Haunt of Jack the Ripper, and birthplace of the Kray brothers, London's East End has a long history of exclusion from respectable society. Yet it is intimately tied up with the emergence of capitalism. At its western flank, Bethnal Green and Stepney lie adjacent to the City of London, in symbiotic polarisation. As the City evolved into the centre of capitalism, it exported its more polluting economic activities - leather, clothing, furniture and shipping - to just outside the city walls, where the benefits were still easily available but did not offend the dignity of the City itself. Together the City and the East End became the hub of the British imperial trading system. Commodities were bought and sold in the City, and handled through the docks and warehouses of east London.
By the middle of the 19th century, east London had become the largest working-class domain in the world, morally sealed off from the rest of the country but dependent on income from the City. This included charity dispensed by numerous City foundations, which in turn helped to attract yet more destitute, including rural and Irish migrants and, through the London docks, alien minorities, such as Huguenots and Jews.
This humble corner of London became a favoured stomping ground for reformers, social commentators and visionaries. Geographically, it was conveniently near Britain's centres of power and wealth; socially, it was as distant as it was possible to be. From the two Booths and Mayhew, through the Webbs and Eleanor Rathbone, to Michael Young and his creation, the Institute of Community Studies, those who have wanted to know how the other half lived, and what they desired or needed, were drawn there. The father of the Labour Party, Keir Hardie, built his political heartland in West Ham, just to the east of Bethnal Green; Clement Attlee based his political career in the Stepney docklands, on the river side of Bethnal Green.
It was this identification with dockers that gave Labour a source of nationalist legitimacy in the Second World War. Britain and, indeed, the imperial system as a whole were economically and militarily dependent on supply lines running through the London docks. Almost overnight, dockers and their families became cast as heroic defenders of the homeland and empire. Attlee, by now deputy leader of the war cabinet, toured east London to tell the people that, when the war was over, they would at last be given a fairer share of the nation's wealth. A new East End would be built, and the whole nation would be rewarded with a welfare state that would banish poverty and need and overcome the ancient divisions between classes.
At the end of the war, half a millennium of exclusion, moderated only by demeaning charity, seemed at last to be at an end. In Attlee's Labour administration virtually all the East End MPs held ministerial office, or at least some government responsibility. Yet this was also a defining moment in the birth of a new ruling class, ready to pursue interests of its own as soon as real politics started up again.
This was the meritocracy. The main aim of Attlee's administrations had been to achieve direct control of the economy through Soviet-style state capitalism. But through the 1950s and 1960s, the party emphasis shifted away from public ownership of productive property towards public promotion and control of the knowledge and skills required for effective exploitation of that property. The best way to counter any regressive influence of private ownership and transmission of property - the roots of old class conservatism - was to give more salience to immaterial, non-heritable educational resources and qualifications. The state could hope quite reasonably to manage this new form of individual property on a centralised basis, in the public interest. So Labour turned to the growing numbers of technocrats for its core support. Under Harold Wilson in the 1960s, the state stimulated demand for formal qualifications among employers, centralised and professionalised the management of education and social services, and used the welfare state to maximise individual independence from family and community ties.
All this was supposed to be an attack on the old regime of capitalism. In fact, members of property-owning families lost little, and merely needed to convert some of their assets into personal educational stock. Those whose lives were rooted in communal or collective rights, attached to a locality, lost out. In prewar days, east London, for example, was extremely self-sufficient. Friends and relatives helped to provide or find employment, with many boys following their fathers and uncles into the docks. Local housing rights were in effect hereditary, passing down mainly through the female line: mothers of young couples about to get married would "speak for" them to rent collectors. Local "savings clubs" afforded some degree of personal insurance and reciprocal security.
The welfare state architects understood these mechanisms at the heart of community life. When new housing was built in the East End after the war, municipal landlords recognised the expectations of tenants that their children would want to live in the area. Wilson's government, however, required public housing allocation procedures to take less account of local connection and commitment. Among the first beneficiaries were young (and generally middle-class or upwardly mobile) members of the new urban left - mainly students or former students committed to social modernisation - who wanted somewhere inexpensive to live near city centres, without having to wait for it. Even more ominously for social cohesion, the later beneficiaries were the Bengali immigrants to Bethnal Green and Stepney, now part of the new borough of Tower Hamlets. Wartime promises were betrayed.
The tensions between Labour's high-minded internationalism and its traditional working-class constituency were evident even in the immediate aftermath of the war. The Attlee government's decision to divert food from the British market to starving families on the Continent led to some angry confrontations between MPs and voters in the East End.
In those days, most councillors were locally born, and knew their wards and voters intimately. By the mid-1990s very few Labour councillors in Tower Hamlets counted as true locals. A sizeable minority were now Bangladeshi, mostly born in Bangladesh. Virtually all the rest were middle-class whites, members of the new meritocracy drawn to London from all parts of Britain. And the council's work now consisted almost entirely of applying national policies determined in Whitehall and Westminster and aimed at enhancing meritocracy.
It was then the Conservatives who figured in public consciousness as the class enemy presiding over attacks on the working-class community. But this was to some extent an illusion. Although the centralisation of welfare state administration took effect only gradually, it was in origin an instrument of Labour modernisation. Now that Labour has been back in power for nearly six years it is evident that it is the main proponent of meritocracy, and the most hostile to traditional, local working-class culture. Removal of the Conservative government makes it much harder to uphold the idea that the problems of poor communities, as indeed of minorities themselves, are due to regressive aspects of British society. It obliges us to confront the contradictions produced by the pursuit of meritocracy itself.
Had Labour's sponsorship of minority group interests in the teeth of working-class resentment actually helped them to find a place in British society more easily, then it might be possible to condone the betrayal of ordinary white people. But it does not seem to have done so. Race relations in Britain have been getting worse not better since Labour came back to power. Until recently, it was possible to believe that we were moving in the right direction. Among younger people, attitudes across race and cultural lines seemed tolerant; rates of intermarriage were rising. All but the most recent immigrant groups appeared to be spreading across the occupational and social structure. But violent uprisings among Asians in northern British cities have uncovered discontent among minorities themselves. This has prompted a heart-searching even more profound than 20 years ago after similar rioting by earlier groups of immigrants, especially African Caribbeans. That led to a strengthening of measures to support minority self-esteem, around policies of "multiculturalism". This time the malaise is harder to handle: it is no longer so easy to blame Conservative governments for loss of minority faith in the system. And the main strategy that Labour prescribed for meeting minority anxieties is precisely what it is now seen as failing to deliver. Multiculturalism itself is discredited. New Labour's promises to minorities are starting to look as shallow as those made by old Labour to the white working class during the war.
A large majority of people now believe that Britain has lost a sense of its core values. Diversity, they think, is fine; but it needs to be tied around a shared body of common assumptions, commitments and practices that inform national cohesion. For too long the political class in Britain has prided itself on being global and cosmopolitan, and above attachment to specific identity. Patriotic ideas and celebration of Britishness have been treated as signifiers of low social status, and tantamount to admission of racist inclinations. In David Blunkett we have the first Labour Home Secretary who talks with conviction of the need to ensure that immigrants learn (at least some) English, know the rudiments of British history and the constitution, and (possibly) make some pledge of allegiance before they get full citizenship.
But there are more fundamental problems. It is no accident that recent rioting involved Muslims in the way that 20 years ago it involved African Caribbeans. These groups have been most exposed to the machinations of British meritocrats. African Caribbeans from an ex-slave-turned-peasant background had relatively little orientation towards competing in a market economy. Pakistani and Bangladeshi migrants similarly came from peasant families, and by comparison with the Indian, Chinese or even African migrants who arrived at the same time had little access to investment capital or commercial experience. Like the African Caribbeans before them, they have been highly dependent for security and advancement on links with patrons in the national elite - above all the Labour Party. These groups have listened most attentively to government promises and then become most confused as they failed to materialise.
When Michael Young coined the term meritocracy in the 1950s, while working in Bethnal Green, he did not intend it as an endorsement of the principle it described. On the contrary, he presented it in the context of a satirical novel, pointing out that any serious attempt to create such a system was likely to fail because it divided a society too sharply into winners and losers. Few in Britain have heeded this warning. The new ruling class sees itself more than ever as occupying its position by merit, and Tony Blair repeatedly calls on citizens to help make Britain more of a meritocracy than it already is. This impulse sharpens conflicts both between classes and between cultural and racial groups, and also hinders our understanding of the true position that minorities occupy in Britain.
New Labour's commitment to meritocratic goals certainly produces its most obvious blind spot: its lack of interest in providing proper rewards for menial or low-skilled workers. What the endless celebration of education actually means to ordinary people is not that they all stand a chance of getting on, but that those who do not succeed in getting qualifications must submit to the rule of those who do. Equally, if your job is not interesting or highly paid, this means that you are a failure and do not deserve any better. Such quaint notions as the dignity of labour, or the value to all of the part played by the smallest cog in the machine - which were the essence of old Labour - have disappeared from party manifestos. Even the welfare state no longer represents fraternal mutual insurance; it has become a mechanism for the redistribution of resources from those who are clever and successful and able to look after themselves to those who are not. It is about dependency and indebtedness and above all shame: a return to the Poor Law in all but name.
This is why the morale of many workers, including those in once-proud public services at the heart of national life such as the health service, post office and public transport, is lower than ever. Work for many has lost its intrinsic satisfactions, and is mainly about status - low status. And this, quite literally, is where many immigrants come in. For one reliable way to recruit workers to do the jobs that meritocracy devalues is to bring in people who are not really part of the system.
Meritocracy, however, cannot husband this resource for long. The zealots who insist that free individual competition must drive the system cannot see that their model creates gaping holes. These holes can be filled only by immigrants; yet the meritocrats want to hasten their unambiguous incorporation into the system. Children of newcomers, if not the migrants themselves, are encouraged to demand full opportunities to rise rapidly, and are expected to feel aggrieved if they do not succeed. Yet even without any resistance from the established population, immigrants could not expect to do as well as those whose families have been present for generations. It takes time to learn a system fully and play it. It is not only unreasonable to expect immigrants to rise quickly up the occupational and status ladder: it is contemptuous of community ties, in both minority and majority communities, to insist that individuals demonstrate such a level of detachment or freedom from their existing families and networks.
Labour's leading thinkers urge the country to pay even less attention to the basic relationships on which social cohesion and long-term stability surely depend. Thus Peter Mandelson, for example, argues that we should not worry that the gap between the highest- and lowest-paid is increasing; what is most important for social justice, he insists, is opportunity.
In a socially just society as envisaged by Mandelson, the daughter of a Hartlepool shop assistant would have the same chance of becoming a high court judge as the daughter of a Harley Street doctor. But this reveals an indifference to family life and community relationships that is unlikely to be widely shared in his Hartlepool constituency. For most people, society is not an atomised mass of freely interacting individuals. Family and community ties do matter to them; they are a source of value, inspiration and consolation that are more important to them than are strictly equal educational and job opportunities enabling individuals to compete better with each other.
Like other new Labour luminaries, Mandelson is childless. This may make it harder for him to detect the gaps at the heart of his meritocratic dream, and easier for him both to advocate it and to remain true to it. Not many meritocrats who are parents are happy to contemplate their own children descending the social ladder - which some must do in order to vacate places for talented children from humbler backgrounds.
As it is, new Labour, faced with a collapsing community and occupational structure, continues to reach for more of the same, and to insist that we need even higher levels of immigration. But how long can any minority be allowed to do mainly menial tasks before this counts as a denial of equal opportunities? In some areas, as many as 40 per cent of young Muslims who have grown up in the UK are unemployed. There are low-level jobs if they want them, but having been educated in the UK many do not. And why should they when, unlike their parents, they have learned how little respect ordinary work commands?
Thus continued immigration not only fails to offer any long-term solution to the problem of making low-status occupations more attractive in British society; it also further demotivates and embitters ordinary white people who might be able to find satisfaction in this sort of work. Such people become double losers. To the basic problem of meritocracy - that the chances of social mobility decline as the most ambitious and able of the lower classes get siphoned off - is added the aggravation of seeing much of what does remain enjoyed by members of immigrant minorities. The white working class is not merely inferior now to the national elite, but can see newcomers leapfrogging over them into it. In schools, teachers come under great pressure to help immigrant children do well. This is seen as showing commitment to the values of meritocracy, overcoming "racism", and not least as helping the school to achieve state targets. Parents of white children may see that this sponsorship of newcomers is good for the country but they feel, all the same, that their children pay the price. The opportunities for social mobility are limited. If minorities are to enter the higher levels of society in sufficient numbers to redress communal imbalances and satisfy Cabinet Office scrutineers that "racism" is under control, then it seems bound to be at some cost of upward mobility among "poor white" children. It is almost as if the best thing that the latter can do for the common good is to perform badly at school and stay at the bottom of society.
Many people feel unable to talk about this, for fear of being condemned by the political class as racist. They sense a reversal of the traditional moral ground rule that commitment and loyalty to a system need to be rewarded with a stake in it. Especially since Labour's return to power, people have felt as though the rights of immigrants and potential immigrants - who have yet to enter the system or even to think about doing so - are given greater weight than those of families who have been here for generations. Instead of moving towards the centre of the nation as time passes, and as their families and community make contributions to the collective effort, groups feel pushed away from it. Yesterday's promises by the governing class are over- laid by today's, and these in turn are overshadowed by tomorrow's. So even recently arrived minorities may feel less favoured than those on the threshold. The faster that minorities are incorporated, the sooner they share in this creeping insecurity. As immigrants turn into settled minorities, they discover that they, too, are being sold a dummy.
If taken more than a little way, this argument leads towards exclusion. So it is important not to take it very far. People in minorities should have every chance to enjoy full membership of the nation, and access to the opportunities this entails. It makes no sense, however, to tell them that this will come about instantly. Most immigrants arrive hoping that if they and their families stay they will be able to work their passage over time and incorporate themselves fully into the nation - just as they are aware that in the meantime they may have opportunities elsewhere that are not available to the national majority. It is their willingness to trade between existing and potential advantages that brings newcomers into the nation in the first place and also constitutes their main value.
Most minorities appreciate that it will take time for their communities to get a firm footing in the system, and be in a position to take full advantage of it. It is time for policy-makers also to remember that exercising full, effective membership of a national group takes time, and there will always be groups with members less well integrated than others. A society consists of a great knot of overlapping and interlocking ties, interests and ideas which takes generations to weave itself, which is pulled by a diversity of purposes and values, and which cannot be reshaped or reconstituted at a stroke by a revolutionary elite. Where a nation has room and reason to expand, it may be able to retain its broad structure while rapidly incorporating many new members. But that is not true of Britain: until shortly before the Second World War, when the new class was starting to invent itself, Britain was seen as dangerously overcrowded and was mainly a country of emigration. So perhaps newcomers to Britain should expect to find themselves more, not less, confined within an existing social system and more subject to discrimination than those to other countries.
The postwar British elite has been keen to repudiate tradition and to insist on the purity of its own centralised and progressive mission. In this spirit it has frequently championed the rights of minorities over those of the national majority. I suspect that this strategy has helped to conceal limitations in its own utopian, meritocratic model by recruiting willing losers to prop up the lowest levels of the occupational structure, while compromising as racist protests from the disinherited masses. But a ruling elite cannot operate for long in such a one-sided way. Inclusive and exclusive principles of fairness each have constituencies and a part to play. Both need attention and, to hold a nation together, a political class must learn to balance competing claims. We must be thankful for signs that some in British government are waking up to this.
Geoff Dench works at the Institute of Community Studies in Bethnal Green where, with colleagues, he is researching into race and community. This essay is edited and extracted from the introduction to an updated edition of his Minorities in the Open Society, published this month by Transaction (£24.95)