Things will never be the same again
30 September 2008
Things will never be the same again. The turmoil in the banking sector will ensure that the housing slump turns into a full scale recession. There will be massive knock on effects, not just for housing associated business in areas like carpets and furniture, but also all those hundreds of thousands of businesses selling things that none of us really need.
For example: In their new sketch show Harry Enfield and Paul Whitehouse feature a shop in Notting Hill that sells overpriced tat to gullible women. A topical satire may soon feel like a piece of history. Almost every parade of shops in well off areas includes pretty little boutiques selling posh bric-a-brac. How many will survive in a world where every penny counts? And as existing business close who will be able to raise the money to start new ones? As for any hope that the public sector will pick up the flack; the public deficit was already huge and now we can add all the money being pumped in to save lame duck banks. I said to my fifteen year old son this morning that if he is lucky things will be starting to pick up again when he leaves University.
All this may be too pessimistic but it reflects the distilled views I have collected from people who know more than me. In terms of the decline of the economy from its peak what we are beginning to experience may be on a par with the depression of the thirties, although fortunately for us absolute levels of personal and social affluence will remain several times higher than those experienced by our great grandparents.
Accounts of the origins of the welfare state emphasise the determination of economists and policy makers to avoid a repeat of the depression – it was this that inspired Keynes and Beveridge. So almost two decades after the beginning of the depression – albeit with the interruption of the war – its impact was determining future policy. What is now happening will cast a shadow over decision makers who are, as I write, on their way to primary school.
Over the coming years we can expect radically new thinking (which always involves rediscovering old thinking). To be sure we will have new economic theories and policy frameworks. But the recession will also reframe thinking about social norms and values and about the relationship between human capacity and complexity (this crisis shows what can happen when we create systems so complex no one knows how to repair them when they go wrong). I popular saying in the eighties was that ‘the right have won the economic argument, the left the social argument and the centre the electoral argument’. As financial capitalism collapses the Tories talk of a broken society and a third of Austrians vote for neo fascists little of this world remains. We can expect ideology to return to politics but the new dividing lines are unpredictable, and possibly dangerous.
Only time will tell what this will all mean but I hope that we here at the RSA can be at the forefront of debating what kind of economy and society will and should emerge now the neo-liberal experiment has collapsed under the weight of its own contradictions.
For example: In their new sketch show Harry Enfield and Paul Whitehouse feature a shop in Notting Hill that sells overpriced tat to gullible women. A topical satire may soon feel like a piece of history. Almost every parade of shops in well off areas includes pretty little boutiques selling posh bric-a-brac. How many will survive in a world where every penny counts? And as existing business close who will be able to raise the money to start new ones? As for any hope that the public sector will pick up the flack; the public deficit was already huge and now we can add all the money being pumped in to save lame duck banks. I said to my fifteen year old son this morning that if he is lucky things will be starting to pick up again when he leaves University.
All this may be too pessimistic but it reflects the distilled views I have collected from people who know more than me. In terms of the decline of the economy from its peak what we are beginning to experience may be on a par with the depression of the thirties, although fortunately for us absolute levels of personal and social affluence will remain several times higher than those experienced by our great grandparents.
Accounts of the origins of the welfare state emphasise the determination of economists and policy makers to avoid a repeat of the depression – it was this that inspired Keynes and Beveridge. So almost two decades after the beginning of the depression – albeit with the interruption of the war – its impact was determining future policy. What is now happening will cast a shadow over decision makers who are, as I write, on their way to primary school.
Over the coming years we can expect radically new thinking (which always involves rediscovering old thinking). To be sure we will have new economic theories and policy frameworks. But the recession will also reframe thinking about social norms and values and about the relationship between human capacity and complexity (this crisis shows what can happen when we create systems so complex no one knows how to repair them when they go wrong). I popular saying in the eighties was that ‘the right have won the economic argument, the left the social argument and the centre the electoral argument’. As financial capitalism collapses the Tories talk of a broken society and a third of Austrians vote for neo fascists little of this world remains. We can expect ideology to return to politics but the new dividing lines are unpredictable, and possibly dangerous.
Only time will tell what this will all mean but I hope that we here at the RSA can be at the forefront of debating what kind of economy and society will and should emerge now the neo-liberal experiment has collapsed under the weight of its own contradictions.
Please register or login to add your comments.
If you already have an account please sign in below, or sign up for an account.
If you cannot login, or have forgotten your password, please go to our Password Reset page to change your password.
If you have any other queries regarding your account please email fellowship@rsa.org.uk.
Share
Mark - 02 Oct 2008 12:22pm
What the end of the current business cycle (and with Q3 output level and with Q4 output forecast to show a reduction, we are clearly in recession now) means is surely an end to the vacuity of policy making that has gripped government for half a generation. For the last fourteen years the bulk of policy debate has been not about how we address the organic issues facing an economy and society like that of the UK, but how we footle around at the edges of it, creating projects that may, tangentially, affect someone somewhere, but in all probability not. In a period of significant GDP growth, income inequality measures (for example) widened at the same time that the Major, Blair and Brown governments - to different degrees - played with schemes that evidently made not one jot of difference. Social mobility is actually lower on some measures than it was two decades ago, despite a wealth of policy 'projects' in education. In short, modern policy making has been about certainly achieving something small rather than risking not achieving something very much larger. What has to change, and change fast, is the maturity of policy debate. Blair, Brown and, as far as I can see, Cameron are still wedded to the notion that policy-making is about targeted measures that, by some strangely osmotic process, will be taken into the wider polity and have wide ramifications, whatever the untrammelled dynamics of the economy or society may be. They have failed because these measures ignored the wider forces shaping life in Britain. An example is higher education, where the aim of increasing participation rates to 50% might have seemed laudable - and even, in the context of growing participation rates elsewhere, essential. Policy measures came thick and fast (often in waves!) but none - none - recognised the essential dynamic of higher education in a period of boom, that plenty and abundance raise expectations about quality; that globalisation widens labour markets; that growth stimulates new forms of information sharing about labour and educational quality. Employers were not, as seemed likely from the policy model adopted for the earliest measures devised, going to value just numbers; they wanted better employees, and students wanted better education too. They got more people, more 'noise' in the system, no noticable improvement in quality to sustain competitiveness, and expectations fuelled by growth were thwarted. Policy failed to work with the underlying changes that were affecting the UK. This policy making approach - convenient, eye-catching, miniature, embryonic but ultimately slight in impact - has to stop. We need thinking that runs with the grain of change. Bigger brains, engaged with bigger issues, working on bigger solutions. Across all political debate, and across all political parties.
Liz Sewell - 01 Oct 2008 8:03pm
Corporate responsibility seems to have been surplanted by short-termism with a get rich quick mentality instead of building strong businesses. It didn't take a genius to see that the economic cycle would bring the reality check that was sorely needed.Social and corporate responsibility with business leaders who take into account the effect of their businesses on others - I vote for long-termism, not short-termism. Can we debate having a co-operative view of the world where our actions and their effects on others aren't treated lightly or casually. Consumers are increasingly taking educated decisions partly based on moral judgements (fair trade, organic, whole world considerations) - isn't it time that business caught up?
Ian Duffy - 30 Sep 2008 4:26pm
It is clearly reassuring that RSA policy is now being shaped by the genius of Harry Enfield. Although whether it is comic genius is another question entirely...
Matt Cain - 30 Sep 2008 10:21am
We may have spent years buying pointless tat. But it's also led to a significant secondary market: ebay et al - which is only likely to grow in its importance. This is one reason why capitalism will survive but also shows the inability of current governance arrangements to tax and regulate the marketplace.