For he was a jolly good fellow

Westminster should mourn Charlie Whelan's departure, argues Patrick Hennessy

It was the scoop I wish I'd never had - the news that my great friend Charlie Whelan was finally to leave his post at Gordon Brown's right hand after five rumbustious years of spinning, scheming and issuing Whitehall's most ferocious bollockings since the days of Sir Bernard Ingham.

With a typical flourish, Charlie ensured that I had the first official confirmation of his departure in time for early editions of Monday's London Evening Standard. It was a system we had used many times in the past, during hours of crackly conversations on mobile phones as he travelled to the Treasury by mini-cab (not paid for by the tax-payer) from his Peckham home.

I first met Charlie in about 1990, when he was a thirty-something press officer for the Amalgamated Engineering and Electrical Union and I was a 27-year-old industrial correspondent for Kelvin MacKenzie's Sun. Drawn together by a mutual love of football (if such a claim is possible for a Spurs fan such as Charlie), dog-racing and a keen sense of the ridiculous, I quickly realised that our relationship was likely to become personal as well as professional.

In those dark days of the Neil Kinnock era, the scars of Wapping remained and most union officials refused point-blank to speak to the Sun. Charlie was a godsend. Not only was he the energetic supplier of leaked documents from Ford and other companies, but he was also keen on getting the engineers' approach of single-union, no-strike deals across to the widest possible readership. We were particularly proud of one feature in the Sun's much-sought-after page six slot, alongside the leader column. Ostensibly written by the AEEU's president, Bill Jordan, but actually the work of Whelan and me in the Marquess of Granby pub, it proclaimed one new car-plant agreement under the headline: "It's a joy-ota to work for Toyota."

Stunts like these attracted the attention of Peter Mandelson, who made overtures to Charlie to join the then opposition's top team late in 1993. Charlie went off to work for Gordon Brown, Mandelson switched sides and attached himself to Tony Blair and the bitterest feud of the new Labour years, one that led directly to the departures of both men, had begun.

It is impossible to begin to understand Whelan the spin-doctor without understanding Whelan the man. If he knows you are on his side and can trust you, then he will do anything for you. It is hard to imagine the workaholic Treasury aide having a life outside his job, but in fact he has a strong, enduring relationship with his partner, Philippa Clarke, and a diverse group of friends who have nothing to do with the political arena.

Football, inevitably, is to the fore. One of his rare protest letters to a newspaper came when the Independent called him an Arsenal fan, and I have fond memories of turning up for a drink after what turned out to be a 6-1 drubbing of Spurs by Chelsea and finding a lone figure in a tatty sheepskin coat, cursing his team and braced for my inevitable taunts.

This sense of loyalty was one of the main reasons why Charlie kept getting into trouble with the Downing Street control freaks. His "popularity" among journalists at Westminster has often been stressed, but in reality he was popular among a dwindling band of hacks. Others never seemed to recover from his expletive-studded tongue-lashings (the best technique was always to swear back at him even louder). This meant that, during the long, long campaign by Downing Street to have him sacked, he could count on relatively few media allies.

Many press officers, especially in the ranks of young new Labour wannabes, are careful not to make too many enemies as they have their eyes on a political career. This was not the case with Charlie. He saw his job as being to make, and keep, Gordon Brown popular, not to court popularity for himself. It is forgotten how poor Brown's image was before Charlie's recruitment. Showing real political skill, Charlie transformed a dour, soundbite-obsessed workaholic into a relaxed, smiling, avuncular figure, who somehow managed to combine a war on state spending with regular handouts of cash for the "people's priorities" - schools and hospitals.

The great test for the man whom Charlie made the Teflon Chancellor will be how he survives Whelan's departure and how this will affect the strained relationships between the Prime Minister and the Chancellor and between Brown and at least seven members of the cabinet who feel they have been the victims of Whelan "monsterings". My guess is that it won't take long before many members of the government come to realise that, while Charlie might have been the weapon, he was not the real marksman.

Finally, when you know someone really well, it can be amusing to see how the same small mistakes constantly reappear in profile after profile. Charlie's favourite drink is spritzer, not lager or Guinness. His "Cockney accent" actually reveals the drawling vowel sounds of his middle-class upbringing. At least they all got the football right. And I'm looking forward to the next Chelsea-Spurs game. As always, Chelsea will win. And this time maybe the mobile phone belonging to the man sitting next to me in the sheepskin coat will not ring six times in the first half alone. But don't bet on it.

This article first appeared in the 08 January 1999 issue of the New Statesman, Stuff the millennium

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What Marx got right

...and what he got wrong.

1. You’re probably a capitalist – among other things

Are you a capitalist? The first question to ask is: do you own shares? Even if you don’t own any directly (about half of Americans do but the proportion is far lower in most other countries) you may have a pension that is at least partly invested in the stock market; or you’ll have savings in a bank.

So you have some financial wealth: that is, you own capital. Equally, you are probably also a worker, or are dependent directly or indirectly on a worker’s salary; and you’re a consumer. Unless you live in an autonomous, self-sufficient commune – very unusual – you are likely to be a full participant in the capitalist system.

We interact with capitalism in multiple ways, by no means all economic. And this accounts for the conflicted relationship that most of us (including me) have with capitalism. Typically, we neither love it nor hate it, but we definitely live it.

2. Property rights are fundamental to capitalism . . . but they are not absolute

If owning something means having the right to do what you want with it, property rights are rarely unconstrained. I am free to buy any car I want – so long as it meets European pollution standards and is legally insured; and I can drive it anywhere I want, at least on public roads, as long as I have a driver’s licence and keep to the speed limit. If I no longer want the car, I can’t just dump it: I have to dispose of it in an approved manner. It’s mine, not yours or the state’s, and the state will protect my rights over it. But – generally for good reason – how I can use it is quite tightly constrained.

This web of rules and constraints, which both defines and restricts property rights, is characteristic of a complex economy and society. Most capitalist societies attempt to resolve these tensions in part by imposing restrictions, constitutional or political, on arbitrary or confiscatory actions by governments that “interfere” with property rights. But the idea that property rights are absolute is not philosophically or practically coherent in a modern society.

3. What Marx got right about capitalism

Marx had two fundamental insights. The first was the importance of economic forces in shaping human society. For Marx, it was the “mode of production” – how labour and capital were combined, and under what rules – that explained more or less everything about society, from politics to culture. So, as modes of production change, so too does society. And he correctly concluded that industrialisation and capitalism would lead to profound changes in the nature of society, affecting everything from the political system to morality.

The second insight was the dynamic nature of capitalism in its own right. Marx understood that capitalism could not be static: given the pursuit of profit in a competitive economy, there would be constant pressure to increase the capital stock and improve productivity. This in turn would lead to labour-saving, or capital-intensive, technological change.

Putting these two insights together gives a picture of capitalism as a radical force. Such are its own internal dynamics that the economy is constantly evolving, and this in turn results in changes in the wider society.

4. And what he got wrong . . .

Though Marx was correct that competition would lead the owners of capital to invest in productivity-enhancing and labour-saving machinery, he was wrong that this would lead to wages being driven down to subsistence level, as had largely been the case under feudalism. Classical economics, which argued that new, higher-productivity jobs would emerge, and that workers would see their wages rise more or less in line with productivity, got this one right. And so, in turn, Marx’s most important prediction – that an inevitable conflict between workers and capitalists would lead ultimately to the victory of the former and the end of capitalism – was wrong.

Marx was right that as the number of industrial workers rose, they would demand their share of the wealth; and that, in contrast to the situation under feudalism, their number and geographical concentration in factories and cities would make it impossible to deny these demands indefinitely. But thanks to increased productivity, workers’ demands in most advanced capitalist economies could be satisfied without the system collapsing. So far, it seems that increased productivity, increased wages and increased consumption go hand in hand, not only in individual countries but worldwide.

5. All societies are unequal. But some are more unequal than others

In the late 19th and early 20th centuries, an increasing proportion of an economy’s output was captured by a small class of capitalists who owned and controlled the means of production. Not only did this trend stop in the 20th century, it was sharply reversed. Inherited fortunes, often dating back to the pre-industrial era, were eroded by taxes and inflation, and some were destroyed by the Great Depression. Most of all, after the Second World War the welfare state redistributed income and wealth within the framework of a capitalist economy.

Inequality rose again after the mid-1970s. Under Margaret Thatcher and Ronald Reagan, the welfare state was cut back. Tax and social security systems became less progressive. Deregulation, the decline of heavy industry and reduction of trade union power increased the wage differential between workers. Globally the chief story of the past quarter-century has been the rise of the “middle class”: people in emerging economies who have incomes of up to $5,000 a year. But at the same time lower-income groups in richer countries have done badly.

Should we now worry about inequality within countries, or within the world as a whole? And how much does an increasing concentration of income and wealth among a small number of people – and the consequent distortions of the political system – matter when set against the rapid ­income growth for large numbers of people in the emerging economies?

Growing inequality is not an inevitable consequence of capitalism. But, unchecked, it could do severe economic damage. The question is whether our political systems, national and global, are up to the challenge.

6. China’s road to capitalism is unique

The day after Margaret Thatcher died, I said on Radio 4’s Today programme: “In 1979, a quarter of a century ago, a politician came to power with a radical agenda of market-oriented reform; a plan to reduce state control and release the country’s pent-up economic dynamism. That changed the world, and we’re still feeling the impact. His name, of course, was Deng Xiaoping.”

The transition from state to market in China kick-started the move towards truly globalised capitalism. But the Chinese road to capitalism has been unique. First agriculture was liberalised, then entrepreneurs were allowed to set up small businesses, while at the same time state-owned enterprises reduced their workforces; yet there has been no free-for-all, either for labour or for capital. The movement of workers from rural to urban areas, and from large, unproductive, state-owned enterprises to more productive private businesses, though vast, has been controlled. Access to capital still remains largely under state control. Moreover, though its programme is not exactly “Keynesian”, China has used all the tools of macroeconomic management to keep growth high and relatively stable.

That means China is still far from a “normal” capitalist economy. The two main engines of growth have been investment and the movement of labour from the countryside to the cities. This in itself was enough, because China had so much catching-up to do. However, if the Chinese are to close the huge gap between themselves and the advanced economies, more growth will need to come from innovation and technological progress. No one doubts that China has the human resources to deliver this, but its system will have to change.

7. How much is enough?

The human instinct to improve our material position is deeply rooted: control over resources, especially food and shelter, made early human beings more able to reproduce. That is intrinsic to capitalism; the desire to acquire income and wealth motivates individuals to work, save, invent and invest. As Adam Smith showed, this benefits us all. But if we can produce more than enough for everybody, what will motivate people? Growth would stop. Not that this would necessarily be a bad thing: yet our economy and society would be very different.

Although we are at least twice as rich as we were half a century ago, the urge to consume more seems no less strong. Relative incomes matter. We compare ourselves not to our impoverished ancestors but to other people in similar situations: we strive to “keep up with the Joneses”. The Daily Telegraph once described a London couple earning £190,000 per year (in the top 0.1 per cent of world income) as follows: “The pair are worried about becoming financially broken as the sheer cost of middle-class life in London means they are stretched to the brink.” Talk about First World problems.

Is there any limit? Those who don’t like the excesses of consumerism might hope that as our material needs are satisfied, we will worry less about keeping up with the Joneses and more about our satisfaction and enjoyment of non-material things. It is equally possible, of course, that we’ll just spend more time keeping up with the Kardashians instead . . .

8. No more boom and bust

Are financial crises and their economic consequences part of the natural (capitalist) order of things? Politicians and economists prefer to think otherwise. No longer does anyone believe that “light-touch” regulation of the banking sector is enough. New rules have been introduced, designed to restrict leverage and ensure that failure in one or two financial institutions does not lead to systemic failure. Many would prefer a more wholesale approach to reining in the financial system; this would have gained the approval of Keynes, who thought that while finance was necessary, its role in capitalism should be strictly limited.

But maybe there is a more fundamental problem: that recurrent crises are baked into the system. The “financial instability” hypothesis says that the more governments and regulators stabilise the system, the more this will breed overconfidence, leading to more debt and higher leverage. And sooner or later the music stops. If that is the case, then financial capitalism plus human nature equals inevitable financial crises; and we should make sure that we have better contingency plans next time round.

9. Will robots take our jobs?

With increasing mechanisation (from factories to supermarket checkouts) and computerisation (from call centres to tax returns), is it becoming difficult for human beings to make or produce anything at less cost than a machine can?

Not yet – more Britons have jobs than at any other point in history. That we can produce more food and manufactured products with fewer people means that we are richer overall, leaving us to do other things, from economic research to performance art to professional football.

However, the big worry is that automation could shift the balance of power between capital and labour in favour of the former. Workers would still work; but many or most would be in relatively low-value, peripheral jobs, not central to the functioning of the economy and not particularly well paid. Either the distribution of income and wealth would widen further, or society would rely more on welfare payments and charity to reduce unacceptable disparities between the top and the bottom.

That is a dismal prospect. Yet these broader economic forces pushing against the interests of workers will not, on their own, determine the course of history. The Luddites were doomed to fail; but their successors – trade unionists who sought to improve working conditions and Chartists who demanded the vote so that they could restructure the economy and the state – mostly succeeded. The test will be whether our political and social institutions are up to the challenge.

10. What’s the alternative?

There is no viable economic alternative to capitalism at the moment but that does not mean one won’t emerge. It is economics that determines the nature of our society, and we are at the beginning of a profound set of economic changes, based on three critical developments.

Physical human input into production will become increasingly rare as robots take over. Thanks to advances in computing power and artificial intelligence, much of the analytic work that we now do in the workplace will be carried out by machines. And an increasing ability to manipulate our own genes will extend our lifespan and allow us to determine our offspring’s characteristics.

Control over “software” – information, data, and how it is stored, processed and manipulated – will be more important than control over physical capital, buildings and machines. The defining characteristic of the economy and society will be how that software is produced, owned and commanded: by the state, by individuals, by corporations, or in some way as yet undefined.

These developments will allow us, if we choose, to end poverty and expand our horizons, both materially and intellectually. But they could also lead to growing inequality, with the levers of the new economy controlled by a corporate and moneyed elite. As an optimist, I hope for the former. Yet just as it wasn’t the “free market” or individual capitalists who freed the slaves, gave votes to women and created the welfare state, it will be the collective efforts of us all that will enable humanity to turn economic advances into social progress. 

Jonathan Portes's most recent book is “50 Ideas You Really Need to Know: Capitalism” (Quercus)

Jonathan Portes is senior fellow The UK in a Changing Europe and Professor of Economics and Public Policy, King’s College London.

This article first appeared in the 22 June 2017 issue of the New Statesman, The zombie PM

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