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Former Comptroller & Auditor-General to be made a peer

Published by Anonymous (not verified) on Fri, 26/02/2021 - 8:41am in


banks, money

Sir Amyas Morse, who left office in 2019, is the first former Comptroller & Auditor-General to be made a peer since the office was created in 1866. Why is this of interest? Apart from the fact that the post takes in being head of the National Audit Office, which is something we have all heard... Read more

Keir Starmer inches towards radical finance ideas

Published by Anonymous (not verified) on Fri, 19/02/2021 - 7:32am in

I was certainly delighted that Keir Starmer suggested ‘Recovery bonds’ as a method – in order to, well, recover from the Covid hangover. Yes, most on Progressive Pulse know that government creates money out of thin air so never needs bonds. But others of us might like bonds in order that those savings might earn... Read more

How Competitive are U.S. Treasury Repo Markets?

Published by Anonymous (not verified) on Thu, 18/02/2021 - 11:00pm in

Adam Copeland, R. Jay Kahn, Antoine Martin, Matthew McCormick, William Riordan, Kevin Clark, and Tim Wessel

The Treasury repo market is at the center of the U.S. financial system, serving as a source of secured funding as well as providing liquidity for Treasuries in the secondary market. Recently, results published by the Bank for International Settlements (BIS) raised concerns that the repo market may be dominated by as few as four banks. In this post, we show that the secured funding portion of the repo market is competitive by demonstrating that trading is not concentrated overall and explaining how the pricing of inter-dealer repo trades is available to a wide range of market participants. By extension, rate-indexes based on repo trades, such as SOFR, reflect a deep market with a broad set of participants.

What are secured funding repo trades?

A common use of the repurchase agreement (repo) is as a secured-funding transaction between two financial institutions. Indeed, market participants use repos to borrow more than a trillion dollars against Treasury securities each day to finance their activities. As with most financial markets that trade over-the-counter (OTC), repo transactions can be roughly categorized into two groups: Trades between a broker-dealer and its client, and trades between two broker-dealers. In the United States there are two inter-dealer venues, the GCF Repo and the Fixed Income Clearing Corporation's (FICC's) DVP markets, both of which are centrally cleared through FICC, a financial utility. In contrast, the dealer-to-client market is more decentralized.

Our repo data come from two confidential sources. The OFR repo collection gathers detailed data on GCF Repo and FICC DVP, and the Federal Reserve gathers detailed data on a portion of dealer-to-client trades, called tri-party repo. Our focus is on repo trades done for the purpose of obtaining funding. All tri-party repo transactions serve that purpose but inter-dealer trades also contain repos driven by other considerations, such as borrowing specific securities (specials activity). As such, we filter the inter-dealer trades to focus on repos aimed at securing funding (we use the same filters implemented to construct SOFR). Furthermore, our analysis focuses on overnight trades involving Treasury securities because we want to relate our results to SOFR, a benchmark rate index based on overnight Treasury repo trades. Nevertheless, the results presented here continue to hold when including both term repo trades as well as repo trades involving all types of collateral (in fact we find there is even less concentration when including these trades.)

How concentrated are these markets?

Using these data, we compute standard measures of concentration that describe the share of total repo activity done by the largest five and the largest ten participants, where we combine entities that belong to the same holding company. We consider both sides of a trade and so compute these measures across all participants that lend cash (cash-lenders) and, separately, across all participants that borrow cash (cash-borrowers). We compute these measures for every day in 2020 and report the average here.

We begin by considering both segments of inter-dealer repo, FICC DVP and GCF Repo, together, because of their economic similarity and the ability of dealers to operate in both markets. When we combine trades from both venues for 2020, the resulting concentration measures show that large players do not dominate the inter-dealer market. The top five largest cash-lenders and cash-borrowers account for 44.2 and 40.2 percent of total activity, respectively. Furthermore, the largest ten participants on the cash-lenders and cash-borrowers side account for only 63.6 and 56.7 percent of total activity. These results demonstrate that a broad set of participants are active in the inter-dealer market.

To provide a more complete picture, we also compute concentration measures for FICC DVP and GCF Repo trades separately. Note that FICC DVP is a much larger venue, with an average daily total volume of $626 billion in Treasury overnight repo, compared to GCF Repo’s average daily total volume of $22 billion. Furthermore, in FICC DVP there are close to one hundred participants active on each side of the market on a typical day, whereas in GCF Repo there are only thirteen or fourteen active cash-lenders or cash-borrowers active on a typical day.

The FICC DVP concentration statistics demonstrate a market that is not dominated by a few large players. Rather, as shown in the table below, the top five largest cash-lenders and cash-borrowers account for an average 45.2 and 41.2 percent of total activity, respectively. In addition, the largest ten participants account for less than 65 percent of total activity on both sides of the market.

In contrast, the GCF Repo concentration statistics reflect some concentration, with the top five largest cash-lenders and cash-borrowers accounting for 77.2 and 80.7 percent of total activity, respectively, and the top ten participants accounting for more than 95 percent of activity on both sides of the market. These statistics are not surprising however, given the relatively few participants in the market.


Because participants in the inter-dealer markets often lend and borrow cash in the same day, another way to view concentration is to consider participants’ net positions, or the absolute value of the difference between a participant’s lending and borrowing positions. This view arguably better captures firms’ influence on prices. The last row in the table above reports concentration measures using this approach, and shows that by this measure there is even less concentration in the overall inter-dealer market.

Some market commentators and participants have expressed the concern that sponsored repo trades, a form of dealer-to-client activity that is cleared in the FICC DVP market, may be concentrating transactions in the hands of the firms that act as sponsors. The data do not support these concerns, however. The above statistics incorporate sponsored repo transactions, and, in fact, the top five and top ten shares on both sides of the market are slightly higher excluding these trades. Hence these results imply that sponsored repo is helping make repo a more broad-based marketplace.

Finally, in the table below we report similar measures of concentration for tri-party repo. In this market, the top five cash-lenders and cash-borrowers account for 45.2 and 52.2 percent of total activity, demonstrating a similar level of concentration as in the inter-dealer market. Note that while there are a large number of cash-lenders in tri-party repo, there are roughly thirty cash-borrowers active on a typical day. As before, these results demonstrate that repo activity is broad-based, rather than based on a small set of firms.


The results discussed above stand in stark contrast to the recent and well-publicized BIS report which reported that four banks dominate lending in the repo market. The difference lies in the set of participants studied; the BIS report focused on depository institutions whereas this work focuses on all participants. Because depository institutions are not the dominant source of cash in the broader repo market, the different conclusions about concentration between this post and the BIS report are not surprising.

By extension, our results on concentration imply that rate-indexes based on repo trades, such as SOFR, reflect the actions of a wide set of participants. SOFR, then, is not a “narrowly constituted benchmark,” as described in a recent op-ed, but rather a broad measure that reflects the cost of overnight secured funding in the Treasury repo market.

Repo pricing data is available to market participants

Although concentration measures are important to consider when analyzing the competitiveness of a market, they are not the only factor. Especially in OTC markets, the availability of pricing information is often a key factor as well. Along this dimension, the repo market excels because the vast majority of inter-dealer trades involve inter-dealer brokers (IDBs) that post real-time repo quotes to Bloomberg and other financial-information platforms. As a result, broker-dealers and other participants have access to real-time information on repo pricing, helping to make the inter-dealer markets quite competitive. Indeed, recent work demonstrates the narrow range of repo pricing that occurs in the inter-dealer markets, consistent with these markets being competitive. Further efforts such as the OFR short-term funding monitor, the New York Fed’s tri-party repo statistics website, and the three repo-reference rates, and the additional statistics around these rates, published by the New York Fed provide additional transparency to the repo market.

The availability of pricing information in the inter-dealer market also benefits the dealer-to-client segment of the market, for which little real-time pricing information exists. Some dealers’ customers, for example, can access the repo pricing information provided by IDBs. Further, the sponsored repo program, which has been growing in terms of activity and number of participants, enables some of these customers to trade in the inter-dealer markets. Overall however, pricing of repos in dealer-to-client venue remains opaque, spurring calls for increased transparency.


The overnight secured funding portion of the Treasury repo market is not concentrated, but rather reflects trading by a broad group of participants. In addition, pricing transparency helps ensure that Treasury repo is competitive. These are both attractive features for a market which is central to the U.S. financial system. Furthermore, the concentration statistics imply that rate-indexes based upon Treasury repo, such as SOFR, reflect activity across a range of participants.

Copeland_adamAdam Copeland is an assistant vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.

R. Jay Kahn is an economist at the Office of Financial Research, U.S. Department of the Treasury.

Martin_antoineAntoine Martin is a senior vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.

Matthew McCormick is an economist at the Federal Reserve Bank of Dallas.

William Riordan is an assistant vice president in the Federal Reserve Bank of New York’s Markets Group.

Kevin Clark is a senior associate in the Bank’s Markets Group.

Tim Wessel is an associate in the Bank’s Markets Group.

How to cite this post:

Adam Copeland, R. Jay Kahn, Antoine Martin, Matthew McCormick, William Riordan, Kevin Clark, and Tim Wessel, “How Competitive are U.S. Treasury Repo Markets?,” Federal Reserve Bank of New York Liberty Street Economics, February 18, 2021,

Related Reading

Everything You Wanted to Know about the Tri-Party Repo Market, but Didn’t Know to Ask

New York Fed Tri-Party Repo Statistics


The views expressed in this post are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author.

Did Subsidies to Too-Big-To-Fail Banks Increase during the COVID-19 Pandemic?

Published by Anonymous (not verified) on Thu, 11/02/2021 - 11:00pm in



Asani Sarkar


Once a bank grows beyond a certain size or becomes too complex and interconnected, investors often perceive that it is “too big to fail” (TBTF), meaning that if the bank were to become distressed, the government would likely bail it out. In a recent post, I showed that the implicit funding subsidies to systemically important banks (SIBs) declined, on average, after a set of reforms for eliminating TBTF perceptions was implemented. In this post, I discuss whether these subsidies increased again during the COVID-19 pandemic and, if so, whether the increase accrued to large firms in all sectors of the economy.

Expected Effects of the COVID-19 Pandemic on TBTF Subsidies

Unlike the global financial crisis (GFC), the COVID-19 pandemic did not directly affect banks. Rather, nonfinancial firms that had to curtail or shut down business activities due to health restrictions were the most stressed. Nevertheless, banks that lent to hard-hit businesses might also suffer if many borrowers defaulted on their loans. Indeed, there was concern that a wave of corporate bankruptcies would overwhelm courts. Such concerns, if widely shared, might increase expectations of large bank bailouts and implicit subsidies.

Extensive fiscal and monetary support, and supervisory measures that provided regulatory relief, prevented the worst-case economic outcomes. Consequently, widespread bankruptcies have not materialized. However, there is continuing concern regarding large credit losses to banks in the near future.

Relative Returns of the Largest Financial Firms Changed during the Pandemic

If SIBs are viewed as likely to be bailed out, they can issue debt and equity at a discount to the fair market price, thus receiving an implicit funding subsidy that, in turn, creates a competitive disadvantage for non-SIB firms. As in my previous post, I estimate the implicit subsidy by first constructing a TBTF risk factor, and then estimating exposures to this factor for SIBs and other large financial firms, as detailed in my related study.

The TBTF risk factor is based on the idea that the largest financial firms have a higher probability of bailout and so investors perceive them to be less risky and have lower expected equity returns, relative to other large financial firms. Empirically, the TBTF factor is constructed by taking a short equity position on the largest 8 percent of financial firms globally and a long equity position on the next largest 8 percent of financial firms globally. The returns to this factor are expected to be positive, and represent in part the systemic risk premium—the additional compensation that investors require to hold less systemically important firms.

The chart below shows estimates of the systemic risk premium using equity returns data of a global portfolio of financial firms from Asia (excluding Japan), Canada, Europe, Japan, and the United States. To focus on the recent pandemic, the sample starts in 2012, once TBTF reforms started to be implemented. On an annualized basis, the systemic risk premium increases from 2.58 percent in the pre-COVID-19 period (January 2012 to February 2020) to 13.23 percent in the COVID-19 period (March 2020-August 2020). In other words, during the pandemic, investors have required more compensation for holding the stocks of large financial firms, as compared to the very largest financial firms. One explanation may be that investors are putting a premium on safety during the pandemic, and the perceived default risk of even large firms shot up relative to that of the very largest firms.


Implicit Subsidies to SIBs before and after the Pandemic

In order to estimate the implicit subsidy to SIBs, we consider the exposures of SIBs and other large non-SIB financial firms to the TBTF risk factor. Since SIBs benefit when they are perceived to be TBTF, they should have a lower TBTF risk exposure than non-SIBs. This differential exposure is a measure of the subsidy to SIBs. Our methodology accounts for the systematic risk of large banks, or how much their returns co-move with the market return. This is important because large banks are expected to have large systematic risk, which should be separated out when estimating their systemic risk.

In the chart below, we show the evolution of the implicit TBTF subsidy for the global portfolio, expressed as a lower equity cost of capital for SIBs relative to three other groups: large non-SIB banks, large nonbank financials, and large nonfinancial firms. For all three comparisons, the implicit subsidies have generally decreased since their peak during the GFC, except for a second smaller peak around 2011 when the European debt crisis occurred, and other smaller increases that cannot be attributed to specific events. With the start of the COVID-19 period, subsidies increase. However, because subsidy levels were low prior to the pandemic, TBTF subsidies remained at moderate levels by historical standards even after this increase.

LSE_2021_TBTF_COVID_sarkar_ch2_Artboard 2

To get a better understanding of the evolution of the subsidy in the pandemic era, we zero in on the two recent years, 2019 and 2020 (see chart below). Except when using large nonbank financials as the control group, subsidies increase at the beginning of the COVID-19 period and peak in summer. A regression analysis shows a statistically significant increase in subsidies of between 50 and 80 basis points (depending on the control group) between March and August of 2020, from a pre-COVID-19 average of about 100 basis points between January 2012 and February 2020.

LSE_2021_TBTF_COVID_sarkar_ch3_Artboard 3

Did Funding Advantages Increase for All Large Firms?

Are the increased funding advantages specific to large banks or do they accrue to large firms broadly? The pandemic was particularly adverse for small- and medium-sized firms and to the relative advantage of large firms in many industries. If so, our results might reflect this broad-based structural economic change rather than a TBTF subsidy.

We examine this question by constructing a nonfinancial size factor, analogous to the TBTF factor but using large nonfinancial instead of large financial firms. This factor is constructed at the industry level, given differences in how COVID-19 affected different industries. Then, we evaluate the funding advantage of the largest 10 percent of nonfinancial firms in each industry, relative to the next largest 10 percent of nonfinancial firms. An increase in this funding advantage during the pandemic, especially in the hardest-hit industries, would suggest an economy-wide shift towards large firms.

Our results show that in the oil and gas, retail, and transportation sectors—all disproportionately affected by the pandemic—the largest firms increase their funding advantage during the pandemic, but the statistical significance of the change is weak or absent. In the remaining sectors—including the hard-hit entertainment and hospitality sector—the funding advantage of the largest firms decreased during the pandemic. Hence, the evidence of an economy-wide increase in funding advantages for large firms is mixed.

Final Thoughts

While our findings suggest that implicit subsidies to SIBs increased during the pandemic, our calculations were carried out in a period of unprecedented government support. Such support may have muted estimates of bank risk (and required subsidies) or, alternatively, reinforced expectations of bailouts in spite of reforms. Moreover, our subsidy estimates are based on equity prices alone. Future work should assess whether using alternative asset prices yields a different perspective.

Sarkar_asaniAsani Sarkar is an assistant vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.

How to cite this post:

Asani Sarkar, “Did Subsidies to Too-Big-To-Fail Banks Increase during the COVID-19 Pandemic?,” Federal Reserve Bank of New York Liberty Street Economics, February 11, 2021,

Related Reading

The COVID-19 Pandemic and the Fed’s Response

Did Too-Big-To-Fail Reforms Work Globally?


The views expressed in this post are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author.

Up on Main Street

Published by Anonymous (not verified) on Fri, 05/02/2021 - 11:00pm in

Donald P. Morgan and Steph Clampitt


The Main Street Lending Program was the last of the facilities launched by the Fed and Treasury to support the flow of credit during the COVID-19 pandemic. The others primarily targeted Wall Street borrowers; Main Street was for smaller firms that rely more on banks for credit. It was a complicated program that worked by purchasing loans and sharing risk with lenders. Despite its delayed launch, Main Street purchased more debt than any other facility and was accelerating when it closed in January 2021. This post first locates Main Street in the constellation of COVID-19 credit programs, then looks in detail at its design and usage with an eye toward any future programs.

Main Street in the Universe

Facility space is a jumble of acronyms, so it is best navigated starting with the two types of programs (see table below). Purchase facilities buy debt; loan facilities lend directly. The latter are close cousins to traditional discount window lending, so the three launched last year (or rebooted from 2008) were up and running in just a few days. Purchase programs, by contrast, are newer (and potentially riskier), and so they took longer to build. Main Street required longer than most because it bought loans, a more complex, varied type of debt than the “vanilla” bonds or securities purchased by the other facilities. “It is far and away the biggest challenge of the … facilities,” Fed Chair Powell said during build-out.


It’s Not a Race, but…

Main Street purchased more debt than the other facilities and accelerated across the finish line (see chart below). Its $17 billion in volume (as of December 31, 2020) pales compared to $525 billion in Paycheck Protection Program (PPP) loans cum grants but is close to the $18 billion by which small U.S. banks outside the largest twenty-five (as most Main Street banks were) in aggregate increased their stock of business loans every six months on average over 2010-19 (FRED).


Main Street Up Close

The design and funding of Main Street was a collaborative effort. Treasury committed $75 billion and bears first losses, an important consideration in the overall risk tolerance of the program. The public also contributed over 2,200 letters that prompted several changes to the program. The Boston Fed administers the program.

The guiding concept was risk sharing without oversharing. Lenders could sell 95 percent of new loans to the facility with losses (and earnings) shared proportionately. Risk sharing was supposed to mitigate the uncertainty (COVID “fog”) constraining loan supply and release bank capital (by reducing loans on banks’ books) to support new lending. Buying the whole loan might be going too far since lenders would have little incentive to screen and monitor credits or work out problem loans.

To accommodate the diversity in bank loans, Main Street purchased three types of loans (see table below). Priority Loans and Expanded Loans could be larger and their borrowers more levered than with New Loans but were also more senior in default events. Lenders had considerable leeway within those parameters except when it came to pricing; all loans, risky or safe, had to be at 3 percent over LIBOR. Main Street targeted mid-sized firms (up to 5,000 employees) that might be too large for the PPP yet too small to benefit from the “Wall Street” facilities. Only banks (and credit unions) were eligible to sell loans to the program. Nonbank (“shadow”) lenders such as finance companies and “fin techs” (financial technology) are not supervised by the Fed and specialize in riskier lending than banks (Chernenko et al.).


Lenders and Loans

Main Street bought 1,810 loans from 312 lenders, virtually all banks. Three of the four U.S. banks with more than $1 trillion in assets participated but banks with less than $31 billion in assets accounted for 90 percent of loans sold (see chart below).


The average purchase was $9.1 million (see chart below). The average PPP loan was just $101,000 (Hubbard and Strain) so Main Street succeeded in targeting more medium-sized firms. Priority loans (which could be used for refinancing) accounted for two-thirds of loans and three-quarters of volume and New Loans most of the rest. Expanded Loans (which entailed re-writing existing loan agreements) were not much in demand.


Not a Dead End

Demand and supply help explain why Main Street did not go further. Senior loan officers reported contracting demand for business loans every quarter last year after the first quarter (recessions usually reduce loan demand). Main Street, a supply-side intervention, was pushing on a string.

While weak demand was arguably the biggest roadblock, some program features also sidetracked participants. Senior loan officers eschewing the program cited their uncertainty about how loss-sharing (the key feature) with the Fed and Treasury would play out. They reported that some borrowers were deterred (according to loan officers) by restrictions on salaries or dividends. The lack of risk-based pricing may have deterred some safer borrowers (Vardoulakis; English and Liang) though it did simplify matters. The overall risk tolerance of Main Street also mattered. A more aggressive facility would have reached more borrowers but with higher expected losses to taxpayers (Rosengren). These are considerations for any future Main Streets.


Don Morgan is an assistant vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.


Steph Clampitt is a senior research analyst in the Bank’s Research and Statistics Group.

How to cite this post:

Donald P. Morgan and Steph Clampitt, “Up on Main Street,” Federal Reserve Bank of New York Liberty Street Economics, February 5, 2021,

Related Reading

Helping State and Local Governments Stay Liquid

The Money Market Mutual Fund Liquidity Facility

The Primary Dealer Credit Facility

The Paycheck Protection Program Liquidity Facility (PPPLF)

The Primary and Secondary Market Corporate Credit Facilities

Securing Secured Finance: The Term Asset-Backed Securities Loan Facility

Video: The Commercial Paper Funding Facility, Explained


The views expressed in this post are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author.

‘Term Funding Schemes’ updated – a quick fix?

Published by Anonymous (not verified) on Fri, 29/01/2021 - 9:10am in

There is something called the Term Funding Scheme, which was an initiative to ensure the passing on to commercial borrowers of the Bank of England’s recently lowered rates. There is now another scheme, called the Term Funding Scheme with additional incentives for Small and Medium Enterprises (SME)s, which is orientated especially towards small companies and... Read more

The Bank of England was founded on making money out of money

Published by Anonymous (not verified) on Thu, 28/01/2021 - 10:07am in

Going back to Christine Desan’s interview I think we can also take some interesting further conclusions: In creating the institution of the Bank of England not only was a Private Public Partnership created but also a mechanism for creating private money which had previously been the privilege of only the money created by the state... Read more

The original motivation of Christine Desan may be indicative…

Published by Anonymous (not verified) on Tue, 26/01/2021 - 9:25am in

……and even probably many of us all and perhaps of some of society in general…Christine Desan in discussing her book said she initially “majored in religion and sociology of religion”. The book itself ‘Making Money: Coin, Currency, and the Coming of Capitalism’ is unfortunately expensive to buy but at least it is cheaper as a... Read more

Promissory notes, Treasury notes and Bank notes

Published by Anonymous (not verified) on Mon, 25/01/2021 - 9:06pm in

In Felix Martin’s Book ‘Money the Unauthorised Biography’ he quotes this wonderful fact: In 1702, just six years after the foundation of the Bank of England, in Clarke v, Martin, the Chief Justice described the still very new ‘promissory notes’ as ‘a new sort of specialty unknown to the Common Law’ and ‘invented in Lombard... Read more

Book on Utopias from the 17th Century to Today

Ruth Levitas, The Concept of Utopia (Oxford: Peter Lang Ltd 2011).

I’m sorry I haven’t posted anything for several days. Part of that is because the news doesn’t really inspire me. It’s not that it isn’t important, or that the Tories have stopped trying to strip working people of their rights and drive them further into poverty and degradation. Or that I’m unmoved by Trump trying to organise a coup to keep himself in the Oval Office like just about every other tin pot dictator throughout history. Or that Brexit isn’t threatening to destroy whatever remains of British industry and livelihoods, all for the benefit of the Tory superrich and investment bankers like Jacob Rees-Mogg, who have their money safely invested in firms right across the world. Or that I’m not outraged by even more people dying of Covid-19 every day, while the government has corruptly mismanaged their care by outsourcing vital medical supplies and their services to firms that are clearly incompetent to provide them, because those same firms are run by their chums. Ditto with the grossly inadequate food parcels, which are another vile example of Tory profiteering. It’s just that however disgusting and infuriating the news is, there is a certain sameness about it. Because all this is what the Tories have been doing for decades. It’s also partly because I can’t say anything more or better about these issues than has been already said by great bloggers like Mike, Zelo Street and the rest.

But I’ve also been kept busy reading some of the books I got for Christmas, like the above tome by Ruth Levitas, a sociology professor at Bristol Uni. The blurb for this runs

In this highly influential book, Ruth Levitas provides an excellent introduction to the meaning and importance of the concept of Utopia, and explores a wealth of material drawn from literature and social theory to illustrate its rich history and analytical versatility. Situating utopia within the dynamics of the modern imagination, she examines the ways in which it has been used by some of the leading thinkers of modernity: Marx, Engels, Karl Mannheim, Robert Owen, Georges Sorel, Ernst Bloch, William Morris and Herbert Marcuse. Utopia offers the most potent secular concept for imagining and producing a ‘better world’, and this classic text will be invaluable to students across a wide range of disciplines.

It has the following chapters

  1. Ideal Commonwealths: The Emerging Tradition
  2. Castles in the Air: Marx, Engels and Utopian Socialism
  3. Mobilising Myths: Utopia and Social Change in Georges Sorel and Karl Mannheim
  4. Utopian Hope: Ernst Bloch and Reclaiming the Future
  5. The Education of Desire: The Rediscovery of William Morris
  6. An American Dream: Herbert Marcuse and the Transformation of the Psyche
  7. A Hundred Flowers: Contemporary Utopian Studies
  8. Future Perfect: Retheorising Utopia.

I wanted to read the book because so many utopias have been socialist or socialistic, like the early 19th century thinkers Karl Marx described as utopian, Saint-Simon, Fourier and Robert Owen, and was interested in learning more about their ideas. In this sense, I’m slightly disappointed with the book. Although it tells you a little about the plans for the reformation of society, and the establishment of a perfect state or political system, the book’s not so much about these individual schemes as a more general discussion of the concept of utopia. What, exactly, is a utopia, and how has the concept been used, and changed and developed? Much of this debate has been within Marxism, beginning with the great thinker himself. He called his predecessors – Owen, Fourier and Owen ‘utopian’ because he didn’t believe their particular schemes were realistic. Indeed, he regarded them as unscientific, in contrast to his own theories. However, Marx did believe they had done a vital job in pointing out the failures of the capitalist system. Marxists themselves were split over the value of utopias. The dominant position rejected them, as it was pointless to try to describe the coming society before the revolution. Nevertheless, there were Marxists who believed in their value, as the description of a perfect future society served to inspire the workers with an ideal they could strive to achieve. This position has been obscured in favour of the view that Marx and his followers rejected them, and this book aims to restore their position in the history of Marxist thought. This idea of utopia as essentially inspirational received especial emphasis in the syndicalism of Georges Sorel. Syndicalism is a form of radical socialism in which the state and private industry are abolished and their functions carried out instead by the trade unions. Sorel himself was a French intellectual, who started out on the radical left, but move rightward until he ended up in extreme nationalist, royalist, anti-Semitic movements. His ideas were paradoxically influential not just in the Marxist socialism of the former Soviet Union, but also in Fascist Italy. Sorel doesn’t appear to have been particularly interested in the establishment of a real, syndicalist utopia. This was supposed to come after a general strike. In Sorel’s formulation of syndicalism, however, the general strike is just a myth to inspire the workers in their battle with the employers and capitalism, and he is more interested in the struggle than the workers’ final victory, if indeed that ever arrived.

The book also covers the debate over William Morris and his News from Nowhere. This describes an idyllic, anarchist, agrarian, pre-industrial society in which there are no leaders and everyone works happily performing all kinds of necessary work simply because they enjoy it and find it fulfilling following a workers’ revolution. Apart from criticisms of the book itself, there have also been debates over the depth of Morris’ own socialism. Morris was a member of one of the first British Marxist socialist parties, Hyndman’s Social Democratic Federation, and the founder of another, the Socialist League, after he split from them. Critics have queried whether he was ever really a Marxist or even a socialist. One view holds that he was simply a middle class artist and entrepreneur, but not a socialist. The other sees him as a socialist, but not a Marxist. Levitas contends instead that Morris very definitely was a Marxist.

When it comes to the 20th century, the book points out that utopias have fallen out of fashion, no doubt due to the horrors committed by totalitarian regimes, both Fascist and Communist, which have claimed to be ideal states. However, the critic Tom Moylan has argued that utopias have still been produced in the SF novels of Joanna Russ, Ursula le Guin, Marge Piercy and Samuel Delaney. He describes these as ‘critical utopias’, a new literary genre. The heroes of this literature is not the dominant White, heterosexual male, but characters who are off-centre, female, gay, non-White, and who act collectively rather than individually. The book criticises some earlier utopias, like News from Nowhere, for their exclusive focus on the male viewpoint, comparing them with the Land of Cockayne, the medieval fantasy that similarly presents a perfect world in which everything is seemingly ordered for men’s pleasure. In contrast to these are the feminist utopias of the above writers, which began in the late 19th century with Harriet Gilman’s Herland. It also discusses the value of satires like Samuel Butler’s Erewhon, and dystopias like Eugene Zamyatin’s We, Aldous Huxley’s Brave New World and Orwell’s 1984.

Levitas does not, however, consider utopianism to be merely confined to the left. She also considers Thatcherism a form of utopianism, discussing the late Roger Scruton’s Conservative Essays and citing Patrick Wright’s On Living in an Old Country. This last argued that the Conservative promotion of heritage was being used to reinforce old hierarchies in a markedly racist way. Some members of society were thus delineated as truly members of the nation, while others were excluded.

The book was first published in 1990, just before or when Communism was falling. It shows it’s age by discussing the issue whether the terrible state of the Soviet Union served to deter people dreaming and trying to create perfect, socialist societies. She argues that it doesn’t, only that the forms of this societies are different from the Marxist-Leninism of the USSR. This is a fair assessment. In Kim Stanley Robinson’s trilogy of books about the future colonisation of Mars, Red Mars, Green Mars, Blue Mars, the colonists not only succeed in terraforming the planet, but also create socialist society in which authority is as decentralised as possible, women are fully equal and patriarchy has been overthrown and businesses run by their workers as cooperatives. At the same time, those wishing to return to a more primitive way of life have formed hunter-gatherer tribes, which are nevertheless also conversant with contemporary technology.

Further on, although the Fall of Communism has been claimed to have discredited not just Marxism but also socialism, recent history has shown the opposite is true. After forty years of Thatcherism, an increasing number of people are sick and tired of it, its economic failures, the glaring inequalities of wealth, the grinding poverty and degradation it is creating. This is why the Conservative establishment, including the Blairites in the Labour party, were so keen to smear Jeremy Corbyn as an anti-Semite, a Communist and Trotskyite, or whatever else they could throw at him. He gave working people hope, and as Servalan, the grim leader of the Terran Federation said on the Beeb’s classic SF show, Blake’s Seven, ‘Hope is very dangerous’. A proper socialist society continues to inspire women and men to dream and work towards a better world, and it is to stop this that the Blairites contrived to get Corbyn’s Labour to lose two elections and have him replaced by Keir Starmer, a neo-liberal vacuity who increasingly has nothing to say to Johnson and his team of crooks.

Back to the book, its discussion of the nature of utopia therefore tends to be rather abstract and theoretical as it attempts to describe the concept and the way it has changed and been used. I didn’t find this really particularly interesting, although there are nevertheless many valuable insights here. I would instead have been far more interested in learning more about the particular ideas, plans and descriptions of a new, perfect, or at least far better, society of the many thinkers, philosophers and authors mentioned.