The unsurprising news that future government spending will shift further away from education and economic development towards pensions and healthcare highlights the growing antagonism between different fractions of capital in the UK. Though this has mainly been discussed in recent decades in terms of the "demographic timebomb" and its effect on the affordability of welfare, the smarter capitalists are waking up to the potential risks for capital itself. According to the neoliberals at the Resolution Foundation, "This relative growth of state spending on health and old age – and withdrawal from areas such as post-16 education, housing and economic development – also raises big questions about the state's role in supporting productivity growth".
Public spending is unlikely to fall as much as is being claimed, not just because large cuts are difficult to realise outside of major capital-intensive programmes such as housebuilding and defence, but because government is the prime site for rent-extraction. If the economy continues to stutter along, public services where demand is guaranteed to grow in advance of GDP, such as health and elderly care, will become ever more attractive to the sort of businesses who make political donations. The number of public bodies and public sector workers may well decline, but the amount of public money spent on services via commercial providers is likely to grow. This means that total public expenditure, as a percentage of GDP, will probably remain closer to 40% than the supposed target of 35%.
The challenge to other industrial sectors is that this compositional shift undermines public investment in economic resources such as infrastructure and human capital (i.e. education and training). This raises costs for UK capitalists who have, over the last century, relied on state subsidies for these "public goods" financed through general taxation (i.e. predominantly paid for by labour in the form of income tax, VAT, council tax etc). Though the current government is ideologically opposed to formal subsidies for strategic industries, such as steel-making, its welfare spending priorities mean that it is now turning away from the much larger informal subsidies to broad industry. This applies not only in terms of money spent on public infrastructure and education, but money spent subsidising labour costs through working tax credits.
This is consistent with its encouragement of business sponsorship of schools and colleges, where it is pursuing a strategy of privatisation in the true sense of that term - i.e. leaving it to private actors to pursue their own interests rather than pool efforts for the common good. In effect, business is being told to "grow your own" because public provision will continue to decay. While New Labour's academy programme was the thin end of the wedge, we should remember that it was driven by the delusion that "beacons of excellence" would drive up average standards to the benefit of capital generally. The Tory policy, with its emphasis on elitism and reductionist assessment, is the pursuit of a pluralism in which failure is a necessary component. Capitalists are being asked to become discriminating and to treat education as a buyer's market.
In contrast, economic development exhibits a hybrid, multilateral approach, due to the need for local government involvement (which cannot be dispensed with as easily as in the case of education) and the preference of foreign state-level investors for UK government guarantees. But even here the idea of state investment for national resources is being eroded. Instead, subsidies are directed to foreign investors (e.g. Hinkley Point), privileged domestic groups (e.g. private builders), or both (e.g. HS2). Eschewing state-led investment not only allows the government to resist subsidising ailing industries, it also allows FDI to be used to impose "market discipline" on local authorities, obliging them to compromise in order to "win" foreign approval. The problem for industry is that this can lead to lopsided investment and regional inconsistencies - i.e. a lack of the central planning that traditionally benefited big capital.
The news on the evolving shape of the public sector comes hard on the heels of the latest episode of "The Rise of the Robots", in which the social scientists of Bank of America Merrill Lynch report that "robots and artificial intelligence ... could leave up to 35% of all workers in the UK, and 47% of those in the US, at risk of being displaced by technology over the next 20 years". Some of this is just the usual MBA guff. For example, "We are facing a paradigm shift which will change the way we live and work". No. A small number of robot owners (capitalists), and either wage repression or un/under-employment for much of labour, does not constitute a paradigm shift but a reversion to historical norms. What caught my eye was the standard neoliberal hope: "It’s not meant to be a doom and gloom report: one of the ways we think people could help themselves here is through education".
But the idea of education as a way of positively meeting technological change already seems out of date. Citing recent research showing an above-average rise in mortality for the white working-class in the US (and specifically the middle-aged with limited education), Andrew McAfee speculates that this may be the result of structural unemployment: "The boredom and vice that come up when work goes away are dire problems. They are, in fact, a serious public health problem". This might appear to be a liberal plea to consider the human cost of economic dislocation, but it echoes a conservative presumption that the working-class are unsuited to leisure because their only purpose is labour. McAfee doesn't seem too bothered by the prospect of boredom and vice among the idle rich, but more significantly he doesn't even attempt to claim that more education could be the solution for labour.
The chief argument against technological unemployment, apart from the risible Luddite myth, is that progress opens up new economic sectors and creates more new jobs than are lost. The classic example used to support this is the steep decline of agricultural employment, with the surplus of labour trooping off to the new factories. In fact, while there was a massive movement from the countryside to urban areas, this masked a movement of jobs as much as people. For example, a lot of those classified as agricultural workers in the eighteenth century, at a time when transport was labour-intensive and most markets local, were actually engaged in food distribution and retail, not working the land. Others were small-holders or "cottars" who supplemented their income through casual (non-agricultural) labour or craft-work. A lot of the "industry" that sprang up in the emerging towns was activity that had previously been dispersed in villages, hidden under the blanket of the rural economy.
In other words, a lot of "new" jobs were actually old jobs retooled or relocated rather than the result of new demands satisfied. A blacksmith replaced by a car mechanic is categorically different to a ploughman who becomes a cinema projectionist. This distinction is important because future job prospects will depend more on the degree of retooling and relocation than society's ability to invent new personal services. The fear is that we have reached an inflexion point where the replacement rate is now less than 1, both because technology has become more substitutionary than complementary (more autonomous robots than power tools), and because technology has enabled relocation on a global scale (so disadvantaging historic concentrations of labour that enjoyed higher wages).
One symptom of this evolution is the way that previously skilled or rationed roles are now being dispersed by technology across a larger casual workforce, e.g. the so-called "sharing economy". The challenge that Uber drivers present to London cabbies is globalisation on a metropolitan scale. The ideological groundwork for this was laid over recent decades by the vogue for portfolio careers and freelancing, but that in turn placed a greater emphasis on the importance of human capital. In this current phase, the mood music is about the declining returns to education and the importance of contacts: who you know rather than what you know. Social media reflects this transition from "brand me" and unmediated self-expression to insider networking and the clubhouse, with trolling providing the justification for discrimination and horizontalist initiatives drowned out by the cacophony of the privileged.
As the ideological frame shifts away from human capital, state education policy is increasingly attracted to social regulation. Education has always been first and foremost a matter of discipline, the roots of which lie in religious and moral conformity, so it is easy to redirect it to a system geared to separating and socialising children based on their parent's socio-economic status or aspirations. The recent tale of the primary school requiring its pupils to walk with their hands behind their backs is resonant precisely because the justification, that it will "make sure children arrive in class in the best possible frame of mind for learning", is so obviously specious. If anything, the evidence is that children are likely to benefit more from running around, which is what they instinctively try to do. Forcing small kids to comport themselves as if they were in holy orders is education only in the sense of teaching them in-group behaviour.
Though public debate will focus on the increased share for health and the elderly, the real story emerging from the government's public spending priorities is not one of demography or even tactical cuts to other services. It is that we have no expectation that "new high-wage industries" will finally arrive in numbers to replace those shut down since the early-80s, and that consequently we have given up on education as a public, as opposed to a private, good. We're writing off our human capital and asking business to make the best of whatever it can find. This is a high-risk strategy given that a "no" vote in the EU referendum would lead many large firms to conclude that they would be better-off relocating to the continent, particularly if tighter immigration controls made importing human capital difficult. For all its triumphalism and the obliging media coverage, there's an unmistakable whiff of the closing-down sale about the current administration.