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The price of getting the ‘predators’ off our backs | Deborah Orr

A Labour government could see off the cynical traders, but only at the cost of economic growth

Sometimes it’s hard to tell the predators from the producers. Alessio Rastani seemed like a major predator when he appeared on the BBC, proclaiming: “For most traders, we don’t really care that much how they’re going to fix the economy, how they’re going to fix the whole situation. Our job is to make money from it.”

Of course that’s true. If that wasn’t true, it would be traders, not politicians, who were deep in negotiations and struggling to hold the eurozone together. Instead, traders just wait for announcements and promises from frazzled heads of state, then, if pressed, offer gnomic statements about whether those announcements and promises are likely to be pleasing to the markets. That’s precisely why, as Rastani put it: “The governments don’t rule the world – Goldman Sachs rules the world.”

Yet Rastani isn’t a predator. He’s merely a would-be predator, operating freelance from his girlfriend’s semi in Bexleyheath, and regretful that he did not, in fact, make “a fortune” out of the crash. Actually, the guy is the most honest broker ever to hit the telly. No wonder he’s broke.

But here’s the funny thing. The BBC is in trouble because it let Rastani on to the television without vetting him properly first. He presented himself as a successful trader, when there is no sign that he is. There’s a bit of a double-bind here, isn’t there? A broker’s declaration of the cynicism of market trading can only be considered valuable if he has exploited the markets successfully himself. In which case he has a vested interest in deploying the jargon-bound obfuscation that is more generally peddled in the cause of “market analysis”. In other words, you can’t really tell who is a predator until after they have acted. At which point, you’re a bit loth to upset them, by insisting they admit that they’re predators, for example, because they’ve got all your money, and you’ll be wanting to borrow it back from them pronto, and at a decently low rate.

Britain’s government is in exactly this situation. Many governments are. The markets are demanding austerity because, as Rastani says, “they’re moving their money away to safer assets like treasury bonds, 30-year bonds and the US dollar”. They want austerity, because it keeps their money safe, in the absence of “growth”.

Sure, they like “growth” more, but they’re survivors – they’ll work with what they have got. They will, as Rastani so floridly stated, “make a lot of money from a downward market”.

Even, the “producers”, those paragons of Ed Miliband’s conference speech on Tuesday, are producing, most of all, investment opportunities for the money people.

The markets want “producers” even more than Ed Miliband does, and if the producers can be ruthlessly cost-efficient, then so much the better. (Note to Ed Miliband: It’s rarely cost-efficient to produce things in Britain, which is why the last Labour government was so cavalier about the decline in manufacturing. It’s also why “buy British” campaigns made no dent in large trade deficits stretching right back to the 1960s.)

Amazingly, Miliband’s speech on Tuesday has been hailed in some quarters as a “move to the left” and reviled in some quarters as a “move to the left”. The speech was, in fact, sentimental, naive, nodding only timidly to the reality of the deep mire we are in. I don’t quite know how anyone has managed to conjure up such vehement feelings about its content, because its content was silly.

It didn’t have any content, beyond: “We foolishly put ourselves in the hands of markets that didn’t care about the wellbeing of individuals and communities. We won’t be making that mistake again.” No, we won’t be making that mistake again, because we’ve already made it, comprehensively. The markets are in command. No use hoping they can be made “nicer”. Ed Miliband, despite the delusions of both sides, is still stuck in the centre, trying to think of ways to tame the guys who put him in his cage.

Sure, a future government can offer tax incentives for mutuals and co-ops. It can, if it dares to, tell “predator” companies not to darken Britain’s door. These actions would possibly make Britain a slightly nicer place. But they wouldn’t make it a richer place. They wouldn’t promote the sort of magical growth that the left dreams can be fostered to pay off the deficit, but not “too fast”. No way.

Can you be on the left and also believe that the state really does have to be much more lean and much more efficient? That it is healthy to encourage people in a society to help each other more, rather than always turn to the state for solutions? Or do you have to sign up to the idea that the market economics of New Labour (Blairite or Brownite) can be disavowed, while the expanded state that was built on the back of it can stay?

Can you move away from New Labour, yet continue to claim credit for the hospitals and schools that were built under private finance initiatives? Praise right-to-buy – the flagship policy that delivered our unhappy home-owning democracy, and dictated that council homes had to be allocated only to the most needy – yet declare that neo-liberalism was never something you admired, not really?

Can you really cherry-pick the stuff you think voters liked from the past 30 years, and keep it, discarding only the stuff they didn’t? No.

Britain has two options right now: a period of austerity to appease the markets even further, as this government is doing with its cuts and market reforms in public services; or a period of austerity to get out from under the markets, lessening their power by becoming less reliant on their money. Both mean a more disciplined and manageable state – in the short term at least, I’m afraid, a smaller one. The kind of smaller state one wants is the only choice – one that is financed by taxes from a mixed economy or one that is financed by taxes from a market economy. The desired outcome defines more than anything whether you’re on the left, or on the right, whatever the condition of your post-operative septum. © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds