Vol. 44 No.

15 · 4 August 2022

The Seductions of Declinism

William Davies
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I n the month leading up to the Chris Pincher scandal, which finally did

for Boris Johnson, there was a flurry of bleak news about the state and
future of the British economy. Inflation hit a forty-year high of 9.1 per
cent, and the Bank of England announced its fifth interest rate rise since
December, to 1.25 per cent. At the end of June, Andrew Bailey, the
governor of the bank, admitted that inflation in the UK – triggered by a
combination of war in Ukraine and supply-chain bottlenecks in the wake
of Covid lockdowns – is likely to endure for longer than in the United
States or mainland Europe.
At the end of June, data emerged from the European Commission which
appeared to confirm the worst fears concerning the impact of Brexit on
trade: exports from the UK to the EU (still the UK’s largest trading
partner) in 2021 were 14 per cent lower than in 2020, and 25 per cent
lower than in 2019. The OECD predicted that Britain would enter
recession next year, and said it had the second worst outlook among the
G20 nations, just above Russia, which is currently the target of all-out
financial war.
Then there was surreal news from the housing market, the perennial joker
of British capitalism. The Halifax announced that June had seen the fastest
monthly rise in house prices since 2007, and the twelve months to June the
largest annual rise since 2004. In the fantastical political bubble
administered by the right-wing press, this counts as excellent news. Given
that homeowners are on average older, more likely to read newspapers and
more likely to vote Tory, it certainly helps explain the eerie sense
pervading British public life that the storm has not yet arrived, although
for many people it certainly has.
The housing market won’t be able to buck the influence of rising interest
rates, slumping real wages and looming recession for ever, but in the short
term, here was evidence that the ‘cost of living’ crisis, manifest in
spiralling energy and food costs, isn’t afflicting everybody. For
participants in the housing market (many of whom also built up their
savings during lockdown), inflation is still comparatively innocuous, while
interest rates remain low by historical standards. It’s people in rented
homes, living wholly off wages and benefits, who are the principal victims
of this crisis, which has no clear end in sight. Half the population has
already cut back on food shopping, while schools, care homes, leisure
centres and other public services face impossible choices in allocating
budgets that are declining rapidly in real terms. Prospects for the winter
are truly grim, with a further planned increase in energy prices coinciding
with the arrival of cold weather, and the continuing threat of Covid
worsening the situation in an already clogged-up NHS. It is a telling
reflection on the precarity of Britain’s current social and economic model
(not to mention the precarity of our relationship to the climate) that the
main thing holding back disaster right now is summer weather.
Some of the factors in this crisis are beyond the control of government
policy. To the extent that inflation is being driven by the war in Ukraine
and the effect of Covid-19 on global supply chains, there isn’t all that
much the Bank of England or anyone else can do about it. Raising interest
rates acts as a signal that the bank still takes its responsibilities seriously (it
does, after all, have an official mandate to pursue an inflation target of 2
per cent), but while interest rate rises may have the effect of depressing
economic activity – and even deflating the housing market – there’s a limit
to the influence they can have on energy and food prices, when there are
real material and geopolitical reasons that those prices are high. There are
no grounds for believing those forces are about to alter, and therefore no
reason to assume that energy in particular will suddenly become affordable
again. Modern central banks understand their role in terms of mass
psychology: they seek to influence expectations of the future so that
markets come to believe that prices will remain stable, until, eventually,
that’s what happens. But the current inflation crisis derives from the state
of the world, not from our psychological expectations about it.

Other factors are very much within the control of government. Brexit,
which has been the focus of the Conservative government for the past six
years, and a pipedream of the party’s Thatcherite wing for the past thirty,
is making Britain measurably poorer. Growth in business investment in
the UK, which before the 2016 referendum roughly tracked the rate of
other G7 economies, has stagnated ever since, and hasn’t recovered from
the shock of Covid despite an unprecedentedly extended period of cheap
credit, which in principle should have made investment more attractive,
not less. This under-investment has led to a drop in productivity, and a loss
of prosperity overall.
A longer-term view of Britain’s economic malaise is presented
in Stagnation Nation, a new report by the Resolution Foundation think
tank.* Two headline trends are identified, from which much else follows.
First, since the financial crisis of 2008 productivity has grown by just 0.4
per cent per year, compared to an average of 0.9 per cent in the 25
richest OECD countries. Partly as a consequence of this, average wages
simply stopped increasing, one of the strangest and most socially corrosive
developments in the history of British capitalism. The report shows that
between 1970 and 2007, wages typically went up by 33 per cent every
decade. Since then, they haven’t grown at all. One of the most startling
statistics in the report is that there are now eight million younger workers
who have never experienced an economy that delivers a rising standard of
living through wages alone.
The second overarching problem identified in the report is that Britain has
become an unusually unequal society over the past forty years, both in
income and in wealth. A low-income household in Britain is typically
£3800 a year worse off than the equivalent one in France, something that
makes a world of difference to the way this new inflationary crisis is
experienced. Meanwhile, total household wealth (what people own, rather
than what they make from wages) rose from three times GDP in the late
1980s to nearly eight times at the start of the pandemic, and then shot up
further thanks to the emergency monetary interventions of the Bank of
England in 2020-21. But many people have no wealth at all. The
contribution of ‘investment income’ (returns on shares, property, bonds
etc, as distinct from wages) to Britain’s deep regional inequality has
doubled since 1997.
The picture painted by Stagnation Nation is familiar from the work of
many political economists, such as Brett Christophers and Jodi Dean, who
have tracked the drift of contemporary capitalism towards ‘rentierism’ and
even ‘neo-feudalism’. What these terms suggest is that economies like
Britain’s have effectively abandoned the pursuit of prosperity through the
traditional capitalist practices of investment in technology, R&D, skills
and entrepreneurship (all of which offer a reason and a means for
businesses to increase wages), and descended instead into passive
speculation on unproductive assets, above all housing, but extending to
such Ponzi schemes as NFTs and other cryptocurrencies. This tendency
can be dated back to the explosion of financial services in the late 1980s,
but has become acute in the years since the 2008 financial crisis, when –
for reasons that aren’t entirely clear – an abundance of very cheap credit,
which could have been used for the creation of new firms, new production
methods, whole new business models, was instead used to inflate the value
of existing assets even further. One reason that highly unequal, low-
productivity economies tend towards stagnation is that wealth
management strategies of the sort pursued by the super-rich become
largely defensive, aimed at preserving and exploiting existing assets, rather
than risk-taking. The Resolution Foundation is quite praising of recent
government efforts to increase the rate of investment in the public sector,
but despairs at the extraordinarily low investment in the private sector. To
put it bluntly, Britain’s capitalist class has effectively given up on the
future. It’s against this economic backdrop that the nostalgia fest of the
Tory leadership election is taking place.

A s Boris Johnson limped towards his final prime ministerial

disgrace, his supporters in the Conservative Party and the press believed
they had hit on a strategy for weathering the mounting economic gloom.
With inflation now reducing the value of every pound by 9 per cent a year,
it was no surprise to see unions representing transport workers, refuse
collectors, teachers and telecom engineers, among others, begin to ballot
their members to strike for higher pay. The political right immediately
responded with oddly euphoric analogies to the 1970s. ‘Labour Isn’t
Working!’ one Daily Mail front page yelled. ‘We regret to announce that
this country is returning to the 1970s,’ the front page of the Sun said the
same week.
The aim in conjuring up this memory (at least among the over-sixties) was
quite clear: if this is a replay of the 1970s, then the unions must be
responsible for a large part of the economic disorder, so what’s needed is
some strong, Thatcherite figure to come along and take charge. Not only
that, but Labour – which Johnson and his supporters have gone to comical
lengths to identify as the ultimate instigator of any strike action – would be
responsible too. Cultivating an exaggerated sense of conflict and chaos
holds out the prospect of far greater political rewards than facing up to the
stagnation described by the Resolution Foundation. Chaos calls for an
authority figure to suppress it on behalf of the silent majority. Stagnation
calls for ... what exactly?
Stuart Hall identified this political tactic at the outset, in his 1979 essay
‘The Great Moving Right Show’, which defined ‘Thatcherism’ before
Thatcher had even taken power. Hall diagnosed a new variant of
‘authoritarian populism’, which responded to the inflationary crisis of the
1970s (which successive Conservative and Labour governments had failed
to alleviate) by framing it in ways that melded economic theory with a
moral and cultural diagnosis of national decline. Panics over progressive
ideas in education, the breakdown of law and order, family breakdown and
excessive reliance on welfare were all stirred up as a means of authorising
a new economic programme. A reassertion of traditional authority and a
clamping down on personal freedoms were integral to the Thatcherite
vision of a restored British capitalism. Renewed respect for private
property, enterprise and hard work would serve to fix all of these social
and economic crises at once.

Echoes of this ‘authoritarian populism’ can be discerned in the Johnson

administration’s moves to limit the right to protest, police the behaviour of
student unions, deport refugees to Rwanda and pick fights with the
judiciary. Some moral panics have been imported directly from the US,
including those surrounding the teaching of critical race theory in schools
and ‘cultural Marxism’ in universities. The former attorney general and
sometime leadership candidate Suella Braverman has pushed nationalistic,
illiberal rhetoric the furthest, arguing that Britain should pull out of the
European Convention on Human Rights (Belarus and Russia are currently
the only non-signatories) and put its own sovereignty ahead of whatever
international agreements it might have signed up to in the past. Kemi
Badenoch, who briefly looked as if she might get to represent the Tories’
Brexiter wing in the final run-off, has foregrounded a ‘war on woke’.
Controversies over gender identity, which has become a thorny issue for
the Labour Party (and could become thornier still in an election
campaign), have been seized on by candidates for Johnson’s job as a
means of demonstrating their wholesome commitment to Britain. Rishi
Sunak and Penny Mordaunt both criticised ‘gender neutral’ language at
their campaign launches, while the organisers of Badenoch’s launch were
reduced to sellotaping handwritten notes marked ‘Men’ and ‘Ladies’ onto
unmarked toilet cubicle doors. A willingness to recite key phrases
involving words like ‘woman’ and ‘penis’ has now joined a stated
willingness to deploy nuclear weapons as a necessary credential for
national leadership, at least in the eyes of much of the media. Little is
revealed by such rhetorical rituals, beyond a hunger for power.

Where economic policy has featured in the Tory leadership contest so far,
the focus has tended to be on levels of taxation, which the right of the
party has long considered far too high. While most economists would
argue that a shortage of economic growth over many years creates the
need for higher taxes (how else do you fund the public services on which
an ageing population depends?), the Thatcherite revivalists argue that it is
high taxation that leads to low economic growth – the idea being that
entrepreneurs are sitting idly at home, refusing to ‘unleash’ investment in
new firms and technologies because they’re too resentful towards the
taxman. Liz Truss, so desperate to draw comparisons with Thatcher that
she appeared to have dressed up as her idol for the Channel 4 leadership
debate, has described government targets for housebuilding as ‘Stalinist’.
Rishi Sunak, meanwhile, has internalised the banker’s mentality, in which
the state’s first priority must be to balance its books.

There have also been signs of hostility from the right of the Conservative
Party towards the Bank of England, with Truss blaming it for failing to
reduce inflation, and Braverman calling somewhat cryptically for a ‘more
binding inflation target’. This too is a revival of a Thatcherite motif.
Thatcher’s chief tactic against inflation between 1979 and 1982 was to
push up interest rates, which triggered such a deep recession and such high
unemployment that inflation was eventually brought under control. If
inflation can be pegged as the fault of the bank’s Monetary Policy
Committee, this provides another enemy, along with the resurgent trade
unions, for the neo-Thatcherites to confront. And as with Brexit, the fact
that the bank is now independent (unlike in Thatcher’s day) allows
resentment to be nurtured that the British economy is being unfairly held
back by a bunch of unelected technocrats.

Britain is not experiencing an economic rerun of the 1970s. Long-run

economic growth is lower, inequality far higher and the trade unions less
powerful. Inflation, as yet, has nothing to do with wages rising too fast (if
only). Where there are signs of chaos to rival the ‘winter of discontent’ –
the twenty-mile queues of trucks waiting to get through the port of Dover,
the six-hour waits at A&E, the missed holidays because of delays with
passport applications – this has nothing to do with left-wing insurrection,
and everything to do with the Johnson administration’s own policy choices
and failings. The invocation of the 1970s is less significant for what it
captures about reality than for what it tells us about the exhausted, wishful
thinking of the right. Part of Hall’s aim in attempting to understand
‘Thatcherism’ was to shake the left out of its complacency and to highlight
what was new and effective about this emergent political ideology. Some
on the left never forgave him, but the aim of such a Gramscian analysis
isn’t to credit one’s opponents with being correct; it is to recognise how a
certain representation of economy and society succeeds in making sense of
an otherwise bewildering, uncertain world. Thatcherism did this. A
pantomime re-enactment of Thatcherism, in a palpably different social and
economic age, offers nothing beyond the occasional set-piece to be
circulated on social media.

The term ‘culture war’ has become a commonplace in British politics over
the past four years, and especially since Johnson became prime minister.
Much of what it refers to can be covered by the question ‘Who holds the
authority to narrate Britain’s identity and history – universities or
newspapers?’ The conflict between the two has been supercharged by the
fact that columnists and academics (along with their respective
sympathisers) now frequently inhabit the same platforms, Twitter in
particular. It also has an intergenerational dimension, partly as a result of
the fact that newspapers are now largely read by the over-fifties, while
young people are far more likely to have gone to university. For a host of
reasons (not least that its current leader is a journalist), the Tory Party has
effectively become the political arm of the press, while routinely
complaining about the cultural influence of universities.

It is hardly a surprise to see candidates for the Conservative leadership

demonstrating loyalty to their newspaper allies in this ‘war’. ‘Cultural’
issues soak up vast amounts of attention online, while Johnson has made
an art form of stoking fresh controversies as a means of distraction, or
purely for the hell of it. One of the first hustings in the leadership contest
was held by the Conservative Common Sense Group, at which candidates
were grilled about the place of statues in society and similar issues. All of
this suggests a bad miscalculation over the weight most voters attach to
campus politics and to the opinions of newspapers. The Conservative Party
has become so closely entangled with a handful of newspapers, owned by
three or four billionaires, that it is unable to see how eccentric and often
irrelevant the concerns of these papers really are.
Pronouncements about Stalinism, gender identity, wokeness and Brexit are
useful as oaths of loyalty, but they do nothing to build an electoral
coalition or hegemony of the sort Hall identified in Thatcherism. The press
(especially the Financial Times) was an important component in the
assembly of Thatcherism, but so were think tanks and academic
economists. The current Conservative Party is an intellectual vacuum,
hovering around the epistemological void of Brexit, a policy whose
consequences must never be named or known. To be fair, the leadership
candidates haven’t yet had to worry about wider electoral strategy, since
the next prime minister will be decided by a combination of Tory MPs and
about 170,000 party members. But the winner will eventually collide with
the reality of economic stagnation and mounting pressures on the NHS.
Their electoral chances against Labour will probably be affected by the
depressing fact that no frontline Westminster politician is very popular
(the net approval ratings for Keir Starmer, like those for all eight of the
original Tory leadership candidates, are negative), and trust in politicians
generally remains low. Johnson has generated a lot of noise and outrage
during his three and a bit years in Downing Street and tested some
constitutional norms to the limit, but the deeper sense of hopelessness that
pervades British democracy predated his premiership by many years. The
next Tory leader, whether Sunak or Truss, will no doubt resort to many of
the same tactics as Johnson, creating further mistrust and alienation, when
they come to fight the next general election campaign. Labour needs to be
prepared.

L amentations of national decline have been a cottage industry in

Britain since the 1950s. The thesis advanced by Perry Anderson and Tom
Nairn in the 1960s and 1970s was that Britain modernised too early and
not enough, never experiencing a proper ‘bourgeois revolution’ (along the
lines of 1789) or developing a fully self-conscious or revolutionary
proletariat. Britain’s empire engendered an inflated sense of political and
economic grandeur, but two world wars and subsequent decolonisation left
an exhausted nation without any tradition of innovation or democracy to
draw on. The context for the economic challenges of the 1960s dated back
to the 1640s. Talk of ‘the crisis’ was a constant feature of New Left
debates; Hall’s account of Thatcherism was also the story of a country in
decline. Since the 1980s, British scholars and critics have produced a
succession of pessimistic diagnoses: ‘post-democracy’, ‘postcolonial
melancholia’, ‘elite debacle’, ‘capitalist realism’, to name just a few.
The historian David Edgerton has warned against the seductions of
national ‘declinism’ on the left, not least because it works symbiotically
with the nationalist ‘revivalism’ of the right. The claim that everything has
been getting worse for decades is a gift to Thatcherites and Brexiters, who
promise a dramatic turnaround in the fortunes of the nation, and would like
to banish those who talk down Britain’s prospects. Edgerton went to
considerable lengths in The Rise and Fall of the British Nation: A 20th-
Century History to dispute the claim that the interwar and postwar British
economy was a failure, or that it needed ‘reviving’ in the way Thatcher
promised. For Edgerton (and the Resolution Foundation appears to agree),
Britain’s current economic malaise began under Thatcher, when rent-
seeking via the housing market, privatisation and financial ‘innovation’
became the basis of Britain’s economic growth. But even Edgerton would
agree that we are now in a very bad way. The poor quality of the Tory
leadership candidates and the unseriousness of the debate between them
creates the impression of a country that can now only speak to itself in
slogans, oaths and insults, and has no capacity to describe or explain its
problems.
Away from the theatre of the leadership contest, the signs are that Britain’s
elites now intend to stake everything on another financial free-for-all.
Inexplicably, the Bank of England recently abolished the regulations that
impose affordability criteria on the sale of mortgages, meaning that lenders
no longer need to check whether borrowers have the capacity to repay if
interest rates rise further. A new Financial Services Bill, supported by
Sunak and the current chancellor, Nadhim Zahawi, will challenge the
power of the Bank of England to regulate financial services, with the aim
of releasing the City of London to engage in greater risk-taking. The
Brexiters’ ideology, according to which Britain remains restricted by its
conformity to EU rules, may have one more hurrah, if it can liberate
speculators for another few years before the Ponzi schemes finally
collapse. Truss has frequently promised to ‘unleash’ Britain from the
bonds of taxation and regulation. Given what is known about Tory Party
donors, the proprietors of the newspapers who support her, and the
oligarchical concentration of wealth at the top of British society, one must
wonder who or what precisely will be ‘unleashed’. It seems unlikely that
an army of entrepreneurs or visionaries will suddenly ride to the rescue,
but all too likely that the already wealthy will find Britain an even more
‘efficient’ place to live and deal than they did before.
Against this backdrop, the temptations of ‘declinism’ become harder than
ever to resist, even for policy wonks. The word ‘serious’ is used 28 times
in Stagnation Nation, each time with a sense of exasperation regarding the
delusional nature of discussions about economic policy – not only on the
right. The report does not conclude with a policy programme (that will
follow next year), but the list of problems confronting any ‘serious’
policymaker is substantial. Britain achieved very little in the way of
growth or productivity gains during the 2010s, despite exceptionally low
interest rates and inflation, and will find it much harder going now. And
yet significant redistribution has never been achieved without economic
growth. That said, should a country that has just experienced temperatures
of 40°C for the first time really be prioritising economic growth at all?