The UK’s Brezhnev years and the failure of the free market utopia

Late Soviet Britain: Why Materialist Utopias Fail, by Abby Innes, Cambridge University Press, £26.99.

Reviewed by Lesley McDonald 

One comment about the recent Dutch elections and the rightward march across Europe jumped out at me. Alexander Clarkson from the LSE pointed out that the balance between left and right hasn’t changed, but the balance between constitutional right and the far right has.

It is perhaps not a coincidence that he supplied his LSE colleague Abby Innes with the title of her fine new book: Late Soviet Britain. The constitutionalists have fed themselves to the feral right. And as Jean Marie Le Pen said “Les Français préféreront toujours l’original à la copie“.

The UK right is a poster-boy for this, contra British exceptionalism – The Tories, gutted of constitutionalists, boast of trashing the rule of law. Abby Innes supplies both clues as to why and tools for fighting back.

But first, a spirited defence of Margaret Thatcher. 100 years ago a planned economy seemed obviously better. Firms were drops of order in a sea of market chaos. Surely order everywhere, under the hand of the workers, would be better?

It turned out that market ‘chaos’ was the apex predator – driving innovation and change by culling weak members of the herd. Mrs Thatcher’s corrections returned Leyland motors and Gleneagles Hotel alike to the private sector.

But her epigones, of both left and right, did something quite different. Combining market good/state bad and a simplistic economic theory they created pseudo-markets across the state. Here starts Abby Innes’s story.

Neo-classical economics is insanely bad at describing the modern world. All decisions are supposedly taken by rational economic actors with perfect market information. Perfect competition means rates of profit tend to zero. Profit is a sign of economic distortion, imperfection and friction. Supply chains emerge spontaneously. In the real world advertising, brands and marketing depend on irrationality, mood over analysis. Companies are, and want to be, profitable. Supply chains are a source of competitive advantage.

You might think this disconnect would be fatal to the project – instead it informs and drives it. Each failure can be ascribed to the pernicious impact of the state – each failure requires another assault on it, more pseudo-markets, more ‘reform’, more tax cuts.

We lack a language to describe pseudo markets. David Cameron spent his ‘gap year’ at Greensill. Companies borrow money against their unpaid invoices. Greensill said “the government is late at paying bills, let us be the official lender of its unpaid invoices”. This isn’t capitalism, it isn’t a market, there is no competition. The solution to the problem is not financialisation but the government paying on time. Inserting a middle-man, taking a levy, is tax farming. Cameron was paid via Guernsey natch, to avoid tax.

The private sector must seduce with honeyed words, but the state, and tax farmers, can take with a bayonet. It is not a mistake that the mafia, who use boots and fists, feel affinity to one over the other – Russian kleptocrats don’t invest in British football clubs they wash money in them.

Competing in a free market is not the same as buying influence in and contracts from the state. There is a taboo against civil servants using their power of compulsion for private commercial ends for a good reason.

Pseudo-markets are so obviously flawed that they ‘need’ to have regulators to provide the market-like discipline to bring out their ‘entrepreneurialism’ which is where late Soviet Britain comes in.

By the 60s it was obvious that central planning in the USSR had failed – but that was ideologically inadmissible. Under Kosygin the regime took up information theory and tried to use cybernetics to create a planned economic regime with perfect pricing signals. In the face of failure the Soviets doubled down.

So it is with the post-Thatcher governments. Cummings and Gove fantasised about a cybernetic state where the great dashboards would allow a control room in the Cabinet Office to bend the state to its will – Gosplan-sur-Whitehall.

Both regimes share a common quasi-religious belief in a dogma-revealed which cannot be examined. Both think more perfect information, more powerful data-driven analysis, more scientific and technical mastery are the key to success – even as failures pile up around them. Both believe that a bit more centralism, a bit more bending the recalcitrant to their infallible will can turn it around.

These ‘regulators’ are pseudo-regulators. In the same way tax farmers cosplay as capitalist companies, central planners cosplay as regulators – with whom they have nothing in common.

Trading Standards officers have no opinions about the products they regulate, they don’t have an aesthetics or a view on production targets. They care that the market is free: from monopoly, from information-asymmetry, from cheats and scoundrels. A regulated market is a free market, freedom in free markets is never from-regulation. A Trading Standards officer sets no targets, reject everything or reject nothing are equal to them.

By contrast the pseudo-regulators do care about outputs – indeed their goal is to do output planning. Abby Innes’s book shows how the Soviets and the British state have the same flaw: information-asymmetry. The organs under regulation have production information and the planners do not. There is no market discipline, no organisational death, competition or transfer of risk. The regulated tail wags the central dog.

In our pseudo-market state, the tax farmers use the bayonets of the state to deliver revenue and sate themselves on it without performing the investment that is their purpose in the plan. The state, stripped of its capability, weakens. The former state structures, looted for revenue, decay. Taxes that shift to farmers disappear from the national accounts – on paper taxes are cut, but the share of income taken by force increases. Public services go to hell, as life gets more and more expensive.

I write this, not as socialist or supporter of a state run economy – but as a true believer in actual free markets. Markets free from the state are always rigged.

The neo-classical model always spits out the same answer: shrink the state and cut taxes. But the bedrock of the right is general prosperity, good infrastructure and a better life. When this fails, a culture war turn is all that’s left.

As Goebbels fades from memory, old taboos do too. Right wing politicians convince themselves that they personally have discovered the mobilising power of love, hate, fear, grief and anxiety. The old anti-constitutional right are made respectable again. Riding the tiger is fun, until it isn’t.

In the UK it is hard now to distinguish between the ceremonial state (Black Rods, men in tights, Penny Mordaunt) and the nominally functional one. For the 14th year in a row the Chancellor pulls the traditional, symbolic, and ceremonial tax cut lever (and yet the tax burden goes up).

The government thrills to respond pro-cyclically to the rising tide of inter-communal tension caused by massacre and counter-massacre in Israel and Gaza, such emotion! The world continues to heat up.

We need to name the tax farmers, kleptocrats and central planners and drive them from our institutions. Politics needs to focus on capability, infrastructure and tax base – and planetary sustainability. The sensible right needs to be rebuilt. This tremendous book is essential to help us correct this historic mistake.


Lesley McDonald is a pseudonym for a civil servant working in Scotland in a politically restricted post.



Comments (10)

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  1. SteveH says:

    There’s no left wing- right wing conflict, there’s only the graduate elite minority and the working class/non-graduate majority.

    The grad elites can be identified by their political flags of convenience such as those with critical social justice ideological leanings and those who are just simply ambitious for cash and the power.

    Grad elites equate higher education with intelligence and the divine-like right to rule and govern, and infallible. They have broken the covenant with the working classes and lower middle classes, whom they now despise and no longer listen to.

    Blair’s “education” x 3 pledge produced an explosion of new universities, courses and students. Most of which are pointless, leaving a generation or two with mediocre degrees and a debt for life. These also-rand think they are part of the elite, but of course few really are, although many of them are inclined to be activists and act like true believers.

    Over the past few decades the grad elites have formed a technocracy that has grown in number, and ceased to value critical thinking in favour of critical theory or just downright getting their own way. The technocracy have failed to serve the people. We have less safety, less energy security, less food security, less social cohesion, less democracy. Why should anyone accept this arrogance and incompetence any longer.

    The grad elites identify with their equivalents in other Western democracies, and gravitating to some form of global citizenship. Typically, they will sneer at our national identity, history, heritage and culture. If course Scots grad elite convince themselves that all the nasty past was down to the English, and convince themselves they were oppressed like many subjects of the British (English) Empire.

    They’ve conveniently forget Scots were enthusiastic players in the old empire.

    The enthusiasm for mass immigration is another proof of membership of the elite club even though Scotland is 95.4% white, and doesn’t really know what loss of social cohesion is all about.

    We hear Glasgow is whingeing because it has to house a mere 1500 asylum seekers…. Tough. They support this political madness, but so long as it’s not inconvenient. Hypocrisy.

    One of the worse aspects of the grad elite revolution is how its prepared to weaken the Western nations to serve its own narrow purpose. Its a Darwin approach to geopolitics. It has failed to appreciate that the totalitarian nations out there are waiting for us to weaken ourselves to the point if no return.

    Our strength comes from our national unity and identity, and respect of each other’s national identity.

    We are strong as a collection of Western nations not as an homogenous blob, weakened by a huge influx of alien cultures and religions, who are then favoured over the indigenous ones.

    The good news is that the working class is fighting back in England, Wales and yes – Scotland too.

    Without the arrogant grad elites serving their selfish ambitions, this apparent populist shift to the right would not have happened. In fact it happening across Europe.

    As natures abhors a vacuum, it also abhors an imbalance. The push back is in progress.

    Enjoy the ride!

    1. John says:

      I watched University Challenge this evening (maybe not your favourite programme Stevie?) but one answer was very relevant to your post. The answer related to the poem If by Kipling and knaves and fools.

  2. florian albert says:

    I have tried hard to make sense of this article. In particular, I do not know who the ‘tax farmers’, referred to several times, are. Are they banks, like
    HBOS and RBS ?
    Near the end, Lesley McDonald writes ‘we must name the tax farmers . . .’ Why not do so in the article ?
    Having visited Poland and East Germany in the late Soviet period, I see almost no resemblance between those countries and the contemporary UK.

    1. Satan says:

      As far as I can make out, ‘tax farmer’ is a meaningless phrase that the author made-up. It may or may not be from the tedious sounding socio-economic tome in question (I have a book about cement that is possibly more interesting), or maybe it comes from the inexplicable idea that the reviewer thinks he/she has a job that bans them from writing book reviews using their real name. This is the only magazine I have read that reviews books on socio-economics. If people can drag themselves away from that subject, I would recommend anything by George Saunders that wasn’t written to win the Booker prize.

      1. 231229 says:

        Tax-farming’s a technique of financial management, in which the management of a variable revenue stream is assigned by legal contract to a third party. The holder of the revenue stream then receives fixed periodic rents from the contractor.

        It’s most commonly used in public finance, where governments (the ‘lessors’) lease or assign the right to collect and retain the whole of the tax revenue to a private financier (the ‘farmer’), who is charged with paying fixed sums into the treasury.

        1. florian albert says:

          Thanks. Your description brings back memories of lectures – long ago – on pre-1789 France during which this phrase was used.
          I do not see any obvious connection with the UK in 2023.
          The problem here is simpler; too many people, companies and institutions do not want to pay the taxes which provide for the services and welfare payments they get.

          1. 231230 says:

            Yep, it’s a hang-over from the ancien régime.

          2. 231230 says:

            It’s also still used as a [pejorative] term for public revenue leasing schemes; e.g. when tolls on bridges and roads and dues from public properties are leased to private individuals or companies, the fixed-term sale of parking meter spots, or the outsourcing of the collection of lower-value tax debts. It’s a way in which governments can raise ready-cash, defer the costs of revenue collection, and/or even-out variations in revenue returns.

    2. Mike parr says:

      Tax farming could also be all the “outsourced” gov services so incompetently provided to gov by “private” companies. Or it could be the school formerly run by local authorities and gifted to the private sector, or indeed, the provision of (profitable) health services by the private sector to the NHS. The list is long and growing. & one should not forget the “Insulants” (Insult – Consultant) that “help” the gov, whilst helping themselves.

  3. Mike Parr says:

    Brilliant. I will get the book.

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