Brexit Britain Is All Alone in a Senseless Pursuit of Disaster Capitalism

Yves here. While Liz Truss and Kwasi Kwarteng have been forced into a hasty and embarrassing retreat on their too-obviously-predatory mini-budget, they are still willing and able to do a lot of harm to ordinary citizens in Britain. However, I beg to differ with the headline claim about the UK being unique in its enthusiasm for looting by the wealthy, particularly via crisis related action. The US has been going down the path for a long time, but as a wealthy industrial power also endowed with a lot of natural resources, it takes quite a while to start cutting into muscle. High housing, health care, and now energy costs will greatly accelerate the pauperization of the former middle classes.

By Adam Ramsay, openDemocracy’s special correspondent. You can follow him at @adamramsay. Adam is a member of the Scottish Green Party, sits on the board of Voices for Scotland and advisory committees for the Economic Change Unit and the journal Soundings. Originally published at openDemocracy

When Britain’s new chancellor Kwasi Kwarteng stood up on stage at the Conservative Party conference yesterday, he was a lonely figure.

Only a few days earlier, his French counterpart had announced a budget that included significant spending boosts for the ministries of labour, health, ecological transition and education.

Meanwhile, Germany’s federal government is “investing in the future”, pouring billions of euros into “climate protection, digitalisation, education and research as well as the infrastructure required.” Over the summer, in a bid to get the economy back on track after the pandemic, Germany’s state-owned rail company slashed the price of rail fares – offering unlimited local and regional journeys for just nine euros a month.

In Spain, everyone turning 18 this year is being given €400 to spend on books, concerts, theatre tickets or other cultural activities to give the arts a post-pandemic boost, while train travel on large chunks of the national railway network is currently free.

Looking further afield, in the US the Inflation Reduction Act will pump hundreds of billions of government money into low-carbon transition and healthcare, including slashing the cost of prescriptions and cancelling $10,000 of student loans for millions of graduates. This is part of an attempt to, as the White House christened the proposals from which the legislation was born, ‘build back better’ – with president Joe Biden telling Congress, “trickle-down economics has never worked. It’s time to grow the economy from the bottom and the middle out”.

In Brazil, the day before Kwarteng gave his speech, the left-wing former president, Lula De Silva, who ran on promises to scrap the government’s spending cap and invest in infrastructure, nudged ahead of far-Right incumbent Jair Bolsonaro in the first round of the country’s presidential election, the most significant vote of 2022. While Lula isn’t yet over the line, he is the clear favourite.

Across the Western world, state-led investment is back. Limping out of a pandemic and into a European war, looking ahead to increasing climate chaos and back at a decade of stagnant wages and soaring billionaire wealth, most governments, most citizens, can see that a 40-year experiment with radically free markets was a disaster. Most can see the need to pull together, that collective action is required to navigate the current omnicrisis.

But in Britain, we’ve got a return to tax cuts for the rich and austerity for the rest. Rather than putting money into the pockets of ordinary people, Kwarteng is cutting corporation tax by £19bn, promoting a free-for-all on bankers’ bonuses and launching what Gordon Brown has called a “tax avoiders’ charter”, slashing tax for employees who are able to declare themselves self-employed.

Two decades ago, Kwarteng’s ideas were wrong, but they were at least in vogue. Now, Brexit Britain stands alone.

In his speech yesterday, Kwarteng said he had abandoned his cut in income tax for the richest because it was distracting from his broader plans. But it’s precisely his broader plans that are the problem.

As well as slashing tax for the rich, he wants to get rid of regulations for the rich, promising to “review, replace or repeal retained EU law holding our country back”.

Much of the rhetoric was the vague nonsense of wilting neoliberal ideologues, but he did give some specifics.

“On childcare, agriculture, immigration, planning, energy, broadband, business, financial services,” he said, “Sensible, economic reforms to produce more of the products and services we need to drive down costs.”

What this means in reality is a massive attack on safety and standards. Proposals to abolish Ofsted accreditation for childminders don’t do anything to solve the problems faced by parents who desperately need better-funded childcare, but will make it harder for parents to know their child is being well cared for, and easier for profiteering agencies.

The reference to agriculture seems to be a nod to the chaos around England’s attempts to replace the EU’s Common Agriculture Policy. Under Boris Johnson, with Michael Gove as environment secretary, there were some genuine attempts to ensure that farmers’ subsidies were given in exchange for environmental goods, via a policy known as the Environmental Land Management Scheme. This could have gone some of the way towards slowing the biodiversity crisis in the UK – one of the most nature-depleted countries on earth.

But it looks like Liz Truss and her environment secretary, Ranil Jayawardena, are scrapping all of this namby-pamby ‘not killing the planet’ nonsense, and restoring lump sum payments to agribusinesses based on how much land they have – the richer they are, the more they get.

Or perhaps Kwarteng was talking about Britain’s new-found power to decide which pesticides agribusinesses should be allowed to spray on our land and leach into our water – various poisons banned across the EU are already allowed in Britain.

As my colleague and housing economics expert Laurie Macfarlane has argued, Tory attempts to reform planning laws in recent years have represented “a ferocious attack on democracy”, stripping power from elected representatives and handing it to developers. Without proper planning, cities become suburban sprawl, with lengthy commutes, traffic jams and deep economic inefficiencies. Thriving cities require thoughtful consideration from authorities with a broad view of different needs, resulting in communities joined up with public transport, schools and doctors’ surgeries, not endless mazes of cul de sacs and traffic jams.

When Kwarteng talks about energy, what he means is not that he’ll lift England’s absurd ban on onshore wind farms – in fact, Truss seems to want to extend it to include solar farms, too – but rather, to bend to the will of the fossil fuel lobby, and bring back fracking.

And when he talks about financial service deregulation, we don’t need to be very old to remember where that led in 2008.

To push all of this through, the chancellor made another important pledge – this time to increase regulation, specifically the regulation of workers.

“Pernicious strike action disrupts the lives of the British people and it slows down our economy,” he said. “So, we will introduce important reforms to stop strike action from derailing our daily lives.”

We shouldn’t be surprised by this agenda. It’s the deregulated corporate playground that was promised when Britain voted for Brexit. But the problem for the government is that it’s entirely out of step with much of the rest of the world.

If Britain allows its fields to be soaked in chemical poisons and its chickens to be chlorinated, its exports to undercut safety standards and its financial services to side-step regulations, then the EU isn’t going to allow itself to be undercut. The bloc will simply ban inferior British produce. And the much-mooted US trade deal looks unlikely – Biden hasn’t exactly shown himself to be a fan of the Brexit agenda.

The British government is already scrambling around the other side of the world looking for partners – as the prime minister announced in her recent UN speech, the UK is in the process of acceding to the Trans-Pacific Partnership. But you can’t just wish away ten thousand miles.

In the past, I would have described Truss’s government’s agenda as shock doctrine, or disaster capitalism – an audacious attempt to use the various crises of the day to strip away vestiges of democracy and workers’ power, and to advance corporate power. And in one sense, it is. But, in the past, with neoliberalism on the march, it would have felt like part of a global project. Now, they just look like fools, standing on the prow of a boat that’s abandoned its fleet, and pissing into the winds of history, only to find they are getting themselves wet.

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  1. Matthew

    What do we think of the idea of many regulations being a form of rent seeking? It does make sense to me that many regulations are motivated by creating barriers for entry and less competition rather than a really compelling public interest.

    1. paul

      That is certainly the case in a regulatory capture situation, which is by and large what is found in all the UK OF’s (OFGEM,OFcom etc) , but that is not the environment regulation should be developed and implemented.

      Government requires the balancing of its population’s interests. Regulation is one of the tools it can employ, for good and bad.

      The current UK government is certainly using regulatory power for bad, in order to please its rather narrow constituency (and I do not mean its senile membership).

      1. Colonel Smithers

        Thank you and well said, Paul. You are right to make the distinction between the Tory blue rinse and the Tories’ real constituency. The twain rarely, if ever, meet. Good lord, no! Ugh, as the residents of Mayfair or Monaco may feel.

        Having worked as a banker and lobbyist, so seen that close up, I have never understood the attractions of Thatcherism and Blairism for the poor, bloody infantry and the mass of voters turned on by neoliberalism.

        1. Jams O'Donnell

          Yeah, well remember, like almost anything graphable, intelligence follows a bell-shaped curve. And by definition, half the population are of below average intelligence. Of course if you are wealthy this doesn’t matter, as the more able can manage your money for you.

          1. c_heale

            I disagree. Nassim Taleb’s work disproves this in economics/social sciences, and all kinds of curves are present ln the harder sciences.

          2. c_heale

            And I need to add, there is no standard definition of intelligence. I’m not even sure it can be proved that overall intelligence varies. For example people use their brains to compensate for difficulties in their environment, and since everyone is born into a different environment, everyone has used their brain in different ways to adapt to that environment. A free climber has adapted their intelligence to climbing, a mathematician to math, and a blind person to moving around in the everyday world. Is the idea of ntelligence even useful conceptually?

          3. paul

            I think there is a standing prize awaiting someone who can proof a bell curve from data rather than fit it. Maybe the late pierre sprey sponsored it.

            A bathtub curve might be more suitable.

    2. OnceWereVirologist

      One might consider “professional licensing and credentialling” as regulatory barriers to entry and rent-seeking but those are never the types of regulation that free marketeers are interested in eliminating. Outside of that limited sphere, how is regulation supposed to be interpreted as rent-seeking ? What specific examples do you have in mind ?

      1. russell1200

        They are a restraint of trade. But unrestrained markets are generally going to be a race to the bottom. So the restriction, at least in theory, will create an inefficiency that will benefit the trades that are credentialed. The credentialing board can get rid of at least some of the bad actors.

        That being said, how the credentialing occurs goes a long way as to whether it is the business owner, or the tradesman , who benefits -when they are more than a one-person shop of course.

        It doesn’t take a rocket scientist to guess that what little benefits that occur usually go to the business owner.

    3. spud

      deregulation leads to massive market concentration, monopolization, chaos and collapse. it does the exact opposite of what the deregulators say. it does not lead to more competition, it leads to less.

      1. flora

        Yep. Compare what happened in California’ deregulated energy market during the Enron scandel with what happened – or did not happen – in states that did not deregulate their state energy utilites and markets, or even to California municipalities that kept their regulated public utilities. While California’s “grandma Millies” were getting extortionate-level deregulated utility bills people in states with strong utility regulations barely noticed any slight bump up in utility prices.

        A refresher about just what happened to California’s deregulated utility markets. From 2006:

    4. Ignacio

      FWIW, I think this is true in electricity markets, at least in Spain. The hand of lobbies is hard on regulations to meet precisely that end.

    5. drumlin woodchuckles

      If the regulations are designed to make sure that if it says “aspirin” on the label, it isn’t arsenic that is in the bottle, I don’t care if the wannabe fake-aspirin seller feels it is a form of “rent-seeking”. I want aspirin in my aspirin bottle and I want zero arsenic in the same bottle.

      And I feel the same way about every other regulation against slavery-conditions in the workplace, cancer juice in the water supply, cancer gas in the air supply, cancer gravy all over the food supply, etc. And I don’t care how the business community feels about regulations to prevent those things.

      And I certainly don’t care how a libertarian eye-diddy-ologist might feel about those things.

  2. The Rev Kev

    The boys at The Duran did a short video on Truss and the Tories and it is not looking good for her – and by extension the Tories. She is seriously out to sea and does not have the chops to cope with the Prime Minister-ship. She should never have had the Foreign Ministry portfolio for that matter. The mind boggles of what would have happened in 1940 if instead of Winston Churchill, you would have had somebody of the caliber of Truss appointed instead- (11:48 mins)

    1. john jones

      Brexit never was about trade – it was about politics.

      Had the EU stuck purely to the Single Market (for trade give or take) the UK could have been persuaded to stay in the SM and all that entails inc Freedom of Movement (aka cheap EU labour).

      Most people still haven’t worked out that it is principally Global bodies such as WTO, WCO, ICAO, UNECE , ILO et al, that form the basis for SM regulations – in or out of the SM ,the UK will essentially follow these regulations but now as a political peer of the EU – the EU is therefore a rule-taker from these global bodies as we in the UK are.

      Time was when a quasi halfway house like EFTA/EEA was potentially feasible but over time, as the UK finds its rightful place at the top table of these governing bodies even EFTA looks less attractive.

      Had it not been for ‘political overreach’, the EU might have still proven attractive. Given the ructions & the begger thy neighbour behaviours going on in EU ( don’t mention the Eurozone) currently, it’s hard to see any large new players wishing to join a declining trade & political entity.

      Independent pesky nation states look safe for a while yet .

  3. Mikel

    “…But, in the past, with neoliberalism on the march, it would have felt like part of a global project…”

    Neoliberalism is still on the march globally.
    That’s the problem with this article from beginning to end.

    I read the opening few paragraphs and just wanted to ask the author if he thought Covid was airborne and what should be doneabout that?

    1. flora

      …most citizens, can see that a 40-year experiment with radically free markets was a disaster.

      The World Economic Forum (WEF) devotees don’t think it has failed. They think it’s finally getting going with more to come. Truss is WEF. (That might explain her Stepford Wife-like thousand-yard stare.)

      1. Mikel

        And he’s talking about the austerity loving EU and the Biden and Macron administrations as if they don’t have a neoliberal bone in their bodies.

        Hard to believe I’m living in the same world as Adam Ramsay.

        1. Anonymous 2

          I don’t know about the US , but be assured that whatever may be visited on the citizens of EU member states, UK citizens face a worse prospect under their current government. Macron and Co are pussycats compared to the rabid right-wingers who are in control of the UK at present.

  4. caloba

    RK – I have wondered if the health of our old dear Queen wasn’t fatally undermined by the starkness of the contrast between her first PM, Sir Winston, and the arrival at Balmoral of her last PM, Liz Truss, two days prior to her death!

  5. begob

    A description of the Tory Party Conference doing the rounds in the UK:
    “As soon as the ringmaster, Johnson, left the circus tent, the lions set about devouring the clowns.”
    A slight misquote, I think, but all the more vivid for that.

    1. Jams O'Donnell

      “As soon as the ringmincer, Johnson, left the circus tent, the rats set about devouring the clowns.”

      There – ‘fixed that for you’ – as they say, tediously.

  6. Colonel Smithers

    Thank you, Yves.

    UK based readers may have seen / heard the news that Truss has gone to an EU meeting in Prague. This is to discuss Macron’s idea of a European Political Community to include the EU and other European countries, excluding Russia. The idea sounds suspiciously like the “multi speed” and “variable geometry” Europe promoted by the UK under Major.

    The invitation was made in June when Johnson was PM. After a few days of mixed signals, perhaps to test the waters, Johnson turned down the invitation. Some said it was dastardly French attempt to undermine Brexit.

    What may have concentrated minds in the British government were two near misses of multi-day black outs last month. Emergency supplies at eye gouging rates were negotiated with, of all sources, plucky, little Belgium, a country kinda, sorta invented by the UK and furnished with some dodgy Saxe-Coburgs for decoration.

    At the moment, all local authorities are in the red and being bailed out by the central government. In some cases, it’s robbing Peter to pay Paul as taking money allocated to one authority and giving it to another sends the former into deficit when the allocation disappears. One way the UK government is raising money is to send British officials on secondment overseas and pocket a fee for these services. In addition, some British contractors are paying fees to the UK government for helping them win contracts.

    Shopkeepers, eh?!

  7. JBird4049

    >>>If Britain allows its fields to be soaked in chemical poisons and its chickens to be chlorinated…

    I’m still thinking of the chlorinated chickens… Wtf is that? And what dim bulb thought the two should have any connection to each other?

    1. hazelbrew

      the use of chlorine on chicken does have nuance to it.

      Chlorine as an anti-microbial is used in lots and lots of places in the US, UK and EU. e.g. on chlorine washed salad bags, or our water supply is chlorinated. ingesting chlorite residue in that way is not necessarily bad. I use it in brewing to clean equipment before brewing or fermenting. it is very effective as an anti-microbial and at varying concentrations.

      one of the specific concerns is more about the use of chlorine as a poor substitute for good hygiene standards in the whole food chain.
      I’d be more worried about other things in farming – the financing, the patenting, use of anti-biotics etc.

      1. drumlin woodchuckles

        My understanding is that soaking vast numbers of just killed just processed chickens in chlorine-water is to kill the salmonella, listeria, e-killer-coli, etc. all over the chicken meat. These diseases were not a problem in the days of smaller slower-moving kill and processing lines with adequate live-body inspectors actually on scene doing analog inspections with their own analog eyeballs.

        When vast mega-slaughter mega-process facilities were invented with all their super speedup of pace, chicken manure traces got all over the chicken bodies and so chlorination was invented as a way to kill – – maybe – – the bacteria which wouldn’t even have been there to begin with under the older and slower kill and process methods.

        So chlorination is a form of open door permission and facilitation to turn the shinola chicken of yesterday into the sh!t chicken of today, fed super-bug-o-genic antibiotics, covered in its own manure as a basic part of the slaughter-process procedure, and without enough visual inspectors to visually inspect.

        So if your chicken was chlorinated, that is because the makers know very well that they have produced filthy chickensh!t covered chicken to begin with and they are just spraying chlorine on the chickensh!t. And that is what you buy when you buy mainstream non-artisanal chicken.

        About meat-chicken-etc. inspection . . . . President Reagan first began the “reform” of understaffing inspector levels on all meat production lines while granting permission for those lines speeding up. That was when I first started seeing warnings against consuming “undercooked” hamburger. The whole Dept. of Ag public awareness campaign to ” cook the hamburger till it is gray all the way through” was a psy-op to cover up for the introduction of diseases into the meat by the Reagan Administration.

        And President Clinton’s role in all this? Clinton and his Sec of Ag Glickman pioneered the HAACP concept. I believe I remember that HACCP stands for Hazard Analysis Critical Control Points or something like that. It was sold as being the idea that super routinization of the production process itself and computerised and otherwise super-documentation of every little step being followed would assure product safety. And the inspector’s job would be to inspect all the documentation, so as to give them too little time to inspect the meat itself . . . at least as far as the HACCPiteers could push that concept. I read in Acres USA that the meat inspectors themselves said that HACCP stood for Have A Cuppa Coffee and Pray.

        Reagan kicked open the door to the primrose path of total deregulation, and Clinton waltzed America all the way down the primrose path to the total deregulation we have today. So lets all thank Slicky Bill Clinton for setting the stage for all the Presidents who came after, including most of all Trump himself, who was more a delayed reaction to NAFTA and etc. than to anything that Obama himself did.

        1. spud

          100% plus bill clinton championed modernization of meat inspection, he said the meat industry should self inspect. you can’t make this stuff up!

    1. Flip

      With respect, Ken, although the polity idiotically voted for the Tories over a far better alternative in 2019, no one voted for Liz Truss’s slash-taxes-on-the-rich-then-austerity. they voted for Boris Johnson who, for all his faults and all we may doubt his sincerity, promised a lot of government investment in left-behind areas, ran campaigns based on more funding for the NHS, et cetera, and would not have pursued these tax cuts (one of which is effectively reversing a tax rise under Johnson and Sunak.). Truss was chosen, ultimately, by a tiny selectorate of Conservative party members who are well to the right of even the median Tory voter.

      Now you can of course correctly point out that voting for the Tories under our system and electing Tory MPs who are now happy to go along with this is reap-what-you-sow, but I would prefer the British constitution to accept that radical shifts in policy direction like this require the fresh mandate of a general election. Otherwise, imagine what might have happened if Corbyn had somehow won in 2019 – his enemies within the PLP could have toppled him and replaced him with a Starmer who would go in a very different direction.

    2. 3_man

      That’s the point being ignored by almost everyone – nobody has voted for this agenda, with the exception of a handful of Tory party members.

      Having treated the leadership contest as a presidential campaign, His Majesty’s members of the press seem to have decided that there’s no need for Truss to go to the polls as the right sorts of people have already had their say.

    3. S

      Truss has never faced a general election. What’s more, because of the way the British Conservative Party picks its leaders, she represents a very extreme right-wing faction of the Tories.

      The Tories pick their leader in two stages: first the Tory MPs winnow the field of candidates through multiple ballots, until only two are left. In the final round of this balloting, Truss received fewer votes than her opponent, Sunak. So she should have lost, right?

      But enter the second stage of the selection process: the top two candidates are voted on by registered members of the Tory party. These voters are like Republican primary voters in the United States, the most ideological and hard-core of the hard core. They’re older, richer, whiter, and much more conservative than the electorate at large.

      These voters picked Truss over Sunak despite the latter winning the votes of a majority of MPs.

      Thus Truss is the first person ever to become PM without a general election or the support of a majority of Tory MPs in the selection process. She reached the top of the greasy pole only because of her support from the hard hard right of the Tories.

      It’s similar to how Trump became the first person to become president while only winning a minority of primary voters AND of general election voters. The system is designed to give a rabid, extreme minority disproportionate power in picking leaders and Trump and Truss both took advantage of this fact.

      I suspect Truss will call a snap election and, although the Tories will lose seats, they’ll manage to hold on to power. Perversely this will tighten Truss’s grip on the party because it’s primarily the MPs who oppose her who will lose, rather than her supporters. The Tories will become a smaller but more ideologically cohesive party, more in tune with Truss and her backers. And because the British PM is effectively both the executive and legislative branch combined in a single individual, her government will have pretty free rein to do what they want.

      1. JBird4049

        The system under which Trump was elected was intended to push the moderate candidate and to force them to pay at least some attention to places like Sheboygan, WI; however, with the (deliberate) polarization of the nation, the massive wealth, and therefore power, disparity, and the rigging of the primaries by both parties, the mechanisms that however imperfectly pushed moderate small r conservatism and attention to the wider society has been either destroyed, corrupted, or jammed into a place where moderation is pushed aside, extremism is encouraged, and the majority of society that does not have money is ignored.

        I can’t wait to see what the further destruction of the political system will get us come the next two or three election cycles. Nehemiah Scudder? (From “If this goes on.”)

      2. paul

        I do not think there will be any snap election

        The Dissolution and Calling of Parliament Act was granted royal assent on 24 March 2022

        so latest election is january 2025, plenty of time for planet tufton street to create mischief and misery.*

        *which the loyal opposition under blair starmer will be happy to complete, but that’s colonial politics for you.

      3. drumlin woodchuckles

        Well . . . that’s the Parliamentary System at work there.

        That’s the system which well-meaning sympathisers tell us would be an improvement over the system we have here.

        Would it be? Well . . . we’ll see how it works out for Britain once Britain has slid all the way down the far side of Hubbert’s Peak and come to its final resting place at the bottom of Hubbert’s Pit.

  8. elkern

    (not really OT) The next round of Sanctions is focused on setting a “price cap” for Russian oil. Third parties are expected to cooperate because it will be “enforced” by disallowing Shipping Insurance, which will be easy because 90% of that market runs through Britain.

    My prediction: the Price Cap on Russian Oil will lead to the end of the monopoly that the City of London holds in this market. The main barrier to entry is pure capital – a big pile of Money, or a convincing illusion thereof. China – recognizing that the war against Russia is largely a desperate attempt to contain OBOR to Central Asia – will gladly (but quietly) provide Big Piles of Money. And there are probably several Zillionaires in India & Pakistan who would enjoy getting some measure of revenge on the British Ruling Class (while making a few more Zillion, of course)

    Will they ring the Lutine Bell when LLoyds of London goes under?

  9. Tom Stone

    If your Political system coughs up “Leaders” like Biden and Truss it is a failed system.
    “By their fruitcakes ye shall know them”.

  10. jeff

    “Looking further afield, in the US the Inflation Reduction Act will pump hundreds of billions of government money into low-carbon transition and healthcare, including slashing the cost of prescriptions and cancelling $10,000 of student loans for millions of graduates.”

    Great, another deflectionist for Biden the courageless, vote buying, can kicker. Can we at least stop with the fetishizing of politicians and just call balls and strikes on yet another budget that no one read except for the lobbyists that wrote it. 755 pages of nonsense. On what page is inflation reduced?

    There is no one empowered to audit where this money is really going. All Democrats and most Republicans have shown they had no interest in how money is spent in Ukraine, so no reason to care where its spent here. How long has the water in Flint been black? Or Jackson’s water for that matter. 181,000 homeless people in California. So long as Raytheon and Boeing get their beaks wet with that sweet Saudi money or more borrowed money from Ukr, it’s all good.

    This kind of attaboy garbage should never have seen the light of day.

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