The Bickerstaffe Record

The world beyond West Lancashire

Thatcher’s handbag, the discursive articulation of financial commmon sense, and the meta-alienation of the masses

11.27.08 | 5 Comments

In a quick post the other week about my current favourite (alive) national level politician, John McFall MP, I suggested that he had almost inadvertently ‘nailed’ the whole question of whether additional public borrowing at this stage of the economic cycle was justified.  The interview on the radio went:

John Pienaar:  ‘There’s no such thing as free money.  In the end taxes are going to have to go up, aren’t they?’

John McFall: ‘Well actually in terms of borrowing, I think this is a leftover from Baroness Thatcher’s time, in which she compared the government’s borrowing to a household’s borrowing.  The conventional thinking assumes a fixed pot of money.  That isn’t true.  It wasn’t even true under the gold standard and we now have what we call a paper currency…area…where government prints money and the amount of liquidity….money…is a joint outcome of official policy and the private sector’s behaviour.  So it’s wrong to compare it to a household’s income.’

I blogged about it, but no-one looked at it.  No big surprise there, as my mum has trouble with her eyesight now and hasn’t got a computer anyway. 

Then I mentioned to a friend that the world’s money supply was not fixed in stone and that the creation of the whole notion of such might just be a cunning trick on the part of those capitalist types to keep us in our place.  She looked at me a bit blankly.  Then I mentioned it to someone else who’s supposed to know about this kind of stuff, but she merely said ‘how interesting’ in an ever-so-slightly sarcastic way and moved the conversation on.

This got me thinking, especially when I started to see posts with the broadly similar theme – or worry – that the whole idea of what money is, and is for, should be open to more debate.

First off, there was Vino’s post drawing my attention to this good American article on the history of the money supply and how this has had a long-term impact upon the ‘depoliticiasation’ of the management of the US Federal reserve. 

The interesting bit for me in the article was not so much the headline stuff about the United States  is governed not by President GW Bush but by a Harvard academic who had a tough time on his kids’ school board, but that in 1844 the Bank of England broke the law by printing money it  didn’t have backed by gold in its vaults in order to keep afloat banks who’d lent too much too quickly to new capitalists industrialists and would have gone bankrupt if the Bank of England hadn’t stepped in. The law was changed to cope with a de facto change to the modus operandi by banks in support of early capitalism.

Pretty well from the start of capitalism, then, the state connived with capitalists to provide them with the wherewithal to ride out the boom and bust crises inherent to it, and to start them on their trajectory towards extractions of every greater levels of surplus value from the labour of an ever larger proletariat.

Yet, by and large (and excluding John McFall’s crystal clarity) this fundamental change to what money is – no longer something that is a symbolic indication of the existence of something more substantive, whether that be gold or amount of time worked, but a substance in its own right – has gone unnoticed. 

Thus, Phil at A Very Public Sociologist is absolutely correct in his critique of a new TV series/book about the nature of money and its enduring importance, when he says that even a very clever historian bloke like Niall Ferguson is as confused as everyone else:

‘The second problem is Ferguson’s treatment of capitalism. Or rather, his non-treatment of it. By focusing entirely on the history of finance he abstracts it from their contexts. For example, we are led to believe there is no real difference between the capitalism of today and the mercantile activities of 13th century Northern Italy. Taken at face value, it results in a naturalisation of capitalism, a presumption that the mode of production in which we live now is as old as humankind itself.’

Why doesn’t Ferguson get the distinction between the then-use of money to trade, and the now-use of money to exploit labour, backed by the force of the state when need be to do so?  Why does it take a well-informed socialist like John McFall to nail it?

Well, I think a lot of the reason is that we’ve been clevery conned by capitalism into thinking about money the way they would have us think about it.  And the really, really clever bit is that 21st century capitalism has even created two kinds of money – one kind for the forces capital which operates according to one set of rules, and another one for the rest of us to scrabble about in the dirt for.

 This is where Margaret Thatcher and her now iconic handbag come in. 

Nearly thrity years ago Stuart Hall showed us brilliantly that the popular success of Thatcherism – popular despite the fact that it wreaked havoc on Britain and provided a legacy of poverty that lives on today – was created through a discursive articulation of New Right economic ideology coming out of the United States (Friedman, Hayek and all that) via primary ‘thinker’ Keith Joseph, to an older authoritarian Tory tradition, ‘family values’ and a mythologized sense of what an Englishman’s castle was all about, a place of security set apart from the evils of sociologists and other left beardy-weirdies, who’d all been carefully constructing demonic forces of society when they weren’t hiding under your bed or leading secondary pickets. As part of this discursive articulation, though, there was something that I now realise was even more insidious – the creation of money as the driver of all things social and moral.  I don’t mean this in the narrower sense of monetarist economic policy, but at a wider cultural level.   

When John McFall refers to Thatcher’s notion of household income as erroneous, the image that comes forth in my mind is of Thatcher herself, standing in front of a door – a door that may be in Downing Street or may be that of a 1950 grocery store – arm folded half defensively across her wait, and a handbag dangling from it. 

It is an image that takes us backwards to a time when money was easy, when you couldn’t spend more than you earned because you simply didn’t have access to the cash, when household budgeting meant stocking up judiciously on tins of beans if you could afford it one week.  It was a pictorial representation of Hall’s articulation of the new monetarism to an older tradition, ultimately a pre-capitalist tradition in which money represents goods and labour. 

Thatcher with her handbag is one iconic image of the 1980s in the UK, as iconic in its own way as Korda’s Che Guavara picture in the innocent 1960s, and a screaming, terrified naked Vietnamese girl in the innocence-losing 1970s.  Yet there is also another image of the 1980s – the banker in pinstriped suit and red braces, a slightly unworldly being who needs eat no lunch to sustain in his powers, the original prototype for the later Masters of the Universe. 

It is these two images of the 1980s which mark a divergence of the conception of what money is into two different conceptions – one for us and one for the Masters of the Universe.   For us, money was in limited supply, whatever the 1844 banking act had to say about it, because was that the new virtuous common sense and discipline that Margaret Thatcher had introduced, and that John Major was to later seek to reinforce with a bit of back to basics.  Yes, we could have credit to buy things, but only when the banks told us we could be sending us a brochure or advertising on the telly, but even then it wasn’t really our money, and it was still attached to real stuff like a new pair of shoes, or a bike, or even a house. 

This notion – actually pre-capitalist in its logic but formulated for a modern age – has taken deep hold, as John McFall was perceptive enough to realise.  Thus, for example, when Tom and I challenged Werner (in admittedly redistributional than overall money supply terms) on the matter, Werner’s ‘common sense’ response was classic Thatcherite in its ‘no alternative assertion’ – ‘you can only spend what you have’. In fact, that is precisely what the Bank of England did in order to cope with the first banking crisis, but that old logic has been done away with now. 

For the Masters of the Universe, though,  money had a fundamentally different quality which transcended the mere mortal connection with real stuff.  The masters were no longer the ‘merchant bankers’ they’d been called in the 1970s, because that still implied grubby, earthly dealings with ships and lorries and bags; now they were called financiers, or just became someone ‘in the city’.  Their money was not actual cash – that was the stuff you had a bit of fun throwing about at the end of an busy bull market day – it was green flashing numbers of a screen. 

And quickly, as Dave Osler has pointed out, they developed their own set of logic in which it seemed quite reasonable that the derivatives market should be measured globally in quadrillions of dollars because of hedging upon hedging upon hedging, even though another earlier, seemingly outdated, logic suggested this was about 10 times greater than some ‘real economy’ or other. 

In the end, in the early 21stcentury, there is a virtual realty in the very sense that Baudrillard meant it – unattainable and incomprehensible to the masses, but which controls the world of the masses to its own ends.  In more Marxist terms than Baudrillard chose to use, it is a virtual world which has stepped beyond the alienation of the masses through the exploitation of their labour, and created what I would term a ‘meta-alienation’ and control, in which the masses can be ordered to behave as though automatons – to spend when required, not to spend when required. 

It is just this sense of alienation from himself, from the set of logics about his own enduring humanity which he still feels he should own, which is nagging at the perceptive Mil when he says: 

We need an economy for people. Not people for an economy.’

It is this same sense of alienation when he wonders why we shouldn’t simply print money.  That of course is precisely what the Bank of England did in 1844 at the start of it all, and if money really was for people rather than the other way round, it wouldn’t be portrayed, even by the author who’s tentatively suggesting it, as a slightly mad option dating from another time and no longer relevant. 

So how should the half-conscious left react to the latest crisis of capitalism that the masses are expected to behave their way out of, rather than get busy living the lives they might otherwise choose? 

Well first, a bit of applause IS due to a Labour government which, led by John McFall, has at least half realised that a finite money supply is actually only a cunning trick that’s been played on us for the last 30 years, and that the money supply can actually be used in the interests of people’s lives, rather than the other way round. 

But beyond that, we need to keep on getting the message out that, in going trough this spend, spend-it-now process we are really only offering what Bob Jessop (following Nikos Poulantzas) would call the next ‘spatio-temporal fix’ for capitalism, and that in so doing we’re not really emancipating ourselves from those Master of the Universe, who have taken cover behind their respective state apparatuses for now, but will be back soon enough in all their glory. 

In doing so, we need to go beyond the late Baudrillardian attempts to accommodate what for him had become permanent state of virtual reality by constructing a tense but workable ‘lucidity pact’ with the intelligence of capitalist evil.   

Instead, we need, in my now traditional end of post Habermasian terms, to be striving for a state of ‘ideal speech’, in which all people actually know what they mean by the term money, and in which we are emancipated from the control of those who currently control what it means and how we behave in respect to it.

 We need, again in Habermasian terms, to reclaim modernity on our own terms, and to codify it in the interests of the masses; as I’m sure the boy Jurgen would appreciate, there would be a delicious irony in the use of the law to remake a society which was initially splintered from its Enlightenment progress back in 1844, when those first agents of capitalism, realising they needed to resolve their first crisis, simply got on and broke the law, then got on with recasting the whole of the legal system in their favour.   

Now then, I just need to get this brief statement of socialist principle into leaflet form and we’re away.  Anyone want to give me a hand? 


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