When Clement Met Margaret – the unholy alliance of the 1950s and the 1980s

It’s the worst of both worlds. A glance at 20^th century economic history indicates that the noxious right-wing consensus currently ruling the roost in this country is intent on the nightmarish combination of post-WW2 military Keynesianism (state spending on arms manufacturers) with 1920s/1980s austerity which shuffles the tax burden onto ordinary people and lets the rich get away with murder.

In order to appease Trump, Sir Kier Starmer has promised to spend an extra £32 billion a year on defence (taking spending on weapons to at least 3.5% of GDP) ostensibly on the absurd notion of protecting the country from Vladimir Putin menacing British streets. And absent any willingness to tax the billionaires, this can only come from renewed austerity and increased taxation on most people.

The image of post-war decades in this country (and Europe) is bathed in the sepia-tinted light of the birth of welfare states and health services. Out of the rubble of World War Two, Britain created the National Health Service and instituted a mass council house building programme, two things that clearly cost a lot of money. This can be designated social Keynesianism (state spending that benefits people).

However, this memory is selective. At the same time, after falling immediately after the Second World War, military spending hit 11.2% of GDP around the time of the Korean War in the early ’50s. It subsequently dropped but still remained comparatively high, holding steady at over 5% of the GDP in the 1970s.  This can be designated military Keynesianism (state spending on weapons). Hitler and later Ronald Reagan were quite taken with the concept.

Bear in mind that 5% of GDP is what Trump and Nato want military spending to be.

In truth, the post-war years saw the creation of both a welfare and a warfare state. “After the Second World War, Britons built not only a new Jerusalem but a new Sparta,” writes historian David Edgerton in The Rise and Fall of the British Nation. “Though no longer one of the greatest powers, in the 1950s the United Kingdom was militarized to an unprecedented peacetime degree.”

Into the 1960s and ’70s, he notes, the “warfare state” consumed more than the health or education budget.

Now we are told, in the midst of what is undeniably a much richer country, that we must choose warfare over welfare. Not we have a genuine welfare state nowadays anyway. After years of ever greater conditionality rules being attached to it, it is more properly classed a punishment state.

But what is interesting about the post-war years is not only that a balancing act between welfare and warfare was achieved but that it was done without imposing unbearable levels of taxation on ordinary people. The lower middle class enjoyed an effective tax rate far lower than today (before the increase in military spending hits), whilst large and essential ‘consumer’ items, such as houses, were much more affordable.

How was this possible, let alone actualised? The answer lies in three decades of robust economic growth (the best in the history of capitalism) which permitted rising public spending – part of which was diverted to military purposes – and the paying off of war debts. But this package, benign in certain respects, was enabled by much heavier taxation of the wealthy, encapsulated in the Beatles’ song ‘Taxman’, an embittered two and half minute whinge about paying 92.6% supertax. In fairness to its author, George Harrison objected to paying tax so governments could find new ways to bomb people and in that he was, at least partially, justified.

Socially speaking, however, the post-war years were a conscious repudiation of the policies of the 1920s and ’30s. As shown by Clara Mattei in The Capital Order in many countries, Britain and Italy for example, this involved swingeing cuts to public spending (that had risen in the aftermath of World War One), coupled with reducing direct taxation on the rich and increasing indirect taxation of consumption, especially duties on working class pleasures such as tobacco, beer and spirits. In Britain corporation tax, only created in 1920, was abolished four years later and would only return after 1945.

By then this economic cocktail was thoroughly discredited. It had contributed to and exacerbated the economic depression of the 1930s, laying the foundations for the worst conflict in human history, the Second World War.

But the dawn of the 1980s was long enough for amnesia to have set in. Thatcher in Britain and Reagan in America set about rehabilitating the economic prescriptions of the 1920s. Public spending was held down, mass privatisation inaugurated, and taxation precepts turned upside down. Direct, progressive, taxes on the rich were slashed while consumption taxes – regressive because everyone pays the same – were hiked. For example, corporation tax was 51% in 1981 and it is now at less than half that level (and recently has been even lower). VAT has gone in the opposite direction. It stood at 8% in 1979 and has since nearly trebled.

There is admittedly one significant difference. Whereas the austerity mongers of the 1920s were unconcerned about the effects of their policies on mass consumption, since the 1980s our political overlords have been far less complacent. A four-decades long house price boom, the huge expansion of personal debt, frequently low interest rates, and the introduction of tax credits have attempted to compensate for the fact that wages have not risen as they did in the post-war decades and in recent years have flatlined.

Some have called this privatised Keynesianism – a third kind of economic policy named after someone who died in 1946.

But the point is that, in conspicuous contrast to their predecessors of the 1920s, Thatcherism and Reaganism had the necessary stickiness. They stayed around. So much so that the current ‘Labour’ government in Britain is, in essential respects, Thatcherite. It is committed to deregulation, not increasing tax on the wealthy and keeping utilities like water and electricity in private hands. Any similarity to the Clement Attlee government of 1945-51 is purely rhetorical.

Except, though, in one respect. It is intent on repeating the trick of post-war military Keynesianism which, in addition to the creation of the NHS and nationalisation, the Attlee government eventually succumbed to, especially with Britain’s involvement in the Korean war in 1950. In response to this, defence spending doubled.

The post-war decision to increase weapons spending was not painless. It involved introducing charges for some NHS services which sparked a bitter controversy and much soul-searching about the meaning of democratic socialism.  But the conversion happened without sacrificing the core of the post-war settlement. The Conservatives – in power from 1951 – continued the huge council house building programme and the welfare state was expanded in the 1960s and ’70s.  Government policies tended towards increasing equality.

However, that was then. Thanks to the incredible shelf-life of Thatcherism, we don’t live in the same country anymore. As a result, something has to give – if you want to spend an extra £32 billion on the military, the money will have to be re-allocated from elsewhere and augmented from increasing taxation even more on moderate earners.

This process is already in the works.  In addition to slashing support for new claimants for disability benefit, the government is merging the Work Capability Assessment (for Universal Credit) into the assessment for Personal Independence Payments.  It is estimated that over 600,000 chronically ill and disabled people will lose their means of support as a result.

Plans to raise the state pension age to 70 are cut from the same cloth.

As socialist economist Michael Burke has said, “the funding for the war drive can only be generated by much harsher austerity, harsher even than in 2010.”

More and more, the decades following World War Two appear a unique aberration in the history of capitalism, precipitated by a uniquely destructive conflagration that was the deadliest in history.

Rather the norm is austerity, low taxation of the rich and corporations, unending hostility towards trade unions, and military aggressiveness.

Politically we are reverting to type too. The Second World War alliance against Nazism of a ‘communist’ country and western capitalist states only came about as a last resort after the latter had exhausted all other possibilities. Previously, and for years, British and French elites had wanted to enlist the Nazis as a “bulwark against Communism”, giving them a “free hand” to attack the Soviet Union. Even after the outbreak of the Second World War (during the seven-month “phoney war”), Britain and France still plotted an attack on the Soviets.

The preference for the far right has clear echoes today. Despite growing public disquiet at the genocide, the British government is still supporting the Fascist Israeli government and the West finds de facto support to Fascist thugs in Ukraine aligns with its geopolitical ambitions.

Is there an alternative to this witches’ brew? I want to explore those possibilities in a later post.

Rightification: A Theory

 

In May, in the midst of the concerted effort to deny disabled people who can’t dress themselves any means of support, work and pensions secretary Liz Kendall gave a fascinating glimpse into the mindset of Thatcherite Labour.

The cuts, were “crucial”, Kendall averred, “to fighting the rise in populist politics”

They really believe that by forcing through right-wing, necrophile Thatcherite policies they are holding the fort against Trump-esque barbarians when, in fact, they are causing not so much a drift to the Right as a raging stampede.

The disability cuts Labour wanted to implement are a perfect example. The ‘victory’ of PIP cuts being postponed (not shelved, they still might come back in a different form) hides the fact that the other major aspect of the cuts – reducing the weekly benefit of new claimants in the most severe Limited Capacity for Work-Related Activity group by nearly £50 a week from next year – was passed into law.

The cut is greater than the £30 a week one introduced by the Tories in 2016. It’s an interesting theory that you defeat the right by becoming more right-wing that it is.

Or rather was. Because caving in to the slavering dogs just whets their appetite. The proudly Thatcherite Centre for Policy Studies says Labour “must go further”, while Tory leader Kemi Badenoch warns that the “benefits bill” is a “ticking time bomb” which could “collapse the economy”.

Reform UK, meanwhile, wants to force 1 million plus people back into work, declaring that it is the party of “workers and strivers, not shirkers and skivers” (yes it actually rhymes, it sounds like some nightmarish poem written by a 70-year-old bloke with too much time on his hands).

But the truly scary thing that, to Labour’s Machiavellian strategists like Morgan McSweeney, this is a sign that everything is working perfectly. At the next election, Labour will claim it alone is sensible and moderate, while the alternatives send a shudder down the spine. I’m sure some will be seduced by this ploy (but not enough as Labour has alienated so many people that it is clearly toast).

By its action and inactions, and bovine right-wing impulses, Labour is causing this right-wing flood to happen.

Surely there is no-one more slavishly pro-Israel than this Labour government? Labour has increased weapons sales to Israel before exempting the F35 bomber from its cosmetic restrictions. It refuses to call the worst genocide of the century a genocide. It still undertakes (now privatised) daily spy flights over Gaza from an RAF base in Cyprus and places pensioners who oppose the mass killing under house arrest.

But meet Kemi Badenoch, who won’t utter a word of criticism of Israel, thinks the country is fighting “a proxy war on behalf of the UK” and has appointed as shadow foreign secretary a woman who believes UK aid should go to the Israeli Defence [sic] Force.

Or say hello to Nigel Farage who finds the Netanyahu/Trump Gaza Riveira plan for ethnic cleansing “appealing”, and frets that the UK is  not an ally of Israel anymore.

Rachel Reeves, absurdly, wants to deregulate finance again, allowing people to borrow for mortgages at more than four and a half times their income. This is despite the fact that the 2008 financial crisis was precipitated by exactly this kind of permissive environment (it’s easy to forget that we had our own home-grown banking crisis in 2007 caused by Gordon Brown’s light touch regulation before the American one spread across the globe the following year).

But who is going to oppose this desperation? Probably not Kemi Badenoch who regards Argentina’s chainsaw wielding ‘anarcho-capitalist’ President Javier Milei as the template for her imaginary government.

Nor Nigel Farage, the former stockbroker who wants to “keep the flame of Thatcherism alive” by reducing corporation tax to 15%.

Starmer is fruitlessly aping Reform UK’s rhetoric, justifying and amplifying its pseudo-fascist ‘solutions’ while still being markedly less popular with its supporters than his unmentionable socialist predecessor.

But when not emboldening Farage, Sir Kier is channelling the blessed Margaret by promoting the nightmare possibility of a “limited” nuclear war in Europe and appeasing Trump by promising to spend an extra £32 billion (!) every year on weapons, thus ensuring even harsher austerity than that of Cameron/Osborne.

The reaction from the opposition is not to advise caution but to chide that he is not “going far enough”, a phrase I predict we will hear with tiresome regularity in the run up to the next general election.

Reform UK, meanwhile, dreams of an  Musk-style DOGE in every council despite local government, post 2010, bearing the brunt of “the biggest and most sustained cuts in public spending since World War II”.

In their all-encompassing obsession with defeating the Left, the Labour party are fomenting, literally and figuratively, a right-wing arms race that will lead to disaster.

The irony is that I believe they believe that they will ultimately emerge victorious from this horror. The even greater irony is that the person they hate for nearly destroying ‘their’ party, succeeded by his mere presence is shifting the country slightly to the Left, while they – in government and on the back of a huge Parliamentary majority – are dragging it to the extreme Right even though most of its inhabitants don’t want to go there.

The new Left party cannot come soon enough.

Red Tories Blowin in the Wind: A Chronicle of Welfare Cuts Foretold

 

Sometimes calling them Red Tories is being too kind. Labour’s £6 billion pounds’ worth of cuts to disability benefit, which threatens the “ability of low-income families to meet basic needs like food and shelter, potentially endangering lives”, is going somewhere even the Tories under Iain Duncan Smith’s regime of conscious cruelty did not tread.

The cut means that from next year new claimants in the Limited Capacity for Work-Related Activity group (LCWRA) will only get £47 a week to ‘live’ on, £50 less than they currently do. Existing claimants will have their benefit frozen at £97 a week, a real-terms cut. And if you’re under 22 you won’t be able to get anything at all.

Additionally, it will become harder to claim Personal Independence Payments. Under Kendall’s plans you have to ‘score’ more points on daily activities, such as incontinence, washing and dressing, and communicating.

For context, LCWRA is the old Support Group under pre-Universal Credit Employment & Support Allowance (ESA). These are people officially deemed to have such severe health problems there is no current prospect of them being able to work, notwithstanding Labour’s insistence that those with the harshest, ‘life-long’, conditions will be exempt.

Even Iain Duncan Smith left them alone. His attention was taken up with applying the Work Capability Assessment – introduced by Labour in 2008 – to existing ESA claimants, to turning the screw on those declared unfit for work but placed in the Work-Related Activity Group  (the equivalent of the Limited Capacity for Work group under Universal Credit), and ratcheting up sanctions on Jobseekers’ Allowance claimants (over a million sanctions were imposed in 2013).

Not that he wouldn’t have got around to it had he not abruptly resigned as Work and Pensions secretary in 2016. Although it’s illuminating to recall why he resigned from Cameron’s Cabinet. It was, he claimed, because he couldn’t stomach cuts to Personal Independence Payments*, which would have made it harder to qualify for PIP and meant some people wouldn’t have got anything at all. Last year, nearly half of all claims for PIP, around 300,000, were rejected.

The Starmer/Kendall/Reeves cuts are on top of the cuts that Duncan Smith found so intolerable he had to resign. This means that the current Labour government are significantly to the right of Iain Duncan Smith. When Rachel Reeves promised to be tougher than the Tories on benefits (not as tough as, mind, but tougher), she was telling the truth for once.

But with all due respect to the innate genius of IDS, Kier Starmer, Liz Kendall, Rachel Reeves, Therese Coffey or Yvette Cooper (that’s irony by the way), you can see what is going to happen to disability benefits simply by observing what important think tanks and corporate ‘thought leaders’ are saying.

The fact the Labour are introducing these cuts is, in a sense, irrelevant. Labour are, at present, the British government (probably for one term admittedly) and this is simply what the British government wants to do.

So let’s look at a chronicle of disability benefit cuts foretold.

In November 2014, Paul Litchfield, chief medical officer of the BT Group, published the fifth and final independent review of the Work Capability Assessment. This was, as John Pring notes in The Department, the very time that claimant deaths were reaching a peak under the first round of austerity, but Litchfield wasn’t interested in that. He recommended that the government look “as a matter of urgency” into why there had been such a substantial rise in the proportion of claimants placed in the Support group.

In a curious twist of fate, that is exactly what Starmer’s Labour government is doing.

In 2016, the neoliberal Reform think-tank proposed slashing the weekly benefit given to people in the Support Group by £58 so as to equalize it with the rate of Jobseeker’s Allowance. The thinking was that having a higher rate for sick and disabled people encouraged them “to stay on sickness benefits rather than move into work”. The chimes perfectly with Labour’s claims that the benefit system represents a “big discouragement to work”.

Reform (the think-tank not Farage’s company masquerading a political party that is currently leading in the polls) also described the benefits system as “broken” which uncannily is the exact word chosen by Sir Kier Starmer.

Interestingly, though, while Reform advocated putting the money saved from removing the additions to standard unemployment allowance into an enhanced Personal Independence Payment, Labour is cutting PIP as well. And the benefit levels for disabled people and the main body of claimants aren’t being equalised, the former is being significantly reduced.

Also in 2016, the Social Market Foundation proposed abolishing the ESA Support Group entirely.

The writer, who in 2016 analysed the output of these think-tanks, made a prophetic statement: “Policy change can often be explained by reference to changes in background ideas about the state, society and the individual, held and promoted by influential individuals, groups, political parties and … multinational companies,” she said. “It turns out that you can predict such a lot by simply watching the way the wind blows.”

Dominic Cummings, who apparently is informally advising Starmer’s government, used to refer to the educational ‘establishment’ – made up of local authorities, teaching unions and even the Department of Education – as the ‘blob’ because they were, allegedly, always thwarting his plans for schools.

In reality, the blob, consisting of “influential individuals, groups, political parties and … multinational companies” is always at work ensuring governments, as in the case of disability benefits, keep to the neoliberal script.

It is so huge it is very difficult to exist outside of it. The blob has a very keen sense of its own self-interest, and can always provide useful advice on what to say on any given subject, meaning its members don’t have to expend too much energy on thinking.

Corbyn wasn’t part of the blob and look what happened to him. But the blob has devoted acolytes at the helm of all political parties (and also in the backwaters of all political parties). Reform, the ‘party’ that is, might present itself as anti-establishment but it is right at the heart of the blob; its former leader, Richard Tice, handily on message in attacking “shirkers and skivers”.  The Greens might appear to be the one political party that is resisting the blob but should they ever hold the balance of power and enter government, I predict the blog will emerge victorious after a short scuffle.

To adapt the old anarchist canard, and song, no matter who you vote for, the blob always gets in.

* Duncan Smith was a tyrannical advocate of the notion that work is good for you, a zealotry shared with fellow blob dwellers Starmer, Reeves and Kendall. So it’s revealing that he was so opposed to cutting Personal Independence Payments. Perhaps that’s because, in recompensing people for the additional costs of disability, PIP enables people to work. But this realisation is apparently lost on the geniuses in the DWP.