Those of you with long enough memories will remember the Cold War fear that there were Soviet sympathisers everywhere, just waiting for their opportunity to overthrow capitalism; “reds under the bed” was the common turn of phrase. But then came Gorbachev, the fall of the Berlin Wall and the discrediting of the Soviet economic model. At the same time, Western leaders such as Thatcher and Reagan provided new impetus for market based economic reforms. This trend continued into the 1990s, converging around centrist policies promoted by Blair, Clinton and the EU.
The next turn came in 2008 with the crash of the financial system, and holes began to rapidly appear in the consensus as the debt fuelled expansion in the private, public and banking sectors all came to a grinding halt and the full difficulties in paying back those debts became apparent.
In Britain, one of the main focuses of the coalition government has been to reduce the ever growing welfare bill, and this has created one of the biggest fault lines in British society, and one that is likely to grow wider. On the right, the argument is that a system of welfare dependency has been created, leading to large numbers of people for whom living off benefits is preferable to low paid and/or unfulfilling jobs. The evidence for this is that Britain has more people in employment than ever before, but with increasing numbers of those low paid and/or unfulfilling jobs taken by immigrants, as benefit drawing Brits either refuse to take them, or are so unemployable that no sensible employer would hire them. On the left, the argument is that the the poorest members of society are being blamed for the chaos caused by the reckless behaviour of financial institutions (they never blame over borrowing individuals or governments, who must also surely share the blame?) in the pre-crash period, and that a return to economic growth will solve the ballooning welfare costs.
I want to reflect on a slight tangent – is this British underclass starting to to resemble aspects of Soviet era society? I know it sounds crazy, but here is my thinking. In the Soviet bloc unemployment was practically non-existent, but productivity was almost practically non-existent; if they had not, their economies would not have collapsed in the way that they did. The Soviet bloc economies could not meet the requirements of their population due to the ever increasing productivity gap with the west; just compare east and west German industry – Trabant -v- Volkswagen. Capitalism works because it makes people hungry, sometimes literally, sometimes metaphorically in terms of what they wish to achieve or acquire. The benefit system creates a kind of mini-Soviet bloc society within a broader capitalist society, with people paid low amounts but with no expectation of productivity or profit. Like Soviet society, its members live with petty, often vindictive rules, and a standard of living that does not compare to the mainstream capitalist economy, but it is also undemanding on its citizens. They receive free healthcare, sufficient income for a basic standard of living and none of the issues associated with life in the tooth and claw of capitalism. Somebody recounted the experience of a job centre advisor (albeit in Canada) about people returning to work not being psychologically prepared; I would argue that it is not work but capitalism that they are unprepared for, and when they then try to enter or re-enter the mainstream workforce, they find similar cultural difficulties to those experienced by Soviet bloc citizens post the collapse of communism and their attempts to join the capitalist economic system.
The question is, will this sub-economy collapse in the same way that the Soviet economy did?