The Madness of King Ed

June 30, 2011

I love annoying people, because I’m a bit sociopathic like that. However, I do bow down to the efforts of the Labour Party in this regard, who appear to have engaged in a 15 year experiment on how much you can piss people off before they turn around and say, “Fuck you, we’re voting for someone else.”

The whole point of the Labour Party is to represent the interests of working people, working people without capital. Ostensibly a creation of the unions on the back of disappointing representation by the then Liberal Party, that representation remains central to its existence. Blair’s movement of the party away from outright socialism and into social democracy can be seen in this context; whatever else you may say about Tony Blair, it seems pretty clear that this move was intended to indenture capitalism into the service of the working public.

He did this while ignoring the reduction in the power of the unions that took place under the previous Conservative administration, but did actively praise unions as a force for good, only condemning a stupidly provocative RMT strike timed to take place during a General Election. He was never the unions’ man, and so his relationship with them could be construed as constructive, rather than something he was ashamed of.

Contrast that with Ed Milliband, who has condemned today’s strikes out of hand. He’s done this for the very real political reasons of not wanting to appear too close to the unions and to ensure that Labour is not perceived as the party of the public sector. I’m sure he believes he’s demonstrating ‘leadership’, that abstract quality beloved most by politicians who do not possess it.

But ‘leadership’ implies leading people somewhere. Milliband is ostensibly leading his party and the unions to a future in which strikes over significant changes to pay and conditions are not justified. This is not in the interests of working people. This is a trap by a Government which includes my party, to take advantage of public disquiet over union activity in order to restrict it. I don’t doubt that this is driven in main by the Conservatives, but our potential aquiesence to it is something about which I am deeply concerned.

A Labour leader, rather than simply warning of this trap, should actively work to disarm it. The boss of PCS, Mark Serwotka, pointed out this morning that the amount paid out under public sector pensions is actually predicted to decrease in the future as a percentage of GDP. This is something Milliband should be saying, in an effort to lead the public to the side of the people he’s ostensibly meant to represent. He would still be wrong – regardless of the percentage of GDP spent on pensions, public sector employees should be looking after their own future via defined contribution pensions rather than relying on the Government to do it for them post retirement – but it’s still something he should be saying. To not do so is to betray the very people he’s meant to represent, as has been Labour’s strategy for the last fifteen years. When even Blairite Dan Hodges disagrees with Milliband, you might hope he realises his own mistake.

Advertisements

I’ve put up a post on Labour’s internal coalition and why the Lib Dems should look at working with the unions.

Inequality & Crises

February 4, 2011

Via Stumbling & Mumbling, we learn of a fascinating column on vox which appears to provide a convincing argument that the origins of the financial crisis lay in rising inequality. I’m betting it’ll be seized on by the Left as this year’s Spirit Level*, so let’s have a look at what Kumhof and and Ranciere are saying.

The argument runs that increasing levels of inequality lead to the accumulation of capital by the top strata of a given society. The more capital possessed by the top strata, the less wealth they use for consumption. Something has to be done with this outstanding wealth, and so it’s reinvested – in physical assets, or in financial products. The rich don’t just leave their wealth under the bed; they want it to be working all the time.

This increased demand for financial products leads to the expansion of the financial services sector, who endeavour to meet this demand with the creation of new investment products. Once the given level of investment opportunities available in the economy is exceeded by the amount of capital seeking returns, products which package up consumer credit become more widespread.

At the same time as this expansion in consumer credit commences, restrictions on worker bargaining power mean that the share of GDP that goes to workers decreases, reducing their social status. To reclaim this social status, they access newly cheap credit, which they use for consumption rather than investment. Since their share of GDP continues to decrease, the ratio of workers’ wages against the amount by which they’re leveraged continues to increase. This is clearly not a sustainable situation, and eventually defaults begin. This suddenly slashes the amount of wealth available to the top 5%, who become suddenly much more frugal with their money via their intermediaries, the financial services. Cue a credit crunch.

This is, of course, broadly what happened: toxic mortagages from the US poisoned much of the credit system. The authors predict that without some way of ensuring that workers are able to pay their debt, the result will be another financial crisis. They advocate increasing the bargaining power of workers to achieve this.

We’ll skip over the colossal irony that debt-fuelled expansion was Labour’s economic policy and appears to remain Labour’s economic policy. Let’s focus on the implications of this study. If the modelling carried by Kumhof and Ranciere is correct, the origins of the economic crisis lay not in Thatcher’s relaxation of regulation of the financial sector, but in her tightening of legislation around union activity. The implication of this is that the current furore around bank regulation is misplaced: Government should instead relax union regulations to avoid another crisis.

I have some sympathies with this view – as a Liberal, I don’t believe the State should be regulating the activities of individuals except inasmuch as they impact on the rest of society. Union activity in the private sector, where excessive demands can cause a business to fold, has typically only private consequences. Union activity in the public sector can have implications for everyone else, as Bob Crow appears determined to prove. There’s a strong case for separate bodies of regulation for unions in industries with multiple providers and industries with a single provider, which would enable proper disputation between workers in the former industries. Unfortunately, no-one’s advocating that at the minute – certainly not the Labour Party, who’d be crucified by their public-sector paymasters, and certainly not the Conservatives, who view any union activity as a constraint on their chums in big business. This is something Liberal Democrats should be unafraid to work for.

*for any outstanding believers, do read Christopher Snowdon on this, he’s very good.

Vast reams of paper and oceans of ink have already been spilled over the interplay of personalities during the New Labour years, and the conflicts and mutual loathings within the government of the period have already been well-chronicled. However, there’s another interesting story to tell, and that’s the intellectual journey Labour took over the period. I can only hope to briefly sketch it in the space of a single blog post, but the outlines themselves are interesting and have implications for the future of the party as a whole.

New Labour is intimately identified with the Third Way, the ideology espoused by Blair and Brown. Broadly, the thinking behind the Third Way is that the State can be a force for good, and is to be empowered to achieve moral goals, and is enabled to do so by the dynamism of the private sector, both in service provision and in the taxation of private enterprise. More bluntly, the social goals of the Labour Party are to be achieved by allowing the private sector to flourish and using its profits to fund the achievement of those goals. The moral justification for New Labour’s adherence to capitalism was given by the social goals it funded; the markets are moral inasmuch as they can be used to achieve the good.

It’s immediately clear that the ‘third way’ was not as much of a compromise between liberal capitalism and socialism as may otherwise have been perceived; rather, its focus was always on putting private enterprise at the service of the state. This results in something of a bizarre moral doublethink: “We will give you freedom to produce in order that we might enslave your product”.

The financial crisis has revealed this doublethink in harsh relief, and given a new edge to Gordon Brown’s claim to have ended boom and bust. This should not be interpreted as an ironic stupidity, as is often the case, but rather as a moral requirement for the New Labour project. If markets are moral inasmuch as they provide the wherewithal to achieve social goals, then if they fail to provide that wherewithal they cease to be moral. This explains the very emotive and moralistic language used by many on the left about the banks – they must be ‘made to pay’ for their mistakes, which impacted on their moral duty to produce profits. The problem is that this language fails to understand the real nature of the doublethink involved in the Third Way – while profits were acquired to achieve social goals, those social goals themselves were as a consequence enslaved to the markets. When they failed, so did the chance of achieving the moral ends at which the Third Way aimed. This is why the key intellectual conceit of New Labour was that the State could prevent boom and bust, that State intervention could halt the business cycle.

This was never going to be the case. There are multiple theories of the business cycle; I would advocate an approach which says that capital is plunged into new inventions and new fields until the potential profit from that invention is exhausted – but owing to poor information that limit is not identified by the people plunging in capital. In this sense, cheap credit is the ‘product’ that was overextended. However, none of those theories suggests that State intervention can make a difference – given the freedom to do so, people will continue to invest in exciting products regardless of the information available on expected rate of return. Economic freedom means that someone will always lose money. Putting the good of the most vulnerable in our society in hock to this process means that eventually they were always going to lose out too.

The problem for the left is that the exposure of New Labour’s intellectual failure leaves them with little room for intellectual manoeuvre. We can chart the progression of more and more limited aspiration; from the Marxist notion of direct ownership of the means of production by the workers, through the state socialism and ownership of key industries by Labour in the 70s, and the socialisation of the products of the market by New Labour. With each step, the domain of conflated economic and moral values grows smaller and more limited, and the scope for achieving social goals decreases. This is the steady impact of economic reality on the socialist project, which was always about trying to achieve moral ends through economic means.

This is why the Labour Party were right to reject David Milliband; the heir to Blair could only ever espouse an ideology that had already failed. Ed Milliband may yet herald the final division of Labour between the special interest groups of the unions and the state-backed moralism of the Fabians; the creed of the latter has few other places to go than towards a liberalism viewed from above rather than below. It was always the economic means of achieving their moral goals that the unions represented to the Fabians; and the likelihood is that the unions will overplay their hand over the next few years. A reconfiguration of Labour away from a broad moral consensus into a more narrowly focused political arm of the trade union movement seems likely, as the only intellectual space left open to the left is to accept the vagaries of the business cycle and to aim to achieve social goals regardless. At this point, their interests and those of the unions begin to diverge – even more so than under New Labour. I would not be entirely surprised to see a new centre-left party forming as a consequence, to accommodate disaffected Liberal Democrats and ex-Labourites turned off by the militancy of the trade union movement.

Part 16 of blogging my way through my first reading of Atlas Shrugged. You can find the first part here.

Chapter 16: Miracle Metal

This chapter is annoying. Annoying not in the standard Rand sense of teenage characters having pretend angst, but rather in the sheer number of obvious stupidities it crams into relatively few pages.

We’ll start with the opening section, which deals with what Rand clearly considers to be a council of evil. It consists of the various strawmen we’ve encountered so far; James Taggart, Wesley Mouch, Orren Boyle, and more ridiculous chaps with silly names. There’s also a representative of the unions, Fred Kinnan, who just appears at this point without any prior reference to him in the book. Given that he’s now responsible for much of the ensuing, this seems something of an oversight (i.e. something Rand forgot to put in because she was too busy raving about other things, and couldn’t be arsed to go back and correct her mistake, because it’s her work so must already be perfect, dammit).

The strawmen mince around their subject rather pathetically for a while, talking about how making sure peoples’ needs are fulfilled is the most important thing in the world, while Kinnan (who for some reason is presented as the embodiment of knowing evil; the evil that’s happy to deliver men into socialist bondage in the full knowledge of what it’s doing) makes occasional sarcastic remarks about their pretensions. They commit to a directive that institutionalises socialism in the USA – or rather a Randian version of socialism that involves various insanities like not being able to fire anyone at all any more or demanding that all invention and innovation stops. Kinnan is the enabler of this directive, inasmuch as he agrees to commit the workers he represents to it and by weight of numbers will ensure its enactment. In exchange he gets control of the Unification Board, the body discharged with overseeing the wacky new employment laws.

I don’t understand Rand’s antipathy towards unions. The free exchange of goods in the marketplace is her moral standard, and unions merely improve the relative position of the worker selling their labour by virtue of collective bargaining. This is free association – while closed shops would obviously be immoral to Rand, someone paying for the representative service that union membership represents is exchanging value for value. Many of Thatcher’s anti-union reforms were anti-libertarian in this sense; they curtailed the freedom of that private enterprise. This, much like the janus-faced moral argument in preceding chapters, implies that libertarianism is nothing to do with freedom and everything to do with class. Hence the title of this post.

The directive is implemented, and Dagny quits, refusing to deliver men into bondage. She retreats to a cottage in the country. Rearden stays in position, intending to defy a requirement that he surrender his patent to Rearden Metal to the State.

Dr Ferris comes to collect, and reveals to Rearden that the strawmen know about his relationship with Dagny and will reveal it to the world if he does not voluntarily surrender his patent. Rearden gets lost in a reverie, which begins with:

‘It was not to Dr. Ferris that Rearden was speaking. He was seeing a long line of men stretched through the centuries from Plato onward, who heir and final product was an incompetent little professor with the appearance of a gigolo and the soul of a thug.’

This is yet another Randian slander on philosophers. Plato’s political philosophy involved no reference to need, and in fact celebrated reason above all other qualities – as Rand does. His aristocracy of reason bears more resemblance to Rand’s aristocracy of talent than she appears to realise.

There follows some of the most tortured reasoning it has ever been my misfortune to read in any attempt at moral prose. The net result is that Rearden signs over his patent to protect Dagny, on the grounds that he placed her in jeopardy in the first place and so is culpable on the grounds of his own moral failure. He should’ve divorced Lillian and married Dagny, to avoid this very situation.

But this makes absolutely no sense under Rand’s moral system. Self-flagellation is unreasonable, as one’s moral worth is judged by one’s ability to produce and exchange goods. There is no exchange here, no demolition of property. Dagny’s perceived morality in the eyes of the world is not something one can exchange – rather, from earlier chapters, it’s a form of public relations and so is irrelevant. It is noble of Rearden to take the act he does, to sacrifice himself – but self-sacrifice, and a moral system which demands it of oneself, has previously been condemned by Rand.

I suspect that Rand, at the last, couldn’t permit her hero to be ignoble to a lady. This betrays a certain latent morality deep within a confused attempt to be ‘rational’; certainly the passages in which Rearden makes his choice are the most human of the book so far. I doubt Rand will permit herself any more.

Part 17 is here.

Atlas Blogged #8

July 25, 2010

Part 8 of my blog of reading Atlas Shrugged for the first time. You can find the first part here.

Chapter 8: The John Galt Line

Dagny has been thrown out of the Taggart Transcontinental offices, and runs the new John Galt Line company from a couple of pokey rooms behind the tower of her former empire; part of the pretence that this new line is nothing to do with TT.

The Equalisation of Opportunity Act has forced Rearden to divest himself of his ore and coal mines, leaving only his forges remaining. He sells his ore mines to a rather wet chap called Paul Larkin, who appears to find the whole business so upsetting that in a peculiar way he wants Rearden to say that it’s fine that the government has forced Rearden to sell Larkin his ore mines, because he trusts Larkin. Rearden doesn’t believe trust has anything to do with commerce.

Rand launches on a brief survey of public attitude towards the John Galt line, which is mostly of the ‘IT’S GOING TO KILL US ALL!’ variety. She indulges in attributing a few ridiculous arguments to her straw men: Slagenhop says, “There is no source of public opinion. It is spontaneously generated. It is a reflex of the collective instinct of the collective mind.” The general policy of the press is set by the maxim: “There are no objective facts. Every report on facts is only someone’s opinions. It is, therefore, useless to write about facts”.

Oh Rand, you are naughty. How can the convincing win which Dagny is doubtless about to achieve be convincing in the face of morons like this? At least give their arguments a little intellectual bite.

Dagny confronts the Union of Locomotive Engineers, who are refusing to let any of their workers drive trains on the John Galt line. Dagny (and by extension Rand) uses the following argument against them:

“I know what you want. You want a stranglehold on your men by means of the jobs I give them – and on me, by means of your men. You want me to provide the jobs, and you want to make it impossible for me to have any jobs to provide. [The train is going to be run, and you can choose whether it’s run by your men or not]. If you think that I can run an engine but they can’t build a railroad, choose accordingly.”

No wonder all the libertarian boys love Thatcher. She spent much of the 80s channelling Dagny. This argument works by the implication of control – if a few men represent the workforce in an area of endeavour that requires skilled labour, then they can determine which manufacturers they permit their staff to work for, thus determining which manufacturer has the advantage over the others. By doing so, they can shut down manufacturers they don’t like, and force the remaining manufacturers to only employ union members.

However, this argument has little to do with real-world unions, as in AtlasWorld they seem more akin to guilds – or, perhaps, the RMT, and to a certain extent British unions before Thatcher’s reforms. Unions representatives exist to secure better pay and conditions for their members; during period of low unemployment they provide an effective path towards collective negotiation. Rand’s attitude towards this appears to be that given that workers are incapable of building an industry in the same way as Dagny, they do not have the right to bargain collectively. Individual worth is the determinant of economic success – collective action represents a check on the individual, and so is to be ignored or circumvented. This argument only really applies when unions are too strong – but, of course, given that this is AtlasWorld, the unions are too strong.

Dagny holds a press conference in front of the media of AtlasWorld, who are naturally shocked that she intends to make a profit out of her business venture.

This chapter is generally wonderfully written and joy to read – Rand is a superb author of scenes of triumph and success – but the sheer stupidity of the opposition somewhat detract from this.

The day of the completion of the John Galt Line arrives, and Dagny and Rearden ride the first train along the line. Rand spends thirteen pages talking about how wonderful this is – and quite deservedly so, as even the most hardened socialist couldn’t fail to be moved by this section. There is one interesting argument; although perhaps it’s more simile than argument:

‘[Machines] are alive, she though, but their soul operates them by remote control. Their soul is in every man who has the capacity to equal this achievement. Should the soul vanish from the earth, the motors would stop, because that is the power which keeps them going… the power of a living mind – the power of thought and choice and purpose.’

The train arrives, amidst hullabaloo. Wyatt greets Rearden and Dagny, and they have a triumphant dinner, marred only by Wyatt’s despair at the state of the rest of the world.

Dagny and Rearden become lovers (which surprises no-one who’s been paying attention). Rand makes lots of references to submission, but like the rest of this chapter it’s beautifully written.

Analysis

The argument I quote above is perhaps the core of the book – the notion that the removal of a mind from the world will remove the motive power that mind’s achievements lend to it. It’s a strong statement of the significance of the individual –  that the individual is the key to advancement, that the strong and visionary mind powers the world by reshaping it in its image. It is countered with the weaker collective minds of the press and contemporary commentators, who ride on the back of the strong. This provides part of the justification for Rand’s version of freedom of the individual.

The obvious problem with this argument is that it’s a false dichotomy – human achievement comes in both collective and individual forms. The largest engineered object mankind has ever produced, the Large Hadron Collider, is the product of collective action – state funds and committees of engineers and scientists, as well as the aggregate demand of European scientists for such a facility. It was not the product of a single mind, but rather the shared vision of many. This is a necessary function of complexity; as the knowledge of our species grows, so does the complexity of our tools and specialisation required for each individual to play a part. Thus, the complex collective achievement of public services represents not a single vision but rather a multitude of overlapping visions, one for each employee therein. We should celebrate both the individual and the collective, for both are vital, but Rand would seek to diminish co-operation as a virtue, and in AtlasWorld it inevitably leads to destruction. Why?

Part 9 is here.