How the left went west

You thought Islington was the new Labour heartland? Wrong. Giles Corenexplains the lure of Notting H

On the day in 1997 that new Labour announced a clampdown on road tax evaders, and ceremoniously pulped an offending vehicle before an invited press audience, Philip Delves Broughton, then a young diarist on the Times and resident of Notting Hill's exclusive Northumberland Place, stepped out into the bright morning.

Turning right, and heading towards the Tube station, he passed the front door of the then Minister without Portfolio, Peter Mandelson, his next-door-neighbour-but-one. Glancing at Mandelson's green Rover, he noticed, to his delight, that the tax disc had expired. Naturally enough, he wrote the story up and it appeared next morning in the Times.

"About six o'clock," he recalled to me last week, "I got a phone call at work from Mandelson, who was standing on a train platform with Derek Draper and Robert Harris, saying that he was appalled by the story. He asked me if I thought it was neighbourly behaviour. He clearly felt that his Notting Hill address entitled him to special treatment from the press."

But now the west London home that Mandelson apparently saw as a force field has become the very hubristic flaw that brought about his fall. Notting Hill, like Excalibur, is the ally only of he who has truly earned it and understands its mystical power.

In the aftermath of Notting Hillgate - as the scandal has come to be known - the most shocking revelation for the general public was that Mandelson lived in west, rather than north, London. Those who had been led to believe that N1 was the political postcode of the decade were left goggle-eyed by talk of W2. And the question left quivering on a million lips was: whatever happened to Islington person?

As a feature writer on the Times whose career began only weeks before the death of John Smith, I spent most of 1994 in Islington. I was sent to Granita the night after what the paper called "The Night of the Long Fishknives" to find out what it was about the Upper Street restaurant that had led Tony Blair and Gordon Brown to play out their power struggle on its stripped pine floorboards. Glenda Jackson was in there, and Judi Dench. Islington, they said, was the centre of new Labour power. And it all seemed so right.

But did new Labour fit in? I was sent to Barnsbury Square dressed in Victorian clothes with a troupe of carol singers from St Bride's to see how much the Blairs would give compared to the rest of the street. It took a harassed-looking Cherie some time to open the door. Surrounded by children, she seemed incredibly relieved to discover that we were only carol singers and not journalists. She gave a pound. Most of the rest of the street had given a fiver. I felt terrible, and told my editor there had been nobody at home.

Now fashion, like new Labour, has moved on. While the foot soldiers of the revolution - the Chris Smiths, Harriet Harmans, Geoff Mulgans and Alan Rusbridgers - are still in Islington, the key figures in the government's maturity are being gobbled into the gravitational pull of the Westway. Was Islington a mere staging post? Can we reasonably characterise it as the Damascene spot where old Labour paused on its route down from the grimy North, learnt its focaccia from its Ferragamo and practised a few new vowel sounds before its final push on the seat of privilege?

It is true that very few of our elected representatives, on their £45,066 a year, can afford an area that is now, in pounds per square foot, more expensive than Chelsea. But what has happened is that, ensconced in office, the Labour Party has turned towards the new establishment (better off, in fact, than the old Knightsbridge Tories) to keep up momentum. Lord Jenkins is crucial to Blair's ideological life, but Roy's neighbour in Kensington Park Gardens, Elisabeth Murdoch, will be of more long-term use to the party. And they both live on the all-important south side of the street. Anyone who is anyone backs on to Ladbroke Square, darling.

Benjamin Wegg-Prosser, the 26-year-old special adviser credited with overhauling the Mandelson image, must have been delighted when his boss moved in. Round the corner in Palace Gardens Terrace, Wegg-Prosser is just the sort of dyed-in-the-wool Notting Hillbilly (or should that be Notting Hilltony?) on whom the future of the party looks to depend.

Matthew Freud, the young head of Freud Communications and central to the Dome project, recently bought a £2.5 million house round the corner in Ladbroke Road, before moving out when his relationship with his neighbour Elisabeth Murdoch became public. She it may have been who pointed Mandelson towards Lambton Place Health Club, where he is often seen on the treadmill chatting to Lady Antonia Fraser. She and her husband, Harold Pinter, new Labour's greatest literary grandee, live two minutes up the road in Campden Hill Square. Blair's favourite huntsman, John Mortimer, is but a "view-halloo" away. Also in Notting Hill, you will find Lord Hollick, Blairite proprietor of the Express, and David Sainsbury, generous new Labour donor.

When the sacked minister David Clark blamed the loss of his job on being "out of the loop" and "not part of the London social scene", complaining that as an outsider "you don't make the contacts, you are not invited to the soirees, the coffee mornings, the dinner parties", he presumably had in mind Carla Powell. She, since becoming friends with Mandelson, has become the first "society hostess" for some time to enter the sphere of political influence. She lives in Caroline Place, but a short trot down Queensway from Newton Road, where the columnist Paul Johnson, a Blair confidante, seems also to be making a comeback.

The Express editor, Rosie Boycott, in Chepstow Road, has her part to play. Michael Jackson of Channel 4 and John Birt are among the other on-message media mandarins in the heart of Trustafaria.

There are red herrings, too: it is said that Peter Mandelson offered to babysit for his neighbour Princess Charlotte of Luxembourg, a power alliance that is probably not too threatening. Norman Lamont can be found in Kensington Park Road, but then he surely bears as much responsibility as any Millbank spin-doctor for getting new Labour into power. It's more difficult to fit in Tony Benn, who has lived in the area for years. It is not impossible to imagine the Prime Minister strolling down Westbourne Grove on a Sunday morning on his way to chat to Lord Jenkins about the Third Way, waving merrily to the gawping Okay Yardies, only to spot Benn coming back from the newsagent, and having to dart into Cafi 206 to hide behind Mariella Frostrup.

Perhaps there is a natural affinity between Labour and Notting Hill. For years after the war it was the working class, the poor and the ethnic minorities who made it what it was. By the 1980s, however, the property boom caused an identity crisis to set in, leading to some years in the wilderness. From the early 1990s, however, money was embraced wholeheartedly, and the area is now dominated by right-thinking but style-silly media slaves. They may have gone to public school, but they pay lip service to the ideals of cultural diversity and salt-of-the-earth rootsiness they believe their postcode upholds.

All this could so easily have been old hat by now. In November 1995 the Evening Standard revealed that the Blairs had employed a "looker" to find them a "suitable residence in west London". They were forsaking the wilds of Islington, it was revealed, for this "paradise for upmarket lefties". It was only the events of May 1997, then, that kept them out of Notting Hill. But for one small landslide Tony might have had an address to be really proud of.

It is still his dream. If you ask him where he would most like to be living in five years' time, he will say "No 10". Watch his eyes very carefully and say, "is that on the north side of Kensington Park Gardens or the south?"

This article first appeared in the 15 January 1999 issue of the New Statesman, A slight and delicate minister?

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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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