Monday, 13 July 2009

But British Capital Is Pants!

I’ve been silent on the blogging front for a couple of weeks simply because I have had nothing to say. Or nothing even I found interesting anyway.

But I see Rick over at Flip Chart Fairy Tales has waded into a discussion of that James Heartfield piece that so impressed me, and this has sparked a number of thoughts.

Firstly, just to clear some ground, let me say I simply didn’t know that Heartfield was an ex-RCP/Institute of Ideas/Furedi groupie/Astroturf merchant type when I first read the piece. Generally, I find their analysis a bit ...well, silly, in its single minded downplaying of climate change risks and bigging up of technological ‘progress’ as an unqualified good. But even if, as a commentator on my initial post said, it is just a case of a stopped clock being right twice a day I did find lots to agree with in his post. In particular it exposed the whole ‘public sector bad private sector good’ type arguments for what they are: ideology. A large part of the British public sector spending is actually a form of outdoor relief for the private sector, and quite a lot of the New Labour programme of public sector ‘modernisation’ (consumer ‘choice’ , contestability, marketisation and so forth)has actually been a way of shifting resources from delivery to people – however well or poorly done - into propping up this system of private sector relief.

One part of Heartfield’s explanation for this is, essentially, that British Capital is basically pants. It has lost the will to innovate. It expresses all its strategies in terms of risk, and especially risk minimisation – a language borrowed, in essence, from finance. The bastard off spring of actuaries who price the ‘lifespan’ of profit now rule the roost. The hero-innovators of Marx’s day – those who constantly remade the world - are long gone; their great grandchildren need the succour of a State which appears ever less separate from their own interests. They’ve lost their will to do big things, so they need the rest of the world to be remade in their own image by statutory decree.

Rick sees things differently. But then, to be fair, he’s a manager, not a politico, so he would. He sees the problem as one of public sector managers being more hidebound than their private sector counterparts, and much more trapped in rule bound systems of employee relations. So the public sector needs to call in the private sector for help. I think he just means that unions are stronger in the public than the private sector – though, of course, they’re pale shadows of what they were when Rick and I were growing up.

Of course there are difficult employees. But you can’t change the world on the basis that all employees are difficult. You have to give the people you work for and with something to believe in. And this is where a purely managerial perspective will never penetrate. The greatest weapon – at an operational managerial level – that social democracy ever had was the idea of public service, which grew out of the political ideas of community and mutuality and solidarity. What we’ve got in its place, in my view, bears a passing resemblance to the ‘Old Corruption’ of the eighteenth century : endless initiatives and restructurings and cost cutting done by ‘consultants’, a euphemism, in general, for large multinational firms. A teat which constantly feeds the private sector. No wonder there is workforce resistance.

& now the establishment call for cuts to be made – and to an extent they’re right, even if they exaggerate the immediacy of the necessary decisions, ignore the potential for offsetting tax rises and embellish the potential for ‘protecting frontline services’ whilst doing so. But nowhere, or almost nowhere, is there an alternative vision. If I had to generalise, I'd say it is this blindness which the public sector has imported from the private sector, not 'efficiency'.


  1. Good to have you back, Charlie.

    When you say "British capital" is pants, what precisely do you mean? Do you mean our firms are pants (timid, failing to innovate) or our financial sector is pants (ridiculously short termist and blinkered, totally failing to invest in building long-term successful technology-based companies)?

    (Let us take with a big pinch of salt the views of Rick Flip Chart Fairy Tales, who appears to blame the fecklessness of the Great British Worker for all our ills.)

    Obviously both are pants, but I would locate the source of the problem in the over-dominance of the City, the investment approach that looks only at the get-rich-quick numbers and not at the product, the leadership, the long term prospects. This is all stuff Will Hutton was banging on about in the nineties.

    The solution seems an obvious one: we now own over half of the banks. So let's shift them to a "Rhineland" useful-company-nurturing financial system as soon as possible .

    I was actually inspired today by the Grauniad's "Manchester Report" pull-out, full of "world-remaking" ideas from "hero-innovators", and thinking how many of these - necessary, urgent - innovations to address the climate change issue will die a death thanks to the shite British system of short-termist finance, or will have to go abroad to get the necessary funding support.

    Maybe tomorrow I'll post some of the "Manchester Report" stuff on Red Pepper to see if anyone wants to discuss.

  2. Strategist,

    Firstly, I think you're wrong to be so hard on Rick as an individual. He's a manager type, with a HR background. He sees things through that prism. I enjoy his blog. Surely we lefties have to try to win round such people, not by trying to deny they have relevant professional expertise which, in general, we don't, but by attempting to show that such expertise might be used in a different and more progressive context ?

    Secondly, though, when I said 'British Capital is pants' I was intentionally crudifying a very long standing debate about precisely why both British industry and, indeed, the 'native' firms in the City of London since the 'Big Bang' of the mid 1980s, have historically tended to lose out to their foreign competitors. (Remember: the process of the fictionalization of our economy has been compared to 'Wimbledonisation' - hosting a world class tournament which we never win.You might just recall Brigg had a go at me over using this term on the RP boards). Heartfield goes further,

    "Rather than generating new wealth through innovation, Britain’s capitalists are increasingly involved in desperate rent-seeking activities, plundering the public sector or living off the commissions earned on financial intermediation in the City of London."

    I'll pop by EP to say something re the Manchester Report.

  3. Thanks Charlie. I don't know if I was being *that* hard on Rick, but I'll carry on reading his blog. I don't have a problem with people I disagree with as long as they are fine with the possibility that others may disagree with them.

    I love the Heartfield quote, think the wording is exactly right, but would just quibble that this behaviour is something new, this was Will Hutton's point twelve years ago about the behaviour of British capitalists for the last 100 years.

  4. That's the second time in as many days that someone has put words in mouth. First it was James Higham,from the free-market right, havin a go and now Strategist, presumably from the left. It just shows what happens when people read stuff throug the fog of ideology.

    I never mentioned feckless British workers. James Heartfield said today's British capitalists were too cowardly to make their organisations perform effectively and to close down those which didn't. I said that conflict avoiding managers are nothing new but cultural, procedural and legal changes now give them more excuses and that, as a general rule, this is a geater problem in the public sector.

    How yo get from that to blaming the feckless British worker for the country's ills, I'm not sure.

    Heartfiled didn't even mention short-termist investment and the dominance of the City. I happen to agree with you both that this was a problem well before Will Hutton wrote about it and it still is.

    I remember thinking when I read Hutton's book all those years ago that this problem goes beyond political ideology. The more interventionist French and Germans seem to be better at investing in innovation but so do the free-market Americans. Somehow we get the worst of both worlds.

    Unfortunatley, my wife chucked the Grauniad's "Manchester Report" in the recycling before I had time to read it, so I will be interested to see what you have to say about it.