EcoLogics

Last Sunday’s Observer carried an article by Gordon Brown in which the Prime Minister tried to distance himself from the very policies that he and the New Labour government have promoted for over 11 years. In an extraordinarily disingenuous article, the Prime Minister suggested that the UK faces a ‘defining moment’ in which ‘we are seeing not just the collapse of failed institutions but the collapse of a failed laissez-faire dogma. In this first financial crisis of the global age the old free market fundamentalism, no matter how it is dressed up, has been found wanting.’

If anything has been found ‘wanting’, it’s been Gordon Brown’s laissez-fairism, and his adherence to what he himself quite rightly describes as ‘the old free market fundamentalism’. For Brown to preach against these things is the equivalent of Dick Cheney saying that that we should look beyond the militarism that has so failed the U.S. in Iraq. Both men are the architects of their own failed policies, and fortunately the Prime Minister’s readers in the Observer are not as unaware as he evidently assumes them to be. If in doubt, have a look at the comments posted beneath the article in the Observer’s Comment-is-Free section.

Alas, Brown’s perorations may be of little consequence if they turn out to be little more than an opportunistic effort to capitalize on the goodwill generated by Obama’s victory. And indeed, in exactly the same newspaper we find evidence that New Labour’s neoliberalism will continue full steam ahead in at least one field: Higher Education. In an article titled ‘Universities face degree revolution’, Denham was quoted by the Observer as saying that

‘There is going to need to be a greater flexibility in the way we deliver higher education’…’The ability to study flexibly, which more often than not will mean part time; to study at more than one institution; to be accredited for what you learn in the workplace as well as what you learn in a university; all of these things will become more and more common.’

As I have explained in other posts, the government’s references to ‘flexibility’ in higher education are really codewords for a policy of backdoor privatisation and commercialisation of higher education. The key to this change will be the vocationalisation of teaching and learning, such that private corporations will be able to determine what is taught where and when to meet their own immediate needs. This in turn will require a big shift from the kind of three-year courses that we currently have, to an growing reliance on continuing professional development, part-time courses, and indeed degree courses that only last two years, if not less.

Amongst other changes, Denham envisions a higher education sector with a US-style system in which college dropouts would be able use the credits for courses they have done if they want to resume education later. This may seem like a good and inclusive policy, but it does raise questions about what happens when, say, someone who dropped out at the end of their first year of classes returns 8 years later expecting to start from level 2. Rather more worrisome for academics will be the confirmation that New Labour is still committed to doing away with the traditional academic year, especially with what the Observer described as its ‘long holidays’ [sic], which ‘might be scrapped at some universities to suit part-time students who wish to enrol all year round’. Again, this is a coded way of saying that in some universities—presumably the newer ones—there will be no time for research. The combination of vocational courses, privatisation and no research will mean that such universities will really be no more than privately owned institutes of further education.

The announcement comes at the beginning of a review of the university funding scheme, and one can well imagine that Denham is perhaps either bear-bating, or trying to cow vice-chancellors ahead of the review, or both. There is something eerily familiar about such a strategy; this blog reported almost a year and a half ago that Denham and the institutions closest to New Labour’s neoliberal agenda were threatening universities with what sounded very much like a Maoist ‘cultural revolution’: as I noted in ‘The UWE Experiment‘,

“The July 20, 2007 THES [Times Higher Educational Supplement]… included an article (‘Embrace Leitch or lose out to FE, sector warned’) which … reported on the government’s plans to impose a ‘cultural revolution in higher education’. In it John Denham, Secretary of State for Innovation, Universities and Skills, said that he wanted a ‘skills revolution’ and that employers would be given the ‘purchasing power to shape what our country supplies by way of skills and qualifications’. Richard Brown, chief executive of the Council for Industry and Higher Education, was also quoted as saying that if universities didn’t embrace this ‘revolution’, ‘then the private sector will continue to take this market. Universities have to decide how much of a loss that would be’[8]. The Council of Industry and Higher Education is funded by what reads like a who’s-who of the UK’s largest private corporations—the list includes BAE Systems, Corus, Rio Tinto, the Bank of Scotland, Tesco and BUPA(9).’

As the quotes demonstrate, there is not much that is new in Denham’s policy. What is new, or rather, what is revealing, is the extent to which the current announcements show that the government remains intent on pushing through plans that will open up a multi-billion market for companies such as the failed Carter & Carter. This is typically neoliberal in the sense that the plans invoke the sacred need for consumer choice in order to dissimulate the real priorities: to open up new commercial possibilities for big business, and in so doing, to kill the proverbial second bird with the same stone by getting the government off the hook of funding greater access to higher education.

It is a sign of the times that in one same day, in one same newspaper, we may find one New Labour politician (the prime minister) saying that fundamentalist economism must come to an end, even as one of his lieutenants announces that, in effect, a policy of fundamentalist economism will still be imposed on universities in the UK. Gordon Brown, John Denham, Peter Mandelson and the rest of the New Labour politicians clearly believe that they can have it both ways. It is difficult not to conclude that, like Margaret Thatcher, they want to eliminate universities as a space of opposition to their policies. No better way to do so than to close down precisely the kind of courses that have historically provided a space for critical reflection.

The reader should be in no doubt that what will be lost will be the relative autonomy of at least the newer universities. If universities go the way proposed by Denham, Leitch, and the late vice-chancellor of UWE, it will no longer be possible to conduct research, and to teach and learn in ways that are not simply determined by the greedy, and short-termist interests of business. As I noted in the aforementioned post about UWE, (and also in my three-part critique of the Leitch Review) the government and the advocates of ‘knowledge exchange’ are intent on eliminating the fundamental boundary that has long allowed academics to engage in ‘blue skies’ thinking, and to invent things that at the time may not have seemed to have any practical application. It is also what has long provided lecturers and researchers with some protection from the possibility of grossly distorting interventions by the Church, Government, and now, ‘UK Plc’.”

The irony is that that selfsame ‘UK Plc’ may not itself be willing to play ball with the government. As I noted in another post, Personnel Today, the newsletter of corporate human resources, said 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.’ The article made it clear that private corporations will not be willing to accept the imposition of any targets. No doubt, though, they will happily accept the government’s offer to force at least some universities to provide them with á la carte curricula.

Of course, the government would fiercely deny any and all of this. Denham himself claimed in the Observer that the academic year could be organised to allow time for research, and that universities’ traditional role in ‘broadening the mind’ would continue. ‘People say we are going to push a very utilitarian model of education and that it’s against the idea of a mind-expanding personal development,’ …’One part of what [employers] want is vocational skills, but the other is communication, the ability to think around an issue, to think in an original way – things you get from a liberal education.’

Upon reading this, anyone who has actual experience of teaching, and doing research in higher education will realise that Denham simply doesn’t know what he’s talking about. You do not do away with the summer teaching recess without profoundly affecting a university’s research culture. While teaching should always be research led, it is simply not true that teaching and research ‘go together’. More often than not, research requires relatively long, uninterrupted periods during which academics can do field work, and/or work out complex theoretical problems. Unless you find some other way to make up the time, the elimination of the summer recess is tantamount to the elimination of the time for research. If the time for research is in turn replaced by more frequent, short-term, and intensive teaching—i.e. continuing development courses, or two-year degrees—then you effectively kill off whatever is left of a university’s research culture.

Destroy what is left of that research culture among the new universities and you will be left with little more than a collection of colleges of further education for the poor and the lower middle classes, and a handful of increasingly expensive elite universities where the children of the upper classes will engage in the kind of ‘broadening of the mind’ that Denham refers to. The process may not seem to work as crudely as this at first because you do not eliminate a research culture overnight; there can, however, be little doubt that this is one very real possible outcome of the New Labour policy.

A revolution in the UK’s higher education? New Labour’s plans sound more like a return to the Conservative efforts of old to ensure that the poor were barred from the kind of education that might allow them to contest the UK’s deeply class-bound society. How incredibly paradoxical that now even the Conservatives seem to be to the left of New Labour.

By way of a postscript: what would universities have taught their students if bankers and financiers had dictated what they wanted on the curriculum back in the late 1990s and early 2000s?

Note: this post was published in November 2008.

At the end of April of this year, this blog published a post that was titled ‘2008: The Year that Monetarism Died?’ What was a question mark then is a certainty now: even Mervyn King, the governor of the Bank of England, has effectively accepted that the policy of making inflation ‘public enemy no. 2’ (after terrorism) no longer works. The irony is that the Bank’s Monetary Policy Committee (MPC) response—cutting interest rates by an extraordinary 1.5%—is still premised on the same monetarist philosophy, even if it throws the house of gradualist policy out the window. As I suggested in the earlier blog,

The monetarist discourse—an integral and indeed central aspect of the neoliberal 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 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.

Since I wrote that post, the fallacy that underpinned the monetarist discourse has become the reality of a global economic crisis. Not only are we heading for what is euphemistically described as a ‘deep recession’ (more on this below), but the monetarist discourse has simply stopped having the practical consequences that neoliberal economists have long ascribed to its policies. The media late yesterday were full of news of banks in the UK refusing to pass on the interest cuts to home owners. This morning the Chancellor is trying to browbeat the banks into submission. If he succeeds, it will be the best evidence that the mythical market, left to its own devices, no longer works in the image of the quaint 18th century marketplace favoured by the neoliberals.

The question in April, as now, was why politicians like Gordon Brown and Mervyn King (make no mistake, he too, is a politician) continue to try to adhere to monetarism, and to its parent ideology, neoliberalism. No doubt there are complex reasons for this, ranging in Brown’s case from first-hand experience of the chaos and frustration of Labour’s long years in the political wilderness, to the blind certainty, in the years after his party returned to power, that all was well, and all would be well. Cynics might add that when one is surrounded by banker friends, and when one’s party is bankrolled by hedge fund managers, then it is difficult not to be a neoliberal.

Whatever the case, it seems very clear that the New Labour project was, and remains inspired by a few fateful words that were published back in 1962 by Milton Friedman. These words go a long way in explaining the state of the economy, but more generally, the state of the polity. The words are found in the introduction of Friedman’s famous book, Capitalism and Freedom:

‘…the scope of government must be limited. Its major function must be to protect our freedom both from the enemies outside our gates and from our fellow-citizens: to preserve law and order, to enforce private contracts, to foster competitive markets.’

Interpreted in the way that they were by Thatcher, Reagan, Blair, and now Gordon Brown, these words begin to explain three major aspects of politics in the UK, if not beyond. First, they begin to explain why New Labour has been so devoted to protecting the private sector. Second, they begin to explain why the government has been so keen to follow the US in waging war ‘outside our gates’. Third, they begin to explain why such enormous strides have been taken in the direction of a panoptical society, viz., one in which we are persuaded to think that we are all constantly being watched. ‘Our’ freedom must be protected, after all, not just from the ‘enemies outside our gates’, but from ‘our fellow citizens’. Perhaps one significant change in the now decades-old policy is that New Labour is interested in ‘big government’ if and when it serves the purposes of corporate welfarism.

As I see it, a government that is conceived mainly as serving the interests of the private sector—a sector that has become identified with the interests of the major private corporations—and of waging war against enemies within and ‘without’ can only end up in tragedy. It is also more likely to be corrupt to the extent that not just the economic, but also the social and political currency of the day quite literally becomes money. Witness the truths that have recently emerged about Tony Blair in relation to the Ecclestone Affair (1) and other scandals that followed it.

Perhaps most tragically for all of us, such a government is also more likely to have its hands tied when the time finally comes to intervene directly and forcefully to save the economy from implosion. The inertia of the ideology is perfectly exemplified by the volte face of Mervyn King, whom, according to the Guardian today, ‘had been resisting rate cuts all summer and into the autumn as he and most of his colleagues on the MPC fretted about rising inflation rather than the growing threat to the wider economy from the credit crunch’(2).

Alas, despite the extraordinary u-turn, it may be a case of too little, too late. There is, apparently, no agreed definition of what counts as an economic depression, as opposed to a recession. But as the country’s economy stumbles on in the terrible uncertainty of our times, it is worth remembering one lesson, if it can be called that, from the last depression. The Great Depression is typically characterised as having begun with the famous ‘Black Thursday’ of October 29, 1929. In fact, the US economy continued to turn over for the following six months or so. It was only really in the spring, or some would say the late summer of 1930 that the economic collapse began to take its toll. It is possible to argue, of course, about exact dates and economic indicators. My point is that anyone who thinks that we’ve been spared an economic depression, and that now is the time to buy houses or invest in shares, may be jumping the proverbial gun. The banks remain so powerful that there is no guarantee that any government will be able to force them to do what needs to be done, i.e. to loosen the credit that is so desperately needed to return, paradoxically, to the old modus operandi. Vincent Cable of the Liberal Democrats was right in this sense when he noted that the rescued banks were ‘making monkeys’ out of Brown’s government(3). It might further be noted that in Britain especially, we have grown so reliant on the banking industry as a major part of the economy that the sector’s collapse is likely to have huge consequences for unemployment—consequences that will, however, take some time to feed through the system.

As if to add the proverbial last nail to the economy’s coffin, the government’s new-found pragmatism is by no means synonymous with a change of political heart. On the contrary, New Labour almost certainly remains in the ideological spell of neoliberalism—as evidence of this, witness the return, at the height of the crisis, of ‘Lord’ Mandelson to the New Labour cabinet. Mandelson is not just a hard-line neoliberal; as his imbroglio with the Rothschild family and with the Russian oligarch revealed, he is at the heart of the corruption of New Labour as a party in the grip of the material interests of some of the fiercest advocates of neoliberalism.

Given these circumstances, I would argue that we have a recipe for continuing, and quite possibly deepening, crisis. Perhaps the one ‘wild card’ is Barak Obama’s election–will he be able to change the political and economic dynamics in the US, and beyond? We can only hope that he will.

I should now explain what all of this has to do with the Palacio de la Moneda. In another blog, written this time in December 12, 2007, I suggested that

… economic liberalism has come and gone for centuries now, but its neoliberal variant came roaring to life in the 1970s and 80s when American monetarists led by Milton Friedman first ‘demonstrated’ that its principles could be made to work in Chile—that is to say, in Pinochet’s dictatorship. The Conservatives in Britain were the first to try to emulate this nefarious experiment. Indeed, it is not surprising that Margaret Thatcher was so keen to visit ‘Mi General’ during his infamous house arrest in London; after Pinochet, Thatcher was the second ruler to sign up for Friedman’s neoliberal model and its bitter prescriptions. In one of the great ironies of the time, Thatcher’s own Cecil Parkinson said in an interview [in the Chilean newspaper El Mercurio] that ‘It [the Chilean economic experience] is very similar to what we are trying to develop now in Great Britain.

I might add that we should not be surprised that it was Gordon Brown’s own ally Jack Straw who pardoned Pinochet and let him go back to Chile. New Labour, whose members are even more neoliberal than the Conservatives, must now be hoping that we have forgotten that the Chilean experiment came to an end in 1983 when Pinochet had to take over some of the largest Chilean banks to stop them from going bankrupt.

The question for me has been, and remains, just when, why, and how did Gordon Brown forget what happened in Chile? (For one economist’s assessment of what did happen in Chile in the early 1980s, see my Gordon Brown’s Financierism and the ‘Economic Miracle’ of Chile).

Back to the Palacio de la Moneda: this is the name of the presidential palace in Santiago de Chile which Pinochet bombed in order to depose the democratically elected Salvador Allende during the ‘other’ 9/11. The name, which paradoxically means in Spanish ‘The palace of the coin’, is a reference to the fact that the building housed the Chilean mint from 1814 to 1929.

The current (outgoing) U.S. administration’s ‘lineage’ to the other 9/11 bombing has been well documented: if it was Nixon’s CIA that helped to organise the coup, it was also that administration that served as a nursery for many of today’s leading neoconservatives: amongst several others, Dick Cheney himself (if in doubt about either of these two claims, see the declassified documents at the George Washington University website. See also Wikipedia’s biographical entry on the remarkable vice-president). What is perhaps less well known is the fact that many Chilean generals would not have signed up to the coup—many were extremely reluctant to join in—had it not been for the ‘Chicago boys’, a group of Chilean economists trained by Milton Friedman, who suggested that they had the solution to the economic chaos that the Nixon administration itself had helped to stoke in order to prepare the ground for the coup. That solution was, of course, the very neoliberalism that Margaret Thatcher eventually emulated, and which Gordon Brown and his allies seem quite willing to continue to impose on England, Northern Ireland, and Wales.

UPDATE, November 9, 2008: Gordon Brown published an extraordinarily opportunistic article in the Observer today. The following extracts give a sense of the manoeuvre being attempted by Brown:

“This is a defining moment. A new chapter of the human story is being written and will be studied by our children, and their children, and their children after them. It is up to us whether 2008 is remembered for a financial crash that engulfed the world or for a new resilience and optimism from a generation which faced the economic storm head on and built the fair society in its wake.”

“Today we are seeing not just the collapse of failed institutions but the collapse of a failed laissez-faire dogma. In this first financial crisis of the global age the old free market fundamentalism, no matter how it is dressed up, has been found wanting.”

“Our government is pro business; I believe in markets, entrepreneurship and there are many areas of the economy that need the spur of more competition. [...] But the events of the past months bear witness, more than anything in my lifetime, to one simple truth: markets need morals. ‘Greed is good’ is no prescription for the good society, but neither is it the mark of a good economy. It is the progressive values – rewarding hard work, co-operation, responsibility while penalising excess and reckless risk-taking – which will ensure our market economy works efficiently and fairly.”

Eh? This coming from the man who has done the most to promote the very values he is now criticizing is rich in every sense of the term. The question is, whom did he think he would be fooling by writing the article? Does he think that we are all so foolish? If so he could do worse than read the responses logged by the newspaper’s comment-is-free section.

UPDATE 2, November 12, 2008: The Bank of England has announced today that we are headed for a far worse downturn than expected. It is forecasting economic deflation, and a far longer downturn than it did three months ago. See the Guardian’s ‘UK recession to be deeper and longer than feared‘

UPDATE 3, November 21, 2008. The Guardian today began its editorial with the following extraordinary sentences: ‘With any luck, Britain will get through the next two years with nothing worse than a recession. But that cannot be guaranteed.’

In the wake of the events surrounding Ian Tomlinson’s death and the renewed controversy over New Labour’s DNA database, a more detailed exposition of some of its aspects has recently been published in the post titled New Labour’s spiral of terror: the other 9/11.

References
(1) See for example “‘Blair Intervened’ on Tobacco Ban in http://news.bbc.co.uk/1/hi/uk_politics/7665718.stm, accessed November 7, 2008.
(2) Ashley Seager, ‘Governor’s cautious demeanor shaken by dramatic u-turn’ in Guardian, http://www.guardian.co.uk/business/2008/nov/07/bank-of-england-interest-rates, accessed November 7, 2008.
(3) Simon Bowers, ‘Rescued Bank to Pay Millions in Bonuses’, in Guardian, http://www.guardian.co.uk/business/2008/nov/01/royal-bank-scotland-vincent-cable