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.
To take this forward, cross-party, I recommend taking a look at 99-percent.org, and the book of the same name, an FT Book of The Year, written by Mark E Thomas.
Please sign-up and join the 99% Organisation.
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
8 comments so far
Well said. Just to add, none of the above happens by accident. It’s a methodology. We can see it at work on a daily basis. The question of national debt is always framed as having to pay money back, which is ludicrous! The money was created by the government. How can it pay something back that it already owns? The media ensure this myth is perpetuated. It means austerity measures can be applied to grab an even bigger slice of the cake for the super rich.
It’s a nasty, vindictive and quite deliberate process. Attacks on opponents can be ruthless. Today, it’s Angela Rayner’s turn. Nicola Sturgeon will continue to be hounded in the hope that she resigns. Right wing politicians, by comparison, are given a free pass to do whatever they want.
It’s really important, I think, to understand just how savage and unrelenting this government is. And to understand how this government would get nowhere outside a wider system of control that includes the BBC and the MSM.
The government is now in an almost unassailable position. It can avoid scrutiny by stamping down on opponents; weaken democratic checks on its power; fund its activities through dark money; and generate division in society. It should not be underestimated how difficult it will be to reverse what is happening.
Martin has said it all.
Beating this Government (and the libertarian ideological regime behind it) out of office is going to require more than good intentions. It will require great guile from all of the opposition parties. I hope they are cooperating behind the scenes. We need a democratic alliance for the UK. 2024 is a critical year for our democracy. It’s under attack from all angles and these people are serious.
And yet the BBC over and over asks only “how are you going to pay for it?” Which is probably the easiest question for a Chancellor to answer. Do people not realise that the national debt could be liquidated tomorrow (exchanging bonds for reserves)? The GFC has taught us nothing if it has not proved that increases in reserves have no inflationary effect (or much of a stimulus effect either, for that matter). We should not think in terms of national debt. We should think in terms of national savings instruments. Money is not a scarce commodity. It is a public utility. It can be used and should be used generously, to put people to work, to build public services, to promote the commonwealth. Lynne Jones has hit the nail on the head. This should form the platform for a new golden age, for a popular, progressive new politics – a conservative vision in many ways, because only by going down this path does the UK have a prayer of conserving all the great things in life, reversing the caustic, erosion of traditional values which austerity accelerates. But no – Lynne Jones is not a current MP, and we do not hear anything of this vision from the current lot. Certainly not from the party in government, who are shamelessly and quite brazenly dedicated to funneling public funds into the hands of an elite few. But also not from the leader of the opposition, not from the self-styled elite of the PLP, not even from those on the left wing, all of whom harp on about taxes – as if taxes were the engine of the economy. Taxes take money out of the economy. That is all they do. Necessary, but as a drain – they are no fountain. We need a new settlement based on putting money into the economy. This a rich, bountiful country. Let’s not be the generation who wreck it.
Replying to Martin: True! But look at all those changes that seemed impossible because the situation had gone on & on and there were so many enormous obstacles. The Me Too movement suddenly gained momentum, seemingly out of nowhere, Gay marriage, Trans rights,…It didn’t look likely that the moment of change for South Africa to ditch apartheid was round the corner, and then it was. It is very difficult to predict how change comes about. We may look back and see this time as one of those moments when things gather momentum in unexpected ways…
Martin, John and Rob: Thanks for your comments. It’s easy to feel gloomy, particularly as the current Labour Leader has apparently reverted to the belief of his predecessors in New Labour that he must operate within the “Overton Window” rather than attempting to shift it to the democratic left – even as the Tories are busy trying to move it to the right! However, there are opposition politicians who have the foresight to realise that our democracy is in peril and are pushing for cross-party co-operation to defeat the current right-dominated Tory Party at the next election. This is a particularly hard ask for the Labour Party, including my friends on the left, which cling on to the notion that a democratic socialist Labour Government is possible without electoral reform. Fortunately, many constituency Labour parties are pressing the Party to support electoral reform and Labour MPs like Clive Lewis are working through Compass (compassonline.org.uk) for the progressive alliance necessary to bring it about. I’m pleased too that 99% is also lobbying to that aim. Hopefully, the reality of the SNP dominance in Scotland (despite current troubles) will help make the penny drop.
I really like the concept of money as a public utility. Deserves to become common parlance!
Follow me on Twitter @lynnejones_exMP
Some excellent commentary here. Confirmation of where we are – not a good place – and reasons for cautious optimism.
One area of consensus seems to be the performance of Labour, which has been very poor in my opinion. Its strategy, if one can be discerned, is almost certain to fail, not least because it is so blatantly searching for votes, but without any principles on offer. It also has succumbed to a collective failure of the imagination. With money so obviously being created out of thin air, it had a once in a lifetime opportunity to explain how money really works. Nope. Nothing doing. We are back to the Tory-friendly idea of balancing the books. Its mistaken ideas on taxation, where the money is assumed to go back into a giant money pot, was summed up beautifully by John. Taxation cannot fund a recovery!
It is hard to see how we turn things around. Yet Shirin is right to point out moments in history where the remarkable has happened. Indeed, nothing ever stays the same. Biden was a big blow to what I think this government was planning: a UK-US alliance of money driven by even dirtier politics. We can be very thankful Trump did not succeed.
The only possible route to change is by sticking together. I agree with Lynne on this. An alliance of some sort is needed, and proportional representation is an essential aim. I’m very pleased to hear that Clive Lewis is working towards these goals. It is frustrating though. While there is plenty of creative thinking going on, and a desperate yearning for change, those with the power to to do anything seem lacking in both ambition and ability.
Great article. This is exactly what Labour should be talking about.
Good article Lynne and interesting comments.
I must admit to a feeling of despair. Johnson seems to be able to lie with total impunity and a majority of the money used to to alleviate the effects of the Covid lockdowns seems to have one straight into the back pockets of the mega rich, while those living on next to nothing are/were expected to self isolate on even less.
When it is all over we are likely to see a crackdown on working conditions and wages of the essential workers. The English NHS staff have been offered just 1%, while train fares were going up by 3.6%. I heard a report on the radio the other day saying new (worse) T&C’s were going to be imposed on refuse collectors. Meanwhile the big financial backers of Brexit are locating their factories and jobs abroad and Dyson wanted (possibly given) tax favours to help out with producing ventilators and other equipment for the NHS.
The NHS and all its staff have been worked to the bone and have done a brilliant job, but it will be Johnson who will take all the credit. He has already told us that the vaccination success was due to the greed of private companies.
One day the public will wake up to what’s been going on but for the time being they will continue to back the Tories.