Neoliberalism Is Decaying

To paraphrase Kenneth Wolstenholme of 1966 World Cup fame, the neoliberals thought it was all over. The final whistle had been blown and the Hayek–Thatcher–Reagan–Friedman team had won. Nothing more to argue about, history’s verdict was in. Sensible leaders on ‘the other side’, like Blair and Brown, acknowledged the result. There was nothing left to do but laugh all the way to the bank, literally in Tony Blair’s case, to cash the cheques that the End of History had written.

They are not laughing any more. The elite is struggling to come to terms with a world in which all it believed was solid starts in its turn to melt into air – free trade, globalization, the transatlantic alliance, US hegemony, the European Union, capitalist democracy, even liberalism itself.

The post-1979 consensus is over. The 2017 general election was, as Jeremy Corbyn said, ‘the year politics caught up with 2008’. The economic impact of the crash had finally found an electoral expression. Since the shock of the 2017 election, undead neoliberalism has continued to wreak one misfortune after another in Britain. This is the twilight of Thatcherism, to give it the proper British name. But it is not ready to go quietly.

What came in with bombs and bullets in Santiago goes out amid social calamity. As Chilean democracy was being taken down in 1973, Grenfell Tower in west London was going up. In a fire immediately after the 2017 general election, the twenty-four-storey public housing block built between 1972 and 1974 was destroyed, with the loss of seventy-two lives. The inferno in North Kensington was an accident, while the coup in Chile was all too purposeful. But they are connected by the threads of neoliberalism. The principles which Pinochet adopted from Hayek and Friedman unwound at Grenfell throughout its forty-three years in occupation. It is a parable of the Thatcherite dogmas of privatization, deregulation and public penny-pinching, written in ashes.

We are always advised not to ‘politicize’ tragedies. But the people of Grenfell Tower were not victims of a lightning strike. Every step towards the catastrophe was prodded by political decisions based on the orthodoxies of the neoliberal state.

Grenfell was the worst, but not the only, calamity. The collapse of outsourcing giant Carillion in January 2018 was also emblematic of this rotten regime. The company had grown fat on state contracts for carrying out work which, a generation earlier, would have been done by the public sector itself. MPs charged with investigating Carillion’s bankruptcy found ‘recklessness, hubris and greed’ on the part of top management and the board. The victims of the collapse included at least 2,000 workers made redundant, a pensions scheme with a £2.6 billion hole in it and 27,000 retired workers facing payment cuts, something the Pensions Regulator had failed to address. All this while huge dividend payments and management bonuses continued to be paid unimpeded, and £2 billion was owed to small business suppliers. Since Carillion went bust, there has been a 20 per cent rise in the number of building firms going bankrupt as the repercussions rippled outwards. And so on ...

Water: Privatized companies have mainly passed into the hands of avaricious hedge funds which have loaded them with debt while costing consumers £2.3 billion more than when they were in public ownership. Even the Financial Times was obliged to acknowledge that water privatization had ‘failed’. It editorialized:

Prices have risen faster than inflation. The regulator has been ineffective at imposing efficiency improvements ... When Thames Water spilled billions of litres of excrement into public waterways in 2013, its chief executive was not sacked. He later received a 60 per cent pay rise ... Management incentives are based entirely on financial delivery. Almost all the industry’s post-tax income is paid out in dividends, while capital expenditure is financed by borrowings, which now stand at £42 bn. There was no debt burden at the time of privatisation.

Railways: The fragmented network, with control divided between track owner and train operator (not neglecting sundry banks, building firms and an armada of railway lawyers), costs the public more than two billion a year in net subsidies to private companies whose failures are legion. Even the Tories have been forced into the role of reluctant renationalizers as the franchisees for the premier East Coast Main Line have gone belly-up for the third time. Opinion polling has shown huge public support over many years for restoring the railways to public ownership.

Housing: Securing any sort of place to live has become an impossible aspiration for millions. Social housing has been radically reduced, as far more council-owned homes are sold off than are being built new. Instead, councils are having to fork out small fortunes in payments to private landlords to accommodate homeless families, often in deplorable conditions. Councils are having to buy back proper- ties they have had to sell, at a huge mark-up. Targets for affordable housing in new developments are consistently diluted or evaded by the developers – often new properties are immediately sold to foreign investors who wish to hold them, empty, as a store of value rather than a home.

Local government: Councils are edging towards bankruptcy – a neoliberal novelty – as the funding necessary to deliver community and social services is reduced by half or more. The first council over the cliff was Northamptonshire, a Tory-run county which had burnt through its reserves with ill-considered outsourcing schemes, a dogmatic refusal to raise council taxes and the hiring of expensive consultants.

So, neoliberalism limps towards the twilight, trailing the homeless, the impoverished, the indebted and the immolated in its wake. Its economic model is broken, its political project exposed as an exercise in the assertion of class power by and for the rich. Politics stands at a turning point analogous to 1945, when the election of the first majority Labour government laid the basis for thirty years of social-democratic governing norms; or to 1979, when Thatcher began the reversal in the name of the assertion of classical liberalism. This is a moment made for an alternative agenda.

The Tories Can’t Adapt

Could the Tories have seized the initiative? It seems like an absurd question. However, the Conservative Party has been nothing if not adaptable down the decades in pursuit of its central purpose, the preservation of social hierarchy and private property. And when she took power in 2016, following the Brexit referendum, Theresa May seemed to know that something had to give. She attacked excessive executive remuneration, spoke of wanting to appoint workers to company boards, and identified inequality and the burdens borne by working people as the main challenges the country faced. She appeared intent on reconnecting the Conservative Party with some of its pre-Thatcher traditions, flirting with ideas that were almost social-democratic in an effort to expand the Tory electoral base. Martin Wolf, lead economist at the Financial Times, noted: ‘Theresa May has buried Thatcherism. Under a Conservative government, the UK is now embracing the political ideas of fairness and government intervention.’

But nothing changed – the Tory Party buried May instead. Most of her MPs regarded these deviations from the forty-year orthodoxy with a horror initially muted only by the misjudgement that May looked like an election-winner, and that her novelties could be curbed in due course. May’s social Toryism never got past first base, blocked at every turn by the neoliberal diehards and the Treasury. The ‘pink Toryism’ developed by her ideologist Nick Timothy, a devotee of Joseph Chamberlain’s school of Conservative municipal reform and hostility to free trade, remained a dead letter, and the Party’s MPs ensured the Party instead stayed shackled to the corpses of Hayek and Friedman. Timothy himself was fired the day after the 2017 general election.

Had May started to deliver on her declared views while she was master of the political landscape – when she was wrapped in the cloak of national saviour, a reincarnated Boadicea – and appealed to working people on that basis, Labour’s own position could have been complicated. Instead of taking the fight to Labour’s turf, however, May’s rhetoric, unmatched by any substantive policy shift, merely helped sustain some of Labour’s arguments. Although Pankaj Mishra’s assertion that parts of her 2017 manifesto were ‘almost communistic’ over-gilds the lily, his argument that she helped prepare the way for ‘advancing, inadvertently, a counter- revolution of the left’ is sounder. It might be better described as a revolution, but it was a Tory folly not to see that May was a more effective potential barrier than last-gasp neoliberalism. Instead, the Conservatives chose to remain the party of rampant inequality, food banks and hedge funds.

The reason? Too many are doing very nicely out of dystopia. Martin Wolf asks ‘why so little has changed since the crisis’; despite ‘a devastating failure of the free market ... policymakers have barely questioned the relative roles of government and markets’. He blames ‘the power of vested interests. Today’s rent-extracting economy, masquerading as a free market, is, after all, hugely rewarding to politically influential insiders’.

A system of class power, one could say. That is not in good shape either.

The Establishment Isn’t Very Well Established

The Tory incoherence speaks to a wider social change, this time at the top. We have a ruling class in Britain, but it is not so much a British ruling class any more. It is now rooted less in British society than in international money. This is a democratic vulnerability.

This establishment sits, for the most part, in London, but it is not facing inwards, to the nations and regions of Britain, but outwards to the world of globalized business. Just as English medieval barons had far more in common with their French counterparts than with the indigenous peasantry, so the British section of the Davos International increasingly appears as the local branch office of a global elite rather than the peak of an integral national hierarchy (see Colin Leys, 'The British Ruling Class', Socialist Register 2014, for a masterly analysis of this problem). Many Conservative voters sense this.

Globalization has eroded the ‘Britishness’ of the establishment, atrophying the roots in society which have been indispensable to its enduring legitimacy. Half the richest people in the country as of 2014 were foreign nationals. The corporate pillars of British capitalism, the FTSE 100 companies, are increasingly owned by overseas investors and led by foreign executives. That is not, to be clear, any sort of a crime – in fact, rather less so than the brigandage of British imperialism. But it does not best fit one to serve as part of a British ruling class. The empty properties across South Kensington, traditional London base for the hautest of the bourgeoisie, tell their own story: they are now mainly investments or boltholes for use in extremis by oligarchs and sheiks, rather than homes for the bosses to actually live in.

This mirrors the all-powerful City, less and less dominated by British-owned financial institutions. Making their fortunes in that most footloose and globalized industry, ‘financial services’, the top bankers are relatively untethered from the domestic market and are part of a power nexus which sees itself as above and beyond nation states, even the British. These are rulers who no longer pray in the same pews, serve in the same regiments, shop on the same streets or even necessarily vote in the same elections as the ruled. Today’s Conservative Party, a gnarled rump of mainly aged reactionaries about one-fifth the size of Labour and a shadow of the multimillion- member organization of the 1960s and earlier, reflects this change and its discontents.

Aeron Davis has written of a new elite without any concept of ‘service to the nation’:

Such a sense of duty and self-sacrifice is decidedly absent in the new elite. Instead, the values of those at the top are all about personal enrichment, individualism, enlightened self-interest and a reverence for the ‘wealth creators’. But such norms are incompatible with any sense of shared, collective interests. Selfish individualism and survival of the fittest are not a good basis for holding any group together – including the elite.

Or a country, one might add. Labour today stands as the antithesis to this reconfigured ruling class.

Classes do not exist separately from each other and a change to one proves to be a change to all. The radical diminution of working-class political articulation over the last generation has left being ‘middle class’ in the long-understood sense rather pointless. Without an ‘other’ to define and defend itself against, the broad- based middle class lacks a unifying sense of social identity. This is now exacerbated by the fact that austerity bears hard on their children and their communities, at work and at home (if they can afford one). As in 1940, many of them will join in the general sentiment that the ruling class have made a pretty poor fist of ruling. Anger at war, the crash, the MPs expenses scandal and public–private corruption is far from being an exclusively working-class phenomenon.

The establishment is aware of its crisis, and losing self-confidence. The Governor of the Bank of England has warned that capitalism could be doomed unless it creates a better society; the Archbishop of Canterbury has acknowledged that ‘our economic model is broken and we are failing those who will grow up into a world where the gap between the richest and the poorest parts of the country is significant and destabilising’; a former Director General of the CBI has called for trade unionism to be strengthened because the market system is no longer working socially; and the FT City Network of business leaders have conceded that capitalism needs ‘reform and modernisation’ on account of ‘greed, corporate tax dodging and investor short-termism’. Uneasy the heads ... and well they might be. Today’s elite skates shakily on the thinning ice of society in austerity Britain. A propitious moment to seek radical change.

The Fall and Rise of the British Left by Andrew Murray is out now.

The remarkable advance of “Corbynism” did not emerge from nowhere. It is the product of developments in socialist and working-class politics over the past forty years and more. The Thatcher era witnessed a wholesale attack on the postwar consensus and welfare state, through a regime of deregulation, attacks on the unions, privatisations, and globalisation. However, at the same time, there existed a persistent resistance to the growing powers of neo-liberalism. This side of the story is rarely told as it was considered to be a history of defeat. Yet out of this struggle emerged a thoroughly modern socialism.

The Fall and Rise of the British Left

by Andrew Murray

The remarkable advance of “Corbynism” did not emerge from nowhere. It is the product of developments in socialist and working-class politics over the past forty years and more. The Thatcher era wit...