The party hasn’t started
As the economic system built by the rich for the rich collapses, pessimism abounds. The argument seems to go like this: if the rich couldn’t build a better nation, a better Europe, a better world, then no one can. It is perhaps best summed up in the title of Robert Peston’s series: “The Party’s Over”. This position is profoundly wrong.
In a sense, the European economic collapse isn’t that complex. After the crash of the 70s, richer people said that, if we handed our wealth to them, then they would invest it better. And so they would build for us a new world of untold prosperity and happiness.
And so we handed them the profits of our labour. We privatised to them, and we cut their taxes. We allowed them to bust unions so that their share packages could soar as average wages stagnated. We cut back regulations and we gave them every chance they asked for to ‘create wealth’. And they failed. Because if you give rich people money, they don’t invest it in those things society needs to become more prosperous. They don’t have some magic skill to spot a need. They just buy stuff they like. Or, if the mood takes them, they gamble with it. Building new factories or investing in genuine research – these things are hard. They take time to deliver a payback. Speculation, derivatives markets, these things give a quicker payoff. But they aren’t investments in a prosperous civilisation. They don’t create true wealth.
And so, having promised that they would deliver rapid economic success, they didn’t. Growth rates stalled. They did however, concentrate more and more wealth into their own hands. And with wages failing to rise with workers’ output they realised they had a problem: if people didn’t have enough money, how would they buy stuff from their companies? And so they needed to lend. We were all encouraged to believe that the houses owned by banks were really ours, and to borrow against this asset as its price rapidly grew as more and more sought to get in on the spiralling act.
Then, the bubble burst. We realised that the surplus tat we could now afford was paid for with money lent to us by the very people who had in the first place taken it from us on the promise of making us rich.
And now that this system – a system designed by the rich for the rich – has failed, we are told that the party is over. We are told that our future is bleak. For if the rich couldn’t make things better for everyone, then how can we make things better for ourselves? “If our way didn’t work” they tell us “then there isn’t a way which can”.
And this is wrong because it misses a fundamental point: this system failed to deliver happiness. It failed to enrich the majority, and it is killing the planet. We knew before 2008 that it had profoundly failed. We already needed urgently to replace it. And it is wrong because it misses this too: We were told that we had to hand our economy to the rich because they were the wealth creators, they were the Übermensch: Nietzscherian super heroes who would rescue us from the squalor of our ignorance, of our incompetence and of our idiocy. And this was always a lie. The truth is that humanity is awesome. As my brother, Gilbert, once wrote:
“It is a myth that the world contains only a handful of ultra brilliant people and that if one exhausts one’s stock of them, then one has lost one’s most important resource. Fifth century Athens, for example, produced in one generation some of the most important thinkers and writers of all time, geniuses like Plato and Euripides and Aristophanes. At the time, the population of the whole of Attica (most of whom were illiterate, of course), was about the same as present day Lowestoft. Humanity is swarming with geniuses. What matters is creating the circumstances to nurture them.”
I would go further. There is a glint of genius in everyone. In a society structured not to plunder material resources for the benefit of the few but to invest in, nurture, and release the potential of us all our collective capacity for improving civilisation would surely be boundless. Those who said they should be entrusted with our wealth and our power lied. They stole. They conned. And now their veil has slipped. And now we have something truly exciting – we have the chance to start again. To build something new, something which is ours.
What we will build we don’t yet know in detail. Ideas are forged in debate and in the fire of struggle. But we do know this: the utopia built by the rich was theirs not ours. Robert Peston tells us that The Party’s Over. He’s wrong. There was a party, but most of us weren’t invited. Our best days are ahead of us. The fall of the Übermensch allows for the rise of the people. We live in the early days of a better world. First, we just need to imagine it, and then to build it.
Re: The party hasn’t started
“But we do know this: the utopia built by the rich was theirs not ours. Robert Peston tells us that The Party’s Over. He’s wrong. There was a party, but most of us weren’t invited.”
Adam, don’t you really mean that yes, the old party is indeed over, and not before time?
Thus, surrounding Robert Peston’s commentary is an opportunity to build a better, more inclusive future, if we can only figure out how. David Cameron appears to believe that the future involves providing protection for his friends in the City. Those who disagree with the PM need to move events in another direction, before the old party is resuscitated as the only game in town.
Kevin, my point is really this: unless we believe the world can be better, it can’t.
The problem is, the Ubermenschen *haven’t* fallen. The Emperor has turned round and said, “what if I am naked? I’m still the Emperor”. I suspect their fall has become inevitable: but it may be long and tortuous.
Things are going to get better. But they’re going to get worse first.
Great article Adam – however I do think you are skipping too quickly over the late 70s – early 80s period. Across Europe we saw a succession of left government – Dennis Healey, the labour Chancellor in 1974 promising to tax the rich until their pips squeaked, Mitterrand’s 1981 Government in France, with 4 Communist ministers, Helmut Schmit’s keynsian expansionism in Germany after 1974. These governments all saw their economic policies collapse – Healey having to turn to the IMF in 1976, Mitterrand’s austerity turn in 1983, the withdrawl of FDP support for the SPD in 1982. It was this political failure of the traditional statist, keynsian model of a left economic strategy that created the vacuum that Thatcherism – or, as you describe it, taking power from the state and giving it to the rich – filled.
So we were conned, but it was the failure of the left to have a convincing alternative strategy that created the conditions.
Interesting article. We would love to hear your ideas for a better world. Please take part in our Futures Interviews Series on Think Act Vote – http://thinkactvote.org/thefutureichoose/
But the large capital surpluses by the Oil producing countries had a lot to do with the Oil shock. So I see that as part of the same problem.
But yes I would agree that Bretton Woods and the fixed exchanged rates were under strain. Those strains would probably have been delayed further if capitalism had followed Keynes’ ideas for post WWII economic system, but the new rules are always dominated by the economic powerful at the time. The US then protecting its export interests, Germany now in the EU protecting its export interests.
yes, I agree with both of you. There was a crisis. But the solution wasn’t what we went with. In that sense, ‘we’ were conned. I certainly agree that we can’t just return to 1965 as though nothing had happened in the middle…
Agree entirely with your last paragraph Kevin.
I’m not sure I agree entirely with the analysis of the 70s though. I think there were underlying economic problems with the form of capitalism that we had until the early 70s. The dollar was running into problems with fixed exchanges given the international demand, and there were large surpluses of capital in oil producing countries that needed to be reinvested, for example. To an extent I think the breaking of Bretton-Woods, globalisation of production and consumption and financialisation (which is tied to that form of production) were inevitable. It wasn’t simply that we, as working people, were conned by the rich into giving up what we’d gained.
I couldn’t bare to watch Peston’s “The Party’s Over” because I new it would be everything you’ve described here, and it would have just have had me getting cross at the telly.
Thanks Adam, you have managed to express thoughts which are very similar to my own on our recent economic history.
One thing I might add is that the 1970 economic problems which were predominantly a consequence of the oil shock provided the first opportunity for an attack against a version of capitalism that was improving the conditions of a lot of people. The oil shock wasn’t blamed, rather the form of capitalism that made lots of economic concessions to people was blamed for the economic problems. Economics and economic history were being rewritten in real time.
The attacks we saw were the beginning of a roll back against hard fought for gains, from strong regulation to decent working conditions. It was like a shock doctrine light, preparing the ground for the full shock doctrine later.
I think it is unlikely that we could return capitalism to the post war pre 1970s form, even if we wanted to. The political dynamic that created it was a coincidence of circumstances* that aren’t going to be repeated so I see no point in trying to turn the clock back. Also relying on Capitalism making concessions is dangerous because as we have seen it is all too easy to roll them back.
* Capitalism needed to demonstrate that it could provide for people better than the Soviet Union.
* Post Great Depression consensus of what is acceptable capitalism was strong.
* Post WWII dynamic of economic rebuilding was strong.