neoliberalism

  • Source: "The middle has fallen out of British politics"         

    For 40 years, British politics has been dominated by the “neoliberal” consensus - the belief that the gains made under the classical liberalism of the 19th Century could be maintained in the 20th Century. The tenets of neoliberalism are privatization; the reduction of government regulation; the lowering of taxes, especially for the wealthy and by encouraging globalization. Where neoliberalism failed was in reducing widespread income inequality and in addressing a sense of British social disintegration.

    Before neoliberalism and after WW2, there was “Butskellism”, named after moderate conservative leader RA Butler and moderate labour leader Hugh Gaitskell. After WW2, the moderates in both parties embraced a welfare state that could encourage equality of opportunity through free education and provide security in the form of old-age pensions and nationalized health care. Butskellism encouraged state ownership of companies, especially utilities and government intervention in the economy (Keynesian demand management). William Beveridge was a Liberal economist whose 1942 report formed the framework for the post WW2 welfare state in Britain. Beveridge identified Five “Giant Evils" in society: squalor, ignorance, want, idleness, and disease.  

    In the 1970’s, with rising unemployment and inflation, combined with half of Britain’s national income going into public spending, economic growth slowed. In the winter of 1979, the discontent reached a peak with multiple strikes and labor unrest shutting down entire sectors of the economy. Electricity had to be rationed. Margaret Thatcher and neoliberalism were seen as the cure for these ills. Government regulations were loosened, industries were privatized, global trade deals and the EU were embraced and the economy improved. Under Labour PM’s Blair and Brown, neoliberalism continued to be the dominant political ideology and their “New Labour” programs left Thatcher’s legacies intact while doing a better job of redistributing income.

    Now in the post-Brexit UK, neither the Conservative nor the Labour Party embraces Thatcher-style neoliberalism. Real wages in the UK are down 10% since the 2008 financial crisis and it may be 2020 before they recover to 2008 levels. Workers on “zero hours contracts” (no benefits) numbered 100,000 in 2004 - there are over a million UK workers on zero-hour contracts today. As a result, even Conservatives like PM Teresa May are calling for government control over utilities and making statements that questioned belief in free markets is a mistake.