People and Political Economy Versus Econocracy

Yesterday a Times leader-writer who frequently writes an Economics column for the paper recognised the Manchester action group that created the Post-Crash Economics Society, and the related movement that has spread around the world [as frequently mentioned in this blog]. He noted that a very few university teachers have cobbled-together courses that give an introduction to the different approaches to the subject that have been taken over the last couple of centuries; and that the vast majority of the established teaching cohort - the Econocracy - have adhered rigidly to the pseudo-mathematical formularies that are their only stock-in-trade. That stock is being demonstrated to be putrid. I was a university teacher, specialising in the History of Economics, for a couple of decades until 1988. During that time I assiduously researched the question of how Economics was taking an increasingly perverse approach to the world; and meanwhile my colleagues selected me to be Dean of the Faculty and eventually Pro-Vice-Chancellor, which I like to think indicates that I was taken seriously as a person.

By 1988 it was clear that common sense and Economics were becoming implacably opposed. The Thatcherites were busily destroying industry, blinded by the mantras of open competition and monetarism that undermined the traditional support from the state budget for the economy [which was repaid as economic growth produced the tax revenue that increased the state's capacity to spend on infrastructure developments, research and product development, and popular welfare]. So I bailed out of academic life, into one of the great support organisations that underpin the skills on which the City of London depends for its unique depth of resources which constantly renew its role as the world's leading financial centre. I have continued to watch the consolidation of Thatcherism into 'austerity', which in turn gives the government the ludicrous notion that state spending [on almost anything] is a 'bad thing'.

There are, of course, the glaring exceptions: of which the most conspicuous are HS2 and Hinckley Point, where the state is in for tens of billions of pounds of useless and unwanted spending. Otherwise, spending by the state is a bad thing: especially on peoples' welfare.

Today's News on the BBC is headed by the facts disclosed in a report on tower blocks that has become critical in the light of the Grenfell Tower tragedy. Sixty-eight per cent of the tower blocks in the UK have only one staircase, almost 40 per cent have some form of cladding [of which a yet-to-be determined proportion are flammable], and only two per cent have sprinkler systems. Sprinklers have been proven as a valid means of quenching fires, and thus preventing their spread, for centuries. When Britain had extensive factories and warehouses, the insurance companies employed inspectors who had the right of entry to premises to check that the sprinklers were installed and operational: if they were not, the insurance was immediately cancelled. Factory Inspectors also had to duty to check on the effectiveness of spinkler systems, and could close units that were non-compliant; and in most local authority areas buildings were only licensed for use if certified as compliant with local specifications by the Fire Brigade. The present shoddy government have made it as clear as they clarify anything - which is not very far - that they will expect local authorities to use their own resources, to the extent of using up all their reserves to begin to introduce measures to address the fire hazard in the blocks that they control.

The Econocracy supports the government line: state spending, bad. Occupiers should pay competitive prices for their flats; and if they want safety measures built in they must pay more for that assurance. If their earnings or benefits or pensions will not cover the higher rents, they must move their homes; or get better jobs. For myriad reasons, such as access to schools and hospitals, proximity to relatives who need or provide care, lack of skills or lack of drive, millions of people cannot get better jobs or pay higher rents. The Econocracy has no patience with such people: they clog up the system and prevent the 'model' from functioning as they think it should, in all its clockwork simplicity. 

We need a new Political Economy, that takes account of people as they are, and has their development and the welfare as its highest goals. The housing situation - with hundreds of thousands of households outside the tower blocks effectively homeless - is a perfect example of the Econocrats' model economy not working: because it is utterly out of kilter with the realities of human existence.

The Implications of the Proposed EADS-BAe Merger

For many centuries there has been a close synergy in successful countries between the most advanced sectors of technology and the  military and naval forces of the regime. The Vienna Arsenal and the Woolwich Arsenal in London occupied massive sites which have quite recently been released for development for civil purposes, as the last survivors of the former Austro-Hungarian and British Empires go to their graves. From at least the fifteenth century until after the middle of the twentieth the British Royal Navy maintained a massive onshore infrastructure of dockyards and other facilities, as well as being the predominant customer for cutting-edge ship and weapons design and construction. In the twentieth century the potential of aerial warfare created huge high-tech industries in all the industrialised states at the same time as vast acreages of land were taken up by airfields; and that phase was followed by space programmes; which India and China have now taken up as western European states and the USA have cut back on their defence spending and of space exploration as the burden of 'welfare' has pressed upon national resources.

Britain's attempt to keep a presence  in aerospace and naval construction, and to retain at least some advanced weapons technology, was by cobbling together British Aerospace, which added shipyards and became BAe, which is the residual legatee of centuries of public investment in defence supplies. This company has been surprisingly successful in retaining a global market share in many segments of defence procurement. Simultaneously Europe - including the UK - agreed that it could only keep up a presence in global civil aviation by collaboration, hence was created the Franco-Germanic-Hispanic-British consortium called EADS. With their usual short-sightedness, the Brits then sold their 20% holding of EADS; which is now regarded as a eurozone business.

It has recently been proposed that BAe and EADS should merge; with EADS owners holding 60% of the equity in the resulting firm. The biggest drawback to the merger is that BAe is the repository of a massive range of secret material relating to the military resources and plans for both the UK and US governments; and while the US has badgered Britain to integrate with Europe for over half a century, in matters like this the US establishment prefers its close satellite to keep close to the US without strings to the continental European states. The British government has a 'golden share' in BAe [as do the continental governments in EADS] and there will doubtless be a great deal of discussion in secret between the US and UK governments before the deal is allowed. One sure outcome if the merger does go through, is that the now-strong position of BAe as a supplier to the US military and space programmes will be reduced, most likely very severely and very quickly.

Thus the capacity of the wider Europe, including the UK, to remain active in globally important fields of production and research will be lost, precisely when China and India are developing their capability. The spin-offs from research into defence and space technologies, applied to terrestrial consumer products, has been responsible for many very popular product developments and innovations: that torch could soon be abandoned to Asiatic innovators. Europe will only have its Economists and politicians [and its supine electorates] to blame for allowing the catastrophe that is already well-developed to come to maturity. Then Europe will be too poor to build shipyards and aircraft factories, or to test rockets. Militarily as well as technologically Europe will be eclipsed, and the politicians will do nothing to avert the catastrophe because they are fixated on buying the votes of hereditary paupers whilst they purport to be controlling the expansion of the national debt.

The Banks 'On Welfare'

Anyone interested in the rational view of American social issues should follow Star Parker in her syndicated columns and via her CURE organisation.
It provides regular blogspots and access to a very significant corpus of work.
Her key perception that the US banking system has - in effect - been put on welfare [alongside the growing cohort of those who have been made unemployed by the banks' past actions] gives a useful perspective to the rapidly advancing statism that has captured both the USA and the UK.
This cannot be seen as a party political issue, as what the Bush administration began the Obama administration has carried forward [though the latter has pursued quasi-nationalisation with much more enthusiasm].
The bovine acceptance of dependency by both individuals and institutions is the antithesis of enterprise; and marks a major phase in the decline of the west.