Tag Archives: inequality

Economics in the raw

Focus E15 — the young London mums at the sharp end of our economic failure

Some of the 29 Focus E15 mums outside the Carpenter's estate flats in Stratford, east London.The Focus E15 mums, who are campaigning for affordable housing in East London, are back in court this week, after fending off Newham Council’s vindictive attempt to evict them on Friday from the abandoned Carpenter’s estate, a stone’s throw away from the Olympic Park. Here’s Zoe Williams, writing in Saturday’s Guardian, after visiting the “really nice” flats being occupied by these brave young women at the sharp end of London’s housing crisis.

So it’s a constellation: social housing being bought out by private developers, councils trying to divest themselves of what sparse stock they have left, “affordability” criteria bearing no relation to actual affordability, wages that don’t even cover social rents, thousands of homes empty in preparation for the billions their destruction will bring in. It’s pretty plain to everyone except council officials that what looks like a heap of problems is actually one: housing is too expensive. If you try to shoo people from each area as they are priced out by rents, at some point they’re going to mind.

Exactly the point I made (less elegantly) in my post earlier this month: sometimes what looks like a complicated, intractable problem has a simple solution, but the people in power simply don’t want to see it.

Newham Council actually sent people to vandalise the water supply to the Carpenter’s estate in a crude attempt to force the Focus E15 mums to leave. How the bloody hell do we end up  with a Labour council in London’s poorest borough doing something like that? Because politicians and policy makers simply can’t bring themselves to admit that the free market has failed utterly with housing and we need to try something else.  God forbid, we might actually have to go back to what we used to do and let councils do what the market patently cannot.

Economic ideas aren’t abstractions; economics happens to real people. And this really is economics in the raw. Market failure ruins lives, including the lives of people too young to have even heard the word “economics”. This is too important to be left to comfortably salaried academics and City executives to discuss among themselves. That’s why I’ll be at Bow County Court on Thursday to support the Focus E15 mums. I hope you can join me, but if you can’t make it, you can donate a few quid to the cause via their Facebook page.

Doubting Thomas

Give Piketty a break – read the book!

Two recent commentaries on Thomas Piketty’s blockbuster, Capital in the 21st Century, caught my attention, if for no other reason than both show signs the writer has actually read the book. While both are broadly sympathetic, they are far from uncritical.

Benjamin Kunkel has a long review in the London Review of Books in which he effectively critiques Piketty from the left. While praising Piketty’s “incomparable array of data” he argues that he pays too much attention to inherited wealth and not enough to wages and growth, and takes issue with the universality of Piketty’s assertion that the return on capital usually exceeds the rate of economic growth. (Kunkel also has some interesting ideas about socialist ownership without monopoly, which I’ll come back to another time.)

Former BBC economics star Steph Flanders’s review in Saturday’s Guardian is more supportive, although she also disputes Piketty’s emphasis on inherited wealth. Flanders’s most interesting point is also picked up by Kunkel: Piketty tends to lump all capital together, regardless of who owns it or to what use it’s put, so that capital accumulation always leads to more inequality. (This seems a bit unfair on Piketty, but I’m only halfway through the book myself, so I’ll reserve judgement.)

Both are worth a lot more of your time than the knee-jerk responses of free market fantasists (try Daniel Hannan or James Pethokoukis), who seem to think just pronouncing Piketty a “Marxist” will encourage everyone to move on (betraying their ignorance of both Marx and Piketty in the process). Most of Piketty’s neo-con critics seem to have done no more than scare themselves shitless about his proposed wealth taxes or just got  lathered up reading commentaries by their right-wing friends (who probably haven’t read it either).

If you’re going to denounce someone’s work at least, like Kunkel and Flanders (or even the highly critical Chris Giles of the FT for that matter), do them the courtesy of reading it or at least trying to understand it. True, it’s a big ask, but I heard somewhere that someone had published a condensed version (approved by Piketty himself). If I can dig out the details, I’ll stick them up here.

Creative catastrophizing

The last year has seen a glut of books on economics for general readers, feeding off the fears most people have about their future in the global economy. In fact, the dismal science has never been so popular – or indeed so dismal.

Catastrophe sells, so many of these books come with doom-laden titles and the sort of menacing predictions familiar from the days of the Cold War. In How the West was Lost, the Zimbabwean-born academic Dambisa Moyo predicts a grim battle between Chinese and American capitalism, from which the more muscular, state-controlled, Oriental version will emerge triumphant. The west has all but given up on saving, skills and innovation – the motors of economic prosperity – and lacks the political will to save itself. America’s only way out is unthinkable – putting up trade barriers and defaulting on its debt.

Will Hutton has always been willing to ask questions conventional economists won’t. In Them and Us: Politics, Greed and Inequality– Why We Need a Fair Society (now out in paperback) he asks if ‘fairness’ matters and, if so, why? (His answer is yes, and because unfairness is inefficient and socially destructive). And before you think, ‘leftie rant follows’, Hutton throws this at you: fairness is ‘capitalism’s indispensable value’. It is fairness that allows innovation to flourish, and innovation is the motor of capitalism (possibly the only thing on which Hutton and Moyo are likely to agree).

bernard-stieglerIf this seems a bit optimistic for the times, look to France for some gloomy abstract thinking. Philosopher Bernard Stiegler (also “director of innovation” at Paris’s Pompidou Centre, and you don’t get more avant-garde than that) has written a book that tramples all over the barriers between economics, philosophy and social psychology.Ce Qui Fait la Vie Vaut la Peine d’Etre Vécue (something like ‘What makes life worth living’) raises the alarming prospect that human beings may be losing their ‘taste for life’ itself. The ecological crisis and the failure of market economics is driving us into a ‘general depression’. Modern capitalism, Stiegler says, works by ‘creative destruction’ – the need to produce goods and services that are ever more disposable and ephemeral – which leaves human beings feeling useless and powerless, without really understanding why.

These are just three examples; there are dozens of others, offering diagnoses and prescriptions varying from fundamentalist free-market to somewhere out beyond neo-Marxist. What they have in common is a willingness to think beyond the sterile models and simplistic equations of conventional economics and tap into much richer veins of thinking. But you won’t hear any of this when the next talking head from Goldman Sachs pops up on telly to give their dry, self-interested view on the latest inflation figures.

In the 1930s, Keynes wrote that an economist should be ‘mathematician, historian, statesman and philosopher…no part of man’s nature or his institutions must be entirely outside his regard.’ Frankly, economics, has spent the last thirty years with its head up its own arse, and it’s high time it took it out and took a look around.