The US State After Trump

In the strange stasis that characterises US domestic politics, it can often seem that nothing really changes. There may be  changes in personnel, but none that threaten the state’s higher, imperial purpose. Yet, some things have changed in the wake of the Trump ascendancy. The tone of US politics has irrevocably shifted. There is now an unavoidable intensification of political competition, even if establishment Democrats would like to fight on the old, more technocratic terms. Insurgents on the left, in multi-ethnic urban centres, are having a genuine electoral impact, while the dinosaurs of the old Right are having their way with the judiciary. Trump is less the manager of this process than a peculiarly omniscient observer, maintaining a constant, hyperventilating stream of consciousness whose effect is not to assert control, but merely to nudge the colossus this way or that.

Still, there has been little evidence of a legislative drive behind the bluster. No major new laws have been passed. No grand authoritarian initiatives have begun to restructure the state apparatus. There is no visible loss of civil liberties (unlike the Bush era), nor any large restructuring of welfare to make it more coercive and punitive (unlike the Clinton era), nor any marked intensification of technological warfare (unlike the Obama years). If Trump is more openly authoritarian than his predecessors, he is largely reliant on a state structure inherited from them. 

Take the case of Brett Kavanaugh. Distinguished only by his extreme odiousness, Kavanaugh is an exemplar of the princeling status of the US capital class. From an elite all-boys prep to law at Yale, Kavanaugh appears to have left a trail of sexual abuse and personal trauma on his way to the pinnacle of conservative lawmaking. His appointment to the Supreme Court in the face of extraordinary civil opposition marks a turning point for conservative politics. As with so much in US politics, the initiative is not in the traditional legislative centres - the House of Representatives and the Senate - but in the complex web of interlocking state institutions. The Supreme Court is where the real initiative lies: a lifetime seat endows its members with power over the most contentious constitutional and social issues in the US. Now with a conservative majority, abortion rights, LGBT rights, and environmental rights are all under severe threat.

It is being heralded as a rare victory for Trump, but this project to overturn hard won social rights stretches back long before him. Indeed, US conservatism has long recognised the de facto discretionary power of the US legal system and made it - rather than Congress - the focus of its activities. This may be canny strategising by the right, but it highlights the extent to which the US diverges from the norm of a functioning congressional democracy. For those who care about such things (and they may be few), it is increasingly difficult to argue that the future decisions of the Supreme Court will be in any sense democratic. In what sense is its composition representative? How do its decisions command consent? What is the mechanism by which they can be held to account? Mouldy US constitutionalists will talk of the division of powers, but this is - now more than ever - a shibboleth. There is no effective division of powers if the legislature ceases to function and power is concentrated in an unaccountable judiciary with a job for life. 

It must by now be clear to all but his most fervent supporters that there will be no draining of any swamps under Trump’s watch. Only, at best, a stirring up of its fetid contents. What goes too often unacknowledged is the broader lineage of the US state that led to Trump. There has been for a long time a general retreat of US democracy. Although there has always been a marked degree of corporatism - of binding big interests into a cumbersome, bipartisan stasis - the transfer of power between the two parties meant real alterations to policy. There was a genuine, if attenuated representative link at work: Democrats for organised labour, liberal capitalists, urbanites, universities and civil liberty interest groups; Republicans for big capital, the military, the petty bourgeoisie, and all forms of white, religious conservatism. Republican strategy was, from the 1960s, the more dynamic: the Southern Strategy saw poor whites move over to political conservatism in the face of civil rights victories. The relocation of capital from the high-wage, unionised north to the non-unionised, low-skilled, low-paid and still largely racially segregated South created fresh, exploitative opportunities for US domestic capital. Although technically a demographic minority, the Republican coalition has benefited from progressive disenfranchisement, gerrymandering, and demobilisation. 

It shouldn’t be thought that the increasing prominence of non-democratic bodies like the Supreme Court or, in monetary policy, the Federal Reserve is simply an effect of the famous ‘partisan gridlock’ that afflicts Congress. As if alternative, technocratic or legalistic state institutions merely compensate for the failures of the more overtly politico-representative state. Such a functionalist view would merely oppose the ‘political’ state to the ‘administrative’ state. There is no such real distinction. Rather, the state itself has been adapted so as to administer an altered economy. It is the state’s job to manage the reproduction of the distinctive social relations of particular phases of the development of capitalism. To do this, the whole edifice of the state must be converted so it is fit for the task.

If this is all very abstract, what it means in the current case is that congressional democracy as it existed in the US was not a suitable political form of the state for the type of neoliberal economy that emerged there. The irony of neoliberalism was that the implementation of a superficially ‘small state’ ideology by a motley cast of Mont Pellerin Society survivors, Chicago School ex-Keynesians, anti-communist cranks and failed actors, actually necessitated the growth of every coercive aspect of the state. Neoliberalism responded to the successive shocks of the 70s (the end of Bretton Woods, the oil price shock, the fiscal drag of Vietnam and the Great Society) by embarking on a project to restructure the relationship of the state to the individual. It would do so of course by fundamentally statist means: the expansion of state-subsidised outsourcing; the semi-privatisation of the government-sponsored enterprises which managed mortgage credit; the implementation of central bank independence; the massive expansion of administrative oversiggt entailed by a financialised economy; the growth of the punitive and carcarel functions of the state; the emergence of spiralling public sector fiscal deficits through endless tax cuts, military spending and clientelism. All this supposedly in the name of ensuring that individuals were not reliant on state patronage and that government would not patronise minority interests.

Congressional democracy of the type that openly advocated for certain social interests - minorities, unionised workers, small businesses - was not a useful system for such a project. But more than this, a certain ‘independence’ from popular pressures was necessary to secure the expansion and reproduction of this system. Neoliberalism in international relations theory (as distinct from the actual economic project of the 1980s and 1990s) advocates a system of institutional managerialism. So-called ‘public choice theory’ reduced political economy to a theory of the unreliability of democratically elected politicians who were biased in favour of a short-termist public. This was an academic fluff job for the complete privatisation of political decision making.  

Although there have been legislative achievements in the last decades - Clinton’s demolition of the welfare system and the increase in policing of insubordinate populations; Bush’s implementation of the Patriot Act, with its erasure of civil liberties and expansion of mass surveillance - these have been developed entirely from above, lacking any popular mandate or initiative, and have swum with rather than against the tide. For much of the activity of the US state, not even this shallow assent has been necessary. The massive project of drone warfare undertaken by Obama received scant public scrutiny. If the migrant deportation regime has intensified in brutality under Trump, it has done so from an already high base. In foreign policy, the tradition of unanimity around the President has continued. 

Trump himself may mark a sea change in the public role of President. Now a vocal, stridently partial commentator on events within the state from which he seems strangely detached, the current President only makes explicit these longer term post-democratic trends. Trump is quite literally beside his own administration, reduced to the same impotent social media carping that one finds among his millions of supporters. But if many who work within the state - including many conservatives - will not miss his verbal incoherence, in substance he has not proved harmful to the conservative project. Trump may ultimately prove little more than the enduring effectiveness of this project. Certainly, institutionalised conservatism will finish his presidency in a stronger position than when it began. But the weakened elite hold over the two parties - as grassroots right and left insurgents grasp onto the hollowed out party structures - could yet lead to future challenges. 

What to expect if Labour comes to power

The Labour party has recently finished its annual conference and, unacknowledged by most major Brexit-obsessed news outlets, it’s unveiling a very radical plan for government. The party leadership has been advancing a series of proposals that would see British capitalism re-oriented towards working-class income and democratic control. Worker shares in companies; workers on company boards; democratised forms of public ownership; a financial transactions tax; a clampdown on tax avoidance; increases in corporate tax rates. All are massively popular and all are likely to be in a forthcoming Labour manifesto. This is in the context of a government floundering over Brexit negotiations and desperate for a way out. The one thing standing between us and another general election is the disaster that befell the Tories the last time they tried it. If there were an election, there is a good chance Labour could become the largest party and maybe even snatch a small governing majority.

Naturally, people are wondering what awaits Britain if the most left-wing leader of any major party in the UK’s history becomes prime minister. The World Transformed - the annual get together of the Party’s new radical left - has rippled with concerns about how the establishment might try to stop or water down the programme. What’s the likely reality facing an incoming Labour government?

Some people have talked about Labour needing a massive governing majority to implement its programme and a much more left-wing parliamentary party rooted in local struggles in working class communities. If there’s an election imminently, that is not going to happen. Efforts to reform candidate selection and to build the party’s local institutions are yet to get off the ground. So let’s assume the most favourable possible election outcome is a Labour majority of one composed of the current orthodox parliamentary party and a few new left-wingers. Let’s also assume that the SNP and even some Lib Dems will back some aspects of Labour’s social and economic programme to offset the most right wing Labour MPs and the obvious uniformity of Tory opposition.

In this - not impossible but far from certain - scenario, Labour could feasibly hope to run a functioning government, at least when it came to passing some moderate reforms. But of course what happens in parliament is only part of the story. What can be expected to take place in wider civil society - one marked by long decades of class war waged by the rich against the organised working class?

1. Expect the pound to weaken

As the Labour party arrives in government, foreign investors will switch from holding sterling to euros and dollars. Even before Labour comes to power, the richest, most mobile (and - to be honest - least productive) rentier capital will flee. Anticipating inflation and a more interventionist government, others will rapidly dump the pound once Labour is in power. Labour could introduce capital controls to prevent the most egregious forms of this. But its unlikely to be able to do this given the current balance of political forces. Much will therefore depend on the speed and persuasiveness of the Bank of England’s response. The Bank of England can sell its own foreign currency reserves and buy up sterling in order to defend the pound’s value (perhaps letting its slide somewhat to boost export competitiveness). If these interventions are not definitive, however, markets may attempt to game the Bank, anticipating a lack of future commitment to the pound. A fall in itself is not disastrous: it makes imports more expensive, but accompanied by the right stimulus can also boost exports. Any initial slide will have to be accompanied by immediate stimulus to the productive, exporting sector of the UK economy. At first there will need to be a focus on industries with a comparative export advantage. Later this can spread to a more comprehensive, state-backed revival of productive capacity. What needs to be avoided is a downward spiral in the early days. This might be why Shadow Chancellor John McDonnell has been relatively emollient towards the Bank’s Governor Mark Carney. The left should not anticipate full, unquestioning support from the ‘independent’ Bank, which has its own mandate and a political culture quite divorced from that of the Labour party. 

2. There may be a spike in the yield on British government debt

The British government partly funds itself through tax income and partly through issuing debt. It was controversy around the growth in public sector debt during the financial crash that led the Tory party to embrace austerity - as so called automatic stabilisers (the fall in government tax income and the rise in unemployment spending that take place in a recession) kicked in, government borrowing rose. The deficit was the difference between what the government was bringing in in tax income and what it was spending during the recession. Cuts to spending during a weak recovery helped prolong the agony of the crisis and did little to reduce the rate of public debt growth, since lower income led to lower tax returns. Labour will be seeking to boost government spending. But it isn’t this alone that will drive up the yield (or interest rate) paid on public sector debt (or bonds). Bond yields may rise where investors anticipate inflation and a depreciation in the currency in which public sector debt is denominated. Once again, the central bank can intervene to bring yields back down by buying up government bonds in secondary markets, which supports the face value of the bonds and drives down the yield. Once again, events will turn on the decisions of the Bank of England and the emerging political relationship between it and the new government. There is talk of altering the mandate of the Bank, if not of ending outright independence (instituted by Gordon Brown during the first Blair government). Central banks from the US Federal Reserve to the European Central Bank have emerged as possibly the central actors in the global economy in the era of financialisation. They can be relatively open to unorthodox policy, but are nevertheless the apex of the financial pyramid of advanced capitalism. There is no guarantee that a lack of haste or truly persuasive intervention in bond markets or the exchange markets couldn’t place huge pressure on the government.

3. Inflation will rise

Just as inflation rose following the Brexit vote as imports became more expensive due to the massive drop in the value of the pound, inflation is bound to rise in the wake of a Labour election victory. One of the spectres that haunts the left is a currency run combined with runaway domestic inflation. The French Socialist government of Francois Mitterrand is supposed to have been brought down by just such pressures. In truth that government chose to defend an uncompetitive currency peg to the Deutschmark as a member of the Exchange Rate Mechanism rather than press ahead with its domestic agenda. A Labour government will be defending no such currency peg. Yet it will likely still be forced to defend itself by largely conventional means. As Simon Wren-Lewis has pointed out, if inflation rises due to domestic growth, an interest rate rise will follow. Indeed, given the low interest rates elsewhere, international  finance may even respond positively to such a rate rise. Anticipating rising interest rates, international finance could even seek out sterling assets in search of higher yields. 

So far I’ve listed the almost ‘automatic’ market conditions that a Labour government will precipitate and suggested the kind of elite political relationships that will have to hold for the government to avoid collapse in its opening weeks. With a responsive central bank, the government can probably afford to reverse the worst effects of austerity - lifting the public sector pay cap, raising public investment through new borrowing and increased corporation tax, new welfare measures for early years education, putting extra money into most public services - especially the NHS, maybe even saving some money by ending the costly, inefficient welfare assessments. There is some degree of consensus in the party around these measures and they are widely popular. The SNP might support a Labour minority government on some of these measures - resisting them would certainly hurt SNP and, to a lesser extent, Lib Dem support. If decisive action is taken in the opening weeks of the government, there need not be any long-term investment strike - with capitalists postponing investment decisions due to uncertainty about future growth, interest rates and profit margins. Signs of a fiscal expansion - convincing signs - can encourage preemptive activity - so long as markets buy it.

But there are formal and informal political mobilisations which will emerge as obstacles to the government in the first few weeks:

4. The state will seize up

There’s a bit of a cliche on the left that the ‘bureaucracy’ of the state will undermine socialists in government. It’s easy to demonise the civil service - whether reactionary or merely patrician. But this thinking - which leans towards conspiracy - neglects state structure. Power in the capitalist state can relocate. From being relatively concentrated under a Tory government, it can appear to disperse across a range of institutions when a radical government comes to power. This goes beyond the Sir Humphreys of English legend to the outsourced, semi-privatised provision of public services, the imbrication of the Treasury with the expertise of the major banks, the hybrid ‘independence’ of the Bank of England, the revolving door between conservative media, government and even some aspects of academia. A multi-leveled intersection of institutions - from local government to the lords to NGOs, pressure groups, and organised representatives of international capital - extends the material power of the state out into civil society. In normal times, this hodgepodge assemblage is dysfunctional and conflictual, but never fatally so. The state crystallises and materialises the complex struggles between social groups in society at large. It is deeply imbricated with the workings of the wider economy, but the nature of the ‘interventions’ of the capitalist state in the economy are necessarily limited - the state institutions are simply not well-equipped to defy capital too directly. This is a major threat. A radical government will profoundly disturb the delicately arranged balance or ‘hegemony’ that operates across state and civil society institutions. In other words, they will seize up, move at a snail’s pace, lack coherence and coordination. This will make passing legislation slower and will be discouraging for more conventional politicians in the government. Defections, resignations, and rebellions will follow. Leaks to the right-wing press will be constant. The left’s response has historically been based on the concept of working class ‘counter power’ - there currently isn’t much of that, but some forms of organised working class power do still exist. The question of big institutional support from trade unions will be crucial here.

5. Civil society mobilisations will apply pressure through organised and disorganised ‘spectacles’ 

We are likely to learn quickly that it is not only the radical left that can organise a protest - think of the Tea Party or the pro-EU demos, at different ends of the spectrum. We can brush aside the march of landowners and street thugs alike, but when it’s small business owners, ‘pro-business’ students, or the offended middle classes, an air of chaos will descend on the government. This will, to some extent, be a PR battle: who is acting in the broader interests of society? And as the Thatcher government knew, we cannot govern purely by consensus. Though a radical Labour government won’t resort to the state authoritarianism of the Blair or Thatcher governments, it will need to be resourceful in how it fights these challenges. The worst - but most likely - outcome is a tactical retreat to the formal confines of respectable, technocratic government - striking a moderate, reasonable pose in the face of relentless opposition. Counter-mobilisations will be important if the PR war is to be won.

If this all sounds depressing and dispiriting, that’s because it will be. Who on the left wants to mobilise to defend the very modest programme of a social-democratic government? We all want to push it ‘further’ left. We want to stop it ‘backsliding.’ This view fundamentally misunderstands the dynamic of the left in power. Our mobilisations will be exhausting, unrewarding media spectacles designed to offset the most visible opposition to the government. By nature, this sort of activity is unsustainable.

When the Attlee government came to power in 1945, it won a huge parliamentary and popular majority. The trade unions were powerful and the population had high expectations - even if there was little in the way of a combative popular movement against capitalism. There was a high degree of policy consensus on the left and in liberal circles about the need for a welfare state and the creation of a national health service. The party and especially the leadership had been integrated through the joint war effort into the respectable apparatus of the state. Though far from united, the parliamentary party formed a much more coherent bloc than today. Still, the government was exhausted by its third year. Despite considerable achievements, it was ejected from power after just six years (although it won the popular vote in 1951).

An incoming Labour government will have none of these advantages. This perhaps is why McDonnell is placing so much emphasis on the first hundred days of its tenure. Without significant, popular achievements, it will be exhausted far sooner than the Attlee government. It also needs to publicly sell what it does and explain clearly what it is trying to do and who is trying to prevent it. It needs to name and own its successes as well as naming its enemies.

There is a lot of talk on the left about the need for a ‘mass movement’ to support or to push the government where necessary. Yet it isn’t always clear what - practically - a mass movement can do. In the face of tedious call outs to hold placards in Parliament Square and oppose the constant dull drumbeat of opposition, burnout is an inevitability. For what little leverage it gives, it will fruitlessly consume energy, emotion, and time. As I suspect many in the movement already realise, the mass movement would be better off building its own, durable institutions that will outlast the beleaguered government.

The reforms enacted by the Labour government should be treated as an opening to build up leftist resilience. A prime example is the unions. If the government can repeal anti-union legislation, we should take it as a spur to renew union activism and to expand union membership. Once reforms are embedded, new intellectual and academic work can build and promote new policies. Community activists and worker cooperatives can take advantage of the funding opportunities that come from public investment. Ideologically, we can argue that the government’s policy successes show that real wage increases and a rejuvenated public sector are good for the country, not just a drag on private enterprise. We can demonstrate that livelihoods don’t have to fall in order for the country to ‘pay its way’.

None of this is to foreclose the possibility that the government could come through on some of its more radical policies - in particular, the democratisation of the economy. It could also be pushed to the left on prison reform, immigration, security, foreign policy and policing (on which it is frankly inadequate). Early victories could create leeway. A serious economic crisis could widen the space for improvised, emergency measures to reform the economy and demoralise capital in the process. One reason we can expect such bullishness from organised capital is that it escaped 2008 unencumbered by reform. It likes this feeling of invulnerability. Disciplining it will be that much harder. 

But these are hopes, not expectations. There are things that the left can do regardless of the pace of change at the level of central government. 

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: https://www.newstatesman.com/broadcast/2013/08/hard-evidence-how-biased-bbc#amp

Rajan’s text is here: http://www.nber.org/papers/w11728.pdf

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 Zweckrationalität 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.

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.

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.