As this will be
the last blog until 2025, I thought I’d make it a bit more
substantive than usual. Normal service will be resumed in 2025.
I started writing
about how the UK and US under right wing leadership had become
a kind of plutocracy in 2017, after the Brexit vote
and the election of Trump. [1] That was relatively unusual at the
time, because most of the discussion of Brexit and Trump focused on
their populist aspects. However in the last few years talking about
US and UK plutocracy has become more common: see in particular Martin
Wolf’s latest book “The Crisis of Democratic Capitalism”
(interesting
review here).
Though I didn’t at
first, I’m now inclined to view this development as an almost
inevitable consequence of neoliberalism. Perhaps my most coherent
presentation of this point of view can
be found here, where I set out why neoliberalism is
different from plutocracy, why neoliberalism encourages plutocracy,
and how the political right that championed neoliberalism has become
plutocratic. In this post I want to examine some of these dynamic
links more closely, including why a plutocratic right can so easily
turn populist and why it can also be easily subverted by charismatic
leaders who are hopeless at governing.
Before and after
If you tend to
describe everything that came from Thatcher and Reagan as neoliberal,
it may seem hasty to say that the political right in both countries
are no longer neoliberal. You would be right, because neoliberal
ideology remains a core part of how many right wing politicians
think, and it remains a pervasive influence on society more
generally. Yet while it is obvious to describe the Thatcher and
Reagan governments as neoliberal, it is much harder to use that label
for politicians that erect rather than lower barriers to trade, and
politicians who attempt to stop firms hiring workers from overseas.
This problem applies
to a wide range of ways of describing neoliberalism. If you like to
think of neoliberalism as an ideology that favours free markets, then
erecting trade barriers or telling firms what labour they can hire is
not promoting free markets. [2] I tend to think about neoliberalism
as a collection of ideas that helps existing capital in general (e.g.
reducing union power), or at least some parts of capital without
harming others (privatisation). In technical terms they represent
ideas or policies that are Pareto improvements for capital. [3] More
colourfully, under neoliberalism the executive is at least in part “a
committee for managing the common affairs of the whole bourgeoisie”.
Yet immigration controls or trade barriers harm large sections of
capital, so how can politicians that enact them be categorised as
neoliberal?
As with
neoliberalism, aspects of plutocracy, like lobbying or political
donations, exist in varying degrees in all periods. For example large
parts of the media have always been controlled by very wealthy
individuals who used that media to further their political views or
agenda as well as their own personal interests. The key point is that
under Thatcher and Reagan those plutocratic elements largely promoted
a neoliberal agenda, while subsequently that is no longer the case.
Dynamic 1: the
growing unpopularity of neoliberalism, the weaponisation of culture
wars and unintended consequences.
The (essential? -
see below) background to the politicisation of culture wars is
growing social liberalisation. In the US that included greater racial
equality, and following Nixon’s ‘southern strategy’ the
Republican party became the natural home for social conservatives
reacting against social liberalisation. In the UK culture wars were
not a significant part of Thatcher’s appeal, because reducing union
power and the number of strikes, privatisation and tax cuts were
initially popular policies. But after a time the popularity of
continuing to reduce the size of the state fell away, and in
opposition after 1997 the Conservatives began focusing on immigration
as a political weapon.
The unpopularity of
neoliberal efforts to reduce public services and cut taxes has only
increased in recent years. (This tension might have shown itself more
quickly had it not been for North Sea Oil in the UK and growing
deficits in the US.) In the UK with lax regulation, privatisation at
least in some areas began to become a means to extract wealth from
the public. In
the last UK election 52% of those who voted
Conservative in 2019 wanted lower NHS waiting lists to be a
government priority, compared to 19% for tax cuts.
Rather than
abandoning the goal of a smaller state enabling tax cuts, Republicans
and Conservatives increasingly used culture war type issues to win
elections by attracting socially conservative voters. However this
strategy contained two problems. First, because the use of these
culture war issues was largely instrumental, it created a danger that
social conservatives who had given their vote on this basis would
quickly become disappointed.
Second and perhaps
more importantly, when pursuing culture war issues clashed with
neoliberal goals, neoliberal politicians were very reluctant to
sacrifice these goals when in power. Immigration benefits capital,
and perhaps as a result antagonism towards immigration was initially
not part of the culture wars in the US. The economic costs of
reducing immigration was why Cameron never seriously tried to hit his
immigration targets. As long as the mainstream parties just ‘talked
the talk’ on culture war issues but when it came to policy deferred
to the collective interests of capital they remained neoliberal.
This led to the
crucial outcome of this dynamic, which was growing discontent from
the socially conservative element of the right wing coalition.
The emergence of
populism
Populism is used in
many different senses. The sense
I prefer is due to Jan-Werner Müller, and involves an
attack on the key institutions of liberal, pluralist democracies:
parliaments, the civil service, the courts, the media and so on.
Populists argue that these institutions have been captured by ‘the
elite’, and to return power to ‘the people’ (as represented by
the populist party or its leader) requires overhauling these
institutions.
It would not be
surprising for a left wing party that believed that these
institutions were designed or had been co-opted to work in the
interest of capital to be populist in this sense. But why would a
party that wanted to achieve socially conservative goals be populist?
I can think of two reasons for this. First as I noted above, most
western societies have been becoming more socially liberal quite
rapidly over the last few decades, so it is easy for anyone with
socially conservative views to feel like an outsider, and be made to
believe that while they represent a ‘silent majority’ they feel
like an outsider because the elite has captured the institutions of a
pluralistic democracy. Indeed the success of social liberalism
provided a fertile ground for those who wanted to exploit social
conservatism for political ends.
Second, social
scientists often refer to the social conservative/liberal axis as the
authoritarian/liberal axis, because authoritarian and socially
conservative views often go together. This will not only lead to an
impatience with independent sources of power or authority (or
indeed democracy itself), but it will also mean that
socially conservative voters may be more attracted to ‘strong’
(charismatic) leaders than those who are more socially liberal. Leaders who are elected not because of their policies or past history of competence, but who appear to conservative voters to be most likely to turn the tide against social liberalism.
Grass roots
factionalism and competitors on the right
In the UK, divisions
over UK membership of the EU had been a constant feature of dissent
within the Conservative party for decades before that party emerged
from opposition to lead the Coalition government in 2010. A new right
wing party, UKIP, challenged it on this issue in particular, but its
impact was small given the UK’s voting system for General
Elections.
That changed after
David Cameron insisted in 2010 on establishing targets for overall
immigration numbers. These targets never came close to being met.
Talking the talk but not delivering when in government greatly
increased UKIP’s popularity (helped by the impact of his austerity and the government's use of migrants as scapegoats), leading to defections from Tory MPs to
the new party. To attempt to stem this insurgency Cameron agreed to
hold a referendum on EU membership if he won power outright at the
next election.
The insurgency
within the Republican party at around the same time came from the Tea
Party. However this appeared not to be a reaction by disillusioned
social conservatives, but rather by Republicans angry about the
bailing out of banks after the financial crisis, and Obama’s
healthcare reform. It quickly became an activist revolt against the
party establishment, and backed particular candidates in primary
elections. There
is good evidence that the Tea Party played an
important role in the 2016 election of Trump as Republican presidential
candidate.
In the US,
immigration policy under Republican presidents since Reagan had
been fairly benign. It was Democrats rather than
Republicans who tended to push for trade barriers. In retrospect this
can be seen as repressing the instincts of the Republican’s
socially conservative base. While the Tea Party deliberately avoided
campaigning on social issues, there is little doubt that its
membership was largely socially conservative. Trump was so successful
in part because he mobilised that activist base.
Dynamic 2: a
growing dependence on wealth and the media
When there is only
one right wing party likely to gain power, and that party is fairly
united, right wing individuals or groups with money they want to use
to influence the political process have little choice about where to
send their money to. Equally, most newspaper owners who have
considerable power (as well as money) will generally have little
choice about which party their newspaper supports. Even if
occasionally they end up switching formal support to a centre left
party, the filters they put on what news they report and how they
report it will be designed to promote a right wing agenda and a
neoliberal ideology.
When the mainstream
right wing party becomes factionalised, or when it is challenged from
the right, this is no longer the case. Politicians recognise that
this gives monied interests far greater power and influence. It is
this that has fuelled the change from neoliberalism to plutocracy.
Supporting causes that are no longer Pareto improvements for capital,
or indeed harm large sections of capital, can no longer be dismissed
because if they are, the right wing competitor may take the money and
the mainstream right wing party may suffer as a result.
Choice also gives
newspaper owners much greater power, for much the same reason. This
became particularly evident during the Brexit referendum in the UK.
Of course newspaper owners and some wealthy political activists
understood this, and encouraged these divisions. In this sense they
were not just beneficiaries of a process, but helped make it happen.
There are various
ways in which neoliberalism made the emergence of plutocracy easier.
By cutting the top rates of tax, and by facilitating excessive pay awards for senior management with its emphasis on maximising shareholder value, it not only increased the wealth of the wealthy but it also gave the wealthy more to fear (from a
government prepared to reverse this) and therefore more reason for
political involvement. In addition by weakening the power of the
trade union movement, neoliberalism reduced a natural check on the
power of wealth and also helped reduce union influence on centre/left
parties. Wolf in his book is good on how financialisation directed resources away from productive capital to rent seeking (making money by taking it off others), helping create a crisis where almost everyone suffered except those who should have been held accountable.
But with only a single, largely united right wing party,
there is little that the wealthy could do to further their individual
interests other than lobbying politicians. When that unity on the
right disappeared, it gave wealthy individuals much more power. Thus
dynamic 2, the arrival of plutocracy, emerges from the break up of a
unified right described in dynamic 1.
Electoral
takeover
By encouraging and
mobilising concern about culture war issues, but then largely
ignoring those concerns when in power, the mainstream parties of the
right encouraged voters to look to parties from the further right, or factions within the mainstream
party, that appeared more committed to their views. Through the Tea
party movement in the US and UKIP in the UK, the right wing
establishment found itself fighting insurgency from the right, a problem that
was mirrored in many other countries.
These parties or
factions tended to be far more nationalistic than their mainstream
rivals, and were happy to attack another key feature of
neoliberalism: free trade and the globalisation it had helped create.
Erecting trade barriers is not a Pareto improvement for domestic
capital, but there will always be some businesses or wealthy
individuals who either benefit from such restrictions or see them as
a means to an end. With only one right wing party the Pareto
principle generally held, however much the particular monied interest
was willing to throw the party’s way. With more than one right wing
party (or clear factions within it), the monied interest not only had
a choice, but they had the power that went with that choice.
Within PR type
voting structures, these further right parties could be excluded from
power as long as the mainstream right party was able to join with
parties further to the left to exclude them. In a two party system
with open primaries it was ironically much easier for a populist
faction to become dominant. In essence you just needed a quarter
rather than half of all voters to take over the mainstream right wing
party, and then hope that party loyalty, political polarisation or populism (with a good bit of help from media and gerrymandering) would be
enough to win general elections.
In the US open
primaries allowed a gradual takeover of the party by more
conservative elements who now tend to follow Donald Trump. In the UK
they achieved a takeover through the Brexit referendum, the
subsequent turmoil, and Conservative MPs finally choosing to elect
Johnson in an attempt to counter the growing popularity of Nigel
Farage..
Dynamic 3: The
centre left begins to (slowly) move away from neoliberalism
The evident failure
of neoliberal ideas means that the centre/left when in power in the
UK and US are also more likely to move away from neoliberalism than
they had been immediately after Reagan and Thatcher. These failures
included the externality of climate change, and in the UK the failure
of at least some privatisations. The centre/left also began to
increase its support for trade unions.
Needless to say this
move away from neoliberalism was much more gradual than those further
left desired, and you can reasonably argue that the governments of
Biden and Starmer are closer to neoliberalism than 1970s social
democracy, but right now at least the direction of travel for both
Labour and the Democrats is away from neoliberalism rather than
towards it.
While immediately
after Thatcher and Reagan the centre/left felt it had to follow large
aspects of neoliberalism, today the immediate threat is from right
wing populism. To counter this more rather than less state
intervention will be necessary, either by following socially
conservative themes (e.g. over immigration) or more traditional
social democratic measures that are designed to tackle economic
inequalities that many believe intensify the concerns of some
socially conservative voters.
Unlike dynamic 2,
this dynamic is a result of the clear economic rather than political
failure of neoliberalism.
A new landscape
In the UK we have a
centre/left government and a right wing opposition seemingly divided
(a mainstream Conservative party and the populist Reform) but where
in reality there is little to divide the two right wing parties in
terms of policy. In the US we have centre/left Democrats replaced by a new Trump administration. In
these two countries and in some others, the big divide is no longer
between traditional mainstream parties of the right and centre/left,
but between the centre/left and a populist plutocratic right focusing
on socially conservative issues. Whether that plutocratic populism
comes from a mainstream right party or an insurgent party seems
second order, and both may be run in an autocratic manner by
charismatic figures ill-suited to government.
Needless to say,
this last aspect of plutocratic populism is a disaster for those
countries unlucky enough to suffer under one of these autocratic
populists. Tens of thousands of people probably suffered a painful and
early death in both the UK and US because the pandemic hit while
Johnson and Trump were in power, and it could be even worse if Trump
succeeds in appointing anti-vaxxer Kennedy as his health secretary and a new flu pandemic hits us soon.
In this new
landscape, the central political fight is between right wing socially
conservative populists serving the interests of a select plutocracy,
and more traditional centre or centre/left parties generally
triangulating on culture wars but pursuing an economic policy that is
a blend between neoliberalism and more traditional social democracy.
Divisions reflect age and education rather than class. This suits the
plutocrats in power, but why centre/left parties don’t do more to
expose the plutocracy of the right is an interesting question.
Wither
neoliberalism? From centre/left governments the move away from
neoliberalism (dynamic 3) may be slow but it is clear. On the right, a focus on controlling migration and trade means neoliberalism is over as a unified
ideology of government. Exactly what replaces it on the right
is unclear. As Justin
Vassallo notes here, in many cases it is hard to
predict the general direction of economic policy in Trump’s second
administration, as it will depend on who in Trump’s cabinet gets
the upper hand. Some things are for sure, of course: there will be
more tax cuts for the wealthy and the poor will suffer. It is a
plutocracy after all. But, to quote Vassallo:
“It would be
different from the neoliberal model insofar that the economy would,
on one level, be much more regulated than before, but also radically
deregulated, depending on which bankers, tech barons, and energy
firms maintain Trump’s favour.”
This makes things
much more difficult for businesses and corporations. Under
neoliberalism corporations could be pretty sure that the government
would not enact policies that did them serious harm. In a plutocracy
that is no longer the case, and it becomes much more important for
CEOs to ingratiate themselves with the populist leader. The
incentives for rent seeking rather than innovation increase yet
further, and of course corruption becomes routine. On the other hand
business leaders get tax cuts!
Critique
This story is very
much a top-down narrative of political developments over the last few
decades. Politicians realising that extending neoliberal goals were
no longer enough to win elections turned to culture war issues, but
this created a dynamic that would eventually lead to socially
conservative populism and governments run for the benefit of a select
group of the very wealthy. In this account, it is no surprise to see
plutocratic populism emerging among the major economies first in the
US and UK, because that is where neoliberalism first became dominant.
In this account political actors seeking to extend neoliberal goals, who saw the financial crisis not as a neoliberal failure but an excuse for austerity, became the authors of their own demise. A critique might suggest that this is incidental, because a rise in socially conservative populism was inevitable anyway. This alternative story
is more bottom-up. It would have a combination of growing social liberalism and
wide-spread immigration radicalised social conservative voters, which
helped by an ageing population became a dominant political force. For
reasons described above, these voters would always look to the
political right rather than left, and also for reasons noted above
many were attracted by charismatic populist leaders. Plutocracy,
rather than playing the causal role in my top-down narrative, simply
benefited from the breakdown/transformation of the mainstream party
of the right caused by this bottom-up movement. The fact that it
happened in the UK and US before France, Germany or Japan may simply
reflect different voting systems.
A third narrative
stresses the economic conditions created by
neoliberalism (or the absence of the redistribution that went with
social democracy), and how this made a group of voters (the ‘left behind’)
disenchanted with mainstream parties and suseptible to populists. Because this story, like my own, puts
neoliberalism at centre stage it fits with populist first taking
power in the UK and US. This narrative can downplay the importance of
social conservatism and culture wars, and simply note that attacks on
minorities including immigrants has always been how populists deflect
economic concerns that might otherwise be directed towards the
wealthy.
These three alternative accounts can be competing or complementary. Maybe in 2025 I will think about how
to judge whether any one is more persuasive than the others. Have a
great Christmas and New Year!
[1] I prefer
plutocracy to oligarchy because it stresses the key point that
political leaders are either very wealthy themselves, or answer to
those who are. However the term plutocracy leaves unclear whether it
is government by all the rich or just some of the rich, and I use the
term in the second sense.
[2] John
Elledge suggested an ingenious way in which Brexit could still be
described as favouring free markets, if you view free as meaning free
from government involvement. However I don’t think this is
neoliberal because neoliberalism is quite happy for the state to take
action that helps markets function better for capital, and that
includes international standardisation of regulations.
[3] Sometimes policy
has to decide between competing capital interests. Climate change is
an interesting example. Neoliberals who are economically literate do
not deny the existence of externalities, and so a natural neoliberal
position would be to support green technology rather than fossil fuel
companies. For some time in the US but more recently in the UK the
position of the right has moved from this position to become more critical of measures to moderate climate change (see here
or here).