The pandemic that exposed British neoliberalism


In its response to coronavirus, Britain has fared substantially worse than most other countries. The roots of this failure are in the neoliberal consensus – a consensus that is now vanishing.

By Edward Howell via unsplash

Critical moments such as these make or break the reputations of political leaders. Only two months ago, when Boris Johnson announced Britain’s coronavirus lockdown in a televised address to the nation, even his political opponents were impressed by the seriousness and sense of purpose with which he had met the crisis. In the space of just a few weeks, however, his reputation for waffle and buffoonery has been restored. With evidence mounting that the UK government failed to respond adequately in the early stages of the pandemic, Johnson returned to television on 10 May to announce the easing of the lockdown. The vagueness and confusion of his new instructions has left him the laughing stock of the international media, and stoked fears of another spike in infections and deaths as people struggle to make sense of the changes.

It will be some time before the full extent of the British government’s blunder is clear. Nevertheless, the evidence is even now disturbing. Caveating comparisons in official statistics from authoritarian states like China, the UK has now suffered the second highest number of recorded deaths anywhere in the world. Only the USA has seen more. Perhaps worse, Britain also has one of the highest death rates relative to its population size. Neither can the government plead ignorance; the UK was hit comparatively late in the pandemic and had plenty of opportunity to learn from other countries.

Responses to the pandemic: humanitarian and political

When confronted with news like this there are broadly two attitudes one can take, which we might call ‘humanitarian’ and ‘political’ respectively. The humanitarian response focuses on the human tragedy of the pandemic, the lives lost and those grieving as a result. Mantras like ‘the virus does not discriminate’ remind us that Covid-19 is a force of nature which we cannot fully control. The humanitarian attitude also lauds the heroic efforts of frontline workers during the crisis, especially the health-sector professionals battling every day to care for patients and return them, safe, to their loved ones.

The political attitude takes us in a different direction. While not downplaying efforts to respond, it asks more challenging questions about why some people have survived while others have not. This partly means questioning why certain groups within a given population - especially ethnic minorities and migrants, who are often disadvantaged already - are experiencing higher rates of infections and deaths. It also means drawing attention to how a country’s success in tackling the virus is linked to a range of pre-existing political factors, including the ideological slant of governments and their track-record of investment in public services.

It is on this political measure that Britain ranks so poorly. Government ministers have demonstrated admirable public spirit over the last few months in their celebration of the National Health Service (NHS) and the key workers who have kept society functioning under lockdown. Nevertheless, they cannot escape culpability for the state of the British economy, the NHS and other public services going into the crisis. The Conservative Party has been in power for almost exactly a decade, during which time it has pursued one of the most aggressive programmes of spending cuts and privatisation in British history. We were continually told during this period that the confidence of the financial markets trumped the social impact of austerity, and that in any case no real, lasting damage was being done. The Tories are now reckoning with their own legacy of carelessness in public office.

International comparisons show that we might have avoided our current predicament. Germany, with a social market economy beloved of British progressives, has fared substantially better during the crisis. Recovering from a bout of austerity in the early 2010s, Portugal’s Left-wing coalition has now both defied predictions of another recession and responded well to the pandemic. Perhaps the starkest comparison is with the Indian state of Kerala, run by a left-wing administration with an excellent record of investment in public health, which reports only four deaths out of a population of 35 million. In a country still often characterised in Britain as deprived and backward, Kerala has experienced 0.02% of the UK’s per capita deaths.

Volte face of the Conservative government

The failures of British neoliberalism have seldom seemed worse than in the over 37,000 people now dead because of coronavirus. In quiet recognition of this fact, the Conservative government has already performed a remarkable volte face in economic policy. After years of free-market orthodoxy, finance minister Rishi Sunak has brought forward a tranche of interventionist policies to ensure that people retain access to essential goods and services. Loans and grants have been made available to businesses to help maintain cash-flow. For firms struggling with labour costs, directly-employed workers can receive 80% of their incomes guaranteed by the state up to a maximum of £2,500 (€2,700) per month. Similar measures are being implemented for the self-employed. Meanwhile, the government is bringing forward sectoral bailout packages as successive industries fall victim to the collapse in demand triggered by physical distancing and economic uncertainty.

Public debt has skyrocketed, but that no longer seems to matter. Gone are the days when Conservative politicians would line up to denounce proposals from progressive parties as threatening to bankrupt the country. In a similar manner, the quasi-religious faith that the market will self-correct if left to its own devices has been jettisoned; the Tories wisely judged that public opinion would not tolerate a full-scale economic collapse for the sake of maintaining pure liberal principles. To adapt a notorious phrase first used during the 2017 general election, it seems that the ‘magic money tree’ has been discovered after all.

This drastic overhaul in economic policy should remind us of two things. Firstly, what the political and media elite - along with much of the population - take to be ‘common sense’ one day can very quickly come to be regarded as total madness. Full employment and the public ownership of key industries, which after the experience of the Great Depression was regarded as the only means to manage the economy had, within ten years, been thoroughly discredited by Margaret Thatcher and Ronald Reagan. Similarly, within a few short days in 2007, the idea that unregulated banks could be trusted to steer the rest of the economy responsibly was exposed as farcical. There is no accounting for how the orthodoxies of one moment can become the pipe-dreams of the next.

Secondly, even the widespread recognition that a system is failing does not, on its own, ensure that it will be replaced. Some sort of spark is needed to ignite change. Since 2008, very few people have believed that neoliberal capitalism is fit for purpose, and yet in many ways the world has continued as if nothing had changed. Even a wave of popular dissent spreading from Cairo and Athens to Harare and Santiago did not manage to dislodge the status quo. It seems to have taken a global pandemic to finally overturn 40 years of received wisdom.

The end of neoliberal orthodoxy

Britain - and in particular its ruling party - has had to make a greater ideological leap than most to meet the challenges of the moment. Much will be written with the benefit of hindsight about how neoliberal solutions, refined by the British Conservatives of the 1980s before being exported around the world, so suddenly became inadequate at home. From an initial look, however, we can discern two sources of inspiration for the new wave of policymaking. One is undoubtedly old-fashioned social democracy, as manifested in the UK and much of the rest of western Europe immediately after the Second World War. Like their forebears who constructed the post-war order, this generation of politicians has stumbled onto a fundamentally Keynesian intuition: even if the market is the most efficient means of distributing goods and services in normal times, during periods of crisis some degree of central planning becomes inevitable.

The other inspiration is the blend of ideas that has emerged in recent years under the rubric of the ‘new economics’. Incubated in think-tanks such as the New Economics Foundation in the UK and the Democracy Collaborative in the USA, and including academic luminaries like Thomas Piketty and Mariana Mazzucato, the new economics is imagining alternatives beyond neoliberalism which foreground social and environmental goods. A good example of madness transformed into common sense is the proposal for a universal basic income, where everyone in a given society would receive a flat-rate payment from the state in addition to any private income or welfare provision. Long derided by the mainstream Right as unworkable and/or immoral, Sunak’s income support policy has suddenly brought that possibility much closer. With an unprecedented appetite for public spending, now would be a perfect moment to experiment with new ideas.

It is far too soon to say what Britain will look like when it finally emerges from the coronavirus crisis. Already, however, it is clear that there can be no return to the status quo ante. The definitive question in world politics in the coming years will be how some countries succeeded in protecting life while others so dramatically failed. In its response to the pandemic, the British government has already tacitly accepted that the neoliberal orthodoxy of the last four decades is finished. When the time comes to rebuild, we should have the humility to learn from others and the bravery to imagine an alternative.