IIt is no coincidence that the modern Conservative party was born just when Britain was its most equalin the late 1970s. Thatcherism was a counter-revolution in economic thought. Its aim was to roll back what had hitherto been a successful model of state intervention in favor of corporate interests. During the 1970s, energy price shocks produced inflation. Yet this has been attributed by right-wing thinkers to loose fiscal and monetary policy by the government. When the policy was tightened, the resulting long queues were blamed on the power the unions had gained after decades of full employment.
Thatcherism pinpointed the feeling of a country adrift on egalitarianism. His supporters argued that economic progress needed more, not less, inequality. Conservatives first identified their enemies, then opportunistically chose them as scapegoats for the fate of the country. This scheme worked when they were insurgents, but today’s Conservative Party has been in power for 12 years. He struggles to repeat the trick. Voters do not recognize union leaders as “baronsbecause they don’t think their status is more privileged than that of their members or the general public.
What has been created in Britain since the 1970s is an unstable economic structure marked by strong inequalities. The financial crisis of 2008 should have put an end to it. Instead, Conservative Prime Ministers have continued to support the unequal practices of big business and the unequal distribution of gains from economic activity. None of the candidates for the leadership of the Conservative Party shows the slightest sign that reducing poverty and inequality will be a priority. Leveling up remains a slogan in search of a policy.
Income inequality in the UK is high, but the Conservative Party has seen fit to use government intervention to thwart further rises. Increase the minimum wage – which covers one in four employees – led to salary growth among the lowest earners, almost double the level of other staff. millions of self-employed, however, are not covered by this legislation and earn far less than the minimum wage. Conservatives have learned to love politics because it allows them to pretend they are on the side of working people while maintaining gig economy practices that undermine their bargaining power.
Wealth inequality is another story. Last week, the Resolution Foundation pointed out in its stagnant nation report that labor productivity grew by just 0.4% a year in the UK after the financial crisis, half the rate of the 25 wealthiest countries in the Organization for Economic Co-operation and Development. Yet even these small gains have produced no growth in real wages. Instead, the fruits of labor went to boost the business profit margins – and ultimately benefited wealthy owners such as shareholders, who are experiencing records dividend payments. Rising asset prices – especially housing – have widened the gap between haves and have-nots. Since 2008, the average wealth held by an adult in a family in the wealthiest tenth of the population has increased by around £500,000 compared to that held by an average adult in the middle of the distribution. Wealth taxes, on the other hand, have not increased as a proportion of GDP. Clearly they should.
In the past, the dilemma of capitalism was that corporations had to make real wages rise with productivity to ensure that the goods produced were sold. Financial market deregulation solved this problem by allowing households and businesses to borrow from a lightly supervised money-lending industry, which supported purchasing power in the economy. For the Conservatives, it was nicer than paying higher real wages. Brexit further reduces consumer protections to increase lenders’ profits. This will turbocharge a form of capitalism that caused the last economic crash. All those in the race for the leadership of the Conservative Party appear engaged to such trips. It is depressing that the Labor Party Mr Keir Starmer seems attached to them too.
