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'Democratic Wealth': clearing a path to the future

Democratic Wealth: Building a Citizens' Economy is a collection of essays that challenges the poverty of thinking around economic policy, particularly after the 2007 financial crash. It explores the renewed interest in republicanism and suggests this as a framework to shape an economy that serves the common good. It is a selection of articles from a series published by openDemocracy and Politics in Spires, a blog run by the universities of Oxford and Cambridge.

You can read or download the e-book for free here.

Below is the afterword to the e-book by James Meadway.

The end of history?

It is twenty-five years, this November, since the Berlin Wall fell. Francis Fukuyama, then a US State Department official, gained instant fame – if not notoriety – by moving, with particular haste, to declare this moment the “end of History”. Capitalism – specifically, the liberal, democratic capitalism of the west – had defeated all alternative ideological choices. It could supply something that its competitors never could: a means of providing not just material goods – the contrast between the empty shelves of the east and the consumer abundance of the west was glaring – but something far deeper: a means of bringing into reconciliation the immutable conflicts over identity that have shaped humanity’s time on earth. By providing the institutional forms in which identities could be shaped, exercised, and prevented from entering self-destructive war, the liberal state of the West was the universal form into which all other states would evolve.

Widely ridiculed, and still more widely misunderstood, Fukuyama was no simple apologist for George W. Bush’s “New World Order”: his argument drew on a particular reading of Georg W. Hegel, interpreting the struggle for recognition as the motor of progress in history. Allied to the powerful drive to control nature represented in modern science, the shape of the world after Communism (argued Fukuyama) was, in its essentials, already determined.

It is easy, now, to dismiss these arguments. Those few decades since have provided a continual succession of seeming disproofs, from 9/11 to the uprising in Ukraine. Fukuyama himself is today significantly less confident about the future, now seeing in the development of science the potential for civilisational disaster. Climate change, the unintended consequence of unbridled development, threatens to profoundly reshape much of what is taken for granted as stability and prosperity even in the calmest of societies. The failings of liberal capitalism, enumerated but essentially dismissed by Fukuyama at the time, from environmental destruction to ballooning inequality, look sufficient to overwhelm whatever merits may be claimed for it.

And yet the presence of a genuine, systemic alternative to that capitalism still eludes its critics. Protest movements and uprisings have shaken and even toppled regimes in the last few years. The crash of 2008 revealed, in the starkest way possible, that one of Fukuyama’s engines of progress, the market mechanism, could catastrophically fail. Societies like Britain have, for the last five years, seen the engine apparently thrown into reverse: year after year, median incomes have fallen and fallen again, the longest sustained decline in living standards for the majority since Queen Victoria was on the throne.

Despite all this, and despite the many confident expectations of the system’s critics, the mechanism is still there. There has been no fundamental reshaping, anywhere, of the market machine, however loud its critics have become. The sudden (perhaps shocking) reappearance of the state as an economic actor – after years of denial about its capacities – in the immediate aftermath of the financial crash, bailing out banks to the tune of trillions, did not in any way lead to a change in the fundamentals. The Last Men, Fukuyama’s inhabitants of the end of History, who, following Nietzsche, remain serenely unbothered by grand struggles or great drama, appear as unruffled as ever. If the system’s supporters lack a certain confidence, they at least remain where they are: in charge. Its opponents seem incapable of formulating a challenge to their rule.

The republican challenge

That a challenge is necessary is, of course, taken as read by the contributors to this volume. But they suggest it needs to be a different sort of challenge, or a challenge mounted on different terrain, to those the left has currently made. The incapacity of the left to overcome the end of History is tied to its own, very specific, historical circumstances. If the current path forwards is blocked – and it would certainly seem that it is – perhaps we need to go back, and think about taking a different one. What the essays here present is a set of arguments about how some routes, otherwise somewhat sidelined by the majority of the progressive movement, can be brought back into the centre of a strategy for the humane transformation of society. “Republicanism”, defined here as the traditions of popular sovereignty and civic participation, offers one means to do so. What we have grown used to is just one version of how a left could define itself, based around the role of the state as a guarantor, and a particular type of citizenship associated with that; a new left could draw on different traditions.

Karl Marx, indeed, recognised the immense value of the co-operative movement, as Joe Guinan here notes. Marx’s address to the First International in 1864 sings the praises of the co-operative movement, a “victory of the political economy of labour over the political economy of property.” Marx looked to a day when these workers’ co-operatives and new forms of ownership would spread to cover the whole of society, following this early lead. Alex Gourevitch, in his essay, details how republican themes shaped the early US labour movement; Royden Harrison’s Before the Socialists made a similar case for its UK counterpart.

This now constitutes something of a lost tradition, at least for a left that grew up in the happy shadow of what is the left's greatest achievement to date: the post-war welfare states that, in western Europe at least, capped a century of struggle by its labour movements. These were not presented in some act of generosity: "If you do not give the people social reform," noted the future Conservative Cabinet member, Quintin Hogg, in 1943, "they are going to give you social revolution." The British Conservatives, like their conservative and Christian Democratic counterparts across the continent, speedily abandoned their commitment to pristine free market ideals and accepted the new social order.

This is not to argue the order was perfect: far from it. For the UK, the same government that oversaw the introduction of such sweeping changes as the National Health Service, the welfare state, nationalisation of essential industries also oversaw Britain's pursuit of the atomic bomb and a bloody colonial struggle in Malaysia. France embarked on a series of still more desperate wars to retain its former colonies in Indochina and Algeria, the struggles over which poisoned its domestic politics. It took de Gaulle to admit defeat in both.

Conservatism, which had, across much of the content, disgraced itself in supporting fascist regimes, was by no means seen off. It adapted itself to changed circumstances; the drive to transform society was everywhere corralled and rendered as far as possible. The old order in Europe, which had dragged the continent into two exceptionally bloody wars in the space of twenty years, was on its last legs. Its states and its legitimacy were shot to pieces. In the east, a particular form of reordering, grossly skewed to the demands of the Russian state, was imposed. For the west, it took the accommodation of systemic challenges to enable anything like legitimacy to be restored.

No return to the ‘Spirit of ‘45’

What emerged was a compromise with the state by its organised critics: something more than a non-aggression pact, a recognition of mutual rights within a framework that still contained the core elements of capitalism. Welfare provisions, and a deepening of state direction over the economy at the level of the nation were supported by an international order, drawn up, in its essentials, in the Bretton Woods conference of 1944, that strove to restrain capital and regulate its worst excesses.

In the UK, the particular form of state control adopted was developed from earlier experiments in “municipal socialism” – Herbert Morrison’s 1930s stewardship of London Transport in particular. This stressed managerial prerogatives as the means to achieve efficiency; it meant, as Ken Loach’s recent The Spirit of ’45 detailed, both the assumption of passive consumers and a docile, subordinate workforce. Nationalisation in practice changed the title deeds, but did not change who was in control. Welfare provisions were structured on similar lines: the existing state, with its particular set of hierarchies, simply expanded its sphere of operations.

These changes appeared during an unprecedented period of prosperity – Eric Hobsbawm’s “Golden Age” in a twentieth century otherwise marked by war and social disaster. Capitalism, in its historic heartlands of western Europe, North America, and Japan, grew as never before – or since. The proceeds of that growth fell more evenly than ever before: real living standards, for the great majority, improved and went on improving. “You’ve never had it so good,” was a slogan on which an election could be won. The mechanisms put in place to drive some redistribution operated effectively.

The institutions established during that period remain with us, as do the organisations most closely associated with their creation – the trade unions and the social democratic parties. But both look dangerously trapped in their own past. Austerity, across the continent, whether imposed by the EU or freely entered into, as the UK’s Coalition did, is reshaping states and therefore societies. It is, as David Cameron made clear, only tangentially related to the need to repay state debts – debts themselves very largely the result of the financial crash. “Permanent austerity” is the order of the day: a resetting of the relationship between state and citizens to deal with straitened new circumstances. Competition from the east, rising raw materials and energy costs, an aging population: all have been offered as reasons to close down the brief period of social democratic advance.

From sharing spoils to shared control

The economist Thomas Piketty, analysing two hundred years of raw data, has showed that we are at the end of the great process of restoring and sharing society’s spoils. The post-war world lessened capitalism’s deeply embedded drivers towards gross inequality – that the returns to the ownership of capital exceed the rate of economic growth. But it did not remove them. The old order of capitalism is being reasserted; worse, this old order is appearing when the motor of capitalism – its ability to produce continual economic growth – seems to be grinding, slowly, to a halt. Robert Barro has speculated on the uniqueness of the previous 250 years of growth – that we lived through an historical aberration, and may now have to look forward to a world in which low-to-zero growth is the norm. The consequences, as he suggests, will be enormous: if capital retains its intense, competitive dynamic, but the system as a whole is not growing, the stage is set for a brutal conflict. Each unit of capital is driven to grow, but can only do so by taking from elsewhere in the system – a zero-sum game that will force a redistribution from the majority to the 1%. Conflicts over the distribution of society’s resources, apparently buried (or at least mitigated) by the post-war institutions, will return with a vengeance. Those same institutions, under the pressure of decline, are now being turned from support for society into a brutal form of coercion, whether through the bedroom tax or the disability living allowance.

We need, instead, a different form of ownership – one that breaks with both the failures of the Morrisonian ideal of state control, and of the failures of capitalism. We need to change the form of ownership to break the inegalitarian drive of capital as such – of the competitive need to squeeze the maximum possible monetary return from an asset, irrespective of its consequences. Collective and community ownership of wealth, highlighted by Stuart White in his second essay and by Angela Cummine on the sovereign wealth funds, are one part of that. But we need, too, to recognise that ownership is not enough. If it taught us nothing else, the crash should have revealed this much – owning a bank is not enough to prevent it behaving exactly as badly as it always did. RBS is largely in public hands. It behaves as if the public did not exist. Control matters, and it is here that the themes of the great post-crash protest movements, from Occupy to the indignados, come to the fore. Forms of popular democracy, as experimented with in the occupations of the squares and public spaces, can be extended to society’s common resources. The establishment of different priorities, beyond the blind imperative to growth and maximum cash returns, will require mechanisms by which they can be found and built-in. Democratic workplaces, community ownership, popular regulation: all might be suitable. We are not, yet, able to end the end of History. But we might, slowly, begin to clear a path to the future. 

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