This is the concluding chapter of openDemocracy’s e-book New Thinking for the British Economy. You can download the full e-book here for free.

“It is not possible to build democratic socialism by using the ancient institutions of the British state. Under that, include the present doctrine of sovereignty, Parliament, the electoral system, the civil service, the whole gaudy heritage. It is not possible in the way that it is not possible to induce a vulture to give milk.”[1]

As the forces of entropy have continued to pull at the threadbare remnants of Britain’s empire state, Neal Ascherson’s claim in 1985 has become more potent than ever.

This “gaudy heritage” includes the House of Lords where a combination of the only hereditary legislators in the world, the only automatic seats for clerics outside Iran, and hundreds of appointed cronies get a say on all the UK’s laws. This valve in the British state allows the interests of the powerful to flow freely, while holding back progressive change.

When the Conservative party pushed through the Health and Social Care Act in 2012, which undermined the foundations of the NHS, a quarter of its peers had shares in private health companies.[2] To begin the building of the welfare state in 1910 the Commons first had to limit its influence, but it still has the power and desire to delay and disrupt much of what is proposed in our e-book.

There’s the Royal family, and the empire-kitsch nationalism it encourages, allowing tabloids to imply that anyone who isn’t loyal to Britain’s iniquitous institutions is a traitor to their country.

There’s the fact that 86% of the land, 90% of the biodiversity[3] and an unknown but large proportion of the wealth for which the British state is responsible lies outside our North Atlantic Archipelago. Stretching from the Cayman Islands to Gibraltar, from the UK’s military bases in Cyprus to the US military bases on the British Indian Ocean territory, the Overseas Territories spin a dark web around the world, allowing the mega-rich to launder their spoils in the shadow of vestigial empire and prompting the leading expert on the mafia to call the UK “the most corrupt country on earth”.[4]

There’s the constitutional oddity of the City of London, which sits at the centre of this web, which has managed its own affairs since before the Norman Conquest with a corporate-elected council, has its own police force (dating back to Roman times) and enjoys the only constitutionally mandated permanent lobbyist in parliament, known as the “Remembrancer”.

There’s the absurd concentration of power which ensures that decisions of the state are held out of reach of ordinary citizens. Local government in Britain is both less local, and has less power to govern, than almost anywhere else in the western world, helping produce a country with the most extreme regional inequality in Western Europe.[5]

There’s the mess of asymmetric devolution, the now multidimensional West Lothian Questions it delivers, and demands for more autonomy from Cornwall to Shetland. There’s the collapsed institutions of Northern Ireland; the immunity of the Bank of England from democratic influence; and the towering power of the Treasury, whose wonky models often seem to shape government policy more than the manifestos of the parties we elect.

There’s an electoral system which encourages millions to believe that voting can never make a difference, that democracy is defunct. There’s a civil service whose culture and revolving doors with the institutions of British capital ensure that it would likely be as much of a barrier to change today as when it was founded as a check against the growing enfranchisement of working class men in the 19th century, on the back of the Northcote-Trevelyan report[6], whose co-author, Sir Charles Trevelyan, is most famous for his genocidal approach to the Irish famine, and who based its structure on the lessons of the colonial administrators of the East India company.

There’s the lack of constitutional protections for human rights or civil liberties. One of the central exhibits in the Stasi museum in East Berlin is a bug inserted inside a kitchen door, which had recorded family conversations for years. But the Edward Snowden revelations showed that the UK spy agency GCHQ’s Optic Nerve programme collected images of millions of people through their laptop cameras and smartphones: a level of surveillance that the government of the German Democratic Republic could only dream of, and which poses a drastic threat to the activism and journalism needed to hold power to account. As the Guardian revealed at the time: GCHQ had a “sustained struggle to keep the large store of sexually explicit imagery collected by Optic Nerve away from the eyes of its staff” [7].

While the US has constitutional protection to stop the government spying on civilians without a warrant, the UK doesn’t, and the ability of structurally racist security services to collect both data and meta-data, tracking our networks and movements, gives it capacity for unprecedented social control, including new tools for undermining social movements and trade unions during protests and strikes.

The UK sits at 40th in the latest rankings for press freedom, behind almost every other Western country.[8] After Beijing, London is the most watched city in the world, while the shifting terms of citizenship as Britain has made its way from an empire to an EU member to neither – is the beaker holding the poisonous conversation about immigration.

Underlying all of this is the ultimate principle of the British constitution, that sovereignty lies not with the people, but with the crown in parliament: the compromise of failed democratic revolutions, which stumbled as the bourgeoisies of previous centuries were bought off with the plunder of empire and slavery.

But these questions are as relevant today as ever. Neoliberalism is the process of shifting decisions from one person one vote to one pound – or dollar or Euro or Yen – one vote. It’s no surprise that it has thrived most in those countries in which the democratic revolutions were least complete, in which people are most easily convinced that markets are a better way to make decisions than politics.

Most of the policy proposals in this volume demand a different approach: that democratic institutions of various flavours take some kind of control over major areas of decision-making. And if they are to do so, it’s vital that they are genuinely democratic, that they are responsive to the needs of the population, and that they act in the interests of those they are supposed to serve.

And if these proposals are to survive beyond the lifetime of more than one government, then their implementation must come alongside a process of empowering citizens to defend those policies and institutions which work. One of the many lessons from the Blair/Brown era is that much of the good they did do – Sure Start Centres and rising public sector pay – was swept away within the term of one austerity happy government.

What is to be done?

Image, K99.com

Britain’s constitutional debate often feels like a car owner attempting to repair a smashed-up windscreen by trying to mend each fracture separately. A much better approach would be to replace the whole mess with a constitutional convention.[9]

Specifically, the government should gather a jury of citizens – representative of different races, genders, ages, classes, regions and nations of the UK – to draw up a new constitution, and then hold a referendum or series of referendums on whether to accept it. It was a similar process in Ireland which triggered the magnificent referendums there on equal marriage and abortion rights, which have both undone huge historic injustices, and also unleashed an energy which has helped change Ireland. But while a huge amount can be learned from the Irish process[10], the UK, without a codified constitution to start with, begins from much further back.

Of course, once such a group was convened, it wouldn’t be up to the government to decide what it concluded. But progressives should absolutely be free to advocate for particular decisions during the process, and what follows are a number of the changes I would wish to see.

What rights?

Human rights can be an atomising way to see morality and they are of little use in determining the most complex questions, which arise when rights conflict. However, democracy requires protection for the marginalised and minorities, for the unloved and unlovable, and for everyone against the powerful. The current set-up means that any government – especially without the framework of the EU – could quickly pass a law abolishing any right it didn’t like. This is why most countries enshrine rights in constitutions, which require deeper democratic mandates to amend. A bottom up Convention should help ensure that such rights are seen not as an imposition from some ‘metropolitan elite’ as they are sometimes described, but as emerging from a conversation among the people.

Among the principles that should be enshrined is the core of the Magna Carta – equal access to the justice system, which has been so corroded by years of cuts to legal aid. Such a principle is core to any economic reforms: how, for example, can we ensure minimum wage laws are enforced or tenants’ rights are protected unless workers and renters can access the courts on equal terms with their bosses or landlords?

A set of rights for women would be important in our systemically sexist society. While they should of course be drafted by women themselves, I’d include rights to equality in pay, property and political representation as well as reproductive rights such as access to safe abortions. Similarly, people of colour, LGBTQI people and disabled people face structural discrimination and their rights should be enshrined.

Recent scandals around both the state and corporations spying on trade unionists and environmental activists show the need for protection of both privacy, and of collective organising. And the story that the Home Secretary will allow people accused of terror charges to be sent to the United States to face a potential death penalty shows the potential fatal consequences of elected dictatorship.[11]

The 2016 Trade Union Act drastically undermined the capacity of workers to organise collectively, and in 2018 the International Trade Union Congress ranked the UK alongside Russia and the Congo as a country where there are “regular violations of workers’ rights”[12]. A constitution should enshrine collective rights for workers, and for marginalised groups such as the UK’s traveller community, who have been victims of cultural vandalism in recent years.

Likewise, we should guarantee not just civil and political rights but also social and economic rights. It seems likely that a list of rights drawn up by a representative sample of British people would include a right to healthcare, and legal protection for the NHS as a universal service, making future attempts at eroding it much harder, and similar rights should exist to education, social care, housing, food and digital access.

And when other countries have debated rights in the modern era, some have chosen to think beyond people. The constitutions of both Bolivia[13] and Namibia[14] enshrine protections for nature, which mean environmentalists and indigenous people have legal recourse to challenge corporate polluters and plunderers in the highest courts in the land. If the point of constitutions is the long-term stewardship of a civilisation, then it ought to build in protection for the planet.

The same is true of digital rights. If data is the new oil, then asking who owns it means asking who owns much of our economy. A modern democratic revolution should have Google and Facebook in mind alongside government and finance. There are important questions to be asked about how this sort of data should be owned, stored and used. Our current governance structures have proved woefully incapable of even asking those questions – it is clueless when it comes to contemplating possible answers.

And the flip-side of data protection is transparency. The 2001 Freedom of Information Act has helped sweep aside some of the deep corruption of the British state. Without it, we wouldn’t have had the expenses scandal or known as much as we do about corporate lobbying and the revolving doors between the civil service and big business. But with MPs dodging the Act with WhatsApp groups, and government departments now turning down Freedom of Information requests wholesale, with more and more of the functions of the state being privatised beyond the reach of the Act (for now) there’s a deep need for new rules – and a newly empowered Information Commission – to ensure our government is transparent.

And just as the Information Commission needs to be renewed, so the Electoral Commission and the rules protecting our democracy from big money need to be comprehensively refreshed. In the 2010 election – which took place immediately after the banking crash – more than half of the donations to the Tories came from the City of London.[15] They were paid to not regulate the banks, and they didn’t: a historic dereliction of duty. As I write this, I’ve spent nearly two years investigating where much of the cash that paid for various campaigns to leave the EU came from, and I couldn’t tell you the answer with certainty, other than that it came through tax havens and loopholes in the British constitution, from people with vast wealth who believed that Brexit was in their interests. Without either public funding for political parties, or much tougher enforcement of stricter laws on funding, British democracy is in real trouble.

Similarly, the 2000 Elections Act was written before the advent of Facebook or Twitter. These are new spaces for democratic debate and they need new rules.

Regulation, regulation, regulation

There’s another way to look at the Information Commissioner’s Office and the Electoral Commission. Both emerged during the Blair/Brown years, where regulation became part of a “third way” compromise between public and private ownership, and led to a set of organisations which blur the old constitutional lines between judiciary, legislature, and executive. For the most part, though, as Anthony Barnett has pointed out Britain has regulated goods and services in an increasingly complex and globalised market by participating in the EU. [16] And if we are to leave the EU, then we will need to rapidly take on many of these functions, and in that context, there is important thinking to be done about what sorts of regulators we want in the future.

If, for example, the Food Standards Agency, or the Financial Conduct Authority, or the Care Quality Commission, or Natural Resources Wales, or the General Pharmaceutical Council, or the Social Care Inspectorate, or all of the new regulators the UK will have to create as we take on work previously done at an EU level – are to have the powers they will need to hold the powerful to account, then they will need the legitimacy of democracy in some form. Otherwise they will find themselves in the same position as the EU: facing accusations of being unaccountable legislators. And this applies as much to those who regulate democratic and non-profit institutions as it does those who oversee the market.

Britain’s current regulatory structure was mostly built by a New Labour administration which was largely populated by the great and good of bureaucratised NGOs and elites from within the public sector. As such, it is essentially a new form of unaccountable governance by those elites. It will either find a way to democratise itself, or it will be torn down by those it ought to be regulating, and their allies in the media.

The basic functions of the state

Image, ‘inspector gadget’ with thanks to Clare Sambrook.

At the very core of the state sits two groups. First, there are those who run it: the civil service. Second is those who administer its most defining power: the monopoly on legal violence.

In recent years, the work of the civil service has been increasingly outsourced to the big four accountancy firms, Deloitte, PwC, EY and KPMG. To take just one of them, PwC has played a key role in everything from military procurement[17] to Brexit negotiations[18], to the justice system[19] to healthcare[20] and almost any other function of the state you might imagine.

The big four audit all but one of the FTSE 100 and 97% of US public companies[21], meaning they were responsible for signing off the books of all of the major banks which would then go on to collapse in 2007/8.[22] PwC is also the UK’s “leading provider of tax services”[23], and in 2015 was accused by Margaret Hodge, chair of the House of Commons Public Accounts Committee of “promotion of tax avoidance on an industrial scale”.[24] In 2018, the firm was banned from auditing listed companies in India after a company it had audited turned out to have committed a billion dollar fraud (PwC denied any wrongdoing).[25]

Ahead of the 2015 election, PwC was, after the trade unions, the biggest donor to the Labour party[26], having seconded staff to the offices of then shadow ministers Chuka Umunna and Ed Balls to write the party’s policy on tax and education. Given the key role that it plays in writing, shaping and delivering government (and opposition) policy, PwC, alongside the other big-four firms, should be understood as a key component of the modern British state (and of most other Western states).

As the journalist Ellie Mae O’Hagan has pointed out, there was until 2010 a public body called the Audit Commission, which audited 11,000 public bodies, but which was abolished by the coalition government. [27] It’s vital that we bring back the Audit Commission, and I would suggest that as well as all public bodies, all major firms ought to be audited by it, rather than being allowed to choose who will check their sums. More broadly, any progressive government is likely to find it impossible to deliver its agenda with a hollowed out civil service, which relies heavily on the big four to deliver any major project: the reforms in this volume conflict directly with the interests of most of their corporate clients, and of the big four themselves. This means there will need to be a major project in re-building and re-skilling the civil service.

Similarly, the monopoly on violence has become more of a competitive marketplace for physical force. From the G4S employees who suffocated Jimmy Mubenga to death[28], to the guards in our privatised prisons and the staff at the firm Maximus[29] (who determine whether or not people are fit to work), the right to decide who lives and who dies is increasingly being outsourced to private firms. And as the NGO War on Want has revealed, this is equally true outside the country.[30]

Since the 2001 invasion of Afghanistan, the work of war has increasingly been contracted to mercenaries, whose industry has grown exponentially. The industry is now worth hundreds of billions of dollars, and is one of the few sectors in which the UK is the world leader, in part because the government allows it to regulate itself. This process had a direct impact on British and American democracy when SCL, a mercenary psychological operations contractor hired by NATO and the defence departments of various of its members, realised it could apply the skills it had developed in warzones to domestic campaigns, and set up a subsidiary called Cambridge Analytica, which secured the contract to run Trump’s 2016 presidential campaign, while its close associate, AggregateIQ, effectively ran the pro-Brexit campaign. In both cases, the firms won by smearing racism across the internet.[31]

Private armies, mercenary military propagandists and social-media monopolies are drowning our democracy. We need robust independent media and democratically refreshed public broadcasters. And if prisons, the police and the military are to exist (that’s another debate), there must be a constitutional requirement that any monopoly on legal violence and the broader work of war is held directly by a democratically accountable state, not outsourced to mercenaries.

Where is British?

British Overseas Territories and Crown Dependencies. Image, George Bozanko, Wikimedia Commons.

The geographical reach of the British state peaked in 1920 at around 25%[32] of the surface of the earth and remains much larger than most British citizens realise – with most of it still falling in the Southern Hemisphere. There are, by my count, 18 legislatures sitting under Westminster’s wings; with varying degrees of autonomy over populations ranging from the 5.3 million citizens of Scotland to the 50 people on Pitcairn, descendants of the mutineers of HMS Bounty and the women they kidnapped and raped.

First, there’s the five recognised nations of the UK. Recent polls in Scotland have consistently shown majorities of people under the age of 55 supporting independence[33], and sooner or later, Westminster will find itself facing a constitutional choice similar to the one which has been bungled by the Spanish government in Catalunya: if Holyrood demands a legally binding independence referendum, will Westminster block it?

Similarly, the sickly Good Friday Agreement – the official discussion of which has been described by Robin Wilson as a constitutional re-enactment of Monty Python’s dead parrot sketch[34] – requires that the UK Secretary of State for Northern Ireland hold a referendum on Northern Ireland’s constitutional position “if at any time it appears likely to him [sic] that a majority of those voting would express a wish that Northern Ireland should cease to be part of the United Kingdom and form part of a united Ireland.”[35] How the Secretary of State is supposed to divine such a likelihood is, however, left unsaid, and it doesn’t take much imagining to ponder a scenario in which disagreement about this reaches crisis point, producing further chaos in what is already one of the poorest corners in Northern Europe. In the meantime, as I write, every institution set up by the Agreement apart from the police service is not operating, and the likely imposition of border controls with the Republic risks bringing with it chaos and queues.

Meanwhile, England and Wales are going through their own, different, and ongoing, processes of emergence from empire, in which England maintains the arrogance of believing it isn’t just a normal country, while Cornwall[36] – a recognised national minority and the second poorest region of Northern Europe[37] – normally goes unnoticed, despite strong support for devolution there.

Then there’s the fourteen British Overseas Territories: Akrotiri and Dhekelia; Anguilla; Bermuda; British Antarctic Territory; British Indian Ocean Territory; British Virgin Islands; Cayman Islands; Falkland Islands; Gibraltar; Montserrat; Pitcairn, Henderson, Ducie and Oeno Islands; St Helena, Ascension and Tristan da Cunha; South Georgia and South Sandwich Islands; and Turks and Caicos Islands. Each of these has its own complex stories, from the disgraceful expulsion of the Chagosians from the British Indian Ocean Territory to the child rapes on Pitcairn[38] to the financial secrets of Cayman and Gibraltar.

Finally, there’s the Crown Dependencies: the Isle of Man, which has the oldest (and only tri-cameral) parliament in the world, and the Bailiwicks of Jersey and Guernsey, the latter of which includes three jurisdictions: Guernsey itself, Alderney and Sark. These are the property of the Crown and have a series of complex arrangements with the British government, particularly around defence.

Twice since 1980, Britain’s armed forces have fought wars in defence of Overseas Territories. In 1982, the Falklands War revived Thatcher’s ailing government and so played a key role in shaping a generation of British politics. In 2003, the famous ‘dodgy dossier’ declared that Saddam Hussein had weapons of mass destruction capable of being deployed within 45 minutes against Akrotiri and Dhekelia, Britain’s mini-military dictatorship on Cyprus, where 8,000 Cypriots live under the rule of an appointee of the Department of Defence. This is what provided the supposed legal justification for the invasion which triggered the ongoing disaster in Iraq, and which has helped shape much of British politics ever since.

Under the protection of Britain’s armed forces, but without the scrutiny of international politics, the Crown Dependencies and many of the Overseas Territories play a key role as the world’s most important network of tax havens and secrecy areas. More than half of the companies registered in the Panama papers were listed in Britain or its Overseas Territories, and Crown Dependencies.

A distinct part of any constitutional convention would probably have to look at the Overseas Territories and Crown Dependencies in conversation with those who live in them and their governments. Each has a different history, different controversies and by their nature, each will have a slightly different relationship with the UK.

However, here is my fairly simple proposal. First, England should be given a parliament of its own and treated as the biggest in a family of nations, not the imperious parent. If the people of Cornwall wish their own, separate chamber, then they should have one too. England’s regions (such as Yorkshire) should also have their own assemblies. While this will be attacked as “more politicians” by neoliberals, a growing state, with publicly owned public transport, water, regional investment banks and other renationalised services means more work for elected officials, and such services will often be best managed at a regional level.

Second, if the people of any given Overseas Territory wish to remain under the purview of the British state and to nestle under the protective wings of Her Majesty’s Royal Air Force, then the government should offer a basic set of rights and responsibilities, including the two or three MPs between them that their collective population merits. They should be allowed legislatures of their own, like Scotland or Wales, where they can develop their own health and education systems. But corporation tax rates, transparency laws and basic rights for citizens should be shared: no more tax havens and secrecy areas. They should not be allowed to use the British state as a protective screen as they hide wealth for the crooks of the world.

Thirdly, each constituent nation of the British state – from the citizens of Scotland or England to the people of Pitcairn or Montserrat – should be given a legal right to vote for their own independence or to join with another country of their choosing, with a referendum triggered by a petition signed by a pre-agreed portion of registered voters: say, a fifth. Those who wish to remain within the UK should negotiate between them which powers they wish to delegate up to Westminster, and which they wish to retain at a national level.

How to arrange our democracy

Ester Tewogbade, 3, from London, helps support her mother Dolapo show support for reform in the House of Lords. Image, Michael Stephens/PA Archive/PA Images

Then there’s the basic infrastructure of our democratic processes. The question of what to do with the House of Lords is long running. As Anthony Barnett has pointed out to me, if it were replaced by a proportional senate but the Commons left unreformed, then it would immediately become the more representative chamber and accrue more moral legitimacy. And so, both must be reformed at once.

Proportional representation is both fairer and tends to produce more progressive governments[39] – citizenries, on the whole, are more egalitarian than their establishments. Endless dull texts have pondered which system is best, and I don’t propose to mull here on the various advantages of STV over AV+ or D’Hont[40], but it seems clear that a switch to a system in which every vote contributes to the final result would be an important step towards restoring faith in democracy.

The institution of Westminster is itself damaging to British democracy, as the disciplinarian mother of parliaments insists that its citizens are seen but not heard. Both Caroline Lucas[41] and Mhairi Black[42] have written well about their experiences as MPs entering a building that intimidates anyone unfamiliar with the cloisters of an old public school or Oxford college, where you are given a hook for your sword but have to fight for desk space. It is closer to Versailles – which aimed to awe subjects into submission – than it is to more egalitarian institutions, such as the Scottish Parliament. The fact that only 30% of MPs are women – 47^th in the world, just behind Sudan[43] – indicates a deep sickness in the culture of the place, and recent stories of heavily pregnant MPs being marched through the voting lobbies show that things need to change.

To walk into the Houses of Parliament, I need to pass a statue honouring a man – Oliver Cromwell – whose troops murdered a fifth of the population of my home city, Dundee[44], and who is considered by many in Ireland to personify the slaughter of their ancestors by the British state.

A simple solution would be to turn the whole palace into a museum and debunk to a city further north. Apart from anything else, Northern England’s rackety trains might finally get the upgrade they have long needed if more MPs were forced to travel on them every week. And if the two chambers were placed in different cities, the narcissism of the place might dissipate a little. At the same time, the various absurd traditions of Westminster should be replaced with clear, accountable democratic procedures, including two proportionally elected chambers with different systems, an element of sortition (which I’ll come to), and mechanisms to ensure women and minority groups are fairly represented.

But ultimately, bringing power closer to people is vital if we are to build a democracy at a more human scale. For too long, local government has been stripped of power, to the point that Britain is now, by some measures, the most centralised developed country. It’s no surprise that people have paid less and less attention to disempowered local authorities with little capacity to shape their communities. But when people are given real decisions, they show up in their thousands.

Across Europe, the average population of a local authority is 5,620.[45] The smallest council area in England is West Summerset, with 34,000 people.[46] The biggest is Birmingham – the largest ‘local’ government area in Europe – with 1.1 million people.[47] Scotland and Wales aren’t much better, while local government in Northern Ireland has very few powers.

In Germany, the average local councillor represents 600 people.[48] In England, that figure is 7,000, with 3,500 in Wales and 4,270 in Scotland. In Norway, as Lesley Riddoch points out, one in every 81 people will stand for local election at some point, while the equivalent figure in Scotland is one in 2071.[49] And that’s before we consider the numbers who stand for election to the broad array of other democratised institutions, like school boards. As Riddoch points out, “In Norway a small kommune of 3,000 people is still responsible for fire and police.”

Moreover, she goes on to say, “Sweden has even more powerful local councils. Anyone earning less than £35k per annum pays all their income tax to the local council and none to central government; financed by higher rate earners and corporation tax.”

For neoliberals, of course, none of this matters much. You’re unlikely to mind what sort of government is getting out of the way of the market, and the more ‘politics’ is confined within the walls of an obviously anachronistic Westminster, the more that the mantra “there is no alternative” wins. But once we accept that neoliberalism has failed and some sort of government intervention matters, if we believe that politics is about power everywhere, then the sort of government – and its ability to understand local differences – becomes enormously important.

While there is often discussion among progressives about the Nordic social democratic model, there is little understanding in Anglo-American debate that the key to building the ‘social’ has been the ‘democracy’.

Since the Beveridge Report, progressives in Britain have relied on a strategy of universalism to defend the social security system, on the grounds that public services just for the poor end up being poor public services. This, of course, remains true, and Blairism’s embrace of means-testing was a key precursor to Cameron’s cuts: see, for example, the broad resistance to fortnightly bin collection versus the ease with which housing benefit has been cut.

It’s clear, though, that universalism isn’t sufficient. If future governments hope to protect parts of our lives from the brutality of the market for the long-term, that means building institutions and policies that people will be willing to organise to defend, over generations. And the best way to do that is to involve citizens directly in building and running those institutions.

Beyond social democracy, to radical democracy

In 1972, the Glaswegian trade unionist Jimmy Reid was elected rector of Glasgow university on the back of a work-in he led of Clydeside shipbuilders. The speech he gave accepting the post was so powerful it was re-printed in the New York Times. In it, Reid railed against both the market, and the centralisation in the local government reforms going through at the time. He opened with a stark claim: “Alienation is the precise and correctly applied word for describing the major social problems in Britain today”.[50]

In the 46 years since he gave his speech, the extent of alienation has only got worse. The claim is even more true today than it was at the time. But three major things have changed.

The first is that progressive governments at both local and national levels across the world have developed a range of techniques to support citizens to make large scale decisions through participatory and deliberative processes. Since 1989, the people of Porto Allegre in Brazil have come together every year to choose how to spend the city’s multi-million pound budget. And the scheme has been such a success – even the World Bank[51] has accepted that it’s been more efficient in alleviating poverty than the conventional process of leaving budget decisions to political elites – that it’s been repeated in cities across Latin America, and even the world. In Edinburgh, where I live, the people of Leith have an annual process for divvying out community funds, inspired by lessons from Brazil.

One of the most remarkable effects of such processes though is not just the way in which it changes how money is spent, but how it changes the people involved. As the World Bank report mentioned above says, “information disclosure through meetings involving public representatives has facilitated a learning process that leads to a more active citizenship. Citizens have become aware of new possibilities, and this has helped them to decide on civic matters influencing their everyday lives.” A study by the University of Columbia in 2005of the impact of participatory budgeting on the people of the Argentinian city of Rosario came to a similar conclusion. [52] People they interviewed talked about how the process had helped bring together the community and give them a sense of ownership over it.

The various experiments in radical democracy that have taken place around the world stretch beyond budgeting, and they don’t always involve mass assemblies: as mentioned above, Ireland’s recent constitutional referendums were the result of a citizens’ jury, and the participatory processes have been used to look at a whole range of questions. But what they have in common is that they allow space for people to have conversations about the future, outside the endlessly atomising force of the market.

The second thing that has changed since Jimmy Reid railed against alienation is the arrival of the internet, and with it a series of tools to facilitate collective decision-making. While it’s important not to fall into the perils of tech-utopianism, the web can be a powerful tool for radical democracy.

And the third change is the arrival of big data. Mostly, this important new tool has been used to sell us things and spy on us. But the depth of information humanity is now able to gather on how to understand major problems ranging from cancer rates to climate change is vast.

In this context, the centralised British constitutional system – where 650 MPs plus 792 Lords make the vital decisions which affect all of us, is an absurd anachronism, designed more to protect a ruling elite than to unleash the collective wisdom of the country.

As Peter McColl has argued, the mix of near-universal literacy, the power of pervasive and ubiquitous data to help us better understand the challenges we face, and success in trialling and developing the tools of radical democracy, means that now is the time for a participatory society.[53]

Such suggestions are often contentious among those who worry that decentralising the power of the state can be a divide-and-rule tactic which allows capture by big business. But in reality, the states which have managed to stop being entirely controlled by big business are the least centralised, because the best guardian against corporate capture is an empowered citizenry with hands-on control of public investment.

In practice, what I’d propose is a mixed model of direct and representative democracy, with powerful local government facilitating participatory processes for decisions like budgeting and the production of urban plans, and national government using jury-style processes as a stage in the writing of major new laws, to oversee the work of public bodies such as government departments, police forces, regulators and the central bank, and in public inquiries as Dan Hind has proposed.[54]

Who’s sovereign?

The Queen’s Speech. PA/ROTA PA ROTA/PA Archive/PA Images

Any basic politics course will teach you that such a society is anathema to the British constitution. In the UK, we’re told, the Crown in parliament is sovereign. In reality, however, this principle is already broken, as Anthony Barnett and I pointed out last year.[55]

First, there’s the question of Scotland. Here, there is a strong cultural belief that the people of Scotland are sovereign, sometimes claimed to date back to the declaration of Arbroath in 1320. In 1989, the majority of Scottish MPs (mostly Labour and Liberal Democrat) signed “the Claim of Right”, which declared “We, gathered as the Scottish Constitutional Convention, do hereby acknowledge the sovereign right of the Scottish people to determine the form of Government best suited to their needs”.[56] A majority of MSPs currently sitting declared, as they were sworn in, that “the people of Scotland are sovereign” – a position taken by both the Scottish Government and the Church of Scotland[57], but in direct contradiction to the sovereignty claimed by Westminster. And when David Cameron, Nick Clegg and Ed Miliband signed “the Vow” ahead of Scotland’s independence referendum, they declared that the Scottish parliament is permanent: a promise restated in the 2016 Scotland Act[58], which bans future incarnations of Westminster from abolishing it without consent of the people of Scotland, meaning that there is a level of sovereignty greater than that of the Crown in Parliament.

This principle went further in 2017. When the activist Gina Miller won her case at the supreme court determining that MPs had to vote on Brexit, two things happened. First, the three dissenting Supreme Court judges argued that they could not instruct Parliament to vote on the matter, because to do so would be to declare that the court had power over Westminster, and therefore that Parliament was not sovereign. They lost 8-3, but the very fact that three of the country’s most senior judges believe that this means that the Supreme Court – another product of Blair’s constitutional tinkering – can now overrule the Commons is vitally important. Secondly, MPs then voted, overwhelmingly, for something they believed was a bad idea, because, they said, the will of the people must be respected. They abdicated responsibility for deciding on the matter. In other words, the Brexit vote produced the best display that, in reality in modern Britain, we have no idea where sovereignty really lies.

There are two reason for this collapse in the idea that the Queen-in-parliament is sovereign. First, the contemporary concept of parliamentary sovereignty dates from AV Dicey’s famous book, ‘Introduction to the study of law of the constitution’ from 1885. When he wrote that parliament is “an absolutely sovereign legislature” with “the right to make or unmake any laws”, London was the capital of the biggest empire in human history. It was a literal description of the power of a chamber which, ultimately, could enforce its will across the world. This, clearly, is no longer true, with power shifting both east and west, and capital becoming increasingly footloose.

Secondly, Anglo-Britain (the Welsh, Irish and Scots have different stories), maintains a cognitive dissonance about the monarchy. On the one hand, they are at once the deities of reality TV Britain and icons of empire-kitsch sentimentality. They are the zenith of a nationalism so ubiquitous it goes unmentioned, which permeates the society of a past-it empire desperate to remain cool in the modern media market. On the other hand, the absurdity of the idea of the divine right of kings in a country where fewer than one in fifty actually attend a Church of England ceremony each week is overwhelming. We are left with a Schrodinger’s sovereignty, where the compromises of the seventeenth century are alive, until you look at them too closely.

Looked at another way, at the core of the British constitution lies the creaking old class system. Only five British universities have produced a prime minister, and more than twice as many have gone to Eton as to non-fee paying schools. And at the centre of this system, reminding us all that it’s the natural order of things for posh white people to be in charge and that vast inequality is part of our national culture, is the monarchy.

To clean up our current constitutional mess means therefore means resolving the question of who is sovereign. For any democrat, the answer to that question is “the people”. But that means a head-on confrontation with monarchism: whilst, of course, it would be possible (though undesirable) to maintain a Nordic style monarchy, with a role that is genuinely only ceremonial, even such a cautious move would almost certainly be treated by the tabloids as what it was: an all-out assault on British traditions, and so would likely provoke a confrontation with Anglo-British nationalism.

To understand the scale of this challenge, you need to understand that the UK is currently spending around £170 billion renewing its nuclear submarines, with the support of both main Britain-wide parties, despite MPs knowing them to be technologically redundant, because it’s easier to do so than to explain to the voters of Anglo-Britain that the sop they got for losing the empire was designed in a world before maritime drones.[59]

A new economy is impossible without democracy

There will be those who read what I have proposed above and feel that none of it is a priority. There are people starving on the streets of Britain, and we need to hurry on with sorting the housing crisis and income inequality. The planet is burning, and we must prioritise the transition to a low carbon economy.

Others might argue that this is all a side-show: power in our system lies with big corporations, not governments. The system we should be focussing on is neoliberal capitalism, not archaic questions about constitutional sovereignty, and provoking a bare-knuckled fight with revanchist nationalism is a dangerous game.

But a political system built to ensure elite rule will always mean that decisions are steered towards the interests of the elite. Powerful property owners still have huge sway. Shell and BP still have their teeth deep into the Foreign Office. And we will never succeed in taking power away from corporate elites if the only alternative is a laughably anachronistic system of quasi-democracy that is deeply in hoc to those elites anyway.

Deep down, people understand this. When Scotland’s independence referendum campaign kicked off, it was the height of austerity, and the response from much of Scottish Labour was to treat it as a sideshow to ‘bread and butter’ issues. But the vote produced huge levels of political engagement, unseen in a generation, because people understood that without mending the system somehow, the bread and butter questions would never be answered. Similarly, the biggest turn out in England in recent years was the European referendum, when people voted for a campaign promising them the chance to “take back control”: the ultimate desire in the age of alienation.

The future

If a future UK – or its consciously uncoupled constituent countries – is to transform itself into a democracy, then it’s imperative that the rules of that state are written not by the politicians of any one party, but through a process which itself is seen as legitimate, democratic, and plural. The best evidence seems to be that mixed models work well: where a randomly selected and representative jury is interspersed with a small group of elected politicians from across the party spectrum (who are there mostly to advocate for the process in the old institutions), and given the power to determine its own direction and ask advice from the experts it chooses. Such a group, I would hope, would bring a string of proposals similar to those I’ve sketched out above, to the public, through carefully thought through referendum processes, which would lead us to democracy. Perhaps one such proposal would be a return to the EU.

In the last five years, these islands have seen four iconic, culture-shifting referendums. Scotland’s independence vote shifted attitudes in the country, making them more progressive as thousands became enthused about politics once more. Ireland’s votes on abortion and equal marriage awoke a progressive spirit and helped the country cast off its conservative Catholic heritage. England’s Brexit vote (because that’s what it was) pulled in a different direction, unleashing a negative energy which often feels scary. This certainly reveals the risk of badly run democratic process in a noxious context. But the risk of progressives retreating to a belief in elite rule is much greater.

National identity and national institutions help create each other. England, specifically, desperately needs to find a way to escape the prison of imperial longing, and emerge as a modern democracy. A vast national debate about how to really ‘take back control’ from those who have hoarded power for generations is long overdue. It’s time to complete the democratic revolution.

Click here to download a free electronic copy of ‘New Thinking for the British Economy’. Hard copies of each chapter can also be purchased for £1 via Commonwealth Publishing and the Democracy Collaborative. If you would like to order physical copies, and inquire about organising author events, please contact Dan Hind or visit the Commonwealth Publishing website – www.commonwealth-publishing.com

Further reading

Barnett, A. (2017). The Lure of Greatness. Unbound.

Cave T, Rowell A. (2015). A quiet word: lobbying, crony capitalism and broken politics in Britain. Penguin.

Hind, D. (2018). The Constitutional Turn, Liberty and the Co-operative State. Available at: https://opendemocracy.net/uk/dan-hind/constitutional-turn-liberty-and-co-operative-state

Lucas, C. (2015). Honourable Friends: Parliament and the Fight for Change. Granta Publications

McColl, P. (2018). It’s time for a participatory society. Available at: https://opendemocracy.net/uk/peter-mccoll/its-time-for-participatory-society

openDemocracy. (n.d.). Great Charter Convention. Available at: https://www.opendemocracy.net/ourkingdom/collections/great-charter-convention/constitutional-convention

Ramsay, A. (2018). Cambridge Analytica is what happens when you privatise military propaganda. openDemocracy. Available at: https://opendemocracy.net/uk/brexitinc/adam-ramsay/cambridge-analytica-is-what-happens-when-you-privatise-military-propaganda

Reid, J. (1972). Alienation. Available at: https://www.gla.ac.uk/media/media_167194_en.pdf

Riddoch, L, 2017: Local democracy needs a hand. Available at: https://www.scotsman.com/news/opinion/lesley-riddoch-local-democracy-needs-a-hand-1-4415708

Sambrook C and others. (n.d.). G4S, Securing whose world. openDemocracy. Available at: https://www.opendemocracy.net/shinealight/g4s-securing-whose-world

Sambrook, C. and Omonira-Oyekanmi, R. (n.d.) Shine a Light. openDemocracy. Available at: https://opendemocracy.net/shinealight

Shaxton, N. (2011). Treasure Islands, tax havens and the men who stole the world. Palgrave McMillan.

[1] Ascherson, N. (1985). John MacIntosh Memorial Lecture. Available at: https://opendemocracy.net/uk/neal-ascherson/ancient-britons-and-republican-dream

[2] Robertson, A. (2012). Will private interests of peers swell the vote for England’s health bill? Retrieved from: https://opendemocracy.net/shinealight/andrew-robertson/will-private-interests-of-peers-swell-vote-for-englands-health-bill

[3] Rand, M and Briggs, J. (2016). The United Kingdom’s Overseas Territories harbour an environment worth protecting. Retrieved from: http://www.pewtrusts.org/en/research-and-analysis/articles/2016/07/07/the-united-kingdoms-overseas-territories-harbour-an-environment-worth-protecting

[4] Yeung, P. (2016, 29 May). UK is most corrupt country in the world, says mafia expert Roberto Saviano. Retrieved from: https://www.independent.co.uk/news/uk/home-news/roberto-saviano-britain-corrupt-mafia-hay-festival-a7054851.html

[5] Inequality Briefing. (2015). Regional Inequality in the UK is worst in Western Europe. Retrieved from: http://inequalitybriefing.org/brief/briefing-61-regional-inequality-in-the-uk-is-the-worst-in-western-europe

[6] Northcote S, Trevelyan C. (1854). The Northcote-Trevelyan report. Retrieved from: https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1467-9299.1954.tb01719.x

[7] Ackerman, S, Ball, J. (2014). Optic Nerve: millions of Yahoo webcam images intercepted by GCHQ. Retrieved from: https://www.theguardian.com/world/2014/feb/27/gchq-nsa-webcam-images-internet-yahoo

[8] Reporters Without borders. (2018). Retrieved from: https://rsf.org/en/ranking

[9] White, S. (2015). Building a constitutional convention: Citizens and the UK’s constitutional moment. Retrieved from: https://onlinelibrary.wiley.com/doi/full/10.1111/j.2050-5876.2015.00838.x

[10] See more at: https://www.citizensassembly.ie/en/

[11] Grierson, J. (2018). UK government criticised over change in death penalty stance on Isis pair. Retrieved from:  https://www.theguardian.com/uk-news/2018/jul/23/uk-will-not-oppose-us-death-penalty-for-isis-beatles

[12] International Trades Union Congress. (2018). ITUC Global Rights Index: The worst countries for workers. Retrieved from: https://www.ituc-csi.org/IMG/pdf/ituc-global-rights-index-2018-en-final-2.pdf

[13] Plurinational sate of Bolivia, constitution. (2009). Articles 30, 280, 352, 376, 380, 381, etc. Retrieved from: https://www.constituteproject.org/constitution/Bolivia_2009.pdf

[14] Republic of Namibia. (n.d.) Constitution, Article 95. Retrieved from: https://www.gov.na/documents/10181/14134/Namibia_Constitution.pdf/37b70b76-c15c-45d4-9095-b25d8b8aa0fb

[15] Mathiason, N, Bessaoud, Y. (2011). Tory Party Funding From City Doubles Under Cameron. Retrieved from: https://www.thebureauinvestigates.com/stories/2011-02-08/tory-party-funding-from-city-doubles-under-cameron

[16] Barnett, A. (2018). Why Brexit won’t work: the EU is about regulation, not sovereignty. Retrieved from: https://opendemocracy.net/anthony-barnett/why-brexit-won-t-work-eu-is-about-regulation-not-sovereignty

[17] Aston, S. (2014). MoD announces selected private sector contractors for DE&S transformation. Retrieved from: https://www.civilserviceworld.com/articles/news/mod-announces-selected-private-sector-contractors-des-transformation

[18] Crump, R. (2016). Civil service turns to big four for help over Brexit trade negotiations: https://www.accountancyage.com/2016/07/05/civil-service-turns-to-big-four-for-help-over-brexit-trade-negotiations/

[19] Gibb, F. (2018). Fears over £30m bonanza for consultants. Retrieved from: https://www.thetimes.co.uk/article/fears-over-30m-bonanza-for-consultants-lljfwltmm

[20] Molloy, C. (2013). Milburn, the NHS and Britain’s revolving door. openDemocracy Retrieved from: https://opendemocracy.net/ournhs/caroline-molloy/milburn-nhs-and-britains-revolving-door

[21] Alberts, J. (2018, 19 March). The audit market: if the big four became the big three. The Market Mogul. Retrieved from: https://themarketmogul.com/audit-market-big-four/

[22] Brooks, R. (2018). The financial scandal no one is talking about. Retrieved from: https://www.theguardian.com/news/2018/may/29/the-financial-scandal-no-one-is-talking-about-big-four-accountancy-firms

[23] PWC. (n.d.). Services – Tax. Retrieved from: https://www.pwc.co.uk/services/tax.html [assessed 29 August 2018]

[24] Public Accounts Committee. (2015). Tax avoidance: the role of large accountancy firms, press release. Retrieved from: https://www.parliament.uk/business/committees/committees-a-z/commons-select/public-accounts-committee/news/report-tax-avoidance-the-role-of-large-accountancy-firms-follow-up/

[25] Shoaib, A. (2018). PwC slapped with 2 year audit ban in India. Retrieved from: https://www.accountancyage.com/2018/01/23/pwc-slapped-2-year-audit-ban-india/

[26] Ball, J, Davies, H. (2015). Labour received £600,000 of advice from PwC to help form tax policy. Retrieved from: https://www.theguardian.com/politics/2014/nov/12/pricewaterhousecoopers-tax-structures-politics-influence

[27] O’Hagan, E M. (2018). The failure of accountancy’s big four has one solution: nationalisation. Guardian. Retrieved from: https://www.theguardian.com/commentisfree/2018/jun/13/accountancy-big-four-nationalisation-pwc-ey-deloitte-kpmg

[28] Sambrook, C. 2013. Jimmy Mugenga and the shame of British Airways. openDemocracy Retrieved from: https://opendemocracy.net/shinealight/clare-sambrook/jimmy-mubenga-and-shame-of-british-airways

[29] Hodgeson, K. (2017). Maximus ‘admits’ using brutal and dangerous suicide question. Retrieved from: https://www.disabledgo.com/blog/2017/03/maximus-admits-using-brutal-and-dangerous-suicide-questions/#.W4aaan4nbEZ

[30] War on Want. (2016). Mercenaries Unleashed. Retrieved from: https://waronwant.org/Mercenaries-Unleashed

[31] Ramsay, A. (2018). Cambridge Analytica is what happens when you privatise military propaganda. openDemocracy Retrieved from: https://opendemocracy.net/uk/brexitinc/adam-ramsay/cambridge-analytica-is-what-happens-when-you-privatise-military-propaganda

[32] National Archives. (n.d.). British Empire Overview. National Archives. Retrieved from: http://www.nationalarchives.gov.uk/education/empire/intro/overview2.htm

[33] IpsosMori. (2018). Scottish Public Opinion Monitor – Wave 35. Retrieved from: https://www.ipsos.com/sites/default/files/ct/news/documents/2018-03/scotland-spom-march-2018-tables.pdf

[34] Wilson, R. (2018). Tweet. Retrieved from: https://twitter.com/robinwilson250/status/983981603457327105

[35] HM Government. (1998). The Belfast Agreement. Retrieved from: https://www.gov.uk/government/publications/the-belfast-agreement

[36] HM Government. (2014). Cornwall granted national minority status. Retrieved from: https://www.gov.uk/government/news/cornish-granted-minority-status-within-the-uk

[37] Smallcombe, M. (2016). Cornwall is the second-poorest region in northern Europe and a quarter of children live in poverty – so what are the problems and what can be done? Retrieved from: https://www.cornwalllive.com/news/cornwall-news/cornwall-second-poorest-region-northern-617199#

[38]Hirsch, A. (2008). Pitcairn victims of child sex abuse win compensation. Guardian. Retrieved from https://www.theguardian.com/uk/2008/oct/10/law-foreignpolicy

[39] Doring, H, Manning, P, Jan 2017. Is Proportional Representation More Favourable to the Left? Electoral Rules and Their Impact on Elections, Parliaments and the Formation of Cabinets. British Journal of Political Science, 47, 1 pp. 149-164.

[40] You can read about the different systems here (I prefer STV with large numbers of MPs (8-10) per constituency): https://www.electoral-reform.org.uk/voting-systems/types-of-voting-system/single-transferable-vote/

[41] Lucas, C. (2015). Honourable Friends: Parliament and the Fight for Change. Granta Publications.

[42] Unknown author. (2018). Westminster is a club masquerading as a parliament says Mhairi Black. Scotsman. Retrieved from: https://www.scotsman.com/news/westminister-is-a-club-masquerading-as-a-parliament-says-mhairi-black-1-4778873

[43] Interparliamentary Union. (2017). Women in Politics. Retrieved from: https://www.ipu.org/resources/publications/infographics/2017-03/women-in-politics-2017

[44] Dundee Evening Telegraph. (2013). September 1, 1651 the day a fifth of Dundee’s population were massacred. Retrieved from: https://www.eveningtelegraph.co.uk/2013/09/18/september-1-1651-the-day-a-fifth-of-dundees-population-were-massacred/

[45] Common Weal. (n.d.). We need real local democracy. Retrieved from: http://www.allofusfirst.org/the-key-ideas/we-need-real-local-democracy/

[46] LGIU. (n.d.). Fun facts about local government. Retrieved from: https://www.lgiu.org.uk/local-government-facts-and-figures/

[47] Ibid

[48] Riddoch, L. (2017). Local democracy needs a hand. Retrieved from: https://www.scotsman.com/news/opinion/lesley-riddoch-local-democracy-needs-a-hand-1-4415708

[49] Ibid

[50] Reid, J. (1972). Alienation. Retrieved from: https://www.gla.ac.uk/media/media_167194_en.pdf

[51] Bhatnagar, D, Rathore, A, Moreno Torres, M and Kanungo, P. (2001). Participatory Budgeting in Brazil. Indian Institute of Management and World Bank. Retrieved from: http://siteresources.worldbank.org/INTEMPOWERMENT

[52] Lerner, J and Schugurensky, D. (2005). Learning citizenship and democracy through participatory budgeting: The case of Rosario, Argentina. Conference paper presented at Democratic Practices as Learning Opportunities, Columbia University, New York. Retrieved from: www.linesofflight.net/work/rosario_pb_columbia.pdf

[53] McColl, P. (2018). It’s time for a participatory society. Retrieved from: https://opendemocracy.net/uk/peter-mccoll/its-time-for-participatory-society

[54] Hind, D. (2018). The Constitutional Turn, Liberty and the Co-operative State. openDemocracy. Retrieved from: https://opendemocracy.net/uk/dan-hind/constitutional-turn-liberty-and-co-operative-state

[55] Barnett, A, Ramsay, A. (2017). The abdication of the Commons: how article 50 saw parliament vote against its sovereignty. Retrieved from: https://opendemocracy.net/uk/adam-ramsay-anthony-barnett/abdication-of-commons-how-article-50-saw-parliament-vote-against-its-

[56] See, for example, BBC. (1999). Claim of Right passes to parliament. Retrieved from: http://news.bbc.co.uk/1/hi/special_report/1999/06/99/scottish_parliament_opening/380989.stm

[57] Church of Scotland. (2017). Church responds to second referendum request. Retrieved from: http://www.churchofscotland.org.uk/news_and_events/news/2017/church_responds_to_second_referendum_request

[58] HM Government. (2016). Scotland Act 2016. Retrieved from: http://www.legislation.gov.uk/ukpga/2016/11/part/1/crossheading/the-scottish-parliament-and-the-scottish-government/enacted

[59] Ramsay, A. (2017). Trident and the very British yearning for empire bling. openDemocracy. Retrieved from: https://opendemocracy.net/uk/adam-ramsay/trident-and-yearning-for-empire-bling

The post Trying to milk a vulture: if we want economic justice we need a democratic revolution appeared first on New thinking for the British economy.

Neoliberalism – the set of economic ideas and policies that have dominated politics for the past 40 years – is rapidly losing legitimacy in the face of multiple crises: stagnant or falling living standards, sharply rising inequality of income and wealth, financial fragility and environmental breakdown. At this critical juncture, new ideas about the kind of society we want to live in, and the future we want to see, are needed more than ever.

‘New Thinking for the British Economy’ brings together leading thinkers to outline the broad pillars of a new economic agenda, and the type of policies that are needed to get us there. As well as more traditional policy areas such as trade, finance, housing and industrial policy, the book explores a range of areas that are not typically considered to be within the sphere of economic policy but which nonetheless play a critical role shaping our political economy – such as the media, our care systems, racial inequalities and our constitutional arrangements.

Contributors include Adam Ramsay, Andrew Cumbers, Ann Pettifor, Christine Berry, Craig Berry, Dan Hind, Johnna Montgomerie, Katherine Trebeck, Laurie Laybourn Langton, Laurie Macfarlane, Mathew Lawrence, Maya Goodfellow, Ruth Bergan, Susan Himmelweit, Thomas Hanna, Tom
Mills and Will Stronge.

Download the eBook for free – or purchase hard copies for events and reading groups

The eBook version of New Thinking for the British Economy can be downloaded for free here, or viewed in the embedded viewer below. Printed versions of each chapter are also available for £1 via Commonwealth Publishing and the Democracy Collaborative. If you would like to order physical copies, and inquire about organising author events, please contact Dan Hind or visit the Commonwealth Publishing website – www.commonwealth-publishing.com

New Thinking for the British Economy has been produced with generous support from the Friends Provident Foundation. All the authors have contributed to this volume in a personal capacity and do not necessarily endorse all the views expressed within it.

The post ebook appeared first on New thinking for the British economy.

Throughout more than fifty years as professional economist, rare has been the opportunity for me to claim “I was right” – even less “I told you so”. However, the recent meeting in Chequers of Theresa May with her unspeakable cabinet provides me with one of those rare moments.

Despite repeated and almost universal denials of the possibility of a Brexit agreement brokered by the accident prone May, a deal now seems if not imminent then certainly in the offing. And, yes, I predicted it. As much as I might like to attribute my prediction to analytical brilliance, the explanation is mundane: recognising the obvious.

The coming of what May dubbed a “UK-EU free trade area” is what any reasonably open-minded observer would have anticipated. The pieces of the Brexit puzzle have been lying around in full sight, awaiting some momentarily open-eyed person to put them together.

The Brexit jigsaw puzzle

Like jigsaw puzzles, the likely Brexit outcome is more easily assembled when one begins with the corner pieces then works to the centre. First among these is that any Brexit outcome will be determined by the most powerful actors. These are the financial interest of the City of London and German manufacturing capital.

Especially important is German trade in transport equipment with Britain (including cars). German producers have a substantial surplus as a glance at the numbers shows. The Merkel government has sought and will seek a deal acceptable to German manufacturers, as May will with the barons of the City. Both governments are right-wing, whose natural constituency is big business. As with most decisions in Brussels, the other EU governments are likely to yield to German economic interests and seek compensation and reciprocity on other issues (immigration, in EU budget negotiations, etc).

The second corner piece is that few if any Conservative MPs will cast a vote the result of which is to bring the government down and force an early election (that is, before 2022). The Chequers game demonstrated yet again that the enthusiasm of Tory Brexit MPs for “no deal” is more than offset by their loathing for a Labour government, with Tory Remainers in agreement on that point. To put it simply, fear of an end to almost forty years of Tory and Blairite neoliberalism far outweighs fear of leaving the European Union.

The improbability of a second referendum of any type provides the third corner piece. The first obstacle is timing. The average time it takes for parliament to process a bill to law is about 12 months. The Article 50 two year deadline is 29 March 2019. If a referendum were scheduled for the 11^th hour, such as 21 March, referendum legislation would need Royal Assent not later than a month before to allow minimal campaign time. Parliament “rises” for recess on 17 July and does not return until 5 September when party conference season begins, which does not end until the first week of October. That leaves very little time, about 18 calendar weeks for legislation to run its course. The schedule is even tighter because of the five weeks of scheduled recess during October through mid-February.

This leaves a very tight parliamentary schedule to achieve a very contentious goal.  The difficulties are compounded by the likelihood that a May government might not itself introduce a second referendum bill, even were a Tory revolt to be successful. The alternative, a private embers bill, would face well-known and insurmountable obstacles. The likelihood that all the best outcomes occur – a sufficiently large and solid revolt of Tory MPs, a shift by Labour to enthusiastic support, new legislation that gets passed through parliament, and a question that is favourable or neutral to Remain – is very small indeed.

The fourth and final corner piece is that the fear of Brexit economic disaster represents a losing strategy in 2018, just as it was in June 2016. Thanks to fiscal austerity, the British economy has fluctuated between stagnation and sluggish growth for eight years. The most negative calculations of Brexit compare economic growth with and without EU membership. Were the same method used for the impact of austerity, the Brexit estimation would seem trivial. For a decade UK growth performance has been dismal, so how persuasive is the fear that GDP growth might decline from 2% to 1.7%?

After identifying the corner pieces, filling in the puzzle is an easy task. The important players want a deal. Tory parliamentarians are unlikely to bring their government down. The odds are stacked against a second referendum. And the public propaganda strategy for retaining membership was and is ineffective. All of this is obvious, yet even after the Chequers game almost every commentator and some of the public still persist in the “no deal” illusion.

Let reality intrude

As I write, articles are dismissing May’s cabinet agreement as temporary and certain to collapse. Remainer optimism has seized on cabinet resignations as indicating “chaos” in the government, an oft-used word with no clear meaning. The immediate question is not whether the Tory government is chaotic or orderly. Instead the important question is: will May survive? If a revolt removes her, the Chequers deal becomes an irrelevant.

If her removal prompts a new election, the probability of stopping Brexit increases dramatically. A successful leadership challenge requires that a majority of Tory MPs take the gamble of bringing the government down and prompting an election that ushers in a Labour majority, or a Labour coalition government. Every progressive should hope that so-called chaos transforms into successful Tory rebellion, while recognising that its likelihood is not high. The obvious “stop-Brexit” strategy is to eject this government.

Bitter experience and many disappointments have convinced me that, when it comes to politics, one must plan strategy and tactics for the worse outcome. For a realistic Remainer, the worst outcome is the following scenario:

1. May and her allies reach a tentative agreement with their continental counterparts (all right-wing except in Portugal and Spain).
2. The agreement is announced at the Tory party conference at the end of September.
3. Three weeks later at its scheduled meeting, the European Council gives conditional approval to the same or similar agreement.
4. In November the British and European parliaments approve the agreement.
5. Before the end of 2018, Britain is out of the European Union with a new trade agreement in place.

As Will Hutton has written, approval by the European Council is quite likely.  Furthermore, no announcement will be made at the Tory Conference without de facto agreement with Brussels. Members of the European Parliament may grumble, but any agreement approved by the European Council will pass. For the May government, the weakest limit in this scenario is UK parliamentary approval. This is also the only point at which progressives can block the scenario from running its course.

We face the possibility that long before any second referendum could be approved, much less voted on, Brexit will be a “done deal”. The anti-Brexit strategy must therefore take that seriously and plan accordingly. We must pressure Tory Remainers to think, for them, the unthinkable – a rebellion that could bring the government down.

Accepting reality

The refusal to entertain the possibility of a Tory brokered deal may in part result from deep anxieties about the consequences of Brexit, an outcome many view as too disastrous even to contemplate much less plan for. While I share those anxieties, I also realize that what we want to happen, and what will happen, are frequently different.

For many reasons, I want the British government to retain membership of the European Union. Contrary to what I want, the probability is high that Theresa May’s government will end Britain’s membership of the European Union, perhaps before the end of the year.

The time has come for rational Remainers to shift strategy, away from methods of prevention and towards developing a policy agenda to mitigate an undesired outcome.  Managing adversity requires foresight and policies. If by a great stroke of good fortune we remain in the European Union, our Brexit preparations will prove unnecessary, erring on the side of caution. But if Brexit happens, our preparations for it will provide the progressive policy response to mitigate disaster.

The post Theresa May won the Chequers game – now Remainers must face reality 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.

Eighteen months on from the Brexit referendum, the story that the ‘people have spoken’ is only one version of the truth. There was only a very small majority for leaving the EU: more than 16 million people were on the electoral register but did not vote, and a further 2 million were not even registered. It is now evident that many of those who voted to leave had no idea what this entailed, or the likely costs. Surveys confirm that enough people have now changed their position that, if there was a second referendum, a majority would now vote to remain in the EU.

But both the Government and the Labour opposition seem determined not to have a second referendum, despite the mounting evidence of the massive destruction Brexit will cause to the British economy. There is a daily record of companies preparing to leave the UK and establish themselves elsewhere in the EU. Cumulatively, the impact on GDP, employment and the public finances are going to be extremely large and yet these costs are simply shrugged off as if they were obviously worth enduring.

To take the most obvious example, let us consider banking and financial services, the only sector where the UK has established a global position. Many banks and associated enterprises have already begun the process of moving to Paris, Dublin, Frankfurt and elsewhere. These are highly paid jobs in firms that are very profitable and which account for a very significant proportion of GDP and government revenues. The CEOs of banks have been perfectly open about their planned shift to other locations, and have called on Government to re-evaluate their policies but to no avail. The consultancy and auditing firm EY has estimated that on day one of Brexit some 10,500 jobs would be lost in the City, and they had previously estimated that a total of 83,000 jobs would disappear.

Two EU agencies have already announced they will be moving to other locations in the EU – the European Medicines Agency and the European Banking Agency, with a loss of skilled jobs. In the case of the EMA, the transfer of jobs to Amsterdam will be 900 – all highly skilled and professional. More worrying is that the move of the EMA will lead to disinvestment in the UK by pharmaceutical companies as they shift their clinical research activities elsewhere.

Other sectors have pointed to the impact on their ability to function if EU residents leave. In the higher education sector, around a third of academic posts are filled by EU citizens – with many of them in scientific areas – and many university leaders have warned of the effects on system capacity. The impact on construction, health and social services, on transport, on agriculture, on tourist and related services have been enumerated and yet are shrugged aside as if they were manageable and unimportant. How the UK will source the 40% of food that is currently imported and which sustains national food production, given the massive dependence on EU labour, remains a mystery.

Then there is the economic and social impact on EU residents, and the effects on UK residents living and working in the EU. Not least of the predictive costs are those on Ireland where 80% of exports are sent to the UK, and where there is a possibility that these will subsequently face import tariffs. The impact on Ireland is more or less ignored in the UK and instead the focus is on the issue of the border between the North and the Republic. While this issue is important, it is clearly unresolvable unless the UK remains within the single market and the existing customs union. To believe that there is any other practical solution is like believing the moon is made of cheese.

Employment will contract, incomes will fall, tax revenues will decline, prices will rise and the balance of payments will worsen. The sterling exchange rate has already fallen against all of the major currencies with a decline of more than 15% against the euro. The LSE has estimated that the impact of Brexit has already been significant and that the average household has experienced an increased shopping bill by £400, largely due to the fall in the value of sterling. The effects will not be confined to the UK; residents from the EU will be directly and indirectly impacted by the resulting shifts in demand and supply.

Brexit has already diverted the resources of Government and of Parliament at considerable cost. Governance has more or less come to a standstill as the Tories battle it out amongst themselves about what kind of relationship the UK will have with the EU. It has always been clear to anyone who knows anything substantively about the EU what would be on offer, and this really should not have been a surprise to the British Government. There was never any chance that a deal would be negotiated which threatened the stability of the EU, and this would be paramount in any discussions with the UK.

Key basic principles such as freedom of movement of labour, goods and capital were sacrosanct and would be retained at all cost. So would be the demand that the UK meet all of its financial obligations. It has also been made clear that no trade deal would be possible after Brexit except under conditions in which the UK accepted and applied the existing regulatory regime. This means that the UK could not be in a trading relationship with the EU if it deregulated existing labour, health and environmental standards – and would be expected to apply future changes as well.

A deal would have to be struck for EU citizens in the UK, and for UK citizens living in Europe, that protected all of their existing rights. These and other key elements of the ongoing relationship between the UK and the EU would need to be subject to the European Court of Justice. Finally, a deal had to be agreed that was legally binding on both parties to any agreement to prevent any hard border between Northern Ireland and the Republic. In effect, this last requirement means that the UK has to remain a member of the single market and customs union.

Given these conditions, why would any rational government pursue Brexit at such immense financial and non-financial cost?  On the face of it none of this makes any sense given the easily predicted consequences of Brexit and the uncertainty created both in the UK and with our partners in the EU. Everyone has wasted resources over the past 18 months on negotiations and posturing that have led to an outcome that was always inevitable. One of the less evident consequences, but a cost nevertheless, has been a breakdown in national social cohesion and a release of ethnic tension. Putting this genie back in the bottle will not be an easy thing to achieve, with or without Brexit.

What are the forces driving Brexit given the above analysis? We now have more information on the funding of the leave side of the referendum, and after a good deal of pressure the Electoral Commission is finally doing some real analysis of the sources of funding. There can be no doubt that this funding was illegal and largely from overseas sources. In a series of articles Carole Cadwallader has documented the role that a very right wing American billionaire had in providing financial and non-financial support to a UK company called Cambridge Analytica. The purpose of this structure was to infiltrate social media with fake news so as to influence voting behaviour in the referendum. This process acted as support for the lies being told by Farage, Gove and Johnson and others who bombarded the electorate with falsehoods about extra funding for the NHS, swarms of Turkish Muslim migrants, and the threat from EU nationals to British livelihoods.

Also worrying is where most of the money for the leave campaign came from. It was supposedly provided by a millionaire called Arron Banks, but an analysis of his finances by openDemocracy suggests that he was in no position to make very large donations. So where did this money come from? This is presently under investigation by the Commission, but it is evident that it does not have the resources for such an investigation. Some of the funding was routed to the leave campaign via the DUP in Northern Ireland where the is no legal requirement to disclose the sources of funding.

This leaves it unclear where Banks’ money came from, except that we now have evidence of the role that Russia played in the US presidential elections and elsewhere. What is driving Farage, Mercer, Banks and their supporters? It is only too evident. They want to see the collapse of the post -war settlement in which the state actively intervenes in economic and social life in the interests of social stability and fairness in accessing social goods. They want to roll this back in the interests of the rich and the wealthy, and have managed to get Trump elected to pursue their objectives.

Brexit might yet do the same, and in the meantime, it has managed to divert the attention of policymakers in the UK from important issues such as how to reduce wealth and income inequality and associated issues of housing, jobs and pay. Brexit in their eyes is simply a source of instability that in the short and longer runs will enable them to bring about their ultimate right wing agenda. This includes a determination to deregulate the UK economy and remove regulations covering the environment, food safety, animal welfare and labour conditions.

But what of Putin: why would he be prepared to finance the leave campaign?  He has clearly been trying to undermine the EU for many years, hence his opposition to Ukraine joining the EU and to the EU sanctions after the annexation of the Crimea. Weakening the EU as was hoped would suit Russia just fine since this would further enhance Russia’s power in Europe. Furthermore, anything that weakened Europe’s military capacity would be highly desirable, as would anything that caused greater economic weakness.

Brexit is a failed process and will cause untold and unnecessary damage to the UK, the EU and elsewhere. The sooner it is dumped the better for everyone, including for those who voted for it given that most of the negative effects of Brexit will fall mainly on those living in the less favoured areas of the UK.

The question is: do we have political leadership capable of doing the obvious? The influence of big money is everywhere in politics – not least in the UK – and politicians are both too close to the rich and too isolated from the electorate. But it could all change. The Rand Corporation – a respected US think tank – recently published an assessment of the impact of Brexit on the UK . It has concluded that “a no deal Brexit will cost Britons £1,585 each. Even the softest Brexit of the customs union would damage the economy and any gains from leaving would take at least 12 years”.

Why would any Government, Tory or Labour, go down this route if it had the interests of the population, and of Europe, at heart?

The post Brexit is an economic catastrophe – the sooner it is dumped the better appeared first on New thinking for the British economy.

The divorce deal between the UK and the European Union (EU) agreed earlier this month has effectively averted the immediate prospect of a ‘hard Brexit’. After the UK’s capitulation on a range of key sticking points, talks on some sort of trade deal will now ensue. Any new arrangements will be preceded by a lengthy transition period during which nothing much will change. But we should be wary of assuming a return to an approximation of the status quo; the EU is being transformed from the top down, and it is unlikely that a half-in, half-out UK will be a viable part of its next iteration.

Brexit means…

I had predicted we would end up more or less where we are now shortly after the June 2016 referendum. Able to marshal only narrow and technical arguments in favour of EU membership, the UK’s overwhelmingly pro-EU business elite had little influence in the referendum campaign, but much more where it matters, over policy development. In the Remainer Theresa May they had a Prime Minister determined to deliver a ‘soft Brexit’, while able to retain just enough trust among leave voters.

Then the snap election happened. May threw away the parliamentary majority she needed to deliver Brexit on her terms; victorious over Labour’s Eurosceptic leader Jeremy Corbyn, but ultimately outsmarted as ‘the Brexit election’ became an opportunity instead to protest against a perceived fait accompli.

What few realised at the time, however, was just how much the soft Brexit cause would be helped by the Conservative Party’s enforced alliance with the DUP. While May has undoubtedly been weakened by the election result, the DUP’s refusal to endorse a Brexit deal that left the door open (in order to maintain the Good Friday agreement) to regulatory divergence between Northern Ireland and the mainland has proved to be a quite convenient constraint.

The leaders of the Scottish and Welsh governments, and of the Greater London Authority, quickly seized on the original draft to argue that they too wanted the opportunity to diverge from the rest of the UK, when the UK starts diverging from the EU after Brexit – even if Northern Ireland did not. But Theresa May believes in the union a great deal more than the payday patriots in the hard Brexit camp.

As such, underlying the redrafted deal is a quite remarkable concession. Brexit means Brexit means leaving the single market and customs union. But not if this ends up being too difficult! If the UK cannot agree trade arrangements that essentially replicate the single market and customs union – satisfying London and the devolved nations – while pretending to do the opposite, then we will leave the EU while retaining membership of both. We will not, after all, be taking back control over EU migration or trade policy.

This would, the agreement suggests, be a direct consequence of the Irish border problem. But since the Irish border is also a UK-EU border, the ‘fallback’ position would apply to the UK as a whole.

Labour continues to offer no meaningful input to the national conversation on Brexit, repeatedly vacating space for hard Brexit fanatics to offer the only sustained critique of May’s strategy. An aversion to single market membership is necessitated by Jeremy Corbyn and John McDonnell’s somewhat antiquated perspective on the EU, and the calculation that free movement of labour (a requirement of the single market) is unpalatable to a sizeable chunk of the Labour vote.

The only serious policy thinking – the thing between principle and politicking – on Brexit on the Labour benches is being done by the rather apolitical shadow Brexit secretary Sir Keir Starmer. But Starmer’s advocacy of a single market ‘variant’ for the UK has the misfortune of being the only plausible scenario now available. Home truths are bad politics.

What lies ahead?

As Richard Jones and I have argued, soft Brexit will be better for the UK economy, and especially the prospects for a new industrial strategy in the medium term, than ‘no deal’ would have been. But this is not a moment for celebration. The UK economy remains riddled with severe shortcomings, and it should be acknowledged that EU membership had allowed the UK to develop a growth model based on its structural advantage in financial markets. The Brexit vote was, in part, a fairly forgivable form of ‘voice’ for those ‘left behind’ by this model.

At best, soft Brexit kicks the need to confront these problems down the road a little. But this road remains a perilous one, because the EU itself is undergoing a transformation. It is the nature of this transformation – the trajectory of which the UK will have few ways of influencing – that foretells the more significant Brexit to come.

The UK’s departure extinguishes all hope of the EU moving towards a ‘Europe of the regions’ model, which attracted support before the 2008 crisis. By decentring nation-states within EU governance, this model would perhaps have helped to assuage the UK’s internal contradictions, but essentially signalled the end of the ‘ever closer union’ project which underpins both the EU’s ability to shape domestic governance in member nations, and its credibility as an international actor.

Instead, a state-led process of enhanced integration will now ensue, led by German and French elites. The Spanish government’s reaction to Catalonian independence ambitions is therefore a direct consequence of Brexit – a weakened Spain risked losing its seat at the reconfigured top table. The new approach will also accommodate, rather than challenge, the new authoritarianism evident in many countries of Eastern Europe. Democratic legitimacy is not central to the new European project.

The shape of the new EU has been outlined by the response to the financial and sovereign debt crises in the Eurozone, as emergency responses are institutionalised, exemplified by new forms of macroeconomic surveillance. Such powers are centred on the EU Commission – and its president Jean-Claude Juncker would clearly like to go much further – but it would be wrong to see this stereotypically as a contest between Brussels bureaucrats and member-states. The Commission is dancing to the tune of the most powerful members, and Juncker is very much their man.

Ironically, the new Europe is in many ways a product of a long-running process of Anglicisation, transposed to the supranational level – the EU is building a powerful central government to enforce an ostensibly liberalising economic programme.

Helen Thompson has rightly argued that the UK’s non-membership of the Eurozone had been becoming untenable, given the contradictions between the City of London’s financial entrepôt function and (German-led) European Central Bank regulation. While the City’s status, entrenched in the single market and upheld by the European Court of Justice, concerned Germany and France, it also exacerbated socio-economic divisions at home.

Elite support for Brexit in the UK can in large part be explained by a fear that Germany and France were gearing up to challenge the City’s power. Popular support for Brexit arose for almost the opposite reason, in defiance of a City-centred growth model. The alliance of these two groups is, frankly, bonkers. But such alliances are also stupefyingly mundane facts of political life, especially in the UK.

The apparent genius of the soft Brexit option is in navigating these contradictory developments at the national and supranational levels. Single market membership will be retained, while the prospect of Eurozone membership is decisively iced. As such, the UK may continue to use unconventional monetary policy to paper over the cracks in the British economy, without significantly jeopardising existing patterns of wealth distribution.

However, while the remaining EU may tolerate this compromise for now, it cannot last. A cleaner Brexit will be a near-inevitable marker of the next phase of European integration. But this project remains at an early stage, and could yet be derailed by the fragility of the post-crisis recovery. Soft Brexit is a short-term fix for the EU, as well as the UK.

Perma-Brexit?

It is beyond doubt that the post-Brexit EU will be messy and uneven, and accompanied by resistance. All political constructions routinely face such challenges. However, while disintegrative dynamics certainly exist, prophecies of doom are premature, especially insofar as they overlook the determination of the German and French states to reset the integration project.

The political capital required to manage integration from now on will be significant. There will, for instance, be much less scope for non-EU countries to benefit from single market membership. Members of the European Free Trade Association (EFTA) will experience the obligations associated with the European Economic Area hardening over time.

EFTA has been regularly promoted in the UK by a strangely over-informed group of soft Brexit aficionados. But membership of EFTA for the UK has never been on the table, and never will be. Technically, EFTA’s members (Iceland, Norway, Liechtenstein and Switzerland) could let the UK in. The problem is that the EU would in practice prohibit such a move, barring a radical reconstitution of the EU-EFTA relationship. EFTA is essentially a small group of satellite economies. Its own status will be questioned eventually by the new (leaner and meaner) EU, so it is hardly about to let the EU’s biggest headache – Europe’s financial centre and third biggest economy, no less – join just because we asked.

There will be no free-riding. The UK will have to demonstrate its value to Germany and France if its bespoke soft Brexit compromise is to endure beyond the short term – and while a relationship with the UK after Brexit has clear economic advantages, it has clear political disadvantages. And even the economic benefits will be significantly undermined if the UK rejoins the single market but not the customs union.

And once the UK formally leaves the EU in 2019, the prospect of returning as a full member will quickly evaporate, at least for a generation or two. It is not clear of course whether the UK would want to rejoin the EU once its post-Brexit transformation starts to take shape. The UK is a hugely unequal and disjointed economy and polity, and the preferences of different groups are quite often very far apart.

Even with a soft Brexit, EU-UK relations are likely to become further strained. Given that the new trade arrangements will not solve the UK’s malaise, I would expect that over time the mechanics of the UK’s relationship with the EU to again become politically charged, and indeed scapegoated. The only question is whether EU tires of us before we tire of them.

It is far easier said than done, but the UK needs to make its mind up, and quickly, about what kind of economy it wants to be. No politician, left or right, has dared to address the development trap which now ensnares us. Brexit did not cause, but will accelerate, the UK’s migration to the outer core of the global political economy (parts of the country are already firmly peripheral). We will be too weak to fend for ourselves, but too large to rely on Franco-German patronage.

Even if a new industrial strategy were to start bearing fruit, the UK simply has too many people and too many problems for success in a few new industries to have a transformative impact. We may well remain a large, resourceful and wealthy economy for the foreseeable future. But it might not feel like it for most. And our ability to retain and reproduce this status will, increasingly, be out of our hands.

The post The path towards a ‘soft Brexit’ has been established, but the real disjuncture may still lie ahead appeared first on New thinking for the British economy.

Our constitution is being rewritten by perhaps the most right-wing government in modern British history, propped up by an even more fanatical party, the DUP. This week, despite an orchestrated campaign to amend the legislation previously known as the ‘Great Repeal Bill’, we’ve failed to land a blow on the government.

The battle is by no means over, and the renamed EU Withdrawal Bill will shortly move to the Lords. But it should be a wake-up call, that we can’t just wait for another government. Vital protections, safeguards and rights are being removed from us right now, and the EU Withdrawal Bill is just the opening salvo. It will be followed by legislation on food, farming and fisheries, on immigration and borders, on trade and customs.

The last of these bills was introduced into parliament two weeks ago, and carries with it serious implications for everyone in the UK as well as millions more people round the world. If you were worried about US-UK trade deal TTIP, you need to take Liam Fox’s new Trade Bill seriously. If it isn’t amended, we have every reason to fear a ‘TTIP on steroids’ is coming our way.

The Trade Bill will allow the British government to negotiate trade deals after Brexit. It is our only chance to make sure that these deals done will be open, democratic and accountable. And we only have a few months to do it.

Last week Trade Secretary Liam Fox rolled out the red carpet to Trump’s trade negotiators. We’re not allowed to know what they discussed, but we do know that Trump’s Commerce Secretary, the so-called ‘King of Bankruptcy’ Wilbur Ross, has said that lower food standards will be a prerequisite for any US-UK trade deal. So TTIP’s infamous chlorine-washed chicken and hormone-filled beef are likely to appear on the British menu. We also know US politicians are desperate to open the NHS to US healthcare multinationals.

As things stand, MPs have no right to know what’s going on in these talks – or the talks that Fox hopes will commence with 16 other countries including human-rights bashing Saudi Arabia and Turkey. MPs can’t set any guidelines for Dr Fox. Once he concludes a trade deal with any of these countries, they can’t amend or stop that deal. If they’re very good, they might get a debate.

As one newspaper editorial explained this week, the Trade Bill “is a coded way of saying that Dr Fox reserves the right to do whatever he likes without pesky MPs getting in the way”.

Fox’s behaviour to date justifies suspicion. It was, after all, Dr Fox who signed the UK up to the EU-Canada deal known as CETA, when it was discussed in Brussels. He told a furious parliamentary committee last year that two years simply wasn’t enough time for Westminster to have a proper debate.

The Trade Bill was preceded by a white paper. In among the platitudes about the great benefits of global free trade, there was mention of transparency and input to trade deals from ‘stakeholders’ like…. parliament. The white paper generated tens of thousands of submissions from campaigners. But given that the Trade Bill was published just one day after the submission closed, it would be safe to assume that Fox’s officials haven’t given those ‘inputs’ a whole lot of weight in writing the bill.

A proper timetable for the Trade Bill will be published any day now. Yesterday MPs of different parties will launch a campaign, backed by campaigners, to amend this bill. The demands shouldn’t be controversial in any modern democracy – that parliament gets to set guidelines for trade deals, that it can scrutinise the work of ministers while negotiations take place, and that it gets to stop deals it doesn’t like. Devolved administrations must get a say when their powers are involved, human rights and environmental impact assessment must be mandatory, and there should be as much openness as possible.

Trade deals today touch on more and more aspects of our lives – from how we run public services like the NHS, to how we set food standards, to whether or not big business is able to sue governments when they pass laws which corporations don’t like. So-called ‘e-commerce’ rules will decide what tech giants like Amazon and Google can do with your private data. There is no reasonable argument that MPs should not have a say over such major pieces of public policy.

And that’s before we start worrying about other people’s rights. Dr Fox, who hung a picture of arch-imperialist Cecil Rhodes above his desk and whose own staff mock his trade strategy as ‘Empire 2.0’, is in talks with countries with atrocious human rights records. Britain, home to some of the biggest pharmaceutical corporations, has always pushed for tighter intellectual property rules, which can literally mean life or death for people who need access to vital medicines. Britain has regularly been the most vociferous proponent of corporate courts, and is dedicated to expanding supermarket power around the world.

What’s more this procedure will be used to pass any post-Brexit EU-UK trade deal. As things currently stand, Brussels MEPs will have far more power over such a deal than Westminster MPs. In fact, depending on the content, it might well be that the deputies in the regional parliament of Wallonia will have more say than our MPs.

So much for parliamentary sovereignty. We have a few months to stop this.

The post Our constitution is being rewritten – the time to fight is now appeared first on New thinking for the British economy.

“The Falklands”, they said, “are British”. They are so British that we went to war for them. We also went to war for Akrotiri and Dhekelia, the British Overseas Territories on Cyprus. That’s where Saddam Hussein was supposedly able to get his weapons of mass destruction to within 45 minutes. And, less than a year ago, we were measuring ourselves up against Spain when they were threatening Gibraltar.

The Cayman islands are British, too. And Bermuda. And the British Virgin Islands – they even put it in the name.

Specifically, they are British Overseas Territories, the last vestiges of empire. Their citizens are entitled to British passports. They are, as much as English or Scottish or Welsh or Northern Irish people, subjects of Queen Elizabeth II.

And so when said Queen is revealed to store millions of pounds of her wealth in the Cayman islands in order to avoid paying the Treasury for it, it’s a misunderstanding to treat this as unpatriotic. It’s a misapprehension to imagine that the term ‘overseas’ means foreign. Tax dodging is as British as fried breakfast, the Bengal famine, and castrating Mau Mau leaders.

Like any good parent, Her Majesty loves her country just as we are. And what we are is the world centre for tax havens and secrecy areas.

The reason this story is so resonant is that it brings together the two ends of the British constitution. It’s the collision between the bling we parade in public and the cobwebs lurking in the corners. It forces the celebrities whose personal stories are used to maintain popular support for our empire state into the same narrative as the network of tax havens and secrecy areas, with London at its centre, which is how Britain’s elite maintained its wealth as land empire dissipated.

I often ask British people what they know about our Overseas Territories: how many there are, what their names are, where they are, how big they are. I bore my friends by delighting in telling them that Britain is responsible for more penguins than any other country on earth and more land in the Southern Hemisphere than the northern.

But the reason I do is this: the British constitutional issue which impacts on most people in the world is not our awful election system. It’s not even the unelected House of Lords, nor the fact that Westminster is the most centralised parliamentary system in Europe – especially for those who live in England outside London, and enjoy no serious devolution.

No, the piece of our uncodified constitution which matters most is the parts that mean that most of the wealth, and most of the biodiversity, for which the British state is ultimately responsible lies not in this North Atlantic archipelago, but in our fourteen Overseas Territories; the parts which allow the crooks of the planet to hide their ill-gotten gains in island chains protected by the might of the British state – and to launder their money through the centre of that web, the City of London, and the capital’s ever-inflating property market.

It’s the part which led the Tax Justice Network to rank the UK as the world’s most important player in tax havens. It’s the part which famously led the top mafia expert, Roberto Saviano, to call the UK “the most corrupt country on earth”. It’s the bit which ensured that more than half of the companies in the infamous Panama Papers were registered in Britain or its Overseas Territories. It’s the section which helped ensure a trillion dollars have been stolen from African countries since the UK and other European countries ended formal colonisation in the 1960s and ‘70s.

None of this is incidental to Britain. It’s core. The British state was built to manage an empire. It’s central constitutional principle – that the crown in parliament is sovereign – is asserted on the assumption of global dominance. It’s ability to stave off revolutions as they set most of Europe aflame came from the capacity of its elite to placate the anger of the domestic working class by parting with small amounts of the proceeds of plunder.

These days, the direct plundering is usually done by others. Britain with its Overseas Territories acts as the middle man – the safe haven. Support for the system is secured through increasingly shrill demands for loyalty to Queen and country, expressed culturally through increasingly tasteless British Empire Kitsch, and by channeling rage at outsiders: immigrants, Europe, whoever else can be blamed as wages shrink and the wealth of the ultra-wealthy mysteriously vanishes from sight.

And at the centre of all of this is the Queen, with her Jubilee street parties, and her adorable great-grand-children, the world’s biggest celebrities in an era of TV-celebrity rule.

And so, yes, the Queen stores millions of pounds of her wealth in her Dominions Beyond the Seas, as her original title called them. Why wouldn’t she?

The Cayman Islands are British, after all.

The post The Queen of the Cayman Islands appeared first on New thinking for the British economy.

Even if Bernie Sanders in 2016 and Jeremy Corbyn in 2017 did not win their respective elections, they showed that democratic socialism is back as an electorally viable proposition. The financial crisis of 2008 revealed the shortcomings of neo-liberal capitalism, and millions of voters have responded to austerity, inequality and insecurity by looking for alternatives.

To date, the Sanders and Corbyn programmes have focussed on economic redistribution and the expansion of public provision, rather than on political reform. This is understandable. But if democratic socialism is to offer a viable alternative to neo-liberalism, it needs to concentrate as much on democratic institutions as on socialist policies. The capture of these institutions by corporate and financial interests, the distortion of democratic processes by big money, and the corruption, venality and arrogance of the political class, have done much to create the current malaise.

This tendency to favour ‘economic’ over ‘political’ reform has deep roots. The Labour Party, from its earliest days, has concentrated on securing better material conditions for the organized working class within the existing state – a state whose constitutional structures bear more than a passing resemblance to those of the 1689 settlement. Labour politicians wanted to focus on ‘bread and butter’ issues. But, as the 2008 crisis revealed, the central bank can give a lot of bread and butter to favoured sectors under the cover provided by an unreformed state.

This lack of interest in the potential of constitutions to underpin or frustrate economic objectives was part of a wider British, or more precisely, English torpor. Unlike much of Europe, the UK missed out on a 1789 or 1848 revolution and emerged from two world wars without a formal refoundation of the state on a written constitution. The Blair-era reforms, which introduced the Human Rights Act, the new Supreme Court, and devolution, retained the essential features of the ancestral state, and led to more anomaly and incoherence rather than a new democratic constitutional settlement.

With the notable exception of a few individuals, such as the Graham Allen MP, chair of the Political and Constitutional Reform Committee in the 2010-2015 Parliament, Labour has generally ceded constitutional matters to the Liberal Democrats and the Scottish National Party. The latter, in particular, has developed a sophisticated critique of British institutions, culminating in radical (in UK terms) proposals for popular sovereignty and a written constitution with a judicially enforceable bill of rights.

Labour’s quietism on constitutional matters is becoming increasingly untenable. A dangerous distance now separates the inhabitants of Westminster and most of the people they rule. The UK’s unwritten system of government, which was once for many a source of pride, has become a source of confusion and embarrassment. It is not just that the rules can be changed or even ignored by any government with a bare parliamentary majority, but that the adequacy and appropriateness of those rules – even, at times, their continued applicability – has come into question. Theresa May’s proposals to repeal the Human Rights Act and the Miller judgment’s interpretation of the Sewel convention (which in normal circumstances prohibits the UK Parliament from legislating on devolved matters) show the fragility and inadequacy of an unwritten constitution. Opportunistic manipulation of the Fixed-term Parliament Act only adds to the sense of a system of government in disarray.

Neoliberalism was a profoundly anti-democratic ideology, an ideology which sought to replace citizens’ voices with consumer choices, and to contract the sphere of democratic decision-making in such a way as to leave private economic interests unconstrained. The institutions of the British state were not neutral in that process. There was a natural alignment between a closed, minimal, majoritarian, centralised version of democracy in the state, and an oligarchic dispensation in the economy and in society; the one enabled and reinforced the other. Other countries, with more inclusive democracies, stronger constitutional foundations and a wider distribution of political power, were able to mount a more successful – if still only partial – resistance to neo-liberalism.

If Corbyn forms the next government he will do so with a mandate for profound economic and social change.  That requires as much attention to be paid to renewing democracy on the constitutional front as to reinventing socialism on the economic front.

The 2017 Labour manifesto contained a commitment to a Constitutional Convention, but offered few details on what that might mean. Perhaps they envisaged just another lukewarm Royal Commission, proposing minor reforms. However, if this were to be a real Constitutional Assembly based on widespread and egalitarian participation, with the power to draft, subject to public ratification, a new Constitution, then it would be an opportunity for real democratic renewal – the necessary political dimension to a reformed political economy.

The unwritten constitution, rooted in ceremony and tradition, maintains a culture of deference, not of citizenship.  At the heart of any new constitution must be a commitment to citizenship and popular sovereignty: the UK’s unwritten system starts from the Crown and works begrudgingly downwards; a democratic constitution would start from the people and work up, with public institutions in the service of the people. From that basis, we can then begin to address – from first principles – questions such as how to represent the people, how to protect rights, and how to hold those in public office fully accountable.

This is not a distraction from social and economic policies, but a foundation for them. Oligarchy does as oligarchy is. It brings forth rotten fruit from its rotten nature. One can no more expect egalitarian prosperity from the ancient constitution than milk from a vulture, as Neal Ascherson likes to say. Without a new constitutional order, and the ferment of mutual education necessary to create it, any economic reforms achieved by a Labour government will not be understood by the public and will be vulnerable to the inevitable right-wing counter-attack. The left must consider not only what policies should be put in place, but also what institutional mechanisms and decision-making structures can keep policies in line with people’s real interests, and can prevent them from being captured and colonised by oligarchic corporate and financial powers, or subverted by corrupt politicians and public officials.

Constitutions have much anti-oligarchic potential. We can ameliorate the housing crisis through legislation. We will only solve it if we change the constitutional relationship between the people and the land. We can roll back privatization in the public sector, but we will only develop new forms of collective provision if we make their administration more transparent and accountable. We can curb the excesses of the private sector, but we cannot create a dynamic co-operative economy unless we create systems of oversight that take seriously Machiavelli’s warning that anyone seeking to organize a republic must take it for granted that ‘all men are evil and that they will always act according to the wickedness of their nature whenever they have the opportunity’.

Britain now needs more than a new government. It needs a substantially new state. The ambition of a genuinely popular movement should be to build that new state. The UK has the advantage of being a late-adopter of constitutionalism. Democratic nations have learned a lot about constitutionalism in the last 250 years. We do not have to look to 18^th century models like the United States – a constitution that was designed to frustrate as much to enable democracy – but can turn elsewhere, to democratic constitutions such as those of Sweden or South Africa, for example, for guidance.

Even Union itself should be open to review. The UK’s constituent nations might reasonably decide that keeping the UK together with complicated federal arrangements is simply not worth the expense and complication, and that inclusive democracy might be better served by the creation of independent countries. Or maybe federalism can be made to work.  At any event, only a Constitutional Assembly can reboot democracy, drawing reforming energy into the constitutional process, and decisively taking power away from those to possess wealth and office and putting it into the hands of the rest of us – from the few to the many.

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When British prime ministers go into negotiations with the DUP, they find themselves giving undue consideration to some very skewed priorities.

Back in 2006, Tony Blair was brokering the deal between DUP and Sinn Fein that would become the St Andrew’s agreement. The DUP brought him what would become known as a “shopping list” of demands that they wanted to see implemented if they were to go into government with their former enemies. Amongst their concerns about legacy issues arising from the Troubles was an obscure request about a proposed development at the Giant’s Causeway.

The aspiring developer who wanted to build a new visitor’s centre at the tourist attraction was a man called Seymour Sweeney. A constituency planning matter brought up in an international peace settlement seemed like a rather minor request, but it would lead to a scandal that would bring down Ian Paisley Senior as First Minister, barely a year into the job he’d worked towards his whole life. Sweeney’s ambitions were a direct threat to plans to restore the National Trust visitors’ centre. UNESCO were alarmed when it was revealed that Paisley Jnr had falsely claimed that they had personally told him that they were happy with Sweeney’s proposals. Northern Ireland’s only World Heritage site was now under threat of being delisted.

It would turn out that Sweeney was one of Ian Paisley Junior’s closest friends and business associates, although Paisley was at first rather coy about their relationship.  In a foretaste of the expenses crisis that would engulf Westminster a year later, it transpired that the Paisleys’ joint constituency office was costing the taxpayer £56,000 a year in rent, and that Sweeney was a director of the company that had been set up to buy the building and act as landlord to First Minister & Son.

The intervention on behalf of Sweeney’s business interests during negotiations to secure peace for Northern Ireland was inferred by many as patronage in return for services rendered.  This public perception was enough to trigger the palace coup that installed Peter Robinson in the Rev Dr’s place.

It was the memory of this affair that led me to cast a sceptical eye over the Conservative-DUP financial agreement as soon as it was released. I knew that there could be potential threats to environmental justice.

What immediately jumped out wasn’t much of a surprise, but could amount to an attack on Belfast’s urban working class. You see, apparently Northern Ireland’s suburban commuters need to get to work faster. That’s the first item on the agenda of the financial settlement attached to the agreement announced on Monday 26 June 2017.

This is the cost of needing to negotiate with the Northern Ireland parties when you need something from them. Not that we don’t need our fair share of help from the UK government. Like every other part of the country, Northern Ireland is suffering from a chronic shortage of adequate housing for our poorest citizens.  Just like in Great Britain we are failing to provide the minimum standards of breathable air for the residents of our towns and cities. All this costs money, and solving these problems is incompatible with austerity.

Yet Theresa May has been negotiating as a priority the upgrading of Belfast’s urban motorway, instead of finding the money to stop another Grenfell. Northern Ireland is one of the poorest areas of the UK, and we desperately need more cash. But the first real problem with this financial settlement is that so much of the money coming our way will go on this one tiny stretch of road, when every previous attempt to use new infrastructure to ease Belfast’s chronic congestion has given us only temporary respite.

Eventually the lanes will clog up again – as they did on the Westlink in the noughties – and the idling traffic will spew even more unlawful quantities of nitrogen dioxide, particulate matter, and climate trashing carbon dioxide into the air, mostly affecting some of the country’s most economically deprived communities. Belfast has two of the ten most congested thoroughfares in the UK. It has been emptying of residents for decades, and yet tens of thousands of us still need to do our jobs in the city centre every day.

Our uniquely permissive planning system let too many of our citizens build their homes in the open countryside. This isn’t just a legacy of the Troubles, but a reflection of a polity whose environmental and planning governance are far behind the rest of the UK. A dispersed, hyper-suburbanised population cannot easily be connected via mass transit to a highly centralised economic hub, and so our politicians and civil servants are locked into a 1960s vision of transport, with the needs of the private car trumping all other means of conveyance. It is this mindset that the DUP brought to their negotiations with Theresa May.

The perimeter of the city centre is already blighted by a grey donut of multilane roads cutting through what used to be tight lattices of streets that fostered cohesive inner city communities who felt connected to the beating heart of Belfast. The remnants of those communities now sit on the wrong side of the tarmac, feeling the city turn their back on them. They suffer disproportionately from the exhaust fumes of the suburban and rural dwellers who drive past them every day. Of all the things that the DUP could have negotiated on our behalf, the facilitating of unsustainable settlement patterns and transport policy was certainly not in the national interest.

I have no doubt that prioritising the rights of commuters is environmentally unjust. I am also sure that another key item in the new “shopping list” is potentially disastrous. The term “Enterprise Zones” evokes a Silicon Valley vision of tech start-ups and disruptive innovation.  This is not what they’re likely to mean for Northern Ireland.

A similar sounding idea was first floated during the lead-up to the G8 summit in County Fermanagh in 2013. During a meeting with David Cameron at Downing Street, First Minister Peter Robinson, and deputy First Minister Martin McGuinness announced their plans to introduce “Special Economic Planning Zones.” What this meant in practice was that OFMdFM (the Office of the First Minister and deputy First Minister) could draw a circle right in the middle of County Tyrone and declare it, for example, a gold mining free-for-all. A deregulated klondyke for anyone living nearby, with all the usual protections of the right to participate in the planning system suspended.

A planning bill that was passing through the Assembly at the time was hijacked by Sinn Fein and the DUP with amendments that would have made these special powers a reality. Then environment minister, Mark H Durkan, was forced to withdraw the entire bill from further passage through the Assembly in order to prevent this power grab from progressing. Could these “Enterprise Zones” be yet another attempt to experiment with hyper-deregulation? Is Northern Ireland going to be a guinea pig for the complete suspension of environmental rule-of-law?

What we do know is that the Conservative-DUP confidence-and-supply deal was agreed by a prime minister desperate to defend her position after a shock election victory, and that she was negotiating with a team of seasoned deal-makers who have a history of coming at these discussions sideways.

I cannot say from what I’ve seen so far if there is any sectarian imbalance in the financial settlement, and I doubt strongly that the DUP or the Tories would make the mistake of letting this happen. There is already enough concern about how this deal threatens the British Government’s status as a neutral arbiter in the ongoing peace process, without scoring the own goal of handing more goodies to one side than the other.

Concerns like this distract us from looking out for other potential hidden agendas in the new governing arrangements at Westminster. We should not cry foul about an extremely impoverished part of the UK getting a sudden injection of cash, or keep caricaturing the DUP as Cromwellian fanatics and killjoys. But we do need to cut through the murky detail, to the hidden background of this deal.

It took multiple Freedom of Information requests in 2007/8 to uncover the St Andrew’s scandal. It is incumbent on all the citizens of the UK to be sceptical and vigilant as the new supply and demand regime beds in at Westminster.

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Without the support of the EU, Britain’s wood-wormed constitution must crumble. Part one of a short series.

The British state is responsible for more penguins than any other government on earth. And more land in the Southern hemisphere than the Northern. And by far the most important network of tax havens and secrecy areas in the world. It is, along with Saudi Arabia, Israel and New Zealand, one of only four governments on earth which doesn’t have a codified constitution. It is, along with Iran, one of only two to automatically appoint clerics to seats in its legislature. It is the only one with a parliament in which some seats are hereditary.

Our election system for the chamber we do get to choose is so antiquated that 2015 saw an MP win with less than 25% of the vote. Our governing rules are so contested that 2016 saw the prime minister’s preferred route out of the EU quashed by the High Court. Our internal national relationships are so ill-defined that 2017 will see the Supreme Court rule on whether the government can, without the consent of the people there, unilaterally rip Northern Ireland out of the EU, tearing up the Good Friday Agreement. Already, Brexit is pulling at the cracks of our creaking constitution. What the process will expose, though, is grim.

Because constitutional quirkery helps make the UK what it is: the shady safe-house for crime and corruption worldwide. London, specifically, is said to be the global centre for cleaning up stolen cash, with the Home Affairs Select Committee this summer describing the city’s property market as “a safe haven for laundering the proceeds of crime”. The majority of companies found in the famous Panama Papers leak this summer were listed in Britain or its network of overseas tax-havens. Most of those which weren’t hailed from Hong Kong, which used to be owned by Britain, and remains a key part of London’s global network.

Our media likes to write about crime and corruption as though they are the funny fetishes of Johnny Foreigner: Italian mafia, Russian oligarchs or Mexican drug lords. But this year alone, the former banker and anti-corruption campaigner Roman Borisovich made the claim that three-quarters of the money looted in Russia comes to Britain, the Italian mafia expert Roberto Saviano described the UK as “the most corrupt place on earth”, and our biggest bank was sued for its involvement in laundering Mexican drug money: appropriate, given than HSBC was founded by criminal drug dealers on the back of the Opium Wars.

This racket is big enough to have vast control over our politics. An enterprise dogged by criminal charges can pay to hush up the nation’s biggest broadsheet. It’s hard to look at party funding in the last two UK general elections without concluding that it was the donations of the financial sector and prominent tax dodgers which put David Cameron into Downing Street twice to ensure that they weren’t regulated after the 2008 crash.

And it’s not just the Tories. After trade unions, the biggest ‘donors’ to the Labour party before the 2015 elections were the accountancy firm PricewaterhoueCooper, who ‘gave’ in the form of £600,000 of research ‘help’. Then shadow-chancellor-now-TV-dancing-supermo Ed Balls effectively outsourced £200,000 worth of policy work to these much criticized wizards of tax accountancy for the mega-rich, while shadow business secretary Chukka Ummuna got £60,000 worth of ‘support’.

Not wanting to miss out on the action, the Liberal Democrats accepted 1371 hours of policy ‘technical support’ from PwC in 2015 alone, the year after the Luxemburg Leaks revealed the firm’s significant involvement in helping the hyper-rich slash their tax bills through complex accounting arrangements. It’s worth pondering on who wrote the maze of loopholes into the laws in the first place…

Once they leave office, the deal only gets better for our prominent politicians. Former British foreign secretaries like Malcolm Rifkind, Jack Straw and David Miliband have auctioned access to themselves for huge sums of money. Former British health secretaries like Alan Milburn, Virginia Bottomley and John Hutton have all quietly slipped from government into the private healthcare sector, and now make millions of pounds between them cashing in on NHS privatisations they (and their cousins) pushed through. Former British Chancellor George Osborne has seen his best man’s firm rake in £36 million from his bargain-basement privatisation of the Royal Mail. Former British prime minister Tony Blair used the links made in office to secure vast sums of money running round the globe as a lackey for the violent royal dictators of the United Arab Emirates, and working as an advisor, lobbyist and spin doctor to a cast of characters including Nursultan Äbishuly Nazarbayev, the dictator of Kazakhstan and Aleksandar Vučić: once Slobodan Milošević’s Information Minister, now Serbia’s prime minister.

Our country is represented in the world by a trade minister who was previously sacked as defence secretary for allowing a businessman funded by companies which “potentially stood to benefit from government decisions” to sit in on at least 40 meetings and a foreign secretary whose time as London Mayor included overseeing property deals described by the former chairman of the government’s Committee on Standards in Public Life as “having the smell of semi-corruption” involving large donations to the Conservative party. Do either of them have an eye to the second career profits of their predecessors? We’ll have to see.

And those who wish to buy influence get their way. David Cameron promised “no ifs, not buts, no new runways” at Heathrow. Theresa May came out publicly against the scheme. Boris Johnson and Zac Goldsmith both tied their reputations to their opposition to it. But it is going ahead, costing the Tories an MP and a bucket of political capital across marginal seats in West London. It seems to me that there is a simple explanation for what would normally be seen as an astonishing act of political self-harm: as the organisation 10:10 puts it: “15% of the population took 70% of all flights in 2014. People in that 15% group earn more than £115,000 a year. They tend to have a second home abroad. And their most popular destinations? Tax havens.[1]” The third runway only makes sense if seen from the top of the towers of Canary Wharf. But in Britain, that’s the view that matters.

The scar of living in a country run by and for the rich is marked by more than a runway, though. Even if you ignore the vast quantity of wealth hidden in tax havens, Britain is the sixth most unequal country in the OECD, after Chile, Mexico, Turkey, the USA and Israel. This is a level of inequality of the scale that tears whole societies apart; or is only possible in places that have already been rent asunder: three of those countries have governments at war with their own citizens; and the USA just elected Donald Trump.

By some measures, the UK has nine of the ten poorest regions of Northern Europe, while London is the richest. We produce 18% less per hour worked than the G8 average, and real wages have fallen 10.4% since 2007: a figure only matched across the OECD by Greece. Children in England are among the least happy in the world, and in 2013, the UK was criticised by the UN for a mortality rate among under 5s that’s higher than in countries including the Czech Republic and Slovenia. Meanwhile, the bonfire of the London housing market sucks in ever more of our cash, ensuring the nation’s wealth is squandered on making homes in the most expensive city on earth ever-more expensive, rather than investing that capital in anything productive.

For those of us who seek answers to serious questions about how to build a just, sustainable economy in this archipelago, one of the first questions must surely be what vehicle we have to do this through. And whilst government is certainly necessary, the ancient British state; built to run an empire, seems utterly unfit for the purpose. Without the modifying influence of the EU, though, it’s all that England is left with.

In this context, any conversation about tax in Britain must include a thought about the constitutional position of our tax havens. Any discussion of regional inequality has to look at the vast centralisation of power in our supposedly sovereign parliament. Any talk of financial regulation has to ask why the City can have such vast influence within our politics. Any look at income inequality must also survey inequalities of political reach. Because once you accept that the state has a decisive role in our economy – and it does – you need next to ask who runs that state, in whose interests, and how that can change.

In 2016, millions of British people voted to leave the EU because they wanted to ‘take back control’. The remaining question, then, is a simple one: to whom will that control be returning? Will it be the same ruling class, using the same holes in the same wood-wormed constitution to squirrel away wealth and power and plunder the country like they plunder the planet? Or will the process force us to realise that Britain’s problem aren’t the fault of foreigners from whom we can escape; but come instead from our own failure to free ourselves from Medieval subjecthood, and fight for real democracy?

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For a chancellor who has been branded both ‘dull and cautious’, Phillip Hammond’s Autumn Statement caused quite a stir. Although much of the attention so far has been on his admission that Brexit could leave a £59bn black hole in our nation’s finances, focus is slowly turning to other matters, with funding for health and social care top of the list.

Over the past few days, medical professions as well as politicians from all the major parties have queued up to bemoan Hammond’s failure to allocate any more funding for health and social care. This includes members of his own party, such as former secretary of state for health, Stephen Dorrell. Cuts to social care in particular have so far been brutal, with local authority expenditure on caring for the elderly down 11 per cent in real terms in the last five years.

This squeeze has meant that huge numbers of people are now ineligible for state funded care; capacity in the sector has been shrinking; and there has been a fall in the standard of care. Furthermore, people are now coming to A&E or staying in the NHS for longer (so called ‘bed-blocking’) because they have nowhere else to go.

This, Dorrell argues, means that Hammond’s decision not to give social care more money is not just bad for people’s health, but also for the public purse as the costs fall on the NHS. He is, of course, spot on. We at IPPR have long seen extra money for both the NHS and for social care as a good investment.

However, the reality is that even if Hammond had stumped up some more funding, it would have only served to ‘kick the can down the road’ on the wider crisis that we face. The number of over-85s will nearly double by 2030, rapidly increasing demand for health and social care services (along with other support mechanisms provided by the state, such as pensions). Meanwhile, the working age population, who fund all of these services, will increase by only 2%.

This ageing effect will mean that as time goes by, either the government will need to raise more money through tax to fund this higher demand, or an ever increasing share of existing government spending will be spent on elderly people, with people of working age receiving less benefits and fewer services. So far, successive governments have leant on the latter option, with both the NHS and pensions largely spared the pain of austerity.

However, it’s far from clear how long this can last. At some point, today’s working generation will realise that the unspoken but deeply ingrained intergenerational social contract which the welfare state has rested on has been broken. They are paying for services that they themselves will never receive when they get older.

So, what should we do about this? At some point it is inevitable that we will have to recognise that an older population will probably require a bigger state. Voters may want Swedish public services at American tax rates, but this is simply not possible. A solid first step – both politically and in terms of policy – would be to introduce an NHS tax with the revenue shared between the health service and its poorer, frailer sibling in local government.

However, it seems unlikely that the public will accept the scale of tax rises needed to maintain existing spending growth on services and benefits for elderly people – especially as those in their 20s and 30s today are very likely  to be significantly worse off than their parents. This means that politicians must negotiate a new social contract between the generations.

At the heart of this new social contract must be a recognition that we are now living longer and will therefore have to work longer, but it may also have to include an end to the triple lock on pensions which ensure that pensions rise by either inflation, average earnings or a minimum of 2.5% (whichever is higher). This has meant that since 2010 pensioner incomes have far outstripped average incomes despite the fact this group are already doing better than most.

The revenues saved by these changes – which would be considerable, considering that the triple lock is costing the taxpayer an extra £6bn every year – could then be split between services for younger generations as well as targeted at those older people who are genuinely at risk from poverty or ill health.

This was the argument made earlier this week by an all-party committee of MPs, chaired by influential welfare reformer Frank Field. But the government has been quick to reject this. “We want to ensure economic security for people at every stage of their life, including retirement.” Fortunately, many MPs – including Conservatives – are now starting to question whether this is fair with former Minister, David Willetts, accusing the government of creating “country for older generations”. All told, it’s clear we must act, and now.

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It is a rare thing to hear a Conservative prime minister call for more responsible capitalism. Theresa May’s remarks at the recent Conservative party conference are a sign that large corporations are breaking the unwritten contract they have with society.

Corporate scandals that regularly hit the headlines (most recently Sports Direct and BHS, but there’s a long list stretching back centuries) are just the tip of the iceberg. It’s the routine, day-to-day greedy and destructive behaviour that is most alarming; the tax dodging; the excessive executive salaries; the steadfast resistance to regulations designed to improve societal or environmental well-being. Most of all, it’s the remorseless urge for growth that drives a never-ending cycle of consume and throw away, leading to widespread societal and environmental damage

We can’t eliminate greed and selfishness from human behaviour. What we can do is design human systems to encourage people to behave more in line with the dictates of their conscience and less likely to strive to please their corporate masters or satisfy their own egoistic desires.  And company law, which governs every company in the UK, has a big role to play.

Company law has changed very little in its essentials since the 1850s, when the Limited Liability Act was passed. That was a very different age. English society was even more stratified by class and only a minority of men (and no women) could vote.  The slave trade had only recently been abolished. Places in Europe and Russia were still structured on a system of feudal serfdom. Since then, we’ve seen the evolution of global capitalism, the invention of fast travel and instant communication. We’ve split the split the atom and decoded the genome.  Yet despite the enormous overhaul of how we conduct much of our daily lives, the fundamental legal structure of a business hasn’t changed.

A company still comprises members with ‘limited liability’, meaning no personal liability for the actions of the company.  Every company also has a board with responsibility for the day-to-day activities of the company. Such a structure would have been familiar to the powerful men of that age, many of whom owned vast tracts of land. Often living far from their estates, they relied on local managers who were incentivised to pursue profit for their masters. In essence, it was a feudal system.

British law is rooted in feudal thinking. This applies to property law (every bit of land in the UK ultimately belongs to the Crown) and even to human beings (we are subjects of the Queen, protected only by human “rights” that can be removed by Parliament).  Likewise company law is based on feudal thinking, dividing the world into a governing authority (shareholders); subjects (staff) to be used (employed) in service to the ultimate authority; and overseers (the board) who watch over the subjects.

This hierarchical structure channels the efforts of the whole into pursing private interests, whilst the dispersed responsibility allows individuals to avoid being held accountable for any public damage this might incur. Because it’s lasted so long and has become so all-pervasive, it is tempting to think that the limited company represents a universal pattern that can’t be improved upon. Yet this is actually a man-made, and relatively modern, contrivance and it’s ripe for change. It is time to start treating large companies not as the property of shareholders (a fiction that is used to justify a lot of the worst corporate excesses) but as institutions that exist to serve the common good.

How could such an overhaul be implemented? I’d suggest several things:

1. Professionalise the role of a director of all public limited companies (plcs). There would be compulsory training and exams to be taken before anyone could be a director of a plc. This is not so radical – to become the company secretary of a plc (a far less powerful or responsible position), you need a formal qualification.

2. Change the law to clarify that the ultimate duty of a director is to serve the common good.  Directors of a plc should be treated as public servants, not as servants of shareholders. This idea of a higher duty is familiar in professional practice – for example, a barrister’s highest duty is to the court, not her client.

3. The appointment of directors should be more transparent and participatory.  This could be achieved by setting up a panel to approve appointments, with representation from different constituencies such as staff, customers, government etc.

4. Task the company secretary to act as the “conscience” of the company, with the right to attend board meetings and to speak at the annual general meeting.  The difficulty with this is that the secretary, who is appointed by the board, risks losing their job if they speak out – a significant dis-incentive.  To safeguard the secretary’s integrity, we would require a government minister’s approval for their removal, mirroring the sort of constitutional arrangements commonly used to protect the integrity of the judiciary.

Such innovations would reap numerous benefits. I even believe, surprisingly perhaps, that they would have a positive impact on corporate profits. This may sound like wishful thinking. Yet the fixation on shareholder value that is characteristic of British companies, and embedded in section 172 of the Companies Act, has hardly turned British companies into world beaters. There is some evidence (for example from Scandinavian companies) that adopting a wider purpose that includes social and environmental well-being can correlate to enhanced financial returns.

Ultimately, what is needed is a change of mindset. We need government to stop trying to control or lecture from above (itself a symptom of out-dated thinking) and instead to focus on enabling corporations to be truly self-regulating, for the common good. This would indeed be a revolution!

NB: the above is an edited version of a submission by the author to the UK Parliament’s Business, Innovation, and Skills Committee which is running a consultation on corporate governance.

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London’s Garden Bridge will cost £60m of public money, and may even require a public bailout upon completion. Meanwhile, museums in Derby, Lancashire, Jarrow and Durham face closure. The cost of keeping them open is a tiny fraction of the public money funnelled into the Garden Bridge.

Of course, the problems with Britain’s economy don’t begin and end with the Garden Bridge, but it is a fantastic symbol of how skewed the nation’s economy, culture and infrastructure investment are towards London and the South East. It’s also an explanation for the resentment people living outside of London feel for the national overemphasis on the capital.

The first thing to address when it comes to rebalancing the economy is George Osborne’s idea of ‘Northern Powerhouse’. This was marketed by the then Chancellor as a way of rebalancing the economy and fueling economic growth in the North. But, as Daniel Bailey wrote for the Centre for Labour and Social Studies: “there is a great incongruence between the soaring rhetoric of devolution and the actual policy content of City Deals, such as the one in Sheffield, where only modest budgetary powers have been handed down. Moreover, an analysis of the specific powers being transferred speak to Whitehall’s existing objectives rather than an enabling of any deeper sense of decentralisation.” The emphasis on Whitehall has been demonstrated in farcical news stories about over 200 Northern Powerhouse jobs being moved from Sheffield to London.

In short, the Northern Powerhouse initiative is an exercise in devolving blame but centralising power. City deals mean British regions will get the choice over how they spend an ever-decreasing pot of money, and may even end up undercutting one another if business rates are also devolved. This doesn’t devolve power, it just outsources austerity. It’s not a solution to the problem of a London-centric economy; it is part of the problem.

What the UK needs is a proper industrial strategy to develop communities across Britain. This would involve investing more in the manufacturing industries so that there are plenty of well-paid skilled jobs in areas that have previously suffered industrial decline. Part of this industrial strategy would be to invest heavily in research and development to ensure the technology Britain develops can be exported to other countries, and the revenue used to invest in the country’s future.

A proper transport strategy is also needed to balance the economy away from London. By improving transport links and reducing commuting costs, the government could create a metropolis encompassing many northern cities – like a spiderweb of different economies across the north. This would be a far better solution to Londoncentricity than HS2, which is essentially a project to make commuting to London easier.

Finally, some national institutions should be relocated to the north. Parliament could be moved to Newcastle, taking many journalists and lobbyists – and the money they spend – with it. The BBC already has a huge media centre in Salford, but this could be expanded further. National newspapers could be offered peppercorn rent for opening regional offices outside of London. The financial, political and media hubs of the US are spread across the country. It is absurd that the UK crams all of them into the same city at the expense of everything else.

These are just a small number of ideas for a balanced economy. The government must think of more, and make enacting them a priority. London can no longer be allowed to remain Britain’s black hole, sucking in all the resources in its vicinity.

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There is an unfortunate tendency in English – not British – political debate to make a sharp distinction between the ‘bread and butter’ issues of economic management and the highfalutin and technocratic world of constitutional design. Real politics is about schools and hospitals, things that matter to everyday people – the folk and the tots of the tabloid imaginary. Only a handful of liberal democrats care about the constitution.

But the distinction, like so much that clutters public speech, is a fiction. Patterns of uneven development in the UK are directly linked to the current constitutional order. The concentration of political power in London and the demotion of English local government after 1979 partly explain the economic decline of much of the Midlands and the North. Meanwhile, the privileges afforded the City of London in the ancestral constitution, privileges that date back to before the Norman Conquest and were confirmed in a still extant clause of Magna Carta, have helped the financial sector to achieve an almost perfect capture of the official mind.

The uncodified nature of the British constitution makes all this easy to miss, but the 2007-8 crisis should have made it obvious that economic outcomes are inextricably linked to the structure of the constitution. The independent Bank of England has so far created £435 billion in order to buy bonds from financial institutions. This quantitative easing programme is intended to encourage private sector borrowing and thereby restore economic growth. The trading commissions on these bond purchases are roughly equal to the amounts given in bonuses every year in the City of London.

That’s an awful lot of bread and butter, created ex nihilo by the state’s central bank. Parliament was not consulted. The response to the crisis was coordinated from Downing Street. A different distribution of power in the state might well have led to a different economic outcome, in which the failing of the financial sector led to their effective demotion.

Finance as a whole is considered of part of the private sector. But as the crisis showed, in the final resort, the sector is dependent on state power. At present we allow profit-seeking banks to create most of the money in circulation and so we outsource decisions about investment to them. Not surprisingly they use this unexamined power to blow bubbles in asset markets. A new constitutional order could bring credit creation under effective public control and head of the threat of debt deflation.

We rarely discuss these matters in public. The media themselves exist inside a constitutional order that determines, in Aristotle’s words, ‘who learns what, and to what extent’. Widespread ignorance of how the constitution works is part of how the constitution works. In this sense, the BBC is a cornerstone of the really existing constitution. By describing quantitative easing in 2009 as being like putting “imaginary petrol” in our cars, the BBC helped ensure that the financial sector’s pre-eminence was preserved in the aftermath of the crisis it caused.

Efforts to reform the UK economy that fall short of changing the constitutional order can only achieve so much. For all the flim-flam about markets, the state is the decisive arbiter of outcomes in the economy. The structure of the state, and the ways in which that structure is described, largely determine who ends up with what, and at whose expense.

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