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Kilburn Manifesto: The economy - changing the terms of debate

It is neither austerity nor its preceding crash which is sucking the life from Britain's economy, it is the failure of democracy that sees the economy geared solely towards wealthy interests. We must establish an economy directed to achieving social goals rather than being an end in itself.

Doreen Massey Mike Rustin
6 June 2014

The Killburn Manifesto is a statement being made in twelve monthly instalments, issued free on-line, about the nature of the neoliberal system which now dominates Britain and most of the Western world, and about the need to develop coherent alternatives to it. Here is Mike Rustin and Doreen Massey discussing the need to reorient the economy.

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City of London. Flickr/Miradortigre

It is often argued that the United Kingdom economy is in a mess, a mess from which it must be rescued. We agree.

However, we want to take issue with the way in which, in most political debate, this situation is usually understood.

First of all, the woes of the UK economy do not result from the recent crisis (which was more of a symptom), nor from the austerity-driven response to that crisis (which is a political means of furthering a longer-term dynamic). Neither – and this is more rarely said – do they result solely from the decades of neoliberalism immediately preceding the crisis.

The underlying problem for the UK economy is the long dominance – changing its form over the centuries but remaining remarkably persistent – of financial interests. These are interests which, from the very beginnings of Empire through to the financially-dominated globalisation of today, have been thoroughly international, with a shifting but often semi-detached relation to the economy that is situated within the shores of the UK itself. Then there is the significance of landed property. At least since the enclosures and the clearances, the elite ownership of vast parts of the country, and the associated power of the landed interest, has been a notable feature of British political economy.

Wealth based on finance and land ownership is not centrally about production; it is not a product of human labour. It is about the holding of assets and the relations of exchange. And the victory of the economic philosophy of neoliberalism out of the ashes of the post-war social-democratic settlement fitted perfectly with these interests. Trading in land and property (including home-ownership) has become a central motor of the UK economy, which is now running along without a sufficient basis in production, often fuelled by excessive credit.

The UK economy is based to an extraordinary degree not in production, but in trading assets, with financialisation at its heart. Indeed the dominance of finance actively undermines production. The effects are deep and disastrous. There is the sharpening of inequality between rich and poor and between London/South East and North and West, and the subordination of democracy to the interests of the City.

Of course this is not ‘a mess’ for everybody. A small stratum is doing very well indeed out of these arrangements. Meanwhile the rest of us struggle against (or acquiesce in) the financialisation of our very imaginations and identities as we are drawn into its practices and rhetorics.

To address this woeful situation we need to challenge finance head-on – to make it serve the economy, not suck value out of it. We need to dampen the attraction of assets (and here a Land Value Tax would be a useful tool). We also need a serious industrial strategy to help counter the dominance of finance. The government already intervenes in the economy in a thousand ways: what is needed is democratic debate about the goals and methods of its interventions. We need to discuss what the economy is actually for.

We propose two priorities for a productive economy: a green new deal to promote ecological sustainability, and the reassertion of the importance of care in the public sphere.

This is perfectly do-able. The obstacles to change are political, as well as our lack of vision of the real possibility of genuine alternatives.

An economy should be a means for fulfilling social goals, and not an end in itself, and a process for deliberating and determining what such goals should be is essential to democracy. But our political institutions do not currently serve this purpose. Instead, capital is treated as the universal class – its interests are assumed to coincide with those of society as a whole. Democratising the economy, and debating what an economy is for, hold out the potential for challenging this.

 

Doreen Massey and Michael Rustin will be discussing this instalment of the Kilburn manifesto on Tuesday 10 June at the Marx Memorial Library. For more information, and to see the chapter in full please go to www.lwbooks.co.uk/journals/soundings/manifesto.html

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