How the Long, Slow Death of Neoliberalism Sent the Conservative Party Into Crisis

In a matter of weeks the Conservative party has lost its formerly flimsy grip on parliament, a historic six votes, any remaining confidence of EU negotiators, and the plot entirely. In more ordinary times, no one ever lost money betting on the party (and class) loyalties of Conservative MPs – spawning the popular truism that ‘there’s no such thing as a Tory rebel’. But these are not ordinary times. After prime minister Boris Johnson threatened to withdraw the whip from any member who scuppered his brinkmanship EU negotiating policy by further empowering parliament, 21 MPs still defied him and were kicked out. Since then, more have joined them. Some have fallen over themselves to heap praise on the principled integrity of the rebels. But rats, too, know when to flee a sinking ship.

Johnson’s strongman strategies rely on posturing as a leader of Churchillian fortitude, squaring off against the EU with the threat of a no-deal Brexit. A flashy PR stunt, but one which crumbles on contact with European realpolitik like a vampire on contact with sunlight. The truth is that this tactic has set the party on a crossroads between two futures, either of which could promise electoral catastrophe next time the Tories are tested at the polling booth. Either he delivers no-deal – or something sufficiently close to it to satisfy the Brexit Party and the European Research Group (ERG). In which case, his will be the party responsible for delivering – by its own estimates – a massive economic shock, a recession, and the ensuing years of intractable chaos from which even traditional Tory power bases will not be insulated. Or he settles for something similar to May’s deal, bowing finally to the EU’s demands for a backstop and numbering himself as one among the ‘traitors’ – facing a possible voter backlash from those on whose disaster capitalist (and ‘disaster nationalist’) appetites he’s built his public mandate for power.

Such huge internal contradictions are unusual for a party reliably adept at stewarding the strange tangled interests of Britain’s elites, from its ancient shambling aristocracy to its industrialists to the financiers in the soaring glass towers of the City. We can exhaust ourselves micro-analysing the palace intrigue. We blame the chaos on the venality and incompetence of those at the head of government – of which there has been plenty. But the problem has much deeper roots in the long crisis of neoliberalism, and in the governance of those trying to help it stagger on, despite itself.

Let’s take a step back. The British economy is in the pits. Growth is sluggish, investment is low, and productivity is pitiful. Superficially higher employment and an overall GDP increase hasn’t translated into a pay rise; wages have stagnated for a decade, and the resulting loss of demand has only entrenched problems. The incomes of the richest households have grown – whilst inequality and poverty have skyrocketed.

Meanwhile, the Conservative party has been steadily losing voters for nearly thirty years. In 2015, its only election victory since the early 90s delivered the slimmest of majorities – which Theresa May famously gambled away a mere two years later. With little interest in industrial strategy, and in the thrall of its wealthy funders, the Conservative party has responded to crisis by doubling down on the neoliberal policies and the reheated dogma of the Thatcherite revolution nearly forty years ago. Even Johnson – great populist though he claims to be – has shown little embarrassment in announcing tax cuts for the wealthy and proclaiming himself the friend of bankers. The Conservatives cling to Thatcherism despite – or perhaps because of – a near total ignorance of how and why it, for want of a better word, ‘worked’. 

Old-school liberals venerated a superficial separation of politics, economics and society into their different spheres, where the ‘free market’ is guaranteed by the minimal intervention of the state. This was always riven with internal contradictions – as bloomed disastrously to the surface in the ‘long recession’ of the late 1900s. But come the 1970s, neoliberals saw no need for politics to feign a tactful disinterest in the daily affairs of the market. They regarded the state as a tool to unleash the logic of competition and profit in all sectors of society. The economic and disciplinary power of the state acts as a wellspring and guarantor of private profit, offloading the risks of speculation – whilst large private corporations in return take on the task of disciplining the working class. Talk of the ‘free’ market conceals a deeply interventionist logic. 

Thatcher’s was never a majoritarian populist project, as Andy Beckett points out. At best, she could count on around 40-45% of the vote – which under our parliamentary system granted her the power to radically remake the country. She courted the aspirational middle classes and some of the working classes with promises of home ownership and a vision of enterprising individualism. But most importantly, she opened up the UK to the insatiable interests of corporations, previously somewhat restrained by the postwar settlement. She flogged off public assets, she deregulated the financial industry, she undertook a process of rapid deindustrialisation. She broke the collective bargaining power of the working class, and relied on personal debt to plug what would otherwise be a resultant gap in demand. 

The logic was that by putting no limits on the accumulation of wealth – by forcibly extending the power of private enterprise – one would stimulate investment, entrepreneurialism, growth. Where old industries were broken, new ones would flourish in the new territory cleared from the weeds of unionism. And for a while it did unleash giddy speculation and soaring profit margins. But it wasn’t going to last for long. 

Wages fell and unemployment grew. The new class of property owners created by the sell-off of public housing stock were able to borrow against their new assets, and renters relied on easier credit access to boost demand where wages fell short – creating a debt-based model of consumption which came crashing spectacularly down in 2008.

Breaking the power of the unions slowly decoupled GDP and wage growth, until they finally came apart in 2010. But the suppression of wages can only go so far without the kinds of productivity, demand and investment slumps we’re seeing at the moment.

Financial speculation inflated asset prices so radically that the modern Tory party can’t hope to offer a tactical chunk of the electorate a cynical buy-in to a traditionally conservative constituency of home owners. Ownership of assets has been concentrated in the hands of fewer and fewer people. Talk of a ‘share-owning democracy’ with a popular buy-in to capitalism was just that: talk.

Moreover, when Thatcher came to power the Conservatives inherited the considerable public wealth created by the postwar settlement – and their sell off (particularly North Sea Oil) temporarily boosted the economy. Even then, her government only ever ran two budget surpluses. That dubious miracle is unrepeatable because the current members of the Conservative party have no such rich inheritance. There is nothing left to sell.

This has not stopped the modern Conservative party relying as devoutly on the truisms of neoliberalism as a flock of priests chanting the unimpeachable mysteries of some old and vengeful god: cutting taxes; suppressing wages even though demand is at rock-bottom; deregulating to ‘stimulate business’ without a plan for investment. All the while, showing little interest in industrial strategy beyond further deregulation and tax incentives to ‘stimulate business’ – the equivalent of trying to revive a corpse by giving it a stern talking to. They have no clue about how to summon a successful electoral coalition beyond stirring up a culture war to appeal to the assumed bigotry and frothing nationalism of the ‘ordinary working class’. (Enabled, it should be said, by the Labour Party’s perpetual reluctance to reinvent the debate around race and immigration like it did with economic issues.) We should not be surprised that the administration’s electoral focus is all PR and no policy, all mouth and no trousers. Neither should we be surprised that where popular support isn’t forthcoming, they turn to voter suppression and authoritarian attempts to hijack or circumvent parliament.

Part of this is down to the Conservative party’s assembled ranks of corporate interests and lobbyists blithe mandate for inaction; in the short term, their profit margins are looking healthy. Part of it is an endemic Victorian fascination with punishing a work-shy underclass by any means necessary, and an utter bewilderment that leftwing policies consistently poll well – even if Labour doesn’t. Part of it is down to their membership whose disproportionally rich, white, male and rabidly bigoted ranks provide little institutional anchor to the mood – and indeed the fortunes – of the rest of the country.

But even without these hangups, they would still face a hard problem. What kind of economic programme, with enough teeth and determination to haul the country out of long-term stagnation, would be acceptable to the assembly of corporate interests backing the Conservative party, who fight tooth and nail against any tax rise, any workers’ protections, any restraint on the gargantuan power of finance? Since the deregulation and free trade revolution of the 1970s, a subtle gap has grown between the interests of domestic exploiters and those of the finance capital servicing international markets. What kind of economic programme would satisfy their (sometimes overlapping but) competing interests? In a Tory world, what new ideas are possible?

The Conservative party has been the historic home of Britain’s capitalist elites. It is tasked with the solemn duty of preserving their interests whilst maintaining popular consent to govern on their behalf. But with fractures growing within the capitalist class and little room for populist policy-making to conjure up more votes, it’s struggling to do just that. It has been suffocating under the weight of its own vacuity and inaction.

Enter Brexit. The referendum was initially offered in an attempt to solve similar problems – a bargain made by David Cameron with the troublesome ranks of far right parties and his own restive backbenches to stem vote loss and deliver that 2015 victory. The campaign loss marked a definitive confirmation that demanding public faith in the truisms of neoliberalism, whilst frantically insisting that everything is fine, is a powerful vote-loser. (It is a lesson which much of the political establishment – including the Liberal Democrats and some Labour members, are yet to seriously learn.) And since then, the different visions for Brexit have sharpened the contradictions between competing visions for the future of British capital.

True, the Conservative coalition’s interests largely align with the practical interests of the EU as a supranational body enshrining the legal and technocratic mechanics of neoliberalism. But as Quinn Slobodian and Diete Plehwe have explained, it would be a mistake to think that the hardline Brexiteers in the ERG – and their cheerleaders in the US – are any less ardent neoliberals. Theirs is a more freewheeling, hard-globalist shock doctrine, whereby the chaos of a no-deal Brexit will allow them to fully unshackle the power of finance capital, likely to turn the country into ‘Singapore-on-Thames’. As Margaret Thatcher complained in 1988, ‘We have not successfully rolled back the frontiers of the state in Britain only to see them re-imposed at a European level’. Thus the tub thumping ambitions of retro-imperialist nostalgics, keen to re-inflate Britain’s lost colonial glory, merges neatly with those of lobbyists and politicians keen to open up the UK to yet more predatory financialisation. 

These aims are starkly at odds with the interests of much of the traditional Conservative base. But they’ve still managed to strong-arm themselves into party supremacy by virtue of the fact that those interests have fallen into sluggishness and stagnation; clueless and chaotic, with no substantial offer to bring to a divided and mistrustful electorate. Hard Brexiteers, no-dealers – they have a vision. A nightmarish, fascistic vision. A muscular optimism, a promise of glory, a way of channelling political fury into a militarist fantasy of national renewal. A vision for the renewal of party and country in the fire trials of Brexit, to re-found their voting base just as they re-make the country. It’s a nightmarish vision, but Dominic Cummings waits salivating in the wings to cut away the older necrotic flesh of the party to reveal a leaner, hungrier, more dangerous beast.

Despite the ambitions of a man who once wished to be “world king”, sheer force of vision and will has not been enough to broker a deal in parliament, let alone forcibly break and reforge the country as Thatcher did. And in the long term, it’s not clear how Johnson and Cummings plan to maintain that mythically renewed mandate and its nationalist fervour in light of a no-deal Brexit recession. Perhaps a further nightmarish turn to authoritarianism, or slinking off into the opposition benches to lick their wounds and regroup. Perhaps a split. Perhaps an annihilation at the polls. We will see in the coming months whether it is possible for the Conservatives to renew themselves – as an electoral force, as the people in charge of a newly brutal economic ‘common sense’. Or if they will continue to nurture the managed decline of their own world order before socialism or barbarism sweeps them away.

Eleanor Penny is a writer and a regular contributor to Novara Media.