Serendipity in plasticine
I was at my friend and neighbour’s house one afternoon after school recently. I have three kids, she has four. It was lively. They were all playing with this nice plasticine called ‘Fimo’. I’d never heard of it, but apparently it’s what the Aardman people use to create Shaun the Sheep and Wallace & Gromit, etc.
I remarked to my friend that ‘Fimo’ sounded like one of those contemporary socio-economic demographic acronyms like ‘DINKIES’ (Double Income No Kids) or ‘NEETS’ (No Education, Employment, or Training). Thus, the challenge was on: to come up with an acronym for ‘FIMO’! As it happens, it didn’t take too long at all. We soon cracked it. Therefore, dear readers of this blog, I am proud to give you the Agent of History contribution to the world of acronyms. Do a drum roll in yer heads as I give you…
FIMO – Financially Ignorant, Money Oriented!
What better phrase to sum up your average Brit!? That’s what we all are, right: financially ignorant but money oriented? Allow me to explain…
The case for FIMO
To make the case for FIMO as a germane acronym for contemporary Britain (and beyond), I think we need to answer three questions and see if these answers apply to the current British cultural-political-economic situation:
What behaviour would we expect to see from FIMOs?;
What kind of macroeconomic outcomes would FIMO behaviour generate?; and
Where did FIMOs come from? (or Who made us FIMOs?)
(1) FIMO behaviour
The clue is pretty clearly in the title here. FIMOs are money oriented. They, therefore, spend their lives trying their damnedest to get their hands (earn, beg, borrow, steal) on money. Yet, they are financially ignorant which suggests a propensity to spend it rather than to save it, and even to borrow it up to and perhaps far beyond a point of financial viability. Financial ignorance also expresses a deeper sense of not understanding the financial system that has such a big impact on their lives.
(2) The macroeconomics of FIMO-ism
So, what we’re looking for in the UK as evidence of FIMO behaviour on a society-wide (macro) level would be indicators like large rises in consumer spending fuelled by either corresponding rises in income (primarily wages) or, failing that, by large rises in private indebtedness (mortgages, secured and unsecured personal loans, credit card debt, etc) and/or large falls in rates of household savings. In plain English, we’re looking for evidence of a society spending lots of money because they’re earning lots more, but still spending lots even if they’re not by eating into their savings and/or racking up lots of personal debt. So, what do we see? First, here’s the evidence that British people have been spending consistently more over recent decades…
This chart, taken from World Bank data, shows that consumer spending as a percentage of GDP (the total value of goods and services produced annually) has been rising pretty consistently since the late 1970s, stabilising at around 65% from the late 1990s. This means that we now spend over £1trillion each year on everything: essentials, luxuries, frivolities.
So, are we spending more because we’re earning more? For the vast majority of us, the answer is a clear ‘no’. Workers enjoyed a modest but growing share of economic growth in the form of wages until the late 1970s. Since then, the trend has been downwards. We’ve benefitted increasingly less from any economic growth. In the same period, executive pay has soared. The median pay of a FTSE 350 company director trebled between 2000 and 2013! This in no way correlates with these companies’ performances over the same period.
Furthermore, since the Great Financial Crisis of 2008 and subsequent continued depression, real wages (wages accounting for changes in inflation) have plummeted more than any comparable period in history.
Though the Government may claim credit for recent revivals, real wages are only now finally growing modestly again due to (probably worryingly) huge falls in inflation, driven largely by the plummeting world oil price. Though the government crows about sustained falls in unemployment, this has largely been the outcome of a combination of workers staying in jobs on frozen or reduced wages; moving to lower skilled jobs; moving into precarious, low-paid (often ‘zero hours’), low productivity self-employment; or even leaving the formal job market altogether. We are seeing a qualitative downgrade of and systemic underemployment in the UK economy.
So, if we’re not earning any more of it, what’s been driving the sustained rise in consumer spending? Well, take a look at this historical chart on levels of private debt…
What we see is a debt explosion, including a doubling of household debt as percentage of GDP (note the staggering boom in financial sector leveraging compared to the generally stable level of government debt, spiking only after the bank bailouts of 2009). If we take the timescale out even further, we can clearly see that, while household debt grew steadily from the 1960s, it has exploded since the early 1980s.
At the same time, savings rates in the UK plummeted from a high of 12% of income in the late 1970s to just 2% on the eve of the Great Crash in 2008.
All this has made the UK the indisputable debt king of the First World!
So, people spending more and more, earning less and less, saving less and less, and borrowing more and more. And I haven’t even covered the housing bubble fuelling much of this nor the deteriorating quality of these loans, i.e. a notable shift from secured to unsecured lending. Credit card debt has trebled to £56bn since 1998! Sounds like a surefire bunch of FIMOs if you ask me! (Not sure what the appropriate collective noun for FIMOs is. Possibly a ‘misery’!) But, hold on! If you’re reading this outside of the United Kingdom of FIMO-land, you’re also likely to be facing a similar situation. Indeed, global debt to GDP has increased by a further $57 trillion in the past seven years alone, reaching 286%!
So, we’re talking perhaps not just about FIMO-land, but FIMO-world!
(3) Understanding FIMO-ization
What these historical charts show us is that we weren’t always FIMOs. There was another time – not the romantic ‘Golden Age’ posited by some, but still a better time – when we earned more, worked less, spent less, and saved more. How can we explain this shift?
The neo-liberal orthodoxy that dominates our culture tells that there is no society, just individuals taking individual decisions and needing to take individual responsibility for these decisions. If we get into debt then there is no social explanation beyond individual irresponsibility. If that’s the case then the only explanation to what we’re seeing here would be some kind of devastating virus inducing a FIMO pandemic since the late 1970s. I’m not buying that. We are confronted by clear patterns of structural change in our economy and our collective socio-economic behaviour. We need a structural explanation. Here’s one…
Capitalism and FIMO-ism
Capitalism is a profit-oriented system. What are produced in a capitalist system in order to generate these profits are commodities. Commodities have to have a use-value, i.e. be something that people want to use in some way (though these wants can be manufactured), and an exchange-value, i.e. be saleable for money in order to realise the profit. The unique and perverse thing about capitalism is that use-value is always subordinate to exchange-value – things aren’t produced because they are socially necessary, they are produced because they can generate profit. Use-value is just instrumentalised in the generation of profit.
In turn, what is called ‘profit’ by the capitalists and bourgeois economists is cast as a technical return on capital – the capitalist’s fair share as reward for enterprise and risk – alongside wages for workers and rent for landlords. In reality, profit is actually the surplus value produced by paying workers far less than the total value of the commodities they produce. This reality is easily hidden because profit seems superficially to be realised in the marketplace of supply and demand. However, when we see how bosses and workers struggle incessantly over the conditions of work – hours, holidays, benefits, pensions, safety, wider taxation and regulation, etc – we can readily recognise that something fundamental regarding profit/surplus-value, i.e. something fundamentally political, takes place within and beyond the workplace itself. Furthermore, when we consider all that work undertaken (predominantly by women) within the household and community required to reproduce the bodies and souls that capitalism needs for its workforce and when we consider the resources that Nature must surrender to the capitalist production process, we see again clearly that ‘profit’ just doesn’t cut it. What is going on is not technical, nor purely economic, but political and deeply social.
This is a crucial starting point for understanding the rise of the FIMO. Remember that capitalism is fundamentally about the pursuit and maximisation of profit i.e. surplus-value. Therefore, let’s start our explanation by looking at the rate of profit that UK corporations have enjoyed since the 1940s. I’m no economist, but I understand that these are derived by dividing corporations’ net operating surpluses by their net stock of fixed assets.
Don’t worry about the two separate measures. Just check out the trend – the very high rate of profit in the early post-war era gradually falling until we hit the crisis of the 1970s. After the late 1970s, we see a small revival that actually leads to a prolonged stagnation.
One main factor behind the falling rate of profit is when workers organise into effective trade unions which win higher wages, benefits, pensions and also higher general levels of taxation. This was the case throughout the 1950s, 60s, and 70s. This led to the profit crisis of the 1970s and heralded a political counter-revolution of the ruling class that crystallised in the election of Margaret Thatcher in 1979. This Thatcherite or ‘neo-liberal’ project that revved up into full swing by the mid-1980s was an unmistakeable political project to restore profitability and class power. Thus, we saw: the attack on the trade unions; the dramatic reduction in and regressive redistribution through taxation (i.e. huge cuts in taxes on rental and capital gains income, rises in V.A.T); mass privatisations; the gradual roll back of the welfare state; de-industrialisation as corporations merged into multi-nationals and transferred production away from the UK into low-wage Third World sites; the sell-off of council housing, a slump in new builds, and the deregulation of the mortgage market; and the deregulation and mass expansion of financial markets.
Alongside all these huge structural shifts came an accompanying cultural narrative: rewards for the hard-working, for the entrepreneurial; the end to the something-for-nothing culture; the end of society and community, the rise of the individual; aspiration, ownership, and consumption; Credit macht frei. This was necessary because, regardless of whether wages are rising or not, capitalists still produce ever more commodities in pursuit of ever-growing profits. This means that falling incomes had to be supplemented by growing debts.1 It was in this environment – in an economic environment of rising unemployment, stagnating wages, and burgeoning credit, and in a cultural environment relentlessly promoting consumerism and individualism – that the FIMO was born. We are all creations of these cultural-political-economic conditions.
(4) Beyond FIMO-ism
This capitalist structural explanation for FIMO-ization is a simplistic one, but I think it’s powerful. It helps us begin to overcome the extreme individualisation of neo-liberal society – to recognise that we might not be as free as we’re constantly told. The danger is, of course, that we go the other way towards a crude and false determinism that posits us as hollow pawns in a game not of our making or control. This would be a grave mistake. We are all human beings with a great potential for learning, for changing, for freedom. Nelson Mandela, Mumia Abu-Jamal, and many others have shown us that we can find mental freedom within a prison cell, but they have also shown us that, beyond the individual, we can only win greater, potentially total, freedom by coming together with many others in political struggle.
The first step beyond FIMO-ism is to begin to understand our financial system, its place in the wider political-economic system, and our place within that. That won’t itself pay off our debts, but it might lead us to question whether simply working harder, saving more, or just borrowing more will win us the freedom and happiness we all desire. It certainly challenges the notion that immigrants are to blame for our plight.
Instead, we might begin to think that what is really required is a political campaign of a more radical kind – for the public ownership and control of banks; for the end to financial markets created for speculation and gambling, especially those gambling on the price of vital basic food commodities; for the removal of all costs for further and higher education; for the universalisation of living wages and, indeed, of a basic income guaranteed for all; for the renationalisation of all privatised industries; and for the eventual control of all enterprises by workers themselves, for without this last revolutionary political victory we cannot win the rest.
We are now in a situation in which almost all of us are FIMOs reeling from debts that, realistically, can never be fully paid. The youngest among us are suffering the most. Indebtedness accompanied by a discourse of individual ‘responsibilisation’ creates lives lived in fear, anxiety, and self-loathing. It may reduce us usefully to ignorant, unquestioning, pliant subjects, but it is no foundation for democracy. Furthermore, when indebtedness reaches unmanageable levels – levels that constrain the very reproduction of the system itself, levels that generate endemic levels of stress and mental illness, levels of falling living standards and rising poverty and homelessness – history clearly tells us that societies in these situations experience revolution or collapse.2 The history of the previous century shows us that profound capitalist crisis can be either resolved through socialism or revived ultimately through barbarism.3
I propose that the society of FIMOs is a profoundly unhappy, unfree, and unstable place. I also propose that the very fact that people are readily classified into demographic acronyms is suggestive of this unfreedom. Therefore, rather than proposing a post-capitalist acronymic alternative to the FIMO, I propose that we create a society that liberates us not just from FIMO-ism, but from any economistic constraints on our collective freedom.
Those more regular readers among you might have picked up on the way I end blogs on a note of upbeat utopianism. I do not apologise for this. The more I engage with the reformist agenda, and the more I learn about the parlous state of all areas of our economic life and its consequences, the more I am convinced that the ‘real world’ that we are supposed to live in or ‘get with’ is built on lies and that utopianism is actually realism. Thank you for reading!4
1This is one of many contradictions within the system. No individual capitalist wants to pay higher wages. They either risk losing market share by passing on costs to consumers or face reduced profits. As a class, capitalists seek lower wages too and unite to attack unions and workers generally. However, workers are also consumers, so falling wages means falling demand for commodities.
2See the work of David Graeber and Michael Hudson on this.
3Incidentally, I would place the Soviet experience as one that offered hope of the former but which, perhaps unavoidably, succumbed to the latter.
4By the way, if you don’t think that you or ‘ordinary people’ can understand political economy, well, you just have!