British Chancellor of the Exchequer Kwasi Kwarteng speaks at a fringe event during the Conservative Party's annual conference at the International Convention Centre in Birmingham, on October 4, 2022. (Photo: Isabel Infantes/Anadolu Agency via Getty Images)

Britain's Senseless Pursuit of Disaster Capitalism

As other nations return to state-led investment, Truss and Kwarteng act to weaken our democracy, economy and rights.…

When Britain's new chancellor Kwasi Kwarteng stood up on stage at the Conservative Party conference yesterday, he was a lonely figure.

In Britain, we've got a return to tax cuts for the rich and austerity for the rest.

Only a few days earlier, his French counterpart had announced a budget that included significant spending boosts for the ministries of labour, health, ecological transition and education.

Meanwhile, Germany's federal government is "investing in the future", pouring billions of euros into "climate protection, digitalisation, education and research as well as the infrastructure required." Over the summer, in a bid to get the economy back on track after the pandemic, Germany's state-owned rail company slashed the price of rail fares - offering unlimited local and regional journeys for just nine euros a month.

In Spain, everyone turning 18 this year is being given EUR400 to spend on books, concerts, theatre tickets or other cultural activities to give the arts a post-pandemic boost, while train travel on large chunks of the national railway network is currently free.

Looking further afield, in the US the Inflation Reduction Act will pump hundreds of billions of government money into low-carbon transition and healthcare, including slashing the cost of prescriptions and cancelling $10,000 of student loans for millions of graduates. This is part of an attempt to, as the White House christened the proposals from which the legislation was born, 'build back better' - with president Joe Biden telling Congress, "trickle-down economics has never worked. It's time to grow the economy from the bottom and the middle out".

In Brazil, the day before Kwarteng gave his speech, the left-wing former president, Lula De Silva, who ran on promises to scrap the government's spending cap and invest in infrastructure, nudged ahead of far-Right incumbent Jair Bolsonaro in the first round of the country's presidential election, the most significant vote of 2022. While Lula isn't yet over the line, he is the clear favourite.

Across the Western world, state-led investment is back. Limping out of a pandemic and into a European war, looking ahead to increasing climate chaos and back at a decade of stagnant wages and soaring billionaire wealth, most governments, most citizens, can see that a 40-year experiment with radically free markets was a disaster. Most can see the need to pull together, that collective action is required to navigate the current omnicrisis.

But in Britain, we've got a return to tax cuts for the rich and austerity for the rest. Rather than putting money into the pockets of ordinary people, Kwarteng is cutting corporation tax by PS19bn, promoting a free-for-all on bankers' bonuses and launching what Gordon Brown has called a "tax avoiders' charter", slashing tax for employees who are able to declare themselves self-employed.

Two decades ago, Kwarteng's ideas were wrong, but they were at least in vogue. Now, Brexit Britain stands alone.

In his speech yesterday, Kwarteng said he had abandoned his cut in income tax for the richest because it was distracting from his broader plans. But it's precisely his broader plans that are the problem.

As well as slashing tax for the rich, he wants to get rid of regulations for the rich, promising to "review, replace or repeal retained EU law holding our country back".

Much of the rhetoric was the vague nonsense of wilting neoliberal ideologues, but he did give some specifics.

"On childcare, agriculture, immigration, planning, energy, broadband, business, financial services," he said, "Sensible, economic reforms to produce more of the products and services we need to drive down costs."

What this means in reality is a massive attack on safety and standards. Proposals to abolish Ofsted accreditation for childminders don't do anything to solve the problems faced by parents who desperately need better-funded childcare, but will make it harder for parents to know their child is being well cared for, and easier for profiteering agencies.

The reference to agriculture seems to be a nod to the chaos around England's attempts to replace the EU's Common Agriculture Policy. Under Boris Johnson, with Michael Gove as environment secretary, there were some genuine attempts to ensure that farmers' subsidies were given in exchange for environmental goods, via a policy known as the Environmental Land Management Scheme. This could have gone some of the way towards slowing the biodiversity crisis in the UK - one of the most nature-depleted countries on earth.

But it looks like Liz Truss and her environment secretary, Ranil Jayawardena, are scrapping all of this namby-pamby 'not killing the planet' nonsense, and restoring lump sum payments to agribusinesses based on how much land they have - the richer they are, the more they get.

Or perhaps Kwarteng was talking about Britain's new-found power to decide which pesticides agribusinesses should be allowed to spray on our land and leach into our water - various poisons banned across the EU are already allowed in Britain.

As my colleague and housing economics expert Laurie Macfarlane has argued, Tory attempts to reform planning laws in recent years have represented "a ferocious attack on democracy", stripping power from elected representatives and handing it to developers. Without proper planning, cities become suburban sprawl, with lengthy commutes, traffic jams and deep economic inefficiencies. Thriving cities require thoughtful consideration from authorities with a broad view of different needs, resulting in communities joined up with public transport, schools and doctors' surgeries, not endless mazes of cul de sacs and traffic jams.

When Kwarteng talks about energy, what he means is not that he'll lift England's absurd ban on onshore wind farms - in fact, Truss seems to want to extend it to include solar farms, too - but rather, to bend to the will of the fossil fuel lobby, and bring back fracking.

And when he talks about financial service deregulation, we don't need to be very old to remember where that led in 2008.

To push all of this through, the chancellor made another important pledge - this time to increase regulation, specifically the regulation of workers.

"Pernicious strike action disrupts the lives of the British people and it slows down our economy," he said. "So, we will introduce important reforms to stop strike action from derailing our daily lives."

We shouldn't be surprised by this agenda. It's the deregulated corporate playground that was promised when Britain voted for Brexit. But the problem for the government is that it's entirely out of step with much of the rest of the world.

If Britain allows its fields to be soaked in chemical poisons and its chickens to be chlorinated, its exports to undercut safety standards and its financial services to side-step regulations, then the EU isn't going to allow itself to be undercut. The bloc will simply ban inferior British produce. And the much-mooted US trade deal looks unlikely - Biden hasn't exactly shown himself to be a fan of the Brexit agenda.

The British government is already scrambling around the other side of the world looking for partners - as the prime minister announced in her recent UN speech, the UK is in the process of acceding to the Trans-Pacific Partnership. But you can't just wish away ten thousand miles.

In the past, I would have described Truss's government's agenda as shock doctrine, or disaster capitalism - an audacious attempt to use the various crises of the day to strip away vestiges of democracy and workers' power, and to advance corporate power. And in one sense, it is. But, in the past, with neoliberalism on the march, it would have felt like part of a global project. Now, they just look like fools, standing on the prow of a boat that's abandoned its fleet, and pissing into the winds of history, only to find they are getting themselves wet.

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