Britain out of the EU: a treasure island for rentiers

There’s no sign that ministers will use the twin shocks of the pandemic and Brexit to fix a broken system that is failing too many people opine the editors of The Guardian

‘Culturally, Brexit plays the same sort of role as the right to buy, insulating poorer leave voters from the idea that they will suffer from the resulting policies.’ Photograph: Christopher Furlong/Getty Images
 

When the UK entered the coronavirus age in March, state resources and collective commitment were mobilised on a scale not seen since the second world war. Decades ago, Britain had revealed itself, thanks in part to being able to marshal the industrial might of the empire, to be a formidable world power. Its economy was energised with breakthroughs in radar, atomic power and medicine.

Although the story of the pandemic has not yet ended, there appears to be no such transformation in sight under Boris Johnson. Rather depressingly, familiar trends of greed, incompetence and cronyism are reasserting themselves. This is bad news for an economy where there has been a collapse of socially useful innovation. Britain’s lack of hi-tech manufacturing capabilities, notably in medical diagnostic testing, was cruelly exposed by the pandemic.

This country has become more of a procurer than a producer of technology. But it is a remarkably inefficient one – despite an extraordinarily high percentage of lawyers and accountants in the working population. Connections seem to matter more than inventions. How else to explain why, in the desperate scramble to procure personal protective equipment, ventilators and coronavirus tests, billions of pounds of contracts have gone to companies either run by friends or supporters – even neighbours – of Conservative politicians, or with no prior expertise.

History is not short of examples where political insiders were successful in extracting virtually all the surplus that the economy created. Such influential interests moulded politics to enlarge their share of the pie. Greed was limited only by the need to let the producers survive. The shock of war, revolution, famine or plague provides an opportunity to fix a broken society. But if, post-pandemic, UK politicians care less about reform than the retention of power, they will fail to restrain the grasping enrichment that undermines democracy itself.

Windfall profits

Perhaps the most penetrating X-ray of this phenomenon today is by Brett Christophers in his book Rentier Capitalism. The academic makes the case that Britain has become a treasure island for those seeking excess profits from state-sanctioned control of natural resources, property, financial assets and intellectual property. Rent, paid by renters to rentiers, is tied to the ownership or control of such assets, made scarce under conditions of limited or no competition.

Mr Christophers says that the first sign of this new order was when Britain struck black gold in the North Sea. He writes that MPs on the public accounts committee noted with incredulity in 1972 that “the first huge areas of the sea were leased to the companies as generously as though Britain were a gullible Sheikhdom”. After that, public assets were sold off cheaply. The private sector ended up controlling lightly regulated monopolies in gas, water and electric supply, and public transport and telecoms. Customers lost out, overpaying for poor service. In a rentier’s paradise, windfall profits abound. Brazenly occupying the lowest moral ground was essential, as the housebuilder Persimmon proved by earning supersized state-backed help-to-buy profits long enough to hand out a £75m bonus to its boss.

The banks, which took this country to the brink of collapse a decade ago, are at the heart of a rentier state. France, Germany, Japan, the US all have banking sectors smaller than the UK. While banks earning rents have flourished, the households paying them – either directly as financial consumers, or indirectly as taxpayers of a debtor state or customers of debtor firms – have floundered.

The anger that such spivvery engenders is diffused politically by making voters complicit in the theft. The sell-off of council homes, says Mr Christophers, was a privatisation that gave many of those perhaps most inclined to kick against Thatcherism a personal stake in the project. Culturally, Brexit plays the same sort of role as the right to buy, insulating poorer leave voters from the idea that they will suffer from the resulting policies.

The prime minister understands that Covid can change Britain, but lacks modernising policies. He extols the virtues of free competition – both for itself and because such freedom, he reasons, will somehow liberate the spirit fluttering within a pre-Brexit Britain caged by coronavirus. He is no doubt betting that the disruption of leaving the EU will be lost in the roar of an economy taking off as an inoculated population returns to offices and shops.

Weakened regulations

The gap between rich and poor in the UK is at least as high today, academics calculate, as it was just before the start of the second world war. This is largely because the British state that once mediated the struggle between labour and capital has been taken over by rentiers. Weakening regulations, reducing the importance of fiscal policy and shredding social protections has corroded liberal democracy in which an increasingly influential wealthy few have been enjoying a free run. Ultimately, rentiers want to increase what the economist Michał Kalecki called the “degree of monopoly” in an economy. This allows them to limit the ability of workers, consumers and regulators to influence the markup of selling prices over costs and to defend the share of wages in output.

The EU says its labour, environment and customer protections are a floor, not a ceiling, and that they can’t be traded away for frictionless market access. If we had stayed in the club, our ability to concentrate profits for monopolists would have been stymied in future trade deals negotiated by Brussels and open to MEPs’ scrutiny. Outside the EU, Mr Johnson can barter away such regulations – without parliamentary oversight – and scrap safeguards in new technology for higher monopoly profits. Karl Marx wrote in The Eighteenth Brumaire of Louis Bonaparte in 1852 that “the Tories in England long fancied that they were in raptures about royalty, the church and the beauties of the ancient constitution, until a time of trial tore from them the confession that they were only in raptures about rent”. His assessment of early 19th-century Tories applies with unerring accuracy to today’s Conservatives.

Mr Christophers’ insight is that the Tories under Mr Johnson are a party of – and for – rentiers, much more than the interests of productive capital. This explains why, after 2016, the Tory party embraced Brexit and shrugged off productive capital’s concerns about leaving the EU. It will be to the great detriment of this country if the pandemic permitted Mr Johnson to combine present-day fears with a yearning for hopeful change to persuade the average person to vote against their interests in the future. But history often repeats itself first as tragedy, then as farce.

Throughout history Britain’s ruling class has created crisis after crisis – just like now

Boris Johnson’s run of bad decisions on Brexit and Covid have their roots in a saga of elite entitlement and superficiality writes John Harris in The Guardian

‘Then came the Brexit trade deal, and a familiar idea returned, that under the shambling exterior, the prime minister is some kind of swashbuckling genius.’ Photograph: Pippa Fowles/No10 Downing Street


When the novelist John le Carré died earlier this month, among the passages quoted by journalists was a short excerpt from The Secret Pilgrim, published in 1990. In the book, the words are spoken by Le Carré’s fondly loved character George Smiley. “The privately educated Englishman – and Englishwoman, if you will allow me – is the greatest dissembler on Earth,” he says. “Was, is now and ever shall be for as long as our disgraceful school system remains intact. Nobody will charm you so glibly, disguise his feelings from you better, cover his tracks more skilfully or find it harder to confess to you that he’s been a damned fool.”

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The words are a cutting summary of the far-off era of upper class treachery and cold war subterfuge, but also fit the less romantic time of Brexit, the pandemic and a Conservative party whose leadership by two public schoolboys has so pushed us into disaster. Therein lies a huge part of the national tragedy that, amid stranded lorries, a shamefully high death toll and some of the greatest peacetime blunders this country has ever made, has recently seemed to be reaching some kind of awful climax. Of late, some of the best writing about the mess we are in has focused on Boris Johnson’s character flaws, which are undoubtedly a big part of the tale. But what has been rather less examined is the fact that his shortcomings blur into a much longer story about our longstanding ruling class, and its habit of creating crisis after crisis.

The year 2021 will mark the 80th anniversary of George Orwell’s inspirational essay, The Lion and the Unicorn, his warmly patriotic text about the English national character, and his belief that this country’s efforts in the early stages of the second world war were being compromised by the fact that he was still resident in “the most class-ridden country under the sun”. Here, too, there are plenty of characterisations of the English elite that seem as pertinent now as they were then. “Probably the battle of Waterloo was won on the playing fields of Eton, but the opening battles of all subsequent wars have been lost there,” wrote Orwell, and as an Etonian himself he surely knew what he was talking about.

Of the ruling-class politicians who had overseen Britain’s domestic travails during the 1920s and 30s while pursuing the disastrous foreign policies that culminated in appeasement, he said this: “What is to be expected of them is not treachery, or physical cowardice, but stupidity, unconscious sabotage, an infallible instinct for doing the wrong thing. They are not wicked, or not altogether wicked; they are merely unteachable.” Back when Conservatives at least partly understood such criticism and successively embraced first postwar consensus politics, then the populist meritocracy most spectacularly embodied by Margaret Thatcher, they were harder to malign as chancers and stuffed shirts. But in the buildup to Christmas, as I watched Johnson deny the nightmare of a no-deal Brexit, row back on his stupid promise of a normal Christmas and then yet again offer the prospect of a return to normality (this time, he seemed to suggest, by Easter), Orwell’s words once again made perfect sense.

Since the election as party leader of David Cameron back in 2005, even if the Conservatives have stuck with a post-Thatcher view of the world, many of the inner circles of Tory politics have reverted to a way of doing things more rooted on the grouse moors of old than in the modern world. Johnson’s arrival at the top revived a familiar mixture of entitlement, superficiality and lives that most people would think impossibly opulent. We all know what those things have led to – a seemingly endless run of terrible decisions, from the calling of the 2016 referendum to the chain of stupidities that has defined Britain’s experience of Covid-19.

Just to be clear: the downsides of a certain kind of privileged leadership have flared up on all sides of politics, from the messianic arrogance that led Tony Blair into the Iraq disaster, to Nick Clegg’s virtual destruction of the Liberal Democrats. But in the main, this is a Tory story. If your Christmas presents included the horrifically readable memoir, Diary of an MP’s Wife by Sasha Swire (whose husband, Hugo, was a minister under Cameron and part of his social circle), you will have a sense of what all this looks like up close. Johnson’s biographer, Sonia Purnell, described Swire’s book as a portrait of people who are “unserious, entitled, snobbish, incestuous and curiously childish” – obsessed with the subtle distinctions of taste and status that separate the middle from the upper class, and drawn to politics and power not out of any sense of mission or duty, but a dull belief that such things are what people like them do. Under Johnson, the same culture of entitlement and mutual back-scratching has hardened into the so-called “chumocracy”. Oligarchy is rarely an efficient or sensible way to govern, but that doesn’t seem to have got in the way.

Just before Christmas, dismay about the Johnson government and its apparent distance from reality seemed to be reaching a peak. But then came the Brexit trade deal, and a familiar idea returned – not least in the rightwing press – that under the shambling exterior, the prime minister is some kind of swashbuckling genius. This is an archetype that depends on the glib charm cited by Le Carré, and draws on a deep well of deference. The reality is surely that a reckless project driven by the alumni of private schools (Johnson, Dominic Cummings, Nigel Farage, Jacob Rees-Mogg et al) has resulted in probably the only trade deal in history that puts up barriers to commerce rather than removing them, and will be rushed through parliament with a sickening disdain for any scrutiny. Combined with the economic effects of the pandemic, the result will be damage and uncertainty that is only just starting: all the talk about Brexit now being finished is further proof of the ditch we have been led into.

The disasters, then, will continue to mount up, but will they result in any change? If history teaches us anything, it is that this country’s mixture of cap-doffing and unassailable privilege tends to keep even the most rotten hierarchies in place, and the saga grinds on. This is the essence of the very British mess that we seem unable to escape.