Corbyn! Trump! Brexit! Thus went the words of Talking Politics, an influential British podcast, when launched in 2016. Since then, much talk about politics has been talk about populism, in Cambridge common rooms and elsewhere. What are its causes and consequences, how can it be dispelled or harnessed, does it harbour progressive, reactionary, or just destructive potential?
This is the conversation into which Martin Sandbu’s The Economics of Belonging intervenes. The book speaks to two of the central axes of this debate: what are the drivers of populism? Are they primarily economic – inequality and insecurity – or primarily cultural – racism and xenophobia? And how should politics react? Should populism be accommodated, via an anti-globalist turn, should it be ‘educated away’, in a doubling down on 1990-style liberalism? Should it be ignored, transformed, or can it maybe be harnessed in some way, for projects of the left, or of the right?
Sandbu offers decisive, clear answers on both counts: the drivers, in his view, are economic inequality and insecurity, which create a context in which (right-wing-)populists can trigger otherwise latent identity conflicts (chapter 3). It is the economy first, though not alone, that causes the political disruptions of our moment.
The best reaction, he then argues, is to undo “half a century of policy mistakes” (chapter 4), crafting a fairer form of globalisation – a renewed economy of belonging – through pulling domestic levers such as minimum wages, education spending, public investment, or credit controls. This, and not a withdrawal behind tariff- and other walls, or pious hopes of renewed international cooperation alone, can remove the fuel that fires the popular, anti-liberal insurgency of today.
The bulk of the book develops and fleshes out these answers. Part I explains the diagnosis – “What went wrong?” –, part II lays out “What is to be done?” Together they account for more than 200 of its 240 pages.
Elements of Sandbu’s analysis and proposals could be contested: concerning the analysis, it is not obvious that a clean distinction can be drawn between domestic policy and globalisation. As the work of Katharina Pistor suggests, financial globalisation in particular depends on widespread recognition by other states, in their own courts, of the domestic laws of England and New York State (Code of Capital, ch. 6). Is this domestic policy or globalisation? How much globalisation would be left once domestic policy ‘mistakes’ are ‘corrected’? Or, in foregrounding technological change and domestic policy as key causes, what about one of the most important phenomena of the second half of the 20th century, decolonisation? Researchers like Vanessa Ogle and Quinn Slobodian have identified the “end of empire” as a crucial driver for financial intransparency, the spread of neoliberalism, and hence arguably the erosion of economic belonging; but they receive little coverage in The Economics of Belonging.
Concerning Sandbu’s proposals, the arguments for or against a universal basic income (chapter 7) are controversial. Nor is it obvious that domestic credit controls without international capital controls (chapter 9) would be effective in preventing Minsky-style credit cycles of boom and bust: domestic borrowers, particularly multi-national corporations, could use foreign collateral to borrow on foreign markets and then repatriate funds, thereby circumventing domestic credit controls. Geographic inequality is an admirably central pre-occupation, yet the extent to which Sandbu’s proposals – or anyone’s, for that matter – can redress it is uncertain.
But a focus on issues of this kind would be misplaced. The book is bold and its lucid prose hides nothing in obscurity. It deserves to be judged on the big calls, not evaluated via scrutinising every detail. On this metric, both the book’s analysis and the proposals stack up well. In identifying insecurity and inequality as the drivers of the anti-liberal backlash, and in highlighting states’ own policy choices as their causes, Sandbu’s analysis gets considerably more right than wrong. In stressing the endogeneity of the supply side – or “trend” – growth to the wage distribution and to aggregate demand, the book breaks with both neoliberalism and neoclassical economics, opening the door to multiple-equilibria thinking, to taking inequality and uncertainty seriously, and so towards a primacy of the political.
Nor does part II, the alternative vision, suffer from a lack of ambition: a push for high minimum wages, strong public investment in infrastructure, education and active labour market policies, full employment macroeconomic management (a.k.a. “a high pressure economy”), a universal basic income, the administrative extension of collective bargaining outcomes, the re-introduction of net wealth taxes (to the tune of multiple percentage points of GDP, no less) and credit controls, even a flirt with narrow banking (via directly accessible central bank digital currency). With these proposals and others, Sandbu offers precisely what the book’s subtitle promises: “A radical plan to win back the left behind and achieve prosperity for all.”
A faulty theory of error
Yet all of this raises the following question: How are these policies not already implemented? Higher productivity and more equality: which electorate could possibly reject this offer?
Of course, Sandbu is too sharp a thinker to miss this: “If my diagnosis is right, how did the liberal centre let it come to this in the first place?” (p. 229). What explains the half-century of policy mistakes? Who made those choices, and why? Rarely does a reader ask for a longer book, but in my eyes The Economics of Belonging would have gained from dedicating four chapters rather than four pages (pp. 230-233) to developing this theory of error.
As it stands, the book’s theory of error revolves around the chaos of the 1970s, the fall of communism in 1989-91, and then, in the 1990s and beyond, the invisibility of left-behind people and places (due to “psychological and intellectual blind spots”, p. 233) and the fragmentation of traditional electoral alliances. What this misses – and what, in fairness, would have required much additional text – is a closer analysis of moments of struggle and the workings of power: why did the chaos of the 1970s give rise to ‘neoliberal modernisation’, against presumably more popular ’embedded modernisation’ or ‘a modernisation of belonging’? Given the intense industrial struggles of the 1970s, 80s, and even early 1990s, can it really be true that “the underlying dynamics of divergence and inequality […] escaped serious attention” (p. 231)? Would it not be more accurate to say that resistance was intense, hence often highly visible, yet in the end defeated – as were opponents of third way politics in their internal party struggles, whether Oscar Lafontaine in Germany, Jean-Pierre Chevènement in France, or Tony Benn in the UK?
In part because of this incomplete theory of error, the proposals of the book risk being political orphans. Who will fight for them? Given the sociological consequences of deindustrialisation, clearly identified by Sandbu, what is the political base for an economics of belonging? The erosion of trade unions, the rise of capital mobility, the growth of public and private financial leverage, persistent slack in labour markets, a fraying of formerly dense social fabrics, the dismantling of manpower-intense armed forces and defence industries – as Sandbu would no doubt agree, these and other changes have weakened the bargaining power of the many.
And although the book portrays the economics of belonging as ni gauche, ni droite, when push comes to shove, this is a programme of downwards and anti-metropolitan redistribution, to counter the upwards, pro-metropolitan, and productivity-retarding redistribution of recent decades. Much needed, but not obviously appealing to those whose bargaining power has been boosted over recent decades. Just as significantly, the “conscious directing of resources” (p. 236) that is central to the book’s proposals is a direct challenge to the power of capitalists and investors. Whether they will accept such a loss of control, in addition to a loss of relative wealth and income, remains to be seen.
In other words, just as an economics of belonging has become more urgent, the preconditions for a politics of belonging may have crumbled. Lacking a fully elaborated theory of error, the book moves between recognising this deep quandary, and taking refuge in voluntarism. Characteristic of the latter, at times a much simpler theory of error shines through: better policies were available, but past liberal centrists “simply did not try hard enough” (90). There was a “lack of boldness” (106), “too often they have not even tried” (91).
Were this true, the way forward would be Nike Politics – ‘just do it’ –, a politics that is both oversimplified and unrealistic. Unlike others in the populism genre, Sandbu ultimately resists the temptation of calling for Nike Politics. In its final chapters, the book instead outlines a Hegelian-Keynesian theory of change, in which interests are seen as malleable through better understanding and acts of persuasion: yes, an economics of belonging may harm the rich, from a narrowly financial point of view. But in re-legitimising and re-stabilising a liberal social order, it would serve their enlightened self-interest, for worse outcomes are looming on the horizon. Readers of Geoff Mann’s In The Long Run We Are All Dead will recognise these arguments as characteristic of committed liberals with a deep understanding of capitalism.
But just as the book comes close to calling for Nike Politics at times, it also contains the seeds of an alternative, more hard-nosed reading of politics. In the discussion of financial globalisation (pp. 88-90), and in the attention paid to the sociological and political-coalitional consequences of structural economic changes, a recognition of the deeper quandary outlined above emerges. “The end of belonging is fundamentally a story about power” (p. 111), is the summative statement of this view. Were this perspective more central, the book might have ended with a chapter on political education, not in the ‘teaching from on-high’ sense, or as conventional civic education, but as the process through which a ‘class in itself’ – perhaps the precariat – could become a ‘class for itself’. It is the economy, this perspective would re-iterate, that drives a politics of anger. But once an economy of precarity has woken our inner demons, Hegelian-Keynesian persuasion may no longer suffice. A project of world-making, meaning-making, community-building, consciousness transformation, all in pursuit of resilient, long-term mobilisation would become necessary instead. Of course, how to combine class-making and mobilisation with the coalitional politics necessary to get to 51 percent, this is the great task for any political project seeking a renewed economics of belonging.
While not articulating this alternative vision, Sandbu’s book gets to the edge of this project. Indeed, it provides a credible economic roadmap for it, with clear programmatic near-term demands. For this, it is to be welcomed by progressives everywhere.