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A Reversion to a Dickensian Variety of Capitalism

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By Jayati Ghosh, Professor of economics at Jawaharlal Nehru University, New Delhi, and the executive secretary of International Development Economics Associates. Cross-posted from Triple Crisis.

Since her death, many eulogies of Thatcher have spoken of her as a revolutionary. Thatcherism (along with the associated Reaganomics) is seen as a radical transformative agenda that changed the face of economy and society. But seen from the developing world decades later, much of this agenda appears familiar, in the form of structural adjustment policies that have been forced upon different countries at different times by international institutions.

Given the broad contemporaneity of these strategies, it is a moot point who “inspired” whom, or just how original those ideas were. But it is certainly true that they contributed to shaping policy dialogue in fundamental ways, and thereby left a continuing (if unfortunate) legacy. Consider just five significant elements of this legacy, most features of which are now found across the world and especially in developing countries.

First, and possibly the most well-known: the attack on organised labour and the resulting drastic reduction in workers’ bargaining power. This occurred not just through the instrument of unemployment (or fear of it) used to discipline workers, but through regulation and legal changes as well as changing institutions. This is now an almost universal feature, except in societies such as in Latin America where recent political changes have generated some reversal.

Second, financial deregulation and significant increases in the lobbying and political power of financial agents. This has led to the massive expansion and then implosion of deregulated finance, with the crisis affecting the real economy in terrible ways. It has also contributed to deindustrialisation and the rentier economy. The UK today is clearly one, with its focus on the City of London as its most prominent “industry” – but this is increasingly the fate of countries that are much lower in the development and per capita income ladders.

Third, the triumph of private gain over social good and the aggressive delegitimisation of public provision. Quite apart from the adverse effects on the long term (in terms of inadequate public investment for the future or for meeting current social needs) this has terrible effects on society, creating not just injustice but small-minded and petty individualism as a dominant social characteristic.

Fourth, the weakening or destruction of notions of the rights of citizens, particularly social and economic rights. Most citizens of the developing world are still struggling for these to be recognised, so the rapid derecognition of such rights in the post-Thatcher era has been a setback for everyone – and is only too obvious in much of Europe today.

Fifth, sharply increasingly inequalities of assets, incomes, opportunities, which has become socially and economically counterproductive everywhere and increasingly politically destabilising as well.

Was Thatcherism then all that new? No – it was essentially a reversion to an older, Dickensian (if not even Hobbesian) variety of capitalism, bringing back into significance those more unpleasant features of the capitalist system that were supposed to have been abandoned in the forward progress of human history.

Jayati Ghosh is professor of economics at Jawaharlal Nehru University, New Delhi, and the executive secretary of International Development Economics Associates.

This piece first appeared in the Guardian. 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved.

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48 comments

  1. Nathanael

    The Dickensian, Victorian-era version of capitalism succeeded largely due to the surplus wealth being generated by industrialization. On the whole, peasants actually preferred the industrial jobs, even though they sucked, to the previous agricultural jobs.

    There is no equivalent surplus wealth or “bribe” to make people go along with Dickensian capitalism now. Expect South America’s present to be our future.

    1. nonclassical

      …Nathan..

      peasants “preferred” industrial revolution jobs-Britain, while these jobs existed
      in homes, spinning on own mills…when industrialization took place, within factories, control of workforce WAS the issue…

    2. Mark P.

      Nathaniel wrote: ‘On the whole, peasants actually preferred the industrial jobs, even though they sucked, to the previous agricultural jobs.’

      Come now. In the UK, at least, there were these little things called the Inclosure Acts (Enclosure, as we have it) that entered into the equation…
      http://en.wikipedia.org/wiki/Inclosure_Acts
      https://en.wikipedia.org/wiki/Enclosure

      As one writer commented a century later:-

      ‘Stop to consider how the so-called owners of the land got hold of it. They simply seized it by force, afterwards hiring lawyers to provide them with title-deeds. In the case of the enclosure of the common lands, which was going on from about 1600 to 1850, the land-grabbers did not even have the excuse of being foreign conquerors; they were quite frankly taking the heritage of their own countrymen, upon no sort of pretext except that they had the power to do so.’
      —George Orwell, ‘As I Please,’ Tribune, 18 August 1944

      And, indeed, as a contemporary 19th century commentator wrote:-

      ‘The spoliation of the church’s property, the fraudulent alienation of the State domains, the robbery of the common lands, the usurpation of feudal and clan property, and its transformation into modern private property under circumstances of reckless terrorism, were … conquered the field for capitalistic agriculture, made the soil part and parcel of capital, and created for the town industries the necessary supply of a “free” and outlawed proletariat.’

      – Karl Marx, Chapter Twenty-Seven: Expropriation of the Agricultural Population from the Land

      from CAPITAL, Vol. 1

        1. jrs

          here enclosure consists of transferring not land but paper wealth to banks. How did the rich in FIRE get so rich? Not legitimately. Of coures with that paper money there’s no land that *can’t* be bought up, and that’s exactly what they do, including all the hedge funds now in on the game.

          1. Mr. Jack M. Hoff

            Why would the rich want any land in this system? That’d just cost them taxes and maintenance. They can instead have any wealth derived from the land directed to them with the policies that THEY have put in place. Yeah, they’ve came a long ways haven’t they?

        1. neretva

          and of course the wealth from overseas was major force of industrialization.

          and Mike Davis
          http://en.wikipedia.org/wiki/Late_Victorian_Holocausts

          and numerous others, such as David E. Stannard

          liberal-democracy, i.e. looting and pillaging, is the most lethal, of all -isms. It, naturally, include Nazism and Fascism. In word all Eurocentric ideologies are pernicious for humankind.

      1. banger

        Great reply. Industrialism succeeded very well in Britain because there was a desperate underclass willing to work for very little. Capital, btw, came from the looting of India in the 18th century so British capitalism was built on the extreme suffering of the poor.

        Capitalism is a dynamic system that, I would say, had to happen for us to get to the next stage. The trouble is that the West lost its nerve with the reaction on the right. Who feared, above all, the rise of collectivism or the notion that we now have the technology to build a society that can allow nearly all people to live good, healthy and creative lives without an emphasis on dominance and submission. What Thatcher represented was the nostalgia for the dominator culture and the ultimate goal of her segment of the right is neo-feudalism.

        Sadly, the left fell of the political cliff by not presenting an articulate contrary view–I think that is in the process of being remedied as people have, rightly, lost faith in “progressives” who told us Obama was the answer when he is just more of the same right-wing BS.

        1. from Mexico

          Regardless of all the hype to the contrary, and regardless of which end of the political spectrum it emanates from, people who have to work for a living have no political representation these days. Thorstein Veblen got it exactly right when he said that “democracy has…outgrown the Mid-Victorian (1846-1886) scheme of personal liberty and has grown into a democracy of property rights.”

          Lawrence Goodwyn , In “The Populist Moment,” sums up post-1896 America as follows:

          Today, the values and the sheer power of corporate America pinch in the horizons of millions of obsequious corporate employees, tower over every American legislature, state and national, determine the modes and style of mass communications and mass education, fashion American foreign policy around the globe, and shape the rules of the American political process itself. Self-evidently, corporate values define modern American culture.

          You can dress up 20th-century America in whatever partisan or ideological garb you want, but the bottom line is the same: It’s politics of the oligarchs, by the oligarchs, and for the oligarchs.

          1. banger

            Yes, all that is obvious but we still have the remnants of civil liberties–I can start a business, I can organize others to do things that social capital has not been lost or lost mainly on the margins.

            Our problem is not the oligarchs but the confusion of the masses from the campaign of mind control that has been going on since WWI. If people were not walking around in a daze largely ignorant of anything of substance because they are perpetually confused and unable to digest information then we could easily act and create a very different world. We have the information and tools readily available–but we don’t do anything but follow along. Why? And what happened to the left in this country? Why is it so moribund?

          2. Massinissa

            “What happened to the left in this country”

            The several red scares perhaps?

            That, and I believe the INCREDIBLE prosperity of the late 40s up until the late 60s had alot to do with essentially destroying the Left’s willingness for radical change. Things are good, capitalism is good, most of the population benefits from capitalism, so why change it? The Socialist movement, which was instrumental in forcing the implementation of the New Deal to begin with, essentially fell off the face of the earth not only because of political persecution, but the economic situation facing working people improved so dramatically in the new deal-great society period that I believe socialism was simply no longer regarded as necessary: Capitalism had delivered prosperity to all (at least all whites).

            Of course, this form of capitalism has proven unsustainable, and has essentially started eating its own tail by trying to immiserate the working class in order to make the impossible exponential growth created by modern capitalism possible.

          3. Linden

            What happened to the left? Their leaders have a funny habit of ending up dead: MLK, RFK, Paul Wellstone …

      2. EmilianoZ

        According to Polanyi (The Great Transformation), there was something else besides the enclosure. That was the ending of the Speenhamland system, which garanteed some kinda minimum survival food to the poor peasants. After it was abolished in 1834 the poor had the choice between starving and going to work in the factories. Nobody would willingly go to the factories.

      3. Nathanael

        Mark: you have to remember that the start of the enclosures and privatization of the commons came long before the Industrial Revolution.

        By the time of the Industrial Revolution, the position of the agricultural laborers were already very poor. The conditions of agricultural land tenancy were not very good by then.

        1. Nathanael

          Note that you date the first Enclosure Acts to *1600*. This is pre-industrial-revolution material.

          1. EmilianoZ

            Although the enclosure movement started with the Tudors, it didn’t stop with them. It was an on-going process. Mark P. cited Orwell:

            “In the case of the enclosure of the common lands, which was going on from about 1600 to 1850, the land-grabbers did not even have the excuse of being foreign conquerors;”

            Some years ago, I was in the Isle of Skye (Scotland). Once, in a pub, I was shocked by some truly dismal paintings on the wall. I asked what the ghost-like figures depicted were. They told me they were peasants driven out of their lands by the enclosure act. That was 19th century stuff. I’ve heard similar stories since. It looks like the memory of the enclosure hardship is still very fresh in many rural communities in Scotland.

    3. digi_owl

      More like the strip-mining of foreign resources. remember that UK in that era was a colonial empire. They were shipping in raw materials from everywhere for cheap.

      1. Nathanael

        So were all the other empires. Britain generated more wealth because of industrialization. This isn’t disputable.

        1. Nathanael

          You’re making my point for me. Perhaps I was unclear.

          During the industrialization period, the advances generated by industrialization meant that the elite were getting ahead *so fast* that the scraps they were tossing to everyone else (cheap, mass-produced clothing being the first) constituted a significant and sizeable bribe.

          Right now, there is no equivalent. The 99% are actually getting less each year. In order to stop that and “bribe” the 99% properly, the 0.1% would actually have to reduce their own rate of thievery. During industrialization, quite often they didn’t have to.

      1. nonclassical

        “why” is the “left” so moribund??? Oh, I don’t know-JFK, RFK, MLK, Malcolm; ALL the REAL leaders of “left” were….summarily disposed of…what do you suppose bushbama believes will happen to him if he actually governs as was expected of him by U.S. public SICK of bushit-repubLIEcon-”Project For A New American Century” return to “manifest destiny”???

        1. pws (@pws4)

          Here I’m reminded of an exchange from I, Claudius:

          Agrippinilla: We all did things during the reign of my mad brother that we might not otherwise have done.

          Claudius: That’s true, that is true. Although some us did them a little more willingly than others, didn’t we?

          Obama is in the second group.

  2. nonclassical

    …succinct summation of “neo-feudalism”, forecast in Poly-Sci departments, late 70′s, 80′s;

    ..”financial deregulation and significant increases in the lobbying and political power of financial agents. This has led to the massive expansion and then implosion of deregulated finance, with the crisis affecting the real economy in terrible ways. It has also contributed to deindustrialisation and the rentier economy.”

    …never to be mentioned in mainstream media…

    1. Newtownian

      So true. One of its really pernicious manifestations are the superannuation systems, especially in Australia Canada and NZ. Retirement is increasingly funded by personally held investments directly or indirectly through the finance industry and its diverse asset amalgamation vehicles which essentially tie up assets and primarily are there to extract rent.

      On the surface at its inception superannuation was presented as a way to balance govt budgets and provide worker control or retirement. But in practice funds are allocated very conservatively and narrowly into cash, exploitative interest gains from debt etc., property and mostly conservative share portfolios and of course amalgamation vehicles.

      Thus the engines of old style capitalism are screwed because when you retire you just want to keep a good income and your horizon is inevitably very short term (pre the long sleep). Thus greedy capitalists and good socialists alike become petty bourgeois rentier capitalists unable or unwilling to invest in the future.

      Pre Thatcher a state based system was set up whereby the nanny state could throw resources out which sometimes these were largesse or a waste – Concord – but sometimes they led to wonders – CERN and the Internet or as importantly dreams which have not been repeated for decades (NASA). Would CERN be possible today funded by rentier superannuation capital – not likely.

      1. Expat

        Absolutely right. The TINA effect is most apparent in savings: where can you invest in your community, social change, a better environment? Even credit unions have been contaminated by the capitalist vermin. If you don’t have a pension paid from your employer’s present income, you are sloughed off into, at best, a low cost index fund, so your temporary well-being depends on the FIRE beast that pollutes, poisons and pillages for profit.

  3. jake chase

    Thatcherism/Reaganism was a devious scheme to gull middle class dupes conceiving themselves as overtaxed bootstrap individualists forced to support a small army of boondoggling bureaucrats and a large herd of welfare chislers. The idea was to enable financial peculation and untax the rich, while giving the middle class a few crumbs: lower tax rates, easy credit, a booming stock market and speculative real estate opportunities. Of course the speculative window had to close at some point and the debt had to be serviced, but the insider looting could continue forever because all countervailing influences were simply dismantled. Trumpeted as economic geniuses, Thatcher and Reagan were simply public relations shills, song and dance men sponsored by the ultrarich. Their entire performance was simply a con, and we are stuck now with the wreckage.

    Pretty much the same thing was orchestrated by the military by ending the draft. Who needs a draft when today’s lower class dupes sell themselves into military service? By the time they realize it’s a bad bargain, the game is over. But at least they get free baseball tickets and those wonderful commercials portraying them as heroes. What does everyone else get? Happy Hour at Taco Bell and panther piss from Budweiser?

    For those who like real beer, I recommend Warsteiner.

    1. Thor's Hammer

      Jake,
      That is the distinguishing feature of real free market capitalism— you get microbrews instead of horse piss for beer.

      1. Mr. Jack M. Hoff

        LOL at that one Thor. I think everyone should honor both Reagans and Thatchers gravesites. They oughtta be made National Pissing Places. After all, they both pissed all over you while they ruled the roost.

        1. Lambert Strether Post author

          Lord Byron anticipated you:

          Posterity will ne’er survey:
          A nobler grave than this:
          Here lie the bones of Castlereagh:
          Stop, traveller, and piss.

    2. banger

      Well said. In fact, PR is now the Queen of the Sciences. PR is now the whole game–journalism of the mainstream media is PR and largely influenced by PR firms who arrange stories and guests for TV shows (at least in Washington). People are hired to blog, man/woman the phones, go to parties, provide sexual favors, make threats to manage the PR agenda of wealthy clients in Washington. Information is the essence of politics and what goes on what show when is critical. If you wonder why climate-change is unreported it is because those who favor action on that aren’t throwing money at the PR firms in large enough quantities.

    3. damian

      i would add one thing about the end of the draft in 1970 – it permitted the MIC to wage war without citizens voicing opposition no one cares anymore – the draft spurred huge outcry – Hell No We won’t Go – stopped the Vietnam war in its tracks

      you cant make money with kids stopping the game – so in my mind that is why they ended the draft – no other reason –

      the ZIP codes that buy into slogans – Freedom, Democracy and Liberty in great numbers (are not in NYC) in exchange for their dismemberment i have never understood after WWII

  4. clarence swinney

    OBAMA DEJA VU
    The GAO reported that the Republican Congress spent $110,000,000 on Hearings and Investigations in an effort to destroy the Clinton Administration.
    Let is look at what the money bought:
    GDP–rose from 6300 to 11,600
    NATIONAL INCOME-5,000 to 8,000 Billion–took 20 years to grow 2500B before his time in office.
    JOBS CREATED–over 22 million–record by far
    AVERAGE WEEKLY EARNINGS–$360 to $478
    AVERAGE WEEKLY HOURS WORKED–never hit 35.0–hit that  mark 4 times in 80′s
    UNEMPLOYMENT–from 7.2% down down down to 3.9%
    WELFARE TO WORK—11,533,710 on federal roll in 1996 and 3,880,321 in 2007.
    MINIMUM WAGE–$4.25 to $5.15
    MINORITIES–did exceedingly well
    HOME OWNERSHIP–hit all time high
    DEFICIT–290 Billion to whoopee a SURPLUS
    DEBT—-+28%—300% increase over prior12 years
    FEDERAL SPENDING–+28%—80% under Reagan- who da true conservative?
    DOW JONES AVERAGE–3,500 to 11,800  all it’s history to get to 3500 and he zooms it
    NASDAQ–700 to 5,000—all of it’s history to get to 700 and he zooms it
    VALUES INDEXES– almost all bad went down–good went up in zoom zoom zoom
    FOREIGN AFFAIRS–Peace on Earth good will toward each other—Mark of a true Christian–what has Bush done to Peace on Earth?
    POPULARITY—highest poll ratings  in history during peacetime in  AFRICA, ASIA AND EUROPE even 98.5% in Moscow–left office with highest Gallup rating since it was started in 1920′s.
    STAND UP FOR JUSTICE–evil conservatives spent $110,000,000 on hearings and investigations and caught— ONE— very evil man who took a few plane rides to events.
    BOW YOUR HEADS–Thank you God for sending us a man of his character, intelligence, knowledge of governance, ability to face up to crises without whimpering and a great leader of the world.
    THANK YOU GOD FOR THE GOOD TIMES THE CLINTON YEARS.

  5. from Mexico

    Oh well.

    What goes around comes around.

    The ravages of neoliberalism (aka neo-imperialism) have finally come home to roost. As Henry Steele Commager put it: “If we subvert world order and destroy world peace we must inevitably subvert and destroy our own political institutions first.”

    The much-feared boomerang effect of the “government of subject races” on the home government during an imperialst era meant that rule by violence in faraway lands would end by affecting the government of England, that the last “subject race” would be the English themselves.

    1. nonclassical

      …exactly, from mejico…as any poly-sci student, 70′s-80′s could comprehend..
      (“Killing Hope”-William Blum, “Confessions of an Economic Hit Man”-Perkins,
      “The Shock Doctrine”-Klein, etc, etc…summed up succinctly, historically, economically, by Yves, or Naylor, or Satyajit Das)…

  6. Jim Shannon

    Clearly intended – Clearly Class Warfare – Clearly ONLY One solution!!!!
    TAX ALL WEALTH over $10,000,000 @ 100%!!!!!!!!!!!
    Wake up World – “We The People” are STILL being treated like slaves, owned by the Narcissists for the Benefit of the Ultra Wealthy Elite!
    The Billionaire$ have been corrupting All Governments – A CLEAR UNIVERSAL TRUTH!

  7. Gil Gamesh

    May the circle, be unbroken….

    Certainly the USA has regressed to mean, as Movement Conservatives have, with the assistance of the Noble Professions of Economics, Law, and Finance, through regressive policies and junk economics, largely reversed the mildly progressive, tepidly social democratic experiments of the early-to-mid 20th century. Welcome to the neo-19th century, folks. Never have so many given so much to so few.

  8. allcoppedout

    The left has always been right on these matters. The imperialism of the Berlin Conference (1864 ish) has merely re-arranged its spots – and instead of the Brits, French and Russians riding in on the Confederate side, the US has become the major imperial player. All is not yet lost, though many opportunities for democratic foreign policy have been.

    The UK is a farce not only on being the hub of offshore banking but also in our UKIP protest politics. What all of us lack is the ability to vote for anything that matters. But how would anyone know what this is given most people remain ethnocentric and religious? Education has broadly failed. We lack the action plan, not critique. But this could be the vapid plea of an individual who has forgotten Action Man is just a plastic doll.

  9. Thor's Hammer

    Apart from being whimps, prostitues, or just terminally cynical the American “left” is totally devoid of initiative and vision. Where are the dump trucks loaded with manure crashing through the front gate of Jamie Dimon’s and John Corzine’s estates in the Hamptons to dump their loads on the front doorstep? Where is the tanker truck full of blood from a slaughterhouse deploying a fire hose to spray its cargo onto the entry steps of the New York Stock Exchange?

    1. neo-realist

      Maybe those forces where told that the snipers are in place in case you come anywhere near our residences.

  10. William Powe

    I expect this form of capitalism and empire of financial
    derivatives to collaspe and then lead to some new political
    extermism. I don’t think it will be fascism or communism
    but something else brand new as it were and with a dark
    side that will be hard to predict now. The powers that be
    know there will be a reaction and that is why NADA and
    homeland security have been put into place. Most local
    police forces have tanks and automatic weapons for
    terrorist attacks but the absurdity of 9000 cops
    and one kid on a boat not withstanding, these are just
    practice runs. America has over 700 military bases and when
    this empire implodes like Russia did there will be a huge
    implosion. How long no one knows, all I know is that
    the financial collaspe is not over and happy day are not here again, the second drop is coming like the sunrise
    all that is in question is the timing. The market booms
    but without a consumer and with huge unemployment thoughout
    the world, central banks pumping money into a corrupt system
    that is why it will fail its the right solution but in order
    for it to work they had to reform the system but they lacked
    the will and foresight and so the whole thing is doomed.

  11. aw70

    I’m British, and old enough to even remember the start of the Thatcher era. And although I do share a healthy disgust for her personal style (or lack thereof), and her “values”… chaps, you should not be as one-sided as everyone here seems to be. There was a reason why she and her era happened.

    Thatcher (and I presume, to some extent also Reagan) did not succeed through their evil, machiavellistic schemes alone. They could not have pulled off anything like the transformation that happened on their watch without at least a part of the population actually agreeing with them. Up to a point, at least.

    The reason Thatcher & Co made such headway was that at the end of the 70ies, *socialism* was widely regarded as being as much of a failure as neoliberal economics are considered to be one now – especially in this forum, and with some justification. So anyone who made a convincing case against socialism and collectivisation *in the forms that prevailed at the time* struck a chord with lots of people in Britain.

    In 1978, Britons had the endless trade union disputes and countless economic fuck-ups of the 60ies and 70ies fresh on their memories (in particular, the cartoonish mis-management and decline of the British nationalised industry behemoths), as well as the grim spectacle of Real Socialism across the Iron Curtain in plain view (abject poverty, barbed wire fences, lies, secret police, the works).

    But at the end of the 70ies, Britain could also still remember being the workbench of the world, and being at the centre of the industrial revolution. That this bygone supremacy had been bought at the price of extorting the colonies was not on people’s minds, rather, a very strong feeling of “what have we become?” prevailed. By the 70ies, cutting-edge technological innovation had left the country for good, and “Made in Britain” on any product was more of a threat than anything else. The quality of produced goods and services rendered by public utilities was often abysmal; there was a reason the movie “Brazil” was done by a Brit, and done then. And to quite some extent, people were not entirely wrong to blame nationalisation and the mentality of the trade union chiefs for the debacle.

    Enter a narrow-minded greengrocer’s daughter, with her “views” on How Things Should Be Done, and her promises that She Would Show Those Pesky Reds Where They Belong. I remember a lot of people realising that she was a dangerous idiot even then – but if you had her on the ballot, and the Labour goons of the time as the only real alternative, it still made a lot of sense to vote for her. It was a choice between the plague and cholera, as they say.

    1. Nathanael

      Hampered by single-member districts again.

      A lot of people would have voted for a third alternative, but the UK, like the US, is under the iron shackles of Duverger’s Law, which means that a third alternative can only arise when one of the first two alternatives has collapsed and died.

  12. Roland

    It didn’t help that the during the high-inflation ’70′s the unions had to waste a lot of their time and energy merely trying to keep wages up with the pace of monetary expansion. Strike after strike, running just to stand still, and meanwhile inevitably antagonizing the general public with the unending nuisance of it all.

    The triumph of neocons throughout the Anglo world during the 80′s was at least partly a consequence–a very unfair consequence–of the 1970′s inflation.

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