Rarely has the world had it so good. If most of the economic forecasts are correct, global growth in 2007 will exceed four per cent for the fifth year running, economic fortunes in advanced countries will become more balanced and emerging market economies will continue to power ahead. Such a sustained run of good news has not been seen since the early 1970s.
Financial Times, 24 January 2007 (quoted in Glyn, 2007, 184)
... the most striking similarity [between this new belle epoque and the Edwardian one] has been the almost complete lack of realisation on behalf of their beneficiaries that the sudden and unprecedented prosperity that they had come to enjoy did not rest on a resolution of the crisis of accumulation that had preceded the beautiful times ... It was only a question of time before the crisis would remerge in more troublesome forms.
Giovanni Arrighi, The Long Twentieth Century (1994, 324)
Hegel famously said that the Owl of Minerva only spreads its wings at dusk: a fancy way of saying hindsight is wonderful thing. To read much of the mainstream press and the speeches of Gordon Brown or David Cameron, you would think that no one saw the great financial crash of 2008 coming.
It is only with hindsight, so the story goes, that we now know the UK's sixty quarters of positive growth, driven by the City of London, was built on a speculative house of cards. There were one or two highly lauded exceptions to the rule, such as Vince Cable or NYU Professor Nouriel Roubini, blessed with seer-like powers. The rest of the political and economic establishment, not least a certain Tory leader and shadow chancellor let down by their close friends in the City, are now taking flight like Hegel's owl to survey the wreckage.
This version of events is, to put it mildly, galling for the left. It colludes with the decades-long suppression of the some of the most well known historical truths about the crisis-prone nature of capitalist economies. It is precisely the economic and social instability generated by unregulated capitalism that brought social democracy into being as a political force. Yet there is a distinct sense, reinforced by the disappointing results of the recent European elections, that social democrats have missed the moment of opportunity presented by the crisis of the neo-liberal paradigm. This is ultimately because they have no alternative political economy to offer in response.
New Labour's clammy embrace of the Anglo-American model of capitalism was a Faustian pact: one that not only exchanged 'light touch' regulation for high tax yields to invest in public services and tax credits for the working poor, but also required the repression of the left's intellectual legacy and history. This has ultimately meant that the centre-left abandoned the economy as an object of political contestation. While recent decades have seen vast increases in inequality, it was argued that a rising boat lifts all tides. What was good for the City of London was good for the country. As the model of financialised growth crashes and burns, and the acrid smell of burning plastic fills the air, the uneven distribution of its rewards can no longer be ignored. Yet even now it takes the centre-right economist Adair Turner to break the taboo and question the social value of the financial services industry and the rationale for prioritising its success in public policy (Turner, 2009).
The centre-left won't seize the moment...