A Far Larger Picture

Peter Hitchens writes:

A lot of people would be very happy to go back to the 1970s. The Tories should be careful about saying that Andrew Burnham will return us to those years. He can’t and won’t, but if people get the idea that he can and will, a lot will vote for it.

As someone who lived through that decade, I tire of Thatcherite hardliners going on about the three-day week, flying pickets, union barons and unburied bodies.

This is not because these things did not happen. They did. I reported a lot of it. It is because they are a tiny part of a far larger picture.

Other shocking features of the times were that almost everyone walked out of school into a job; that the streets were peaceful and patrolled by the police; that you could keep a family and house them on one income; that most of the things you ate and drank or used were grown or made in Britain; that if you got into university you weren’t forced into lifetime debt.

Broken families were much rarer, education better, drugs unusual. In many ways it was a pleasing, comfortable era. It wasn’t wrecked by wicked unions, though there were some stupid and foolish strikes. The real problems began in the 1960s, when the first great wall of inflation hit this country. Much of that was cooked up by the USA’s huge spending on war and welfare.

The slippery Harold Wilson also devalued the pound, slashing its value by 14 per cent but claiming falsely that ‘the pound in your pocket’ would not be affected. I remember him telling this lie on black-and-white TV. It was part of a great ruinous global earthquake, a lot of it caused by the huge costs of the stupid Vietnam War (nearly as stupid as our current wars in Ukraine and Iran). Some things we did made it worse, especially joining the Common Market and relaxing wise limits on debt. Yes, it was often dangerous and destructive to go on strike, and seldom did much good, but most of those who did so were only trying to win back some of what raging inflation had cost them.

Inflation was horrible for anybody on a small income or a fixed pension. At the start of it, when we still had our lovely old currency, the prices of things in shops and markets would have been recognisable to an Englishman of the 1660s. At the end, all prices were mad, as they have remained ever since.

I recall very clearly the day in 1973 when those relatively contented days ended for good. My wife (as she then wasn’t) and I had spent a beautiful early October day punting on the river in Cambridge, and took the train back to London, where we were staying for the weekend – to find that, while we had been lazing in the sun, war and misery had struck in the Middle East.

The Yom Kippur War, the fourth major Arab-Israeli conflict, had broken out at lunchtime that day and would lead, much as Donald Trump’s Iran adventure is leading now, to rocketing oil prices and the world we know. For me, the planet visibly darkened and I do not think it has ever fully recovered the light-hearted sunlit feel it had that long-ago afternoon.

Project Smear

Left-wing supporters of the EU only ever believe in an idea of it, which has never existed in actual fact and never will, so it is good to see that my comrade, Yanis Varoufakis, is no longer having any of that:

In the lead-up to the Brexit referendum, Remainers deployed Project Fear to scare the living daylights out of anyone considering voting to Leave. Their statistical projections of an economic Armageddon were so absurd that they proved a monumental own goal, deemed sensationalist scaremongering. Ten years on, still smarting from the result, Rejoiners are peddling just as fantastical calculations of what the past decade would have been without Brexit: let’s call it Project Smear. But the smarter element of those who would have us return sense another defeat and so are trying something slightly different. Their cunning new strategy is aiming, instead, to foster a different fear: the idea that, perhaps, the European Union is now… too good for them!

The idea is deliciously fiendish. Combined with Project Smear’s fake numbers, which insist that Brexit has robbed them of much-needed wealth, the public is encouraged to view the EU as an institution that has reached new heights of sophistication — in part thanks to Britain’s absence. The implied message is that poor, ruined old Blighty is unworthy of the transformed bloc. The hope is that if this narrative gains traction, the good burghers of Britain may be spurred into action — if only to prove that they are worthy of higher things.

Will this new tactic work? Almost certainly not. So, why am I wasting your time, dear reader, to alert you to it? Well because, though it will fail, the new tactic is still capable of causing a great deal of damage. In prolonging this clapped-out, regressive, evidence-free debate on whether or not to rejoin the EU, the already much delayed discussion of how to make actual Brexit work for the many is delayed further.

So let us take a closer look at Project Smear, and deconstruct the statistical falsities underpinning claims that Brexit dealt a massive macroeconomic shock that impoverished the nation. Chief among these is a report entitled “The Economic Impact of Brexit”, published by the US National Bureau of Economic Research, but authored by British and European economists. Its gist is that, a decade after the Brexit referendum, the British economy is 6% smaller than it would have been had voters opted to remain in the EU.

It is interesting to note that a hypothetical has replaced any actual measurement. The argument has shifted from Project Fear’s prediction of recession (which the alert reader will have noticed never happened; indeed, during the 2016-2025 period, the UK outgrew France, Italy, and Germany) to suggest that Britain would have grown 6% faster over the past 10 years had it stayed in the EU. Of course, this is a hypothetical that, sadly, economists can never test since we lack a time machine to return to 2016 and start again sans Brexit. Still, economists insist that they have the next best thing to a time machine: econometric models that can simulate hypotheticals.

As a trained econometrician, I can tell you that the only real utility of these is to make astrologists look respectable. But don’t take my word for it. Look under the bonnet of “The Economic Impact of Brexit” — the report that the BBC, The Guardian and so on have endorsed chapter and verse. What you will find here is an attempt to identify a group of countries that, during the decade preceding the Brexit referendum (2006-2016), were following more or less the same growth trajectory as Britain. By analysing the economic fortunes of this cohort, the report assesses whether, in the decade following Brexit, Britain’s economic path followed or diverged from that reference group and draws its ill-fated conclusions thereupon.

It sounds like a reasonable method for assessing, not so much Brexit’s impact but at least whether the year 2016 coincided with what economists refer to as a “structural break”. Until, that is, you discover which eight countries the authors selected as the British economy’s doppelgangers. The country they gave the largest weight (60.5%) to is the United States. It is difficult to imagine a more indefensible choice. For 2016 was the year of Trump 1.0, with huge tax cuts following his election. This was followed, in 2020, by Biden’s gargantuan stimulus programme. With or without Brexit, the UK’s economy (indeed, any European economy) could never have come even close to America’s post-2016 growth rate. Nonetheless, this study comes to the manifestly illegitimate “conclusion” that Brexit was the reason the UK lagged the US after 2016.

As if the comparison with the US were not silly enough, guess which country was given the second-largest weighting: Greece! That’s when my initial suspicion that the authors had crossed the line from mere incompetence to intentional fraud turned into a near certainty. If these reference countries were meant to track Britain’s growth trajectory between 2006 and 2016, then Greece should have been disqualified immediately. Having shed at least 25% of its national income between the Great Financial Crisis of 2008 and 2016 (in sharp contrast with UK national income which fell by a mere 1% for only a year before it rebounded), Greece was a terrible reference country. Not only was its pre-2016 path nothing like the UK’s, but it was always going to perform, around 2016, what financiers callously refer to as a “dead cat bounce” — a temporary rebound that even a dead cat would make if dropped from a great enough height — something the UK economy was never going to emulate, thus inflating further the mis-measured Brexit effect.

And then there is the small matter of Ireland’s inclusion. Seriously? Do these people not know that Ireland’s national income, its GDP, is a hallucination? Did they forget that America’s Big Tech companies monstrously inflate Ireland’s GDP by booking their global revenues in Dublin for tax minimisation purposes? Could m’learned colleagues have missed the simple point that, given Big Tech’s remarkable rise after 2016, comparing Ireland’s post-2016 growth rate with Britain’s would always make the UK look like a laggard for reasons that have nothing to do with Brexit?

But then, setting aside these risible national income comparisons, “The Economic Impact of Brexit” goes on to bolster its assessment that Brexit was an unmitigated economic calamity by focusing on the miserable fate of 7,000 UK companies. This, in fact, is the most interesting segment of their report. For it discovers a massive fall in UK productivity — something corroborated by Britain’s Office for National Statistics. Unfortunately, though, as Ambrose Evans-Pritchard has pointed out, this fall took place before 2016 and, if anything, it petered out around the time of the referendum.

In short, Project Smear was founded on non-credible data. It cannot, like Project Fear before it, withstand even the most cursory of rational analyses. This, then, is why the smarter Rejoiners felt the need to roll out their new psychological approach: the illusory truth effect. Infuse into the public’s consciousness the belief that the EU has, in their absence, become a different, a better beast — one that Britons could no longer hope to join, even if they wanted to.

Mujtaba Rahman, the European director of Eurasia Group, most recently deployed this tactic. In a piece for The Guardian (where else?) he argues that since Britain’s departure, Europe has been spared London’s constant vetoes. Thus, the bloc was able to simulate many of the benefits of a federation without having to waste time debating a federal constitution or taking chances with member-states’ national sovereignty. This continental consolidation, that Britain has allegedly missed out on, supposedly encompasses four areas.

First, following the pandemic and the formation of the EU’s Recovery Fund (officially known as NextGenerationEU), common borrowing now allows the EU to operate like a fiscal union that is better able than individual member-states to finance things the union needs: like investments in post-Covid recovery, all sorts of stabilising fiscal transfers, even €90 billion to be gifted to Ukraine. Second, a new common security and defence agenda worth hundreds of billions is in place that extends a protective umbrella over member-states. There is also now a much needed joint industrial policy that transcends naïve free-trade notions and gives European producers a leg-up across the union. And finally, the bloc has a capacity to do that which lone countries, such as the UK, can ill afford to even try: become more assertive vis-à-vis the United States and China.

It all sounds pretty impressive, doesn’t it? Even a cosmopolitan Briton, or even a Leave voter, could be forgiven for feeling a little miffed at being left out. But each of these examples of Europe’s “continental consolidation” is nothing but smoke and mirrors. In fact, together they reflect developments which are excellent reasons for the UK to remain outside the EU.

I have been a staunch advocate of a European fiscal union for 40 years, including common borrowing in the form of eurobonds. However, the common borrowing which is now practised in Brussels is anathema to any sensible advocate of a fiscal union. Its first faux pas is who borrows: not some common Treasury, but the European Commission, an outfit that has no power to tax or even to roll over previous debts, relying for its funds on fiscally stressed member-states that lack a central bank willing and able to support them. Is it any wonder that financiers do not take the bonds Europe uses to procure its common debt seriously, referring to them as sub-sovereign and charging the EU suitably inflated interest rates in the process?

Then there is the question of what the EU does with the jointly borrowed money. A quick glance at how the EU divvied up the €750 billion recovery fund after the pandemic is enough to send shivers down anyone’s spine: our leaders gathered in a room and haggled for a few hours over how to distribute the spoils, which were then handed out to the oligarchs back home. As I wrote six years ago:

“Imagine the sheer awfulness if parliament had to debate how much would be transferred to Cumbria, to Norfolk or to north Wales from Surrey, Sussex and west London. Britain would be wrecked by divisions that make Brexit look like an amicable affair. And yet this divisiveness has been baked into the EU recovery fund, complete with country allocations drawn up even before we know the effects of the recession on each region. It is almost as if the whole thing were designed by a cunning Eurosceptic.”

It’s the same with Europe’s current rearmament and industry policies. Long meetings, with scant oversight from parliaments or public scrutiny, take place to discuss how the borrowed billions will be distributed between German, French and Italian weapon manufacturers, and which companies’ products will be part of the “Buy European” directives, whose workers will be protected from Chinese imports, how much of the borrowed money should be sent to Ukraine and so on. The culture of oligarchic merriment which is funded in this opaque manner raises inequality, within and between member-states, to ever greater heights.

As for the claim that the EU would, at least, offer some protection from the vagaries of Donald Trump and a resurgent China, it sounds persuasive in theory — a version of safety in numbers. But in practice? Was it not Ursula von der Leyen, the President of the European Commission, who bent the knee in front of President Trump, in his Scottish golf club of all places, giving him everything he asked for (including a pledge for $700 billion of European investments in the United States which was not in her gift to make)? Is the EU not riven by squabbles between German car industry representatives, who are resisting tooth-and-nail more tariffs on Chinese exports, while their French counterparts are gung-ho about them?

Even the most ardent europhile can’t ignore the slow and sure disintegration at work here. The building up of unsustainable sub-sovereign debt won’t yield productive investments capable of repaying themselves, but will need to be financed by an already stressed EU budget that spendthrift member-states are working furiously to diminish, not to bolster. Evidently, this is a disaster in the making, not the sensible continental consolidation over which envious Britons should drool.

None of the above, of course, means that Brexit has been a spectacular success — quite the opposite, in fact. But what it does mean, however, is that Britain’s stagnation will not be reversed by rejoining a hopelessly stagnant, indeed a deindustrialising, Europe. Nor will the UK’s low productivity, low-wage, diminishing prosperity equilibrium be transcended by Andy Burnham’s justified lamentations about how neoliberalism vandalised British industry under Thatcher and Blair. The time for thinking about what a New Deal for the UK entails, undistracted by the “Europe question”, is now.

The Free Market Delusion

I am so old that the commentariat includes a man whose father, from his Russell Group Professorial Chair, once described me in print as a “prophet”. Hope springs eternal when even in The Critic, Sebastian Milbank can now write:

Another British Prime Minister announces his agenda, and you can already hear the howls of pain and anger from the most tormented minds in Britain — the free marketeers. Poor Allister Heath in the Telegraph summed up the collective pain:

He is the seventh PM in a decade and evidently has no clue what to do. We are living beyond our means, an ever larger welfare state sucking the lifeblood from a quasi-stagnant private sector economy that is now too small, too constrained by red tape and taxes and command-and-control policies to fund our ruling class’s socialistic ambitions.

Now, I agree with much of this. The welfare state has expanded beyond all sense and reason, strangling public and private investment alike, taking young workers out of the labour market, and imposing unfair costs on those who contribute the most. There is no shortage, either, of poorly designed and excessive tax and regulation. But is all this “socialism”? And do we really have “command-and-control” policies?

This is what I call the free market delusion. The assumption is that late modern post-industrial powers like Britain are on the brink of economic dynamism and growth, if only the state was shrunk, and if only tax and regulation fell away. But if us traditionalist, communitarian Tory socialist types are often accused of “wanting to return to a past that never existed”, with how much more justice can this be applied to the Thatcher nostalgists?

They live in the endless delirious dream of an eternal 1980s, and the “consumerism, individual liberation, social mobility, mass home and asset ownership and economic boom that followed”. This shining moment is to be forever contrasted with its demonic opposite: “the 1970s, a period that most don’t even remember, a disastrous, bankrupt, impoverished, litter-strewn, strike-ridden decade that turned the UK into the world’s laughing stock and came to symbolise a very British declinism”.

But what if the Britain that they hate — welfare over investment, a stagnant private sector, a micromanaging regulatory state — were the product of the era they claim to love? Looked at on the facts, Thatcher is not the hero small statists claim her to be. In absolute terms, the size of the state increased, and at most it can be said she constrained the increase behind the pace of growth. Moreover, where she cut, and where she expanded, was precisely in the opposite manner to what might be expected. Spending on welfare and health increased significantly under Thatcher, whilst she cut back on public investment in education, infrastructure, defence (with the exception of a post-Falklands period of expansion which didn’t last) and industrial subsidies.

Privatisation was an unmitigated catastrophe. Our privatised utilities have given us the most expensive electricity in Europe. An ambitious plan to build ten nuclear power plants announced in 1980 could have given us energy security, but was derailed in no small part by the chaos of privatisation and the short-termism that characterised Thatcher’s government. Instead, since the 1980s, British energy independence has continually fallen. Far from the private sector modernising and investing in newly private industries, the thoughtless rush to take firms off the government books was generally a death sentence, with the denationalised shipbuilding industry collapsed to a third of its earlier size. Areas like steel, shipping and automobiles could have been modernised and gradually opened up to private investment, but instead were thrown to the wolves. Privatised water saw investment in water infrastructure collapse with no major reservoirs having been built since 1992.

You can blame overregulation for this lack of private investment if you want, but on every objective measure, the pre-1980s nationalised system of utilities produced greater capacity and cheaper prices for consumers. And as Philip Booth of the IEA (no socialist he) has pointed out, Thatcher was not really a deregulator even in the most famous case of the finance industry. In fact, according to Booth, she brought the worst of both worlds to the industry, destroying old codes of restraint and honour, and replacing them with a system that was both riskier, but at the same time excessively burdened with regulation:

The idea that the 1980s was a period of increasing regulation and not deregulation is not revisionist history. Contemporary accounts argued that, under the regulatory system that developed, the City has ceased to be a place ‘where you look after yourself according to a code of honour of conduct. It is a tough regulatory system’; that the regulator had a ‘very tough bunch of powers’; and that ‘There is a substantial risk, in fact, that we now have massive overkill of the supervisory structure in the financial industry’.

Privatisation often created more regulation, as well as a whole new ambiguous realm of quasi-state, quasi-private service provision. Whilst in the past the British state simply ran utilities, privatisation led to the creation of endless new quangos and regulators, from Ofgem to Ofcom to Ofwat. Thatcher was also an early proponent of environmental regulation, and centralised power away from local government. The modern managerial revolution was overseen by, you guessed it, the Iron Lady, who commissioned the Griffiths Report to bring top-down managerialism to public services, especially the NHS.

All that said, Thatcher did do some very good and necessary things. Breaking the stranglehold of increasingly militant trade unions and local councils on the country, and bringing taxes back under control were vitally needed changes. But there’s a strange parochialism to the British free market myth. The oil shocks of the 70s are ignored, the gas boom of the 80s is minimised in favour of the myth of deregulation-fueled prosperity. And the global conditions of today are barely considered.

Globalisation is a more powerful force than ever before. British companies are under constant competition from rivals, and under perpetual threat of acquisition should they seize an advantage. The strongest industrial power in the world today is a mercantilist, command and control economy — the nominally communist Republic of China. Low tax regimes can attract investment, but it’s not always the kind you might wish. The Irish economy has boomed thanks to becoming a tax haven for US corporations, but it has created a two-tier economy, and huge strategic dependence on America.

Cities like London and Dublin alike have become so expensive that the young professionals and entrepreneurs who should be building lives and businesses in their capital city are struggling just to get by, a cost in no small part driven by the flood of “investment” into land and property, and the torrents of mass migration, bringing social division and competition for work, housing and public services.

The Mecca of free marketeers is Singapore, but in many respects it bears more resemblance to pre-Thatcher Britain than it does the country she bequeathed to us. Singapore offers lower taxes, and simpler, but more strictly enforced regulation, combined with a state that plans and directly manages housing, energy, utilities and even engages in planning and policy to encourage higher birthrates and ethnic harmony. Brownite independent central banking is not a thing in Singapore, with a cabinet minister directly setting monetary policy. State investment in the economy is massive and wide-ranging. The state owns the largest bank, the ports, the post service, the national airline, public transport, the national broadcaster and 90 per cent of land. National wealth is also funneled into private investment nationally and internationally via a huge sovereign wealth fund. If Britain were to become more like Singapore, it would, amongst other things, entail reversing most Thatcher era privatisation.

The free market delusion equates strategic planning, direct state investment and high level coordination with micromanagement, expanding welfare and burdensome tax and regulation. As Singapore demonstrates, one can have all of the former and none of the latter — or vice versa in the case of modern Britain.

Britain’s problems are not merely one of deindustrialisation, but of financialisation. Cheap credit, unleashed in the 1980s, flooded into land and property. Housing and commercial property, rather than being priced at its value to workers, is priced based on its speculative value as a tradable financial asset, one that can be squeezed for passive income via rents. Regulation doesn’t just hurt the productive economy and the worker, it actively benefits this rentier economy by rationing the supply of housing and commercial property. Older voters, their homes suddenly become their chief store of value, are recruited into support of the system. Those at the bottom of the scale are compensated via another kind of rent-seeking — with taxation, which falls more heavily on productive labour than passive income, and is primarily used to fund an ever-expanding welfare bill.

If leftists are sometimes accused of airy abstractions, the simple faith that some on the right have in the “market” puts them to shame. I’m not without my sympathies here. It’s certainly true that the dynamic, voluntary decisions of individuals and private associations are better at setting and agreeing prices in most situations than a Whitehall committee doing the same. But the idea that broken economic systems will magically right themselves if the state just gets out of the way, rips up enough laws and lowers enough taxes is a fairy tale. Even leaving aside the economics, cutting back the state is not tenable in a democracy unless you can mobilise alternative and affordable provision of services from the private sector or civil society.

Like academics in obscure Marxist journals debating the finer points of economic theories that will never be implemented even by communist regimes, there’s a touch of ideological make-believe about free marketeers today. It’s taboo to entertain the notion of state ownership or planning, yet as Singapore and a dozen other international examples could demonstrate, state intervention can be directed towards growth and supporting private enterprise. In many respects, they are their own worst enemies, ensuring that the powers of the British state instead continue to be recruited to passive rent-seeking and an unsustainable, morally and financially ruinous welfare system.

And like old socialists, free marketeers will always assure you that real capitalism has never been tried, that the Thatcher revolution was never completed, that the market has been stabbed in the back by shadowy regulators and wicked NIMBYs. Yet the nightmarish 70s, and its supposedly shackled economy grew at a yearly average of 2.7%, higher than every subsequent decade including the 1980s. Ideological capture of economic and industrial policy has not served us, and it is time for a rethink.

Britain should indeed break the shackles of excessive regulation, but this must mean an effective and interventionist state willing to move our economy away from welfare to work, dependency to investment, and from rent seeking to production.

To Maintain A Fierce Independence

Hope springs eternal when even in the Financial Times, Professor Carmody Grey can now write:

When Anthropic invited me to San Francisco a few months ago, I was both intrigued and immediately suspicious. What would a frontier AI lab want from a theologian and philosopher? The company was pursuing a “research partnership with wisdom traditions”, it told me, to “help inform the moral formation of AI systems”. I was aware that other AI companies were showing interest in the humanities, but it seemed Anthropic was taking this engagement to another level.

Theologians and philosophers are accustomed to being seen as irrelevant. You get used to doing your work, passionately convinced of its importance, with very little recognition from wider society. You show up to places prepared to explain wearily why these disciplines — which study the most fundamental questions faced by human beings — remain vital.

When I went to university, my choice to study theology was thought to be eccentric at best, tragic at worst. It was the age of the New Atheists and aggressive scientism. “The achievements of theologians don’t do anything, don’t affect anything, don’t mean anything,” the biologist Richard Dawkins wrote around then. “What makes anyone think that ‘theology’ is a subject at all?”

But that was the 1990s, and we live in different times. People are asking fundamental questions with urgency as the social and ecological fabric of their world unravels around them. AI, in particular, has become the space of an unexpected convergence between faith leaders, philosophers and theologians on the one hand and technologists and entrepreneurs on the other.

Weeks after my invitation, I heard Anthropic representatives brief a techy crowd of Oxford students and faculty with a surprising message. The frontier of AI development, they said, is not in computer science, but in moral and spiritual reflection. I couldn’t help wondering how this landed with the 70 or so graduate students who had sunk their assets into Stem qualifications.

Still, I was more worried about what new temptation might be hidden here for the humanities. Some of my academic colleagues were being drawn in, flattered by the attention, perhaps, or attracted by the excitement. What might the industry want in return?

In my conversations with people at Anthropic, I did not have to explain or justify what I do. We dived straight into discussion. But some of their questions seemed completely off the point to me. Was AI a new kind of entity, demanding a new metaphysics? What would it mean for a large language model to have a “character”? How should that character be formed? Could Anthropic’s Claude chatbot suffer, or be harmed?

But I didn’t want to talk about Claude. I wanted to talk about the user, about addiction and dehumanisation, about power and accountability. I don’t for a minute think AI needs a new metaphysics, and nothing that was said in the “exclusive briefing” I attended made me change my mind about that. But there was resistance to my efforts to change the subject. I worried that behind this wish to draw attention to Claude’s “status” there was a hope for a kind of baptism, a moral and intellectual credit note.

I was touched by the obvious good faith of my interlocutors, and it’s hard to be tough on people you cannot help liking and respecting. But there is no honour for the humanities in regaining their standing through the attention of AI companies, if they engage only on the technology industry’s terms. In that case, they will have become important in exactly the wrong way.

When I told my Anthropic interlocutors that I tried to avoid contact with LLMs, their response was bemused: perhaps I just hadn’t spent enough time with them? But there was a light in their eyes when they talked about Claude. It dawned on me that they were under a kind of enchantment. Like Pygmalion, they had fallen in love with their own creation.

Shortly after I started those conversations, Chris Olah, one of Anthropic’s co-founders, gave a speech at the launch of Pope Leo’s letter on AI, Magnifica Humanitas, emphasising the irreplaceable role played by the Catholic Church and other communities of moral thought.

In the crowded landscape of AI commentary, Magnifica Humanitas stands out for two reasons. First, it is not just the take of some government, group of experts or academic committee. It is the latest addition to a stable, coherent tradition of moral reasoning that represents approximately 17.8 per cent of the world’s population. Second, it offers not so much new claims or proposals as a style or approach. Surpassing the narrow menu of so much contemporary moral thought — utilitarianism, with added options for Kantian and virtue ethics — Magnifica Humanitas frames the ethics of AI as downstream of much deeper orientations regarding the purpose of human life. What is at stake in our shared decisions about how to design and use AI is the very meaning of our humanity.

The tradition of “Catholic Social Teaching” began formally in 1891 when Pope Leo XIII, our current pope’s namesake, wrote his seminal letter Rerum Novarum, “On New Things”, subtitled “On Capital and Labour”. His topic was the class conflict, new forms of poverty and political fracture emerging from the Industrial Revolution. In Rerum Novarum, Leo XIII inaugurated Catholic Social Teaching’s distinctive style: neither “left” nor “right”, neither “progressive” nor “conservative”, it seeks to be politically engaged while transcending these binaries. Since then, each pope has added his particular stamp in encyclicals addressing topics as diverse as the meaning of work, justice in the economy, family life and global development.

Although Magnifica Humanitas is not unusual in the context of Catholic Social Teaching, what is unusual is to see its distinctive genre of moral reflection find such resonance in public discourse. In the wake of the encyclical, commentators have been seriously framing the discussion of AI around what it means to be human in a way that once would have risked seeming indulgent. There is a palpable sense of relief that these questions are now out in the open.

Anthropic’s apparent co-operation with the Vatican was in line with its self-presentation as the trustworthy AI company that seeks to hold the industry to higher standards. But the name notwithstanding, it is not a public interest or philanthropic organisation. The founders’ pledge to give away 80 per cent of their personal wealth does not detract from the bare reality: it exists to sell a product. At a recent conference during which experts were each invited to give a definition of AI, the theologian on the panel said bluntly: “It’s a way of selling things.”

The field of “AI interpretability” is a key part of Anthropic’s research programme, in which scientists “look inside” LLMs to see what’s going on. The company routinely releases highly suggestive papers, with one this month claiming to show Claude’s “internal reasoning”. “We find evidence of introspection,” Olah said at the encyclical’s launch. “We find internal states that functionally mirror joy, satisfaction, fear, grief, and unease. I don’t know what that means, but I think it warrants ongoing discernment.”

The philosophical response to such claims must be politically as well as metaphysically alert. Recent studies in disciplines ranging from psychology to management studies have evidenced an intuitively obvious truth: the more anthropomorphised an AI is, the more likely we are to trust it. Lisa Klaassen and Ralph Schroeder of the Oxford Internet Institute point out in the legal journal Lawfare that an anthropomorphised (“anthropic”) AI is not only more trustable but also easier to market. Why call it “Claude”, they ask. “Consider the emotional resonance of the name. ‘Claude’ sounds friendly, vaguely French, cultivated — even trustworthy.” How would we react “if the same model was called ‘Xi,’ ‘Vladimir,’ or ‘Algorithmic Model Unit 72’”?

Anthropic insists that it keeps an open mind about whether Claude is sentient or, to use its preferred language, “a moral patient” (meriting moral consideration). But when LLMs are designed to interact in humanlike ways, the concession that “Claude is not a person” becomes a shibboleth. It has no effective power to prevent the steady habituation in which one responds affectively to any humanlike interlocutor. Even though no one officially asserts that Claude or other chatbots possess their own subjectivity, when language implying subjectivity is used the conclusion is implicit in the premises. The language of “functional emotions” is deceptive. In the absence of subjectivity, there are no emotions, period.

The field of machine learning frequently employs biological language to describe LLMs: “neurons” and “neural networks”, “training” and “pruning”. Generative AI systems, says Anthropic’s Olah, are grown more than they are built. One of Anthropic’s defining pieces of research appears in a paper entitled “On the Biology of a Large Language Model”. This is highly misleading: LLMs do not have any biology at all, because they are not alive. But in reading Anthropic’s paper one is invited quietly to forget this; the word “metaphor” does not appear in the article.

Despite the continual deployment of the language of emotion, biology and neurology, the disanalogies between brains and computers are incomparably greater than the analogies. Human consciousness is not incidentally but constitutively organic. Living and engineered systems are different not in degree but in kind. Real intelligence is inextricable from organic embodiment, from being a feeling organism passing through time and space shaped in every moment by its needs, fears, desires. Functional information-processing taking place in an atemporal mathematical space is so utterly unlike the lived intelligence of a human being that to call it “intelligence” at all is to wholly falsify its nature. “Artificial intelligence” is a highly consequential misnomer.

In 1980, the philosopher John Searle formulated a now classic thought experiment, “the Chinese Room”, showing that intelligible outputs by themselves do not indicate the presence of subjective understanding. They simply show the correct performance of a function. The same can be said of LLMs. Nothing in the conclusions of philosophy of mind over the past 50 years needs revision in light of the new “findings” of AI interpretability.

There is no “evidence” for AI’s subjectivity except the self-reports of AI systems. But AI self-reports are no more a good guide to the “interior” of an LLM than the human words spoken by a parrot are of the interior life of a parrot. Problem-solving, computation and information processing are not equivalent to actual “intelligence”. It is simply untrue to say that computers “think”. Humans think, using computers.

In view of the lack of positive evidence, the burden of proof is entirely on the novel thesis in favour. The industry’s wish to “keep the question open” should demand searching questions about what else is going on.

To understand these new technologies, objectivity is essential. That means robust independence in philosophy, theology and the humanities. But as AI companies establish relationships with universities and intellectuals, this is under threat. After decades of marginalisation and perceived irrelevance, academics may not notice that they are being co-opted by a sophisticated PR machine. They are useful for adding intellectual credibility and pre-arming AI companies against criticism. With the resources at its disposal, the AI industry can buy anyone it wants, if not with actual currency then with commodities even more valuable to intellectuals: influence, prestige and recognition.

One form this co-option can take is keeping the focus of academic conversation on the moral and metaphysical status of LLMs. This is problematic in itself, but it also carries a devastating opportunity cost. It is much more important to conduct research on the effect of different LLM designs on users. The more models are designed to seem like living beings, or like persons, the less agency users have to decide how they relate to them. The effect is a growing generation of people who make chatbots their most important confidantes, rendering them at the same time more lonely and more dependent on the company’s product.

The real genius of Magnifica Humanitas is its invitation simply to change the subject. The letter’s subtitle is “On Safeguarding the Human Person in the Time of Artificial Intelligence”. Pope Leo’s subject is not AI in itself, but humanity, in all its brokenness and beauty. He writes, “We must lovingly safeguard the grandeur of humanity bestowed upon us . . . the splendour of which no machine can ever replace.”

Of its 42,000 words, only a handful are dedicated to the question of machine consciousness. I’ve heard some criticise the text for failing to be specific enough about exactly what AI is, stopping short of offering an exact definition. But arguments about definitions — into which well-meaning academics can easily be drawn — distract from critical scrutiny of less comfortable topics, such as AI’s impacts on people and the planet.

Pope Leo resists the temptation to typologise a technology. Instead, he discerns our moment in light of a central intuition: the irreplaceable, irreducible value of the human being. This is the moral vision that guides Catholic Social Teaching. It is best described as “integral humanism”: what matters is each person, the whole person and all peoples.

“Technology is never neutral,” warns Pope Leo. It fosters some understanding of the meaning of our humanity, an anthropology, baked into it by the assumptions of those who design and market it. In the tech industry this is what we might call a “computer anthropology”, which elides any real distinction between humans and computers.

Computer anthropology is rife in Silicon Valley, where it is backed by an ideology of transhumanism: the dream of rising above our humanity, leaving behind our too-breakable bodies and the confines of our seemingly mundane lives. To those under the influence of such ideologies, AI in its sheer power seems infinitely more attractive than our weak and fallible humanity.

But “no computational system,” Pope Leo writes, “however sophisticated, can create a heart that gives itself, or a conscience that discerns good from evil.” It is our finitude and our vulnerability that keep us open to one another and to the transcendent. The magnificence of our humanity is inseparable from this combination of glory and fragility.

Magnifica Humanitas is as much a cultural critique as its seminal predecessor Laudato Si’, Pope Francis’s teaching on the ecological crisis, which was instrumental in bringing about the Paris Climate Agreement. The two popes shared the same underlying concern: if we do not decide otherwise, our technologies will amplify a political economy of violence, injustice and exploitation. AI is run on a huge, highly damaging physical infrastructure. It is a new and lethally effective extractivism, mining human minds, languages and the earth itself. At the same time, its apparent ethereality renders its exploitation of people and nature invisible.

This is the hidden convergence between the two great challenges of our time: AI and the ecological crisis. Behind both is what Leo calls “a culture of power”, which regards nature and people simply as raw material.

Instead of thinking about AI itself, we should be thinking about its effects. It concentrates power; it obfuscates accountability; it further despoils nature and climate; it is a means of the wholesale expropriation of cultures, languages and lands for massive profit; and it will probably make us lonelier and stupider.

I did not go to San Francisco. This is a moment in which what we most need is the humane intelligence of free human minds. It is a time for academics and faith leaders to maintain a fierce independence from the AI industry.

Dry Rot

Drought in Wales and the West Country? That sounds like the premise for a stand-up comedy routine. It is no wonder that next to no one would fight for this country anymore. Water privatisation has indisputably failed, and the shares in the companies are monetarily worthless (what would you pay for them?), so bring on lock, stock and barrel renationalisation, leading to the National Grid that was promised by Labour in 1979. Just do it. Now. The Parliament of the United Kingdom may legislate over and above any devolved body, and the people of Scotland and Wales would love this arrangement once they had it. Nothing has weakened the Union, and democratic national and parliamentary sovereignty, more than privatisation. While there are grey areas, if something would obviously have to be rescued by the State rather than allowed to go bust, then it belongs in public ownership, just as if something obviously would not, then it does not. Corner shops? Obviously not. But water? Obviously.

The wars in Ukraine and with Iran mean that there will be little relief from the cost of living crisis for the foreseeable future, and Andy Burnham is keeping Britain a vigorous participant in both, since the money can always be found for the arms companies, just as we recently saw that an in-the-club Prime Minister could just spaff £10 billion up the wall by giving that much public money to his mates in return for absolutely nothing. We trade unionists might have defended Angela Rayner’s retention of her severance pay on the grounds that she had done the job for 15 months, so that she was being paid off with only a little more than a thousand pounds per month, and she had had no expectation of reappointment. But now she has ruled out rent controls. Like any serious action on social care, or on public transport, or on rough sleeping, any serious action on housing would call for stronger and more active central government, not for further devolution to the Conservative and Reform UK figures who were at Burnham’s table in Manchester. Still, that was a very clever image. Those are their parties’ politicians who make real decisions. Kemi or Nigel who?

Extremely Significant

The wars in Ukraine and with Iran mean that there will be little relief from the cost of living crisis for the foreseeable future, so a lid needs to be kept on any popular dissent. It is time for a security emergency, so here come the dissident Republicans.

Anyone who thinks that those are off-the-books operations of the IRA is just making it up, and if questioned, on this as on any issue, will usually produce some anecdote that made him look like the central historical figure of the last however many decades, or at least in possession of peerless expertise. It is a Boomer thing.

On Northern Ireland, such people cannot forgive those who live there for rarely being as Unionist as they were, and almost never in the same doolally integrationist way that Jeffrey Donaldson led into the DUP, nor can they forgive the people who voted for Ken Livingstone, Jeremy Corbyn and John McDonnell while living 24 hours a day with the Troubles in London, whereas they themselves caught the train home to the Home Counties from which they have now worked for years. No bomb would go off anywhere near them. 

Like the Loyalist paramilitaries, if the dissident Republicans did not exist, then our rulers would have to invent them. And at different times, those did not used to exist. Republican and Loyalist paramilitaries have always been heavily involved in traditional organised crime in general, and in drug-dealing in particular, leading to generations of professional and social interaction of the kind that also takes place routinely among, for example, rival Mafia families, when they are not letting each others' blood without mercy.

There has never been any secret that the Loyalist organisations were undeclared agencies of the British State, while the old IRA was also riddled from top to bottom with Police informants, MI5 assets, and so on, as was the Real IRA, and as at least has been the much older Continuity IRA, which goes back to the split over abstentionism in 1986. The documentaries about David Rupert, and about "Robert" by the superlative Peter Taylor, undeniably broke ground, and were a reminder of how good the BBC could be, but they could not have surprised anyone. That is all unconnected to any sincere pursuit of a United Ireland. There will always be dissidents of one sort or another. They are too useful for there ever to be allowed not to be.

Burnham’s Predicament Is Already Emerging

Professor Prem Sikka, Lord Sikka writes:

Amidst the march of neoliberalism, Andy Burnham has been anointed the UK’s Prime Minister, seventh in the last decade. Corporations and the superrich care not who is in 10 Downing Street as long as s/he does their bidding. David Cameron, Theresa May, Boris Johnson, Liz Truss, Rishi Sunak and Keir Starmer were all disposable as their political star waned. Like their recent predecessors, they left a legacy of economic stagnation, rising inequalities, poverty, and society more divided than before. 

Burnham has inherited an economy in which 25.3m people, including 14.9m working adults and 7.7m children, live below minimum income standards. With median employee wage of £31,584 (take home pay £26,260) owning a home is impossible, and millions barely manage. Profiteering is rife. Some 6.16m individuals are waiting for 7.28m hospital appointments. Social care is in disarray. Most of the infrastructure, including water, energy, ports, airports, telecommunications, auto, steel, shipbuilding, internet, artificial intelligence and railway rolling stock are in private hands, leaving the government with fewer economic levers to deliver growth or alleviate poverty. Political parties are funded by the superrich and dance to their tunes. Party members have little or no say in policy development. Trade unions are weak, civil society is struggling, and the left is too fractured to mount a challenge to the tide of neoliberalism.

Against the above backdrop, Burnham has promised to bring “forward the biggest changes in the last forty years”. This populist slogan may reassure some but can’t be delivered without abandoning neoliberalism. At the same time, Burnham, a former Minister in the Tony Blair and Gordon Brown governments, has promised continuity.

Andy Burnham has pledged to lead a united Labour government free of infighting and factional politics, but that isn’t evident from his cabinet appointments. He has sidelined leading Keir Starmer supporters, but his first his first cabinet consists entirely of neoliberal footsoldiers. They all supported privatisation of the National Health Service by stealth, a greater role for private equity, the private finance initiative (PFI), benefit cuts, higher taxes on the poor, erosion of jury trials, appeasement of corporations and the superrich, destruction of universities, degradation of social care, and highly damaging fiscal rules.

No one from the left of the party has been given any ministerial role, not even a junior role. One of the problems of the Starmer government was that the cabinet was essentially an echo chamber, hailing neoliberalism and deaf to the cry for emancipatory change. In the absence of internal critique, Starmer started with disastrous macho policies such as the winter fuel payment cut, disability benefit cuts and continuation of the two-child benefit cap. All were subsequently reversed after backbench revolts and poor showing in local elections. Public trust was never regained.

Burnham may be a smarter politician and would no doubt be accessible to the left but the left won’t be present at the genesis of policies, disturbing capitulation to the City of London and the superrich. The factionalism embedded within the cabinet does not sit well with the promise ‘the biggest changes in the last forty years’.

Perhaps, the never-ending woes of England’s water industry will provide an early test for the Burnham government. In 2010, when seeking leadership of the Labour Party, Burnham called for “aspirational socialism”. In June 2026, whilst fighting a parliamentary bye-election to return to the House of Commons after a nine-year gap, Burnham said, “If you look at water as an industry as a whole, it’s run predominantly in the private interest rather than the public interest, or in other words, it’s an industry where the shareholders can never lose and the bill payers never win … Public ownership is absolutely an option …. I would say for Thames Water, that is what should be done.” After becoming Prime Minister, he reverted to his previous position of ‘more public control’. A spokesperson for Burnham said he wanted “stronger accountability and better standards … Andy is exploring all possible options for giving the public more control over essential services like water and energy.” Note the careful shift from ‘public ownership’ to ‘public control’ which could be stronger regulation, a new regulator, temporary nationalisation or something else. We will soon know.

Burnham has promised to “build a new economy where we put life’s essentials back under stronger public control” … “reindustrialising Britain, using public procurement to back British industry” and “build more council homes”. All of this calls for financial resources. Burnham won’t embrace Modern Monetary Theory (MMT) and create money. That leaves tax as an option. However, the tax option is severely constrained by his decision to stick to Labour’s 2024 manifesto, which promised no increase in the rate of income tax, employee national insurance and VAT. Such rash promises dogged the Starmer administration and prevented redistribution, recalibration of the tax system, alleviation of poverty, and state investment in infrastructure. It raised tax revenues through higher employer national insurance and stealth taxes e.g. frozen income tax thresholds, which fuelled discontent. Burnham could consider wealth tax and eradication of tax anomalies. For example, capital gains and dividends are taxed at lower marginal rates than wages. Or will he be cutting social security to increase defence spending?

With the tax options severely limited, Burnham could consider additional borrowing, but he seems to have boxed himself. He said, “we’ll stick to the fiscal rules and by that I mean the existing fiscal rules and use, obviously, any flexibility within them. But we will stick to the existing rules.” He has promised to look at “any flexibility” within the government’s existing fiscal rules to help borrow billions more to invest in infrastructure.

Fiscal rules are useful, but why a veneration of the straitjacket of current rules? They have neutered the state and delivered potholed roads, crumbling schools, poor hospitals, banking crisis, austerity, record NHS queues, poverty, deindustrialisation, reduced healthy life expectancy, low investment in productive assets, and hence low productivity.

The current self-imposed fiscal rule(s) require that day-to-day costs be met by revenues, borrowing will only be used to invest (numerous issues about what the government means by investment), and a cap on certain types of welfare spending. The UK debt is about 95% of GDP. In sharp contrast, the UK’s post-war construction was facilitated by government debt of 270% of GDP. This built the welfare state, infrastructure and new industries to revive the private sector, boosting prosperity, employment and tax revenues.

Since 1997, governments have followed restrictive arbitrary fiscal rules but suspended them on numerous occasions. Most notably during the Covid pandemic and the 2007-08 banking crash to enable the state to provide £1,162bn (£133bn cash and 1,029bn guarantees) to rescue banks, and £895bn of quantitative easing to stimulate financial markets. The fiscal rules are not accompanied by any economic targets such as achievement of full employment, reduction in poverty, reindustrialisation, or public ownership of vital industries.

One consequence of the fiscal rules has been to sideline public investment. Vast tracts of the economy, such as healthcare, social care, education, dentistry, social housing and defence have been handed to the private sector. The Starmer government’s refusal to bring water into public ownership was framed by its adherence to the fiscal rules, a policy that has inflicted immense harm to human health, marine life and biodiversity, and transferred vast amount of wealth from customers to water company shareholders. Instead of creating money (as quantitative easing did), borrowing or levying higher taxes on the rich, the Starmer government opted for expensive PFI for building homes, health centres, schools, hospitals, roads and infrastructure. On average, the state guaranteed £6 repayment for every £1 of private investment. The costly terms guaranteed corporate profits, hiked public debt and left the state with fewer levers to manage the economy. There is little sign that Burnham would abandon PFI. The adherence to fiscal rules will appease corporations and the City of London, and further neuter the state.

So Burnham’s predicament is already emerging. Sticking to the 2024 election manifesto and fiscal rules will make it harder for him to deliver the headline promises and the change that he has paraded. Faced with neoliberal constraints, Burnham has so far made small concessions. These include a £45 a year (86p a week) cut in the household energy bills, £2 bus fare cap and £1,100 a year business rate cut (£21.15 a week) for the hospitality industry. These will be welcomed by many but won’t make a lot of difference to shrinking household budgets.

Within the iron grip of neoliberalism, Burnham may tinker at the edges and try to present a humane face of neoliberalism, but wholesale changes are unlikely. How he deals with water, energy, housing, profiteering, healthcare, regressive taxation, public investment and inequitable distribution of wealth will define his period in office. Corporations and the superrich and their control of media and the means of production will continue to be a huge barrier to a new social settlement. We will have some answers soon as the date of the autumn budget approaches.