There is hope – neo-liberalism is an historical aberration

Another lesson from history coming up. People of my generation studied the great books by Charles Dickens, which apart from their literary form, left an indelible impression of life in England during the period covered by the 1834 Poor Law. We also read George Orwell’s account of working class life in Northern England in the pre-World War 2 period. These impressions meant that we heralded in the creation of comprehensive welfare states in the Post World War 2 period as evolutionary innovations made possible by increasing national prosperity. We formed a common belief that this prosperity allowed us to escape the sort of conditions that Dickens was describing in early industrial England. And if prosperity fell, we would have to rein in some of the generosity that the welfare state systems provide. How many times have you read or heard some politician or corporate lobbyist claim that advanced nations, with fiat currencies, can no longer ‘afford’ to fund comprehensive welfare states that protect the poorest citizens in their societies. Many of these speeches are made at glittering functions where business types enjoy sumptuous lunches with plenty of wine and fine food and listen to politicians talk about running out of money and the need to pull our belts in. The arguments are used to attack the comprehensive welfare systems that emerged in the post World War 2 period as governments took responsibility for improving the plight of the poor. But, an understanding of history allows us to appreciate that the modern welfare state was nothing particularly new. There had been a comprehensive welfare support system in place in Britain for 300 years before the 1834 Poor Laws ended that system. This should give us hope – 1601 Poor Law (comprehensive welfare system) -> 1834 Poor Law Amendment (demolished it and blamed the poor for their plight) -> Modern Post World War 2 welfare states (comprehensive welfare system recognising systemic failure rather than individual blame) -> neo-liberalism (back to the 1834 mentality) -> ???? – hopefully another progressive reaction to the greed driving the current system.

The Post World War 2 economic and social settlement in most Western countries was based on three main pillars. First, the Economic Pillar was defined by an unambiguous commitment to full employment, although this commitment became blurred in the debate about the trade-off between inflation and unemployment in the 1960s.

Second, the Redistributive Pillar was designed to ameliorate market outcomes and defined much of the equity intervention by government. It recognised that the free market was amoral and intervention in the form of income support and wage setting norms was a necessary part of a sophisticated society.

Third, the Collective Pillar provided the philosophical underpinning for the Full Employment framework and was based on the intrinsic rights of citizenship. We accept that our depiction is a stylisation and that there were many individual nuances in particular countries over the period considered.

The Great Depression taught us that, without government intervention, capitalist economies are prone to lengthy periods of unemployment.

The emphasis of macroeconomic policy in the period immediately following the Second World War was to promote full employment. Inflation control was not considered a major issue even though it was one of the stated policy targets of most governments.

In this period, the memories of the Great Depression still exerted an influence on the constituencies that elected the politicians. The experience of the Second World War showed governments that full employment could be maintained with appropriate use of budget deficits.

The employment growth following the Great Depression was in direct response to the spending needs that accompanied the onset of the War rather than the failed Neoclassical remedies that had been tried during the 1930s.

The problem that had to be addressed by governments at War’s end was to find a way to translate the fully employed War economy with extensive civil controls and loss of liberty into a fully employed peacetime model.

From 1945 until 1975, governments manipulated fiscal and monetary policy to maintain levels of overall spending sufficient to generate employment growth in line with labour force growth.

This was consistent with the view that mass unemployment reflected deficient aggregate demand which could be resolved through positive net government spending (budget deficits).

Governments used a range of fiscal and monetary measures to stabilise the economy in the face of fluctuations in private sector spending and were typically in deficit.

As a consequence, in the period between 1945 through to the mid 1970s, most advanced Western nations maintained very low levels of unemployment.

While both private and public employment growth was relatively strong during the Post War period up until the mid 1970s, the major reason that the economies were able to sustain full employment was that they maintained a buffer of jobs that were always available, and which provided easy employment access to the least skilled workers in the labour force.

Some of these jobs, such as process work in factories, were available in the private sector. However, the public sector also offered many buffer jobs that sustained workers with a range of skills through hard times. In some cases, these jobs provided permanent work for the low skilled and otherwise disadvantaged workers.

The full employment commitment (the Economic Pillar) was buttressed by the development of the Welfare State, which defined the state’s obligation to provide security to all citizens.

Citizenship embraced the notion that society adopted a collective responsibility for welfare and abandoned the failed dichotomy that had been constructed between the deserving and undeserving poor.

The Redistributive Pillar recognised that the mixed economy (with a large market-component) would deliver poor outcomes to some citizen, principally via unemployment. Extensive transfer payments programs were designed to provide income support to disadvantaged individuals and groups.

Underpinning the Welfare State and the economic commitment to full employment was a sophisticated concept of citizenship (the Collective Pillar).

The rights of citizenship meant that individuals had access to the distribution system (via transfer payments) independent of market outcomes.

Furthermore, a professional public sector provided standardised services at an equivalent level to all citizens as a right of citizenship. These included the public sector employment services, public health and education systems, legal aid and a range of other services.

It was clear that the stability of this Post-War framework with the Government maintaining continuous full employment via policy interventions was always a source of dissatisfaction for the capitalist class.

And hence the attacks upon it which have accelerated in recent decades.

Charles Dickens published his second book – Oliver Twist – in monthly instalments from February 1837 to April 1839 in the Bentley’s Miscellany, an English Magazine.

with the intention of demonstrating that the Poor Law Amendment Act 1834 – was a cruel shift in British government attitude to the disadvantaged.

The Poor Law Amendment Act or the ‘New Poor Law’ was designed to overturn the provisions and systems provided for in the – The Act for the Relief of the Poor 1601 (the Elizabethan Poor Law), which created a comprehensive system of welfare relief for both England and Wales.

I will come back to that soon.

Dickens wrote Oliver Twist as a commentary on the ‘New Poor Law’ which created the so-called ‘workhouse system’, which effectively functioned as prisons for the poor. For more on the Workhouses.

The British Library produces some wonderful research articles and in this one – Oliver Twist and the workhouse – we learn that:

Dickens was disgusted by Parliament. Before becoming a successful novelist, he had worked as parliamentary reporter. He had watched politicians at very close quarters, rapidly taking down their speeches word for word in shorthand notes, and then transcribing them for daily newspaper reports. He had listened carefully to many debates, and he was sickened by the attitudes MPs expressed towards their fellow human-beings. When Dickens planned and penned Oliver Twist, new legislation was just beginning to be implemented across the country.

The Poor Law (Amendment) Act of 1834, otherwise known as the ‘New’ Poor Law, established the workhouse system. Instead of providing a refuge for the elderly, sick and poor, and instead of providing food or clothing in exchange for work in times of high unemployment, workhouses were to become a sort of prison system. The government’s intention was to slash expenditure on poverty by setting up a cruelly deterrent regime. The old parish poorhouses and almshouses were to be completely changed, no cash support whatever would henceforth be given out – whatever the hardship or the season – and the old gifts in kind (food, shoes, blankets) which could help a family survive together, were now disallowed. The only option would be hard work, forced labour, and only inside the workhouse (which meant entering there to live, full time) in exchange for a thin subsistence. Homes were broken up, belongings sold, families separated.

The same themes resonate in this neo-liberal period.

In Australia last year, our Treasurer delivered a lecture to all of us where he claimed we had to ditch our culture of entitlement. He said that with Australia:

There is a new divide: the taxed, and the taxed-not … [and a large proportion of Australians] … go through their entire lives without ever paying tax.

His predecessor, the ill-fated and bumbling Joe Hockey had used different language – “lifters and leaners” – to push the same worn out line.

The problem with this narrative is that the entities that make an art form of paying little or no tax are the multinational corporations and the high-income rollers who can exploit international tax havens.

At the lower end of the scale are the host of businesses that create family trust to avoid paying tax.

The normal worker has little capacity to avoid tax.

The Treasurer was targetting income support recipients who for one reason or another are in need of our support through the public agency we consider our agent – the government.

In Dicken’s time, the same arguments were used:

– government needs to cut spending.

– the poor are just bone lazy.

– welfare makes them lazier.

– the poor have less rights to familial structures than the rich.

Just this week, a candidate for the Western Australia State election – who represents the right-wing One Nation party – published an article in the leading right-wing magazine Quadrant about “lifestyle choices that could be defunded” by government.

He wrote:

The first that springs to mind is single motherhood. These are women too lazy to attract and hold a mate, undoing the work of possibly 3 million years of evolutionary pressure. This will result in a rapid rise in the portion of the population that is lazy and ugly. We know what causes pregnancy these days, so everyone who gets pregnant outside of marriage is a volunteer. This is an easy one for defunding.

He then talked about defunding disability support pensions and childcare for the poor working mothers.

And, the US thinks it has it bad with its new President. In Australia, this sort of discourse is increasingly common among those who attack the poor and the income support systems that protect them, notwithstanding how inadequate that protection is in real terms.

The British Library article notes that Charles Dickens wrote about the administrators of the workhouses – the so-called “Guardians” – who were “usually local business people” and were “self-satisfied and heartless men”.

Dicken’s novels allow us to see that:

The poor – even if sick, old or dying – were treated punitively, as if their predicament was entirely of their own making, and they were deserving of punishment. This was at a time when there was no National Health Service to help the sick get well, no pension scheme to help the elderly remain at home, no unemployment pay for people with no work, no social services at all for those in need.

The British Library article is worth reading for its florid description of the workhouses – the conditions, etc.

Later, George Orwell’s 1937 sociological masterpiece – The Road to Wigan Pier – another staple in the literature studied at high school during my era, provided a vivid account of the plight of the unemployed and the working class poor in industrial England (in Lancashire and Yorkshire) in the immediate pre-World War 2 period.

Nothing much had changed although the workhouse system was abandoned by the a href=”″>Local Government Act of 1929, which transferred responsibility away from the ‘Guardians’ to local government authorities.

This was the first step to the Post World War 2 welfare state.

Ken Loach has carried on this tradition of highlighting the plight of the working class – in film.

But, our impressions from being schooled in this literature bias us to thinking that the Post World War 2 Welfare States described above were innovations – that had been made possible by economic advancement – and which represented a evolution from the period described by Dickens and Orwell.

But a recent article in The Lancet (Volume 388, December 3, 2016) late last year allows us to see a different angle.

The article – Health, welfare, and the state-the dangers of forgetting history – by Cambridge University academics in the Faculty of History and the Institute of Public Health, reminds us once again how a less than complete appreciation of where we have all gone in the past can easily lead to flawed conclusions and poor policy development.

The Lancet article notes that the same narrative that attacks the poor and talks about the welfare money drain is alive and well in the UK (as it is everywhere).

We read:

Recent public policy in the UK has been dominated by a discourse which asserts that public expenditure on universal health coverage and welfare is a burden on the productive economy and unaffordable in what has been deemed a time of austerity. There is a widely held assumption that universal welfare provision, as offered by most modern welfare states, is a luxury, only afforded since World War 2 by wealthier economies. According to this view, if the productive efficiency of the economy falters, then this luxury should be trimmed back aggressively. Reduction in universal welfare will relieve enterprise, capital, and so-called hard-working families from the burdens of taxation required to fund these unproductive public services and (by implication) those unproductive families-the poor.

The thesis entertained in The Lancet article is that “there should be an end to setting the goal of economic growth against that of welfare provision. A healthy and prospering society needs both. We suggest that they feed each other.”

They draw this conclusion from a careful study of history.

In a recent blog – When Britain went fiat and the skies remained above – I discussed the period from the inception of the Bank Restriction Act 1797 to its abandonment in 1821.

This was a period where government spending was facilitated through the creation of cash from the Bank of England and it corresponded with excellent macroeconomic outcomes and the years the industrial innovation accelerated.

The Lancet Article goes back further to Elizabethan England and the introduction of the – The Act for the Relief of the Poor 1601 (the Elizabethan Poor Law), which created a comprehensive system of welfare relief for both England and Wales.

You can read the full text of the Poor Law 1601 – the so-called Reginae Elizabethae Anno 43 Chapter 2

The Welfare State in the Post World War 2 period was no evolution, but, rather, a return to the sort of sentiments expressed in the 1601 Poor Law, with the mean-spirited New Poor Law interrupting the application of this concern for the poor.

That should give us hope, in fact.

The Lancet article notes that:

A long-term historical perspective shows how universal benefits funded by progressive taxation can both assure health and welfare and support social cohesion, with concomitant processes and behaviours likely to be important stimulants for a productive economy. Investing in universal health coverage and welfare makes for national prosperity every bit as much as the increasing wealth of an economy provides the funding for enhanced health and social security.

Apart from the lapse about the ‘funding’ source of government spending, the point is clear – if we want strong societies and upward mobility then we have to provide universal welfare support (including public health, education and income support systems).

They go back to England under Queen Elizabeth I – a time which marked “England’s 200-year rise to global economic pre-eminence”.

The 1601 Poor Law recognised that the monastic support structures for the disadvantaged were in decline and a national (then England and Wales) scheme was needed to address poverty.

The times were difficult – “The country was at war with France, and was near bankrupt, there were poor harvests, and the dissolution of the monasteries by her father, King Henry VIII, had removed the associated welfare system provided by the Catholic Church.”

The 1601 Law was “pragmatic in origin, but drawing nonetheless on principles of the common good.”

There was an advanced notion of citizenship and concomitant rights entertained in the Law.

It was recognised that there was “an absolute ‘right of relief’ for every subject of the Crown”, which would be made operational though “a nationwide system of social security through a progressive community tax to fund provision at local level. This was predicated on the assumption that poverty is an unavoidable and common risk, which can be shared and mitigated.”

So the blame the victim approach, which became the hallmark of the Dickensian times, and later, during our own neo-liberal years was absent.

It was understood that an individual could drop to the bottom as a result of forces beyond their control and the state had a responsibility to set up safety nets.

The system of income support administered through the local Anglican parish structure and supplemented by the “statutory compulsion on the prosperous to take financial responsibility for their parish poor”.

As a result, there was a burgeoning growth in “local schools, almshouses, and also hospitals”.

The Lancet article reports that:

By the 1800s, England’s Poor Law was transferring about 2% of gross national product in support to the nation’s poor in crisis years. Although modest by today’s standards, this was the most generous such system in the world at that time.

And, during this period, England became the world’s strongest economy (usurping Holland). London grew strongly and labour, released from increased productivity in agriculture, worked to build the manufacturing and export sector.

The Lancet shows that the Elizabethan system:

.. facilitated the most sustained period of rising economic prosperity in the nation’s history. By the first half of the 19th century England had become the most dynamic economy in the world, underpinned by its social security system.

And this knowledge provides a different slant on the way we see the modern period.

In effect, we have been here before. The New Poor Law is to the 1601 Poor Law what neo-liberalism is to the full employment period. A progressive development followed by a retrograde step.

The New Poor Law replaced the notion of “shared risk mitigated by contribution to a welfare safety net” to one that were “premised on ideas of individual self-interest, choice, and responsibility”.

In the Post World War 2 period we have gone from an awareness that systemic failures (for example, to provide enough jobs) cause mass unemployment and poverty, to a diatribe that individuals are lazy and are responsible for their own poverty.

The New Poor Law made poverty a criminal state in the same way that ‘fining’ welfare recipients for breaches of complex work test requirements does in our modern systems.

As The Lancet article notes:

The Victorians’ new zero-sum belief system saw any penny given to the idle poor as a penny lost to the productive rich.

However, there is no evidence that this changed approach improved the economy’s productivity. In fact, annual growth rates of Britain’s gross domestic product (GDP) fell behind those of its main rivals during the decades after 1870.

Not until after 1945 did the economy return to sustained high GDP growth rates during the following three decades. Universalist principles of progressively funded health and welfare provision were reinstated and became stimulants of a dynamic period of per capita economic growth, widely spread prosperity, and upward mobility in Britain. All, including the poorest, again enjoyed a measure of security and opportunity, and differences between the wealth of rich and poor reached an all-time low in the 1970s.

And those gains made in the full employment era have once again started to be lost in this neo-liberal of low growth, high mass unemployment, depressed wages growth and rising inequality.


The message of this blog is that same old patterns – repeat themselves in history.

That is a very positive conclusion if you believe that the dynamics that led, first to the 1601 Poor Law and the Post World War 2 welfare state are based on fundamental concerns for sharing risk and minimising the damage of systemic failure to individuals.

Similarly, it is hopeful, if you see the New Poor Law and the neo-liberal era as the work of a small proportion of wealthy, influential types who just want more for themselves.

In that sense, while the top-end-of-town can bully the vast majority for a while with coercion, mass consumption possibilities etc, they eventually get ahead of themselves – that is the hallmark of greed – it has no limits.

But our tolerance does have limits and the same forces that led to the Welfare State reintroduction in the 1940s will eventually lead us to reject the neo-liberal indecency and a new more inclusive system will evolve.

But history can move slowly – so I am not holding my breath.

That is enough for today!

(c) Copyright 2017 William Mitchell. All Rights Reserved.

This Post Has 19 Comments

  1. let us hope it does not take a world war to promote fiscal stimulus.
    Let us hope it does not take the sacrifices of war to promote the
    welfare ,social spending and progressive taxation required to
    promote social justice and cohesion.

  2. Neoliberalism is just plain capitalism. Chapter fifteen, “Machinery and modern industry”, section 3, “The proximate effects of machinery on the workman”, Capital, Volume I, for instance, explains what is capitalism and reasons about it. The only reforms came, in parts of the western world, due to the existance of communism, no matter now if bad or good communism. You can not reform capitalism based “only” on sound economic analysis and denouncing the flaws of Neoclassicism. Expropiation of big and medium industry is necessary before it is too late. More Kantorovich and less Keynes.
    All this being said by an affectinate reader of your blog.

  3. Dear Bill,

    There is a bit of a gap in your timeline. You did not mention the introduction of the old age pension (1909) or National Insurance (1911). Arguably these owe their existence ultimately to the extension of the franchise to the working class, starting with the second reform act (1867). So, a good forty years between cause and effect. You are quite right to say that history can move slowly.

  4. Yes, Kevin, because that’s what it took for economists to think clearly and not sow falsehoods in people’s minds as we see by the example of our dreadful political class. Only a major shock will cause change. Neo-liberalism is taking a battering and disbelief in the mainstream narrative is building strength. Before long it will be ripe for change, but IMO still needs a big shock, hopefully without it being the end of dynasty event we face. So we might have some time to enjoy it!

  5. The Victorians’ new zero-sum belief system saw any penny given to the idle poor as a penny lost to the productive rich.

    And I was under the impression the Victorians believed the Bible which says, for example:

    The generous man will be prosperous,
    And he who waters will himself be watered.
    Proverbs 11:25 New American Standard Bible (NASB)

    Not that an extensive welfare state is the solution either but a just society and that would include a just money and credit system – not positive interest paying sovereign debt (“corporate welfare” per Bill Mitchell) and not a government privileged usury cartel, our current situation.

  6. Thank you Billy.
    Like the poor the avaricious sociopaths are with us always. Human and social evolution are patchy. But from time to time humanity prevails. Progress is not a given but there is light at the end of every tunnel. The bastards have been building more tunnel since 1979 and they have over-reached themselves..

    The crises of corpocracy offer opportunities for good or ill. We hang in a balance between neo-fascism and a return to social democracy. There are choices to be made.

    War is a very bad choice as a means to full employment. A better choice would be enlistment in the common cause of the fight against poverty and catastrophic climate change.

  7. “Every generation must fight the same battles again and again. There’s no final victory and there’s no final defeat”. Tony Benn (RIP)

  8. dnm and Mr Shigemitsu together make a rather sad point, underwritten by your own exposition, that getting rid of awfulness must be addressed again and again, seemingly without end. How depressing. I already knew this from my own reading and research, but to be reminded of it once again is well, … .

  9. If the welfare state could turn over the volume of money passing through its organisation at a faster pace (by employing those out of work), thus producing large GDP (and tax) increases, then perhaps we might not be having this incessant argument between which is best; private or public enterprises.

    One small problem raises its head; Aldi Stores, the highly successful convenience store group, aims to shift 1,000 items per hour through its tills, I’m not so sure a hospital A&E could manage that.

  10. “The Great Depression taught us that, without government intervention, capitalist economies are prone to lengthy periods of unemployment.”

    “It recognized that the free market was amoral and intervention in the form of income support and wage setting norms was a necessary part of a sophisticated society.”

    As a millennial, this is inconceivable to me. Do people really think that back then? All these old people that work in a government that they hate seem to think that “free market” can’t be criticized or it will cry, which will result in people losing that small slice of leftover slice of pizza of the oligarchs. To be fair, I haven’t been too politically involved and TV old people certainly don’t represent all of them. Maybe many of them, like me, know roughly what is going on but are powerless to change course because not enough people know/believe the same.

    I can’t deny the silver lining though: for our generation, it’s so easy for someone like me to imagine a better world. However, I used to work with a couple of graduate students who believe that poor people are miserable solely because of their own fault. To a degree, they believe that their own struggle got them where they are now. It is true, but they never mentioned the government deficit spending that gave them a chance to do so (maybe they also think they are failures themselves, which is also sad).
    However, they then think that because poor people aren’t successful, they must have not struggled. Sometimes I also have this unrealistic belief that-by struggling hard enough-I can eventually be successful. Problem comes in when there are macroeconomic problems that individuals simply can’t solve by struggling hard on his/her own. I hope working through the propaganda doesn’t take 40 years.

    Finally, I feel like telling people to get a job (that doesn’t exist) is a powerful argument ender in USA.

  11. Bill: That is a very positive conclusion if you believe that the dynamics that led, first to the 1601 Poor Law and the Post World War 2 welfare state are based on fundamental concerns for sharing risk and minimising the damage of systemic failure to individuals.

    I think the emphasis on compassion and sharing is a rhetorical risk. An important truth of neo-liberalism is that “saving” is a tactic of conquest over fellow citizens. “Saving” causes current unemployment and this is the “risk” that Bill refers to. It is similar in many ways to the “risk” incurred in other forms of assault and violence and should be viewed rhetorically in a similar way. I am not sure how to achieve this, but we need to have “saving” viewed in a similar light to public drunkenness, somewhat unavoidable but nevertheless unsavoury and needing magisterial intervention when taken to excess.

  12. Brendanm, saving doesn’t cause unemployment. The government not matching the budget to the desire for saving causes unemployment.

  13. Matt,

    Sounds like rationalisation.

    When you don’t spend, you decide not to employ people.

    Some saving is justified to spread out expenditure and mitigate risks, but most of the saving is specifically aimed at raising the value of money and distorting markets. Government acting as buyer of last resort only partially mitigates this, as the distorting spending power remains. Spend it or lose it taxes are necessary.

  14. @larry,

    Hence the slogan, “La Lotta (or Lucha) Continua”, The Continuous Struggle.

    And, yes, it is depressing – especially as we seem to be losing it at the moment.

  15. I suspect that the move further Right will gain pace before we have any swing in the opposite direction and probably only when things get so undeniably bad that change is inevitable.

    Here in the UK there is probably about 30-35% doing OK and not really touched significantly. Crap and poor news pouring from T.V’s and media reinforce myths and ignorance. The first thing neo-liberalism did nin the UK was to wreck adult education facilities and destroy meeting places for those unemployed/poor and marginalised, this redeuced access to education and the encouragement of intellectual development.

  16. Fascinating blog,

    very big orwell fan myself,road to wigan pier is the one i haven’t read,my favourites being down and out in paris and london and homage to catalonia.

    I must stress that the mainifestation of the poverty in elizabethan england was the result of encroaching enclosures which really picked up pace after the split with rome and the land grabs of ecclestial lands.The landed wealthy began illegally(or with illicit consent from the parliment rather) cofiscating the land alloted to peasants and acquiring the commons and relinquishing the feudal rights of usefruct of various forests(for timber) and common land available to pasture animals.

    This was the first privatisation, as it were; that created an impoverished landless proletariat who previous could fend for themselves when they had access to land.
    What this tells us this that if people had access to cheap land,you wont get high levels of poverty,to the extent seen in elizabethan england and dicksenian england.fiscal/tax policy should be used to achieve this end.As limitations of access to land ,-housng crises in modern equivalence,is the biggest cause of poverty and initially unemployment-as access to the common lands and the customary parcel tended to by each individual would of provided well above subsitence levels of wealth

    ” London grew strongly and labour, released from increased productivity in agriculture, worked to build the manufacturing and export sector.”

    ‘released from increased productivity’ is an unfortunate choice of words because in reality these people were evicted from lands which they had previously supported their families for generations.The creation of an army of mass unemployed and landless was used as cheap labour for early industrialists.The lands they lived on prior were typically transformed into pasture land to produce wool which was appreciating in price.
    The 1601 poor law was sub optimal to simply not evicting people from their lands and creating the poverty in the first place.
    while the economy overll may have been more productive,for the vast majority of the population ,they would of been worse off.
    here’s a good article on this

    and here is karl marx on this matter

    This points to the usefulness of a land value tax to lower the cost of land,and prevent the polarisation of income and wealth and the high savings rate of the (landed) wealthy which reduces agregate demand and spending in the first place.

  17. Good points Jake with regard to the ‘loss of the commons’ reflected today in the 40 year housing bubble we have here in the Uk which has caused massive wealth transference, in work poverty and an ideological attack on the poor and those in social housing.

    Land Value Tax was first supported by the LIberals over 100 years ago (Churchill was behind it!) but was always being defeated by the Landlord class who didn’t want their rentier money reduced. Labour took up the idea but gradually dropped it in the 1950’s.

    Now we have a crisis and disaster that will be very hard to reverse because the bubbles have been allowed to expand in four cycles for the last 40 years-in fact the start of the first post-war bubble was after Edward heath relaxed bank credit creation in 1971, it was followed immediately by a bubble.

    I have yet to read of any serious discussion of how house prices can be significantly brought down so that weekly mortgage/rent payments are no more than 25% of disposable income. I thin Corbyn’s idea of a huge social house building program is good as long as it is accompanied by legislation that stops buying for buy-to-let or speculative purposes.

  18. There is some irony concerning the calls for greater realism in politics and economics and pointing to fiction writers as effective agents of change.

    Dickens wrote for newspapers, where he progressed from reporting parliament’s activities to concocting serialized fictions which workers would pay greater attention to. Even the illiterate knew of Dickens’ stories- a common practice was for the stories to be read out loud during work breaks of coal miners. The fact these accounts were fictions was immaterial to this subversive young journalist- he understood people were guided by narratives and that if he told a narrative people whose truth they could be confident about, there would be a slow but powerful political impact. Today, information purveyors for news outlets compete for the attention of the masses. Outlets such as those dominated by Murdoch manufacturer consent using a modern form of the Dickensian formula. Workers listening to a potent cocktail of reactionary fictions on talk radio in the States resulted in the election of a candidate who tell wild fictions that convey certainty to his followers.

    The scientist in us recoils in horror at this outcome. Similarly in the field of economics, mathematicians such as Tony Lawson rail at fictions concocted using the certainty-conveying rhetoric of formulas and supposed “laws” of economics. Because the distortions created by unrealistic assumptions are opaque to policy makers, this rhetoric is convincing to political actors writing legislation.

    So what we see are two layers of fictions- one layer sufficient for voters and a second sufficient for lawmakers.

    The right wing is at an advantage because their fictions are more homogeneous than those of free thinking progressives. The story that is told is that the project proposed by Professor Mitchell and his intellectual brethren are at best those of Fezzywig. Scrooge came to believe that keeping to the old ways was unrealistic, and that the idea of an obligation of the privileged to the commoners- to pay more than the market rate for labour, or to be otherwise generous in spreading wealth to his people was an archaic vestige of a medieval system that was rapidly being swept away with the industrial revolution and financial innovations of the early 19th century. When Fezzywig is wiped out and the vested interests of Scrooge’s company acquire his operation, workers are kept on but at lower pay. In the political dimension, the Speenhamland system of guaranteed income would be wiped out by the poor laws because of the need for labour to be highly fluid- commodified in the same way as had been achieved with other resources in the prior centuries. The church no longer had the resources to provide an income floor, and the new norm advocated by Adam Smith and his cohorts gave the new elites a pass to brush aside the archaic notion of noblesse oblige.

    The traditional activity of historians is to project a narrative arc over events. Such stylizations skip over details such as the motives the privileged had for keeping labour immobile after the black death. Brian Tierney’s “Medieval Poor Law” documents how high demand for labour was causing peasants to leave their parish to work for lords in more devastated regions willing to share more generously in the fruits of labour. So the generosity that found its more mature expression in the poor laws of Elizabeth and the later Speenhamland system told the necessary narrative of Christian charity, but attained political acceptance due to the benefits it delivered to powerful interests controlling Parliamentary lawmaking. By time of Dickens, the rise of the machines and their high demand for fluidity of labour meant that the system designed to keep labour immobile was an obstacle. This is not to say that the missing ingredient is more science and less “stylization” of history. Historians of science such as Thomas Kuhn and Paul Feyerabend took a new approach to historical accounts of change. They sought to get inside the mind of the actors of the period to see the way in which their fictive accounts of reality made sense to them and guided their actions. Kuhn’s realisation was that there are paradigm shifts in which each revolution is accompanied by a gestalt switch in ways of viewing the world.

    Dickens speaks to this gestalt switch of the early 19th century- the way young Scrooge is swept away by the drama of the sweeping changes of the times. It wasn’t just cynical Jorkins seeking to break Scrooge’s loyalty to Fezzywig, but well meaning leaders who became enchanted by the narrative of progress and the more scientific and less sentimentalist darwinist rules of the market-oriented new Hard Times. Scrooge takes this turn with great passion, discards the old order and with it his religious fiance who believes that he is not being “more realistic” but has instead surrendered to an ancient “golden idol”. The gestalt switch is everywhere in Dicken’s work- in Hard Times, Gradgrind seeks to grind out of the young minds other non utilitarian ideas of putting flowers on carpets. From the new view, we must orient ourselves to cold hard facts, not ideas. This was integral to logic of the market, and the divorce from values embodied in sentiments of collective responsibility to one another.

    The question for our times is not answered by regressively resurrecting past paradigms. In Dickens’ case- it was a return to the system of enlightened good hearted Fezzywigs- where the privileged have more good will and a sense of noblesse oblige to those less fortunate both economically and intellectually. Today, the language of elites is different, where technocrats tell tales woven with utilitarian logic. What is the protagonist’s motive told within the narrative of the Lancet article? It is that maintaining social welfare systems has utilitarian value. In the minds of some progressives, we must resurrect a particular flavour of historical analysis that will convey a solidarity of vision necessary for political action. Some choose the utilitarian cost-benefit scheme of Clintonesque politics-as-transactions. Others choose the Sanders like worker solidarity/ New Deal collectivist narrative. But in the highly variegated context of social media in the 21st century, their competing progressive gestalts have lead to self defeating internecine battles.. We find ourselves in a world where thinkers like Lawson advocate a more pluralistic accommodation between competing factions. Detractors present coherent arguments against this, not just on philosophical grounds but practical grounds- pointing out the tower of Babel problem this introduces- of cognitive load imposed by complex interpretations necessary to mediate between competing languages that have differing accounts that which is true. Some accuse people like Kuhn and Feyerabend as promoting the idea that truth is some kind of plaything. Lawson is perhaps unjustifiably impressed with the scheme of critical realism put forth by Bhaskar.

    Whatever the solution, it is fanciful to presume that the solution to the factionalism is unity within the same poltical-economic gestalt. The gestalt switch needed is at a higher level- towards a framework that mediates between competing gestalts. Until we find a way of telling such a successive meta narrative that can practically mediate between the competing fictions on the left, we shall remain in dysfunctional disarray. Until then, speakers of truth such as Professor Mitchell shall be successfully portrayed as Fezzywigs or alternatively- as Quixotic knights from a bygone era tilting at windmills- in a fantasy world of economics where ideals are victorious over reality.

  19. Thanks Bill, great work as always.
    Good to see you get mentioned in the weekend SMH 5.2.17

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