Disaster Capitalism, UK Style

As my colleague Alex Goodall said to me the other day, I hate it when governments do things that make me agree with Naomi Klein. I’ve always found Klein thought provoking but often lacking when it comes to a positive agenda for change that I can sign up to. Nevertheless, the point that Alex was making, and one that I agree with, is that the kinds of the things that the British government is doing at the moment pretty much fits the disaster capitalism template that Klein describes in her book The Shock Doctrine

For those of you who haven’t read the book or seen the film, the gist is that governments and large corporations use disasters, often in the developing world, as an excuse to unleash the forces of unrestrained capitalism, even though it’s the last thing these countries actually need to deal with the problems they face. Though it’s stretching it a bit to compare the UK with the developing world, it’s still the case that the Conservative led coalition’s budget cuts are of the same spirit as disaster capitalism. 

The reason is that the cuts are profoundly ideological in the sense that they aren’t being made out of strict and immediate necessity. Instead, the cuts are part of a strategy to refashion the state quickly. If reports are to be believed, the pace of these cuts is being driven by the Tories’ desire to learn the lesson of Blair’s first term in office when, as he has constantly remarked since, he failed to make the most of his massive commons majority.

To see how successful the Tories have been at their own version of disaster capitalism, rewind a couple of years to the beginning of the current financial and economic crisis. Remember the situation that we were in: the biggest market failure since the 1930s, which forced the state to bail out banks because we were seriously on the verge of not being able to draw money out of cash points. If someone had told me that we’d be in situation we are now (no serious reform of the institutions that caused the mess, slashing budgets, etc) I wouldn’t have believed them. It’s not that I expected the emergence of international communism but I find it amazing that Cameron can stand in front of cameras and say, with a straight face, that it was reckless state spending that caused the problems we are experiencing. Moreover, it’s astonishing that important parts of the media are running with that message and a lot of people seem to buy it. 

The question of why this is happening is an interesting one. On the one hand, understanding the situation from Cameron’s point of view is easy: he’s from the upper classes, he’s had no attachment to the state at any point during his life, even if he likes to talk up the care his son received from the NHS. From the point of the view of the Lib Dems, I think this is just a revelation for most people. As they’ve proven whenever they’ve been given power in local government, the Lib Dems are free marketeers and they privatise everything they can get their hands on. What makes them different from the Tories is their liberal social values. This much is clear from David Laws’ admission that he could have joined the Tories if it wasn’t for their attitude towards homosexuality. 

From the perspective of the public, I don’t quite understand what’s going on. You could argue that there’s broad public support because it’s just the poorest who are being hit at the moment and the poorest don’t have anyone to speak for them, especially when the Labour party has been anonymous under its new leader. However, I think that is only partly the case. I think there are a couple of important points to make here. The first is that there is a great deal of concern about what’s going on and that can be measured via the debate about tuition fees and the axing of the education maintenance allowance. This is going to get worse when, for example, streets are cleaned less often and potholes aren’t repaired at the end of the winter.The second point is the most important one: there actually isn’t a democratic mandate for anything that is happening at the moment. The Tories ran largely policy free campaign, which means they now just argue that they had to wait to see the public finances before acting, even though that’s basically a lie. As we all know, the Lib Dem’s manifesto has turned out to be a work of fiction.

All of which brings me back to Naomi Klein. It would be one thing if the decision to scale back the state were one that had a democratic mandate but what’s happened is entirely different. A government is forcing through quite serious structural changes to British society having campaigned on a platform of efficiency savings. And they are doing so by telling people that they’re doing it because they’ve seen the government books and it’s the only thing they can do, notwithstanding the fact there’s plenty of authoritative opinion to the contrary (Paul Krugman’s  blog and Ed Ball’s Bloomberg speech spring to mind here). 

What will be the outcome of this? Well, some of what’s going on will be challenged when public services go back to the 80s. As I recall from my childhood, any kind of public institution was basically a bit dirty and run down during the 80s because nothing got fixed and it was constantly starved of money. This was Blair’s great trick: capitalising on the dissatisfaction people felt towards such poorly run public services. However, this will only be the case with some of what’s going on. The rest of it is truly serious stuff that won’t or can’t be reversed. Speaking from my own experience, higher education is one such area as the humanities, for example, will no longer receive any state help. However, another change that concerns me is the change to child benefit whereby higher earners will no longer claim it. The upshot of this will be a generation of people, many of whom will go on to serve in parliament, who will have no kind attachment to the welfare state. The consequence of that could be the final destruction of the welfare state that we have at the moment – one that everyone shares in – and it’s replacement with a minimal welfare state that only the very poorest have any contact with. When that happens, the welfare state will be something that everyone but the very poor resent and it will constantly be chipped away at until it’s gone. And that will be the legacy of Britain’s version of disaster capitalism  


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