BOris Johnson’s latest wheeze is classical political economy. Faced with the chaos of gasoline shortages, empty supermarket shelves and soaring gasoline prices, Johnson proposed a bold response this week: it was all part of the plan. Great Britain, he explained, was simply moving from a broken economic “model”, based on low wages and high immigration, to a new one, based on high productivity and the creation of well-paying jobs.
His conference speech was immediately criticized by the right, on the grounds that in celebrating tightening labor markets it seemed to actively encourage inflation. But at the basal gut level, which Johnson never speaks to, he seems to have gotten away with it. Britain’s most infuriating economic policy conundrum of decades – its slow productivity growth – was simply going to be solved by magic, he said.
Whether we agree with the Adam Smith Institute that his speech was “economically illiterate,” Johnson’s new interest in economic “models” tells us something about how this strange new Tory party works. It is just as significant as Keir Starmer – unlike his two predecessors – have well avoided discussing the state of British capitalism. The terms of the political debate seem to have been reversed.
To some extent, Johnson was carving a familiar Tory groove. The insistence that apparent economic failure is, on the contrary, only a symptom of the beginning of medicine’s action strongly echoes the turbulent early years of Margaret Thatcher. In 1981 Thatcher was notoriously criticized by 364 economists far more distinguished than those at the Adam Smith Institute in a letter to the Times condemning its attempts to fight inflation with punitive interest rates.
Thatcher was posing as the strict nurse, painfully weaning the patient from his addiction to inflation. Johnson, on the other hand, suggests that Britain must now end its dependence on foreign labor. Regardless of the apparent damage the Conservative Party does to business or to GDP, there is something about its status in British public life that grants its leaders the right to speak out about the essence and direction of capitalism, in defiance of all logic and all economic indicators.
Thatcher, of course, was extremely serious and a living embodiment of the work ethic she stood for. Johnson is neither. Thatcher came close to paying a heavy political price for his intransigence, when it’s hard to imagine Johnson risking his position for mere ideology. For Johnson, it’s safe to say it’s more bluster that “works” as far as it gets him to spin a good thread. Theories of capitalism are now joining ancient Greek myths and rugby metaphors – all of these simple ways Johnson chooses to navigate in an interview.
Starmer obviously sees Johnson’s recklessness as an opportunity to position Labor as the party of business. “Good business and good government are partners” he said at the labor conference a week earlier. While his speech was understandably hostile to conservative economic policies, which he blamed for low wages, it contained nothing as drastic as changing the whole of model of the British economy. In the tradition of New Labor, he has largely focused on touting the benefits of what (good) business can do.
This is a strange turning point to have been reached, as the character of British capitalism is now called into question for utterly opportunistic purposes by a showman like Johnson. But that’s what happens when more honest politicians avoid tough questions about how capitalism works, or be punished for asking them by the media – which is precisely what has happened over the past 30 years.
Among political economy scholars, interest in “varieties of capitalism” flourished during the 1990s, just as liberal democracies abandoned the question of “capitalism or socialism? in favor of a question on what kind of capitalism. Before seizing power, New Labor was tempted by the Germanic visions of ‘stakeholder capitalism’ proposed by Will Hutton, but Gordon Brown came to the conclusion that Britain’s flexible labor market was an asset. too valuable, especially given the stubbornly high unemployment rate on the continent at the time. .
Economist David Soskice, whose 2001 book Varieties of Capitalism (edited with Peter Hall) is still the manual for this mode of analysis, would have convinced Brown that it was much better to rationalize the existing flexible “model” of the Great. -Brittany than to seek to impose a set of constraints on the labor market in search of a new one. In a short time, the whole question of economic “models” fell through. Brown, meanwhile, implemented a system of tax credits, which swept the social consequences of a low-wage economy under the rug.
It was not until 2011, with capitalism in crisis and the bookseller Ed Miliband at the head of the Labor Party, that such questions were resuscitated. In place of New Labor Bland hymns usual to ‘business’, Miliband sought to draw a line between the ‘predators’ and ‘producers’ of the economy – a truthful recognition that British capitalism had become a playground for strippers, speculators and monopolists. He was shot in the press as proof of “Red Ed’s” dangerous Marxism.
From 2015 to 2019, Jeremy Corbyn and John McDonnell raised the bar, developing a leftist populism that accused the super-rich of “rigging” the economy. In their eagerness to side with the majority of workers, they ran in the 2019 general election promising to target only 150 “billionaires”: not so much a failed economic “model” as a tiny parasitic clique.
By reverting to New Labor’s tactic of praising “business” and promising “economic prosperity” in general, Starmer has abandoned any such criticism. The multiple differences between, for example, a private equity fund that derives profits from a retirement home by cutting wages and a family-owned exporter of machine tools, are again obscured. In his attempt to appear economically serious, Starmer had to avoid making serious economic distinctions. In a public culture that rewards lying, a liar like Johnson finds himself with more license to raise such matters, as long as he doesn’t do so with serious intent and Labor remains silent about them.
Economic reality cannot, of course, be erased entirely with boast and humor. But among Westminster’s dysfunctions is the fact that economic outcomes can eventually be determined by two policy areas that are no longer the subject of democratic debate: Brexit and monetary policy. Johnson can bluff on productivity and immigration whatever he wants, but neither he nor Starmer will stand up in public and point out the obvious links between the UK Brexit deal and logistical chaos.
And he can troll the Confederation of British Industry as much as he wants by celebrating wage increases, but if inflation rises above 2% long enough, the independent Bank of England must respond by raising rates. ‘interest. The effect this may have on an already inflated housing market may pose far greater political problems for it than wage inflation, but that is how the UK economic model works. If he really wants to change it by design, and not just revel in the current chaos, he has his work cut out for him.