The coronavirus crisis

This blog has been sadly neglected in recent years, as all my blogging time and energy have been taken up with my Brexit Blog. But the current coronavirus crisis prompts me to return to it, because so much of what is happening in this crisis has an organizational dimension, and some of it relates directly to the themes of the book which this blog accompanies. In this post, I’ll discuss some of them, with the focus on what is happening in the UK but no doubt at least some of it has a wider relevance.

Overall, it’s possible to see many of the chickens of contemporary organization coming home to roost. This is most obvious in the National Health Service where spending as a percentage of GDP effectively flatlined between 2011 and 2019, and per capita is well below that of most other highly developed countries (e.g. France, Germany, Japan, Australia). Crucially, this is against the background of a rapidly ageing population and – as has also been laid bare by the coronavirus pandemic – a social care system that was already in crisis and has been for at least half a decade (as discussed on this blog in May 2016).

The issues here go well beyond those of funding, though. They also relate to managerial apprehensions of the ‘efficient’ use of that funding. In the book (p. 142) I use the specific example of the NHS to discuss this, writing that “one way this has been done is to reduce spare capacity in the system. This in turn has the effect that unusual peaks in demand, such as a major incident or a flu epidemic, swamp the system … the question still remains: efficient for whom? Is spare capacity inefficient from the point of a view of a patient caught up in a demand peak?”

This seems almost prophetic now, as the NHS faces a desperate struggle to obtain the machinery and protective equipment needed to deal with coronavirus, whilst old people dying in care homes are not even included in the official coronavirus mortality statistics. Of course, it would be absurd to argue that any health system could permanently maintain all of the spare capacity needed to deal with so unprecedented crisis. But running a system for years without any spare capacity at all was always bound to lead to disaster.

Similarly, we are now seeing the consequences of the endless restructurings and in particular the dynamic of centralization-localization as the supposedly inefficient bureaucracy of the NHS is subjected to almost yearly reforms. It was such an analysis which led to the fragmentation of the NHS into Clinical Commissioning Groups (CCGs), to break down the ‘monolith’ of the NHS. This was happening even as it was being reported that the problem with NHS procurement was lack of centralization, but under the dogma of ‘post-bureaucracy’ this was ignored (discussed on p. 87 of the book). Fast-forward to the coronavirus crisis and what do we fine? That very quietly the government has taken back central control of procurement from the CCGs to deal with it.

Nor is it only in health care that we see the consequences of the ill-judged managerial reforms and budget cuts of the last decade or more. I wrote on this blog in October 2016 about the crisis that was already underway in prisons. No surprise, then, that coronavirus is sweeping through them now, and there are calls for the early release of at least low-risk offenders and prisoners on remand.

Beyond public service issues, the coronavirus crisis has laid bare the inequalities and insecurities associated with the new capitalism and its associated ‘precariat’ (discussed on p. 118-120 of my book). The supposedly self-employed ‘entrepreneurs’ and zero hours workers of Uberfied business models are by the far the most economically vulnerable to the lockdown of the economy. The gap between this precariat and the salariat (like me) who have continued security as they work from home is more obvious than ever. It falls to government, at least partially, to bear the costs of this – in effect bailing out the employers who have for years benefitted from this ‘flexible’ workforce. As with the financial crisis, what we see is a privatization of profits and a socialization of costs and risks.

Meanwhile, hundreds of thousands who had never expected to now turn to the welfare system and find that it is very far from the generous safety net they had imagined, let alone the scroungers’ paradise that the tabloid press had led them to believe (see also p.120 of book). This is not just a matter of a one-off crisis. Rather, it comes against the background of the middle-calls insecurity which has been underway for some time, and is intimately linked to the demise of middle management and the white-collar underclass that has characterized the new capitalist model (p.123 of book; see also this blog post from February 2015).

Intimately linked to precarious employment is the use of foodbanks (blog post from September 2016) and here, too, coronavirus has had an impact. On the one hand, they face mounting demand as people’s incomes dry up. On the other, staffing and donations are both impacted by the illness, and some foodbanks are having to close down just as they are most needed.

No doubt there are many more examples of how coronavirus is exposing underlying issues within the organization of public services, of work, and of society more generally. The key words are ‘exposing’ and ‘underlying’. In this post I have made frequent reference to what I wrote in my book or on this, accompanying, blog. The message is not meant to be a self-congratulatory ‘I told you so’. Rather, it is intended to show how so much of what is happening grows directly out of things we already knew, or which were already happening.

This is absolutely crucial for otherwise they would just be regarded as ‘crisis’ events and, as such, unusual or short-lived. This in turn would support the idea that once the crisis is over we can and should return to ‘business as usual’. To an extent, this is what happened after the financial crisis. Although many expected that it would lead to a wholesale re-evaluation of how – at the most generic level – we organize, that didn’t really happen. Instead, we saw what Colin Crouch aptly dubbed the strange non-death of neo-liberalism.

Perhaps this time things will be different. The neo-liberal or new capitalist model has been much more challenged by the coronavirus in that it has led to the mobilization of state resources in a way not seen since the Second World War. That ought, at least for a while, to put paid to the innumerable paeans to the superiority of the market for any and every political and economic question. It feels, at least at the moment, as if something quite fundamental has ruptured – although one should be wary in assuming that any such rupture will have predictable, let alone positive, effects. And even should they be positive, it is a tragedy that it will have taken the deaths of so many to demonstrate what was, in so many ways, already obvious.

Required reading

Over Christmas I have been reading Jonathan Coe’s latest novel, Number 11. Like John Lanchester’s Capital, which I ‘reviewed’ on this blog, it can be read as a ‘state of the nation’ novel (Coe even makes a joke about this) and, via five interlocking sub-stories, it reprises some of the themes of his earlier books, especially What a Carve Up! and The Closed Circle. Overall, I would characterise these themes as being about the unwinding of the post-war welfare state and its accompanying collectivism, and the ongoing consequences of individualization, privatization and – a key one in Number 11 – monetization (in the sense of putting monetary value on things like education which might otherwise be regarded as valuable in themselves).

The title Number 11 carries several resonances: the address of Britain’s finance minister; the number of the circular bus route that a character rides so as to be warm without heating her home; the number of subterranean floors being dug below an uber-rich family’s London home to extend their already commodious residence. For it’s a satire – sometimes almost judderingly heavy-handed, other times almost painfully delicate – that often addresses some of the themes of this blog, especially those of inequality, tax avoidance, the pitfalls of choice, the politics of ‘austerity’ and, even, the perils of twitter.

The section that spoke most profoundly and personally to me is entitled ‘The Crystal Garden’ which tells of the doomed attempt of Roger, an Oxford academic of about my age, to track down a short film he had seen as a child:

“Roger was convinced … that life was better, simpler, easier, in the past … it wasn’t just a hankering for childhood. It was bigger than that. It was to do with what the country was like … in the sixties and seventies …. For Roger it was about welfarism, and having a safety net, and above all … not being weighed down by choice all the time … he loved the idea of trusting people to make decisions on his behalf. Not all of them. Just some. Just enough so that you were free to live other parts of your life the way that you wanted.” (Coe, 2015: 176)

It’s important to understand that this isn’t about nostalgia, or at least not just about nostalgia. It’s about a rupture that animates – in very different ways – the politics of both nationalists and socialists across, at least, Europe. In France, Les Trentes Glorieuses, Jean Fourastié’s term for the 1945-1975 period of economic growth and social security, captures the same sentiment that Coe expresses. This rupture is described in my book in terms of the shift in the 1970s to the new capitalism (pp. 104-120) and so, of course, present in the book I most heavily draw on in that section, Richard Sennett’s (2006) The Culture of the New Capitalism. And it’s no coincidence that at the heart of Roger’s memory was “waiting for his father to come home from work – from the same place he worked for forty years” (Coe, 2015: 176) because stable employment was at the heart of the economic and social security of those years. As I’ve argued elsewhere on this blog, the erosion of that security constitutes the most pressing political issue of the present time in Western societies, in ways well-captured (for all that it is startlingly inattentive to the ‘critical management’ literature that says much the same thing) by Boltanski and Chiapello’s (2007) The New Spirit of Capitalism.

We can understand this in conventional political terms: the social democratic consensus of North and West Europe and, to an extent, the USA in the post-war decades was about the best economic and social arrangement that has so far existed (even if it did not always seem so at the time). But perhaps it is better understood without thinking in terms of economic or political theory. Bill Bryson’s humorous memoir The Life and Times of the Thunderbolt Kid expresses it well as regards the United States; David Lodge’s novel Nice Work captures the beginning of it in the UK, especially as regards academic life. And Coe’s book is the latest example of the powerful way that art and humour can illuminate social science.

In a somewhat related vein, another Christmas read was Douglas Board’s novel MBA. This is not nearly so well-written (but, to be fair, whereas Coe is a well-established professional novelist Board is a coaching and leadership consultant who has turned his hand to fiction) and it’s a fairly clumsy satire, if not farce, of business schools. Still, it does hit what are for me some familiar targets in terms of the corporatization and even corruption of the contemporary business school, including the hubris of high-flying deans (see Parker, 2014 for a real world example). And there are some acute insights along the way about, for example, the enmeshment of business schools and politicians in the marketization of the public sector that also get a look-in in Coe’s book. MBA certainly isn’t a great or even a good novel, but it’s the first that I know of that tackles the business school. I feel sure that this setting is ripe for the attention of a latter-day Malcolm Bradbury or David Lodge campus novel.

Legitimate questions

The concept of legitimacy is central to organizations in many ways, most obviously in terms of who has the right to tell others what to do, and what kinds of things this applies to. That is one reason why many books about organization studies – including mine – begin by talking about Max Weber’s account of authority (in the meaning of legitimate power).

I was thinking about this in relation to the current political row in the UK about the House of Lords’ rejection of a House of Commons policy to cut tax credits for people in work. I won’t discuss the tax credits issue itself - important as it is – it is the issue of legitimacy that I want to look at. Britain, famously and unusually, has an ‘unwritten constitution’, and so relies on custom and precedent to determine what is legitimate. In this way, it could be seen as a system based partly on what Weber called ‘traditional authority’ in contrast to the rational-legal authority of written constitutions.

Since the House of Commons is elected on the basis of, certainly, a system of rules and to this extent rational-legal, and the House of Lords is an unelected body the government have been keen to say that the Lords’ action was illegitimate. More precisely, the argument is that it is illegitimate because it violates the ‘convention’ that the Lords will not block financial legislation or legislation deriving from an elected government’s manifesto.

But convention is a rather slippery terrain. As regards tax credits, what was blocked by the Lords was not, technically, financial legislation but, rather, a ‘statutory instrument’. It’s an arcane point that needn’t detain us except to the extent that it shows the imprecision of ‘tradition’ as a legitimating principle. On the other side of the coin, the House of Commons, whilst certainly elected, has a government majority on the basis that the ruling Conservative Party achieved 36.9% of the votes cast on a turnout of 66.1% of the electorate. In other words, 24.4% of the electorate voted for them.

Moreover, although the Conservative Party manifesto promised extensive cuts to the welfare budget, it did not specify that these would include cuts to the tax credits of working people. It is at least questionable whether they would have been elected had they done so. My sense is that what the electorate thought was meant by welfare cuts was cuts to benefits of people out of work. One might say so much the worse for them, but even so the point is that democratic consent to this policy looks rather threadbare.

The imprecision of party manifestos is by no means new. For example, at the 2010 election the Conservative manifesto promised that there would be no top-down re-organization of the NHS. In government (with Liberal Democrat support) there was massive and controversial re-organization. The disjuncture became an argument about what ‘top-down’ meant. At one time these manifestos consisted of quite precise lists of policies. Now, they tend to be much vaguer. And this in turn links with a far more ‘presidential’ approach to UK politics in which the persona of the leader is the key issue, even though the ‘constitutional convention’ is that a House of Commons is elected constituency by constituency and the leader is the person who can command a majority. Thus a key aspect of the last election was which of David Cameron or Ed Miliband was the most ‘prime ministerial’. So, here, what is at stake is what Weber called ‘charismatic authority’.

This complex mish-mash of rational-legal, traditional and charismatic authority makes for plenty of political spectacle and debate. But I wonder if it does not also show the limitations of Weber’s ideal-types of authority? Isn’t it actually rather common for, say, a CEO to draw selectively and eclectically on the different types*? And more challengingly, isn’t the idea that there is a distinction of authority and power a rather dubious one? After all, whatever is decided about tax credits, those affected by or hostile to the changes will ultimately be forced to accept them.

On a more personal note, this week I was awarded the title Fellow of the Academy of Social Sciences (FAcSS). This, too, is about legitimate authority – the Academy’s legitimacy to award the title, the legitimacy it bestows on me. But of course I am just shoehorning this in to make it fit with the rest of the post. The truth is that I am rather pleased and want to boast about it.

 

*Something like this has always been the critique of ideal-type reasoning and the defence, of course, is that these are ideal-types, for conceptual clarification rather than empirical claims. I suppose that my point is that in political debates like this one an ideal-type is treated, at least by implication, as an empirical claim.

Uberfication: an idea from the past

I learned a new and rather ugly word this week: uberfication. It came up in a discussion of new patterns of work and employment and checking on the internet I find that it is a term which has been in use for a year or so now. It derives from the taxi firm Uber which has developed a model for taxi hire in which customers use a mobile phone app to match their journey requirements to the availability of an Uber driver. This has caused protests from taxi drivers all over the world, most recently in Rio de Janeiro just yesterday, because Uber drivers are exempt from the licensing and many of the regulations of established taxi firms and drivers who are thus having their livelihoods threatened.

Uberfication refers to the application of the same, or similar, business model to a range of businesses and activities with many websites referring to the uberfication of everything, examples ranging from dog walking to doctors. Other terms for the same phenomenon are the ‘gig economy’, the ‘on-demand economy’ or the ‘platform economy’ (the point being that a platform such as Uber does not provide services but connects customer demand to a supplier, who provides a service as if engaged to play a gig) or the more cosy-sounding ‘micro-entrepreneurship’.

This business model has three defining features. The most obvious is a technological one, the mobile phone app that enables the connection between demand and supply to be made, including differential pricing according to levels of demand and supply at the moment that the transaction is agreed. The second is that it enables the avoidance of most or all of the regulations that apply to conventional providers of the service. The third is that those providing the service are not employees of any company but are independent contractors or self-employed agents (or, if you prefer, ‘micro-entrepreneurs’).

Although the word is a new to me, the underlying idea is one discussed at several places in my book and on this blog. The ‘flexibilization’ of work has been underway for some time now, leading increasingly to a ‘precariat’ (p.117 of book) whose work is insecure, often characterized by zero-hours contracts and without much or anything in the way of fringe benefits such as pensions, sick pay or maternity/paternity pay. Uberfication is an intensified form of this, since the independent contractors have no employment rights at all: they are not employed, so such rights are irrelevant.

Unsurprisingly uberfication is beginning to find its way onto the political agenda, at least in the United States. For the free market right it is a splendid development, bypassing state regulation and ‘vested interests’ and promoting an Ayn Rand type vision of autonomous self-determining individuals, freely contracting with each other in a pure(ish) market (only pure-ish because there is some evidence that prices are manipulated by controlling supply at times of peak demand). For the left, the concern is that employment rights are eroded, insecurity increased and, for that matter, buying power diminished (in other words, this isn’t an anti-capitalist point, it’s a Keynesian point: if workers don’t have strong and secure earnings then where does demand come from?).

One way of looking at this in organization theory terms is a shift from ‘hierarchy’ to ‘market’. In brief, the idea here (associated with the economist Oliver Williamson but also, in a different way, the business historian Alfred Chandler) is that there are different ways of co-ordinating human activity, which come into play according to specific cost conditions, allied to particular technological conditions. One way is via a market of individual contractors (the invisible hand, as Adam Smith called it), the other is through internal hierarchies within firms (the visible hand, as Chandler dubbed it in his book of that name). Following that account, uberfication substitutes market for hierarchy. However, it should not be forgotten that the way that co-ordination occurs does not just arise ‘naturally’ from cost and technology but depends on the political decisions we make and the legal systems through which we enact those decisions (hence the many legal challenges to Uber, most recently in Canada).

We can see this as a new technologically-mediated moment in the long-term hollowing-out of the social contract that sustained at least Western economies and societies in the post-1945 era which, along with erosions of the welfare state, makes for an increasingly insecure existence as I have written about several times on this blog. But although the technology may be new, the idea, and its consequences, are not: in very many ways it is reminiscent of the ‘putting-out system’ of the early industrial period (and still to be found in many parts of the world today). In this system subcontracting to individuals and families working within their homes was a way of bypassing the restrictions of the medieval guild system.

Of course the idealised image of uberfication is one in which people have complete flexibility of work and complete control of their destinies with no manager telling them what to do. And that may fine for some people, especially when they are young and healthy. But as a general model of employment it means low wages, no security and no protections. Stripped of its technological glitz it means a life rather like that depicted in the long poem written by Thomas Hood in 1843, The Song of the Shirt, which is about the putting-out system in the garment trade. The link to the full text is here, but just to quote the closing stanza:

Stitch! stitch! stitch!
In poverty, hunger, and dirt,
And still with a voice of dolorous pitch,--
Would that its tone could reach the Rich!--
She sang this "Song of the Shirt!

I began my last post with a reference to the saying that history always repeats itself but never in the same way. Here, I will finish with another aphorism, usually attributed (in a number of variants) to the Spanish-American philosopher George Santayana: those who don’t learn from history are doomed to repeat it.

Lessons of history

History repeats itself, but never in the same way. I’ve been thinking about this saying (for which I can’t find a definitive source) as the British Labour Party has been tying itself into knots over whether to oppose the government’s welfare cuts. On one side of the argument is the proposition that the cuts are wrong and unnecessary. On the other that Labour lost the last election and should accept the prevailing, or anyway government, view that ‘hard choices’ must be made to balance the budget.

The historical resonance is with the early 1930s and the formation of the National Government or coalition of the Labour leadership, the Tories and the Liberals, which split the Labour Party at the time. For sure, this is not a repeat of that but in recent years very similar notions have swirled around. The formation of a Conservative-Liberal coalition in 2010 in the ‘national interest’ echoed the 1931 National Government, and the current debate has a similar flavour – some idea that a ‘responsible’ Labour Party must accept the terms of the Tories. And, as at that time, the axes of the debate are those of balancing the government budget and the concomitant need for spending, especially welfare cuts. It was the call to cut unemployment benefit by 20% that broke the Labour government in 1931. Moreover, the popular narrative that Labour had been responsible for the 1929 financial crisis (aka the Wall Street Crash) mirrors the narrative that holds Labour responsible for the 2007-08 global financial crisis.

So although not precisely the same, there is a great similarity between British politics now and then. I don’t know whether that is comforting or not. In one way, it is depressing to see the same pre-Keynesian nonsense about balanced budgets being trotted out all these decades after his work in exactly the same way as it was before, and not just in Britain but in relation to Greece and other countries. There are no certainties in economics but we do in broad terms know that Keynes was right, which is why even the IMF have indicated that the EU plan for Greece won’t work (and we might also look to Keynes’ assessment of the 1919 Treaty of Versailles to see why the entire approach to Greece is storing up disaster).

In another way, the parallel is encouraging, at least in the parochial context of the British Labour Party. For it does show that even from a deeply unpopular and unpromising trough it is possible to recover. In 1931, Labour lost 225 seats and was reduced to a rump of 52, a far worse result than in 2015. But 14 years later they won a landslide majority and created the welfare state that, even now, shapes the British polity. Of course I know that in the intervening years there was the small matter of the Second World War but as business leaders and textbooks never tire of telling us, we live in times of unparalleled change – so who knows what the situation may be in 2029.

At the very least what history might teach us, imperfect teacher though it is, is that change happens not through the ‘realistic’ acceptance of the supposedly immutable truths of the present time but through a radical re-imagination of those truths. In Britain, that happened perhaps three times in the twentieth century: the Liberal landslide of 1906, the Labour landslide of 1945 and the Tory landslide of 1979. There was a fourth, botched, possibility in the 1997 Labour landslide of 1997. That possibility remains, pregnant, to be grabbed until it is forced upon us. As will happen not (I hope) because of world war but by the accumulated misery of unfilled roads; moribund emergency services, closed libraries, courts and nurseries; delayed operations or even the suicides engendered by welfare cuts.

The core of this is the democratic politics is about both representation and persuasion. It is not enough for Labour (or any other democratic political party) to represent the views of some or many people; it must also seek to change those views, through persuasion. That means believing in something and fighting for it; and if that belief is rejected then fighting again. In the end, that is how change happens.

Right diagnosis, wrong prescription

A long-delayed report into the organization of the British National Health Service (NHS) has belatedly been published this week, with remarkably little media coverage. It was prepared by Stuart Rose, the former boss of retailer Marks & Spencer, and we might wonder to what extent his expertise is relevant to the NHS. Nevertheless, he makes a good fist of explaining how constant and contradictory changes have led to ‘change fatigue’; how targets have had a dysfunctional effect; and that the recent marketization of the NHS in particular has led to a virtually unmanageable situation.

So far, so good, and very much in line with what I have written recently on this blog about unhealthy management and healthy bureaucracy in the NHS. Unfortunately, Rose goes on to wheel out the tired and predictable nostrum that the solution is better leadership and leadership training. We’ve been round this loop endlessly in, especially, the public sector: first it’s better management that’s needed, then better structures, then culture change, then better leadership. Leadership, especially, currently takes on an almost magical character as the universal panacea for what ails organizations. There's an extraordinary impoverishment in the managerial imagination that keeps its proponents going round a hermetically sealed loop of systems (management, organizational structures) and values (leadership, organizational culture).

I don’t actually disagree that leadership (and management, and structure, and culture) matter both in organizations in general and in the NHS. But it is woefully inadequate to think that these things can make very much difference in the face of overwhelming resource deficiencies. As I’ve pointed out before on this blog, health costs are spiralling because of ageing populations, scientific advances and healthcare cost inflation that exceeds general price inflation. UK health expenditure per head is US$3405 or 15 in the world (OECD, 2011 figures), and this does not include the allied issue of care spending for, in particular the elderly.

Now, for sure, expenditure isn’t the whole story because the UK system of socialized health is more efficient than any other. Moreover, I’m very well aware that the situation in the UK is enormously privileged compared with most of the rest of the world. Still, there is a basic arithmetic here. How much difference can leadership make when compared with resources? Suppose, modestly, that it was equivalent to a 1% increase of per head expenditure. Then, the UK would remain at 15 in the league table. Suppose, more extravagantly, it was the equivalent of 10% of per head expenditure. Then the UK would rise to 14 in the list. Suppose, ludicrously surely, it was equivalent to a 20% increase in per head expenditure. Then, by a whisker, it would be 11 in the list. In fact, even if leadership had the capacity to be equivalent to a 100% increase, a doubling, in per head expenditure then the UK would still only be second in the global list. But consider this: no study has definitively shown that leadership makes any difference to organizational performance at all.

 

 

The benefits of work

The way that work is rewarded is central to organizations, and pay is only one part of it. Associated benefits such as pensions, maternity and paternity pay, and sick pay are also highly important. Sick pay in particular makes a huge difference to security and quality of life. I know this very well from personal experience. When I was a child in the 1960s and 1970s my father was self-employed. He had no savings, six children, and a wife whose work – looking after these children – was not paid. If he was ill, as he sometimes was, or if for some other reason there was no work for him, as was often the case, we felt the consequences within a day or two: there was no food to eat.

So I was struck today by a news story that the British government are considering the idea that workers should fund their own sick pay by paying into an individual savings account. There are no details yet – it isn’t a policy announcement – but seems to be based on similar systems in the United States and in Singapore. It has also been explained in a paper by – predictably – the free market think tank, the Adam Smith Institute (ASI). The idea seems to be not so much a savings account per se, but a combination of savings and private insurance policies.

The logic, if one can call it that, seems to be the same as that in the debate about NHS funding, which I discussed in a recent post. It is that state welfare is unaffordable and so must be replaced by private provision. That is nonsense because it still has to be paid for: if I can’t afford to pay the tax or national insurance to fund sick pay, how can I magically afford to pay an insurance premium to a private provider? Actually, as with health, the situation is worse than this. State-run insurance systems pool risk across the entire population, making them cheaper. Private insurance systems don’t just pool risk across a smaller population (the customers of the company) but are also inherently prone to sub-divide those populations. Thus, as we see most obviously with car insurance, companies segment their customers into risk groups and charge differentially accordingly – hence the very high premiums charged to young and old drivers. The commercial logic is obvious: those most likely to claim have to pay a higher premium. Translated to sick pay the logic is equally obvious: those most likely to need it have to pay more to insure against it. And, pretty quickly, they become uninsureable.

Perhaps the logic is that private providers will do the job better than a state system. This standard neo-liberal claim for private provision is, predictably, made in the ASI paper (as an aside, if the ASI ideologues read the writings of Adam Smith they might be less naïve). It founders on the now massive evidence of how in the personal finance sector in particular inefficiencies and rip-offs abound. Consider the massive mis-selling of private pensions, endowment mortgages and personal protection insurance (PPI), which have given rise to billions of pounds of compensation claims and huge heartache along the way, since compensation never really compensates and, often, arrives too late to do so at all as in the case of the Equitable Life pension scandal. Most of this arose from precisely the deregulation of financial services and of state provision of welfare. It doesn’t take a genius to work out that if sick pay goes the same way there will be massive scandals a couple of decades down the track. And, if so, then as with PPI a second wave of scandals around scam sales of compensation services will emerge.

But suppose all that is too pessimistic, and a private market in sick pay insurance accounts did not fall prey to scandals and rip-offs. If so, then at best we would have yet another extension of the paradoxically controlling nature of choice, which I discuss in the book (p.75) drawing on the more extensive, and brilliant, discussion in Barry Schwartz’s (2004) book The Paradox of Choice. For, now, we will have to monitor, evaluate and switch between the providers of sick pay accounts alongside our same (unpaid) work choosing electricity, gas, water, phone, pension providers and so on. The extension of choice as an unquestioned good into every area of life re-constitutes us as perennial choosers. An image of, say, shopping around the market for the nicest or cheapest vegetables, becomes elevated to a cardinal and unique principle. Making the wrong choices means you only have yourself to blame, but the consequences will not just be a less than nice dinner; they will be destitution.

It is tempting to think that those advocating such measures are well-intentioned but naïve, over-attached to the theoretical nostrums of page one of the Economics 101 textbook. It is not so. They know exactly what they are about. As the ASI report that provides the intellectual ballast for this idea bleakly puts it:

“The new system must overturn any idea that society collectively is responsible for the future needs of its members; that future provision is for themselves to determine by their actions now.” (p.13)

Or, as Margaret Thatcher so chillingly put it as long ago as 1981: “Economics are the method: the object is to change the soul”.

 

Oxi and No

So Greece has voted 'Oxi'. The consequences are unclear, but the reaction so far from Germany, in particular, does not make my hope of a write-off and reconstruction very likely (I heard an interview on BBC radio this morning, that unfortunately I cannot track down to link to, in which a politician from Angela Merkel's party voiced this very forcefully). It is worth just pausing to reflect how extraordinary this is. If a major bank gets into difficulties through imprudent lending then it is deemed ‘too big to fail’ and is bailed out, as we saw several times during the financial crisis, although its sub-prime borrowers are left in debt. But when a state gets into difficulties through imprudent borrowing and its counterpart of imprudent lending, then bailout is deemed impossible. Or, to come at it from a different angle, lenders lend money on the basis that there is always a risk that it won’t be returned, and this is priced into the interest rate. So why, when a borrower cannot repay, is it deemed unacceptable for the debt to be written off? The general rule seems to be that under no circumstances can the lender lose out and under no circumstances can the borrower be let off the hook. So where's the risk, and the justification for the risk being priced in? Actually, the situation as regards Greece is even worse: not only can it not be forgiven but also it must be obliged to follow policies that will make it even less able to repay its loans.

But in this post I want to focus on the response on this end of the continent to events in Greece. They have been profoundly depressing. First, it has been seen as validating ‘austerity’* policies: 'look what happens if you don’t balance the books!'. The fact that it has been the pursuit of such policies in Greece since 2010 that has turned a crisis into a drama is completely forgotten. For that matter, the significant differences between Greece and Britain (principally, that Britain can print its own money and that its debt is completely differently structured) are never mentioned. By the way, we see today just how extreme austerity policies in the UK have now become, with it being reported that terminally ill benefits claimants are being questioned by welfare officials as to when they expect to die.

Second, and far more bizarre, is the spectacle of the anti-EU political Right lining up to cheer far-Left Syrizia, as in articles by veteran Tory Europhobe John Redwood and UKIP leader Nigel Farage, presumably on the usually dubious principle that ‘my enemy’s enemy is my friend’. What they miss (or presumably don’t care about) is that Syrizia, and the Greeks who voted 'oxi’ in yesterday’s referendum, are rejecting the rule of global financial elites and the ideology of neo-liberalism. Yet what the British Europhobes have in mind in exiting the EU is an even more intensive embrace of these.

Redwood and Farage make as their prime argument that the Greek crisis reveals the gap between democratic nation-states and an undemocratic and overbearing EU and Eurozone (EZ). What this neglects is that the lack of EU democracy (which is indeed a serious problem) is a consequence of the fact that Europhobes like them in the UK and elsewhere have always refused to countenance a democratic European polity, deriding it as a federal ‘super-state’. The consequence is precisely the lack of democracy they now bemoan and, moreover, the fact that the entire basis of the Eurozone crisis is (as both Right and Left agree) that it is a monetary union without a fiscal union. And why is there no fiscal union? Because that, too, would require the European polity to which Europhobes are implacably imposed.

I expect that the attempt to tie together the Greek crisis with the case for Brexit will intensify, especially if Greece were to end up leaving the EZ or even the EU. For some voters it will be as simple as feeling that given the turmoil in Greece, Brits should pull up the drawbridge (as if, somehow, the rest of the world would then disappear). But for political leaders to encourage that by making false connections is deplorable. There are precedents, of course, such as the way that the French vote against the EU Constitution in 2005 was hailed by British Europhobes as supporting their view when, in fact, it was in large part a vote against a more neo-liberal EU.

The present case is even more clear. The Greek ‘Oxi’ in their referendum was a rejection of neo-liberalism and a vote for a more fraternal, collective EU project. A British ‘No’ in the forthcoming referendum would be a rejection of a fraternal, collective EU project for a more intensive neo-liberalism. 'Oxi' and 'No' do not mean the same thing.


A minor footnote. Yanis Varoufakis, who resigned today as Greece’s Finance Minister, is, so far as I know, the only politician of any note to have an academic publication in the organization studies literature:

Varoufakis, Y. (2008), ‘Game Theory: Can it Unify the Social Sciences?’, Organization Studies 29, (8-9): 1255-1277.

For an analysis of the role that Varoufakis’ knowledge of game theory may have played in the negotiations, see this article by the always interesting journalist and blogger Neil Clark. The answer, by the way, to the question in the title of Varoufakis' article is both 'oxi' and 'no' (and 'nein' and 'non') - but that is another story.

* I put 'austerity' in scare quotes because it is not just a euphemism but an objectionable one, invoking as it does the collective sacrifices of the post-war austerity that laid the basis for the NHS and the welfare state in support of a drive to erase the last vestiges of the post-war collective project.

Strivers and scroungers

In this post, I want to pick up on an oblique point in my previous one. I mentioned there how a very potent political trope is to draw a distinction between scroungers and strivers. Scroungers, here, are those who do not work and rely on welfare benefits. Strivers are those who are in work and, by implication, are seeking to better themselves through work. I was reminded of this not just in writing my post on Greece but also, today, by an announcement by the British government that inheritance tax liability is to be reduced. It’s the justification that is relevant here, because it was couched in the argument that “hard-working families” who had saved to buy a home and improve it should be able to pass the fruits on to their children rather than to the tax collector.

This term – “hard-working families” – has become a cliché in the political lexicon. It’s a strange expression in and of itself. What is a hard-working family? One in which every family member (and how extensive does it have to be?) works hard? Are single people who work hard part of it? Should the idle rich be taxed more? What about those who go to work every day but slack off?

In relation to inheritance tax it seems especially strange. The new policy is aimed primarily at those whose houses have become very valuable, and in the UK housing market, especially in London, they have indeed become very valuable. But this has nothing to do with work, or saving, or home improvements. All you have to do is sit there and it happens. Recently it was reported that in many parts of Sothern England house price inflation earns homeowners more than they receive in wages. So there’s no particular virtue, and certainly no hard work, or even any work at all, involved in accruing an inheritance based on home ownership to pass on. Moreover, what of the recipients of this inheritance? Manifestly, they have not put in any hard work at all. So why, if hard work is the cardinal value, should they receive anything?

The counterpart, of course, is an equally incoherent – and very longstanding - narrative of the deserving and undeserving poor. Indeed, in the same package as the inheritance tax changes are further restrictions on welfare articulated through exactly the same distinction. Ironically, many of those who will suffer as a result are, indeed, hard-working families in receipt of tax credits to top up low wages. Nothing new there, either: the Speenhamland system of the early 19^th Century was similarly a subsidy for low wages, as the Poor Law Report of 1834 demonstrated.

And those most poignantly affected by welfare changes are the disabled. Here, again, a narrative of the deserving and undeserving is in play, with endless stories about fraudulent claims from the ‘bad back brigade’ accompanying sentimental and self-congratulatory statements of sympathy for the ‘genuinely’ disabled, which seems to mean those who are so self-evidently handicapped that even the most stony-hearted cannot deny it. Or perhaps not, since in some cases people who cannot walk, talk or feed themselves are being called to the job centre. At all events, plans to shift disabled people on to jobseekers allowance suggest a belief that they are ‘shirkers’ and not ‘strivers’. Yet when it comes to migration, the narrative reverses. Here, the problem is the strivers – the economic migrants – pretending to be asylum seekers, or in other words ‘bogus’ asylum seekers. These strivers are to be rounded up into detention centres and deported pronto. Whereas, in a long-remembered phrase, unemployed workers should get 'on their bike' and look for work, an idea espoused by the government as recently as 2011, those who get on the boat (and risk their lives) to do so are the most dangerous of scroungers.  

There is no logic in any of this, unless it is the logic of spite and division. Which is not to say that work – whether ‘hard’ or not – is unimportant. On the contrary, work is massively important both economically and in terms of self-worth and identity. But work bestows or enables value and identity; it does not express it, nor does it disclose any fundamental morality. The idea that it does is deeply rooted, though, enabling the idea that poverty and suffering reflect individual moral failure rather than systemic inequality or just dumb luck. Over a hundred years ago, the founding figure of organization studies, Max Weber, wrote one of the most important books about modern society, a book that influenced me deeply - The Protestant Ethic and the Spirit of Capitalism. It still has much - all too much - to say about the contemporary world.