The Coming Britain

Austerity Without Neoliberalism

Keir Starmer may be the luckiest Labour leader in history. Thanks to fourteen years of Tory misrule, he looks set to become PM.

Introducing securonomics. London, May 2023.

Starmer has done almost nothing to deserve this except lying to the public and his party members.

Never before has a Labour victory seemed so certain. Never before has Britain felt so broken and hopeless.

This is a far cry from the build-up towards 1997 when most people could still believe the world might get better under New Labour.

There are projections of Labour winning a 250-seat majority or even 400 seats in a recent YouGov projection.

This would give Keir Starmer an unprecedented stranglehold on Parliament.

Reform UK leader Richard Tice has warned against the coming ‘Starmergeddon’.

It’s another shit portmanteau he’s come up with, but it’s not as shit as ‘Consocialists’ – the term he uses for Rishi Sunak’s Conservative Party.

Yet Reform’s real position is clear in its strategy.

The far-right party will target Tory seats and absorb disaffected right-wing voters. However, splitting the right-wing vote will likely result in more Labour and Lib Dem seats.

The kernel of truth in ‘Starmergeddon’ is that Labour’s victory may spell the end for neoliberalism.

This is a terrible prospect for the libertarian right represented so coherently by Tice.

The End Games

Shadow Chancellor Rachel Reeves has laid out a vision for securonomics.

Reeves explained (in her robotic style) that the Labour government will be an “active state” in promoting and developing UK industries.

Labour will also impose a new fiscal lock by making all fiscal changes subject to a forecast by the Office for Budget Responsibility. According to Reeves, this will be guaranteed in law.

The OBR is one of the key institutions of austerity set up by the Cameron government in 2010. Labour has handed over its fiscal strategy to austerity junkies for approval.

Not only has Labour sold out to fiscal conservatives, but Team Starmer has also thrown away the Green New Deal infrastructure plan, which was a £28 billion-a-year commitment.

Governments can still do a lot to shore up industry with state power.

But Reeves is clear that Labour will not be “picking winners and propping up uncompetitive industries”. It will be working with big business.

This does not mean post-war social democracy is coming back.

Shadow Health Minister Wes Streeting has big plans to further reform the NHS – meaning greater privatisation and marketisation than ever before.

Labour reportedly is planning to consolidate NHS data to monetise it on the global market.

Streeting is looking to build on the New Labour private finance model to substitute public spending with private investment.

Left-wing economist James Meadway has suggested Team Starmer is reaching back to the Old Labour right rather than New Labour.

This wing of the party represented the right wing of the trade union movement, which was unconcerned about many social problems.

The Old Labour right sought a business-like compromise to protect skilled workers’ wages and working conditions. This was a viable politics in the post-war era when the UK still had a significant industrial base.

According to Meadway, Labour faces three serious obstacles.

Firstly, the Reeves plan lacks meaningful support in the country because of deindustrialisation. Most workers are now in the service sector, not manufacturing.

Secondly, Labour will inherit crumbling public services and no prospect of economic growth.

Reeves said she would launch an “emergency budget” once in power, but Labour is adamant the government will not lend more money to improve public services.

Thirdly, Labour still has to address education, healthcare and social care crises.

Millions of people can’t access social care or health treatment, while schools are literally collapsing in some cases.

There are no guarantees of stability and growth. The big question is what Starmer will do when faced with waves of strikes and protests.

The hope is the left will be able to make more gains by challenging Labour than by blindly supporting the party.

No System Change

Unfettered neoliberalism is not possible anymore.

COVID-19 may have buried it, but we don’t yet have the words for what will replace it.

Neoliberalism’s breakdown has been ongoing for years, but the end of this era does not necessarily mean something better is coming. The future could be even worse.

In the absence of an alternative economic model, there will be more populist shocks and neo-nationalist attempts to break with 90s-style globalisation—Brexit and Trump, in other words.

The pandemic accelerated neoliberalism’s demise. Lockdown economics demonstrated that the old rules didn’t work in a global crisis.

Massive state intervention in response to COVID-19 became the norm worldwide.

This included bailouts of companies and millions of people in the form of furlough schemes and, even more directly, government cheques sent out by mail.

Economists have been discussing neoliberalism’s end since at least the 2008 financial crash. A new kind of active state capitalism looks likely.

This change is coming even though Labour will try to work within the Tories’ confines. The Brexit deal will be a key part of this new settlement.

What liberals cheering for Keir Starmer don’t understand is that the government will not return to the centre ground as they once knew it under New Labour.

The changes to the economy wrought by governments since Blair are invisible to their nostalgia and desire to bring back the Third Way.

The past is gone. It cannot be brought back.

Please support The Battleground. Subscribe to our free newsletter and make a donation to ensure our continued growth and independence.

Photograph courtesy of Duncan Cumming. Published under a Creative Commons license.