Will Hutton is interviewed about the economic crisis in this week’s Big Issue magazine. Despite Hutton’s position in the mainstream media as a bit of a maverick, he normally makes quite conservative predictions about economic and social matters, trumpeting the rise of China or promoting economic / managerial approaches to social and cultural change. As director of the Work Foundation, he is certainly not a radical voice and for that reason we should look at his predctions as representative of a current within mainstream political circles, albeit one that he is able to voice publicly due to his ‘outsider’ status in the media.
Hutton points out that an economic recovery will require a rise in spending, by consumers or businesses. The consumer, claims Hutton, is concentrating on rebuilding savings, while businesses are becoming debt-minimizers in order to future-proof themselves against difficult economic times. Whether the British are re-building savings or merely starting to save after years of credit-fuelled spending is a moot point, but the likely outcome of this is stagnation in the economy, as happened in Japan in the 1990s after their economy crashed following a sustained boom. Stagnation of course, is even more problematic than a recession for a capitalist economy. A recession and a collapse in asset values at least offers the opportunity for growth and the restoration of the rate of profit; a prolonged stagnation denies capitalists the ability to grow their capital and limits the potential for competition, destroying the engine of the economy.
The stagnation that Hutton predicts however, doesn’t look like stagnation at the level of the individual worker or their communities. In order to maintain profit levels, it is likely that the current rate of job losses could continue at 60,000 per month for another three years before stabilisation is achieved. This could (should) lead to a period of social change as the economy and social provision is restructured to reflect this new socio-economic reality. Whether this period of change can be politicised to promote positive political developments remains to be seen, but already the possibilities of workforce mobilisation and collective responses to the crisis are facing up to the use of the recession to intimidate and manipulate workers. Politicians are keen to avoid taking the blame for the current crisis, as each country seeks to line up other markets or ‘the world financial system’ as the villains of the piece. This tactic creates a moving, camouflaged target for the public at large to aim at, and one that is obscured further by techno-managerial jargon and PR.
Will Hutton’s prescription for the crisis is a super-Keynesian level of fiscal stimulus, mainly based around a massive programme of public works similar to that which helped to lift the US economy out of the great depression in the 1930s. This might include large engineering projects and the development of a green economy. Of course, after the 1930s the US was left with a vastly expanded productive capacity which could only be usefully employed on a war footing over the following 60 years. The government funded expansion of production can only fix the system in the short-term, eventually the levels of state production work against competition and so have to be reduced and the debts incurred have to be repaid.
As David Harvey has pointed out, the current crisis offers an opportunity, as do all crises, for the reconfiguration of society within a different ideological framework. A more equitable society is not the necessary outcome of this process. Previous crises have seen the deepening and strengthening of the current system of power and attempts to provide a stimulus to return the economy to ‘normal’ are attempts to do just this. The human costs of this will be enormous, and should shame journalists and politicians out of their current fetishisation of the fiscal stimulus as they hide behind superlative descriptions of it’s size and importance.