EcoLogics

Over the past weeks, the UK has witnessed a remarkable phenomenon whose macroeconomic implications have been glossed over by much of the UK’s press.

The monetarist discourse—an integral and indeed central aspect of the neo-liberal ideology that continues to dominate the UK, and much of the world—is premised on the notion that governments can use the supply of money, as regulated by central banks, to control inflation. Two arguments underpin this logic. The first is that central banks actually can control inflation by controlling the money supply, i.e. by raising or lowering the main interest rates. The second is that inflation is the main economic bogey. Simplifying somewhat, and to paraphrase Mother Julian of Norwich, the idea is that if inflation remains low, then all will be well, and all manner of thing [sic] shall be well.

New Labour—and more specifically, Gordon Brown—are keen as mustard on this, Milton Friedman’s great idea. It was of course New Labour who set up the Bank of England’s ostensibly independent Monetary Policy Committee, and gave it the task of determining the Bank’s main interest rates each month. Until 1997, this had been the prerogative of finance ministers (or chancellors of the exchequer) who were prone to mismanage the interest rates for political reasons. An independent body would take care of this problem for once and for all, or so it was argued.

To critical theorists, this logic was as fallacious as the concomitant notion that, left to its own devices, the economy would work like a quaint 18th century market in which collective forces would attenuate the greed of individuals by way of the allegedly objective ‘laws’ of supply and demand. One does not have to be unemployed to realise that controlling inflation is meaningless if it results, as it arguably has, in greater unemployment (this is, of course, a point that the Tories, of old Conservative or New Labour ilk, would contest and massage away by way of clever statistical calculi, e.g. excluding the long-term unemployed, or those no longer looking for employment). On the other hand, as BAA, Tesco and other mega-corporations show, the market left to its own devices is no longer a market, in Adam Smith’s sense of the term. As Smith himself pointed out, untrammelled greed breeds even more greed, and crucially, greater economic concentration.

Alas, over the last decade or so, the monetarist theory has nonetheless appeared to work: inflation rates have gone down and pretty much stayed down, the economy has grown, and to paraphrase Mother Julian once again, it has seemed that all is well, and all manner of thing remain well.

In fact, all manner of thing are not well. For a start, the gap between the rich and the poor has grown during New Labour’s first (and probably last) 10 years in government. It is not just that the proverbial gap between the haves and have-nots has increased; it is also that the class structure has begun to ossify to the point where, for the first time in decades, class mobility has decreased: today it is less likely than it was shortly after WWII that a young person who has grown up in a working class family will be able to move into a higher social class. To be sure, a whole generation of middle class young people whose parents were comfortably well off can now expect to be decidedly less well off than their parents by the time they reach their parents’ age. One of the factors in this impoverishment will undoubtedly be the New and Old Tories’ not-so-covert plans to privatise healthcare in the mid- to long term. Another is the virtual impossibility of getting a foot on the first rung of the property ladder. Indeed, all those who have been willing the property bubble to burst may be disappointed to find that it will make little difference that a house once worth 200K reaches 150K if they cannot get a reasonably priced mortgage—or any mortgage whatsoever—despite the lower price.

This brings us back to the subject of today’s blog: at a time when the Bank of England is lowering interest rates, the real cost of mortgages is going up. The banks, ever ready to find even greedier ways of disproving Adam Smith’s theories (even as their managers loudly profess allegiance to those self-same theories), have discovered that they can justify the rising cost of their own products by blaming the quaintly named ‘credit crunch’. This strategy will no doubt be encouraged by that additional ‘bloodaid’ of £50 billion that Brown is throwing in to gladden the heavy hearts of all those corporate managers who, in the manner of the image drawn by Steve Bell, are lying on their furry backs even as they receive ‘transfusions’ from Nurse Brown.

When one is filthy rich, and a pragmatist to boot, the trials and tribulations of the poor, let alone of a lowly economic theory, probably do not matter much. However, once a central bank can no longer really affect inflation via the money supply, it is not just monetarism that dies. When millions and millions of people find that their only saving is worthless, when they find that they are deeply in debt, and that rising fuel and food prices are stoking the fires of inflation, then the possibility of a full-blown economic depression becomes a growing reality. Will Gordon Brown join Tony Blair on the board of JP Morgan when that happens?

Interesting news have reached EcoLogics via the Personnel Today website. In an article titled ‘Minister moves away from mandatory skills training’, Personnel Today noted that ‘Skills secretary John Denham has distanced the government from carrying out its threat of requiring employers to provide training in 2010 if not enough employers have signed up to the skills pledge – a key recommendation of the Leitch Review.’

Personnel Today went on to add that

‘In an exclusive interview with Personnel Today, Denham insisted the number of employers signing the skills pledge – which commits firms to training their staff to Level 2 – was not significant, as long as the message to invest in learning and development was being driven home.

“The skills pledge is important – not so much how many employers sign it numerically – but it does help us get the message across that training is good for your business,” he said.

“What everybody is working towards is a situation where the skills pledge, [skills brokerage service] Train to Gain, and employer engagement in training gathers momentum, so any question of needing to do things differently [in 2010] doesn’t really exist,” he said’(1).

However, the same article’s statistics appeared to contradict the idea of any such momentum: ‘Research from the Learning and Skills Network (LSN) published last week showed just 6% of the 1,137 employers surveyed had ever worked with a government-funded skills broker – such as Train to Gain – despite the huge push over the past year to ramp up organisations’ involvement in skills.’ A study from the Chartered Institute of Personnel and Development ‘revealed just 47% of organisations believed their learning and development work had been influenced by the government’s post-Leitch Review skills agenda.’ Actually, this might be interpreted as a fairly high statistic given the UK’s history of corporate disinterest in skills training. But Personnel Today also suggested that ‘Almost 90% said it was the government’s responsibility to ensure that young people were educated to appropriate standards of numeracy and literacy’(2).

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With Personnel Today as with any news medium, the reader must of course consider the possible interests that might structure its newsmaking. Personnel Today is published by Reed Business Information, a division of the publishing giant Reed Elsevier Group Plc. The publication almost certainly reflects the concerns of the HR (human relations) industry, which is itself the arm of the large corporate sector tasked with securing the objectives of what a personnel director might euphemistically describe as the own ‘organisational culture’. Personnel directors, let alone the large companies that employ them, are unlikely to want to be told by a government how they have to train their employees. From this point of view, Denham’s retreat, or apparent retreat on mandatory skills training would be rather good news for many readers of Personnel Today.

Even if a more complex analysis is required to explain Personnel Today’s positioning of news about the New Labour skills policy, the news item clearly reflects a contradiction which EcoLogics pointed out in the context of a sustained critique of the Leitch Review of Skills. As noted in that critique, it was always clear that the whole New Labour ‘skills agenda’ would hinge on employers’ willingness to embrace it. As explained in Lord Leitch’s Levers Part 2, ‘…in the chapter on ‘Employer Engagement in Skills’, the Review makes it clear that individuals wanting to ‘invest’ in skills would need to secure the advice and consent of their line managers, and/or of a new careers service that would itself be ‘demand led’. […] Given this political economy, it is not difficult to imagine that, on this point alone, the whole Leitch edifice could come tumbling down. The employers who don’t value the acquisition of new skills—and the Review recognises that there is a huge proportion that don’t—could refuse to support any training whatsoever.’

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Any hostility of the corporate sector to mandatory aspects of the Leitch Review of Skills would reveal the extent to which its leaders are unwilling to make any concessions whatsoever to a government that is already actively representing their interests. This reminds one that, even if the New Labour government is far to the Thatcherite or neo-liberal right, it is of course possible to go even further in that direction. As Gordon Brown is perhaps belatedly discovering, the greed of at least a significant swathe of the corporate sector knows no bounds. To be sure, the idea that businesses should take up the slack of the state educational system was always, and remains, ludicrous.

The Personnel Today article compounds the bad news found in the Leitch Review of Skills itself. As EcoLogics has noted, the policy itself already had negative implications for any individuals fortunate enough to be in a position to work towards a better education. Such individuals are likely to find that, increasingly, it is precisely the personnel departments in the large corporations that will determine what, if any further education the individual, regarded as an employee, can obtain. If the individual tries to go beyond the restrictive criteria of the personnel department (or her/his own employer more generally), s/he will find a double whammy in store.

On the one hand, the older universities with a greater variety of subjects, and that are not as driven by the totalitarian criteria of ‘economically valuable skills’ will have such expensive tuition fees that they may well be unaffordable (unless, of course, the individual is her/himself wealthy, or has a wealthy family). On the other hand, the newer, or indeed newest ‘centres for higher education’ (as Denham delicately calls the privatised further education colleges) will increasingly be businesses whose entire educational agenda is likely to be biased in favour of business-led courses, and indeed, those courses that attract the greatest number of students (for more on the new centres, see my ‘Unlocking the Business of Higher Education‘).

The above is a recipe for two disasters where adult education in the UK is concerned. The first is that the New Labour approach (let alone that of the private corporate sector) turns back the clock on the problem of class-bound access to higher education. Even as the government proclaims wider access to higher education, its own policies will almost certainly ensure that there is actually less access to real higher education (as opposed to the British equivalent of McDonald’s Hamburger University). The second is that the relative autonomy of higher education, arguably its most important social feature, will be eroded, if not lost. If it is already difficult to raise funds for research that is not a form of ‘knowledge transfer’, this trend can only deepen in a context driven by the mantra of ‘economically valuable skills’.

Again and again, the question is, who stands to gain from all of this? One answer can be found in my post about Carter & Carter.

References

(1) ‘Minister moves away from mandatory skills training’ in Personneltoday.com, April 8, 2008, http://www.personneltoday.com/articles/2008/04/07/45263/minister-moves-away-from-mandatory-skills-training.html, accessed April 14, 2008.
(2) ‘Minister moves away from mandatory skills training’ in Personneltoday.com, April 8, 2008, http://www.personneltoday.com/articles/2008/04/07/45263/minister-moves-away-from-mandatory-skills-training.html, accessed April 14, 2008.