lunedì 20 ottobre 2008

la fabian society e la crisi

Katwala: Economic crisis shows we must share the risks and rewards
venerdì 17 ottobre 2008, 17.14.16 | Rachael Jolley
Speaking at a conference held by the Flemish SP.a party in Brusssels this weekend, Fabian general secretary Sunder Katwala challenges left-leaning European parties to make the argument for scrutiny and public interest during the financial crisis."We meet at an extraordinary time. Governments in Europe and internationally have responded to the financial crisis, to try to bring stability and contain the impact on the real economy. Nobody can accurately predict what the longer-term consequences of this moment will be. That is not just a question of how markets respond or even the broader economic impact. Much will depend on the political and public debates we now begin."

"No government could let the banking system fail, nor indeed other regulated markets in energy, transport or communications. That reality must be properly reflected in how we share the risks, responsibilities and rewards, in a new approach to regulation and taxation."

Read the full speech below.

Thank you for inviting me to take part in your conference. It is also a great honour to speak this morning in advance of Caroline Gennez. Caroline is among the leading voices of the emerging generation of political leaders across Europe. So we all invest much hope in her ability to bring both new ideas and new campaigning energy to the politics of social democracy.

"That is our common task: to create a ‘Next Left’, to renew again our social democratic politics so we show that we have the ideas to meet the challenges our societies face, and can win the public’s trust to earn the chance to try to make our vision for social change a reality.

This will not be easy. Look around Europe in 2008 and, almost everywhere, social democracy is politically in trouble. A decade ago, Social Democratics led European and national politics. Whether we call ourselves Social Democrats, or democratic Socialists in France, or Labour in Britain, today it is more difficult. In many places, our parties are out of office and in opposition. Where we remain in power, the challenges of renewal are often equally profound.

Yet open the newspaper any morning and it should be clear why our values and ideas are needed more than ever before. The issues of our times demand that this should be an age of a new social democracy. It is up to us to make it so.

I want to talk about two of the challenges we face:

* So I want to talk about how we show that social democrats have the right values to respond to the current financial crisis.

* Secondly, how do we make that part of our core mission for a fairer society – and find new ways to win the public argument for our politics?

We meet at an extraordinary time. Governments in Europe and internationally have responded to the financial crisis, to try to bring stability and contain the impact on the real economy. Nobody can accurately predict what the longer-term consequences of this moment will be. That is not just a question of how markets respond or even the broader economic impact. Much will depend on the political and public debates we now begin.

Will social democrats or the parties of the right win the trust to respond? It should be us. But we need to take these fast-moving and often confusing events to persuade people that the right response will be one rooted in our values of fairness and responsibility. If we fail, people may turn away from politics entirely at the very time it is needed most.

During a crisis, have you noticed that even more nonsense is talked in politics than is usual? One Eurosceptic commentator in Britain, Simon Heffer, has declared that government investment in the banking system heralds a “new age of Bolshevism”. That might surprise Gordon Brown, the co-founder of New Labour in Britain and his fellow European social democrats. Perhaps it could surprise Angela Merkel, Nicolas Sarkozy and Europe’s centre-right even more. But don’t forget that it is the US government - the Bush administration no less - which has undertaken the largest market interventions and nationalisations of any western government.

Because of the way our economies are linked, governments everywhere, who come from different political values and traditions, have had to act.

But what happened to the argument that government is always the problem, and that whoever governs least governs best? That market fundamentalist argument has been very prominent in western politics in the last 25 years. In this crisis, that view went missing in action, rejected even by its friends in the White House. The ideology of leaving everything to the ‘hidden hand’ of the market provided no more useful practical advice than the equally discredited Marxist fringe view that there is nothing to do but wait for the collapse of capitalism – whatever the pain caused – to see what new utopian possibilities might arise.

By contrast, Social Democrats, as the constructive left, know we must provide concrete, real world solutions to deal with the economic fallout and ensure we root these in our broader vision of the common good and a better future.

But the Finance Ministers and politicians on the right still don’t get it. They may have acted – but they want to stress how reluctant and how uncomfortable they found it. Listen and you can hear an argument which goes something like this: “We realised that our government had to act it. Let us tell you: we did not want to. We delayed. We hoped the Banks would fix it, or that the market would turn something up. But the consequences of not acting became too great. We still believe that markets are good and that government intervention is dangerous last resort. What we have done offends our core instincts and beliefs. But, pragmatically, we have had to do it. Our world seems to have become very complicated. We admit, we are confused. But we’ll try to get back to normal soon”

This is not good enough. The right still seems confused about what has been done. If it will not understand why action was necessary, it can not get the response right. Still less can it learn the lessons, or advance the changes which we need. So the right’s argument is that, after the crisis, and the emergency response, we need to get back to business as usual. Until the next crisis.

Social Democrats must reject that view. We must remind ourselves, our opponents and the public of some important social democratic truths.

Firstlly, there is no such thing as the free market. Markets can not operate without rules which governments must provide.

Social Democrats believe that markets should have an important place in a democratic and free society. Few of us could imagine our lives without the choices and opportunities which markets provide. But the power of markets is always both creative and destructive. And markets can not operate at all, still less effectively or fairly, unless we use politics and government to put the right rules in place.

Our argument with those who have shouted ‘markets good, governments bad’ for the last 25 years is not to say the opposite: ‘governments good, markets bad’. But we do know that we can only have markets when they are governed by rules. Indeed, we need rules to protect market competition itself: that is why governments act to prevent unfair monopoly power.

That markets can not exist without rules is never more clear than when they provide essential public goods and infrastructure. Of course, no government could let the banking system fail, nor indeed other regulated markets in energy, transport or communications. That reality must be properly reflected in how we share the risks, responsibilities and rewards, in a new approach to regulation and taxation.

Secondly, knowing that there is an important place for the market economy is not the same as accepting that markets determine the values of out society.

Some of the proudest historic achievements of social democracy have been to remove essential foundations of political and social citizenship from the sphere of the market: first, the right to a political voice and a vote; then the provision of education and healthcare.

That is how Social Democratic values helped to shape the social welfare settlement gave Europeans an era of peace and prosperity, underpinned by our shared social commitments to protect each other from the worst risks.

We turned those values into the common sense of most European societies. We need to adapt these models and policies when our societies change, in order to sustain the values and principles that underpin them. It did not require a financial crisis to remind us of that. A free market can not deal with climate change: we must now put in place the national and international governance which could make possible a future of prosperity, social justice and sustainability.

Thirdly, democratic societies also govern markets to maintain the public support on which their licence to operate depends.

The historic role of social democracy has never to abolish capitalism, but sometimes to tame it. Our politics has often been needed to save capitalism from both its worst excesses and its worst advocates – however quickly they forget it.

Indeed the current crisis has endangered public trust in both governments and markets alike. If governments had to act to prevent failure, that can not be combined with a licence to let the risks pile so high. There is rightly public anger at what looks too much like a one-way bet. A small group at the very top has poured scorn during the good times on any idea of social responsibility: celebrating excess, championing tax avoidance, acting for all the world as if they wish to be entirely separate from the rest of our society. But when, when trouble arrives, after years of telling government and society to mind their own business, the same people turn around and ask us all to act to rescue the system and sort out the mess. After that, it is very clear that the rules must change.

Social Democracy after the crisis

Governments of left and right agreed on the need to act in an emergency, because the right ducked the away from the logic of its own anti-government rhetoric. But we must make the differences clear so that Social Democratic values provide the principles for a new political and economic settlement,

1) Firstly, I think some differences have already been seen in the response to the crisis. Gordon Brown'’s Labour government in Britain, which has helped to inform European-wide responses, was very different to the initial plan proposed in the United States. That American plan was to spend hundreds of billions of taxpayers’ dollars to buy up the ‘toxic debts’, to bury it somewhere as if it were nuclear waste, with no return to the public, so that the bankers could get back to making their profits. That could be criticised as doing far too too little to protect the interests of citizens, savers and taxpayers while those at the top had the good fortune to be rescued from their own mistakes.

The important social democratic argument in Britain and across Europe has been that public funding and guarantees had to be combined with tests to ensure this would meet the public interest. How would both savers and taxpayers be protected? What system of public accountability would be in place? When public money and guarantees allow banks to return to profitability, how should we share in the gains, and not just the risks? What new responsibilities should be accepted by the private sector on return for public support? Having established the clear public interest in each of these issues, Social Democrats must now push, whether in government or opposition, for the scrutiny and accountability to ensure that the public interest is reflected and protected in the different national plans being adopted.

(2) Governments must now act again for the longer-term: to create the new international systems of regulation and fair rules that we need; and to ensure that the message of change and responsibility is acted upon. If markets need rules, a global economy needs global rules.

Our Eurosceptics who say ‘we only wanted a Europe of free trade’ always forget that you can’t have a continental single market without the rules to make it happen, as well as the social dimension on which support for the single market also depends. Those principles apply globally as well. We need global rules. And we have political choices about how we govern globalisation. The gains and the losses from global markets will fall very unevenly. We will not rebuild public support which enables us to realise the gains of global trade unless governments ensure the opportunities and the rewards are shared more widely across our societies than they have been so far.

We should make it part of the opportunity we have to rebuild the case for multi-lateral cooperation. Change is in the air internationally too. I believe that every Social Democrat will not just want the Democratic candidate Barack Obama to win the White House but to reinstate the tradition of the better America, which has been so important in Europe’s history, which used its power wisely to help reconstruct Europe and to put in place a multilateral system of rules. If that America has too often seemed to be in retreat over the last eight years, let us hope that we can begin a new era of cooperation when we enter the era of “The World After Bush” on Jaunary 20th next year.

(3) Bringing these arguments home to national politics means ensuring this is not a technical discussion about economic policy.

It will not be enough to have the right analysis if we do not win the political argument. We should be confident in making our argument for a fairer and more equal society in terms which the public can understand, and explaining why that depends on the political choices that governments make.

Equality can be a complex idea – it can be easily misunderstood, as a very abstract argument, or as levelling down and penalising success. We need to make a compelling public argument for fairness.

Go into a hospital ward, and find two babies born that day to mothers from different backgrounds, it is to easy to how they will do at school, what they will earn, even how long they are likely to live. Some people may beat the odds, but the odds should not be so steep. The mission of social democracy is to engage in a ‘fight against fate’ so that where we are born and the parents we are born to do less to determine our outcomes and opportunities in life. That is a positive vision of spreading freedom and opportunity, so we can all be the authors of our own life stories, not have these dictated by forces beyond our control.

This means a politics of fair chances, fair rewards and fair contributions.

Fairer chances means building again on social democratic progress in making life chances from the early years, education, skills and training major issues in politics. But it means we are concerned when income and wealth gaps become so wide that social mobility ends: when today’s unequal outcomes become so wide that they ensure unequal opportunities are inherited across generation. Concrete action to reduce the number of children and families in poverty must also be part of a commitment to a fair start in life for all.

Fair rewards because we should recognise that rewards can be earned, but challenge rewards which bear no relationship to effort or success but reward spectacular failure, and incentives irresponsible behaviour. When pay differences between the shop floor and the boardroom are not 20 to 1 but instead 200 to 1 then scrutiny – within boards, from shareholders and from the public - is required as to how these decisions are made. We need to address how government support for the financial sector, and government procurement more generally, can be used to challenge and change the ‘rewards for failure’ culture.

Fair contributions because we all have a stake in a shared society where all are subject to rights and responsibilities. This matters for social democrats because ours is a vision of a society where we share risks and accept responsibility for each other. If our political opponents are successful in persuading people that they have nothing in common – if our society becomes segregated into separate groups, whether that is by race, or faith, or age, or income and class, each looking out only for itself, then we will not be able to build the coalitions on which social democratic politics of fairness depends.

We can expect our political opponents will say they are for fairness too. The difference will be about whether they will do anything about it. We challenge them to will the means. Our argument must be that fairness does not happen by chance. We need more confidence in arguing that fairness depends on the political choices we make, and what governments do.

The problem with effective soundbites is that they can sometimes be too effective.
Take Bill Clinton’s argument that ‘the era of big government is over’.It was one of the defining moments of the New Democrats and the Third Way. Did it concede too much territory to the anti-government mood of the Reagan and Thatcher era.

Perhaps it did. But that perception is not based on the argument that Bill Clinton actually made. That was about reinventing government, rather than slashing it. The fuller argument which Clinton made was this.

Ever since the Reagan Revolution of 1980, the dominant Republican argument has shifted from 'less government is almost always better than more of it' to 'government is 'always the problem'.

Our administration and the new Democratic party take a different view. We say the era of big government is over, but we must not go back to an era of ‘every man for himself’

The truth is, Americans don’t want our government gutted. We know from experience that there are some things that government must or should do: protect us against enemies, foreign and domestic, come to our aid when disaster strikes, help fight crime, ensure the health and well-being of the weakest among us, restore and preserve the environment, ensure the safety of our food, provide for the needs of those who have defended our country in uniform, provide everyone with access to quality education. We don't want our government in our face, but we do want it on our side when we need it, and quickly.

So the argument was about both reinventing and relegitimising the case for government. But that argument got lost. We need to remind people of it again.

So let us remember that warnings that government can be too strong, too bureaucratic and not responsive enough as long as we recognise that government can fail to respond to citizens by being too weak too. When it comes to dealing with failed states, meeting the millennium development goals, enabling our economies to achieve low carbon growth and creating the global deal we need on climate change, ensuring integration and equal citizenship across our societies, we will need more and better government, not less.

That may well also require a stronger approach to democracy, transparency and accountability too. Our democracies benefit from pressure from the liberal-left, from civil society and from the media to check power and hold it to account. But libertarians go too far when they forget that their argument always depends on the basis of their own freedoms being so secure that they can take it for granted.

New politics

Our greatest challenge may be political.

Over the last decade, we have been better at government than at politics.

And this age of anti-politics presents a profound challenge for those who want to govern, who must build broad coalitions in the electorate, who must be responsible and make promises that they may have to keep, who know that poltiical progress is also made by trade-offs and compromises where we can not immediately get everything we want.

None of those constraints are faced by those engaged in oppositionist anti-politics, whether on the populist right or left, which does not need to offer any answers if it can authentically voice the anger and grievances of any specific group.

That is why we need to ensure we have a social democratic politics which does not just have policy answers but which offers an emotional appeal too, and which has the capacity to mobilise.

Few, if any, institutions have a prouder record of bringing change to our societies than our political parties. But it does not automatically follow that we will now feel like the most obvious or effective forces for social change to the new progressive movements of the future. Here I hope the rest of us can learn from your efforts to change the culture of party politics and political campaigning.

We need a social democratic future. Let us take confidence in our values and our ideas. We can never say that the future will be ours, or take anything for granted. There are no inevitable historical forces which will decide what happens: it is a shame it took the neo-conservatives did not find that out before doing quite so much damage.

And yet, if that were true, there would be no need for politics, or for our parties at all. There would be no need to turn up, to take part, to argue about what should happen next. Especially on a Sunday morning, we might all be able to think of other things in life to do instead. But we are all here because we know why politics matters.

We know that the need for social democracy is as great as ever. Now we must show that we can win the arguments to make it happen. "

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