The World Turned Upside Down: Goodbye to Thatcherism
Gerry Hassan
Sunday National, March 15th 2020
The Tory budget marked a dramatic change in tone, content and politics from what we have become used to. The language of active government, investment and public spending saw UK Chancellor Rishi Sunak make commitments to an extra £30 billion in public spending.
This raises questions about Boris Johnson’s government, the Tories, UK politics, and whether this change is superficial, tactical, or something more long lasting? And what, if any, are the consequences for Scotland and independence?
It is now widely accepted that ten years of austerity led first by Cameron and Osborne was a political choice and hence avoidable. Osborne declared with typical hubris ‘never let a crisis go to waste’ and proposed shrinking the state and public spending to 35% of GDP – a size last seen in the UK in the 1930s.
If there were any doubt that the political environment has shifted fundamentally listen to the cries of pain from the right-wing think tanks and their descriptions of the budget. The Taxpayers’ Alliance called it ‘a Gordon Brown-style budget of eye-watering bumper borrowing, a higher tax burden and billions in spending bungs’.
The Adam Smith Institute went further declaring that government was ‘spending like a drunken sailor’, while Paul Goodwin of Conservative Home observed of the politics that the budget ‘marks a wider and deeper Tory break from the Thatcher legacy.’
Political change in Britain often does not coincide with general elections, but happens inbetween them when critical shocks and crises arise. The shift from the post-war consensus to what was initially called monetarism predated Thatcher coming to power in 1979. It occurred in 1976 when the Labour Government had to go to the IMF and Prime Minister Jim Callaghan presided over deep public spending cuts, declaring ‘we used to think you could spend your way out of recession and increase government spending’ and ‘that option no longer exists.’
A more dramatic shift occurred when the age of big government and planning came about – which did not first happen when Labour won its famous victory in 1945. Rather the shift predated this by five years, back to 1940, when Churchill became Prime Minister and Labour entered wartime coalition government with the Tories and Liberals and together organised the collective effort of the people’s war.
It may be that we are witnessing a similar convergence of political, economic and social factors – one capable of shifting intellectual and geo-political realities and how we think and act about the world.
These have been set in hyper-motion by the coronavirus and include the global economic slowdown heading into recession, market volatility, collapse in consumer spending and confidence, dramatic falls in stock markets the world over, extent of corporate debt, health and stability of the banking sector and absence across most of the West of significant interest rate cuts as a fiscal stimulant.
There is the position of China, the fragility of Italy, and the inadequate response of the Eurozone and European Central Bank. To top this there is the absence of any coherent American political leadership under Donald Trump – domestically and internationally.
We are experiencing instability and disruption on an unprecedented scale. Take the fall in UK share prices in the first three months of this year. This is bigger than over any three month period since the South Sea bubble burst in 1720 according to Ed Conway, Economics Editor at Sky News. That means in his analysis that this decline is ‘Bigger than 2008, Bigger than Black Monday 1987, Bigger than the Depression, Bigger than Dunkirk, Bigger than the Napoleonic Wars’. In a country where the City of London is a larger part of the economy than nearly everywhere else that is significant.
The left’s counter-charge over this period has been for more spending and investment but this usually lacked specifics beyond calling for extra NHS spending. The left did not campaign on the basis of detailed plans and policies. This meant that what was conspicuously missing was a strategic argument about the kind of investment and choices which would be the most beneficial and progressive to society.
The Tories are only putting back and repairing some of the damage they did to public services in a decade of cuts. What is missing has been any understanding of the need for redistribution beyond the constant invoking of ‘levelling up’, social justice, or looking after the most vulnerable.
While the Tories claim to have a new belief in government they are still clinging to old dogmas. Their attachment to a vindictive, punitive welfare state remains, with universal credit unreformed, while employee rights remaining weak and stacked against workers – with statutory sick pay the lowest in Western Europe and not covering millions.
Some Tories are aware that for all their electoral dominance they have been treading water in terms of ideas for years. One perspective comes from Nick Timothy, formerly Theresa May’s chief of staff in Downing Street and who has penned a forthcoming tome, ‘Rethinking One Nation: Conservatism in an Age of Crisis’ which makes the case for the state and challenges the economic liberalism of the right and social liberalism of the left.
These shifts have huge consequences for Scotland. First, the virus has illustrated the widespread ignorance in London circles about Scotland and the UK. On Thursday Nicola Sturgeon put her post-COBRA announcement on the crisis before Boris Johnson causing many Westminster voices to reach for the hyperbole with Andy Silvester, Deputy Editor of City A.M. commenting: ‘Sturgeon is announcing COBRA decisions. It is a borderline coup’, to the sound of much derision.
Second, others in Scotland have been quick to declare the virus may be the savour of all things British. Kenny Farquharson in ‘The Times’ wrote that this crisis could produce ‘on balance, a renewed respect for a United Kingdom that for the first time in a long while is working as it should.’ Those last words: ‘working as it should’ are doing a lot of lifting and little more than a statement of faith.
There are deeper historic issues at play in Scotland. Historically we have regarded – certainly across the arc of the 20th century to the present – the state as a force for good. It has been seen as an entity for managing capitalism and ameliorating its worst and harshest excesses. What we have been less good at has been paying enough attention to the kind of state we have and what it does.
The embryonic state in Scotland began to take root in the 1920s and 1930s as the scale of government expanded in response to inter-war unemployment and hardship. It then subsequently dramatically grew in size and ambition in the immediate post-war period under both Labour and Conservatives and has, since the Scottish Parliament arrived, become more autonomous and distinctive from the UK Government.
We have to think about the nature of our government and state – and its role and reach. Not only has it a long history of not being democratically accountable and being paternalist pre-devolution, but a Westminster department (the Scottish Office) became the Scottish Government and civil service. This continues to limit its capacity for policy development, joined-up strategy, or of learning from delivery and practice.
The shift in the political landscape, not just in the UK but across the developed world – and retreat of the nostrums of conservative low tax small statism – will necessitate a debate in Scotland about the kind of state we have and need. How can we make the Scottish Government more of a smart, strategic agency, with the potential to be a developmental state, setting long-term priorities, while aiding and empowering others fostering partnership and collaboration?
This requires breaking with the limited prospectus we have got used to from most of our politics – including the SNP’s Growth Commission which was based on economic orthodoxies and the failed thinking of recent decades. Instead, we have to see the model of Anglo-American capitalism as a major global problem – one which is only interested in the self-interest of corporate power, elites and their hangers-on.
Flowing from this, all of us have to come to terms with the fact that the world is being turned upside down, including a whole host of assumptions about politics, business, capitalism and economics which were thought unchallengeable until a few weeks ago.
The stranglehold of neoliberalism swept all before it across the political spectrum – winning the adherence of Tories, New Labour, Lib Dems and SNP. It promised us economic prosperity, greater choice and individual freedom – but has produced a world vastly wealthier where a tiny elite have increasingly extracted more and more from the rest of us.
The new dispensation cannot be led by fainthearts such as Boris Johnson and Richi Sunak or charlatans such as Donald Trump. A new generation of radicals on the left and green, feminist movements globally alongside self-government forces here has to rise to this occasion. It has to according to economist Ann Pettifor, not just offer a new economics but ‘displace the idea of GDP as what success is about and come up with a different kind of measurement and way of counting based on a different society’.
We need a new architecture of politics, government and statecraft, and a new set of arrangements for the nations and peoples across what is the UK. Where and how that is going to emerge will become clearer after the coronavirus pandemic but cannot be left to politicians and the parties who have compromised with the rotten economic and social order of the past forty years.
These are unparalled times. The only equivalent global moments in the years since the start of the Second World War are the 1970s – which led to the 1976 adoption of monetarism in the UK and then Thatcherism, and the 1939-41 period that in the UK saw the emergence in 1940 of a cross-party consensus about the need for government planning and which laid down the foundations of the post-war welfare state.
The 1940s was a profoundly British decade; the 1970s turned out to be the beginning of the unravelling of the United Kingdom and Britishness. Despite Kenny Farquharson’s early call it is too early to tell how this will evolve in Scotland and the UK, but the latter addressing its many multiple crises seems a distant prospect.
We face massive challenges – climate change, the failure of corporate governance and stakeholder capitalism, the huge concentrations of wealth and power within a tiny group of people, and the rise of a monopoly capitalism and cartels around the hi-tech companies.
Challenging and overcoming the vested interests of this failed order will not be easy – as their advocates are entrenched in positions of power and influence. But the tide is turning and although defeating them will be difficult they have nothing left to offer but fear, scaremongering and dogma to maintain their power. Politics, economics and public life are across the globe away to become the focus of fundamental debate about the future. Finally, we can say goodbye to Thatcherism.
