2008 was the right's 1989 - this is how we can build a new economy

We should personalise, rather than privatise, property. 

NS

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All the handwringing and outcry over the outrageous outbursts of Donald Trump and his promised intentions for the future, however self-righteous in tone, will do little in confronting the greater problem behind his election. And that problem is now reflected in most advanced industrialised economies.

The Trump phenomenon cannot be entirely separated from the causes behind Brexit and the so-called New Populist movements in much of Europe and other countries across the globe. This amounts to the crisis or breakdown of the democratic consensus that has influenced the politics of the enlightened world for 200 years. That consensus may be defined as the resolution of issues through the left/right divide, or between Haves and Have-nots, or between conservatism and the call for radical or socialist-inspired change.

Such old ideological belief systems are no longer workable. Society has undergone a total transformation over the past 60 years. In no advanced industrial economy does there remain the old-style proletarian mentality in conflict with a proud middle class intent on retaining its privileges. This is because such a middle class no longer exists. The forces of egalitarianism, through democratic legislation and changes in the world of work, have created a new middle majority, where the political will or power should be expressed through the ballot box, but unfortunately is not. The irony to be observed is that this egalitarianism is complemented by the contradiction of an increasing polarisation of wealth at the bottom and apex of society.

If a true proletariat may be said to still exist, for example in run-down industrial areas which regeneration has not yet reached, it remains a small fraction of the electorate. The majority of what constituted a proletariat 60 years ago are now entrenched within the new middle majority. Contemporary middle-class values reflect economic circumstances, rather than personal choice. And these values amount to an increased individualism in meeting the demands of greater occupational differentiation, and varied property responsibilities that hardly existed before. Hence today it is absurd to maintain class warfare in the sphere of politics. The consequence of all these changes is a discontent amongst the majority in all advanced industrial economies, which in turn leads to political apathy, the desertion of mainstream parties and the failure to cast a vote.

Most politicians are fully aware of the situation as described above. Their response has been to promote a pragmatic political approach. This has not led to a happy outcome, but rather a self-delusional, if not openly deceitful attitude. Tony Blair and his cohorts were amongst the most successful and the most disastrous of the pragmatists when they embraced “Thatcherism” on their election to power in 1997. Our politicians remain trapped woefully between two evils, irrespective of their feelings or intellectual comprehension of the true situation. 

This brings us to the core of the problem. If the panacea of the left was finally discredited worldwide with the fall of the Berlin Wall in 1989; it may equally be contended that the panacea of the right was finally discredited worldwide with the banking debt crisis in 2008. And yet mainstream political parties at both ends of the spectrum failed miserably to respond to either of these crises. The greatest need of our time, therefore, is to politicise issues that hitherto have avoided the commentator radar screen. That is, the financial-industrial system must be subjected to close political analysis.

The right have stood by so-called privatisation with an unthinking and superstitious belief (all the while misinterpreting the principles of their assumed mentor, Adam Smith). Meanwhile, the mainstream left since the post-war period have foolishly eschewed any interest in the nature of capitalism, and have instead concentrated all their thought and energy on social reform and justice. But the financial-industrial system and globalisaton as presently structured is: 1) polarising both wealth and property ownership; 2) unaccountable and outside intentional human control; and 3) beyond the responsibility of any effective democratic mechanism.

The above allegations are made evident by the worldwide human crisis. In the United States, it is the middle majority who are the economically oppressed through the collapse of mortgage arrangements, both domestic and business, urban and rural. In Britain, it is the younger generations who are saddled with student debts and the inability to gain a foothold on the lowest rung of the housing ladder. Similar examples abound in Continental Europe and the megacities of the Third World. The hyper-inflation of land and property values, and the extortionate rates propelling it, is the major economic issue of our age.

The only meaningful and practicable alternative is to be found through the personalisation of property. This calls for the increase of smaller-scale property ownership, which often contributes to greater efficiency, and certainly to a better competitive environment and to more innovation. Company law would need to be amended to allow share ownership in conjunction with seniority within the company structure. The share ownership rights of employees would need to override those of external investors in safeguarding jobs against undesirable downsizing or outsourcing.

Giant industrial enterprises that do not easily lend themselves to size reduction, such as shipbuilding, auto manufacture, chemicals, and mining, should seek ultimately 100 per cent home-based ownership to protect their best long-term interests. Others might opt to convert into cooperatives or similar organisational bodies, providing their commercial viability was not compromised. Home-based industrial enterprises in the UK could be financially supported by stock exchanges in Birmingham, Edinburgh, Cardiff and Belfast, thus leaving London to handle other international trading transactions  as desired.

Smaller enterprises would be supported, as presently in Germany, Japan, and other Continental countries, by specialised industrial investment credit banks. Such banks would need to import the skilled labour of our European neighbours in creating an entirely new type of funding institution. Such an industrial system would maximise productivity in a way that benefits the consumer, instead of simply an investor's profits. 

The present system, sometimes called “Neo-American", but more strictly described as the rentier economy, is self-destructive through its extreme usury, as well as through its polarisation of wealth. The system proposed, a productive economy, more equally distributes wealth throughout society. And the health of democracy has always gone hand-in-hand with a smooth-running and prosperous business environment

If President Trump is to be confronted, and if the questionable rightist movements in Continental Europe and elsewhere are to be neutralised, we must make radical reforms to our financial-industrial systems. No amount of moralising on the failures of the establishment, or the fallibility of human nature – and certainly no attempt to revert to outdated ideologies of the past - is likely to turn things round for the better. But if serious attempts were made to establish such reforms, then I believe the likes of Trump and Marine Le Pen would melt as snow with the advent of spring. 

Robert Corfe is the author of the 3-volume work Social Capitalism in Theory and Practice.