About Capitalism

 Talking to my Daughter about the Economy Varoufakis (2018)

Besides the works of literature and the poems mentioned in the text, as well as the science-fiction movies without which I find it hard to understand the present, I shall mention four books: Jared Diamond’s Guns, Steel and Germs, which underpins the story in the first chapter that explains the emergence of gross inequities and, ultimately, racist stereotyping; Richard Titmuss’s The Gift Relationship, whose discussion of the blood market underscores ideas first developed in Karl Polanyi’s Great Transformation; Robert Heilbroner’s majestic The Worldly Philosophers; and novelist Margaret Atwood’s Payback, which I recommend unreservedly as perhaps the best, and most entertaining, book ever written on debt.

Finally, it would be remiss not to mention the spectre of Karl Marx, the dramaturgy of the ancient Athenian tragedians, John Maynard Keynes’s clinical dissection of the so-called ‘fallacy of composition’ and lastly the irony and insights of Bertolt Brecht. Their stories, theories and obsessions haunt every thought I ever had, including the ones laid down in this book.

And this is a useful summary of what the book is trying to say - 

“Talking to My Daughter About the Economy: A Brief History of Capitalism” is a book written 
by Yanis Varoufakis, an economist and former Greek finance minister. The book aims to 
explain complex economic concepts in a simple and accessible manner, targeting a general 
audience, including the author’s daughter.
In the book, Varoufakis provides an engaging and insightful overview of the history of 
capitalism, tracing its origins and evolution from ancient times to the modern era. 
He delves into the key economic ideas and theories that have shaped the world we live in, 
including the role of markets, money, and finance.
Varoufakis also highlights the inherent flaws and inequalities within the capitalist system 
and discusses how these issues have contributed to various economic crises throughout history. 
He addresses contemporary challenges, such as the increasing wealth gap and the impact of 
globalization, offering his perspectives on potential solutions and alternatives for a more 
equitable economic future.
Overall, “Talking to My Daughter About the Economy” presents a captivating and approachable 
exploration of the complex world of economics, making it accessible to readers who may not 
have a background in the subject while encouraging critical thinking about the current economic 
system and its implications for society.

Key concepts and ideas.

1. Capitalism’s Historical Development: The book provides a historical overview of how 
   capitalism evolved over time. It traces its roots back to ancient civilizations, 
   through feudalism and mercantilism, to the industrial revolution and the emergence 
   of modern capitalist societies.

2. The Role of Markets and Money: Varoufakis explains the significance of markets in 
   capitalist economies as mechanisms for the exchange of goods and services. 
   He also discusses the importance of money as a means of facilitating these exchanges 
   and its role in shaping economic activities.

3. Invisible Hand and Self-Interest: The book explores Adam Smith’s concept of the 
   “invisible hand,” the idea that individuals pursuing their self-interest in a 
   competitive market can unintentionally benefit society as a whole.

4. The Division of Labour and Productivity: Varoufakis discusses how the division of 
   labor and specialization in capitalist economies have contributed to increased productivity 
   and economic growth.

5. Capital and Surplus Value: The author delves into the concept of capital and how surplus 
   value is generated in capitalist systems through the exploitation of labor, often leading 
   to income inequality.

6. The Great Depression and Economic Crises: The book examines historical economic crises, 
   including the Great Depression of the 1930s, to illustrate the inherent instabilities 
   and vulnerabilities of capitalist economies.

7. Globalization and Financialization: Varoufakis explores the impacts of globalization and 
   financialization on economies worldwide, emphasizing how these processes have transformed 
   the nature of capitalism in recent decades.

8. Income Inequality and Wealth Concentration: The book addresses the growing issue of income 
   inequality and the concentration of wealth among a small segment of the population, which 
   can have detrimental effects on social cohesion and economic stability.

9. The Role of Governments: The author discusses the role of governments in managing 
   capitalist economies, including their responsibilities for regulation, social welfare, 
   and addressing market failures.

10. Alternatives and Proposals: Throughout the book, Varoufakis presents alternative economic 
    ideas and policies that aim to address the shortcomings of capitalism and promote a fairer 
    and more sustainable economic system.

11. Economic Democracy: One of the core themes is the notion of “economic democracy,” which 
    involves giving citizens a more direct say in economic decisions that affect their lives, 
    rather than leaving these choices exclusively to market forces and corporations.

12. Social Responsibility and Solidarity: The book promotes the idea of fostering a sense of 
    social responsibility and solidarity among individuals and societies, aiming for a more 
    compassionate and just economic order.

Overall, “Talking to My Daughter About the Economy” presents a comprehensive exploration 
of capitalism and its historical development, offering readers an engaging and thought
-provoking perspective on the complex world of economics and its impact on society.


The Destiny of Civilisation – finance capitalism, industrial capitalism 
or socialism Michael Hudson (2022)

Michael’s decision to shift to economics was dramatic. One evening, af­ter moving to New York planning to publish the works of Schenker, George Lukacs and others, he had dinner with Terence McCarthy, an Irish com­munist and translator of Karl Marx’s Theories of Surplus Value. The con­versation turned to how changes in water levels caused crop failures in the United States that led to an autumnal drain of money from the stock and bond market, and hence to periodic financial crises. In Michael’s words, “to me, these interconnections between production, finance and the over­all economy’s systemic relationships were so beautiful, so aesthetic in their unfolding—like musical counterpoint leading to modulation to a higher overtone key—that I decided on the spot to become an economist.” Ever since, he says, he has been able to achieve in his economic writing what he could not have created in music.

Michael’s first training followed his acceptance of the condition Terence McCarthy set to mentor him: that he would read all the works in the bib­liography of Marx’s Theories of Surplus Value. So while taking his graduate degrees and working for Wall Street banks, Michael also worked part-time for the publisher Augustus Kelley to recommend and write introductions to reprints of economic classics. In the process, he acquired a library of books by economists missing from the “normal” history of economic thought.

Childhood and teenage experience—in an adversarial position

Michael’s disposition certainly has a lot to do with his family and social background during his formative years. He was born in March 1939 in Minneapolis, Minnesota, into a family of labor activists. Of all the cities in the world, Minneapolis had the strongest Trotskyist influence. Michael’s father, Carlos Hudson, had worked with Leon Trotsky in Mexico and had been one of the leaders of the great Minneapolis general strike of 1934 as editor of the Northwest Organizer. His father loved Huckleberry Finn, and Michael was called “Huck” by family and friends. But since his father’s par­ty name was Jack Ranger, Michael as a boy also was nicknamed “The son of the Lone Ranger.”

When Michael was three years old, Carlos Hudson was jailed under the Smith Act as one of the Minneapolis 17. Carlos remarked that his year in prison was the happiest time of his life, being assigned to the library, where he collected a long list of proverbs that Michael reproduced on his blog in June 2017. Reading “Dad’s Many Proverbs,” one might come to see not only how J is for Junk Economics came to be structured, but also where Michael’s remarkable sense of humor and witty comments can be traced.

When he was growing up in Chicago, visitors to his house included former German colleagues of Rosa Luxemburg and Karl Liebknecht, and members of the Third International when Lenin was still alive and in pow­er. There was almost constant discussion of socialist doctrine and tactics in the meetings convened in his home. When Michael was 14 years old, in the University of Chicago’s high school, he was called a fascist by Stalinists and a communist by fascists. He told me, “I was very happy being in an adversarial position, yet also the reasonable voice avoiding ideology. I liked being hated by the right-wing because it made me a lot of friends and I re­cruited many members into the socialist youth groups in Chicago.”

Getting more confident and stronger when put in an adversarial position probably has been one of the key traits of his life. Michael has never accept­ed the world as it is, with its frauds, hypocrisy and injustice. Yet it has taken more than self-confidence and a strong spine to become the great econo­mist that he is today. One reason for his brilliance and uniqueness is that he has not been swayed by his academic training in the unrealistic theories of the economics schools in the universities that justify rather than critically challenge the status quo. Michael has developed his analytic ideas through his real-life work experience in many countries, combined with his deep understanding of the history of economic thought.

Wall Street bank experience—countering ideology

While employed by Wall Street banks as a statistical economist to under­stand how the financialized economy works, Michael studied for a Master’s and then a PhD degree in economics at New York University. According to him, most teachers in the master’s program at NYU were part-time. The relatively few full-time academics had no experience working in a bank or corporation; their worldview came from textbooks. Michael fortunately found out for himself how the banks worked, starting as a statistical ana­lyst for the Savings Bank Trust for three years, and then as balance-of-pay­ments economist for the Chase Manhattan Bank from 1964 to 1967.

Initially, Michael’s job was to trace how savings were recycled into new mortgage loans by New York’s savings banks. His research showed that most deposits grew not by new saving, but simply by the accrual of div­idends at compound interest. This exponential growth was recycled into new mortgage loans to buyers of real estate, seeking ever larger debt/eq­uity ratios in order to dispose of the surplus finance capital. He saw that commercial banks did not lend money to finance new industrial capital investment, but only lent against existing assets, seeking above all to turn their profits or rents into a flow of interest payments. In short, rents were for paying interest. And increasingly today, so are wages, because payments on bank loans, mortgage loans, student debt and credit-card debt eat away at the disposable income of most families. This is the monthly “nut” that households pay to the Finance, Insurance and Real Estate (FIRE) sector off the top of their paychecks.

Later, at Chase Manhattan, Michael compiled statistics to trace how the export earnings of foreign countries were captured into paying debt service. He also traced statistically how U.S. oil companies made profits by “transfer pricing,” selling crude oil production cheaply to tax-free “non-countries” such as Liberia or Panama that used U.S. currency. The oil was then re-sold to refineries in Europe and the USA at a mark-up so high that oil compa­nies had no profits to report, and hence paid no income tax anywhere on their international and domestic operations. To U.S. policy makers, this exploitation was a success story. In 1966 the oil industry had copies of Mi­chael’s report placed on the desk of every senator and representative, and obtained special favoritism as a result of the sector’s strong contribution to the U.S. balance of payments during the Vietnam War years.

The conflict between this reality and academic orthodoxy struck him in 1968 when he had to retake the money-and-banking part of his PhD orals, because his answers were based on his real-world monetary and financial experience, which was at odds with the Chicago School monetarism and vulgarized Keynesian liberalism that had become the academic norm. That was an era when textbooks still taught of helicopters dropping money on the economy—not acknowledging the principle that Michael has made at many monetary conferences ever since: the central bank’s helicopter only flies over Wall Street. Money from this helicopter is lent out to buyers of real estate, stocks and bonds (and to corporate raiders), with little being spent on goods and services. So the effect is asset-price inflation—which Michael has shown leads to debt deflation as homeowners need to borrow higher and higher mortgage loans to afford the debt-inflated cost of hous­ing, leaving them with less to spend on real goods and services. This now-obvious linkage between rising housing costs and debt de­flation was deemed heresy in the 1960s. Mainstream economists thought that as families became wealthier homeowners, they would have more to spend—ignoring the debt dimension of how homes were bought on credit that steadily pushed up the cost of obtaining housing. The Finance, Insur­ance and Real Estate (FIRE) sector was (and still is) treated as if its rentier income should be added to the economy’s output instead of siphoning it off.

Economic historian—delving into the origins of money and debt

Michael’s experience on Wall Street inspired him to set about investigating the origins of money and replacing the individualistic theories of its ori­gin with a more realistic and historically based explanation. His technical articles and monographs are now accepted as documenting how money originated, not in barter among individuals, but as a means of palatial ac­counting in Bronze Age Mesopotamia, above all to denominate debts owed to the palace, temples and other creditors in grain and silver as common denominators whose units were set as having equal value for fiscal pay­ments to the palace.

Michael also has shown that instead of interest being invented by in­dividuals lending cattle or grain to reflect productivity rates (as Austrian theory imagines), early interest rates were set by the palaces or other civic authorities simply on the basis of ease of accounting, in terms of the local system of fractions—60ths in Mesopotamia and Egypt, decimals in Egypt and Greece, and the 12-based duodecimal system in Rome (1 troy ounce on the pound per year), increasingly decimalized into 1 percent per month. Finally, he has applied this historical analysis to modern times by show­ing that throughout history, debts have grown at compound interest faster than the economy is able to pay, leading to foreclosures and economic po­larization if the debts are not cancelled. Indeed, for this reason, personal debts were cancelled when new rulers took the throne in Sumer, Babylonia, Egypt and their neighboring lands, in contrast to Greek and Roman oligar­chic opposition to debt cancellation and imposition of pro-creditor laws.

Michael’s insights into the workings of modern financialized rent-seeking economies, both within the United States and globally, have prompted him to conduct years of research not only into the origins of money and account­ing, but into the origins of labor and how it was paid, the origins of land tenure and taxation, and the origins and history of debt. This analysis has led to his well-known proposition that “debts that can’t be paid, won’t be paid,” and to his advocacy that unpayable debts should be cancelled, and can be cancelled without causing economic disruption—and indeed that without doing so, economies will polarize and crash.

At the World Social Forums, I had marched with tens of thousands of participants, including Samir Amin and Immanuel Wallerstein, with a banner whose slogan “Don’t owe, won’t pay” demanded cancellation of debts for impoverished countries of the Global South. However, I some­times wondered if the slogan was chanted by many from a political posi­tion without a deep understanding of how the debts were generated. The slogan would be meek if it were only a political position to express the distress of the indebted countries and peoples, without an appreciation of why and how the debts should be cancelled.

Michael’s advocacy of debt cancellation does not come from a simplis­tic political position, though certainly the proposition itself is profoundly political. The proposition comes from his insider knowledge of the oper­ation of banks, oil companies, the government and even the military. This experience informed his understanding of the domestic and global politics of the United States, and of the financial dynamics of debt and the long history of debt cancellation in antiquity. Exempt from academic dogma­tism and left-wing infantilism, Michael’s economic theories are based on decades of pragmatic statistical and historical inquiry, backed by his earlier training in cultural history as well as his comprehensive reading of Marx’s economic works.

Staunch critic of U.S. Super Imperialism

Working for the accounting firm Arthur Anderson, Michael spent a year analyzing the U.S. balance of payments. His statistics showed that the en­tire payments deficit resulted from military spending on the Vietnam War and elsewhere. Seeking ways to finance that military deficit led the U.S. Government to ameliorate the worsening balance-of-payments deficit by asking U.S. banks to set up branches in offshore banking centers to attract the world’s criminal capital, from drug dealings to kleptocratic embezzle­ment (the world’s new “neoliberal” sectors). This outgrowth of oil-indus­try “flags of convenience” has led to today’s crisis of tax enclaves enabling the world’s wealthy individuals and corporations to avoid taxation and file fictitious economic statistics. Michael has exposed this in numerous intro­ductions to books and in interviews in documentary films.

Michael’s understanding of how the global economy under U.S. hege­mony worked enabled him to forecast in Ramparts in 1968 that the USA would have to go off gold, which it indeed did in August 1971. Explaining how ending the gold standard had inaugurated the U.S. Treasury-bill stan­dard that obliged foreign governments to finance the U.S. balance-of-pay­ments and domestic budget deficits, his first book, Super Imperialism: The Economic Strategy of American Empire (1972), gained him international recognition and has been translated into many languages. He had hoped to help countries resist the system of dollarization that has enabled the United States to obtain a free ride for its foreign military spending and takeover of other economies. But from the very beginning, the U.S. Government used the book as a how-to-do-it manual. Michael was quickly employed by Herman Kahn’s Hudson Institute to explain to the White House and the Department of Defense how the new international financial order worked.

The success of Michael’s books led many Wall Street and Canadian fi­nancial institutions to retain him as a consultant forecasting interest rates and currency exchange rates. The Canadian government invited him as fi­nancial advisor to develop the balance-of-payments dimension of what has become Modern Monetary Theory (MMT), showing that Canada did not need foreign loans to finance its provincial and other domestic spending. His book describing why Canada did not need foreign borrowing for its provinces and companies to spend domestically, Canada in the New Mone­tary Order (1978), showed that when Canada borrowed abroad, the central bank still had to create domestic money in any case to be spent locally as a counterpart to the foreign currency inflow. Hardly by surprise, this led to passionate attacks by Canada’s banks seeking to profiteer by indebting the economy through their loan underwriting. But it also led to further con­tracts with Canada’s State Department and Science Council.

In the late 1970s, Michael was invited by the United Nations Institute for Training and Research (UNITAR) to become economic advisor on North-South debt and trade. He warned of the coming Latin American debt defaults, which indeed began in 1982 with Mexico. He subsequently has served as economic advisor to numerous governments, agencies and political parties from Latvia to Greece. He has argued for national protec­tionism and capital controls to resist free-trade imperialism, for domestic money creation to finance domestic spending on less inflationary terms than borrowing foreign currency, and for the need to tax and limit rentier gains in real estate and finance.

Academic and theoretical contributions

Michael has worked within academia on sustained intellectual inquiry. For many years he was on the economics faculty of the University of Mis­souri at Kansas City (UMKC), which became the center of MMT in the early 2000s with Randall Wray, Stephanie Kelton and Bill Black. He was Economic Research Director at the Riga Graduate School of Law (RGSL), where he became Chief of the Committee of Experts for the Renewal Task Force Latvia (rtfl.lv). As for his most well-known academic inquiry, that into the history of debt and money, he was appointed a research fellow in Babylonian economics at the Peabody Museum of Archeology and Eth­nology at Harvard University, where he organized a colloquium every few years from 1994 onward. The five volumes of conference colloquia that he has co-edited have rewritten the economic history of the ancient Near East and classical antiquity.

These colloquia were on privatization, land tenure and real estate own­ership (which were found to be based on fiscal liability), debt cancellation and economic renewal, the origins of money and accounting, and the or­igins of labor services (discovered to have arisen to work on public infra­structure and to work off personal debts). The findings of these colloquia and their members refute previous libertarian individualistic theorizing on economic origins, and have now become the new orthodoxy among Assyr­iologists, Egyptologists and anthropologists, most notably Michael’s friend David Graeber, who wrote his book Debt: The First Five Thousand Years, largely to popularize Michael’s approach. The essential focus of the colloquium volumes is on how money, inter­est-bearing debt and land tenure were innovated in the palaces and temples of the ancient Near East, and on how the privatization of money and credit led to the polarization in ownership of land and other wealth in the hands of private oligarchies from classical antiquity to today’s Western economies.

As one of the few economists who predicted the 2008 crash, Michael published one of his most important theoretical papers in 2006: “Saving, Asset-Price Inflation, and Debt-Induced Deflation.”1

1. In L. Randall Wray and Matthew Forstater, eds., Money, Financial Instability and Stabi­lization Policy (Cheltenham: 2006), pp. 104-24.It accurately explained how the exponential expansion of credit created corresponding debt that would lead to the impending financial crash and its aftermath. On Septem­ber 8, 2009, Dirk Bezemer wrote an article “Why some economists could see it coming” in the Financial Times, which stated that “Michael Hudson of the University of Missouri wrote in 2006 that ‘debt deflation will shrink the ‘real’ economy, drive down real wages, and push our debt-ridden economy into Japan-style stagnation or worse.’ Importantly, these and other analysts not only foresaw and timed the end of the credit boom, but also perceived this would inevitably produce recession in the US.” That article included the set of charts that helped make Michael famous for his explanation of why financial crises are endemic and lead to secular stagnation:

Today, with the world in deep financial crisis, Michael has reiterated his proposition that unpayable or odious debts should be cancelled, and indeed must be cancelled in order to avoid a global austerity crisis and economic polarization stemming from chronic debt deflation. One point of clarifica­tion here. The United States has become the world’s biggest debtor, mainly as a byproduct of the fact that most international debts are denominated in dollars. This poses a basic question: Which debts should be wiped out?

Michael urges that the debts of overindebted households and impover­ished countries in the Global South should be written down, but that one debt should not be cancelled: the official foreign debt of the U.S. Govern­ment. The United States has run up this official foreign debt—like its do­mestic Treasury debt—without expecting ever to actually pay it off. It has no intention of imposing on itself the austerity that it and the IMF demand of other debtor countries. This asymmetry, along with the U.S. sponsorship of today’s New Cold War, has led leading dollar-holding nations such as China and Russia to begin de-dollarizing their economies. This signals the fracturing of the world economy that Michael predicted in his 1977 Global Fracture. The United States is forcing other countries to choose between accepting a dollarized and militarized rentier austerity, or going their own way by creating mixed public/private growth-oriented economies.

For socialism

For us on the Global U team, it has been a great privilege and honor to be learning from Michael, face to face. He was invited to give lectures in Hong Kong and Macau in November 2019, during which he had a dialogue with Wen Tiejun on economic and financial issues in China. During the Seventh and Eighth South-South Forums on Sustainability in 2020 and 2021, he had further discussions with Wen Tiejun. Michael has a particular concern for China’s development, as he feels that China is the leading exception to the U.S.-based neoliberal economic model, not taking the destructive ad­vice of the IMF and World Bank. He has argued that China’s economy can be resilient if it organizes its real estate, debt and tax system to avoid the rentier financialization process that is destroying the West.

In September 2020, while we were chatting online, I sounded the idea that Michael give a lecture series for Global U. Michael accepted on the spot. I emailed him a proposal of 10 topics, and within five hours he came back with a detailed outline. The lectures were delivered weekly in Septem­ber-December 2020. Rewriting these lectures to create the current book took another few months.

I sometimes wonder whether Michael would have had second thoughts if he had known that his spontaneous acceptance of my request would take ten months of his time. But fortunately for readers, this became a blessed opportunity to access his central ideas and be guided to his dozen books. The videoed lectures, subtitled in Chinese and divided into 70 episodes, were screened in April-August 2021 in China. The first episode has been watched by over 188,000 viewers, with 30,000 viewers on average for the remaining episodes. The English-subtitled lectures are available on www.michael-hudson.com. What readers now hold in their hand, the book writ­ten on the basis of these lectures, presents Michael’s dissection of the burn­ing global issues of today, and his explanation of how the industrial capi­talism analyzed in the 19th century by Marx and other classical economists has turned into finance capitalism based on debt and rent extraction. This financialized system is polarizing the Western economies and threatening their collapse in a wave of foreclosures and new privatizations by a finan­cial oligarchy.

Most important are Michael’s proposed alternatives for de-dollarization and de-privatization to avoid global debt deflation and New Cold War im­perialism. Indeed, if civilization is to avoid the destiny of destruction, if humanity is to have a future, socialism is the only way—and that is what Michael has passionately argued in this book.

Lau Kin Chi

Director, Executive Team, Global University for Sustainability Coordina­tor, Programme on Cultures of Sustainability, Centre for Cultural

The Bubble and Beyond – fictitious capital, debt deflation and global crisis Michael Hudson (2012)

Payback – debt and the shadow side of wealth Margaret Atwood (2008)

THE SIX INVERSIONS

This is a useful post from Josh Hunt about what he calls "the great British inversion”

The British state can still do some things quickly. It can stand up a furlough scheme in a 
fortnight. What it can no longer do is build, plan, or reform at anything like the speed the 
new era demands. The evidence is not contested, it is simply tolerated.
No major reservoir has been completed in England since the early 1990s, in a country 
whose population has grown by ten million since. Grid connections are quoted in years 
and sometimes in decades, in a country proposing the largest electrification in its history. 
Our last nuclear plant has been under construction longer than the entire Victorian railway 
boom took to connect every major city in Britain. The planning application for a single 
road crossing of the Thames has cost more than Norway spends building actual tunnels. 
These are not anecdotes. They are the operating speed of the system.
The deeper problem is that the system’s design assumptions match the old era exactly. 
Annual budgets for compounding decadal pressures. Departmental silos for problems 
that cross every department. A Treasury that prices everything at this year’s cost and 
nothing at this generation’s. Political incentives with a four-year horizon facing inversions 
with a forty-year one. The machine is not broken. It is doing what it was built to do, 
superbly, for a world that has ended.

History offers a clear, uncomfortable lesson about how machines like this get rebuilt. 
They get rebuilt in crisis. The 1832 Reform Act passed under fear of revolution. 
The Edwardian welfare state was born from the national panic when half the Boer War 
recruits were too malnourished to fight. Beveridge required total war. The 1976 IMF crisis 
forced in a fortnight what a decade of argument had not. The pattern repeats abroad: 
Sweden and Finland built the most disciplined fiscal frameworks in Europe in the rubble 
of their early-1990s banking collapses.
Foresight is rarer, but it exists, and its examples are the most important data points in 
this article. Singapore planned its water independence and its housing system across 
half a century. Ireland in 1987, broke and bleeding emigrants, struck a social partnership 
that held across governments and turned the country around inside a generation. 
Estonia built a digital state from a standing start because it had no legacy machine to 
defend. The common ingredients are worth stating: an honestly named emergency, 
a coalition wider than one party, and mechanisms deliberately placed beyond the each of the annual political auction.
Crisis reform works, but it buys the same destination at a vastly higher price, paid in 
unemployment, disorder and lost decades. Foresight is cheaper. It is also, on the historical 
record, much rarer. The whole argument of this article is that Britain still has the choice, 
and that the window in which it has the choice is the next decade, not the next generation.

VI. Britain on current trend
Let me be concrete about where the current trend goes, using only published projections. 
None of this is prophecy. All of it is what the official numbers say happens if nothing changes.

Britain in 2036. A population of around 71 million that has stopped growing naturally and 
      now shrinks in three of its four nations. One person in five of pensionable age. 
          Hundreds more primary schools closed; the university sector contracting as the 
           small cohorts arrive. The NHS, if its own plan is delivered, employing one working 
          person in eleven, with the wider care economy absorbing something approaching 
          one in seven. Debt interest still a top-four spending programme. Defence spending 
          rising toward 3.5% of GDP under treaty obligation, every pound of it competing 
          with care. Taxes at or beyond the post-war record. The gilt market pricing all of it, 
          hour by hour, through lenders with no particular attachment to Britain.

Britain in 2046. The 1960s baby boom fully inside the care system, the over-85 population
 having roughly doubled, drawing on a workforce that has been flat or shrinking for a 
decade. Workers per pensioner heading toward the OBR’s long-run figure of 2.7, and on 
the honest count, workers actually in work per pensioner, materially lower. The state pension 
alone costing nearly 8% of GDP. The OBR’s current-policy debt path passing 150% of GDP 
on its way to a number nobody intends to reach, which means the correction, voluntary or 
imposed, has happened somewhere in between.
The honest way to read those two paragraphs is not as a prediction that they occur. It is 
as a measurement of the gap between the trajectory and anything survivable, which is to  
say, a measurement of the scale of reform that is coming one way or the other. 
That scale is the point. Nothing in any party’s current programme is within an order of 
magnitude of it.
VII. The case against this point of view
Now, I know what some will say, and the objections deserve better than a paragraph each,
 because some of them are partly right.
Declinism is Britain’s oldest cottage industry. True. The 1890s panicked about 
national efficiency and then won two world wars. The 1970s sick man joined the single 
market and boomed. The base rate for British doom predictions is poor, and I hold this 
objection seriously. But notice what rescued Britain each time: a growing population, 
cheap energy, an expanding world order, and fiscal room to manoeuvre. 
The rescues came from exactly the assumptions that have now inverted. Past declinism 
was wrong about a country with tailwinds. The question is what the same country does 
in headwinds, and that question has no historical answer yet.
Immigration solves the demographics. It has, so far, genuinely. Without it the workforce 
would already be shrinking. But three things bound the strategy. Migrants age too, 
so the fix must be perpetually renewed at growing scale. The political tolerance has 
collapsed, with net migration already down two-thirds from its peak. And the deepest 
bound: fertility is falling everywhere. The countries we recruit from are on the same curve, 
a generation behind. Importing working-age people is borrowing against other nations’ 
demographic futures, and the global lender is closing.
AI is the productivity dividend that pays for all of it. Possibly. It is the one genuine 
wildcard in this article, and intellectual honesty requires saying that a sustained AI-driven 
productivity boom is the single scenario in which the fiscal arithmetic repairs itself. 
But weigh the shape of the dividend against the shape of the need. The productivity gains 
arrive in cognitive services, which is where the tax base lives, and the demonstrated effect 
of automation on care, the actual binding constraint, is so far nil. A dividend that displaces 
our taxpayers whilst leaving your costs untouched is a strange kind of rescue. I would 
gladly be wrong about this.
Fewer people is fine, even good. Per head, perhaps, eventually, and the environmental 
case is real. Japan remains safe, clean and cohesive. But Japan entered its decline with 
net assets abroad, an industrial export machine, and government debt held almost entirely 
by its own citizens. Britain enters its decline as a net debtor, importing food and energy, 
owing money to foreigners and hedge funds. The same demography, with the opposite 
balance sheet.
Services specialisation is an asset in any world order. The surplus is real and growing, 
and it is the best card in our hand. But a services surplus buys goods only whilst the world 
stays open, and it employs the workers most exposed to the technology. An asset, yes. 
A foundation, no.
Each objection, examined, does the same thing. It extends the timetable. None of them 
changes the destination. That, in the end, is my answer to the optimists: you may be right 
about the decade. The argument of this article is about the direction.

VIII. Governing the inversion
So what would a country that took all this seriously actually do? Not a manifesto. A sketch 
of the categories, with one worked example, because the point of the article is the shape 
of the response, not its every line item.
First, it would measure the new era. You cannot govern what your instruments cannot 
see. Publish an annual intergenerational account alongside the Budget, as New Zealand’s 
Treasury does, so that every Parliament sees the forty-year cost of its four-year decisions. 
Report the effective dependency ratio, workers actually working per pensioner, not the 
flattering official one. Count the care economy, paid and unpaid, as the national infrastructure 
it is.
Second, it would take the compounding decisions out of the annual auction. 
The most successful adaptations abroad share one design: automatic stabilisers placed 
beyond yearly politics. Sweden’s pension system contains a brake that adjusts payouts 
to demographic and economic reality without requiring any politician to commit career 
suicide. Denmark and the Netherlands index the pension age to longevity by formula. 
Britain instead re-fights every parameter, every year, in public, and loses. A serious country 
would legislate the formulas once, honestly, and let arithmetic do what courage cannot.
Third, it would rebuild the energy foundation as the first-order national project, on 
the simple ground that energy is the economy and everything else in this article sits 
downstream of its price. That means treating grid connections, nuclear delivery and 
the planning system as a single national-security programme with wartime priority, 
because the alternative, attempting history’s largest electrification at the developed 
world’s highest power prices, is not a plan. It is a queue.
Fourth, it would govern the care economy as a system rather than a staffing problem, which brings me to the worked example, because it shows what inversion-native policy actually looks like.
Consider the multi-generational household. For two centuries the whole drift of housing,
welfare and planning policy assumed dispersal: the young move away, the old age alone, 
and the state and market fill the widening gap between them. In the old era of abundant 
workers and cheap money, that was affordable. In the new era it is the single most 
expensive assumption Britain holds.
Because look at what one household arrangement does to the arithmetic of three different
 inversions at once. The grandmother in the annexe receives much of her care as a 
byproduct of household life rather than consuming a paid carer’s shift, easing the 
second inversion. The same grandmother provides the childcare that releases her 
daughter into the workforce, easing the first, and on the international evidence, families 
with grandparents nearby find it easier to have the children they already wanted, easing 
it at the source. The household needs one larger home rather than two or three small 
ones, which changes the shape of housing demand rather than simply adding to it. 
No new workforce is hired. No new tax is raised. The largest care provider in Britain 
is already the family, five million unpaid carers strong, providing a second NHS for free. 
The policy task is not to build something new. It is to stop punishing the thing that is 
already holding the system up.
And we do punish it, comprehensively. Council tax surcharges on annexes. Stamp duty 
structured against combining households. Benefit rules that treat sharing a roof as a 
fraud risk. A planning system in which a granny flat is a battle. California liberalised 
accessory dwellings by right and watched tens of thousands appear in a few years. 
Britain could do the same within a Parliament, at a fiscal cost of approximately nothing, 
and it would be the first policy in decades designed for the country we are becoming 
rather than the one we were.
I offer it not as a panacea but as a proof of category. Inversion-native policy exists. 
It tends to be cheap, because it works with the new grain rather than against it. There 
are equivalents waiting in every domain: Buurtzorg-style self-managing care teams 
that deliver more care per worker by removing the management layer rather than 
adding robots; defence procurement that buys magazines of munitions rather than 
museum pieces; a migration policy honest that it is a bridge with a closing far end, 
and priced accordingly.
Fifth, and hardest, it would tell the truth about the era, because every successful 
adaptation in the historical record began with a country being levelled with. Ireland in 
1987 was told it was broke. Singapore was told it could be extinguished. The national 
efficiency panic of 1906 began with the publication of one honest, horrifying 
recruitment statistic. The precondition for foresight is a shared, named emergency. 
Britain’s emergency does not yet have a name. This article’s wager is that naming it, 
the Inversion, accurately and without partisan blame, is the first act of governing it.

IX. The choice
Let me end where I began, with the threshold we cross this year.
A nation that buries more people than it christens is not necessarily a nation in decline. 
Japan is proof that it can be orderly, even graceful. But it is, unarguably, a different kind 
of nation, running on different arithmetic, and it cannot be governed by the habits of the 
old kind. Every inversion in this article will be managed eventually. Care will find its 
workers or its substitutes. The debt will find its buyers or its restructuring. The energy will 
be rebuilt or rationed. The defence will be funded or abandoned. The only open question, 
and it is the largest question in British public life even though it appears in no manifesto, 
is whether these adaptations are designed or suffered. Whether they arrive by foresight, 
on our terms, over decades, or by crisis, on the market’s terms, in months.
History says crisis. History is usually right. But not always. There is a version of this 
country that treats the Inversion the way it once treated the threat of invasion, as a fact 
that reorganises everything, that dissolves the luxury of the old quarrels, that makes the 
impossible reforms merely necessary. A country that measures the new era honestly, 
automates its hardest decisions, rebuilds its energy foundation, houses its generations 
together, and tells itself the truth. We used to be that country in our worst moments. 
The task now is to become it in time. The old era did not end with a bang. It ended in a 
maternity ward, quietly, on an ordinary day, sometime around now. The new era began 
the same way. Nobody noticed. That part, at least, we can still fix.

And the highly recommended Novara site offers this discussion about 
how the UK can’t build anything
 

Seven More

Five years ago I posted about “Future Politics” by James Susskind to which I now return Future Politics - living together in a world transformed by tech (2018)

Politics in the twentieth century was dominated by a central question: how much of our collective life should be determined by the state, and what should be left to the market and civil society? For the generation now approaching political maturity, the debate will be different: to what extent should our lives be directed and controlled by powerful digital systems—and on what terms? This question is at the heart of Future Politics.

In the next few decades, it is predicted, we’ll develop computing systems of astonishing capability, some of which will rival and surpass humans across a wide range of functions, even without achieving an ‘intelligence’ like ours. Before long, these systems will cease to resemble computers. They’ll be embedded in the physical world, hidden in structures and objects that we never used to regard as technology. More and more information about human beings—what we do, where we go, what we think, what we say, how we feel—will be captured and recorded as data, then sorted, stored, and processed digitally. In the long run, the distinctions between human and machine, online and offline, virtual and real, will fade into the background. This transformation will bring some great benefits for civilization.

Our lives will be enriched by new ways of playing, working, travelling, shopping, learning, creating, expressing ourselves, staying in touch, meeting strangers, coordinating action, keeping fit, and finding meaning. In the long run, we may be able to augment our minds and bodies beyond recognition, freeing ourselves from the limitations of our human biology.

At the same time, however, some technologies will come to hold great power over us. Some will be able to force us to behave a certain way, like (to take a basic example) self-driving vehicles that simply refuse to drive over the speed limit. Others will be powerful because of the information they gather about us. Merely knowing we are being watched makes us less likely to do things perceived as shameful, sinful, or wrong. Still other technologies will filter what we see of the world, prescribing what we know, shaping the way we think, influencing how we feel, and thereby determining how we act.

Those who control these technologies will increasingly control the rest of us. They’ll have power, meaning they’ll have a stable and wideranging capacity to get us to do things of significance that we wouldn’t otherwise do. Increasingly, they’ll set the limits of our liberty, decreeing what may be done and what is forbidden. They’ll determine the future of democracy, causing it to flourish or decay. And their algorithms will decide vital questions of social justice, allocating social goods and sorting us into hierarchies of status and esteem.

The upshot is that political authorities—generally states—will have more instruments of control at their disposal than ever before, and big tech firms will also come to enjoy power on a scale that dwarfs any other economic entity in modern times. To cope with these new challenges, we’ll need a radical upgrade of our political ideas. The great English philosopher John Stuart Mill wrote in his Autobiography of 1873 that, ‘no great improvements in the lot of mankind are possible, until a great change takes place in the fundamental constitution of their modes of thought.’ It is time for the next great change.

Stealing Horses to Great Applause – the origins of the first world war 
reconsidered Paul Schroeder (2025)

With a preface by the great Perry Anderson, this text promises much

The Decisionist Imagination – sovereignty, social science and democracy in the 
20th Century ed Daniel Bessner and Nicholas Guilhot (2018)
An unusual take on the making of decisionsYesterday – the UK from Thatcher to Covid Brian Harrison (2026) 1100 pp

Some Afterthoughts How far, then, was the UK in decline between 1990 and 2020?
 We must first summarize the conclusions so far reached, in roughly their order of 
discussion in the previous subsection (Current Realities). Because the Church of 
England was never disestablished, it had long been integral to the UK’s stability. 
With the loss of faith since the 1960s, however, its political role slowly became 
primarily ceremonial, declining only to the extent that the state declined. 
Opposition to birth control was among the controversial interwar religious 
standpoints, but thereafter other issues seemed more important, the controversy 
cooled and both standpoints succumbed before sexuality’s secularization. 
The UK’s relative economic decline was inevitable to the extent that less developed 
societies were bound to catch up, but it is absolute decline that brings trouble, 
and in the nation as a whole, this was averted. Not everywhere, though: 
economic growth was very patchy, both by region and by type of manufacture 
or service. Science-based industries flourished in several parts of the UK, 
and the North Sea witnessed remarkable advances in turbine manufacture, 
wind power and extraction of oil and gas; there were also simultaneous and 
related advances in environmental consciousness.

In education there was expansion and innovation at every level, spurred on by international comparison, and led by world-beating schools and universities. Although computerization in the UK was early and widespread, its record in computer manufacture was disappointing. In its media aspects, however, the UK was notably resourceful and recreation boomed and diversified after 1990, as never before. Behind all this lay a party-political situation whose stability required controversy to be publicly aired—political stability being in itself an economic asset. By 1990 the Wall’s fall had dampened Marxian fires: riots thereafter were mostly consumerist, and were contained. Containment was not cost free if only because of the UK’s relative enthusiasm for removing delinquents from the workforce into imprisoned work-free idleness. Helpful to the economy, however, was the move of both Labour and Conservatives after 1979 towards the centre, while the adversarial party system maximized opportunities for public debate. The worldwide credit crunch of 2007 was serious, however, and the UK was relatively slow to recover from it.

In international relations the UK’s world influence was probably at its peak in the 1880s, rather than in 1918 when the empire’s land-mass was at its peak. Henceforth the UK was a ‘satisfied power’ in need of alliances, and despite being on the winning side in 1945, diminishingly convincing as a ‘great power’. There followed decades of unsuccessful face-saving formulae and more frequent attempts to deny failure. By the 1970s the UK’s former international status was beyond recall, and it was a sign of the UK’s ongoing decline that so much was made of the Falklands victory in 1982. Having joined the EEC in 1973 in the hope that membership would revive the UK’s status, British governments seemed determined to minimize the benefits of joining, and on leaving the EU in 2020 the UK seemed only to sink further.

As for the empire/Commonwealth, it had originated in a powerful combination of idealism, commercial energy and wishful thinking. The twentieth-century prevalence of the third and waning of the first and second help to explain the empire/Commonwealth’s decline. Missionaries, in their idealistic and moralistic fervour, had helped to advance colonial frontiers, but their denominational diversity, with each component fervently held, could only erode faith by fostering irreligious relativism.

In 1989 K. O. Morgan’s preface to the first edition of his The People’s Peace (1990) saw the period 1945–90 as possessing ‘a unity of its own’. Not a situation prevailing between 1990 and 2020. In domestic politics these years include the long middle period (1997–2010) of Labour government, bounded at each end by periods of Conservative-dominated government, so no integrating theme there. Alternatively these years co ld be identified as a period of reflection and digestion, whereby the long-term implications of Thatcherism, especially within the British labour movement, were at last grasped. The difficulty in choosing this uniting theme, however, is that Thatcher’s impact has not yet ended. Or the period could be seen as a peaceful interval between two periods of ‘cold war’, beginning with the fall of the wall and ending with Putin’s invasion of Ukraine; but again, the end of Putin is not yet in sight. Some will complain, however, that there is more to life than politics. Besides, independent nations do not need to be fixated upon arbitrary international rankings—still less did it depend upon rankings based on military or power-political criteria. The decades between 1990 and 2020 have not acquired any distinct label, nor should they: a decade, or even three decades, are arbitrary periods, and if they have any distinctive feature, the label can be detected or confected only in retrospect.

Politicians at any level tend to make exaggerated claims for what they can achieve—claims that are pumped up during general elections, and even verge on chauvinism. ‘I want Britain to be seen as the best’, Major told Conservatives in March 1992, ‘not only in our eyes, but in the eyes of others. First and first again—a world leader—that is where I want us to be, and to stay’. On 30 September 1997 Blair described ‘our goal’ as being ‘to make Britain the best educated and skilled country in the world, a nation, not of a few talents, but of all the talents’. The two-party system carries with it the drawback of encouraging rebuttal rather than empathy. Wise politicians, however, do not exaggerate their powers and still less do they take national setbacks personally. Foreign Secretary Hague was portrayed in 2012 as ‘intoxicated by the aroma of office’: finding some regime ‘unacceptable’, he is ignored, stamps his foot on the world stage, but ‘only stubs his toe’. Not even Palmerston in his Victorian prime could get away with such conduct, and was at least accountable to an evangelical and nonconformist conscience, whereas in present-day UK politics there is no such conscience, nor have we a Cobden to rise up from the back benches to offer the necessary corrective. The UK today in the international arena may, however, see merits in Cobden’s mid-Victorian hallmark: combining empathy with example-setting. Heath, assuming a decidedly Cobdenite stance, reminded parliament in 1993 of the link between success at home and influence abroad: when the UK tells other countries what to do, ‘people politely ask, “What about Northern Ireland?”’ and specify recent terrorist incidents ‘on our own doorstep’. Ashdown in 1998 thought that what became the Good Friday agreement would make Blair more credible in pursuing his wider diplomatic ambitions.

Governments must always make national security their first priority, but intelligently mobilizing soft power and collective security can in the long term outmanoeuvre populist sabre-rattling. In 1960 the sociologist Michael Young saw ‘no necessary connection between power and greatness’: nations could be ranked in possession of weapons, he wrote, but also in art, intellect and social concern. Young would have gone further, favouring a stouter British backing for the UN: ‘we could find a pride and purpose, not as the smallest of the Great Powers but as the greatest of the Small Powers, in helping to lead the world towards the renunciation of national sovereignty’. Self-advertisement is difficult to reconcile with an allegedly British modesty and understatement, but the UK with its world-beating universities and its world-pervasive language has potentially strong foundations. Hugh Seton-Watson in 1977 held up France as a model: lacking after 1815 ‘the military, industrial or manpower resources of a firstrate power’, the worldwide cultural missions of the French made their language ‘the instrument of civilized men all over the world’. Here, too, the UK is in a strong position.

When Joseph Chamberlain was seeking in 1903 to overturn Cobden’s achievement by promoting protection through tariff reform, he claimed that ‘the day of small kingdoms with their petty jealousies has passed. The future is with the great empires, and there is no greater empire than the British Empire’. Twenty-first century perspectives beg to differ. Among the few benefits of possessing nuclear weapons is their capacity to ‘freeze’ the status of declining countries, thus causing small countries to proliferate. ‘The hydrogen bomb is a great leveller’, said Julian Amery: ‘It cancels out the disparity between population and big areas of territory and smaller ones’.

The histories of Switzerland, the Netherlands and Scandinavia show that significant world influence requires neither the bomb, nor even a large landmass. The UK’s world influence reached its height well before preoccupation with the empire’s land-mass attained its ultimate extent, and we—more readily than many Victorians—acknowledge that formal annexation carries many burdens in its train, and that collective self-defence can be more effective than grandiose patriotic pretension. Smallness does have its advantages.

Political Realism in Apocalyptic Times Alison McQueen (2018)

A consideration of how sound this concept is – with amazing documentation

The Return of the Great Powers Brendan Simms (2026)

Futures of Socialism Colm Murphy (2023)
Murphy starts in iconoclastic form by tracing the origins of left discourse about 
globalisation to the Alternative Economic Strategy (AES) developed by the 
Labour left in the 1970s and early 1980s (this explains the unusual starting year 
of 1973 in the book’s date range – when Labour’s annual conference famously 
first adopted a programme heavily influenced by the AES). As Murphy points out
, a key premise of the AES, based on bitter reflection on the 1960s Labour 
government, was that the rise of multinational corporations and international 
finance had hollowed out the power of individual states to secure full employment, 
narrow inequality and boost economic growth. The remedies that the left 
prescribed for this malaise were obviously very different from what became 
New Labour’s economic strategy. Roughly speaking, the left sought to increase 
the state’s power to control the British economy through measures such as 
increased public ownership (especially of financial institutions), planning 
agreements with private enterprise and import controls. 
But the underlying economic analysis – that the post-1945 model of economic 
management was no longer viable amid a globalising capitalism – was essentially 
very similar to the rhetoric rolled out by Blair and Gordon Brown much later. 
Murphy demonstrates that one wing of the Labour left, led by Stuart Holland 
(the key theorist of the AES), did eventually lose confidence in a strategy 
based on socialism in one country. Instead, Holland and his colleagues invested 
considerable intellectual energy during the 1980s in arguing for a more 
interventionist economic strategy at a European level. 
This too flowed into the formation of a modernised Labour vision that firmly 
distanced itself from the Euroscepticism that was common currency on the 
British left in the 1970s. Murphy is clear that the Labour leadership’s 
entanglement with the discourse of globalisation after c.1994 drew on 
influences besides the AES (he mentions the writings of figures such as 
Anthony Giddens and David Held as one alternative source). 
But he argues that an important reason that internal critics found it hard 
to push back against the Blair/Brown account of globalisation was that 
they had already signed up to the idea that a traditional social-democratic 
economic strategy had been ruled out by the rise of giant corporations and 
fleet-footed global capital flows. A wide cross-section of the party had been 
primed by the preceding twenty years of internal debate to accept that 
‘globalisation’ required Labour to retool its economic policy. 
Murphy makes a similar observation with respect to ideas about the 
decentralisation of economic and political power. During the 1970s and 
1980s a very large number of political actors on the left and centre of British 
politics became convinced that the model of centralised state-driven socialism 
associated with Labour’s heyday in power in the 1940s was out of step with 
modern Britain. Political formations as various as the New Left, leading trade 
unionists, disillusioned Labour revisionists, left-led Labour councils, 
Scottish and Welsh nationalists, the Liberal Party and the emergent SDP 
all agreed that there needed to be greater economic and political empowerment 
below the level of the UK state. Initially this was often framed in socialist terms 
as the extension of economic democracy through worker participation in 
industrial decisionmaking and trade unionists taking seats on company boards. 
But these ideas quickly widened (or perhaps moderated) to include passing 
power on to consumer and community groups, local councils (with Ken 
Livingstone’s Greater London Council as a model) and co-operatives. 
At a theoretical level, these decentralising tendencies were forged into what 
Murphy dubs the ‘neo-corporatism’ advocated by David Marquand and Paul Hirst. 
Marquand and Hirst envisaged a British economy that looked a lot more like the 
West German social-market model, by combining federal constitutionalism with 
a more collaborative and long-term industrial culture. All of this was premised 
on the assumption that Labour’s traditional political vision was too top-down 
and statist and thus out of step with a less deferential, more individualist society. 
This was said to be the vulnerability in Labour’s earlier model of socialism that 
Thatcherism had exploited, by offering a right-wing vision of individual economic 
empowerment that widened private property ownership and increased disposable 
incomes through direct tax cuts (a point that had been presciently made by 
Stuart Hall even before the Thatcher government was elected in his 
famous 1979 Marxism Today essay ‘The Great Moving Right Show’). 
But it was ultimately constitutional rather than economic decentralisation 
that achieved more traction within the Labour leadership in the 1990s. 
John Smith’s victory over Bryan Gould in the 1993 Labour leadership election 
was one important moment here. Murphy shows that Gould had been a key 
advocate of a form of economic modernisation that drew on ideas about 
diffusing economic power, whereas Smith was more engaged by 
modernising Britain’s democracy. 
A second key moment was Blair’s dalliance with the ideas of Will Hutton in 1996. 
Hutton’s The State We’re In (1995) was a brilliant popularisation of the 
neo-corporatism espoused by Marquand and Hirst, which caught the political 
zeitgeist as the Conservatives imploded, ultimately selling a remarkable 
250,000 copies. But the small circle that controlled Labour’s economic policy 
was reluctant to sign up to Hutton’s wide-ranging economic vision, 
which Brown and Ed Balls regarded as a dangerous hostage to electoral 
fortune (and an attempt by Blair to loosen their control over economic strategy). 
Murphy shows that, instead, a discourse of constitutional reform, somewhat 
influenced by the work of Charter 88, emerged to fill the space where debates 
about economic democracy and corporate governance might otherwise have 
gone. Murphy’s point is not to downplay the significance of constitutional reform. 
On the contrary, he (rightly) thinks that we should view this period of debate 
on the constitution within Labour, and the watered-down version of reform 
that was enacted after 1997, as a historic episode of political reform. 
Thanks to the massed ranks of the leftist intelligentsia mobilised through 
Charter 88; the Scottish Constitutional Convention; and a generic left-wing 
rhetoric that disparaged the Thatcher government for pushing through radical 
reforms ‘undemocratically’, Labour’s account of modernisation encompassed 
constitutional changes such as devolution, incorporation of the ECHR into 
domestic law, freedom of information and (limited) House of Lords reform. 
This was despite the lack of enthusiasm for these measures among Blair 
and other key figures in the PLP. As Murphy notes, this demonstrates both 
the success of Charter 88 and others in forcing the Labour leadership to 
adopt a set of measures that they were fundamentally ambivalent about, 
but also shows why, in the end, there was little appetite in Labour high 
command to go any further in deepening and rationalising these individual 
reforms into one overall coherent package of constitutional change.   
In that case, we might ask, how should we characterise Labour’s 
economic strategy by 1997? Surely that was neoliberal? 
Again, Murphy complicates the picture. He points out that Labour had long 
thought of its economic policy as aimed at modernising the British economy 
through state intervention on the supply side. This was, after all, the 
central political pitch of Harold Wilson in the 1960s and again of Neil 
Kinnock in the 1980s: that a Labour government was better suited than 
the Conservatives to drive investment into British science and industry
 and to use the state to adapt Britain’s economy to new technologies 
and methods of production. The real innovation in Labour’s economic 
worldview, Murphy shows, was that during the 1990s supply side 
modernisation was conceptualised as less about revitalising the 
manufacturing sector and more about increasing investment in education, 
training and infrastructure. This was the rise of ideas about a 
‘knowledge-based economy’ or ‘human capital’, influenced by American 
New Keynesian economists such as Robert Reich (in his earlier, New 
Democrat guise) and Lawrence Summers (who had taught Ed Balls at 
Harvard). These ideas – which legitimised public investment in education 
and training as a means of boosting economic growth – intersected with 
the growing awareness among Labour policy-makers that the British 
economy was now increasingly dominated by service-sector employment 
and thus had become ‘deindustrialised’.
 For one group within the party, it was essentially the greatest peacetime 
government in history (or perhaps should be ranked equal with the 1945 
government), led by one (or perhaps two) of the best politicians Labour 
ever produced. For another group, it was a moral disgrace that sold out 
Labour’s basic principles, led by a shifty opportunist with only the 
shallowest connection to Labour’s traditions. 
Futures of Socialism makes a powerful intervention in this discussion 
because it shows that Labour needs a more rational debate about what 
the party got right after 1997 and what it got wrong, not to mention a 
more detailed appreciation of how the social and economic context has 
changed since 2010. It is arguable that a discussion along those lines 
took place among Democrats in the US, for example, after 2016. 
Shocked by the victory of Trump, the Biden administration came into 
office determined to build on the Obama years but also to take some 
more strongly left-leaning stances on economic and social policy. 
Labour should follow suit. There is no better starting point for politicians, 
commentators and academics who want to contribute to the debate on 
Labour’s past and future than Colm Murphy’s book.  Ben Jackson