The formless nought. That was my thinking when I heard Chancellor of the Exchequer, Kwasi Kwarteng mentioning ‘the people,’ ‘the people’ he talked to, ‘the people’ he listened to, ‘the people’—
Not my people. Not me.
Benjamin Disraeli, 1st Earl of Beaconsfield, friend of Queen Victoria, leader of the Conservative Party and twice Prime Minister but also a writer. Sybil (1845), for example, brought the two nations argument into dining rooms. The working class, of course, did not need to read about it in novels they couldn’t afford to buy, we lived it.
‘Two nations: between whom there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts and feelings as if they were dwellers in different zones, or inhabitants of different planets; who are formed by different breeding, are fed by different food, are ordered by different manners, and are not governed by the same laws.
You speak of… the rich and the poor.’
PM Liz Truss and her chancellor no longer are going to implement a 45p tax rate for top earners, equivalent to Thatcher’s hated poll tax, but worse, because that possibility remains.
Liz Truss puts her faith in trickle-down economics. Also called supply-side economics, or monetarism as opposed to Keynesism. Thatcherism. Reaganomics. Trumpism. Lowering taxes and cutting regulation will promote economic growth. A coded form of letting the rich grow rich.
Margaret Thatcher, Conservative Party leader but not yet Prime Minister in a speech given in early1975, to The Institute of Socioeconomic studies in New York, outlined her philosophy in her ‘Let the Poppies Grow Tall speech’. ‘I would say, let our children grow tall and some taller than others if they have the ability in them to do so’.
Greed is good. Money trickles down the economy and everyone wins. But some more than others. There’s not much trickle down from King Charles III’s conservatively valued £10 billion of art work. But he gets to put his mugshot on our notes and coins. Its value goes on rising as the economy goes into triple-dip recession. He’s looking down on us. Sterling tanks, allied to the economic folly of Brexit which knocks around five-percent off Gross Domestic Product. The price of money goes up. Mortgages go up, the value of our homes fall, for the first time since the financial crisis, but not too far. There’s a safety net for investment. Demand for housing outstrips supply. The oldest, most costly and least energy-efficient housing in Europe (50% built before 1965, most of it council stock, 20% built before the end of the first world war, housing for heroes). Price, in theory, will find a new equilibrium under Alfred Marshall’s original supply and demand diagram. The free market will have done its job of allocating scarce resources.
The Tory government refused to let the Office for Budget Responsibility audit these tax cuts. But According to the Institute of Fiscal Studies, only taxpayers whose earnings are £155 000 or more would have paid less tax in the government’s mini-budget. Millionaires would, nominally, become £40 000 per annum better off. Spending and welfare payments to be cut, and not to rise with inflation, which is another way of penalising the poor. Austerity the answer for one of the two nations. Withdrawing free child care for three-to-four-year-olds marked down as a saving. According to the Child Poverty Action Group, 800 000 children living in England are missing out on free-school meals and going hungry. Ten-to-fifteen percent, the amount house prices are likely to fall next year according to analysts. Eight million households struggling to pay telecom bills, according to Offcom, a record.
Fredrich Heyek (1944) The Road to Serfdom argument that a central bureaucracy will lead to militarism and fascism. Council houses equals fascism. British Rail equals fascism. Public control of water companies equals fascism. Health Care and the NHS equals fascism.
Arthur Scargill, President of the National Union of Mineworkers, the class enemy of Thatcher’s government. 85 000 coal miners and then there were none. His mantra that not a seam of coal would be left in the ground has much the same ring as Secretary of State for Business, Energy and Industrial Strategy, the Right Honourable Jacob Rees-Moggs’s claim that no untapped gas should be left in the North Sea. No great surprise that deniers of manmade climate change and deregulation have the same office and same ideology.
BP, which used to be owned by the taxpayer, who like other energy companies have had a good war in Ukraine, and enjoyed massive windfall profits with sky-high oil prices, chief executive, Bernard Looney was paid £4.46 million in 2021. Like his colleagues in Shell and British Centrica, top ups range from around £75 000 to just over £550 000. More is on the way for less.
The Rand Corporation in the United States shows decades of tax cut and deregulation of labour markets have taken around $50 trillion in wage growth from the bottom 90% of earners and given it to the top 1%.
We talk about subsidising Putin’s war by buying Russia’s oil and gas. We are familiar with sanctions against Russian oligarchs who have supported the Conservative Party. But we remain wilfully blind to who helped the moron’s moron get Trump elected in the United States in 2016, supported Nigel Farage and engineered Brexit. We’re talking Moscow.
But as James Meek argues in Private Island, the free marketeers in selling off public assets at knockdown prices effectively subsidised other nation’s public sector, privatised and taken back into state control. The French state energy company EDF is a good example. The company we hoped would build new reactors for us with Chinese partners. Our government ditched the Chinese for political reasons. EDF ditched our government for financial reasons. There wasn’t enough cash in it for their private monopoly. Win-win for them.
Meek tells the reader what we already know about privatisation.
‘The Spanish economist Germa Bel traces the origins of the word to the German Reprivatiserung, first used in English in 1936 by the Berlin correspondent of The Economist, writing about the Nazi economic policy in 1943.
‘The Nazi Party facilitates the accumulation of private fortunes and industrial empires through “privatisation” and other measures thereby intensifying centralisation of economic affairs in an increasingly narrow group.’
Ironically, Karl Marx’s dictum that all value comes from the surplus value of labour shows best how deregulation worked in concentration camps that benefited the national socialist elite and their eugenic philosophy. Heinrich Himmler, a leading architect of the holocaust, had a sign over the entry to Auschwitz: ‘Work makes you free’. He benefited from the unit cost of labour. Worker’s wages were driven down. Uniforms, housing, and food were provided by the SS. They acted as a modern employment agency where workers were replaceable parts. The commodity price of labour fell to the bare bones with sick days limited and near to zero. A right-wing paradise and the trains ran on time. Even Amazon or Uber would find it difficult to beat such benefits.
Surplus value. The gap between the price the worker can sell his or her labour for and the price of the commodity on the free market widens. Win-win for efficiency and the capitalist mode of production. The hidden cost of labour is taken out of the equation. Low cost labour labelled workshy or lazy by the right-wing media or lacking the prerequisite skills, until we’re told to clap them as they worked throughout the pandemic. Now those same workers are labelled greedy and unreasonable for not agreeing to inflationary pay cuts.
Thatcher did not have a patent on privatisation. The Common Lands used for the good of communities was made uncommon. Those that owned the land owned the people on the land.
Unchained Britannica, the cabal of free marketeers who seized power committed themselves to the same path as Cameron and Osborne’s austerity budgets or Johnson’s levelling-up agenda. Taking money from the poor and giving it to the rich (the reverse-Robin Hood, I’ve been saying that for ten years or more). But they talked about it in the wrong language. They scared Tory voters. And they scared the markets they claimed to understand better than anyone else. George Soros bought sterling and sold sterling. Black Wednesday, 16th September 1992, wasn’t black for him. He made billions of dollars. Sterling’s weakness was regarded as a snapshot of the economy by trading markets. Hedge funds are similarly piling into the pound, borrowing to bet it will fall to parity with the dollar. Money for nothing. Who works for it?
Chrystia Freeland (2013) in the introduction to Plutocrats: The Rise of the New Global Super Rich noted the super-rich, or the one-percent, didn’t like being called rich. They prefer the term affluent. Winners and losers. We’re all in it together rhetoric of David Cameron. Bumps in the economy ahead. A 2011 experiment conducted by Michael Norton of Harvard Business School with behavioural economist Dan Early, Duke University showed people the wealth distribution of the United States (top 20% own 84% of wealth) and compared it to Sweden’s (top 20% own 36% of wealth), and asked them where they would like to live.
The predictable answer is Sweden wins, even as it is becoming more right-wing, insular and moving towards the American model. Ironically, the Swedish model of wealth distribution was similar to the American model and indeed the British model of the 1950s.
‘The skew towards the very top (accelerated after the moron’s moron, Trump took office in 2016) is so pronounced that you cannot understand economic growth figures without taking it into account.’
Trussonomics and the Tory Party, and the magic money tree, follow this model of deception based on nominal economic growth. After the 2008, $700 billion banking bailout in which unregulated (which they termed self-regulation) money men were given public money, which was mirrored in Britain and around the world at no cost to the rich. Boom and bust for some. Greed is indeed good. All the gains, none of the losses. America’s economic recovery in 2009-10 of 2.3% of GDP could be considered impressive out with China and Asian economies.
Economist Emmanuel Saez had a closer look at these growth figures. ‘99% of American’s incomes increased by 0.2%. Incomes for the top 1% rose by 11.6%.’
Tweets, President Joe Biden: ‘I am sick and tired of trickle-down economics. It has never worked. We’re building an economy from the bottom up and the middle out.’
Thomas Piketty (2014) The New York Times Bestseller, Capital in the Twenty-First Century was based on fifteen years of research. He acknowledges the empirical data provided by Simon Kutznet and compared him to Karl Marx. Kutznet’s theory could be summarised in a single sentence spouted by President Reagan, ad-libbed by numerous politicians, the latest being Prime Minister Liz Truss.
‘Growth is a rising tide that lifts all ships.’
Kutznev, like Piketty, was measuring income distribution. Who gets what, without providing the why as Marx did.
‘He (Kutznev) noted a sharp reduction in income inequality in the United States between 1913 and 1948.’
America was becoming a more equal society. Income equality would follow the path of the Kutznet Bell Curve. Inequality was shrinking as Americans and the world became more middle-class.
Freeland compares Alexis de Tocqueville’s prediction to Kutznet’s, which sounds very like a justification for the modernity of colonialism and the white man’s burden. He was writing in the early years of the industrial revolution, when the wealth and status of landowners was being undermined by industrialists who poured labour into the coal mines, shipyards and sugar plantations (that’s not to claim that many industrialists weren’t also aristocratic, the two aren’t mutually exclusive) and took out vast sums of money or capital.
‘If one looks closely at the world since the beginning of society, it is easy to see that equality is only prevalent in the historical poles of civilisation. Savages are equal because they are equally weak and ignorant. Very civilised men can all become equal because they all have at their disposal similar mean of attaining comfort and happiness. Between these two extremes is found inequality of condition, wealth, knowledge—the power of the few, the poverty, ignorance and weakness of the rest.’
Piketty worked with other economists to analyse, like Kutznet, wealth distribution and inequality in around twenty nations using historical and contemporary data such as income tax returns. His findings are clear. Hayek believed we were on the The Road to Serfdom. Much the same road as Marx envisaged in his theory of infinite accumulation. Wealth increasingly flows from the poor the rich, who use their resources to deregulate and create an environment in which inequality as measured by the Gini coefficient, like global warming, reaches increasingly new highs, which become the new norms to further pauperise society and call for more tax cuts for ‘the people’. We lost the propaganda war. Fox News is no news. Plutocrats might not like to be called rich or super-rich. No bell-shaped Kutznet curve, but the hockey stick of man-made global warming shooting up year on year, running in tandem with the wealth of the super-rich and growing inequality. In our new gilded age, the must have is a bolt-hole away from common humanity and the coming apocalypse. Liz Truss could play her part as being the useful idiot that builds a fence to keep out the poor. Inside the gilded escape pod, the problem of labour returns in a familiar form. How do we keep the servants servile? How do we keep labour labouring? Discuss, Liz Truss.