The Guardian view on Britain out of the EU: a
treasure island for rentiers
Editorial
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
‘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.’
Sun 27 Dec
2020 15.23 GMT
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.
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