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A thinker for our times

Global leaders are once again reminding themselves of the insights of the Cambridge academic who hel

John Maynard Keynes has been restored to life. Rusty Keynesian tools – larger budget deficits, tax cuts, accelerated spending programmes and other “economic stimuli” – have been brought back into use the world over to cut off the slide into depression. And they will do the job, if not next year, the year after. But the first Keynesian revolution was not about a rescue operation. Its purpose was to explain how shipwreck might occur; in short, to provide a theoretical basis for better navigation and for steering in seas that were bound to be choppy. Yet, even while the rescue operation is going on, we need to look critically at the economic theory that takes his name.

In his great work The General Theory of Employment, In terest and Money, written during the Great Depression of the 1930s, Keynes said of his ideas that they were "extremely simple, and should be obvious". Market economies were in herently volatile, owing to un certainty about future events being inescapable. Booms were liable to lead to catastrophic collapses followed by long periods of stagnation. Governments had a vital role to play in stabilising market economies. If they did not, the undoubted benefit of markets would be lost and political space would open up for extremists who would offer to solve economic problems by abolishing both markets and liberty. This, in a nutshell, was the Keynesian "political economy".

These ideas were a challenge to the dominant economic models of the day which held that, in the absence of noxious government interference, market economies were naturally stable at full employment. Trading in all markets would always take place at the "right" prices – prices that would "clear the market". This being so, booms and slumps, and prolonged unemployment, could not be generated by the market system itself. If they did happen, it was due to "external shocks". There were many attempts to explain the Great Depression of the 1930s along these lines – as a result of the dislocations of the First World War, of the growth of trade union power to prevent wages falling, and so on. But Keynes rightly regarded such explanations as self-serving. The Great Depression started in the United States, not in war-torn Europe, and in the most lightly regulated, most self-contained, and least unionised, market economy of the world. What were the "external shocks" that caused the Dow Jones Index to fall from 1,000 to 40 between 1929 and 1932, American output to drop by 20 per cent and unemployment to rise to 25 million?

He set out to save capitalism, a system he did not much admire, because he thought it the best hope for the future of civilisation

We can ask exactly the same question today as the world economy slides downwards. The present economic crisis has been generated by a banking system that had been extensively deregulated and in a flexible, largely non-unionised, economy. Indeed, the American capitalism of the past 15 years strongly resembles the capitalism of the 1920s in general character. To Keynes, it seemed obvious that large instabilities were inherent in market processes themselves.

 

John Maynard Keynes was a product of Cambridge civilisation at its most fertile. He was born in 1883 into an academic family, and his circle included not just the most famous philosophers of the day – G E Moore, Bertrand Russell and Ludwig Wittgenstein – but also that exotic offshoot of Cambridge, the Bloomsbury Group, a commune of writers and painters with whom he formed his closest friendships. Keynes was caught up in the intellectual ferment and sexual awakening that marked the passage from Victorian to Edwardian England. At the same time, he had a highly practical bent: he was a supreme example of what Alasdair MacIntyre calls “the aesthete manager”, who partitions his life between the pleasures of the mind and the senses and the management of public affairs. After the First World War, Keynes set out to save a capitalist system he did not particularly admire. He did so because he thought it was the best guarantor of the possibility of civilisation. But he was always quite clear that the pursuit of wealth was a means, not an end. He did not much admire economics, either, hoping that some day economists would become as useful as dentists.

All of this made him, as his wife put it, "more than an economist". In fact, he was the most brilliant non-economist who ever applied himself to the study of economics. In this lay both his greatness and his vulnerability. He imposed himself on his profession by a series of profound insights into human behaviour which fitted the turbulence of his times. But these were never – could never be – properly integrated into the core of his discipline, which spewed them out as soon as it conveniently could. He died of heart failure in 1946, having worked himself to death in the service of his country.

The economic theory of Keynes's day, which precluded boom-bust sequences, seemed patently contrary to experience, yet its foundations were so deep-dug, its defences so secure, its reasoning so compelling, that it took Keynes three big books – including a two-volume Treatise on Money – to see how it might be cracked. His attempt to do so was the most heroic intellectual enterprise of the 20th century. It was nothing less than the attempt to overturn the dominant economic paradigm dating from Adam Smith and David Ricardo.

He finally said what he wanted to say in the preface to The General Theory: "A monetary economy, we shall find, is one in which changing views about the future are capable of in fluencing the quantity of employment and not merely its direction." In that pregnant sentence is the whole of the Keynesian revolution.

Keynes's understanding about how economies work was rooted in his theory of knowledge. The future was unknowable: so disaster was always possible. Keynes did not believe that the future was wholly unknowable. Not only can we calculate the probability of winning the Lottery, but we can forecast with tolerable accuracy the price movements of consumer goods over a short period. Yet we "simply do not know" what the price of oil will be in ten, or even five, years' time. Investments which promised returns "at a comparatively distant, and sometimes an indefinitely distant, date" were acts of faith, gambles on the unknown. And in that fact lay the possibility of huge mistakes.

Classical economists could not deny the possibility of unpredictable events. Inventions are by their nature unpredictable, especially as to timing, and many business cycle theorists saw them as generating boom-bust cycles. But mainstream economics, nevertheless, "abstracted" from such disturbances. The technique by which it did so is fascinatingly brought out in an argument about economic method between two 19th-century economists, which Keynes cited as a fork in the road. In 1817, Ricardo wrote to his friend Thomas Malthus: "It appears to me that one great cause of our differences . . . is that you have always in your mind the immediate and temporary effects of particular changes, whereas I put these immediate and temporary effects quite aside, and fix my whole attention on the permanent state of things which will result from them."

To this, Malthus replied: "I certainly am disposed to refer frequently to things as they are, as the only way of making one's writing practically useful to society . . . Besides I really do think that the progress of society consists of irregular movements, and that to omit the consideration of causes which for eight or ten years will give a great stimulus to production and population or a great check to them is to omit the causes of the wealth and poverty of nations . . ."

Keynes sided with Malthus. He regarded the timeless equilibrium method pioneered by Ricardo as the great wrong turning in economics. It was surely the Ricardo-Malthus exchange he had in mind when writing his best-known aphorism: "But this long run is a misleading guide to affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again."

Ricardo may have thought of the "long run" as the length of time it took storms to disperse. But under the influence of mathematics, economists abandoned the notion of time itself, and therefore of the distinction between the long run and the short run. By Keynes's time, "risks", as he put it, "were supposed to be capable of an exact actuarial computation". If all risks could be measured they could be known in advance. So the future could be reduced to the same epistemological status as the present. Prices would always reflect objective probabilities. This amounted to saying that unregulated market economies would generally be extremely stable. Only very clever people, equipped with adequate mathematics, could believe in anything quite so absurd. Under the influence of this theory, governments withdrew from active management and regulation of economic life: it was the age of laissez-faire.

Keynes commented: "The extraordinary achievement of the classical theory was to overcome the beliefs of the 'natural man' and, at the same time, to be wrong." It was wrong because it "attempts to apply highly precise and mathematical methods to material which is itself much too vague to support such treatment".

Keynes did not believe that "natural man" was irrational. The question he asked was: how do we, as rational investors, behave when we – unlike economists – know that the future is uncertain, or, in economist-speak, know that we are "informationally deprived"? His answer was that we adopt certain "conventions": we assume that the future will be more like the past than experience would justify, that existing opinion as expressed in current prices correctly sums up future prospects, and we copy what everyone else is doing. (As he once put it: "Bankers prefer to be ruined in a conventional way.") But any view of the future based on "so flimsy a foundation" is liable to "sudden and violent changes" when the news changes. "The practice of calmness and immobility, of certainty and security suddenly breaks down. New fears and hopes will, without warning, take charge of human conduct . . . the market will be subject to waves of optimistic and pessimistic sentiment, which are unreasoning yet in a sense legitimate where no solid basis exists for a reasonable calculation."

 

But what is rational for individuals is catastrophic for the economy. Subnormal activity is possible because, in times of crisis, money carries a liquidity premium. This increased "propensity to hoard" is decisive in preventing a quick enough fall in interest rates. The mainstream economics of Keynes's day viewed the interest rate (more accurately, the structure of interest rates) as the price that balances the overall supply of saving with the demand for investment. If the desire to save more went up, interest rates would automatically fall; if the desire to save fell, they would rise. This continual balancing act was what made the market economy self-adjusting. Keynes, on the other hand, saw the interest rate as the "premium" for parting with money. Pessimistic views of the future would raise the price for parting with money, even though the supply of saving was increasing and the demand for investment was falling. Keynes's "liquidity preference theory of the rate of interest" was the main reason he gave for his claim that market economies were not automatically self-correcting. Uncertainty was what ruined the classical scheme.

The same uncertainty made monetary policy a dubious agent of recovery. Even a "cheap money" policy by the central bank might not be enough to halt the slide into depression if the public's desire to hoard money was going up at the same time. Even if you provide the water, you can't force a horse to drink. This was Keynes's main argument for the use of fiscal policy to fight a depression. There is only one sure way to get an increase in spending in the face of falling confidence and that is for the government to spend the money itself.

This, in essence, was the Keynesian revolution. Keynesian economics dominated policymaking in the 25 years or so after the Second World War. The free-market ideologists gave this period such a bad press, that we forget how successful it was. Even slow-growing Britain chugged along at between 2 and 3 per cent per capita income growth from 1950-73 without serious interruptions, and the rest of the world, developed and developing, grew quite a bit faster. But an intellectual/ideological rebellion against Keynesian economics was gathering force. It finally got its chance to restore economics to its old tramlines with the rise of inflation from the late 1960s onwards – something which had less to do with Keynesian policy than with the Vietnam War. The truth was that "scientific" economics could not live with the idea of an unpredictable world. So, rather than admit that it could not be a "hard" science like physics, it set out to abolish uncertainty.

The "new" classical economists hit on a weak spot in Keynesian theory. The view that a large part of the future was unknowable seemed to leave out learning from experience or making efficient use of available information. Rational agents went on making the same mistakes. It seemed more reasonable to assume that recurrent events would initiate a learning process, causing agents to be less often surprised by events. This would make economies more stable.

The attack on Keynes's "uncertain" expectations developed from the 1960s onwards, from the "adaptive" expectations of Milton Friedman to the "rational" expectations of Robert Lucas and others. The development of Bayesian statistics and Bayesian decision-theory suggested that agents can always be modelled as having prior probability distributions over events – distributions that are updated by evidence.

 

Today, the idea of radical uncertainty, though ardently championed by “post-Keynesians” such as Paul Davidson, has little currency in mainstream economics; however, it is supported by financiers of an intellectual bent such as George Soros. As a result, uncertainty once more became “risk”, and risk can always be managed, measured, hedged and spread. This underlies the “efficient market hypothesis” – the idea that all share options can be correctly priced. Its acceptance explains the explosion of leveraged finance since the 1980s. The efficient market hypothesis has a further implication. If the market always prices financial assets correctly, the “real” economy – the one involved in the production of goods and non-financial services – will be as stable as the financial sector. Keynes’s idea that “changing views about the future are capable of influencing the quantity of employment” became a discarded heresy.

And yet the questions remain. Is the present crisis a once-in-a-lifetime event, against which it would be as absurd to guard as an earthquake, or is it an ever-present possibility? Do large "surprises" get instantly diffused through the price system or do their effects linger on like toxic waste, preventing full recovery? There are also questions about the present system that Keynes hardly considered. For instance: are some structures of the economy more conducive to macroeconomic stability than others?

This is the terrain of Karl Marx and the underconsump tionist theorists. There is a long tradition, recently revived, which argues that the more unequal the distribution of income, the more unstable an economy will be. Certainly globalisation has shifted GDP shares from wages to profits. In the underconsumptionist tradition, this leads to overinvestment. The explosion of debt finance can be interpreted as a way of postponing the "crisis of realisation".

Keynes did not have a complete answer to the problems we are facing once again. But, like all great thinkers, he leaves us with ideas which compel us to rethink our situation. In the long run, he deserves to ride again.

Lord Skidelsky is the author of "John Maynard Keynes" (three volumes), published in hardback by Macmillan

This article first appeared in the 22 December 2008 issue of the New Statesman, Christmas and New Year special

BRIAN ADCOCK FOR NEW STATESMAN
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Divided Britain: how the EU referendum exposed Britain’s new culture war

The EU referendum exposed a gaping fault line in our society – and it’s not between left and right.

There are streets in Hampstead, the wealthy northern suburb of London, where the pro-EU posters outnumber cars. A red “Vote Remain” in one. A “Green Yes” in another. The red, white and blue flag of the official campaign sits happily next to a poster from the left-wing campaign Another Europe Is Possible proclaiming that the world already has too many borders.

If you were looking for an equivalent street in Hull, in the north of England, you would look for a long time. In the city centre when I visited one recent morning, the only outward evidence that there was a referendum going on was the special edition of Wetherspoon News plastered on the walls of the William Wilberforce pub in Trinity Wharf. Most of the customers agreed with the message from the chain’s founder, Tim Martin: Britain was better off outside the European Union.

“Far too much Hampstead and not enough Hull” – that was the accusation levelled at the Remain campaign by Andy Burnham in the final weeks of the campaign. He wasn’t talking about geography; Remain’s voice is persuasive to residents of Newland Avenue in Hull, where I drank a latte as I eavesdropped on a couple who were fretting that “racists” would vote to take Britain out of the EU.

Rather, Burnham was talking about an idea, the “Hampstead” that occupies a special place in right-wing demonology as a haven of wealthy liberals who have the temerity to vote in the interests of the poor. The playwright and novelist Michael Frayn, in his 1963 essay on the Festival of Britain, called them “the Herbivores”:

“. . . the radical middle classes, the do-gooders; the readers of the News Chronicle, the Guardian, and the Observer; the signers of petitions; the backbone of the BBC . . . who look out from the lush pastures which are their natural station in life with eyes full of sorrow for less fortunate creatures, guiltily conscious of their advantages, though not usually ceasing to eat the grass.”

For Hampstead then, read swaths of Islington, Hackney, Brighton, Bristol, Cambridge, Edinburgh and Oxford today – all areas that were most strongly in favour of Remain and where Jeremy Corbyn is popular. But Remain never found a tone that won over the other half of Labour England; the campaign struck as duff a note among the diminishing band of pensioners on Hampstead’s remaining council estates as it did on Hull’s Orchard Park Estate.

The rift between “Hampstead and Hull”, in the sense that Andy Burnham meant it, is one that has stealthily divided Britain for years, but it has been brought into sharp focus by the debate over Europe.

Academics use various kinds of shorthand for it: the beer drinkers v the wine drinkers, or the cosmopolitans v the “left behind”. “It’s not just that [Britain] is div­ided between people who buy organic and people who buy own-brand,” says Philip Cowley, a professor of politics at Queen Mary University of London, “but between people who wouldn’t understand how anyone could buy own-brand and people who wouldn’t buy organic if you put a gun to their head.” Equating political preferences with shopping habits might sound flippant, but on 21 June the retail research company Verdict estimated that “half of Waitrose shoppers backed a Remain vote, against just over a third of Morrisons customers”.

The referendum has shown that there is another chasm in British politics, beyond left and right, beyond social conservatism v liberalism, and beyond arguments about the size of the state. The new culture war is about class, and income, and education, but also about culture, race, nationalism and optimism about the future (or lack of it). This divide explains why Ukip’s message has been seductive to former Labour voters and to Tories, and why Boris Johnson, an Old Etonian, led a campaign that purported to despise “elites” and “experts” and spoke of “wanting our country back”.

***

At the start of the campaign, the question that most accurately predicted whether you would back Remain or Leave was consistently: “Are you a graduate?” (Those who answered yes were much more likely to vote in favour of staying in the EU.) Stronger In never found a way to change that and win over those who left education at 18 or earlier. Pollsters also suggested that the much-vaunted Euroscepticism of older voters reflects generations where only one in ten people went to university.

This fissure has been growing for the best part of a decade and a half, but Britain’s first-past-the-post system, which deters newcomers and maintains entrenched parties, has provided a degree of insulation to Labour that its European cousins have lacked. Yet even here in the UK the mid-Noughties brought the brief rise of the British National Party, powered by voter defections from Labour in its strongholds in east London and Yorkshire, as well as the election of the Greens’ first MP on the back of progressive disillusionment with the governments of Tony Blair and Gordon Brown.

In office, both Blair and Brown calculated, wrongly, that Labour’s core vote had “nowhere else to go”. In opposition under Ed Miliband, the party calculated, again wrongly, that discontent with immigration, and the rise of Ukip powered by that discontent, was a problem for the Conservative Party alone.

In a 2014 pamphlet for the Fabian Society, ­Revolt on the Left, the activist Marcus Roberts, the academic Rob Ford and the analyst Ian Warren warned that Labour had “few reasons to cheer about the Ukip insurgency and plenty to worry about”. When the votes were cast in the general election the following year, that prediction turned out to be dispiritingly accurate. Defections from Labour to Ukip led to Labour losing seats to the Conservatives in Gower, Southampton Itchen, Telford and Plymouth Moor View.

For the most part, however, first-past-the-post papered over the cracks in Labour’s broad coalition: cracks that, in the harsh light of the EU referendum, have become obvious. The divide isn’t simply one of class, or income. The social profile and culture of voters in Cumbria are no different from that of voters on the other side of the border – but Scots in the Borders backed a Remain vote while their English peers in the border areas opted for Brexit. Inhospitality towards Brexit proved a stronger indication of city status than a mere cathedral: Vote Leave generally found Britain’s great cities more difficult terrain than the surrounding towns and countryside.

The problem of the fracturing vote is particularly acute for the Labour Party, which for much of the 20th century was able to rely on the Herbivores. In concert with Frayn’s “less fortunate creatures”, they have been enough to guarantee Labour close to 250 seats in the House of Commons and roughly one-third of the popular vote, even in difficult years. But Britain’s EU referendum placed Hampstead and Hull on opposing sides for the first time in modern British political history.

It was Tony Blair who, in his final speech to the Trades Union Congress as Labour leader in September 2006, said that the new debate in politics was not left against right, but “open v closed” – openness to immigration, to diversity, to the idea of Europe. Driven by their commitment to openness, Blair’s outriders dreamed of reshaping Labour as a mirror of the US Democrats – though, ironically, it was Ed Miliband, who repudiated much of Blair’s approach and politics, who achieved this.

At the 2015 election Labour’s coalition was drawn from the young, ethnic minorities and the well educated: the groups that powered Barack Obama’s two election wins in 2008 and 2012. The party was repudiated in the Midlands, went backwards in Wales and was all but wiped out in the east of England. (Scotland was another matter altogether.) Its best results came in Britain’s big cities and university towns.

The Remain campaign gave Labour a glimpse of how Miliband’s manifesto might have fared without the reassuring imprimatur of a red rosette. Britain Stronger In Europe has been rejected in the Midlands and struggled in the east of England. But it also failed to inspire passion in Sunderland, Oldham and Hull – all areas that, for now, return Labour MPs.

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In appearance, Hull’s city centre is built on blood and sandstone, dotted with memorials to a lost empire and postwar replacements for bombed buildings, all ringed by suburban housing built by the private sector in the 1930s and the state in the 1950s and 1960s. It could be Bristol without the excessive hills, or a smaller Glasgow with a different accent. Unlike in Glasgow or Bristol, however, the residents of Hull are largely hostile to the European Union. Unlike Glasgow and Bristol, Hull is a post-imperial city that has yet to experience a post-colonial second act.

The William Wilberforce is named after a native son who helped destroy the British slave trade, the engine of Hull’s prosperity in the 18th century. The destruction of another local industry – fishing – drives resentment among the pub’s ageing clientele, who were there for breakfast and a bit of company when I visited. They blame its demise squarely on the EU.

Although the Labour Party now has only one MP in Scotland, the back rooms of the labour movement host an outsized Scottish contingent. For that reason – and the continuing threat that the loss of Labour’s seats in Scotland poses to the party’s chances of winning a majority at Westminster – the Scottish independence referendum of 2014 loomed large for Labour throughout the EU campaign.

From the outset, Britain Stronger In struggled to replicate the success of the Scottish No campaign, in part because the price of victory was one that Labour regarded as too high to pay a second time. In Glasgow, in the week before the Scottish referendum, everyone knew where Labour stood on independence – consequently, many voters were already planning to take revenge. The proprietor of one café told me that Labour was “finished in this city, for ever”.

Predictions of this sort were thin on the ground in Hull. Alan Johnson, the head of Labour’s EU campaign, is one of the three Labour MPs whom Hull sent to Westminster in 2015. But even late in the campaign, in his own constituency, I found uncertainty about the party’s official position on the referendum. For that reason, if nothing else, it didn’t have the feeling of a city preparing to break with a half-century-plus of Labour rule, as Glasgow did in 2014. In Scotland, most people I spoke to believed that they were on the brink of independence, which made the eventual result a big blow.

Only among Hull’s pro-European minority could I find any conviction that Britain might actually leave the EU. In September 2014 Kenneth Clarke remarked that Ukip’s supporters were “largely . . . the disappointed elderly, the grumpy old men, people who’ve had a bit of a hard time in life”. To listen to Hull’s Leave voters is to hear tales of the same frustrated potential: they feel that politicians of all stripes have lives entirely removed from theirs. In their defence, they are right – just 4 per cent of MPs in 2010 were from working-class backgrounds.

As for Ken Clarke, he has carved out a second career as every left-winger’s favourite Tory, but that tone of indifference towards the “disappointed lives” of globalisation’s casualties recalls his younger days as a rising star of Margaret Thatcher’s government.

Hull’s residents have been dismissed, first as the regrettable but inevitable consequence of Thatcherite economics, and now as small-minded opponents of social progress and racial diversity. Unsurprisingly, people who feel that their wishes have been ignored and in some cases actively squashed by successive governments of left and right did not expect to wake up on the morning of 24 June to discover that this time, their votes really had changed something.

Equally unsurprisingly, the Remain campaign’s warnings of economic collapse lacked force for people for whom the world’s end had been and gone.

In Glasgow in 2014 Scottish independence was a question of identity in itself, whereas in Hull, hostility towards Europe is the by-product of other identities that feel beleaguered or under threat: fishing, Englishness and whiteness, for the most part.

In Hampstead, a vote for Remain feels more like a statement about the world as you see it. One woman, who walks off before I can probe further, tells me: “Of course I’m voting to stay In. I buy Fairtrade.”

***

Immigration, not the European Union, is the issue that moves voters in Hull. “Britain is full” was the most frequent explanation they gave for an Out vote. Knowing that immigration, rather than the abstract question of sovereignty, would be crucial to winning the contest, Vote Leave tried from the beginning to make it a referendum on border control. Leave’s main theme: the threat of Turkey joining the European Union and, with it, the prospect of all 75 million Turks gaining the right to live and work in Britain.

Although Turkey’s chances of joining the EU are somewhere only just north of its hopes of launching a manned mission to Mars, the tactic worked: according to an ­Ipsos MORI poll released on the morning of 16 June, 45 per cent of Britons believed that Turkey will be fast-tracked into the Union.

That same morning, Nigel Farage posed in front of a poster showing refugees – mostly from Syria and most of them non-white – on the border between Croatia and Slovenia, with a slogan warning that uncontrolled immigration was leaving Britain at “breaking point”. But the row over the poster came to an unpleasant halt just a few hours later as news began to break that Jo Cox, the Labour MP for Batley and Spen, had been shot and stabbed on her way out of a constituency surgery. She died of her injuries a little over an hour later. On 19 June Thomas Mair, who was arrested in connection with the killing, gave his name at Westminster Magistrates’ Court as “Death to traitors, freedom for Britain”.

The circumstances of the killing felt familiar. A little after midnight on 5 June 1968, Robert Kennedy was returning to the Ambassador Hotel in Los Angeles in high spirits. He had just won a crucial victory in the California primary and was well placed to secure the Democratic nomination to run in that year’s presidential election. Going through the kitchen in order to avoid cheering crowds and get straight to his press conference, he was ambushed by a man called Sirhan Sirhan, who fired six shots from a revolver. Kennedy was rushed to hospital, where he died early the following morning.

Five months later Richard Nixon was elected president. The American right held on to the White House for 20 years out of the next 25. Jo Cox’s killing, amid the nativist howling from Farage et al, felt like the beginning of a similar chapter of right-wing advance in the UK.

Labour’s problem, and that of its social-democratic cousins throughout Europe, is the same as the American left’s was in the 1960s. Its founding coalition – of trade unions, the socially concerned middle classes and minorities, ethnic and cultural – is united (barely) on economic issues but irrevocably split on questions of identity. Outside crisis-stricken Greece and Spain, the left looks trapped in permanent opposition, with no politician able to reconsolidate its old base and take power again.

***

When I arrive in Hull, preparations are under way for a vigil in Jo Cox’s honour, but it is the nation of Turkey that is weighing on the minds of undecided voters. On Park Street, residents are divided. Those who have exercised their right to buy and are concerned about their mortgages are flirting with an Out vote but are terrified about negative equity. Those who remain in social housing or the private rented sector are untouched by stories of soaring mortgages. To many residents, the Treasury’s dire warnings seem to be the concerns of people from a different planet, not merely another part of the country. As Rachel, a woman in her mid-fifties who lives alone, puts it: “They say I’d lose four grand a month. I don’t know who they think is earning four grand a month but it certainly isn’t me.”

As Vote Leave knew, the promise that an Out vote will allow people to “take control” always had a particular appeal for those with precious little control – of their rent, of next week’s shift, of whether or not they will be able to afford to turn the heating on next week. Never mind that the control envisaged by Vote Leave would be exercised by the conservative right: the campaign found a message that was able to resonate across class and region, at least to an extent that could yet create a force to be reckoned with under first-past-the-post in Britain.

Four grand a month isn’t a bad salary, even in leafy Hampstead, but in that prosperous corner of north London fears of an Out vote, and what will come after, gained a tight purchase. The worry was coupled with resentment, too, over what would come, should the Outers triumph.

The great risk for the left is that herbivorous resentment is already curdling into contempt towards the people of Hull and the other bastions of Brexitism. That contempt threatens the commodity on which Labour has always relied to get Hull and Hampstead to vote and work together – solidarity. The referendum leaves the Conservatives divided at Westminster. That will give little comfort to Labour if the long-term outcome of the vote is to leave its own ranks divided outside it.

 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics. 

This article first appeared in the 23 June 2016 issue of the New Statesman, Divided Britain