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?

Housing Again

Every so often I post about housing association finance - which normally ensures even less readers than usual*. But, sod it, it's my blog and I'm going to take this opportunity to claim a 'I-told-you-so' moment.

Moody's, the Financial Ratings Agency, have released a report on the creditworthiness of the sector and especially on the five big associations they rate: Affinity Sutton Group, Circle Anglia, Sanctuary, Shaftsbury and Places for People. These are very big organisations - Places for People alone owns or manages around 60,000 homes.

The report helpfully explains how Moody's ratings work:

"..ratings are composed of two principal inputs: the association’s intrinsic credit profile (Baseline Credit Assessment or “BCA”); and the likelihood of extraordinary support from the central government in case of need."

& what do you find when you look at appendix 3? A list showing that their Baseline Credit Assessments are relatively low, but the likelihood of extraordinary support from government is 'high', thus making them very creditworthy indeed.

So the big guys are seen as very creditworthy because the government backs them. (Which does seem to rather undermine associations' fight not be considered as public bodies, but I digress...)

Nonetheless, one in five associations - not the ones mentioned above - are seen as having shaky finances. This is very largely because they have business models based on sales, not just rental income, and the sales have dried up. Moody's notes the recently introduced split of funding and regulatory functions and says the two new bodies - the Homes and Community Agency and the Tenants Services Authority - need to get their act together because,

" ...the institutional capacities to assist weaker associations now require more ‘joined-up’ policy and actions, which may be tested under what may be the worst recession in decades."

18% of the country live in housing association owned properties. Just thought you'd like to know that.

*Did you see what I did there? I used the word 'readers' in the plural without apparent irony...

I've Got That Sinking Feeling

Say what you like about John Ross - he does give good graph...




Advice for the shortsighted: blow up that second graph and check the dates the black line represents.

The Recession Moves At Different Speeds for Different People

The markets are going up. Is this the first sign of our being in a short, sharp 'V' shaped recession, or is it just a 'sucker's rally' as Larry Elliot would have it?

I haven't got a clue. Or at least I don't pretend to be able to call the markets. But I do accept that the recession will end at some point: this , I agree, is not the final crisis of capitalism. Much, I suspect, will depend on the the ability of the G20 to refashion a new set of global trading relationships.(I'm not holding my breathe, but you never know...)

But even if that works it is important to remember that the recession moves at different speeds for different people. Re-stabilised markets are not the same thing as a re-stabilised economy and society. The unlikely coupling of Gary Younge and Max Hastings both make that point in their different ways in the Guardian this morning. Younge looks forward to a resurgence of the Left as the magic of invincibility falls away from the financial Masters of the Universe. Hastings quietly notes the similarity of the current period to that of the phoney war of 1939 and early 1940. As yet, the recession has only hit a minority. Whoever is in power after the next election will govern at a time when it hits the majority. This is not necessarily a happy prospect for the Tories. Elliot puts this into perspective:

"Normally, Alistair Darling would be preparing a budget next month of such austerity that it would put Sir Stafford Cripps to shame. But the chancellor is considering an expansionary package that will lead to a further increase in the budget deficit. On some estimates, the Treasury may need to borrow £180bn next year to balance the books – 12% of GDP and unprecedented in peacetime (and probably wartime, for that matter)."

Cuts are coming. Big time. 2010: the year of living dangerously.

But I still remain to be convinced our barely functioning labour movement - well, barely functioning by the standards of the 1970s, anyway - is going to be the only or even main vehicle via which resistance raises its head. David Harvey, the doyen of Marxist theorists of neo-liberalism, seems to be saying something similar here. But his alternative, or supplementary, vectors of resistance seem cloudy and ill-defined.

As are mine, I must admit.

How Low Can You Go?

Via here, via here but really from here. So there we have it: only 1929 has been worse in percentage terms and, if John Ross is right, that record might not last either...

But Dave Osler very reasonably asks: and the alternative is? The answers aren't pouring in at this point, but you never know.

The Economic Crisis: Getting A Sense of Scale

The economic commentators are always full of doom and gloom. The very strength of the adjectives they use make it difficult for non-economists to get a real sense of the sheer scale of current crisis. Because, without a doubt, part of the commentariat's shock at what is happening is simply the breaking of a spell: the illusion that 'boom and bust' was over, and the 'Great Moderation' had tamed the business cycle, had been very widespread. So some of this rhetoric may be simply a reaction to the previously prevailing orthodoxy, not a reliable guide to the severity of the problem.

Richard Parker in the NYRB, however, gives be a comparison I can understand:

"By mid-February, the Federal Reserve's once-gargantuan $29 billion rescue of Bear Stearns had been dwarfed not just by the government's hotly debated $700 billion "bailout bill" last fall, or even President Obama's nearly $800 billion stimulus package, but far more stunningly by the $7.6 trillion the Fed and Treasury had by the beginning of 2009 already pledged to contain the ever-widening collapse of the economy, and the additional sum of up to $2 trillion that the new administration said it would raise from public and private sources to rescue banks. Governments from London to Beijing have meanwhile rushed to provide vast sums to their own capital markets. These figures are mind-numbing to voters—and to sophisticated investors and economists as well, and for good reason: fifty years ago the United States spent what in today's dollars would amount to only $115 billion on the Marshall Plan to reconstruct all of Western Europe; the 1980s savings and loans bailout—at the time the largest financial rescue operation since the Great Depression—cost taxpayers a mere $130 billion." (my emphases)

The other issue is how long is this likely to go on for. Will this recession be 'V' shaped (painful decline, but followed by a very swift recovery)? Will it be 'U' shaped ( painful decline, followed by a period of flatlining before the recovery) ? Or will it be 'L' shaped, like in Japan ( drop off cliff and stay at the bottom of the economic canyon for ages...) ? John Ross points out 27th Febrauary was the 352th day since the Dow Jones hit it's peak, and that overall stock prices have so far declined by 50%. He goes on:

"The only fundamental difference between the current decline and that of 1929, so far, is the duration of the fall. After 1929 it took the Dow Jones 713 trading days to reach its bottom – the trough being on 8 July 1932 by which time the Dow it had lost 89.2% of its value. It remains to be seen for how long the current decline will continue. However although the duration of the drop is at least as yet not as great as after 1929 is as rapid."

OK: so we don't know what shape this recession will be because we're still falling off the cliff, despite throwing money at the problem on a scale which dwarfs the post-war recovery package for an entire continent.

The Economic Crisis: First Sight of Green Shoots in Italy

Bloomberg reports:

"Jan. 30 (Bloomberg) -- Revenue raked in by Italy’s mob surged 40 percent last year, turning crime into the nation’s No. 1 business, Eurispes said in its annual report.

Income increased to 130 billion euros ($167 billion), up from about 90 billion euros in 2007, according to figures supplied by Eurispes and SOS Impresa, an association of businessmen to protest against extortion. Drug trafficking remains the primary source of revenue, bringing in about 59 billion euros, and the mob earned 5.8 billion euros from selling arms, the Rome-based Eurispes research group said today.

“During a crisis, people lower their guard,” Roberto Saviano, who wrote the bestseller “Gomorrah” about the Camorra crime bosses, said in an interview. “Studies show the criminal market never suffers during a crisis. I’m convinced that this crisis is bringing huge advantages to criminal syndicates.”

Via MR

Isn't it wonderful how the market mechanism reallocates capital to more efficient enterprises during a recession?

The Economic Crisis: How's the Centre Left Doing?

Henry knows.
"It may well be.... that the time is ripe for social democracy. But I fail to see any social democratic actors out there who are ideologically prepared (let alone politically organized) enough to take advantage of these opportunities. Hence, we’re seeing what might be described as parodic social democracy – many of the organizational forms of social democracy (temporary stimuli, nationalization of major chunks of the economy) being undertaken by right leaning and centrist administrations as stop-gap measures to save capitalism and markets, rather than to subordinate them to broader social and democratic needs."

'Parodic social democracy'. Somehow the phrase has a certain ring to it, don't you think? .

Lady Godiva Town Feels a Chill

Having spent some months posting about Iceland (e.g.) and the economic crisis, 2-3 weeks ago I promised to keep an eye on my old university town. The logic being that all the expert commentators kept reminding us that 'Iceland was a special case', 'lessons couldn't be drawn from such a small country', 'it's only got a population the size of Coventry for chrisssake....'

All this strikes me as plausible - but how plausible? So I want to use whatever local data on Coventry I can get my hands on as a sort of yardstick by which to assess the real impact of the recession outside the fetid confines of the Square Mile.

It seems Lady Godiva town is being hit hard by the chill winds of recession. The local paper is reporting a 10% jump in JSA claims in the city in December alone - and a 37% jump, year on year. & it is claimed that local firms are in the dark about how to access the various 'business support' funds the government has been alledgedly making available to them.

I'll come back to this. If you come across Coventry-specific economic data - or indications of social unrest - I'd be grateful if you could post a comment to direct me to the source.

"Another Year Older & Deeper in Debt..."

When I started blogging one of the seemingly best pieces of advice I read was to concentrate on what you know and don't get caught up in endlessly commenting on others' views. It still sounds sensible to me in the abstract - but given that very few of us, and certainly not me, fully understand the nature of the economic crisis it's been quite hard to adhere to.

Sometimes the function of a small time blog like this can be to merely repeat and spread around striking bits of info found elsewhere. So here (via) is a sobering graphic showing the current level of debt in the US financial system compared to the years of the Great Depression. Ann Pettifor gives a no-holds-barred Left Keynesian view of the implications of this graphic, and acidly comments:

"The implications are clear. It took years - from 1929 until the 1940s - and a World War, before the US cleansed itself of the 1930s debt sludge. Japan is still trying to purge itself of debts built up in the 1980s. 18 years after the Japanese ‘debtonation’ of 1990, the economy is still the weakest of all the OECD countries. Eighteen years after the property bubble burst, Japanese house prices are still falling!

Will it take 12-18 years for the US economy to recover...? On this reckoning: more than likely."

The original piece from which the graphic is drawn is by Dr. Krassimir Petrov. His is a more soberly written text - but one which seem to unequivocally point towards us actually being at the start of the second Depression.

Two Sociologists Get Me Thinking

Two sociologists have posted economics stuff which has got me thinking this morning.

Firstly, Bud the American points out that, initially at least, FDR's New Deal - and certainly the famous 'First 100 Days' - wasn't what we'd now call Keynesian for the very good reason that, actually, Keynes didn't publish his magisterial General Theory until 1936 and FDR came to power in 1933. Events usually precede their theorisation. I suspect the same thing is going to be true of various kinds of policies and turning points in the current crisis.

Secondly, AVPS bravely takes an initial stab at commenting on the unofficial strike at the Lindsey Oil Refinery. I say 'bravely' because, as the title of his post suggests, this action might clearly be woven into a racist narrative. I see the BNP (and, no, I'm not going to provide a link to their website) are already claiming, "1000 British construction workers demonstrated in support of “British jobs for British workers”. But the very brevity of this statement suggest to me that, thankfully, they do not currently have a base amongst these workers - if they did, they'd be boasting much more actively. AVPS tries, gamely, to see the positive anti-globalisation themes embedded in the strike and remind people of the principled left view on dilution of labour. But I sense his heart is not quite in it as, like everyone else, he can't know how all this is going to turn out.

Nonetheless, the action takes my mind back to a fascinating Red Pepper article from last summer on 'Underdog Politics' across Europe.

"The success of right-wing populism is not only about what its proponents do and what voters think. It is just as much about how other parties, and especially the leftist elite, have created an enormous division between themselves and ordinary people at the bottom of society. The right’s populist success is the other side of the left’s failure, whether they are self-satisfied social democrats occupying privileged positions in the state or ‘post-modern’ socialists entrenched behind trendy theories on globalisation, the ‘networking society’ and individualisation."

Yesterday, the day of the French General Strike, I posted to the effect that I doubted whether the British Labour Movement would demonstrate the same type of resistance to the economic downturn as is apparent in some other European countries. But there will be resistance - and it is that 'underdog' theme which scares me most if it becomes the trope of choice of such resistance.

But perhaps, as Bud reminds us, we'll only be able to truly understand the political and economic effects of this crisis after we have lived through it for some time.

Midday Update: the BNP's site is now carrying a front page article on the strike - and the arrival of a team of their activists....

6pm Update: ah, but now almost all the Left are behind the striking workers, having convinced themselves that the basic motive is not racist. & The TUC have put out a very helpful statement which is relatively strongly worded given that these strikes are, by definition, illegal. I hope they're all proved right. Perhaps I'm being overly-gloomy but I still fear it could take a right-populist turn...

Maybe Not Broke, But Still Broken

Despite the hints of Mr.Cameron Britain's not going broke it seems. Or at least not unless everyone else does, according to the much quoted and seemingly sensible Flip-Chart Fairy Tales. So that's alright then.

Except, of course, it isn't alright. Countries don't actually go broke in the same way as companies. They don't get put into receivership and then get closed down/broken up/sold off to the highest bidder. Even if the IMF suits did arrive to take over the direction of the Treasury their first thought wouldn't be "...let's see if we can interest the Germans in annexing Middlesbrough 'cos they've got a chemical industry as well" or " ..hmm, there's no alternative but to simply close down Rotherham because no one in their right mind would want them as a colony..." or " ..I think we should turn down this proposed management buy-out from Guildford because they're not offering enough money - we'd get a better price flogging the town to the Saudis..."

What we're really talking about is the degree to which the current financial and economic crisis will impact on the county's political and financial autonomy and on the living standards of our people. Whether or not the IMF will arrive - as in Iceland - is a matter that those of us who know the depth of our own economic ignorance are best advised to leave to the experts. (You know, those people who did so well in warning us all this was coming over the horizon...).

But one thing seems clear to me: the 'national business model' is broken. That is to say our heavy dependence on the financial sector is unlikely to be restored to its previous degree of viability. We - and the States - simply haven't saved or invested enough compared to the emerging economies, and particularly China, as John Ross relentlessly points out. So we're going to get poorer and have less national political autonomy. This is the big point. We've got to find a different balance of things to do as a nation - and probably pay ourselves less for doing it. (Well, I say 'ourselves', but I really mean pay the boss class less ......)

The question of how much poorer and how much less political autonomy is wrapped up in the technical language of economists that so few of us really grasp. Is it to be a crisis of 'early nineties' scale? Or are we talking of something akin to the the post 1976 crisis that led to - and was made worse by - Mrs.Thatcher? Or even the Big One - a Depression, 1930s style ? I don't know and, to be frank, I don't really believe anyone else does either.

Frozen Orange Blowback ?

No, not that kind of Orange......

The Icelandic Weather Report carries a really helpful eye witness account of events in Iceland over the last week. In summary: mass popular protest has caused a deeply unpopular government to concede fresh elections in the aftermath of economic Armageddon.

This turmoil - and similar events elsewhere on Europe's periphery - has begun to worry the continent's political and financial elite. (Via the leftist sage of Suffolk).

But what caught my eye in the latest Weather Report was her reference to a degree of popular revulsion at rioting as a tactic - and an explicit iconographic reference to events in the Ukraine.

"Hundreds of Icelanders join the “orange movement” to show they support peaceful protests and reject violence. Protests continue outside the parliament buildings despite cold temps and gale-force winds. People bring roses and tulips to give to the police; someone brings hot chocolate and distributes equally to protesters and police officers..."

How amusing if the turbo-driven world of globalised finance capital were to be challenged in the ideological clothes of a movement which presented itself as sweeping away the corrupt and undemocratic remains of the old Soviet era. Especially since 'even the dogs in the street' (as a real god-fearing Ulster Orange man might say) know that Ukraine's original Orange Revolution was part funded and organised by a range of Western government and non-government agencies including George Soros' Open Society Institute. & who personifies globalised finance better that Soros, the 'man who broke the Bank of England' back in 1992?

Blowback time?

Lotta Continua

Peston talks lucidly about why the Government's levers on the market aren't working. &, make no mistake, it might be the so called independent Bank of England which has just implemented the 1.5% interest rate cut but it is the Government which leant on them to do so. Paul Mason and Richard Murphy agree on this point, whilst Will Hutton restricts himself to telling us markets are stupid.

Whatever. The fact is this is an unprecedentedly large interest cut and we now have the lowest base rate since 1954. & still the banks aren't lending at rates the rest of us can afford. Peston puts this in polite 'economist-talking-to-the-masses' language,

"Lenders have - understandably - concluded that the risk of lending has risen very sharply, and are therefore demanding much greater rewards for providing credit."

But there is another way of describing this: straightforward, unadulterated class struggle on behalf of finance capital.

What Are Banks for (part 3)?

They're there, or should be there, to direct capital to the most efficient enterprises, allow economic development and facilitate home ownership in sensible circumstances.

What we now have in the UK, it seems, is a system for re-founding the very banking system that almost collapsed and ruined us all only a few weeks ago. UK Financial Investments Limited – run by a banker – will hold the government's interests in banks, and press them to make profits 'sustainably', whist still lending. The idea is that we'll get everything back to normal quite quickly and then the government will sell its shares on the refloated open market. Richard Murphy is going bonkers, and even Peston raises a discreet eyebrow. It's the economics of, ahem, optimism to put it mildly: putting public money at risk by steering policy to re-create the problem that caused all the hoo-ha in the first place.

It won't work. We're Swedish now, and we're going to be for a long time. We need to direct investment in different parts of the economy, perhaps partly through a Green New Deal, which leaves this country better off because it is less exposed to the vagaries of finance capital. But steadfast in their conviction that the City is a Good Thing, Brown and Darling boldly set off towards another disaster...

 

The Limits of ‘I Told You So’ Leftwingery....

Via the blog with no name
Marx on the credit crisis
FromCapital (Volume 3, Chapter 30):

"In a system of production, where the entire continuity of the reproduction process rests upon credit, a crisis must obviously occur — a tremendous rush for means of payment — when credit suddenly ceases and only cash payments have validity. At first glance, therefore, the whole crisis seems to be merely a credit and money crisis. And in fact it is only a question of the convertibility of bills of exchange into money. But the majority of these bills represent actual sales and purchases, whose extension far beyond the needs of society is, after all, the basis of the whole crisis. At the same time, an enormous quantity of these bills of exchange represents plain swindle, which now reaches the light of day and collapses; furthermore, unsuccessful speculation with the capital of other people; finally, commodity-capital which has depreciated or is completely unsaleable, or returns that can never more be realised again. The entire artificial system of forced expansion of the reproduction process cannot, of course, be remedied by having some bank, like the Bank of England, give to all the swindlers the deficient capital by means of its paper and having it buy up all the depreciated commodities at their old nominal values. Incidentally, everything here appears distorted, since in this paper world, the real price and its real basis appear nowhere, but only bullion, metal coin, notes, bills of exchange, securities. Particularly in centres where the entire money business of the country is concentrated, like London, does this distortion become apparent; the entire process becomes incomprehensible; it is less so in centres of production."

Yeah, but I still can't work out prices/resource allocation decisions from the Labour Theory of Value...

So, tempting as all this "Hey, We're BACK!" stuff is, I have yet to see anything thing from the Left which shakes me in my view that the Marxist tradition still has a lot to offer in terms of sociological and historical perspectives - even, stripped of the absurd blind alley of 'democratic' centralism, something to offer in terms of political theory - but it really, really isn't helpful when approaching directly economic questions.I'm with Dave on this one.

How Long Can the Labour Bounce Last?

Stumbling tells us the government is all over the place: the right hand doesn't quite know what, er, the other right hand is doing. It's probably true: a large ship of state is being turned round after many years of steaming in one direction and the crew have quite forgotten how to perform the manoeuvre. Underneath the headlines about Brown leading the world into a series of counter-cyclical Keynesian reflation measures are a whole host of more practical problems which New Labour is only weakly equipped to address in this new world. Today reported this morning that Lord Mandelson - now doesn't that name have a ring to it, like a title that was somehow always pre-ordained – was considering shelving the family friendly/flexible working extension proposals for small businesses. Meanwhile Brown and others still plough on in their quest to help 'hard-working families'. Something is going to have to give.

Perhaps some of this is inherent in the nature of politics itself: you deal with one problem and another one pops up somewhere else and you suddenly remember you used a different technique to deal with that one some time ago. 'Events dear boy, events'. But it is also due to the fact that New Labour abandoned politics per se, or at least politics as it was previously understood on the Left of the spectrum. They were and remain essentially technocratic managerialists. They ask not 'What is the Good Society and how can we edge towards it?' as old-style social democrats did, but simply," What Works?" A global recession makes it very, very difficult not to extend this into the obvious next question of "Who do you want it to work for?" and that's a political, not a managerial, question.

There is more than one historic model for Keynesianism. FDR tried it with infrastructure projects – but so did Hitler with his rearmament programme. Dave Osler reminds us that Keynesianism alone is not enough: we need policies for full employment. Will Hutton makes the striking observation that the quickest way to get the economy moving is not pulling forward large scale building projects but raising unemployment benefits. & the Green New Deal people want the infrastructure measures to be ones that leave us better off than before in terms of being able to face the challenge of climate change. But every one of these things involves some renegotiation of the relationship between state and economy, not just technocratic reflation.

New Labour will go down in the history books as the masters of spin - and the original spinmeister is back in the cabinet. But that's not going to be enough now. They need some politics now and I'm not sure they can magic it up without hurting their long time friends.

“Who’s That With Our Norman?”

Cameron's got his ducks in a row at last: it's back to the 1950s, apparently. We've had 'irresponsible capitalism and irresponsible government'. The Tories' motivating idea is 'not freedom but responsibility'. Brave move: he's abandoning the Austrian vote – which may not cost him much with the electorate but might well play badly amongst the younger constituency members. All those Ron Paul wannabees on the benches behind him are going to be fun to watch as they do a quick ideological softshoe shuffle to get in line behind him.

I think we'll be hearing a little less about the dreadful Nanny State with all its horrendous centralised targets that so discourage enterprise and initiative and a little more about the innate probity, frugality and all round wonderfulness of the traditional Officer class virtues that made the Empire the envy of the world that it is today...(hang on, that can't quite be right can it ?- Ed).

I can't see this working. It may well be that Brownanomics was completely irresponsible - but so was turbo-capitalism internationally. Brown has, albeit temporarily, acquired the kudos of the Man With A Plan. But shiny David - I think this is the end of 'call me Dave' -of Eton and Bullingdon Club fame suddenly looks just like a merchant banker....

What will the next set of polls say ?

On Living in the First Days of the Swedish Empire

Even Switzerland is on board it seems: the whole world has turned Swedish. To recap: the Swedish solution is to take failing banks into full or partial public ownership, re-capitalise them and then, when market conditions allow, sell off the government's stake ideally at a profit but certainly without any loss to the tax payer. There are national variations around all this, naturally. American nobel prize winners seem to be queuing up to tell us how dodgy the Bush/Paulson variant is. But the general outline is clear.

The British banks are having a little problem with this, as you might expect. They are the Bourbons of the capitalist world - arrogant, stupid and without the capacity to see themselves as others see them. I think they'd be demanding their bonuses and share dividends even if the cart was coming to take them to the guillotine...

But this new Swedish consensus might not last. I don't say this because stock markets continue to fall - all that would mean, if it goes on, is that we'd all become even more Swedish, in the sense that governments would have to go for full, rather than partial nationalisation. (Did I really just use the dismissive phrase 'all that would mean' in that last sentence? Christ, I am becoming blaise about global capitalist crises...). To some extent the national Treasuries, and certainly the IMF, have contingency plans for this, even if they passionately wish to avoid it.

No - it's the bit about selling the banks back to the private sector and getting at least a break even price that I'm beginning to have doubts about.Or at least doubts about it happening in the medium term. John Ross gives us this splendid graph: the Dow didn't recover its September 1929 value until September 1954: 25 years later.

So perhaps the one recession proof activity to get involved in might be Swedish language evening classes.

Capitalism in Crisis: So How Am I Going To Explain to My Kids What Socialism Is?

Hot news: today, like every other day of my life, capitalism didn't collapse. Which is perhaps just as well: I'm fairly certain now that there isn't a soul on the planet who would know what to do if it did.

The SWP remind us, in a Old Time Religion kind of of way, that Markets are Bad; Stumbling persists in his lonely but honourable quest to invent a sort of 'son of Yugoslavian style market socialism' by re-connecting collective ownership forms to market driven enterprise; and the parecon lot give us what the more hard-line Marxists would no doubt sneeringly refer to as 'utopian' socialism. More or less everyone else give us rehashed left Keynesian programmes of macro-economic policies, though often with an important Greenish twist.

I'm not sneering at any of this. I am attracted to aspects of all of these approaches, despite the fact they are clearly contradictory. But I am, wistfully, asking why is the Left so much better at analysis – as in this excellent Monthly Review piece – than prescription?

I think it is because we've lost an overarching story to tell, a meta-narrative as those clever folk who understand these things tend to say. The two traditions of 1917- not just the Bolshevik one, but the counter-veiling, legalist social democratic one that emerged in the West – are both effectively dead. I really don't think the material or historical conditions still exist to go back to the ways of that old, post 1917 Left in any of its 57 varieties, be they social democratic or Marxist.  I'm still convinced by the New Times people on that one.

I'm reminded of the High Victorian period. A 'Left' disappeared, more or less, during the mid nineteen century – a Left driven by a democratic, ultimately post French Revolution agenda, about electoral arrangements and the franchise (cf Chartism). The 'Left' which re-emerged afterwards was different - more focused on industrial struggles, more concerned with financial as well as democratic equality, more 'socialist' (or at least incipiently socialist) in a sense  those of us born in the twentieth century might recognise. 

I've often wondered if we're currently living through a similar period. The ideological foundations of the Left of my youth have crumbled. Something new has yet to emerge. My longer term hope of the coming recession is that it can act as the midwife to a new way of looking at the world in terms of framing a coherent Red-Green response to changing conditions.

Because the neo-liberal spell is now broken. It's not the only way of doing things, it's not 'the natural order'. We have the conditions for politics again, not just marketing and management write large as per 'triangulation' and 'the Third Way'. & , yes, the questions now before us are creating the politics of running capitalism differently. But if we do this well, other, more basic questions may emerge along the way.