Tag Archives: Neo-Liberalism

There is an alternative – moral economics and economists

Economists see the free market economy as the end point of social evolution. Industrialisation and the market economy are but inevitable stages in the development of society. Sophisticated developed societies are market economies. They are the high point of social evolution, a belief best demonstrated in Francis Fukuyama’s claim that history ended with the development of liberal democracy. All these democracies were of course free markets. Human freedom has reached it’s zenith in the free market. (Milton Friedman even thought the killing and imprisonment of thousands in Pinochet’s Chile, as a price worth paying for the restoration of human and economic freedoms.)

This triumphalism of the market economists is a recent phenomenon. In the period after the second world war and as a consequence of the Great Depression, free market economists were a small discredited minority. Instead economists such as Karl Polanyi, Nicholas Kaldor and John Maynard Keynes who supported the state management of the economy were those held in the highest regard. However with the economic crisis of the 1970s, these economists fell out of favour to be replaced by the free market economists, who persuaded governments institute the new era of neo-liberalism.

Karl Polanyi is now one of those unfashionable economists that is now being studied again after the collapse of the market economy. What makes him so different from the free market economists is that he did not believe that free markets were a product of social evolution. He sees the economy as part of an integral part of a network of social institutions. Changes in the economy were a consequence of changes in wider society and changes in the economy in its turn changed the society in which it was located.

Polanyi traces the origins on the free market industrial society of today to Tudor society. The old military aristocracy was losing power to a new rising class comprised of small landowners and the merchants in the towns and cities. It was the demands of these two groups that kick started the social and economic change that led to industrialisation and development of the free market. Landowners wanted the rural peasantry off the land, so they could introduce new and more profitable farming methods. This was enclosure of common lands. Legislation made it almost impossible for the poor ‘inefficient’ peasant farmers to continue to farm the land. They could not afford the costs of enclosing their farmland. . The great merchants in the cities wanted the end of the guild system, which they believed restricted their ability to make money. Guilds imposed regulatory controls on their members, which the great merchants believed placed unfair restrictions on their ability to trade. These two groups were over represented in parliament. Also the great merchants (Wolsey and Thomas Cromwell) were the source of loans for a government that was always short of money. Consequently the government introduced measures to help both groups.

Once example was the vagrancy laws which could be used to control the landless peasantry. Landless peasants without work and no support within the community could be whipped and driven out of the community, so relieving the landowners of the obligation to support them. E.P. Thompson about the Black Laws introduced in the 18th century) which further disempowered the working poor. These acts introduced capital punishment for offences such as trespass or for destroying a farm gates. These had the effect speeding up the exodus of peasants from the land. Formerly the rural peasantry could collect fallen branches from the woods, now this was illegal. Similarly poaching as means of supplementing a poor diet was now a hanging offence. This created a new class of landless proletariat who would supply the labour for the new industries that were developing in the towns and cities.

This breaking of the link between the poor and the land, created the flexible and mobile workforce that the new industries would need. Obviously there were other important factors that facilitated the industrial revolution such as advances in technology.

If I understand Polanyi correctly the free market and industrialisation, were accidental changes following on from a power grab by the landowning and merchant classes.

Social and economic change produced a new ideology, that of capitalism. In the new social environment, people thought differently. What now ensured societies well being was Adam Smiths ‘invisible hand’ of the free market. Now the price system would be responsible for distribution of wealth, and consequent responsibility for people’s well-being. Poverty now was not deserving of amelioration, it was a consequence of a personal failings. However even Adam Smith was shocked at the brutal way the new capitalists were treating there employees in Glasgow. However the moral coda that he inserted at the end of ‘The Wealth of Nations’ stating that employers owed a duty of care to there employees was ignored. Capitalist ideology dehumanised society, people and land were now valued according to their utility. They were now things, society was commodified, people and land were things that were bought. Valued only according to their usefulness. This was according to Weber the process of disenchantment. What today has become known as financialisation. Society was an inhuman affair in which people only had value in their functionality.

Perhaps the best illustration of the new way of thinking is represented in the writings of those twentieth century economic historians who wrote that the introduction of the Factory Acts were responsible for the slowing of economic growth in the 19th century, as the money that should have been reinvested in the business was instead spent on wages or improving the welfare of the workers. This was the cause of Britain’s relatively poor economic performance compared to foreign rivals. There spokesman was the liberal MP John Bright who argued that the country’s continued prosperity was dependent on the continued exploitation of children in the Mills. An attitude that still prevalent today. During the 2015 election campaign Ed Milliband was criticised by a member of the audience for not understanding that the success of his business depended on his continued ability to continuation of that exploitation of his workers through the zero hours system. Some employers certainly in the medieval period treated their workers equally badly, but they did not boast of the fact, or claim that their behaviour had moral sanction from the nations code of ethics. Then the prevailing Christian code of ethics would have condemned such behaviour. The stocks were often occupied by tradesmen who had cheated there customers. Whatever the failings of the Middle Ages a different and anti capitalist ethics prevailed.

Polanyi writes that the unregulated free market is a threat to social order. The example he uses to demonstrate this is the Speenhamland system which was introduced in the late 18th century. Until industrialisation there was a thriving cottage based textile trade. With the introduction of new technology and the growth of the factory system, these people faced impoverishment. Trade was lost to the new mills taken and payment for whatever they produced was reduced to the price paid for such products by mills. In France the impoverished peasants together with the urban proletariat provided the foot soldiers that made revolution possible. This was avoided in Britain, because the poor could apply to the parish for relief. They never became as desperate as the working poor in France. The parish money enabled these workers to remain in their homes and provided them with sufficient money to satisfy there family’ basic needs. Unlike their French counterparts desperation did not drive them to revolution. There were no equivalence in England of the Chateau burnings of France.

One writer rightly describes Polanyi as a moral economist. All new economics students in the U.K. are taught that moral preoccupations have no place in the study and practice of economics. It is a science different in nature from ethics. Even today economists and writers prefer Polanyi without the moral dimension. Threats to the social order posed by the economy are said to bring forth a reaction, societies develop protective measures that seek to minimise the disruptive effects of the free market. Anybody who has read ‘The Great Transformation’ cannot fail to note his suppressed anger when he describes the impact of the Great Depression on people in Europe.

Polanyi is important today not just because he offers an alternative vision of economics and society; but because he was one of that great generation of economists, who persuaded governments that a new way of managing the economy was possible. A way that would prevent a recurrence of both the crash of 1929 and the Great Depression. Unfortunately a later generation of economists have persuaded governments to abandon the policies of these economists and revert to the failed economic policies of the 1920s.

One last point Polanyi makes and that is that the market based price system is only a recent historical development. Only in the last two to three hundred years have households satisfied a majority of there needs by exchanging money for goods and services in the market. Prior to take the market only provided a minimum of a households needs. There is no reason why the price system and free market will always be the means by which goods and services are distributed. When the managing director of the IMF warns of another Great Depression, all that can be certain is that the free market so beloved of the Neo-Liberals will disappear.

Why the economic crash of 2008 will not be the last such financial crash.

As an economist I know of several explanations of why economies experience sudden and unexpected down turns, the usual explanation is the bursting of a credit bubble as happened in 2008. These downturns or crashes are always claimed by our political leaders to be unpredictable events, once in a life time happenings, even an ‘act of God’. Even when as in 2008 when the crash was caused by both human folly and greed. This misunderstanding is only possible because politicians have never understood the economics associated with John Maynard Keynes. He stated that economies are inherently unstable and these sudden and unexpected collapses in economic activity are part of of natural economic cycle. Unfortunately politicians act as if the good times will continue forever, a dangerous self delusion.

Although an economist by education, I am a philosopher by interest. Unlike Keynes I want use the techniques employed by the Greek philosopher Plato to explain the instability of the economy. He used myth to explain those aspects of reality that were not easily given to rational explanation, myth could make understandable, what reason could not easily explain. Perhaps the myth of the cave is the best known. A myth he uses to explain the ignorance of mankind as to the true nature of reality. He says imagine mankind as a group of individuals chained up in a cave. These chains prevent them moving and force them to look in one way only forwards.. In front of these men is a wall behind which is a fire. Now behind that wall images of things are passed backwards and forwards, so all the chained men see is a series shadows, which they take to be reality. Mankind for Plato could only see the world of appearances, which obscured the true nature of reality. However as I’m a 21st century economist who does not believe in myth, I will use metaphor as a substitute for myth.

The economy can be seen as a jigsaw puzzle in which the pieces seem to fit together to form a picture,. It’s seems to be composed of a series of interlocking pieces that fit together to form an integrated whole. However closer inspection of the puzzle reveals that the pieces do not fit easily together. There are gaps between the pieces they don’t easily fit together. Now if the tray on which the pieces are resting is moved, the puzzle immediately begins to lose shape and the picture eventually disappears from sight. The economy can be seen as a badly formed jigsaw puzzle that is likely to falling apart at any disturbance. Politicians ignorant of economics constantly make foolish decisions, that disturb and disrupt the economic policy. Occasionally they make disastrous decisions that cause the economic puzzle to fall apart,

There have been in our recent history a series of such foolish policy making from our political leaders. The most common fallacious policy is to promote speculative boom in either the property or stock markets as the main driver of economic activity. It is the fools gold of a policy. If economic growth is dependent on a constant inflation in house and property prices, there will be a time when market confidence fails and asset prices collapse and with it the economy. Unfortunately this simple understanding of the economy is beyond the political classes. Politicians seem predisposed to believe that everything in the garden is rosy and nothing bad will occur. A recognition of the fragility on which economic well being is based is too disturbing and unsettling to be accepted as a truth by our blindly optimist politicians.

The jigsaw metaphor can be used to explain how policies should be made to fix an economy, once a downturn has occurred. The broken puzzle can be put together through decisive political action and the economy rebuilt. There might have to be some reshaping of the pieces to make them fit together better, so making the economy more resilient to future shocks. Obviously the one piece that needs to be reshaped is the property and financial markets. Action needs to be taken to limit the activity of speculators in each. This action is a system credit controls and taxation that chokes off any foolish speculative activities. Unfortunately the politicians seem to believe that remaking the economy is an impossible task. What they prefer is the maladroit tinkering that is called Neo-Liberalism or leaving the market to fix itself. This is akin to asking these malformed pieces that remake up the economic puzzle in their own image. As a consequence the speculative economy that caused the collapse of 2008, has been rebuilt by the dominant players in the market, bankers and financiers with minimal interference from the government.

I must confess to one failing which is typical of all economists, I find it much easier to explain why economies go wrong than why they go right. My jigsaw metaphor cannot explain why the economy is subject to exuberant and unexpected periods of rapid economic growth. Perhaps if economists such as I could explain this economic fact, the economy would be in a better position than it is now.

What is required today is a return to the economics practised in 1968

The storm clouds are gathering over the economy, yet our political leaders seem oblivious to the approaching storm. These are some of the gathering clouds, inward investment has fallen 80% since 2016, the investment in national infra structure is at levels similar to Greece and in consequence economic growth fell to 0.1% in the last quarter. As a nation our trade deficit is the highest, as a proportion of GDP in the developed world. A trade deficit of 5.9% of GDP is only reduced to 2.2% through the contribution of financial services. A situation in which the U.K. is over dependent on recycling foreign cash invested in the U.K. to pay for imports. This gives an incentive to government to ensure that the City of London remains the largest money laundering financial centre in the world. Dirty money is as acceptable as clean money for paying our debts. This situation cannot continue indefinitely, if politicians cannot take action to resolve some of these problems, they will resolve themselves. This resolution will come in the form of an economic crash which will make us all much poorer.

A useful comparison can be made with the 1960s and 1970s a period of frequent balance of payment crises. In the 1960s the trade deficit never exceeded 0.6% of GDP and in the crisis year of 1976 it rose to 1% of GDP. These deficits always called for remedial action such as devaluation and economic policy measures to reduce the demand for imports. Now this ever rising import bill is never considered a problem for the U.K. Its role as one of the world’s financial centres ensures that it always has ample reserves of foreign currency to finance its debts. What never troubles the world’s governments is that one of the world’s largest financial centres lacks the strong economy to sustain it in that role. In the 19th century Britain’s strong economy enabled it to fulfil its role as the world’s banker. Now with a significantly diminished role in the world’s economy it still tries to be the world’s banker. This mismatch cannot continue, we as a country are unfortunately heading for a crash that could wreak havoc with the world’s financial system. The catalyst could well be Brexit when Britain begins to lose its role as the EU’s banker and uncertainty develops about the UK’s future this could precipitate a flight from sterling similar to that which happened on Black Wednesday. This time there will be no easy strategy for quickly resolving the situation. There is no ERM to leave and no easy currency devaluation to make. The pound will crash and the only remedy will be a large IMF loan and the imposition of a Greek like austerity programme.

Whatever criticisms the politicians of the 60s and 70s deserved, they were at least pragmatists. Unlike today’s ideologues they can recognise that there was a reality that existed beyond the world as seen from Westminster. The Labour government of 1976 could embark on an incomes policy that would alienate its supporters, knowing that this was necessary to restore the economy to health. This programme of income cuts was the only way that the government could reduce the high level of inflation and reduce the trade deficit. This programme was so successful that by 1979 the trade deficit had been converted into a surplus. These politicians were pragmatists who listened to the advice of outsiders and adopted an economic programme that was contrary to their political instincts.

Unfortunately this government of pragmatists lost the election to a party led by radical minded ideologues. They advocated a policy of Neo-Liberalism, which included as part of its policy manifesto the recommendation to adopt supply side economics. This meant freeing up resources from the less productive parts of the economy by closing them down. Capital and labour would them be freed from being shackled to old inefficient industries and be freed to be used by the new dynamic industries that would replace them. This it was they claimed would boost economic growth. What was talked about was the so called ‘weightless economy’ an economy largely devoid of manufacturing industry instead one based on the finance and industries such as the entertainment industry. These new industries would replace the jobs lost caused by the closure of the old manufacturing industries. The economy never developed in a way that these new economic prophets claimed.

At the beginning of their period in government these Neo-Liberals were warned by economists that there policies would lead to depression and the damage British manufacturing industry. Yet they were ignored by the new radicals, who knew this was outmoded thinking. The British manufacturing sector lost 20% of its capacity, with the consequent widening of the trade deficit. A deficit temporarily covered up by the wealth generated from the exploitation of North Sea oil. The old manufacturing centres declined, there was no rush of new money to so called new industries to compensate for the lost output from the old manufacturing industry.

What was damaging to the country’s economic prospects was new understanding in politics that the economy no longer mattered. Free marketers in government believed that economy was a largely self regulating mechanism that could be largely left to itself. All that was required was the occasional light touch on the tiller in the form of interest rate changes. What was once a major department in government, that of Trade and Industry now became a mere sideshow. Now industry could be left to run itself, no longer would government try to pick winners.

What these politicians had forgotten was the words of Maynard Keynes, there would be times when the government would be needed to save capitalism from itself. That happened in 2008/9 when the world financial system was only saved from the consequences of the financial crash by timely action of governments. Politicians learnt little from this crisis and continued the policy of non intervention. When I was a child one popular ornament was the China or brass three monkeys who epitomised the motto ‘hear no evil, see no evil, speak no evil’. This is the government’s current approach to all matters economic. No matter what wrong doing is practised by managers and directors, as in the example of Carillon, they do nothing. Even if individuals can do wrong, the belief is that the market as a whole can do no wrong.

In the now much discredited 60s and 70s there was a belief amongst politicians that the welfare of the nation was dependent on the well being of the economy. Whatever the political conviction of the politicians, they believed an interventionist economic policy was necessary to maintain the well being of the economy. When the economy was in danger of over heating it for example imposed restrictions on demand to prevent that happening. Perhaps the most famous is Selwyn Lloyd’s 1961 credit squeeze. Unlike today’s politicians they did not see inflation in the housing market as a good thing. This contrasts markedly with all governments of the past twenty years who regarded house price inflation as a good.

One consequence of this is the unfortunate lending programme of the banks. Today only about 6% of bank lending goes to manufacturing industry. In 2008 almost 80% of bank lending went to the property market, a figure which it is approaching today. The U.K. remains an economy in which the main driver of economic growth remains property speculation, while manufacturing industry the real creator of the wealth that matters is neglected.

Whatever experts might say or write contemporary politicians remain impervious to economic realities. Nothing of what I have written impinges on their consciousness. They now seem to inhabit a hermetically sealed world into which no outside thought intrudes. The leadership of the main parties are locked into an increasingly complex debate in which each of them strives to deliver the most authentic Brexit. That the Brexit promised by each of the leaderships is a fantasy, that fails to acknowledge any economic reality is of no concern to these politicians. In the words of one leading Brexiteer, the people are tired of experts and don’t what to hear what economists such as myself say. All that matters is the authentic voice of the people as interpreted by the Brexit politicians no matter how fantastic that interpretation.

The Economy does not Exist

Perhaps now being in my eighth decade I can look back with some perspective on society. While I must admit that wisdom does not necessarily come with age, one’s vision and understanding does sharpen over time. What becomes increasingly evident is the follies of mankind and in particular the politicians. One often repeated folly occurs when politicians say that … must be done for the sake of the economy. To their listeners it sounds impressive, but it is just yet another must say meaningless phrase that politicians say. The economy does not exist, it is not a thing as such. It is merely a word that economists give to a series of activities that create wealth, and the means by which that wealth is distributed. The crofter the Outer Hebrides and the investment banker in London will be included by the government statistician as being part of the British economy, but the link between the two is tenuous. Rather it is better to say that the economy is lots of different things that involve wealth creation and distribution, but it is no more than that.

There is a very simple example that illustrates this point. Government ministers take policy decisions that they claim are for the benefit of the economy, but which in reality damage significant sectors of the economy. British governments have pursued policies designed to keep the exchange value of the pound high. The reasoning being that as so many of our goods are imported from abroad, if foreign currency is relatively cheap compared to the cost of the pound, imports will be comparatively cheap. As over 50% of our food comes from abroad, it makes the fruit and vegetables in the supermarket cheap to buy. However this same policy is damaging to our domestic manufacturing industry. If the pound is expensive in terms of foreign currencies, it makes British exports expensive and foreign imported manufactured goods cheap. Consequently British manufacturers are hit twice, their expensive imports are hard to sell abroad and they are increasingly undercut in the domestic market by cheap foreign imports. This is why British manufacturing industry only accounts for 10% of national output (GDP) and why of all the developed countries the U.K. has the largest trade deficit as a percentage of GDP.

What I am trying to say is that by treating the economy as one thing, rather than several things, government economic policy making is condemned to be both wrong headed and damaging. Anyone looking back over government economic policy, will see a series of constant policy errors and misjudgements.Observing this record of failure politicians came to believe that a policy of doing nothing or as little as possible was the best policy option. From this came Neo-Liberalism and free market economics. There was an equally obvious conclusion that politicians could have drawn and that was that governments had been using the wrong economic policies or applying them correctly, which they preferred to ignore. Also it was a terrible misreading of history, a recovery from the ravages of war in 1949s and 50s was only made possible by the government regulation of the economy. Money was directed towards rebuilding the economy away from consumption. Rationing of goods was very unpopular, but it made possible the post war economic recovery.

Today the only economic policy measure used is monetary policy, the government believes that by controlling the supply of money they can best manage the economy. One way they control the money supply is through varying interest rates. Their reasoning is that of interest rates are low people will be encouraged to borrow more and the increase in the amount of money in circulation will increase the demand for goods and services so increasing economic growth. What they don’t understand is that a policy of cheap money can be bad for the economy. Interest rates are the price paid to borrow money and as such the price at which money is borrowed should be high enough to discourage foolish and silly investments. Unfortunately when money costs next to nothing to borrow it encourages many foolish speculative investments. As money borrowed today can buy shares that can be sold tomorrow at a profit. If only a higher price was charged for borrowing money such speculative punts would be discouraged.

Government ministers need to realise that a booming stock market is not the economy, but only one part. The froth on the coffee. When money is made so easily by speculating, why bother with the long term investment that business desperately needs. Such investment does not deliver the quick and astronomic returns of speculation, it only delivers in the future. Why wait several years for a return on your money when a speculative will deliver a profit tomorrow or the day after. Consequently the UK’s investment in infra structure is as low as that of the European basket case, Greece.

South Korea offers an instructive comparison. After the Korean War in 1951, it was a basket case. The country’s economy had been devastated by war. Now South Korea is one of the world’s major manufacturing nations. This was a country which the government actively interfered in the economy. What it employed was sectorial economics, in which the government decided on which industrial sectors to promote and how to support them. Samsung was originally a manufacturer of agricultural machinery, who following the dictates of the government concentrated on the manufacture of electronic goods. Samsung is now one of the world’s leading manufacturer of electronic goods. Neo-Liberal Britain’s last major manufacturer of electronic goods GEC disappeared long ago, after its directors made a series of foolish acquisitions.

The only large British owned and managed manufacturing industry is in engineering, where there are two remaining industrial giants. BAE and Rolls Royce. It is no coincidence that these two companies have been in receipt of government largesse in the form of defence contracts. Sometimes politicians cannot see what is in the front of their noses.

Obviously South Korea is not without its problems, it does as does all developed countries have a severe youth unemployment problem. However in ten years time South Korea will still be a major manufacturing nation of hi-tech goods, the same cannot be said of the U.K. Quite possibly it will continue on the path of slow decline, which has been its history this century. Only if politicians stop believing that there is an economy and instead acknowledge the economic reality, they might develop policies that promoted economic growth and welfare and not the reverse.

*This essay owes a considerable debt to Markus Gabriel’s book ‘Why World does not Exist’

The Dead Economist’s Society*

Politicians have constantly complaining about economists, usually for not giving them the answers they want. Only recently Michael Gove a leading Brexit campaigner complained that the people were fed up with experts. What he was complaining about was the fact that economists who had previously supported the government weren’t making the upbeat predictions about Brexit that he expected. The loss of these expert cheer leaders must have been galling.

Michael Gove is typical of many politicians in their misunderstanding of economics. While throughout the course of his political career economists tended to speak with one voice, that of the Neo-Liberal free marketers. Free market economists of the Chicago school dominated the universities and the professions and maverick economists were marginalised or silenced. Economics Journals now refused to print articles that did not fit in with the mainstream view. Only by exposing free market economics could academics hope for preferment in their profession. However that did not mean that economics had completely lost their integrity, all economists still believe that their subject is an evidenced based one. Surprising to the Brexiteers these economists could not agree that leaving the largest and most prosperous free market in the world was a good idea. Only the most ideological and extreme of economists could believe in the Brexit fantasy.

What economics has lost is it’s robustness. Although economists have as a profession tended to be of the right and free marketers, they have in the past accepted that there is a space in their subject for alternative voices. Unfortunately in the 1980s these alternative voices were suppressed. Their books disappeared from the university curriculum. Now these alternative voices are needed as the government seems to have emptied the basket of free market policy measures and needs an alternative approach to policy making. If only government ministers and their civil servants were familiar with the writings of the non free market minority of economists of the past they would not be short of policy alternatives.

One such past economist is Michael Polanyi. Michael Polanyi argued that the unregulated free market was the worst possible of economic systems. What he suggested was that the state could be better at second guessing what people wanted, than did the market. In a free market the rich and powerful have undue influence over how the goods and services that the economy produces are distributed amongst the people. Not only could they claim the lions share of the wealth, but they could also deny the majority a fair share of the nations wealth. The health care system in the USA provides an example of his thinking. There the well off can have access to the best health care in the world, but also deny access to adequate health care for the less well off majority. Health care in the USA is run by for profit health care providers. The poor have the most health problems but they are the least able to pay for treatment. Since the provision of health care to the less well off is a loss making service, it is not provided. The poor and less well off instead have to rely upon the health care provided by those hospitals run by charitable institutions. These institutions are poorly funded and cannot provide the best of care. Michael Polanyi would argue that health care is a universal good, as all have a right to good health care only a state run health care service can provide health care for all.

When only one voice is heard the result is bad policy making. Michael Polanyi has long since been forgotten and the government only gets policy advice from free marketers of the school of Friedrich Hayek and Milton Friedman. (However today’s politicians are ignorant of the latter’s seminal work ‘Monetary theory and the Trade Cycle’. A book which if they read, they would realise that he would regard their current policy of quantitive easing and low interest rates as wrong headed.) Now all too often government policy has been that of trying to fit square pegs into round holes. Every government embarks on a new policy to make health care more market efficient, each reform costs billions, yet is considered as necessary by each new government. Never does any health minister ever stop to think that their policy might be wrong and that there are alternatives to remaking the NHS into a faux free market, by continually dividing and re-dividing health service care providers into competing groups of buyers and sellers. Never do they consider that each new bureaucratic structure they impose on the NHS, is yet another costly diversion of resources away from front line services.

What economists know but politicians do not is that evidence demonstrates that a health service run by health care professionals is more cost efficient that its for profit alternative. For example health care professionals might adopt some wasteful practices such as the over ordering of medicines, but this is less costly than its alternative. If this over ordering is to be eliminated a new and expensive bureaucracy of stock controllers, accountants and financial controllers is required to take over the purchasing and distribution of medicines. The cost of these bureaucrats far exceeds the cost of any over ordering of medicines. In the well managed private hospitals of the USA administrative costs account for 40% of the costs of running the business. Unfortunately in the U.K. the government with its various reforms is trying to divert an increasing share of the health care budget to these financial controllers in the name of cost efficiency.

Although Michael Polanyi was once was a well known economist, he is now virtually unknown. Contemporary economists are overwhelming free market economists and little is published that is contrary to their consensus view. What is now needed is a ‘Dead Economists’ society. A society that will popularise the policy prescriptions of these long dead and forgotten economists. There are a number that I can recall such as Michael Polanyi, J.K.Galbraith, Piero Staffa and John Maynard Keynes. If politicians were familiar with Friedrich Hayek’s work other than his short populist text, ‘The Return to Serfdom’, they would realise that he would have been critical of much their ill thought out policy making. There are numerous economists who have written about solutions to many of the now problems of facing the U.K. economy, but ignorance of them means they are never considered. What politicians want are the simple easy to under policies of the type offered by the free marketers, they have little patience with good economic practice, as it can be difficult to understand and ones that do not provide the simple answers that make good headlines in the popular press. Donald Trump is not a maverick politician contrary to the mainstream, but rather the exemplar of a mainstream politician that has little time for the different reality that is the real economy.

What adds urgency to my writing is an article published by the Institute for Public Policy Research that the Bank of England which states that the government is ill prepared for the next recession. They have exhausted all the possibilities that can derived from expanding the money supply, through a policy of quantitive easing and low interest rates. What they state is that the government’s policy cupboard is bare and they now lack the anti recessionary policies to deal with any future economic downturn.

* I don’t wish to claim originality for my title. It is one that I have borrowed and adapted from Larry Ridener’s website, Dead Sociologists Society, one which I used to good effect during my teaching career.

Our Dirty Streets are not so much a consequence of Neo-Liberalism as the Poor Policy Choices made by our Politicians

As a fan of Scandinavia noir I am always struck by the cleanliness of the streets, which is such a contrast with the streets of the city where I live. Italy is always said to be a country where local government does not work, yet my experience of Italy is very different. When I stayed in Pisa, I would always come across the street cleaners when returning to my hotel late at night. Apparently the council was concerned that leaving rubbish uncollected in the streets would encourage rats and mosquitos. (Obviously there are exceptions, as in Naples where the Camorra control refuge collection.) British towns and cities seem to demonstrate a certain air of neglect, it is obvious that refuge collection is not a priority. What is not realised is that this dirtiness of the British city is not so much a characteristic of the national character, but a consequence of policy decisions of government.

This is a neglect imposed on local communities by central government consequent on it adopting the policies of Neo-liberalism. One of the tenets of Neo-liberal practice is that private enterprise is superior to public enterprise in the provision of goods and services. If however the state or local authority preferred to keep a service within the private sector, it should be run as if it was a private business enterprise. In practical terms this meant respect for the bottom line. If the private sector ethos was adopted by the public sector the same level of service could be delivered at a lower cost of the tax payer. Also these efficiencies in service provision meant that more could be delivered for less.

When working as a manager in local authority social services, I encountered this new philosophy first hand. The funding to local government had been cut and I was at a meeting with fellow managers to discuss how best to implement these cuts. This particular meeting was about home care; the local authority employed care staff to look after the elderly and the house bound. Our senior managers were enthusiasts for this new philosophy of work and had decided that twenty minutes of care would be all that any housebound individual needed. What we agreed on was a certain minimum of care that could be achieved in twenty minutes. Light dusting only was permitted in the room in which the individual spent most of their time. Using a vacuum cleaner to clean the carpet was forbidden, as it would take up too much time. There were a whole of list of don’ts, that is time consuming care activities. To ensure that the staff were not tempted to do more than the minimum, they were given so many clients to visit, that if they did more than the directed minimum, they would end up working more hours than those for which they were paid. This new service delivery scheme was regarded as a success as it mean fewer care staff were needed for home care, which meant a big cost saving for the local authority. What the housebound elderly or sick wanted was irrelevant.

A similar approach is applied to refuge collection. Funding for such has been cut by the central government to encourage the adoption of cost cutting efficiency As a fan of Scandinavia noir I am always struck by the cleanliness of the streets, which is such a contrast with the streets of the city where I live. Italy is always said to be a country where local government does not work, yet my experience of Italy is very different. When I stayed in Pisa, I would always come across the street cleaners when returning to my hotel late at night. Apparently the council was concerned that leaving rubbish uncollected in the streets would encourage rats and mosquitos. (Obviously there are exceptions as in Naples, where the Camorra control refuge collection.) British towns and cities seem to demonstrate a certain air of neglect, it is obvious that refuge collection is not a priority. What is not realised is that this dirtiness of the British is not so much a characteristic of the national character, but a consequence of policy decisions of government.

This is a neglect imposed on local communities by central government consequent on it adopting the policies of Neo-liberalism. One of the tenets of Neo-liberal practice is that private enterprise is superior to public enterprise in the provision of goods and services. If however the state or local authority preferred to keep a service within the private sector, it should be run as if it was a private business enterprise. In practical terms this meant respect for the bottom line. If the private sector ethos was adopted by the public sector the same level of service could be delivered at a lower cost of the tax payer. Also these efficiencies in service provision meant that more could be delivered for less.

When working as a manager in local authority social services, I encountered this new philosophy first hand. The funding to local government had been cut and I was at a meeting with fellow managers to discuss how best to implement these cuts. This particular meeting was about home care, the local authority employed care staff to look after the elderly and the house bound. Our senior managers were enthusiasts for this new philosophy of work and had decide that twenty minutes of care would be all that any housebound individual needed. What we agreed on was a certain minimum of care that could be achieved in twenty minutes. Light dusting only was permitted in the room in which the individual spent most of their time. Using a vacuum cleaner to clean the carpet was forbidden, as it would take up too much time. There were a whole of list of don’t, that is time consuming care activities. To ensure that the staff were not tempted to more than the minimum, they were given so many clients to visit, that if they did more than the directed minimum, they would end up working more hours than those for which they were paid. This new service delivery scheme was regarded as a success as it mean fewer care staff were needed for home care, which meant a big cost saving for the local authority. What the housebound elderly or sick wanted was irrelevant.

A similar approach is applied to refuge collection. Funding for such has been cut by the central government to encourage the adoption of cost cutting saving measures and the ending of what were seen as over friendly employee policies. The local authority can only manage this service by giving a time limit to each individual household refuge collection. Speeding up refuge collection is achieved by making householders take there bins on the pavement for collection. These refugee collectors know that if they delay themselves by collecting the rubbish strewn in the street, they will be unable to complete there work in time forcing them to work for free in their own time to finish their round. In consequence any difficult or time consuming tasks are left undone. Problematic streets or houses will be left untouched, as to tackle them would be take up too much time. Given human nature, the refuge collectors will be tempted to avoid the more difficult tasks claiming that it would contravene their terms of employment, which demands the minimum of time spent on each task. When the work practice emphasises quantity not quality, it is easy to understand why our streets remain dirty.

What has been had the most impact on the provision of public service provision is the self denying ordinance adopted by the politicians. The one that tells them that they should never interfere in the free market and that free markets work best if all power is ceded to the entrepreneur. If all entrepreneurs were gifted and benevolent this would be fine. Instead they have used this freedom from regulation and oversight to enrich themselves at the expense of society and the state. They have been given a licence to make money, a licence that imposes no obligations on them. Only today I read an article explaining how a property developer could make £50,000 a year. All they had to do was convert a house into a series of micro flats and charge the tenants exorbitant rents. This £50,000 would in come in part or wholly from the state. Either the tenants received tax credits to help pay their rent or the tenants received housing benefit which would be used to pay the rent. Only recently two major rail companies walked away from a contract the run the East Coast railway. The government never questioned there reasoning, it was sufficient for them to claim that the continue to operate the railway would cause them to lose money.

Rather than blaming Neo-Liberalism for this situation, it is the politicians who are to blame. They failed to have an elemental grasp of human psychology. If you give a group of powerful and ruthless people the freedom to act as they please, they will do just that. If profit maximisation is the sole motivating factor for running a service, the business owners will do whatever they can to maximise their profits. If reducing the quality of the service improves profits, that will be done. One illustration of this is a proposal by one of the privatised rail company was to strip all the seats out of the carriages in its commuter trains and replace them will diagonal resting places. This would have enabled the company to squeeze even more people on to its trains, increasing both revenue and profits.

Our politicians are as hapless babes in the cut and thrust of the market place. When a business tenders for a large contract, it incurs substantial costs in drafting that tender. If it fails to win the tender it will have to bear the cost of failed bid. Our political babes have allowed those who submit losing tenders, to sue them for the money they lost in preparing the contract. These naive innocents are quite happy to acquiesce in this most uncommercial of practices. The business men and women who compete for contracts for the privatised services have been more or less able to draft the terms on which they compete for government business.

What renders our politicians so helpless is that they have so decimated the civil service and local government in there desire to create a small minimal cost government, that they lack the staff who are either qualified or experienced to manage out sourcing successfully. Not so long ago the staff devising a contract for the running of a railway service, were so incompetent in their drafting and in the subsequent negotiations, that the losing tenderer was able to successfully take the the Ministry to court and win back the contract it had lost. It is not unknown that for a government so lacking in-house expertise, that it will turn to one of the large accounting companies asking them to draft the out sourcing contract. This same accountancy company could also be advising one of the companies bidding for that contract. With the out sourcing of government services to the private sector, it is always win, win for the private sector and lose, lose for the government.

Returning to the start of my essay the dirty streets of British towns and cities is a consequence of the adoption of least cost minimal service practices, associated with out sourcing and competitive tendering. This could be said to be a consequence of the adoption of Neo-liberalism, but really it’s down to the naivety of the political classes. To put it another way the wrong people are in charge of the provision of public services, people with the wrong mindset. When for those in charge the priority is the bottom line, non profit making services will be delivered for the lowest cost, even if that means the service is minimal and delivered barely acceptable standards. What is needed is the services to be put in the hands of those whose priority is to maximise the common good. Obviously cost efficiency is important but it should not be the main criteria for service provision. The least cost health care option is to provide no health care, but it is not necessarily the best option. measures. The local authority can only manage this service by giving a time limit to each individual refuge collection. Speeding up refuge collection is achieved by making householders take there bins on the pavement for collection. These refugee collectors know that if they delay themselves by collecting the rubbish strewn in the street, they will be unable to complete there work in time and will be forced to work for free in their own time to finish their round. In consequence any difficult or time consuming tasks are left undone. Problematic streets or houses will be left untouched, as to tackle them would be take up too much time. Given human nature, the refuge collectors will be tempted to avoid the more difficult tasks claiming that it would contravene their terms of employment, which demands the minimum of time spent on each task. When the work practice emphasises quantity not quality, it is easy to understand why our streets remain dirty.

A new and unusual solution to economic policy making. ‘Wittgensteinian’ Economics.

Recently I have been reading Ray Monk’s biography of Wittgenstein. In reading this book I realised that Wittgenstein’s approach to philosophy opens the possibility of there being a different approach to economics. What Wittgenstein is always criticising philosophers for is there constant search for the one grand theory, the unifying theory that answers all the questions. There was he argued no grand theory and it was pointless looking for one. This is an approach that I believe should be adopted in economics.

There is at present one theory that dominates economic policy making and that is what might be termed free market economics. One small book Hayek’s ‘The Road to Serfdom’ is the origin of all current thinking on economics. Usually today it is known as Neo-liberal economics, an economic philosophy associated with the political right. Although there is a left of centre variant, new Keynesianism. Proponents of the latter claim to have rediscovered in Keynes writings his love for the free market and put to one side Keynes radicalism.

Keynes radicalism was the consequence of his despair at the misguided policy making of the governments of the 1920s and 30s. Usually the policies of the 19th century Parisian commune are ridiculed by economists. One policy that was held up to ridicule was the policy of having the unemployed dig up the paving stones, only to replace them later. The unemployed were paid a wage for this work. Economists saw this as a foolish waste of money that did little to improve the economy. However as Keynes pointed out this created an income for the unemployed and that there spending could help bring a dormant economy back into life.

What this illustrates is that Keynes was asking a different question to that asked by his contemporaries. He was trying to find an answer to the question, how do we bring to an end the misery of mass unemployment? His academic colleagues were asking a different question, how do we restore a dysfunctional economy back to being a fully functioning one that will in the long term work to the benefit all? Different questions have different answers. While Keynes advocated greater government spending to increase the demand for labour to reduce unemployment; they wanted to cut government spending, believing that only a prolonged period of sound finance and balanced budgets could create the strong economy, an economy which would eventually generate new economic growth and so ending the time mass unemployment. All this government could say to the unemployment was to have patience, as eventually the economy would pick up and they would have jobs. Keynes had one answer to this policy and that was in the long run we are all dead. There was also the unspoken assumption that growth generated by Keynes spending policies would be bad growth, whereas the economy eventually moved into the upswing in the trade cycle that this was good growth. A set of unprovable and dubious assumptions

When George Osborne adopted a similar policy in 2010, that of fiscal consolidation, cutting government expenditure and balancing the books, he repeated all the errors of the politicians of the 1920s and 30s. Mass misery, although this time not caused by unemployment, but low wages and the insecure employment of the ‘gig’ economy.

Wittgenstein’s last book was ‘Philosophical Investigations’ crystallised my thinking on economics. Rather than believing that there was one grand unified theory of economics, there are series of economic investigations which belong to one family, as they all bear a familial resemblance. The economy as subject matter is the familial resemblance. He also writes about the grammar of philosophy, which provides the format or structure for ensuring that the correct questions are asked or the correct philosophical investigations undertaken. What is the nature of good is an incorrect question. The correct question is what actions are understood as good. Asking people what is good is silly, as anybody when asked that question could give numerous examples. They understand the concept good, what they don’t need is a philosopher telling them what good means. Philosophers when asking this question brings itself into discredit, as the answer is either I don’t or a definition that lacks application or validity to everyday life.* Politicians are also failing to formulate their questions correctly. What they ask is that asked by the politicians of the 1930s how can we the economy to health. What they should be asking is a series of questions about the economy, such as how can unemployment be reduced, when looking for policy solutions to all these individual problems they will be answering the big question, of how can we restore the economy to good health.

I can give examples to demonstrate my thinking. The British economy has a number of dysfunctions within it, but ones that the Neo-Liberals believe only require the one solution. These dysfunctions are:

• Slow and anaemic economic growth

• The highest trade deficit as a percentage of GDP for a developed country, as a consequence of a shrinking manufacturing industry

• An unbalanced economy, one in which the financial service sectors are booming and manufacturing is in slow relative decline, an economy also unbalanced in that the southeast and London are experiencing high growth and incomes while the other regions experience the reverse

• An economy that is increasingly failing to deliver for increasing numbers of people, who are denied the essentials of a good life, that is fair incomes, secure employment and good housing.

• Income inequality is now approaching those levels last seen in the dismal 1930s

• The economy is increasingly subject to speculative booms and busts in the various asset market, usually such busts originate in the property market

• A country which shares record levels of indebtedness with Japan. The majority of British debt is private sector debt, which an upward shift in interest rates could make unsustainable, as too many households would have difficulty managing their debt repayments

There are other dysfunctions that I could add to the list, however I had to end the list somewhere. Only today Areon Davis (Reckless Opportunists: Elites at the end of the Establishment) has in today’s Guardian newspaper outlined a different set of market dysfunctions, which could result in a repeat of the 2008/9 financial crisis. Yet the Neo-Liberals politicians always resort to the same set of policy options to deal with each of these dysfunctions. They are

• Vary interest rates, either lower or raise them

• Reduce regulation on business, thereby reducing the regulatory role of the state

• Cut taxes and government spending

• Recently they have added a new measure – quantitive easing, that is increasing the supply of money to the banks

What the British economy requires is a different set of policy options for each of these major dysfunctions. Why do these politicians believe that the same policy options should be prescribed for each policy? A doctor prescribes antibiotics to treat a bacterial infection, he would not use them a patient that suffered a cardiac arrest, yet this is exactly what the government does with economic policy making. It’s always the same prescription, whatever the problem.

The economy is a dynamic organisation that is constantly changing and each change in the economy offers new benefits or brings to the fore new problems. There can be no one theory of everything, while Neo-Liberalism offers some policy options suitable for some problems, that is all it can offer. If instead politicians realised that each new problem the economy threw up was asking a new question of them and not just some variant of an old question policy making would improve. To paraphrase Wittgenstein, economics is a series of investigations that ask different questions, each of which requires a different response.

*I am aware that my brief paragraph does an injustice to Wittgenstein’s thinking, as I have taken elements from ‘The Brown and Blue Books’ and ‘Philosophical Investigations’, which are dissimilar books written at different stages in the development of Wittgenstein’s thinking. However to do so suited my purposes.

Why I am such a poor economist

Actually I think I am quite a good economist, but I fail to match up to the standards by which professional or academic economists judge other economists to be good. This failing in my practice of economics began to develop in 1966. Then I was appalled by an article I read, which was written by two economists from my university advising the government of the island of Mauritius on how to improve their failing economy. It was a blue print for the most severe form of what today would be called Neo-Liberal economics. A reform programme that if implemented would have impoverished thousands if not millions of Mauritians. There was also a professor at my university who advocated an increase in unemployment as the best means of ending the inflation that beset the British economy of the 1960s. Today most academic economists now see increased unemployment as a useful policy tool in management of the economy. Then in the 1960s, it was heresy, as too many people remembered the misery caused by the mass unemployment of the 1930s.

Unemployment has always been seen as a necessary feature of a functioning market economy by economists. They believe that a certain level of involuntary unemployment is a required to make the market function efficiently. If there are people unemployed there will always be workers available to for expanding firms to recruit and there will always be workers made newly unemployed by failing businesses. Unemployment when explained in these terms can be seen as justified, as the free market model suggests that there is but a short time in which workers remain unemployed. Unemployment then is a short term pain suffered by a few, their temporary period of pain was for the benefit of all.

However the economy never worked in the way described by economists. There were a number for whom unemployment was a temporary situation, but there were many for whom unemployment was for the long term and who were subject to life of poverty and misery. What economists failed to take into account was there was always a mismatch between the location of  unemployed workers and the location of the expanding businesses. Large scale unemployment always occurred in areas where many businesses were failing or where many had already failed.

Economists had an answer to this problem, the unemployed workers should move to the areas in which there was work available. This is a solution of unbelievable callousness, it treats people as if there were a resource similar to other non human factors of production. One that should be used as the business though fit. Never have economist recognised the inhumanity of their policies. One can be sure that all economists are unfamiliar with Steinbeck’s ‘The Grapes of Wrath’. A book in which he describes the miseries suffered by the ‘Oakies’, the people forced off the land in Oklahoma by the Great Dustbowl and forced to look for work in California.

What makes me a bad economist is that I can’t accept the inhumanity of my subject. The golden rule of economics is that labour or humanity is just a resource like any other and should not be treated differently. This is very much the accepted rule today. It is unusual to find any economist speaking against the closure of any business and the unemployment it creates. All they see is human resources freed to work in more profitable sectors of the economy, the recent spate of closures of retail businesses to economists just part of the structural change in the economy. Put simply online competition in the retail trade has forced many high street shops to close, which they see as a consequence of the essential restructuring of the market.

One might add that in a British economy that is struggling there are few of the profitable sectors of business that will recruit these workers. Usually redundant workers find work in which they are paid an average of 30% less than in there previous work. Skilled workers are forced to take relatively low paid work in call centres and warehouses. There is no happy ending to a period of unemployment that the economist claim.

There is to an economist such as myself (one who sees unemployment as an evil to be avoided wherever possible) an alternative explanation for the closure of these high street shops. For me an equally important factor in this situation is the inflexible and dysfunctional commercial property market. The shops are always situated in central areas of towns or cities where the shop sites command premium rents. Economic theory states that when the demand for a resource declines its price should fall. Recently the House of Fraser appealed to its landlords for a reduction in their shop rentals in light of there falling profits. There landlords will ignore their plea and continue to demand sky high rents. All these city centre or high street sites are owned by large property companies whose only concern is to extract the maximum possible rent from these sites. It matters little to them if the shops fail and thousands lose their jobs. What matters most to them is the rents remain high, even it that means the site remains vacant. These people are eternal optimists and will wait as long as it takes to find a new tenant who will pay there extortionate rents. What makes me a bad economist to my peers is that I would seek a different solution to the problems of the failing high street. The solution for me is to introduce some form of rent control, there are plenty of mechanisms that can be used to ensure that a fair rent is charged for a property. This would benefit the economy as it enable many viable businesses to survive that would otherwise be put out of business through excessively high rental costs. Also it would preserve many thousands of jobs that would otherwise be lost.

Before anybody criticises me for being unfair to the commercial landlords through forcing them to let properties for uneconomic rents. It should be noted that all our city centre properties are owned by a few large property companies. These companies operate an informal cartel in which they co-operate in their self interest to maximise their rental incomes. In the past it was quite usual for such cartels to be regulated by the state to prevent them from abusing their powers.

Where I differ from so many economists is that I believe that policy measures or economic practices that create unemployment should not be a first resort. The first option businesses consider to increase profits, should not be to shed staff. The hollowing out of a business whereby labour costs are reduced to a minimum through shedding staff and premises closed to reduce costs to increase overall businesses profitability should be made difficult to undertake*. When hollowing out of a business occurs it is not just the staff who suffer, but the customers who experience poor customer service or a reduction in the quality and range of goods on sale.

The problem for me is the inhumanity of much economic theory and practice. I cannot accept economic policy and business practices that damage society’s well being as ever being justified. Not only is much of current business practice as sanctioned by economics harmful to individuals but it is also harmful to the state. When workers are paid wages that are insufficient to support themselves and their families, the state has to step in to provide in work benefits. The cost of these in work benefits are very substantial and represent a huge subsidy to bad employers, as state struggles to ensure that these low paid workers get a living wage.

What I have to answer is why economists are so indifferent to the suffering of their fellow inhumanity. Why don’t economists care? The answer I think can be found in the writings of Wittgenstein. He introduces the concept of the language game, language for him is not universal there are groups with society that have their own language or language codes which have meanings that are understood only by them. One such group are economists we use words and phrases that have no meaning to outsiders, such as monopsony, giffen goods and zero lower bound. Some I can easily explain to non economists others I would find it practically impossible so to do. Economists have their own unique language embedded in which are truths only known to economists. The supreme good in which economists believe is the free market. The greatest gift that mankind gave to itself was the creation of the free market which ensures the most efficient and equitable distribution of goods and services. All economic policy making should be directed towards ensuring the most efficient operation this free market. Other economists such as myself that don’t share this belief are dismissed as poor economists.

There is one example from the 19th century which best demonstrates how economists think. When the Irish potato famine was at its height in 1846, the government suggested that it should import wheat from Russia to distribute to the starving Irish. Economists, landowners, land owing politicians and farmers objected. It would be an interference in the free running of the market and no good ever comes from government intervention in the market. Governments they said do not understand the workings of the free market. These objectors argued it would lower the price of wheat in the British market and put British farmers out of business. This they argued it would be bad, as it would reduce the number of farmers working in the industry and reduce in the long term food production in the British Isles, so causing problems in the future. Anybody familiar with Irish history knows that the government rejected the proposal to import wheat to feed the starving Irish, preferring to let them starve. To those who would say this is an unfair depiction of the mind set of economists, my rejoinder is that they know nothing of the thinking of the economists employed by HM Treasury.

Economists always have a defence against the claims that the practice of economics is an exercise in inhumanity. They will claim that the free market will in the long term provide all the benefits and goodies that it is possible for an economy to provide. All that is required in patience however Keynes provided the best retort to this thinking he said ‘that in the long run we are all dead.’

*One easy means of making hollowing out a less popular practice, would be to reintroduce the employment protection policies of the past, such ending the practice of zero hours contracts and other short term employment contracts that make it easy to dismiss staff. Re-introducing fair redundancy payments for dismissed workers would be another.

When a visitor encountered the philosopher Democritius* in his garden, he to his surprise found him laughing uncontrollably. When asked why he was laughing, he said it was at the follies of mankind. If Democritius was living today he would have found plenty to laugh at in the follies of our leaders.

One of the more interesting of the Greek philosophers was the sceptic philosopher Pyrrho. This was a man so sceptical about the possibility of there being such as human knowledge, that he did not bother to look where he was going went he went walking, as he thought that if he was going to fall into a ditch there was little he could do to prevent it happening. While this story recounted by Diogenes Laërtius is apocryphal it does illustrate quite clearly the nature of his thinking. As all human knowledge was fallible, he said that we should be wary of putting too much trust in the great systems of the philosophers that claimed to ‘explain everything’. Why I value Pyrrho is he an  antidote to stupid thinking. Whenever I contemplate the latest popular fashion in contemporary thinking, I always think of Pyrrho. I am wary of the latest popular enthusiasms, whether it be for hygge, Gloop the philosophy of Gwyneth Paltrow or Neo-Liberalism, as on examination they all seem to rest on similarly filmsyl foundations.

Unfortunately politicians with a naive belief in rightness of free market economics are particularly prone to such stupid thinking. The politicians of the New Right,  despite their claims to realism are often the enthusiasts for the silliest of ideas. One such is the idea that the when the UK leaves the EU it can install an computer based system to record all foreign trade transactions. This scheme will operate so efficiently it is believed, that traders will find litle difference betwen the new trading system  and the current regulation free trade system. Traders will find it as easy to move goods in an out of the country as they do at present. The only flaw is that there is no such system anywhere in the world and the record of governments installing new computer systems is one of failure. This government has spent seven years trying and failing to introduce a computer system to pay benefits, the much derided universal credit system. If this scheme in which all the recipients of this benefit are already known and yet the government finds it impossible to get the scheme to work effectively, how can it possibly develop an IT scheme that will be able to handle the thousands of daily transactions that make up our international trade. Already the fallibility of the HMRC computer system enables thousands of people to avoid paying tax. Yet even although they know this, these Brexiters claim that they will be able to introduce a new marvellous IT system which will have none of the failings of any of its predecessors.

What Pyrrho would have advised these politicians and economists of the New Right to do; would have been to look at the past history of government failure in the procurement and introduction of new IT systems. This would have reminded the Brexit enthusiasts that there has never been a government IT scheme that has not been a magnificent failure.

If they were not convinced by that, he could have told them to look at the problems of IT in the defence system.  The operating system in our new aircraft carries is Windows XP, an operating system so outdated that Microsoft has stooped supporting it with updates. The vulnerabilities of this operating system were exposed when hackers (from North Korea)? were able to shut down so many of our hospitals that relied on this as an operating system. Also the broadband speeds available to these carriers does not exceed 8mb, a speed slower than most household broadband systems.  Pyrrho would have told these politicians to stop being foolish and indulging in stupid fantasies and instead address the reality of the real world of flawed computer systems.

Why blame economists when all the failures that I have outlined are those of the politicians? Quite simply because all these politicians of the New Right and our Brexit are believers in the economic philosophy called Neo-Liberalism. Neo-Liberal thinkers such as Friedrich Hayek and Milton Friedman have taught that mankind has invented the best possible of social institutions and that is the free market and that the role of politicians is merely to ensure the smooth operating of this market.

It would be anathema for these politicians to install customs barriers at our sea and airports, as that mean introducing a barrier into the smooth working of the free market. Their philosophy then poses for them an unsolvable problem. Having decided that the UK must leave the free trade area that is the Single Market and the Customs Union, how do they introduce customs barriers that are not customs barriers? They know that once they introduce customs checks on imports and exports at Dover, they face the possibility of there being long tailbacks of traffic. Some estimates state that these queues will be up to 15 miles long. Now having introduced a problem that has no solution, they resort to a fantasy answer. The IT system for exports and imports that they propose only exists in the realms of their imagination, it is incapable of an existence in the real world. Its nonsense but nobody in government wants to admit to this.

What puzzles me is the great majority of these politicians who are enthusiasts for this scheme studied philosophy at one of our elite universities as part of their Philosophy, Politics and Economics degree. Even although scepticism is not the fashionable mode of philosophy in our universities, philosophy departments do boast that they teach their students critical thinking. Obviously our politicians of the New Right seem to think that this is a skill that only applies to essay writing.

*Democritius was a philosopher who lived in the fourth century BC in the cityl of Adbera, Greece.

My Cursed Generation – the Baby Boomers

Seeing my nephew and all the other students graduate at his university produced within me a number of  mixed emotions. A pride in his success and that of the other students was mixed with a sense of despair about the world which they are about to inherit. While as individuals we have not been directly responsible for the actions of the powerful business corporations who with their political allies have been responsible for the devastation that they have wrought on the social fabric of our society; my generation has been complicit in support their destructive actions by giving them our support at the ballot box. In the last general election my generation overwhelming voted for the parties of the right. The parties whose policies are characterised by selfish individualism, greed and hatred of modernity. The vote to leave the EU was just one expression of this hatred of modernity. While we claim that we dislike European immigrants taking jobs away from our young people, what we hate more is the diverse ethnic makeup of our cities, which we associate with modernity. When a leader of the ‘leave Europe and hate modernity’ party complained that when he travelled on a train to London he could not hear one English voice amongst the speakers he was speaking for far too many of my generation.

I call my generation the  ‘cursed generation,’ because we were cursed by being born into wealth. Not the great wealth of the rich but a relative wealth, we were all aware how lucky we were not to have experienced the hardships of our parent’s generation. I can remember my father telling me that his family only had meat one day a week. On other days they had to resort to cutting for themselves a piece of ‘chitlin’ which was a slab of cured pig fat hanging in an outhouse. As a child I had meat every day of the week, even if some of those meals were of low quality meat. The English sausage which was a stable of so many meals in the 1950s contained almost as much bread as it did meat. We all knew that compared to our parents we were the privileged generation. It was this sense of privilege that was corrosive of our sense of collective morality.

All the belief systems of the past that had motivated our parents generation to work for a better Britain died in our generation.Being the generation of wealth we developed our own new beliefs. Ours was the generation of the teenager, a generation that had the money to spend on clothes and entertainment. When our parents were teenagers their appearance mirrored that of their parents. Their teenage years were for them but a short introduction to adult life. My father was at the age of 14 given the job of stacking the hay bales after harvest. It was an unpleasant job as mixed with the hay were thistles that priced the skin. He could not wait to get an adult job and leave behind his childhood. There was for him and millions of others no teenage.  Unlike my generation for whom it was a period of privileged irresponsibility. We could go out in the evening to clubs, buy fashionable clothes (which our parents hated), we were not overburdened with the sense of earning the income necessary for survival. Somehow this sense of childish irresponsibility never completely left us with the onset on adulthood. We were the first generation of child adults. The respected behaviour was one of self indulgence. We spent money on clothes, home entertainment and foreign holidays. Very much like the monied aristocracy of the past we became a generation of self indulgence. What mattered to us was how we spent our money, what had been the great issues of the past faded into insignificance.

A political ideology developed which mirrored the childish self indulgence of my generation, that of the New Right. The individualist philosophies which gave expression to our self indulgence were the philosophies of choice. What they damned was the corporate state, the state which provided had good quality social housing, ensured employed rights at work. They portrayed the laws and regulations of the good society as so many restrictions on individual freedom. A philosophy which won wide support among the baby boomers. When the Labour party in 2015 proposed a wealth tax on the most expensive of properties, the baby boomers uttered a collective expression of rage, as they were the prime beneficiaries of the housing boom. It mattered little to them that this money would go to fund local community services. If chance had increased the value of your house to £4 million, you claimed instead that the increase in value was due to your work in improving the house and that they state had no right to tax you for enjoying the benefits of your hard work.

One of the strange successes of this policy of freedom was the almost completer removal of state supplied social housing in many desirable areas. The ‘right to buy meant that tenants in local authority housing were able to buy them at a discount. Now thirty-seven years after the policy was introduced a majority of those houses are now in the hands of buy to let landlords. Now the tenants in these properties are forced to pay exorbitant rents and suffer anxieties of insecurity of tenure. Governments privileged potential landlords further by giving them the right to remove their tenants with only two months notice and so effectively ending tenants security of tenure. Right to buy has disadvantaged social housing tenants through denying them low cost housing and security of tenure. What the philosophers of the right failed to explain was that their philosophies of choice would privilege only a few individuals, the rich and powerful not the great majority.

Given the childish self indulgence of my generation it is not surprising that the newspaper, that so many of them choose to read was the one that deliberately crafted in message in a format that could be read by a child. Initially the owner of this most popular of papers insisted the articles in his paper should be written in the language that could be understood by the average thirteen year old. Today it has  been so dumbed down that the wording of its articles is that which could be comprehended by a seven year old. What better newspaper to popularise the political philosophy of individualism and self indulgence?

The political philosophy of these newspapers is very much that of the playground. When a child you want to belong, and you belong you must be a member of a gang. These childhood gangs have criteria for acceptance, criteria that must be met by all members. They have a definite sense of who cannot belong, who must be excluded from the gang in our to maintain its identity. If anybody could become a gang member the gang would cease to exist. Similarly our tabloid press identifies those who have a right to belong to the British gang and those who don’t. The don’ts are the poor, particularly those on benefit, European immigrants, particularly those of the East and European politicians of all sorts. All those who pose a threat to the British gang’s identity are to be excluded from membership. Just as children do, these papers subject the ‘outsiders’ to all kinds of abuse, reminding them that they are not wanted in the British gang.

Although mine was the self proclaimed generation of the age of Aquarius, that was an illusion. Instead it is the generation that disliked all that the Age of Aquarius brought with it. The disproportionate voting of my generation for Brexit and the Conservative party, is nothing more than the expression of this dislike.  I recently read an article by Thomas Franks about Republican supporters of Donald Trump which I think best explains this phenomenon. What we remember of our childhood was that it is was one of security, prosperity and endless summer holidays. Part of the reason for our roseate memories are that as children we were protected by our parents from the nastiness of society. However it was also a time of full employment, good wages and good housing for all who needed it. All that has vanished from society largely due to the rapacious behaviours of the large business corporations and their political allies. Yet rather than apportion blame were its due, we lay the blame at the feet of modernity. Modernity for us is the most visible expression of the modern bad times. As a group we dislike the ethnic mix in our big cities, we want to return to the security of our childhood. A childhood in which all the people were white ethnic British, as it as a time of job security, fair wages and the many other things that we associate with the good society. All of which are lacking today, so we think if we return to the past we will get all those good things that we had then. A belief not so dissimilar to those much derided cargo cults of the Pacific Islands. Instead of worshipping Prince Phillip and waiting for him to return and return all the wealth stolen by the Europeans, we worship the past and believe if somehow we could return to it, we would be able to return to the good society of the past.

I do believe that it is my generation’s innate sense of childishness and its nostalgia for a fondly remembered past, that makes it so susceptible to the siren appeal of the stories of the New and Alt Right.