The Economy the Rich Won

The two-part BBC documentary, The Decade the Rich Won, which concluded last week, made for interesting viewing. It told “the little understood story of our times” – how through the policy of Quantitative Easing (QE), the fabulously wealthy became even more fabulously wealthy and the rest of us had to make do with austerity and falling wages. But it did beg certain questions:

Why didn’t anyone say so at the time? “Full disclosure” said hedge fund manager Paul Marshall. Since the 2008 crash the world’s largest central banks (US Federal Reserve, Bank of England, European Central Bank and Bank of Japan) have created around $20 trillion which has basically gone into the already cavernous pockets of banks and wealthy individuals (like Paul Marshall’s).

In the words of Andrew Huszar, who was QE Program Manager at the Federal Reserve (and thus in charge of the entire process): “over the last 12 years, we’re talking about unprecedented amounts of money being printed and funnelled into the markets, banks being showered with trillions upon trillions upon trillions of dollars, ultimately benefiting the most privileged in our societies.” Only a fraction of the ‘stimulus’ he admits, “was actually getting out and making a difference in the lives of everyday people”.

But these mea culpas are strictly retroactive. When QE was first happening, not only politicians and central bankers – who you might expect to parrot the official line – but also media organisations like the BBC uncritically rehearsed the story that QE was providing  a lifeline to the ‘real economy’.  In 2009, the BBC likened QE to putting “imaginary petrol” in your car. 

And this isn’t of purely historical interest. The Covid shut down saw governments quickly turn to the “unconventional” (now used so much it must be thoroughly conventional) technique of QE. In Britain, the Bank of England increased QE from £495 billion to £895 billion. And the BBC was on hand to explain how this pumping of money into the economy would “help it to recover”.

So much like a war, when the controversy in question has to be implemented unscathed, critical voices are sidelined. But in the aftermath, when it doesn’t much matter anymore, they are allowed airtime and what actually went on can be safely revealed. That’s how much freedom we’re allowed.

If the economy wasn’t saved, what was? All the old familiar faces protested that they had no choice but to implement QE. It was a no brainer. “We kept the economy going,” said Alastair Darling (Chancellor in 2008). “People who’d otherwise have lost their jobs didn’t”. Former Bank of England Governor Mervyn King attested that the first tranche of QE prevented a re-run of the Great Depression. Transient Tory PM Theresa May called QE “emergency medicine”.

But if only a small amount of the QE trillions actually escaped into the ‘real economy’ – in the US mortgage lending actually went down after QE was introduced – it can’t have been the actual economy, the economy of people exchanging goods and services, that was saved. The “emergency medicine” has to have been for the conduit through which QE was implemented, the financial system. And only by QE preventing the implosion of the financial system, was the real economy rescued from oblivion.

The real question is therefore how did QE save the financial system? This is something the documentary didn’t try to explain but is actually the crux of the whole story. One means was simply by pumping huge amounts of money into the system. Thus hugely indebted banks and other companies escaped their natural free market fate.

But QE did more than supplying, in Huszar’s words, “the greatest Wall Street bailout of all time”. It also works by ensuring an ultra-low interest rate and by increasing the price and reducing the yield on government bonds, incentivising investors to shift into other assets, such as shares.

In this way, zombie companies – firms that do nothing more than survive by meeting the interest payments on their debt and paying wages – are permitted to live on. And the stock market as a whole receives a purely artificial boost. Under ‘normal’ market conditions, shares prices reflect investors’ expectations that profits will be high or low in the future. But not under QE. Thus a company such as car rental firm Hertz can file for bankruptcy and see its share price soar at the same time.

This is nothing like a free market system. More accurately it should be called a state capitalist system.

You can’t artificially hold down energy prices but you can, apparently, artificially raise share prices. Ex-banker and hedge fund manager Rishi Sunak lectured us last week on the futility of the state trying to hold down the natural, market prices of gas and electricity. But strangely this King Canute style impotence does not apply to share prices – or house prices – which through QE can be synthetically raised for years.

But what happens, you might wonder, when this outside ‘stimulus’ is taken away? When “the shot of adrenalin”– in Alastair Darling’s phrase – has done its work and we can get back to normal.  Will there be a massive market correction towards ‘natural’ share prices, precipitating widespread company bankruptcies? In 2018, US Federal Reserve started selling the bonds it had acquired under QE – a practice called Quantitative Tightening – but it had to abandon the policy after a few months owing to a negative reaction from markets.

In Britain, authorities have reached for the “unconventional” policy of QE on three separate occasions in the last decade. Currently central banks around the world are reducing the amount of QE but not stopping it altogether or reversing it which should happen under a free market system.

The documentary only nibbled at this question. “In a way markets are addicted”, said hedge funder Marshall, “and central banks have become very nervous indeed about removing the drug.”

But if QE has become a near permanent part of the economic landscape what are the consequences? Does its very existence – and the huge amount of money involved – mean that it is always accompanied by the shadow of austerity?

Or can QE be redirected to pay for essential public services like the NHS? If you can save the financial system by injecting huge amounts of money why can’t you do the same for public services millions of people depend on? This is essentially the argument of Modern Monetary Theory – that public services can be fully funded through nothing more elaborate than hitting keys on a computer. The need to amass taxpayer funds to pay for everything is a myth. Austerity is a political choice, not an economic necessity. The only constraint – MMTers argue – is inflation.

However, lack of inflation is the one sure sign that QE didn’t diffuse through the real economy, rather staying within the financial system. The classic explanation of inflation is that it is caused by too much money chasing too few goods. And the simple fact that inflation didn’t rise exponentially is a pretty strong indication that the QE trillions didn’t filter through the financial system. Inflation is rising now unquestionably, probably caused by supply chain disruptions and Covid relief spending. The Bank of England predicts it will hit 7.25% in the spring. But this is not the level of inflation that QE, if the theory is right, should generate.

However, if QE is redirected to pay for public services, all the ingredients for spiralling inflation are there. This is because the money in its entirety will enter the real economy – through spending by consumers and suppliers. And the mere existence of more money, if accompanied by rising prices, does not translate into greater value or purchasing power.

It’s also the case that QE, notwithstanding the public pronouncements, is intended to have financial effects. Through buying bonds from banks and other companies, these institutions are suddenly awash with cash which they will inevitably use to buy assets, such as shares, thus inflating their price. It is also meant to reduce interest rates on debt for vastly overleveraged companies. QE “for the people” cannot, I would suggest, use the same conduits without having similar effects which pointedly don’t benefit the people.

But the establishment’s faith in QE is unshaken. The BBC doc did reveal a certain buyer’s remorse on the part of some. Ex-Bank of England governor Mervyn King admitted, “if you’ve had the biggest monetary policy stimulus the world has ever seen and you still haven’t had adequate economic growth, maybe the answer is not yet more monetary policy stimulus.”

But there no indication that those at the helm would, in retrospect, have done anything different or, indeed, would do anything different today. Even in conditions resembling 1970s’ “stagflation” – negligible economic growth and rising inflation – alternative means of stimulus are not seriously entertained. “Helicopter Money”, for example, the crediting of ordinary people’s bank accounts with cash in the expectation they will spend it, contravenes a core principle of our political settlement, that only the financial system deserves bailing out and everyone else – especially the bottom 30% — must be kept on a firm leash.

The QE/Austerity duopoly thus reigns supreme and is, if anything, more entrenched than ever given that it is longer a leap in the dark but tried and tested policy. The Chancellor of the Exchequer, for example, hails from the finance system and has faithfully imbued its self-interested mores. The personally very wealthy Rishi Sunak used to work for Goldman Sachs and a hedge fund – the precise ‘sector’ of the economy that Paul Marshall says has “made out like bandits” because of QE.

And if that isn’t guarantee enough, Sunak’s opposite number – Shadow Chancellor Rachel Reeves – used to work for the Bank of England and is an expert – mercifully! – on QE.

So despite the enormous pile of evidence that QE just makes the rich richer and has no impact on economic growth, the establishment faith in the practice remains undimmed. The bandits have taken over the asylum.

QE’s impact on inequality is astonishing. A statistic flashed on the screen at the end of the documentary revealed just how well the bandits have done. UK billionaires (individuals who own assets of more than a thousand million pounds) are worth 310% more than in 2010. But the effect is not limited to this blessed island. According to rich peoples’ magazine Forbes, in 2021 there were 2,755 billionaires in the world, an increase of 660 from just a year earlier. “Altogether these billionaires are worth $13.1 trillion, up from $8 trillion in 2020,” says Forbes. In 2006 – just two years before the QE era began in Euro-America – there were less than 1,000 billionaires globally with a collective net worth of under $3 trillion. What explains the huge increase in a period of insipid economic growth?

Objecting to this is not just a case of the “politics of envy” as it used to be derided. Beside the fact that these individuals do not deserve their loot under any objective free market criteria, such mammoth inequality fundamentally distorts society. As I have argued in a previous post, these billions are not all spent on buying luxury yachts or even blasting into space. They are also used as capital – money invested to make more money. In areas such as housing, privatisation, fossil fuel extraction, the media and democracy the invested funds of the ultra-rich are perverting society in ways that are directly at odds with the interests and desires of the vast majority. And through QE we have, through government action, turbocharged this process.

But then that is not all that surprising as the ultra-rich basically own the government as well.

Debt: The Last 30 Years

We are marginally less constipated than before. Ideologically speaking. Thanks in large part to Jeremy Corbyn British politics has begun to move on from the mendacious obsession with public debt being the cause of the last financial crisis (and the harbinger of future ones).

Political conservation has started to appreciate the seriousness of enormous levels of private debt, which was always the elephant in the room. The Bank of England has warned of a ‘spiral of complacency’ about growing household debt, while the IMF has cautioned that the ‘rapid growth in household debt – especially mortgages – can be dangerous’. Anthropologist David Graeber says ‘the household sector is a rolling catastrophe’. Around 17 million Britons have less than £100 in savings.  And with the BoE making noises about raising interest rates from rock bottom levels, there are worries that some mortgage-holders could default, precipitating a US-style sub-prime crisis.

The problem is that all attention is directed at one kind of private debt – personal debt. And while its seriousness should not be minimised there are other sorts of private debt that merit just as much, if not more, concern:

Personal debt is not the most extreme form of private debt

Private debt can be divided into three types – financial sector debt (i.e. banks & insurance companies), corporate debt and personal or household debt. All three have grown exponentially since the start of the 1990s. According to economist Michael Roberts, what he terms ‘global liquidity’, a combination of banks loans, securitized debt and derivatives, mushroomed from 150% of world GDP in 1990 to 350% in 2011. And while in some countries, colossal financial sector debt has declined to a degree following the financial crisis, and household debt levels fell before rising once more, corporate debt, nourished by near zero interest rates, has just snowballed over the last nine years.

According to figures released by management consultants McKinsey in 2015, all forms of private debt have grown since 2007 but corporate debt has increased by double the rate of both household and financial debt, which nonetheless rose but in a more subdued manner than before the crisis (see the graphic in this article). Government debt has also exploded as financial debt was transferred to state coffers. “Nonfinancial corporate debt remains the largest component of overall in the advanced capitalist economies at 113% of GDP,” says Roberts, “compared to 104% for government debt and 90% for household debt.”

The forms that corporate debt takes vary but one of the most common is for companies to use debt to buy back their own shares. This practice, which was illegal in the United States before 1982, increases the firm’s share price in a totally artificial manner, giving the appearance of financial health and success in the marketplace. Frequently, it also personally benefits the corporate executives who authorise it as they are paid partly in stock options. In fact the corporate sector has been the main buyer of US equities since the market meltdown of 2008, engaging in what has been described as ‘the greatest debt-funded buyback spree in history’. It was estimated that in 2017 the largest US companies would spend a record $780 billion on share buy backs, though, in reality, the forecast bonanza has apparently hit a snag.

Or possibly corporate debt takes the form of shareholder loans, the practice by which one company deliberately loads another company that they own (they are the main shareholders) with huge amounts of debt which the captive company is then obliged to pay back at high rates of interest; 15 or 20% for example. The Financial Times recently highlighted the case of Arqiva which owns 9/10ths of the UK’s terrestrial TV transmission networks and, in the three years to June 2016, paid around £750 million in interest to its controlling shareholders, payments financed by borrowing.  It is now £3 billion in debt. And that’s just one company.

Household debt did not cause the 2007-8 Global Financial Crisis

What household debt did was light the touch-paper. The nationwide implosion of the housing market in America after interest rates were raised signalled the demise of all those mortgage backed securities and collateralized debt obligations but the reason it proved so devastating for the US economy and spread the crisis around the world was because of the fatal combination of household debt with gargantuan financial sector and corporate debt. The Global Financial Crisis was sparked in August 2007 (‘the day the world changed’) when French bank BNP Paribas froze its funds because of its exposure to the mortgage backed securities of the US sub-prime market. The problem wasn’t defaulting French mortgage-holders but the effects were being felt by a French bank. BNP was one of three major French banks who were collectively overleveraged to the tune of 237% of French GDP. That level of indebtedness caused the crisis to spread to Europe as hugely indebted, and now effectively insolvent, European banks called in the loans they had made to southern European governments.

Nobody can say with any assurance what the trigger will be for the next financial crisis. It might be heavily indebted US college graduates or UK credit card borrowers or Australian consumers or Dutch mortgage holders (a country which has the most indebted households in the euro area).

But it’s equally possible that the fuse will be lit from another sector of the economy entirely – massively overleveraged corporations being unable to repay their creditors when interest rates rise, for instance. In that case, households will simply be spectators to the unfolding events.

All the focus is on personal debt because it represents a morality play

In Debt: The First 5,000 Years David Graeber points out that in Sanskrit, Aramaic and Hebrew ‘debt’, ‘guilt’ and ‘sin’ are all the same word. In modern German, the word for ‘debt’ – schuld – also means guilt. “If history shows anything,” Graeber writes, “it is that there’s no better way to justify relations founded on violence, to make such relations seem moral, than by reframing them in the language of debt – above all because it immediately makes it seem that it’s the victim who’s doing something wrong.”

The existence of enormous level of personal debt in advanced capitalist countries is a sure sign that the individual freedom these societies claim to uphold is skin deep. In reality, they are founded relations of coercion and control. To be in debt is to have someone’s boot on your neck. In the UK, high rates of personal debt are intimately related to the fact that real wages are 10 per cent lower than a decade ago. Rising personal debt is also strongly correlated to mental health problems like depression and anxiety.

From another perspective, personal debt is the symbol of our fatal addiction to consumerism, the consequence of an all-embracing need to maintain a modern lifestyle, decorated with the latest products, no matter what the cost to ourselves or the environment. Either way, personal debt unmistakably says something about the current state of society – what drives it and who is in control.

Corporate and financial sector debt, by contrast, is not only opaque, it is frightening neutral. Debt has simply become the way of doing business over the last 30 years. Debtors are frequently also creditors and companies may simultaneously indebt themselves and hoard cash. Indeed, increasing ‘leverage’ (to use the technical term) or loading debt onto captive companies (as in the Arqiva case) is often the primary means by which profits are made. No sense of shame or ‘doing something wrong’ attaches to it.

The question that should arise is why the corporate sector – financial and otherwise – has become so addicted to debt? Why is old-fashioned investment in new products or new technologies comparatively shunned?

It is possible to reduce personal debt but corporate debt is far more of an intractable problem

Theoretically it is possible to cut personal debt to more manageable and less dangerous levels.  Ending austerity, strengthening trade unions, instituting rent controls and directing efforts to raising the level of real wages should see the rates of payday loan and credit card debt diminish. I say theoretically because, interestingly, some of the highest quantities of personal debt, as a proportion of GDP, are in Scandinavian countries – nations that have impressive rates of trade union membership, collective bargaining and high personal incomes. However, those in debt in Nordic countries tend to be higher earners. In the US and UK, by contrast, personal debt often afflicts people much lower down the income scale – people who are much more likely to default given a slight change in the economic winds.

Corporate debt is a different matter entirely. The massive government bail outs of 2008 only succeeded in transferring debt from the financial sector to the state and, even then, only denting marginally the indebtedness of the banks. Corporations, whose debt had risen markedly over the previous twenty years, merely took advantage of the lower interest rate environment, to become even more indebted.

The writer and broadcaster Paul Mason says governments have to do something ‘clear and progressive about debts’. He advocates a policy of ‘financial repression’ – that is stimulating inflation and holding interest rates below the rate of inflation for 10 or 15 years as a way of writing off debt. But we can see the problems that a mild rise in the rate of inflation to the historically low level of 3% is currently causing people in the UK, with wages unable to catch up. Deliberately stoking inflation for a decade or more would surely precipitate the household debt defaults that so many people are warning about – inflation would erode the total amount of people’s debt but interest payments would still need to be met as real incomes plummeted. And if interest rates are below inflation – as they are now – the incentive for corporations to take on more debt is still there.

It is difficult to imagine how this system can gradually and progressively resolve its problems without provoking the economic collapse that everyone is so desperate to avoid.

Addendum

It's probably worth re-emphasising that when I speak about corporate debt, I'm not referring to the borrowing a company naturally needs to do to keep going and expand its operations. See - https://www.touchfinancial.co.uk/knowledge-centre/blog/4-reasons-why-successful-businesses-borrow-money

What's happening now is massive borrowing to either appear successful (share buy backs) or invest in debt to make more money. They're nothing to do with how capitalism is meant to function in the textbooks.


 

EU Ref: What was it good for?

 This piece was originally published by the online magazine New Compass

As most of the world knows, the UK had a referendum on EU membership in June. What the rest of the world probably doesn’t know is how divisive the referendum and its aftermath were. It exposed deep divisions around class and race, revealed that half the country knows nothing about the life experiences of the other half, and holds them in contempt anyway and that a sizeable section of the population would like to repeat the exercise until they get the outcome they want. And towards the end of the campaign, an MP was assassinated by a Fascist.

But despite fomenting such profound fissures in British society, the referendum result (Leave won by 52% to 48%) has resolved nothing. Prominent Leave campaigners seem disappointed they won, the Conservative government is nowhere near triggering Article 50 (which begins the two-year process of Brexit) and calls for a second referendum regularly emanate from businessmen and politicians while others hold that Parliament should simply refuse to implement the result. The referendum has, at best, instituted a shaky truce which won’t last long.

The EU referendum was, in short, a terrible way to arrive at an important decision. It failed miserably to apply three vital principles of effective decision-making. The people making the decision did not have adequate information, were denied the chance for deliberation and critical reflection and lacked the power to implement the decision they arrived at.

The referendum was presented as the epitome of democracy. What could be more democratic than asking the people what they think, after all? But other forms of democracy exist that grant sovereignty to ordinary people while avoiding the ephemeral thrill of choosing which section of the elite you like the best. Experiments, such as citizen juries, participatory budgeting, random selection and assembly democracy devolve genuine power and result in more trusted and better judgements:

Deliberation and critical reflection

The EU referendum was a thoroughly mediated experience which relegated the public to the role of passive onlooker. The jousting of the protagonists was presented daily on TV screens and through the print and online media. For most of the campaign, the mainstream media presented the referendum as largely an internal Conservative party contest and revelled in farcical spectacles such as a confrontation of ‘In’ and ‘Out’ flotillas on the River Thames.

Other forms of democracy, however, rest on enabling conversation and deliberation to happen. Participatory Budgeting, for example, involves the election of recallable delegates by assemblies to determine how all or most of a municipality’s budget is spent. According to one academic, “the key ingredient is deliberation, the quality of the exchange of ideas.” Citizen juries spend days deliberating issues such as obesity, transport, electoral systems or work and as a result their findings are trusted by the public.

Thinkers such as Erich Fromm have pointed to the way the jury system, a democratic way of arriving at life-altering decisions, arrives at generally objective and reliable decisions precisely because it involves prolonged deliberation. The participants know their decision will have an immediate and lasting effect and treat it seriously as a result. The EU referendum, by contrast, resembled a two month long edition of ‘Judge Judy’.

Representation

One Leave campaigner, the writer Dreda Say Mitchell, described the political world which she temporarily gained entry to, as “largely one big boys’ club. And it’s for a very specific type of boy, at that.”

Referenda, like its kin Parliamentary government, merely amplifies the representation of people who have already carved out a media profile. The most vocal protagonists of the EU referendum – David Cameron, Boris Johnson, Nigel Farage and Michael Gove – all male and privately educated, illustrate the unrepresentativeness of representative government. The referendum made it plain to see how the upper middle classes dominate the terms of the debate in British politics.

By contrast, there is a growing use around the world of an ancient principle of democratic government – that of random selection. Aristotle thought democracy was characterised by selection by lot, so that citizens could ‘rule and be ruled in turn’, while elections were a sure sign of oligarchy. The modern form of selection by lot involves the creation of a mini-publics by randomly selecting willing participants with the aim of achieving demographic balance and the representation of all social groups. The new Icelandic Constitution of 2010 and the electoral system in British Colombia were both partly determined by randomly selected groups of citizens.

Aside from its inclusiveness, random selection or sortition has two other important effects. It detaches political influence from personal ambition as participants are not elected and only wield influence for a finite period. And it brings together people with divergent views and backgrounds, compelling them to take into account perspectives other than their own and those of people like them. In these senses, random selection represents the antithesis of the UK’s referendum experience.

Adequate information

The EU referendum excelled in generating a thick fog of misinformation. The Leave side peddled the fiction that Brexit would result in £350 billion in extra funds for the NHS every week and made immigration the centrepiece of their campaign, masking the fact they weren’t in fact promising to reduce immigration. And, aside from aping Nazi propaganda, the Leave side’s posters deliberately conflated the migrant crisis with EU membership.

The Remain side, meanwhile, predicted economic Armageddon and warned a ‘punishment budget’ comprising spending cuts and tax rises would inexorably follow Brexit. Allegedly neutral economic experts from the Bank of England, OECD and IMF were cited to underline the recklessness of voting Leave and its calamitous effect on GDP. But these experts were anything but neutral. The OECD had advised Britain to ‘press on with austerity’ on the eve of the 2015 General Election, while the Bank of England ensured making rich people richer and inflating share prices were the crucial elements of the way the state responded to economic collapse in 2008.

Both sides in the campaign also indulged in the daily fantasy that the UK was still a manufacturing nation and that the result would either ruin or invigorate the country’s trade. Politicians made endless visits, garbed in high vis vests and hard hats, to whatever manufacturing firms they could locate. In truth, the UK has undergone rampant deindustrialisation over the last 30 years and the country’s biggest export is financial services.

Other forms of democratic decision-making, however, are predicated upon understanding, not concealing, the issues at hand. A Citizen’s Jury established in Mali in January 2006 heard evidence for and against the introduction of the GM technology before concluding that GM crops should not be grown in the country. In the US state of Oregon a randomly selected panel of citizens convenes to scrutinise ‘ballot initiatives’, referendum proposals which are then put to the state’s voters at election time. They take evidence from advocates and policy experts before compiling a ‘Citizens’ Statement’ about the proposals, essentially a piece of distilled information which can be used by voters to make their choice.

Both these democratic techniques embody the proper attitude towards experts. Experts are never neutral and should not be treated as such. There is disagreement within every field of expertise and practitioners, whatever their claim to superior knowledge, need to be interrogated by citizens and their viewpoints translated into understandable language. Every branch of specialised authority, especially finance and economics, relies on establishing an air of mystery about its workings and judgements. The task of a genuine democracy is to dispel this.

Taking back control

A natural and justified objection to the examples of alternative democracy presented here is that they are mere adjuncts to the existing system and have no real power. They can advise but little else. So I think we need to establish ways that ‘alt democracy’ can transform society, not just make it appear more consensual. Appropriating the language of the Leave campaign in Britain, here are two ways we can ‘take back control’.

The first is through the public control of information. Beyond the racism and xenophobia, the UK’s referendum result indicated there was something very wrong with status quo despite the official narrative of growing GDP and record levels of employment. But this was an intuitive sense of anxiety and directed at the wrong target.

We need to shine an unflinching light on our economic system and dominant institutions. The writer, Dan Hind, advocates a system of ‘public commissioning’ with the expressed intention of taking the power of forming opinion and social depiction out of the hands of the mainstream media and giving it to the public. Through an annual budget of £80m, thousands of journalists and researchers would be employed to undertake long-term research. The public would vote for the subjects it wanted to see investigated and each round of voting would be preceded by open meetings. “National institutions, the EU and institutions like the International Monetary Fund, the World Bank, and the Bank of International Settlements would all become available to sustained scrutiny,” says Hind. This approach was piloted in Croatia in 2013.

The second way is through the public establishing an influence over private investment and government stimulus. Illustrating how little has changed over the last eight years, the Bank of England responded to the Brexit vote by spending £170 billion on shoring up the wealth of rich people. It revived its Quantitative Easing (QE) programme, bought the debt of companies it liked, and re-embarked on a £100m programme to encourage banks to lend out their money. QE, which buys debt securities from pension funds, insurance companies and ‘high net worth’ individuals, has succeeded in pushing up the prices of assets such as shares and property. But for those without assets it is meaningless.

A real way to ‘to take back control’ or in fact to establish it in the first place, would be for the public to decide how economic stimulus is spent. Through country-wide assemblies the public could determine how many new council homes are built, develop transport projects, found co-operatives or establish medical research laboratories.

If this democratic method of assigning state stimulus money was established, we could become more ambitious. The American mathematician and author of After Capitalism, David Schweickart, has proposed ‘social control of investment’:  a tax on the capital assets of all enterprises to be dispersed throughout the country on a per person basis, enabling assemblies to decide how a proportion of investment is spent. Apart from establishing a breach in the divine right of central and private banks and corporations to decide where and how investment takes place, such a new democratic initiative would impede the inexorable growth of mega-cities, such as London. Mega-cities are ecological nightmares, sucking in people and capital, while starving other regions of investment. If GDP is calculated per capita, London and the South East are the only regions of the UK to have recovered at all from the crash of 2008. This is one form of inequality, highlighted by the referendum, which needs urgent rectification.

But instead of these democratic alternatives, the UK has indulged in the illusory freedom of plebiscite democracy, which assiduously stokes dissatisfaction while failing to deliver anything more than the chimera of empowerment. Real democracy looks very different.