Who can bring about change? the problem of agency.

17 07 2009

thumbnailCATV6JYWSome readers of this blog have suggested that it has become an unofficial Dave Cameron adviser. In the limited dealings I have had with shadow Tory ministers it is clear that they are thrashing around to come up with answers for the problems created by the recession. But for reasons that are well rehearsed on this blog, the Tories are hardly more likely than Labour to be able to tackle the deep seated problems of the UK economy. The Tories have modelled themselves on the short term, presentational and market research driven approach pioneered by New Labour. They have no coherent plan for the future nor any vision for where the UK should go. In short they are as trapped in the present crisis as the party they wish to replace.

All of which raises a very painful dilemma. If New Labour is done and the Tories represent nothing new, how is it possible to affect the political and economic agenda? In the past there were two ways of thinking about capitalism. One was that the market was fine and should broadly be left to its own devices, with some support from the state. The other was that it could not consistently develop the economy, was crisis ridden and exploitative and should be replaced by some form of socialist society. In the latter case the agency for change was seen as mainly supported by the working class.

The demise of the socialist project has left only the market option on the table for the time being. And now even those who own and run the economy are doubtful that the market on its own can deliver. The need to give huge  amounts of state support to the financial and manufacturing parts of the economy have shaken belief in the market amongst the capitalist class itself. Even the Financial Times ran a critical series earlier this year called ‘the future of capitalism’. The employing class has little confidence in its own system and is open to the suggestion that market led economic growth is dangerous for the environment and damaging to society’s peace of mind.

In that sense it is pointless to try to model any response to the recession around what appear to be the interests of either the working class or the employing class. As agencies for positive change and progress they are, at least temporarily, bankrupt. So what is the point of maintaining a critique of the options on the table if there is no obvious agency for change? I do not have any easy answer to this question. However I think it is important that some people do stand back and try to look at the problems facing society as a whole, to attempt to create some coherent picture within which others can understand what is really going on.

As this is not a narrow class based approach it may mean that some possible solutions appear to be to the immediate detriment of some working people or some employers. For instance, the suggestion that defunct industries should not be propped up by the state. But, in this case for example, it is to the greater good of society as a whole that productive industries replace unproductive ones. Growth and prosperity depend upon innovation and investment in new dynamic industries not old failing ones. Nobody benefits from economic decline. Challenging anti-growth sentiments in society at least put the issue of the need for material progress on the agenda. Any revival of  political activity in any section of society which supported that would be welcome. For the same reason it is also encouraging when people stand up for their own interests and combat attempts to impose austerity.

Barriers to innovation and change

22 05 2009

My closing speech at the Battle for the Economy conference

Taking risksWe have to frame this discussion within a cultural and a political context. Our society has become tremendously risk averse at every level. Common sense tells us it is unlikely that we can create a more dynamic and innovative economy when we are afraid to send our children to the park on their own, and how likely are these over protected children  to become confident risk takers as they grow up?

This may seem too much of a generalisation, but if you look at the specifics of what is happening in our economy you can see the links.

Take first of some of the better commodity producing  parts of our economy, the bits which actually make new things. Foremost in these are aerospace, pharmaceuticals, bioscience and energy. Each of these industries has been subjected to intense criticism for their supposed threats to us as consumers or to the environment. The aerospace industry is held responsible for global warming , as is the energy industry. The pharmaceutical industry is held in deep suspicion of selling us drugs which cause more harm than good. The biosciences have been held back by fears of Frankenstein food amongst other things. Many of these negative sentiments have been allowed to go unchallenged by our political leaders, sunk as they are in the mire of market research led policies.

How likely is it that these industries can attract the best and brightest young people to work in them or the support they need in universities or from investors when they are held in such low esteem?

Almost every time a crisis has arisen in public confidence the instinct of our political leaders has been to cut and run: Tony Blair over the MMR scare and nearly the whole political class over nuclear power and GM food. This has helped to create a lack of trust in science  and an irrational approach to what are the most exciting areas of development in medicine and other things.

The lack of leadership has encouraged this mood of anti-science and anti-progress, so much so that when swine flu broke out in a school down the road from me local opinion was divided between those who didn’t believe some scientists’ claims that  it  was a real threat, and those who took heed of this warning, but did not believe that Tamiflu was safe and not a dangerous kin to thalidomide, for example.

Secondly, also stemming from our over inflated sense of risk is the belief that economic growth in itself, whatever the source,  is problematic. There are even people who say that recessions are good for us and for the planet. These anti-growth sentiments fly in the face of reality, as all human progress is built on material prosperity. Yet they are very influential.

Thirdly, many of these anti-growth feelings are wrapped up in the idea of the Green New Deal, which seeks that progress and development be restricted to areas that can be proven to do no harm to the planet. This narrow criterion threatens to divert investment down narrow channels and hold up progress elsewhere.

Any threat to the environment or indeed any other challenge we face, is best dealt with by encouraging scientific and economic development on a broad front. Often scientists and technologists come up with solutions to problems they were not themselves originally looking for. To narrow down the areas of scientific endeavour too much risks those serendepitous discoveries.

Even on the terms of alternative energy itself, encouraging economic growth offers the best way forward. China creates 16% of its electricity through renewable sources, compared with 4% in the UK. This is  because China ‘s demand for energy to fuel its rapidly growing economy is such that it is prepared and able to experiment and innovate on a grander scale then we are here.

Finally, in the UK we have lower than OECD levels of both VC investment and R&D, but this is not because there is an absolute shortage of investment money available. Rather, risk aversion is what dominates large investors. The roots of the financial crisis lay in the fact that vast sums of money were recycled through financial instruments with a view to spreading and avoiding risk, incredible as it now seems.

There may be a case, as people like Lord Drayson are arguing, for diverting more of our State resources into encouraging innovation, but science and innovation need to be unwrapped from the risk aversion which surrounds and infuses them at the moment. Perhaps some of the money which is going into authoritarian measures such as ID cards, or the extension of CRB checks could be diverted into encouraging productive investment instead. In other words, this is a politicial and cultural problem about priorities, not an economic one, and so it needs to be tackled at that level.

It is clearer than ever before that there is a close connection between the failures of political leadership and the problems of our economic set up. You cannot tackle one without the other. The good news is that unlike, for example, a cure for cancer, the cure for our political problems lies in our own hands in the here and now.

Sharing out the misery

22 04 2009

A recent study by Keep Britain Working has found that many workers have responded to the threat of job cuts by proposing that their own pay and benefits should be cut in order to save the jobs of others.  While I have no idea how sound the methodology of this survey is it does chime with anecdotal evidence.  How can we understand this apparently altruistic response, for which one struggles to think of a historical precedent?

There is a positive element of solidarity in not wanting to see your colleagues lose their jobs.  Perhaps there is even the fear that if you accept the redundancies of others then you may well be next.  However, whilst in previous recessions there has been a similar and quite strong tendency to fight for the defence of jobs, in the past people simultaneously fought to defend wages.  One need only go back to the UK Miners’ Strike in the early 80s to see that.  During this period, workers tended to focus on forcing employers to not make redundancies, cut pay or close businesses.  It would seem then that the virtual elimination of organised labour as an effective force in society today plays a significant role in fuelling a widespread mood of acceptance that cuts have to be made somewhere for us all to survive.

The prevailing popular reaction to the recession in the UK has been passive acceptance with underlying anger, where the anger has been directed mainly at bankers or foreign workers.  Very little active hostility or organised resistance has been directed at the government or at employers.  This recession is increasingly being seen as the product of greed in the City and perhaps also greed in general.  In light of that, we can see how the willingness to take cuts in living standards is the flip side of this diagnosis, in the sense that people now feel that a period of austerity is a necessary antidote to the age of greed.

The unwillingness of people to fight for what is in their best interests, which for many of us means the maintenance or improvement of living standards, shows how low our self-expectations have become.  Current discussion about the public sector and possible cuts in public spending will now take place within this milieu of virtuous and necessary austerity and prudence, in no small part influenced by our modern-day preoccupations with what is good for the environment. 

Perhaps it is time to focus our efforts elsewhere and create a different agenda which puts development and growth at the centre of our discussions on the recession, the economy and the future.  Let us put our time to better use and quit trying to work out how best to share out the misery.