The Conjuncture Continues

The Bank of England’s announcement of a recession in the last quarter of 2022 and the next in 2023 has been met with suspense rather than disbelief. It was more an inevitability considering inflationary pressure, a weakened labour market and tepid growth post-pandemic. But compared to 2008, the last recession in the UK which was met with bank runs, a debt crisis and the devaluation of assets (mainly housing), this recession is more an example of exasperation. The years leading up to 2008 had seen consistent growth levels and upward real wages[1], while the years leading up to 2022 had seen minimal growth, real wage stagnation and an asset price boom which did not filter down to the general populace through taxation or distributive allocation. This recession then is a continuation of the norm, of misallocated and unproductive capital expenditure (exacerbated by years of quantitative easing) and the reduction of wages as a ratio of profit or value.

2008’s conjuncture is thus continuing and has never been resolved. Through a series of ideological transformations, the Conservative Party went from austerity measures for deficit reduction to higher spending levels to enact a distributive dividend (levelling up) and attempt to construct a post-Brexit economy. What has been developed is a tangled mess of contradictory priorities which have achieved no national redistribution from London to the British counties and metropolitan areas and have made no attempt to meaningfully tackle house price booms and the UK’s productivity stagnation.

Inflation trending upwards now means those real wages which had stagnated will now reduce in value. Combined with the post-Brexit regulatory mess which has increased the cost of exports while failing to construct production/manufacturing capacity which could enact import substitution (to offset increased costs) in the wake of post-COVID supply chain bottlenecks, the UK has a brittle economy with no meaningful growth prospects. It is reliant on a low-pay service sector and an underfunded tertiary sector with a vast managerial apparatus sitting atop to enact staff consultations and organisational consolidation (i.e. job cuts and contract renegotiations as in Network Rail).

But none of this conjunctural inertia has caused significant reshaping in the way British politicians or policymakers understand or reform the economy. While the Corbyn moment suggested a radical displacement of conventional thinking around the British economy, reintroducing nationalisation and a strong fiscal state as potential directions for a government, it has come to nothing as the Labour Party under Keir Starmer returns to the party’s post-2010 consensus, a series of meaningless mantras like “fiscal restraint” or “regaining the public’s trust” repeated by a series of rubber-faced technocrats each of which is forgettable and replaceable. Starmer could just as well be David Miliband or Alan Milburn. Similarly, Johnson’s so-called populism similarly amounted to nothing. “No one in living memory can have squandered such a far-reaching and revolutionary mandate for reform through such petty and absurd personal failings”[2]. Johnson promised radical reform not just of the British economy but of the whole governing apparatus. Yet when meaningful decisions around COVID policy or a post-Brexit settlement had to be made, he dithered, governing effectively as a technocrat. In the end scandals overtook his premiership because there was nothing of substance he could fall back on.

The two candidates set to replace Johnson represent a further stagnation of thinking. Both claim the mantle of Thatcher while having no idea what to do when it comes to governing the country. Both simply spout the class war rhetoric of curtailing trade unionism and preventing state handouts without any degree of rigour for ideological commitment that Thatcher represented. They are cardboard cut-outs of the Conservative Party membership neither of whom will reform the British economy in a substantive manner. Tax cuts or hikes, spending cuts or limited redistribution just rehash the past three Conservative Party leadership contests going back to Cameron.

Even on the technocratic side there has been no radical rethinking of monetary policy. The Bank of England’s rate hike will achieve little considering tepid consumer spending in 2022[3] and a limited savings rate[4] which with inflationary pressure potentially spiking at 17% is not going to be helped by interest rate increases. The current crisis requires radical action whether in the form of targeted capital injections into specific sectors or across a wider distributive format rather than through bond markets and bank windows with QE, or in the form of much stronger fiscal intervention to increase domestic production capacities and pivot the economy away from the Baumol effect and private indebtedness toward one that more intensively produces domestic energy and removes reliance on global supply chains. But these types of actions were also necessary after the 2008 crisis, and after Brexit and after the pandemic.

Each of these crises predicted a realignment of politics as the interests of citizens altered due to prevailing economic and cultural conditions. However, both main political parties still represent the same limited coalition of interests they did two decades ago. In Britain there has not been a realignment but rather a fragmentation of identities across class, nationality, ethnicity and culture[5]. This economic crisis has shown this acutely, as union strikes and social movements like Don’t Pay UK no longer protest at the politicians or the institutions, but instead sectoralise the public and present themselves as representatives of a particular section of it that demands either recompense or governing power. “The lines of this conflict are not cohering toward a general strike or a revolutionary moment, but are instead playing out across a fractured landscape of popular demands”[6].

The tired stasis of modern British politics will not resolve this conjuncture. However, it appears at this point that not much else will either. Instead, the sectoral conflicts that are emerging and the wider economic and environmental crises provide more forums for disputes and the fragmentation of the demos. Politics in its current form is being overtaken by a war machine.







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