Trump of Doom?

Thought for the day. The type of economy we call social democracy depended for its success on a willingness of the majority of the population to cooperate as well as compete with one another, giving up a portion of their income in taxes to be spent on various public goods like medicine, education and transport. If the population loses its willingness to make these reasonable sacrifices then it becomes impossible to maintain a social democracy.

The UK population was so willing for at least 30 years following WWII, to a large extent thanks to the experience of necessary cooperation among the generation who fought that war. But over the *last* 30+ years that willingness has been steadily eroded by many factors, including (but by no means confined to): greater individualism stemming from precisely the relative affluence and economic freedom that post-war social democracy conferred; successive economic crises (some related to oil, some to financial recklessness); industrial decline, outsourcing and austerity imposed by politicians in thrall to neoliberal economics; free market propaganda promulgated by politicians in thrall to neoliberal economists; mass migrations; international terrorism.

The UK Brexit referendum, US election of Donald Trump, and developments within many EU countries suggest that this willingness has now been lost by somewhere around a crucial 50% of my own "baby boomer" generation, and there's evidence of loss too among younger generations whose expectations have been drastically curtailed. But despite the nationalist rhetoric of "taking back control" from the Brexiteers, it seems more likely that what's actually happening is a withdrawal of people's engagement from the nation-state altogether, back to the individual family as unit of survival.

Perhaps the only way the willingness required for social democracy could ever be restored is in the event of some major catastrophe, on the order of magnitude of a world war, great depression or an abrupt climate deterioration, that forces people to relearn cooperation in order to survive. Recent governments in both Europe and USA have been just barely prudent and competent enough (tempering their neoliberal policies with judiciously-applied shots of Keynes during the emergencies) to avoid such a catastrophe. Such a catastrophe feels quite a lot closer following the inauguration of the impulsive President Trump, but a catastrophe it would remain - and to imagine otherwise would be grotesque.

What I've learned this week.

That insecure, narcissistic, retarded-adolescents who can barely distinguish between reality and computer games, are inventing and controlling technologies on which the future of civilisation may depend (Andrew O'Hagan's "The Satoshi Affair" in the LRB, 30th June). That a majority of working people are being written out of this future, robbed of dignity, security and jobs, and they're so furious that they'll lash out right and left at institutions they blame - like Parliament, the EU, and perhaps in November the USA. And that we lack any politicians who have clue what's going on, the nous or the backbone to handle it. It will take some time to digest these lessons.

To be absolutely honest, I did know all this already but, hell, I don't get too many opportunities to exercise my rhetoric nowadays...

Blimey, it could be Brexit!

It's a year since I wrote a new entry on this blog, and that isn't because I have nothing to say, merely that the world is getting crazier faster than I can focus on it. Now though, faced with an imminent EU referendum, it would be remiss not to say something. Boris, Gove and the other Brexiteers have the scent of victory in their nostrils, a scent wafting from a silent majority who don't share their real thoughts with pollsters. This scent is part xenophobia – the Brexiteers are convincing many people that leaving the EU would reduce immigration, which it won't – but also partly from their simmering rage against liberal media and cultural elites who have for several decades been fiddling while they were robbed of security, dignity, jobs. Unfortunately the Remain campaign relies on precisely those elites for advocates, which simply turns up the heat under the simmering pot.

So what of a "Left Case For Brexit"? There isn't one. Even if you sneakily share some of that majority resentment, accept the fact that victory for Brexit would leave you locked on this small island with neo-Poujadist governments permanently in power. Read Anthony Barnett's long but thoughtful analysis Blimey, it could be Brexit! Then vote Remain on June 23rd. Just do it.

Connection Lost: the crisis of social democracy

I'm not going to claim to have predicted Cameron's success and Labour's defeat in the general election: that would suggest an expertise in psephology that I don't possess, as well as being in poor taste. I will claim though to have expressed a bad feeling about the way things were going for some years before the disaster. For example in reply to a Facebook friend who reposted Paul Krugman's excellent refutation of the case for austerity on April 29th I said this:

"A very good article on economics, as you'd expect from Krugman, but this election is about politics. Austerity is really about punishing 'welfare scroungers' and the immigrants who 'steal our jobs'. The Tories and UKIP are succeeding in selling this story to a large part of the public. Never underestimate the desire to punish. Labour is trapped by this story, as it can't be seen as soft on either scapegoat group. It's not about the real economics at all."

That reply contains the kernel not only of my critique of Labour's recent campaign and policies, but also of my analysis of the crisis of social democracy all over the world. The Tories have managed to sell their rationale for austerity thanks not to a superior grasp of economics, but rather of social psychology: they spotted and capitalised upon a shift of public mindset to which Left ideology has made Labour blind. A standard trope in most recent Left analyses of neoliberalism is that one of its most important effects is the promotion of the economic over the political, the invasion of the social world by market forces and pricing. The conclusion drawn from such an analysis is that the Left needs to assert a more powerful moral position, to mount a Gramscian counterattack which substitutes empathy and social solidarity in place of commerce and competition. This conclusion, that the Left needs to become more moralistic, was a major factor in the recent defeat. A new critique is certainly necessary, and it does indeed need to start from non-economic grounds, but from social psychology rather than morality.

Since World War II, and at an accelerating pace from the 1960s onwards, affluent Western societies shifted from being mostly organised around production (which we've largely outsourced to the East) in favour of services and consumption. This seismic shift created a profound change of mindset, or character if you prefer, among the population. The type of bourgeois individualism preached by Rousseau and analysed by Max Weber placed a high value on work as a source of both identity and virtue, but our post-60s individualism is more hedonistic, even narcissistic. We've lost most of our deference to authority and adopted in its place a prickly sort of confidence that recoils from any kind of political paternalism. Most of us tend to value pleasure and personal autonomy over social solidarity (except towards family), and sentimentality (rebranded as "emotional honesty") over stoicism. And in recent years the advent of social media like Facebook and Twitter have reinforced this shift enormously, especially among the young, bringing us to the cult of the "selfie".

In the UK dwindling faith in organised religion has lead to morality becoming more personal, arbitrary and even contradictory: on the one hand we dislike people being "judgemental" toward us, while on the other we mercilessly refuse forgiveness to transgressors like "love rats" or celebrity paedophiles. The prevalent attitude of "middle England", of the tabloid press, indeed of a narrow majority among most Western populations, it presents many such contradictions which doom to failure any attempt to analyse public opinion in terms of Left versus Right (or, in the USA, Liberal v Conservative). A deep adherence to personal autonomy might lead someone to support gay marriage while opposing immigration, to resent anti-discrimination laws, to support taxes to pay for the NHS but not for foreign aid, and to despise those who depend on welfare. And this unreadability is compounded by a growing generation gap.

The 35 years following the end of WWII saw governments that were in effect social democratic, even when sometimes called plain Democrats (USA), Christian Democrats (Europe) or one-nation Conservatives (UK), who constructed welfare states that guaranteed a high degree of security in employment. By contrast the last 35 years have seen free-market reforms - under both Tories and New Labour - claw back much of the power that organised labour acquired after WWII, resulting in far less secure employment, and with rewards for the lower-paid static or even falling. Over the period we've witnessed the rising power of the mass media and "celebrity culture", accompanied by a divorce of remuneration from productivity among the upper echelons, a phenomenon that Robert Frank and Philip Cook called "The Winner-Take-All Society" and Slavoj Žižek has dubbed the "surplus wage". Top executives, artists, performers, fashion designers and the like behave like self-selecting, invitation-only clubs in which the rewards are orders of magnitude greater than those for normal jobs.

Young folk in their 20s and 30s are faced with debt and uncertainty, only slightly counterbalanced by the small but real possibility of entry - if they're both talented and lucky - into these "creative industries" which might bestow great wealth. Two generations of left-leaning teachers (the ones Michael Gove would have loved to eradicate) have inculcated values of anti-racism and ecological awareness deeply into most of these youngsters, while popular culture adds a topping of sex, drugs and <insert any one of two hundred+ new genres here>. Old folk in their 60s and 70s on the other hand, faced with a similar loss of certainty, security and identity are offered no compensation beyond a free bus pass: they're among those tempted toward UKIP, toward transferring some of their pain onto scapegoats like immigrants and "welfare scroungers". Fundamentally opposed as some of their attitudes are though, these different age cohorts share a profound dislike of ideology, a keen nose for hypocrisy and contempt for politicians, and - as rampant individualists, forced to forge their own character rather than accept those imposed by work and church - an unprecedented sensitivity to tone.

Commentators on the election debacle seem puzzled why the list of Labour manifesto policies - some stolen from the Tories, some sensible and progressive - failed so badly to capture public support. The answer isn't in the policies' content but the tone in which they were delivered. Ed Miliband performed far better than expected on television, and even managed to convey a degree of passion. It was exactly the wrong sort of passion. Agreeing to continue austerity-lite might have been expected to cover both bases, prudence and compassion, but it wasn't believed because it was delivered without the Tories' special spice, punishment. (It's not only "cheats" and "scroungers" that need spanking, but also a little smack bottom for ourselves for running up so much debt during the boom years). Immigration was equally fraught. Every TV interviewer from Jeremy to Krishnan asked rival politicians the question "how many new immigrants is too many?", and of course received no answer because a liberal-minded orthodoxy forbids such a quantitative approach as potentially racist. A sizable proportion of the public think the answer is "not many" but they bitterly resent being accused of racism and so don't express it: instead they allow Nigel Farage to express it for them in his well-rehearsed, cheeky-bar-room-wag manner. This question is pure poison to Labour politicians, from whom it brings out their inner Methodist. The 2015 public hates to be lectured or scolded more profoundly than any before. This mindset - descendant from what David Robins and I called "Cool" in our 2000 book - is not reversible by hectoring or propaganda but is a result of structural changes in the nature of work, and it's wholly at odds with the prevailing voice of the Labour Party.

The same problem affects, or will soon affect, social democratic parties the whole world over as electorates recoil from the collectivist moral tone that's formed the basis of social democratic thinking for a century, which renders them more amenable to libertarian and free-market rhetoric even where that directly threatens their "real" interests. Labour's recent defeat is the culmination of a process that's been more visible than ever since 2008: Alistair Darling and Gordon Brown's prompt action really did save the world's banking system from collapse, but rather than thanks they get blamed for rescuing greedy bankers; the extent of global inequality is widely known and understood, but attacks on the "1%" get brushed off as envy; the crooked bankers, financiers and tax evaders who precipitated the financial crisis and still profit from it today aren't pursued with any great moral outrage, but instead the Tories' wafer-thin excuse that they are the "wealth creators" is swallowed. There's a complete disconnect between economic facts, Labour's analysis of them and the public's perception. It's a Habermasian failure of communication that can't be fixed by quoting Habermas (that only makes it worse). Labour needs more than just a new language: it needs to reorient its whole relationship to civil society and the state if it is to survive, which is by no means guaranteed.

An Armistice 
Social democracy does not mean employing reformist rather than revolutionary means to achieve a state-socialist society. It is not an alternative way of "winning" the class war. Instead social democracy is an armistice in the class struggle, whereby the employed classes agree not to expropriate the employing classes in return for a fair share of the profits, paid not only through wages and salaries but through free or subsidised services like health, education, firefighting, policing and so on, administered by the state and financed by universal progressive taxation. The economy remains resolutely mixed, with publicly-owned utilities operating alongside private firms, and with unions representing the interests of the employed. Social democracy in this sense has been the dominant type of economy throughout most of the Western world for 70 years, even when it doesn't use that name. That least social democratic of nations, the USA, still hasn't repealed every trace of Roosevelt's New Deal, while every UK Conservative government since the war, Thatcher's included, has been forced to live with a large degree of social-democratic compromise. However this compromise is now under attack as never before, and the result may well a complete breach of the armistice.

Since the 1980s many centre-right commentators have been predicting the collapse of social democracy on economic grounds, as a failure of Keynesian economic management, but this is only a small part of the problem. The real problem is a deep structural problem with the second half of its name, "democracy". Social democrats eschew revolutionary violence and authoritarian rule, governing populations who are free to live as they wish, within the constraints of a market somewhat moderated by redistributive welfare measures. Society remains divided into classes, some of who own means of production and others who don't.

Classes aren't biological entities and your class is not encoded in your DNA, though it most definitely is greatly affected by your birth, that is by your parents' position in the hierarchy of ownership. Since class isn't biological it must therefore continually renew itself (humans have a finite lifespan) by sifting and sorting, recruiting and rejecting new members into each class, and two of the most potent class-forming forces in modern Western democracies are housing and education. The deeper crisis of social democracy isn't so much the funding of welfare through taxation (important though that is), but more to do with a movement among the middle classes to segregate themselves from the working classes, both geographically and educationally, thanks to their superior exploitation of their economic freedom. Ideologues of the Right understand these forces as well as, maybe better than, those of the Left, and Conservative governments ever since Thatcher have been devising policies to accentuate this defection and division - with an effect that far exceeds their hopes since they're pushing at an open door. The middle classes are tremendously effective and self-organising in their desire to defend higher remuneration and superior social status through housing and school choice. Those countermeasures that social democrats once employed during their successful era, provision of social housing and excellent state education, have ceased to be effective.

Social democracy has been eroded by an interlocking set of sociological vicious-circles. Its very success in expanding the consumer economy after WWII lead to an affluence that increased the confidence of the middle classes, while the high wages achieved by the working classes prompted manufacturers to outsource production to the orient. Politicisation of education combined with a collapse of deference lead to a decline in the quality of state education, drove more and more of the middle classes back to private schooling, and produced a barely-employable underclass of undereducated youth. Loss of deference toward the professions, coupled with a deskilling of many arts through new technologies, lead to growth of a "creative class" and stimulated the aspiration to enter this class, to escape from wage labour into creative, non-manufacturing jobs and bohemian lifestyles: Žižek's "surplus wage" and the zero-hours contract are two sides of the same debased coin.

This being the case, why not just let social democracy die, mutter RIP, and wipe away a small tear? One good reason is that it's indispensable for the survival of the human species. The alternative of state socialism was tested to total destruction by history (and let's waste no more time on all that sectarian bullshit about "actually existing socialism" versus "deformed state capitalism" and the rest). The alternative of totally free markets is about to be tested to destruction right now, but this time the destruction will affect most lifeforms on the planet through increasing ecological catastrophes, through mass migrations, through financial meltdown and universal impoverishment. Social democracy on a world scale is the only imaginable way that the necessary regulation can be applied to steer capitalism back toward sustainable progress, and reverse the defection of a tiny super-rich minority at everyone else's expense. Social democracy really is just an armistice, and the result of breaking it won't be some kind of benign anarchistic cooperation but rather an epidemic of terrible new forms of authoritarianism and mayhem.

If there's any role left for social-democratic parties in this changed world, it can only be as honest referees of the armistice. They can no longer be partisan advocates for either the middle or working classes. A social democratic party needs to re-educate the electorate about the necessity for a mixed, regulated economy, which might not be impossible in the UK given the British public's continued adherence to the NHS. It mustn't be afraid to call itself social democratic and to explain what that label means. It needn't suck up to "business" and finance capital in the lubricious way that New Labour did, but nor must it pander to the public sector and unions uncritically: it must remain a referee. It needs to seek cooperation with other international parties and institutions to pursue tax evading corporations vigorously and plug the revenue leaks that threaten to sink the ship of state. It needs to enforce equitable rules about employment rights, work-place safety and welfare matters, but its job is not to promote the public's aspirations, which are their own business, nor to judge their moral failures (except those that breach the law). In short it needs to step back out of people's personal lives and concentrate on the context and infrastructure that supports those lives. Abandoning PC rhetoric will be as a hard as giving up smoking, but it has to be done.

Starting a new social democratic party from scratch isn't a sensible option and the only party in the UK whose history suggests that it could become such a party again is the Labour Party: the LibDems have imploded, while the SNP can't help but be suspected of trying on a social-democratic mask over its nationalism. Whether or not a potential Labour leader exists with the will, charisma and political nous to reforge its broken halves into such a party is something we won't know for at least five years, perhaps a lot longer.

Here Come The Robots?

Criticism of Silicon Valley's blueprint for a future society has begun to gather some momentum over the last couple of years. Privacy of communications is still perhaps the biggest source of public concern, along with cybercrime and the security of online shopping and banking, but questions about automation and its effect upon employment are now starting to be raised too. This is a concern that resurfaces periodically with every major wave of technical innovation.

In the 1960s the prospect of the abolition of work by automated machinery could still be treated as a utopian goal by groups like the Situationist International: back then trade unions were sufficiently strong that it was taken for granted that wages could be maintained as working hours shrank. The neoliberal reversal of the last 30 years has ensured that labour lacks any such power nowadays (if it ever had it). The matter cropped up again in the early 1980s when it looked as though the personal computer "revolution" might do away with millions of white collar jobs, but that turned out to be a false alarm too. In fact PC operating systems and application programs were so primitive and unreliable that many new jobs had to be created in IT departments tasked with trying to keep them all running.

The latest version of this problem is being raised just now, thanks to dramatic advances in robots controlled by AI ("artificial intelligence") software. Google's driverless car is one uncanny example, and the giant online retailer Amazon has been rumbling about employing pilotless aerial drones to deliver ordered goods to customers. It seems extremely unlikely that the powers who control airspace will permit this any time soon, but Amazon more realistically talks about AI-driven automation of the location and retrieval of inventory in its chain of huge warehouses, which poses a genuine threat to jobs that are already scandalously underpaid. In a recent interview with the online magazine Slate, Professor Andrew McAfee, a research scientist at MIT's Center for Digital Business, was asked by interviewer Niall Firth "Are robots really taking our jobs?" and he replied by offering these three alternative scenarios:

1. Robots will take away jobs in the short term, but more will be created and a new equilibrium reached, as after the first Industrial Revolution
2. Robots will replace more and more professions and massive retraining will be essential to keep up employment
3. The sci-fi-horror scenario in which robots can perform almost all jobs and "you just won't need a lot of labour" 

McAfee believes that we'll see scenario three in his lifetime.

When asked further about any possible upside to this automation process, McAfee described the "bounty" he saw arising as a greater variety of stuff of higher quality at lower prices, and most importantly "you don't need money to buy access to Instagram, Facebook or Wikipedia". One doesn't need to have actually read Keynes to recognise that though McAfee might know a lot about robotics, his grasp of political economy is rather weaker. If employers "just won't need a lot of labour" then they just won't need to pay a lot of wages either, unless forced to do so by some agency whose identity is very far from obvious right now. If no-one outside that fraction of a percent of the population who own the robots has money to spend on food or housing, then the prospect of free access to Instagram and Facebook is unlikely to appease them very much. It's entirely possible that they will employ their spiffy new 3D printers to reconstruct Madame Guillotine, and Prof McAfee might perhaps be misremembered as a 21st-century Marie Antoinette for that line.

This blindness to the political - perhaps the most important victory the neoliberal ascendancy has achieved - is amplified a thousandfold in a survey conducted at the start of 2014 by the US Elon University and Pew Internet Project, in which 1,896 highly-qualified practitioners in the fields of AI, robotics and networks were asked to comment on this question of job loss. One of the survey questions asked respondents to share their answer to the following query:

"Self-driving cars, intelligent digital agents that can act for you, and robots are advancing rapidly. Will networked, automated, artificial intelligence (AI) applications and robotic devices have displaced more jobs than they have created by 2025? Describe your expectation about the degree to which robots, digital agents, and AI tools will have disrupted white collar and blue collar jobs by 2025 and the social consequences emerging from that."  

Respondents were fairly evenly split between three scenarios similar to those that McAfee proposed, and I was fairly unsurprised by the lack of any mention of real politics by any of them. I searched the summary of the survey results, to discover only a single occurrence of the word "politics". To be sure there were 20 occurrences of the word "political", but most of those instances conformed to a similar, vague template, something like:

"...our political and economic institutions are not prepared to handle..."
"...economic, political, and social concerns will prevent the widespread displacement of jobs..."
"...humans are in control of the political, social, and economic systems that will ultimately determine..."
"...unemployment should be addressed primarily by creating a smarter political system that serves the citizenry..."

These really are little more than pieties: mustn't appear too technologically deterministic, ought to mention social effects, there... done. Among this stratum of techno-utopians actual politics is regarded as something rather old-fashioned that happened before social networking, a type of natural disaster that only re-emerges at times of social breakdown (and some of them are of course actively engaged in deploying the new technologies to suppress dissent under those circumstances). If McAfee's third scenario were to come about it would certainly generate a faster rise in inequality even than at present - even than that envisaged by Thomas Piketty - and it would be likely to precipitate some sort of social breakdown. The question is, what sort of breakdown?

If the notorious 1%, the rentier class and their heirs, did end up with more or less all the money and all the property, what kind of economic model could they operate? Not even the most pony-tailed of tech-utopians believes that robots will be able to design themselves by 2025, and so a tech-elite will still be required to do that job. Here Slavoj Zizek's notion of the "surplus wage" comes in handy once again: the owning class can pay very generous salaries to those people who invent the robots for them, and those who work on their fabrication. Such a surplus wage, one not directly related to productivity, can always be withdrawn to suppress dissent, making membership of the tech-elite into a sort of lifeboat, with a queue of people waiting for your seat if you should stumble. (That implies that some degree of technical education must be retained to keep the queue full).

This wouldn't be an entirely unprecedented state of affairs as something quite like it already prevails in the popular entertainment business - movies, TV, music - at all levels below that handful of top stars who can extract enough to set up as producers themselves. Under such a model any resurrection of a labour movement and trade union power becomes all but impossible, since people who have neither jobs nor workplaces can't easily unionise, even if there were a will in the Labour or Democratic parties to reform anti-union legislation (which there isn't). For the same reasons any revival of Leninist/Bolshevik communism is improbable - no workplaces to organise in - while anarchist/mutualist movements like Occupy similarly lack any purchase on the real economy, as well as any adequate source of funding.

The most likely scenario would be emergence of some kind of new Jacobins, renegade members of the privileged tech-elite who stir up and manipulate mobs of the unemployed to attack the rentier elite. The US Tea Party already displays many characteristics of such a movement (it would need to turn against its Koch brother backers, but such about-faces aren't uncommon in the history of right-wing extremism). Putin's FSB-oligarch state has some of the right stuff too. In China such renegade factions already pose a threat to the ruling party, as recent purges of Bo Xilai and Zhou Yongkang suggest. A succession of such revolts would install more or less identically impotent juntas, who might persecute and expropriate the super-rich for their own gain but fail entirely to restore employment (a bit like Argentina then). Fairly quickly the capacity to conduct advanced electronics research would be eroded and the robot age would grind to a rusty halt.

Personally I doubt that McAfee is right about his third scenario, not because large corporations lack the will to throw most of us out of work (they do not) but because the abilities of AI have always been hyped way beyond the reality, in order to extract grants from ignorant and gullible politicians. Everyone forgets that the fighting drones which the USA wields to such devastating effect in Afghanistan and Pakistan are controlled by people, not by AI computers. The Russians have just announced an autonomous war robot, a small armoured car on caterpillar tracks equipped with a radar-, camera- and laser-controlled 12.7mm heavy machine gun. It's being deployed to guard missile sites and will open fire if it sees someone it doesn't like the look of. Now there's an IT department I wouldn't want to work in...

Nevertheless such speculations are far from useless. Like the climate change debate, they concentrate minds on what a short time window we have to prevent such horrible future outcomes. Preserving incomes at the cost of profits is a matter for politics, and for unfashionable class politics at that. We  need to be inventing and researching a swathe of new policies, from John Lewis-style mutual ownership, through universal basic incomes or negative taxes to job shares and reduced working weeks, that might gain electoral appeal if McAfee's second scenario turns out to be the more likely.

Gilt by association

"Just because you're paranoid, it doesn't mean they're not out to get you!"
Anon

To be frank I can't be arsed to Google for long enough to discover the originator of this well-known aperçu (it may have been Joseph Heller, it certainly wasn't Nirvana, though they did put it into a song). All that matters about it to me is that while I once thought of it as a joke, I've recently begun to consider it as a profound truth. And I'm not talking, as you might perhaps expect, about the NSA and GCHQ and their clandestine mass surveillance of our communications. I'd accepted long ago that was happening, and what's more - regardless of whether you accept them or not - there are publicly-aired justifications for such actions as necessary functions of the modern State.

No, I'm talking about an altogether deeper and more dangerous kind of paranoia, on a par with "The Protocols of the Elders of Zion", the Zinoviev letter or the Fu Manchu novels, fantasies about tiny cabals of malign actors who have the power to alter the course of history. As a marxisant social commentator I've spent the last 50 years rejecting, refuting (perhaps even pooh-poohing) all such paranoid theories. Capitalism isn't a thing, let alone a person who could have malign intentions. It's a form of organisation of human labour that has no overall director apart from abstract property laws, and which follows its own unpredictable logic to produce a multitude of different outcomes, some better, some worse, for some people and not for others. This tendency to imagine dark conspirators plotting the spread and development of capitalism is something I've been resisting for most of my life.

So what happened to make me start doubting the viability of such scepticism? It was reading Paul Krugman's review of Thomas Piketty's seminal book "Capital in the Twenty-First Century" in the New York Review of Books. But surely neither Krugman nor Piketty is a conspiracy theorist? Of course not. What Piketty has done is analyse the overall development of capitalism over the last centuries, using new and powerful analytical tools. What Krugman's review does is to explain Piketty's analysis with admirable clarity, and bring out its social implications, which are so alarming that it was they that introduced this doubt into my mind. Given the facts presented in this review (I've yet to read Piketty's book itself: regrettably too busy for next few months), the only way I can explain Krugman/Piketty's findings to myself is by supposing that the financial crash of 2008 may have been in some way an act of deliberate sabotage by some conscious group of actors, rather than just the working out of impersonal market forces.

Krugman's excellent review is entitled "Why We're in a New Gilded Age", a nod to one of the key facts emerging from Piketty's analysis, namely that income inequality is set to revisit levels last seen during the first US Gilded Age between 1870 and 1910. That was the period when the great monopolistic fortunes were being accumulated in oil, railroads, steel and banking by family dynasties like the Rockefellers, Mellons, Carnegies and Morgans. I won't waste space and your time by repeating all the facts Krugman picks out here: do try to read his review for yourself. He reproduces a pair of Piketty's graphs that plot After Tax Rate of Return to Capital and Growth of the World Economy from antiquity (0 BCE) up past the present day and projected forward to 2050:

The profit graph is nearly flat for most of recorded history, with only a shallow rise from the Renaissance to World War 1, then a precipitous V-shaped descent spanning the whole 20th century which represents the dramatic decrease in inequality between the two world wars caused by the power of organised labour. The growth graph rises steadily from the 1500s up until the 1970s, a steady 500-year increase in equality caused by growth spreading wealth more widely.

That growth rate has been declining now for more than 60 years and the graphs crossed sometime in the '80s so that by 2050 Piketty projects that inequality will be back to levels not seen since 1820. There's a significant difference between earnings inequality and inherited inequality, and inheritance of wealth among the top 0.01% has become such as to generate a new crop of dynasties (highly visible among Hollywood and Rock brats in the pages of Tatler for some years now). Krugman also remarks that one difference between this New Gilded Age and the first is that income inequality now trumps asset wealth by numbers, though not by total worth: those managerial and financial classes who pay themselves multi-million-dollar fat-cat salaries far outnumber the 0.01% who live solely off ownership of huge corporations.

What struck me so forcibly was that Piketty's book and Krugman's review bring together, and make sense of, several disparate themes that I've been banging on about in this blog, and in my book reviews for The Political Quarterly, for the last decade: a crucial turning point in the mid-1970s when labour began to lose out, which is often blamed on the "oil crisis" but actually far more than that; and the concept of the "surplus wage",  paying salaries that are no longer remotely connected with productivity as a legal way to loot the assets of companies.

One of the more important books I've reviewed in recent years was Winner-Take-All Politics by two US economics professors Jacob S. Hacker and Paul Pierson, in which they painstakingly unravel the ways in which the Republican party helped turn the tide against organised labour since 1971, in the face of complacency, collaboration and incompetence from the Democrats. Contrary to conservative mythology it wasn't Reagonomics that turned that tide but a blunder by Carter Democrats in refusing tax and regulatory measures offered by Nixon that were more liberal than anything Obama can dream of. It was also a tax law of Nixon's that permitted clever and diligent Republicans to pay for George W. Bush's upper-class tax cuts by trapping the middle-classes in a higher tax band, thus turning them into enraged tax-cutters and paving the way for the Tea Party. By dominating those boring committees that actually run America, Republicans have permanently shifted the balance from labour back to capital. As Krugman has it:

 "Nor is this orientation toward capital just rhetorical. Tax burdens on high-income Americans have fallen across the board since the 1970s, but the biggest reductions have come on capital income—including a sharp fall in corporate taxes, which indirectly benefits stockholders—and inheritance. Sometimes it seems as if a substantial part of our political class is actively working to restore Piketty’s patrimonial capitalism. And if you look at the sources of political donations, many of which come from wealthy families, this possibility is a lot less outlandish than it might seem."

And there you have the germ of my paranoia, "a lot less outlandish than it might seem". Krugman's statement is fairly radical for a mainstream US economist, in that it acknowledges that the Republican Party pursues class politics (a forbidden topic that neither party nor the US voting public like to hear spoken). My concern however goes way beyond that: is it "too outlandish" to suggest that a small cabal of libertarian Republican bankers and lawyers actually forsaw and abetted the crash of 2008?

Harvard Law School, Skull and Bones, Goldman-Sachs' boardroom, the ratings agencies, the Fed under Ayn-Rand-libertarian Alan Greenspan. It doesn't require the hypertrophied imagination of a Thomas Pynchon or a Bruce Sterling to conjure up from those ingredients the possibility, if not probability, of a small, informal clique with the determination, technical know-how and prescience to understand that unfettering mortgage-lending might bankrupt the public finances, thus cripple the State's regulatory capabilities and open up a once-only opportunity to reverse all the gains made by labour over the course of the 20th century...

The conclusion of Piketty's book, more or less endorsed by Krugman, is that in democracies we could still do something about this rising inequality if we wanted, the more obvious measures being steep progressive taxation on both incomes and wealth, transaction taxes and the breaking up of monopolies (as was done by the Anti-Trusters before World War 1). But it's perfectly clear that the political will is lacking for such measures both in the UK and the USA, where both parties and electorate have largely bought into an anti-tax, austerity agenda. Add to this the fact that US democracy itself has now become so dysfunctional as to prevent any significant reforms from being passed.

To add to my paranoia, we're entering a period where our giant corporations are no longer the railroads and steel but in electronics, and they're finally poised on the brink of a technical revolution that's dogged both the radical political and science fiction imaginations for a century - the possibility of employing robots to displace human workers. Superimpose this onto Piketty's projections of wealth-concentration and dynastic succession and you glimpse the outlines of a very grim society indeed, dominated at one end by shanty-towns and favelas (the World as Detroit) and at the other by gated communities and private islands.

In that world only a minority of the population would be in paid employment, medicine and policing are privatised, and the suppression of civil disturbance is automated and terribly effective. Sounds like a script treatment for yet another dystopian sci-fi/action movie starring Vin Diesel, but it's not that far from the vision Guy Debord arrived at in his (paranoid?) Comments on the Society of the Spectacle in 1988. Another theorist I greatly admire was Thorstein Veblen, he who best analysed the first Gilded Age and influenced the first Anti-Trust movement: so I'll fade out to a characteristically sarcastic comment of his on unearned income:

"... in modern times and in the civilised countries, those immemorial principles of privilege equitably vested in the master class have fallen into discredit as being not sufficiently grounded in fact; so that mastery and servitude are disallowed and have disappeared from the range of legitimate institutions. The enlightened principles of self-help and personal equality do not tolerate these things. However, they do tolerate free income from investments. Indeed, the most consistent and most reputable votaries of the modern point of view commonly subsist on such income."

 The Vested Interests and the Common Man (1919) 

after rain

after rain, originally uploaded by dick_pountain.

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