Give the People Some Credit

So we are now to have 'credit easing'. The Chancellor of the Exchequer has persuaded the Governor of the Bank of England to participate in lending to small and medium-sized enterprises which would have been too risky for banks to undertake. It is another step on the road which started with the bail-outs of financial institutions in 2008. The government is increasingly (if reluctantly) involved in the supply of credit.

Nothing wrong with that in our present circumstances; bond markets are still more willing to lend to our government than European banks are to each other. But there is a stark and widening contrast between the terms on which the Treasury and BoE lend to business, and those on which other ministries provide income to citizens.

Essentially it comes down to the same thing; government loans to firms (which may or may not be able to pay back) for their production needs, and pays benefits or allowances to citizens (who may or may not be able eventually to 'repay' these in tax contributions). But businesses face no sanctions if they become insolvent, whereas ordinary people are subject to increasingly punitive measures if they fail to live up to their 'responsibilities'.

In opposition, Iain Duncan Smith sponsored a report on how the tax-benefit system for the poorest working-age citizens should be integrated, in order to improve incentives to take part-time work. The bases of this new scheme were to be 'universal credits' (note the term), and the report made no mention of enforcing the obligation to work, instead emphasing how New Labour's complex administration had created barriers to participation.

But in office as Secretary of State for Work and Pensions, now he stresses the penalties and disqualifications that people who claim benefits of all kinds will suffer if they do not adopt the posture of seeking employment (or training, or experience) of any kind, at any wage.

And - since the city riots - he and the Prime Minister have mooted plans to cut off the benefits and evict from social housing anyone involved in criminality of any kind. In other words, you will lose your livelihood and your home for actions which have nothing to do with claiming, if you have not already been penalised for not looking hard enough for non-existent jobs.

The irony is that the terminology - 'universal credits' - remains, despite this fundamental shift in the politics of the proposed reform. People who rely on the government for their incomes are losing their basic civil liberties at an alarming speed, at the very time when reliance on such payments is rising.

Can anyone imagine that business people would be subject to this stigma and coercion if they failed to repay the loans made to them as part of 'credit easing', or if they were discovered to have cooked the books or underpaid their taxes? Hardly.

The fact is that workfare, welfare-to-work and all the other paraphernalia of state enforement has had absolutely no effect on reducing long-term unemployment, here or anywhere else. Even in the boom years after 2000, the average duration of workless spells increased substantially, in the USA, in Europe, and in all the other OECD countries except Canada and Australia.

Isn't it about time that governments started giving some real credit to citizens as well as businesses?

A Double Crisis of Government

A global stock market crash and riots in our cities; business leaders and media commentators call for strong political leadership. The government should step in to stabilise the economy, restore order and protect property.

But many making such demands - such as Eamonn Butler, Director of the Adam Smith Institute, on BBC Radio 4's 'The World at One' yesterday - have been campaigning for years to reduce the power of the state and allow a self-regulating market order. And they have largely succeeded. The public sector is ruled by a business ethos, citizens are cast as consumers, and such authority as officials still have is directed towards making sure that poor people take any low-paid work available.

Yet every time there is a crisis, it is the government that is expected to sort it out, as in the bail-out of the banks in 2008-9. As soon as taxpayers' money had been poured into rescuing them from their gambling debts, all the same old arguments were used to resist radical restructuring and controls. And now it is states that are left in the red, and unable to repond to the latest catastrophe.

The truth is that capitalism has always needed a strong neutral referee to save it from itself, but capitalists have always tried to subvert that power in one way or another (bypasssing regulations, corrupting politicians and officials, ripping off the public purse) for the sake of short-term gains. Now we see global markets demanding austerity programmes so that government borrowing can be repaid, but panicking because these measures are causing a second recession. It is just such contradictions in the system that political authority is required to resolve.

During the Cold War, states were able to keep an independent role in economy and society because business feared communism more than it resented regulation and taxes. Since 1989 governments have gradually lost their ability to protect their citizens from market forces, so that the new generation faces far bleaker prospects, in relation to employment security, wages, career development, pensions, property ownership, etc., than the previous two have enjoyed.

Young people's resentment of their position, and the blame they attach to the ruling elites in their societies, finds different expression in each country. We applauded the courage of the protesters in the 'Arab Spring' and in the Syrian uprising, because it was easy to identify with their fury at corrupt dictators and their plutocratic cronies. We even sympathised with the mass gatherings in Athens and Madrid, even if we regarded their governments as wasteful and incompetent.

But it comes as a shock to find that so many of our own young people refuse to accept their position as the victims of a failed political economy, and demonstrate this by smashing and looting shops and burning cars. Indeed, our political leaders and our media quickly adopt the language used by the regimes in Tunisia, Egypt and Syria to describe them. But in the end we all get the riots, protests or revolutions we deserve.

Unhealthy Relationships

Was David Cameron's appointment of Andy Coulson as his Director of Communications just as bad as Scotland Yard's contract with his former deputy at the News of the World, Neil Wallis, as a media consultant? No, it was much worse.

The police are responsible for upholding the rule of law (not just 'fighting crime', as that paper preferred to put it). The resigning Metropolitan Police Commissioner, Sir Paul Stephenson, acknowledged that his force had been compromised in that task by the contract with Wallis; but he could not resist hinting that the Prime Minister had made the same mistake. In fact, Cameron was far more at fault, for the following reasons:

First, governments have far broader responsibilities. Law and order and defence are fundamental, but governments are ultimately the guardians of all the 'public goods' from which the whole of society benefits. The most important of these are intangible, qualitative features of social relationships, such as decency, honesty, fairness and solidarity.

Of course, governments cannot 'deliver' these, but they can set the tone and protect an environment in which they flourish. They can also look for ways to clamp down on organisations which systematically promote their opposites - corruption, exploitation, cynicism, division and the depletion of society's cultural resources - or at very least offer them no encouragement.

Even before the police gained (and chose for many years to ignore) the evidence of endemic criminality at the News of the World, it was common knowledge that its executives and editors were running such an organisation. Yet successive prime ministers paid court to them, and Cameron's appointment of Coulson went a step further in bringing one of them into government itself.

Second, the state is not a company or a brand, however many useless logos and hubristic mission statements it agencies may choose to adopt. In a democracy, it is suppose to express the public interest, based on the will of the people. Its communications with citizens should seek to clarify this interest and this will; they should not ape businesses in cultivating 'public relations' (even if this was the professional background of the prime minister).

Third, those who hold political power should be accountable to their citizens for their actions. Yet for several decades they have used newspapers like the News of the World as proxies for the people, adding a layer of insulation between themselves and those they are supposed to represent. In this way, they have compromised democracy itself, and allowed the integrity of the political process to be subverted.

Fourth, they have facilitated the view - popularised by global businesses like News Corporation - that governments are given powers of compulsory taxation solely to supply those services which cannot be organised more 'efficiently' by a private firm. This narrow view ignored all the reasons for protecting a flourishing public sphere other than those of costs to taxpayers, and it legitimated a rolling programme of privatisation, and a relentless critique of public benefits and services, along with the demonisation of many who used them. As the largest media empire, News Corporation was empowered by this unchallenged ideology, and governments surrendered to it. Coulson's appointment signalled a further step in this process, and revealed the limitations of Cameron's 'Big Society' - not big enough to stand up to big business.

Too late, this government has found out what was missing from this ideology was a recognition of the potentially corrosive power of such businesses on institutions, cultures and the qualities on which successful societies rely. The trustworthiness of a whole elite has been undermined, along with that of the police, and we now face years of enquiries and court hearings before they will be restored.

All the World's a Business Opportunity

In Wednesday's Guardian, John Harris bemoans the fact that 'the world needs a new Marx, but it keeps creating Malcolm Gladwells'. I've just been reading 'The Social Animal: The Story of How Success Happens' by David Brooks (another New York Times columnist), the latest manifestation of this phenomenon, and - like its predecessors from 'Blink' to 'Nudge' - being devoured by the political elite.

What all these books have in common is the promise to reveal the hidden workings of the human brain, the unconscious but pro-social, pre-rational bases for our behaviour. Here we have 'the emotions, intuitions, biases, longings, genetic predispositions, character traits, and social norms' which influence decisions below the level of awareness (Brooks, p.x), enabling people to read each other, grasp situations and contexts, build networks and become 'street smarts'.

What these texts seek to demonstrate is that successful people have intuitively been practising these arts since the human world began. It was philosophers and political theorists from Plato onwards who have misled us into a hyper-rational view of society, leading either to utopian visions of a perfect order through enlightened individual choices, or to complex bureaucratic designs to control our irrationality for us.

So who were these smart operators who had it right all along? Why - you guessed it - business people of course. The way they laid out supermarkets, to get us to spend more than we planned; the way they created brand loyalties; the way they sold us insurance and pensions, all drew directly on their implicit understanding of our unconscious desires, fears and habits. They had intuitive knowledge of the brain science,the behavioural economics and the sociobiology that that researchers have only just turned into a systematic 'revolution in conciousness', to put philosophers and politicians on the right path.

Brooks's version of this story is told through the lives of Harold, the dreamy, clever, kind but slightly ineffectual offspring of a conventional, privileged couple, and Erica, who has escaped deprivation and psychologicl damage in a Chinese-Mexican household to become a driven entrepreneur. Although they eventually move sideways to work in government, their identities and career pathways are forged in business, and their success is confirmed by a prosperous old age.

Why is this stuff seen as so important by those who exercise power on our behalf? And why, as Harris asks, does our age produce so much of it?

It seems to me that this is not so much because of the failure of the grand political projects of the past three centuries as because humanity has surrendered the quest for control over its destiny to impersonal forces. We have chosen to entrust our fate to computer-operated trading floors in currency and stock markets, and to geeks designing electronic systems for eliminating risks through feedback loops. The 'revolution in consciousness' provides us with an alibi for this surrender, and tells our political leaders that it is OK to manipulate our behaviour while dancing to the tune of global market forces.

But closer examination shows that it should supply us with no such excuse. The tricky shift in Brooks's book is to treat the world of commerce as given, the 'natural' environment and context in which we must all find meaning, purpose and fulfilment. His whole story depicts people with well-functioning stone-age instincts and skills getting by in a society shaped by business plans and corporate strategies.

This is deeply misleading. During my lifetime, almost every institution which defined our way of life, from the post office to care homes, has been turned into a business. The latest victims have been universities, demeaned by the requirement to sell themselves to student 'customers', who are themselves forced to mortgage their futures for the price of a degree. In this context, the creation of an elite 'New College', charging twice as much as the going rate, and staffed by television celebrities, can claim to be a defence of true scholarship.

People are indeed 'social animals', but this is not a reason for putting us in a cleverly-organised zoo, run by the super-rich. A true 'revolution of consciousness' would be a revolution against these restrictions on our potential achievements.

Social Care?

Social care for frail elderly and severely disabled people is in the news for all the worst reasons. The revelations on the BBC1 TV Panorama programme about abuse of patients in a private hospital for people with learning disabilities and autism followed the equally disturbing news that a mega-provider of care for older people, Southern Cross, is in serious financial trouble. Both the organisation of care and its practice are under critical media and political scrutiny.

The obvious link between the two stories is that both involve for-profit enterprises, wholly or mainly paid for out of public funds. The principle of contracting for care, which is supposed to improve quality and efficiency, is clearly unreliable. We cannot trust the business models of large firms like Southern Cross not to collapse, with serious costs to taxpayers, nor can we depend on companies earning huge fees for their supposed expertise in specialised care like Castlebeck to supply even the basics of dignity and protection for those entrusted to them.

But nor can we trust the inspection and regulation body, the Care Quality Commission, to provide an adequate regime of supervision, even when they are tipped off about abuse. Generating paperwork and ticking boxes is no substitute for a genuine, qualitative assessment of how such institutions are functioning.

These problems are not new ones. The 30 years after the Second World War, when most such care was provided by the NHS and local authorities, were punctuated by scandals over abuse and neglect, especially in what were then called 'subnormality hospitals'. These Victorian institutions, often in remote places, were at best deadening and impersonal, at worst cruel and oppressive. So the state did not do this work well either.

The aims of the reforms set in motion in the late 1970s were laudable. Residents and patients were to have more individual personal care, and be more involved in local communities. They and their carers were to exercise more choice, partly by access to a market in providers, encouraging innovative approaches.

But the policy-makers and regulators were always in danger of forgetting the grim reality of the task. As researchers had pointed out for decades, after all those who can live an 'independent' life in the community have received the necessary financial and practical support, there will always be some who are left outside the mainstream of social life, because of the severity of their impairment, or because of sheer old age and infirmity.

Staff who care for them must overcome an atavistic tendency to devalue and demean all who cannot earn the esteem and status given through work, family and civic interactions. To do their job well, staff must create their own culture, through which residents are given value simply for their humanity. This requires leadership, example and mutual support; without these, the tendency is to revert to indifference or cruelty.

Individual care plans can be faked, activities fabricated and management goals invented. No checklist can capture whether a regime has the ingredients to treat residents and patients with dignity and respect, or create a sense of belonging to a community of hope and purpose. Managers and inspectors who lack a feel for these things are of little use.

If the public culture of a society is one of individual achievement and self-reliance, all this becomes even more difficult. Depending on others, needing to be looked after, are seen as discreditable. Care is counter-cultural in such a social context.

This problem is not confined to the private sector. Recent reports on NHS care for elderly hospital patients have been highly critical of nurses, grudging about giving time, callous about distress, careless over nutrition. Here again, it is a challenge for professional leadership to reject a purely technical approach, and create an environment of sensitivity, concern and empathy.

But the Southern Cross story really is about the shortcomings of treating care as a business. It exposes the myths of choice for residents and efficiency of private provision. Block contracts which have given Southern Cross 31,000 residents in 750 homes do not give choice, and the strategy of selling its stock and leasing it back has left the business with annual losses of £300 million, all underwritten by council taxpayers. And guess who owns Southern Cross and devised the stategy. A private equity company, of course.

Evolution, Ecology and Politics

It is now almost three years since the economic crash, and the global economy, led by China, is growing again. But the political disturbances provoked by that crisis are still rippling around the globe, and no-one believes that this unrest will soon subside. Why so?

Economics is easy, politics is hard. In its broadest sense, every living species practises economics, by adopting a strategy for sustaining itself over generations from a given set of resources. That doesn't need an MBA from Harvard Business School, or even a brain.

These strategies are immensely varied, but only a few of them involve co-operation with a group of others to provide sustenance and resist predation. Ants and bees achieve this by a complex mixture of biology and communication. Chimpanzees, with whom we share 99 per cent of our DNA, use gestures, cries and facial expressions to build social organisation, including patrolling the boundaries of territory and punishing deviants. They live quite well, but they are limited to a jungle habitat, now under threat from human expansion.

Being physically puny, but requiring large quantities of protein to feed our heavy brains, human beings needed to co-operate in sophisticated ways. It seems that size of brain and communication skills evolved together; as populations grew, more social organisation was required, and more brainpower demanded more nutrition. Larger groups relied on a shared understanding of their worlds, a way of agreeing who owned what, and a system for dividing up their spoils, to sustain co-operation and defence.

Archeological and anthropological evidence suggests that most hunter-gatherer bands were loose-knit and egalitarian; they rejected attempts to impose leadership, and preferred informal methods - ridicule, shaming, shunning - to achieve work effort. But gradually larger groups gained competitive advantage, by seizing key assets such as water holes. Eventually rulers, using new technologies and forms of military discipline, took charge, and finally writing, bureaucracy and organised religion made them stronger.

In human ecology, the struggle between tribes as much as the struggle with natural adversities shaped this development, and the sheer size of societies was often a key advantage. Ancient empires were the most advanced civilisations as well as the most prosperous economies of their day. But alternative political structures sometimes proved more resilient and adaptable. Tiny Greek city states defeated the mighty Persian Empire in the fifth century BC, before war with each other led to their decline.

The Roman Empire was a clear example of how an efficient political system could facilitate a flourishing economy, but it too perished when its military organisation could no longer withstand attacks from Germanic and Central Asian tribes.

Europe's prosperity lagged well behind that of China and the new Muslim empire from this political breakdown until the late middle ages. Then banking and trade, followed by science and technology, allowed Europe to forge ahead in the relative secuity of cities and newly-consolidated nation states, despite continual conflicts. Finally, by 1913 Europe ruled the world, its empires trading with eachother and absorbing colonies into an integrated global economy.

What followed was 40 years of war and political instability, slaughter and economic ruin. Globalisation in the late nineteenth and early twentieth centuries had not been matched by political evolution; rivalry between classes and nations over resources and power destroyed Europe's golden age, and allowed the USA to emerge as the world superpower.

Now once again we seem to be entering a period when the global economy has outgrown political institutions, after a long period of rapid growth. During that expansion it was assumed that transnational governance of various kinds would evolve to solve the problems thrown up by the new prosperity. After an unpromising start in the 1950s, the European Community seemed to be achieving this. When the poor and backward dictatorships of Greece, Portugal and Spain achieved democracy, the first thing they did was to apply for membership of the EEC; the same happened when the Central and Eastern European countries escaped Soviet domination ten years later.

Now the streets of Greece and Spain are full of people protesting against euro-austerity. In the UK we face a decision whether to remain a single country after the Scottish election, and the coalition government is committed to a revival of small-scale administration in the Localism Bill.

Politics is difficult because we do not even know the best kind of social unit in which to try to do it. For the past 30 years we have suffered from the delusion that the economy could regulate itself, and politics was dispensible. Historically, the price of that fantasy has always been conflict. If human ecology is not governed by orderly political processes, it will be brutally controlled by war between tribes of one kind or another.

Sex, Money and Power

What's the link between current celebrity sex scandals - should they be able to protect their privacy with super-injunctions? - and the threatened financial crisis in Europe? Obviously it is the arrest of the managing director of the International Monetary Fund (IMF), Dominique Strauss-Kahn, on charges of attempted rape of a chambermaid, as he was about to take off from New York to attend a meeting about the euro-crisis in Brussels. If you were trying to write a blockbuster with all the ingredients of sex, money and power, you couldn't make it up.

But this is no random connection. There is a crucial thread joining the revelation that Strauss-Kahn had a history of sexual harrassment with the feared collapse of the European currency. It is the new form of unaccountable power that is built into the global economy, and amazingly it all started with science fiction.

The BBC2 tv documentary 'Watched Over by Machines of Loving Grace' on Monday evening revealed what I had always suspected - that the fantasy of radical individual freedom through new technology created the posssibility of such power. The novels of the Russian-born American author Ayn Rand anticipated the invention of computer networks and the internet, claiming that they could free people from the need for government control, regulation and authority. She and a devoted group of followers spread the dream of personal liberation in a global society, mechanically co-ordinated through feedback from electronic systems. Set free to follow their sexual desires, individuals could create their own paradises of prosperity and self-fulfilment - a project which she and her acolytes lived out with disastrous consequences for their relationships and emotional well-being.

One of the leading members of the Rand clique was Alan Greenspan, who went on to chair the US Federal Reserve (their central bank) in the 1990s and early 2000s. But before this, the young entrepreneurs who launched Silicon Valley were fervent adherents to Rand's message, called their children after her, and their companies after characters in her novels. One of them even conducted a social experiment to show that people's actions could be rationally co-ordinated without any external direction or direct communication between them in a computer game.

So a fantasy, dreamed up by a creative genius with no economic education, became the guiding gospel for the most influential players in the game of globalisation. Drawing on the work of two elderly Austrian advocates of free markets, Hayek and Von Mises, they elevated these ideas into an orthodoxy for how the whole world should be re-organised, first through the US financial community, and then through the IMF. When the Soviet Bloc collapsed, the scope for global economic integration seemed infinite; the economic world could become a single, self-regulating unit, running on electronic adjustments in entirely automated processes, making governments redundant and liberating individuals for self-realisation.

Ever since the early 1990s this has been the ruling global ideology. Different variants have been the basis for the Washington Consensus and the Third Way; financial markets have been deregulated and governments have retreated almost everywhere (China has been an important exception). As gullible customers of the banks, people have enjoyed the opportunity to borrow far more than they could afford. Power has not disappeared - it has become concentrated in the hands of an unaccountable plutocratic elite, running the global economy in its own interests.

Through the Federal Reserve and the IMF, with US interest rates held low for many years, a series of bubbles hve inflated and exploded all over the world, but the outcome has always been the same. First the financial crashes in Asia, Russia and South America, then the dotcom bubble, and finally in the subprime crisis and the global credit crunch, bailouts have been followed by a downward plunge in the living standards of ordinary people, as they have been forced to pay for the mistakes made by the financial masters of the universe.

The cause of these bubbles has always been the same delusion - that the new information technology, high-speed global communications and complex new products could eliminate risk and human self-deception. Each time a new foolproof system is developed, its failure has to be paid for by the public, not the speculators.

What started as the power of a few individuals is now built into the system of global capitalism; even if we want our governments to hold their financial overlords to account, they cannot. Until this situation is challenged, we are waiting for the next crash.

So what started as science fiction and wishful fantasy is now hard reality. And the remedy is still the same, whether it is the power of the rich to flout the laws of sexual conduct or their power over our economic prospects. First we must abandon our dreams of perfect freedom and unrestrained prosperity. Then we must recognise that democracy and its rules are not artificial ways of limiting our chances to discover our personal potentials. They are essential ways to limit power, by holding the powerful to account.

In Search of a New Politics

The enormous crowd of young people which has been assembling in the Puerta del Sol, Madrid, all last week is a protest against Spain's political elite and its failed economic policies. The rate of unemployment among people aged 16-24 is around 42 per cent; this is a well-educated cohort, in danger of becoming a 'lost generation'.

There are obvious echoes here of Tahrir Square in Cairo and earlier demonstrations in Tunis, both of which toppled corrupt, self-perpetuating regimes. But it was only a little over 30 years ago that Spain, like Greece and Portugal, overthrew a military dictatorship and became a modern democracy. Given access to the European Community in the 1980s, they ceased to be authoritarian, backward societies of emigration, and their economies grew faster than those to their north and west, where young people had traditionally travelled to work.

What went wrong? It is far too facile to see the present problems of southern Europe as symptoms of incompetent government, lax public finanacial management and reliance on Euro-handouts. The emergence of a 'Precariat', to use the term coined by Guy Standing in his book of that title published this month, is a global phenomenon. As many as half of South Korea's workforce are temporary workers and a third of Japan's. The process of making labour markets more 'flexible', which has been a defining feature of globalisation, has transformed employment everywhere, and created a new class of mainly younger people who lack the traditional links to job and income security, benefits eligibility, occupational identity, career prospects and pension rights of their parents' generation.

Being on average better educated than their parents were adds to the sense of anger, anomie, alienation and anxiety experienced by this new class. Above all, they feel no identification with the political programmes of the established parties. The gathering in Madrid, now being consolidated into a semi-permanent camp, is like a mass movement-in-waiting, a crowd in search of new ideas. Whereas their Egyptian and Tunisian counterparts had a clear goal, to overthrow discredited autocrats, their European equivalent seems to be looking for a common identity and purpose.

But perhaps the most important aspect of this moment is the collective experience - the coming together of hundreds of thousands of people whose lives and work situations constantly isolate them, fragment their consciousness and make them feel responsible for their failure to achieve security, careers, property-ownership and family formation. The whole thrust of globalisation has been towards breaking up the organisation of the social, political and economic collectives in which people can form solidarities and influence their destinies by acting together. Denied these ways to understand and give meaning to their experiences, they have also been excluded from the political processes of their societies.

If the mass collective action of the precariat can be recognised and can recognise itself as a truly global movement of this generation, then it can acquire a vocabulary for its demands, and can frame specific policy goals. Guy Standing has long campaigned for a universl basic income, a guaranteed, unconditional sum which would allow all the legal residents of any political community to have the means to resist exploitation, to allocate time between paid and unpaid work, study, leisure and political participation. I too have spent 40 years advocating this proposal.

Starting as a protest, these demonstrations may become a movement with a voice, in turn leading to a new politics. Already the Madrid crowds are finding slogans to express their disgust with their situation. One of their largest banners reads: 'Spain Is Not A Business: We Are Not Slaves'.

Debtors and Creditors: Who's Bothered?

Now that the US Treasury has had its warning about its government deficit from the credit rating agency Standard and Poor's, the landscape of the new global capitalism is becoming clearer. It is now not so much that there are debtor and creditor regimes, though this is a feature of the topography. It is more that there are debtors (like the UK and Ireland) who care greatly about their respectability and credit-worthiness, and some (like the USA and Greece) who care far less; and there are some creditors (like China) who are in a strong position to exploit their advantages in global markets, and others (like Japan) which are actually quite vulnerable.

The Americans and the Greeks have insouciance about their credit rating, but little else, in common. In the case of the USA, the bickering between the president and a Republican congress over how to reduce the deficit is an inconvenience, but it is unlikely to damage the living standards of American citizens because the savings-based wealth accumulated in countries like Japan has nowhere else to go; the dollar is still the dominant world currency. So little sleep will be lost in Washington about the Standard and Poor's warning, at least for now; a trillion and a half dollars of debt can continue to mount up for the time being.

In the Greek case, it is the people who refuse to accept responsibility for the government's debt. Acts of resistance, from refusing to pay tolls for roads not yet constructed to witholding council tax payments, are making life hard for the authorities. But they in turn can ultimately afford to shrug their shoulders; everyone knows that it is not a question of whether Greece will default on its debts but when. And that everyone includes its bondholders and its European bail-out guarantors.

Does this mean that Greek stock is plummeting in world markets? Certainly not. Investors recognise that it is only by defaulting that Greece has any chance of achieving economic recovery. If it repays the loans given it as an uncompetitive bankrupt, it will be stuck in a downward spiral of austerity for decades. The resistance of citizen tax-revolters is doing Greece a big favour in the world economy. The compliance of Irish and Portuguese citizens in their collective misery is confirming their continuing impoverishment.

Among the creditor regimes, China can simply go on acquiring the foreign land and infrastructural facilities it needs to supply its export-led boom; others' debts are opportunities rather than constraints. For Japan, the situation is anxious in the short term, because of the cumulative impact of the tsunami and the nuclear accident, but in the medium term the reconstruction programme will stimulate its sluggish economy. Too much saving, not too much debt, has been its problem.

The UK is a more complex case. The 'successful', 'world-class' sector of its economy, the City of London, needs to be seen as solvent and supremely profitable. The government has gone into massive debt to protect its reputation, and must now do an elaborate dance, appearing to enforce a new regime of stricter regulation, while actually allowing it to make its risky fortune in the global financial casino.

Much of the rest of the economy, and the part which supplies employment and income to the majority of the population, is more Portugal or Greece than Hong Kong or Shanghai. While Osborne simpers to the City, Cameron and his Big Society missionaries must persuade the proles to accept a new kind of communal co-operation, the simple pleasures of taking in each other's washing and organising royal wedding street parties.

The problem for the coalition government is to sell this dualised future to the younger generation. Those who run up ruinous debt for the dream of a plum, plutocratic post in the City must eventually accept the reality of the dole queue or a job in a call centre. A career with security, promotion and a pension is a remote prospect; to earn enough to start repaying their university fees and student loan will itself be an achievement. How long before our Tunisian or Egyptian moment?

Increasing Happiness

'Action for Happiness' is a new organisation with members in over 60 countries, though their total numbers amount to a less-than-impressive 4,500. Its website is a mixture of policy manifesto and homily on personal well-being. The latter includes a list of 'Daily Actions' - 'be mindful', 'be kind' and 'be grateful'. A video clip by a famous psychologist tells you to remember the good things which happened in the day just before you go to sleep.

It would be easy to dismiss this stuff with derision, but it has the backing of David Cameron, and is in line with his political vision - that well-being is more significant than consumption, and that government should promote happiness rather than income per head. And the decision to put four questions on happiness in this year's official Household Survey was masterminded by Matthew Taylor, former policy advisor to Tony Blair, and now head of the Royal Society for the Arts, Manufactures and Commerce.

Speaking on BBC Radio 4's 'Today' programme, Taylor pointed out that research on Subjective Well-being (SWB) is broadly supportive of redistributive policies (countries like Sweden and Denmark with high taxes and benefits top the global league tables for happiness), but also of traditional family and community relationships (close personal ties and the sense of belonging are, along with good health and job satisfaction, the biggest factors in SWB). The questions he had put in the survey were on life-satisfaction, anxiety level and the feeling of meaningful activity. He pointed out that highly competitive routes to economic growth, such as the one set by the USA, produce less happiness among populations.

The Action for Happiness home page urges people to join a group to advance well-being. Clearly this is in line with Cameron's Big Society, and reflects the research finding that activists are happier than passive consumers. The Conservative Party manifesto of 2010 declared the aim of getting all citizens involved in local associations, and Cameron spoke of a 'culture shift' towards collective action which would transform our society.

We have already seen that the Big Society does not readily embrace student protesters or anarchist activists. Perhaps even more problematic is the issue of how it creates the large-scale solidarities needed to fund something like a universal National Care Service, or an adequate Educational Maintenance Allowance.

There is also an obvious tension between the market-mindedness of the coalition in relation to the NHS and schools, and the community-mindedness of the Big Society rhetoric. It is hard to see how a cultural transformation in favour of collective action, co-operation and mutuality can be achieved within a collective landscape designed to offer choices and incentives for individuals seeking advantage over others.

Individualism is a deep-seated feature of British society, political and social, and its origins lie far back in our history. Rivalry and conflict can arise through many forms of competition for status and resources; they are found in certain cultures worldwide, at stages of development from hunter-gatherer to post-communist transition.

There is a story about the Archangel Michael appearing in the flat of a Hungarian man to tell him that God would grant him anything he desired, on one condition: whatever he chose, his neighbour would get two of the same. The man clutched his head, rocking and moaning for several minutes in deep distress. Eventually he replied, 'Put out one of my eyes'.

We are fortunate in our civil liberties and democratic rights, but it is easy to overlook the collective struggles and sacrifices which brought them into existence. Sustainable well-being requires a framework in which people are free to run their own lives, but also empowered to hold authorities of all kinds to account. It is far from clear whether we are moving in the direction of real power-sharing and accountability.

Uneven Development

So finally Portugal has had to seek a bail-out from the European Central Bank. But this was not, like Ireland, because of a collapse in the banking sector or a construction bubble, but because it has never really been up with the required pace for eurozone club members. Its growth rate has been too sluggish, its competitiveness too slack; its private sector has been borrowing too much just to stay in business and its government deficit has grown wider and wider. In this sense it was more like Greece, but without quite the same defiant bravado.

The pundits shrug their shoulders and point out that the smallish perpheral states which have gone bust so far make up only 18 per cent of the EU's total income. It's sad that they are condemned to years - perhaps an eternity - of austerity, because the bail-out is essentially a bridging loan paid to a national economy which is bankrupt (if they couldn't pay the interest charged by the bond market, they won't be able to afford the charges levied by the ECB either). It would probably have been better to default on their debts, but now of course it's too late for that. And yes, Spain may be next, but then again it might just get by. And then there's Italy....

And then, on the same day, the ECB put up interest rates, not by much, but enough to signal which way things are going. The rationale is to prevent overheating of the German economy, the eurozone's one real success story. So now there is not so much a division between the sound, stable, fiscally solvent north, and the spendthrift, shifty south, with its creative government accounting; it is morea division between Germany and the rest. The monetary policies of the eurozone are dictated by the requirements of the one dynamic, world class, globally competitive member state.

A country like the UK must put on a show of conducting itself by Germany's standards, even as a eurozone outsider. It must strike a pose of conducting an industrial revival, improving public-sector efficiency and observing fiscal rectitude. Nothing less will keep the bond market wolf from the door, even if it means running down everything from libraries, museums and theatres to the armed services.

In this sense, the European economic scene mirrors both the global one and the internal economies of most countries. The tune is called by the super-rich, who stride ahead confidently, and everyone else must try to shuffle along in step, in spite of wonky legs or leaky shoes.

Capitalist economic growth has always relied on uneven development, but this has become an extreme feature of every level of the global economy. It has led to political conflict worldwide, as a new, dispossessed generation, without the prospect of achieving the modest security of employment and income attained by their parents, takes up esistance of various kinds.

Historically, periods of rapid growth relied on a combination of new technologies and organisational forms in the advanced centres of production, and large movements of population away from the most backward ones - as happened in China during the past three decades. The trouble for Europe and North America is that the present phase of technological innovation is Silicon Valley, not nineteenth century Sheffield or Salford; it needs a few highly skilled workers, not a mass influx of muscle.

Nowadays large-scale migrations mostly involve low-paid service workers or others doing jobs with undesirable conditions, such as the movement of those from post-communist Central Europe to the affluent member states of the EU. Ireland, Greece and Portugal, traditionally countries of emigration, had come to be hosts to such migrants, especially Ireland during its Celtic Tiger bubble.

In response to the new austerity, many governments are making gestures at reducing immigration, as part of an attempt to combat rising unemployment. For instance, the UK's Agricultural Workers Scheme, under which a succession of young people from the post-communist countries have come to pick and pack fruit, is to be abolished next year. Poles and Slovaks no longer need this system, but Romanian and Bulgarian youngsters will be blocked from entry, until they are granted free movement two years later, by which time they will want more rewarding work.

So who will pick the fruit next year? Migrants from Portugal or Ireland? Or Serco conscripts, benefits claimants doing forced labour to qualify for their JSA?

Stressed Out in Dublin

I'm Irish by birth, and my mother's family played a significant part in Irish political history; so the rise and fall of the Celtic Tiger has been of more than academic interest to me. On frequent visits to Cork and occasional ones to Dublin, I remained slightly sceptical about the fabulous expansion of that pneumatic phantasm, and felt sad when it imploded, shrivelling to a distorted caricature of itself.

But far worse has been the aftermath, as voluntary austerity moved to compulsory impoverishment. The latest turn of the screw, announced on Thursday, was the result of the new 'stress tests' on the Irish banks, which factored in the collapse of house prices, and the losses due to the speculative construction bubble. This implies a new round of bank nationalisation, of taxpayer liability for financial sector debts, and expensive borrowing from the European Central Bank, the IMF, Germany and the UK, who will charge 6 per cent for funds they themselves can borrow at 3 per cent.

This condemns Irish citizens to many years of falling incomes, rising taxes and reduced public services, all because of the grandiose delusions of bankers, politicians and speculative builders, tightly bonded in the close circle of cronies who ran the country. And it raises huge questions about which path Ireland should try to take in future.

The accepted wisdom that prevailed among the Irish elite was that the road to prosperity lay in capturing some of the fruits of global trade - in money and in manufactures. The government encouraged inward investment, especially from the USA, and offered low business taxes to attract the headquarters of international companies to Dublin. The success of these strategies in the 1990s emboldened a new generation of chancers,who then joined the global banking casino to finance the building bubble.

Now Ireland is one of several small European countries that must think about a radically different alternative, looking to its indigenous resources, physical, cultural and human. The clues to how this might be achieved may be found in other regions which sank into poverty after sudden economic catastrophes, but
enjoyed gradual recoveries, pulling themselves up by their bootstraps to achieve sustainable growth.

One example is the Basque country in Spain. As reported in Wednesday's Guardian, that region was devastated by the 1930s civil war (remember Picasso's Guernica), and then suffered the collapse of its traditional industries, shipbuilding and steelmaking, twenty years ago. But - despite a troubled political history with Irish resonances - it is now resurgent, thanks mainly to co-operatives and social enterprises with strong local roots, not to global capital.

The regional government gave tax breaks to these co-ops, not to international companies, but required them to invest 10 per cent of their profits in community cultural resources in return. This sector has thrived, and its success helps to explain the youth unemployment rate half that of Spain as a whole. But the Basque region is not isolated from global markets. Its biggest co-operative, Mondragon, has a turnover of 14 billion euros and 85,000 employees wordwide, with more than 250 constituent companies.

The organisation is a flat pyramid, with top managers earning no more than 5 times the salaries of workers, and around half the profits invested in the healthcare plans and pensions of staff. Its enterprises include manufacturing companies, a supermarket chain and a university.

In other words, the Basque strategy is to scale up indigenous co-operatives and social enterprises, building on local and regional success, rather than trying to attract foreign investment. After all, this was how Ireland's economic expansion started - with firms like Kerrygold, and with the spread across Europe of Irish pubs.

And it is not only the small peripheral countries of Europe that might take a leaf out of the Basque book. That region might provide a model for Scotland, Wales and the North of England, as austerity creeps across thes islands like a new ice age.

Suddenly Going Green

This spring, politics has become unpredictable worldwide. The German state of Baden-Wurttemberg, home to Daimler and Mercedes, prosperous and Christian Democratic for six decades, has elected a Green government. There is no British equivalent, of course, but it is as surprising as Hertfordshire going Socialist, or Glasgow Conservative.

The pundits seem divided over whether the key to this turn-around was the Fukushima factor (Angela Merkel had not gone far enough by suspending Germany's nuclear power programme) or the Portugal problem (she makes fierce noises about refusing to bail out Eurozone debt defaulters, but ends up subscribing to rescue funds). Merkel stands accused of being environmentally unsound by sufferers from eco-angst, and financially unsound by the patriotic Deutschemark tendency.

One way or another, it is not a great time for governments. It may be worst for the dictators of Arab states, trying to weigh up the advantages of all-out repression of dissidents (Gaddafi-style), last-minute placation (which failed in Tunisia and Egypt), or some combination of the two(as in Assad's Syria). But it is not straightforward for the NATO allies either, all with their domestic wiseacres warning of a Libyan stalemate, or for the Russians, Chinese and Turks, who sat on their hands during the UN vote for intervention, but are now trying to distance themslves from its consequences.

Financial, political and environmental instability make a very tricky combination, yet this is exactly the sort of triple whammy that governments should expect in an interdependent world. If the flapping of a butterfly's wings in Brazil can shift the Gulf Stream, and hence the weather in the northern hemisphere, how much more can a tsunami in Japan influence the budget deficit in the USA, the stock market in London, or the political landscape in Germany?

What suddenly seems blindingly obvious is that both the mathematical certainties of the World Bank's global economic model, and the political calculations by which the White House and the Pentagon tried to maintain a precarious balance of power in the Middle East, are well past their sell-by dates. Both economic and political science are revealed as little better at prediction than astrology or soothsaying.

Revisionists seem to be recognising that it might be better to focus on large-scale movements, sudden shifts and trigger points, rather than precise formulae, in trying to read the direction of global developments. In this respect, the environmentalists may have the most plausible basis for such predictions in weather forecasting, and in mapping sudden rises or falls in animal and plant populations and extinctions. Rather than trying to construct models, frame laws or detect regular patterns, ecological science might look at the lumpy clustering of 'exceptional' events for clues about the future, and become foresightful planners using the equivalents of butterfly wings and seaweed.

When the most successful manufacturing economy among the developed nations turns to the Greens to run a state in its industrial heartland, something new is stirring, and it isn't just spring fever.

Globalisation versus Solidarity

So the Eurozone crisis isn't over after all. By rejecting Prime Minister Jose Socrates' austerity package, the Portuguese parliament brought down his government. Now the Eurozone summit in Brussels is trying to re-inforce the European Central Bank's bail-out fund, against a background of rising interest rates on Portuguese debt, and the downgrading of that country's credit rating in global money markets.

All this highlights the dilemmas facing all European governments, and indeed governments worldwide. On the one hand, apart from Cuba, North Korea and Zimbabwe, they have all embraced globalisation and financial interdependence. For some, like China, oil-rich Middle Eastern states and Norway, this enables them to deploy sovereign wealth funds in a worldwide strategy for investments and loans. But for Iceland, Ireland, Greece, and now Portugal and possibly Spain, it means that they must reduce their welfare benefits and public services, raise taxes and cut wages and pensions.

In the EU, only Germany is for the moment immune from these pressures, but it is increasingly forced to bear the burden of propping up the euro. Commentators argue that only full political union, effectively turning the EU into the United States of Europe, can finally stabilise the currency's future (not that the United States of America has fared so wonderfully well in the global debt stakes).

Politically this situation plays into the hands of the far right, with the rise of anti-immigration parties all over the Continent. For a long time only in Austria did such a grouping get enough support to demand a place in government. Now people like Geert Wilders in the Netherlands have won similar proportions of the vote in national elections, and other such nationalist parties have made big gains in Sweden and Denmark. In France, Marine Le Pen, daughter of the Front National's founder, is a serious presidential candidate, and may undermine the left's hopes of unseating Sarkozy.

But the underlying challenge is more complex than this, and it is the long-term strategic question facing Ed Miliband's Labour Party in the UK. Blair and Brown insisted that the country could prosper as a financial hub in the global economy, open for business and acting as banker to the world. At the 2010 election, voters gave their verdict on the Third Way economic strategy, not just because of the financial collapse, but also as a protest against stagnating wage rates and growing inequality.

New Labour had imposed a regime in which individual self-responsibility in a market environment was the new form of citizenship, and people were nudged towards the banks not the state or each other to meet their needs. There were some who gained from the additional freedom this gave them, but many were losers. For the first time in 2010, the Labour ballot contained more middle class than working class votes. Can Labour win back its working class support, now fragmented between the coalition parties, UKIP and the BNP, but mainly angry or apathetic?

Some believe it must, and can only do so by showing more respect for the solidarities, loyalties and commitments of working-class communities. 'Blue Labour' voices, like those of Maurice (now Lord) Glasman, and Oxford political theorist Marc Stears, have Ed Miliband's ear. They argue that the party must go back to its roots in co-operatives, friendly societies trade unions and Guild Socialism (workers' control of industries), at the expense of liberal individualism.

They see New Labour's 'modernisation' of the welfare state as having taken Beveridge's project to an extreme of centralised, elite-dominated, remote, bossy managerialism. The party neds to get back to a politics of belonging, of relationships and local participation, and away from rationalist administration and abstract, universal principles. There are obvious risks in such a move, given the demographic shift towards a university-educated, aspirational electorate, and the temptations of a backward-looking (and potentially racist) form of nationalism.

But the dangers of a depoliticised, rootless, alienated generation, disillusioned with democracy, are equally alarming. Cameron's interest in the 'Red Tory' vision of a revitalised, active community involvement is bidding for the same political territory - and looking for new ways of rebuilding solidarities in the face of globalisation's destructive forces.

Safety Checks on Power

For two weeks the tsunami in Japan and the war in Libya have taken turns to dominate our TV screens and front pages. For a while Gaddafi's eastward advance against the rebels was displaced by reports about the threatened meltdown at the nuclear power station at Fukushima. Now enforcement of the UN's resolution to protect civilians under attack by Libyan government forces fills the news bulletins.

So only those of us listening to the 4 a.m. broadcast on the BBC World Service this morning caught the revelation that the company running the Fukushima plant, Tepco, has been failing to carry out proper safety checks for many years. As workers risk their lives in a continuing struggle to limit radiation emissions, Tepco has admitted cutting corners as part of the cost-saving regime driving its business model.

Interviewed about this story, Tim Phillips, author of Fit to Bust:How Great Companies Fail, explained the history of such collapses and scandals. Business leaders cultivate an image of success, based on dynamism and vision, to beguile investors and government officials. This view prevails in markets and the corridors of power; no-one wants to look behind the self-promotion of a profitable management team, or investigate the practices it conceals.

In cases like this, Phillips argues, a business culture can put such practices beyond inspection and public scrutiny, and make it virtually impossible for staff to question what they are being made to do. Eventually by-passing safety standards and neglecting checks becomes routine, and no-one has an interest in changing things.

Of course this is not unique to business settings. Nearly all abuse of power, in every type of organisation, is a taken-for-granted feature of the everyday. It comes as a shock to those who perpetrate abuses that they should be regarded as questionable, or that outsiders should try to hold them to account.

This is a common feature of the Fukushima story and the Libyan situation. Gaddafi is outraged that any citizens should claim the right to challenge him, or make him answerable for his actions. Over time he has come to believe himself to be the embodiment of the people's will, with a God-given right to define who are true Libyans, and who are traitors, scum and vermin.

Dictators discredit politics, which is why the Arab uprising, in pursuit of democratic freedoms, has been so refreshing. In our jaded political culture, where Parliament itself has been tarnished by the expenses scandal, and state services (including the NHS) tainted by examples of inhumanity, the prevailing wisdom is that markets and firms are efficient, and competition keeps organisations honest.

So the Tepco revelation is a timely reminder. It is public accountability that protects us from exploitation, exposes corruption and keeps us safe. Leaders of all kinds, business and political, are tempted to try to cover things up, and to shield themselves from scrutiny within a culture of routine abuse of power.

Speculations in the Wake of a Disaster

Even as the catastrophe at the Fukushima nuclear power plant was unfolding, and the Japanese emergency services were uncovering the true scale of the country's human tragedy, commentators were waking up to the implications of the disaster for the world economy. It has already started reverberating through financial and commodity markets everywhere, with often perverse, counterproductive outcomes, illustrating the unstable and irrational global system we now inhabit.

Japanese savers have for some time funded a large part of the West's government debt, especially that of the USA. Now the need for Japan to rebuld its stricken north-eastern coastal towns will mean that much of this money is likely to be repatriated. Even if that does not happen on the scale anticipated by Peter Hadfield in his article on Wednesday's Guardian, the prospect of the Japanese treasury needing more of its citizens' savings (they already supply most of the funding for its massive overdraft), both to deal with the nuclear clean-up and for reconstruction, has already beenenough to spook the markets.

First, fears that Japanese insurance companies would repatriate funds to settle post-tsunami claims, and that construction companies too would disinvest globally to begin recovery projects, led currency traders (i.e. speculators) to buy the Japanese yen, driving up its value. This led to the co-ordinated intervention of the G7 central banks, to sell that currency, pegging it back - they claimed - so as not to disadvantage Japan's trade in manufaactured goods, already badly hit by the tsunami's effects.

Then commodity 'investors' (i.e. speculators) started to sell their futures in wheat, on fears that Japanese consumers would not be able to afford bread and other import-based products. This drove down the world price of the grain by £30 a ton, directly affecting the prospects of UK farmers' returns on this summer's harvests.

In other words, the effects of the Japanese tragedy on the rest of the world are mediated by the activities ( i.e. speculation) of global traders, using vast sums to make money out of money. Governments in turn are forced to react to these shifts in markets, before they can find space to contribute to the real-world issues of Japanese people's suffering, or the predations of the Gaddafi regime in Libya.

According to Hadfield, the longer-term effect will be a boom in the Japanese economy, as the reconstruction effort injects funds and citizens replace lost possessions, reversing the deflationary forces which have caused 20 years of stagnation. But the rest of the world will take the hit, because trillions of yen which had been loaned to governments (especially the USA's) or invested in global companies, will be substantially withdrawn. Borrowing will become more expensive for states - the real fear behind the G7 intervention - and companies will have to scale down their expansion plans.

So the credit extended to governments and consumers in the USA and UK courtesy of thrifty Japanese (and Chinese) savers will no longer be available, and we will have to tighten our belts by two notches instead of one.

All in it together

The aftermath of the Japanese earthquake and tsunami has demonstrated the high level of organisation in that country's emergency services, and the collective solidarity of its people. In response to the tragedy, the whole population mobilised to help the stricken north-eastern districts, and all adopted the stoical but purposeful approach that characterises the Japanese cultural attitude to natural disasters.

All this has been in marked contrast with the response to the flooding of New Orleans during George W. Bush's presidency of the USA, when the city's authorities were virtually left to their own devices, and its inhabitants were unprepared and disorganised, lacking the collective basis for saving the most vulnerable. The two catastrophic events revealed how important both public infrastructures and civic spirit are in such circumstances. Disasters like these call forth a society's underlying solidarities, or display a Hobbesian 'state of nature', with everyone acting for themselves.

None of this will have surprised readers of Richard Wilkinson and Kate Pickett's book The Spirit Level, in which Japan scored high for equality of incomes among citizens, and hence (on their account) for general well-being, longevity, quality of health, trust between citizens and educational performance. Less equal societies like the USA and UK fared much worse on these measures. Japan's political and social institutions reflect a far more collective culture, in which economic competition is balanced by traditions and practices which value commitment to the common good.

In some ways this is all the more impressive because the Japanese economy has been stagnating since the early 1990s. In response to these problems in the 1970s, the USA and UK elected neo-liberal governments which strengthened markets and rewarded individual self-interest, at the expense of public services and civil society. Japan has government debt of 200 per cent of Gross Domestic Product, yet we are unlikely to see its authorities complaining about the costs of reconstruction, partly because most of this debt is owned by Japanese savers, not foreigners.

Even so, the economic perspective on the tragedy is predictably distorted. Listening to the economic commentary in the BBC Radio 4 Today programme on Monday morning, I heard experts express relief that nature's destructive forces had not hit Tokyo, the financial and commercial centre, and the source of 40 per cent of GDP. Their main concern about the threatened melt-down of the nuclear power stations at Fukushima was that they supplied over a quarter of the capital's electricity, needed for investment and trading decisions. Quite unconsciously, their comments wrote off the populations of the north-eastern coast, and the port city of Sendai, as expendable - as indeed they were from the standpoint of city analysts.

Of course, to some extent the economic geography of Japan reflects the different value that the new global capitalism puts on finance and commerce on the one hand, and more traditional economic activities on the other. Because it struck the north-eastern coast, the tsunami killed a disproportionate number of old people, farmers and fishermen, in a relatively backward area from this perspective.

But the other striking feature of the tragedy is that it illustrates the global impact of such events. In many ways, stock market plunges are the least important of these, in terms of human value. My nephew Luke's girlfriend, teaching English in Japan, is safe; but my friend Toru in Tokyo has an uncle who is still not accounted for, my friends Ikumi and Kevin in our village have not been able to contact their friends living in Sendai, and my ex-wife Jane was about to visit Japan. These days there is a global network of social ties to support the international response to the disaster.

RBS Share-Out? Why Not?

Did I hear the early-morning BBC News right on Tuesday? I thought they said that the Liberal Democrats were proposing the redistribution of state-owned RBS shares among the whole adult citizen population. If so, it was the first evidence of the Lib Dem body still having a live brain since the coalition was formed. But the item was dropped from the news soon afterwards, so perhaps the BBC realised that they had been deceived by a few twitches in that some-time-dead corpse.

The proposal (if anyone actually made it) would have been consistent with the ideas about the Big Society circulating before the election last May. The redistribution of property, in the form of shares like this, bonds and all other kinds of assets, to individuals and communities, was the 'Red' part of Phillip Blond's Red Tory message, which David Cameron claimed to admire, and which might have supplied some kind of ethical justification for the devolution of collective services to the local level.

Instead, of course, the cuts - made in the name of balancing the budget - have facilitated the incursion of private firms, empowering these commercial forces, and enriching their already wealthy owners, not the general population. As Blond acknowledges in his analysis of Thatcher's privatisations, these weakened civil society and made individuals more insecure and vulnerable, in the name of the 'property-owning democracy'. The same trick is being played again.

It is much the same story in the case of Iain Duncan Smith's welfare reforms. Back in September, 2009, his Centre for Social Justice published a Report, Towards Welfare that Works, that recommended the partial integration of the tax and benefits systems to create 'universal credits' for all adults of working age.

In his Preface to that report, Duncan Smith argued that the enforcement of work conditions in benefits was impossible to justify unless incentives for available work improved. He promised that his scheme would achieve this aim, withdrawing benefits at a steady rate as claimants took paid work, making even a few hours of employment advantageous for them.
Instead, since he became Secretary of State for Work and Pensions the whole thrust of his reforms has been to cut benefit rates, remove eligibility from disabled people, and impose new sanctions on those refusing job offers, however disadvantageous. The incentives which are supposed to stem from his modified version of the CSJ's scheme will not arrive until some time after this punitive regime has been imposed.

A universal distribution of the shares acquired through the state bail-out of Northern Rock, RBS and Lloyds would signal that there remains a long-term prospect of the radical part of the Big Society programme becoming a reality. It would create a sort of 'Social Dividend' for all citizens, a bit like the annual payments made to all the permanent inhabitants of Alaska (in their case redistributing a small part of that state's oil wealth, in compensation for the hardships of living in that frozen wasteland).

This proposal has recently been canvassed as a part of the solution to the structural problems of employment and income identified in my last blog. If there really is going to be little chance for the new generation to develop careers, with prospects of incremental salaries, promotions and pensions, them they will need assets which yield reliable subsistence during periods of retraining or setting up a business of their own.

But this kind of redistribution would also make unpaid collective action to improve the quality of life in communities (a.k.a. the Big Society) feasible. Without it, such tasks would rely on the labour of officially-coerced unemployed claimants, forced to clean streets or plant trees, as part of a system of state serfdom - the 'Servile State' foreseen by Hilaire Belloc, from whom Blond claims to get his inspiration.

So, any chance of the share-out happening? Not to judge by the latest developments. On Wednesday The Guardian reported that RBS executives had awarded themselves shares worth £28 million as part of this year's bonus package. This indicates that the UK plutocracy has little intention of allowing its assets to be redistributed. Only concerted political pressure, by an organised movement of the young generation, will persuade them to share their vast wealth, and the government to reclaim for citizens their bail-out billions.

RBS, LSE and UKplc

Lots of chickens came home to roost on March 4^th, 2011. On the day of Sir Howard Davies’ resignation from the Directorship of the London School of Economics, and the revelations about Prince Andrew’s frolics with the entourage of ex-president Ben Ali of Tunisia and an American billionaire paedophile, the Governor of the Bank of England denounced the greedy exploitation of gullible customers by the banks, and claimed that the bonus culture still encouraged unjustifiable risks, based on confidence that future governments would repeat the bail-outs of 2008-9.

What these disparate embarrassments had in common was that they derived from the inappropriate application of a business model to activities demanding some form of ethical regulation. Not that bankers, royal trade envoys and academic administrators are supposed to be moral philosophers; but some aspects of their interactions with the public, with governments and with each other are simply different in quality from pushing insurance, boosting sales or promoting a brand. The Blair years made it compulsory for every organisation to think and act as a business, as part of the modernisation of ‘UKplc’, so it was hardly surprising that these undignified falls from grace involved the exposure of grubby wheeling and dealing where other standards of behaviour were required.

Defining the proper limits of market relations is a difficult task, but New Labour insisted that it was a redundant one, because they had (courtesy of the theory of information, incentives and contracts peddled by the World Bank) discovered how to create an environment in which ethics (and politics) were dispensable. The financial sector was key to this model. Blair’s strategy was to get citizens to turn to the banks for most of the things they previously looked to the state to supply. His reforms allowed the explosion of personal credit which saw UK holding most of Europe’s credit card debt.

This financialisation of citizenship was also its depoliticisation. Simultaneously the New Labour regime made every institution funded by the government adopt commercial practices – competition, under the surveillance of inspectors and managers who enforced standards and targets, and provided the public with the information for the league tables on which they based their choices of facilities. Decisions in the public sphere were explicitly analogous to shopping or investment ones; government was there to create the conditions for this marketplace, and to protect them from the distorting effects of political factors.

In the General Election of May, 2010, the Conservatives attacked many of these features of the collective landscape. Not only was the system of central regulation, which prescribed the methods of micromanagement in the public services, seen as fatal for active engagement and local community and democracy; it was also damaging for professional practice in education, health care and child protection. The Big Society would allow citizens to shape their own services, and staff to use their expertise and judgement, but be accountable to these groups and associations. The public would be encouraged to mobilise for collective action, with the help of new community organisers. Implicitly this required the repoliticisation of the public sphere, allowing non-commercial standards to return to matters in which the social and moral principles of faith groups and mutual organisations could become the dominant influences.

But the coalition government soon encountered the problems of this new approach. It proved difficult to dismantle parts of the Third Way edifice without destabilising other aspects of the system. Abolishing some quangos and devolving some funding to the professional level had unanticipated consequences. Above all, doing these things at the same time as imposing huge spending cuts to appease bond markets led to effective resistance in the courts and on the streets. Ironically the only visible collective actions stemming from the Big Society programme were the protests by students and public sector workers.

David Cameron had always argued that the transformation he sought was a long-term one that required a culture shift. But because commercial organisations were often the only ones in a position to take advantage of the new opportunities provided by deep and rapid cuts, the reforms looked like a new phase of Thatcherite privatisation. The coalition cannot afford to disown this legacy, so it is difficult for ministers to distance themselves from the excesses of firms and public bodies found guilty of overenthusiastic business practices, whether these are the unreconstructed casino strategies of state-owned banks, the opportunism of universities in search of Libyan money, or the leisure time associations of errant royal trade emissaries.

All this tends to discredit the project for remoralising the public sphere espoused with equal commitment by Red Tories like Phillip Blond and Blue Socialists like Maurice Glasman. These radicals want to displace the commercial ethic from public life, and substitute a new culture of co-operation for the common good, based on local associations, faith groups and families. The scandals of March 4^th reveal just how large a task this will be.

There is another irony in the timing of these revelations. The Arab uprisings are acknowledged to stem from the fury of a new class of young, well-educated people, with no prospects of a secure career – what Guy Standing calls the Precariat. Yet it is becoming horribly clear that this class now exists all over the world, not least in Europe, and especially the UK, and that no set of policy proposals currently on offer really addresses their situation. Our current rate of graduate unemployment reveals the failure of New Labour’s attempt to absorb them into a sustainable ‘knowledge economy’. It is this deeper crisis that poses the greatest challenge to the coalition government’s strategy.

Perhaps the real message of March 4^th was that the global plutocratic elite who operate the business model of government – the leading bankers, dictators such as Gaddafi and Ben Ali, and public figures like Davies and Prince Andrew – have much to fear from uprisings of the Precariat such as those in Egypt, Tunisia and Libya. A new model is needed for the sake of democracy and the health of public life.