Will the market revolution – the predominant ideology of our time – survive the pandemic? Events this week suggest that the UK government certainly hopes so. Ministers’ statements suggest a desire to return to a mode of governance where choices about resource distribution and priorities are dodged by mechanisms that depoliticise decision-making. The messaging from Whitehall is that if the worst of Covid is over, then Britain should return to policies that have failed. Earlier this week, the prime minister extolled the virtues of free market capitalism to tackle the climate emergency; the chancellor wants a “competitive” tax cut for City financiers; the Bank of England signalled a premature interest hike. These are moves to convince voters that, post-pandemic, the state must forfeit economic power to the market. Such a retrograde shift must be resisted.
The historian Adam Tooze’s recent book Shutdown explains how difficult it will be to change the course of the river of history. Last year the pandemic revealed that states did have the tools they needed to exercise control over the economy. They could – and did – spend whatever it took to deal with Covid. The UK state forked out £370bn from February 2020 to July 2021. The sky has not fallen in. Prof Tooze writes that the government’s “economic logic confirmed the basic diagnosis of interventionist macroeconomics back to Keynes. They could not but appear as harbingers of a new regime beyond neoliberalism.”
Yet these were top-down interventions made in the heat of a crisis. To ground economic policy in democratic sovereignty would require root and branch reform. Prof Tooze presciently wrote that the “odds are stacked” against that happening. Yet what choice do we have? For decades the globe has ricocheted from one crisis to another, each one inducing and being magnified by the next. The response cannot just be for those in power to secure pre-existing inequalities and the invidious economic model that produced calamities. One alternative would be to have stronger trade unions and progressive policies.
When economic democracy gets a chance, there are hopeful signs: Berliners voted last month in a non-binding referendum for the city government to expropriate apartments owned by big corporate landlords. The UK’s 2019 election has convinced some that such radicalism is politically risky. Yet the fragilities and inequities of modern society have not gone away. The ideas to deal with them need parliamentary spokespeople. It’s heartening to see that some are stepping into the breach. Labour MP Jon Trickett is right to suggest that runaway wealth needs to be taxed fairly by bringing dividend and capital gains levies more in line with income tax rates. A private member’s bill from his colleague Barry Gardiner, which gets its second reading on Friday, would outlaw “fire and rehire” tactics used by employers to drive down pay and conditions – and fortify organised labour. Both are attempts to tie economic growth to wage increases instead of debt-financed speculation and asset-price appreciation.
Prof Tooze is pessimistic, suggesting future spells of “crisis management on an ever-larger scale”. It’s right to be sceptical, but that does not mean some big, much-needed shifts are not on the cards.