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.

The Horror, the Horror .... the Silence. Conservatives and unconditional income

 

The 20^th century Polish economist Michał Kalecki noted an apparently perplexing trait of business leaders and their bought “experts”. One would expect such people to oppose public investment much more vehemently than subsidizing mass consumption because the former contains the possibility of competition from state enterprises. But such expectations are misplaced. “Indeed”, said Kalecki “subsidizing mass consumption is much more violently opposed by these experts than public investment. For here a moral principle of the highest importance is at stake. The fundamentals of capitalist ethics require that ‘you shall earn your bread in sweat’ – unless you happen to have private means”.

Kalecki was writing in the 1940s with an eye on the previous decade. But his observations are particularly apposite to our own era.

Boris Johnson revealed the lingering mind-set of conservatism when he justified ending the £20 uplift to Universal Credit by citing his “strong preference” that people see their wages rise “though their efforts” rather than by welfare.

The same mentality was at work in the pervasive uneasiness around the now defunct furlough scheme which was only introduced under pressure from lame duck Labour leader Jeremy Corbyn and the unions. It can still be seen in the ‘get back to the office’ propaganda that conservatives and business executives – supported by the media – routinely dish out.

The anxiety – verging on horror – that these schemes provoke in conservatives stems from the fact that, in Kalecki’s words, “a moral principle of the highest importance is at stake”. That principle is the maintenance of work discipline. The sanctions regime at the heart of Universal Credit exemplifies the edict of conservatives – big C conservatives and those who go by other nomenclature – that no money be given to ordinary people without stringent conditions.  “Please keep on cracking the whip,” exhorted Good Morning Britain host Richard Madeley earlier this week in true conservative style.

But note Kalecki’s caveat – “unless you happen to have private means”. In which case, all qualms instantly vanish. In fact, regarding the lack of actual work undertaken by the ultra-rich, a veil of silence reigns.

So what do you do?

The existence of huge swathes of people who receive large amounts of money without doing anything to earn it is capitalism’s dirty little secret. “What do capitalists actually do?” asks mathematician David Schweickart in his 2002 book After Capitalism. The answer is very little. They have an entirely passive role. “The capitalist” he says “engages in nothing that can be reasonably regarded as ‘productive activity’. Workers produce and distribute goods and services. Salaried managers coordinate production. Entrepreneurs and other creative personnel develop new products and techniques of production. The capitalist qua capitalist does none of these things.” In sum:

In a capitalist society, enormous sums are paid to people who do not engage in any entrepreneurial activity or take on any significant risk with their capital. Trillions flows to shareholders who make an entirely passive contribution to production.

Some have tried to quantify the enormity of these “enormous sums”. According to economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman, around 30% of all income produced in the United States is paid out as “capital income”. These payments, in the form of interest, rents and share dividends, are “entirely passive”. They comprise “income divorced from work”.

But conservatives are, to borrow a phrase from Peter Mandelson, “intensely relaxed” about this form of unconditional basic income. In fact, they’d rather not talk about it if you don’t mind.

Capitalism, but not as we know it

However, this was the income distribution under capitalism. The past tense is not a typo. Because under the state capitalist system we’ve inhabited since the financial crisis – one vastly ramped up by the Covid pandemic – the passive income of the ultra-rich has been multiplied many times over by the actions of the state.

This process goes by the name of Quantitative Easing (QE) – so-called because it increases the quantity of money in, putatively the economy, but in reality swishing around the financial system.

QE is an extension of practices undertaken by central banks before the financial crisis over a decade ago – known as Open Market Operations – but one that vastly changes their nature. Central banks used to buy assets from commercial banks in order to ensure they had cash in order to settle their day to day transactions with each other, but these purchases were only very short-term. The assets would usually be sold back after a week.

However, under QE the central banks uses the money only it can create to buy assets – government bonds, corporate bonds or mortgage-backed securities usually – outright. Not temporarily. That why, under QE, the balance sheets of central banks have grown exponentially.

As a result of QE the bank or corporation that sells the assets suddenly has an enormous amount of cash to spend. The volume of financing under QE is astronomical, amounting to $834 million an hour by central banks worldwide. By buying the assets, the central bank causes their prices to rise and their yield to fall. The sellers – the banks and corporations – are therefore ‘incentivised’ to put their new money elsewhere, for example into shares or property or acquisitions. Thus, synthetic ‘asset booms’ are generated and the prices of assets rise. In theory, QE is meant to generate a ‘wealth effect’ in the ‘real economy’ by stimulating investment and lowering the borrowing costs for corporations. But there is no evidence this actually happens.

What there is evidence of is an immense, artificially induced, increase in the wealth of the ultra-rich. The combined wealth of US billionaires, for example, has risen by 70 per cent (!!)* since the beginning of the pandemic, a stretch of a little more than 18 months. That is, during a period of severe economic contraction – not to mention prolonged suffering endured by many people – billionaire wealth has leapt from just under $3 trillion to over $5 trillion. In addition, the number of billionaires in the US has risen from 614 in March 2020 to 745. According to Ruchir Sharma of Morgan Stanley Investment Management (and he should know) “the fundamental driver … of the billionaire boom” is “easy money [QE and ultra-low interest rates] pouring out of central banks.” For a sense of perspective here, a billion is a thousand million.

That’s capitalism folks. Except of course it isn’t just capitalism. Pure capitalism, inequality generating machine though it undoubtedly is, does not increase billionaire wealth by 70% in a year and a half all by itself. In essence, the passive wealth accruing nature of capitalism – the ‘normal’ workings of the market – has melded with the passive wealth accruing intervention of central banks – the abnormal workings of the state capitalist regime. But about both unconditional fountains of income for the rich conservatives are, almost universally, mute.

Drop the Pilot

However, the deafness is not limited to conservatives. Leftists also seem unable to grasp the nature of QE. Often the only problem they have with the “easy money” regime is that they think it should be redirected. The authorities, it is said, seem peculiarly oblivious to the unsuccessful nature of QE: that – despite the vast sums involved – it doesn’t actually seem to stimulate the economy.

As an alternative, many advocate cutting out the middleman and instituting so-called “helicopter money”. This involves the metaphorical ‘dropping’ (the term was coined by right-wing economist Milton Friedman in 1969) of large amounts of free money into ordinary citizens’ bank accounts. The theory is that this will actually stimulate the economy as poor (or not rich) people, unlike “high net worth” individuals, are liable to spend the money rather than save it. And it can achieve this at a fraction of the cost of QE.

The problem is that helicopter money flagrantly transgresses Kalecki’s “moral principle of the highest importance”. It doles out unconditional income to the multitude. Therefore, whatever its economic rationality, it won’t be allowed to happen. QE only appears unsuccessful. It wasn’t ever seriously intended to stimulate the economy. QE has served – and continues to serve – its real purpose. It preserves the existence of large corporations and banks and bolsters the wealth of the mega-wealthy.

For conservatives, that is justification enough. As for the rest of us the whip needs to keep being cracked, as it has been for centuries past.

*Elon Musk, CEO of electric vehicle manufacturer Tesla and potential coloniser of Mars, tops the list. He has seen his wealth grow from a mere $24.6 billion in March 2020 to $209.3 billion in October 2021, a rise of 750%. Indeed, he subsequently saw his fortune increase by another $36.2 billion in one day in October. You could argue that this latest alignment of cherries has something to do with the ‘natural workings’ of capitalism. Rental car firm Hertz placed an order for 100,000 Teslas. But even here the fingerprints of the QE regime are all over the deal. Last year Hertz declared bankruptcy but under the strange conditions of QE infinity its share price surged and it issued $1 billion worth of new shares. If the ‘laws’ of capitalism existed anymore, Hertz wouldn’t be around to wave a magic wand over Elon Musk’s wealth.

Johnson and Cameron: A Tale of Two Extremes

We are, we are told, suffering under the yoke of one of the most right-wing governments Britain has ever had. Before coming to power, Boris Johnson chewed over tactics with white supremacist Steve Bannon. Upon achieving it, he has suspended Parliament, appointed a Home Secretary who has registered her support for capital punishment and wants criminals to “literally feel terror” and dog-whistled to racists, the far right and empire nostalgists that he is on their side.

Indeed, the person who first came up with the idea of proroguing Parliament is a former Conservative special adviser, now Brexit party supporter, who convinced himself that ex-PM David Cameron was leading a “homesexualist movement” and infecting Britain with ‘cultural Marxism’ lifted straight out of the Frankfurt School.

So it’s plausible – for those of us who inhabit Planet Earth – to believe that Britain is now led by a hard right nationalist party that has brutally severed its ties (by expelling 22 MPs for example) with the saner, moderate, liberal conservatism that preceded it. Plausible, indeed believed in by many people, but not correct.

In fact, we are confronted by two extremes – undoubtedly different in certain ways – but united by a dogmatic, ideological conviction that the damage they inflict is justified and necessary.

It’s hard for people not of the Conservative persuasion – and not under the age of 60 – to understand how David Cameron upset traditional conservatives. Commitments to equal marriage, to disowning Section 28 and to prioritising more female and ethnic minority candidates, which appeared to successfully‘detoxify’ the Conservative brand, were anathema to many Conservative members who think wearing ties should be de rigueur and that Christianity should lie at the heart of public policy. Such people are economically Thatcherite but culturally traditionalist, which might appear contradictory, although not to them. They are also invariably anti-EU. Cameron was tolerated while he won elections and referendums, which all came to juddering halt in June 2016.

But all the while, and despite protestations from esteemed academics that he was a one-nation Conservative at heart, Cameron deepened Thatcherism. Austerity took public sector cuts to places Thatcher could only dream about, privatisation was driven as far as it could go and the NHS was starved of funding like never before while being opened up to the private sector. Anti-trade union laws were extended, while protection against unfair dismissal was diluted. And for the poor and disabled, Cameroonian Conservatism made the Thatcher era look positively compassionate by comparison. The Con/Lib Dem coalition government – followed by a year of ‘pure’ brand Cameron – left a trail of ruined lives, deaths, suicides, destitution, homelessness even self-immolation.

This was, by any fair assessment, an extreme and intensely ideological government but its leading lights presented themselves as centrists, modernisers and “liberal internationalists”. That they were taken seriously by large swathes of the media can be explained in part by the fact that their amplifiers had no personal experience of the depredations the Tories and Lib Dems inflicted. Those that did – though they number in the millions – were largely silent in public debate. Hence, Brexit, which was rooted in deprived areas hardest hit by austerity, appeared to many commentators to come out of the wild blue.

This political mind-set has been described, by Tariq Ali for example, as emanating from the ‘extreme or far centre’. Its manifestation certainly wasn’t limited to Britain. The EU imposed savage austerity on countries such as Ireland, Portugal, Greece and Italy and in order to get its way was quite prepared to overthrow governments and override the will of national Parliaments – in fact proroguing the House of Commons seems almost quaint by comparison. But neither this, nor the pursuing of secretive trade deals with the United States, has dented its reputation as a bastion of enlightened liberalism surrounded by populist sharks.

In Britain, the transition from David Cameron to Boris Johnson – in which the failures of the first flow inexorably into the predominance of the second – reveals several things. One is that the liberal conservatism Johnson is determined to expunge from the Tory party is very selective in the principles it is willing to stand up for. It is pro-EU and against overt bigotry. But, as shown by the voting records of Tory dissidents such as Dominic Grieve and Anna Soubry, strangely unmoved by the social callousness of the Cameron-Lib Dem government. Hence, contemporary liberal conservatism should not be mistaken for a rebirth of the Tory Wets of the 1980s. They – Ian Gilmour for example – would have been outraged, primarily, by Cameron’s inherently Thatcherite approach to social and economic policy and the human damage it inflicted. Unfortunately, they no longer exist.

Another is the strange sight of strict austerians reneging on their previous iron commitments to reducing public spending and controlling the deficit, obsessions which have defined politics for the past eight years. The chancellor, Sajid Javid, noted The Economist, “is a fan of Ayn Rand and hangs pictures of Margaret Thatcher his office. Yet on Mr Johnson’s instructions he announced an extra £13.8bn in election-friendly giveaways, paid for with extra borrowing.”

However, as highlighted by this blog last year, such flexibility is simply what happens when the Right realises that patience with austerity is at breaking point and the consequences of persevering with it are worse than performing an intellectual volte-face.

Undoubtedly Britain now has a ‘hard Right’ government under Boris Johnson. But it has already experienced one for the past eight years, although one whose sheen was that of modernising conservatism. Now some of the elite are getting a taste of the ruthlessness that Cameron routinely meted out to ordinary citizens. But don’t worry too much – they won’t starve.