David Priestland is worried. Towards the end of his recently published book Merchant, Soldier, Sage, he warns:

‘[The crash of] 2008 has set the world on a course towards potential conflict, and the domestic and international forces that brought us the violence of the 1930s and 1940s are with us today – albeit still in embryonic form.’

It is fashionable, especially in heavily indebted Europe, to compare the uncertainties of the present with those of the 1930s. The Second World War is passing out of living memory and entering popular historical consciousness. Angela Merkel appeals to this when she warns that only the European project can guarantee peace; and Greek protesters who equate her with the Nazis assert the opposite view.

Priestland, an Oxford history don specialising in communism, asks how history might guide us through this precarious moment. The question, ‘What does history teach us?’, demands that we understand which forces impel historical change. Priestland contests the prevailing belief that, to adapt Macaulay, the history of the world is emphatically the history of liberal progress. Challenging Francis Fukuyama and others, Priestland rejects the comfortable notion that capitalism and liberal democracy are entwined. He argues that this misconception is making it impossible for the West to comprehend and respond to its present crisis. Therefore, Priestland says, we need an alternative.

His answer is the intriguing scheme of ‘caste orders’. By this he does not mean the rigid social forms of India, but rather flexible social groups in which membership is determined by occupation. He names the basic castes as merchant, sage-technocrat, warrior and peasant-worker; then finesses the categories by differentiating, for instance, between ‘hard’ merchants, like investment bankers, and softer varieties, like retail bankers.

Essentially, Priestland has adapted the basic medieval stratification of a society that prayed, fought and ploughed, to include recent psychological and sociological research which suggests that social values and economic interests are linked and from which politics emerges. He presents history as the story of competing social and economic concerns rather than a clash of political ideologies or economic classes. He pays close attention to the ‘torturous rise of the merchant’ because he believes that the world’s present difficulties (and Britain’s in particular) issue from the merchant’s dominance. He argues that the merchant must be softened by the sage-technocrat, which he defines as civil servants, academics, lawyers and so forth. In other words, various institutions, most of them organs of the state, need to be reinvigorated as a matter of urgency.

One could be forgiven for thinking that this is an elite version of history; indeed, the worker hardly features. It is also curious that Priestland emphasises the importance of social values as engines of historical change but neglects to consider religious or ethical motivations explicitly. If the problems of today are largely the result of unconstrained greed, it follows that one possible resolution is for society to re-moralize itself, a process that would depend on activism rather than imposition.

Priestland is, of course, aware of the limitations of compressing human history into four general groups and 300 pages. Yet it strikes me that he is right to see contemporary political history in the West as a developing picture of distant elites and frustrated masses. This is expressed clearly in the sections in his book describing the Davos summits, or the ‘Valhalla of the new merchant gods’ as he puts it. And he identified a similar disconnect when talking to me of the euro:

“I’m pro-European, but I think it was crazy for the European Project to latch onto this Gold Standard-type currency. And it seems to me that this is still very strong among elites: that we’ve got to have the euro, that the euro is proof that Europe works… And if European elites had spent nearly as long addressing the democratic deficit problem that they have in trying to put together this common currency, I think the whole project would have been massively more popular and successful.”

This implies that economic uncertainty is masking a deeper crisis of democracy. Priestland hints at this in his book and expands on it in person. He explains that political alienation is the cousin of economic exclusion and how they often conspire to create political strife. He warns that the London riots of 2011 are a “sign of things to come” as the minority who exist outside Britain’s social and economic system protest their exclusion by turning to criminality and confrontation. Priestland, a university tutor, reckons that the urban middle class may follow suit if graduate unemployment deepens.

“History suggests that when you get educated people and give them expectations about particular jobs and then those don’t materialise, a sort of 1848 situation, then you get a political movement because you get quite vocal people who are used to participating in politics getting very fed up. We’re not there yet; but when we get to that stage we may get some change.”

Priestland is “very sympathetic” to the Occupy Movement. He admits that Occupy lacks the coherence of the 1848 movements, but predicts that it is the first of many such associations as people seek a stake in their society. He sees the (considerably more galvanised and successful) Tea Party voicing similar frustration on the other side of the political divide, albeit from a reactionary rather than revolutionary perspective.

Yet there is a problem here. Priestland also argues that the pace of economic and technological development ‘compels us to accept more state involvement in the economy not less.’ What does Priestland mean by ‘state involvement’? The phrase evokes a discredited vision of government planners and grand designs that relegate dissenting opinions. Priestland is adamant that he is not proposing to revive central planning, not least because the original post-war model was “too hierarchical and not democratic enough”. The reform he envisages builds on the example of what he terms “the collaborative economies” in Scandinavia and Germany, where self-confident governments work with businesses, private finance and respectable trade unions to nurture a well-trained, motivated workforce in an competitive economy that it is, to adapt Adair Turner’s phrase, socially useful.

I asked for a working example. Priestland is no raving banker basher, but he advocates major banking reform on the grounds that an accident of history made Britain “the trade centre of the world and its banks developed as international banks rather than banks that were really there to deal with local investment.” Priestland is referring to a varied historiographical debate over the causes of Britain’s relative economic decline since 1870. The discussion turns on the contested point that the City’s wealth has not always diffused to the regions, and that governments might have been more proactive in this regard either by shifting money from the City or by making the provinces more attractive to investors. This dog-eared historical question, Priestland implies, ought to be foremost in policymakers’ minds today.

The collaborative approach may well be sound economically; but rendering an economy more relevant to the people will not necessarily distract them from their own political powerlessness. Priestland does not give himself sufficient space to examine questions of democracy; though perhaps he felt it unnecessary to do so because he is so pessimistic about economic reform in the wake of the 2008 crash. Political and economic elites in the developed world, he says, have demonstrated their determination to pursue the same policies which contributed to the crash. He concludes with the sobering phrase, ‘Meanwhile, as society frays, the warrior waits in the wings.’

There is much to reject, much to contest and much to admire in Priestland’s book. There are undoubtedly flaws with his schematic approach, which sees contemporary China lumped together with Wilhelmine Germany, and the Muslim Brotherhood characterised as diligent non-conformist merchants rather than ideologues. Indeed, the suppression of religious ideology is perhaps the scheme’s greatest weakness. Yet such criticisms miss the point of the book, which is to make the general reader revisit the past and ask themselves what drives historical change. If you do that, you cannot help but ask why our society seems to be stationary.

Merchant, Soldier, Sage by David Priestland is published by Penguin.

Tags: Economy, History, Interviews, Non-fiction, Politics, Second world war