No, The Tories Aren’t ‘Moving Left’ on the Economy

There has been a lot of commentary about how the Tories are 'moving left' on the economy, but their newly interventionist policies won't help workers – they are designed to prop up British capitalism.

The pandemic has forced this Conservative government into much greater levels of direct economic intervention, and much more transparency about that intervention, than its predecessors.

Previous Conservative governments were not, of course, ‘non-interventionist’ in any real sense. Like all neoliberal governments, they frequently used their power both to direct economic activity and to shape the conditions in which it takes place: they spent huge amounts supporting the finance, real estate, and oil sectors, as well as implementing reams of regulation to shape the operation of existing markets or create new ones where they did not yet exist.

They also attempted to shift and shape peoples’ behaviour. Think back to all the conversations about the ‘nudge’ unit – Conservative politicians like David Cameron believed they could shift individual behaviour and make people ‘more rational’ by using tiny ‘nudges’ that would allow authorities to exercise subtle forms of power over citizens.

Even Thatcher’s government was keener on state intervention than we might think. Through mass privatisation—not least of the UK’s social housing stock—she sought to create a property-owning democracy, in which citizens would embrace free market ideology and expect their governments to do the same.

This Conservative government is both building on the neoliberal ideology of the past and substantially shifting it. Today’s Conservatives are as much the party of crony Keynesianism as they are free market fundamentalists.

The government is at once relying on private companies to respond to the pandemic—many of which have appalling records in the delivery of public services—and talking about raising corporation tax and setting up a national investment bank to direct capital flows around the country.

While there are huge holes in both proposals, it is not enough simply to argue that Boris Johnson’s and Rishi Sunak’s promises to ‘build back better’ are no more than empty rhetoric. We are dealing with a Conservative Party in transition – it just isn’t quite clear where that transition will lead.

The Queen’s speech this week gave us some indication as to how Johnson and his allies want to change the Conservative Party. The speech contained a smattering of announcements about public investment both to upgrade the UK’s creaking infrastructure and to ‘level up’ areas of the country that have been starved of funding for some time.

In place of the EU’s rules around state aid and procurement, the Tories are developing a new set of rules and standards – with Johnson said to prefer a more interventionist approach than that taken by the EU. Public funding for research and innovation will be given a boost and a new body—the Advanced Research and Invention Agency—will be set up.

Combined with some of the announcements made in the budget around taxation and investment, this suggests a more dirigiste approach to economic management than that pursued by Cameron and Osborne.

At the same time, the Tories are planning on rolling out eight new freeports across the country – a classic form of neoliberal spatial planning that allow large companies to escape taxation and regulation.

As I’ve argued many times in the past, previous Conservative governments implemented cuts across the public sector not so much to save money as to curtail the power of working people. In the wake of an economic crisis that fundamentally threatened the legitimacy of capital, sweeping cuts to public services and social security made working people feel powerless.

Johnson and Sunak are attempting to achieve similar ends but with different means. They are expanding state spending because big business requires it – not simply because of the pandemic, but also because the British economy (and indeed the world economy) has performed poorly across a number of indicators ever since 2008, from wages, to growth, to investment.

At the same time, they’re neglecting the parts of the public sector upon which most people depend. They’re spending more money, but they’re making sure that most of it doesn’t end up in workers’ pockets.

The furlough scheme was one of the few exceptions to this rule – and even then, research from IPPR has shown that half of the money distributed through the furlough scheme was paid to landlords and banks. And the Bank of England’s asset purchasing programme is inflating the wealth of owners at the expense of non-owners.

Alongside channelling money into the bank accounts of the wealthy, Johnson is working very hard to ensure workers don’t get any dangerous ideas about the state’s responsibilities to protect and support them.

Rather than spending money on social care, universal credit, and education, the government is funnelling cash into the police, the armed forces, and border control. It is also launching an all-out assault on freedom of speech and expression with bills like the Police, Crime, Sentencing and Courts Bill.

The tactics this government is using are different to those used by Johnson’s predecessors, but the aim is the same: to wage class war on working people across the UK.