Christine Lagarde, the IMF and the World Economic Forum
Christine Lagarde has once again used the World Economic Forum meeting in Davos this week to highlight her quest to refocus the International Monetary Fund on the task of reducing inequality. Mme Lagarde has repeatedly made such statements at the WEF and I’ve covered these on this blog before.
Speaking at a Bloomberg sponsored event on the ‘squeezed and angry’ middle classes throughout the world, she reminded the audience that she had warned of the destabilising political effect that inequality might have. With the rise of populist political movements now very much in evidence she was once again making the same warning.
I have previously noted the IMF’s interest in inequality under Lagarde and went to meet some of the people in the Fund responsible for the research published in 2013 and 2014 to ask them about it. I concluded then that the concern was genuine but that this was motivated in the main by a concern to prevent political destabilisation rather than an egalitarian ethical standpoint. To be clear here – this is not a critique of the individuals; they appeared to have a very developed ethical commitment to equality, but an organisational one. It seemed to me then that what had enabled their work on inequality (which had been around for a long time) was the stance of the IMF’s Managing Director (Mme Lagarde and Dominique Strauss-Kahn before her) but also the context of increasing political instability. I called this the ‘New Global Politics of Inequality from above’.
The struggle for reform
This week Lagarde commented on her own struggles to turnaround the IMF to focus on inequality. It is worth reading this at length:
“[back in 2013/14] we were demonstrating that excessive inequalities were putting a brake on sustainable growth… I got a strong backlash from economists in particular saying that it was not really any of their business to worry about these things, including in my own institution, which has now been very much converted to the importance of inequality and studying it and providing policies in response to that… we now have a very opportune time to put in place policies that we know will help…”
So to summarise this and the tenor of the Davos debate:
- Mme Lagarde recognises that inequality is a problem;
- Davos stakeholders and policy makers should worry about this because it is bad for growth and creates political instability;
- she has tried, against resistance, to change the IMF and to lead the G20 with some success, to focus more on putting in place policies to reduce inequality.
For those with an ethical or just pragmatic concern to reduce inequality some important questions arise from this. These are about how much the Davos set (such as international organisations like the IMF, multinationals, the G20, policy makers and leading NGOs) have genuinely taken action to reduce inequality as a result of this kind of analysis.
So, is the IMF really trying to reduce inequality?
I can’t answer for all of these different organisations, but recent research I undertook with Dr Paul White, did focus on the extent to which the IMF has changed. We undertook our analysis in several stages.
First, we looked at high level pronouncements and reports from the Fund on the subject of inequality. Speeches from Lagarde herself and several important research and policy documents do indeed have a strong focus on reducing inequality. They map out both the case for reducing inequality and identify a series of evidence based conclusions about precisely which sorts of policies might increase or reduce inequality in different types of country.
Next, we took that list of policies: that is the policies that the Fund itself says will reduce inequality. Rather than evaluating ourselves whether these policies would reduce inequality, we took that at face value and looked for evidence that these policies were being promoted by the Fund when it works with member states.
Few international organisations have as direct a channel of influence on their member states as the IMF. This comes mainly in two forms. The IMF regularly provides advice and recommendation to all members (nearly all countries in the world). While these recommendations are not mandatory, they do carry some weight because capital markets may view this advice as sensible and therefore access to funding for government programmes may be affected if governments ignore it. For governments who borrow from the Fund, this advice obviously has much stronger leverage; it is often part of the conditions that the Fund attaches to receiving financial support.
The next step was to look at the operational guidance that IMF staff work under when producing advice to member states. We wanted to see the extent to which the policies the Fund says reduce inequality are present in that guidance. There have been several changes to this guidance recently and at a headline level concerns with sustaining growth and reducing inequality appeared to have triggered those changes. Evidence then of Mme Lagarde’s reform programme.
But when we looked at the actual detail of the changes to the operational guidance and the various supporting documents, it was difficult to discern the emphasis on reducing inequality. It seemed that whatever message had come from the top about this, got lost somewhere in the technocratic process of re-drafting the operational guidance.
Finally, we looked at recent IMF documents providing advice to member states. We looked only at recommendations produced after the new operational guidelines were in place. We were specifically looking for recommendations which echoed those in the Fund’s own lists of policies which might reduce inequality. We also searched the documents for any mention of concerns with inequality, income distribution and the like. Perhaps unsurprisingly, we found very little evidence of any of this.
So it seems that while there may be an attempt to reform the IMF to focus on reducing inequality, this has not yet fully percolated through the organisation to operational practice. We shouldn’t necessarily be surprised. Reform takes time after all.
Rhetoric and practice
There are several possible explanations for the lack of change.
Perhaps it is an ‘organised hypocrisy’ or ‘legitimation strategy’: high level pronouncements on socio-economic and gender inequality are a veil for the real business of the Fund, which is unconcerned with these sometimes negative consequences of promoting growth and global market integration.
Alternatively, perhaps it merely represents institutional stickiness: reform takes time and not enough time has passed. If either of these explanations is adequate, research like that undertaken by Paul and I, as well as others (Best, Broome, Kentikelenis et al., Weaver, Gronau and Schmidtke etc) help to keep the pressure on and support the reform efforts of committed leaders like Lagarde.
I am not yet in a position to be definitive on this, but I suspect something of both these explanations, placed in a broader analysis of the role of international organisations in the expanding global economy, is the real answer. But to stand up that conclusion, more research is necessary.
Where to from here?
For me the next phase in my research on the IMF is to continue to audit policy documents to see whether there is any identifiable change in practice. I also intend to enquire with Fund staff, and perhaps Christine Lagarde herself, as to what they think explains the apparent dissonance between high level policy and practice.
Whatever the outcome of this research, it is important that those involved in highlighting the issue of global inequality, continue to keep the pressure on, to hold the powerful to account. That includes the IMF, Mme Lagarde and all those present at the Word Economic Forum this week of course.
It is now a week since I trudged through the snow to deliver a lecture with sleep and disbelief in my eyes after staying up much of the night watching the US election results come in. That morning, my thoughts revolved around the election of Trump and how to explain this as part of my lecture on Neo-Marxist approaches to International Relations. I hope I did a reasonable job in the circumstances and in the days that followed I gave various media interviews, wrote blogs and gave a public presentation on the topic.
In the immediate aftermath of political ‘convulsions’ it is perhaps inevitable that we explain them using the tools we have immediately to hand. To a significant extent the New Politics of Inequality thesis that I have been working with does help to understand these political convulsions, and suggests that more will occur in the years to come.
However, both Brexit and the Trump elections are convulsions whose internal dimensions require more detailed and careful examination. It seems to me that some of the questions that many of us have been asking in the post-convulsion period, in both cases, are not fully answered using the existing analytical tools at our disposal.
For example, why did so many women vote for a man who appears to openly admit to sexual assault and incredibly sexist views? Similarly, why did some Latino voters support a man who wanted to curtail the opportunities to move to the United States for people like them? Perhaps a bigger question which applies to both the Brexit and Trump convulsions is: why is it that challenges associated with globalisation and the effects of competitiveness are popularly understandable via a regressive politics of seeking out past securities and xenophobia, in the face of the paucity of evidence that such politics can pose a solution for the problems?
In the wake of the Trump election it has been commonplace to suggest that in combination with Brexit, the rise of populism elsewhere and challenging geo-politics involving Russia threaten to unravel the global liberal order. Many have suggested that there are parallels with the circumstances of the inter-war period. The worry is that these circumstances mirror those that created the fertile ground for extremism and conflictual nationalisms to develop. The parallels are certainly there and these concerns are apposite: Nazism didn’t start with gas chambers and concentration camps, it started with poverty, insecurity and widespread anxiety about how to resolve these problems, which was then exploited by opportunist populist leaders via regressive ideology.
Another – more intellectual – parallel is perhaps also appropriate. In comparable yet different terms both Antonio Gramsci and the early members of the so called ‘Frankfurt’ school both struggled to come to terms with the rightward shift in popular opinion which saw Fascist leaders gain widespread support. Both camps sought to explain why the development of an alienating industrial capitalism that Marx had predicted accurately in economic terms, did not lead to the types of solidaristic and internationally oriented working class consciousness he anticipated, and instead led to nationalism and fascism. Both stressed the role of ideology, the ways in which collective and individual psychologies obscured the material reality from being popularly understood.
Perhaps both Gramscian and Frankfurt school ideas offer us a way of understanding the present. Hegemonic institutions of the extended state, the culture industry and so on embed the power relations of the status quo in our common sense, produce ‘false consciousness’ and create the conditions for simplistic and regressive understandings of our collective insecurities.
But, if these tools are able to help us understand the current conjecture then we are surely in need of new and detailed applications of them. Such applications must be central to the development of a progressive counter-movement to the rise of right-wing populism, with any chance of success. It clearly is not enough to fall back on a defence of the post-war liberal settlement that got us to where we are. Instead, it is surely better to try to understand why the popular consensus in support of that settlement has fallen apart.
My sense is that the New Politics of Inequality thesis takes us some way along that path. It helps understand the causes of poverty, inequality and insecurity and that this may realise a popular backlash to globalisation or European integration. It helps to understand why in conditions of precarity and precarious lives, there is fertile ground for regressive political ideologies in relation to immigration, race, gender and so on.
But it does not explain why and how regressive ideas take hold in terms that Gramscian notions of hegemony or Frankfurt school understandings of collective psychology would identify. Further, it doesn’t help us understand the terms on which an alternative progressive ideology might be constructed, beyond the rather trite observation that progressive and effective political leadership and more complex popular understandings are necessary.
In other words, to recall many of the debates between academic colleagues that I have seen on social media over the last week: while the working class vote for Trump or Brexit might be explained via some kind of notion of ‘false consciousness’ or women voting for Trump might be the product of patriarchy and internalised misogyny, neither explanation seems on its own sufficient or wholly effective.
It is necessary to better understand now, how and why people comprehend their circumstances in ways that are supportive of regressive political ideas. Current research on these issues is necessary because it is surely the case that the detailed ways they work is dynamic over time and space. So if Frankfurt school research on the Nazi period did help to understand that, we need new research now to focus on how and why regressive, xenophobic and divisive political agendas are taking hold. Colleagues like Owen Worth, Stuart Shields, David Bailey and Ian Bruff I know have begun to tackle these issues in different contexts, but I am sure that they themselves would agree that more detailed understanding is still required.
I don’t immediately have the answers to these challenges. So perhaps to advance our thinking we need to marry some of the very well developed tools of public opinion research (albeit recognising the problems of atomisation and aggregation) with the critical theoretical perspective outlined by Horkheimer (and later derived from Gramsci’s work by Robert Cox) and material analysis of the production and reproduction of inequality in different national and local contexts subject to world market integration.
It is these things that will shape my thinking as I continue to try to make sense of contemporary political convulsions. I might even be able to put them into practice. If anyone reading has any ideas on how best to do this, then please do get in touch!
Yesterday I posted about the US Presidential Election and suggested that whatever happened the support for Trump constituted a political ‘convulsion’, in a similar way to the Brexit referendum result.
My basic thesis in terms of the New Politics of Inequality is that inequalities that have arisen as a consequence of neo-liberalisation, are increasingly recognised by communities who are becoming anxious and insecure about their socio-economic futures, both for them and their children. This is creating a sense of disenfranchisement with politics and political institutions, and fuelling anti-establishment politics, extra-parliamentary political movements and new political parties.
These insecurities are located in universal processes of world market integration which increase international competitiveness. Much is up for grabs here in terms of how economic insecurities are explained via different cultural politics.
On the one hand rightwing-populism appears to exploit economic insecurities as fear of social and cultural change, and in particular to place the blame on immigrants. Voters with anxieties about economic futures might have already faced the costs of adjusting to globalisation, but they may also be relatively affluent and concerned about the prospects for their children. This partly explains why the Republican party in the US now seems to be the party of the relatively poor.
On the other hand, leftist populism seems to focus on the insecurities of the relatively skilled workers who find benefits in a more cosmopolitan society and greater diversity. In part this explains the high skill profile of Brexit remainers and anti-Trump voters in the US. It is also partly the reason why the Democrats are becoming the party of the rich.
The main ‘convulsions’ seem to result from the success of politicians in manipulating right-wing populism, seeking to ‘take back control’ in the case of Brexit or ‘make our country great again’ in the case of the US. But these convulsions are somewhat against the tide of history, in several respects.
First, they are against the trend of world market integration. In terms of UK, constraints on sovereignty are as much, or more, related to its free trade commitments as wider aspects of European integration. Leaving the EU while maintaining access to the single market is unlikely to claim back much sovereignty, but appears a likely outcome of the Brexit negotiations. Similarly, voters supporting Trump’s calls to renegotiate free trade deals might also find that this is easier to say and harder to achieve.
What’s more, while free trade has led to increased competitiveness and the loss of jobs in traditional industries, undoing those deals might merely accentuate the problem for those same families and communities who might then be faced with further job losses, rising consumer prices and more economic insecurity.
It is easy for politicians to stoke up these sentiments for a quick political win, but it will prove much harder to actually deliver for those communities. In both the US and the UK, the really worrying aspect of the Trump victory and Brexit result might be that the ‘cry of anger’ that underpins them will not be met with beneficial change. Indeed, they may well be worse off still as a result. Whatever, voters in the US or UK may want, international competition is only likely to increase.
Second, the demographic tide of history is also against these convulsions. Those watching the TV coverage from the US overnight or early this morning will have been struck by the degree of demographic change in the country. When Ronald Reagan won the presidency in 1980 88% of voters were white. This year 70% were white. Courting white voters may work for now, but there is a ticking clock on that strategy. Similarly, like support for Scottish independence and remaining in the EU, support for Hilary was much higher among the young, and those not quite yet able to exercise a vote. Supporters of the ‘take back control’/’make our country great again’ claims to the past are on the wrong side of inevitable change.
None of that should read as comfort. These convulsions are against the tide of history, but they are characterised by division, aggression and scapegoating of particular communities. To some extent these convulsions are about communities trying to cling to an imagined past. When those same groups find that the tide of history is not turned by their pyrrhic victories, the scope for further division and conflict will surely only increase.
Convulsions now, may then breed the conditions for further convulsions in the future.
In that context, and as Sophia Price argues in a companion post to this one, left politicians and parties need to better understand the ways that culture, race, gender and other identities intersect with class. These intersections shape the ways in which increasing international competition might be understood.
For several decades political parties have sought to respond to the tastes of median voters. This has often meant that they court, rather than reshape political anxieties – such as in responses to populist – and often ill-informed – understandings of welfare or immigration. In place of this, left parties seeking progressive responses to competition and insecurity need to meet these challenges head on, offer alternative explanations and unpick the easy sound-bite politics of the right-populists.
That’s no easy task, but the alternative is pretty bleak.
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Politics through Facebook
This week I was prompted to remember the birthday of one of my oldest school friends by a helpful message from Facebook. I didn’t really need a reminder, but nevertheless I responded to Facebook’s exhortation and dutifully posted the obligatory – if low key – ‘Happy Birthday’ message on his Facebook page.
But I don’t expect a response, and perhaps I don’t deserve one.
On Friday June 24th- – the morning of the EU referendum result – I foolishly entered into a Facebook quarrel with this old friend. He was posting in muted but triumphal terms about the decision to leave the EU, and I objected to some of the explanations used. He obviously received several posts and messages that were negative, and, despite some enthusiastic support from others in his network, he posted on Saturday morning that he didn’t want to offend anyone and would delete the posts in question. I suspecthe thought some people – and I fell into that camp – were sore losers and should ‘just get on with it’, but like his initial post his tone was polite, consensual and intended to pour oil on troubled waters.
So why had his posts motivated me in the first place?
Frankly, the reason was that I recognised his concerns. He explained his antipathy toward the EU as a result of concerns about de-industrialisation, the loss of well paid and secure employment. He was worried about the social implications of this; in terms of increased insecurity and a sense of disruption of the local communities that had relied on these industries. I know from our friendship that he and his family are long-standing members of those communities which they hold dear. His values are of commitment to place and others.
In the wake of the referendum many remainers have poured scorn on leavers, accusing them of being uninformed, motivated by racism, xenophobia and simplistic nationalism. All of these are easy to dismiss as the product of a lack of education or rational thought. But my friend’s posts did not fall into any of these categories. He was thoughtful, well informed and motivated by a commendable and deeply held commitment to community and place, and concerns over the insecurity of both.
What is also notable about this friend is that he has been successful in adjusting to the changes he bemoans. He is well trained and qualified, and I assume reasonably well paid in a high skilled job. His concerns are about material changes in the communities he values, but they are not sour grapes from a loser in the globalisation story. He was expressing concerns about the wider and common effects of global economic changes, of which European integration was just one part.
I clearly should have been more cautious with my response to my old friend, and hopefully in time our spat will be forgotten. The irony is of course that his concerns very much feature in my own research.
That same weekend similar – albeit more consensual – discussions between myself and a range of academic colleagues, also facilitated by Facebook, suggested a more hopeful trajectory. The Facebook ‘echo chamber generated’ new friends too – all motivated by the EU result and concerned about the need to do more to engage with the political concerns that motivated my friend.
We all recognised that we have been too insular, too concerned with metrics of student satisfaction, research impact and academic reputation to spend sufficient time on the politics of the real world. As the algorithms of social media generated a discussion of increasing numbers of like minded colleagues, more than 250 of us joined a discussion. The result was that we rather quickly formed a new think tank – InformED. I hope that in the months and years to come you will hear more about our work, for that will suggest that we have carried through our commitment to reach out beyond the confines of the University lecture hall and academic conference room.
So aside from introducing InformED, it is the links between the EU referendum result and my research on ‘the New Politics of Inequality’ that I want to tease out in this (admittedly over-long) post. I have two core arguments.
The first is that the pressure for the referendum and the result were partly generated by a ‘New Politics of Inequality’.
The second is that if we are to leave the EU, then it is vitally important that this process is undertaken in a way that involves us all taking greater political responsibility. For their part, politicians need to take responsibility for the social divisions they have created. Critical academics like me and my colleagues in InformED, have a responsibility to reach out beyond the academy to influence this, and the wider public have a responsibility to engage with political debate in a more substantive way.
The New Politics of Inequality From Below
In a paper, currently under review and co-authored with Daniela Tepe-Belfrage, we argue that levels of inequality in the UK are fracturing the political consensus that had been reflected in the post-war middle class. In a paper published in 2014 I argued that during the 1980s, Thatrcherism had sought to separate out different sections of the working class, seeking to differentiate between a deserving skilled working class able to cope with increased competitiveness and those less able to cope. This has been a long-running trend; the current government has repeatedly sought to emphasise its support for ‘hard working families’ against the ‘undeserving poor’.
The argument made by Daniela and I is that the specific forms taken by socio-economic inequality in the UK are now undermining both one and two nation attempts to build political compromises. The much vaunted ‘new middle class’ of the 1960s and 70s sociology text-books is fracturing.
For one thing, the long-term prospects of this group now look less secure. As I argued in my inaugural lecture, the generation now in their twenties and teens look like they will be the first to be considerably worse off than their parents. The exception to this is where families have acquired housing assets to pass between generations sufficient to protect those now in their teens and twenties from increased insecurity. In buy-to-let mortgages at one end of the spectrum and increased private renting at the other, the housing and credit markets are acting as a significant mechanism of upward redistribution.
For another thing, those families affected by these changes increasingly recognise their own declining security. As the recent data from the British Social Attitudes survey shows, concern with inequality is increasing, as it has done for some time.
It is this recognition that has fueled the emerging realignment of British electoral politics. Just before the last general election the British Social Attitudes Survey showed that UKIP voters were just as likely to be concerned about inequality as were labour voters. While some groups mix these concerns with more cosmopolitan cultural politics, others express them through more conservative cultural views. The former group might be more likely to be young, urban and highly educated (or just living in Scotland!); the latter more likely to be out of the major urban centres, older and less well qualified. Without over simplifying things, the former group may be more likely to be among the ‘Momentum’ group supporting a new extra-party popular mobilisation behind Jeremy Corbyn. The latter group are more likely among the ranks of labour and conservative supporters who have switched to UKIP in recent years.
As the Ashcroft polls show, these shared concerns and divergent interpretations of them were neatly aligned with the propensity to vote remain or leave in the EU referendum. Leave voters were more likely to be socially and culturally conservative while remainers were more likely to be socially and culturally cosmopolitan and outward looking (see graphics below). But both groups (see graphic above) were influenced in their decisions by concerns about economic insecurities and the effects of these on social and community stability.
These patterns are not just present in the UK, they are echoed across Europe and North America. In the US presidential elections similar patterns of support can be seen for Bernie Sanders versus Donald Trump. The Five Star movement in Italy, the formation of Syriza in Greece exemplify the leftward reaction. On the other hand the rise of the far right parties in France, Austria, Denmark and the Netherlands and the Pegida movement in Germany demonstrate the counter trend to view polarisation and insecurity through the prism of cultural stasis and fear of the other. Perhaps more significantly the New Politics of Inequality is also manifest outside of electoral politics in the expressions of protest such as Occupy or the Indignados in Spain, or the rise of far right protest movements all across Europe. Evidence can be found also in declining popular confidence in political institutions.
The New Politics of Inequality then are fracturing the post-war consensus in the highly developed nations of the North America and Europe, from both left and right. Inequality and cultural change are popularly viewed negatively on both ends of the political spectrum.
The fracturing of the new middle class is perhaps realising Marx’s prophecy that the class structure would evolve into two great and opposing classes. The sloganeering of the 1% versus the 99% seem to suggest that. However, it seems that the 99% are definitely not drawn together in a cohesive class consciousness by their common economic realities, but are fractured both within and across countries on their cultural response to those economic realities.
The EU referendum result represents the most significant real world expression of this so far in terms of UK, European and even global politics, though the US election result may clearly trump(!) it.
The New Politics of Inequality from Above
Several of the other papers I have written recently have addressed what might be called here the ‘New Politics of Inequality from Above’. Here I refer to the elite concern about levels of inequality being politically, economically and socially destabilising. This concern has been emergent over the last decade, but is particularly pronounced since the great financial crisis of 2008.
Evidence of this concern can be drawn from the policy documents of significant international organisations such as the International Monetary Fund, the Organisation for Economic Cooperation and Development, World Bank and the World Economic Forum. These organisations have different roles and functions, but collectively one of the things they do is act as the think tanks and ideas forums of elite policy knowledge. Social, economic and political changes are interpreted by these organisations as particular problems for the status quo. The OECD began to worry about inequality first, but all of them have published high level papers rendering inequality as a policy problem over the last five years, as I discuss in a paper published in Spectrum late last year.
Of interest here is that the European Commission definitely qualifies as one of those transnational organisations that has had influence in shaping the elite interpretation of ‘problems’ that national governments choose to focus on and frame particular responses to these in terms of recommended – and in the case of the Commission sometimes mandated – policies. It is also the case that inequality has featured on the list of concerns the Commission has raised over the last five years.
The key terms of this new politics of inequality from above are that inequality is not rendered by these elite think tanks as an ethical problem. This new politics does not represent a ‘road to Damascus’ moment for these organisations. Rather they are concerned precisely because inequality might now be seen as a ‘risk’ to the stability of globalisation. As such they are busy trying to persuade national governments to take these risks seriously.
This new politics of inequality from above was clearly apparent in the EU referendum process. For years policy elites have sought to exploit social differences to manage the process of disciplining their populations to accept lower wages, and in some cases lower standards of living also. This has been possible politically, precisely because elites have mobilised fear and sometimes nationalism to generate this division. Politicians have regularly sought to use the image of the immigrant, the welfare or health tourist or the domestic welfare benefit recipient as a negative foil for generating support among the rest of the population.
However, that fear and xenophobia is now rather like the ‘Sorcerers Apprentice’; its animated spirit has got out of hand is undermining the position of established elites. Specifically in the UK, both Labour and Conservative Parties have played the ‘immigration’ and ‘race’ cards, exploiting fears over insecurities to court popular appeal.
Indeed, the now defining moment of Gordon Brown’s tenure as Prime Minister might be thought of as the moment that he unguardedly let slip his discomfort with that narrative when commenting that he thought remarks made to him by a Labour party supporter about migration were bigotry.
Of course when he realised (see the image above from the Telegraph website capturing the moment) he had been recorded making these comments he immediately back-tracked and offered profuse apologies for ever even thinking about challenging fear expressed as xenophobia. The episode is still referred to as evidence that Brown was out of touch with popular opinion, and – no doubt encouraged by the party machine – he certainly did not try to challenge this populism. It was an episode that demonstrates the cultural divergence in responses to inequality, its manipulation by politicians and the way that this is now hard to control.
But in the run up to the referendum vote, elite concern seemed ever more shrill in the face of the evidence that the Sorcerer’s broom might now be beginning to act on its own motivation, and out of their control. As the campaign progressed and opinion polls showed a close contest, the array of large businesses and elite policy think tanks became increasingly willing to enter the fray. The supposedly neutral civil service machine also strained at the leash to get involved to put public opinion back in its place, as both the Treasury and Bank of England – the oldest and most central institutional structures of the UK state – sought to raise their own fears of what a Brexit vote would mean to the elite transnational status quo.
The elites were trembling, and, as it turned out, they had good cause. The sight of Bank of England governer Mark Carney standing in Threadneedle Street promising that the Bank would step-in to rescue the financial markets, and stablise the global financial system, was evidence of how seriously those elites were rocked. That other Central Banks immediately joined forces to make the same promises is only evidence of the transnational nature of those elites.
Why has inequality risen?
Again, I and many others have addressed the underlying reasons for rising inequality in a number of places, such as my talk in launching the Global Inequalities research cluster at Leeds Beckett, and in a workshop paper to an ESRC seminar at Goldsmiths University late last year. There is also no shortage of explanations. Again, the OECD, the IMF et al. have all jumped on the bandwagon of explaining rising inequality.
The most remarkable thing in terms of the New Politics of Inequality is that the explanations put forward by these elite organisations now are remarkably similar to those put forward for a long time by critical scholars in international political economy and the wider social sciences. Ofcourse the different proponents of these explanations place varying degrees of emphasis on different parts of the explanation, and often use different language to describe them. Semantics aside the more or less accepted basket of factors that have increased inequality include:
- Increasing competition resulting from increased openness to trade and, in some circumstances, increased migration, also. Migration though tends only to have shorter-term and more localised effects and it should be remembered that the migrants themselves are the subject to the negative effects of this competition.
- Offshoring and globalization as some industries and occupations have moved overseas.
- Skill Biased Technological change – resulting from the substitution of machines and computers for labour, meaning some occupational roles have disappeared while other more skilled jobs have attracted higher wages.
- Privatisation of state owned enterprises, which has invariably put a downward pressure on wages in public sector employment, often more dominated by women.
- The decline of trade union membership and collective bargaining.
- Labour market policy, including anti-trade union legislation and reduced employment protection legislation.
Of course where critical scholars and the elite international organisations part company is that these are the very changes long-recommended by the OECD, IMF etc. And in the face of rising inequality and social destabilization they still recommend that the answer is more competitiveness. But, as Paul Cammack has long argued, pursuing competitiveness as a solution to the problem of increased competition is a fairly circular argument. Its hard to find a different path out of a tricky situation if one is going in circles!
The European Union and the New Politics of Inequality
European integration was very much the product of the post-war international compromise; motivated by geo-political desires to tie the countries of Europe together in a peaceful free-trade zone of collaboration, while bolstering them against the threat of Soviet expansion. These geo-political concerns suppressed and held in check the tension between two important component elements of EU integration. These were first a political and social liberal project to spread and realise the individual rights of citizens through constitutionalism ;and second an economic liberal project to promote market integration.
After the end of the Cold War the geo-political suppression of tensions between these two projects was removed, and the market liberal project began to emerge as dominant.
As Paul Beeckmans and I argued in a recent paper, the process of economic meta-governance in EU integration has increasingly pursued the objective of economic competitiveness to the detriment of concerns to build a ‘Social Europe’. The suppression of wages and living standards has been encouraged by the European Commission as an element of EU integration to meet these ends. If in any doubt about this, just ask the Greek population that has been at the harshest end of this discipline over the last 6 years.
In sum, EU integration has increasingly taken on the concern with competitiveness that has generated the inequality underpinning the damaging ‘new politics’ I describe above. So, if I am so critical about EU integration as was my friend and the wider ‘Lexiteer’ (Left wing leave voters) campaign right about the need for the UK to leave the EU?
My answer would be ‘no’, on several grounds.
First, while the EU – and the European Council and European Commission in particular, have worked to promote competitiveness at the cost of greater inequality and social tensions, they did not really have this impact in the UK. That is principally because the UK government (under all political parties) has always run ahead of the EU in these objectives.
Indeed, many other Member States have often complained about the role of the UK in encouraging market-oriented reform in the wider EU. While European integration has been consistent with the types of reform that have realised the New Politics of Inequality in the UK, it has not been a cause of it and at times has acted as a substantial drag on UK ambitions. Constant debates over the implementation of EU directives strengthening workers rights are prime evidence of this, with the UK often being oppositional in the European discussion on these matters and sluggish to implement the resulting watered down versions that could be agreed in the face of UK objections.
Second, the majority opinion among the political elite (among remainers and leavers alike) is that leaving the EU should be complemented by immediately rejoining the single market or negotiating other equivalent trade deals. Leaving aside the difficulty of this, as pointed out by Gabriel Siles-Brugge, the direct implication is that leaving will see more market oriented reform and a greater dominance of the economic liberal project over the political liberal one. Put simply, as Ruth Cain also persuasively argues it will accentuate the conditions which generated the New Politics of Inequality in the first place.
Third, the subordinated aspect of EU integration – shared citizenship, a European identity, the idea of peace and cooperation between nations, cosmopolitan values of tolerance and openness, individual rights and Europe’s great gift to the world: the idea that we collectively have a social and economic responsibility to one another, as expressed through the institutions of a welfare state and social protection – may all be on the back foot, but they are not gone. We should be promoting a radically different Europe that defends and promotes these values, not turning our back on it.
Where to now?
Plenty of commentators have spent the last week worrying about the precise ways in which the fallout from Brexit will play out in terms of the potential for a second referendum, Scottish cessation from the Union and the politics of Party leadership. The blogosphere is alight with this stuff and it is all many of my colleagues, friends and acquaintances have been able to talk about since July 25th. It is not just ‘lefty academics’ either. I have overheard conversations in shops, on public transport and in pubs that all suggest a very much heightened interest in politics and a dawning realisation of the dynamics I describe above. These things are clearly significant and comment worthy in themselves.
However, the big story here is not so much the contingent terms in which the immediate processes of responding to the vote pan out. Rather, it is in the underlying socio-economic trends and their rival interpretations in cultural politics. The apparent rise of racial harassment and violence is one immediate expression of this, but so too is the widespread antagonism between the two sides of the debate. My Facebook spat is clearly part of this!
In the fallout then there is increased responsibility on all sides.
Politicians have a clear responsibility to engage with the problems in place of Westminster games.
Academics, such as those coming together in this new think tank, have a duty to do more to engage with public opinion and inform scrutiny of politicians. Critical academics working in the fields of international political economy, sociology, social policy, European studies and critical management studies have long been aware of rising inequality and its consequences in the form of alienation and disenfranchisement. It is crucial that those critical analyses find their way from the lecture hall and conference room to the public debate. We need to do more to engage the public directly and to influence the political debate in the media. This is the objective of my colleagues who have come together to create InformED.
The public also have an obligation here. The stories over the last week or so about Brexit voters immediately becoming ‘regrexiteers’ when the implications of their actions became clear and about the prominence of ‘What is the EU?’ searches on Google suggest a democratic obligation to be better informed before contributing to collective decisions. They also suggest an increased realisation of this.
Acting on these responsibilities is no ‘academic’ issue. It is of vital importance if we are not to travel further down the road of cultural divisions. As a divided nation we are easier to rule in the interests of the few and not the many. Divergent cultural political reactions to common insecurities risk the many blaming each other for our common inequalities, and letting the few of the hook.
Moreover, these circumstances – common insecurities, fear of the future, disenchantment with existing institutions – look much like the political conditions that led to the downward spiral into the Second World War. I don’t say we are anywhere near that now, but we are closer now than we were, and the warning signs are clearly there. It is imperative that we all act now to ensure that we do not travel any further down that path.
Paul Mason’s (2015) recent book Post-Capitalism: A Guide to Our Future has created quite a media stir over recent months. David Runciman, writing in the Guardian is broadly positive, concluding that Mason has provided ‘a spark to the imagination… a worthy successor to Marx’. By contrast former Labour MP Chris Mullin, also in the Guardian, is more scathing, seemingly lambasting Mason for his socialist politics and ‘utopian folly’. Reviews in other media display a similar ‘Marmite’ reaction.
It was with these reviews ringing in my ears that I picked up the book in preparation for a talk at the Centre for Culture and Art’s Post-Capitalism: Rethinking, Crisis, Culture, and Politics Conference, where Mason himself was also talking about the book alongside a film screening of Boom Bust Boom.
Unusually the book is both everything that it is credited and lambasted for. It is probably overly long and far too eclectic in its choice of supporting ideas. The book’s point of departure is that there is something systemically broken in contemporary neo-liberal capitalism. It proceeds through an ill-advised detour of Kondratieff’s wave theory and a rather ill-informed critique of Marx generally to an appreciation for an autonomist reading (Negri and Flemming, 1991) of the so called ‘Fragment on Machines‘ in Marx’s Grundrisse. Here Mason finds the basis for the optimism of the book’s title: Post-Capitalism.
Info-capitalism, he concludes, sows the seeds of its own destruction because innovation has become ‘non-excludable’, to use a mainstream economic term. That is; information distribution on the internet means that technology can be widely shared at minimal or no cost, and innovation itself can become the product of decommodified cooperation. His big example here is ‘Wikipedia‘ on which many thousands of people help to co-create a reliable and ever expanding source of open knowledge. The effect of this cooperative innovation has been to crowd out for profit providers from the market. If such innovations became generalised, capital would no longer be able to rely on innovation to generate profits, and capitalist social relations would therefore whither away. The handmaiden for this ultimate transition, Mason suggests, is the generation of tech-savvy youths with ‘white cables hanging from their ears’. To give all this a shove, Mason lays out a plan of action that states should engage in now: ceasing privatisation; taking radical and centralised multi-lateral action on climate change and socialising finance.
Video of Mason launching the book at Leeds Beckett University
There is plenty to question here. To pick a few: if the state is precisely what is to be transcended by the radical implications of the digital commons, then why is the state also so necessary to the precursor steps that Mason identifies? Are the generation with the white earphones really so tech-savvy? Aren’t they precisely the ones who are so used to using the Xboxes, Playstations and Apple products that focus on the ‘user’ being just that, impeding rather than speeding the types of problem-solving skills that digital co-creation might both generate and require?
Capital and the Commons
And more than any of this, is Mason’s reading of ‘the Fragment on Machines’ consistent with what Marx was trying to argue, and, much more importantly still, the real-world evolution of capitalist social relations? If the Fragment on Machines is put in the context of the wider discussion of competition in the Grundrisse and Capital, then it is arguable that what Marx was trying to show was the ephemeral nature of the relative form of surplus value, based as it is on the need to maintain an innovation advantage. Because capitalists can’t always exclude others from seeing and then applying their innovations in products and production, this means that the way is always open to other capitalists to copy and even leapfrog their innovation, potentially devaluing inventory and fixed capital. This is what drives the endless pursuit of innovation, the perpetual need to supress labour power and the expansive tendencies of capital. It is one source of the chronic instabilities that present themselves to firms, workers and whole communities as periodic crises (read on).
As Marxists like Werner Bonefeld (2011) and Massimo De-Angelis (2004) and feminist Marxists like Silvia Federici (2012) in particular show us, capital is very attuned to the advantages that arise from the commodification of common resources that it did not pay to produce. In this sense, the digital commons may not be so different to the social commons, such as the biological reproduction of life itself. Capital loves to appropriate these base materials whether or not they are directly paid for. Feminists, like Nancy Fraser (2014) point to the exploitation of unpaid domestic labour as a necessary and universal input to every production process, but very rarely does capital acknowledge this through the allocation of pay to cover these costs. Rather, for the most part, this labour is unpaid, undervalued and merely assumed to be in place.
So like the work of ‘social reproduction’, capital exploits freely available technology and ideas as inputs into the production of surplus value. The widespread corporate exploitation of Linux is good evidence of this. That doesn’t suggest that cooperative and non-commodified production won’t survive alongside capitalist production or that it can’t be used as a source of opposition and resistance. Again, feminist political economy of the household and body illustrates this well. In the same way then the digital commons might be a new frontier in class struggle, but is it not inherently transformatory or necessarily progressive.
All this demonstrates that, while often inconsistent, Mason’s book is certainly thought provoking. The main line of thinking that the book opened up for me though was around the subject of crisis, systemic punctuation and transformation. In that sense, the premise of the book; that the Great Recession opened up a fissure in contemporary capitalism and is therefore a turning point of sorts – albeit one that must be struggled over – has obviously been a topic of much discussion over recent years. This is graphically illustrated with the proliferation of literature making an appeal to the imagery of Zombies. The dominant narrative here is that neo-liberal capitalism is ‘Zombie like’; still moving and devouring all that happens to be in its path, but dead from the neck up and waiting to be toppled. As Jamie Peck (2010, p. 109) puts it, neo-liberalism…
“…has ‘entered its zombie phase. The brain has apparently long since stopped functioning, but the limbs are still moving… The living dead of the free – market revolution continue to walk the earth, though with each resurrection their decidedly uncoordinated gait becomes even more erratic”.
The first thought that always comes to mind when discussing the idea of crisis and capital is the need for specificity over the use of the term. Stephen Gill (2012) has highlighted the medical genealogy of the word; being the acute point in an illness where the patient either dies or recovers. To stretch the metaphor, however, illnesses can be chronic life limiting conditions or these more acute turning points. I argue below that the way in which crisis manifests in capitalist development takes the form of both long-term malaise creating conditions of chronic instability, as well as acute periods in which alternative futures might appear possible because pre-existing social structures are disrupted.
In terms of the logic of capital, crisis can be read as a break in the circulation of value. From the perspective of capital this relates to barriers or interruptions in circulation that prevent the realisation of surplus value in the process of transferring money into the commodities of labour power, fixed capital and raw materials, through the altered commodity form and back to money, with surplus value included as profit. From the point of view of labour, crises can be seen as acute breaks in the circulation process which begins with labour power and flows through commodities back to the reproduction of labour power.
Chronic Crisis Tendencies and Instability
Taking the latter circuit first, chronic, life-limiting malaise and instability is a fairly accurate description of the everyday lived reality for many. Here I don’t just refer to the 800m or so living in extreme poverty on the UN’s metric and whose crisis is likely caused by the absence of exploitation at the hands of capital. Rather, I refer to the much larger section of the global population, who may or may not be living in ‘extreme poverty’ regardless of the UN’s rather limited $1.25 a day standard, but whose lived reality is determined by the logic of capital. For these people (including many of the authors and readers of this blog) this crisis is formed through the subsumption of their aspirations, the limitations placed on their opportunities and the way their existence is alienated from others around them because of exploitative relations of production or social reproduction. As Shirin Rai (Rai, Hoskyns, & Thomas, 2014) reminds us, it is these people whose energies are ‘depleted’ by the daily process of reproduction in a world of alienation. On top of all this, the looming impact of climate change is both clearly linked to the expansive tendencies of capitalist production and is set to limit human possibilities into the future. The reality of life under the logic of capital then is some form of crisis for large parts of the world’s population for a large part of the time. This type of everyday crisis is of course often hidden behind the appearance of formal equality, freedom and the festishism of commodities and money. Deeply embedded but constantly evolving ideologies serve to obscure these real effects from view.
In this sense, capitalist social relations engender chronic life limiting effects which can be read as ongoing crisis tendencies which might be generative of more acute crisis moments. These tendencies though, are not a special condition but an ‘everyday’ lived reality.
There are other ways in which the tendencies toward acute crisis moments are ever present in the ‘normal’ operation of capitalist competition. Firms unable to keep up with competitive pressures succumb to them, devaluing their accumulated capital and the labour power and potential of their workers. To the extent that clusters of interdependent firms are often co-located geographically, these sorts of competitive crises have spatially concentrated effects and act to switch the geographical flows of capital (Harvey, 1982) from one place to another, leaving behind a trail of devastation in human lives and visible traces of decline in their wake, as my coulleague Andrew Lawson’s (2013) work on ‘Foreclosure Stories’ clearly illustrates.
Acute Crises and Systemic Punctuation
Clearly this is not though the type of crisis potentiality that motivates the media headlines and the Zombie metaphors. Rather crisis in this sense appeals to a more dramatic and systemic reading of the term. Here crisis becomes precisely a departure from the norm of capitalist development. If accumulation and expanding reproduction are read as the desired (if difficult to realise and sustain) steady-state of capitalist development, an interruption to either can have systemic consequences. Crisis in this sense – in that suggested at the outset of Mason’s book – can therefore be ‘punctuating’; a point at which alternative socio-economic paths become possible. The emphasis on the openness of socio-economic change and the role of social struggle in determining the direction of this is one of the real strengths of Post-Capitalism.
These punctuating and systemic crises provide the acute interruptions of accumulation and often social reproduction too. Of course Marx provided a theory of crisis development that focussed on the breakdown of accumulation and reproduction. Subsequent theorists continue to argue about whether these systemic crises are the result of different technical aspects of this theory such as the controversial ‘long term tendency of the rate of profit to fall’ or the necessary under-consumption of the working class because the portion of their labour power that is taken in surplus value means that they are simply unable to consume everything that they produce. One of the senior figures in these debates is David Harvey, who long ago (1982) laid out a way of understanding contemporary crises via Marx’s theoretical treatment of crisis. He has recently returned to the subject to clarify his thinking in ways that serve as a useful introduction for the unitiated. However, one reads these highly technical debates, Marx provides for a range of ways in which what Simon Clarke (1994) calls ‘disproportions’ in supply and demand between sectors and between capital and labour can lead to these systemic crises.
Of course over the last 100 years there have been several punctuating crises of this type, during which not only variants of capitalism but perhaps capitalist social relations per se were up for question. It was these sorts of crisis that occasioned the transition from laissez-faire to social democracy in the immediate Post-War era and the transition toward neo-liberalisation in the 1970s/80s. In both cases, capital encountered barriers to continued accumulation and reproduction. New ideas, modes of production, institutional forms and distributional arrangements were needed to ensure that capitalist social relations per se, could be sustained. In the first case this involved the spectacular devaluation of capital in the form of two world wars and a severe depression. In the latter it involved Harvey’s famous spatial fix as new areas of the globe were opened up to the flow of capital, first through ‘globalisation’; outsourcing and integration of much of South East Asia into the global economy and then through the post-Communist transition of East and Central Europe. These spatial fixes involved the neo-liberalisation of these societies, as they entered the realms of global capitalism (Shields, 2012).
Neo-Liberalism in Crisis?
Of course, like crisis, neo-liberalism is itself a hugely problematic and ambiguous term (Boas & Gans-Morse, 2009), but it is widely understood to be descriptive of the ideas, modes of production, institutional and distributional arrangements which have gradually come to characterise capitalism as a result of the spatial fix that Harvey identifies. Without opening up another genealogical and definitional can of worms, following Jamie Peck and collaborators (Brenner, Peck, & Theodore, 2010), I use the term here as a dynamic process (ala ‘neo-liberalisation’) which is contradictory in character involving all sorts of different institutional forms. Indeed, Japhy Wilson (2015) argues that constant re-engineering of neo-liberalism – embedded in culture, the ideas of thought leaders and also institutions – is crucial to the ways in which ideology enables the reality of capitalist exploitation to be obscured, even if this neurotic redefinition is often only partially successful. What is common though, is a partly private and partly state-authored project to restructure the relation between capital and labour to benefit the former and to realise the interests of ‘capital in general’, most easily represented in the form of finance. That said, it is far too simplistic to read this as a finance vs industrial capital distinction, for much of what might pass for the latter is so thoroughly financialised as to make such a distinction redundant.
If then, the premise of Post-Capitalism the book is to be believed, we are living in times of an acute and potentially punctuating crisis moment for neo-liberalisation, opening the possibility for a transition to ‘Post-Capitalism’. While it is hugely significant that a mainstream journalist is willing to confront such systemic and political issues, we are a long way from a systemic crisis of neoliberalisation and therefore much further still from a crisis raising the possibility of a transition away from capitalist social relations altogether. As another colleague Katy Shaw’s (2015) suggests in her recent book on Crunch Lit, the continued dominance of the Vampire metaphor for contemporary capitalism might be more apposite than that of the Zombie. Here’s why.
In the initial post-crisis period there were indeed a range of developments that questioned the continuity of neo-liberalisation, such as the widespread adoption of Keynesian stimulus, banks taken into public ownership and active state interventions in some countries to offset or avoid unemployment, notably in Germany. Politicians and other ‘organic intellectuals’ made high profile speeches at the World Economic Forum at Davos and other places which promised a new kind of economy and academics and thought leaders as disparate as Joseph Stiglitz and Naomi Klein commented that they expected significant change. This window in which alternatives to further neo-liberalisation were to the fore, was short-lived however and the widespread implementation of austerity measures has since reinstated an on-going trajectory of neo-liberalisation.
Austerity as Governance by Crisis
The implementation of austerity though provides another way in which we can think about crisis. Like crisis and neo-liberalism, ‘austerity’ is another over used phrase that requires, but is not often given, a definition. Indeed, it is notable that ‘what is austerity?’ has been one of the most prominent Google searches over recent years and especially during elections. Despite its widespread use, many people simply do not know what it means. Clearly a full definition is beyond the realm of this blog-post, but one suggestion here is that austerity be read partly as means of politically inducing crisis in the reproduction of labour and households.
A video of my talk at the Centre for Culture and the Arts event on Post-Capitalism
Austerity as public spending cuts, reducing welfare or reproductive services often relied on by poor households, forces them to moderate their consumptive behaviour or look for other forms of subsistence. As such, austerity is crisis inducing in the household. At recent ESRC Seminars on the ‘Hidden Costs of Recovery’ the contradictions of austerity policies which appear to hinder the productive capacities of households were widely discussed, and the commonly proposed answer was that this was the product of state strategies to assert control over especially poor households. At these seminars Ruth Cain showed how this was carried through in the form of the new ‘Universal Credit’ welfare benefit and Anat Greenstein and Daniela Tepe-Belfrage showed the deeply interventionist logic underpinning both the ‘Bedroom Tax’ and the government’s Troubled Families Programme. As Mary Evans and Angus Cameron argued persuasively in these discussions, it is not an accident that these government policies are matched by a moralising culture of austerity which portrays poverty and inequality as the ‘fault’ of poor households, and women in particular. In different ways Johnna Montgomerie, Emma Dowling and Ruth Pearson all highlighted how material and cultural austerity are linked to crises in social reproduction, whose costs are born largely by households, and thereby disproportionately by women (Pearson and Elson, 2015). As these colleagues argued, this is a dynamic and dialectical process, since crises in social reproduction can also be causes of crises in material accumulation.
In even more dramatic ways, the countries receiving support from the ‘Troika’ of the European Commission, European Central Bank and the IMF, massive reductions in the size of the state itself and in the living standards of large sections of the population have been used to moderate the behaviour and future expectations of these populations. As Johnna Montgomerie argues, the forced moral economy of the debt crisis in Southern Europe is selectively applied by the powerful against the relatively powerless. Different debt-moralities are applied to lenders than to borrowers and to different types of public and private borrowers. The result is debt-crisis management as a governing strategy to impose a particular form of moral order in which financial interests are to the fore.
Responding to popular resistance to forced austerity, the Troika – and other member states of the European Union – have been quite happy to see the suspension of democracy as in Italy, or (once international capital had been repatriated) in Greece to merely offer those populations the straightforward choice of accepting the unacceptable or leaving the EU, with all the uncertainty that that would entail. Indeed, following the various rejections of further austerity by the Greek people, the conditions attached to further support have actually been accentuated and Syriza is now implementing a more stringent package of measures than those they were elected to resist. It seems as though the Greek population is being singled out among those requiring external support, for particularly punitive action, in comparison say to the Irish who, after initial protests, did put up with externally imposed austerity.
In the context of the structural lack of external competitiveness of the European economy, it might be possible to start to interpret the application of contemporary austerity, whether internally authored as in the case of the UK or externally enforced as in the case of Ireland, Greece, Spain, Portugal and Italy, as an ‘experiment’. Whether consciously designed in this way or not, there may be parallels between the experience of austerity in Europe now and the way that Pinochet’s Chile was used in the 1970s to test neo-liberalisation. Perhaps the experience of poor households in the UK and the bailout countries of Europe can show just how much of an alteration in living standards can be enforced in European societies while retaining stable reproduction, and including, where necessary, the suspension of democracy to ensure implementation. Different scales of governance – and supranational meta-governance in particular – have been used in a divide and rule strategy over the populations of Europe, with the effect that the Irish subjects of austerity expect their counterparts in Greece to swallow the same painful medicine, whether or not it is in the end any good for them. Understood thus, the ‘recovery and return to normalcy’ narrative for the current conjuncture in Europe looks distinctly unlikely. Rather, we might be in for episodic and crisis induced ‘ratcheting down’ of living standards for the forseeable future.
This leads to us to the importance of critically interrogating the logics of policy failure and success, and the ways that this might shape our understanding of precisely how ‘crisis’ should be understood. As Peck et al. (2012) argue, neo-liberal policies often (and predictably) appear as if they fail. But ‘failure’ here needs to be understood in complex and contingent ways because policies “typically fail in such a way as to engender new rounds of experimentation, generally oriented toward the same market- disciplinary agendas that underpinned earlier forms of policy reform—and associated policy failure(s)” (p274). As such, neo-liberalisation often continues while appearing to fail, the appearance of failure induces a sense of crisis and therefore a further justification for more of the same. As Stuart Shields pithily summarises this ‘the time for reform is always now’. In a recent article on EU Meta-governance Paul Beeckmans and I argue that the EU has operated under this logic for more than 20 years now, especially mobilising ideas of failing competitiveness in relation to an evolving list of countries from the US and Japan in the early 1990s, to China, India and other emerging markets today (Nunn & Beeckmans, 2015). Neo-liberalism might be chronically unstable and frequently appear to be experiencing existential crisis, but it is not currently in the throes of the acute episode that might realise its transformation.
Crisis and Post-Capitalism?
If neo-liberalism is not in crisis then, what of Paul Mason’s claim that we might be in a position to witness ‘Post-Capitalism’? Given the preceding discussion we should clearly treat this sort of claim with some caution, without necessarily dismissing it. We shouldn’t dismiss it because the simple act of thinking about ‘post capitalist’ social relations is itself a form of resistance to the dominance of capital and its attempt to write itself into our minds and bodies.
However, no such transition appears likely in the near future. Paul Cammack’s recent work offers a way to think about such issues. In several recent papers he argues that Marx and Engels always intended that their analysis of the contradiction and crisis ridden nature of capitalist development mapped out a world where capitalist social relations were universal before they could be transcended. This makes perfect sense if Rosa Luxemburg’s argument that capital requires social groups outside of it to constitute supplies of new labour, raw materials and demand is taken seriously. As David Harvey has convincingly (and repeatedly) argued, the availability of ‘space’ for capital to expand into is one important way that chronic instabilities and even acute crises can be offset and partially resolved. As Cammack shows though, there is still plenty of space left for capital to expand into, though the doubling of the global workforce since the early 1990s is clear evidence of the intensification of its expansiveness and an explanation for chronic instabilities to come to the fore. If expansion can offset systemic crises then we shouldn’t expect a crisis-transcendence logic to emerge any time soon.
Finally then, if neither post-capitalism nor post-neo-liberalism are around the corner, what might we expect from the coming decades? To answer that question we might need to enjoin Paul Mason’s ‘optimism of the will’, with a slug of ‘pessimism of the intellect’. Unfortunately there is a popular tendency in ‘the west’ to almost absent mindedly associate capitalism with progress and the sort of distributional and institutional arrangements that have been dominant in Europe and, to a lesser extent, in North America in the post-war period.
However, there is of course no clear reason why we should expect capitalism to be combined with high or rising standards of living and generous redistribution and social protection. For much of the world’s population, capitalist social relations have never been like this. Indeed, reading it as such may serve to naturalise the social distinctions between those who have, and have not, benefitted from high levels of redistribution and state spending, obscuring important cleavages of ethnicity and gender which structure inequalities of experience, resources and life chances. Over the long-run, Thomas Piketty’s (2014) recent high profile empirical findings about patterns of inequality across the last hundred years or so may illustrate the exceptionalism of the Post-War experience in the relatively small number of countries where social democracy prevailed, for a relatively short period of time. The equation of capitalism with such progress then was a rather white and male experience, and to speak of crisis in punctuating terms, as the unravelling of social-democratic institutions may also obscure the real experience of capital for people outside of Europe and North America.
Nevertheless, in a world of intensified competition, driven in part by the expansion of capitalist social relations to South and East Asia, it might well be that European and North American populations can expect a tightening of living standards that extends beyond an exceptional period associated with ‘recovery’ from the ‘Great Recession’. Indeed, permanent belt tightening and social conflict over the distribution of costs and benefits might well be the ‘new normal’ of European and North American societies. Rising inequality and instability in the electoral landscape in many countries may just be the first signs of these trends setting in. Increased attention in governance circles to the importance of managing the effects of rising inequality might then be interpreted as a ‘New Politics of Inequality’ where the underpinning moral economy is not so much egalitarian, as about functionally managing the chronic instabilities and tendencies toward crisis that are the normal, everyday and systemic characteristics of an expanding capitalist system.
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Sheffield Political Economy Research Institute has published a new blog on the ‘Political Economy of Good Parenting’ jointly authored by PAGE member Prof. Alex Nunn, alongside Dr Daniela Tepe-Belfrage (Sheffield) and Prof. Shirin Rai (Warwick).
An excerpt is below:
The political economy of ‘good parenting’
‘Good parenting’ is grounded in a white middle-class ideal of what the family is and thus shifts responsibility for nurturing from society to individuals, mostly women
Family breakdown and poor parenting have hit the headlines in Britain in recent years as the proclaimed reasons for a large range of societal problems, from youth rioting to youth unemployment to teenage pregnancy. According to the Home Office:
“There are a small number of families that can be described as ‘dysfunctional’. Two or three families and their wider network of contacts can create havoc on a housing estate or inner city neighbourhood. It is always in areas of greatest disadvantage that this corrosive effect is seen and felt most clearly. Sometimes it occurs where there has been considerable family breakdown; multiple partners can pass through the house; children do not have a positive role model; there is little in the way of a predictable orderly routine; and the lifestyle is such that it makes the lives of neighbours a complete misery.”
This thinking – socially conservative, hetero-normative and judgemental – culminates in the idea that these factors lie the root of a ‘Broken Britain’….
This short paper is a summary of my inaugural lecture, given on April 29th 2015. A longer version of the lecture notes are available here, and a video of the lecture will be available in the near future.
In some ways those of us who have long worried about rising inequality ought to be cheered by the prominence now being given to the subject in popular debate. After several decades in which socio-economic inequality was firmly off the agenda, reduced to the discussion only of equal opportunities, inequality is now firmly back on the political agenda. Academic and popular texts, campaigning organisations and powerful international institutions all draw attention to the disproportionate economic and political resources accruing to the ‘1%’ made famous in the sloganeering of the Occupy movement. But I argue in this lecture that this New Politics of Inequality might not be quite so progressive as it at first appears.
My argument is that the New Politics of Inequality is mainly concerned to contain the negative affects of inequality in terms of social and political stability, rather than an ethical commitment to egalitarianism. This is the case whether it is found in Thomas Piketty’s high profile Capital in the Twenty First Century or OECD and IMF reports (see here for a critique of the New Global Politics of Inequality).
Rising inequality is a common international trend internationally: many countries have experienced increasing inequalities over the last thirty years. Oxfam’s Even it Up campaign has drawn much attention to this. Elsewhere I argue that this is driven by increasing world market integration, resulting in increasing competition between emerging markets and existing ‘advanced’ economies like ours. However, it is also important to examine the specific conditions that pertain inside particular countries; while many countries have witnessed increases in inequality, they are by no means all the same. For this reason, in the lecture I go on to explore some specific aspects of increasing inequality in the UK.
Inequality has been rising in the UK for some time. It rose dramatically in the 1980s, stalled in the 1990s before rising again just before the great recession. Since then, some people draw attention to the fact that headline measures show that inequality declined after 2008. I argue that this is misleading and that data lag and measurement issues are hiding the true situation. Reductions in welfare generosity after 2012, changes in employment conditions and earnings since 2008 and the recovery of asset values owned largely by better off households in the last two years will mean that over the short-term we can expect to see headline inequality rise again to at least pre-crisis levels.
In this sense, the effect of the crisis has been to reinforce existing inequalities rather than reduce them. Earnings have fallen disproportionately at the bottom of the income distribution than at the top, full time earnings have declined more for women more than for men, and the household incomes of ethnic minority groups have for the most part fallen by more than for white households. Ethnic minority households also remain more likely to experience poverty and have even larger income differentials than do white households. But perhaps the biggest shift experienced in the crisis has been the structural decline in the position of young people in terms of employment, earnings and wealth accumulation. Given what we know about the prospects for young people who enter the labour market during a recession, we can expect that these disadvantages will continue through their life-course.
It is the experience of these younger groups that I argue will drive a longer-term structural pressure toward greater inequality, similar to that which Piketty identifies. First, the data shows that younger age groups experience greater income inequality than do older cohorts. Second, over and above their labour market disadvantage in terms of employment and earnings, those who entered the labour market during the crisis are much less likely to own their own home than were those who entered the labour market before the crisis. Just short of 50% of those below 35 are living in private rented accommodation. They are not benefiting from the falling mortgage costs associated with homeowners. Third, because of the unequal accrual of housing, financial and pension assets in their parents’ generation some will be better protected by inheritance than others.
Of course these are long-term pressures and much can happen to contain and offset them, before they are fully realised. This is though the problem associated with the New Politics of Inequality: polarisation within the ‘new middle classes’. It is this structural pressure toward polarisation, rather than just the experiences and disproportionate influence of the ‘1%’ that I will be discussing in the lecture. One possible outcome of this inter-generational polarisation is increasing political and social destabilisation and of course it is this destabilisation that I claim the New Politics of Inequality is most concerned to avoid.
So what evidence is there of the New Politics of Inequality in UK domestic politics?
The language of the two main parties as they seek to differentiate between a deserving and undeserving poor or to protect a ‘squeezed middle’ from the cost of living crisis is certainly evidence of a recognition of the way that inequality is experienced in ‘everyday life’.
The shifting electoral landscape and the emergence of smaller parties is also partly reflective of this. The SNP may have lost the referendum in which they made inequality a major feature, but the medium term impact of that campaign may be to make them ‘king makers’ in a hung Westminster parliament. UKIP may to some extent look like a two issue (Europe and immigration) party, but its supporters are both socially conservative and very concerned about inequality. The Green Party has made inequality a key issue alongside environmental sustainability. So to that extent, inequality is emergent as a key political issue in electoral as well as protest politics.
This is the agenda for my research over the next few years. In a range of projects with colleagues in our Global Inequalities research programme at Leeds Beckett University and collaborators at other Universities in the UK and beyond, I will focus on:
- The way in which household and community structures interact with public services, housing and labour markets to produce and reproduce inequality over time. This research is being undertaken as part of a large international collaboration.
- The extent to which the New Politics of Inequality is sustained over time and whether it represents a real and substantive concern to limit or even reduce inequality in order to contain destabilisation. An alternative is that the New Politics of Inequality becomes merely an attempt at discursive legitimation of the status quo.
The World Economic Forum (WEF) is meeting this week in Davos, Switzerland. The annual conference has a long history of bringing leading individuals from the worlds of business, government and academia together. Following criticism and protest in the 1990s and early 2000s, the annual meeting has also been opened up to ‘civil society’ and webcasts now enable the interested public to peek into the proceedings of the once very secretive meeting.
The WEF prides itself on being an ‘agenda setter’ and bringing the ‘international community’ together to tackle common global problems. This international community is broadly conceived and now takes in key multinationals, international NGOs, international organisations and the leaders and senior politicians of leading states, as well as senior academics from across the social and natural sciences. To illustrate this point, the Co-Chairs of this year’s meeting included Winnie Byanyima (Executive Director of Oxfam International), Jim Yong Kim (Director of the World Bank) and Eric Schmidt (Chief Exec of Google). Many hundreds of participants from these sectors will be present at the meeting and contribute to the discussions.
The conference theme this year is ‘the New Global Context’ and is underpinned by four pillars. These include the challenges associated with maintaining global cooperation in the context of geo-political shift and ‘decentred globalism’; the challenge posed by slow growth and the need to make this more sustainable and resilient; the promises and challenges of new technology; and social instability.
Something of a ‘pinch of salt’ is needed when decoding some of this: it suits the forum organisers to present significant systemic challenges as requiring imminent attention, because that suggests a stronger purpose for the forum. However, the agenda does highlight some significant risks facing the global system, and which it has a track record of outlining, particularly in its Global Risks Report, the tenth annual iteration of which was published last week.
Risk management has become a hot topic among international organisations in recent years. In my paper due to be presented at the International Studies Association annual convention in New Orleans in a few weeks time, I take a look at the role of international organisations in managing systemic risk in the international system, in the context of academic debates about the emergence of a world society.
In the paper, I argue that a world society is emergent, but this is better understood as a ‘world market society’ (WMS) in which the process of world market integration is ‘ecologically dominant’ (to borrow a phrase from Bob Jessop) over other aspects of it, such as increased social connectivity, the development of shared cosmopolitan identities and the extension of democracy and human rights.
I also argue that if a WMS is emergent, it also has some important institutional promoters – these being supra-national institutions such as the World Economic Forum, but also inter-governmental organisations like the World Bank, International Monetary Fund (IMF) and Organisation for Economic Cooperation and Development (OECD). These organisations have a long track record in promoting world market integration. But the same organisations are also now increasingly engaged in identifying risks to the continued process of world market integration and attempting to manage these.
For the many activists and critics who have traditionally viewed these organisations negatively (for e.g. the anti-globalisation movements of the late 1990s and early 2000s, the Occupy protestors and the like), this can be superficially confusing. For one of the major themes in work put out by the WEF, the OECD and the IMF over recent years has been to lament the world wide rise in inequality and its now widely recognised negative impacts on growth, social stability and the vulnerability of the financial system.
My paper charts the various research and strategy reports put out by these organisations over the last few years which make these arguments. It also reports on interviews undertaken with senior figures at the OECD and IMF in the last few months about their work on inequality. The tenor of these interviews was that these high profile reports on inequality should be taken at face value; they represent a serious concern with the growth of inequality.
So how can the apparent serious interest of these organisations in containing and/or reducing inequality be reconciled with their commitment to the process of world market integration ? Afterall world market integration is a principal factor in the increase in inequality in the first place.
The answer lies in ‘risk management’, and by understanding risk in a dynamic way. As Paul Cammack argues, risk management to these organisations is about seeing risk as both positive and negative. Risks are positive when they are about pro-market behaviour – rewarding investments in skills or product development. Risks are negative when they corrupt market behaviour.
In this sense prominent negative risks are climate change or natural disasters because they undermine confidence in market-based risk taking and lead to market failure. As if to reinforce Cammack’s point, the World Bank’s annual World Development Report in 2014 was titled Risk and Opportunity and much of it was focused on how to incentivise positive risk and contain negative risk.
Inequality can be understood in this way too. Inequality is seen by these organisations as positive when it leads to disproportionate rewards for some, and therefore incentivises market-based risk. However, there is a level of inequality when the costs of negative risks outweigh these positive ones. This is the case where inequality leads to social and political instability or undermines trust in political institutions and the status quo of uneven wealth and power distribution.
To cite an example from a recent OECD report, it is also negative when it undermines market based risk taking: for instance when unequal societies mean that the poor do not invest in their skills development for future reward, because they cannot forgo today’s consumption, or they see the potential benefits as too uncertain. Clearly, in the judgement of those responding to the WEF’s Global Risk survey in recent years, and the OECD and IMF, inequality has risen to a level when these negative risks are now outweighing the positive ones.
The argument underpinning my paper is then that the new concern among international organisations with inequality – what might be termed a ’New Global Politics of Inequality’ – is just one example of their role in managing the risks associated with world market integration. It is a genuine concern, but it is not necessarily progressive. Rather it should be seen as a feature of these organisations attempting to save World Market Society from its own in-built crisis pressures.
None of this is to question the individual motivations of some of the committed people that I spoke to about their work on inequality inside these organisations. Many of them were genuinely committed and from a progressive desire for a more equal distribution of power and resources. They reported long-standing commitments and work in the area of inequality which stretched far beyond the recent organisational support for it. However, what seemed clear was that their work and ideas were allowed to come to the fore, and given organisational prominence, precisely because the context had changed. From an organisational standpoint, inequality had moved between the categories of positive and negative risk.
There are many reasons why this shift in organisational perspective occurred. On the one hand protest and activism was significant. The Occupy movement, resistance in Southern Europe to the imposition of austerity and the Arab Spring were all major triggers for shifting organisational agendas. So too is the increasing uncertainty among international organisations about their leadership and facilitation of the international community in a world of geo-political power shift from the US and ‘West’ to a multi-polar world. Dealing with inequality and social fragmentation as well as the impacts of this on consumer demand and environmental problems like resource depletion and climate change, in the context of reduced leadership capacity worries these organisations greatly. Watching the webcasts of discussions at Davos reaffirms this conclusion substantively.
A final question relates to the role of advocacy in this context. A future avenue for my research, and one currently being explored in our Global Inequalities research group by doctoral researcher Priyan Senevirantne, is what role leading NGOs are playing in this process?
Oxfam has been one of the loudest critics of increasing inequality, and no doubt has been influential in putting the issue on the agenda of the institutions of world market society. Oxfam’s critique is that WMS is skewed toward the very rich. Its analysis is far more radical than that of the IMF or OECD because it clearly suggests that there is something inherently wrong with the WMS itself.
However, by engaging with the WEF process as an insider, surely Oxfam risks becoming a part of the WMS: that is part of the very problem it is seeking to address. Priyan’s research suggests that many international NGOs – not necessarily Oxfam – are indeed becoming central elements of the very system that they were established to change. Other excellent research even suggests that protest itself is becoming a commercial proposition and stripped of its radical and system-changing objectives. A natural extension of my ISA paper would then be to explore the way in which Oxfam and other similar organisations engage with the institutions of the WMS and the effect that this has on the radicalism and progressiveness of their objectives. Watch this space.
As I argued at the launch of the Global Inequalities Programme @CeASR_Leeds a few weeks ago, it has become common to argue that increasing inequality created the conditions for the financial crisis that triggered the more generalised economic, social and political crises that still afflict European countries, seven years after the ‘credit crunch’. In my debate with Hilary Benn MP, I suggested that the declining share of overall wealth of those at the bottom of the income distribution led to increased demand for credit to maintain living standards. This then was part of the explanation for increased personal indebtedness.
However, what I didn’t discuss was the growth in demand for mortgage and personal debt in the financial markets, as assets that could fuel further credit expansion. Had I done so I would have certainly recalled an excellent seminar given by my colleague Dr Jamie Morgan who elaborated this very argument in an explanation of the role of Private Equity funds as intermediary institutions in capital markets to my Masters students and a group of international Higher Education Agents April 2013 (also available here, published by Palgrave).
I remembered that seminar just now when reading Photis Lysandrou and Anasatasia Nesvetailova’s excellent account of the role of the Shadow Banking System in the run up to the financial crisis. They argue against the prevailing explanations which suggest that it was the operation of the shadow banking system which caused the crisis. Instead they suggest that the growth and role of the Shadow Banking institutions in creating the now infamous CDOs and other complex and unstable financial products, was driven by increased demand in the wider system for these products to act as assets.
Their argument is that while some institutions – such as governments, pension funds etc – have a socially legitimate reason for wanting to hold such assets, others – such as exceptionally wealthy individuals – do not, and that regulation of the Shadow Banking sector needs to be matched with measures to curb this additional demand through measures to radically redistribute the wealth of the very rich.
It was precisely the incomes of this group: not just the top ten percent of income earners but the top one percent, that I discussed as one of the most significant drivers of increased inequality over the past three decades, both in the UK and internationally. The wealth of this group is discussed at length in the excellent work of Thomas Picketty. But what the Lysandrou and Nesvetailova paper shows is just how powerful this group of people are likely to be as the ongoing debate about financial reform.
Inequality in power then and not just resources is at the centre of both a moral problem and some of the structural weaknesses in contemporary capitalism.
This post is also on my own personal blog: https://alexnunnblog.wordpress.com/
On Friday night I helped launch the Centre for Applied Social Research (@CeASR_Leeds) Global Inequalities Research Programme when I debated inequality with Hilary Benn MP.
If you are interested the notes from my talk are here. A video of the event is coming soon.
The basic argument was that inequality has risen in the UK, its high by international standards, we know why and politicians need to face up to it. To reduce it requires strengthening the power of the working class politically and industrially, and, more complicatedly, negotiating coordinated international adjustments between surplus and deficit countries and between developed and developing countries. A big challenge and one that requires political imagination and not populist focus group politics.
Led by Dr Andrew Lawson and Dr Alex Nunn, the Global Inequalities programme will see colleagues look at many different dimensions of inequality in many different contexts. Dr Sophia Price and Dr Mark Langan will be looking at trade and inequality in Africa, Dr Jamie Morgan and Dr Caroline Herbert will be looking at poverty and inequality in urban settings in India. Dr Andrew Lawson and Dr Zoe Thompson will be looking at inequality in the United States, its representation in literature and contemporary political protest. Dr Quentin Bradley will be looking at urban inequality, planning and housing policy in the UK. Dr Rachel Julian will be looking at inequality, violence and the integrated role of peacebuilding and development in post-conflict developing countries. Dr Paul Wetherly will continue his investigation into state theory with a particular emphasis on the role of the state in mediating and reproducing poverty and inequality. In a related project Oriel Kenny will focus on access to water in rural settings and mechanisms to reduce resource inequality. Dr Robin Redhead will be looking at the role of human rights in securing greater equality as well as continuing her work on the rights of indigenous peoples. Along with Prof Colin Webster, my main focus will be on inequalities and the future of the Welfare State in Europe.
Keep an eye on https://www.leedsmet.ac.uk/research/centre-for-applied-social-research-ceasr.htm and http://leedspage.wordpress.com/ for more news from this exciting new initiative.