There was a time when the political economy was very much an issue for discussion but it was ever such a long time ago. We have lived for three decades in an era of deregulation, light-touched and even lighter-fingered, so much so that the basic questions of socialist thinking (what is money, what is wealth, who owns it and how do we change and egalicise these structures of power so that everybody benefits?) were a peripheral matter for the intellectual left. Now such matters return to haunt us and even Tribune is conducting a tombstone interview with Marx himself! New Labour antipathy to public ownership is holed spectacularly below the waterline and they will surely sink further unless it ends its residual quantum of pro-capitalist solace and gives the banks a fundamental lesson about economic power. As they take our handouts, they must accept and be forced to accept that the economy should serve the people and not their bonuses and profits. Their days as highwaymen and casino buccaneers must end and we must show our contempt for their self-serving greed and indifference to their victims (December 08).
'High Noon for the Boys of Chicago'
Ray Davison reviews Naomi Klein's The Shock Doctrine: The Rise of Disaster Capitalism, Penguin Books, 2007.
Those who want the name of Milton Friedman permanently glorified as a building in the Department of Economics at the University of Chicago, should be the first to read this book. Here they would find five hundred pages packed with reasons why this high priest of free-market capitalism, author of the seminal Capitalism and Freedom (1962), progenitor, with Hayek, of the 'Chicago Boys' School of Economics and their intellectual and political heirs the neo-cons, should not be celebrated in bricks and mortar but excised as an anti-democratic malignancy of the modern world economy. If the old wild west was tamed by sheriffs, rangers and marshals, then Klein can legitimately lay claim to be fulfilling a similar function for these equally wild and dangerous apologists of deregulated capital and market adulation. Klein does not fire blanks or miss her targets: her aim, in twenty one hard-hitting, bullet-raining chapters, is to show how over a period of thirty years or so, the core tenets of Chicago School economic theory (privatisation, deregulation and cuts to government services) exploited as an experiment a number of global crises, some natural but others, more ominously, created for the purpose. Klein baptises these experiments as the 'disaster capitalism complex'. Let us be very clear about this: her charge is that, by deliberate and fully conscious intent, the 'Chicago Boys' and their ilk used situations of shock and instability (coups, regime changes, wars and floods) to test and apply their theory that unconditional, deregulated capitalism was the pathway to individual freedom, prosperity and democracy. The theory naturally challenged any form of collectivist culture and practice (Marxist or otherwise) but also Keynesian developmentalism and protectionism. The theory was hatched in the fifties and sixties but first tested and applied in Chile after Pinochet's coup against Allende in 1973. However, thirty years later, Klein finds the same fundamentalist economic theory and practice underpinning the invasion of Iraq. In between Chile and Iraq, she tracks relentlessly and repeatedly the ever-present influence of the School in Brazil and Uruguay and Argentina in the seventies, South Africa under apartheid, Asia, the Russia of Yeltsin, Thatcherite Britain and the USA. In each and every chapter, she cogently exposes the disastrous impact of the theory and practice on the public sphere, its damage to the institutions of social solidarity. Far from being the begetter of wealth, democracy and freedom, cut-throat capital again and again generates a terrible 'ideological blowback' where immense inequalities thrive in ruthless greed-pickled cultures without proper democratic accountability or adequate public control, a breeding-ground for other forms of fundamentalism. Worst still, the Chicago Boys repeatedly boasted of their successes as they buried their disasters in mountains of lies and duplicity and one of their advocates, Fukuyama, even had the audacity to claim their tenets as the final form of History. Here is a book that comprehensively refutes the drip-down theory of wealth, unmasks self-serving greed and demonstrates beyond doubt that an agreement with capital is an agreement for it. A female Chomsky? Certainly, at the very least, a powerful addendum to his work. (This review was written for the 2008 Labour Party Conference edition of Campaign Group News which published it minus the last two sentences. This was the last issue of the paper as it became financially unviable. I had been invited to review regularly other books of my choice. I do not know if the events were connected!).
DON’T BANK ON THE BANKS
It is almost unbearably painful to see New Labour racking itself to persuade the banks of Britain to act to defend the public interest, rather than their own, as this financial crisis bites ever deeper. Almost unbearable, yes, but as total public ownership, and therefore accountability and control, edges closer, so the defining economic flagship of the Blair /Brown years, that special partnership with capital, will capsize and wreckage aplenty will follow. There will be many people who will be amazed that the gods of deregulation have been exposed with feet of clay, as the dethroned tyrants and tycoons of the market bring out the begging bowls and clamour for protection from the very forces they unleashed to satisfy their greed. However, what follows is the really important issue. Partnerships require trust and cooperation but the banks have displayed considerable indifference to anything but their own financial interests and bonuses. This should not surprise us as an agreement with capital is invariably an agreement for it. How far the banks will go in their resistance to Darling’s imprecations is not clear but their capacity to absorb public money so readily is a sponge of some proportions. In such times, real public ownership is required.
ITS TIME FOR A CHANGE
I am told that some irresistible electoral law determines that there shall be in Britain a change of government every so often and that nothing can stop the feeling that it is time for 'the other lot' to have their turn. I am not wedded to determinism of this kind, so if it has been like this in the past, I do not see that it has to be like this in the future. Even so, I have to ask: has it been like this in the past? Obviously not if you know anything about history! Did Labour and the Tories alternate power under Victoria and William the Conqueror? The sensibility that makes Labour possible as a government and a force in politics generally is a cultural construction born in struggle and conflict, some of it quite violent. If it is a time for a change and it always is if you are progressive and socialist, then it is not a change for a return of the Tories. Their raison d'être is to protect an interest and that interest is necessarily a privilege of the few paid for by the exploitation of the masses. When the Tories talk of the public interest or benefit, you know they are Greeks bearing gifts and you should fear them (pace Greeks). However, a country and a people that can spend so much time on and pay so much attention to the general garbage pumped into its cerebellum by the 'entertainment industry' (and I see most of the media as part of that) is probably not ready for the harsh, demanding and higher lessons of political life. There are people who say they are not interested in politics as they lose their jobs and houses and who demonise unions as instruments of oppression. Well, I suppose the jobless and the homeless can get together somewhere to watch Strictly Come Dancing and Celebrity Millionaire etc and get sucked into that dumb-downed world which then makes them think it 's time for a change to the Tories so that they can be rescued. But I think it would be better if they used their limbs and loins, eyes and synapses to engage politically and fight for a decent and fair society, a change that really matters and which is in their power to achieve but not with a remote in an armchair.And yes it is time for a change , a change to the politics of money, a change that will bring accountability to the deregulated casino economy so that it serves the public and not its own greed. New Labour needs to think this through and cease being the prisoner of capital and start being its jailer.
QUANTITATIVE EASEMENTS
This super laxative injection, which promises to unblock the constipated back passages of our Great British Banks and release capital flow aplenty, has a certain allure to it. I am sure that most of us could do with a few shots of it to get our own economies moving but it’s the banks and lamentably the bankers who are getting all the doses of this financial syrup of figs. The many face the insecurities of lost jobs and homes and the anxieties of making ends meet. Will the strategy work? Sisyphus pushed a stone up a hill only to see it roll down again and I know people who see this as a myth about constipation (pushing hard things to no avail). I hope it does not finish like that but things do not appear to be moving that easily. I must say that I endorse for once Rowan of Canterbury’s view that it is not enough to blame the bankers and the bonus culture for our troubles: we must address the system which gives rise to it, that is to say deregulated liberalism (or some would say capitalism and yes it must be abolished but that is not the agenda for our government. Nor is it on the agenda of the much- praised, dancing Cabletalk (the voice of Vince) who wants the banks to be taken into public ownership now and forced to operate for public benefit not private gain. He then thinks, inexplicably in my view, when all this is over, that they should return to the private sector. Where is the logic in that and why has he not been asked this simple question by media pundits?
