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The Republicans



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Rediscovering the Great British Republican Tradition


For a Civic and Constitutional Republic



Issue No 59 Friday 30 April 2010




This week 


·        The Shadow of Big Finance over the General Election


News Stories

Highlighting news stories important to the Civic Republican view, particularly those that are overlooked or little covered in the main media.




  • The Shadow of Big Finance over the General Election

The 2010 British general election has become the most interesting and the most unpredictable in living memory. Labour is currently last in the polls but thanks to the peculiarities of the first-past-the-post electoral system could easily remain the party with the most seats. The last issue of the Republican Party Newsletter proposed a new electoral system which would compensate for this unacceptable anomaly and ensure that the party which gained the largest share of the vote nationally would also have (thanks to its weighted votes in the Commons) the greatest voting power there and so the greatest chance of forming a government. As things are, only the LibDems will definitely not be the biggest party - even if they poll more votes than Labour. But again this fact demonstrates the anomaly of FPTP and again under the weighted reps system this would be corrected.


That is as maybe, but what is of concern in this newsletter is the matter of how real power works in our society and how it relates to the main parties and the election. It is often said that there is nothing to choose between the main parties and their leaders and so the election is of no interest or significance. While there is a great deal of truth in this statement it obscures certain fundamental facts about the histories of these parties which still bear on their character and allegiances.


It is often said that British politics is tribal meaning that people vote according to what they see as their identity within society rather than according to some kind of objective assessment of the party’s relative worth. There is also a great deal of truth in this.


And so to appreciate why we have these two apparently contradictory tendencies whereby on the one hand the parties appear very similar but on the other hand command fierce and different  loyalties we need to place the political parties of Westminster within a larger societal and economic arena.


If you follow the reporting of the election in the standard media you are presented with the assumption that is it simply the case that the elected government will have the power to run the country as they see fit and the electorate have the power (however imperfectly) to choose that government. It would be quite false to say that the elected government does not have much power for its clearly does for governments to a large extent shape our social services, make wars, run the economy and so on. Governments have power to be sure. But what we often forget is that others do as well. These others are not democratically elected and the source of their power is quite different from that of the government. They represent constituencies quite different from the electorate but their power can be almost as great as that of the electorate if not greater.


In the seventies and eighties is was fashionable to talk about the power of the unions and how they were usurping the power of the elected government and this lead to a challenge to their power by the Thatcher government - although it is not clear whether the subsequent demise of union power was the result of union legislation or the Conservative's destruction of the industries in which they had traditionally operated



But there was a still more powerful force at work that had always been there– the City of London. The City is a collection financial companies with an international dimension and massive power. It came to pre-eminence in the nineteenth century thanks to the global reach of the British Empire and indeed there is good reason to say that it was the agenda of the City that propelled the construction of the Empire.  


The City's power springs above all from one right that has been bestowed on it when the modern financial system was invented in the seventeenth century. The banks in the City were given the almost exclusive right to issue credit into the economy and this they retain until this day.


This issuance of credit even extends to the government itself which in order to fund its debt must turn to the private banks and brokers in the City for what are in effect loans. With the Thatcher liberalisation of the City in the eighties  (a process that was continued with gusto by New Labour in the nineties and noughties) the power of the City increased many times over as its banks devised ways of multiplying money creation with all manner of financial “instruments”. All these had one aim – to inflate the supply of money – money that the City would then maintain control over. The result was a massive distortion of the operation of the economy that culminated in the Great Banking Crisis which we are still very much in the midst of.


But to return to the election, how does this City power relate to the main parties? For the last thirty years all the parties have supported and embraced fully the City of London and the power of Big Finance. The results of this strategy are the root of many of the problems we now have. What is somewhat different in the case of each of the three main parties is their history in relation to the City and it is this that accounts mainly for what distinguishes the parties.



The Conservatives have always worked hand in glove with the City and have proved themselves quite happy to put the interests of the City before that of, for instance, British manufacturing. Whilst maintaining this cozy relation with the City, they were at the same time, until Thatcher, able to foster a patrician image to present to the electorate that permitted them to remain in government and to serve the City’s interests at the same time. This image came undone with Thatcher’s strident “no society” style and they have never been able to recapture it. It was always a delicate balancing act and once dismantled could not  be reconstructed.


This is the problem that all Conservative leaders since Thatcher have faced and found themselves quite unable to overcome. Dave Cameron has managed this deficiency better than his predecessors and has been fortunate to find himself confronting, in Gordon Brown, a less effective opponent that the others . The essential problem for the party however remains, and it unlikely that they will ever be able to regain their one nation image and consequently will always struggle to achieve significant governing overall majorities in the Commons.


Labour on the other hand were, in the medium past, not so much implicated with the City. When in government as in the 1960’s they were successfully intimidated and manipulated by the City but once out of government in the seventies and eighties they returned to what they saw as their natural constituencies in the unions and to a lesser extent the civil society, comprising professional and administrative groups.


The big change for Labour came in the nineties when it embraced wholeheartedly the neoliberal Thatcherite agenda and saw the City with its ever extending global reach and its ever evolving instruments of financial hocus pocus as the economic future of the country. It is probably fair to say that Gordon Brown may have started out in politics with some genuinely social objectives but then Ed Balls persuaded him to swallow hook line and sinker the idea that the City could create pots of gold from which the whole economy could benefit. When Brown said he had abolished boom and bust he undoubtedly believed it. In this he was taken for a ride and in the process wrecked the financial lives of millions of British people and thousands of businesses.


The LibDems have garnered more respect for their attitude towards the City largely through the pronouncements of their Treasury spokesman, Vince Cable, but at root Mr Cable’s thinking is little different from that of his corresponding front bench spokesmen. Added to that, this supposed financial sage wants to take us into the euro! Nothing in the Prime Ministerial debates indicated any attempt by Nick Clegg to distance himself from the City’s power and wishes.


It is this relationship to the City that is so crucial to understanding how the British polity works, for the City's power and wealth place huge temptation in the way of our politicians that many cannot resist.


Politicians are intrinsically insecure individuals, as well they might be, for they can be thrown out of a job by an electorate over which they as individuals have little control. This insecurity results in their seeking friends – powerful friends. This is where the City steps in to reassure them that loyalty to it will be rewarded. In this it seldom lets them down and Tony Blair’s walking into a $1 million a year job ship at J.P.Morgan on Wall Street is a only one high profile case of this of recent times.



Gordon Brown once in office in 1997 sold his soul to the City. David Cameron did so long ago. Nothing illustrates this more clearly than his and George Osborne’s willingness to do the City’s dirty work in penalising the British people with draconian austerity measures to reduce the deficit and so support the pound against foreign currencies. Brown and Darling have resisted pressure from the City to a degree and vowed to keep spending so as to not undermine the “recovery”. But there policy is only to delay the austerity measures not seek a different way out.


Both the Conservatives and Labour are busted flushes. The Tories sacrificed their one nation philosophy on the altar of neoliberalism and City deregulation. New Labour sacrificed its socialism and commitment to the civil society–and it did so on exactly the same altarpiece. So both parties are in a very similar place although they come from different historical directions.


During the General Election Prime Ministerial debates there was much discussion on the government deficit and on the way in which the people of Britain are will have to endure hardship to pay it back. Not once was the cause of this deficit mentioned - the financial centre of the City of London and the deregulation it had enjoyed supported by all the leaders present. All were content to peddle the line that the Great Banking crisis is a global phenomenon over which we had no control. Nothing could show more clearly how all three leaders are still absolutely in the pocket of the City.


It will be fascinating to see what the electorate make of this. It is difficult to avoid the conclusion that next Thursday will not be decisive. It is difficult to imagine that the matter of producing the next government will then be at an end.



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……. …….until next time