Why we are not revolting

Something strange has happened over the past few years yet few seem to have noticed. The sharp cuts in popular living standards, with more likely on the way, have met little resistance.

The exact impact of the economic squeeze is open to debate but the overall picture is clear. According to a recent study by the Office for National Statistics:

“Between the fourth quarter of 2007 (when both series were at record levels) and the latest period, households’ expenditures per head fell by 6.4 per cent including in kind services and 8.6 per cent excluding them.”

Another way of looking at this is that by the first quarter of 2012 living standards were back down to their level in the second quarter of 2005. And this was before the estimated fall of 0.7 per cent of GDP in the second quarter of this year.

There have been two broad responses to these falls in living standards but neither is convincing. The more upbeat argument is that life was not so bad in 2005 so it is not hard to see why falling incomes have been accepted.

But this perspective misses the point that most people have worked hard for the past seven years yet, on average, they have made no material progress. The premise of the market economy is supposed to be that people will be rewarded for their efforts. But if anything their position has become worse because of growing insecurity and the emerging deterioration of public services.

In any case such cuts in living standards have often provoked strong reactions in the past. The mystery is why the current response is so muted.

The alternative perspective is to point to protests against public spending cuts that the unions and others have organised. But in reality these have been puny affairs with little conviction. If anything they reinforce the point about the tame response to the squeeze.

To understand this acceptance of austerity it is necessary to look at the broader cultural environment rather than economics in its narrow sense. Over four decades the idea that economic growth, and even prosperity itself, is problematic has become increasingly entrenched.

This anxiety about prosperity usually takes the form of a strong sense of limits about growth. This growth sceptic perspective is strongly linked to green thinking in the broad sense of the term.

Typically its proponents will say they are in favour of growth before adding a series of “buts” as caveats. They then claim that rising prosperity damages the environment, makes people unhappy, widens social inequality and promotes greed. If these are the views that are held by growth’s supposed supporters it is hardly surprising that it is hard to defend.

The viewpoint was clearly articulated at a recent Bookshop Barnie at Foyle’s Bookshop in London where Lord Robert Skidelskyemphasised the need for moral limits to growth. In his view growth in the West no longer benefits most people yet they constantly fail to resist their insatiable appetite for consumption. He made broadly the same point on the BBC Radio 4 Stephanomics programme a few days later.

What was both laughable and absurd about Skidelsky’s contention was his assumption that the broad thrust of his argument is in any way new. Sadly the stigmatisation of prosperity went mainstream many years ago.

This post first appeared on the Fundweb site.