How to support Labour and hope to get away with it

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• Owen Jones, The Establishmentand how they get away with it, Allen Lane, hardback, 358pp, £16.99

Owen Jones has become a celebrity on the left with his newspaper columns, first in The Independent and more recently in The Guardian. He is a major figure in the People’s Assembly, and can command substantial audiences when he speaks on its platforms across the country. His new book is a polemic against what he calls the Establishment, and it reads like an extended newspaper column in that it contains myriad useful facts and sharp observations for those wanting to fight back against austerity, but ultimately lacks real substance. His method is idealist: he cannot tie his Establishment down to the realities of British imperialism. As a result his conclusion, that Britain needs a democratic revolution to undermine the power of the Establishment, not only underestimates the scale of the struggle that this would require, but also fails to point to the agency for such a change. Furthermore, his failure to deal with the reactionary Labour Party leads the reader to conclude that however radical his politics seem, he will join those calling on us to vote Labour at next year’s general election.

The Establishment is a phrase coined in the 1950s by a Spectator columnist, Henry Fairlie. According to Jones, Fairlie thought the Establishment ‘included not only “the centres of official power – though they are certainly part of it” – but “the whole matrix of official and social relations within which power is exercised…In other words, the Establishment comprised a set of well-connected people who knew each other, mixed in the same circles and had each other’s backs’ (Jones, p8).

Jones himself says the Establishment includes ‘politicians who make laws; media barons who set the terms of debate; businesses and financiers who run the economy; police forces that enforce a law which is rigged in favour of the powerful’ (p5). He criticises Fairlie’s concept for excluding reference to shared economic interests, ‘the profound links that bring together the big-business, financial and political elites’ (p9). He also argues that Fairlie gives no sense ‘of a common mentality binding the Establishment together’ (p9). In Fairlie’s time, he says, that was ‘an ethos of statism and paternalism – above all, a belief that active government was necessary for a healthy, stable society’; it was ‘the era of welfare capitalism’ (p9).

Jones’s view is that this has now changed: paternalism has gone out of the window and today’s Establishment is characterised by a triumphalist neo-liberalism; it ‘is amassing wealth and aggressively annexing power in a way that has no precedent in modern times’ (p12). It experiences no opposition – politicians have become conformists, trade unions are without power and opponent economists or academics are driven out of the intellectual mainstream. These changes represent the triumph of neo-liberal ideologues – followers of individuals like Friedrich Hayek and Milton Friedman – and the institutions they created – like the Adam Smith Institute; collectively Jones calls them the Outriders, those whose ideas were marginalised by a post-war consensus, but served as the advance guard for this transformation of the Establishment. What made their triumph possible, Jones argues (p247), was the end of the post-war boom and in particular, the collapse of the Bretton Woods financial system when the US government terminated dollar-gold convertibility in August 1971.

Jones cites Professor Costas Lapavitsas who argues that the period of the post-war boom ‘was when finance was repressed’ (p247), adding that Bretton Woods had been ‘a framework of global regulation which today doesn’t exist’ (p247). Jones concludes that ‘a new anarchic financial world beckoned.’ In Britain, he sees two key steps in the process: first, the ending of credit controls by Tory Chancellor Anthony Barber in 1971, and second, the triumph of Thatcherism: ‘As Thatcherism helped forge the new Establishment, the financial sector was encouraged as never before. In one sense, the new Establishment represented the victory of finance capital over manufacturing capital’ (p248).

This analysis however has very important weaknesses, ones which in the end have significant consequences when we come to deal with Jones’s political conclusions. The first is that it was a Labour government which heralded the breakdown in the post-war Keynesian consensus when Prime Minister James Callaghan told the Labour Party conference in 1976: ‘We must get back to fundamentals…We used to think that you could spend your way out of recession, and increase employment by cutting taxes and boosting government spending. I tell you in all honesty that that option no longer exists’. The Callaghan government opened the way to Thatcherism by complying with the conditions of an IMF loan to defend the pound. It set monetary targets and cut public spending and wages (see David Yaffe, ‘Coalition declares class war’, FRFI 216 Aug/Sep 2010).

Second, Jones does not explain why what he calls finance capital triumphed over manufacturing capital in Britain in the first place. It is just idealism to claim that the City was pushed into the heart of the new Establishment because ‘it was seen as extolling the sort of anti-statist, laissez-faire individualism that would become Britain’s de facto official creed’ (p248). The City has always been central to the British state; the height of Empire was also the period when Britain held a monopoly of the finance of foreign trade, of shipping and insurance and other financial services. Manufacturing has been declining as a proportion of the British economy since the turn of the 20th century, not just during the last 40 years. The reality is that Thatcherism represented a turn to the most dynamic and aggressive section of British capitalism in an effort to resolve the crisis of capital accumulation, a profitability crisis, that underpinned the collapse of the post-war consensus.

The post-war boom had never undermined the City’s global interests despite the end of formal Empire. They were, of course, massively stimulated from the 1980s by successive Tory and Labour governments so that their scale by the onset of the 2007 crisis, had reached unprecedented levels. In 2008, Britain’s overseas assets stood at £7,135bn, five times GDP; including financial derivatives, they were nearly £11,000bn, over seven times GDP. 60% of these assets were loans and deposits abroad by UK banks, essentially a gigantic usury capital. The City borrowed cheap and lent dear, the difference in earnings being crucial not just to the survival of British capitalism, but for sustaining the living standards of a large section of the population outside of the Establishment, including over a long period of time, sections of the working class. Without the surplus on services trade, and income from the international investment account, Britain would have experienced huge balance of payment crises because of a ballooning deficit in the trade of goods.

The survival of the British economy has rested on looting and plundering the rest of the world. In essence, this has not changed since the days of the colonial empire: the form may be different, but it remains parasitism – imperialism. This underlies the various elements that Jones associates with the Establishment – the Westminster cartel of professional politicians on the make, the ‘mediaocracy’ parroting self-serving neo-liberal mantras, the police targeting any real opposition to widening inequalities, the expectation of the Establishment that the state exists purely to support its avarice while its members conspire to ensure that they avoid paying any tax in return: Jones describes a culture of parasitism but he does not present a real understanding of its material base.

Despite the massive profits being raked in by the multinationals, the overall crisis of accumulation remains unresolved: trillions of pounds are sloshing around the system unable to find profitable outlets. These funds are either employed in speculative ventures, or directed via dividend payments or exorbitant salaries into supporting the ever more extravagant lifestyle of the wealthy and their hangers-on. This is capitalism in decay: a moribund system, its continued survival dependent on intensifying repression and war. Jones’s use of the term ‘Establishment’ has a dual purpose: first, it is somehow more respectable than the correct term, ruling class, and second, it allows him to present the Establishment as a superstructural element united by ideology – ‘The Establishment represents the institutional and intellectual means by which a wealthy elite defends its interests in a democracy’(p294) – rather than one rooted in a system of production driven by its need for self-preservation.

Underplaying the material factor – Britain’s global interests – also allows Jones to follow a well-trodden path of the opportunist left in presenting Britain with only the illusion of sovereignty, subordinate to the US (p270) and offering US ‘slavish support’ (p271). He says that this dependency started when the Attlee government joined NATO, bringing ‘the country solidly into the US-led sphere of influence’ (p270). In fact it was Bevin as Labour Foreign Secretary who led the creation of NATO, and its formation was part of a diplomatic struggle to defend the British Empire against US encroachment by drawing it into an alliance against another threat to Empire, the Soviet Union, with its support for colonial liberation movements. Britain’s alliance with the US was and remains determined by the need to protect its vast overseas investments.

It is Jones’s call for a democratic revolution ‘to reclaim by peaceful means the democratic rights and power annexed by the Establishment’ (p295) that reveals his idealism most starkly. He wants a capitalist utopia: workers’ representatives on company boards as in Germany (p304); democratic public ownership of key utilities (p305); an industrial policy to ‘wean Britain off its dependence on the financial sector by developing a new generation of modern industries’ (p306); in the meantime, democratic representation on the boards of the banks ‘we’ the taxpayers have saved (p307); controls on capital flows and an all-out assault on tax avoidance (pp308-09).

Jones describes these proposals as ‘modest’, and indeed they are – but that does not make them achievable when at the outset he has limited the struggle to ‘peaceful means’. His focus on the Establishment means that he does not understand the material class interests that are at stake. The British ruling class will not tolerate an assault on the position of the City of London or the financial sector – these are the foundations of its power, not mere incidentals to be surrendered to democratic opposition. The only force that can confront it is the class that has no stake in the continuation of imperialism – the working class.

Yet Jones does not propose the agency for the changes he wants to see, and nor does he mention socialism as the historical alternative to the barbaric system under which we live. These are crucial omissions, because, while Jones knows he cannot seriously argue that the Labour Party will be the agency of the changes he wants, he equally fails to address or analyse its reactionary, racist, imperialist and anti-working class character.

Back in April 2014, Jones’s ally in the People’s Assembly, Unite General Secretary Len McCluskey, declared that if Labour supported a cautious ‘austerity-lite’ policy it would lose at the general election and Unite might consider supporting a separate party ‘representing the interests of ordinary people’. Hot air! Two months later, he decided that Labour leader Ed Miliband’s ‘austerity-lite’ policy was in truth an ‘increasingly radical agenda’ and that he would be proud to ‘fight alongside Labour to secure it’. Jones has bemoaned Shadow Chancellor Ed Balls’ pro-austerity influence on Labour policy; a year ago on a TUC platform, however, he claimed that Shadow Health Secretary Andy Burnham had done a ‘fantastic and courageous job’ to prevent privatisation. In The Guardian, he comments on Labour’s ‘timidity’, the derisory commitments it has made – but this is mealy-mouthed criticism of a party which will only win an election if it meets the needs of the ruling class. Watch as Jones follows in McCluskey’s footsteps.

Robert Clough

Fight Racism! Fight Imperialism! 241 October/November 2014