The neoliberal order established since the 70s is collapsing and what comes out of it is down to us, argues Chris Bambery

What is happening in Britain is obviously a major political crisis over Brexit. But beneath that immediate crisis lies the continuing and perpetual decline of the UK, economically and as a power on the world stage, and the breaking up of the consensus which has dominated for more than four decades.

What emerged in the 1980s and the 1990s was what Gramsci would have termed a new “historic bloc.” Whereas before there was a social democratic consensus post-1945 that full employment had to be maintained together with a welfare state that was replaced by acceptance of neoliberalism, in many ways rooted in the economic liberalism of the 19^th century.

The global turn to neo-liberalism and the break with the post-war Keynesian economic consensus is usually attributed to Margaret Thatcher and Ronald Reagan. In truth, there were many who could lay claim to parenthood but in Britain, the shift pre-dated Thatcher’s election in 1979 and took place under the proceeding Labour Government.

Already hit by high inflation and a weak economy in March 1976 the Pound fell below US$2 for the first time and kept falling to hit US$1.55 in October. The British Government went cap in hand to the IMF to ask for a loan to staunch the collapse, knowing the price meant making painful cuts to public spending.

In the end, the Pound largely recovered by the close of that year and the loan money never had to be used and was quietly paid back.

But in the midst of the crisis, Prime Minister James Callaghan told the Labour Party’s annual conference:

“We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists.”

If a moment exists when the turn towards neoliberalism occurred in Britain it was that Autumn. Interestingly, the gap between rich and poor had narrowed to the lowest point in modern British history. Now it would grow ever greater.

Under Margaret Thatcher, free market measures and an all-out assault on the trade unions, ultimately largely successful, represented a blunt club. Thatcher was good at destroying much of British industry, which was viewed as globally uncompetitive, but was unable to build the new slimmed down industrial base which could halt the UK’s economic decline stretching back to it being overtaken first by the USA post-civil war, and then by a unified Germany. Within the UK, that shifted economic dominance further towards the City of London and finance.

Yet Thatcher herself also represented a traditional conservative nationalism (the small c in conservative is important) which was important to her success, particularly in the case of the Falklands War, but which could sit uneasily with the new neoliberal globalised economy that was emerging. Witness her deep concern over German unification post-1989 and her troubles with the European Single Market.

This conservative nationalism is important, it was shared by much of the Labour Party, which had loyally supported Empire and rallied at time of war. It was crucial to the middle class base of the Tory Party.

But what Thatcher did by winning three general elections, with a fourth under her successor John Major, was to ensure that the opposition Labour Party dropped the last vestiges of its social democratic programme and embraced the market. That was the achievement of Tony Blair.

What Blair added to the new historic bloc was, in addition to economic liberalism and conservative nationalism, was social liberalism. By that I mean the world view of an elite who, based in certain Chi-Chi parts of North and West London, see themselves as global or European citizens with no time for discrimination based on gender, race or sexuality. Under David Cameron the Conservatives shifted towards that agenda. It was always unpopular with the membership and many MPs but they stomached it because Cameron pledged it would bring them electoral victory (they never forgave him that he failed to achieve that in 2010 and only took office via a coalition with the hated Liberal Democrats).

Nonetheless, this new historic bloc could maintain itself while property prices mushroomed and the City of London partied. That of course came to a crashing end, though as elsewhere the majority had to pick up the tab for a few who would never suffer the ensuing austerity.

But in the wake of financial crash and the recession that followed, the ruling historic bloc suffered a puncture. Economic liberalism remained but it was now open to real questioning.

Secondly, although politically the old social democratic agenda was off the agenda, a wide spread of the population preserved a loyalty to it. This was very evident at the 2012 London Olympics opening ceremony with its hymn of praise to the 1945 Welfare State and the National Health Service in particular.

In Scotland popular resentment of Thatcher and then Blair’s New Labour found a focus when the Scottish National Party began to shift from the centre to adopt much of Old Labour’s rhetoric, overtaking the thoroughly neo-liberal Scottish Labour in consequence. That also reflected a shift among many Scots that independence might mean escape from the worst of neoliberalism and the post-2008 austerity.

The subsequent threat to the very existence of the UK, not resolved by the 2014 Scottish referendum, and emerging once more as I write, undermined conservative nationalism, but also reflected an alienation from the ruling elite which found an expression in Scotland but which existed too in much of England, particularly in the northern old industrial areas.

The vision of Britain, or more accurately England, presented by Thatcher, Major, Blair and Cameron was based on the more prosperous Southern England and had a sort of theme park character in which the Royal Family descended from their pedestal to embrace celebrity culture. The celebration of wealth and of finance in particular, left much of England in the cold.

So much of the English popular classes were alienated from the elite consensus on economic and social issues and could not identify with the version of nationalism now on offer. They took the chance to wreak revenge in the Brexit referendum.

But their alienation was mirrored by the alienation of much of the Conservative Party’s traditional base. Firstly, the neoliberal order meant their children could no longer rely on secure, well paid “professional” jobs as doctors, accountants, lawyers or academics. After 2008, few could look forward to buying their own home – high levels of home ownership have been key to Tory success.

That is true across Europe but their conservative nationalism meant they were at odds with the socially liberal, pro-EU elite. They longed for Thatcher but got Cameron and then the indecisive Theresa May. They too got revenge in the Brexit referendum when a majority of Conservative members and voters opted for Leave.

But something else entered the field. The unexpected election of Jeremy Corbyn as Labour leader and the failure of umpteen plots to depose him mean a residual nostalgia and loyalty to the old Social Democratic agenda was suddenly transformed into a political force.

This is important for Europe because Britain seems likely to be heading towards a General Election, a better way to advance than calling for a re-run Brexit referendum. And Corbyn could win in England and Wales, win an overall majority or form a minority government reliant on SNP votes (the price would be a second independence referendum). If that’s the case it means a left wing alternative takes the European stage giving new wind to the radical left but also tempting existing centre-left politicians to take a chance on moving left to win votes (I can imagine that being the case in the SPD in Germany where the cost of coalitions with Merkel is continuing loss of support).

If Scotland were to gain independence it would have a profound effect on Catalonia.

Something important is happening in Britain. The tipping point is Brexit, but underneath swathes of the population are alienated from the elite and their once hegemonic ideas.

For observers elsewhere in Europe, and for many in Britain, the Brexit debates are difficult to follow. But in a sense that is not important. The EU will want to run a mile from any more referendums, but that will further increase the demonstrative lack of democracy underlying the whole project. In Britain, the very future of the state and of ideas upholding the dominance of the ruling class are in flux. There is something at play more important than the relationship between the UK and EU.

As Antonio Gramsci wrote:

‘The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.’

Yet other positive symptoms are also apparent. That is for us to choose; in England, Scotland and across Europe.