Monday, November 09, 2009

A few points about that 'age of austerity'

This is interesting. After ten years in office, during which inequality has consistently risen, New Labour now proposes to do something about it. Higher taxes on the rich are among the measures mooted, but this is unlikely to be accepted by Brown, Mandelson et al. If this sudden concern with income and wealth inequality looks like a desperate attempt to guard Labour's left-flank in anticipation of electoral wipe-out, that is probably because it is. Mind you, there are worse ways to respond to potential electoral annihilation. They could just put Peter Mandelson in charge, and let him lead the party into a mighty progressive coalition with David Cameron and George Osbourne. The flyweight Liberals would then be the, er, 'left' opposition.

The social realities referred to by the equalities minister, Harriet Harman, are certainly compelling. That a fifth of all marketable wealth is owned by a tiny 1% of the population (probably an underestimate, given the amount of wealth that is successfully concealed, offshored, laundered, etc.) is an obscenity. And inequality kills. A report last year found that babies born to poorer families stand a 17% higher chance of dying than those born to richer families. But it isn't just inequality with regard to income and wealth that kills. Inequality in job status and conditions also reduces life expectancy for those not in professional jobs. (See Richard Wilkinson's detailed discussion here). The aggregate effects of inequality, from degraded life conditions to early mortality, amount to a grave abuse of human rights, though it happens to be one that is structural to capitalism. It would be a relief if the Labour Party really felt obliged to mitigate its impact, though it is hard to believe that much will come of it. At the very least, though, the fact that this idea has been raised is symptomatic of the divisions that are increasingly arising within the party in response to meltdown on the economic and psephological fronts.

The wholesale enervation of the New Labour project, after years of ostentatious dynamism, results essentially from the failure of its growth model. I am not dismissing other causes, notably the 'war on terror' and the alignment with unpopular right-wing administrations in America and Europe. But what New Labour promised, what it seemed so certain it could deliver, was a model of growth that would maintain the relatively prosperity of middle class voters, keep capital internationally competitive, and provide enough tax base to keep the working class base loyal with public spending, comparatively high employment, tax benefits and so on. Growth would be maintained through a combination of financial success and an increasingly skilled and educated workforce - the 'knowledge economy', as they used to call it when New Labour's soothsayers were Charles Leadbeater and Anthony Giddens. That emphasis on education would also serve the cause of equality, in a very limited sense, since Brown was committed to reducing 'endowment inequality' by enhancing the ability of the 'socially excluded' to compete effectively in the labour market. The institutional and intellectual underpinnings established by Thatcherism were to be preserved, with flexible labour markets, low business taxes and scaled back welfare systems thoroughly entrenched. Thus, New Labour's victory in 1997 was treated as a success for the New Right, in which the Labour Party played a game of catch-up, finally adopting the electorally successful policies of its Conservative opponents. The task was simply to hitch those policies to the modified ends of social democracy. Whatever the misgivings of Labour's core supporters, this approach consolidated the ideological hegemony of a particularly nasty variant of capitalism. So far, so drearily familiar.

The economic crisis has thrown that ideological hegemony into disarray. In a recent poll, only 11% of people questioned in 27 countries approved of the way that free market capitalism is working. While the majority of people feel that the system can still be saved and made to work with adequate reforms and redistribution of wealth, sizeable minorities say it is totally unworkable and "a different economic system is needed". That minority is 20% in the UK - smaller than many others, but still a massive number of people questioning the basic running of society. That is the basis for a social movement. If that questioning, and the anger that underlies it, is not articulated by the left then it will be appropriated by the far right. Actually, forget 'will' - it is being appropriated by the far right.

If the diagnosis of marxists is correct, moreover, this crisis has not run its course. We are in for a prolonged period of stagnation, with worsening conditions for labour. The crisis has already been successfully used by capital to drive down wages and recoup profits by increasing productivity. Look at the latest statistics from the US Bureau of Labor Statistics. They say that in the non-farm sector of the economy during the last quarter of production, productivity rose by 9.5%, with unit labour costs decreasing by 5.2% (and by 7.1% in manufacturing. I expect you'll find the same trends in the UK. So, while things are particularly bad for the swelling numbers of unemployed, those in work are having to labour harder for less. In response to this, none of the main parties can even pretend to have an attractive social vision. They are all committed to ensuring that the working class pays the price of this crisis, with privatization, attacks on public sector unions, and spending cuts across the board. The major differences are in emphasis and pitch. That is why the Tories are, in a throwback to their old 'if it isn't hurting, it isn't working' mantra, pledging an 'age of austerity'.

In this context, the decade-old project of trying to construct a left-wing alternative to Labour becomes all the more urgent, though it acquires new dimensions. Electorally, non-aggression pacts and broad coalitions are the order of the day. But I wonder if it isn't long past time for some sort of anticapitalist alliance, not quite like the NPA but certainly drawing inspiration from it, to be forged.