American dream a British nightmare

By Ian Fraser

Published: Sunday Herald

Date: May 19th, 2002

Review of: The world we are in by Will Hutton (Little, Brown, £17.99)
WILL Hutton has issued a wake-up call to Britain.

In The World We’re In, the sequel to his 1995 blockbuster The State We’re In, the former Observer editor-in-chief argues that Britain has reached a crossroads in its development – and that we are facing some tough choices.

If we continue to be America’s poodle in economic and foreign policy terms, warns Hutton, we risk being sucked into a vortex of unfettered capitalism and liberalised markets (sometimes known as “neo-liberalism”). This will permanently scar our country, and by extension the rest of the world, as Britain and Europe are one of the last bulwarks against its devastating onwards march.

Less privileged Britons would be more permanently disenfranchised, inequalities of wealth further exaggerated, business and politics further corrupted. The United Kingdom would end up being governed by a self-serving monied elite, without any interest in redistributing their wealth.

To avoid this dystopia, Hutton believes Britain must to throw its lot in with Europe. He cogently argues that we must join the euro and then assist the European Union’s evolution into an alternative political and economic model that demonstrably works. (The book is well timed to marshall public opinion ahead of a euro referendum, now widely expected for spring 2003.)

In Hutton’s view, the EU would then be able to act as a counterweight to an increasingly isolationist United States. The new Europe could lead by example, perhaps by reforming its own farm subsidies to help raise living standards in the third world.

The first half of The World We’re In is as withering a critique of American values as you will read anywhere – even from the keyboard of Noam Chomsky – rubbishing, one by one, every myth of superiority that the US likes to disseminate about itself.

Hutton’s underlying themes are that US-style capitalism is a good deal weaker than it likes to pretend and that US society has been disfigured by the way America’s economy is run.

Readers already sceptical of the virtues of the American Dream will be impressed. In a country where the richest 1% hold 38% of the wealth, he reveals how the poorest are less likely to escape from poverty than other developed nations. He paints a harrowing and vivid picture of a neo-Dickensian society where the ‘‘haves’’ can have it all, and where the idea that the ‘‘have-nots’’ should be provided with a safety net by the state has never even been on the agenda.

Hutton is seeking to dramatise the perils of continuing to follow a path laid out by American right-wing conservatives. One reason is that the world’s largest economy is not as strong as they sometimes like to make out. In fact, says Hutton, it is plagued with ‘‘unsustainable imbalances – notably the disappearance of saving and the colossal trade deficit. Rather than being the possible engine of a global economic recovery, Hutton says the US economy ‘‘looks floored and faces years of depressed growth’’.

Hutton accuses Gordon Brown and Tony Blair – in whom he had faith when he gave them their mission statement with The State We’re In six years ago – of naivete in paying too much heed to the American right. He says they have been foolish to swallow the doctrine that publicly-owned and publicly-managed activity is, by its very nature, inefficient, a myth peddled by among others their favourite management consultants McKinsey. However he does suggest that Blair and Brown may have learnt something from the collapse of Railtrack.

Hutton also successfully demolishes the myth that senior executives are a breed apart – existing like top-class footballers in a global market for talent – and that they have to be paid accordingly. He cites the examples of European businesses such as Volkswagen, Michelin and Airbus Industries, whose chief executives are paid much more reasonable salaries, and yet are still able to beat their American rivals at their own game.

There are weaknesses in this book. In his praising of the German system, Hutton glosses over the string of bankruptcies which have recently blighted the country’s economy. These include those of construction group Philipp Holzmann, aircraft makers Fairchild Dornier, and media group KirchMedia. He also fails to mention that state-owned banks such as Bayerisch Landesbank have been dangerously over-exposed to such insolvencies.

But Hutton is a realist. He acknowledges that his recommendation that Britain becomes firmly rooted into a reformed European Union will not have universal appeal. He concedes it will be a tough challenge in Britain because of our cultural and linguistic affinities with the US and our deep-seated mistrust of ‘‘Europe’’, coupled with the widespread support for US-style capitalism and economics in business schools, economics faculties and the financial press. Then there’s the problem of the ‘‘credulity’’ of Britain’s political leadership.

He accepts that Labour is taking steps in the right direction, such as the new Companies Act which will require directors, like their counterparts in Europe, to acknowledge their obligations to the whole organisation they serve, rather than just shareholders. For Will Hutton, however, this isn’t enough. We can still sustain some of our ties with the US but he believes that we must ultimately accept that we are Europeans.

Copyright 2002 SMG Sunday Newspapers Ltd

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1 Comment for “American dream a British nightmare”

  1. […] common with Will Hutton, author of The World We’re In, Stiglitz believes the developed world must also set an example by dismantling its own trade […]

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