The Poverty of 'Fantasy Island' / FRFI 199 Oct / Nov 2007

FRFI 199 October / November 2007

Larry Elliott and Dan Atkinson
Fantasy Island: waking up to the incredible economic, political and social illusions of the Blair legacy
Constable, London, 2007, 260pp, £7.99 pbk

‘The financial services industry... is, and will always be, of vital importance to this country…We are world leaders and we want to keep it that way’ Alistair Darling, Chancellor of the Exchequer, Labour Party Conference, 23 September 2007 [1]

Britain can be seen as ‘one big offshore hedge fund churning speculators’ money while asset-strippers draw up plans for the few remaining factories to be turned into industrial theme parks’, say the authors of a new book exposing the illusions of the Blair legacy (p74).2 They also believe that nothing essential will change under Gordon Brown. He is unlikely to curb the activities of the global financial markets because the UK has actually done rather well out of them, at least in the short term, a point reinforced by the new Chancellor at the recent Labour Party conference. The result of this could well be an almighty financial crash and a ‘backlash against the excesses of the financial markets of a kind not seen for 75 years [since the Great Depression]’. While such a backlash, the authors say, would lead to demands to regulate the financial markets, ‘the only pity is that [such reforms] now could avoid the crash’ (pp230-1). Elliott and Atkinson (E&A) have written this book to warn us of the perils ahead, as a wake up call to take action before the real world goes up in smoke (p238).

The action they have in mind, of course, is not revolutionary. Unless Karl Marx was right about the ultimate crisis of capitalism, they say, the world will recover from even the most serious crash, given time. At what cost and at whose expense is not even discussed. They are correct to argue that there are great similarities between the precarious nature of the global economy now and that in the late 1920s, with the added dimension of an ecological crisis from which ‘there may be no coming back’. But their solutions are illusory and reactionary. A moral challenge to the consume-at-all-costs mentality, an appeal for cleaner fuels, more efficient cars, sustainable buildings and a tax system to provide incentives to make this all happen (p233) is hardly going to disturb the course of the financial corporations and multinational companies based in the UK, desperately scouring the world for new sources of profit. Capital must expand or go under, so a challenge to environmental destruction that does not challenge the source of that destruction, capitalism, is a deception. It is a complacent and indulgent simplification by ideological representatives of the commercial and professional middle classes who fear the worst for their own comfortable lives.

Fantasy Island is a ‘companion volume’ to The Age of Insecurity (Verso, 1998), which offered a scathing attack on the neo-liberal policies of Thatcher and the then recently elected Blair government.3 They warned of the dangers ahead and argued, then as now, for a managed, more compassionate capitalism with curbs on the free market. Their warnings went unheeded and now we face dire consequences – a looming crash of the capitalist system. By exposing the dangerous fantasies of the Blair administration they hope, even at this late stage, to avoid catastrophe – hence the full title of their latest book.

E&A argue that among the rather modest solid accomplishments under Blair’s ‘centre-left’ government were a series of dangerous fantasies. The two most serious are the belief that the British economy can be sustained on ever-higher levels of debt and the environment can be sustained on ever-higher levels of growth. The others are: that the decline of manufacturing and a shrinking industrial base do not matter; that prices can continue to fall while wages continue to go up; that an increasingly commercialised public sector is on the verge of becoming ‘world class’ rather than being on the edge of meltdown; that flexible labour markets can beat off the challenge of China and India yet attract more people back to work; and that Britain can play the part of the world’s policeman on the cheap with dangerously overstretched armed forces (px and p26). Finally, the central theme of their book is that the prosperity of the Blair years has been largely illusory (p24).

Whatever happened to British imperialism?
As in their earlier book, E&A fail to see the connection between ideology and economic developments. Monetarism, for example, was not some cultural preference or ‘new credo’ as they imply, but was the necessary ideological response of the ruling class to the renewed crisis in the capital accumulation process in the early 1970s. That is why it had to be implemented by a Labour government, some years before Thatcher became Prime Minister in 1979. Callaghan and Healey might or might not have been ‘reluctant monetarists’ (p29), but, running a government in the service of capitalism, they had no choice. Monetarism/neo-liberalism gave ideological expression to the new requirements of capital in this crisis-ridden period. The financial deregulation, de-industrialisation and privatisation that followed through successive Tory administrations were necessarily appropriated by Labour under Blair and will essentially be continued by Brown.

Britain is a leading imperialist power. The imperialist character of Britain has been decisive in determining all the major economic and political developments in this country. Britain’s relative industrial decline has been combined with a dynamic, aggressive imperialist expansion of commerce and finance overseas. That is how it was able to compete with the other rising imperialist powers from the turn of the 20th century. Globalisation was not a political option (p36), but a necessary expression of growing inter-imperialist rivalry in a crisis-ridden capitalism. Britain used its role as the leading international banking centre, through the City of London, to sustain its position internationally as the imperialist power second only to the US. Today this development has reached unprecedented heights. Britain’s overseas assets are now more than four times its GDP. No other imperialist country has such a relation with the international capital and foreign currency markets.4 Labour’s justification for ‘humanitarian wars’ and its support for military intervention in Iraq, Afghanistan and other areas where Britain retains economic ties are explicable in terms of its need to protect and expand these vital global interests. That is why Britain acts as the junior partner to the United States in policing the world, despite its overstretched armed forces.

E&A do not even begin to understand this. In industrial terms, they say, Britain is ‘no longer a developed but a developing nation’ (p219). Fantastically, they even suggest that, after the Cold War, Britain could have followed the Scandinavian model, reducing the armed forces to little more than ceremonial organisations, using the peace dividend for welfare spending or tax cuts (p216).

In the Age of Insecurity the word imperialism was not in the index. In Fantasy Island it occurs once. For E&A Blair appears as a self-aggrandising poseur who wants superpower status for Britain on the cheap. They are at a loss to explain the numerous armed interventions abroad under Blair’s governments. ‘That a British prime minister could have waded into the quagmire of Iraq was bad enough; that a Labour prime minister could have done so beggared belief’ (p167). The earlier armed intervention in Yugoslavia (Kosovo) in 1999 was, in fact, the 100th overseas military campaign by British armed forces since World War II. In the lead up to the war on Yugoslavia, the then Labour Foreign Secretary, Robin Cook, declared that ‘nowhere in the world is so far away that it is not relevant to our security interests’.5 Throughout its history Labour has always been prepared to use military power to defend the interests of British imperialism.6 The interventions under Blair are simply a continuation of that stance.

Poverty in ‘Fantasy Island’
There is very little about poverty in ‘Fantasy Island’. The journalist Polly Toynbee’s book on the plight of the working poor, arising from her undercover investigations, is as close as E&A get to it. The book they say ‘took the reader into a world of which most of us are barely aware, one of dreadful pay and almost zero status’ (p149). They report that most employment growth in the UK continues to be at the low-skill end of the service sector, including nearly 1m workers in call centres. So many migrant workers are allowed in, they say, because ‘they help to keep wages down and thus please New Labour’s business allies’ (p159). And there are at least 4m workers in ‘service’, with the proportion employed by the well-off to do their cooking, cleaning, childcare, and gardening as high as in the 1860s (p76, p79). These are, however, just throw-away comments. They never examine the political, social and class implications of these developments.

This is hardly surprising. E&A believe that New Labour has turned the tide in terms of rising income inequality (p12). ‘There have been the minimum wage, and redistribution of wealth through tax credits and other mechanisms’ (p23). These are lazy simplifications. Income inequality has actually grown under Labour. From 1996/97 to 2005/06, the share of total income of the top 10% of individuals has risen from 27.8% to 29.5% and that of the bottom 10% has fallen 2.0% to 1.6%. The ratio of the top 20% share to the bottom 20% share of total income has also risen from 7.3 to 7.8. Overall the gini coefficient (100 equals perfect inequality; zero equals perfect equality) has risen from 37 to 39 in the same period. Britain is the least equal society in the European Union.

Over ten years Labour has hardly begun to reverse the massive increase in the numbers living in poverty under the Tories. 12.8m individuals (22% of the population) and 3.8m children (30% of all children) lived in poverty (below 60% of the median income after housing costs) in 2005/06 – a decrease of only 1.2m individuals and 500,000 children since 1996/97, after a period when real incomes rose 28%. The numbers living in poverty are in fact rising again. From 2004/05 to 2005/6 the number of individuals living in poverty rose by around 800,000 and the number of children in poverty rose by 200,000.7 So Blair’s announcement in 1999 that he would abolish child poverty in a generation is really a fantasy – although not on E&A’s list.8

E&A believe that without a change in political direction they face two equally unpalatable developments. The first is a serious deterioration to their own comfortable lives – a prosperity, however illusionary, of ‘plenty of jobs and plenty of money, with friends always popping round for a barbecue, cheap flights to interesting destinations, white wine in the fridge and a flat-panel television to watch the latest British sporting triumph’ (p24). The second is that of a highly polarised society threatened with financial collapse and setting into play politically dangerous, possibly revolutionary, forces. They yearn for a middle way ‘between the harshness of free market capitalism on the one hand’ and what they casually dismiss as ‘the cruelties and inefficiencies of communism on the other’ (p34). That middle way is the real fantasy. It is the one that graces every page of Fantasy Island.
David Yaffe

1 Cited in the Financial Times 24 September 2007
2 Elliott and Atkinson are the economics editors of The Guardian and Mail on Sunday respectively. Page numbers in the text refer to the book.
3 See my review of this book in ‘The Age of Anxiety’ in FRFI 143 June/July 1998 ( frfipages/143html)
4 See my article ‘Britain: Parasitic and decaying capitalism’ in FRFI 194 December 2006/January 2007 ( frfipages/194.html)
5 Cited by John Pilger New Statesman
2 April 1999.
6 See R Clough Labour: a party fit for imperialism Larkin Publications 1992. A new edition is being prepared.
7 All poverty statistics are from DWP Households below Average Income 1994/95–2005/06.
8 They do speak of ‘ambitious plans’ of Brown to eradicate child poverty by 2020, saying that he will have to spend billions of pounds to achieve it (pp225-6).