Economy & Finance Left Politics Neoliberalism

Reimagining our Economy

Our economy is broken. Capitalism is not stable. It never has been and was never designed to be. Indeed, David Harvey describes very effectively through his analysis of the Crises of Capitalism, with capital seeking ever greater returns, destabilising the system in the process. And despite what Theresa May might wish to be true, austerity is certainly not over. 10 years after the financial crash we continue to see widening inequality, increasing climate precarity, and all the other horrendous consequences of the almost total implosion of our financial system. It seems timely, 10 years after the crash that has defined my and many others’ political life, to explore the roots of the crash, and consider where we need to go now.

I think the root of the crash lies in how society has understood, over the last few decades, and in many ways, how we still understand, democracy: our understanding of what democracy is has determined the approach to the economy.

Democracy has, broadly speaking, two definitions. It is the freedom of people to choose their government. And it is the freedom of consumers to choose within the market, thus determining how capital is allocated. The fundamental difference between left and right is that the left believe the first should be given primacy, whilst the right focus almost exclusively on the latter.

And we see this represented in our global politics: funny how the neoliberal West supported dictatorships like Pinochet, Suharto, and others, because they were market authoritarians. And we see this in rightwing Brexiteers’ desire for Brexit Britain to be like Singapore – a free market authoritarian state in which the government overrides democracy to oppose fracking and then jails those who resist. At the same time, democratically elected leaders who sought to curtail the market were and are described at dictators.

In the late 1980s/early 90s, the resolution of this conflict between left and right was political formations like New Labour in the UK, the New Democrats in the US, Die Neue Mitte in Germany. And of course, then came the collapse of the Soviet Union: the right had won – the free market was victorious. Democracy was about people as consumers operating in an omniscient market, rather than as citizens being served by the economy. History was over.

And the left has flailed ever since. We were totally unprepared, because of the general acceptance that history marked by political conflict was over. Following the fall of the USSR there was a deep intellectual crisis on left: there was no meaningful alternative to the notion that the market was the way to do things: there would be taxation on market activities to pay for public services – that was pretty much as far as the left could get. We see New Labour and other ‘third way’ formations accommodating big business, and the often nefarious activities of the City to support the interests of capital, and provide crumbs off the table for those who wanted public services, hospitals and schools being built under PPP/PFI schemes. The crisis has outlasted some of these schools – some have, literally, fallen down.

In 2008, we did not have the appropriate analysis to counter the response to the crash. However, we have now begun to develop some of the tools required to tackle the dominance of the market. Many of the problems have come through inequalities not just in income, but in wealth and assets, which are largely inherited rather than earned. The work of Thomas Piketty, Kate Pickett, Richard Wilkinson and others show us that this is how we’ve ended up with so much inequality, and how this inequality is bad for everyone.

So, what is to be done. There are three broad areas we need to address.

First, we must understand the shift in capital accumulation from productive areas of the economy into rentier accumulation. Organisations like Living Rent and Acorn are tackling the power of landlords as the focus of accumulation shifts to ownership of accommodation because returns from productive capital have collapsed. As this shift is happens in other sectors (like Uber and transport), so we need new strategies to deal with the move away from capital owning machinery that workers need to use to earn a living, towards capital owning the things and the systems and processes we need to lead our everyday lives. It is no longer through labour that the rich are making themselves richer.

Second, we know that the new models of employment that are emerging (zero-hours contracts, gig economy jobs, etc.) are extremely precarious, and are undermining what we traditionally think of as “the workplace”. This undoes much of the work done over the last few decades on things like Equal Pay and Minimum Wages: (bogus) ‘self-employment’ makes those advances redundant. We must find new ways of organising workers in these areas, and we need to find new ways of capturing these business models. We need platform co-operatives for this new age of platform capitalism.

Third, we must consider commons, which takes us beyond the financial crash. Commons are things we all share, but that are very difficult to own, like our atmosphere and the global climate that it creates. Even for the most enthusiastic advocates of the free market, it is difficult to account for the costs imposed on others through these commons. We must develop ways of governing commons at a global level, but also more locally. This requires deep democratisation of our economy and society, and action at a global level.

There were claims in 1991 that the defeat of the Soviet Union marked the end of history. We now know that this was not true – history is very much back with us. Over the next 10 years, we need to lead the argument on workers control, on reclaiming our commons, and on building movements that help to make it true that not only is another world possible, another world is imminent. The 2008 crash was, if you like, the beginning of the end of the end of history. Long live history.

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