Standing in opposition to the dominance of privilege

Being aware of one’s own privilege doesn't detract from the struggle - working to ameliorate its effects can only enhance what we are trying to achieve.

At risk of sounding recursive, I’d like to highlight problems with a New Statesman blog entitled “The problem with privilege checking”. Its author, Tom Midlane, won the privilege lottery, and reckons that we should stop highlighting problematic language and behaviour displayed by those with the luxury to not have to think about it, as it lets the right dismantle the welfare state while we’re not looking. 

Now, first of all, let us acknowledge that this exact assertion is very much untrue. The wheels have been in motion for a long time, long before the coalition came into power. None of these things happened because the opposition was too busy arguing over privilege to do anything else; they happened because we live in a system which is set up to benefit the people with the privilege. It doesn’t help that the tactics which may have historically worked - the marches, the boycotts, the coordinated letter-writing campaigns - don’t really work so well any more, as time marches on and the system develops resilience to these approaches. 

As it stands, those in power are comfortably conserving their social order, and making themselves a little more comfortable at the expense of everyone else. This must be opposed. All of it. Yet by avoiding checking our own privilege, the best possible outcome is that the social order will continue to be conserved, with those at the top taking less from everyone else. 

For those who benefit from the existing social order - the white, able-bodied, cisgendered, heterosexual middle-class men - this is enough. For many of the rest of us, it really, really is not. A lot more needs to change before we stop facing oppression, and that revolution begins in the mind. The conservatives are happy to dismiss this pressing need and continue doing what they are doing without a care in the world for the people that will be harmed. For the most part, it is not malice that motivates them, but sheer negligence. They just don’t care.

Those of us standing in opposition to this dominance cannot and must not fall into the same trap, or we run the risk of creating something which is merely another movement representing the interests of the privileged. This movement can never be as strong as the dominant order, as the majority of its target audience will inherently be part of the dominant order. So we need to do things differently. 

Far from detracting from struggle, being aware of one’s own privilege and actively working to ameliorate its effects can only enhance what we are trying to achieve. We must be willing to be radically different from those in power if we are to avoid alienating those less privileged than ourselves. It is utterly urgent that we listen to those who we claim to be fighting for and avoid contributing to any continuing oppression. Without getting our own house in order, we are coming from an inherently weak position.

Oppression is far more than hate speech. It is insidious, it comes in the form of words and deeds which we were unaware could ever be a problem. The effect of negligence can be exactly the same as the effect of malice. It is our responsibility to mitigate these effects: ultimately, I too hope for the day to come where we no longer call upon one another to check privilege. For me, this will only happen when my allies in social justice are doing this for themselves. 

In reaching this understanding, we will be far, far stronger. It is interesting that the phrase “fighting with” carries a double entendre. At present, it is a struggle against resistance from those unwilling to rescind their own privilege and act in solidarity. However, “with” can also mean “alongside”. And in the future, I hope that we all fight with each other a lot more.

 

"Fighting with" can also mean "fighting alongside". Photograph: Getty Images
Ralph Orlowski / Getty
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Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

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