My good friend John Milbank, Research Professor of Religious, Politics & Ethics at Nottingham University has written the following essay below.

To contact John: john.milbank@nottingham.ac.uk

For more reading on Blue Labour themes see

http://www.youngfabians.org.uk/blog/index.php/2011/10/06/blue-labour-after-conference/

http://resistanceandrenewal.net/2012/06/25/into-the-blue-labours-re-discovery-of-its-conservative-roots-by-ian-geary/

http://richardsrobinson.org.uk/2011/11/labours-good-society-strong-communities/

Contact: 1) Adrian Pabst,  http://www.kent.ac.uk/politics/about-us/staff/members/pabst.html 

              2) David Landrum, http://www.eauk.org/connect/about-us/whos-who/staff.cfm

              3) Ian Geary, idtommyg@hotmail.co.uk

              4) Paul Bickley, http://www.theosthinktank.co.uk/about/theos-team

 

Every bit as Red as Blue: The New Story Told by Blue Labour

John Milbank

 

Over the last forty years or so, the left has been in retreat. In part that is because it has not had a very convincing story to tell. The story told by the so-called right, but actually by economic liberals, has been much more believable.

 

What is this story? It is that capitalism has been the biggest success in the whole of human history. It has delivered untold wealth, got rid of disease, lengthened human life. But it is also admitted by the right that capitalism is amoral. So if it has succeeded this has been the result of a kind of Faustian pact with the devil, as Robert Skidelsky suggests.  

 

How does that pact work? It works by the idea that if each of us pursue selfishly our own interests, calculating rationally what will make us most happy and content, in terms of our own private objectives, then the market mechanism, matching supply to demand, can operate smoothly to harmonise all outcomes. Out of egotistic chaos, social harmony and untold wealth will magically arise.

 

The updated application of this story says that up till the 1970’s unions extracted excessively high wages and made workers too unproductive. Meanwhile governments extracted too much tax, spent too much on welfare and interfered too much in industry. Once that was corrected by Mrs Thatcher, unprofitable industry vanished, profitable industry survived and the city of London boomed.

 

What has the left had to offer in place of this story? Only a modified version of it. Even Karl Marx thought that capitalism, with all its evils, was a stage society had to go through on its way to progress. That’s what they still think in China today. Social democrats and the Labour Party since Anthony Crossland go further: capitalism will always be with us, the pact with the devil has to remain in place. Capitalism is a great evil monster and we need it in all perpetuity. However, it can be domesticated; it can be tamed. When there is an economic crisis, governments can intervene with work programmes to generate demand. And in general governments can intervene all the time tactically with various devices like valuing or devaluing the currency, setting interest rates, subsidising some industries, operating prices and incomes policies.

 

In the later New Labour version most of this was backed away from and the liberal argument of leaving the market alone was largely accepted. However, through tax and spend, the evil consequences of capitalism were now to be modified by the redistribution of wealth and provision of welfare. In addition, housing and education policies could ensure that everyone had an equal opportunity to play the market game.

 

However, we can now see that, at least in the short term, these two stories have both started to look less plausible.

 

Let’s look at the main, rightwing liberal story first. Over recent years, months and now even days, capitalism and especially finance capitalism has started to look ever more sordid. Perhaps that should not surprise us. But much more significantly it now looks as if in some ways it’s not even working very well in pragmatic terms. Is the devil finally letting us down; not keeping his side of the bargain? Aspects of capitalism now look incompetent as well as semi-criminal. What is more, their immorality is often the very thing that renders them unworkable. For it now appears to be the case that sometimes self-interested behaviour just serves the self-interested individual and doesn’t serve society at large, not even economically. Moreover it often only serves individual interest taken in the short-term.

 

It was supposed to be true that massive wealth for a few would trickle down to the many. Well, the opposite has occurred: inequality under neoliberalism has got massively wider. Moreover, the generating of profits by defeating worker’s demands in the 1970’s didn’t last long. Quite quickly, a lot of capital had nowhere to go and there was a need to boost demand again. The contradictory cycles of capitalism noted by Marx seemed to be speeding up. But instead of turning back to Keynes, the system we live under invented a new sort of bastard Keynesianism which increased demand by increasing the indebtedness of almost everyone at every level. This has the enormous advantage that those in debt are disempowered and politically weakened.

 

However, just as high wage demand tends to eat into profits, so, in the end, does debt-demand. It’s as simple as that: someone has to pay up sometime, debts can’t be endlessly passed on into more and more fictional vehicles. Sooner or later people start to get panicky; you can’t really do without the final securitisation of the abstract on the concrete.

 

So that’s where we seem to be at present. Belief in the hidden hand as the only economic and social bond has left us with rampant individualism and excessive abstraction. If people are told that selfishness is good, then they won’t always obey the rules out of calculated self-interest. They’ll sometimes gamble that they can get away with breaking them. And they increasingly do. And if we deny that we have anything concrete in common then the common good will reduce to an  unreal and  idea of wealth – just a big pile of numbers, with most of us assigned very few of them.

 

But now all this egotism and virtuality isn’t delivering the economic goods. It turns out that even capitalism needed more cooperation and reciprocity than liberals thought. If you don’t trust your colleagues even within your own firm or bank, then a kind of anarchy ensues. To contain that anarchy in private and public corporations – including universities – we get increased top-down impersonal management of individuals. But that kills co-operation, tacit interactive process and creativity. And disgruntled individuals try to exploit the bodies they work for.

 

What we’re seeing here is increased de-professionalisation or the abolition of any true reality of  vocation. Working people have faced this for centuries: their guilds, self-regulating bodies and ownership of their own means of production, homes and workplaces, plus the right to organise their own time and labour were removed long ago. But now that’s hitting the middle classes also. It’s even hitting politicians.

 

But it’s no longer clear that this deprofessionalisation, this removal of self-regulation and an ethical ethos governing work is a reliable means of wealth-generation, never mind any reasonable degree of wealth distribution. That’s what the current crisis is really all about.

 

So what about the left’s softer version of the same big story? What about social democracy? The idea that capitalism is a big hungry fire-breathing dragon that can be successfully chained up and made to work for you? Well that’s in just as much trouble. Fifty years of attempted redistribution through welfare policies have only led to an ever more unequal society. And the whole idea is unstable. It depends on endless economic growth in order to be able to redistribute without damaging the capitalist mechanism. And such growth will not be consistently delivered. Just at present  we could instead be entering a long period of stagnation in the West.

 

Indeed, the liberals are this far right: excessive state intervention can be one factor in eventually over-inflating demand and so inhibiting profit. Hence Keynesiansim as a sufficient alternative to neoliberalism is a huge delusion. Sure, Ed Balls is quite right for the moment: in depressed circumstances you apply demand-stimulation remedies from the top. Hayek and Milton Friedman thought so too. But inversely Keynes’s view of happier capitalist times is scarcely different, if a little bit more interventionist than theirs. He mostly lies within the paradigm of neoclassical economics which assumes the isolated, rational, utility-maximing economic actor. Certainly we can agree that we should today we should substitute the real demand of more money in people’s pockets for the draining-degrading demand of debt. But that just takes us back into the cycling treadmill. Sooner or later excessive benign demand would eat into profits, and even Keynesians would recommend lower taxes, less government expenditure and wage restraint.

 

Above all the mantra of ‘more state, less market’ cannot deal with the disease of a market system which is increasingly criminal, unequal and incapable of generating wealth, at least in the UK. In a globalised world it is this system which dominates, leaving the state very little room for manoeuvre at the tactical level.

 

So far in the face of the global economic crisis we have seen little more than impotent anger from various protestors, with not all that much analysis. Why should capitalism in certain ways no longer be working? Any notion of final crisis is implausible because, although it is always chronically crisis-ridden, capitalism has infinite resources to readjust and recover. That’s the very beauty of its indifferent abstraction. And there is absolutely no sign of anyone inventing a new variant of socialism to replace a tottering system.

 

It’s here that Blue Labour wants to offer an altogether different story. A powerful new story that can challenge not just the story told by the right since the 1970’s, but the story told by the right about the whole of modernity. A story that could propel the left back to long-term power.

 

Quite simply, is the success of the market economy really the same as the success of the capitalist economy? Historians and the subtler economists increasingly say no. The market economy stretches back at least to the 12th C. It means the division of labour, the freedom to work and to trade and the attempt to increase wealth in the real sense of improve human life – make it more comfortable, exciting, various and fulfilling. It was this economy which was responsible for the growth of free cities unique in the history of the world and for the first industrial revolution in the West. But it wasn’t a capitalist economy? Why not?

 

A capitalist economy, as Stefano Zamagni explains, does not pursue the common good but ‘the total good’. That means the sum total of individual utilitarian happiness in the aggregate. People counted one by one, not in their real relationships. But an abstract sum means a sum of numbers, the total wealth of a community, which may accrue to some more than to others, to a small minority rather than to the vast majority. The British GDP is evidently not the common good of the British people.

 

But the older market economy can be described, after Zamagni, as a ‘civil economy’. That really does pursue the common good: the good of each and every one of us as we concretely are in our families, workplaces, communities. But how can we do that by labouring and trading in the market? The answer is that one can be both pursuing a reasonable profit for oneself, and at the same time trying to offer to other people a social benefit – in return for a social benefit that they are offering you. One can trade in real human goals as well as in hard cash. Likewise a contract can be a reciprocally agreement about a shared goal and value, not just the joint meeting of two entirely separate individual goals. The latter applies when I take a cab: I want to get to the station, the cabbie need to feed his kids. But it doesn’t apply if I and my neighbour agree to put up a hedge between our gardens that we both want, or better a shared tennis court at the bottom of both our gardens.  It doesn’t even apply if you know the cabbie or if you offer him an unnecessarily generous tip.

 

So what historians have shown is that well into the 16th century a civil economy operated according to ideas of contract that were not purely competitive. The price mechanism was determined to a degree co-operatively as well as competitively. So, for example, it was not assumed that you would always charge the highest possible price that the market would tolerate. You might lower that price to help your neighbour because you did not want to destroy your neighbour and it would not even make economic sense to do so. Now even tough-minded economists are rediscovering this idea that so-called ‘shared benefit’ can make economic sense.

 

If you withheld charging the full possible price from your neighbour, then it was explicitly seen that you were offering him a gift. Or if you paid your worker rather more than you needed to. Or if you offered your debtor a lower rate of interest than you might have extorted. All these things were seen as gift and there was no absolute distinction of gift from contract. This fact formed the operative basis for notions of just prices, just wages, just rates of interest and the restriction of usury.

 

Alongside this, civil economy was a vocational economy. People served apprenticeships and there were conditions of entry to professional associations or guilds. These guilds tried to govern quality, treatment of customers and protection of workers. They conferred dignity and even an aura of religious mystery about craft. Let’s remember that in the pagan world labour enjoyed no such status: its sacred importance was invented by Christian – especially Benedictine — monks and then communicated to the laity.

 

But surely, you’ll be perhaps thinking, it was the distinction of contract from gift and abolition of guilds and protective corporations, along with enclosure and the removal from the worker of the ownership of the means of production that lead to the great capitalist take-off? But it is just this view that may not be so clear. There could be a sense in which – to echo Bruno Latour – ‘we have never been capitalist’.

 

A few crucial points here: 1. The take-off had to an extent already began with the civil economy. 2. Its deviation into a capitalist economy was the result of peculiar contingencies: the influx of overseas trade from the New World and American gold which unbalanced things towards the power of liquid wealth and the owners of that wealth. Also the Protestant ethos which took a gloomy view of life in this world and so reduced notions of the common good and the possibility of prudential rather than purely selfish judgement in everyday life. 3. Outside the Protestant world and even the Anglo-Saxon world, the civil economy continued in a modified form. Indeed many elements of it are still there in contemporary Italy and Germany. The latter’s economic success is not then purely a capitalistic success. 4. To a large degree the enlightenment reacted against the individualism of contract. Thus Adam Smith’s economist contemporaries in Naples and Milan tried to revive the civil economy and they thought that when you bought meat from your butcher you did do so partly out of benevolence, because he was you’re your friend and you needed his shop still to be there. Actually we still think like that in my small town Southwell in Nottinghamshire, despite the attempts of Tory Newark Town Council to make us join their version of modernity. But even Adam Smith wanted the market economy to be embedded in networks of social sympathy.

 

And what about Victorian England? OK we had the Benthamite influence which led to fully fledged utility maximising economic theory. But meanwhile back in complex reality we also had Quaker manufactures trying to care for their workers, we had regional banks operating in partnerships with cities, we had a fusion of heritage and economic effort that combined cultural and economic flourishing. Despite all the Dickensian horrors, there was a certain motor of trust and common purpose and quite soon people tried to amend those horrors through extraordinary efforts of philanthropy. In that atmosphere of mutual help the Labour party was first  born  — in tune with the real story of western economic success and not in opposition to it.

 

So what if both the liberal and the Marxist or Social Democratic stories are myths? What if we did not need the bargain with the devil? What if even the factory system and enclosure were not entirely necessary to economic success and after all they do not seem to have been so in the same degree outside the UK – by no means in France for example. What if the Nottinghamshire Luddites of the clothing trade, heir of that hero of vanishing fraternity, Robin Hood, were right, and one did not need to sacrifice quality of work to levels of production? For it was that sacrifice which they opposed and not machines as such.

 

It’s of course possible to say that the bad practice of capitalism, the abandonment of the common good, has produced an awful lot of wealth in its own terms and that it  has indeed produced material benefits for many as well as exploitation, impoverishment, uglification and lack of meaning in work. One can argue about how far it could all have happened differently.

 

But what is for certain is that now a more extreme form of capitalism, totally removed from the norms of civil economy isn’t working very well any more. For a very long time now growth has increasingly slowed and inequality and unemployment has vastly increased.

 

So maybe we need to try a pact or better covenant with God instead. Maybe virtuous practice can also achieve more stable and sustainable economic prosperity.

 

This is the big new story that Blue Labour wants to tell. And the end of the story is a new mode of action such as Lord Glasman has started to chart. At the centre of this new mode of action lies a linking of the renewal of our culture and of pride in our regions with economic recovery. For if we’re still sick in the UK it’s a psychological and not just an economic sickness. We need to recall who we are as a nation: the people who invented constitutional government and gave it to the world and should continue to help to do so, freed from the shackles of excessive US influence. We also need to recall who we are in our localities. In Nottingham a place of free manufacturing all the way from medieval alabaster statues supplying the whole of Europe through lace-making to modern bicycles and drugs to the world market. A place of craft, skill and greenwood fraternity and sorority, Without that kind of pride and self-belief we won’t want to work in the future to any purpose.

 

And instead of relying mainly on state redistribution we need to forge an economy that operates justly and fairly in the first place: both through the internal ethos of firms and professional associations and through a new legal framework that demands that every business deliver social benefit as well as reasonable profit.

 

But this does not mean that the state has no role. Alongside ideas of the big society we need a new notion of the ‘public’ that slides between the social and state-direction or answerability. It is here that, following the ideas of Lord Glasman, at the centre of the merging Blue Labour programme  stands the idea not of tactical government intervention but of the strategic shaping of new economic institutions: of systems of apprenticeships; of entry conditions to work through the operation of professional bodies, of new polytechnics, more visionary business schools, regional banks and partnerships between such banks, local business and new city-based parliaments.

 

We can renew our country if we renew our love for each other and for our common purpose. And by rejoining gift to contract we can recover at once our ancient English festivity and our spirit of genuine economic enterprise.