A crash course in financial crises, Britain’s missing voters and Prince Philip’s secret socialism

Peter Wilby’s First Thoughts column.

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If August’s stock-market panic turns into a full-blown financial crisis – and, as I write, that seems possible but far from certain – it will be the sixth of my lifetime. Only four such crises seriously affected Britain in the whole of the 19th century. An even more telling point is that the first crisis I lived through, in 1973, brought to an end 44 years of relative stability, the longest such period since the 18th century.

Capitalism is dynamic but inherently unstable, as the phrase “creative destruction” suggests. After the crash of 1929, governments across the western world, guided by John Maynard Keynes, found ways of lessening the instability while retaining much of the dynamism. In 1973 Keynesianism began to unravel. Though the crisis was caused largely by a quadrupling of oil prices, the ruling elites agreed that capitalism had lost too much dynamism and that the rewards for enterprise had become inadequate. State controls on markets were relaxed, as were controls to prevent the rich hogging too much wealth and income. This new economic regime became what we now call neoliberalism.

Assuming the 2015 panic doesn’t prove to be what the stock market calls a “correction” (a 10 per cent fall in equity prices), 42 years of neoliberal crises – with one every seven years, on average – will have followed 44 years of Keynesian stability. That, neoliberalism’s defenders would argue, is the necessary price for the creativity released by a more dynamic capitalist order.

It depends on what you mean by creativity. In the period from 1929 to 1973, goods such as cars, refrigerators, washing machines and televisions became accessible to almost everybody in the industrialised world. The past 42 years have given us Twitter, Facebook, Ashley Madison, stag parties in Vilnius, the M25 and Rupert Murdoch’s satellite dishes. You decide.

 

Pain in the assets

During one stock-market crash, a fellow lefty told me cheerfully that he wasn’t affected because he didn’t buy and sell shares. I asked if he had money in a pension fund. He did. There was a long and thoughtful silence when I explained that his pension money must be invested in shares and bonds. Though the greatest benefits of neoliberalism go to an elite, it has cleverly given enough people enough of a stake in its success – mainly through property and pensions – to make them fearful of disruption to the system and reluctant to elect politicians who propose to transform or even to tinker with it.

Yet falls in asset prices are good news for those who don’t already own shares or houses, which now includes most people under 40. If, for example, shares fell 20 per cent, it would be a good moment for young people to invest in a pension fund, which could then buy cheap shares on their behalf. A 20 per cent fall in house prices would be even better news. The mainstream media, however, treat stock-market crashes and even small falls in house prices as events only slightly less alarming than a tsunami.

 

Turning up the turnout

Pundits tell us that if Labour is to win the 2020 general election, it must woo signi­ficant numbers who voted Tory in 2015. Lib Dem and Green voters, they say, are ­insufficient to overturn Tory majorities in all but the most marginal seats. There is, however, another source of potential voters: the 34 per cent who were on the electoral register but didn’t vote in 2015.

Many are young, poor or black. Some are all three. It now seems to be accepted that a 70 per cent turnout is unattainable in a UK election. Yet all but three of the 13 general elections from 1950 to 1992 had turnouts above 75 per cent. If turnouts can be restored to that level – and I am discounting those who are not even registered – an extra three or four million non-Tory voters, in addition to 3.5 million voters for the Lib Dems and the Greens, would be available.

One reason to back Jeremy Corbyn in the Labour leadership contest is that he is the only candidate who shows the smallest sign of being able to, or even wishing to, persuade such people to go down to the polling stations. Is there a late pro-Corbyn swing in this column? Watch this space.

 

Weather or not

My late father, a Conservative, was always irritated when he saw advertisements from what were then nationalised industries such as gas and electricity on commercial television. Why, he asked, shouldn’t public corporations do their advertising on the BBC without charge?

I wonder what he would have made of the BBC parting company with the Met Office. The two once fitted nicely together, the national broadcaster and the national weather forecaster combining to give reliable information. Now they are driven apart by the relentless advance of commercial imperatives. The Met Office must get the highest price for its services; the BBC must put services such as weather forecasting out to tender, seeking “value for money”. Tory MPs aren’t entirely happy, worrying that what was once part of the Ministry of Defence will fall into foreign hands. Nobody seems at all concerned about whether the public will get a better or worse weather forecast.

 

Corbyn and the consort

Reading another volume of David Kynaston’s brilliant history of post-1945 Britain, I find the following, quoted from Harold Macmillan’s dairy: “I don’t altogether like the tone of his talk. It is too like that of a clever undergraduate, who has just discovered socialism.” A meeting with a young Jeremy Corbyn? No, Macmillan had been talking to Prince Philip at Balmoral in 1957, where Her Majesty’s consort apparently revealed himself to be against Britain having nuclear weapons, thus putting himself somewhere to the left of Aneurin Bevan. Perhaps Corbyn, a republican, should swallow just one principle and seek an alliance with the prince, creating a big tent that even Tony Blair never dreamed of. 

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 appears in the 27 August 2015 issue of the New Statesman, Isis and the new barbarism