Today we've learned that a private company - either Serco or Virgin - is likely to take over the supply of children's services in Devon.
This is a situation I foresaw, discussed and contextualised in the foreword to my book, The Courageous State, published last November. There I said (and I summarise, a bit):
The economic crisis we are now facing is the legacy of Thatcher and Reagan because they introduced into government the neoliberal idea that whatever a politician does, however well-intentioned that action might be, they will always make matters worse in the economy. This is because government is never able, according to neoliberal thinking, to outperform the market, which will always, it says, allocate resources better and so increase human well-being more than government can.
That thinking is the reason why we have ended up with cowardly government. That is why in August 2011, when we had riots on streets of London we also had Conservative politicians on holiday, reluctant to return because they were quite sure that nothing they could do and no action they could take would make any difference to the outcome of the situation. What began as an economic idea has now swept across government as a whole: we have got a class of politicians who think that the only useful function for the power that they hold is to dismantle the state they have been elected to govern while transferring as many of its functions as possible to unelected businesses that have bankrolled their path to power.
This, it should be said, has not just been an issue within the Conservative party. Thatcher arrived in power with what was, in retrospect, a remarkably timid manifesto for change, and although she became bolder as her career as Prime Minister progressed she retained a strong belief in the power of government regulation over the businesses that she privatised. Her legacy was regulated capitalism: ownership in private hands, with some power to control those sold-off enterprises retained by state-appointed regulators that were one stage removed from the ministers who appointed them.
John Major oversaw a collapse in the credibility of government, and something more besides. It was on his watch that the Private Finance Initiative (PFI) began, and it was on his watch that some of the more absurd privatisations, such as that of the railways, were undertaken. It was John Major who began the process of outsourcing. A weak Prime Minister ran away from his responsibilities: the cowardly state was by now in full flow.
Tony Blair continued the process. It was he who promised the ‘The Third Way', not that anyone knew what it was, any more than anybody now knows what David Cameron's ‘Big Society' might be. Both, however, have a hallmark in common: they meant ‘anyone but government', and that was the intention. These were prime ministers in common in that they believed that whatever one asked for it was not the state's role to supply it.
Based on this belief, Blair pursued outsourcing as if it was the solution to all the government's problems. Despite having opposed PFI when in opposition PFI became Labour's favoured form of government finance until we have ended up in the absurd situation that the building in which the Treasury is located is now owned by an offshore company. And everywhere the message was given that light touch regulation of finance was to be the Labour mantra, ‘liberated' as it had been by Thatcher from the constraints that had previously made it responsible in her ‘Big Bang' reforms in 1986. This was perhaps the most cowardly act of all, for from that ‘liberation' and subsequent failure to regulate sprang a finance sector that has now dragged us to our knees. Gordon Brown may have saved the day in 2008 and had a moment of glory in the April 2009 G20 summit, but for his role in allowing finance to take over the UK economy he too takes his share of the blame for creating the cowardly state.
What the cowardly state represents
- This is the state that now argues that in the face of mass unemployment the government's only choice is to sack more people.
- And this is the state that says when there is no hope of the market generating new jobs, new investment, new innovation, new skills and new prospects then the government must cuts its spending and so remove any prospect of recovery from the economy.
- This is the state that says that those who never created this crisis must pay for it while the rich and powerful who did create it from within the banks must have tax cuts.
- This is the state that failed to stand up to bullying and abuse from the media.
- This is the state that is failing its young by putting them in debt for what may be the rest of their working lives to secure an education that previous generations enjoyed for nothing.
- And this is a state that does not have the courage to provide its young people with jobs, its old people with secure care, its population with protection against unemployment and the unforeseen and its children with decent schools.
This is a cowardly state: a state that sees responsibility and runs away from it. This is a state that now exists solely to facilitate the looting of its power to tax for the benefit of an elite who want to own its assets through the PFI scheme, and be guaranteed a high and risk-free income for doing so. It is a state that wants to privatise its education system through ‘free schools' — free only because yet more tax goes to the private sector in the process. And it is a state that wants to hand control of one of the UK's greatest achievements — the National Health Service — to the market so that we can copy the US healthcare model and double the cost of provision in exchange for worse healthcare outcomes — all so that a few can cream off from the tax revenues a wholly undeserved and excessive risk-free return for being in the right place at the right time, somewhere near their old school friends who might now be in power in Westminster.
No wonder we're in a mess. And no wonder the world's markets are teetering on the brink of collapse. After all, why invest in businesses when something so much more attractive — the outsourced tax income stream of a government as anxious as possible to give it away — is waiting to be claimed just around the corner?
The result is that private industry has discovered that rather than trying to innovate new products in an uncertain consumer marketplace it is much easier to make profits from the certain commodities that people are always going to need, such as health, education, local government services, the utilities and so on that were once the preserve of government. So not only are these services now more costly because a profit margin has been or is being added into their cost structure, it can also be argued that their transfer into the private sector via outsourcing actually weakens the incentive for companies to invest in new technologies which might be useful to meeting people's needs.
Clearly, there's a lot more in what follows that. But I owe it to the publisher to not reproduce it all here.
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I think its about time people woke up to the fact there is no democracy and no difference between the two biggest parties.The last 30/40 years have seen neither side aiming for full employment both sides overseeing unmanagable levels of immigration and huge increases in legislation for both small businesses and the workforce in general. I have argued and will continue to argue that there is enough money in this country to satisfy the needs of the people, what is lacking is fair distribution and i am not advocating a socialist state but a benign government that understands the benefit in a MIXED ECONOMY .The bank run capitalist economy is a failed model and we dont really want to be wearing overalls so the way forward would be to support certain industries through intervention whilst encouraging free markets where it would be beneficial for competition. And by that i do mean nationalisation such as utilities and the trains.I do not accept the standard critisisms against public ownership especially after looking at the record of the companies involved since maggies fire sale. I shall conclude by saying that the biggest problem we need to overcome is the parliament filled with career politicians beholden to private companies who are hellbent on destroying this country of ours and splitting the spoils.This has to be stopped.
Well said
Paul. Your comments about the lack of democracy hit the button because democracy cannot co-exist with the ‘wisdom of the markets’. The two ideologies are irreconcilable. Tony Blair said that there were only two parties; one comprised of those who believe in market solutions and the other comprised of those who believe in the power of the state to be ‘courageous’. Unfortunately, the divide does not correspond with our mainstream political parties but instead, cuts across all three such that the divide is between the leadership and their respective grassroots. Arguably, One Nation Tories, socially liberal LDs, the centre and left of the LP have more in common than they do with the Thatcherites (Cameron’s modernisers), the Blairites and the Orange Bookers who are virtually indistinguishable. Given that the latter have been in power for the last 32y, the electorate has been conned into believing that their vote will make a difference. I hope that Richard will not mind me linking to a Think Left post which expands my argument:
http://think-left.org/2012/02/16/the-nhs-and-tina-mrs-thatchers-ideological-anti-democratic-political-legacy/
The media discussion about the centre being the electable position is ludicrous. There is a great chasm rather than a political spectrum. A more refined analysis would also suggest that those who believe in ‘market solutions’ only do so if it is convenient. They have no hesitation in employing the power of the state in order to promote the interests of the transnational corporations… for which, as you imply, they are inevitably hansomly rewarded. I believe that we must make parasitology a core curriculum subject if a Courageous state ever comes into being.
My pleasure Sue – you are always welcome
I thought it was just nostalgia on my part to believe that there are Tories who don’t like the Neoliberal ethos and could find common cause with some Lib Dems and (some) Labour.
Paul and Sue -you describe the real divide very clearly. How can we bring the ‘courageous state’ people into an effective force?
I’m so pleased with your distinction between the courageous and the cowardly state. It’s a very neat differentiation that expresses exactly what has happened in “anglo-saxon economies”. I’m an American and our country has exactly the same problems you describe, only larger. Of course, we have the comic relief of the current Republican candidates, but that is only a dismal diversion from our real problems.
Most people seem to know they have been fleeced by the banks and brokers, but until more people understand how and why they have been hoodwinked by the elite, we are fighting an uphill battle. The very confusion of “neoconservative” in the US and “neoliberal” in the UK meaning the same mental view, adds to the confusion. You have supplied valuable definition to the problem and to the solution.
I read “Tax Havens” and passed it on to my eldest son, a cost accountant. The two of us have to pour milk on our ulcers when we talk about the subject. Nevertheless, I will buy and read “The Courageous State” soon. I guess we will be courageous readers.
Thank you for the clarity you bring to the issues you write about.
I’m getting to the point where its nearly time to give up on the Labour Party. The only policies that seem to be announced, never discussed, are the drivelly ones spouted by Liam Byrne and the mood music is just ‘hammer the poor, hammer the poor’!
We need to get private money out of politics and developed an ethos that values the public realm. Pressure groups are fine,they do good work and their profile at the moment is high and effective, but there will come a point where a new mainstream party is required, speaking to mainstream politics but absolutely adamant in trying to help people. The three main parties are ‘rent’ parties, they only bother about the well-off and how they can shovel more rent their way, meanwhile for those who can’t go a-rent-seeking, life is becoming almost impossible. People cannot afford to live with on the same islands as rent-seeking energy companies, landlords, mega-corporations, banks and so on.
When people move together they can change things but they have to move together and they have to be able to make laws. Whether its called the Citizens Party or the People’s Party, something has to change. I would rather be dead than live as someone else’s slave but as wage differentials move ever upwards that’s where a lot of people are going to find their work.
Hello, is anyone else out there?!!!
I agree, the time for real change is arriving
What we have is unsustainable in so many ways
It is long past time to give up on the labour party. They dealt with “entryism” when they expelled Militant: they did not even blink at entryism from the right, and there has been no substantive alternative arguably since Kinnock: certainly since Blair.
I work in Child Protection and it is now impossible to do that job. The people who run it have absolutely no idea how to manage and no idea what the job is for. The sad thing is that things are now so bad that nobody wants to do the job; and for some, at least, the prospect of “any” change is welcome, because it could only be a change for the better.
Social workers are no longer professionals: they are local government officers. The departments focus on their own defence after years of ignorant and aggressive attack from the ignorant and the ideologically driven. There had been no defence of the sort we have seen from the medical profession: but make no mistake- the attack on the NHS is the end of a long process of undermining the whole idea of public service and the techniques were honed long ago in my field first: and then in those less dear to the public heart. The change in the public perception of public service was built slowly and they clearly now feel that the change is embedded to the extent that they an take on the last bastion in the form of the NHS.
In another part of the forest they are slipping in other changes to the welfare state and the furore over the NHS is covering that, I think. For example, they have just sent out letters advising that there is a change in the law such that a state pension orginally promised at 60 (for women); and subsequently altered to payment at 62 for those in their late 50’s; will now not be paid till 66. People had a contract: that contract is not to be honoured. Yet they tell us they cannot breach contractual agreements about bankers’ bonuses. What, pray, is the difference?
To me, there is no mandate for anyone to dismantle the mixed economy and the welfare state. If we have anything akin to a constitution it was the post war settlement which ensured a minimum standard of living for all. Not perfect but it was what the people wanted and I believe it is what they still want. The lip service, from “safe in our hands” to Cameron,s big lie that what he is doing is “reform” shows they know they have no mandate. Doesn’t matter because they are not democrats. Nor do we seem to object to the fact that they are not. Not enough to oppose this coup, at any rate.
I am lucky: I am scottish. This means I have the option of voting for independence. And that is what I have been doing, and will contine to do. Not because I am a nationalist, in the sense that term is normally understood. Rather because I am a social democrat. I do not want to live in a plutocracy and I have no chance of anything else while tied to a much larger country which doesn’t seem to care enough about democracy.
If a truly social democratic party arose across the UK that might change my mind. But I see no sign of that at all. I hope that enough of my compatriots see this the same way, because TINA is a two way street
I know so much of what you’re saying is absolutely true