by Jonathan Todd
When the global financial crisis struck, as John Kay recently noted:
“The political left offered no diagnosis or new ideas, and it gained no electoral advantage. Instead, across Europe, the parties that had waited a century for capitalism to collapse under its own contradictions congratulated themselves that such collapse had been averted by the injection of incredible amounts – trillions of dollars – of taxpayer funds into the banking system”.
Gordon Brown and Alistair Darling were right to bring us back from the brink. The left’s failure is the dearth of explanation as to how we came to be in this position or prescription as to where we go next. The explanation is a precondition of the prescription. If you can’t say how the crisis came about, then you can’t say how repetition should be averted.
The left’s explanations have tended to be personalised (e.g. “greedy bankers”), in spite of the left’s historic mission being to identify and correct structural explanations. We don’t think people are born wretched (even “Fred the shed”); we think that injustice and circumstance makes them so. The left’s explanation, therefore, shouldn’t be the banker’s greed but the structures that create and sustain this greed.
The left, for the most part, was no more analysing these structures than anyone else in 2008. Such analysis would have revealed a paradox: what we thought was high capitalism was anything but. Well functioning markets wouldn’t have allowed the banker to be so greedy. Effective competition would have restrained wages to merit-based levels.
