From London to Edinburgh, ‘the markets’ are asserting themselves over British politics in anti-democratic moves with far-reaching implications, writes David Jamieson.
By the time you read this, Liz Truss could well be gone. That is of little significance in itself, because she has effectively lost power already, and is PM in name only.
From the moment Jeremy Hunt arrived as her new Chancellor, after the ditching of her close ally Kwasi Kwarteng, it became apparent that both her government, and indeed the whole UK, was under administration by an establishment enforcer there to represent ‘the markets’ – a euphemism for the interests of the most powerful fractions of the capitalist class.
These interests generally guide policy, marking out the limits of liberal democracy. But typically, they are cloaked behind talk of constitutions, prosperity, and freedom. And usually, governments have some room to interpret those interests, and to debate the best way to serve them.
No longer. The current government, voted for by no one (even fewer than selected Liz Truss), is the closest thing to emergency direct rule by the dominant sections of British capitalism in living memory. Within days of Hunt’s arrival, the entire government programme had gone out the window with Kwarteng. Hunt has wiped-out Truss’ announced tax cuts and reigned-in her cap on energy prices; a move that is projected to see them explode to an average of £4300 a month from next April. He then held a cabinet meeting (and really it was he and not Truss) where he told ministers that their departmental budgets would be cut.
The Chancellor/enforcer has brought in an Economic Advisory Council including figures from finance, the Bank of England and a chief adviser to George Osbourne, the architect of the UK’s last great austerity drive from 2010-16. The direction of travel could not be clearer. Behind Hunt is the permanent establishment of the Tory party – the party of class warrior fiscal hawks.
The novelty of the situation is attested by baffled journalists and commentators, whose turns of phrase cannot match events. Steve Richards, British media’s go-to political history bod, appeared on TV screens after Hunt’s arrival to warn that Liz Truss’ “power might begin to seep away”. As already stated, Liz Truss has no power. It disappeared in an instant, leaving no opportunity for it to “seep” anywhere. Tabloid front pages talk of ‘plots’ to oust Truss. But this implies a mode of political competition redundant in the circumstances. Instead, the Tory party is pulling together to replace her with a figure who can stop the rot.
Allusions drawn by commentators to the British sate’s rough tutelage by the IMF in the 1970s, or Alex Massie’s comparison to the Suez crisis under Anthony Eden in 1956, likewise cannot do justice to the present scenario. Consider the distinction to Eden’s humiliation. The US stepped in to remind Britain that it was no longer to pursue an independent course in Africa. Today Hunt has come to discipline the British state on matters of internal policy – a punishment for setting the wrong tax rates, while US President Biden scolds from the side lines.
This is a humiliation witnessed by the world, and its implications will be more far-reaching than almost anyone currently imagines. There are governments in other continents reconsidering their internal policies after having witnessed such a direct intervention from capital.
And if that is true in far-off lands, it is doubly true for all the major political parties in Britain. Both Labour and the SNP have conservative leaderships. Both those leaderships just became more conservative simply by observation of recent days.
Starmer of ‘The Markets’
Under Starmer, Labour were never going to launch any challenge to the power of British capitalism. After the destruction of the Truss government, the party will be eager to present itself as the safest pair of hands – the most militant adherents of the new market discipline. The only question is what the capitalist class want, and how far that agenda can be pushed.
Chiefly this will mean what Hunt calls “sustainable public finances”, reductions in national debt by lower borrowing, higher taxes, cutting public spending, or a cocktail of all three. This has traditionally been called austerity, though it is unlikely Labour will call it that.
In any austerity regime, naturally, the heaviest burden will fall on the working class. Markets and state institutions would react even more violently to redistributive policies than they have Truss’ cock-eyed libertarianism.
A massive Labour majority, should it materialise, is no barrier to an austerian orientation. The threat to the stability of a future Labour government is no longer principally the Conservatives, but a capitalist class prepared to assert themselves in the most forthright manner to impose discipline.
Meanwhile, the cowed remains of Labour’s group of left MPs continues to atrophy. Having pledged not to speak on Nato, they are now extremely vulnerable to further attacks from an emboldened leadership. On the day Hunt ditched Truss’ budget, the Labour party machine blocked the reselection of former MP Emma Dent Coad for associations with the anti-war movement. There is no left MP safe from the purge.
In some of the more extravagant polling (which cannot really be trusted given the character of events), the SNP would form the next official opposition despite losing seats to a Labour landslide. But the SNP too are chastened by the sight of the beating the UK Government has taken.
This was apparent from their re-launch of the Growth Commission proposals on currency and economic policy, in their third paper on the ‘renewed’ case for independence. Though the document simply repeated the stale nostrums of years ago, their framing as market friendly has a new pertinence.
Unlike in past iterations of sterlingisation (which means Scotland using the UK currency without a central bank or control of monetary policy), no timeframe was indicated for a transition to a new currency: “The decision about when to do this would be taken by the Scottish Parliament, guided by transparent criteria and economic conditions, rather than a fixed timetable.”
The new document stresses the need for “market confidence” in the new regime, and one can imagine that some of the phrases emphasising this point were added quite recently. As Jonathon Shafi has argued, the document itself is not a case for independence, more a case for voting SNP in an election likely to be dominated by the Labour party (hence the need to foreground independence and a return to the EU in particular – matters that clearly distinguish the SNP).
But the logic of “market confidence” runs in every direction. It applies to the SNP at Westminster, in local authorities and at Holyrood, independence or no. It’s remarkable that the SNP leadership could boast of shackling Scotland to the authority of international markets on the day that authority smashed a UK Government.
The party’s Europhilia perfectly dovetails with the new vogue for rigid adherence to markets – the EU itself being a focus of ‘fiscal discipline’ and ‘market credibility’ mongering, dominated by right-wing conservative governments and personnel. The old People’s Vote milieu have been quick to lend their approval to the new regime, portraying it as a necessary correction against the irresponsibility of the Brexiteers. They will likely push for re-alignment with the EU and may find an echo in the establishment.
Resisting the New Discipline
The ability of ‘the markets’ to re-enforce their own political power in such a naked display, even as they cast-aside old neoliberal favourites like corporate tax cuts to stimulate growth, means a radically altered political landscape.
It confirms the weaknesses of a ‘ginger’ strategy of pushing centre-left government ‘to the left’. This key part of the arsenal of many on the left of Labour now looks more toothless even than it has in the years since the removal of Jeremy Corbyn.
It likewise confounds such an approach in Scotland. The Greens have already been politically subsumed by their SNP partners, and will follow where the markets lead next. But this is true across the board. Scottish Governments will hardly be more inclined now to face-down Westminster on the new austerity measures. This isn’t just a problem for independence, but for devolution as well.
At the heart of the new discipline is a profound democratic malaise. No one has voted for this government. The new economic prospectus has ever been presented before the country, nor Tory members nor even MPs. The entire country has been side lined by the markets and the permanent state. The official alternatives are closely tied to those institutions.
Breaking the power of that new discipline will mean confronting and defeating it as it manifests in governments of various hues. Fuzzy coalitions for generational reform, trade union lobbies on sitting governments, or winning a ‘battle of ideas’ based on competent service of market expectations are all notions likely to re-enforce the central thrust of British capitalism.
‘Doing capitalism better than the Tories’ is going to be the maxim of those who saw themselves displaced from influence in the years following 2016. It is a platform hostile to the interests of the working class majority, who have suffered the authority of the markets for too long already.