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Catastrophe averted?

The leaders of the rich countries went to Washington to save the world from sliding into deep recess

Vincent Cable

Shadow chancellor, Liberal Democrats

By the low standards of economic summitry, the G20 meeting rated quite high. There was a predictable, no doubt pre-written, communiqué, full of the usual banalities. And the meeting suffered from the absence of the world's most important politician, who hasn't yet taken up office. But, these necessary caveats aside, there were important achievements.

The first is that the meeting took place at all. The ludicrous pretence of the G8 (or G7) that the old western powers should set the global economic agenda has been punctured for good. On a purchasing power parity basis, China has the second-biggest economy in the world and India the fourth. It has been clear for some time that China is lender of last resort to the global system (by, in effect, underwriting US government paper) and the main source of global incremental demand (and commodity price inflation). The Chinese self-parody as the pupil sitting meekly at the feet of a dominant, but erring, master defies belief. It is obviously right that China, India and the other main non-G7 countries should be at the top table.

The second achievement was the clear realisation that unless governments hang together they will hang separately. Enough has been learned from interwar history for us to understand the follies of beggar-my-neighbour economics. Perhaps a warning shock was being sent across the bows of the incoming Obama administration not to reinvent the protectionist tariffs of the 1930s in a new guise, directed at China or Mexico in particular, or aiming to salvage the US auto industry through public subsidy. But this new-found concern for open markets has not yet communicated itself to EU or Indian or Chinese trade negotiators, who show no enthusiasm for lifting the block on trade liberalisation under the Doha round.

While trade policy is on the back burner, macroeconomic policy co-ordination is not. With a few exceptions - Germany notably - there is recognition of the need for aggressive monetary and fiscal policy and for large-scale intervention to recapitalise banks. These interventions can be and are being undertaken nationally. But governments acting in isolation attract critical attention from capital markets and currency speculators, as Gordon Brown is discovering. Structures like the G20 are the best safeguard against chaotic, unilateral action.

Will Hutton

Economic commentator

It was remarkable to gather so much economic and political power in one room to address a common agenda. That was the good news - along with commitments to co-ordinate fiscal expansion, to expand the lending power of the IMF and World Bank (Japan's $100bn loan to the IMF will increase the Fund's lending capacity by 40 per cent), to boost cross-border supervision, to tackle credit rating agencies, to reassess mad accounting rules and require member countries to attack the bonus culture in the financial services industry. A year ago such an agreement would have been inconceivable.

The bad news is that much of this is shutting the stable door after the horse has bolted. Four things have to be recognised: that the world has profound imbalances between high-saving, high-surplus areas in Asia and the Gulf and low-saving, structural deficit countries in the transatlantic economy (Germany excepted); that a system of floating exchange rates and private banks can no longer take the weight of recycling those savings; that unless the system is de-risked and the burden of adjustment is placed on deficit and surplus countries alike, the global system faces breakdown; and finally, that the business model used by the banks to recycle surpluses - securitisation and hedging in the $360trn global derivatives market - is broken.

In plain English, China must accept that its currency must appreciate; Britain and America, that they cannot run their economies on foreign savings; and all players that there has to be a system of semi-fixed exchange rates between the yen, the euro and the dollar.

One tough reality is that, for all their new economic weight, China, Brazil, Russia and India do not have fully convertible currencies - nor do they want to accept the discipline involved in having convertible currencies.

Ann Pettifor

Fellow, New Economics Foundation

Over the past decade, the Group of Eight leaders turned their exclusive annual meetings into jamborees. Rock concerts, protesters and celebrities added populist glitz. However, the real purpose of the meetings - international co-operation and co-ordination - was ducked. At last year's G8 Summit in Heiligendamm, Germany, George W Bush and Gordon Brown vetoed Angela Merkel's agenda item for co-operation over tighter international regulation and financial oversight of capital markets. That task, they argued then, could safely be delegated to "the invisible hand". Now that the fantastic, self-regulating machinery of free markets has proved grossly malfunctional, it is good to hear talk of enhanced co-operation and regulation.

But, in places, the joint statement issued by the 20 world leaders borders on the delusional. The phrase "We must . . . ensure . . . that a global crisis, such as this one, does not happen again" implies that they are avoiding the next war when they are still losing this one.

Even more questionable is the call for continued "economic growth". In a world of finite resources on a planet with limited capacity to absorb toxic emissions, and with bushfires encircling Los Angeles, we would have hoped that world leaders had some awareness of the threat of climate change and of the limits to economic growth. But no. The gravest threat to global security - our rapacious attitude to the earth's resources - is once again whipped up with talk of "market principles, open trade and economic growth".

Jesse Norman

Senior fellow at Policy Exchange

One might have thought the G20 summit a good moment for some straight talk from the Prime Minister. Instead, the political wind machine was cranked up to full blast. The summit would be a second Bretton Woods. Gordon Brown would forge a new global consensus on co-ordinated intervention to stimulate growth (while, of course, leading reforms to prevent the banking crisis from ever recurring). Luckily virtually none of this was true, or the summit would have been a hopeless failure. With fiscal measures already widely adopted, the G20 hardly needed Brown's leadership. No surprise that he returned empty-handed.

Labour has moved from despondency to a manic desperation to remain in office. The result is that the ever-fragile concept of truth in politics has wholly been cast aside. Thus the humiliating bank nationalisation has been dressed up as an act of far-seeing economic statesmanship. And a sensible warning from the shadow chancellor that current economic policy puts sterling at risk has been condemned for breaching an irrelevant semi-convention dating from the time of fixed exchange rates.

Alex Brummer

City editor, Daily Mail

There is a golden rule of international financial meetings. The larger the "G" number, in other words the more countries involved, the less likely it is that any worthwhile or binding decisions will be taken. So while it was wholly encouraging that the G20 summit brought a number of emerging market leaders to the top table of finance, including China, Brazil and Russia, there was never any real prospect of the event becoming the new Bretton Woods.

Furthermore, the summit took place in the final days of the lame duck administration of George Bush. Once it became clear Barack Obama was going nowhere near the confab, the event became even more of an irrelevance.

European leaders may like to blame Wall Street and Anglo-Saxon capitalism for the credit crunch and the recession now spreading through the Group of Seven like wildfire, but there is no hope of concerted international action without the new White House and Federal Reserve on board.

Almost all that was agreed could have been decided before the leaders left home. The commitment to reviving the Doha trade round is pure motherhood and apple pie. The prairie populists on Capitol Hill are unlikely to be enthusiastic.

At the core of the proposals was the commitment to use fiscal measures, tax cuts and public spending to kick-start global economies. But despite Gordon Brown's enthusiastic embrace of a new Keynesian big-spending approach - as advocated by Nobel prize-winner Paul Krugman - he neatly forgot to mention that such big-spending ways were only for those countries with a "policy framework conducive to fiscal sustainability". The UK with its ballooning budget deficit, which could hit £100bn or more next year, is clearly in no such position.

It is hard to fathom in what way the G20 was "historic", as the Prime Minister claimed in the Commons. There is little original in a bunch of old ideas designed to remove risk from the financial system and control executive pay. That is what regulators should have done before the banks ploughed into the iceberg.

James Buchan

Author and financial commentator

What is the Financial Stability Forum? What is "mitigating against pro-cyclicality in regulatory policy"? What, if anything, has the G20 summit in Washington on the weekend of the 15 November achieved?

Nothing very much, is the answer to all three questions. In the twilight of a discredited US administration, and with President-elect Barack Obama absent, the meeting was never likely to achieve a great deal or generate excitement in the US. Yet the final declaration, drafted with suspicious ease by the delegations on Saturday night, has something for everybody but not enough of anything to scare the financial horses.

Nicolas Sarkozy, the French president whose idea the whole thing was, gained some support for more institutional government of trade and finance, but no super-gendarme international of the type that has been directing financial traffic in the French imagination since the 17th century. As Jean-Pierre Robin wrote in the Figaro: "Those with fantasies of supranational supervision will need to change therapist." The US, jealous of its commercial sovereignty even when it is going about without its shirt, put paid to those Gallic dreams and also gained some platitudes about free trade.

The new commercial powers, not only Brazil, Russia, India and mainland China but also rich oil producers such as Saudi Arabia, received diplomatic recognition of their deep pockets. "The world's geopolitical structure has a new dimension," the Brazilian president, Luiz Inácio Lula da Silva, said. "There is no logic to making any political and economic decisions without the G20 members - developing countries must be part of the solution to the global financial crisis."

I suspect the winner is Gordon Brown. The next meeting will be held under his presidency in London in April. The Washington ragbag of proposals to reform or tinker with the current system, such as reminding us about the Financial Stability Form and mitigating against that regrettable pro-cyclicality in regulatory policy, appeals to his technical vanity and plays to his technical strengths.

Paul Mason

Economics editor, Newsnight

There was a sense in Washington, despite the throbbing engines and bulletproof glass, of powerlessness. The communiqué was stronger on the causes of the crisis than on co-ordinated solutions. Policymakers are right to stay focused on the near-term dangers: these are country-level debt default, the rising cost of borrowing for non-financial companies, rapid job losses and - via feedback - further destabilisation of the banking system. We are moving into the phase of fiscal stimulus but there are powerful technical arguments that say without "quantitative easing" - that is, printing money to stimulate demand - it doesn't work. The same people who told me it would come to recapitalisation, that the TARP (troubled assets relief programme) would not work, are now saying: nationalise the banks and print money.

Despite the urgency of the focus on near-term dangers, what was obvious at G20 was the lack of vision as to the future growth model of capitalism. The problem was seen as a failure of regulation; the solution a pretty weak brew of re-regulation that will get diluted even more as the lobbyists begin to have influence. But the problem is more fundamental: the growth model based on high debt instead of high wages has failed and will be hard to revive.

Peter Mandelson

Secretary of State for Business

We have been caught in a global whirlwind of extraordinary force.

It has brought with it a fear that has gripped the world economy and taken hold here at home. We are seeing it every day, with fear among consumers that is depressing demand; fear among banks that is inhibiting them from lending; fear among small- and medium-sized businesses that banks are just about to cut off their credit lines. The choice facing us and governments around the world is this: do we act decisively to counter and overcome this fear, or do we become paralysed by it and fail to act?

The government has already shown its willingness to take the bolder course as the first mover in setting about stabilising the banks. What is needed now is action to stimulate the demand essential for recovery. The UK economy, like economies in the rest of the world, needs a shot of adrenalin.

The Bank of England has already made a significant cut to interest rates. This monetary stimulus now needs to be matched by a fiscal stimulus. And because this is a global crisis this is best done if the benefit of the measures taken nationally is maximised by the same measures being taken around the world. That was the message from the international conference in Washington, as governments recognised the need to take the action necessary to stimulate their economies.

People will say, "But you are resorting to borrowing in order to deliver the stimulus that's needed." My answer to that is, what is the alternative? We certainly haven't heard one from the Conservatives.

David Cameron and George Osborne, trapped by their desire to oppose everything the government does, refuse to accept the scale of the challenge the world's economies now face and the prescribed international action. Their stance appears to be, if the rest of the world disagrees with us, it is because the rest of the world is wrong. The result is incoherence and an Opposition at sixes and sevens. One minute this is "do all it takes" and the next it is - as we heard this week - leave the recession to "take its course".

Sitting on our hands watching houses repossessed and businesses go to the wall is certainly not the approach being urged on me by people I have been speaking to up and down the country. They want their government to act to stimulate demand in the economy here and now. With all due prudence, that is what we are going to do.

Diane Coyle

Author and economist

The G20 meeting confirmed a robust and rapid response (by past standards) to recession, even in the US operating under a rump free-market administration. Policymakers around the world have been shaken to see the financial system at the brink of collapse - on their watch.

Yet it is difficult to predict how severe the recession will be. Bank lending to businesses and individuals is virtually frozen. In many (but not all) areas of the economy, activity has come to a halt. The last financial boom and bust, ending in 2001, had surprisingly little impact on jobs and growth, as the financial bubble had become increasingly untethered from anything real. Today's vicious circle of evaporating liquidity is much more serious, but lower interest rates and bigger government deficits will help. The underlying trends are easier to outline. Some challenges are clearly unaltered, such as climate change and our ageing society.

The technological opportunities are still there, too, in communications, the internet and biotechnology. Globalisation will be less driven by finance in future, but it will not be unwound. It would take a generation to turn back the clock on economic linkages, and the cultural impacts are permanent. In fact, the crisis has underlined our interdependence across national borders.

What has changed is the political economy of globalisation. In the triad of efficiency, fairness and freedom which dominates political choice in democracies, fairness will take priority in the years ahead, and the drive for ever greater productivity gains will retreat. The semi-nationalisation of the banks has started to shift the boundary between public and private domains; we will have to think more carefully about how to govern private choices that have big social spillovers. The G20 did not touch on this profound question of governance.

Iain Macwhirter

Political commentator

The G20 was largely a throat-clearing session and was never going to put in place the foundations of a new international financial system. Progress on the stalled Doha trade talks is encouraging but provides no guarantee that protectionism will not raise its head in the coming economic slump.

It is inevitable that countries faced with financial collapse will try to defend their economies by any means possible. Britain is already far down the road of "beggar my neighbour" economics by the "managed" devaluation of the pound, a crude attempt to boost UK industry by lowering the prices of British exports and creating a de facto tariff wall around imports from abroad. It won't work because Britain does not make much of anything any more except debt, and the world has plenty of that already.

But the collapse of the pound will seriously damage what is left of UK financial services. No one in their right minds would put money into the UK economy now, with the property market collapsing, UK banks insolvent and government borrowing likely to reach £100bn in the next 18 months.

Gordon Brown seems to believe that sterling is like the dollar, and that people will buy our dud pounds whatever the likely losses. However, as we are discovering, sterling is not a reserve currency and unlike the US we cannot force other countries to pay our debts. The future for our battered island is likely to be hyperinflation punctuated by appeals to the International Monetary Fund for emergency aid. Forget about spending our way out of recession - the UK government simply lacks the resources to fund the huge borrowing that would be required. Something will have to give. Brown will have cause to regret being so beastly to the Icelanders.

Richard Reeves

Director of Demos

James Carville, the hardened political aide to Bill Clinton, said that if he was reincarnated he'd want to come back as the bond market: "You can intimidate anybody." Right now it seems odd to think of any financial markets threatening anybody. But it is one of the ironies of the current economic situation that the capital markets still have some serious muscle.

Western governments, faced with recession, need to throw a lot of money at their ailing financial institutions - money that can be raised only by selling Treasury debt, mostly to the capital-rich investors of the Far East. For Gordon Brown, this is likely to become a more difficult sell, as Prudence is given the push and the pound takes a nosedive. Even national exchequers invite sceptical scrutiny in this new, nervous world.

The financial crisis is at heart a loss of faith. The word credit derives from the Latin credo - "I believe". When the Titanic of the financial world - in the shape of Lehman Brothers - was allowed to sink, the bonds of trust stretching around the world were snapped. In an instant, everyone stopped believing in each other.

A number of sensible measures should be on the agenda when the G20 reconvenes next year, including legislation to ensure bonuses in financial services are paid on the basis of five-year performance; new "pro-cyclical" provisioning rules requiring finance houses to increase their store of capital in economic upturns; and tougher, independent regulation of the rating agencies whose doe-eyed assessments of banks built on a mountain of paper helped get us in this mess.

There is, however, no quick technical fix for such a dramatic loss of confidence. Trust can be lost in the blink of a market-trader's eye - but it will take years to rebuild.

TEN THINGS THEY ACHIEVED

  • 1 Created a road map aimed at stabilising the world economy and overhauling the banking system with targets for the end of March 2009
  • 2 Advocated Keynesian big-spending
    “fiscal stimulus”
  • 3 Expanded from a small club making world decisions to recognise the importance of the economies of Brazil, Russia, India and China
  • 4 Agreed to reform international finance institutions, including better transparency and supervision of credit ratings agencies
  • 5 Agreed that the Financial Stability Forum should include emerging economies
  • 6 Banks and hedge funds to hold increased levels of capital and cash
  • 7 Recommended “supervisory colleges” for all major cross-border financial institutions
  • 8 Return to the Doha round – trade ministers to meet in Geneva next month
  • 9 Instructed G20 finance ministers to draw up plans and timeline
  • 10 Agreed to meet again, in London next April

. . . AND FIVE THEY DIDN’T

  • 1 Agree a future growth model for capitalism. Instead they reconfirmed their “shared belief in market principles”
  • 2 Agree detailed plans for regulatory reforms of banking
  • 3 Establish a plan of action for achieving the already endangered Millennium Development Goals
  • 4 Set up an international supervisory body with sufficient power to control global markets
  • 5 Halt the run on sterling, which fell sharply against the euro and dollar

Alyssa McDonald

This article first appeared in the 24 November 2008 issue of the New Statesman, How to get us out of this mess

Grammar school in 1962. Getty
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What I learned about class after my twin brother and I were separated by the 11-plus

When my twin brother went into a secondary modern school, and I went to a grammar, something more than a private rift opened up: we were assigned to different social classes. 

The cultural schism exposed by Brexit in Britain and the election of Donald Trump in the United States has been a long time in the making. It goes deep, and for many it has been not only a bleak social ­phenomenon, but also a profound personal experience.

When my twin brother went into the C stream of a secondary modern school in the 1950s, and I passed the examination for Northampton Grammar School, something more than a private rift opened up: we were assigned to different social classes. Apprenticed to a carpenter at 15, he did national service, while I remained at school until I went up to Cambridge University. By this time, the breach had become irreparable. Our separate lives were emblematic of divisions in Britain which have only recently been officially acknowledged. My brother made a success of his life restoring historic buildings, but many others did not, consigned to failure at 11, or subsequently ejected from employment that they had imagined would last a lifetime – work scornfully dismissed now as “jobs for life”, as though heavy manual labour were an idle sinecure.

 

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Why do we recognise the true nature of the society we live in only when it is on the verge of dissolution? Perhaps its passing shows up its certainties for the brief, shadowy arrangements that they are. Yet while it remains, it is life itself, the only possible way for human beings to be. No society is exempt from the cycle of ascent, momentary stability and decay, and this is as true in Britain of the industrial era as it was of a declining agrarian society in the 18th century.

In An Essay on the Principle of Population (1798), Thomas Malthus, echoing the French physiocrats, declared that manufacturing would never increase the wealth of the nation because food production was its primary economic purpose. The industrial worker “will have added nothing to the gross produce of the land: he has consumed a portion of this gross product, and has left a bit of lace in return; and though he may sell this bit of lace for three times the quantity of provisions he has consumed whilst he was making it . . . he cannot be considered as having added by his labour to any essential part of the riches of the state”.

Rarely can such predictions have been so swiftly disconfirmed. Industry was already sweeping up people in its compulsions, as Oliver Goldsmith had lamented of a wasting rural life in his poem “The Deserted Village” (1770): “Far, far away, thy children leave the land.” Industry effaced the sensibility of country people and remade it in the image of the rigid discipline of manufacturing, mining and mill. A new kind of human being came into existence: the industrial worker, whose disposition, mutinous and refractory, was observed by the rich with suspicion, as they could not assess its potential for disaffection and tumult. Little was known of the “alien” mentality of the people; as little, perhaps, as that revealed to an astonished establishment by the unanticipated result of the EU referendum.

No wonder the working class became a central preoccupation of governments, reformers and politicians. There was controversy from the beginning over the “true” temper of the worker, then predominantly male, engaged in the making of things, useful and necessary to the prosperity of Britain. Did the workers want a fairer share of the wealth of the country? Did they seek to overthrow the established order? What was simmering in their mysterious, impenetrable communities of poverty?

Researchers ventured into darkest England – to places frequently likened to sites of imperial conquest – and returned with lurid tales of squalor and discontent; at the same time, trade unions and friendly and burial societies were growing, the co-operative movement evolved, and eventually a Labour party emerged which at last appeared to be a definitive expression of the psyche of the working class.

Strengthened as the 20th century dawned, but weakened by war and the Depression, Labour gained new vigour after the defeat of Nazism. With the coming of peace in 1945, both the spread of communism and the dissolution of the European empires made it timely, just and prudent for ruling elites to make concessions to the working class. Hence the marriage of unequals between capitalism and welfare, which at the time promised to be a permanent settlement.

What was regarded as the enduring sensibility of the industrial worker was doomed to follow its agricultural predecessor. It, too, became fully defined only when close to disintegration. When E P Thompson published his splendid Making of the English Working Class in 1963, signs of its decomposition were already detectable. Similarly, The Uses of Literacy, Richard Hoggart’s tender depiction of working-class culture (first published 60 years ago this year), was based on his experiences as a child in the 1920s and 1930s. The historians Eric Hobsbawm and Raymond Williams also framed what looked like a definitive version of the ­working class even as workers from the Caribbean and south Asia, recruited for a waning textile industry and transport and health systems, were transforming it.

Similarly, the consolation that the gritty north was the true source of Britain’s wealth, in contrast to a soft, self-indulgent south, left a long afterglow; it persisted long after the factories had collapsed in clouds of brick dust and splinters of glass and the south, with its financial services and advanced technologies, had become the principal generator of wealth.

 

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Social class was always inflected by individual circumstances. There were other elements involved in the separation from my twin. Our mother’s husband was diagnosed with tertiary syphilis in 1939; at the time, this was curable only by prolonged treatment with injections of arsenic and mercury. Our mother, who looked after the butcher’s shop that we lived above, realised that there would be no children in the marriage. A strong and resourceful woman, she met an engineer working on a construction site near the butcher’s shop she ran while her husband drove his lorry, carrying timber, bricks and glass all over the Midlands. He also carried more tender cargoes, with whom he spent nights in the back of the truck under a tarpaulin intended to protect merchandise from the rain. From one of these cargoes he contracted the disease, the sibilant syllables of which struck terror into those touched by it, much as HIV/Aids was to do half a century later.

Our mother became pregnant with my brother and me. Perhaps it was a fear that the two men in her life might gang up on her that impelled her to keep me and my brother apart, distributing roles that would ensure we never learned truly to know one another, even though we lived in the same house, with its frozen atmosphere, numb with secrets, for the first 18 years of our lives. My brother was practical and good-looking, docile and sweet-tempered; I was clever and fat, demanding and devious. Our schooling played a secondary role, but it did succeed in driving us further apart. Class was only one element in the hidden geometry of kinship.

 

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Even in the 1950s, when the effect of ­prosperity on the working class was discussed in The Affluent Society by John Kenneth Galbraith and The Status Seekers by Vance Packard, it was difficult to sustain belief in the existence of a homogeneous class. In 1959, after three consecutive Conservative electoral victories, even the Daily Mirror doubted whether a Labour party had a future.

Writing In Pursuit of the English in 1960, Doris Lessing described her “search” for the working class as “a platonic image, a grail, a quintessence, and by definition, unattainable”. Having been assured in her native Southern Africa that black workers were “not working class in the true sense”, she came to Britain, where, after encounters with the Communist Party (“not typical”), miners and dockworkers (“very specialised” labour) and workers in a new town (“tainted by capitalism”), she was advised that the true working class could be discovered only somewhere like South Africa, where “the black masses are not yet corrupted by industrialism”.

The erosion of identity of the working class, as it existed between the mid-19th century and the end of the Second World War, went largely unrecognised by its defenders and representatives. It was certainly apparent in Blackburn in 1969, when, for my book City Close-Up, I recorded a torrent of racism and prejudice in working-class areas: this was the outrage of people who had never been consulted on the social and economic mutation of their world. Barbara Castle, the energetic and radical MP for the town, suggested I play down race, because “in a few years it will burn itself out”.

 

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Class itself was already in flux as a result of the unprecedented affluence of the time, and class consciousness was dissolving in the mild acid of consumerism. The differences between my twin and me appeared to be influenced by culture rather than class, because he was economically more successful than I was. This faltering of a sense of class was perhaps a symptom of the triumph of market-based relationships over those that are socially determined; and perceptions of the world had shifted in accordance with this reality.

 

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Distance grew between the way people actually were and an embalmed version of the working class which continued to animate the left. In 1977, I published What Went Wrong?, subtitled Working People and the Ideals of the Labour Movement. In the US the subtitle was presciently amended to Why Hasn’t Having More Made People Happier? – in that advanced country, ideals and the labour movement had become unintelligible concepts.

I interviewed hundreds of elderly Labour activists who, looking at a world changed beyond recognition, spoke of their younger selves with the sad detachment with which people usually speak of the dead; their tone bore the melancholy regret of In memoriam notices.

It was clear four decades ago that the northern industrial towns were “wanting in purpose, looking for the meaning they once derived from their role in producing goods”. In the 1970s the feeling was that immigrants from Asia had somehow usurped the people’s way of life: they lived in houses lately vacated by millworkers; they had a strong sense of family and neighbourhood, as well as powerful cultural and religious traditions – all characteristics supposed to “belong” to Lancashire.

During the economic restructuring in the 1980s, I compared (in my book Unemployment) the experience of being out of work in those days with that of the 1930s, with its poignant tales of officials from the ­Unemployment Assistance Board, sitting in the balcony at the Rialto Cinema to see who was in the stalls when they should have been pounding the pavement looking for work; or Means Test men compelling families to sell an upright piano or a wedding ring before they could receive a penny of state charity. In the 1930s, no one doubted work would return; in the 1980s, industrial work was vanishing.

It seemed the working class in Britain had attained quietus after the miners’ strike in 1984. High unemployment was said to be “frictional” as we moved between epochs, a “creative imbalance” that would one day make us all richer and happier, though not quite yet. The working class was eliminated from the very history that, in some versions of prophecy, was to have ensured its ultimate triumph. Had the working classes died and gone to a heaven shaped in the image of expropriated socialist utopias? Had they been drowned in prosperity or assimilated into an expanding middle class? Whatever their fate, they were no longer of any account in the version of society disseminated by the media. This was reinforced by the collapse of the USSR, and there ceased to be any interest in what might be happening to them. Their sometime heroic role had been unceremoniously annulled.

In the absence of the working class, the rich were transformed: employers no longer exploiters of labour, but philanthropic providers of work. Those amassing fortunes became authors of the doctrines of wealth creationism. The working class, far from the gravedigger of capitalism, was merely a transient irritant. The class reached its zenith, faltered and fell back; and the ­liberatory power once attributed to it was appropriated by the warriors of wealth, who assumed the mantle of destiny of those they had displaced.

The working class was fragmented and dispersed, like the migrants who now constituted such a significant segment of it. New generations grew, not as citizens of this or that town, with its place in a national division of labour, but as dependants of a global market. If “globalisation” is to the 21st century what industrialisation was to the 19th, its significance lies in its disarming of people, no longer able to answer basic needs in the places where they live, but compelled to buy in what they need from countries whose names are only a vague echo of forgotten geography lessons. As the market colonises society, we become subjects of a curiously dematerialising topography: Theresa May could not have expressed it better when she said that “if you believe you’re a citizen of the world, you’re a citizen of nowhere” – although this was not her ­intended meaning.

As the (welfare) state shrank, the market dilated, invasive and predatory. Our lives are so penetrated by its “values” that these now appear in our most intimate relationships – we speak of emotional investment and interrogate our deepest attachments, asking what returns we will get; should we cut our losses; what are our best assets; are we in the market for a new relationship; shall we take a gamble; what is to be gained out of profitless attachments; will it pay dividends; what will it yield? Just as “human nature” serves as a cover for the nature of capitalism, so society provides an alibi for market-induced disorders – obesity and pathologies around eating, unquiet addictions to alcohol, drugs, gambling, celebrity, sex, food; all facilitated by what money, in its own right the most addictive substance known to humanity, can buy.

No wonder this age is characterised by nostalgia for coherence and purpose. It focuses on the recent manufacturing era, even if this was shadowed by grim institutions of factory, chapel, pub, workhouse, cinema and cemetery and the oppression of women and children – just as the Industrial Age directed its yearnings towards a past of sunlit field and flower-filled hedgerow, despite the omnipresence then of overseer, magistrate, bailiff and parish pay-table.

 

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Despite a sense of continuous change, the wounds of social class continued to influence even those to whom it no longer appeared as a force in their lives. My twin brother paid for his early membership of the working class with his death 12 years ago from mesothelioma: his early construction work had exposed him to the baleful effects of asbestos.

 

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The disorientation is profound: demolition of the old workplaces also suppressed the way of life and sensibility that accompanied them. Progressives, no less alarmed by these developments than the reactionaries, applauded them, turning to the growing diversity and pluralism of the labour force. They welcomed the shifting composition of the working population, in which women, ethnic minorities and LGBT people were moulded into a fragile coalition for social progress. That such an alliance contained factions and some incompatible objectives (say, respect for same-sex relationships, at odds with many Muslims and evangelical black churches) was not its greatest failing. This lay in the elevation of social equalities over economic equality, which continued to get worse, even for most of those in the groups favoured by progressives. Moreover, “mobility” was interpreted as a one-way street; few considered the downwardly mobile, many of whom proudly acknowledged their working-class roots. Poverty, too, was redefined: no longer concerned with unanswered need, it was now measured against unattainable wealth.

 

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Personal relationships – which for most people are now more powerful than any sense of social influence – also help to conceal patterns of class and what in 1993 Richard Sennett called its “hidden injuries”. Our mother revealed to my brother and me the secret of our paternity only when both men were dead. This also exposed unsuspected inherited features: my brother had acquired from our biological father his love of restoring buildings, while I had the questionable gift of his radicalism. He had been a member of the Communist Party in the 1930s.

 

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The fluid nature of class complicates the re-emergence of a working class in its new, emancipatory alliance with the super-wealthy – Trump and the funders of Brexit. Its sudden resurrection is attended not by the solidarities of belonging, but by those of a graveyard ideology of hatreds thought to have been conquered. This is a gift to demagogues and “strongmen”, as it enables them to perceive once more the “true” nature of a class whose heart still beats to rhythms of imperial nostalgia and aggressive nationalism.

Perhaps, following the precedents of agrarian and industrial cultures, the cult of the market is finally being acknowledged, just as it, too, is on the point of eclipse. Beneath the chaos of a culture where even truth has become a kind of consumer choice, new patterns of resistance are forming: commitment to a more just distribution of the goods of the Earth and respect for a planet ransacked by an omnivorous market; a rejection of robotics displacing humanity; a rediscovery of our capacity to do and make things freely for ourselves and each other.

But the savage regressions of our time may be not just a momentary disturbance, any more than agrarian and industrial society were. The cycle may have to play itself out, in who knows what ugly and distressing scenes, before the time for remorse comes round once more; then, appalled by our destructiveness, we shall repeat the constantly broken resolution: Never Again.

The great Spanish humanist Juan Luis Vives, whose influence helped shape the Elizabethan poor law, wrote, in On Assistance to the Poor (1526): “. . . the poor are cast out of the churches and wander over the land; they do not receive the sacraments and they hear no sermons. We do not know by what law they live, nor what [are] their practices and beliefs.” After five centuries of upheaval and driven change, and in a radically altered context, his words still have a haunting, prophetic relevance.

Jeremy Seabrook’s most recent book is “The Song of the Shirt”, published in India by Navayana and in the UK by Hurst

This article first appeared in the 06 April 2017 issue of the New Statesman, Spring Double Issue

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