Leader: The end of capitalist realism?

Though the ideological distance between the parties is huge, a new economic consensus is emerging. 

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In the years before the 2008 financial crisis, liberalism appeared to have triumphed in the United Kingdom and beyond. Tony Blair, David Cameron and Nick Clegg all embraced free markets, globalisation and European Union membership. In his 2009 book Capitalist Realism, the late cultural theorist Mark Fisher used the term “capitalist realism” to describe the pervasive sense that “not only is capitalism the only viable political and economic system, but also that it is now impossible even to imagine a coherent alternative to it”.

The crash, however, and the Great Recession that followed it undermined the notion (more of a faith) that the free market was infallible and unquestionable. As the state intervened to save capitalism from itself, the liberal triumphalism of the post-Cold War period lay exposed. A decade after the crisis, both the 2019 Labour and Conservative general election manifestos reflect a changed world.

Labour’s document promises an economic transformation, with the state reclaiming responsibility for areas long ceded to the market. The party would invest £400bn to address the climate crisis and social deprivation; renationalise the railways, Royal Mail and the water and energy companies; establish British Broadband to provide a free and universal internet service; and transfer up to 10 per cent of shares in large companies into worker ownership funds.

The boldness of Labour’s proposals should not be overstated. Public spending would rise to 45.1 per cent of GDP, only slightly above the European average, and none of the proposed interventions are incompatible with EU law. A top income tax rate of 50 per cent on earnings over £125,000 and a corporation tax rate of 26 per cent (its 2011 level) are similarly unremarkable by postwar standards. But for the UK, where Margaret Thatcher launched the free-market counter-revolution in 1979 and where the Conservatives have pursued austerity since 2010, it would represent a break with consensus.

The Conservative manifesto, by comparison, appears a far more modest document. Yet it still symbolises a changed era. The party that took the UK into the European Economic Community in 1973 and championed the single market has ended its long engagement with the European project.

The free-market right has often dreamed of using Brexit as a vehicle to pursue a radical programme of tax cuts and deregulation. But the Conservative manifesto instead betrays a more statist turn. The party has abandoned any ambition of an overall budget surplus and is committed to borrowing for investment (adopting a version of Labour’s 2017 fiscal rules). It has vowed to raise the minimum wage to £10.50 within five years, one of the highest rates in the developed world. And it has abandoned promises to cut corporation tax to 17 per cent and to raise the 40p income tax threshold to £80,000.

Though the ideological distance between the parties is huge, a new economic consensus is emerging. After a decade of austerity, wage stagnation and untamed markets, both parties have embraced an expanded role for the state. Debates that were once thought settled – over EU membership and the nature of capitalism – have been resurrected and alternative futures now appear possible.

The world in revolt

The protests that have broken out across the world in 2019 were provoked by a series of ostensibly mundane policies. In Chile the trigger was an increase in subway fares. In Lebanon it was a proposed tax on WhatsApp calls. In France the gilets jaunes revolted against a levy in fuel prices. In Hong Kong it was a bill that would have allowed the extradition of criminal suspects to China.

But below the surface of these leaderless uprisings are much deeper furies. Starting on page 30, our contributors examine how politics has moved from parliaments and on to the streets. Unlike the anti-Soviet revolutions of 1989, or the Arab Spring of 2011, these protests are not reducible to narratives of democracy vs dictatorship, nor are they defined by old sectarian rivalries and ideological divides. They are instead fuelled by citizens’ anger towards stagnant economies, enfeebled democracies and corrupt political orders. Above all, they reflect the confidence among younger generations that a radically different politics could exist, one heralded by a new era of protest.

This article appears in the 29 November 2019 issue of the New Statesman, The English Question