Tuesday 20 April 2021

Why neoliberalism’s evolution into a populist plutocracy was inevitable

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In last week’s post I referenced an earlier post I had written in 2017 called “Was Neoliberal Overreach Inevitable? The question it posed was whether Trump and Brexit were an inevitable consequence of Thatcher and Reagan, or whether there was an alternative ‘fork in the road’ which if taken could have saved neoliberalism from that fate. That post was written in the aftershock of Trump’s election and the Brexit referendum. Four years on I think it is worth revisiting that question. (This post is a slightly more focused version of something I wrote six months ago.)


The best way to look at this is to ask what normally stops plutocracies happening? The first obvious but important point is that the threat of plutocracy depends on the number of the very rich, and also perhaps the extent to which they gained their wealth by actions that could easily be reversed politically. Those who have money will often want to influence politics either to increase or preserve their wealth, and this can be done by lobbying or political donation that compromises but does not end democracy. However the more very wealthy people there are, the more likely it is that some will wish to go beyond this, and try and influence the nature of democracy.


A plutocracy is where at least some of the very rich play a much larger part in determining key political decisions than lobbying or donations allow. This is quite compatible with the continuation of a nominal democracy as long as the party that will ensure the influence of the plutocrats is dominant always gets elected to power. If that fails to happen the plutocracy can just attempt to win next time, or can attempt to overturn the democratic decision that saw them lose power.


So what stops some wealthy people trying to change a democratic system into a plutocracy that is almost bound to serve their interests? The most obvious answer is the democratic process. A party run by a tiny minority of the very rich is not likely to be seen favourably by most voters if they see it as such, and so has little chance of being created. The way plutocrats can get around this is by persuading the members of a political party (inevitably a party of the right) to follow their wishes.


The first sense in which neoliberalism makes a transition to plutocracy easier is by increasing the number of the very wealthy. The 1980s saw a huge reduction in the marginal tax rate on high incomes in the US and UK. A bit of neoliberal mythology is that this wealth is actually good for everyone else, because the wealthy are ‘wealth creators’. That myth was increasingly accepted in part because of another defining aspect of neoliberalism, the destruction of the unions as an effective political force.


By substantially reducing the power of trade unions, neoliberalism reduces the influence of organised Labour on the electorate. That makes it easier to spread the myth that the wealthy are wealth creators, rather than the reality that the high incomes of the wealthy are at the expense of everyone else. Reducing union influence also increases the potential influence of the media on voters’ opinions.


The third way neoliberalism makes plutocracy easier is that, in the name of reducing regulations, restrictions on bias in the media are reduced. Under Thatcher, Murdoch was able to significantly increase his share of UK newspapers he owned, and Reagan abolished the Fairness Doctrine. The link between plutocracy and media ownership is very direct because media barons are part of the plutocracy and their influence on both right wing party members and voters more generally is considerable.


These three aspects of neoliberalism in the US and UK are necessary for plutocracy to emerge, but not I think sufficient. The main reason for this is that, after an initial decade or so, progressing neoliberalism from the right becomes unpopular. Starving public services in order to reduce taxes (particularly if the main beneficiaries are the wealthy) is not what most people want. Partly as a result the Conservatives lost to Labour in 1997. Labour, while accepting the neoliberal changes under Thatcher, actually increased health spending by raising taxes.


The way around this for both the Republican party and (later) the Conservatives was to shift the political debate away from economic left/right issues towards a culture war. Taking the socially conservative side in culture wars is attractive to parties of the right in both the UK and US partly because it detracts from the right’s less popular right wing policies, but also because of the properties of the electoral system. Social liberalism flourishes in cities and university towns, so the bias in the US Senate (and therefore the electoral college) towards rural communities and the bias of FPTP towards social conservatives means the right can win without a majority of the popular vote.


Culture wars are possible because of the tremendous social liberalisation of society over the last 60 odd years. That transformation is led by the young and those who have been to university, so there will always be many voters who feel left behind by this pace of change. Furthermore, as much of the material on the broadcast media is made by university educated socially liberals, social conservatives are open to talk about a liberal elite. Culture wars are a natural consequence of neoliberalism because right wing parties will adopt them, and that becomes a fourth reason why neoliberalism encourages populism.


In the US the Republican party had for some time allowed money to greatly influence elections, and had fought culture wars. The radicalisation of the party increased substantially when the Koch brothers helped finance the Tea Party, and Murdoch’s Fox News stopped just being supportive of the Republican party and started trying to change it in a more radical direction. In both cases we have very rich individuals pushing their political line not only because it is in their interest, but also because their ideology tells them it is right for the country.


The Tea Party and Fox meant the Republican party lost control of its base, and therefore who stood for election for the house, senate or President. In truth Trump was nobody’s candidate initially, but his appeal to the Republican base reflected two main factors. The first is that he said in plain language what had been dog whistled before in terms of the culture war. Second, he broke with neoliberalism in two important populist directions: controls on trade to ‘save jobs’, and controls on immigration. With his election the transformation from consensus neoliberalism to right wing populism became complete.


While Trump is unique, a right wing party controlled by its more militant base fighting a culture war is always vulnerable to a populist leader. In some ways the US was lucky that the populist they got was also fairly inept at strategy once in power, although we should note that it is quite possible he could be re-elected having learnt important lessons. Neoliberalism, having created the conditions where there are plenty of wealthy people able to mount a Presidential campaign, and having lost control of their base because of the actions of wealthy people, provided ideal conditions for a very wealth populist leader to win the Presidency, and through charisma then take over the right wing party.


The route taken by Trump to control the main right wing party was not available in the UK, because MPs could exclude any of their number they didn’t like from standing to be their leader. That, together with the absence of primaries, reduces the power of the right wing base. So if populism was to come to the UK, it would be through using a majority of voters to enable a populist takeover of the main right wing party. That could only be achieved by the right wing press and a charismatic politician who could convince a majority of voters that Brexit would allow them to take back control, which of course can only be done through lying on an industrial level. But it also needed a populist outside of the Conservative party that threatened its hegemony, Nigel Farage.


After Brexit the right wing party tried to keep control from populists, but the reality of those lies threatened to end the right’s control on power because they were being eclipsed by Farage, so Conservative MPs finally turned to Johnson as their saviour. A divided opposition and FPTP ensured the takeover of the right by a populist government under Johnson was complete. For those who still doubt Johnson’s government is a plutocracy, the group that provides 80% of Conservative party funds is called the Leaders group, and they meet regularly with senior politicians. Matthew d'Ancona describes the plutocratic world of senior Tory politicians. A defining characteristic of the Johnson government is that it provides public money to many of its donors through non-competitive contracts. With most of the press and a fearful BBC permanently on side, there is no accountability and so no reason why public wishes should be respected (see Barnard’s Castle, a second wave, bullying, corruption and so on).


Should we call the populism of Trump and Johnson a variant or evolution of neoliberalism? Certainly neoliberal ideas among both live on. That is for another time, but I would make one point on this. Neoliberalism (more precisely monopoly neoliberalism) as an ideology that acts in favour of the existing structure of capital. The populism of Johnson and Trump favours parts of capital (friends and donors) at the expense of others (particularly trading firms).


For the US it’s hard to argue against the proposition that the Republican party was wide open to a Trump like figure emerging. For the UK, it is tempting to focus on some 'if only' event. If only Cameron hadn’t agreed to a referendum, or Johnson had sent his other article, or Cameron’s campaign had been better and so on. But in a choice between losing power and giving in, at some point any Conservative leader was bound to give in, and a charismatic populist leader was bound to take over.


To summarise, neoliberalism in the US and UK was bound to lead to plutocratic populism, because it promoted growing inequality at the top, drastically reduced the power of trade unions, deregulated the media, and adopted culture war politics. These create the conditions in which populists acting in the interests of private money can take over the main party of the right.

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