Wednesday, 30 September 2015

How the banks ignored the lessons of the crash

Joris Luyendijk in The Guardian

Ask people where they were on 9/11, and most have a memory to share. Ask where they were when Lehman Brothers collapsed, and many will struggle even to remember the correct year. The 158-year-old Wall Street bank filed for bankruptcy on 15 September 2008. As the news broke, insiders experienced an atmosphere of unprecedented panic. One former investment banker recalled: “I thought: so this is what the threat of war must feel like. I remember looking out of the window and seeing the buses drive by. People everywhere going through a normal working day – or so they thought. I realised: they have no idea. I called my father from the office to tell him to transfer all his savings to a safer bank. Going home that day, I was genuinely terrified.”

A veteran at a small credit rating agency who spent his whole career in the City of London told me with genuine emotion: “It was terrifying. Absolutely terrifying. We came so close to a global meltdown.” He had been on holiday in the week Lehman went bust. “I remember opening up the paper every day and going: ‘Oh my God.’ I was on my BlackBerry following events. Confusion, embarrassment, incredulity ... I went through the whole gamut of human emotions. At some point my wife threatened to throw my BlackBerry in the lake if I didn’t stop reading on my phone. I couldn’t stop.”

Other financial workers in the City, who were at their desks after Lehman defaulted, described colleagues sitting frozen before their screens, paralysed – unable to act even when there was easy money to be made. Things were looking so bad, they said, that some got on the phone to their families: “Get as much money from the ATM as you can.” “Rush to the supermarket to hoard food.” “Buy gold.” “Get everything ready to evacuate the kids to the country.” As they recalled those days, there was often a note of shame in their voices, as if they felt humiliated by the memory of their vulnerability. Even some of the most macho traders became visibly uncomfortable. One said to me in a grim voice: “That was scary, mate. I mean, not film scary. Really scary.”

I spent two years, from 2011 to 2013, interviewing about 200 bankers and financial workers as part of an investigation into banking culture in the City of London after the crash. Not everyone I spoke to had been so terrified in the days and weeks after Lehman collapsed. But the ones who had phoned their families in panic explained to me that what they were afraid of was the domino effect. The collapse of a global megabank such as Lehman could cause the financial system to come to a halt, seize up and then implode. Not only would this mean that we could no longer withdraw our money from banks, it would also mean that lines of credit would stop. As the fund manager George Cooper put it in his book The Origin of Financial Crises: “This financial crisis came perilously close to causing a systemic failure of the global financial system. Had this occurred, global trade would have ceased to function within a very short period of time.” Remember that this is the age of just-in-time inventory management, Cooper added – meaning supermarkets have very small stocks. With impeccable understatement, he said: “It is sobering to contemplate the consequences of interrupting food supplies to the world’s major cities for even a few days.”

These were the dominos threatening to fall in 2008. The next tile would be hundreds of millions of people worldwide all learning at the same time that they had lost access to their bank accounts and that supplies to their supermarkets, pharmacies and petrol stations had frozen. The TV images that have come to define this whole episode – defeated-looking Lehman employees carrying boxes of their belongings through Wall Street – have become objects of satire. As if it were only a matter of a few hundred overpaid people losing their jobs: Look at the Masters of the Universe now, brought down to our level!

In reality, those cardboard box-carrying bankers were the beginning of what could very well have been a genuine breakdown of society. Although we did not quite fall off the edge after the crash in the way some bankers were anticipating, the painful effects are still being felt in almost every sector. At this distance, however, seven years on, it’s hard to see what has changed.

A typical education in the west leaves you with more insight into ancient Rome or Egypt than into our financial system – and while there are plenty of books and DVDs for lay people about, say, quantum mechanics, evolution or the human genome, before the crash there was virtually nothing to explain finance to outsiders in accessible language. The City, as John Lanchester put it in his book about the 2008 crash, Whoops!, is still “a far-off country of which we know little”.

As a result, ordinary people trying to form an opinion about finance over the past decades have had very little to go on, and many seem to have latched on to the images provided by films and TV. 

The British stereotype of the boring banker began to change in the 80s when finance was deregulated. Following Ronald Reagan’s dictum, “Government is not the solution to the problem, it is the problem”, banks were allowed to unite under one roof activities that regulation had previously required to be divided between separate firms and banks. They were able to grow to sizes many times bigger than a country’s GDP – the assumption being that the market would be self-regulating. The changes also meant that bankers became immensely powerful. Hollywood provided the City with a new hero: the financier Gordon Gekko, from Oliver Stone’s 1987 film Wall Street, who brought us the phrase “Greed is good”. In his portrait of bond traders’ raging ambition, Bonfire of the Vanities, novelist Tom Wolfe coined the term “Masters of the Universe”.

It all seemed innocent entertainment, before 2008: tales about a far-off country where boys behaved badly, scandalously even, but above all, reassuringly far away from the comfort and safety of our own homes, something like watching a Quentin Tarantino film or an episode of The Sopranos. This was the era when a Labour chancellor, Gordon Brown, could give a speech to a gathering of bankers and asset managers and tell them: “The financial services sector in Britain, and the City of London at the centre of it, is a great example of a highly skilled, high value-added, talent-driven industry that shows how we can excel in a world of global competition. Britain needs more of the vigour, ingenuity and aspiration that you already demonstrate that is the hallmark of your success.”

Those words were spoken in 2007, and a year later the world found itself in the middle of the biggest financial panic since the 1930s. In the end, it was only through a combination of pure luck, extremely expensive nationalisations and bailouts, the lowest interest rates in recorded history plus an ongoing experiment in mass money printing, that total meltdown was averted.

The post-Lehman panic was followed by a wave of investigations and reconstructions by journalists, writers and politicians. More than 300 books have been published about the crash in English alone. Every western country held extensive hearings and produced detailed recommendations. Everything you need to know about what is wrong with finance and the banks today is in their reports; the problem is that there is so much more that needs to be explained.

Most areas inside banking had little or nothing to do with the crash, while many players outside banking bore a heavy responsibility, too, including insurers, credit rating agencies, accountancy firms, financial law firms, central banks, regulators and politicians. Investors such as pension funds had been egging the banks on to make more profits by taking more risk. Unless you had a firm understanding of finance, the causes of the crash were very unclear, and this must be part of the reason why the clearest and most urgent lesson of all would get lost or buried: the financial system itself had become dangerously flawed.

After the crash of 2008, ignorance among the general public, reticence among complicit mainstream politicians and a deeply skewed and sensationalist portrayal of finance in the mass media conspired to create the narrative that the crash was caused by greed or by some other character flaw in individual bankers: psychopathy, gambling addiction or cocaine use. (A whole genre of City memoirs sprang up with titles such as Binge Trading: The Real Inside Story of Cash, Cocaine and Corruption in the City. Gordon Gekko returned for a sequel, Wall Street: Money Never Sleeps, and Leonardo di Caprio scored an immense hit playing the title role in The Wolf of Wall Street, about a whoring and cocaine-snorting financial fraudster.)

From there it was a small step to the notion that we can fix finance by getting rid of the “jerks”, as the plain speaking former Barclays CEO Bob Diamond put it. When Diamond was forced to resign in July 2012 over a scandal involving interest rate rigging by his traders, his successor, Antony Jenkins, also promised to focus on changing the culture. And so the same banks that brought us the mess of 2008 eagerly embraced the need for cultural change – which alone should arouse our suspicions. If there is one recurring theme in the many conversations I had with City insiders, it was the need for structural rather than cultural change; not so much different bankers, but a different system.

“Sometimes I feel as if finance has reacted to the crisis the way a motorist might after a near-accident,” said the City veteran at a small credit rating agency whose wife had almost chucked his phone into a lake at the height of the panic. “There is the adrenaline surge directly after the lucky escape, followed by the huge shock when you realise what could have happened. But as the journey continues and the scene recedes in the rear-view mirror, you tell yourself: maybe it wasn’t that bad. The memory of your panic fades, and you even begin to misremember what happened. Was it really that bad?”

He was a soft-spoken man, the sort to send a text message if he is going to be five minutes late to a meeting. But now he was really angry: “If you had told people at the height of the crisis that years later we’d have had no fundamental changes, nobody would have believed you. Such was the panic and fear. But here we are. It’s back to business as usual. We went from ‘We nearly died from this’ to ‘We survived this’.”

The City is governed by a code of silence and fear of publicity; those caught talking to the press without a PR officer present could be sacked or sued. But once I had persuaded City insiders to talk (always and only on condition of anonymity), they were remarkably forthcoming.

“I have the wrong accent and I went to a shit school,” said one City veteran, after explaining that for many years he had made millions at a top bank only to move to an even better-paying hedge fund. “Forty years ago, I wouldn’t even have been given an interview in the City. Finance today is fiercely meritocratic. Doesn’t matter if you’re gay or black or working class, if you can do something better than the other person, you’ll move up.”

He was a mathematician by training, and his direct manner reminded me of stallholders at the biggest open market in my hometown of Amsterdam – tough guys with a highly developed mistrust of pretentiousness. He fuelled himself with Diet Coke and coffee and teased me for ordering cranberry juice. Before he was recruited by the bank in the early 1990s, he had taught at a university; his only idea of an investment bank was based on two books he had read: Liar’s Poker by Michael Lewis and Barbarians at the Gate by Bryan Burrough and John Helyar. “Traders as loud, crass, bad-mouthed, macho dickheads. The sort of guys with red braces who shout ‘buy, buy, sell, sell’ into their phones and have eating competitions.” Many outsiders still believe that these are the people occupying the top positions in big banks, he said, and taking the biggest risks. “That’s over,” he told me. “Some of the best traders are now women. Totally unassuming, cerebral and talented. Trading is no longer a balls job. It’s a brains job. To be sure, the kind of maths traders now have to be able to do is not of the wildly hard variety. But it requires real skills in that area.”

He described the basic flaw in the banking system as it has evolved over the past decades: other people’s money. Until deregulation began to liberate finance from the constraints placed on it after the last major crash in the 1930s, risky banking in the City was carried out in firms that were organised as partnerships, which were not listed on the stock exchange. The partners owned and ran the firm – and when things went wrong, they were liable. Hence the system of bonuses: if you put your personal fortune on the line and things go well, it stands to reason that you deserve a big bonus. Because if things go the other way, you are personally liable for the losses.

Back in the days when his bank was still a partnership, the former banker had drawn on his gift for maths to build a complex financial product that he thought was very clever. “I was very new and maybe a bit cocky,” he said. “So I went over to the head of trading and showed it to him, saying, ‘Look, we can make a lot of money with this.’ The head of trading was a partner in the traditional sense. He looked at me and replied: ‘Don’t forget, this is my money you’re fucking with.’”

The problem with the way banks are now organised is not that they take risks – that is their job. The problem with today’s banks is that those who accept the risks are no longer those who get stuck with the bill.

A bank that is listed on the stock market loses control to the new owners; that is, the shareholders. When these shareholders, which can include insurers, wealthy dynasties or pension funds, start demanding ever greater profits, then greater profits are what you have to deliver. In 2007, in an inadvertent moment of candour, the then CEO of the megabank Citigroup, Charles O Prince, summarised this relationship: “As long as the music is playing, you’ve got to get up and dance.”

This dynamic became all the more dangerous as globalisation began to create a single market for finance. Not only were partnerships allowed to be listed on the stock exchange or taken over by a publicly listed bank, they were also allowed to go on a global shopping spree. Wave after wave of mergers and acquisitions meant banks could generate higher profits than the GDPs of their host countries, resulting in the institutions that we now know as “too big to fail” – so big that if they go bust, they can bring down the system with them. When excessive risk turns sour, it’s the taxpayer who suffers.

In a functioning free market system, incompetence and recklessness are punished by failure and bankruptcy. But there is currently no functioning free market at the centre of the global free market system. I heard City workers scoff at the employees of banks that cannot be allowed to fail – calling them overpaid civil servants who play a game they cannot lose. Risk-taking at a bank that will always be saved, they said, is like playing Russian roulette with someone else’s head.

In the old days, veterans told me, there was an office party almost every Friday: celebrating the anniversary of someone who had stayed with the firm for 20 years or longer. That is all over now, and in its place has come a hire-and-fire culture characterised by an absence of loyalty on either side. Employment in the City is now a purely transactional affair. It is exceedingly rare to find people who have stayed with the same bank for their entire career.

Many of the insiders I spoke to had stories about abrupt sackings: You get a call from a colleague, saying: “Look, could you do me a favour and get my coat and bag?” She is standing outside with a blocked security pass. One morning, you swipe your pass only to hear a beep and find your entrance barred. You turn to the receptionist who says, after a glance at her computer screen, “Would you please have a seat over there until somebody comes to fetch you?”

In the City, sudden dismissals of this kind have a name: “executions”. Add to these the quarterly “waves” when headquarters decides to reduce headcount and a certain percentage of staff worldwide are given the sack, all on one day. Some banks operate a “cull”. Every year, prestigious banks such as Goldman Sachs and JP Morgan routinely fire their least profitable staff. “When the cull comes ...” people would say, or: “Oh yes, we cull.”

“When you can be out of the door in five minutes, your horizon becomes five minutes,” one City worker told me. Another asked: “Why would I treat my bank any better than my bank treats me?”

If the threat of being culled influenced bankers’ behaviour through fear, there were also powerful motivations. Deregulation has allowed perverse incentives into the very fabric of global finance. People are faced with immense temptations to take risks with their bank’s capital or reputation, knowing that if they don’t act on them, their colleague across the desk will.

Before the deregulation of the 80s and 90s, the City was far from perfect: it was a snobbish, antisemitic and misogynistic place. But the City – and Wall Street – of old was a world that Gus Levy, head of Goldman Sachs in the 70s, famously described as “long term greedy”; you made money with your client and your firm. Because partners were personally liable, they had an interest in keeping their firm on a manageable scale and making sure their employees told them of any risks. In a few decades, this system has evolved into one that Levy called “short term greedy”; you make money at the expense of the client, of the bank, of the shareholder or of the taxpayer. This did not happen because bankers suddenly became evil, but because the incentives fundamentally changed.

Until the mid 80s, the London Stock Exchange’s motto was dictum meum pactum, “my word is my bond”. These days the governing principle is caveat emptor, or “buyer beware” – it is effectively up to the professional investor to figure out what the bank is offering. As one builder of complex financial products explained to me: “You have got to read the small print. You need to bring in a lawyer who explains it to you before you buy these things.”

Perhaps the most terrifying interview of all the 200 I recorded was with a senior regulator. It was not only what he said but how he said it: as if the status quo was simply unassailable. Ultimately, he explained, regulators – the government agencies that ensure the financial sector is safe and compliant – rely on self-declaration; what is presented by a bank’s internal management. The trouble, he said with a calm smile, is that a bank’s internal management often doesn’t know what’s going on because banks today are so vast and complex. He did not think he had ever been deliberately lied to, although he acknowledged that, obviously, he couldn’t know for sure. “The real threat is not a bank’s management hiding things from us, it’s the management not knowing themselves what the risks are.”

He talked about the culture of fear and how people are not managing their actions for the benefit of their bank. Instead, “they are managing their career”. He believed that the crash had been more “cock-up than conspiracy”. Bank management is in conflict, he pointed out: “What is good for the long term of the bank or the country may not be what is best for their own short-term career or bonus.”

If the problem with finance is perverse incentives, then the insistence on greed as the cause for the crash is part of the problem. There is a lot of greed in the City, as there is elsewhere in society. But if you blame the crash on character flaws in individuals you imply that the system itself is fine, all we need to do is to smoke out the crooks, the gambling addicts, the coke-snorters, the sexists, the psychopaths. Human beings always have at least some scope for choice, hence the differences in culture between banks. Still, human behaviour is largely determined by incentives, and in the current set-up, these are sending individual bankers, desks or divisions within banks – as well as the banks themselves – in the wrong direction.

How hard would it be to change those incentives? From the viewpoint of those I interviewed, not hard at all. First of all, banks could be chopped up into units that can safely go bust – meaning they could never blackmail us again. Banks should not have multiple activities going on under one roof with inherent conflicts of interest. Banks should not be allowed to build, sell or own overly complex financial products – clients should be able to comprehend what they buy and investors understand the balance sheet. Finally, the penalty should land on the same head as the bonus, meaning nobody should have more reason to lie awake at night worrying over the risks to the bank’s capital or reputation than the bankers themselves. You might expect all major political parties to have come out by now with their vision of a stable and productive financial sector. But this is not what has happened.

Not that there has been no reform. Banks are taxed when they get beyond a certain size, for example, and all banks must now finance a larger part of their risks with equity rather than borrowed money. American banks are banned from using their own capital to speculate and invest in the markets, and the European commission, or national governments, have forced a few banks to shrink or sell off their investment bank activities – the Dutch bank ING, for example, was told to sell off its insurance arm, ING Direct. But change has been largely cosmetic, leaving the sector’s basic architecture intact. If a bank collapses, the new European banking union – set up in 2012 to transfer banking policy from a national to a European level – is meant to step in and wind it down in an orderly fashion. But who is propping up that European banking union, if several banks should fail at the same time? The taxpayer. A bonus cap in banking was introduced by the EU, so instead of paying widely publicised million-pound bonuses, banks now simply offer higher salaries.

Perhaps the most promising change in the UK is the so-called “senior person regime” that makes it possible to prosecute bankers for reckless behaviour – but only after they have wrecked their bank. Virtually all big banks remain publicly listed or are doing everything they can to get back on the stock exchange. They have never allowed staff to talk openly about what went wrong before 2008 and why. The code of silence remains intact. The banks have not sacked the accountancy firms or credit rating agencies that failed to raise the alarm over the erroneous or misleading items on their balance sheets. Banks have certainly not joined hands to fight for a globally enforced increase in capital buffers (the minimum capital they are required to hold), which could help them absorb and survive severe losses. Indeed, they have spent millions lobbying to keep any increase in buffers as low as possible.

“Back to business as usual.” This is how many interviewees described the post-crash atmosphere in the City. As the senior regulator put it with chilling equanimity: “Is the sector fixed, after the crisis? I don’t think so.” What we have now, he added, is “what you get with free-market capitalism – consolidation of all wealth into fewer and fewer banks, which end up dividing up the market as a cartel.”

When it comes to global finance, the most startling news isn’t news at all; the important facts have been known for a long time among insiders. The problem goes much deeper: the sector has become immune to exposure.

“If I had a million pounds for every time I have heard a possible reform opposed because ‘it wouldn’t have prevented Northern Rock or Lehman Brothers going bust’, I might now have enough money to bail out a bank,” the Financial Times columnist John Kay wrote in 2013. “The objective of reform is not to prevent Northern Rock or Lehman going bust ... The problem revealed by the 2007-08 crisis was not that some financial services companies collapsed, but that there was no means of handling their failure without endangering the entire global financial system.”

Only last year Andrew Haldane, chief economist at the Bank of England, told the German magazine Der Spiegel that the balances of the big banks are “the blackest of black holes”. Haldane is responsible for the stability of the financial sector as a whole. He knowingly told a journalist that he couldn’t possibly have an idea of what the banks have on their books. And? Nothing happened.

It made sense in 2008 for those in the know not to deepen the panic by talking about it. Indeed, one of the most powerful figures in the EU in 2008, the almost supernaturally levelheaded Herman van Rompuy, waited until 2014 to acknowledge in an interview that he had seen the system come within “a few millimetres of total implosion”.

But because the general public was left in the dark, there was never enough political capital to take on the banks. Compare this to the 1930s in the US, when the crash was allowed to play out, giving Franklin D Roosevelt the chance to bring in simple and strong new laws that kept the financial sector healthy for many decades – until Reagan and Thatcher undid one part, and Clinton and Blair the other.

Tony Blair is now making a reported £2.5m a year as adviser to JP Morgan, while the former US Treasury secretary Timothy Geithner and the former secretary of state Hillary Clinton have been paid upwards of $100,000 a speech to address small audiences at global banks. It is tempting to see corruption in all this, but it seems more likely that, over the past decades, politicians as well as regulators have come to identify themselves with the financial sector they are supposed to be regulating. The term here is “cognitive capture”, a concept popularised by the economist and former Financial Times columnist Willem Buiter, who described it as over-identification between the regulator and the regulated – or “excess sensitivity of the Fed to financial market and financial sector concerns and fears”.

With corruption, you are given money to do something you would not have done otherwise. Capture is more subtle and no longer requires a transfer of funds – since the politician, academic or regulator has started to believe that the world works in the way that bankers say it does. Sadly, Willem Buiter never wrote a definitive account of capture; he no longer works in academia and journalism. He has moved to the megabank Citigroup.

The European commission president, Jean-Claude Juncker, memorably said in 2013 that European politicians know very well what needs to be done to save the economy. They just don’t know how to get elected after doing it. A similar point could be made about the major parties in this country: they know very well what needs to be done to make finance safe again. They just don’t know where their campaign donations and second careers are going to come from once they have done it.

Still, the complicity of mainstream politicians is not the whole story. Finance today is global, while democratically legitimate politics operates on a national level. Banks can play off one country or block of countries against the other, threatening to pack up and leave if a piece of regulation should be introduced that doesn’t agree with them. And they do, shamelessly. “OK, let us assume our country takes on its financial sector,” a mainstream European politician told me. “In that case, our banks and financial firms simply move elsewhere, meaning we will have lost our voice in international forums. Meanwhile, globally, nothing has changed.”

This then opens up the most difficult question of all: how is the global financial sector to be brought back under control if there is no global political authority capable of challenging it?

Seven years after the collapse of Lehman Brothers, it is often said that nothing was learned from the crash. This is too optimistic. The big banks have surely drawn a lesson from the crash and its aftermath: that in the end there is very little they will not get away with.

Marxism Today: the forgotten visionaries whose ideas could save Labour

John Harris in The Guardian

In May 1988, a group of around 20 writers and academics spent a weekend at Wortley Hall, a country house north of Sheffield, loudly debating British politics and the state of the world. All drawn from the political left, by that point they were long used to defeat, chiefly at the hands of Margaret Thatcher. Now, they were set on figuring out not just how to reverse the political tide, but something much more ambitious: in essence, how to leave the 20th century.

Over the previous decade, some of these people had shone light on why Britain had moved so far to the right, and why the left had become so weak. But as one of them later put it, they now wanted to focus on “how society was changing, what globalisation was about – where things were moving in a much, much deeper sense”. The conversations were not always easy; there were raised voices, and sometimes awkward silences. Everything was taped, and voluminous notes were taken. A couple of months on, one of the organisers wrote that proceedings had been “part coherent, part incoherent, exciting and frustrating in just about equal measure”.

What emerged from the debates and discussions was an array of amazingly prescient insights, published in a visionary magazine called Marxism Today. In the early 21st century, that title might look comically old-fashioned, but the people clustered around the magazine anticipated the future we now inhabit, and diagnosed how the left could steer it in a more progressive direction. Soon enough, in fact, some of Marxism Today’s inner circle would bring their insights to the Labour party led by Tony Blair, as advisers and policy specialists. But most of their ideas were lost, thanks partly to the frantic realities of power, but also because in important respects, Blair and Gordon Brown – both of whom had written for the magazine when they were shadow ministers – were more old-fashioned politicians than they liked to think.

At the core of Marxism Today’s most prophetic ideas was a brilliant conception of modern capitalism. In contrast to an increasingly dated vision of a world of mass production and standardisation, the magazine’s writers described the changes wrought by a new reality of small economic units, franchising, outsourcing, self-employment and part-time work – most of it driven by companies and corporations with a global reach – which they called “Post-Fordism”. Computers, they pointed out, were now being built from components produced in diverse locations all over the world; iconic companies had stripped down their focus to sales, strategy and what we would now call branding, outsourcing production to an ever-changing array of third parties. As a result, economies were becoming more fragmented and unpredictable, as the bureaucratic, top-down structures that had defined the first two-thirds of the 20th century were pushed aside.

Politics and society reflected all this tumult. The conversations at Wortley Hall touched on the decline of class politics, new conceptions of identity more complex than the hoary category of “worker”, how an insurgent women’s movement had highlighted huge changes to the fabric of everyday life, the rising importance of green politics, the increasing expectation of personal autonomy – and how seemingly unstoppable forces were weakening the traditional nation state. While the right had turned these changes to its advantage, far too much of the left still lived in a world that was fast disintegrating beneath its feet. As one Marxism Today editorial put it, the Labour party and the trade unions were “profoundly wedded to the past, to 1945, to the old social-democratic order … backward-looking, conservative, bereft of new ideas and out of time”.

Union membership was declining fast. By 1988, Labour had lost its third consecutive election to Thatcher’s Conservatives. The party had moved on from the unapologetic old-school socialism that it had presented to voters in 1983 and painstakingly worked on more modern policies and presentation, but in retrospect, its thinking was still largely built around enduring articles of traditional socialist faith. Labour people still believed that Thatcher’s success amounted to a flimsy con-trick – and it was Labour’s job, as their 1980s leader Neil Kinnock put it in one of his impassioned conference speeches, to “deliver the British people from evil”. The means of doing so still revolved around the big, beneficent, centralised state, the promise of stability and security through paid employment, and the idea that people’s identity could usually be boiled down to their lives as workers.

Three decades later, the impact of the economic and social changes that Marxism Today identified is undeniable – and the politics it prescribed are, if anything, more relevant today than ever before. But apart from a few cosmetic updates, today’s Labour party still essentially clings to the same old shibboleths. Indeed, with the election of Jeremy Corbyn, its collective faith in them looks to have been renewed. Just before the last general election, Corbyn assured one interviewer that his was “a class-based socialist party”; throughout the recent leadership campaign, he extolled the wonders of nationalisation and at one point suggested that some British coal mines might be reopened. Meanwhile, centre-left politics all over Europe remains locked in a deep crisis, sidelined by the dominance of the centre-right, and further unsettled by the rise of new populist and nationalist parties from both ends of the political spectrum. In the delirium of Corbynmania and the arrival of tens of thousands of new members, the cold reality of Labour’s predicament has been somewhat forgotten. At the last election, it won its second-lowest share of the vote since 1983.

In leftist circles today, one frequently hears the argument that the world was changed for ever by the crash of 2008. But a much older point has still to be satisfactorily answered: has the left ever really understood the consequences of the economic and political changes that began to reveal themselves in the 1970s, defined the 1980s, and have been hugely accelerating ever since? On the evidence of his pronouncements over the last 30 years and the messages he dispensed during the leadership campaign, Corbyn does not seem to. Even Blair and Brown, who were at pains to stress their understanding of the late 20th century, failed to convincingly remodel their party’s politics for this new age.

Yanis Varoufakis: How I became an erratic Marxist

This is the case for the continued relevance of a magazine that published its last issue in 1991. As this summer’s Labour leadership election showed, there is a need for a modern, radical politics, more ambitious and forward-looking than either reheated New Labour or a revived hard left. But it is nowhere to be seen – and that absence arguably sits at the heart of the Labour party’s ongoing crisis, and the sense that the left, here and across Europe, is all at sea.

For most of its life, Marxism Today – founded in 1957 – described itself as “the theoretical and discussion journal of the Communist party”. But in its peak period – from 1977 to 1990 – it was far from what those words suggested. Though published from inside the belly of the Communist party of Great Britain (CPGB), it spoke to a whole swath of the British left, and particularly the Labour party. Moreover, what it said was not academic and abstract, but vivid and urgent.

These were convulsive times. A run of watershed events began with Thatcher’s first election victory in 1979, and the 1980 arrival in the White House of her ideological soulmate, Ronald Reagan. After austerity and recession, the Falklands war came in 1982, ensuring another Thatcher election win a year later. British coal miners began a year-long strike in 1984 and were defeated in 1985; the printworkers who took on Rupert Murdoch began a similarly doomed struggle in 1986. The same year, the Thatcher government abolished England’s Metropolitan County Councils, and the Greater London Council (GLC), and thereby snuffed out a loud municipal revolt led by Labour politicians; a year on, the Conservatives won a third Westminster term. In 1989 came the most seismic change of all: European Communism breathed its last, and the free-market politics championed by Thatcher and Reagan was proclaimed triumphant.

Such were the birth pangs of a new order, as an innovative kind of accelerated capitalism spread across the planet. In the everyday world, this transformation took the form of a turbocharged consumerism, so that as old certainties collapsed, the world was suddenly painted in deep and dazzling colours. Marxism Today captured the mood: I read it avidly as a politics-obsessed teenager, and in my memory, its bold, brazenly modern covers sit in the same place as the 1980s’ iconic record sleeves.

As Britain and the wider world were transformed, the magazine set out on a journey based on three big ideas. One, the work of the renowned historian and lifelong Communist Eric Hobsbawm, was a clear diagnosis of the crisis that had confronted Labour and the trade unions. Another was a prescient analysis of Thatcherism, a term invented by the Jamaican-British thinker Stuart Hall, and used to describe not just a political project, but its embedding in millions of ordinary lives in the form of basic ideas about common sense and everyday life. When the magazine’s thinkers subsequently came up with what they called the “New Times” project, they wrapped up these previous insights in an all-encompassing analysis of profound changes, running much deeper than politics.

Martin Jacques in 1985, during his time as editor of Marxism Today

By the 1970s, the British Communist party was almost irrelevant as an electoral force, but its senior members included high-ranking trade unionists, and its organisation was partly built around a national network of shop stewards. Its offices in Covent Garden were bugged by MI5; its daily paper, the Morning Star, came out each day, buoyed by a Soviet subsidy in the form of up to 15,000 copies bought each day, and flown out to the USSR. The party’s once-rigid orthodoxies had been shaken by the Soviet invasions of Hungary in 1956 and Czechoslovakia in 1968 – and the latter episode in particular had galvanised a young generation of Communists intent on pushing their politics somewhere new, in defiance of the pro-Soviet diehards known as “tankies”, in honour of the military vehicles that had rolled into Budapest and Prague. One of these activists was Martin Jacques – a native of Coventry, the son of Communist parents, a graduate of Manchester University, and by 1967, a member of the party’s executive committee.

I met Jacques, now 69, in his mansion-block apartment nudging Hampstead Heath, where we sat in his kitchen, talking over the endless gurgle of a fishtank and drinking green tea. He was preparing for one of his regular trips to China, the global power he analysed and explained in his bestselling 2009 book When China Rules the World, but he happily cast his mind back to the passions that had driven him nearly 50 years ago, when his life was changed by the student militancy that spread across Europe in 1968. In Manchester, he and other students were embracing the more political aspects of the 1960s counterculture – but his perspectives were decisively shifted when he spent a week in and around Prague, two months before the Russians arrived. “I know what I thought then. I can remember it vividly. I basically said: ‘Everything is contingent now, and how things relate to my membership of the CP” – he paused – “I don’t know.”

By the mid-1970s, British Communists of Jacques’s ilk had an increasingly clear sense of who they were. Their big theoretical inspiration was Antonio Gramsci, the Italian Communist who had died in Mussolini’s jails, and left a political legacy built around the concept of “hegemony” – in essence, the means by which capitalism maintains its dominance through culture, social institutions and the everyday stuff of supposed common sense, all of which would have to be turned around by a politics much more creative and outward-looking than the European left had so far managed. Gramsci’s devotees now looked not to the USSR, but Italy, where the national Communist party was blazing a trail for the open, nuanced and self-consciously “Gramscian” politics increasingly known as Eurocommunism.

In the CPGB, Eurocommunism began to amass momentum and influence, and just before the party congress of 1977, Jacques was approached by the party’s general secretary, Gordon McLennan – a representative of what Jacques characterises as the Communist party’s “centre ground”, whose politics were dutiful and dull, rather than sharply ideological. McLennan had an offer: would Jacques give up his life as an academic at Bristol University, start a new working life at the CP’s offices, and edit Marxism Today? He would be paid the “party wage” of around £8,000 a year, and take his place in a small office partly staffed by volunteers.

Jacques recalled how his new job initially worked. “When I started, there was Doris Allison, who was 82, and like this – ” he walked around the table, bent double – “and she was in charge of subscriptions. There was Minnie Bowles, who was my part-time secretary. She was 75: a very sexy woman of 75. She just had something about her. And there was Margaret Smith, who would put in a day or half-day every week, and she was 65. Effectively, I was on my own. And that was the beginning of a new start.”

In three months spread across 1978 and 1979, Marxism Today published the two essays that started to set out a new mission for the British left. The Forward March of Labour Halted? [pdf download] appeared in September 1978. The work of Eric Hobsbawm, then in his mid 60s, it was initially delivered as the Communist party’s annual Marx memorial lecture. By modern standards, it was a somewhat pedestrian read, but its message was clear enough: if the Labour party and wider labour movement had understood themselves to be hopefully trudging onwards and upwards, their progress had long since stalled, as class consciousness had waned and Labour’s support had started to dwindle. There had been a superficial increase in union militancy in the 1970s, but most of it had been about increasing wages rather than heightening class consciousness. “It seems to me,” Hobsbawm wrote, “that we are now seeing a growing division of workers into sections and groups, each pursuing its own economic interest at the expense of the rest.”

The growth of white-collar employment and the mass entry of women into paid work were both part of this fracturing; in 1979, a third of the UK’s trade unionists would vote for Thatcher. “The forward march of labour and the labour movement, which Marx predicted,” Hobsbawm told his readers, “appears to have come to a halt in this country about 25 to 30 years ago.”

The second watershed text that Marxism Today published was a piece titled The Great Moving Right Show [pdf download], written by Stuart Hall, the pioneer of cultural studies who would become Marxism Today’s most insightful thinker, and one of Jacques’s closest friends. Written in the somewhat chewy language of cultural and political theory, it was an analysis of what had been quietly happening to politics – and Britain at large – since the 1960s, and which was now being taken to a new level by Thatcher, despite the fact that she was still keeping her brand of zealously free-market economics somewhat hidden.

Stuart Hall, the pioneer of cultural studies who would become Marxism Today’s most insightful writer and thinker. Photograph: BFI

Hall knew that what the Tories were doing was much more ambitious than simply ramping up orthodox Conservatism: he talked about their new use of a “rich repertoire of anti-collectivism”, which fused with “popular elements in the traditional philosophies and practical ideologies of the dominated classes”. Thatcher and her allies, in other words, were living out Gramsci’s ideas about hegemony, by pursuing their politics on the terrain of common sense: kitchen-table economics, the comforts of self-sufficiency, the necessity of property ownership.

As well as coining the word “Thatcherism” six months before Thatcher had even taken power, he wrote about “the doctrines and discourses of social market values – the restoration of competition and personal responsibility for effort and reward, the image of the over-taxed individual, enervated by welfare coddling, his initiative sapped by handouts by the state”. And he identified something at the heart of Thatcherism that would serve the Tories well for the next four decades: “in the image of the welfare ‘scavenger’,” he said, the new Conservatives had hit upon “a well designed folk-devil”.

Hall and Hobsbawm quickly came to define Marxism Today’s intellectual core. According to their old comrades, they were as different as could be: Hobsbawm an imposing, exacting Communist whose debates with others would evoke “the weight of history”; Hall a more open operator who was never a member of the CPGB (“he did have an ego, but he was very willing to let people speak, and listen – he gave people permission to do their thing”). But in some Communist circles – and beyond, in left-wing academia, the Labour party and the trade unions – the pieces they wrote provoked the same controversy. In the New Left Review, the stentorian Marxist academic Ralph Miliband – the father of two sons who would eventually speed to the top of the Labour party – charged them with retreating into “new revisionism”, and contributing “in no small way to the malaise, confusion, loss of confidence and even despair which have so damagingly affected the left in recent years”.

“Thatcherism was widely rejected when we first came up with the idea,” Jacques told me. “Tony Benn said: ‘Nonsense, it’s just the same old Toryism, but tougher.’ There was that cautious, conservative thinking which was unable to respond to change in the real world.” What he said next applied to what happened in the 80s, but he phrased it in the present tense. “One of the biggest problems is, the Labour party can’t think. And it never really has been able to think, of its own accord.”

Hall called the magazine’s detractors “the pessimists”: people who seemed to think “that we mustn’t rock the boat, or demoralise the already dispersed forces of the left”. He responded to them by quoting an injunction from Gramsci: “to address ourselves ‘violently’ towards the present as it is”.

Morning Star opts for youth by appointing Ben Chacko as editor

Beatrix Campbell was another important voice within MT’s pages. A fiercely clever, ideas-hungry Cumbrian and another child of Communist parents, she had come to London to live in a commune, and met and married a musician and journalist called Bobby Campbell. He was a folk violinist and boxing correspondent for the Morning Star, and he encouraged his wife to work for the paper, first as a subeditor and then a reporter. In 1970, she had her first encounter with the women’s liberation movement, at a meeting in Hackney: “I can see the people in the room as if it was now. Being in a room full of women, which was unprecedented … the allure was awesome.” She and other feminist members of the party started a new feminist journal titled Red Rag; when the CPGB leadership insisted they needed official permission, they carried on regardless.

Having been repelled by the loud sexism of some of the Morning Star’s senior staff, Campbell worked first for the London magazine Time Out, and then City Limits, the co-operatively run challenger founded by former Time Out staff after that magazine was forced to abandon its collective model of working. Thanks to her journalism, she became closely acquainted with the “metropolitan radicalism” Ken Livingstone was exploring at the GLC until the Thatcher government abolished it in 1986, and a strand of Labour politics that obviously intersected with what Marxism Today was saying. The GLC had an Industry and Employment unit, which not only involved itself in some of the capital’s businesses, but tracked the kind of economic changes the magazine was interested in. One MT article captured the way the politics of the GLC had taken root beyond the usual structures of the Labour party, in myriad “community papers, women’s groups, trade-union support units, peace groups, legal advice centres … [and] tenants groups”, and said that the council “has tried to see itself as giving strength to … the innumerable groups from which [its politics] sprung”. As Campbell saw it, “the genius of Livingstone was that he read London brilliantly: he saw that class was only one dimension of being a Londoner who was dispossessed. If you only had a class agenda, you didn’t get it.”

Campbell was recruited as a writer by Jacques, and eventually given her own column, titled Bea-Line (for which, after some negotiation, she was paid). Among her commissions was a March 1987 interview with the infamous Tory minister Edwina Currie: “She was up for anything – looser, more open-minded and more connected to popular culture than a lot of Tories would be. And she was shameless. And the thing that was great about that time was saying, ‘You’ve got to talk to Tories, to find out why they’re thinking what they’re thinking.’ The labour movement didn’t do that.”

There was always a tension in Campbell’s relationship with Marxism Today. “The MT boys were not interested in feminism,” she said. “Martin absolutely never got it … Stuart [Hall] didn’t really get it. Hobsbawm didn’t get it.” Nonetheless, the magazine gave space to feminist writers, and as it exploded leftwing orthodoxies, there was a sense of common ground. “For us, the death of socialism was its sexism – that was a catastrophic part of its history. So there was this funny convergence: we were writing about that, and the way that British Labourism produced a politics dedicated to inequalities, at the same time as Hobsbawm delivered The Forward March of Labour Halted? From a different direction, we were addressing the same problem.” The result, she said, was that “I felt like a Marxism Today person. I was terribly proud to be involved in it. It was so engaged, and restless. 
And thinking, thinking, thinking.”

Marxism Today contributor Eric Hobsbawm. Photograph: Wesley/Getty Images

Throughout the 1980s, Jacques and his writers carried on unsettling the left, in often delicate circumstances. Tempers were frayed by Marxism Today’s occasional habit of giving space to dissenting voices from the eastern bloc. In 1981, a leading British Communist called Monty Johnstone went to Poland, and came back with not only an interview for Marxism Today with the deputy prime minister, but also a smuggled-out cassette on which he had recorded a conversation with Lech Walesa [pdf download] , the leader of the insurgent Solidarity movement (“I am not a good politician. I am first of all a consumer and I want something to consume,” Walesa said – probably not the most welcome words to Communist ears). Twelve months later, Jacques ran an article by the renowned dissident Roy Medvedev, which triggered a letter from the central committee of the Communist party of the Soviet Union – to the more orthodox high-ups at the British party, the equivalent of an intervention from the headmaster – which, Jacques told me, “complained bitterly about it”.

In the same issue, there was an article that took another candid look at the increasingly troubled predicament of the trade unions, and drew fire from the old-school Communists at the Morning Star, who published a piece calling it “a gross slander on the labour movement”. The ensuing controversy gives a good flavour of the grim comedy of 1980s Communist politics: motions decrying Marxism Today were passed by the party’s London district secretariat and East Midlands district committee; the Action Rail trade union ranch complained about “the latest outrage to our class”.

Jacques believes the stink was kicked up at the behest of the Russians. “I think these guys were in cahoots with the Soviets. And for me, that was the beginning of the end. I thought: ‘The CP has had it.’” Soon after, in fact, the Morning Star was effectively captured by his adversaries, moved out of the Communist party’s control, and confirmed for keeps as the voice of a staunchly traditionalist, hard-left, union-based position (which – against not inconsiderable odds – it retains to this day).

Amid these factional battles, Jacques managed to remain focused on the magazine to which he was devoting most of his waking hours. Almost none of Marxism Today’s writers were paid, but he insisted that most pieces were rewritten two or three times – though if that seemed unnecessarily arduous, he could always point to the travails of his own existence. “Basically, my life was lived in a state of permanent emergency. That was what I felt like. It was like camping. No money, working all the hours god sends. I got ill on several occasions. ME-type illness. The first time was ’83, the second time was ’85. The worst was ’87. I was knocked out for a lot of ’87. I was in a state of total exhaustion. Money can buy you a weekend away, or a quick holiday, or a bit of fun, and we didn’t have any. And then there were all these incessant attacks. At the core of it all, there was this total devotion to creating a great magazine, and getting the best writers, and getting the most interesting ideas. That was my life.”

Julian Turner was a Cambridge graduate and CP member who was briefly Marxism Today’s production editor, before he became its business manager, at the new Communist party offices near Smithfield market in London. “It felt very exciting,” he told me. “It was a little island of youth in the CP building. There were about a dozen people permanently there, but that would expand to many more when we needed envelopes to be stuffed, or the magazine to be sent out, or whatever. Then you’d have this army – I don’t want to make out that our motives were anything other than intellectual and political, but usually extremely attractive people would arrive, and end up socialising afterwards, which was definitely part of the attraction.”

“Everybody that was employed on the magazine was on the party wage. The party wage was the same for everybody. It was £8,600 when I started. I think it went up to £9,800 – that may have been the peak. One of the formative experiences of my life was standing up in front of the party congress, and asking them to let me pay the advertising staff commission. How did that fit into their utopia? I had to explain why it was an equitable idea, and why it was pragmatic, and worth doing. We got that through.

“I think a lot of people at the magazine had very mixed feelings about Marxism Today,” he went on, “because they were able to develop themselves professionally to a very high standard, and they grew a lot of their skills. But it was very exploitative, I think. Martin is quite unforgiving: he’s not an easy person to work with. I would spend some time repairing the human damage that was wrought by pursuing a quality standard that we all believed in, but struggled to stick to. We had a lot of people who over-committed; who felt that the demands made on them were unreasonable.”

Suzanne Moore, the Guardian columnist whose journalistic career decisively began when she edited the back section of the magazine, which she renamed “Culture”, echoed these memories when we met in a pub near her north London home. “It was Martin’s magazine, and there wasn’t a word in it that didn’t go through him,” she told me, as she recalled long days spent at MT’s office. “He would phone me up at 4am. It was not a normal job. Because it wasn’t a job to him. It was a way of life.” She lasted six months as a member of staff, before she simply stopped going into the office, and even then was confronted with Jacques’ exacting approach to people-management. “He’d come round to my house on his bike and try and get me out of bed.”

By 1988, Marxism Today was attracting huge attention and selling around 20,000 copies a month, partly thanks to the fact that it was stocked by WH Smith. To some extent, it had turned itself into what Jacques called “the intellectual forum for the Labour party – I didn’t approach it like that, but that’s what it became”. A handful of senior Labour figures – Bryan Gould, a former academic who served as Neil Kinnock’s shadow industry secretary and in-house intellectual, was the best example – made a point of appearing on its pages, and the impression that Kinnock was busy modernising the party was boosted by the energy and attention Marxism Today had generated, as well as sympathetic coverage in its pages (in October 1984, one MT cover had simply featured a Kinnock headshot and the words “the face of Labour’s future”).

‘It wasn’t a normal job’ … former Marxism Today writer and current Guardian columnist Suzanne Moore. Photograph: Sarah Lee for the Guardian

As the magazine’s success increased, there was talk about changing its title. “It was a problem,” Jacques told me. “But, you know, changing the name is quite tricky. And it became a joke: ‘Marxism Today? The only Marxism is in the title.’ Very early on, one of the designers said to me, ‘Why don’t you slowly reduce the size of ‘Marxism’, and increase the size of ‘Today’?” The arrival of the Today newspaper in 1986 killed that suggestion. “Another idea was to call it ‘MT’, but there was another magazine called Marketing Today.”

An altogether bigger concern was to do with the magazine’s momentum. “By this point, I thought we’d run out of steam a bit, really.” Jacques told me. “We were influential, but I thought we needed a fresh impulse. And there had to be fruit on the trees: we needed some new writers.”

So it was that in May 1988, Jacques convened the seminar at Wortley Hall, a sumptuous mansion owned by a collective of trade unions. Among the people who took part were Hobsbawm, Hall, Campbell, and Moore (“I said: ‘Oh, that’s nice – a weekend away in a country house’. They said: ‘It’ll be £180 each’”). Also in attendance were two twentysomethings who were new to the magazine. Charles Leadbeater was a one-time researcher on the ITV current affairs programme Weekend World – where he had worked alongside Peter Mandelson – who had then moved to the Financial Times, and begun enthusiastically writing for Marxism Today, as well as joining the CP. “I said to Martin, ‘How do you get involved in Marxism Today?’” Leadbeater recalled. “He said: ‘Well, you really have to join the Communist party. And I thought: ‘Sod it. Alright, I will.’” Alongside Leadbeater sat Geoff Mulgan – not a CP member, but another new discovery who had begun his post-Oxford career at Livingtone’s GLC, before completing a PhD at the Massachusetts Institute of Technology, where he shared the company of people working on the nascent internet. He would soon start work as an adviser to Gordon Brown.

The weekend’s conversations were sometimes difficult. When Leadbeater presented a paper about the modern expectation of choice and the need for the left to understand individualism, Hobsbawm seemed scandalised. “I went for a walk,” Leadbeater told me, “and after lunch, Eric came back and said: ‘It’s good to come to places like this and have debates, but I think we went a bit far this morning.’” Beatrix Campbell also recalls clashing with Hobsbawm thanks to what she saw as his antediluvian attitude to the women’s movement: “He was terrible on feminism. Awful … he was the kind of person who … will make you feel crap.”

The discussions led to a special issue titled New Times, published that October. “The uptake was fantastic,” Jacques told me. “There were articles in newspapers about it. Extracts were published. This was a major point of departure.” The central idea was “post-Fordism”, a term that captured western societies’ transition from what an opening editorial characterised as “mass production, the mass consumer, the big city, big brother state, the sprawling housing estate, and the nation state” to a new reality of “flexibility, diversity, differentiation, [and] decentralization”.

The term “Fordism” – a reference to that 20th-century kingpin Henry Ford – came from Gramsci, but the concept had been updated in 1970s by a group of French Marxist economists known as the Regulation School. In its British incarnation, the idea of post-Fordism was the work of an economist called Robin Murray – another thinker who had cut his teeth in the tumult of 1968, and who based his thinking in the real world, rather than theoretical abstractions.

Murray had played a key role at Livingstone’s GLC, where he worked as the grandly titled director of industry, and set up the Greater London Enterprise Board, aimed at giving the council an active role in the capital’s economy. At first, he and his colleagues had decided only to work with companies larger than a minimum size, thinking that Thatcherism’s fetishisation of small business was something to oppose. But when they took control of a bankrupt furniture factory in the Lea Valley that had 1,000 workers, they discovered it was being trounced by competitors in Italy – whose businesses were far smaller, did not have huge production lines and often worked co-operatively.

This realisation led them to immerse themselves in a new world of so-called flexible specialisation, and industries increasingly organised along much more agile, fast-moving lines, not least in retailing. When they worked with people from London’s music industry, the upshot was even more obvious: even if Fordism still defined large swaths of the world, in the late-20th century’s leading economies, Henry Ford’s world of vast production lines and standardisation – which had arguably been tested to destruction in the Soviet Union – was clearly on its way out, and this conclusion had huge implications for politics. “The forms of organisation – the Labour party, the trade unions, all these things – had all been formed around the same model as the corporate innovations we’d had in the early part of the century,” Murray told me. “It was all Fordist. So another theme was a critique of those structures, and how you could have much more open, democratic forms.”

Today, Geoff Mulgan – who was a protege of Murray at the GLC – calls his old mentor “the great unrecognised prophet of Britain. People like Hall and Hobsbawm are famous, but in many ways, Robin better understood where the world was going.” Now 75, Murray still brims with enthusiasm and insight: when we spent two hours together in a cafe next to the London School of Economics, he talked with infectious passion not just about the work he did for Marxism Today and the GLC, but his trailblazing efforts in what we now know as fair trade, and the nitty-gritty of environmentalism.

With Jacques’ help, Murray poured his thoughts into an article titled Life After Henry (Ford). As well as the economics of post-Fordism, he wrote about its political manifestations: not least, a new politics of consumption, rather than production (“the effects of food additives … the air we breathe and surroundings we live in, the availability of childcare and community centres, or access to privatised city centres”). He talked about what we would now call the “work-life balance”. He emphasised the need for decentralised public services and structures of government. He pointed out that post-Fordism was widening the gap between the job market’s winners and losers, and that any future Labour government would have to “put a floor under the labour market, and remove the discriminations faced by the low-paid” (it would be another decade before the introduction of a British minimum wage). And he asked profoundly difficult questions to people still attached to the idea of jobs-for-life and the postwar settlement: “How real is a policy of full employment when the speed of technical change destroys jobs as rapidly as growth creates them?”

This was one of the best texts the magazine ever published. Murray had drafted it while on holiday in the Lake District, sporadically discussing it on the phone with Jacques and receiving requests for rewrites via the postman. “We had three weeks away,” he told me. “And I spent the whole time working on it. On the way back, we broke down. The AA had to come. It was two in the morning. And my wife has a picture of me at some service station, sitting on a suitcase, correcting this document.”

In late 1989, as communist Europe underwent a series of largely peaceful revolutions, the “tankies” were in abeyance, and the politics of Marxism Today dominated what remained of the CPGB, whose membership was now down to around 7,500. A new party mission statement, titled Manifesto for New Times, was being put together. Here were the ideas of New Times – indeed, the whole project pursued by MT over the previous 12 years – in the form of programmatic politics. The manifesto made the case for proportional representation, a written constitution, a strong emphasis on environmental sustainability, the possibility of an English parliament, a guaranteed citizens’ income, “the potential of information technology to decentralise and strengthen local control”, and the writing-off of developing-world debt – and had a prophetic view of Scotland, where “a new confidence” and “aspiration for self-determination” were emerging.

Jacques explained these ideas as the keynote speaker at the party’s annual congress, but by that point, it was clear that the CPGB was expiring, at speed. As Campbell put it, the new dominance of Marxism Today thinking in the party represented “a triumph over a corpse”. With its characteristic chutzpah, MT commemorated the end of European communism with a cover featuring an iconic portrait of Marx splattered with eggs and tomatoes. And it carried on for another two years, soon negotiating its financial independence from the party.

Having run a brief piece by Gordon Brown [pdf download] about the New Times agenda in late 1989, it then carried an article by the Labour party’s shadow employment spokesman, one Tony Blair. “He rang me one day,” Jacques told me. “He said, ‘I’d like to write for Marxism Today – would that be possible?’ I worked on what he wrote with him; it went through several drafts. What’s the lightest boxing division? Featherweight. It was lighter than that.”

Blair’s piece appeared in October 1991, titled Forging a New Agenda. It suggested he had done a speed-reading of the Marxism Today canon, and then regurgitated it in the form of political nothings: “The notion of a modern view of society as the driving force behind the freedom of the individual is in truth the implicit governing philosophy of today’s Labour party.” In retrospect, it also suggested the magazine was running out of momentum.

  ‘I was exhausted. I’d been worn out by it, and as wonderful as it was, I was feeling trapped’ … Martin Jacques (pictured in 2008). Photograph: Eamonn McCabe for the Guardian

Two months later, just as the Soviet Union ceased to exist and the CPGB wound itself up, Marxism Today published its last issue. Apart from anything else, Jacques told me, it was finished off by the leaden weight of its associations with communism. “After the fall of the Berlin Wall, the atmosphere was very triumphalist, and if you’d been associated in any way with the 1917 project, or Marxism, you were dead. It was very difficult to escape that. But also, I just wanted to stop. I was exhausted. I’d been worn out by it, and as wonderful as it was, I was feeling trapped.”

There was one last weird twist: in November 1991, the Sunday Times discovered old Soviet papers which revealed that, contrary to its leaders’ claims that the CPGB had struggled through the 1970s with no help from the USSR, at least two secret payments had been made to the party’s former assistant general secretary,Reuben Falber, who had kept some of the money in the loft of his bungalow in Golders Green. Jacques says he instantly resigned his membership; Campbell is not sure there was any party left to leave by this point. “I’d been assured that that in my political lifetime, we’d never taken any money,” said Jacques. “For me, it was an act of betrayal.”

“I still remember the moment when Martin rang me,” Campbell told me. “He said: ‘Are you sitting down?’ And then he told me. It was a scalding shock. Because our raison d’etre in the Communist party was that something in this revolutionary project could be redeemed. And the discovery of this sordid distribution of Soviet money … what it revealed was that what we had tried to do in the 70s and 80s had all been impossible. There’s no way we could have been allowed to win.”

Thatcher had been toppled by a Tory revolt in 1990, but the Labour party went on to lose its fourth consecutive general election in April 1992. Meanwhile, Jacques and Turner spent a year working on a possible successor to Marxism Today. It was to be a monthly magazine with an international focus; the working title was Politics, but it came to nothing. Jacques then helped Geoff Mulgan set up Demos, the thinktank that would attach itself to New Labour and supply it with no end of policy ideas. After a spell spent writing for the Sunday Times, Jacques then became deputy editor of the Independent between 1994 and 1996.

When Tony Blair became the leader of the Labour party in 1994, Jacques initially dispensed warm words. But three weeks before Labour’s great victory at the 1997 election, he and Hall announced in a piece for the Observer that, before the party had even taken power, it had been pushed in completely the wrong direction. “Blair embodies the ultimate pessimism – that there is only one version of modernity, the one elaborated by the Conservatives over the last 18 years,” they wrote. “He represents an historic defeat for the left, the abandonment of any serious notion that the left has something distinctive to offer.” The whole point of New Times, as they saw it, was to understand the new world and then set about challenging its injustices with a fresh kind of left politics. New Labour had attempted the first part, but replaced the second with a doctrine of surrender.

The seeds of this swingeing take had actually been planted nine years earlier – when Hall and Jacques warned in 1988 of the danger that Labour would “produce, in government, a brand of New Times which in practice does not amount to much more than a slightly cleaned-up, humanised version of … the radical right”. All this came to a head in November 1998, when Marxism Today returned with a one-off issue on “the Blair project”, preceded by another two-day seminar. The old typefaces and in-jokes returned; on the cover was a photograph of Tony Blair, and the word “Wrong”.

Marxism Today’s one-off return in 1998. Photograph: Amiel Melburn Trust

Marxism Today had floated policy ideas that New Labour had taken up. Blair and Brown had written for the magazine, and were now being advised by ex-Marxism Today writers. But its writers and thinkers now wanted to kill the idea that the magazine had anything in common what the government was up to. Citing the Asian financial crisis that had begun in 1997, Hobsbawm perhaps got a little ahead of himself, and wrote a piece charging Blair and Brown with “not recognising that the age of neoliberalism is over”. And in a long essay titled The Great Moving Nowhere Show, Hall harked back to the magazine’s peak, arguing that while Blair had touched “the modernising part” of Marxism Today’s ideas, he was “framed by and moving on terrain defined by Thatcherism”.

Mulgan had gone from Demos to a job as the head of Blair’s Downing Street policy unit. He also attended the MT seminar on Blair – and wrote an irate piece published in the one-off issue. “I was really annoyed with them all,” he said. “I thought they were deeply indulgent, and in their comfort zones: tenured academics, pontificating from on high.” At this point, he fell out with Jacques. “I haven’t seen him for years. He thought I’d betrayed him.”

All that apart, Mulgan is now candid about the gap between what people like him had envisaged and what Labour actually did with power. The first article he had written for Marxism Today – published in December 1988 – was titled The Power of the Weak. “Governments,” it said, “remain quintessentially strong power structures, devising policies and programmes at the top and passing them down to through a hierarchical bureaucracy to the people at the bottom.” When we met earlier this month atNesta – the gleamingly futuristic “innovation charity” he runs in London – he agreed that New Labour’s record turned out to be a case in point. “There was the Mandelson view of what a party should be, which was very centralised and top-down: Leninism plus Saatchi-and-Saatchi advertising. One of the things we failed to do was to get a really active debate going about the shape and nature of the state. Tony Blair’s instinct was more, ‘Get some levers and pull them from the top.’”

“One of the dynamics of New Labour was, ‘You’ve got to change, because the world’s changing. If you don’t do it, you’re going to be out of a job,’” said Leadbeater, who worked as a government adviser in the early New Labour period, assisting Mandelson at the Department of Trade and Industry, and writing speeches for Blair. “They used that to get change in the party. But that was combined with two things. One was a notion of branding, and discipline. But also, there was something that developed in the first term.” This, he said, was a mixture of modern management consultancy and “the Brownite big state”, and it amounted to “super-Fordism … very mechanistic, and about setting targets. It didn’t become a bigger story about Britain. It was about delivery.”

“I remember going to an awayday with Blair and his policy team at Chequers, about two years in,” Leadbeater told me, “and saying, ‘The state can’t solve everything. If you think social goods are going to be represented by state spending, you can’t work that way now. You have to imagine how people can create social solutions in a different kind of way, with a different kind of state.’ They were interested. But actually, if you’re there in the middle of government, it becomes about pulling all these levers.”

He then turned his thoughts to more recent developments. “What if when Blair left office, you’d had a new generation of politicians who were capable of taking it all to a different kind of place: reasserting ethical values, being modern, but also embracing a more participative, open, decentralising kind of politics? Why wouldn’t that have been possible?” His face darkened, and he answered his own question. “It wouldn’t have been possible within the New Labour framework … and all that younger generation” – a reference to politicians such as the Miliband brothers, Yvette Cooper and Andy Burnham – “were schooled in that way of thinking”.

I met Leadbeater in an elegantly shabby cafe on Highbury Corner in Islington, north London, where we spent 90 minutes considering the Marxism Today legacy, and the real-life politics he now saw echoing the ideas MT had explored. “I see it in cities: in London, Manchester, Leeds,” he told me. “I see it in social media politics; in that huge response to the refugee crisis. I see it in the wave of people who want to be social entrepreneurs, and the soul-searching of lots of people involved in capitalism who think it’s in crisis. I see it all over the place. Just not in the Labour party.”

The Corbyn earthquake – how Labour was shaken to its foundations

 A few days later, he sent me an email containing an off-the-cuff text he had written about the rise of Jeremy Corbyn. “At first sight, it might seem strange to think that a politician who has not changed his views since the late 1970s might be an innovator,” Leadbeater wrote. “Yet that is what Jeremy Corbyn has managed to become while appearing blissfully – and, to some, charmingly – uninquisitive about the changing world around him.” He went on: “Corbyn has created what Roberto Unger, the Brazilian political philosopher, calls a ‘high-energy’ politics – tumultuous, passionate, participative, dynamic, unfolding … It’s just possible that some of what Corbyn and his young team might try – open-sourcing questions for PMQs, involving the party in constant rolling debate – might work by being more participative than old-style politics … So the lesson in all of this is perhaps above all not to be sniffy, not to turn our noses up and not to make assumptions, but to learn, and fast, about what Corbyn, the unlikely innovator, is telling us about the world.”

Other Marxism Today alumni were pessimistic. One pointed out that, as a Haringey borough councillor and then London MP, Corbyn – a regular contributor to the Morning Star – was party to the leftwing tumult in the capital that blurred into Marxism Today and the GLC. The new shadow chancellor John McDonnell, indeed, served as the GLC’s deputy leader. But, they said, “the good bits of the GLC were essentially ’68 politics. And the weird thing about McDonnell and Corbyn is that they were almost pre-that: culturally untouched by the 1960s.”

“If Corbyn was a woman of 35 or 40, we’d be in business,” Robin Murray told me. “But he’s missing 100 tricks. I wish he’d speak about the future, not the past.” He gestured at the copies of Marxism Today I’d brought with me. “And I wish he’d take things out of all this. I suppose my hope is that he listens to young people, because he believes in democracy.”

“Corbyn is, in a way, a throwback,” Jacques told me. “But his message seems more relevant than it did then.” For a moment, I got a sense of what it would have been like in one of those Marxism Today seminars, throwing around ideas and arguing for the fun of it – as Campbell put it, thinking, thinking, thinking. “You can’t just extrapolate from the past and think in straight lines: that’s what I learned from Gramsci,” Jacques said. “I thought the Labour party was dying, and I don’t think that’s true now. In some measure, it’s being revived.

“There are ironies there, but I quite like them,” said the man who mapped out the future from inside the doomed British Communist party. “It shows you we’re in a new period.”

Tuesday, 29 September 2015


‘I can’t sacrifice my family for the NHS’: the junior doctors forced out of jobs they love

Amelia Gentleman in The Guardian

At what point does a dedicated doctor, with a lifelong commitment to the NHS, decide it is time to quit? For Dr Singh, 34, a junior doctor in general medicine, the moment will come when he is no longer able to pay his mortgage and childcare bills, a situation he expects to find himself facing sometime next year.

Dr Singh has worked in hospitals, with regular A&E shifts, for 10 years since qualifying, loves his job and describes himself as “the kind of doctor you’d want to see to your gran”. But, having done an online calculation assessing how the Department of Health’s new junior doctor contract will affect his household income, he believes he and his paediatrician wife face a 25% cut to their joint take-home pay, making life in London unaffordable. He plans to move into the pharmaceutical industry.

New junior doctors' contract changes everything I signed up for

Several of Dr Singh’s friends have already left the medical profession to work as bankers and consultants in the City; others are considering emigrating to work as doctors in Australia or New Zealand. Most of them are dispirited by the proposed contract, but are more fed up with the daily stress of their work, annoyed that the long hours and considerable financial and personal sacrifices they make during their training are not appreciated, and they worry about the impact that dwindling morale could have on the NHS and its patients.

“I am not looking for parity of pay with my friends in the City. But if you can’t afford to pay your mortgage or your child’s nursery bills and you can’t look after your child yourself in the evening or [at] the weekend because the government is proposing you should work those hours on a normal basis, you can’t continue with that kind of life,” he says, asking for his full name not to be published to avoid annoying his employers. “I am a very valuable resource to the NHS. I do work incredibly hard, I really enjoy looking after my patients and I get immense satisfaction from it. I have an absolute commitment to the NHS but I can’t sacrifice my entire family for that. I have to put a roof over my son’s head.”

Junior doctors will be balloted to decide whether to strike over a radical new contract imposed on them by the Department of Health, which redefines their normal working week to include Saturday and removes overtime rates for work between 7pm and 10pm every day except Sunday. The government says the changes will come with a rise in basic salary, higher hourly rates for antisocial hours and will be “cost neutral” – but doctors believe this change could reduce salaries in some areas of medicine by up to 30%. The British Medical Association (BMA) argues that it is “unacceptable that working 9pm on a Saturday is viewed the same as working 9am on a Tuesday”.

It is unusual to hear doctors getting angry and this swell of rage is disconcerting. A social media campaign means their voices have begun to be widely heard over the past week. If the effects of the government’s austerity drive on care workers, for example, have gone largely unnoticed, the seething protest from this powerful group looks set to be harder to ignore.

Most junior doctors are smart enough to know that they will have to work hard to persuade the public that they are a genuinely needy section of society. A perception of doctors as well-paid professionals has stuck and even a semi-attentive observer knows that the harsh 100-hour-week working pattern that used to characterise medical training has been abolished.

What most people outside the medical profession are probably unaware of is that you aren’t just a junior doctor for a fleeting period after qualifying; this makes up a substantial chunk of your career – sometimes a decade, and often stretching late into your 30s. Basic salaries start at around £23,000 and are enhanced by various complicated supplements, including the antisocial hours pay that is set to be cut. Because medical training takes longer than other degrees, most junior doctors have large amounts of student debt and are expected to continue paying for the exams as part of their ongoing training, in addition to putting in large amounts of unpaid study time and paying out monthly professional payments to the General Medical Council (GMC) and the BMA.

Few people chose to go into medicine for the money, but this contract has triggered a surge of resentment about how much harder doctors work for less money than their equally ambitious and well-educated peers in other fields.
  Radiologist Anushka Patchava says she will have to quit the profession if the proposals are implemented. Photograph: Teri Pengilley for the Guardian

Anushka Patchava, 29, a radiologist who qualified in 2011 and has at least two more years as a junior doctor before she graduates to being a consultant, plans to switch careers and is midway through a rigorous interviewing process with two management consultancy firms. She is fed up with the hours and the current pay and is despondent at the prospect of getting a substantial cut to her salary. She earns £31,000, which includes a 40% supplement to her basic salary, to compensate for the antisocial hours she works. Once the new contract is imposed, she thinks she will see this reduced to £27,000 or £28,000 and she expects the hours she works will become even more antisocial. She campaigned for David Cameron in May’s general election, but has subsequently rescinded her membership of the Conservative party in protest at the contract.

If she gets the management consultancy job, Patchava will quadruple her salary on day one. “It’s horrific, isn’t it?” she says. She doesn’t consider herself to be materialistic and, in normal circumstances, would not want to leave a job she loves, but the level of needless daily stress has become wearisome and she is constantly aware of lack of morale among her colleagues.

“Going into work is a struggle – you have to psych yourself up. You’re so short staffed that you can’t offer patients everything you want to offer them. There aren’t enough doctors to fill the posts that there are available now, even before the contract is brought in,” she says. “We are not supported and morale is low. You work really long hours, taking decisions that impact on people’s lives and, at the same time, you’re worrying whether your pay check is going to be enough to cover your bills.”

The daughter of two NHS surgeons, Patchava has an deep-rooted sense of loyalty to the NHS, but her parents understand the pressure she is under and why she wants to leave. There are no perks; she has to buy expensive food and coffee from the hospital cafe and pays £12 every night shift to park in the hospital car park. She calculates that, once the long hours are factored in, she earns about £10 an hour, so these costs are not negligible. As junior doctors, her parents used to get free food and free accommodation. Four of her closest friends from Cambridge, where she studied medicine, have already left to work in the City. “One of them got a gold medal in medicine, for being top of the year, but they dropped out for exactly these reasons.”

These are not alarmist stories being spread by campaigners. Even the Conservative MP and doctor Sarah Wollaston, who chairs the Health Select Committee, knows about the brain drain – her daughter has left the NHS for Australia. Now she, her husband and eight of their friends work in a hospital where they have yet to meet an Australian junior doctor in the casualty department. “It is staffed almost entirely by British-trained junior doctors,”Wollaston wrote this week.

Patchava worries about what will happen when she wants to have children and has to organise childcare for the irregular hours. Another aspect of the new contract is that parents who take time off to look after their children will no longer see their pay rise automatically while they are on leave. People who take time out of the medical training system to do research will be similarly penalised. Other changes include the removal of a supplement paid to those going into general practice, to match those working in hospitals, which doctors believe could see trainee GPs losing a third of their pay.

“I don’t have a luxury lifestyle, but I don’t think I could support children with that money and those hours,” Patchava says. “The NHS runs on the philosophy of altruism. Everyone comes in an hour early and stays late to make sure the work is done. We love the NHS, but this has been such a kick in the teeth. I’ll have no hesitation about taking a job elsewhere.”

This sense of mismatch between the commitment put in and reward taken out is widespread. “I’m 30 years old, live in a friend’s flat with three other people, don’t own a car and have still got thousands of pounds of debt,” writes one junior doctor in an angry email. “My friends outside of medicine have bought houses, have children and the majority have their weekends and evenings for themselves. On top of my ‘48 hours a week’, I teach and lecture in my free time, attend courses (which we have to fund), study and do everything I can to be a better doctor. I love my job – I couldn’t imagine living with myself if I left. However, the prevalence of locums and holes in the rota, overstretched stressed GPs and A&E staff make the atmosphere toxic. We miss weddings, funerals, birthdays. Relationships are lost, friends estranged, all because we love our job.”

Foiz Ahmed, a junior doctor in emergency plastic surgery (who is grappling with £30,000 debt) argues that the new contracts will strike a pernicious blow to the NHS and patient safety. “This isn’t just about salaries, although of course a 10-30% pay cut is unmanageable for most of us. Let’s ignore the fact that I used to earn more an hour while working for a mobile-phone company as a student ... With the continued denigration of public perception of doctors, there is a sustained attempt to make the NHS fail. A demoralised workforce performs less efficiently, and a less-efficient system can be broken up and sold to private firms.”

The Department of Heath insists these fears are misplaced. “We are not cutting the pay bill for junior doctors and want to see their basic pay go up just as average earnings are maintained. We really value the work and commitment of junior doctors, but their current contract is outdated and unfair.”

Junior doctors are not convinced. The GMC had 3,468 requests for a certificate of current professional status, the paperwork needed to register to work as a doctor outside the UK, in the 10 days since the new contract was announced; usually it processes 20 to 25 requests a day. Partly this was the result of a concerted online campaign to get junior doctors to apply as a way of showing their anger. But some doctors, such as David Watkin, 30, a paediatrician based in Birmingham, truly intend to leave if the contract is imposed. Watkin recently returned from a year working in New Zealand, has stayed in touch with his employers out there and is confident that there will be a job for him.

The day-to-day stress Watkin experiences in Birmingham, which is mainly the result of standing in for unfilled doctors’ shifts, was absent in New Zealand. “But stress is not really the issue,” he says. In New Zealand, he says he felt more looked after, with meals paid for and professional fees covered by the hospital.

Would I be a fool to return to the NHS on the new junior doctor contract?

“Here we feel very under-appreciated by the government and the Department of Health. We have sacrificed a lot – years of training and extra hours studying outside of our work. We have moved around the country every six months to go where our training jobs send us, with no say in where we go, so it’s difficult to settle anywhere and hard to buy a house. We, as a body, are feeling under attack; it feels like any concerns we raise are being misrepresented with hospitals portraying us as just wanting more money.”

At 30, he still has about £9,000 in debt (down from about £30,000). He has done seven years as a junior doctor already and has another four to go before he becomes a consultant. “I worry that this is going to lead to an exodus of doctors, and I worry about the pressure that this will put on those who stay – and on patients. I had a work-experience student with me this week; it feels harder to come out with a positive line about why they should do it.”

  Holly Ni Raghallaigh: ‘I worked very hard and put myself in a lot of debt to get here.’ Photograph: Teri Pengilley for the Guardian

Holly Ni Raghallaigh, 29, a trainee urologist, is planning to go to Scotland (which, like Wales, will not impose the new contract). She has been pushed to the brink of bankruptcy by the cost of her training, and doesn’t feel able to take a pay cut. With five more years as a junior doctor, she doesn’t think she could afford to continue if her pay is reduced.

“I worked very hard and put myself in a lot of debt to get here,” she says. At one point she had to pay for a urology course ahead of an exam and was so overdrawn that she missed two consecutive monthly payments to the GMC, was temporarily removed from the medical register and subjected to a large fine. She estimates she has spent £5,000 on mandatory surgery courses and exams during surgical training; she is paying back her remaining £10,000 of student loan at a rate of £450 a month. Once her rent in London and her monthly subscriptions to the Royal College of Surgeons (£50), GMC (£40) and BMA (£18) are paid, she has nothing left. It isn’t possible to save towards a deposit on a flat.

“Every single time I found myself in my overdraft or having to borrow petrol money or forego a flight home to Ireland to book a course, or every weekend I spent working as a locum to fund my education – I would do it all over again,” she says. “I adore my job and, honestly, working in the NHS is all I have ever wanted to do. And, for the record, I am grateful to the taxpayer who has put me here.” She says she hopes the tales of difficulties she found “embarrassing and demoralising” make people understand the financial pressures junior doctors face. “I don’t want it to sound like a sob story. I could have managed my finances better, but I had no money.”