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'.