This is the first of a multi-part series, to coincide with the publication of my book REDS: A Global History of Communism. What you’re getting is a chapter I had to delete, because the book is already 510 pages plus footnotes.

At the end of this series I am going to pause Conflict & Democracy for a while, to focus on other writing projects. So I’m not accepting any more paid subscriptions for now.

To buy REDS in the UK, click here. To preorder in the USA click here. Enjoy - and Amazon reviews are always helpful!

I first read The Communist Manifesto at the age of 17: it was a slim, black paperback, high on a shelf in the school library, wedged between books on Buddhism and Catholic social teaching. Its first line read:

“The history of all hitherto existing society† is the history of class struggles.”^[1]

This was not news to me. My grandfather, a coal miner, had gone without food during the General Strike of 1926; my father, a truck driver, had just been on a wildcat strike. As a family we weren’t particularly left-wing - just working class people who understood that disputes between ourselves and the bosses had been going on since before we were born.

But there is a glyph in the middle of that opening line in the shape of a crucifix, and - as anyone who has read the Manifesto in hardcopy knows - it points to a massive footnote, which begins:

“That is, all written history...”

The footnote was written by Friedrich Engels in 1888 - 40 years after Manifesto came out. It explained that before the class struggle began, there was once a “primitive communistic society”; that its survival in 19^th century Russia was shown by someone called Haxthausen; and that its presence among Native Americans had been described by Lewis Henry Morgan. It advised me to read a book called The Origin of the Family, Private Property and the State by Engels himself - but that could not be found in any library I had access to in 1977.

The idea that society was once communist is a powerful argument supporting the proposal that it could be communist again. The idea that the family and the state might also be inventions - and not the product of some immutable natural order - intrigued me from the start. And I was not alone.

When I went to university a year later, socialist feminism was in its heyday: for many of its followers it was an article of faith that, before there was sexism, there had been gender equality. With working class militancy at its height and feminism on the advance, the classless society and women’s liberation seemed within reach and inseparable. This was not a niche opinion in the world: in that year alone, the People’s Republic of China printed half a million copies of The Communist Manifesto.^[2]

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I do not regret being excited by these claims about the deep past but I know today that they are incorrect. Anthropology has systematically debunked the idea that gender equality existed during the Stone Age. And though we are certain that states, classes and private property were absent until the Neolithic period, we are equally certain that oppression, coercion and hierarchy were not.

Looking back to the moment where I first encountered Marxism, what strikes me is how important its claims about prehistory were to the overall proposition. Engels’ footnote suggests that the whole of “written history” - from The Epic of Gilgamesh to this week’s Netflix drama - has been a blip, and that our true nature is to live altruistically, sharing what we produce and defying oppressive morality. To achieve it, however, people like me, my Dad and Grandad - “the proletariat” - had not only to overthrow the factory owners and the state, but abolish all forms of hierarchy including the family and - in the process - our working class way of life.

As I absorbed this, back in 1977, it dawned on me: I already know this story.

The idea that human life started out perfect, untroubled and sexually equal; that there was a descent into inequality and misery; and that someone had to destroy themselves to redeem the situation… well, that was a story the Catholic priests, glancing nervously at my choice of reading matter in that school library, had been drumming into me for years.

The French philosopher Michel Henry spelled it bluntly a few years later: “The proletariat is Christ”.^[3] But I think I had already made the connection. Communism’s allure as an ideology rests not only on our desire to live in an altruistic society, but on our conviction that we once did so. And that instead of Jesus it is we, the working people of the world, who can redeem humanity through our suffering.

The more you understand about the origins of Marxism, the less offensive this comparison becomes. The point is not that Marxism degenerated into a “secular religion” in the Soviet Union (though it did). It is, more fundamentally, that its basic concept of progress - from primitive communism via class society to a condition of abundance and human freedom - was overtly designed to mirror the Christian triad of innocence, fall and redemption.

And when I say “designed” I do not mean subliminally: the triad – as we will see – was overtly adopted by Marx from his philosophical mentor, Georg Hegel. Marxism, as the first line of the Manifesto suggests, is a theory about the whole of human history, and thus a comprehensive theory of humanity.

But if one of its premises is flawed doesn’t the whole argument fall apart? In this chapter I will ask: did a “primitive communist” stage of society ever exist; if not, what did; and why did the theory come to merit such an important place in communism as an ideology? Plus, if the whole communist tradition was based on faulty anthropology, what were the practical consequences?

Let us start with the evidence - from the archaeological record, from accounts written by the Europeans who conquered and destroyed the indigenous societies of the Americas; from the surviving hunter-gatherers themselves; and from scientists who study the difference between human and primate behaviour. Only with their help can we rectify the mistakes of Engels and the 19th century anthropologists he relied on.

Evidence from the bones and stones

Our knowledge of human evolution is changing fast: not just because we have new methods for dating fossils and analysing their DNA, but thanks to data models that can simulate the evolutionary process, group dynamics and the changing climate.^[4] The more evidence we gather, the more we see that the human evolutionary process was non-linear: instead of a neat succession of phases, corresponding to changing physical characteristics, there were a wide variety of hominin types, branching out and co-existing. Even the term “hominin” - to denote the wide variety of human-like species now discovered - didn’t exist in the year I first read Engels’ footnote.^[5]

Nevertheless, the broad picture is clear: humanity in its current form is the product of three major evolutionary events.

• First, around 1.8 million years ago, we evolved into a recognisably human species, walking upright and making stone tools.

• Second, around 600,000 years ago something happened that rapidly enlarged the brain size of early humans across all sub-types, raising it close to the modern average, allowing them to produce much more sophisticated tools and to spread across Eurasia.^[6]

• Third, around 50,000 BC, one hominin group in Africa - Homo sapiens - developed behaviours sophisticated enough to enable their migration to the rest of the world, where they interbred with and replaced the other species, most notably the Neanderthals, and began to engage in continuous technological innovation.

What kind of behaviour enabled the survival and flourishing of early humans? And how did the technologies they produced influence the way they behaved and thought? Unfortunately, for the first two events - the birth of humanity and the emergence of more sophisticated stone tools in the Middle Stone Age (MSA) - the fossil record is so sparse that we can make few assumptions about cause and effect: broadly concurrent changes in technology, skull shape and climate are obviously linked, but we don’t know precisely how they interacted.

The third inflexion point is different: it does not happen because of a change in skull shape but a change in the way our brains work.^[7] From around 50,000 BC our behaviour started to evolve rapidly. This suggests that - unlike all other species - we were able to respond to environmental threats using brain power, rather than allowing only the physically best-adapted humans to survive.

From this point onwards - the Upper Palaeolithic or Late Stone Age (LSA) - human DNA becomes remarkably uniform: everyone alive today is probably the descendant of a population of just 10,000 people in Africa. We became, to a much greater extent than other species, able to survive “as we are” anatomically. And technological change began to occur rapidly - even though it was still based on stone, wood and animal products.

Homo sapiens made long stone blades, not just hammers and axes. They became better at killing fish, birds and dangerous animals. They shaped bones and antlers to make intricate tools like needles and fishhooks. Tools changed shape for reasons of style, not function, and the new styles were quickly diffused across the continents. People exchanged precious goods over long distances. They adorned themselves with shells. They built elaborate hearths in their camps and buried their dead ceremonially. They made the first attempts at seafaring. And above all they made art.

The spectacular cave paintings found places like Lascaux and Chauvet depict animals moving dynamically in profile, with the clearest detail devoted to features that differentiate the species, and exhibit a clear artistic language. Theories abound as to the meaning of such art, with some suggesting their placement deep within the caves signifies a mystical function, others that the artists had photographic memories, similar to those of neurodivergent people today. Either way, the art of the Upper Palaeolithic is unlike anything humanity had produced before.^[8]

Taken together, these new features of human life, says Harvard anthropologist Ofer Bar-Yosef, provide evidence that it was characterised by: “rapid technological changes, emergence of self-awareness and group identity, increased social diversification, formation of long-distance alliances [and] the ability symbolically record information”.^[9]

Exactly why this take-off happened is a matter of controversy.^[10] But in the debate about primitive communism what matters is: what forms of social organisation did the technological revolution produce?

If we build our answer only on the archaeological evidence, it might amount to this: all previous humans had possessed imagination - the ability to shape a stone tool using fine finger skills and pass on the knowledge to other humans; they had lived in bands and therefore had social skills and cognition; they had some form of spoken language.

But the objects made by Homo sapiens from around 40,000 BC suggest they had languages just as useful as ours. They could, above all, think abstractly - massively expanding the scope of their imagination - while their more complex language skills allowed them not just to communicate but to reason with each other.

As for social organisation, the evidence suggests that, where conditions were harsh, they lived in small bands of around 25-30 people, forming smaller task groups during the day and camping together at night. The bands were made up of people related to each other by blood, but membership was fluid; the groups interacted with each other and formed part of a wider “tribe”, sharing a common language and way of doing things. Where conditions were better, groups of up to 200 lived in more settled communities: the assumption that all Upper Palaeolithic societies were nomadic is contradicted by the evidence.^[11] It is also clear that, when they engaged in communal hunting projects, or building shared infrastructure or in warfare, people co-operated in numbers over a thousand.

The critical question is: was their social structure egalitarian? In the 1960s anthropologists concluded that it was - because the people of the Upper Palaeolithic were technologically similar to hunter-gatherer societies that had survived into modernity, and the surviving tribes generally practice egalitarianism and altruism.

Modern archaeological scholarship challenges such reasoning. It is now clear that groups existed during the Upper Paleolithic that were able to settle, store food and sustain bigger and denser communities, primarily near the oceans and lakes. One reason anthropologists underplayed their existence is that the sea, which has risen 120 metres since then, covered some of the evidence.^[12] Based on their association with lavish burials, the domestication of dogs and evidence of feasting, the anthropologist Brian Hayden concludes that these bigger, more permanent communities had clear ranks and stratifications.^[13]

In the old account of the Stone Age, foraging gives you primitive communism, while agriculture – in the Neolithic period - gives you class society. In the new account, hierarchies are seen wherever hunter-gatherers live in ecosystems that allow for larger clans plus storage. This is not necessarily a disaster for proponents of “primitive communism”, because it supports a key idea that we are about to explore: that it was the economic surplus – spare food at the end of the season - not the agricultural technique itself, that became the material basis for inequality.

But it does mean the old assumption that Late Stone Age life was lived only in small, egalitarian, wandering bands must be abandoned. Instead, we should accept that a wide range of social forms existed at that time, and the tribes that stored food generated hierarchies, rituals to validate those hierarchies, and the most advanced art. There was, for certain, a marked division of labour between men and women across all Upper Palaeolithic communities, suggesting sexual inequality and (as we will see) prevalent male dominance.

So if we want to know whether primitive communism existed between 40,000 and 10,000 BC, we are forced to call other witnesses….

[To be continued…]

REDS covers the history of communism from the Utopian Socialists and left Jacobins through to the fall of the USSR and the survival of China. There’s an exclusive extract in this week’s The New World magazine.

^[1] Marx, Karl and Engels Friedrich, The Communist Manifesto: With an Introduction by A.J.P. Taylor, Harmondsworth, 1967, p79

^[2] https://www.leidenspecialcollectionsblog.nl/articles/the-1973-chinese-edition-of-the-communist-manifesto

^[3] Henry, Michel, Marx: A philosophy of human reality, Bloomington, 1983, p74

^[4] https://www.smithsonianmag.com/science-nature/essential-timeline-understanding-evolution-homo-sapiens-180976807

^[5] https://www.smithsonianmag.com/science-nature/whats-in-a-name-hominid-versus-hominin-216054/#:~:text=If%20you%20follow%20news%20about,revising%20how%20they%20classify%20primates.

^[6] Klein, The Human Career, p638

^[7] Klein, The Human Career, p638

^[8] Folgerø, P.O. et al, The Superior Visual Perception Hypothesis: Neuroaesthetics of Cave Art. Behav. Sci. 2021, Vol 11, No 81

^[9] Bar-Yosef, Ofer, The Upper Palaeolithic Revolution, Annual Review of Anthropology, 2002, Vol 31, p365

^[10] Scerri, Eleanor, and Will, Manuel, The revolution that still isn’t: The origins of behavioural complexity in Homo sapiens, Journal of Human Evolution, Vol 179, Jun 2023

^[11] Singh, Manvir and Glowacki, Luke, Human social organization during the Late Pleistocene: Beyond the nomadic-egalitarian model, Evolution and Human Behavior, Vol 43, No 5, 2022, p418

^[12] Singh and Glowacki, p6

^[13] Hayden, Brian D., Did secret societies create inequalities in the Upper Palaeolithic? In Moraeau, Luc (ed) Social inequality before farming?: Multidisciplinary approaches to the study of social organisation in prehistoric and ethnographic hunter-gatherer-fisher societies, Cambridge, 2020, pXX

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For the next few weeks I’m going to be focused on launching my book, Reds: A Global History of Communism. I’ve put three years work into the book which is a big physical chunk of paper: to preorder in the UK click here and quote REDS2026! to get 50% off. Meanwhile, here’s a riff on a new report from economists studying global fertility rates, which raises alarming questions about the future of capitalism….

It turns out that the most salient fact about global population is that you can only have children in integers of 1. Though total fertility rates (TFR) are declining fast, to around 1.8 children per every two adults, all numbers after the decimal are statistical, not human realities.

As Jesus Fernández-Villaverde and Patrick Norrick write, it only takes a few more people to decide against having kids than at present to get the population shrinking fast. If the number of childless women grows from, say, 15 out of 100 to 23 in their model, the total fertility rate (TFR) slumps to 1.3.

In their UPenn paper, Terra Incognita: The Economics of a Shrinking World, the authors predict that “unless trends change, world population will peak at roughly 9 billion around 2056 and then start falling, first slowly, then fast”.

We are living through a second demographic transition, which deaths are going to exceed births and population will fall.

Once thought to be a phenomenon of the developed world, and triggered by a mixture of rising income and female access to education, falling birthrates are now a feature of societies across the global south, and are falling faster among the poor than the rich.

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Mexico, Tunisia, Colombia, Thailand, Iran and numerous other middle income countries are recording total fertility rates way below those of Europe and North America.

At a loss for provable single causes, the authors conclude the reason is simply “modernity”. We are all living in organised societies, with structured economic and social relationships, which make having kids expensive, and the more you have than two, the more you are going to suffer financial and career consequences.

That, they say, is the safest explanation for why birth rates among low income and poorly educated women are falling faster than for those higher up the scale.

Whatever the cause, say the authors, it’s unlikely to be reversed. There is no economic scenario in which couples voluntarily start producing more than 2.1 children again. And if they’re right… here’s what the population of three major power blocs would look like in 2100.

A new “limit to capital”?

There are upsides to this. Falling populations will place less stress on resources and maybe help achieve and sustain Net Zero faster.

But the economic downsides predominate. In mainstream economics, output growth equals rising productivity plus rising numbers of workers, or hours worked. Once you start shrinking the workforce, the productivity side of the algebra has to work overtime just to stand still.

But – in normative or “endogenous” theories of capitalism – rising productivity is the consequence of new ideas and the diffusion of new technologies. But with fewer young people you get fewer new ideas, and indeed there is a (highly abstract) model in which you end up with no growth and no new ideas at all.

Long before that however, you get the mismatch that’s perplexing Britain’s OBR: between rising debt – due to welfare systems catering for the old and sick – and falling numbers paying tax. Since most modern states service welfare systems out of current taxation, eventually those systems break, and long before that, so does consent to be governed.

And though humanity’s demographic retreat doesn’t begin, at the earliest, until the 2050s, you can begin to see rational expectations forming among lenders who intend their money to be around in that decade.

Today’s news of surging global 30 year bond yields, triggering extraordinary actions by the Fed, may be driven by short term fears of inflation. But lurking behind them must be the fear that population de-growth leads to economic degrowth, with a massive pile of stranded debt.

This is the first time in the history of the world that rising human capability – what Marxists call “productive forces” – has driven population shrinkage rather than growth.

And it poses an interesting question for critics of capitalism. In all forms of historical materialism – which considers a system like capitalism to be likely time limited due to its endogenous contradictions – there is a model of change that works as follows:

Technological change drives rising expectations; at some point the structure of society can no longer support the existing distribution patterns; dynamism fails; revolution – either political, social or cultural – overthrows the existing elite and a new one forms, around a new distribution deal (or in the case of communism, equality).

For ecosocialists, this sequence is complicated by the intrusion of a third factor: the limits of what the planet can withstand. Instead of straight clash between productive forces and the social “superstructure”, it is global warming that brings the once-dynamic system to its denouement.

I think the UPenn paper means we have to consider a third way that capitalism might end: at the point where its core growth dynamic – more productivity plus more people – simply breaks down because that 1.8 number trends towards 1.3 or below.

We end up with ghost cities, bankrupted states, motorways depopulated of the automobiles that once clogged them, and the innovation process narrows.

There’s a potential solution – of course – and it’s artificial intelligence. If AI can achieve the spectacular productivity hikes promised by its quasi-religious advocates, and the falling birth rate actually spurs us to replace people with machines, you can theoretically have decent GDP growth with a falling population, though you still don’t overcome the problem of how the taxes of the decimated workforce cover the welfare bill.

But in the AI productivity miracle scenario, you also have to explain how consumption is sustained, since a shrinking population and lower wages puts a crater in that metric as well.

This rapidly falling birthrate problem is new, and was not anticipated when we first noticed the climate change problem. Likewise, the addition of climate as a “limit to capital” – on top of the internal dysfunctions observed by Marx, Schumpeter, Keynes, David Harvey etc – is relatively new. And the “AI destroys the market, innovation, entrepreneurship and work” hypothesis, which I’ve covered here before, is also new.

As a result, when we think about capitalism and its future (a subject driving neoliberal economists crazy as hell because Chiara Cordelli had the temerity to foreground the system’s critics in the Stanford Encyclopaedia of Philosophy) we may have to factor in four highly unpredictable dynamics.

The first question is: can capitalism go on working, given the exogenous shocks marching in like waves on a surfing beach. Can the old routine of morphing into a new regime of accumulation, so well documented by Kondratieff, go on working forever.

When I wrote Postcapitalism: A Guide to Our Future I was pretty sure that it could not, because of the network effects of information technology.

The second question is: can capitalism solve, on the terrain of an economy regulated by market forces, the challenge of Net Zero. Compared to 2015, when I wrote the book, I am now far more certain that it can.

The plummeting cost of solar panels, the imminent breakthroughs in nuclear fission, the EV revolution… sure there are bumps in the road ahead, concerning the problem of electrifying economies built around oil, coal and gas, but I think it’s doable. A post-carbon capitalism will look very different, and may have to be quite small scale, but it could conceivably be a mixture of state and market.

The third question concerns AI and robotics. I think there are serious doubts as to whether capitalism as a complex adaptive system can cope with the agentic and post-agentic phases of neural networks. It will destroy not only brainwork jobs; it could automate innovation, destroy the basis for intellectual property per se, long before it automates housebuilding and elderly social care.

The fourth question is that posed by Fernández-Villaverde and Norrick: can capitalism survive the first strategic shrinkage of the world’s population?

If the answer is no, then the transition to what comes next is not a one- but four-dimensional dynamic. We have to solve the problems of debt, low productivity and stagnating growth; the problem of Net Zero; the problem of automating jobs and tasks faster than we create new ones; and the problem of shrinking populations.

If you map their interconnections, to me it points to one, common strategic logic: create smaller and more sustainable communities.

If “modernity”, with its demand for years of education, university fees, a tight career ladder and the frenetic city, is what’s turning people off from having more kids, then just stepping back from it – in a technologically progressive way, rather than as in the fantasies of the ecofascists – might be a feature of what comes next.

The 15 minute neighbourhood – again detested by the right, but an essential part of the Net Zero transition – gains new attractions once you factor its potential benefits in terms of care for the elderly, and care for the young.

If we built slower, smaller, more sustainable communities, with nurseries and supervised playgrounds, the people in them might be inclined to have two children per adult.

I have never been emotionally drawn to this vision: I love living in a mad, frenetic city, zipping along in a cavalry charge of e-bikes in the rush hour and fighting my way to the bar of my teeming local pub.

But if it has to happen, it has to happen.

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Please share and comment. Thank you to all subscribers. Once again, please preorder my book here, use the REDS2026! discount code, and if you like it please leave a review on Amazon to counteract the crazed MAGA and Stalinist reviews that will no doubt follow.

The UK government’s Resilience agenda will ultimately be shaped by the Defence Readiness Bill, which is due in the next King’s Speech. As we await that, and the “National Conversation” on Defence begins to explore challenges of Homeland resilience and defence, we can learn a lot from granular case studies - both from the Cold War and the Second World War.

Unfortunately, there is not a lot in the public domain, or in easily accessible archives.

One exception is the remarkable booklet: It Happened Here: The Story of Civil Defence in Wanstead and Woodford 1939-45 - by Stanley Tiquet. First published in 1948, when memories of the war were fresh, it was reissued by Redbridge Council in the 1990s but remains hard to get hold of.

I am still ploughing through the detailed accounts - it gives the address of every ARP station and there is an hour by hour account of the hardest days of the Blitz in 1940 - but there are some big-picture thoughts worth sharing.

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Let’s start with what Wanstead and Woodford looks like today. It’s part of Redbridge Borough Council, in the far north-east of London, and is still surrounded by green space to its east and west, though it now has the M11 Motorway running through it. Here’s a snapshot from Google Earth, with two railway stations marked in order to position it against the 1948 map.

That’s about four or five modern electoral wards. If we zoom out a little, you can see its strategic position during the Blitz and later in the war during the Doodlebug and V2 campaigns. It’s due north of the docks (now London City Airport and Canary Wharf).

And of course it lies directly between central London and Peenemünde, where the V2s were fired from.

In 1939 this area was home to around 55,000 people, falling to 49,000 by the time the Blitz started, due to evacuation and conscription.

Here’s the first thing that struck me from the statistics: for those 49,000 people, in around 16,000 homes, there were no fewer than 43 Air Raid Warden’s Posts and 14 Rest Centres where people whose homes were bombed could rest and recuperate. Most of the latter were Church Halls, while some of the Air Raid Precautions (ARP) posts were private houses, golf and bowling club premises.

So that’s basically greater than one civilian-staffed resilience institution per 1,000 people!

And they were going to need those institutions….

War Damage Statistics

On the first night of the Blitz, 7 September 1940, the area was hit in the second wave, with three high explosive bombs and 500 incendiaries hitting Wanstead High Street.

Throughout the whole course of the Second World War, 532 bombs of various types fell on the borough, followed by 25 V1 “Doodlebugs” and 14 V2 rockets. Here are the casualties they inflicted:

• Bombs: 129 dead, 194 injured, 235 required first aid.

• V1: 54 dead, 109 injured, 276 required first aid

• V2: 55 dead, 74 injured, 278 required first aid.

Terrifying and destructive as the Blitz was, the V1 and V2 phase in 1944-5 (what we would today call deep precision strike), killed and injured proportionally more people.

Now here’s a map from It Happened Here, showing the precise location of the projectiles. It is laid out with North at the left hand edge. As you can see, some areas were hit with densely clustered HE bombs, while the whole area was vulnerable to the Doodlebugs.

Here’s the same map, rotated and superimposed on today’s satellite image:

I don’t know if this is the famous Poisson distribution that forms the premise of Thomas Pynchon’s novel Gravity’s Rainbow, but it is pretty terrifying.

Some 509 houses were destroyed; 1,348 seriously damaged and 13,507 had to be patched up. That’s the vast majority of the 16,790 homes in the borough!

Dense network

As we think about lessons for the UK’s own resilience efforts, it’s not the carpet bombing, nor even the potential for precision deep strike that should concern us primarily.

• It’s the absence of that dense network of civilian support agencies that existed in the Second World War.

• And the current absence of statutory duties on councils and the emerging Strategic Authority layer to address this problem.

• And - of course - the blithe insouciance most of the British public is displaying amid the worst geopolitical tension in their lifetimes.

Tiquet’s book reveals that, as early as July 1935 the Home Office sent instructions for preparing air raid warnings, wardens, treatment stations and decontamination centres. It was followed by a series of memoranda and instructions that by 1938 filled “two bulky folders in the Town Clerk’s keeping”.

I would strongly suggest to anyone involved in drafting the Defence Readiness Bill gets their hands on those bulky folders, and has a good look.

Because though places like Redbridge are massively different - physically, demographically, politically - today, how the UK stood up a civil defence network by the time of Munich, will contain a lot of valuable and enduring lessons.

During the Munich Crisis the council had to distribute gas masks from 18 depots, requiring it to mobilise 800 workers for the task. Tiquet notes:

“Now the men and women of the ARP had their first opportunity to work in close contact with their neighbours, and many residents learned with surprised that Mr So-and-so down the road was one of these new Wardens, and that it was an essential and long planned part of his job to help them.”

The book shows that Munich was the turning point in preparation, so that by the time the war broke out in September 1939, “little had to be done to equip the centre for its work” - because there were 60 men and women already working 24x7 on civil defence - again, it is worth reminding oneself: for a borough with 55,000 residents.

Once the Blitz began in earnest, the control centre had a map table with coloured discs that were moved across it, just like in the HQ of Fighter Command in The Battle of Britain movie. That’s how organised UK civil society was at granular level.

It probably helped that Churchill represented neighbouring Epping, and in fact switched seats to Wanstead and Woodford in 1945. And the council was an absolute Tory stronghold throughout the 1930s. But the story of this leafy, lower-middle class patch of Outer London holds many lessons for us (and indeed for the two Labour MPs whose constituencies overlap there, armed forces minister Calvin Bailey and Defence Secretary Wes Streeting, and Tory grandee Sir Ian Duncan Smith).

Could we emulate this effort today?

Today, around 72,000 people live in the area that was Wanstead and Woodford. I don’t know the area well - I campaigned there for Labour in 2019 - but the internet tells me that the area outlined above has a 62% white, with around 12% Asian and 7% black population. It’s an affluent, managerial suburb according to ONS data, and significantly better off than the whole of Redbridge.

Long before we get to explore the granular problems of mobilising today’s more diverse and atomised populations for resilience duties, it’s the state that has to get serious - about physical preparation, messaging, the maintenance of critical infrastructure and information security.

The fact that Wanstead and Woodford started mobilising in 1935 - before any of the lessons of the Spanish Civil War had been learned, and while Labour was still voting down the annual Defence Budget - should be a wakeup call for those involved in the UK’s resilience and Home Defence debate.

To repeat - I don’t expect to be dealing with a Blitz type situation, even if the worst happened and Russia attacked NATO. What we’re dealing with - as the Leipzig drone incident last week reminds us - is an escalating and unpredictable hybrid and cognitive campaign by Russia, that could quite easily escalate if a cyber- or sabotage- attack hit a vulnerable target.

The “Call for Views” just issued, for a review of the Civil Contingencies Act 2004, asks respondents to consider (I summarise):

• Should Category 2 responders - the privatised utilities etc - be given duties similar to the police, fire and ambulance services?

• Should Local Resilience Forums be better funded and brought onto a statutory basis?

• Should Strategic Authorities and Mayors be given the primary role co-ordinating civil contingency action?

• Can faith and community organisations play a more formal role?

The survey runs until 5 October, and is open to anyone involved or adjacent to civil contingencies. My experience researching and wargaming civil defence issues at the University of Exeter suggests the answer to each of these questions should be Yes, and pronto.

What we need is a clear and unitary local command structure in time of civil emergency - and the current reforms to Strategic Authorities and Regional Police Forces have to converge on one set of boundaries and a fairly simple wiring diagram going from the Cabinet Office, to the armed forces Regional HQs, down to the new Strategic Authorities.

As I pointed out in my last posting - around a dozen of these Strategic Authorities are still to be decided, while there’s not even a proposal on the table for Regional police forces.

I’ll return to It Happened Here once I’ve dived into the stats, and try to present them in an interactive format. For now, from the book, here’s an image of incendiary bombs on Woodford Green in 1940 - an oil painting by a local artist.

You can just see a fire pump and four incendiaries on the green, with the dramatic searchlights playing into the sky. Here’s what it looks like today:

Thank you for reading. Please share and subscribe if possible - and a reminder to new subscribers that I am only currently accepting monthly, not annual, signups.

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On 31 July the new government of Andy Burnham dropped a bombshell into British politics that few have fully understood.

In a Cabinet statement entitled Rewiring The State, the government pledged to:

• Create a Strategic Authority in every English region, and align police, fire, social care and other service boundaries with those authorities

• Devolve some income tax receipts to English local authorities

• Hand more of local business rates collected to local authorities

• Devolve some public spending allocated to social housing to Strategic Authorities

• Devolve the power to raise a tourism tax to all Mayoral Strategic Authorities

• Force every English region to choose between mayoral and non-mayoral models, with greater powers granted to the former

• Shrink the Civil Service and distribute its expertise to regions

• Abolish some arms-length bodies, by diving their resources and responsibilities between Whitehall ministries and regional governments

It’s all being done fast, with the full map of Strategic Authorities finalised this year, and in place by 2028. The full details will be published alongside the Autumn Budget on 28 October 2026.

If it works, it is not so much a new wiring diagram as a new state – requiring cultural change in Whitehall, massive upskilling of local government – both at the official level for those elected – and a long hoped for (by me) bonfire of what the statement calls “performative consultations”. Among other things, the Office for National Statistics will be required to produce timely ultra-localised data.

The aim of the project is to achieve Burnham’s goal of “good growth in every postcode” – itself a total reversal of the dynamics that have driven the UK economy in the era of free-market globalisation (a.k.a neoliberalism).

I support these reforms, and I think they are brave.

But in this edition of Conflict & Democracy I want to explore their implications for national security. The UK government has initiated its “national conversation on defence” at sotto voce. But in academia, local government and the Cabinet Office itself there’s a lot of work going on to identify ways to make UK society, infrastructure and governance more resilient in the face of hybrid attack.

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In my University of Exeter paper, Designing the 21^st Century Wartime State, I laid out some suggestion for how the Defence Readiness Bill scheduled for next year, and the “War Book” – which outgoing Cabinet Secretary Darren Jones confirmed is being drafted – might rewire the state under conditions of a conflict with a peer adversary.

Here I will consider what Burnham’s plans for Strategic Authorities and fiscal devolution might mean for the agenda I spelled out in the Exeter paper.

Putting the ‘Strategic’ into Authority

Let’s start with a couple of maps. First, the heat map of English deprivation – which is a fair proxy for low, bad or zero growth in a postcode:

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A report from the Transition Security Project generated a front-page Guardian story last week, claiming that the MOD’s Defence Investment Plan will “cost 10,000 jobs”.

It’s bullsh*t, of course, but let me first state where I agree with the authors of Buying The DIP: The Defence Investment Plan Will Lead to Domestic Unemployment.

I am against raiding existing departmental capex budgets to fund Britain’s journey to spending 3.5% of GDP on Defence.

All historical experience suggests that rearmament should be funded by – as the Kiel Institut puts it - “borrow now, tax later”: taxing the proceeds of growth arising from massive investment in manufacturing and R&D, financed by targeted borrowing.

By limiting the DIP to what could be scraped out of other departmental budgets, we are avoiding the inevitable moment where rearmament through borrowing has to be accepted.

I also agree that the MOD is wasteful. That is why Labour launched Defence Industrial Strategy 2025, and a huge Defence Reform process, whose intent is to eradicate waste, attack prime contractor rent-seeking and ensure that extra money spent on defence goes to UK regions starved of it under the Tories.

But that’s the limit of my agreement with the TSP authors, Kevin Cashman and Khem Rogaly, whose think tank believes UK defence spending is negative full stop.

In 2024, two years into the Ukraine war, Rogaly penned a report demanding the diversion of UK public spending away from defence towards mitigating climate change, shrinking the defence workforce and reducing the UK armed forces to the point where they can no longer achieve “power projection”.

With our data cables and pipelines under attack from Russia, and Russian-paid saboteurs torching Keir Starmer’s house, it might be worth asking cui bono if this wish were to be enacted.

But the TSP’s entire raison d’etre is to prove that Defence spending inevitably conflicts with the priorities of Net Zero. Its website states that it:

“investigates the US and UK military industrial complexes as economic, climate and geopolitical threats.”

I’m no fan of investigations whose outcomes are decided in advance - especially one that labels our own defence industry a “geopolitical threat” but says nothing about the Russian murder machine raining hell onto Kyiv as I write.

But let’s look in good faith at the TSP’s assertion that investing in Defence “will lead to domestic unemployment”.

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Funding the DIP

To fund the DIP, Rachel Reeves demanded departmental capex reallocations totalling £6.8bn over the next four years. £4bn billion came from across the whole of Whitehall, while a further £2.8bn came from energy and transport capex.

Compared to the £5.1 trillion the British state will spend over the same period, that figure is peanuts.

It is a reallocation (not a cut) amounting to 0.117% of total spending. As I say, I am against it because I want to see the government embrace targeted borrowing, but it is a minuscule amount.

As a result of the extra cash, the MOD claims nearly 60,000 jobs will be created in Defence and related industries.

The TSP generate their “10,000 job cuts” headline by assuming that Defence spending creates fewer jobs than if the money had been spent on capex in energy and infrastructure.

At one level this is a “Bears Poop In The Woods” story – because ONS estimates of jobs created per £1m of public spending always show that Defence creates fewer than, say, healthcare or housebuilding.

That is because Defence is one of the most high-productivity sectors of the economy, and its Aerospace subsector even higher. But it also produces massive economic benefits in terms of Gross Value Added.

Unfortunately the TSP report fails to consider that fact at all.

Murky Maths

Here’s a chart summarising the ONS methodology on public spending vs job creation:

It shows Defence creates about 5 direct jobs for every £ million spent and 10 once you include indirect job creation. Low paid and insecure sectors achieve much higher job creation.

For reasons known only to Whitehall, the MOD did not use these estimates to come up with its 60,000 figure, but instead:

• They took the baseline “jobs created per £1 of MOD spend” figure from 2023/4 (the latest available),

• applied productivity and inflation deflators,

• assumed the amount of MOD budget spent in Britain remains constant to 2029,

• and did the math….

• Significantly, they calculated jobs from total MOD spend, not the capex spend that most of the DIP money will go on, and from which most of the other Departments lost out.

The MOD methodology is outlined here.

The Transition Security Project did something completely different. They divided the MOD’s claim of 60,000 jobs created by £25bn, to calculate that each million pounds spent creates just 2.4 jobs. Then they estimated – correctly – that capex spent on building railways and grid infrastructure might create more than that.

But… the DIP cost £15bn, not £25bn, so where did the £25bn divisor come from? The answer is they seem to have included all the extra money allocated to Defence since Labour took power.

But the DIP claims that “this new investment plan” is what produces the extra jobs, not the money already spent. So we’re already looking at mismatched claims.

In addition, the TSP authors focused on capex alone, while the MOD figure is based on total spend including services like maintenance.

If they’d mirrored the MOD’s method, the TSP would have to accept that the extra £15bn creates at least 4.0 jobs per £ million spent, not 2.4.

They are right that spending money elsewhere would probably create more jobs. If you spend a million pounds on free school meals it might create ten school meal attendant jobs, while if you spend it at a missile factory it might create four, or even two.

But in addition to creating new jobs, increased Defence spending creates economic value - something the TSP investigation forgot to investigate.

The Defence Multipliers

Multiplier effects from Defence spending are one of the most contested issues in economics. But there is good evidence that they are greater than 1:1.

In the run up to the election, Labour’s Defence team drew on a consultancy report from Bain & Co. It showed that the multiplier for UK Defence spending is 1:2.2. For every billion spent in Defence, you get £2.2bn of gross output.

Other multipliers are available, and all analysts acknowledge that the final outcome depends on the successful execution of industrial strategies across the board, on regional effects and third order spillovers.

But if we look at GVA and productivity, not simply jobs created, the picture becomes a lot more positive. The y-axis of this chart, from the Bain & Co research, shows that Defence spending has a higher multiplier effect than general manufacturing, and the y-axis shows that the average productivity of its workforce is way higher than in construction and transport (where the TSP want to spend the money):

That is because Defence jobs are among the highest paid in manufacturing. The MOD’s figures show that the average Defence job pays £57k, compared to around £38k across the rest of manufacturing.

Plus - again escaping the notice of our investigators - Defence has some of the highest unionisation rates in the private sector and (thanks to Labour) the unions now sit on the Defence Industrial Joint Council with the bosses of BAE and Lockheed Martin, on equal terms.

While we’re on the subject, 21% of the Defence workforce is female. And while that leaves a lot of room for improvement, it is 6 percentage points ahead of construction as a whole, while the on-site construction workforce is just 1% female.

The point here should be clear. Even if Defence spending creates fewer jobs than money spent on energy and transport (say 5 jobs compared to 9): (a) the economic impact is likely greater; (b) the socio-political impact might is probably higher and; (c) we might not care, because at the end of the day Defence, like clean energy and transport, is a public good.

Ultimately we spend on healthcare because we need hospitals, not jobs. The same argument goes for defence.

The left neoliberals

Let us look at the wider arguments against Defence spending in the TSP report. It states:

“The loss of economic infrastructure — such as regional transport networks or energy investments that reduce bills — will not be replaced by spending on weapons programmes that do not provide wider value to the economy beyond employment.”

This is an argument borrowed straight from neoliberal economics, which often treats Defence as luxury spending.

For me, living in a country that cannot be conquered due to possessing a strategic nuclear weapon would fit my definition of “wider value”.

So would generating intellectual property, AI sovereignty, a dense network of university research labs - plus the intangible goodwill and strategic advantage that allows the British state to shape the world around us.

So would having a workforce with secure jobs, a track record of promoting women into skilled tasks, trade union recognition and some of the highest wages in Britain.

The authors, in short, do not seem to recognise that security, defence and resilience, and the intellectual property they generate, are public goods - on which our critical national infrastructure, democratic freedom, trade position etc depend.

In making their case against Defence investment, the authors also ignore the work done by Labour to transform Defence. For example, they claim that:

“The recent growth in European military spending now supports nearly 200,000 jobs in the US due to the billions spent by European governments on weapons imports. The UK is a core contributor to this, with 85 per cent of its weapons imports coming from the US. Widespread spending on weapons imports maybe one reason that military spending has such a poor jobs multiplier.”

But the entire premise of Labour’s Defence Industrial Strategy is to “Build in Britain” – that’s why the DIP allocated a massive £6bn to the GCAP stealth bomber programme with Italy and Japan – whose purpose is to wean the UK off US-produced combat aircraft.

And it is why the MOD’s assumption – of a steady 53% of the Defence budget spent domestically – is probably too negative by the time we get to 2030.

In addition, the TSP authors ignore Labour’s proposal for an Offset Scheme, whereby foreign companies winning UK defence contracts will be obliged to create economic value in the UK to a standard % of the contract value - a kind of tax on offshoring.

The purpose their muddled maths and faulty assumptions becomes clear once they outline their wider objections to Defence spending: it is unnecessary because it supports the aims of “a persistent military footprint in the Middle East”, a “persistent military presence in the Indo-Pacific”, a “persistent forward presence in Latin America and the Caribbean”, plus military engagement in the Caucasus, Africa and Moldova.

If you are going to object to these commitments, fine: they amount to less than a quarter of a billion pounds.

But please don’t try and say that such spending on global reach is “wasteful”. Because you just cannot know.

You cannot know whether the two small Offshore Patrol Vessels the Royal Navy has stationed in South-East Asia are, economically, worth their weight in gold or guano. Because, again, the value of military presence in the Pacific cannot be calculated on the neoliberal matrix of “value for money”.

The authors make the point that there is about £1.5bn of fraud risk and an equivalent amount in written off contracts in the MOD accounts. That is lamentable. It the legacy of 14 years of Tory government. Labour’s intent is to clean it up. But it is not an argument for refusing to rearm.

They also point out that the UK’S nuclear deterrent is £3.7bn more expensive than the French. But there are good and bad arguments contained in that objection.

The French practise defence dirigisme: they buy domestically from a substantially state-owned industry – all of which makes their deterrent cheaper. I, too, would prefer some dirigisme and state ownership here at home.

But the French nuclear posture is framed around the concept of a “warning shot” which the UK does not subscribe to: our deterrent is for strategic use only – a second strike capability designed to deter Russia from a nuclear attack. They are two different capabilities.

In addition, the UK nuclear deterrent is assigned to NATO and the French one is not.

So we are not comparing like with like. The only way we’ll ever find out whether the £3.7bn discrepancy is a good thing or a bad thing is if we ever have to wage a nuclear war. Personally I would prefer a nuclear weapon that is expensive and achieves deterrence to one that is cheap and might not.

The least defensible statement in the TSP report is this:

“The Ministry of Defence has forced through cuts that harm the everyday security of citizens and reduce the UK’s resilience”.

Hold on! The DIP funds a strategic investment in 6G combat air; it switches the navy from crewed ships towards uncrewed ones, putting fewer sailors’ lives at risk; it puts £1.6bn into AI and quantum computing – where losing the race with China could have catastrophic rather than incremental outcomes. It will create a substantial stockpile of munitions and fund a new lab to protect the UK against biological threats that are proliferating from the CRINK countries.

All of these are, again, public goods that cannot be contained either in raw jobs or GVA figures.

So it is not proven that the DIP “harms the everyday security of UK citizens”. In fact, it massively enhances it. And once Andy Burnham’s resilience agenda kicks in, it will enhance it further.

Regional inequality

There’s one more argument in the TSP report that deserves addressing:

“Military spending is also a poor solution to regional inequality as more than half of it goes to the south of England and London”.

Actually London is not a huge per capita recipient of Defence spending: the £3bn a year it gets amounts to £320 per head of population – around the same as the East Midlands. What’s true is that South West and South East England get around £7bn each because that is where the Royal Navy is based.

But Defence spending is also a massive regional success story for the North West, where nuclear submarines and a large amount of aerospace is built. As a result, if you divide the impact of defence spending by the number of jobs created – which is where we started out – the standout winner is …. Andy Burnham’s home region:

But because Labour has identified areas in deficit - like Wales and Tyneside - it has made a big play of remedying that.

The whole point of the DIP, alongside Labour’s Defence Industrial Strategy – which I helped author while in opposition - is to spread the investment across the regions.

Pursue the synergies, not the conflicts

The TSP report speaks to an important sub-theme that is emerging as Labour moves into Burnham era. Andy Burnham, writing in the Times, rightly emphasises the resilience agenda alongside hard military power.

I’ve written elsewhere that his work on resilience after the Manchester Arena bombing will allow his administration to bring new dynamism to that agenda – sorely needed given the shaky state of the UK’s privatised energy and water infrastructure.

What we cannot have is a debate that says “resilience versus defence”. The two have to work in synergy, as they do via Article 3 and Article V of the North Atlantic Treaty.

As we leave neoliberalism behind, we have to learn to conceive the inputs and outputs of public spending in human terms, not sheer value for money metrics.

Achieving Net Zero and enhanced energy security, and deterring Russia from attacking ourselves and NATO allies, are twin objectives vital to the human security of the UK population.

Deterrence costs money, and it is clear that the new government will retain Labour’s commitment to spend 3.5% of GDP on Defence. We need to find the maximum synergies between the Net Zero/energy security objectives and the hard Defence imperative.

To do that, we should reject poorly evidenced claims about Defence production undermining the security of the population and “causing unemployment”.

Thanks for reading. I’m feeling public spirited today, so this is unpaywalled. Back to the exclusive content next week. Here’s my latest at The New World. Please share and subscribe.

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Since the full-scale invasion of Ukraine my recurring nightmare has been to wake up to the headline:

First Nuclear Strike Since 1945: 100 Dead!

A low-yield airburst over an abandoned airfield might produce such damage, with minimal contamination if done carefully.

It would fit the profile regularly rehearsed in Russia’s ZAPAD military exercises: escalate with a tactical nuke to de-escalate from a land grab against a NATO country.

That such a possibility is real was reflected by the decision in January this year to move the Doomsday Clock, maintained by the Bulletin of Atomic Scientists, to “85 seconds to midnight”.

In his new book, 85 Seconds to Midnight: A Physicist’s argument against rearmament, the acclaimed scientist Carlo Rovelli makes an impassioned plea for nuclear disarmament, and gainst the current round of rearmament Western countries have engaged in following the 2022 invasion of Ukraine.

I admire Rovelli. Not only for his groundbreaking work in theoretical physics, but for the explanatory power of his book Helgoland, which traces the origin story of quantum physics.

So it pains me to say that his book as at best, facile and at worst - when read alongside his statements on the Ukraine war - a sustained apologia for appeasing Russian imperialism.

At the core of Rovelli’s book is the story of the debates, mistakes and questionable choices that led physicists in the 1940s to build a nuclear bomb. He believes the US decision to begin the Manhattan project was “irrational”, because the war was always going to be won through conventional means. And that it left humanity with a catastrophic capability for self destruction.

But woven around this story is a narrative about today that relies on crude parallels and outright historical revisionism, wrapped up in simplistic logic that – bizarrely for someone trained in scientific rigour – does not cohere.

Scrambling the 1930s

The trouble begins when Rovelli tries to explain the march to war in the late 1930s. Germany armed itself, “as it has today” he interjects, and then demanded border adjustments along cultural and linguistic lines “as happened not long ago after the collapse of the Soviet Union”.

These asides are fatuous: Germany is only rearming itself today after an agonising debate, following Russia’s attack on Ukraine. The only “border adjustment” Germany achieved during the collapse of Soviet communism was reunification of the two Germanys, which was the overwhelming desire of people on both sides of the Berlin Wall. There is no way that either of these acts can be compared with those of Nazism.

He then claims the Allies showed “little enthusiasm” for an anti-German alliance in the 1930s, and that this explains Stalin’s sudden embrace of a strategic pact with Hitler on 23 August 1939.

Well, Carlo, it’s a lot more complicated than that. So “little enthusiasm” did France show for collective security that it signed a mutual defence treaty with the USSR in 1935, as did Czechoslovakia.

The reasons Stalin sacked Maxim Litvinoff in May 1939 and installed Molotov, telling him to “clear the Jews out of the foreign ministry” are disputed by historians. Either way, it led to the Soviet crime of the century – a new, strategic alliance with Nazism that destroyed the morale of millions of left-wing European workers.

And as late as the Autumn of 1940 Stalin considered actually joining the Axis – a move that would have left communist parties from France to Japan accepting permanent Nazi rule.

Rovelli continues the story of the 1930s:

“Russia, frightened by Hitler’s expected continental triumphs, rushes to rearm itself (as it is doing now). Germany, worried (as now) by the abrupt acceleration of Soviet rearmament…does what was planned from the beginning: it invades Russia.”

This gets the sequence plain wrong. Soviet rearmament began in 1927, spurred by the spurious concept of the “Third Period”, which predicted the triumph of fascism everywhere, and an imminent attack by Britain and France.

For sure, the triumph of Nazism, the repudiation of disarmament, and the Spanish Civil War all spurred the USSR towards greater rearmament, but the idea that this was a simple tit-for-tat escalation driven by irrational fears is outlandish.

Rearmament in the 1930s was a rational response to the deterioration of collective security and the collapse of the League of Nations. Those who started late got conquered.

And there is no valid parallel between Russian rearmament today and that of 1930s. Russia began its hybrid offensives in its “near abroad” with Georgia in 2008, seized Crimea in 2014, engaged in prolonged asymmetric warfare in the Donbas ever since, and mounted a full-scale invasion of Ukraine, with an explicit ethno-nationalist aim of destroying its language, culture and sovereignty.

The only possible way you can interpret these actions as defensive, is if you view them through the dirt-smeared lens of “NATO aggression” – a trope all too familiar on the Italian Stalinist left.

Unfortunately, Rovelli has a track record of echoing the “NATO aggression” trope. On the eve of the Russian invasion, he tweeted:

Five words are sufficient to stop the Ukraine madness: "NATO won't expand to Ukraine". So hard to say them?

Subsequently Rovelli signed a “peace” declaration accusing NATO of aggression against Russia in Ukraine, called for the population of Ukraine’s Donbas region to be allowed to vote to join Russia, and framed the 2014 Euromaidan uprising as a Western-backed “coup”.

None of these utterances are repeated in the book, which instead sticks the same kind of saintly appeals for peace that Jeremy Corbyn has become renowned for.

Is fear of Putin irrational?

Rovelli’s chapter on the Manhattan Project contains the moral-philosophic heart of the argument. It was the product of “exaggerated fear”:

“It is fear, unmotivated and irrational fear, that (then as now) makes us aggressive.”

Since we find ways within civil society to mitigate aggression – rule of law, constitution, human rights – why can’t we do the same in relations between states, asks Rovelli?

For certain it is a human genetic trait that fear drives aggression. And we have certainly erected ways to mitigate such aggression between states: the UN Charter, its convention on the law of the sea, and numerous multilateral agreements – for example the nuclear non-proliferation treaties.

But there is an entire academic discipline – International Relations – founded on the observation that, for states, in certain circumstances, armed conflict can be rational.

The realist view in IR, which assumes a baseline of inter-state anarchy and self interested action, may not rank alongside theoretical physics as science. But as a framework for understanding conflict it is ubiquitous in academia, and cannot be lightly ignored in favour of admonishing governments to “do good”.

Armed with the conviction that all inter-state rivalry is irrational, Rovelli makes the sweeping claim that Israel vs Iran, Russia vs Ukraine, Japan’s rearmament in the face of Chinese expansionism etc are each irrational actions.

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• Change the fiscal rule that demands debt be falling over a three-year horizon

• Exempt Defence and Resilience spending from the debt-falling rule

• Turn the £28bn National Wealth Fund into a Defence, Security and Resilience Fund.

• Join the Canadian led Defence, Security and Resilience Bank

• Meet the demands of the Strategic Defence Review in full, with 3% of GDP spent on Defence by 2030

• Set out a pathway to the NATO 2035 target of 3.5/1.5% spending on Defence and Resilience.

• The UK’s ability to shape the defence of Europe is in peril.

Borrow only to invest. It’s the first of Labour’s three fiscal rules and it is correct. So is the third fiscal rule, which caps welfare spending as a percentage of GDP – though it is already broken.

But it’s the rule in the middle, the one about the need for falling debt at an arbitrary date in the future, which has stymied the government’s Defence Investment Plan, forced one of its most competent and popular ministers to resign and – worse – now threatens to end the whole Starmer project.

Last month I was shown polling data on which public figures are trusted to tell the truth about security and defence. Sir Mark Rowley, boss of the Met, and Ken McCallum the boss of MI5 scored highest. Keir Starmer scored abysmally and Andy Burnham not much better.

Only one politician was seen as communicating the defence message positively and that was John Healey – and that is why forcing him to resign, over a catastrophically inadequate Defence budget settlement, is the low point of this administration.

But there is a way back, and it’s embodied in the fiscal rule: borrow to invest. Labour plunged itself into turmoil over the Defence Investment Plan because, yet again, it responded to a sudden demand for higher Defence spending by trying to raid other budgets.

In a country crying out for investment, growth and higher wages – and having been on the doorsteps of Makerfield and on the streets of Wigan this weekend, that cry is justified – taking capex from energy, schools and healthcare was always going to be fractious and self-defeating.

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What’s at stake?

So let’s start by laying out the sums involved. They can’t be accurate, as we don’t know what growth is going to look like in 2030. But according to the IISS think tank we are talking about the difference between £96.4bn and £109bn.

Starmer’s offer to spend 2.68% of GDP on Defence in 2030 is way short of his own pledge to meet 3% in that year and not credible as a pathway to the pledge he made at the Hague, with all other NATO leaders except one – to spend 3.5% by 2035.

Next, let’s understand the stakes. Failing to meet the 3% target – and indeed back-loading it so the money cannot be spent up front – does not only leave the military scrabbling around for kit.

It undermines Britain’s geopolitical credibility and freedom of action, and places in peril something Labour has cherished since the 1940s: the UK’s position as America’s “leading ally” in Europe.

This chart shows how rapidly other European nations have hiked their defence spending.

Poland, Lithuania, Latvia, Estonia, Norway and Denmark are already spending more than 3%. Germany, though still below 3%, is already spending more than Britain in cash terms – knocking us off pole position in absolute spending.

And by 2030, all of the above plus Finland, Sweden, Norway, Türkiye, Greece, Netherlands and Denmark will hit 3%, leaving the UK in the second tier of commitment, together with France, Romania, Bulgaria, Portugal, Slovenia, Hungary.

An engine for growth

Of course, there are arguments against Defence spending – and the far left has been trotting them out since Healey’s resignation.

The MOD is profligate: yes, probably, but Healey spent two years trying to sort that out. The defence firms are wasteful and rip off the taxpayer: again, Labour’s defence industrial strategy, which I worked on, was designed to attack that problem by encouraging new tech companies and established SMEs into competition with the primes.

Defence is a poor return on investment? Absolute garbage. Here’s a chart from Bain & Company, whose research influenced Labour’s defence investment strategy while in opposition. It shows that among UK sectors, Defence delivers more than double the inputs in terms of output and in subsectors like aerospace and defence-related IT, it is way better than the red blob below:

The Labour government buys the idea of Defence as an engine for growth, and buys the 3% and 3.5% targets, and – because they see intelligence we don’t – understands the peril we are in.

So why have they trapped themselves with a debt rule that threatens to undermine not only their ambitions on Defence but on all other investment-led growth projects?

Rachel Reeves made one big advance in her first Budget: she replaced the technical measure of debt – Public Sector Net Debt – with a more accurate one called Public Sector Net Financial Liabilities, known as PSNFL or “Persnuffle” by economists.

This allows the £2 trillion debt pile to be understood in relationship to the growth it generates and the assets it has purchased. But she also made two mistakes:

• First, she refused to reform, or change the leadership of the Office for Budget Responsibility. This is the Treasury that perennially got things wrong in the 2010s, authorising a doom loop of autsterity because it underestimated the effects of spending cuts. The OBR simply does not believe in the government’s strategy of investment-led growth, and continually tries to countermand Reeves by predicting it will not work.

• Second, she tightened the fiscal rule that demands debt be falling after a certain period. She set 2029-30 as the target year and then said, once we get to next year, the horizon moves to three years into the future. So in every budget from now on, she has to guarantee PSNFL to be falling as a percentage of GDP in three years time.

It is not logical and it is not necessary. We’re in a polycrisis. Wars are proliferating. The country is dilapidated. Why would you mandate yourself to pay down debt when the only debt you’re allowed to incur is the benign, investment-focused kind?

What about the bond market?

Bond market nervousness about lending to the UK rightly haunts HM Treasury thinking. I am on record as slamming commentators who underestimate the fragility of Britain’s fiscal position.

There is a view that says you can solve the high interest rates Britain has to pay to borrow by ending Quantitative Tightening (the Bank of England selling bonds it bought during the finaicial crisis) and by ending the issuance of index-linked gilts.

But though I agree with both these arguments, on their own they will not solve the problem of high yields: bond market investors are increasingly foreign hedge funds, not British pension funds, and what they worry about is not the size of the debt pile but the UK’s unique exposure to global inflation (which threatens to erode the value of their investments).

Andy Burnham and his supporters are right to state that the ultimate cause of this is the post-Thatcher privatisation of the basics of human life: housing, energy, water, rail fares – all exorbitantly expensive because handed to private, rent-seeking corporations.

If we had a long-term programme of taking ownership and control of these utilities and assets into public hands, that would be a signal to those who lend to the government that we’re on a path away from high inflation. It would also, as Burnham points out, be a way of assuaging the cost of living crisis for working people.

But it will take time, and the Defence issue is urgent. All well-informed security analysis believes that, once Vladimir Putin achieves peace with Ukraine, he will rearm and menace Europe.

So spending on Defence now, to prepare for future aggression and deter it in the present, is the most important duty of government. I don’t know what’s in the Defence Investment Plan, but it will likely involve tradeoffs between large, expensive projects and vital, urgent ones.

The point is, it will cost £28bn at least – and it is not some whimsical figure, but one designed to meet the demands of the Strategic Defence Review, carried out by three independent experts last year.

The SDR did something very simple: it measures the threat and specifies the kind of military capability you need to meet it.

There have been calls since Healey’s resignation to revisit the SDR, and do a new one. Please understand those calls for what they are: a demand to bury our heads in the sand: to recalibrate the danger according to what we can afford. That’s what every previous government did - and why the Tories allowed Defence spending to fall by 22% in real terms!

How to fix this

To meet the investment demanded by the SDR, Rachel Reeves’ own principles demand that she borrow. So the second fiscal rule must be either suspended or altered. There are several ways of doing it:

• She could push the “debt must be falling” rule out to five years or even, as Lou Haigh MP has suggested, 10 years.

• She could exempt all Defence spending above the peacetime 2.5% baseline from fiscal rule #2.

So you are still borrowing only to invest. You are still capping welfare. You are still seeing debt falling in three, or five years, but “Defence debt” is allowed to rise. This is what Germany has done – and sends a clear signal to bond market investors that it is not for welfare or current spending that we are borrowing.

• In addition, she should join Mark Carney’s initiative for a multilateral Defence Security and Resilience Bank.

This involves the UK subscribing capital to a joint fund, which can achieve a higher credit rating than the UK’s, and then borrowing maybe 10x more capital from than fund, at AAA rates – below the interest rates applying to UK debt.

Reeves’ officials have steadfastly refused to support this move, preferring their own scheme which is going nowhere. The DSRB does not give you the ability to borrow now, or likely before 2030. But by signalling to the bond markets that we intend to do the heavy lifting of rearmament in concert with other countries, we reassure investors we’re not going to incur excessive debt on our own. That in itself should knock a few basis points off gilt yields.

• In addition, Reeves should repurpose most new Premium Bond issuance as Defence Bonds.

Let high street investors put their money directly into Defence growth, and let institutional investors take a stake in such bonds as well. It would be a great communicative as well as fiscal move.

• Plus, she should repurpose the National Wealth Fund as a Defence, Resilience and Innovation Fund.

Of the £28bn it is supposed to lend, the NWF has issued just £2bn – because it cannot find viable private sector projects. Better to put that money to use in Britain’s surging defence-adjacent tech sector, and into SMEs that are starved of capital.

• Finally, the UK must renew its efforts to join the European SAFE mechanism.

The French blocked us the first time around, squeezing UK firms out of access to a massive £150bn lending fund. As SAFE begins to dole out large sums of cash, with Romania alone getting €15bn this year, we need UK firms to be in that market and, ideally, the UK as a core participant to any future pooled investement.

Of all the measures proposed above, finding a way to mitigate the “debt falling by arbitrary year X” rule is the most important. Whether by changing the rule, or exempting defence, a way must be found to honour Britain’s commitment to allies, not only to meet our own 3% target but to meet the 3.5% pledged at the Hague.

Because borrowing to invest, with the money spent in British towns, with British firms, creating jobs and spending power in Britain’s high streets - is the Labour thing to do.

If we don’t, we leave the military short and our country diminished.

SAFE, together with the European Defence Industrial Strategy, is already shaping and centralising the European defence market in ways that have never been seen before.

• If we lose our position as “leading ally” in Europe, we lose our ability to influence the geopolitical space around us.

• We lose our ability to shape coalitions of the willing, such as for Ukraine or the Strait of Hormuz.

• And we risk losing technological leadership in areas vital to our future - quantum, AI, space, cyber and 6th generation air power.

And alongside the perils, a full-bore rearmament programme will deliver real benefits to the people of Britain. It’s not just about the jobs that follow once you commit, and send a demand signal into industry and the research field.

The Resilience imperative

The NATO 2035 target, alongside 3.5% on Defence, mandates governments to spend 1.5% on security-related infrastructure. Think solar panels on water pumping stations, electrification of railway lines, new social housing in areas like Barrow where defence is booming.

In a time of threat, the ordinary risks to our economic infrastructure are amplified, creating the need to harden them against sabotage and cyber-attack. In 2024 the MOD conducted a supply chain and industrial production wargame at the Defence Academy, Shrivenham, which showed that “our supply chains are largely designed for peacetime operating (with minimal resistance) not war”.

That needs to be remedied in short order.

If you invest in Defence and Resilience now, you generate growth, jobs and productivity onshore which, later down the line, becomes tax receipts. You might even impose a windfall tax on defence firms once the bonanza got under way, as the Baldwin government tried to in the 1930s (Chamberlain, his successor, wimped out).

Starmer understands this. He has been told it by every expert, every civil servant and economist he’s spoken to.

He pledged to see security and defence:

“not as one priority amongst many others but as the central organising principle of government. The first thought in the morning – the last at night. The pillar on which everything else stands or falls”.

It is now time to honour that pledge. He should meet the demands of the SDR, embodied in the Defence Investment Plan in full. He should authorise a waiver for the “debt falling” fiscal rule. He should set out a clear plan to meet the 2035 target.

And if, as seems likely, there is going to be a leadership challenge, so should anyone who plans to replace him.

Thank you for reading. This one is unpaywalled. I’ve got a big think posting upcoming on Trump and China post the Beijing visit. Please share and subscribe if you can…

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[I’ve removed the paywall on this for wider sharing.]

A group called demilitarise Education (dED) has put out a statement denouncing Labour’s formation of the Defence Universities Alliance, an initiative to voluntarily align a group of universities with government defence research objectives.

As someone who proposed this policy while Labour were in opposition, and advocated it in this think-tank report, I am delighted that the DUA is about to launch, and I welcome the opportunity to debate with the signatories of the dED statement.

Stop the War, which has signed the statement, would not recognise the principles of moral philosophy even if a resurrected Saint Augustine wrote them out in crayons.

But Quakers in Britain, Action on Armed Violence (AoAV) and People & Planet – each of whom has also signed the protest - do good work, and their arguments deserve to be considered.

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Can there be just wars?

The principles here are very simple.

First, should there be a state, with the duty to defend its citizens, and should that state have the moral and legal right to go to war?

The UN Charter answers yes. And most world religions subscribe to theories of just war, which prescribe specific reasons for going to war and specific strictures on how to fight them.

But the answer is no, full stop, then it would be logical to deny the right of Ukrainians to defend themselves against Russian aggression (as Stop the War do by trying to halt arms supplies), and to oppose all military spending and any presence of defence manufacturers on campus.

The Quaker position is absolute, and I respect it. Yet the Leninist re-enactors who run Stop the War have a very clear just war theory, based on Lenin’s theory of imperialism. And AoAV is run by people who support Ukraine’s right to resist, while People & Planet mobilises activists for whom the absolute free-riding position of religious pacifism is not high in the mix.

Is there at threat?

If we accept there can be a state with a monopoly of armed force, and the legal right to use that armed force under the UN Charter, and that as socialists we aspire to win elections and govern such a state democratically, the second question is:

Is there a threat that requires not only a standing army and a defence industry, but the use of science and technological innovation to deter aggression against us?

Here’s what UK’s National Security Strategy says – a document drawn up after thousands of hours of study and consultation with expert groups, including from across academia:

“Threats are proliferating. We are entering a period in which we are likely to face indirect and potentially direct confrontation with adversaries, the intensification of strategic competition – including the increasing salience of nuclear weapons in the policies, doctrines and approaches of our adversaries…”

It points out that Russia’s war against Ukraine has been accompanied by

“a campaign of indirect and sub-threshold activity – including cyber attacks and sabotage – by Russia against the UK and other NATO allies and the use of increased nuclear rhetoric in an attempt to constrain our decision making.”

The NSS is not a party-political document: it is the most rigorous analysis the state can make and publish, written by civil servants.

Since it came out the Russian military buildup in Belarus and around St Petersburg and in the Arctic circle has continued. Russian submarines are actively scanning and rehearsing the destruction of the cables and pipelines our entire system of survival depends on.

So if you accept there is a state, that there is a rising threat that Russia will attack the UK or one of the NATO allies we are bound by treaty to defend, and that there can be a just war, why would you oppose some universities – the government’s initial target is 20 – voluntarily aligning their science and career pathways with government national security efforts, and building partnerships with companies that make the ships, aircraft, satellites and software we need to defend ourselves?

Our adversaries have militarised science. We refuse to

The Defence Universities Alliance was conceived as a democratic British response to Russia’s emerging war economy and China’s civil-military fusion doctrine.

Seven Chinese universities – known as the Seven Sons of National Defence – have their research entirely aligned with the demands of the People’s Liberation Army; on top of that there are 160 Chinese universities with a privileged relationship with the military.

Chinese universtiy science is, in this respect, neither independent nor ethically sound – and for this reason there is no way the UK could ever emulate such military-civilian fusion, even in wartime. Every principle of academic freedom militates against it.

Yet the Ukraine war shows that, in a war against an authoritarian, militarised state, only by innovating faster than the attacker can a smaller country defend itself.

The wars of the 21^st century will be fought and won with intelligent machines and software. If we don’t at the very least keep pace with the scientific arms race China and Russia have begun, we will lose our ability to deter them from attacking us.

The DUA aims to do this through voluntary agreement and incentive, which as we will see is a fundamental principle in British higher education.

The dED claims debunked

Let’s now take dED’s arguments one by one. They claim that by defining universities as part of the Defence Industrial Base, the Labour government is:

“treating campuses as extensions of military infrastructure rather than spaces for independent inquiry and the pursuit of knowledge that serves humanity”.

This is totally mistaken. The Defence Industrial Base (in the EU called the Defence Technological and Industrial Base, or DTIB) is just a term in economic policymaking.

Labour has also defined the trade unions as part of the DTIB, and invited them, together with universities, to sit on the first ever joint industrial council, with a voice in policy and priorities.

Are the unions – GMB, Unite and Prospect, all of whom have agreed to sit on the industrial council – “an extension of military infrastructure”? Have they lost the ability to set their own policies on war, defence spending etc? Clearly not.

In fact, it is precisely because Labour prizes the independence of science, and wants to produce “knowledge that serves humanity” that it designed a voluntary scheme.

The problem is that, given China’s record of intellectual property theft and espionage, some of what UK universities are producing is going straight into the Chinese DITB, where there are no ethical checks and balances at all.

One outcome I hope will arise from the DUA initiative is that institutions will begin to take greater care over research security, and be more aware of potential malign tech transfer to the dictatorships in Beijing, Moscow and Tehran.

And the amount of Defence funding going into universities is tiny compared to the MOD’s overall spend.

The Defence Science and Technology Labs (Dstl) spent £461.1 million on research contracts in 2023–24, but only 4.8 percent was awarded to universities, (roughly £22.1). Navy Command spent £130.85 million on research contracts, but only 1.3 percent went to academia, which is about £1.7 million.

So there is a massive opportunity for UK universities to take part in the innovation surge that’s going to be necessary to keep the UK capable of defending itself in the era of AI, robotics, quantum computing and tactical nukes.

The dED declaration claims the DUA is bad because it is:

“Redirecting research priorities away from addressing pressing social, environmental, and humanitarian challenges toward military applications.”

Anyone with a cursory knowledge of the UK university scene knows that is simply untrue. There is massive societal/environmental/humanitarian benefit from e.g. the space innovation, materials science, avionics and pure maths and physics involved in defence research.

Here’s one example: a Dstl funded project to make artificial blood that doesn’t need to be refrigerated. Would you drive that project off campus because it is MOD-linked?

dED further alleges that the DUA is:

“Compromising institutional independence by making universities dependent on arms/military funding and strategic alignment.”

Well, right now, almost every university in Britain is dependent on funding from the Chinese state, via student fees – and to a far greater extent than on MOD funding.

Since the DUA is voluntary it is hard to see how it compromises institutional independence, since university governing bodies can vote to leave it at any time.

The dED statement further claims the DUA is:

“Creating ethical conflicts for researchers and students whose values oppose war and militarisation.”

Again, it is hard to see how this stands up. First, one of the most important aspects of the DUA is the insistence that defence research is carried out under the rigorous standards.

Secondly why assume people involved in defence research do not “oppose war”. Do you think the programmers running Ukraine’s autonomous drone programme right now “supported war” before 24 February 2022?

If it’s wider “corporate influence” people are worried about, fair enough – start big pharma, the oil majors, the banks etc – all of whom have relationships with HE institutions – but be prepared for the massive loss of funding, expertise and functionality of the sector. In fact, be prepared for the return of the polytechnic.

Defence is a human need

Running throughout the dED statement is the idea that “military priorities” and “real human need” are different things. It’s facile.

One of the most fundamental human needs is physical security. To switch on the lights in your university dorm you need electricity and gas: which comes through cables and pipelines Russia is targeting right now.

There is a different issue, which is the presence of defence firms and the military on campus, and at recruitment fairs. But this has been going on for years – and all the DUA does is allow some universities to brand themselves as aligned with Britain’s self-defence and deterrence efforts, and to actively shape government priorities in this sphere, rather than being passive bystanders.

I understand the initial call for 20 DUA members has been massively oversubscribed, so it’s clearly an attractive offer at a time when many institutions face financial penury.

The statement is also confused about Labour’s £182m Defence Technical Excellence college initiative. This has nothing to do directly with universities: it is creating engineering training places for working class kids in some of the poorest places in Britain – creating pathways into jobs that are, on average, paying £10k more than their equivalent on the rest of manufacturing.

The dED signatories want students at all universities to oppose DUA membership full stop.

I would argue, instead, that we need a mix of HE institutions – some of which are overtly aligned to government priorities, others which do defence work on a contract-by-contract basis, while others might explicitly state that the do no defence related science.

Pacifist-inclined students could readily enrol at the latter, secure in the knowledge that someone else is defending them against the possibility of kinetic and nuclear attack, and that the defence firms, Silicon Valley and the rest will likely take their research dollars elsewhere.

But we’re in a world where priorities matter. The armed forces are there to defend our country – upholding the lifestyle and freedoms that allow dED to exist.

So it should be a condition of all universities’ licence to operate that the armed forces can recruit there and have a public presence on campus.

As for corporations: by all means hold individual defence firms to account for the countries they sell to and the ethical standards they uphold; there are some defence firms in the world that I would not want on a British campus. And by all means question defence firms’ involvement with Israel or other countries that break the laws of war.

But a blanket opposition to collaboration with firms employing tens of thousands of Brits in good, unionised jobs seems perverse.

It’s Haldane, stupid…

Finally, it seems to have escaped the notice of the drafters of this protest that the entire concept of the modern British university, with its academic freedom guaranteed from short-term government diktat, was designed by the same man who came up with the Officer Training Corps, the Imperial General Staff, the university Military Education Committee and the Territorial Army.

Richard Burdon Haldane, a liberal peer, insisted in 1907 that universities should be set free from elitist hierarchies and religious influence, and led the massive expansion of what we today call the Russell Group universities, opening them up to working class students in the process.

In a 1918 report, Haldane spelled out the principle that “decisions about what to spend research funds on should be made by researchers rather than politicians”.

That is exactly the government’s intent. It’s why the MOD’s research bodies put out tenders, not instructions. So the Defence Universities Alliance is fully rooted in the Haldane Principle.

And it is because we run our universities as sites of intellectual challenge, not the rote-learned totalitarian bullshit that shapes politics at the PRC’s “Seven Sons”, that we will hopefully turn out better quantum, space, autonomy and materials science graduates, and be able to better deter aggressors and defend our democracy from those trying to destroy it.

Finally dED calls for “public lectures, workshops, and teach-ins about the ethics of militarised academia and the history of resistance to military-academic complexes”.

Great, let’s start with the Seven Sons of National Defence and work back from there. While we’re at it, maybe Stop the War can host a session explaining what happened to “resistance” in the militarised universities of Assad’s Syria, Putin’s Russia and Khamenei’s Iran?

The fact is that in the UK, from Haldane onwards, Defence is just part of what universities do, and what they’ve always done.

Cui bono?

So if you meet someone who wants to reverse more than a century of collaboration between universities and Defence, at the very moment when threats to UK national security and democracy are at their highest since 1991 – and they’re not a religious pacifist – it’s worth asking them the question: cui bono?

In the unlikely event that we expelled the armed forces and defence firms from all our campuses, and terminated every university research contract with the MOD, who would benefit?

I dunno what the motivation of AoAV and People & Planet is for signing up to an initiative alongside Stop the War, but I can guess precisely what StW’s controllers in Counterfire and the SWP want to do: move people engaged in justified solidarity with Palestine into entirely unjustified agitation against the armed forces of their own country.

Once again, comrades: cui bono?

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The next few issues of Conflict & Democracy will focus on the relatively new concept of Cognitive Warfare. I will argue that it has to replace “hybrid” in British strategic thinking, subsume information and psychological operations, and bring cognitive strategy into the heart of the civilian institutions of government.

This article serves as a primer in the concept: a history, lexicon and a proposed definition (to compete with about 100 others!).

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History of a Concept

In the 1970s the Soviet military developed the doctrine of “reflexive control”, using information operations to distract, overload, paralyse and exhaust the enemy, to the point where he starts thinking in ways favourable to your own logic.

In 2013 the Russian general Valery Gerasimov proposed that a mixture of kinetic and information operations can rapidly collapse a state and destroy its population’s willingness to fight. Since then, the collective West has coined various terms to describe this new way of war.

“New Generation Warfare” was a label invented and discarded by analyst Mark Galeoitti. “Hybrid” entered NATO’s lexicon in 2014, both in response to the Gerasimov article and to its application in Crimea, and is now firmly embedded in the Alliance’s military doctrine.

But the hybrid concept, sometimes popularised as “greyzone” warfare, sees the non-military means - disinformation, cyber-attacks, economic pressure, deployment of irregular armed groups etc – as adjuncts to kinetic warfare: the phase of “shaping the battlefield” before the coup de main. It is a concept fitted to the operational level of armed conflict rather than strategy.

The Cognitive Warfare concept, by contrast, was conceived by NATO military thinkers as a strategic level idea. Arising from work in the French military academy and NATO’s Allied Command Transformation, Cole and le Guyader proposed in 2020 that the Cognitive arena forms a sixth domain of operations, alongside air, land, sea, space and cyber.

Noticing that China, in its newly aggressive posture under Xi Jin Ping, had also begun to foreground the strategic use of information and psychological operations, Claverie and du Cluzel outlined the first comprehensive definition in 2022:

“Cognitive warfare is an unconventional form of warfare that uses cyber tools to alter enemy cognitive processes, exploit mental biases or reflexive thinking, provoke thought distortions, and influence decision-making, with negative effects at both individual and collective levels.”

A second, more authoritative definition, was adopted by NATO ACT in 2023:

“Cognitive warfare comprises the activities conducted in synchronisation with other instruments of power, to affect attitudes and behaviours by influencing, protecting, and/or disrupting individual and group cognitions to gain an advantage.”

Since then, NATO has begun to use the concept in military training and education, and to incorporate agentic AI into the analytical mix. Its most recent authoritative statement was the Chief Scientist’s Report issued in late 2025.

Scant UK buy-in

However the UK has proved reluctant to make the conceptual transition from hybrid to cognitive, even in the military discourse, while in the sphere where cognitive self-defence, deterrence and counter-attack should really take place – politics, economics and civil society – the term has barely penetrated.

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Suddenly everyone in the Labour Party is proposing an alternative to the policy they stood for election on in 2024. The Tribune group wants to tweak the fiscal rules, the Labour Growth Group wants to cut income tax, while Andy Burnham’s Mainstream Labour wants to renationalise the water industry and build council homes.

I want all of the above and more (and the LGG and Tribune reports do contain excellent proposals).

I want rapid rearmament, solar panels on every rooftop, and an end to the rip-off capitalism that shovels billions into the bank accounts of property developers and crypto-kings, while kids arrive at the school gate hungry.

But since joining the Labour Party in December 1979, armed with suitably socialist aspirations, I have learned two things.

First, as Nye Bevan told us, “the language of priorities is the religion of socialism”. Resources are finite, so is parliamentary time, so is focus in government, and so – as Labour found out on 7 May – is the patience of working class people.

Second, capitalism is a system. It has, since around the year 2000 when the Nasdaq crashed, been convulsed by crisis and surviving on credit. To manage it, let alone to supersede it with something else, you need to have a theory of it.

And what frustrates me most about the current debates within the Labour Party is the absence of theory: the vacuum of political concepts with which to understand what just happened, and the paucity of fundamental economic analysis.

So I am going to set out ten facts that those who want to rescue this government, and with it democracy – because after any collapse comes an authoritarian Reform regime – need to understand.

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1. Capitalism has become financialised. Profits are generated from production, services and exchange, but they are packaged into financial instruments, and traded on deeply unsentimental markets. Financial, technological and commercial monopolies (think Blackrock, Palantir and Amazon) have near-unlimited power to extract rent from the worker, the consumer and the entrepreneur alike.

That’s why our society is dominated by rent-seekers: the buy-to-let empire builders, the commercial landlords who’ve filled our high streets with vape and barber shops, the property developers building empty mansions into the city skyline.

2. Financialised capitalism is in crisis. It blew up in 2008, forcing states all over the world to incur crippling debts that have refused to shrink, and mandating austerity to a level that has eroded public confidence in the state. Since then, the solution to everything has been cheap credit: to the consumer, the business and the state.

3. The crisis of capitalism is now the crisis of indebted states. Take a look at the now-famous chart showing the reversal of a 50-year trend in falling bond yields. Bond yields are the floor for capital accumulation: the safest way to make money on earth. With Covid, then the Ukraine war and now Trump/Netanyahu’s attack on Iran, it is likely that we’re on a long, upward trend in the cost of borrowing, in which individual states, companies and families will at some point crack.

That is why, if you are sitting around in a Labour think tank seminar coming up with good ideas for the micro-economy, or for your local town, you should have this chart, and these facts, pasted to the whiteboard with a permanent flashing light taped next to it.

All social-democratic policymaking now needs to take place as crisis-management.

4. Global capitalism has become a zero-sum game. There is not enough growth in the world, so globalisation is over and states are trying to dump economic pain on rivals and seize advantages. China is growing, but not domestically: its growth depends entirely on exports to the West. America is growing by borrowing, exploiting the exorbitant privilege of the dollar to force the rest of us to finance its largesse, while choking our exports through tariffs.

Any government not prepared to fight dirty in this zero sum game will lose. And since the UK is geographically and economically part of Europe, and the world is disintegrating into competing blocs, we must enthusiastically engage with, join and build the European project.

Our security, our economy and our democratic culture are each entwined with the destiny of Europe in this new, fragmenting world.

5. The domestic economy has also become zero sum. Since the 1950s Labourism has been about “redistributing the proceeds of growth”. But growth is meagre. Rachel Reeves’ securonomics agenda achieved some turn-around, as the brief glimmer of GDP growth in Q1 2026 showed. But it is likely to be squashed by soaring energy and food prices over the summer.

So before we get into the phase of bright policy ideas, Labour needs to be in the phase of strategy for a zero sum world – a place it has not been in since the 1930s.

6. Zero sum plus identity politics is a recipe for political carnage. I know an entire generation of Labour politicians and activists has grown up in the world of identity politics; I’ve embraced it. I thought it was an irreducible kernel of resistance in the face of atomisation: if you can’t find class allies you can at least find allies among your religious, ethnic, sex, gender or sexuality affinity groups.

But politics has become a battle for resources, legislative time, voice, and position on the league table of human rights. One way to read the Green advance in places like Lambeth and Haringey is as a collective “fuck you” by identitarian voters to the majority – and the feeling is mutual among people in places like Wigan and Newcastle who voted overwhelmingly for Reform.

Labour’s massive advantage, as a party of workers with 120 years’ experience, is that we are the only force that can bestride these divisions and appeal for unity.

But we need to face up to a horrible fact: the divisions and enmities are logical. If you create a resources game that rewards oppressed groups with time, attention and voice, don’t be surprised if white working class people start playing it.

This, by the way, has nothing to do with embracing Blue Labour type solutions: it’s about recognising what’s gone wrong.

In response, before we come to any policy proposals, socialists have to adopt a strictly universalist language. What we are doing is for everyone, and we leave our identities at the door of politics.

7. The external threats are real. In my work with the Council on Geostrategy and with the University of Exeter I get to sit in seminars with people in global security and the “deep state”. I haven’t met one of them who believes we won’t be attacked. Most western armed forces are preparing themselves to fight a kinetic war before 2030. So rearmament, at a pace and intensity much faster than the one currently envisaged, is mandatory.

Any Labour politician who skirts around the issue, or relegates it to a niche issue, should have the question flung at them: how does your bright idea help us prepare to beat Russia in a war, stop Iran terrorising our Jewish communities, stop the far right – also manipulated by Russia – stoking civil war against British Muslims. That’s the #1 issue on the urgent/important grid.

8. The bond market cannot be ignored. For reasons I’ve written about before, the UK is an outlier in its cost of borrowing. I’ll list them so that pedants in left-wing academia don’t accuse me of being a bond market fetishist: our welfare commitments don’t match our future tax take; Liz Truss proved a British prime minister can try to scam their way out of that problem; our privatised utilities and monopolised consumer sector gives companies and landlords pricing power over consumers; the Bank of England is dumping bonds needlessly onto a glutted market; the structure of the pensions system has changed; the OBR is useless.

We have only one route out of this: investment led growth, investment led decarbonisation, investment led rearmament. And to invest you need to borrow, and to borrow you need to stabilise your borrowing costs.

Yet just like the war threat, this is relegated to a minor problem by people trying to wishful-think their way out of the crisis.

9. The risks are always greater than you think. But we can shut Reform and its right-wing Tory collaborators out of power forever if we want to, because there is a progressive majority. But we need political will to mobilise it and we have three years to erect democratic defences, against foreign money, disinformation and extremist destabilisation.

10. Here’s what Labour should do. Whether Keir Starmer stays in power, or is replaced by Andy Burnham (I don’t think Wes Streeting has a chance with the membership and unions), or whether someone else takes over.... If there’s going to be a leadership battle, let it take place on the basis outlined here – what’s your solution to these big problems? Not what’s your bright idea.

For certain, we need communicators at the top of politics. But we also need executors. Actions create their own narrative. And that means actions taken in the correct sequence.

I have to warn you that there is a non-negligible possibility that the sight of untested politicians, fighting each other with armfuls of policy papers, while ignoring the bond market and ignoring the threat of war and destabilisation, might of itself be enough to trigger a Liz Truss style bond-market convulsion.

But here are the non-negotiables:

• Rearm Britain – laying out a costed path to the NATO 3.5/5% target by the Ankara Summit in July

• Join the Customs Union – the terms are clear, it can be done tomorrow, and the uplift in fiscal sustainability will be clear to the markets.

• An urgent programme to shore up democratic resilience – not just banning under-16s from social media but much tougher regulations on platforms, criminalise disinformation (not just for a foreign powers) and a new Public Order Act that tamps down the low-level disorder that’s become the weapon of choice by extremists.

• Yes, alter the fiscal rules. Scrap the “debt falling in three years time” rule – extend it to five years or, as Lou Haigh says, ten. No rational actor in the bond market thinks PSNFL will inexorably fall. Keep the rule that says only borrow to invest, change the leadership and remit of the OBR and order the Bank of England to cease QT, under its mandate for macroprudiential stability.

• As to the Andy Burnham agenda – nationalising water, transport, housing and energy to stabilise prices – I’m not against it but it needs an electoral mandate and will not, in any case, address the near-term inflation risks that the bond markets worry about.

• So let the next generation of Labour leaders hash out a programme for 2030-2040 – of mass, green council housebuilding, nuclear power, and state owned utilities – but let this generation deal with what is coming down the track, which could be soaring food prices and massive global instability.

• Price controls now, temporary food subsidies for those on welfare, and giving mayors the power to cap rents immediately – will be more effective than the structural reversal of Thatcherism.

Finally, to have any chance of regaining the narrative advantage, the entire Labour Party has to make enemies of the enemies of the British people. The fly tippers, the mobile phone thieves, the assholes dealing drugs from vape shops, the masked-up antisemites with their hand-scrawled placards, the racists yobs, the shoplifters, the kids on dirt bikes…

We, as socialists, need to understand that crime and nuisance are class issues. Beyond all the friction and unhappiness they bring to people’s lives individually, they are eroding belief in the state: it seems to many people that rulebreaking is allowed to become a lifestyle.

The police alone can’t deal with this. There has to be a moral rearmament, where ordinary people just refuse to tolerate it anymore.

We need wealth taxes: Much of what needs to be done is going to require investment by the state. And since we can’t tax growth, and profits are hard to come by, tax rent and wealth.

Piketty warned us. We treated it as a nice idea and ignored him. In a stagnating economy, in a zero sum game against offshore billionaires and China, wealth taxes are the only viable means of redistribution. Otherwise you’re just “redistributing” from white van man to pensioners.

Bottom line: I love the fact that Labour think tanks are churning out good ideas. But we’re in survival mode. Answer the big questions first.

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And in truth, it’s an idea shared by many Labour MPs and voters: if only the party would stop being so fiscally conservative while in office, it could unleash the hope and vigour it came to power with.

Conflict & Democracy is written by an avowedly left-wing social democrat. There is nothing I want more than for Labour to find its socialist soul and transform Britain. But in this edition I am going to reprise an explainer thread I posted on X.com, to show why the left simply has to stop fantasising about “defying” bond market capitalism and start utilising its dynamics to achieve social justice.

Put simply, “defying the bond market” is like trying to defy gravity. But if you recognise the laws of gravity, and combine them with thermodynamics, you can fly from here to Australia without stopping.

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Bonds, gilts, yields…

To start with, let’s lay out some definitions and restate some facts.

A bond is an IOU, issued by the government, with special characteristics. The government guarantees to:

• pay back the whole sum at the end of a fixed period (say, 10 years)

• pay a fixed amount of interest every six months.

Because it’s issued by the state, and the state has never failed to meet these obligations, it’s the safest place to keep your money and the most predictable way to earn interest on it.

But once it’s been sold, it can be traded. And as its price moves up and down, so does the real interest rate the government has to pay people to get them to buy more bonds. There’s a more detailed explanation here.

British government bonds are traditionally called gilts because the certificates used to have golden edges. The real interest rate, created by market movements, is known as the yield.

So now look what has happened to the yield on a 10-year UK gilt during this decade, with the key events annotated…

The government’s cost of borrowing has risen from <1% to 5%. And though the rising cost of borrowing has hit all developed countries, the UK has been hit the worst, as this chart of the UK vs other G7 yields shows.

If you are in the business of delivering social justice, through growth, high wages and a generous welfare system, these two charts should be tattooed inside your eyelids.

Because in a capitalist system, the government’s cost of borrowing sets the floor for capital’s cost of borrowing. Sainsbury’s can go bust. The government can’t. Therefore when gilt yields rise, everyone else’s cost of borrowing does likewise.

Before we get into the politics and the economics, I want you to contemplate one more chart: the predicted difference between the UK’s tax take and what the state will need to spend, on services, pensions and welfare…

What you’re seeing, in these three charts, is a capitalist economy suffering from malaise: it can’t grow, it can’t borrow, it can’t meet rising demand for services due to ill health, ageing and other demographic factors.

It demands a socialist answer. But before we spell it out, we have to understand the causes, both systemic and local.

What’s driving the yield surge?

In the decade after the financial crisis, yields plummeted, because central banks were prepared to buy up bonds issued by governments (a.k.a. quantitative easing), boosting demand over supply and reducing the cost of borrowing.

In fact, the era of near-zero borrowing costs came at the end of a decades-long slide, as this chart shows. Throughout the entire neoliberal era, yields fell steadily, creating a mass psychology of cheap credit, not just for governments but for businesses and consumers. For Boomers like me, this has been going on for our entire adult lives, and its the same for all subsequent generations:

So what happened after the Covid pandemic is a massive economic and psychological shock. An era ended and a new relationship between the state, capital and people opened up:

So what’s driving the new era? The main factors are

• Supply vs demand

• Inflation expectations

• Fiscal credibility

If the government borrows more than savers and banks have to offer, it will have to pay higher interest (nominal and real).

If savers and banks expect central banks to allow higher inflation, which erodes the real value of the sum repaid after 10 years, they will look for higher real interest rates or switch to other forms of investment.

If those managing bond investments think a government is politically unstable, or prone to borrowing to cover its day to day costs, they will charge higher interest.

There are also secondary factors: the mix of long and short term bonds issued - with longer dated bonds demanding higher interest rates; and the behaviour of the USA, whose currency allows its to issued more or less unlimited debt.

So UK gilt yields have surged because:

a) it is borrowing more to fund investment

b) at the same time the Bank of England is selling the bonds it bought during quantitative easing (a.k.a quantitative tightening), boosting supply over demand

c) the UK is more prone to inflation, partly because it is dependent on external energy supplies, which are subject to shocks, partly because monopolies and landlords have pricing power, and can hike prices and rents more easily than consumers can switch to cheaper options. This is the root cause of the politically pervasive “cost of living crisis”.

d) and since the Liz Truss chaos, the UK is paying a permanent premium for having a government that tried to rip up its fiscal rules.

On top of this, there is an important change in the makeup of the institutions that lend to the UK government. Twenty-five years ago most gilts were bought by pension funds, which used the regular interest payments to guarantee payouts to people who have retired (aka defined benefit schemes).

Today, because many companies have moved to defined contribution schemes - where the final sum is not guaranteed and depends on what’s happened in the stock market - UK pension funds hold only about 1/5 of the government’s debt. The rest is held by foreign investors, and investors like hedge funds who are more concerned with price movement than price stability. Plus the Bank of England itself holds about 1/5 of all debt.

Now let’s think about what the people in these segments actually want from a government. The orange - the pension funds - want low inflation, so the value of their money is not eroded. The blue - foreign governments, banks, hedge funds and pension funds - want low inflation and exchange rate stability: if the pound falls, they lose out. The purple and the grey strands are quite interested in making money from the movement in yields and prices. The Bank just wants to get rid of its holdings so that, if capitalism is convulsed once again on the scale of 2008, it can start buying them again to save the system.

Why we need fiscal rules

As we racked up debt, to bail out the banks, and as a result of low growth due to austerity, debt servicing costs remained low, at around 2% of GDP.

Today we’re spending £110bn a year on the interest payments on gilts alone, which is 3.6% of GDP and 8.1% of public spending. After the NHS and welfare, debt interest is the third highest item of government spending.

Rachel Reeves came to office determined, nevertheless, to follow an investment-driven growth strategy. The fiscal rules she imposed are threefold:

• Borrow only to invest, not to fund day-to-day spending. This means running a small surplus on the “current budget” (day-to-day spend vs annual taxation) by FY 2029.

• Debt should be falling as a proportion of GDP between FY 2028 and 2029 - to demonstrate to the markets that borrowing to invest can create a virtuous circle of growth and tax receipts - and be falling in the third year of every budget after that.

• Spending on about half of welfare benefits - not including pensions and disability payments - is capped at £195 by FY 2029.

Fiscal rules are a good idea: they demonstrate a government’s understanding that fiscal credibility will drive its borrowing costs lower.

But for a left-wing government they are a pain in the ass. We do not want to borrow to fund day-to-day spending - except in an emergency like war or pandemic. But we do want to borrow to invest.

Rachel Reeves made a major and welcome change in the way debt is calculated, moving from Public Sector Net Debt - a crude measure - to Public Sector Net Financial Liabilities (PNSNFL - which economists call “persnuffle”), which measure income generating schemes as positive, and disregards “contingent liabilities” - potential losses that have not yet happened.

The problem is that most of the growth-oriented left-wing strategy advocated even by quite mild Labour think tanks demand higher borrowing and higher debt.

Meanwhile, because MPs spend every Friday morning acting as welfare advisors to desperate people whose benefits don’t cover their needs, they are acutely opposed to cutting the total amount spent on welfare.

What this means for the Starmer crisis

I want Labour to come out of this crisis fighting. Voters are sick of services that don’t work, taxes that are eating into their wages at one end, while inflation (petrol, food, rent) eats the other end, the general decline of high streets and public infrastructure, and the rise of a scam-ridden culture where rule-breakers (money laundering vape shops, thieves, scammers, fly-tippers) prosper while they suffer.

Fixing all this costs money. But taxes on ordinary people and most businesses are maxed out.

But the fiscal rules contain a contradiction: borrow to invest in order to grow; but cap debt at an arbitrary limit (80% of GDP as measured by PSNFL).

For me, it’s the arbitrary limit that has to change. The Labour MP Louise Haigh this week called for the rolling 3-year debt ceiling (which kicks in in 2029) to be scrapped and replaced with a ten-year limit.

I agree with that. What the bond markets are most concerned about right now is not the absolute debts of the UK, but the danger of them being inflated away, and the danger of untested politicians taking over and - as with Truss - breaching UK fiscal credibility.

But there are five more things Labour could do to free itself up to start delivering the radical, positive effects voters are crying out for, and which it promised in 2024.

First, the Office for Budget Responsibility has been mis-designed and is badly led. It’s stuffed full of people who simply do not believe that the Labour formula for investment led growth can work. That’s why every Budget is preceded by an almighty private slanging match between Reeves’ officials and the OBR. Though their own economists believe “in principle” that investment can drive growth, the OBR rarely reflects this in its actual projections.

So either change the personnel or the remit. There are plenty of left-wing economists who would apply more realistic measures to Reeves’ budget projections, and installing them would actually improve market perceptions of the OBR’s function as a truth-teller and fiscal watchdog.

Second, it could change the mix of bonds issued, from long to short term. This raises the risk of having to pay more to borrow in a crisis, but it will reduce the premium paid to investors for asking them to hold our IOUs for 10, 20 and 30 years.

Third, it could instruct the Bank of England to stop selling bonds into a glutted market. Quantitative Tightening is supposed to be a technical excercise. If so, it is happening at the wrong time.

Fourth, Starmer - or his successor if he falls - has to grasp the knotweed of welfare reform. It is bizarre that, despite all mainstream parties claiming to favour work over welfare, the welfare bill has mushroomed since the financial crisis.

Fifth, Starmer could make good his proposal to align strategically with Europe by dropping the “red line” that prevents rejoining the Customs Union or the Single Market. Brexit has cost between 4% and 8% of GDP already, which will compound as the EU gets its act together under the Draghi Report project. Rejoining the market, even if not the Union, will alter the debt/gdp projections of any honest fiscal watchdog and even more importantly, send major geopolitical signals that the UK understands where its future lies.

It is this list of prosaic but vital measures that any candidate who wants to replace the Reeves-Starmer duo will have to face up to, otherwise they will be hit by further bond-market turbulence if they win - and indeed turbulence even if they don’t win, because every vote for a “defy the bond market” candidate is a danger signal to investors.

In the long-term, the socialist principle should be to attack the causes of our high welfare dependency; our inflation prone, rent-seeking economic model, our fossil-fuel dependency, and our pitifully low productivity and business investment.

Which is what makes me truly sick when I see lists of “demands” presented by trade union leaders and self-described left wingers in the Labour Party. Or calls from Unison leader Andrea Egan to “stand up to markets”.

If there is now a leadership challenge to Keir Starmer, based on fantasy economics and lists of demands drawn from Socialist Worker, I will oppose it. I want more spending on defence, more public investment in infrastructure, and to unlock the potential productivity gains of AI and automation.

I want to see everyone who can work, in work.

But I know from bitter experience there is a world of difference between “demands” and governing.

So the next time you hear a politician or union leader say: the markets must fall in line, or we don’t want to be in hock to the markets, or that we should take on the markets, just substitute the word “gravity” for markets.

Thanks for reading. This issue is free. If you want the detailed, specialist stuff, please subscribe. I post here about once a week. My other output is at The New World and occasionally the iPaper.

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In Turin on Saturday 25 April, a group of young left activists, some wearing t-shirts saying “Lenin Lives”, burned the EU and NATO flags.

In Rome, pro-Palestinian demonstrators chanted that the Jewish Brigade - a contingent commemorating Jewish soldiers from Palestine who fought with the British Army alongside the anti-fascist resistance - were “murderers”, and pepper sprayed people carrying Ukrainian flags.

In Milan, a left-wing counter-protester gave the Nazi salute towards a contingent of Jews, Ukrainians and Iranian dissidents, while others shouted that Jewish marchers were “failed bars of soap”.

In Bologna, Tino Ferrari, a retired university professor carrying both the EU and Ukrainian flags, was forcibly ejected from the commemoration by a man associated with the journal Contropiano, which eulogises North Korea. In Genoa marchers again burned the EU flag, but allowed the flag of Putin’s puppet republic in Donbas to be held high…

Meet the “campists” of the Italian ultra-left: anti-semites, Putinists, supporters of authoritarianism from Tehran to Pyongnang, but no longer outliers in global far-left thought.

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The disgraceful scenes during the annual Festival of Liberation in Italy have been widely condemned by politicians from across the mainstream, including the centre left. But this mixture of Islamism and Stalinism is becoming a phenomenon across the Western world, and in this edition of Conflict & Democracy I will try to give an overview of where it’s coming from and how to fight it.

Legacy of Losurdo

That Italy is one of the centres of Neo-Stalinism is an irony: it was here that, using the prison writings of Antonio Gramsci from the 1930s, that the post-war Italian Communist Party (PCI) helped to create “Western Marxism” – a form of Marxism which accepted the liberal democracy, acknowledged its own debts to liberalism and humanism, stood with the masses against the bureaucratic crackdowns in Hungary (1956) and Prague (1968), and saw the collapse of the USSR as an opportunity, not a tragedy.

But since the 1990s Italy has also been an intellectual centre of “anti-revisionism” – a left-wing political current that sees Khruschev and Gorbachev as traitors, which lionises Stalin, and has produced a huge amount of historical disinformation about what happened in the USSR.

Its doyen was the late Domenico Losurdo. Losurdo wrote that the Katyn Massacre was overblown, the Gulag just a run-of the mill prison system and that the charges for which Nikolai Bukharin was shot after the Third Moscow Trial in 1938 were probably justified.

But Losurdo’s ideology was about more than just apologism and nostalgia for the USSR. In his influential book on Western Marxism, Losurdo argued that Neo-Stalinists should ditch Lenin’s idea that a revolutionary state might “wither away” over time, as the classless society is achieved.

Taking his cue from Mao during the Cultural Revolution, he predicted the survival of a repressive state for “tens of thousands of years” after the achievement of communism, and argued that, if faced with a choice between an authoritarian state or failure to develop the global south economically, we must always choose repression.

Further, said Losurdo, there is something much more attractive about Maoism than a Euro-centric Marxism tainted with Judeo-Christian messianism, which is focused on revolutionary change. The “Sinification of Marxism”, he said, turned it into a doctrine of national economic development and gradual progress, if necessary through the means currently adopted by Xi Jin Ping – authoritarian capitalism.

But while it is no accident that pro-Khamenei, pro-Hamas and pro-DPRK leftism has flourished in a milieu influenced by Losurdo, its intellectual sources are also to be found in academia, way outside of anything resembling Marxism.

Because the “campist” doctrine first enunciated by Zhdanov in 1948, and loyally reproduced by Stalin-nostalgics like Losurdo, has gained new life in the form of decolonisation theory.

Decolonisation: The logic-free zone

I have written elsewhere that academic critiques of colonialism should not be written-off out of hand. Though Western colonial empires have been dissolved, their moral, cultural and economic legacy has survived and mutated, and is still shaping social relations, and indeed individual psychology, in the global north as well as the global south.

But what’s wrong with decolonisation theory is clear: it’s a mirror image of white ethno-nationalism; it creates an entirely arbitrary coalition of self-described “indigenous” victims of modern capitalism - including “queer people” but not necessarily gay men; “people of colour” but not Vietnamese refugees; transgender people but not lesbian feminists; prisoners but not workers, unless they are precariously employed and living on the margins.

Tuck and Yang, the authors of the oft-ridiculed pseudo-academic garbage that has come to define the ideology, make clear that decolonisation is not a project of social justice:

“It is not converting Indigenous politics to a Western doctrine of liberation; it is not a philanthropic process of ‘helping’ the at-risk and alleviating suffering; it is not a generic term for struggle against oppressive conditions and outcomes. … By contrast, decolonization specifically requires the repatriation of Indigenous land and life. Decolonization is not a metonym for social justice.”

Put more simply: it is a strategy of despair. And its number one target is the “settler colonial” state of Israel, whose “colonists” descend from a people that lived there 3,000 years ago and – barely mentioned in the academic narrative – in 66 CE “decolonised” Judea from imperial Roman occupation through armed struggle, before doing so again against the British in the 1940s.

But while the Neo-Stalinism of figures like Losurdo is so ludicrous that it has to be preached in small rooms, by Leninist re-enactment groups, decolonisation theory has swept academia, just as its progenitor, postmodernism did in the 1990s.

Basically, in some universities, you can get an A* for reproducing Tuck and Yang’s bullshit, but hounded off campus for suggesting Hamas are genocidal terrorists.

So what we saw on the streets of Italy last Saturday was a fusion of Neo-Stalinism and decolonisation mysticism, overlaid with the traditional battle over memory of the liberation struggle in Italy.

This, as my upcoming book Reds points out, is a far more complex story than the one told by people in Lenin t-shirts. For it is a historical fact that, as liberation approached (a.k.a the advance of American and British “imperialist” troops), Stalin ordered the PCI to join a government with former fascists, and to ensure that there would be no social revolution in the process of overthrowing Nazi occupation.

A typology of Neo-Stalinism

I spent the anniversary of Italy’s liberation in Berlin, at a political festival organised by TAZ, Germany’s bestselling progressive newspaper. I was in a panel discussion with Paris-based Israeli left-winger Eva Illouz and Nicholas Potter, a left-wing writer who has received death threats after publishing a book entitled Die neue autoritäre Linke (The New Authoritarian Left).

Potter shows how, though they are manipulated by Putin and deliberately spread Russian and Iranian disinformation messages, Neo-Stalinist voices are real and organic within Western society. They glorify violence such as that perpetrated by Hamas on 7 October 2023, they openly apologise for authoritarian regimes in the Axis of Resistance, and they dress up Jew-hate as anti-Zionism.

In the panel discussion I tried to sum up what has changed about Stalinism, between the late 1970s, when I first encountered it, and today. I think it is worth reprising that summary because it will help social-democrats and progressives understand what we are up against.

• In the 1970s, orthodox communists tended to deny the severity of Mao and Stalin’s crimes, as did the regimes themselves. Today they admit the scale of mass death but, like Losurdo, claim it was necessary to achieve freedom from imperialism and economic development.

• In the 1970s, most Stalinist parties tolerated Western Marxism (ie humanism, universalism, respect for human rights and engagement with liberal academia) even if they didn’t espouse its. Today they are at war with it. Gabriel Rockhill’s book Who Paid the Pipers of Western Marxism is a fashionable re-tread of Losurdo’s theme, that the attempt to humanise Marx, based on writings discovered in the 1930s, was all a CIA plot.

• In the 1970s, orthodox communism was rooted in the working class. That meant it had to coexist with Trotskyism, anarchism, left-Zionism and of course all shades of social democracy and even Christian democracy. Today it is rooted only in identity politics – and must therefore sift through all relevant identities to find allies for the campist project: white workers are now the enemy, together with Korean shopkeepers in America, Zionists everywhere and – the latest on the blacklist – Iranian women who don’t want to wear the hijab.

• The political payload is that, unlike the Stalinists of the 1970s, who wanted to push social democratic governments to the left, and occasionally wanted (as in Italy) a grand social bargain with the Keynesian state, Neo-Stalinism has adopted the “Third Period” trope that social democrats and liberals are as bad as, or worse than, fascists.

• In the 1970s and 80s, the programme of e.g. the Communist Party of Great Britain was essentially left Keynesian economic nationalism: its title was The British Road to Socialism. Though they imagined a socialist Britain might be more friendly with the USSR, the Stalinists never came across as outright proxies of Moscow. In fact, though they called for “the ending of antagonistic military blocs, world disarmament and the banning of nuclear and other weapons of mass destruction”, they did not obsessively campaign against NATO membership. Today they are manically opposed both to NATO and the EU - the two lynchpins of a democratic, rules-based system in the West.

• Today’s neo-Stalinists have no programme of social transformation – except perhaps of the kind recently laid out by Aaron Benanav in the New Left Review: an imaginary utopia in which planning works and everyone is paid in tokens. They cannot see any way that modern democracies – even ultra-liberal ones like the UK – could be used to enact social justice (and remember the decolonisers are not even interested in social justice).

• And while the Stalinists I knew at university, just like the Soviet leadership, supported the existence of Israel, neo-Stalinists want to destroy it in favour of a “one state solution”.

The upshot of all this is clear from anyone watching the antics of those carrying Hezbollah, Hamas, Iranian and Donetsk People’s Republic flags: they are the unashamed proxies of a bunch of authoritarian capitalist states – Russia, China, Iran.

When Zhdanov announced, at the start of the Cold War, that there were only the imperialist and the anti-imperialist camps, there was at least room for manoeuvre for the leaders of the French, German and British communist parties. They could still chart a path to power inside their “own” imperialist countries by participating in democracy and supporting pacifism. And they could remain rooted in the broader traditions of their respective working class milieux.

But that’s become impossible for the Neo-Stalinist/decolonial movement. The guardrails of class, and of the social-democratic tradition, are gone.

So there are no barriers to the kind of outright antisemitism we saw in some Italian cities last Saturday, and which we see on British campuses from masked-up kids who have never read a work of social theory, or indeed studied formal logic.

• There’s a final difference that should terrify us. In the 1930s, the Comintern self-corrected. Faced with the rise of Nazism, Moscow ordered the Third Period line to be abandoned and replaced with the Popular Front: the French CP even sang the Marseillaise, flew the tricolor and lionised Joan of Arc.

• But there is nothing to correct this destructive political trajectory. Indeed, Putin’s penchant for Gotterdammerung if defeated – taking the whole world down with him – incentivises him to push these proxy groups towards extremes. The same goes for Iran’s proxies.

Neither the interests of the working class nor the interests of a Soviet mothership can restrain them. They are on an accelerated path to destroying Western democracies. They are not our allies. They are our enemies (as they made pretty clear by attacking Ukrainians, Jews, supporters of the European Union and dissident Iranians).

Is ‘the left’ finished?

But when people say “the left” has disgraced itself over Ukraine, first, then 7 October and now the Iran war, that’s too sweeping.

There are countless activists who call themselves Marxists, anarchists, eco-socialists or socialist feminists who are appalled by the emergence of left authoritarianism. And of course the most effective left force in the world – social democracy – has been largely immunised against this mind-garbage. The same goes for the German Green Party (though unfortunately not its equivalent in England and Wales).

But those of us on the left who are prepared to fight Neo-Stalinism need to understand where it comes from.

In 1929 the sociologist Erich Fromm issued a questionnaire to around 3,000 German workers. He found attitudes strongly correlated with political affiliation, except in one instance. Among supporters of the communist KPD, there were a minority whose social attitudes mirrored those of the Nazis:

“These people were filled with hate and anger against everyone who had money and who appeared to enjoy life. That part of the socialist platform which aimed at the overthrow of the propertied classes strongly appealed to them. On the other hand, items such as freedom and equality had not the slightest attraction for them, since they willingly obeyed every powerful authority they admired and liked to control others.”

Fromm, in retrospect, believed that this group of communist supporters then went over to the Nazis in two waves, first during Hitler’s electoral breakthrough in 1931, then in the immediate aftermath of the Nazi election victory of March 1933.

One reason neo-Stalinists hate the Frankfurt School is that its theorists – Adorno and Horkheimer – built on Fromm’s insight to develop the stereotype of the “authoritarian rebel”. If you want to understand what an authoritarian rebel looks like, scrutinise the footage of the guy who kicked Tino Ferrari and his Ukrainian and EU flags off last Saturday’s march.

Resisting such people is not easy – above all because their reputations are being laundered by more moderate, less crazy sections of the left, who simply cannot see beyond their shared iconography and powerlessness. But the starting point is logic and evidence, plus mass mobilisation and social-democratic delivery.

The Neo-Stals will always claim that advances made by socialist governments in Europe, or Democrats in the USA, are simply the result of “pressure” exercised on the streets by them.

Their maximum programme is the collapse of Western society. Their minimum programme is to disrupt the surgery of a local Labour MP with drums and megaphones.

What I have always found a useful antidote is to surround them with thousands of ordinary people, mobilised in their own self-interest, who haven’t read Losurdo and despise Stalin, and who are prepared to say to them simply: “don’t be silly”.

Thank you for reading. Please share and subscribe…I will make this one free as it’s matter of public interest. More paywalled coverage of the global security situation coming later this week…

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Welcome to Part 3 of my paper on Postcapitalism and Agentic AI. Please read Part 1 and Part 2 first. I will publish this as CC-ND-BY paper soon but subscribers are getting it first. Thanks for reading and supporting this publication. Let me know what you think…

From Neoliberalism to Postcapitalism?

At present, two groups of people are gaining asymmetric advantage from the deployment of agentic AI. First, the owners of the systems and the corporations manufacturing the technologies needed – from the semiconductor maker NVIDIA to the solar farm developers building energy supplies for the datacenters, to the army of new marketing hires at these firms. Second, individual firms and workers who are deploying AI to make efficiency and revenue gains from tasks whose prices/wages have not yet fallen in response to a more widespread rollout.

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This cannot last. Soon we should begin to see a variety of tasks and job functions automated, so that the humans standing – to quote Marx – to the “side of the machine” become fewer and more productive.

But this only begins to explore the transformative power of AI. As Morozov (2026) suggests, its true potential lies in its ability to unleash creativity and imagination. That, as he also suggests, begs the question: to what ends, under which ethos?

Let us imagine for a moment that the technical structure of LLMs remain as at present: large datacenters consuming massive amounts of energy and “compute”, with end-users charged a monthly rent for limited time on the machine. Let us also assume – following the Claude Code leak – that generative and symbolic AI merge into a hybrid form that overcomes the limits of each. What are the most likely transformative effects?

First, we will see the automation of tasks involving language, screens, repeatable workflows, searchable bodies of knowledge and that are auditable after the fact.

Second, we will see the innovation, product design and cultural creation process increasingly automated.

Third, it will revolutionize scientific research – where “LLMs have evolved from tools of convenience—performing tasks like summarizing literature, generating code, and analyzing datasets—to emerging as pivotal aids in hypothesis generation, experimental design, and even process automation” (Zhang et al, 2025).

Fourth, it will transform medicine. Fifth, it will populate all aspects of military, policing and security capabilities.

Tasks, rather than entire jobs, will be replaced at first, likely leading to the merger of the remaining tasks into fewer, more versatile human employees (as when London Underground trains lost their guards). But the real revolution will come at the moment of synthesis: when entrepreneurs (or states, or co-operatives) begin using agentic AI to redesign processes from scratch to operate with minimal human oversight – to continue the example, as when the Docklands Light Railway became the first London transport system to operate without drivers at all.

The question is then: to what end do we want to design the low-work/high-automation economy, and with what social and technological outcomes.

If we begin from the assumptions of the mainstream economists, we will be stuck in a Baumol world, where the most likely spontaneous impact of massive LLM adoption will be a massacre of screen-based, language based and decision-based jobs – ranging from office administrator, junior lawyer, postgraduate researcher to train driver and customer service operative. Jobs that cannot be automated will become more sought after – e.g. chef, roofing contractor, all forms of construction and installation. The undisputed feudal nobility will be anyone who works for hyperscaler or its supply chain.

But what if we managed this process toward the objective of an “X-Y-8 economy” – where hours of work (X) trend toward zero and hours of leisure (Y) towards 16; in which remuneration in kind (goods, services and information) replaced wages; and in which voluntary, unpaid work replaced compulsory work.

Unlike Benanav I am not interested in designing the end state separate from the messy, historically determined present it must emerge from. Indeed, the beauty of the Postcapitalism Thesis is that it conforms to Marx’s belief that the new social relations must accumulate within the “interstices” of the old.

There are several in-principle lines of advance. First, as I suggested in Postcapitalism, the state must adopt a mixture of Universal Basic Income and Universal Basic Services – the former as a transitional measure to remuneration in kind, according to need. Its initial source will be taxes of the profits of the private sector and the wages of upper income employees, but as these dry up the UBI – as suggested in 2015 - will be replaced by UBS. UBI itself is not a long-term solution to displacement effects.

In addition, there should be legislation to limit and eventually abolish intellectual property. Though the idea might scandalize the oligarchs of Silicon Valley, it is they who are actually pursuing it – by agglomerating all human knowledge and attempting to charge rent for the privilege of accessing it through a quasi-intelligent machine.

We cannot simply “take hold” of the means of information production created by the current LLM corporations: we need, as Morozov suggests, to restructure the technology itself around the task of creating a high-welfare, low work economy.

Beyond this, absent specific restrictions by the owners of the LLMs, there is nothing to stop groups of progressive users utilizing them today, for the tasks of transition to a more sustainable, socially just future. Just as the Big Four accountancy firms are buying bespoke corporate versions of the LLMs, so too might a state, or Mayoral Authority, or a coalition of worker co-ops, or a mutually owned water/sewage provider. The upsides here would lie in process design and innovation, the reduction of organizational friction and risk.

Another potential area for shifting the balance between total leisure and total SNLT lies in the automation of unpaid domestic labor. In the 20^th century, this process (washing machines, vacuum cleaners) allowed women to enter the workforce in larger numbers – but the capitalists reaped the upside. Humanoid robotics are too crude at present to perform most domestic labor, as they cannot yet properly navigate the complexities of the physical world: the challenge head is to cheapen the cost of such robots and deploying them into the most social-justice producing situations.

Fifth, there are massive possibilities in the fields of education and training. Some of the most spectacular experiences during the agentic phase involves people using Claude, Gemini and ChatGPT to educate themselves using dialogues with the machine.

Finally, though I do not see planning as the route to socialism, it is certainly part of the solution in a transitional economy of state, state-owned enterprises, publicly-held corporations, SMEs and co-operatives. Shalizi (2012) pointed out that, to plan an economy with billions of variables, even using the most advanced forms of linear programming and current compute power, would take a thousand years.

But to project the optimal outcomes at a smaller scale (or a series of competing outcomes, as Benanav wishes) falls well within the power of agentic and generative AI, when combined for example with agent-based modelling.

The point of any application of GenAI to the planning problem is to say: the aim of the plan is reduce the total amount of work needed to sustain human life on the planet, and allow people maximum free time, while allocating increasingly broad categories of goods according to need.

Table 2 (below) shows how we might insert the above principles into a policy framework. The Keynesian paradigm was replaced by neoliberalism through assertive policy and class struggle. To make the next transition we will need to be similarly assertive and purposeful.

Obviously, there is an entire missing problem set, which is fiscal and monetary policy during the transition beyond the market. It lies beyond the scope of this paper but was covered in Postcapitalism (Mason 2015).

AI for Social Democracy?

We must now insert these thrilling technological prospects into the problematic social reality we face. Unlike Benanav, I am interested in the transition path, not the idealized outcome. And the desire for a transition is likely to be driven by people’s exasperation with the polycrisis wracked world they live in, so the steps we take need to connect with the immediate problems people face.

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Mainstream economics: running to catch up

Professional economists began to grapple with the potentially job-destroying impacts of AI in the middle of the last decade. Acemoglu and Restrepo (2018) built an influential model based on the problem of “automation vs reinstatement”. Automation displaces labor from the production process; the creation of new and more complex tasks reinstates labor. During the displacement process, labor’s bargaining power and share of GDP becomes weaker; during the reinstatement process they become stronger.

Their core – and I suggest false – assumption is that digital information networks have the same effect as previous technologies: creating roughly as many jobs/tasks as they destroy, by creating new consumption norms and more sophisticated human activities (eg when Vaudeville theatres were replaced by movie theatres).

In their model, the factor determining whether these processes balance each other out, is the cost of capital relative to labor. If capital is scarce and expensive, it becomes harder to automate; where it is cheap, the model eventually produces full automation.

Aghion et al (2019) frame the problem of job destruction/reinstatement around “Baumol’s Disease”. Baumol (1967) observed that when a sector becomes automated, it tends to shrink as a percentage of GDP, allowing low-productivity sectors to expand into the gap:

“As a consequence, economic growth may be constrained not by what we do well but rather by what is essential and yet hard to improve.”

Aghion et al extrapolate a range of outcomes: (i) where overall balanced growth accompanies complete automation but the capital share of GDP stays well below 100% (i.e. there are still a lot of people with jobs, because of Baumol’s Disease); (ii) where the automation of innovation leads to sub-optimal growth because AI is able to imitate every technology patented, destroying its value as intellectual property (death of the entrepreneur); (iii) a singularity event, where growth and productivity take off exponentially.

Either the high-productivity/high-growth segment of the economy gets squeezed, and we get a massive population of low-skilled, low-paid and under-employed people doing human-to-human services; or these tasks too are largely automated, and SNLT falls close to zero – leaving society with a massive hole in consumption, because so do wages; or we get repeated a singularity events where GDP growth rises spectacularly and everybody gains. That is a very wide range of outcomes from a single model and certainly does not rule out the collapse of paid employment.

A recurrent problem in this literature is the attempt to find empirical evidence for such proposed effects in recent data. Acemoglu and Restrepo, for example, writing in 2018, feared that the recent stagnation in growth and productivity in Western economies, coincident with ultra-cheap capital costs following Quantitative Easing by central banks, might indicate a long-term shift from labour to capital, and from humans to machines. Aghion et al pointed to the rising capital share of Western economy GDP in recent years as an indicator of non-replacement.

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For the purposes of this paper, however, the empirical evidence of the past 25 years is scarcely relevant. Sajadieh et al, in the April 2026 Stanford HAI Index, show that LLM implementations are in their infancy. Once the rollout gathers pace, agentic AI, together with advances in robotics, autonomy and the network effects of their deployment, will create much stronger and more discernible impacts than those experienced to date. The balance between the automation and new job creation will also be conditioned by policy and consumer behavior, rather than simply by technological change.

Early evidence of the impact of LLMs on jobs suggests they replace tasks rather than entire jobs, and that employees with what Garciano (2026) calls “weak bundles” of tasks, are at greatest risk of being replaced. Crane and Soto (2026) suggest the US workforce is missing half a million junior software coders compared to pre-LLM trends. Sajadieh et al (2026) report:

“In software development, where AI’s measured productivity gains are clearest, U.S. developers ages 22 to 25 saw employment fall nearly 20% from 2024, even as the headcount for older developers continues to grow”.

Just as automated telephone exchanges replaced the least skilled operators first, LLMs are replacing junior programmers with few management or strategy responsibilities. Firms at the leading edge of such activity report both productivity and revenue gains of 10-20%, with the strongest effects felt in functions like strategy and corporate finance, product development and marketing/sales. (Sajadieh et al 2026)

However, a model of job destruction/replacement driven only by automation and the cost of capital does not fully reflect what happened to employment in the neoliberal era. In addition to creating more human-to-human service jobs, the demands of a highly financialized capitalism also created what the anthropologist David Graeber called “bullshit jobs”: jobs that do not need to exist (Graeber 2018).

Graeber ascribed the motives for such job creation to corporate inefficiency and self-aggrandizement. In Postcapitalism I suggested that, to the contrary, bullshit jobs are an emergent phenomenon of financialization: financialized capital needs not only workers but credit card borrowers, apartment renters, auto and student loan repayers, smartphone owners etc.

Without high employment levels and awarding even low-paid workers respectable credit scores, none of these rentier business models can exist. So while individual corporations recurrently cull excess workers, and over the past 40 years have relentlessly hollowed out middle-income jobs, the system as a whole keeps on creating minimally paid jobs that don’t need to exist, plus rising welfare dependency.

Whether this can continue in the late 2020s, in an era where capital and credit have suddenly become expensive due to global shocks plus demographic ageing, will be a complicating factor in what happens next. If a jobs cull at the low-skill end of the workforce coincides with rising credit scarcity for the same deciles, owing more to the rising cost of capital, that might create a Depression-scale event for such workers.

Should that also coincide with a jobs massacre at the middle-to-high end (junior marketers, programmers, lawyers and consultants etc.) it would create an unprecedented social crisis.

Xu (2023) shows that in the UK, the main impact of the barbell effect on salaries in the neoliberal era was felt at the top, with the top three deciles in terms of salary each almost doubling their incomes between 1993 and 2023. That is what makes the outcome of automation on these professional and managerial sectors crucial. However, to fully theorize the impact of AI on jobs, employment and the future of capitalism, we need to factor in something not considered by mainstream economics: free time.

Labor: Paid, Voluntary and Domestic

As they considered AI’s impact on growth, productivity and sectoral reallocation mainstream economists have generally ignored a concept central both to Marxist political economy and the Postcapitalism Thesis: free time.

For Aghion et al, the economy consists only of capital and paid labor; for Acemoglu and Restrepo there is only job destruction and reinstatement. In the Postcapitalism Thesis, there is capital, paid labor, unpaid labor and, for want of a better word, “play”. Once we factor free time, unpaid labor, collaborative production and recreation into the model, we can escape the Baumol cul de sac into which much of the mainstream literature has steered itself.

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[I’m releasing a 10k word paper on Postcapitalism and AI, updating the thesis of my 2015 book, as a series of posts here on Conflict & Democracy. Here goes…]

With the Middle East on fire, the rules-based order disintegrating and the far-right advancing, it may seem perverse to revisit the idea of transcending capitalism through automation. Our tasks as progressives look urgent and defensive. What we achieve will be done in alliance with people wedded to the free-market economy and unequal outcomes.

But the speed of development of generative artificial intelligence (GenAI) has renewed debates among technologists, economists and left-wing theorists alike, about whether the anticipated jobs massacre, together with the advance of robotics, might trigger an existential crisis point for capitalism.

In light of this, an addendum to Postcapitalism (Mason, 2015) is overdue. In this series of articles for Conflict & Democracy, which will be collated into a paper, I will:

• Reiterate the hypothesis that information technology uniquely disrupts capitalism’s ability to adapt to technological change, opening a pathway beyond a system based on markets and private property.

• Survey attempts within mainstream economics to predict the impact of generative AI on jobs, consumption and growth, showing why the labour theory of value is essential to breaking out of the academic impasse.

• Outline a stylised transition path beyond capitalism, based on AI, autonomy and robotics.

• Survey an influential debate between two left-wing proponents of info-socialism: Aaron Benanav and Yevgeny Morozov.

• Explore what AI means practically, for the minimum, maximum and “transitional” programmes of those who want to create a society without property and hierarchy, and how these map onto the current priorities of the centre left.

I will keep the language non-technical, because both macroeconomics and critical theory revel in abstruseness when discussing this issue. First, however, I will state my political premise.

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I am a radical social democrat. I believe in using democracy, where it exists, to: (a) promote social and economic justice; (b) manage the crisis of capitalism towards benign ends rather than fascism and war; (c) transition rapidly to Net Zero; (d) advance towards an economy where human need is the primary regulator, not market imperatives or oligarchic power, without risking the totalitarian outcomes we saw in the USSR and the PRC.

That means I believe the democratic state is the primary instrument, not just “the class struggle” or small, Utopian community experiments (though both will come in handy). I am a member of a party that seeks and utilizes power through the ballot box and therefore make no apology for wanting to bring this debate into the world of the practical.

Though I employ the labor theory of value as an analytical tool, I believe there are profound flaws within Marxism, namely: abolishing private property does not automatically abolish coercion; the working class is neither spontaneously communist, nor the “bearer” of postcapitalist social relations, and has in any case been atomized and its function within the valorization of capital altered. The postcapitalist project must therefore adopt a moral-philosophical foundation which asks: “What is a good society, and what does a virtuous member of it look like?” (Mason, 2019).

LLMs: Reality and Hype

There is an unhealthy amount of hyperbole surrounding the achievements of Large Language Models (LLMs) during their current “agentic” phase. It is likely that the market valuations of the Magnificent Seven hyperscaler corporations (Mag 7) will eventually fail to reflect their actual turnover and profits.

This mandates some form of financial market crash, which – given the circular funding model of the Mag7 - will likely take down other over-exposed sections of the world economy and financial markets, just as structured derivatives did in 2008.

But that is not the focus of this paper; nor will it deal in detail with the ethics and risk problem-sets; and it will treat the problem of high energy use in compute, and the resource allocation problem in pursuit of Net Zero as a solvable engineering problem.

The point is: the technology is real, just as the railways were real despite the financial crash they triggered in the 1840s. And it is creating new utility at spectacular pace.

I expect that after any AI financial crash, probably with the intervention of one or more states, the technology will go on improving and deepen its user base; the business models of the corporations that own the LLMs will evolve; and the ethical and safety issues will become more acute, requiring enhanced and comprehensive regulation.

The task here is to understand how GenAI will impact the rest of the economy; how it could be used to promote the goals of social justice, democracy and the transition to a needs-based distribution system; and how – in that process – the technology itself might be reshaped.

Over the past five years, GenAI has progressed from a collection of crude chatbots, used as expensive search engines and prone to hallucination, to an ecosystem of models, agentic systems and enterprise-level software tools. These can, as of April 2026, write computer code, analyse and produce images, operate software, take actions on behalf of a user, produce human-like content and communicate with each other if permitted. Beyond what is available to the public, states and corporations are developing proprietary AI – either unique models or adapted versions of the commercial ones - that can do likewise.

In the process, claim the makers, these models and agents have developed the capacity to reason, not just to predict and mimic a human response (though their prediction and mimicry was already useful). The leak of Claude Code’s source code in April 2026 confirms that this is already a hybrid technology, utilizing both the pattern matching of LLMs and the symbolic logic of “Good Old Fashioned AI” (GOFAI) to produce “neuro-symbolic” AI. (Eliot 2026)

GenAI has thus reached “internet-scale adoption” faster than any previous technology. There are now, globally ~60 million paying subscribers to the big four services and an estimated 1.5 billion people either relying on the free versions, or on services integrated into commercial software (e.g. Copilot, which automates tasks within Microsoft Office). By comparison there are 5.4 billion internet users, >6 billion smartphone users, 4 billion Google Search users and 5 billion people on social media. Facebook took more than 4 years to achieve 100 million users; ChatGPT took two months.

It is therefore legitimate to label GenAI a general-purpose technology. But with the arrival of the “agentic” phase, we are seeing quality improve as rapidly as quantity.

The change wrought by agentic AI might be summarized as the transition from “answering questions” to “performing tasks”. Claude Cowork, for example, can not only research and write briefings, articles and reports, it can learn and improve “skills” – i.e. routines for processing requests. Agents increasingly call up other agents to perform tasks. For example, if asked to “build a website” an AI agent allocates tasks to a planning, coding, testing and debugging agents; it acts as a project manager and does not need a human to manage the process.

This, in turn, leads to the proposal that there will be an “Virtual Agent Economy”: an economic layer, or sector, where agents transact and coordinate at scales and speeds beyond direct human oversight. Tomašev et al (2025) explore the possibility that such an economy might emerge spontaneously; and that it could remain impermeable to it the human economy. I discuss this proposition below.

However, while businesses report rising awareness of agentic AI, the majority of companies surveyed by McKinsey & Company in 2025 were not using it, and even in tech heavy functions like Knowledge Management, IT, product development and software engineering, only ~6% of firms reported themselves at the “scaling” stage of implementation. (Sajadieh et al 2026)

A second revelation in the agentic phase is something no Marxist will be surprised at: artificially intelligent systems are spontaneously social. Evans et al, (2026), point out that the most advanced LLMs do not achieve their results simply by “thinking longer”:

“Instead, they simulate complex, multi-agent-like interactions within their own chain of thought—what we term a ‘society of thought’… When reinforcement learning is used to reward base models solely for reasoning accuracy, they spontaneously increase conversational, multi-perspective behaviors.”

All knowledge is, as Marx put it, social knowledge – only now the “social” is populated by two types of actor: human and machine. Advances are made through a combination of conversation and computation, both on silicon and in the human brain.

In The Fragment on Machines, written in 1858, Marx predicted that capitalism would be overcome through the socialization of knowledge into a “general intellect”, creating highly intelligent and versatile human beings, freed from the necessity to work. (Marx 1973) What he underestimated was the extent to which such socialized knowledge would migrate into the inanimate side of the human/machine binary.

The Postcapitalism Thesis

In Postcapitalism: A Guide to Our Future, (Mason 2015) I argued that information technology is unique, in that its impact on our ability to own and price information goods disrupts the adaptation process of market economies to technological change.

Digital information processing plus networks creates an information capitalism (infocapitalism) in which the existing structures and social relations are forced to coexist with a new, non-market sector, where the profit motive and monetary exchange no longer drive economic activity. Work and leisure time become blurred, while the link between hours of work and wages becomes weaker.

Digital information networks have a unique quality: they can produce information goods in abundance, which are non-rivalrous and as durable as the media on which they are stored/streamed (Romer 1990). Leon Walras expressed the most fundamental assumption of economics when he wrote:

“There are no products that can be multiplied without limit. All things which form part of social wealth … exist only in limited quantities.”

Since around 1995 that no longer holds: Walras’ book is now available in unlimited quantities as a PDF. (Walras 1874)

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JD Vance terminated 21 hours of talks with Iran because they - he claims - refused to commit to never acquiring a nuclear weapon or the tools to create one. Having twice claimed to have smashed Iran’s nuclear programme, if that was the red line causing the US walkout, what happens next?

There was a lively debate at the London Defence Conference this week, over the outcome of the US-Israeli war with Iran. My interim view is contained in this feature for The New World magazine, namely that while the USA has not been defeated, it has achieved strategic failure. Some excerpts:

If we list the ever-changing US goals during operation Epic Fury, only one of them – the destruction of the Iranian navy – has been achieved. The nuclear programme is degraded but not destroyed; the missile stockpile may be less than half depleted; and Iran’s terrorist proxies are operating unrestrained in Iraq, Gaza, Lebanon and Yemen.

Iran – whose proxies launched the genocidal attack on Israel on 7 October 2023, and whose regime just murdered tens of thousands of oppositionists – has achieved the right to sit, face to face with US negotiators, and decide the future of Gulf: not just whether ships will transit, but whether the fragile monarchic economies can survive in their present form.

China, by proxy, will sit at that table also. Russia, whose targeting intelligence allowed Iran to hit strategically important US radars, and destroy an American AWACS aircraft on the ground, will also be metaphorically in the room.

For me, the outcome so far is a symptom of waning US power:

There is only one strong argument coming out of accounts of how America made the decision for war – and it was put by Pete Hegseth: since we will have to “take care of the Iranians eventually, we might as well do it now”. This is a rationale straight out of Clausewitz, the 19th century strategist whose book On War remains a bible for Western military thinkers. But there’s one telling problem: for Clausewitz the advice to attack sooner rather than later was aimed at small states whose adversaries were only going to get stronger.

But at #LDC2026 I heard conflicting responses to this thesis.

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Strategic failure or coming implosion?

Professor Janice Stein, who heads the Munk Schook of Global Affairs & Public Policy, thinks Iran has basically won. First, because the USA failed to plan militarily for the closeure of the Strait of Hormuz, with Trump reportedly laughing off the prospect.

Second, because Iran itself laid detailed plans for a decentralised defence, whose resilience is incentivised by the existential nature of the conflict: lose power and you are personally in the hands of the people whose relatives you killed on the streets in January. Third, Prof. Stein points out, Iran has made a big dent in the petrodollar system, and any tolls through the Strait may now have to be paid in RMB.

Joel Rayburn, Senior Fellow at the Hudson Institute and former Iran strategist during the first Trump administration, put a strikingly contrary case, which I want to focus on here.

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In the beginning we had propaganda and deception. Then we recognised cyber as a domain of conflict. Then we attached the label “hybrid” to the Russian concept of new generation warfare – and when that proved hard for the public to understand we used “greyzone”. And now we have Cognitive Warfare (CogWar).

On 19 December 2025 the NATO Chief Science and Technology Organisation published a landmark report on CogWar, summarising the Alliance’s work, which recognises “cognitive” as a sixth operational domain of armed conflict.

Now, inevitably, there’s a backlash. In February 2026 Samuel Zilincik of the Royal Danish Defence College published an article attacking the concept, saying it misrepresents the strategic challenge and relies on outdated science.

In this edition of Conflict & Democracy I’m going to run through the development of the concept and (conditionally) defend it – but draw out some stark implications about what it means – not just for the military but for the politicians and civil servants who actually stand on the front lines in this domain.

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Let’s begin by stating something that should be obvious. We are struggling to define what we are up against because we do not ourselves practise it. Like all states in history, Western countries have used espionage, deception, subversion, propaganda and influence operations.

But a mixture of networked information technology, its mass psychological impact on human beings, the rise of non-human intelligence and the emergence of technologically-enhanced authoritarian aggressors have synthesised these practices into something new that we have to deal with at the strategic level.

Whether we elevate it to the status of a “domain” or not, we need a deep, strategic response to it, for a reason that goes back to Clausewitzian basics: Cognitive Warfare, as practised by Russia, China, Iran and their proxies, is an attack on our will to defend ourselves. Lose it, and they can “win without fighting”.

And while that truism is as old as the spear, digital information technology constitutes a new kind of spear.

Genesis of the CogWar

The People’s Liberation Army began speaking of the “cognitive domain” as early as 2002, with a sharp uptick from around 2014 (for a fully referenced account see Frank Hoffman’s excellent summary in Small Wars Journal).

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[Elsewhere: This week in The New World I outlined a proposal for a European Safe Asset to leverage the EU’s position in an increasingly fractious game of economic coercion. This edition of Conflict & Democracy assesses who is winning the narrative in the Gulf conflict, and whether it matters…]

Last July the US Senate ordered Pete Hegseth to supply, in writing and no later than 31 March 2026, a Department of War (DOW) definition of Cognitive Warfare, together with an assessment of how it relates to existing doctrine on information and psychological ops.

It further directed Hegseth to produce:

“…an examination of the relative value of narrative intelligence, defined as intelligence of the story or narrative an adversary is attempting to build, to cognitive warfare and related disciplines. The committee expects this evaluation to consider how narrative intelligence can enhance military operations, including information operations and irregular warfare.”

For the Trump administration however, it turns out that “narrative intelligence” is – as with military intelligence in that famous joke – a contradiction in terms.

Trump’s rambling address to the nation, made in primetime on 2 April, was greeted with dismay both by the financial markets and America’s increasingly frustrated allies. It contained zero narrative intelligence and fostered little confidence that the US has a cognitive grasp of what it is trying to achieve in the war against Iran.

In the meantime, we are approaching a mid-April crunch point at which numerous Asian economies are going to start running short of oil and oil-derived products, while the spike in petroleum price inflation in the developed world will start to feed through to headline inflation rates.

With the conflict ongoing, I approach situations like this in full knowledge that, behind the fog of war, there is a reality that most of us simply cannot grasp.

Both sides are trying to achieve a mixture of kinetic, economic and cognitive effects, in order to destroy the adversary’s means and will to fight. And though Iran has no chance of destroying the USA’s means, it is certainly hiking the moral and reputational price America will pay for victory - and in the process destabilising the world economy.

Nine days of brinkmanship

It is certain that talks between Iran and the USA are taking place, through messages relayed by Pakistan. And that three other nations – Turkey, Egypt and Saudi Arabia – are facilitating the process.

Around 25 March the US sent a 15-point peace plan via Pakistan, calling for three nuclear sites to be dismantled, halting uranium enrichment; suspending ballistic missile work; ending support for proxies; reopening the Strait of Hormuz.

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