The Return of the State by Graeme Garrard review – why big government is back

Lessons will be learned, says everyone trying to glean some wisdom from the calamitous pandemic that fell upon us in 2020. But looking back on the lockdowns and the deaths, family and friends unseen, the seismic social lesson was the shock reminder that everyone needs the state. There is no other saviour. Businesses big and small, alongside each citizen, rediscovered how much they rely on government to protect them. Here ends the long Thatcher era that cast its shadow down four decades. Her small-state message of the primacy of the individual and stand-on-your-own-two-feet brutalism is also a Covid victim, intellectually dead in the water.

The title of this book comes as a timely reminder that The Return of the State is here already. Its inevitability is thoroughly proved when it has been ushered in not by some socialist party but a stubbornly reluctant Conservative government. Anti-state in its marrow and all its sinews, it found itself obliged to borrow, tax and spend with Keynesian panache. Of course, they still kick hard against it as they keep trying to cut and cut again, impoverishing the already poor, but economically, socially and politically, they are finding out that small-state austerity is now a proven loser.

Tolerance for state-shrinking was already ending by 2019, so Boris Johnson only won by proclaiming it over. Neither his chancellor nor his party intended to keep lavish promises implied in levelling up, until Covid forced open the Treasury safes to borrow and tax more than any time since the war. The state emerged as no enemy of enterprise but its only salvation.

Graeme Garrard, a Canadian political theorist at Cardiff University, assembles the moral, economic and political reasons why the world of the privatised and outsourced state is over. He takes us back to the delirious pre-1979 dawn when Thatcher, with Nicholas Ridley, Keith Joseph and other ardent believers, planned a popular capitalism and a property-owning democracy that would liberate anything state-owned not actually nailed to the floor. They were revolutionaries, intoxicated with the idea of the magical market’s invisible hand using individual self-interest to bring greater good than any state endeavour.

Popular capitalism never happened, but instead share ownership declined. Shares released were rapidly gobbled up, ironically often by foreign state companies making fine profits. Utilities such as water enriched their shareholders at the expense of consumers. Weak, underfunded regulators are easily captured by their industries.

No wonder people now strongly back public ownership for the things that squandered our oil wealth on tax cuts when Norway saved theirs scrupulously for future investment.matter most – utilities, buses, trains and Royal Mail. Garrard wants them all renationalised to tilt the economy back into public hands, criticising Blair and Brown for failing to do so. But he doesn’t address the tough question: if he were chancellor, would he really prioritise spending billions on buying them back before spending a penny on improving them, let alone on parched public services, from the NHS to schools and everything else in dire need?

As the state retreated, mega-corporations began to usurp the strength of governments. They are gigantic oligopolies outside the control of mere democracies, grown mightier and richer than states, like modern day East India Companies. These Googles and Amazons dominate our lives, giants growing fewer in number, dangerously indispensable and unaccountable. While politicians and public servants come under aggressive media scrutiny, these mighty titans are impenetrable to outside eyes, their “corporate responsibility” thin disguises for rampant pursuit of profit. Further down the pecking order, the 2008 crash showed how many businesses rely on that ultimate and inevitable state guarantee if things go wrong.

Garrard makes short shrift of romantics who imagine the big society and community organisations can make up for the retreat of state support. There is no substitute for big government, a Public Interest State ready to do whatever people need. Though he acknowledges there is no ideal balance between the size of the state and private enterprise, it’s clear the scale has tipped too far from public control.

Garrard’s book neatly encapsulates the case with a useful canter through the history of the growing then shrinking state. His evidence is familiar, drawn from the likes of economist Mariana Mazzucato, who showed how wholly dependent private success has always been on state investment and research. No state means no enterprise either. But he makes not enough of the one all-conquering argument: that civilisation will die without governments to control the heating climate.

He also has little feel for electoral politics. He attempts no guide towards how to get a country that has voted conservative for over two-thirds of the Queen’s reign to embrace social democracy. The 2008 crash with taxpayers bailing out the bankers should surely have done the trick, but no. Instead rebellion burst out in Brexit. The hope must be that the Covid experience of the saviour state has flipped the switch.

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