February. Home Secretary Patel is on interview overdrive. She’s selling her Government’s proposal to limit low-skilled immigrant hitchhikers. We’re already too crowded; our firms must drive the native workshy to fill these trifling trades. Fast forward to March; COVID-19 postpones that immigration control race. Valuations become fluid and the low skilled are promoted straight to the winner podium. Now rebranded as ‘necessary workers’, the original reaction by Tom Hadley (Director of Policy for the Recruitment and Employment Confederation) appears prophetic: “Jobs the Government considers ‘low-skilled’ are vital to well-being and business growth. The announcement threatens to shut out the people we need to provide services the public rely on”. So, as the Government finally shifts out of its ‘dither and delay’ gear, where will our economy be when we finally switch back on the economic cruise control? The road ahead appears unclear, so let me whip out first the map I bought back in 2008.
To highlight the impact of the Financial Crisis, let’s use a term more suited to Comic Con: ‘crash, bang, wallop’. The ‘crash’ is immediately followed by the ‘bang’ of crisis management. But reaction chugs on, fashioning a ‘wallop’ of spill-over effects. In the ‘crash’, the Financial Crisis ironically appears benign. 
See, for example, the lack of any significant impact on inequality measure such as the Gini Coefficient. Perhaps it can be a celebration of a cliché like ‘we’re all in it together’? Perhaps it describes how, unless there is permanent and radical shift in our social institutions, shocks will dissipate? Social democracies beat liberal democracies, who then shatter Anglo-Saxon neoliberalism, in any equality beauty stakes. Closer attention, however, provides for less comfortable reading. The ‘bang’ of crisis management leads to a discussion of Quantitative Easing. Stabilising the economy and protecting employment, that policy can create egalitarian cheer. Factor in the impact of asset price inflation and low interest rates, however, and these effects are easily swamped. But it’s the ‘wallop’ which is conducive to an involuntary tic. Austerity is enforced; it is a phenomenon which derives no love for fairness. Insidious effects, from the disaster of Universal Credit to the closure of key local services, impact on the most vulnerable. Even Steve Hilton, David Cameron’s version of ‘herd immunity’ Dominic Cummings, has somehow U-turned and accepted evidence of an avoidable death toll as high as 130,000.
Hang on though! With COVID-19 policy, we’re undoubtedly saving lives. How can lives lost be a fitting example? Let’s return to that ‘crash, bang, wallop’. The policy ‘bang’, admittedly more of a ‘pop’ until recently, has kicked in with geographical lockdown. A misplaced Government objective, as illustrated by PM Johnson’s quote, may hint at a perturbing impact: “We must act like any wartime government and do whatever it takes to support our economy”. Perhaps we will see too much focus on protecting elements of our economy and too little on protecting its people? The interesting number for a geek like me is 5 million and 42. The meaning of British economic life is the 5 million self-employed. It is also the 5 million-plus small businesses. They will undoubtedly share a much greater hardship from the ‘crash’. In contrast, corporations are often automatically shielded. The rail franchise system is suspended, nationalising any losses. A private health care deal, lauded as altruistic, guarantees that their costs are covered. The corporation won’t suffer from the loss of 80% of its revenue as routine contracting-out of NHS operations is postponed.
Will the ‘wallop’ again be a devil in the detail? Will we see the Government, despite infrastructure advantages and the ability to continue to borrow at low interest rates, obsess over corporate bailouts? Will socialising corporate losses, coupled with vanishing small firms, lead to an intensification of market concentration? Answering affirmatively to these questions might encourage an involuntary eye movement along a hypothetical ‘competition spectrum’ ranging from perfect competition to monopoly. That wouldn’t be accurate. Instead, we could see it cementing a shift in our economic paradigm to something akin to Munkirs’ Centralised Private Sector Planning. Here key corporations, together with tacitly colluding industries, lead on the coordination of our production and distribution systems. Rather than the premise of an impersonal ‘invisible hand’, the reality is an industrial and financial elite offering a ‘visible fist’ that enforces preferred economic outcomes. And how does this fist punch through and dictate? Deploying market ideology can only nudge. It needs a bureaucratic glove; it requires blurring of the distinction between private and public sector. Government officials become the robotic soldiers that are programmed, through social and cultural capital, to maintain the health status of the centrally planned corporations.
This of course is just one possibility. Let’s hope that I’m wide of the mark.
Photo by William Daigneault on Unsplash
Capitalism has become socialism for the rich. When private companies make profits that believe they should keep it all and not pay tax. When things go bad they say the government must help them. It’s the bailout disaster of the bankers again! We give them money to help they keep most of it to make profit and as soon as they become profitable we give them ownership of their banks back and take no interest out payment !!!
I wouldn’t necessarily apply the term ‘socialism’ as we would automatically be referring to worker ownership and control of the means of production. Your focus on socialising losses, however, yields merit. That certainly would be consistent with the idea of ‘private planning’ in this blog, rather than the standard competition criteria traditionally applied in Economics. Perhaps further insights are required by developing Chandler’s original analysis into the ‘visible hand’? This is used to show how, through differences in investment levels in organisation methods during the 2nd Industrial Revolution, we can explain divergence in economic performance. Traditionally, the ‘sick’ competitor is deemed to be Britain who- due to its class system and focus on family advantages- did not invest in managerial systems in the same way as the the likes of the US, Germany and Japan. The problem with that analysis, perhaps, is that it ignores how the creation of a management class can engineer an alternative ‘sickness’: the rise of rentier capitalism, with the market incapable of counteracting the inefficient advantages of ‘big business’.
Nationalising of the rail franchises temporarily so they don’t lose money, Bailout for the airlines so billionaires like Branson doesn’t lose money. Yet again the poor tax payers pick up the tab and no doubt will now have years of austerity to live through to pay for the privilege whilst the billionaires are allowed to pay less tax by using dodges such as tax havens offshore.
Whether austerity, despite previously falling foul of any grounded rationale, can be again reimposed does seem incomprehensible. However, zombie economics is impervious because of its undead reaction to real world outcomes. “The economy is akin to Aunt Meryl’s purse” is more likely to impact on public perception over government policy than a coherent, but complex, explanation focused on economic rationality. The voter, often corrupted by a false ‘common sense’ narrative, can indeed be easily nudged towards a neoliberal ideology.