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.