Wednesday, 29 April 2009

The Limitations of Gesture Politics

Say what you like about New Labour, it is intensely relaxed about people's sexual orientation.

Take that row a little while ago about Catholic Adoption Agencies having to toe the line and accept applications from gay folk who might want to adopt. They really stood up to the forces of darkness and reaction on that one, didn't they?

Except, of course, there was no recorded incident of any gay couple ever approaching a Catholic Adoption Agency anyway. It was all the politics of headline and gesture.

But there are almost 7,000 Christian schools in England. So protecting vulnerable gay kids - or children of gay and lesbian people - in these institutions might really matter. But these schools are free to preach against homosexuality, and sex outside marriage for that matter, under government proposals to introduce compulsory sex education.

Say what you like about New Labour, it is intensely relaxed about people's sexual orientation -except of course where it might cost them votes.

A Call To Arms.... (Conversion)

The bright Labour loyalist Hopi has started a discussion about what the polls mean - and, lo, some antediluvian lefty has hijacked it to suggest getting rid of Trident. Which, actually, even Hopi admits might be popular at the moment but he cautions that,
" cutting a programme that will create tangible manufacturing jobs amongst skilled manual workers strikes me as one of the less likely spending cuts to appeal to the public, right now..."
Duncan joins in. As an ex-Treasury man he is particularly sensitive to the apparent success of 'our' aerospace and defense industries, though he seem ultimately willing to sacrifice them if it protects other, more sensitive public service programmes.

I think this might be the moment to advertise this CAAT pamphlet, which tells us:

  • Since the early 1980s, UK arms-related employment declined from 740,000 to 315,000 by 2006.
  • The arms trade is characterised by an intense supply-side dynamic to sell high-technology weapons into areas of regional tension like the Middle East and there are widespread allegations of corruption and bribery around these contracts, such as the Al Yamamah deal between BAE and Saudi Arabia to supply Typhoon/Eurofighter.
  • The UK has accepted a subsidiary role to the US in the latter's broader strategy of global military force projection not least because it seeks to retain access to leading edge military technologies, including nuclear weapons. But the cost of this subservience is continued multi-billion pound expenditure on a range of sophisticated equipment that offers no contribution to the country's real security needs;
  • The decline in arms employment has left only a handful of local economies with a residual dependency on military R&D and production, including Preston, Barrow-in- Furness, Yeovil, Brough and Glasgow. These reflect the pattern of regional concentration in the North West, South West and South East, although the latter is not as significant as it was.
  • Overall, because arms-related employment constitutes such a small proportion of national employment, the adjustment from a further restructuring based on deep cuts to military expenditure, is a minor one. Only in these small pockets of local dependency would further assistance be required to help diversify the local economies.
  • Central government has a vital role to play in developing a radical, political economy of arms conversion and common security. By moving away from military force projection and arms sale promotion, the UK could carry out deep cuts in domestic procurement including the cancellation of Trident and other major offensive weapons platforms, as well as adopting comprehensive controls on arms exports, including the suspension of weapons exports to the Middle East. The substantial savings in military expenditure could help to fund a major arms conversion programme.
  • The emphasis would be on environmental challenges, including a multi-billion pound public investment in renewable energy, particularly offshore wind and wave power, that would substantially cut the UK's carbon emissions and reduce dependency on imported oil, gas and uranium supplies. These new industries will also generate more jobs than those lost from the restructuring of the arms industry. In this way, the UK would be taking a leading role in establishing a new form of international security framework based on disarmament and sustainable economic development.
So this is not just a programme of austerity or cuts - it's also about reshaping our economy for a workable and sustainable future, a future which offers us greater security. Trident is part of it, of course, but its only the most visible and most obviously wasteful part. We need a new 'national business plan' which cuts us free from the stupidities and dangers of running the sort of economy which has so spectacularly hit the buffers recently, and which actually addresses our real place in the world. As I've noted before, the bit of Whitehall given over to promoting arms sales has doubled its staff. Something is deeply wrong here.

P.S.Those of a tidy mind might want to tie this together with the CAAT campaign to get local authority pension funds to disinvest from arms companies.

P.P.S. For those comrades tut-tutting at my unwillingness to put all this in Marxoid language about the inherently destructive, amoral nature of capital and the drive to imperialism I'll work on a translation for you lot later on. I just thought I'd talk to some folk outside the lefty laager first. But, yes, any successful 'swords into ploughshares' strategy has to rely on the deep and sustained involvement of the workforce in the transformation of the industry - we need an updated Lucas Aerospace Shop Stewards Plan. In fact we need scores of them.

Monday, 27 April 2009


Will Hutton puts it as graphically as anyone:

"... 5% of Britain's GDP has disappeared forever. ...This means that the path to sustainable public finances is going to be astonishingly painful. We can live with national debt doubling, but it cannot double again... The problem is that so much economic capacity has permanently disappeared, along with those parts of the economy that used to deliver rich tax revenues; the post-recession economy will only reduce the deficit by a quarter. The rest has got to be found by tax increases or reductions in planned spending....

Britain is going to feel very different in the years ahead. .... the pound has suffered a devaluation since 2007 that is bigger than those in 1931, 1949 or 1967. The British economy, in dollar and euro terms, is now emphatically smaller than those of France or Germany, and our new peers are Italy and Spain. ..... Like the empires of Venice, Spain, the Netherlands and Austria before us, Britain no longer has an economy large enough to finance our ambitions and overseas commitments.

The next government, of whatever hue, will surely raise the basic rate of income tax; 22 pence is certain, 25 pence likely. Public sector pay and pension benefits will be frozen or cut. The state pension will not be indexed to earnings growth. The national ID card scheme is dead. We will need a network of public infrastructure banks to finance capital investment, otherwise it will be goodbye to CrossRail and a modernised rail system and any hopes of improving our housing stock. But all this will still be insufficient.

There is no way that Britain's defence, overseas aid and foreign commitments can survive the next decade without swingeing cuts. Trident, the Eurofighter and the planned aircraft carriers must go. A review will cut the defence budget by a third, the aid budget by a similar proportion. Embassies will be shared or sold. Our permanent seat on the UN Security Council will become indefensible. The special relationship will be a joke; Britain will not have the capacity to invade anybody. Suddenly, the European Union will seem a more attractive way of retaining influence.

An urgent debate will begin about how to grow, because unemployment is going to rise by at least another one and half million by 2012 and fall only very slowly thereafter. The Faustian deal New Labour struck with the City cannot be repeated."
Duncan is patiently explaining to the Labour loyalists the reality of this. I'm not sure this Labour Party will be able to take that much reality - look, even the very clever Hopi resorts immediately to attack dog mode. I think the next election will be fought on the basis of lies, more or less consciously. Neither the Tories nor New Labour will quite be able to admit to this sort of prospect. Who would vote for either of them if they did?

The trick for the much derided and usually invisible Left though is rather different. It's time to move from almost ritualised denunciations of bankers , or even denunciations of capitalism in general, and find a way that a meaningful austerity programme can be re-packaged as sustainability. Sadly, I'm not holding my breathe.

Skating on Green Ice


Last time I looked, the average Icelander was 30,000 euros in debt and the IMF was predicting the national economy was due to shrink by 10% this year. The numbers may have shifted a little since then, but I doubt the general picture has. The default assumption amongst this tiny nation of 300,000 people is that they need someone to rescue them, or at least share the burden of this unimaginable level of debt. Few seem prepared to actively embrace default, as Michael Hudson advises. The room for manoeuvre for any Icelandic government at this point may be very limited indeed.

Which is why it’s only two cheers from me at the news that a Social Democrat/Left Green coalition has won the Icelandic elections? The basic tension in this coalition is around whether or not they should open talks with the EU about prospective membership - the Social Democrats are in favour, the Left Greens against, although their strength of purpose is crumbling and their formal position is that they want to see a referendum before any such talks are entered into. The guy gagged and tied onto the back of the bus in the cartoon is Steingrímur J. Sigfússon, chairman of the Left-Greens and finance minister.

I've only seen a fraction of the debate in Iceland as I'm a monoglot. But it does seem to me to be an argument devoid of any doubts about whether the EU - and, more to the point, the European Central Bank, masters of the Euro - would accept them under any better conditions than on offer from the IMF.

Larry Elliot points out this morning that,

"...the losses made by the banks have not gone away; the debts have simply been shifted from the private sector to the public sector. A potential meltdown in the global financial system last October was averted, but only at the risk of ­creating a sovereign debt crisis.

It would only take two or three of the emerging economies of Eastern Europe or Latin America to default on their debts to see doubts surface about the viability of the bigger developed economies, including Britain. The idea that the next big shock will come in the emerging markets is plausible, because these countries have been heavily dependent on foreign capital, and those flows have reversed as banks have repatriated what's left of their capital."

Basically, Iceland is already at the point where bank default merges into something that is, in all but name, sovereign default. Given it's so small, there is a case for rescuing it. But the ECB have got to be worried about precedent - if they rescue Iceland on overtly favourable terms, how can they not do the same to the Baltic countries, Hungary or even Ukraine if they go belly up?

Blogged with the Flock Browser

Friday, 24 April 2009

A New Poet (Well, New To Me...)

Kevin Higgins knows about growing old as a Lefty

My Militant Tendency

It's nineteen eighty two and I know everything.
Hippies are people who always end up asking
Charles Manson to sing them another song.
I'd rather be off putting some fascist through
a glass door arseways, but being fifteen,
have to mow the lawn first. Last year,
Liverpool meant football; now
it's the Petrograd of the British Revolution.
Instead of masturbation, I find socialism.
While others dream of businessmen bleeding
in basements; I promise to abolish double-chemistry class
the minute I become Commissar. In all of this
there is usually a leather jacket involved. I tell
cousin Walter and his lovely new wife, Elizabeth,
to put their aspirations in their underpants
and smoke them; watch
my dad's life become a play:
Sit Down In Anger.

His world cracked like a brandy glass,
when she said she was leaving, had
met a man not yet beyond repair.
The universe chuckled and moved on,
not wishing to afflict the mocked. Now,
he texts her to say he thinks he left
his life's work in the back of her car; and
though the rabble-rouser she married
vanished around 1975, he's still against
poverty on Wednesdays. She replies
she should have known: inside
yesterday's perfectly sculpted revolutionary
was always today's paunchy liberal who slugs
his cabernet, and watches daytime TV
with an elderly Labrador named
Adlai Stevenson, the Fourth.

Hat-tips to this one and that one.

Hardly Only The 2nd Time, But I Still Hope This is Farce

McGuinness has been threatened by dissident Republicans. Presumably he's now some kind of weird Michael Collins re-incarnation in their heads. Word by Storm dissects dissent Republican strategy with an unflinching eye over on the Cedar Lounge Revolution. Basically, he doesn't think they've got one.

But perhaps they don't need a strategy to destabilise SF and through SF, the Good Friday Agreement. Splinty sets out the potential logic,
"What anti-Agreement republican activity does..... is to ask the question “Which side are you on?” Do you, in essence, support the state against republicans, no matter how deluded you think those republicans may be? Imagine this being asked to a panel at a debate. It wouldn’t be a difficult question for an RSF member, who would simply answer No. It wouldn’t be a difficult question for a member of the SDLP, which has been collaborating with the state for decades, and who would simply answer Yes. The leftist on our imaginary panel would huff and puff and say that this was the wrong question, and we should really be talking about water rates. But for a PSF politician? Totally committed to the peace process, yet subjectively unwilling to openly pledge loyalty to a partitionist settlement, or even to recognise that that’s what the settlement is. For that reason, it’s still problematic to support the state against republicans – that’s why they don’t say they’re defending the state, they say they’re defending the Good Friday Agreement."

But the question that won't go away for me now is more pragmatic - who is it, exactly, that is giving McGunness the legitimate protection he needs? The State he fought? Or the supposedly disarmed organisation he once headed? The dissidents don't have to actually shoot him to undermine him.

From Gilts to Class Struggle in Five Easy Quotes

1. What's a gilt when it's at home then? Over to Paul :

"...gilts are IOUs issued by the government over periods of 5, 10, 30, and 50 years and bring a guaranteed interest payment for the buyer, paid every six months. Two thirds are held by pension funds, as they supply a ready and predictable source of income. Once issued gilts can be traded, so their price can go up or down compared to the interest rate guaranteed. Out of this relationship you get a yield - which is a bit like a "real" interest rate. If the price of gilts goes down, because there's not enough demand, the yield goes up - and the government effectively ends up paying a higher interest rate on its debt."

2. Sorry, I'm struggling to say awake here - why does that matter? Alice reckons it matters because:

"Even under the best case scenario, New Labour has bequeathed this country a decade of historically unprecedented fiscal problems. In the worst-case scenario, the UK could be slipping towards a fiscal crisis, where financial markets question the long run solvency of the UK government and refuse to finance this profligacy."
3. Blimey, that sounds scary - is it likely? Chris doesn't think so:
"The most important number about today’s Budget is $12.5 trillion. That’s the amount of money the private sector is likely to save around the world this year. This means that the government can raise the £220bn it plans to borrow in the gilt market merely by attracting 2.5 pence for every pound saved**. This is smaller than the share of the UK in the global economy..... the world has a shortage of safe liquid assets. Issuing gilts therefore meets global savers’ needs. This is why the UK - and governments of developed countries generally - has enjoyed very low borrowing costs as debt has soared."
4. Phew, so I can rest easy then? I mean, the FT says we're so safe we're rated AAA:

"As Moody’s says in its overview of sovereign ratings:The probability of default for a government depends on both the ability and willingness to pay.

Countries with long-term, firm financial systems that lock them firmly into the global economy are, of course, much more “willing” to pay than those without them.

Or to flip all this seeming optimism around: the UK won’t lose it’s triple-A rating because Moody’s knows the government would rather cut public spending to the bone first."(My emphasis)

5. Ah. I think the penny's beginning to drop here. So that's what Willem Buiter was on above when he said,
"The long-term pain of higher taxes and lower public spending is not the result of public debt and deficits incurred because of a war fought by a united nation against a hated external enemy. It is the result of an economic civil war, a massive systemic peacetime economic failure, with a large domestic component. It is therefore not clear that the necessary social and political cohesion - readiness to accept joint fiscal burden-sharing - will be present. If the necessary fiscal tightening is not forthcoming because different groups and vested interests are engaged in a war of attrition aimed at shifting the fiscal burden to the other guy, markets could easily panic and Britain could face..... the rest of the world withholding financing from its public and private sectors."

Bail Out Struggles

Some of these American folk are getting the idea about this dirgisme business you know.

Polanyi Again

The Great Transformation again. This time on the differential effects of pre-existing class structures on the 'birth marks' left on the working class movements in Britain and on Continental Europe:

".....there was no comparison between the moral and cultural catastrophe of the English cottager or copyholder of direct ancestry, who found himself helplessly sinking into the social and physical slums of some Northwestern factory neighbourhood....and the Slovakian or...Pomerian agricultural labour changing overnight from a stable dwelling peon into a industrial worker in a modern metropolis. ...the English yeoman's son or the evicted cottager certainly did not feel his status raised...the recently emancipated farm labourer of the continent [had] a fair chance of rising into the lower middle class...[and] even the bourgeoisie, which socially towered above him, was politically in the same boat, being almost as removed from ranks of the actual ruling class as he was himself...In England the middle classes...were strong enough to vindicate their rights alone, and not even in their near revolutionary effort in 1832 did they look to the labourers for support...while on the Continent the still semi feudal aristocracy did not intermarry with....the bourgeoisie and the absence of..primogeniture hermetically insulated them from the other classes. Every successful step towards equal rights and liberties thus benefited Continental middle and working classes was part of the Continental tradition that the working class would help fight the battles of the bourgeoisie against feudalism, if be cheated by the middle class of the fruits of victory. But whether the working class won or lost...its experience was enhanced, and its aims raised to a political level...While the British worker developed an incomparable experience in the personal and social problems of unionism and left national politics to 'his betters', the Central European worker became a political socialist, expected to deal with the matters of statecraft, though primarily with those that concerned his own interests....The Continental worker needed protection..against the normal action of factory and labour market conditions. He achieved it mainly by the help of legislation, while his British comrades relied more on voluntary association – trade unions – and their power to monopolise labour. While economically the difference be over rated...politically its consequences were great. On the Continent trade unions were the creation of the political parties of the working class; in England the political party was the creation of the trade unions."

This, I think, is closer to Anderson and Nairn than Thomson's Peculiarities of the English, but I don't want to re-open that debate. I merely quote at such length to ask whether a leftwing party need be based on the trade unions. I don't think it does, I don't even think it is desirable because it muddies certain waters in terms of roles - which is why I fear people like Phil and Stroppy are radically mis-reading the potential and significance of NO2EU, which looks to me like a train-crash about to happen.

Thursday, 23 April 2009

"The ambition to bring British infrastructure back up to the level it achieved at the end of the 19th century has been postponed"

Y'know, the thing about Willem Buiter is that he is a professor of political economy, not 'just' an economist. Economics, we all know, is the so called 'dismal science'. Political economy is quite different:

Alistair Darling is a good chancellor of the exchequer. He has presented a Budget that does  essentially nothing - a good budget, given the dreadful economic circumstances. ....Mr Darling is doing his best to clean up the mess left by his predecessor, Gordon Brown. .... the global financial regulatory race to the bottom have left the UK .... in its worst fiscal shape ever in peacetime ...... It has a bloated financial sector, including a banking sector that is too large to save unless state support is restricted to the UK high street banking bits of UK-based global banking groups....Under the best possible scenario, taxes will have to be raised and/or public spending cut on a permanent basis by between 5 and 6 per cent of GDP to regain fiscal sustainability. The necessary permanent fiscal tightening could easily be larger. The pain will be widely felt. The ambition to bring British infrastructure back up to the level it achieved at the end of the 19th century has been postponed by another quarter-century. Education and health will suffer....If the necessary fiscal tightening is not forthcoming because different groups and vested interests are engaged in a war of attrition aimed at shifting the fiscal burden to the other guy, markets could easily panic and Britain could face an emerging market-style “sudden stop”, with the rest of the world withholding financing from its public and private sectors.....I would consider the case for a government of national unity. It would help if Mr Brown - responsible more than any one for this debacle - were to resign.

In my unacademic, vulgar leftist way I think he's saying (a) British capitalism's basic 'national business model' just went down the Swannee; (b) there will be an upsurge of class struggle after the election to play 'pass the pass' with the consequences of this; (c) but this risks the 'mutual ruin of the contending classes' if the international markets decide not to finance the country's debt.

P.S. Hopi is quite right to boast about the quality of economic debate on his site. Duncan in particular has crystallised something for me by doing a quick back of the envelope calculation which suggests that the gap between tax yields and spending is about 12% GDP - equivalent to either 25% of all public spending, or a general tax increase of 30%. Neither of these things is going to happen in their entirety of course - but neither is any possible combination of them without massive struggles....which Buiter says the international money markets have the capacity to simply call time on by taking their money away.

Wednesday, 22 April 2009

I Can’t Do Instant Commentary, but I Can Wonder What Age We’re Living In...

Those bloggers who, quite unlike me, don't have to take their socks off to count up to 20, are fast coming into the fray with instant budget commentary. I marvel at their ability to absorb and assess so much stuff so quickly. Duncan the Labour Fund Manager delivers a 'on the right lines but could do better' sort of end of term report, and then moves into a pragmatic defence of the 50% tax rate. Meanwhile Richard Murphy is moving from initially positive coverage to a series of critical, detailed notes on taxes, anti-tax avoidance measures and the limitations of the 'greenspray' Darling has slapped onto his plans.

Over on the right-hand side end of the playground, Alice tells us we're all doomed because of the size of the gap between tax take and spending; Chris Dillow says there's loads of money sloshing round the globe wanting to buy gilts to cover that gap; from the Left AVPS breaks into uncharacteristic purple prose to tell us that the ,"...twitching corpse of neoliberalism has been stitched together with the cadaverous remains of disinterred Keynesianism" with the aim of making the working class pay for the crisis.

I respect all of these bloggers a lot, but I can't help thinking that these are responses 'prepared earlier', like a half built Blue Peter project pulled from under the presenters table. But - hey, what do I know? I've still got both my socks on, after all...

But even as an economic ignoramus I have a hunch that two things are true, one to do with low down politics and one with our perceptions of the Age itself.

Firstly, this is a pre-election budget so it is voter friendly as it is possible to make it in the circumstances.(Just because the rest of us think the prospect of a Labour victory at the polls is vanishingly small doesn't mean that Darling and Brown have accepted the fact). So whoever wins the next election is going to introduce a more severe budget shortly after they move into Downing St.

Well, at least they will if we really are living through a crisis. From the unorthodox left, Boffy argues that not all of us actually are, and the effects of the credit crunch might be quite short lived, though severe in those age and geographical sectors most affected. But there's another view: the Keynesian Left have rediscovered both long waves and Schumpeter, now joyfully reunited by Carlota Perez,

"...growth in the world economy takes place by successive surges of about half a century, each driven by a technological revolution. The massive changes that this brings each time around... involve great behavioural upheavals in the economy and society. For that reason, the difficult process of unlearning the old and absorbing the new takes twenty or thirty turbulent years of "creative destruction." It is after the massive paradigm shift has been basically achieved, that the fruits of the new technologies in higher productivity and widespread innovation can be reaped and socially shared.

Historically, the first half of each surge -the Installation Period- has been the time when financial capital shapes the economy, while the ideology of laissez faire shapes the behaviour of governments. It is a grand experiment when unrestrained finance can override the power of the old production giants and fund the new entrepreneurs in testing the vast new potential. Finance then helps the new giants emerge, enables the modernization of the old industries with the new techno-economic paradigm and facilitates the necessary overinvestment in the new infrastructures (so coverage is enough for widespread usage). Thus the extreme "free market" ideology has a role to play in the early decades of each surge.

The Installation period has led each time to a major bubble followed by a major crash (canal and railway manias ending in panics, the roaring twenties ending in the crash of 1929). The collapse reveals the need for regulation to restrain financial excesses and to favour the real economy, usually under political pressure for reversing the income polarization and other negative consequences of the bubble times. If adequate policies are put in place to facilitate and develop the conditions for healthy market operation and social fairness, what follows is a Golden Age -the Deployment Period- when production (rather than finance) leads the expansion, the benefits of the new technological potential are fully realized across the economy and its social benefits better spread (the
Victorian Boom, the Belle Epoque, the Post War Golden Age)."

Fascinating – but shot through with technological determinism, if the quote above is typical. Schumpeter himself had a rather brilliant protégé who would have dismissed this with a snort: Paul Sweezy. He might, plausibly, have accepted a lot of Perez's analysis, but he would have insisted on the importance of the relations of production as well as the forces of production. & it is Sweezy's own protégés who, to my mind at least, have produced the most interesting analysis of the crisis from the Marxist Left so far. They say there is a systematic crisis, and that socialism is the answer- but Perez's analysis points to the possibility of a kinder, gentler capitalism. So what is the nature of this crisis, and of the Age we're living through?

Jack Jones R.I.P

He was the spirit of that age. A deeply honourable man, infused with all the strengths and weaknesses of the Labour Movement of that time. An International Brigader, he was a TU full timer who even the most purblind of ultra-leftist would have difficulty pinning the charge of personal or political corruption on. Integrity was his hallmark. He was hewn from the same rock as thousands of now departed working class leaders, in TUs and the Labour and Communist Parties, whose like I fear we will not see again. Despite the historians' argument I think this rock was neither specifically Methodist nor Marxist - but a uniquely working class culture and morality, shaped by the demands of British politics and industrial relations of the day.

Of course there were things I disagreed with him about. But on the big political question of his time as TGWU General Secretary let me just say this: the teenage Charlie thought the Social Contract Jones entered into was a sell-out. The teenage Charlie was both callow and wrong. Jack Jones was right - he just didn't have a movement behind him with the political maturity to make it a socialist Social Contract. So wage driven, economistic struggles predominated. There is a sadness here - he was, after all, an early supporter of the Institute of Workers Control.

Mod pays his tribute here, and there is some immediate TUC reaction here. Andy has a different view of the Social Contract, but not of Jack Jones the man over here on Socialist Unity.

Monday, 20 April 2009

Whose Cradle? Whose Grave? A Response to Chris Dillow

One of bloggers I respect the most, Chris Dillow, is in left-libertarian gadfly mode, and is asking whether the left should support a small state, or if the state should even be trusted as a vehicle for increasing equality. It's all jolly fun, even allowing him to quote mad axe-man Althusser, of all people, on Ideological State Apparatuses in one of the older posts he links to. What it doesn't do, though, is look at the specifics of how state run and funded welfare services have actually worked historically. So I offer this note, a version of something I did for a friend last year, as a cautionary note.


Let's start with Attlee and Beveridge, although of it course it didn't really start with them. But they are the two figures it is conventional to see as the embodiment of the post war consensus on social welfare matters, a consensus which has only been seriously questioned in active political terms in the last 15 or 20 years. The consensus they supposedly represent is one in which the State takes responsibility of ensuring a 'cradle to grave' security for all citizens from what the 1942 Beveridge report described as the five "Giant Evils" in society: squalor, ignorance, want, idleness and disease.

This version of a welfare state rested on some fairly profound unstated assumptions, foremost of which was the notion of a population organised almost entirely into nuclear family households, dependent on a male wage earner. Such families might need help in times of trouble or ill health, or assistance in redistributing income between different phases of their lives, but they were seen as essentially self dependant units of social organisation as long as any repeat of the mass unemployment of the 1930s was avoided. This hid the unremarked on fact that most childcare and most care of elderly or disabled persons was, in reality, carried out by the female members of these nuclear family households. Precisely because this was so the borderline between formal 'care' and 'health' was often hazy: because most elderly people – or mentally ill people, or people with learning disabilities – lived with their families, the range of state services for those that couldn't get support in this way was often overly-medicalised and very institutional. The formal welfare state of Beveridge and Attlee rested on an unseen army of female caring labour, and sometimes provided less than ideal alternatives to this labour.

It also rested on some unstated assumptions about the likely demand for services. Its very centrepiece, the National Health Service, was originally planned on the assumption that once a backlog of health problems in the population had been addressed, demand for services would stabilise or subside. This proved hopelessly wide of the mark.

Not all 'classic' state welfare services were about individual incapacity: some were, originally at least, most definitely about self improvement. Council housing is the key example here: its large scale expansion was the answer to a massive post-War problem of privately rented slum housing and bomb damaged housing stock. But this wasn't a response that was indiscriminately or objectively bestowed on all people in these circumstances: you had to qualify for council housing, partly through the grim experience of waiting on a list and partly through some less objective tests which measured your moral suitability to be given access to this scarce resource.

It's important to note, despite the conventional view to the contrary, that this never, even at the beginning, implied that the State necessarily directly delivered all the relevant services. A moment's thought about the historic role of the Anglican and other churches in the field of education shows this idea to be untenable. Nor did the State necessarily even exert a strong regulatory function over all welfare services – for more than a generation after its founding, the primary form of practice regulation in the NHS was professional self regulation by the medical colleges and BMA. But it is broadly true that the State took responsibility for funding these services and was seen as the universal source of health care, social care, education and social insurance, as well as an important source of service options in housing and pensions, at least for those who couldn't or wouldn't make private provision for themselves.

From the very beginning, a number of conservative and libertarian thinkers claimed the assumption of such roles by the state was a fundamental threat to freedom per se, whilst some on the left objected to the way state intervention steamrolled prior systems of localised mutual self help out of existence. On the one hand, predominantly conservative or New Right thinkers built an increasingly sophisticated theoretical case that public services, especially those free at the point of use, needed to demonstrate they didn't undercut individual responsibility, and weren't subject to 'provider capture' - being run for their staff rather than users. On the other hand, the 1960s was widely seen as the decade in which poverty was 'rediscovered', and during which so many of the major campaigning and service providing Third Sector organisations that loom so large in the housing and social care fields today were founded. In most cases, these bodies originally conceived of their role as supplementing the existing welfare state; demonstrating new and better practice which might be adopted by the state; and/or lobbying the state on behalf of the interest group or need they spoke for.

Underneath all this ferment of idea more profound changes were afoot. 30% of the population of all UK households contained only a single person in 2001 and only half of all adults lived in a marriage; by 2005 over two thirds of all mothers were in some sort of paid employment. Beveridge's default assumption of a nuclear family with a male wage earner being the norm is clearly not sustainable. The 'unseen' army of female caring labour which underpinned his 'cradle to grave' vision has quietly slipped away as household size changed, or been forced to juggle two sets of conflicting responsibilities. So more had to be done by the public services, and this, coupled with the ceaseless march of the cost of medical and other welfare technology, and periodic public outcries to improve standards, led almost inevitably to a crisis in the Attlee/Beveridge model which has been slowly unfolding since the mid 1970s.

The political response to this crisis has been piecemeal and – certainly compared to industrial or economic changes in the same period – rather slow. This is no accident: large parts of the 'old' welfare state long retained a loyalty and even affection amongst many sections of the community. But it has gathered pace, and now there is a substantial consensus for change across all the main political parties.

The first big political breach in the old consensus came in the form of a populist challenge to the very idea of collective provision: the sale at discounted prices of council houses to their tenants by the first Thatcher administration. This redrew Beveridge's boundaries between state support and individual self improvement in a radical way. It was massively popular – at least with its beneficiaries - and laid the ground for the further development of the theme of individual choice as the centre piece of welfare policy and, less prominently, the closely linked theme of individual responsibility. Almost unnoticed at the time, Third Sector providers, housing associations - not the local state – became the governments default choice for providing new social housing. Again, this shift was justified on grounds of increasing choice.

Under increasing financial pressure, the State pursued two further strategic aims in the 1980s.

Firstly it tightened the regulatory framework on many parts of the welfare state in significant ways, especially in education which saw a whole new framework of inspection, league tables and tightly defined national curriculum imposed on it. It also moved against 'provider capture' of services in other ways, especially in the health service which saw a series of managerialist reforms designed to curb the perceived power of doctors, and boost those of general managers working to supposedly ideological neutral principles of general management. Such reforms were generally described as attempts to make the services concerned more responsive to 'customer choice'.

But the real breakthrough came later: the increasing emphasis on, if not always a full blown internal market, at least the formalisation of a 'purchaser/provider split in health, social care and social housing. This move was only politically possible because of a number of prior developments, not all of them on the ideological right.

Whilst it is true that the idea of a purchaser/provider split is an answer to the Right's fear of provider capture, it is also a response to the Left's concern about state provision of inappropriate services to disempowered communities. The Livingstone led Greater London Council of the early 1980s had pioneered not the state provision of services but the funding of community groups from different demographic constituencies to provide a more nuanced and responsive pattern of service. So important sections of the Left had accepted that, in some arenas at least, the model of universalist state run provision wasn't the way forward. Much dispute was raised at the time about the supposed strengths or failures of internal markets, be they in the NHS or elsewhere, but the more fundamental shift to a welfare world organised into purchasers and providers was less remarked on.

Or less remarked on outside the Third Sector, anyway. There was a quite a lively debate amongst voluntary organisations, charities and other not for profit bodies about this change. On the one hand, this new paradigm obviously offered what had often been small and marginalised bodies the chance to acquire a much more significant role as they replaced or supplemented the 'old' statist welfare structures of the post war consensus. On the other hand the very idea of dividing the world into 'purchasers' and 'providers' was a direct challenge to those whose motivation for engagement with welfare services was because they themselves self identified with the problem to be addressed. Some Third Sector services- women's refuges run by former domestic violence victims, substance misuse projects run by ex-users, some specialist minority ethnic groups and the like - found the idea of dividing the world up into 'professionals' and 'clients' difficult enough, let alone acknowledging a further division with the 'professional' caste of purchaser and provider. The old idea of self help or mutual self improvement seemed to have completely disappeared. Many more organisations had traditionally seen themselves as both providers and campaigners or lobbyists for their particular interest group. Adapting to a world where they had to increasingly choose between these options – because it was purchasers, not lobbyists, who influenced how resources were distributed – was not always easy.

Yet it is this paradigm which has prevailed. There have been, and remain, very important differences in how different parties, at different times, have attempted to develop specific sets of policy proposals within this paradigm. Jargon encrusted policy succeeds jargon encrusted policy - but there are differences. Compulsory Competitive Tendering is different from Best Value. The prospect of a Voluntary Sector Compact that actually worked, is a very different world to the one we sadly inhabit. Nonetheless, an underlying unity of purpose can obviously be perceived. It is a world of purchasers and providers. A world where in theory at least – because, in practice, there is a large amount of relative inertia in the system – most core welfare services outside of education are subject to periodic review and potential contract termination. Even in the education field, we have the phenomenon of a central government increasingly pushing a greater degree of structural autonomy for state funded schools - an autonomy subject to definite limits, and potential closure, in the event of failing to deliver the required results.

The 'modernisation agenda' of the New Labour government has largely been about achieving this situation – and, more recently, about re-addressing the long standing financial crisis of the welfare state through efficiency reforms. Insofar as the Third Sector has engaged in this agenda – and most of it has had no choice but to do so – it has been subject to central government targets and scrutiny for performance against these targets.

Furthermore, both major political parties appear – or seem to appear once one negotiates their rhetoric – less than totally enamoured with the existing Third Sector. We are constantly told that 'faith communities' should be invited to contribute more to the actual running of welfare services, despite the fact thatfaith communities are already major players in the sector. Some of this, of course, is merely a rhetorical cover for policies designed at the social inclusion of Muslim communities after 9/11 and 7/7. But some of it reflects a slowly growing recognition that the Third Sector per se may not fit quite as easily into the purchaser/provider marketised split as theorists once hoped. In the sector where these developments have perhaps gone furthest, that of social housing, government first 'fattened' the Third Sector providers through prioritising them as vehicles for development; then created opportunities for them to bid for the management of services previously run by the local state. But, still, performance wasn't considered sufficiently robust, and recently capital funding for new social housing has been made available to the private sector as well as non for profit bodies. This is perhaps a canary in the coalmine - as the logic of the purchaser provider split bites more deeply in health, social care and even education then perhaps more Third Sector bodies will be found similarly wanting.

The Conservative Party is currently extremely critical of centralised target setting, and the diminution of local autonomy. It seems likely they will alter the system if they re-assume office, perhaps increasing the degree to which local, rather than central, government acts as purchaser. They also seem to have learnt from their experience in government in the 1980s and 1990s that, whatever theorists might say, one can only deliver welfare services in partnership with the professions in the field, not against them. Such a stance is perhaps typical of an opposition party. It remains to be seen how far it will survive the experience of government.

The basic problems remain, however. The old 'invisible' system of welfare provided by unpaid female labour is doomed. The 'modernised' system state has found it necessary create a whole tier of low paid term time/school hours Teaching Assistant type jobs in schools, for example. But this just emphasises that, today, women have to be paid for doing what, 60 years ago, they were assumed to do 'automatically'. The issue of the financial crisis of the welfare state rumbles on - hence the endless repetition in government documents about the importance of choice and prevention and personal responsibility and partnership between state and individual. It's about creating the mood music for sharing the eye-watering bill for welfare services between state and individual.

When Chris Dillow and fellow left-libertarians question the value of the 'big state', they mean something very different from this, I know. They mean something like the 'happy' ending ( there is another one) David Edgar foresaw in his still-very-readable short story Novel Approaches, in the August 1989 issue of Marxism Today.(Go read). I want that happy ending as well: a new social democracy, revitalised by localism and community control.

But it's not what we're being offered - we're being offered the language of libertarian welfareism dolloped liberally over the reality of the steady withdrawal of the state from facilitating certain kinds of mutual insurance.