Pay up: a banner outside St Paul's Cathedral during the Occupy London protests. Photo: Rex/Matt Lloyd
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Risky business: Peter Wilby on Owen Jones’s The Establishment

Jones is excellent on how the state, supposedly rolled back, has just changed its nature so that, as big as ever, it has become a creature of capital, controlled by the corporate sector.

The Establishment: and How They Get Away With It 
Owen Jones
Allen Lane, 358pp, £16.99

When Lehman Brothers collapsed in 2008, sparking the deepest recession in at least 70 years, it seemed that the end of neo­liberalism, even of capitalism, was close. This was the biggest market failure in history, largely attributable to the dismantling of regulatory structures that had once restrained bankers, traders and speculators. We had long been told by neoliberals that markets were super-efficient vehicles for allocating resources and that, left to themselves, they would deliver prosperity for all. Surely nobody would believe that any longer? Surely the merits of the state, so long reviled as a meddlesome enemy of enterprise and initiative but now compelled to step in and rescue the masters of the universe, would at last be recognised? Surely governments would take control of banks and perhaps other commanding heights of the economy as Labour Party pioneers envisaged? Surely bankers would lose their lavish salaries and bonuses? The party was over, wasn’t it?

It wasn’t. On the contrary, almost nothing changed. What had gone wrong, we were told, was not the market but the state. Its reckless overspending, particularly on welfare, was responsible for the crisis. Governments, not private companies, had borrowed too much. The pain was inflicted on families with modest incomes while, for bankers, the champagne continued to flow. Neoliberalism’s cheerleaders scarcely paused for breath. In 2011, the Institute of Economic Affairs, one of Thatcherism’s original outriders, published a report calling for public expenditure to be cut by half. The state’s main policy response to the crisis was to create more money through quantitative easing (QE) and to give it not to ordinary consumers but to financial institutions. As the Bank of England admitted, the main beneficiaries were those who already held most assets: according to one estimate, the richest 10 per cent gained £322,000 each up to 2012, while the poorest 10 per cent lost £779 each.

How was all this possible? How do the rich in general and bankers in particular get away with it? That is the question Owen Jones attempts to answer. In this, despite thorough and admirably vivid reporting, he only partly succeeds. He is excellent on how the state, supposedly rolled back, has just changed its nature so that, as big as ever, it has become a creature of capital, controlled by the corporate sector. As Jones shows, British capitalism is highly dependent on state largesse and rich corporations are the biggest scroungers of all.

Rail, arms, nuclear energy and (post-crisis) banking are examples of industries that receive big state subsidies. Companies such as Atos, A4e, Serco and G4S make substantial profits from supplying outsourced state services, which do not offer obviously better value for money than when the state ran them. Under the private finance initiative (PFI), hospitals and schools pay large “service fees” to private companies. Chunks of the NHS are now, in effect, being privatised and, if the Tories are returned to power, schools cannot be far behind. Lawyers, accountants and consultants are richly rewarded for drawing up the complex contracts that govern these arrangements.

Jones is good, too, on how the business and political elites have become inter­twined. Donations to party coffers and sponsorship of party conferences and ministers’ pet projects (such as academies) are the tip of a sizeable iceberg. In the first ten months of this coalition government, ministers met corporate representatives 1,537 times against just 130 meetings with trade unionists – and that excludes chats on the phone and informal contact at conferences, parties and dinners. Former ministers and top civil servants take up board positions or consultancies with the same corporations they dealt with in office. Ministerial advisers and quangocrats, many of whom used to come from academia, trade unions and consumer groups, are increasingly from the corporate sector. Big accountancy firms help to design tax policy and then advise clients on how to get round the rules. The tax collector, HMRC, has developed cosy relationships with those same firms so that, according to the Tax Justice Network campaigner Richard Murphy, the global financial elite has “captured” both the writing of tax laws and the policing of them.

One of Jones’s interviews was with Douglas Carswell, the right-wing Tory MP who recently defected to Ukip. According to him, Britain is now corporatist rather than capitalist, with “big business and big government getting together and carving up a large slice of the economic pie for their advantage”. Together, they form a new establishment. This establishment gets away with it, Jones writes, because it has a cohesive ideology supported by a media that is largely controlled by corporate interests. Any proposal to clip its wings is “bad for business” and so bad for jobs and national prosperity. New Labour, despite its mildly redistributive policies, was much loved by the business sector because it accepted the establishment’s ideology, along with its cleverly twisted language in which the words “vested interests” mean workers and unions, while “reform” and “modernisation” mean handing over public services to unaccountable private capital.

Yet neoliberalism has palpably failed to deliver the goods, except to an ever-richer elite. Most voters recognise this and, as polls show, support a cap on energy prices, for example, and renationalisation of some essential services. So why aren’t protests against government policies louder and more insistent? Why isn’t blood, at least metaphorically, running in the streets?

This is where Jones doesn’t go quite deep enough. What is missing from his account is how the masses were also captured by neoliberalism and how they bought in to capitalism to such an extent that it became all but impossible to escape. Margaret Thatcher said in 1981 that her aim was to change “the heart and soul of the nation”. The greatest tribute to her success, as she often observed, was that the Labour Party eventually accepted her agenda. In effect, she abolished the British working class, making a working-class lifestyle, in the conventional sense, unsustainable.

This was not only because her economic policies hastened the decline of the manufacturing industries that had provided stable employment. Her legislative programme diminished the unions, which were not only the main instruments through which workers protected and improved their living standards but also the vehicles through which their leaders could emerge, acquiring skills that might lead to parliament and ministerial office. Her discounted sale of council houses, coupled with increased council house rents, transferred more than a million families into the property-owning bourgeoisie. Her abolition of credit controls and weakening of mutualised building societies undermined long-standing habits of financial prudence. Her privatisations compelled families to “shop around” for basic services and seek the best “deals” if they were not to be ripped off.

The same privatisations lured millions, if only temporarily, into owning shares. So, more indirectly, did the destruction of defined-benefit pension schemes, which, along with the abolition of a state second pension (known as “Serps”) and a revised formula for annual state pension rises, left many dependent on the money markets to ensure a secure old age. Thus, almost all of the structures that once gave security to working families were stripped away, forcing them to participate, however marginally, in the individualistic risk-taking of capitalism. The alternative was to drop into what became known as the “underclass”.

Almost everyone above a certain age now trembles at a fall in house values, watches bond and equity prices anxiously and frets over interest rates. Everyone feels locked to some degree in to the neoliberal economy, knowing that, if it crashes, those of modest wealth and income will lose proportionately far more than the plutocrats who exploit them. That explains why the 2008 crisis didn’t lead to a revival of the left, which was in any case woefully short of coherent answers. On the contrary, by exposing the fragility of capitalism, it made most voters keen to avoid further jeopardy.

Yet politics, like most things in life, is cyclical. Contrary to the “end of history” thesis, nothing lasts for ever. The under-thirties do not care about falling house prices or crashing stock markets because they do not have a stake in the neoliberal economy and see little prospect of acquiring one. Owner-occupation has fallen sharply; the proportion of shares owned by individuals is far lower than it was 50 years ago. Members of this generation have nothing to fear and much to gain from steep falls in asset prices. From them, in time, will come support for a new economic order, provided that the left (or even the centre) can produce convincing alternatives.

Jones recalls how, throughout the 1950s and 1960s, neoliberals were dismissed as fantasists and dreamers. Only through the patient marshalling of their case, skilful manipulation of the media and assiduous wooing of politicians, opinion-formers and rich donors did they eventually turn the tide. Paradoxically, it is to their story that the left must now look for hope and inspiration. 

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 03 September 2014 issue of the New Statesman, The summer of blood

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A swimming pool and a bleeding toe put my medical competency in doubt

Doctors are used to contending with Google. Sometimes the search engine wins. 

The brutal heatwave affecting southern Europe this summer has become known among locals as “Lucifer”. Having just returned from Italy, I fully understand the nickname. An early excursion caused the beginnings of sunstroke, so we abandoned plans to explore the cultural heritage of the Amalfi region and strayed no further than five metres from the hotel pool for the rest of the week.

The children were delighted, particularly my 12-year-old stepdaughter, Gracie, who proceeded to spend hours at a time playing in the water. Towelling herself after one long session, she noticed something odd.

“What’s happened there?” she asked, holding her foot aloft in front of my face.

I inspected the proffered appendage: on the underside of her big toe was an oblong area of glistening red flesh that looked like a chunk of raw steak.

“Did you injure it?”

She shook her head. “It doesn’t hurt at all.”

I shrugged and said she must have grazed it. She wasn’t convinced, pointing out that she would remember if she had done that. She has great faith in plasters, though, and once it was dressed she forgot all about it. I dismissed it, too, assuming it was one of those things.

By the end of the next day, the pulp on the underside of all of her toes looked the same. As the doctor in the family, I felt under some pressure to come up with an explanation. I made up something about burns from the hot paving slabs around the pool. Gracie didn’t say as much, but her look suggested a dawning scepticism over my claims to hold a medical degree.

The next day, Gracie and her new-found holiday playmate, Eve, abruptly terminated a marathon piggy-in-the-middle session in the pool with Eve’s dad. “Our feet are bleeding,” they announced, somewhat incredulously. Sure enough, bright-red blood was flowing, apparently painlessly, from the bottoms of their big toes.

Doctors are used to contending with Google. Often, what patients discover on the internet causes them undue alarm, and our role is to provide context and reassurance. But not infrequently, people come across information that outstrips our knowledge. On my return from our room with fresh supplies of plasters, my wife looked up from her sun lounger with an air of quiet amusement.

“It’s called ‘pool toe’,” she said, handing me her iPhone. The page she had tracked down described the girls’ situation exactly: friction burns, most commonly seen in children, caused by repetitive hopping about on the abrasive floors of swimming pools. Doctors practising in hot countries must see it all the time. I doubt it presents often to British GPs.

I remained puzzled about the lack of pain. The injuries looked bad, but neither Gracie nor Eve was particularly bothered. Here the internet drew a blank, but I suspect it has to do with the “pruning” of our skin that we’re all familiar with after a soak in the bath. This only occurs over the pulps of our fingers and toes. It was once thought to be caused by water diffusing into skin cells, making them swell, but the truth is far more fascinating.

The wrinkling is an active process, triggered by immersion, in which the blood supply to the pulp regions is switched off, causing the skin there to shrink and pucker. This creates the biological equivalent of tyre treads on our fingers and toes and markedly improves our grip – of great evolutionary advantage when grasping slippery fish in a river, or if trying to maintain balance on slick wet rocks.

The flip side of this is much greater friction, leading to abrasion of the skin through repeated micro-trauma. And the lack of blood flow causes nerves to shut down, depriving us of the pain that would otherwise alert us to the ongoing tissue damage. An adaptation that helped our ancestors hunt in rivers proves considerably less use on a modern summer holiday.

I may not have seen much of the local heritage, but the trip to Italy taught me something new all the same. 

This article first appeared in the 17 August 2017 issue of the New Statesman, Trump goes nuclear