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"Divide and rule"? Diane Abbott was right, says Laurie Penny

The privileged will do anything to distract attention from their own power.

The privileged will do anything to distract attention from their own power.

Racism, as the British National Party and its neo-fascist street imitators have been arguing for years, cuts both ways. On 4 January, a black British woman MP hammered out a comment on Twitter which could, taken entirely out of context, be interpreted as a a generalisation about white people. Diane Abbott MP is now Britain's best-known racist -- in a week when the nation's top story has been the prosecution of the murder of a black teenager by a gang of white youths and the subsequent "institutional racism" that was unearthed in the handling of the case by the Metropolitan police.

But hang on, what was it that Abbott actually said? Let's have a little look at the generalisation over which the Hackney MP got a public dressing-down from her own party. Abbott said that "white people" like to play the game of "divide and rule". That's rude, isn't it? Clearly she thinks that ordinary white people like me spend the waking hours between tooth-brushing and the office dividing and ruling. It couldn't possibly be a comment on the structural imposition of power along lines of race and class, particularly not from a veteran anti-racist campaigner, and especially not in a week where institutional racism is in the news. That would just be silly.

Dorian Lynskey's comments on the matter are worth quoting at length. He points out that Abbott, who has a track record of saying the right thing in just the wrong way -- "she should have said 'white people in power' or 'certain white people'" -- was essentially on the money.

[Abbott] clarified that she was referring to 19th century colonialism when, to take just one example, the Belgians colonising modern-day Rwanda strategically favoured the Tutsis over the Hutus and sowed the seeds of attempted genocide a century later. But you don't need to go back that far. The US government's efforts to disrupt the civil rights and Black Power movements are a textbook example of divide-and-rule. It is what dominant powers do. To read her tweet as an indictment of every single white person in the world requires either paranoia or malice. Most of all it means denying that power matters.

The British right has always been allergic to any structural understanding of racial politics, and all week, the commentariat has been coming out in hives. A day before Abbottgate, a Telegraph leader wrung its hands over the profound impact of the Lawrence trial on racial awareness in British public life, complaining that "people" have "found themselves denounced for harmless, if inappropriate, remarks". Elsewhere, former Prospect editor David Goodhart wrote that:

If the Stephen Lawrence case may help to diminish a black grievance culture, it is likely to increase a white working class one . . . this is part of a broader story of how parts of white working class London, especially in the east and the south, felt that they had to accommodate the changes required by post-war immigration...and then had to endure lectures about racism from middle class liberals whose lives had not been changed at all.

The argument that the "white working class" has had anti-racist politics forced on it by "middle class liberals" is an insult to those white working-class people who have spent years, sometimes lifetimes, fighting racism in their communities. In Barking and Dagenham in 2010, thousands of the borough's residents mobilised to stop the British National Party gaining a foothold in Westminster. Goodhart's lazy generalisations play right into the language of the modern far-right: that anti-racism is itself racist, and that any gains for black people must produce equal and opposite losses for white people, in a world in which privilege and prejudice can never be fought, only redistributed.

There's a term for that tactic. The term is "divide and rule".

It's a tactic, as Abbott herself put it, "as old as colonialism" - and it's also a tactic as modern as Twitter. When those with an ideological or personal stake in defending the interests of privilege feel themselves under threat, their first line of defence is often to persuade the underprivileged that it is they who are under attack.

Rick Perry and Mitt Romney defend tax-breaks for the super-rich by telling blue-collar Americans that Democrats and union workers want to cut their paycheques: divide and rule. David Cameron denounces industrial action by encouraging low-paid private sector workers to complain that the pensions public sector workers are striking to protect are higher than theirs: divide and rule. David Willetts tells unemployed men that it's all these selfish women in the workplace who have taken their jobs: divide and rule. Ed Miliband and Liam Byrne, not to mention Ian Duncan Smith, defend the dismantling of the welfare state by persuading the working class that those in receipt of housing benefit are scroungers scamming the system. Divide, dismiss -- and rule.

Everywhere, the right fights public awareness of structural injustice by re-phrasing it as a personal attack by one vulnerable demographic on another. Structural injustice itself cannot be wedged into the story of neoliberalism, which reduces everything to a cloying moral syrup of personal responsibility lectures -- except where the banking sector is involved, of course.

What's missing from the story -- what's always missing -- is power. Defenders of privilege and hierarchy will do anything at all to distract attention from power, and to re-phrase attacks on power as attacks on the powerless. The chorus of faux-outrage over Abbott's tweet isn't just cynical; in a week when structural racism is in the news, it's a classic game of divide and rule.

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things.

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation