Sunday, 16 September 2018

Andrew Neil or the Pedantic Style in British Journalism

There’s a pedantic style in British political journalism. It’s in the view that what counts is the letter and never the spirit of the argument. It’s in the obsession with the minutiae of pre-election spending pledges and their precise revenue sources. As if politics is really just a complex form of accounting and not about whose interests particular policies serve. This is not to say that politicians should get away with making up their figures. But where any sensible person looks at the spirit rather than letter of policy, BBC journalists can’t resist looking for either lies or errors in the sums.

The working assumption is that all human civilisation is the victim of some cosmic stupidity. Because ideas, values, and conflicts over the fundamental direction of society are precluded from their remit, they prefer to believe that politics is really about lies, errors, and blindness. Thus, if they didn’t see something coming, it must be because not only they - but all - were inevitably and unavoidably blinded. Hence BBC Daily Politics presenter and burly right-wing tribune Andrew Neil’s insistence on Twitter that nobody saw the financial crash of 2008 coming. Those who now claim to have seen it coming are fantasists, he says. 

Various people took up his challenge to name those who had spotted the disaster coming: the economist and anti-debt activist Anne Pettifor; the NYU economist Nouriel Roubini; the risk analyst Nassim Nicholas Taleb. Neil’s response was to deny that anyone had foreseen the specific conditions surrounding the Lehman Brother collapse. Imagine for a moment that this conversation was taking place at a dinner party or a restaurant. You’d rightly dismiss Neil as a bore and a pedant. Because what he’s pigheadedly refusing to do is respond to the spirit rather than the letter of the argument. 

Let’s take one particular warning about the financial system from 2005. Raghuram Rajan, at that time an IMF economist and later the head of the Indian Central Bank, argued that the growth of financial markets had created perverse incentives to take on greater ‘tail risk’, to ‘herd’ into similar investment practices, and to clutter up bank balances sheets with the costliest, riskiest debt. He also goes on to identify the increased funding issues associated with over-reliance on money market liquidity. Indeed, it was precisely the latter that dried up in 2007-08 and left banks cut out of the markets, unable to borrow or to lend. At a speech on the occasion of Fed Chair Alan Greenspan’s retirement, Rajan voiced his concern over the broader implications if trillion dollars of CDS (Credit Default Swaps, a product that provided insurance for debt holders in the event of default) being suddenly claimed if the mortgage market turned downward. He worried about the seizure of the money markets. Consequently, Rajan was dismissed as a Luddite. Tim Geithner, then chair of the Nee York Fed, declared he was ‘misguided.’

Rajan is not a radical - he was careful to couch his language in perfectly orthodox terms. His paper makes it clear that even in the narrow analytical frame provided by conventional economics, the conditions leading to the crash were perfectly visible.  Yet, rather proving the point of Andrew Neil’s interlocutors on Twitter, he was largely ignored, his position receiving little coverage in current affairs reporting or in the business press.

Neil’s point is that no one correctly predicted the date, time, and precise quantities involved in the Lehman collapse. It’s an attempt to deny the validity of deeper political reflection on the causes of the crisis, the cheerleaders for this kind of financial exploitation, and its treatment by the organisations like the BBC. It’s also a way of letting the moral universe of elite finance off the hook: they all appeared to be doing a good job.

A large content analysis of the BBC’s output, conducted by researchers at Cardiff University, found that the organisation’s business coverage was heavily slanted towards voices from the world of high finance. During the six weeks surrounding the collapse of Lehman even orthodox voices such as Rajan were invited to speak five time less often than representatives of business. There is no data on the politics of the academics in question, but the study suggests these were ‘mostly neo-classical economists.’ This suggests that there was little challenge to the dominant view of what was happening, why it was happening or how to respond. The BBC failed to hold the big banks responsible for the crisis accountable.

It did this in the belief that perhaps such crises really were just accidents - that no one could have seen it coming. That ‘the numbers’ just weren’t showing the underlying risk. But this is nonsense, nonsense that may perhaps help figures like Andrew Neil sleep at night. For the more circumspect, the lesson is that those few siren voices were looking at the broader horizon and could see the tsunami coming.

A review of the Cardiff research is available here:

Rajan’s text is here:

Saturday, 15 September 2018

Ten Years on from the Global Financial Crisis, Where Does Power Now Lie?

Financial saviours? Treasury Secretary Tim Geithner;
US President Barack Obama; and Federal Reserve Chair Ben Bernanke 

Review: Adam Tooze, Crashed: How A Decade of Financial Crises Changed the World

It is ten years since the great crash of 2008. Amid the retrospectives, thoughts are turning to the future. Presumably not wanting to throw the baby of financial profit out with the bathwater of dodgy practices, the Economist notes gratefully that regulation is receding while the riskiest sources of funding are curbed. Not everyone has been so measured: a ‘golden age’ of banking is once again on the horizon, according to Jamie Dimon, the CEO of JPMorgan Chase. Nevertheless, where banks were once left largely to their own devices, the Economist opines, now the whole business of regulation is unavoidably ‘politicised.’ Surveying the financial scene it is clear that little has really changed since the disaster of 08. For perhaps the world’s most influential pro-market serial or at least its oldest, the lesson of the crisis is that public ‘authority can expand’ to fill the private vacuum. This is, if anything, an understatement for what happened in the wake of the crash, when the US Federal Reserve arguably became the linchpin of the financial system and the political nerve centre of global capitalism, with profound repercussions.

Adam Tooze has written a compelling account of how this played out. Crashed: How a Decade of Financial Crises Changed the World tells a two-part story in many chapters: there is, first, a technical economic narrative based on the mortgage securities boom of the 2000s and its eventual, historic crash. Then there is the long story of the various geopolitical repercussions that have followed in its wake. It takes in the technicalities of money market funding, the botched crisis management of the Eurozone, China’s unprecedented fiscal stimulus, Russian revanchism, and - perhaps pivotally - the novel rescue efforts of the US Federal Reserve. 

This was not for Tooze a crisis of the ‘real economy’ - there is scant regard for the long term stagnation of wages that is familiar from leftist critiques of neoliberalism. Rather Tooze’s is a story whose backdrop, laid out in the opening third of the book, is a relatively apolitical technology of finance. The force that determines the fateful collapse of financial activity in 2007-08 is not, in Tooze’s telling, the acquisition of risky assets (mortgage backed securities or collateralised debt obligations, etc.) per se, but the liability or funding access of the big investment banks, which was heavily skewed towards short-term money markets and had largely divorced itself from the prosaic traditions of bank deposits and productive investment. What Tooze calls a ‘modern bank run’ involves large money funds simply refusing to lend to those whose balances are cluttered with risky debt. The panic led investors away from risk and straight towards Treasury bills, bunds, and other safe sovereign assets. This stampede out of private securities markets and into safe public sector debts was presided over by political regimes of varying technical ability and differing ideological baggage. In its turn this would decide whether an economy recovered (China), stagnated (the US) or burned (the eurozone).  

Tooze’s construction of agency is one of feedback between economic structure and political agency, with each driving the formation of the other. He is admirably critical of the type of technocratic governance produced by the neoliberal era, less so of its ontological assumptions. In its sheer technicality, it inevitably lacks reforming passion. Aditya Chakrabortty has accused the book of being ‘brilliant, but bloodless’. The criticism is largely misplaced; a certain forensic skill is inherent in the form. More apposite would be to say there is a certain entering into the Lebenswelt of those who made the crisis and a empathy with its particular Weltanschauung. It’s a cliche to say that empathy underlies historical understanding. Yet to impute a kind of Weberian critical method of Verstehen to the book would be to place a more complete emphasis on individual Zweckrationalitรคt than he really offers. At the project's base, and despite its insistence on the real centrality of great power politics, is an apolitical set of financial mechanisms that just... emerge. Perhaps what Tooze really shares with his subjects is a narrative framework of understanding in which politicians and officials improvise in the face of vast, unforeseen, and largely accidental conflagrations.  

On the spark that caused the bank runs and the liquidity crunch - or the widespread refusal of banks and financial institutions to lend - one could quibble with Tooze on a technicality. If these short term money lenders were refusing to lend to over-leveraged banks, they must have been doing so on the basis of certain signals. And all the signals suggested that the wave of mortgage defaults that was sweeping the US would soon hit the MBS markets. The funding model used by the banks was to borrow at relatively low rates from money markets and invest in higher rate securities. The trigger may not have been collapsing subprime securities, but the rising uncertainty caused by the obvious chaos in the US mortgage sector. Since the entire lending structure of the financial system – indeed, the investment structure of capitalism per se – is based on the psychology of expectations, any bank run will be caused not by present losses but precisely by expected ones. The funding collapse was no different. The system saw the defaults coming and anticipated its own demise.

At a less technical and more historical level, Tooze’s account implies but does not explore a critique of the political economy of homeownership in the US: the private mortgage system that had made two thirds of US citizens into property owners was not originally profitable. Thirty year fixed interest rate mortgages that could be refinanced at favourable rates meant ruin – especially in the era of high inflation – for the large system of small banks who offered mortgages in the postwar era. So government sponsored enterprises (GSOs) like Fannie Mae were created as public sector entities that would buy up mortgages from the small commercial and savings and loans banks. After the semi-privatisation of Fannie Mae during the fiscal squeeze of the Vietnam War, new revenue streams were found by selling on the mortgages as assets to investors. ‘Originate and distribute’ and the subsequent invention of mortgage-backed securities, which pooled mortgage products into high and low risk tiers, was in part a result of the search for profit in a lopsided and dysfunctional private housing system. 

This covers the asset side, but what about bank liabilities? Where was the cash sourced? Formerly respectable investment banks – Merrill Lynch, Goldman Sachs, Morgan Chase and so on – came to specialise in MBS, but what was their funding model? They had no depositors, so instead they would draw on pools of funds managed by the so called money market mutual funds (MMF). The role of commercial banks as middle men between those with cash and those willing to invest it disappeared. Wealthy individuals lent directly to the funds and these were drawn on by speculative investment banks. These were later joined by commercial banks following the abolition of New Deal banking regulations in the Clinton era. In this way, investment banks, commercial banks and mortgage lenders would break free of the patrician mortgage system of the New Deal era and build their business models around each stage of the MBS circulation system. The low interest rates of the early 2000s allowed this private circuit of capital to fully unleash its potential and to really dominate the semi-public GSEs. The move into subprime tranches of mortgage debt followed the break with the GSEs: the sale of ever more risky and exotic mortgage products was enabled by the growth of the ratings agencies as well as the spread of insurance facilities like credit default swaps (CDS), which covered the holder in the event of default. CDOs repackaged and reorganised “mezzanine” debt tranches so as to further spread the risk. The process of risk spreading itself was taken to warrant an AAA rating by the now infamous ratings agencies. 

The granting of AAA ratings to such assets may have been ill-considered at best, but that didn’t stop surging demand for assets from the newly globalised economic system. The trade surpluses of developing countries hoovered up Treasury bills. The large institutional investors of the financial markets were left with agency-rated private debt – especially MBS – to put on their books. Thus, Tooze argues, while everyone in the US worried that China would one day sell off its dollar-denominated Treasurys, the real risk went unnoticed: the huge growth of private sector debt in financial markets that was funded by extremely volatile and risk-sensitive money markets. The latter was, for Tooze, the “fully lethal mechanism” of the 2007-08 crisis. 

Tooze does not scrimp on the detail, but this is precisely what makes the book so useful for understanding the crisis. Banks would issue asset-backed commercial paper (ABCP) via special investment vehicles (SIV). This asset-backed paper derived its value from expected future cash flows from the assets issued by the banks and relied on the reputation of the bank itself. The assets were made up of debts such as student loans, car loans, mortgages and CDOs. Thus the funding of the banks – that is, their access to the liquidity that could keep the whole system moving – was reliant on the reputation of their assets unlocking short-term borrowing. The SIV could hold large amounts of riskier, higher yield assets while issuing ‘safe’, low yielding ABCP. The incentive was thus to expand the balance sheet and profit from the spread between the high yield assets and the low yield payments it made on ABCP. After 2004, Tooze explains, the SIVs that issued the ABCPs on behalf of investment and large commercial banks were required to hold just 10% of the capital that their ‘parent’ banks had to hold. The repo (or repurchase) markets were the ‘most elastic’ form of funding: investment banks would purchase a security and immediately resell it in a repo market. When reselling the security (often t-bills), it would commit to buying it back at a fixed price on a very short term basis – usually over night. Investment banks selling securities on repo markets would accept a cost (an interest payment as well as a ‘haircut’ or discount on its nominal value) in order to access liquid cash belonging to either other investment banks or to money market mutual funds. Tooze explains that in exchange for $100 million in Treasurys, a bank would receive only $98 million in cash. This meant that in the initial securities purchase the bank was accessing 98% of its funding via repo and fronting only 2% of its own capital. What would make the difference, however, was a sudden sharp increase to the 2% haircut, which would increase the bank’s own capital requirements. The risk for under-capitalised, over-leveraged banks is clear enough, yet the repo markets were not much monitored or regulated. When the haircut rose steeply, as it would in 08, banks were simply cut off from funding.

It was by no means only US banks that were involved in this process: as Tooze explains, the European financial system had by the mid-00s become an appendage of the US system. European banks held half of nongovernment money market funds by 2008 – a total of $1 trillion. It was often European assets that made up the collateral used by SIVs in the issuance of commercial paper. Tooze makes clear the extent to which Transatlantic finance is a fully-integrated, transnational system. Supposedly ‘inter-continental’ flows of securities purchases, ABCPs and repo transactions between the US and Europe would simply be moved from one Wall Street office to another. This was an extraordinary means for what David Harvey, echoing Marx, called the annihilation of space through time. Cross border bank claims between the US and Europe more than doubled in the boom of 2002 to 2007. Moreover, Asian money tended to go through Europe first before it entered the US economy. This was a global financial system with the US and Europe at its heart.

Yet it was regional policy responses which would determine the impact of the crisis. Indeed, it is in the rush to hold sovereign debt – and Europe’s failure to respond – that one strand of the eurozone crisis can be traced. As automatic stabilisers kicked in in the wake of recession (including unemployment insurance and declining government tax intake), public sector deficits naturally grew. Whether fiscally conservative or spendthrift, most governments were forced to borrow heavily. While other major central banks committed to buy up the glut of government debt that followed the recession, the ECB at first did not. Instead it extended favourable loans (LTROs) to banks and only in 2012 bought up bonds in secondary markets from financial investors themselves (OMT). Thus stressed European banks moved into sovereign debt, amply funded by ECB liquidity. The mild divergence in the yield (interest) on eurozone member states’ government debt was an initial spur. Greek bonds were denominated in euros, but earned slightly more than German bunds. It seemed like a safe enough bet. It was only as it became clear that Greece and Ireland were in serious debt trouble that the spread on government bond yields between the core of the eurozone and the periphery became problematic.

Less a question of scale, then, for Tooze, the 2008 crisis was really rooted in the peculiar conditions of the 2002-07 boom in mortgage securities lending – in particular on the funding rather than asset side. Once the refinancing boom of the early 2000s – sparked by Fed interest rate cuts – had burnt itself out, the hunt was on for the next big thing. AAA-rated MBS looked like the perfect bet: high yield, low risk, and seemingly ever-expanding. Even as the Fed gradually raised the rate in short term funds, long term rates failed to rise. But what emerges as the real spark of the crisis – the seizure of the money markets and the refusal to grant banks access to vital liquidity – is, as Tooze says, a matter of funding, not of mortgage defaults per se. Yet there was a wave of mortgage defaults, triggered by those whose rates had risen while their incomes had stagnated. The foreclosure wave had millions of victims. The job losses were in the real economy and had complex, secular causes that stretched back before the 2000s boom. 

Financialisation itself was rooted in the dollarisation of the world economy that took root during the Breton Woods era and was turbo-charged by the various shocks of the long 1970s – the Nixon Shock (ending the dollar’s gold peg and the system of fixed exchange rates); the oil shock (sudden, inflationary price hikes); and the Volcker Shock (a huge, sustained increase in interest rates to kill off inflation at the end of the 70s). The interconnections with the real economy are complex but the results are familiar: the weakening of organised labour; the decoupling of wages from productivity; the deindustrialisation of the Anglo-Saxon economies; a neo-Mercantilist Germany whose wage repression encouraged huge trade surpluses; the rise of China as the industrial engine of the world; the integration of dominant and subordinate economic groups of states into an extremely hierarchical, technocratic system of governance with central bankers at its head. The liberalisation of national economies and the ending of all kinds of capital restrictions put a fire under the development of a foreign exchange market (largely dollar based) that was already housed in the City of London. The need for dollars was pervasive and only more deeply entrenched by 2008. The most startling result of the crash was the revelation that the Fed was not merely a bit player, tidying up after the banks and smoothing the system, but was really the dominant player in the entire global financial order. Thanks to existing dollar exchange swap lines, Tooze explains, the Fed was quietly able to pump liquidity not only into US banks, but out into the entire world economy – and to an ailing Europe in particular.

There is a risk of course that such an analysis lapses into conspiracy theory. The Fed’s powers are, in a certain sense, quite accidental. Indeed, its own centrality to the global system was not officially recognised by its governing ideology. The Fed was supposed to finetune, to correct for certain imbalances, to lever this way or that by controlling the short term funds rate. When this didn’t work, however, it was clear that the capacity and willingness to intervene was there. When the private sector was unwilling to maintain the supply of dollars to the world system, it turned out there was one institution that could step in, perhaps without limits.

The latter has led to something of an epiphany among academics. Money, we have been reminded, is indeed political. In a clear break with the Friedmanite neoliberal era, the question of monetary governance is no longer seen as one simply of over or under supply. This is not to say that mainstream economists now want a break with the era of central bank independence. But for both left liberals and liberal technocrats, central banks are either the potential or really existing saviours of the financial system and the wider economy. 

There are several caveats to this: there can only be one Fed. Other central banks are not granted equal privileges. While the Fed can support the global system by its control of the dollar, others have more parochial concerns. They must use the old technique of mobilising their foreign reserves in the event of a currency run. There is also a question over the limits to which markets will tolerate central bank intervention in secondary sovereign debt markets to support governments’ fiscal deficits. And then there is the question of unaccountable, unelected power. In the enduring tension between economic governance and political accountability that characterises liberal democracies, the new role of a select few central banks represents an extreme kind of technocratic governance. Less the abolition of politics per se than its transference to corporatist, consensus-oriented, anti-popular elite institutions. Which inevitably provoked a backlash in the form of the extreme right of the Tea Party and the election of Donald Trump.

One wonders if what was needed in the crisis was not less politics but more. For a left liberal such as Tooze, the early moves of the Obama administration cannot but seem a missed opportunity. Had a bigger stimulus package been passed by the government – not as a technical rescue package but as a popular and populist measure to save the real economy – government would at least have taken the credit. Yet as Tooze rightly observes, the Obama administration was the inheritor of a kind of liberal macroeconomic orthodoxy. Though clearly capable of major interventions to rescue finance, it was ideologically incapable of a radical or popular break to the left.

Much of the rest of Tooze’s book is taken up with an account of the geopolitical response to the crisis. If the economics is highly technical, the politics is oddly conventional. There is nothing in the approach that could not be found in the liberal intergovernmentalist turn of 1990s international relations theory. Is there something of an elective affinity between Tooze’s left liberalism and the much more traditional, even realist assumptions of IR-influenced liberals like Moravcsik? Or is there a formal limitation of this kind of macro-economic narrative history? Then again, perhaps only a left liberal would attempt such a narrative history in the first place. The segue (or even gear change) from a structural and institutional analysis of the incentives driving the boom to, first, the improvised policy around the recovery and, finally, the subsequent social fallout may necessarily lack theoretical integration. The narrative Tooze has chosen to construct demands a focus on the strategic international environment of states, the actors who attempt to advance state interests, and the domestic, societal pressures placed on governments by interest groups. This is not necessarily a shortcoming: the sparse theoretical backdrop allows the substantial contrasts in state orientation to emerge all the more clearly. There can be no mistaking that China’s Keynesianism-on-steroids bucked the global trend and maintained growth across the entire world economy in the early 2010s. The eurozone’s catastrophic lost decade seems all the more self-imposed precisely because of its divergence from the US’s early monetary adventurism. The eurozone crisis itself emerges not as a matter of sovereign debt, nor even really one of underlying competitive imbalances between national economic blocs, but as failure of elite policy. 

Within all of this there is a hidden tension: Tooze does not regard trade and capital flows between national and regional economic units as of particular significance to the cause of the crisis. He dispenses with the conventional macroeconomic focus on national accounts, competitive imbalances, and exchange rate fluctuations. The global system as an integrated whole was in crisis. Therefore, a supposedly deracinated policy elite emerges as the central bloc of actors who are responsible for crisis resolution. And yet throughout, these responses are conditioned by regional, and yes, national and state-level views as to the scale, nature and policy implications of the crisis. Again and again the individual actors are situated in national and regional contexts. In the midst of the crisis, intergovernmental bargains once again come to the fore. The sublime world of smooth financial flows, market signals, and ‘market-conforming’ interventions is brought clattering down to earth – first, via the coarse, improvised intrusions of the rescue efforts and second, by the difficult realisation that national and sectional interests would reassert themselves against the ‘technocrats’.

Still, there is a stark lesson in all of this: the existential threat to the neoliberal order does not emanate wholly ‘from within' –that is, from those famous ‘internal contradictions’ of the capitalist system –but from the political reactions (and reactionaries) it produces. Tooze’s book points above all to a new era of intensified political competition. And indeed, for progressive challengers to the old hegemony, it is not necessarily the economic or ‘structural’ sphere that poses a threat to real reforms, but the politics of the thing. For all that the book is a measured critique of the weaknesses of the policy elite, it is quite comfortable with the machinery of the political world that has emerged from the crisis. After all, if the Fed can literally rescue the global financial system through liquidity provision, it can probably fund a long-term deficit that would finance public goods like universal healthcare. So long as a central bank is willing to keep up sovereign bond purchases, there is no reason that government debt should experience a sudden loss of value and a spike in yields. Insofar as a radical government will rely on an expansion of public debt, this is a strangely reassuring thought. Yet the crisis has also revealed the autonomy of central banks and may even have generated in them a sense of their own institutional responsibilities and interests. It is unlikely that no conservative political pressure would be brought to bear on, say, the Bank of England if there were to be a radical left Labour government. The key lesson of the book for those who do want to reform capitalism is that they may be more reliant on the loyalty of these institutions than they would comfortably like.

Tooze has produced a dazzling account of the decade of crisis that has shaped the world in which we now live. In the struggle to understand and to change that world, the book will be helpful, though not perhaps in the ways radicals might hope. As a technical description of the financial crisis it is unmatched. As an account of political action, we must hope it is not exhaustive.

Friday, 31 August 2018

On the IHRA definition of antisemitism

The Labour Party is going to have a National Executive Committee (NEC) meeting on 4th September at which members will try to resolve its antisemitism debate. All signs so far point to the adoption in full - including highly contentious ‘examples’ of what may count as antisemitism - of the International Holocaust Remembrance Alliance (IHRA) definition of antisemitism. The leadership looks isolated and many NEC members probably want the whole scandal to go away. Yet acceptance of the IHRA definition would be a dispiriting result to say the least.

Both Jewish groups critical of Israeli policy and Palestinian civil society groups have issued independent letters asking that Labour not adopt the definition on the grounds that certain of its examples could be - and indeed are - used to prevent criticism of the Israeli occupation of Gaza. According to the groups, the definition has been used to attack the Boycott, Divestments and Sanction (BDS) campaign, which aims to diplomatically and economically isolate the Israeli regime while it continues to keep Gaza under occupation. According to IHRA’s supporters, BDS unfairly targets Israel and holds it to a standard not expected of other ‘democratic states.’ Of equal controversy is the example contained in the IHRA definition which states that holding ‘a state of Israel’ to be a ‘racist endeavour’ is a denial of Jewish right to self-determination and therefore itself racist.

What is the IHRA definition? Adopted in 2016 by the Alliance, it is legally non-binding and intended as an aid to governments and institutions which have to judge what constitutes antisemitism. Its central definition holds that antisemitism is ‘a certain perception of Jews, which may be expressed as hatred towards Jews.’ It gained rapid recognition - a European Parliament resolution in 2017  called on EU member states to adopt the definition. Yet as ever in arguments over Israel-Palestine, dissenting, pro-Palestine voices are being marginalised and ignored.

Arguably no definition of antisemitism could divorce itself from the complex interrelations between Jewish identity, the state of Israel, and other types of identity. But the definition risks clear politicisation by eliding any separation between Jewishness and the Israeli state. It’s worth restating: many of the examples of antisemitism contained in the definition are uncontroversial. The definition itself - though relying on the unhelpful modal ‘may’ - is not all that problematic. While it focuses on expressions of hatred, it is clearly an attempt to not preclude subtler, pernicious expressions of antisemitism. Where the trouble arises is in some of the substantive examples of what may count as expressions of antisemitism. 

If one accepts the principle of self-determination (and whatever the value of the term, its peculiar historical origins, or its uneven application), it is still clear that such a principle will in practice be contradictory - where one claim for self-determination conflicts with another. This is the case with the Jewish right to self-determination in Israel and the Palestinian right to self-determination on the same territory. Leftist Jewish groups outside of the scope of Zionism never wanted to found a Jewish state, let alone one in Palestine. Would the definition mean that Jewish and non-Jewish socialist and anarchist groups who disagree with the very Wilsonian concept of self-determination are de facto and by definition antisemitic? Even if one accepts the elision of Israel with Jewishness - that is Israel’s encapsulation of what it is to be Jewish in the form of a state - what would the definition mean for the right of self-determination of non-Jewish people? 

The same example suggests that the belief that ‘a state of Israel’ is ‘a racist endeavour’ is a denial of Jewish self-determination. Not only does the example elide the distinction between Jewishness and Israel, it also makes support for Jewish self-determination conditional on support for the actually existing Israeli state. Its choice of the indefinite article - ‘a’ not ‘the’ - may be an attempt to deal with this ambiguity. Not only this state of Israel, but any. Does this therefore permit the accusation that Israel is indeed a racist state? Because precluding such an argument amounts to the erasure of history - that is, it would permit only the ahistorical critique of current Israeli policies and not a broader critique of Israel as a settler colonial project. By analogy, it is possible to hold that the USA is at once a liberal democratic state and a settler colonial state based on a history of racism, colonial expropriation, slavery, and segregation. It is not ‘anti-US’ to believe this, let alone evidence of prejudice against its people. There is a range of types of criticism of Israel - including legitimate criticisms of its bloody foundation and long history of repressive Palestinian policies - that is not antisemitic. Clearly criticisms which limit themselves only to immediate government policy will be of only the most moderate kind since that cannot, by definition, take in broader structural and historical critiques of Israel as a violent state project. Holding these critical views does not at the same time mean holding Israel to unfair standards.

The latter brings us to the second contentious example: the IHRA definition claims that holding Israel to unfairly high standards not expected of ‘other democratic states’ may be antisemitic. Again there are highly contentious claims here. One has to accept the central claim that Israel somehow embodies and gives voice to Jewish opinion and that therefore its deep hypocrisies are less expressions of a particular state project than the expression of some collective Jewish will. This is precisely the wrong way to think about democratic legitimacy, which derives from the state’s accountability to its people. Where Israel fails on counts of democracy, including in its disenfranchisement of Israeli Arabs, its systematic segregation of Palestinians, its refusal of the right of Palestinian return, and its occupation of Gaza, it should clearly be criticised. This is not a case of holding Israel to unfair standards, but simply holding it to widely accepted democratic standards. This is why BDS is so important: it highlights and campaigns against the Israeli state’s special claim to be a democracy when it so often betrays those principles.

The definition and its supporters often claim that to single out Israel in this way is unfair since presumably in their eyes no state lives up to its democratic values. This may be true, but is nevertheless a deeply cynical, bad faith argument. Israel is a close ally of European and western governments. It is therefore important that Europeans be able to put pressure on their governments to hold its ally Israel to account where it violates international law and democratic principles, which it does in a systematically racialised way with regards to Palestinians. For those for whom Israel’s actions are indeed of special political and emotional significance - Palestinians themselves, pro-Palestinian Jews and Israelis, people of Palestinian descent and so on - what does it mean  for governments around the world to hold your special criticism and personal investment in Israel’s actions as themselves antisemitic? The implications for pro-Palestine activism are obvious.

All of this comes of course in the context of Labour’s long antisemitism row. There is antisemitism on the left - I’ve seen it online, from people in and outside the Labour Party. I’ve called it out in the past. But there is no evidence that Labour members or voters are more antisemitic than anyone else in British society (the contrary is the case), nor is there any evidence that rates of antisemitism have increased among Labour members, despite the tripling of Party membership since Jeremy Corbyn became leader. This should be reassuring for those of us who are concerned about antisemitism and do believe it is a problem that must be solved with the Labour Party in a leading role.

But at the same time, there is a clear political question to be answered, one that forms the pivot of the current debate in Labour: do we turn a blind eye to the systematic, historical and structural racism of the Israeli state and government towards Palestinians in order to make criticism go away? This argument has been grinding on for three years and only got worse. The Labour leadership and those of us on the left should make it clear where we stand: an Israeli state which abides by international law and a Palestinian people with their own right of self-determination respected. This demands that Israel’s history as a settler colonial state be criticised.

Israel itself can and must be distinguished as a separate actor from Jewishness more generally. Israel can be defined as having distinctive state interests that have little to do with Jews as a people or as a religion. It is precisely because we want to treat Israel as just another state that the  IHRA definition should be rejected. The left and progressives more broadly are rightly critical of other states’ histories of racial and colonial domination - it should be no different in the case of Israel.

Thursday, 10 May 2018

Can the left talk to the "white working class"?

Professor Green in the documentary
Working Class White Men

Matthew Goodwin, a Professor of Politics at Kent University, and co-author with Robert Ford of the seminal study of UKIP, Revolt on the Right: Explaining Support for the Radical Right in Britain (Routledge: 2014), spends a lot of time on Twitter sharing data that proves two things: one, populism is durable and deeply rooted in European electorates and two, European social democracy is dying for wont of an adequate response. Alongside this is a nagging insinuation: if social democracy wants to survive, it needs to appeal to working-class voters' deep, durable concerns about security, immigration, and cultural change. More often than not, it is one section of the working class in particular that is seen as the driver of populism, Brexit, and Trump: the white working class.

If it didn't invent it, Goodwin and Ford's book certainly popularised the phrase the "left behind" as a descriptor, first, of UKIP voters and then of the majority that voted for Brexit in 2016. Goodwin's prominence may advert less to his own brilliance, than the total inadequacy of prevailing political science to account for something like Brexit. This is not to insult Goodwin's achievement. More than anyone else - at least on Twitter - he has made Brexit at least loosely comprehensible to centrist commentators and concerned liberals. He is also a voice of sanity compared to the #FBPE crowd, a singular reminder that Brexit won and that no polling shows any evidence that it would not win again. A new centrist party, he argues, would almost certainly fail against the challenges of Britain's First Past the Post electoral system - and there my be deeper causes for its failure than that. In his view centrist voters are spread too thinly across the country to have significant impact on electoral results. But perhaps more seriously, centrism cannot call on any deep cultural attachments in order to wield together an electoral alliance. It is a permanent tabula rasa which rarely sustains complex political cultures for any period of time. Moreover, converting one of the existing major parties - the likely candidate being Labour - to a Remain position would spell electoral disaster for similar demographic and geographic reasons.

Goodwin's weaknesses are also what make him understandable to an 'educated', often 'liberal' and politically informed readership. His story about Brexit - and about European populism more broadly - is one of "preferences". This is a term he falls back on on occasion to explain what Brexit means to people who still struggle to comprehend why it happened. In a recent podcast he depicts populism as a "reaction" by working-class voters against the liberal era that started in the 1960s. It has been gestating since the 1970s and has gradually captured more of the concerns of more conservative, settled populations. "Preferences" come - presumably - from "interests" and allow political scientists - I suppose - the advantage of grouping sections of society by what they are supposed to want. They are useful to political science because they are measurable. Even if preferences themselves are not rational they can be rendered meaningful by rational inquiry. They can be inserted into systems of competing interests and the conflicts between them can be easily explored. But something is missing, something captured by the Freudian word "desire." All of political science is some kind of answer to the terrifying question, "What do the masses want?" What is terrifying for polite society here is not the answer to the question, which can be pretty mundane - faith, flag, nation, and all the rest - but the need to know. What liberals are looking at when they look at the "working class" is, in Freudian terms, a fear of their own impotence, their own inability to know, their own inability to control and direct the working class. This is why so often "the masses" appear in political science not as rational actors but as a mute blob of inchoate prejudices which must be rendered visible and comprehensible to reason.

One of the more glorious spectacles of the aftermath of the 2017 General Election was the sight of Matthew Goodwin eating his own book on live television after predicting the Labour Party would fail to reach 38% of the vote. Political science will, it turns out, eat itself. For all his credentials on populism, Goodwin had missed something about it. He had missed how an apparently unappealing, marginal left-winger could tap into a seam of anger in British society and articulate it to left-wing ends. Goodwin has dedicated a good deal of effort since to proving that Corbynism is a "blip", a perverse outcome of a flawed electoral system. This is another weakness of political science: when the analysis fails, it blames a system which prevents "preferences" from attaining their natural expression. Goodwin is ultimately right that the Labour electoral coalition is fragile and split down the middle on Brexit, but he is far from understanding what on earth is holding it together.

A typical left response to Goodwin's invocation of the "white working class" is more or less to deny its existence. This is a sure sign of failure of analysis - though this time on the left's part. The standard argument goes like this: materially speaking - that is, at the most authentic level of its existence - the working class is multi-racial or (which is really the opposite) it knows no race. There are internal cleavages within the working class, which are related to greater and lesser degrees of exploitation on the basis of citizenship, property, skill sets, racialisation, gender, and so on. Thus, there are racist layers of the working class, though they are really the minority. These layers tend to be richer, older, more propertied, and whiter - or perhaps on their way out of working class-dom altogether. The first problem with this view is that it neglects a principle lesson of Marxism: class is relational and is not only about material conditions but about how identities are articulated between different social groups. What the working class is at the level of some unmediated material reality is less important than how it is articulated through a given set of social relations. If the working class is not merely a material thing - if it is composed internally and externally of social relations - then it must be multi-racial and it must logically contain a white section. To the extent that some are racialised as non-white, some must be racialised as white. And while it's true that "in normal times" whiteness is invisible, times are rarely normal.

But for all that, the "white working class" should not be abstracted from its peculiar conditions of existence. Whiteness is a badge - often of citizenship, or of ownership, or of rights and respect - which allows certain people access to things they wouldn't otherwise get. Historically, the working class has been partially racialised as white. Its multi-racial character has been half-buried. The welfare state and the postwar settlement were heavily, if only implicitly, coded with whiteness. It was paid for partly out of the legacy of imperialism, the sterling zone, colonial export markets, and the pound's reserve currency status in the commonwealth. The left is rightly very cautious about using the term "white working class," but that does not mean there are not people - many people - who will identify in this way. To acknowledge this is to acknowledge a difficult fact about the society in which working class-ness is embedded. There is, then, always a left-wing struggle within the working class to convert it to anti-racism.

Goodwin's work, then, does pose a serious practical problem for the left. Even in the wake of the Windrush scandal, there remains widespread support for the "hostile environment" policy against immigrants. Although concerns about immigration have lost some of their intensity since the Brexit vote, we should not see this as the success of anti-racist movements but rather an increase in the feeling that the state is now "on side." Nor will racism subside because a left-wing Labour government manages to redistribute wealth downwards for the first time in decades. There is a fear on the left that if we talk about the "white working class", we might just conjure it into being, ignoring that it already exists as a settled social fact. But there is also the opposite tendency - the tendency of Blue Labour, occasionally Paul Mason, and sometimes Goodwin himself - that if we just talk about the white working class enough, they'll come round to us, they'll realise we aren't all "Tumblr liberals" obsessed with identity and safe spaces. We have to realise here that the increasingly explicit whiteness of a section of the working class is a product of a non-material "identity" turn in politics as a whole. I don't mean this in the sense Angela Nagle means it, that is, that identity politics is just bad and is the demon spawn of social media. We can't just get back to class politics, as if identity politics never happened and as if Brexit is not itself a matter of culture and identity as much as economics (as Goodwin has rightly said). 

Being white and working class doesn't make someone racist. But we also need to be aware that those who talk up whiteness, who see something in whiteness per se that is worth celebrating, generally do so out of a sense of grievance. The danger, then, is the left becomes hectoring, insisting that poorer white people experience their loss of status in an age of multiple forms of insecurity as a loss of their historical claim to privilege in the form of their whiteness - the lack of the lack in Lacan's terms. The job is not to abolish whiteness but to displace it, even to disperse it, and to substitute it with something else.

In Professor Green's documentary Working Class White Men there is a nice scene where a teenage model is on his way to Japan for his big break. Professor Green asks the young man if anyone in his family has ever been to Tokyo before and he says, "We go on English holidays - to Tenerife - and we stay in the resort and watch the entertainment. That's all we do." It is a familiar enough description of the English abroad, but is it necessarily or exclusively a white one? Well, perhaps, yes, actually. Indeed the issues that Green catalogues - unemployment, criminalisation, absent dads - are not the preserve of white people. Yet, in a society in which a certain culture of whiteness became synonymous with working class life, the disappearance of manufacturing jobs and the communities built around them is experienced - partially at least - in racialised terms. The experience of economic decline is over-determined by cultural, political, and - crucially - inter-generational factors. It is the latter - the continuities and discontinuities of generational heritage - that weight these experiences towards racialised and nationalistic conclusions.    

It is this over determination of lived experience that suggests a workable left strategy can only be developed out of a return to theory. The theory of hegemony in the left tradition, from Gramsci to Stuart Hall, is the best alternative I know of to the bland "preferences" and "interest groups" of political science. Hegemony is about how power always incorporates subjects, pulling them into its orbit and inducting select groups into situations of relative privilege at the expense of others. It is a necessarily cultural process, but one that does not do away with material matters. Indeed, in the process of building hegemony, we find the material and ideal in constant relations of mutual determination. The primacy of one over the other in actual social formations is never finally established.

Building an effective counter-power - "counter-hegemony" - involves articulating diverse groups into a formidable political will. The success of socialist and social democratic parties, trade unions, and social movements in the past suggests that "preferences" are not just givens but are formed through political activity. This is not to say that the preferences of white people - or of anyone - are infinitely malleable. Only that there is potential for apparently settled views to be shifted - however slightly - over time and through experience. The task is ultimately to find ways of making that happen through political action.

Sunday, 4 February 2018

There Is No Outside of Ideology: A Quick Note on What Everyone Should Already Know About Politics

A truism on the left, but widely misunderstood beyond it

There has for a long time been a view that bad politics is “ideology driven” and good politics is “policy driven”. Bad politics is ill-informed and emotive; good politics pragmatic and founded on a what-works attitude. Or as one Twitter user put it, left and right are ideological; the centre is nice people doing the best they can for stupid people. Politics is reduced to a set of technical procedures - a profession.

So I thought I’d outline the view, commonly accepted in the social sciences, that all politics is ideological. This sort of discussion can get very jargon-heavy and this can cloud some of the basic consensus that exists out there, so I’ll state it as simply as possible and won’t use obscure terms. A further caveat is that this will involve necessarily sweeping generalisations about what the “hard sciences” do and what the “social sciences” do. But I intend this to lay a common basis for further discussion, not to be the final word.

The belief that all politics is ideological can be justified in the following ways.

  1. Society is not the same kind of object as a plant, a solar system, or an atom. When photosynthesis is described, the description does nothing to affect the internal structure of the process. Society is not like this for two reasons: I) the observer of social processes (an individual academic) is an immediate product of the processes they are observing - every individual comes from a particular society and a particular background within that society so how they understand society will be structured by this ii) society itself is influenced by our conceptions of it - for example, the more economists tell us we are utility maximising, self-interested consumers, the more we will come to think of ourselves in those terms and adjust our behaviour and expectations of others in line with those terms. Description of society changes the object it describes.
  2. The above subject/object distinction (between scientific observer and the object of society) does not remove the basis of scientific enquiry, but places the two in a dialectical relationship. The latter just means that subject and object are mutually constitutive and the back and forth between the two leads to a process of continual, open-ended change: our observations about society change society itself, and these changes then impact on us and change our observations about society. 
  3. Society consists of different groups with opposed interests - different groups with different stakes in society struggle over how society should be organised and to whose benefit. Moreover, the way these groups construct what is in their interest is not the foundation of politics, but is the actual stuff of politics. In other words, groups don’t exist in a simple relationship to their “rational self-interest”, but rather build specific conceptions of what is in their interest through political struggle with other groups. This means that politics involves a struggle within social groups over how to define and pursue different interests as well as a struggle between social groups. Social leadership is not just about domination but also about building consent - and part of this is the struggle within and between groups of how interests are defined (this is the meaning of the popular notion of “hegemony”).
  4. Since politics involves building conceptions of the interests of different, opposed groups, all social science work is political - that means simply that it is related to the composition of particular interests and participates, however indirectly, in the process of building and legitimising particular ways of thinking about society. There is no neutral position outside of ur superior to politics (contra much political science)
  5. Social objectivity does exist but not in the way that nature exists - because social objectivity is a set of relations which are constantly open to change by different types of social actors. No empirical observation describes a simple matter of social fact, but operates with specific assumptions about how society works and will reinforce or undermine assumptions about society. That said, society is not infinitely plastic: Society is composed fundamentally of relations among social actors. These relations can be reorganised, but that takes real effort and long processes of material and discursive struggle.

By now it should be clear why the attempt to classify some politics as “ideology-free” is the purest gesture of ideology. The ultimate victory of a social group depends on its ability to “naturalise” its world view. That is, to make its way of going about pursuing its own interests as simply the natural order of things.

None of this is to say we cannot make empirical observations about society in the way we can about nature. It is only to say that in the social sciences a statement is always more than merely empirical. This is because individual statements take on a fuller meaning when integrated into a broader discourse. So to say “society consists of individuals” may be an empirical statement, but its discursive meaning only becomes clear when we place it in a broader context. For example, when the statement is taken in the Thatcherite sense of “society consists *only* of individuals (and families)” (I.e it does not consist of classes). All empirical statements therefore appear in a wider discursive context and this context accounts for part (but not all of) the meaning. That “society consists of individuals” is not a matter for the social sciences, unless it comes with broader assumptions (which, of course, it always does). These broader assumptions can always be contested and this is the sense in which politics - even at its most scientific - is about struggles between different ways of building and articulating the interests of opposed social groups.

This raises the question of what scientific as opposed to ideological thinking is. I’m of the view that scientific thinking is a highly specific variant of ideological thinking - that is to say, scientific thinking is ideological thinking but executed under carefully controlled conditions and with carefully and explicitly defined assumptions. In other words, the goal is not to expunge the ideological from the scientific, but to make the ideological presuppositions of science explicit. 

To be clear, then, acknowledging your own ideology and its active role in shaping your politics leads to better politics as a whole. There is no “outside” of ideology. There are only various critical relations to ideology. Not to boast, but the fact I come from a very clear ideological background - and am aware of it - does not make me less self-critical but clarifies the basis of self-criticism. I come from a Marxist background and know full well the dangers of Marxist dogma. What about you? If your answer to that question is, “I have no ideology” then you’re probably a centrist dad. 

Tuesday, 28 November 2017

The Left Should Celebrate Its Marxist Heritage

People on the left need to stop insisting there is a large gulf between their “common sense” policies and some radical spectre called Marxism.

This sort of thing reached a nadir a year or so ago when John McDonnell couldn’t get on TV without being asked if he was a Marxist. To be fair to the Shadow Chancellor, he didn’t exactly deny Marx’s influence on his thinking, but listed a range of socialist and non-socialist economists on the left who are part of his outlook. The real problem was when parts of left Twitter responded by @ing Andrew Marr with Tweets claiming the question was analogous to asking David Cameron is he was a Nazi. This is a bad take on many, hopefully obvious levels. 

Recently it has cropped up again in response to increasingly unhinged allegations by a visibly ruffled right wing press that the nation’s youth has fallen to communism. You don’t have to be a Marxist to raise corporation tax to 25%, but being a Marxist certainly helps. This is because contemporary Marxist economics is full of interesting, heterodox analysis about how modern economies work and it’s increasingly easy to take that theory and build policy out of it.

Publicly disavowing Marxism’s influence on the contemporary left might seem expedient in the short term. But it won’t stop accusations of communism. And if anything we should respond by saying yes, indeed, most Marxists would agree that we need to raise corporation tax. But they’d also go further and say we need de-commodified public goods and public spaces, and the right to democratic control over economic life. We should be insisting that Marxism shares a lot with popular common sense. 

This is not to say that most Labour members or even Momentum members have any interest in the finer aspects of dialectical materialist philosophy. But some of the basic presuppositions of Marxism - that we live in a class society, that there are values which exist outside of market commodification, that the image of homo-economicus does not come close to explaining human nature - are a part of the texture of progressive politics around the world. And today, Marx is being reimagined for the modern world.

This hasn’t always been true: for a time after the fall of the Soviet Union, there didn’t seem to be much life in the vast body of Marxist political and economic theory. History’s most powerful and influential anti-capitalist theory had somewhat fallen by the wayside. But no more. Take the SOAS economist Costas Lapavitsas, for example. Lapavitsas is as influenced by Rudolph Hilferding’s Marxist work on financialisation as he is by the infamous German philosopher himself. A basis in Marxist value theory and, in particular, Marx’s theory of money has spawned one of the most innovative and comprehensive analyses of the contemporary conjuncture. Lapavitsas, in collaboration with the Keynesian Heiner Flassbeck, is also a trenchant critic of the monetary arrangements of the Eurozone. 

Or take the range of conceptual innovations of David Harvey, who has recast Marxian theory as a critique of geographically- fixed processes of accumulation. Or even Lapavtisas’ fellow Greek economist Yanis Varoufakis, whose work is eclectic but nevertheless underpinned by a specifically Marxist conception of value formation under capitalism. Both Harvey and Varoufakis contrast exchange value (or the value of marketised goods) and use value (or the real human needs and desire that exist regardless of the market). Out of this they have produced compelling and exciting theories about how our contemporary world works. There is nothing as thrilling or true to be found in orthodox economics as Harvey’s notion of “accumulation by dispossession.” This is Harvey’s way of talking about the continual recourse to violent expropriation which underpins the ‘norms’ of market processes. Anyone confronted with the darker underside of the bright and gleaming capitalist market - a netherworld of lawless super-exploitation - will recognise Harvey’s description. The dismantling of social protections and the continual destruction of people’s mode of existence is here explained as a prerequisite for capitalist exchange value creation.

Marxist political economy is both more accessible than orthodox economics and truer to the world in which we actually live. Fundamentally Marxism sees society as divided into classes and these classes must struggle for control over socially produced goods. Wealth is primarily social wealth and is only individualised by relations of production, the institutions of the state, legal forms, and ideology. Of course, it paints a simple picture of a complex reality - just like any theory. But its basic components - of groups defined by their relation to the means of production, wealth, and the state - allows even in its simplest form for a far richer picture of the world than orthodox economics. For most orthodox economists we have only individuals with their utility maximising self-interest, firms with their innovative drive for profit, and governments with their bias for public choice. This is a world without passion or conviction or many of the things that make us complex - it is a world without politics.

There are limits and shortcomings to Marxism. The less said of its so called orthodox variant - endorsed by the Comintern during the Cold War era - the better. And it is true that the left must always be aware of the intellectually moribund and outright dangerous, anti-democratic strains of Marxism which led to Stalinism. Just as extreme nationalism, colonialist imperialism, and environmentally destructive consumerism developed in part out of the classical liberal worldview, Marxism can become dangerous if it is not rooted in the daily lives and democratic movements of the broad mass of people. 

Moreover, some more heterodox Marxism can still be at least potentially theoretically reductive. Even the work of great political Marxists like Ellen Meiksins Wood can sometimes appear to reduce ‘non-economic’ forms of exploitation such as misogyny to hangovers from past modes of production (however useful they may be to capital). Rather than seeing misogyny and other forms of oppression as vital components of the contemporary capitalist system, Marxism can sometimes depict them as secondary to the ‘foundational’ forms of class exploitation which are inscribed in the capitalist mode of production itself. Of course, the simplified Marxist model of a capitalist mode of production cannot be mapped onto really existing societies without taking account of all their complexities.

It would also be wrong to argue that the left should be exclusively Marxist to the neglect of other traditions of critique of capitalist society - from anarchism to the more critical end of post-Keynesianism. Just as in real life, theory should constantly cross-pollinate in order to remain vital. 

The left risks internalising the anti-intellectualism of the British right, which has always argued that theory is “irrelevant to the real needs.” We should not be doctrinaire in our thinking, but nor should we allow self-styled ‘moderates’ to get away with the claim that they are merely practical solution-seekers. It is the old right which clings desperately to an outdated ideology, while the left is - finally - moving with the times. 

The right wants to turn Marxist into a pejorative. It wants to foreclose fundamental arguments about the nature of the societies in which we live and to make its own worldview appear as a reflection of the natural order of things. Most of all, it wants to neutralise the threat of a newly-powerful left which is finally - hesitantly - finding its voice. The left should not only embrace its Marxist heritage, but celebrate its radicalism.