There is a long story to the crisis we are in

Gerry Hassan

The Scotsman, July 14th 2012

As the economic, social and political turmoil mounts across Britain, Europe and the West, some voices of certainty have arisen.

One of the most vocal strands of opinion concerns who to blame for the wreckage and debris we see before us, with some wanting to lay the responsibility solely on the shoulders of Thatcherism, ‘the Big Bang’ and 1980s.

It is very simple and easy to understand; the human need to rewrite history as a self-fulfilling prophecy. The 1980s as the epitome of everything that is wrong and has gone wrong is a powerful current in modern Britain.

This view stresses the politics of individualism of that decade, deregulation and privatisation. This, it is argued, created a climate which led to the present malaise: from Harry Enfield’s ‘Loadsamoney’ to today’s villains, Fred Goodwin and Bob Diamond.

This view has been frequently and simply presented by writer Owen Jones, whose book, ‘Chavs’, rightly takes aim at the demonisation of the working class in much of current culture. However, the Jones account of the world seems to know little history pre-Thatcher, pre-1979, and sees the Britain of the fifties, sixties and seventies implausibly as some kind of land of milk and honey.

This may seem like a heretical thought to many, but Thatcherism and New Labour are not the real culprits of the mess we are in. They are merely manifestations of a much deeper, longer story and set of powerful dynamics.

The origins of our present crisis hark back to the beginnings and evolution of British capitalism. There was the emergence of what was called ‘gentlemanly capitalism’ during the rise of Britain as the first industrial power. This was the era of magnates, of self-made men, self-regulation and the cult of the amateur.

At the same time the British ruling elites remained passionately anti-industrial, looking down their noises at the new classes who made money out of getting their hands dirty; part of that dismissive attitude exists in society to this day in ‘old money’.

This was the age of industry and Empire and the emergence of the City of London as the world’s first business hub. From London a myriad of networks made the City dominate the British economy, while also standing simultaneously inside and outside the UK as part of a vast global trading nation. Its remnants can be seen today in the tax havens of the Channel Islands, Isle of Man and Bermuda.

The rise of industrial Britain also saw the emergence of ideas which still define us and the modern world: political economy, civil society and moral sentiment seen in the writings of Adam Smith, David Ricardo and Adam Ferguson.

British capitalism in the 19th century came to be supported by an expanding public realm, ‘gas and water socialism’ in municipal authorities and Victorian philanthropy. Alongside this lay an ecology of local banks and building societies which supported small businesses and whose slow decline began with the Bank of Glasgow crash of 1878 which caused a shipbuilding recession on the Clyde.

Britain exported its ideas of capitalism and economics to the world and in particular, the English-speaking world, aided by Empire and emigration from the UK.

It is no accident that every one of the countries of ‘the Anglo-sphere’, the English speaking developed capitalist economies, the UK, Ireland, US, Canada, Australia and New Zealand, all experienced more than anywhere else in recent times the full fury of market fundamentalism and the pursuit of excess reward by a tiny unrepresentative elite. This is a revolution that Britain basically exported to the world, in ideas and people.

This argument about the unique place of Britain in the evolution of capitalism has been trumpeted by the likes of Andrew Roberts and Niall Ferguson in their accounts of the triumph of free market values. A much more nuanced account has been provided by Andrew Gamble in his ‘Between Europe and America’ where he has argued that England saw itself as a ‘world island’ at the heart of several relationships it thought it could influence: the union of these isles,  Anglo-America, Europe and the Commonwealth.

If we are to understand the current crisis, how we got into it and how we get out of it, we have to place British capitalism and its evolution in some kind of historical place.

Blaming Thatcherism and New Labour for our disappointments and defeats is a displacement activity. Believing the 1980s were the source of all that went wrong with Britain is the equivalent to the Norman Tebbit view of Britain, which saw our moral standards and behaviour weaken due to ‘the funk’ and ‘fudge’ of the 1960s. That was an equally preposterous view rightly ridiculed.

Thatcherism and New Labour did not emerge from nowhere. Their seeds took root in the nature of British culture, individualism, the nature of the state and political economy.

Why did Thatcherism find it so easy to find a coherence and political voice in the 1970s and overturn the post-war consensus? Why did New Labour find it so painless to thrash the last remains of British social democracy and govern from the viewpoint of the dominant class?  The answer cannot be found just in the last 30 years, but in the 300 years since the beginning of the industrial revolution.

One-dimensional history, blaming all our sins on Thatcherism and Blairism might make some feel good and catch a soundbite, but it won’t develop a serious politics which can get us out of this mess and address the long-term problems and challenges of the British economy and society.

British capitalism has developed in a dynamic, dysfunctional direction which is increasingly about serving the needs of the short-term, self-interested, self-rewarding global class of buccaneers, asset strippers and vulgarians.

It has been a revolution from above which has remade much of our society, our relationships and aspirations. But it has also at critical points won popular support in the 1980s or under Blair, and we have to recognise this.

Only then and by confronting the deep roots of this current crisis and its apologists can we hope to begin to articulate a different kind of society: one based on long-term interests, proper banking and investment, and support for industry. Such change will require what is in effect a very different kind of British capitalism and the breakup of the current broken political system which has shown itself the equivalent of the ‘rotten boroughs’ of pre-democratic times.