In 1832, before the passage of the Great Reform Act, the enfranchised population of Great Britain stood at an estimated four hundred thousand men. Liz Truss, the country’s shortest-serving prime minister following her resignation this Thursday around lunchtime, was elected to the role by less than half as many people: 141,000 registered members of the Conservative Party. Favoring expediency this time, Sir Graham Brady, as head of the 1922 Committee — the rule-setting group of backbench Tories — has opted for a streamlined version of this summer’s election; the next prime minister is likely to be declared on Monday following a nomination process conducted among the Party’s 357 current MPs. By the end of the year, we might expect the cabinet to decide the matter among themselves every other week to spare the remaining sixty-seven million Britons the hassle.
MPs favor Rishi Sunak, chancellor of the exchequer under Boris Johnson and former hedge fund manager at Goldman Sachs, whose personal wealth stands at £730 million. At the time of writing his competition is Penny Mordaunt, former Royal Naval reservist and unhinged culture warrior, and Boris Johnson — who on exiting office compared himself to the Roman general Cincinnatus, who returned to power as a dictator. Whoever is handed the keys to Downing Street, the financial shocks induced by Truss (forty-five days in office) and her chancellor of the exchequer Kwasi Kwarteng (thirty-eight days in office) have severely constricted the parameters of British politics.
On September 23, in the aftermath of the ghoulish national carnival precipitated by the death of Queen Elizabeth, Kwarteng published “The Growth Plan 2022,” to all intents and purposes a mini-budget: a broad wave of tax cuts whose aim was — you guessed it — to produce economic growth. Most controversially, though least consequentially, Kwarteng scrapped the top rate of income tax while also reducing levies on investment, meting plans to push welfare recipients more aggressively into work, and axing plans made by the Johnson administration to increase corporation tax.
Sensing that “Growth 2022” might have been a misnomer, the markets reacted viciously. The value of the pound plummeted to $1.035 just three days after the chancellor’s announcement; the Institute for Fiscal Studies estimated that paying for the plans would require £62 billion in savings; and yields on ten-year government debt shot up by over a percentage point to 4.3, a signal that investors now felt Britain to be a risky bet. What eventually steadied the ship was not any political response but the technocratic intervention of Andrew Bailey, the head of the Bank of England, who committed to buying £10 billion in long-dated gilts per day until October 14.
The Origins of the Present Crisis
That this crisis has played out as one between a government accused of fiscal irresponsibility by markets on the one hand, and a central bank charged with assuming the role as the rational caretaker of capitalism on the other, should be deeply worrying. Labour Party leader Keir Starmer — who, as the likelihood of a general election increases, will be preparing himself for a stint at the cursed No. 10 lectern — needs no invitation to demonstrate his penchant for technocratic fixes to political problems. This he has already displayed as a lawyer in Britain’s highest court and a skilled manipulator of his party’s rules to purge left-wing members from its ranks.
That this crisis has been triggered by a budget — mini or not — will tie the issue of government spending, however it is funded, to impressions of instability and irresponsibility for years to come. Starmer, already economically to the right of Sunak on spending pledges, has no bones to make about staking out his territory as the disciplinarian. Starmer is imbued with all the charisma of a supply teacher; nevertheless, the election, when it is called, is his to lose. Meanwhile the Conservative Party has learned that its plan to ape Ronald Reagan’s economic policies by using unfunded tax cuts to fuel economic growth has one fatal flaw, observed by the Financial Times late last month: the UK does not issue the world’s reserve currency and accordingly there is not an unlimited demand for its sovereign debt.
On one fundamental fact about Britain’s economy Truss ultimately was right. Productivity within the country is among the lowest in the G7 and growth has scarcely rebounded since the crash of 2008; like the rest of the developed world it has found no path out of the slow growth caused by global overcapacity. However, Truss’s solutions to these problems were full of the shopkeeper’s idiocy common amongst Britain’s political class. In an unguarded moment at a party husting, shortly before being elected, the future prime minister could be heard claiming that British workers lack the graft of their global counterparts; she has described the UK as home to the worst idlers in the world. Quoting the novelist Kingsley Amis, the Financial Times summarized her growth plans as: “Faster, you fuckers!”
Comfortable bromides, Truss and her coconspirator’s diagnoses of Britain’s backwardness do little to get at its causes. Chief amongst them is the UK’s inability to compete globally, and the weakness of public investment in education, infrastructure, or housing, which has driven up the cost of survival for many. At the same time, this underinvestment is driving down the possibility of any return to growth and with it, improved living standards for the British populace.
Interesting, then, to note Truss’s use of the past tense in her resignation speech — “families and businesses were worried about how to pay their bills” (one of only two achievements she could name in an eighty-nine-second speech, along with reversing the National Insurance hike brought in by Sunak). The reality is that very few people noticed the energy unit price cap. Who cares if bills were prevented from soaring to £6,000 per household if they remain locked at £2,000 instead? It’s an amount of money most still can’t pay. Added to the normalized disgrace of a country reliant on foodbanks to feed itself is now the sight of “warm places,” areas of communal heating where those who can’t afford to switch the boiler on at home can gather for relief as the cold sets in.
Most worryingly, the UK is yet to register the full effects of the near-global shift away from loose to tight monetary policy. The growth model of both New Labour and the Conservatives was predicated on access to cheap credit, which in the context of stagnant wages for many not only kept the wolves away from the door but allowed access to cheap commodities and services as well. Under both Tony Blair and David Cameron, consent for neoliberalism was bought by a regime of permanently low interest rates. These were themselves reliant on suppression of organized labor, defanged by a combination of Thatcher’s anti-union laws (unrepealed by a majority-Labour government in power for fourteen years) and decades of political fragmentation. Without the inflationary threat created by rising wages, the Bank of England could be secure in its asset-inflating monetary policy of low interest rates.
Sacks of Potatoes
Variations in fixed-term mortgages will mean that the worst of the crisis will hit Britons in dribs and drabs rather than as an avalanche — the difference is between slowly bleeding out versus dying in a head-on collision. The effect may be to dilute any chance of mass popular mobilization, certainly anything comparable to the French gilets jaunes who rallied collectively in the face of a single price hike in fuel at the end of 2018.
The UK has reached the paroxysm stage of the disease endemic to late globalization: primary goods, from fuel to energy to housing to transport to schooling, remain utterly unaffordable, while trivial consumption goods receive monthly upgrades. Britain’s mortgage holders — for decades now, touted as the “winners” in the dizzying asset bubble of the housing market, compared to immiserated renters — will go bust one by one. As Marx already noted in 1851, debt atomizes instead of aggregates, turning everyone into a “sack of potatoes.”
In the short-, medium-, and long-term, Britain’s elites have given no impression that they can offer a way out of their country’s malaise. Credit, the lifeline on which British politics has relied for a generation, will be in increasingly low supply. During the few weeks in which Truss was in power, there was much talk of the libertarian takeover of the Tories led by Britain’s pro-market think tanks. Yet as hired agents they were also secondary to the old nexus between the Treasury, Bank of England, and the City of London, which the Truss government has now inadvertently tied back together in opposition to her short-lived plans. It has been this complex that has set the Overton window on policymaking since the 1970s at least, silently backed up by the Federal Reserve. The Left ought to pay heed: the structures that prop up British capitalism are more conventional, terrifying, and ruthless than any conspiracies of a cabal of think tanks lurking behind the scene suggest.
The resurgent trade union movement has thus far proved to be the only faction in society willing to increase labor’s share of income. That this militancy has risen during a period in which the Labour Party’s leadership has been at times actively hostile to worker organization should dismiss ideas that the Party is a catalyst for mass mobilization: the party has always been parasitic on the working class, never the other way around. Impressively, over eighty-seven thousand days were lost as a result of strike action in July of this year alone; the yearly average for 2019 was 19,500. It is only among the labor movement that any sign of organization or leadership equal to the scale of the crisis faced by Britain’s population — never mind its political class — has been in evidence. Only those parts of British society which retain a sense of communal life through the workplace — particularly in the public sector — retain a sense of collective action.
Speculatively, we could say that the political climate is one in which governments, hampered by slow growth and the rising cost of borrowing, are losing the ability to implement any serious program, whether on the Right or the Left. (Corbyn’s plan for a national investment bank, lest we forget, was itself reliant on low interest rates, while few on the Left seem willing to contemplate a counterfactual world in which the Corbyn government stands in for Truss.) At the level of parliamentary politics this will continue to intensify the hollowing of the void which the political scientist Peter Mair diagnosed so trenchantly.
In such conditions, the swift turnaround of political leaders will likely become par for the course, as one by one career parliamentarians prove unequal to the system collapse they inherit. Those among the Tories with one eye on the long game (such as committed ideologue Nadine Dorries) understand the received wisdom in such circumstances: step back, and let Labour muddy themselves through association with the mess.
Across the political spectrum, Britain’s elites are counting on Starmer to “do a Blair” and stabilize — with the minimal amount of reform possible — the country’s economy for renewed Tory dominance in a couple of elections’ time. Meanwhile, ordinary people will die from hunger and cold, the government (of whichever party) will remain committed to its hawkish position in a conflict with nuclear potential, and Britain will proudly declare that it remains open for business.