AN INTERESTING POLEMIC

How Did Britain Come to This? - a century of systemic failures of governance Gwyn Bevan (2023) The book looks at how systems of governance developed under four different rules of the game in Britain.

• First, the UK’s version of the minimal state in the 1920s and 1930s nurtured the growth of William Beveridge’s five giant evils of Want, Idleness, Squalor, Disease and Ignorance.

• Second came the planned state as developed under Clement Attlee’s Labour government, which tackled Beveridge’s five giant evils but ran into problems in the 1970s, in council housing, running public services, high government borrowing, inflation and unemployment (‘stagflation’).

• The Attlee settlement was largely dismantled by Margaret Thatcher’s Conservative gov­ernments from 1979 to 1991. The Thatcher settlement of neoliberalism began by developing the third institution of the marketised state.

• That still applies to education, has been abandoned for the NHS after three failed attempts, and morphed into the fourth institution, the financialised state, in which ‘only money matters’.

The dysfunctional consequences of this apotheosis of neo­liberalism include: the demise of successful private corporations; the Global Financial Crisis of 2008; unaffordable housing; and failures in government outsourcing and privatisation. Its structured inequalities in opportunities and incomes mean that a small minority live in a plutonomy of luxury watches, super yachts and private jets, and nearly 30 per cent of British children live in poverty, with many of their families having to choose between eating and heating in the winter.

Afterword

10.1 Pathologies of neoliberalism Ronald Reagan began his 1981 presidential address by remarking on how, in the US, The orderly transfer of authority as called for in the Constitution routinely takes place, as it has for almost two centuries, and few of us stop to think how unique we really are. In the eyes of many in the world, this every-four-year ceremony we accept as normal is nothing less than a miracle. That address is remembered, however, for setting out the case for neoliber­alism in one sentence:

‘In our current crisis, government is not the solution to our problems: government is the problem.’

In 1989, towards the end of Reagan’s second term, he drafted an executive order to establish a new gov­ernment agency. It was to act on the findings of the secret Project Socrates, led by Michael Sekora, which had diagnosed the underlying cause of America’s declining competitiveness. That project found that the falling competitiveness of the US was the consequence of its institutions shifting their focus from technological innovation to ‘increasingly sophisticated economic shell games to maximize profits’ (emphasis in original). That was the outcome of taking seriously Friedman’s 1970 doctrine that:

there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception [or] fraud.

Reagan’s term of office ended before his executive order could be signed.5 His successor, President George Bush, abolished Project Socrates. In the 2000s and 2010s, increasingly sophisticated economic shell games continued to be played in the financialisation of the economies of the US and UK, with four pathological consequences. The primary pathology is the corrosive impact of financialisation on what used to be great companies in the real economy (see Chapter 5). The mission of maximising shareholder value overturned almost all other arguments about what was needed to build great corporations – by making money the core mission and sole rationale of the organisation and those who work for it. In the 1990s, Boeing was the world’s most commercially successful air­craft company, thanks to the success of its 747 aircraft, which was designed and developed by people who ‘eat breathe and sleep the world of aeronaut­ics’.6 After its takeover by McDonnell Douglas 20 years ago, Boeing’s core mission became ‘improving the company’s financial profile’. In 1976, Fred Hirsch wrote:

In principle, individual maximisation can be held to its social pur­pose – making the best of opportunities for all – so long as it oper­ates on the basis of properly designed and implemented rules; yet individual maximisation means manipulating these rules too.8

In 2018, in Indonesia, Boeing’s 737 Max 8 airline, ‘which was practically new, crashed minutes after takeoff, killing all 189 people on board’. In 2019, in Ethiopia, another Boeing 737 Max 8 crashed, again killing all 346 people on board. On 22 September 2022, the New York Times reported that:

Boeing reached a $200 million settlement with U.S. securities reg­ulators on Thursday to resolve an investigation into claims that the aircraft manufacturer and a former chief executive had deceived investors about problems with its 737 Max plane … The aircraft manufacturer last year reached a $2.5 billion settlement with federal prosecutors as part of a deferred prosecution agreement … Last year, a group of Boeing directors agreed to a $237.5 million settlement with shareholders who accused them of failing to adequately oversee the company, allowing the lapses that led to the crashes.

The secondary pathology is the consequences of major shocks to the body politic in the US and the UK as a consequence of the 2008 Global Financial Crisis. Everyone could see that the rules of the game in the institutions of financialisation were privatising gains and socialising losses and that under­mined trust in our institutions. Fiona Hill was brought up as the daughter of an unemployed miner and midwife in Bishop Auckland and went ‘From coal house to White House’, becoming an adviser on foreign affairs to US Presi­dents George W. Bush, Barack Obama and Donald Trump. She saw the same pathologies led to those in the deindustrialised areas, which had been left behind, to vote for new political settlements: in 2016, for Brexit in the UK, with its promise to ‘take back control’, and Donald Trump in the US, as the 45th president, with his promise to Make America Great Again (MAGA).12 Brexit now makes the British economy look like a team of athletes who used to struggle to compete in the Olympics and have decided to go on a fast-food diet: they can still run but not compete effectively. Trump’s refusal to accept his defeat in the presidential election of 2020 resulted in that infamous day of 6 January 2021, when five people died in the Capitol in Washington. That ceased to be Reagan’s miracle of ‘orderly transfer of authority’.

The third pathology is a set of direct malign consequences from the growth of the UK financial sector and its lobbying power. John Muellbauer and David Soskice highlight the following:

• lax regulation and generous tax treatment of capital gains and hedge funds;

• a seamy underbelly of the UK financial and property service sector, abetted by the UK’s overseas territories, making international tax eva­sion easier;

• credit-fuelled property booms, and high property prices; and

• diminished productivity growth.

The fourth pathology is, perhaps, the most troubling of all: the low productiv­ity of the UK as compared with other countries in Europe, and the UK’s rate of increase in productivity over the decade to 2018, which was the lowest in the last 250 years. The UK’s stagnating economy is why there have been histor­ically high levels of taxation and failing services (for example, nearly 26,000 waiting more than one year for treatment in the NHS). Those struggling to deliver front-line services are trapped in a vicious circle of being underpaid and overworked, which creates problems of retention and recruitment, and so staff leave. The government’s plans to tackle staff shortages in emergency care were deemed to have been misdirected for ‘a demoralised and burnt-out workforce seeing high rates of people leaving, and a social care system devastated by years of squeezed budgets and bad pay’.

10.2 Second thoughts on markets and quasi-markets

The quintessential neoliberal philosopher Robert Nozick, in 1974, argued that the market ought to be allowed free rein. He carefully chose what then seemed to be an innocuous example: the willingness of baseball fans to pay to watch one of the sport’s greatest players, Wilt Chamberlain. In his book “What Money Can’t Buy: The Moral Limits of Markets”, Michael Sandel offers troubling examples of what the rich can now buy: access to an elite university, shooting endangered black rhinos, and the right to immigrate into the US. He still has the ticket from when he was 12 years old and went, with his father, to watch their baseball team, the Minnesota Twins, play in the World Series. They lost and he was devastated. There was then little difference in the prices of admission for the two types of seats, box seats and stand seats. The market for sport is now financialised. In 2012, a box seat to see the New York Yan­kees costs $260.21 I remember, when I was 18 and at school, paying out of my pocket money to watch George Best play for Manchester United at Old Traf­ford. Those who now pay up to £239 to watch a game at Manchester United are buying not only hospitality but also exclusivity. Sandel’s argument is that these changes have undermined how watching sport used to develop a strong sense of belonging to the same local community.

Timothy Besley responds to Sandel’s book by showing that economists have recognised the problems he illustrates when only money matters. I noted above that Julian Le Grand’s quasi-market theory is that this encourages those who are ‘knights’, who are altruistic, and discourages ‘knaves’, who are driven by self-interest, because the former are rewarded and the latter penal­ised by changes in market shares and funding. Timothy Besley and Maitreesh Ghatak question the efficacy of seeking to generate incentives from financial gains and losses for those who have chosen to work in not-for-profit organ­isations. They argue that high performance of public services follows from matching their missions to the motivation of those who deliver them. For example, teachers who derive intense satisfaction from educating the young are committed to their calling as professionals and do not seek large financial rewards. This approach stands in radical contrast to the mission of maximis­ing shareholder value and financialisation by re-emphasising the core mission of the organisation and those who work for it. Chapter 8 showed that health­care is an exemplar for where markets fail and where effective alternatives have been implemented. We would expect a quasi-market for schools to work best in cities. But it failed in London, which is why the Blair government launched the London Challenge. This combined ‘experimentation on the ground, [and] rapid feed­back and learning by advisers and officials, with strong project management across different strands of the policy’. It ran from 2003 to 2011 and improved the performance of secondary schools in inner London local authorities from being ‘the worst performing to the best performing nationally’. It has had an abiding impact. In 2019, Farquharson, McNally and Tahir showed that more than three-quarters of local authorities where at least 70 per cent of primary school leavers met the expected level in reading, writing and maths were in London. They also found that the impacts of poverty, as indicated by eligi­bility for free school meals (see Chapter 7) on attainment at GCSE in London schools was around half of that in the rest of the country. They emphasise that this was ‘entirely driven by better performance among disadvantaged pupils, meaning that lower educational inequality in the capital is a result of “level­ling up” rather than levelling down’.

Although Julian Le Grand and Samuel Bowles start from David Hume’s maxim, with which this chapter began, they argue for, and against, the use of market mechanisms as a system of governance of public services. Le Grand was aware of the risk that introducing quasi-markets could crowd out altru­ism by turning ‘knights’ into ‘knaves’. Samuel Bowles argues in The Moral Economy that this is what quasi-markets are designed to do, because individu­als are motivated either by altruism or by market mechanisms, but not both. And, as these processes cannot be separated (as is required for quasi-markets to work), market mechanisms undermine, rather than reinforce, ‘knightly’ behaviour. Market mechanisms also typically fail to provide sanctions for ‘knaves’ because it is so problematic for a failing provider (school, university or hospital) to exit the market. What happens instead to failing providers in a quasi-market is that they continue to provide a poor service with inadequate funding. That is what happened to the comprehensive school of Chelmsley Wood council estate, and was found by the Institute for Fiscal Studies for schools in England (see Chapter 4). Hume observes that ‘it appears somewhat strange’ that his political maxim ‘that every man must be supposed a knave … should be true in politics which is false in fact’. Indeed, it is reasonable to assume that most who choose to deliver a public service start out aiming to be ‘knights’. So, we require a more discriminating system of governance than treating all as if they were ‘knaves’. Ian Ayres and John Braithwaite lay out the principles of regulatory discrim­ination of a strategy of tit-for-tat based on the conduct of those providing services: being punitive for ‘knavish’ and persuasive for ‘knightly’ conduct. Adam Oliver proposes a system of governance by reciprocal altruism, which offers an alternative to a market mechanism. Reciprocal altruism has two dif­ferent systems of negative reciprocity, which sanctions unacceptably poor per­formance by ‘knaves’, and positive reciprocity, which encourages excellence from ‘knights’. Diagnoses of, and remedies to, the pathologies of neoliber­alism have been developed by those known as ‘behavioural economists’. That raises an obvious question: isn’t all economics about human behaviour? To which the answer is: not when it is based on mathematical models abstracted from institutions and human behaviour.

David Hume’s close friend Adam Smith has a strong claim to be the first ‘behavioural economist’. His Theory of Moral Sentiments emphasised the importance of sympathy, that we feel loss more acutely than a gain of sim­ilar magnitude, and introduced the concepts of positive and negative reci­procity. Scholars of Smith’s work have sought to reclaim the breadth of his vision of society from its misrepresentation by neoliberal economists (including Ludwig von Mises, Friedrich von Hayek and Milton Friedman).Glory Liu reviews the scholarly literature on what is known as ‘Das Adam Smith Problem’, namely the cognitive dissonance between the Theory of Moral Sentiments and the Chicago School’s version of Smith as ‘an economist who believes in the social productiveness of self-interest alone, and whose meta­phor of “the invisible hand” illustrates how free markets – not government – protect and promote individual freedom’. Jesse Norman’s book on Smith lucidly sets out how ‘In Friedmanite fashion [the discipline of economics] has long been overly preoccupied with its own models rather than the real-world phenomena they are supposed to represent’. In 1976, Milton Friedman won the Nobel Prize in Economics and celebrated the 200th anniversary of the publication of The Wealth of Nations in his paper ‘Adam Smith’s Relevance for today’. Jesse Norman describes that paper as a ‘master class in adjusting the facts to fit one’s own theory’: Friedman was being economical with the truth in his account of Smith’s position on Britain being overgoverned, the efficacy of free markets, and the importance of the ‘invisible hand’. Schol­ars of Smith’s work have sought to reclaim the breadth of his vision of society from its misrepresentation by neoliberal economists (including Ludwig von Mises, Friedrich von Hayek and Milton Friedman). Jacob Soll argues that they failed to understand that Smith’s thought was grounded in Cicero’s economic vision in which ‘good morals … drove a healthy market’. Glory Liu points out that Barack Obama cited Smith:

They who feed, clothe and lodge the whole body of the people should have such a share of the produce of their own labour to be themselves tolerably well fed, clothed and lodged.

Obama translated that to mean ‘if you work hard [you] should make a decent living [and] be able to support a family’. The failings of neoliberalism to deliver a promised land after 40 years of trying can be understood as a conse­quence of a fundamental misreading of Adam Smith. In economic behaviour, what matters is not only, or even primarily, money.

10.3 Governing by reciprocal altruism

In the UK, teachers, doctors and nurses, who provide vital public services, were three of the top four most trusted professions in 2020 (the other was engineers). The reputational damage from ‘naming and shaming’ mem­bers of these professions for unacceptably poor performance brings a loss of esteem that undermines their core identity – like being unfrocked in public. The regime of ‘star ratings’ is an exemplar of how that sanction of negative reciprocity tackled unacceptably poor performance in the English NHS. If ‘naming and shaming’ does not work, then negative reciprocity requires dismissal – as applied in the ‘star rating’ regime (see Chapter 8) Negative reciprocity is, however, limited in scope: it can be effective only when performance is unacceptably poor, for example if waiting time at a hospi­tal for a hip operation were three years (and the target were 18 months) but not if it were 19 weeks (and the target were 18 weeks). Positive reciprocity encour­ages high performance through collegial benchmarking with recognition for high achievement by peers and the public. Timothy Besley and Maitreesh Ghatak describe that kind of competition as sustaining and supporting the mission of excellence to deliver outcomes that benefit citizens. Positive rec­iprocity is encouraged through recognition of excellence by awards in a pro­cess of ‘naming and faming’, for example from winning a Nobel Prize. In the US, the Sammies are annual awards of medals that highlight excellence in the federal workforce. Our honours system does not do the same for our public servants. Positive reciprocity is most effective in concert with negative reciprocity. For example, it would have been futile to try to develop collegial competition for developing care of high quality at Mid Staffordshire hospital between 2006 and 2010 (see Chapter 1).

Oliver argues against trying to use the same system for both positive and negative reciprocity. But that is what we do for public services in England with, for example, NHS star ratings, school league tables, and inspections by the Care Quality Commission and OFSTED. Christopher Hood argues that it is easier to implement punitive policies, such as negative reciprocity, in big countries because of the substantial relational distance between the gov­ernment and those who deliver public services. This may explain why the devolved government in Wales stopped publication of school league tables, and did not follow England in implementing a regime similar to ‘star ratings’ in its NHS, with consequent worse outcomes in Wales than in England. Oli­ver argues that positive reciprocity of learning through collegial competition against benchmarks needs to operate at a regional scale. Regions need to be large enough that there are enough producers of public services to learn from each other but small enough that the key players in each organisation can meet in the same room at the same time to learn from those delivering excep­tional performance, as in the London Challenge. As so often in the case in the UK, that was a localised one-off exercise. We need to institutionalise that capacity to learn as integral to our running of devolved public services, as in the network of the Interregional Performance Evaluation System across and within Italian regions (see Chapter 8). Veneto, which is part of that network, showed more resilience when Covid-19 hit Italy than did Lombardy, which is the only region in Italy that persisted with trying to make hospital competi­tion work. At the end of March 2020, Pisano et al reported that the mortality rates per 100,000 were six in Veneto and 50 in Lombardy.

George Akerlof and Rachel Kranton developed the economics of identity, which explains the power of negative and positive reciprocity for public ser­vices as compared with financial incentives. Negative reciprocity defines what is, and is not, acceptable behaviour. They describe the initial rite of pas­sage for new cadets at the United States Military Academy at West Point (‘R day’). They are stripped to their underwear, have a severe haircut, are put into uniform and required to salute and address an older cadet ‘until they get it exactly right, while being reprimanded for even the smallest mistake’. The mission of West Point is:

to educate, train, and inspire the Corps of Cadets so that each grad­uate is a commissioned leader of character committed to the values of Duty, Honor, Country and prepared for a career of professional excellence and service to the Nation as an officer in the United States Army.

West Point has developed processes to develop a cadre for whom reciproc­ity (not self-interest) is fundamental. Akerlof and Kranton highlight the profound sense of identity imbued within that cadre. For example, a soldier would rather risk his life than let down his peers and, after leaving military service, will experience acute disappointment on being offered jobs by poten­tial future employers who assume that only money matters.

If we look to developing governance based on reciprocal altruism, the UK’s current constitutional arrangements look like one hand clapping. England has the scale for negative reciprocity but lacks a regional organisation for positive reciprocity. The devolved countries are at the scale for positive reciprocity but lack the relational distance for negative reciprocity. Devolution in England remains problematic because, as I found, officials in Whitehall devolve power as willingly as a leech gives up sucking blood (see Chapter 1). A review of devolution in Manchester pointed out that devolution in England has resulted in ‘very little local autonomy, major areas not devolved and hardly any tax raising powers’. But the evidence from more than 20 years of fuller devo­lution to national governments within the UK has shown them to be more vulnerable to producer capture, which is why their schools and hospitals have tended to perform worse than in England. Devolution to Scotland, Wales and Northern Ireland is necessarily asymmetric because the scale of England dwarfs that of the other countries. That means that it makes no sense to have a Parliament for England. That does not, however, justify our two deficiencies compared with proper federal arrangements.

First, our public services are funded by taxes on a UK-wide basis without a constitutional basis for agreeing what should be the UK-wide elements of policy: for example, charging for medicines and other prescriptions (which continues in England only) or not charging tuition fees for undergraduate education (which continues in Scotland only). Second, one promise of federal arrangements is that they offer a laboratory to experiment with different kinds of governance so enable learning about which works. We have experiments across the UK but lack the capability to learn from them, partly because we lack a federal institution to negotiate arrangements for reporting performance across our countries. Over time it has become increasingly difficult to com­pare public services’ performance across the four countries of the UK – a blind spot that reduces the scope for citizens to put pressure on their govern­ments to remedy their shortcomings. Requiring each government to collect basic data, following common definitions, so that performance can be com­pared and lessons learnt, does not constrain the different parts of the UK from having different priorities or pursuing different policies. This was recognised in the Concordat on Statistics of October 2021 in which the UK government and devolved administrations agreed on the objective of producing ‘coher­ent/comparable statistics at the UK and disaggregated levels’. But, in August 2023, it was reported that the UK statistics authority had problems in being supplied with comparable NHS data.

The development of performance monitoring at the national and regional levels in Italy offers a good model for a new constitutional settlement for the UK in which there is full devolution to regions within England combined with effective scrutiny of their use of public money and by the devolved coun­tries of the UK. An example is the performance agreements linked to funding for government departments as implemented by the Treasury under Gordon Brown in the Blair government in the early 2000s. In a new constitutional settlement, the Treasury would report to the public on how effectively their taxes are being used by the devolved countries and English regions. And these bodies would develop their own systems of comparing performance of local providers of public services by developing collegial competition between them. These services would include healthcare, and all education except for an elite set of internationally competitive research-intensive universities. Regions would also look to develop means of better use of our resources for healthcare along the pathways of care and education over a lifetime.

10.4 A new political settlement

In 2022, Peter Hennessy, writing in A Duty of Care, hoped Covid-19 would be followed by a new political settlement, as after the 1942 Beveridge Report (see Chapter 3). William Beveridge set the agenda for the Attlee government with his five giant evils: Want, Idleness, Disease, Ignorance and Squalor (see Chapter 3). This is a game you can play. My take on our current five giant evils is as follows:

• Want (or poverty and lack of means) was caused by the economics of less eligibility for the unemployed. Beveridge showed that the UK could have afforded to abolish it in the 1930, and how that could be done in the 1940s, in a system of social security. In modern Britain, Want has re-emerged as a giant everywhere. The high cost of housing in a financialised market is a primary cause of poverty. And, contrary to Adam Smith’s view of a well-ordered society, all too often having a job offers no escape. In-work poverty means too many have to trade off heating and eating, or childcare versus employment.

• Idleness was a consequence of market failure that sustained armies of unemployed people over a decade. Now regulatory failures of com­plex markets generate Insecurity in our future supplies of privatised water and energy, from toxic social media (the murders of Jo Cox and David Ames give menace to the anonymous death threats our MPs receive every week), in our financial institutions, and from the existential threat of climate change and developments of artificial intelligence (AI).

• Disease was prevalent from lack of access to healthcare. Now we have Ill-health from overall policy systems so designed that many people ‘freely’ choose ways of living that have resulted in ‘epidemics’ of obesity and diabetes.

• Ignorance was caused by lack of access to secondary education. Now we have Miseducation, with degrees awarded by our bloated univer­sity sector, from which only 25 per cent of graduates earn enough to pay back their student loans in full. Uniquely across the OECD, our younger generations of people in the UK are no more numerate or literate than those born four decades earlier.

• Squalor was caused by the mismatch between where people lived and opportunities for employment, leading to very poor living environ­ments. While some problems here have been ameliorated by post-war economic growth, rundown areas remain on almost the same scale, leaving people living in them vulnerable to Despair, where those on benefits or with gloomy jobs see no escape for themselves (or their children) from a life of drudgery, low pay and low status. In the US, despair is a leading cause of deaths from drugs and suicide.

Beveridge’s 400-page report was focused on tackling Want. (His recommen­dation for the governing principles of what became our NHS was because this would tackle Want – and, of course, Disease.) He described the five giant evils in two short paragraphs. It is beyond the scope of this book, and my knowledge, to suggest how we tackle what I have suggested are our five giant evils. Indeed, the purpose of this book is to inform debate over their causes, so others more expert than I can debate how we ought to tackle them. I conclude with the following observations on our systems of governance.

• We are still living in the Thatcher settlement based on neoliberalism as if there were no alternative. Indeed, Colin Crouch, in 2011, described what failed to follow the Global Financial Crisis as “The Strange Non-death of Neo-liberalism”.

• For neoliberalism to die, we need a new political settlement: the ena­bling state, which recognises that now market failures are the problem of government. As Chapter 5 argued, it would be a mistake to go back to the Attlee settlement based on the state ‘rowing’. This new settlement is where the state steers different systems of governance: regulating markets where they can work effectively (not just for shareholders and senior executives) and developing alternatives where they do not.

• Effective devolution is vital to developing an enabling state in the UK, with consequent radical changes in the skills, staffing and attitudes of those working in Whitehall and Westminster.

TWO MORE

Two useful reminders of Britain's past -

Jeremy Corbyn and the Strange Rebirth of Labour England Francis Beckett 
and Mark Seddon (2018)

CHAPTER FIVE BACK TO THE ’30S WITH MAGGIE

Labour England had at its heart the idea of social, public and cooperative

ownership as part of a mixed economy. It shared the same vision as the Scandinavian social democrats or the German and French socialists.

The idea that Labour was committed to public ownership of the corner shop was one ritually trotted out by the Conservatives – who, nonetheless, up until the mid-1970s had little intention of reversing the public ownership of the utilities for instance. Indeed, Edward Heath’s government nationalised Rolls-Royce in the early 1970s to save it from possible closure – just as David Cameron’s Tory government was to nationalise failing banks that had brought the Anglo-American economies almost to their knees decades later. But for Margaret Thatcher and her arriviste new Tories, the promise of a new Britain of small shareholders was a powerful one. Glitzy television advertisements urged the public to buy into what they already owned.

‘Psst, don’t tell Sid!’ was the advertising line used to accompany the selloff of British Gas. ‘Buzby’, a yellow canary, did the job on British Telecom. No matter that within a dozen or so years the privatised public utilities were largely in the hands of the big corporate shareholders, many of them based overseas. Even a former Conservative Prime Minister, Harold Macmillan, was to speak out against the sell-off of the ‘family silver’. But it would be another thirty-odd years before the grand larceny that had been the sale of often profitable nationalised industries began to be seriously questioned. On the privatised British railways, for instance, a ticket costs far more than on the nationalised railways in France. Furthermore, some of the organisations being subsidised to run trains over tracks in Britain were nationalised foreign railway companies, such as the French SNCF. When the private operators failed, they were usually rewarded with more franchises and more taxpayers’ money. When the East Coast line returned to public ownership and proved hugely successful and profitable, the government handed it over to the same failing privateers, including the company owned by the subsidy junkie Sir Richard Branson. Tony Blair and his closest cohorts in New Labour refused to countenance taking back at least some of the utilities into public ownership. Rather the reverse, Peter Mandelson was to cite the ludicrous corner shop claim as he and Blair set about removing any commitment to common ownership in Labour’s constitution. Blair would usually excuse himself by saying that it was ‘too costly’, or in the case of the Post Office, blame the European Union for forcing Britain to outsource its publicly owned companies.

Outsourcing and privatisation were to continue apace as the remnants of the family silver were flogged off. But back in the early 1980s, Labour’s praetorian guard, the National Union of Mineworkers (NUM), had to be broken before the real process of breaking up and selling public assets was to begin in real earnest – the National Coal Board being one such target. The year 1983 had been marked by a small eruption of seemingly unplanned, unrelated events that were in turn to explode into much bigger and profound struggles. These were to determine the future of the declining trade union movement in particular.

The first came on the Ides of March and with the decision of the miners in one of the last remaining pits in the Rhondda Valley, Lewis Merthyr Colliery, to call on their union to come to their aid over plans to shut it on the grounds that it was no longer profitable. Profitability in coal mines was one of the great industrial bones of contention of the late twentieth century. A mine could go from being profitable to making a loss in fairly quick order if one face stopped being mined while another was under development. The miners’ union had long argued that pits should only be shut if exhausted. In Germany, France and the Netherlands, a long-term approach, based on retraining and bringing new industries into areas with a declining coal industry, was the preferred option. Not in Britain, though. On two occasions in 1984 and in 1992, Tory governments had no compunction whatsoever in shutting down whole swathes of the industry, without any realistic employment prospect for those affected. While doing it, they appeared to take some collective enjoyment in humiliating those they had targeted. The national leadership of the NUM under Arthur Scargill and his deputy Mick McGahey had long predicted that a hidden Tory plan to run down the coal industry – and Lewis Merthyr – was to be just the beginning of a major pit closure programme.

This was the first whiff of grapeshot in the battle that followed the Tories’ victory in the May 1983 general election. In March, Scargill had called for a national strike as a show of solidarity against the threat of pit closures nationally. In a portent of what was to come, he also suggested that strike action could take place without a national ballot of miners being held. Yet barely a week later, on 8 March, a majority of miners voted to reject a national strike in support of the striking Welsh colliers in a secret pithead ballot. Lewis Merthyr was shut soon afterwards and unlike most of its sister pits whose iconic architecture and headgear was soon to be bulldozed from the landscape, was reinvented as the Rhondda Heritage Park. On a visit to the park a few years after the convulsive strike of 1984–85, Mark Seddon recognised former south Wales area NUM stalwart Ivor England, now dressed in Victorian collier’s gear in his new role as a tourist guide. ‘It’s bollocks,’ said Ivor. ‘But it’s a job. And most jobs, well they’ve vanished like an autumn mist from these valleys.’ Would Margaret Thatcher have opted for an early general election had the miners voted for an all-out strike in support of their doomed colleagues in south Wales in March 1983? Would she have risked another general election framed by pictures of striking miners, picket lines and a bitter struggle for the survival of the coalfields and risked an Edward Heath-style debacle? For when Heath had asked the British electorate, ‘Who governs Britain?’, in the middle of a national miners’ strike over pay in 1974, voters had responded with a fairly definitive answer: ‘It’s clearly not you!’, and sent Harold Wilson back to Downing Street, with Michael Foot as the Employment Secretary to work out a pay deal with Britain’s miners. Britain was a changed place a decade on, but probably not changed enough to produce an entirely different set of circumstances. The Tory government backed off from confrontation in 1981, under the threat of industrial action from the NUM.

Historically, Conservative governments had always avoided confrontation with the miners. Harold Macmillan had once famously warned that as with ‘Eton and the Guards’, all Tory Prime Ministers should avoid taking on the NUM. Winston Churchill, when asked in the 1950s whether he had settled with the miners on his terms or theirs, replied, ‘On theirs, of course. One must have electric light.’ The appointment of Ian MacGregor, a former American business executive who had been presiding over the shrinking of the British steel industry, to head the publicly owned National Coal Board in March 1983 was to set the scene for much that was to follow. Industrial convulsions continued. Workers at Ford’s giant Halewood plant began a strike over the unfair dismissal of a colleague. Labour’s campaign document ‘The New Hope for Britain’, outlining its strategy for fighting the next general election, proposed an ‘emergency programme’, to be enacted upon taking office, with increased public investment in transport, housing and social services. A ‘national economic assessment’ was to be undertaken in co-operation with the trade unions. Also included were proposals to withdraw from the then European Economic Community (EEC) and the establishment of a nonnuclear defence policy by removing nuclear weapons from US and other bases. The campaign document was to morph into a Labour manifesto,  enthusiastically embraced by, among others, the young, upstanding candidate for Sedgefield, Tony Blair. Blair had squeaked into winning the parliamentary nomination on the casting vote of the chairman, Jack Burton. Moreover, this, according to folklore, had been helped by Burton’s decision to wave aloft a letter from Michael Foot that waxed enthusiastically over the qualities Blair had demonstrated in fighting the hopeless seat of Beaconsfield in Buckinghamshire a year or so earlier. Blair, despite his later detestation of the Labour left, always had a soft spot for Foot. The manifesto was dubbed ‘The longest suicide note in history’, by Manchester Gorton MP Gerald Kaufman. Foot famously and quite uncharacteristically never forgave Kaufman for his outburst, coming as it did in the middle of the general election. Labour’s national campaign is remembered for the general chaos that surrounded it. Shadow Cabinet ministers frequently didn’t know where they were supposed to be and sometimes turned up at the wrong venues. And yet the enthusiasm that often met Michael Foot as he travelled the country seemed to suggest that the polls were guilty of underestimating the number of his supporters. Foot’s arrival in Norwich coincided with the arrival of footsore participants taking part in the ‘People’s March for Jobs’, who had marched from unemployment-hit towns in the north-east of England to protest the rising level of joblessness and deindustrialisation. Mark Seddon recalls going to meet the marchers, who were consciously adopting the mantle of the Jarrow hunger marches of the 1930s, as they arrived at the approaches to the city. Foot’s natural empathy was well received by them and the image of the day which made it onto the front pages of some of the national press was of the Labour leader, his arms draped around the shoulders of one of the young female marchers who sported a magnificent pink Mohican and multiple nose piercings. Foot then got a rapturous reception in the ancient and packed St Andrew’s Hall in the city, as the marchers finally arrived.

But for all of the enthusiasm, the uplifting oratory and the hard work of activists, the campaign was succeeding in motivating existing supporters, but few others. When Michael Foot arrived in Norwich, two Labour MPs represented the city. Yet after the general election, both had been swept away and replaced by Conservatives to the genuine shock and disbelief of virtually everyone who had been there battling it out on the doorsteps. Margaret Thatcher was returned to office as Prime Minister with a majority of 144 seats. Labour won the fewest number of seats since the Second World War. Among the prominent parliamentary defeats were those of Shirley Williams, whose Crosby constituency was captured by the Conservatives; Bill Rodgers, whose Stockton North seat was one of only four gained by Labour; and Tony Benn, who lost the newly redrawn Bristol East to the Tory candidate, Jonathan Sayeed.

Generation Left Keir Milburn (2019)

In the next chapter we examine the impact of the event of 2008 on the technical composition of the working class. I will argue that the older generation are still tied to the neoliberal hegemony of finance while the young seek to escape it. The event of 2008 provides a shared generational location for the young and disadvantaged. But the emergence of a coherent new political generation requires events of a different kind. A Left generation requires a rupture caused by a moment of collective action that exceeds the existing sense of social and political possibility. In chapter 3 we will name these types of events ‘moments of excess’ and propose the 2011 international wave of protests and revolutions as a prime example. We will examine this wave as the first iteration of an emerging political composition, examining its forms for traces of 2008’s impacts on the technical composition.

The events of 2011 created a Left generational unit, and in chapter 4 we examine this unit’s turn to electoral politics to gain hegemony over the much larger but politically ambiguous generation of 2008. This turn brought them into conflict with a previous Left generation, the Third Way Left, formed by the events of 1989 and characterized by their compromise with neoliberalism. The event of 2008 undermined that generation’s formative assumptions, leaving them unable to understand or deal with the current generation gap. This means it falls to Generation Left to deal with the current situation, and in chapter 5 I suggest ways that the current generation gap can be overcome. This will involve reinventing the categories of youth and adulthood to break their current entanglement with private property ownership, shifting them instead towards the kinds of common ownership which can act as a solution to the generational divide over access to material security. Only in this way can we ensure that our current ‘storms of youth precede brilliant days’ for all generations.

On PETER DRUCKER

Peter Drucker and Management Karen Linkletter (2024)

Those readers are looking to Drucker to be an orthodox management writer. Drucker was never that. He was, by his own admission, a social observer and a journalist. It is our hope that this text presents Peter Drucker as not merely a social observer but also a social theorist who impacted the world of management. This book is organized into chapters that can be read independently from one another but also present a logical thematic approach to Drucker’s work. Chapter 1 gives the reader an in- depth biographical evaluation of Drucker’s life focusing on his European roots and how that background informed his later work and life.

Chapter 2 lays out Drucker’s social theory in detail, tracing how his concept of a functioning society worked its way into his writings.

Chapter 3 delves into the detail of Drucker’s work on the actual practice of management, as he moved from his theoretical work to his efforts to make management a profession.

Chapter 4 takes up the subject of leadership, a topic of much interest today that Drucker was, frankly, lukewarm to. Drucker came late to the leadership conversation, and this chapter explains why, with some takeaways as to what we might learn from Drucker on this today.

Chapter 5 addresses Drucker’s signature term, the knowledge society, and addresses some of our current concerns with new developments in this area. Chapter 6 takes up Drucker’s work on innovation and entrepreneurship, including his early thinking on that topic before his 1985 book, as well as how we might use his ideas today.

In Chapter 7, we confront the controversial topic of Drucker’s work on government and how he has been misinterpreted by some politically; Drucker was intentionally an apolitical figure, and we hope to show that efforts to recruit him as a political icon are misconstrued. The current topic of technology and society is related to discussion of artificial intelligence and other emerging developments.

Chapter 8 shows that Drucker was a pioneer in thinking about how such advances are part of historical context and larger processes, and thus need to be viewed carefully in terms of threats and potential.

Lastly, Chapter 9 looks at Drucker as he characterized himself: a social ecologist. We begin the book looking at Drucker as a theorist. Social ecology is the way Drucker put his theory into practice, not just for individual organizations but also for society as a whole.

I knew Peter Drucker. He was a brilliant man with whom I had many wonderful conversations, and with whom I laughed and shared personal activities aimed at subverting Hitler’s success. With the Nazi’s eventual victory, Drucker fled first to England and then to the United States. Landing in the United States during the Great Depression, shortly before that country’s entry into World War II, Drucker witnessed the dramatic changes happening in the American economy, as it transformed into an industrial manufacturing powerhouse (first for armament production, and, after the war, for a vast array of consumer goods). By sheer accident of timing and history, Drucker was catapulted from world to world. First, Drucker’s youth in a placid upper- middle- class neighborhood in Vienna, the crown of the Austro- Hungarian Empire, was marred by the upheaval of World War I and its aftermath. As a young man starting an independent life, he was shattered by the rise of the Nazis and the threat to his family, career, and personal safety. Landing in America on the cusp of that country’s entry into World War II, Drucker experienced the subsequent massive economic and cultural shifts and disruptions that the war created in the United States. Given that Drucker experienced all of these discontinuities in his first some 35 years of life, it is not surprising that his work focused on his primary project: how to find a path to a functioning society, and one that would balance change and continuity.

For Drucker, the key to avoid another totalitarian or fascist disaster such as that he witnessed in Europe in the 1930s was to provide people with a society that made sense. When rational explanations for events broke down, people lost all hope and turned to authoritarianism— a strong leader who made promises that, even if they made no sense, would at least offer a way out of misery. The only recompense was to create a society that gave individuals social status and function. Everyone needs to feel that they are important somewhere in society, that they matter and are recognized and valued. They also need to feel that they contribute and have a purpose (a job). Additionally, society needs to be held together by an agreed- upon power that is deemed legitimate. How do we create this functioning society?

In mid- twentieth- century America, as business and other organizations began to become more important than the traditional dominance of government as the primary institution, Drucker was naturally drawn to management as he sought to shore up the institutions of society. If the new institutions of society— first corporations, and later non- profits and other institutions— were well- managed, they could provide individuals with status and function and also represent a legitimate form of authority and power. Ultimately, a pluralistic society of organizations that were well- managed could prevent the rise of totalitarianism and, while not creating an ideal society, at least provide the opportunity for a tolerable one. The fact that Drucker witnessed such incredible change in his life experiences. He was also a complicated person with a history we cannot begin to understand or imagine. I hope that I have captured something of his life and work in these pages.

Ch 1Landing in industrial America by accident of history, Drucker’s search for a 
functioning society of institutions led him to use America as a blueprint for avoiding the 
breakdown of social structures that occurred in Europe. Steeped in a wealth of knowledge in political
philosophy, literature, economics, sociology, and many other disciplines, Drucker’s unique perspective as a European émigré
allowed him to see the world in the context of larger patterns of change and continuity. 
His experience with the massive disruptions of two world wars, economic upheaval, 
and totalitarian government gave Drucker an early education in the need to balance 
change with continuity.

Driven by his experiences in Austria as a teenager and in Germany as a young man, Drucker’s life project was the search for a tolerable society of institutions that would provide meaning to people and prevent a repeat of the history he witnessed. In his interviews and memoir, Drucker told a consistent story of his life and career development, one that emphasizes his role as an observer or bystander in American society. He often used a quotation from Goethe’s Faust to describe himself: “Born to see, meant to look” (Drucker, 1995). By deliberately fashioning himself as a bystander, not a participant, Drucker distanced himself from the very culture he also claimed as his own. Austrian-born and German educated, Drucker, like many other émigrés, was drawn to America because it in so many ways contrasted with Old World Europe. Yet, at the same time, he sought to lose his European identity, to become American, he created his own identity as an outsider rather than an insider. As a self- made bystander, Peter Drucker wrote for himself an identity that placed him between identities; he was neither fully American nor European. Although he retained his Austrian accent, he wrote as an American bystander, taking title to American society and culture. However, as someone who fled Europe around the same time as Hannah Arendt, Ludwig von Mises, Erich Fromm, and Herbert Marcuse, Drucker could not help but write from the perspective of an émigré. He crafted an identity that selectively blurred his status as a European immigrant, yet, at the same time, prevented him from complete immersion and assimilation in American life.

Drucker’s bystander identity was useful to him as a means of negotiating the virtual impossibility of complete assimilation. Other fellow émigrés experienced similar difficulties with becoming American, and, like Drucker, constructed outsider identities. Theologian Paul Tillich entitled his autobiography “On the Boundary,” conveying his bystander status along the outskirts of American society. Others, such as Theodore Adorno and Berthold Brecht, established a Tocquevillian stance, as the outsider looking in to critique American culture for its homogeneity and mind- numbing effect (Heilbut, 1983). Drucker, however, used his bystander identity for its practical applications in his role as a consultant; by maintaining his distance from his clients’ organizations, he retained his objectivity. USC management professor Warren Bennis stated that Drucker told him this was one of the secrets of consulting: “be an outsider” (Bennis, 1985, p. 25). But it served another important function as well. It allowed him to find his own place of meaning and status in society, a topic which is of great importance to him, while still protecting his own individuality and uniqueness. As management professor Warren Bennis has commented, “It is not clear where Peter Drucker does belong.” He clearly did not fit into the corporate world; he never worked for one of the large organizations, business or non- profit, that he analyzed. He was never at home in the academic realm, which he himself acknowledged: “…I am not a scholar and I have always had a very large part of my life outside the university.”