This is What a Labour Government Does

Ahead of the Chancellor of the Exchequer's Spring Statement there has been much gloomy reporting of dismay and disappointment among Labour MPs. The prospect of further austerity, on top of the deeply-unpopular cuts to disabled benefits that were recently announced, adding to the lingering angst occasioned by the earlier cut to the Winter Fuel Allowance and the decision not to lift the two-child cap on benefits, have resulted in many nameless backbenchers claiming, in time-honoured fashion, that this wasn't what they came into politics to do. You could cynically dismiss this as bleating by people who have no intention of staging an effective Commons rebellion, but the reluctance to put their name to these quotes rather blunts the purpose. As a result, you find yourself concluding that they are probably sincere and really never imagined this outcome. Given the long history of Labour governments enforcing Treasury orthodoxy from 1929 onwards, and the tendency to cheesepare benefits, from the prescription charges introduced in 1949 to the public expenditure cuts of 1975, this attitude is historically illiterate but it is psychologically plausible.

Diane Abbott, who is happy to be named, has insisted that cutting the benefits and services of the most vulnerable is "not a Labour thing to do", but that is clearly a critique of the right - i.e. a belief that they have overstepped the traditional bounds of what the party is all about - rather than a considered assessment of the history of Labour governments. Again, it makes psychological sense to assume that the party has been hijacked by neoliberal entryists, much as it was in the 1990s, but this presumes some social democratic golden age when Labour governments didn't cut benefits or kowtowed to the Treasury. The reality is that Labour has been schizophrenic in office, giving with one hand and taking away with the other (the increase to Universal Credit at the same time that PIP eligibility is cut is typical behaviour). And what determines the relative degrees of generosity and parsimony is invariably the Treasury View, aka the "fiscal rules". Indeed, as the Truss/Kwarteng interlude showed, it is Labour that has always been most rigidly observant of those economic pieties. 

A Conservative government can always get away with bending, or ignoring, the rules more than a Labour government ever could. This is because the financial markets and the media know that the party serves the interests of capital and accumulated wealth: the risks of a Tory administration are wholly to do with competence. While Labour in practice serves the same interests, it retains a reputation for profligacy that is at odds with its history. Not only was Labour the original party of austerity after World War Two, but it has frequently found itself clearing up after Tory indulgence (e.g. the Barber Boom of the early-1970s) and has had the bad luck of being in office when global crises have hit (the ongoing effects of the Oil Shock of 1973, the banking crash of 2008). The lingering suspicion that Labour is overly-sympathetic to the poor (and thus naive to boot) is not justified by the record, but it remains a central trope of British politics because its purpose is to discipline government and ensure that MPs understand whose interests they must serve.

If backbench MPs come across as ingenuous fools, the liberal press are even worse. The hints that a Starmer-led government would reveal itself to be more generous once in office were always incredible, ignoring not only Labour's history but flatly refusing to acknowledge that the makeup of the parliamentary party had changed after 2019, with fewer battlers for society's underdogs and many more representatives of the managerial class that prospered under neoliberalism and that spent decades overseeing cuts in local government. The hopes invested in the new intake of MPs, notably the former think-tankers like Torsten Bell who built a reputation criticising the false economies of austerity, have been dashed. The PLP is now dominated by the same unimaginative technocracy that dominated under Blair and Brown and, like the Bourbons, appears to have learnt nothing during its exile from power while nursing grudges against the left. 

The solution to the government's poor poll ratings, we are told, is "re-education", first of MPs and then more widely of the electorate. But this is doomed to fail. Not only is the language patronising and tone-deaf (imagine the uproar if someone on the left had used that term), it is based on an attempt to big-up what are actually modest achievements. Thus we are told that "nationalising the railways, imposing a windfall tax on oil and gas, and VAT on private schools" chime with Labour values, ignoring that the railway rolling stock will remain in private hands, that the windfall tax was contingent and will eventually be reversed, and that VAT on private schools is a poor substitute for a wealth tax. Insofar as these reflect Labour values, those values appear to be exaggeration, opportunism and distraction. The tone of querulous stupidity was perfectly captured in this comment: "While officials do not deny deep cuts are ahead – with some departments facing reductions of as much as 7% over the next four years – they say it is happening at half the pace as under George Osborne."

Perhaps the most gob-smacking comment in the article by Pippa Crerar, Downing Street's preferred stenographer, was this: "Morgan McSweeney, Starmer’s chief of staff, is said to believe that when push comes to shove, Labour’s core vote will come back to the party to keep the Tories, or even Nigel Farage, out. While some may simply choose not to vote, the polling indicates a majority would return to the fold." This is little more than whistling to keep your spirits up. The key point that the media routinely ignores about the 2024 general election is that Labour won a large majority on only 34% of the vote because the right was split. It's actual vote count was half a million fewer than in 2019. Voters have been deserting the party for years now and they don't appear to be jumping ship. Turnout was dramatically down, highlighting the growing sense of public disillusion with all parties. As Frances Ryan put it elsewhere in the Guardian: "There is a feeling that, if this is life under the “good guys”, there really is no hope that anything will get better. Politicians, it turns out, really are all the same."

It's hard to imagine that by 2029 backbench MPs and the press won't have come to the reluctant conclusion that cutting benefits is actually what Labour governments do. And as there really isn't much difference between Labour and the Tories on fiscal policy, surely a coalition to thwart Reform is the progressive option if the electorate is split three ways (the Observer leader practically writes itself). As the end of this parliament approaches, there will no doubt be many backbenchers suggesting that now is time for the government to splash the cash, and just as many insisting that Labour cannot risk its new-found reputation for fiscal rectitude. Both views presume an understanding of the "political business cycle" as the alternation of parsimony and generosity around elections, ignoring the actual history of the term as the strategic deployment of anxiety over deficits to restrain stimulus. That historic meaning has disappeared from view not because it is out-of-date but because it has become hegemonic: the common sense of our politico-media caste and the final triumph of Treasury Brain.

The Human Condition

The UK's welfare system is not "broken", as some Labour MPs have claimed. If it were, then you would expect it to be failing across the board in its core purpose, which is to stop people dying from hunger and neglect. At the margin there is certainly unneccesary suffering, often the result of prior attempts at the "reform" of conditionality and procedure, but that is a different matter, specifically a matter of efficiency. In terms of effectiveness, the system is robust and does what it is meant to do. The pragmatic discussion on welfare centres on the level of benefits, and sure enough the government's mooted plans for welfare reform have, beyond the rhetoric about "moral duty", boiled down to the question of real-term cuts. But the wider framing is of existential crisis, and that cannot be explained away as either the result of systemic failure or the product of waste, which is both a chronic issue (there will always be some fraud and error at the margin) and relatively small. There is plenty to criticise in the design and operation of the welfare system, but nobody can seriously claim that it fails to do the job given it by Parliament. So why do politicians, and Labour's backbench Get Britain Working Group in particular, think that the system is broken? The argument, outlined in a letter to Liz Kendall, the Secretary of State for Work and Pensions, stands on three claims. 

The first is the idea that "Britain faces a crisis of economic inactivity". Despite the passing reference to NEETs, the letter focuses on the fact that employment levels among disabled people are 30% lower than among the non-disabled. You might pause at this point and wonder if that is actually a problem. Surely levels are always going to be lower: many disabled people simply cannot work. Even if you accept that the gap might be reduced by 10%, you will then wonder just how many extra workers this would produce. A little under a quarter of the working-age population have a disability of some sort, and most of them already work. A 10% change in employment levels would thus equate to roughly a 2.5% increase in the working population. That's not to be sniffed at, though as we're talking about marginal labour it is likely that the consequent output gain would not be proportionate. In other words, a 10% improvement in employment levels among the disabled might increase GDP by only 1% or less. But given that growth is the chief goal of this government, that would still be a welcome contribution.

The second claim of the GBWG is that "The economic cost of this is staggering". Leaving aside the hyperbole, this is also questionable. Not only would any increase in GDP be marginal, but there are good reasons to suspect that the types of jobs that would be created will be at the bottom end of the pay-scale and that a rapid increase in available labour would, as a simple matter of supply and demand, have a dampening effect on pay growth. In other words, getting more disabled people into work is not, whatever its other benefits, going to raise aggregate skill levels or productivity and thus long-term pay rates. The final claim is that "the current system often acts as a barrier against finding work." Expanding on this, the GBWG insist that "Rather than empowering individuals, it traps them in precarity". This is an odd claim because insofar as the welfare system makes claimants lives precarious it is through conditionality and sanctions, including the threat of benefits clawback should they secure temporary work. In other words, the system is not preventing them finding casual employment, but it can penalise them when they do. The broader problem that paid work may lead to a negligible increase in income is an issue of low pay, not high benefits.

The letter talks of the security and dignity of employment but ignores that these ideals have been steadily eroded under neoliberalism to the point where they have been replaced by their opposites, rebadged as the ideal of "flexibility" and the "hack" of eating a cheese sandwich at your desk as you work through your lunch-hour. Precarity has become pervasive among lower income workers because of zero-hour contracts and the need to take multiple jobs to make ends meet, not because more disabled people are on benefits. It also ignores that chivvying the disabled into low-paid work is unlikely to increase their sense of security and doesn't look very dignified from any angle. If the letter was a transparent attempt to encourage backbench support for the government's plans to tighten the rules on eligibility for disabled benefits, in particular for the young with mental health issues (the solipsistic "snowflake" has leapfrogged the shameless skiver on the media's list of public enemies), the rumoured real terms cut in PIP looks like a dead cat that will now be consigned to the bin as a quid pro quo for allowing that tightening to proceed. 

Starmer's "private address" to MPs, which has been helpfully released to the press, echoed the letter in imagining a frustrated population of disabled people held back from fulfilling employment by a perverse welfare system: "Addressing a meeting of the parliamentary Labour party in Westminster, Starmer said the current system was “discouraging people from working ... And if you want to work, the government should support you, not stop you”." Continuing in this vein, "Starmer said the government would promise to “make work pay” for those who could work", which studiously ignores that we have had working tax credits for a quarter of a century because for too many people work simply does not pay. If his address had included a commitment to significantly raise the national minimum wage (arguably a smarter "tax" on employers than increasing NICs) then it would have been more coherent.

The idea that the state somehow discourages work is obviously absurd, but it's of a part with Starmer's more general claim that government is the problem. This doesn't mean he has taken a libertarian turn (the chat about "Project Chainsaw" is little more than a cruel joke by Morgan McSweeney), rather he is insisting that government must be more determined and effective at driving neoliberal restructuring, hence the related decision to further centralise power by abolishing NHS England. Undoing the Lansley reforms makes sense, but we shouldn't imagine that this dirigiste turn heralds the dismantling of the internal market, less reliance on outsourcing to the private healthcare sector, or a major programme of investment to address the physical decay of the last 15 years. Starmer's attempt to present himself as the Great Emancipator of the Civil Service, unshackling the talent, is simultaneously undermined by his naive belief that AI can do much of the work. What this confusion highlights is that he remains a process guy, not a people guy, something that should give the swooning fans of his shuttle diplomacy pause for thought.

There is a general confusion in the Labour Party these days over its purpose and this is reflected in the understanding of work. Some see Labour as the party of work, in the sense of a managerial class seeking to optimise labour as a factor of production (the Fabian legacy congruent with neoliberalism). Others see Labour (still) as the party of workers (or at least "working people") and thus a class formation. This isn't a simple right-versus-left dichotomy as many on the party right, particularly those formed in the trade union movement, still see Labour as the workers' party. Likewise, some on the left, influenced by the tradition of social liberalism, have seen work in terms of self-actualisation rather than collective progress. It's perhaps worth pausing at this point and considering a distinction made by Hannah Arendt in The Human Condition between "animal laborans" (engaged in the brute struggle to secure shelter and food) and "homo faber" (making the world in the form of useful goods). She also included a third category, political activity or "action". In its classical origins, this was limited to the elite, but by 1958, when the book was published in an era of material plenty and high employment, there was a recognition that civic society was expanding through greater democratisation to include groups hitherto marginalised, such as the working class, women and ethnic minorities.

Arendt's progressive hierarchy was typical of postwar thinking, though it should be noted she was warning of its problems: the trivialisation of life as necessity recedes and the subsititution of action by consumption. In the optimistic telling, technology and superior management would gradually do away with the necessity of animal laborans (like AI will do away with civil servants) but it would also allow homo faber to progress to a more active civic life. What has happened since is a collapse of the boundaries between the three conditions. The hard division between venal business and the elite practice of politics, first established in the Greek city states of the Classical era, has evaporated as politics has adopted the theory and manner of business. But just as significantly the neoliberal era has seen the boundary between necessity and productivity erode. In the early industrial era, as analysed by Marx and others, necessity was reduced to the mimimum needed to keep workers alive while maximising production. The reaction to that inhumanity (the Polanyian counter-movement) led to the creation of a clear boundary between necessity and productivity: the Factory Acts, the 8-hour day, public services beyond the mere reproduction of labour. Necessity became a social concern.

What we have seen since the 1970s is an attempt to make necessity once more the responsibility of the individual, most obviously (in the UK at least) in the context of shelter. The rhetorical division of society into strivers and shirkers is not about the creation of a new class consciousness among the former but instead the atomisation of society into individuals whose own efforts constantly determine their categorisation. Labour's plans for the disabled are consistent with this, an initiative that will ignore individual circumstance (critics loudly citing specific cases of potential injustice are wasting their breath) while simultaneously denying the individual identification with anything other than the nebulous "working people" beloved of Starmer's speechwriters. Though the positive language of "security, dignity and agency" remains, it is clear that work is seen less as a route to self-actualisation than as an obligatory contribution to the economy. We have a moral duty not to treat people instrumentally, but that clearly isn't a guiding principle at the DWP, while the very name of the Get Britain Working Group of MPs subsumes the interests of both the individual and the working class in the greater glory of national GDP.

In Arendt's day it was still possible to imagine the civic sphere in the idealistic terms that would have been familiar to Pericles, despite the jarring reality (McCarthyism, venality, jobbery). No longer. Politics today is performed by managerialist drones like Wes Streeting and Liz Kendall, who celebrate their lack of idealism as maturity, while the real power in the land, the nexus of private wealth and corporate influence, avoids the public square. The postwar dream of welfare as the auxiliary support for homo faber, banishing necessity and encouraging civic participation, has given way to a revival of the Victorian principle of "less eligibility", but this time without the commitment to at least provide animal laborans with the shelter of the poor house.

War Actually

To mistake Keir Starmer for Hugh Grant in Love Actually once may be regarded as a failure of imagination; to do so a second time looks like a pathological delusion. The determination by the Guardian to cast Starmer's supplication before Donald Trump in Washington this week in the most positive terms was shared across the media spectrum. Ahead of the meeting there was much talk of the need for Starmer to "seize the opportunity"; afterwards, loud praise for his success in "walking the tightrope" and coming away with as much as could be expected. In fact, Starmer got nothing of substance. Neither, for that matter, did Emmanuel Macron, indicating that the once more popular entente cordiale, mooted as the foundation of the new European security order, is not something that even registers in American calculations. Both meetings were reported almost exlusively in terms of Trump's casual asides, his words parsed for significance like the utterances of an oracle. Maybe Putin will accept European peacekeepers in Ukraine; maybe the UK will not be hit by the same tariffs as the EU. In reality, Trump was merely toying with his interlocuters, a point made clear when he defied them to call him a liar by claiming that he'd never described Volodymyr Zelenskyy as a dictator.

Civility in politics is not just an instrument for circumscribing the legitimate. It also functions as a polite fiction that obscures the reality of naked power. Trump isn't a mad emperor who has been conned into walking around with no clothes on. Rather he is the naked depiction of American imperial might: demanding obeisance from allies and treasure from the weak. He is a performer who loves giving a performance and demands to be the centre of attention. In contrast, Starmer is lauded by his biographer for not being a performer, but Tom Baldwin fails to understand that the PM is highly performative, in the proper sense of that word, it's just that his promises are rarely kept. The British political establishment understands Trump to this extent, which is why the invitation for a state visit made in the name of King Charles was an important trinket, even though it highlights the limited options available in any future trade negotiations. Maybe we can avoid all that chlorinated chicken by offering to make Trump the Earl of Troon. Today will presumably see the President of Ukraine sign the terms of surrender. The question now appears to be whether the presence of American corporate staff in and around the countries mines will be sufficient to constitute a de facto US security guarantee. We are firmly into clutching at straws territory.

There was never any real doubt that the endgame for Ukraine would be dismemberment. Russia lacks the materiel sufficient to defeat and conquer the entire country, and had little interest in absorbing a hostile population beyond the Russian-speaking eastern oblasts. Ukraine in contrast lacks the manpower sufficient to push the Russians out of the occupied territories and has quietly accepted for some time that Crimea is never going to return to the fold. The only question was how much of the country could it hang on to and that in turn meant how much could it securitise through Western finance. The US hasn't fundamentally changed its policy under Trump, he has merely made the reality explicit. The military support was always a financial loan, not a donation, which meant that the US had an interest in the preservation of most of Ukraine as a debtor. Likewise, the salience now of those mineral deposits is less in their market value than the fact that a lot of them lie in the east, which means that the US has a vested interest in Ukraine recovering as much territory as possible from Russia. Of course, the other possibility is that Russia will keep the territories but allow American corporations access to them, which would incidentally mean an end to sanctions. It's just business.

From Washington's perspective, the angst of European countries over the end of the fiction of NATO is no more than a sideshow to its geopolitical pivot to Asia and its determination to quieten down both Ukraine and the Middle East. The desperation of British politicians and journalists to conjure up an Anglo-French nuclear foundation for a new European security alliance is a sideshow to that sideshow. With Trump's economic focus on tariffs against the EU and China, not to mention Canada and Mexico, the UK is merely an afterhought in terms of trade. In short, the UK simply doesn't matter on the world stage at the moment, despite the attempts by the political parties to talk up the significance of Diego Garcia. This was captured inadvertantly by the Newsnight journalist Nicholas Watt who claimed, ahead of this week's meeting, that "Labour figures" were hailing it as Starmer's "Falklands moment", which is obviously absurd as a parallel but does highlight the desperation to define this aimless administration. The consensus seems to be that "wartime leader", or perhaps this generation's Ernest Bevin, is as good as it's going to get, which shows how divorced from reality our politico-media caste is. Predictably, Watt reported the aftermath of the meeting in terms of an "ecstatic" Downing Street despite admitting that it had won precisely nothing in return for its "unprecedented" offer of a state visit.

Inasmuch as the Falklands War has a lesson for us today, it is in the manner that America's partisan support for the UK over Argentina during that conflict led to disillusion among Latin American countries where many, even in government, still clung to the myth of the US as an anti-colonialist power. The parallel today is with the growing disillusion of European nations about America's geopolitical interests. Again, the reality has always been privately acknowledged: America first in trade isn't a novelty, it will never impose a two-state solution on Israel (which is why that fiction can be supported in Europe) and its priorities now lie around the Pacific. The problem is accommodating this publicly in a political culture still wedded to Atlanticism and comfortable in its return to Russophobia. The reconfiguration of trade has been underway for over a decade now following the end of high globalisation and it's clear that of the major trading blocs it is the EU that will benefit least from the new order. Attempts to position the EU (or more bathetically the UK) between the US and China have come to naught, essentially because the US refuses to see Europe as a peer rather than as a collection of client states.

As in Ukraine, there is a recognition that Europe must provide greater security in the Middle East as the US disengages, but there is no willingness to countenance a fundamental change in policy that might destabilise the current balance of regional powers (Iran is to be contained, and Saudi Arabia and Israel indulged). With Washington openly subscribing to the idea of ethnic cleansing in Gaza, Europe must construct some other moral basis for its public stance of unstinting Zionism, hence Germany's adoption of Israel's security as a staatsraison has become generalised in a European intolerance of all things Palestinian. It would be easy to dismiss the common political drift to the right in the EU as the result of the failures of the traditional cartel parties to "get a grip" on immigration, but this would be to miss the undercurrent of resentment towards the US for having created the "immigration crisis" through its actions in the Middle East and North Africa. There is a sense among the European political establishment of having to clean up America's mess, and that dates from long before Donald Trump's first term in office. This is why being lectured by J D Vance, the US Vice-President, over free speech and the failure of governments to respond to popular concerns about immigration, is particularly galling. 

In the UK, where Atlanticism remains strong and cleaning up after America has long been instinctive, the chief irritation this week is that the cost of rearmament will be paid for by cutting foreign aid. Former Head of the Army Richard Dannatt outlines the conventional view: "diplomacy, development and defence are not competing priorities – they are complementary". But this is a framing that quietly excludes the role of trade, not least in weaponry. Aid money has a tendency to partially return as arms deals, so this may just be a case of cutting out the middle man. Now ensconced in the House of Lords, Dannatt can be blunt: the government "may well have to break its own fiscal rules and either raise taxes or increase borrowing. We may all have to share in the cost of doing the right thing." Obviously the Chancellor has no intention of raising borrowing, so you might wonder who that "all" is and how exactly the cost will be shared. Robert Shrimsley in the Financial Times helpfully notes that foreign aid must be cut to justify tax rises on working people, and that funds should also be freed-up through a "culling" of NHS officials and tougher welfare rules. In other words, higher taxes on incomes, not wealth, and no let up in austerity camouflaged as reform. Starmer's "triumph" is likely to prove as evanescent as all the previous attempts to gve this government a sense of purpose once those realities hit home.

NATO and After

Patrick Wintour in the Guardian thinks that NATO was founded on the defence of shared values and that a parting of the ways with the US may now be inevitable because of the American turn towards a populism that shows more sympathy for Russia than Europe. But NATO was never about the defence of democracy or nebulous freedom, as should be clear from the authoritarian dictatorships than it happily accommodated at various times (Portugal, Greece and Turkey). It was about the restraint of the USSR and (covertly) a mutual defence pact against communist success in domestic Western European politics. The Ukraine War has shown Russia to be a paper tiger that offers a negligible military threat to Europe and none whatsoever to the US. Everybody knows this and security arrangements will adjust accordingly. For all the urgent talk about increasing defence spending, the secular trend of a decline will continue once the war has ended. Wintour's emphasis on a "firewall" against populism indicates that the political dimension will remain uppermost in the minds of the European political establishment, but you can be sure that this won't be limited to excluding the far-right. If anything, absorption of the far-right is on the cards.

Trump's intervention has called into question the rules-based order, but this ignores that the USA has always refused to accept that the rules applied to it as the hegemon, and has done so regardless of who was in the White House. The ultimate rule has always been that might makes right. As Wintour continued later: "Sir Alex Younger, a former head of M16, argued Trump had ushered in a rules-free amoral world order in which the only commodity that mattered was raw power. “We have moved from a world of rules and multilateral institutions to strongmen making deals over the heads of weaker, and smaller countries,” he said. “This is our new world. This is Donald Trump’s world. The key psychological pivot we have to make is to that world. We are not operating in a systems world any longer, but an incentives world.”" While liberal commentators fulminate about appeasement and the 1930s, the more useful historical analogy for the slow erosion of NATO is the gradual dismantling of the Concert of Europe across the nineteenth century. We are moving from the age of Metternich to that of Bismarck, as realists have been insisting since the fall of the Berlin Wall, contradicting the many liberals proclaiming a perpetual peace.

But the value of the parallel is less to do with the notion of great power rivalries or "carve-ups" after 1848 than in the idea of a looming "policeman" guarding against disruptive tendencies which persisted beyond the end of the Concert. Then the threats were republicanism, national self-determination and socialism; now they are mass immigration, DEI and socialism (the one consistent spectre). Vladimir Putin's foreign policy has always aimed to revive the idea of Russia as a civilisational bulwark against the decadent West, an idea that owed as much to Tsar Nicholas I as Comrade Stalin, and he has found common cause now not just with J D Vance and other authoritarian conservatives but with native movements against le wokisme and immigration. If nothing else, it is amusing to see the confusion of groups such as Blue Labour as they simultaneously advocate the staunch defence of Ukraine and hob-nob with American reactionaries. This highlights the extent to which European politics over the last 30 years has been a "vacation from history", complacent in the face of geostrategic shifts - the decline of Russia and the rise of China - and obsessed with the parochial reconciliation of liberal economics and social conservatism. The early signs are not promising that the Trumpian disjuncture will lead to much more than regular meetings and portentous communiques.

If the United States believes that the greatest threat to its global hegemony is China, and if it also believes that its interests in the Middle East are best served by the regional defeat of Iran, then Russia would be a far more useful geostrategic ally than Europe, despite its relative decline. There is an obvious congruence of interests. Putin's is to weaken US support for Europe and to fragment the interests of the European states in order to give Russia more latitude in its "near abroad". But that is a strategy born of weakness, a weakness made all too apparent in Ukraine. The expansion of NATO and the EU to include Eastern Europe and the Baltics means that Russia has already lost the geostrategic battle over spheres of influence. It also means that while the US will ignore Russia intimidating Ukraine, it holds the monopoly on intimidating NATO members, as Romania is finding out. The likely failure of Europe to offer Ukraine any meaningful "security guarantees" simply reinforces the fact that the country was never seriously considered for membership of the EU and its dismemberment is not seen as an existential threat to the European order. The withdrawal of the US is a threat to Europe, but this should be seen more in terms of the reconfiguration of capital relations than in the disappearance of a security guarantee. 

One of the more useful comments on the last few days came from Yanis Varoufakis in his "leftist jester at the court of liberalism" role. Amid the tearful hyperbole and wild prescriptions in the Guardian, he focused on Trump's economic-cum-geostrategic plan: "His tariffs are a negotiating tool to get foreigners to revalue their currencies, to swap their holdings of short-term for long-term US debt, and to magnetise European chemical and mechanical engineering conglomerates (eg BASF and Volkswagen) from a stagnating Europe to a boisterous United States." This is a view implicitly shared in the more considered capitalist press, which has been concerned by European industrial and technological stagnation for over a decade. As Gideon Rachman in the Financial Times put it: "Europeans need to start preparing fast for the day when the US security guarantee to Europe is definitively removed. That must involve building up autonomous defence industries. It should also mean a European mutual defence pact, outside Nato, that extends beyond the EU — to include Britain, Norway and others" (but not Ukraine, you'll notice).

The US demand for European states to increase defence spending is self-interested, but not in the simplistic sense of "burden-sharing": there is no appetite in Washington to reduce American defence spending, as the priorities of Elon Musk (a major recipient of Pentagon money) make clear. Rather Washington expects much of that increased European spending to be directed to American arms manufacturers. Trump's executive order to suspend enforcement of the Foreign and Corrupt Practices Act (FCPA), which was passed in 1977 in the wake of the Lockheed arms scandal, is a signal that every means will be used to boost the interests of American capital. Europe is not so much a geostrategic theatre as a developing market in this perspective. The approach that the US will take will be informed by the standard operating practices of its multinationals, particularly those in the energy and mining sectors: coercive extraction of natural assets (already the price being asked of Ukraine), the demand for impunity from local laws and regulations (Vance's attack on Europe's legal integrity was pretty transparent), and the completely unfettered mobility of capital. No wonder Amazon, Meta and the like are on board with the administration.

The strategic issue for the UK is not the percentage of GDP that is devoted to defence - the mooted rise to 2.5% - but the use it is put to. An aircraft carrier in the South China Sea isn't much use for the defence of Europe, let alone Ukraine, and it wouldn't make that much difference to the US strategy in East Asia and the Pacific either. What does matter in Washington is Airstrip One and its forward operating bases in Cyprus and Diego Garcia. If the wars in Iraq and Afghanistan achieved anything, it was to convince the Pentagon that the British military is at best of marginal use and at worst a positive burden, but it has some nice real estate. Integrating them more closely operationally would best be achieved by buying American arms, rather than trying to maintain an independent arms sector that is obliged to sell to American clients like Saudi Arabia to keep afloat. The challenge then is not simply to the Treasury to find more money, but to the coherence of British Atlanticism, hence the attempt by Paul Mason to reimagine NATO as a British-led coalition that can reassure the US that the European flank is well-guarded, and incidentally to recast Keir Starmer as a modern Ernest Bevin (the parallels made with Harold Wilson as recently as 6 months ago now appear laughable, but drawing a line to Bevin seems much more risky given Ernie's well-known anti-Zionism).

Everyone agrees that Europe needs a major economic stimulus, and many have noted how the Russian economy has adapted to sanctions (an extreme form of tariff) and being put on a "war footing". Some thought that the green transition would provide this stimulus, but the decision of the centre-right to opportunistically oppose much of it (largely at the prompting of the reactionary press) has made that politically problematic. Likewise, there is no consensus on large-scale investment in public infrastructure, particularly public housing, even if specific business-friendly projects, like a third runway at Heathrow, will get state backing. In this climate, "building up autonomous defence industries", as Rachman suggests, makes sense. This doesn't necessarily herald a return to what David Edgerton, in the British context, referred to as the Warfare State, let alone to Paul Mason's daydreams, but it does provide a programme, likely to be acceptable across most of the political spectrum (e.g. including the German Greens), for a major domestic industrial stimulus whose costs can be funded by a combination of collective EU bonds (the same mechanism that many on the left proposed for the green transition), public spending cuts and higher taxes, but without jeopardising the dominance of capital markets or property prices. That Keir Starmer and Rachel Reeves immediately spotted the political opportunity this presents explains the alacrity with which the PM announced "our" readiness to once more put boots on the ground.

What's Up?

Katy Balls, the Spectator's resident Tory-whisperer, might seem an odd choice to present the Guardian's commentary on the latest Labour WhatsApp scandal, but the paper has long outsourced topics that might compromise its own political desk (there are plenty of Labour right factional chat groups that include both politicans and journalists). An added advantage is that it allows for an ecumenical approach, hence Balls can set the brouhaha in the context of a Westmister-wide addiction to chatting shit. What was notable by its absence in Balls' brief survey of the history was the infamous leak of the WhatsApp messages of the Labour Party HQ group that plotted against Jeremy Corbyn when he was leader. Balls does mention Corbyn, but only in the context of a separate group that provided an early outing for the clown troupe that would become known as Change UK. Given that the HQ group leak prompted an independent inquiry by Martin Forde, you might have thought it worth highlighting, not least because the personal attacks on the likes of Diane Abbott in the "Trigger Me Timbers" group clearly continued a theme. 

One explanation for the omission is that this latest example had no strategic or policy substance to it, allowing Balls to characterise such communications as an example of poor impulse control and the sort of backbiting that constitutes the chaff of daily political journalism. What the Forde Report revealed was, among other things, evidence of a conspiracy to pervert the conduct of the 2017 general election campaign for factional ends. If there is one thing that has characterised the Starmer regime it is the absolute determination to avoid having the party's factional disputes aired so publicly again, hence the alacrity with which the whip is withdrawn the moment an MP steps out of line. Andrew Gwynne will no doubt look suitably contrite while he sits in the sin bin but he can expect to be welcomed back into the fold once he has served his time and displayed good behaviour. After all, Starmer has made it clear that even lefties can be rehabilitated if they keep their noses clean, though some of them can also expect to be squeezed out before the next general election through deselection, something Gwynne will probably be spared.

If the substantive arguments that characterised previous Labour governments - from incomes policy to membership of the euro - are notable by their absence today, this doesn't mean that factional spite and jockeying for position have taken a back seat. This week's revelations about Rachel Reeves's questionable expenses when working for HBOS and her sexed-up CV are actually old news but they've been revived both because Starmer looks increasingly like a one-term Prime Minister and because others in the cabinet don't fancy Reeves taking over from him either before or after the next election. The implicit charge against her is that she isn't as competent a manager as she claims, rather than that she is drifting towards the left or has questionable judgement on how how high to jump when Washington barks. It's politics reduced to office politics, which is arguably a summation of this government with its vapid mantra of "Growth" and its insistence that greater process efficiency, from the Competition and Markets Authority to local planning decisions, can deliver it.

The dynamic behind all of this is the publication of Patrick Maguire and Gabriel Pogrund's Get In, a follow-up to their Left Out.  While the earlier book portrayed the 2019 general election defeat as a "betrayal" of Labour's constituency by the naive left, their latest gossipy offering revels in the skill by which the party right, and in particular Morgan McSweeney, won power first in the party and then at the 2024 general election. This obviously elides the contingent luck of facing a shattered Tory administration and a split on the right occasioned by the rise of Reform, but it also ignores the extent to which that same Labour constituency was cynically betrayed through a series of pledges made by Starmer to win the party leadership that were then steadily binned, resulting in fewer votes at the 2024 general election and a share of only 34%. That opinion polls now have Labour on around 25% simply emphasises the point that while journalists may be in awe of McSweeney the public have steadily turned against Labour and are perhaps disillusioned with representative politics more generally (turnout has fallen from 69% in 2017 to only 60% last year.)

What Maguire and Pogrund's book makes clear is that Starmer is despised by many in the PLP and in particular by the Blairites who think that he has served his purpose: the clean-skin with few moral scruples who was needed to finally seal the left's tomb. With the old right, represented by Rachel Reeves and Yvette Cooper, deemed too stupid to govern and the soft left little more than a punchline, the Blairites feel that their time has come again. The memory of Liz Kendall's dire performance as their flagbearer in 2015, garnering only 5% of the membership vote in the leadership election, has been washed away, and the woman herself given free rein as Secretary of State for Work and Pensions to tell us that too many people on benefits are "taking the mickey". This is ironic not only in the sense that forcing the disabled to take crap jobs does not constitute a credible strategy for growth but also in the sense that, as Maguire and Pogrund make clear, the Labour Party has been taking the piss since 2019, something the electorate appears to have clocked long before the media.

The name in the frame as Starmer's most likely successor is the Health Secretary Wes Streeting, who is in many ways similar to the Prime Minister, particularly in his opportunism and eagerness to please business interests, but who at least doesn't need the help of a voice coach to humanise him. But while the lad with the colourful East End family background may seduce the media with what passes for emotional intelligence in their circles, he does not offer a departure in terms of his politics from either New Labour (directing NHS funds towards the private health sector) or the current shift towards a Reform-adjacent Blue Labour (criticising the NHS for pulling the "immigration lever" to recruit foreign doctors). If the latest WhatsApp nonsense tells us anything, it isn't that the Labour right is made up of horrible people - we already knew that - but that their factionalism was always a substitute for a meaningful politics. Being an arsehole is an end in itself, hence Trigger Me Timbers' performative arseholery.

Just as getting Brexit "done" served to obscure the lack of a meaningful Conservative Party programme after a decade of self-defeating austerity, but quickly evaporated as the reality of a pointless government became all too plain after the Covid pandemic, so the insider revelations of Labour Party politics since 2015 are now being promoted way beyond their intrinsic value as a distraction from the lack of a meaningful programme of government. But arseholes being arseholes can only take up so much newsprint and airtime, hence the Guardian finds itself once more legitimising the far-right by its obsessive focus on populist incivility and poring over the receipts for donations to Reform, as if rich men funding reactionary politics was newsworthy. We are cursed in the UK with a dumb government and an anti-intellectual and bitchy political class, and the chief reason for that is our awful media, most of which is owned by other rich men keen to advance reactionary politics. As the nominally liberal opposition to this, the Guardian has played its part by offering an insipid centrism that celebrates the political void and now presents the political class as addled teenagers, glued to their phones: victims of social media who deserve our pity.

Waiting for the Barbarians

According to Jon Henley, the Guardian's Europe Correspondent, centre-right parties across the continent are being cannibalised by the far-right, in particular over the issue of immigration: "For decades, mainstream European parties on the right and left united behind a barrier – the Brandmauer (firewall) in Germany, the cordon sanitaire in France – against accommodating far-right ideas or cooperating with far-right parties. More recently, however, centre-right parties in particular have increasingly adopted far-right policies and, in several countries, formed coalitions with far-right parties. Despite evidence showing this only boosts the radical right, the process is accelerating." This makes it sound like centre-right parties are simply stupid: repeatedly pursuing an electoral strategy that demonstrably does not work. But they are clearly doing this with their eyes wide open. In fact, the normalisation of rightwing policies is less a push from the fringe and more of a pull from the centre, reflecting that it is the nominal middle that is choosing to shift rightwards. It isn't being dragged there against its will. 

Henley's suggestion that the centre-right are making a tactical error by trying to accommodate the far-right's policies on immigration ignores that the policies in question have long been promoted by the centre-right. In the UK, the Tories have been openly hostile to immigration since Margaret Thatcher's "swamped" remarks and regularly accused Labour of overseeing an intolerable rise in both net migration and asylum-seeking during the Blair and Brown years. That they subsequently proved incapable of delivering the promised reductions in net flows reflects the contradictions of their politics: support for capital's appetite for cheap labour and the tacit indulgence of the bigotry and xenophobia of their electoral base. In reporting the prediction that "Europe’s centre-right parties could be subsumed by the far right within 10 to 15 years", Henley misidentifies the dynamic: it is absorption, not subsumption. We've already seen this in the UK with the inroads that first UKIP and then the Brexit Party made into Tory support, its evaporation in 2019 as these voters "returned home", and now its re-emergence as Reform. This electoral promiscuity obscures the steady march to the right by the parties of the centre.

The European and American far-right remain ideologically chaotic and organisationally incompetent. The parallels with the 1930s are misleading because these groups do not in the main aspire to reorder society. As we are witnessing in real-time in the US, in power these people are focused on vandalising the state, not reinforcing it as a tool of totalitarian repression. Some voices on the far-right are programmatic reactionaries, or even sincere Fascists, but most are just pro-capital conservatives who want to deregulate markets and lower taxes on the rich. It's worth emphasising that the party leaders who have come to prominence on the far-right in Europe - Nigel Farage, Marine Le Pen, Georgia Meloni, Alice Weidel - are electoral pragmatists, concerned with relative positioning and alliance-building, rather than visionaries set on revolution. They face towards the centre and are unsurprisingly cut from the same bourgeois cloth as the cartel party leaders. That latter group includes the nominal centre-left as much as the centre-right. For example, the UK Labour government has shown its centre-right nature in office by consciously pursuing policies that it thinks will find favour with Reform voters as much as with Conservative ones, and you can't simply blame this on panicked MPs in marginal seats.

The far-right's strength is down to its promotion by the media. Long before Steve Bannon talked of "flooding the zone with shit" (ironically his claimed tactic for subverting mainstream media), rightwing newspapers were churning out propaganda that placed the locus of politics significantly to the right of centre. The rightwing policy entrpreneur Joseph Lehman claimed that "The most common misconception is that lawmakers themselves are in the business of shifting the Overton window. That is absolutely false. Lawmakers are actually in the business of detecting where the window is, and then moving to be in accordance with it." That claim itself was false, not only in its supposition that changes in policy preferences were purely organic but in its implication that political parties ("lawmakers") simply responded to public opinion rather than seeking to craft it. The relationship between press barons and politicians is often presented as asymmetric, the latter obliged to pay homage to the former (think of Tony Blair's relations with Rupert Murdoch), but they are actually symbiotic. Just as the EU was regularly blamed for policies that originated in Whitehall, so the press (presented as a reflection of popular opinion) can be blamed for a party shifting its policy rightwards.

This shift is often justified by reference to a minority of voters whose concerns and interests are given outsized importance on the grounds that they have hitherto been ignored by the political establishment. This is usually little more than puppetry. The political cartel has been convinced since the 1970s of the rightness (sic) of the neoliberal analysis: the primacy of private property, the need to marketise public services and the priority of tax cuts. To this end, the parties have worked with pollsters and the media to construct a number of character types seen to embody the same preferences and associated virtues (independence, hard-work etc), from Basildon Man through Worcester Woman. Initially these were presented as new formations in society, representing the zeitgeist, and were characterised by a transactional attitude towards both the state and each other. As neoliberalism has curdled, a new character group has come to the fore: the left behind. In contrast to the progressive and pragmatic types of the 1980s and 90s, these voters are conservative and nostalgic, motivated by "values" that have been supposedly undermined by globalisation and "identity politics" .

The psephology of the second half of the twentieth century centred on the construct of the median voter who was not only to be found in the middle of the political spectrum but also at the midpoint of other demographic dimensions such as age, education and income. In contrast, the politics of the era that commenced with the bankruptcy of neoliberalism in 2008 - what liberal commentators have taken to referring to as "populism" - have been characterised by the idea of the neglected conservative: older, less educated and poorer. In reality, far-right voters tend to be richer than the median and predominantly middle-aged. If far-right parties are gaining greater support, that will be down to what were once described as median voters. In other words, the median voter has been recast as more conservative than the demographic reality, and thus they have acquired the traditional characteristics associated with conservatism. The one dimension of the populist cliché that does appear to be true is educational attainment: voters for far-right parties tend to be less educated than the median, however that appears to be largely a product of the relatively recent expansion of higher education, i.e. it correlates with age, and is therefore likely to dissipate over time.

This "left behind" character is deemed by political scientists to combine a more leftwing view of economics (e.g. pro-nationalisation) with a social conservatism, and thus to be potentially attracted to the policies of the far-right, or at least to the faux nostalgia of a mythical hybrid such as Blue Labour. This ignores that actual far-right parties are typically economically liberal: in favour of rolling back the state and cutting taxes. It also ignores that in the character's political articulation in the media the leftwing economics are barely mentioned, just as they are equally marginal among MPs trying to revive Blue Labourism. And that's the clue that this is a character constructed in the interests of the cartel to justify a rightwards shift in social policy without jeopardising neoliberal hegemony. This is why "anti-green" and "anti-woke" impulses features so prominently. Genuine Fascists tend to be pro-environmental, to the point of blood-and-soil mysticism, and obsessive about identity and group rights. The push against net-zero and DEI in the US clearly serves the interests of particular fractions of capital, not neo-Nazis. 

The biggest shifts in policy on the right in recent years across Europe have been on the far-right and have invariably seen a move towards the centre. This has coincided with the nominal centre-left moving to the right, so squeezing the traditional parties of the centre-right. Thus the Rassemblement National in France has dropped its plan to quit the EU while Marine Le Pen continues her strategy of de-demonisation and seeks de facto alliances with the centre-right now represented by Emmanuel Macron. The Brothers of Italy have toned down their support for protectionism and shifted towards Atlanticism as they have joined the centre-right in a government coalition. The AfD in Germany is split between a centripetal Alternative Mitte and a more radical-right Der Flügel, with the former clearly in the ascendancy and keen to ally with the CDU/CSU. Across Europe, the far-right is being house-trained by the cartel as part of a process that seeks to embed neoliberal economics and governance within a "populist" framework of social reaction. All that has changed since 2008 is the abandoment of the progressive narrative of the centre-left.

It's All About You

Jonathan Liew's midweek column in the Guardian starts with sarcasm - "Well, obviously we need to talk about that Myles Lewis‑Skelly red card" - but doesn't manage to advance much beyond it, unless you consider the Punch-style whimsy - the idea that you can be a football writer and know almost nothing about the leading referees - as an improvement. What the column doesn't do (well, obviously) is talk about the Myles Lewis-Skelly red card, other than to imply that those who have questioned it were guilty of hyperbole: "That was almost certainly not the worst decision you’ve ever seen." Liew has some self-awareness in an otherwise self-regarding piece: "nobody needs another sensible middlebrow columnist explaining in deeply patronising serif font that, actually, it’s the fans who are the problem here." But this is merely the downpayment on his final conclusion that "much of the stigmatisation of referees is a sublimation of other grievances: fan disenfranchisement, rising prices, malign owners, useless administrators, a sport that at an elemental level no longer works for us." Everyone and everything else is to blame.

At heart, most Guardian sports journalists prefer other sports to football - cricket, rugby, tennis, you get the idea - so their attitude towards the game is one of barely-concealed class disdain mixed with professional ennui. Compare and contrast the coverage whenever cricket or rugby are in "crisis". The class angle is obvious when you see Liew equate anger over refereeing standards "with “two-tier policing” and “legitimate concerns about immigration” as something over which the little people can obsess." In suggesting we shouldn't dismiss such concerns he is not just being patronisingly ironic in Guardian house-style, he is reverting for comic effect to the newspaper's atavistic view of football fans as part of an uncultured mob. There are plenty of people angered by Michael Oliver's decision who voted remain in 2016 and would support greater generosity towards asylum-seekers today (some may even be fans of cricket). That these issues are not of equivalent political or social importance does not mean that one in particular should not be addressed.

By submerging refereeing into a general bleat about football as a rapacious industry and football fans as unreasonable consumers, Liew seeks to dilute the issue of the PGMOL's high-profile errors and questionable use of VAR. The latter has raised standards, but by winnowing the chaff it has also highlighted arbitrariness (the Lewis-Skelly red card could have been challenged by Darren England at the time). Liew's plea that referees "should be anonymous" is both irrelevant to the issue of poor judgement and the inadequate recourse when referees get it wrong. VAR has helped, but it has been implemented in a way that seeks to protect the referees rather than the integrity of the game, hence the long delays and poor communication. Despite his disdain, even Liew cannot help but admit that the quality of refereeing is a legitimate concern (sic) and one that has become more pronounced as the referees have lost the anonymity that he cherishes. In his words, the PGMOL has become "a sort of floating body in the ether, run neither by the Football Association nor the Premier League and thus answerable to nobody but its own insatiable main-character energy".

In the event, Arsenal appealed the red card and it was duly over-turned by the independent regulatory commission. This wasn't unexpected, given the near-unanimity among ex-players and coaches (who provide the bulk of the 5-man commission) in the aftermath that it was a yellow card, but you don't have to be paranoid have to wonder whether the game's "guardians", such as the FA, may have been irked by the outcome and whether that may have contributed to what in football parlance is referred to as "a bit of afters", with Arsenal charged for failing to control their players. The media management of the fallout included the report that Michael Oliver's family had faced social media abuse and threats, the aim apparently being to paint the referee as the real victim, which is never a smart strategy. The coincidental Sun interview with David Coote, which linked his well-known troubles with the pressure of being secretly gay, likewise came across as special pleading on behalf of the referees obliged to survive in "the macho world of football". The whiff of thuggery is never far from the surface in media descriptions.

The Guardian, in the person of Barney Ronay, cast a typically withering glance in the direction of Coote's revelations and his choice of newspaper in which to make them, including the now standard ironic self-deprecation ("why is this person in the Guardian newspaper now complaining"). Not only did he criticise the grubby motives of the Sun ("monetising Coote's distress"), but he also suggested that associating homosexuality with bad behaviour would not encourage other gay referees to come out, which is a fair point. But that negative association is also being made by Ronay, albeit in a deniable "look what this other paper printed" fashion. Just as Jonathan Liew's column didn't need writing, so neither did Barney Ronay's, and both can be accused of making themselves the main character in their relationship with football, as well as chasing clicks by contrarian sneering. Typically, Ronay's final conclusion is that the game itself is rotten, "the real takeaway is how brutally football has chewed this person up", which chimes with Liew's take that football is essentially vicious.

Let us return to the Lewis-Skelly red card decision. One of the regular reasons for dismissing criticism of referees is what Liew describes as "conspiracy hokum": the idea that refs have it in for your favoured club. It's important here to distinguish between bias and corruption (e.g. Coote has faced questions about whether he issued a yellow card as the result of a betting tip to a mate). There is no substantiated evidence of corruption in the English Premier League, but that referees are subject to unconcisous bias is academically well-established. They are influenced by the crowd, they tend to favour home teams and currently successful teams, and there is a degree of regional sympathy. This last point is particularly salient in English football because of its partisanship: every referee is also assumed to be a fan (many are happy to publicise their allegiances). Most PGMOL referees hail from the North West or elsewhere above the Severn-Wash line. London is barely represented (compare and contrast its contribution to players and coaches), which gives rise to a certain paranoia among some fans of teams in the capital.

The issue is not that the PGMOL is a closed shop, though its lack of diversity does make it look like one, but that it is an intrinsically conservative institution with its own cultural norms, which above all means defending your mates against players and coaches and treating fans as ignorant and ignorable. The focus on bias, which the media implicitly stokes as much as it formally derides, is a moralistic distraction from this sociological point, not least because unconcious bias tends to be very marginal and in some cases (e.g. home advantage) will even out. What matters to fans are game-changing incidents, which in football is a reflection of how many such incidents there can be and how their impact varies over the duration of a match. Issuing a red card in the opening minutes or a penalty in the closing minutes matters a lot more than vice versa. And what some fans have begun to suspect is that referees are sensitive to this, hence the chants of "Who's the wanker in the black" and "You don't know what you're doing" have increasingly given way to "It's all about you".

It is this suspicion that referees want to be the centre of attention that drives the current dissatisfaction, not the "sublimation of other grievances" as Liew put it. And, whether you consider it bias or not, a controversial decision involving a big club (or a national team) is more likely to raise the profile of a referee than a similar decision involving a small club. This is why Liew's appeal for referees to be "highly paid and totally anonymous" is naive, even allowing for the weary irony. English referees have been making themselves the centre of attention ever since matches were televised - e.g. Jack Taylor awarding two penalties in the 1974 World Cup Final and Clive Thomas denying Brazil a winning goal against Sweden in the 1978 World Cup. The very existence of the PGMOL is a by-product of television and the money it has injected into the game, while the characteristics the organisation displays - prickliness, pedantry, vanity - are those that could be recognised in Taylor and Thomas all those years ago. What football needs is not more VAR or less VAR but more humble referees, which would require a massive cultural change at the grassroots. But so long as top-division games are comprehensively televised, don't expect it to filter up to the PGMOL.

The Pivot of History

According to Branko Milanovic, "January 20, 2025 marks a symbolic end to global neoliberalism. Both of its components are gone. Globalism had now been converted into nationalism, neoliberalism has been made to apply to the economic sphere only. Its social parts—racial and gender equality, free movement of labor, multiculturalism—are dead. Only low tax rates, deregulation and worship of profit remain." There is no shortage of symbolism in Donald Trump's second inauguration, but I think the idea that his return to power marks the definitive end of global neoliberalism is too neat. The stark opposition that Milanovic proposes between globalism and nationalism makes little sense, neoliberalism continues to dictate social policy in such areas as welfare, and the claim that multiculturalism is dead is no different to rightwing commentators claiming that it has "failed". Pivotal moments are often little more than narrative conveniences. Just as neoliberalism started to influence government policy long before Margaret Thatcher entered 10 Downing Street in 1979, so its end will be a long, drawn-out affair. 

The roots of neoliberalism lie in the counter-movement against democracy that began after the First World War. The idea that politics should conform to market principles was a later ideological addition to the premise that democratic control over the economy would spell the end of private property. It was the exigencies of war that first opened the appalling vista of state control and led both to working class radicalism in the postwar years and the emergence of what Clara E Mattei in her book The Capital Order described as a "reconstructionist" agenda among progressives who saw state intervention as the means to advance social justice. The centre-piece of the counter-movement was the invention of austerity: an explicit programme to constrain the state by imposing costs on the democratic majority through reductions in welfare, wage repression and the fiscal discipline of government by debt-holders. These features have been as consistent throughout the history of neoliberalism as low tax rates, deregulation and the worship of profit. 

The simultaneous emergence of Fascism in Italy in the 1920s was not simply another expression of the anti-democratic movement. It showed that neoliberalism's political agenda was wholly compatible with an activist state. Fascist governments employed the same techniques of austerity but justified them through appeals to nationalism, racism and anti-Bolshevism. Private property was sacrosanct and state industries were privatised (the ideological equation of Nazi and Soviet totalitarianism during the Cold War obscured this). Even in the depths of total war, the Nazi state declined to expropriate capitalists, with the exception of Jews. But notwithstanding this cleaving to economic orthodoxy, the Second World War vastly expanded the scope of the state and led to the election of "reconstructionist" governments, typically of a social-democrat stripe, in many countries after the war. But from the beginning, these governments were reluctant to confront capitalists and soon acquiesced in a return to austerity. Far from marking a retreat of neoliberalism, les trente glorieuses marked its steady march towards hegemony.

If there is a symbolic moment that marks the triumph of neoliberalism it wasn't the fall of the Berlin Wall in 1989 but the Nixon shock in 1971. That brought to an end the Bretton Woods system and in particular led to the gradual removal of exchange controls and thus the free movement of capital. From that point onwards we see the steady spread of neoliberal practice throughout the developed world and the emergence of what would later be termed the Washington Consensus in respect of its relations with developing nations. The point to note here is that it took 50 years for neoliberalism to achieve that victory. Had the Second World War not happened, perhaps it might have been quicker, but the war happened because neoliberalism promoted Fascism. I suspect that the end of neoliberalism may take as long. Trump's first Presidential win marked the culmination of a phase of neoliberal decay that started around the millennium and became obvious in 2003, with the Iraq War marking the end of the delusions of liberal intervention. It became inarguable in 2008 when the banking crisis marked the end of financialisation as a substitute for material production. 

Subsequent attempts have been made to deal with the fallout, notably the imposition (again) of austerity as a way to protect asset values, the adoption of Green New Deal rhetoric as cover for the subsidisation of domestic producers, and the promotion of security interests as a justification for trade restraints on competitors, notably China. Trump's second inauguration indicates the extent to which these developments have now been normalised. Much of the claimed successes of the Biden Presidency were simply an extension of the mercantilist logic that Trump brought into the open during his first term, which is why his return to the White House shouldn't have been a surprise, even allowing for the Democrats' disastrous handling of the nomination process and the subsequent election. If Trump's initial electoral victory emphasised how neoliberalism had failed the democratic majority, his second indicates the failure of institutional politics to respond. But it doesn't mark the definitive end of neoliberalism. For all the distracting nonsense of his initial executive orders, the meat of his programme remains cuts to welfare, deregulation and lower taxes.

In a follow-up blog post, Milanovic notes how the principles of neoliberal globalisation have been in abeyance for over a decade and paints a consequently bleak picture of the immediate future: "It implies the return to mercantilistic policies where the interests of individual countries are paramount. It also means the abandonment of any cosmopolitan and internationalist perspective where the rules are at least in principle universal. We no longer have universal rules and the main culprit for not having universal rules is not Trump, but the view of the world where domestic political interest and the so-called security concerns are above everything else. This is not a world of globalization, but of parceled regionalisms and even nationalism." As a former employee of the World Bank, Milanovic is an evangelist for global development so he sees this as a betrayal. But I think emotion may be clouding his judgement. The interests of individual countries have always been paramount (this is the essence of realism) and the universal rules have always been selectively applied, as Israel frequently reminds us.

Simon Wren-Lewis has also been ruminating about the end of neoliberalism and the dynamics of what comes after: "the main political battles in many countries [will] be between on the one hand socially conservative right wing plutocratic populists and on the other centre or centre/left parties tentatively moving away from neoliberalism." That "tentatively" is doing a lot of work, as is the implication that the movement would be leftwards. Just consider two of Keir Starmer's recent pronouncements. First, the commitment to "ruthtless" public spending cuts in support of Rachel Reeves's fiscal rules. Second, his paean to the idea that the fairy dust of AI can transform public services and that selling off public data is a price worth paying for what amounts to little more than hype. These are the classic tropes of neoliberal utopianism: the liberation afforded by technology and the discipline of markets. With its rejection of nationalisation, its antipathy towards welfare and its belief that deregulation will spur growth, this is a government that remains in thrall to neoliberal practice. Insofar as the Labour right intend to move anywhere, it is, as Phil Edwards notes, to a "position where it embraces policies which would have been more characteristic of a far-Right party forty or fifty years ago".

Wren-Lewis makes an interesting point about international dynamics: "Increasingly the populist plutocratic right is an international project, and Trump’s victory gives its national representatives much more power. The UK is far from alone in having to contend with this kind of political interference. There is a danger that individual national governments that are not right wing populists may be too weak to combat this attack, particularly when resistance can result in economic retaliation from Trump in the form of tariffs." This may raise a rueful smile among anyone in a country that has historically had to put up with interference by the West, or where the only acceptable forms of government are those that satisfy the IMF and World Bank. A sub-text of much liberal commentary on the costs of Brexit has been the idea that the UK has been relegated from a nation that interferes in the affairs of others to one that is intefered with.

The plutocratic right has always been an international project, specifically to ensure the free movement of capital. When democracy looks like it might get out of hand, i.e. threaten private property, capital will up sticks and move elsewhere. Capital mobility is not simply about finding the best return but about minimising the risk of expropriation or (what amounts to the same thing in the minds of many capitalists) taxation. What has been little reported on is the way that initially isolationist and even autarkist rightwing movements have been repurposed in recent years, e.g. the anti-EU Front National became the grudgingly pro-EU Rassemblement National. This isn't due to any electoral calculation but because of pressure from its rich backers. While many saw opportunities in Brexit, notably the deregulation of capital flows through the City of London, few see similar opportunities in Frexit, with the country's continuing presence in the EU market being far more important to domestic and foreign capital. 

According to Wren-Lewis, "The fight against right wing plutocratic populism is not like previous post-war political battles between the right and left, over how society should be organised to best serve its citizens. Instead it is a battle over whether politics addresses the real world problems voters face, or whether it is instead preoccupied with a fantasy world." Politics has always dealt in fantasy, not least in the postwar era, from Churchill warning that Labour's 1945 manifesto heralded the arrival of a British Gestapo to Thatcher insisting that only monetarism could save British industry and reduce unemployment. As ever, what matters is not what people claim to believe but what those ostensible beliefs indicate, e.g. "Gestapo" was the hyperbolic inflation of worries about a nanny state but at root it reflected a fear that the state would seize private property. Likewise, monetarism was a technocratic rebranding of sound money: the idea that the interests of savers should trump those of consumers.

Wren-Lewis isn't simply wrong in his history here, he is obscuring that what we are faced with is not a novel situation but simply the latest round in the struggle between socialism and capitalism. The determination to rule out the possibility of any form of socialism has resulted in the advance and inevitable fall of governments of the ostensible "centre-left". They are incapable of reviving neoliberalism in its progressive, internationalist guise, but are also unwilling to properly embrace the legacy of postwar social democratic nationalism. Some have flirted with the idea of a national economy to outflank the far-right, but their unwillingness to consider nationalisation means they usually settle for a rhetorical nationalism that shades into xenophobia. The UK government promising to crack down on people-smuggling while opening up the NHS to foreign companies being illustrative.

Donald Trump doesn't mark the end of global neoliberalism because there is currently no effective opponent of neoliberalism within electoral politics. Until such time as there is, there can be no alternative and so neoliberalism will stumble on like a Zombie. The characteristics of its latest phase -  the populism, the plutocracy, the austerity - are simply amplifications of the nature of neoliberalism itself: the subversion of democracy to preserve property rights and impose the costs of capital's externalities on the general population. The re-emergence of a historically mild form of social democracy during the last decade, which was ruthlessly curtailed by the political establishment in both the UK and the US, indicates that the democratic appetite for an altenative exists, a point paradoxically reinforced by growing electoral disengagement. At present, it may seem hard to imagine how this could happen again, but it looked even less likely before 2015. Neoliberalism is dying and this gives rise to many morbid symptoms, not the least of which is the tendency to mistake a contingent form of rhetoric for substantial interests. The struggle of the last 100 years has been between democracy and private property, or socialism and capitalism, if you prefer. That isn't about to change.

AI Will Save Us All

One of the debates loosely collected under the rubric "The Great Stagnation" during the last decade was the question of why the productivity gains of the IT revolution were disappointing. This was an example of a failure of perspective, particularly in its comparison of the last quarter of the 20th century with earlier revolutions and the adoption of general purpose technologies (GPTs) such as steam power and electricity. Productivity is relative, not just temporally (producing more today from the same inputs than we did in the past) but spatially. The slow dissemination of technologies in the 18th and 19th centuries gave the UK a notable "first mover advantage", so much so that this phrase became pervasive in discussions of startups around the millennium. The lesson of history was that gradual dissemination, as much as government policy (e.g. protective tariffs or import-substitution), drove the catch-up of competitors with equal or better natural endownments such as the USA and Germany in the late 19th century. The greater rapidity of dissemination in subsequent technological waves, enabled in part by the cumulative effect of those earlier GPTs, has meant that first mover advantage has shrunk: a narrowing of the window of opportunity for the relative out-performance of peers. 

When all countries get the benefits of a new technology almost simultaneously the impact is diffused globally, but it manifests in different local productivity growth rates depending on the prior technological level. In simple terms, there is scope for a bigger step up in some areas than others. Consider the sub-Saharan African countries that skipped fixed-line telephony and went straight to cell networks and widespread smartphone usage after 2010. While the continent remains bedevilled by many structural impediments, it is now expected to be the second fastest growing region after Asia in coming years. Robert Solow's 1987 quip, "You can see the computer age everywhere but in the productivity statistics", was what you might expect from an MIT professor focused on the American economy. What he didn't seem to appreciate is that just as neoliberalism shuttered much of American industry and exported capital to peripheral nations, so it also exported productivity gains that might otherwise have been seen in the domestic data.

Perhaps the greatest impact of the IT revolution was that it enabled globalisation. While it was the container revolution and the falling cost of shipbuilding (as it moved to Japan and South Korea) that created the hard infrastructure for a huge increase in global trade, it was IT that enabled global inventory management and offshoring, which is why globalisation accelerated in the 1980s, not the 1960s. In other words, the productivity gains were revealed among developing nations able to leverage both the technology and low labour costs. Western corporations were able to tightly manage this process through technologies such as email, ERPs and CRMs, not forgetting the rapidly expanding and more reliable telecoms and datacoms that we nowadays take for granted. One part of the puzzle of Japanese stagnation, which started in the 1990s when North America and Europe were (relatively) prospering, was the country's reluctance to let go of the technologies that had powered its earlier boom years, such as fax machines and floppy disks. Other countries have read this as a lesson to embrace new technologies as soon as possible, which brings us to the current vogue for government AI strategies.

Much of the promise of AI is based on the assumption that it will drive productivity gains, but this can only be temporal rather than spatial because its dissemination is likely to take place pretty much everywhere at the same time. This is a consequence not only of that narrowing of the window of opportunity due to cumulative GPT waves (the most recent being the now-pervasive Internet), but because the technology itself is dependent on its concentration into global businesses that will necessarily seek maximum profit, and therefore rapid global spread, over national advantage (the tension between the MAGA right and the tech-bros in the US over immigration policy is reflective of this). Countries like the UK that produce national strategies for the development of AI as a productive industry, centred on light-touch regulation, facilitating infrastructure and leveraging "national data libraries", are seeking to combine the prescriptions of neoliberal development economics with the dirigisme of the postwar era, much as Joe Biden's administration in the US attempted more widely in respect of industrial strategy. It's not clear that this can succeed politically. That the electorate won't see the benefits any time soon is obvious, even to those who don't understand the technology. That AI's impact on wages may further erode the social solidarity necessary for a welfare state is perhaps less obvious as we try to peer through the hype.

The problem is that while the UK may well retain its position as a leading AI research centre this won't necessarily translate into a sustainable and significant economic advantage relative to other nations. What government subsidies will do is help defray the costs, both in cash terms and more importantly in terms of environmental externalities, for those global businesses that will dominate the sector, almost all of whom will be American. And you can be confident that they will pay minimal tax on their UK operations. But if the spatial advantage is likely to prove illusory, what of the temporal advantage? Will we at least see an above-trend improvement in domestic productivity? The first point to make is that if British firms have been slow in adopting new technology and working practices up to now, as evidenced by the poor productivity data, then it would seem unlikely that they'll suddenly embrace AI. The rate of the application of technology reflects multiple factors but the decisive one is usually management culture, and it's no secret that outside certain sectors and pockets (typically foreign-owned firms) British industry has poor calibre management.

The second point to make is structural. The UK's under-performance in productivity growth relative to its peers isn't because it lacks high-productivity businesses - there are many - but because of the composition of the national economy. The most obvious factor is the size of the service sector relative to manufacturing. Though the latter has shrunk relative to the former in all developed economies, the shift has been greater in the UK over the last 50 years. Achieving productivity gains in services is more difficult than in manufacturing where newer technology is often decisive. In services, productivity gains are limited by the human factor (the Baumol Effect), the greater difficulty in applying best practice to processes rather than tools, and by the low costs of entry (less need for plant and machinery). The latter encourages smaller, under-capitalised firms, which is a notable feature of the British economy. This is exacerbated by a tax regime that indulges sole traders ("Be your own boss"), small businesses (particularly family firms preserved by generous inheritance rules) and lifestyle companies (i.e. where the priority is a comfortable living rather than productivity).

If there is a strong sense of deja vu about the UK government's rhetoric about AI it is not simply because of its obliviousness to the structural peculiarities of the domestic economy or its proud technological illiteracy but because it sounds remarkably like the paeans once sung to globalisation by Tony Blair: "I hear people say we have to stop and debate globalisation. You might as well debate whether autumn should follow summer. They're not debating it in China and India." Thus Keir Starmer's recent article for the Financial Times opens "Artificial intelligence is the defining opportunity of our generation. It’s not a technology that is coming. It is already here, materially changing lives." The conclusion to the piece managed to be both needy and manic: "Put simply, that’s our message to anyone working at the AI frontier: take a look at Britain. Our ambition is to be the best state partner for you anywhere in the world. We can see the future, we are running towards it and we back our builders. Because we know that AI has arrived as the ultimate force for change and national renewal."

The cultish overtones are not just evidence that Blair's crazed eyes glanced approvingly over Starmer's speech. They point to the increasing desperation of the Prime Minister and his Chancellor as they find their economic strategy unravelling before their eyes. The idea that the financial markets would reward the return of "the grown-ups" to office has proven as naive as the idea that the UK could be shielded from the global turbulence now taking another turn as the implications of the second Trump Presidency are assessed. Insofar as Rachel Reeves had a plan, it was to defuse the Tories' fiscal bombs, provide enough extra funding to stop the NHS immediately keeling over, and otherwise sit tight and hope that improved business confidence would drive growth. Again, this studiously ignores the track record of the UK economy: the frothy nature of financial services growth around the millennium, the permanent scarring caused by austerity after 2010, and the sluggish bounceback after the pandemic as zombie SMEs staggered on. The fundamental problem of this government, like the New Labour administrations before it, is not that it doesn't understand technology but that it doesn't understand the UK economy. AI won't save Britain and it won't save this government.