Fantasyland Britain and its Zombie Economics are now in the firing line
Sunday National, March 8th 2020
Britain and the world are facing an unprecedented crisis: a worldwide epidemic with major consequences for public health, sustainability of societies and way of life.
This is a defining point. It calls for government, state and public agency action – for solidarity and recognising that health and well-being are social and interconnected. As the writer Otto English wrote we have had ‘three years of ‘we don’t need experts, we survived the war, Project Fear’’ which have been shown even more to be the nostalgic bunkum they are.
The British economy – along with economies elsewhere – is going to take a significant hit. Everywhere growth forecasts have been downgraded by the OECD – and this when the UK economy was already facing the downside of Brexit uncertainty.
To Tory uber-right-wing bloviators all of this can be faced with confidence because the UK is undergoing a ‘great British jobs miracle’ as ‘The Spectator’s’ Fraser Nelson based on the number of jobs created in the past decade. This week Iain Martin in ‘The Times’ wrote in similar terms about the economy saying that ‘Britain’s fundamental prospects are good’ while ‘the big picture remains one of improvement and innovation.’
Yet if a significant percentage of the UK workforce and society is affected, it is going to expose the weak conditions workers have, and even more the flaws and faultlines in the dominant model of the economy and economic orthodoxies built by government of all persuasions and near entirety of the political classes.
Take statutory sick pay. This is £94.25 per week and payable for the first 28 weeks of sickness by employers. When the UK was a member of the EU this was the lowest rate in the entire EU28; it is a lower rate than the UK national minimum wage.
UK workers who earn under £118 per week do not qualify for statutory sick pay – a point government was consulting on before the virus – which affects two million workers, mostly part-time.
Then there is the so called ‘gig economy’ of casualised workers – many of whom have no legal rights and are treated by their employers as non-employees to avoid statutory rights. So far Tory ministers have been vague on the rights of such workers, heavy on ‘compassionate’ rhetoric, while short of proposing anything concrete.
Added to this is the punitive nature of what remains of the welfare state with two million people reliant on universal credit with all its problems. For any new claimants there is a deliberate five week delay before any benefit payment with people reduced to taking out loans and using food banks to survive – a system designed by people who have no sympathy with those who are unemployed or in financial hardship.
The UK workforce on any measurement is not happy and content. The UK scores towards the bottom of the European league table for job satisfaction and work-life balance – with a disempowered workforce, precarious employment for many, and declining living standards across the last decade for the majority of workers.
It wasn’t meant to be this way. Over a decade ago, the 2008 banking crash showed how dependent the UK economy was on finance capitalism and the City of London and how it crowded out real investment, research and productivity growth.
The crash according to Gordon Brown, Vince Cable and George Osborne was meant to be a wake-up call to ‘rebalance the economy’ from finance capital and short-termism. Such platitudes turned out to be as empty as ‘levelling up’ will prove under Boris Johnson and Rishi Sunak’s budget next week.
Instead of change the past decade has seen a restoration and extension of Fantasyland Britain – our very own version of the South Sea Bubble built on speculation, dodgy purveyors of ‘business services’, debt and the UK City of London as the epicentre of dodgy deals and dirty money – while handing over public services and large parts of national infrastructure to foreign ownership.
Not content with eroding the public realm the Tories, aided by New Labour before them, have encouraged an insidious culture of outsourcing, contracting out and offshoring ownership of public services. This has been aided by the rise of a new class of extraction capitalists (such as Serco) who exist to win contracts for monopoly public services and talk about partnership but practice corporate capture.
This is further entrenched by the big four accounting firms – KPMG, PwC, Deliotte and Ernst & Young – who have built a corrosive culture of auditing the companies they account, providing 99% of audits of the UK’s biggest companies. One such failure saw the big four not pick up the over-extension of Carillion through successive audits, leading to accusations of them operating as a cartel in corporate collusion and ‘a cosy club’.
The UK is the most regionally unbalanced developed economy in the world. London has been encouraged to grow and dominate the rest of the UK to an unprecedented degree. As Oxford academic Danny Dorling comments: ‘rich Londoners appear to believe that there is no alternative to these inequalities and that the rest of the UK may even benefit from the trickle-down of some of the wealth of an ever richer capital.’
As well as regional inequality the degree of income and wealth inequality has marked the UK out from most developed countries. Since 1980 the share of income taken by the top 1% of taxpayers has steadly increased; at the same time the income and wealth of the top 0.1% has left behind even the very wealthy, who as an overclass have accumulated unprecedented wealth in the UK and internationally.
UK productivity has always lagged behind its main competitors. This represents the amount of physical goods UK workers produce over a given period comparable to workers elsewhere. On this measurement the average German worker can create the same amount of goods as a UK worker by Thursday midday with the UK worker taking until the end of the week.
This arises from appalling investment and spending by UK business on research and development. This has long been a systematic problem – with UK companies driven by short-term fixes and goals, shareholder dividends, corporate rewards and bonuses, and neglecting long-term growth.
This has been the underlying weakness of British capitalism – in increasingly not creating real physical things. Instead it has focused on the intangibles of what the City of London can do: making a quick buck, doing deals, and speculating to make money.
One of the great failures of Labour and the left has been its inability to mount a convincing critique in understanding the damage that the City of London does to the UK economy and how it connects to other weaknesses. New Labour embraced the City and finance capital and abandoned serious reform; the ill-fated Corbynite experiment barely got started and it remains to be seen if any of its radical impulses will remain under new leadership.
The City of London originated from the zenith of the British Empire, financing its many deals, expeditions and adventures. This led to an aversion amongst the upper classes to work in actual industry which was seen in the 19th century as dirty and beneath the calling of the gentlemanly classes, whereas financial capitalism was seen as the vocation of a proper gentleman.
Hence a set of codes became entrenched around the City, private schools and universities which became known as ‘gentlemanly capitalism’, although there was nothing gentle in it, which looked down on factories, mills and manufacturing and was anti-industrial. This condescension remains in the upper classes to this day and in the higher echelons of the Tory Party.
Suddenly collective action, mobilisation and even looking after one another are being talked about due to the corona virus – but this is from a Tory Party which has been obsessed with the pursuit of possessive individualism, encouraging inequality and turning a blind eye to the excesses of the City, to the detriment of the majority of us for decades.
At the onset of this year the World Economic Forum, when assessing who were the most socially mobile societies in the world, listed at its top five: 1. Denmark, 2. Norway, 3. Finland, 4. Sweden, 5. Iceland – our five Nordic neighbours with the UK 21st and US 27th.
These five countries know how to do pooling and sharing resources and practice solidarity – rather than just as is the case in the UK continually invoking it rhetorically. They have learned how to practice and embody it – and economically and socially thrive.
The fragility of the UK economy and the shallowness of those who trumpet its qualities was always going to be exposed and if it doesn’t happen due to corona virus it will happen at some point in the future. Fundamentally the economic model and values of recent decades in the UK is one which has is broken, immoral and increasingly discredited, while based on an unsustainable, unequitable global order – one which had to be fed by endless growth, consumerism and ecological damage.
Right-wing supporters realise that increasingly people are wary of the false promises of globalisation with Kate Andrews of ‘The Spectator’ observing that this is ‘a world that is addicted to interconnectivity but jaded by its failures.’
This raises the question of what kind of interconnectedness we aspire to and for what purpose? In the world of the right-wing think tanks this has become reduced to seeing us as economic agents operating in a world of infinite choice and freedom.
While human wealth has exploded across the planet in the past four decades human happiness, well-being and quality of life has not kept pace. Human beings are innately social beings hard wired to co-operate and we need a model of connectedness and solidarity which acknowledges the multiple facets of being human.
To get there we have to defeat the dogmatic economic orthodoxies of recent decades – which economist Paul Krugman calls ‘arguing with zombies’ by which he means ‘ideas that should have been killed by contrary evidence, but instead keep shambling along, eating people’s brains’ such as the continued belief in free market economics.
Fantasyland Britain promoted by Tories, Lib Dems and Labour in office is one of the leading advocates of zombie capitalism in the world – and the forthcoming challenges here and globally will show even more how inadequate, unsustainable and anti-social they are.
Scotland’s 2014 vote and Brexit in 2016 were votes against this rotten order but one the Westminster elite only seem to want to pay lip service to on the former. Danny Dorling views that they ignore the underlying drive for many for self-government in Scotland: ‘The choice facing Scots then was whether they trusted each other enough to sever the umbilical cord: London largesse, London-based decision-making, London hegemony.’
These divisions have not been addressed post-2014 and increasingly they will come to the fore, not just about a global version of London, but of Anglo-American capitalism, type of business and corporates we want, and the purpose of the economy itself. The fantasy in Fantasyland Britain is literally a nightmare for many of us.