This article was written by 99% member, Lynne Jones, Member of Parliament for Birmingham Selly Oak from 1992 until the dissolution of parliament in April 2010.
The article was published in Order! Order! — the official journal of the The Association of Former Members of Parliament.
Since 1980, we have adopted a system of market fundamentalism that has been transferring more wealth to the already wealthy. Market fundamentalists have us believe that markets are the best way to allocate resources. You can’t buck the market and so there is no alternative. The market price is the moral price and reflects merit. Public spending interferes with this morality and must be minimised. And so it came to pass that the Chief Executive of British American Tobacco receives an annual remuneration of over £6.5 million, reflecting a “value” 200 times that of an oncology nurse.
Unfettered Markets are Less Efficient and Increase Inequality
Under market capitalism, GDP growth has been lower (2.4%; 2% per capita -UK figures) than that during the post-war period (3%; 2.6%), justifiably referred to as the “Golden Age of Capitalism” even weathering the collapse of the Bretton Woods system and the oil price shocks. In the “Golden Age”, the proceeds of that better growth were also more fairly distributed. If we sliced the national “cake” in the same way as we did in 1980, most people would be almost twice as well off today as then. Even with slower growth, we are richer than ever in terms of GDP, yet a growing proportion of the population is getting poorer. As Figure 1 shows, most people are poorer today than in 2007 (lower median gross income) as a result of the imposition of austerity in 2010. The Covid Pandemic has exposed just how threadbare the “safety net” has become after years of erosion.
Figure 1: Trends in GDP per capita and Median Earnings
The belief in markets has led to the selling of public assets at below intrinsic value and a tax system that has reduced taxation on wealth and high incomes whilst raising it on everyday spending, such that the poorest 10% pay over 40% of their income in tax (Equality Trust).
Untruths Used to Justify Austerity are Leading to Mass Impoverishment
Remember when George Osborne said that the worst thing that the Government could do to people on low incomes would be to bust the public finances by having a welfare system the Country couldn’t afford?
Austerity was justified on the basis of the state of the public finances i.e. the level of public (not private) debt to GDP. Though society as a whole was richer than it had ever been, mysteriously, we could afford far less than we could before. The narrative that the post-war social contract was unaffordable took root. Austerity was hard but necessary. The process of “levelling down” gathered pace. Even as we were told “there’s no magic money tree”, the Bank of England was creating almost £1 trillion of new money to save the banking system.
As Figure 2 shows, our two most successful economic periods in terms of growth (post industrial revolution and WWII) began when public (government) debt was at its highest.
Figure 2: UK Government Debt:GDP since 1700
Even post-Covid, after allegedly “maxing out on our annual credit card”, the level of debt will be just average in historical terms. As Lord Turner says in his book, Between Debt and the Devil,
“By excluding the option of borrowing for public spending, the Government has caused unnecessary harm to both the economy and individuals.”
And it has meant that we were less well-prepared for new shocks such as the Covid pandemic.Taking the long-view, if these trends are allowed to continue, impoverishment will spread further up the social scale as middle class incomes decline. The fall in home ownership is one measure of this process.
In stark terms, by 2050, the UK’s median wage could fall almost half way to today’s poverty income (Figure 3).
Figure 3: Scenarios for Median Earnings in 2050
Transfer of Political Power to the Wealthy
How could the narrative of unaffordability have become so widely accepted when it is based on untruths?
Over the last 4 decades, the wealthiest have been able to shape policy in the interests of themselves and their businesses. The transfer of wealth has coincided with the transfer of political power. We have seen that power used to shape public perception of reality in a way that is against the interests of the overwhelming majority – the 99%.
There are four key levers of power that it are easier to pull if you are extremely rich:
- access to elite education;
- access to the social circles of the rich and powerful;
- ownership of major media outlets; and
- access to policy-makers.
In addition, the ownership and operation of digital platforms has been ceded to the political economics of private surveillance capital. This has provided further tools in the armoury of the already wealthy and powerful. Individuals with extreme wealth have been able, if they choose, to have an impact on the dominant narrative that is disproportionate to their numbers. They do not have more than one vote at the ballot box but they are able to influence the votes of millions.
Some examples of the exercise of this power involve interventions that are subtle, such as happened with the escalation of the vilification of Jeremy Corbyn between the 2017 General Election (when he could be largely ignored – the election was only called because he was perceived as an obvious loser) and GE 2019 (when it ensured he would be).
In this case, the process involved a combination of furtive and subconscious interventions, twisting the truth with constant repetition. This was overlaid onto the long-term process: setting one group within the 99% against another, pitting those portrayed to have advantages against another group to whom these advantages are no longer available. Further impoverishment becomes justified in the name of fairness between groups divided in order to rule: “shirkers versus strivers”; “Baby Boomers” versus “Generation Rent”; those in the public sector with “gold-plated” pensions versus those in the private sector whose pensions have been eroded; immigrants versus low-paid workers etc. As Market Capitalism prevailed, traditional jobs were destroyed and replaced by the gig economy. Those “left behind” increased in number. Add to this the move away from universality in the social security system, rebadged as welfare, and the scene was set.
Brexit: The Rise of the Sovereign Individual
Brexit: in which its unscrupulous advocates single-mindedly pursued power for themselves and enrichment for their patrons, using both covert and overt methods to peddle blatant lies. Their message to “take back control” still resonates with many people who feel that they have lost control over their own lives. The use of the language of “sovereignty” was designed to ignite feelings of nostalgia for past greatness. Yet the only sovereignty actually being pursued was the personal sovereignty of the few wishing to avoid interference by state bodies in their personal accumulation of wealth. The last thing they wanted was to allow someone into power whose mission was to unite the 99%.
If you doubt this could be true or seriously contemplated, then I will refer you to the book entitled The Sovereign Individual by James Dale Davidson and William Rees-Mogg, in which mass democracy is dismissed as being control of Government by its employees, put on the payroll by the welfare state, enabling them to dispense with the bother of reporting to work. Or take a look at Average is Over by Tyler Cohen, a vision of what control by a small minority in a free market ‘hyper-meritocracy’ would mean. The vast majority will earn little or nothing living in shanty towns and pacified with cheap or free fun “that is so plentiful it will feel like Karl Marx’s Communist utopia, albeit brought on by capitalism.” Far fetched? The current plot line in the everyday story of country folk has victims of modern-day slavery provided with games consoles and controlled by regulating access to them.
Fact-based Evolution to Solidarity and Abundance or March to Serfdom?
We’re not as far down this road as its advocates would like but sufficiently far to enable Jacob Rees-Mogg to feel “uplifted” by the charitable efforts of food banks, showing “what a good and compassionate country we are.” The direction of travel is clear – towards mass impoverishment with democracy threatened. Figure 4 depicts possible future alternatives. Hayek warned that an active government would mean ‘The Road to Serfdom‘; we can now see that it is the market fundamentalism he advocated that is leading us down that road.
Figure 4: Eight Scenarios for the UK
Scenario 3, Solidarity and Abundance within a peaceful democracy would, I am sure, be the aim of most of us.
To achieve this we need to clean up capitalism and ditch the narrative of unaffordability.
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I take sole responsibility for the views expressed here, acknowledging with gratitude the input of ideas and information from Mark and other friends in 99-percent.org