Theresa May’s speech today, and the whole tenor of the Conservative Party conference, marks a profound shift in the relationship between politics and economics in the UK. Britain’s exit from the EU has been the trigger, but make no mistake – this is part of a global shift that no country will be spared from.
Let’s start with what we are used to. We have a global economy. The major project of international capital is to liberalise markets, to privatise and to internationalise trade by breaking down the regulatory power of nation states. This process is twinned with a political strategy which we can describe as technocratic. Political parties jostle over which party is best at protecting citizens from the ramifications of unrestricted globalisation; changing the economy is out of the question.
But in the post-08 crash world the globalisation consensus is beginning to crack under the strain. Austerity and quantitative easing were supposed to provide the stability financial elites needed for another round of accumulation. It’s not happened. World financial flows are down 60% compared on their pre-crash peak. Rather than boosting bank balance sheets for real investment, the rich have hoarded the cash to re-inflate asset prices.
The historic collapse in interest rates is a sign that capitalism has stalled. Central bankers are now using monetary policy to competitively devalue the national currency against rival states. That policy is creating a liquidity crisis for commercial banks, which, according to influential financial sector analyst Nick O’Connor of MoneyWeek, is “the start of a banking civil war”.
O’Connor writes: “To be clear about what this means: central banks and commercial banks are fighting on opposite sides now. The central banks will do anything to save the system, even sacrifice their mates down the road. And through a combination of monetary and regulatory policy, that’s exactly what they’re doing.”
O’Connor argues that could lead to the nationalisation of retail functions in the banking sector to split them off from the “casino” elements of finance. Banks like Deutsche Bank, which like RBS and others tried to become global giants when neoliberalism was at its peak, are now looking at possible exposures to failing global capitalism of up to $60 trillion.
What all this means is it looks like the hey-day of globalisation is over – and this is central to the new strategies of the Right. Witness the Prime Minister today, in a speech that was the polar opposite of everything that came out of George Osborne and David Cameron’s mouth since 2008:
“It’s about doing what every other major and global economy in the world does. Not just about sitting back and seeing what happens – but in putting in place a plan and getting on with the job.
“So we will identify sectors of the economy – financial services, yes, but life sciences, tech, aerospace, car manufacturing, the creative industries, and many others – that are of strategic importance to our economy, and do everything we can to encourage, develop and support them.
“And we will identify the places that have the potential to contribute to economic growth and become the homes to millions of new jobs.”
As Iain MacWhirter said on Twitter: “Who’d have thought it would be Theresa May who delivered the last rights to neoliberalism.”
To be sure, some of May’s words are rhetorical flourish, but this is very real – in the post-Brexit climate it is no longer feasible for British state actors to maintain a fetish for failing ‘free markets’: they need to act, and they need to do it big. That means putting the interests of The City above all else, the Tories raison d’être since Thatcher, is no longer tenable.
This new economic protectionism is still taking form, but we can see signs of it in Donald Trump’s agenda, who has successfully painted Hilary Clinton as an unrepentant ‘globalist’ that was fully signed up to trade deals which exposed rust belt states to deindustrialisation. The new anglo-American Right are dispensing with the baggage of free-market dogma in favour of a dogged nationalist populism.
And of course this nationalism is deeply chauvinistic in character. When the Tories say ‘an economy that works for everyone’, what the messaging is really intended to say is ‘an economy for the indigenous working class’. Racism and xenophobia is now transparent – it’s now mainstream to say that immigrants as nothing more than commodities to plug skills gaps for a limited space of time before being dispensed with so British-born workers can take their place. If a ‘foreigner’ does take a job that Brits could be doing, ‘name and shame’ the employers to whip up a backlash against owners who don’t make employment decisions based on birth-right. This is a new level of racism that we’ve not seen from any UK Government in our lifetime.
But it’s a mistake to see this as simply lashing out. It is a perfectly logical part of the Right’s new populism both ideologically and electorally: protect the indigenous ‘national interest’ at all and any cost. State intervention? Needs must. Dehumanisation of ‘foreigners’? Why not. It’s Britain against the world.
The potential voter appeal of this agenda should not be underestimated. The left’s failure has been to allow immigration to become the major political proxy for discontent about globalisation. For many working class people, especially south of the border, immigration is now a lightening rod for anger over pay, housing, jobs and more. State interventionism combined with populist rhetoric on immigration could be a potent mix.
None of this should be assumed to say the ascendency of the new populist Right is unbeatable. One gets the sense that Theresa May is not even that sure of her new ideological footing. To make this agenda anymore than just rhetoric requires hard Brexit and conflicting with hard vested interests, including potentially the City. She could quickly become hated among Britain’s ruling elite, still rueful over the Remain vote. She may also struggle to keep her party together. Nothing is certain in this new line of march.
The Institute of Directors had this to say on Theresa May’s speech: “Plans to ‘name and shame’ companies who employ foreign workers, aside from adding to bureaucracy, send precisely the wrong message. The prime minister should instead listen to her own advice and remember that, in Britain, it doesn’t matter where you were born.
“Make no mistake, Britain is at its best when it is open and offering a home to the world’s brightest and best who want to study and build a better life for themselves, while contributing to the British economy.”
This reflects an emerging split between British capital and the party of British capital – the result of a political crisis the Tories didn’t plan for and a global economic crisis that is shattering the neoliberal centre. They sound confident but are in uncharted territory and do not have a clear route to stabilising Britain domestically, geopolitically or economically that can bring all of their key interest groups with them.
That means this moment, which feels like being on the edge of something very nasty, is also a massive opportunity for the left if it can adapt to the new context. We are the ones that for years have been arguing for the need for major state intervention in the economy and the dangers of the neoliberal doctrine. If, when the whole edifice starts to unravel, we are found wanting it will be a historic dereliction of responsibility.
Walden Bello, leftist politician in the Philippines and author of several books on globalisation, describes ‘deglobalisation’ as “not a synonym for withdrawing from the world economy. It means a process of restructuring the world economic and political system so that the latter builds the capacity of local and national economies instead of degrading it. Deglobalisation means the transformation of a global economy from one integrated around the needs of transnational corporations to one integrated around the needs of peoples, nations, and communities.”
He advocates 14 key principles of deglobalisation, which can be read here. This must be the basis of a left challenge to right-wing populism – the deglobalisation of capital and the internationalisation of solidarity between people. This includes classical Keynesian big state investment projects, like John McDonnell’s £500bn investment plan, but it must be a lot more than that, as Corbyn advisor and economist James Meadway has argued:
“Keynesianism, as a policy, is not enough. We are not just dealing with bad ideas, but a bad structure. Any programme seeking to end austerity in the UK has to push beyond the point of demand management or some macroeconomic tinkering, and seek to transform the finance-led economy we all now inhabit. It will not be enough just pull the levers in a different way. The machine needs to be rebuilt.”
The ownership structure of the UK economy needs to be fundamentally challenged and power needs to be dispersed more evenly throughout society: this isn’t just necessary to tackle deep seated economic issues like poverty and inequality, it is necessary to build a new base for left-wing politics in the modern world. Globalisation has fragmented the left’s electoral base – deglobalisation must rebuild it.
If we fail to do this – the left, collectively and internationally, in the broadest possible definition of the word – if we fail to understand the scale of the challenge we face and the radicalism that will be needed to match it, then the new and insurgent populist Right will sweep all before us, and the consequences for civilisation will be devastating.