The “Third Way” of running capitalism has failed

By   /   June 29, 2017  /   17 Comments

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The days of capitalism are numbered because it can’t get the basics right – including the right to life itself. People need jobs, housing, health care, education. To achieve those goals for all requires a radical attack on wealth inequality.

The surge in support for the British Labour Party under the leadership of Jeremy Corbyn in the recent election has buried the “Third Way” policies of the former leader Tony Blair.

Blair and his ilk insisted that parties of the left had to essentially occupy the centre in order to succeed. They claimed that if the party was seen as too far to the left it would lose support. The purpose of this stance was to say to the establishment that a Blair-led party would not be a risk to their interests. They were a safe pair of hands for managing capitalism in the UK. On that basis, Blair got support from media baron Rupert Murdoch and finance capitalists in “The City”.

The fundamental problem with this approach is that the vast majority of people are actually on the left when it comes to solutions needed on big social and political questions. People are concerned about health, jobs, inequality, housing, transport, climate change. As a rule, these are usually much more important than dog-whistle policies around law and order or immigration.

This was true in the UK before the recent election. When polled even a majority of Conservative Party voters wanted the railway network renationalised and the National Health Service protected.

The same is true in New Zealand. The vast majority of people have been opposed to past privatisations, they want serious action to end the housing crisis, the see the need to extend access to quality public services in health and education and they want action to end the grotesque inequalities in wealth.

What the Green and Labour parties have failed to do is to get people to believe they are serious about tackling the problems that exist. The joint pledge for “Fiscal Responsibility” both parties made recently is actually a pledge to the establishment, not their supporters.

Jermy Corbyn, in contrast, is being seen as a rock star of British politics at the moment because people know he is an anti-establishment politician with a serious programme radical change which the unashamedly called “For The Many Not The Few”.

The June 17 issue of The Economist magazine, which has been a mouthpiece for the British ruling class for 174 years, made a remarkable admission of the failure of their system when analysing the British election results. Sometimes right-wing magazines targeting an upper-class readership are more honest when talking to themselves. They wrote:

For the past 40 years, Britain has been dominated by neoliberalism, a creed that sought to adapt some of the tenets of classical 19th-century liberalism to a world in which the role of the state had grown much larger. It emphasised the virtues of rolling back that state through privatisation, deregulation and the reduction of taxes, particularly on the rich; of embracing globalisation, particularly the globalisation of finance; of controlling inflation and balancing budgets; and of allowing creative destruction full rein.

The Economist praised the fact that these ideas had become common currency for the Labour Party as well and quoted Stewart Wood, a former adviser to former Labour Party Prime Minister  Gordon Brown that: “One of Margaret Thatcher’s great achievements was to turn a fundamentalist faith in free markets into the hallmark of moderate centrism for the next generation of leaders.” Now the Economists fears that the pendulum has swung in the other direction because of “the failures of neoliberalism” but which is actually a failure of capitalism.

The biggest factor was the 2008 global financial crisis. It hit Britain particularly hard because financial services play an outsized role in the country’s economy, generating 8% of its GDP, and because of its ‘light touch’ regulation. The crisis made Britons significantly poorer: British workers saw their wages (adjusted for inflation) fall by 10% in 2008-14, and are unlikely to see them reach pre-crisis levels until at least 2020. It played havoc with the public finances: faced with large deficits the coalition government chose to cut back on public spending….

The crisis also undermined the public’s faith in their rulers… Many British politicians also did very well, and not just through their expenses. Politicians such as Mr Blair, Peter Mandelson and Mr Osborne have made millions by offering advice to banks, making speeches and otherwise transforming themselves from gamekeepers into poachers…

But the financial crisis did not just entrench distrust and anger. It also laid bare longer-term problems in the economy…

That division was made more poisonous by the fact that the elite did very well in the neoliberal years. In 1980 the average CEO of a company on the FTSE All Share index earned 25 times more than the average employee. In 2016 the bosses earned 130 times more. Between 2000 and 2008 the index fell by 30% but the pay for the CEOs running the firms on the index rose by 80%.

Privatisation has fed resentment too. Labour’s promise to re-nationalise the railways, which would have been unthinkable ten years ago, is popular today: thank high fares and private profit. The bits of the public sector that stayed public did pretty well by their overseers, too. Mark Thompson, then the director-general of the BBC, saw his pay soar from £609,000 in 2005-06 to £788,000 the next year and £834,000 the year after that. The average pay of a university vice-chancellor is now more than a quarter of a million pounds…

And all the while Brexit will be hurting the economy. Even Brexiteers concede that Britain will suffer short-term shocks as it renegotiates its relationship with its single biggest market. Most independent experts predict long-term harm as well…

The result is likely to be a partial reprise of the 1970s. Politics will be paralysed—this time by negotiating Brexit rather than fights with unions. The economy will stagnate thanks to a mixture of uncertainty and business flight. Public services will be squeezed. The roiling discontent that produced Brexit will find new targets. In the 1970s, though, Britain edged its way towards solving the problems of its former dispensation. It is much harder to see it doing the same this time round.

The traditional party of British capitalism the Conservative Party is now in crisis. It is deeply divided over whether to be part of Europe or not. They have been forced into negotiating an exit from Europe after promising a referendum to appease their right wing, then unexpectedly losing the referendum when many people used the vote to register a protest at the system failing their communities.

They now have lost all political authority by being forced into a coalition with the deeply reactionary Democratic Unionist Party in Northern Ireland at the cost of some billions of pounds.

The Grenfell Tower fire and the deaths of probably hundreds of people have turned into a moral, as well as political crisis for the government. The policies of deregulation, so-called social housing with profit-driven managers, and simple contempt for the lives and safety of working people has exposed a criminal negligence.

The Conservative Party has lost all right to govern as it cannot protect the lives of its own citizens – especially if they happen to be working class. Prime Minister Theresa May was driven out of the area of the fire to cries of “shame”, “murderer”, “scum” while Corbyn was completely at ease and welcomed as a friend.

The days of capitalism are numbered because it can’t get the basics right – including the right to life itself. People need jobs, housing, health care, education. To achieve those goals for all requires a radical attack on wealth inequality. The rich treat tax as a voluntary activity and ways must be found to force them to pay in full. Radical policies are needed that challenge the power of the 1% takes back the wealth they have expropriated from working people. The planet needs protecting from a system based on perpetual growth and wasteful resource extraction. There is no “Third Way” to that end.

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About the author

Mike Treen

National Director of Unite Union

17 Comments

  1. CLEANGREEN says:

    Absolutely right Mike.

    Why do we trust the fox that raids the hen house??????

    “Free market economics” is the same analogy.

    Time for an overhaul!!!!!!!!

  2. Sam Sam says:

    Creative individuals dominate the centre by moving queens pawn beyond the threat of attack – #GarryKasparov

    Tory- fail

    Corbyn- proper

  3. Afewknowthetruth says:

    Industrial civilisation is inherently unsustainable because it converts finite resources into waste.

    Capitalism is one of the most unsustainable forms of industrial civilisation ever invented…..and will collapse fairly soon because it converts ever greater quantities of resource into waste in order to perpetuate its Ponzi financial system.

    .

  4. RosieLee says:

    I do hope someone from the Labour hierarchy reads this and gets the message very soon.

  5. WILD KATIPO says:

    Good article. We can see the crumbling of neo liberalism , and the desperation of the Globalist bankers through the inevitable lenses of ineptitude demonstrated by their political stooges.

    Did they seriously think they could keep doing this to people all the time ad infinitem before some series of incidents occurred that blew it all back in their faces ?

    Certainly the bankers can carry on, – but politicians are by nature temporary beasts, and because of that come to parliament with a certain agenda, short , medium and long term goals.

    And while the bankers by and large remain untouched and generally faceless, politician are not. And all we will see is the widening differences between the elite they truly work for and the people who they claim they were elected to serve.

    We see the same with John Key and Bill English – perfect examples of the Globalist neo liberal politicians.

    This says it all :

    ” The Conservative Party has lost all right to govern as it cannot protect the lives of its own citizens – especially if they happen to be working class. Prime Minister Theresa May was driven out of the area of the fire to cries of “shame”, “murderer”, “scum” while Corbyn was completely at ease and welcomed as a friend.”

  6. Jack Ramaka says:

    With the world’s wealth concentrated at the top of the Food Chain money is not circulating correctly, and the masses and Government’s ie the taxpayers are becoming more and more indebted to the Global Elite, one wonders how the whole senario will play out. $500-$600k affordable homes in NZ on minimum wages ?

  7. Mike in Auckland says:

    Has this been communicated to the NZ Labour Party, who are in damage control mode?

  8. Mike in Auckland says:

    I live in a newly gentrified suburban area of Auckland, and I am surrounded by a mixture of residents, many what I would call ‘professional urban liberals’.

    These people are climbing up the property ladder, are managing ok, given the fact that most have managed to study and get a degree, they work in ‘professions’, as teachers, lawyers, consultants, officials and self employed of whatever also.

    They are so sure of themselves, they may even vote Greens, they do, and they think, hey, I want to protect the environment, and do my part, but they drive around in one or two modern day imported SUVs all the time, maybe take the bus or train to the weekend activity, or sports event where the All Black play.

    They are in favour of the living wage, yeah, but hey, I paid my hefty student fees, and have a huge loan, I managed, so should others.

    They thus see nothing wrong with their relatively high salaries, which enables them to buy property and improve this.

    They are in favour of public transport, yeah, but hey, they want it and have their SUVs as well, to drive where they want, with kid or without, as they please. Buses and trains, when it is convenient, but hey, paying more rates and taxes, ahem, oh, I have so much debt to pay off they say.

    They want free childcare and healthcare, but paying more taxes? Hey, some are ok with a moderate increase, most rather not comment, they have to pay off their student loan first.

    They all want more of this and that, and say, they want to protect the environment, they can live without plastic bags, yeah, but that is a rather humble ‘sacrifice’, I feel, as emissions and other waste are even worse.

    They all want a “decent living standard”, and that means, the latest gadgets, made by Foxconn for Apple and so in China, with virtually slave labour, but they are at the same time happy to sign petitions and the likes, against this kind of exploitation.

    They want protection of local species and waterways, but they travel freely in and out of the country, and risk bringing in pests and pollutions. They fly airplanes that emit high levels of emissions that pollute and contribute to climate change.

    They wear this and that fad kind of t-shirt, promoting this and the other, but when it comes to living by principles, that is just somehow not connecting.

    They want immigration and are happy with the relatively low paid workers at supermarkets and restaurants and rest homes to deliver them services, but when it comes to paying more, they scream “rip off”.

    I cannot get it, how these people can be called “progressive”, they do not get it, they may support same sex marriage, gender equality, feel good stuff of other kind, but when it comes to making real sacrifices they are not prepared fo r it.

    It is a damned illusion, to believe this planet and human kind can be saved, certainly when it comes to decent living conditions, with an ever growing population and continued exploitation and waste of resources. Even the so called energy efficient cars are still made with much fossil fuel energy being burned, and the solar panels also, and all the consumer goods, and including food, depend on the continued rape and pillage of the resources that are finite, and it involves burning forests and overusing much agricultural land.

    We live in and under utter hypocrisy, the revolution can only be realistic if people get real and make sacrifices, and live within what the planet allows us to life off and with, that is far from what I observer is going on.

    So called “progressives” of the urban professional ilk, join your Nat ACT brothers and sisters in utter hypocrisy, perhaps learn to earn your living with your hands, which the bulk and vast majority of ordinary working people on this planet still have to do. The rest is illusion and fake and endless BS.

  9. Mike in Auckland says:

    CONSPIRACY!

  10. Jack Ramaka says:

    New World Economics suckered in by overpriced real estate and large mortgages, the only winners are the Bankers and the Global Elite.

  11. David See-More says:

    Just utter poppycock.

    Read the ACT Party Website http://act.org.nz/ if you want a real vision of the future, instead of boogeyman scare tactics by Labour and the Greens.

    The economy is in such a rock-star state at the moment with National, ACT, Peter Dunne and the Maori Party, that there are surpluses enough for TWO tax cuts.

    If we allow fiscal management back into the hands of the left, NZ’s debt to earning ratio will be under severe pressure, similar to the PIGS crisis in Europe (Portugal, Italy, Greece and Spain.).

    The only way forward is by responsible fiscal management, putting state assets into the hands of private sector. Education, health and social security drains on government should be first to be go into teh private sector for a good tune-up.

    • David says:

      What is the national debt under this rock star economic fiscal management system. I’ve heard figures of some 90 odd billion bandied about,doesn’t appear to be well managed to me.

    • Jack Ramaka says:

      ACT/Labour/National’s Neoliberal Experiment has been an abject failure here in New Zealand over the last 30-40 years, and that is a FACT.

  12. savenz says:

    I think you need to be careful because the failure of capitalism has led to a rise in a new scarier type of capitalism, advocated by Libertarians led by billionaires like Thiel, who have a lot of tricks up his sleeves to get people like Trump in power.

    To get to the ‘new type of capitalism’ you need to remove democracy and that is exactly what we are seeing in NZ and around the world. Look at social housing, taken from a democratic government model and paid for by taxpayers to a non democratic model when taxpayers are forced to pay the rich to administer the housing. That’s not democratic.

    It’s all over the place in NZ from the fake Supercity & unitary plan consultation which is a complete balls up, Pike River and the lack of accountability for 29 lives killed without any normal rescue attempt in a timely manner and the subsequent cover up, Trump supporting Billionaire Thiel getting NZ citizenship without having or wanting to live here, water being given away for free to corporations while Kiwis are being poisoned in Havelock North and paying through the roof for water in Auckland, state grants being used for overseas corporations (apparently Oracle’s boat builders got a grant for over 3 million) , foreign aid being used to build fancy hotels and conference centres with lucrative contracts for hotels like Scenic hotels to ‘manage them’ also paid by taxpayers, millions given to Saudi businessmen to kill sheep in the desert, Panama papers with the billionaire paying little to zero taxes, Mondelez asset stripping and closing factory in Dunedin after giving itself millions in loans and ‘special payments’ to bankrupt it. Dicksmith, etc etc

    The system has failed BUT the left are need to address the growing anti democratic model and growing failure of human rights.

    What really turned Corbyn around was when Theresa May talked about removing human rights (after the terrorist attack) and then this was followed by the fire in Grenfell which clearly showed what removing human rights was doing in their own city.

    The people of the UK saw the big picture of what May and the Conservatives were up too and she went down 20 points while Corbyn went up 20 points.

    The left need to look at the BIG picture, talk about what really matters, freedom, human rights, a decent society – and examples of that, like the above where it has been eroded by the National party.

    Even the Todd Barclay drama is about human rights. Should those in power be allowed to spy on their employees?

    As soon as the left start talking about what is really going on, not just piece meal policy like 1000 new houses or landlord beat ups, then they will get the poor, rich and middle class because it is a myth that people don’t care about society – but the left can be just as divisive as the right on that.

    Corby unites and that is also part of his power and all good leaders who create change do that. Decency is in every person and most people will always do and vote for the right thing – but they need the fundamental choices pointed out to them, not National will build 700 houses a year, Labour 1000 etc etc.

    Some links on what the far right are up too,

    https://www.theguardian.com/technology/2016/jul/21/peter-thiel-republican-convention-speech

    http://www.politico.com/magazine/story/2016/11/donald-trump-steve-bannon-peter-thiel-214490

    https://www.theguardian.com/politics/2017/feb/26/robert-mercer-breitbart-war-on-media-steve-bannon-donald-trump-nigel-farage

    https://www.theguardian.com/politics/2017/mar/04/nigel-oakes-cambridge-analytica-what-role-brexit-trump

    https://motherboard.vice.com/en_us/article/big-data-cambridge-analytica-brexit-trump

  13. Siobhan says:

    The idea that Centralism is the answer, the centre being ‘where adults do politics’ is now a position on the wrong side of history.

    I would so love to see Labour NZ make a leap to the left.
    My hope is this election will give them that push, when they realise that the battle for the middle isn’t going to get them over the line.

  14. Sumsuch says:

    No authors seem to engage in the comments sections below their articles here but, Treen, can you summarise Marx for us who didn’t get through the first chapter of ‘The Gulag Archipelago’. Persuade me it, in its Russian applied form, was better than the personal kindness of Chekhov, who was described as being like a ‘young girl’ by Maxim Gorky( or maybe Trotsky). Forks that weren’t taken.

    Certainly, democracy must be run by demo-crats. The last 30 years prove that. I think the free market is the best distributor, maximiser of goods. If only goods were infinite.

  15. Jack Ramaka says:

    The last 30-40 years has transferred State Wealth to the Private Sector through stealth and unethical behaviour by politicans and their associated cronies – it is basically called crony capitalism.