From the Archive: Paul Johnson on the Know-Nothing Left

The historian and journalist Paul Johnson made his name writing for and then editing (1965-70) the New Statesman, but gave up on socialism in the 1970s and became a Thatcherite. Here, in a piece first published in the NS of 26 September 1975, he derides a Labour Party in hock to the “fascist” anti-intellectualism of trade unionists. After Margaret Thatcher’s landslide victory in 1979, he became a leading adviser on union policy and a powerful pro-Tory polemicist.

The biggest change that has overcome the British socialist movement in my time has been the disintegration of Labour’s intellectual Left. The outstanding personalities who epitomised, galvanised and led it are dead and have never been replaced. I am thinking, for instance, of G D H Cole, whose activities covered the whole spectrum of working-class activism and whose voluminous writings constituted a summa theologica of left-wing theory and practice; of R H Tawney, who placed the modern Left firmly in a long historical context and who endowed its philosophising with enormous intellectual and literary distinction; of R H S Crossman, who brought the bracing austerities of reason into the grossest skulduggeries of practical politics; and, above all, of Aneurin Bevan. The majesty of Bevan’s contribution lay in the fact that he transcended classes and categories – a working man with the instincts and capacities of a philosopherking, a man of action with a passion for reflection, a romantic devoted to the pursuit of pure reason, and an egalitarian obsessed by excellence.

Around these, and other, great planets swam many scores of satellites, collectively constituting a huge left-wing galaxy of talent and intelligence.

And where do we find the left wing of the party today? Without a struggle, with complacency, almost with eagerness, it has delivered itself, body, mind and soul, into the arms of the trade union movement. There is a savage irony in this unprecedented betrayal, this unthinking trahison des clercs. For Labour’s intellectual Left had always, and with justice, feared the arrogant bosses of the TUC, with their faith in the big battalions and the zombie-weight of collective numbers, their contempt for the individual conscience, their invincible materialism, their blind and exclusive class-consciousness, their rejection of theory for pragmatism, their intolerance and their envious loathing of outstanding intellects. The whole of Cole’s life was devoted to demonstrating, among other propositions, that trade union organisation was not enough, that there was a salient place for the middle-class intelligentsia in the socialist movement, and an essential role for didacticism. What Labour lacked, argued Tawney, was what he termed “the hegemonic way of thinking”: it concentrated on the base trade union aim of sectional gains for its own members instead of trying to create a new moral world.

Bevan, though a trade unionist, never regarded trade unionism as a substitute for socialism – in some ways he thought it an enemy, indeed a part of the capitalist system. He fought bitterly against the attempts by the TUC to determine Labour policy in conference and to usurp the political role in government. He believed passionately that Parliament was the instrument of strategic change, and its control the political object of social democracy – he would have resisted at all costs the brutal threat of a syndicalist takeover. Crossman put the anti-union case a little more crudely: what invalidated the TUC claim to control Labour was its sheer lack of brains and talent. Hence his notorious article pointing out that only five trade union MPs were fit to participate in a Labour ministry. For this heinous heresy he was dragged before the inquisition and, just as Galileo was forced to recant his heliocentric theory, Dick was made to pay public homage to the dazzling genius of his trade union “friends”. Afterwards, he said to me: “There was only one thing wrong with my article – I should have written three, not five.”

In those days, it was a dismally common event to see a left-winger stretched on the rack of trade union power. Intellectuals from Stafford Cripps to Bertrand Russell were the victims of drumhead courts-martial conducted by the union satraps. Yet today the leaders of what is hilariously termed the Left look to the unions as the fountainhead of all wisdom and socialist virtue. Mr Michael Foot, a Minister of the Crown, will not stir an inch unless he has the previous approval of the TUC General Council. Mr Eric Heffer, Foot’s doppelgänger and cheerleader on the back benches, regards any criticism of British trade unionism as a compound of high treason and the Sin Against the Holy Syndicalist Ghost. Did this gigantic U-turn come about because the trade union bosses have undergone a cataclysmic change of heart and transformed their whole philosophy of life and politics? Not a bit of it. It is true that the general secretaries of the biggest unions no longer, as in [Arthur] Deakin’s day, pull the strings from behind a curtain, but prefer to strut upon the stage of power themselves. It is true, also, that they inspire more genuine fear than they did 20 years ago, as their crazy juggernaut lurches over the crushed bodies of political opponents. In other respects, however, their metaphysic has not altered: it is still a relentless drive to power by the use of force and threats.

The union leaders still regard money as the sole criterion of success and social progress. They are prime victims of what Tawney, in Equality, called “the reverence for riches, the lues Anglicana, the hereditary disease of the English nation”. Blind to the long-term, to the complexities of the economic process, to the well-being and rights of other human beings – blind, in fact, to what Tawney called “fellowship”, to him the very core of the socialist ethic – they see the whole of the political struggle in immediate cash terms. The other day one of them said he would not hesitate to bring the entire publicly owned steel industry to a halt, and throw perhaps hundreds of thousands of his “comrades” out of work, unless he was offered “more money on the table”, as he put it. Asked if he would heed the activities of the government conciliation service, he said he was not going to take advice from those he contemptuously referred to as “college boys”.

Indeed, one of the startling characteristics of modern British trade union activists is their systematic dislike for intellectual and cultural eminence and their hostility towards higher education. Here a great and deplorable shift in attitudes has taken place since the 19th century. To me, the saddest newspaper report of recent years was a survey of the miners’ clubs of South Wales, which revealed that their large, and often rare and valuable, libraries of political books and pamphlets had been sold off to dealers in order to clear space for juke-boxes, pintables and strip-shows. Part of the price the left wing of the Labour Party has paid for its alliance with the trade union bosses has been the enforced adoption of a resolutely anti-intellectual stance. If miners prefer strip-shows to self-education, the argument runs, then so be it: that the collective working masses express such a preference in itself invests the choice with moral worth. Anyone who argues the contrary is “an elitist”.

“Elitist”, in fact, has become the prime term of abuse on the syndicalist Left; it heads the list of convenient clichés brought on parade whenever the Eric Heffers put pen to paper, or give tongue. It is a useful bit of verbiage to be hurled at those who, by any stretch of the imagination, can be accused of criticising wage-inflation, strikes, aggressive picketing, the Shrewsbury jailbirds, the divinity of Hugh Scanlon, “free collective bargaining”, differentials, overmanning and other central articles of syndicalist theology. And equally, anyone who pays attention to quality, who insists on the paramountcy of reason, who does not believe the masses are always right or that the lowest common denominator is the best, and who considers there are more things in heaven and earth than are dreamt of in the philosophy of a Mick McGahey or an Arthur Scargill – well, he or she can be dismissed as an elitist, too. Crossman, Tawney, Cole, above all Bevan, would have been given short shrift today – elitists, the lot of them.

It says a great deal for the power of the syndicalist Left in the councils of the Government, and even in the immediate entourage of Harold Wilson (who, secretly, is one of the outstanding elitists of our time), that anti-elitism has, to some extent, become official government policy, at any rate in the sphere of higher education. Our universities used to be autonomous, and for all practical purposes exempt from state control or guidance – a very elitist and reprehensible state of affairs! But all this is now being changed as the financial cuts begin to bite and the University Grants Committee progressively takes up its role as the Government’s instrument of supervision. Earlier this year, Reg Prentice, one of Harold’s innumerable Education Ministers, sneeringly told the universities to “live off their fat” and, if necessary, “sell their art treasures”. Direction of the anti-elitist policy has now devolved on the Prime Minister’s personal academic henchman, Lord Crowther-Hunt. In an earlier incarnation he was Dr Norman Hunt, an assiduous gatherer of Westminster anecdotage with a fashionable prole accent, who made himself useful to Harold Wilson and other Labour magnificos. His reward has been a peerage and ministerial charge of higher education.

The new anti-elitist spirit in the realms of higher education both complements and echoes the alliance between the trade unions and Labour’s know-nothing Left. Away with the ivory towers! To hell with expensive research which ordinary people can’t understand, and will probably come to nothing anyway. The job of a university is to turn out field-grey regiments of “socially relevant” people, with the right egalitarian ideas, the capacity to learn by heart the latest fashionable slogans, and to march, shout, scream, howl and picket as and when required. Degradation of the universities, of course, would fit in neatly with the syndicalisation of the Labour Party, since the ideal student – according to the anti-elitists – is one who conforms as closely as possible, mentally, emotionally and culturally, to a union militant. The operation is part of an uncoordinated but nevertheless impressive effort to proletarianise the educated classes, and to smash to bits what are venomously referred to as “middle-class values” (such as honesty, truthfulness, respect for reason, dislike of lawbreaking, hatred of violence, and so forth).

It is by no means confined to students. At a recent conference of local authority education officials, a former headmaster and university vice-chancellor had the temerity to attempt a half-hearted defence of elitism and was promptly denounced, by a yobbo from Glamorgan, as “an educational fascist”. But students are the prime targets of the anti-elitists because they can be so easily organised into Rentamobs by Labour’s syndicalists and their allies (and future masters) even further to the Left. As all totalitarian rulers have discovered, once you have hacked away the logical and rational foundations on which the edifice of civilisation rests, it is comparatively easy to invert the process of ratiocination, dress up the results in verbiage, and sell them to thousands of apparently well-educated people.

A typical example of anti-elitist Newspeak is a dissenting minority report of a Yale Committee on Freedom of Expression, appointed after left-wing students smashed up a meeting addressed by William Shockley in 1974. The overwhelming majority of the Yale academics concluded that disruption of a speech should be regarded as an offence against the university, and one which could lead to expulsion. The dissentient, speaking for the Left, argued that free speech was both undesirable and impossible until there had been “liberation from, and increased self-consciousness of, the social and irrational factors that condition knowledge and pre-form the means and structures of language”. Hidden in this ugly gobbet of verbiage is the thoroughly totalitarian idea that the meanings not merely of words but of moral concepts must be recast to conform to political expediency – the very essence of Newspeak. The example is American; but there are plenty of parallels over here, not always expressed quite so naively as by the Essex student leaders who refused even to discuss an “independent report” on their activities, for which they had clamoured, on the grounds that “reason is an ideological weapon with which bourgeois academics are especially well armed”!

When reason ceases to be the objective means by which civilised men settle their differences and becomes a mere class “weapon”, then clearly the anti-elitists are making considerable progress. How long will it be before the books are burning again, and the triumph of the “Common Man”, that figment of violent and irrational imaginations, is celebrated by another Kristallnacht? Already, at the extreme fringe of the syndicalist Left, the aggrosocialists are taking over public meetings, with their ideological flick knives and their doctrinaire coshes. Not long ago, hearing and seeing a group of students and trade unionists giving the Nazi salute, and shouting “Sieg heil!” at some very stolid-looking policemen, I shut my eyes for a few seconds, and tried to detect the redeeming note of irony in their chanting. For the life of me, I could not find it. What differentiated these mindless and violent youths from Hitler’s well-drilled thugs? Merely, I fear, the chance of time and place, a turn of the fickle wheel of fortune.

Unreason and thuggery are always the enemies, whatever labels they carry; for labels are so easily removed and changed. I remember Adlai Stevenson – an elitist if ever there was one – saying wearily: “Eggheads of the world unite, you have nothing to lose but your yokes.” Perhaps it is time for the elitists to stand up for themselves – there may not be so few of us, either – and start the long business of rescuing the Labour Left from the know-nothings and the half-wits.

 

Master and the masses: Tony Benn (foreground, second right) leads a march in London, May Day 1975. Image: Getty

This article first appeared in the 23 September 2013 issue of the New Statesman, Can Miliband speak for England?

Getty
Show Hide image

We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?