The sickening theory of laissez-faire capitalism finally died with the recent report
from one of the West’s leading think tanks. The Organisation for
Economic Co-operation and Development (OECD) has found that income
inequality actually hampers economic growth in some of the world’s
wealthiest countries, while the redistribution of wealth via taxes and
benefits doesn’t.
In a nutshell: the reality of what creates and reverses growth is the
exact opposite of what the current right-wing, neo-liberal agenda has
been espousing ever since its rise to power under Thatcher and Reagan in
the eighties. Perhaps worst of all, the report showed evidence that the
UK would have been 20 per cent better off if the gap between the rich and poor hadn’t widened since the eighties.
To those of us who have only just survived the credit crunch and
recession, this evidence will be welcome, but hardly surprising. The
surprising thing is how it took this long. To extend a metaphor, why
didn’t we realise the patient had already died more than half a decade
ago?
Didn’t anyone who is sane and have any common sense realise this was
the case after the crash in 2008? Haven’t there been hundreds of
thousands of people demonstrating on the streets about the abuses of
bankers and the wealthiest 1 per cent? Haven’t we seen almost seven
years of unprecedented economic woes because of this very reason – that
the current system is bankrupt, in every sense of the word?
Why then have we spent such a long time ignoring the obvious? The
answer is of course because the current economic philosophy benefits the
all-powerful financial and business elite. But also, in this country at
least, because David Cameron’s Conservative party got into power off
the back of the 2008 crisis with the clever trick of rewriting the
causes of that very crisis. And what did they blame? Prepare your (now
factually justified) facepalm: they blamed it on too much state spending.
Before the 2008 crash the Tory strategy to get back into power had
been to match the then-Labour government’s state spending and perhaps
even further it. However, when the crash happened a sudden opportunity
presented itself to demonise the over-bloated public sector and blame
Labour‘s public spending for the economic downturn. Did it matter that
evidence of the crash being caused by recklessly unrestricted banking
practices was writ large over the whole world economy? Of course not,
this was cheap trick politics, and it worked. The Tories got into power
and we all bought into the narrative of austerity.
Now after five years of being forced to tighten our belts, we are
finally waking up to what that narrative actually was. Thanks to the
OECD report, we find that the very thing that the sacrifices of
austerity were made to preserve – the growth of the economy – is the
very thing they are destroying. Neo-liberal, laissez-faire capitalism
extends inequality, we already knew that. But now we have the evidence
that inequality harms, rather than encourages growth.
Like a sick patient being given the wrong drugs, it is the very thing
we thought was curing us that is actually killing us. And all the while
we are told to Keep Calm and Carry On taking our medicine by the
government, to keep on swallowing the same old propaganda.
What new narrative will the Government spin now?
