This is a transcript of the 99% Launch presentation at the IPPR on Tuesday, 3 September 2019.
Understanding the Coup
A week ago, I thought I had my presentation ready. I thought my job was to show you some facts about mass impoverishment, to explain what will happen if current trends continue and to persuade you that the implications of that were unacceptable. I was going to go on by tackling some of the many excuses politicians use for not dealing with mass impoverishment – and demonstrating that those excuses are based on myth not fact. Then I was going to conclude by setting out a framework for solving the problem.
And under any normal circumstances, I think that would have been important and newsworthy.
But then Prime Minister Johnson assembled a cabinet of market fundamentalists, decided to prorogue Parliament to frustrate opponents of a no-deal Brexit – something which only a short time earlier most of them had declared unacceptable or unconstitutional – and has begun purging rebels.
So, what is my job now?
I think my job today is to show that these recent events – what people are referring to as the coup – fit into the big picture of mass impoverishment. They represent a major acceleration, rather than a change of direction, and present an enormous threat to the post-war social contract and to the people of this country.
I will begin as I had planned by showing you some statistics about mass impoverishment and explaining why I was worried even before Johnson became Prime Minister. But then I will focus particularly on the consequences of having a cabinet dominated by market fundamentalists – both economically and, even more importantly, politically. I will argue that it poses a fundamental threat to our post-war social contract. And I shall conclude by arguing that we now have a constitutional emergency, and we need to act very fast.
Let’s start with some facts.
Even on historic trends, mass impoverishment is a threat to the UK
The period from the end of the Second World War up to 2050 splits neatly into three 35-year chunks. The Golden Age of Capitalism ran from 1945 up to 1980. The age of Market Capitalism ran from 1980 at 2015. And we are just beginning the third of those periods, so we can’t name it yet – but so far, the signs are ominous.
When we look at these three periods, what do we see?
- In the last 35 years (the Age of Market Capitalism) economic performance has been lacklustre
- That lower growth has largely gone to the already wealthy: over the last 10 years, in the UK, most people’s wages have actually declined
- Continuation of current trends would mean that by 2050 the UK’s median wage would have fallen almost halfway to today’s poverty income!
On almost every measure of economic performance except inflation, the Golden Age was a far more successful period in the age of Market Capitalism. And this is particularly true when one looks at the measures which affect the experience of individual members of the population like median income growth and the unemployment rate.
The story of economic renewal after the Reagan and Thatcher reforms is recorded widely in print – but I could find no evidence of it in the databases of the national statistical agencies. It is a myth, not a fact.
If we look in more detail at the UK and focus on the period since 1997, we can see the following rather surprising facts:
- economic growth was higher in the period from 1997 – 2010 than it has been in the period since 2010 even though that first period included the Global Financial Crisis and the Great Recession which followed it;
- median income was more or less in line with economic growth;
- since 2010, real per capita GDP – what you can think of as the size of the pie – has grown slightly, and in fact the country is now richer than it has ever been in its history;
- but most people are not – wage earners are poorer than they were in 2010, and some are a great deal poorer.
So the pie has grown, but most people’s slices have shrunk. That is what mass impoverishment is.
What happens if this continues? Well, on recent trends the median wage would decline from around £24,000 per annum today to under £20,000. Almost halfway to today’s poverty line – in an economy which will be richer than it has ever been.
Even with the reduced growth, if inequality stopped rising, the median income would also rise to just under £30,000 per annum. And if we returned to the trends from the period 1997 – 2010, the median wage would rise to over £34,000 per annum.
But we’re not headed for that, we are headed for mass impoverishment.
So, even without any of the recent changes, mass impoverishment needs to be right at the top of the political agenda.
But now we have a cabinet of Market Fundamentalists
The 2017 Tory party manifesto was clearly right wing, but it was a one-nation manifesto. It included commitments to increase the living wage, tougher regulations on tax advisory firms and to prevent misuse of trusts for tax avoidance, to protect critical national infrastructure, to invest in a national productivity fund and to create a sovereign wealth fund. The UK elected one-nation Tories. But what do we have now?
Here are some of the key roles in the cabinet today.
At least one member still claims to be a one-nation Tory. But at least five have made it clear that they are market fundamentalists – they believe, almost as a religion, that markets are the best way to allocate resources. And anything, particularly governments, that get in the way of that needs to be tackled.
And with a no-deal Brexit, there is – for market fundamentalists – a once-in-a-lifetime opportunity to accelerate the process and to replace the post-war social contract with something completely different and very sinister.
Many people have analysed the impact of Brexit. This graph shows the government’s own analysis: any form of Brexit does economic damage, and harder the Brexit, the more damage it does. A no-deal Brexit is of the same order of magnitude as the Global Financial Crisis.
Let’s just consider one sector. In the UK, the automotive sector employs approximately 800,000 people. And it could be devastated. Honda, PSA, Ford, Nissan and Jaguar Land Rover have all indicated that major plants may need to close. And once they are closed, they are unlikely ever to re-open. The industry is in peril. And for every job which is lost in a car plant, a further seven are at risk in the automotive supply chain. The damage in this one sector should be enough to make us reject a no-deal Brexit.
For this reason, many people have called a no deal Brexit an act of national self-harm. I do not believe this is quite correct. I don’t think that the people committing the act are the people who will experience the harm.
For market fundamentalists, as well as protecting their tax breaks and giving them once-in-a-lifetime buying opportunities, a no-deal Brexit means that it becomes far easier to justify continuing rolling back of the frontiers of the state in the name of unaffordability.
Lower growth means that more people have personal experience of economic hardship, which makes it more plausible when politicians say that spending is unaffordable. Tax reductions and spending cuts seem more attractive. And the consequences in terms of poorer services and lower growth merely reinforce the effect.
Most fundamentally, it will enable a shift towards a new social contract.
The post-war contract was based on people; the fundamentalist contract is based on markets. Most importantly it represents a radically different view of justice.
For market fundamentalists, the Golden Age of Capitalism represents a massive injustice – the most valuable members of society have been plundered via progressive taxation (or as they refer to it ‘coerced redistribution’) by the less productive members of society, whose sense of entitlement knows no bounds.
What is fair, they say, is that each person should receive their market value. If I say that I am worth £1 million a year, but nobody is prepared to pay me £1 million a year, my words are empty. Conversely, if somebody is prepared to pay me £1 million a year, then demonstrably I am worth it. What you get is your fair value.
And it sounds reasonable until you look at the practical implications. By that logic, Van Gogh, who sold very few paintings during his lifetime, was a very bad painter. But then he became a genius after his death. Every Board member at the tobacco company Philip Morris is worth more to society than 50 oncology nurses tending those with cancer.
The idea that market forces guarantee a fair distribution is one that really only appeals to those who are pretty certain of a very large share.
Although you have probably heard all the elements on the right-hand side individually, their proponents are usually careful not to assemble the complete picture. The only exceptions that I am aware of – where the full consequences are spelled-out explicitly – are in the book by Jacob Rees-Mogg’s father, William Rees-Mogg, The Sovereign Individual, which is a kind of handbook for dismantling democracy, and in Tyler Cowen’s book, Average Is Over.
If what I have said sounds like an extreme description of what market fundamentalists believe, please read Chapter 4 of the book, 99%. I think that you will see that it is an accurate description of an extreme position.
And it’s not the position of the Tory party manifesto in 2017. Nobody voted for this.
So the real coup isn’t the prorogation of Parliament. It isn’t even driving through a no-deal Brexit. It is the seizing of power by market fundamentalists with the aim of introducing a radical new social contract.
For those who feel that the post-war social contract is an essential element of our current civilisation, this means that our civilisation is under immediate threat.
Our civilisation is far from secure, so we need to act now
There are only eight scenarios for our future – and our leaders are not planning for us to inhabit the only attractive one. So, we need to act now, beginning with constitutional reform.
Three questions, each with a yes or no answer, determine the scenario we will find ourselves living in:
- Will the pie grow?
- Will the median slice grow?
- Will we have a peaceful transition to our future state?
And only one of these scenarios – the one called solidarity and abundance – represents the success of our current civilisation. That was the scenario during the Golden Age Of Capitalism and we have already left it. What we have seen in recent weeks heralds at least an acceleration of the drift towards accepting impoverishment, and possibly even to neo-feudalism.
So of course we need policy change. But even more fundamentally we need a democratic reset. We don’t have a written constitution in this country – and I have never felt more nervous of that fact than I do now. It is not illegal for a government in this country to pass legislation that it knows will harm the interests of 99% of the population. And we may be witnessing the early days of a government that is happy to take advantage of that freedom.
And we need fact-based policy. Since 2010, policy has been guided by the myth of unaffordability – that was the reason for austerity. When Theresa May wanted as her final act to commit the UK to carbon neutrality by 2050, Philip Hammond didn’t try to deny the science, but he claimed that it would cost £1 trillion, and it was taken for granted that this meant that we couldn’t afford to do it. Why not? Because of the state of Government finances. But Government Debt:GDP is today below its 300-year average, below where it was before the Industrial Revolution took off, and below where it was before the Golden Age of Capitalism. It is simply a myth that we couldn’t afford to protect the health of the economy and our environment. And in the US, they don’t even accept the science. Without facts, there can be no sanity.
On the basis of this constitutional reform and a commitment to look at the facts, we can then expect government to formulate policy that will tackle and reverse mass impoverishment. Policy formulation is complex, but there are only fundamentally four types of policy.
Each policy either grows the pie or it doesn’t; and it either shares the benefits of that growth fairly or it doesn’t. That gives us these four types of policy: captured growth policies, shared growth policies, vulture policies and balancing policies. We have had far too many captured growth policies and vulture policies, and far too few shared growth policies and balancing policies.
I would like to go on and talk in more detail about policy for ending mass impoverishment. Especially in this building, which is perhaps the home of such policy, where the Commission on Economic Justice Report was produced. And I would like to talk about investing wisely in the future and cleaning up capitalism.
But I think in today’s situation that the big picture is more important, and I want to leave time for discussion.
Even before Johnson became Prime Minister and assembled a cabinet of market fundamentalists, there were grounds to be very concerned – which is why I have spent the last four years of my life on this book. But now, the stakes are far higher, and the urgency is far greater.
Just as Extinction Rebellion has pointed out that we are looking at a climate emergency, I believe that we are looking at a constitutional emergency.
I would like to ask all of you to do whatever is in your power to help preserve our civilisation before it is too late.
If this matters to you, please do sign up and join the 99% Organisation.