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The political struggle ahead: only by understanding that the economic agenda is part of a wider social and political settlement will we succeed in opening up the debate on the alternatives.

Beyond economics

It is not so very long ago that the implosion that began in August 2007 looked to be bringing into question far more than the iniquities, and the dominance, of the financial sector. It seemed that there might just be the beginnings of a fracturing of elements of the hegemonic common sense. The basic tenets of market fundamentalism were found to be wanting. Even in the most 'popular' of discussion fora there was outright hostility, not just to individual bankers, but to greed and self-interest as the means by which they were seen to have risen, and now to have fallen. There were not a few who proclaimed that this looked set to be 'the end of neoliberalism'.

This was not, then, a moment of potential crisis just about finance, or even about economic theory. It ran more deeply than that. It was about a way of being human. It came near to questioning the wider hegemonic ideological framing of life. It touched upon the ethical.

That moment of potentially wider rupture has, for the moment, passed. And one of the ways in which this cover-up has been achieved is through a re-separation of the sphere of 'the economic' from the sphere of ideology (and thus, in a wider sense, of politics). This is in fact a re-separation. It is in itself a crucial part of a return to business as usual. For that separation has been one of the fundamental achievements of the last thirty years-the period we have come to call neoliberal. The economic has come to be viewed as a set of forces equivalent to a machine, or to the laws of nature. Its construction through social relations, and thus through potentially different social relations, has been hidden from view. That moment of clarity, when the economic and the ideological were fleetingly seen to be interwoven (not the same, but connected) was thus a real (potential) dislocation. For now, normality (the normality of the last thirty years) has been restored. The crisis is once again interpreted as purely financial and, crucially, as a technical question. But only for now; it is not over yet.

The June emergency budget made this plain. It was moulded by politics and ideology. It was in no sense technically 'unavoidable'. Any serious response from the left must address it at this level. Argue the case in terms of economic logic (the danger of double-dip recession, etc), yes; but also insist on the bigger picture-the ideological dimensions of this moment. If a wider break with the past is to be won, then the question of the economy has to be set within its wider conjunctural context. (1) It must address directly the ideological underpinnings that have, until recently, been so successful and so self-assured.

It is not so long ago that this self assurance-this class victory-seemed to be a simple fact of life. Andrew Adonis and Stephen Pollard, for example, argued that:
   The rise of the Super Class ... is a seminal development in modern
   Britain, as critical as the rise of the gentry before the English
   Civil War and the rise of organized labour a century ago, and
   rivalled in contemporary significance only by thedisintegration of
   the manual working class. (2)

As recently as 2006 it was argued that 'This has been a period of elite consolidation for which there is no parallel in the country's history'; (3) that 'There is a certain swagger about the City of London these days'; (4) and that-in relation to the global dimensions of this ascendancy-'This new financial elite is the true heir to the imperial legacy' ... 'here is an elite of the elites whose power has grown to a dimension that is truly imperial in the modern world'. (5)

These elites have by no means been unseated by recent events, but things are not quite the same. There have been cracks in the self assurance. Can this moment of potential fracturing be seized upon to turn this from being a financial crisis into a wider political questioning that might shift the balance of social forces? For that to happen there need to be more than economic arguments.

The 'neoliberal' social settlement

It is certainly the case that the socio-economic settlement of the past thirty years is broken. There has to be, at least, a readjustment. And this in itself opens up the political battlefield. The first elements of the economic structure that underpinned this settlement were, of course, set down under Thatcher-through the double move of the decimation of mining and manufacturing, especially in employment terms and with the social implications that go along with that, and the ascendancy of finance and its wide halo of surrounding sectors. That stage in the process was hugely contested-in defensive mode from the industrial and mining regions, and with proposals for an alternative way out of the crisis of the social-democratic settlement from the cities, chief among them London, where finance and the new elite had (and has) its seat of power. It was then, too, that began that shift in commonsense towards neoliberal terms-the inevitability and rightness of market forces, the primacy of the sturdy competitive individual. It drew on longer-term cultural changes that had been under way since the 1960s to turn them into tools for capital and the right. It went down very well in the South and East of England, outside of London. But it was the bargain struck by New Labour that generalised this shift across the country into a full social settlement. (6) This bargain aimed to continue with the shape of the private-sector economy installed by Thatcher, with its prioritisation of and obeisance to the finance sector, and to use that sector to provide the tax surplus (or what remained of its potential yield after deductions through tax havens, non-dom status, an effectively regressive tax regime, and many pieces of imaginative accounting) to fund the social-democratic infrastructure. (7)

Everything depended on finance. It was to be the way out from the long decline of the British economy; it was to assert once again an imperial presence for that economy within the international division of labour; and it was to provide income to the exchequer for the expansion of public-sector investment and services. And voices from finance themselves put much work into promoting their role as the 'golden goose' of the nation. This was not, though, as it is often painted, just a question of backing a 'sector' of the economy; it was also the promotion of specific class interests.

This social settlement had effects that we know about well-the steep rise in 'inequality of the top', the growth of the new elite and a stratum of private-sector professionals, and many related developments (see notes 2, 3, 4 and 5 above). It also set off other social dynamics and produced or reinforced new social relationships. One such was the entrainment of the mass of people into financialisation. Through the practices of privatisation, of health, pensions, housing, people became entangled with the finance sector in ways which the financiers could harvest for 'investment' in SIVs, derivatives and assets. By this means millions of people became both materially enrolled into the interests of finance in the short term (even if structurally in the long term their interests would be elsewhere) and ideologically acculturated into its ways of thinking.

There were always weaknesses in this New Labour bargain. There was, for instance, the problem of employment. John Buchanan et al point to the way that publicly supported employment covered over the failure of the private sector to generate jobs. (8) It was a failure that was partly concealed by privatisation-which apparently added to private-sector employment levels-when in fact these were not new jobs but transfers, and were thus still directly dependent on state funding. The inherent precariousness of this model should have been evident.

Geographically, moreover, this was a social settlement that tore the nation apart. (9) The finance and associated sectors are overwhelmingly concentrated in (a small part of) London and the South East. The national geometries of power became even more focused on those regions; and the geography of the democratic deficit became even more glaring. Other regions became increasingly dependent on public-sector and para-state employment, nonetheless being drawn in to the new hegemony, of audit and market-thinking, by the changes introduced into those sectors themselves. (10) Within London, acute inequalities made the very social reproduction of the city impossible without special measures (key workers; a specifically London living wage, etc). The inequality in growth between regions resulted in differentials in house-price rises that further exacerbated national inequality. This was certainly not a geography that had been voted for.

Even before the crash, then, the frailties of this socio-economic strategy were apparent.

Moreover they were made more acute by the internal dynamics of the settlement. In particular, the prioritisation of finance led to a self-reinforcing dominance. There is a tree called the upas tree, beneath and around which nothing else can grow. It has been used as a metaphor for regional and city economies that are dominated by a single sector that crowds out and/or stunts the growth of all others. (11) ('Crowding out' is usually a term used by those who would wish to prune back the public sector, but Buchanan et al argue that over the last two decades public-sector employment, far from crowding out growth in the private sector, has been compensating for its absence.) In the social settlement of the last thirty years in the UK, and as a structural consequence of this economic strategy, it has been finance and its associated sectors that have been the upas tree. The conflict between finance and industry is one with a long history in the UK, but it takes specific forms in different conjunctural moments. Over the last thirty years the dominance of finance has actively harmed the interests of other parts of the economy. At macro-level its dominant voice on exchange rates and its commitment to short-termism have been the problem; within London the effect on land and property prices, especially in the area around the City, and the advance buying-up of land and property, have threatened the diversity of the capital's economy; between regions a host of dynamics has been set in play, most particularly the draining from all other regions of professionally qualified workers into the maw of London and the South East. It is not, then, just that finance was prioritised for strategic regions, but that the dynamics of that very bargain increased the dominance of finance at the expense of other potential sources of growth.

And then it imploded.

An alliance against the dominance of finance: for a more balanced society

The vortex of the current moment is the crisis in the financial sector, and the nature of the political response to it. (Indeed, insisting on this, rather than accepting the public-sector deficit as the crisis, is itself a central political task.) But, as argued above, the dominance by the financial sector was already a problem, even before that sector's implosion, and needed to be tackled on a much broader front. Finance and financial modes of calculation are emblematic of a wider mode of being, one that any left political strategy should be challenging. And there is also the question of democracy. The voice of the City is powerful in policy-making. The judgement of 'the markets' hangs over everything, setting the parameters within which political debate can operate. This assertion of economic power exposes the thinness of our political democracy. One central political priority must be to take advantage of this moment of relative weakness at the crux of this constellation and lever open those wider politics.

It is often pointed out that this crisis is different from the dislocation that brought the end of the post-war social-democratic settlement in that it was not made by the pressure of social forces or, directly, by social struggle. It was an implosion. There are in that sense no 'forces' at the ready. This is correct so far as it goes. But the social forces that produce a crisis are not necessarily the ones that will point to an alternative way out. The forces that generated the crisis of the post-war social-democratic settlement tended, when the crisis came, to respond mainly in defence of the old settlement. There need also to be creative alternatives (in the 1980s some of these came, for example, from the urban left). In the present moment there are, contrary to what is often said, plenty of ideas and alternative political strategies. The problem is that these ideas do not have a social base, or purchase in the wider population. This problem for the left is compounded by the way in which so many of the radical challenges it made to the post-war hegemony (feminism, the rejection of an undifferentiated 'public', the acknowledgement of heterogeneity, the stress on flexibility and flow rather than rigidity ...) have been in a thousand ways recuperated into the current hegemonic project, taken up in ways we never meant, turned to use as flexibilised labour, selfish individualism, and arguments against collectivism and the state. 'Liberation' turned into lifestyle capitalism. Cries of 'yes but ...' and 'we never meant that' do not have much political appeal. And so we find ourselves wrong-footed, and yet further disarmed.

This lack of voice was all too evident in the ease with which the financial crisis itself, a result of the structure of finance and of the actions of the super-rich, has been converted into a need for public-sector cuts. There is no need here to reiterate the 'illogicality' of this-that the poor are paying for the sins of the rich, that it was state intervention that saved the day, that much of the deficit results from the recession that followed the financial collapse, that such a strategy will curtail the possibility of growth, and likely plunge us more deeply into recession, etc, etc. The point to note for the moment is simply the astounding ease with which this renarrativisation was achieved.

The question then arises as to what kinds of changes these cuts in public-sector expenditure will themselves bring about, and what kinds of defensive social forces might arise. At the sharpest end, undoubtedly, will be the ranks of public-sector workers, potentially in alliance with those who depend on their services. Most generally, Con-Lib policies will yet further sharpen economic inequality. Over the last thirty years the biggest statistical contribution to this widening inequality has come through growth in income and numbers at the rich end of the scale. With cutbacks in public expenditure-which will have impacts both on welfare and on jobs-this will change-the already poor are likely to be hit hardest. And there will be further differentiations. Whereas the prime producers of, and beneficiaries from, the disaster of the last thirty years have been very highly paid men, the cost of paying for the collapse of that period will, through public-expenditure cuts, be borne far more by women. Can these patent unfairnesses be the ground for finding new political voices?

And then there is geography. The North-South divide within the United Kingdom continued to widen under New Labour. Moreover the economic strategy of the last three decades changed the nature of that divide, dramatically reinforcing some inherited characteristics and introducing new ones, to form a new national spatial division of labour. There is the continuing centralisation of power into London and the South East (the North-South divide is about more than comparative levels of income and unemployment). There is the continuing loss of manufacturing employment. And, most of all, there is the fact that the social settlement of the last period has left some regions, outside of London and the South East, perilously dependent on the public sector for sources of employment as well as for welfare. In any serious programme of cuts in public expenditure they stand to be devastated. This is a regional inequality that, like the dominance of finance, has an internal dynamic that makes it self-reinforcing. The lack of voiced anger in the regions outside London and the South East is extraordinary. The official representatives of those regions have for too long acquiesced in the dominant narrative that no regional policy should in any way hold back London/the South East, and that the other regions must be regenerated by 'standing on their own feet' (while all the while London/the South East's problems of congestion and inflation are ameliorated by state intervention and subsidy). What has been problematical for the left in the past has been an understanding of this geography of inequality in terms of competition: the North versus the South. And so the poverty in London has been pitted, for political voice, against the poverty of the regions of the North and West. It is a problem that has frequently disfigured, and hampered, struggles on the left (for examples, see World City). Certainly these are poverties that are produced and experienced in different ways: in the context of acute inequality in London, in the dismal draining of hope in parts of the North and West. It is often remarked that the regional problem of the North and West is regeneration, while the regional problem of London/the South East is redistribution. But the two have the same sources, and it is time for an alliance across them, challenging the centrality and power of the City constellation in both the national economy and the national geography.

All of this is about a 'grassroots' response, based in trades unions, local alliances, feminist networks ... and it is the strengthening of these voices that is right now most important. Unless and until that happens, the Labour Party seems unlikely to come out and redefine the political field. For that is what is needed.

However, none of these potential voices of protest will carry much weight without the ability to propose an alternative. And here we are in a vice, for in purely economic terms the grip of the financial sector and its wider constellation is real. In the years of its pomp finance worked hard to convince us that it was the golden goose upon which, in the end, all the rest depended.

To the extent that this was so it was by no means the result of untrammelled market forces; rather it grew out of political strategy, from Margaret Thatcher on, combined with the propaganda work put in by the sector and its representatives.

But it is important to understand that finance is not simply the golden goose. Over the last thirty years it has not been 'the motor of the economy' in the sense of driving investment. Its money went into assets; its result was redistribution. It was not a 'motor' in the sense of providing investment into other industries. (As many have pointed out, the undifferentiated language of 'investment' should here itself be challenged.) Indeed, as has been argued above, the dominance of finance has weakened other sectors, thereby reinforcing the fable of the golden goose.

But if there is a way in which finance is the golden goose it is as the provider of finances to the exchequer. Manufacturing, because of its much smaller size and lower profit rate, is very small by comparison in this regard.

However, manufacturing does still exist within the British economy. The UK is, by value, the sixth largest manufacturing economy in the world. Any way out of the current crisis, and especially one that avoids massive cuts in public expenditure, will need to generate growth. As Ha-Joon Chang has argued, that growth cannot come from the financial sector. (12) Much of it must come from non-financial sectors. This will be a hard road, but there are clear links here to the intersecting crises of climate change and oil-depletion, and the programme in the Green New Deal for a green army of workers to address, through new industries including recycling and repair, not only the economic but the environmental threats. (13) There are, moreover, other clear advantages (political as well as economic) to such a strategy. For one thing, an industrial strategy need not necessarily be very expensive-much can be achieved through regulations and incentives. The German commitment to environmentalism provided a framework, ideological as well as economic, within which green industries could flourish. Secondly, there is no reason why green industries should be so concentrated in London/the South East. Indeed, some of them by their nature will need to be located in relation to the distribution of the population. There could thus be a positive counter-dynamic to the currently increasing regional inequality. And, thirdly, an active industrial strategy (brilliantly argued for in Chang's paper on industrial policy, see note 12) would itself present an ideological challenge. As Chang pointed out in May, after decades of the free-market approach 'such an aversion to industrial policy has developed in Britain that there is hardly any debate on it in the current election campaign'. (14) One element of an alternative strategy must therefore be to argue for a rebalancing away from finance.

But the ideological challenge must also be wider than that-it will be crucial, as argued above, to reconnect and interweave the ideological and the economic. One central question is economic democracy. What happened to collectivity, to all those intimations of a return to cooperativism and mutualism that were around when the banks were first under attack; when the principles of economic organisation were also up for question? Again, one feels, much of the energy and imagination that might start to embed such ideas more widely will have to come from grassroots initiatives. Many of the political meetings I have been to since the elections have stressed the importance of 'bottom-up' organisation. Labour's performance in the local elections was certainly helped by their being held on the same day as national ones, but it was nonetheless in places impressive. It won control of Liverpool, Coventry, Doncaster, St Helens, Hartlepool, Oxford, and a host of London boroughs. There may be reasons to be depressed about the sharp geographical divides, but is there a basis here for a fightback led from local level? A new 'new urban left'?

Any effective strategy to reduce the dominance of finance over the rest of the economy will involve directly challenging its hegemonic stories: that it is the golden goose, that it is socially useful, or even economically useful in the sense of a productive economy; the constant threats to leave each time there is the most timid of challenges to their interests are null and void (they don't actually go, and it is a moot point whether we should care anyway).

What is at issue here is directly taking on class interests. It means defining enemies; it means delineating political frontiers. And this is something Labour has persistently refused to do. The Green New Deal has begun the task of identifying the groups that might be recruited to such a cause, writing of:
   an exciting possibility of a new political alliance: an alliance
   between the labour movement and the green movement, between those
   engaged in manufacturing and the public sector, between civil society
   and academia, industry, agriculture and those working productively
   in the service industries (p6).

'Such a political alliance', it argues, 'is vital if we are to challenge the dominance of the finance sector in the economy, its threat to the productive sectors of the economy, its corruption of the political system, and its corrosion of social and environmental values' (p6). Quite so. It is important to note that these groups-potential political voices-do not 'show up' as classes. As Stuart Hall argued in Soundings earlier this year:
   That's not because class is unimportant or has disappeared ... But
   when you look at the theatre of politics, classes don't appear in
   their already-united form. Unifying into a 'historical bloc' is part
   of what politics does. (15)

This also means that formulations of a simple choice between working class and middle class, or about 'moving to the centre' or not, as though it were a smooth spectrum, rest on an inadequate imaginary. What is really at issue is identifying, and taking the lead in formulating and articulating, real-and complex and multifarious-interests and attitudes on the ground.

Such an alliance could be international too, and this not only in the sense of alliances with those in other countries facing common threats, but also in recognition of the new imperial role of the City of London as a key node in the generation of the ideology, and the form of finance, that led to these problems in the first place. (16) With such potential allies, taking on the burgeoning strata of the super rich and the interests of finance and its surrounding sectors should not be impossible.

What does neoliberal hegemony represent?

And yet, what has also to be addressed is the astonishing success of the ideological hegemony of the last thirty years. It is this that lies behind the supreme ease with which the re-narrativisation was achieved: that while 'they' caused the problem it is 'we', through public-sector cuts, who must pay. In part, this hegemony raises political issues about the current state of democratic debate in the UK, and in particular about the role of the media: the question of media ownership and influence is absolutely central. It is also a hegemony in part established through the enrollment of people's material interests, most obviously through the privatisation of pensions. But it is also more than these things.

There is (was?) an amazing fit between the characteristics of finance and the wider feel of society. Finance's nature of pure exchange, its apparent (only apparent) disembeddedness, its prioritisation of flow over territory, of movement over stability, its (again only apparent) non-materiality, the individual(istic) character of its 'production process'. All of this chimed somehow with the spirit of the times. Jurgen Kadtler has written of financial rationality being a power in itself; (17) it was also a form of rationality that became generalised to-or perhaps was the most precise expression of relations in-wider society.

The public bail-out of the banks led to talk of the end of neoliberalism. We know now-at policy level-it is not so. But more importantly, in popular discourse there is a lot left of neoliberalism. There is a profound embedded resignation to the naturalness of market forces. There is a pervasive negativity towards the state, reinforced by things like the politics of spectacle around MPs' expenses. These things are deep within popular discourse, even if often contradictorily so.

All of which leads to a final point that has often been obscured in the debates about neoliberalism. 'Neoliberalism' as a purely economic doctrine-a doctrine about how to run an economy-was always (if not only then certainly in part) a tool in the armoury of a battle between social forces: the battle to restore profits at the end of the social-democratic settlement against a labour force that had made substantial gains. Its hegemony rests in part on the ability to hold together contradictory practices in an over-arching narrative. Of course, much of neoliberalism chimes politically with elements of a classic right-wing agenda. But its nostrums have always, even in its pomp, been drawn on selectively-used when useful but totally disregarded when not. In that sense, mobilising the state to bail out the banks was not an anomaly. It was more blatant, more obvious, more crucial, and in that sense ideologically and politically more important. But it was not new. And this highlights a disjunction between the legitimating hegemonic ideology on the one hand and actual economic/political practice on the other. And what this in turn indicates is that at bottom what is at issue here, or what will be at issue if we are going to turn this into a real ruptural moment, is a submerged contest over the balance of social forces. For it would be possible to defeat 'neoliberalism' and still to lose the social struggle. The same class forces could remain in power.


(1.) For more on conjunctural analysis see S. Hall and D. Massey, 'Interpreting the crisis', Soundings 44, spring 2010.

(2.) A. Adonis and S. Pollard, A class act: the myth of Britain's classless society, Penguin 1998.

(3.) H. Williams, Britain's power elites: the rebirth of a ruling class, Constable 2006.

(4.) M. Dickson, 'London: capital gain', Financial Times, 27.3.06 (report on The New City).

(5.) H. Williams, 'How the City of London came to power', Financial Times, 21.3.06, p15.

(6.) See P. Devine, 'The 1970s and after: the political economy of inflation and the crisis of social democracy', Soundings 32, spring 2006; D. Massey, World City, Polity 2007; S. Hall, 'New Labour's double-shuffle', Soundings 24, autumn 2003.

(7.) 'Finance' throughout is shorthand for finance and its surrounding sectors.

(8.) J. Buchanan, J. Froud, S. Johal, A. Leaver and K. Williams, 'Undisclosed and unsustainable: problems of the UK national business model', CRESC Working Paper Series 75, Manchester University and Open University 2009.

(9.) See Massey, World City.

(10.) See Hall, 'New Labour's double-shuffle'.

(11.) S. Checkland, The upas tree: Glasgow 1875-1975: a study in growth and contraction, Glasgow University Press 1976.

(12.) H-J. Chang, 'Industrial policy: can we go beyond an unproductive confrontation?' mimeo, presented at Annual World Bank Conference on Development Economics, June 2009, and New Political Economy Group, April 2010; and 'UK needs a selective industrial policy', Guardian comment is free, 3.5.10

(13.) nef, A Green New Deal, nef 2008.

(14.) Chang, 'UK needs a selective industrial policy'.

(15.) Hall and Massey, 'Interpreting the crisis', p63.

(16.) D. Massey, 'London inside-out', Soundings 32, spring 2006.

(17.) J. Kadtler, 'Financialisation or: bargaining on economic rationalities', paper presented to CRESC Conference, Finance in question/Finance in crisis, Manchester, April 2010.
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Author:Massey, Doreen
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Date:Jun 22, 2010
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