Tag Archives: capitalism

David Harvey and Andy Merrifield in conversation

This post was contributed by Rowan Lubbock, a student on Birkbeck’s MPhil/PhD programme (Politics) whose research focuses on the relationship between the peasant movement La Via Campesina and the regional institution of ALBA.

In a packed lecture hall last Thursday night at Birkbeck College, I was lucky enough to see two heavyweights of urban studies and Marxist theory in conversation, largely around the topics of their latest books. Andy Merrifield’s The New Urban Question, and David Harvey’s Seventeen Contradictions and the End of Capitalism set the tone of the conversation, which sought to unravel ‘the urban’ as it exists today.

Merrifield kicked off the evening with an explication of what the ‘new’ urban question entailed. Fundamentally, the neoliberalisation of cities had created a type of ‘neo-Haussmannisation’, a process that transforms public infrastructures into sources of profit for private actors. The term seeks to compare and contrast today’s urban form with the great renovation project of Paris in 1854 by Georges-Eugène Haussmann, which saw a reorganisation of the urban fabric on a gargantuan scale. Like Haussmann’s Paris, today’s urban condition is characterised by a process of gentrification, turning urban centres into spaces of consumption, speculation and leisure. But unlike Haussmann’s project, today’s neoliberal city does not create new ‘values’ (i.e., creation of infrastructure that absorbs surplus capital, expands employment or facilitates new spaces of accumulation); it ‘parasitically’ extracts value from existing public goods. Merrifield asks how it is possible that capitalism is able to reproduce itself in the absence of what it fundamentally requires for its survival – the creation and re-creation of public infrastructures.

The effect this has on the public at large led Merrifield to enquire into the nature of social resistance to these types of privations. Here, a number of concepts were offered: “double agents”, as those who live a type of double life split between the exploitative nature of their workplace and the more egalitarian values they may hold; or “great escapers”, who seek to exit the system altogether (The Coming Insurrection, being one example). These disparate terms reflect the general disorganised form taken by today’s potential ‘sans-culottes’, yet Merrifield cited the potential for ‘rage’, ‘imagination’ or ‘creativity’ for bringing these social forces together.

Harvey’s response was offered in his typical register, which revolves largely around Marx’s three volumes of Capital. This did, however, bring Merrifield’s winding and speculative exploration into a more grounded understanding of how capital circulates within and beyond ‘the city’. Yet at this point of the conversation, the formalism of ‘critical disagreement’ (which Harvey himself noted was an unavoidable necessity) tended to occlude the substantial overlap between each position.

For example, if Merrifield’s ‘neo-Haussmannisation’ is something that is happening in virtually every city, Harvey helped to stitch this picture together by referring to the ways in which cities form a type of global hierarchy through which the differential flow of value is transmitted; from low-wage, low profit margin-based production in China to high profit margin-based realisation of sales in North America, which has become a key feature of today’s global economy. From his observation of the power shift from productive capital (e.g., General Motors) to commercial capital (Wal-Mart), Harvey questioned to what extent today’s neoliberal cities can be considered ‘parasitic’, given that consumption itself is central to the realisation of value and its production. He went on to say that, “if value cannot be realised through urbanisation then capital is in a lot of difficulty” – thus, the city and the “manner of its orchestration” as a market-place delineates the parameters of this potential difficulty. But surely the manner in which neo-Haussmannisation unfolds, as described by Merrifield, points towards a precarious foundation upon which capital attempts to expand without the requisite spatial infrastructures that are needed in order to move beyond an urbanisation process based on property speculation and conspicuous consumption by the world’s richest people.

Nevertheless, the value of Harvey’s political-economic take on the ‘new’ urban question lay in his claim that the structures of accumulation largely produce their own specific forms of resistance, the corollary of which is that we must understand what capitalism is doing if we want to go beyond it. This is indeed a useful approach that helps us to fill in the gaps created by terms like ‘multitude’ and their ‘screams’ against the power of capital. It would have been interesting to hear some alternative suggestions, which Harvey stopped short of, but this was perhaps unavoidable given that his own provisional answer to the problem of anti-systemic organisation boils down to no less than seventeen necessary elements.

What was certainly made clear that night is the scale of the problems we all face as human beings who are subjected to the most in-human forms of social predation. The need to address the contradictions of capitalism and the questions they pose is more vital now than ever.

A video of the event is now available.

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Will Hutton – Fizzing with ideas for the UK economy, a new social contract and a vision for the UK as a centre for global innovation!

This post was contributed by Tim Lewis, a 2nd year student on Birkbeck’s MSc Corporate Governance and Ethics.

When the organisers of the Birkbeck Business week booked Will Hutton (28th June 2012) to give the week’s final lecture on the title “It was bad capitalism that got us into this crisis – good capitalism that will get us out” they could not have predicted that this event would coincide with the zenith of another major news story. Not Germany’s unexpected exit from the Euro football championship to Italy in that night’s semi-finals, but the results of the FSA Libor interest fixing investigation into Barclays.

News of this scandal, combined with a software glitch at RBS, resulting in a payments backlog, earlier in the same week, were perhaps symptoms of the kind of bank-made, self-interested incompetence and poor service, that represent the bad capitalism that the UK economy currently finds itself in.

Against this backdrop, well ok a Powerpoint with the lecture title, and after a brief introduction from Professor Jonathan Michie, Will Hutton took to the lectern. Right from the start his examples and anecdotes, ideas and concepts, came tumbling forward in an avalanche of electric rhetoric and accompanying slides …

The Bad Capitalism that got us into this Crisis ....

Hutton’s definition of bad capitalism is the one advocated by the US Neo Classicists, with its strong emphasis on free markets, flexible workforces, unfettered by regulation, and prices governed by supply and demand. The dominance of this model, Hutton argues, whilst illustrating a necessary part of the capitalist system, has distorted the social impact of market changes. He sees boom and bust as an inevitable part of the economic cycle, a product of new technologies and innovation. However, Hutton argues, there need to be some interventionist mechanisms and reformed institutions in place to socialise the downside risk.

Hutton is unashamedly a Keynesian economist, by this he means ‘not just the Balfourism’ that lead to the UK welfare state, but the broader view of capitalism, advocated in Keynes ‘General Theory’.

The financial background that got us into this mess?

Hutton showed, through a series of graphs, the rise of UK financial capitalism starting with the relaxation of credit controls in the mid 1970s, which sowed the seeds of an exponential growth in banking, wages and credit. This created an unbalanced and unsustainable economy. He saw the crash that came as inevitable, and it benefited the wealthy disproportionately, bypassed the least advantaged and left a disastrous unbalanced social and economic geography.

More controversially, he argues that had we entered the Euro when Labour came to power in 1997, this may have given the UK a more stable trade credit and balance of payments position from which the industrial and manufacturing sectors could have enjoyed growth rather than further decline.

Hutton spared no punches in criticising both major political parties for getting the UK economy into this shape, but he describes former Chancellor and PM Gordon Brown as ‘the worst steward of the UK economy ever!’

Good Capitalism will get us out …

From this analysis, Hutton begins to define his vision of good over bad capitalism. Features of bad capitalism include, aside from a general lack of transparency and accountability; ‘unproductive entrepreneurship’ – CEOs requiring high remuneration unrelated to rewards or personal liability, and ‘ownership tourism’ – in which UK strategic companies are bought and sold by foreign owners without governments holding golden shares.

Good capitalism consists of the kind of stakeholder capitalism he has outlined in books and newspaper columns since The State we’re in (1996) and his most recent publication Them and Us (2011). Hutton advocates a collaborative approach: transparent, democratic, with committed owners dedicated to productive entrepreneurship, proportionately rewarded and dedicated to business outcomes measured through balanced scorecard, rather than the financial bottom-line.  The core values of this approach are fairness, due desert and proportionality.

Socialising Risk…‘A New Social Contract’

Linked to this economic vision is a more flexible and modern networked vision of intervention after market failure. Hutton proposes new institutions, including trade unions that act as ‘employment shock absorbers and enterprise partners’, rather than conservers of declining industries, the status quo or as advocates of ever-burgeoning pay demands. Hutton outlines a new workplace bargain, called ‘flexi security’, in which workers accept less job security in exchange for training plus lifelong learning and unconditional unemployment benefit. His vision includes provision for New Housing and forms of ownership beyond owner occupancy. In addition he advocates education reforms, including a variant of the German Berufsshule (apprenticeship) system. The current UK apprenticeship programme, while welcome, is inadequate he argues.

Creating An Ecosystem for Innovation and Growth…

By laying the foundations of a good capitalism, backed by the values of fairness and a new social contract, Hutton hopes to create new business ecosystems from which new enterprises, primarily SME-based and new sustainable innovation can flourish! It is this need for innovation that is the driving force behind the Big Innovation Centre, founded by Hutton in November 2011.

Getting us out of the state we’re in?

If this seems like a grand and utopian vision, Hutton is unrepentant, he concedes if we can move some way forward on this path, its far better than the austerity-driven ‘Plan A’ of the current Conservative /Liberal Democrat coalition.

Hutton argues there is no current debt problem. Debt in the 1930s depression was 19% of GDP. Today, the debt is just 3% of GDP and underwritten by 14 year government bonds. He predicts Chancellor George Osborne will in future come to regret Plan A, as Churchill did when tying the UK exchange rates to the gold standard in 1925. He predicts that continuing down the current path will lead the Coalition to fall before the current 2015 expiry date.

Time will tell if his predictions are well-founded, but Will Hutton offered a compelling analysis and challenging vision for the UK’s future prosperity, social equality and innovation that was well worth listening to. He left the lecture audience, fizzing with new ideas and insights. A fitting finale, to end Birkbeck Business week 2012!

Photo by Richard Beard

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Ideology Now – part 3

This post was contributed by Nick Pearce, Director of the Institute for Public Policy Research.

Is there a distinct social democratic ideology which has political relevance in the 21st century? Patently not, if you think that social democracy was the product of a particular moment in European history that has now passed. This view, exemplified by John Gray’s After Social Democracy, holds that social democracy was a geo-political response to the Cold War, a class compromise to build a democratic, social market alternative to Soviet Communism and US capitalism, which lasted nearly forty years, until a combination of neo-liberalism and the collapse of the Berlin Wall administered its last rites. 

Ironically, this perspective is obliquely endorsed even by self-professed social democrats. In Ill Fares the Land, the late Tony Judt lamented the passing of the post-war European order but did so in terms that conceded the depth of social democracy’s political defeat and offered little hope of its resurrection.

It is perhaps unsurprising, therefore, that Third Way revisionists seeking to revive the fortunes of the democratic left in the 1990s recoiled from professing an ideological position. Anthony Giddens gave the subtitle The Renewal of Social Democracy to his book The Third Way but “what matters is what works, not ideology” was more often the lodestar of New Labour. In the pre-crash period of steady, continuous economic growth – or so-called Great Moderation – a distinct political ideology came to be seen as a little outré.

The political terrain of post-crash politics is more rugged. But as European voters splinter off the mainstream political parties, there is no guarantee that social democracy will furnish the ideological or political tools for a new generation to bring it back to power. Indeed, even contemporary Labour theorists like Maurice Glasman who are critical of the New Labour record disdain the term social democracy, preferring to nourish themselves on European Christian Democracy, Catholic social movements, and the guild traditions of British socialism.

Yet for all that, the social democratic tradition is a remarkably resilient and versatile one. It defeated its main rivals, Marxism and Fascism, in the 20th century. It fed off a productive intellectual and political relationship with liberalism, the other great winner of the last century, and built institutions for the common good, as well as individual liberty, that have endured successfully in European countries. It was pragmatic, recognising the necessity of building cross-class alliances, and drew political success, as well as ideological flexibility from that pragmatism. But it held fast to core beliefs, chief amongst them the universality of citizenship, a claim which it embodied in institutions of the welfare state, like the National Health Service, through which social democratic values live and breathe, assumed and unspoken, today. And it renewed its political appeal despite the passing into history of the Cold War era and the organised industrial working class which had done so much to shape it. Its most successful Nordic bastions remain beacons of social justice, human flourishing and the pursuit of a decent common life.

If social democratic ideology has continued relevance today, it is because it asserts the “primacy of politics” in Sheri Berman’s felicitous phrase. It insists on the importance of active democratic citizenship and the primacy of politics over economics. As Europe seeks to emerge from the wreckage of the global financial crisis, it will need a new political economy. A new generation of social democrats are likely to be at the heart of that endeavour, even if in partnership with other political movements, and actors, as they have been for most of their history.

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Ideology Now – part 2

This post was contributed by Nina Power, from the Department of Philosophy at Roehampton University.

What do we mean by “ideology” today? Is it possible to identify forms of contemporary ideology, or is the very discourse of ideology itself an ideological remnant of an earlier period? In the latter instance, we might talk about ideologies, plural, indicating perhaps a clash of grand narratives, communism v capitalism in the context of the Cold War perhaps being the most historically obvious: here “ideology” comes to stand in for something like a rigid set of beliefs about the way the world ought to work, which usually incorporates some kind of folded-in theory of human nature (capitalism’s idea that people are ‘naturally selfish’, for example, and that ‘markets’ are the best way of managing this ‘fact’). This understanding of ideology is frequently argued to be over, and we are imagined to now be living in an uncertain post-ideological period, where competing fragmentary ideas jostle amongst each other for perhaps temporary precedence.

Against this familiar story, we could return to the image Louis Althusser picks up from Pascal – the idea that belief is not something that pre-exists action, but something that follows from it: not believe and you will be a good Christian, but rather kneel in prayer enough times and then you will believe. Here ideology is conceived as a material practice, reinforced by repetition and a context in which that repetition has a framework to support it. Spinoza poses the problem in a slightly different way in his theory of knowledge: here ideology is something like a way of understanding the world that ‘works’ but is false – not an illusion exactly, which is sometimes where discussions of ideology end up, but a way of structuring what happens in such a way as to make it seem superficially plausible (thinking that the legal system is ‘fair’ for example, because you agree with its verdict most of the time, while not stopping to ask larger questions about who benefits, the plausibility and nature of the laws themselves, or the likely outcomes for those accused of ‘breaking’ them).

In my paper on the ideology of law and order I picked up a slightly different idea: that ideology is perhaps rather not thinking about something really, really hard, in such a way that it doesn’t come into vision at all, except for if and when it directly affects you. Here it seems to me that the law is precisely this kind of gigantic purloined letter, indirectly conditioning what we do (or really what we don’t do), but not being visible for the most part (the same of course goes for its agents, the police and its buildings, prisons). So while we might know on one level that the police are rarely, if ever, held accountable for the people who die in their custody, for example, the idea that this might be because of a combination of police violence and corruption, racism and legal unaccountability is pushed behind the idea of individuals – the rotten apple police officer, the hint of suspicion that the victim was most likely up to no good, and so on. Otherwise the whole edifice – state ‘protection’, ‘justice’ ‘equality before the law’ – starts to look shaky…it seems to me that the law and its enforcement is most definitely hidden in plain sight, and just as following the economic crash, all the mystified terms of economic skill were revealed to be little more than a pile of Ponzi schemes with some computers attached, the law, used ever-increasingly against those who are protesting against the effects of the austerity measures imposed as a result of the crash, and always used against those the police deem to be ‘pre-criminal’ in one way or another is a form of contemporary ideology we would do well to pay much closer attention to…

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