Britain’s irrational faith in capitalism

by editor | 2nd November 2011 8:39 am

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The almost religious veneration of the current economic system does not allow any thoughts for a “Plan B”
Daniel Hind

The Occupy protest at St Pauls in London is about the kind of economy and society people want [GALLO/GETTY]

For a long time British politicians have treated the world of business with something like religious veneration. The last Labour government was always trying to make the public sector more entrepreneurial and consumer-focused. They loved it when management consultants and financiers told them that they had to modernise the state through the ever-greater use of market mechanisms.

Their child-like faith in market forces would have been touching if the consequences hadn’t been so disastrous.

As chancellor and prime minister, Gordon Brown stood by while private banks vastly increased the stock of debt in the economy. In the summer of 2007, Brown went as far as to announce “the beginning of a new golden age in the City of London”. Within months, the game was up and a growth model based on speculative bubbles driven by credit expansion broke down.

The current conservative-liberal coalition is proving just as awestruck by the private sector. And once again, a faith-based approach to economic management is causing mayhem. On arrival in office, the coalition declared that it would cut the public sector in order to reduce borrowing. The pain was necessary, George Osborne assured us, because it would create the necessary conditions for increased private-sector investment. The investing classes in general, and the banks in particular, had been saved by public money. Now they would have to be coaxed into putting money back into the economy. This was Plan A, and there was to be no talk of Plan B.

Even at the time, the whole thing seemed more like the ravings of a cargo cult than a serious plan for the economy. As I pointed out in an article for Al Jazeera almost a year ago, the opportunities for profitable investment against the background of an insolvent banking sector and a global collapse in demand are extremely scarce.

Sure enough, the private sector investment boom hasn’t happened and unemployment is going up. The worship of capital is no substitute for an understanding of the incentives in a capitalist economy.

The Labour Party’s criticism – that George Osborne is “cutting too much, too soon” – doesn’t amount to a serious alternative. Like the coalition, they remain wedded to an irrational faith in the animal spirits of bankers and investors. They want to keep demand up through public-sector borrowing until the private sector roars back to life. Or that’s what they say they want to do. Their main priority seems to be to stay away from government for a few years, while the coalition does what much of the Labour Party leadership quietly thinks is necessary. This is no Plan B.

Thankfully, though, there is a concerted effort going on to discover and publicise a way out of the overlapping crises in which we find ourselves. Appropriately enough, it is happening in the City of London, a key player in creating the problem in the first place.

The beginning of a conversation

But this is not an initiative of the established powers. Instead, a few thousand concerned citizens have occupied a piece of land in front of St Pauls and are using it as a venue for free deliberation, discussion and debate.

The occupiers are not representative of the wider population. They are relatively few in number. It is easy to caricature any gathering like this. Journalists who have made a career out of taking the easy option are busy doing so. Nevertheless, matters that have been ignored or misrepresented in the major media are being discussed in a spirit of equality and mutual respect. Even the media have been forced to acknowledge that something is happening.

And how are the authorities responding to this outbreak of civic seriousness? They have taken a break from worrying about the public’s disengagement from politics to try to have the occupiers evicted.

The occupation of St Pauls is part of a conversation long-delayed, about the kind of economy and society we want, about the role and constitution of the state, and about the communications system we need if we understand our circumstances.

Read more from Daniel Hind:

Nothing mindless about rioters
Science in the Middle East

Last year, students occupied their university buildings and UK Uncut staged direct actions on the high street. At the time, it might have seemed that trying to articulate an alternative to the existing consensus – a real Plan B – was a fool’s errand. Now those few protesters are part of a vast global movement for democratic change.

For decades, the advocates of free markets dominated public discussion, but the rest of us are now talking among ourselves. More than that, we are talking in ways that are becoming increasingly audible.

In the coming months, I hope that many more people join this conversation, on their own terms, in ways and in places that seem right to them. Certainly, we have a lot of work to do. But it is surely time we put more faith in each other than in markets. And perhaps we shouldn’t pay too much attention to the ex cathedra pronouncements of the experts and commentators, who have been so plausibly and so confidently wrong.

This moment of direct democracy in the heart of the City of London will not last forever, any more than the occupations in hundreds of other cities around the world will. But while they are happening, if you can, I strongly suggest you visit, chat to one or two people, and perhaps join the discussions, working groups and assemblies.

You will find people talking about things the powerful either don’t understand or desperately wants us to ignore. It is particularly important that those with proposals for change make the case for them in the context of the assembly. The assembly outside St Paul’s is a social medium that has considerable potential.

At some point, the occupations will stop, but the conversation is only getting started.

Daniel Hind has worked in publishing since 1998 and is the author of two acclaimed books: The Return of the Public and The Threat to Reason. He is this year’s winner of the Bristol Festival of Ideas Prize.

Follow Daniel Hind on Twitter.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.

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