[A-List] UK state: strategic dilemma (was the war on labour)

["Michael Keaney" <michael.keaney@xxxxxx>]

Chris Sanders writes:

One surmises, considering the spirit of FSA rules (guilty until
proven innocent, ignorance is no defence, confess and accuse even if you
suspect an infringement) and the levels of disclosure required of
individuals' financial holdings and investments, that the real role of the
FSA is to build an infrastructure for tax collection and capital controls in
the event of a dollar (and sterling?) collapse. And in the United States,
SEC rules are if anything even more draconian.

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This was a fascinating article Anne. The establishment of the FSA by the
Blair government is, without question, a strengthening of the British state.
But to what end? Brown is a keen student of the IMF intervention in 1976, at
which time he was a young radical heaping scorn on the lily-livered
occupants of the Labour leadership and Whitehall. How times have changed.
Nevertheless all along I have suspected that, at least in part, Brown's
conversion to PPPs and supply side BS is driven by a desire to manage "the
markets" (i.e., US banks, the US Treasury, the Fed, the IMF) as the economic
flipside to Tony's political manoeuverings vis a vis Europe vs. North
America. Would it be such a stretch of the imagination that the masters of
spin and news management have been stage managing a "feud" or "rivalry"
between Tony and Gordon in order to hold together their fractious coalition
in the midst of very serious threats posed by "the markets" and their allies
on the British right wing (led by Rupert Murdoch, Conrad Black and "Lord"
Rothermere)?

The fraction of British capital that the Labour Party, under Wilson,
Callaghan, Kinnock and Smith, represented was primarily manufacturing. Hence
the repeated recourse to industrial policy and the promotion of national
competitiveness via corporatist structures of the sort that Thatcher
destroyed and vowed should never return. Macmillan, Heath and various Tories
were of the same mind as Wilson -- while in no way as sympathetic towards
labour (although Macmillan made some telling criticisms of Thatcher's
treatment of the miners, for example), their policies were born of the
conception of "Britain" as an organic unity of capital, labour and state.
The biggest capitalist support for this conception and its subsequent
policies came to be that fraction most oriented towards Europe. And
Macmillan, Heath, Wilson and Smith are all identified as being, in their own
respective ways, fundamentally pro-Europe. And the reason for this is
simple: because they recognised the nature of the alternative. However, the
Britain that Tony, the natural inheritor of this legacy, finds is rather
different from that which could have been. Britain no longer has the social
conditions necessary to support the sort of corporatism that would have
slotted neatly into a European framework. This is largely because of the
Thatcher counterrevolution and mistakes committed by the leadership of the
British labour movement (conceiving of Europe as a vast supercapitalist
conspiracy when in fact the alternative, to which they remain blind, is by
far worse), which, to use Frank Cousins' criticism of Arthur Scargill in
1984, was simply "not political" -- i.e. not strategically aware nor
politically astute. But the British financial interests which spearheaded
reaction in the 1970s have themselves largely been usurped by US and
European interests, such that most of what used to be the City of London is
now a branch office of Wall Street. Meanwhile what remains of that, together
with much of what remains of a very shrivelled manufacturing base (the
result of Thatcher's war on labour -- basically, destroy the jobs and
thereby starve the labour movement) is more clearly oriented towards Europe.
Thus Tony's job is to effect a fundamental ideological change (the economics
already dictate a Europe-ward trajectory), whilst Gordon keeps the
US-oriented financial sector happy with lots of entrepreneurialist rhetoric
(praising the "US model" whilst lecturing the EU on the need to be
"competitive") and supply side bs, together with an acceleration of the PPPs
started by his Conservative predecessors (and very much in line with
European Commission thinking vis a vis the provision of public services, but
nonetheless impressive to US investors looking for potential growth
opportunities).

The FSA is the result of Gordon's taking advantage of the opportunities
provided by the succession of financial scandals that plagued the
Conservative era, especially (and ironically for Labour) that of Robert
Maxwell. But it is a strengthening of the British state/capital fraction
that is oriented more towards Europe, since its establishment involved
stripping the Bank of England (traditionally a home of highly reactionary
and very Atlanticist views) of its regulatory powers, making it simply the
custodian of monetary policy, whose tenets everyone adheres to anyway (the
source of "credibility"). So who cares if the Bank, and not Gordon, is
responsible for setting interest rates? Gordon knows that if Gordon were to
lower them in order to assist manufacturing industry, in line with decades
of Labour Party policy, "the markets" would punish him via sanctions up to
and including destabilisation of the sort witnessed in 1974-6. So leave it
to the Bank, which will do what you would have done anyway, but you get lots
of credit in the process. Meanwhile construct a sophisticated regulatory
regime ready to act in times of crisis -- to which the British economy
remains acutely prone -- and moreover compatible with structures that are
also being assembled elsewhere in Europe (Germany and Sweden, the other
corners of the "Policy Network" Third Way triumvirate).

Bush's "election", 9/11 and Tony's frantic running to stand still since then
have distracted us from the fundamental realignments still taking place.
Indeed, is it not very likely that the recklessness of the Bush
administration has simply served to accelerate these realignments as greater
recognition of fundamental interests dawns on the participants? Why has
Tony, for example, in the last two weeks, quietly reversed his opposition to
the Franco-German proposal that the EU should have a "parallel" (i.e.
separate) defence apparatus to that of NATO?

Michael Keaney