welfare state. Now they have practically succeeded, welfare payments are now seem as benefits to a group of undesirables the work shy. The emphasis now is on reducing benefits and targeting the claimants with sanctions to force them into work. Only last week the welfare minister announced to general a claim that he would target the disabled forcing more of them to take work, through making it harder to claim benefits and by reducing individual welfare payments. The assumption is that by making life progressively more difficult for them, they will take up employment to avoid the unpleasantness of life on benefit. As one who has worked with disabled people, I can only see this minister as an uncaring monster largely lacking the human traits of empathy and compassion.
Now the philosophies of such as Ayn Rand are the guides to life for the decision makers in society. While it may seem harsh to suggest that a writer who would welcome the death by starvation of hundreds of the useless poor provides the distorting ideological glass through which these people view the world, evidence suggests otherwise. Recently our rulers withdrew the Royal Navy from the task of rescuing refugees adrift in the Mediterranean, on the grounds that by making the journey across the sea safe it would encourage migrants to attempt the crossing. The unspoken assumption was that if some refugees drowned at sea it would discourage the rest from trying to enter Europe. This policy was not questioned by any of the opposition leaders, so demonstrating that the spirit of Ayn Rand flows through our the veins of all our political leaders. Now it is ‘cool’ to be uncaring, as this is regarded as hard nosed realism, as distinct from the naive sensitivity of the political left. 

Revolutions of the Left

Unlike revolutions of the right which are initiated at the top of society, revolutions of the left are initiated by those in the middle and lower orders of society. This means that they are inevitably doomed to failure as the top orders of society command the instruments of power. The legal system can be directed against the insurgents. Imprisonment being but one of the means of suppressing such people. Yet such revolutions are not futile even if they end in defeat. They can despite their repeated failures change the nature of society and ultimately achieve their desired ends. This can be demonstrated through a metaphor, these revolutionary movements are as a wave from the sea smashing against a rock, the rock at first repulses the wave leaving it to fall back into the sea, yet the constant pounding sea will eventually destroy the rock. Similarly while the revolutionary movements of the left are initially doomed to failure, they can through insurgencies change society. By revolutionary surges I don’t mean violent revolution, so much as oppositional social movements which constantly rise and fall, but which eventually undermine the existing social structure, which leads to change.

The sea metaphor has further applications. British society at present resembles a placid sea but which under the surface there are currents swirling which can change the nature of the sea. One such current which has surfaced in the insurgency which threatens the Labour party. In the current elections to find a new leader it is the outsider Jeremy Corbyn who seems to have an unassailable lead in the contest. He represents a very different politics to that of the main stream party, a politics well to the left of the current parliamentary consensus. It is quite likely if elected his term as leader will be brief, as the parliamentary party will find means of rejecting a leader they don’t want. However he is representative of a much larger social movement, a left insurgency that rejects the harsh austerity programmes endorsed by the parliamentary party. This current which is sweeping through the party will change it whatever happens in the leadership contest. There are other similar examples of insurgency in Europe such Podemos in Spain and Syriza in Greece. Whether these individual insurgencies succeed or fail, what matters is that the initial process of undermining the unequal social order has begun.  
Then there is in the USA the ‘Fast Food Forward’ campaign whose aim is to secure a national minimum wage of $15 an hour, if it succeeds it will transform US society and economy, it is yet another insurgent movement. What these movements have in common is that they form outside the political system, as that system is constructed so as to prevent change, rather than facilitate it. Change of this significance will only take place in response to change from outside the political process. The established political process is dominated by the dogmatists who believe that the existing social and economic order is the the best possible one as it is founded on the universal truth of the free market. Politicians believe their only role is to implement changes to make the market system work more effectively, keep things as they are and if necessary repress those movements campaigning for change.

The economics of change and revolution

Society comprises of competing social groups with conflicting claims on its wealth. Rather than stable social order organised around one universal organising principle  that of the free market, it is a kaleidoscope of competing different groups all wanting very different orderings of the social system and its wealth. Society at best is the ring in which these groups compete, but according to rules of the competition.  Violence for example as a means of effecting change is ruled out. However if the dominant group refuses to recognise the legitimacy of the competing groups and tries to suppress them, violence will be resorted to as the social order or the rules of co-existence have been destroyed by the dominant social group.

Economics to have any relevance must be a dynamic subject one that can accept change, not a subject that believes that it has found the holy grail of social existence in the free market. It must recognise that the society of today can be very different from that of yesterday and so should accommodate that change. Economics cannot be a subject of universal truths, but one of partial truths, it must establish which of those truths in its current content list can be used in the study of different societies. A modest subject that seeks to find truths in very different economic and social systems, rather than have a universal blue print to which all societies and economic systems must conform. 

The Flawed Belief in TINA (there is no alternative)

economic history, Economics, Philosophy, Politics, , , , , , , , , , , , ,

Today there was yet another article in my daily newspaper by a prominent politicians disparaging those on the political left that fail to recognise the realities of life and want to make impossible changes in society. This disparaged group who are abused as fantasists, protest voters but never by terms that suggest that their choices are made on the basis of rational judgement. The only surprise is that he did not suggest taking the vote away from these ‘childish’ voters. Actually one former leading politician did suggest that by suggesting that the vote for the new leader of the Labour Party should be sabotaged by the other candidates withdrawing so making the contest invalid. If this had happened the same politician would have advised on how to rig the voting mechanism to ensure the right person was elected.

costume-french-nobles-2

18th Century Aristocrats (counter-factual.net)
What is barely understood is that we are governed by an elite comparable to the landed aristocratic elite that dominated politics in the eighteenth century. This elite is composed of politicians, media persons, technocrats and financiers educated at the elite universities. (There are other groups that could be included but for brevity I have excluded them, what they all have in common is an education at one of the elite universities. It is this education that sets them apart from the rest of society.) What they practice is a policy of exclusion, only the dialogue between the members of this selected group is considered valid. They only listen to themselves, the rest of society is to be a childish rabble whose views and opinions are not worthy of consideration.

What I want to attack is the shared understanding of this group, an understanding which ‘things must be as they are’ or as it is more familiarly known TINA that is the society in which we live is the product of economic, social and technical forces that are beyond the control of individuals. What the politician must do is understand those forces making for change and work within the constraints imposed by them. Social democratic politicians recognise the pain of people working on zero hours contracts and that caused by job insecurity, but their role is not to change the cruel inequalities in society. Their task is to explain that low wages and job insecurity are a feature of modern society and must be accepted and that it is only through individual efforts at self improvement can circumstances change. The only amelioration they offer is the most modest of reforms, which will have little impact on there working lives. The social democratic party refuses to accept policies that would reduce or end job security by insisting that it is not the role of government to ensure that employers treat their employers well, what they instead offer is a way out of this appalling way of life through self improvement via education.

This new elite remains isolated by its adherence to things must be as there are ideology from the wider discontent in society. They believe that they are the ‘grown-ups’ in the words of Christine Lagarde (Managing Director of the International Monetary Fund). The new left in Greece (Syriza), Spain (Podemos) and Britain are childish fantasists trying to ignore the reality of the grown up world.

As a sceptical economist I must doubt such understanding of society I would ask why is it society is as it is? The reasons given are irreversible technological and social changes. Yet on examination they are only partial truths. Technological change has taken place but the distribution of incomes is determined by the social order. The company director in Britain earns a hundred times the salary of the average of the incomes of the employees in his business. In the 1960s the director’s salary was only 30 times greater than the average. Why the change, if the answer is that company directors have become more productive, that is open to objection. The profitability of companies as a return on capital invested in very similar to that of companies in the 1960s. The falsity of this view is demonstrated by the fact that in many failing businesses the directors are paid excessive salaries, how can huge salaries be justified for such corporate dimwits?

What as the sceptical economist I would say that there are different reasons for gross income inequality. While it cannot be doubted that some income differentials are due to technical change in that information technology has made many former skilled occupations redundant, the growing prevalence of the low wage culture has origins elsewhere. One is custom and tradition which decrees that unskilled occupations only deserving of low incomes.There is one interesting example which demonstrates this fact. When at university I read a book on applied economics by a Professor Brown and one example from that book sticks in my mind. He stated that the evidence suggested that wage differential between craftsmen and unskilled labourers had remained the same since Roman times. This suggests to me that much the justification of current income differentials comes from custom and tradition and does not reflect the real contribution each employee makes to the business. Why should the cleaner or the sales assistant be paid so little?

The other factor is power, the financial and industrial elites have cited custom and tradition as the reasons for low pay. Their mantra is unskilled staff make such a small individual contribution to the businesses profitability that they are only deserving of low pay. Yet I have never read of any study which has successfully identified the contribution to the firms productivity of say the cleaner and the financial director, yet the salary of the latter is more than that of the former. Businesses are a collaborative venture in which it is impossible to identify the contribution that each individual makes to the success of the business. Is the cleaner really that unproductive? It is the cleaner that maintains the workplace as a clean and healthy environment in which to work. Dirty toilets and uncleaned washrooms would lead to outbreaks of illnesses associated with unhygienic environments. How productive would the company director or IT specialist be if struck down by dysentery? There is good reason to suggest that cleaners are vastly underpaid, yet employers continue to pay the minimal wages.

Governments have enabled this power grab by the business elite by passing legislation to weaken or destroy those organisations that are the only means of equalising power in unequal labour market. Ever since the Neo-Liberal revolution politicians have constantly weakened the power of those groups that threaten the power of the over mighty employer. In Britain it has meant the emasculation of the one powerful trade union movement, changes in the law now make it very difficult for the unions to effectively organise industrial action. Therefore there is little restraint on the employer who wishes to pay as little as possible to his staff. It is no coincidence that some of the most profitable businesses with the highest paid directors in Britain have been the supermarkets an industry where low pay and job insecurity are endemic.

Scepticism as a philosophy is misunderstood, sceptics don’t believe are no truths, in that all philosophies or ideologies are fallacious. Instead it is the belief that in subjecting an ideology, philosophy or belief system to sceptical enquiry the truths it contains can be discovered it is the stripping away of error.

Being a sceptic is not contrary to a belief that society can be improved through reform, it is just a scepticism about the nature of such much contemporary reform, reforms whose fundamental truths are based on custom, tradition and exploitation of market power. I am a left of centre sceptic who believes in the superiority of left of centre ideology because it contains less wrongs than the alternatives and that with its emphasis on fairness those wrongs are likely to be less damaging to humanity than the wrongs of alternatives that exclude any notion of fairness. A sceptic also favours democracy as in a democracy there are always contending philosophies and ideologies as the proponents of each that will be subjecting each to scrutiny and through that many of the errors of policy associated with the mono-thought of the Neo Liberal world view can be avoided.

Unlike the interchangeable Neo-Liberals and New Keynesians who dominate the political process with their uniformity of view, I want a political culture that recognises many ideologies and philosophies as valid and that a recognition the aim of politics is not to destroy the opposition but to create a political culture in which many views can thrive. Contemporary politicians are so assured of the rightness of their beliefs that they cannot concede that they may wrong. They are as in Christine Lagarde’s word the grown ups who understand reality and who don’t indulge in childish fantasies. What a sceptic would say is that any believers in any ideology that denies it contains any errors or wrongs are the childish and naive ones.