This lecture was originally delivered at the Centre for Research on Socio-Cultural Change (“CRESC”).
It is a great honour to give the CRESC annual lecture this year. Your work has been an inspiration to all of us who have tried to stitch together the political position that has become known as Blue Labour.
It is difficult to strike the right balance between being stubborn and open. Through the political failure of the Left to resist Thatcherism and then the grim accommodation of New Labour it was very hard to stay true to the insight that something bad was going on and at the same time overcome the limits of failed progressive paradigms and articulate something more politically appealing and economically plausible.
All at CRESC had to be stubborn in maintaining a sustained objection to the impoverishment and humiliation of working people by the power elites of the market and the state, and open in finding an interpretive framework that could best explain the radical nature of reality. C. Wright Mills and Andy Haldane make unlikely partners but the relationship works and has been an inspiration to me.
My relationship with Karel, however, didn’t get off to a good start. Blue Labour did make an appearance in the CRESC literature but only as an aspect of faddish elitism that gestured to the right problems but could find no means of affecting them.
Given the scale and range of attacks on Blue Labour this was received with a slight pang of disappointment, an emotion common to academics, rather than grief but I did wonder how this relationship could be brokered. It was with subdued delight therefore that I received an email from Karel supporting an argument in a New Statesman article in early January and suggesting a conversation.
I had one lingering misgiving. For many years I wrote a very specific genre of literature which one might call ‘lonely academic’ in which you are rejected by the mainstream and despised by the alternative. Unread and bereft it is hard to describe such a life as brimming over with friendship and laughter.
The effect of recognising how much unnecessary suffering there is for working people, how superficial and inept our political elites can be, how venal our financial elites really are and how far we are from having a popular expression of hope and disaffection can be debilitating. A certain humourlessness can pervade the heart and an unrelational superiority that is the very opposite of what the political position requires. It is not called Blue Labour for nothing.
Was Karel going to be a person like that? It was with trepidation and excitement that I approached a distant bearded figure at the entrance of the House of Lords and as I walked up to Karel he smiled at me he said, ‘It really is a load of bollocks isn’t it’ and I knew that everything was going to be alright. As the opening line of a public relationship it may not rival ‘Dr Livingstone I presume’ but it has stayed with me. We then sat down and had a political conversation the type of which there is far too few of in Parliament and the invitation to speak here followed from that.
I honour all at CRESC for the quality and quantity of your writing. I think it will turn out to be the most important contribution to the new political economy of any academic centre. There are two distinctively CRESC themes that I have drawn upon in my own work and which will be developed in various ways in this lecture.
The first concerns the political power of the City of London and its economic consequences. The Alternative Banking Report not only rightly questioned the claims of the financial sector in terms of job creation and tax revenues but also the type of internal investment the financial sector pursues which was overwhelmingly in property and loans and underpinned the debt based model of growth characterised by subsidised badly paid jobs.
The City of London Corporation is the most ancient continuous democratic commune in the world and it represents the interests of the financial sector alone which is the most important economic interest in our polity and CRESC were among the first to understand this causally and in terms of power. A sentence from the report which said ‘the only credible response is radical new economic policies which can usefully be launched through local and regional initiatives’ is one which has organised my own work and will be developed this evening. The central theme here is financialisation and how it leads to concentrations of ownership and the centralisation of decisions.
The second is the concern with the failure of leadership and statecraft. ‘After the Great Complacence’ introduced me to two new concepts to describe this, ‘the elite debacle’ and the ‘fiasco’. I have tried to work with both ever since. The theme was continued in ‘Groundhog Day’ which is a personal favourite. There is also a common interest in the work of Andy Haldane at the Bank of England. My respect for Mr Haldane is profound and it is necessary that he is part of the conversation that lies ahead of us. CRESC drew attention not only to the consequences of financialisation but also the failure of leadership, which was not personal but systematic.
The crash of 2008 will turn out to be the decisive moment in the emergence of 21st Century politics. In its aftermath there is the need for an articulation of a strategy through which to harness popular disaffection with the power elites and an agenda for economic transformation through a democratic politics of the common good.
Blue Labour is an attempt to do that and tonight I want to particularly emphasise the link between tradition and modernisation, between retrieving our inheritance and competing effectively in a global economy.
Relationships, paradox, tradition, power, leadership, institutions, vocation, virtue, reciprocity. I find these words cropping up in unlikely places in the work I do but before attempting to show how they fit together in the framework of a political strategy it is necessary to tell a brief story about where we are now as concerns the economy.
The combination of finance capital and public administration, which have been the dominant drivers of employment and growth over the past 30 years have not generated very much energy or goodness. Of the 1.3 trillion pounds lent by banks in the British economy between 1997 and 2007, 84% was in mortgages and financial services. The practical predicament we confront is that in the combination of household debt and those held by our financial institutions we are indeed a world leader and this comparative advantage has been building for a long time. Private indebtedness was the most recent method by which we borrowed against our future to serve the present and it has reached its limit.
The theoretical predicament is that on their own, neither a Keynesian nor a neo-classical approach has the conceptual means of understanding the importance of institutions; of vocation, virtue and value in generating competitive advantage, reciprocity as the foundation of good practice and the importance of long term relationships between capital, labour and place in generating growth and innovation. It sounds like a foreign language but ethos, virtuosity and leadership are fundamental to a firm’s success in contemporary capitalism. The ugly economic phrase is value added. The importance of these institutions and practices is the lesson of the comparative strength of the German political-economy which did not pursue a Keynesian model after 1945 but one based on worker representation in firms, a vocational economy and robust regional banks constrained to lend within the region or the sector. The importance of the body politic as well as of the administrative state is one way of describing this, the renewal of the Labour tradition of political economy, another.
Labour was born out of the decimation of the common life of the people by enclosure and the abolition of any status or association between non professional people. The Glorious Revolution was truly glorious for lawyers, accountants and professional partners, it was not so good for peasants, carpenters and plumbers. The professions were protected in law and retained their status but the vocations were dissolved into the labour market.
It was through the establishment of the institutions of the labour movement; the burial societies, mutual funds, building societies, combinations, as trade unions used to be known, that the people organised themselves and protected their status from being that of a commodity in the economy and an administrative unit of the poor law state. The working poor buried each other in proper graves, they built houses and ensured each other from calamity. The party was radical and conservative, democratic and traditional. Labour was a partner in brokering that most extraordinary of political settlements: the democratic monarchy.
The fundamental insight of the labour tradition is that human beings and nature are not commodities. They were not created as commodities and cannot endure their loss of status due to excessive exploitation and subsequent exhaustion. Capital is committed to securing the highest return on its investment but the consequences of that, unless mediated by non-market institutions, is ruinous for human beings and their environment. The Labour tradition, while brokering a common good not only between Catholic and Protestant but between secular and religious, is continuous with Christianity and the Citizenship tradition in asserting that the value of the person is not exclusively defined by their price.
The best way to resist both exploitation by the market as well as oppression by the state was through democratic association built around locational and vocational institutions. In terms of CRESC categories I am suggesting adding commodification to financialisation as a core concept. If commodification is understood as the transformation of that which was not produced as a commodity, human beings and nature, into a commodity, with a monetary price in the market and financialisation as the pressure exerted to turn substantive assets into formal money then both concepts are central to the construction of a better theory and their practical effects need to be resisted by the formation of countervailing institutions with popular legitimacy. Status and trusts, institutions and endowments are the most effective way of doing this.
The tragic paradox of the Labour tradition is that while there is no alternative to capitalism, capitalism is no alternative. The politics of Blue Labour is to recognise that and build institutions and solidarity that can domesticate capital and tame its commodifying and financialising force by building democratic institutions and constraints.
This is a long way from the political economy of new labour. The assumption that globalisation required transferrable skills and not vocational speciality, that tradition and local practice were to be superseded by rationalised administration and production was mistaken. The denuding of the country and its people of their institutional and productive inheritance by the higher rates of returns found in the City of London, and then the vulnerability of those gains to speculative loss, is the story we confronted in 2008 and is well told in the CRESC report.
It turns out that the German political economy, with its federal republic and subsidiarity, with its works councils and co-determination between capital and labour, with its regional and local banks and vocational control of labour market entry, with its distinctive stress on place, a democracy locational and vocational; was much better equipped to deal with globalisation than we were with our financial services and transferrable skills.
The institutional settlement of post-war West Germany has endured because it generated value. They retained pre-modern artisan organisations and turned them into the foundation of their contemporary economic success. They entangled and constrained capital in a myriad form of national, sectoral and localised arrangements and they emerge from the crash, virtually alone, with a productive economy and a functioning democracy, with greater equality than us and more meaningful work.
They have retained ideas of status that we discarded in favour of flexible labour markets and yet they proved better at adapting to the change in circumstances generated by new technology and financial innovations. They asserted that globalisation was not a fate that required a single response.
An Aristotelian conception of internal goods, of internal negotiation and co-operation, of a balance of interests within a corporation and not an exclusive assertion of external ownership and unilateral managerial prerogative characterised a system built upon strong self-organised democratic institutions within the economy. The comparative superiority of the social market economy is an important feature of the new consensus.
Blue Labour is considered to be at its most fanciful when talking about the revival of Tudor Statecraft and the commonwealth tradition. However, the move away from policies and programmes towards institutions and the common good requires this.
In 1500 England was behind in maths and science, literature and munitions, naval technology and theology. Kings and Trinity College were established in Cambridge with endowed chairs in Maths, Greek, Hebrew and Science, the Greenwich maritime college was established along with the Woolwich Arsenal, the Royal Exchange was established in London as an alternative to Amsterdam as a clearing house for global trade, the gold captured from the Golden Hind formed the foundation of the gold standard and the exchequer.
Within a hundred years our ships ruled the waves, the King James Bible established English as a literary language, London was the undisputed emporium for currency and the emerging Atlantic trade, Bonfire night indicated that when it came to gunpowder and munitions we had enough to fed the needy and there was an institutional body politic capable of underpinning state policy and prosperity. England was in a very different position in 1600 to 1500 and institutional endowment was a key part of that. I think we are in a similar position now where long term institutional design and a re-imagining of the body politic are necessary in order to reconstitute our nation as a free and democratic nation with distinctive traditions and practices that are a blessing to ourselves and to the world.
Blue Labour is based upon the assumption that we are living at a time that the Ancient Greeks used to call a Kairos moment. A time of a challenging of orthodoxies that requires decisive political leadership and a change of direction. This form of statecraft is consistent with our national traditions and combines the establishment of new economic institutions within a framework of a decentralised democracy and a more durable body politic.
This requires not only that we can tell a story about our successes and failures, about where we have gone wrong so that we can do better, but also that we can tell it within the understanding and experience of our fellow citizens. Aristotle spoke of doxa, of working within the experiences and meanings of everyday life. Blue Labour is rooted in the Aristotelian tradition, and as with its predecessor associated with the Tudor Commonwealthmen, it allied that with the freeborn tradition of English liberty. It is as synthetic as the myriad peoples who have lived here.
So, what are the forms of the new economy that are linked to the ancient polity? How can an embedded institutional system be brokered from the materials that we inherit and have to work with now? How can we move from the world as it is to the world as it should be?
The first is to establish new banking institutions in the places where people live and would like to work which can address the fundamental problem of lack of internal investment. The stranglehold of the City on our pension funds, savings and assets and the relentless recklessness of the money managers who were their custodians proved calamitous.
Constraining banks to lend within specific places, to establish productive and profitable relationships with businesses that function in those places is necessary in order to break the illusory speculative thrall of higher returns on investment. ‘Best value’ intensified the pressure. I am inspired by the excellent work of Andy Haldane at the Bank of England and he has gone furthest in probing the causes of systematic unaccountable recklessness in the banking sector.
I would suggest that we use 5% of the bailout money to endow the Banks of England, which would be established in the counties and cities of England and would be constrained to lend within the county or city. The principal of the endowment would be in trust to the people of that county or city, in perpetuity so that it could not be liquidated by its members, and the balance of power in its corporate governance will be held by a third being held by the Bank of England, a third by its workforce and a third by the civic institutions of the locality. These newly constituted ‘Banks of England’ are one of the essential feature of Blue Labour statecraft built upon endowment and institution building.
Without the endowment of newly constituted banks with a locational constraint the story of the Northern Counties Permanent Building Society and its tragic transformation into Northern Rock will be repeated and generalised within an increasingly financialised economy. There are always short term rational reasons for improving returns by easing lending constraints but the result is invariably unreasonable. The Co-operative Bank had a policy of ‘relational banking’ based on local relationships with business and it had a half a per-cent of the toxic debt found in the mainstream banks in 2008. The government has failed to establish these new institutions in the regional economy and, given quantitative easing and targeted stimulus packages, that is its greatest failings. It is using failed institutions as its instruments for growth and the trend is continuing. It is a telling statistic that there are nine effective lending banks in Britain and more than two thousand in Germany.
Learning from local failure within a decentralised system is different from the centralised fiasco of the banking bailout. The lack of capital in the regions requires not simply the establishment of one big industrial bank but regional banks and sectoral banks that can build long term relationships with local firms and their specific needs. Both finance and state administration have a tendency to centralisation. The building of locally endowed financial trusts recognises and resists this. There are strong traditions of local and mutual financial institutional in the regions of England that have been largely eviscerated over the last forty years. Their revitalisation is a central aspect of the work ahead. All the demutualised building societies and banks have been bought out and on July 5th I am speaking at an event to remutualise the Halifax, I hope to speak at similar events in Bradford and Woolwich. It is perhaps too late to relocate Arsenal back into their ancestral home but I will raise the issue.
The embedding of the economy in an institutional system is one way of conceptualising this. It is however, only half the story. There needs to be a renewal of political institutions and a confrontation with power elites whose lobbying and institutional power is a key fault line in our political settlement. Central to this is the power of finance within the State. Let’s take my city, this city, London. Rather, it is not a city but an authority. The City of London Corporation, the most ancient continuous democratic city in the world, Milton’s mansion house of liberty, with its common council, guilds, livery companies, Alderman and Mayor, with its Remembrancer and sheriffs is, in contrast, a supremely well endowed lobbyist for the financial sector..
It is an important reality to recognise, that our greatest civic inheritance represents only the interests of money. It has 150 democratically elected representatives while London as a grater authority representing 8 million people has one elected mayor and an ill defined council of twenty-four. London, which more than any other city has had to experience relentless population churn, institutional disruption and de-industrialisation meanwhile has the greatest need of a sense of place, of a common life.
An example of Blue Labour statecraft would be to extend the City of London Corporation to all of London so that the Mayor of London can live in the Mansion House, that each locality in London can be represented in its Parliament in the Guildhall and the Livery Companies of bakers, plumbers, merchant adventurers and carpenters are no longer dining clubs for bankers but actively renew the promotion of a vocational economy. London was established as a commune in 1191, its civic retrieval would be an important step towards blocking the domination of a single interest and renewing citizenship as a powerful practice.
That is what Blue Labour mean by radical traditionalism, the way we construct our democratic destiny out of our civic inheritance, part of the virtue through which we confront fortuna, to take a trope from Machiavelli. The establishment of local banks and city parliaments work together to generate a politics of the common good, a redistribution of power and a challenge to the domination of policy by the financial interest. I would argue for the establishment of unitary city parliaments in all our major cities. The entire population of Scotland could fit into North London and all of Wales into South London with something to spare and yet we fret over our national settlement. Of far more importance is the establishment and linking of institutional power for capital and citizens in a renewed framework of democratic cities and counties. That is one meaning of the Labour Commonwealth.
A second example of an ancient polity for a new economy concerns the status of work, our lack of regard for skill and the conditions of its preservation and dissemination. The work I have chosen to summarise this, is an ancient and a modern one: that of vocation.
The endowment of vocational institutions and the establishment of a vocational economy is central to this. The key link that needs to be made is between the national skill formation regime and the organisation of the labour market. In the professional economy it is illegal to practice without having served a long period of training and apprenticeship.
Doctors, lawyers and dentists have self-organised institutions that function as interest groups and internal ethical regulators that control labour market entry. They used to be called guilds. This was generalised across skill formation and labour market entry throughout all trades in Germany. A democratically organised artisan skill sector constantly renewed its skills and this worked as a constraint across the entire economy and provided the tradition within which innovation could make sense in terms of good practice.
A move away from university education as the exclusive goal and towards a system that honours work by hand and brain and renews a sense of virtue within the craft, enforced and sustained by organisations, is one possible consequence of pursuing value. This would require a re-organisation, a re-orientation of higher education.
One path could be to restore the ex-polytechnics as vocational colleges, and establish a co-governance system within them between unions, private sector and the state. One could think of placing the medical schools and the law schools within them so that the class distinction is dissolved. It also requires an intensification of the union direction pioneered by Union Learn in which the Union partners vocational training. The government makes no link between apprenticeship and labour market entry and their skills agenda thus lacks institutional force. But who speaks for skill, for expertise, for tradition in the swelter of interests that I sometimes survey in the atrium of Portcullis House? The vocational economy needs to be linked to the renewal of the ancient polity.
This relates to the reform of the institution I am now a member of, the House of Lords. The idea proposed by the government of a mirror of the House of Commons called a Senate, elected by proportional representation and serving fifteen year terms is not a very good one. The Lords is really an extraordinary place. The hereditary peers are democratically elected, there are people there with genuine distinction in their careers in business, academia, medicine, church as well as politics. There are moments, listening to debates when I am genuinely moved by the experience that is brought to bear on the issue. Legislation is very properly amended and revised and a certain breath-taking civility characterises conversation between parties and more eerily, within them. The number of working class peers on our benches outnumbers those in the Commons. So, obviously, it has to go.
I would suggest that the Commons is best understood as democracy locational, where people are elected from the places where they live. The country emphatically rejected losing that link last year. The Lords, in contrast, should represent vocational democracy, where people are elected from their working lives.
There should be people elected from their sector, whether that be electrical or academic, medical or administrative. The Vice Chancellors should elect a Lord and so should academics. The elected Lord of the heads of hospitals as well as nurses and cleaners should be there. There should be a minimum age limit of fifty so that the people involved are experienced and are recognised by their peers as embodying virtue, that combination of experience and expertise that comes with practice.
There should be elected representatives not only of the Church of England, but of all significant denominations, Catholic as well as Muslim. I would return the judges to the Chamber so that it is the final court of appeal and the apex of the Common Law, in Parliament. The English Tradition is based upon the balance of interests not the separation of the powers and that should be pursued in the firm as well as the polity.
The Vocational chamber would revise and amend legislation, as it does now, but on the basis of the judgement of people who actually know what they are talking about, who are recognised as experts in their field by their peers through democratic election.
It has been the greatest honour and privilege of my life to sit in Parliament, each day my heart is full of wonder that such a thing could be true and I have probably enjoyed myself too much and I recognise that I would not win election to such a distinguished house and would not deserve to. This form of constitutional and institutional renewal serves modern demands within the constraints of a meaningful tradition. Above all, such an arrangement would ensure that the working life of the country is represented in Parliament. In a renewed vocational system the Queen would be the custodian of the vocational tradition, and looking ahead it is certainly a job that Prince Charles could do quite well.
The creation of local banking and the strengthening of city councils, the protection of status at work and House of Lords reform go back to the birth of the Labour movement as does the third area of institutional change which concerns the use of endowment and trusts to promote land reform and house building.
As I am fond of saying at Labour Party meetings, within three weeks of the Norman Conquest 90% of the freehold property in England was owned by 12 French nobles and its been pretty much uphill ever since. There is ten billion pounds worth of public land being sold off by the government in parallel to the cuts. There are many reasons for thinking that this is the most fruitful area of resistance by Labour. The sale of the forests and allotments was opposed and reversed.
The further reason is that taking away the freehold cost halves the price of property. In terms of community land trusts which would be endowed by the state or local authority ‘in perpetuity for the people of that place in trust for the nation’ would enable leasehold house building within a shared freehold structure. Community Land Trusts were pursued, with extraordinary results in East Brooklyn by the Industrial Areas Foundation in the building of ‘Nehemiah Homes’. Without freehold costs house building would become affordable, local skills developed and a redistribution of land and assets, both individual and shared, to people who are dispossessed. The Great Recession, as Wolfgang Streek calls it, is most morose in the construction sector. The endowment of the land to the people would be one form of stimulus as it could make the generation of the money necessary for house building possible.
This use of community land trusts is not only applicable to housing but to public assets. Dover Port, for example, is owned by the Government and leased to Dover Port Authority, which is now a private company and they wish to sell it to another private authority as a freehold entity. This is part of the portfolio rationalisation made necessary by the deficit. The highest bidder at the moment is a French company.
One of the features of commodification is that it severs meaning from price. Dover port is a lot of things but French is certainly not one of them. In contrast, Dover Port could be ‘endowed to the people of Dover in perpetuity for the nation’ as a community land trust and could be governed on the corporate model of a third funders, third workers and a third the people of Dover. Their vocational college could specialise in travel; maritime, train and motor based, and could be funded partly by the Kent County Bank and by Union pension funds, as in the restructuring of Chrysler in Detroit, thus bringing all aspects of this system together.
Regional banks, vocational colleges, worker and civic representation in governance, the use of trusts and endowment and an audacious and populist local politics are all embodied in Dover Port. The White Cliffs may yet again represent defiance and hope for the working people of England. As it stands the citizens of Dover are tenant farmers in their own city. This is an example of where a populist politics is in alliance with a new economy through the restoration of an ancient city.
Three paradoxes have organised this lecture. The first has been the suggestion that globalisation requires a national institutional regime, the second is that this is best conceived in a decentralised form that would challenge the primacy of the Treasury in favour of regional variety and power. The third is that the generation of the new economy and the renewal of our ancient polity are linked.
The recapitalisation of the regions through the endowment of new Banks of England can only be achieved if the City of London Corporation is retrieved by the citizens of London from its capture by the financial sector. The establishment of a vocational economy by the restoration of the House of Lords as a vocational chamber. The establishment of community land trusts to redistribute housing is linked to the civic and economic renewal of one of our most ancient and iconic ports.
CRESC have spoken mournfully about the disconnect between elite institutions and democratic politics. The price of a successful political action is a constructive alternative and I have tried to present one this evening. There is much more to say and you can’t imagine the self-disciple involved in not saying it but I am aware that I have already spoken for too long. I would like to thank CRESC again for the work you do and for giving me the opportunity to give this lecture.