To win power, the left must build a narrative around ending privatisation, empowering the workforce and borrowing to invest. To stay in power, left governments must transition towards an economy based on high automation, shorter working hours and free services. 

***

After Trump, Brexit, the formation of a right wing coalition in Austria and now the M5S/Lega government in Italy, the way the current era might end is becoming clearer. Right wing populism demands an end to migration and offshoring. Right wing conservatism, in response, harnesses the populist into a programme of nation-centric free-market economics – call it “Thatcherism in One Country”.

Meanwhile, Russia’s perennial hybrid warfare against Western democracies opens up the social fissures within them even further.

The G7’s failure to commit to a “rules based global order” after Trump’s walkout then presages the actual paralysis of multilateral institutions. At worst the EU, NATO and the Eurozone fall apart.

Of course, it’s possible to imagine that the populists, the demagogues and their right wing, authoritarian voters suddenly become exhausted and satisfied with the world as it is. But it is much easier to imagine that the anger of their voters escalates, that democratic institutions become frayed and discredited, and that the nerves of liberal technocrats crack.

Either way, the project I am trying to outline in this series – namely the programme, philosophy and moral basis for a radical social democracy in the 21st century – has increasingly to be conceived as a plan for picking up the pieces, not the deepening and extension of an essentially stable system.

In my book ‘Postcapitalism’, I argued that information technology creates the possibility of a long transition beyond market-based societies towards an economy based on relative abundance, high automation, low work and free utility produced by network effects. This remains, for me, the 21st century equivalent of the “maximum programme” adopted by social-democracy in the 1890s.

However, the crisis of the short-term demands answers – and better ones than the re-treaded Keynesianism on offer from the traditional social-democratic left.

A programme of immediate, “minimum” actions and principles – which social democratic parties across Europe and North America could sign up to – would have at its heart two twin aims:

1. to revive economic growth, prosperity and social cohesion in Western democracies; and
2. to defend and deepen their democratic rights and institutions.

It would also need to contain elements of “transition” – though not of the kind originated by the Communist International in the 1920s and later associated with Trotsky’s Fourth International. Then the aim was to introduce elements of planning and workers control into the programmes of left governments, moulded around scarcity. Today the transition path has to embrace the potential for abundance contained in information technology and, of course, to deal with climate change as an urgent issue.

So the core issue for those who want to radicalise social democracy is: what kind of capitalism is it possible for us, in these conditions, to create?

Before attempting an answer I want to recapitulate the argument of my previous essays in this series for openDemocracy:

• To solve the problem of working class atomisation, and create a narrative for social democracy, the British Labour party and other social-democratic parties should focus their efforts on achieving a tangible upward movement in incomes, health, lifestyles and prospects for working age adults over the next 10 years.
• To solve the problem that globalisation empowered corporations while limiting the sovereignty of electorates, we must be prepared to retreat from extreme globalisation, into a “second trench”, consisting of national economic policymaking in the context of international solidarity, abandoning certain supranational regulations deemed currently to have the force of eternal law.
• To solve the problem of agency, we need to understand that oppression and exploitation take many forms in late-neoliberal capitalism, and that the movement to deliver a progressive government will most likely be a tribal alliance of people adversely affected. In that alliance, the traditional working class and labour movement structures will exist, but will not have hegemony; where working class culture has been inverted into a form of nostalgic ethno-nationalism, the movements and demands it produces will have to be resisted.

In Britain, the practical implications of the above are for Labour to seek a progressive electoral or governmental alliance with the Greens and left nationalists; for a rapid rise in real disposable incomes to be the number one deliverable of a progressive government; and for that government to fight for the reform of all multilateral treaties or obligation that stand in the way of social justice – whether it be the EU or the World Trade Oraganisation.

But what, practically, should a left-wing government do, and in what sequence? The answer to this is not obvious from reading Labour’s 20,000 word 2017 general election manifesto – detailed though it was, nor from the 100+ bullet points that formed the manifesto of Podemos. Nor even the 83 chapters of L’Avenir En Commun, on which Jean-Luc Melenchon fought for the French presidency in 2017.

None of these documents reads like a battle plan; in fact, they read more like an infantry manual full of standard procedures, rules and principles. None was likely to survive contact with the enemy if the parties that produced them had gained power.

To transform capitalism rapidly in the direction of democracy and social justice, you need a linked series of actions – and a project-management understanding of their synergies and interrelationships.

***

Day One

What should a left-wing British Labour government – or a Podemos-PSOE coalition, or a France Insoumise presidency supported by the trade unions and the remnants of the socialist party – do on their first day in office? The obvious answer is: survive the financial market backlash. If you observe the market turmoil caused by the possibility of a far-right/populist alliance in Italy, you get a taste of what’s in store for a government of the radical left.

The clear danger lies not just in the kind of capital flight experienced by France under Mitterrand in 1981-83, but flight on a scale resembling the “sudden stop” phenomenon that plagued Latin America and parts of Asia in the mid-1990s, and which have re-emerged in the post 2008 period (sudden stops have been defined as a sudden reversal of capital inflows causing GDP to decline by the order of around 6% in a twelve month period).

Almost everywhere a left government is conceivable, financial markets would be capable of mixing a rational aversion to risk with speculative and politically-motivated capital movements to cause the currency to plummet, growth to tank, and foreign exchange reserves to be depleted, demanding central bank action to counteract the declared programme of the winning party.

It is this – not a rerun of the coup against Allende in Chile in 1973 – that left governments need to be ready for.

François Mitterrand during the 1981 presidential campaign. Image: Jacques Paillette, CC BY-SA 3.0

Of the four remedies usually chosen to combat a sudden stop – fiscal policy, monetary policy, currency depreciation and pro-market structural reform – the last is a non-starter for a left government. With capital controls ruled out except in extreme circumstances, any left party contemplating power has to wargame how it might use reserves, monetary policy, fiscal expansion and currency maneuvers to sit tight through the average three to four quarters most sudden stop episodes last for.

I don’t intend to wargame such tactics here. They would have to be highly time and country specific. Suffice to say, as left governments appear on the brink of power, their right wing nationalist and neoliberal centrist opponents are likely to try to tie their hands, for example by running down reserves.

What is certain however, is that from Day One a left government taking power has to give as many people as possible “skin in the game” of its survival.

Fortuitously, the neoliberal model of capitalism has over the past 30 years depleted the amount of power wielded by parliaments in favour of executive power. Though the medium-term aim of a left government would be to reverse this trend, the Day One question would be: what is possible through urgent ministerial action?

Let’s take the example of the UK. Here, ministers can, technically, order their departments to do anything that is not illegal or forbidden by treaties. However, a huge realtime audit power is given to senior civil servants by their role as “accounting officers” for each department. They can object to ministerial actions and have frequently done so, most commonly on grounds of “value for money”. If not doing something is cheaper than doing it, or if a minister is proposing to pursue anything other than the value for money option, the permanent secretary can object, requiring the minister to issue a “direction”, which then becomes a public cause célèbre.

In the case of a left-led Labour government in the UK, it’s not hard to imagine the process becoming weaponised: one minister after another clashing publicly with their civil servants over whether a state investment bank, state aid to a steel works, or the choice of a public healthcare provider over Richard Branson, is “value for money”. This power, in other words, would lie in the hands of civil servants even after Brexit. Without Brexit, the rules of the single market would simply give the permanent secretary added justification.

However, the definition of value for money lies entirely in the hands of the Treasury. Though the National Audit Office is headed by an officer appointed by the Queen, the value for money guidelines (last issued in 2004) are drawn up by HM Treasury.

So the most far-reaching thing a left Labour government could do on Day One would be to set out new value for money rules aligned with the macroeconomic philosophy of its new Treasury economics team, which recognises the power of public spending multipliers to stimulate growth in excess of the sum outlaid.

This revised philosophy on public spending would ripple through Whitehall in the space of a few days. It would probably ruffle a few people’s people’s feathers, above all the National Audit Office which has been working to different guidelines. But it would remove one of the classic neoliberal objections to ministerial actions. It would free individual departments to take operational decisions in pursuit of short term objectives.

First 100 days

What might these be? If things go wrong, the answer could easily end up as: a set of reactive or piecemeal measures designed to address long-held grievances, or assuage public opinion. Or measures that make sense in the long-term but deliver very little “skin in the game” for the electorate that has installed the left-wing government in the first place.

To make things go right for a left government in its first few weeks, you have to understand the strategic objective: to change the dynamics of the whole British economy so that if ever a right wing government returns to power it will, as the Tories did in 1951, accept large parts of what the left has achieved as the foundation for a new consensus.

With this in mind here are the five things I would urge a Corbyn/Sturgeon government in the UK, or a Sanchez/Iglesias government in Spain, or Democrat government in the US under Bernie Sanders to do in the first 100 days:

1. Switch off the neoliberal privatisation machine. This is not yet about reversing existing privatisations but declaring that there will be no new ones, and stating that outsourcing will no longer be done on the cheapest-wins basis, or by preferring private over public provision. The government should state that its preference is for essential public services to be provided by publicly-owned bodies and that the market, and any competition rules required by the EU, NAFTA or WTO, will be worked-around. Furthermore, existing privatised utilities and monopolies, once renationalised, will not be run as profit-making corporations but with the aim of providing social value in the form of cheaper energy, cheaper rail travel, higher wages, and of creating templates for new forms of social ownership at large scale such as co-operatives, platform co-operatives, credit unions, ethical banks and benefit corporations.

2. Publish, and therefore signal the imminence of, a basic package of new labour rights to be legislated without consultation. The consultation stage was the election, should be the argument. The new rights should be a mixture of individual and collective:

• With regards to individual rights, the aim would be massive, free and easy access to the justice system, whereby individual workers can enforce their human rights against employers. Though in the UK it would require reversal of legislation from the neoliberal era, ministerial directives could do a lot of the work up front.
• With regards to collective rights, the removal of exemptions for small businesses, and for people in post for less than an arbitrary time limit would be easy game changers before primary legislation takes place. An employment minister turning up at McDonalds, TGI Fridays or Pret A Manger, with the cameras but unannounced, to tell the workforce that within six months they will have the right to a living wage, union representation on the board, collective wage bargaining, paid holidays and maternity leave could have as much effect on behavioural change as the legislation itself.
• The issue of bogus self-employment, which plagues industries as diverse as construction, hairdressing and journalism could be addressed by the relevant Treasury surveillance department having its staff tripled and bonuses paid for successful prosecutions of the relevant employers. Since the business model of these sectors would have to change, it would require a transition period to get the relevant workforce on the books, paying the right taxes and receiving the right benefits. But the early signal should trigger rapid behaviour change among all those businesses that intended to survive.

3. Set up an Infrastructure Commission. The UK already has a National Infrastructure Commission which advises on long-term projects, but a progressive solution would be to set one up with executive powers, allied to a state investment bank to raise and spend the money.  While it might take more than 12 months to legislate and raise money for a state investment bank, and get regulatory clearance from the EU, the Treasury could require a sub-department to begin operating in the shadow of the intended bank immediately, assessing the likely funding decisions, modelling the outcomes etc. Meanwhile, the Infrastructure Commission should, drawing together major sectors, cities and town governments, determine the detailed plan to spend billions borrowed under new rules which allow borrowing for investment.

To the extent that a Labour – or Spanish or French left government – remained under the tutelage of the European Union, it would have to press for the reform of the Maastricht criteria or secure opt-outs from them – above all exempting borrowing to invest from the deficit limits. A US left government would, as long as it controlled Congress, face very few obstacles to enacting a major fiscal stimulus, unless China decided to use the extra borrowing to trigger a currency and debt showdown. In the medium-term, the success of such projects would be indicated by whether they began to transform blighted communities, not by the kilometres of motorway or railways upgraded. However, the major signalling job has to be done upfront. The private sector – both domestic and international – should react positively to a clear, irreversible long-term signal from government to upgrade not only the physical infrastructure but the social and environmental situations. The earlier and clearer it is given the better.

4. Change the remit of the central bank. For left governments in the Eurozone this would need a prolonged and co-ordinated struggle to reform the ECB. In Britain and the USA, much of it could happen through a letter from the finance minister. The principles of a post-neoliberal remit for, say, the Bank of England are not hard to design. They should be:

• Non-intervention in fiscal policy: then Bank of England governor Mervyn King once threatened to counteract any fiscal stimulus by the Brown government in excess of what he deemed strictly necessary to maintain inflation at around 2%. Such reasoning should be explicitly excluded, demoting the central bank from its high perch in the neoliberal hierarchy.
• A policy to promote mild inflation: under neoliberalism, because the implicit fear was of a wage take-off which never materialised, central banks like the Bank of England always put the brakes on growth and never put the brakes hard enough on recessions.
• Macroprudential regulation: i.e. spotting and preventing boom-bust cycles and the failure of systemic banks, roughly as now only with more political transparency and prejudice in favour of early intervention.

And that’s it. You would also need an industrial policy, but as I outlined in the previous essay if you want to keep a roughly multilateral and global system the industrial policy more or less writes itself: move legacy industries up the value chain, build “human capital” (i.e. skill and wage-earning potential) and keep some core industries, like steel, energy and defence manufacturing onshore and domestically owned for reasons of national security (in a deteriorating global environment).

Industrial policy and a long-term fiscal expansion would pay their dividends over five to ten years, not 90 days. But the combination of ending privatisation, empowering the workforce, borrowing to invest in infrastructure and subordinating the central bank to the national economy’s interests, not the global elite’s doctrines, are the four big pumps a left government needs to make work.

“McStrike” in Crayford, 2017. Image: War on Want, CC BY 2.0

Hard as it may be for some Corbynistas to accept, the rest is basically tactical. Whether to bring all state-owned housing back under the control of councils or to incentivise the housing associations to deliver the same result; whether to build a tidal lagoon at Swansea or a nuclear power station at Hinkley Point –  these are legitimate matters of debate inside the left, mobilising interest groups, obsessions and differing priorities. But they are secondary issues when it comes to implementing a new model, stabilising the country’s position within a fragmenting global system and giving the mass of people “skin in the game”.

The problem is, even as you revive a high-growth, high-wage, state-led economic model in northern-hemisphere countries, across the whole of the developed world the dynamics I described in ‘Postcapitalism’ are inescapable. It is these that make classic Keynesian expansion programmes unsuitable for the 21st century.

How technology alters the medium term agenda

There are four main processes triggered by information technology which, medium term, left governments have to construct responses to. They are:

• the collapsing cost of production of everything that is touched by infotech, which then disrupts the price mechanism itself (making things cheap or free);
• the delinking of work from wages, which allows leisure time and labour to bleed into one another, promoting massive under-employment and – at the bottom of the labour market – precarity;
• the emergence of new, positive, network effects, producing new use-values on an exponential scale, which are not prima-facie the property of any company or individual; and
• massive asymmetries of information, and therefore power.

As I argued in ‘Postcapitalism’, these processes fundamentally challenge the property relations on which the market system rests. In response, over the past 15 years, the following structural mutations have taken place, which a left government would need to deal with:

• The zero-marginal cost effect, which calls into being vast monopolies like Facebook, Google, IBM and Microsoft whose sole aim is to suppress price formation.
• The possibility of rapid automation, which calls forth its opposite: mass precarity and under-employment. Today we create millions of jobs which do not need to exist, just to include the low paid in the more lucrative mechanisms of exploitation, namely the credit system and social media (via the smartphone)
• Network effects, dubbed positive externalities by economists, which are captured by information monopolies, preventing the socially useful exploitation of user data except where it is useful to the monopolies.
• New information asymmetries, which market theory says should be eroded by competition, are institutionalised with copyright, IP and patents extended ad infinite by the power of global corporations, and with the mass of small investors permanently disempowered compared to the large, niche, unaccountable ones.

From this contrast between the potential of the information economy and its malformed present arises the need for a programme of transition which radical social democracy should graft onto – and indeed into – the more traditional measures outlined above. It should include:

1. Breaking up or nationalising information monopolies, like Facebook and Amazon, so that price competition can bring the cost of information goods closer to zero.

2. Subsidising a programme of rapid automation with taxpayer-funded basic services and basic incomes: transport, education to degree level, healthcare and housing should be at a basic level free and beyond that cheap.

3. Outlawing the seizure and colonisation of collective user data by the IT industry and make data a public good. Empower citizens to tweak and control the conditions under which private companies own and exploit their data, using mechanisms such as the blockchain. This is the principle behind current trials both in Barcelona and Amsterdam, and if generalised would represent a major reversal and limitation of the power of the info-monopolies.

4. Enacting a new, universal human right to information symmetry: “no decisions about me, without me”, if translated into the information sphere, would force global corporations to cease building business models on the basis of permanent asymmetry of power and information. Algorithms should be transparent, and artificial intelligence deployed only with informed consent and under strict ethical guidelines. Data privacy should be a fundamental human right, and flouting it should lead to the termination of a corporation’s licence to operate.

Though breaking up the tech monopolies costs you nothing (apart from political grief), the move to a basic income and services model, paid for out of taxation, would demand a major rebalancing of the tax system in favour of redistribution. Winning the argument for this becomes the key objective of a radical social democracy. Consequently, squandering redistributive taxation measures in pursuit of the pet social-democratic objectives should be, where possible, avoided.

Instead of relying on redistributive tax measures, a sovereign state like Britain, the USA or the Eurozone has the ability, using its central bank, currency and new borrowing, to fund the “Keynesian” half of what I propose here. The other half – the massive cheapening of goods and services required to make everyday life with low work hours – is what needs new, redistributive taxation.

“Your kids go to school, your healthcare becomes world class, your journey to work cheap and your home affordable… and Facebook, Google, Deutsche Bank and some hedge funds pay for it,” is a narrative that I think, if confidently outlined, could allow the radical left to breakthrough into government across the developed world. Especially once the ethnic-utopias of the demagogic right deliver, as expected, only tears and disappointment.

Facebook CEO Mark Zuckerberg meets members of the European Parliament. Image: European Parliament, CC BY-NC-ND 2.0

For Labour in Britain, the art of winning the next election revolves around switching off the scatter gun of progressive promises and building a tight narrative around economic transformation, wage growth and the right to free basic services. The fact that the left controls the spray gun, not the right, does not solve the essential problem RH Tawney pointed to in the 1930s: either Labour has a clear strategy or it has a shopping list written by a committee.

Tawney’s survey of Labour under George Lansbury in 1934 described Labour’s programme then as “a glittering forest of Christmas trees with presents for everyone, instead of a plan of campaign for… a pretty desperate business”.

Tawney advised Labour’s hierarchy to set out the kind of society it wanted to establish, the kind of resistance expected, and the mechanisms needed to overcome that resistance. Though Podemos and France Insoumise are equally guilty of the “forest of Christmas trees” approach, it should be said that their leaders have made no bones about the need for mass organisations focused on overcoming resistance.

***

The first half of the strategy I have proposed here draws on classic Keynesianism but goes way beyond it: it requires a revolution in thinking about the central bank; the removal of market-oriented culture across government; and the explicit adoption of a high wage and moderately pro-inflation policy that could, over time, begin to de-financialise society. And the imposition of new macroeconomic thinking in key government departments so that the likely positive effects of borrowing, spending and printing money are factored in.

The second half, though more future oriented, has fewer policy shibboleths to overcome. The art of staying in government, and delivering irreversible change, revolves around how much of this new, transitional strategy Labour (or any other left social democracy) can manage to insert into its change programme in the first five years.

Suppose it goes right. What could a radical left government expect to achieve in four or five years?

In week one and month one: survive the financial backlash and mobilise the people by giving them clear, tangible things to defend. In the first year, kickstart growth and wage growth through fiscal and monetary expansion. In years two to five, allow infrastructural investment and human capital growth take over and, if possible, produce a sustainable upswing. Meanwhile, begin the microeconomic transformation to the new kinds of business model, ownership and technology regulations that are needed to allow the move to a shorter-hours, higher welfare economy.

This is still only an outline. But it’s a clearer outline than the ones contained in any left manifesto in the past three years. The clearer and simpler the outline, the more easily it can be communicated to the managers, civil servants, trade union/community activists and entrepreneurs who will have to respond to it.

I can anticipate numerous objections – and will deal with them if people respond to this essay. But to one objection I want to be brutally honest in advance.

Is this strategy designed to allow the populations of the developed world to capture more of the growth projected over the next 5-15 years, if necessary at the cost of China, India and Brazil having to find new ways to break out of the middle income trap? Would it, in other words, flatten out and reverse the trends captured in Branko Milanovic’s famous “elephant graph” over the next two decades?

For me the answer is yes. This is a programme to save democracy, democratic institutions and values in the developed world by reversing the 30-year policy of enriching the bottom 60% and the top 1% of the world’s population.

It is a programme to deliver growth and prosperity in Wigan, Newport and Kirkcaldy – if necessary at the price of not delivering them to Shenzhen, Bombay and Dubai.

The post What kind of capitalism is it possible for the left to build? appeared first on New thinking for the British economy.

‘Networked individuals’ have replaced the industrial working class as the key agent for overhauling capitalism in the digital age. To win power, Labour must represent their values, culture, aspirations and political priorities.

***

In the spring of 1888, a sociologist called Beatrice Potter went undercover in the East End of London to research conditions in the garment industry – publishing the findings as Pages of A Workgirl’s Diary not long after. One finding, however, proved too scandalous to publish:

“The fact that some of my workmates, young girls in no way mentally defective… could chaff each other about having babies by their fathers and brothers, was a gruesome example of the effect of debased social environment … The violation of little children was another not infrequent result…”

Potter saw the unskilled working class as helpless and degraded, incapable of rising out their ignorance and self-oppression without intervention from above. This was a consistent trope in 19th century sociology – reinforced by skilled, self-educated workers themselves as they clawed their way out of poverty and expressed scorn at those they left behind.

The popular assumption was that middle class women like Beatrice Potter had agency; the workgirls of Limehouse did not.

Within 12 months the entire assumption was blown away. In July 1888 the “match girls” famously went on strike at the Bryant & May factory; then in 1889 the dockers – whose lives Potter had described as a mixture of “bestial content and hopeless discontent” – shut down the Port of London through mass, spontaneous strike action. Then much of London joined them, led by union organisers who could quote Marx because Karl’s own daughter had been educating them.

The London Dock Strike of 1889 was not just a British event. It was part of a global moment in which the unskilled and migrant working class of the late 19th century found collective agency. Potter’s memoir of that year is entitled “How I became a socialist”, though by now she had also become Beatrice Webb.

It took 12 years from the formation of mass trade unions in 1889 to the formation of the Labour party in 1901, under the tutelage of Webb and the Fabian socialist movement she helped create. Between then and the outbreak of the war, progressive social movements hit the British establishment like a meteor shower. The Suffragette agitation and the mass strike agitation, which reached a peak in 1911-1913, had the greatest impact. But Robert Blatchford’s The Clarion newspaper and the emergence of working class voices via the new repertory theatre movement show that a wider popular radicalisation was also under way.

The London Dock Strikes. Image from the Illustrated London News of 7 September 1889. Public domain.

By 1914 nobody could dispute the facts: a labour-movement consciousness was widely and spontaneously shared by millions of working people; it was rooted in the technological and social realities of early 20th century capitalism; and it was allied to demands for wider democracy and social justice – even if it took until 1924 for the word ‘socialist’ to appear in a Labour party manifesto.

Labour’s challenge today is to repeat this process with a whole different set of people. It’s not going to be easy and, as with the Fabians, the Suffragettes and the syndicalists of the Edwardian era, it will take time.

***

Neoliberalism is the first form of capitalism since the 1830s in which capital is needed to atomise the working class instead of regimenting it. The sheer social strength of organised labour in the early 1970s, combined with the unworkability of the economic model that had allowed that strength to accumulate, required a break from paternalism and incorporation.

We live with the results. It’s not just that trade unions are weak and the old, fixed working class communities are destroyed. The bargaining power of the individual worker is weakened by globalisation, by precarious work and by a culture of individualism that would have been obnoxious even to the dockers of Limehouse fighting over halfpennies on the streets in 1889. The radical culture and lifestyle once known in France as “la vie ouvriere” (the working life) has been vapourised.

As a result, the most fundamental question facing the modern social democratic left is: who do we represent?

From 1945 until around 1989 you could say that the left’s problem in many countries was the decline in voting by class identification. After 1989 it became much more serious: the actual demographic basis of social democracy was dissolving, while the electoral base of the right – the middle class, people dependent on financial investment and the repressive state – was actually hardening up.

This demographic challenge was compounded by a political one after the 2008 crisis, when most centre-left politicians refused to see how badly the system was broken. They chose to implement austerity and to double down on support for globalisation, free market economics and the coercive imposition of competitive behaviour that required.

As a result there began a conscious switch among some – mainly white – working class voters towards authoritarian, xenophobic nationalist parties. Meanwhile the educated salariat were also drifting away, towards cosmopolitan nationalisms in places like Catalonia or Scotland; or towards Green or radical left parties, as in Spain, Greece and the Netherlands.

For the technocrats in charge of social democracy, this presented a sudden and insoluble problem. Their strategy had always been – as with Blair and Clinton – to take the manual working class vote for granted and to create an electoral alliance with the educated, urban middle class through policies differentially positive for the latter. These included support for the consumer against the “producer interest”; suppression of union rights; deference to the agenda of social liberalism; and the introduction of market mechanisms into public services, which the better educated were able to game to their advantage.

At its most effective, as the Labour peer Maurice Glasman pointed out, technocratic centrism created a community of interest between the atomized urban poor and the salaried public servants employed to police, jail and rehouse them. This was not the intention of the original Third Way, which assumed all could rise out of poverty and dependency, but one of its byproducts. Centrist politicians were happy to go with the flow. They treated the urban poor and the elderly as clients; revived social democracy as the administrator of the client state; and told the traditional manual working class of the small-towns to adapt or die. As a consolation prize, what was left of the trade union movement in the defence, aerospace and supermarket sectors could have “partnership”, albeit usually on the terms of the corporations.

Once austerity replaced fiscal expansion, the assumptions and alliances that held New Labour together fell apart.

In Britain, the problem was compounded by the unresolved national question. The tribal alliance needed to put Labour in power was never just about class. For a majority Labour government you needed the working class of the north of England, Wales and Scotland; the city-dwelling workforce of all big cities; plus some swing voters from the salariat of small towns in Southern England.

But Labour’s support for unionism during the Scottish referendum saw them punished by the section of the Scottish working class that wanted independence, losing 40 seats. Labour’s support for carbon-heavy energy policy and for nuclear weapons were some of the reasons one million people voted Green in the 2015 election. Meanwhile, the 4.3 million votes for UKIP in the European election of 2014 was another signifier that the tribal alliance was no longer possible. UKIP – and later the Tories – would feed off an unaddressed English nationalism that Gordon Brown, with his “Britishness” ideology, barely understood.

Today the facts about Labour’s support, and its membership, are clear. Its half a million members are overwhelmingly drawn from the urban salariat, with more than 112,000 in London alone. It has lost maybe a fifth of its voters – typically white, unskilled manual workers in small towns – to right wing nationalism. The 2017 election showed that, for many of them, UKIP was a gateway drug to voting Conservative. And it has lost vast numbers of elderly people.

But in turn, vast numbers of educated, young, networked people have mobilised themselves to vote Labour.

To party strategists, this problem presents itself as: “how do we win?”. The persistent ability of Theresa May’s Tory party to poll around 40%, however badly they mess up, is not about competence or charisma. Instead it reflects a new political alliance involving a section of the “old” working class who are opposed to migration, globalism and social liberalism, with a layer of middle class people who are opposed to redistribution and social justice.

We can only move forward if we can answer the deeper question: who wants to change the world, and who has the agency to do it?

***

After reporting on the 2011 revolts, and observing the similarities between the people in the streets and squares of Cairo, Athens and New York City, I became convinced that a new kind of person had emerged, which sociologists labelled the “networked individual”.

Networked technology, combined with high levels of education and personal freedom have created a new historical subject across most countries and cultures which will supplant the industrial working class in the progressive project, just as they replaced the cottage weavers and artisans of the 18th century.

An Occupy London Public Assembly at St Pauls, 16th October 2011. Image: Neil Cummings, CC BY-SA 2.0.

Orthodox Marxists are appalled by this proposal, and for good reason. If the classic proletariat, owning no substantial property and destined to spontaneously solidaristic ways of life, is not in fact destined to overthrow class society, then a key tenet of Marxism is disproved.

This, as I argued in ‘Postcapitalism’, is the inevitable conclusion we have to draw from 200+ years of working class history. The working class always wanted to go beyond the piecemeal reforms offered by parliamentary socialists like Beatrice Webb, but never – outside extreme circumstances – wanted to impose the proletarian dictatorship proposed by Marx. Nor during the rare times that workers’ council-type bodies gained power were the working class able to secure these institutions against the influence of outside parties and bureaucracies.

The actual 200 year record of the proletariat is heroic: it wanted control and cultural space within capitalism and would fight to the death for this, even against parties claiming to be communist. But it persistently refused to play the role of capitalism’s gravedigger.

However, all this is only a tragedy if you have never read the early Marx. In the so-called Paris Manuscripts of 1844, Marx argues that the ultimate goal is not communism; that humanity needs to overcome scarcity and to reconnect with its fundamentally social nature. Communism, says Marx, is only the initial form society will take once you abolish private property, but this itself is not the goal. Individual human freedom is the goal.

But since the individual human being created by mid-19th century capitalism cannot achieve it, there needs to be a collective subject to make it happen. The Marx of 1844 designated the working class the agent of human liberation because of the altruism, self-organisation and education he observed among the left wing workers of Paris.

If you see the networked individual of the early 21st century not as a degenerate offshoot from the proletariat but as an improvement on it, then it is possible to accept that Marx was wrong about the industrial working class while maintaining the belief human history has both an outcome (self-emancipation via the abolition of private property and the achievement of individual freedom) and a collective subject with the interest in achieving it.

It’s been clear since 2011 that this is the role that the networked, educated and connected people of the 21st century will have to play. Work, the working class, its culture and trade unions are not abolished, but the place of each one of these things in the progressive project has to be rethought.

What’s become clear to me since 2011 is that, just like the 19th and 20th century working class, the networked individual group will have to undergo a process of political maturity analogous to the one the British working class went through between 1889 and 1914.

***

Marx is thought to have distinguished between a class “in itself” and a class “for itself”. This too is the change that has to happen with the networked individuals.

The first concept can be summarised by the idea that “we have a common way of life, a common interest and we hate the rich”. The second concept can be pithily summarised by the words used at Jeremy Corbyn’s famous Seder celebration: “fuck capitalism!”

However, Marx’s account of working class consciousness was more complex, and the more complex version has relevance to our political tasks today.

Marx never used the term “a class in itself”. Discussing the spontaneous tendency of workers to form organisations in ‘The Poverty of Philosophy’, Marx says they become “a class against capital but not yet for itself”. This makes a lot more sense, especially in the original French, where the first condition is described as “une classe vis-à-vis capital” – i.e. both opposed to and defined in relation to capital.

What would it mean for the networked individuals to define themselves “vis-à-vis” capital today? Once you understand how 21st century capital exploits us, it’s obvious.

Today capitalism exploits us at not just at work, but through financial transactions and via consumption. We are “pro-sumers” in many different ways: our fashion choices create the value of global brands. In addition, huge new corporations have adopted business models based on harvesting the positive network effects of our online behaviour. In addition to that, as with all previous generations, capital exploits us by invading and commoditizing our ordinary human behaviour.

In its current form – overshadowed by a global debt mountain four times the size of annual GDP – this mixture of broken financial capitalism and unregulated info-capitalism relies heavily on coercion: we are coerced off disability benefits, coerced into competitive behaviour patterns, coerced away from cash as a store of value.

In addition, as long as people stick by the rules of market behaviour they are allowed to form all kinds of destructive power hierarchies – from organized crime to the culture of workplace harassment that triggered the #MeToo movement.

Harvey Weinstein. Image: Thomas Hawk, CC BY-NC 2.0.

Almost everything the networked generation has done can be interpreted within the framework of resistance and adaptation to these new forms in which capital exploits us.

The #MeToo movement is just the latest example. Consumer boycott movements against cheap labour in garment factories; the widespread sit-ins in banks and pharmacies in 2010-11 launched by UK Uncut; the Occupy movement and its political aftermath – which was the occupation of the Labour party by tens of thousands of active, educated, young networked people – can all be seen through this lens.

In the USA, Black Lives Matter was a product of the independent means of communication, access to the legal system and, above all, the emergence of a networked and educated generation who had actually studied at school and college the movements they would now emulate.

Even where issues of social oppression collide – as with the increasingly bitter “trans vs radical feminist” dispute in the English speaking left – you are dealing with two sets of network-empowered people fighting for the right to define their own oppression and set social norms to alleviate it.

When they first emerged among the tech workforces of the 1990s studied by Richard Sennett, the behaviour patterns of networked individuals seemed negative from the point of view of social justice movements. They cultivated weak ties, refused to form permanent organisations, framed all struggles in terms of the self not the collective, and seemed at home in the most alienating of modern environments – the newly gentrified inner city. The title of Sennet’s 1998 book sums up how the effects of networked technology looked then: “The Corrosion of Character”.

Since then, I think it is fair to say that this new demographic (I would not call them a class in the sense of 20th century sociology) have defined themselves fairly clearly “vis-à-vis capital”, as Marx put it.

They don’t like its effects. They fight its effects sporadically and in a framework centred on the individual. But they have no overarching concept of collective liberation, and their political project is poorly articulated. However, that too is changing.

***

When Marx used the term “a class for itself” he added that “the struggle of class against class is a political struggle”. The evidence that a social group recognizes its own interests and begins to fight for them as a positive concept comes through political action.

The Arab Spring was a political action. So was Occupy. So were the Corbyn and Sanders movements. But so also was the Yes campaign in Scotland’s big cities. So was Catalonia’s referendum on 1 October 2017. So was the camp at Gezi Park. So was the US women’s march of 21 January 2018. So was the anti-Orban demo in Hungary a few weeks ago. So is the Repeal the 8th movement in Ireland.

All over the world what appear to be the defence of “liberal” values against authoritarian, racist conservatism are in fact much more than this. They are the defence of a new concept of freedom, in the face of coercion from markets, states and kleptocratic elites.

But the ultimate, and most revolutionary form of political action that can be taken amid a neoliberal system in crisis is to put a party into government committed to the positive goals and values of this demographic group.

Above I said that the group I am talking about is not a “class” in the sense that the proletariat was from around 1820 to say 1989. But EP Thompson once made the point that the 18th century working class also had to be defined using different criteria.

Thompson taught us not to apply the concept of class that emerged alongside the 19th century workforce retrospectively onto the class struggles of the 18th century. The players then were the gentry, the monarchy, the respectable cottage artisan and the urban crowd. You could discern a class struggle within these blurred lines only by refusing to use the factory proletariat as the framework.

By the same token if my blasphemous proposal is correct, and the proletariat has been replaced as the historical subject by a more diffuse behaviourally-identified layer of people, not defined by their role in production but also by consumption, culture, attitude and ideas – then we can’t hope to describe them adequately in a framework based purely on people’s relationship to work.

***

The social explosion of 1889 didn’t happen by itself. Tom Mann, the organiser of the Dock Strike, had been an activist in the Marxist-led Social Democratic Federation, a member of the engineering union when it functioned more like a brotherhood, and worked in the USA at the time of the anarchist-inspired eight hours campaign.

But once it did happen, it posed left wing thinkers and strategists with a major question: are we going to provide this movement – mass, cultural and inchoate as it is – with a sharpened political tool or not? Are we going to leave parliamentary politics to the liberals or burst through into the power system with something of our own?

If you listen to Eleanor Marx on a soap box in Hyde Park on Mayday in 1890, she’s trying to answer the problem in the old way: enough of strikes, fight for socialism and the eight hour day, she tells the crowd.

If you listen to Beatrice Webb, however, there’s the beginnings of a new answer. Webb understood that the power of capital was too strong to be defeated and restrained by meagre things like co-operatives or garment workers’ unions. You had to enact the co-operative principle at the level of the state, she wrote.

Fabianism is often accused of belittling the agency of ordinary workers, but at its inception it was an attempt to focus that agency around achievable – and massive – political goals.

Mann himself, in the aftermath of the Dock Strike, contributes a different principle: that through self-organisation, self-improvement and the struggle for control, workers can create the beginnings of the new world through their everyday practice.

Here’s what I think that means for Labour in Britain now. As Brecht once wrote: those who will change the world are the people who don’t like it. Right now, what these people don’t like about it is, in no particular order:

• the coercive and invasive nature of markets;
• the unfairness and rising inequality;
• the lawlessness and tax evasion of the rich;
• the perennial resort of elites to wars of aggression;
• the persistence of racism, sexism and homophobia in a world where they’re supposed to have disappeared;
• the return of fascism, xenophobia and ethnic nationalism;
• the unaccountability of elites; and
• the precariousness and often pointlessness of work.

As they move from simply resisting these impacts of capital to a more political goal, the Labour party has to be the tent in which they gather. There has to be room in the tent for the modern Tom Mann, who wants to build the new society from below through defiant practice. There has to be room for the modern-day Eleanor Marx, who can’t forget the left wing orthodoxy of the previous century. And there needs to be a Beatrice Webb, to tie it all together into a long-term strategy at the level of the state.

Once you conceive Labour’s strategic task as representing and empowering networked individuals who want to change the world, the tactical problems don’t go away, but they can be placed in the right framework.

Labour has to represent the networked individual: their values, culture, aspirations and political priorities. Insofar as these things are represented by other parties – as in young urban Scotland or in Green voting parts of Bristol and Brighton – it must expect, and live with, the fact of other progressive parties.

Labour’s programme cannot be a mishmash of last-century demands with a few deferential nods to the agenda of the networked, precarious, individually-minded people who form the core of its support base and membership.

The radical thinking that has begun under Corbyn and McDonnell – the exploration of new forms of ownership, new business models, commitments to co-operatives and consideration of the basic income idea – has to gain pace and deepen. It took the Labour party from 1901 until 1924 to stop issuing manifestos that were simply appeals for more democracy and demands for higher wages and welfare benefits. We don’t have that long in which to overhaul the programme, culture and strategy of British social democracy in a radical direction.

Right now, the attention of many Labour activists and pro-Corbyn MPs is being sapped by the tawdry rearguard action of a few Blairite die-hards who seem determined to form a new party after they have trashed the reputation of the old one. When the break with them comes – and all the signals are there that it is coming – the danger is that it will empower “old-think” inside Labour. People will run towards comfort blanket of Keynesian state management, welfarism and corporate nationalisations.

Instead we need a new, expansive radicalism that enables everybody who wants to resist capitalism’s invasion of the self – via markets, coercion, authoritarianism, xenophobia and illiberalism – to identify Labour as the tool they will use to change the world.

That means, in turn, a Labour party that is both more like a social movement and part of a wider collection of social movements. It is to that organizational question I will turn to in a future essay.

The post Labour must become the party of people who want to change the world, not just Britain appeared first on New thinking for the British economy.

In his second essay in a new series for openDemocracy, Paul Mason argues that only a new left internationalism that accepts a limited reassertion of national economic sovereignty can defeat the rising tide of authoritarian populism.

If there is a founding document of social democracy it is Eduard Bernstein’s ‘Evolutionary Socialism’. Written in 1899, it taught the leaders of the Social Democratic Party of Germany (SPD) that capitalism had permanently stabilised; that socialism would be achieved through parliament – not the industrial class struggle – and that the working class of the 20^th century would be neither culturally homogeneous nor spontaneously socialist.

Social-democrats should stop waiting for a mega-crisis to kill capitalism, stop obsessing about mass strikes and the dictatorship of the proletariat, and make a moral case that, while capitalism had improved the workers’ lot, socialism could do it better. [i]

The stability lasted a mere 15 years, ending on the day Bernstein’s party voted for the war budget of Kaiser Wilhelm II. By 1919 the dictatorship of the proletariat was an actuality – not just in Russia but in Bavaria and Hungary. What was left of the SPD entered the first coalition government of the Weimar Republic where, on Bernstein’s advice, it resisted the attempts of its own left wing to “socialise” the economy and ruthlessly suppressed the communist left.

If there is a re-founding document of social democracy, it is Anthony Giddens’ book ‘Beyond Left and Right’. Published in 1994 it emerged, like Bernstein’s work, from a critique of orthodox Marxism. Like Bernstein, Giddens argued that the structure of capitalism had changed, creating conditions that made the old programme of state-led socialism permanently impossible. Once crystallised into the doctrine of the Third Way, in the 1998 book of the same name, Giddens’ ideas provided the ideological frame for social-democratic governments in Britain, Germany, Australia and the Netherlands, and for Bill Clinton’s second term in office.

Unlike Bernstein, Giddens never claimed capitalism had become permanently stable; instead it had become permanently mercurial in a way that was potentially benign, so long as progressive governments could take control. The task of social-democrats was to help working class people survive amid the permanent insecurity and disempowerment that globalisation had unleashed. Instead of a programme to clear the capitalist jungle, social-democracy would become a kind of survival kit.

The general crisis of social democracy is happening because the world Giddens described has vanished. The world of Trump, Putin, Erdogan and Xi Jinping is as different to the world of Blair and Schroeder as the street fights of Weimar were to the peaceful, electoral socialism of the 1890s.

Twice, then, in the space of a century, social democracy has entered crisis because its strategic project came to be based on conditions that ceased to exist. If we survey the remnants of centrist social democracy and social liberalism – Renzi in Italy, Schulz in Germany, Hillary Clinton in the USA and the Progress wing of the British Labour Party – the image that springs to mind is of shipwreck survivors clinging to pieces of wreckage.

Schulz clings to Merkel, Renzi wanted to cling to Berlusconi, but they both lost so many votes it became pointless. Hillary Clinton clings to Wall Street. Labour’s Progress wing clings to the possibility that a new, Macron-style centrist force will emerge to save it from the nightmare of the Corbyn leadership. All of them are clinging to a form of globalisation that has failed; and for the Europeans it has become obligatory to cling to the Europe of the Lisbon Treaty – even as this, too, is failing.

To renew social democracy we have to do what Bernstein and Giddens were trying to do: construct an analysis of the world we live in. Both argued from premises concerning the future dynamics of capitalism, the role of the state in the economy, and the atomisation of class structures, cultures and alliances that had prevailed in the decades before them. Significantly, both were critically engaged with, and borrowed eclectically from, the Marxist method of historical materialism – a method of no concern to the party apparatchiks who used their theories as adornments for the project of managing capitalism.

Starting from a material analysis of the world – rather than a list of policies, tactics and principles – is a tradition that got lost inside European social democracy during the neoliberal era. Neoliberalism’s ideological premise was always anti-theoretical: don’t ask why this kind of economy exists, or how long it can last – just accept it as permanent and get on with making it better.

So amid the panic – as the Alternative fur Deutschland (AfD) draws level with the German SPD in opinion polls, and as the Italian Partito Democratico (PD) slumps below 20% while populists and xenophobes surge – we must start by analysing the situation, not by issuing frantic demands that the word “go back to normal”.

***

If neoliberalism is broken, what exactly is the central mechanism that has failed? It cannot be that the collapse of a mere banking system has turned large parts of the population of the West against universal rights and cosmopolitan social arrangements.

Goldsmiths University economist William Davies offers two definitions of neoliberalism which explain why the world Giddens described – and fairly accurately – has disappeared.[ii]

The first is “the elevation of marked-based principles and techniques of evaluation to the level of state-endorsed norms”. Davies points out that neoliberalism, over time, became less about the creation of exchange-based relationships and more about the imposition of competitive behaviour in areas where no market could exist.

School league tables and global university rankings are just two examples of this – a third being the fake tendering process which has seen billions in public service contracts handed to firms like Carillion and Interserve. For Davies, it is economic calculation – not markets per se – that is being coercively forced into all aspects of life under the neoliberal system. That leads to his second, pithier, definition of neoliberalism: “the disenchantment of politics by economics”.

Neoliberalism failed because it was not a solution to the problems of the Keynesian system but, in fact, a work-around. What caused the ruin of both models was their inability to sustain both productivity and corporate profitability.

Between 1989 and 2008 growth was driven by unsustainable financial expansion, by fiscal deficits, by the rapid catch-up of Asia and Latin America, and by the expansion of the working population. In 2008 a global system reliant on financial fiction exploded. As a result, we now have a global economy kept afloat by $19 trillion of central bank money creation, by the permanent socialisation of banking risk, and where many of the advanced industrial countries exhibit the following features:

1. Rising inequality boosted by the surge in asset values triggered by quantitative easing.
2. Entire sectors dominated by rent-seeking monopolies.
3. A global financial elite clustered around the defence of its strategic privilege – which is to keep its wealth in offshore jurisdictions and unavailable to the tax collectors of nation states, and therefore immune to redistribution.
4. High under-employment and precarious work, as millions of people are employed in what David Graeber calls “bullshit jobs”; real wages failing to keep up with the rising asset wealth of the 1%; and a historically low wage share.
5. A global market that has begun to fragment along regional and national lines; the stalling of trade liberalisation treaties; the Balkanisation of finance systems and the information economy; and the beginnings of an open trade war.

There are typically three kinds of response to this situation among national political elites. The first is to try to maintain the status quo, resulting in the continued rise of inequality, continued impoverishment of workers and the lower middle class. This is the approach of Macron in France, Merkel in Germany and the liberal-conservative Remain lobby in the UK.

The second is a kind of “nationalist neoliberalism”: the attempt to deepen the coercive introduction of market mechanisms through a partial break with the multilateral global trade system. This is the intention behind the European Research Group (ERG) inside the UK Conservative Party: to scrap environmental and safety regulations, and to scrap – as Liz Truss wants – professional licensing and qualifications that are said to “suppress growth” by insisting that doctors, airline pilots or physiotherapists must be licensed and therefore difficult to replace with the precariat.

It is, in effect, “Thatcherism in One Country” – and it also forms the unacknowledged common ground between the three factions of the German right: the AfD wants deeper free market reforms but no immigration; the Free Democratic Party (FPD) wants Germany to double down on gaming the Eurosystem to let the rest of Europe go hang; so effectively does the right wing faction of the Christian Social Union (CSU) around Alexander Dobrindt who, for good measure, wants a “revolution” to roll society back to a pre-1968 social conservatism.

A third response – best illustrated in Europe by the Law and Justice government in Poland – is to break overtly both with neoliberal economics and “liberal democracy”. Law and Justice has secured a 49% poll rating not only through crass nationalism and dog-whistle antisemitism, but by daily verbal attacks on “liberal democracy” and the elites who profit from it, and by distributing significant universal welfare payments to working class people. Liberal democracy gets in the way of the real democracy – which is the will of the white, Catholic Polish people, untrammelled by such things as an independent media, judiciary and multilateral obligations. That is the message of Law and Justice.

None of these responses can remedy the breakdown of neoliberalism strategically. The problem is, however, two of them could work temporarily and locally, providing that the national elite concerned is prepared to renege on multilateral obligations to its trading partners. In the 1930s such attitudes were described as “beggar thy neighbour”. In modern parlance, it’s about being prepared to say to other countries: fuck you.

Law and Justice has placed itself on a collision course with the European Commission, while the Tory ERG wants Britain to stage a hard, confrontational exit from the EU altogether. Trump, likewise, with tax cuts that will boost America’s debt pile and a trade war over steel, is determined to deliver a revival of prosperity in the USA at the expense of its key trading partners.

Social democracy’s problem is that for 30 years it moulded its project around the priorities of the neoliberal model, and around the certainty that a multilateral global system would (a) always exist, and (b) deepen.

Both conditions have been falsified, while the neoliberal elite’s priorities are rapidly evolving to adapt to the growing power of authoritarian kleptocrats and the Mafiosi who trail behind them.

The basic problem with the Macron strategy – carry on regardless with a globalised free market – is that it cannot be done by standing still: you have to double down on the coercive imposition of competitive behaviours and values onto a population weary of being coerced. You have to renew TTIP; you have to do more privatisations; you have to go expanding the EU to the East, pulling in yet more xenophobic and corrupt national elites. If we return to Davies’ definitions (the elevation of market principles to state endorsed norms, and the disenchantment of politics by economics), we can say with certainty that these are strategies that no longer work. People have had enough of free market coercion and are prepared to “re-enchant” economic decision making with the only things that lie to hand: nationalism and xenophobia on the one hand, radical anti-authoritarianism, feminism, environmentalism and leftism on the other.

To renew social democracy, we need to stop clinging to the wreckage. Even though it was mainly window dressing for Blair and Clinton, the Third Way was a serious and coherent theory. Some of its premises survive even though, as a practical project, it is dying.

***

Giddens’ framework for radical politics in the neoliberal era consisted of six priorities. The first, to “repair damaged solidarities”, involved recognising that even the free-est market makes people interdependent. While the neoliberal right would have us stab each other in the back, people with a stiletto between their shoulder-blades will still need a hospital to go to.

Second, social democracy had to accept that instead of improved economic conditions, people would fight over “life politics” – that is for the individual freedom to behave as they please. Unequal opportunities to do so – as we are today seeing with the #MeToo movement – could, he said, be a much stronger driver of protest and radicalism than pure economic inequality.

Third, in place of solidarity there would have to be “generative politics”: social democracy had to create a space between the state and the market in which people could do things for themselves, which neither the state nor the market were capable of delivering.

Fourth, recognising that globalization would weaken the formal democracy of states, Giddens called for a democracy of self-help groups and social movements. These, it was understood, should forget trying to bend the state to their wishes – it was irrevocably under the control of corporations and destined to shrink – but they could achieve stuff for themselves, empower themselves, and boost their own emotional literacy in the process.

Fifth, the left must be prepared to rip up the welfare state. Instead of a safety net designed to protect people against “what might happen”, it had to be a kind of survival guide. The welfare state, said Giddens, was sexist, bureaucratic, impersonal and never fully eradicated poverty anyway.

Finally and perceptively, Giddens warned that a neoliberal global order would lead to violence, and that the left needed to find ways to mitigate that. When social conflict occurs in a globalised free market, Giddens said, you can’t solve it by coexisting or by separation.

“No culture, state or large group can with much success isolate itself from the global cosmopolitan order,” Giddens wrote.[iii] As a result, conflicts would lead more quickly to open violence and the left would have to be the party of dialogue not conflict.

What strikes me today about this political framework, on which Third Way social democracy was built, is its absolutism. The state would wither, the market would triumph, the welfare state would have to be abandoned, class solidarity would collapse, and individual lifestyle politics would dictate everything. This was the assumption.

But nearly 25 years after its publication all of the things that were considered already gone are still here, even in a society like Britain which became under Major, Blair and Cameron a laboratory of social atomisation. The RMT union is still able to shut down London’s Tube network; the welfare budget still makes up 34% of all state spending in the UK; market experiments in the railway system have gone badly wrong. Even at my local tube station in London, there is a union rep who defies the management instruction to wear a name badge by sporting one with the word “Lenin”.

Though Giddens never subscribed to the “end of history” thesis, the assumption underpinning his project was that markets were efficient and tended towards equilibrium and prosperity. Like Bernstein, he created a formula for coping with capitalist stability that failed to survive the return of instability.

In the hands of Blair, Clinton and Schroeder these assumptions became an excuse for venal collaboration with the interests of corporations against those of the very people who voted for social democracy. But even in their purer, academic form, Giddens’ assumptions have been negated by the political, economic and social realities of the capitalism that emerged after 2008.

The most important fact about the new reality is that, since 2008, states, regions and communities have begun to attempt to exit the system. What was deemed impossible has become the dominant trend: the desire to cancel, reverse or block globalisation. Whether it be the globalisation of workforces through migration, or the privatisation of the public realm in the name of trade liberalisation, or the impoverishment of industrial communities through offshoring.

Interestingly, the very forces Blairism assumed were spent – community, trade unionism, working class identity and of course language and ethnicity – have been factors driving this rush for the exit, both to the left and right.

As Giddens predicted, such projects are met with violence – sometimes literally as the Catalan people found out on 1 October 2017 – and sometimes via the more subtle coercion of closing a nation’s banking system, as the Greeks experienced in June 2015.

But wherever the “exit” strategy is adopted, the key institution is the one Giddens – and Blair – assumed would have diminishing power in a neoliberal universe: the democratically elected national government.

As to what is driving the desire for exit, it is primarily insecurity. All over the world, state welfare provision has been ripped up, but not replaced by any new forms of solidarity as Giddens advocated. As I wrote in the first essay of this series, one of the huge drivers of populist anger and insecurity is the enhanced fear of “what might happen”, whether it’s the possibility of the working class person falling into the under-class because they lose their highly precarious job; or a migrant occupying a place in front of you in the doctor’s waiting room; or a home-grown jihadi terrorist blowing up your children at a pop concert.

“No more change!” was the demand campaigners in Thuringia told me they heard on the doorstep, from voters who had switched to the AfD. Ludicrous as it may sound to the paid-up technocrats who still believe in neoliberalism, it is a rational desire when change brings only stress, impoverishment and anxiety – and in this case perceived competition for a limited welfare and social budget.

Practically, far from empowering those from whom the safety net was removed, neoliberal policy during the crisis became increasingly focused on coercing them, as with the scandalous disability assessments by the DWP in the UK or in the mass incarceration programmes of black people in America which boomed under both Clinton and Obama.

Finally, and ironically, it has been the populist right and radical left, together with some cosmopolitan nationalist parties and environmental NGOs, who have engaged with the task of “repairing damaged solidarities”. Blairite social democracy might have urged people to discover the new solidarities of suburban life, or the professionalised workplace or the private members’ gym,  but these were unavailable to the newly impoverished lower-strata of the workforce neoliberalism created. They clung, instead, to what was left of their old solidarities, which – as I have described in ‘The Great Regression’ – were often stripped of their progressive content.[iv]

***

That the Third Way doctrine suffered the same ultimate fate as Bernstein’s “revisionism” is no accident: both were formulated during the upswing and stabilisation phases of a global economic model. Neither could survive the model’s crisis.

Indeed, understanding that our task today is to construct a “crisis politics” – not a survival guide for the losers within a successful form of capitalism – is the first step towards a solution. In subsequent contributions I will try to spell out the details. Here, however, it important to state the broad conclusions if you accept the idea that neoliberalism is over.

First, the rise of authoritarian nationalist projects among some western elites is both logical and inevitable, given their histories. You only have to listen to the British elite’s continuous dirge of devotion to Winston Churchill to understand how powerfully the myths, narratives and traditions of national bourgeoisies guide their actions, even in the age of Davos and globalised consumer culture.

When I asked Polish progressives at a seminar last month, “why is a section of the Polish elite prepared to break with globalisation and seek nation-centric and xenophobic solutions?”, they simply shrugged and said: “that’s what they did in the 1930s”.

It is not that the globalism of the elites during neoliberalism was fake – only that, in the entire history of industrial capitalism there have been only two modes of regulation: the nation-centric one and the multilateral globalist one. Most elite groups in the world have intellectual traditions that can accommodate both, and some are prepared to reach into the dark basement of those traditions to revive the nationalist ideologies that suited their grandparents. What sections of the elites and intelligentsias of Poland, Hungary, Italy and Austria are doing now is no mystery. It’s a reversion to type.

Second, the rise of authoritarian populism and xenophobic narratives among the populations of many western democracies is – as I argued in the first essay – the result of the breakdown of a coherent narrative and of intense perceptions of insecurity. The strategy of keeping the economy on life support does not keep the ideology that underpinned neoliberalism on life support. The reward for all the backstabbing, atomisation and conformity to market individualism was supposed to be prosperity. Once that disappeared, the story became incoherent.

It follows from this that social democracy – and the wider progressive movements it must ally with – needs to construct very quickly a new narrative about how the world gets better for you, your children, your community. People want to know how life becomes less insecure, and how change becomes more predictable and manageable. Unless the left answers that question, the xenophobic right will do so.

Third, logically the new project of social democracy must be framed around a radical break with neoliberalism. What is destroying our movement is that a whole generation of social democratic leaders have tied their personal prestige and identity to an economic model that no longer works.

Schulz wanted to keep Merkel in charge forever; Renzi in Italy would rather see Berlusconi in power than admit the grievances that are driving people towards the Northern League and the Five Star Movement were real. Indeed, when I spoke to Italian social democrats before the election disaster of 4 March, it was always the possibility of being beaten by Beppe Grillo’s Five Star Movement, not the racist FI-Lega Nord alliance, that haunted them. In Britain, the spectacle of Haringey’s Labour leader Claire Kober self-destructing amid mass popular opposition to her housing privatisation project, is a vignette painted from the same colour scheme.

To be clear: a break with neoliberalism  means a limited, reversible and calibrated retreat from some aspects of globalisation.

To salvage what is salvageable from the global system we must prevent its implosion: that means preventing the chaotic breakup of the EU, the collapse of multilateral global trading arrangements and – the ultimate threat – a spate of mutual debt defaults during which everyone heads for the exit in a disorderly manner.

Here the analogy with trench warfare holds good. If the front trench is overrun, the last person standing in it is going to get bayoneted. Better to retreat to the next trench and defend that.

This has informed my approach to Brexit. The substantive issue was always going to be: what form does the semi-detached relationship of Britain to the EU take in future. I voted Remain because the alternative – which has now transpired – was Boris Johnson and Jacob Rees-Mogg constructing Thatcherism in One Country, with Naomi Klein’s ‘The Shock Doctrine’ used as a handbook.

Because people were told freedom of movement was non-negotiable inside the EU, they voted to leave it. They did not believe the assurance that “ever closer union” no longer applied to the UK – and the actions of the European Commission during the Brexit negotiations have tended to confirm that suspicion.

Given that, it is neither possible nor desirable to use intrigue and elite chicanery to override the votes of 17 million people. What is possible is to persuade them to accept a limited – and thus reversible – semi-detachment from the EU in the form of a Norway style agreement, a customs union or something in-between.

The question for Europe’s social democrats is far bigger than the one that usually greets me in seminars and one-to-one meetings, which is “how do we emulate Corbyn?”. Nevertheless, it is worth reminding ourselves that UK Labour’s current recovery and dynamism is premised on the fact that, first, Britain was always effectively exempt from the Maastricht rules mandating fiscal austerity.

Corbyn’s ability to draft a post-austerity manifesto, centred on a £250 billion borrowing programme and a £50 billion tax redistribution plan, together with some limited renationalisation and a state investment bank, was an act of imagination unavailable to Renzi, Sanchez and Schulz.

On top of that, Corbyn has – correctly – accepted the result of the Brexit referendum, refusing the invitation from the die-hard Blairite right to destroy his own party by labelling a third of Labour voters deluded xenophobes.

What lesson can the rest of European social democracy draw from Labour’s success? The exact lesson they refuse to draw: which is that “retreating to the second trench” means adopting as an overt goal a revision of the Lisbon Treaty in favour of greater social justice. Europe has to be redesigned to allow state aid, nationalisations, the equalisation of social safety nets and minimum wages – removing the Maastricht criteria on debt and borrowing which mandate austerity.

A Corbyn government in Britain, and a Sanders or similarly left-led Democratic Party government in the USA, would at least have some fiscal freedom. Until they can imagine themselves operating in the same way – either collectively across an alliance of core EU countries or individually – the European social democratic parties will go on destroying themselves for the sake of Lisbon and the Bundesbank. They should stop doing so.

***

Which brings us face to face with a general principle: over the next five years the venue in which authoritarian populism and economic nationalism have to be fought is the nation state itself, and state-level democratic institutions.

Trump will be beaten at the level of Federal elections, the Supreme Court and the FBI, not the WTO or the United Nations. Orban, Kaczinsky and the Blue-Black coalition in Austria will be beaten at the level of the national cultures, parliaments, intelligentsias and the national demos – not through the authority of the European Commission and tongue-lashings by Guy Verhofstadt in the Brussels parliament (welcome though these may be).

Done intelligently, and without conceding to the rhetoric of the right, a limited reassertion of economic sovereignty is going to be key to the revival of left politics both in Europe and the USA. Indeed, if it had been done five years ago then, like a flu jab, it might have prevented the current sickness.

Working out how to reform capitalism to meet the needs of those on stagnating wages and in precarious jobs becomes easier once you accept that the place that is going to be done is national parliaments and regional assemblies. They will still have to be constrained by multilateral agreements, but they will probably look more like the flexible deals that preceded the heyday of neoliberalism, not the inflexible ones that are currently falling apart. Customs unions, free trade areas, bilateral currency pegs, an exchange rate mechanism rather than a single currency for Europe, and a two-speed structure for the EU itself – these might have to be the forms in which globalisation survives.

For social democracy, internationalism – which was rooted into its practice from the formation of the Second International in 1889 – is a strong trench to fall back on as globalism evaporates. The globalism of elites – from Mar-a-Lago to Budapest – is proving depressingly fragile; the internationalism of left parties can, given the right basis, prove much more durable.

And social-democrats will not be the sole occupiers of this second trench: liberalism, radical left, feminism and green movement have all made strong intellectual contributions to the progressive, internationalist ideology that will have to replace free market globalism.

The advantage of forcing social democratic politicians to focus on the dynamics of their own society is that in most countries they face the same demographic challenge: cultural conflict between an educated, younger workforce with liberal values and a less educated, older workforce clinging to social conservatism. It is a split between the city and the small town; between old and young; and, at its worst – as with the alt-right in America and the populist right in Poland – it weaponises gender inequality as well.

From Bernstein to Giddens, the prophets of stability socialism always focused on the atomisation of class and community loyalties, and the decline of solidarity. As early as 1899 Bernstein warned that “the precision tool maker and the coalminer, the skilled decorator and the porter… live very different kinds of life, and have very different kinds of wants”. It would be easier to unite them around race and nation than it would around pure class politics, he wrote. A century later Giddens’ entire project was premised on the idea that most social solidarities – even ethnicity and nationality, let alone class – would be atomised under the impact of marketisation and networked individuality.

It turns out that the current struggle is not between atomization versus old solidarities; it is in fact a death match between two spontaneous solidarities that can no longer coexist.

For now, wherever the authoritarian right is on the march, it is mobilising people around nationalism, racism and sexism. Yet the ideology of an educated, networked, diverse, globally focused and tolerant section of society is equally spontaneous and, in some places, stronger.

In one way, the salariat, the Millennial generation and their natural allies among ethnic minorities, women, the LGBT community have achieved what Giddens had called for: an agency born out of fear. As he wrote: “Values of the sanctity of human life, universal human rights, the preservation of species and care for future as well as present generations of children may perhaps be arrived at defensively, but they are certainly not negative values.”

Instead of a proletariat with a historic, positively-defined mission, we might have to make do with a motley tribal alliance with many missions, some of them conflicting, Giddens said.

I will return to this question of agency in a future essay, but here it is worth acknowledging how closely Giddens’ 1994 position anticipates what came to be known in the anti-globalisation movement as “One No, Many Yesses”.

The difference is, today, we have two “Noes”: no to neoliberalism and no to the xenophobic right. In turn, that limits the number of “Yeses” that are practical in the short term: yes to defending universalism, yes to mitigating climate change and yes to upholding the rule of law. That should be the terrain on which the progressive forces of humanity come together.

But social democrats should not flinch from adding one more “yes” to this list, and that is to the right of electorates to use democracy to regulate and control the market at a national level – even if this means reforming, suspending or defying the institutions through which global corporations have dictated the world’s affairs for 30 years. That is the ground on which social democracy and the radical left should converge.

The journey towards a radical social democracy will be fraught with temptations to ditch what was progressive in the era of free market globalisation alongside what’s been wrecked. In fact, studying centre left thinkers who tried to move the SPD on from Bernstein between 1914 and the early Weimar era – Karl Kautsky, Otto Bauer in Austria and the workers’ control advocate Karl Korsch – I am struck by how unstable the centre ground was between Bernsteinism and Bolshevism. Every attempt by the German centre left to stabilize, humanise and democratize capitalism was outflanked by the venality of the ruling elite and the brutality of the street politics the far right adopted.

If there had been no USSR and no Leninism, could that large and vibrant movement of German workers who vacillated between the communists and the social-democrats in Germany between 1919 and 1929 have succeeded in creating a more sustainable left social-democratic pole of attraction than the one the doomed Communist Party of Germany (KPD) did? It’s an interesting ‘what if’. Put another way, in a time of crisis and breakdown, is radical social democracy even possible?

Because today there is no equivalent of the USSR, no Lenin, and a much-weakened industrial working class, we are destined to find out the answer to that question through our own practice.

Today we need a form of social democracy attuned to a period of crisis, not stability. Accepting the need for it is the first step towards achieving it.

[i] https://www.marxists.org/reference/archive/bernstein/works/1899/evsoc/index.htm

[ii]   Davies, William. The Limits of Neoliberalism: Authority, Sovereignty and the Logic of Competition (Theory, Culture & Society) (p. xiv).

[iii] Giddens, Anthony. Beyond Left and Right: The Future of Radical Politics (p. 19). Wiley. Kindle Edition.

[iv] “Overcoming the Fear of Freedom” in Geiselberger H, ed The Great Regression, 2017

The post The second trench: forging a new frontline in the war against neoliberalism appeared first on New thinking for the British economy.

In his first monthly column for openDemocracy, Paul Mason argues that the mission of radical social democracy must be to rekindle hope in a simple idea: that life in your community will get better. Next week Paul will discuss the issues raised in this essay at a roundtable discussion hosted by openDemocracy at Goldsmiths, University of London. A video of the event will be released shortly after. 

The earliest picture I have of my Dad, John, is a class photo at primary school, sometime around 1936. He is clearly one of the poorest kids in the school and one of the most sickly: deaf in one ear, stick thin, small for his age, struggling to smile.

When I look at my favourite picture of him, on a beach at Newquay in the 1960s, he is happy, healthy and doing OK: a lorry driver who can sight-read and sight-transpose music, and discuss the ideas of EP Thompson and Solzhenitsyn.

His income had risen steadily in the post-war decades. But his life had been transformed. The technical term for what happened to him is intra-generational upward social mobility. But it does not even begin to capture the upswing in mood, quality of life, confidence and freedom of action that his generation experienced.

During the Depression, my dad used to cling to his mother’s knees to stop her answering the door, in case it was bailiffs coming to take their furniture. Furniture you could do without; the self-esteem that went out of the door with it, to be replaced by cold humiliation, was a different thing.

Today, the ghosts of my Dad’s childhood are back. Massively indebted households; poverty deep enough for food handouts to matter; rampant domestic violence; housing insecurity, and far-right xenophobic politics.  All these are symptoms of a deeper problem which has made the idea of upward mobility in your lifetime feel impossible to many working class people and – equally important – made the fear of a downward plunge distinctly rational.

The post-war Labour government of Clement Attlee met the aspirations of my Dad’s generation so exactly that it was the political equivalent of throwing a treble 20 at darts. It made, both at the time and in their memories, a satisfying clunk.

Labour under Attlee was able to transform British capitalism irreversibly because they understood: what they needed to do, who to do it for, in what order, what the risks were, and how to overcome the resistance.

Labour under Jeremy Corbyn has clawed its way to just above 40% in the polls because it has answered some of these questions; it will get to form a majority government when it answers all of them. The same lesson holds for other would-be transformative left governments across the world.

The what, the who for, the sequencing and the mitigation of risk will the subject of this essay series for openDemocracy on what radical social democracy means during the next decade.

***

What’s the problem we are trying to fix? It was described clearly by Jeremy Corbyn in his speech to the European Social Democrats’ conference in Brussels in October: “the neoliberal economic model is broken”.

That model, like all paradigms within industrial capitalism, had a beginning, middle and an end. In a brilliant confirmation of the dialectic, the same factors that drove neoliberalism’s upswing also caused its downswing.

Globalisation expanded the world’s workforce and delivered gains from trade way in excess of any previous period of international open-ness. Smashing the power of organized labour allowed a historic global reversal of labour’s previously rising share of GDP. The globalization of finance allowed household and corporate debt to grow, apparently, without destabilizing the system.

But from the mid-1990s onwards capitalism began to regurgitate capital. From the Asian crisis, to the Russian crisis, to Long Term Capital Management and then the dotcom crash of 2000-2001 a pattern emerged: an excess of capital compared to real growth and productivity.

With the wage share depressed, consumption had to be driven by credit, forcing large numbers of people to believe they had a stake in the financialisation of everyday life.

The pattern between the mid-1990s and 2008 is repetitive: capital floods into the financial sector triggering a boom-bust cycle; central banks respond by creating more money; this floods into a new asset class or country or region – triggering a renewed financial boom and bust cycle.

If, in the meantime, the information technology revolution had delivered what it promised – high productivity, high wages and high growth – this speculative frenzy might have ended with a new take-off of capitalism. The problem is: information technology is real but its value-producing properties are over-estimated. It produces increased usefulness but collapses the price of everything, above all itself.

According to the Bank of England’s economists Rachel Lukasz and Thomas Smith, out of an average global growth rate of 3-4% per year, technological innovation is responsible for precisely minus 0.2 percentage points over the past 30 years.

If you look at the positive drivers of growth identified by the Bank’s economists during the neoliberal era, they reach an inflexion point somewhere around the year 2000. In the 1980s and early 1990s about half the growth comes from the expanded global labour supply and half from “growth at the frontier of productivity”: that is rising education levels, falling inequality and the long term fiscal expansion that had pushed global government debts up to 60% of GDP by around 2000.

But from around the turn of the century global productivity growth disappears, to be replaced by “catch-up growth”: poorer countries industrializing their economies, urbanizing their populations and moving into the services sector. The price is massive financial, trade and fiscal imbalances which can only be reversed through a devastating financial crisis. Paying for that crisis boosts global government debt above 90% of GDP and has left the entire world economy dependent on monetary life support.

The problem is that over the next 30 years the Bank’s economists predict that catch up growth will peter out; growth in the global workforce will be slower; fiscal expansion from a base of 93% of global GDP will be very difficult; and tech-driven productivity is nowhere.

Their projections accord with the view of Larry Summers, the former US Treasury Secretary, who wrote in 2014:

“the difficulty that has arisen in recent years in achieving adequate growth has been present for a long time, but has been masked by unsustainable finances.”

If he is right, then the brutal conclusion we have to draw is that neoliberalism was not a solution to the problems of Keynesian system: it was a work-around.

The essential problem my Dad’s generation faced after 1973 – declining productivity and rising state spending – has not been solved by globalisation, or by vastly inflating the finance system with cheap money. It was just shoved to one side.

Unless it could go on expanding private debt and the money supply forever, sooner or later the neoliberal model was going to hit the wall just as Keynesianism did. That’s what happened in 2008. The system ran on empty until 2016 and then with Trump and Brexit the multilateral global framework began to fragment. Elites all over the world discovered that human brains cannot run on empty: they need a coherent story and the neoliberal model no longer tells one.

The implications of this for social democracy should be obvious. It means you can’t replace neoliberalism with a return to the Keynesian model. It, too, was broken. The assumption of many activists on the Labour left – that if only we could nationalise more, tax more, write better industrial strategies, upskill more people, build more infrastructure and homes, we would come out with a working model of capitalism – is wrong.

Likewise – from the Bernie Sanders movement in the USA to the Left Party in Germany – the illusion that working class discontent with globalization can be fixed by offering people over 50 a return to the economics of their childhood is also false.

In power the left will have to use tools and techniques borrowed both from the Keynesian era and from the neoliberal era, but its aim must be to design a model that is different from both – with an emphasis on modelling over planning; mixed ownership models rather than straight nationalisation, massive decarbonisation, and the proactive creation of a collaborative sector – using open source software and non-profit production.

And because all governments exist within in a highly connected global system, we will have to take a lot more people with us: foreign investors, foreign governments, foreign exchange markets.

A Labour government led by Corbyn, and committed to measures similar to those of the 2017 manifesto, would take its first steps amid resistance. It would come from an almost totally hostile press – whose job would be continuous de-stabilisation through misinformation; from those parts of the London finance sector that have made the City a playground for every crook and tax dodger in the world; and from a small but viscerally reactionary section of the population influenced by the international far right, from which Jo Cox’s murderer, the alleged Finsbury Mosque attacker and the five soldiers accused of neo-Nazism were all drawn.

Against each of these adversaries, a left-wing Labour government has to deploy the powerful weapon of hope. Not long-term hope, but the short-term promise and delivery cycle that saw my Dad’s pit nationalised and healthcare made free within two years of Labour’s election victory.

The aim of a radical left government in Britain should, over a five- to ten-year period, establish a new dynamic to drive economic growth, which replaces the broken dynamic of neoliberalism.

That means: replace growth driven by asset price inflation with growth driven by productivity. If, in the process, it has to rely on growth driven by expanding the workforce or catch-up growth with more advanced economies, or even further monetary expansion, it shouldn’t flinch from that. But Labour will have to wean consumers off cheap money; wean the elite off tax evasion and rent-seeking; wean entrepreneurs off the creation of low-wage, low value businesses; and wean the private sector off reliance on outsourcing and on rent-seeking activities like PFI.

That, in one paragraph, should describe Labour’s economic strategy. People who think John McDonnell’s fiscal policy – essentially a £50 billion redistributive tax plan plus £250 billion borrowing – amounts to an economic strategy are mistaken. These are simply the fiscal conditions for beginning a much wider transformation project.

And that transformation project has to be defined around a social goal. Labour has to use the extra money, together with micro-level reforms to company law and business regulation, radically changed outsourcing rules and a limited nationalisation programme. I will explore the options in a later essay, but the basic aim is to achieve two things:

1. Tangible and rapid improvement in the real pay, housing costs and public service quality for working age adults on middle and low incomes.
2. The revival of towns, estates and communities whose economies have had the heart ripped out of them.

This means rethinking the very concept of social mobility.

So cynical have people become during this fag-end era of neoliberalism that, on the left and among community activists, it is becoming common to hear the very idea of social mobility decried as “elitist” – as if it is always for someone else.

Since Thatcherism, it’s become a code word for the “aspirational voter” – someone who wants to escape poverty by stabbing everyone else in the back and leaving them behind; someone who wants to scale the class hierarchy even as the gaps between rich and poor widen.

For my Dad’s generation, it meant something different. It meant being able to do well by working hard, while seeing your town, your community, its built environment and its commercial vibrancy rise with you.

So we need to start defining social mobility in terms of people and place. Before they resigned in frustration at Theresa May’s negligence, the government’s Social Mobility Commission produced 16 criteria against which to state the bleeding obvious: that rural areas, coastal areas and old industrial areas are seeing conventionally defined social mobility stagnate.

But only five of their criteria concerned adult life – and these criteria were almost always static: the level of the average wage, the number of homeowners, the number of managers and professionals in an area.

At best, the official social statistics of the Tories’ now-abandoned social mobility project reflected the “value added” by schools and nurseries – not changes in the life chances of adults. The subtext was that the best you can hope for in an era of wage stagnation is that the next generation escapes their parents’ no-hope towns and dead-end jobs via the education system.

This is not good enough.

If instead, the Social Mobility Commission had measured changes in the value of take-home pay, in leisure time, in the quality and speed of public transport and the affordability of housing they would, in many areas, be recording a big reversal. And that’s even before you start considering the intangibles like how safe or how crime-ridden does an area feel, how dead or vibrant the high street, or simply whether there’s an atmosphere of hope.

In 1962 the urban theorist Charles Stokes divided the world’s informal settlements into “slums of hope” and “slums of despair”. Though no government has dared apply these categories to British towns, their inhabitants subconsciously do so.

Labour’s economic policy has to be framed in a way that offers all adults at or below the median wage the believable possibility that their real pay will rise; their housing costs fall and the quality of their environment will improve. Whereas post-war governments targeted bomb damage, slum clearance and areas of extreme privation, today it is the “town of despair”, to borrow Stokes’ phrase, that should be highest on the rescue list.

One of the first things Labour needs to do is frame new metrics that will force civil servants, local councils and outsourcing contractors to judge their success or failure against these goals – and to scrap the market metrics which have been coercively applied to the public sector to justify rip-off outsourcing and PFI contracts.

People must see a future where wages rise, instead of stagnating; where servicing their debts does not swallow half their salaries; where life in towns and cities becomes easier; where the basic amenities of life become cheaper; where there is a rich and vibrant cultural life.

An important part of this story is about restoring people’s belief in public services. That means not just funding the health service, reversing cuts to education and local government but uncapping public sector pay; creating salary structures and rewarding career paths for the millions of people who work in public services; space to innovate in public service, not just to survive the week.

For all this, you need money. Labour’s 2017 manifesto promised to raise £50 billion in taxes from corporations, property speculators and high earners to fund NHS and education spending, the beginnings of a Nordic childcare system and free university education. It was the right thing to do but it is not the whole solution. That £50 billion pushed at the limits of what can be raised in a stressed economy like Britain’s.

Far more important is the £250 billion Labour has promised to borrow and spend via a state investment bank. The next time Labour goes into an election it needs to concretise how, when and where that £250 billion would be spent. Every school needs to know how much of that money it can expect; every local Labour party needs to be asked for a wish list of what their town needs.

From the conversations I had on the doorstep around the general election in 2017, my guess is that the local demand will rarely consist only of new motorways and railway lines. I had primed myself for a Brexit backlash, but even in the classic pro-Leave communities the first encounter usually involved a person pointing angrily over my shoulder at a hole in the road and asking simply: when will this get filled?

People want the fabric of their local communities restored: youth clubs, adult social services, mental health facilities, green space and thriving high streets.

One of the most depressing things about the narrative of neoliberalism was its insistence that old communities must be disrupted, their facilities allowed to rot, so that shiny palaces of uninhabited luxury flats could be built next to them. That the pubs must close so that the high streets of small towns could become lined with shops selling alcohol for consumption at home.

Labour in power has to defy the idea that public spending on skills, human capital, the urban environment and culture is somehow “not investment”. I would like to see significant amounts of that borrowed £250 billion go into human capital and urban renewal. We’re short of nurses, doctors, home care workers; we’re short of people who can design and virtually manufacture aircraft; we’re short of recruits to the armed forces. Invest in that.

But even £250 billion may not be enough to kick-start the investment needed to restore dynamism to those areas of Britain that time – and successive governments – seem to have forgotten. That’s why a Labour government should maintain and even expand quantitative easing, and broaden the scope of what the printed money can be spent on. The aim should be – as Bank of England Governor Mark Carney himself suggested at Shanghai in February 2016 – to create a bridge to the future economic model, not a “pier” that ends up nowhere.

Any government that did what I am suggesting would be an outlier in the global system. It would meet domestic and external resistance and I will discuss in a later essay how this resistance could be overcome.

But I want to finish where I started. For my Dad’s generation, the ideas of Edward Thompson and Alexander Solzhenitsyn were – beyond the complexities – distinct signifiers. Thompson taught them that the British working class has a story, and that what Labour did after 1945, and Wilson in the 1960s, was designed to achieve progress for them before anyone else. Solzhenitsyn taught them that, if there was an alternative to capitalism, if could not be the abhorrent and inhuman forced march to planned scarcity we saw in the USSR.

When they smashed my Dad’s generation of trade unionists, and subjected them once again to the humiliation of mass unemployment, the aim of the neoliberals was not simply to defeat them, but to eradicate the idea that there might be something better than the coercive, monopolized, almost penal free market system that was then imposed.

In that sense, Thompson’s history of the working class and Solzhenitsyn’s revelations about Russia shaped the framework of the social democracy I grew up in much more clearly than, say, the writings of Labour intellectuals like Anthony Crosland.

With the industrial society I grew up in long gone, this battle for a cultural narrative is going to be harder for radical social democracy, but not impossible.

To get significantly beyond its current 40% poll ratings, Labour has to punch through into two demographics that are not yet excited by the prospect of Corbyn in power: firstly, the left-behind, impoverished and sometimes bitter people from my Dad’s generation who see de-industrialisation and high migration as the reason social mobility has disappeared. And secondly, a class of private-sector employed professionals; people happier voting Tory or Liberal Democrat, but increasingly concerned at the rising costs of their kids’ education and their parents’ social care.

The Attlee governments have been mythologized. Everybody wants to remember Bevan founding the NHS, but few know or care that Labour’s chancellor Stafford Cripps once slapped a 95% tax on the super-rich, proudly telling the TUC in 1948 that only 70 people in the country were capable of luxury spending.

And while everyone knows the post-war Labour government built houses, how many understand how vital it was that these were high-quality, low-rent properties offering tenancies for life, not insecure shoeboxes built as an afterthought to luxury developments?

Neoliberalism turned social mobility into a game of snakes and ladders – with even people on middle incomes worried that redundancy, offshoring or the insolvency of a major contractor like Carillion can plunge them several rungs down the ladder.

By implementing the Beveridge Report, and creating a nigh-impenetrable social safety net, the Labour government banished that fear for a generation.

Attlee’s 1945 manifesto gave my 18-year old Dad, in his first year down Astley Green Colliery, something positive to say both to the older generation, who believed nothing could change, and to middle class voters wary of a radical break. Its last lines contain an appeal to “all men and women of progressive outlook, and who believe in constructive change, to support the Labour Party”.

Labour’s message needs to be just as clear. Alexis Tsipras may have failed in his attempt to break Greece out of its EU-imposed austerity in 2015. But his slogan – “Hope is Coming” – sums up perfectly the message Labour and the other emerging forces of the left has to deliver to voters.

John McDonnell’s fiscal policy in 2017 acted like an electrical charge for voters in many working class communities; next time Labour needs something a lot more concrete.

People will believe “hope is coming” when they know that money, investment, decent jobs and better services are coming – not just to their town or region but to their street and postcode.

Next week Paul will discuss the issues raised in this essay at a roundtable discussion hosted by openDemocracy at Goldsmiths, University of London. A video of the event will be released shortly after.  

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