The future of capitalism

Dedication for Sue diverging lives, converging anxieties Contents Cover Title Page Dedication Part One: Crisis 1: The New Anxieties Part Two: Restoring Ethics 2: The Foundations of Morality: From the Selfish Gene to the Ethical Group 3: The Ethical State 4: The Ethical Firm 5: The Ethical Family 6: The Ethical World Part Three: Restoring the Inclusive Society 7: The Geographic Divide: Booming Metropolis, Broken Cities 8: The Class Divide: Having it All, Falling Apart 9: The Global Divide: Winners, and the Left Behind Part Four: Restoring Inclusive Politics 10: Breaking the Extremes Acknowledgements Bibliography Notes Index Copyright About the Publisher Part One Crisis The New Anxieties PASSION AND PRAGMATISM Deep rifts are tearing apart the fabric of our societies They are bringing new anxieties and new anger to our people, and new passions to our politics The social bases of these anxieties are geographic, educational and moral It is the regions rebelling against the metropolis; northern England versus London; the heartlands versus the coasts It is the less educated rebelling against the more educated It is the struggling workers rebelling against the ‘scroungers’ and ‘rent-seekers’ The less-educated, toiling provincial has replaced the working class as the revolutionary force in society: the sans culottes replaced by the sans cool So, what are these people angry about? Place has become a dimension of the new grievances; after a long period during which geographic economic inequalities narrowed, recently they have been widening rapidly Across North America, Europe and Japan, metropolitan areas are surging ahead of the rest of the nation Not only are they becoming much richer than the provinces, socially they are becoming detached and no longer representative of the nation of which they are often the capital But even within the dynamic metropolis, these extraordinary economic gains are heavily skewed The newly successful are neither capitalists nor ordinary workers: they are the well educated with new skills They have forged themselves into a new class, meeting at university and developing a new shared identity in which esteem comes from skill They have even developed a distinctive morality, elevating characteristics such as minority ethnicity and sexual orientation into group identities as victims On the basis of their distinctive concern for victim groups, they claim moral superiority over the less-well educated Having forged themselves into a new ruling class, the well educated trust both government and each other more than ever While the fortunes of the educated have soared, pulling up national averages with them, the less-well educated, both in the metropolis and nationally, are now in crisis, stigmatized as the ‘white working class’ The syndrome of decline began with the loss of meaningful jobs Globalization has shifted many semi-skilled jobs to Asia, and technological change is eliminating many others The loss of jobs has hit two age groups particularly hard: older workers and those trying to find their first job Among older workers, job loss often led to family breakdown, drugs, alcohol and violence In America, the resulting collapse in the sense of a purposeful life is manifested in falling life expectancy for whites who have not been to college; this at a time when the unprecedented pace of medical advances is delivering rapidly rising life expectancy for more favoured groups.1 In Europe, social safety nets have muted the extremity of outcomes, but the syndrome is also widespread and in the most broken cities, such as Blackpool, life expectancy is also falling Redundant over-fifties are drinking the dregs of despair Yet the less-educated young have fared little better In much of Europe, young people face mass unemployment: currently, a third of young Italians are unemployed, a scale of job shortage last seen in the Depression of the 1930s Surveys show an unprecedented level of youthful pessimism: most young people expect to have lower living standards than their parents Nor is this a delusion: during the past four decades, the economic performance of capitalism has deteriorated The global financial crisis of 2008–9 made it manifest, but from the 1980s this pessimism has been slowly growing Capitalism’s core credential of steadily rising living standards for all has been tarnished: it has continued to deliver for some, but has passed others by In America, the emblematic heart of capitalism, half of the 1980s generation are absolutely worse off than the generation of their parents at the same age.2 For them, capitalism is not working Given the huge advances in technology and public policy that have taken place since 1980, that failure is astounding These advances, themselves dependent on capitalism, make it entirely feasible for everyone to have become substantially better off Yet a majority now expect their children’s lives to be worse than their own Among the American white working class this pessimism rises to an astonishing 76 per cent.3 And Europeans are even more pessimistic than Americans The resentment of the less educated is tinged with fear They recognize that the well educated are distancing themselves, socially and culturally And they conclude that both this distancing and the emergence of more-favoured groups, perceived as creaming off benefits, weaken their own claim to help The erosion of their confidence in the future of their social safety net is happening just as their need for it has increased Anxiety, anger and despair have shredded people’s political allegiances, their trust in government and even their trust in each other The less educated were at the core of the mutinies that saw Donald Trump defeat Hillary Clinton in the USA; Brexit defeat Remain in the UK; the insurgent parties of Marine Le Pen and Jean-Luc Mélenchon gain over 40 per cent of the vote in France (shrivelling the incumbent Socialists to under 10 per cent); and in Germany so shrinking the Christian Democrat–Social Democrat coalition to turn the far right AfD (Alternative for Germany) into the official opposition in the Bundestag The education divide was compounded by the geographic divide London voted heavily for Remain; New York voted heavily for Clinton; Paris eschewed Le Pen and Mélenchon; and Frankfurt eschewed the AfD The radical opposition came from the provinces The mutinies were age-related, but they were not as simple as old-versus-young Both older workers, who had been marginalized as their skills lost value, and young people, entering a bleak job market, turned to the extremes In France, youth voted disproportionately for the new-look far right; in Britain and the USA, they voted disproportionately for the new-look far left Nature abhors a vacuum, and so voters The frustration born of this gulf between what has happened and what is feasible has provided the pulse of energy for two species of politician that were waiting in the wings: populists and ideologues The last time capitalism derailed, in the 1930s, the same thing happened The emerging dangers were crystallized by Aldous Huxley in Brave New World (1932) and George Orwell in Nineteen Eighty-Four (1949) The end of the Cold War in 1989 appeared to usher in a credible prospect that all such disasters were behind us: we had arrived at ‘the end of history’, a permanent utopia Instead, we are facing the all-too-credible prospect of our very own dystopia The new anxieties have promptly been answered by the old ideologies, returning us to the stale and abusive confrontation of left and right An ideology offers the seductive combination of easy moral certainties and an all-purpose analysis, providing a confident reply to any problem The revived * Consistent with marginalization, Spellcheck refuses to recognize the name despite its population being double that of Oxford, a name to which it raises no objection * Instead of writing books, I could have been a rent-seeking barrister * Britain used to have such colleges, called polytechnics Symptomatic of the British bias to academic prestige, they were all turned into universities * In Britain during 2016, among those in further education only 4,000 people achieved a technical level award: less than one for every 10,000 of the British population (Alison Wolf, Financial Times, 28 December 2017) * In May 2018 the French government introduced such a policy * Just in case, let me assure them that I have them over a legal barrel: thank God for barristers * This would be the mortgage outstanding at the date the policy was first announced, so as to avoid it being gamed by remortgaging * The shareholders ended up bearing losses that far exceeded these dividends, as the share price collapsed * 30/70 = 0.43 * But not necessarily: as part of the reality checks for this book, I asked a highly experienced lawyer to comment on these proposals His response was ‘I like the idea of targeting the rich City lawyers and their metropolitan ilk.’ But perhaps he is atypical: he is a Quaker * This chapter has benefited from innumerable discussions with Tony Venables It draws on Collier (2018a) * I seized my opportunity to contribute to that effort (Collier, 2013) * The statistics that follow are by the psephologist Dr Stephen Fisher, of Oxford University, based on the most reliable of the Brexit survey data We realized the scope for testing these hypotheses too late to write up the research prior to the publication deadline for this book, but our intention is to submit it for professional scrutiny and publication In the interim, the results must be treated as provisional * Formal Marxist theory has long recognized that the vanguard is dependent upon attracting a category of fans termed ‘useful idiots’ Mr Corbyn’s insightful innovation was to refine this into ‘youthful idiots’ * In December 2017 I was invited to address Denmark’s Social Democrats Mette Frederiksen, its remarkable new leader, had arrived at precisely this diagnosis and was vigorously returning the party back to its co-operative, communitarian origins Reversing a long period of decline, its vote share was already rising, with the exception of highly educated metropolitans: the WEIRD were indignantly shifting to the hard left ... ahead of the rest of the nation Not only are they becoming much richer than the provinces, socially they are becoming detached and no longer representative of the nation of which they are often the. .. suspicious of the arrogant paternalism of the vanguard, its view of well-being was as reductionist – equalized individual consumption The Future of Capitalism is not a remake of The Future of Socialism... northern England, the co-operative movement rapidly spread across much of Europe By banding together, these co-operatives became the foundation of the political parties of the centre-left: the