IPR Blog

Expert analysis, debates and comments on topical policy-relevant issues

Exposing a fragile coalition: The state of the basic income debate

📥  Economy, employment, living wage, political parties, universal income

Dr Luke Martinelli is Research Associate on the IPR's universal basic income project.

Is it time to move beyond the polarised views that characterise the basic income debate? Universal basic income (UBI) may be an attractive solution to a host of policy problems – but advocates must recognise that moving from abstract concept to reality will involve significant trade-offs and political barriers.

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Gaining traction, growing support

In recent weeks, there have been a number of developments which appear to demonstrate the movement of UBI towards the political mainstream: in the UK, the influential Trades Union Congress (TUC) has endorsed social security reform that embodies the principles of basic income; in Canada, the Government is moving forward with concrete plans for a basic income pilot, adding to those upcoming in Finland and the Netherlands; the French region of Aquitaine is consulting on the idea; and in Germany, the single issue party Bündnis Grundeinkommen (Basic Income League) has just been established. These trends seem to suggest that UBI is gaining traction that will lead inexorably to widespread implementation.

After all, UBI is not just a good idea; it is an increasingly good idea in a world in which the nature of work, family and society is rapidly changing.  Automation of production processes, both in manufacturing and, increasingly, services; large and growing wage gaps between ‘lousy’ and ‘lovely’ jobs (Goos and Manning, 2007); the growth of zero-hour and temporary contractual arrangements; and long-term unemployment among disadvantaged groups are all problems which urgently need addressing. Nuclear families have given way to the emergence of complex and unstable family structures, and the ‘new social risks’ of lone parenthood and gaps in the provision of care for children and the elderly threaten vulnerable sectors of society.

All of these factors are feeding into the widespread failure of existing social security systems to achieve equitable and efficient settlements for growing numbers of people – exactly what UBI claims to be able to provide.

Yet despite (or perhaps because of) intensified interest in basic income, the debate has become more polarised than ever. It is an elegant balance of justice and liberty; it is the worst of all possible worlds. It is the saviour of the welfare state; it will destroy it. It can be implemented tomorrow; it is a vague and distant utopia.

All things to all people

When considering these polarised views on basic income, it is worth noting that UBI is best considered as a family of proposals, rather than a specific policy per se.

The core characteristics of UBI as an idea are that payments should cover the entire population, and eligibility cannot be conditional on income, work history, or behavioural requirements. Beyond this, there is a great deal of variation between plans in terms of a number of important aspects  – including, crucially, the level at which payments should be made, and how the basic income fits into the wider constellation of welfare and tax policies.

These design features vary in relation to the precise goals that basic income is intended to achieve, which themselves are contested. Although it can be seen as a prosaic way to simplify a complex welfare system, alleviating administrative costs and bureaucratic intrusion while reducing marginal tax rates – and thus eliminating the poverty and unemployment traps that pervade means-tested systems – it has also been touted as having the potential to fundamentally alter how we think about ‘work’. Releasing individuals from the compulsion to enter paid employment – and the exploitation and domination this entails – in order to survive, and liberating them to pursue a variety of socially valuable and creative activities, UBI has been mooted in radical terms as “a capitalist road to communism” (Van Der Veen and Van Parijs, 1986).

Multi-partisan support

The protean nature of basic income helps to ensure that the concept appeals across traditional party lines. One of the striking things about this idea is the wealth of favourable theoretical arguments which appeal across the political spectrum, leading to the popular description of UBI as 'not right or left, but forward'. In isolation, these arguments apply to other ways of organising social security – but few if any such systems so effectively marry the priorities of the social democratic left (equality, solidarity and redistribution) with those of the libertarian right (small government, freedom and efficiency). By both left- and right-wing proponents, UBI is viewed as the saviour of a broken welfare system which is stigmatising and intrusive yet unfit for purpose.

For basic income advocates on the left, the focus is on the failure of the system to provide security for all in an adequate and dignified fashion, as socio-economic conditions have made the Beveridgean system increasingly untenable. Gone are the days – if they ever existed – when male breadwinners provided for their families with stable, well-paid jobs. The Trente Glorieuses, that period of yet unmatched growth and prosperity following WWII, gave way to deindustrialisation, structural unemployment, rising wage inequality, and the increasing prevalence of precarious employment.

For the right, the welfare system is seen as the cause of dependency and societal breakdown, as the complex array of means-tested benefits reduces work incentives and discourages family formation. The bloated government bureaucracy which administers the intrusive work tests and financial conditions creates higher taxes, which act as a drag on the efficiency of the economy as a whole.

Basic income, perhaps miraculously, seeks to balance these competing goals and priorities. But does this congregation of political views mean that it is universally and normatively desirable? Clearly not.

Cross-party opposition

There is an equivalent (and possibly more significant) meeting of minds across the political spectrum that finds basic income a deeply discomfiting notion. Social democrats believe that welfare should be generously available for all, and those on the right that it should be a residual safety net – but both agree that the right to an income comes with a responsibility to work (however this responsibility is actualised). Notwithstanding the claims of political philosophers such as Philippe Van Parijs that “even surfers should be fed”, Bowles and Gintis (2000) demonstrate that people “support the welfare state because it conforms to deeply-held norms of reciprocity and conditional obligations to others”. Of course, this goes beyond the simplistic equality of contributions and receipts – but the belief that everyone has an obligation to contribute to society if they can, and that only those unable to work through incapacity, involuntary unemployment or caring responsibilities are deserving of state support, provides a philosophical foil to the arguments of basic income advocates (Anderson, 1999). Bay and Pedersen (2006) show that support for universal welfare drops when respondents consider the possibility of foreign immigration. Data on attitudes to welfare, which have hardened in recent years, appear to uphold these insights – as analysis of the British Social Attitudes Survey by Eleanor Taylor and IPR Director Professor Nick Pearce serves to demonstrate.

For progressive opponents of UBI, welfare should be restricted to those most in need, since the wealthy do not need it; if you are going to spend more on welfare, why not make payments more generous for the poor? Thus, basic income is likely to be seen as ineffectual by the progressive left, as demonstrated by reactions to Compass’ UBI proposals stating that “a powerful new tax engine will pull along a tiny cart”, and that feasible UBI schemes are “not generous enough to achieve the aim of replacing wages in an increasingly automated world; or they are not funded properly; or both”. The concept of uniform benefits also appears to conflict with the principle that levels of support should correspond to the needs of claimants – which are complex and varied, and therefore might be seen to justify an equally complex range of benefits.

At the same time, conservative opponents argue that UBI would be prohibitively expensive, require huge tax rises, and significantly damage work incentives. Although the unconditional nature of UBI leads to lower marginal effective tax rates (as the benefit is not withdrawn as income rises), if payments were pitched at subsistence level or higher, there would be a significant negative labour market response as individuals opt for more leisure.

Thus, while basic income has supporters across the political landscape, it also has detractors – and the large family of basic income proposals provides a wide target at which to direct criticism.

A fragile coalition

The multifaceted nature of basic income enables detractors to criticise the least desirable type of basic income (from their particular perspective). Thus, basic income’s association with ‘undesirable’ political views permits left-wing opponents of basic income to attack UBI as an alternative to decent public services and a project to dismantle the welfare state, while simultaneously allowing right-wingers to criticise it for inflating the role of government in welfare provision and dampening incentives for self-provision.

Exacerbating the political challenge of UBI is what De Wispelaere (2015) calls the “problem of persistent political division” among supporters. While agreed on the general principle, UBI advocates on each side of the political divide have different ideas about the key parameters. When UBI is operationalised in a specific scheme, divisions appear; as De Wispelaere observes, a residual scheme such as that proposed by Murray (2006) is “entirely unacceptable to anyone supporting basic income on progressive grounds”. At the same time, libertarian UBI advocates would only support basic income schemes that sought to replace the entire welfare system. Thus, support from the ‘opposite’ political side may taint the concept of basic income by association: progressives cannot get behind a policy supported by right-wingers, and vice versa.

Although steps to realise basic income show signs of progress, therefore, this ultimately hinges on the extent to which meaningful coalitions of interests can be built and sustained around concrete proposals. This prospect is a lot more distant than appears at first glance; the apparent unity of the basic income movement masks a multitude of deeply divided actors, and a highly fragile coalition.

To end on a more positive note, these political difficulties are not necessarily intractable – but it may be that advocates have to sacrifice their broad coalition in favour of congregation around specific schemes. This would give lie to the idea that basic income is ‘all things to all people’, but it might garner new and more enthusiastic supporters as well.

 

References

Anderson, Elizabeth S. (1999). "What Is the Point of Equality?" Ethics, 109(2): 287-337.

Bay, Ann-Helén, and Axel West Pedersen. "The limits of social solidarity basic income, immigration and the legitimacy of the universal welfare state." Acta Sociologica 49(4): 419-436.

Bowles, Samuel, and Herbert Gintis (2000). "Reciprocity, self-interest, and the welfare state." Nordic Journal of Political Economy, 26(1): 33-53.

De Wispelaere, Jurgen (2015). "The struggle for strategy: On the politics of the basic income proposal." Politics (2015): 1467-9256.

Goos, Maarten, and Alan Manning (2007). "Lousy and lovely jobs: The rising polarization of work in Britain." The review of economics and statistics, 89(1): 118-133.

Murray, Charles. (2006). In Our Hands: A Plan to Replace the Welfare State. Washington, DC: American Enterprise Institute Press.

Van Der Veen, Robert J. and Philippe Van Parijs (1986). "A capitalist road to communism." Theory and Society, 15(5): 635-655.

Van Parijs, Philippe (1991). "Why surfers should be fed. The liberal case for an unconditional basic income." Philosophy and Public Affairs, 20: 101-131.

Who will shape the future of the data society?

📥  big data, data science, future, open data, technology

Dr Jonathan Gray is Prize Fellow at the IPR

The contemporary world is held together by a vast and overlapping fabric of information systems. These information systems do not only tell us things about the world around us. They also play a central role in organising many different aspects of our lives. They are not only instruments of knowledge, but also engines of change. But what kind of change will they bring?

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Contemporary data infrastructures are the result of hundreds of years of work and thought. In charting the development of these infrastructures we can learn about the rise and fall not only of the different methods, technologies and standards implicated in the making of data, but also about the articulation of different kinds of social, political, economic and cultural worlds: different kinds of “data worlds”.

Beyond the rows and columns of data tables, the development of data infrastructures tells tales of the emergence of the world economy and global institutions; different ways of classifying populations; different ways of managing finances and evaluating performance; different programmes to reform and restructure public institutions; and how all kinds of issues and concerns are rendered into quantitative portraits in relation to which progress can be charted – from gender equality to child mortality, biodiversity to broadband access, unemployment to urban ecology.

The transnational network that assembled last week in Madrid for the International Open Data Conference has the opportunity to play a significant role in shaping the future of these data worlds. Many of those who were present have made huge contributions towards an agenda of opening up datasets and developing capacities to use them. Thanks to these efforts there is now global momentum around open data amongst international organisations, national governments, local administrations and civil society groups – which will have an enduring impact on how data is made public.

Perhaps, around a decade after the first stirrings of interest in what we know know as “open data”, it is time to have a broader conversation around not only the opening up and use of datasets, but also the making of data infrastructures: of what issues are rendered into data and how, and the kinds of dynamics of collective life that these infrastructures give rise to. How might we increase public deliberation around the calibration and direction of these engines of change?

Anyone involved with the creation of official data will be well aware that this is not a trivial proposition. Not least because of the huge amount of effort and expense that can be incurred in everything from developing standards, commissioning IT systems, organising consultation processes and running the social, technical and administrative systems which can be required to create and maintain even the smallest and simplest of datasets. Reshaping data worlds can be slow and painstaking work. But unless we instate processes to ensure alignment between data infrastructures and the concerns of their various publics, we risk sustaining systems which are at best disconnected from and at worst damaging towards those whom they are intended to benefit.

What might such social shaping of data infrastructures look like? Luckily there is no shortage of recent examples – from civil society groups campaigning for changes in existing information systems (such as advocacy around the UK’s company register), to cases of citizen and civil society data leading to changes in official data collection practices, to the emergence of new tools and methods to work with, challenge and articulate alternatives to official data. Official data can also be augmented by “born digital” data derived from a variety of different platforms, sources and devices which can be creatively repurposed in the service of studying and securing progress around different issues.

While there is a great deal of experimentation with data infrastructures “in the wild”, how might institutions learn from these initiatives in order to make public data infrastructures more responsive to their publics? How can we open up new spaces for participation and deliberation around official information systems at the same time as building on the processes and standards which have developed over decades to ensure the quality, integrity and comparability of official data? How might participatory design methods be applied to involve different publics in the making of public data? How might official data be layered with other “born digital” data sources to develop a richer picture around issues that matter? How do we develop the social, technical and methodological capacities required to enable more people to take part not just in using datasets, but also reshaping data worlds?

Addressing these questions will be crucial to the development of a new phase of the open data movement – from the opening up of datasets to the opening up of data infrastructures. Public institutions may find they have not only new users, but new potential contributors and collaborators as the sites where public data is made begin to multiply and extend outside of the public sector – raising new issues and challenges related to the design, governance and political economics of public information systems.

The development of new institutional processes, policies and practices to increase democratic engagement around data infrastructures may be more time consuming than some of the comparatively simpler steps that institutions can take to open up their datasets. But further work in this area is vital to secure progress on a wide range of issues – from tackling tax base erosion to tracking progress towards commitments made at the recent Paris climate negotiations.

As a modest contribution to advancing research and practice around these issues, a new initiative called the Public Data Lab is forming to convene researchers, institutions and civil society groups with an interest in the making of data infrastructures, as well as the development of capacities that are required for more people to not only take part in the data society, but also to more meaningfully participate in shaping its future.

This piece originally appeared on the IODC16 website.

Have you been in a Jobcentre lately?

📥  employment, future, political parties, Welfare

Dr Rita Griffiths is Research Programme Lead for the IPR.

“Anyone who thinks Jobcentres are like [those in The Full Monty] … would be pleasantly surprised by visiting [one today],” quipped Damian Green, Secretary of State for Work and Pensions in his address to the Conservative Party Conference last week; “no screens, no queues … no sense of sullen despair.” He is right in his observation that Jobcentre Plus offices today look very different from how they did in the 1980s and 1990s, when The Full Monty – along with films like Billy Elliot and Brassed Off – depicted the humiliation and shame wrought on working class men forced to sign-on after being made redundant from jobs in mining, steel and other heavy industries.

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It is true that the metal security screens have gone, and dole queues no longer snake out of the doors of benefit offices – which have long since disappeared, along with the traditional industries and breadwinning jobs these men were once employed in. However, it is debatable whether, as claimed by Green, this is down to the transformative power of a modernised and rebranded Jobcentre Plus better equipped to meet the employment needs of ‘ordinary working-class people’ in the post-industrial era. Some would argue it says more about the depersonalised, contracted-out and digitised nature of today’s benefit and employment services – director Ken Loach, for example. His latest offering I, Daniel Blake, for which he won the 2016 Cannes Film Festival’s Palme d’Or, sits uncomfortably alongside Green’s resolutely upbeat account of the changing landscape of government employment support. The protagonist of Loach’s drama, a skilled man in his 50s whose working career is curtailed after he suffers a heart attack, finds himself cut adrift amidst the faceless, ‘digital by design’ bureaucracy of Jobcentre Plus call centres, online benefit processing and the impersonal, one-size-fits-all responses of government-funded advisers. So who is right?

In their own way, both are. Today’s Jobcentre Plus may have upholstered seats, carpets and jaunty, modern graphics – but just try getting past one of those burly security guards if you want help to get a job, or secure better-paid work. Austerity-driven civil service staffing cuts mean that, unless you are an existing benefit claimant required to attend a mandatory appointment with an adviser as a part of your ‘Claimant Commitment’[1], you will likely be turned away – told instead to search for jobs online, or to contact a call centre (using your own mobile and, until recent lobbying persuaded the DWP to change its stance, at a premium call rate). If the security guard allows you entry, you will be directed to a Jobpoint, a touchscreen monitor for online job-hunting – that’s if they haven’t already been removed, along with the free-to-use telephones, as Jobcentre Plus moves inexorably towards full digitisation. In fact, you may be hard-pressed to find a Jobcentre in your local area; in the last five years, scores of them have been closed – including many in rural areas where the nearest alternative may be over an hour’s travel away.

Reduced Jobcentre footfall is of course an undeniable product of the changed nature of work, and online recruitment methods now used by most employers and applicants. However, research is beginning to show that another important factor in the decline of Jobcentre use is the increasingly punitive way in which ‘jobseekers’ and other benefit claimants are dealt with, and a corresponding rise in the incidence of benefit disentitlement and sanctioning.[2] Arrive late for a mandatory appointment, or apply for fewer jobs than is stipulated in your ‘Claimant Commitment’, and you risk being sanctioned. Too many sanctions and you risk losing your benefits altogether, potentially for up to three years.[3] The government claims that sanctions are used infrequently and only as a last resort, but the evidence tells a different story. Research by David Webster from the University of Glasgow found that between 2007 and 2012, one fifth (19%) of all JSA claimants – equivalent to almost a million and a half people – had been subject to sanctions or disallowances.[4] In the context of an increasingly stringent, parsimonious and punitive welfare system, some eligible groups are simply not bothering to claim, further reducing the claimant count.

This brings us to another reason that Jobcentres may seem less desperate places these days: increasing localisation and discretion in the delivery and payment of welfare. In what Frank Field describes as “the most radical departure in welfare since the Atlee government"[5], emergency financial help and other discretionary support intended to prevent the poorest and most vulnerable people in society from falling through the safety net has been devolved from central government to local authorities. This has occurred, it should be noted, with limited public debate about the issues and implications localisation raises. So the queues, over-crowded waiting rooms and sense of despair have not gone away, they have simply relocated – into the burgeoning network of council ‘one-stop shops’ and food banks, where cash-strapped local authorities and volunteer workers struggle to help the growing numbers of claimants and families whose benefits or tax credits have been reduced, stopped or failed to reach their bank accounts for whatever reason.

Even if Green’s rosy vision of the contemporary Jobcentre is right, changes are afoot which may yet see a return to Jobcentre queues and sense of frustration.  Under the most radical and contentious welfare reform measure proposed to date, working people and families claiming Universal Credit means-tested financial help with housing, childcare and living costs will be drawn into a system of conditionality and sanctioning similar to that which currently applies to unemployed and economically inactive claimants. Untried anywhere in the world, a large-scale randomised control trial involving 15,000 low-paid Universal Credit claimants is piloting a new Jobcentre Plus-delivered ‘in-work progression’ service[6] targeted at an entirely new category of customer: low-paid workers and their partners. If rolled out nationally, an additional one million UC claimants will become subject to work conditionality. But here’s the most controversial part: these people will already have jobs. What is more, unless the family contains children under the age of 13, work conditionality requiring regular face-to-face meetings with a Jobcentre adviser will continue until household earnings reach a minimum threshold equivalent to both adults in a couple working 35 hours per week at the national minimum wage. Only parents with authorised caring responsibilities for younger children and other officially exempted groups, such as those with a serious health condition, will have the option to work part-time.

Encouraging low-paid workers to increase their earnings is a laudable policy goal, but when earning more means working longer hours, even in families with young children – and when working for longer is the only way of meeting mandatory conditions for UC receipt – the role of Jobcentre Plus advisers in supporting individuals to progress in work becomes somewhat compromised. Tailored, one-to-one, personalised support from a work coach which underpins the in-work progression service is similarly to be applauded, but progression implies improvement – not just in earnings, which could be achieved simply by getting another low-paid job - but in rates of pay and job prospects. Will customers be helped to access training to improve their earnings potential and jobs offering better terms and conditions, or will they simply be obliged to find more low-paid work? This raises another important question: in whose interests will this employment advice be offered? These already ‘hard working’ customers, employers proffering zero hour contracts, or a government intent on reducing social security expenditure?

Empathetic, individualised support to encourage employment progression runs counter to the work-first culture and general direction of travel that Jobcentre Plus has been moving in for more than a decade. What seems to be missing too is any acknowledgement that, although low earners eligible for means-tested help may represent a new category of customer for Jobcentre Plus, they are not necessarily a different group of people; it is well known that people in poverty and at the bottom end of the earnings distribution often cycle between work and benefits. How realistic is it to think that low-paid workers will be willing to trust the very same advisers who may have imposed a sanction on them during a previous spell of unemployment?

Not simply a cultural and logistical challenge for resource-strapped Jobcentres, through eroding the distinction between being in work and out of work and potentially extending negative representations of benefit claimants to those who already have a job, in-work conditionality also risks obscuring the hitherto strictly demarcated political dividing line between Theresa May’s ‘just managing’ families and welfare-dependent ‘scroungers.’ Hampered by the incremental and chronically delayed rollout of Universal Credit, and a paucity of up-to-date government-commissioned and academic research, only time will tell whether this new vision for Jobcentre Plus will ever be realised.

Notes

[1] Originally designed as part of Universal Credit, with a rollout that has been much slower than anticipated, the ‘Claimant Commitment’ – with its requirement for 35 hours of evidenced job search as a mandatory condition of benefit receipt – also now applies to claimants of jobseekers allowance (JSA) and employment support allowance.
[2] See ESRC-funded research entitled ‘Welfare conditionality: sanctioning, support and behaviour change’ led by the University of York.
[3] A third failure to comply with the most important jobseeking requirements will result in a sanction of 156 weeks.
[4] See D Webster, University of Glasgow
[5] http://www.publications.parliament.uk/pa/cm201516/cmselect/cmworpen/373/37302.htm
[6] http://www.publications.parliament.uk/pa/cm201516/cmselect/cmworpen/549/549.pdf

The rise of Bristol, success but not yet shared growth — notes for a new mayor

📥  cities, Economy, education, employment, labour market, Welfare, young people

Gavin Kelly is Chief Executive of the Resolution Trust, and former Deputy Chief of Staff at 10 Downing Street.

Any outsider asked to comment on Bristol’s prospects should, of course, tread fairly carefully. I love coming to the city but claim no special knowledge of it. I like to think I’ve been here enough to see past the standard cliché that it’s a city made of hipsters and hills, balloons and bridges. But I have no granular understanding of the different communities within the city, the twists and turns of its economy, and how its politics have ebbed and flowed.

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So I’m going to rely instead on some arid statistics to form a dispassionate external impression. Statistics are, of course, always partial and quite often misleading. They never tell the whole story  – they’re just dots on a chart. But if you join the dots you form a picture, even if it’s a sketchy one. And pictures can be very revealing. As I’ll explain, the image that emerges for me is a city that has rare strengths as well as major challenges.

What’s happened in Bristol should, I think, be of interest across the country. That’s because to some degree Bristol’s story reflects the received wisdom about the correct recipe for urban economic success. Mix physical regeneration of a city-centre with a successful and growing university, a large pool of high-skilled labour and strong transport links. Sprinkle in some cultural-cool and a high quality of life. And then sit back and watch a place thrive. On this basis, Bristol has the lot.

Given these ingredients, how does the city perform? Like most things, it’s a mixed story. Its strengths are very real: simply put, it has high employment levels, above-average pay for those working in the city, and a remarkably high share of graduates in the workforce. These are big assets. Some cities have lots of jobs but weak pay; others have decent pay but fewer jobs. To do well on both fronts is impressive. And being a magnet for graduates is more vital than ever. Every city that wants to succeed in high-knowledge, high-value sectors will always require a critical mass of highly-educated workers. Outside of London, Bristol outperforms every other city in the UK on this front with 4 in 10 of those in Bristol’s workforce holding a degree.

So far so good. Why, then, do I say the city faces deep problems? For me, three challenges stand out.

First, it is something of an understatement to say that the benefits of the city’s success have not been evenly shared. It is a city of deep inequalities. If we look at child poverty across the city we find a gigantic poverty gap with 5% of children in poverty in some wards and just under half in others. That’s a far more pronounced difference between affluent and deprived communities within a city than we see in places like Glasgow or Nottingham.

But to really get a sense of the challenge facing Bristol look at educational inequality. GCSE attainment for state schools in the city is slightly below the national average and this is mostly due to the low attainment of the poorest children. 25% of pupils on free school meals in Bristol reach the usual benchmark of 5 good GCSEs including English and Maths, compared to 62% of non-poor pupils. That’s a big, ugly, 37% gap between the poor and the rest: only nine local authorities in the country have a larger one. Put simply, non-poor pupils in Bristol do better than the national average, whereas the poor do worse.

This inequality at age 16 is maintained as young people progress. Just 13% of those on free-school meals in Bristol at GCSE progress onto higher education (and the gap between the poor and the rest in this regard has been getting larger in Bristol over time while it shrinks nationally). To put this in context, compare it to the London story. In Inner London half of the poorest kids achieved five good GCSEs including English and Maths. That’s not much lower than the overall score for all pupils in Bristol. And 42% of the poorest pupils in inner London go on to university. That’s three times as many as in Bristol. Let me repeat that: a poor child in London is three times more likely to progress to higher education than their counterpart in Bristol. And, no, it’s not just London: the 13% of poor children progressing to university compares to 30% in Birmingham and 25% in Manchester. Until this is turned around then any talk of improving social mobility in the city will be a pipe dream.

Even on wages  –  where Bristol performs better than average –  there is still a lot of poverty-pay: one in five workers earn less than the (real) Living Wage. Moreover, like everywhere else in the UK, it has been a lost decade for workers. After the financial crisis average pay in Bristol collapsed all the way back to the level it was at in 2001. As of today it has climbed back to 2005 levels. It would be very surprising if pay returns to its 2009 peak before 2020.

If the first big challenge facing the city concerns inequality then I’d argue that a second issue concerns productivity. Bristol has its very own productivity puzzle  –  and it’s a worrying one. Now, in some ways that’s an odd thing to say. Bristol  – and the South West region  – performs better than large parts of the UK on this score and, historically at least, the city looked like a strong performer outside London. The puzzle is that since the financial crash Bristol’s productivity has been sliding backwards. It now stands at just 93% of the UK average (and bear in mind that this has occurred while national productivity has itself flat-lined).

The conundrum grows when we consider that Bristol very nearly matches London in terms of the high share of graduates in the workforce. Yet it resembles places like Darlington or North Lincolnshire in terms of productivity. That’s an odd combination. It should cause pause for thought within the city’s business community and invite questions about the utilisation of skills, along with the quality of infrastructure in the city.

Finally, there is  –  of course –  the housing challenge. Again, Bristol is hardly alone in facing acute affordability issues. But the problem is particularly severe and getting worse. The average house price in Bristol has now passed £250,000. According to the ONS it has jumped 15% in the past year alone, 50% since 2010 and 255% since 2000. You don’t need me to tell you that this isn’t sustainable. To see why look at the ratio of house prices to average earnings. It leapt from around 5:1 in the early 2000s to over 9:1 today. Or to put it another way, house prices have grown more than 3 times faster than earnings in Bristol since 2002. And things are just as bad for renters. A household on a modest income in the private sector will typically spend at least a third of their total income on rent. That is what housing experts call ‘unaffordable’. And it puts Bristol in the top quarter of the most expensive places to rent in England.

Let me finish by saying that being a mayor of an incredible city like Bristol must be a remarkable privilege. But being a new mayor has to be both a luxury and a burden. It’s the former because you have the joy of being able to speak freely about the city’s challenges. And it’s the latter because you know that moment is a fleeting one and that soon all the city’s shortcomings will be hung around your neck if they aren’t addressed.

I hope and expect the new mayor will prioritise an agenda of ‘shared growth’. Doubtless he’ll already be familiar with the received views on the right recipe for a successful city. My argument is that some extra ingredients are required. I hope he won’t hold back in being candid about the scale of the challenge if the ‘shared’ part of the equation is to be made real. And he’ll need to be ambitious and innovative in his agenda for putting it right.

This piece was the basis of remarks made in response to the Inaugural Address of the Mayor of Bristol, Marvin Rees. It first appeared on Gavin Kelly's personal blog.

 

Brexit and the bread ration: a story of everyday farming subsidies

📥  Agriculture, Brexit, Economy, EU membership

Professor Stuart Reynolds is Emeritus Professor of Biology in the Department of Biology and Biochemistry at the University of Bath, and former President of the Royal Entomological Society. 

In the 18th Century economist Adam Smith identified the “invisible hand” of the marketplace as the true, efficient regulator of prices. This is now conventional wisdom, and the idea that free trade is best is so pervasive that the diplomats and politicians of every country seem to exert themselves ceaselessly to abolish or minimise the barriers in its way; globalisation appears an unstoppable trend, opposed only by the fringe protesters of the anarchist left.

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There’s no more important commodity than food. So do we practice free trade in food? Of course not.

The truth is that today almost no country on earth is prepared to allow a laissez-faire agricultural system. A secure supply of food is so central to public contentment that no politician can risk endangering it, and almost every government fiddles with the food chain through subsidies on prices or other kinds of payments to domestic food producers. In this way, farmers are encouraged to grow more crops, raise more animals. This intervention results in food that is more expensive than it would otherwise be (although part of the price may be concealed as taxes).

There’s a long tradition of such fiddling with food prices that stretches back at least to ancient Rome, in which the cura annonae - a grain dole to registered heads of households - was used at first to hold down prices to a set level, and later on became a totally free handout of bread to citizens of the Imperial city. It’s notable that it was introduced when Rome was a republic and citizens held at least a semblance of democratic power. Electors were wooed by rich candidates with low food prices. The grain dole imposed costs on the empire (and therefore on taxes) and must have been a nightmare to administer. It caused endless political problems, but nevertheless it worked well enough to endure from the grain laws of Gaius Gracchus in 123 BC through to the Empire and at least the late 3rd Century CE.

Today, such fiddling with food prices continues on a previously unimaginable scale. The world’s largest producer of food, the United States of America, up until 2014 regulated the market through price support not only of cereals but also of numerous other commodities. Responding to criticism of this market-distorting expenditure, the Farm Bill of that year phased out direct payments to farmers (some of those previously available did not require the recipient to grow any crop at all), but despite this change the USA’s food market is still regulated by a hand that is far from invisible. The US Department of Agriculture’s budget is so large (the total outlay for 2016 is estimated at US$148bn) and so complicated that it’s difficult to say exactly how large is the total direct and indirect subsidy actually paid to US farmers - but some idea of the scale of intervention can be seen from the 2016 USDA budget estimates. According to the OECD, the benefits to farmers in 2015 totalled $38.7bn. Despite the 2014 Farm Bill, support payments for particular commodities are still made as “agricultural risk/price loss coverage” (the total for 2016 is estimated to be $7.1bn). Moreover, there are numerous other billion-dollar-scale benefits to farmers, such as crop insurance to the value of $8.2bn (effectively providing a guaranteed income from a planted field) and environmental payments such as the “conservation reserve program” (a $1.8bn fund similar to the EU’s stewardship programme).

The EU is another big subsidiser of food production. According to the EU itself, from 2016 it will spend €42bn per year on direct payments to producers based on land area (the so-called “first pillar” of support to farmers). A further €13.6bn is provided for rural development (“second pillar”) funding. Again, it’s difficult to track every actual subsidy, and the OECD reckons that the total subsidy in 2015 was much more than this, at €81.1bn.

Launched in 1962 (before the UK was a member), the EU’s Common Agricultural Policy (CAP) initially caused various kinds of food prices to be supported by interventionist purchase of surplus harvest, and had the desired effect of increasing production. It was so successful that it quickly resulted in the notorious “mountains” of butter, sugar and grain, and “lakes” of wine and olive oil that in the 1980s were almost daily excoriated as a scandal by British tabloid headline writers. The EU is typically represented by its critics as exceptionally unresponsive to media pressure of this kind, but - by 1992 - the Commission was obliged to reform the policy by reducing price supports and paying farmers not to grow crops at all (“set-aside”). Subsequently, in 2003, the EU’s agri-food policy was modified again, so that subsidies for particular crops were withdrawn altogether, while maintaining much the same level of total support for farmers through area-based “single farm payments” which now account for most CAP spending. The idea is to make farmers more responsive to agricultural product markets, and less strongly driven by the level of subsidy. Does that mean that Europe has at last achieved an Adam Smith-style laissez-faire agricultural policy? Hardly. The level of payments to farmers is still massive, representing around 40% of the whole EU budget.

The OECD gives figures for subsidies as a percentage of total farm income. The 2015 figure for the 28 countries of the EU is 28%, while that for the USA is only one third of that at 9.4% - and both these superstates are far from the top of the subsidy list. The biggest spenders are small, rich states. In both Norway and Switzerland, for example, subsidies represent more than 60% of total farm income. In fact price supports and other interventionist instruments are alive and well in the agricultural systems of almost all the countries listed in the OECD table. Although at the World Trade Organization talks of 2001, the rapidly developing BRIIC countries (Brazil, Russia, India, Indonesia and China) opposed the distorting effects of the agricultural subsidies of the developed world (especially the USA and the EU), the strategy of the former has since been to emulate the policies of the latter. China’s total payments to farmers ($160bn per year in 2012, representing 21% of farm income), in point of fact, now dwarf those of the USA, both in total and proportionally.

Although globalisation is nominally all about tearing down barriers to free trade, there’s little sign that the interventionist policies of the biggest food producers are about to change. Evidently free trade is thought to be a good idea as long as it’s not free trade in food. One reason for this is simple but scandalous: the farm payments that are the core of these policies go overwhelmingly to the biggest landowners. The recent press reports identifying the top 100 recipients of EU farm subsidies as a roll call of the very rich make interesting but horrifying reading. In the USA the picture is similar with three quarters of the money going to only one tenth of recipients. These big landowners are of course prominent among the people who bankroll politicians (in some cases they are actually the same people), and they make it clear that they want the farm payments to continue. Viewed in this way, farm subsidies look like politically sanctioned schemes to transfer wealth from poor to rich.

But inequitable political power is volatile, and meddling with food prices comes at a political cost - at least where democracy is practised. Populist politicians don’t have to work hard to persuade electors of the merits of cheap food policies. Direct payments to farmers that aren’t tied to food production are particularly hard to justify. And it’s difficult to keep corruption from creeping in when very large sums of money are sloshing around. Although farmers are effective lobbyists in many countries, it’s hard work to defend payments to plutocrat landowners. And how come the biggest landowners receive larger proportional subsidies than small ones?

The result of these conflicting pressures is a trade-off between laissez-faire policies that yield cheap food (popular with voters) and intervening to ensure a consistent supply (popular with farmers). Evidently the enhanced security of the food supply makes higher prices palatable to the electorate at least some of the time.

Farm payments don’t only affect farmers at home. Direct payments to farmers can also lead to price distortions on world markets that amount to the dumping of surplus food at low prices, effectively hindering access to the agricultural products of less-developed countries and generating food insecurity. The EU and the USA have also both been accused of dumping their own surpluses as food aid to regions suffering food shortages; this feeds those who are starving, but has the disastrous effect of impoverishing local food producers. Responding to criticism of this kind, in the last twenty years donors have increasingly chosen to purchase food aid locally instead of sending aid from stores in the donor country - but this is still a controversial area.

There are also arguments other than economic ones to be made against political intervention in agricultural markets. One of these is that price supports not only boost the incomes of farmers, but also determine what kinds of crops farmers grow, regardless of whether they are actually needed. It isn’t an accident that maize (corn) is the US’s biggest crop – it’s also the most heavily subsidised. Almost all of the maize grown is not for human consumption, and most is destined to be eaten by cattle. It is the availability of cheap corn that has enabled the vastly increased production of feedlot beef cattle, and hence the growth of the burger industry.

But there aren’t enough cows to eat all the maize that is produced, and something else must be done with it. In recent years, with awareness of climate change and the need to limit fossil fuel consumption, there has been enthusiasm for turning it into alcohol for use as fuel - and in 2009 some 29% of US corn production was used in this way. But there are now serious doubts about the environmental benefits of ethanol-based fuels, and official enthusiasm for biofuel has waned. The other main non-cattle use for maize is the production of corn syrup, a commodity that is actively looking for both food and non-food uses, despite the fact that it probably isn’t a very healthy choice as a food. Low-cost sugary drinks are a direct consequence of growing all that corn. The knock-on consequences of growing the wrong kinds of food are serious, being directly relevant to the state of public health and the (huge) costs of healthcare systems. Too many burgers, too many sugary drinks? It won’t do simply to blame the people who follow such a diet. The fact is that that these are the cheap foods that many poor people are obliged to consume. The modern epidemic of obesity is at least in part due to agricultural policies followed by the US and other developed nations.

Green activists have also finally realised that many kinds of farm subsidy are very bad for the rural environment. Any system that promotes bringing as much land as possible under the plough is bound to diminish biodiversity. The whole point of agriculture is to promote the growth of a single kind of crop at the expense of whatever would be there otherwise. The more efficient is the agriculture, the fewer other species will be able to live alongside it. The 2016 State of Nature report, which was produced by a consortium of green NGOs and pressure groups, concluded that in the UK “policy-driven agricultural change [is] by far the most significant driver of [biodiversity] declines”. It’s true that the EU has in the past made a portion of payments to producers (currently about 20% of the total) contingent on negotiated plans for environmental stewardship, but the complex bureaucracy involved is formidable and unpopular with many farmers.

What are the prospects for a world-wide reduction in the scale of agricultural subsidies?

It’s notable that interventionist policies tend to be implemented when memories of shocks to the food supply chain are still strong. The notorious British Corn Laws (tariffs on wheat imports designed to maintain a minimum price for the domestic product) were introduced in 1815, just after the battle of Waterloo brought the Napoleonic wars to a close. US farm payments began in the 1920s, following a period of volatility in farm gate prices, and were consolidated in the depression years. The European Union’s Common Agricultural Policy (CAP) was negotiated over a decade of wrangling in the 1950s, less than 10 years after World War II’s food rationing. The idea in all these cases was to ensure food security. This suggests that when politicians who never experienced the nutritional deprivation associated with war or other food price shocks, rationing, or even starvation, finally come to power, they will fret much more about high food prices than did the previous generation, and worry much less about continuity of supply. Perhaps this is what’s happening now; perhaps we can expect a rapid change in food policy as the baby boomers of the late 1940s retire from the political scene.

Reducing or eliminating farm subsidies makes most sense for countries with secure domestic food supplies that are also net exporters of food. Today, the states that intervene least in food pricing by some way are New Zealand and Vietnam, both of which have subsidies less than 1% of farm income. These are both countries with large farming sectors occupying particularly favourable geographic positions from the point of view of agriculture-friendly climates combined with closeness to the emerging market of China. There are other nations (like Australia, Brazil, Chile and South Africa) that have low levels of subsidy (all less than 5% of farm income), but they don’t come close to these two.

New Zealand is particularly interesting, because it took the decision to deregulate its highly developed and previously highly subsidised agricultural industry only in 1984, and has since prospered. The country’s animal industry is particularly successful, exporting grass-grown beef, lamb and dairy goods. Enthusiasts for deregulated agriculture argue that the abolition of price intervention and other supports in 1984 has allowed New Zealand farmers to innovate and become successful exporters. This is a remarkable achievement given that New Zealand farmers don’t sell into an unfettered supply-and-demand market, because most international competitors operate under interventionist conditions and many of their customers impose tariff barriers to imports. Surely, it is argued, this kind of success is what every country should aim to emulate? But the period since 1984 has coincided with the unprecedentedly rapid growth of the Chinese economy and a concomitant huge increase in exports of New Zealand agricultural products to China. This was consolidated in the 2008 zero-tariff free trade agreement with China. Would New Zealand’s non-interventionist food policy stance have been possible in a time of less impressive market growth? Will its success continue? The questions have at least to be asked.

Here in the UK there is already widespread discussion about what will happen to UK food and agriculture policy after Brexit, when we in the UK can in principle decide to do as we like?

British politicians have never been happy about Europe’s interventionist CAP, perhaps being influenced by long-lasting memories of the problems caused by the 1815 Corn Laws, which enriched big farmers but inflated grain prices and caused misery for the poor. A parliament stuffed with landowners was reluctant to forego the profits, but it was only too obvious that eventually the Corn Laws would have to go. Only the disaster of the Irish Potato Famine caused their repeal in 1846, and British statesmen have been suspicious of food price intervention ever since. However, it is ironic that during the years of EU membership, British politicians have evidently become so accustomed to the EU’s system of agricultural support payments that in the recent past, far from demanding to scrap it, they have featured among its fiercest proponents. In the latest iteration of the CAP, provision is made for national governments to impose a ceiling on payments; unlike most EU countries, the UK government has chosen not to do so. It’s quite difficult to explain this, but it’s hard to avoid the conclusion that the continuing preference of the landed classes for the Conservative party may have had something to do with it.

Some kind of reform seems at least desirable. Vested interests, such as the big landowners and perhaps the politicians whom they support, will doubtless argue that what is needed is simply to institute a local version of the CAP, which will continue to intervene in various ways to support farmers’ incomes (perhaps especially those of big landowners). But the press has already smelled blood over the level of payments to the very rich, and popular sentiment for a redistribution of payments in favour of small farmers seems certain to grow. Politicians don’t like populist campaigns like this (remember the fuss about MP’s expenses?) but inevitably they are obliged to respond when votes are at stake.

A further shift towards green farming also seems likely. NGOs such as the National Trust are already arguing that Brexit offers an opportunity to enact a policy that will do more to protect the countryside from the undesirable environmental effects of intensive farming. It is uncertain to what extent, however, these campaigns will be successful in a time of austerity.

It isn’t hard to predict that politicians will be most concerned to respond to electors’ worries about the cost of feeding their families. For this reason, a reduction in the total extent of farm subsidies now looks inevitable. Farmers, whether plutocrats or crofters, will doubtless squeal, and the National Farmers’ Union will campaign to maintain direct payments at pre-Brexit levels. Perhaps there will even be French-style protests involving invasions of tractors in central London. But there can be little doubt that much of the referendum support for Brexit came from those who feel neglected by the existing political system, and who have little sympathy with farmers and farm workers, who are now so few in number that they can exert little political leverage except through lobbying at the highest levels. The success of the Brexit campaign rested at least in part on promises to repatriate the UK's payments to the EU and to redirect them to popular worthy causes such as the National Health Service. There are high expectations that at least something of this kind will be delivered. But given that maintaining direct farm payments until 2020, as already promised by the Government, will consume almost half of this money, the political pressure to reduce agricultural subsidies after that date will be very hard to resist.

 

Legacies and long shadows: will Theresa May succeed where Chamberlain failed?

📥  Anglosphere, Brexit, future, political parties

Birmingham has a square named after Joseph Chamberlain, its most famous politician, through which visitors to the Conservative Party conference will pass on their way up from rebuilt New Street station this week. Although the square is home only to a lacklustre memorial fountain, and not his statue, Chamberlain will still loom large over proceedings at the conference. He will be celebrated by Theresa May and her colleagues as a champion of the manufacturing industry and a great social reformer, the radical who campaigned for municipal education, decent housing and civic improvements for the Victorian working class.

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Chamberlain was also an apostle of imperial unity between Great Britain and her settler colonies – what today’s Brexiteers call the “Anglosphere”. As Colonial Secretary, he sought closer economic and political ties between Great Britain and Canada, South Africa, Australia and New Zealand. His passion for this cause would eventually lead him out of government, the better to campaign for tariff reform that would give preference to colonial goods and shelter British industry from international competition. It was a lost cause. Free trade was too deeply embedded in the political economy of Edwardian Britain for Chamberlain to dislodge it. Birmingham’s manufacturers were no match for the financial, commercial and shipping interests that had the deepest stakes in the liberal British world order, while the free traders’ “big loaf” beat Chamberlain’s “little loaf” for the loyalty of the working class. Unionist imperialism plus social reform lost out to a new progressive alliance of Liberal and Labour interests.

Theresa May wants to succeed where Chamberlain failed in uniting working-class voters with the British industrial interest. She has created a new department for industrial strategy and promised to prioritise “just managing” households. Housing policy is to be refocused from subsidising home ownership, to building homes and supporting private renters. Fiscal policy will be relaxed, easing planned cuts to services and benefits. The electoral coalition that delivered Brexit – of struggling working-class voters and middle-class older voters (or the “excluded and the insulated”, as David Willetts recently put it) – will form the ballast of a new Conservative hegemony.

But the Prime Minister’s chosen path to Brexit – of prioritising immigration control over the single market, and “sovereignty” over the jurisdiction of the European Court of Justice – will bring her into conflict with Britain’s existing political economic interests, just as much as Chamberlain’s campaign for tariff reform did. Britain’s leading-edge manufacturers – in the automotive and aerospace sectors, for example – are deeply integrated into the European single market. They do not simply make products in the UK, and sell them to the rest of Europe, tariff free, as Brexiteers suppose: they have complex supply chains and move parts and people across plants in the EU. Imposing custom checks, slowing down supply chains, and limiting the movement of workers will matter as much as tariffs to their operations. And what goes for manufacturing is doubly true for services.

Decisions about new investment will often be taken in global HQs, not national branch offices. The growth of foreign direct investment in the UK since the 1980s means that much of Britain’s industrial capital is no longer national in any meaningful sense. Economic patriotism will hold little sway over multinational investors or global bankers.

Some political economists argue that the advanced sectors of the economy are not subject to partisan division, since their centrality to national prosperity is such that political parties agree on the policies needed to secure their interests. If so, that may be about to change. The City of London and the leading export sectors – trade unions and employers – have yet properly to flex their muscles in the Brexit debate. Although they cannot currently turn to an electorally credible Labour opposition to make their case, they will have advocacy routes of their own, not least through the Mayor of London and the Scottish government. Hard Brexit will stretch Theresa May’s unionism and the unity of the country, as much as that of her own party, to the limit (and that is before the status of Northern Ireland’s border is factored into the equation).

Few peacetime prime ministers have confronted a set of challenges like those facing Theresa May: holding together the United Kingdom, revitalising British industry, delivering shared prosperity to working people, and renegotiating Britain’s place in Europe and the world. It is a formidable list. Lesser ones defeated Joe Chamberlain and his generation. Theresa May will hope that she isn’t memorialised by failure.

Four men who will shape the way the EU negotiates Brexit

📥  Brexit, EU membership, EU renegotiation, France, Germany, International relations

Dr Susan Milner is Reader in European Politics at the University of Bath. Dr Patricia Hogwood is Reader in European Politics at the University of Westminster, and Clément Jadot is a PhD candidate at the Université Libre de Bruxelles.

Although the UK has yet to announce when it will trigger the all-important Article 50, which will start the process of it leaving the European Union, diplomats on the continent are getting ready for kick-off. Here we profile four people – two Germans, a Frenchman and a Belgian – who are likely to play a part in shaping the way Brexit negotiations will play out.

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Michel Barnier
Chief Negotiator for the European Commission on Article 50

The nomination of Michel Barnier in July to head European Commission president Jean-Claude Juncker’s task force on Brexit negotiations raised eyebrows and a few hackles in Britain. The right-wing press depicted the Brussels insider as an “arch federalist”. He has been an EU commissioner twice, most recently in charge of the single market from 2010 to 2014, and is known in the UK as the architect of banking union.

But Barnier has been at pains in his recent writing to distinguish himself from both what he sees as a British-style narrow agenda for the EU and a federalist expansive view of it. Instead, he has sought to promote a strong European economy and industry in a world of regional economic blocs: as he put it in his 2014 book, “less regulation and more policy”. Commentators agree that his task force, which will start work on October 1, shows that Juncker’s commission means business.

Two things are of note here: first, Barnier’s team shows a strong Franco-German political leadership, with the appointment of current trade commissioner Sabine Weyand as his deputy, and experienced commission official, Stéphanie Riso as his chief advisor. Second, all concerned have strong links with the single market, intra-EU trade and external trade negotiations. The level of specialist knowledge, experience and networks they have to hand will be difficult to match on the British side.

Barnier also has strong links with the French political establishment, maintained over a long career in politics (he was the youngest MP in parliament at the age of 27 in 1978). This means that he will have a close working relationship with any of the likely presidential candidates of France’s right-wing party Les Republicans who currently look best-placed to beat the Front National in next year’s executive elections.

At the moment, France’s relationship with the UK is mired in acrimony over the Calais migrant crisis which will intensify as the elections loom, creating another headache for Brexit negotiators. Any incoming French president is likely to push for a tough line on allowing Britain to retain access to the single market.

Martin Selmayr
Head of Cabinet for Jean-Claude Juncker

EU president Jean-Claude Juncker’s right-hand man, Martin Selmayr, is well-placed to set the parameters of the Brexit negotiations. A professor of European law, Selmayr was appointed Juncker’s head of cabinet in 2014. There his responsibilities include overall management of the cabinet and legal and communications strategy. Fiercely competent, ruthless and abrasive, Selmayr is a staunch European federalist who believes that the UK has long obstructed European integration and that Brexit will promote European unity.

Selmayr is best known in Britain for his comment that the prospect of Boris Johnson as UK prime minister would be a “horror scenario”. Selmayr enjoys links to the German media and to Angela Merkel’s chief of staff Peter Altmaier, but some believe he may be taking too much of a political risk in confounding Germany’s leadership role in EU internal matters. Certainly, Germany has been keen to avoid the Commission dominating the Brexit process for fear that hardliners Juncker and Selmayr would adopt a confrontational and uncompromising stance against the UK.

EU member-state governments were quick to block an attempt by Selmayr to appoint himself as the coordinator of Brexit negotiations for the European Council – a job that council president Donald Tusk gave to the Belgian Didier Seeuws. But Selmayr remains in an ideal position to shape the commission task-force once the exit clause is triggered by the UK.

Guy Verhofstadt
European Parliament’s chief Brexit negotiator

A spearhead of the federalist movement within the European Parliament, Belgian’s former prime minister Guy Verhofstadt enjoys great popularity both in Belgium and the EU and substantial experience in negotiating both at the national and EU levels. But his appointment as the parliament’s chief negotiator on Brexit, sparked criticism from UK eurosceptics, with the former UKIP leader Nigel Farage branding him a “fanatic”.

Former Belgian PM, Guy Verhofstadt. ALDEGroup/flickr.com, CC BY-ND
At the age of just 29 he became president of the Flemish liberal party of Belgium and quickly became a major political player. As prime minister between 1999 and 2008 he was already looking towards Europe – and in 2006 wrote a book called the United States of Europe. But in 2004, the then UK prime minister Tony Blair refused to back him as a candidate to succeed Romano Prodi as European Commission President, despite the fact that he had had early support from French president Jacques Chirac and German chancellor Gerhard Schröder.

Five years later, he entered the European Parliament as an MEP, where he’s been holding the chairmanship of the Alliance of Liberals and Democrats for Europe (ALDE) group ever since. He has built up a reputation as a fierce partisan of a federal Europe. Popular among his peers, he co-founded the Spinelli Group in 2010 – a network of organisations working for greater federalism in Europe – and in 2014 was the ALDE party nominee for the European Commission presidency.

In the UK, Verhofstadt is known for his arguments within the European Parliament with eurosceptics and nationalists over the future of Europe. Since his appointment, he has been frank about his negotiating position, in particular, insisting the parliament would refuse a deal which would allow the UK to enjoy access to the single market while opting out of the free movement of people.

No doubt that over the forthcoming discussions, Verhofstadt will be a tough and experienced negotiator.

Michael Roth
Germany’s de facto Brexit negotiator

As soon as the EU referendum result became known, it was clear that Germany would play a key role in the Brexit negotiations. In Germany, an issue exists only when it has legal status. This means that there will be no formal designation of a Brexit negotiating team until the UK triggers Article 50 of the Lisbon Treaty, formally launching the exit process. In the meantime, Germany’s de facto spokesperson on Brexit is Michael Roth.

A committed protestant and member of the Social Democratic Party (SPD), Roth has been an MP since 1998. He was made European affairs minister in 2013, aged 43. As a secretary of state or junior minister, to the public Roth is little known outside his home region of Hessen, but is recognised in political circles as one of the most influential up-and-coming politicians in chancellor Angela Merkel’s cabinet.

Young, dynamic and confident, Roth claims to be “heart and guts” for Europe. On Brexit, Roth is a moderate, conceding that the EU will need to work out a “special status” for the UK after Brexit on account of the country’s size, its economic weight and the length of its membership of the EU. At the same time, though, he has stressed that a close relationship would not allow UK “cherry picking” and there would be no access to the EU free market without the free movement of people. He insists that the UK needs to be ready to negotiate at the start of 2017.

This article first appeared on The Conversation.

 

Whatever happened to the soft left?

📥  New Labour, political parties, Soft left

The New Statesman led its Labour Party conference edition with a series of “New Times” pieces, in emulation of the 1988 Marxism Today special of that title. For people of a certain age, Marxism Today remains talismanic. It was where the future was debated on the left in the 1980s, in a spirit of intellectual openness and curiosity. It analysed and probed culture, as much as politics and economics, and stood for broad anti-Thatcherite alliances. It featured progressive Tories on its pages, as well as feminists, greens and eurocommunist Marxists. Remarkably, (but characteristically) you could buy it in WHSmith.

It was also a potent source of intellectual renewal for the Labour Party in the 1980s. Although it was originally a Communist Party magazine, it consistently engaged in debate with Labour MPs and intellectuals, seeking to understand the popular appeal of Thatcherism and its place in history, and to sketch out paths forward from the ruins of post-war Keynesianism and the ossified, dying cultures of the industrial Labour movement. It was everything the Trotskyist, Bennite and Old Labour right were not.

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Selection of Marxism Today covers: Composite, Amiel Melburn Trust

The key receptacles of this intellectual debate in the Labour Party were the soft left and its leading thinkers: MPs like Bryan Gould, Robin Cook and Gordon Brown. In the 1980s, the soft left had an important place in the Labour Party’s modernisation. Where the right provided organizational ballast, the soft left provided ideas and energy. They were trusted with the party’s values, but also its intellectual journey to the future. They understood the importance of winning elections, but they fed off wider social movements and organisations, like environmentalism and Charter 88, and engaged with Labour’s grassroots in local government and the trade unions.

To get a feel for the interplay of ideas that took place between the Labour soft left and Communist Party modernisers in the late 1980s, read this exchange from the Marxism Today archive between Bryan Gould, David Blunkett, Bea Campbell and Charlie Leadbeater. It ranges across political strategy, theory, and substantive issues of economic and democratic reform. Something of the soft left’s modernising impatience comes across: Gould talks about “leapfrogging” Thatcherism, while also displaying the economic radicalism that was later to cost him his career. Blunkett meanwhile combines electoral realism with a participatory democratic impatience with “parliamentarianism”.

This exchange would be inconceivable today, and not just because the Communist Party of Great Britain folded in the early 1990s. The contemporary Labour soft left has become a shadow of its former self. As the 1990s and 2000s wore on, its luminaries deserted, departed or died, and it proved incapable of renewing itself. In the last two Labour leadership elections, the soft left torch was carried by Owen Smith and Andy Burnham. It did not burn brightly. Rather than contest the terrain of ideas with Corbyn, both chose to surrender the intellectual field to him.

If Labour’s moderates are to stand any chance of political renewal, they will need to rediscover the party’s soft-left traditions, not simply in name, but in spirit and substance. These traditions have become associated with political ineptitude and intellectual torpor, but it was not always thus. The soft left was an important ingredient, not just in the recovery of the Labour Party in the 1980s, but in the birth of New Labour in the mid-1990s – precisely when Tony Blair was at his most ecumenical. He too graced the pages of Marxism Today, though the magazine would come to disown his project. The soft left contributed ideas and energy that a leader from the right of the party absorbed. There is an enduring lesson in that.

Altering the foreign aid equation

📥  Foreign aid, International relations

Ali Salman is Founder and Executive Director of the Policy Research Institute of Market Economy in Islamabad, and is studying on the IPR's Professional Doctorate programme.

The West has spent US$2.3 trillion on foreign aid over the last five decades and has not managed to “get 12-cent medicines to children to prevent half of all malaria deaths, or $3 to each new mother to prevent 5 million child deaths,” writes William Easterly, the author of The White Man’s Burden: How the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good.

Easterly believes that economic development comes not through aid, but through the home-grown efforts of entrepreneurs and social and political reformers. It could also be added that strengthening of the civil society also helps in economic development.

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Criticisms of government-to-government foreign aid can be divided into two groups. One group rests its claim on the technical evaluation of aid programmes, thus raising doubts about the efficacy of foreign aid - especially in relation to poverty reduction. This group makes recommendations for improving the programme design and accountability mechanisms, but it accepts the basic paradigm of foreign aid that the poor need external help. This is aid managerialism.

The other group criticises foreign aid in terms of its probable use as a leverage to extend influence on the domestic policy of developing countries. This group raises fundamental questions about how the aid is structured and relates it with what it calls a neo-imperialist agenda.

In most cases, 75% of aid money goes back to donor countries in the form of contracts and supply of goods. Governments are often engaged in a turf war when negotiating the terms of engagement with foreign aid agencies.

The currently enforced Foreign Contributions Act 2015 in Pakistan links the use of foreign aid with transactional approval from the Economic Affairs Division. This is aid politics.

There are important actors in foreign aid – the aid professionals, consultants, evaluators and international and local contractors. They associate themselves with governments, civil society and donors. More often than not, they broker the flow of aid between donors and recipients by preparing programmes, proposals and projects. Their interest obviously lies in expanding foreign aid. This is aid business.

Problems

The problem with the first argument – aid managerialism – is that it may end up demanding more foreign aid and, just like any failed government programme, it gets more budget. This just feeds into the foreign aid cycle and increases the cost of fundamental change.

The problem with the second argument – aid politics – is that it may deny external resources when and where they are needed the most, especially for meeting challenges of the on-going humanitarian crisis including disaster preparedness and mitigation.

This argument also increases the risk of government’s increased control in the recipient country, which in turn could be utilised to further a government head’s undemocratic ambitions.

Possible remedy

An alternative scenario, a hypothetical one, can be considered in which there is no government-to-government foreign aid. In such a scenario, the recipient government declares a ban on foreign aid for publicly funded programmes and departments such as public education and health.

Instead, it creates channels and mechanisms where foreign aid can flow directly to civil society, NGOs, the private sector and philanthropic organisations, serving the same purpose of public goods delivery, albeit in a much more cost-effective manner.

An immediate consequence of this ban will be a fundamental change in intergovernmental relationships altering the power structure. At the same time, it will keep donor countries committed to the Sustainable Development Goals. This is aid globalism.

Altering the foreign aid equation by this fundamental shift will strengthen civil society and private institutions, which will also bring a positive change to social and political structures in the recipient countries.

The re-directed foreign aid will be government-light, society-heavy. Governments on both the donor and recipient sides will have reduced controls. However, this should not undermine collective efforts to make aid flows more transparent and more accountable.

Under aid globalism, less money will be flown back to donor country-based contractors and less money will be stuck in the bureaucratic gridlock of recipients. More of the aid will reach the places where it is needed the most.

This article originally appeared in The Express Tribune.

Colin Crouch: The familiar axes of politics are changing, with momentous consequences

📥  Brexit, Multiculturalism, political parties, Political sociology

The familiar axes of politics are changing, with momentous consequences, argues Colin Crouch

From the time of the French Revolution, mass politics has revolved around two core conflicts: that between preferences for more or less economic inequality; and that between conservative, authoritarian values and liberal ones. The main divisions among political parties in most countries fit into this frame, but we have become accustomed to seeing the former, raising issues of redistributive taxation, the welfare state, and the role of trade unions, as the senior partner. In western Europe, if not in the USA, this has become even more the case as organized religion, the main historical carrier of social conservatism, has declined in importance.

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This situation is challenged by the growing prominence of a chain of partly associated, partly quite independent, forces: economic globalization, immigration, refugees and the assertion of Islamic identities, which includes terrorism as its extreme. Together these reassert the old struggle between authoritarian conservatism and liberalism. Many people feel that everything familiar to them is being threatened, that they are being confronted with decisions, cultural artefacts and the presence among them of persons, all coming from outside their familiar and trusted sphere.  They seek security by trying to exclude the forces and people that are doing this to them. Most affected are those whose own working lives give them little control in any case, and who are accustomed to the security that comes from the enforcement of rules that exclude troubling diversity. This response takes various forms. Many Russians become both highly nationalistic and also stress their homophobia. Many people in the Islamic world assert their religion (which is here far more important than nationality as a symbol of a pre-globalized past) and impose strict dress codes on women. Many Americans not only become fearful of Mexican immigrants and Islamic terrorists, but become agitated about abortion. A more general social conservatism, most powerfully embodied in deep-rooted feelings around sexuality, mixes with xenophobia to produce new social supports for the traditional, not the neoliberal, right.

Europe, especially western Europe, has been a partial exception. The final great battles of the 1970s in Catholic lands over contraception, divorce and finally abortion petered out, the churches, the main bearers of European social conservatism, became weak and in many cases often liberal in their social attitudes. There are today few supports for general authoritarian conservatism, and matters have narrowed down more closely to immigration and the following chain: the European Union is a super-national force that suppresses traditional national identities; in particular, it brings immigrants with unfamiliar cultures and languages; it is difficult to distinguish immigrants from refugees, who come in alarming numbers from even more unfamiliar cultures; and since these refugees are Moslems, they are likely to include terrorists who will try to kill us.

Against these beliefs and fears stands a liberal, inclusionary mind-set that sees in globalization and multiculturalism a series of opportunities for a richer life, more varied cultural experiences, perhaps new possibilities for individual advancement.

A brief history of political identity

To put this confrontation into context, we need to understand how it happened in the first place that ordinary people in the late 19th and early 20th centuries, whose daily lives were very remote from big political issues, ever came to have political identities. It occurred as they found that aspects of their social identities, which they understood very well, were engaged in struggles over inclusion and exclusion in voting and other political rights. Depending on one’s social position, one’s identity was implicated in either demands to be included, or demands to exclude others. Class and property ownership, religion, and occasionally ethnicity (in Europe normally with reference to Jews, in the USA to Afro-American people) were the key identities around which these struggles revolved. By the end of World War II and after considerable bloodshed the concept of universal adult citizenship had become accepted in almost all advanced economies. Spain and Portugal remained outside the consensus until the mid 1970s; Greece flitted in and out. In central and eastern Europe a very back-handed kind of universalism dominated, where universal inclusion came to mean universal exclusion except for a small communist party elite; but in general in the west politics became peaceful and more or less democratic.

Once universal citizenship was achieved, those identities forged in struggles to achieve or prevent citizenship began to lose their raison d’être, but so deeply rooted were they that paradoxically they became the basis of democratic electoral politics. Over time they could do this not as direct memory but only as memories of parents’ and grand-parents’ experiences. These necessarily faded, and in any case many people moved away from the social locations of their parents and grandparents. Democracy therefore began to depend for its vigour on forces that its very achievement had weakened. Their decline was reinforced by three major changes. First came the rise of the post-industrial economy and the creation of many occupations that have no resonance with the struggles of the past, and whose practitioners cannot easily relate their occupational identities to political allegiance at all. Class declined as a reliable source of political identity. Second, (in Europe but not the USA) religious adherence declined, and along with it both the power of the identity struggles surrounding it and general conflicts over authoritarianism versus liberalism. Finally, the use of ethnicity or nationality as identity resources in partisan struggles had been rendered horrifying to most politicians and ordinary people, partly as a result of the two world wars and their demonstration of the destructive force of nationalism, and partly through knowledge of the Holocaust and the passions that had lain behind it. A nationalistic fringe continued in some countries, and the separate issue of racial entitlements to citizenship continued to flourish in the USA until the 1960s, but in general this became a no-go area in political conflict.

We should not puzzle at declining voting turnout and even more strongly declining identification with political parties once we appreciate that a strong interest in politics by the mass of citizens who have no chance of being politically effective needs social supports, and that those bequeathed to us by the struggles of the past have declined in salience. There has now been such a general loosening of ties between parties and voters that it increasingly seemed inappropriate to include a discussion of voting behaviour within a discussion of identities. Does voting for a party, even repeated voting for it, necessarily imply an ‘identity’ with it any more than frequent purchase of a brand of soap implies an identity with the firm making the soap? Certainly, election campaigns increasingly resemble advertising campaigns for products, suggesting that parties do indeed consider that they bond with voters no differently from the way producers of goods bond with customers.

But this may now be changing, as economic globalization and its broader consequences start to reproduce social identities with powerful political potential. Central is revived national consciousness. While the great majority of politicians had for decades abjured using national identity in party conflict, there was no reason for them not to use it as a non-conflictual rallying call, since after all their role is to care for the nation. As a result national sentiment has been left lying around in popular consciousness, available for other purposes if occasion arose. Globalization, immigration, refugees and terrorism provide such occasions. Meanwhile memories of the appalling consequences of the political use of nationalism in the first half of the 20th century are fading. Nation is strengthening as a political force, while class and religion (unless the latter becomes implicated in conflict around Islam and therefore absorbed into nationalism) are declining.

The turnaround can be seen most clearly in parts of central Europe. The political implications of class identities had been stood on their head under state socialism, and national identity remains the only strong link that people can feel to their polity. This helps explain the puzzle of the Czech Republic, which has suddenly become the most Europhobic country in Europe after the UK. The country has benefited more than any other from the European Union, which has provided its modern infrastructure, a safe framework for the divorce from Slovakia, an easy channel for the German and other investment that has equipped an advanced economy, and a base for trading with the rest of the world that the infant country would otherwise have had to create from scratch. Then the EU asked for some payback, putting pressure on the Czechs to help bear the burden of Middle Eastern refugees arriving on the coasts of Greece and Italy. Czechs – whose nationalism historically never hurt anyone but has been a badge of resistance against various forms of foreign domination – suddenly became responsive to the wave of anti-foreigner feeling sweeping through Europe.

One major, unexpected result of these developments is that the old predominant conflict axis around inequality and redistribution is itself becoming interpreted through nationalism rather than through class politics. The new nationalist movements nearly always include the global financial elite in their attacks. Many observers were surprised when there were relatively few mass expressions of anger after the 2008 financial crisis. We can now understand why. For ordinary non-political people to take any kind of action, including voting, against powerful forces they need some confidence-boosting assurance that they are part of something wider, something rooted in a strong social identity. Given the decline of class, only national identity has been available to give them that assurance. All contemporary xenophobic movements, from Donald Trump in the USA and Mariane Le Pen in France to Geert Wilders in the Netherlands and Norbert Hofer in Austria, link their attacks on immigrants and refugees to those on the national elites implicated in the financial crisis. In turn, some protest movement that began as non-xenophobic opponents of elites, like il Movimento Cinque Stelle in Italy, find that they can get more traction if they include resentment at refugees in their rhetoric. Groups like UKIP in the UK or Alternative für Deutschland, which started life as critics of the European Union, have found success by responding to fears around immigrants and Moslems. The challenge to powerful elites is hereby made safe, because it is enfolded in attacks on the weaker symbols of globalization. One might be frightened to kick a strong man, but one might kick what one believes to be his dog.

In a recent Guardian article, Martin Jacques claimed that the successful Brexit campaign and various other instances of widespread support for populist movements around the western world constituted the return of class politics in general and a political reassertion of the working class in particular[1]. This was wistful thinking. Outside Greece, Spain and possibly Scotland, the new populism is precisely not articulating itself as class movements, but as nationalistic, anti-immigrant, anti-refugee – quite apart from the fact that a majority of Brexit voters were comfortably off Conservative voters in southern England.

The social supports of multiculturalism

Is nationalism therefore set to trump all other political forces, as its deeply rooted emotions come up against little more than voting behaviour of the soap-buying kind? Are persons holding liberal opinions anything more than randomly scattered individuals? Stalin invented the term ‘rootless cosmopolitans’ to stigmatize Jews, but the general idea that cosmopolitanism or a positive approach to multiculturalism implies rootlessness or normlessness is widespread. Some recent research suggests otherwise, providing evidence that liberal attitudes are associated with particular social locations.

The starting point is the work of a Swiss sociologist, Daniel Oesch[2]. He became dissatisfied with the idea of an undifferentiated middle class used in so much academic as well as popular discussion, given that the category was coming to mean the broad majority of occupational positions in the advanced economies. He proposed that social and political attitudes were formed, not just by the positions people occupied in organizational hierarchies (class), but by the kinds of work tasks on which they were engaged. He distinguished three of these: technical (e.g. manufacturing), administrative (e.g. banks, public bureaucracies), interpersonal (e.g. public services). If these categories were combined with hierarchical position, he found that one could account for differences in, say, voting behaviour among those occupying middle-class positions.

Oesch’s idea was applied to issues of direct relevance to us here by two German political scientists working in the US, Herbert Kitschelt and Philipp Rehm[3]. Gathering data from all western member states of the EU, they examined typical differences in attitudes among people working in different hierarchical positions and on Oesch’s different types of task along the three dimensions that I have used here: inequality and redistribution; the role of authority versus liberty; and immigration. The first of these relates to the inequality axis, the other two to the authoritarian versus liberalism axis. Unsurprisingly, they found that people at the upper and middle levels of hierarchies in all types of task held less egalitarian views than those in lower positions, though senior and middle-ranking persons in interpersonal services were considerably less inegalitarian than the others. Those at higher and middle levels in all work tasks had liberal attitudes on both general authoritarianism and immigration, though there were differences. The most liberal were professionals in interpersonal services, then those engaged in technical tasks, least so those in administration. Those at the lowest levels of hierarchies held illiberal views on both dimensions, and egalitarian views on the third dimension. These findings held true after controlling for whether people worked in the private or public sectors, or whether they were male or female.

Without more detailed research it is difficult to know to what extent people with certain social attributes are drawn towards working at particular tasks, or working at particular types of task leads people to develop the attitudes in question. From the finer details of Oesch’s and Kitschelt and Rehm’s work it emerges that the more people have discretion in their work tasks and work directly, face to face, with other human persons, the more liberal and inclusive they are; the more their own work follows rules and routines in impersonal contexts, the more they support authoritarianism and exclusion. There does not seem to be any important difference between attitudes to immigrants and those on general issues of authority. For example, people who believe that immigration should be restricted are also likely to believe that school discipline should be tougher.

It seems clear that attitudes on issues of authority and liberty are not just personal whims, but socially rooted. The Brexit referendum similarly revealed sociological regularities. Young, particularly female, well educated people living in large cities were more likely to vote to remain in the EU; older, mainly male persons in both declining industrial cities and prosperous provincial areas not much touched by the new economy tended to vote to leave. The politics of this question is more complex in the British case than elsewhere. Whereas the Brexit campaign played on fears of foreigners and implicitly encouraged isolationist tendencies, the purpose of the ministers involved in negotiating the UK’s future economic place in the world seems to be to expose the country to intensified global competitive pressure. How they will eventually reconcile that with their mass supporters is a very interesting question, but beyond our concerns here. Most important is to recognize that openness to multiculturalism and internationalism have become deeply felt, socially grounded beliefs among those parts of contemporary populations whose work and other aspects of social location lead them to reject exclusion and value inclusiveness. This determined cosmopolitanism might be based on a positive appreciation of being enriched by engagement with other cultures, or on a desire to be free of constraints on individual freedom. In either case, it is necessary to note that the revival of exclusionary nationalism is not the only popular development in contemporary politics. A major cleavage is opening between two sets of deeply held attitudes.

Long-term implications

These changes will have long-term and unpredictable consequences for all main political forces in advanced societies. The biggest challenge is to the alliance of neoliberals and conservatives, currently the world’s dominant political formation, expressing the inegalitarian end of the inequality and redistribution axis. Hegemonic as the economic ideology of an international elite, neoliberalism is rarely a powerful force in democratic party politics. When it appears virtually alone in a party’s identity, that party is usually very small (as with the German Free Democrats). More normally it appears within conservative parties, as with the UK Conservatives or US Republicans. But classic European democratic conservatism is weakening alongside its former religious supports. Its parties then face a strong temptation to rediscover the nationalism that is part of their heritage and become part of the new xenophobia. They can do this either in coalitions or deals with far-right parties (as in Scandinavia) or through shifts within the party (as with British Conservatives). But this threatens the heart of the neoliberal project, which is globalizing and highly cosmopolitan. So far the tension has been even more severe in the US, where the Christian right is far stronger than in most of Europe. The Republican Party is being torn apart between the neoliberals who have dominated it for years through their billionaire backers and the protectionist nationalism represented by Donald Trump. Neoliberalism and conservatism are allies when the main conflict axis is that around inequality and redistribution; if that is gradually replaced by one that sets liberalism and a nationalist conservatism against each other, they stand at opposite poles.

Moderate conservatives do not necessarily follow the nationalist path. Using their central position in most political systems, they can achieve simultaneous accommodations with the two main rival forms of liberalism, neoliberalism and social democracy. One sees this most clearly in German Christian Democracy – the country where the nationalist option is seen as most dangerous.  It was also there in the currently defeated Cameron-Osborne wing of British Conservatism.

Neoliberals also have the option of shifting to the left by making compromises on the inequality axis, if that axis is being dwarfed by that over conservatism-liberalism. There are certainly precedents. Blair’s New Labour, Schroeder’s Neue Mitte SPD, Clinton’s New Democrats, have all been examples, as are today Renzi’s Democratici. These may seem uncomfortable antecedents, but arguably the largest social change in recent times, the move towards gender equality, has been a shared neoliberal/social-democratic, anti-conservative project. When, following the financial crisis, the OECD and IMF began to resile from their earlier neoliberal policy stances, they were motivated mainly by the risks being posed by growing US inequality to mass consumption[4]. In the wake of the Brexit vote some global investment advisors went further and began to worry whether growing inequality was not nourishing xenophobic resentment against globalization. How far are neoliberals willing to accept redistribution and strong welfare states in order to safeguard their other achievements?

Social democrats have their own crises. As the manual working class declines in size, they reluctantly face the reality that they will never again be the assured representatives of the biggest fraction of society. Instead they fight for their share of that large middle mass of the post-industrial world. Thanks to Oesch’s analysis, we can see that this mass is no longer just the conservative bourgeoisie of the past, but includes, particularly among those engaged in interpersonal work tasks, the new constituency of the left, though where voting systems give them the chance, they often prefer environmentalist and other non-social-democratic forms of the left. These people are primarily liberal, though also favourable to redistribution, and there is growing tension between them and the old working class as the conservatism-liberalism axis grows in importance. Can social democrats reassert the priority of the inequality axis to hold their coalition together?

David Goodhart[5], Wolfgang Streeck[6] and some other observers have pointed out that the social democratic welfare state was an essentially national institution, rooted in people’s sense of shared membership in a national community. The idea is expressed most clearly in the Swedish idea of the welfare state as folkshemmet, the place where people can feel at home. These meanings could be stretched to include small numbers of immigrants, but to how many? Is the US aversion to a strong welfare state a reflection of its cultural heterogeneity? Thinking on these lines leads some to seek a national social democracy, which requires severe limitations on immigration, a rejection of liberalism, and in the case of European countries withdrawal from the EU.

Political clocks cannot be put back. The great welfare states developed under the aegis of a benign form of national identity that was not directed against outsiders. The most advanced welfare states developed in open trading nations – Scandinavia, Germany, the Netherlands, the UK. That world cannot be recaptured. To assert the limitation of social citizenship to ‘real’ nationals now can no longer be the folkshem of a people who just happen to be ethnically homogenous, but becomes symbolized by the demand of the Front National that rights be limited to français de la souche (best translated broadly as ‘true born French’), requiring active exclusion of those deemed to be outsiders. Non-aggressive nationalism is still possible in places like Scotland or Greece, where resentment against external domination does not require the victimization of immigrants and refugees. Elsewhere it has become very difficult to sustain.

Also, free trade is now nested in a regime with global rules, not a series of national decisions to choose how much free trade they want to accept. In this context the EU constitutes an opportunity to extend social policy alongside free trade, expressing the pooled sovereignty of its members, rather than the loss of sovereignty implied by the pure free trade of the World Trade Organization.

But is the direction of pooled sovereignty towards the construction of transnational social policy possible with the current politics of the EU? Today’s European tragedy has two components. First, Europeans are being asked to absorb large numbers of dispossessed people from the other side of the Mediterranean. Second, the EU is coping with both this and the free movement of labour from central Europe at a moment when EU policy makers and the European Court of Justice have experienced an extreme neoliberal turn, rendering it unwilling to provide the social policy support that these large movements of people require. The first was not Europe’s fault; the second it is fully within the power of its policy makers and jurists to change. This is again dependent on some rethinking by European neoliberals, which the withdrawal of the UK might make easier.

No political family can look forward to a comfortable future. The outcomes of these tensions and their explosive consequences for the main contemporary political currents will be very varied. A particularly important variable is the balance between the electoral (democratic) component of political systems and that which concerns lobbying, the role of big money, the bargaining power of global corporations. The latter is probably more important in shaping our politics, though since it is largely invisible we can say least about it. It is the arena within which neoliberalism mainly operates as a political force. Ironically, it is likely to be here that alliances between neoliberals and social democrats are forged. It may be easier for neoliberalism to soften in this non-democratic but dominant part of political life, because change involves rational calculation by small numbers of self-interested individuals and corporations, not the deep feelings of large numbers of people. One can already see the framework for this elite compromise in the changing approaches of the OECD and IMF. As international organizations, these can never share in the new xenophobia. Since the late 1970s they have helped forge the neoliberal hegemony and have been major protagonists of an open global trading system, but their recent fears about the impact of growing US inequality on mass consumption, and the role of big money in political lobbying marks a major shift. The OECD has also started to change its earlier hostility to the work of trade unions and collective bargaining. This could be the start of a new neoliberal/ social democratic historic compromise.

In the electoral sphere much depends on the relative sizes of Oesch’s different fractions of the middle class, on party structures and voting systems. The tensions within both conservative and social-democratic parties as the relative importance of the two great axes of conflict changes can be most fruitfully released in systems where new parties can form and then make various alliances. Electoral systems of the British and in particular US kind force everything to remain within existing parties, sometimes contorting them out of all meaning. Within all this complexity, generational change and economic restructuring seem to favour the growth of various kinds of liberalism, while every new horror emerging from the Middle East strengthens xenophobic nationalism.
[1] Jacques, M. (2016) ‘The death of neoliberalism and the crisis in Western politics’, The Guardian, 21 August.
[2] Oesch, D. (2006) Redrawing the Class Map. Basingstoke: Palgrave Macmillan.
[3] Kitschelt, H. and Rehm, P. (2014) ‘Occupations as a site of political preference formation’, Comparative Political Studies.
[4] See, in particular, OECD (2011) Divided We Stand (Paris: OECD).
[5] Goodhart, D. (2013) The British Dream: Successes and Failures of Post-War Immigration. London: Atlantic.
[6] Streeck, W. (2015) ‘The Rise of the European Consolidation State’, MPIfG Discussion Paper 15/1. Cologne: Max Planck Institute for the Study of Societies.

Colin Crouch is a sociologist and political scientist, and is emeritus professor at the University of Warwick and an external scientific member of the Max Planck Institute for the Study of Societies, Cologne. His most recent book, Society and Social Change in 21st Century Europe, is published by Palgrave Macmillan

This essay appears in the latest edition of Juncture, the IPPR journal of ideas.