Stumbling and Mumbling

Thatcherism is dead: Thatcherism lives

Thatcherism is dead. It has ceased to be. It has expired and gone to meet its maker. It has kicked the bucket, shuffled off this mortal coil and joined the bleedin' choir invisible. That seems to be the obvious inference to draw from Penny Mordaunt's call for the reintroduction of national service.

Let's call this what it is - forced labour. Whereas Thatcher long and loudly proclaimed the value of freedom - so much so that the Economist's obituary labelled her a "freedom fighter"- her epigones now want to deny people the most basic of freedoms of what to do with their lives, thus rejecting Thatcher's assertion that "a man's right to work as he will" is "the essence of a free economy."

This, however, is by no means the only way in which today's Tories are profoundly anti-Thatcher.

She declared the single market to be “a fantastic prospect for our industry and commerce” which offered “complete freedom for our manufacturers, our road hauliers, our banks, our insurance firms, our professions to compete.” The Tories have of course ripped up these freedoms.

Thatcher also thought that a key role for government was to provide stability, so that companies could plan better for their futures:

An economy will work best when it is built on a framework of clear and predictable rules on which individuals and companies can depend when making their own plans. Government's primary economic task is to frame and enforce such rules.

Today's Tories, by contrast, lurched from creating years of uncertainty about Brexit to inflicting the ideological fanaticism of Truss upon the economy. "Fuck business" was perhaps the only sincere thing Boris Johnson ever said.

Also, the Thatcher government favoured a tax system that was neutral between income and capital gains, so that labour was not penalized relative to capital ownership: Nigel Lawson argued that taxing the two differently "creates a major tax avoidance industry". Today's Tories, however, regard tax-dodging as a feature not a bug, and want to encourage rentierism at the expense of real work. 

And then, of course, there's home ownership. Thatcher was smart enough to know that if you wanted people to support capitalism you had to give them at least a chance of owning property. Today's Tories have forgotten this. Which explains one massive difference between the 80s and now - that in the 1987 election the Tories actually led Labour by 39-33% among 25-34 year olds, whereas today (pdf) less than 15% of under-50s support them.

It's not just the Tories who have abandoned Thatcher, though. So too in many regards has public opinion. The majority of voters support public ownership of utilities and transport companies and a wealth tax. And many opponents of London's ULEZ plan favour vandalising cameras, which would have horrified Thatcher with her strong support for the rule of law.

Thatcher, it has been said (by John Gray, I believe), hoped to create a society of men like her father - a hard-working entrepreneur in a market society - but in fact left us one with men like her son, a talentless amoral grifter who made money by exploiting political contracts. We see evidence for this is not just in the economy's regress to feudalism in which wealth depends upon political power and asset ownership, but also in daytime TV. Programmes such as Homes Under the Hammer and Bargain Hunt show that the British public prefer to make money from rising house prices and selling tat rather than from the hard work, innovation and entrepreneurship which Thatcher lauded.

But, but, but. Despite all this. many Tories still think of themselves as Thatcherite, and many leftists believe our economy is Thatcherite. How can we explain this?

Simple. Although Thatcherism was an abject failure in terms of promoting support for widespread freedom and creating an entrepreneurial property-owning market economy, it was a success in another respect. It certainly did increase inequality. What matters here is not just income inequality, although the share going to the top 1% has risen from 6.8% to 12.7% since 1980. Inequalities of power in the workplace have increased with the smashing of trades unions and reassertion of "management's right to manage" (a now-overlooked Thatcherite slogan). And so too have inequalities of political power: whereas Labour used to be "in hock to the unions", it now defers abjectly to the billionaire-owned media.

And it is these inequalities that the right values far more than rhetoric about liberty and free markets. As Corey Robin has said, "the priority of conservative political argument has been the maintenance of private regimes of power." Or as the man put it:

The Tories in England long imagined that they were enthusiastic about monarchy, the church, and the beauties of the old English Constitution, until the day of danger wrung from them the confession that they are enthusiastic only about ground rent.

Benefits for capitalists

A recent Yougov poll found that most people think that people out of work should not be able to afford smartphones, takeaways, visits to the pub or pets. This is not just evidence of their mean-spiritedness, but also of their anti-capitalist attitudes.

I say so because of a basic economic idea - the circular flow of income. Out-of-work benefits are not so much payments to people as payments through them. They are payments to Greggs, Primark and Aldi and other places where recipients spend their money. Just as there's tax incidence, so too is there benefit incidence. The beneficiaries of benefits are those capitalists and employees who sell to the unemployed.

In this way, benefits serve several useful functions.

One is that they help to stabilize demand and cushion us from recessions. Monetary and fiscal policy cannot do this simply because, as Prakash Loungani has shown, recessions are unpredictable. The best such policies can do is hasten the recovery. To moderate the downturn we need automatic stabilizers of which out-of-work benefits are one. This matters, because stability tends to boost investment, as Nick Bloom has shown.

Secondly, such benefits subsidize and hence facilitate the creative destruction which is necessary for higher productivity. When benefits are mean we see more violent opposition to redundancy plans; less geographical mobility because people want to stay close to family and friends who could support them in hard times; and people being loath to move into potentially good but insecure jobs. In all these ways, out-of-work benefits help increase labour mobility.

To see a third benefit, imagine out-of-work benefits were increased. Recipients would probably not spend much of the extra on gas and electricity, but would do so on little treats - better food, a night out and suchlike. More spending on "luxuries" would therefore help increase the size of the competitive sector of the economy relative to the monopoly sector. It would support entrepreneurs against rentiers. That's good not only for allocational efficiency but also for dynamism and growth.

And for something else - the legitimacy of capitalism itself. An economy dominated by rentiers and monopolists is one that will struggle to justify its existence. One that can plausibly claim to give people what they want at reasonable prices has less difficulty.

In all these ways, intelligent capitalists favour reasonable out-of-work benefits. It's no accident that, in many countries, they were introduced not by leftist governments but by pro-capitalist ones.

Of course, against all these advantages must be weighed two potential drawbacks.

One is that when we are near full employment such benefits must be paid for by taxes or cuts in other parts of government spending, and those taxes would curb demand for the outputs of the competitive sector.

I'm not sure this is a grave problem though. If instead benefits were paid from a clampdown on procurement and subcontracting costs, the competitive sector would benefit relative to the extractive rentier sector. You might not like Tim Martin's politics, but a healthy economy has more Wetherspoons and less Capita.

A second possible drawback is that higher out-of-work benefits could reduce work incentives. This, however, is not a knock-down argument. For one thing, we could get people into work by making them fit to do so, for example by reducing NHS waiting lists. For another, work incentives are about the gap between out-of-work and in-work incomes. If both of these rise so that the latter remain well above the former, work incentives remain strong. And for another, a tight labour market should be a good thing as they encourage firms to economize on the use of labour by investing or improving working practices.

My point here is that you don't need to be a bleeding heart lefty to favour decent benefits for the unemployed. In fact, they are in the interests of capitalists (and people in work) themselves.

Which poses the question: why then, as that Yougov survey showed, is there such hostility to them?

One answer is overconfidence; people in work don't expect to lose their jobs, and so regard out-of-work benefits as payments to others rather than as insurance for themselves.

Another answer, I suspect, lies in reference group theory. We compare ourselves (pdf) to those around us, so many people on low incomes resent benefit claimants more than rich bosses - a resentment reinforced by our tendency to hate being thought of as mugs.

Whilst these might help explain popular antipathy to benefits it doesn't explain the Tories' hostility. Instead, this lies in a nasty fact, that there's something the right loves more than capitalism, and certainly more than free markets - hierarchy and inequality. As Corey Robin wrote:

The conservative defends particular orders – hierarchical, often private regimes of rule – on the assumption, in part, that hierarchy is order. (The Reactionary Mind, p24)

Decent welfare benefits undermine hierarchy. And for many on the right, defending inequality is more important than promoting well-functioning market capitalism.

The labour shortage "problem"

One of the tricks of bourgeois politics is to blame workers for the systemic failures of capitalism. So it is with the claim that there's a problem with increasing numbers of over-50s being out of the workforce. The Guardian, for example, says:

This is placing strain on the labour market, with many employers struggling to recruit, and is part of the reason for high inflation, the Bank of England has said.

The numbers, however, don't bear this out. There are now 3.47 million people aged between 50 and 64 who are economically inactive. Whilst this is 250,000 more than at the 2019 low-point, it is less than a year ago and less than the average in the 20 years before 2008.

Which poses the question: if 3.5 million over-50s being economically inactive was not a problem before 2008, why do the Bank of England and government think it is now?

A big reason is that we've had 15 years of flatlining productivity. We need to work harder - and have more of us doing so - because we are not working smarter.

Had GDP per worker-hour grown at the same rate since 2007 as it did in the preceding 30 years, it would now be 28% higher than it actually is. That means the average worker could be over £150 a week better off, or that all of them could take a day off a week without being worse off than they are now.

As it is, though, we are a poor country. To produce the things we want - that is, to overcome the lack of capacity which the Bank believes to cause inflation - we therefore need more workers simply to make up for our inefficiency.

One reason for this inefficiency is that many people are in the wrong jobs. There are the bullshit jobs described by David Graeber; guard labour such as supervisors, security guards and some middle managers which are needed to overcome the distrust engendered by capitalism and inequality; too many lawyers and accountants because of the complexity of the tax system; too many Border Force or DWP employees because of malevolent policy choices; and a bloated financial sector because of unpriced risk pollution and an false and ideologized perception of the fund management industry.

If bosses are "struggling to recruit" it is because too much labour is absorbed in doing things that are the product of capitalist failure.

But there's something else. Very few people have the luxury of cushy, enjoyable jobs where their employer will indulge their writing bullshit and harassing co-workers. Instead, many 50-somethings are leaving employment because it is dull or stressful - things which are often the result of rank bad management (and the public sector might be even worse than the private in this regard).
It was Adam Smith who wrote:

The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. The torpor of his mind renders him not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment.

Why wouldn't anybody who can afford to do so want to escape this fate?

This is especially the case because capitalism is the thief of time. As Marx pointed out, we must work longer than we need for our own ends because we must also work for capitalists and the state*. As we get older we appreciate that our time is running out - a point brilliantly made by Martin Hagglund's This Life - so this surplus labour time becomes more onerous.

My point here is simple. Insofar as government and capital need more people in work, it is only because of the failure of capitalism; the failure to increase productivity recently; the failure to allocate labour efficiently; and the failure to offer satisfying work. The labour problem is therefore in reality a capitalism problem. The system's lackeys and useful idiots, however, must go to great pains to deny this truth.

* We might add that many of us must also work for landlords, but this will actually keep younger people in work for decades.

Another thing. Some Tory fool says we over-50s can become Deliveroo drivers. Having been knocked off my bike yesterday by somebody who didn't realize that we drive on the left in this country, I have a lively impression of why people might choose not to do this.